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HIGH COURT OF AUSTRALIA PLAINTIFF AND COMMONWEALTH OF AUSTRALIA & ORS DEFENDANTS Williams v Commonwealth of Australia [2014] HCA 23 19 June 2014 ORDER The questions in the amended special case dated 1 May 2014 be answered as follows: Question 1 Was the SUQ Funding Agreement: as made, and as varied by the First to Fourth Variation Deeds, authorised by Appropriation Act (No 1) 2011-2012 (Cth)? as varied by the Fifth to Tenth Variation Deeds, authorised by Appropriation Act (No 1) 2012-2013 (Cth)? as varied by the Eleventh to Fourteenth Variation Deeds, authorised by Appropriation Act (No 1) 2013-2014 (Cth)? Answer Unnecessary to answer. Question 2 If not, are: s 32B of the Financial Management and Accountability Act 1997 (Cth) (FMA Act); Part 5AA and Schedule 1AA of the Financial Management and Accountability Regulations 1997 (FMA Regulations); and item 9 of Schedule 1 to the Financial Framework Legislation Amendment Act (the Financial Framework Amendment Act); wholly invalid? Answer In their operation with respect to the SUQ Funding Agreement (being the Funding Agreement dated 21 December 2011 between the Commonwealth and Scripture Union Queensland, the third defendant, as varied from time to time up to and including a Fourteenth Variation Deed dated 23 January 2014) and with respect to the payments purportedly made under that Funding Agreement in January 2012, June 2012, January 2013 and February 2014, none of s 32B of the Financial Management and Accountability Act 1997 (Cth), Pt 5AA and Sched 1AA of the Financial Management and Accountability Regulations 1997 (Cth) or item 9 of Sched 1 to the Financial Framework Legislation Amendment Act (No 3) 2012 (Cth) is a valid law of the Commonwealth. Question 3 If not, is the SUQ Funding Agreement, as varied by the First to Fourteenth Variation Deeds, authorised by: s 32B of the FMA Act; and Part 5AA of, and item 407.013 of Schedule 1AA to, the FMA Regulations; and where applicable, Item 9 of Schedule 1 to the Financial Framework Amendment Act? Answer Question 4 Was the Commonwealth's entry into, and expenditure of monies under, the SUQ Funding Agreement, as varied by the First to Fourteenth Variation Deeds, supported by the executive power of the Commonwealth? Answer Question 5 Does the Plaintiff have standing to challenge the making of: the January 2012 Payment; and the June 2012 Payment? Answer In the circumstances of this case, and to the extent necessary for the determination of this matter, yes. Question 6 Was the making of the January 2013 Payment and the February 2014 Payment and, to the extent that the answer to question 5 is "Yes", the January 2012 Payment and the June 2012 Payment, unlawful because it was not authorised by statute and was beyond the executive power of the Commonwealth? Answer Yes. Question 7 What, if any, of the relief sought in the Writ of Summons should the Plaintiff be granted? Answer The Justice disposing of the proceeding should grant the plaintiff such relief and make such costs orders as appear appropriate in light of the answers given to these questions. Question 8 What orders should be made in relation to the costs of this Special Case and of the proceedings generally? Answer The defendants should pay the plaintiff's costs of the special case. The costs of the proceeding are otherwise in the discretion of the single Justice who makes final orders disposing of the proceeding. Representation B W Walker SC with G E S Ng for the plaintiff (instructed by Horowitz & Bilinsky) the Commonwealth and J T Gleeson SC, Solicitor-General of S P Donaghue QC with G M Aitken and N J Owens for the first and second defendants (instructed by Australian Government Solicitor) D F Jackson QC with J A Thomson SC and E M Heenan for the third defendant (instructed by Norton Rose Fulbright Australia) Interveners M G Sexton SC, Solicitor-General for the State of New South Wales and J K Kirk SC with A M Mitchelmore for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor (NSW)) G L Sealy SC, Solicitor-General of the State of Tasmania with S K Kay for the Attorney-General of the State of Tasmania, intervening (instructed by Director of Public Prosecutions (Tas)) M G Hinton QC, Solicitor-General for the State of South Australia with C Jacobi and D F O'Leary for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) S G E McLeish SC, Solicitor-General for the State of Victoria with N M Wood for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) G R Donaldson SC, Solicitor-General for the State of Western Australia with F B Seaward for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) P J Dunning QC, Solicitor-General of the State of Queensland with G J D del Villar for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Williams v Commonwealth of Australia law Constitutional (Cth) – Powers of Commonwealth Parliament – Commonwealth entered into funding agreement with private service provider for provision of chaplaincy services at state school – Funding agreement made under National School Chaplaincy and Student Welfare Program – Commonwealth paid money under funding agreement – Section 32B of Financial Management and Accountability Act 1997 (Cth) empowered Commonwealth to make, vary or administer arrangements, for purposes of specified programs, under which public money payable by Commonwealth – National School Chaplaincy and Student Welfare Program specified program for purposes of s 32B – Whether s 32B in its relevant operation supported by s 51(xx), (xxiiiA) or (xxxix) of Constitution. Constitutional law (Cth) – Executive power of Commonwealth – Executive power to spend and contract – Whether entry into and expenditure under funding agreement supported by executive power of Commonwealth. Constitutional law (Cth) – Reopening of previous decisions. Words and phrases – "appropriation", "benefits to students", "executive power of the Commonwealth". Constitution, ss 51(xx), 51(xxiiiA), 51(xxxix), 61. Acts Interpretation Act 1901 (Cth), s 15A. Financial Framework Legislation Amendment Act (No 3) 2012 (Cth), Sched 1, item 9. Financial Management and Accountability Act 1997 (Cth), s 32B. Financial Management and Accountability Regulations 1997 (Cth), Pt 5AA, Sched 1AA. in schools, and FRENCH CJ, HAYNE, KIEFEL, BELL AND KEANE JJ. In 2012, this Court held1 that an agreement the Commonwealth had made to pay money for the provision of chaplaincy services Commonwealth had made under that agreement, were not supported by the executive power of the Commonwealth under s 61 of the Constitution. Soon after the Court published its decision, the Parliament enacted legislation evidently intended to provide legislative authority to make not only the agreement and payments which had been held to have been invalidly made, but also many other agreements and arrangements for the outlay of public money and the payments made or to be made under those agreements or arrangements. the payments Is the remedial legislation valid? These reasons will show that the remedial legislation is not valid in its relevant operation. The earlier litigation In December 2010, Ronald Williams brought a proceeding in this Court, against the Commonwealth and others, challenging the payment of money by the Commonwealth to Scripture Union Queensland ("SUQ") for SUQ to provide chaplaincy services at the state school Mr Williams' four children attended in Queensland. Mr Williams failed2 in one branch of his argument – that the payments were prohibited by s 116 of the Constitution – but succeeded in his claims that the funding agreement made between SUQ and the Commonwealth, and the payments made under that agreement, were not supported by the executive power of the Commonwealth. Accordingly, in June 2012, this Court answered questions stated by the parties to Williams (No 1) in the form of a special case by rejecting the claim based on s 116, but otherwise in the sense sought by 1 Williams v The Commonwealth (2012) 248 CLR 156; [2012] HCA 23 ("Williams 2 Williams (No 1) (2012) 248 CLR 156 at 182 [9] per French CJ, 222-223 [107]-[110] per Gummow and Bell JJ, 240 [168] per Hayne J, 333-335 [442]-[448] per Heydon J, 341 [476] per Crennan J, 374 [597] per Kiefel J. Hayne Bell The FFLA Act amended Within days of the Court ordering that the questions stated in the special case in Williams (No 1) should be answered in this way, the Parliament enacted the Financial Framework Legislation Amendment Act (No 3) 2012 (Cth) ("the FFLA Act"). the Financial Management and Accountability Act 1997 (Cth) ("the FMA Act") and the Financial Management and Accountability Regulations 1997 (Cth) ("the FMA Regulations") in ways evidently intended to provide legislative support not only for the making of agreements and payments of the kind which were in issue in Williams (No 1) but also for the making of many other arrangements and grants. This litigation Mr Williams has brought a fresh proceeding in this Court against the Commonwealth, the relevant Minister and SUQ, challenging the validity of certain provisions of the FMA Act and FMA Regulations (inserted by the FFLA Act). He challenges the validity of those provisions both generally, and in their particular operation with respect to the payment of money by the Commonwealth to SUQ, in accordance with a funding agreement made with SUQ, for SUQ to provide chaplaincy services at the state school Mr Williams' four children continue to attend. The funding agreement need not be described in any detail. It has been varied several times, but nothing turns on the details of those variations. Both the agreement and the payments made under it are said to be made under the "National School Chaplaincy and Student Welfare Program". That expression is found in Portfolio Budget Statements in support of the relevant Commonwealth department's3 budget presented to both Houses of the Parliament in connection with the Bills for what would later become the relevant Appropriation Acts. The National School Chaplaincy and Student Welfare Program was one of many administered items4 the subject of the relevant Appropriation Acts. Section 8 of each of those Appropriation Acts permitted application of the appropriated sum 3 The name of the relevant department has been changed several times. It is not necessary to describe those changes. 4 A detailed description of the current form and content of Appropriation Acts, including, in particular, the distinction drawn in those Acts between "administered items" and "departmental items", is given in Combet v The Commonwealth (2005) 224 CLR 494 at 564-567 [121]-[133] per Gummow, Hayne, Callinan and Heydon JJ; [2005] HCA 61. It need not be repeated in these reasons. Hayne Bell "for expenditure for the purpose of contributing to achieving" an outcome for the relevant Commonwealth department. From time to time the relevant Commonwealth department has issued guidelines "setting out requirements for the administration and delivery" of the National School Chaplaincy and Student Welfare Program. Again, it is not necessary to set out any part of these guidelines. For the moment, it is sufficient to refer to so much of the FMA Act and FMA Regulations as bears upon the agreement and payments which Mr Williams challenges in this proceeding as "the impugned provisions". The Commonwealth and the Minister ("the Commonwealth parties"), and SUQ, sought to meet Mr Williams' fresh challenge by defending the validity of the impugned provisions, in their relevant operation, as laws with respect to the provision of benefits to students, within s 51(xxiiiA) of the Constitution. These reasons will show that the impugned provisions are not laws of that character. legal entity SUQ further submitted that, because published guidelines for the National School Chaplaincy and Student Welfare Program provide that a "Funding incorporated under Recipient" Commonwealth or state legislation)", and because funding agreements require the provision of services for reward, the impugned provisions, in their relevant operation, are laws with respect to trading or financial corporations within s 51(xx) of the Constitution. Again, these reasons will show that the impugned provisions are not laws of that character. In their relevant operation, the impugned provisions are not valid laws of the Commonwealth. (an organisation In addition to submitting that the impugned provisions are laws supported by s 51(xxiiiA), the Commonwealth parties sought to advance several arguments which, if accepted, would support the making of the agreement and payments regardless of whether the impugned provisions, in their relevant operation, are laws supported by s 51(xxiiiA). Mr Williams submitted that the Commonwealth parties are precluded from advancing, or should not be permitted to advance, these arguments. As these reasons will later show, some of the arguments have been advanced by the Commonwealth more than once in litigation in this Court. Some were advanced in Williams (No 1). They are arguments which have not hitherto been accepted by the Court. Their repetition does not demonstrate their validity. They are arguments which should not now be accepted. It is not necessary to decide whether, or to what extent, the Commonwealth or the Minister may, or should be permitted to, advance these additional arguments. Hayne Bell As in Williams (No 1), the parties have agreed to state questions in the form of a special case for the opinion of the Full Court. Consideration of the questions may usefully begin by identifying the impugned provisions more fully and then referring in more detail to this Court's decisions in Pape v Federal Commissioner of Taxation5 and Williams (No 1). As will later be explained, the decisions in those cases provide the foundations for the decision in this case. The Commonwealth parties sought to reopen the decision in Williams (No 1). They did not seek to reopen Pape. The impugned provisions The FFLA Act inserted a new Division (Div 3B) into Pt 4 of the FMA Act. The new Division (ss 32B-32E) is entitled "Supplementary powers to make commitments to spend public money etc". The central provision of the new Division, s 32B, provides: apart from this subsection, the Commonwealth does not have power to make, vary or administer: an arrangement under which public money is, or may become, payable by the Commonwealth; or a grant of financial assistance to a State or Territory; (iii) a grant of financial assistance to a person other than a State or Territory; and the arrangement or grant, as the case may be: is specified in the regulations; or (iii) is included in a class of arrangements or grants, as the case may be, specified in the regulations; or is for the purposes of a program specified in the regulations; (2009) 238 CLR 1; [2009] HCA 23. Hayne Bell the Commonwealth has power to make, vary or administer the arrangement or grant, as the case may be, subject to compliance with this Act, the regulations, Finance Minister's Orders, Special Instructions and any other law. (2) A power conferred on the Commonwealth by subsection (1) may be exercised on behalf of the Commonwealth by a Minister or a Chief Executive. Note 1: For delegation by a Minister, see section 32D. Note 2: For delegation by a Chief Executive, see section 53. In this section: administer: in relation to an arrangement—includes give effect to; or in relation to a grant—includes make, vary or administer an arrangement that relates to the grant. arrangement includes contract, agreement or deed. make, in relation to an arrangement, includes enter into. vary, in relation to an arrangement or grant, means: vary in accordance with the terms or conditions of the arrangement or grant; or vary with the consent of the non-Commonwealth party or parties to the arrangement or grant." into (Sched 1AA) In addition, the FFLA Act inserted a new Part (Pt 5AA) and a new the Schedule the FMA Regulations. FMA Regulations is entitled "Supplementary powers to make commitments to spend public money etc"; Sched 1AA is entitled "Arrangements, grants and programs". Regulation 16(1)(d) of the FMA Regulations (inserted by the FFLA Act) provides that, for s 32B(1)(b)(iii) of the FMA Act, Pt 4 of Sched 1AA specifies "programs". One of the "programs" identified in Pt 4 of Sched 1AA (in item 407.013), under the rubric of the Department of Education, Employment and Workplace Relations, is: Part 5AA of Hayne Bell "National School Chaplaincy and Student Welfare Program (NSCSWP) Objective: To assist school communities to support the wellbeing of their students, including by strengthening values, providing pastoral care and enhancing engagement with the broader community". It will be recalled that the Portfolio Budget Statements relating to the relevant Appropriation Acts also referred to the National School Chaplaincy and Student Welfare Program. The description given of the program in the Portfolio Budget Statements was generally similar to the statement of objective set out in item 407.013. The FFLA Act made transitional provisions in respect of what it called "pre-commencement arrangements". Item 9 of Sched 1 to the FFLA Act provided that: "(1) This item applies to an arrangement made, or purportedly made, by the Commonwealth before the commencement of this item if: assuming that: section 32B of Accountability Act 1997 as amended by Schedule; and the Financial Management and this regulations made any the purposes of subparagraph (1)(b)(i), (ii) or (iii) of that section within the transitional period; and for (iii) the amendments made by Schedule 2 to this Act; had been in force when the arrangement was made or purportedly made, the arrangement would have been authorised by subsection (1) of that section; and the arrangement was in force, or purportedly in force, immediately before the commencement of this item. For this purpose, it is immaterial whether the arrangement was the subject of a proceeding instituted in a court or tribunal before the commencement of this item. Hayne Bell The arrangement has, and is taken to have had, effect, after the commencement of this item, as if it had been made under and subsection 32B(1) Accountability Act 1997 as amended by this Schedule. the Financial Management In this item: arrangement includes contract, agreement or deed. made, in relation to an arrangement, includes entered into. transitional period means: the 60-day period beginning at the commencement of this item; or if a longer period is specified in the regulations—that longer period. The Governor-General may make regulations for the purposes of paragraph (b) of subitem (3)." transitional period the definition of If the impugned provisions are valid in their operation with respect to the National School Chaplaincy and Student Welfare Program, item 9 of Sched 1 to the FFLA Act is evidently intended to make good the deficiency in authority to make the funding agreement and payments which was found in Williams (No 1). Consideration of the validity of the impugned provisions must begin from an understanding of what this Court decided in Pape and in Williams (No 1). Pape In Pape, all members of the Court concluded6 that ss 81 and 83 of the Constitution do not confer a substantive spending power. All members of the (2009) 238 CLR 1 at 55 [111] per French CJ, 73 [178], 82-83 [210] per Gummow, Crennan and Bell JJ, 113 [320] per Hayne and Kiefel JJ, 212-213 [606]-[607] per Hayne Bell Court agreed7 that the power to spend appropriated moneys must be found elsewhere in the Constitution or in statutes made under it. The majority of the Court held8 that the determination of the Executive Government that there was a need for an immediate fiscal stimulus to the national economy enlivened legislative power under s 51(xxxix) to enact the impugned law as a law incidental to that exercise of the executive power. But the division of opinion about this more particular issue should not be permitted to obscure the importance of the conclusions about location of the power to spend. It is those conclusions which underpinned the decision in Williams (No 1). The answers which the Court gave to the questions stated in Williams (No 1) have already been identified. It is necessary, however, to say something more about the course of argument in Williams (No 1) and the decision itself. First, the Commonwealth parties in Williams (No 1) submitted that s 44(1) of the FMA Act provided legislative authority both for the Commonwealth making the agreement with SUQ to pay SUQ to provide chaplaincy services and for the Commonwealth making the payments provided for by that agreement. The Commonwealth parties in Williams (No 1) pointed to no other legislative support for the Commonwealth making the agreement, the several variations to that agreement or the payments for which the agreement provided. Six members of the Court rejected9 the submission relying on s 44(1); the seventh member of the Court, Heydon J, found10 it unnecessary to express any opinion about it. Second, the Commonwealth parties in Williams (No 1) did not submit that making the funding agreement in issue, or the payments for which it provided, was supported by those aspects of executive power which might be referred to (2009) 238 CLR 1 at 55 [111] per French CJ, 73 [178] per Gummow, Crennan and Bell JJ, 113 [320] per Hayne and Kiefel JJ, 211 [601], 212 [604] per Heydon J. (2009) 238 CLR 1 at 23 [8], 63-64 [133]-[134] per French CJ, 89-92 [232]-[243] per Gummow, Crennan and Bell JJ. (2012) 248 CLR 156 at 210 [71] per French CJ, 222 [103] per Gummow and Bell JJ, 273 [260] per Hayne J, 358-359 [545]-[547] per Crennan J, 374 [596] per 10 (2012) 248 CLR 156 at 321 [407]. Hayne Bell loosely as the Executive's power to deal with or respond to a national emergency (considered in Pape) or other matters of the kind commonly grouped under the heading "nationhood". Third, six members of the Court held11 that the agreement providing for payments to SUQ was invalid, because it was beyond the executive power of the Commonwealth under s 61 of the Constitution, and that the making of the relevant payments by the Commonwealth to SUQ under that agreement was not supported by the executive power of the Commonwealth under s 61. Consistent with what had been held in Pape, six members of the Court held that there was no authority in the Constitution or in statutes made under it to spend the moneys appropriated for the purposes of what was then called the National School Chaplaincy Program. No doubt, as the Solicitor-General of the Commonwealth pointed out in the course of the argument of this case, differences can be identified in the reasons given in Williams (No 1) for the conclusions reached in that case. But of more immediate relevance than the differences in reasoning which can be identified in Williams (No 1) are the premises which underpinned the decision. Those premises were established in Pape. They are, first, that the appropriation of moneys in accordance with the requirements of ss 81 and 83 of the Constitution does not itself confer a substantive spending power and, second, that the power to spend appropriated moneys must be found elsewhere in the Constitution or in statutes made under it. It is convenient to deal at once with the question of Mr Williams' standing. Standing Question 5 asks whether Mr Williams has standing to challenge the making of the particular payments to SUQ which he challenges. The Commonwealth parties accepted that the question should be resolved in Mr Williams' favour, and SUQ made no submission to the contrary. This being the position of the parties, question 5 should be answered "In the circumstances of this case, and to the extent necessary for the determination of this matter, yes". 11 (2012) 248 CLR 156 at 179-180 [4], 216-217 [83] per French CJ, 233 [138] per Gummow and Bell JJ, 281 [289]-[290] per Hayne J, 359 [548] per Crennan J, 374 Hayne Bell It is necessary to explain why, despite there being no dispute about the issue, the answer should be qualified in this way. There are two reasons. First, the Commonwealth parties conceded the question of standing "in light of the position taken by the [State Attorneys-General as] interveners" to support Mr Williams' submissions that the impugned payments were not validly made. Second, it is not necessary to determine whether, as Mr Williams and some of the interveners submitted, s 32B of the FMA Act is wholly invalid because it constitutes an impermissible delegation of legislative power12. Because it is not necessary to decide that wider question, it is not necessary to decide whether Mr Williams would have standing to challenge the validity of other arrangements purportedly authorised by s 32B for the payment of money in respect of matters which do not affect him or his children. These considerations require that the answer be qualified in the manner indicated. Validity of the impugned provisions Question 2 asks whether s 32B of the FMA Act, Pt 5AA and Sched 1AA of the FMA Regulations and item 9 of Sched 1 to the FFLA Act are wholly invalid. For the reasons which follow, question 2 should be answered: "In their operation with respect to the SUQ Funding Agreement (being the Funding Agreement dated 21 December 2011 between the Commonwealth and Scripture Union Queensland, the third defendant, as varied from time to time up to and including a Fourteenth Variation Deed dated 23 January 2014) and with respect to the payments purportedly made under that Funding Agreement in January 2012, June 2012, January 2013 and February 2014, none of s 32B of the Financial Management and Accountability Act 1997 (Cth), Pt 5AA and Sched 1AA of the Financial Management and Accountability Regulations 1997 (Cth) or item 9 of Sched 1 to the Financial Framework Legislation Amendment Act (No 3) 2012 (Cth) is a valid law of the Commonwealth." 12 cf Roche v Kronheimer (1921) 29 CLR 329; [1921] HCA 25; Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 101 per Dixon J, 119-120 per Evatt J; [1931] HCA 34. Hayne Bell In order to explain why question 2 should be given an answer limited in the manner indicated, it is necessary to begin from some uncontroversial and obvious principles. The validity of the impugned provisions cannot be determined without understanding their legal operation. And that requires consideration of the proper construction of the provisions, particularly s 32B of the FMA Act. The FMA Act provides for the administration of public money: money in the custody or under the control of the Commonwealth or of a person acting for or on behalf of the Commonwealth13. Division 3B of Pt 4 of the FMA Act (and s 32B in particular) provides power to make commitments to spend public money. The Parliament's legislative power to enact the FMA Act derives14 from every head of legislative power which supports the Commonwealth, or a person acting for or on behalf of the Commonwealth, being entitled to have custody or control of money or being entitled to make a payment of public money. Section 32B deals particularly with the power to make a commitment to make one or more payments of public money. And again, the Parliament's legislative power to grant the authority to make a commitment to pay public money is founded in every head of legislative power which supports the making of the payments with which s 32B deals. It may be that, taken literally, s 32B would have a very wide field of actual and potential application. It would be possible, for example, to read s 32B(1) as extending to cases where the Parliament does not have constitutional power to authorise the making, varying or administration of arrangements or grants. But ordinary principles of statutory construction require rejection of such a reading of those words. And, more generally, consistent with the requirements of s 15A of the Acts Interpretation Act 1901 (Cth)15, s 32B should be read as providing power to the Commonwealth to make, vary or administer arrangements 13 s 5, definition of "public money". 14 cf R v Hughes (2000) 202 CLR 535 at 555 [40] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [2000] HCA 22. 15 "Every Act shall be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth, to the intent that where any enactment thereof would, but for this section, have been construed as being in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power." Hayne Bell or grants only where it is within the power of the Parliament to authorise the making, variation or administration of those arrangements or grants. To read the provision in that way is to read it within constitutional power. To read it as having a wider operation might take the provision beyond either constitutional power or the meaning and operation which its words can fairly bear, or beyond both constitutional power and the fair reading of its text. But if, as Mr Williams' arguments based on Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan16 suggested, s 32B does present some wider questions of construction and validity, they are not questions which are reached in this case and they should not be considered17. Rather, it is enough to consider whether, in their operation with respect to the agreement about and payments for provision of chaplaincy services, s 32B and the other impugned provisions are supported by a head of legislative power. As already noted, the Commonwealth parties and SUQ each sought to support the impugned provisions, in their relevant operation, as laws with respect to the provision of benefits to students within s 51(xxiiiA). It is that issue to which these reasons now turn. Benefits to students? The impugned provisions seek to authorise the making of agreements about and payments for the provision of services which are to be available to students. The "objective" set out in item 407.013 in Pt 4 of Sched 1AA to the FMA Regulations refers to assisting "school communities to support the wellbeing of their students". Some of the argument proceeded on the footing that the services provided under the program would be available not only to students but also to members of the relevant "school community". This aspect of the argument depended upon identifying the content of the relevant program by reference to the guidelines for "administration and delivery" of the program published by the relevant Commonwealth department. The funding agreement made with SUQ required compliance with those guidelines, as varied from time to time. 16 (1931) 46 CLR 73. 17 See, for example, Lambert v Weichelt (1954) 28 ALJ 282 at 283 per Dixon CJ; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 437 [355] per Crennan J; [2009] HCA 2; ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 199 [141] per Hayne, Kiefel and Bell JJ; [2009] HCA 51. Hayne Bell How and why reference could properly be made to those guidelines in order to identify the content of the program specified in item 407.013 was never satisfactorily explained by any of the parties or interveners. And the Commonwealth parties suggested that reference could be made to the guidelines as varied from time to time. It is by no means obvious that the guidelines, whether as they stood at the time of enactment of the relevant provisions, or as they stood from time to time, are documents which can properly be taken into account in either construing the relevant legislative provisions or determining their validity. It is not necessary, however, to pursue those issues to their conclusion. It is enough to say that, if the program, properly understood, permitted the provision of services not only to students but also to the wider "school community", this broader understanding of its content would appear to point away from characterising the program as providing benefits to students. It is, therefore, not necessary to explore who is or may be a member of a "school community". Rather, it is enough to observe that all students may use the chaplaincy services provided at a school. For the purposes of argument, it may be accepted that some students would derive advantage from using the services and, in that sense, should do so. But no student and no member of the school community must do so. All may; perhaps some should; none must. As has just been noted, it may be assumed that provision of chaplaincy services at a school will help some students. Provision of those services will be of benefit to them. It will be of "benefit" to them in the sense of providing them with an advantage or a good18. But the word "benefits", where twice appearing in s 51(xxiiiA), is used19 more precisely than as a general reference to (any and every kind of) advantage or good. The meaning of the word "benefits" accepted by the majority in British Medical Association v The Commonwealth ("the BMA Case")20 was that expressed by McTiernan J: "material aid given pursuant to a scheme to provide for human wants ... under legislation designed to promote 18 cf The Oxford English Dictionary, 2nd ed (1989), vol II at 111, "benefit", sense 3a. 19 Williams (No 1) (2012) 248 CLR 156 at 279-280 [280]-[285], 366-367 [570]-[573]. See also British Medical Association v The Commonwealth (1949) 79 CLR 201 at 260 per Dixon J; [1949] HCA 44. 20 (1949) 79 CLR 201 at 279. See at 246 per Latham CJ, 286-287 per Williams J, Hayne Bell social welfare or security". And that material aid may be provided in various ways. McTiernan J referred21 to the provision of benefits in the form of "a pecuniary aid, service, attendance or commodity". In Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth ("the Alexandra Hospital Case")22 all five members of the Court accepted that "the concept intended by the use in [s 51(xxiiiA)] of the word 'benefits' is not confined to a grant of money or some other commodity" and that the concept "may encompass the provision of a service or services". The Court treated this conclusion as supported, even required, by the decision in the BMA Case. And it was on this footing that the Court decided in the Alexandra Hospital Case that the payment of money to the proprietor of an approved nursing home, in respect of each qualified nursing home patient, for each day on which the patient received nursing home care in that nursing home, was provision of a "sickness and hospital benefit". As the Court pointed out23, the benefit could be identified either as the money paid to the nursing home proprietor or as the services provided by the proprietor to the patient as the quid pro quo for the money payment made by the Commonwealth. But each description reflected the central fact that the intended ultimate beneficiary of the benefit was a particular patient: the identified patient in respect of whom a particular payment was made. It would not be right to attempt to state some comprehensive definition of what may be "benefits", whether "benefits to students" or any of the several other forms of benefits identified in s 51(xxiiiA). Nothing in these reasons should be understood as attempting that task. It is enough, for the purposes of this case, to observe that the constitutional expression "benefits to students" cannot be construed piecemeal. That is, the expression is not to be approached as if it presented separate questions about whether there is a "benefit" and whether that "benefit" is provided to or for "students". Section 51(xxiiiA) uses in several different collocations. It uses the word to refer24 to the provision of aid to or for the word "benefits" 21 (1949) 79 CLR 201 at 279. 22 (1987) 162 CLR 271 at 280 per Mason ACJ, Wilson, Brennan, Deane and Dawson JJ; [1987] HCA 6. 23 (1987) 162 CLR 271 at 281. 24 cf BMA Case (1949) 79 CLR 201 at 260 per Dixon J. Hayne Bell individuals for human wants arising as a consequence of the several occasions identified: being unemployed, needing pharmaceutical items such as drugs or medical appliances, being sick, needing the services of a hospital, or, as is relevant to this case, being a student. The benefits are occasioned by and directed to the identified circumstances. In the usual case, the assistance will be a form of material aid to relieve against consequences associated with the identified circumstances. Provision of the benefit will relieve the person to whom it is provided from a cost which that person would otherwise incur. In the case of unemployment and sickness benefits, the aid will relieve against the costs of living when the individual's capacity to work is not or cannot be used. That aid may take the form of payment of money or provision of other material aid against the needs brought on by unemployment or sickness. Pharmaceutical and hospital benefits provide aid for or by the provision of the goods and services identified. And in the case of benefits to students, the relief would be material aid provided against the human wants which the student has by reason of being a student. item 407.013 in Pt 4 of Sched 1AA Providing at a school the services of a chaplain or welfare worker for the objective described the FMA Regulations is not provision of "benefits" of the kind described by McTiernan J in the BMA Case or by the Court in the Alexandra Hospital Case. Providing those services does not provide material aid to provide for the human wants of students. It does not provide material aid in the form of any service rendered or to be rendered to or for any identified or identifiable student. There is no payment of money by the Commonwealth for or on behalf of any identified or identifiable student. And the service which is provided is not directed to the consequences of being a student. There is no more than the payment of an amount (in this case to an intermediary) to be applied in payment of the wages of a person to "support the wellbeing" of a particular group of children: those who attend an identified school. And the only description of how the "support" is to be given is that it includes "strengthening values, providing pastoral care and enhancing engagement with the broader community". These are desirable ends. But seeking to achieve them in the course of the school day does not give the payments which are made the quality of being benefits to students. Providing money to pay persons to provide such services at a school is not to provide benefits which are directed to the consequences of being a student. It is not a provision of benefits to students within the meaning of s 51(xxiiiA). Hayne Bell Trading and financial corporations? SUQ's reliance on s 51(xx) may be dealt with shortly. The impugned provisions seek to provide authority for the Commonwealth to make agreements and payments. For the purposes of considering the argument, it may be assumed that the opposite party to an agreement made for the purposes of the National School Chaplaincy and Student Welfare Program and the recipient of payments made under that program can be, even must be, a trading or financial corporation. A law which gives the Commonwealth the authority to make an agreement or payment of that kind is not a law with respect to trading or financial corporations. The law makes no provision regulating or permitting any act by or on behalf of any corporation. The corporation's capacity to make the agreement and receive and apply the payments is not provided by the impugned provisions. Unlike the law considered in New South Wales v The Commonwealth (Work Choices Case)25, the law is not one authorising or regulating the activities, functions, relationships or business of constitutional corporations generally or any particular constitutional corporation; it is not one regulating the conduct of those through whom a constitutional corporation acts or those whose conduct is capable of affecting its activities, functions, relationships or business. It is not necessary to consider whether SUQ is a trading or financial corporation. In particular, it is not necessary to decide whether, as SUQ submitted, the corporation was properly classified as a trading or financial corporation simply because it made agreements with the Commonwealth which obliged it to provide services in return for payment. This question, and larger questions left open in the Work Choices Case about the meaning of "trading or financial corporations formed within the limits of the Commonwealth", are not reached in this case and should not be examined. Appropriation Acts as legislative authority to spend? Commonwealth Appropriation and Supply Acts over many years provided26 that the Treasurer was "authorized and empowered to issue and apply" the moneys identified in the Act (emphasis added). And s 8 of each of the 25 (2006) 229 CLR 1; [2006] HCA 52. 26 Williams (No 1) (2012) 248 CLR 156 at 264 [231]. Hayne Bell Appropriation Acts27 relevant to this case provided that amounts specified in administered items "for an outcome for an Agency may be applied for expenditure for the purpose of contributing to achieving that outcome" (emphasis added). In each of the years for which the relevant Appropriation Acts provided, the National School Chaplaincy and Student Welfare Program28 was an administered item for an outcome for the relevant department. In Williams (No 1) the Commonwealth parties did not submit that provisions of this kind in the applicable Appropriation Acts provided statutory authority for making the agreement or payments in issue in that case. But in this proceeding, the Commonwealth parties submitted that the Appropriation Acts for the years 2011-2012, 2012-2013 and 2013-2014 authorised the making of the funding agreement (as it was in force in each of those years) by providing that the amounts appropriated by those Appropriation Acts may be applied to the outcome identified as the National School Chaplaincy and Student Welfare Program. Question 1 in the special case asks whether the funding agreement was authorised by those Acts. Mr Williams submitted that the Commonwealth parties were precluded from relying on this argument in this proceeding because the argument had been open and was not advanced in the earlier proceeding. The Commonwealth parties responded by submitting29 that doctrines of preclusion could not, or should not, be applied in this way in constitutional litigation and by further submitting that, because different payments (and different Appropriation Acts) were at issue in the two proceedings, the doctrines, if otherwise applicable, were not engaged. 27 Appropriation Act (No 1) 2011-2012 (Cth), Appropriation Act (No 1) 2012-2013 (Cth) and Appropriation Act (No 1) 2013-2014 (Cth). 28 In the earliest of the years in issue, the reference was to the National School Chaplaincy Program. Nothing turns on this fact and it is convenient to refer only to the National School Chaplaincy and Student Welfare Program. 29 See, for example, Queensland v The Commonwealth (1977) 139 CLR 585 at 597 per Gibbs J, 605 per Stephen J; [1977] HCA 60; Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 590 [156] per Gummow and Hayne JJ; [1999] HCA 27; Re Macks; Ex parte Saint (2000) 204 CLR 158 at 238 [224] per Gummow J; [2000] HCA 62; cf The State of Victoria v The Commonwealth ("the Second Uniform Tax Case") (1957) 99 CLR 575 at 654 per Fullagar J; [1957] HCA 54. Hayne Bell It is not necessary to examine or decide the validity of these arguments. Their decision should await30 a case in which it is necessary to deal with them. If the Appropriation Acts relied on by the Commonwealth parties are to be construed as providing statutory authority to make either the funding agreement or any of the payments in issue in this proceeding, the same questions about the validity of the relevant provisions (in that operation) are presented as arise in relation to the other statutory provisions said to support the making of the relevant payments and agreement. The conclusions reached about the validity of the impugned provisions of the FMA Act, the FMA Regulations and the FFLA Act would apply equally to the Appropriation Acts if they otherwise provided authority for the making of the agreement and payments in issue in this case. Question 1 should be answered "Unnecessary to answer". The conclusion that the impugned provisions are not laws supported by either s 51(xxiiiA) or s 51(xx) determines the outcome of the litigation unless one or more of the several arguments advanced by the Commonwealth parties about the ambit of the Executive's power to spend is made out. The Commonwealth parties advanced their arguments under the cloak of an application to reopen the decision in Williams (No 1). The Commonwealth parties put31 four main reasons for what they described as "a compelling case" to reopen the decision in Williams (No 1). First, they submitted that "the principle identified in [Williams (No 1)] was not carefully worked out in a significant succession of cases" and "constituted a radical departure from what had previously been assumed by all parties to be the orthodox legal position". Second, they submitted that the course taken in the hearing in Williams (No 1) resulted in the Court not receiving "sufficient argument, or sufficient material by way of constitutional fact, on what became 30 See, for example, Lambert v Weichelt (1954) 28 ALJ 282 at 283 per Dixon CJ; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 437 [355] per Crennan J; ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 199 [141] per Hayne, Kiefel and Bell JJ. 31 cf John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439 per Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ; [1989] HCA 5. Hayne Bell the ultimate issue". (The material was said to include "evidence of how the Senate in fact functions in and about the appropriation process" and "evidence of consultation with the States in relation to" the National School Chaplaincy Program.) Third, they submitted that "the reasons of the four Justices constituting the majority in [Williams (No 1)] do not contain a single answer" to when and why Commonwealth spending requires authorising legislation or whether legislation operates "solely at Commonwealth level or at both Commonwealth and State levels". And fourth, they submitted that the decision in Williams (No 1) "led to considerable inconvenience with no significant corresponding benefits". the requirement for authorising to which As has been explained, the decision in Williams (No 1) depended upon premises established in Pape, and the Commonwealth parties did not seek to reopen Pape. In these circumstances, there may be room for debate about the extent to characterise the Commonwealth parties were right Williams (No 1) as establishing a new principle. But, even if it is right to say that Williams (No 1) did not apply principles "carefully worked out in a significant succession of cases", demonstrating this to be so would not show that the decision should be reopened. Rather, it would show only that the decision was not one which the Court should be especially reluctant to reopen. It would provide no necessary reason to reopen what has been so recently decided by six Justices. Although the Commonwealth parties submitted, in effect, that the course of argument in Williams (No 1) was unsatisfactory, they stopped well short of submitting that the decision was given in ignorance of any relevant legal argument or decision or that there was any want of procedural fairness. And neither of those submissions was open. The Commonwealth parties in Williams (No 1) were given a complete opportunity to advance their arguments against the challenge which Mr Williams then mounted and the Commonwealth parties do not now point to any principle of law or decision which was not before the Court and able to be canvassed fully in the course of argument in Williams that The Commonwealth parties did submit that not all relevant constitutional facts were established in the hearing of Williams (No 1). It is greatly to be doubted (Senate practice and inter-governmental consultations about the particular program) are relevant constitutional facts. If they are, it was well open to the Commonwealth parties to have sought to bring them to attention, and rely on them, during argument in Williams (No 1). They did not. the matters they point to which Hayne Bell The submissions that there were deficiencies in the way in which Williams (No 1) was argued should be rejected. The argument that Williams (No 1) should be reopened because it did not give a single and comprehensive answer to when and why Commonwealth spending needs statutory authorisation and did not decide what powers the Executive Governments of the States have to spend or contract should also be rejected. Williams (No 1) decided the issues which were tendered for decision in the case. The decision may not provide the Commonwealth with an answer to every question that may be asked about Commonwealth expenditure powers. And the decision does not consider any question about State expenditure powers: no such question was put in issue in that proceeding or in this. How or why these observations point to a need to reopen Williams (No 1) was not, and could not be, explained. Finally, then, there was the assertion of "considerable inconvenience with no significant corresponding benefits". What was meant in this context by the references to "inconvenience" and "corresponding benefits" would require a deal of elaboration in order to reveal how they bear upon the resolution of an important question of constitutional law. Examination of the proposition reveals no greater content than that the Commonwealth parties wish that the decision in Williams (No 1) had been different and seek a further opportunity to persuade the Court to their view. The only inconvenience identified was the need to enact the impugned provisions. These are not reasons enough to permit reopening. The application to reopen the decision in Williams (No 1) should be refused. Refusal of that application entails rejection of so much of the arguments advanced on behalf of the Commonwealth parties as sought to revisit the question about the Executive's power to spend money in performance of a funding agreement of the kind in issue in this proceeding. It is important, however, to record the arguments which were advanced by the Commonwealth parties and to identify why those arguments have been rightly rejected. Executive power revisited The Commonwealth parties identified the central holding in Williams (No 1) as being "that many, but not all, instances of executive spending and contracting require legislative authorisation". They submitted that this holding was wrong and that there were only seven limitations on the Executive's power to spend and contract. Those limitations can be identified shortly as follows. First, Hayne Bell from the Executive may not "stray into an area reserved for legislative power". Second, an exercise of executive power cannot fetter the exercise of legislative power and cannot dispense with the operation of the law. Third, there can be no withdrawal of money the Consolidated Revenue Fund without parliamentary authority in the form of appropriation legislation. Fourth, s 51 of the Constitution "provides every power necessary for the Parliament to prohibit or control the activity of the Executive in spending". Fifth, through collective and individual ministerial responsibility to the Parliament, the Parliament "exercises substantial control over spending". Sixth, the Constitution assumes the separate existence and continued organisation of the States. Seventh, State laws of general application apply to spending and contracting by the Commonwealth without legislative authority. Although cast as an acknowledgment of what may be accepted to be important limitations on the power of the Executive to spend and contract, this argument was, in substance, no more than a repetition of what were referred to as the "broad basis" submissions which the Commonwealth parties advanced32 in Williams (No 1) and which six Justices rejected33. A proposed limitation on the power to spend and contract Notably absent from the list of seven limitations proffered by the Commonwealth parties was any limitation by reference to the areas in which (in the sense of subjects for or about which) the Commonwealth may spend or contract. If such a limitation was considered necessary, the Commonwealth parties submitted that the limitation should be framed as follows: "[E]xecutive power to contract and spend under s 61 of the Constitution extends to all those matters that are reasonably capable of being seen as of national benefit or concern; that is, all those matters that befit the national government of the federation, as discerned from the text and structure of the Constitution." (emphasis added) 32 (2012) 248 CLR 156 at 167. 33 (2012) 248 CLR 156 at 186-187 [26]-[27], 191-193 [35]-[38] per French CJ, 236-239 [150]-[159] per Gummow and Bell JJ, 270-271 [251]-[253] per Hayne J, 343-344 [488], 355 [534] per Crennan J, 373-374 [595] per Kiefel J. Hayne Bell This limitation was said to be "the corollary embedded in s 61 of the Constitution to the 'purposes of the Commonwealth' referred to in s 81 (in the specific context of spending)". So expressed, the proposition is one of great width. It may go so far as to permit the expenditure of public money for any national program which the Parliament reasonably considered to be of benefit to the nation. It is hard to think of any program requiring the expenditure of public money appropriated by the Parliament which the Parliament would not consider to be of benefit to the nation. In effect, then, the submission is one which, if accepted, may commit to the Parliament the judgment of what is and what is not within the spending power of the Commonwealth, even if, as the Commonwealth parties submitted, the question could be litigated in this Court. It is but another way of putting the Commonwealth's oft-repeated34 submission that the Executive has unlimited power to spend appropriated moneys for the purposes identified by the appropriation. The reference to discerning what are the matters "that befit the national government of the federation" from "the text and structure of the Constitution" appears to propose a test narrower than "all those matters that are reasonably capable of being seen as of national benefit or concern". It is not useful, however, to stay to attempt to resolve any internal inconsistency in the submission of the Commonwealth parties. Rather, it is more productive to identify the way in which it was sought to apply the submission in this case. The Commonwealth parties submitted that, if the breadth of the executive power to spend and contract is limited, the provision of chaplains in schools is within the executive power of the Commonwealth because it "is reasonably capable of being seen as a matter of national benefit or concern". The 34 See, for example, Victoria v The Commonwealth and Hayden ("the AAP Case") (1975) 134 CLR 338 at 342-343; [1975] HCA 52; Pape (2009) 238 CLR 1 at 10; Williams (No 1) (2012) 248 CLR 156 at 167. See also Attorney-General (Vict) v The Commonwealth ("the Pharmaceutical Benefits Case") (1945) 71 CLR 237 at 242-243; [1945] HCA 30; Brown v West (1990) 169 CLR 195 at 197; [1990] HCA 7; Combet v The Commonwealth (2005) 224 CLR 494 at 510-512; Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) Hayne Bell Only one of them need be specially noticed. Commonwealth parties developed this submission by reference to several considerations. The Commonwealth parties submitted that the chaplaincy program was of national benefit or concern because the States had been consulted about and had supported Williams (No 1). And the Solicitor-General of the Commonwealth began his oral submissions in this matter by referring to consultation documents which he submitted showed that the States supported the chaplaincy program. the chaplaincy program considered the extension of Consultation between the Commonwealth and States coupled with silent, even expressed, acquiescence by the States does not supply otherwise absent constitutional power to the Commonwealth. The Constitution contains several provisions by which the States and the Commonwealth may join in achieving common ends. It is enough to mention only s 51(xxxvii) (about referral of powers) and s 96 (about grants on condition). Neither of those provisions was engaged in relation to the matters the subject of this case. The consultations to which reference was made in argument do not support the Commonwealth parties' submissions. But there are more fundamental defects in the argument of the Commonwealth parties about the breadth of the Executive's power to spend and contract. An assumption underpinning the Commonwealth parties' argument The Commonwealth parties submitted that the content of the executive power to spend and contract should be determined in two steps. It was said to be necessary to "commence with an understanding of executive power at common law". The task was then described as being to identify "the precise source of any limitation on Commonwealth executive power" (emphasis added). The identification of those limitations proceeded from a false assumption about the ambit of the Commonwealth's executive power. The Commonwealth parties submitted that determining the content of executive power (but not the limitations on its exercise) should proceed from only two premises. First, "a polity must possess all the powers that it needs in order to function as a polity". Second, "the executive power is all that power of a polity that is not legislative or judicial power". Both of those premises may be accepted. But the conclusion the Commonwealth parties sought to draw from those premises about the content of Commonwealth executive power does not follow unless there is a third premise for the argument: that the executive power Hayne Bell of the Commonwealth should be assumed to be no less than the executive power of the British Executive. This third premise is false. inquiry (about "limitations") proceeded was What the submissions called "executive power at common law" was executive power as exercised in Britain35. Thus the assumption from which the that, absent some second "limitation", the executive power of the Commonwealth is the same as British executive power. But why the executive power of the new federal entity created by the Constitution should be assumed to have the same ambit, or be exercised in the same way and same circumstances, as the power exercised by the Executive of a unitary state having no written constitution was not demonstrated. To make an assumption of that kind, as the arguments of the Commonwealth parties did, begs the question for decision. The history of British constitutional practice is important to a proper understanding of the executive power of the Commonwealth. That history illuminates such matters as why ss 53-56 of the Constitution make the provisions they do about the powers of the Houses of the Parliament in respect of legislation, appropriation bills, tax bills and recommendation of money votes. It illuminates ss 81-83 and their provisions about the Consolidated Revenue Fund, expenditure charged on the Consolidated Revenue Fund and appropriation. But it says nothing at all about any of the other provisions of Ch IV of the Constitution, such as ss 84 and 85 (about transfer of officers and property), ss 86-91 (about customs, excise and bounties), s 92 (about trade, commerce and intercourse among the States), or ss 93-96 (about payments to States). And questions about the ambit of the Executive's power to spend must be decided in light of all of the relevant provisions of the Constitution, not just those which derive from British constitutional practice. 35 The extent of this power may remain controversial. See, for example, R (Hooper) v Secretary of State for Work and Pensions [2005] 1 WLR 1681 at 1695-1696 [46]-[47] per Lord Hoffmann; [2006] 1 All ER 487 at 506-507; R (New London College Ltd) v Secretary of State for the Home Department [2013] 1 WLR 2358 at 2371 [28] per Lord Sumption JSC (Lord Clarke of Stone-cum-Ebony and Lord Reed JJSC and Lord Hope of Craighead agreeing); [2013] 4 All ER 195 at 210- 211; cf Maitland, "The Crown as Corporation", (1901) 17 Law Quarterly Review 131; Harris, "The 'Third Source' of Authority for Government Action Revisited", (2007) 123 Law Quarterly Review 225; Howell, "What the Crown May Do", (2010) 15 Judicial Review 36. It is neither necessary nor appropriate to enter upon that subject. Hayne Bell Consideration of the executive power of the Commonwealth will be assisted by reference to British constitutional history. But the determination of the ambit of the executive power of the Commonwealth cannot begin from a premise that the ambit of that executive power must be the same as the ambit of British executive power. It may be assumed that, as the Commonwealth parties submitted, "what might be described as the inherent or traditional limits on executive power, as they emerged from the historical relationship between Parliament [at Westminster] and the Executive, have not hitherto been treated [in Australia or, for that matter, in Britain] as the source of any general limitation on the ability of the Executive to spend and contract without legislative authority". But it by no means follows from this observation that the Commonwealth can be assumed to have an executive power to spend and contract which is the same as the power of the British Executive. This assumption, which underpinned the arguments advanced by the Commonwealth parties about executive power, denies the "basal consideration"36 that the Constitution effects a distribution of powers and functions between the Commonwealth and the States. The polity which, as the Commonwealth parties rightly submitted, must "possess all the powers that it needs in order to function as a polity" is the central polity of a federation in which independent governments exist in the one area and exercise powers in different fields of action carefully defined by law37. It is not a polity organised and operating under a unitary system or under a flexible constitution where the Parliament is supreme. The assumption underpinning the Commonwealth parties' submissions about executive power is not right and should be rejected. Finally, reference must be made to the Commonwealth parties' arguments based on the express incidental power in s 51(xxxix). Section 51(xxxix) For the most part, the submissions which the Commonwealth parties made about s 51(xxxix) depended upon the success of other arguments they advanced but which have been rejected. Thus the Commonwealth parties submitted that, in 36 Pharmaceutical Benefits Case (1945) 71 CLR 237 at 271-272 per Dixon J. 37 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 267-268; [1956] HCA 10. Hayne Bell so far as the Appropriation Acts provided authority to spend appropriated moneys, the Appropriation Acts were supported by s 51(xxxix) as laws incidental to the power to appropriate. They further submitted that s 32B of the FMA Act was supported by the incidental power as a law incidental to the power to appropriate or the executive power under s 61 to spend and contract. Both of those arguments must be rejected. To hold that the Parliament may make a law authorising the expenditure of any moneys lawfully appropriated in accordance with ss 81 and 83, no matter what the purpose of the expenditure may be, would treat outlay of the moneys as incidental to their ear-marking. But that would be to hold, contrary to Pape, that any and every appropriation of public moneys in accordance with ss 81 and 83 brings the expenditure of those moneys within the power of the Commonwealth. Likewise, to hold that s 32B of the FMA Act is a law with respect to a matter incidental to the execution of the executive power of the Commonwealth (to spend and contract) presupposes what both Pape and Williams (No 1) deny: that the executive power of the Commonwealth extends to any and every form of expenditure of public moneys and the making of any agreement providing for the expenditure of those moneys. Conclusion and orders For these reasons, the questions stated in the form of a special case should be answered as follows. Question 1, which asks whether the SUQ funding agreement is supported by the Appropriation Acts, should be answered: "Unnecessary to answer." Question 2, which asks whether the impugned provisions are wholly invalid, should be answered in the manner indicated earlier in these reasons: "In their operation with respect to the SUQ Funding Agreement (being the Funding Agreement dated 21 December 2011 between the Commonwealth and Scripture Union Queensland, the third defendant, as varied from time to time up to and including a Fourteenth Variation Deed dated 23 January 2014) and with respect to the payments purportedly made under that Funding Agreement in January 2012, June 2012, January 2013 and February 2014, none of s 32B of the Financial Management and Accountability Act 1997 (Cth), Pt 5AA and Sched 1AA of the Financial Management and Accountability Regulations 1997 (Cth) or item 9 of Hayne Bell Sched 1 to the Financial Framework Legislation Amendment Act (No 3) 2012 (Cth) is a valid law of the Commonwealth." Question 3, which asks whether the SUQ funding agreement is supported by the impugned provisions, should be answered: "No." Question 4, which asks whether the Commonwealth's entry into, and expenditure of moneys under, the SUQ funding agreement was supported by the executive power of the Commonwealth, should be answered: "No." Question 5, about standing, should be answered in the manner indicated earlier in these reasons: "In the circumstances of this case, and to the extent necessary for the determination of this matter, yes." It follows from the answers which should be given to questions 2, 3 and 4 that question 6, which asks whether the making of the payments identified in the question was unlawful, should be answered: "Yes." What relief should now be given in the proceeding should be a matter for a single Justice to determine. Question 7, which asks about relief, should be answered: "The Justice disposing of the proceeding should grant the plaintiff such relief and make such costs orders as appear appropriate in light of the answers given to these questions." Question 8 asks about the costs of the special case and the proceeding generally. Having succeeded, Mr Williams should have his costs of the special case. What further orders for costs should be made in finally disposing of the proceeding should again be a matter for a single Justice to determine. Who should be liable to pay Mr Williams' costs? SUQ submitted that, if Mr Williams succeeded, "there should be no order for costs made against SUQ as it has acted in good faith in reliance upon the validity of the Commonwealth's legislation". But, SUQ having chosen to play an active part in defence of the validity of the impugned provisions, there is no reason why it should not be ordered, with the Commonwealth parties, to pay Mr Williams his costs of the special case. How liability for satisfying that order might be adjusted between the defendants should be a matter for those parties to determine. Question 8 should be answered: "The defendants should pay the plaintiff's costs of the special case. The costs of the proceeding are otherwise in the discretion of the single Justice who makes final orders disposing of the proceeding." Crennan CRENNAN J. Subject to a reservation set out below, I agree with the joint reasons for judgment and with the answers proposed to the questions stated in the form of a special case. The reservation is confined to Mr Williams' challenge to the validity of the impugned provisions on the basis that those provisions are not properly characterised as the Commonwealth for "the provision of ... benefits to students" within s 51(xxiiiA) of the Constitution. For convenience, the same definitions which are employed in the joint reasons are used in these reasons. laws which fall within the powers of The objectives of the National School Chaplaincy and Student Welfare Program are described in constituent documents in terms of assisting school communities by supporting "the wellbeing of their students, including by strengthening values, providing pastoral care and enhancing engagement with the broader community". Whilst those concepts, including "pastoral care", are not defined comprehensively in the constituent documents, attention was given in submissions to services which might be provided to students by student welfare workers or student counsellors, and it may be assumed, without deciding, that such services would fall within the concept of "pastoral care". In dealing with Mr Williams' submissions on the scope of s 51(xxiiiA), it is not necessary for this Court to express any views about the wisdom of governments providing services to school communities and students which support the wellbeing of students, including pastoral care, or about whether the provision of such services is a worthy object for the expenditure of public moneys. The Court's task is limited to determining whether the National School Chaplaincy and Student Welfare Program is sufficiently connected38 to s 51(xxiiiA), which was relied upon by the Commonwealth parties as a relevant head of power to support validity. It is enough for the purposes of upholding Mr Williams' challenge to validity to find that the impugned provisions do not fall within s 51(xxiiiA) because they do not institute a scheme for the provision of government assistance to, or for, persons – in this case, students – as prescribed and identifiable beneficiaries. 38 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 373 [104] per Gummow J; [2005] HCA 44, citing O'Sullivan v Noarlunga Meat Ltd (1954) 92 CLR 565 at 594; [1954] HCA 29. Crennan Sir William Beveridge's Report Social Insurance and Allied Services39, mentioned by Dixon J in the BMA Case40, considered the harmonisation of various social security systems to tackle threats to society described as want, ignorance, disease, squalor and idleness. Two requirements for effective social security advanced in the Report were universality and comprehensiveness. There was a spate of social security legislation in Australia in 1944 and 1945, which included the Pharmaceutical Benefits Act 1944 (Cth)41. The inclusion of s 51(xxiiiA) in the Constitution, following a referendum, was a response to this Court's decision concerning that Act42. In the second reading speech for the Constitution Alteration (Social Services) Bill 194643 and in the explanations of the meaning of "benefits" in s 51(xxiiiA) in the BMA Case44, reference is made to enlarged conceptions of social security. In particular, the explanation of the meaning of a "benefit" given by McTiernan J in the BMA Case45, approved in the Alexandra Hospital Case46 – "material aid given pursuant to a scheme to provide for human wants" – shows that the word "benefit" has a specific meaning when used in social security legislation. 39 Beveridge, Social Insurance and Allied Services: Report, (1942) Cmd 6404. 40 (1949) 79 CLR 201 at 259; [1949] HCA 44. 41 See also Unemployment and Sickness Benefits Act 1944 (Cth), Maternity Allowance Act 1944 (Cth) (amending Maternity Allowance Act 1912 (Cth)), Widows' Pensions Act 1944 (Cth) (amending Widows' Pensions Act 1942 (Cth)), Child Endowment Act 1945 (Cth) (amending Child Endowment Act 1941 (Cth)), Education Act 1945 (Cth), Hospital Benefits Act 1945 (Cth), Invalid and Old-age Pensions Act 1945 (Cth) (amending Invalid and Old-age Pensions Act 1908 (Cth)), National Welfare Fund Act 1945 (Cth) (amending National Welfare Fund Act 1943 (Cth)), Social Services Contribution Act 1945 (Cth) and Widows' Pensions Act 1945 (Cth) (amending Widows' Pensions Act 1942 (Cth)). 42 Attorney-General (Vict) v The Commonwealth (1945) 71 CLR 237; [1945] HCA 43 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 44 (1949) 79 CLR 201 at 246 per Latham CJ, 260 per Dixon J, 279 per McTiernan J, 45 (1949) 79 CLR 201 at 279. 46 (1987) 162 CLR 271 at 280; [1987] HCA 6. Crennan Speaking in the singular, a "benefit" in social security legislation is government assistance to which a person is entitled, whether the assistance is provided in the form of money47, or in the form of goods48 or services49, the provision of which is underwritten by the State. Irrespective of the manner of delivery of government assistance legislation, and notwithstanding any prescription of beneficiaries as a class, entitlement to a social security benefit is a personal entitlement of individual human beings. Such an entitlement is predicated invariably upon there being prescribed, hence identifiable, persons as beneficiaries50. This is readily explicable. As was recognised in the BMA Case, government schemes for social security may involve not simply the expenditure of public moneys, but also personal contributions and insurance51. in social security The meaning of "benefits" in s 51(xxiiiA), explained in the BMA Case, was informed by, but not confined to, "benefits" provided by benefit (or friendly) societies, which, in return for regular payments of small sums, provided financial assistance to contributors – persons of limited means – or their dependants, in times of old age, sickness or death52. In a similar vein, there was little resistance from Convention delegates to empowering the Commonwealth to provide pensions for "the invalid and aged poor"53, found in s 51(xxiii) of the Constitution. This was because the contemplated beneficiaries were persons of the "labouring classes", who were often itinerant throughout the colonies54. In the absence of invalid and old-age pensions, such persons ran the risk of "becoming destitute in their declining years through no fault of their own"55. 47 For example, "widows' pensions". 48 For example, pharmaceuticals. 49 For example, medical services. 50 Alexandra Hospital Case (1987) 162 CLR 271 at 280-282. 51 (1949) 79 CLR 201 at 259-261 per Dixon J. 52 (1949) 79 CLR 201 at 259 per Dixon J, 279 per McTiernan J. 53 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 22 September 1897 at 1085. 54 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 22 September 1897 at 1086. 55 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 22 September 1897 at 1086. Crennan Nowadays, there is a well-understood concept – the Welfare State – in which the State undertakes responsibility to provide government assistance, ie benefits, to which persons are entitled, even from cradle to grave. Sir William Beveridge's Report foreshadowed as much. That s 51(xxiiiA) is a plenary power which should be given a wide and liberal interpretation was accepted in the BMA Case56 and illustrated in the Alexandra Hospital Case57. It is accepted by Mr Williams that the provision of services may fall within the scope of the power. The Commonwealth parties' submission that the grant of power in s 51(xxiiiA) should be construed with all the generality which the words used admit58 must be accepted, as must their submission that the grant of power is not to be constrained by historical conceptions of social security legislation as at 1946. Further, the text of s 51(xxiiiA) does not confine "benefits" which are services to those services involving a payment by, or a cost to, persons who are prescribed beneficiaries. Before social conditions were ameliorated by social security legislation, known regimes for the provision of free medical services, for example, included (and even blended) charity, insurance, and services the "costs" of which were underwritten in the private sector59. It can be accepted, as the Commonwealth parties urge60, that "benefits" under s 51(xxiiiA) are not confined to forms of government assistance provided by way of a service for which a person otherwise must pay. However, the Commonwealth parties' submission that the BMA Case and the Alexandra Hospital Case support a reading of "benefits" in s 51(xxiiiA) to include services provided to undifferentiated persons – recipients or beneficiaries who cannot be identified as entitled to some benefit – whether the services are provided in a group setting or individually, must be rejected. 56 (1949) 79 CLR 201 at 279-280 per McTiernan J, 286 per Williams J; see also at 57 (1987) 162 CLR 271 at 279-282. 58 R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225-226; [1964] HCA 15; Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 492 [16]; [2000] HCA 14; Work Choices Case (2006) 229 CLR 1 at 103 [142] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; [2006] HCA 52. 59 See generally Perkin, The Rise of Professional Society, (1989). 60 Relying on Williams (No 1) (2012) 248 CLR 156 at 329 [429] per Heydon J; [2012] HCA 23. Crennan The explanation of the meaning of the term "benefits" in the BMA Case, to which reference has already been made, is sufficient to rebut the suggestion that "benefits" can include assistance to an undifferentiated group, rather than to persons prescribed as being entitled to them. Furthermore, in the BMA Case, it was obvious to Latham CJ that responsible Parliaments, providing "benefits" out of public moneys, are likely to include in relevant legislation a method of administration as a precaution against fraud by "recipients" of such benefits61. Similarly, in the Alexandra Hospital Case, this Court recognised that sickness and hospital benefits legislation can include a scheme to ensure that the provision of such benefits would be effective to meet the needs of the "real beneficiary" (patients, not service providers), and capable of being held "within reasonable budgetary limits", irrespective of the means adopted by government to provide benefits to persons as prescribed beneficiaries62. Each of the 11 grants of power in s 51(xxiiiA), whether described by reference to "allowances", "pensions", "child endowment", "benefits" or "services", involves an entitlement of persons to money, goods or services provided, or underwritten, by the federal government. The empowering of the federal government to provide enumerated social security benefits under s 51(xxiiiA) does not require that such be provided by way of direct financial assistance to the persons who are the prescribed beneficiaries. However, indirect assistance, for example to students, such as subsidies paid to universities, must relate to education services provided to real or actual persons as prescribed recipients or beneficiaries entitled to those education services63. The National School Chaplaincy and Student Welfare Program does not institute a scheme for the provision of government assistance by way of the 61 (1949) 79 CLR 201 at 245-246; see also at 279-280 per McTiernan J. 62 (1987) 162 CLR 271 at 282. 63 See, for example, s 14 of the Education Act 1945 (Cth), which provided that the function of the Universities Commission established under the Act was to include: "(a) to arrange, as prescribed, for the training in Universities or similar institutions, for the purpose of facilitating their re-establishment of persons who are discharged members of the Forces within the meaning of the Re-establishment and Employment Act 1945; (b) in prescribed cases or classes of cases, to assist other persons to obtain training in Universities or similar institutions; (c) to provide, as prescribed, financial assistance to students at Universities and approved institutions". Crennan provision of services to, or for, persons who have a personal entitlement to a benefit. Under the scheme, no student is required to be identified by the providers of "Chaplaincy and Student Welfare" as a prescribed recipient or beneficiary entitled to a social security benefit. Payments made to SUQ (or other providers) out of public moneys are not made in respect of government assistance to persons with a personal entitlement to some benefit. Accordingly, the National School Chaplaincy and Student Welfare Program is not a scheme for the provision of "benefits" within the meaning of s 51(xxiiiA). Mr Williams' challenge to validity being upheld on that basis, and Question 2 in the special case being answered as set out in the joint reasons, it is unnecessary to conclude, or to imply, that the services of student welfare workers or student counsellors could not be the subject of a federal government scheme for "the provision of ... benefits to students", within the scope of s 51(xxiiiA).

HIGH COURT OF AUSTRALIA ARISTOCRAT TECHNOLOGIES AUSTRALIA PTY LTD APPELLANT AND COMMISSIONER OF PATENTS RESPONDENT Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29 Date of Hearing: 9 & 10 June 2022 Date of Judgment: 17 August 2022 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation D Shavin QC and C L Cochrane SC with P J T Creighton-Selvay and W H Wu for the appellant (instructed by Gilbert + Tobin) C Dimitriadis SC with E E Whitby for the respondent (instructed by Australian Government Solicitor) F C St John with N L Gollan for the Institute of Patent and Trade Mark Attorneys of Australia, appearing as amicus curiae (instructed by Mills Oakley) Fédération Internationale des Conseils en Propriété Intellectuelle appearing as amicus curiae, limited to written submissions Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents Patents – Invention – Manner of manufacture – Where appellant manufactured electronic gaming machines ("EGMs") – Where appellant owned four innovation patents concerning various embodiments of EGM – Where specification described claimed invention as combination of player interface, being physical features of EGM, and game controller, being computerised components interacting with player interface to implement base game and feature game – Where player interface and game controller part of common general knowledge – Where delegate of respondent revoked innovation patents on ground that claim in each not "manner of manufacture" within meaning of s 18(1A)(a) of Patents Act 1990 (Cth) – Whether claimed invention "manner of manufacture" within meaning of s 18(1A)(a) of Patents Act. Words and phrases – "abstract idea", "artificially created state of affairs", "characterisation", "common general knowledge", "computer-implemented invention", "electronic gaming machine", "generic computer technology", "improvement in computer technology", "innovation patent", "invention", "manner of manufacture", "mere scheme or plan", "patent", "patentable subject matter", "proper subject of letters patent", "Statute of Monopolies", "useful result". Patents Act 1990 (Cth), s 18, Sch 1. KIEFEL CJ, GAGELER AND KEANE JJ. The appellant ("Aristocrat") is a company which manufactures electronic gaming machines ("EGMs"). Aristocrat owns four innovation patents granted pursuant to s 62 of the Patents Act 1990 (Cth) ("the Act"), each of which derives from patent number 2015210489 filed on 10 August 2015 and each of which has a priority date of 11 August 20141. The patent the subject of consideration in this proceeding was entitled "A system and method for providing a feature game" and the field of invention described in the patent specification itself was said to relate to a gaming system and a method of gaming. The respondent ("the Commissioner"), having been asked to examine the innovation patents pursuant to s 101A of the Act, revoked each of the patents on the ground that the claim in each was not for a manner of manufacture within the meaning of s 18(1A)(a) of the Act. The Commissioner's delegate concluded that, no technical contribution to the art being made by any of the innovation patents, the substance of the invention was nothing beyond the games and the game rules of gaming machines, and, as such, was not patentable subject matter2. Aristocrat's appeal against the delegate's decision to the Federal Court of Australia (Burley J) was allowed; but then the Commissioner appealed successfully to the Full Court of the Federal Court of Australia (Middleton and Perram JJ, Nicholas J agreeing). Aristocrat has appealed to this Court pursuant to a grant of special leave. For the reasons that follow, Aristocrat's appeal to this Court should be dismissed. It is necessary to begin with a description of the design and operation of EGMs, Aristocrat's claim as formulated and a summary of the legal framework within which that claim was determined. The reasons for judgment of the courts below will then be summarised before turning to a consideration of the arguments agitated in this Court. The design and operation of an EGM An EGM is a physical device that is available for sale to licensed venues such as casinos, hotels and clubs. It is a modern form of a poker or slot machine. It typically has a number of features, which were agreed by the parties in the courts 1 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 401 [1], 402 [6], [10]; Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 575 [4]. See also Aristocrat Technologies Australia Pty Ltd [2018] APO 45 at [8]. 2 Aristocrat Technologies Australia Pty Ltd [2018] APO 45 at [12], [67]. below to be part of the common general knowledge possessed by persons who devote their talents to the construction of EGMs as at the priority date. Those features are3: a central display area or screen that displays the game(s) to be played and other game-related information (for example, prizes won and available credits); relative to the central display area or screen, upper and/or lower display areas of screens that display various information about the game in the cabinet, including the name of the game, the supplier and other pertinent information; a random number generator; a game controller which controlled gameplay by executing software stored in memory; buttons for user interaction, either touch screen or physical buttons; a credit input mechanic, being either a cash note input or [ticket] reader; a coin out or ticket out mechanic; artwork featured above the display in digital form as well as artwork in hardcopy on the belly of the EGM; and speakers to play music, sound effects and announcements." It was also part of the common general knowledge that, in 2014, EGMs were distinguished from each other by certain features engaging and entertaining players in different ways4. Since the 1980s, EGMs have been operated electronically including by computers, electronic circuitry and electronic display screens. In 2014, EGMs 3 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 406 [30]; Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 576 [7]. 4 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 406 [31]; Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 576 [7]-[8]. generally consisted of five virtual or video reels of symbols being displayed in a grid or matrix, each of which spun vertically and stopped at random positions to be displayed in that grid or matrix upon completion of the spin, as determined by a random number generator. Each of the five reels could have strips of symbols that were the same as or different from the symbols that appeared on other reels within that same game, depending on the design of the strip. The total number of symbols on a given reel defined its "reel strip order", which was determined by the game designer and comprised all the symbols that could appear on the reel. The number of possible combinations of symbols in an EGM using virtual or video reels is, in principle, unlimited5. To commence a game, a player inserts credits, in the form of money or some other form of payment, and he or she can select the value of a bet. Whether the player wins depends on the occurrences of a winning symbol combination across the five reels on predefined "pay lines" or "win lines". A player may choose to place a wager to cover one or more win lines and each of the five reels is independent of the other. Winning combinations can also be formed if a certain symbol, known as a "scatter" symbol, appears anywhere in the grid6. The advent of electronics allowed designers to create new ways to stimulate and maintain player interest, commonly through the use of free games, bonus games or games in addition to the main or base game (a "feature game")7. A feature game is a secondary game made available to a player on the occurrence of a defined "trigger event" in the base game. The player can seek to win further prizes in the feature game and will be returned to the base game upon completion. The more successful a feature game is at holding player interest – and encouraging further betting – the more lucrative the EGM is for its operator8. 5 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 407-409 [32], [35]-[37], [39]-[42]. 6 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 408 [38], 409 [43]. 7 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 409 [44]. 8 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 574-575 [3]-[4]. The claim in the innovation patents The innovation patents are referred to respectively as the 967 patent, the 097 patent, the 098 patent and the 629 patent9. The parties agreed that the specification of claim 1 of the 967 patent is sufficiently similar to the specifications of the others that it may be used for the purpose of analysis10. As noted earlier, the 967 patent was entitled "A system and method for providing a feature game". The specification of the 967 patent described the architecture of the claimed invention as a computerised EGM with several of the core components being part of the common general knowledge11. The part of the specification entitled "Detailed Description of a Preferred Embodiment of the Invention" described the game structure of the system as "having components which are arranged to implement a base game, from which may be triggered a feature game". The system incorporated a mechanism that enabled symbols to be configured so as to define when a feature game is triggered. The configurable symbols contained a common component and a variable component. The variable component of each configurable symbol was indicative of the value of a prize. When the feature game was triggered, the player was guaranteed to win the accumulated value of the prizes indicated by the variable portion of the configurable symbols12. The specification only gave examples of what a feature game may look like; it otherwise left open that "any number of configurable symbols may trigger the feature game", that element of the invention being up to the person programming the computer on which it is played. 9 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 402 [5]. 10 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 402 [8]-[9]; Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 574 [1]. 11 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 410-415 [51]-[68]. 12 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 410 [48]-[50]. Claim 1 of the 967 patent consisted of the following integers13: "(1) A gaming machine comprising: (1.1) a display; (1.2) a credit input mechanism operable to establish credits on the gaming machine, the credit input mechanism including at least one of a coin input chute, a bill collector, a card reader and a ticket reader; (1.3) meters configured for monitoring credits established via the credit input mechanism and changes to the established credits due to play of the gaming machine, the meters including a credit meter to which credit input via the credit input mechanism is added and a win meter; (1.4) a random number generator; (1.5) a game play mechanism including a plurality of buttons configured for operation by a player to input a wager from the established credits and to initiate a play of a game; and (1.6) a game controller comprising a processor and memory storing (i) game program code, and (ii) symbol data defining reels, and wherein the game controller is operable to assign prize values to configurable symbols as required during play of the game, the game controller executing the game program code stored in the memory and responsive to initiation of the play of the game with the game play mechanism to: (1.8) select a plurality of symbols from a first set of reels defined by the symbol data using the random number generator; (1.9) control the display to display the selected symbols in a plurality of columns of display positions during play of a base game; 13 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 415 [69]. (1.10) monitor play of the base game and trigger a feature game comprising free games in response to a trigger event occurring in play of the base game, (1.11) conduct the free games on the display by, for each free game, the display, retaining configurable symbols on (b) replacing non-configurable symbols by selecting, using the random number generator, symbols from a second set of reels defined by the symbol data for symbol positions not occupied by configurable symbols, and (c) controlling the display to display the symbols selected from the second set of reels, each of the second reels comprising a plurality of non-configurable symbols and a plurality of configurable symbols, and (1.12) when the free games end, make an award of credits to the win meter or the credit meter based on a total of prize values assigned to collected configurable symbols." The specification stated that when a "trigger event" occurs, a free feature game, as described by integers 1.10-1.12, is initiated, whereupon the configurable symbols are held in their display positions and the feature game is run. That feature game may use the configurable symbols, symbols from the base game or different symbols. The player accumulates prizes throughout the play of both the base game and the feature game14. Each time a configurable symbol appears in the display grid at the end of the free game, that particular symbol position on the relevant reel stops spinning for any remaining games and remains locked in place. When the player runs out of free games in the feature game, a prize is calculated and awarded to the player based on the number of configurable symbols and their assigned values which have been locked in place. The 967 patent does not disclose any particular description of a configurable symbol, but provides for them to be assigned prize values by the computer on which the game is played15. The gaming industry in Australia is, and was in August 2014, regulated by State-based authorities. In addition, the Australian/New Zealand Gaming Machine 14 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 414 [66]-[67]. 15 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 577 [11]-[12]. National Standard is a set of national standards that apply, and also applied in 2014, and which establish mandatory requirements for EGMs regarding matters such as cash input systems, credit metering and the minimum return to player16. The Act The Act distinguishes between two kinds of patents: standard patents and innovation patents, which are defined as letters patent for an invention granted under s 61 or s 62 of the Act respectively17. Within Pt 3 of Ch 2 of the Act, s 18 defines the circumstances in which a patent is valid, or what constitutes a "patentable invention"18. A "patentable invention" is defined in the Dictionary in Sch 1 to the Act as "an invention of the kind mentioned in section 18". The term "invention" is defined as: "any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention". For the purposes of an innovation patent, s 18(1A) provides: "Subject to subsections (2) and (3), an invention is a patentable invention for the purposes of an innovation patent if the invention, so far as claimed in any claim: is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and (b) when compared with the prior art base as it existed before the priority date of that claim: is novel; and 16 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 409 [45], 422 [97]. 17 Sch 1 to the Act, definitions of "standard patent" and "innovation patent". The version of the Act applicable to the innovation patents is that which follows the commencement of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth), but the amendments therein are not presently relevant. 18 See also N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 659. involves an innovative step; and is useful; and (d) was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee's or nominated person's predecessor in title to the invention." The exceptions in sub-ss (2) and (3) relate to plants, animals, human beings and the biological processes for their generation. Those exceptions are not presently relevant. The requirements for a valid innovation patent differ from those for a standard patent contained in s 18(1) of the Act only in that a standard patent must involve "an inventive step", rather than "an innovative step". Nothing was said to turn on the distinction between those terms in this appeal19. The case law which has developed in relation to s 18(1) of the Act is thus relevant to the application of s 18(1A). The reference to a "claim" in the introductory words of s 18(1A) directs attention to the formal requirement of s 40(2)(c) of the Act that a complete specification for an innovation patent must "end with at least one and no more than 5 claims defining the invention". It has been held that, in the context of s 40(2)(b), the equivalent provision for standard patents in materially similar terms, the word "invention" does not "import the definition in the Dictionary, but means 'the embodiment which is described, and around which the claims are drawn'"20. Section 18(1A)(a) uses the "centuries old terminology"21 that for an invention to be patentable it must be a "manner of manufacture" within the 19 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 574 [3]. 20 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 343 [13], quoting Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 14 [19], 15 [21], citing AMP Inc v Utilux Pty Ltd (1971) 45 ALJR 123 at 21 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 339 [4]. meaning of s 6 of the Statute of Monopolies22. That section declared all monopolies to be void save for: "Letters Patents and Grants of Privilege for ... the sole working or making of any manner of new Manufactures within this Realm, to the true and first Inventor and Inventors of such Manufactures, which others at the time of making such Letters Patents and Grants shall not use, so as also they be not contrary to the Law nor mischievous to the State, by raising prices of Commodities at home, or hurt of Trade, or generally inconvenient ..." The course of authority in this Court23 has established that, in an application for a patent under the Act, s 18(1)(a) raises the question: "Is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?" Generally speaking, "working directions and methods of doing things" fall outside s 6 of the Statute of Monopolies24. It has long been accepted that claims to a mere scheme, plan or discovery, or mere abstract ideas or information, are not claims for patentable subject matter25. Neither the discovery of a natural phenomenon or law of nature, nor a scheme or plan devised for the accomplishing of a task, nor a set of rules whether devised for the conduct of a business or the playing of a game, is the proper subject of letters patent. 22 21 Jac I c 3 (1623). 23 National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 at 269; Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 253 CLR 284 at 297-301 [10]-[16], 324-325 [71], 356 [186]-[187]; D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 345 [18]. 24 Grant v Commissioner of Patents (2006) 154 FCR 62 at 66-67 [15]. 25 Re Cooper's Application (1901) 19 RPC 53 at 54; Reynolds v Herbert Smith & Co Ltd (1902) 20 RPC 123 at 126; Grant v Commissioner of Patents (2006) 154 FCR 62 at 66 [14], citing Lahore, "Computers and the Law: The Protection of Intellectual Property" (1978) 9 Federal Law Review 15 at 22-23, approved in CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 292; Research Affiliates LLC v Commissioner of Patents (2014) 227 FCR 378 at 397-398 [94]-[95]; Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27 at 49 [96]; Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) 372 ALR 646 at 667 [99]. It was held by this Court in National Research Development Corporation v Commissioner of Patents ("NRDC")26, and affirmed in D'Arcy v Myriad Genetics Inc27, that the terminology of "manner of manufacture" taken from s 6 of the Statute of Monopolies is to be treated as "a concept for case-by-case development" applied in accordance with common law methodology. It is not to be confined to the use of any verbal formula in lieu of "manner of manufacture", though various formulations have asked whether there is a "vendible product"28 or "an artificially created state of affairs"29. The practical implementation of a discovery of an abstract truth about nature, or a strategy devised for the conduct of business, or a set of rules devised for a game – whatever the level of originality of the discovery or exhibited in the devising – is not patentable subject matter if the mode of implementation is not itself patentable. The distinction is "between mere intellectual information and a method that affect[s] the operation of an apparatus in a physical form"30. So, in Grant v Commissioner of Patents31, it was held that a method for protecting assets from unsecured judgment creditors was not patentable. The method comprised establishing a trust, giving money to the trust, borrowing said money from the trust and the trustee securing the loan by taking a charge for the money over the asset. The Full Court (Heerey, Kiefel and Bennett JJ) concluded that the claimed method was "at best an abstract, intangible situation"; it had no physical consequence for process or product32. Of course, a claimed invention which serves a "mechanical purpose that has useful results" is not unpatentable "merely because the purpose is in the carrying (1959) 102 CLR 252 at 269. (2015) 258 CLR 334 at 339 [5]. 28 Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 253 CLR 284 at 303 [21]; D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 345 [19], both citing Re GEC's Application (1942) 60 RPC 1 at 4. 29 NRDC (1959) 102 CLR 252 at 277. 30 Grant v Commissioner of Patents (2006) 154 FCR 62 at 67 [18]. (2006) 154 FCR 62. 32 Grant v Commissioner of Patents (2006) 154 FCR 62 at 70-71 [30]-[32]. on of a branch of business"33. In relation to computers and computer-related technology, it has been held in decisions of the Federal Court that a claimed invention will be a proper subject of letters patent if it has some "concrete, tangible, physical, or observable effect", as distinct from "an abstract, intangible situation" or "a mere scheme, an abstract idea [or] mere intellectual information"34. It has been held that an artificial state of affairs may also be created if the invention can broadly be described as an "improvement in computer technology", where the computer is integral to the invention, rather than a mere tool in which the invention is performed35. These propositions may be illustrated by reference to those decisions. CCOM Pty Ltd v Jiejing Pty Ltd36 concerned a claim for an invention which enabled a standard English keyboard to be used to generate Chinese characters for word processing purposes. The invention used a particular method of characterisation of character strokes which were applied to an apparatus in such a way that the operation of the keyboard would enable the selection through the computer of the appropriate Chinese characters. The Full Court (Spender, Gummow and Heerey JJ) held that the claimed invention was patentable subject matter. It was capable of being a manner of manufacture because it was concerned with a mode or manner of achieving an end result which was an "artificially created state of affairs of utility in the field of economic endeavour", that field being the use of word processing to assemble text in Chinese language characters37. The Full Court, in reaching its conclusion in favour of patentability of subject matter, 33 Grant v Commissioner of Patents (2006) 154 FCR 62 at 66 [14], citing Re Fishburn's Application (1938) 57 RPC 245 at 248. 34 Grant v Commissioner of Patents (2006) 154 FCR 62 at 70 [30]-[32]. See also International Business Machines Corporation v Commissioner of Patents (1991) 33 FCR 218; CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 295; Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27 at 49-50 [96]-[99]; Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) 372 ALR 646 at 665 [88]. 35 Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27 (1994) 51 FCR 260. 37 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 295. referred with evident approval38 to the observations of Graham J, delivering the decision of himself and Whitford J, in Burroughs Corporation's Application39: "[I]f a method is regarded purely as the conception of an idea, it can always be said that the product of such a method is merely intellectual information. If, however, in practice the method results in a new machine or process or an old machine giving a new and improved result, that fact should in our view be regarded as the 'product' or the result of using the method, and cannot be disregarded in considering whether the method is patentable or not." The Full Court later noted in Grant that the invention claimed in CCOM included a "physically observable effect", being "the retrieval of graphical representations of desired characters for the assembly of text"40, such that CCOM could be said to have fallen within a category of case in which, as an element of the invention, "there was a component that was physically affected or a change in state or information in a part of a machine"41. There is no issue that CCOM, as so explained, was correctly decided. As will be apparent from what will be said later in these reasons, there is nevertheless an aspect of the reasoning in CCOM which must be treated with caution in light of subsequent authority in this Court. In contrast to CCOM, in Research Affiliates LLC v Commissioner of Patents42, the Full Court (Kenny, Bennett and Nicholas JJ) held that a computer-implemented business scheme for compiling a weighted index of securities using generic computer technology to produce an electronic file, for the purpose of determining how capital should be allocated, was not patentable subject matter. Similarly, a claim for a computer-implemented method and apparatus for displaying information relating to one or more entities, and thereby providing business intelligence, was held in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd43 to be no more than "an instruction to apply an abstract idea (the steps of the 38 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 293. [1974] RPC 147 at 158. 40 Grant v Commissioner of Patents (2006) 154 FCR 62 at 68 [20]. 41 Grant v Commissioner of Patents (2006) 154 FCR 62 at 70 [32]. (2014) 227 FCR 378 at 400 [103], 402-403 [115]-[120]. (2019) 372 ALR 646 at 667 [99]. using generic computer method) computer-implemented method for linking a user to an advertising message by way of an intermediate engagement offer, involving a series of detailed processing steps, was also held not to be patentable subject matter in Commissioner of Patents v Rokt Pte Ltd44. technology". A claim for Aristocrat accepts that Grant was correctly decided. It is important, therefore, to note in relation to Grant that the method the subject of the claim was not patentable subject matter even though it was reduced to written form and thus instantiated as a vendible product. The presentation of an idea or method or scheme – or the rules of a game – in written form is one of the most obvious (and among the most ancient) examples of common general knowledge. Thus the facilitation of card games by the use of packs of cards bearing visible symbols and values has for so long been part of common general knowledge that no one would suggest that a new variation of the rules of a game such as poker is patentable subject matter. In such a case, the well-known pack of cards is put to a different use for the purpose of the new game; but no one would suggest that there is an invention because the only difference from the common general knowledge lies in the idea of the new game45. In the present case, the integers in claim 1 defining the core physical and hardware components, including computer components46, do not disclose any departure from the common general knowledge as to the computerisation of games or gaming. As the parties agreed was part of the common general knowledge, most EGMs in 2014 were "distinguished from each other by the way in which features were introduced to utilise the physical or hardware components to provide different products that would engage and entertain users in different ways"47. As will become apparent later in these reasons, that carries significance in respect of whether the claimed invention is a manner of manufacture. (2020) 277 FCR 267 at 296 [108]-[109], 297-298 [114]-[115]. 45 See, eg, Re Cobianchi's Application (1953) 70 RPC 199 at 201. 46 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 604 [131]. 47 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 406 [31]; Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 576 [7]-[8]. The reasons of the primary judge Pursuant to s 101F(4) of the Act, Aristocrat appealed from the delegate's decision to the Federal Court48. As noted above, that appeal was successful. Before the primary judge, a large volume of expert evidence was adduced from a patent attorney, several gaming experts and Human Computer Interaction experts49. The primary judge used this evidence as an aid to construing the claim, noting that expert evidence in such cases should be used only to place the court in the position of a person acquainted with the surrounding circumstances as to the state of the art and manufacture as at the priority date50. The primary judge framed the "central question" as whether a claim for an EGM, which included a combination of physical parts and computer software to produce a particular outcome in the form of gameplay, is a manner of manufacture within s 18(1A)(a) of the Act51. As noted earlier, in accordance with the parties' agreement, the primary judge found it necessary to consider only claim 1 of the 967 patent to dispose of the matter52. The primary judge assumed, uncontroversially, that the requirements of novelty, innovative step and usefulness were met, and that there had been no secret 48 An appeal pursuant to that sub-section proceeds as a matter in the original jurisdiction of the Federal Court of Australia, which is conducted as a hearing de novo: Commissioner of Patents v Sherman (2008) 172 FCR 394 at 399 [18], 400 [22]; Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 401 [2]-[3]. 49 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 402-406 [10]-[28]. 50 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 405-406 [27]-[28], citing Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 16 [24]; D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 342-343 [12]. 51 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 401 [1]. 52 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 402 [8]-[9]. use before the priority date53. His Honour then stated he was required to consider whether the claims in suit, as read in light of the specification as a whole and the relevant art, were for a manner of manufacture54. His Honour then, controversially, adopted a two-step process: first, he asked whether the claimed invention was for a "mere scheme or business method of the type that is not the proper subject matter of a grant of letters patent"; and secondly, if that question were answered in the affirmative, he asked whether the computer-implemented method is one where invention lay in the computerisation of the method, or whether the language of the claim involves "merely plugging an unpatentable scheme into a computer"55. The second inquiry would have involved consideration of whether the contribution of the claimed invention is "technical in nature" or solves a "technical" problem, or whether it merely requires "generic" computer implementation56 – matters which were the subject of expert evidence57. His Honour proceeded to decide the issue of characterisation of claim 1 of the 967 patent by resolving the first of these questions in the negative. The primary judge accepted that the core components of an EGM provide an interactive means of playing a game, and that the EGM described in claim 1 was "a device of a particular construction, known and recognised by those [skilled] in the art"58. Nevertheless, his Honour went on to find that the claimed invention was not a "mere scheme or plan" on the basis that it was "to a mechanism of a particular construction, the operation of which involve[d] a combination of 53 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 419 [84], citing CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 54 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 419 [86]. See also 420 [87]. 55 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 420 [91], citing Commissioner of Patents v Rokt Pte Ltd (2020) 277 FCR 267 at 290 [84]. See also Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27 at 49-50 [99]. 56 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 420 [91], quoting Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27 at 49-50 [99]. 57 See Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 403-405 [13]-[26]. 58 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 411 [54]. physical parts and software to produce a particular outcome in the form of an EGM that function[ed] in a particular way"59. His Honour found that the invention as claimed included hardware, firmware and software components that were identified, particularly the display, credit input mechanism, gameplay mechanism and game controller. His Honour found that the expert evidence established that a skilled reader would understand, upon reading the specification, that EGMs are subject to regulatory supervision and standards imposing requirements across many areas. To a person skilled in the art, "the machine that is the subject of the claims is built to allow people to play games on it", where each of its physical and virtual components amounted to nothing more than a combination of features to create "a device of a specific character"60. The primary judge was influenced in his resolution of the first question in his two-step process by the consideration that his approach advanced the social utility and value of innovation. His Honour observed that if claim 1 were to have been implemented mechanically in "the old-fashioned way", using cogs, physical reels and motors to create the gameplay instead of software, there would undoubtedly have been a manner of manufacture because the combination of physical parts would be inseparable from the features of the game. His Honour considered that the utilisation of the efficiencies of electronic technology could not disqualify the invention from patent eligibility. To hold otherwise, his Honour observed, "would be antithetical to the encouragement of invention and innovation"61. His Honour considered that the claims in the case before him were analogous to those considered by the Federal Court in Aristocrat Technologies Australia Pty Ltd v Konami Australia Pty Ltd62, where claims for an EGM had been held to amount to a manner of manufacture. Because Konami was not plainly 59 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 421 [95]. 60 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 421-422 [96]-[98]. 61 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 423 [102]. (2015) 114 IPR 28. wrong, his Honour considered himself obliged to follow it63 in holding that the invention as claimed in claim 1 of the 967 patent was for a manner of manufacture64. It is noteworthy that the claims in Konami were for what were found to be "new and useful gaming machines and new and useful methods of operation producing new and improved results"65. Having found that the claimed invention was not a mere scheme, the primary judge considered it unnecessary to consider the second inquiry, so he did not make findings of fact to that effect. The reasons of the Full Court The Full Court held that the primary judge erred in adopting his two-step approach, and hence in his characterisation of the claimed invention. Middleton and Perram JJ identified the question as whether the invention disclosed in claim 1 constituted patentable subject matter66. Their Honours noted that the feature game was an "abstract idea" that was not itself patentable, but recognised that an abstract idea may be patentable if it is physically embodied by an invention that gives it practical application67. Their Honours gave the example of a mechanical poker machine which allows a game defined by particular rules to be played, but emphasised that "the patent protects the invention which is the poker 63 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 424 [104]. 64 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 424 [106]. 65 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 424 [104], quoting Aristocrat Technologies Australia Pty Ltd v Konami Australia Pty Ltd (2015) 114 IPR 28 at 72 [223]-[224]. 66 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 576 [9], citing D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 67 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 578 [14]-[16]. machine and not the abstract idea consisting of the game which it plays"68. Earlier decisions involving board or card games were cited in support of that approach69. Their Honours understood from claim 1 that integers 1.10-1.12 were to be implemented by means of a computer program rather than by any mechanical apparatus, but noted that the integers of the claim did not disclose any particular computer program and did nothing more than call for the utilisation of a computer by the person implementing the invention70. In the upshot, their Honours held that integers 1.10-1.12 (along with the game controller in integer 1.6) would not of themselves be a patentable invention, and none of the additional features in claim 1 could make it so, because claim 1 did not claim an advance in computer technology71. Middleton and Perram JJ considered that the formulation of the primary judge's first question did not involve any question of computer implementation, and that the second assumed that the scheme in question had been implemented in a computer. That is, the question whether the invention was, in truth, a computer-implemented invention was never asked and consequently was never answered72. That was in error, their Honours held, because the invention proposed 68 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 578 [16] (emphasis added). 69 See Re Cobianchi's Application (1953) 70 RPC 199 at 201; Re Peter Szabo and Associates Pty Ltd (2005) 66 IPR 370 at 379 [38], citing Official Ruling 1926A (1926) 43 RPC Appendix i; A Couple 'a Cowboys Pty Ltd v Ward (1995) 31 IPR 45. See also IP Australia, "Patent Manual of Practice and Procedure: 2.9.2.9 Games and Gaming Machines", available at <https://manuals.ipaustralia.gov.au/patent/2.9.2.9- games-and-gaming-machines> [https://perma.cc/MEA4-TCJV]. 70 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 578-579 [17]-[18]. 71 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 579 [18], 594 [94]. 72 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 580 [21], 581 [28]. in the 967 patent was not so self-evidently computer-implemented that the issue did not require to be addressed73. the Their Honours asked invention claimed a two questions: computer-implemented invention; and if so, can the invention claimed broadly be described as an advance in computer technology74? As it happened, their Honours answered the first question in the affirmative, finding that an EGM is a computer and the feature game identified in integers 1.10-1.12 is a computer-implemented invention75. But their Honours' answer to the second question was "no". While their Honours said that some aspects of the 967 patent – being changes in the reel structure as identified in claim 3 and the idea of configurable symbols – may have been advances in gaming technology, they were not advances in computer technology. Fatal to the claim, in their Honours' view, was the circumstance that integers 1.10-1.12 left it entirely up to the person designing the EGM to do the programming which gave effect to the game or games defined by those integers76. As to the primary judge's suggestion that if claim 1 had been for a mechanical poker machine it would have been patentable subject matter, their Honours said that the circumstance that a computer's only purpose is to give effect to abstract ideas embodied in the code which it executes, so as to "giv[e] life" to that abstract idea by that means, does not, without more, warrant the grant of a monopoly; it "would rather monopolise the abstract ideas thus embodied"77. The supposed anomaly that troubled the primary judge was, in their Honours' view, nothing more than a difference in the way that the implementation of abstract ideas has been approached by the courts given the availability of computer implementation. It may be said immediately that, in this respect, their Honours 73 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 580-581 [22], [24]-[25]. Cf Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) 372 ALR 646; Commissioner of Patents v Rokt Pte Ltd (2020) 277 FCR 267. 74 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 581 [26]-[29], 587 [57]. 75 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 581-587 [30]-[57]. 76 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 588-589 [63]-[65]. 77 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 593-594 [88]-[91]. were clearly correct. It may readily be accepted that on the first occasion a mechanical poker machine was invented, it was patentable. But a later model of the same machine would not have been patentable simply because it allowed a new variant of poker to be played. That difference would not have relevantly differentiated it from the prototype78. The other member of the Full Court, Nicholas J, agreed that the appeal should be allowed, but reached his conclusion by asking whether the claimed invention produced an "artificially created state of affairs". The answer to that question was said to turn on whether the claimed invention "solves a technical problem or makes some other technical contribution to the field of the invention"79. His Honour declined to take an "excessively rigid or formulaic approach" to the question whether a computer-implemented scheme is a manner of manufacture, especially where there may be no clear distinction between the field to which an invention belongs, and the field of computer technology80. Nicholas J accepted that "[m]ere business schemes" and abstract ideas or information have never been regarded as sufficiently tangible in character to constitute patentable subject matter, but said that they may become something patentable if the abstract ideas or information are given "practical effect and transformed into a new product or process which solves a technical problem, or makes some other technical contribution in the field of the invention"81. His Honour rightly said that Konami should be understood as a case in which a gaming machine or gaming system that could be seen to provide a technical solution to a practical problem in the field of gaming was proper subject matter of a patent82. 78 See, eg, Re Crown Melbourne Ltd (2020) 161 IPR 144. 79 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 601 [117]. 80 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 600 [116], citing Research Affiliates LLC v Commissioner of Patents (2014) 227 FCR 378 at 403 [117]; Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27 at 49 [98]. 81 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 601 [118]-[119]. 82 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 602 [124]. His Honour considered that the two-step approach adopted by the primary judge was erroneous because it failed to engage with the Commissioner's submission that the invention was a "mere scheme or set of rules for playing a game implemented using generic computer technology for its well-known and well-understood functions". In his Honour's view, the primary judge's approach failed fundamentally to address the question whether the EGM referred to in claim 1 was, or included, a computer and whether the invention was a computer-implemented scheme or a set of rules governing the playing of a game83. Nicholas J observed that the specification did not identify any specific problem in the computer implementation of the new game to which the claimed invention was directed84. It merely described an EGM consisting of physical components that were common to such machines; neither that description, nor its capacity to trigger a feature game, was said to be anything new85. The instructions embodied in the game code that determined the course of the base game and the feature game represented "abstract information in the nature of a scheme or set of rules governing the playing of a game"86; that amounted to neither the required "artificial effect" nor an "unusual technical effect" because the code could not be regarded as transforming the way in which the EGM operated so as to make it Nevertheless, Nicholas J had reservations as to whether the appeal to the Full Court could finally be determined and would have remitted the proceeding to the primary judge to determine whether claim 1 of the 967 patent "is a manner of manufacture on the basis that it involves technical and functional improvements to 83 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 605 [135]. 84 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 602 [126], 606 [141]. 85 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 605 [136]-[137]. 86 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 605 [139]. 87 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 605-606 [140]-[142]. EGMs through the use of configurable symbols of the kind more fully described in the specification"88. Aristocrat's argument in this Court Aristocrat accepted that mere schemes, plans or methods are not patentable subject matter as a manner of manufacture, but submitted that the Federal Court decisions post-dating CCOM and Grant fell into, and perpetuated, error by developing "contrived constraints"89 which anomalously fetter the patentability of inventions that utilise a computer. Aristocrat also accepted that the assessment of manner of manufacture is to be undertaken, as a matter of substance, by reference to the subject matter of the claims and having regard to the utility of the claimed invention in the field of economic endeavour. Aristocrat emphasised that claim 1 was not merely for a set of game rules, which it accepted was not patentable, but for a "combination of many elements that includes the functionality of the gaming machine". It was submitted that viewing the claim as a combination allows it to be assessed as a whole as a manner of manufacture. Aristocrat urged that this Court should not disturb the primary judge's finding of fact that the claimed invention was not a mere scheme. In Aristocrat's submission, Research Affiliates and subsequent decisions90 erroneously conflated the issue as to manner of manufacture with issues as to novelty and inventive step, thereby narrowing unjustifiably the conception of manner of manufacture. Aristocrat emphasised that each of the grounds of invalidity is distinct from the others. Aristocrat endorsed the primary judge's approach, emphasising the central importance of asking whether the claimed invention is a mere scheme separately from any question of inventiveness. Aristocrat also submitted that the Full Court's decision in Research Affiliates inappropriately drew upon principles of patent law from the United Kingdom and the United States that did not translate to Australian law. Aristocrat 88 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 606 [144]. 89 Grant v Commissioner of Patents (2006) 154 FCR 62 at 65 [8]. 90 Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27; Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) 372 ALR 646; Commissioner of Patents v Rokt Pte Ltd (2020) 277 FCR 267. deprecated the US approach as having "resulted in chaos", in preference for the "watershed" and "celebrated judgment" in NRDC. Aristocrat argued that the approach of Middleton and Perram JJ relied on an understanding of "computer" that could "encompass, practically, any device containing a processor and memory", which would have "significant ramifications for industry" by excluding from patentability goods from digital clocks to writing instruments to "the whole Internet of Things". It was also said to produce the incoherence that the claimed invention is not patent-eligible, but a mechanical equivalent would be. In Aristocrat's submission, Nicholas J was right to hold that there was no requirement for an advance in the field of computer technology, but fell into error by adopting the approach in earlier Full Court decisions and equating an "artificially created state of affairs" with a "technical innovation, technical contribution or technical effect". The Commissioner's argument in this Court The Commissioner submitted that, as a matter of substance and in light of the common general knowledge, the invention claimed in claim 1 of the 967 patent was properly characterised as being for a set of rules for playing a game, implemented using conventional computer technology. The Commissioner emphasised that integers 1.1-1.6 of the claim were part of the agreed common general knowledge relating to EGMs, as at 2014. The Commissioner submitted that the apparatus disclosed in claim 1 of the 967 patent is a conventional gaming machine having well-known and well-understood functions, involving the selection and display of symbols on reels and the awarding of prizes to carry out an electronic game. It was said that the substance of the claim, and what differentiated it from other conventional gaming machines, was what it disclosed only in its feature game, which, as an abstract idea, is not patentable. The Commissioner submitted that each of the recent Full Court decisions challenged by Aristocrat correctly applied the principles in NRDC and Myriad, in recognising the distinction between an abstract idea that has been implemented using conventional computer technology, and an invention that involves some differentiation from generic computer technology to implement the idea and is distinct from the idea itself. The Commissioner endorsed the approach of Middleton and Perram JJ, but also endorsed the approach of Nicholas J, arguing that there was no fundamental difference in principle. It was said that the two approaches were simply "two sides of the same coin", in making the distinction between an "abstract idea", on the one hand, and an invention involving some technological adjustment or advance or improvement in the apparatus, on the other. Patentable subject matter – an idea for a game or product or process The monopoly rights of a patentee are conferred by s 13(1) of the Act; they relevantly include the exclusive rights to, where the invention is a product, "make, hire, sell or otherwise dispose of the product". Where the invention is a method or process, those rights are to use the method or process to do any such act in respect of a product resulting from such use91. In Myriad, French CJ, Kiefel, Bell and "The idea of something which can be 'made' by human intervention is central and long-standing93 – '"[m]anufacture" connotes ... the making of something'94. It is an important element of the exclusive right to exploit a patented product." Myriad concerned product claims for an isolated nucleic acid which coded for, in the sense of having the potential to produce, an identified protein with mutations or polymorphisms indicative of a predisposition to breast and ovarian cancer. This Court held that the claim was not for a manner of manufacture and so was not a patentable invention. The plurality said that the genetic information which was the substance of the claim was not invented by human action, but was a natural phenomenon discerned as a matter of discovery of a fact of the natural world95. In reaching that conclusion, their Honours emphasised that an invention is something which involves "making", whether that be a product, a process or an outcome which can be characterised as an "artificially created state of affairs"; and it must be brought 91 Sch 1 to the Act, definition of "exploit". 92 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 344 [16]. 93 R v Wheeler (1819) 2 B & Ald 345 at 349-350 [106 ER 392 at 394-395]; Lane Fox v Kensington and Knightsbridge Electric Lighting Co [1892] 3 Ch 424 at 428-429; Reynolds v Herbert Smith & Co Ltd (1902) 20 RPC 123 at 126. 94 Blanco White, Patents for Inventions, 2nd ed (1955) at 12. 95 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 339-340 [6], 372 [91]. about by human action96. The claim in Myriad failed to meet that requirement because satisfaction of an integer of the claim depended upon a discovery of a characteristic of the human being from whom the nucleic acid was isolated and not an invention of that characteristic by the person doing the isolating97. The point of principle of present relevance supported by that decision is that neither the discovery of a truth about the nature of things nor the devising of a scheme or game for entertainment is the invention of a manner of manufacture. In addition, the plurality in Myriad said that the purpose of the Act would not be served by according patentability to a class of claims which by their very nature lack well-defined boundaries or have negative or chilling effects on innovation98. Their Honours considered that there would be a "real risk" that the chilling effect of the claims "would lead to the creation of an exorbitant and unwarranted de facto monopoly on all methods of isolating nucleic acids containing the sequences coding for the [relevant] protein"99. Gageler and Nettle JJ expressed a similar concern100, as did Gordon J101. It has been seen that the primary judge in the present case was influenced in his characterisation of the subject matter of the claim by a concern that too "narrow" a characterisation might be "antithetical to the encouragement of invention and innovation"102. His Honour's concern is offset by the consideration that the characterisation of the invention favoured by his Honour carries with it the risk of chilling innovation by excluding competitors from this field of the gaming business. NRDC held that a new use of an old product may be a method that is patentable if it is itself an invention. In NRDC, the manner of manufacture in question, methods for the eradication and control of weeds by the application of a known herbicide, was patentable as an invention because it produced the economically beneficial effect of a new use of the particular chemical compound, 96 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 340 [6], quoting NRDC (1959) 102 CLR 252 at 276-277. See also 344 [16], 372 [91]. 97 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 340 [6]. 98 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 340 [7], 351-352 [28]-[29]. 99 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 340 [8]. See also 352 [29]. 100 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 372 [93]. 101 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 414-415 [259]-[264]. 102 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 423 [102]. as distinct from the earlier, and different, economic effect from a different use of that compound103. It is necessary to appreciate that NRDC is not authority for the proposition that a claim for a new use of an old product may confer a patent monopoly over the old product. In such a case, the old product is, in light of the prior art, not relevantly a manner of manufacture that can be said to have been invented by the claimant. NRDC does not support the view that new, but unpatentable, subject matter presented or operated through generic technology is patentable104. It is important to appreciate that to say this is not to err, as Aristocrat claims, by conflating the issue of manner of manufacture with issues of novelty and inventive (or innovative) step. In N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd105, Brennan, Deane and Toohey JJ referred to s 18(1) of the Act as identifying "the essential characteristics of a 'patentable invention' for the purposes of the Act". Focussing upon the introductory words of that sub-section, their Honours upheld the approach of the primary judge and the Full Court in that case, whereby "independently of the specific provisions of s 18(1)(b) relating to novelty and inventive step, s 18(1)(a) must be read as containing a threshold requirement to the effect that what was claimed as a patentable invention must be a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies 1623 (Imp)"106. In characterising a claimed invention for this purpose, one does not trespass impermissibly into issues of novelty or obviousness by focussing on the features of the claimed invention that differentiate it from the common general knowledge. These are the features which enable one to identify what is said to be the "invention" for the purposes of s 18(1) and s 18(1A) of the Act. Brennan, Deane and Toohey JJ went on to hold that "if it were apparent on the face of the specification, when properly construed and understood, that a subject process was (for example) nothing more than a new use of an old product, 103 NRDC (1959) 102 CLR 252 at 277. 104 cf Mullard Radio Valve Co Ltd v British Belmont Radio Ltd (1938) 56 RPC 1 at 20. See also Harwood v Great Northern Railway Co (1865) 11 HLC 654 at 682 [11 ER 1488 at 1499], cited with approval in Willmann v Petersen (1904) 2 CLR 1 at 20; Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461 at 480. 105 (1995) 183 CLR 655 at 659. 106 N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 660. See also 662-663; Bristol-Myers Squibb Co v F H Faulding & Co Ltd (2000) 97 FCR 524 at 531-533 [20]-[23]. the specification would itself disclose the absence of 'an alleged invention' within the second limb of the definition [of the term 'invention']", and in such a case the Commissioner "was entitled to reject the application for the reason that it failed to satisfy the threshold test". Their Honours specifically rejected the proposition "that s 18(1)(b)'s requirements of novelty and inventive step (when compared with the identified applicable prior art base) are exclusive and exhaustive in so far as inventiveness (whether of step or idea) is concerned"107. Brennan, Deane and Toohey JJ emphasised the primary significance of the words "a patentable invention is an invention that ..." in s 18(1), as it then stood, as words which "impose a threshold requirement which must be satisfied before one reaches that contained in the body of par (a)"108, that being the requirement of manner of manufacture. Their Honours explained109: "The effect of those opening words of s 18(1) is that the primary or threshold requirement of a 'patentable invention' is that it be an 'invention'. Read in the context of s 18(1) as a whole and the definition of 'invention' in the Dictionary in Sch 1, that clearly means 'an alleged invention'110, that is to say, an 'alleged' 'manner of new manufacture the subject of letters patent and grant of privilege within s 6 of the Statute of Monopolies'111. In the light of what has been said above about what is involved in an alleged manner of new manufacture, that threshold requirement of 'an alleged invention' will, notwithstanding an assertion of 'newness', remain unsatisfied if it is apparent on the face of the relevant specification that the subject matter of the claim is, by reason of absence of the necessary quality of inventiveness, not a manner of new manufacture for the purposes of the Statute of Monopolies. That does not mean that the threshold requirement of 'an alleged invention' corresponds with or renders otiose the more specific requirements of novelty and inventive step (when compared with the prior art base) contained in s 18(1)(b). It simply means that, if it is apparent on 107 N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 662-663. 108 N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 663. 109 N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 663-664. 110 See the final words of the definition. 111 See the first part of the definition. the face of the specification that the quality of inventiveness necessary for there to be a proper subject of letters patent under the Statute of Monopolies is absent, one need go no further. In that regard, the position under s 18(1) remains that indicated in the following extract from the judgment of Dixon CJ, Kitto and Windeyer JJ in [NRDC]112: '... in the portion of the definition of invention which includes in the meaning of the word an alleged invention, the word "alleged" goes only to the epithet "new" in the expression "a manner of new manufacture", and ... accordingly the Commissioner may properly reject a claim for a process which is not within the concept of a "manufacture". But the case cited [ie Microcell] shows also that even if the process is within the concept the Commissioner is not bound to accept the allegation of the applicant that it is new, if it is apparent on the face of the specification, when properly construed, that the allegation is unfounded: see also Re Johnson's Patent113. It is therefore open to the Commissioner in a proper case to direct the deletion of a claim for a process which may be seen from the specification, considered as a whole, to be "outside the whole scope of what is known as invention" because, in the words of Lord Buckmaster, when Solicitor-General, in Re BA's Application114 it is "nothing but a claim for a new use of an old substance"115.'" In N V Philips, Brennan, Deane and Toohey JJ addressed arguments to the same effect as were addressed to this Court by Aristocrat, by reference, inter alia, to this Court's earlier decision in Commissioner of Patents v Microcell Ltd116. The relevant passage is lengthy, but given Aristocrat's reliance on a view that has been authoritatively rejected, it should be cited in full. Their Honours said117: 112 (1959) 102 CLR 252 at 261-262. 113 (1937) 55 RPC 4 at 19. 114 (1915) 32 RPC 348. 115 Re BA's Application (1915) 32 RPC 348 at 349. 116 (1959) 102 CLR 232. 117 N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 664-665 (some footnotes omitted). See also D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 382-383 [129]-[131]. "It is true that it can be argued that there is internal tension in an overall legislative scheme which imposes a threshold requirement of inventiveness reflecting the effect of the saving clause in s 6 of the Statute of Monopolies and then proceeds, if that threshold requirement be satisfied, to impose more specific requirements of novelty and inventive step. It seems to us, however, that there are several answers to that argument. One is that there is no construction of s 18(1) of the Act which is not susceptible of some legitimate criticism. Another is that traditional patents law under s 6 of the Statute of Monopolies long recognised cumulative requirements of an element of invention (as distinct from, eg, mere discovery or analogous use) in the subject matter as described by the specification and novelty or newness as disclosed by comparison with a prior art base118. The distinctive requirements of novelty and inventive step required by s 18 of the Act are emphasised by their elaboration in s 7. In that regard it may be noted that in the [Patents Act 1952 (Cth)] one of the grounds for revocation of a patent was that the invention 'was obvious and did not involve an inventive step, having regard to what was known or used in Australia' (s 100(1)(e)). More important, it seems to us to be highly unlikely that it was the legislative intent that there should be a significant alteration of the law as explained in Microcell by extending the ambit of a patentable invention so as to include what is 'nothing more' than 'the use of a known material in the manufacture of known articles for the purpose of which its known properties make that material suitable'. In that regard, we do not accept the argument on behalf of Philips that Microcell was decided on the question of newness and not on manner of manufacture. It is true that, in Microcell, 'counsel for the applicants argued that ... they were required to show no more than that the specification described a manner of manufacture and that it was alleged to be new'. But it is clear that the decision of the Court was that '[t]he specification in the present case does not, in our opinion, disclose a patentable invention'. Rather, the deliberate retention of the established definition of 'invention' in the Dictionary in Sch 1 strongly supports the view that it was the legislative intent that the threshold requirement of 'an invention' would continue to exclude from a 'patentable invention' any claimed process, method or use which was not, on the face of the specification, a proper subject of letters patent according to traditional principles." It is convenient to note here that the Full Court in CCOM made some guarded observations in relation to the decision of the earlier Full Court in N V 118 See, eg, Gadd and Mason v Mayor of Manchester (1892) 9 RPC 516 at 525-526; Sharp & Dohme Inc v Boots Pure Drug Co Ltd (1928) 45 RPC 153 at 170-173. Philips, which was, of course, ultimately upheld by this Court. In CCOM, the Full Court said, in obiter dicta, that119: "counsel for [the party contending for invalidity] ... resiled from [reliance on the decision of the Full Court in N V Philips] in so far as issues more apt to obviousness may have intruded into the consideration of the concept of manner of manufacture. Counsel accepted that many of the old cases which may have been treated in the texts under the heading of 'manner of new manufacturer' would now be treated as decisions upon degree of inventiveness, that is to say obviousness." In N V Philips, Brennan, Deane and Toohey JJ expressly adverted to these observations, but ultimately affirmed the approach of the primary judge and the Full Court as to the interpretation of s 18(1), noting that all of them were in agreement120. N V Philips provides an answer to Aristocrat's reliance on observations in CCOM about the structure of s 18 of the Act which were encapsulated in the example that "whilst a claim for the ball point pen now would fail for anticipation [want of novelty] and obviousness [want of an inventive step], it would still be a claim for a manner of manufacture"121. The ball point pen would not, now or at the time CCOM was decided, have met the threshold requirement of s 18 that it be an invention because it is not, and was not then, new. Characterising the claimed invention In accordance with the approach in Myriad122, it is necessary to characterise Aristocrat's claimed invention by reference to the terms of the specification having regard to the substance of the claim and in light of the common general knowledge. In the absence of a claim to some variation of or adjustment to generic computer technology to give effect to, or accommodate the needs of, the new game, there is no reason to characterise the claimed invention as other than a claim for a new system or method of gaming: it is only in relation to the feature game that the 119 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 294. 120 N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 660 esp at fn 26. 121 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 291. 122 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 342-343 [12], 385-388 [138]-[145]. See also Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 12-13 [16], 16 [24]. invention is claimed to subsist. The title of the 967 patent and the field of invention described in the patent specification accurately characterise the invention claimed by Aristocrat. The claimed invention takes its character, as an invention, from those elements of the claim which are not common general knowledge. If that were not so, every EGM conforming to the generic physical and hardware components, including computer components, described in the claim would be patentable simply because it, like every other EGM, allowed a new game to be played. And the only thing differentiating each new claimed invention, as an invention, would be that unpatentable game. Unlike CCOM, the present cannot be said to fall within a category of case in which, as an element of the invention, "there [is] a component that [is] physically affected or a change in state or information in a part of a machine"123. All members of the Full Court were right to conclude that the subject matter of Aristocrat's claim is not patentable subject matter. It is common ground that the new game devised by Aristocrat, as an idea, is not itself patentable subject matter; and there is nothing in claim 1 that might lead to the conclusion that it has produced some adaptation or alteration of, or addition to, technology otherwise well-known in the common general knowledge. Neither the primary judge nor the Full Court made any finding that any of the integers of claim 1 addressed the exigencies of the physical presentation of the operation of the game devised by Aristocrat. And it is not apparent from the terms of the specification of the 967 patent or claim 1 itself that there is a basis for such a finding. In the absence of such a finding, there is no basis for concluding that the claimed invention is patentable subject matter. It is no more than an unpatentable game operated by a wholly conventional computer, using technology which has not been adapted in any way to accommodate the exigencies of the game or in any other way. Two aspects of the reasons of Middleton and Perram JJ warrant comment. First, the two-step analysis proposed by their Honours unnecessarily complicates the analysis of the crucial issue. As explained in Myriad124, the crucial issue is as to the characterisation of the invention by reference to the terms of the specification having regard to the claim and in light of the common general knowledge. It is not apparent in the present case that asking whether the claimed invention is an advance in computer technology as opposed to gaming technology, or indeed is 123 Grant v Commissioner of Patents (2006) 154 FCR 62 at 70 [32]. 124 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 342-343 [12], any advance in technology at all, is either necessary or helpful in addressing that issue. As Nicholas J explained, the issue is not one of an "advance" in the sense of inventiveness or novelty. In conformity with the decision in N V Philips, the issue is whether the implementation of what is otherwise an unpatentable idea or plan or game involves some adaptation or alteration of, or addition to, technology otherwise well-known in the common general knowledge to accommodate the exigencies of the new idea or plan or game. Secondly, the suggestion by Middleton and Perram JJ that the claimed invention may be an advance in gaming technology but not an advance in computer technology was an unnecessary flourish. This observation might be thought to reject the notion that an advance in gaming technology may be patentable subject matter. That would be erroneous. The flourish was unnecessary because there is no reason to conclude from the terms of claim 1 of the 967 patent that it was claiming an advance in gaming technology other than the use of a generic computer to play its new game. It was also neither necessary nor appropriate to speak of advances in gaming technology where one is concerned with a claimed invention that discloses no adaptation or alteration of, or addition to, apparatus well-known in common general knowledge in order to accommodate the exigencies of the new idea. As Nicholas J appreciated, a new idea implemented using old technology is simply not patentable subject matter125. It may be noted here that the claim does not disclose any basis on which one might conclude otherwise. On that basis, there was no occasion for the Full Court to consider remitting the proceeding to the primary judge to enable findings to be made as to whether the claimed invention made any technical contribution to the common general knowledge of computerised gaming. Nicholas J had no sufficient reason to think that the remitter he proposed was necessary or appropriate. During the course of argument in this Court, a question arose as to the the configurable symbols, which are significance of integers 1.6-1.12. Claim 1 does not disclose that the configurable symbols somehow facilitate the implementation of the game by the EGM in any way different from a generic EGM. There is nothing in the claim over and above an instruction to provide configurable symbols, an instruction which a person skilled in the art could be expected to act upon in the exercise of his or her own judgment, in light of the common general knowledge. Put another way, there is nothing new referred 125 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 598-599 [111], 601 [118]-[119]. or inventive about the interaction between the configurable symbols and the game126. There is also nothing disclosed in the claim in the specification to suggest that the configurable symbols have any function or physical presentation that differentiates the claimed invention from a generic EGM. As was said in Calidad Pty Ltd v Seiko Epson Corporation127, the price for the monopoly rights conferred by a patent "is that the invention must be disclosed in the patent". In this regard, the claim is of central importance in the definition of a patentable invention128. As Lord Russell of Killowen observed in 1938, the function of a patent claim is "to define clearly and with precision the monopoly claimed, so that others may know the exact boundaries of the area within which they will be trespassers"129. As the primary judge found, the EGM described in the claim is "a device of a particular construction, known and recognised by those [skilled] in the art"130. Nothing in the reasons of the primary judge suggests that his Honour was invited to find that the configurable symbols should be regarded as standing outside this conclusion. Aristocrat's application to amend its notice of appeal Aristocrat submitted that should this Court reject its primary contention, the matter should be remitted to the primary judge for determination of the issue whether the claimed invention involved a technical contribution, including in the field of gaming technology. Aristocrat, in its reply in oral argument, sought leave to amend its notice of appeal to assert that Middleton and Perram JJ erred in failing to remit the proceeding to the primary judge to consider whether claim 1 of the 967 patent is a manner of manufacture. As discussed above, the primary judge expressly declined to make findings that the claimed invention made any technical 126 cf Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 at 182 [12]. 127 (2020) 94 ALJR 1044 at 1075 [152]; 384 ALR 577 at 611. 128 s 40(2)(b) of the Act. 129 Electric & Musical Industries Ltd v Lissen Ltd (1938) 56 RPC 23 at 39. See also D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 343-344 [14], citing Bodkin, Patent Law in Australia, 2nd ed (2014) at 367 [5960]. 130 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 411 [54]. contribution in the sense of involving the creation of an artificial state of affairs131. To the extent that Aristocrat seeks now to embrace the reservations of Nicholas J as to the final disposition of the matter, that course should not be entertained. Although the Commissioner did not oppose Aristocrat's application, she submitted that it would be futile to grant it. As these reasons have explained, the Commissioner was correct to submit that the essential question is to characterise the invention, an inquiry which is conducted by reference to the claim in light of the specification as a whole and the common general knowledge. Claim 1 of the 967 patent does not disclose any technical contribution to either computer or gaming technology outside the common general knowledge. At best, the claimed invention contains a new game which may enhance player enjoyment132; but that cannot be said to amount to a technical contribution or to solve a technical problem in the field of computer or gaming technology. In addition, special leave was granted in this matter on the footing that the appeal would resolve issues of legal principle that were ripe for determination. An appellant in such a case should not expect to be allowed to expand its appeal to extend the final resolution of the matter by remitting it for further litigation of issues of fact not adverted to when special leave was being sought. Aristocrat's application for leave to amend its notice of appeal should be refused. The IPTA's submissions The Institute of Patent and Trade Mark Attorneys of Australia ("the IPTA") was granted leave to appear to make submissions as amicus curiae in support of Aristocrat's appeal. The IPTA made submissions that were supportive of Aristocrat. To the extent that IPTA argued in support of Aristocrat's contention that the approach of Middleton and Perram JJ conflated or confused issues of novelty or obviousness with the issue as to manner of manufacture, that argument cannot be sustained having regard to this Court's decision in N V Philips. The IPTA also expressed concern that the approach of Middleton and Perram JJ would have "seismic" effects beyond the gaming industry, rendering unpatentable "swathes of inventions" that otherwise would have been, such as 131 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 420 [91], 421 [95]. 132 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 602 [125]-[126], 605 [136], 606 [141]. medical imaging and diagnostic machines, speed detection camera systems and biotechnology inventions such as COVID-19 diagnosis systems. It must be understood that a claimed invention for patentable subject matter does not become unpatentable because it is operated by generic computer technology. The FICPI's submissions The Fédération Internationale des Conseils en Propriété Intellectuelle ("the FICPI") was granted leave to provide written submissions as amicus curiae with respect to the position under US law on the requirement for patent-eligible subject matter. It too supported Aristocrat's appeal generally. The FICPI too argued that the merits of an invention, such as inventiveness, play no part in assessing patentability; and that the two-step test that the Supreme Court of the United States developed in the decisions of Mayo Collaborative Services v Prometheus Laboratories Inc133 and Alice Corporation Pty Ltd v CLS Bank International134 involves a "search for an 'inventive concept'". The Supreme Court held in Alice that a requirement of generic computer implementation of a method does not transform a patent-ineligible abstract idea into a patent-eligible invention135. The relevant statutory provision on which that decision was based, 35 USC §101, provides that: "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title". The FICPI noted subsequent decisions and academic writings which have criticised the two-step Mayo/Alice test as conflating patent eligibility with obviousness136. The consequence, it was said, was adversely to affect the 134 (2014) 573 US 208. See esp at 217. 135 Alice Corporation Pty Ltd v CLS Bank International (2014) 573 US 208 at 221. 136 Ariosa Diagnostics Inc v Sequenom Inc (2015) 788 F 3d 1371 at 1381; Interval Licensing LLC v AOL Inc (2018) 896 F 3d 1335 at 1348; Athena Diagnostics Inc v Mayo Collaborative Services LLC (2019) 927 F 3d 1333 at 1335; American Axle & Manufacturing Inc v Neapco Holdings LLC (2020) 967 F 3d 1285 at 1312; Committee on the Judiciary, Subcommittee on Intellectual Property, "The State of development of innovations in the US in fields where computer-implemented technologies are used. The FICPI submitted that the proposed alternative approach of Middleton and Perram JJ is "highly likely" to have that same chilling effect on innovation in Australia by restricting patentable computer-related inventions to those that demonstrate an "advance in computer technology". Having regard to the reasons set out above, it can be seen that the FICPI's argument is unnecessarily alarmist. In addition, as with the argument for Aristocrat and the IPTA, it is inconsistent with this Court's decision in N V Philips. Further, since the relevant US statutory provision is different from the relevant terms of the Act, it will be readily apparent that the decisions in cases such as Alice have little significance for the outcome of this case. The foregoing reasons for holding that the appeal to this Court should be dismissed involve no reliance on the reasoning in Alice, or any other decision of the US courts. It may also be said that if this Court's decision in a patent case would bring Australian patent law into conflict with that of a major trading partner such as the US, that would be a reason to scrutinise with special care the reasoning which would lead to such a result. That would be so especially where there are no substantial differences in the relevant statutory provisions137. But where no problem of conflict arises, that is not necessary. And it is of little assistance to the application of Australian law to criticise the jurisprudence of a different legal system for reaching the same solution to a problem that Australian courts have reached. Conclusion and orders The appeal should be dismissed with costs. Eligibility Patent available America: <https://www.judiciary.senate.gov/meetings/the-state-of-patent-eligibility-in- america-part-i> [https://perma.cc/S27H-4H8F] see esp Testimony of Judge Paul R Michel (Ret) [https://perma.cc/KMJ2-9BLN], Testimony of David J Kappos [https://perma.cc/2GFA-9MQK]; Taylor, "Confusing Patent Eligibility" (2016) 84 Tennessee Law Review 157 at 230, 235. Part 137 cf Calidad Pty Ltd v Seiko Epson Corporation (2020) 94 ALJR 1044 at 1052-1054 [17]-[24], 1063-1064 [83]-[84]; 384 ALR 577 at 582-584, 596-597. Gordon EdelmanJ GORDON, EDELMAN AND STEWARD JJ. Introduction An electronic gaming machine ("EGM") is a device that was described in expert evidence in this case as a "video slot machine"138. An EGM typically has a player interface by which players input money into the machine, make wagers, and play the game. The appellant, Aristocrat Technologies Australia Pty Ltd ("Aristocrat"), claimed innovation patents under s 18(1A) of the Patents Act 1990 (Cth) concerning various embodiments of an EGM, including one that incorporated a standard player interface integrated with, and governed by, the hardware and software of an electronic game controller which included feature games and configurable symbols. The only question on this appeal is whether the claim by Aristocrat139 is not the proper subject matter of a patent because it is not a manner of manufacture within s 6 of the Statute of Monopolies as required by s 18(1A)(a) of the Patents Act. Before the primary judge in the Federal Court of Australia, in a concession that was rightly never revoked on appeal to the Full Court of the Federal Court of Australia or to this Court, the Commissioner accepted that if the relevant claim had involved a mechanical implementation "using cogs, physical reels and motors to create the gameplay" then there would have been no doubt that the relevant claim was a manner of manufacture140. The primary judge held that the electronic and digital nature of an EGM made no difference to that conclusion. The Full Court unanimously allowed an appeal. Two members of the Full Court held that a claim that involved a "computer-implemented invention" could only be a manner of manufacture if it could broadly be described as an advance in computer technology. In the 21st century, a law such as s 18(1A) of the Patents Act that is designed to encourage invention and innovation should not lead to a different conclusion where physical cogs, reels, and motors are replaced by complex software and hardware that generate digital images. Throughout this litigation, the Commissioner attempted to avoid such a curious result by re-characterising Aristocrat's claim as a mere scheme or abstract idea. The Commissioner could only 138 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 584 [45]. 139 Claim 1 of the 967 patent. See [130] below. 140 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 423 [102]. Gordon EdelmanJ that characterisation by filleting from the claim essential and achieve interdependent integers providing for the implementation of the game on the EGM. The integers stripped from the Commissioner's characterisation included components as basic as the display component of the player interface on which the images of symbols generated by the software and hardware appeared. For the reasons below, the appeal must be allowed. Section 18 of the Patents Act Section 18 of the Patents Act provides: "Patentable inventions Patentable inventions for the purposes of a standard patent (1) Subject to subsection (2), an invention is a patentable invention for the purposes of a standard patent if the invention, so far as claimed in any claim: is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and (b) when compared with the prior art base as it existed before the priority date of that claim: (i) is novel; and (ii) involves an inventive step; and is useful; and (d) was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee's or nominated person's predecessor in title to the invention. Patentable inventions for the purposes of an innovation patent (1A) Subject to subsections (2) and (3), an invention is a patentable invention for the purposes of an innovation patent if the invention, so far as claimed in any claim: is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and Gordon EdelmanJ (b) when compared with the prior art base as it existed before the priority date of that claim: is novel; and involves an innovative step; and is useful; and (d) was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee's or nominated person's predecessor in title to the invention. (2) Human beings, and the biological processes for their generation, are not patentable inventions. Certain inventions not patentable inventions for the purposes of an innovation patent (3) For the purposes of an innovation patent, plants and animals, and the biological processes for the generation of plants and animals, are not patentable inventions. (4) Subsection (3) does not apply if the invention is a microbiological process or a product of such a process." An "invention" is defined in Sch 1 to the Patents Act as meaning "any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention". The preliminary question of characterisation The starting point for any assessment of whether an applicant has satisfied the requirements of s 18(1) or, as in this case, s 18(1A) is characterisation of the relevant claim. Section 18(1A), like s 18(1), requires answers to questions such as: "is the subject matter an alleged invention?"; "is the alleged invention a manner of manufacture?"141; "is the alleged invention novel?"142; "does the alleged invention 141 Patents Act 1990 (Cth), s 18(1A)(a). 142 Patents Act 1990 (Cth), s 18(1A)(b)(i). Gordon EdelmanJ involve an innovative step?"143; "is the alleged invention useful?"144; and "was the alleged invention secretly used?"145 None of these questions can be answered without first characterising the claim, which involves answering the fundamental question of "what is the subject matter of the claim"? Relatedly, it also involves asking "what are the facts and matters which are relied upon to justify a conclusion that the claim contains an invention?"146 The characterisation of the claim must be undertaken as a matter of substance, not mere form147. It requires consideration of all of the integers of the claim in light of the relevant facts and matters in the specification. The exercise of characterisation might reveal an alleged invention which may be either a process or a product. The characterisation exercise should not be artificial. An artificially specific characterisation could confine any claim to a mere intellectual idea, which, as is explained below, could deny an obvious manner of manufacture by ignoring the means of idea. Similarly, an artificially generalised characterisation could remove the element of novelty or inventiveness from any claim. implementing the The risk of artificially characterising a claim is particularly pronounced where the claim contains interdependent integers. Unless a claim asserts a monopoly "in any integer by itself", it is "only necessary that each integer form part of a full description of the invention"148. As will be explained below, the claim which is the subject of this appeal did not assert a monopoly in any single integer; the claim relied upon the full description of the alleged invention. In Minnesota 143 Patents Act 1990 (Cth), s 18(1A)(b)(ii). 144 Patents Act 1990 (Cth), s 18(1A)(c). 145 Patents Act 1990 (Cth), s 18(1A)(d). 146 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 417 [278]. 147 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 370-371 [86]-[88], 373 [94], 148 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274 Gordon EdelmanJ Mining and Manufacturing Co v Beiersdorf (Australia) Ltd149, Aickin J referred to such a circumstance as a "combination patent" where: "it combines a number of elements which interact with each other to produce a new result or product. Such a combination may be one constituted by integers each of which is old, or by integers some of which are new, the interaction being the essential requirement." In short, the characterisation of the claim at the appropriate level of generality should include all of the matters that properly form part of the idea, as well as its implementation. Only then can the questions required by s 18(1) or s 18(1A) properly be answered. The threshold requirement for "an alleged invention" Once the subject matter of the claim has been characterised, and the facts and matters relied upon for that characterisation are identified, there is a threshold question of whether the subject matter can meet the description of an alleged invention within Sch 1 to the Patents Act. This threshold question was most clearly expressed in N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd150. In N V Philips, a purported invention characterised as a "low-pressure mercury vapour discharge lamp" had been held by the primary judge and a majority of the Full Court of the Federal Court of Australia not to be a patentable invention because it was merely a new use of a known product, namely using the known luminescent properties of phosphors in a lamp151. On appeal to this Court, the appellants submitted that this reasoning impermissibly imposed a threshold requirement for "newness" separately from the independent requirement of novelty in s 18(1)(b)(i)152. A majority of this Court in N V Philips, Brennan, Deane and Toohey JJ, dismissed the appeal. Their Honours held that the reference to a "patentable 149 (1980) 144 CLR 253 at 266. 150 (1995) 183 CLR 655. 151 (1995) 183 CLR 655 at 665-666. See also Re BA's Application (1915) 32 RPC 348 at 349, "a new use of an old substance", quoted with approval in Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232 at 247 and National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 at 262. 152 (1995) 183 CLR 655 at 657. Gordon EdelmanJ invention" in the prefatory words in s 18(1), read in light of the definition of "invention", imposed a threshold requirement for an "alleged invention" requiring a minimal level of "newness" and "inventiveness" before something could be a patentable invention153. As the language ("so far as claimed in any claim") of s 18(1) illustrates, that threshold requirement is to be assessed by reference to the face of the claim in the context of the specification rather than, as ss 18(1)(b)(i) and 18(1)(b)(ii) read with s 7 require for the independent requirements of novelty and inventiveness, by reference to the prior art base154. Without satisfaction of that threshold requirement, there can be no manner of manufacture as required by s 18(1)(a)155. In recognising the threshold requirement, the majority in N V Philips156 relied upon the earlier decision of this Court in Commissioner of Patents v Microcell Ltd157, in which a claim characterised as a self-propelled-rocket projector was refused on the basis that on the face of the specification it was nothing more than "the use of a known material in the manufacture of known articles for the purpose of which its known properties make that material suitable". In N V Philips, Dawson and McHugh JJ dissented, saying that it was "scarcely to be thought that the legislature, in closely defining the context for consideration of the questions of novelty and inventiveness, intended that those or related questions should otherwise remain, and remain at large"158. Later, this Court in Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2]159 also denied that the decision in Microcell involved a threshold test. Nevertheless, in D'Arcy v Myriad Genetics Inc160, French CJ, Kiefel, Bell and Keane JJ confirmed, citing N V Philips, that an "anterior exclusion" may arise "based upon an admission, on the face of the specification, which makes clear that the invention claimed is not novel or does not involve an inventive step". Similarly, Gordon J, 153 (1995) 183 CLR 655 at 659, 663-664. 154 (1995) 183 CLR 655 at 664-665. 155 (1995) 183 CLR 655 at 664, 667-668. 156 (1995) 183 CLR 655 at 665. 157 (1959) 102 CLR 232 at 251. 158 (1995) 183 CLR 655 at 671. 159 (2007) 235 CLR 173 at 211 [106]. 160 (2015) 258 CLR 334 at 342 [12]. Gordon EdelmanJ also citing N V Philips, said that the "primary or threshold requirement of a 'patentable invention' is that it be an 'invention'"161. imposes a Whatever controversy may remain as to the threshold requirement for an alleged invention, the decision in Microcell and the remarks in D'Arcy v Myriad Genetics Inc demonstrate that the threshold is low. Further, the threshold necessarily independent less stringent requirement requirements of novelty and inventiveness in ss 18(1)(b)(i) and 18(1)(b)(ii) read with s 7. Like those provisions, the threshold should not be assessed in hindsight: "[t]he opening of a safe is easy when the combination has been already provided"162. And, when assessing this threshold question without the benefit of expert evidence as to prior art, it is important to "remember warnings" that "[the] Court should be careful to avoid assuming a technical expertise it does not have"163. than the Manner of manufacture The established principle Provided that a claim overcomes the threshold requirement of a minimal degree of novelty and inventiveness, the iterative issues that will arise are those contained in s 18, namely: (i) manner of manufacture within the meaning of s 6 of the Statute of Monopolies; (ii) novelty; (iii) inventive or innovative step; (iv) utility; and (v) absence of secret use. This appeal is concerned only with manner of manufacture. A manner of manufacture within the meaning of s 6 of the Statute of Monopolies has long extended beyond the etymology of "manufacture" to include new processes in any art that produce effects that are useful to the public. Hence, Eyre LCJ said in 1795164: "Under things made, we may class, in the first place, new compositions of things, such as manufactures in the most ordinary sense of the word; 161 (2015) 258 CLR 334 at 407 [219]. 162 Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 293. 163 Bristol-Myers Squibb Co v F H Faulding & Co Ltd (2000) 97 FCR 524 at 541 [44], quoting in part from CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 284. 164 Boulton v Bull (1795) 2 H Bl 463 at 492 [126 ER 651 at 666]. See also National Research Development Corporation v Commissioner of Patents (1959) 102 CLR Gordon EdelmanJ secondly, all mechanical inventions, whether made to produce old or new effects, for a new piece of mechanism is certainly a thing made. Under the practice of making we may class all new artificial manners of operating with the hand, or with instruments in common use, new processes in any art producing effects useful to the public." A manner of manufacture thus requires only the existence of some material and artificial advantage, which was expressed, in the "watershed"165 decision of this Court in National Research Development Corporation v Commissioner of Patents166, as requiring the process or product which is said to be the proper subject matter of a patent to be part of the useful arts rather than the fine or intellectual arts. As this Court emphasised, "manufacture" does not bear its ordinary meaning "by reference to the idea of making tangible goods by hand or by machine"167. In National Research Development Corporation it was held that there was a manner of manufacture in the application of known chemicals to rid crop areas of certain weeds. In that new use of existing products there was "an artificially created state of affairs" with a useful result, an obvious indicium of which was that the result was of economic significance168. Nevertheless, in a product claim, the existence of a vendible product involving an artificially created state of affairs with economic significance is not a sharply defined test for manner of manufacture169. Indeed, any product that "improves, restores or preserves" a vendible product and thereby creates some new and useful effect will be a manner of manufacture170. 165 Joos v Commissioner of Patents (1972) 126 CLR 611 at 616. 166 (1959) 102 CLR 252 at 275, citing Re Virginia-Carolina Chemical Corporation's Application [1958] RPC 35 at 36. 167 National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 at 269. 168 (1959) 102 CLR 252 at 277. See also D'Arcy v Myriad Genetics Inc (2015) 258 CLR 169 National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 at 278. See also D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 170 See Blanco White, Patents for Inventions and the Protection of Industrial Designs, 5th ed (1983) at 157-158 [4-902] and National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 at 271-275. Gordon EdelmanJ Schemes, games, and other intellectual endeavours It is well established that a "mere scheme or plan"171, or any other merely intellectual endeavour, cannot be the subject matter of a patent. They are part of the fine or intellectual arts rather than the useful arts. Hence "[b]usiness, commercial and financial schemes"172, without more, are not the proper subject matter of a patent. Nor are the rules of a game. In order for patentable subject matter to exist, there must be more than "a mere method or mere idea or mere desideratum"173. It is, however, equally well established that one way in which a "mere method" will become a manner of manufacture is when it is practised or used in a way that is embodied in a physical form174. As this Court expressed the point in Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2]175, although an "idea simpliciter" cannot be patented: "When an idea is incorporated into a means for carrying out an idea, the idea itself can be taken into account when considering validity, and inventiveness may repose largely in the idea. As a matter of language, it is almost inevitable that the subject matter of an invention which involves an improvement to a known combination will be spoken of as 'an idea' or 'a concept', as occurred here, and invention may lie in 'the idea of taking the step in question'". This reasoning applies equally where the idea consists of the rules of a game. Although the rules of a game alone are not the proper subject matter of a patent, they may be the proper subject matter when combined with physical materials used for playing the game. In Re Cobianchi's Application176 an idea for a new way of playing the game of "Canasta" with differently marked cards was held to be a manner of manufacture. Lloyd-Jacob J, the first specialist British 171 Re Cooper's Application (1901) 19 RPC 53 at 54. 172 Grant v Commissioner of Patents (2006) 154 FCR 62 at 66 [14]. See also at 70-71 173 Burroughs Corporation (Perkins') Application [1974] RPC 147 at 160, quoted with approval in Grant v Commissioner of Patents (2006) 154 FCR 62 at 67 [18]. 174 Grant v Commissioner of Patents (2006) 154 FCR 62 at 67 [18]. 175 (2007) 235 CLR 173 at 199 [60]. 176 (1953) 70 RPC 199. Gordon EdelmanJ patent judge177, held that "the game itself, whatever its ingenuity, could not be the subject of patent protection" but that the new pack of cards, "which requires the operation of a manner of manufacture for its reproduction", could not be "dismissed as a mere idea or plan"178. In the 21st century, it would be absurd if the application of this principle were any different where the idea of the game is combined with a digital representation rather than a cardboard representation of the game. For instance, as senior counsel for the Commissioner properly accepted on this appeal, the game of Monopoly is patentable subject matter where it is embodied in a physical form such as a designed cardboard board, dice, and playing characters. It could not possibly be the case that the game of Monopoly ceases to be patentable subject matter if the graphics are displayed on a machine rather than on cardboard. To treat the two differently on the basis that the digital representation does not involve a physical transformation of something would plainly be to allow form to triumph over substance. As Heerey, Kiefel and Bennett JJ said in Grant v Commissioner of Patents179, "[a]n application is not limited to a physical transformation". Rather, the requirement of a "physical effect" includes "a concrete effect or phenomenon" and extends to "a change in state or information in a part of a machine"180. However, it is not enough that the scheme involves the use of a machine to manipulate abstract ideas. Where the manner of manufacture relies upon some change in state or information in a machine, then that change must produce an artificial state of affairs and a useful result181. Thus, as Emmett J said in Dynamite Games Pty Ltd v Aruze Gaming Australia Pty Ltd182, although a mathematical formula is not the proper subject matter of a patent, "if the claim is not for a mathematical formula in the abstract, but rather a way of using the mathematical formula in a process for producing particular products, there may be a patentable invention". Numerous examples can be given where the proper characterisation of the claim is one that merely involves the use of a machine to manipulate an abstract 177 See Tribute to the Late Mr Justice Lloyd-Jacob [1970] RPC 27 at 28. 178 (1953) 70 RPC 199 at 201. 179 (2006) 154 FCR 62 at 68 [22]. 180 (2006) 154 FCR 62 at 70 [32]. 181 Grant v Commissioner of Patents (2006) 154 FCR 62 at 68 [22]. 182 (2013) 100 IPR 86 at 117 [160]. Gordon EdelmanJ idea rather than involving the implementation of the idea on a machine to produce an artificial state of affairs and a useful result. An idea that uses a computer, but does not generate some artificial state of affairs, remains no more than an idea. In Grant v Commissioner of Patents183, a scheme for protecting assets from unsecured judgment creditors was not the proper subject matter of a patent although the scheme involved the use of a computer. In Research Affiliates LLC v Commissioner of Patents184, a scheme for constructing data concerning a non-capitalisation weighted portfolio of assets was not the proper subject matter of a patent although it involved the use of a computer to access and process the data and to apply a weighting function. In Commissioner of Patents v RPL Central Pty Ltd185, a scheme for assessing the competency or qualification of people in accordance with recognised standards was not patentable subject matter merely because it involved the use of a computer. In Encompass Corporation Pty Ltd v InfoTrack Pty Ltd186, a method and apparatus for displaying information to provide "business intelligence" was not the proper subject matter of a patent because, in substance, it was "no more than an instruction to apply an abstract idea (the steps of the method) using generic computer technology". No particular software was an essential feature of the invention187. In Commissioner of Patents v Rokt Pte Ltd188, a marketing scheme did not become patentable subject matter merely because it happened to be digital and therefore involved the use of a computer. It involved "computer technology that is utilised for its basic, typical or well-known functions"189. Although there was no artificial state of affairs created in any of these cases, and the results in all of these cases are plainly correct, some of the statements explaining the results in these and other cases must be read in the context of what was being decided. For instance, one expression of the characterisation question in some of the cases was whether the implementation of the scheme could be 183 (2006) 154 FCR 62. 184 (2014) 227 FCR 378 at 403 [119]. 185 (2015) 238 FCR 27 at 52 [110]. 186 (2019) 372 ALR 646 at 667 [99]. 187 (2019) 372 ALR 646 at 667 [100]. 188 (2020) 277 FCR 267. 189 (2020) 277 FCR 267 at 292 [91]. Gordon EdelmanJ described as "an improvement in computer technology"190. A better way of expressing the point in such cases, consistent with the ultimate single question of whether there is a manner of manufacture within s 6 of the Statute of Monopolies, would be to ask whether, properly characterised, the subject matter that is alleged to be patentable is: (i) an abstract idea which is manipulated on a computer; or (ii) an abstract idea which is implemented on a computer to produce an artificial state of affairs and a useful result. The artificial state of affairs and useful result may be a physical change in something, but it need not be. The artificial state of affairs may be an improvement in computer technology, but it need not be. It is enough that the artificial state of affairs and useful result are created by "the way in which the method is carried out in the computer"191. Further, the method of carrying out the idea in the computer, and the artificial state of affairs and useful result, need not be inventive or ingenious. The ingenuity may lie only in the idea but, when the idea is applied to produce an artificial state of affairs and a useful result, there will be a manner of manufacture. As this Court said in National Research Development Corporation192: "This is perhaps nowhere more clearly put than it was by Fletcher Moulton LJ in Hickton's Patent Syndicate v Patents and Machine Improvements Co Ltd when he said of Watt's invention for the condensation of steam, out of which the steam engine grew: 'Now can it be suggested that it required any invention whatever to carry out that idea when once you had got it? It could be done in a thousand ways and by any competent engineer, but the invention was in the idea, and when he had once got that idea, the carrying out of it was perfectly easy. To say that the conception may be meritorious and may involve invention and may be new and original, and simply because when you have once got the idea it is easy to carry it out, that that deprives it of the title of being a new invention according to our patent law, is, I think, an extremely dangerous principle and justified neither by reason nor authority'." (footnotes omitted) 190 Commissioner of Patents v Rokt Pte Ltd (2020) 277 FCR 267 at 296 [108]. See also Repipe Pty Ltd v Commissioner of Patents (2021) 164 IPR 1 at 2 [4]. Compare Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) 372 ALR 646 at 191 Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27 at 51 [104]. 192 (1959) 102 CLR 252 at 264, quoting Hickton's Patent Syndicate v Patents and Machine Improvements Co Ltd (1909) 26 RPC 339 at 347-348. Gordon EdelmanJ By contrast with the examples above in which a computer was merely used to manipulate an abstract idea, an example of an idea implemented on a computer to produce an artificial state of affairs and a useful result is the invention in CCOM Pty Ltd v Jiejing Pty Ltd193. In that case, the Full Court of the Federal Court of Australia held a claim to be the proper subject matter of a patent where it was characterised as one that enabled, through the operation of a computer keyboard, the selection of Chinese characters for word processing. The invention was one that implemented changes to the hardware and software of a computer in carrying out the idea. It was not merely the use of a computer to manipulate the abstract idea. The Full Court correctly held that it was not necessary that there be "anything new and unconventional in computer use"194. Although there might be doubt about whether CCOM sufficiently recognised the threshold requirement for an invention195, the reasoning in CCOM as to manner of manufacture has never been doubted and has been approved on many occasions in the Federal Court196, including in recognising as a manner of manufacture the results produced by the application of computer programs in EGMs197. Another example of a computer carrying out a method to produce an artificial state of affairs and a useful result, rather than merely manipulating an abstract idea, is a decision of the Patents Appeal Tribunal in Burroughs Corporation (Perkins') Application198. In that case, Graham J, delivering the judgment of himself and Whitford J, held that a proper subject matter for a patent was an idea that was implemented in a computer program to make a "slave computer" interrupt the operations of a "central computer". A manner of manufacture existed in the artificial state of affairs of "an old machine giving a new and improved result", since "[i]f the bare method or idea is also clothed ... with a practical garment in the shape of apparatus enabling that method or idea to 193 (1994) 51 FCR 260. 194 (1994) 51 FCR 260 at 291. 195 See N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 660, fn 26. 196 See, eg, Welcome Real-Time SA v Catuity Inc (2001) 113 FCR 110 at 135-136 [116]-[122]; Grant v Commissioner of Patents (2006) 154 FCR 62 at 67-68 [17]-[20]; Research Affiliates LLC v Commissioner of Patents (2014) 227 FCR 378 197 Neurizon Pty Ltd v LTH Consulting and Marketing Services Pty Ltd (2002) 58 IPR 198 [1974] RPC 147. Gordon EdelmanJ be realised in practice, it should no longer be regarded as a naked conception, for it has found a practical embodiment in the apparatus"199. The decision in Burroughs Corporation (Perkins') Application reflects long-established principle. It was quoted with approval by Heerey, Kiefel and Bennett JJ in Grant v Commissioner of Patents200. It was cited with approval in CCOM201. And it was relied upon in International Business Machines Corporation v Commissioner of Patents202, where Burchett J concluded that the application of mathematical methods to a computer to produce an image of a desired curve was the proper subject matter of a patent. The dangers of reliance upon foreign law concerning manner of manufacture A characteristic of some of the Australian decisions in relation to the patentability of ideas implemented through the use of computers has been a focus upon overseas authorities in which similar questions have arisen. It is necessary to explain why this is an area where overseas authorities are, at best, of limited assistance and, at worst, dangerously misleading. As to the United Kingdom, in CCOM203 the Full Court emphasised the need to take care when referring to decisions under the Patents Act 1977 (UK). Following that legislation, the Jacobean Statute of Monopolies that underpinned, and still underpins, the terms of manner of manufacture in Australia "no longer supplies a criterion for patentability in the British legislation". In Aktiebolaget Hässle v Alphapharm Pty Ltd204, four members of this Court spoke of the "failure in an appreciation" in the lower courts of the divergence between Australian case law and United Kingdom case law. And in Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2]205, this Court reiterated the divergence between the 199 [1974] RPC 147 at 158. 200 (2006) 154 FCR 62 at 67 [18]. 201 (1994) 51 FCR 260 at 293. 202 (1991) 33 FCR 218 at 225. 203 (1994) 51 FCR 260 at 288. 204 (2002) 212 CLR 411 at 430 [42]. 205 (2007) 235 CLR 173 at 193 [46], quoting Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 at 432 [49]. See also Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 253 CLR 284 at 384-385 [290]. Gordon EdelmanJ Australian and the United Kingdom patent systems and the "shift in grundnorm" after the enactment of the Patents Act 1977 (UK) following the Convention on the Grant of European Patents (1973). Following that shift, and in light of the concern in Art 52 of the Convention for "all fields of technology", the concept of a contribution having a "technical character" has featured as a requirement for an invention in decisions of the EPO Technical Board of Appeal and the courts of the United Kingdom206. As to the United States, §101 in Title 35 of the United States Code is expressed in very different terms from s 18 of the Patents Act. It relevantly provides that "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor ...". Unsurprisingly, in cases that might otherwise have provided comparators with the circumstances of this case the focus is upon the question of whether there is any "new and useful improvement" in a machine or other technology207. Claim 1 of the 967 patent and the specification The focus of the proceedings below was upon Claim 1 of a patent referred to as "the 967 patent". Before the Delegate of the Commissioner, there were four innovation patents in issue. The dispute at all times has been whether the innovation patents are manners of manufacture. It was, however, common ground before the primary judge and the Full Court that if Claim 1 of the 967 patent was a manner of manufacture then the other claims in the four patents would also be manners of manufacture. Claim 1 was set out by the primary judge as follows: "(1) A gaming machine comprising: a display; a credit input mechanism operable to establish credits on the gaming machine, the credit input mechanism including at least one of a coin input chute, a bill collector, a card reader and a ticket reader; (1.3) meters configured for monitoring credits established via the credit input mechanism and changes to the established credits due to play 206 See Symbian Ltd v Comptroller-General of Patents [2009] RPC 1 at 7 [9], 8 [11], referring to Duns Licensing Associates T 0154/04, 15 November 2006. 207 See Alice Corporation Pty Ltd v CLS Bank International (2014) 573 US 208 at 225. Gordon EdelmanJ of the gaming machine, the meters including a credit meter to which credit input via the credit input mechanism is added and a win meter; a random number generator; a game play mechanism including a plurality of buttons configured for operation by a player to input a wager from the established credits and to initiate a play of a game; and a game controller comprising a processor and memory storing (i) game program code, and (ii) symbol data defining reels, and wherein the game controller is operable to assign prize values to configurable symbols as required during play of the game, the game controller executing the game program code stored in the memory and responsive to initiation of the play of the game with the game play mechanism to: select a plurality of symbols from a first set of reels defined by the symbol data using the random number generator; control the display to display the selected symbols in a plurality of columns of display positions during play of a base game; (1.10) monitor play of the base game and trigger a feature game comprising free games in response to a trigger event occurring in play of the base game, (1.11) conduct the free games on the display by, for each free game, (a) retaining configurable symbols on the display, (b) replacing non-configurable symbols by selecting, using the random number generator, symbols from a second set of reels defined by the symbol data for symbol positions not occupied by configurable symbols, and (c) controlling the display to display the symbols selected from the second set of reels, each of the second reels comprising a plurality of non-configurable symbols and a plurality of configurable symbols, and (1.12) when the free games end, make an award of credits to the win meter or the credit meter based on a total of prize values assigned to collected configurable symbols." As the specification explains, the EGM described in Claim 1 is a combination of the game controller and the player interface which enables manual Gordon EdelmanJ interaction between the player and the EGM. Integers 1.1 to 1.5 mostly describe the physical features of an ordinary EGM, and are generally part of the player interface. Integers 1.6 to 1.12 interact with the physical features of the player interface and are components of what is described as a "game controller". The player interface in integers 1.1 to 1.5 includes mechanisms to enable the player to input credits and receive payouts; one or more displays; a game play mechanism such as a touch screen or buttons; and speakers. The game controller is a combination of integrated hardware and software typically including a processor, memory which stores instructions and data for the processor, hardware meters to monitor player credit and ensure regulatory compliance, a random number generator, and an input/output interface to communicate with the player interface. The game controller communicates with the player interface by a processor that processes the player's instructions in accordance with game play rules and sends outcomes to the display. The processor is any device that can receive and process inputs in accordance with instructions stored in memory and generate outputs. include: a microprocessor, microcontroller, programmable logic device or other computational device, a general-purpose computer (eg a PC), or a server. It may In the embodiments described in the specification, a player makes a wager and starts playing the base game. The symbol selector uses the random number generator to select symbols from the symbol data. The symbol data stores both configurable symbols (symbols which can be configured during the game to change the value of the prize) and non-configurable symbols. The selected symbols are sent to the display controller, which then displays the symbols on the player interface display. The pictures below illustrate the configurable symbols in one embodiment described in the specification. The configurable symbols each have a common component: a pearl symbol (marked 902). The configurable symbols also have a variable component: the numbers that overlay the configurable symbol and indicate the value of the prize associated with it (marked 904). The prize value is assigned to the configurable symbol by an electronic value assigner which draws on prize value data. Gordon EdelmanJ During the base game, an outcome evaluator determines whether a "trigger event" has occurred, such as the display of a particular number of configurable symbols. If a trigger event occurs, then a feature game will begin. The combined prize value of the configurable symbols at the end of the base game will have been won by the player. Those configurable symbols will be held in their respective display positions during the feature game. The player can then win additional prizes from configurable symbols in the feature game. In the feature game, the outcome generator causes the feature game to be displayed by retrieving symbol data and passing the data to the display controller. As in the base game, the symbol selector selects symbols to be displayed in the display positions that are not otherwise displaying a configurable symbol. The outcome evaluator monitors the play of the feature game. If at least one configurable symbol is displayed, then that symbol will be held on the reel and the configurable symbol counter (marked 810) will be increased. If a predefined number of configurable symbols are displayed on the reels, a jackpot will be paid. It is apparent that two important elements of the claim, as described in the specification, are the configurable symbols and the feature games, which are part of the game controller. There was expert evidence before the primary judge that the configurable symbols, particularly the prize values overlaid on them, are a significant enhancement of a player's experience208. Both the configurable symbols and the feature games require implementation in the EGM. In the operation of the 208 See Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 604 [133]. Gordon EdelmanJ EGM, they interact with, and are entirely dependent upon, other integers of the claim, especially the physical integers. They are inextricably connected with the player interface. For instance, the configurable symbols and feature games operate by reference to modules stored in memory and implemented by the processor, namely: the outcome generator comprising the symbol selector, value assigner and rule modifier; the outcome evaluator; and the display controller. The decisions of the Delegate, the primary judge and the Full Court The Delegate of the Commissioner characterised Claim 1 as a feature game in which configurable symbols from a main game were retained but non-configurable symbols were removed and replaced with other configurable or non-configurable symbols, with a prize at the end of the feature game based on the values displayed on the configurable symbols. Based on this characterisation, the Delegate found that Claim 1 was merely a "game rule" and was not a manner of manufacture. The Delegate revoked the 967 patent as well as the three other patents in issue. The primary judge (Burley J) rejected the characterisation of Claim 1 by the Delegate. The primary judge explained that the Delegate's characterisation was based upon the error of first identifying the "inventive concept" and using that to characterise the claim as a mere scheme209. As the primary judge correctly observed, "[a]ny claim can be stripped back to remove all specific limitations, so that at its core an abstract idea emerges"210. The primary judge characterised Claim 1 as "a machine of a particular construction which implements a gaming function ... [T]he physical and virtual features of the display, reels, credit input mechanism, gameplay mechanism and game controller combine to produce the invention."211 In determining whether Claim 1, so characterised, was a manner of manufacture, the primary judge applied a two-stage test involving an "initial question" of whether the claimed invention was for "a mere scheme or business method" that is not the proper subject matter of a patent. If so, there was said to be a "subsequent inquiry" as to "whether the computer-implemented method is one where invention lay in the computerisation of the method" or whether it involved 209 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 423 [99]. 210 (2020) 382 ALR 400 at 423 [101]. 211 (2020) 382 ALR 400 at 422 [98]. Gordon EdelmanJ "merely plugging an unpatentable scheme into a computer"212. The primary judge concluded, however, that Claim 1 was not a mere scheme and that it was, on its proper characterisation, a manner of manufacture. The Full Court allowed an appeal. Two members of the Full Court (Middleton and Perram JJ) began – with respect, correctly – by identifying the critical issue as the proper characterisation of the invention based upon the construction of Claim 1213. Their Honours considered that the primary judge had characterised Claim 1 as being "solely the EGM itself"214. Middleton and Perram JJ preferred a characterisation which accounted for both the EGM and the feature game, namely: a "feature game implemented on [a] computer which is an EGM"215. Middleton and Perram JJ rejected the two-stage approach of the primary judge. As their Honours observed, that approach has the potential to convert the proper enquiry – is the invention patentable subject matter? – into a different question which asks whether the invention is a scheme216. In place of the approach of the primary judge, Middleton and Perram JJ proposed two different questions: (i) is the invention claimed a computer-implemented invention?; and (ii) if so, can the invention claimed broadly be described as an advance in computer technology? If the answer to (i) is "no", the general principles of patentability must be considered. If the invention is computer-implemented but the answer to (ii) is "no", then the invention is not patentable subject matter217. Middleton and Perram JJ applied this approach to their characterisation of Claim 1 to conclude that Claim 1 was not the proper subject matter of a patent. The claim was for a feature game implemented by a computer and, although their Honours reasoned that the configurable symbols "may constitute advances in 212 (2020) 382 ALR 400 at 420 [91], quoting from Commissioner of Patents v Rokt Pte Ltd (2020) 277 FCR 267 at 290 [84]. 213 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 576 [9]. 214 (2021) 286 FCR 572 at 587 [55]. 215 (2021) 286 FCR 572 at 587 [56]. 216 (2021) 286 FCR 572 at 580-581 [25]. 217 (2021) 286 FCR 572 at 581 [26]-[27]. Gordon EdelmanJ gaming technology", their Honours declined to equate advances in gaming technology with advances in computer technology218. Nicholas J agreed with Middleton and Perram JJ that the appeal should be allowed and that the orders of the primary judge should be set aside. His Honour characterised Claim 1 in a similar manner to Middleton and Perram JJ, referring to both the "physical components that are common to [EGMs]" and the operation of the "gaming machine ... which seeks to enhance player enjoyment by offering a feature game that may be triggered during play of the base game"219. However, his Honour did not adopt Middleton and Perram JJ's proposed new test, holding instead that a manner of manufacture required that an abstract idea "has been transformed in some definite and tangible way so as to result in a product or method providing the required artificial effect"220. In an earlier decision, Nicholas J had held that a "new and useful" feature game including a claim involving a random prize awarding feature implemented by an EGM was a manner of manufacture221. In the present case, his Honour held that Claim 1 was not a manner of manufacture because the specification did not "identify any technological problem to which the patent purport[ed] to provide a solution"222. Nevertheless, Nicholas J, dissenting on this point, would have remitted the matter to allow the primary judge to consider whether the invention involved technical and functional improvements to EGMs223. The proper characterisation of Claim 1 It was common ground on this appeal that integers 1.1 to 1.6 were, as a matter of common general knowledge, components of generic EGMs. If the proposed invention the subject of this appeal were characterised by exclusively focusing upon those integers, as a "gaming machine" or EGM, it would not be patentable. The claim would fail at the threshold stage. It would not display even 218 (2021) 286 FCR 572 at 589 [65]. 219 (2021) 286 FCR 572 at 605 [136]. 220 (2021) 286 FCR 572 at 601 [119]. 221 Aristocrat Technologies Australia Pty Ltd v Konami Australia Pty Ltd (2015) 114 IPR 28 at 72 [223]-[224]. 222 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 at 606 [141]. 223 (2021) 286 FCR 572 at 606 [144]. Gordon EdelmanJ the minimal degree of novelty and inventiveness required for it to be an alleged invention. Such a characterisation would be absurdly and artificially generalised. It would entirely ignore the integers of Claim 1 that provide its alleged novelty and inventiveness; in particular, core features of the game controller in integers 1.7 to 1.12 including the configurable symbols and feature games were, emphatically, not part of common general knowledge. At no stage in this litigation has such a generalised characterisation been proposed by any party. Contrary to the views of Middleton and Perram JJ in the Full Court, the primary judge's characterisation was not so generalised. His Honour had focused upon the gaming function that was implemented as well as the gaming machine. Hence, neither before the primary judge in the Federal Court, the Full Court, nor this Court did the Commissioner suggest that Claim 1 must fail at the threshold stage for reasons of complete lack of novelty or inventiveness. At the other extreme, of characterisation which is artificially specific, Claim 1 might be characterised by reference only to those elements that are deduced from the specification to involve alleged novelty and inventiveness. Although the Delegate characterised Claim 1 by reference only to the configurable and non-configurable symbols, neither the primary judge nor any member of the Full Court characterised Claim 1 in such an artificially specific manner. Such a characterisation should not be accepted. At that level of specificity, the characterisation entirely ignores other elements of the game controller and the whole of the player interface, which is interdependent with the game controller. In this Court, the Commissioner's characterisation was also extremely specific and narrow. The Commissioner described Claim 1 as no more than "an instruction to carry out an electronic game, using conventional computer functions". That its well-known and well-understood technology characterisation might encompass most integers of the claim concerning the game controller, but it ignores entirely the interaction between the instructions and those integers concerned with the player interface. for By contrast, the various characterisations proposed by Aristocrat in this Court have the common feature of reiterating the elements of Claim 1, but without describing the essence of the claim. Characterisation at the proper level of generality involves an exercise of judgment with regard to all of the integers of the claim. There will often be a number of reasonable alternatives. Each of the characterisations of the primary judge, and of Middleton and Perram JJ and Nicholas J in the Full Court, was reasonable. All included the elements involved in both the game controller and the player interface, and Middleton and Perram JJ rightly included the feature game in the characterisation. However, given the emphasis upon both the feature game and the configurable symbols in the Gordon EdelmanJ specification, the best characterisation of Claim 1 is: an EGM incorporating an interdependent player interface and a game controller which includes feature games and configurable symbols. Is Claim 1, as properly characterised, patentable subject matter? The only objection to Claim 1 was that it was a mere scheme or intellectual idea and therefore not a manner of manufacture within s 18(1A)(a). At no stage in this litigation before the primary judge, the Full Court, or this Court did the Commissioner argue that Claim 1 failed to meet the threshold requirement for sufficient novelty or inventiveness for an alleged invention. Although the Delegate received submissions under s 28(1) of the Patents Act, which allows a person to object to the validity of a patent under s 18(1A) for the reason that the claimed invention lacks inventive step or novelty, the Delegate declined to consider those submissions. No issue was subsequently raised in the courts below concerning any threshold requirement for an alleged invention or any requirement in s 18(1A)(b), s 18(1A)(c), or s 18(1A)(d)224. The proper approach to assessing whether a manner of manufacture exists is that which was enunciated by this Court, as described above, in National Research Development Corporation225. There is only one question: is there a manner of manufacture within s 6 of the Statute of Monopolies? The focus of that question commonly leads to enquiries such as: whether the process or product is part of the useful arts rather than the fine or intellectual arts; whether there is an artificially created state of affairs with a useful result including a result of economic significance; and whether the subject matter of a claim is no more than a mere intellectual idea, scheme, or game. But, as the authorities have long shown, the limits involved in each of these enquiries are not narrow. To take an approach to a manner of manufacture that is too confined is "unsound to the point of folly"226. The question of whether a claim, as properly characterised, is the proper subject matter of a patent should not be deconstructed to require, separately from the general principles of patentability, consideration of whether the subject matter is "computer-implemented". It is unnecessary to descend into the serious policy concerns that were raised against such an approach in the written and oral 224 See Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2020) 382 ALR 400 at 419 [84]. 225 (1959) 102 CLR 252. 226 National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 at 271. Gordon EdelmanJ submissions by the Institute of Patent and Trade Mark Attorneys of Australia appearing as amicus curiae. Nor is it necessary to determine whether such consideration would amount, in substance, to a judicial addition to the exceptions in s 18(3). It suffices to say that, although modern computers could not have been in the mind of anyone in the Jacobean era of the Statute of Monopolies, the implementation of a scheme or idea on a computer to create an artificial digital state of affairs should not be treated any differently from the implementation of a scheme or idea by any other machine to create an artificial physical state of affairs. In both cases, however, the implementation must do more than merely manipulate an abstract idea. In the language of National Research Development Corporation, it must create an artificial state of affairs and a useful result. Claim 1, characterised in light of the specification as a whole, is a manner of manufacture within s 6 of the Statute of Monopolies. As explained above, the proper characterisation of Claim 1, as an EGM incorporating an interdependent player interface and a game controller which includes feature games and configurable symbols, is not merely the idea of a game, incorporated into a game controller, without any novelty or inventiveness. The game controller, which includes feature games and configurable symbols, has been assumed at all stages of this litigation to meet the threshold requirements for an alleged invention. No suggestion to the contrary was made in this Court. Nor, on its proper characterisation, is Claim 1 a scheme or idea for a game that is separate from the external or artificial application of that game. In the characterisation of Claim 1, the operation of the game controller cannot be severed from the interdependent player interface in the EGM. The claimed operation of the game controller, displayed through the player interface, is an altered EGM involving an artificial state of affairs and a useful result amounting to a manner of manufacture. Conclusion Claim 1 is a manner of manufacture within the meaning of s 6 of the Statute of Monopolies. Orders should be made as follows: (1) Appeal allowed. Set aside the orders of the Full Court of the Federal Court made on 6 December 2021 other than Order 1, and, in lieu thereof, order that the appeal to the Full Court be dismissed with costs. The respondent pay the appellant's costs. In the circumstances, it is unnecessary to consider Aristocrat's application to amend its Notice of Appeal in order to seek alternative relief of remitting the Gordon EdelmanJ matter to the Federal Court for the purpose of considering expert evidence led by Aristocrat concerning the novelty and inventiveness of the claim.

HIGH COURT OF AUSTRALIA RAFTLAND PTY LTD AS TRUSTEE OF THE RAFTLAND TRUST APPELLANT AND COMMISSIONER OF TAXATION RESPONDENT Raftland Pty Ltd as trustee of the Raftland Trust v Commissioner of Taxation [2008] HCA 21 22 May 2008 ORDER Appeal dismissed. Special leave to cross-appeal granted. Cross-appeal treated as instituted, heard instanter and allowed. Set aside the orders made in paragraphs 2 and 3 of the order of the Full Court of the Federal Court of Australia made on 31 January 2007 and, in their place, order that the appeal to that Court in respect of the year ended 30 June 1996 be dismissed. Appellant to pay the respondent's costs of the appeal and cross-appeal. On appeal from the Federal Court of Australia Representation D G Russell QC with H L Alexander for the appellant (instructed by Tobin King A Robertson SC with J H Momsen and P A Looney for the respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Raftland Pty Ltd as trustee of the Raftland Trust v Commissioner of Taxation Income tax – Trust income – Present entitlement – Trust deed provided that beneficiaries entitled under default provision had immediate and indefeasible vested interest in income – Income never paid to or demanded by appellant as trustee of Unit Trust – Whether appellant as trustee of Unit Trust presently entitled to trust income – Whether entitlement of appellant under default provision reflected legal entitlements intended by parties creating trusts – Application of parol evidence rule – Whether entitlement of appellant under default provision a "sham". Income tax – Trust income – Present entitlement – Reimbursement agreement – Income Tax Assessment Act 1936 (Cth), s 100A provided that beneficiary otherwise presently entitled to income of trust estate deemed not to be presently entitled where entitlement arose out of, or arose by reason of act, transaction or circumstance that occurred in connection with, "reimbursement agreement" – Whether transactions between building companies and Development Trust "reimbursement agreement" – Whether other income of Development Trust distributed to Raftland Trust but not derived from agreement between building companies and Development Trust arose out of, or arose by reason of act, transaction or circumstance that occurred in connection with, "reimbursement agreement" – Whether, by operation of s 100A, appellant as trustee of Raftland Trust and not tertiary beneficiaries of Raftland Trust presently entitled to trust income. Income tax – Avoidance or minimisation of liability to tax – Proper analysis of documents and actions of appellant and other persons – Suggestion that certain actions constitute a "sham" – History and meaning of "sham" for the purposes of Australian law – Utility for legal purposes of conclusion that transactions constitute a "sham" – Whether in present case propounded documents expressed legal consequences determined purposes and accordingly – Whether documents were a "sham" and may be disregarded with legal obligations of parties determined otherwise – Whether primary judge erred in references to and conclusions of "sham" – Whether Full Court erred in giving effect to different conclusion as to existence of "sham". intentions of parties with Trusts – Trust income – Whether losses borne by capital in previous tax years must be recouped before trust income is available for distribution – Relevance of existence of successive interests, where interest in income followed by interest in capital – Relevance of Upton v Brown (1884) 26 Ch D 588. Words and phrases – "present entitlement", "reimbursement agreement", "sham". Income Tax Assessment Act 1936 (Cth), ss 99A, 100A, 226H, 260, Pt IVA. GLEESON CJ, GUMMOW AND CRENNAN JJ. This appeal concerns assessments to income tax of the appellant, Raftland Pty Ltd ("Raftland") in its capacity as trustee of the Raftland Trust, for the years ended 30 June 1995, 30 June 1996, and 30 June 1997. Although the respondent at one time relied upon Pt IVA of the Income Tax Assessment Act 1936 (Cth) ("the Act"), by the time of the hearing at first instance such reliance had been abandoned. The appeal turns upon the application of Div 6 of Pt III of the Act, and, in particular, ss 99A and 100A. The issue is whether, having regard to those provisions, the appellant has established that the assessments were excessive. The appellant failed both at first instance in the Federal Court before Kiefel J1 and (subject to one minor qualification) in the Full Court (Dowsett, Conti and Edmonds JJ)2. The qualification concerns an amount of $57,973 relating to the year ended 30 June 1996. It is the subject of an application for special leave to cross-appeal. It is convenient to leave that application to one side until the conclusion of these reasons. Save for that, the questions to be determined are the same for each of the three years of income. It is unnecessary to deal separately with the second and third years, other than briefly to note the material facts. There was a difference between the reasons for decision of Kiefel J and those of the Full Court, although ultimately they agreed that the net income derived by the appellant fell to be assessed pursuant to s 99A of the Act, which provides that in certain circumstances trust income is to be taxed in the hands of the trustee at a special rate. Section 100A affects the question of present entitlement to trust income. If s 100A(1) applies to a beneficiary, the beneficiary is deemed not to be presently entitled to income, thereby rendering the trustee liable under s 99A. Section 100A(3A) provides that, in certain circumstances, s 100A(1) does not apply. In order to give effect to ss 99A and 100A, it is necessary to identify the legal rights and liabilities arising from the facts, the decisive question being one concerning present entitlement to income of a trust estate, bearing in mind s 95A, which extends the concept of entitlement to cover the case of a beneficiary who has a vested and indefeasible interest (s 95A(2)). There was also a matter of penalties under Pt VII of the Act. Kiefel J and the Full Court, having concluded that the appellant's challenge to the assessments had not been made out (subject to the minor qualification earlier mentioned), and that there was, therefore, a "tax shortfall" as defined by s 222A, accepted that, in 1 Raftland Pty Ltd v Commissioner of Taxation (2006) 227 ALR 598. 2 Raftland Pty Ltd v Federal Commissioner of Taxation (2007) 65 ATR 336. Crennan the circumstances of the case, the shortfall was caused by recklessness within the meaning of s 226H. On the view of the case taken by Kiefel J, the reason for that conclusion was clear. On the other hand, the appellant strongly resists such a conclusion on the approach taken by the Full Court. The appellant also complains that the Full Court gave inadequate reasons for its decision on the point. This is a matter to which it will be necessary to return. The statutory provisions Division 6 of Pt III of the Act deals with trust income. Section 96 provides that, except as provided in the Act, a trustee shall not be liable as trustee to pay income tax upon the income of the trust estate. Where there is a beneficiary of a trust estate who is not under any legal disability and is presently entitled, s 97 provides that the beneficiary's share of the net income of the trust estate is part of the assessable income of the beneficiary. Later provisions deal with various circumstances in which the trustee will be liable to pay income tax on the income of the trust estate, or some part of it. Section 98 is one such provision. Section 99A relevantly provides: "(4A) Where there is a part of the net income of a resident trust estate: that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section 98; and that does not represent income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia; the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate at the rate declared by the Parliament for the purposes of this section." The rate referred to in s 99A(4A) is what was earlier described as the special rate. Section 100A includes the following: "(1) Where: apart from this section, a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate; and Crennan the present entitlement of the beneficiary to that share or to a part of that share of the income of the trust estate (which share or part, as the case may be, is in this subsection referred to as the 'relevant trust income') arose out of a reimbursement agreement or arose by reason of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement; the beneficiary shall, for the purposes of this Act, be deemed not to be, and never to have been, presently entitled to the relevant trust income. (2) Where: apart from this section, a beneficiary of a trust estate who is not under any legal disability would, by reason that income of the trust estate was paid to, or applied for the benefit of, the beneficiary, be deemed to be presently entitled to income of the trust estate; and that income or a part of that income (which income or part, as the case may be, is in this subsection referred to as the 'relevant trust income') was paid to, or applied for the benefit of, the beneficiary as a result of a reimbursement agreement or as a result of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement; the relevant trust income shall, for the purposes of this Act, be deemed not to have been paid to, or applied for the benefit of, the beneficiary. (3A) Where: apart from this section, a beneficiary (in this subsection referred to as the 'trustee beneficiary') of a trust estate is presently entitled to a share of the income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the 'interposed trust estate'); apart from this subsection, the trustee beneficiary would, by virtue of subsection (1), be deemed not to be, and never to have been, presently entitled to that share or a part of that share of the income of the first-mentioned trust estate Crennan (which share or part is in this subsection referred to as the 'relevant trust income'); and apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the 'distributable trust income') that is attributable to the relevant trust income; subsection (1) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable. (3B) Where: apart from this section, a beneficiary (in this subsection referred to as the 'trustee beneficiary') of a trust estate would, by reason that income of the trust estate was paid to, or applied for the benefit of, the trustee beneficiary, be deemed to be presently entitled to income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the 'interposed trust estate'); apart from this subsection, that income or a part of that income (which income or part is in this subsection referred to as the 'relevant trust income') would, by virtue of subsection (2), be deemed not to have been paid to, or applied for the benefit of, the trustee beneficiary; and apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the 'distributable trust income') that is attributable to the relevant trust income; subsection (2) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable. Subject to subsection (8), a reference in this section, in relation to a beneficiary of a trust estate, to a reimbursement agreement Crennan shall be read as a reference to an agreement, whether entered into before or after the commencement of this section, that provides for the payment of money or the transfer of property to, or the provision of services or other benefits for, a person or persons other than the beneficiary or the beneficiary and another person or other persons. (8) A reference in subsection (7) to an agreement shall be read as not including a reference to an agreement that was not entered into for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into. For the purposes of subsection (8), an agreement shall be taken to have been entered into for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into the agreement for that purpose, or for purposes that included that purpose, as the case may be. In this section: 'agreement' means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings, but does not include an agreement, arrangement or understanding entered into in the course of ordinary family or commercial dealing; 'property' includes a chose in action and also includes an estate, interest, right or power, whether at law or in equity, in or over property." Kiefel J and the Full Court, by different paths, came to the conclusion that s 100A applied, in conjunction with s 99A(4A), to bring about the result that the appellant was liable to tax at the special rate on the income of the Raftland Trust. The appellant, in order to succeed, must make good its challenge to both lines of reasoning. The primary difference concerned the legal effect of the transactions to be described below and, in particular, the matter of present entitlement to certain trust income. In that respect, Kiefel J concluded that the entitlement was not as the appellant claimed it to be. The Full Court, on the other hand, accepted the appellant's case as to the nature of the relevant legal rights, but held that, notwithstanding those rights, s 100A defeated the appellant's attack on the assessments. Crennan The transactions giving rise to the assessments were acknowledged to have been aimed at securing a fiscal benefit by enabling accumulated tax losses, incurred in earlier years by a trust estate called the E & M Unit Trust, to be set off against the income of previously unrelated, profitable, businesses controlled by what were described in argument as the Heran interests. The appeal does not directly concern the offsetting of past losses against present income, although both parties attach evidentiary importance, in one way or another, to that fiscal objective. It is Div 6 of Pt III of the Act that is of direct relevance to the assessments, and the challenge to them. This is not a Pt IVA case, and the tax avoidance purpose of the arrangements to be described below, while of those significance arrangements, should not distract attention from the ultimate issues that must be decided in order to measure the assessments against the provisions of the Act. The assessments are founded upon an acceptance, at least to a substantial extent, of the legal efficacy of the arrangements. The differences between the appellant and the respondent as to the legal relations created by the transactions, upon which the Act operates, although important, are relatively confined. It is necessary to bear this in mind because, although the respondent relied, with good effect before Kiefel J, upon an argument that invoked the concept of "sham", that argument was not aimed at the entire complex of arrangements. A wider and less carefully directed argument might have threatened the assessments themselves. legal rights created by identification of the the The background to the 1995 transactions The fiscal objective of the 1995 transactions which are said to have given rise to the tax liabilities in dispute was to enable the Heran interests, identified in more detail below, to obtain the benefit of tax losses previously incurred by the E & M Unit Trust. It is convenient to begin by identifying the E & M Unit Trust, the Heran interests, and two trusts (including the Raftland Trust) that were constituted on 30 June 1995. The E & M Unit Trust was settled on 8 July 1986. The original trustee was E & M Investments Pty Ltd ("E & M Investments"), whose directors were, until August 1991, Mrs Thomasz (formerly Mrs Carey) and Mr Thomasz. The beneficial interest in the trust fund, comprising initial sums together with any additional sums accepted by the trustee, was held by unit holders in proportion to their units. Clause 22 of the trust deed obliged the trustee to pay, apply or set aside the net income from investment of the trust fund for the benefit of the unit holders in proportion to their units. Ten units were divided equally between Mrs Thomasz, as trustee of the ECK Family Trust, and Thomasz Enterprises Pty Ltd, as trustee of the Thomasz Family Trust. Crennan The business of the trust was the acquisition and sale of real property. The business failed. The 1991 tax return for the E & M Unit Trust (prepared in 1994 and lodged in 1997) disclosed carried forward tax losses of $4,014,738. Mr and Mrs Thomasz became bankrupt, but they had been discharged by the time of the 1995 transactions. The bulk of the losses incurred by the E & M Unit Trust resulted from the sale (by a mortgagee) of trading stock (land), the proceeds of sale being insufficient to discharge secured liabilities. Pursuant to documents executed in July 1991, E & M Investments ceased to be the trustee of the E & M Unit Trust and Mr Carey, the son of Mrs Thomasz, became trustee. At that time, it seems that Mr Carey also became trustee of the Thomasz Family Trust and the ECK Family Trust. There is no suggestion that Mr Carey had any role independent of that of a representative of the interests of Mr and Mrs Thomasz. The draft balance sheets for the 1992, 1993 and 1994 tax years were substantially the same as the financial statements prepared for 1991, except that after the sale of the security property in February 1992, a loan to Mr Thomasz appeared in place of (and in the same amount as) the loan from the mortgagee. Between July 1991 and June 1995, Mr Thomasz engaged in some modest trading in shares and options on behalf of the trust. Until the 1995 transactions, the Heran interests had no contact or association with the E & M Unit Trust, or Mr and Mrs Thomasz. Heran Projects Pty Ltd ("Heran Projects"), Northbank Homes Pty Ltd ("Northbank") and Southbank Homes Pty Ltd ("Southbank") were building development companies controlled by one or more of the Heran brothers – Mr Brian Heran, Mr Martin Heran and Mr Stephen Heran. Northbank was trustee of the Northbank Trust, constituted by deed of settlement dated 11 July 1995, the primary beneficiaries of which were the three Heran brothers. Southbank was trustee of the Southbank Trust, constituted on the same date with the same primary beneficiaries. Mr Brian Heran and, until May 1996, Mr Stephen Heran also controlled Maggside Pty Ltd ("Maggside"), which, as trustee of the Brian Heran Discretionary Trust, carried on a business of renting properties owned by the trust. The Brian Heran Discretionary Trust was constituted in April 1990; the primary beneficiaries included any trust or partnership in which any of the Heran brothers had a vested or contingent interest and any company in which any of them held shares or of which any of them was an office holder. Heran Developments Pty Ltd ("Heran Developments") was a company incorporated in February 1993 and controlled, at the relevant time, by one or more of the Heran brothers. On or before 30 June 1995, two companies, Raftland and Navygate Pty Ltd ("Navygate"), were acquired. The three Heran brothers became the directors of those companies, and the shares were held by Crennan The Raftland Trust was settled on 30 June 1995, with Raftland as the trustee. The trust was established on the advice of Mr Brian Heran's solicitor, Mr Tobin; the settlor, Ms Sommerville, was Mr Tobin's employee. She had no relevant intention independent of that of her employer's client. The trust was constituted by deed poll, executed by Ms Sommerville. The trust fund, which included a nominal settlement sum and any other property or income to be received by the trustee on the trusts of the deed, was to be held on behalf of beneficiaries, who were divided into classes described as primary, secondary and tertiary. The three Heran brothers were the primary beneficiaries of the Raftland Trust; the secondary beneficiaries included relatives of the Heran brothers, as well as any trust or partnership in which any of the Heran brothers had a vested or contingent interest, any company in which any of them held shares or of which any of them was an office holder and any person or company that had granted a power of attorney to any primary beneficiary. According to the terms of the trust instrument, the tertiary beneficiaries were the trustee for the time being of the E & M Unit Trust, together with any person the principal (Mr Brian Heran) determined to be a beneficiary before the perpetuity date. Clause 3(b) of the Raftland Trust deed gave the trustee a discretion to pay, apply or set aside all or any part of the net income of the trust (after allowing for all expenses of the trust fund) for the benefit of one or more of the primary, secondary and tertiary beneficiaries, or to accumulate the income. Clause 3(b) further provided that, if that discretion was not exercised by 30 June in any year in respect of all or any part of the income, the trustee was obliged to hold that income as set aside or accumulated for such of the tertiary beneficiaries as were then living or in existence, absolutely and as tenants in common in equal shares and, absent tertiary beneficiaries, for one of the other classes of beneficiaries. Clause 3(c)(iii) provided that a determination in exercise of that discretion could be made in writing or by resolution of the trustee, while cl 3(f) provided that any beneficiary becoming entitled to share in the income of the trust under cl 3(b) had an immediate and indefeasible vested interest in that income. The trust was to terminate and vest absolutely on the perpetuity date and the capital was to be held for such one or more of the primary beneficiaries then living in such proportions as the trustee should in its absolute discretion think fit. On 30 June 1995, Mr Carey executed a deed acknowledging, as trustee of the E & M Unit Trust, his acceptance of appointment as a beneficiary of the Raftland Trust and undertaking not to disclaim that interest or distributions from the Raftland Trust. In the same document, Mr Carey amended cl 34(a) of the E & M Unit Trust deed (relating to the period of notice required to be given before a trustee could retire), removed himself as trustee, and appointed Raftland as trustee of the E & M Unit Trust with effect from 2 July 1995. Crennan The Heran Developments Trust was also constituted on 30 June 1995, with Heran Developments as trustee. The beneficiaries were of three classes, cast in the same terms as those of the Raftland Trust; as with the Raftland Trust, the settlor was Ms Sommerville. Clause 3 was the same as cl 3 of the Raftland Trust deed. The 1995 transactions In May 1995, management reports prepared for Heran Projects and Northbank forecast taxable profits of approximately $2.7 million and $284,000 respectively. the possible Mr Brian Heran contacted Mr Tobin about "acquisition" of a trust with accumulated tax losses. Pursuing Mr Heran's instructions, Mr Tobin obtained information about the E & M Unit Trust from Mr Adcock of Harts Accountants ("Harts"). Mr Adcock informed Mr Tobin that the E & M Unit Trust had tax losses of approximately $4 million, and nominated a "price" of $250,000 to be paid with respect to the E & M Unit Trust. On 22 June 1995, Mr Tobin wrote to Harts, suggesting that the E & M Unit Trust be paid $250,000. Mr Tobin suggested that the E & M Unit Trust dispose of the distribution that would be made to it in a way which did not fall foul of the income injection test (referred to in a press release of the Commonwealth Treasurer dated 9 May 1995, entitled "Trafficking in Trust Losses"), giving as examples a distribution to its unit holders or part payment of debts. Mr Tobin also acknowledged that further steps might be necessary once amendments to the Act had been passed. He stated his expectation that Harts' clients would cooperate with his own clients' reasonable requests, but averred that he was "not seeking to impose any contractual obligation on them to do so." Mr Heran never met, spoke or wrote to Mr Carey, Mr or Mrs Thomasz or their agents. The availability of the accumulated tax losses having been to that extent secured, it was then necessary to take steps to direct into a convenient channel the income against which the losses would be offset. On 22 June 1995, Heran Projects entered into an agreement with Maggside, by which Maggside, as trustee of the Brian Heran Discretionary Trust, was to be paid the sum of $2,915,000 for granting Heran Projects the right to sell a number of investment properties of the Brian Heran Discretionary Trust and retain the sale proceeds. The dealings between Heran Projects and Maggside involved the payment of $2,915,000 by Heran Projects to Maggside, and a payment by Maggside to Heran Projects in the same sum. The payment to Heran Projects was funded partly by way of repayment of an earlier loan, and partly by a further loan to Heran Projects. On 30 June 1995, Maggside resolved to distribute all of the income of the Brian Heran Discretionary Trust for that year ($2,849,467 after carrying forward Crennan trust losses of $43,295) to the Raftland Trust. There is no challenge to the power of Maggside to apply the income of the Brian Heran Discretionary Trust in that way. It is accepted that Raftland as trustee of the Raftland Trust was an eligible beneficiary under the Brian Heran Discretionary Trust. The distribution and receipt were recorded in the internal accounts of the Brian Heran Discretionary Trust and the Raftland Trust respectively. This was the derivation of income by the appellant on which the 1995 assessment was based. Also on 30 June 1995, the directors of Raftland passed two resolutions: that the Raftland Trust distribute $250,000 to Mr Carey in his capacity as trustee of the E & M Unit Trust; and that the Raftland Trust distribute the balance of its income for 1995 to Mr Carey in his capacity as trustee of the E & M Unit Trust. The moneys for a bank cheque for $250,000 payable to Mr Carey came from Heran Projects, Northbank and Southbank. Mr Carey directed in writing that payment be made to Harts, and the bank cheque was handed over at a meeting on 3 July 1995. Harts deducted $30,000 (evidently for fees) and the balance of $220,000 was paid to Mr Carey, who in turn paid it to Mr Thomasz. Mr Thomasz decided to have the $220,000 paid to the Thomasz Family Trust. The Thomasz Family Trust income tax return for the 1996 year showed the sum of $220,000 as "business income". The internal balance sheet of Raftland as trustee of the Raftland Trust shows in handwriting the figure of $2,849,467 against "other debtors" under "current assets", a non-current liability being "loan other entities" of $250,000 and a current liability of $2,642,762 ("other creditors"). In a notation against a journal entry, the sum of $250,000 is shown as "drawings to G Carey". The tax return of the Raftland Trust for the 1995 tax year asserted the distribution of net income of $2,849,467 to the E & M Unit Trust. Raftland did not pay, and at the time the appeal was heard had not paid, the balance of $2,599,467 (after deduction of the $250,000 paid to Mr Carey) to the E & M Unit Trust. The E & M Unit Trust has never called for or received those moneys, and no distribution of those moneys to unit holders is proposed. Instead, as will appear, the amount was applied for the benefit of the Heran interests, in a manner calculated to diminish any risk that Mr and Mrs Thomasz might evince some further interest in it. The internal accounts of the E & M Unit Trust for 1995 show current assets at $2,892,762 with a loan due from "other entities" of $250,000, and the balance of the assets owed by "other debtors". The tax return for the E & M Unit Trust for 1995 shows a distribution to it from the Raftland Trust of $2,849,467, against which losses brought forward from previous years were set off. The net income was nil. Losses of $1,165,271 were carried forward. Crennan Mr Brian Heran's legal advisers were aware that income would be "sheltered" by the losses of the E & M Unit Trust only to the extent that the trustee of the E & M Unit Trust was presently entitled to the income of the Raftland Trust. It was not disputed that the attainment of a fiscal objective motivated the participants in the 1995 transactions. There was, however, a dispute as to whether the legal rights created by the transaction conformed with that objective. That was the point on which Kiefel J and the Full Court differed. On 3 July 1995, there was a meeting of directors of Raftland as trustee of the Raftland Trust. The chairman reported that, apart from $250,000 to be distributed to the trustee of the E & M Unit Trust for immediate payment to creditors and/or beneficiaries, Raftland did not expect to require the funds to which it was entitled under the resolution of Maggside as trustee of the Brian Heran Discretionary Trust made on 30 June 1995. The basis of that expectation, or lack of expectation, will require further examination. What is clear is that no requirement to pay the money to the E & M Unit Trust was envisaged. The Thomasz interests had taken the $250,000 and departed. They were not expected to return. The directors of Raftland resolved that the moneys be applied in subscribing for shares in Navygate, to be paid as soon as alterations to the Memorandum and Articles of Association and to the authorised capital of Navygate had been effected. Also on 3 July 1995, the directors of Navygate resolved to accept Raftland's offer and to do what was necessary for the issue of the additional shares. On 6 July 1995, in the context of Raftland subscribing for shares in Navygate, senior counsel provided a written advice to Mr Tobin, which said that, as the E & M Unit Trust would not be calling upon the balance of funds to which it was entitled from the Raftland Trust, the funds were to be reinvested in the group for the benefit of the group. The only sense in which the E & M Unit Trust was part of the group was that Raftland had become the trustee. The unit holders remained the same. The brief to counsel was not in evidence. The basis of his knowledge that the E & M Unit Trust would not be calling on the funds to which it was entitled is a matter of inference. The group for whose benefit the funds were to be reinvested did not include the beneficiaries of the E & M Unit Trust. On 7 July 1995, at an extraordinary general meeting, the members of Navygate resolved to increase Navygate's share capital by three million shares of $1 each and to alter the Memorandum and Articles of Association accordingly. The directors of Raftland resolved to apply in writing for 3,999,998 shares in Navygate, and the chairman reported that Raftland as trustee of the Raftland Trust had received funds by way of income, which were not required for use in the business of the trustee, and that other companies related to Raftland had offered to provide additional loan funds to enable Raftland to subscribe for Crennan 3,999,998 shares in Navygate. The minutes recorded cheques tabled for $3,999,998, but no cheques were in fact tabled. Also on 7 July 1995, Navygate resolved to issue the shares. The Navygate share register did not record this further issue of shares, but the Navygate shareholding is recorded in the accounts of Raftland. It was not contended by the appellant that the amounts referred to above were misappropriated. Yet it is central to the argument for the appellant that they were amounts to which the E & M Unit Trust and, through that trust, its beneficiaries were entitled. The apparent discrepancy between the entitlements appearing on the face of the documents and the way in which the funds were applied gave rise to a question whether the documents were to be taken at face value. In various situations3, the court may take an agreement or other instrument, such as a settlement on trust, as not fully disclosing the legal rights and entitlements for which it provides on its face. If that be so, the parol evidence rule in Australia identified with Hoyt's Pty Ltd v Spencer4 does not apply. One such case is where other evidence of the intentions of the relevant actors shows that the document was brought into existence "as a mere piece of machinery" for serving some purpose other than that of constituting the whole of the arrangement5. That, in essence, is the respondent's case with respect to the alleged existence of the "present entitlement" of the trustee of the E & M Unit Trust to the income of the Raftland Trust. The term "sham" may be employed here, but as Lockhart J emphasised in Sharrment Pty Ltd v Official Trustee in Bankruptcy6 the term is ambiguous and uncertainty surrounds its meaning and application. With reference to remarks of Diplock LJ in Snook v London and West Riding Investments Ltd7, Mustill LJ later 3 See Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 484 [36]; [2004] HCA 55; Hadjiloucas v Crean [1988] 1 WLR 1006 at 1019; [1987] 3 All ER 1008 at 1019. (1919) 27 CLR 133 at 144; [1919] HCA 64. 5 Hawke v Edwards (1947) 48 SR (NSW) 21 at 23 per Jordan CJ. See also the remarks of Windeyer J in Scott v Commissioner of Taxation (No 2) (1966) 40 ALJR 265 at 279. (1988) 18 FCR 449 at 453. [1967] 2 QB 786 at 802. Crennan identified8 as one of several situations where an agreement may be taken otherwise than at its face value, that where there was a "sham"; the term, when "[c]orrectly employed", denoted an objective of deliberate deception of third parties. The presence of an objective of deliberate deception indicates fraud. This suggests the need for caution in adoption of the description "sham". However, in the present litigation it may be used in a sense which is less pejorative but still apt to deny the critical step in the appellant's case. The absence of a present entitlement within the meaning of s 100A(1)(a) of the Act may appear from an examination of the whole of the relevant circumstances, and these are not confined to the terms of the Raftland Trust instrument. The 1996 and 1997 transactions In July 1995, Heran Developments and Heran Projects entered into an agreement by which Heran Developments as trustee of the Heran Developments Trust took over the assets and liabilities of Heran Projects. Heran Developments distributed all of its trust income for 1996 to the Raftland Trust, as did Maggside, as trustee of the Brian Heran Discretionary Trust, and Northbank, as trustee of the Northbank Trust. Raftland as trustee of the Raftland Trust then resolved to distribute its income for that year to the E & M Unit Trust. Subject to what appears in the next paragraph, it is not suggested that these arrangements, or the transactions carried out in 1997, produce any consequence different from that which obtains for the year ended 30 June 1995. Of the moneys that came into the Raftland Trust for the year ended 30 June 1996, $57,973 came from the Brian Heran Discretionary Trust, which, the Full Court found, was not sourced from the agreement described above between Heran Developments and Heran Projects. Instead, it appeared to derive from rental and interest income. This is the matter the subject of the proposed cross-appeal. The amended assessments By letter dated 15 July 2002, the Commissioner informed Raftland that determinations had been made under Pt IVA of the Act. On 19 July 2002, the Commissioner issued notices of amended assessment for the 1995, 1996 and 1997 tax years. For 1995, the taxable income was stated as $2,849,467; the total tax assessed was $2,973,766.28, which included $689,571.01 in penalty tax and 8 Hadjiloucas v Crean [1988] 1 WLR 1006 at 1019; [1987] 3 All ER 1008 at 1019. Crennan $905,051.25 in interest. For 1996, the taxable income was stated as $779,705; the total tax assessed was $837,610.43, which included $25,820.10 in additional tax for late return, $189,078.76 in penalty tax and $244,544.65 in interest. For 1997, the taxable income was stated as $386,035; the total tax assessed was $393,693.59, which included $10,819.45 in additional tax for late return, $93,999.58 in penalty tax and $100,875.50 in interest. On 13 September 2002, Raftland lodged objections to the amended assessments. The Commissioner informed Raftland that its objections had been disallowed by letters dated 29 October 2002 (in relation to the 1995 and 1996 tax years) and 4 October 2002 (in relation to the 1997 tax year). Shortly before the hearing before the Federal Court, the Commissioner advised that he no longer relied on the provisions of Pt IVA in relation to this appeal. Entitlement to the income of the trust estate The first question to be addressed was that of the legal entitlement to the income of Raftland as trustee of the Raftland Trust. As noted earlier, it is convenient to confine attention to the income for the year ended 30 June 1995. The answer, according to the appellant, was that the trustee of the E & M Unit Trust was so entitled, either by force of the resolutions to distribute such income passed by Raftland as trustee of the Raftland Trust on 30 June 1995 or by force of the default provisions of the Raftland Trust deed. This argument was accepted by the Full Court, but not by Kiefel J. It was argued by the respondent, and accepted by Kiefel J, that, notwithstanding the appearance of legal entitlement created by the Raftland Trust deed and the resolutions for distribution, such appearance did not reflect accurately the intentions of either Mr Brian Heran or Mr and Mrs Thomasz, who were the parties to the transactions constructed by Mr Tobin and Harts, and that those intentions were truly reflected in the application of the funds that in fact occurred. The appellant bore the onus of establishing that the assessments were excessive. Although Mr Brian Heran, and his two brothers, Mr Tobin, Mr and Mrs Thomasz and Mr Carey were called as witnesses, the evidence of the intentions of the Herans and Mr and Mrs Thomasz was somewhat oblique, and the Raftland Trust, much depended upon Ms Sommerville, had no relevant evidence to give on the matter of intention. She was the only person who executed the trust deed. It may be inferred that she had no intention independent of that of the Herans, who were her employer's The settlor of inference. Crennan clients. It also may be inferred that Mr Carey had no intentions independent of those of Mr and Mrs Thomasz. The legal relevance of the intentions of Mr Tobin was a matter of dispute in argument, but an attempt in cross-examination to elicit clear evidence on the subject was unsuccessful. The following exchange occurred: "Q. Now, the Raftland Trust, was that set up by you? Yes. Q. Ms Sommerville who was the settlor, did she work in your office? Yes. And I take it you determined the terms of the Raftland Trust? Yes. And one of the matters in particular was that the trustee of the E & M Unit Trust was named as the tertiary beneficiary? Correct. That was what you had intended? Yes. Perhaps was advised that that was a deliberate step? Yes. I take it that Mr Brian Heran played no part in the determination of what the terms of the trust should be? He simply would have been advised by me. That is, he was advised what was necessary? Yes. And the Heran Developments Trust was settled on the same day? I think that's right, yes. HER HONOUR: I'm sorry, which trust was that? Crennan MR HACK: Heran Developments Trust. The purpose of naming E & M Unit – or the trustee of the E & M Unit Trust as a beneficiary of the Raftland Trust was to enable it to receive distributions from the Raftland Trust? Correct. And in that way use up the losses that it had? Correct. It was a mechanism for injecting funds from the Heran entities in a tax effective manner? Yes. I take it that it was – you never intended that – leaving aside the question of the purchase price, that the trustee of the E & M Unit Trust ever benefit from these arrangements? in fact, the arrangements. That's how it was set up. trustee would have benefited from the In what way? A. Well, that's what the document said. Sorry. It may say it but it was never the intention that there be real distributions to it, was there? A. We recognised that the unit holders of that trust could call up those funds. And you created a mechanism to prevent that from happening? A. Well, we did some things such as we took control of the trustee of the E & M Unit Trust, which was Raftland, and we did some other things which involved Navygate, and I suppose those things were done because we had a concern that the unit holders could call up those funds. And you wanted to ensure that they were not in a position to do so? A. Well, there was a commercial risk that they could have. Crennan Q. Well, by naming it as a beneficiary, it was not then in contemplation that anything other than a purchase price would have been paid to the trustee of the E & M Unit Trust? Sorry, can you just repeat that? The trustee of the E & M Unit Trust was named as the tertiary beneficiary of the Raftland Trust? Yes. At that time it was never in contemplation, leaving aside the question of $250,000, that any amount would be paid to the trustee of the E & M Unit Trust? Do you mean physically paid? Q. Well, let's start with physically paid? A. Well, that's probably right, yes. And what was in contemplation at best was a distribution on paper only? I think that sells it a bit too short because we recognised that there was a real risk that the unit holders could call up those funds." It may be observed that "a commercial risk" is a curious way to describe a legal entitlement. When Mr Tobin said that "there was a real risk that the unit holders could call up those funds" he was giving less than enthusiastic endorsement to the theory that the money belonged to them. As has been noted, the settlor of the Raftland Trust, Ms Sommerville, had no intention separate from that of Raftland. The directors of Raftland were the Heran brothers, and two of them were the shareholders. It is the intention of the Heran brothers that is specifically relevant to a question whether the trusts apparently created by the Raftland Trust deed were wholly or partly a pretence. The creation of such an express trust depends upon the intention of the person alleged to have created it9. A part of an instrument may be a pretence10. The 9 Commissioner of Stamp Duties (Qd) v Jolliffe (1920) 28 CLR 178 at 181; [1920] HCA 45. 10 A G Securities v Vaughan [1990] 1 AC 417 at 462-463. Crennan respondent argued that in this case the pretence was that part of the trust instrument which made the E & M Unit Trust a tertiary beneficiary. The corollary of that argument was that the document signed by Mr Carey as trustee of the E & M Unit Trust, insofar as it accepted appointment as a beneficiary of the Raftland Trust, also was a pretence. As has been noted, Mr Carey had no intention independent of Mr and Mrs Thomasz, and it was their intention that was relevant to that question. The Heran brothers, and Mr and Mrs Thomasz, were business people, not lawyers. It is unlikely that they applied their minds with care to the detail of the documents that were prepared by Mr Tobin. That does not mean, however, that their intentions were irrelevant. It may mean, as a matter of factual inference, that they had no intentions inconsistent with the documents prepared by Mr Tobin and that, therefore, there is no reason to take those documents other than at face value. It may mean (as the Full Court, in substance, found) that they intended to do whatever was regarded by Mr Tobin as necessary to secure the fiscal objective of the exercise. On the other hand, the respondent argued, and Kiefel J held, that the Heran brothers and Mr and Mrs Thomasz had a common intention that was inconsistent with the creation and the enforcement of the entitlement of the E & M Unit Trust as a beneficiary of the Raftland Trust. It is, therefore, necessary to examine the findings of fact made by Kiefel J. Central to her Honour's reasoning was the $250,000 paid to the Thomasz interests as the "price" for the E & M Unit Trust. It was, her Honour held, the intention of the Herans, and Mr and Mrs Thomasz, that the Thomasz interests were to receive that amount and no more. Following such receipt, they were to make no further claim on the Raftland Trust. The conduct of the parties after 30 June 1995 is evidence of their intention on and before that date. Kiefel J said: "Raftland has not in fact paid the balance sum of $2,642,762 to the E&M Unit Trust and it is not intended to do so. I do not understand Raftland to suggest that it ever held that intention. Mr Tobin conceded as much and in any event its intention not to do so may readily be inferred ... The E&M Unit Trust has not called for or got in those monies and has recorded no intended distribution to its unitholders. Mr Thomasz said that apart from the purchase price of $250,000 he had no expectation of receiving any further benefits from the transactions. He considered that control had been relinquished by the E&M Unit Trust. In answer to a question put by the Commissioner, he agreed that he understood the transaction to involve entities with which he or his wife were associated being owed a purchase price and from that point [they] would have no further dealings with the trust." Crennan The evidence showed that the business people looked upon the transaction as the purchase, for a price of $250,000, by the Heran interests from the Thomasz interests, of control of a trust with accumulated tax losses. In legal terms there was no sale and purchase of property. The sum of $250,000 was not consideration for rights of property. It does not follow, however, that for the parties to regard it as a price was wholly incorrect. It was the amount that the Heran interests (specifically, Heran Projects, Northbank and Southbank) were willing to pay to Mr and Mrs Thomasz for "control" of the E & M Unit Trust. In the context "control" included the assumption of trusteeship, and the capacity to direct its future affairs. It had a negative as well as a positive aspect, involving the exclusion of Mr Carey and Mr and Mrs Thomasz, or their respective trusts, from any future involvement. It would have been inconsistent with this "sale" of "control" for the Thomasz interests subsequently to seek an accounting from Raftland for the purported distributions. Kiefel J pointed out that the $250,000 was not paid from income of the Raftland Trust; it was provided by other entities associated with the Herans. She found as a fact (and her finding was amply supported by the evidence) that it was to be "a one-off payment with nothing further to take place between the parties." "So far as concerns the second resolution to distribute, Raftland had no intention of ever paying it and Mr and Mrs Thomasz had no expectation that the E&M Unit Trust would [ever] receive those monies or any further benefits. Mr Thomasz knew that that income was to be applied against the Trust's losses. He knew that whilst a debt was to be recorded as owed to the E&M Unit Trust, in its books of account, he and his wife would be having no further dealings with the Trust. Those controlling Raftland and the E&M Unit Trust well understood that the only transaction which was to take place between them was that relating to the control of the Trust. There is no direct evidence that Mr and Mrs Thomasz promised never to seek any further monies. I infer however that they had no intention of doing so, consistent with their understanding of the transaction." Kiefel J concluded that the provisions of the Raftland Trust deed which purported to create an entitlement in the E & M Unit Trust as tertiary beneficiary, and the resolutions which purported to reflect that entitlement, were a façade and were contrary to the intentions of the Herans and Mr and Mrs Thomasz. Consistently with that, if, having received the $250,000, the Thomasz interests had attempted to restrain Raftland from applying the trust income as it did or to seek an accounting, or otherwise to assert any rights, they would have been unsuccessful. They had no entitlement to the income. Under the default Crennan provisions of cl 3(b) of the Raftland Trust deed the primary beneficiaries were entitled to the trust income. Her Honour went on to consider and apply s 100A on that basis. That is a matter to which it will be necessary to return. In the Full Court, the principal judgment was that of Edmonds J. Dowsett J substantially agreed, subject to certain qualifications which are not presently material. Conti J agreed with Edmonds J. Edmonds J disagreed with Kiefel J's conclusion that the E & M Unit Trust was not entitled to the income of the Raftland Trust, and that it was contrary to the intentions of the parties that the E & M Unit Trust (and, through it, the Thomasz interests) should be entitled to such income. He quoted, and relied upon, the passage from the evidence of Mr Tobin set out above. He said: "Those who advised Mr Brian Heran, notably Mr Tobin, but there were others such as senior counsel retained by Mr Tobin, were well aware that, only to the extent that the trustee of the E & M Unit Trust was presently entitled to the income of the Raftland Trust, would that income be sheltered by the losses in the E & M Unit Trust. The attainment of that fiscal objective drove the transaction from the point of view of its participants. Hence, if it was not achieved by a determination to pay to or apply or set aside the income of the Raftland Trust to the trustee of the E & M Unit Trust pursuant to cl 3(b)(i) of the Raftland Trust deed, it was to be achieved by the default provisions of the proviso to cl 3(b), reinforced by the provisions of cl 3(f)". Edmonds J referred to a passage in the reasons of Lehane J in Richard Walter Pty Ltd v Commissioner of Taxation11, where that learned judge observed that many tax schemes are intended to have an otherwise inexplicable legal effect precisely because of the fiscal objectives that are pursued. That is undoubtedly true, but it does not deny the possibility that, in a particular case, documents might not be intended by the parties to have legal effect according to their tenor. The conclusion of Edmonds J was that, far from being a façade or sham, the nomination of the E & M Unit Trust as a tertiary beneficiary of the Raftland Trust "was at the forefront of the intentions of those charged with responsibility for establishing the Raftland Trust." The reference to "the intentions of those charged with responsibility for establishing the Raftland Trust" appears to be a reference to the intentions of Mr Tobin. As earlier explained, the relevant intentions are those of the Heran 11 (1996) 67 FCR 243 at 267-268. Crennan brothers, and Mr and Mrs Thomasz. Furthermore, the reasoning does not reflect the complexity of Mr Tobin's position. In the passage from his evidence set out above, which Edmonds J quoted, it was put to him directly that it was not in contemplation that anything other than the "purchase price" ($250,000) would be paid to the trustee of the E & M Unit Trust. His response was evasive. He said it was probably right that nothing would be "physically paid" (an expression of unclear meaning). He then remarked that to say that what was in contemplation was a distribution on paper only "sells it a bit too short". He said that "we recognised that there was a real risk that the unit holders could call up those funds." He had earlier explained the steps that were taken to diminish that "risk", including the application for shares in Navygate. Mr Tobin's intentions were, no doubt, more subtle than those of his clients, but he was unable to give a direct answer to the suggestion that it was the intention of the parties that the Thomasz interests, and the E & M Unit Trust, were to receive $250,000 and nothing more. There was an inconsistency between the fiscal and the financial objectives of the transaction, although they overlapped. It is accurate, as a proposition of law, to say that for the tax scheme to succeed it was necessary for the E & M Unit Trust to be entitled to the income of the Raftland Trust. Yet Kiefel J found as a fact, on the basis of compelling evidence, that it was the intention of the Herans, and of Mr and Mrs Thomasz, that $250,000 was all the beneficiaries of the E & M Unit Trust were ever to receive or to seek. It is little wonder that Mr Tobin found it difficult to distinguish between a legal entitlement and a commercial risk that the entitlement would be invoked. The primary judge was fully justified in finding that the entitlement under the Raftland Trust deed was not intended by the settlor or the trustee, or the "tertiary beneficiary", to have substantive, as opposed to apparent, legal effect. On this issue, the conclusion of Kiefel J should be upheld. It was on the question of the operation of s 100A that the appellant failed in the Full Court. However, because Edmonds J was willing to accept that, subject to s 100A, the E & M Unit Trust was entitled to the income of the Raftland Trust for each of the three income years in question, whereas Kiefel J found that it was the primary beneficiaries who were entitled, they began their respective analyses of s 100A from different starting points. In view of the conclusion expressed above, the correct starting point is that adopted by Kiefel J. The application of s 100A Having held that the primary beneficiaries of the Raftland Trust were presently entitled to the income of the Raftland Trust, within the meaning of s 100A(1)(a) (a matter that followed from her earlier reasoning), Kiefel J considered whether that present entitlement arose out of a reimbursement agreement or arose by reason of any act, transaction or circumstance that Crennan occurred in connection with, or as a result of, a reimbursement agreement, bearing in mind the definition of "agreement" in sub-s (13), and the terms of sub- ss (7) and (8). The transactions, her Honour held, were clearly not in the ordinary course of commercial dealings. Following Commissioner of Taxation v Prestige Motors Pty Ltd12 and Idlecroft Pty Ltd v Commissioner of Taxation13 she observed that an "agreement" does not have to be legally enforceable and it is not necessary that the beneficiary be a party to it. It is, however, necessary that a reimbursement agreement provide for the payment of money, transfer of property or the provision of services or other benefits to a person other than the beneficiary. "A benefit in this case was gained by the Brian Heran Discretionary Trust and by Heran Projects. The benefit accrued so long as Raftland did not make the payment of trust income to the E&M Unit Trust. In turn Maggside did not have to pay Raftland and it did not have to call upon the monies it had loaned Heran Projects. At the same time they enjoyed tax benefits. Raftland submitted that, whilst there may have been a connexion to the E&M Unit Trust's entitlement and the reimbursement agreement, this is not so with respect to the Primary Beneficiaries whose entitlement arises because of the operation of the default clause. A similar argument was raised and rejected in Idlecroft. It was held ... that the requisite connexion is present in such a case. The connecting circumstance is that the entitlements of the default beneficiaries came about because the appointment of income was invalid. That appointment was made pursuant to the reimbursement agreement. But for the existence of the agreement, the appointments would not have been made. The same analysis applies in the present case." The reference to "appointment" in that passage is a reference to the facts of Idlecroft, and to a passage in the joint reasons of Ryan, Tamberlin and Kiefel JJ in that case14. In the Full Court, Edmonds J also found that the 12 (1998) 82 FCR 195. 13 (2005) 144 FCR 501. 14 Idlecroft Pty Ltd v Commissioner of Taxation (2005) 144 FCR 501 at 512 [45]. Crennan agreement of 22 June 1995 between Heran Projects and Maggside was a "reimbursement agreement", providing for the payment of money to a person other than the beneficiary, namely Maggside, and that but for that reimbursement agreement there would have been no income of the Raftland Trust for the year ended 30 June 1995. Although they had different views on the identity of the relevant beneficiary, the approach of Kiefel J and Edmonds J to s 100A(1) was otherwise consistent. Kiefel J was correct to conclude that s 100A(1) applied, subject to the question whether s 100A(3A) denied that result. She held that s 100A(3A) did not apply to deny the application of s 100A(1) because the primary beneficiaries were not beneficiaries in the capacity of trustees of other trust estates. Upon the hypothesis that (subject to s 100A(1)) the primary beneficiaries were presently entitled to the income of the Raftland Trust for each of the income years, the reasoning of Kiefel J on s 100A(3A) was correct. This was accepted by the Full Court. It is strictly unnecessary further to examine the reasons for the Full Court's conclusion, on a different hypothesis, that is to say, entitlement of the E & M Unit Trust, that s 100A applied adversely to the appellant. Nevertheless, one of those reasons involves a question of general principle that was fully argued in this Court, and it should not be allowed to pass. Save for the matter of the $57,973 in the 1996 year which is the subject of the proposed cross-appeal, the Full Court found that there was a reimbursement agreement and that the present entitlement of the trustee of the E & M Unit Trust arose out of that reimbursement agreement, so that, subject to s 100A(3A), s 100A(1) was satisfied. The Full Court held that s 100A(3A) did not deny the application of s 100A(1), because there was, in the circumstances of the case, a failure to satisfy the condition that, apart from s 100A(3A), the beneficiaries (Mr Carey in his capacity as trustee of the Thomasz Family Trust and Mr Carey in his capacity as trustee of the ECK Family Trust) of the E & M Unit Trust were presently entitled to the whole of the income of the E & M Unit Trust in each of the years of income, the whole of such income in each of those years being wholly attributable to the relevant trust income. The primary reason given for that conclusion was that, for each of the three years, the E & M Unit Trust had no net income for trust purposes because of the losses of previous years. Edmonds J said: "The losses of previous years had been incurred by the trustee at the time in carrying on a business of buying and selling real property. The general rule is that such losses in one year must, in the absence of any contrary direction in the trust instrument, be made up out of profits of subsequent Crennan years and not out of capital ... There can be no profits properly distributable in cash until all past losses are paid". The authority for this proposition was said to be Upton v Brown15. That case concerned a settlement by which a business was assigned to trustees for successive tenants for life (a wife, a husband, and their children) and then to be held in trust absolutely for remaindermen16. A receiver and manager was appointed to carry on the business. During the life of the first tenant for life, the business was carried on at a loss. During the life of the second tenant for life, profits were earned. The question was whether the loss must be made good out of the subsequent profits, or out of capital. The former was held to be the case. The principle is stated in the current edition of Lewin on Trusts17 as follows: "Where a business is held in trust for successive life tenants and remaindermen and is carried on by a receiver at a loss during the life of the first life tenant, the loss must be made good out of the profits during the life of the next life tenant and not out of capital, unless payment out of capital is expressly directed. In every case the adjustment of the relative rights of life tenant and remainderman in such a case necessarily depends to some extent on the construction of the particular will." The principle is a particular application of the general requirement that a trustee who has two or more beneficiaries is under a duty to deal with each of them impartially18. The question whether a loss should be borne by capital or made good out of the income of later years, or, to put it another way, whether capital should be recouped before income is regarded as available for distribution, like the question whether benefits flowing from the use of trust property should be to the advantage of life tenant or remainderman, may arise where "a testator or settlor creates successive interests, with an interest in income followed by an interest in capital"19. In the case of the E & M Unit Trust, however, where there was one class of unit holders in a unit trust, with co- 15 (1884) 26 Ch D 588. Reference was also made to In re Reynolds [1942] VLR 158 and Jacobs' Law of Trusts in Australia, 7th ed (2006) at 480 [1945]. 16 The trusts are described in Upton v Brown (1879) 12 Ch D 872. 17 Lewin on Trusts, 18th ed (2008) at 888 [25–60] (references omitted). 18 Scott and Ascher on Trusts, 5th ed (2007), vol 4 at 1462-1472 §20.1-§20.2. 19 Sinclair v Lee [1993] Ch 497 at 506. Crennan extensive interests in income and capital, the rationale for the application of Upton v Brown did not exist20. It is unnecessary to say anything further about the reasons given by the Full Court for deciding that s 100A(3A) did not deny the application of s 100A(1). Subject to the question raised by the proposed cross-appeal, the conclusion of Kiefel J on this issue should be upheld. Penalties The argument in this Court on the question of recklessness raised by the terms of s 226H challenged the Full Court's approach, bearing in mind that, unlike Kiefel J, the Full Court held that the parties intended to create, and effectively created, a present entitlement in the E & M Unit Trust. On that hypothesis, all that was involved, so the argument ran, was an erroneous appreciation of the operation of s 100A and an understandable error supported by competent legal advice. The hypothesis having been rejected, the argument falls away. On the basis on which Kiefel J decided the case, which should be upheld, her decision as to recklessness and her finding that no case for remitter of part of the penalties was made out must also be upheld. The application for special leave to cross-appeal Although the Full Court, for reasons different from those of Kiefel J, concluded that s 100A applied, and dismissed the appeals in respect of the years ended 30 June 1995 and 30 June 1997, its order in relation to the appeal in respect of the year ended 30 June 1996 was that such appeal be allowed so as to exclude the sum of $57,973 from the application of s 100A but otherwise be dismissed. The respondent seeks special leave to appeal against that order. Edmonds J, when examining the question of the identification of the reimbursement agreement for the purposes of the application of s 100A, and in particular the connection between the reimbursement agreement and the entitlement of the beneficiaries, considered that there was a difference between an amount of $57,973 which came into the Raftland Trust from the Brian Heran Discretionary Trust during the year ended 30 June 1996 and the remainder of the income for that year and for the other two years, which was distributed as part of the arrangements identified as a reimbursement agreement. That was an amount 20 cf In re Bridgewater Navigation Co [1891] 2 Ch 317 at 327. Crennan of rental and interest income derived by the Brian Heran Discretionary Trust and regarded by the Full Court as distinct from the agreement of 22 June 1995 between Maggside and Heran Projects or from the later rearrangements under which the former business of Heran Projects was carried on by other entities. "The $57,973 which came into the Raftland Trust from the Brian Heran Discretionary Trust for the year ended 30 June 1996 appears to be sourced in rental and interest income. In other words, it is not sourced in the 'reimbursement agreement' between Heran Projects and Maggside, as trustee of the Brian Heran Discretionary Trust". What his Honour meant by "sourced" is explained by a passage a few paragraphs earlier in his reasons where he was dealing with the connection required by s 100A(1). He said: "I am also of the view that the present entitlement of [the relevant beneficiary, which he regarded as the trustee of the E & M Unit Trust] to the income of the Raftland Trust for the year of income ended 30 June 1995 'arose out of' that reimbursement agreement as identified, in the sense that 'but for' that reimbursement agreement there would have been no income of the Raftland Trust to which [the beneficiary] would have been presently entitled". He went on to say that the position in relation to the 1996 and 1997 years was not so clear, and finally reached the conclusion that, as to $57,973, s 100A(1) did not apply. The problem is that, on the approach his Honour took to the matter of connection, the difference between that amount and the other amounts in question is not material. If the reimbursement agreement had not been entered into, the $57,973 would not have been distributed to the Raftland Trust. There would have been no income of the Raftland Trust. The respondent's challenge to this part of the reasoning of the Full Court has been made good. Although the point is relatively minor in the larger context of the case, it is integral to the matter of the application of s 100A(1), which had to be considered in order to deal with the arguments of the parties on the appeal. In that sense it would not do justice to the parties if this Court were to refuse to deal with it21. 21 cf Director of Public Prosecutions v United Telecasters Sydney Ltd (1990) 168 CLR 594 at 602; [1990] HCA 5. Crennan Special leave to cross-appeal should be granted and the cross-appeal should be allowed. Conclusion and orders The appeal should be dismissed. Special leave to cross-appeal should be granted, and the cross-appeal should be allowed. The orders made in paragraphs 2 and 3 of the order of the Full Court of the Federal Court should be set aside, and in their place it should be ordered that the appeal to that Court in respect of the year ended 30 June 1996 be dismissed. The appellant should pay the respondent's costs of the appeal and cross-appeal. Kirby KIRBY J. As argued in this Court and in the Federal Court of Australia, a critical issue in these proceedings was whether certain dealings affecting the liability of a taxpayer under the Income Tax Assessment Act 1936 (Cth) ("the Act") amounted to a sham, and, as such, were to be ignored in determining that liability. In Australia and in other countries with comparable revenue laws, issues of this kind have given rise to debate and sharply differing views22. Nearly forty years ago in Paintin and Nottingham Ltd v Miller Gale and Winter23, Turner J, in the New Zealand Court of Appeal, warned against allowing the word "sham" to become a "legal shibboleth" so that "on its mere utterance it [is] to be expected that contracts will wither like one who encounters the gaze of a basilisk". The anxiety that lay behind this judicial warning has been influential. The law ordinarily operates upon documents and other evidentiary materials that attempt to express intended legal consequences according to the words used and the statutes or legal doctrines that those words enliven. Fear of over-reaction should not, however, prevent courts, where justified, from calling a sham what it is. That is what the primary judge in the Federal Court (Kiefel J) did in this case24. The Full Court of the Federal Court disagreed. It held that the impugned transaction was "not a sham, but rather was at the forefront of the intentions of those charged with responsibility for establishing the Raftland Trust"25. This difference of view produced a different legal analysis, although it ultimately resulted in almost identical orders on the principal issues. In this Court, Raftland Pty Ltd as trustee of the Raftland Trust ("the appellant") challenged the approach and orders of the Full Court. The Commissioner of Taxation ("the respondent"), by notice of contention, sought, primarily, to restore the approach, findings and conclusions of the primary judge. The respondent also sought special leave to cross-appeal against the Full Court's modification of the primary judge's orders. He asked for their restoration. 22 Tiley, Revenue Law, 5th ed (2005) at 107. 23 [1971] NZLR 164 at 175. 24 Raftland Pty Ltd v Commissioner of Taxation (2006) 227 ALR 598 at 618 [90]. 25 Raftland Pty Ltd v Federal Commissioner of Taxation (2007) 65 ATR 336 at 359 [83] per Edmonds J; cf at 343 [8] per Dowsett J ("for slightly different reasons"), 343 [9] per Conti J. Kirby I agree with the conclusions of Gleeson CJ, Gummow and Crennan JJ ("the joint reasons"). The orders of the primary judge should be restored. In large part, I agree with the joint reasons. Specifically, I agree that26: "The primary judge was fully justified in finding that the entitlement under the Raftland Trust deed was not intended by the settlor or the trustee, or the 'tertiary beneficiary', to have substantive, as opposed to apparent, legal effect." In my opinion, this conclusion means that the primary judge was right to ignore the transaction characterised as a sham, and to have regard instead to what she identified as the "real transaction"27. The primary judge's conclusions and orders, but also her reasoning, should be upheld. The Full Court erred in so far as it decided otherwise. The appellant's challenge to the orders made below fails. I agree with the joint reasons that the respondent's cross-appeal should succeed28. The facts Complex transaction: The dealings the subject of this appeal are summarised in the joint reasons in terms that I accept. Further details are recorded in the reasons of the primary judge29. As the joint reasons make clear, the facts of the matter are not without complexity. However, complexity is sometimes a deliberate feature of sham dealings. This is because their purpose is to disguise the real nature of a transaction, so as to avoid undesired taxation or other consequences30. Complex transactions may also be involved in taking proper advantage of provisions of the Act in order to minimise taxation liability. Often, the identification of sham dealings is a difficult task. However, from the start, the respondent contended that essential elements of the transactions here at issue 26 Joint reasons at [58]. 27 (2006) 227 ALR 598 at 618 [90]. 28 Joint reasons at [73]-[78]. 29 See (2006) 227 ALR 598 at 600-614 [2]-[74]. 30 See, for example, R v Inland Revenue Commissioners; Ex parte Matrix-Securities Ltd [1994] 1 WLR 334 at 345; [1994] 1 All ER 769 at 780 where Lord Templeman referred to "[t]he trick of circular, self-cancelling payments with matching receipts and payments". Kirby represented a sham31. Those elements had no real business or commercial explanation or justification. Moreover, there was a demonstrated discordance between the real intentions of the participants and the apparent purposes of the constituent documents on which the appellant relied. Explicit reliance on sham: Lest there be any doubt that, before this Court, the respondent sought to support the primary judge's invocation of sham, in the course of oral argument his counsel made it plain that "[t]he primary submission is that Justice Kiefel's analysis was correct with the consequences that her Honour found"32. Only as a fall-back position did the respondent support the alternative route to substantially similar orders adopted by the Full Court. Respectfully, therefore, I cannot agree with Heydon J that the trial judge did not make a finding of sham and "does not seem to have been explicitly invited to do so"33. Such conclusions are not consistent with the record. The primary judge noted that one of the issues that the respondent's arguments presented was whether or not the "purported distributions" amounted to a "sham"34. In consequence, a significant part of her Honour's reasoning proceeded to address that issue under the heading "Whether the distributions to the E&M Unit Trust were a 'sham'"35. In the relevant section of her reasons, the primary judge referred to the decision of this Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd36, and decisions of the Full Court of the Federal Court on sham which were binding on her37. She did so immediately before expressing her findings and conclusions38. Evidence supporting conclusion of sham: In this Court, the respondent pointed to a number of considerations as supporting the primary judge's finding 31 Joint reasons at [8]. 32 [2008] HCATrans 009 at 94 [4222]. 33 Reasons of Heydon J at [173]. 34 (2006) 227 ALR 598 at 611-612 [59]-[61]. 35 (2006) 227 ALR 598 at 614-618 [75]-[91]. 36 (2004) 218 CLR 471 at 487 [48]-[49]; [2004] HCA 55 cited (2006) 227 ALR 598 37 (2006) 227 ALR 598 at 615 [76]-[77] citing eg Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454 per Lockhart J. 38 (2006) 227 ALR 598 at 618 [89]-[90]. Kirby that the written documents did not express the true intentions of the participants, and therefore amounted to a sham. Without repeating all of her Honour's findings in this respect, the following can be noted39: The appellant bore the burden of proving a distribution of trust income of the Raftland Trust to the E & M Unit Trust40. However, it failed to The appellant and the other Heran entities having an interest in the impugned dealings were not concerned to create a real relationship of trustee and beneficiary between the appellant and the E & M Unit Trust. They had no business, commercial, family or other reason to benefit that trust or its unit-holders, aside from the object of enabling income to be channelled to a trust which had accumulated tax losses. Mr Brian Heran was candid in this respect, agreeing in his evidence that, had the E & M Unit Trust not been available for that purpose, he would not have had Heran Projects and Maggside enter into the initial transaction42; The $250,000 paid to the E & M Unit Trust was not income of the Raftland Trust. It was provided by related Heran entities in the sole and obvious expectation of deriving income tax benefits from doing so. The parties understood it to be "the price for control of the [E & M Unit Trust], access to the accumulated losses and the co-operation of Mr Carey and Mr and Mrs Thomasz". It was not expected that there would be any further, still less ongoing, dealings between the parties. According to its true character, the transaction involved the transfer of interests for an identified, limited and valuable consideration43; In respect of the year ended 30 June 1995, the appellant did not make, and at no time intended to make, payment of the balance of the income of the Raftland Trust ($2,599,46744) to the E & M Unit Trust45. It was the disparity between the documentation and the inferred intention of the 39 The same abbreviations are used as in the joint reasons. 40 (2006) 227 ALR 598 at 616 [81]. 41 (2006) 227 ALR 598 at 618 [89]. 42 (2006) 227 ALR 598 at 616 [83]. 43 (2006) 227 ALR 598 at 616-617 [84]-[85] (emphasis in original). 44 See joint reasons at [27]. 45 (2006) 227 ALR 598 at 606 [35], 616-617 [84]. Kirby participants in this connection that led to the "curious" evidence of Mr Tobin, the Herans' solicitor, recounted in the joint reasons46; (5) Not only did the appellant have no intention of ever paying the balance, but Mr and Mrs Thomasz had no expectation that the E & M Unit Trust would ever receive it or, indeed, any further benefits whatever. Mr Thomasz was aware that the balance was to be applied against the E & M Unit Trust's losses, but he did not expect that he and his wife would have any future dealings with that trust. Whilst there was no direct evidence that Mr and Mrs Thomasz promised never to claim any further moneys, the primary judge was clearly right to infer that they never had any intention of doing so, consistent with their understanding of the true nature of the transaction that had taken place47; The appellant considered that there was no real risk that the unit-holders of the E & M Unit Trust would or could require the trustee of that trust to seek the balance. The Navygate transaction could therefore be seen as nothing more than an attempt to encourage the opposite impression48; and For the years ended 30 June 1996 and 30 June 1997, payment by the appellant of $779,705 and $386,035 respectively was not in fact made to the E & M Unit Trust. Nor was it intended to be made. The purported further distributions from the appellant were not, in reality, further distributions at all. The parties did not intend them to have effect as such49. The legislation The relevant provisions of the Act, including ss 97, 98, 99A and 100A, are described, or set out, in the joint reasons50. The provisions of s 226H, governing liability to additional tax having regard to alleged "recklessness" in connection with the under-statement of income, are also explained there51. I agree with what the joint reasons say on the issue that arises in respect of s 226H. 46 Joint reasons at [45]-[46]. 47 (2006) 227 ALR 598 at 617 [86]. 48 (2006) 227 ALR 598 at 617 [87]. 49 (2006) 227 ALR 598 at 607 [41]-[42]. 50 Joint reasons at [5]-[6]. See also (2006) 227 ALR 598 at 607-611 [46]-[57]. 51 Joint reasons at [72]. See also (2006) 227 ALR 598 at 621 [105]. Kirby It is unnecessary for me to explain the unique Australian provisions of Pt IVA of the Act52. Those provisions amount to one legislative response to the significant problem of the use of complex transactions to facilitate tax avoidance that arose in Australia in the context of the narrow scope afforded by this Court to s 260 of the Act53. Originally, the respondent notified the appellant that he was making his determination of under-payment of income tax under Pt IVA of the Act. However, shortly before the hearing before the primary judge, the respondent advised that he did not rely on Pt IVA54. It was on that footing that the application of ss 95A, 99A and 100A of the Act fell to be determined. The reasons of the Federal Court The primary judge: After considering the character of the purported distributions to the E & M Unit Trust, the primary judge stated55: "The true nature of the distributions is to be determined by reference to all of the evidence. [The appellant] is required to prove that there were distributions of trust income and there is evidence which strongly suggests that this was not the parties' common intention. Rather, [the appellant] was to pay and the E&M Unit Trust was to receive a sum for control of the trust and access to its losses. No further dealings were intended to take place. The onus then shifts to [the appellant] to show that these inferences, concerning the parties' intentions, are not correct. It might have done so by direct evidence from the parties or [scil as] to what had taken place between them, if that had been helpful. Having not done so it has not established that there were distributions of income. A conclusion that a transaction is a sham means that it may be ignored and regard had to the real transaction. In the present case, I conclude that there were no distributions of income to the E&M Unit Trust. The appointment of the E&M Unit Trust as a tertiary beneficiary was made only as part of the facade and should also be disregarded." 52 cf joint reasons at [8]. 53 cf Cridland v Federal Commissioner of Taxation (1977) 140 CLR 330 at 337-338 per Mason J; [1977] HCA 61 ("the very restricted operation conceded to s 260 by the course of judicial decision and the generality of the language in which the section is expressed stand in high contrast"). 54 (2006) 227 ALR 598 at 607 [45]. 55 (2006) 227 ALR 598 at 618 [89]-[90]. Kirby This finding can only be understood against the background of the primary judge's earlier explanation of the preconditions to a determination that what appear to be effective legal transactions amount to a sham, and of the legal consequences that follow when the sham elements are disregarded. It was, therefore, on the basis of a finding of sham that the primary judge proceeded to her ultimate conclusion that the appellant held the income on trust for the primary beneficiaries, obliging consideration of s 100A56. In the result, the primary judge held that s 100A(1) of the Act applied, so that the primary beneficiaries were not to be taken as presently entitled to the income, and the appellant was liable to be assessed pursuant to s 99A57. Section 100A(2), (3A) and (3B) had no application58. These conclusions applied to the assessable income of the Raftland Trust for each of the relevant taxation years59. In the premises, the conclusion that the appellant's under-statement of its income amounted to "recklessness" was inevitable. As the primary judge "In the context of a sham transaction, a conclusion of recklessness is clearly open." The Full Court: The principal reasons in the Full Court were delivered by Edmonds J. After detailed reference to the evidence and to decisional authority, "With respect to the conclusion of the primary judge … I am of the view that the nomination of the trustee of the E & M Unit Trust as a tertiary beneficiary of the Raftland Trust [was] not a sham, but rather was at the forefront of the intentions of those charged with responsibility for establishing the Raftland Trust. In other words, to establish it in such a way that the income of the Raftland Trust passed to the trustee of the E & M Unit Trust, to be sheltered by the losses of that trust, if not by distribution – in the sense of payment to, application or setting aside of 56 (2006) 227 ALR 598 at 618 [91]. 57 (2006) 227 ALR 598 at 621 [101]. 58 (2006) 227 ALR 598 at 621 [102]-[103]. 59 (2006) 227 ALR 598 at 621 [104]. 60 (2006) 227 ALR 598 at 621 [105] (emphasis added). 61 (2007) 65 ATR 336 at 359 [83]. Kirby such income for the E & M Unit Trust – then by the default provisions of the proviso to cl 3(b), reinforced by the provisions of cl 3(f)." In the result, Edmonds J took the view that the trustee of the E & M Unit Trust was entitled to the income of the Raftland Trust for each of the relevant years62. He further concluded that s 100A(3A) of the Act did not operate to deny the application of s 100A(1)63. This led Edmonds J to his conclusion and to the orders favoured by the Full Court. The threshold issue In my view, it is essential for this Court to grapple with the issue of sham. It should do so in light of: The specific difference that emerged between the reasoning of the primary judge and that of the Full Court; The submissions of the parties before this Court; The particular submission of the appellant that it was difficult or impossible to reconcile the Full Court's rejection of the finding of sham with its limited disturbance of the parties' transaction and the imposition of additional tax by the Full Court by way of penalty for "recklessness"; and The respondent's explicit argument, expressed in his notice of contention, that the Full Court had erred in disturbing the primary judge's factual conclusions, analysis and orders, which included her Honour's express invocation and application of the concept of sham. The foregoing considerations render impossible (and certainly undesirable) for this Court, without facing up to the sham issue, to resolve the question defined by Dowsett J in the Full Court as64: "whether or not the parties intended that legal or equitable rights and obligations be created by the various transactions into which they entered. … In a case such as this the question to be addressed is whether the parties intended that the various transactions take effect, or whether they were really trying to camouflage the true nature of the dealings between 62 (2007) 65 ATR 336 at 359 [84]. 63 (2007) 65 ATR 336 at 368 [114]. 64 (2007) 65 ATR 336 at 342 [4]. Kirby them. In such a case the court must decide where reality stops and camouflage starts." There is a further and final reason for this Court to address the issue of sham. The resolution of the question in this appeal is not without importance for the approach of the Commissioner, his officers, administrative bodies and courts to complex transactions designed to achieve minimisation of tax obligations. As Dowsett J suggested, such matters will often present difficult problems of characterisation and judicial line-drawing. Clearly, Turner J was correct to state in Paintin and Nottingham65 that the mere invocation of sham does not render a transaction suspect, still less ineffective. In one sense, the sham classification is one to be applied in retrospect, when all of the evidence is understood. Nevertheless, in the present case, there are strong reasons for supporting the approach of the primary judge and affirming the conclusion of a sham transaction and the orders to which that conclusion led. Emergence of the concept of sham The problem of tax avoidance: As revenue law in developed countries became more complex and the stakes larger both for the revenue and for taxpayers, it was inevitable that taxpayers would seek expert advice on how they might order their affairs so as to reduce their liability to tax. Courts cannot "ignore the [fact] that … tax laws [now] affect the shape of nearly every business transaction"66. Businesses plan their affairs around the realities of competition and tax liability67. Subject to the law, that is a taxpayer's right. However, over the years, endeavours to diminish tax obligations have given rise to minimisation "schemes" of varying degrees of artificiality, and to legislative responses both of a general68 and a particular69 kind. It is important to keep such responses in mind, for they afford the context within which distinctive judicial approaches have emerged in other countries, as in this, to render the more artificial "schemes" ineffective as against the revenue. 65 [1971] NZLR 164 at 175. See above these reasons at [81]. 66 Frank Lyon Co v United States 435 US 561 at 580 (1978) cited Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 at 416; [1996] HCA 34. 67 Commissioner of Internal Revenue v Brown 380 US 563 at 579-580 (1965); cf Spotless (1996) 186 CLR 404 at 415-416. 68 The Act, s 260. 69 The Act, Pt IVA. See also s 100A. Kirby United States response to artifice: In the United States of America, the Supreme Court has developed a doctrine akin to sham to enhance the ability of a decision-maker to disregard artificial transactions of ostensible legal regularity and effect. In 1935, in Gregory v Helvering70, the Supreme Court observed of a corporate reorganisation which it judged to be sham and unrealistic: "The whole undertaking … was in fact an elaborate and devious form of conveyance masquerading as a corporate reorganization, and nothing else. … To hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose." Similar views were expressed by the same Court ten years later in Commissioner of Internal Revenue v Court Holding Co71: "To permit the true nature of a transaction to be disguised by mere formalisms, which exist solely to alter tax liabilities, would seriously impair the effective administration of the tax policies of Congress." Murphy J's dissent in Westraders: In the heyday of tax avoidance schemes that found favour in this Court, according to a literal interpretation of the impugned documentation, Murphy J, in dissent in Federal Commissioner of Taxation v Westraders Pty Ltd72, cited the foregoing United States decisions. He expressed a preference for their approach. He favoured it over the kind of "strict literalism" that he regarded as prone to defeat the obvious purpose of revenue legislation. Murphy J applied the United States approach to the case in hand. However, he was alone in doing so. Although Wilson J agreed in reading the legislation in a "broad way" so as to achieve its purposes73, he did not embrace the basic change of doctrine and approach favoured by Murphy J. Looking back at Westraders, some of the remarks of Murphy J appear to herald the general change that was later to emerge in this Court in the interpretation of federal legislation – a move from the "literalist" approach of earlier times to the more "purposive" approach now generally followed74. 70 293 US 465 at 470 (1935). 71 324 US 331 at 334 (1945); cf Frank Lyon 435 US 561 at 580 (1978) cited Spotless (1996) 186 CLR 404 at 416. 72 (1980) 144 CLR 55 at 79; [1980] HCA 24. 73 (1980) 144 CLR 55 at 81-82. 74 See eg CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2; Newcastle City Council v GIO General Ltd (1997) 191 CLR (Footnote continues on next page) Kirby Murphy J's search was for the purpose and object of the applicable statutory provisions. He declared that it was "an error to think that the only acceptable method of interpretation is strict literalism"75. He went on76: "In tax cases, the prevailing trend in Australia is now so absolutely literalistic that it has become a disquieting phenomenon. Because of it, scorn for tax decisions is being expressed constantly, not only by legislators who consider that their Acts are being mocked, but even by those who benefit. In my opinion, strictly literal interpretation of a tax Act is an open invitation to artificial and contrived tax avoidance. Progress towards a free society will not be advanced by attributing to Parliament meanings which no one believes it intended so that income tax becomes optional for the rich while remaining compulsory for most income earners." A refined doctrine of sham: After Westraders, the notion of sham in the context of commercial transactions was invoked in a number of decisions of the Federal Court. In influential reasons in Sharrment Pty Ltd v Official Trustee in Bankruptcy77, Lockhart J reviewed the authorities on the concept of sham to that time. He said: "A 'sham' is … for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive." Important to this description is the idea that the parties do not intend to give effect to the legal arrangements set out in their apparent agreement, understood only according to its terms. In Australia, this has become essential to the notion of sham, which contemplates a disparity between the ostensible and the real intentions of the parties78. The courts must therefore test the intentions of 85 at 112-113; [1997] HCA 53; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69], 384 [78]; [1998] HCA 28. 75 (1980) 144 CLR 55 at 79. 76 (1980) 144 CLR 55 at 80. 77 (1988) 18 FCR 449 at 454 cited (2006) 227 ALR 598 at 615 [76]. 78 Scott v Commissioner of Taxation (Cth) (No 2) (1966) 40 ALJR 265 at 279; cf Re State Public Services Federation; Ex parte Attorney-General (WA) (1993) 178 CLR 249 at 290 per Toohey J; [1993] HCA 30. Kirby parties, as expressed in documentation, against their own testimony on the subject (if any) and the available objective evidence tending to show what that intention really was. Comparative approaches to sham transactions Differing approaches: A review of comparative law on the identification of sham transactions reveals that, in several jurisdictions whose legislation is relevantly comparable to our own, the sham concept is well-entrenched. Indeed, judges elsewhere have indicated some degree of willingness to consider the development of a broader and more robust approach to the identification of sham. Such willingness demonstrates the disinclination of judges to accept, at face value, documents devised and executed by the parties in purported expression of their legal rights where there is reason, as a matter of evidence and common sense, to believe that their real intentions lie elsewhere. United Kingdom: In Bridge v Campbell Discount Co Ltd79, a case involving a suggested penalty in a hire purchase agreement, Lord Devlin proposed the following test for discerning sham80: "[W]hen a court of law finds that the words which the parties have used in a written agreement are not genuine, and are not designed to express the real nature of the transaction but for some ulterior purpose to disguise it, the court will go behind the sham front and get at the reality." The sham concept was then further refined by Diplock LJ in Snook v London and West Riding Investments Ltd81: "[I]f it has any meaning in law, ['sham'] means acts done or documents executed by the parties to the 'sham' which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. … [F]or acts or documents to be a 'sham', with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they 80 [1962] AC 600 at 634. 81 [1967] 2 QB 786 at 802 citing Yorkshire Railway Wagon Co v Maclure (1882) 21 Ch D 309 and Stoneleigh Finance Ltd v Phillips [1965] 2 QB 537. See also W T Ramsay Ltd v Inland Revenue Commissioners [1982] AC 300 at 337. Kirby give the appearance of creating. No unexpressed intentions of a 'shammer' affect the rights of a party whom he deceived." Although Diplock LJ's definition was offered in connection with hire purchase documents, his analysis has been accepted as generally applicable to revenue cases in the United Kingdom82, Australia83 and elsewhere84. Critics have suggested that it "means nothing more than that the label given by the parties to a transaction is not conclusive in determining [their] legal rights"85. However, as will be demonstrated, the maintenance of sham as an independent legal concept is useful from both a terminological and a procedural point of view. Courts in the United Kingdom have insisted that they will not treat an act or a document as a sham simply because they conclude that it is uncommercial or even economically artificial86. They have drawn a distinction between87: "the situation where parties make an agreement which is unfavourable to one of them, or artificial, and a situation where they intend some other arrangement to bind them. In the former situation, they intend the agreement to take effect according to its tenor. In the latter situation, the agreement is not to bind their relationship." Attempts have been made, however, to broaden the bases on which transactions manifesting characteristics of sham might be disregarded, and thus to ameliorate the strictness of the Snook definition. Hence, courts in the United Kingdom have developed a concept of "fiscal nullity" which applies where steps having no commercial or business purpose other than tax avoidance are inserted into a composite transaction88. It has been suggested that this should be viewed 82 See eg MacNiven v Westmoreland Investments Ltd [2003] 1 AC 311 at 319 [4]. 83 See Sharrment (1988) 18 FCR 449 at 453-454. 84 See eg Stubart Investments Ltd v The Queen [1984] 1 SCR 536 at 572. 85 Tiley, "Judicial Anti-avoidance Doctrines: The US Alternatives", (1987) British Tax Review 180 at 196; cf Lehmann and Coleman, Taxation Law in Australia, 5th ed (1998) at 1321. 86 Hitch v Stone [2001] STC 214. 87 Hitch [2001] STC 214 at 230 [67] per Arden LJ (Kay LJ and Sir Martin Nourse concurring). See also Revenue and Customs v Dempster (t/as Boulevard) [2008] EWHC 63 (Ch) at [12] per Briggs J. 88 Ramsay [1982] AC 300; Inland Revenue Commissioners v Burmah Oil Co Ltd [1982] STC 30; Furniss v Dawson [1984] AC 474. Later decisions suggest that the (Footnote continues on next page) Kirby as "a species of the sham concept"89. However, so far, "fiscal nullity" has not been accepted in other jurisdictions90. In Australia, this Court has held it to be inapplicable, assigning as a reason the lack of necessity because of the existence of the specific anti-avoidance provisions enacted as Pt IVA of the Act91. Another development in the United Kingdom has involved the elaboration of the concept of "pretence", which permits courts to override contractual terms that have been inserted solely to avoid a public policy expressed in a statute92. Some observers have regarded the concept of "pretence" as extending the law's response to "sham devices" and "artificial transactions"93. Notwithstanding these developments, the basic doctrine as explained in Snook continues to govern the law's response in the United Kingdom when a transaction is alleged to be a sham94. The parties must have intended to create rights and obligations different from those appearing in their documents. They must have intended to give a false impression of those rights and obligations to third parties. Only then will the label of sham be applied, with the legal consequences that it attracts95. Canada: In Minister of National Revenue v Cameron96, the Supreme Court of Canada adopted the approach to sham expressed in Snook. However, "principle" may be a technique of statutory interpretation rather than a common law doctrine of anti-avoidance: see Craven v White [1989] AC 398 at 520 per Lord Goff of Chieveley. 89 Lee, "The Concept of Sham: A Fiction or Reality?", (1996) 47 Northern Ireland Legal Quarterly 377 at 387. 90 See eg Stubart [1984] 1 SCR 536. 91 John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 434-435; [1989] HCA 5. 92 Street v Mountford [1985] AC 809; A G Securities v Vaughan [1990] 1 AC 417. 93 A G Securities [1990] 1 AC 417 at 462 per Lord Templeman. See Bright, "Beyond Sham and into Pretence", (1991) 11 Oxford Journal of Legal Studies 136 at 140. 94 Tiley, Revenue Law, 5th ed (2005) at 107. 95 Hitch [2001] STC 214 at 230 [66]. 96 [1974] SCR 1062 at 1068 per Martland J. Kirby shortly afterwards, in Minister of National Revenue v Leon97, the Federal Court of Appeal felt entitled to hold that: "If [an] agreement or transaction lacks a bona fide business purpose, it is a sham." The "business purpose" criterion was subsequently rejected by the Supreme Court of Canada in Stubart Investments Ltd v The Queen98. In that case, Estey J, using the language of "deceit", explained that lack of business or commercial purpose was insufficient to evidence a sham. An additional, subjective, element was needed99: "This expression ['sham transaction'] comes to us from decisions in the United Kingdom, and it has been generally taken to mean (but not without ambiguity) a transaction conducted with an element of deceit so as to create an illusion calculated to lead the tax collector away from the taxpayer or the true nature of the transaction; or, simple deception whereby the taxpayer creates a facade of reality quite different from the disguised reality." In her reasons in the same case, Wilson J noted that100: "A transaction may be effectual and not in any sense a sham … but may have no business purpose other than the tax purpose." During the ensuing decade, other Justices of the Supreme Court of Canada hinted at an attempt to revitalise an "economic realities" rule. Thus, in Bronfman Trust v The Queen101, Dickson CJ concluded: "If … the Trust had sold a particular income-producing asset, made the capital allocation to the beneficiary and repurchased the same asset, all within a brief interval of time, the courts might well consider the sale and repurchase to constitute a formality or a sham designed to conceal the essence of the transaction, namely that money was borrowed and used to fund a capital allocation to the beneficiary." 97 [1977] 1 FC 249 at 256. 98 [1984] 1 SCR 536. 99 [1984] 1 SCR 536 at 545-546. 100 [1984] 1 SCR 536 at 540. 101 [1987] 1 SCR 32 at 55. Kirby For some time, it was unclear whether these observations indicated the emergence of a broader approach to sham in Canada102. However, in McClurg v Canada103, the Supreme Court again endorsed the approach stated in Snook. Subjective deception, rather than alleged objective unreality, was affirmed as the essential criterion. Hints of the alternative theory still appear in Canadian case law from time to time104. But for the moment, the Snook test prevails. New Zealand: In Paintin and Nottingham105, Turner J made it clear that, in New Zealand, "[t]he word 'sham' has no applicability to transactions which are intended to take effect, and do take effect, between the parties thereto according to their tenor". In an earlier decision in Bateman Television Ltd v Coleridge Finance Co Ltd, his Honour had remarked, to like effect106: "[T]he occasions on which Courts have set aside the form of a transaction as a 'sham' are confined to cases in which, really doing one thing, the parties have resorted to a form which does not fit the facts in order to deceive some third person, often the revenue authorities, into the belief that they were doing something else." Later, in Mills v Dowdall107, Richardson J postulated, as a test for sham, whether "the [documents do] not reflect the true agreement between the parties". Later still, in Marac Life Assurance Ltd v Commissioner of Inland Revenue, "The true nature of a transaction can only be ascertained by careful consideration of the legal arrangements actually entered into and carried out: not on an assessment of the broad substance of the transaction measured by the results intended and achieved or of the overall economic consequences." 102 Nitikman, "Preparing for NAFTA: Canadian Judicial Anti-Avoidance Doctrines – Part 2", (1993) 19(4) International Tax Journal 47 at 52. 103 [1990] 3 SCR 1020. 104 See eg Faraggi v The Queen [2008] 1 CTC 2425. 105 [1971] NZLR 164 at 175. 106 [1969] NZLR 794 at 813. 107 [1983] NZLR 154 at 160. 108 [1986] 1 NZLR 694 at 706. Kirby This approach has laid the ground for a narrow operation of the doctrine of sham in New Zealand109. So much was reaffirmed in the recent decision of the New Zealand Court of Appeal in Accent Management Ltd v Commissioner of Inland Revenue110: "[A]rtificiality and lack of commercial point (other than tax avoidance) are not indicia of sham. And the concepts of sham and tax avoidance are not correlatives. As well, while there are elements of pretence (and certainly concealment) associated with [the] transactions [here at issue], these are explicable on bases other than sham". Authority of this Court The effort of Murphy J to develop a broader doctrine of sham, capable of dealing with "artificial and contrived transactions for tax avoidance purposes"111, has not, so far, found favour in this Court. Nor, despite early support in other Australian courts112, has this Court accepted the principle of "fiscal nullity" adopted by the House of Lords in W T Ramsay Ltd v Inland Revenue Commissioners113, citing the presence in the Act of statutory provisions enacted "for the purpose of inhibiting tax avoidance"114. This is so despite a number of legal trends that might have been taken as supporting the adoption of a more ample doctrine of sham: 109 Prebble, "Criminal Law, Tax Evasion, Shams, and Tax Avoidance: Part II – Criminal Law Consequences of Categories of Evasion and Avoidance", (1996) 2 New Zealand Journal of Taxation Law and Policy 59 at 63-66. 110 [2007] NZCA 230 at [59]. See also Accent Management Ltd v Commissioner of Inland Revenue (2005) 22 NZTC 19,027 at 19,059-19,061 [215]-[225]. 111 Westraders (1980) 144 CLR 55 at 79. 112 Federal Commissioner of Taxation v Ilbery (1981) 38 ALR 172; Federal Commissioner of Taxation v Kelly Ford Pty Ltd (1984) 3 FCR 469; Oakey Abattoir Pty Ltd v Federal Commissioner of Taxation (1984) 54 ALR 595. But see Oakey Abattoir Pty Ltd v Federal Commissioner of Taxation (1984) 55 ALR 291. 114 Federal Commissioner of Taxation v Patcorp Investments Ltd (1976) 140 CLR 247 at 292 cited John (1989) 166 CLR 417 at 434-435. Kirby The retreat from past decisions upholding schemes involving artifice115, which decisions led to professional and public criticisms116, and produced both legislative117 and judicial118 responses; The strong tendency of current legal doctrine, across a wide range of areas (except perhaps the criminal law), to give preference to substance over form, that is, to the real and intended meaning of a law or a legal instrument, understood in its context, in preference to the meaning suggested by a strictly literal verbal analysis119; The strong general trend towards a "purposive" interpretation of legislation and other written texts, aimed at giving effect to the imputed purpose of contested words120; The increased recourse by courts to extrinsic materials, in order to clarify the purposes of legislation121; and 115 See eg Curran v Federal Commissioner of Taxation (1974) 131 CLR 409; [1974] HCA 46. 116 cf Marr, Barwick, (1980) at 228-229, 293-294. 117 The Act, Pt IVA. See Spotless (1996) 186 CLR 404 at 416. 118 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 313, 320; [1981] HCA 26; cf Ramsay [1982] AC 300. 119 See eg Fish v Solution 6 Holdings Ltd (2006) 225 CLR 180 at 206 [86], 214 [112]; [2006] HCA 22; Federal Commissioner of Taxation v Citylink Melbourne Ltd (2006) 228 CLR 1 at 20-21 [51]; [2006] HCA 35; Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 651 at 671 [54]; [2007] HCA 14; General Motors Acceptance Corporation Australia v Southbank Traders Pty Ltd (2007) 227 CLR 305 at 313 [23]; [2007] HCA 19; Tofilau v The Queen (2007) 81 ALJR 1688 at 1727-1728 [188]; 238 ALR 650 at 699; [2007] HCA 39; Telstra Corporation Ltd v The Commonwealth (2008) 82 ALJR 521 at 530 [43]; 243 ALR 1 at 13; [2008] HCA 7. 120 Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423-424; Bropho v Western Australia (1990) 171 CLR 1 at 20; [1990] HCA 24; Project Blue Sky (1998) 194 CLR 355 at 381-382 [70]. 121 See Acts Interpretation Act 1901 (Cth), s 15AB. See also Cooper Brookes (1981) 147 CLR 297 at 321; cf Hill, "A Judicial Perspective on Tax Law Reform", (1998) 72 Australian Law Journal 685 at 688-689. Kirby The appreciation that income tax legislation, although having some special features, is not to be isolated from general interpretative trends, such as those described above122. A narrow approach to sham thus prevails in Australia. This was affirmed in the recent decision of this Court in Equuscorp123. That was a case where investors, alleged to have entered improvident loan agreements for the purpose of obtaining tax deductions, themselves later sought to avoid enforcement of the agreements on the basis of sham, giving evidence of earlier oral agreements to limit the operation of the written documents. They submitted that the transactions involved no true loans because no "real money" was ever actually lent. This Court held that, having executed the written loan agreements, the investors were bound by them in the absence of proof of their invalidity or of rectification of the written documents. Although the primary judge in Equuscorp (Helman J) had concluded that the agreements were "book entries … made to create an 'audit trail'" resulting in transactions that were a sham, in the sense of "a complete artifice or facade" or a "charade"124, this Court held that each of the written agreements was legally effective on its face and not a sham. The Court said125: "'Sham' is an expression which has a well-understood legal meaning. It refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences126." To the complaint that no "real money" had been lent (in the sense of no actual capital being brought into the partnership), and that there had therefore been no "loan", this Court said127: 122 Federal Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 146 [84]; [2000] HCA 4. 123 (2004) 218 CLR 471. 124 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2001] QSC 464 at [28]-[29]. 125 (2004) 218 CLR 471 at 486 [46]. 126 Sharrment (1988) 18 FCR 449. 127 (2004) 218 CLR 471 at 487 [48]. Kirby "As the expression 'real money' might suggest, the point which the respondents sought to make in these matters appeared to be one about the economic rather than the legal effect of the transactions in question." Equuscorp thus stands for the proposition that, where parties express their rights and obligations in what appear to be binding legal instruments, courts will accord such instruments their purported legal effect, according to their tenor, even if the transactions described do not appear to "have been commercially sensible"128 (that is, entered into with an economic motive in mind other than tax avoidance). However, Equuscorp does not deny the existence of sham as a legal category. On the contrary, this Court expressly accepted that sham has a well- understood legal meaning, and that whether a sham is established or not depends on whether the parties intend their respective rights and obligations to derive from what appears to be a legal instrument. It could hardly be supposed that Equuscorp had written the sham classification out of revenue law in Australia. The place of sham in legal analysis has been acknowledged since the early days of this Court129. Its continuing relevance has been repeatedly recognised over the years130. There is thus no reason for this Court to avoid either the concept or the word. The word "sham" derives from Old English. It may probably be traced to the same root as the similar Old English word "shame", with which its core notions of duplicity and deceit are connected131. One of its dictionary meanings ("something that is not what it purports to be"132) is the primary meaning assigned to it by current legal doctrine in Australia. It follows that it is perfectly proper for Australian courts, and other decision-makers, legal analysis, as the concept of sham acknowledged in Equuscorp. It may be helpful in revenue cases so long as the need for intentional deception is kept in mind. And because what is intended, in invoke 128 (2004) 218 CLR 471 at 488 [53]. 129 See eg Jaques v Federal Commissioner of Taxation (1924) 34 CLR 328 at 358 per Isaacs J; [1924] HCA 60. 130 See eg Scott (1966) 40 ALJR 265 at 279 per Windeyer J. 131 The Shorter Oxford Dictionary, 3rd ed (rev) (1965), vol 2 at 1863-1864. In Dr Johnson's Dictionary of the English Language, (1755), "sham" is defined as "[f]alse; counterfeit; fictitious; pretended". 132 The Macquarie Dictionary, Federation edition (2001) at 1731. Kirby the context of a sham, may itself be disguised, the objective facts are by no means irrelevant. They may assist to prove the relevant intention of the participants where (as will usually be the case) a forthright admission by those who have resorted to the sham is lacking. The utility and content of sham in legal analysis Utility of sham analysis: The foregoing survey demonstrates that the use of the notion of sham in legal analysis, including in revenue cases, is to some extent controversial. In the opinion of some, it is merely a conclusory label. For others, it is irrelevant and likely to mislead. On the other hand, as noted above, this Court has recognised that the concept of sham has a "well-understood legal meaning"133. Where that meaning is applicable, invocation of the expression is preferable to the use of other descriptive words with no necessary legal consequence, such as "charade", or "facade", or "artifice". It is not useful to state that "in the present litigation" it is legitimate to use the word "sham" in a "less pejorative" sense than that indicating fraud unless consideration is given to the meaning and outer limits of the concept which that word indicates134. The challenge is to give the word "sham" more precise content, and to confine its use to cases that fit within the resulting definition. Mr Malcolm Gammie is right to conclude that there is only a "limited scope for the sham concept in a straightforward contractual dispute"135. In such a case, more useful tools of legal analysis, and more appropriate relief, may often be found by invoking remedies of rectification136, the doctrine of non est factum137 and invalidation for deceit. The particular utility of sham analysis, especially in revenue cases, is that it permits courts to send a clear signal that they will not be deceived into giving effect to unreal transactions, just because such transactions are expressed in 133 Equuscorp (2004) 218 CLR 471 at 486 [46]. 134 cf joint reasons at [36]. 135 Gammie, "Sham and Reality: the Taxation of Composite Transactions", (2006) British Tax Review 294 at 312. 136 Bright, "Beyond Sham and into Pretence", (1991) 11 Oxford Journal of Legal Studies 136 at 140, fn 33. 137 Conaglen, "Sham Trusts", (2008) 67 Cambridge Law Journal 176 at 202. Kirby documents that, to a greater or lesser extent, observe legal forms and give effect to apparent legal objectives. Dr Matthew Conaglen points out that, in the course of conventional legal analysis, courts ordinarily feel obliged to interpret documents according to the meaning that they "would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract"138. Evidence concerning previous negotiations, declarations of subjective intent and the parties' subsequent conduct is normally excluded from consideration. Where sham is invoked, however, examination of such evidence may be required. "[T]he relevance of the sham doctrine is that it justifies the court in stepping outside of the normal construction process in order to ascertain 'the truth of the matter' by reference to material which would normally be excluded as irrelevant to that process." In other words, where it is legally warranted, sham analysis affords the court a ground for ignoring, instead of merely construing, the primary documentary material in determining the rights and obligations of the parties140. It follows that the prerequisites for sham analysis are important because they provide a filtering process by which courts may decide which cases are to be dealt with outside the normal rules of documentary construction and which must be decided within those rules. An important policy justification for this approach is that it helps to ensure that "the normal rules of construction are not circumvented without justification"141. Without recourse to otherwise excluded materials, a sham transaction might achieve the purposes behind the parties' conduct and documentation. The fact that sham transactions normally involve an element of deceit will ordinarily support a conclusion that cases of sham can be set apart from the remedy of 138 Conaglen, "Sham Trusts", (2008) 67 Cambridge Law Journal 176 at 180 citing Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912 per Lord Hoffmann; [1998] 1 All ER 98 at 114. 139 Conaglen, "Sham Trusts", (2008) 67 Cambridge Law Journal 176 at 182. 140 cf joint reasons at [33]. 141 Conaglen, "Sham Trusts", (2008) 67 Cambridge Law Journal 176 at 182. Kirby rectification142. In such circumstances, this will also provide a strong ground for the application of the label of sham to the proved acts and documents. Content of sham analysis: Although, therefore, courts will ordinarily give legal effect to documents according to their language, sham analysis is an exception to that conventional approach. That is why it requires exceptional circumstances to enliven a conclusion that documents and acts amount to a sham, with the legal results that such a conclusion justifies. The key to a finding of sham is the demonstration, by evidence or available inference, of a disparity between the transaction evidenced in the documentation (and related conduct of the parties) and the reality disclosed elsewhere in the evidence. Where, for example, the evidence shows a discordance between the parties' legal rights or obligations as described in the documents and the actual intentions which those parties are shown to have had as to their legal rights and obligations, a conclusion of sham will be warranted143. The test as to the parties' intentions is subjective144. In essence, the parties must have intended to create rights and obligations different from those described in their documents. Such documents must have been intended to mislead third parties in respect of such rights and obligations145. Where a court is considering a suggestion of sham that has a reasonably arguable evidential foundation, the court will not be confined to examining the propounded documentation alone. It may examine (and draw inferences from) other evidence, including the parties' explanations (if any) as to their dealings, and evidence describing their subsequent conduct146. To justify a conclusion that documents constitute a sham, the requisite intention to mislead must be a common intention of the parties147. An exception may exist where the acts and documents reflect a transaction divisible into 142 cf Bright, "Beyond Sham and into Pretence", (1991) 11 Oxford Journal of Legal Studies 136. 143 Snook [1967] 2 QB 786 at 802. 144 Snook [1967] 2 QB 786 at 802; Hitch [2001] STC 214 at 230 [66]. 145 Hitch [2001] STC 214 at 230 [66]. 146 Hitch [2001] STC 214 at 230 [65]; Sharrment (1988) 18 FCR 449 at 461. 147 Snook [1967] 2 QB 786 at 802; Hitch [2001] STC 214 at 230 [69]. Kirby separate parts, such that a transaction is a sham as to part only of the transaction148. Neither the complexity nor the artificiality of a transaction149, nor any circularity evident in it150, nor the apparent lack of commercial or economic sense151 will of themselves, alone or in combination, necessarily warrant a conclusion that a transaction constitutes a sham152. Nor does a departure by the parties from the terms of their original agreement necessarily indicate that they never intended that agreement to be effective and binding according to its tenor153. Nevertheless, a sham can develop over time if there is a departure from the original agreement and the parties knowingly do nothing to alter the provisions of their documents as a consequence154. Sham as a tool of analysis: When the foregoing considerations are kept in mind, it is obvious that the analysis of documentation by reference to such criteria can be useful so long as it is remembered that the focus is upon the mutual intentions of the parties as to their respective rights and obligations. The focus is not, as such, upon an assessment of the "broad substance of the transaction measured by the results intended and achieved or of the overall economic consequences"155. It follows that the primary value of sham analysis is that, where justified, it may rescue the decision-maker from being led by the nose into the artificial task of defining the legal rights and obligations of the parties by reference to their proved documents and related conduct alone, where extrinsic evidence 148 See New Zealand Commissioner of Inland Revenue, "Sham – meaning of the term", (1997) 9(11) Tax Information Bulletin 7 at 7-8. 149 Sharrment (1988) 18 FCR 449 at 454-455; Oakey Abattoir (1984) 55 ALR 291 at 150 Sharrment (1988) 18 FCR 449 at 458. 151 See Case X10 (2005) 22 NZTC 12,155 at 12,171 [116]. 152 cf Accent Management [2007] NZCA 230 at [59]. 153 Hitch [2001] STC 214 at 230 [68]. 154 See Marac Finance Ltd v Virtue [1981] 1 NZLR 586 at 588. 155 Marac Life Assurance Ltd v Commissioner of Inland Revenue [1986] 1 NZLR 694 at 706 per Richardson J. Kirby demonstrates that they constitute a sham and were not intended to be effective or have their "apparent, or any, legal consequences"156. For a court to call a transaction a sham is not just an assertion of the essential realism of the judicial process, and proof that judicial decision-making is not to be trifled with. It also represents a principled liberation of the court from constraints imposed by taking documents and conduct solely at face value. In this sense, it is yet another instance of the tendency of contemporary Australian law to favour substance over form. As such it is to be welcomed in decision-making in revenue cases. Conclusion: sham established, transaction ineffective When the foregoing principles are given effect in this appeal, the present was a case where it was clearly open to the primary judge to conclude, as she did, that arrangements described in the impugned written documents amounted to a sham. The primary judge made findings as to the intentions of the participants. There was no error in those findings. To the contrary, her findings were fully sustained by the evidence. They reflected sensible and rational inferences drawn from that evidence. They supported the primary judge's conclusion that a sham was demonstrated. In the Full Court, Edmonds J departed from the primary judge's findings by deciding that the nomination of the trustee of the E & M Unit Trust as a "tertiary beneficiary" of the Raftland Trust was not a sham157 and that, consequently, the trustee of the E & M Unit Trust was entitled to the whole of the trust income of the Raftland Trust for the taxation years ended 30 June 1995, 1996 and 1997. In so deciding, Edmonds J and the Full Court erred. Focusing on the state of mind of the Herans' solicitor, Mr Tobin, did not demonstrate that the findings and conclusion of the primary judge were wrong. Whatever may have been the purpose of the professional adviser, the proper subject of attention was the intention of the parties with regard to the impugned transaction. It was with this in mind that the primary judge correctly addressed the question that she had to decide. The conclusion of the primary judge as to the common intention of the parties ought not to have been disturbed. There was no demonstrated or proper ground for such disturbance. Because of the reimbursement agreement, 156 Equuscorp (2004) 218 CLR 471 at 486 [46]. 157 (2007) 65 ATR 336 at 359 [83]. Kirby s 100A(1) of the Act applied in relation only to the primary beneficiaries. Section 100A(3A) did not apply to the primary beneficiaries because they were not trustees. The analysis of the primary judge was therefore correct. It should be restored. And this Court should not be diffident to invoke the tool of reasoning that sham provides in cases of this kind. Nor should it be hesitant in utilising the word "sham" when explaining its reasons. So long as the legal preconditions are established, the decision-maker should call a spade a spade – and a sham a sham. If the documents evidencing a transaction are shown to be intentionally deceptive, false and misleading, they are "inherently worthless, and … no enactment [is needed] to nullify [the transaction]"158. In other words, when the documents amount to a sham, they are ignored. They fail to achieve their purported objectives. The law then gives consequence to the true transactions, as revealed by the evidence – just as the primary judge did in this case. There is an orthodox approach to sham, accepted and expressed in Australian legal doctrine, as in the law of other, similar jurisdictions. There have also been suggestions of the emergence of a broader approach to the notion of sham, particularly in revenue cases. I accept that the "narrower" approach to sham, explained by this Court in Equuscorp, is applicable to this case. It was correctly applied by the primary judge. However, in my view, the idea of sham could be broadened somewhat. Doing so would not cut across the language and purpose of the explicit tax avoidance provisions enacted as Pt IVA of the Act. On the contrary, such an approach would be compatible with that contained in Pt IVA and the purposes that led to the enactment of that Part. It would demonstrate, once again, that in the present age, the doctrines of the common law evolve in the orbit of statute159. Orders The orders of the primary judge should be restored. I agree in the orders proposed in the joint reasons. 158 Jaques (1924) 34 CLR 328 at 358 per Isaacs J. 159 cf Roads and Traffic Authority v Royal [2008] HCA 19 at [93]. 161 HEYDON J. The circumstances are set out in the judgment of Gleeson CJ, The central question is whether the Tertiary Beneficiary under the Raftland Trust Deed was "presently entitled" to the income of the Raftland Trust in the tax year ended 30 June 1995 within the meaning of s 100A of the Income Tax Assessment Act 1936 (Cth). The Heran interests – that is the brothers Brian, Martin and Stephen Heran – being the principals of the Heran group of companies, which were profitable, desired to obtain the benefit of tax losses incurred by the E & M Unit Trust and to obtain control of the E & M Unit Trust. The principals of the E & M Unit Trust, Mr and Mrs Thomasz – the Thomasz interests – desired to gain whatever financial advantage they could out of the transfer of control. The solicitor for the Heran interests, Mr Tobin, devised a plan to effectuate these desires, and prepared the documents thought necessary to implement them. The Raftland Trust was created by a Deed executed by the Settlor, Mrs Sommerville, on 30 June 1995. It was executed in the presence of, and The Trustee, who was not party to the Raftland Trust Deed, was Raftland Pty Ltd. The directors of Raftland Pty Ltd were the three Heran brothers. The shareholders of Raftland Pty Ltd were Brian and Stephen Heran. The three brothers were the Primary Beneficiaries of the Raftland Trust, and various of their relatives and associated entities were the Secondary Beneficiaries. Clause 1(u) and the Schedule of the Raftland Trust Deed appointed the Trustee of the E & M Unit Trust as a Tertiary Beneficiary of the Raftland Trust. In the events which happened, the effect of cl 3(b) was that if by 30 June 1995 the Trustee of the Raftland Trust had not decided to pay out or accumulate the income of the Trust Fund for that year, it was to be held in trust for the only Tertiary Beneficiary – the Trustee of the E & M Unit Trust. On 30 June 1995 the directors of Raftland Pty Ltd passed a resolution proposing that in its capacity as Trustee of the Raftland Trust it distribute as income an amount of $250,000 to Mr Carey as Trustee of the E & M Unit Trust. On the same day those directors also passed a resolution that Raftland Pty Ltd, in its capacity as Trustee of the Raftland Trust, distribute the balance of its income to Mr Carey as Trustee of the E & M Unit Trust. The appellant's case was that if matters stood there, contrary to the assessment made by the respondent, the sum of $2,849,467 would not have been taxable in the hands of Raftland Pty Ltd, the Trustee of the Raftland Trust, because it had no present entitlement to it. It would have had no present entitlement to it because the Trustee of the E & M Unit Trust would have had a present entitlement under the Raftland Trust Deed. However, the respondent contended that matters did not stand there. It contended that the following three things should be "disregarded". The first was the Raftland Trust Deed so far as it appointed the Trustee of the E & M Unit Trust as a Tertiary Beneficiary of the Raftland Trust (cl 1(u) and the Schedule). The second was the first resolution on 30 June 1995. The third was the other resolution passed that day. It may be inferred that, so far as the intention of the Settlor, Mrs Sommerville, was relevant, that intention was to be found in the minds of the Heran brothers, the principals of Mr Tobin, who was Mrs Sommerville's employer. So far as the intention of the Trustee, Raftland Pty Ltd, was relevant, the same was true in view of its directors and shareholders. In assessing that intention any evidence by Mr Tobin, the architect of the transactions, could be taken into account, particularly if it were adverse to the interests of his principals. It may also be inferred that the intention of Mr Carey as Trustee of the E & M Unit Trust was the intention of Mr and Mrs Thomasz, the controllers of that Trust, and that that intention was the same as that of the Heran brothers. The trial judge made the following findings. The Heran interests desired to obtain control of the E & M Unit Trust, with its carried forward losses. The Thomasz interests desired to relinquish that control for the price of $250,000. The Heran interests did not desire to benefit the E & M Unit Trust to any extent greater than $250,000. The Thomasz interests had neither any expectation of that benefit nor any intention of seeking it: any risk that the unit holders of the E & M Unit Trust might require the Trustee of that Trust to seek payment of the income of the Raftland Trust pursuant to cl 3(b) of the Raftland Trust Deed was "commercial" only – a risk of no significance, "little more than a mere possibility". Hence both the Heran interests and the Thomasz interests did not contemplate that there would be any distributions of income from the Raftland Trust, and the only payment to pass from the former interests to the latter was to be the $250,000 payable as the price for control of the E & M Unit Trust. Those findings are crucial to considering the question of whether, as at 30 June 1995, the Trustee of the E & M Unit Trust had a present entitlement to the income of the Raftland Trust. A person of full capacity who has a present beneficial entitlement to trust income can vindicate that entitlement by curial action, and a person of full capacity who cannot do that has no present beneficial entitlement. The position in relation to the income of the Raftland Trust thus may be tested by posing a hypothetical inquiry. As shown below, if the event hypothesised took place, criticism of the Trustee of the E & M Unit Trust would be merited. Accordingly, it is desirable to stress that the event hypothesised has never happened and is never likely to happen. The inquiry is: had the Trustee of the E & M Unit Trust sued the Trustee of the Raftland Trust for the income of the Trust in its operation for the year ended 30 June 1995, pursuant to cl 3(b) of the Raftland Trust Deed, what answer could the Trustee of the Raftland Trust have made? It does not appear possible for the Trustee of the Raftland Trust to answer that there was a "sham" in the sense of a transaction aimed at deceiving third parties. The trial judge did not make a finding to that effect, and does not seem to have been explicitly invited to do so. In these circumstances it would be difficult in this Court to make that finding in this case. In some cases it would be possible to hold that a beneficiary apparently entitled under a trust was not presently entitled because that beneficiary had contracted to give up the relevant beneficial interest in whole or in part. That is an unlikely analysis for the Trustee of the Raftland Trust to proffer here, because it is difficult to find any consideration flowing to the E & M Unit Trust or from any other party for that contract. In any event it is erroneous to characterise the parties' dealings as first causing beneficial interests to spring up in the Tertiary Beneficiary and then leading to a contract in which the Tertiary Beneficiary gave up those beneficial interests: the question is rather whether their dealings, despite the form of cl 3(b) of the Raftland Trust Deed, prevented any beneficial interest arising at all. For the same reason it would not be possible for the Trustee of the Raftland Trust to contend that the Tertiary Beneficiary had waived its beneficial interests. "'Waiver' implies that you have something, and that you are throwing it away."160 On the trial judge's findings of fact, the question is rather whether the Tertiary Beneficiary as such ever had anything. Nor, if the Trustee of the E & M Unit Trust insisted on its apparent rights under the Raftland Trust Deed, is the case one where rectification is available to forestall that claim. Rectification is a remedy granted where the parties are in complete agreement as to the terms of their dealings, but by an error wrote them down wrongly. Here they were in complete agreement, and one of the terms of that agreement was that in part they be written down as they were written down in the Raftland Trust Deed. However, the Trustee of the Raftland Trust could give an answer in the words which Lord Selborne LC, James and Mellish LJJ used Jervis v Berridge161. It is not the case that cl 3(b) of the Raftland Trust Deed was 160 Ewart, Waiver Distributed, (1917) at 13. 161 (1873) LR 8 Ch App 351 at 359. The passage was quoted with approval by Hope JA in Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 318. "valid and operative between the parties, but omitting (designedly or otherwise) some particular term which had been verbally agreed upon". Rather it was "a mere piece of machinery obtained by the [Heran interests] from the [Thomasz interests], as subsidiary to and for the purposes of the verbal and only real agreement, under circumstances which would make the use of it for any purpose inconsistent with that agreement dishonest and fraudulent." A court of equity, asked by a person claiming a present beneficial entitlement under a purported trust to enforce it, would not do so if that attempted enforcement of the purported trust would be dishonest and fraudulent. That is the position in which the Trustee of the E & M Unit Trust would be if an attempt to enforce cl 3(b) had been made. If the Thomasz interests acting through the Trustee of the E & M Unit Trust could not use cl 3(b) of the Raftland Trust Deed to claim a present entitlement to the income of the Raftland Trust, it follows that they did not have that entitlement. The conclusion of the Full Court of the Federal Court cannot stand with the findings of the trial judge, and those findings have not been shown to be wrong. While in one sense the Full Court was correct to say that the nomination of the Trustee of the E & M Unit Trust as a Tertiary Beneficiary of the Raftland Trust was at the forefront of the intentions of those who established the Raftland Trust, their intentions taken as a whole were inconsistent with the existence of any capacity in the Trustee of the E & M Unit Trust to enforce a beneficial entitlement, and that Trustee did not have a beneficial entitlement. It follows, as the respondent submitted, that the nomination of the Trustee of the E & M Unit Trust as a Tertiary Beneficiary of the Raftland Trust should be "disregarded". It further follows that the two resolutions of the directors of Raftland Pty Ltd on 30 June 1995 purporting to distribute the income of the Raftland Trust to the Trustee of the E & M Unit Trust as a Tertiary Beneficiary should also be disregarded. There having been no payment of income to the Secondary Beneficiaries, the proviso to cl 3(b) has the result that Raftland Pty Ltd held the income on trust for the Primary Beneficiaries within the meaning of s 100A. On other issues I agree with Gleeson CJ, Gummow and Crennan JJ, and with the orders they propose.

HIGH COURT OF AUSTRALIA Matter No B93/2003 EQUUSCORP PTY LTD & ANOR APPELLANTS AND GLENGALLAN INVESTMENTS PTY LTD RESPONDENT Matter No B94/2003 EQUUSCORP PTY LTD & ANOR APPELLANTS AND CODD Matter No B95/2003 RESPONDENT EQUUSCORP PTY LTD & ANOR APPELLANTS AND Matter No B96/2003 RESPONDENT EQUUSCORP PTY LTD & ANOR APPELLANTS AND PRENDERGAST RESPONDENT Matter No B97/2003 EQUUSCORP PTY LTD & ANOR APPELLANTS AND THORNTON Matter No B98/2003 RESPONDENT EQUUSCORP PTY LTD & ANOR APPELLANTS AND HGT INVESTMENTS PTY LTD RESPONDENT Equuscorp Pty Ltd v Glengallan Investments Pty Ltd Equuscorp Pty Ltd v Codd Equuscorp Pty Ltd v Anderson Equuscorp Pty Ltd v Prendergast Equuscorp Pty Ltd v Thornton Equuscorp Pty Ltd v HGT Investments Pty Ltd [2004] HCA 55 16 November 2004 ORDER Orders in each matter Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of Queensland made on 27 September 2002 and, in place thereof, order that: the appeal to that Court is allowed; the orders of the primary judge made on 30 November 2001 and 5 March 2002 are set aside; and the matter is remitted to the Supreme Court of Queensland for further consideration of the issues not decided at trial. Appellants have 14 days from the date of these orders to make written submissions as to costs and the respondents have a further 14 days to make written submissions in answer. On appeal from the Supreme Court of Queensland Representation: P A Keane QC with S S W Couper QC for the appellants (instructed by Gadens Lawyers) D R Cooper SC with C L Francis for the respondents (instructed by Lees Marshall & Warnick) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Equuscorp Pty Ltd v Glengallan Investments Pty Ltd Contract – Loan – Written agreement and prior oral agreement – Written agreement inconsistent with terms of alleged prior oral agreement – No allegation of mistake or claim to rectification – Borrower bound by written agreement. Contract – Loan – Direction to lender to apply money lent in payment of moneys due from borrower to third party – Series of connected and legally effective transactions creating and satisfying debts – One of those transactions satisfying amount due from borrower to third party – No payment by cheque or cash – Does a loan require the transfer of "real money" – Whether loan made as agreed. Practice and Procedure – Appeal and new trial – Remitter for further consideration. GLEESON CJ, McHUGH, KIRBY, HAYNE AND CALLINAN JJ. As the 1989 financial year ebbed away, each respondent in these appeals considered making a "tax effective" investment. On the last day of May 1989, Mr Alastair Hassell, a marketing consultant for a group of companies associated with Mr Tony Johnson ("the Johnson Group"), sent to one of the respondents, Mr Barry Thornton, a circular entitled, "Precisely What is the Best Farming Investment this Year?". The circular suggested that the answer to this question was "the Red Claw (fresh water crustacean) Project in northern Queensland" to be conducted by the Johnson Group as a "large-scale aquaculture project". Each of the respondents determined to invest in this project. All were associated, in one way or another, with Mr Thornton and a company then called GWA Pty Ltd. The case against Glengallan Investments Pty Ltd, Mr Thornton's family's investment company, has been taken as typical of the claims against all respondents. No distinction has been drawn in argument between the respondents. None need be drawn in these reasons. Together, the respondents sought to acquire over 3,700 units in the project and to borrow more than $3.2 million for that purpose. The circular explained that the minimum investment was 5 units at $868 each ($4,340) and that, of that sum, $4,280 was tax deductible in the initial financial year. If the investment was "fully borrowed", and one year's interest was prepaid, "an investor would have an initial cash outlay of $781 and a deduction of $5,061". The circular pointed out that an application for investment in the venture could be made only "through the registered Prospectus". So much followed from the provisions of the then applicable companies legislation (Div 6 of Pt IV of the Companies (Victoria) Code). What was being offered to the public was a prescribed interest. A prospectus was issued on 16 June 1989, 14 days before the end of the financial year. It, too, described the taxation consequences that were said to follow from investing in the project. If the deductions described in the circular, and in the prospectus, were to be obtained in the 1989 financial year, time was short. The prospectus described the proposed structure of the venture. An investor in the venture bought units in a limited partnership to be registered under the Partnership (Limited Liability) Act 1988 (Q). The terms of each partnership were recorded in a partnership deed made between Eagle Star Trustees Ltd ("Eagle Star"), Forestell Securities (Australia) Ltd ("Forestell") and others. Forestell was the "General Partner"; Eagle Star was the "Representative". Forestell, as General Partner, was given authority to manage the partnership McHugh Kirby Hayne Callinan project and the business of the partnership. Eagle Star agreed to act as representative of each of the partners: those who were registered as the holders of units in the partnership. More than one partnership was formed. (The number of partnerships was at the discretion of the General Partner, Forestell.) Up to 80,000 units could be issued. The minimum subscription, which had to be received before the project commenced, was 4,000. The prospectus said that, subject to the minimum subscription being received, the first partnership would commence business on 30 June 1989. The partnership deed authorised Forestell, as General Partner, to retain Johnson Farm Management Pty Ltd ("JFM") as manager of the project. A form of management agreement was annexed to the partnership deed. By that management agreement, JFM was obliged to meet all costs, expenses and outgoings of the partnership in its first year, but JFM was to be paid a management fee. If the fee was prepaid (that is, before 30 June 1989) the fee was $833 for each unit issued in the partnership. Forestell made a further agreement with JFM and with Farmer Johnson Aquaculture Ltd ("FJA") by which FJA agreed that it would grant a "grow out pond lease" and a "facilities licence" in respect of each partnership. The annual rent under the grow out pond lease was $20 per unit; the annual licence fee was $3 per unit. Thus, by the various agreements described, each investor would pay $868 per unit; $833 would be paid to JFM; and $23 would be paid for rent and licence fees. The balance of $12 was to be available to buy crayfish stock. It was this last sum (a total of $60 for each 5 units subscribed) that the circular had said would not be tax deductible. On the last day of the financial year, each respondent applied for units. Each executed a written loan agreement, agreeing to borrow the whole of the purchase price for the units from the second appellant ("Rural Finance"). The first and principal question in these appeals is whether Rural Finance lent the respondents the amounts agreed. (The first appellant ("Equuscorp") sued as assignee of the loans.) Deciding whether Rural Finance lent money to the respondents will require consideration of a series of connected transactions that took place at the offices of a Melbourne branch of Westpac Banking Corporation on 30 June 1989. On their face, those transactions (a round robin) appeared to be intended to constitute a payment from Rural Finance to Eagle Star of the amount of each respondent's investment, Eagle Star's payment of those amounts to Forestell, McHugh Kirby Hayne Callinan Forestell's payment of the amounts to JFM and FJA, and those companies' deposit of the sums paid with Rural Finance as an interest bearing deposit. The respondents say there was no loan, or at least no loan of what they called "real money". When sued by Rural Finance and Equuscorp in the Supreme Court of Queensland for money lent, the respondents answered by saying they were not indebted, because no money was lent. Alternatively, they said that they had been misled or deceived and they challenged the validity of the assignments from Rural Finance to Equuscorp. At trial, the respondents succeeded in their defence that there had been no loan1. The primary judge (Helman J) concluded that the transactions at the offices of Westpac were "book entries ... made to create an 'audit trail'"2 and that each of the transactions was3 "a complete artifice or façade" and a "charade". The respondents' contentions about misleading or deceptive conduct and about the validity of the assignments were not decided. An appeal by Rural Finance and Equuscorp to the Court of Appeal of Queensland4 failed. Williams JA, who gave the principal reasons of the Court, concluded5 that "it was fundamental to the performance of the various agreements associated with the venture that real money flow from the [respondents] to those entities responsible for conducting the enterprise". By special leave, Rural Finance and Equuscorp now appeal to this Court. The appeal should be allowed. The appellants' case in the courts below The appellants' case against the respondents was simple. They alleged that on 30 June 1989, Rural Finance made written loan agreements with each 1 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2001] QSC 464. [2001] QSC 464 at [28]. [2001] QSC 464 at [29]. 4 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2002] QCA 380. [2002] QCA 380 at [111]. McHugh Kirby Hayne Callinan respondent. By each of those agreements, Rural Finance agreed to lend, and the relevant respondent agreed to borrow, a sum which the borrower directed the lender to apply "in payment of the Application Moneys [for units] and otherwise in accordance with the Borrower's obligations under the [Partnership] Deed". The appellants alleged that Rural Finance had done this but that each respondent had defaulted in the repayments of principal and interest. The respondents' case in the courts below The respondents' case was much more complex. First, they alleged that the loan agreements were made in June 1989 but were wholly oral. Each was said to be constituted by a number of conversations taking place between early June 1989 and 30 June 1989 "but prior to the execution of the Loan Agreement" (emphasis added). The respondents alleged that it was a term of these agreements (referred to in the pleadings as the "operative agreement[s]") that the liability of each respondent was limited. It was said that liability was limited to one payment on 30 June 1989 and two subsequent payments on 30 September 1989 and 31 December 1989, and that, thereafter, "the income generated by the limited partnership would be applied in extinguishment of the balance of the ... loan". It is convenient to refer to this allegation of limited liability as the "limited recourse" point. The primary judge held6 that the respondents should succeed on the limited recourse point. He accepted the oral evidence given by certain witnesses for the respondents about the conversations on which they relied and concluded that the operative agreements alleged by the respondents governed the relations between the parties. On appeal, however, it was held7 that the finding that the terms of the loan were agreed upon orally could not stand. The second argument advanced by the respondents was that Rural Finance had not provided a cheque, or paid cash, to Eagle Star for the units and, therefore, had not made the alleged loan to the respondents. This may be called the "real money" point and on this point the respondents succeeded both at trial and in the Court of Appeal. [2001] QSC 464 at [15]. [2002] QCA 380 at [89]. McHugh Kirby Hayne Callinan Thirdly, the respondents alleged that they had entered the operative agreements and subsequently signed the written loan agreements relying on representations: (a) that the liability of the respondents was limited in the manner described earlier; and (b) that Rural Finance "had sufficient funds to lend" to the respondents by way of a payment to enable the respondents to acquire the relevant number of units in the limited partnership. Each of these representations was said to be misleading and the respondents contended that they were entitled to rescind, and had rescinded, the operative agreements. Further, if, contrary to the respondents' principal contention, the written loan agreements bound the respondents, the first representation was alleged to constitute misleading or deceptive conduct, contrary to s 52 of the Trade Practices Act 1974 (Cth), and the respondents claimed damages. The second representation was also alleged to be false and misleading "in that [Rural Finance] did not have sufficient funds to lend to [the respondents] and did not in fact lend any funds" to them. Again the respondents claimed damages for misleading or deceptive conduct. This group of points may be called "the misleading or deceptive conduct points". Neither the trial judge nor the Court of Appeal found it necessary to decide any of them. Finally, the respondents alleged that the purported assignments by Rural Finance to Equuscorp of the respondents' debts were ineffective either because the respondents were not indebted, or because the assignments were conditional, and failed for want of fulfilment of the conditions. The appeal to this Court The first three of these points arise on the appeal to this Court. Equuscorp and Rural Finance, as appellants, submit that the courts below erred in their conclusion on the real money point. The respondents, by notice of contention, allege that, even if that is so, they have the answer that the loan was a limited recourse loan and they have met their limited obligations. They further submit that the misleading or deceptive conduct points, and the points about the validity of the assignments, have not been decided and should now be remitted for further consideration by the courts of Queensland if they otherwise fail in the appeal. It will be necessary to say something further about the facts. Having first done that, it will be convenient to begin with the limited recourse point, even though it arises by way of notice of contention. That will require examination of what were the agreements between the parties. Only then will it be appropriate to consider whether Rural Finance performed those agreements. McHugh Kirby Hayne Callinan Some further aspects of the facts Not all who invested in the project borrowed from Rural Finance. Some paid cash for their units. Overall, about $13 million was raised from investors. Of that, about $2 million was subscribed by investors who did not borrow from Rural Finance. There was little or no evidence that showed how the sums invested by those who did not borrow from Rural Finance were dealt with on or before 30 June 1989. So far as the evidence went, there was no reason to think that their money was treated in any significantly different way from the amounts subscribed by those who borrowed from Rural Finance. Were this so, it would suggest that some of the respondents' arguments about the economic effect of the transactions were open to question. The evidentiary foundation for investigating this aspect of the matter, however, is not extensive. It will be convenient to leave it to one side and focus only upon the transactions to which the respondents were party. There was evidence at trial given by Mr Hassell, the marketing consultant who introduced the respondents to this investment, that in June 1989 there were other "tax effective" farming investments being offered to the public. At least some of these were being offered in conjunction with an offer of "non-recourse loans". Indeed, the Johnson Group had previously made offers of prescribed interests in a blueberry venture which limited the liability of investors to the obligation to pay one year's interest and one repayment of a part of the capital sum borrowed. The remaining liability was to be paid for and discharged from what was referred to as the "proceeds" of the initial crop of fruit and a "Sale of Fruit Agreement". In the prospectus for that venture this arrangement was referred to as "the non-recourse nature of the Loan". The respondents alleged that the loan agreements they made with Rural Finance were of the same kind. By June 1989, however, the Australian Tax Office was expressing at least concern about the effect of such arrangements. On 26 June 1989, JFM sent a circular about the Red Claw Project addressed to "Accountants and Advisors and Existing Blueberry Clients only". In that circular it was said that "[t]he proliferation of guaranteed forward income projects [had] recently attracted detailed scrutiny by the Sydney ATO". It went on to claim that, in 1987, JFM had been the first to introduce "guaranteed farm income". But it concluded that: "Due both to this proliferation and to Sydney ATO's current views, [JFM] decided in May 1989 to abandon 'safe' investor loans and 'forward minimum income' attachments in favour of 'full investor risk' coupled with highly conservative project profit forecasts." McHugh Kirby Hayne Callinan The respondents' allegations that their liability was limited are at odds with these statements and the history recorded in the circular of 26 June 1989 as lying behind them. The prospectus, the agreements referred to in the prospectus, and the documents executed by the respondents, were all consistent with the description given in the circular of 26 June 1989 of the arrangements to be made. Neither the prospectus nor the written loan agreement suggested any limitation on the liability of the borrower and neither suggested that any warranty was given that the estimation of future receipts or profits would be realised. Instead, the prospectus said on its cover that "[t]his Investment may be considered speculative as unpredictable adversities could occur which might affect either production costs or volumes". As events turned out, the warning was well based. The venture failed. Not insignificant among the reasons for failure were such unpredictable adversities as stock losses and finding that, because ponds built to keep the stock leaked, a lot of time and money had to be spent sealing them. There were some communications after 30 June 1989 which were said to suggest that the respondents' liability was limited. In particular, there was a letter from Rural Finance dated 29 November 1989 seeking payment of a "second (and final) loan repayment" in relation to the "investment in the Red Claw Project" and offering a rebate if that sum was paid before its due date. Against that may be set what was said in 1993 to the Australian Tax Office by accountants acting for at least some of the respondents. In response to a Position Paper prepared by the Tax Office, after conducting an audit of Red Claw Partnerships, the accountants were at pains to point out to the Tax Office that borrowers from Rural Finance "remain[ed] liable for capital repayments and interest payments in relation to the loans". Any limitation of recourse was said to be no more than a limitation of the security in respect of the loan. (How those two apparently conflicting propositions were to be reconciled was not apparent from what was said in the accountants' letter.) In addition, there were several other documents or communications said to bear on this issue. Of these, only one group need be noticed: documents entitled "Guarantee" executed under seal by JFM and Mr Johnson and signed "for and on behalf of" Rural Finance by Mr Johnson. These documents were given, or sent, to the respondents in December 1989. They provided that "we, the undersigned hereby guarantee and indemnify [the respondents] as follows". There followed three clauses. First, it was said that "the only payments to be made" by the respondents were to be payments described as prepaid interest, and two principal repayments. It was then said that "no further payment will be made by [the McHugh Kirby Hayne Callinan respondents] beyond the above" to JFM, Rural Finance, "or any other party". Finally, allowing for certain verbal infelicities, it was said that the "undersigned" guaranteed and indemnified the respondents against "any claims or demands by [JFM] or Rural Finance ... or any other party in respect of the Red Claw Project or the said loan agreement in excess of the abovementioned amount". The difficulties in construing these documents are evident. Were they releases? Were they a contract of suretyship? The difficulties were not made less by the respondents' contention on appeal that the documents did not accurately record the agreement that had been made between the parties in June 1989. Rather, the documents were used in argument, both on appeal to this Court and in the courts below, as a basis for suggesting the correctness of the respondents' fundamental contentions that the operative agreements were oral, were made before the written loan agreements were executed, and contained provisions limiting the liability of the respondents. It is convenient to turn at once to these fundamental contentions without pausing to examine how, or whether, these several conflicting pieces of evidence might be reconciled. Written agreements or oral? Debate in the courts below, about whether the loan agreements were wholly oral, as the respondents alleged, or wholly written, as Equuscorp and Rural Finance contended, proceeded upon the premise that the critical question was whether the primary judge should have acted on his acceptance of oral evidence given on the respondents' behalf of some conversations that were said to have occurred before the written loan agreements were signed. That, in turn, was seen as a question to be decided by reference to whether subsequent events (including those we have mentioned) made it more or less probable that during these conversations some consensus was reached that the loans were "limited recourse". But behind these arguments lies a more fundamental issue which the respondents' contentions did not address, whether in the courts below or on appeal to this Court. It is, and always has been, common ground that each of the respondents executed a written loan agreement on 30 June 1989. The respondents alleged that the "operative agreement" was not contained in that writing. It was said that the relevant agreement was reached earlier and was wholly oral. Yet it was not said that the written agreement should be rectified. It was not said that a defence of non est factum was available. It was not said that the written agreement was executed by mistake, or that its execution was procured by misrepresentation as to its contents or effect. (The misrepresentation alleged was as to what had been said in the conversations, not what the document was or provided.) McHugh Kirby Hayne Callinan The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it8. The parol evidence rule9, the limited operation of the defence of non est factum10 and the development of the equitable remedy of rectification11, all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents' case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither. There are reasons why the law adopts this position. First, it accords with the "general test of objectivity [that] is of pervasive influence in the law of contract"12. The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time-consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of 8 L'Estrange v Graucob Ltd [1934] 2 KB 394. 9 Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133. 10 Petelin v Cullen (1975) 132 CLR 355. 11 Taylor v Johnson (1983) 151 CLR 422. 12 Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 per Gleeson CJ. 13 Gissing v Gissing [1971] AC 886 at 906 per Lord Diplock; Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 502 per Lord Diplock. McHugh Kirby Hayne Callinan statute or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here. In a time of growing international trade with parties in legal systems having the same or even stronger deference to the obligations of written agreements (and frequently communicating in different languages and from the standpoint of different cultures) this is not a time to ignore the rules of the common law upholding obligations undertaken in written agreements. It is a time to maintain those rules. They are not unbending. They allow for exceptions. But the exceptions must be proved according to established categories. The obligations of written agreements between parties cannot simply be ignored or brushed aside. The conclusion that the respondents are bound by the written loan agreements may leave open the possibility that an earlier consensus reached by the parties was in each case a collateral agreement (made in consideration of the parties later executing the written agreement14), but that has never been the respondents' case. In another case it may leave open the possibility that the contract is partly oral and partly in writing15. But that cannot be so here. The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties' agreement recorded in the writing they executed16. It is the written loan agreement which governed the relationship between Rural Finance and each respondent. It is as well to add, however, that it may be doubted that the evidence at trial revealed that the parties reached any consensus about the loan being a "limited recourse" loan that would be sufficiently certain to admit of enforcement. For the reasons given earlier, it is not necessary to reach this point in order to decide this aspect of the case. It is enough to say that the oral evidence given by certain witnesses, which the primary judge accepted as true, was evidence which, when examined in transcript, appears to have been far less than definite about who agreed what, with whom. So, to take only one example, 14 Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133; De Lassalle v Guildford [1901] 2 KB 15 Maybury v Atlantic Union Oil Co Ltd (1953) 89 CLR 507 at 517. 16 Gordon v Macgregor (1909) 8 CLR 316 at 322-323; Masters v Cameron (1954) 91 CLR 353 at 360-361. McHugh Kirby Hayne Callinan the written statement of Mr Thornton, which stood as his evidence in chief, described a conversation with Mr Hassell in which it was said that there would be "a written document guaranteeing that the loans are limited recourse" and that Mr Johnson had "confirmed what Alastair [Hassell] had told" Mr Thornton. This conversation was critical to the contention that "limited recourse" terms were agreed. But what was meant by limited recourse? For whom were Mr Hassell and Mr Johnson acting? The evidence about these questions was far from precise. The respondents attached significance to the documents dated 19 December 1989 and headed "Guarantee" which were sent to Mr Thornton. Yet those documents, created nearly 6 months after the written loan agreements had been executed, appeared to assume that the borrower was liable to repay the loan in full. They provided that Mr Johnson and JFM would guarantee and indemnify the borrower against payments further than those which the respondents alleged to be the limit of their liability. It was accepted in argument that an agreement in that form did not record an agreement of the kind the respondents alleged. The agreement they alleged limited their liability to the making of certain payments; it did not provide for their looking to another party to indemnify them against a continuing obligation. Yet the respondents made no complaint about these documents when they were received. They did not then suggest that the documents failed to record the agreements that, on their case, had been reached much earlier. Of no less significance than these evident imperfections in the proof of what was said to be an earlier consensus constituting the agreements between the parties, providing that the loans should be "limited recourse", is that the respondents' argument inevitably posed a question presenting a dilemma which could not be resolved to their advantage. If there was an earlier oral agreement providing for limits to the respondents' liability to repay the sums lent, why did the respondents execute the written loan agreements? They could not say that those written loan agreements were shams. If they said that, the inference that the written agreements were executed to deceive the taxation authorities would be all too readily available, and no other competing inference appears to be open. But neither could the respondents assert that they were agreements collateral to the principal oral agreements. If the earlier oral agreements limited the respondents' liability in the way they alleged, the later written agreements were inconsistent with that limitation. Yet they did not seek rectification of the written agreements. The only way to reconcile the earlier oral arrangement the respondents alleged and the written loan agreements they executed would be to understand McHugh Kirby Hayne Callinan the limitation of recourse to the respondents as a limitation which was to be effected by the Johnson interests undertaking some secondary liability to the respondents to save them harmless if the venture did not produce profits sufficient for the respondents to meet their obligations under the loan agreements. But such an agreement (perhaps of a kind intended to be effected by the Guarantees of December 1989) would give the respondents no answer to the lender's claim for repayment; it would do no more than give the respondents a right against other parties. The respondents' contention about limited recourse therefore fails. The agreements between Rural Finance and the respondents were recorded wholly in the written loan agreements. Did Rural Finance perform its obligations to lend the respondents the sums referred to in those loan agreements? The real money point It was of the first importance to all who invested in this venture, not only that they pay for their units by 30 June 1989, but that the money they paid be applied in the manner described in the prospectus and the agreements referred to in the prospectus. Only if the money they paid was applied in that way would the investors be able to claim the tax deductions that had been spoken of in the circular and were described again in the prospectus. Only then would their investment be "tax effective". And, as the circular had pointed out, that tax effect was enhanced if the investment was "fully borrowed". By prepaying interest on the loan (at $781 for each 5 units) the investor would claim a deduction of $5061, but outlay only $781 of the investor's own money. The prospectus and its associated documents made clear that the amounts which investors subscribed, or at least all but $12 per unit, would be paid to JFM or FJA before 30 June 1989 as prepayment of management fees and lease and licence fees. If those sums were not paid, the partnerships (which were not to commence business until 30 June 1989) would sustain no loss during that financial year, and the partners could claim no share of a partnership loss. It was against that background that the several transactions were effected at Westpac on 30 June 1989. There was no dispute about what the transactions were. Pursuant to written authorities signed by Mr Johnson as Managing Director of Rural Finance, Rural Finance's account at Westpac was debited with two amounts ($7,910,084 and $3,634,316) and Eagle Star's account was credited with these amounts. Westpac recorded these transactions in debit and credit McHugh Kirby Hayne Callinan notes. Cheques were drawn by Eagle Star on its account in favour of Forestell and paid to the credit of Forestell. Forestell drew cheques in favour of JFM and FJA for amounts calculated at $845 per unit payable to JFM (for the management fee of $833 and the price of crayfish stock of $12) and $23 per unit payable to FJA (for lease and licence fees). The intention was that the funds received by JFM and FJA would be transferred to Rural Finance pursuant to written authorities given by those companies and argument, both on appeal and in the courts below, has proceeded on the assumption that this was done. Each of these transactions was legally effective. None of the transactions that took place on 30 June 1989 could be said to be a sham. The primary judge was wrong to characterise them, as he did by his references to "artifice", "façade" and "charade", as shams. "Sham" is an expression which has a well-understood legal meaning. It refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences17. In this case, debts were created and satisfied18 at all points in the chain until, at its end, Rural Finance owed JFM and FJA certain sums, and the respondents owed Rural Finance certain sums. And of most particular relevance to the present matters, in accordance with its obligations under the written loan agreements, Rural Finance had applied the money it lent in payment of the application moneys due from the respondents for the units being bought. The contrary view reached in the Court of Appeal was much influenced by that Court's earlier decision in Australian Horticultural Finance Pty Ltd v Jekos Holdings Pty Ltd19. Perhaps that decision may be understood as turning upon its particular facts. If, as the respondents contended in these matters in the Court of Appeal, it stands for some more general principle – that there is no "loan" unless there is "real" money lent – it is wrong and should be overruled. As the expression "real money" might suggest, the point which the respondents sought to make in these matters appeared to be one about the economic rather than the legal effect of the transactions in question. That is, the 17 Sharrment Pty Ltd v Official Trustee (1988) 18 FCR 449. 18 Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 at 13-14; In re Harmony and Montague Tin and Copper Mining Co (Spargo's Case) (1873) LR 8 Ch App 407 at 411-412. 19 [1997] QCA 440. McHugh Kirby Hayne Callinan respondents' contention appeared to be a complaint that no "real" capital was brought into the partnerships. And as the prospectus made plain, the purpose of issuing units was to provide working capital for the venture. The economic proposition that no "real" capital was brought into the venture (or that no "real" money was lent) depended upon an unstated premise that the obligations which Rural Finance owed JFM and FJA, to repay the interest bearing deposits the latter companies had made, were obligations that could not, or would not, be met. As mentioned earlier, it is a proposition that would not readily accommodate the fact that some investors did not borrow the amounts they invested and it may well be that the money they invested was dealt with in the same way as the respondents' application moneys were applied. But again, as mentioned earlier, this point may be left to one side. Had JFM and FJA deposited the moneys they received on 30 June 1989 with a bank rather than with a related company, the contention that there was no real money raised would evidently fail. Thus, the point which the respondents sought to make in this regard was one dependent not only upon pointing to the relationship between Rural Finance and the depositing companies (JFM and FJA) but also upon a premise that Rural Finance would not, or could not, meet its obligations. Even if that premise had been made good, it would not demonstrate that no loan had been made by Rural Finance. It would show only that JFM and FJA had made an improvident investment of their funds. It was not suggested that the payments made to JFM and FJA contravened any provision of the agreements governing the relationships between the respondents as unit holders and other participants in the venture. Indeed, for the reasons given earlier, the making of those payments was a step of critical importance to the respondents. It was the making of those payments that was thought to produce the tax consequences they sought. Nor was it suggested that the deposit with Rural Finance of the funds received by JFM and FJA contravened any provision of the agreements which governed the relationships between the parties. These are reasons sufficient to conclude that the courts below erred in deciding that Rural Finance did not lend money to the respondents. But there is a further, separate, point which should be made. To say that Rural Finance "would not or could not meet its obligations" poses the further question: when? Presumably that would have to be answered by saying: when the money was lawfully demanded. But it is not a question that permitted or required the answer: 30 June 1989. The capital raised was not to be McHugh Kirby Hayne Callinan expended then. Hence, whether Rural Finance could have met a demand on 30 June 1989 is not to the point. What happened after 30 June 1989 showed, in any event, that the premise for this aspect of the respondents' argument (that Rural Finance would not, or could not, repay the interest bearing deposits made by JFM and FJA) was false. Rural Finance repaid at least $5 million of those interest bearing deposits. That it raised the money to do so by factoring its debts may or may not have been commercially sensible. But the fact is that it did repay significant amounts of the interest bearing deposits. The respondents' contention that Rural Finance could not pay what it owed depended, in large part, on the fact that the venture as a whole failed. That failure may well have been affected by a lack of sufficient working capital to cope with unexpected events like the need to seal ponds against leakage. But it is not necessary to explore these questions. The relevant fact is that the premise for this branch of the respondents' argument was not made good. Even if made good, it would not have denied the legal effect of the several transactions that took place at Westpac on 30 June 1989. It is not necessary, then, to reach a further point which Rural Finance and Equuscorp sought to make. They contended that the respondents, having learned about what happened at Westpac on 30 June 1989, chose to "affirm" the transaction. There was dispute about when the respondents first learned of the way the transaction had been effected on 30 June 1989 and about whether steps then taken by the respondents constituted their adopting the benefit of those transactions. These disputes need not be resolved. It should be noted, however, that the appellants' contentions about what they described as "affirmation" of the agreements would have required close consideration of the legal basis for the conclusion asserted to follow. It was not said that the respondents were estopped from contending that there was no loan20. There was not said to have been some election made between competing and inconsistent rights21. In the end, the point appeared to be no more than a forensic point about the respondents' delay in 20 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641; Legione v Hateley (1983) 152 CLR 406; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; The Commonwealth v Verwayen (1990) 170 CLR 394. 21 Sargent v ASL Developments Ltd (1974) 131 CLR 634; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26. McHugh Kirby Hayne Callinan complaining about what had happened. It is, however, unnecessary to pursue this question. What It follows that the appeals must be allowed with costs. consequential orders should be made? Should the matters be remitted for further argument of the misleading or deceptive conduct points, and the points about the validity of the assignment, and decision of those aspects of the matter by the courts of Queensland? The appellants submitted that remitter was futile. The misleading or deceptive conduct points As noted earlier in these reasons, the respondents contended that they had entered the so-called operative agreements, and later signed the written loan agreements, relying on two misrepresentations. The first was said to be that their liability was limited in the manner alleged, and the second that Rural Finance had sufficient funds to lend to the respondents but in fact did not. What should be done about these claims? It is necessary to recall that the primary judge accepted evidence given on the respondents' behalf about what was said, before the respondents executed the written loan agreements, on the subject of limiting the respondents' liability. The Court of Appeal's conclusions about the consequences that followed from that acceptance were directed to identifying what was the agreement between the parties rather than to the issues whether the statements about limited recourse were operative misrepresentations, or constituted misleading or deceptive conduct. Those issues require consideration not only of what was said, but also whether what was said misled the respondents. And neither at trial nor on appeal has there been any real attention given to whether what was said constituted misleading or deceptive conduct by Rural Finance, as distinct from the individual speaker, or some company in the Johnson Group other than Rural Finance. Nor has there been any focus upon what causal connection, if any, there was between the misleading representations allegedly made about limited recourse, earlier in June 1989, and the subsequent execution of the written loan agreements by, among others, Mr Thornton, a chartered accountant whom the primary judge found22 to be "a businessman of considerable experience". The respondents' claims that there were operative misrepresentations and that the respondents were misled or deceived in this particular respect have not 22 [2001] QSC 464 at [23]. McHugh Kirby Hayne Callinan been decided by the primary judge or by the Court of Appeal. They should not be decided for the first time in these appeals. Rather, they should be decided at first instance and accordingly these questions should be remitted to the Supreme Court of Queensland for consideration conformably with the reasons of this Court. If the respondents' claims about misrepresentation and about misleading or deceptive conduct concerning limited recourse are to be remitted for further consideration at first instance, it is prudent to remit the claims concerning the alleged representation about "real" money. The conclusion reached earlier in these reasons about the real money point may suffice to prevent the respondents succeeding on the alleged misrepresentation about limited recourse may show that the evidence led at trial was insufficient to establish the respondents' claims of misrepresentation and of contravention of s 52 of the Trade Practices Act. These, however, are matters better reserved for further argument before the Supreme Court of Queensland, together with the limitation defence which the appellants pleaded. So, too, any remaining question about the effect of the assignments from Rural Finance to Equuscorp should be remitted for further consideration. And further examination of this account. It will be for the Supreme Court of Queensland to decide whether the further hearing of the matter can or should be by the primary judge. The order for remitter is not an order for retrial. As in Murphy v Overton Investments Pty Ltd23, we express no view about whether, if either side were to apply for leave to reopen their case to lead further evidence, that application should be granted or the parties confined to the case each made at trial. Conclusion and orders The appeals should be allowed. The several orders of the Court of Appeal of Queensland made on 27 September 2002 should be set aside and the appeals to that Court allowed. The orders of the primary judge should be set aside. The matters should be remitted to the Supreme Court of Queensland for further consideration of the issues not decided at trial conformably with the reasons of this Court. The appellants asked for an opportunity to make further submissions in relation to any costs orders that might be made. The appellants should have 23 (2004) 78 ALJR 324; 204 ALR 26. McHugh Kirby Hayne Callinan 14 days from the making of these orders to make any written submissions on that subject that they desire to make and the respondents a further 14 days to make any submissions in answer.

HIGH COURT OF AUSTRALIA Matter No S313/2013 APPELLANT AND THE QUEEN Matter No S314/2013 SEONG WON LEE AND THE QUEEN RESPONDENT APPELLANT RESPONDENT [2014] HCA 20 21 May 2014 S313/2013 & S314/2013 ORDER In each matter: Appeal allowed. Set aside paragraph 2 of the order of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 3 April 2013 and, in its place, order that: the appeal be allowed; the appellant's convictions be quashed; and a new trial be had. On appeal from the Supreme Court of New South Wales Representation M Thangaraj SC with G A Bashir for the appellant in S313/2013 (instructed T A Game SC with S S Pararajasingham for the appellant in S314/2013 (instructed by Nyman Gibson Stewart) N J Adams SC with J E Davidson and H R Roberts for the respondent in both matters (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Appeal against conviction – Where appellants gave evidence before New South Wales Crime Commission ("Commission") – Where non- publication direction made under s 13(9) of New South Wales Crime Commission Act 1985 (NSW) – Where transcripts of appellants' evidence before Commission published to members of New South Wales Police Force and officers of Director of Public Prosecutions – Whether publication of appellants' evidence before Commission meant subsequent trial differed in fundamental respect from that which our system of criminal justice seeks to provide – Whether publication of appellants' evidence before Commission gave rise to miscarriage of justice. Words and phrases – "miscarriage of justice", "non-publication direction". Criminal Appeal Act 1912 (NSW), s 6(1). New South Wales Crime Commission Act 1985 (NSW), s 13(9). FRENCH CJ, CRENNAN, KIEFEL, BELL AND KEANE JJ. The appellants and one Brendon Pak were the subject of an investigation by the New South Wales Crime Commission ("the Commission"). As part of that investigation and pursuant to powers given by the New South Wales Crime Commission Act 1985 (NSW) ("the NSWCC Act")1, the appellants were summoned by the Commission to give evidence before it. These appeals concern the publication of that evidence to members of the New South Wales Police Force and to officers of the Director of Public Prosecutions ("the DPP"). The appellants submit that their joint trial on various drug and firearms offences miscarried as a result of the DPP's possession and possible use of that evidence. The appellant in the first matter, Jason Lee ("the first appellant"), was examined by the Commission on two occasions, on 26 November and 1 December 2009. At the time of the examinations, he had not been charged with the offences in question. Section 13(9) of the NSWCC Act required the Commission to make a direction prohibiting the publication of evidence given before it where publication might prejudice the fair trial of a person who may be charged with an offence. A direction was made by the Commissioner on the occasion of the first appellant's first examination in these terms: "I direct that any evidence given by this witness or tendered or produced in the presence of this witness or any information that might enable this witness to be identified as a person who has given evidence before the Commission, shall not be published except in such manner and to such persons as the Commission specifies." It is accepted that this direction continued to apply to the first appellant's second examination. On 7 December 2009, members of the New South Wales Police Force executed a search warrant at premises in Sydney, where a firearm and a quantity of white powder in boxes labelled "washing powder" were found. In another part of the premises, another weapon, a quantity of white powder and a substantial 1 The New South Wales Crime Commission Act 1985 (NSW) has been replaced by the Crime Commission Act 2012 (NSW). Section 45 of the Crime Commission Act 2012 is, however, in similar terms to the relevant provision under the New South Wales Crime Commission Act 1985, namely s 13(9). Crennan Bell quantity of cash were found. The first appellant was charged with possession of prohibited firearms and an offence in the nature of money laundering, connected to the cash found at the premises. A strong suspicion was held that the powder seized was drugs, but drugs charges could not be laid until tests of the powder had been completed. The appellant in the second matter, Seong Won Lee ("the second appellant"), is the first appellant's son. The second appellant was present at the premises when the search warrant was executed and was charged with firearms offences. He was examined on 16 December 2009. At that time, charges against both appellants relating to the supply of prohibited drugs were imminent. A direction under s 13(9) was not made when the second appellant came to be examined, but it was accepted by the Crown in the court below that such a direction ought to have been made. That is clearly correct, as the supply of drugs charges were, at the time, anticipated. These proceedings have been conducted on the basis that the second appellant's evidence before the Commission was subject to a direction in the same terms as that set out in relation to the first appellant above. Pseudoephedrine was subsequently found in some of the powder. In May 2010, the first appellant was charged with two counts of the supply of prohibited drugs, and the second appellant with one count of supply and, alternatively, of being knowingly concerned in the first appellant's supply of the drugs found in one part of the premises searched by police. The transcripts of the appellants' evidence before the Commission were published by the Commission to the police and to the DPP. Documents which had been produced by the first appellant to the Commission were also made available to potential witnesses, the police and the DPP. The focus of these appeals is on the publication of the transcripts of the appellants' evidence to the DPP. In July 2010, a solicitor with the DPP who was preparing the prosecution of the charges against the appellants emailed the police officer who had been seconded to the Commission and had laid the charges against the appellants ("the charging officer")2. The solicitor asked if she could see the transcripts of the appellants' evidence given before the Commission, "especially if it is something that defence are going to try & rely on – specifically that they had no knowledge 2 New South Wales Crime Commission Act 1985, s 32(5). Crennan Bell that the washing powder was actually drugs." The charging officer forwarded the email to an officer of the Commission, who advised the counsel assisting the Commissioner, regarding the transcripts, that the DPP "need[s] to know whether there is content in them which the defence may rely on". The counsel assisting forwarded this email to the Commissioner. A short time later, the Commissioner responded, "[a]pproved". The transcripts of the appellants' evidence before the Commission were made available to the DPP. It is not suggested that, in approving this publication, the Commissioner turned his mind to the purpose of s 13(9) and the direction which had been made. The Crown's concession that publication was unlawful, discussed later in these reasons, would appear to accept that he did not. At a pretrial hearing held in the District Court of New South Wales on 23 November 2010, a question concerning the relevance of evidence of property owned by a company controlled by the first appellant to the drugs charges was raised. In the course of discussion, the Crown Prosecutor advised the Court that this evidence: "is led to rebut any innocent explanation of, firstly, the cash that was found in the unit, but also we say it goes to the possession of the drugs, because we say that is the only rational explanation for not only the cash, but the property themselves that has been purchased by the company supports that suggestion." The prosecution case relied upon the presence of the money, the drugs and the guns at the premises to support an inference of guilt respecting the drugs charges. The Crown Prosecutor continued: "[T]he Crown has nothing much to go on as to how the defence will be run, and obviously not required to indicate how they are going to run their defence, but both of the accused were examined at the Crime Commission, and whilst these that evidence proceedings I suppose it gives us a bit of an idea where they might be heading … isn't admissible Well we are not in a position to lead that evidence. All I'm saying, your Honour, is that because they were given the usual rider at the commencement of their evidence when objection's taken that it can't be used against them. But there's things said there to the Commission, which, as I say, give the Crown at least a possible scenario for where the defence might suggest that there's some innocent explanation about, not only the money in the unit, but they don't know anything about drugs. Crennan Bell That innocent explanation in terms of how it all connects up with the property is the father Jason Lee, for example, in his evidence at the Crime Commission indicated he'd received large amounts of money from--". At this point, senior counsel for the first appellant interrupted and complained about the prosecution apparently having been provided with transcripts of evidence given before the Commission. The Crown Prosecutor reiterated that the prosecution would present a case which rebutted any innocent explanation about the money and the drugs. In the result, the Court ordered that the money laundering charge be tried separately from the drugs and firearms charges, but that the evidence in relation to the cash found at the premises could be led with respect to the drugs charges. No further discussion was had about the prosecution's possession of the transcripts of the appellants' evidence before the Commission. In fact, the transcripts were, at that time, part of the prosecution brief, a copy of which had been provided to the appellants' legal representatives. On 16 March 2011, the first appellant was found guilty on two counts of the supply of prohibited drugs and one count of possessing a prohibited firearm. The second appellant was found guilty on the alternative count of being knowingly concerned in the first appellant's supply of drugs found in one part of the premises searched by police on 7 December 2009, as well as four counts relating to the possession of firearms. The appellants' legal representatives were aware, before the trial, that the prosecution was in possession of the transcripts of the appellants' evidence before the Commission. Indeed, the second appellant's solicitor later said that the publication of the transcript of the second appellant's evidence foreclosed the possibility that the second appellant would give evidence at trial. The first appellant's solicitor had been present when the Commission made the only direction of non-publication. Neither the appellants' legal representatives nor the Crown Prosecutors having the carriage of the pretrial hearings and the trials appear to have turned their minds to how the prosecution came to be in possession of the transcripts. It is possible that they misapprehended the extent of the Commission's power to release the transcripts. At all times, that power was limited by the protective purpose of s 13(9). However, the appellants' legal representatives did not know that the transcripts of the appellants' evidence before the Commission had been supplied to the DPP, at the DPP's request, in order that the DPP could ascertain any defences the appellants might raise. This information was only revealed to them on 21 August 2012, a few days before their appeals against conviction were Crennan Bell heard by the Court of Criminal Appeal of the Supreme Court of New South Wales. The appellants' appeals from their convictions were then amended to claim that there had been a miscarriage of justice within the meaning of s 6(1) of the Criminal Appeal Act 1912 (NSW), by reason of the prosecution's possession and possible use of the appellants' evidence given before the Commission. The Court of Criminal Appeal (Basten JA, Hall and Beech-Jones JJ) dismissed the At the hearing of the appeals, the Crown Prosecutor who had had the conduct of the trial was cross-examined, to a limited extent. As one might expect, he agreed that it was "interesting" and "informative" to know what the defence might say. He said that the transcripts of the evidence given before the Commission gave the prosecution some knowledge of what might be a defence in relation to the cash, and that other material from the Commission suggested that what might be relied on by the first appellant as an explanation might not be truthful. Answers given by the second appellant before the Commission must also have been of assistance to the prosecution in its preparation of its case. It is neither necessary nor appropriate to detail those answers. The Crown Prosecutor believed that he was entitled to read the transcripts, although he conceded that he had thought it "unusual" that he had materials which seemed to disclose the defence case. But he did not take the matter further. He did not enquire whether the transcripts should have been provided to him. The Crown's concession in the Court of Criminal Appeal In written submissions filed in the Court of Criminal Appeal, the Crown conceded that: "In view of the protective purpose of s 13(9) of the NSWCC Act in relation to a fair trial, the Crown concedes that the dissemination to the DPP was unlawful, in the unusual circumstances of this case, and that the appellants' trial miscarried in respect of the drugs charges … The Crown does not make this concession in respect of the appellants' trial on the weapons charges". 3 Lee v The Queen [2013] NSWCCA 68. Crennan Bell The Crown, however, submitted that neither a verdict of acquittal nor a permanent stay would be appropriate, but, implicitly, accepted that an order for retrial would. The Court of Criminal Appeal expressed reservations about accepting the concession. This resulted in a withdrawal of part of the concession. The concession that the publication had been unlawful was maintained, but it was no longer conceded that there had been a miscarriage of justice concerning the drug convictions. As these reasons will explain, the concession first made was correct, though it did not go far enough. The appellants' trial miscarried in a fundamental respect. The appeals should have been allowed on that ground. Because the prosecution case connected the firearms, the money and the drugs, there should have been orders quashing the convictions on all charges and a retrial ordered. Section 13(9) and its protective purpose The NSWCC Act, in common with the Commonwealth legislation4 considered in X7 v Australian Crime Commission5, has its origins in the earlier National Crime Authority Act 1984 (Cth), which provided the National Crime Authority with coercive investigatory powers. Those powers included a power of compulsory examination6, for the purpose of co-ordinating investigation of serious and organised crime. The Commission established by the NSWCC Act consisted of a Commissioner and such Assistant Commissioners as were appointed to exercise the functions given by the NSWCC Act (ss 5, 5B). The principal functions of the Commission included: investigating matters relating to a relevant criminal activity which had been referred to it by the Commission's Management Committee7; assembling of evidence admissible in the prosecution of a person for a relevant offence and the furnishing of such evidence to the DPP; furnishing 4 Australian Crime Commission Act 2002 (Cth). (2013) 248 CLR 92; [2013] HCA 29. 6 National Crime Authority Act 1984 (Cth), ss 28, 30. 7 Which comprised the Minister for Police, the Commissioner of Police, the Chair of the Board of the Australian Crime Commission and the Commissioner: s 24(1). Crennan Bell reports relating to illegal drug trafficking and organised and other crime; and disseminating investigatory, technological and analytical expertise to such persons or bodies as the Commission thought fit (s 6(1)). The Commission could, with the approval of the Management Committee, disseminate intelligence and information to such persons or bodies as the Commission thought appropriate (s 7(a)). For the purpose of its investigations, the Commission could hold hearings (s 13(1)). A hearing was to be held in private and the Commission could give directions as to the persons who could be present (s 13(5)). A member of the Commission had power to summon a person to appear before the Commission to give evidence and to produce such documents or things as were referred to in the summons (s 16(1)) and the Commission could require the person to give evidence on oath or affirmation (s 16(5)). A person summoned to appear as a witness was required not to fail to attend without reasonable excuse (s 18(1)) and was not excused from answering any question or producing any document on the ground that the answer or production could incriminate or tend to incriminate him or her, or on any other ground (s 18B(1)). The terms of s 18B(1) affected the privilege against self-incrimination. It is not in dispute that the sub-section applied to the appellants as persons who might be charged with relevant offences. Section 18B(2) provided that any answer made, or document produced, by a witness at a hearing before the Commission would not be admissible in evidence against the person in any proceedings, civil or criminal. The exceptions to that prohibition are not presently relevant. It was these provisions to which the Crown Prosecutor alluded in the pretrial hearing referred to above. He also referred to the provision by which a witness could be taken to have objected to all answers or productions, without having to do so on each occasion (s 18B(5)). However, the Crown Prosecutor apparently did not have in mind the terms of s 13(9) and whether a direction had been made pursuant to it. Section 13(9) provided: "The Commission may direct that: any evidence given before it, the contents of any document, or a description of any thing, produced to the Commission or seized pursuant to a search warrant issued under section 11, Crennan Bell any information that might enable a person who has given or may be about to give evidence before the Commission to be identified or located, or the fact that any person has given or may be about to give evidence at a hearing, shall not be published, or shall not be published except in such manner, and to such persons, as the Commission specifies, and the Commission shall give such a direction if the failure to do so might prejudice the safety or reputation of a person or prejudice the fair trial of a person who has been or may be charged with an offence." A person who contravened a direction made pursuant to s 13(9) was guilty of an offence punishable by fine or imprisonment for a period not exceeding two years, or both (s 13(12)). Section 13(10) and (11) provided for an exception to the non-publication of evidence the subject of a direction under s 13(9) which involved the courts. Where a person had been charged with an offence before a New South Wales court and the court considered it may be desirable, in the interests of justice, that evidence given before the Commission, in respect of which a direction under s 13(9) had been given, be made available to the person or the person's legal representative, the court could give the Commission a certificate to that effect, upon which the Commission was to make the evidence available to the court. If the court, after examining the evidence, was satisfied that the interests of justice so required, the court could make the evidence available to the person charged or the person's legal representative. The involvement of the courts in determining whether evidence would be released confirms the importance of the confidentiality that s 13 attached to evidence given before the Commission. The larger question, regarding the interests of justice, is one which is usually reserved for courts. The Commission's considerations were more confined, but were nonetheless important in ensuring the protection which s 13(9) sought to provide for the fair trial of the person examined. The NSWCC Act provided extraordinary powers to the Commission to compel the giving of evidence by a person against the person's interest and which might incriminate the person. These powers were provided in order that the Commission could more effectively investigate serious and organised crime. But the NSWCC Act also provided safeguards. Section 13(9) obliged the Crennan Bell Commission to make a direction prohibiting publication of evidence before it, if not to do so might prejudice the person's fair trial. If there was a risk of prejudice, s 13(9) required a direction to be made. Whether such a risk existed was a question to be assessed objectively. In considering that question, the Commission would be expected to adopt a careful approach reflecting the protective purpose for which the duty to make such a direction was imposed on it. A decision, inconsistent with that duty or purpose, to publish transcripts or documents which were, or should have been, the subject of such a direction would not be a decision which the Commission was empowered by the Act to make. The making of a direction under s 13(9) was not the first, or the only, occasion on which the Commission was required to consider the possible effects of a compulsory examination on a person's trial. Section 13(5) required that the Commission determine who should (and, it would follow, who should not) be present at the private hearing. It could set at nought the protection afforded by s 13(9) if persons associated with the possible prosecution of the person giving evidence were present. Nor was the Commission's decision whether to make a direction, or to specify a person to whom publication should be made, exempt from judicial review. It does not appear to have been doubted by this Court that decisions of this kind, relating to the publication of evidence obtained on compulsory examination by an investigative authority, are subject to review8. In X7, French CJ and Crennan J pointed out9 that the failure of an examiner to provide any, or any adequate, direction of this kind could be met with remedies by way of judicial review. A fortiori such remedies, including in this case prohibition and certiorari, could apply to a decision to publish transcripts or documents contrary to, or without regard to, the duty imposed on the Commission by s 13(9). In X7, a majority of this Court held that the powers of compulsory examination given to the Australian Crime Commission were not to be construed as applying to persons already charged with offences the subject of the examination. To do so would be to depart from the accusatorial nature of the criminal justice system in a fundamental respect. Clear words or those of 8 See, for example, Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56. 9 X7 v Australian Crime Commission (2013) 248 CLR 92 at 124 [59]. Crennan Bell necessary intendment were therefore necessary and neither were present in the legislation in question. As such, it was not necessary for the majority in X7 to consider the protective purpose of a provision similar to s 13(9)10. However, French CJ and Crennan J, who were in dissent, did so. It was a matter of some significance to their Honours' reasoning that the legislation, in providing for a direction regarding non-publication, did so in order to safeguard the examined person's trial as fair11. Our system of criminal justice reflects a balance struck between the power of the State to prosecute and the position of an individual who stands accused. The principle of the common law12 is that the prosecution is to prove the guilt of an accused person. This was accepted as fundamental in X713. The principle is so fundamental that "no attempt to whittle it down can be entertained"14 albeit its application may be affected by a statute expressed clearly or in words of necessary intendment15. The privilege against self-incrimination may be lost, but 10 Australian Crime Commission Act 2002, s 25A(9). 11 X7 v Australian Crime Commission (2013) 248 CLR 92 at 110-111 [26]-[27], 115 12 Woolmington v The Director of Public Prosecutions [1935] AC 462; Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477; [1993] HCA 74. 13 (2013) 248 CLR 92 at 119-120 [46], 135-136 [100]-[102], 153 [159]; see also Lee v NSW Crime Commission (2013) 87 ALJR 1082 at 1126 [176], 1154 [318]; 302 ALR 363 at 417, 453-454; [2013] HCA 39. 14 Woolmington v The Director of Public Prosecutions [1935] AC 462 at 481-482; X7 v Australian Crime Commission (2013) 248 CLR 92 at 119-120 [46]. 15 Momcilovic v The Queen (2011) 245 CLR 1 at 51 [53], 97 [191], 200 [512], 240 [659]; [2011] HCA 34. Crennan Bell the principle remains16. The principle is an aspect of the accusatorial nature of a criminal trial in our system of criminal justice17. The companion rule to the fundamental principle is that an accused person cannot be required to testify. The prosecution cannot compel a person charged with a crime to assist in the discharge of its onus of proof18. Recognising this, statute provides that an accused person is not competent to give evidence as a witness for the prosecution19, a protection which cannot be waived20. The purpose of s 13(9) of the NSWCC Act was to protect the fair trial of a person who might be charged with offences. It supported the maintenance of the system of criminal justice referred to in X7 and the trial for which that system provides, in which the prosecution has a defined role and the accused does not. The protective purpose of s 13(9) would usually require that the Commission quarantine evidence given by a person to be charged from persons involved in the prosecution of those charges. It would require the Commission to make a direction having that effect and to maintain the prohibition in the face of requests for access to the evidence. That purpose was not met in the present case, with the consequence that the appellants' trial differed in a fundamental respect from that which our criminal justice system seeks to provide. The publications As discussed, the appellants rely on the publication of the transcripts of the appellants' evidence before the Commission to the DPP as contrary to the direction pursuant to s 13(9) and the purpose of that provision. No issue 16 Lee v NSW Crime Commission (2013) 87 ALJR 1082 at 1127 [182]; 302 ALR 363 17 X7 v Australian Crime Commission (2013) 248 CLR 92 at 119-120 [46], 136 [101]-[102], 142-143 [124], 153 [159]-[160]; Lee v NSW Crime Commission (2013) 87 ALJR 1082 at 1123 [159]; 302 ALR 363 at 413. 18 Lee v NSW Crime Commission (2013) 87 ALJR 1082 at 1095 [20], 1116 [125], 1123 [159], 1126 [175]; 302 ALR 363 at 376, 404, 413, 417. 19 See, for example, Evidence Act 1995 (NSW), s 17(2). 20 Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 565 [51]-[52]; [2010] HCA 1. Crennan Bell concerning the meaning of the term "published" in s 13(9)21 arises in this connection, given the concession that the publication was unlawful. The appellants also rely on two other acts said to involve publication contrary to that direction. In the first place, the Commissioner approved the release of the appellants' transcripts of evidence to the police, so that they could review them for the purpose of preparing the brief on the charges brought against the appellants. Apart from any obligation under the general law, the police officers investigating these offences were subject to a duty under the Director of Public Prosecutions Act 1986 (NSW) to disclose to the DPP all relevant information, including documents, obtained during the investigation that might reasonably be expected to assist the case for the prosecution or the accused22. Amendments to that Act have since refined the scope of the duty with respect to the disclosure of material that is the subject of a non-publication order under s 45 of the Crime Commission Act 2012 (NSW)23. The effect of those amendments is not raised by these appeals. The police did provide the transcripts to the DPP as part of the brief of evidence. Neither in relation to this direct publication to the police, nor in relation to such indirect publication to the prosecution, is it suggested that the Commission took into account the protective purpose of s 13(9). In each case, as in the Commission's direct publication to the DPP, the decision to publish was, in law, no decision at all24. 21 See SD v New South Wales Crime Commission (2013) 84 NSWLR 456 at 466 [33]. 22 Section 15A. 23 A provision relieving police officers of the duty to disclose to the DPP material the subject of a bona fide claim of privilege, public interest immunity or statutory immunity (subject to the requirement to inform the DPP of the fact that material of that kind had been obtained) was introduced by the Director of Public Prosecutions Amendment (Disclosures) Act 2011 (NSW), Sched 1. This provision was repealed and re-enacted in a different form, and a new provision relieving law enforcement officers of the duty to disclose material contravening a statutory publication restriction, including under s 45 of the Crime Commission Act 2012 (subject to the requirement, to the extent not prohibited by the restriction, of informing the DPP of the existence and nature of the material), was introduced by the Director of Public Prosecutions Amendment (Disclosures) Act 2012 (NSW), Sched 1. 24 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 506 [76]; [2003] HCA 2. Crennan Bell The first appellant also relies upon the publication by the Commission of documents which were produced by him under compulsion at his second examination. On their face, the documents might have provided an innocent explanation as to the sources of the monies which the prosecution sought to link to the drugs. The documents were used by the Commission to take statements from persons who were signatories to them as to their authenticity. The documents were then attached to the statements and made available to the police. A number of questions arise respecting the use of these documents. As the Court of Criminal Appeal observed25, copies of these documents were also found when the search of the premises was conducted by police. Furthermore, the respondent submits that the documents, as documents produced or seized (s 13(9)(b)), do not come within the terms of the direction made. It would not appear that a direction specifically covering the documents was sought, although the first appellant submits that the Commission ought to have made one as a matter of course. These matters may be put to one side. It is sufficient for the disposition of these appeals to focus attention upon the publication of the transcripts of the appellants' evidence before the Commission to the prosecution, directly to the DPP officer and indirectly through the police. The decision to do so, without regard to the protective purpose of s 13(9), was not authorised by the NSWCC Act. The publication to the DPP, in particular, was for a patently improper purpose, namely the ascertainment of the appellants' defences. However, the critical question on these appeals is not whether the publication was unlawful and wrongful. It is whether, as a result of the prosecution being armed with the appellants' evidence, there has been a miscarriage of justice in the eyes of the law. A miscarriage of justice? The principal reason given by the Court of Criminal Appeal for dismissing the appellants' appeals was that there had been no "practical unfairness", which is to say that the publication of the transcripts had no discernible effect on their defence. Nothing in the transcripts of the appellants' evidence was considered to be relevant to the trial as it was conducted26. 25 Lee v The Queen [2013] NSWCCA 68 at [93], [136]-[137]. 26 Lee v The Queen [2013] NSWCCA 68 at [146]-[147], [149]. Crennan Bell Basten JA, with whom the other members of the Court of Criminal Appeal agreed, did recognise that the second appellant's evidence before the Commission could be used to forewarn the prosecution witness Pak and to permit clarification of his evidence. It could also be used indirectly, to aid the prosecutor's preparation for the cross-examination of the second appellant, in the event that he gave evidence27. In this regard, it will be recalled that the second appellant's solicitor gave evidence before the Court of Criminal Appeal that the prosecution's possession of the second appellant's evidence foreclosed that possibility. An accused person may be prejudiced in his or her defence because he or she can no longer determine the course to take at trial according only to the strength of the prosecution case28. Further, the Court of Criminal Appeal appears to have overlooked the nature and extent of the evidence given by the second appellant before the Commission – in particular, that concerning his relationship and dealings with Pak. Basten JA also considered it to be fatal to the appellants' appeals29, absent practical unfairness, that the defence failed to object to the apparent possession by the prosecution of evidence from the Commission. As has been mentioned, while a complaint was initially made at a pretrial hearing that the prosecution appeared to have such material, it was not further pursued. These appeals do not fall to be decided by reference to whether there can be shown to be some "practical unfairness" in the conduct of the appellants' defence affecting the result of the trial. This is a case concerning the very nature of a criminal trial and its requirements in our system of criminal justice. The appellants' trial was altered in a fundamental respect by the prosecution having the appellants' evidence before the Commission in its possession. The prosecution has a specific role in our system of criminal justice, one which entails particular responsibilities. It is not to the point that the defence lawyers did not object or seek a stay of the proceedings. No forensic advantage could have been sought by the failure to do so. It is the prosecution which has the responsibility of ensuring its case is presented properly and with fairness to 27 Lee v The Queen [2013] NSWCCA 68 at [159]. 28 X7 v Australian Crime Commission (2013) 248 CLR 92 at 142-143 [124], 146 29 Lee v The Queen [2013] NSWCCA 68 at [163]. Crennan Bell the accused30. It is therefore more to the point that the prosecution's possession of the appellants' evidence before the Commission put at risk the prospect of a fair trial, which s 13(9) sought to protect. The prosecution should have enquired as to the circumstances in which the evidence came into its possession and alerted the trial judge to the situation, so that steps could be taken to ensure that the trial was not affected. The trial judge could have ordered a temporary stay, while another prosecutor and other DPP personnel, not privy to the evidence, were engaged. It must be acknowledged that the matters in question occurred, and the decision of the Court of Criminal Appeal was given, before judgment in X7 was handed down. Attention was therefore not directed to the principle of the common law respecting proof by the prosecution, unaided by the accused, which was in that case confirmed as fundamental to our system of criminal justice. In X7, it was held that the compulsory examination of a person with respect to an offence with which the person stands charged would be a departure, in a fundamental respect, from that principle31. X7 was ultimately concerned with questions of statutory construction. Nevertheless, the point it makes about what may amount to a fundamental departure from a criminal trial as it is comprehended by our system of criminal justice is relevant to this case. It is a breach of the principle of the common law, and a departure in a fundamental respect from a criminal trial which the system of criminal justice requires an accused person to have, for the prosecution to be armed with the evidence of an accused person obtained under compulsion concerning matters the subject of the charges. It cannot be said that the appellants had a trial for which our system of criminal justice provides and which s 13(9) of the NSWCC Act sought to protect. Rather, their trial was one where the balance of power shifted to the prosecution. In Wilde v The Queen32, Brennan, Dawson and Toohey JJ held that the common form proviso has no application where an irregularity in the trial process has occurred "which is such a departure from the essential requirements 30 Richardson v The Queen (1974) 131 CLR 116 at 119; [1974] HCA 19; Whitehorn v The Queen (1983) 152 CLR 657 at 675; [1983] HCA 42; Attorney-General (NT) v Emmerson [2014] HCA 13 at [63]. 31 X7 v Australian Crime Commission (2013) 248 CLR 92 at 131 [85], 140 [118], 32 (1988) 164 CLR 365 at 372-373; [1988] HCA 6. Crennan Bell of the law that it goes to the root of the proceedings." Their Honours were referring to a criminal trial which was fundamentally flawed. Deane J33 said that "[t]he fundamental prescript of the administration of criminal justice in this country is that no person should be convicted of a serious crime except by the verdict of a jury after a fair trial according to law", and the proviso did not negate this principle. In a case where impropriety or unfairness permeated or affected a trial to an extent where it ceased to be a fair trial according to law, an appeal court could not dismiss an appeal on the basis that there had been no substantial miscarriage of justice. In Jago v District Court (NSW)34, his Honour referred to the circumstance where irregularity in proceedings was such that the trial "has been rendered unfair or has lost its character as a trial according to law." This statement was cited by Gaudron, Gummow and Callinan JJ in Katsuno v The Queen35, where their Honours said that a "failure to observe the requirements of the criminal process in a fundamental respect" means that a conviction cannot stand36. In Weiss v The Queen37, this Court held that some miscarriages of justice occurring in the course of a criminal trial may amount to "such a serious breach of the presuppositions of the trial" as to deny the application of the common form proviso. In the passage from Wilde referred to above, Deane J spoke of impropriety as affecting a fair trial. In Katsuno, the Court was concerned with the provision of information respecting jurors, which had been obtained by the prosecution in breach of statute. McHugh J38 spoke of the improper manner in which the information had been obtained as well as its giving the prosecution an unfair advantage over the accused. In the latter respect, his Honour observed, the Crown had "subverted the legislative scheme" for selecting an impartial jury and used information which the legislation intended to deny it. Though his Honour 33 Wilde v The Queen (1988) 164 CLR 365 at 375. 34 (1989) 168 CLR 23 at 56; [1989] HCA 46. 35 (1999) 199 CLR 40 at 60 [35]; [1999] HCA 50. 36 Citing Maher v The Queen (1987) 163 CLR 221 at 234; [1987] HCA 31; see also Katsuno v The Queen (1999) 199 CLR 40 at 95 [131]-[132] per Kirby J. 37 (2005) 224 CLR 300 at 317-318 [43]-[46]; [2005] HCA 81. 38 Katsuno v The Queen (1999) 199 CLR 40 at 66-67 [56]-[59]. Crennan Bell was there in dissent as to whether a failure to observe the requirements of the criminal process in a fundamental respect had occurred, a similar observation respecting the NSWCC Act might be thought appropriate here. The wrongfulness of conduct on the part of the police or the prosecution has on occasions raised questions of policy, rather than questions of unfairness to an accused. It is, for example, questions of public policy which have largely informed the court's discretion to exclude evidence which has been improperly obtained. In Bunning v Cross39, Stephen and Aickin JJ said that "[i]t is not fair play that is called in question in such cases but rather society's right to insist that those who enforce the law themselves respect it". Their Honours said that the executive should not be free to disregard safeguards built into regulatory interventions affecting the liberty of the subject40. Moreover, the courts "should not be seen to be acquiescent in the face of the unlawful conduct of those whose task it is to enforce the law."41 On the other hand, where "accidental non- compliance" may be involved and there is "no overt defiance of the will of the legislature", the court, as the tribunal upholding the law, will not be demeaned42. The circumstances of this case involve the wrongful release and possession of evidence. However, its effects cannot be equated with the use of evidence illegally or improperly obtained. The question whether such evidence should, as a matter of discretion, be admitted does not arise. Clearly, s 18B(2) of the NSWCC Act provided that the appellants' evidence before the Commission was inadmissible at their trial. Rather, these appeals concern the effect of the prosecution being armed with the appellants' evidence. It is not necessary to resort to questions of policy to determine whether a miscarriage of justice has occurred. What occurred in this case affected this criminal trial in a fundamental respect, because it altered the position of the prosecution vis-à-vis the accused. There was no legislative authority for that alteration. Indeed, it occurred contrary 39 (1978) 141 CLR 54 at 75; [1978] HCA 22. 40 Bunning v Cross (1978) 141 CLR 54 at 77. 41 Bunning v Cross (1978) 141 CLR 54 at 78. 42 Bunning v Cross (1978) 141 CLR 54 at 78; see also Cleland v The Queen (1982) 151 CLR 1 at 19-20, 34-35; [1982] HCA 67; Pollard v The Queen (1992) 176 CLR 177 at 202-203 per Deane J; [1992] HCA 69; Foster v The Queen (1993) 67 ALJR 550 at 556-557, 565; 113 ALR 1 at 10, 21; [1993] HCA 80; Ridgeway v The Queen (1995) 184 CLR 19 at 30-33, 49, 84; [1995] HCA 66. Crennan Bell to the evident purpose of s 13(9) of the NSWCC Act, directed to protecting the fair trial of examined persons. Orders The appeals should be allowed and the judgment of the Court of Criminal Appeal set aside. In lieu thereof, it should be ordered that the appellants' convictions be quashed and that they have a new trial.

HIGH COURT OF AUSTRALIA PLAINTIFF AND MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS DEFENDANT Bodruddaza v Minister for Immigration and Multicultural Affairs [2007] HCA 14 18 April 2007 ORDER Questions asked in the special case be answered as follows: Does s 486A(1) of the Migration Act 1958 apply to the plaintiff's application to the High Court for remedies to be granted in exercise of the Court's original jurisdiction? Yes. If the answer to Question 1 is yes for any or all of the remedies applied for, is s 486A of the Migration Act 1958 invalid in respect of the plaintiff's application? Yes. If appropriate to answer having regard to the answers to questions 1 and 2, did the delegate of the Minister make a jurisdictional error in the course of assessing the plaintiff's visa application? By whom should the costs of the proceeding in this Honourable Court be borne? The defendant should bear the costs of the plaintiff reasonably necessary for the determination of questions 1 and 2. The plaintiff should bear the costs associated with preparing and presenting the case in relation to question 3. Representation S B Lloyd with L J Karp for the plaintiff (instructed by Parish Patience Immigration Lawyers) D M J Bennett QC, Solicitor-General of the Commonwealth with G R Kennett for the defendant and intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) S F Stretton with L K Byers intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor's Office South Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Bodruddaza v Minister for Immigration and Multicultural Affairs Constitutional law – High Court – Constitutional writs – Availability of constitutional relief in the High Court's original jurisdiction – A delegate of the respondent cancelled the plaintiff's visa – s 486A of the Migration Act 1958 (Cth) purported to place a time limit on applications to the High Court exercising its original jurisdiction – The plaintiff applied for relief outside this time limit – Whether s 486A applies to the plaintiff's application – s 51(xxxix) of the Constitution conferred on Parliament power to regulate procedures for seeking relief under s 75(v) of the Constitution – To what extent this power is limited by the constitutional purposes of s 75(v) – Significance of s 75(v) in the federal scheme – Whether s 486A of the Migration Act 1958 (Cth) is valid. Certiorari – Interrelationship with s 75(v) of the Constitution – Whether s 486A of the Migration Act 1958 (Cth) validly regulated the authority of the High Court to grant certiorari to the plaintiff. Immigration – Cancellation of visa – The plaintiff's visa was cancelled because of a failure to meet language skills qualifications in the Migration Regulations 1994 (Cth) – Whether the decision to cancel the plaintiff's visa amounted to jurisdictional error. Statutes – Statutory Construction – Presumption that words in the singular include the plural – Item 6A31 of the Migration Regulations 1994 (Cth) fixed on what transpired "in a test" – Whether presumption vitiated by the text of Item 6A31 of the Migration Regulations. Words and phrases – "purported privative clause decision", "migration decision", "in a test". Constitution, ss 51(xxxix), 73, 75(v). High Court Rules, rr 4.02, 25.06.1. Judiciary Act 1903 (Cth), ss 33, 32. Migration Act 1958 (Cth), s 486A. Migration Litigation Reform Act 2005 (Cth). Migration Regulations 1994 (Cth), reg 2.26A(2)(a)(iv), Sched 2, Item 880.222, Sched 6A, Pt 2, Sched 6A, Pt 3, Item 6A31. GLEESON CJ, GUMMOW, KIRBY, HAYNE, HEYDON AND CRENNAN JJ. The plaintiff was born in 1976 in Bangladesh and is not and never has been an Australian citizen. He entered Australia on 18 July 2003 as the holder of a visa and his then current visa was due to expire on 13 February 2006. The litigation arises from the plaintiff's unsuccessful attempt to obtain a further visa. In the original jurisdiction of this Court, the plaintiff seeks various orders against the respondent ("the Minister") respecting a decision made by a delegate of the Minister on 5 January 2006. The delegate was exercising power conferred upon the Minister by s 65 of the Migration Act 1958 (Cth) ("the Act") to decide to grant or refuse visas. The delegate refused an application lodged by the plaintiff on 26 July 2005 for a Skilled – Independent Overseas Student (Residence) (Class DD) Subclass 880 visa. The criteria to be met for the grant of such a visa were set out in Pt 880 of the Migration Regulations 1994 ("the Regulations"). It will be necessary later in these reasons to refer to the text of Pt 880. The plaintiff was notified of the decision of the delegate by notice sent by prepaid post on 5 January 2006 and addressed to his migration agent. The plaintiff instructed the migration agent to apply for review of the delegate's decision. By application lodged with the Migration Review Tribunal ("the Tribunal") on 7 February 2006, the plaintiff sought review by the Tribunal of that decision. Section 347 of the Act and reg 4.10 of the Regulations required the application for review to be made to the Tribunal within a period ending not later than 21 days after the receipt of notification of the decision. Further, it followed from a combination of ss 494B, 494C and 494D of the Act that it was on 16 January 2006 that the plaintiff was taken to have received the notification sent on 5 January 2006. The result was that the 21 day period for the making of the review application ended on 6 February 2006. This was one day before the application was made. It is from this failure of the plaintiff's migration agent by one day to ensure observance of the statutory deadline that the litigation in this Court ensued. First, on 9 May 2006, the Tribunal decided that it did not have jurisdiction to determine the application for review. In its accompanying reasons, the Tribunal stated: Kirby Hayne Crennan "There is no provision for an extension of time and the submission [made by the plaintiff] provides no basis for accepting the review application received on 7 February 2006 outside the mandatory time limit. The review application is not a valid application and the Tribunal has no jurisdiction to review the delegate's decision." Thereafter, on 11 July 2006, the plaintiff instituted the present proceeding in this Court. He seeks in respect of the decision of the delegate made on 5 January 2006 certiorari to quash that decision, accompanied by prohibition, and also mandamus requiring determination by the Minister of his visa application according to law. The plaintiff asserts jurisdictional error by the delegate in refusing his visa application lodged on 26 July 2005. On this aspect of the application, the plaintiff's arguments turn upon the construction of Pt 880 of the Regulations. However, in this Court, the plaintiff encounters a threshold difficulty. This also turns upon a time constraint. The constraint is presented by s 486A of the Act in the form taken after amendment by the Migration Litigation Reform Act 2005 (Cth) ("the 2005 Act"). The application to this Court was made outside the maximum 84 day period now identified in s 486A of the Act. If valid, s 486A(2) denies to this Court any competency to make an order allowing the making of the plaintiff's application out of time. The special case In reliance upon s 486A, the Minister, by summons, sought dismissal of the application as incompetent. The sequel was an order by a Justice of this Court on 21 September 2006. A special case which had been agreed on by the parties pursuant to r 27.08.1 of the High Court Rules 2004 ("the Rules") was referred to the Full Court. Section 18 of the Judiciary Act 1903 (Cth) ("the Judiciary Act") provides that a Justice may direct that any case or question be argued before a Full Court and the Full Court thereupon has power to hear and determine that case or question. Questions 1 and 2 in the special case ask respectively whether s 486A applies to the plaintiff's application and, if so, whether s 486A is invalid in respect of that application. Question 3 is contingent upon answers to questions 1 and 2 which favour the plaintiff. Question 3 proceeds to the determination by the Kirby Hayne Crennan Court of the legal merits of the application, asking whether the decision of the delegate of the Minister displayed jurisdictional error. The Solicitor-General of the Commonwealth appeared for the Minister and on behalf of the Attorney-General as intervener. His submissions with respect to question 2 were supported by counsel who appeared on behalf of the Attorney-General for South Australia as intervener. For the reasons which follow, s 486A applies to the application but does not validly deny the competence of this Court to entertain the application, and questions 1 and 2 should be answered accordingly. However, the plaintiff makes out no case of jurisdictional error by the delegate of the Minister and, accordingly, question 3 should be answered adversely to the plaintiff. Section 486A of the Act Section 486A as it previously stood received some attention in Plaintiff S157/2002 v Commonwealth1. Section 486A then provided that an application to this Court for a writ of mandamus, prohibition or certiorari or an injunction or declaration in respect of "a privative clause decision" had to be made to this Court within 35 days of the actual, as opposed to the deemed, notification of the decision; further, this Court was enjoined by s 486A(2) not to make an order allowing, or having the effect of allowing, an applicant to make an application outside that 35 day period. In Plaintiff S157/2002, Callinan J accepted that the Parliament may in exercise of power conferred by s 51(xxxix) of the Constitution regulate the procedure by which proceedings for relief under s 75(v) of the Constitution may be sought and obtained2. However, his Honour held s 486A invalid. He accepted the submission that s 486A so substantially interfered with or limited access to the constitutional remedies for which s 75(v) provides that it went beyond regulation and rendered those remedies either nugatory or of virtually no utility; the power of regulation did not permit what in substance was a prohibition3. In the circumstances discussed later in the present reasons, the (2003) 211 CLR 476. (2003) 211 CLR 476 at 537 [172]-[173]. (2003) 211 CLR 476 at 535-536 [165], 537 [173]. Kirby Hayne Crennan other members of the Court in Plaintiff S157/2002 did not rule upon the validity of s 486A as it then stood. Section 486A was recast after the decision in Plaintiff S157/2002 but, whilst longer time periods are now provided, s 486A(2) still enjoins this Court from making orders relieving against failure to comply with the time scale established by the section. The maximum permitted period for the institution of an application is now 28 days with a possible extension by this Court of up to 56 days, upon application made within that 84 day period. After amendment by the 2005 Act, s 486A states: "(1) An application to the High Court for a remedy to be granted in exercise of the court's original jurisdiction in relation to a migration decision must be made to the court within 28 days of the actual (as opposed to deemed) notification of the decision. (1A) The High Court may, by order, extend that 28 day period by up to 56 days if: an application for that order is made within 84 days of the actual (as opposed to deemed) notification of the decision; and the High Court is satisfied that it is in the interests of the administration of justice to do so. Except as provided by subsection (1A), the High Court must not make an order allowing, or which has the effect of allowing, an applicant to make an application mentioned in subsection (1) outside that 28 day period. The regulations may prescribe the way of notifying a person of a decision for the purposes of this section." (emphasis added) As a result of further amendments made by the 2005 Act, the term "migration decision" is now defined in s 5(1) as meaning: a privative clause decision; or a purported privative clause decision; or Kirby Hayne Crennan a non-privative clause decision". The expression "purported privative clause decision" receives its content from s 5E, sub-s (1) of which states: "In this Act, purported privative clause decision means a decision purportedly made, proposed to be made, or required to be made, under this Act or under a regulation or other instrument made under this Act (whether in purported exercise of a discretion or not), that would be a privative clause decision if there were not: a failure to exercise jurisdiction; or an excess of jurisdiction; in the making of the decision." In Plaintiff S157/2002, the Court held, as the Act then stood and before the special provision for a "purported privative clause decision", that "privative clause decisions" in respect of which there was to be no judicial review did not include decisions involving jurisdictional error; they were not decisions made "under" the Act. The members of the Court, other than Callinan J, did not enter upon the validity of s 486A. This was because, as the section was then expressed, it restricted applications to this Court only "in respect of a privative clause decision", being one made "under" the statute and where, as in Plaintiff S157/2002 itself, jurisdictional error was established, there was no such decision. The construction of s 486A after the 2005 Act Before embarking upon the questions of alleged invalidity of s 486A as it now stands, it is necessary to consider various points of construction which were disputed in submissions before the Court. Once s 486A is construed, it will be appropriate to turn to consider its validity. The Solicitor-General of the Commonwealth submitted that the phrase in s 486A(1) "a remedy ... in relation to a migration decision" was sufficiently broad to encompass more than applications for judicial review. He submitted that, for example, unless the plaintiff complied with s 486A, an action in tort would not lie in the original jurisdiction of this Court against the Commonwealth for false imprisonment where an officer had detained the plaintiff as an unlawful Kirby Hayne Crennan non-citizen without the knowledge or reasonable suspicion stipulated by s 189 of Counsel for the plaintiff advanced cogent reasons why the phrase "a remedy ... in relation to a migration decision" should not be given a reading which would take s 486A beyond public law remedies and into the area of what might be called collateral attack upon migration decisions. First, the plaintiff emphasised the extensive scope of the definition of "migration decision" in s 5(1), and in particular the inclusion of proposed decisions in the definition of "purported privative clause decision" found in s 5E. The tortious conduct completing a cause of action might well take place after the end of the 84 day period stipulated in s 486A by reference to actual notification of a migration decision. Such a draconian, if not irrational, legislative scheme should not be attributed to the Parliament in the absence of clear words. Secondly, the perceived mischief to which the 2005 Act was directed concerned the challenge by judicial review processes to migration decisions. The application to this Court identified in s 486A(1) is "for a remedy" by way of judicial review, specifically in a s 75(v) matter. The Explanatory Memorandum on the Bill for the 2005 Act circulated by the authority of the Attorney-General to the House of Representatives is instructive in this respect. Section 486A was one of several provisions5 included in the 2005 Act amendments with the avowed objective "to impose uniform time limits for applications for judicial review of migration decisions in the [Federal Magistrates Court], the Federal Court (in the limited circumstances that migration cases will be commenced in that Court) and the High Court". Accordingly, the submission now made by the Solicitor-General which would give broader reach to s 486A should not be accepted. It is convenient here to deal, on the other hand, with a submission by the plaintiff which should be rejected. The plaintiff submits that s 486A applies to cf Ruddock v Taylor (2005) 222 CLR 612. 5 Sections 476 and 477A applied respectively to the Federal Magistrates Court and the Federal Court. The special case raises no question of the validity of either of these provisions. Kirby Hayne Crennan his present application to this Court only to the extent that he seeks certiorari and that s 486A does not reach the s 75(v) remedies he seeks, namely mandamus and prohibition. However, the application for prohibition to the Minister requiring the Minister not to take action upon the delegate's decision of 5 January 2006 and for mandamus to consider according to law the plaintiff's visa application refused by that decision are applications "for a remedy ... in relation to a migration decision". This is nonetheless so where the plaintiff seeks to achieve by mandamus a future, and favourable, migration decision to displace the previously unfavourable decision. There are further submissions by the Solicitor-General on the construction of s 486A which also should not be accepted. The effect of s 486A was said to be, at the end of the 84 day period, to "validate" the migration decision in respect of which judicial review was sought as a s 75(v) "matter", and to make the decision "effective for all purposes". This consequence of the lapse of the 84 day period was said by the Solicitor-General to follow even if the migration decision was infected by some error, including fraud, which otherwise would attract prohibition under s 75(v) of the Constitution. It would be a bold exercise of legislative choice for the Parliament to enact that Ministers and their delegates were authorised to exercise fraudulently any of the powers of decision conferred upon them by statute. A legislative purpose of that kind would not be imputed in the absence of "unmistakable and unambiguous language"6. Further, in such an unlikely eventuality, questions of validity might well arise of the nature outlined in Plaintiff S157/20027. But there is no occasion here further to pursue such questions. That is because, as the plaintiff correctly submits, there is no statement or indication in the text of s 486A that it operates by reference to the 84 day period so as to give migration decisions an effect or validity they otherwise did not have. Indeed, there are indications in the text of s 486A which point against any such construction. For example, given that there will be instances where more than one party has an interest sufficient to challenge a migration decision, and given that there might be different dates of actual notification received by such persons, there may be differently expiring 84 day periods; the upshot would be 6 Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 492 [30]. (2003) 211 CLR 476 at 512-513 [101]-[103]. Kirby Hayne Crennan the conferral of validity as respects different parties at different times rather than a generally effective conferral of validity at the one date. The text of s 486A indicates, as the above example illustrates, that it is directed not to the conferral of validity but to deny the competency of applications to this Court not commenced within the stipulated period. It is in this setting that the alleged invalidity of s 486A falls for decision on the special case. Before turning to consider the submissions respecting validity, something more should be said respecting what otherwise is provided by the Rules of this Court. The Rules The Rules make special provision concerning mandamus as follows, in "An application for an order to show cause why a writ of mandamus should not issue to a judicial tribunal to hear and determine a matter shall be made within 2 months of the date of the refusal to hear or within such further time as is, under special circumstances, allowed by the Court or a Justice." It will be apparent that this provision has no application to the present case, neither the delegate nor the Minister being a "judicial tribunal". The Rules contain no time stipulation respecting applications for prohibition. Certiorari is not a remedy identified independently in s 75(v) of the Constitution, a point to which it will be necessary to return. However, the Rules make special provision respecting certiorari in r 25.06.1: "An order to show cause why a writ of certiorari should not issue to remove a judgment, order, conviction or other proceeding, for the purpose of its being quashed shall not be granted unless the application for the order is made not later than six months after the date of the judgment, order, conviction or other proceeding, or within such shorter period as may be prescribed by any law." It may be accepted for present purposes that the decision of the delegate answers the description of "other proceeding". The delegate's decision was dated 5 January 2006 and the application to this Court was made on 11 July 2006, thus Kirby Hayne Crennan outside the six month period stipulated by r 25.06.1. However, account must be taken of r 4.02. This states: "Any period of time fixed by or under these Rules may be enlarged or abridged by order of the Court or a Justice whether made before or after the expiration of the time fixed." As already remarked, if valid, s 486A(2) would deny authority under r 4.02 or otherwise for this Court to make an order allowing, or with the effect of allowing, an application for a judicial review remedy outside the stipulated statutory period. Provisions to the effect of those now made respecting certiorari and mandamus8 have been found in Rules of this Court since 1903. So also have general provisions for the enlargement of time. The Rules of Court included as a Schedule to the High Court Procedure Act 1903 (Cth) made provision for a six month period in respect of certiorari9 and a two month period in respect of mandamus10, with a provision for enlargement of time11. The same pattern was followed with the Rules made in 191012 and in the 1952 Rules which immediately preceded those made in 200413. The English antecedents In considering the time constraints upon the judicial review remedies sought in this case, some assistance is to be derived from the state of the law on that subject in England at the time of the commencement of the Constitution. r 25.06.1, r 25.07.2 respectively. 9 O XLI r 7. 10 O XLI r 25. 11 O XLV r 6. 12 SR No 130/1910, O XLVII rr 7, 25; O LIII r 6. 13 O 55 rr 17, 30; O 60 r 6. Kirby Hayne Crennan First, as to prohibition. Prohibition had been seen as intimately connected with the rights of the Crown and as ensuring the prerogative was protected against encroachment by disobedience to the prescribed structure for the administration of justice. In Farquharson v Morgan, Davey LJ remarked14: "[I]t has always been the policy of our law as a question of public order to keep inferior Courts strictly within their proper sphere of jurisdiction". His Lordship added that for the inferior courts to stray beyond that sphere would involve "an usurpation of the prerogative of the Crown"15. However, by the end of the nineteenth century, prohibition was seen as protective of the rights of the subject rather than as a safeguard of the prerogative16. It was in this contemporary setting that the remedy was carried over to the federal structure provided by the Constitution. There, what was to be protected in the Australian constitutional context was not only the rights of all natural and corporate persons affected17, but the position of the States as parties to the federal compact, and jurisdictional error might arise from a want of legislative or executive power as well as from decisions made in excess of jurisdiction itself validly conferred. It is out of its recognition of these features of the remedies provided by s 75(v), and their high constitutional purposes, that in more recent years this Court has described the remedies there provided as 14 [1894] 1 QB 552 at 560. 15 [1894] 1 QB 552 at 560. 16 Shortt wrote in 1887 that "the original groundwork of the jurisdiction in prohibition has undergone modification by the decisions of recent times" and that it was only from the standpoint of the right of the subject to protection from jurisdictional error by inferior courts "that laches, acquiescence, or misconduct can be said to disentitle him to the aid of the superior Court": Informations (Criminal and Quo Warranto), Mandamus and Prohibition, (1887) at 445-446. 17 Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 514 [104] per Gaudron, McHugh, Gummow, Kirby and Hayne JJ. Kirby Hayne Crennan "constitutional writs" rather than (as earlier and historically in England) as "prerogative writs"18. In the authorities in the Court of King's Bench, a distinction was drawn between the grant of prohibition where the want of jurisdiction appeared on the record and so was patent, and those cases where the want of jurisdiction was latent. The Court of King's Bench was not bound to grant prohibition to a party who had acquiesced in the proceeding in the subordinate tribunal where the defect of jurisdiction did not appear on the face of the record; acquiescence precluded the party from showing aliunde the want of jurisdiction. But acquiescence did not disentitle a party to relief where the defect of jurisdiction was patent19. The distinction was further explained by Lopes LJ in Farquharson v Morgan20, with particular reference to what had been said by Willes J in Mayor, &c, of London v Cox21. Lopes LJ said22: "In the elaborate opinion of the judges delivered by Willes, J, to the House of Lords in Mayor of London v Cox23, it is said that 'upon an application being made in proper time, upon sufficient materials, by a party, who has not by misconduct or laches lost his right, its grant or refusal is not in the mere discretion of the Court;' and at 283 of the same case it is said: 'Where, however, the defect is not apparent, and depends on some fact in the knowledge of the applicant which he had an opportunity of bringing forward in the Court below, and he has thought 18 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 92-94 [18]-[25] per Gaudron and Gummow JJ, 133-134 [138] per Kirby J, 140-141 [161]-[162] per 19 Shortt, Informations (Criminal and Quo Warranto), Mandamus and Prohibition, 20 [1894] 1 QB 552 at 558. 21 (1867) LR 2 E & I App 239 at 279. 22 [1894] 1 QB 552 at 558. 23 (1867) LR 2 E & I App 239 at 279. Kirby Hayne Crennan proper, without excuse, to allow that Court to proceed to judgment without setting up the objection, and without moving for a prohibition in the first instance, although it should seem that the jurisdiction to grant a prohibition in respect of the right of the Crown is not taken away, for mere acquiescence does not give jurisdiction24; yet, considering the conduct of the applicant, the importance of making an end of litigation, and that the writ, though of right is not of course, the Court would decline to interpose, except perhaps upon an irresistible case, and on excuse for the delay, such as disability, malpractice, or matter newly come to the knowledge of the applicant.' It was held in that case that the writ was not of course, inasmuch as there might be circumstances which would justify the Court in refusing it, such as undue delay, insufficient materials, or misconduct or laches by the party applying for it. But there is nothing in the case contravening the rule, which I have mentioned, where the absence of jurisdiction is apparent on the face of the proceedings; in fact, there is an express exception of such cases." The position in England respecting mandamus was less complicated. As a general proposition, save in cases where delay was duly accounted for, mandamus would not be granted unless applied for within a reasonable time. In R v Churchwardens of All Saints, Wigan, Lord Chelmsford remarked25: "A writ of mandamus is a prerogative writ and not a writ of right, and it is in this sense in the discretion of the Court whether it shall be granted or not. The Court may refuse to grant the writ not only upon the merits, but upon some delay, or other matter, personal to the party applying for it; in this the Court exercises a discretion which cannot be questioned." In the same case, Lord Hatherley26 spoke of "matters connected with delay, or possibly with the conduct of the parties" as "matters of discretion". 24 Knowles v Holden (1855) 24 LJ (Ex) 223. 25 (1876) 1 App Cas 611 at 620. 26 (1876) 1 App Cas 611 at 622. Kirby Hayne Crennan In an appeal from New South Wales, Broughton v Commissioner of Stamp Duties27, the Privy Council considered a situation where executors had paid probate duty partly under a mistake of law and partly with the expressed reservation of the right to have the excess refunded without regard to delay. Subsequently it was decided in another case that no duty at all was payable, but the Privy Council held that an application made nine years later for a mandamus to require the Commissioner to state a case for the New South Wales Full Court was not brought within a reasonable time and must be refused. With respect to certiorari, in the eighteenth century a period of six months had been fixed by statute28, but thereafter the Court of Queen's Bench held that the statute applied only to certiorari in respect of orders of magistrates and that there was no general rule of practice which required an application for certiorari to be made within six months29. Where the period of six months was fixed by statute, there had been no power of extension in the Court. Thereafter, the Crown Office Rules which applied on what was then "the Crown side" of the Queen's Bench Division made provision with respect to certiorari30. No writ of certiorari might be granted unless applied for within six calendar months of the making of the order or determination of which complaint was made; however, the Court had a power of extension of time in all civil proceedings on the Crown side31. The place of s 75(v) in the Constitution In R v Federal Court of Australia; Ex parte WA National Football League32, Barwick CJ treated as applicable to "prohibition" as identified in s 75(v) of the Constitution the law pertaining to that writ when issued by the 28 13 Geo II c 18, s 5. 29 R v Mayor of Sheffield (1871) LR 6 QB 652. 30 The Crown Office Rules 1886, r 33; The Crown Office Rules 1906, r 21. 31 The Crown Office Rules 1886, r 293; The Crown Office Rules 1906, r 259; Halsbury, The Laws of England, 1st ed (1909), vol 10, par 403. 32 (1979) 143 CLR 190 at 201. Kirby Hayne Crennan Court of King's Bench in England. As already remarked in these reasons, more was involved in the translation of prohibition to a remedy in a federal constitution. As a result, and as explained by Hayne J in Re Refugee Review Tribunal; Ex parte Aala33, the anterior situation in England has not generally been accepted as a comprehensive guide to the operation of s 75(v) of the Constitution. For example, while there had been much judicial discussion in England as to whether prohibition issued as a matter of right, under s 75(v) it is a discretionary remedy34. However, the absence in England of legislatively fixed time bars of an absolute character is a matter of present significance to which further reference will be made. Section 75(v) has the special significance identified by Dixon J in Bank of NSW v The Commonwealth35. His Honour said that the purpose of the inclusion "to make it constitutionally certain that there would be a jurisdiction capable of restraining officers of the Commonwealth from exceeding Federal power". The reference to restraint of officers of the Commonwealth from exceeding federal power should not be read as limited to the observance of the constitutional limitations upon the executive and legislative power of the Commonwealth. An essential characteristic of the judicature provided for in Ch III is that it declares and enforces the limits of the power conferred by statute upon administrative decision-makers37. Section 75(v) furthers that end by controlling jurisdictional error as asserted in the present application by the plaintiff. In this way, s 75(v) introduced "into the Constitution of the Commonwealth an entrenched minimum provision of judicial review"38. The 33 (2000) 204 CLR 82 at 140-141 [162]. 34 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82. 35 (1948) 76 CLR 1. 36 (1948) 76 CLR 1 at 363. 37 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 38 Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 513 [103]. Kirby Hayne Crennan significance of s 75(v) in the structure of the federal system of government established by the Constitution was further explained in the joint judgment of five members of the Court in Plaintiff S157/200239: "The reservation to this Court by the Constitution of the jurisdiction in all matters in which the named constitutional writs or an injunction are sought against an officer of the Commonwealth is a means of assuring to all people affected that officers of the Commonwealth obey the law and neither exceed nor neglect any jurisdiction which the law confers on them. The centrality, and protective purpose, of the jurisdiction of this Court in that regard places significant barriers in the way of legislative attempts (by privative clauses or otherwise) to impair judicial review of administrative action. Such jurisdiction exists to maintain the federal compact by ensuring that propounded laws are constitutionally valid and ministerial or other official action lawful and within jurisdiction. In any written constitution, where there are disputes over such matters, there must be an authoritative decision-maker. Under the Constitution of the Commonwealth the ultimate decision-maker in all matters where there is a contest, is this Court. The Court must be obedient to its constitutional function. In the end, pursuant to s 75 of the Constitution, this limits the powers of the Parliament or of the Executive to avoid, or confine, judicial review." The validity of s 486A The Minister (and the interveners) did not dispute that, if s 486A had the character of a law which purported to direct the manner in which the judicial power of the Commonwealth should be exercised, it would be invalid. The treatment given in Chu Kheng Lim v Minister for Immigration40 to what was then s 54R of the Act demonstrates the point. Section 54R provided: "A court is not to order the release from custody of a designated person." 39 (2003) 211 CLR 476 at 513-514 [104]. See also the reasons of Gleeson CJ at 40 (1992) 176 CLR 1. Kirby Hayne Crennan The majority of this Court construed s 54R as purporting to apply to persons detained unlawfully, and held it invalid. Brennan, Deane and Dawson JJ (who, with Gaudron J, formed the majority41) said42: "Ours is a Constitution 'which deals with the demarcation of powers, leaves to the courts of law the question of whether there has been any excess of power, and requires them to pronounce as void any act which is ultra vires'43. All the powers conferred upon the Parliament by s 51 of the Constitution are, as has been said, subject to Ch III's vesting of that judicial power in the courts which it designates, including this Court. That judicial power includes the jurisdiction which the Constitution directly vests in this Court in all matters in which the Commonwealth or a person being sued on behalf of the Commonwealth is a party44 or in which mandamus, prohibition or an injunction is sought against an officer of the Commonwealth (s 75(v)). A law of the Parliament which purports to direct, in unqualified terms, that no court, including this Court, shall order the release from custody of a person whom the Executive of the Commonwealth has imprisoned purports to derogate from that direct vesting of judicial power and to remove ultra vires acts of the Executive from the control of this Court." Further, the Minister and the interveners accepted that a law which sought to prevent any application being made to this Court for remedies in respect to a particular class of decision by an officer of the Commonwealth would be invalid as inconsistent with the entrenched provision for judicial review made by s 75(v) of the Constitution. However, they characterise s 486A as regulating the right to institute proceedings, rather than as an attempted deprivation of the entrenched jurisdiction of the Court; the section was said to be analogous to a limitation statute barring the remedy but not extinguishing the right of action. 41 Mason CJ, Toohey J and McHugh J construed s 54R as a direction not to release persons lawfully detained in custody and held it valid. 42 (1992) 176 CLR 1 at 36. 43 R v Richards; Ex parte Fitzpatrick and Browne (1955) 92 CLR 157 at 165 per Dixon CJ, McTiernan, Williams, Webb, Fullagar, Kitto and Taylor JJ. 44 Constitution, s 75(iii). Kirby Hayne Crennan In addition, the Minister and the interveners (a) pointed to the statement in the passage from the joint reasons in Plaintiff S157/200245, set out earlier in these reasons, that the powers of the Parliament to avoid or confine judicial review are limited, given the centrality of s 75(v) in the structure of the Constitution; and (b) emphasised that their Honours in that passage did not deny the competence of legislative regulation of judicial review under s 75(v) of a class of decisions made by officers of the Commonwealth; (c) referred by analogy to the appearance in s 73 of the Constitution of the phrase "with such exceptions and subject to such regulations as the Parliament prescribes" for the appellate jurisdiction of this Court and to the long established acceptance of time limits within which proceedings under s 73 must be instituted46 and (d) concluded that, whilst an "unreasonably short" limitation period might be seen, as Callinan J put it in Plaintiff S157/200247, to be "in substance a prohibition", and so inconsistent with s 75(v), the present s 486A "reasonably regulates" the right to proceed in a s 75(v) jurisdiction in a particular class of case. The plaintiff countered that the references to regulation are not useful and direct attention away from the task at hand. This requires consideration of the degree to which applicants for s 75(v) relief may be denied access to this Court by the Parliament but without contravening the entrenchment of judicial review by that provision. The plaintiff emphasised the significance in the English provenance of mandamus and prohibition of the discretion of the Court to grant relief without fixed time limits and the apparent influence of the English system in the rules of this Court since 1903. The plaintiff submitted that references to statutes of limitation devised to control litigation of private rights, in particular causes of action in contract and 45 (2003) 211 CLR 476 at 514 [104]. 46 Hannah v Dalgarno (1903) 1 CLR 1 at 9-10. But, in Cockle v Isaksen (1957) 99 CLR 155 at 166, Dixon CJ, McTiernan and Kitto JJ warned that a legislative exception made in reliance upon s 73 must not: "eat up or destroy the general rule laid down by the Constitution that appeals shall lie to this Court from judgments decrees orders and sentences of courts of a State exercising federal jurisdiction". 47 (2003) 211 CLR 476 at 537 [173]. Kirby Hayne Crennan tort, are of no assistance where what is at stake is the operation of s 75(v) in enforcing the due administration of the laws of the Commonwealth. It is unnecessary to decide this case at the highest level at which the plaintiff put his submissions. This appeared to be that constitutionally permissible legislative regulation of the s 75(v) jurisdiction could never support a fixed time limit upon the making of an application to this Court. It is sufficient to accept a less absolute proposition as follows. This is that a law with respect to the commencement of proceedings under s 75(v) will be valid if, whether directly or as a matter of practical effect, it does not so curtail or limit the right or ability of applicants to seek relief under s 75(v) as to be inconsistent with the place of in Plaintiff that provision the constitutional structure, as explained The determination of the validity of a provision such as s 486A requires consideration of the substance or practical effect of the provision, not merely of its form49. Accordingly, distinctions drawn in private law (but not without question50) respecting the barring of remedies but not rights are of little assistance. To say that because s 486A only denies entitlement to applicants to institute proceedings it therefore cannot trench upon the content of s 75(v) and upon the authority of this Court to determine applications thereunder is to look to form at the expense of substance. Section 486A is cast in a form that fixes upon the time of the actual notification of the decision in question. This has the consequence that the section does not allow for the range of vitiating circumstances which may affect administrative decision-making. It is from the deficiency that there flows the invalidity of the section. In Plaintiff S157/200251, Gleeson CJ emphasised in relation to the former s 486A that the time of the notification of a decision "may be very different from 48 (2003) 211 CLR 476 at 482-483 [5], 513-514 [104]. 49 See Ha v New South Wales (1997) 189 CLR 465 at 498. 50 See Jackson, "The Legal Effects of the Passing of Time", (1970) 7 Melbourne University Law Review 407 at 423-424. 51 (2003) 211 CLR 476 at 494 [39]. Kirby Hayne Crennan the time when a person becomes aware of the circumstances giving rise to a possible challenge to the decision". His Honour went on to instance the discovery, after the expiry of a time limit fixed by reference to the time of notification, that the decision had been procured by a corrupt inducement. What was there said is applicable to the present operation of s 486A. Likewise the plight of an applicant where the circumstances giving rise to actual or apprehended bias are unknown and unknowable whilst the s 486A timescale is in operation but later become known to the applicant. The fixing upon the time of the notification of the decision as the basis of the limitation structure provided by s 486A does not allow for supervening events which may physically incapacitate the applicant or otherwise, without any shortcoming on the part of the applicant, lead to a failure to move within the stipulated time limit. The present case where the plaintiff was one day late, apparently by reason of a failure on the part of his migration adviser, is an example. It is no answer to say that some unfairness is to be expected and must be tolerated. The above examples are instances where the time limit subverts the constitutional purpose of the remedy provided by s 75(v). Further examples may be suggested from practical experience. Considerations of this kind may be dealt with at the level of discretion to grant or withhold the remedy under s 75(v). That is the path taken by the Rules and the case law in this Court. The path taken by the Parliament with s 486A is to deal with these considerations by the application of a rule precluding what is considered by the legislature to be an untimely application for what by hypothesis is a discretionary remedy. As the above discussion of the operation of s 486A illustrates, any attempt to follow that path is bound to encounter constitutional difficulties. Section 486A is invalid. It is so drawn as not to permit its reading down so as to sever and preserve any valid operation, and no case for severance was presented. As has been remarked, s 75(v) of the Constitution does not include certiorari as one of the enumerated remedies. Section 33 of the Judiciary Act provides that the High Court may make orders or direct the issue of certain writs, among which certiorari is not enumerated; however, the section also provides Kirby Hayne Crennan that it is not to be taken to limit by implication the power of this Court to make any order or to direct the issue of any writ. Section 32 enjoins the Court in the exercise of its original jurisdiction to grant complete relief so that all matters in controversy may be completely and finally determined. It is unnecessary to determine whether it would be open to the Parliament to legislate to withdraw from this Court any power to grant certiorari as the principal relief in the original jurisdiction of the Court52. That is because here certiorari is ancillary to the principal relief of prohibition and mandamus and the Court is seized of jurisdiction with respect to that s 75(v) "matter". In Re Refugee Review Tribunal; Ex parte Aala, Gaudron and Gummow JJ said53: "The power of this Court to issue certiorari is not stated in Ch III of the Constitution. Rather, in a matter such as the present, the conferral of jurisdiction to issue writs of prohibition and mandamus implies ancillary or incidental authority to the effective exercise of that jurisdiction. In the circumstances of this matter, that includes authority to grant certiorari against the officer of the Commonwealth constituting the Tribunal54." The upshot is that s 486A cannot validly diminish the authority of the Court in the present case to afford the remedy of certiorari as an ancillary remedy so as effectively to determine the "matter" in respect of which jurisdiction is conferred by s 75(v). Was there jurisdictional error? The plaintiff thus crosses the threshold into adjudication of his application under s 75(v). We therefore turn to address the substance of the plaintiff's complaint, unimpeded by the invalid attempt of s 486A of the Act to prevent this Court from doing so. However, the plaintiff fails to show jurisdictional error by the delegate in the course of assessing the plaintiff's visa application. 52 cf Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 507 [81]. 53 (2000) 204 CLR 82 at 90-91 [14]. 54 R v Cook; Ex parte Twigg (1980) 147 CLR 15 at 33. See also Glover v Walters (1950) 80 CLR 172 at 174-175. Kirby Hayne Crennan One of the criteria to be satisfied at the time of the decision on the application for the visa for which the plaintiff applied was that set out in Item 880.222 of Sched 2 to the Regulations. This stated: "The applicant has the qualifying score when assessed in relation to the visa under Subdivision B of Division 3 of Part 2 of the Act." The relevant subdivision related to the "points system", with respect to which s 93 of the Act states: "(1) The Minister shall make an assessment by giving the applicant the prescribed number of points for each prescribed qualification that is satisfied in relation to the applicant. In this section: prescribed means prescribed by regulations in force at the time the assessment is made." The prescription reg 2.26A(2)(a)(iv). This permitted points to be awarded for each qualification specified in column 2 of an item in certain Parts of Sched 6A. The language qualification in Pt 3 of Sched 6A was as follows: the Subclass 880 visa was found for "Part 3 Language skill qualifications Column 1 Column 2 Item Qualification The applicant provides evidence of having achieved [International English Language Testing System] test score of at least 6 for each of the 4 test components of speaking, reading, writing and listening in a test conducted: not more than 12 months before the day on which the application was made; or Column 3 Number of points Kirby Hayne Crennan during processing of application the The applicant provides evidence of having achieved [International English Language Testing System] test score of at least 5 on each of the 4 test components of speaking, reading, writing and listening in a test conducted: not more than 12 months before the day on which the application was made; or during processing of application" the The plaintiff required 20 points in the language skills qualification to meet the points test, so that he had to satisfy Item 6A31 rather than Item 6A33. The plaintiff undertook two tests, one on 17 September 2005 and the second on 17 December 2005. He only achieved a score of at least six in three of the four components in any one test, although taking the two tests together he achieved a score of at least six in each of the four test components. The delegate construed Item 6A31 as requiring that the score of at least six for each of the four test components be obtained at the one test rather than in one or more tests undertaken within the qualifying period. Accordingly, the delegate awarded the plaintiff only 15 points for language, because he satisfied Item 6A33. Even if the interpretation given Item 6A31 was erroneous, it is not immediately apparent that this had the consequence of vitiating the decision for jurisdictional error, rather than representing an error within jurisdiction which would not attract prohibition and mandamus under s 75(v). The differential treatment of errors on the face of the record with respect to certiorari has often been noted55, but here certiorari can only be ancillary to relief under s 75(v) for jurisdictional error. 55 See, for example, Craig v South Australia (1995) 184 CLR 163 at 175-176. Kirby Hayne Crennan It is unnecessary further to pursue this question. This is because, in any event, there was no error by the delegate of any description. The plaintiff relies upon the presumption that words in the singular number include the plural56. However, any such presumption must yield to the particular text involved. Item 6A31 fixes upon what transpired "in a test". That test must have been conducted not more than 12 months before the day on which the application is made or during the process of the application. From that test the applicant must be able to provide evidence of having achieved a score of at least six for each of the four components of that test, namely, speaking, reading, writing and listening. The Minister correctly submits that the apparent objective of requiring a particular level of overall competence in the English language would not be achieved if Item 6A31 were to be satisfied by sitting the test on several occasions, concentrating on different components, until there was accumulated a sufficient collection of scores. Orders Questions 1 and 2 in the special case each should be answered "yes". Question 3 should be answered "no". There remains question 4 which asks by whom the costs of the proceeding should be borne. The plaintiff accepts that the construction of Item 6A31 does not give rise to any matter of public interest and the costs associated with preparing and presenting the case in relation to question 3 should be borne by him if he be unsuccessful. However, the great bulk of the argument and of the written submissions was concerned with s 486A and here the plaintiff has been successful, although the outcome of the litigation is that the application under s 75(v) will be dismissed by the Justice disposing of the matter. 56 Acts Interpretation Act 1901 (Cth), ss 23, 46(1). Kirby Hayne Crennan There is no absolute rule with respect to the exercise of the power to award costs57. In Oshlack v Richmond River Council58, for example, reference was made to Liversidge v Anderson59, where, in response to an intimation by the Law Lords that, the case being one of "very general importance", costs should not be asked for, junior counsel60 for the successful Home Secretary responded that, in those circumstances, he "should not dream" of asking for them. The present is a case of very general importance, so far as the validity of s 486A is concerned. Not only should the Minister not have the costs of questions 1 and 2, the Minister should bear the costs of the plaintiff reasonably necessary for the determination of questions 1 and 2. 57 Oshlack v Richmond River Council (1998) 193 CLR 72 at 88 [40], 126-127 [143]. 58 (1998) 193 CLR 72 at 89 [42]. 59 [1942] AC 206 at 283. 60 The future Valentine Holmes KC. Callinan CALLINAN J. Subject to a reservation, I agree with the reasons given and conclusions reached in the joint judgment. The reservation is as to the availability of certiorari as an entrenched constitutional remedy. In this regard I need merely draw attention to, without restating, what I said on this topic in Plaintiff S157/2002 v Commonwealth61. 61 (2003) 211 CLR 476 at 520-525 [120]-[131]; see also Aitken, "The High Court's Power to Grant Certiorari – The Unresolved Question", (1986) 16 Federal Law Review 370.

HIGH COURT OF AUSTRALIA R & ANOR AND APPELLANTS THE INDEPENDENT BROAD-BASED ANTI- CORRUPTION COMMISSIONER RESPONDENT R v Independent Broad-based Anti-corruption Commissioner [2016] HCA 8 10 March 2016 ORDER Appeal dismissed with costs. Order 2 of the orders of French CJ and Keane J made on 13 November 2015 be vacated. On appeal from the Supreme Court of Victoria Representation D Grace QC with O P Holdenson QC for the appellants (instructed by Tony Hargreaves & Partners) R M Niall QC, Solicitor-General for the State of Victoria with E W Woodward SC and J M Davidson for the respondent (instructed by Independent Broad-based Anti-corruption Commission) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS R v Independent Broad-based Anti-corruption Commissioner Statutory interpretation – Independent Broad-based Anti-corruption Commission Act 2011 (Vic) ("IBAC Act") – Investigation by Independent Broad-based Anti-corruption Commission into allegations of assault and human rights violations by officers of Victoria Police – Where appellants were police officers suspected of involvement in alleged assault – Where appellants summoned to give evidence at public examination – Whether power to hold examination under Pt 6 of IBAC Act exercisable in relation to persons who have not been, but may be, charged with offence relating to subject matter of examination. Statutory interpretation – Common law rights – Whether s 144 of IBAC Act abrogates privilege against self-incrimination. Words and phrases – "abrogate", "companion principle", "compulsory examination", "police personnel misconduct", "principle of legality", "privilege against self-incrimination". Independent Broad-based Anti-corruption Commission Act 2011 (Vic), ss 5, 8, FRENCH CJ, KIEFEL, BELL, KEANE, NETTLE AND GORDON JJ. The principal issue in this appeal is whether the power of the Independent Broad-based Anti-corruption Commission ("the IBAC") to hold an examination under Pt 6 of the Independent Broad-based Anti-corruption Commission Act 2011 (Vic) ("the IBAC Act") is exercisable in relation to persons who have not been, but might subsequently be, charged and put on trial for an offence relating to the subject matter of the examination. Also at issue is whether s 144 of the IBAC Act is effective to abrogate such an examinee's privilege against self-incrimination. The appellants raise no issue as to the competence of the Victorian legislature to enact the provisions in question, or as to whether the exercise of the powers so conferred in the circumstances of this case involves an abuse of power by the IBAC or any other functionary of the executive government of the State. The appeal is confined to questions of statutory construction: the appellants contending that the IBAC Act does not, on its proper construction, authorise an examination, or compel the giving of answers which might tend to incriminate the examinee, where there are reasonable grounds to suspect that the examinee may be guilty of an offence. For the reasons which follow, the appellants' contentions cannot be sustained, and their appeal should be dismissed. Background On 20 March 2015, the IBAC, of its own motion, commenced an investigation into the conduct of certain members of Victoria Police stationed at the Ballarat police station. The investigation, named "Operation Ross", was concerned with whether officers of Victoria Police assaulted a female in a cell at the Ballarat police station on 15 January 2015 as well as with a number of other incidents alleged to have occurred at the Ballarat police station in recent years which might have involved human rights violations in respect of other women. On 1 April 2015, the IBAC, having been satisfied of the matters referred to in s 117(1) of the IBAC Act, issued a witness summons to each of the appellants, requiring them to give evidence in a public examination of their knowledge of matters falling within the scope of Operation Ross. Attached to each witness summons was a document titled "Preliminary Information and Directions for Public Examinations in Operation Ross", which listed the following areas of examination: Bell Nettle Gordon "1. Allegations of serious police personnel misconduct (within the meaning of the IBAC Act) on account of alleged unnecessary and/or excessive use of force towards certain vulnerable persons at Ballarat Police Station. 2. Whether any human rights have been violated by any such alleged conduct. The sufficiency and appropriateness of internal reporting by Victoria Police members involved in or associated with such alleged conduct. The handling by Victoria Police of complaints made by such persons concerning such alleged conduct." Each appellant was also issued with a confidentiality notice from the IBAC, specifying matters related to the examination which were to be treated as confidential. On 2 April 2015, the appellants were issued with a Notice of Interim Action from Victoria Police, informing them that they had been suspended from duty on the basis that they were reasonably believed to have committed an offence punishable by imprisonment. On 10 April 2015, Victoria Police informed the Secretary of the Police Association on behalf of the appellants that the offence to which the Notice of Interim Action referred was an allegation of assault occurring on 15 January 2015. The Secretary was advised that "[n]o interview will take place until conclusion of the IBAC public hearing". In written submissions, the IBAC Commissioner ("the Commissioner") foreshadowed that he would, if he were permitted to do so, adduce evidence that the Notices of Interim Action were subsequently withdrawn by Victoria Police. As will become apparent, it is not necessary to take this aspect of the matter any further. Whether or not Victoria Police reasonably suspects or has at some earlier time suspected either appellant to have committed an offence is immaterial to the resolution of the question of statutory construction raised by the appellants. On 10 April 2015, written submissions were delivered to the IBAC on behalf of the second appellant, in which it was submitted that the public examinations in Operation Ross should be held in private, or alternatively that the second appellant's examination should be held in private. On 12 April 2015, Bell Nettle Gordon written submissions were delivered to the IBAC on behalf of the first appellant, in which it was submitted that the first appellant could not be compelled to give evidence, or alternatively that the first appellant's examination should be held in private. On 15 April 2015, the Commissioner delivered reasons for his decision rejecting the appellants' submissions1. On 16 April 2015, the appellants commenced judicial review proceedings in the Supreme Court of Victoria. The appellants had applied to the Court on 15 April 2015 for an interlocutory injunction restraining the Commissioner from proceeding with the Commissioner determined to adjourn the public examinations and, as a result, interlocutory orders were not required. Before discussing the reasons for the failure of the appellants' appeal, it is convenient to refer to the provisions of the IBAC Act which bear upon the issues agitated by the appellants. the public examinations; but on 17 April 2015, The objects of the IBAC Act, as set out in s 8, are, among other things, to: provide for the identification, investigation and exposure of – police personnel misconduct; assist in the prevention of – police personnel misconduct; facilitate the education of the public sector and the community about the detrimental effects of … police personnel misconduct on public administration and the community and the ways in which … police personnel misconduct can be prevented; 1 The Commissioner's reasons for dismissing the submissions were revised on 17 April 2015. Bell Nettle Gordon assist in improving the capacity of the public sector to prevent … police personnel misconduct; provide for the IBAC to assess police personnel conduct." The expression "police personnel misconduct" is defined by s 5 to mean relevantly: "in relation to a public officer who is a police officer … conduct which constitutes an offence punishable by imprisonment; or … conduct which is likely to bring Victoria Police into disrepute or diminish public confidence in it; or … disgraceful or improper conduct". Sections 12 and 14 establish the IBAC as consisting of one Commissioner appointed in accordance with s 20. Section 15 sets out the functions of the IBAC, including: identify, expose and misconduct; investigate police personnel to hold examinations; to make referrals to other persons or bodies. (5) … education and prevention functions for the purpose of achieving the objects of this Act." Section 41 permits the IBAC to provide or disclose information acquired by it to a number of persons or bodies, including State, Territory and Commonwealth prosecutorial bodies such as Directors of Public Prosecutions, and law enforcement agencies such as Victoria Police. Bell Nettle Gordon Section 42 authorises the IBAC to issue a confidentiality notice in respect of an investigation to a person, if, during the investigation, the IBAC considers on reasonable grounds that the disclosure of a restricted matter would be likely to prejudice "the fair trial of a person who has been, or may be, charged with an offence"2. Section 64 relevantly permits the IBAC to conduct an investigation in accordance with its police personnel conduct investigative functions, either on a complaint made to it, or on its own motion. Section 70(1) enables the IBAC to commence or continue an investigation despite the fact that civil or criminal proceedings are on foot which are connected to the subject matter of the investigation. Section 70(2) requires that, if the IBAC becomes aware of such proceedings, it must take all reasonable steps to ensure that the investigation does not prejudice those proceedings. Section 74 provides that the IBAC may refer to a prosecutorial body, such as the Director of Public Prosecutions, any matter which it considers is relevant to the performance of the prosecutorial duties and functions of that body. Section 84(2) provides that, for the purpose of an investigation into, among other things, conduct by a police officer which constitutes an offence punishable by imprisonment, the IBAC may direct any police officer to give to it any relevant information, produce any relevant document, or answer any relevant question. Part 6 of the IBAC Act deals with examinations by the IBAC. Section 115 provides that "[f]or the purposes of an investigation, the IBAC may hold an examination." Section 116 provides that, in holding an examination, the IBAC is not bound by the rules of evidence and may regulate the procedure of the examination as it considers appropriate. Bell Nettle Gordon Section 117 provides that examinations are to be held in private unless the there are "exceptional that, among other conditions, Section 120 empowers the IBAC to issue a witness summons to a person to give evidence. Section 144(1) abrogates the privilege against self-incrimination in respect of persons who have been summoned to give evidence: "A person is not excused from answering a question or giving information or from producing a document or other thing in accordance with a witness summons, on the ground that the answer to the question, the information, or the production of the document or other thing, might tend to incriminate the person or make the person liable to a penalty." Section 144(2) provides a limited "use immunity", relevantly in the following terms: "Any answer, information, document or thing that might tend to incriminate the person or make the person liable to a penalty is not admissible in evidence against the person before any court or person acting judicially, except in proceedings for – perjury or giving false information; or an offence against this Act; or a disciplinary process or action." Part 7 of the IBAC Act contains provisions relating to the IBAC's powers with respect to recommendations, actions and reports. Sections 162(5) and 165(5) prohibit the IBAC from including in its reports any information which would prejudice any criminal investigation or proceedings or other legal proceedings of which it is aware. Sections 162(6) and 165(6) provide relevantly that the IBAC is prohibited from including in its reports a statement that a Bell Nettle Gordon specified person is guilty, or has committed, is committing or is about to commit any criminal offence or disciplinary offence, or a recommendation that a specified person be prosecuted for such an offence. While the IBAC is an agency constituted to maintain the integrity and probity of the police service, s 190 provides that the IBAC may bring proceedings "for an offence in relation to any matter arising out of an IBAC investigation". The appellants focused on this provision, arguing that the "use immunity" provided in s 144(2) of the IBAC Act may be illusory, given that the IBAC itself is empowered to bring proceedings against people such as the appellants so that an examiner may become the prosecutor, who would have the benefit of information derived through examination. No doubt this observation was made with an eye to the decision of this Court in Lee v The Queen4, but that case turned upon the non-observance of statutory provisions directed to preserving the forensic balance between the prosecution and the accused protected by the common law. No such issue arises in this case. The proceedings at first instance The appellants applied to the Supreme Court of Victoria for orders in the nature of certiorari and prohibition for the purpose of preventing the IBAC from examining the appellants. Alternatively, they sought to prevent the IBAC from holding the examinations in public. The alternative claim was unsuccessful both at trial and in the Court of Appeal. It is not in issue before this Court. The appellants' principal argument was that the IBAC Act could not be construed as permitting the compulsory examination of a person reasonably suspected of a crime because that "would effect a fundamental alteration to the process of criminal justice"5 by requiring that person to assist in his or her own prosecution. The primary judge (Riordan J) rejected this argument. His Honour held that because the appellants had not yet been charged with an offence, the process (2014) 253 CLR 455; [2014] HCA 20. 5 X7 v Australian Crime Commission (2013) 248 CLR 92 at 140 [118]; see also at 117-118 [41], 137 [105], 138 [109]; [2013] HCA 29. Bell Nettle Gordon of criminal justice had not commenced and the entitlement of each appellant to decline to assist the prosecution had not been engaged6. His Honour also held that the IBAC Act had abrogated each appellant's though each appellant might privilege against self-incrimination even subsequently be charged with an offence. His Honour reasoned that the purpose of abrogating the privilege is to compel an examinee to give evidence in circumstances in which the answer might incriminate him or her, and to interpret s 144 of the IBAC Act as not requiring an examinee to answer where the answer may incriminate the examinee would be to deprive the section of its intended operation7. The Court of Appeal The Court of Appeal of the Supreme Court of Victoria (Priest, Beach and Kaye JJA) refused the appellants leave to appeal. Their Honours rejected an argument that Pt 6 of the IBAC Act had no operation in relation to persons who might have been involved in criminal conduct in respect of the matters under investigation. In this regard, their Honours were of the view that "an examination, under Part 6, must ordinarily involve an inquiry into potentially criminal conduct" so that the IBAC Act "intended that the persons, who might be examined, include persons who might have been implicated in that conduct."8 Their Honours also rejected the appellants' submission that the privilege against self-incrimination was abrogated by s 144 only in respect of persons whose criminality is either wholly unknown or not under investigation9. 6 R v Independent Broad-based Anti-corruption Commissioner [2015] VSC 374 at 7 R v Independent Broad-based Anti-corruption Commissioner [2015] VSC 374 at 8 R v Independent Broad-based Anti-corruption Commissioner [2015] VSCA 271 at 9 R v Independent Broad-based Anti-corruption Commissioner [2015] VSCA 271 at Bell Nettle Gordon The appellants' submissions The appellants' sole ground of appeal to this Court10 was that the Court of Appeal erred in failing to hold that Pt 6 of the IBAC Act did not authorise their examination. As noted above, this ground of appeal was advanced solely as a matter of statutory construction. The appellants sought to develop this ground in two ways: first, it was said to justify the quashing of the Commissioner's decision to examine the appellants on the basis that they were not compellable to attend or answer any questions at the examination; and secondly, it was said that the Commissioner should be prohibited from examining them in connection with the subject matter of Operation Ross on the ground that answers dealing with that subject might tend to incriminate them. The appellants argued that the Court of Appeal erred in drawing a distinction between persons who have been charged with a criminal offence, and those who are "of interest" or "suspected" of being involved in the commission of a criminal offence. It was argued that "suspects" or people "of interest" are in the same position, so far as compulsory examination is concerned, as persons already subject to the process of criminal justice. Anticipating the objection that this construction of the IBAC Act would substantially deprive it of any practical operation, the appellants argued that, if the extension for which they argued were to be accepted, the IBAC Act would not be nullified. It was said that the IBAC Act would still have work to do in relation to the examination of persons who are not reasonably believed to have been involved in criminal conduct. The appellants also submitted that the language of s 144 of the IBAC Act does not compel the conclusion that the privilege against self-incrimination has been abrogated in respect of persons not yet charged with a criminal offence. They argued that s 144 of the IBAC Act would not be denied practical utility if this construction were accepted because witnesses to the alleged criminal acts of the appellants, as well as any victim of those acts, would not be able to claim the privilege. 10 The appellants appeal to this Court pursuant to special leave granted on 13 November 2015 by French CJ and Keane J. Bell Nettle Gordon The Commissioner's submissions The Commissioner submitted that the limitation of the IBAC's powers of compulsory examination for which the appellants contend has no foundation in the text of the IBAC Act, is not supported by any recognised principle of statutory construction, and is both uncertain in its scope and incompatible with the purpose for which power is conferred on it to investigate and expose police misconduct. In relation to s 144, it was submitted that the section evinces a clear intention to abrogate the privilege in respect of examinees. Compulsory examination The appellants sought to invoke, as the first step in their argument, the principle of statutory construction known as the principle of legality11, whereby common law rights are to be regarded as abrogated by statute only by the use of language which manifests a clear intention to do so. The principle of legality means that common law rights will not be taken by a court to have been displaced by legislation save where the intention to do so is "expressed with irresistible clearness"12. The appellants argued that this Court's decision in X7 v Australian Crime Commission13 illustrated the operation of the principle of legality in a way which was significant for the outcome of this case. But in X7 the decision turned on the circumstance that the person to be compulsorily examined under the Australian Crime Commission Act 2002 (Cth) ("the ACC Act") had been charged with an offence and was, as a result, subject to the accusatorial judicial process. The majority held that the ACC Act did not authorise the compulsory examination of a person charged with an offence about the circumstances of the offence while 11 See, eg, Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 329 [21] per Gleeson CJ; [2004] HCA 40; Momcilovic v The Queen (2011) 245 CLR 1 at 46-47 [43] per French CJ; [2011] HCA 34. 12 United States v Fisher 6 US 358 at 390 (1805); Potter v Minahan (1908) 7 CLR 277 at 304; [1908] HCA 63; X7 v Australian Crime Commission (2013) 248 CLR 92 at 153 [158] per Kiefel J. 13 (2013) 248 CLR 92. Bell Nettle Gordon his trial was pending14. In their Honours' view, the accused's defence would inevitably be prejudiced if he were required to answer questions about the subject matter of the charge15; and the ACC Act had not, by express words or necessary intendment, effected such an alteration to the process of criminal justice16. As Hayne and Bell JJ said17: "To hold that the general words of the relevant provisions of the ACC Act authorise compulsory examination of a person charged with an indictable Commonwealth offence about the subject matter of the offence charged would thus depart in a marked degree from the 'general system of law'." Kiefel J, the other member of the majority, explained that the rule that "an accused person cannot be required to testify to the commission of the offence charged" is a companion to the fundamental principle of the common law that the onus of proof of a criminal charge rests upon the prosecution18. The appellants sought to invoke the companion principle in this case, but this was misconceived. The companion principle is, as its name suggests, an adjunct to the rights of an accused person within the system of criminal justice. Its application depends upon the judicial process having been engaged because it is an aspect of that process19. Thus, in X7, the joint reasons of Hayne and Bell JJ made it clear that the companion principle protects the position of "a person charged with, but not yet tried for" a criminal offence20. 14 X7 v Australian Crime Commission (2013) 248 CLR 92 at 127 [70]-[71], 152-153 15 X7 v Australian Crime Commission (2013) 248 CLR 92 at 127 [71]. 16 X7 v Australian Crime Commission (2013) 248 CLR 92 at 127 [71], 153 17 X7 v Australian Crime Commission (2013) 248 CLR 92 at 132 [87]. 18 X7 v Australian Crime Commission (2013) 248 CLR 92 at 153 [159]. 19 R v Hertfordshire County Council; Ex parte Green Environmental Industries Ltd [2000] 2 AC 412 at 419. 20 X7 v Australian Crime Commission (2013) 248 CLR 92 at 127 [70]-[71]. Bell Nettle Gordon In Lee v The Queen21, this Court affirmed the fundamental principle of the common law that it is for the prosecution to prove the guilt of an accused person as "an aspect of the accusatorial nature of a criminal trial in our system of criminal justice22." The Court went on to say23: "The companion rule to the fundamental principle is that an accused person cannot be required to testify. The prosecution cannot compel a person charged with a crime to assist in the discharge of its onus of proof24." These observations were set in the context of a discussion of the "balance struck between the power of the State to prosecute and the position of an individual who stands accused."25 Most recently, in Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd26, French CJ, Kiefel, Bell, Gageler and Keane JJ referred to this passage from Lee v The Queen, and went on to say that the companion principle: "is an 'aspect of the accusatorial nature of a criminal trial in our system of criminal justice' whereby an accused person cannot be compelled to assist 21 (2014) 253 CLR 455 at 467 [32]. 22 X7 v Australian Crime Commission (2013) 248 CLR 92 at 119-120 [46], 136 [101]-[102], 142-143 [124], 153 [159]-[160]; Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 261 [159]; [2013] HCA 39. 23 (2014) 253 CLR 455 at 467 [33]. 24 Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 212-213 [20], 25 (2014) 253 CLR 455 at 466-467 [32] (emphasis added). 26 (2015) 89 ALJR 622 at 629-630 [36]-[37]; 320 ALR 448 at 455; [2015] HCA 21. Bell Nettle Gordon the prosecution to make its case27. The companion principle is a 'companion' of criminal trials". (emphasis in original) In the same case, Nettle J said28: "The fundamental principle of the criminal justice system that the onus of proof beyond reasonable doubt rests on the Crown, and its companion rule that the accused cannot be required to assist in proof of the offence charged, are now conceived of as expressions of the basic accusatorial nature of the criminal justice system." In the present case, the companion principle is not engaged because the appellants have not been charged; and there is no prosecution pending. The appellants urge the Court to extend the principle. For a number of reasons, that suggestion should not be accepted. First, to reformulate the principle as the appellants urge would be to extend its operation beyond the rationale identified in the authorities, namely, the protection of the forensic balance between prosecution and accused in the judicial process as it has evolved in the common law. Secondly, the appellants' formulation of the terms of the extension for which they argued varied over the course of their submissions: the variety of expression is eloquent of uncertainty as to the basis for, and operation of, the extension. In this regard, the appellants' formulation shifted from "persons reasonably believed to have committed a criminal offence", to "a person the specific subject of an investigation", to "a person reasonably suspected of having committed a criminal offence". A third difficulty, related to the second, is that to urge that the companion principle be extended to terminate the examination of a person reasonably suspected of an offence invites a query as to the person by whom the requisite suspicion is to be held, whether an officer of the IBAC, or an officer of Victoria Police, or some other executive functionary, or a court before which the issue arises. Different functionaries, having access to different bodies of information, 27 Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at 528; [1993] HCA 74. 28 Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 89 ALJR 622 at 633 [61]; 320 ALR 448 at 460 (footnote omitted). Bell Nettle Gordon may have different views upon the issue. The practical operation of the principle so extended would be unstable, in that the quality of suspicion could be expected to vary over the stages of consideration of the information relevant to the issue as more information becomes available to whichever functionary is called upon to address the issue. Fourthly, to apply the companion principle in anticipation of the commencement of criminal proceedings would be to fetter the pursuit and exposure of a lack of probity within the police force, which is the object of the IBAC Act. The subject matter of the IBAC's investigations covers a range of conduct, only some of which may constitute a criminal offence. Upon the appellants' construction, the IBAC, while investigating conduct of an examinee, might uncover information that makes a certain person a suspect in relation to a criminal offence, at which point the examination would have to cease, leaving issues which may affect the public interest unexplored. It may also be noted here that the appellants were, at one stage of the hearing, disposed to argue that s 120 of the IBAC Act should be construed as if the reference to "a person" did not include "a person whom the IBAC suspects of having committed an offence". No principle of statutory construction warrants the addition of these words to limit the operation of the statutory text. Further, if accepted, this argument would have the surprising consequence that an examination directed to conduct which might fall short of a criminal offence, but which nevertheless amounts to police personnel misconduct, could not proceed. As was observed by Gleeson CJ in Theophanous v The Commonwealth29 of the need to maintain standards of probity in the conduct of public affairs, "[n]othing could be more central to good government." The appellants' proposed construction would deny the IBAC access to precisely the kind of information about matters of grave public interest that may bear upon the discharge of its functions from the very people who are likely to have that information and who may be the only people who do. This would tend to frustrate the statutory objective of identifying and reporting on police misconduct. Section 144 Section 144 operates on the premise that, in its absence, an examinee would be entitled to claim the privilege against self-incrimination. If s 144 did 29 (2006) 225 CLR 101 at 115 [10]; [2006] HCA 18. Bell Nettle Gordon not apply in relation to a person reasonably suspected of having committed an offence, it would have no work to do. In this regard, it is to be borne in mind that the privilege against self-incrimination can only be claimed by a person whose answer is apt to incriminate him or her. Thus, in Sorby v The Commonwealth30, Gibbs CJ referred to R v Boyes31, where it was said: "to entitle a party called as a witness to the privilege of silence, the Court must see, from the circumstances of the case and the nature of the evidence which the witness is called to give, that there is reasonable ground to apprehend danger to the witness from his being compelled to answer." There can be no doubt that the provisions of the IBAC Act demonstrate that the legislature adverted to the possibility that the exercise of the powers conferred by the IBAC Act might effect a curtailment of the privilege against self-incrimination. Thus, s 42 expressly serves to prevent prejudice to a person who "may be … charged with an offence". To say, as the appellants do, that s 144 could have an operation in respect of an examinee whose criminality is entirely unknown or is not the subject of an investigation is to give little weight to the evident purpose of Pt 6 of the IBAC Act, which is to obtain material not presently available to it in order to advance the objective of maintaining public confidence in the police force. In the nature of things, such information may be expected to include information which may be incriminating of the examinee. It is also to be borne in mind here that the appellants are duty-bound to give an account of their conduct in the course of their duties by reason of their membership of a disciplined police force32. That duty is reinforced in respect of investigations by the IBAC by s 84(2) of the IBAC Act. Where such a duty exists, it is not difficult to discern an intention to abrogate the privilege against 30 (1983) 152 CLR 281 at 289; [1983] HCA 10. See also In re Westinghouse Uranium Contract [1978] AC 547 at 612, 627, 647. 31 (1861) 1 B & S 311 at 329-330 [121 ER 730 at 738]. 32 Police Service Board v Morris (1985) 156 CLR 397; [1985] HCA 9, which concerned reg 95A(7) of the Police Regulations 1957 (Vic). Bell Nettle Gordon self-incrimination where allegations of police misconduct are to be examined. In Police Service Board v Morris33, Brennan J said: "The effectiveness of the police in protecting the community rests heavily upon the community's confidence in the integrity of the members of the police force … The purpose of police discipline is the maintenance of public confidence in the police force, of the self-esteem of police officers and of efficiency. … To permit, under a claim of privilege, a subordinate officer to refuse to give an account of his activities whilst on duty when an account is required by his superior officer would subvert the discipline of the police force." These observations have special force where the full circumstances of the misconduct of concern can be expected usually to be such as to be peculiarly within the knowledge of the police officers concerned34. Orders The Court of Appeal was right to refuse leave to appeal. The appeal to this Court should be dismissed. The appellants should pay the Commissioner's costs of and incidental to the appeal. 33 (1985) 156 CLR 397 at 412. 34 See Mortimer v Brown (1970) 122 CLR 493 at 496; [1970] HCA 4. The main purpose of the IBAC Act is expressed to be to establish the IBAC35. The first of its expressed objects is to "provide for the identification, investigation and exposure of ... serious corrupt conduct ... and ... police personnel misconduct"36. Having established the IBAC37, the IBAC Act pursues that object by conferring on the IBAC express functions "to identify, expose and investigate serious corrupt conduct" and "to identify, expose and investigate police personnel misconduct"38. For the purposes of the IBAC Act, "corrupt conduct" is defined so as always to be "conduct that would, if the facts were found proved beyond reasonable doubt at a trial, constitute a relevant offence"39: either an indictable offence against a statute or a common law offence of bribing a public official or of perverting or attempting to pervert the course of justice40. The expression "police personnel misconduct" is defined to include conduct on the part of a police officer which constitutes an offence punishable by imprisonment41. The IBAC is empowered to conduct an investigation in accordance with its corrupt conduct investigative functions42, only if "it is reasonably satisfied that the conduct is serious corrupt conduct"43. It is empowered to conduct an investigation in accordance with its police personnel conduct investigative functions44 without being subject to any similar limitation. For the purposes of an investigation, the IBAC is empowered to hold an examination45. For the purposes of an examination, the IBAC can summon "a 35 Section 1(1). 36 Section 8(a). 37 Sections 1(1) and 12. 38 Section 15(2). 39 Section 4(1). 40 Section 3(1), "relevant offence". 41 Section 5, "police personnel misconduct". 42 Section 60(1). 43 Section 60(2). 44 Section 64(1). 45 Section 115. person" to attend before it to give evidence46, and an IBAC Officer47 authorised to do so may examine the person on oath or affirmation in accordance with the summons48. After conducting an investigation, the IBAC is permitted to take a range of actions49. Those actions include referring the matter under investigation to a prosecutorial body50 and providing or disclosing to that body information the IBAC has in relation to the matter referred51. The actions open to the IBAC also include the IBAC itself bringing proceedings for an offence in relation to any matter arising out of the investigation52. Addressing the common law presumption that a statutory power to investigate an offence ends when a prosecution of that offence begins53, the IBAC Act expressly provides that the IBAC may commence or continue to investigate a matter despite the fact that criminal proceedings are on foot, or are commenced, in any court that relate to the matter the subject of investigation54. Addressing the risk that the conduct of an investigation might prejudice concurrent criminal proceedings, the IBAC Act expressly obliges the IBAC to take all reasonable steps to ensure that does not occur55. Addressing the common law privilege against self-incrimination of a person summoned to give evidence to the IBAC, the IBAC Act expressly abrogates the privilege56, and goes on to provide for the person to have direct use 46 Section 120(1)(a). 47 Defined in s 3(1), "IBAC Officer". 48 Section 132(2)(a)-(c). 49 Section 164. 50 Sections 164(1)(a) and 74. 51 Sections 164(1)(a) and 77. 52 Sections 164(2) and 190. 53 Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 316-317 [325]; [2013] HCA 39. 54 Section 70(1). 55 Section 70(2). 56 Section 144(1). immunity: an incriminatory answer is not admissible against the person except in specified proceedings57. The specified proceedings do not include proceedings for an offence constituted by conduct which constitutes the subject-matter of the IBAC's investigation. The consequence is that, on the face of the IBAC Act, a person examined before the IBAC in the course of an investigation is not immune from answering a question relevant to the offence constituted by conduct which constitutes the subject-matter of the investigation. The person's answer to the question can be used by the IBAC for the purpose of the investigation, but the answer cannot be admitted against him or her in any prosecution for that offence. Addressing more generally the risk that the disclosure of evidence given to the IBAC during an investigation might prejudice the fairness of the trial of a person in an existing or future prosecution, the IBAC Act expressly empowers the IBAC to issue a confidentiality notice restricting disclosure of that evidence58. A precondition for the issuing of such a confidentiality notice is that the IBAC "considers on reasonable grounds that the disclosure ... would be likely to prejudice ... the fair trial of a person who has been, or may be, charged with an offence"59. The argument of the appellants is that there is yet another principle or presumption of the common law which stands in the way of the IBAC examining a person about the offence constituted by conduct which constitutes the subject- matter of an investigation, and which the IBAC Act fails to address. It is the recently formulated "companion rule" to the common law principle that the prosecution bears the onus of proving criminal guilt: that the prosecution cannot compel a person charged with a crime to assist in the discharge of its onus of proof60. The companion rule would be reduced to an empty formality, the appellants argue, were it to operate only after the prosecution of an offence had commenced. That is because evidence compulsorily obtained from an accused person is capable of being used to assist in the prosecution of that person in precisely the same way whether that evidence is obtained before or after the prosecution has commenced. For it to have meaningful content, the companion rule must therefore operate during the investigation of an offence in the same way that it operates during the prosecution of that offence. The appellants' essential point might be thought to be illustrated by the facts of the case in which the companion rule was adopted. There the evidence 57 Section 144(2). 58 Section 42. 59 Section 42(1)(c). 60 Lee v The Queen (2014) 253 CLR 455 at 467 [33]; [2014] HCA 20. which was found to have come into the hands of the prosecution in "breach of the principle of the common law"61 had been obtained in compulsory examinations conducted before the persons examined had been prosecuted62. Because it fails in its terms to address the companion rule, the appellants argue, the IBAC Act has to be read as having no operation to permit the IBAC to summon or examine a person whose own potentially criminal conduct is under investigation. The argument, if good, must apply in the same way to an investigation into corrupt conduct as it does to an investigation into police personnel misconduct constituted by conduct which constitutes an offence punishable by imprisonment. How the companion rule, operating as a common law principle of interpretation in Victoria, might relate to the human right recognised under the Charter of Human Rights and Responsibilities Act 2006 (Vic) of a person charged with a criminal offence "not to be compelled to testify against himself or herself or to confess guilt"63 was not explored in argument and is best left to another day. Questions of legislative compliance with a human right are, of course, concerned with the substantive operation of the applicable legislation as distinct from being focused merely on the form or manner of expression of that legislation. And a human right is not absolute; it is subject to such reasonable limits imposed by law as can be demonstrably justified in a free and democratic society based on human dignity, equality and freedom64. Nor was any attention given in argument to how the detailed statement of compatibility, laid before the Houses of the Victorian Parliament in respect of the Bill for the IBAC Act as required by the Charter of Human Rights and Responsibilities Act65, might bear on the construction of the IBAC Act in light of the common law principle. The statement of compatibility appears to have drawn on concepts familiar within European human rights jurisprudence in recognising that the IBAC Act would have imposed an unjustified limit on the exercise of the human right of a person charged with a criminal offence not to be compelled to testify against himself or herself or to confess guilt were the IBAC Act to have permitted the tendering in evidence in a subsequent prosecution of the answers obtained under compulsion before the commencement of 61 Lee v The Queen (2014) 253 CLR 455 at 471 [46]. 62 Lee v The Queen (2014) 253 CLR 455 at 459 [2], [6]. 63 Section 25(2)(k) of the Charter of Human Rights and Responsibilities Act. 64 Section 7(2) of the Charter of Human Rights and Responsibilities Act. 65 Section 28 of the Charter of Human Rights and Responsibilities Act. prosecution66. The statement of compatibility explained the balance struck in the IBAC Act to be compatible with that human right in part by reference to the express abrogation of the privilege against self-incrimination having the purpose "to assist the IBAC in its function as a truth-seeking body that is able to undertake full and proper investigations", and in part by reference to the inclusion of the provision conferring direct use immunity operating to prevent self-incriminating answers obtained in an examination from becoming evidence in a prosecution for the offence under investigation67. The statement of compatibility went on to note that, subject to the limitation on the tendering of evidence imposed by that direct use immunity, "[i]f it were the case that self- incriminating information obtained from a person was disclosed in accordance with the [IBAC Act], for example to the Chief Commissioner of Police, it would be a matter for the police to determine what use is made of that information"68. The answer to the appellants' argument based on the companion rule, in my opinion, is that given by the Victorian Court of Appeal69. That answer is that, whatever the temporal operation of the companion rule might be, the IBAC Act manifests an unmistakable legislative intention that a person summoned and examined might be a person whose corrupt conduct or criminal police personnel misconduct is the subject-matter of the investigation. The exclusion of a person whose corrupt conduct or criminal police personnel misconduct is the subject-matter of an investigation from the reference to "a person" who might be summoned and examined in the course of an examination conducted for the purpose of that investigation is not only unjustified by the unqualified statutory language. Such exclusion would undermine the principal statutory purpose of the IBAC Act by compromising the attainment of the express object of providing for the identification, investigation and exposure of serious corrupt conduct and police personnel misconduct. It is in the nature of an investigatory function that the investigator will seek to ascertain the truth about the subject-matter of the investigation and for that 66 Eg Beghal v Director of Public Prosecutions [2016] AC 88 at 120 [68] explaining Saunders v United Kingdom (1996) 23 EHRR 313. 67 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 19 April 2012 at 1783; Victoria, Legislative Council, Parliamentary Debates (Hansard), 3 May 68 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 19 April 2012 at 1783; Victoria, Legislative Council, Parliamentary Debates (Hansard), 3 May 69 R v Independent Broad-based Anti-corruption Commissioner [2015] VSCA 271 at purpose will follow leads presented by evidence as it unfolds. It is in the nature of serious corrupt conduct and police personnel misconduct that the involvement of individuals in the conduct which forms the subject-matter of the investigation will often be hidden unless and until exposed. The appellants' construction would confine the IBAC to the essentially prosecutorial function of assembling evidence from other persons who were or might have been witnesses to the criminal conduct of identified individuals. Although not accommodated anywhere within the highly prescriptive scheme of the IBAC Act, the appellants' construction would then presumably require the IBAC to stop taking evidence from those witnesses at any time that it might begin to emerge that they too might have been involved in the conduct under investigation. The exclusion of a person whose corrupt conduct or criminal police personnel misconduct is the subject-matter of the investigation would, moreover, reduce to nonsense the IBAC Act's solemn abrogation of the privilege against self-incrimination and with it the consequent conferral of direct use immunity. The purpose of the abrogation of the privilege against self-incrimination, to adopt the explanation in the statement of compatibility, is to assist the IBAC as a truth- seeking body to undertake a full and proper investigation. Were a person whose potentially criminal conduct is the subject of investigation excluded from being summoned or examined for the purpose of the investigation, the privilege against self-incrimination that is abrogated would have no scope for application to answers given about the very conduct that is under investigation. The abrogation of the privilege against self-incrimination would instead be reduced in its application to such self-incrimination as might occur peripherally to the course of an examination. The answers required to be given would be those which expose potentially criminal conduct at the fringe of the subject-matter of the investigation. A rational legislative basis for abrogating the privilege and conferring direct use immunity only in respect of evidence peripheral to the purpose of the examination would be difficult to discern. Legislation is sometimes harsh. It is rarely incoherent. It should not be reduced to incoherence by judicial construction. An interpretative technique which involves examining a complex and prescriptive legislative scheme designed to comply with identified substantive human rights norms in order to determine whether, and if so to what extent, that legislative scheme might butt up against a free-standing common law principle is inherently problematic. The technique is even more problematic if the common law principle lacks precise definition yet demands legislative perspicacity and acuity if it is not to create of its own force an exception to the scheme that is spelt out in the statutory language. Be that as it may, any common law principle or presumption of interpretation must surely have reached the limit of its operation where its application to read down legislation plain on its face would frustrate an object of that legislation70 or render means by which the legislation sets out to achieve that object inoperative or nonsensical71. The appellants' invocation of the companion rule to read down the IBAC Act would do both. For these reasons, I join in the orders proposed in the joint reasons for judgment dismissing the appeal with costs. 70 Eg Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 563 [43]; [2002] HCA 49. 71 Eg Coco v The Queen (1994) 179 CLR 427 at 438, 446; [1994] HCA 15.

HIGH COURT OF AUSTRALIA ROSE SHOREY AND APPELLANT PT LIMITED as trustee for McNamara Australia Property Trust & Ors RESPONDENTS Shorey v PT Limited [2003] HCA 27 28 May 2003 ORDER 1. Appeal allowed with costs. 2. Set aside the orders of the New South Wales Court of Appeal dated 7 June 3. Remit the proceedings for rehearing and determination of the appeal and cross-appeal to that Court conformably with the reasons of this Court. the Court of Appeal On appeal from the Supreme Court of New South Wales Representation: D F Jackson QC with A S Morrison SC and A C Casselden for the appellant (instructed by Maurice Blackburn Cashman) B W Walker SC with P S Jones for the first respondent (instructed by PricewaterhouseCoopers Legal) No appearance for the second and third respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Shorey v PT Limited Appeal – Rehearing – Causation – Conflict of expert evidence – Review of trial judge's finding of fact – Where plaintiff fell and suffered physical injuries as a result of from persistent psychologically disturbed condition – Whether psychological condition caused by fall. tortfeasor's negligence – Plaintiff suffering Negligence – Damage – Causation of – Evidentiary foundation for proof of – Existence of multiple causes of damage – Obligation of plaintiff at trial to prove damage – Sufficiency of proof that the alleged tortfeasor's conduct was a cause of the plaintiff's damage – Alleged disproportion between the tortfeasor's conduct and subsequent symptoms – Whether plaintiff malingering – Obligation of tortfeasor to take plaintiff as it finds him or her. Evidence – Evidentiary presumptions – Multiple causes of damage allegedly occasioned by tortfeasor's negligence – Evidentiary onus of tortfeasor to exclude the operation of its wrong as a cause of continuing damage – Relevance of factual findings made at trial – Whether alleged tortfeasor has displaced the causative effect of its injury. GLEESON CJ, McHUGH AND GUMMOW JJ. The facts of the case are set out in the reasons for judgment of Kirby J and Callinan J. The issue upon which the Court of Appeal, by majority (Handley and Powell JJA; Davies AJA dissenting), reversed the commencement of the reasons of Callinan J. the decision of is stated at judge trial the Accepting, as did the Court of Appeal, the finding of the trial judge that the appellant genuinely experienced the extreme, and in some respects bizarre, symptoms of which she complained, and that she was not malingering, the question became whether the fall for which the respondents were responsible was a cause of the appellant's condition as it manifested itself at trial. That there were other factors which contributed to that condition was beyond doubt; but if it were correct to conclude that the fall was a cause of the condition, then the appellant was entitled to succeed. Deciding that question was not easy, as acknowledged. The appellant's case was supported by Dr Yeo who said: the medical experts "In this lady's case my interpretation of her problems is that she had an original injury from which she appears to have made a very satisfactory recovery from the surgery but she would have had scar tissue in and around the spine where that repair was done and the potential to have a trigger point there. For a period of at least 18 months she claims she was symptom free prior to the fall which occurred in April 1988 and from that point she obviously had an exacerbation of back pain and leg pain which ... was disabling but certainly had not reached the level of disability which subsequently occurred with her paraplegia. The three main psycho-social episodes that you describe could well have sensitized this lady to becoming more profoundly disabled than she would have been had those particular [episodes] not occurred but may have occurred had other particularly emotional crises occurred, different to the ones you describe. So that here we have, I believe, a very reasonable scenario of a physical disability and coupled with the complexity of emotional crises which are understandable and which led this lady to present as profoundly paraplegic which we know is not from an organic cause. In my opinion the main trigger point for this present level of serious disability is the fall that she had on 2 of the fourth 1988." Dr Yeo's opinion depended for its psychiatric content upon the opinion of Dr Phillips, a psychiatrist called for the appellant. Dr Phillips was contradicted by Dr Dyball, a psychiatrist called for the respondents. The evaluation of the evidence of Dr Phillips was complicated by the fact that he learned at a very late stage, and after he had formed his initial opinion, McHugh certain important facts concerning the appellant's psychiatric history. The cross- examination of Dr Phillips is set out in the reasons of Callinan J. Handley JA regarded it as crucial. He said: "Dr Yeo rises no higher than Dr Phillips, Dr Phillips withdrew his opinion in cross-examination, and Dr Dyball's opinion was that the fall was not causative." We are unable to agree that Dr Phillips withdrew his opinion. A concession by an expert witness of the possibility that an opinion may be incorrect, (a possibility of which reasonable people, including judges, are always conscious), does not amount to an abandonment of the opinion. When, as in the present case, an expert concedes under cross-examination that his or her original opinion was formed without knowledge of some material facts, an appreciation of the extent to which the witness accepts that the opinion is to be qualified or discounted may depend upon an assessment of the witness by the trial judge. Sometimes, of course, this will be plain from the transcript of evidence. In other cases, of which the present is an example, the record will be equivocal. Handley JA also criticised the trial judge's finding that the fall in 1988 was a cause of the appellant's conversion disorder on the following ground: "If the fall only caused a temporary aggravation of the [appellant's] degenerative condition for some 12 months or so, her pain thereafter was not caused by the accident, but by her underlying condition for which the [respondents were] not responsible." That, however, was not what the trial judge found. He said: "I find that the [appellant] suffered severe back pain as a result of the fall, probably mainly at the sites of previous surgery, and I find that this pain due to physical factors continued to some degree for approximately twelve months after the fall ... I also find ... that she has continued to experience back pain and leg pain from time to time as a result of degenerative disease of the lumbar spine. I find that this degenerative disease was aggravated by the fall of 1988." The reasoning of Davies AJA on the facts appears to us to be persuasive. The principal problem in the case, once the possibility of malingering is put to one side, lay in relating legal concepts of causation to the medical concept of a conversion disorder. The appellant, suffering from a not insignificant, but not catastrophic, back complaint aggravated by her fall, with a history of psychological vulnerability, and being subjected to further severe emotional distress, developed a condition in consequence of which her disablement became McHugh far greater than her physical problems could account for. Was the fall a cause of that condition? On the evidence, that became a difficult question of fact. Different conclusions were fairly open, and it is not surprising that the question gave rise to a division of judicial opinion. Even so, we agree with Davies AJA that the trial judge was not shown to be in error. We would allow the appeal. We agree with the orders proposed by Kirby KIRBY J. This appeal is one of a series in which challenges have been brought to this Court in respect of the appellate review of factual conclusions decided at trial by a judge sitting without a jury1. In the present proceedings the primary judge (Dodd DCJ) heard the action in the District Court of New South Wales. It was brought by Mrs Rose Shorey ("the appellant") against the respondents. Negligence was proved in a hearing in which that issue had been severed from the issue of damages. There is no challenge to the determination of negligence. In a second stage, the primary judge found that the appellant had suffered serious injuries, disabilities and losses as a result of the negligence. He entered judgment in favour of the appellant in the sum of $555,212.55 and made an order apportioning liability between the respondents. That judgment resulted in an appeal and cross-appeal to the Court of Appeal of the Supreme Court of New South Wales. The respondents sought a reduction in the damages to $68,911.05. The appellant, by cross-appeal, sought an increase to more than $2 million. In the result, the Court of Appeal, by majority2, allowed the appeal and dismissed the cross-appeal. The Court found appellable error on the part of the primary judge. It concluded that the Court of Appeal could, and should, proceed to a re-assessment, as requested by the respondents3. A substituted judgment was entered, in terms of the proposal of the respondents. Judgment was then entered in the appellant's favour in the sum so proposed. By special leave, the appellant now appeals to this Court. She seeks orders setting aside the judgment of the Court of Appeal and remitting to that Court the cross-appeal which was not decided in consequence of the conclusions which that Court reached. The facts, legislation and issues The background facts are stated by Callinan J4. The appeal from the judgment of the District Court5 had to be decided by the Court of Appeal in 1 The other appeals are Fox v Percy (2003) 197 ALR 201; Whisprun Pty Ltd v Dixon reserved by the Court on 7 November 2002; Joslyn v Berryman reserved by the Court on 8 November 2002; Hoyts Pty Ltd v Burns reserved by the Court on 8 May 2 Handley JA, Powell JA concurring; Davies AJA dissenting. 3 PT Limited v Shorey [2001] NSWCA 127 at [69]. 4 Reasons of Callinan J at [57]-[67]. 5 Pursuant to the District Court Act 1973 (NSW), s 127(1). Kirby accordance with the Supreme Court Act 1970 (NSW). Relevantly, such an appeal is by way of re-hearing6. The appellate court has the power and duty to draw inferences and make findings of fact on the basis of the record7. It may re- assess damages8. In specified cases, it may receive further evidence9. It is obliged to "make any finding or assessment [and to] give any judgment … which ought to have been given or made or which the nature of the case requires"10. The authority of this Court upon the application of the foregoing statutory provisions is contained in a series of decisions that settles the applicable law. An appeal by way of re-hearing must be "a reality, not an illusion"11. The appellate court must correct decisions of the trial judge found to be wrong. This includes decisions of law; but also decisions of fact. However, in respect of decisions of fact, the appellate court must perform its functions within the limitations inherent in the appellate process and in accordance with rules validly provided by law. This involves a recognition of the significant advantages of the trial judge in fact finding, especially12 (but not only13) in cases in which the credibility of the parties, or of important witnesses, was in issue at the trial. As in the other cases in the present series, the basic issue for decision in this appeal is whether the Court of Appeal erred in its application of the foregoing principles. Just as the proper functions of appellate courts in reviewing findings about the evidence have been the subject of detailed consideration in this Court, so in national courts in other common law countries the applicable principles have been explored and explained. The verbal formulae vary from one country to another, but the substance is much the same. In each case, the appellate court must respond in a principled way to the call for action to correct s 75A(5). s 75A(6)(b). s 75A(6)(c ). s 75A(7) and (8). 10 s 75A(10). 11 Warren v Coombes (1979) 142 CLR 531 at 553. 12 Jones v Hyde (1989) 63 ALJR 349 at 351-352; 85 ALR 23 at 27-28; Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179; Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479, 482-483. 13 State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306; 160 ALR 588. Kirby error, whilst at the same time observing the demand for appellate restraint consonant with the respective facilities and functions of the appellate and trial courts14. At first instance the present proceedings revealed that the case was an unusual one. The appellant had been injured on 2 April 1988 in a fall at a shopping centre at Blacktown, near Sydney. From this seemingly unremarkable incident she claimed that a severe and grossly disabling condition developed, resulting in profound incapacity. Such incapacity did not have a provable organic foundation. Accordingly, at trial, it was alleged for the appellant that she was suffering a conversion disorder: a psychiatric condition said to explain her debilitating symptoms and to substantiate them as genuine and serious. The issues for trial in the District Court were: (1) whether the appellant's disability, including her alleged inability to walk, were genuine or whether she was a malingerer; (2) if they were genuine, whether the disabilities were caused by the fall found to have been occasioned by the negligence of the respondents; and (3) depending on the answers to (1) and (2), the monetary amount of the damages to which the appellant was entitled. The first issue: malingering The primary judge rejected the respondents' contention that the appellant was a malingerer. He found that she was genuine. This was so despite some objective evidence (such as the lack of muscle wasting in her thighs and calf muscles) that gave a degree of objective support to the respondents' attack on the appellant's claims. In reaching this conclusion, the primary judge relied upon certain objective signs (calluses on the appellant's knees consistent with her claim that she was forced to crawl; as well as bizarre movements demonstrated when observed15). He also relied on "the way the [appellant] presented in court and the evidence of her daughter Tracey"16. In light of the reasons of the primary judge and consistent with authority, it became difficult for the respondents to overturn the judge's conclusion on the first issue. However, before the Court of Appeal, the respondents sought to construct a challenge based upon incontrovertible evidence so as to overcome this conclusion. In the result, that challenge was unanimously rejected by the 14 Fox v Percy (2003) 197 ALR 201 at 206-210 [20]-[31]. 15 Shorey v PT Limited, unreported, District Court of New South Wales, 29 February 2000 ("reasons of the primary judge") at 14. 16 Reasons of the primary judge at 14. Kirby Court of Appeal. While acknowledging that the respondents' submissions "as a matter of ordinary common sense [appear] to have considerable force"17, Handley JA, for the majority, concluded18 that the submissions on the first issue could not overcome "the usual obstacles presented by the principles in Abalos v Australian Postal Commission"19. Davies AJA agreed20. Accordingly, the Court of Appeal decided the first issue in the appellant's favour. That issue has not been re-opened in this Court. The acceptance of that conclusion is not determinative of the outcome of the second issue. But it is highly relevant to it. This Court must commence its analysis of the second issue, as the Court of Appeal was bound to do, on the basis that the appellant had been injured in a fall caused by negligence and that she had suffered very severe disabilities which, although bizarre and without an apparent physiological explanation, were genuine in the sense that she was not malingering. The second issue: causation The second issue was determinative for the majority of the Court of Appeal. Handley JA concluded that the causal link between the fall for which the appellant sued and the conversion disorder "was not based on … findings as to credit"21. It was, he said, an inference which the primary judge had drawn from his primary findings with the benefit of the expert evidence to which he had referred. Accordingly, Handley JA found that this conclusion was open to review in a re-hearing in accordance with the principles in Warren v Coombes22. Conducting that review, his Honour concluded that it was open to the Court of Appeal to reach the conclusion that the fall in 1988 was not the applicable cause of the appellant's conversion disorder. 17 PT Limited v Shorey [2001] NSWCA 127 at [16]. 18 PT Limited v Shorey [2001] NSWCA 127 at [15]. 19 (1990) 171 CLR 167. That decision concerns the limits upon appellate disturbance of credibility-based conclusions reached at trial. 20 PT Limited v Shorey [2001] NSWCA 127 at [72]. 21 PT Limited v Shorey [2001] NSWCA 127 at [65]. See Fox v Percy (2003) 197 ALR 201 at 208 [25], 223 [87]; cf 233-234 [134]-[135]. 22 (1979) 142 CLR 531. Kirby Nevertheless, Handley JA found that it was unnecessary to "go that far"23. It was sufficient "to decide on those other findings and that medical evidence that the plaintiff did not discharge the onus of proving a causal link between the fall and her conversion disorder". This was the basis upon which the majority in the Court of Appeal set aside the primary judge's assessment of the appellant's damages. In its place, their Honours proceeded to assess the damages on the footing that, in the fall, the appellant had suffered soft tissue injuries to her back involving a temporary aggravation of a pre-injury degenerative condition. As this was judged likely to have resolved within 12 months, the Court of Appeal majority reassessed the damages in the sum proposed by the respondents. It ordered that judgment be entered accordingly24. Davies AJA dissented. He pointed out that, at trial, counsel for the respondents had "passed very lightly over the events of 1988 and did not confront either Mrs Shorey or her daughter, Tracey, with the specific proposition that Mrs Shorey recovered during 1988 from the effects of the 1988 accident"25. He also pointed out that the primary judge had viewed the physical and psychological factors in 1988 (the time of the fall) and 1989 (the time of the death of the appellant's husband) as "intertwined"26: "The psychological factors would not have manifested as they did without the back pain. While it may be true to say that had she not had back pain the plaintiff's psychiatric disorder would have displayed itself in some other way that seems to me to be beside the point. She did have back pain. Just as frequently psychological complications occur in the recovery from physical injury, so this case is in principle no different. I find the plaintiff's conversion disorder caused by a variety of factors, including the fall in 1988 in respect of which the plaintiff sues." In the opinion of Davies AJA this conclusion demonstrated no error on the part of the primary judge, was "well based" on medical opinions before him and "also on the facts as established by the evidence"27. His Honour proposed a minor adjustment of the quantification of damages but, otherwise, would have dismissed the appeal. In this Court, whilst maintaining her complaint about the 23 PT Limited v Shorey [2001] NSWCA 127 at [67]. 24 PT Limited v Shorey [2001] NSWCA 127 at [68]-[69]. 25 PT Limited v Shorey [2001] NSWCA 127 at [100]. 26 PT Limited v Shorey [2001] NSWCA 127 at [101] citing the reasons of the primary judge. 27 PT Limited v Shorey [2001] NSWCA 127 at [102]. Kirby quantification of damages, the appellant supported and elaborated the approach of Davies AJA. The respondents sought to uphold the approach of the majority. Before seeking to resolve the competing submissions, it is convenient to dispose of one submission to the effect that the primary judge, having decided the issue of malingering, proceeded directly to assess the appellant's damages without addressing the second issue of causation. To the extent that this submission was pressed by the respondents, it must be rejected. This was not the way the Court of Appeal understood the primary judge's reasons. Nor, more importantly, was it the way in which those reasons were expressed. Having resolved the issue of malingering in favour of the appellant, the primary judge went on to ask "[i]s this condition caused by the fall in 1988?"28 This was the correct question to ask. His Honour then proceeded to answer it. In the ensuing passages in his reasons the primary judge made findings about causation on questions that loomed large in the Court of Appeal. His reasons are replete with the language of causation ("as a result"; "argue that the effects of the fall"; "caused by"). In these circumstances, any suggestion that the issue of causation was overlooked or bypassed at trial must be rejected. The issue in the appeal thus becomes whether the primary judge erred in the way he resolved the question, warranting the Court of Appeal's reversal of his conclusion. The majority's opinion that the primary judge had erred on the causation issue was based on a conclusion, expressed by Handley JA, that the link between the fall and the conversion disorder that was postulated to explain the appellant's disabilities was not something that could depend upon ordinary lay estimation. The appellant therefore had to depend upon proof by expert medical evidence establishing the link. It was when that relevant expert evidence, called by the appellant, was examined that the flaw in the reasoning of the primary judge was said to be exposed. The evidence in question was that of Dr Phillips, a psychiatrist, whose specialty was central to proof of the aetiology of the conversion disorder. To the extent that the appellant also relied on the evidence of Dr Yeo, a consultant in spinal medicine and surgery, this could only be as strong as that of Dr Phillips – the expert with the relevant knowledge upon whom, in this respect, Dr Yeo relied. In the critical passage in his reasons, Handley JA states29: "The causation of the plaintiff's conversion disorder was a matter within Dr Phillips' specialty and outside that of Dr Yeo. After the cross- 28 Reasons of the primary judge at 15 (emphasis added). 29 PT Limited v Shorey [2001] NSWCA 127 at [57]. Kirby examination of Dr Phillips, the Judge could no longer act on the evidence of Dr Yeo on the causation question … because Dr Yeo had relied heavily on the opinion expressed by Dr Phillips in his original report … Nor could the Judge act on Dr Phillips' opinion, given in his evidence-in-chief, that the fall was 'the sentinel event in the causal chain' … because he had withdrawn that opinion during cross-examination." Passages from the cross-examination of Dr Phillips are set out in the reasons of Callinan J30. His Honour considers that, having regard to this cross- examination, the issue of causation was correctly decided by the Court of Appeal in the respondents' favour31. In my respectful view, it was not correctly so decided. It is unnecessary in this appeal to consider whether the judicial authority about disturbing evidence on the basis of assessments of credibility applies, or applies with the same strictness, in the case of expert witnesses where (normally at least) the honesty of the witness is not in doubt and the issue for decision at trial is the acceptability of the witness' opinion, the extent of his or her experience in the specialty and whether one expert's conclusion is more acceptable and logical than that of another expert. Differing views have been expressed on that question32. In my view, the error on the part of the majority of the Court of Appeal can be shown without holding that their Honours were not entitled to disturb the conclusion of the primary judge because it rested, in part, on his impression concerning the credibility of Dr Phillips (a consideration incapable of precise replication in the Court of Appeal which did not see or hear Dr Phillips give his evidence). There are other and more fundamental flaws in the way Handley JA reasoned. They require reversal of his conclusion and of the orders to which his conclusion gave rise. Erroneous findings by the Court of Appeal The supposed withdrawal of testimony: It is incorrect, with respect, to say that Dr Phillips withdrew his opinion during cross-examination to the effect that 30 Reasons of Callinan J at [81]-[82]. 31 Reasons of Callinan J at [84]-[85]. 32 Ahmedi v Ahmedi (1991) 23 NSWLR 288 at 291; State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306 at 321 [68]; 160 ALR 588 at 608; cf Watts v Rake (1960) 108 CLR 158 at 162-163; Bell, "Judgments Revisited: Abalos as a High Court Low", (2001) 33 Australian Journal of Forensic Sciences 61 at 70. Kirby the appellant's fall in 1988 was "the sentinel event in the causal chain" linking the later gross disability to the fall. Dr Phillips did not say so in terms. He did, at one stage say "I withdraw everything I have said then". However, read in context, that was a semi-humorous remark ventured in response to the primary judge's rejection of the witness' postulated proposition that medicine did not "rule out other stressors" whereas "law would like us to have a single cause". When the primary judge, correctly, said "I don’t know about that", Dr Phillips responded "I withdraw everything I have said then". The context and the word "then", makes it clear that the expression was in direct response to the judge's interjection. During the hearing before this Court, counsel for the respondents agreed that this "withdrawal" of evidence was irrelevant and "facetious". It can be ignored. Dr Phillips went on to say immediately: "I believe the accident in the shopping centre and the course which followed remains of very great significance aetiologically." Dr Phillips agreed with Dr Yeo's earlier oral evidence that "physical trauma usually – not always but usually – played a role in precipitating problems of this sort". Over objection, Dr Phillips agreed that this opinion accorded with his own experience. The foregoing passages appeared in the re-examination of Dr Phillips that followed the cross-examination relied upon as demolishing the effect of Dr Phillips' aetiological opinion that linked the fall with the conversion disorder. On the face of things, the concluding opinion expressed by Dr Phillips fell far short of a withdrawal of his earlier testimony. To the contrary, it represented a reaffirmation of the causal link previously stated. Moreover, it amounted to a statement that, whilst there were other "stressors", the subject fall was "of very great significance". This statement simply cannot be viewed as an expression of opinion about the possibilities. Allied with the common experience that some physical events (of which the fall was the only one identified as relevant) are often associated with a conversion disorder, Dr Phillips' summation contributed a strong reaffirmation of his opinion identifying the fall in 1988 as a cause of the appellant's disabilities. I have read, and re-read, the cross-examination of Dr Phillips. It does contain agreement that the appellant's case was "a most difficult" one. It does bring out the causative relevance of the previous back operation undergone by the appellant in April 1986, prior to her fall. It also accepts the causative significance of the supervening death of the appellant's husband and of her feeling of guilt associated with her administration of morphine to him at about the time of his death. However, much of the cross-examination of Dr Phillips was addressed to the issue of whether the appellant was malingering. This was a theory that Dr Phillips rejected and it can now be put to rest. Kirby However, on the issue of the precise sequence of events after injury, following her husband's death and up to the date of the trial, Dr Phillips agreed to the cross-examiner's question: "Q What you would really prefer to do doctor is to see this lady again, armed with all this additional information … is that right? Yes." It is difficult to know what else Dr Phillips could say to such a question. An expert would normally welcome the chance to elaborate the recorded history and to clarify questions and doubts stated, or hinted, in cross-examination. Dr Phillips did state that the questioner was "perhaps even a little bit more optimistic than I would be" that such a further consultation would clear away all doubts. In short, he would welcome a chance to "sit down and work through all that with her", as the cross-examiner put it. But such agreement scarcely constituted a withdrawal of his earlier opinion. Obviously, the trial judge did not understand it to be so. It was not so stated in express terms. The answers in re- examination contradict that interpretation. The search for a single cause: It is a basic principle of the law governing the recovery of damages that a claimant does not have to prove (as Dr Phillips seemed at first to assume was the law) that an impugned event was "the" cause, in the sense of the one and only cause. It is enough that the claimant shows that the event is "a" cause of the condition for which damages are claimed33. The fact that the appellant had undergone a laminectomy and discectomy of her spine in 1986 (before the fall) that she was of an age where deterioration in the condition of her spine might be expected to some degree, and that she also suffered grief and a sense of guilt following the death of her husband from lung cancer in January 1989 (after the fall) did not rule out the consequences of the fall as "a" relevant cause in the subsequent disability. In a sense, the back operation (which was reported as successful, following which the appellant was pain free until the fall) and the death of her husband simply rendered the appellant more susceptible to the consequences of the fall. Certainly, that was a view open to the primary judge. It is the one that he preferred to that urged by the respondents, namely that a pre-existing back disability was aggravated for a limited time or that any aggravation was well on the way to recovery when the death of the appellant's husband, with consequent 33 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 511; Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 6-7; Henville v Walker (2001) 206 CLR 459 at 480 [60]-[61], 490 [97]. Kirby grief and sense of guilt, precipitated the conversion disorder of which she complained. There is more than a hint in the reasoning of the majority in the Court of Appeal of a search for a single cause of the appellant's disability whereas the applicable law and the relevant facts contemplated that this was a case of multiple causes in which the fall and its outcomes could only be really understood in the context of events that happened before and after, rendering the appellant more susceptible to the kind of disability that in fact resulted. Discerning the operation of multiple causes: Whereas it was for the appellant to prove her case, and although the burden remained upon her as plaintiff throughout the trial to establish that her condition of conversion disorder was caused by the fall, the appellant started with certain advantages in her endeavour to do this. The evidence supported the conclusion that she had made a good recovery from her back operation prior to the fall. The occurrence of the fall was clearly established. Its trauma was such as to produce injuries and disabilities. Malingering on the part of the appellant was ruled out. In this context, the appellant was entitled to invoke a principle of law and an evidentiary presumption that helped her to support the conclusion reached by the primary judge. The principle of law is that a negligent defendant must take its victim as it finds her and must pay damages accordingly34. It is not to the point to complain that the injury, in the form of the fall, was trivial in itself and that it would be unfair to burden the respondents with the obligation to bear costs consequent upon the fact that the appellant was peculiarly susceptible to developing bizarre symptoms inherent in a conversion disorder. If such symptoms were genuine and a consequence of the subject trauma, the apparent disproportion between cause and effect is not an exculpation for the negligent party. It does not render the damage "unforeseeable" or otherwise outside the scope of the damages that may be recovered. As Dixon CJ explained in Watts v Rake35: "If the injury proves more serious in its incidents and its consequences because of the injured man's condition, that does nothing but increase the damages the defendant must pay. To sever the remaining leg of a one- legged man or put out the eye of a one-eyed man is to do a far more serious injury than it would have been had the injured man possessed two legs or two eyes. But for the seriousness of the injury the defendant must pay." 34 Watts v Rake (1960) 108 CLR 158 at 160. 35 (1960) 108 CLR 158 at 160. Kirby So here. The respondents must pay if the appellant's pre-accident operation and spinal condition and post-accident grief and sense of guilt rendered her specially susceptible to suffering an unusual psychiatric consequence (conversion disorder). It must do so as long as the accident triggered the appellant's condition and so long as its causative effects were still present as a factor to help explain the ongoing signs and symptoms. So far as the evidentiary presumption is concerned, this is the presumptio hominis to which Dixon CJ referred in Watts36. It stands in a plaintiff's favour and "any tribunal of fact should insist that the defendant should overcome [it]". The presumption was explained in these terms37: "If the disabilities of the plaintiff can be disentangled and one or more traced to causes in which the injuries he sustained through the accident play no part, it is the defendant who should be required to do the disentangling and to exclude the operation of the accident as a contributory cause. If it be the case that at some future date the plaintiff would in any event have reached his present pitiable state, the defendant should be called upon to prove that satisfactorily and moreover to show the period at the close of which it would have occurred." The other judges in Watts agreed with Dixon CJ's approach38. The principles so stated have been re-stated by the Court since then39. They are settled doctrine. They were not contested in this appeal. Indeed, they represent no more than the application of common sense to decisional reasoning. If it be the case that these principles were not expressly relied on at trial or in the Court of Appeal, it matters not. They are simple rules, applicable to judicial reasoning, whether at first instance in a trial, or in a re-hearing on appeal when the issue concerns the effect on damages of multiple causes. In the present proceedings the foregoing principles had the consequence that, whilst the appellant carried throughout the burden of proving the occurrence of the fall and that it had consequences for her which continued to cause her disabilities and loss, in so far as the respondents asserted that some other cause or causes (the pre-accident spinal operation, the constitutional deterioration of the spine or the post-accident grief and guilt feelings) had taken over as the 36 (1960) 108 CLR 158 at 160. 37 (1960) 108 CLR 158 at 160. 38 (1960) 108 CLR 158 at 163-164 per Menzies J, 165 per Windeyer J. 39 Purkess v Crittenden (1965) 114 CLR 164 at 168. See reasons of Callinan J at Kirby explanation of the disabilities and losses, the evidentiary obligation to establish such a proposition rested upon it. The appellant was not obliged to disprove the relevance of the supervening causes or their incapacitating consequences. The burden of disentangling the ongoing operation of multiple causes (the "multiple stressors" to which Dr Phillips referred in his evidence) was upon the respondents if they wished to assert that other causative agents had taken over as the sole or the effective cause of the appellant's damage. One such effort by the respondents failed, namely the attempt to show that the real cause of the appellant's disabilities and loss was deliberate malingering on her part. In my view, the other hypothesis equally failed. No alleged recantation by Dr Phillips was established during cross-examination or otherwise to justify the contrary conclusion as expressed by the majority in the Court of Appeal. Misreading the judge's assessment of the evidence: The opinion expressed by Handley JA was that the fall in 1988 caused only a "temporary aggravation"40 of the appellant's degenerative condition of the spine. His Honour suggested that this opinion was in accordance with the primary judge's findings. With respect, Handley JA misread the primary judge's findings in this regard. The primary judge said that the appellant had initial severe back pain continuing for approximately 12 months, but that there had been a continuing consequence of the fall in the form of recurrences "from time to time". Contemporaneous records in 1988, prior to the death of the appellant's husband, showed that the appellant was then having difficulties in walking. Moreover, as Davies AJA noted, the appellant's daughter, Tracey, gave evidence that the appellant's condition steadily got worse after the accident. The primary judge said explicitly that he accepted such evidence and took into account the way the appellant and her daughter presented in court41. Moreover, as Davies AJA pointed out, it was not explicitly put to the appellant or her daughter that the appellant had effectively recovered from the temporary aggravation caused by the fall when she was propelled into bizarre symptoms by grief and feelings of guilt brought on by the death of her husband and its circumstances. Whether or not such a course of questioning was required by procedural fairness or otherwise, the failure to put the proposition directly to the appellant and her daughter at trial, so as to give them the chance to respond, weakened the significance of the argument that such an interpretation of events should be preferred on appeal. In my view it should not have been. 40 PT Limited v Shorey [2001] NSWCA 127 at [20]. See also at [18]. 41 Reasons of the primary judge at 14. Kirby Conclusion: the appeal miscarried It follows that, for reasons substantially similar to those expressed in the Court of Appeal by Davies AJA, I would conclude that that Court was not warranted to disturb the findings of the primary judge on the second issue at the trial, causation. The foundation for that step, as stated in the reasons of Handley JA was, with respect, mistaken. No other basis is demonstrated to support the conclusion on another footing. None of the respondents filed a notice of contention or relied upon a different basis to sustain the judgment of the Court of Appeal. That judgment must therefore be evaluated in terms of the reasons given by the majority to sustain it. Even if I had come to the conclusion that the appeal to the Court of Appeal was bound to succeed (for example because of unsatisfactory reasoning by the primary judge in failing to address specifically the suggested force of the cross-examination of Dr Phillips) this would not, in my opinion, have been a case in which the Court of Appeal was entitled to substitute its own assessment of the appellant's damages for that arrived at in the trial42. There were, in addition to Dr Phillips, a number of witnesses whose evidence needed to be given weight in judging the duration of any disability caused by the fall, most notably the appellant herself and her daughter. The Court of Appeal had seen neither give evidence, yet their evidence was important, even perhaps critical. In such circumstances the most that the respondents could properly have hoped for was a retrial in which the alleged defect in reasoning at the trial was addressed and all of the evidence fully weighed and subjected to improved judicial reasoning. I see no defect in the primary judge's reasons sufficient to warrant such criticism and consequential relief. The conclusion reached by the majority in the Court of Appeal appears to have diverted that Court from examining the particular complaints of the respondents, as appellants in that Court – such that related to the issue that led Davies AJA to propose an adjustment to one item in the composition of the damages. The Court of Appeal needed to assess the correctness of the complaints of the appellant on the footing that the general attack upon the damages, grounded in the arguments of malingering and causation fail, as in my opinion, they do. Because it is necessary for the cross-appeal to be heard and determined by the Court of Appeal, it seems appropriate to require that the appeal and cross-appeal both be returned to the Court of Appeal to be heard and determined conformably with these reasons. 42 cf Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 477 [60], 501 [132]; Fox v Percy (2003) 197 ALR 201 at 212 [42] and 225 [97]-[98]. Kirby Orders The appeal should therefore be allowed with costs. The judgment of the Court of Appeal should be set aside. In place of that judgment, the proceedings should be returned to the Court of Appeal for the hearing and determination of the appeal and cross-appeal to that Court, conformably with the reasons of this Court. Callinan CALLINAN J. The question in this case is whether the appellant discharged the burden of proving that her persistent psychologically disturbed condition was the result of a fall which caused comparatively minor physical injuries. Facts and previous proceedings The appellant was 56 years of age in April 1988 when she suffered an injury in a fall in circumstances which gave her a right of action in which she succeeded in the District Court on the issue of liability, and, in a subsequent hearing (Dodd DCJ), on the issue of her damages which were assessed in the sum of $555,212.55 in February 2000. The appellant believed that she became unconscious for a period after the fall. On recovering consciousness she experienced pain in her back and her legs. When she was discharged from hospital three weeks later the pain had abated to some extent. She was able to walk. She took painkillers and rested to ease the pain in her lower back. She was able to do some housework, to drive, and to shop. She had no need of a walking stick. Her right leg did not trouble her unless she walked too far. If she did, she noticed a tired feeling in it, and numbness. The appellant continued to experience back pain. She was examined by a number of orthopaedic specialists and underwent several diagnostic procedures over the years. She also had consultations with psychiatrists. She began to use one walking stick and then two. By July 1992 she was using a walking frame, and in early 1993 she started to use a wheelchair. At the date of trial the appellant was not walking. She managed to move by using her arms and also her legs to crawl in a way which left calluses on both knees. There was no apparent physiological reason why she could not walk. The first issue to which the primary judge directed himself was whether the appellant was deliberately malingering, or whether a genuine psychiatric condition was operating at a subconscious level to prevent her from walking. The second was, if the condition were genuine, what was the prognosis? The third issue was, if it were genuine, was it attributable to the fall in April 1988? As will appear the question in this appeal is whether the primary judge satisfactorily considered and answered that question. The appellant's husband's health severely deteriorated in 1988. He was diagnosed with cancer and died on 1 January 1989. The appellant experienced guilt associated with his death and her administration of morphine to him, but said (in evidence) that she no longer felt guilty after about six months. Callinan The appellant's evidence at the trial was that her own health began to deteriorate from about this time. On 5 April 1992 she had woken in the early hours of the morning with pain throughout her body. She was unable to move. One of her legs was twisted over the other, and she could straighten neither. It was necessary for her daughter to assist her. An ambulance was called and she was taken to Blacktown Hospital. There she had a CT scan, rested in bed, took analgesics and underwent physiotherapy including traction. She was gradually mobilised and was discharged on 11 May 1992. She continued to have physiotherapy after discharge. The appellant was admitted to hospital again in September 1993 for eight days, and in October for 18 days. She was treated with bed rest, physiotherapy and analgesics. On discharge, on each occasion there was no improvement. Since then she has been treated with analgesics. This apparently simple trajectory of deteriorating health and capacity is however complicated by the presence of a number of other factors. In cross- examination the appellant conceded that a stomach ulcer with which she was afflicted pre-dated the fall, and was not caused by it. She also conceded that in 1978 she had begun to lose the use of her right leg and to develop pain across the lower back. She agreed that there was significant family disharmony after her husband's death, indirectly related to money. A dispute about the family home which was in the name of her husband and a daughter erupted. She believed that on her husband's death she would continue to live in the house. The appellant came to think that she was being turned out of the home. About three months after her husband's death the appellant was able to drive to Queensland and back. She was away three weeks. She was able to move and walk around during that period. The trial judge summarized the extensive medical evidence in this way: "Dr Graham Arthur Edwards, a psychiatrist, appeared to discard his original diagnosis. On hearing of aspects of the [appellant]'s evidence he thought she might be suffering from a conversion disorder or chronic hysteria, to which her husband's death and subsequent family squabbles over the family home may have contributed. Dr Edwards indicated that treatment for such disorder would have to be individually tailored for the [appellant]'s various symptoms and the precise causes of the disorder – including treatment by medication of the associated depression, working out the psychosocial factors such as fear of being thrown out of her own home and alleviating that fear, and encouraging walking again through a rehabilitation program of physiotherapy and graded exercise embarked upon with an attitude that recovery is possible. Dr Edwards did not think she was malingering. Callinan Dr Malcolm Dent, psychiatrist, also gave evidence. He saw the [appellant] in September 1995 and considered a questionnaire she had completed at his request a little later. He diagnosed a chronic pain disorder of which at least fifty percent was made up of psychological factors. He agreed that for the [appellant] to say that she could not use her legs but to be able to crawl is bizarre behaviour, but he thought that she genuinely believes in her pain and disability. He thought the longer the duration of the disorder the more powerful would become the psychological issues, making reversal of the disorder more difficult. Nevertheless, Dr Dent reported a recovery success rate of sixty percent to seventy percent in dealing with people who have chronic pain disorder and have had it in a disabling fashion for twenty or thirty years. He added that by recovery he meant not cure but relief of suffering and some acquisition of autonomy over life. He thought there was a moderate chance of recovery of the [appellant]'s physical function. When pressed he said the likelihood that she will recover walking is low. Later he said the prognosis for the [appellant] is poor. Dr Dent also thought that she was not malingering although he indicated that he could not be certain of this and would need further information. Dr John Yeo gave evidence. He is a consultant in spinal medicine and surgery. He saw her on 29 April 1999. He thought the predominant trigger of her complaint of pain was the fall on 2 April 1988. He also thought there was a substantial psychological disorder associated with her presentation. Her symptoms and signs are bizarre. It was not possible for Dr Yeo to identify specific pathology at various areas in her body that would be causing the symptoms. He did not think she was malingering. Dr Yeo's interpretation of the [appellant]'s problems is that '... she had an original injury from which she appears to have had scar tissue in and around the spine where that repair was done and the potential to have a trigger point there ... from [the fall] she obviously had an exacerbation of back pain and leg pain which was disabling but certainly had not reached the level of disability which subsequently occurred with her paraplegia ... psychosocial episodes ... could well have sensitised this lady to becoming more profoundly disabled than she would have been had [they] not occurred but may have occurred had other particularly emotional crises occurred ... physical disability ... coupled with the complexity of emotional crises ... led this lady to present as profoundly paraplegic which we know is not from an organic cause'. Dr Yeo thinks the [appellant]'s condition is permanent. Dr Yeo agreed that although the crawling activity of the [appellant] could explain the lack of significant muscle wasting in the [appellant]'s thighs, it could not explain the lack of significant muscle wasting in the [appellant]'s calf muscles. He further agreed that this lack of significant muscle wasting Callinan was inconsistent with the [appellant] being confined to a wheelchair for most of the time. He said there is no question that the muscles are being used. The [appellant] is using and moving her lower legs despite her saying she cannot do so. Dr Jonathan Phillips, consultant psychiatrist, gave evidence. He thought that the [appellant] might be suffering a conversion disorder. He thought the 1988 fall was 'the sentinel event in the causal chain'. That accident was '... the psychological trauma of principal importance'. Dr Phillips did not think the [appellant] was malingering. He thought that if she was suffering from conversion disorder treatment would be very difficult, but that movement in the supposedly paralysed limb was a good prognostic sign. Dr Phillips was tentative as to all his conclusions, stressing that this was a very unusual case. Dr Peter Brimage, consultant neurologist, gave evidence. With the possible exception that he did not see the value of psychiatry in helping the [appellant] to walk his views appear to coincide largely with those of Dr A L G Smith, orthopaedic surgeon, also gave evidence. He concluded that the [appellant] was fabricating physical signs and that from an orthopaedic point of view there was not very much wrong with her. However, in the field of psychiatry he defers to psychiatrists. He did note that she had calluses on her feet, seemingly inconsistent with the [appellant] not using her feet to walk. Dr Fernando Roldan, a consultant clinical psychologist, gave evidence. He thought it more likely than not that the [appellant] was not consciously exaggerating or fabricating her symptoms. He also thought it more likely than not that she was suffering a 'conversion type disorder'. He was guarded as to prognosis but suggested some general strategies for the resolution of the condition. Dr Kenneth Dyball consulting psychiatrist, gave evidence. He saw her at her home on two occasions. He eventually came to the view that a theoretical case could be made out that she was suffering conversion disorder as a result of 'a need that had come about by virtue of her grief over the death of her husband, the potential loss of her home, the need to be cared for and looked after'. He thought the fall in 1988 may have provided the focus for the site of the possible conversion disorder. If she is suffering conversion disorder he thought her prognosis appalling, but he regarded it as possible that she might walk again if she felt she could get better perhaps by being able to buy her own home and have independence. Callinan Dr John Shand, consulting psychiatrist, gave evidence. He saw the [appellant] on three occasions. He came to the conclusion that she was either malingering or she was suffering conversion disorder. He thought it more likely that she was malingering. Ms Kathryn Bolger, occupational therapist, gave evidence. She visited the [appellant] with a colleague at her home to assess her needs. A videotape was produced showing the [appellant] at times during that visit. During the visit and on the videotape the [appellant] demonstrated an ability to use muscles and move her legs in ways entirely inconsistent with what she said she could not do. Two reports of Dr Wendy Roberts, clinical psychologist, are in evidence, dated 27 April 1999 and 4 June 1999. She comes to the conclusion that malingering cannot be excluded, and that the chief problems of the [appellant] predated the 1988 fall which is of little significance in the development of her emotional problems and chronic depression with which she now presents. In her opinion this depression is not attributable to the fall, but to pre-existing factors and mainly her guilt over having administered what is said to be 'excessive' morphine to her husband and which according to Dr Roberts, killed him. I should note at this stage that much time of the case was spent on this issue. There is no evidence that the morphine killed the [appellant]'s husband, nor that the amount given was excessive in any way. However, it is clear that the [appellant] was asked by hospital staff to assist in giving it to him orally and that she felt for a time that it may have played a part in his death and because of this and perhaps other factors felt some guilt about his death. There is an enormous amount of historical material including medical material, in evidence much of which has been summarised or extracted by the various experts already referred to. Other expert medical reports are in evidence, but those to which I have referred represent the range of views and reasons for coming to those views." His Honour concluded that the appellant was not malingering. He said: "I have come to the conclusion on the balance of probabilities that the [appellant] is not malingering. I base this finding mainly on these factors: she has calluses on her knees, indicative of regular and therefore unobserved crawling; and she demonstrated to a number of experts her methods of movement without attempting to hide the fact that she was able to use her leg muscles. In other words her behaviour has been consistent. I also take into account the way the [appellant] presented in court and the evidence of her daughter Tracey in coming to the conclusion that she is not malingering." Later his Honour weighed up the prospects for the future. Callinan "What is the prognosis? I have wrestled with this. There appears to be a diversity of views to some extent, with some treatment options being supported as possibly leading to recovery of the walking function. It is fair to say, however, that the predominant view is that recovery prospects are not good. I must consider that in the context that no appropriate treatment has been tried. It does not appear to me that any attempt has been made to confront the [appellant] with her ability to use her leg muscles in a treatment context. By 'confront' I mean nothing more than an attempt to persuade her, possibly over considerable time, that she can use her legs in ways she has not realised and has previously denied, this seeking to encourage a belief, eventually, that she can walk. It is an affront to common sense and to the dignity of the [appellant] that she should be left untreated and not walking, when in fact she could walk if she wanted to. I prefer to proceed to assess damages on the basis that the [appellant] is likely to recover, given sympathetic appropriate treatment. I base this on the fact that she has not ceased to use the muscles in her legs, that it can be demonstrated to her that she is capable of walking and that in my observation of her in the witness box she is of sufficient intelligence and potential insight as to be capable of responding to an appropriate treatment regime. However it may take considerable time and I have allowed a period of ten years, roughly equivalent to that taken to get to this point in her condition." The appeal to the Court of Appeal The respondents appealed to the Court of Appeal of New South Wales (Handley and Powell JJA, Davies AJA dissenting). The judgment of the majority was given by Handley JA. In his judgment his Honour referred to the appellant's inconsistent behaviour during medical examinations, the absence of any wastage in her thigh and calf muscles (indicative of the use of these muscles for weight bearing), and the presence of calluses on the soles of her feet at a stage when according to her, she had been using a wheelchair. His Honour noted that the appellant had calluses on both feet when Dr Smith examined her in November 1996, but by May 1998 she had calluses on her knees and on the front of her ankles. No wastage was however discernible in her thigh and calf muscles. Handley JA acknowledged that as an appellate judge he was bound to apply the principles stated in Abalos v Australian Postal Commission43. 43 (1990) 171 CLR 167. Callinan Believing himself to be acting consistently with those, he rejected an otherwise impressive ground of appeal relied on by the respondents, that an inconsistency described by them as glaring, in the evidence, with the trial judge's findings with respect to the absence of wasting in the appellant's calf muscles and the presence of calluses on the soles of her feet, required that the respondents' appeal be upheld. His Honour then went on to deal with the issue of causation. He said: "Having found that the [appellant] was not a malingerer, the Judge concluded that she suffered 'some kind of conversion disorder' which arose 'from unresolved psychological conflict'. This involved various aspects of the aftermath of her husband's death, mainly the Judge thought because of her fear of being thrown out of the family home. He then asked himself whether this disorder was caused by the fall. He referred to Dr Yeo's evidence that 'the main trigger point for this present level of serious disability is the fall', to Dr Phillips' opinion that the fall was 'the sentinel event in the causal chain', and to Dr Dyball's opinion that her ongoing back pain provided a focus for her psychological problems. He found that the [appellant] suffered severe back pain as a result of the fall and that her pain due to physical factors continued in some degree for approximately 12 months after the fall. He also found that the fall aggravated her degenerative disease in the lumbar spine but as I read his judgment he found that this was only a temporary aggravation. That was certainly the opinion of Dr Sengupta, her treating surgeon. The Judge also accepted Dr Smith's evidence that the [appellant] continued to experience back and leg pain from time to time as a result of the degenerative disease in her lumbar spine. The Judge said that it seemed to him that the [appellant]'s slide into her full-blown bizarre symptoms of psychiatric disorder commenced at some stage in 1988 when she began the use of a walking stick and her husband became very ill 'or at the latest on or shortly after his death on 1 January 1989'. He thought that the psychological and physical factors then became intertwined." Handley JA was concerned in particular with the reasoning of the primary judge in this passage: "The psychological factors would not have manifested as they did without the back pain. While it may be true to say that had she not had back pain the [appellant]'s psychiatric disorder would have displayed itself in some other way that seems to me to be beside the point. She did have back pain ... I find the [appellant]'s conversion disorder was caused by a variety of factors, including the fall in 1988 in respect of which the [appellant] sues." Callinan His Honour then analysed in depth for himself the medical and other evidence, pointing, as he did so, to a multiplicity of inconsistencies in it. His Honour interrupted his review of the medical evidence to discuss the circumstances of the appellant's husband's death. "The [appellant] told the psychiatrist at Blacktown Hospital that her husband had received too much morphine administered by her and she had been left with 'tremendous guilt'. A nursing sister had handed her the morphine tablet or tablets to give to her husband and she came to believe that this dose was associated with his death. She blamed herself for not questioning the nursing sister who gave her the morphine, because she realised two days later that this was an increased dose. She did not learn until she saw a Dr Ruppin in 1991 that his dose of morphine had been increased that day from every four hours to every hour and that the nursing sister should never have asked her to give the dose to her husband." And later his Honour added: "The records for her admission on 7 March 1991, more than two years after his death, refer to her grief reaction, her guilt feelings, depression, loss of appetite and weight loss. The consultant psychiatrist found that at that time she had a complicated or unresolved bereavement. Her grief reaction was mentioned again in the records for her admission on 26 March 1991. She was admitted to Westmead Hospital on 16 September 1993, four and a half years after her husband's death, and the nursing notes for the following day recorded: 'Husband passed away 4 years ago teary and hugging to his beret in bed'. The [appellant] said that she continued to carry her husband's beret around with her until 1994 or 1995. Her daughter was not aware of this but said that her mother always takes her husband's photograph everywhere." His Honour's conclusions were stated in these passages: "The Judge found that a conversion disorder is based on an unresolved psychological conflict and this finding was supported by the evidence of Dr Phillips, Dr Dyball, and Dr Roldan. The obvious candidate for unresolved psychological conflict was, as the Judge indeed found, the death of her husband, how it occurred, her role in it and its aftermath in family conflict. This conclusion is supported by the marked contrast between the [appellant]'s normal presentation at Blacktown Hospital in November 1988, her distressed presentation at that Hospital in Callinan May 1989, and her bizarre presentation recorded by Dr Smith in April 1990, and by Dr Sinclair in June 1990. The Judge's conclusion that a causal link was established between the fall and the conversion disorder was not based on his findings as to credit. It was an inference he drew from his primary findings with the benefit of the expert evidence he referred to. As such it is open to review on a re-hearing in accordance with the principles considered in Warren v Coombs44. When the Judge's findings, that the [appellant] was suffering from a conversion disorder, that this was caused by unresolved psychological conflict, and in her case this involved various aspects of the aftermath of her husband's death, are read with the whole of the evidence of Drs Yeo, Phillips, and Dyball, the proper conclusion may well be a positive finding that the fall in 1988 was not a cause of the [appellant]'s conversion disorder. However, it is not necessary for this Court to go that far and it will be sufficient for this Court to decide on those other findings and that medical evidence that the [appellant] did not discharge the onus of proving a causal link between the fall and her conversion disorder. ... Compare Rhesa Shipping Co SA v Edmunds45. The appeal therefore succeeds and the judgment entered by the trial Judge must be set aside. As a result of her fall the [appellant] suffered soft tissue injuries to her back. Dr Sengupta thought these involved a temporary aggravation to her degenerative condition which would resolve within 12 months. The [respondents were] not responsible for the [appellant]'s pre-existing degenerative condition, or for its progress, apart from the temporary aggravation. The [appellant] is entitled to damages for this temporary aggravation of her back condition." It was consequently necessary for a fresh assessment of the appellant's damages to be made. His Honour considered himself able to do so. In the result, a judgment for the appellant of $68,911.05 was substituted for the judgment of the District Court. In dissent, Davies AJA referred to some passages in the appellant's examination-in-chief and re-examination. He read passages in the cross- examination of Dr Phillips which Handley JA regarded as critical, differently 44 (1979) 142 CLR 531. 45 [1985] 1 WLR 948; [1985] 2 All ER 712. Callinan from his Honour: that they amounted to a concession of the possibility only that the doctor's view could be erroneous. The appeal to this Court The appeal should be dismissed. The approach of Handley JA was a correct one. As to the approach generally of appellate courts to findings of fact by trial judges I would have wished to adhere to what I said in Fox v Percy46, but I am bound by the joint judgment in that case47. That judgment does in my opinion qualify what was said in Abalos. Whether, however, Abalos is to be applied in an unqualified way, or whether the joint judgment in Fox v Percy states the current rule, this was still a case calling for the intervention of an appellate court. The trial judge failed to take any, or any sufficient account of the respondents' very effective cross-examination of Dr Phillips at the trial: "Q: Well, let me put it this way. It is not unusual for somebody with a conversion disorder to deny or regard as having little significance the very psychological conflict which might have brought about the disorder? A: We are moving steadily into the area of conjecture and psycho dynamics. Yes, one could state that and I would agree that a person with conversion disorder, and I might add that conversion disorder is comparatively rare, sometimes appears indifferent to the conversion symptoms. So the fact that she says to you: Look, I'm not worried now about my husband's death, doesn't of itself mean that that may not have been a very important factor in the conversion disorder? A: Well, I'm prepared to accept the hypothesis, and it is no more than a hypothesis, that the death of her husband remained a painful matter for her. On the other hand, I would not like to disregard entirely what this lady told me. I will come back to those matters but did you know that as at the 13th of March 1991 she was seeing a psychiatrist in Blacktown Hospital? Did you know that? The date was? 46 (2003) 197 ALR 201. 47 (2003) 197 ALR 201 at 202-213 [1]-[47] per Gleeson CJ, Gummow and Kirby JJ. Callinan 13 March 1991. I'm uncertain of that. She was seeing Dr Edwards but I don't believe at the hospital. Did you know that she was expressing concerns that her husband had died as a result of receiving too much morphine administered by her and that she was left with tremendous guilt? A: My understanding was in fact she was concerned even prior to that, that she was, as it were, the person who administered the morphine and this was not a role that she felt comfortable with. When did you find that out? I found that out subsequently on reading a number of other documents that were put to me. Q: Well, when? When did you find that out? Last night when I read a number of documents that were put to me. So up until last night, you knew nothing about the administration of morphine to the husband by her? She told me nothing about it. You didn't know that she felt tremendous guilt associated with that? Not at that stage, no. Did you know that around about this time in April 1991 she was presenting to a physician in a depressed state, feeling that the medical community had let her down and she had not been provided with sufficient grief counselling? Did you know that as at that time, April 1991, she was obviously hyperventilating? I have no history of her hyperventilating. Did you know that she was presenting with obvious grief and guilt about her husband's death? In which situation? Callinan This is in April 1991, shortly after the incident I put to you at Blacktown Hospital when she saw the psychiatrist? No, I am not aware of that. Doctor, someone who was concerned that their husband with whom apparently she had a close relationship had died as a result of receiving too much morphine administered by her and who was left with tremendous guilt more than two years after the death of the husband is not someone who had apparently got on top of things after six months following the death of their husband? If the chronology is correct and in fact she was expressing guilt elsewhere two years after the death of her husband, then obviously I have to reconsider the stressor, the death of her husband. The death of the husband in the circumstances I have just mentioned to you is capable of causing an unresolved psychological conflict, isn't it? That is always possible. Indeed, just dealing with the matters I have put to you, that is the March 1991 account from Blacktown Hospital and then the April 1991 account, that looks exactly as though that has happened, doesn't it? A: Well, it is certainly possible. It is exactly the sort of unresolved psychological conflict which can bring on a conversion disorder, isn't it? A: Well, it is possible, yes. It is often difficult, isn't it, determining the aetiology of a conversion disorder? Extremely difficult, there is no doubt about that because not only are you looking back in time but you are looking at a complex process." And subsequently these answers were elicited: "Q: And doctor, would it be the situation that to really work out this riddle, and with all due respect it is a bit of a riddle as to exactly what's going on here, isn't it? I think riddle is – I could only agree with you. This is a most difficult case. Callinan Q: What you would really prefer to do doctor is to see this lady again, armed with all this additional information which you didn't have until last night and indeed, some of which I don't think you had until I put it to you, is that right? Yes. Sit down and work through all that with her and it would only be at that point in time, wouldn't it, that you would be able to say with any confidence (1), what condition this lady has, and (2), what the aetiology of that condition is? A: Well you are perhaps even a little bit more optimistic than I would be. I certainly agree that armed with additional information to go back and carry out a further examination would be very useful. Whether I could achieve those two end points I'm not quite sure but I would probably be in a stronger position that I am now. So that even armed with that additional information it still might not be possible to work out exactly what her diagnosis is and what the aetiology of the condition may be? Yes. I think it's true to say that some diagnoses are harder to reach and to substantiate than others and conversion disorder is a diagnosis that is approached when most others are eliminated." It is true that from time to time the witness used the language of possibility only. The unmistakable tone of his answers however is of uncertainty induced by an incomplete knowledge of the relevant facts. It is also possible to detect an unwillingness to concede that an important basis for his conclusion had been significantly eroded. That Dr Phillips only became aware the previous night of the appellant's concern about the administration of morphine to her husband as he was dying has an additional significance to its central importance to his diagnosis. It reflects on the appellant's reliability, and on her history of her symptoms and claims. As the plaintiff, she bore the onus of proving her damages. Uncertainty or selectivity in her claims inevitably weakened her case. But in any event I find it impossible to accept that the cross-examination resulted in no more than a concession of a possibility of a misdiagnosis by Dr Phillips. It undermined the very foundation of his opinion which was of a course of generally consistent complaints by the appellant, and an explicit disavowal by her of any remnants of disabling distress as a result of her husband's death and the circumstances of it. The wide cracks which opened in Dr Phillips' evidence in cross-examination were not repaired by the quite unconvincing re-examination following it, a deal of which was the subject of leading questions. The primary judge made no reference to the evidence in cross-examination to which I have referred. It was of critical importance to the Callinan validity of Dr Phillips' diagnosis. A judgment which relied heavily on Dr Phillips' evidence but made no attempt to deal with this damaging cross- examination was necessarily incomplete, and, in my opinion flawed for that reason. Furthermore, Dr Phillips was not the only medical specialist forced to retreat from an earlier confident diagnosis by reason of the appellant's failure to give a full and accurate history of her condition, relevant events and complaints, as some of the passages from the judgment of Handley JA which I have quoted exemplify. Having regard to the matters that I have mentioned the Court of Appeal was right to intervene as it did. The respondents' other submission should also be accepted: that the conversion disorder found by the trial judge should have been regarded as a supervening cause as in Jobling v Associated Dairies48. The principal focus of the trial judge was on the issue whether the appellant was a malingerer or not. That was an issue at the hearing but was not one which, if resolved in favour of the appellant, was determinative of the issue of causation. The main issue remained, whether the appellant's condition, whatever its nature or extent, genuine or otherwise, was caused by the appellant's fall, for which the respondents were responsible. Having regard to Dr Phillips' evidence in cross- examination that issue should have been resolved in the respondents' favour. The best that could be said for the appellant was that she failed to prove that her present condition was caused by the fall. The respondents accepted that in principle there was relevantly no distinction between a pre-existing and a supervening contributory case. But, they submitted, correctly, no argument had been advanced at any stage by the appellant that the respondents had failed to disentangle the various components of the appellant's condition and their respective causes as required by the rule stated in Purkess v Crittenden49: "It was, in effect, pointed out that it is not enough for the defendant merely to suggest the existence of a progressive pre-existing condition in the plaintiff or a relationship between any such condition and the plaintiff's present incapacity. On the contrary it was stressed that both the pre-existing condition and its future probable effects or its actual relationship to that incapacity must be the subject of evidence (ie either substantive evidence in the defendant's case or evidence extracted by cross-examination in the plaintiff's case) which, if accepted, would 49 (1965) 114 CLR 164 at 168 per Barwick CJ, Kitto and Taylor JJ. Callinan establish with some reasonable measure of precision, what the pre-existing condition was and what its future effects, both as to their nature and their future development and progress, were likely to be. That being done, it is for the plaintiff upon the whole of the evidence to satisfy the tribunal of fact of the extent of the injury caused by the defendant's negligence." Alternatively, if such a requirement, of disentanglement, were to be imposed upon the appellant at this late stage, for the reasons stated, and on the basis of the analysis made by Handley JA in the Court of Appeal, the respondents submit, and I would accept, that they have satisfied it. I would dismiss the appeal with costs.

HIGH COURT OF AUSTRALIA MURAT KURU AND APPELLANT STATE OF NEW SOUTH WALES RESPONDENT Kuru v State of New South Wales [2008] HCA 26 12 June 2008 ORDER Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 15 June 2007 and, in their place, order that the respondent's appeal to that Court on grounds 1, 2, 3 and 4 of the respondent's Notice of Appeal to that Court be dismissed. Remit the matter to the Court of Appeal of the Supreme Court of New South Wales for further consideration and determination of grounds 5, 6, 7 and 8 of the respondent's Notice of Appeal to that Court. Respondent to pay the appellant's costs of the appeal to this Court and of the proceedings in the Court of Appeal of the Supreme Court of New South Wales up to and including the entry of the order of that Court made on 15 June 2007. Costs of the further hearing in the Court of Appeal of the Supreme Court of New South Wales to be in the discretion of that Court. On appeal from the Supreme Court of New South Wales Representation B W Walker SC with M W Sneddon for the appellant (instructed by Carroll & O'Dea) I D Temby QC with P R Sternberg for the respondent (instructed by Crown Solicitor (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Kuru v State of New South Wales Torts – Trespass to land – Power of police to enter private premises – Police officers went to suburban flat after receiving report of male and female arguing – Police treated report as "violent domestic" – Occupier invited police to "look around the flat" – Occupier later asked police to leave premises – Police did not leave and remained on premises for longer than it would reasonably have taken them to leave – Whether statutory justification for police to remain on premises – Proper construction of Crimes Act 1900 (NSW) ss 357F and 357H – Whether express refusal by occupier immediately terminated authority of police "to so enter or remain" on premises, irrespective of fulfilment of purposes for which entry effected. Torts – Trespass to land – Power of police to enter private premises – Whether common law justification for police to remain on premises – Whether entry could be justified as directed to preventing a breach of the peace. Words and phrases – "enter or remain", "expressly refused", "breach of the peace". Crimes Act 1900 (NSW), ss 357F-357I. GLEESON CJ, GUMMOW, KIRBY AND HAYNE JJ. In the early hours of 16 June 2001, police received a report of a male and female fighting in a flat in suburban Sydney. Police treated the report as a "violent domestic" requiring available officers to attend as quickly as possible. Six police officers went to the flat. Mr Murat Kuru (the appellant) and his then fiancée (now wife) who lived there had had a noisy argument, but, by the time police arrived, the fiancée had left the flat with the appellant's sister. When police arrived, the front door of the flat was open. The police officers went into the flat. Two friends of the appellant, who did not live in the flat, were in the living room and the appellant was taking a shower in the flat's bathroom. When the appellant came out of the bathroom, he found that the police were in the flat. The police asked if they could "look around" and the appellant agreed. After the police had looked in the two bedrooms, they asked to see "the female that was here". The appellant said that she had gone to his sister's house. He asked the police to leave the flat. The police asked for the sister's address and telephone number. The appellant said he did not know the address but at some point he wrote a telephone number (presumably his sister's number) on a piece of paper. The appellant repeated his demand that the police leave. He did this several times, very bluntly and with evident anger. Still the police did not leave. At some point the appellant jumped onto the kitchen bench. He was later to say that he did this to get the attention of everyone in the room. Whether he then jumped off the bench towards the police, or jumped off in the opposite direction, was disputed. That dispute need not be resolved. There is no dispute that having got down from the bench, the appellant moved towards the police, with his arms outstretched, and made contact with one of the officers. A violent struggle followed. The appellant was punched, sprayed with capsicum spray, and handcuffed. As he was led to a police vehicle, he twice fell down stairs leading from his flat to the ground floor. He was taken to a police station and lodged in a cell wearing nothing but his boxer shorts. He was released from custody some hours later. The appellant brought proceedings against the State of New South Wales in the District Court of New South Wales claiming damages for trespass to land, trespass to the person, and false imprisonment. The appellant alleged in his pleading, and the State admitted in its defence, that the action was brought against the State in accordance with ss 8, 9 and 9B of the Law Reform (Vicarious Liability) Act 1983 (NSW) and s 5 of the Crown Proceedings Act 1988 (NSW). The application of those provisions was examined by this Court in New South Kirby Hayne Wales v Ibbett1 and New South Wales v Fahy2. No issue was argued in this appeal about the operation of these provisions, or about the liability of the State for any wrongs done by the individual police officers3, and it is not necessary to say more about them. At first instance the appellant succeeded. Judgment was entered for him for $418,265 with costs to be assessed on a "solicitor and client" basis. The State appealed to the Court of Appeal of New South Wales. It alleged that it was not liable to the appellant and that, in any event, the damages awarded (which had included aggravated and exemplary damages) were excessive. The appeal to the Court of Appeal was conducted on the basis that if the State's appeal against the finding that it was liable for trespass to land failed, its appeal against liability in respect of trespass to the person would also fail, and conversely, that if the appeal against the finding of liability for trespass to land were to succeed, the appeal in respect of liability for trespass to the person would also succeed. The claim for false imprisonment was treated as standing or falling with the claim for trespass to the person. That is, the parties conducted the appeal to the Court of Appeal on the footing that the single determinative issue between them was whether the police officers were trespassing in the appellant's flat when the appellant first made physical contact with one of their number. Evidence given at the trial may well have permitted framing the issues between the parties differently. There was evidence that might have been understood as permitting, even requiring, examination of whether the appellant's conduct went beyond taking reasonable steps for the removal of trespassers, and whether the conduct of the police went beyond the application of reasonable force to arrest a person impeding them in the execution of their duty. But the parties having chosen to litigate the appeal to the Court of Appeal on the conventional basis that has been identified, neither sought in this Court to submit that any issue about the use of excessive force either by the appellant, if his ejecting the police officers was otherwise lawful, or by the police officers, if their restraining the appellant was otherwise lawful, should now be considered by this Court. (2006) 229 CLR 638; [2006] HCA 57. (2007) 81 ALJR 1021; 236 ALR 406; [2007] HCA 20. 3 Cf Enever v The King (1906) 3 CLR 969; [1906] HCA 3. Kirby Hayne The Court of Appeal (Mason P, Santow and Ipp JJA) held4 that the State's appeal should be allowed. All members of the Court of Appeal concluded that, despite the appellant's withdrawal of permission for police to remain in his flat, the police were not trespassers when the appellant first made physical contact with one of the officers. The judgment entered at trial was set aside and in its place judgment was entered for the State. The principal reasons for the Court of Appeal were given by Santow JA and Ipp JA. Those reasons differed in some respects but it is not necessary to explore those differences. Immediately, it is sufficient to say that both Santow JA and Ipp JA held that the police had both statutory and common law justification for remaining on the appellant's premises, despite the appellant having withdrawn permission for them to remain in his flat. By special leave the appellant appeals to this Court. The appeal to this Court should be allowed. There was neither statutory nor common law justification for the police remaining on the appellant's premises. The matter must be remitted to the Court of Appeal for consideration of the outstanding issues about damages. That outcome means that this Court cannot make orders disposing finally of the dispute between the parties. This Court has said on a number of occasions5 that, although there can be no universal rule, it is important for intermediate courts of appeal to consider whether to deal with all grounds of appeal, not just with what is identified as the decisive ground. If the intermediate court has dealt with all grounds argued and an appeal to this Court succeeds, this Court will be able to consider all the issues between the parties and will not have to remit the matter to the intermediate court for consideration of grounds of appeal not dealt with below. 4 State of New South Wales v Kuru [2007] Aust Torts Reports ¶81-893. 5 Cornwell v The Queen (2007) 81 ALJR 840 at 865 [105]; 234 ALR 51 at 85; [2007] HCA 12; Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274 at 312 [105]; [2004] HCA 58; Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 19-20 [34]-[35]; [2001] HCA 8. Kirby Hayne Relevant statutory provisions At the time of the events giving rise to these proceedings s 357F to s 357I of the Crimes Act 1900 (NSW) made provision for powers of entry in cases of domestic violence6. Section 357F was directed to entry by invitation; s 357G concerned entry by warrant; s 357H made more particular provision in relation to the exercise of powers of entry under ss 357F and 357G; and s 357I dealt with entry and search for firearms. It will be necessary to set out the text of s 357F. But because the section is long and its provisions dense, it is convenient to preface that by pointing out particular features of the provisions made by the section that are relevant to the present matter. The powers to enter a dwelling-house that were given by s 357F were predicated upon a member of the police force being invited to enter or remain in the dwelling-house "by a person who apparently resides in the dwelling-house, whether or not the person is an adult"7. That is, the provisions of the section were engaged by the invitation of an apparent resident of the premises to enter or remain. Further provision was then made by s 357F(3) and (4) for two different events. First, sub-s (3) provided for what was to happen if an "occupier" of the dwelling-house expressly refused authority to a member of the police force to so enter or remain. That sub-section invites attention to the definition8 of an "occupier" ("a person immediately entitled to possession of the dwelling-house"). It also invites attention to what is meant by the refusal of an invitation when s 357F(2) dealt separately with an invitation to enter a dwelling-house and an invitation to remain in a dwelling-house. Section 357F(4) qualified the effect of an occupier's refusal of authority. It did that by qualifying the operation of sub-s (3) in a case where a member of the police force enters or remains "by reason of an invitation given as referred to in subsection (2) by the person whom the member of the police force believes to 6 These provisions of the Crimes Act 1900 (NSW) were repealed by the Law Enforcement (Powers and Responsibilities) Act 2002 (NSW). The latter Act made other provisions by ss 81-87 for search, entry and seizure powers relating to domestic violence. s 357F(2). s 357F(1). Kirby Hayne be the person upon whom a domestic violence offence has recently been or is being committed, or is imminent, or is likely to be committed in the dwelling-house". In such a case the member of the police force was entitled to enter or remain in the dwelling-house "notwithstanding that an occupier of the dwelling-house expressly refuses authority to the member of the police force to so enter or remain". At the times relevant to this matter s 357F provided: "Entry by invitation In this section, occupier, in relation to a dwelling-house, means a person immediately entitled to possession of the dwelling-house. (2) A member of the police force who believes on reasonable grounds that an offence has recently been or is being committed, or is imminent, or is likely to be committed, in any dwelling-house and that the offence is a domestic violence offence, may, subject to subsection (3): enter the dwelling-house, and remain in the dwelling-house, for the purpose of investigating whether such an offence has been committed or, as the case may be, for the purpose of taking action to prevent the commission or further commission of such an offence, if invited to do so by a person who apparently resides in the dwelling-house, whether or not the person is an adult. Except as provided in subsection (4), a member of the police force may not enter or remain in a dwelling-house by reason only of an invitation given as referred to in subsection (2) if authority to so enter or remain is expressly refused by an occupier of the dwelling-house and the member of the police force is not otherwise authorised (whether under this or any other Act or at common law) to so enter or remain. The power of a member of the police force to enter or remain in a dwelling-house by reason of an invitation given as referred to in subsection (2) by the person whom the member of the police force believes to be the person upon whom a domestic violence offence has recently been or is being committed, or is imminent, or is likely to be committed in the dwelling-house may be exercised by the Kirby Hayne member of the police force notwithstanding that an occupier of the dwelling-house expressly refuses authority to the member of the police force to so enter or remain." Section 357G provided for police obtaining authority by warrant to enter a dwelling-house by force. The section provided for a Magistrate, upon complaint made by a member of the police force, to issue a warrant which would "authorise and require the member of the police force to enter the dwelling-house and to investigate whether a domestic violence offence has been committed or, as the case may be, to take action to prevent the commission or further commission of a domestic violence offence"9. A complaint could be made in person or by telephone10. The warrant could be granted by the Magistrate stating the terms of the warrant11. In executing a warrant granted under s 357G(3) a member of the police force was authorised to use force12, whether by breaking open doors or otherwise, for the purpose of entering a dwelling-house. Section 357H(1) regulated the powers of entry given by ss 357F and 357G. It provided that: "Provisions relating to powers of entry under sections 357F and 357G (1) Where a member of the police force enters a dwelling-house in pursuance of an invitation (as referred to in section 357F), or in pursuance of a warrant granted under section 357G, for the purpose, in either case, of investigating whether an offence which the member of the police force suspects or believes to be a domestic violence offence has been committed, or, as the case may be, for the purpose of taking action to prevent the commission or further commission of such an offence, the member of the police force: is to take only such action in the dwelling-house as is reasonably necessary: s 357G(3). 10 s 357G(4). 11 s 357G(6). 12 s 357G(9). Kirby Hayne to investigate whether such an offence has been committed, to render aid to any person who appears to be injured, (iii) to exercise any lawful power to arrest a person, and to prevent the commission or further commission of such an offence, and (a1) must inquire as to the presence of any firearms in the dwelling-house and, if informed that there is a firearm or firearms, must take all such action as is reasonably practicable to search for and to seize the firearm or firearms, and is to remain in the dwelling-house only as long as is reasonably necessary to take that action." Section 357H(2) addressed the continued existence of other powers of entry. It provided that: "(2) Nothing in subsection (1) or in section 357F or 357G limits any other power which a member of the police force may have under this or any other Act or at common law to enter or remain in or on premises." Application of ss 357F and 357H The events described at the start of these reasons took several minutes to play out. In the Court of Appeal, Santow JA concluded13 that "the duration of [the police officers'] further stay after being first told to 'get out of my house' was some five to eight minutes" (a period Santow JA described14 as "not a very long time"). Inevitably, the evidence given at the trial about the events focused upon what the witnesses remembered of what was said and done. Using those descriptions to construct a comprehensive narrative of the events was not easy. It was not made any easier by the trial judge's finding that the evidence of the police officers was unsatisfactory in some respects. The narrative of events 13 [2007] Aust Torts Reports ¶81-893 at 69,703 [79]. 14 [2007] Aust Torts Reports ¶81-893 at 69,703 [79]. Kirby Hayne given in the Court of Appeal differed in some respects from that found by the trial judge. Those differences are not important for the resolution of the present appeal. What is important is how the Court of Appeal characterised what the police officers were doing in the appellant's flat when he made physical contact with one of the officers. Central to the reasoning of the Court of Appeal was the conclusion15 that the police officers had not finished investigating whether a domestic violence offence had been committed when the appellant walked towards the officers with his arms outstretched and came into contact with one of them. It is to be recalled that s 357F(2) provided that, if certain conditions are met, a police officer may enter and may remain in a dwelling-house "for the purpose of investigating whether [a domestic violence] offence has been committed or, as the case may be, for the purpose of taking action to prevent the commission or further commission of such an offence". There is room for a deal of debate in this case about what exactly were the investigations that the police who attended the appellant's flat had not finished, and about whether the prosecution of those investigations required or was even assisted by police remaining in the appellant's flat. So, for example, there was debate in the Court of Appeal about whether the police wanted, or needed, to look in the flat's bathroom before they left the premises. They had looked in every other room in the flat but once violence broke out, and the appellant was forcibly removed from his flat, there was no evidence that any of the six officers who were at the scene then thought it necessary or desirable to look in the bathroom. This may suggest strongly that such a search formed no part of the investigations that the police were undertaking. There was also some debate about whether the police officers needed to confirm where the appellant's fiancée was, or needed to speak to her, before it could be said that their investigations were at an end. It is not immediately apparent why either of those steps required or was even assisted by the police officers staying in the appellant's flat. But these questions about what further police investigations were under way or were incomplete when violence erupted at the flat need not be pursued. Even if, as the Court of Appeal concluded, further police investigations were still under way, that fact is not relevant to the application of ss 357F and 357H in the present matter. 15 [2007] Aust Torts Reports ¶81-893 at 69,704 [87] per Santow JA, 69,713 [161] per Ipp JA. Kirby Hayne There are only three facts that are critical to the application of ss 357F and 357H in the present matter. Those facts are not disputed. They are: an "occupier" of the dwelling-house (the appellant) had invited the police to "look around" the flat; an occupier of the dwelling-house (again, the appellant) had then asked the police to leave; and the police officers did not leave and remained on the premises for longer than it would reasonably have taken them to leave. Their remaining upon the premises after the appellant had asked them to go, and a reasonable time for their immediate departure had elapsed, was not authorised by the provisions of ss 357F and 357H. To explain why the three facts identified, and only those, are the critical facts in this matter, it is necessary to deal with some issues about the proper construction of ss 357F and 357H. Construction of ss 357F and 357H Section 357F treated entering a dwelling-house and remaining in the dwelling-house as distinct steps. In particular, s 357F(2) provided that, in the circumstances described in that provision, a member of the police force may: enter the dwelling-house, and remain in the dwelling-house". That distinction between entering and remaining is not marked by a bright line. Any entry upon premises necessarily constitutes remaining upon the premises for at least as long as the act of entering takes. And the marking and maintenance of a distinction between the two ideas is not made easier by the way in which s 357F(3) is framed. That sub-section provided that "a member of the police force may not enter or remain ... if authority to so enter or remain is expressly refused by an occupier" (emphasis added). The use of the single verbal phrase "is expressly refused" may suggest that "enter or remain" is to be read as a portmanteau expression, and that the only refusal which the provision contemplated was a refusal at the point of initial entry to the premises. If that were so, the phrase "is expressly refused" might be said not to include a subsequent revocation of a permission granted earlier. Kirby Hayne If there is any awkwardness in the operation of the provision that follows from the drafter treating entering and remaining on premises as distinct steps, those difficulties need not be resolved in this matter. They need not be resolved because it was accepted by both parties, correctly, that the phrase "is expressly refused" in s 357F(3) must be read as including revocation of permission given earlier. Nor is it necessary to consider how the provisions of s 357F applied to the conduct of the police when they first entered the flat through the open door. No one in the flat had asked them to come in, but the lawfulness of that initial entry was not put in issue in this matter. Rather, as noted earlier, attention was directed only to whether the police officers were trespassers when the appellant first came into physical contact with one of them. And the premise for that debate was that because the appellant had agreed that the police officers might "look around" the flat, they then had authority under s 357F to remain on the premises. Once it is observed that s 357F recognises that an invitation to enter or remain in a dwelling-house may be revoked by an occupier of the premises, attention must shift to what it is in the relevant provisions that would permit remaining on the premises after the invitation is revoked. And given that the power to enter and remain that is afforded by s 357F is a power that is predicated upon there being an invitation to enter (issued by someone who appears to be a resident of the premises) why should the revocation of permission (by an occupier) not take immediate effect by withdrawing the licence to remain that was founded in the combination of the invitation and the provisions of s 357F(2)? The Court of Appeal answered those questions by reference to the purposes of the entry specified in s 357F(2): "for the purpose of investigating whether [a domestic violence] offence has been committed or, as the case may be, for the purpose of taking action to prevent the commission or further commission of such an offence". The permission to enter and to remain that was constituted by the invitation extended by an apparent resident of the premises coupled with s 357F(2) was treated as persisting for so long as a purpose of the entry that was a purpose identified in s 357F(2) remained unfulfilled. The purpose identified by the Court of Appeal as the purpose which remained unfulfilled was investigating whether a domestic violence offence had been committed. Of course it is important to recognise that the statute prescribed the purposes that were to be effected when a member of the police force entered or remained in the dwelling-house. But it is also essential to give proper effect to s 357F(3). Section 357F(3) provided, in part, that: Kirby Hayne "a member of the police force may not enter or remain in a dwelling-house by reason only of an invitation given as referred to in subsection (2) if authority to so enter or remain is expressly refused by an occupier." These express provisions of s 357F(3) preclude reading other provisions of the section as permitting a police officer to enter and remain for as long as it was necessary to effect the purposes for which the entry was effected. That is, the express provisions of s 357F(3) require the conclusion that, unless sub-s (4) was engaged, and that was not suggested here, an express refusal by an occupier immediately terminated the authority "to so enter or remain". A construction of s 357F which attaches immediate consequences to the express refusal of an occupier is reinforced by consideration of ss 357G and Section 357G is important because that section provided for compulsory entry to a dwelling-house. The express provisions of s 357G reinforce the view that s 357F dealt only with entry to a dwelling-house by invitation, and then for only so long as the relevant invitation remained unrevoked. In all but the case for which s 357F(4) provided, revocation by an occupier of an invitation to enter or remain sufficed to terminate then and there the permission for a police officer to remain on the premises. Only an invitation to enter or remain issued by the person reasonably believed to be the victim of a domestic violence offence trumped the occupier's revocation of permission. Section 357H(1) further reinforces the view that an occupier's revocation or refusal of permission withdrew the authority given by s 357F for a police officer to remain in a dwelling-house regardless of whether investigation of past or threatened offences was complete. Section 357H(1) identified the content of, and limitations upon, both the exercise of the powers to enter and remain pursuant to invitation conferred by s 357F and the exercise of the powers to enter and remain pursuant to a warrant granted under s 357G. Section 357H(1)(a1) obliged dwelling-house to ask about the presence of firearms and, if told that there was a firearm, obliged the officer to search for it and seize it. As explained in Fahy16, s 201 of the Police Service Act 1990 (NSW) ("the Police Act")17 made it a a police officer who entered 16 (2007) 81 ALJR 1021 at 1028 [21], 1029 [27]; 236 ALR 406 at 412, 413. 17 The short title of this Act was later amended by the Police Service Amendment (NSW Police) Act 2002 (NSW) to the Police Act 1990. Kirby Hayne criminal offence for a police officer to neglect or refuse either to obey any lawful order or to carry out any lawful duty as a police officer. In other respects, however, s 357H(1) confined what a member of the police force may do if he or she entered a dwelling-house for the purposes there described: the purpose of investigating whether a domestic violence offence has been committed or the purpose of taking action to prevent the commission or further commission of such an offence. Section 357H(1)(a) provided that a member of the police force was "to take only such action in the dwelling-house as is reasonably necessary" to do certain things (including "to investigate whether [a domestic violence] offence has been committed"). Paragraph (b) of the same sub-section provided that the member of the police force "is to remain in the dwelling-house only as long as is reasonably necessary to take that action". Each of par (a) and par (b) of s 357H(1) limited the exercise of the power to enter or remain on the premises. Neither can be read as granting a power to enter or a power to remain. The powers to enter and to remain were given by the other provisions of the Act: s 357F or s 357G as the case required. And as earlier observed by reference to s 357F(3), the power to enter and remain given by s 357F could be, and in this case was, revoked. That the purposes identified in ss 357F and 357H for the police entering the appellant's premises had not been fulfilled when the appellant revoked their permission to remain neither precluded revocation of the invitation to remain in the flat nor engaged the relevant statutory provisions in a way that authorised the police officers to remain there. To the extent that, in the end, there was any ambiguity about the meaning and ambit of the authority provided to police by ss 357F and 357H to remain in the appellant's flat after he had made it clear that he was requiring them to leave, such ambiguity must be resolved in favour of the foregoing construction. This is because of the strong principle of Australian law defensive of the quiet enjoyment by an occupier of that person's residence. That principle has been recognised and upheld by this Court on numerous occasions18. It derives from the principles of the common law of England. Indeed, it appears to be a principle against which the provisions of ss 357F and 357H of the Act were written. It defends an important civil right in our society. If Parliament were to deprive 18 George v Rockett (1990) 170 CLR 104 at 110-111; [1990] HCA 26; New South Wales v Corbett (2007) 81 ALJR 1368 at 1372-1373 [18]-[22], 1382 [87] and cases there cited; 237 ALR 39 at 43-44, 57; [2007] HCA 32. Kirby Hayne persons of such a right, or to diminish that right, conventional canons of statutory construction require that it must do so clearly19. We are mindful of the difficulties of police in responding to apparent complaints about domestic violence. Such difficulties obviously lay behind the conferral of police powers in terms of ss 357F, 357G and 357H. Properly, those difficulties, and the importance of effective police intervention in response to suspected cases of domestic violence, were referred to by the Court of Appeal20. However, the powers there granted were not unlimited. They were granted, relevantly, subject to the provisions of the Act. Those provisions reserved the right to the occupier to withdraw an invitation to police to enter and remain on the premises. If, in the present case, the police considered that it was necessary to re-enter the premises, the remedy was in their hands. They could seek a warrant from a magistrate, and this could be sought and provided by telephone21. It follows that the police officers who entered the appellant's flat had no statutory justification for remaining on the premises after he asked them to leave. Was there common law justification? Common law justification? The common law has long recognised that any person may justify what would otherwise constitute a trespass to land in cases of necessity to preserve life or property22. The actions of fire-fighters, police and ambulance officers will often invoke application of that principle. There being no evidence of danger to life or property, it was not suggested that this was such a case. 19 Potter v Minahan (1908) 7 CLR 277 at 304; [1908] HCA 63; Ex parte Walsh and Johnson; In re Yates (1925) 37 CLR 36 at 93; [1925] HCA 53; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 558-559 [28], 562-563 [43], 577 [90]; [2002] HCA 49. 20 [2007] Aust Torts Reports ¶81-893 at 69-705 [93] per Santow JA, 69-710 [138]-[139] per Ipp JA referring to the Second Reading Speech in support of the Crimes (Domestic Violence) Amendment Bill 1982 (NSW). 21 Above at [18]. 22 Maleverer v Spinke (1538) 1 Dyer 35b at 36b [73 ER 79 at 81]. Kirby Hayne The defence delivered by the State in answer to the appellant's claim in the District Court did not distinctly allege that the police officers remaining in the appellant's flat, after he had asked them to leave, was in exercise of any common law right to remain on the land. The defence was cast in terms that were apposite to invoke only a statutory right founded in s 357F of the Crimes Act. Yet at all stages of the proceeding, this litigation has been conducted on the footing that it was open to the State to rely not only on s 357F, but also on a common law justification for what otherwise would have been the police officers' trespass to land. As Mason P rightly pointed out23 in the Court of Appeal, the State's failure to plead all of the defences on which it relied was and is unsatisfactory. It is unsatisfactory because there is no sufficient definition of what was said to be the justification, and there is no sufficient definition of what were the facts that were said to engage that justification. In its written submissions in this Court the State submitted that where police "apprehend on reasonable grounds that a breach of the peace has occurred and unless they involve themselves may recur, or alternatively that a breach of the peace is imminent, they may enter private dwelling premises for preventative and investigative purposes, acting only in a manner consistent with those purposes and remaining only for so long as is necessary for those purposes". It is convenient to treat this submission as identifying the asserted common law justification. It should also be said at once, however, that the submission was cast at a level of abstraction that did not identify the facts of this case that were said to engage the justification. As was pointed out in this Court's decision in Plenty v Dillon24, it is necessary to approach questions of the kind now under consideration by recognising the importance of two related propositions. First, a person who enters the land of another must justify that entry by showing either that the entry was with the consent of the occupier or that the entrant had lawful authority to enter25. Secondly, except in cases provided for by the common law and by 23 [2007] Aust Torts Reports ¶81-893 at 69,690 [3]. 24 (1991) 171 CLR 635 at 639 per Mason CJ, Brennan and Toohey JJ, 647 per Gaudron and McHugh JJ; [1991] HCA 5. 25 Halliday v Nevill (1984) 155 CLR 1 at 10; [1984] HCA 80; Entick v Carrington (1765) 2 Wils KB 275 at 291 [95 ER 807 at 817]; Great Central Railway Co v Bates [1921] 3 KB 578 at 581-582; Southam v Smout [1964] 1 QB 308 at 320; Morris v Beardmore [1981] AC 446 at 464; Eccles v Bourque [1975] 2 SCR 739 at Kirby Hayne statute, police officers have no special rights to enter land26. And in the circumstances of this case it is also important to recognise a third proposition: that an authority to enter land may be revoked and that, if the authority is revoked, the entrant no longer has authority to remain on the land but must leave as soon as is reasonably practicable. In the case of a police officer's entry upon land, this is not necessarily a great burden. As has already been pointed out27, the police officer may then (or earlier) seek a warrant which may be granted in large terms28. Such a warrant may be sought by telephone29. It is granted by a Magistrate. Although the grant of a warrant is an administrative act, it is performed by an office-holder who is also a judicial officer enjoying independence from the Executive Government and hence from the police. This facility is thus an important protection, intended by Parliament, to safeguard the ordinary rights of the individual to the quiet enjoyment of residential premises. Where a case for entry can be made out to a Magistrate, the occupier's refusal or withdrawal of permission to enter or remain may be overridden. However, this is done by an officer who is not immediately involved in the circumstances of the case and who may thus be able to approach those circumstances with appropriate dispassion and attention to the competing principles at stake30. In Halliday v Nevill31, this Court held that if the path or driveway leading to the entrance of a suburban dwelling-house is left unobstructed, with any entrance gate unlocked, and without indication by notice or otherwise that entry by visitors or some class of visitors is forbidden, the law will imply a licence in favour of any member of the public to go on that path or driveway for any legitimate purpose that in itself involves no interference with the occupier's possession or injury to the person or property of the occupier, or the occupier's guests. But as Brennan J pointed out32 in his dissenting opinion in Halliday, 26 Halliday (1984) 155 CLR 1 at 10. 27 Above at [18]. 28 s 357G(3). 29 s 359G(4). 30 Halliday (1984) 155 CLR 1 at 20 per Brennan J. 31 (1984) 155 CLR 1. 32 (1984) 155 CLR 1 at 9. Kirby Hayne there are cases in which it is necessary to recognise that when it is police officers who seek to enter the land of another there is "a contest between public authority and the security of private dwellings". Argument in this Court about an asserted common law justification for the police officers remaining in the appellant's flat necessarily referred to general statements made in decided cases, about "preventing" a breach of the peace, especially some statements on that subject made in the decision of a Divisional Court of the King's Bench Division in Thomas v Sawkins33. Particular emphasis was given to two statements in that case. First, Avory J said34 that "[t]o prevent ... a breach of the peace the police were entitled to enter and to remain on the premises". Secondly, Lord Hewart CJ said35 that "a police officer has ex virtute officii full right [to enter and remain on private premises] when he has reasonable ground for believing that an offence is imminent or is likely to be committed". It is to be noted that neither of these statements countenances an entry or remaining on premises for investigating whether a breach of the peace has occurred or determining whether one is threatened or imminent. Nothing else that was said in Thomas v Sawkins would support such a power and no reference was made to any decision that would cast the power so widely. Rather, the focus of what was said in Thomas v Sawkins was upon prevention of a breach of the peace, not upon any power of investigation. As has been cogently argued in academic commentary36 on Thomas v Sawkins, the statements made by Avory J and Lord Hewart CJ that have been set out earlier were cast in "unnecessarily wide terms"37. The immediate context for the decision in Thomas v Sawkins was the attendance of police at a public meeting held to consider, among other things, a call for the dismissal of the chief constable of the county. For at least Avory J, and perhaps the third member of the Court, Lawrence J, much turned on the fact that the meeting was a public 34 [1935] 2 KB 249 at 257. 35 [1935] 2 KB 249 at 255. 36 Goodhart, "Thomas v Sawkins: A Constitutional Innovation", (1936) 6 Cambridge Law Journal 22; Feldman, The Law Relating to Entry, Search and Seizure, (1986) ("Feldman") at 324-331. 37 Feldman at 324. Kirby Hayne meeting to which all members of the public were invited. What was decided in Thomas v Sawkins must be approached with the facts of the case well in mind, and of course, the facts of the present case are very different. These considerations apart, when it is said that a police officer may enter premises to "prevent" a breach of the peace, it is necessary to examine what is meant by "prevent" and what exactly is the power of entry that is contemplated. Is the power to enter one which permits forcible entry? Does preventing a breach of the peace extend beyond moral suasion to include arrest? Is the preventing of a breach of the peace that is contemplated directed ultimately to prevention by arrest? Some of these questions have since been considered in English decisions38. Those later decisions proceed from the premise stated39 by Lord Diplock in Albert v Lavin that: "[E]very citizen in whose presence a breach of the peace is being, or reasonably appears to be about to be, committed has the right to take reasonable steps to make the person who is breaking or threatening to break the peace refrain from doing so; and those reasonable steps in appropriate cases will include detaining him against his will." As is evident, not only from the passage just cited but also from some of the later English decisions, working out the application of a premise so broadly stated is not free from difficulty40, not least in deciding what constitutes an actual or threatened breach of the peace41 and what steps, short of arrest, may be taken in response42. 38 See, for example, McGowan v Chief Constable of Kingston upon Hull [1968] Criminal Law Review 34; Albert v Lavin [1982] AC 546; McLeod v Commissioner of Police of the Metropolis [1994] 4 All ER 553. 39 [1982] AC 546 at 565. See also Coleman v Power (2004) 220 CLR 1 at 24 [10] per Gleeson CJ; [2004] HCA 39. 40 See Feldman, "Interference in the Home and Anticipated Breach of the Peace", (1995) 111 Law Quarterly Review 562; cf McLeod v United Kingdom (1998) 27 EHRR 493. 41 Addison v Chief Constable of the West Midlands Police [2004] 1 WLR 29 at 31-32. 42 McLeod [1994] 4 All ER 553 at 560. Kirby Hayne And for the same reasons, the State's submission, set out earlier in these reasons, to the effect that police may enter premises if they apprehended on reasonable grounds that a breach of the peace has occurred and may recur, or that a breach of the peace is imminent, suffers the same difficulties. Further, the State's submission that police may enter for "preventative and investigative purposes" would, by its reference to "investigative purposes", extend the power much further than any description of common law power given in the English cases. There is no basis for making that extension. Whatever may be the ambit of the power of police (or of a member of the public) to enter premises to prevent a breach of the peace, that power of entry does not extend to entry for the purposes of investigating whether there has been a breach of the peace or determining whether one is threatened. Both parties in the present case accepted that police officers in New South Wales are duty bound to "keep the peace". A statutory source of that duty was not identified in argument but it may be that it is to be found in the then provisions of regs 8 and 9 of the Police Regulation 2000 (NSW), coupled with ss 6 and 201 of the Police Act. Regulation 8 prescribed a form of oath or affirmation to be taken by a police officer under s 13 of the Police Act. The prescribed form of oath or affirmation contained a promise to "cause Her Majesty's peace to be kept and preserved", and a promise by the declarant to "prevent that peace". the best of my power all offences against Regulation 9(1) provided that police officers were "to comply strictly with the Act and this Regulation and promptly comply with all lawful orders from those in authority over them". Section 6 of the Police Act stated the mission and functions of the Police Service. Those functions included providing police services for New South Wales and "police services" was defined in s 6(3) as including "services by way of prevention and detection of crime" and "the protection of persons from injury or death, and property from damage, whether arising from criminal acts or in any other way". And as noted earlier, s 201 of the Police Act made it an offence to neglect or refuse to carry out any lawful duty as a police officer. It is not necessary to decide whether it is these provisions that obliged police officers in New South Wales to keep the peace. It is sufficient for present purposes to accept, without deciding, that at the time of the events giving rise to this litigation New South Wales police officers were bound to "keep the peace". But in the present matter, by the time police went to the appellant's flat, there was no continuing breach of the peace and nothing in the evidence of what happened thereafter suggested that, but for the police officers not leaving the flat when asked to do so, any further breach of the peace was threatened or expected, let alone imminent. However broadly understood may be the notion of a duty or Kirby Hayne right to take reasonable steps to make a person who is breaching or threatening to breach the peace refrain from doing so, that duty or right was not engaged in this case. It was not engaged because, by the time police arrived at the appellant's flat there was no continuing or threatened breach of the peace. And no breach of the peace was later committed or threatened before the eruption of the violent struggle that culminated in the appellant's arrest. It follows that the continued presence of police officers in the appellant's flat, after he had asked them to go and a reasonable time for them to leave had elapsed, could not be justified as directed to preventing a breach of the peace. No other form of common law justification for remaining in the appellant's flat was suggested. Conclusion and Orders For these reasons, the question treated by the parties as dispositive of liability (were the police officers trespassers when the appellant first came into physical contact with one of them) should be resolved in the appellant's favour. It follows that the appeal to this Court should be allowed. The orders of the Court of Appeal of the Supreme Court of New South Wales made on 15 June 2007 should be set aside. In their place there should be orders that the State's appeal to that Court on grounds 1, 2, 3 and 4 be dismissed and that the appeal be remitted to that Court for further consideration of grounds 5, 6, 7 and 8 of the State's Notice of Appeal. The State should pay the appellant's costs of the appeal to this Court and of the proceedings in the Court of Appeal up to and including the entry of the order of the Court of Appeal made on 15 June 2007. The costs of the further hearing in the Court of Appeal should be in the discretion of the Court of Appeal. HEYDON J. This appeal presents a difficult problem of statutory construction. The problem arises from a tension between s 357F(3)43 and s 357H(1)44 of the Crimes Act 1900 (NSW). The former provision was relied on by the plaintiff to support the submission that at the instant the police officers failed to comply with the plaintiff's first request to leave the premises, they became trespassers. The latter provision was relied on by the defendant to support the submission that once police officers have lawfully entered premises, or remain lawfully on them by reason of a s 357F(2) invitation, they are entitled to stay on those premises for as long as is reasonably necessary to take, and complete, the actions described in s 357H(1)(a) and (a1). The defendant's construction is to be preferred for the following reasons. The construction of the legislation The plaintiff's construction has the result that if police officers who had lawfully entered, or were lawfully remaining in, a dwelling-house because of a s 357F(2) invitation, on observing that a person present appeared to be badly injured, would have no statutory right to remain merely because an occupier of the dwelling-house expressly refused consent to remain. A construction of the legislation which would deprive police officers who, pursuant to s 357H(1)(a)(ii), were trying to control severe haemorrhaging, or were trying to restore an injured person's heart beat, or were trying to prevent an injured person from choking to death, of any statutory right to remain and continue their endeavours once consent to remain was refused, must be rejected. It is necessary also to reject a construction of the legislation which would deprive police officers, on the point of lawfully arresting someone pursuant to s 357H(1)(a)(iii), of any statutory right to remain in order to do so the instant consent was refused. It is necessary, further, to reject a construction of the legislation which would deprive police officers who are seeking to prevent the commission or further commission of a domestic violence offence within the meaning of s 357H(1)(a)(i) of any statutory right to remain in order to continue their endeavours once consent to remain was refused in circumstances not falling within s 357F(4). And it is necessary to reject a construction of the legislation which would deprive police officers who were about to inquire into the presence of firearms, search for them and seize them, or were in the process of conducting that inquiry, 43 Set out above at [17]. 44 Set out above at [19]. search and seizure as contemplated by s 357H(1)(a1), of any statutory right to remain in order to continue that course of conduct once consent to remain was refused. It is no answer to the difficulties posed by these four instances to say that the police officers, once they have left the premises, are at liberty speedily to obtain a telephone warrant to enter the premises for a second time. The plaintiff contended that that process would take very little time. But the process is not supposed to be a formality, and it could often take some time. By the time the police officers had departed and obtained a telephone warrant to re-enter, the injured person might have died or suffered irreparable physical injury; the person to be arrested might have fled and absconded for good; a domestic violence offence, or a further domestic offence, might have been committed, causing grave injury or death; and firearms might have been removed from the premises or used to commit a crime. In each of the four instances just discussed, a correct construction of the legislation gives police officers who are lawfully present before consent to remain is withdrawn a statutory right to remain in order to commence or continue, and then to complete the actions described in s 357H(1)(a)(ii), (iii) and (iv) and (a1), despite that withdrawal of consent. There is no reason not to adopt the same construction in relation to the action described in s 357H(1)(a)(i) – investigating whether a domestic violence offence has been committed. As the defendant submitted, it follows from the fact that under s 357H(1)(b) the police officers are to remain "only as long as is reasonably necessary", that they may remain as long as is reasonably necessary. Is there an absurdity or anomaly in the defendant's position arising from its contemplation that under the legislation consent to enter can be refused in the first place, and any entry therefore rendered unlawful, even if the police officer suspected a serious crime causing grave personal injury had just taken place, but withdrawal of consent to remain cannot render the continued presence of police already on the premises unlawful until the s 357H(1) actions are complete? In similar vein, the plaintiff submitted: "The notion that Parliament would have prevented you from saying, 'I know I let you in but I really do not like the way you are carrying on, I want you to go now', the notion that Parliament has abolished that common law possibility is ... unthinkable." That submission reveals a certain obliviousness to practical circumstances. Police officers who have lawfully entered pursuant to consent, or who remain lawfully after entry pursuant to consent, are likely in practice to know much more about what has happened or is likely to happen than police officers who were not given any consent to enter or remain and did not enter or remain. The compromise struck by the legislation is that police officers who have been refused consent to enter at all must obtain a warrant. Those who have entered or remained pursuant to consent which is then withdrawn may remain until the s 357H(1) processes, in the course of which they may well have learned information which makes the completion of questioning those persons desirable, are complete. To be balanced against the supposedly unthinkable consequences of the defendant's construction to which the plaintiff's submission referred is the fact that the consequences of the plaintiff's construction are, if not unthinkable, at least highly impractical and in particular circumstances undesirable. It would mean that the householder could forestall the lawful activities of police officers just as they were beginning to bear fruit. The plaintiff's construction would read s 357F(3) as prevailing over s 357H(1). On the defendant's construction, the two must be read together, and s 357H(1) prevails because police officers acting within that sub-section are not remaining, to use the language of s 357F(3), "by reason only" of a s 357F(2) invitation: they are "otherwise authorised" by s 357H(1). The facts The police officers entered the premises lawfully because a person who apparently resided on the premises invited them to do so. Even if that were not so, the police officers remained lawfully once the plaintiff encountered the police officers and said that they could look around. The state of affairs in which the police officers found themselves just before the plaintiff came into physical contact with them – just before the moment when the legality of their presence must be tested – was as follows. The police officers had heard a broadcast on their radios of a message preceded by two beeps. That signified a serious state of affairs like an armed robbery or a violent domestic incident. One message broadcast included the words: "Male and female fighting. Female heard screaming". A later message broadcast included the words: "The female had been screaming. Now it's all gone quiet." These signals and messages indicated a serious problem to be dealt with urgently by travelling as quickly as possible to the premises using lights and sirens. Three police vehicles, each containing two officers, responded. After speaking to two friends of the plaintiff, the police officers waited until the plaintiff came out of the shower. The evidence called for the plaintiff reveals that the following events then took place. The police officers informed the plaintiff that they were investigating a domestic violence complaint made by a neighbour. He told them that no female was present and that his "Mrs" had left. They sought and obtained his permission to look around. Two of the officers looked in the two bedrooms in the plaintiff's unit. They asked him where the female who had been there was, and he said that she was at his sister's house around the corner. He could not give the precise address of the sister's house, but described what it looked like and how to get there. He then began to ask them to leave, and did so on a number of occasions (estimates varying from between two to three to at least six occasions) in a foul-mouthed way, accompanying what he said with violent acts like slamming down a piece of paper with his sister's telephone number on it. These were excessive and disproportionate reactions which were not calculated to allay the alarm which had brought the police officers to the premises. They were not obliged to accept his answers immediately, and their experience probably instructed them that it was prudent not to do so. The police officers continued to ask where the female was and where the house of the plaintiff's sister was. The plaintiff then climbed onto a bench between the kitchen and the living room and jumped off in the direction of the police. He came into physical contact with them, and they used force to subdue him and arrest him. They experienced difficulty in getting him down the stairs. After the plaintiff was put in a police car, one of the police officers asked Mr Guler, a friend of the plaintiff, who had been present when the police officers entered the unit, whether he knew where the plaintiff's sister lived. Mr Guler responded that he did not know the address but could show the police where the sister's house was. Mr Guler went in a police car to the sister's house where he then observed the police talking to the plaintiff's fiancée. At that time, at least the urgent stage of the police investigation into whether a domestic violence offence had been committed came to an end. The view of the evidence just expressed corresponds with Ipp JA's approach in the Court of Appeal. Ipp JA did not accept that after the plaintiff had told the police to leave there was nothing to investigate. The mere fact that no person had been found in the unit did not put an end to the investigation of whether a domestic violence offence had been committed. The questions the police asked of the plaintiff in Mr Guler's presence as to the whereabouts of the female who had been heard screaming had not been answered to their satisfaction and were part of the police investigations. Although the plaintiff had given the police a telephone number for his sister, they had not had an opportunity to verify it. The police wanted to know what had happened to the female, they wanted to know where she was, and they were not going to leave until they got answers to those questions. In the few minutes between when the plaintiff first asked the police to leave and the time when he was arrested, they had not obtained an answer from anyone present giving the address of the plaintiff's sister and had not had an opportunity of calling the telephone number which the plaintiff had told them was the telephone number of his sister. The conduct of the police in those minutes was reasonably necessary in order to investigate whether a domestic violence offence had been committed. Santow JA gave a concurring summary, and Mason P agreed with both judgments. The approach of the Court of Appeal to the finding of facts is to be preferred to that of the trial judge, whose judgment is characterised by errors of fact (as the Court of Appeal demonstrated) and by facetiousness, exaggeration and excessive metaphor. The conclusion of the Court of Appeal that the investigation by the police officers of whether a domestic violence offence had been committed was not complete when the plaintiff came into physical contact with them was correct. The view that it was complete once the plaintiff had said the female had gone to his sister's house and could be contacted on a certain telephone number lacks all practical merit. Hence at the time when the plaintiff came into physical contact with the police officers they had a statutory right to be present, and it is not necessary to consider the common law position. Orders The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA Matter No S162/2009 THE QUEEN AND Matter No S163/2009 THE QUEEN AND APPELLANT RESPONDENT APPELLANT RESPONDENT The Queen v LK The Queen v RK [2010] HCA 17 26 May 2010 S162/2009 & S163/2009 ORDER In each matter: Appeal dismissed. Appellant to pay the costs of the respondent except those occasioned by the respondent's notice of contention. On appeal from the Supreme Court of New South Wales Representation T A Game SC with H K Dhanji for the appellant in each matter (instructed by Commonwealth Director of Public Prosecutions) J S Stratton SC with P G Hogan and A M Webb for the respondent in S162/2009 (instructed by Hanby & Associates) T E F Hughes QC with M R Gracie and B C Kasep for the respondent in S163/2009 (instructed by instructed by Mee Ling Solicitors) Interveners S J Gageler SC, Solicitor-General of the Commonwealth with G M Aitken and P McDonald the Commonwealth (instructed by Australian Government Solicitor) intervening on behalf of the Attorney-General of J G Renwick with G E Wright intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v LK The Queen v RK Criminal law – Conspiracy – Fault element – Where respondents charged with having conspired to commit offence against s 400.3(2) of Criminal Code (Cth) ("Code") – Whether s 11.5(2)(b) of Code required prosecution to prove intention in relation to each physical element of substantive offence particularised as subject of conspiracy, even if fault element prescribed for substantive offence was lesser fault element, such as recklessness – Whether elements of conspiracy wholly contained within s 11.5(1) of Code – Relevance of common law offence of conspiracy to interpretation of Code. Constitutional law (Cth) – Federal judicature – Trial by jury – Appeal against directed verdict of acquittal – Application of State law – Section 107 of Crimes (Appeal and Review) Act 2001 (NSW) ("State Act") provided right of appeal by Crown against directed verdict of acquittal – Whether, as matter of construction, s 68(2) of Judiciary Act 1903 (Cth) ("Judiciary Act") picked up and conferred, in relation to Commonwealth offences, federal jurisdiction in terms created by s 107 of State Act – Whether guarantee of trial by jury in s 80 of Constitution infringed by appeal pursuant to s 107 of State Act as picked up by s 68(2) of Judiciary Act against directed verdict of acquittal of indictable offence against Commonwealth law where appeal turned solely on question of law. Words and phrases – "conspiracy", "conspires", "intended that an offence would be committed", "recklessness", "trial by jury". Constitution, s 80. Criminal Code (Cth), ss 5.4, 11.5, 400.3(2). Judiciary Act 1903 (Cth), s 68(2). Crimes (Appeal and Review) Act 2001 (NSW), s 107. Introduction The offence of conspiracy created by the Criminal Code (Cth) ("the Code") is committed where there is an agreement between the offender and one or more other persons, coupled with an intention, on the part of the offender and at least one of the other persons, that an offence will be committed pursuant to the agreement1. Proof of commission of an overt act by the offender or another party to the agreement pursuant to the agreement is necessary2. The primary question in these Crown appeals is whether the offence of conspiracy is committed when there is an agreement to commit the offence of dealing with money the proceeds of crime where recklessness as to the fact that the money is proceeds of crime is an element of the substantive offence. The formulation of the question throws up the fault line in the Crown's argument, namely, the proposition that an agreement to deal with money the proceeds of crime does not require that the parties knew that the money in question was proceeds of crime3. It is said to be sufficient that the respondents contemplated recklessness as to that matter. That is insufficient and, for that insufficiency, the appeals should be dismissed. Other questions were raised by the respondents about the availability of an appeal against a directed verdict of acquittal and whether a State law providing for such an appeal is inapplicable in the exercise of federal criminal jurisdiction because of the guarantee of trial by jury contained in s 80 of the Constitution. Such an appeal is available in respect of an offence tried on indictment and does not infringe the guarantee. Factual and procedural history On 19 May 2008 the respondents were jointly charged that: "between about 1 December 2003 and about 1 February 2004 at Sydney in the State of New South Wales and elsewhere [they] did conspire with each other, [RM] and with divers other persons to deal with money to the value of $1,000,000 or more being the proceeds of crime where those persons who were to deal with the money pursuant to the conspiracy were reckless as to the fact that the money was the proceeds of crime." 1 Code, s 11.5(2)(a) and (b). 2 Code, s 11.5(2)(c). 3 Nor on the Crown's argument would their belief as to the fact be necessary. The respondents had been arrested on 16 August 2005. On 18 October 2006 they were served with court attendance notices and on 17 July 2007 were committed to stand trial in the District Court of New South Wales in Sydney. A first indictment was filed with the District Court of New South Wales on 13 September 2007 but was substituted by the indictment quoted above, which was filed on 26 May 2008. The respondents were tried together before Sweeney DCJ and a jury in the District Court of New South Wales. The trial commenced on 30 June 2008 and evidence was completed on 4 July 2008. On 8 July 2008, following no case submissions on behalf of the respondents, the trial judge directed the jury that as a matter of law they should acquit the respondents of the charge on the indictment. The direction was based not upon any insufficiency in the evidence adduced for the Crown but upon her Honour's conclusion that the indictment against the respondents did not disclose an offence known to the law. Her Honour said to the jury: "Now you do not need to go to the jury room and consider that decision, I will simply ask the foreman to stand. My associate will ask him questions in [respect] of each accused and the count on the indictment and Mr Foreman you will return a verdict of not guilty in respect of each accused. Do you understand that?" The foreman replied in the affirmative. The transcript shows that at her Honour's direction the jury returned a verdict of not guilty in favour of each of the respondents. The respondents were then discharged. In her reasons for directing the acquittals, her Honour observed that the indictment alleged that the respondents "intentionally agreed to commit an offence, the mental element of which was recklessness". The case advanced by the Crown committed it to proving that the respondents were reckless as to the money the subject of the conspiracy being proceeds of crime at the time they entered their agreement. The charge offended a "longstanding principle of criminal liability that an accused must know of all the facts that would make his conduct criminal". Her Honour referred to the decision of the Court of Criminal Appeal in R v Ansari4. She said that the Court held in that case that a person could be charged with conspiring to commit an offence the mental element of which was recklessness when the Crown relied upon intention or knowledge to prove the element of recklessness or where a third party was to commit the offence the object of the conspiracy. In her Honour's opinion, Ansari was not authority for the proposition that a person could be charged with conspiring to commit an offence the mental element of which was recklessness, simpliciter. (2007) 70 NSWLR 89. An appeal by the Crown against the acquittals was brought in the Court of Criminal Appeal pursuant to s 107 of the Crimes (Appeal and Review) Act 2001 (NSW). The section provides for an appeal by the State Attorney-General or the Director of Public Prosecutions for the State against, inter alia, the acquittal of a person "by a jury at the direction of the trial Judge"5. The judgment of the Court dismissing the appeal was delivered by Spigelman CJ, with whom Grove and Fullerton JJ agreed6. The Court held that the reasoning in Ansari was not applicable to the charge against the respondents7. On the authority of Ansari it would have been open to the Crown to prove recklessness, in its extended statutory meaning under the Code, either by proving that the respondents were aware that there was a substantial risk that the money was proceeds of crime or by proving that they intended or knew that the money was proceeds of crime8. "It is not the Crown case that either of the [respondents] knew that the money was proceeds of crime. As the Crown emphasised in its submissions in this Court the Crown case was that the [respondents] were reckless as to the fact whether the money was proceeds of crime. That allegation may have supported a substantive offence under s 400.3(2). It cannot support a charge of conspiracy where, in order to satisfy the test of intention with respect to the entry into an agreement to commit an offence, the accused must know the facts that constitute the offence." (emphasis in original) The Chief Justice said that the trial judge had correctly distinguished Ansari and had correctly concluded that the Crown case disclosed no offence known to the law10. The Crown lodged applications to this Court for special leave to appeal on 19 January 2009. Special leave was granted on 19 June 2009. 5 Crimes (Appeal and Review) Act, ss 107(1)(a) and 107(2). 6 R v RK and LK (2008) 73 NSWLR 80. (2008) 73 NSWLR 80 at 93 [68]. (2008) 73 NSWLR 80 at 93 [67] adapting the words of Simpson J in Ansari (2007) 70 NSWLR 89 at 97 [28]. (2008) 73 NSWLR 80 at 93-94 [69]. 10 (2008) 73 NSWLR 80 at 94 [70]. Grounds of appeal The single ground of appeal in each case is that: "The Court of Criminal Appeal erred in interpreting s 11.5 of [the Code], such that to be guilty of conspiracy to commit an offence that has a physical element for which a fault element of recklessness is prescribed, it must be proved that the offender intended that physical element." Notice of contention Each of the respondents filed a notice of contention in substantially similar terms with the following grounds: The Court below failed to decide that as a matter of law no appeal lay to it because s 107 of the Crimes (Appeal and Review) Act 2001 did not come into operation until 15 December 2006, after the proceedings against the respondent had commenced by court attendance notice served on the respondent on 18 October 2006. This point was taken in the Court below but not decided in the Court's reasons for judgement: see [76], [78] and [79]. In their combined operation, sub-sections (1)(a), (2) and (5) of s 107 [of] that Act are invalid because, contrary to s 80 of the Commonwealth Constitution, they purport to empower the Court of Criminal Appeal to disregard an essential characteristic of a trial by jury of an indictable offence against a law of the Commonwealth, viz, the inviolability of a jury's verdict of acquittal. This point was also taken in the Court below but not decided in the Court's reasons for judgment: see paragraph (1) above." It is convenient to deal first with the matters raised in the notices of contention, as they go to the jurisdiction of the Court of Criminal Appeal of New South Wales. Statutory framework – s 107 of the Crimes (Appeal and Review) Act Section 107, providing for appeals against directed acquittals and acquittals without juries, was introduced into the Crimes (Appeal and Review) Act by the Crimes (Appeal and Review) Amendment (Double Jeopardy) Act 2006 (NSW). The amending legislation also made provision for the Court of Criminal Appeal to entertain appeals against acquittals in relation to offences punishable by life imprisonment or by imprisonment for a period of 15 years or more11. 11 Division 2 of Pt 8 of the Crimes (Appeal and Review) Act, comprising ss 99-106. Those provisions apply to persons acquitted before the commencement of the amending Act12. In this respect they contrast with s 107, which does not apply to a person who was acquitted before the commencement of the section13. Section 107 applies to the acquittal of a person "by a jury at the direction of the trial Judge"14. The section provides that the Attorney-General or the Director of Public Prosecutions can appeal to the Court of Criminal Appeal "against any such acquittal on any ground that involves a question of law alone"15. The section also provides that, while the Court of Criminal Appeal can affirm an acquittal to which the section applies or quash such an acquittal and order a new trial16, it cannot proceed to convict or sentence the person for the offence charged17. Nor can it direct the court conducting the new trial to do so18. A threshold jurisdictional question The parties to the appeals proceeded upon the assumption that, subject to the matters set out in the notices of contention, the jurisdiction of the Court of Criminal Appeal to entertain an appeal against a directed verdict of acquittal derived from s 68(2) of the Judiciary Act 1903 (Cth), read with s 107 of the Crimes (Appeal and Review) Act. The interveners, the Commonwealth and the State of New South Wales, concerned only with issues raised on the notices of contention, also proceeded on that premise. The premise requires consideration, but is correct. Sections 39 and 68 of the Judiciary Act confer federal jurisdiction upon State and Territory courts in ambulatory terms19. The focus in these appeals is on 12 Crimes (Appeal and Review) Act, s 99(3). 13 Crimes (Appeal and Review) Act, s 107(8). 14 Crimes (Appeal and Review) Act, s 107(1)(a). 15 Crimes (Appeal and Review) Act, s 107(2). 16 Crimes (Appeal and Review) Act, s 107(5) and (6). 17 Crimes (Appeal and Review) Act, s 107(7). 18 Crimes (Appeal and Review) Act, s 107(7). 19 As to the ambulatory character of s 39, see The Commonwealth v The District Court of the Metropolitan District (1954) 90 CLR 13 at 22 per Dixon CJ, Kitto and Taylor JJ; [1954] HCA 13. As to s 68(2), see R v Gee (2003) 212 CLR 230 at 240- 241 [6]-[7] per Gleeson CJ, 244 [24] per McHugh and Gummow JJ; [2003] HCA s 68. Section 68 reflects a legislative decision to rely upon State courts to administer criminal justice in relation to federal offences and to have uniformity within each State as to procedures for dealing with State and federal offences. As Gleeson CJ said in R v Gee20: "The federal legislation enacted to give effect to that choice, therefore, had to accommodate not only differences between State procedures at any given time, but also future changes to procedures in some States that might not be adopted in others. That explains the use of general and ambulatory language, and the desirability of giving that language a construction to pick up procedural changes and developments as they occur in particular States from time to time." that enables The statutory precursor of s 68 was the Punishment of Offences Act 1901 (Cth), a temporary measure conferring federal jurisdiction in criminal matters on State courts and applying State laws of a procedural character to the trial on the indictment of persons charged with offences against Commonwealth21. It was expressed to cease to have effect upon the establishment of the High Court22. Section 68 as first enacted substantially reproduced ss 2 and 3 of the Punishment of Offences Act. It contained no reference to appeals23. The only references to criminal appeals in the Judiciary Act as enacted were in ss 72 to 77, dealing with the reservation of questions of law and stated cases to the Full Courts of the High Court or the State Supreme Courts. They reflected procedures provided under various State laws24. There were no Courts of Criminal Appeal in existence at the time25. laws of the The question whether s 39 of the Judiciary Act conferred appellate, as well as original, federal criminal jurisdiction on State courts was answered in the 20 (2003) 212 CLR 230 at 241 [7]. 21 Punishment of Offences Act, ss 2 and 3. 22 Punishment of Offences Act, s 1. 23 Section 4 of the Punishment of Offences Act conferred appellate jurisdiction on State courts, an aspect not reproduced in s 68. 24 See as at 1903: Crimes Act 1900 (NSW), s 470; Crimes Act 1890 (Vic), s 481; Criminal Law Consolidation Act 1876 (SA), s 397; Criminal Code (Q), s 668; Criminal Code (WA), s 667; Criminal Law Procedure Act 1881 (Tas), s 7. 25 See the explanation by Attorney-General Latham in the Second Reading Speech for the Judiciary Bill 1932: Australia, House of Representatives, Parliamentary Debates (Hansard), 22 November 1932 at 2608. affirmative in Ah Yick v Lehmert26. The Court rejected Mr Harrison Moore's argument that s 39 was to be read down in light of the specific provisions made by s 68 in relation to criminal jurisdiction and the specific and limited provisions of ss 72 to 7727. Notwithstanding its lack of success in Ah Yick, a similar proposition underpinned the decision in Seaegg v The King28 in 1932. This Court also expressed the opinion in that case that s 39(2) might be insufficient to effect the conversion of appellate jurisdiction conferred by the Criminal Appeal Act 1912 (NSW) into federal jurisdiction over the different subject matter of appeals against convictions on indictment under federal law29. As a result of Seaegg, s 68(1) and (2) were amended30. State courts with appellate criminal jurisdiction in relation to offences against State law were given the like jurisdiction in relation to federal offences. In the Second Reading Speech for the amending Bill, the Attorney-General, Mr Latham, observed that each of the States had by that time established Courts of Criminal Appeal, which had not existed in 190331. He said32: "It appears only just that a person convicted under a federal law should have the same right of appeal as a person convicted under a State law." There was no reference to appeals against acquittals, but, as appears below, the ambulatory character of the amended s 68 was able to pick up novel appellate jurisdictions created under State law. 26 (1905) 2 CLR 593 at 605 per Griffith CJ, 614 per Barton J; [1905] HCA 22. 27 (1905) 2 CLR 593 at 595. 28 (1932) 48 CLR 251 at 256-257 per Rich, Dixon, Evatt and McTiernan JJ; [1932] HCA 47. 29 (1932) 48 CLR 251 at 256. 30 Judiciary Act 1932 (Cth), s 2. 31 Criminal Code Amendment Act 1911 (WA) (No 52 of 1911), s 10; Criminal Appeal Act 1912 (NSW), s 3; Criminal Code Amendment Act 1913 (Q), s 5; Criminal Appeal Act 1914 (Vic), s 3; Criminal Code (Tas), s 400 (introduced by the Criminal Code Act 1924 (Tas)); Criminal Appeals Act 1924 (SA), s 5. Appeals in Victoria and South Australia lay to a Full Court rather than a Court of Criminal Appeal. 32 Australia, House of Representatives, Parliamentary Debates (Hansard), 22 November 1932 at 2608. One novel jurisdiction was considered by this Court in Williams v The King [No 2]33. The question, on which the Court divided equally, was whether s 68, as amended, conferred federal jurisdiction in the terms of the Criminal Appeal Act 1912 (NSW) providing for a Crown appeal against sentence to the Court of Criminal Appeal34. In holding the jurisdiction to have been conferred, Dixon J conceded that such an appeal was "a marked departure from the principles theretofore governing the exercise of penal jurisdiction"35. He added, however, that it was "a departure sanctioned by State law, and it had already been made when the amendment in the provisions of sec 68(2) was introduced"36. Dixon J contrasted the operation of s 68(2) upon "existing and known provisions of a particular department of the statutory law of the States" with the Appellate Jurisdiction Act 1876 (UK)37, which conferred general appellate jurisdiction upon the House of Lords but was held not to give a right of appeal against an order for discharge from custody made upon the return of the writ of habeas The question was revisited in 1971 in Peel v The Queen39. The Court then held by majority that s 68(2) operated upon s 5D of the Criminal Appeal Act 1912 (NSW) to confer jurisdiction on the Court of Criminal Appeal of New South Wales the Commonwealth against the inadequacy of a sentence imposed for an offence against a law of the Commonwealth. Owen and Gibbs JJ40, with whom Windeyer J agreed41, adopted the reasoning of those Justices in Williams who were in favour of the like conclusion. They particularly referred to the judgment to entertain an appeal by the Attorney-General of 33 (1934) 50 CLR 551; [1934] HCA 19. 34 (1934) 50 CLR 551 at 557 per Gavan Duffy CJ, 563-565 per Evatt and McTiernan JJ against the conferral of the right to appeal; and at 557-558 per Rich J, 558 per Starke J, 561 per Dixon J in favour of the existence of the right. 35 (1934) 50 CLR 551 at 561. 36 (1934) 50 CLR 551 at 561. 37 39 & 40 Vict c 59. 38 (1934) 50 CLR 551 at 561 citing Secretary of State for Home Affairs v O'Brien [1923] AC 603 at 610 per Earl of Birkenhead. 39 (1971) 125 CLR 447; [1971] HCA 59. 40 (1971) 125 CLR 447 at 460 per Owen J, 467-469 per Gibbs J. 41 (1971) 125 CLR 447 at 457. of Dixon J42. In his dissent, Barwick CJ observed that, at the time of the enactment of the Judiciary Act 1932 (Cth), the law of Tasmania43 provided for an appeal by the State Attorney-General against an acquittal on a question of law. He said44: "[I]f a general ambulatory provision such as s 68(2) is apt to create such rights in the Attorney-General of the Commonwealth with respect to sentences imposed by State courts for offences against the laws of the Commonwealth and against an acquittal of a person charged with such an offence, neither the unusual nature of such rights nor the circumstance that they did not exist in 1932 in all the States of the Commonwealth with respect to State offences will require that effect should not be given to the expressed will of the Parliament. But, in considering whether general words of an enactment are so apt, that unusual nature and the singularity of the particular right of appeal ought, in my opinion, to be borne in mind." The textual basis for Barwick CJ's dissent45, which applied equally to appeals against sentence and appeals against acquittal, was undercut by the reasoning of the majority. Section 68 is not confined to conferring appellate jurisdiction in terms which existed under State laws in 1932. Nevertheless, the existence, at that time, of an appeal against acquittal on a question of law tends to detract from the proposition that s 68 could never have been intended to apply to such an appeal and, a fortiori, to an appeal against a directed verdict of acquittal. Peel was applied by this Court in Rohde v Director of Public Prosecutions46. Deane J in dissent observed that the conferral upon the prosecution of a right to appeal against sentence47: 42 (1971) 125 CLR 447 at 460 per Owen J, 467-469 per Gibbs J; see also at 457 per 43 Criminal Code (Tas), s 401(2)(ii). 44 (1971) 125 CLR 447 at 452. 45 See (1971) 125 CLR 447 at 454-455. 46 (1986) 161 CLR 119 at 124 per Gibbs CJ, Mason and Wilson JJ, 126-127 per Brennan J; [1986] HCA 50. See also R v Carngham (1978) 140 CLR 487; [1978] HCA 48. 47 (1986) 161 CLR 119 at 128. "infringes the essential rationale of the traditional common law rule against double jeopardy in the administration of criminal justice in a manner comparable to a conferral of a prosecution right of appeal against a trial acquittal". No party to the present appeals contended that, as a matter of construction, s 68(2) could not confer the like jurisdiction to entertain an appeal against a directed verdict of acquittal as is conferred upon the Court of Criminal Appeal of New South Wales by s 107 of the Crimes (Appeal and Review) Act. There is no decision of this Court directly on the question so far as it relates to appeals against acquittal. However, the decisions of this Court in relation to Crown appeals against sentence and the implied rejection by separate majorities of the arguments of dissenters in relation to appeals against acquittals on questions of law suggest that s 68(2) can be construed to "pick up" and confer such jurisdiction. Subject therefore to the grounds set out in the notices of contention, the common premise of the parties and the interveners about the operation of s 68(2) should be regarded, in the light of the existing authority of the Court, as correct. The operation of s 107 of the Crimes (Appeal and Review) Act The respondents argued that no appeal lay to the Court of Criminal Appeal in relation to their acquittals because the commencement of the proceedings against them had predated the coming into effect of s 107 of the Crimes (Appeal and Review) Act. Their argument involved the following propositions: The criminal proceedings against them began with the committal proceedings. The commencement of the committal proceedings predated the coming into effect of s 107. Absent clear words to the contrary, s 107 should not be construed as conferring jurisdiction on the Court of Criminal Appeal to entertain appeals in respect of acquittals arising out of trials following committal proceedings which commenced before s 107 came into effect. Pursuant to the Criminal Procedure Act 1986 (NSW) ("the CPA"), as it stood in 2006, the committal proceeding against the respondents commenced upon the filing in the registry of the Local Court of a court attendance notice, which was served on them on 18 October 200648. Section 107 came into effect on 15 December 2006. Section 130 of the CPA provided that the trial of an 48 CPA, ss 47(1), 48, 52(4) and 53(1). accused person on indictment in the Supreme Court or the District Court of New South Wales commenced upon the presentation of the indictment and the arraignment of the accused49. The respondents were arraigned on 24 June 2008, and their trial commenced on that date. The provisions of the CPA applied by virtue of s 68(1) of the Judiciary Act to the trial in the District Court of New South Wales of the charges upon which the respondents were arraigned. including what used Committal proceedings, to be known as a "preliminary hearing", have been classified by this Court, with other pre-trial procedures, as "stages in [a] single process" and as part of a "continuous process" for bringing an accused person to trial "beginning with arrest … and ending with the trial"50. In R v Murphy51 this Court said that "the relationship between committal proceedings and the trial of an indictable offence is such that they are part of the matter which the trial ultimately determines". They "traditionally constitute the first step in the curial process, possibly culminating in the presentation of the indictment and trial by jury"52. Those observations do not assist the respondents in this case. Their directed acquittals were the outcome of their trial on indictment for conspiracy. That trial commenced with their arraignment in the District Court of New South Wales. It was then that issue was joined between the parties53. The appellate jurisdiction conferred by s 107 is a jurisdiction which relates to the outcome of a trial on indictment. The relationship between committal proceedings and trial has justified their classification together as the "one proceeding" in particular contexts. That classification has been used in cases involving contempt of court by publication of matters tending to prevent a fair trial54 and attempting to pervert the course of 49 Section 130(2) of the CPA commenced: "The court has jurisdiction with respect to the conduct of proceedings on indictment as soon as the indictment is presented and the accused person is arraigned". And see R v Nicolaidis (1994) 33 NSWLR 364 at 367 per Gleeson CJ; R v Janceski (2005) 64 NSWLR 10 at 20 [41] per Spigelman CJ, 40 [205] per Wood CJ at CL, 42 [219] per Howie J (with whom Hunt AJA and Johnson J agreed). Section 178 of the CPA provided that all proceedings commence upon filing of a notice of court attendance. Absent the requisite filing within time, summary proceedings which ensued were held in Sharman v Director of Public Prosecutions (NSW) (2006) 161 A Crim R 1 to be not validly commenced. 50 Packer v Peacock (1912) 13 CLR 577 at 586; [1912] HCA 8. 51 (1985) 158 CLR 596 at 614; [1985] HCA 50. 52 (1985) 158 CLR 596 at 616. 53 See R v JS (2007) 175 A Crim R 108 at 122 [47]-[48] per Spigelman CJ. 54 Packer (1912) 13 CLR 577. justice55. But such a purposive classification does not eliminate the important distinction between the two processes. In the context of federal judicial power, the first is administrative; the second is a discrete judicial proceeding56. Section 107 is directed to the trial, providing, as it does, for an appeal against its outcome. The trial commenced after s 107 came into effect. The question of retrospectivity in the application of s 107 to the directed acquittals does not arise. Section 80 of the Constitution and s 68 of the Judiciary Act Section 80 of the Constitution requires, inter alia, that "[t]he trial on indictment of any offence against any law of the Commonwealth shall be by jury". It has been said to place "a limitation on judicial power"57. It also places a limitation on the legislative power of the Commonwealth. That limitation is enlivened when a law of the Commonwealth provides that the trial of an offence against a law of the Commonwealth shall be on indictment. When that condition (which lies in the discretion of the Commonwealth Parliament) is satisfied the law cannot provide for the trial to be other than trial by jury58. Notwithstanding the terms of the respondents' notices of contention, the validity of s 107 does not arise in this case. Section 107 is part of a law of the State of New South Wales. It has no application to Commonwealth offences. The constitutional question relates to the operation of s 68 of the Judiciary Act59. For the reasons set out above, that section is capable, as a matter of construction, of conferring, as federal jurisdiction, in relation to Commonwealth offences, a 55 Murphy (1985) 158 CLR 596. 56 Grassby v The Queen (1989) 168 CLR 1 at 11 per Dawson J, with whom the other members of the Court agreed, including Deane J, who dissented on an unrelated point of construction; [1989] HCA 45. 57 Cheng v The Queen (2000) 203 CLR 248 at 277 [79] per Gaudron J; [2000] HCA 58 Kingswell v The Queen (1985) 159 CLR 264 at 277 per Gibbs CJ, Wilson and Dawson JJ, 285 per Mason J; [1985] HCA 72; Cheng v The Queen (2000) 203 CLR 248 at 268-269 [53] per Gleeson CJ, Gummow and Hayne JJ, 295 [141]-[143] per McHugh J, 344 [283] per Callinan J. 59 Although the correctness of the result in Cheatle v The Queen (1993) 177 CLR 541; [1993] HCA 44 is not in question, its analysis was erroneous in so far as the Court considered the effect of s 80 of the Constitution upon s 57 of the Juries Act 1927 (SA) in providing for majority verdicts and read the provision down pursuant to s 22a(1) of the Acts Interpretation Act 1915 (SA). jurisdiction in terms of that created by s 107. The substance of the respondents' contention was that having regard to s 80 of the Constitution it cannot validly do so with respect to directed acquittals. If that contention be correct, then s 68 would have to be construed, as it could be construed, as not conferring that jurisdiction60. The question for determination reduces to whether the guarantee of trial by jury given by s 80 of the Constitution would be infringed by a law of the Commonwealth, having the same content as s 107, conferring a right of appeal from a directed acquittal of an indictable offence against a law of the Commonwealth. The answer to that question requires a consideration of the relationship between a directed verdict of acquittal and the concept of trial by jury. The directed verdict of acquittal The directed verdict of acquittal is a mechanism for taking a case away from the jury because, as a matter of law, a conviction is not open. Its oldest ancestor was the demurrer, which dates back to 15th century England61. That was a mechanism which left open only "questions of substantive law"62. Blackstone described the procedure as one which "draws the question of law from the cognizance of the jury, to be decided (as it ought) by the court"63. The demurrer upon evidence fell into disuse64. The non-suit, which began as a procedure under which a plaintiff in civil proceedings could discontinue an action, became a means by which a defendant could apply to have a case withdrawn from the jury on the basis that the plaintiff had failed to bring evidence of an essential matter65. Historically, judicial acceptance of the defendant's non-suit application was followed by a recommendation that the plaintiff acquiesce on the basis that, as a matter of law, the action could not succeed. The plaintiff would then assent66. The plaintiff who refused to be non- 60 See Acts Interpretation Act 1901 (Cth), s 15A. 61 King, "Trial Practice – Demurrer Upon Evidence as a Device for Taking a Case from the Jury", (1945) 44 Michigan Law Review 468. 62 Thayer, A Preliminary Treatise on Evidence at the Common Law, (1898) at 236. 63 Blackstone, Commentaries on the Laws of England, (1768), bk 3, c 23 at 373. 64 As a result of the decision in Gibson v Hunter (1793) 2 H Bl 187 [126 ER 499]. 65 Jones v Dunkel (1959) 101 CLR 298 at 324; [1959] HCA 8. 66 Jones (1959) 101 CLR 298 at 324 per Windeyer J. suited took the risk that the judge might then direct a verdict for the defendant67. The non-suit evolved into a "peremptory" or "compulsory" non-suit bearing a close resemblance to a directed verdict. It was described in 1821 by Graham B thus68: "The Judge has certainly a right to put the party out of Court, wherever the case is once resolved into a pure question of law. On the other hand, it is the duty of the Judge who tries the cause, to leave the case, if it turns on a question of fact, to the Jury." After the Judicature Acts the word "non-suit" disappeared from the Rules of Court. But as Windeyer J pointed out in Jones v Dunkel69: "The word continued to be used to describe the action of a judge withdrawing a case from the jury and entering judgment for the defendant." Windeyer J, however, pointed to the clear distinction between "non-suit" and "verdict by direction" in trials at nisi prius in New South Wales70. The demurrer upon evidence persisted in American courts long after it had declined in English courts71. It was succeeded by the practice of the directed verdict, although there were apparently examples of directed acquittals in the American colonies as early as 176372. The directed verdict in its modern form and in its application to civil jury trials was considered by the United States Supreme Court in 1850 and was approved on the basis that it served the same 67 Jones (1959) 101 CLR 298 at 326 per Windeyer J. There are reported instances of this occurring in New South Wales as early as the 1840s. In Lyons v Elyard (1846) 1 Legge 328, at the close of the plaintiff's case in an action for trover Stephen CJ directed the jury to find for the defendant after the plaintiff refused to be non- suited. See also Smith v Barton (1848) 1 Legge 445. 68 Ward v Mason (1821) 9 Price 291 at 294 [147 ER 96 at 97]. 69 (1959) 101 CLR 298 at 330. 70 (1959) 101 CLR 298 at 331. 71 King, "Trial Practice – Demurrer Upon Evidence as a Device for Taking a Case from the Jury", (1945) 44 Michigan Law Review 468 at 474-475. 72 Henderson, "The Background of the Seventh Amendment", (1966) 80 Harvard Law Review 289 at 326. purpose as the demurrer upon evidence73. The power of federal courts to direct a verdict for insufficiency of evidence has been repeatedly affirmed by the Supreme Court74. The directed verdict has long been a feature of the criminal procedure of the Australian States and of the Commonwealth75. This Court has held that it is a trial judge's duty to direct a jury to return a not guilty verdict where there is no evidence upon which a jury could convict76. When that condition is satisfied it is sometimes said that there is no case to answer or that the prosecution has failed to make out a prima facie case. The generality of that proposition extends to the trial of offences against laws of the Commonwealth77. The question whether there is a "case to answer" or a "prima facie case" is a question of law78. The power and the duty of the judge to direct a verdict of not guilty where there is no case to answer is an expression of the judge's power and duty to decide questions of law. The position is the same where the direction is made upon the basis that the indictment does not disclose an offence known to the law. The function of the judge as decision-maker on questions of law has been said, albeit in a rare case, to extend to directing a verdict of guilty. In Yager v 73 Parks v Ross 52 US 362 (1850). 74 See, eg, Galloway v United States 319 US 372 at 389 fn 19 (1943). 75 See, eg, R v Fogg (1864) 3 SCR (L) (NSW) 33; R v Bailey (1864) 1 W W & A'B (L) 20; R v Fischel (1865) 2 W W & A'B (L) 11; R v Tidemann (1871) 5 SALR 15 at 18. There are also several reports from colonial New South Wales and Victoria of counsel for the accused, at the conclusion of the Crown case, seeking the withdrawal from the jury of the case against their client. Such requests were variously framed as no case submissions or motions for a directed verdict or acquittal: R v Wood (1862) 1 W & W (L) 371 at 372; R v Ashford (1863) 2 W & W (L) 171 at 172; R v Hooper (1864) 1 W W & A'B (L) 195 at 197; R v Wilson (1865) 2 W W & A'B (L) 22 at 23; R v Hughes (1865) 5 SCR (L) (NSW) 71 at 72- 73; R v Ryan (1868) 8 SCR (L) (NSW) 22 at 23; R v Flood (1869) 8 SCR (L) (NSW) 299 at 300. And see Gurner, The Practice of the Criminal Law of the Colony of Victoria, (1871) at 166, which refers to the practice of entering a judgment of acquittal upon the return by the jury of a special verdict. 76 Doney v The Queen (1990) 171 CLR 207 at 212; [1990] HCA 51. 77 Doney (1990) 171 CLR 207 concerned an indictable offence against the Customs Act 1901 (Cth). 78 May v O'Sullivan (1955) 92 CLR 654 at 658; [1955] HCA 38; Zanetti v Hill (1962) 108 CLR 433 at 442 per Kitto J; [1962] HCA 62. The Queen79 formal admissions were made at trial which threw up for determination the construction of a provision of the Customs Act 1901 (Cth), under which the accused had been charged. Upon the constructional point being decided adversely to the accused, all elements of the offence were made out on the admissions. Barwick CJ held that in such a case the presiding judge could tell the jury that it was "their duty to return a verdict of guilty"80. The Chief Justice also agreed with the reasons of Mason J, who held that the trial judge was "entitled to direct the jury to return a verdict of guilty"81. Stephen J agreed with both the Chief Justice and Mason J82. The trial judge had not formally directed the jury to return a verdict of guilty but had told them it was "quite clearly" the "appropriate verdict"83. Gibbs and Murphy JJ disagreed with the majority and held that a trial judge was not entitled to direct the jury to convict. Gibbs J held that the judge had not gone that far and that what he had done was within his proper province84. Murphy J held that it was not85. The majority in Yager went further than the Court in Jackson v The Queen86. In the latter case, however, the power of the judge to direct a verdict of conviction was not in issue. There the Court held that, on the basis of answers to formal questions put to the jury, the judge was entitled to tell them, as a matter of law, that all elements of the charge had been proved87. Yager supports the proposition that a trial judge's power to direct a jury to return a particular verdict (whether it be guilty or not guilty) is an incident of the duty of the judge to decide questions of law and to direct the jury accordingly. The difference between the majority and the minority in substance turned upon the question whether the jury had the right to return a verdict of acquittal notwithstanding that all elements of the offence were made out upon formal 79 (1977) 139 CLR 28; [1977] HCA 10. 80 (1977) 139 CLR 28 at 36. 81 (1977) 139 CLR 28 at 46. 82 (1977) 139 CLR 28 at 40. 83 (1977) 139 CLR 28 at 37. 84 (1977) 139 CLR 28 at 39. 85 (1977) 139 CLR 28 at 51-52. 86 (1976) 134 CLR 42; [1976] HCA 16. 87 (1976) 134 CLR 42 at 45 per Barwick CJ (Mason J agreeing), 45 per McTiernan J, 49 per Jacobs J, 53 per Murphy J. admissions by the accused. While it might be argued that the majority conclusion in Yager was strictly obiter and that there is room for debate about it, the proposition that a jury should be at liberty to convict where the law requires acquittal is insupportable. It is no part of the function of a jury to do so even though the law may require their formal verdict of not guilty in such a case88. The fact that procedural difficulties may attend a perverse verdict of guilty in the face of a direction to acquit does not alter the position89. There is no normative principle to support such a verdict. A "perverse" verdict of not guilty on the other hand has traditionally been seen as a protection against oppressive laws or prosecutions. It not being part of the function of a jury to exercise any discretion in the face of a direction to acquit, it is no interference with their function, other than in a strictly formal sense, for the law to provide for an appeal against a verdict of acquittal where delivered in inevitable obedience to the judge's direction. That conclusion is consistent with the reasoning in R v Weaver that90: "the decision of the Court of Criminal Appeal quashing a conviction and entering judgment and verdict of acquittal is a determination of a Court of law, and not of a jury, and has been regarded in this Court as subject to the appellate power". It is necessary in light of that conclusion to consider the operation of s 80 of the Constitution. Section 80 of the Constitution Andrew Inglis Clark's first draft Constitution, placed before the National Australasian Convention in Sydney in 1891, provided, inter alia, in cl 65 that "[t]he trial of all crimes cognisable by any Court established under the authority of this Act shall be by Jury"91. As adopted by the Convention, it became cl 11 of 88 There are now provisions in Victoria, Western Australia and the Australian Capital Territory which authorise the trial judge to enter a verdict of acquittal upon a no case submission without requiring the jury to give their verdict: Criminal Procedure Act 2009 (Vic), s 241; Criminal Procedure Act 2004 (WA), s 108; Crimes Act 1900 (ACT), s 287. 89 For examples of procedural responses in such a case see Devlin, Trial by Jury, rev ed (1966) at 80. 90 (1931) 45 CLR 321 at 333 per Gavan Duffy CJ, Starke and McTiernan JJ; see also at 356 per Evatt J; [1931] HCA 23. And see R v Wilkes (1948) 77 CLR 511 at 516 per Dixon J; [1948] HCA 22. 91 Reproduced in Williams, The Australian Constitution: A Documentary History, Ch III of the draft Constitution and relevantly followed the wording of Inglis Clark's draft save for the substitution of "indictable offences" for "crimes"92. There was no recorded debate about the provision. It embodied the form and substance of Art III §2 cl 3 of the United States Constitution. An attempt at the 1898 Convention to delete the reference to trial by jury was defeated. Isaac Isaacs pointed out that the federal Parliament would not be fettered because it could, in creating an offence, "say it is not to be prosecuted by indictment, and immediately it does it is not within the protection of this clause of the Constitution"93. However, the words "on indictment of any offence" were substituted on Edmund Barton's motion for the words "of all indictable offences". The object was to avoid limiting the power of the Commonwealth Parliament to provide that certain offences could be tried summarily94. Although modelled upon Art III §2 cl 3 of the United States Constitution, s 80 did not incorporate a constitutional protection against double jeopardy as found in the Fifth and Seventh Amendments of the United States Constitution95. Nor was there any discussion at the Convention Debates about entrenching the finality of the verdict of the jury in trials to which s 80 applied. As Mason P correctly observed in R v JS96: "[T]he United States experience as at the commencement of the Australian Constitution located finality principles touching a verdict of guilt or innocence within the American constitutional rules about double jeopardy, not within their constitutional rules about trial by jury in criminal matters. The founders of the Australian Constitution, who had before them the American model, chose to adopt a constitutional guarantee of trial by jury and decline a constitutional entrenchment of double jeopardy principles." 92 Official Report of the National Australasian Convention Debates, (Sydney), 9 April 1891 at 958. 93 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 31 January 1898 at 352. 94 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 4 March 1898 at 1894-1895. 95 R v Federal Court of Bankruptcy; Ex parte Lowenstein (1938) 59 CLR 556 at 581 per Dixon and Evatt JJ; [1938] HCA 10; Cheatle v The Queen (1993) 177 CLR 541 96 (2007) 175 A Crim R 108 at 140 [184]. In their commentary on s 80, Quick and Garran did not discuss the finality of the jury's verdict beyond stating that at common law the judge was "empowered to instruct [the jury] upon the law and to advise them upon the facts, and (except upon acquittal of a criminal charge) to set aside their verdict if in his opinion it is against the evidence"97. The verdict of acquittal, which the judge could not set aside, clearly referred to an acquittal after trial. The essential features of a trial by jury within the meaning of s 80 were encapsulated by O'Connor J in Huddart, Parker & Co Pty Ltd v Moorehead98 in his definition of such a trial as "the method of trial in which laymen selected by lot ascertain under the guidance of a Judge the truth in questions of fact arising either in a civil litigation or in a criminal process". This Court in Cheatle v The Queen accepted to "the representative character of a jury and to the fact-finding function which a jury traditionally served in civil litigation and in criminal committal and trial processes"99. As the Court said in Cheatle, the guarantee of trial by jury in s 80 prima facie encompasses the essential features of the "institution of 'trial by jury' with all that was connoted by that phrase in constitutional law and in the common law of England"100. In so saying, the Court was quoting the judgment of Griffith CJ in R v Snow101. that statement as correctly drawing attention Snow was invoked by the respondents for the proposition that the finality of a verdict of acquittal, even a directed verdict of acquittal, is an essential function of trial by jury protected by s 80. The trial judge in that case had directed the jury to find the accused not guilty because the statute creating the offences did not have a retrospective operation102. The Crown applied for special leave to appeal against the judgment 97 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 810. In so doing, the authors slightly misquoted a passage from Capital Traction Co v Hof 174 US 1 at 13-14 (1899). 98 (1909) 8 CLR 330 at 375; [1909] HCA 36. The definition he adopted was that preferred by Justice Miller in his Lectures on the Constitution of the United States, (1893) at 511. That definition originated in the authoritative 9th edition of the Encyclopaedia Britannica. 99 (1993) 177 CLR 541 at 549. 100 (1993) 177 CLR 541 at 557-558. 101 (1915) 20 CLR 315 at 323; [1915] HCA 90. 102 Trading with the Enemy Act 1914 (Cth). discharging the accused. The question before this Court was whether s 73 of the Constitution conferred jurisdiction to entertain such an appeal. The Court answered it in the negative. The judgment discharging the accused, resting as it did upon a verdict of acquittal, could not be attacked. This Court in Snow was not concerned with the question whether a law of the Commonwealth could validly authorise an appeal against a directed verdict of acquittal. The question was whether s 73 of the Constitution authorised such an appeal. Nevertheless, s 73 was construed by three of the Justices by reference to s 80. Griffith CJ, Gavan Duffy and Rich JJ held that no appeal lay directly to the High Court under s 73 of the Constitution in relation to a directed verdict of acquittal. Griffith CJ referred to the "absolute protection" which prior to Federation was "afforded by a verdict of not guilty under the common law of all the States"103. A similar view was expressed by Gavan Duffy and Rich JJ104. The other Justices, Isaacs, Higgins and Powers JJ, held that s 73 allowed for an appeal against an acquittal direct to the High Court105. Powers J, however, did not consider that the Court should exercise its discretion to grant special leave so that the application for special leave to appeal was dismissed by majority106. The case did not establish authoritatively that s 80 required s 73 to be read as excluding appeals against acquittals. A fortiori it did not determine the present case, which involves a question whether the Court of Criminal Appeal could validly exercise a statutory jurisdiction to hear and determine an appeal against a directed verdict of acquittal on an indictment for an offence against the Commonwealth. Such an appeal against a directed acquittal, turning, as it did in this case, solely upon questions of law, does not offend against s 80. Involving, as it did, only questions of law, it did not infringe upon any of the essential functions of trial by jury. The grounds set out in the notices of contention disclose no error by the Court of Criminal Appeal. It is now necessary to turn to the relevant provisions of the Code. Statutory framework – criminal responsibility Chapter 2 of the Code is entitled "General principles of criminal responsibility". The stated purpose of the chapter is the exhaustive codification 103 (1915) 20 CLR 315 at 323. 104 (1915) 20 CLR 315 at 365. 105 (1915) 20 CLR 315 at 337-338, 351-352 per Isaacs J, 355 per Higgins J, 368, 373 106 (1915) 20 CLR 315 at 373. of "the general principles of criminal responsibility under laws of the Commonwealth"107. The chapter applies to all offences against the Code108. Part 2.2 deals with the elements of offences. The drafters of the Code adopted "the usual analytical division of criminal offences into the actus reus and the mens rea or physical elements and fault elements"109. Division 3 contains general provisions relating to the elements of an offence. The classification of the elements is set out in s 3.1: "(1) An offence consists of physical elements and fault elements. (2) However, the law that creates the offence may provide that there is no fault element for one or more physical elements. The law that creates the offence may provide different fault elements for different physical elements." Physical elements are dealt with in Div 4. A physical element of an offence, as defined in s 4.1(1), may be: conduct; or a result of conduct; or a circumstance in which conduct, or a result of conduct, occurs." Conduct is broadly defined by s 4.1(2) to mean "an act, an omission to perform an act or a state of affairs". To "engage in conduct" means to "do an act" or to "omit to perform an act". The concept of engaging in conduct which is a state of affairs is not explained. Fault elements are dealt with in Div 5. A fault element for a particular physical element may be intention, knowledge, recklessness or negligence110. A person is said to have intention with respect to conduct if he or she means to 107 Code, s 2.1. 108 Code, s 2.2(1). 109 Australia, Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (1992) at 9. 110 Code, s 5.1(1). engage in that conduct111. A person has intention with respect to a circumstance if he or she believes that it exists or will exist112. A person has intention with respect to a result if he or she means to bring it about or is aware that it will occur in the ordinary course of events113. Knowledge of a circumstance or a result is defined in terms of awareness that the circumstance or result exists or will exist in the ordinary course of events114. Recklessness is defined in s 5.4 with respect to circumstances and results. Relevantly to the present appeals, s 5.4(1) provides that a person is reckless with respect to a circumstance if: he or she is aware of a substantial risk that the circumstance exists or will exist; and having regard to the circumstances known to him or her, it is unjustifiable to take the risk." The question whether taking a risk is unjustifiable is one of fact115. Where recklessness is a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element116. That extended definition was relied upon by the Crown on appeal in Ansari117. It is not necessary for present purposes to refer to the definition of "negligence". Where offences do not specify fault elements then the fault elements which apply are set out in s 5.6 thus: If the law creating the offence does not specify a fault element for a physical element that consists only of conduct, intention is the fault element for that physical element. 111 Code, s 5.2(1). 112 Code, s 5.2(2). 113 Code, s 5.2(3). 114 Code, s 5.3. 115 Code, s 5.4(3). 116 Code, s 5.4(4). 117 (2007) 70 NSWLR 89 at 96 [23] per Simpson J. If the law creating the offence does not specify a fault element for a physical element that consists of a circumstance or a result, recklessness is the fault element for that physical element." Division 6 refers to offences of strict liability and absolute liability. They have the common feature that there are no fault elements for any of the physical elements of the offence. They differ in that the defence of mistake of fact is available in relation to an offence of strict liability, whereas it is unavailable in relation to an offence of absolute liability118. Statutory framework – conspiracy Part 2.4 is entitled "Extensions of criminal responsibility". Division 11 deals variously with attempt119, complicity and common purpose120, innocent agency121, incitement122 and conspiracy123. This conjunction reflects the historical association of conspiracy with the law of attempts124. The relevant parts of s 11.5, relating to the offence of conspiracy, are as follows: "(1) A person who conspires with another person to commit an offence punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence and is punishable as if the offence to which the conspiracy relates had been committed. For the person to be guilty: the person must have entered into an agreement with one or more other persons; and the person and at least one other party to the agreement must have intended that an offence would be committed pursuant to the agreement; and 118 Code, ss 6.1(1)(b) and 6.2(1)(b). 119 Code, s 11.1. 120 Code, s 11.2. 121 Code, s 11.3. 122 Code, s 11.4. 123 Code, s 11.5. 124 See Stephen, A History of the Criminal Law of England, (1883), vol 2 at 227. the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement. (2A) Subsection (2) has effect subject to subsection (7A). (7A) Any special liability provisions that apply to an offence apply also to the offence of conspiracy to commit that offence." Part 2.6 is entitled "Proof of criminal responsibility". By s 13.1(1) the prosecution bears a legal burden of proving "every element of an offence relevant to the guilt of the person charged". The standard of proof is "beyond reasonable doubt"125. Statutory framework – money laundering The offence which was the subject of the conspiracy charge in this case is that created by s 400.3(2) of the Code, which appears in Pt 10.2, entitled "Money laundering", in Ch 10, which is entitled "National infrastructure". Section 400.3(2) provides: "A person is guilty of an offence if: the person deals with money or other property; and either: the money or property is proceeds of crime; or there is a risk that the money or property will become an instrument of crime; and the person is reckless as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires); and at the time of the dealing, the value of the money and other property is $1,000,000 or more." Section 400.3(4) provides, inter alia, that absolute liability applies to par (2)(d). 125 Code, s 13.2(1). The overt acts relied upon Particulars were supplied by the Crown of overt acts alleged. It would seem they were intended to support the inference that there was a conspiracy and to satisfy the condition of guilt that an overt act had been committed by each of the respondents. The acts alleged involved the transfer of a sum of money exceeding 24,800,000 Swiss francs into an account held at a Swiss bank in the name of RK at the request of his alleged co-conspirator RM. LK, RK and RM were said to have been in contact with each other by telephone over the relevant period. Subsequently, RK was instructed by RM to transfer in excess of 23,600,000 Swiss francs from his Swiss bank account to an account with a bank in New York. However, on 30 December 2003 the Swiss bank received a message from JP Morgan Sydney advising that the funds transferred into the account of RK had been paid fraudulently and should be returned. RK allegedly retained attorneys in Switzerland for the purpose of providing a power of attorney to the bank to effect the transfer of the funds. However, the funds were subsequently frozen. The particulars of the indictment Particulars of the indictment against RK were provided. The Crown identified those who it alleged were to deal with the money pursuant to the conspiracy as RK, LK and RM and the "divers other persons" referred to in the indictment and identified by name in the particulars. The Crown also alleged, as particularised, that RK was aware of a substantial risk that the money was proceeds of crime. It relied upon the facts and circumstances set out in the overt acts. The development of the Code The origins of the provisions of the Code relating to conspiracy date back to 1987 when the Commonwealth Attorney-General established a Committee chaired by Sir Harry Gibbs to undertake a review of Commonwealth criminal laws. The third of the Committee's interim reports, published in July 1990, was entitled Principles of Criminal Responsibility and Other Matters. It dealt, inter alia, with the offence of conspiracy. At the time that the Gibbs Committee was set up it was an open question whether s 86 of the Crimes Act 1914 (Cth) was exhaustive of the common law126. 126 It substantially reflected the terms of s 568(5) and (6) of the Draft Code of Criminal Law prepared by Sir Samuel Griffith which became s 543(6) and (7) of the Criminal Code (Q) and s 538(6) and (7) of the Criminal Code (WA) (being the First Schedule to the Criminal Code Act 1902 (WA); the provisions were subsequently re-enacted as s 560(6) and (7) of the Criminal Code of that State, (Footnote continues on next page) The Committee assumed that it was not127. It also concluded that the word "conspires" in s 86 imported the common law128. The necessary mental element was seen as derived from the common law. An intention to carry out the relevant unlawful purpose was a necessary element of the offence "notwithstanding that the agreement is to commit a crime which may be committed recklessly or a crime of strict liability"129. The Committee did not regard the common law rule in relation to the mental element of conspiracy as having created any "particular difficulties"130. Nevertheless it took the view that "in a consolidating law it would be desirable to make it clear what mental element is required to constitute the crime of conspiracy"131. The Committee recommended that132: "(n) The consolidating law should make it clear that the mental element required to commit a crime of conspiracy is an intention on the part of the conspirators to agree to commit an offence and that the offence should be committed. The consolidating law should provide that an agreement to commit an offence will amount to a conspiracy notwithstanding the existence of facts which render it impossible to commit the offence." being the Schedule to Appendix B of the Criminal Code Act Compilation Act 1913 (WA)). As appears from Griffith's 1897 letter forwarding his Draft Code to the Attorney-General the provisions were intended as "statements of unwritten law" and were referred to in the draft as "misdemeanours at common law": Griffith, Draft of a Code of Criminal Law, (1897) at xiii, 251-254. 127 Australia, Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters, (1990) at 358 [34.7]. 128 Australia, Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters, (1990) at 361 [34.11]; cf R v Cahill (1978) 22 ALR 361 at 370 per Reynolds JA. 129 Australia, Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters, (1990) at 393 [40.1]. 130 Australia, Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters, (1990) at 393 [40.2]. 131 Australia, Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters, (1990) at 394 [40.6]. 132 Australia, Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters, (1990) at 427-428. In 1990 following the release of the Gibbs Committee report, the Standing Committee of Attorneys-General established a Criminal Law Officers Committee, later designated the Model Criminal Code Officers Committee (MCCOC), to advance the objective of uniformity in Australian criminal law. The MCCOC decided to draft a Model Code capable of adoption by all jurisdictions. The second chapter of the Model Code related to criminal responsibility. Conspiracy was dealt with under Pt 4, entitled "Extensions of criminal responsibility". In the proposed s 405 of the Model Code, now reflected in s 11.5 of the Code, the provisions corresponding to s 11.5(2)(a) and (b) were drafted "to more clearly separate the agreement component of the conspiracy from the intent to commit an offence pursuant to that agreement"133. The fault element necessary for the offence of conspiracy was intention – that is to say, intention to make the agreement. Recklessness would not suffice134. It was "foreign to an offence based wholly on agreement"135. The requirement of an overt act, picked up in s 11.5(2)(c), was explained by the MCCOC on the basis that "the simple agreement to commit a criminal offence without any further action by any of those party to the agreement was insufficient to warrant the attention of the criminal law"136. Having regard to the assumption of the Gibbs Committee that the word "conspires" in s 86 of the Crimes Act imported the common law concept and the use of that word, without definition, in s 11.5 of the Code, it may be inferred that the drafters of the Code intended to retain the common law concept of conspiracy. The purpose of s 11.5(2) as explained by the report of the MCCOC 133 Australia, Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (1992) at 99. 134 This was seen to accord with the proposals of the Gibbs Committee and the common law. 135 Australia, Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (1992) at 99. This reflects the common law: see Giorgianni v The Queen (1985) 156 CLR 473 at 506 per Wilson, Deane and Dawson JJ; [1985] HCA 29; Peters v The Queen (1998) 192 CLR 493 at 520-521 [66] per McHugh J (Gummow J agreeing at 533 [93]); [1998] HCA 7. 136 Australia, Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (1992) at 101. was to operate on the common law by "more clearly" distinguishing the elements of agreement and intention to commit the offence the subject of the conspiracy. There was debate on the hearing of these appeals on the question whether s 11.5(2) sets out all or some of the elements of the offence of conspiracy. Although the MCCOC report referred to "elements" in this context137, s 11.5(2) cannot be read as defining the physical and fault elements of the offence of conspiracy for the purposes of Divs 3, 4 and 5 of the Code. That conclusion is required by the importation of the common law concept of conspiracy into s 11.5(1). The common law defines the elements of the offence by reference, albeit not without some difficulty, to the agreement as the actus reus and the intention to do an unlawful act pursuant to the agreement as the mens rea138. The text of s 11.5(2)(b) supports that conclusion. It requires, as a condition of a finding of guilt, an intention by the accused and at least one other party to the agreement to commit an offence pursuant to the agreement. That intention is not able to be described as a fault element of conspiracy as defined in Div 5. A fault element of intention must exist "with respect to" a physical element comprising conduct or a circumstance or a result. The intention referred to in s 11.5(2)(b) does not have such a relationship with any physical element of the offence of conspiracy. Moreover, the commission of an overt act was never an element of the offence of conspiracy at common law. It was a basis from which the criminal agreement could be inferred139. Here it is included, in effect, as a screening device to exclude from "the attention of the criminal law" conspiracies not manifested by any implementing conduct140. Section 11.5(2) therefore operates upon the common law concept of conspiracy but cannot be taken as defining elements of the offence. The preceding conclusion directs attention to the crime of conspiracy at common law. 137 Australia, Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (1992) at 99. 138 As to the inescapable mental element in the actus reus so defined, see the observation of McHugh J in Peters (1998) 192 CLR 493 at 516 [55] referred to below. 139 R v Rogerson (1992) 174 CLR 268 at 281 per Brennan and Toohey JJ; [1992] HCA 140 Australia, Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (1992) at 101. Conspiracy at common law The Code provisions relating to the offence of conspiracy are written against the background of the common law, which, subject to their text, informs their content. Conspiracy evolved as a common law offence in England, albeit with early statutory assistance141. Ordinances of the 13th and 14th centuries provided for civil remedies against persons who conspired to make false accusations against others, whether by way of so-called "false appeals" or "false indictments"142. Although incidental penalties of fine and imprisonment were available143, it was not until 1330 that conspiracy was made readily amenable by statute to prosecution as a criminal offence144. The rule that a combination to commit or procure the commission of a crime would be prosecuted as a conspiracy was an extended application of the decision of the Star Chamber in the Poulterers' Case145. Following the abolition 141 Wright, The Law of Criminal Conspiracies and Agreements, (1873) at 5, 15-18; Pollock and Maitland, The History of English Law, (1895), vol 2 at 538; Bryan, The Development of the English Law of Conspiracy, (1909) at 20-21; Winfield, The History of Conspiracy and Abuse of Legal Procedure, (1921) at 37, 93-96; Harrison, Conspiracy as a Crime and as a Tort in English Law, (1924) at 10-13; Sayre, "Criminal Conspiracy", (1922) 35 Harvard Law Review 393 at 396-397; cf 2 Co Inst 561; O'Connell v The Queen (1844) 11 Cl & F 155 at 233 per Tindal CJ [8 ER 1061 at 1092]. See also Peters (1998) 192 CLR 493 at 513-522 [51]-[69] per 142 Statute of Westminster the Second 1285 (13 Edw I c 12); Statute concerning Conspirators (the text of which appears at 1 Statutes of the Realm 216, the year of enactment being uncertain); Articles upon the Charters 1300 (28 Edw I c 10); Ordinance concerning Conspirators 1305 (33 Edw I). Debate surrounds the dating of the Statute concerning Conspirators. Professor Winfield posits 21 Edw I (1292- 1293) as the most likely regnal year, at least for the portion concerning conspirators: Winfield, The History of Conspiracy and Abuse of Legal Procedure, (1921) at 22-28. The same is evidently assumed in Bryan, The Development of the English Law of Conspiracy, (1909) at 9, 11, 15. 143 Like other civil wrongs, conspiracy could be prosecuted on indictment at the suit of the King and punished under "the villain judgment": see Stephen, A History of the Criminal Law of England, (1883), vol 2 at 228-229. 144 Statute of Westminster 1330 (4 Edw III c 11). 145 (1610) 9 Co Rep 55b at 56b-57a [77 ER 813 at 814-815]. And see Wright, The Law of Criminal Conspiracies and Agreements, (1873) at 7. of the Star Chamber the crime of conspiracy was developed by the Courts of King's Bench, which, "groping their way through unfamiliar paths, tried new legal adventures"146. It became "a crime at common law of general application" with "a close association with the law of principal and accessory"147 and "capable of almost indefinite extension"148. The interaction between statute law and the common law is a feature of the history of conspiracy in England149 and its statutory evolution in Australia150. A concise enunciation of the elements of conspiracy was given by the Court of Queen's Bench in Mulcahy v The Queen151 in 1868 in answer to questions proposed by the Lord Chancellor in relation to a prosecution under the Crown and Government Security Act152. Willes J, delivering the opinion of the judges, said153: "A conspiracy consists not merely in the intention of two or more, but in the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means. So long as such a design rests in intention only, it is 146 Sayre, "Criminal Conspiracy", (1922) 35 Harvard Law Review 393 at 400; see also Weaver (1931) 45 CLR 321 at 339 per Evatt J. 147 See Turner, Russell on Crime, 12th ed (1964), vol 1 at 201; Holdsworth, A History of English Law, 3rd ed (1945), vol 5 at 204, where it was said to have been "inevitable therefore, as Stephen has said, that conspiracy should come to be regarded as a form of attempt to commit a wrong". See also Board of Trade v Owen [1957] AC 602 at 625-626; Shaw v Director of Public Prosecutions [1962] AC 220 at 272-273 per Lord Reid. 148 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 229. 149 A draft Criminal Code proposed in 1879 by the Royal Commission Appointed to Consider the Law Relating to Indictable Offences made provision for the offence of conspiracy to commit indictable or other offences in ss 419, 420 and 421: Great Britain, Report of the Royal Commission Appointed to Consider the Law Relating to Indictable Offences, (1879) [C 2345] at 157. 150 As to which see Gillies, The Law of Criminal Conspiracy, 2nd ed (1990), chs 6 and 151 (1868) LR 3 HL 306. 152 11 & 12 Vict c 12. The Short Titles Act 1896 (UK) titled this enactment the Treason Felony Act 1848 (UK). 153 (1868) LR 3 HL 306 at 317. not indictable. When two agree to carry it into effect, the very plot is an act in itself, and the act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful, punishable if for a criminal object or for the use of criminal means." The House of Lords concurred. Notwithstanding its statutory context, the statement of the common law in Mulcahy has been accepted and applied in this Court154. The requirement, which did not emerge expressly from Mulcahy, that an alleged conspirator intend to carry into effect the common design of the agreement was propounded by the Supreme Court of Canada in R v O'Brien155. It was not sufficient that the accused had intended to agree to commit the offence. He had to have intended to put the common design, the commission of the offence, into effect. In Churchill v Walton156 the House of Lords held that mens rea was only an essential element in conspiracy in so far as there must be an intention to be a party to an agreement to do an unlawful act157. The elements of the offence at common law were restated by the House of Lords in Director of Public Prosecutions v Nock158. It identified the intention to do the unlawful act as the mens rea of the offence and the fact of the agreement as the actus reus159. The difficulties of dividing the offence of conspiracy at common law into actus reus 154 R v Kidman (1915) 20 CLR 425 at 446-447 per Isaacs J; [1915] HCA 58; R v Boston (1923) 33 CLR 386 at 396 per Isaacs and Rich JJ; [1923] HCA 59; Rogerson (1992) 174 CLR 268 at 281 per Brennan and Toohey JJ (Mason CJ agreeing at 279); Peters (1998) 192 CLR 493 at 513-514 [51]-[52] per McHugh J. 155 [1954] SCR 666 at 668 per Taschereau J, 670 per Rand J, 676-677 per Estey J, in connection with the offence, created by s 573 of the Criminal Code (Can), of conspiracy to commit an indictable offence. 157 [1967] 2 AC 224 at 237 per Viscount Dilhorne, in whose speech Lords MacDermott, Pearce, Upjohn and Pearson concurred. O'Brien [1954] SCR 666 was not referred to in the reasons, nor was R v Thomson (1965) 50 Cr App R 1, in which Lawton J had applied O'Brien. The offence the subject of the conspiracy in Churchill was a strict liability offence under the Customs and Excise Act 1952 159 [1978] AC 979 at 994 per Lord Scarman. and mens rea was pointed out by McHugh J in Peters v The Queen160. As he said, the agreement which is the actus reus necessarily also includes a mental element161: "At the very least, there must be an intention to enter into the agreement, and the present state of the authorities suggests that there can be no conspiratorial agreement unless the accused and his or her co-conspirators also intend that the common design should be carried out." The House of Lords in Nock rejected the proposition that the offence of conspiracy could be committed notwithstanding that the crime the subject of the conspiracy would be impossible of performance162. That rejection was linked to the association between conspiracy and attempt163. An agreement to do that which is impossible of performance is not a criminal conspiracy at common law, although it is under the Code164. The association between attempt and conspiracy assists the consideration, relevant to these appeals, of whether conspiracy to commit an offence can be made out where the Crown does not propound as part of its case the existence of a physical element or circumstance of that offence as the subject of the agreement. Plainly a conspiracy cannot be made out in such a case. This leads to a consideration of the place of recklessness in relation to the elements of the offence which is the subject of the conspiracy. At common law a reckless state of mind is not sufficient to constitute the mens rea for the offence of attempt. Knowledge of the likely consequences of an act may evidence the requisite intention to commit the relevant offence. But such knowledge is not to be equated with that intention165. Similarly, it is not 160 (1998) 192 CLR 493. 161 (1998) 192 CLR 493 at 516 [55] (footnote omitted). See also Churchill [1967] 2 AC 224 at 237 per Viscount Dilhorne. 162 [1978] AC 979 at 996 per Lord Scarman. See also R v Smith [1975] AC 476. 163 Nock [1978] AC 979 at 996-998 per Lord Scarman. See also Owen [1957] AC 602 at 625-626 per Lord Tucker; Giorgianni (1985) 156 CLR 473 at 506 per Wilson, Deane and Dawson JJ; Rogerson (1992) 174 CLR 268 at 275 per Mason CJ, 297 per McHugh J; Wright, The Law of Criminal Conspiracies and Agreements, (1873) at 6, 9-10; Stephen, A History of the Criminal Law of England, (1883), vol 2 at 227; Holdsworth, A History of English Law, 3rd ed (1945), vol 5 at 203-205. 164 Code, s 11.5(3)(a). 165 R v Mohan [1976] QB 1 at 10-11. sufficient that an alleged conspirator be reckless as to the existence of an element of the substantive offence – for that kind of recklessness would negate the very intention that is necessary to form the unlawful agreement. As was said in Giorgianni v The Queen166: "For the purposes of many offences it may be true to say that if an act is done with foresight of its probable consequences, there is sufficient intent in law even if such intent may more properly be described as a form of recklessness. There are, however, offences in which it is not possible to speak of recklessness as constituting a sufficient intent. Attempt is one and conspiracy is another." The trial judge's reasoning The trial judge characterised the Crown case against the respondents thus: "The Crown has presented its case against the [respondents] on the basis that they agreed to deal with the money in [RK's] account, which was in fact the proceeds of crime, and that the [respondents] were reckless that the money in [RK's] account was the proceeds of crime." The trial judge found that the evidence relied upon by the Crown was "overwhelmingly capable of proving that each [respondent] entered the conspiracy alleged and was reckless as to the money in [RK's] account being the proceeds of crime". Her Honour then turned to the argument that the indictment did not charge an offence known to the law. Her Honour rejected a submission that the indictment alleged that the respondents recklessly entered into the agreement. Rather, it alleged that the respondents intentionally agreed to commit an offence the mental element of which was recklessness. Her Honour characterised the decision of the Court of Criminal Appeal of New South Wales in Ansari as holding that the Crown can charge a person with conspiring to commit an offence the mental element of which is recklessness where it relies on intention or knowledge to prove the element of recklessness or where a third party is to commit the relevant offence. Neither of these circumstances was alleged in the present case. Her Honour held that "an accused must know of all the facts that would make his conduct criminal". She observed that that proposition, as Howie J held in Ansari167, had not been displaced by the Code. Following Ansari 166 (1985) 156 CLR 473 at 506 per Wilson, Deane and Dawson JJ, also quoted and approved by McHugh J in Peters (1998) 192 CLR 493 at 520-521 [66]. 167 (2007) 70 NSWLR 89 at 109 [78]. her Honour concluded that the offence with which the respondents were charged on the case the Crown had presented was bad at law or unknown to law. The reasoning of the Court of Criminal Appeal The trial judge's direction was upheld in the Court of Criminal Appeal by Spigelman CJ, with whom Grove and Fullerton JJ agreed. The Chief Justice characterised the Crown case thus168: "The Crown case did not allege that the respondents were parties to the fraud against the Commonwealth Superannuation Scheme, nor that they were specifically aware of the fraud. The Crown case was that the respondents were reckless as to the fact that the funds transferred into the account were the proceeds of crime. I emphasise this important aspect of the Crown case: it is alleged that the respondents, not a third party, were reckless about this fact." His Honour noted that neither party suggested that the decision of the Court of Criminal Appeal in Ansari was incorrect. He characterised Ansari as providing an example of a factual situation in which persons could conspire to commit an offence with respect to which recklessness was the fault element attributed to a physical element of that offence. That could occur where the physical element was to be carried out by a person not a party to the agreement169. The Chief Justice proceeded correctly on the basis that the Code imported the common law concept of conspiracy170. So a person cannot enter into a conspiracy under the Code without knowing the facts that make the agreed conduct unlawful. It was not the Crown case that either of the respondents knew that the money was proceeds of crime. The Crown case was that the respondents were reckless as to whether the money was proceeds of crime171. On that basis, and consistently with Ansari, his Honour concluded that the trial judge was correct to find that the Crown case disclosed no offence known to the law. 168 (2008) 73 NSWLR 80 at 84 [12]. 169 (2008) 73 NSWLR 80 at 89 [32]. 170 (2008) 73 NSWLR 80 at 91 [49]. 171 (2008) 73 NSWLR 80 at 93-94 [69]: see above at [7]. The contentions On the appeals before this Court senior counsel for the Crown sought to support the Crown case in the following way. Two or more persons will have conspired, contrary to s 11.5(1) of the Code, to commit an offence against s 400.3(2) if: The persons agree that one of them will deal with money. They each believe it to be equally likely that that money is proceeds of crime or is not proceeds of crime (and have no way of telling which is the more probable). Their agreement is to the effect that one of them will deal with money even though it may be proceeds of crime. They believe that, at the time of the dealing, they will not know whether it is proceeds of crime (but will, necessarily, be aware of a substantial risk that the money will be, at the time of the dealing, proceeds of crime, and know that it is unjustifiable to take that risk). Their agreement is to the effect that they are each willing to commit the crime of dealing with money that is proceeds of crime reckless as to whether it is proceeds of crime (as they are aware of at least a 50 per cent chance that it will be proceeds of crime). An overt act is committed. Counsel submitted that s 11.5(1) uses conspiracy as "a term of art" and that s 11.5(2) gives meaning to conspiracy as used in s 11.5(1). Senior counsel for the respondent LK, in reply, submitted, in an argument applicable to both respondents, that: 1. Where the Crown seeks to prove a conspiracy to commit an offence under s 400.3(2) it must prove that the accused intended each element of that offence. An element of the offence under s 400.3(2) on the facts of the present case is that the money was proceeds of crime. The fact that the money was proceeds of crime was a physical element in the nature of a circumstance. 4. Where the fault element in relation to a circumstance is intention, the Crown must establish that the accused believed that the circumstance existed. Recklessness will not suffice because it is a different and lower fault element. On the facts of this case, the Crown had to prove that the respondents believed that the money the subject of their agreement was proceeds of crime. The Crown's argument was that it would be sufficient to obtain a conviction if it were established that the respondents were reckless as to the fact that the money was stolen, that is to say, aware of a substantial and unjustifiable risk that the money was stolen. The Crown's argument is incorrect because the Crown must establish that the respondents intended to commit the offence, not that they were reckless as to its commission. Conclusions The charge of conspiracy to commit an offence, which is created by s 11.5(1) of the Code, requires proof of an agreement between the person charged and one or more other persons. Moreover, the person charged and at least one other person must have intended that the offence the subject of the conspiracy would be committed pursuant to the agreement. Intention to commit an offence can be taken to encompass all the elements of the offence (subject to the operation of s 11.5(7A) in relation to special liability provisions in the substantive offence). That intention extends to both physical and fault elements of the substantive offence. In the case of an offence against s 400.3(2) its physical elements are: conduct of the offender by the act of dealing with money172; the circumstance in which that conduct occurs, namely that the money is proceeds of crime173; and the further circumstance that the value of the money at the time of the dealing is $1,000,000 or more174. 172 Code, ss 400.3(2)(a) and 4.1(1)(a) (read with s 4.1(2)). 173 Code, ss 400.3(2)(b)(i) and 4.1(1)(c). 174 Code, s 400.3(2)(d). It is the second element which is the stumbling block in the way of the Crown's argument. There cannot be a conspiracy in which the parties to the agreement are reckless as to the existence of a circumstance which is a necessary element of the offence said to be the subject of the conspiracy. Such recklessness would be inconsistent with the very intention that is necessary at common law and under the Code to form the agreement alleged. In this case that intention is an intention to deal with money which is proceeds of crime. Recklessness as to whether the money is proceeds of crime is recklessness about a term of the agreement constituting the conspiracy. This is what was referred to at the commencement of these reasons as the fault line in the Crown's argument. Another way of analysing the difficulty, by reference to the provisions of the Code, is as follows: Section 11.5(1) provides that the offence of conspiracy is committed by a person who conspires with another person to commit an offence of the requisite character. Applying the requirement of s 5.6(1) in relation to the fault element of conspiracy leads to the proposition that a conspiracy is committed by a person who (having the fault element of intention) conspires with another to commit an offence. 3. When s 11.5(2) is applied to the preceding, that person commits a conspiracy if he or she: (intentionally) enters an agreement with one or more others to commit an offence; intends that an offence will be committed, and at least one other party to the agreement intends that an offence will be committed; and (intentionally) commits an overt act pursuant to the agreement or, if that person does not, at least one other party to the agreement does. 4. When the offence the subject of the alleged conspiracy is an offence against s 400.3(2), step 3(b) will require that the person intends that someone will deal with money, the money is in fact proceeds of crime and the dealer is reckless as to the fact that it is proceeds of crime. Bringing in the definition of recklessness from s 5.4, the preceding step requires that the person intend that: someone will deal with money; the money is in fact proceeds of crime (s 400.3(2)(b)(i)); and the dealer will be aware of a substantial risk that it is proceeds of crime and objectively that risk is unjustifiable. These necessary steps do not support the conclusion for which the Crown contends, namely that the alleged conspirator's intention that an offence against s 400.3(2) will be committed is satisfied if he or she is reckless as to whether the money the subject of the offence is proceeds of crime. For the preceding reasons the trial judge's direction and the conclusions reached by the Court of Criminal Appeal were correct and the appeals should be dismissed. A question as to the appropriate order in respect of costs arises. On the first day of the hearing of these appeals, the Court was informed that the Crown would meet the costs of the appeal involving the respondent RK. After the hearing the Commonwealth Deputy Director of Public Prosecutions advised that the same offer applied in relation to the appeal involving the respondent LK. Neither offer extended to the costs of the respondents' notices of contention. The costs of the appeals, apart from those occasioned in respect of the notices of contention, should be borne by the Crown. No costs orders should be made in relation to the notices of contention. Crennan Bell GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ. Introduction On 24 December 2003 a fraudulent set of instructions purporting to be those of the Commonwealth Superannuation Scheme's Fund Manager was transmitted by facsimile to its banker, JP Morgan. The instructions directed JP Morgan to transfer a sum in the order of $150 million to four nominated overseas bank accounts. Acting on the instructions JP Morgan transferred an amount of approximately $25 million to a bank account in Switzerland which was operated by the respondent in the second appeal, RK. Before these events, the respondent in the first appeal, LK, who was acting at the request of a third man, RM, had approached RK and asked if his Swiss bank account could be used for the transfer of funds from Australia. RK had agreed to the proposal. Following the transfer of the money to RK's account there were frequent communications between the three men, which culminated on 30 December in a direction by RK to his Swiss banker to transfer 23 million Swiss francs to an account with a bank in New York. On the same day the Swiss bank received advice from JP Morgan that the funds in RK's account were the subject of a fraud and should be returned. The funds were not transferred in accordance with RK's instruction. It is not said that either LK or RK was a party to the fraud or that either had knowledge of it. There is evidence upon which it is open to find that LK and RK were reckless as to the circumstance that the money transferred to RK's Swiss bank account was proceeds of crime. It is an offence against s 400.3(2) of the Criminal Code (Cth) ("the Code")175 for a person to deal with money that is proceeds of crime being reckless as to that circumstance. A person is reckless as to a circumstance if he or she is aware of a substantial risk that the circumstance exists or will exist and, having regard to the circumstances that are known to him or her, it is unjustifiable to take the risk176. Engaging in a banking transaction relating to money is a dealing with money for the purposes of the offences created in 175 Criminal Code Act 1995 (Cth), s 3. 176 Code, s 5.4(1). 177 Code, s 400.2(1)(a)(iii). Crennan Bell Neither of the respondents was charged with the substantive offence under s 400.3(2). The Director of Public Prosecutions of the Commonwealth, who then prosecuted on behalf of the Queen, determined to charge them jointly with conspiring to commit such an offence. Conspiracy under the Code is an offence that is confined to the agreement of two or more persons to commit an offence178. The particular question raised by these prosecution appeals is whether an agreement to deal with money made by persons who are aware of a substantial and unjustifiable risk that the money is, or will be, proceeds of crime is an agreement to commit an offence. The procedural history Proceedings on indictment were brought in the District Court of New South Wales (Sweeney DCJ). The indictment jointly charged the respondents as follows: "… between about 1 December 2003 and about 1 February 2004 at Sydney in the State of New South Wales and elsewhere [they] did conspire with each other, [RM] and with divers other persons to deal with money to the value of $1,000,000 or more being the proceeds of crime where those persons who were to deal with the money pursuant to the conspiracy were reckless as to the fact that the money was the proceeds of crime." Before the jury was sworn LK and RK demurred to the indictment, contending that it did not disclose an offence that was known to the law179. Sweeney DCJ dismissed the demurrer. At the close of the Crown case LK and RK each sought an acquittal by direction, submitting that there was no case to answer. Sweeney DCJ upheld these applications and directed the jury to acquit in each case. She held that, "on the case the Crown has presented", the offence charged in the indictment was "bad at law or unknown to law". Her reasons were delivered on the morning following the applications and this may explain some lack of clarity in the statement of them. The conclusion expressed in the second of the quotations set out above is qualified by the first. When the reasons are read as a whole, it appears that her Honour upheld the applications because the 178 Code, s 11.5. 179 Criminal Procedure Act 1986 (NSW), s 17. Crennan Bell Crown did not establish, in its case against either respondent, that when he entered the agreement he knew or intended that the money the object of the conspiracy was, or would be, proceeds of crime. In so concluding, her Honour applied the decision of the New South Wales Court of Criminal Appeal in R v Ansari180. She correctly understood that case to hold that an indictment charging an accused under s 11.5 with conspiring to commit an offence which has recklessness as its fault element is not bad at law, on the basis that it was open to the prosecution to "rel[y] on intention or knowledge to prove the element of recklessness or where a third party is to commit the offence the object of the conspiracy". Issues raised in the proceedings The District Court had exercised federal jurisdiction. As the Chief Justice explains in his reasons, there was a threshold jurisdictional question respecting the appeals against the directed verdicts of acquittal. His Honour concludes, and we agree, that the jurisdiction of the Court of Criminal Appeal derived from s 68(2) of the Judiciary Act 1903 (Cth) ("the Judiciary Act") read with s 107 of the Crimes (Appeal and Review) Act 2001 (NSW) ("the Crimes (Appeal and Review) Act") provides a right of appeal from a directed acquittal involving a question of law alone. The Crimes (Appeal and Review) Act also provides (s 111(1)(b)) that a person must not publish any matter having the effect of identifying an acquitted person who is the subject of such an appeal. This has been taken to be a matter of procedure picked up by s 68(1) of the Judiciary Act in the appeal to the Court of Criminal Appeal. On this footing the respondents, and RM, were not referred to by name in the reasons of that Court. The same procedure, without any argument to the contrary, has been adopted in this Court and is followed in these reasons. By notices of contention the respondents submitted that, as a matter of its construction, s 107 of the Crimes (Appeal and Review) Act was not picked up by s 68(2) of the Judiciary Act in respect of their acquittals because, given the chronology, s 107 lacked a necessary retrospective operation. They also contended that s 80 of the Constitution denied any operation of s 68(2), which picks up s 107, because to do so would be to deny an essential attribute of trial by 180 (2007) 70 NSWLR 89 ("Ansari"). Crennan Bell jury. The Chief Justice explains why the submissions by the respondents on these issues should not be accepted and we agree with his Honour's reasons. There remain the appeals, which raise issues respecting the construction and operation of the Code. The appellant's case, on which it failed in the Court of Criminal Appeal, was that Sweeney DCJ erred in her interpretation of the decision in Ansari. Each of the parties before that Court appears to have accepted that Ansari correctly stated the law (save in one respect as contended by the respondents) and no application was made to re-open the decision. The Court of Criminal Appeal (Spigelman CJ, Grove and Fullerton JJ concurring) held that Sweeney DCJ's decision was correct181. The appeals are brought by special leave against the order of the New South Wales Court of Criminal Appeal upon a single ground, which contends that it fell into error in the interpretation of s 11.5 of the Code. In particular, the appeals are said to raise an issue as to whether s 11.5(2)(b) requires that the prosecution prove intention in relation to each physical element of the substantive offence, even if the fault element prescribed for that offence is a lesser fault element, such as recklessness. As these reasons will show, it was incumbent on the prosecution to prove intention in relation to each physical element of the offence particularised as the object of the conspiracy. It follows that the appeals must be dismissed. An issue concerning the identification of the elements of the offence The framing of the special leave question by reference to s 11.5(2)(b) reflects a controversy between the appellant and the respondents concerning the elements of the offence of conspiracy. The appellant contends that the elements of the offence are wholly contained in s 11.5(1), whereas the respondents contend that the elements are to be found in s 11.5(2). The resolution of this question is not determinative of the outcome of the appeals because on either view it was incumbent on the prosecution to prove that the respondents intended that the offence particularised in the indictment be committed. However, since the identification of the elements of the offence is of practical importance in the conduct of trials, and since the Court has had the benefit of full argument, the question is addressed later in these reasons. As will appear, the elements of the offence are found in s 11.5(1). 181 R v RK and LK (2008) 73 NSWLR 80 at 94 [70] ("RK and LK"). Crennan Bell It is convenient at this point to set out the provisions of s 11.5 in full. "11.5 Conspiracy (1) A person who conspires with another person to commit an offence punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence and is punishable as if the offence to which the conspiracy relates had been committed. Note: Penalty units are defined in section 4AA of the Crimes Act For the person to be guilty: the person must have entered into an agreement with one or more other persons; and the person and at least one other party to the agreement must have intended that an offence would be committed pursuant to the agreement; and the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement. (2A) Subsection (2) has effect subject to subsection (7A). (3) A person may be found guilty of conspiracy to commit an offence even if: committing the offence is impossible; or the only other party to the agreement is a body corporate; or each other party to the agreement is at least one of the following: a person who is not criminally responsible; a person for whose benefit or protection the offence exists; or Crennan Bell subject to paragraph (4)(a), all other parties to the agreement have been acquitted of the conspiracy. (4) A person cannot be found guilty of conspiracy to commit an offence if: all other parties to the agreement have been acquitted of the conspiracy and a finding of guilt would be inconsistent with their acquittal; or he or she is a person for whose benefit or protection the offence exists. (5) A person cannot be found guilty of conspiracy to commit an offence if, before the commission of an overt act pursuant to the agreement, the person: (a) withdrew from the agreement; and took all reasonable steps to prevent the commission of the offence. (6) A court may dismiss a charge of conspiracy if it thinks that the interests of justice require it to do so. (7) Any defences, procedures, limitations or qualifying provisions that apply to an offence apply also to the offence of conspiracy to commit that offence. (7A) Any special liability provisions that apply to an offence apply also to the offence of conspiracy to commit that offence. Proceedings for an offence of conspiracy must not be commenced without the consent of the Director of Public Prosecutions. However, a person may be arrested for, charged with, or remanded in custody or on bail in connection with, an offence of conspiracy before the necessary consent has been given." The appellant's submissions the The appellant complains that Spigelman CJ wrongly elevated requirement of s 11.5(2)(b) to the necessity of proof of intention in respect of Crennan Bell each physical element of the substantive offence regardless of the fault element that the law creating the substantive offence specifies. The submission misconceives his Honour's reasoning. Spigelman CJ held that the offence- creating provision is s 11.5(1)182. His Honour characterised ss 11.5(2), (3), (4) and (5) as "particular requirements of a finding of guilt"183, which, together with the discretion that is conferred by s 11.5(6), are reflective of decisions and debates concerning the application of the offence of conspiracy at common law184. Spigelman CJ's analysis of the law creating the offence is consistent with the analysis in Ansari185. As these reasons will show, the analysis is correct. Spigelman CJ's conclusion, that the Crown case as presented could not succeed, was based on his view that the words "to commit an offence" in s 11.5(1) and the words "intended that an offence would be committed" in s 11.5(2)(b) are to be interpreted by reference to the common law186. His Honour said that "[a] person cannot be found guilty of an offence under s 11.5(1) unless s/he knows the facts that make the act or acts unlawful"187. In coming to the latter conclusion his Honour took into account the decisions that are discussed in Howie J's judgment in Ansari188. These include Churchill v Walton189 and 182 RK and LK (2008) 73 NSWLR 80 at 91 [50]. 183 RK and LK (2008) 73 NSWLR 80 at 91 [50]. 184 RK and LK (2008) 73 NSWLR 80 at 91 [50]. 185 (2007) 70 NSWLR 89 at 91 [1] per Simpson J, 105 [63] per Howie J, 124 [150] per Hislop J. Cf United States of America v Griffiths [2004] FCA 879 at [75]-[76] per Jacobson J, although the issue does not appear to have been raised in that case. 186 RK and LK (2008) 73 NSWLR 80 at 93 [60]. 187 RK and LK (2008) 73 NSWLR 80 at 93 [60]. 188 (2007) 70 NSWLR 89 at 106-108 [68]-[76]. 189 [1967] 2 AC 224 ("Churchill"). Crennan Bell Kamara v Director of Public Prosecutions190. In particular, Spigelman CJ relied on the statement of the principle in Giorgianni v The Queen191: "There are, however, offences in which it is not possible to speak of recklessness as constituting a sufficient intent. Attempt is one and conspiracy is another. And we think the offences of aiding and abetting and counselling and procuring are others. … The necessary intent is absent if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence. He need not recognize the criminal offence as such, but his participation must be intentionally aimed at the commission of the acts which constitute it. … Intent is required and it is an intent which must be based upon knowledge or belief of the necessary facts." In the appellant's written submissions it is said that Spigelman CJ's conclusion that the references to "conspiracy" in the Code were intended to be "fixed by the common law"192 evidences a failure to analyse the provisions of s 11.5 in accordance with settled principle respecting the interpretation of codes. The interpretation of the Code Chapter 2 of the Code is expressed to codify the general principles of criminal responsibility under the laws of the Commonwealth and to contain all such principles that apply to any offence irrespective of how the offence is created193. Professors Pearce and Geddes in their book Statutory Interpretation in Australia comment that194: 190 [1974] AC 104 ("Kamara"). 191 RK and LK (2008) 73 NSWLR 80 at 92 [57]-[58], citing Giorgianni v The Queen (1985) 156 CLR 473 at 505, 506-507 per Wilson, Deane and Dawson JJ; [1985] HCA 29 ("Giorgianni"). 192 RK and LK (2008) 73 NSWLR 80 at 91 [49]. 193 Code, s 2.1. 194 Pearce and Geddes, Statutory Interpretation in Australia, 6th ed (2006) at 273-274 Crennan Bell "The main issue relating to the interpretation of codifying statutes is whether or not it is possible to have regard to either the case law or the prior statutes that have been superseded by the code. The theoretical idea of a code is that it replaces all existing law and becomes the sole source of the law on the particular topic. This theory assumes that the code is in no way ambiguous. It also fails to contemplate the notion that expressions may be used that have an accepted legal meaning and that meaning may not be specifically set out in the code." It is the last-mentioned observation that is apt in considering this aspect of the appellant's complaint. The words "conspires", "conspiracy" and "overt act" each had an established meaning in the criminal law at the time of the enactment of the Code. None is defined within the Code. The principle that the appellant calls in aid, that a code should be construed according to its natural meaning and without any presumption that it was intended to do no more than to re-state the existing law195, is qualified with respect to the adoption in a code of a word or expression having an established meaning under the pre-existing law196. A number of the relevant authorities are referred to by Spigelman CJ in his discussion of the topic197. To these may be added the observations of Brennan J in Boughey v The Queen198: "It is erroneous to approach the Code [the Criminal Code (Tas)] with the presumption that it was intended to do no more than restate the existing law but when the Code employs words and phrases that are conventionally used to express a general common law principle, it is permissible to interpret the statutory language in the light of decisions expounding the 195 Brennan v The King (1936) 55 CLR 253 at 263 per Dixon and Evatt JJ; [1936] HCA 24. 196 Vallance v The Queen (1961) 108 CLR 56 at 75-76 per Windeyer J; [1961] HCA 42; Mamote-Kulang v The Queen (1964) 111 CLR 62 at 76 per Windeyer J; [1964] HCA 21; Stuart v The Queen (1974) 134 CLR 426 at 437 per Gibbs J; [1974] HCA 54; Sungravure Pty Ltd v Middle East Airlines Airliban SAL (1975) 134 CLR 1 at 22 per Mason J; [1975] HCA 6; R v Barlow (1997) 188 CLR 1 at 19 per McHugh J; [1997] HCA 19; Bank of England v Vagliano Brothers [1891] AC 107 at 145 per Lord Herschell. 197 RK and LK (2008) 73 NSWLR 80 at 90-91 [44]-[52]. 198 (1986) 161 CLR 10 at 30-31; [1986] HCA 29. Crennan Bell common law including decisions subsequent to the Code's enactment. The meaning of the words and phrases to be found in a Code is controlled by the context in which they are found but when the context does not exclude the common law principles which particular words and phrases impliedly import, reference to those common law principles is both permissible and required." (citations omitted) Spigelman CJ's interpretation of s 11.5 was influenced by a consideration of the legislative history and extrinsic material199. It is appropriate to refer to both before returning to the appellant's further challenge to it. The legislative history The enactment of the Code followed a lengthy process of review of the criminal law of the Commonwealth and of the principles of criminal responsibility200. One impetus for this appears to have come from the growth of Commonwealth criminal law and an anomaly that this phenomenon produced in the prosecution of offences created under statutes other than the Crimes Act 1914 (Cth). Prior to the enactment of the Criminal Code Act 1995, the Crimes Act applied the principles of the common law with respect to criminal liability in relation to offences against that Act201. However, in the case of offences created by other Commonwealth statutes the principles governing criminal liability were those of the State or Territory in which the offence was prosecuted202. The general principles of criminal responsibility under the common law differ from the principles of criminal responsibility that are stated in Sir Samuel Griffith's 199 RK and LK (2008) 73 NSWLR 80 at 89-90 [38]-[39], 91 [51]: see Acts Interpretation Act 1901 (Cth), s 15AB. 200 In June 1984 the then Attorney-General requested Justice Watson to undertake a comprehensive review of the criminal law of the Commonwealth. His Honour's preliminary report, delivered on 14 July 1986, contained a draft Criminal Code. Before the completion of the review, his Honour's work appears to have been overtaken by the establishment of a Committee chaired by Sir Harry Gibbs, of which Justice Watson was a member, which was requested by the then Attorney-General to review the criminal law of the Commonwealth. 201 Crimes Act 1914 (Cth), s 4. 202 Judiciary Act 1903 (Cth), s 80. Crennan Bell draft code ("the Griffith Code")203, upon which the criminal codes of a number of Australian jurisdictions are based204. As a result, criminal liability for many Commonwealth offences was susceptible of varying application depending upon the jurisdiction in which the offence was prosecuted. The Committee chaired by Sir Harry Gibbs, which was charged with reviewing the criminal law of the Commonwealth, addressed this unsatisfactory state of affairs in its Interim Report dealing with the principles of criminal responsibility ("the Gibbs Committee Report")205. The Committee recommended the codification of all the relevant principles of criminal responsibility in order to achieve uniformity in the prosecution of Commonwealth offences throughout Australia. The Committee expressed the hope that codification of these principles would make the law more clear and certain206. It observed that codification need not involve "radical reform" and that its proposals were intended generally to re-state existing principles while at the same time filling gaps, removing obscurities and correcting anomalies207. The Gibbs Committee Report discussed the history of the offence of conspiracy under Commonwealth law. It noted that s 86 of the Crimes Act was expressed in terms that made it an offence for a person "who conspires with another" to effect a prescribed purpose208. The drafting mirrored that of the Griffith Code, which made it an offence for a person who "conspires with another" to commit any crime or to effect certain other purposes209. In neither the Crimes Act nor the Griffith Code was the word "conspires" defined. The Gibbs Committee concluded that the use of the word "conspires" in s 86 imported the 203 Griffith, Draft of a Code of Criminal Law, (1897). 204 Criminal Code Act 1899 (Q); Criminal Code Act Compilation Act 1913 (WA); Criminal Code Act 1924 (Tas); Criminal Code Act 1983 (NT). 205 Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters, (July 1990). 206 Gibbs Committee Report at 14 [3.12]. 207 Gibbs Committee Report at 14 [3.12]. 208 Gibbs Committee Report at 355 [34.1]. 209 Griffith, Draft of a Code of Criminal Law, (1897), ss 565-568; Criminal Code (Q), Crennan Bell common law, save in the respects that were expressly dealt with by the section210. The adoption of the words "conspires" and "conspiracy" in s 11.5(1), without definition, is to be understood against this background. Following the publication of the Gibbs Committee Report the Standing Committee of Attorneys-General established a Criminal Law Officers Committee to advise on a model uniform criminal code211. The Committee, which later came to be known as the Model Criminal Code Officers Committee ("the MCCOC"), commenced its work by addressing the general principles of criminal responsibility. It reviewed the Gibbs Committee Report, the decisions of Australian and overseas courts, legislation in Australian and overseas common law jurisdictions and submissions received from interested individuals and organisations. Its final report ("the MCCOC Report")212, which was published in December 1992, included a draft of a chapter for a criminal code stating the general principles of criminal responsibility. The statement of those principles reflected a preference for the analysis of criminal liability by reference to the subjective, fault-based, common law and not the conceptual framework of the Griffith Code213. Chapter 2 of the Code is based upon the draft in the MCCOC Report. The commentary in the MCCOC Report states214: 210 Gibbs Committee Report at 361 [34.11]. Cf R v Cahill [1978] 2 NSWLR 453. 211 Criminal Law Officers Committee of the Standing Committee of Attorneys- General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (December 1992) at ii. The history of the reform process is set out in Wells, "Criminal Codes for the Commonwealth and States?", (Winter 1991) 62 Reform 108; Donovan, "The Committee for Review of the Commonwealth Criminal Law", (1992) 66 Australian Law Journal 732. 212 Criminal Law Officers Committee of the Standing Committee of Attorneys- General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (December 1992). 213 In certain respects the Griffith Code provided the model for the Code. See for example Div 8 of Pt 2.3, which deals with intoxication. 214 MCCOC Report at 3. Crennan Bell "The Code … will also apply the general principles of criminal responsibility to offences both in the Code and in other statutes. This does not mean that all preceding law will be irrelevant to interpretation of the Code. For example, English courts have drawn on the pre-existing law of larceny to assist interpretation of the English Theft Act 1968. That will also be possible under this Code." Section 11.5 is contained in Pt 2.4 of Ch 2, which deals with extensions of criminal liability, by which are grouped attempts, complicity, innocent agency, incitement and conspiracy. Part 2.4 generally follows the MCCOC draft. Section 11.5 follows draft cl 405 in the MCCOC Report. The commentary in the MCCOC Report suggests that the provisions of the draft corresponding to ss 11.5(2), (3), (4) and (5) were intended to clarify, and in some instances to modify, the common law. The draft clauses corresponding to ss 11.5(6) and (8) were intended to provide procedural restrictions in the light of a concern that prosecutions for the crime of conspiracy under the pre-existing law had been susceptible of abuse215. The commentary to cl 405.1, which corresponds to s 11.5(2), is expressed to refer to the "fault elements" of the proposed offence216. It records the MCCOC's view that "intention was required and that recklessness would not suffice"217. Recklessness was said to be "foreign to an offence based wholly on agreement"218. The MCCOC draft was understood by its authors to accord with the common law as stated in Gerakiteys v The Queen219 and with the views of the Gibbs Committee. The Gibbs Committee's understanding of the mental element of the common law offence is summarised in its Report as follows220: 215 MCCOC Report at 97. See also R v Hoar (1981) 148 CLR 32 at 38 per Gibbs CJ, Mason, Aickin and Brennan JJ; [1981] HCA 67. 216 The MCCOC Report does not analyse the proposed offence by reference to its constituent physical element or elements and any accompanying fault element. 217 MCCOC Report at 99. 218 MCCOC Report at 99. 219 (1984) 153 CLR 317; [1984] HCA 8 ("Gerakiteys"). 220 Gibbs Committee Report at 393 [40.1]. Crennan Bell "The mental element necessary to constitute the crime of conspiracy has been said to be the intention to do the unlawful act which was the subject of the agreement221, but it seems more accurate to say that what is required is an intention to be a party to an agreement to do an unlawful act222 and that such an intention must involve also an intention to carry out the unlawful purpose223. Such an intention on the part of the alleged conspirator is required notwithstanding that the agreement is to commit a crime which may be committed recklessly or a crime of strict liability. It is not necessary that the parties to the agreement should have known that what was agreed was unlawful. If on the facts known to them what they agreed to do was an unlawful act it is no excuse that they did not know that it was unlawful; on the other hand, if on the facts known to them what they agreed would have been lawful they are not rendered guilty by the existence of other facts, of which they did not know, that gave a criminal character to the act agreed upon224." (emphasis added) It may also be noted that the Gibbs Committee recommended that the criminal law of the Commonwealth should make it clear that the mental element required to commit a crime of conspiracy is an intention on the part of the conspirators to agree to commit an offence and that the offence should be committed225. Spigelman CJ's conclusion that the words "conspires" and "conspiracy" in s 11.5(1) are to be understood as fixed by the common law subject to express statutory modification is to be accepted. Contrary to the appellant's written submission it involves no departure from principle. These are words that had an established meaning within the criminal law at the time the Code was enacted. Their use, without definition, in the statement of the Code offence was intended to be understood by reference to that legal meaning. On the hearing of the 221 Director of Public Prosecutions v Nock [1978] AC 979. 222 Churchill [1967] 2 AC 224. 223 Cf Archbold, Criminal Pleading, Evidence and Practice, 43rd ed (1988) at [28-7]. 224 Churchill [1967] 2 AC 224. 225 Proposed s 7D of the Crimes Act 1914: Gibbs Committee Report at 427-428 [49.1] and Pt IX. Crennan Bell appeals senior counsel for the appellant accepted so much. However, the appellant did not accept Spigelman CJ's application of the common law principles stated in the joint reasons in Giorgianni regarding proof of the fault element of conspiracy to commit an offence of recklessness under the Code. Proof of the intention to commit an offence The appellant's challenge is to the conclusion that a person cannot be found guilty of an offence under s 11.5(1) unless he or she knows the facts that make the act or acts unlawful226. The appellant points out that Giorgianni was concerned with derivative, accessorial, liability. The appellant submits that a more refined analysis of what constitutes knowledge of, or belief in, the "necessary facts" is required with respect to proof of the intention to conspire to commit an offence of recklessness227. Since the conspiratorial agreement is to engage in conduct in the future, the question of whether a person intends to commit an offence is said to require consideration of what was within the scope of the agreement. On this analysis, if two (or more) persons agree to deal with money and each has in contemplation that the carrying out of their agreement may involve dealing with money that is, or will be, proceeds of crime and nonetheless they agree to deal with the money, it is open to conclude that each possessed sufficient knowledge of, or belief in, the "necessary facts" to find as a fact that each intended that an offence be committed pursuant to the agreement. In the appellant's submission, the reference in the joint reasons in Giorgianni to the intention required for liability in conspiracy does not address the issue presently raised. The same is said with respect to the decision in Gerakiteys. Conformably with these submissions, the appellant contends that the references in the Gibbs Committee Report and the MCCOC Report to the necessity for proof of intention are to the intentional entry into the conspiracy and not to the knowledge or belief that is required when the object of the conspiracy is an offence that has recklessness as its fault element. It is said to be "at least questionable" that the common law supports Spigelman CJ's conclusion with respect to conspiracies to commit offences of recklessness. 226 RK and LK (2008) 73 NSWLR 80 at 93 [60]. 227 Giorgianni (1985) 156 CLR 473 at 507. Crennan Bell The appellant's submission is unsupported by authority. As McHugh J observed in Peters v The Queen228, it would seem to follow from Gerakiteys that, at common law, a person must intend to achieve the carrying out of the unlawful act and that it is not sufficient proof of a conspiracy that the person realised that the probable consequences of the agreed conduct might result in the performance of an unlawful act. His Honour referred to Professor Sir John Smith's view that "[r]ecklessness as to circumstances of the actus reus is not a sufficient mens rea on a charge of conspiracy to commit a crime even where it is a sufficient mens rea for the crime itself"229. The appellant's submissions referred to academic debate230 and, in particular, to the opinion expressed by Professor Glanville Williams231: "Whether recklessness is sufficient for conspiracy probably varies with the result that is in view. Where an act when done would be criminally reckless, an agreement to do that act is probably a criminal conspiracy." The only authority cited by Professor Williams in this connection is R v Mawbey232, an old case concerning a conspiracy to pervert the course of justice. It provides little support for acceptance of the appellant's submission233. The 228 (1998) 192 CLR 493 at 520 [66]; [1998] HCA 7. 229 Smith and Hogan, Criminal Law, 8th ed (1996) at 287. 230 Smith, "Conspiracy under the Criminal Law Act 1977 (2)", [1977] Criminal Law Review 638; Williams, "The New Statutory Offence of Conspiracy – I", (1977) 127 New Law Journal 1164; Ormerod, "Making Sense of Mens Rea in Statutory Conspiracies", (2006) 59 Current Legal Problems 185. 231 Williams, Criminal Law: The General Part, 2nd ed (1961) at 678 [216]. 232 (1796) 6 TR 619 [101 ER 736]. 233 In Mawbey the defendants, two justices of the peace, were charged with conspiracy to pervert justice. They had signed a certificate, for production in court, that a highway was in a state of sufficient repair. On a motion to arrest judgment the defendants submitted, inter alia, that the conspiracy was not properly charged because the averment in the indictment was that they knew that the road was out of repair at the time the certificate was produced in court but that the indictment was lacking an averment that they had such knowledge at the time they conspired to (Footnote continues on next page) Crennan Bell decisions of the House of Lords in Churchill234 and Kamara235 are against acceptance of it. More recently the House of Lords considered the issue in R v Saik, a case having factual similarities to the present236. The accused was charged with the statutory offence of conspiracy under s 1 of the Criminal Law Act 1977 (UK). Section 1(2) provides that where liability for an offence may be incurred without knowledge of a fact or circumstance, a person shall not be guilty of conspiring to commit that offence unless he and at least one other party to the agreement intend or know that that fact or circumstance will exist at the time when the conduct the subject of the agreement is to take place. Accordingly, the decision does not afford direct assistance in resolving the issue raised by these appeals. However, in the context of the appellant's submission (as to the mental element of the common law offence of conspiracy to commit a crime of recklessness) it is to be observed that Lord Nicholls of Birkenhead described s 1(2) of the English statute as reflecting the common law enunciated in Churchill237. The suggestion that the Gibbs Committee and the MCCOC failed to address the issue of conspiracies to commit crimes of recklessness should be rejected. It is addressed in terms in the second part of the highlighted extract from the Gibbs Committee Report that is set out at [105] above. The Gibbs Committee was cognisant of the United Kingdom Law Commission draft Criminal Code, which proposed for the statutory offence of conspiracy that recklessness with respect to a circumstance suffice where it suffices for the offence itself. The relevant provisions of the English draft Criminal Code Bill produce it. Lord Kenyon CJ dismissed this challenge with the observation, "[b]ut I think that they should have known that the road was in repair before they agreed to certify that it was so": 6 TR 619 at 634 [101 ER 736 at 744]. The issue of the mens rea to support a charge of conspiracy was not addressed. In R v Freeman (1985) 3 NSWLR 303, it was held that conspiracy to pervert the course of justice requires that the intention to agree be accompanied by the intention to pervert justice. 237 [2007] 1 AC 18 at 33 [11], citing Churchill [1967] 2 AC 224. Lord Steyn agreed with Lord Nicholls of Birkenhead at 38 [38]. Crennan Bell were set out in full in the Gibbs Committee Report238. The MCCOC noted that their draft differed with respect to the mental element of the offence from the draft Criminal Code Bill that was proposed by the United Kingdom Law Commission in 1989239. Spigelman CJ's analysis, that the common law offence of conspiracy requires that an accused person know the facts that make the proposed act or acts unlawful240, should be accepted as an accurate statement of the law. The appellant submits that, notwithstanding the position under the common law, textual and structural indications support its submission that, under the Code, the prosecution is not required to prove intention with respect to the physical element of the substantive offence where recklessness is the fault element for that offence. Firstly, the appellant notes that, while the Code specifically provides, with respect to attempts, that intention and knowledge are the fault elements in relation to each physical element of the offence 238 Gibbs Committee Report at 364-365 [35.3], citing United Kingdom Law Commission, A Criminal Code for England and Wales, Law Com No 177, (1989), vol 1 at 63-64. Clause 48 of the draft Criminal Code Bill provided: "(1) A person is guilty of conspiracy to commit an offence or offences he agrees with another or others that an act or acts shall be done which, if done, will involve the commission of the offence or offences by one or more of the parties to the agreement; and he and at least one other party to the agreement intend that the offence or offences shall be committed. For the purposes of subsection (1) an intention that an offence shall be committed is an intention with respect to all the elements of the offence (other than fault elements), except that recklessness with respect to a circumstance suffices where it suffices for the offence itself. 239 MCCOC Report at 101. 240 RK and LK (2008) 73 NSWLR 80 at 92 [55]. Crennan Bell attempted241, it makes no such provision with respect to conspiracy. Understood against the context of the legislative history of the Code, this distinction does not support the appellant's contention. A discussion draft released by the MCCOC included recklessness as a fault element for the offence of attempt in cases in which recklessness would suffice as the fault element of the completed offence242. Several submissions received by the MCCOC opposed this aspect of the draft. The MCCOC accepted these criticisms and deleted recklessness with respect to attempt, complicity and incitement from its draft243. Secondly, the appellant identifies a number of provisions of the Code that create offences of tiered seriousness. Section 400.3 is such a provision. It creates three tiers of offences, with two offences in each tier. The most serious tier involves dealing with money or property believed to be proceeds of crime or intended to become an instrument of crime. The least serious involves dealing with money or property in circumstances in which the accused is negligent as to the fact that the money or property is proceeds of crime or that there is a risk that it will become an instrument of crime. The appellant submits that it is anomalous if, for practical purposes, only the most serious of such tiered offences is susceptible of successful prosecution as a conspiracy. This consideration does not provide a sound reason for holding that proof of the intent "to commit an offence" under s 11.5 embraces the intentional agreement that an act be done that may, or may not, be criminal. Beyond this observation, it is not useful to embark on a wider analysis of other offences under the Code, as the appellant's submissions invited the Court to do. The question raised by these appeals is the correctness of the ruling that, on the evidence adduced at the respondents' trial, the prosecution must fail because it was not able to establish that the respondents intended to commit the offence particularised in the indictment. Resolution – proof of the intention to commit an offence The offence of conspiracy under the Code is confined to agreements that an offence be committed. A person who conspires with another to commit an offence is guilty of conspiring to commit that offence. It was incumbent on the prosecution to prove that LK and RK intentionally entered an agreement to 241 Code, s 11.1(3). 242 MCCOC Report at 77. 243 MCCOC Report at 77. Crennan Bell commit the offence that it averred was the subject of the conspiracy. This required proof that each meant to enter into an agreement to commit that offence244. As a matter of ordinary English it may be thought that a person does not agree to commit an offence without knowledge of, or belief in, the existence of the facts that make the conduct that is the subject of the agreement an offence (as distinct from having knowledge of, or belief in, the legal characterisation of the conduct). This is consistent with authority with respect to liability for the offence of conspiracy under the common law. Subject to one reservation, it is how the fault element of the offence created in s 11.5(1) operates. The reservation concerns the application of s 11.5(2)(b). As these reasons will show, this provision informs the meaning of "conspires" in sub-s (1) by making clear that at least one other party to the agreement must have intended that an offence be committed pursuant to the agreement. It also speaks to proof of the accused's intention. The reservation arises because s 11.5(2)(b) is subject to s 11.5(7A), which applies any special liability provisions of the substantive offence to the offence of conspiring to commit that offence245. A special liability provision includes a provision that absolute liability applies to one or more (but not all) of the physical elements of an offence246. Proof of the intention to commit an offence does not require proof of knowledge of, or belief in, a matter that is the subject of a special liability provision. The respondents were charged with having conspired to commit the offence provided in par (b)(i) of s 400.3(2), which provides: "(2) A person is guilty of an offence if: the person deals with money …; and either: 244 Code, s 5.2(1). 245 Sub-sections (2A) and (7A) were introduced into the Code by the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth). 246 The Dictionary to the Code provides that a "special liability provision" is a provision that absolute liability applies to one or more (but not all) of the physical elements of an offence or that in a prosecution for an offence it is not necessary to prove that the defendant knew a particular thing or that the defendant knew or believed a particular thing. Crennan Bell the money … is proceeds of crime; or the person is reckless as to the fact that the money … is proceeds of crime …; and at the time of the dealing, the value of the money … is $1,000,000 or more." It was not necessary for the prosecution to prove that LK and RK knew or believed that the money with which they proposed to deal had a value of $1,000,000 or more247. Relevantly, the offence the object of the conspiracy is one that criminalises the reckless dealing with money that is proceeds of crime. It is the second of these two physical elements of the offence to which it is necessary to attend. It may be accepted that on the evidence given in the Crown case at the respondents' trial it would have been open to the jury to find the following facts: the respondents agreed to deal with the money in RK's Swiss bank account; at the time of their agreement each respondent was aware of a substantial and unjustifiable risk that the money that had been transferred to RK's account was proceeds of crime; and their agreement was to deal with the money even if it was proceeds of crime. Senior counsel for the appellant accepted that his argument is captured by the proposition that A and B commit the offence of conspiracy under s 11.5(1) if they intentionally agree that one or other of them, or a third party, C, will do acts, A and B taking the substantial and unjustifiable risk that the acts, if carried out, will be criminal. It is the intention that the acts will be done even if the doing of them is criminal that is central to the appellant's argument. 247 Section 400.3(4) of the Code provides that "[a]bsolute liability applies to paragraphs … (2)(d) …". Crennan Bell The prosecution case at its highest was that the respondents intentionally entered an agreement to deal with money whether or not it was proceeds of crime. The matters upon which the appellant relies as providing the factual basis for the inference of intent, namely the respondents' awareness that the money may be proceeds of crime and their agreement to deal with it even if it was, expose the flaw in the analysis. At the time the agreement was made the money may, or may not, have been (or have become) proceeds of crime. The agreement, if carried out in accordance with LK's and RK's intention, may not have involved a dealing with money that is proceeds of crime. It follows that, on the evidence given at the trial, it was not open to find that either respondent intentionally entered an agreement to commit the offence that is said to have been the object of the conspiracy. It may be that a different analysis applies if the offence the object of the conspiracy is an agreement to deal with money (or other property) that will become an instrument of crime248. This is because the factual element of the substantive offence is defined in terms of risk; there is no equivalent to the element in s 400.3(2)(b)(i) that the money be proceeds of crime. It is, however, not necessary to explore these questions here. Before addressing the controversy concerning the elements of the offence of conspiracy it is appropriate to say something about the scheme of Pt 2.2. The scheme of Pt 2.2 Part 2.2 of Ch 2 deals with the elements of offences. The analysis that it provides is generally consistent with the common law in that criminal liability is dependent upon proof of physical elements and accompanying subjective, fault, elements (subject to the provision for offences of absolute and strict liability in Div 6 of Pt 2.2). A physical element of an offence may be conduct, a result of conduct, or a circumstance in which conduct, or a result of conduct, occurs249. A fault element for a particular physical element of an offence may be intention, knowledge, recklessness or negligence250. Each is defined in Div 5 of Pt 2.2. However, the 248 Code, s 400.3(2)(b)(ii). 249 Code, s 4.1(1). 250 Code, s 5.1(1). Crennan Bell law creating an offence may specify a fault element for a physical element other than one of those that is defined in Div 5251. Under the common law, identification of the particular mental state that the prosecution is required to prove in order to establish mens rea (the fault element of the offence) may be the subject of controversy. The scheme of Pt 2.2 is intended to avoid uncertainty in this respect. Under the Code, default fault elements attach to physical elements of an offence where the law creating the offence does not specify a fault element for a physical element252 (subject to express provision that there is no fault element for the physical element253). Intention is the default fault element for a physical element of conduct254 and recklessness is the default fault element for a physical element consisting of a circumstance or a result255. The elements of the offence LK submits that "the elements of an offence", as that expression is used in Ch 2, must be understood as including "the irreducible factual matters, which the prosecution must prove beyond reasonable doubt in order to sustain a conviction". RK adopts this submission. The respondents' submissions draw on the scheme of Ch 2 and, in particular, of ss 3.1 and 3.2. These sections relevantly provide: "3.1 Elements (1) An offence consists of physical elements and fault elements. 251 Code, s 5.1(2). 252 Code, s 5.6. 253 Code, s 3.1(2). 254 Code, s 5.6(1). 255 Code, s 5.6(2). Crennan Bell 3.2 Establishing guilt in respect of offences In order for a person to be found guilty of committing an offence the following must be proved: the existence of such physical elements as are, under the law creating the offence, relevant to establishing guilt; in respect of each such physical element for which a fault element is required, one of the fault elements for the physical element." The provisions of Pt 2.6 of Ch 2 should also be noted. It is there provided that the legal burden of proof of every element of an offence that is relevant to the guilt of the accused is on the prosecution256. Discharge of that burden is beyond reasonable doubt257 (subject to the law creating the offence specifying a different standard of proof258). In the respondents' submission, the opening words of s 11.5(2) pick up those of s 3.2. The evident intent, so it is said, in s 11.5(2) is to state the elements of the offence: each paragraph specifies a factual matter that the prosecution is required to prove beyond reasonable doubt in order to establish guilt. The identification of the elements of an offence directs attention to "the law creating the offence"259. In written submissions, LK acknowledges that the offence of conspiracy is created in s 11.5(1) but maintains that the elements of the offence are those stated in s 11.5(2). Section 11.5(1) makes it an offence to conspire with another person to commit an offence punishable by imprisonment for more than 12 months or by a fine of 200 penalty units or more ("a non-trivial offence"). It reads naturally as the law creating the offence. It is by the adoption of the word "conspires", with its established legal meaning, that the drafters of 256 Code, s 13.1(1). 257 Code, s 13.2(1). 258 Code, s 13.2(2). 259 Code, ss 3.1, 3.2. Crennan Bell the Code chose to deal with questions that are not otherwise addressed in s 11.5. These may be taken to include the parties to the conspiracy and the sufficiency of their dealings to constitute the agreement260. Section 11.5(1) is the specification of a physical element of the offence, namely, conspiring with another person to commit a non-trivial offence. Central to the concept of conspiring is the agreement of the conspirators. The reference in s 11.5(2)(a) to "an agreement" is to the agreement that is criminalised in s 11.5(1). Once this is understood, it is clear that s 11.5(2)(a) is not the specification of a physical element of the offence. The physical element of conduct involving entry into the agreement is specified in s 11.5(1). The "agreement" to which s 11.5(2)(b) refers is, again, the agreement that is criminalised in s 11.5(1). This reading, in relation to s 11.5(2)(b), is consistent with the general scheme of the Code. Under the Code, fault elements apply to physical elements of an offence. The fault elements of intention, knowledge and recklessness are defined by reference to particular physical elements whether of conduct, circumstance or result261. Part 2.2 makes no provision for the specification of a fault element that is not "for a physical element of [the] offence"262. Section 11.5(2)(b) does not specify a physical element to which the intention of which it speaks applies. Paragraphs (a) and (b) of s 11.5(2) are epexegetical of what it is to "conspire" with another person to commit an offence within the meaning of s 11.5(1). Section 11.5(2)(b) looks to the time at which the agreement was entered, making clear that for a person to "conspire" under s 11.5(1) it is necessary that he or she and at least one other party to the agreement "must have intended" that an offence be committed pursuant to it. Together paragraphs (a) and (b) clarify, first, the two points made in the first sentence of the highlighted 260 The agreement of the conspirators need not be attended by any formalities: R v Orton [1922] VLR 469 at 473 per Cussen J; Gerakiteys (1984) 153 CLR 317. See also Orchard, "'Agreement' in Criminal Conspiracy – 1", [1974] Criminal Law Review 297. 261 Code, ss 5.2, 5.3, 5.4. The fault element of negligence is defined in s 5.5 in terms that "[a] person is negligent with respect to a physical element of an offence …". 262 Code, ss 3.1, 3.2, 5.1, 5.6. Crennan Bell passage from the Gibbs Committee Report, extracted at [105] above263, and, second, that the reach of the Code offence does not extend to an agreement to which the only parties are a single accused person and an agent provocateur264. Neither is the specification of an element of the offence within Pt 2.2. Section 11.5(2)(c) more squarely raises the respondents' contention that a factual matter stated as a condition of guilt is necessarily an element of the offence under the Code. This paragraph requires, as a condition of a finding of guilt, proof of the doing of an act in furtherance of the conspiracy by at least one party to it. It reflects the legislature's acceptance of the MCCOC's view that a "simple agreement to commit a criminal offence without any further action by any of those party to the agreement [is] insufficient to warrant the attention of the criminal law"265. The MCCOC Report rejected criticism that requirement of proof of an overt act is too vague. It recorded its understanding that such a requirement works well in those American jurisdictions that have adopted it266. In this respect it noted the provisions of the United States Model Penal Code267. It may be observed that the like provision under the Model Penal Code conditions conviction as distinct from guilt. No reference is made to this distinction in the MCCOC Report. It does not appear that the authors intended anything by it. The requirement of s 11.5(2)(c) is that the accused or at least one other party to the agreement must have committed an overt act and it follows that, if it is the specification of a physical element of the offence, it is an element of circumstance or, perhaps, result. In either case Pt 2.2 would operate to apply the fault element of recklessness for this physical element268. On this analysis it 263 See the discussion in Peters v The Queen (1998) 192 CLR 493 at 515-521 [55]- 264 This probably represents the position at common law: Peters v The Queen (1998) 192 CLR 493 at 518-519 [62] per McHugh J; R v O'Brien [1954] SCR 666; R v Thomson (1965) 50 Cr App R 1; R v Kotish (1948) 93 CCC 138. 265 MCCOC Report at 101. 266 MCCOC Report at 101. 267 American Law Institute, Model Penal Code, (1962), §5.03(5). 268 Code, s 5.6(2). Crennan Bell would be necessary for the prosecution to prove that the accused intentionally entered the agreement to commit an offence (the fault element for the physical element that is specified in s 11.5(1)) and that he or she was aware of the substantial and unjustifiable risk that a party to the conspiracy would do an act in furtherance of it (the fault element for the physical element specified in s 11.5(2)(c)). Intentional entry into an agreement to commit an offence contrary to s 11.5(1) exposes a person to liability for conspiring to commit that offence should any party to the agreement do an act in furtherance of it. Section 11.5(5) provides a "defence" of withdrawal and in this respect may depart from the common law. At common law it was considered that as the offence of conspiracy is complete upon agreement there could be no defence of withdrawal269. Whether this remains so does not require consideration in these appeals270. Of present relevance is that under the Code a person who conspires with another to commit an offence is only relieved from criminal liability in circumstances in which he or she withdraws from the agreement before the commission of an overt act, and has taken all reasonable steps to prevent the commission of the offence271. the Proof of recklessness requires consideration of whether, circumstances known to the accused, it was unjustifiable to take the risk. The risk with which we are presently concerned is that a party to the conspiracy will do an act in furtherance of the agreement. However, as the foregoing analysis shows, it is a risk assumed by the accused at the time of his or her intentional entry into the agreement. It follows that proof of the accused's recklessness with respect to the commission of an overt act by a conspirator adds nothing to the analysis of criminal liability. This suggests that the condition stated in s 11.5(2)(c) is not intended to be an element of the offence to which the provisions of Pt 2.2 apply. 269 Mogul Steamship Co Ltd v McGregor, Gow & Co (1888) 21 QBD 544 at 549 per 270 White v Ridley (1978) 140 CLR 342 at 348-350 per Gibbs J; [1978] HCA 38. See also the discussion in Howard's Criminal Law, 5th ed (1990) at 382. 271 Code, s 11.5(5). Crennan Bell the analysis of s 11.5(2)(c) demonstrates, acceptance of the respondents' submission, that the Code precludes the prescription of a factual matter as a condition of guilt distinct from being an element of the offence, is productive of highly technical and somewhat artificial "elements" of the offence. This may be thought to be the antithesis of the simplification of the law which the Code was intended to introduce272. In Director of Public Prosecutions (NT) v WJI, speaking of the Criminal Code (NT), Gummow and Heydon JJ observed273: "There is thus wisdom in the statement by Dixon CJ in Vallance274, adopted by Gaudron J in Murray v The Queen275, that the operation of those provisions of the Codes dealing with general principles can be worked out only by specific solutions of particular difficulties raised by the precise facts of given cases." The provisions of Pt 2.2 read with those of Pt 2.6 do not require acceptance of the respondents' analysis. This is because it is an analysis that gives no work to the words "the law that creates the offence" in ss 3.1 and 3.2. The provisions of s 11.5(4) may be characterised as conditioning a finding of guilt, albeit that they are expressed in negative terms. The Code does not preclude the prescription of a matter as a condition of a finding of guilt outside 272 In the second reading speech of the Criminal Code Bill 1995 (Cth), Duncan Kerr, Minister for Justice, described the Code as "the beginning of one of the most ambitious legal simplification programs ever attempted in this country": Australia, House of Representatives, Parliamentary Debates (Hansard), 1 March 1995 at 1335. The Senate Legal and Constitutional Legislation Committee, in its report on the Criminal Code Bill 1994 (Cth) and the Crimes Amendment Bill 1994 (Cth), described the Criminal Code Bill as having been intended, inter alia, "to make criminal law easier to understand, easier to find, and, in theory, more easily obeyed": Parliament of Australia, Senate Legal and Constitutional Legislation Committee, Criminal Code Bill 1994 and Crimes Amendment Bill 1994, Report, (December 1994) at 3 [1.11]. 273 (2004) 219 CLR 43 at 54 [31]; [2004] HCA 47. 274 (1961) 108 CLR 56 at 61. 275 (2002) 211 CLR 193 at 198 [12]; [2002] HCA 26. Crennan Bell the law creating the offence. The task must begin with the identification of the law creating the offence. The Court of Criminal Appeal's conclusion that the law creating the offence of conspiracy is s 11.5(1) is correct276. The offence has a single physical element of conduct: conspiring with another person to commit a non-trivial offence. The (default) fault element for this physical element of conduct is intention277. At the trial of a person charged with conspiracy it is incumbent on the prosecution to prove that he or she meant to conspire with another person to commit the non-trivial offence particularised as being the object of the conspiracy. In charging a jury as to the meaning of "conspiring" with another person, it is necessary to direct that the prosecution must establish that the accused entered into an agreement with one or more other persons and that he or she and at least one other party to the agreement intended that the offence particularised as the object of the conspiracy be committed pursuant to the agreement. Proof of the commission of an overt act by a party to the agreement conditions guilt and is placed on the prosecution to the criminal standard. The Code does not evince an intention in the latter respect to depart from fundamental principle with respect to proof of criminal liability278. Conclusion and orders The Court of Criminal Appeal was correct to uphold Sweeney DCJ's ruling on each of the no case applications. On the hearing of the appeals senior counsel for the appellant informed the Court of his instructions that the appellant would meet RK's costs of the appeal. The offer did not extend to the costs of RK's notice of contention, in respect of which it was submitted no order for costs should be made. The Commonwealth Deputy Director of Public Prosecutions, in a letter addressed to the Senior Registrar of the Court, advised that the Director takes the same position with respect to the other respondent, LK. 276 RK and LK (2008) 73 NSWLR 80 at 91 [50] per Spigelman CJ, 94 [78] per Grove J, 94 [79] per Fullerton J. See also Ansari (2007) 70 NSWLR 89 at 105 [63] per Howie J, 124 [150] per Hislop J. 277 Code, s 5.6(1). 278 R v Mullen (1938) 59 CLR 124; [1938] HCA 12. Crennan Bell The appeals should be dismissed with costs, save for the costs occasioned by the notices of contention. 145 HEYDON J. The appeals should be dismissed and the appellant's arguments against that course should be rejected because the reasoning of the Court of Criminal Appeal was correct for the reasons necessary to support it given by Gummow, Hayne, Crennan, Kiefel and Bell JJ279. It follows that there is no need to consider the contentions which the respondents advanced for the view that, even if the Court of Criminal Appeal's reasoning were wrong, their acquittal should be upheld on other grounds. The costs orders proposed by the plurality should be made. 279 At [90] and [92]-[122].

HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION APPELLANT AND FUTURIS CORPORATION LIMITED RESPONDENT Commissioner of Taxation v Futuris Corporation Limited [2008] HCA 32 31 July 2008 ORDER Appeal allowed with costs. Set aside the orders and declaration of the Full Court of the Federal Court of Australia entered on 26 June 2007 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation N J Williams SC with A J Payne and L B Price for the appellant (instructed by Australian Government Solicitor) D F Jackson QC with B J Sullivan SC and T M Thawley for the respondent (instructed by Cosoff Cudmore Knox) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Futuris Corporation Limited Income Tax – Review and appeals – Judicial review – Judiciary Act 1903 (Cth) ("the Judiciary Act"), s 39B – Appellant Commissioner issued amended assessments of income tax to respondent taxpayer – Taxpayer alleged Commissioner deliberately "double counted" amounts of assessable income – Taxpayer sought judicial review in Federal Court under s 39B of the Judiciary Act while "appeal" pending under Pt IVC of the Taxation Administration Act 1953 (Cth) ("the Administration Act") – Relationship between Constitution and proceedings under Pt IVC of the Administration Act and s 39B of the Judiciary Act – Scope of issues for determination in s 39B proceeding – Relevance of availability of remedy in Pt IVC proceeding to discretion to grant relief in s 39B proceeding. Income Tax – Validity of assessment – Judicial review – Finding of Full Court that Commissioner failed to exercise bona fide the power of assessment –Income Tax Assessment Act 1936 (Cth) ("the Act"), s 175 provided that failure to comply with provisions of the Act did not affect validity of assessment – Whether deliberate maladministration manifests jurisdictional error – Whether "double counting" manifested jurisdictional error where amended assessment issued on footing that compensatory adjustment could be made under s 177F(3) – Whether amended assessment "tentative" or "provisional" – Meaning of "bona fide" – Whether other grounds for judicial review of amended assessment relied on by the taxpayer and available in the proceedings. Income Tax – Validity of assessment – Judicial review – Section 177(1) of the Act provided for production of notices of assessment to be conclusive evidence of certain matters except in Pt IVC proceedings – Application of s 177(1) to proceedings under s 39B of the Judiciary Act – Whether s 177(1) a privative clause subject to "Hickman principle" – Relevance of Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168. Constitutional law (Cth) – Income tax – Criteria for valid law with respect to taxation – Absence of arbitrariness and susceptibility to judicial scrutiny – Role of judicial remedies under s 75(v) of the Constitution and s 39B of the Judiciary Act in upholding constitutional design – Discretionary character of such remedies derived from the Constitution. Income Tax – Review and appeals – Judicial review in Federal Court under the Judiciary Act, s 39B – Discretionary character of such review – Availability of proceedings under Pt IVC of the Administration Act – Institution of proceedings under Pt IVC of the Administration Act – Relevance of that step to exercise of discretion to decide proceedings under the Judiciary Act, s 39B – Whether proceedings under s 39B should be dismissed in exercise of discretion – Whether necessary and appropriate to consider application of ss 175 and 177 of the Act. Words and phrases – "assessment", "bona fide", "double counting", "good faith", "Hickman principle", "jurisdictional error", "privative clause", "provisional", "tentative". Judiciary Act 1903 (Cth), s 39B. Income Tax Assessment Act 1936 (Cth), ss 175 and 177(1). Taxation Administration Act 1953 (Cth), Pt IVC. GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. The Full Court of the Federal Court of Australia (Heerey, Stone and Edmonds JJ)1 declared that the amended assessment of income tax for the year ended 30 June 1998 which was served upon the respondent ("Futuris") by notice dated 12 November 2004 (identified in litigation as "the Second Amended Assessment") is not a valid assessment for the purposes of the Income Tax Assessment Act 1936 (Cth) ("the Act"). Their Honours also ordered that the Second Amended Assessment be quashed. The Act provides in s 6(1) that an "assessment" relevantly means "the ascertainment of ... the amount of taxable income ... and of the tax payable on that taxable income". The term "assessment" thus identifies what Kitto J said2 was: "the completion of the process by which the provisions of the Act relating to liability to tax are given concrete application in a particular case with the consequence that a specified amount of money will become due and payable as the proper tax in that case". The Second Amended Assessment fixed the taxable income of Futuris at $188,988,223 and the tax payable at $68,035,760.28. The Full Court allowed the appeal by Futuris against the dismissal by the primary judge (Finn J)3 of its application for the relief now granted by the Full Court. The Full Court based its orders upon the holding that the Second Amended Assessment "was not a bona fide exercise of the power to assess"4 by the appellant ("the Commissioner"). The jurisdiction of the Federal Court invoked by Futuris was that conferred by s 39B of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). Section 39B relevantly replicates the terms in which jurisdiction is conferred 1 Futuris Corporation Ltd v Federal Commissioner of Taxation (2007) 159 FCR 2 Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 at 252; [1963] HCA 51. 3 Futuris Corporation Ltd v Federal Commissioner of Taxation (2006) 63 ATR 562; [2006] ATC 4579. (2007) 159 FCR 257 at 273. Hayne Crennan upon this Court by s 75(v) of the Constitution in respect of any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth. The central issue presented by reliance upon s 39B for an order quashing the Second Amended Assessment thus was not merely whether there had been an error of fact or law by the Commissioner, but whether there had been error in the exercise by the Commissioner of powers conferred by the Act which amounted to jurisdictional error5. In Parisienne Basket Shoes Pty Ltd v Whyte6 Dixon J referred to the maintenance of "the clear distinction … between want of jurisdiction and the manner of its exercise". His Honour in this context also used the phrase "excess of jurisdiction"7 and, with respect to relief under s 75(v) of the Constitution, the same idea had been conveyed as early as 1914 in The Tramways Case [No 1]8, jurisdiction", "wrongful assumption of by such expressions as "usurp jurisdiction" and "proceeding without or in excess of jurisdiction". Thereafter, in his submissions in R v Kirby and Ors; Ex parte The Transport Workers' Union of Australia9, Dr Coppel QC is reported as using the term "jurisdictional error". Part IVC of the Taxation Administration Act 1953 (Cth) ("the Administration Act") contains provisions for the making of taxation objections and their disposition by the Commissioner, for review by the Administrative Appeals Tribunal ("the AAT") and for "appeals" to the Federal Court against decisions by the Commissioner upon certain taxation objections. Further, s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") provides an 5 Glennan v Commissioner of Taxation (2003) 77 ALJR 1195 at 1198 [17]; 198 ALR 250 at 254; [2003] HCA 31; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 505 [73]; [2003] HCA 2. (1938) 59 CLR 369 at 389; [1938] HCA 7. See, further, Craig v South Australia (1995) 184 CLR 163 at 176-180; [1995] HCA 58. (1938) 59 CLR 369 at 389. Writing in the first edition of his work, published in 1959, Professor de Smith traced the development of judicial review in terms of jurisdiction to the 17th century: de Smith, Judicial Review of Administrative Action (1959) at 65-66. (1914) 18 CLR 54 at 62, 65, 72; [1914] HCA 15. (1954) 91 CLR 159 at 168; [1954] HCA 19. Hayne "appeal" to the Federal Court, on a question of law, from a decision of the AAT10. With respect to a decision of the AAT, the Commissioner is obliged by the Administration Act to take such action, including amendment of any assessment concerned, as is necessary to give effect to the decision (s 14ZZL). The Commissioner is required also to implement orders of the Federal Court by steps which may include the amendment of assessments (s 14ZZQ). Neither the AAT nor the Federal Court itself is empowered by Pt IVC to vary assessments. After the disallowance by the Commissioner of the objection by Futuris to the Second Amended Assessment, Futuris had on 1 June 2005 appealed to the Federal Court pursuant to Pt IVC of the Administration Act. The application based upon s 39B of the Judiciary Act was made thereafter on 10 October 2005, but was heard and disposed of in advance of any hearing of the Pt IVC proceeding. That proceeding remains pending in the Federal Court. The recourse to the Federal Court (and thereafter by special leave, to this Court) which is provided by Pt IVC of the Administration Act meets the requirement of the Constitution that a tax may not be made incontestable because to do so would place beyond examination the limits upon legislative power11. This state of affairs has two pertinent consequences. The first is that under the system provided by Pt IVC being, as to the Federal Court, a law supported by s 77(i) of the Constitution, the contestability of assessments made by the Commissioner is not confined to that measure of judicial review for jurisdictional error which is provided by s 75(v) of the Constitution and by s 39B of the Judiciary Act. The second consequence is that, as a matter of discretion, relief under s 75(v) and s 39B may be (and often will be) withheld where there is another remedy provided by Pt IVC12. 10 With respect to "appeals" instituted after 16 May 2005, s 44(7) of the AAT Act empowers the Federal Court, in certain circumstances, itself to make findings of fact. 11 MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 at 639-640; [1984] HCA 20; Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 221-222; [1995] HCA 23. 12 Glennan v Commissioner of Taxation (2003) 77 ALJR 1195 at 1198-1199 [15]-[18]; 198 ALR 250 at 254-255. See also the authorities collected in Re (Footnote continues on next page) Hayne Crennan The holding by the Full Court What is conveyed by the holding by the Full Court that the Second Amended Assessment did not represent an exercise by the Commissioner of the power to assess which was bona fide? That phrase is used in several senses in public law. With cognate expressions, it also appears in formulations of the tort of misfeasance in public office. This Court has accepted that in that context it is sufficient that the public officer concerned acted knowingly in excess of his or her power13. The House of Lords has since indicated that in English law recklessness may be a sufficient state of mind to found the tort14. The affinity between tort law and public law has been remarked upon in this Court15; that affinity reflects the precept that in a legal system such as that maintained by the Constitution executive or administrative power is not to be exercised for ulterior or improper purposes16. However, Aickin J observed in The Queen v Toohey; Ex parte Northern Land Council17 that sometimes it was impossible to be certain of the meaning intended to be conveyed by the expressions "good faith" and "bad faith". His Honour went on to discern three distinct grounds upon which an exercise of an administrative power might be attacked18. One was the existence of a corrupt McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 471 [279]; [2002] HCA 16. 13 Sanders v Snell (1998) 196 CLR 329 at 346-347 [42]; [1998] HCA 64. 14 Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 at 192, 228, 231. 15 Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 558; [1997] HCA 3; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 106-107 [53]; [2000] HCA 57. 16 cf Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 at 190-191. 17 (1981) 151 CLR 170 at 232; [1981] HCA 74. 18 The Queen v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 at 232-233. See also Western Australian Planning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30 at 67 [93], 95 [181]; [2004] HCA 63; SZFDE v (Footnote continues on next page) Hayne purpose, with which Aickin J identified the doing of an act for personal gain including a gain for the associates of the person doing the act. Absence of good faith also was used to indicate the presence of an improper purpose outside the scope of the power but without any endeavour to obtain personal gain. Finally, Aickin J indicated that in a narrow and technical sense a power might be said to have been exercised improperly where the act done was beyond the power conferred irrespective of the motive or intention of the party exercising the power. In this third sense "good faith" means merely exercising an administrative power "for legitimate reasons" and its absence suggests no degree of moral obliquity19. However, it is apparent from the terms in which the Full Court expressed its reasons that the failure attributed to the Commissioner to exercise bona fide the power of assessment was not designed to identify "good faith" in any such softer sense. The Full Court said in the penultimate paragraph of its reasons20 that the Commissioner had applied provisions of the Act "to facts which he knew to be untrue" and it was that circumstance which brought the case "squarely" within the description of a failure to exercise bona fide the power of assessment. For the reasons which follow, the Commissioner did not apply the Act to facts which were known to be untrue, there was no absence of bona fides attending the Second Amended Assessment, there was no jurisdictional error vitiating that amended assessment, and the appeal to this Court should be allowed and the order of the primary judge reinstated. The legislative provisions It is convenient to begin with some examination of the central provisions of the legislation dealing with returns and assessments, and the collection and recovery of tax and with objections against assessments, reviews and "appeals". References to provisions of the Act in these reasons are to the form in which they Minister for Immigration and Citizenship (2007) 81 ALJR 1401 at 1405-1406 [13]; 237 ALR 64 at 67-68; [2007] HCA 35. 19 SZFDE v Minister for Immigration and Citizenship (2007) 81 ALJR 1401 at 1405-1406 [13]; 237 ALR 64 at 67-68. 20 (2007) 159 FCR 257 at 273. Hayne Crennan appeared in the relevant year of income, with an indication of material changes since 1998. The Commissioner has the general administration of the Act (s 8). The staff necessary to assist the Commissioner are engaged under the Public Service Act 1999 (Cth) ("the Public Service Act"), and, with the Commissioner they constitute a Statutory Agency for the purposes of that law21. Section 166 of the Act states22: "From the returns, and from any other information in his possession, or from any one or more of these sources, the Commissioner shall make an assessment of the amount of the taxable income of any taxpayer, and of the tax payable thereon." Section 169 provides: "Where under this Act any person is liable to pay tax, the Commissioner may make an assessment of the amount of such tax." Pursuant to s 166A(1), the Commissioner is deemed to have made an assessment of taxable income and of the tax payable on that taxable income where a tax return is furnished in the circumstances there described. Section 170 makes detailed provision for the amendment by the Commissioner of assessments. There is a general provision for a four year period within which assessments may be amended where there has been an avoidance of tax (s 170(2)(b))23, and s 173 states that: "Except as otherwise provided every amended assessment shall be an assessment for all the purposes of this Act." As soon as conveniently may be after any assessment is made, the Commissioner is obliged by s 174 to serve notice thereof in writing by post or otherwise upon the person liable to pay the tax. Any income tax assessed shall 21 The Administration Act, s 4A. 22 Sections 166 and 169 were amended by the Tax Laws Amendment (Improvements to Self Assessment) Act (No 2) 2005 (Cth). 23 See now Item 4 of s 170(1) of the Act. Hayne be due and payable by the person liable to pay it on the date specified in the notice as the date upon which the tax is due and payable, not being less than 30 days after service of the notice (s 204)24. In the event of a deemed assessment pursuant to s 166A(1), service of a notice of assessment is deemed to have occurred on the day specified by s 166A(1)(c). When it becomes due and payable, income tax shall be a debt due to the Commonwealth and payable to the Commissioner in the manner and at the place prescribed (s 208). Any tax unpaid may be sued for and recovered in any court of competent jurisdiction by the Commissioner or a Deputy Commissioner (s 209)25. As already indicated, provision is made in Pt IVC of the Administration Act (ss 14ZL-14ZZS) for objections to assessments, and for reviews by the AAT and appeals to the Federal Court. Both in the AAT (s 14ZZK) and the Federal Court (s 14ZZO) the taxpayer bears the burden of proving that the assessment is excessive. The tax (and any additional tax or other amount) may be recovered notwithstanding the pendency of a review or appeal (ss 14ZZM, 14ZZR). The operation of the Pt IVC system is triggered by s 175A of the Act which states26: "A taxpayer who is dissatisfied with an assessment made in relation to the taxpayer may object against it in the manner set out in Part IVC of [the Administration Act]." Section 175 is a short but important provision. It provides: "The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with." Section 177(1) states: 24 The tax payable by taxpayers other than a "full self-assessment taxpayer" now becomes due and payable in accordance with the 21 day time periods prescribed by s 204(1). As to amended assessments see s 204(2). The tax payable by a "full self-assessment taxpayer" becomes due and payable in accordance with s 204(1A). 25 Sections 208 and 209 were repealed by the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 (Cth). See now s 255-5 in Sched 1 to the Administration Act. 26 Section 175A was amended by the Tax Laws Amendment (Improvements to Self Assessment) Act (No 2) 2005 (Cth). Hayne Crennan "The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of [the Administration Act] on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct." The significance of s 175 for the operation of the Act and for the scope of judicial review outside Pt IVC is to be assessed in the manner indicated in Project Blue Sky Inc v Australian Broadcasting Authority27. That case decided that the description of provisions as either mandatory or directory provides no test by which the consequences of non-compliance with a statutory criterion can be determined28. Rather, consistently with the reasons in Project Blue Sky of McHugh, Gummow, Kirby and Hayne JJ29, the question for the present case is whether it is a purpose of the Act that a failure by the Commissioner in the process of assessment to comply with provisions of the Act renders the assessment invalid; in determining that question of legislative purpose regard must be had to the language of the relevant provisions and the scope and purpose of the statute. Section 175 must be read with s 175A and s 177(1). If that be done, the result is that the validity of an assessment is not affected by failure to comply with any provision of the Act, but a dissatisfied taxpayer may object to the assessment in the manner set out in Pt IVC of the Administration Act; in review or appeal proceedings under Pt IVC the amount and all the particulars of the assessment may be challenged by the taxpayer but with the burden of proof provided in s 14ZZK and s 14ZZO of the Administration Act. Where s 175 applies, errors in the process of assessment do not go to jurisdiction and so do not attract the remedy of a constitutional writ under s 75(v) of the Constitution or under s 39B of the Judiciary Act. But what are the limits beyond which s 175 does not reach? The section operates only where there has been what answers the statutory description of an "assessment". Reference is made later in these reasons to so-called tentative or 27 (1998) 194 CLR 355; [1998] HCA 28. 28 (1998) 194 CLR 355 at 373-374 [38]. 29 (1998) 194 CLR 355 at 390-391 [93]. Hayne provisional assessments which for that reason do not answer the statutory description in s 175 and which may attract a remedy for jurisdictional error. Further, conscious maladministration of the assessment process may be said also not to produce an "assessment" to which s 175 applies. Whether this be so is an important issue for the present appeal. The alleged error in assessment It is convenient at this stage to identify the nature of the error in the assessment process which produced the Second Amended Assessment. Futuris submits that the assessment process was flawed because there was a "double counting" in a significant amount. It also submits that this "double counting" was deliberately done by the Commissioner, but a consideration of the further dimension this gives to the litigation may be put to one side for the moment. The evidence before the primary judge was documentary and the basic facts are not in dispute. Futuris is a publicly listed company which through shareholding in various subsidiaries owned assets which constituted collectively what was known as the "Building Products Division" of Futuris. Vockbay Pty Ltd ("Vockbay") and Walshville Holdings Pty Ltd ("Walshville") were directly owned subsidiaries. In turn, Bristile Ltd ("Bristile") was a subsidiary of Vockbay. In 1997 Futuris decided to dispose of its Building Products Division. This was to be achieved by a public flotation of Walshville. The implementation of this proposal required the transfer to Walshville of the interests held by Vockbay (through Bristile) in the Building Products Division. Vockbay transferred to Walshville its shares in Bristile. This involved transfers of assets between companies under common ownership and attracted the provisions of Div 19A of Pt IIIA of the Act for the working out of capital gains and capital losses. Part IIIA30 is headed "Capital Gains and Capital Losses" and Div 19A31 (ss 160ZZRAAA-160ZZRH) is headed "Transfers of 30 Part IIIA of the Act (including Div 19A) was repealed by the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 (Cth). See now Pts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"). 31 See Div 138 of the 1997 Act. That division was, in turn, repealed by the New Business Tax System (Consolidation, Value Shifting, Demergers and Other (Footnote continues on next page) Hayne Crennan Assets between Companies under Common Ownership". Division 19A was added to Pt IIIA by s 61 of the Taxation Laws Amendment Act 1991 (Cth). In the second reading speech in the House of Representatives on the Bill for that Act the Minister said that as the law stood asset transfers between 100 percent commonly owned company groups could result in the early realisation of capital losses or reduced capital gains on the disposal of shares in the transferor company and that advantages could also arise in respect of loans made to the transferor company32. The Minister continued: "The Government believes that no taxpayer should obtain tax advantages by reason of an internal reorganisation of a company group's affairs, as a result of which assets are transferred within the group. To prevent this, the Bill proposes a series of cost base adjustments to shares or loans held, directly and indirectly, in the respective companies, that is, the transferor and transferee of the asset. The adjustments are intended to reflect changes in the value of shares or loans held within the group following the transfer of assets from one group company to another." Hence the statement by the primary judge that Div 19A has been characterised as an "anti-avoidance provision"33. Part IIIA had been introduced in 198634. The general operation of Pt IIIA was outlined by Hill J in Commissioner of Taxation v Cooling35. His Honour explained that a "capital gain" accrues to a taxpayer where an asset has been "disposed of" during the year of income and the consideration for that disposal exceeds what the statute refers to as the "indexed cost base to the taxpayer in respect of the asset". That excess is treated as a capital gain which accrues to the taxpayer during the year of income. The provisions respecting indexation of the "cost base" implement the policy of the legislation that Pt IIIA will apply only to Measures) Act 2002 (Cth). A replacement regime, in different terms, is now in Div 727 of the 1997 Act. 32 Australia, House of Representatives, Parliamentary Debates (Hansard), 6 December 1990 at 4651. 33 (2006) 63 ATR 562 at 564; [2006] ATC 4579 at 4581. 34 By the Income Tax Assessment Amendment (Capital Gains) Act 1986 (Cth). 35 (1990) 22 FCR 42 at 58-61. Hayne "real gains" and avoid the taxation of the purely inflationary element of the gain36. In the present case the operation of Div 19A was twofold. It reduced the cost base of the interests of Futuris in Vockbay, which included both shares and loans. It increased the cost base of the shares of Futuris in Walshville. The amount of the cost base of Futuris which was so "transferred" from Vockbay to Walshville was calculated by Futuris to be $82,950,090. Of this approximately $63 million was attributed to shares and approximately $19 million to loans. The total sum was identified by the primary judge as "the transferred cost base calculation"37. In the course of the public float of Walshville, Futuris disposed of its shareholding in Walshville and by reason of that disposal it became necessary to determine the amount of any capital gain. In its return for the income tax year ended 30 June 1998 Futuris specified a taxable income of $86,088,045 and tax payable of $30,991,696.20. In a schedule to its return Futuris disclosed the transferred cost base calculation. Pursuant to s 166A(1) of the Act there arose a deemed assessment in relation to the taxable income as returned and the normal four year period for any amended assessment began to run, with an expiry date of 1 December 2002. In November 2002 the Commissioner served on Futuris a notice of an amended assessment for the year ended 30 June 1998 ("the First Amended Assessment"). The accompanying adjustment sheet indicated that $19,950,088 was to be added to the taxable income returned. That addition was attributed to an increase in capital gain made on the disposal by Futuris of its shares. The Commissioner disallowed an objection to the First Amended Assessment and indicated that the difference of $19,950,088 was to be attributed to a correction in the transferred cost base calculation from $82,950,090 to $63,000,002. On 17 July 2003 Futuris appealed to the Federal Court against the disallowance of the Administration Act is still pending. This proceeding under Pt IVC of its objection. 36 (1990) 22 FCR 42 at 58. 37 (2006) 63 ATR 562 at 564; [2006] ATC 4579 at 4581. Hayne Crennan The Second Amended Assessment was based upon an application of Pt IVA of the Act. Part IVA (ss 177A-177G) was introduced in 198138 and is headed "Schemes to Reduce Income Tax". The evidence includes a report dated 3 December 2003 from officers of the Australian Taxation Office ("the ATO") constituting "The Part IVA Panel". The Report dealt with an issue which was described as follows: "The issue deals with the avoidance of capital gains tax where the holding company of a company group disposes of one of its subsidiaries, where the cause of the avoidance is the increase in the cost base of the shares in the subsidiary that was disposed of. The increase resulted from two separate schemes, a capital gains tax reduction arrangement and the capitalisation of a loan from the holding company to the company that was disposed of." The Report continued: "The Panel also considered if Part IVA was to apply to [Futuris], whether the company should be assessed on a tax benefit of $82,950,088 or, because [the ATO] had already issued an amended assessment including $19,950,088 of the otherwise possible $82,950,088 Part IVA adjustment to [Futuris] in respect to the First Scheme, the Part IVA adjustment should be for only $63,000,000 ($82,950,088 - $19,950,088). The Panel advised the assessment should be made on the full amount and, depending on the outcome of the Division 19A issue, a compensating adjustment can be made at a later stage if necessary." There was also before the Commissioner a subsequent report by an officer which stated: "The Panel recommended that the assessment should be made on the full the amount of $82,950,088 and, depending on Division 19A issue, a compensating adjustment can be made at a later stage if necessary. No doubt the Panel came to this view in order to 'protect the Revenue'. the outcome of I consider that a recent Federal Court case, Australia & New Zealand Banking Group Ltd v Federal Commissioner of Taxation[39] ... is 38 By the Income Tax Laws Amendment Act (No 2) 1981 (Cth). 39 (2003) 137 FCR 1. Hayne relevant here. In that case, pursuant to section 39B of [the Judiciary Act], the taxpayer contended that amended assessments that issued as a result of the application of Part IVA were invalid assessments because each of the amended assessments included an amount that had already been returned by the taxpayer as assessable income. The Court found against the taxpayer. I must point out that this decision is subject to appeal[40]. Obviously, we will not pursue recovery for both amounts of tax, penalty and s 170AA interest/general interest charge involved with the two $19,950,088 adjustments." Thereafter, on 9 November 2004 the Commissioner gave to Futuris notice that a determination had been made under s 177F of the Act, that the amount of $82,950,090 "being a tax benefit that is referable to an amount that has not been included in the assessable income of [Futuris] for the year of income ended 30 June 1998", shall be so included41. The Second Amended Assessment was issued. The First Amended Assessment was further amended by increasing the taxable income specified in that assessment by $82,950,090. Conclusions with respect to jurisdictional error Of Pt IVA the primary judge said42: "It is brought into operation upon the making of a determination by the Commissioner pursuant to [s 177F(1) of the Act]. That section provides the Commissioner with a discretion to cancel a tax benefit where such a benefit has been, or would but for the section be, obtained in connection with a scheme to which the Part applies. It is unnecessary for present purposes to describe the scheme that the Commissioner was satisfied existed relating to the Walshville float, although I would note that, in the Commissioner's view, it involved both declarations of dividends by 40 It appears that this appeal did not proceed. 41 The difference between $82,950,090 and the figure of $82,950,088 referred to earlier by the Panel appears to be the $2 attributed to the indexed cost base of the original Vockbay shares. 42 (2006) 63 ATR 562 at 569; [2006] ATC 4579 at 4586. Hayne Crennan Bristile and Vockbay and the capitalisation of debts owed to Vockbay and Futuris respectively following those declarations of dividend." This sub-section provides The Commissioner relied upon s 177F(3) to overcome any risk of ultimate "double counting". that, with respect to a determination by the Commissioner under s 177F(1) that the whole or part of the amount referable to a tax benefit shall be included in the assessable income, and in certain further circumstances, the Commissioner may determine that there should be an appropriate adjustment and shall then take action accordingly. Finn J considered that s 177F(3) could operate with respect to the Second Amended Assessment and that the decision of Kenny J in Australia and New Zealand Banking Group Ltd v Commissioner of Taxation ("the ANZ case)43, which was also a s 39B case, supported that view of s 177F(3). But his Honour, significantly, went on to hold44 that even if the Commissioner in preparing the Second Amended Assessment had proceeded upon a mistaken view of the applicability of s 177F(3): "The effect of the mistake could, and should properly, be addressed in Part IVC proceedings." In this Court, counsel for Futuris emphasised that the determination under Pt IVA to the effect that some $82.9 million be included in the assessable income of Futuris was not itself challenged in these proceedings. Rather, the case for Futuris had assumed the correctness of that step so that the whole of the $82.9 million was the relevant tax benefit. The essential point made by Futuris was that the Full Court had correctly differed from the primary judge when it determined that the assessment of taxable income in the Second Amended Assessment was flawed because there had been "double counting" of the amount In the process of the making of the Second Amended Assessment errors by the Commissioner of this nature (if indeed there were errors) fell within the scope of s 175 as explained earlier in these reasons. They could not found a complaint of jurisdictional error attracting the exercise of jurisdiction to issue constitutional writs which is conferred by s 75(v) of the Constitution on this Court and by s 39B of the Judiciary Act upon the Federal Court. If there were errors they occurred within, not beyond, the exercise of the powers of assessment 43 (2003) 137 FCR 1. 44 (2006) 63 ATR 562 at 575; [2006] ATC 4579 at 4591. Hayne given by the Act to the Commissioner and would be for consideration in the Pt IVC proceedings. Several further points should be made here. The first is to contrast the provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"). That statute is so drawn as to define most of its grounds without direct reference to principles of jurisdictional error, and, in particular, allows review for non-jurisdictional error of law45. However, Sched 1 to the ADJR Act lists (par (e)) among classes of decisions to which that statute does not apply decisions in administration of assessment provisions of revenue laws, including the Act. Secondly, principles of jurisdictional error control the constitutional writs but do not attend the remedy of injunction including that provided in s 75(v) (and thus in s 39B of the Judiciary Act)46. The same is true of the other equitable remedy, the declaratory order47. Nevertheless, the equitable remedies, which are available at the suit of a party with a sufficient interest, operate to declare invalidity and to restrain the implementation of invalid exercises of power. Where s 175 of the Act operates there will be no affectation of the validity of any assessment. In the present litigation, in addition to an order quashing the Second Amended Assessment, Futuris sought (and obtained in the Full Court) a declaration of its invalidity. Section 21 of the Federal Court of Australia Act 1976 (Cth) empowered the Federal Court to make a declaratory order but only "in relation to a matter in which it has original jurisdiction", here that conferred by s 39B of the Judiciary Act with respect to the constitutional writs. Hence the need to underpin the relief by a finding of jurisdictional error. But, independently of that consideration, and as Gaudron J explained in Enfield City Corporation v Development Assessment Commission48, the usual discretionary considerations attending the grant of equitable remedies apply to injunctions and declarations in public law cases. In the present case, it should be emphasised that 45 Aronson, Dyer and Groves, Judicial Review of Administrative Action, 3rd ed 46 See Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 157-158 [57]-[58]; [2000] HCA 5. 47 Project Blue Sky (1998) 194 CLR 355 at 393 [100]. 48 (2000) 199 CLR 135 at 157-158 [58]. Hayne Crennan the pendency of a proceeding by Futuris under Pt IVC should have led the Full Court to refuse declaratory relief in any event. The third point is one foreshadowed earlier in these reasons. It concerns the relief sought by Futuris on the footing that the Second Amended Assessment was not an "assessment" within the meaning of s 175 of the Act because it was "tentative" or "provisional". In Batagol v Federal Commissioner of Taxation49, after describing "assessment" as a process with the consequence that a specified amount will become due and payable as the proper tax in the case in question, "The idea coincides with that which Isaacs J expressed in Federal Commissioner of Taxation v Hoffnung & Co Ltd[50] in relation to war-time profits tax when he said: 'If an assessment definitive in character is made, it assumes that, so far as can there be seen, a fixed and certain sum is definitely due, neither more nor less. In short, it ascertains a precise indebtedness of the taxpayer to the Crown'51. On this construction of the Act nothing done in the Commissioner's office can amount to more than steps which will form part of an assessment if, but only if, they lead to and are followed by the service of a notice of assessment." Further authorities to this effect were assembled by Kenny J in the ANZ Case52. The defect discerned in Hoffnung appeared in circumstances where the taxpayer had objected within time to the disallowance in a 1925 amended assessment of a deduction it claimed, but had failed earlier to object to the original "assessment" issued in 1919, which had been self-described as "tentative". The Commissioner took the position that any objection should have been made to the 1919 assessment and it was too late to do so in 1925. However, as Starke J put it53 there had not been any assessment under the statute until 1925. 49 (1963) 109 CLR 243 at 252. 50 (1928) 42 CLR 39; [1928] HCA 49. 51 (1928) 42 CLR 39 at 55. 52 (2003) 137 FCR 1 at 14-15. 53 (1928) 42 CLR 39 at 65. Hayne The essential consideration here was explained as follows by Davies J in Stokes v Federal Commissioner of Taxation54: "Because the making of an assessment involves the determination and fixing of the taxpayer's liability to tax, subject to the taxpayer's right to object and to seek administrative review or to appeal to this court, a process which fails to specify what is the amount of the taxable income which has been assessed and what is the tax payable thereon is not an assessment for the purposes of s 166 or of s 170 of the Act." The Full Court held55 that it appeared neither on the face of the Second Amended Assessment nor from the letter written by the Deputy Commissioner to the public officer of Futuris on 20 September 2004 stating: "We also advise that we will not seek payment of any of the primary tax, tax shortfall penalty and interest and general interest charges payable under subsection 170AA(1) in respect of $19,950,088 of the Part IVA adjustment until the litigation relating to the Division 19A issue is finalised." that the assessment was tentative or provisional "in the sense that it was not definitive of Futuris' liability". Futuris challenges that outcome by Notice of Contention, but the Full Court on this issue was plainly correct. There remains, however, the question whether there was a conscious maladministration of the Act and, if so, whether s 175 had any operation in respect of a complaint of jurisdictional error. The knowledge of the Commissioner The Full Court found56: "it is our view that the Commissioner knew, during the relevant period, that if he included in Futuris' assessable, and therefore taxable, income an amount of $82,950,090 as a tax benefit obtained in connection with a 54 (1996) 136 ALR 632 at 638; affd Commissioner of Taxation v Stokes (1996) 72 FCR 160. 55 (2007) 159 FCR 257 at 272-273. 56 (2007) 159 FCR 257 at 262. Hayne Crennan scheme to which Pt IVA applied on top of the taxable income assessed under the First Amended Assessment, he would be 'double counting' the amount of $19,950,088. That the Commissioner found comfort for this in his assumption that he could subsequently make a compensating adjustment in reliance on s 177F(3) does not mitigate against that conclusion as to his knowledge; on the contrary, it supports the conclusion that the Commissioner knew that his chosen course involved 'double counting'; and, with respect to, but contrary to, the finding of the primary judge, it also supports a conclusion that the 'double counting' was deliberate, albeit subject to the assumption that all could be made good by a subsequent compensating adjustment determination in reliance on s 177F(3)." (original emphasis) If this finding as to mental element in the making of the assessment were to withstand the challenge in this Court by the Commissioner, would that, contrary to what has been concluded thus far in these reasons, enliven principles respecting jurisdictional error? The issue here is whether, upon its proper construction, s 175 of the Act brings within the jurisdiction of the Commissioner when making assessments a deliberate failure to comply with the provisions of the Act. A public officer who knowingly acts in excess of that officer's power may commit the tort of misfeasance in public office in accordance with the principles outlined earlier in these reasons. Members of the Australian Public Service are enjoined by the Public Service Act (s 13) to act with care and diligence and to behave with honesty and integrity. This is indicative of what throughout the whole period of the public administration of the laws of the Commonwealth has been the ethos of an apolitical public service which is skilled and efficient in serving the national interest. These considerations point decisively against a construction of s 175 which would encompass deliberate failures to administer the law according to its terms. Such failures manifest jurisdictional error and attract the jurisdiction to issue the constitutional writs. To the extent that there is any indication to the contrary in what was said by Mason and Wilson JJ in F J Bloemen Pty Ltd v Federal Commissioner of Taxation57 that should not be followed. 57 (1981) 147 CLR 360 at 378; [1981] HCA 27. Hayne It should be added that, with respect to the remedy of injunction, what was said in the joint reasons in Plaintiff S157/2002 v The Commonwealth58 indicates that injunctive relief clearly is "available for fraud, bribery, dishonesty or other improper purpose". However, there was no such failure of due administration with respect to the Second Amended Assessment. The Court was taken through the internal documents of the ATO and the correspondence which was in evidence. The key to the error in the reasoning of the Full Court may be seen in the concluding words in the passage from its reasons set out above59 that what was held to be the "deliberate" conduct of the Commissioner was "albeit subject to the assumption that all could be made good by a subsequent compensating adjustment determination in reliance on s 177F(3)". This was more than an "assumption"; the reasoning in the ANZ Case60 was fairly open to the construction that it supported the course taken in making the Second Amended Assessment and the assessment was made on that footing. That s 177F(3) might be differently construed in a subsequent Pt IVC proceeding (and the allowing of this appeal leaves open that possibility in the pending Pt IVC litigation in the Federal Court) does not support any conclusion that the Commissioner engaged in "double counting" with any knowledge or belief that there was a failure in compliance with the provisions of the Act. Allegations that statutory powers have been exercised corruptly or with deliberate disregard to the scope of those powers are not lightly to be made or upheld. Remarks by Hill, Dowsett and Hely JJ in Kordan Pty Ltd v Federal Commissioner of Taxation61 are in point. Their Honours said: "The allegation that the Commissioner, or those exercising his powers by delegation, acted other than in good faith in assessing a taxpayer to income tax is a serious allegation and not one lightly to be made. It is, thus, not particularly surprising that applications directed at setting aside assessments on the basis of absence of good faith have generally been unsuccessful. Indeed one would hope that this was and 58 (2003) 211 CLR 476 at 508 [82]. 59 (2007) 159 FCR 257 at 262. 60 (2003) 137 FCR 1. 61 (2000) 46 ATR 191 at 193; [2000] ATC 4812 at 4815. Hayne Crennan would continue to be the case. As Hill J said in San Remo Macaroni Company Pty Ltd v FCT[62] it would be a rare case where a taxpayer will succeed in showing that an assessment has in the relevant sense been made in bad faith and should for that reason be set aside." The outcome on the present appeal bears out the quoted observation by Conclusions The primary judge was correct to dismiss the s 39B application and the Full Court erred in displacing that outcome. The appeal to this Court should be allowed. It should be noted that the process of reasoning which has led to that conclusion does not depend upon giving determinative effect to s 177(1). Rather, the critical matter for the determination by this Court of the appeal has been the proper construction of s 175 and its application to the facts as correctly found by the primary judge. However, given the attention devoted to s 177(1) in the submissions of both parties something more should be said respecting that provision. The relationship between s 175 and s 177(1) The evident policy reflected in the terms of s 177(1) is the facilitation of proceedings for the recovery of tax which are instituted by the Commissioner under s 209 of the Act in a court of competent jurisdiction63. Corresponding provision is made elsewhere in the Act for the recovery of other amounts64. The action for recovery is facilitated by the "conclusive evidence" provision in s 177(1). That sub-section, as the Commissioner correctly submitted, is not a privative clause in the ordinary use of that term. It does not purport to oust the (necessarily federal) jurisdiction conferred upon any other court in matters arising under the Act. To the contrary, it recognises that there may be Pt IVC 62 (1999) 43 ATR 53 at 71; [1999] ATC 5138 at 5154. 63 Section 209 attracts the conferral of federal jurisdiction upon State courts by the ambulatory operation of s 39(2) of the Judiciary Act: Forsyth v Deputy Commissioner of Taxation (2007) 81 ALJR 662 at 665 [1]-[2]; 233 ALR 254 at 255; [2007] HCA 8. 64 See, as to the PAYE system, Forsyth v Deputy Commissioner of Taxation (2007) 81 ALJR 662; 233 ALR 254. Hayne proceedings and in those proceedings the "conclusive evidence" provision does not apply. In recovery proceedings s 177(1) operates to change what otherwise would be the operation of the relevant laws of evidence. But, given the presence of Pt IVC, s 177(1) does not operate to impose an incontestable tax or otherwise fall foul of the principles which were considered in Nicholas v The Queen65 and which respect usurpation of the federal judicial power by deeming to exist an ultimate fact. What of the operation of s 177(1) as a limitation upon the evidence which may be received in an application for judicial review under s 75(v) of the Constitution or s 39B of the Judiciary Act? What will be in issue there, as explained earlier in these reasons, are allegations of corruption and other deliberate maladministration. The attribution "correct" given by the concluding word of s 177(1) is inapt to describe the situation which would arise were such allegations (properly pleaded) made good in the judicial review proceeding. Considerations applied above in the construction of s 175 apply here also. The result is that, on its proper construction and its application to the present s 39B case, s 177(1) did not conclude against Futuris curial consideration of alleged deliberate maladministration of the Act with respect to the Second Amended Assessment. It follows from what has been said respecting s 177(1) that not only is it not a privative clause, but there is not the conflict or inconsistency between s 177(1), s 175 and the requirements of the Act governing assessment which calls for reconciliation of the nature identified in Plaintiff S157/2002 v The Commonwealth66. The point sought to be made here respecting the relationship between s 175 and s 177(1) and those requirements was expressed in Deputy Commissioner of Taxation v Richard Walter Pty Ltd67, by Dawson J as follows68: "The requirements of the Act which govern the making of an assessment do not produce any inconsistency with the provision that a notice of 65 (1998) 193 CLR 173; [1998] HCA 9. 66 (2003) 211 CLR 476 at 486-488 [17]-[19], 500-501 [57]-[60]. 67 (1995) 183 CLR 168. 68 (1995) 183 CLR 168 at 222-223. Toohey J spoke in somewhat similar terms: (1995) 183 CLR 168 at 233. Hayne Crennan assessment constitutes conclusive evidence in recovery proceedings. That is because s 175 provides that the validity of any assessment shall not be affected by reason of the fact that any of the provisions of the Act have not been complied with. ... Having regard to s 175, there is no inconsistency, apparent or otherwise, between the requirements of the Act relating the making of an assessment and s 177(1), and no reconciliation is called for. Indeed, as I have said, s 177(1) does no more than give evidentiary effect to s 175." It follows that there is no scope here for the operation of the so-called Hickman principle69. Futuris framed its case as if Hickman was engaged and by adoption of Dixon J's words70: "provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body". But it was only the first mentioned consideration ("bona fide attempt") that was relevant at all in the judicial review proceeding. The notion of bona fides had the content explained earlier in these reasons and did not enter the case by the tortuous path of statutory construction and reconciliation with which Dixon J was concerned. Something more should also be said respecting Richard Walter71. That case decided first, that the Act permits the Commissioner to issue assessments on an alternative basis to different taxpayers in respect of the same income and, secondly, that s 177(1) does not limit the jurisdiction conferred by s 39B of the Judiciary Act. Neither holding is challenged in this litigation. Various views were expressed the construction of and relationship between s 175 and s 177(1). Reference was made to the then accepted distinction between mandatory and directory provisions72, and to what seems to have been some doctrinal status then afforded in Richard Walter respecting 69 After R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598; [1945] HCA 53. 70 (1945) 70 CLR 598 at 615. 71 (1995) 183 CLR 168. 72 (1995) 183 CLR 168 at 185 per Mason CJ, 223 per Toohey J, 240 per McHugh J. Hayne to Hickman73. As to the first matter, Project Blue Sky has changed the landscape and as to the second, Plaintiff S157/2002 has placed "the Hickman principle" in perspective. Hence this appeal should be decided by the path taken in these reasons and not by any course assumed to be mandated by what was said in any one or more of the several sets of reasons in Richard Walter. Orders The appeal should be allowed with costs, the orders and declaration of the Full Court entered on 26 June 2007 be set aside and in place thereof the appeal to that Court be dismissed with costs. 73 (1995) 183 CLR 168 at 179-180 per Mason CJ, 193-194 per Brennan J. Kirby KIRBY J. This is an appeal from orders of the Full Court of the Federal Court of Australia74. That Court reversed the orders of the primary judge (Finn J)75. The Full Court declared that an amended assessment of income tax for the year ending on 30 June 1998, served upon Futuris Corporation Ltd ("Futuris"), was not a valid assessment for the purposes of the Income Tax Assessment Act 1936 (Cth) ("the Act"). It ordered that the amended assessment be quashed. By special leave, the Commissioner of Taxation ("the Commissioner") seeks to reverse the Full Court's orders and to restore the orders of the primary judge. The Full Court's decision was based upon its conclusion that the Commissioner had "doubled counted" an amount of $19,950,088 in expressing the contested assessment ("the Second Amended Assessment"). Futuris submits that this amount was treated as a tax benefit that it obtained in connection with a scheme to which Pt IVA of the Act applied, before also being included in Futuris's that the Commissioner had assumed that he could make a corresponding adjustment to the taxable income payable by Futuris, in reliance on s 177F(3) of the Act, if the Second Amended Assessment was later found to have wrongly included the contested amount. Evidence received at trial showed income. taxable that The Full Court decided the Commissioner had knowingly ("deliberately") double-counted the amount of $19,950,088 in issuing the disputed Second Amended Assessment76. It held that it was not open to the Commissioner to make a subsequent compensating adjustment under s 177F(3) of the Act to correct any overstatement of taxable income77. It concluded that the Second Amended Assessment was not a valid "assessment" in accordance with the Act. Whilst rejecting Futuris's submission that the Second Amended Assessment was invalid, by reason that it was tentative or provisional78, the Full Court accepted the submission that it was invalid as it was not a bona fide exercise of the Commissioner's power to assess79. 74 Futuris Corporation Ltd v Federal Commissioner of Taxation (2007) 159 FCR 257 per Heerey, Stone and Edmonds JJ. 75 Futuris Corporation Ltd v Federal Commissioner of Taxation (2006) 63 ATR 562; [2006] ATC 4579. 76 Futuris (2007) 159 FCR 257 at 262 [10]. 77 (2007) 159 FCR 257 at 264-265 [16] and 266 [23]. 78 (2007) 159 FCR 257 at 273 [51]. 79 (2007) 159 FCR 257 at 273 [53]. Kirby In this way, the Full Court decided that the Second Amended Assessment was not protected by ss 175 and 177(1) of the Act. Instead, it was held to fail at the threshold of legal validity. That conclusion attracted relief to Futuris in accordance with s 39B of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). It was on that footing that the Full Court made the declaration and order quashing the Second Amended Assessment now challenged in this Court. The Commissioner disputed the foregoing decision of the Full Court. He asserted that the Second Amended Assessment was valid; involved no double- counting; and was definitive of the liability of Futuris to income tax in the relevant tax year. He also argued that the Second Amended Assessment was protected by ss 175 and 177 of the Act; that it was not subject to judicial review proceedings brought under s 39B of the Judiciary Act but only to proceedings brought under Pt IVC of the Taxation Administration Act 1953 (Cth) ("the Administration Act"); that it was open to the Commissioner to contemplate, if necessary, a later adjustment to the Second Amended Assessment pursuant to s 177F(3) of the Act; and, in any event, that relief under s 39B of the Judiciary Act should have been denied on discretionary grounds. In this Court, Futuris supported the reasoning of the Full Court. It also relied on a notice of contention that sought to extend the basis of the invalidity found by the Full Court. Specifically, Futuris contended that the Second Amended Assessment was tentative or provisional and not issued bona fide as it was known by its maker to overstate Futuris's taxable income and tax payable. Constitutional starting points Criteria for valid tax laws: Whilst neither party raised express constitutional arguments, the Constitution cannot be ignored in approaching the issues in this appeal. Necessarily, the Constitution stands behind and informs the meaning of the legislation under consideration. Every now and again, in these cases, the Court needs to return to the applicable constitutional moorings. The constitutional power of the Federal Parliament to make laws imposing taxation is expressed in very wide terms80. Once engaged, both in matters of content and in the procedures envisaged, the power acknowledges few limits81. Nevertheless, the power is subject to constraints necessarily implied by the grant. Moreover, like all s 51 heads of power, the power to make laws with respect to taxation is subject to the requirements of other provisions of the Constitution and to implications derived from the terms and structure of that document. 80 See Constitution, s 51(ii). 81 R v Barger (1908) 6 CLR 41 at 94-95 per Isaacs J; 114 per Higgins J; [1908] HCA Kirby As to the grant, to be a law with respect to "taxation", the provision must not be arbitrary. It must be based on an ascertainable criterion and be susceptible to judicial scrutiny. Such scrutiny is, at the least, inherent in the design of the Constitution because Ch III subjects the several grants of legislative power in s 51 to the examination of the independent Judicature. This point was made by Dixon CJ in Deputy Federal Commissioner of Taxation v Brown82: "Although there is no judicial decision to that effect, it has, I think, been generally assumed that under the Constitution liability for tax cannot be imposed upon the subject without leaving open to him some judicial process by which he may show that in truth he was not taxable or not taxable in the sum assessed, that is to say that an administrative assessment could not be made absolutely conclusive upon him if no recourse to the judicial power were allowed." From such observations, this Court has derived, and repeatedly expressed83, the requirement that to be valid a tax cannot be incontestable. Any attempt by the Parliament to make a tax incontestable would exceed the legislative power that is granted. Thus, in MacCormick v Federal Commissioner of Taxation, the Court said that the84 "… incontestability of a tax may go to its validity. The principle which lies behind the doctrine is a more general one of elementary constitutional law. It is simply that the legislature cannot determine conclusively for itself its power to enact legislation by putting beyond examination compliance with the constitutional limits upon that power. … For an impost to satisfy the description of a tax it must be possible to differentiate it from an arbitrary exaction and this can only be done by reference to the criteria by which liability to pay the tax is imposed. Not only must it be possible to point to the criteria themselves, but it must be 82 (1958) 100 CLR 32 at 40; [1958] HCA 2. See also at 52 per Williams J. 83 See eg Deputy Commissioner of Taxation v Hankin (1959) 100 CLR 566 at 576- 578; [1959] HCA 2; MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 at 639; [1984] HCA 20; Glennan v Commissioner of Taxation (2003) 77 ALJR 1195 at 1198 [15]; 198 ALR 250 at 254; [2003] HCA 31. 84 (1984) 158 CLR 622 at 639-640 per Gibbs CJ, Wilson, Deane and Dawson JJ, calling on Australian Communist Party v The Commonwealth ("the Communist Party Case") (1951) 83 CLR 1 at 258 per Fullagar J; [1951] HCA 5. Kirby possible to show that the way in which they are applied does not involve the imposition of liability in an arbitrary or capricious manner." In this appeal, Futuris did not challenge any legislation, including ss 175 or 177(1) of the Act, as constitutionally invalid. Nevertheless, Futuris emphasised the centrality of having effective judicial review of the purported imposition upon it of liability to the taxation expressed in the Second Amended Assessment. This proposition was designed to address the contention that, in this case, Futuris should have sought merits review before the Administrative Appeals Tribunal, then appealed from that Tribunal to the Federal Court on a question of law85 or under Pt IVC of the Administration Act. Futuris insisted on the prior facility to challenge the Commissioner's assessment where a taxpayer was asserting that, in law, it was not an "assessment" at all and thus did not have the legal consequences that would flow from a valid "assessment". In effect, Futuris argued that a case such as the present was precisely the kind for which such relief was afforded by the Constitution86 and the Judiciary Act87. To attempt to force a taxpayer, with a threshold and basic legal objection, to pursue other remedies could (depending on the circumstances) burden the facility of contestability before the courts. And such judicial contestability is, in Australia, the constitutional prerequisite for all valid federal taxation laws. The rule of law and s 75(v): The second starting point is connected and is just as fundamental. It derives from a recognition that the Constitution establishes a polity adhering to the rule of law. It affords law-making powers to the Federal Parliament that are ancillary, or incidental, to sustaining and carrying on government88: "[I]t is government under the Constitution and that is an instrument framed in accordance with many traditional conceptions, to some of which it gives effect, as, for example, in separating the judicial power from other functions of government, others of which are simply assumed. Among these I think that it may fairly be said that the rule of law forms an assumption." 85 Administrative Appeals Tribunal Act 1975 (Cth), s 44. 86 Constitution, s 75(v). 87 Section 39B. 88 Communist Party Case (1951) 83 CLR 1 at 193 per Dixon J. Kirby Because this unstated but implied assumption permeates the Constitution, it is reflected in the purposes for which the constitutional writs, established by s 75(v), exist. Those writs afford remedies by which this Court is empowered to ensure that officers of the Commonwealth conform to the rule of law. Pursuant to the Constitution89, s 39B of the Judiciary Act was enacted to grant a facility to the Federal Court to provide similar remedies90. The crucial role of such remedies, to ensure the conformity of federal officials to the Constitution and to laws made under it, was given fresh emphasis by this Court in Plaintiff S157/2002 v The Commonwealth91. Plaintiff S157/2002 addressed s 75(v) of the Constitution. However, the same principles apply in relation to the powers provided to the Federal Court to grant relief under s 39B of the Judiciary Act, the provision invoked by Futuris. In Plaintiff S157/2002 it was said that92 "[Section] 75(v) … introduces into the Constitution of the Commonwealth an entrenched minimum provision of judicial review. There was no precise equivalent to s 75(v) in either of the Constitutions of the United States of America or Canada. The provision of the constitutional writs and the conferral upon this Court of an irremovable jurisdiction to issue textual them reinforcement for what Dixon J said about the significance of the rule of law for the Constitution in [the Communist Party Case] … the Commonwealth constitutes a to an officer of The reservation to this Court by the Constitution of the jurisdiction in all matters in which the named constitutional writs or an injunction are sought against an officer of the Commonwealth is a means of assuring to all people affected that officers of the Commonwealth obey the law and neither exceed nor neglect any jurisdiction which the law confers on them. The centrality, and protective purpose, of the jurisdiction of this Court in that regard places significant barriers in the way of legislative attempts (by privative clauses or otherwise) to impair judicial review of administrative action." Discretionary relief under s 75(v): The third starting point derives from the character of the constitutional remedies provided for in, or contemplated by, 89 Constitution, ss 51(xxxix) and 77(i). 90 Judiciary Act, s 39B(1). 91 (2003) 211 CLR 476; [2003] HCA 2. 92 (2003) 211 CLR 476 at 513-514 [103]-[104]. Kirby s 75(v). Courts in 19th century England93, and later this Court94, have debated whether the remedies specified in s 75(v) (or at least the writ of prohibition) would in particular circumstances issue as of right. Decisions, especially more recent ones, have concluded that all of the remedies provided in s 75(v) are Nineteenth century English practice generally regarded the writ of mandamus as discretionary. Likewise, the remedy of injunction, being equitable in origin, was always so viewed. Looking afresh at the collection of s 75(v) remedies, it was therefore but a small step to conclude, as the Court did, that each such remedy was discretionary in character. Any entanglements in earlier practice and understandings were removed by an appreciation that the Constitution provided the remedies named in s 75(v) for high constitutional purposes. Those purposes had to be found within Ch III ("the Judicature") of the Constitution, the chapter in which s 75(v) appears. Section 73 is a central provision of Ch III. It provides this Court, in its appellate jurisdiction, with the entrenched national supervision of the integrated Judicature of the Commonwealth. Thus, the constitutional writs and remedies contemplated by s 75(v) must operate in a context of an integrated court structure. That structure includes the facility of this Court to decide appeals coming before it, relevantly, from any other federal court, any court exercising federal jurisdiction, any Supreme Court of a State, or any other court identified within that section96. 93 See eg Mayor and Aldermen of the City of London v Cox (1867) LR 2 HL 239 at 279-280; Chambers v Green (1875) LR 20 Eq 552 at 555 per Sir George Jessel 94 See eg R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 at 118-119; [1953] HCA 22; R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 at 201-202; [1979] HCA 6. 95 R v Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504 at 513 per Gibbs J, 522 per Aickin J; R v Marks; Ex parte Australian Building Construction Employees and Builders Labourers' Federation (1981) 147 CLR 471 at 484-485 per Mason J, 489 per Murphy J, 493 per Aickin J, 494 per Wilson J; [1981] HCA 33; R v Ross- Jones; Ex parte Green (1984) 156 CLR 185 at 194 per Gibbs CJ; [1984] HCA 82; R v Gray; Ex parte Marsh (1985) 157 CLR 351 at 375 per Mason J; [1985] HCA 96 Constitution, s 73(ii). Kirby With a fuller appreciation of the context and purpose of the writs and remedies provided by s 75(v), this Court, in Re Refugee Review Tribunal; Ex parte Aala97, clearly affirmed the rule that all of the constitutional relief there mentioned is discretionary in character. Gaudron and Gummow JJ, in their joint reasons in Aala, gave a salutary warning98: "No doubt the discretion with respect to all remedies in s 75(v) is not to be exercised lightly against the grant of a final remedy, particularly where the officers of the Commonwealth in question do not constitute a federal court and there is no avenue of appeal to this Court under s 73 of the Constitution." Their Honours acknowledged those who exercise executive and administrative powers are as much subject to the law as those affected by such exercise99. They drew guidance100 for withholding relief under s 75(v) of the Constitution from the examples given by this Court in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd101: that "[T]he writ may not be granted if a more convenient and satisfactory remedy exists, if no useful result could ensue, if the party has been guilty of unwarrantable delay or if there has been bad faith on the part of the applicant, either in the transaction out of which the duty to be enforced arises or towards the court to which the application is made." 97 (2000) 204 CLR 82 at 89 [5] per Gleeson CJ, 107 [54]-[55] per Gaudron and Gummow JJ, 136-137 [145]-[148] of my own reasons, 144 [172] per Hayne J, 156- 157 [217]-[218] per Callinan J; [2000] HCA 57. 98 (2000) 204 CLR 82 at 107 [55] per Gaudron and Gummow JJ citing Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Q) (1995) 184 CLR 620 at 639, 651-655; [1995] HCA 31. 99 (2000) 204 CLR 82 at 107-108 [55] citing Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135 at 157 [56] per Gaudron J; [2000] HCA 5. 100 (2000) 204 CLR 82 at 108 [56]. 101 (1949) 78 CLR 389 at 400 per Latham CJ, Rich, Dixon, McTiernan and Webb JJ; [1949] HCA 33. Kirby In many cases before102 and after Aala103, including cases where relief had been sought against the Commissioner in reliance upon the Act, remedies of the kind mentioned in s 75(v) have been denied on discretionary grounds. Usually, this has been done for the first reason mentioned in Ozone Theatres that a "more convenient and satisfactory remedy exists"104, specifically one which would be susceptible to ultimate recourse to this Court by way of an appeal. this Court Consistently with previous authority of in similar proceedings105, Futuris did not seek in these proceedings to invoke the original jurisdiction of this Court. Futuris did not claim constitutional writs or injunctive relief in respect of the conduct of the Commissioner for his allegedly invalid Second Amended Assessment, issued without relevant jurisdiction or power. Nor did Futuris claim such relief in respect of the Judges of the Federal Court for exceeding their jurisdiction in the decision they made. Instead, Futuris invoked the jurisdiction of the Federal Court by commencing proceedings for the relief provided by the Judiciary Act, s 39B(1). In respect of the Federal Court, s 39B(1) re-states the grant of remedies provided to this Court by s 75(v) of the Constitution. Decisions concerning the ambit of s 75(v) of the Constitution apply with equal force to the same remedies afforded to the Federal Court by s 39B(1). Conclusion: a significant context: The foregoing three constitutional starting points assist this Court on the way in which it should approach the arguments of the parties in this appeal. Although neither party advanced arguments of constitutional invalidity, it is essential to acknowledge the constitutional setting before proceeding to interpret the relevant legislation and to resolve the issues in the appeal. The first two starting points underlie, in part, the arguments proffered by Futuris. No construction of the contested legislation should be adopted which would effectively make the Commissioner a final judge of his own administrative decisions or would oust the jurisdiction of the courts to scrutinise a tax that the Commissioner has purported to impose on a taxpayer by an "assessment". 102 eg Re Carmody; Ex parte Glennan (2000) 74 ALJR 1148 at 1156 [37]; 173 ALR 145 at 156; [2000] HCA 37. The case was decided in June 2000, five months before Aala. 103 eg Re Heerey; Ex parte Heinrich (2001) 185 ALR 106 at 109-110 [17]-[18]; [2001] HCA 74. 104 (1949) 78 CLR 389 at 400. 105 See Glennan (2003) 77 ALJR 1195-1196 at 1198 [17]-[18]; 198 ALR 250 at 254- Kirby The second starting point also reinforces the contention that making a tax decision review inadmissible would take a purported tax outside the grant of power to the Federal Parliament. Irrespective of other remedies available to challenge assessments of taxation and other acts or omissions by officers of the Commonwealth, the exceptional jurisdiction provided by s 75(v) of the Constitution to this Court stands in reserve (and is mirrored, in the Federal Court, by s 39B of the Judiciary Act). These unique safeguards assure to the named courts the jurisdiction and power to scrutinise all relevant acts and omissions of Commonwealth officers against the applicable legal standards. Such a position is protected despite any attempts that may be made by legislative protections (privative clauses or otherwise) or by administrative practices, purporting to immure such officers and their conduct against the applicable judicial superintendence. Nevertheless, superintendence by reference to legal criteria can be afforded in different ways. An important step in the argument of the Commissioner was that the provision of the remedies which Futuris invoked in the Federal Court, pursuant to s 39B(1) of the Judiciary Act, was misconceived. The correct and available avenue to challenge the Second Amended Assessment, addressed to the taxpayer, was in proceedings brought by the taxpayer under Part IVC of the Administration Act106. The relief sought under s 39B should therefore be refused on the basis of that Court's discretion. The facts and legislation The facts: The evidence of the transactions relevant to this appeal was detailed and complex. However, it was wholly documentary. The Full Court outlined the facts relevant to the underlying transactions107 and to the assessments and appeals process108. It noted that such facts were not in dispute109. 106 Including proceedings where review had been sought before the Administrative Appeals Tribunal ("AAT") and by way of appeal on a question of law from a decision of the AAT pursuant to the Administrative Appeals Tribunal Act 1975 (Cth), s 44. 107 Futuris (2007) 159 FCR 257 at 259 [3] citing Futuris (2006) 63 ATR 562 at 564 [2]-[5]; [2006] ATC 4579 at 4581-4582. 108 (2007) 159 FCR 257 at 259-261 [4]-[6] citing (2006) 63 ATR 562 at 564-565 [6]- [13]; [2006] ATC 4579 at 4582-4583. 109 (2007) 159 FCR 257 at 259-260 [3]-[4]. Kirby In addition to the facts concerning the actions of Futuris and its associated companies (Vockbay, Walshville and Bristile110), the primary judge and the Full Court paid close attention to the records of the Australian Taxation Office ("the ATO") made during the relevant period. This was done in considering the application of Div 19A of Pt IIIA of the Act to determine the applicable capital gains and capital losses. This course was taken to ascertain the knowledge and intention of the Commissioner, through his officers, when he issued the Second Amended Assessment to Futuris111. This Court devoted considerable time during the hearing to an examination of the ATO files, memoranda and determinations. The purpose of the Act, found in Div 19A, to address avoidance of income tax as deemed unacceptable by the Parliament, is explained in the reasons of Gummow, Hayne, Heydon and Crennan JJ ("the joint reasons")112. The joint reasons also describe the dealings between Futuris and its associated companies; the return lodged by Futuris with the ATO stating its self-assessed taxable income for the income tax year ended 30 June 1998113; the subsequent service on Futuris in November 2002 of the First Amended Assessment114; and the later service of the Second Amended Assessment based on an application of Pt IVA of the Act, with special provisions addressed to "Schemes to Reduce Income Tax"115. The joint reasons explain the steps taken by Futuris between the First and Second Amended Assessments116. Specifically, Futuris initiated proceedings under Pt lVC of the Administration Act to challenge the First Amended Assessment by way of an "appeal" to the Federal Court against the Commissioner's disallowance of its objection to that assessment117. The invocation of Pt IVC remained undetermined during the proceedings in the 110 The same abbreviations are used as in the joint reasons at [28] and the court below: (2007) 159 FCR 257 at 259 [3] citing (2006) 63 ATR 562 at 564 [3]; [2006] ATC 111 (2007) 159 FCR 257 at 262-263 [8]-[12] citing the primary judge (2006) 63 ATR 562 at 566-568 [16]-[22]; [2006] ATC 4579 at 4583-4585. 112 Joint reasons at [30]-[31]. 113 Joint reasons at [33]. 114 Joint reasons at [34]. 115 Joint reasons at [36]. 116 Joint reasons at [35]. 117 See Futuris Corporation Ltd v Commissioner of Taxation [2005] FCA 969 at [5]. Kirby Federal Court, which proceedings are now the subject of this appeal addressed to the validity of the Second Amended Assessment. Critical to the challenge by Futuris to the validity of the Second Amended Assessment (and to Futuris's submission that it was not an "assessment" within the statutory powers afforded to the Commissioner) were many recorded exchanges between officers of the ATO. These expressed, and explained, their conclusions about the way the ATO (and hence the Commissioner) should assess the income tax payable by Futuris in the relevant year. Some of the applicable reports in the ATO files are extracted in the joint reasons118. Based on these extracts, Futuris sought to build its argument that the Second Amended Assessment was legally invalid. Its argument was essentially that the subject assessment was not an "assessment" within the meaning of the Act because, as was known to the ATO, it involved "double counting". It was therefore not a bona fide exercise of the Commissioner's power of "assessment" and was not definitive of Futuris's liability to income tax in respect of that taxation year. Instead, it was tentative and subject to revision. It thus lacked the certainty and finality postulated by the Act. It was therefore outside the jurisdiction and power granted to the Commissioner to assess the taxpayer. For that reason it was not covered by whatever protection ss 175 and 177(1) of the Act provided against judicial scrutiny of the Commissioner's actions in the challenge that Futuris presented in its s 39B(1) proceedings. It is neither sensible nor necessary to extract more from the ATO internal memoranda than is contained in the joint reasons. Futuris placed great emphasis upon the importance, under the Act, of the provisions now applicable for self- assessment by the taxpayer119; the powers of the Commissioner to make an amended assessment that has burdensome120 and immediate consequences for the taxpayer; and the high significance attached in the scheme of the Act to any such successive "assessments", effectively as the fulcrum around which rights and duties, liabilities and entitlements, as provided by the Act, operate. The foregoing features of the "assessment process" were invoked by Futuris to support its contention that the assessment provisions and whole scheme of the Act required great care, accuracy, bona fides and finality in the Commissioner's assessments. Anything less would not suffice. Specifically, guesswork, self-protective over-estimation, imposition of assessments known to 118 Joint reasons at [36]-[38]. 119 Pursuant to the Act, s 166A(1). 120 See the Administration Act, ss 14ZZK and 14ZZO. See joint reasons at [24]. Kirby be false or purely provisional pending later developments would not fulfil the statutory requirements of an "assessment". Any purported "assessment" with these or similar flaws would not be an "assessment" within the Act and would not give rise to the statutory consequences for the taxpayer. Futuris complained specifically that the Commissioner in the Second Amended Assessment knowingly and deliberately "double counted" Futuris's income tax liability. Futuris submitted that this was demonstrated by comparing the First and Second Amended Assessment documents. This demonstrated, so it was argued, that the Commissioner "knew, during the relevant period" that, by including the amount deemed to be included by the determination under s 177F of the Act on top of the taxable income in the First Amended Assessment, he was "double-counting" $19,950,088121. Three general comments may be made, based upon a review of the documentary evidence. First, in lodging its income tax return for the relevant taxation year, Futuris did not fully particularise the basis upon which it had applied the provisions of Div 19A of the Act to arrive at the specified taxable income of $82,950,090. Futuris simply attached a brief schedule and subsequently declined to supply comment and information requested by the Commissioner to elaborate and explain that schedule. Whilst this was possibly Futuris's legal right in the circumstances, it inevitably forced the Commissioner to review Futuris's self-assessment and to make his own amended assessments on the basis of potentially incomplete and imperfect information. As to the detail, Futuris was obviously in a position of advantage. Futuris's complaints about a lack of accuracy, certainty and finality in the Second Amended Assessment in this context therefore tend to fall on ears that are, to some extent at least, unreceptive. Secondly, as the extracts from the ATO file demonstrate, the ATO officers appreciated that there was a risk of double-counting in the successive amended assessments issued by the Commissioner122. Nevertheless, the file notes clearly show that there was no intention to deceive or trick the taxpayer or, ultimately, to impose a double burden. The Pt IVA Panel, constituted within the ATO, noted that, depending on "the outcome of the Division 19A issue" (Futuris's appeal to the Federal Court being still outstanding) "a compensating adjustment can be made at a later stage if necessary". The provision of such an adjustment by the ATO was considered to be "obvious"123. The Commissioner's steps were 121 [2008] HCATrans 144 at line 2724, 2732. 122 Joint reasons at [37]. 123 Joint reasons at [38]. Kirby explained as designed to "protect the Revenue". Specifically, the Panel relied on a then recent decision of a judge of the Federal Court124. It is possible that the ATO file contains self-serving statements. In this life it has been known for officials to leave a trail of protective memoranda so as to cloak themselves with an appearance of propriety in case of later official or judicial scrutiny. Suffice to say that there is no evidence of such conduct in the many ATO file entries presented to this Court. On the contrary, from the file contents, the officers appear to have struggled with a difficult problem of evidence and statutory application and to have done so conscientiously, honestly and candidly. Thirdly, the file notes appear to have contemplated that Futuris would pursue its Div 19A "appeal" to the Federal Court. Consequential decisions would then be made either to enforce the First Amended Assessment (if upheld) or to enforce (with whatever modifications were then appropriate) the Second Amended Assessment. Instead of proceeding down this path of challenge, Futuris elected to pursue the remedy of judicial review in reliance on s 39B(1) of the Judiciary Act. That proceeding brought the parties to the Federal Court and now, by special leave, to this Court. The legislation: The relevant provisions of the Act and of the Administration Act are set out in the joint reasons125. It is unnecessary for me to repeat them. The decisions of the Federal Court The primary judge's decision: The primary judge rejected Futuris's challenge to the validity of the Second Amended Assessment. His Honour stated126: "[T]he Commissioner goes on to say that, given the present uncertainty as to how the $19,000,000 was calculated, it may be that the two bases may in fact be found in this case to be cumulative. The Pt IVC proceedings [under the Administration Act] in relation to the first amended assessment will clarify that situation. 124 Australia and New Zealand Banking Group Ltd v Commissioner of Taxation (2003) 137 FCR 1 per Kenny J ("ANZ Banking Group"). No appeal was pressed against this decision. 125 Joint reasons at [16]-[25]. 126 Futuris (2006) 63 ATR 562 at 575-576 [59]-[63]; [2006] ATC 4579 at 4591-4592. Kirby … I agree with the Commissioner's submission. The present matter is one which falls naturally within both the language and the evident purpose of s 177F(3). But even if I am wrong in this, I equally am satisfied that at best all that Futuris has shown is that in making a definitive assessment (that is the second amended assessment) … the Commissioner proceeded upon a mistaken view of the applicability of s 177F(3). That mistake did not invalidate the assessment or evidence bad faith on the Commissioner's part in the exercise of the power to assess. The effect of the mistake could, and should properly, be addressed in Pt IVC proceedings. … I am not satisfied that the Commissioner deliberately engaged in what [Futuris] calls double counting. I equally am satisfied that the assessment was intended to, and did, create a definitive liability notwithstanding that the Commissioner has acknowledged that Futuris' liability could be reviewed at a future date after the Div 19A Pt IVC proceedings were complete127. … [S]uch relief as Futuris is entitled to in respect of [the Second Amended Assessment] is in Pt IVC proceedings and not by way of judicial review under s 39B of [the Judiciary Act]." The Full Court's decision: The Full Court unanimously reversed the conclusions and orders of the primary judge. Doubtless influenced by the way the parties had presented their arguments, by reference to authority of this Court concerned with challenges to the validity of decisions by the Commissioner, the Full Court analysed Futuris's appeal in terms of what it described as the "two strands of invalidity"128. The Full Court rejected what it called the "Tentative/Provisional Strand"129. Their Honours were not persuaded that the Second Amended Assessment was "tentative" in the sense of "provisional", pending the resolution of the correctness of the First Amended Assessment. However, they upheld what they described as the "Lack of Good Faith Strand"130. They considered that the 127 cf F J Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 at 377-378; [1981] HCA 27; ANZ Banking Group (2003) 137 FCR 1 at 26 [70]. 128 Futuris (2007) 159 FCR 257 at 267 [29]. This analysis drew on ANZ Banking Group (2003) 137 FCR 1 at 14-15 [36]-[37]. 129 (2007) 159 FCR 257 at 268 [30] and 272 [47]. 130 (2007) 159 FCR 257 at 270 [40] and 273 [53]. Kirby Second Amended Assessment contained "deliberate overstatements of taxable income and tax payable"131. To this extent "it was not a bona fide exercise of the power to assess"132. It was thus outside the Commissioner's powers as granted by the Act133. The Full Court allowed the appeal on that basis and declared that the Second Amended Assessment was not a valid assessment for the purposes of the Act. Upon that basis, it quashed that assessment. The Commissioner contests those orders in this appeal. The issues Issues in contest: Having regard to the written record and oral submissions, this Court must resolve the following issues: The tentative/provisional assessment issue: Was the Second Amended Assessment "tentative" or "provisional" in the sense that it was not an "assessment" according to the Act, and therefore "not touched" by ss 175 and 177(1) of the Act134? The lack of good faith issue: Was the Second Amended Assessment made with a lack of good faith, as in was it deliberately false and known to be such135, corruptly made in deliberate disregard for the requirements of the Act136 or otherwise made with mala fides on the part of the Commissioner, and therefore not protected by ss 175 and 177(1) of the Act137? The other disqualifications issue: Is the Second Amended Assessment invalid for any other ground that would attract relief under s 39B(1) of the Judiciary Act? 131 (2007) 159 FCR 257 at 271 [46]. 132 (2007) 159 FCR 257 at 273 [53]. 133 (2007) 159 FCR 257 at 273 [54] citing Darrell Lea Chocolate Shops Pty Ltd v Federal Commissioner of Taxation (1996) 72 FCR 175 at 186-187. 134 Bloemen (1981) 147 CLR 360 at 377 per Mason and Wilson JJ. 135 Joint reasons at [55]. 136 Joint reasons at [60]. 137 Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 199-200 per Brennan J; [1995] HCA 23. Kirby The ss 175 and 177(1) issue: Having regard to the conclusions to the foregoing issues, is the Second Amended Assessment a valid "assessment" under the Act and one that is protected in proceedings such as this by ss 175 and 177(1) of the Act? The discretionary relief issue: Having regard to the conclusions to the foregoing issues, the nature and circumstances of Futuris's challenge to the Second Amended Assessment and the availability of other, alternative, remedies (in particular under Pt IVC of the Administration Act with appeal to the Federal Court)138, did the primary judge reject Futuris's application for judicial review on discretionary grounds? In any case, was the primary judge entitled to do so? And did the Full Court err by not exercising its discretion appropriately to dismiss the application for relief under s 39B(1) of the Judiciary Act? Issues resolved by joint reasons: The first two issues are decided by the joint reasons in terms that I accept. Thus, the tentative/provisional issue is resolved in favour of the Commissioner on the basis that the Second Amended Assessment was neither tentative nor provisional "in the sense that it was not definitive of Futuris' liability"139. The joint reasons uphold the decision of the Full Court in this respect, notwithstanding the arguments advanced by Futuris upon its notice of contention. Although I consider that there was more substance to that contention than the joint reasons appear to allow, I would ultimately reach the same conclusion as all other judges who have considered this point. The first issue should be decided in favour of the Commissioner. I also agree with the joint reasons that the second issue concerning the lack of good faith should be resolved in favour of the Commissioner140. The ATO records do not sustain a conclusion that the Commissioner (by any of his officers) acted with intentional falsehood, corruptly or in deliberate disregard for the requirements of the Act or otherwise with mala fides in the making of the Second Amended Assessment. In fact, scrutiny of the record demonstrates precisely the opposite conclusion. The Commissioner's officers might have been 138 Joint reasons at [10]. 139 Joint reasons at [51] referring to Futuris (2007) 159 FCR 257 at 272-273 [50]-[51]. 140 See joint reasons at [59]. Kirby mistaken in law, but there is no evidence of mala fides or other wrongful intention on their part to afflict, oppress or act unlawfully towards Futuris. For this reason, the second issue (upon which Futuris succeeded in the Full Court) should likewise be decided in favour of the Commissioner. These two conclusions effectively dismiss the central bases upon which Futuris sought to demonstrate that the Second Amended Assessment was not a lawful exercise of the Commissioner's power to make an "assessment". Without further elaboration, this would seemingly foreclose the claim by Futuris to relief under s 39B(1) of the Judiciary Act as propounded in the Full Court. Nevertheless, it is proper to address certain remaining issues. The joint reasons adopt this course in respect of the Commissioner’s invocation of the ss 175 and 177(1) issue141. Matters not in issue: Before discussing the outstanding issues, it is appropriate to note two particular questions which, although contingently presented, were not part of the record: issue: Whether, The constitutional validity the Commissioner needed to rely upon them, ss 175 and 177(1) of the Act are invalid under the Constitution. This potential issue might arise on the basis that the provisions attempt to render unexaminable by the courts an administrative decision by a federal official imposing a tax, or to render such a decision examinable only under conditions that are inconsistent with the proper application of s 75(v) of the Constitution (and its counterpart, s 39B(1) of the Judiciary Act). the extent The jurisdictional error issue: Whether, to attract relief under s 75(v) of the Constitution (or s 39B(1) of the Judiciary Act), the applicant must show more than legal error (here, the Commissioner making a legally flawed assessment under the Act) and must demonstrate that any such error took the Commissioner outside his lawful jurisdiction and power. Neither party raised the foregoing constitutional questions in written or oral submissions. No notices were given as required under the Judiciary Act142. However, where fundamental questions as to the operation of the Constitution are necessarily raised in judicial proceedings, it is sometimes essential, subject to procedural fairness, for a court to address the questions even though the parties have elected not to do so143. 141 Joint reasons at [41]-[49], [64]-[70]. 142 Section 78B. 143 See eg Roberts v Bass (2002) 212 CLR 1 at 54-55 [143]-[144]; [2002] HCA 57. Kirby Paying proper regard to the fundamental principle of the rule of law144 and to the role of s 75(v) of the Constitution (and s 39B(1) of the Judiciary Act) in defending its objectives, the constitutional validity of ss 175 and 177(1) of the Act may be in doubt. Given recent explanations of the meaning, purpose and application of s 75(v) of the Constitution145, it is questionable whether the Federal Parliament could lawfully provide that the "validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with"146. The validity of an assessment (like any other legislative, executive or judicial act of a Commonwealth officer) can only be finally determined by a court, not by parliamentary fiat nor by administrative action. Moreover, the effect of non-compliance with a provision of the Act must surely depend upon the particular terms of that provision; the nature, extent and purpose of any non- compliance; and whether in law the non-compliance affects (or does not affect) the validity of what has been done or omitted. In the generality of its language, s 175 of the Act may be an over-broad provision which could not successfully breathe validity into a purported "assessment" that was not in law an "assessment" as contemplated by the Act. This appears to have been acknowledged by this Court, at least so far as this Court has accepted the disqualifying consequences of assessments that are tentative or provisional, or made with a lack of good faith. In such cases (and, as I am inclined to believe, others) a document that purports to be an "assessment" under the Act, if fundamentally flawed, is not a statutory "assessment" at all. Section 175 could not then, as the case authorities say, "touch it". The questions that follow this logic are: (1) What other relevant grounds of invalidity would take a purported assessment outside the power of assessment given to the Commissioner by the Act; and 144 Communist Party Case (1951) 83 CLR 1 at 193 per Dixon J; cf Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 381 [89] per Gummow and Hayne JJ; [1998] HCA 22. 145 Plaintiff S157/2002 (2003) 211 CLR 476 at 513-514 [103]-[104]; Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 651 at 668-669 [44]-[46]; [2007] HCA 14. 146 See the terms of the Act, s 175. Kirby (2) What then is the purpose and valid effect of ss 175 and 177(1) of the Act given that when validity matters most, namely where it is in doubt, such provisions may not in law stand against the irremovable facility of judicial review guaranteed by the Constitution? To answer these questions, and to confine ss 175 and 177(1) of the Act to an ambit regarded as tolerable when measured against the provisions of the Constitution, this Court has propounded a discrimen of "jurisdictional error". Thus, ss 175 and 177(1) of the Act will not prevent a judicial determination of invalidity where the making of an assessment involves "jurisdictional error". They may prevent such a determination where the error, even if one of law, is a "non-jurisdictional error". The former type of "error" takes the decision-maker outside or beyond the available jurisdiction or power. The latter is an error made within jurisdiction, and accordingly the decision-maker would still be competent to make it. Protective, privative-type provisions such as ss 175 and 177(1) of the Act are then enlivened and take effect. I have previously criticised the so-called "jurisdictional error" category147 despite the support it derives from the current doctrine of this Court. The classification is conclusory. It is very difficult to define and to apply148. In recent years it has been substantially discarded by English legal doctrine149. Jurisdictional error is nearly impossible to explain to lay people even though the Constitution (including the central provisions in s 75(v)) belongs to them. Most non-lawyers would regard it as a lawyer's fancy. 147 See eg Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 122-123 [211]-[212]; [2001] HCA 22; Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 439-440 [173]; [2002] HCA 16; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1185 [122]; 198 ALR 59 at 86; [2003] HCA 30; cf Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365 at 405-406 [106], where Gummow, Hayne and Heydon JJ described "jurisdiction" as a "slippery term"; [2004] HCA 20. 148 Aronson, "Jurisdictional error without the tears", in Groves and Lee (eds), Australian Administrative Law – Fundamentals, principles and doctrines, (2007) 330 at 330 and 341. Professor Aronson does not agree with the abolition of the category of "jurisdictional error", although he accepts that the expression is "conclusory". See at 344. 149 Wade and Forsyth, Administrative Law, 9th ed (2004) at 279-280. See Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 at 194-195; Aronson, Dyer and Groves, Judicial Review of Administrative Action, 3rd ed (2004) at 205- 206; E v Secretary of State for the Home Department [2004] QB 1044 at 1064; Re McBain (2002) 209 CLR 372 at 439-440 [173]. Kirby Whatever the position may have been under the "prerogative" writs before and at 1901, there is no reason why the constitutional idea sustaining the writs expressed in s 75(v) (and s 39B(1) of the Judiciary Act) should not evolve into a broader concept of "legal error". Since 1901, the remedies referred to in s 75(v) have themselves evolved so that we now recognise the discretionary character of all the constitutional remedies150. We should likewise accept a parallel evolution and simplification of the grounds for the named constitutional relief151. There are few, if any, strict constitutionalist originalists in Australia today152. Because of the state of the record and the arguments of the parties in this appeal, it is appropriate for me to put each of the foregoing constitutional questions to one side. They will not completely go away and the future will look after them. I therefore return to the issues that remain outstanding upon the record and within the current doctrine of "jurisdictional error" and hence to the operation of ss 175 and 177(1) of the Act as interpreted consistently with that doctrine. The remaining issues: jurisdictional error, ss 175 and 177(1) Available categories of judicial review: Rejection of the invalidity arguments of the Second Amended Assessment, based on tentative or provisional character and lack of good faith, is not the end of the "jurisdictional error" issue for Futuris. For decades, taxation decisions arising in judicial review proceedings have typically concerned the suggested tentative or provisional character of such decisions or their lack of good faith. This does not justify treating these two categories as covering the entire field of disqualifying legal (or "jurisdictional") error for s 39B purposes. As the two nominated categories of invalidity have 150 See above, these reasons at [88]-[89]. 151 cf Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1191 [156]; 198 ALR 59 at 94. 152 Consider, for example, the reasons for the decision of this Court in Sue v Hill (1999) 199 CLR 462 which seem to reject an originalist approach. Compare the reasons of Gleeson CJ, Gummow and Hayne JJ at 492 [65], Gaudron J at 526-528 [168]-[173]; [1999] HCA 30. See also Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 522-523 [111]-[112] of my own reasons; [2000] HCA 14. Kirby arisen in taxation cases for at least 80 years153, there is a risk that specialists in taxation law will overlook, or ignore, the considerable subsequent advances in administrative law, in particular within judicial review. Specialist disciplines, including in law, can occasionally be myopic and inward-looking. commenting on the advances in administrative law, Lord Diplock declared that they had been the "greatest achievement of the English courts in [his] judicial lifetime"154. The same is at least partly true in Australia. The expression "jurisdictional error", for example, whilst first used in this Court by counsel in 1954155 was not used by the Court itself in its reasons until 1983 in R v Coldham; Ex parte Australian Workers' Union156. The recognised "jurisdictional error" categories in Australia are not closed. Least of all are they confined to the two classifications beloved by tax lawyers. According to a leading Australian academic authority on the subject157, the following categories have been recognised158: A mistaken assertion or denial of the very existence of jurisdiction. A misapprehension or disregard of the nature or limits of the decision maker's functions or powers. 153 For example, see Federal Commissioner of Taxation v Australian Boot Factory Ltd (1926) 38 CLR 391 at 397 per Isaacs J; Federal Commissioner of Taxation v Hoffnung & Co Ltd (1928) 42 CLR 39 at 54-55; [1928] HCA 49. 154 R v IRC; Ex parte National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617 at 641. 155 Attributed to Dr Coppel QC in R v Kirby; Ex parte The Transport Workers' Union of Australia (1954) 91 CLR 159 at 168; [1954] HCA 19. See joint reasons at [5]. 156 (1983) 153 CLR 415 at 423 per Murphy J citing Bath, "The Judicial Libertine – Jurisdictional and Non-Jurisdictional Error of Law in Australia", (1982) 13 Federal Law Review 13 at 49; [1983] HCA 35. 157 Aronson, "Jurisdictional error without the tears", in Groves and Lee (eds), Australian Administrative Law – Fundamentals, Principles and Doctrines, (2007) 158 The author notes that the first six points in their catalogue derive from Craig v South Australia (1995) 184 CLR 163 at 176-180; [1995] HCA 58. The two additional categories of "bad faith" and "breach of natural justice" are attributed to Lord Reid's speech in Anisminic [1969] 2 AC 147 at 171. Kirby Acting wholly or partly outside the general area of the decision maker's jurisdiction, by entertaining issues or making the types of decisions or orders which are forbidden under any circumstances 4. … Acting on the mistaken assumption or opinion as to the existence of a certain event, occurrence or fact … or other requirement, when the Act makes the validity of the decision maker's acts contingent on the actual or objective existence of those things, rather than on the decision maker's subjective opinion. Disregarding a relevant consideration which the Act required to be considered or paying regard to an irrelevant consideration which the Act required not to be considered, in circumstances where the Act's requirements constitute preconditions to the validity of the decision maker's act or decision. … 6. Misconstruing the decision maker's Act … in such a way as to misconceive the nature of the function being performed or the extent of the decision maker's powers … [Acting in] bad faith. [A] breach of natural justice." Such categories go well beyond the two that have engaged virtually the entire attention of the Federal Court and of this Court in these proceedings and other cases like it. There is a risk that the broader categories will be overlooked in such taxation matters if reference is made only to past authority in tax appeals. Once disqualifying invalidity ("jurisdictional error") is propounded, these other categories are necessarily enlivened. When a suggestion of invalidation is made, it is not sufficient for the courts, or the parties, simply to cite taxation cases159. To give a semblance of order in the exposition of "jurisdictional error", the decision-maker must test the proposition that such an error exists by reference to a legal concept (and thus the emerging classification of past instances). It is not sufficient to consider only instances where the propounded error has been examined in the judicial review of decisions of taxation administrators, purporting to proceed under the Act. In short, taxation law specialists must make the sometimes enlightening acquaintance of developments in administrative law and judicial review more generally. 159 For example Hoffnung (1928) 42 CLR 39; Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243; [1963] HCA 51; Bloemen (1981) 147 CLR 360; Richard Walter (1995) 183 CLR 168. Kirby Importance of the categories: I do not insist on the foregoing approach for taxonomical neatness alone. In Australia, the issue is of considerable constitutional importance. It is bound up in my misgivings about the notion of "jurisdictional error" and the far from atypical approach adopted by the Federal Court in these proceedings. law, such confine categories consideration If courts, dealing with judicial review of administrative decisions in taxation "the tentative/provisional strand" and the "lack of good faith strand"160, they necessarily restrict or ignore consideration of the broader categories now available in the judicial review of taxation decisions and other administrative decisions in the Commonwealth. Inferentially, they diminish the ambit of the remedies provided by the Judiciary Act, s 39B(1) and, by parity of reasoning, the Constitution, s 75(v). Section 75(v) is vital to ensuring officers of the Commonwealth comply with the requirements of the law161. I could not therefore agree to any approach to the judicial review powers available to the Federal Court, in a case such as the present, which confined or narrowed the categories of invalidity in such a way. It is a flawed legal approach to confine a case such as the present, in law or substance, to an inquiry into whether an assessment was invalid because it was impermissibly tentative or provisional, or because it was made with a lack of good faith. Such an approach prevents judicial review of the much wider ambit of inquiry available in this Court under s 75(v) of the Constitution or in the Federal Court under s 39B(1) of the Judiciary Act. To uphold the wider applications of the s 75(v) power it is essential to maintain, and assert, the broader categories of "jurisdictional error" now recognised in Australian law. This Court should do nothing in this case to affirm or suggest that the ambit of the s 75(v) power is confined to the two instances identified above. We should not allow instances of judicial review of tax decisions dating back 80 years, sub silentio, to suggest a confinement of the power ultimately traced to s 75(v) of the Constitution. I accept that a diminution of judicial remedies was probably not intended in this case. However, unless courts approach such problems conceptually (so far as the notion of "jurisdictional error" allows) there are risks in proceeding in taxation cases only by reference to particular historical categories. Classification as "jurisdictional error" recognises that certain features of the administrative 160 Futuris (2007) 159 FCR 257 at 268 [30] and 270 [40]. 161 Plaintiff S157/2002 (2003) 211 CLR 476 at 482-483 [5] per Gleeson CJ, 513-514 [104] per Gaudron, McHugh, Gummow, Kirby and Hayne JJ. Kirby decision in question (here a Commissioner's "assessment" under the Act) will be so alien to the character of that decision as afforded by the Parliament as to invalidate the purported performance and to render it no decision (ie no "assessment") at all. Claims in the present case: It follows that an important question here is whether, in its attack on the validity of the Second Amended Assessment, Futuris confined its arguments challenging the assessment on the grounds that it was tentative or provisional in character, or lacked good faith. Clarifying the precise way Futuris challenged the Second Amended Assessment was important in the proceedings in terms of the relevant evidence. If a challenge appeared to have some legal substance, a question would then arise as to whether the Commissioner was "entitled to the privative clause protections of ss 175 and 177 of [the Act] in respect of the second amended assessment"162. Finally, identifying the exact objection to the Second Amended Assessment was also important because at the trial, by motion, the Commissioner had sought pre- emptively to have Futuris's claim under s 39B(1) of the Judiciary Act struck out as "unarguable and doomed to failure"163. Futuris's statement of claim certainly identified the alleged lack of good faith on the part of the Commissioner in his exercise of powers conferred by ss 166 and 170 of the Act. Nevertheless, two further grounds of invalidity were specifically mentioned. First, that the exercise of powers did not relate to the subject matter of the Act and secondly, that it was not reasonably capable of reference to those powers. Such grounds presented a fairly standard formulation for a challenge by way of judicial review to the validity of an administrative action. The expressed grounds appear to reflect the drafter's endeavour to attract to these proceedings the general approach of this Court in respect of attempted privative provisions164. On the face of its pleading, it follows that Futuris does not appear to have confined its case to the two "streams" dealt with by the Full Court of the Federal Court. 162 Futuris (2006) 63 ATR 562 at 564 [1]; [2006] ATC 4579 at 4581. 163 (2006) 63 ATR 562 at 564 [1]; [2006] ATC 4579 at 4581. That motion was dismissed with costs in light of the primary judge's conclusion on the Commissioner's substantive contentions: see at 576 [64]; 4592. 164 As expressed in R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 615 per Dixon J; [1945] HCA 53. Kirby In the appeal to this Court, Futuris's notice of contention contests the decision of the Full Court rejecting its argument that the Second Amended Assessment was "tentative" or "provisional" (ground 1(a)). Moreover, in succeeding grounds, Futuris also challenges the expressed ambit of the category of review upon which it succeeded in the Full Court. Effectively, it therefore asserts that the review for lack of good faith, undertaken by the Full Court, was needlessly narrow. Moreover, Futuris contends that the Full Court erred in failing to find that the Second Amended Assessment was not an "assessment" within the meaning of the Act because, whether or not it was issued bona fide: "(b) … it was known to overstate the taxpayer's taxable income and tax payable; (c) … there was no intention that the full amount of tax payable stated in it be payable by the taxpayer". Before this Court Futuris contended that, according to the available categories of jurisdictional error, the Commissioner's decision to issue the Second Amended Assessment was also affected by "jurisdictional error" (ground 1(d)). It was thus not an "assessment" to which ss 175 and 177(1) of the Act could apply (ground 1(e)). This Court must address those contentions unless, during argument, they were abandoned or not pressed. In its written and oral submissions before this Court165, Futuris did not confine its argument of invalidity to infection with mala fides, deliberate falsehood or corrupt and deliberate disregard of the law. To that extent, any inquiry by this Court confined to whether such a ground was made out would fail, in my respectful view, to engage fully with the way Futuris actually presented its case. The terms of the original statement of claim in the Federal Court and of the notice of contention in this Court do not constrict Futuris to such a narrow conception of the available categories of judicial review. Why would Futuris confine its argument to defects expressed in terms of mala fides and provisional or tentative action when the available categories of invalidity (derived ultimately from s 75(v) of the Constitution) are so much wider? The only explanation for such a narrow approach to a claim of judicial review (essential both to the available relief and to avoiding the propounded pitfalls of ss 175 and 177(1)) would be oversight or misapprehension of the other available categories of invalidating error. Parties and their lawyers can sometimes adopt unduly confined views of their legal rights. This might be based on mistakes born of 165 [2008] HCATrans 144 at lines 3288-3295, 3301-3315, 3334-3347, 3698-3708, Kirby undue attention to historical and specialised cases. However, I would not attribute that error to Futuris. Its submissions were in most competent hands. As I understood them, they relied on broader grounds of invalidation. Indeed from the start, in commencing Pt IVC proceedings in the Federal Court (as required within 60 days of the disallowance of the objection to the Second Amended Assessment166) Futuris expressly reserved its right to contend, in other proceedings, that there had been "no valid assessment" at all167. There are several important aspects of Futuris's submissions that the Second Amended Assessment was not an "assessment" within the meaning of the Act: overall scheme of the Act; . the pivotal role of the Commissioner's assessment in the application of the . the practical and financial burden which the duty of immediate . the fact that the taxpayer may be left in consequence with insufficient . the commercial burden faced by a taxpayer deprived of moneys by an assets to pursue review or appeal proceedings; and compliance imposes on the taxpayer; "assessment" that allegedly involves "double counting". Futuris argued that this notion of an "assessment" and the Commissioner's suggested belief that his "assessment" could be "fixed up" on appeal or in later proceedings whilst he retained the fruits of any double counting in the interim, was alien to the scheme and provisions of the Act. In my view, these submissions have much more merit as a basis of judicial review for "jurisdictional error" than the two grounds dealt with by the Full Court. Indeed, the practical burden imposed on Futuris of paying the assessed tax immediately under the Second Amended Assessment was, in strict legal theory, inconsistent with its contention that the assessment was flawed by a "tentative" or "provisional" character. Further, the argument that the Second Amended Assessment was made without good faith was very difficult to establish. It was, in my view, virtually impossible once the internal minutes of the ATO were examined and properly 166 Administration Act, s 14ZZN. 167 Invoking the language of Bloeman (1981) 147 CLR 360 at 371 per Mason and Wilson JJ and Richard Walter (1995) 183 CLR 168 at 182 per Mason CJ, 198 per Kirby analysed. The Commissioner might have made a decision erroneous in law or his Second Amended Assessment might have evidenced a misapprehension or disregard of the nature or limits of his statutory functions or powers168. However, by focusing on a lack of good faith, Futuris and the Full Court arguably assumed an unnecessary burden which was doomed to failure. Under current doctrine, upon rejection of the two "streams" of invalidity identified by the primary judge and the Full Court, questions would remain as to whether any error that had occurred was within the exercise of lawful jurisdiction to make an "assessment" as distinct from one that took the Commissioner outside his jurisdiction and powers. This distinction is itself as conclusory in character as the label of "jurisdictional error". However, the starting point is to identify precisely the grounds of "jurisdictional error" that were propounded. Whatever argument it finally presented before the Full Court, I am not convinced that Futuris confined itself in this Court to the "tentative/provisional strand" and the "lack of good faith strand". Conclusion: remaining issues: The consequence is that, whilst I agree with the joint reasons that Futuris was not entitled to succeed in its claim for judicial review based on the "tentative/provisional" category or the "lack of good faith" category, other categories for judicial review remained available to it. They were ostensibly raised by Futuris's pleadings in the Federal Court. They were also advanced in argument before this Court. They should not be confined or ignored as this would involve a serious misunderstanding of the ambit of s 39B(1) of the Judiciary Act. The proper application of the remedial discretion The remedial discretion: The foregoing conclusions oblige me to face squarely the discretionary issue, given that, on my approach, there are outstanding questions of invalidity presented by Futuris's arguments. Decisions must consequentially be made about the possible engagement of ss 175 and 177(1) of the Act169. Given the availability to Futuris of alternative remedies in proceedings under Pt IVC of the Administration Act, should this Court now proceed to examine the still outstanding categories of "jurisdictional error"? Or should the Court withhold remedies in this case on discretionary grounds? What outcome would represent a proper application of the discretionary remedies under s 39B so far pursued by Futuris in the courts? 168 See Craig (1995) 184 CLR 163 at 176-180. 169 Above, these reasons at [116]. Kirby Invocation of the discretion: As the joint reasons recognise, the Commissioner argued throughout these proceedings and at every level that, as a matter of discretion, relief might be, and should have been, withheld given the other available legal remedies provided by Pt IVC of the Administration Act170. In this Court, the Commissioner relied on two grounds of appeal that effectively requested the proper exercise of the discretion by this Court. These grounds suggested that Futuris's attack on the validity of the Second Amended Assessment was not available in this case "in proceedings other than those under Part IVC of the [Administration Act]"171. Thus, in the present facts and circumstances, Futuris could submit only under Pt IVC proceedings that the Second Amended Assessment was invalid. As Futuris had the right and standing to invoke relief under s 39B(1) of the Judiciary Act by way of judicial review, the only meaning that can be attached to these two grounds of appeal is that they suggest withholding that remedy in the exercise of the Court's dispositive discretion, stimulated to do so by the Commissioner's added reliance on ss 175 and 177(1). Applying the discretion: On conventional theory, the propounded discretion is enlivened in these proceedings because: The remedies under Pt IVC of the Administration Act have been enacted by the Parliament as the ordinary and regular recourse specifically afforded for legal challenges of the kind advanced by Futuris; Futuris has initiated such proceedings172, albeit whilst protesting the validity of the Second Amended Assessment and declaring that it did so only so as to not lose remedies under Pt IVC of the Administration Act, should they alone remain; and The purported anxiety, expressed by Futuris, that remedies under Pt IVC of the Administration Act might have no application if the Second Amended Assessment were ultimately found not to be an "assessment" at all. This concern appears to be without substance given established and repeated authority to the contrary in analogous circumstances173. 170 Joint reasons at [10]. 171 Appellant's grounds of appeal, pars 2(b) and (c). 172 See Futuris (2006) 63 ATR 562 at 565 [12]; [2006] ATC 4579 at 4582. 173 Annamunthodo v Oilfields Workers' Trade Union [1961] AC 945 at 956; Ridge v Baldwin [1964] AC 40 at 80-81 per Lord Reid; Calvin v Carr [1980] AC 574 at (Footnote continues on next page) Kirby Discretionary refusal of relief: The refusal of relief to an applicant for judicial review because other and more appropriate remedies are available by law is not a new concept. The availability of such an alternative remedy has always been a relevant consideration to the grant, or refusal, of such relief. In 1780, a matter arose that involved the invocation of the prerogative writ of certiorari to challenge a criminal conviction174. Lord Mansfield CJ remarked that a court would not grant the writ "if they had power to do it, for [the applicant's] objections are, more properly, the subject matter of an appeal, and the defendant has not chosen to resort to that remedy"175. A long line of English176 and Australian177 authority in respect of writs affording judicial review has repeatedly made the same point. Where other remedies produce the same or better legal outcomes, courts may apply the criteria of appropriateness178; convenience179; consideration of the public interest in the deployment of judicial remedies180; and avoidance of collateral attacks on decisions that are susceptible to broader appellate reconsideration181. 589-590 (PC); Ackroyd v Whitehouse (1985) 2 NSWLR 239 at 248; Macksville and District Hospital v Mayze (1987) 10 NSWLR 708 at 716-719. 174 R v Whitbread (1780) 2 Dougl 549 [99 ER 347]. 175 (1780) 2 Dougl 549 at 553 [99 ER 347 at 349]. 176 eg R v Justices of Surrey (1870) LR 5 QB 466 at 473; R v Stafford Justices; Ex parte Stafford Corporation [1940] 2 KB 33 at 43 per Sir Wilfred Greene MR. 177 eg Waterside Workers' Federation of Australia v Gilchrist, Watt & Sanderson Ltd (1924) 34 CLR 482 at 517-519 per Isaacs and Rich JJ; [1924] HCA 61; Ex parte Corbishley; Re Locke [1967] 2 NSWR 547 (CA); Meagher v Stephenson (1993) 30 NSWLR 736 (CA) at 738. 178 Woolf, Jowell and Le Sueur, De Smith's Judicial Review, 6th ed (2007) at 827 citing R v Hillingdon London Borough Council; Ex parte Royco Homes Ltd [1974] QB 720 at 728. 179 R v Huntingdon District Council; Ex parte Cowan [1984] 1 WLR 501 at 507 per Glidewell J; [1984] 1 All ER 58 at 63. 180 Meagher (1993) 30 NSWLR 736 at 738-739. 181 Re Preston [1985] AC 835 at 852 per Lord Scarman, 862 per Lord Templeman. Kirby The discretion in this Court: Having affirmed that the relief afforded by s 75(v) of the Constitution (and hence by s 39B(1) of the Judiciary Act) is always discretionary182, it is not surprising that this Court has refused such relief in matters before it (including under the ancillary statutory writ of certiorari183) for discretionary reasons. I have done so myself where parties, who enjoy remedies of review or appeal before other independent tribunals or courts, have sought direct access to the original jurisdiction of this Court pursuant to s 75(v) of the Constitution. In Re Carmody; Ex parte Glennan184, with facts admittedly different from the present, I took into account the availability to the taxpayer of remedies provided under Pt IVC of the Administration Act and refused relief185. I remarked that, ordinarily, the appropriate way to proceed was under Pt IVC, and whilst no hard and fast rule could be laid down, the availability (and actual initiation) of remedies of review and appeal under the Administration Act was normally the relief proper to such a case186. Despite the different facts of Glennan, the general discretionary considerations explained in that decision are valid. They are applicable to these proceedings. Re Heerey; Ex parte Heinrich187, which involved the Bankruptcy Act 1966 (Cth), addressed similar considerations. A constitutional writ was sought to be directed to the judges of the Federal Court. Although federal judges have been held to be "officers of the Commonwealth"188, the writ was refused on discretionary grounds because other, seemingly more appropriate, relief was available, namely the invocation of the appellate jurisdiction of this Court. I "Although this court has the jurisdiction to provide that relief against the respondents, and the power to do so if the other requirements 182 Above, these reasons at [88]-[89], [130]. 183 See Judiciary Act, s 33. 184 (2000) 74 ALJR 1148; 173 ALR 145. 185 (2000) 74 ALJR 1148 at 1156 [37]; 173 ALR 145 at 156. 186 (2000) 74 ALJR 1148 at 1157 [40]-[42]; 173 ALR 145 at 157. 187 (2001) 185 ALR 106. 188 Ozone Theatres (1949) 78 CLR 389 at 399. 189 (2001) 185 ALR 106 at 109 [17]. Kirby of law are fulfilled, ordinarily … where an appellate facility is available, this court will, as a matter of discretion, refuse to issue a constitutional writ. It will do so where the applicant has failed, or omitted, to engage the appellate jurisdiction as provided by s 73 of the Constitution." The approach adopted by me in Heinrich190, which in turn applied the approach explained by me in Glennan, was expressly approved by a Full Court of this Court in Glennan v Commissioner of Taxation191. In that decision, earlier and possibly different approaches to the provision of relief under s 75(v) of the Constitution were disapproved. The discretionary approach was described as the correct doctrine. The circumstances in Glennan and Heinrich were relatively straight- forward. The applicant in each case was obviously seeking to bypass the requirements of special leave to gain direct access to this Court in its original jurisdiction. Futuris's case is not so clear cut. The parties have proceeded through the requirement of special leave and this Court is now exercising its appellate jurisdiction. Nonetheless, there remain discretionary considerations. These arise out of the relief originally sought in the Federal Court under s 39B(1) of the Judiciary Act; the earlier conduct and focus of these proceedings; and the availability and invocation of other more appropriate avenues of review and appeal under Pt IVC of the Administration Act. Without any need to rely on ss 175 and 177(1) of the Act, these considerations persuade me that the Commissioner was correct in suggesting to the Federal Court that Futuris's complaints about the making of the Second Amended Assessment would more properly be considered in Pt IVC proceedings available to (and already initiated by) Futuris. In such proceedings, no issue would arise to be considered under s 177(1) of the Act as to the correctness of the amounts and particulars of the Second Amended Assessment. Identifying discretionary considerations: I acknowledge that there are features of this litigation that support Futuris's invocation of the remedies provided by s 39B(1) of the Judiciary Act. These include: The evidence in the case was wholly documentary and the basic facts were not contested; The Parliament has afforded the remedies under s 39B(1) of the Judiciary Act as well as those provided by Pt IVC of the Administration Act, 190 (2001) 185 ALR 106 at 109-110 [17]-[18]. 191 (2003) 77 ALJR 1195 at 1198 [17]; 198 ALR 250 at 255. Kirby thereby recognising that each course of action (and occasionally perhaps both) will sometimes be appropriate; The Commissioner's approach to the Second Amended Assessment, whilst convenient to him, imposed an arguable hardship on Futuris, as the taxpayer liable to pay immediately the tax payable on the assessment the taxpayer contested. It relieved the Commissioner, on his theory, of the obligation to determine whatever "assessment" he truly asserted; In a clear case of jurisdictional error, relief under s 39B(1) may be an appropriate and beneficial procedural shortcut when compared to a review of the substantive merits or legal appeal proceedings as contemplated by It will sometimes be necessary, or suitable, to obtain s 39B(1) of the Judiciary Act relief to vindicate basic constitutional rights or to uphold fundamental principles that demand observance of the rule of law by federal officials and relief from superior courts empowered to command such observance. The availability of this relief will be "very jealously" maintained by the courts192; The Federal Court has, in the event, already proceeded to hear and decide the claim for relief under s 39B(1); and (7) Whilst accepting is ultimately unavoidable, discretionary considerations that control the provision of relief should not be needlessly expanded. the exercise of a discretion that I give full weight to these and like considerations. However, a number of countervailing factors convince me that relief under s 39B(1) of the Judiciary Act ought to have been declined in the present case, at the outset, in the exercise of the Federal Court's discretion. The parties should have been required, in effect, to proceed as Pt IVC of the Administration Act envisages. I base this conclusion on the following considerations: In its character, relief under s 39B(1) is always discretionary. This feature of the relief often presents, as it did here, a threshold question of whether the proceedings invoking such relief should continue, or whether the parties should instead be required to use the specifically provided avenues 192 Ballam v Higgins (1986) 17 IR 131 at 133 (CA) per McHugh JA referring to Master Retailers' Association of NSW v Shop Assistants Union of NSW (1904) 2 CLR 94 at 98 per Griffiths CJ; [1904] HCA 39; Bingham, "Should Public Law Remedies Be Discretionary?", [1991] Public Law 64 at 72. Kirby of review or appeal where remedies exist as of legal right and not by way of discretionary orders; The Parliament has provided a detailed legislative scheme for review on the merits as well as appeal for error of law in accordance with Pt IVC of the Administration Act. The primary judge concluded that, if the Commissioner had made a mistake in making the Second Amended Assessment, any such mistake could, and should, properly be addressed in the Pt IVC proceedings193. In the circumstances, that was a correct conclusion. Without more, it justified the threshold refusal of remedies by way of judicial review in the exercise of the Federal Court's discretion. The Full Court ought to have adopted that approach. Much time and cost might have then been avoided; The relief under Pt IVC of the Administration Act is broader than the relief available under s 39B(1) of the Judiciary Act. The nature of the dispute, as identified by Futuris, involved whether the Commissioner's officers had engaged in "double-counting" and thereby made an "assessment" which was invalid (or would later give credit to avoid such double-counting). These issues were more appropriate to final resolution between the parties in the Pt IVC proceedings. Judicial review, on the other hand, was unlikely to produce finality. As events have proved, it will not do so in this case; (4) Although the basic facts were contained in documents and were not in dispute, they were inescapably complex. Not only were proceedings available under Pt IVC of the Administration Act, but such proceedings had actually been invoked. That fact has always been a most powerful discretionary consideration to deny the provision of discretionary relief. It should have led the Full Court, in this case, to refuse to entertain a collateral claim for judicial review194; and The facts and circumstances here did not indicate the existence of any specific constitutional right that a party sought to be vindicated. Futuris's submission of a lack of good faith was technical, designed to enliven a 193 Futuris (2006) 63 ATR 562 at 575-576 [63]; [2006] ATC 4579 at 4592. 194 cf Joint reasons at [48]. Cf Corbishley [1967] 2 NSWR 547 (CA) at 548 per Wallace P, 548 per Jacobs JA, 551 per Holmes JA; Ultra Tune (Australia) Pty Ltd v Swann (1983) 8 IR 122 (CA) at 122 per Hutley JA; Boral Gas (NSW) Pty Ltd v Magill (1993) 32 NSWLR 501 at 510-513. Kirby particular category of jurisdictional error. Any examination of the documents would quickly have disclosed the absence of intentional oppression; corrupt purposes; or mala fides on the part of the federal officials. Such considerations, if present, might indeed justify pursuit of the remedies available under s 39B(1) of the Judiciary Act. However, those considerations were not present in this case. If the officials did make a mistake (including a mistake of law), it was manifestly one proper for consideration, correction and appropriate orders under Pt IVC of the Administration Act rather than under s 39B(1) of the Judiciary Act. Conclusion: discretionary dismissal: The foregoing analysis is not intended to diminish the importance of judicial review and the role that s 39B(1) of the Judiciary Act, and similar provisions, may sometimes play in ensuring that public officials conform to the rule of law. Considering the way the litigation was conducted in the present case, it is not completely clear that Futuris always identified with appropriate clarity any further categories of jurisdictional error that it wished to advance to demonstrate the invalidity of the Second Amended Assessment. If, however, there remained any different grounds of jurisdictional error that Futuris relied on to invalidate the impugned assessment, they would not warrant further consideration in this appeal. The proper place for any such argument was, as the primary judge concluded, in the Pt IVC proceedings. He was correct to so conclude. Upon this basis, his orders should be restored. This conclusion removes any necessity for me to consider the suggested operation of ss 175 and 177(1) of the Act. Such consideration should be left to a case in which it would be essential for the decision. Orders For these reasons, which agree in part and differ in part from the joint reasons, I agree in the orders there proposed.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT [2018] HCA 8 14 March 2018 ORDER Appeal dismissed. On appeal from the Supreme Court of Queensland Representation S C Holt QC for the appellant (instructed by Nyst Legal) G P Cash QC with M B Lehane for the respondent (instructed by Office of the Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Appeal against conviction – Where appellant convicted of one count of unlawfully doing grievous bodily harm – Where complainant suffered broken hip in three places following confrontation with appellant – Where appellant gave evidence that he pushed complainant causing complainant to stumble backwards three or four metres and fall to ground – Where s 23(1) of Criminal Code (Q) provides person not criminally responsible for event that ordinary person would not reasonably foresee as possible consequence – Where Court of Appeal observed there were "equally open" interpretations of evidence – Whether jury verdict unreasonable or unsupported by evidence. Criminal law – Appeal against conviction – Where s 23(1) of Criminal Code (Q) provides person not criminally responsible for event that ordinary person would not reasonably foresee as possible consequence – Where Court of Appeal found it open to jury to conclude ordinary person could have foreseen injury of kind suffered by complainant – Whether Court of Appeal applied incorrect test – Whether any difference between what ordinary person "could" and "would" reasonably foresee. Words and phrases – "could have foreseen", "grievous bodily harm", "possibility", "probability", "unreasonable verdict", "verdict unsupported by evidence", "would have foreseen". Criminal Code (Q), s 23. KIEFEL CJ, BELL, GAGELER, NETTLE AND GORDON JJ. Following trial by jury in the District Court of Queensland, the appellant was convicted of one count of unlawfully doing grievous bodily harm ("Count 1") and acquitted of a further count of assault occasioning bodily harm ("Count 2"). His appeal against conviction to the Court of Appeal of the Supreme Court of Queensland1 was dismissed. By grant of special leave, he now appeals to this Court. The issue is whether the Court of Appeal erred in not holding that the jury's verdict of guilty in respect of Count 1 was unreasonable or could not be supported having regard to the evidence. For the reasons which follow, it should be held that the verdict was not unreasonable or incapable of being supported by the evidence, and, therefore, that the appeal should be dismissed. The evidence at trial The principal issue at trial was the contest between the account given by the complainant ("Ross") and the account given by the appellant as to a confrontation that occurred between the two men on 28 July 2012. The evidence was, in substance2, as follows. Ross, who was 55 years of age at the time of the confrontation, deposed that he had known the appellant since about 1985 after meeting him at a mutual friend's wedding. From about 1987, the appellant had worked for Ross in Tamworth in insurance sales and thereafter in selling homes. In about 2007, they worked together in a building company with the appellant as builder and Ross as sales consultant. About 12 months later, the appellant took over the company and, by late 2009 or early 2010, the appellant and Ross had stopped doing business together. They were, on the whole, good friends and remained so until 2012. Ross was the godfather of one of the appellant's children. Ross stated that, on Saturday 28 July 2012, he was in his office in Cavill Avenue, Surfers Paradise, from about 8:00 am until about 10:00 am. He then left to purchase a newspaper and cigarettes, and put in a lotto ticket at a nearby shopping centre, Circle on Cavill. He deposed that he walked up a slight ramp past the Perle Nightclub, and, by reference to three photographs, he described how he saw the appellant when he neared the top of the ramp, just to the right of an orange-red post. He claimed that the appellant appeared angry, with glazed 1 R v Irwin [2017] QCA 2. 2 See Irwin [2017] QCA 2 at [6]-[33] per McMurdo P (Gotterson JA and Mullins J agreeing at [53], [54]). Bell Nettle Gordon eyes, and was seething and frothing at the mouth. According to Ross, the appellant said "I've been waiting for this effing time for a long time" and pushed Ross with his left hand, causing Ross to take a few steps back. Ross claimed that the appellant then swung at him with his right fist. Ross turned his head and the blow grazed across his left ear and cheek. The push and the swing were at about the same time and left Ross a little off-balance and moving backwards. The next minute he felt "this almighty pain" in his left leg near his hip and crashed down onto the ground "like a sack of potatoes". He did not see what caused the pain, but was "pretty sure" he landed on his "butt". Ross claimed that while he was on the ground the appellant kicked him in the back and around the thigh on his right-hand side towards his waist and kidneys, between six and eight times, and that, as he tried to roll away, the appellant kept coming for him, yelling at him to get up and calling him a dog. Ross recalled that the appellant was wearing sandshoes. He said that he asked the appellant to stop and told him four or five times that his leg was broken and that he could not get up. Eventually, the attack stopped and the appellant walked away. Ross said that he then pulled himself along the ground to some wire fencing and slowly pulled himself up on a little post. The pain was excruciating and he could not walk. A few minutes later the appellant returned. Ross said that he felt a kick followed by another kick to his back above his kidneys and that he fell, first onto one knee and then backwards onto the ground. Ross claimed that the appellant next tried to choke him and continued to scream at him, while frothing at the mouth and spitting. The appellant said "you have told somebody that you're effing my wife". Ross said that he could not remember much after that but that the appellant was kneeling beside him with his hands around his throat, yelling and screaming, choking and shaking him, and spitting at him; "his face was angry and evil". According to Ross, the appellant also said something to the effect that Ross was lucky that it was a public place and that next time it would not be so public. Ross said that he kept saying that he was hurt, his leg was broken and he could not get up. Then, Ross recalled, a lady told the appellant to stop and a man said he would call the police. These onlookers were on the other side of the wire fence. The appellant stood up and started yelling at the onlookers, saying "this bloke is the biggest crook on the Gold Coast. He's a fraudster." Then the appellant walked off in the direction of his apartment. Ross said that, after the appellant left for the second time, Ross again pulled himself up on the wire fencing, standing on his right leg with his left leg hanging. Some of the onlookers assisted him. He telephoned his son and a work colleague who were at his office nearby, and he asked them to assist him. With a Bell Nettle Gordon great deal of effort he was able to reach a hospital. A couple of days later he had an operation. It was followed by a slow and painful recovery. He was left with a permanent limp and suffered discomfort when sitting for long periods. He also suffered an injury to his ear, which he first noticed in hospital. He said that the appellant had kicked him a couple of times around the head when he was on the ground. He could not recall whether the kicks to the head were on the first or second occasion that the appellant assaulted him. Ross agreed in cross-examination that he was on blood-thinning medication that made him prone to bruising and yet that he had suffered no bruises to his back as a result of the incident. He maintained, however, that, during the first assault, the appellant kicked him at least three times and that, during the second assault, the appellant kicked him twice to his back and twice to his head, and then strangled and shook him. But, apart from his broken hip and the small graze to his ear, Ross had no other injuries or marks. Nor had he complained to the ambulance officer, his son, his treating doctor, the nurse or the police of being strangled or kicked to the head. Ross said that he was focussed on his painful leg injury and that he had been given morphine in the ambulance. Ross also agreed that, in January 2013, he had put in a claim against the appellant under the Personal Injuries Proceedings Act 2002 (Q) for $112,686.90 and that he made no mention in the claim of having been strangled or choked. He said that he thought the claim was about the injury to his leg. Ross agreed that he told police that the appellant kicked him to his right ear on the first occasion he was on the ground and that, at the committal hearing, he had said that the only time he was kicked to the head was when he was on the ground on the second occasion. Ross was extensively cross-examined as to his credit. He gave evidence that he sold superannuation investment properties and financial services but accepted that his trade was that of a plant mechanic and that he held no financial services licence or any formal financial services qualifications other than a diploma. He was declared bankrupt in 2010 and was discharged from the bankruptcy in May 2012. He claimed that the appellant had "ripped [him] off" for a large amount of money. Nevertheless, he agreed that, at the time of the incident, he had not made any formal demand for payment, had not instituted legal proceedings and had not seen the appellant for over a year. He agreed that he had sent the appellant a text message, probably while intoxicated, on 26 June 2012, about a month before the incident. Ross said that the appellant had taken profits of the building company that were owed to Ross by way of commission. Ross denied that he was looking forward to getting his revenge on the appellant. He said that he considered that he had given the appellant an opportunity in life. Bell Nettle Gordon He admitted that he had suggested that he and the appellant might have a fight at the Sea World car-park because of the appellant's unpaid business debts. When cross-examined as to the confrontation, Ross said that he did not see the appellant until the appellant was "in [his] face" pushing him. Ross did not see a kick to his hip but felt it. Ross stated that when he was on the ground, the appellant was "kicking the crap out of" him. He agreed that a woman approached saying something like "Stop. Leave him alone." A man also approached. He agreed that the appellant left for a few minutes but said that the appellant then came back when he, Ross, was leaning against the wire fence. He maintained that the appellant then further assaulted him. He said that, at the time of the second assault, when he was on the ground trying to roll away, he saw the woman to his left. He thought that she was there for the second assault and that other people had come up to him during the first assault. He agreed, however, that, in his statement to police, he had said that the woman was there when he was on the ground during the first assault. Ross maintained that the first and second assaults occurred as he had outlined in his evidence in chief. Jodie Broad ("Ms Broad") gave evidence that she was withdrawing money from an ATM at Circle on Cavill sometime between 8:00 am and 10:00 am one morning in July 2012 when she heard a lot of angry yelling near the Perle Nightclub. She saw one man (Ross) on the ground and one man (the appellant) standing just to the right of an orange-red post behind a wire fence about 50 metres away. The appellant was doing most of the yelling. She walked across to see what had happened. When she first heard the yelling, she saw the appellant make a kicking action. She did not know if that kick connected. As she got closer, the appellant gave a second kick. She did not see if or where that kick connected. She could tell that the men knew each other because of what they were saying. Ms Broad stated that she told the appellant that it was not good to kick someone while they were on the ground. In response, the appellant referred to his relationship issues with Ross and said something about a marriage breakdown and business deals gone wrong, and about being ripped off and having text messages to prove it. At that point, the appellant did not fully calm down but he ceased all physical contact with Ross. Ms Broad said that the appellant probably continued to yell at Ross as he spoke to her. She observed that Ross was still moving but was not saying much, and she was concerned that Ross had some blood on his right ear. After more yelling, the appellant walked away. Other people had gathered around. Ross pulled himself up using the fence. Ms Broad described him as "very wobbly". She said that the appellant then returned from the direction of a newsagency. He came within a metre of Ross and yelled some Bell Nettle Gordon more. But there was no more physical contact; only "general hatred ... and animosity". Then the appellant walked away past Ms Broad and she confirmed with Ross that he would be able to telephone someone for assistance. In cross-examination, Ms Broad agreed that she did not know either man. She confirmed that, after she saw the appellant kick at Ross twice, the appellant walked away, returning shortly afterwards, with a bottle of water, to continue yelling at Ross. But she expressly denied that there was any further physical contact: upon his return, the appellant had not kicked Ross in the back, knocking him to the ground, nor placed his hands around Ross's throat to choke him. Ross's son, Lloyd Ronald James Ross, gave evidence that he went with a work colleague to render assistance to his father at about 10:00 am on 28 July 2012. He observed that his father was bleeding from one ear and was trying to stand on one leg. There were dirt marks on the back of the shoulder of his father's jacket. Shamus Bradley ("Bradley"), who had known Ross since 2006 and was introduced to the appellant by Ross in mid- to late 2007, gave evidence by video-link from Ireland. His evidence related to a conversation he claimed to have had with the appellant on Thursday 2 August 2012. Bradley said that, in response to his comment that the appellant had broken Ross's leg, the appellant said that he had "tried to break the other leg and put him in a wheelchair" and tried to choke him. According to Bradley, the appellant further admitted that he had been waiting for Ross and "just got stuck into him". Bradley reported that he had said to the appellant "you're two grownup guys ... [y]ou're business guys", to which the appellant responded by asking Bradley if he had seen the text message Ross had sent to the appellant, referring to the demand from Ross for money owed to him. Bradley asked the appellant if that was the reason he was waiting for Ross and the reason he got stuck into him. According to Bradley, the appellant said that it was. Bradley stated that he was doing his best to remember the conversation but that it was nearly four years ago. He recalled that the appellant was still angry about what had happened. Bradley repeated that the appellant had said: "I tried to break his leg – to break his other leg, put him in a wheelchair"; adding that the appellant "didn't give a fuck". In cross-examination, Bradley agreed that he was a good friend of Ross. Bradley's company leased a property owned by Ross's wife and, in March 2013, when the property was being sold, he was released from paying at least 12 months' rent as part of an arrangement for entering into a fresh lease for a Bell Nettle Gordon five-year term. He said that he thought he was released from three years of the lease, which he believed was with Ross's company. The rental payments were between $18,000 to $20,000 per month. He said that on the Tuesday before the Thursday on which he spoke with the appellant, he had spoken to Ross's wife about what had happened to Ross. Bradley gave a statement to police about his conversation with the appellant some weeks later on 30 August 2012. He said that he did not discuss his statement with Ross or Ross's wife before he went to the police. He maintained that his evidence of the conversation with the appellant on 2 August 2012 was accurate. Mr Angus Nicoll, an orthopaedic surgeon, gave evidence that he examined Ross on 28 July 2012. Ross's left hip was broken in three places. He had bruising about the hip area consistent with the fracture. But there was no boot print or obvious point of impact. Mr Nicoll had no notes of bruising elsewhere on Ross. He agreed that, because Ross was taking anti-blood-clotting medication and had a slightly lower than normal haemoglobin count, he could have been expected to bruise more easily than others. Mr Nicoll operated on Ross's hip on 30 July 2012 using a metal device to fix the broken bones in position. Without surgery, Ross would have had a significant disability of the hip and eventually may have succumbed to pneumonia, embolus or dehydration. After about nine months, Ross had recovered from the surgery quite well but was estimated to have lost about 25 to 50 per cent of the range of motion of the hip. Mr Nicoll's impression was that the injury was a high-energy fracture, most likely caused when Ross fell on his side onto the ground. Because the fracture required a high degree of force, it was likely to be the result of an incident like a fall from height (for example, from a step ladder onto a hard surface) or a fall while moving quickly (for example, moving or stumbling backwards and hitting the ground at speed), or a motor vehicle accident or a strike from a baseball bat. According to Mr Nicoll, fractures of the kind sustained by Ross were more common amongst older people over 70 years of age and with osteoporosis. Much more force was required to cause a fracture of that type in a younger person like Ross and there was no evidence that Ross had any osteoporosis. A normal 55-year-old male would not be expected to sustain such a fracture by a direct kick to the hip area from someone wearing a sandshoe. To cause Ross's injury a very high and concentrated application of force was required. The injury was consistent with being pushed and then falling directly onto the left side on a hard concrete-tiled surface with some speed. It was conceivable, albeit quite unlikely, that the injury could have been suffered from a direct blow. Bell Nettle Gordon Dr Sarjit Singh gave evidence that he was the emergency physician who attended on Ross on 28 July 2012 at about 3:30 pm. He thoroughly examined Ross. He observed that Ross's main injury was to his left hip. There was a very minor skin tear on his left ear. In cross-examination, Dr Singh noted that there was no evidence of head injury, loss of consciousness, or any other injury however slight to any other part of Ross's body, apart from the minor tear to the left ear. In re-examination, Dr Singh agreed that bruising can sometimes take a few days to develop. The appellant, who was 55 years of age at the time of trial, gave evidence that he met Ross in 1986 and worked for him as an insurance agent for about two years. He and Ross then became directors of a company which later went into receivership, causing the appellant to become bankrupt in 1993. The appellant worked as a real estate agent until 1996 when he was discharged from bankruptcy. The appellant operated his own real estate company until 2001, worked as a property consultant until 2006 and then began his own construction company. He said he had very little contact with Ross between 1993 and 2006. Following the establishment of the appellant's construction company, he and Ross agreed upon a business relationship whereby Ross's company would receive a $22,000 commission, exclusive of GST, for each client it referred who purchased a house from the appellant's company. A company related to Ross's family also held shares in the appellant's company. In 2008, those shares were transferred to the appellant. As part of the transfer, it was agreed that referrals from Ross would result in a higher commission of $35,000 and that additional commission would be backdated to past referrals. Ross and the appellant continued doing business on that basis until about late 2009 when Ross's wife commenced her own building company. From that point, Ross and the appellant had little or no contact. In the early hours of one morning in June 2012, the appellant received a text message from Ross accusing him of owing Ross a lot of money and suggesting he had stolen from Ross. According to the appellant, that was not true and the allegation upset him. The appellant gave evidence that he lived in a residential apartment in Circle on Cavill and that Ross worked nearby and went to Melba's, a venue at Circle on Cavill, daily. The appellant denied that he was waiting for Ross on the day in question or that he had ever said so to Bradley. The appellant added that he would have had no difficulty locating Ross had he wished to. The appellant stated that on Saturday 28 July 2012 he left his apartment at about 7:30 am and drove to the gym, returning at about 9:30 am. He dropped his gym bag and towel at his apartment and, at about 10:00 am, carrying a bottle of water, he decided to go for a walk on the beach. Closed circuit television footage showed the Bell Nettle Gordon appellant leaving his apartment building at 10:02 am and returning, about seven minutes later, at 10:10 am. As he was walking towards the beach, the appellant saw Ross about four or five metres away. Ross approached him and said, "Irwin, where's my fucking money?". The appellant told him to "fuck off". According to the appellant, Ross continued to follow him and then pushed him on his right shoulder saying, "I'm going to get my money". The appellant said that, by this stage, he was feeling "really angry [and] really cranky". He was heading down a ramp towards Cavill Avenue trying to avoid Ross when Ross pushed him again. The appellant stumbled down onto one knee. Ross then said again, "I'm going to get my fucking money". As the appellant stood up, Ross was in front of him on the downward side of the ramp. The appellant stated that he was angry because he had paid Ross everything to which Ross was entitled and because Ross had said things previously to the appellant's eldest daughter about the appellant's wife, including that Ross had had a relationship with her. The appellant said that he was also really cranky about Ross pushing him. As a result, the appellant stood up and pushed Ross in the chest. Ross "stumbled back probably about three or four metres and then fell to the ground ... [r]easonably hard". The appellant walked over and told Ross to get up, adding that, if Ross wanted to have a fight, they would have a fight. The appellant said that he kicked Ross twice in the right buttock but only when Ross was on the ground. The appellant estimated that he used about 40 to 50 per cent of his strength and that they were not hard kicks. He claimed that Ross did not say that he had broken his leg, but agreed that Ross did not get up. A woman he now knew to be Ms Broad was "singing" out to him to stop. He was furious with Ross and told Ms Broad why. After speaking to Ms Broad for about 30 seconds, the appellant left and continued towards the beach. As he had finished his bottle of water, he went to the newsagency to buy another. He was thinking about all the things that Ross had done to him and returned to see Ross leaning up against the wire fence where Ms Broad was talking to him. The appellant said he had no further physical contact with Ross but continued to tell Ross in angry terms that he had repaid everything he owed Ross and more, and to keep away from him and his family. He did not kick Ross again and he did not put his hands around Ross's neck. The appellant said that when he had finished yelling at Ross he was too upset to go for his walk so he returned to his apartment. The appellant denied having a conversation of the kind attested to by Bradley and denied saying the things that Bradley attributed to him. He said that Bell Nettle Gordon he had pushed Ross only after Ross assaulted him, that he had felt intimidated and threatened and that he pushed Ross away in defence. He said that he kicked Ross when he was on the ground to prompt Ross to get up and fight because he was really angry with him. The appellant agreed in cross-examination that there was no written documentation of the backdated commission agreement made with Ross following the transfer of Ross's shares to the appellant, which was said to be worth $1.26 million. Although he and Ross had previously confronted each other at Melba's when Ross was drunk, they had never come to blows. He agreed that, in 1992, he had called Ross out to a fight in the Sea World car-park, after Ross pushed him against a wall in front of Ross's wife and children, one of whom was the appellant's godson. But he said that the incident had passed and their relationship continued as normal. He agreed he was very angry about the text message sent by Ross demanding money and, when he saw Ross that July morning, he was furious and frothing at the mouth. He denied, however, that he was waiting for Ross or that he knew Ross went to the newsagency every Saturday morning. He admitted that he told onlookers, including Ms Broad, that Ross had ripped off hundreds of people on the Gold Coast and that he had text messages to prove it. He also agreed that, in truth, he did not have any such text messages. He maintained, however, that Ross had ripped off a lot of people. He was not aware whether his spittle got on Ross's face during the confrontation. He maintained that his account of the confrontation was truthful. The trial judge's directions Relevantly, the trial judge directed the jury as to Count 1 as follows: "There's a provision of our criminal code that provides so far as it's here applicable as follows: A person is not criminally responsible for an event that: (1) the person does not intend or foresee as a possible consequence; and (2) an ordinary person would not reasonably foresee as a possible consequence. The prosecution must prove that the [appellant] intended that an injury like the fracture of [Ross's] hip should occur, or foresaw it as a possible consequence, or that an ordinary person in his position would reasonably have foreseen the event as a possible consequence. In considering whether the [appellant] did foresee it or an ordinary person would have, you should focus on whether an injury like the hip fracture here was Bell Nettle Gordon foreseeable as something which could happen, disregarding possibilities that are no more than remote or speculative. I referred, already, to the medical evidence about the force required to cause a fracture of that – of this kind and to the evidence of – about what occurred given by [Ross] and [the appellant]. The evidence of the doctors and of [the appellant], in my view, clearly raises for your consideration, the possibility that neither the [appellant] nor an ordinary person could reasonably have foreseen that [Ross] would suffer an injury such as here occurred, a fracture of his hip. I remind you it's not for the [appellant] to prove anything. Unless the prosecution proves, beyond reasonable doubt, that an ordinary person in the position of the [appellant] would reasonably have foreseen the serious injury suffered as a possible consequence of his actions, or that the [appellant] intended or foresaw that, in fact, you must find him not guilty of the charge of grievous bodily harm." It is accepted that there was no error in the trial judge's directions. Proceedings before the Court of Appeal Before the Court of Appeal, the appellant contended3 that the jury could not rationally have excluded the reasonable possibility that Ross assaulted the appellant and that, in response to that assault, the appellant pushed Ross, who fractured his hip when he hit the ground. It followed, in the appellant's submission, that the jury could not rationally have excluded, as a reasonable possibility, that an ordinary person in the appellant's position would not reasonably have foreseen the possibility of a broken hip of the kind sustained by Ross as a possible consequence of a push of the kind described by the appellant. Such an injury, it was submitted, was no more than a theoretical or remote possibility. Irwin [2017] QCA 2 at [34]-[40] per McMurdo P (Gotterson JA and Mullins J agreeing at [53], [54]). Bell Nettle Gordon The Crown submitted4, inter alia, that it was open to the jury to reject the appellant's account that Ross was the instigator of the confrontation, and also referred to other aspects of the appellant's evidence, such as his account of the push, to support the conviction. The Crown contended that it was open to the jury on that basis to find beyond reasonable doubt that an ordinary person in the appellant's position would reasonably have foreseen the possibility that Ross would suffer grievous bodily harm of the kind in fact inflicted. McMurdo P (with whom Gotterson JA and Mullins J agreed) accepted5 that the reliability of Ross's evidence had been starkly brought into question by the medical evidence and Ms Broad's evidence. Given that Ms Broad was an independent and apparently reliable witness, there was no reason for the jury to doubt her testimony. It followed, her Honour concluded, that the jury could not reasonably have relied on Ross's evidence; the verdict of acquittal on Count 2 was consistent with the jury having rejected his evidence at least in part. McMurdo P further accepted6 that the jury could not safely have relied on Bradley's evidence, in view of Bradley's friendship with Ross; the implausibility of the appellant making admissions of the kind which Bradley alleged; the absence of contemporaneous notes of the alleged admissions, coupled with the fact that Bradley did not make a statement to police for several weeks thereafter; the fact of Bradley having spoken to Ross's wife before making a statement to police; and the fact that Bradley had been released from debt obligations to Ross's family totalling hundreds of thousands of dollars. Her Honour added7, however, that it was clear that the appellant was extremely angry with Ross when he pushed him and the medical evidence made it most likely that Ross broke his hip after the appellant pushed him with "a considerable degree of force, causing him to fall heavily on [the] ramp". The Irwin [2017] QCA 2 at [42] per McMurdo P (Gotterson JA and Mullins J agreeing Irwin [2017] QCA 2 at [46]. Irwin [2017] QCA 2 at [50] (Gotterson JA and Mullins J agreeing at [53], [54]). Irwin [2017] QCA 2 at [50] (Gotterson JA and Mullins J agreeing at [53], [54]). Bell Nettle Gordon probability of that being so was confirmed by the appellant's own evidence. Her Honour thus concluded8 that: "A jury may well have considered that an ordinary person in the position of the appellant could not have reasonably foreseen [Ross] would in those circumstances suffer a fractured hip. That, it seems, was the trial judge's view. But that is not the test for this Court. It was equally open to the jury on the evidence to reach the contrary conclusion, that an ordinary person in the position of the appellant could have foreseen that [Ross] might suffer a serious injury such as a fractured hip from such a forceful push. The resolution of the issue was a matter for the jury. They had the advantage of seeing the height and build of the 55 year old [Ross] and appellant. Assuming they were of average build and height, the appellant's push of [Ross], necessarily on the medical evidence forceful, on a slight downward sloped tiled ramp, could foreseeably result in [Ross] falling badly and seriously injuring himself, even breaking his hip. Such a result was not theoretical or remote. ... It was open to the jury to be satisfied beyond reasonable doubt of the appellant's guilt." (emphasis added) Relevant statutory provisions "[G]rievous bodily harm" is defined in s 1 of the Criminal Code (Q) as meaning: the loss of a distinct part or an organ of the body; or serious disfigurement; or any bodily injury of such a nature that, if left untreated, would endanger or be likely to endanger life, or cause or be likely to cause permanent injury to health; whether or not treatment is or could have been available." Irwin [2017] QCA 2 at [51]-[52] (Gotterson JA and Mullins J agreeing at [53], Bell Nettle Gordon Section 23(1) of the Criminal Code was amended in 20119. It provides, and provided at the time of the offence in question, that a person is not criminally responsible for: an event that – the person does not intend or foresee as a possible consequence; and an ordinary person would not reasonably foresee as a possible consequence." In 2013, a note was inserted into s 23(1)10: "Note – Parliament, in amending subsection (1)(b) by the Criminal Code and Other Legislation Amendment Act 2011, did not intend to change the circumstances in which a person is criminally responsible." The relevant "event" for the purpose of s 23(1)(b) in the instant case was the grievous bodily harm suffered by Ross in the form of a badly fractured hip. The appellant's contentions As is apparent from the text of the Criminal Code in its current form, the test posited by s 23(1)(b)(ii) is whether an ordinary person would, not could, reasonably have foreseen the possibility of – in this case – grievous bodily harm in the form of a badly fractured hip. As can be seen in the passage of the Court of Appeal's reasoning earlier set out, the test stated and applied by the Court of Appeal was whether an ordinary person in the position of the appellant could have foreseen that Ross might suffer grievous bodily harm in the form of a badly fractured hip. The Court of Appeal concluded that it was open to the jury to be satisfied beyond reasonable doubt that the appellant's push of Ross could foreseeably have resulted in such an injury. 9 Criminal Code and Other Legislation Amendment Act 2011 (Q), s 4. 10 Justice and Other Legislation Amendment Act 2013 (Q), s 42D. Bell Nettle Gordon In the appellant's submission, that statement and application of the test involved material error. According to both ordinary acceptation and authority, proof that an ordinary person "would" reasonably foresee the occurrence of an event entails proof of the probability or perhaps even near certainty of the occurrence. That requires proof of greater foresight than is necessary to demonstrate that an ordinary person "could" reasonably foresee the occurrence of the event. Hence, by substituting "could" for "would" the Court of Appeal had significantly lowered the standard of proof which the Crown was required to meet. The appellant also argued that the Court of Appeal made a critical error of fact as to the effect of the medical evidence: by concluding11 that it was most likely that the appellant pushed Ross with "a considerable degree of force". In the appellant's submission, the medical evidence was silent as to the force of the push. It established12 no more than that, if Ross's injury were caused by a fall, it was likely that it was an accelerated fall – such as, for example, would be the case if Ross was "moving or stumbling backwards" – and, therefore, was consistent with Ross having been "pushed and then falling onto a hard concrete tiled surface". Nor was the appellant cross-examined as to the force with which he had pushed Ross. In those circumstances, it was submitted, it was not open to the jury to say beyond reasonable doubt that the force used was any more than nominal. And, for the same reason, it was not open to the jury to conclude beyond reasonable doubt that an ordinary person in the position of the appellant would reasonably have foreseen the possibility that the push would result in Ross suffering a badly fractured hip. Additionally, it was contended that the Court of Appeal erred in upholding the conviction in circumstances where the Court was apparently of the view13 that a verdict of guilty and a verdict of not guilty were both equally open to the jury. 11 Irwin [2017] QCA 2 at [47] per McMurdo P (Gotterson JA and Mullins J agreeing 12 See Irwin [2017] QCA 2 at [23]-[24] per McMurdo P (Gotterson JA and Mullins J agreeing at [53], [54]). 13 Irwin [2017] QCA 2 at [51] per McMurdo P (Gotterson JA and Mullins J agreeing Bell Nettle Gordon The Crown's contentions Before this Court, the Crown accepted that the test for the purposes of s 23(1)(b)(ii) of the Criminal Code is whether an ordinary person would, not could, reasonably have foreseen the possibility of the subject injury; and thus that the Court of Appeal may have been better advised to use "would" rather than "could" in its analysis. The Crown submitted, however, that it should not be thought that the Court of Appeal was attempting a definitive statement of the test prescribed by s 23(1)(b)(ii), and hence that no error was established by the Court of Appeal's use of language. In the Crown's submission, it was apparent from the fact that McMurdo P set out the trial judge's directions on s 23(1)(b) that her Honour well understood the correct test and proceeded accordingly. It was also apparent from the authorities, both pre-dating and post-dating the amendment to s 23(1)(b) in 2011, that the notion of what an ordinary person "would not reasonably foresee" is to be applied practically and as excluding remote or theoretical possibilities. Consequently, it was submitted, courts have sometimes employed the expression "could not reasonably foresee" as an analogue for "would not reasonably foresee", and so as an antonym for the expression "would reasonably have foreseen"14. The Court of Appeal's reasoning was to be viewed in that light. Moreover, in the Crown's submission, there would be few if any cases where a useful distinction could be drawn between what could and would reasonably be foreseen: if a particular consequence is objectively sufficiently obvious that an ordinary person could foresee it as a possible consequence, it is hard to imagine circumstances in which an ordinary person would not foresee it. "Would" or "could" reasonably foresee a possible consequence Up to a point, there is some force in the Crown's submissions. Prior to amendment in 2011, the defence provided for in s 23(1)(b) was expressed in terms of whether an act or omission for which it was alleged a person was criminally liable was "an event that occur[red] by accident". As was stated15 in 14 See, for example, Kaporonovski v The Queen (1973) 133 CLR 209 at 231-232 per Gibbs J (Stephen J agreeing at 241); [1973] HCA 35; R v Van Den Bemd [1995] 1 Qd R 401 at 405; R v Taiters, ex parte Attorney-General [1997] 1 Qd R 333 at 336, 338; Stevens v The Queen (2005) 227 CLR 319 at 370 [160] per Callinan J (McHugh J and Kirby J relevantly agreeing at 332 [32], 345-346 [79]); [2005] HCA 65. 15 (1973) 133 CLR 209 at 231 per Gibbs J (Stephen J agreeing at 241). Bell Nettle Gordon Kaporonovski v The Queen in relation to that provision, "an event occur[ed] by accident within the meaning of the rule if it was a consequence which ... would not reasonably have been foreseen by an ordinary person". As the Crown submitted, courts were also sometimes inclined to explain the application of the defence to particular circumstances in terms of whether the consequence in issue was so unlikely that "no ordinary person could reasonably have foreseen it"16, or so unlikely that "an ordinary person could not reasonably have foreseen it"17. Further, as is apparent from the note to s 23(1), Parliament, in amending s 23(1)(b) in 2011, did not intend to change the circumstances in which a person is criminally responsible18. The intent was to retain the existing law, while also making it clearer. Contrary to the Crown's submissions, however, it does not follow that there is logically no difference between what an ordinary person would reasonably foresee and what an ordinary person could reasonably foresee. The former involves a degree of probability19, albeit that it need not be more likely than not, whereas the latter is a matter more akin to mere possibility20. Accordingly, although it is axiomatic that, if no ordinary person could reasonably foresee a consequence, it is not open to be satisfied beyond reasonable doubt that an ordinary person would reasonably foresee it, it logically does not follow that if 16 Kaporonovski (1973) 133 CLR 209 at 232 per Gibbs J (Stephen J agreeing at 241). See and compare Vallance v The Queen (1961) 108 CLR 56 at 61 per Dixon CJ, 65 per Kitto J, 82 per Windeyer J; [1961] HCA 42. 17 Van Den Bemd [1995] 1 Qd R 401 at 405. 18 The note forms part of the Act: Acts Interpretation Act 1954 (Q), s 14(4). 19 See and compare Green v The Queen (1997) 191 CLR 334 at 340 per Brennan CJ; [1997] HCA 50; Heron v The Queen (2003) 77 ALJR 908 at 921 [79]-[80] per Callinan J; 197 ALR 81 at 99-100; [2003] HCA 17; R v Sievers (2004) 151 A Crim R 426 at 431 [21]-[22] per Levine J, 441 [71]-[72] per Simpson J, 444 [89] per Barr J; Attorney-General of the Northern Territory v EE (2013) 33 NTLR 102 20 See and compare Attorney-General's Department v Cockcroft (1986) 10 FCR 180 at 190 per Bowen CJ and Beaumont J, 194-196 per Sheppard J; Green (1997) 191 CLR 334 at 340 per Brennan CJ; Sievers (2004) 151 A Crim R 426 at 444 [89] per Barr J; Revenue and Customs Commissioners v Isle of Wight Council [2007] BTC Bell Nettle Gordon an ordinary person could reasonably foresee a consequence, it is open to be satisfied beyond reasonable doubt that an ordinary person would reasonably foresee it. It is, therefore, prone to lead to error in the application of s 23(1)(b)(ii) to pose the test in terms of whether an ordinary person could reasonably have foreseen the consequence. While the ultimate question for the Court of Appeal was whether the verdict was open21, the critical point to which the analysis of the Court was directed was the application of the test in s 23(1)(b)(ii) to the evidence. The Court of Appeal should not have expressed the test in the terms it did and the practice should not be repeated. That said, however, the jury were properly directed that, in order to find the appellant guilty of the offence of unlawfully causing grievous bodily harm, they had to be satisfied beyond reasonable doubt that an ordinary person in the appellant's position would reasonably have foreseen the possibility that Ross would sustain grievous bodily harm, and they were further correctly directed that what the ordinary person would need to have foreseen was a real and not theoretical possibility of harm. As will be explained, there is no reason to doubt that the jury adhered to those directions, or cause to doubt the reasonableness of the verdict on that basis. Conclusion as to "considerable degree of force" behind push It will be recalled that, in the appellant's submission, the medical and other evidence did not establish the level of force with which the appellant pushed Ross, and therefore it could not be concluded, as the Court of Appeal concluded22, that the appellant used "a considerable degree of force". Contrary to the appellant's submission, there was no error in the Court of Appeal's assessment of the evidence. Given the appellant's own evidence – that he pushed Ross in the chest as Ross stood below him on a hard-surfaced, gradually downward-sloping ramp, while "really angry [and] really cranky", with sufficient force to cause Ross to stumble back three or four metres and fall "reasonably hard" – and given further, as it emerged from the medical evidence, that the appellant must have pushed Ross with sufficient force to cause him to fall "while moving quickly" and to hit the ground "with some speed", it was open 21 See M v The Queen (1994) 181 CLR 487 at 492-493, 494-495 per Mason CJ, Deane, Dawson and Toohey JJ; [1994] HCA 63. 22 Irwin [2017] QCA 2 at [50] per McMurdo P (Gotterson JA and Mullins J agreeing Bell Nettle Gordon to infer, as the Court of Appeal inferred, that the appellant pushed Ross with "a considerable degree of force". Indeed, as a matter of common sense and ordinary human experience, it is difficult to see how one could rationally come to any other conclusion. While other quantifying descriptions of the amount of force used might also have been justified by the evidence, for the reasons given there was no error in the Court of Appeal's description of "a considerable degree of force" and the appellant's submission that the medical evidence was silent as to the degree of force should be rejected. Equally open to find either way There was equally no error in the Court of Appeal's observation23 that there were "equally open" interpretations of the evidence before the jury. Contrary to the appellant's submission, that statement did not mean that the jury acting rationally were bound to conclude that there was a reasonable doubt as to whether an ordinary person in the appellant's position would reasonably have foreseen the possibility that Ross would suffer an injury in the nature of grievous bodily harm. Rather, it appears as having been intended to convey that, while possibly more than one view of the evidence was open, depending on which view of the evidence was taken it was open to be satisfied that an ordinary person in the appellant's position would reasonably have foreseen the possibility of the injury that was suffered. There is no reason to doubt that was so. As the Court of Appeal stated24, the assessment of the evidence was a matter for the jury. It was open to the jury to accept the appellant's evidence that he was angry with Ross and, in that state of mind, pushed Ross causing him to fall down "reasonably hard" on the downward-sloping tiled ramp. Further, on the basis of the appellant's evidence, it was open to be satisfied beyond reasonable doubt that the force of the push was sufficient to cause Ross to stumble back three or four metres before falling to the ground. Taking that, then, in combination with the medical evidence, it was open to conclude that the appellant pushed Ross backwards down the ramp with sufficient force to cause Ross to stumble back for three or four metres and hit the ground at speed. And, 23 Irwin [2017] QCA 2 at [51] per McMurdo P (Gotterson JA and Mullins J agreeing 24 Irwin [2017] QCA 2 at [51] per McMurdo P (Gotterson JA and Mullins J agreeing Bell Nettle Gordon finally, combining that with the jury's common sense and ordinary human experience, and assuming that Ross and the appellant were each of average height and build (there being no suggestion that either man was otherwise), it was open to the jury to conclude that an ordinary person in the appellant's position would reasonably have foreseen that so to push Ross entailed the real and not remote possibility that Ross would fall badly and thereby sustain an injury amounting to grievous bodily harm of the type that was suffered. More specifically, where s 23(1)(b) is fairly raised on the evidence, the prosecution must relevantly prove, beyond reasonable doubt, that an ordinary person in the position of the accused would reasonably foresee an "event" as a possible consequence of the accused's actions. That requires that the event be identified. A number of decisions of the Court of Appeal of the Supreme Court of Queensland have established that the event for the purposes of s 23(1)(b) is, relevantly, an injury of the kind which constituted the grievous bodily harm in fact suffered by the complainant25. It does not suffice to prove foreseeability of simply any injury amounting to grievous bodily harm, or even any injury constituting the relevant limb of grievous bodily harm: in the instant appeal, an injury "of such a nature that, if left untreated, would endanger or be likely to endanger life, or cause or be likely to cause permanent injury to health"26. What is required is proof beyond reasonable doubt that an ordinary person in the position of the accused would reasonably foresee the possibility of the type of injury in fact caused. That finds reflection in the current model direction in the Applying that formulation to the facts of the present appeal, however, the event was the injury suffered by Ross constituting the relevant element of the offence of unlawfully doing grievous bodily harm, namely a fracture of Ross's left neck of femur. It was not necessary that the precise location of the injury (the neck of femur on Ross's left-hand side) or the exact nature of the fracture (a break in three places) be foreseen. All that needed to be foreseen was that 25 R v Stuart [2005] QCA 138 at [17], [22], [25]; R v Condon [2010] QCA 117 at [19]; cf R v Coomer [2010] QCA 6 at [24], [27], [32]. 26 See par (c) of the definition of "grievous bodily harm" in s 1 of the Criminal Code. 27 See Supreme Court of Queensland, Supreme and District Courts Criminal Directions Benchbook, (2017) at 78.1-78.2. A previous iteration of the direction, which is in a substantially similar form, was referred to in Stuart [2005] QCA 138 Bell Nettle Gordon harm of the kind in fact suffered was a possible consequence. And in the circumstances of this case, it cannot be sensibly doubted that, when pushing a middle-aged man backwards on a downward-sloping, hard-surfaced, concrete-tiled ramp with sufficient force to cause him to stumble backwards three or four metres and hit the ground at speed, an ordinary person in the position of the appellant would reasonably foresee an injury of that kind as a real and not remote possible consequence of such a push. Having regard to the role of the jury in assessing the evidence at trial, and having reviewed the whole of the evidence, the Court of Appeal was right to conclude that the jury's verdict was neither unreasonable nor unsupported by the evidence28. Conclusion The appeal should be dismissed. 28 See M v The Queen (1994) 181 CLR 487 at 492-493 per Mason CJ, Deane, Dawson and Toohey JJ. See also R v Baden-Clay (2016) 258 CLR 308 at 329-330 [65]-[66], 333 [79]; [2016] HCA 35.

HIGH COURT OF AUSTRALIA GUMMOW ACJ, MINISTER FOR IMMIGRATION AND CITIZENSHIP APPELLANT AND SZMDS & ANOR RESPONDENTS Minister for Immigration and Citizenship v SZMDS [2010] HCA 16 26 May 2010 ORDER The appeal be allowed. Orders 3, 4 and 5 made by the Federal Court of Australia on 10 March 2009 be set aside. In place of those orders: the appeal to the Federal Court of Australia be dismissed; and (b) Order 2 made by the Federal Magistrates Court of Australia on 8 July 2008 be set aside. The appellant pay the reasonable costs of the first respondent of the appeal to this Court. On appeal from the Federal Court of Australia Representation S J Gageler SC Solicitor-General of the Commonwealth of Australia with G T Johnson for the appellant (instructed by DLA Phillips Fox Lawyers) T A Game SC with T Baw for the first respondent (instructed by Sarom Solicitors) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Citizenship v SZMDS Immigration – Refugees – Review by Refugee Review Tribunal – Where respondent applied for protection visa on ground of fear of persecution in Pakistan because of claimed homosexuality – Requirement of satisfaction of state of facts – Where protection visa refused on grounds that decision maker not satisfied respondent's fear of returning to Pakistan well founded – Whether such findings involved findings of jurisdictional fact – Whether illogicality or irrationality in a finding of jurisdictional fact – Whether jurisdictional error. Words and phrases – "illogicality", "irrationality", "jurisdictional error", "satisfied". Migration Act 1958 (Cth), ss 36, 65, 430(1)(b). GUMMOW ACJ AND KIEFEL J. A criterion for the issue of a protection visa under the Migration Act 1958 (Cth) ("the Act") is that the applicant be a non-citizen of Australia to whom the Minister "is satisfied" that Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol. Section 36(2)(a) of the Act so provides1. If the Minister "is satisfied" that this and other criteria "have been satisfied" then the Minister "is to grant the visa"; if "not satisfied", then the visa must be refused (s 65(1)). The term "satisfy" has various shades of meaning. Two of them are involved in the collocation presented by ss 36 and 65 of the Act. One is that the applicant for a protection visa answers or meets the requirement or condition that Australia has protection obligations to the applicant. The second is that the decision maker accepts or is content that the applicant answers or meets that requirement or condition. Upon review by the Refugee Review Tribunal ("the RRT") of a refusal by the Minister (or the delegate of the Minister), the RRT exercises all the powers and discretions conferred by the Act upon the Minister (s 415(1)). The reiteration in ss 36 and 65 of the Act of the term "satisfied" is significant for the issues on this appeal by the Minister from the decision of the Federal Court (Moore J)2. The Federal Court allowed an appeal from the Federal Magistrates Court (Scarlett FM)3 and quashed the decision of the RRT (the second respondent). Moore J held that the RRT had fallen into jurisdictional error because its determination that the first respondent was not a refugee was based on illogical or irrational findings or inferences of fact4 and remitted the matter to the RRT to be heard and determined according to law. The RRT had affirmed the decision of a delegate of the Minister to refuse the grant of a protection visa to the first respondent. In this Court the RRT entered a submitting appearance. The avenue of judicial review It is important for an understanding of the issues in this case to appreciate that it does not arise under one of the systems of review of administrative decisions which are established by laws of the Commonwealth and under which 1 The appropriate text of the Act appears in Reprint No 11. (2009) 107 ALD 361. [2008] FMCA 1064. (2009) 107 ALD 361 at 370-371. Gummow ACJ the grounds of review are not limited to those involving jurisdictional error. In particular, the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") includes as grounds of review that the decision "involved an error of law" (s 5(1)(f)) and that there was no evidence or other material to justify the decision (ss 5(1)(h) and 5(3)). However, the ADJR Act does not apply to the class of decisions with which this case is concerned5. This was not always so. Important decisions of this Court, including Chan v Minister for Immigration and Ethnic Affairs6 and Minister for Immigration and Ethnic Affairs v Wu Shan Liang7, were given in appeals where the jurisdiction of the Federal Court was conferred by the ADJR Act. In these cases the grounds of review principally in contention were that the decision "involved an error of law" (ADJR Act, s 5(1)(f))8, or was so unreasonable that no reasonable person could have exercised the power (ss 5(1)(e) and 5(2)(g))9. The broader focus of the ADJR Act meant that on the one hand the Court was not concerned with the finding of jurisdictional facts and on the other there was an apprehension that an overbroad review of fact-finding would lead to impermissible "merits review". As will appear, the only avenue of judicial review in the present case was that rooted in s 75(v) of the Constitution itself and that required jurisdictional error to quash the administrative decision in question. This is because the privative clause provision found in s 474 of the Act, as interpreted in Plaintiff S157/2002 v The Commonwealth10, was ineffective to exclude judicial review by the Federal Magistrates Court and on appeal to the Federal Court on the ground of jurisdictional error. The facts The first respondent is a citizen of Pakistan, born there in 1965. He is a Sunni Muslim. His first language is Urdu and he gave evidence before the RRT through an interpreter. On 3 July 2007 he arrived in Australia on a visitor visa valid for three months and on 16 August lodged his application for a protection 5 The exclusion is made by Sched 1, pars (da) and (db). (1989) 169 CLR 379; [1989] HCA 62. (1996) 185 CLR 259; [1996] HCA 6. (1996) 185 CLR 259 at 274-275. 9 See (1989) 169 CLR 379 at 418, 431. 10 (2003) 211 CLR 476; [2003] HCA 2. Gummow ACJ visa. In that application he said that he sought a protection visa "on the basis of my [belief] and practice of homosexuality". That application presented several issues respecting the Convention definition of refugee. One was whether the first respondent was a member of "a particular social group", another was whether, if so, he had a "well-founded fear" of persecution for reason of membership of that social group. There had to be both a state of mind, the fear of persecution, and a well-founded basis, in an objective sense, for that fear. None of this is controversial and the RRT recognised the existence of these issues. The dispute concerns the manner in which the RRT dealt, or failed to deal, with them. The RRT held that it did "not accept that the [first respondent] will engage in [homosexual activities] or intercourse in the future, and therefore [it did not accept] that he will face persecution due to his membership of a particular social group (being a homosexual), whether actual or perceived". The RRT concluded that there was no real chance that the first respondent would face persecution due to any Convention reason if he were to return to Pakistan now or in the reasonably foreseeable future. Accordingly, the RRT decided that it was satisfied that the first respondent did not satisfy the criterion for the issue of a protection visa. In essence, the RRT appears to have accepted that male homosexuals in Pakistan comprised a particular social group11, but to have rejected the claim of the first respondent to membership of that group and thus his claim of a well-founded fear of persecution. The dispute concerns the adverse inferences which the RRT drew from its rejection of the account given by the first respondent of his personal history. These inferences led the RRT to the conclusion that he would not act in a certain way in the future and was not a member of the relevant social group. From this conclusion the RRT derived satisfaction that the first respondent was not a person to whom Australia owed protection obligations. The account given by the first respondent of his personal history was summarised by Moore J as follows12: 11 Cf Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473; [2003] HCA 71. 12 (2009) 107 ALD 361 at 362. Gummow ACJ "In 1991 he married his wife, and had four children from that relationship. In 1995 he travelled from Pakistan to the United Arab Emirates (UAE) where he worked in a factory. He returned to Pakistan in 1998. He remained in Pakistan until 2004 when he returned to the UAE. He finally left the UAE in July 2007 when he travelled to Australia. During the period October 2005 to July 2007 he developed an attraction to members of the same sex. In July 2006 [while in the UAE] he commenced a homosexual relationship with a man called Mr R. By the end of 2006 they were living together. At some point the applicant and Mr R commenced a sexual relationship with a third person, Mr H. Mr R had earlier been in a sexual relationship with Mr H (who was Mr R's boss). The applicant travelled to the United Kingdom in October 2006, returning to the UAE in December 2006. While in the UK he did not apply for a protection visa. In January 2007 the applicant discovered that Mr H was addicted to illicit drugs and was having unprotected sex with others. In March 2007 the applicant spoke to Mr H about this matter and Mr H became very angry and the applicant was bashed and threatened. The applicant and Mr R ran away from Mr H and went into hiding. In May 2007 the applicant returned briefly to Pakistan, and left again in June 2007 to return to the UAE. Shortly after, he travelled to Australia." As Moore J noted, it was central to the reasoning of the RRT that the first respondent was not a homosexual13. Before turning to consider what his Honour held were the defects, fatal to the exercise by the RRT of its jurisdiction, in the inferential reasoning to that conclusion, something should be said of the importance for this case of the doctrine of jurisdictional error, and its constitutional under-pinning. It is the operation of that doctrine which marks this case off from those in which judicial review is attempted for alleged factual error not going to jurisdiction. Jurisdictional error Of the distinction between jurisdictional and non-jurisdictional error in the setting of the Australian Constitution, Justice Selway, writing extrajudicially, said14: 13 (2009) 107 ALD 361 at 363. 14 "The Principle Behind Common Law Judicial Review of Administrative Action – The Search continues" (2002) 30 Federal Law Review 217, at 234. See also the treatment of the review of legality of administrative action as appurtenant to the judicial branch of government by Mr Pat Keane QC "Judicial Power and the Limits (Footnote continues on next page) Gummow ACJ "Notwithstanding the difficulty, indeed often apparent artificiality, of the distinction, it is a distinction between errors that are authorised and errors that are not; between acts that are unauthorised by law and acts that are authorised. Such a distinction is inherent in any analysis based upon separation of powers principles." In Plaintiff S157/200215, Gaudron, McHugh, Gummow, Hayne and "Because, as this Court has held, the constitutional writs of prohibition and mandamus are available only for jurisdictional error and involving because s 474 of jurisdictional error, s 474 does not, in that regard conflict with s 75(v) of the Constitution and, thus, is valid in its application to the proceedings which the plaintiff would initiate." the Act does not protect decisions The constitutional jurisdiction has its origins in the control exercised by the English courts to prevent administrative authorities exceeding their authority or neglecting their duties. The execution of the laws made by the Parliament was seen as an aspect of the executive power16. There was no distinct concept of public administration as developed in some civilian systems17. In the English system the "jurisdictional fact" was an appropriate marker for the enforcement of legality; how much further the field for judicial review of administrative action extended remained a matter of debate. It is in this setting that the statement of general principle by Brennan J in Attorney-General (NSW) v Quin18 is to be understood. His Honour said: "The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the of Judicial Control", in Cane (ed), Centenary Essays for the High Court of Australia, (2004) 295 at 298-301. 15 (2003) 211 CLR 476 at 508 [83]. 16 Cf Constitution, s 61. 17 See Schwarze, European Administrative Law, (1992) at 11-20. 18 (1990) 170 CLR 1 at 35-36; [1990] HCA 21. Gummow ACJ court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone." In his work Administrative Law, Professor Paul Craig describes jurisdictional facts as those relating to the existence of the power of a public body over the relevant area and continues19: "The statutory conditions thus laid down may be factual, legal or discretionary in nature. A classic factual precondition is that a person should be of a particular age to qualify for a benefit; a simple legal stipulation is provided by the meaning of the term employee; a discretionary precondition is where the statute provides that if a minister has reasonable grounds to believe that a person is a terrorist then he may be detained. Claims of factual error can arise in all three types of case. It might be argued that the agency simply got the applicant's age wrong because it confused the applicant with a different person. It might be claimed that the agency misapplied the legal meaning of the term employee to the facts of the applicant's case. It might be contended that the minister did not on the facts have sufficient material to sustain a reasonable ground for believing that the applicant was a terrorist." The criterion for attraction of the jurisdiction of the decision maker in deciding an application under the Act for a protection visa is not expressed in terms of "fact" as simply understood. Rather, as explained earlier in these reasons, the Act fixes upon a criterion of "satisfaction" as to the existence of a certain state of affairs respecting the status of the applicant. In that regard, a statement of principle by Lord Wilberforce made in 1976, before the tectonic shifts in English public law which occurred in later decades, is of first importance. In Secretary of State for Education and Science v Tameside Metropolitan Borough Council20, his Lordship said of a provision conditioning the power of the Secretary of State to act upon satisfaction as to a certain state of affairs: "The section is framed in a 'subjective' form – if the Secretary of State 'is satisfied'. This form of section is quite well known, and at first sight might seem to exclude judicial review. Sections in this form may, no doubt, exclude judicial review on what is or has become a matter of 19 6th ed (2008) at 478-479. 20 [1977] AC 1014 at 1047. Gummow ACJ pure judgment. But I do not think that they go further than that. If a judgment requires, before it can be made, the existence of some facts, then, although the evaluation of those facts is for the Secretary of State alone, the court must inquire whether those facts exist, and have been taken into account, whether the judgment has been made upon a proper self-direction as to those facts, [and] whether the judgment has not been made upon other facts which ought not to have been taken into account." (emphasis added) The essence of the case upon which the first respondent succeeded in the Federal Court was that in attaining the satisfaction required by the Act, the RRT did not make its judgment upon a proper self direction as to the inferences to be drawn from its rejection of the factual account given by the first respondent. In Australia, as Basten JA recently observed21, the principles applicable where the jurisdictional fact is a state of satisfaction or opinion are traced back to the use by Latham CJ in R v Connell; Ex parte The Hetton Bellbird Collieries Ltd of the terms "arbitrary, capricious, irrational" as well as "not bona fide" to stigmatise the formation of an opinion upon which a statutory power was enlivened22. Subsequently, for the Supreme Court of Canada, Iacobucci J spoke of decision making upon an assumption which had no basis in the evidentiary material or which was contrary to the overwhelming weight of that material, and also of decisions based upon a contradiction in the processes by which conclusions were reached or upon the drawing of inferences which were not properly open23. A decision upon jurisdictional fact which has these characteristics is treated as a failure to exercise jurisdiction24. There has been a purported exercise of public power in the absence of the necessary jurisdictional fact25. 21 Commissioner of Police v Ryan (2007) 70 NSWLR 73 at 85. 22 (1944) 69 CLR 407 at 432; [1944] HCA 42. 23 Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748 24 See the authorities collected in Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 419-420 [82], 453 [189]; [2001] HCA 51. 25 Aronson and Dyer, Judicial Review of Administrative Action, 2nd ed (2000) at 205, cited in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1176 [59]; 198 ALR 59 at 73; [2003] HCA 30. Gummow ACJ These considerations have added significance where the law in question is made by a legislature of limited powers. Thus, in Australia a jurisdictional fact may also be or include a constitutional fact. An example would be a criterion of liability that required the satisfaction of a non-curial decision maker that a propositus answer the description of a trading or financial corporation formed within the limits of the Commonwealth. If that satisfaction were not examinable on judicial review, the result, as the Australian Communist Party v The Commonwealth26 teaches, would be that the legislation could rise higher than its constitutional source. These considerations apply in the present case. No doubt, the first respondent being an alien, a Pakistani national, the Act applies to him as a law with respect to that alienage. But the answer to the question posed by ss 36 and 65 as to the application of the definition of "refugee" determines whether in its operation upon the first respondent the Act also is supported as a law with respect to external affairs. In England the distinction between jurisdictional and non-jurisdictional facts has fallen into deep disfavour and broader notions of the scope of judicial review have been developed and applied by the English courts. The submissions for the Minister by the Commonwealth Solicitor-General in significant measure sought to discourage any such development by this Court in applying s 75(v) of the Constitution. In Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam27 there was some consideration of the difficulties in Australia with the recent English authorities respecting review on the ground of "abuse of power" through the alteration of policy to frustrate unfairly the "legitimate" expectations of the individuals seeking review. No such ground was relied on by the first respondent. Nor does the present case require consideration of a doctrine of proportionality to review the exercise of a discretion where there is lacking an appropriate relationship between ends and means28. Still less is this the occasion to consider the development in Canada of a doctrine of "substantive review" applied to determinations of law, of fact, and of 26 (1951) 83 CLR 1 at 262-263; [1951] HCA 5. See also Miller v TCN Channel Nine Pty Ltd (1986) 161 CLR 556 at 614-615; [1986] HCA 60. 27 (2003) 214 CLR 1 at 9-10 [28], 22-24 [68]-[74], 37 [118]; [2003] HCA 6. 28 R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532 Gummow ACJ mixed law and fact made by administrative tribunals. Of substantive review, the Supreme Court of Canada recently said29: "The current approach to judicial review involves three standards of review, which range from correctness, where no deference is shown, to patent unreasonableness, which is most deferential to the decision maker, the standard of reasonableness simpliciter lying, theoretically, in the middle. In our view, it is necessary to reconsider both the number and definitions of the various standards of review, and the analytical process employed to determine which standard applies in a given situation. We conclude that there ought to be two standards of review – correctness and reasonableness." It may, however, be noted that the Supreme Court was not dealing with a system of judicial review created by statute, such as a counterpart of the ADJR Act. Rather, in Canada "the inherent power of superior courts to review administrative action and ensure that it does not exceed its jurisdiction stems from the judicature provisions in ss 96 to 101 of the Constitution Act 1867"30. The determination of this appeal turns on the application of the doctrine of jurisdictional error, implicit in s 75(v) of the Constitution, to a legislative criterion expressed in terms of the satisfaction of the RRT. Writing after the decision in Tameside, Professor Craig said31: "The general approach now is for the courts to require that a minister produce reasonable grounds for his action, even where the jurisdictional fact is subjectively framed." In Television Capricornia Pty Ltd v Australian Broadcasting Tribunal32, Wilcox J carefully, and with respect correctly, distinguished a "no evidence" ground respecting the existence of a jurisdictional fact, from the more debatable question (which does not arise in this appeal, as counsel for the first respondent 29 Dunsmuir v New Brunswick [2008] 1 SCR 190 at 214. 30 Dunsmuir v New Brunswick [2008] 1 SCR 190 at 213. 31 Administrative Law, 3rd ed (1994) at 370. See also the authorities collected by Gleeson CJ, Gummow, Kirby and Hayne JJ in Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 150 [34]; [2000] HCA 5. 32 (1986) 13 FCR 511 at 514, 519-520. Gummow ACJ stressed) of defective fact finding as an independent ground of judicial review, or as indicative of an "error of law" within the meaning of the ADJR Act. The importance of reasons Professor Wade wrote that a system of judicial review which cannot cope with crucial questions of fact necessarily is seriously defective33. In Australia that deficiency is alleviated by requirements in various laws, notably s 13 of the ADJR Act and its progeny in State legislation34, for the obtaining of reasons for the decision. Section 430(1) of the Act is such a provision. Its operation in the present dispute is to lay out, more clearly than otherwise would be the case, the field upon which these operate the considerations mentioned, for example, by Lord Wilberforce in Tameside and Latham CJ in Connell. Section 430(1) obliged the RRT, in making its decision, to prepare a written statement setting out its decision (par (a)), its reasons for the decision (par (b)), the findings on any material questions of fact (par (c)) and referring to the evidence or any other material on which those findings of fact were based (par (d)). The obligation is to set out the findings on what the RRT considers to be material questions of fact; this focuses upon the thought processes of the decision maker, and may disclose jurisdictional error35. Many of the leading authorities in this Court in which administrative decisions were challenged concerned legislative regimes in which there was no counterpart of s 430 of the Act. The decisions at stake in those cases presented an inscrutable face. Thus, in Avon Downs Pty Ltd v Federal Commissioner of Taxation36, s 80(5) of the Income Tax Assessment Act 1936 (Cth) required the taxpayer company, if prior losses were to be allowed deductions, to satisfy the Commissioner of the state of its voting power on the last day of the year of income. No reasons were given by the Commissioner for the disallowance of the taxpayer's objections to its assessment. In that context Dixon J explained37 the circumstances in which the conclusion of the Commissioner was liable to review 33 Administrative Law, 7th ed (1994) at 297. 34 See Aronson and Dyer, Judicial Review of Administrative Action, 4th ed (2009) 35 Minister for Immigration v Yusuf (2001) 206 CLR 323 at 331-332 [10], 338 [34], 346 [68]; [2001] HCA 30. 36 (1949) 78 CLR 353; [1949] HCA 26. 37 (1949) 78 CLR 353 at 360. Gummow ACJ by the court. Likewise, the inadequacy of the material before the decision maker may support an inference that the decision maker has applied the wrong test or was not "in reality" satisfied of the requisite matters38 or from the absence of reasons the court may infer the absence of any good reason39. On the other hand, of provisions such as s 430, it was said in Wu Shan Liang40 that the reasons are meant to inform and, upon judicial review, are not to be scrutinised in an over-zealous fashion. In that case, where the refugee status of the respondent was at stake, the Court said of the use by the decision maker of the term "speculative"41: "The word 'speculative' in the context in which it appears need not amount to a denial of the delegates' function of assessment of future chances of persecution. Rather, the word might equally have been used to refer to the probative force of the material before the delegate." Here the RRT did give reasons in response to the requirement of s 430(1). The issue is whether, having regard to those reasons and without the necessity for a process of divination undertaken in the earlier authorities dealing with other legislation, the RRT fell into jurisdictional error to attract the remedy provided by the Federal Court. SGLB The ascertainment of the relevant jurisdictional error, if there be one, must fix upon the treatment of the requirement mandated by s 65 of the Act that the decision maker be "satisfied" that there is "satisfied" the criterion that the applicant is one to whom the decision maker is satisfied under s 36(2)(a) that Australia owes protection obligations. In dealing with that question two distinctions must be made. They are foreshadowed in what has been said earlier in these reasons. The first is that the first respondent does not assert any general ground of jurisdictional error of the 38 R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 at 120; [1953] HCA 22. 39 Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 663-664; [1986] HCA 7. 40 (1996) 185 CLR 259. 41 (1996) 185 CLR 259 at 277. Gummow ACJ kind disfavoured by Mason CJ42 where there were alleged deficiencies in what might be called "intra-mural" fact finding by the decision maker in the course of the exercise of the jurisdiction to make a decision. The apprehensions respecting "merits review" assume that there was jurisdiction to embark upon determination of the merits. But the same degree of caution as to the scope of judicial review does not apply when the issue is whether the jurisdictional threshold has been crossed. There the imperatives are the separation of powers considerations to which Justice Selway referred. The second distinction concerns attacks upon the exercises of discretionary power which are said to be unreasonable in the sense attributed to Associated Provincial Pictures Houses Ltd v Wednesbury Corporation43. The concern here is with abuse of power in the exercise of discretion, again on the assumption that the occasion for the exercise of discretion had arisen upon the existence of any necessary jurisdictional facts44. Confusion of thought, with apprehension of intrusive interference with administrative decisions by judicial review45 will be avoided if the distinction between jurisdictional fact and other facts then taken into account in discretionary decision making is kept in view. It was against this background that, when considering s 65 of the Act in Minister for Immigration and Multicultural and Indigenous Affairs v SGLB46, Gummow and Hayne JJ said: "The satisfaction of the Minister is a condition precedent to the discharge of the obligation to grant or refuse to grant the visa, and is a 'jurisdictional fact' or criterion upon which the exercise of that authority is conditioned47. The delegate was in the same position as would have been the Minister 42 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356-357; [1990] HCA 33. 44 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1169-1170 [20], 1177-1178 [67]-[69], 1194 [174]; 198 ALR 59 at 64, 75-76, 98-99. 45 See, in particular, the remarks of Brennan J in Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 37-38. 46 (2004) 78 ALJR 992 at 998 [37]-[38]; 207 ALR 12 at 20-21; [2004] HCA 32. 47 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 609 [183]; [2002] HCA 54. Gummow ACJ (s 496) and the Tribunal exercised all the powers and discretions conferred on the decision-maker (s 415). The satisfaction of the criterion that the applicant is a non-citizen to whom Australia has the relevant protection obligations may include consideration of factual matters but the critical question is whether the determination was irrational, illogical and not based on findings or inferences of fact supported by logical grounds48. If the decision did display these defects, it will be no answer that the determination was reached in good faith." However, it should be remarked that what is characterized as the "critical question" should not receive an affirmative answer that is lightly given. It may be noted that the outcome in SGLB and in Applicant S20/2002 was to deny the presence of jurisdictional error. This reflected the approach upon judicial review earlier expressed in Wu Shan Liang to which earlier reference has been made. Similar reasoning to that found in SGLB has been applied by the Full Court of the Federal Court in WAIJ v Minister for Immigration and Multicultural and Indigenous Affairs49, which in turn was followed in authorities including the decision of Gordon J in SZLGP v Minister for Immigration and Citizenship50, upon which Moore J particularly relied in the present case. The Minister submitted that there was no occasion for a redetermination by the RRT, as ordered by the Federal Court. This was because the above line of authority should be disowned, essentially for the apprehended fear of "merits review". But, as indicated in these reasons, that submission should be rejected. It gives insufficient weight to the importance of s 75(v) of the Constitution in ensuring that the legislative expression of jurisdictional facts in terms of satisfaction or opinion of a decision maker does not rise higher than its source. Conclusions The RRT fixed upon two matters as "inconsistent" with the first respondent's claimed fear of persecution and founding its refusal to accept "that the [first respondent] had engaged in homosexual activities in the UAE". 48 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1172 [37], 1175 [52], 1194 [173]; cf at 1168 [9]; 198 ALR 59 at 67, 71, 98; cf at 62. 49 (2004) 80 ALD 568 at 573-574. 50 [2008] FCA 1198. Gummow ACJ The first was his visit to Pakistan for three weeks in May-June 2007, to spend time with his children and to finalise his relations with his wife, before he returned to the UAE and then to Australia. The RRT reasoned that if genuinely fearful of serious harm upon disclosure in Pakistan of his homosexuality, the first respondent would not have travelled there even for a short time. The second matter was that the first respondent had failed to seek protection when he visited the United Kingdom in 2006. His evidence was that, given what were then his favourable personal circumstances in the UAE, there was no reason to seek protection in the UK. The RRT said that the first respondent had been "unable to explain [to its satisfaction] why he preferred at the time to hide his homosexuality for years to come rather than to seek protection". This process of reasoning is based on two assumptions: that an applicant for a protection visa would not return, albeit briefly, to a country in which persecution is feared, and that a claimant fearful of persecution would seek asylum elsewhere at the first available opportunity. It was these assumptions which led the RRT to the conclusion that the conduct of the first respondent was inconsistent with his claim to fear persecution. The assumptions may be logical or rational if the person claims to fear persecution on the grounds of a physical feature such as race or some other feature that is known or likely to be apparent to others within the country. However, the same cannot be assumed where the claimed fear is based on such grounds as those of sexual identity or political opinion or religious belief in the absence of circumstances that may indicate otherwise. The reasoning of the RRT appears to have proceeded on the basis that a person outside Pakistan but with a real fear of persecution as a homosexual in Pakistan would not go there at all and would seek protection as a refugee at the first opportunity. Reasoning of this nature insufficiently appreciates a point made by Gummow and Hayne JJ in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs51. This is that in considering whether a particular applicant for a protection visa has a well-founded fear of persecution by reasons of membership of a social group identified in terms of sexual identity: "Sexual identity is not to be understood in this context as confined to engaging in particular sexual acts or, indeed, to any particular forms of physical conduct. It may, and often will, extend to many aspects of human relationships and activity." 51 (2003) 216 CLR 473 at 500-501 [81] per Gummow and Hayne JJ. Gummow ACJ Further, counsel for the first respondent correctly emphasised that there is essentially an individual character to "membership" of a particular social group. As McHugh and Kirby JJ put it in Appellant S395/200252, a claimant to refugee status is asserting an individual right not merely undifferentiated membership of a group, and as Gummow and Hayne JJ put it53: "The central question in any particular case is whether there is a well-founded fear of persecution. That requires examination of how this applicant may be treated if he or she returns to the country of nationality. Processes of classification may obscure the essentially individual and fact-specific inquiry which must be made54." (original emphasis) So it is that, for example, a person may engage in sexual activity (and, indeed, in religious worship or political activity) in one country rather than another without necessarily denying a claim to protection under the Convention. With respect to the first matter relied upon by the RRT, the return to Pakistan in May-June 2007, the evidence of the first respondent was that he had kept a low profile during the visit to avoid trouble with anyone. The social group of which he asserted membership had the characteristic that membership would not be perceived unless disclosed. The RRT acted on an assumption that if the first respondent had the sexual identity he claimed there was a very real prospect that this would be disclosed by some means during his short visit, that he would have had that apprehension and would not have visited his family before going to Australia. The RRT gave no attention to the question of how it could have become known to the family of the first respondent or to anyone else in Pakistan that he was a homosexual, and made no findings upon it. The absence of the logical connection between the evidence and the reasons of the RRT's decision became apparent when the RRT assumed that a homosexual would be fearful of returning to Pakistan without there being any basis in the material to found this assumption or to counter the possibility that the sexuality of such a person could be concealed from others in the short period of return to the country. Indeed, the first respondent said that he had made other short visits to his family in Pakistan 52 (2003) 216 CLR 473 at 495 [59]. 53 (2003) 216 CLR 473 at 500 [78]. 54 R (Sivakumar) v Secretary of State for the Home Department [2003] 1 WLR 840 at 841 [2]; [2003] 2 All ER 1097 at 1099, per Lord Bingham of Cornhill; at 843 [7]; 1101, per Lord Steyn; at 854 [42]; 1112, per Lord Rodger of Earlsferry. Gummow ACJ from the UAE before that of May-June 2007. These visits had not led to any adverse disclosure. With respect to the second matter, the visit to the United Kingdom in 2006, there was nothing before the RRT which provided any ground for rejecting the explanation given for failure to seek protection at that time. The desire of the first respondent to continue to reside in the UAE, where "at the time he did not have any problems" and had "a good relationship", instead of seeking to reside in a country far removed from his then good relationship, says nothing as to the credibility of the first respondent's claim to fear persecution in Pakistan. It should also be noted that the RRT did not express its conclusion upon any view as to the manner in which the first respondent had given his evidence before the RRT. Rather it gave a lengthy summary of his evidence and then reasoned from the two deficiencies it saw in his account. To decide by reasoning from the circumstances of the visits to the United Kingdom and Pakistan that the first respondent was not to be believed in his account of the life he had led while residing in the UAE was to make a critical finding by inference not supported on logical grounds. The finding was critical because from it the RRT concluded that the first respondent was not a member of the social group in question and could not have the necessary well-founded fear of persecution. The Federal Court was correct to quash the decision and to order a redetermination by the RRT. Orders The appeal should be dismissed with costs. HEYDON J. I adopt the statement of facts made and the abbreviations employed by Crennan and Bell JJ. The question is whether the Federal Court was wrong to respond to a point taken for the first time in that court by characterising the reasoning of the Tribunal as having "simply no basis", as being "completely unsustainable as a piece of logical analysis", and as "based squarely on an illogical process of reasoning". The conclusion urged by the Solicitor-General of the Commonwealth on behalf of the appellant is that the Tribunal's fact-finding was not, on any view, open to these characterisations. That submission is correct, substantially for the reasons that he advanced. It is desirable to consider the nature of the persecution that the first respondent claimed to fear, and the reactions of the Tribunal member to the first respondent's claims in respects other than the two particular issues on which the appeal turns, before going to those two issues. Persecution The nature of the persecution. The first respondent contended that he had good explanations for deciding to return to Pakistan for three weeks in 2007 and for not seeking asylum in the United Kingdom in 2006. In assessing those explanations it is important to bear in mind what his claim for a Protection (Class XA) Visa entailed. That is because the greater the harm he believed would flow from people in Pakistan coming to know of his conduct, the less likely it is that he would return to Pakistan or fail to seek asylum in the United Kingdom. for The first respondent claimed to have a well-founded fear of being reasons of membership of a particular social group. persecuted Section 91R(1) of the Act provides that persecution must involve "serious harm" respondent and "systematic and discriminatory conduct". first Section 91R(2) provides: the "Without limiting what is serious harm for the purposes of paragraph (1)(b), the following are instances of serious harm for the purposes of that paragraph: (a) a threat to the person's life or liberty; (b) significant physical harassment of the person; (c) significant physical ill-treatment of the person; (d) significant economic hardship that threatens the person's capacity to subsist; (e) denial of access to basic services, where the denial threatens the person's capacity to subsist; (f) denial of capacity to earn a livelihood of any kind, where the denial threatens the person's capacity to subsist." While s 91R(2) does not provide an exhaustive definition of "serious harm", the circumstances it sets out do powerfully illustrate the gravity of the kinds of harm which that expression captures. The persecution claimed by the first respondent: the Department. The first respondent's solicitor informed the appellant's Department in writing that in Pakistan homosexuality was punishable by a seven year jail sentence, that society discriminated against homosexuals to an extreme degree, that homosexuality was a matter of shame and embarrassment for the person involved and his or her family, and that the Government of Pakistan did not provide protection to homosexuals. The persecution claimed by the first respondent: the Tribunal. Before the Tribunal, in oral evidence, the first respondent said that the only harm he feared was that, if he returned to Pakistan and his family came to know about the way of life he was living in Australia, he, his daughters and his family (including his brothers and sisters) would feel ashamed and they would all "die of shame". The persecution claimed by the first respondent: the Federal Magistrates Court. Before the Federal Magistrates Court, the first respondent contended, in writing, that if he returned to Pakistan he could not survive there, that there are severe punishments there for the practice of homosexuality, and that persons accused of that practice could be put to death by stoning. He also contended that it was impossible to live as a homosexual in Pakistan because homosexual conduct was deemed to be very shameful and those practising it were boycotted in all fields of life: he would die unless he were allowed to lead a homosexual lifestyle. These contentions were put somewhat more strongly than they had been earlier, but, accepting them as sincere, it may be inferred from them and from the earlier forms in which he put his claim that the first respondent had an extremely strong fear of, antipathy against and revulsion to the conditions in Pakistan of which he spoke55. 55 The Solicitor-General in passing questioned whether these conditions amounted to persecution. In another case that question may have to be examined. But in this appeal it can be assumed that those conditions did amount to persecution. Bases for the Tribunal's ultimate conclusion. The ultimate conclusion at which the Tribunal member arrived was that there was no real chance that, if the first respondent were to return to Pakistan, he would face persecution in the reasonably foreseeable future. The reasons for arriving at that ultimate conclusion may be divided into categories. The first two categories are related to the Tribunal's reasoning about the first respondent's visits to Pakistan in 2007 and the United Kingdom in 2006. But they were not the only categories into which the Tribunal's reasoning fell. There were four others. The third category related to the Tribunal's inability to accept that the first respondent had engaged in homosexual activities in Australia in the seven and a half months between his arrival and the oral hearing in the Tribunal. The first respondent claimed that, because of the need to be cautious about disease, he had limited those activities to a one night stand with a person whose name he did not ask. But he also claimed to have searched websites with a view to establishing relationships. The Tribunal said: involvement "The Tribunal finds the [first respondent's] explanation about his very limited to be in homosexual activities implausible as, despite the apparent fear of disease, the [first respondent] claimed to have engaged in a relationship with an unknown partner. The Tribunal also finds that visiting websites without indicating one's preferences does not indicate that the [first respondent] was looking for same sex partners or that he would be perceived as having done that. The Tribunal does not accept that the [first respondent] had engaged in homosexual activities in Australia." in Australia The fourth category related to the first respondent's claim to have engaged in homosexual activities at school. The Tribunal did not accept that this conduct, if it took place, was indicative of the first respondent's desire to repeat it as an adult. The fifth category concerned newspaper articles and reports which the first respondent provided to the Tribunal about homosexuality in Islam. The Tribunal said: "[t]hese are not specifically about the [first respondent] and the Tribunal does not view these as supporting the [first respondent's] claims that he is a homosexual." The sixth category concerned a report from a doctor. Apart from the Tribunal member's reference to some inconsequential spelling errors, she gave the report no weight because its conclusions were based primarily on the history which the first respondent had given. In this Court the first respondent made no complaint about the Tribunal's reasoning in relation to the third, fourth, fifth and sixth categories. While the Tribunal member's specific comments in relation to the fourth, fifth and sixth categories were not critical of the first respondent's credibility, this was not the case for her comments in relation to the third category. She completely disbelieved him. It is necessary now to turn to the two parts of the Tribunal's reasoning which the Federal Court attacked. The visit to Pakistan in 2007 The key part of the Tribunal's reasoning about the first respondent's visit to Pakistan in 2007 is quoted by Crennan and Bell JJ56. So is the material part of the Federal Court's reasoning57. The reasoning of the Tribunal member may be summarised as follows. Although she did not say so in terms, it is plain that she selected as her major premise the proposition that persons who claim to fear serious harm arising from their conduct if it becomes known in their country of origin – including death through shame to themselves, their wives, their daughters, their brothers and their sisters – are likely to have so strong a revulsion to the conditions and dangers in their country of origin which made these outcomes likely that they will not return to it. The minor premise was that the first respondent did return to his country of origin. The conclusion was that he probably did not in fact fear serious harm of the kind claimed. The Tribunal's reasoning rested on the idea that there was an inconsistency between the first respondent fearing certain perils if his application for a protection visa were rejected and he returned to Pakistan, and his failure to fear those perils when he went there voluntarily in 2007. The Federal Court's criticism was that the Tribunal's reasoning did not explain how the first respondent's conduct would have become known in Pakistan. The answer to the criticism is that the case put by the first respondent makes it necessary to assume that it will become known. It was for the first respondent to establish his claim, not for the Tribunal to disprove it. He had the opportunity to establish his claim without being trammelled by the requirements of the rules of evidence. He invited the Tribunal to reach a conclusion based on what he said were the probabilities of ordinary life in Pakistan. A necessary integer of success in the first respondent's claim of persecution was the proposition that it would be discovered that the first respondent was a practising homosexual. The first respondent did not explain in support of his own case how that proposition would be made good, any more 56 See below at [108]-[109]. 57 See below at [112]. than he explained in answer to the Tribunal's questioning why the proposition was not true in relation to his visit in 2007. However, as the Tribunal was asked to accept the proposition in order to uphold the first respondent's claim that he was in peril of persecution in Pakistan, it was not illogical for the Tribunal also to accept the proposition in order to test the first respondent's apparent position that his visit to Pakistan in 2007 carried no peril of persecution. The Federal Court reasoned that the illogicality lay in assuming that others would discover that the first respondent was a practising homosexual during "the brief period of his visit". But for the Tribunal to assume, in the first respondent's favour, that if he returned to Pakistan for an indefinite period that fact would become known is not inconsistent with assuming that it would become known during a briefer period. It cannot be said that there is any illogicality. And it cannot be said, as the Federal Court did, that there "was simply no basis" for the Tribunal's conclusion. If the only relevant factor were the duration of the visit to Pakistan, the longer the period of the visit to Pakistan, the more likely it was that the fact would become known. The shorter the period, the less likely it was that the fact would become known. But that does not establish that there was no basis for the Tribunal's conclusion. The issue was one on which minds might differ. The Federal Court evidently operated on one assumption or conclusion about that issue. The Tribunal operated on another. The difference was one of degree, impression and empirical judgment. It did not stem from an error in logic by the Tribunal member. The difference could not be said to reveal an absence of any basis whatsoever for her conclusion. There is a further difficulty in relation to the Federal Court's attacks on the reasoning of the Tribunal member. The means by which the first respondent's family or anyone else in Pakistan would discover facts about the first respondent which he claimed he wished to conceal were not limited to those flowing from his physical presence in Pakistan. If the facts were discovered, the impact would be felt in Pakistan. But the facts could be discovered independently of the first respondent's presence in Pakistan. The facts could be discovered, for example, through messages out of the United Arab Emirates via correspondence, telephone or other electronic means, or through reports of Pakistanis coming home from the United Arab Emirates. That diminishes the significance of the length of the first respondent's trip: for even if its brevity reduced the chance of the facts being discovered from the first respondent's mere presence in Pakistan, it did not reduce the chance of persecution taking place as a result of communications during the previous 20 months. On one reading of the Tribunal's reasons, it was dealing only with the three week visit to Pakistan in 2007. That was the reading advanced by the first respondent. But before the passage quoted by Crennan and Bell JJ58, the Tribunal did state: "A copy of the [first respondent's] passport … indicates that the [first respondent] had travelled to UAE on numerous occasions and that he returned to Pakistan." The first respondent confirmed this in his evidence, and said that during the period October 2005 - July 2007, in which he claimed to have developed an attraction to people of his own sex, he went to Pakistan many times. On one view, the more numerous the visits the stronger the Tribunal's point; but since this aspect of the controversy was not fully developed in argument it is better not to deal with it. The visit to the United Kingdom in 2006 The difference between the Tribunal and the Federal Court in relation to the first respondent's visit to the United Kingdom in 2006 centred on his explanation for not claiming asylum in the United Kingdom. In view of a dispute between the parties as to the construction of the Tribunal's reasons, it is desirable to set the relevant part out: "the [first respondent] had indicated that he had travelled to the [United Kingdom] in 2006 but did not seek protection there because he had a good life in the [United Arab Emirates] and was in a good relationship with [R]. However, the [first respondent's] claims are directed at Pakistan where he claims to have feared persecution due to his homosexuality. The [first respondent] was unable to explain to the satisfaction of the Tribunal why, if he was fearful of his homosexuality becoming apparent to his family or to others in Pakistan, he would take no action to seek protection despite having a good relationship with [R]. The [first respondent] appeared to suggest that he had nothing to fear until his relationship with [H] deteriorated. However, this appears to be inconsistent with his claim that he was fearful of being perceived, or of being found to be, a homosexual upon his return to Pakistan, not of being discovered as being in a relationship with [H]. The [first respondent] was unable to explain to the satisfaction of the Tribunal why he preferred at the time to hide his homosexuality for years to come rather than seek protection." (emphasis added) The material parts of the Federal Court's comments about this passage are quoted by Crennan and Bell JJ59. 58 See below at [109]. 59 See below at [112]. The first respondent's explanation was offered in order to explain his failure to seek asylum in the United Kingdom. What he claimed to fear was persecution in Pakistan on certain grounds. The likelihood or unlikelihood of persecution on those grounds in Pakistan is the same whether the first respondent had a good or a bad life in the United Arab Emirates, whether the first respondent's relationship with R was good or bad, and whether his relationship with H moved from being good to being bad. The question is whether knowledge in Pakistan that the first respondent was a practising homosexual would create a risk of persecution. The greatness or smallness of that risk did not necessarily depend on the particular identities of the persons with whom the first respondent had his relationships or the quality of those relationships. The point made in the last sentence quoted above from the Tribunal was put by the Tribunal member more vividly when she asked the first respondent: "Why not apply for the protection visa when you had the opportunity instead of trying to keep something that is so central to your life secret for years and years to come?" The Tribunal plainly thought that the first respondent's explanation for his failure to apply for a protection visa in the United Kingdom was damaging to his credibility. Whether or not all minds would share that thinking, it is not thinking which is illogical. Another criticism which the Federal Court made of the Tribunal's logic arose in relation to the second last sentence in the Tribunal passage quoted above, commencing "However"60. In that passage the words "inconsistent with" do not mean "logically contradictory of". They mean only that whatever "this" is points against or renders less probable the first respondent's claim. What is "this"? The Federal Court considered that the word "this" in that sentence referred to the previous sentence. If so, it was open to the Tribunal to see a logical connection – in the sense of a connection relating to probabilities – between the two sentences for reasons already given: the risk of persecution in Pakistan did not depend on the deterioration of the first respondent's relationship with H, but rather on 60 The Federal Court bore in mind and the appellant urged the precept that the reasons of the Tribunal should not be construed minutely and finely "with an eye keenly attuned to the perception of error". The origins of the quoted expression can be traced at least as far back as Lockhart J's use of it in Politis v Federal Commissioner of Taxation (1988) 16 ALD 707 at 708. With respect to Lockhart J and the many judges who have since repeated his salutary warning, it is necessary to substitute for his warning a warning against construing the words of non-judicial decision-makers minutely and finely either with an eye keenly focussed on the perception of error, or with an ear keenly attuned to the perception of error. information being received in Pakistan that the first respondent was a practising homosexual. On the other hand, the word "this" may refer not to the preceding sentence, but to the topic dealt with in the entire paragraph, namely the first respondent's failure to seek asylum in the United Kingdom. So read, the second last sentence is stating that the first respondent's failure to seek asylum pointed as a matter of probability against a fear of persecution on returning to Pakistan. The difference between the Federal Court and the Tribunal may be put thus. The Federal Court thought that the first respondent's explanation for not seeking asylum in the United Kingdom was "perfectly plausible". There are pejorative meanings of the word "plausible", but they are not the meanings which the Federal Court was conveying. The Federal Court was saying that the explanation was "capable of being believed" or "apparently believable". The Tribunal, however, did not believe it. Something can be capable of being believed without actually being believed. For the Tribunal member to withhold belief from something which is "perfectly plausible" but which she did not find to have been satisfactorily explained and which she found not to be probable is not illogical. Other issues As the Tribunal's reasoning was not illogical, it is not necessary to determine any of the questions of law about which the parties were in controversy. Orders The orders sought by the appellant and not opposed in form by the first respondent correspond with the substance of the condition imposed when special leave was granted. Subject to one point, they are the orders which ought to be made. The effect of order 2 in this Court is to leave standing order 6 in the Federal Court of Australia. That order was that the appellant in this Court pay the costs of the first respondent in this Court of the proceedings before the Federal Magistrates Court and the Federal Court. To avoid doubt, it is necessary to set aside order 2 made by the Federal Magistrates Court, which ordered the first respondent in this Court to pay the costs in that Court of the appellant in this Court. The orders are: The appeal be allowed. Orders 3, 4 and 5 made by the Federal Court of Australia on 10 March 2009 be set aside. In place of those orders: the appeal to the Federal Court of Australia be dismissed; and Order 2 made by the Federal Magistrates Court of Australia on 8 July 2008 be set aside. The appellant pay the reasonable costs of the first respondent of the appeal to this Court. CRENNAN AND BELL JJ. The first respondent is a 44 year old male citizen of Pakistan. He is married to a Pakistani woman who lives in Pakistan with their four children born in 1991, 1993, 1995 and 2003 respectively. The first respondent gave evidence that between 1995 and 1998 he lived in, and moved between, the United Arab Emirates ("the UAE") where he worked, and Pakistan. He stated that from 1998 to 2004 he settled in Pakistan with his family. He subsequently resided in the UAE from 2004 until 2007. In 2006 he travelled to the United Kingdom and remained there from October until December 2006. On 3 July 2007, the first respondent arrived in Australia on a visitor visa and on 16 August 2007 he applied for a Protection (Class XA) visa on the grounds that he feared persecution in Pakistan because of his "belie[f] [in] and practice of homosexuality". After that application was refused by a delegate of the Minister on 8 November 2007, the first respondent sought review under s 476 of the Migration Act 1958 (Cth) ("the Act") in the Refugee Review Tribunal ("the Tribunal") which affirmed the delegate's decision. It can be noted that the Tribunal has filed a submitting appearance in subsequent proceedings, and is the second respondent here. An application by the first respondent to the Federal Magistrates Court was dismissed but a subsequent appeal to the Federal Court of Australia (Moore J)61 ("the Federal Court") was allowed on the basis that "the Tribunal's conclusion that the first respondent was not a homosexual was based squarely on an illogical process of reasoning" with the result that the Tribunal "fell into jurisdictional error having regard to the way it reached the conclusion that the applicant was not a homosexual"62. Special leave to appeal was granted on the basis that the Minister would not seek to disturb the costs order made below and that the Minister would pay the first respondent's reasonable costs of the appeal and the special leave application. The questions The main question arising on the appeal is whether "illogicality", "irrationality", or "lack of articulation" in a finding of jurisdictional fact can amount to jurisdictional error. 61 Moore J was exercising the appellate jurisdiction of the Federal Court pursuant to s 25(1AA)(a) of the Federal Court of Australia Act 1976 (Cth). 62 SZMDS v Minister for Immigration and Citizenship (2009) 107 ALD 361 at The second question to be determined is whether the findings of fact impugned by the Federal Court were findings of jurisdictional fact. These questions arise in the context of judicial review under the Act and the settled principle of limitation that such review is limited to jurisdictional error63 although, as recognised in Re Refugee Review Tribunal; Ex parte Aala64, there is difficulty in drawing a bright line between jurisdictional error and error in the exercise of jurisdiction. In the reasons which follow the availability and scope of "illogicality" and "irrationality", as a basis for judicial review, of a decision as to a jurisdictional fact, will be explained. The appeal should be allowed on the basis that the Tribunal's decision was not illogical or irrational in the requisite sense. Nothing said in these reasons sanctions the deployment of "illogicality" or "irrationality" to achieve what is sometimes called merits review. First respondent's claim for protection The first respondent states that during the period October 2005 to July 2007, while in the UAE, he developed an attraction to members of the same sex and commenced a relationship with an Indian boy "R". About the end of 2006 he said he and R started living together and had a sexual relationship. He gave evidence that R introduced him to R's boss, H, and the three had sexual relations for about a year. Then the first respondent discovered H had a drug problem and had engaged in unprotected sex with other men. The first respondent says that when confronted about this, H bashed him and R, and threatened them with cancellation of their visas as a result of which the first respondent and R went into hiding. During the period October 2005 to July 2007 the first respondent states that he "went to Pakistan many times". In May 2007, after obtaining a visitor visa to Australia in the UAE, the first respondent went to Pakistan for three weeks before returning to the UAE on 25 June 2007, then flew to Australia, arriving on 3 July 2007. In his application for protection that homosexuals are discriminated against in Pakistan and prison sentences apply to sodomy. It appears homosexuality is prohibited in his culture and by his religion and is the subject of social taboo. According to country information considered by the appellant, Pakistan "is one of the few countries in the world where homosexuality is punishable by death". However, the country information also the first respondent states 63 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476; [2003] HCA 2. 64 (2000) 204 CLR 82 at 141 [163]; [2000] HCA 57; see also Craig v South Australia (1995) 184 CLR 163 at 177-178; [1995] HCA 58. included a statement that prosecutions under the laws are rare65. In essence, the first respondent claims he is a practising homosexual, and he fears persecution because homosexuals face discrimination in Pakistani society and are subject to penalties under Pakistani law and also because he does not wish to bring shame upon his family. It appears to have been accepted in the Tribunal's decision that homosexuality is a common and unifying characteristic66 of a social group in Pakistan. However, the Tribunal did not accept the first respondent's claim to be a member of that group. Relevant legislation Section 65 of the Act relevantly provides67: "(1) After considering a valid application for a visa, the Minister: if satisfied that: the health criteria for it (if any) have been satisfied; and the other criteria for it prescribed by this Act or the regulations have been satisfied; is to grant the visa; or if not so satisfied, is to refuse to grant the visa Section 430 relevantly provides: "(1) Where the Tribunal makes its decision on a review, the Tribunal must prepare a written statement that: set out the decision of the Tribunal on the review; and 65 United States, Department of State, Country Reports on Human Rights Practices 2006: Pakistan, March 2007. 66 As to which see Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225; [1997] HCA 4, the authority of which has never been doubted. 67 Reprint No 11 is the applicable reprint. sets out the reasons for the decision; … " Section 65(1)(a) obliged the Tribunal to determine whether or not it was satisfied that the first respondent met the criteria prescribed by the Act for the grant of a protection visa: that is, that as a member of a particular social group he had a well-founded fear of persecution. That required the Tribunal to determine the first respondent's essential claim that he was a member of the particular social group, homosexuals in Pakistan, as a result of which he claimed to suffer a well-founded fear of persecution. In considering s 65(1)(a)(ii) in Minister for Immigration and Multicultural Affairs v SGLB ("SGLB")68, Gummow and Hayne JJ said: "The satisfaction of the Minister is a condition precedent to the discharge of the obligation to grant or refuse to grant the visa, and is a 'jurisdictional fact' or criterion upon which the exercise of that authority is conditioned … The satisfaction of the criterion that the applicant is a non-citizen to whom Australia has the relevant protection obligations may include consideration of factual matters but the critical question is whether the determination was irrational, illogical and not based on findings or inferences of fact supported by logical grounds. If the decision did display these defects, it will be no answer that the determination was reached in good faith." (emphasis added and footnotes omitted) The decision here in relation to s 65(1)(a)(ii) was a decision as to a jurisdictional fact. The approach to be derived from the emphasised statement had been foreshadowed in Minister for Immigration v Eshetu ("Eshetu") where Gummow J referred to "findings or inferences of fact which were not supported by some probative material or logical grounds"69. The approach was also anticipated in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 ("S20") where Gleeson CJ noted that one of the grounds of challenge to the Tribunal's decision was that it "was illogical, irrational, or was not based on findings or inferences of fact supported by logical grounds"70. It was said by the appellant that since S20 a range of views had emerged in the Federal Court as to 68 (2004) 78 ALJR 992 at 998 [37]-[38]; 207 ALR 12 at 20; [2004] HCA 32. 69 (1999) 197 CLR 611 at 657 [147]; [1999] HCA 21. 70 (2003) 77 ALJR 1165 at 1167 [4]; 198 ALR 59 at 61; [2003] HCA 30. whether an illogical process of reasoning in the course of reaching a conclusion of fact amounts to a jurisdictional error71. In Avon Downs Pty Ltd v Commissioner of Taxation ("Avon Downs")72 Dixon J had said of a decision maker empowered to act when "satisfied" of a state of affairs: "If he does not address himself to the question which the [statute] formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review … If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law." In Avon Downs there was no requirement for the giving of reasons as exists here under s 430. This appeal involves the possible application of the approach signalled in SGLB to a decision involving a state of satisfaction which was specified in the Act. 71 See for example, Minister for Immigration & Multicultural & Indigenous Affairs v W306/01A [2003] FCAFC 208; NACB v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 235; W404/01A of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 255; NATC v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 52; VWST v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 286; SZDFO v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1192; Applicant A169 of 2003 v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 8; WAJQ v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 79; SZEEO v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 546; VWFP and VWFQ v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 231; SZCZN v Minister for Immigration & Citizenship [2008] FCA 173; NAOX v Minister for Immigration and Citizenship (2009) 112 ALD 54. 72 (1949) 78 CLR 353 at 360; [1949] HCA 26; see also Minister for Immigration v Eshetu (1999) 197 CLR 611 at 651 [130]-[131] per Gummow J. The Tribunal's decision The Tribunal refused to accept the first respondent's claim that he was in a homosexual relationship with R in the UAE between 2005 until 2007 and that he feared that if his homosexuality became known on his return to Pakistan he would face persecution and his family would be ashamed. The Tribunal relied on two aspects of the first respondent's conduct as a basis for rejecting that claim. It considered that the first respondent's conduct, first, in returning to Pakistan for three weeks in 2007 before coming to Australia and, secondly, in failing to seek asylum in the United Kingdom in 2006, was conduct which was inconsistent with his claimed fears of persecution arising as a result of his homosexuality. Returning to Pakistan The first respondent returned to Pakistan for three weeks after he obtained a visitor visa for Australia and before leaving for Australia from the UAE. His explanation for doing so was described by the Tribunal as follows: "He states that the reasons he went to Pakistan after receiving a visitor visa for Australia were because he was living in the UAE for a while without his children. … He decided not to come back from Australia for ever and therefore he wanted to spend time with his children before leaving Pakistan permanently and he also wanted to finalise his relations with his wife, which he did … [H]e wanted to spend time with his children because he did not know when he would see them again." Of this, the Tribunal said: "[I]f the applicant was genuinely fearful of serious harm as a result that his homosexuality may become known in Pakistan, he would not have travelled to Pakistan, even for a short period, after his claimed homosexual relationship in UAE." Position in the United Kingdom in 2006 When asked why he did not apply for asylum when he was in the United Kingdom in 2006, the first respondent said "he did not have any problem at the time". This referred apparently to the fact that the first respondent had a good life in the UAE and was in a good relationship with R. As to this, the Tribunal took the view that it was unreasonable to "keep something that was so central to his life a secret for years and years to come" rather than apply for asylum. The Tribunal concluded that: "[T]he applicant's conduct in returning to Pakistan and in failing to seek protection in 2006 is inconsistent with the claimed fear of persecution arising as a result of his homosexuality. The Tribunal does not accept that the applicant had engaged in homosexual activities in the UAE or that he was fearful as a result of such activities or his homosexuality." Federal Court decision The appeal to the Federal Court followed a Federal Magistrate's determination73 that the Tribunal decision contained no jurisdictional error. In an amended notice of appeal the first respondent claimed that the Tribunal's decision was "unsupported by probative material, and the inference of fact upon which it based its decision could not reasonably be drawn, when it concluded that the appellant's short visit to Pakistan before travelling to Australia cast doubt on whether he engaged in homosexual conduct in the UAE, or that he was genuinely fearful of persecution in Pakistan"74. The Federal Court's reasoning and findings on what was headed "[i]rrational and illogical fact finding" included the following75: "The Tribunal made no finding about how, during the applicant's brief return to Pakistan, it might conceivably have become known to his family or anyone else that he had become, on his account, a practising homosexual. His claimed fear was based on his apprehension that his family and others in Pakistan might come to know of his homosexuality. However, the Tribunal does not say how that might have emerged during a brief visit when he was the custodian of the information. His fear was predicated on others knowing. Unless others came to know, the basis of his fear did not exist. The Tribunal does not make a finding that he revealed the information. It does not make a finding that, during the brief period the applicant was in Pakistan, he sought out men for homosexual sex and for that reason others might come to know of his homosexuality. It does not otherwise make a finding explaining how his family and others 73 SZMDS v Minister for Immigration [2008] FMCA 1064. 74 SZMDS v Minister for Immigration and Citizenship (2009) 107 ALD 361 at 367 75 SZMDS v Minister for Immigration and Citizenship (2009) 107 ALD 361 at might have come to know of his homosexuality during this period. Without findings of this type, or at least in the absence of an explanation as to how there was any risk that his homosexuality would become known during the brief period of his visit, I simply fail to see how the fact that the applicant briefly returned to Pakistan undermined his claim that he had become an active homosexual in the UAE in the preceding two years. There was simply no basis, in my opinion, for the Tribunal to have concluded that the fact that the applicant returned briefly to Pakistan was inconsistent with him having a fear of harm based, on his case, on his family and others in Pakistan coming to know he was a homosexual. Similarly, the applicant's explanation as to why he did not claim asylum in the UK was perfectly plausible. Putting it slightly differently, the Tribunal's conclusion about the consequences of not claiming asylum in the UK is, in my opinion, completely unsustainable as a piece of logical analysis. In essence what the applicant had said was that he did not claim asylum in the UK because he could return to the UAE where he had a good life and was in a good relationship. His circumstances in the UAE changed after he fell out, as he claimed, with Mr H, which occurred after his return from the UK. I simply fail to understand what the Tribunal meant when it said the following: However, this appears to be inconsistent with his claim that he was fearful of being perceived, or of being found to be, a homosexual upon his return to Pakistan, not of being discovered as being in a relationship with [Mr H]. Even bringing to bear the generosity of analysis that the authorities demand: Minister for Immigration & Ethnic Affairs v Wu Shan Liang, there is no logical connection between what is asserted in the sentence and what preceded it. The Tribunal's conclusion that the applicant was not a homosexual was based squarely on an illogical process of reasoning." Submissions It is contended for the Minister that jurisdictional error would not be established by mere "illogicality", "irrationality" or lack of "articulation" in fact finding or alternatively, if that were enough, the illogicality or irrationality must be so extreme as to show that the opinion formed could not possibly be formed by a Tribunal acting in good faith. In the context of the Administrative Decisions (Judicial Review) Act 1977 (Cth), it has been accepted that a detectable instance of want of logic will not necessarily constitute an error of law76. The Minister drew an analogy from that although here under s 476 of the Act review is necessarily limited to the transgression of jurisdictional limits express or implied in the Act. It was further contended that in any event there was no illogicality or irrationality in the Tribunal's finding that the first respondent's return to Pakistan before coming to Australia undermined his account of his homosexual conduct in the UAE or his claim that he feared he would suffer harm in Pakistan as a result of his family or others discovering that he was a homosexual. Similarly, it was contended that there was no illogicality or irrationality in the Tribunal's findings that the first respondent's failure to claim asylum in the United Kingdom also undermined his claims. Four reasons were advanced in support of the proposition that a want of reason (or logic or rationality) in a decision subject to review must be such as to show that the Tribunal has transgressed what French CJ described in K-Generation Pty Ltd v Liquor Licensing Court77 as "the minimum constraint applicable to the exercise of any statutory power namely that it must be exercised in good faith and within the scope and for the purposes of the statute." The first reason was that the nature of and scope of judicial review under s 75(v) of the Constitution militates strongly against any implication which would blur the demarcation between legality and merits. The second reason was that the implication of a separate judicial requirement that an opinion or a state of satisfaction must be reasonable (or logical or rational) except where it emerges from the text and structure of a statutory scheme would need to be grounded in some general common law principle of statutory construction guiding the construction of the statutory scheme. The third reason was that although the words "unreasonable", "illogical" and "irrational" are frequently used to describe a process of reasoning with which there is strong disagreement, as in Minister for Immigration v Eshetu78, their precise content often remains unexplained. The 76 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356 per Mason CJ; [1990] HCA 33. As an example of a similar approach in the context of migration law see Minister for Immigration and Multicultural Affairs v Epeabaka (1998) 84 FCR 411 at 415-417 [5]-[9] per Black CJ, von Doussa and Carr JJ. 77 (2009) 237 CLR 501 at 523 [59]; [2009] HCA 4. See also Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon CJ; [1947] HCA 21. 78 (1999) 197 CLR 611 at 626 [40] per Gleeson CJ and McHugh J. fourth reason was that a form of curial descent into broader questions of the "reasonableness" and "rationality" of an administrative decision does not sit comfortably with review as explained limitation on judicial the The Minister also relied on the added consideration that a Tribunal is subject to the express obligation under s 430 of the Act to give reasons which statutory requirement does not impose or imply any standard of "articulation". The first respondent contended that there was no evidence and no rational grounds to support the Tribunal's inference that if the first respondent was genuinely fearful of serious harm as a result that his homosexuality may become known in Pakistan he would not have travelled to Pakistan even for a short period after his claimed homosexual relationship in the UAE. As to the visit to the United Kingdom, it was submitted that the Tribunal misconceived the task of determining membership of a particular social group by disregarding the significance of the first respondent's own perceptions, conduct and behaviour as a member of the particular social group in question. Whilst the first respondent accepted that not every instance of illogicality or irrationality in reasoning could give rise to jurisdictional error, it was contended that if illogicality or irrationality occurs at the point of satisfaction (for the purposes of s 65 of the Act) then this is a jurisdictional fact and a jurisdictional error is established. This submission should be accepted. The Minister's counter submission that illogicality or irrationality in fact finding could not without more establish jurisdictional error evokes the familiar distinction between errors of law and errors of fact, or between jurisdictional error and error in the exercise of jurisdiction. The distinction between errors of law and errors of fact is subject to an important qualification in respect of jurisdictional facts80. In S2081, Gummow and McHugh JJ rejected the view that all review grounds must amount to an error of law not fact as they noted that a "'jurisdictional fact' which supplies the hinge upon which a particular statutory 79 (1990) 170 CLR 1 at 37 per Brennan J; [1990] HCA 21. 80 There is a further qualification, not presently relevant, which is that an error of law may occur within jurisdiction: Muin v Refugee Review Tribunal (2002) 76 ALJR 966; 190 ALR 601; [2002] HCA 30. 81 (2003) 77 ALJR 1165; 198 ALR 59. regime turns may be so identified in the relevant law as to be purely factual in context."82 An erroneously determined jurisdictional error. The decision maker might, for example, have asked the wrong question83 or may have mistaken or exceeded the statutory specification or prescription in relation to the relevant jurisdictional fact. Equally, entertaining a matter in the absence of a jurisdictional fact will constitute jurisdictional error84. jurisdictional fact may give rise Development and scope of "illogicality" and "irrationality" In House v The King85 Starke J stated that even wide discretions "must be exercised judicially, according to rules of reason and justice, and not arbitrarily or capriciously …" The plurality recognised that a sentence of imprisonment which was notably severe was not thereby "unreasonable or clearly unjust" 86. Setting a test or formula for isolating the implied category of discretionary decisions which are "unreasonable or clearly unjust" has not proved simple. Just as the unreasonableness of a result was referred to in Avon Downs, correspondingly, the "reasonableness" of a decision has often been considered in circumstances where a public officer must be "satisfied" of some fact or circumstance. In R v Connell; Ex parte The Hetton Bellbird Collieries Ltd, it was not suggested that such an officer must prove his or her satisfaction. However it was found that a requirement that a public officer be "satisfied" of certain facts or have "reasonable cause" to believe facts imports a requirement that the opinion is one that could be formed by a reasonable person87. The Chief Justice went on to state: 82 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1175 [54]; 198 ALR 59 at 71-72. See also Minister for Immigration v Eshetu (1999) 197 CLR 611 at 651 [130] per 83 Minister for Immigration v Yusuf (2001) 206 CLR 323; [2001] HCA 30. 84 Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 574 [72]; [2010] HCA 1. 85 (1936) 55 CLR 499 at 503; [1936] HCA 40. 86 House v The King (1936) 55 CLR 499 at 507 per Dixon, Evatt and McTiernan JJ. 87 R v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 432 per Latham CJ; [1944] HCA 42; see also Liversidge v Anderson [1942] AC 206 at 224-225 per Viscount Maugham, 228 per Lord Atkin. "If the opinion which was in fact formed was reached by taking into account irrelevant considerations or by otherwise misconstruing the terms of the relevant legislation, then it must be held that the opinion required has not been formed. In that event the basis for the exercise of power is absent, just as if it were shown that the opinion was arbitrary, capricious, irrational, or not bona fide."88 Further, satisfaction of the existence of facts must amount in point of law to what an empowering provision prescribes or specifies89. As explicated subsequently by Gibbs J in Buck v Bavone90, this means a decision-making authority which must be satisfied of certain facts "must act in good faith; it cannot act merely arbitrarily or capriciously." His Honour went on to say that even if certain specified errors could not be established "the courts will interfere if the decision reached by the authority appears so unreasonable that no reasonable authority could properly have arrived at it"91. Such formulations convey the idea that a court should not lightly interfere with administrative decision-making. Judicial review has commonly been relied on to set aside a discretionary decision which "is so unreasonable that no reasonable authority could ever have come to it"92 or decisions "which are unjust or otherwise inappropriate, but only when the purported exercise of power is excessive or otherwise unlawful"93. As remarked by Gaudron J in Abebe v The Commonwealth94: 88 R v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 89 R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 at 117 per Dixon CJ, Williams, Webb and Fullagar JJ; [1953] HCA 22. 90 (1976) 135 CLR 110 at 118; [1976] HCA 24. 91 Buck v Bavone (1976) 135 CLR 110 at 118. 92 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230 per Lord Greene MR ("Wednesbury"). 93 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35 per Brennan J; see also East Australian Pipeline Pty Ltd v Australian Competition and Consumer Commission (2007) 233 CLR 229 at 250 [80] per Gummow and Hayne JJ; [2007] HCA 44. 94 (1999) 197 CLR 510 at 554 [116]; [1999] HCA 14. "[I]t is difficult to see why, if a statute which confers a decision-making power is silent on the topic of reasonableness, that statute should not be construed so that it is an essential condition of the exercise of that power that it be exercised reasonably, at least in the sense that it not be exercised in a way that no reasonable person could exercise it." This Court has observed with reference to s 75(v) of the Constitution and jurisdictional error that where a statutory power is conferred the legislature is taken to intend that the discretion is to be exercised reasonably95 and justly96. is a separate freestanding common More recently it has been suggested that statutory tribunals must not only act reasonably as intended by the legislature, they must also act rationally97. If rationality law standard for good administrative decision-making it seems at least related to the implied standard of reasonableness following the articulation by Lord Greene MR of what has come to be known as "Wednesbury unreasonableness"98. It appears closely allied also to the requirement in Avon Downs that extraneous reasons should not be taken into consideration but relevant considerations must be. It appears to be allied as well to the principle that fact finding must be based on probative material, one correlative of which is that a decision based on no evidence displays jurisdictional error. Accepting rationality, as a freestanding common law requirement in decision-making, with the consequence that irrationality may attract judicial review, is complicated by three considerations. First, describing reasoning as "illogical or unreasonable, or irrational" may merely be an emphatic way of expressing disagreement with it99, and to describe a conclusion that a 95 Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123 at 1127 [15] and fn 16; 259 ALR 429 at 433; [2009] HCA 39. 96 See Kruger v The Commonwealth (1997) 190 CLR 1 at 36 per Brennan CJ; [1997] HCA 27. 97 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 367 per Deane J; see also Mahon v Air New Zealand Ltd [1984] AC 808 at 820 per Lord Diplock; Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 at 410-411 per Lord Diplock. 98 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 233 per Lord Greene MR. 99 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1167 [5] per Gleeson CJ; 198 ALR 59 at 61; see also Minister for Immigration v Eshetu (1999) 197 CLR 611 at 626 per Gleeson CJ decision maker is not satisfied as "irrational" might mean no more than that, on the material before the decision maker, the court would have reached the required state of satisfaction100. Secondly, the word "irrationality" is conventionally defined as "the quality of being devoid of reason"101, "illogicality" is conventionally defined as "unreasonableness"102 and "unreasonableness" is conventionally defined as "irrationality"103. In reliance on a statement made by Sir Thomas Bingham MR in R v Secretary of State for the Home Department; Ex parte Onibiyo104 the authors of de Smith's Judicial Review105 have remarked: "Although the terms irrationality and unreasonableness are these days often used facet of unreasonableness." interchangeably, is only one irrationality Thirdly, in England "irrationality" as a basis for judicial review appeared to emerge first as a redefinition of Wednesbury unreasonableness106. Whilst not material to this appeal, further developments in England have included reference to the principle of proportionality in administrative decision-making, being a component of administrative law in a number of European countries. The principles of reasonableness (as derived from Wednesbury) and proportionality are now said to "cover a great deal of common ground" 107. 100 Re Minster for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1168 [9] per Gleeson CJ; 198 ALR 59 at 62. 101 Oxford English Dictionary, 2nd ed, vol VIII at 89. 102 Oxford English Dictionary, 2nd ed, vol VII at 657. 103 Oxford English Dictionary, 2nd ed, vol XIX at 160. 104 [1996] QB 768 at 785. 105 Woolf, Jowell and Le Sueur, de Smith's Judicial Review, 6th ed (2007) at 559 106 Council of Civil Service Unions v Minister for the Civil Service [1985] 1 AC 374 at 410 per Lord Diplock; see also, Woolf, Jowell and Le Sueur, de Smith's Judicial Review, 6th ed (2007) at 543 [11-002]. 107 Wade and Forsyth, Administrative Law, 10th ed (2009) at 312. If, despite the undeniable semantic overlap between "irrationality", "illogicality" and "unreasonableness", "Wednesbury unreasonableness" confined to the exercise of a discretion108 in circumstances where no reasons are required, then the approach articulated in SGLB emphasised above can be seen as occupying somewhat different ground. On the other hand, to the extent that a standard of reasonableness, of wide application to decision-making, has emerged from Wednesbury, there will be inevitable overlap with that standard and a standard of rationality. It can be acknowledged that the contemporary invocation of "illogicality" or "irrationality" as a basis for judicial review may well have first emerged in Australia, as intimated by Gleeson CJ in S20109, as a reaction to the ouster of the review ground of "Wednesbury unreasonableness" in immigration law. Equally it may be that the development of "irrationality" as a basis for judicial review in England grew out of dissatisfaction with the inherent circularity of the Wednesbury test and the implicit suggestion in Wednesbury that there were degrees or grades of unreasonableness110. Be that as it may, accepting that an allegation of "illogicality" or "irrationality" must mean something other than emphatic disagreement as explained above by reference to Eshetu and S20, and also accepting that a demonstration of bona fides will not save an illogical or irrational decision or finding on a jurisdictional fact as stated in SGLB111, how do "illogicality" and "irrationality" fit with the clearly related body of law concerned 108 Minister for Immigration v Eshetu (1999) 197 CLR 611 at 626 [40] per Gleeson CJ, 649 [124] per Gummow J. 109 (2003) 77 ALJR 1165 at 1170 [20]; 198 ALR 59 at 64. At the time of the decision, s 476(2)(b) of the Migration Act 1958, as it then stood, ousted review on the ground "that the decision involved an exercise of a power that is so unreasonable that no reasonable person could have so exercised the power." 110 Woolf, Jowell and Le Sueur, de Smith's Judicial Review, 6th ed (2007) at 543-544 [11-002] and at 551-554 [11-019]-[11-024]; see also Airo-Farulla, "Rationality and Judicial Review of Administrative Action", (2000) 24 Melbourne University Law Review 543 at 572. 111 (2004) 78 ALJR 992 at 998 [37]-[38]; 207 ALR 12 at 20-21. with error, particularly jurisdictional error, in respect of reasoning which is "clearly unjust"112, "arbitrary", "capricious"113 or "Wednesbury unreasonable"114? the context of the Tribunal's decision here, "illogicality" or "irrationality" sufficient to give rise to jurisdictional error must mean the decision to which the Tribunal came, in relation to the state of satisfaction required under s 65, is one at which no rational or logical decision maker could arrive on the same evidence. In other words, accepting, for the sake of argument, that an allegation of illogicality or irrationality provides some distinct basis for seeking judicial review of a decision as to a jurisdictional fact, it is nevertheless an allegation of the same order as a complaint that a decision is "clearly unjust" or "arbitrary" or "capricious" or "unreasonable" in the sense that the state of satisfaction mandated by the statute imports a requirement that the opinion as to the state of satisfaction must be one that could be formed by a reasonable person. The same applies in the case of an opinion that a mandated state of satisfaction has not been reached. Not every lapse in logic will give rise to jurisdictional error. A court should be slow, although not unwilling, to interfere in an appropriate case. What was involved here was an issue of jurisdictional fact upon which different minds might reach different conclusions. The complaint of illogicality or irrationality was said to lie in the process of reasoning. But, the test for illogicality or irrationality must be to ask whether logical or rational or reasonable minds might adopt different reasoning or might differ in any decision or finding to be made on evidence upon which the decision is based. If probative evidence can give rise to different processes of reasoning and if logical or rational or reasonable minds might differ in respect of the conclusions to be drawn from that evidence, a decision cannot be said by a reviewing court to be illogical or irrational or unreasonable, simply because one conclusion has been preferred to another possible conclusion. Was the Tribunal's fact finding "illogical" or "irrational"? Because illogicality or irrationality may constitute a basis for judicial review in the context of jurisdictional fact finding as explained above, it becomes 112 House v The King (1936) 55 CLR 499 at 507 per Dixon, Evatt and McTiernan JJ. 113 R v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 432 per Latham CJ; Buck v Bavone (1976) 135 CLR 110 at 118 per Gibbs J. 114 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 233 per Lord Greene MR. necessary to decide whether the Tribunal's conclusion about the state of satisfaction required by s 65 and its findings on the way to that conclusion revealed illogicality or irrationality amounting to jurisdictional error. It is clear, from the extracts from the Federal Court decision set out above, that the Federal Court emphatically disagreed with the Tribunal's finding that the first respondent's return to Pakistan and failure to seek asylum in the United Kingdom was conduct which was inconsistent with the claimed fear of persecution arising as a result of homosexuality. It also seems clear that the Federal Court, acting on the same material or evidence on which the decision was based, would have been satisfied that the first respondent feared persecution as alleged. However, the correct approach is to ask whether it was open to the Tribunal to engage in the process of reasoning in which it did engage and to make the findings it did make on the material before it. There was evidence that the first respondent was married with four children and that he regularly visited Pakistan to see his family after the time at which he said he commenced, as he put it, "the practice of homosexuality" in the UAE. In particular, he visited his family for three weeks before coming to Australia. During the time when he said he engaged in the "practice of homosexuality" in the UAE, and when he visited the United Kingdom, the evidence was that under both civil law and Shari'a in the UAE homosexual activity was criminalised115. The first respondent also gave comprehensive evidence of homosexual activity in the UAE which was uncorroborated. The Tribunal saw the first respondent give evidence and sought answers and explanations from him. Such was the evidentiary context in which the Tribunal determined that the first respondent's conduct, first in returning to Pakistan and secondly in failing to seek asylum in the United Kingdom, was conduct which was inconsistent with his claimed fears of persecution as a result of homosexuality. The process of reasoning followed by the Tribunal, which needs to be considered in the light of all of the evidence set out above, was as follows: the Tribunal appeared to accept that homosexuals as a social group in Pakistan were the subject of persecution. It also appeared to assume that a person with a genuine fear of persecution as a homosexual in Pakistan would not go back to Pakistan and that a person with such a fear would seek asylum at the first available opportunity. The Tribunal then examined the first respondent's conduct in the United Kingdom in 2006 and in returning to Pakistan for three weeks in 2007. The Tribunal asked whether that conduct was consistent with a fear of persecution based on the practice of homosexuality said to have occurred in the UAE. The Tribunal then concluded that the conduct was not consistent with the 115 United States, Department of State, Country Report on Human Rights Practices 2006: United Arab Emirates, March 2007. claims of homosexual conduct said to form the basis for the fear of persecution. The Tribunal essentially found that it was improbable that the first respondent feared persecution because of homosexuality as claimed. It is that conclusion which the Federal Court found illogical and irrational; it would have come to a different conclusion which appears to be largely based on the view that no-one in Pakistan would necessarily discover that the first respondent had, as claimed, engaged in the practice of homosexuality. The Federal Court differed from the Tribunal in finding that the first respondent's fear of persecution as a result of homosexuality was plausible whereas the Tribunal had found it improbable. On the probative evidence before the Tribunal, a logical or rational decision maker could have come to the same conclusion as the Tribunal. Whilst there may be varieties of illogicality and irrationality, a decision will not be illogical or irrational if there is room for a logical or rational person to reach the same decision on the material before the decision maker. A decision might be said to be illogical or irrational if only one conclusion is open on the evidence, and the decision maker does not come to that conclusion, or if the decision to which the decision maker came was simply not open on the evidence or if there is no logical connection between the evidence and the inferences or conclusions drawn. None of these applied here. It could not be said that the reasons under consideration were unintelligible or that there was an absence of logical connection between the evidence as a whole and the reasons for the decision. Nor could it be said that there was no probative material which contradicted the first respondent's claims. There was. The Tribunal did not believe the first respondent's claim that he had engaged in the "practice of homosexuality" in the UAE and accordingly it was not satisfied that he feared persecution if he returned to Pakistan. There is no sense in which the decision that the first respondent did not fear persecution, or the findings upon which that decision was based, could be said to be "clearly unjust", "arbitrary", "capricious", "not bona fide" or "Wednesbury unreasonable". Whilst these analogous categories were not relied on, they serve to confirm the want of jurisdictional error by reference to the closely related complaints of illogicality and irrationality. Neither the decision that the Tribunal was not satisfied that the first respondent feared persecution nor the findings on the way to that conclusion were "irrational" or "illogical" in the sense explained in these reasons. The Tribunal's decision did not show any jurisdictional error. Order The appeal should be allowed. There should be orders as proposed by

HIGH COURT OF AUSTRALIA Matter No M311/2003 AMCOR LIMITED APPELLANT AND CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION & ORS RESPONDENTS Matter No M312/2003 MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS APPELLANT AND CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION & ORS RESPONDENTS Amcor Limited v Construction, Forestry, Mining and Energy Union Minister for Employment and Workplace Relations v Construction, Forestry, Mining and Energy Union [2005] HCA 10 9 March 2005 M311/2003 & M312/2003 Matter No M311/2003 ORDER Appeal allowed. Set aside the order of the Full Court of the Federal Court of Australia made on 28 March 2003 and in its place order: the appeal to that Court is allowed; set aside the orders of Finkelstein J made on 12 July 2002 and in their place order that the application is dismissed. Matter No M312/2003 Appeal allowed. On appeal from the Federal Court of Australia Representation: A C Archibald QC with R J Buchanan QC and M F Wheelahan for Amcor Limited in both matters (instructed by Allens Arthur Robinson) S C Rothman SC with S J Howells for the first and second respondents in both matters (instructed by Ryan Carlisle Thomas) R R S Tracey QC with J L Bourke for the Minister for Employment and Workplace Relations in both matters (instructed by Phillips Fox) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Amcor Ltd v Construction, Forestry, Mining and Energy Union; Minister for Employment and Workplace Relations v Construction, Forestry, Mining and Energy Union Industrial law (Cth) – Certified agreement – Corporate demerger – Business transferred to subsidiary and employees immediately re-employed on same terms and conditions – Change in identity of employer though no change in duties of employees – Whether positions in a business had become redundant and employees had been retrenched – Whether employees entitled to redundancy payments under the agreement – Relevance of termination and succession provisions of the Workplace Relations Act 1996 (Cth). Words and phrases – "position", "business", "position in a business", "redundant", "retrench". Workplace Relations Act 1996 (Cth), Pts VIA, VIB, ss 149(1)(d), 170MB, 170MD. GLEESON CJ AND McHUGH J. The issue in these appeals is whether, following a corporate reorganisation described as a demerger, certain employees became entitled to redundancy payments under the provisions of an industrial agreement. The employees worked in the same jobs, under the same terms and conditions, following the demerger, but, in consequence of the corporate restructuring, their employer changed. The resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose, and the nature of the particular reorganisation. There is nothing inherent in the idea of redundancy that justifies an expectation either that redundancy payments will, or that they will not, become payable in the event of a reconstruction, merger, or takeover1. Similarly, there is nothing inherent in the nature of a corporate reconstruction that justifies an expectation either of continuity of a legal entity, or of succession, or of discontinuity. Thus, depending upon the legal regime under which it takes place, a merger between two companies might or might not put an end to the merging entities. The effects upon their pre-existing rights and obligations, and the question of succession to these rights and obligations, will require examination of the relevant legal (usually statutory) framework2. The demerger in this case was effected by a scheme of arrangement and reduction of capital. An application, pursuant to s 411 of the Corporations Law, was made to the Supreme Court of Victoria for approval3. Warren J, who dealt with the application, described what was involved as follows4: "Amcor conducts both a packaging and a paper business. The paper business is conducted largely through Amcor's wholly-owned subsidiary PaperlinX Ltd (PaperlinX). Amcor is proposing a demerger whereby it will become purely a packaging business. To that end, the board of Amcor has resolved to put before shareholders an arrangement which has become known as the Demerger Proposal. Pursuant to the Demerger Proposal, Amcor proposes to cancel share capital in an amount of $1.22 per share by way of capital reduction and then to appropriate that $1.22 by using it as the consideration for the transfer to each Amcor 1 Shop, Distributive & Allied Employees' Association (NSW) v Countdown Stores (1983) 7 IR 273 at 293. eg Gold and Resource Developments NL v Australian Stock Exchange Ltd (1998) 30 ACSR 105. 3 Re Amcor Ltd (2000) 34 ACSR 199. (2000) 34 ACSR 199 at 199-200. McHugh shareholder of one share in PaperlinX for each three shares in Amcor. Thereafter, PaperlinX will cease to be a wholly-owned subsidiary of Amcor. However, after the distribution among Amcor shareholders of those shares in PaperlinX, Amcor will continue to hold approximately 18% of the capital of PaperlinX. Accordingly, Amcor is proposing to sell those shares to the public." Her Honour later pointed out that the proposed arrangements imposed obligations not only upon Amcor and its members but also upon PaperlinX and that, in a document entitled the Implementation Deed, PaperlinX had covenanted to carry out all the obligations which the scheme imposed on it5. The information supporting the Scheme of Arrangement included the following: "All creditors associated with the Paper Operations will be transferred to PaperlinX pursuant to the internal restructuring. This will include the obligations to lenders, trade creditors and employees of the Paper Operations." Specific provisions were made for PaperlinX to accept obligations to employees who had entitlements under the Amcor group's Employee Share Purchase Plan. The commercial benefits that were expected to flow from the separation of the Amcor group's packaging business and paper operations are presently irrelevant. Before the demerger, a wholly-owned subsidiary of Amcor named Paper Australia Pty Ltd ("Paper Australia") owned and operated paper mills in which the persons the subject of these appeals had been employed. Some years previously Amcor had transferred those businesses to Paper Australia, but Amcor continued to employ the people who worked in the businesses, providing their services to Paper Australia on the basis that Paper Australia agreed with Amcor to meet Amcor's obligations as employer. As part of the demerger, Amcor transferred its shares in Paper Australia to PaperlinX. Amcor terminated the employment of the employees. They were offered identical terms, including continuity of service for all employment-related purposes, including accrued entitlements, by Paper Australia. They went on doing the same work as before, except that their employer was now Paper Australia. Paper Australia became a wholly-owned subsidiary of PaperlinX, which was the holding company of the group conducting the paper operations. (2000) 34 ACSR 199 at 204. McHugh The question is whether, in those circumstances, it is correct to say that, within the meaning of cl 55.1.1 of the Australian Paper/Amcor Fibre Packaging Agreement 1997 ("the agreement"), the positions of the employees became redundant and they were retrenched. If so, they became entitled to redundancy payments as specified in the clause. The terms of the agreement, the facts, and the relevant legislation, are set out in the reasons of Gummow, Hayne and Heydon JJ, and of Callinan J. The key concept upon which the operation of cl 55.1.1 in the present case depends is that of a position becoming redundant. The appellants contend that, in this context, "position" means a position in a business, and that, in the circumstances of the demerger, in which a conglomerate enterprise involving a packaging business and a paper operations business was split into two parts, each of which continued to function as before, with the employees performing the same functions, on the same terms and conditions, those employees' positions did not become redundant. The respondents contend, and the Federal Court accepted, that there was a critical change in the employment situation, namely the identity of the employer. That is, even if it is a case of succession, so that the employees had the protection of s 170MB of the Workplace Relations Act 1966 (Cth), at the time of the termination by Amcor of their employment, the employees lost their positions, and they lost them because Amcor no longer needed their services. Accordingly, as between Amcor and the employees, the positions of the employees became redundant, and for that reason the employees were retrenched by Amcor, even though they were immediately re-employed by Paper Australia. It is true that this is a case of succession to a business, but there is more to it than that. What was involved was a particular kind of succession. What had been conducted as a combined business enterprise was divided into two separate business enterprises, conducted by corporations which, immediately following the division, were in substantially common ownership. The shareholders of Amcor held 82% of the shares in PaperlinX and the other 18% were held by Amcor. It is also true to say that there was a change in the identity of the employer, but, again, there is more to it than that. Before the demerger, the business in which the employees worked was owned and operated by Paper Australia, then a wholly owned subsidiary of Amcor, even though the employees were employed by Amcor, which provided their services to its subsidiary. Following the demerger, the employees worked in the same jobs, in the same business, now employed directly by Paper Australia, which had become a wholly owned subsidiary of PaperlinX. There is no logically stringent process of reasoning which requires a construction of cl 55.1.1 that favours either side. The problem arises because the agreement is expressed in general terms that do not distinguish between the McHugh different circumstances which might arise in different cases. There is nothing unusual, or surprising, in that. In the industrial context, redundancy of position is not a concept of clearly defined and inflexible meaning. Whether cases of succession to a business following corporate restructuring are regarded as justifying an award of redundancy payments is dealt with "on the particular merits of the case rather than by way of broad prescription."6 Here, however, it is necessary to apply an agreement that contains a "broad prescription", and the task is to decide how that broad prescription operates in the particular circumstances. Having regard to the industrial purpose of the agreement, and the commercial and legislative context in which it applies, it seems to us that the appellants have the better of the argument. As Finkelstein J pointed out, if there had been no demerger, but Amcor had simply decided that Paper Australia should employ the paper employees directly, then, on the respondents' case, cl 55.1.1 would come into operation. That seems a very curious result, both industrially and commercially. The argument for the respondents treats "position" as meaning "position in the employment of Amcor", so that any change by which another legal entity became the employer would mean that the positions became redundant, unless Amcor proposed to employ other people to take their place. This approach is too narrow, and allows insufficient flexibility to accommodate the commercial and industrial realities with which the general terms of cl 55.1.1 had to deal. On the other hand, if the words are given the meaning for which the appellants contend, that is to say, position in a business, they are more readily capable of sensible adaptation to the circumstances of particular cases. Redundancy of position is not a legal or industrial term of art, although there are many cases which examine the concept of redundancy, usually for the purpose of distinguishing it from other causes of retrenchment7. In the present case, Amcor was originally the parent company of a group that carried on two kinds of business. The group was split up so that each business would in future be conducted separately. The businesses continued and the employees continued to do the same work, on the same terms and conditions, as before, and with their accrued entitlements preserved. Their new employer was the company that had owned and operated the particular business in which they worked before the split. In the circumstances, the positions did not become redundant. 6 Shop, Distributive & Allied Employees' Association (NSW) v Countdown Stores (1983) 7 IR 273 at 293 per Fisher P. 7 eg R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co-operative Limited (1977) 16 SASR 6; Re Government Cleaning Service (Privatisation) Award (No 2) (1994) 55 IR 199; Termination, Change and Redundancy Case (1984) 8 IR 34. McHugh We agree with the orders proposed by Gummow, Hayne and Heydon JJ. GUMMOW, HAYNE AND HEYDON JJ. An industrial agreement provided that "[s]hould a position become redundant and an employee subsequently be retrenched" the employee was entitled to certain payments. After the agreement was made, the employer (Amcor Limited – "Amcor") sold several of its businesses and associated plant and equipment to a wholly owned subsidiary. Those who were employed in the businesses remained employees of Amcor. The subsidiary (Paper Australia Pty Ltd – "Paper Australia") agreed with Amcor that it would discharge the obligations which the employer (Amcor) owed to employees working in the businesses but the evidence does not suggest that these arrangements were made known to employees. Subsequently, a demerger was announced. What was described as the Amcor Printing Papers Group was to be floated as a publicly listed company called PaperlinX Ltd. Before the demerger was effected (by scheme of arrangement and reduction of capital) Amcor gave notice terminating the employment, with effect from 31 March 2000, of all employees who worked in the businesses that had been sold to Paper Australia. At the same time, Paper Australia (then still a wholly owned subsidiary of Amcor, but to become a wholly owned subsidiary of PaperlinX Ltd) made a written offer of employment to each of these employees offering employment on the same terms and conditions. The offer said that all benefits would be preserved "including continuity of service for all employment-related purposes, salary/wage, superannuation and accrued leave entitlements". The offer made was to be accepted by reporting for duty on the employee's first normal working day on or after 1 April 2000 and all, or nearly all, employees did so. Did the events described trigger the obligation to make the payments for which the industrial agreement provided? the In proceedings brought in the Federal Court of Australia by the respondent Union (a party judge industrial agreement), both (Finkelstein J)8 and the Full Court (Moore, Marshall and Merkel JJ)9 answered that question, "Yes". By special leave, both Amcor and the Minister for Employment and Workplace Relations (who intervened in the Full Court) appeal to this Court. Each appeal should be allowed. the primary 8 Construction, Forestry, Mining and Energy Union v Amcor Ltd (2002) 113 IR 112. 9 Amcor Ltd v Construction, Forestry, Mining and Energy Union [2003] FCAFC 57. The Agreement The agreement at the heart of this matter was called the Australian Paper/Amcor Fibre Packaging Agreement 1997 ("the Agreement"). It described the parties bound in four sub-paragraphs. The first two sub-paragraphs referred to "Australian Paper Limited as Agent for Amcor Limited" in respect of four named mills and "Amcor Limited trading as Amcor Fibre Packaging" in respect of four other named mills and what was called "the Recycling Group". The parties referred to in those two sub-paragraphs were described in the Agreement as "the Company". The other parties identified in the Agreement were the Union respondent to these appeals, and another union, not a party to the proceedings, whose members are not affected by the issues now under consideration. At the start of the Agreement, in the clause described as "Title", there appeared, after the statement of the name by which the Agreement was to be known, the further statement that "[d]ue to organisational changes which have occurred within the Company since 'in principle' agreement was reached" any reference to Amcor Paper Australia was to be taken to mean Amcor Fibre Packaging in respect of a group of four mills and the Recycling Group. For present purposes, the only significance of this provision is its recognition of, and apparent indifference to, the occurrence of what it called "organisational changes ... within the Company". The Agreement provided (cl 4) that it applied "to employees, members of the unions, engaged in the production functions and ancillary operations, excluding engineering", at specified "sites of the Company". It identified (cl 5) certain awards as providing "the required safety net of minimum wages and conditions of employment underpinning" the Agreement and said that the terms and conditions of the Agreement "constitute the terms and conditions of employment for employees and supersede and replace the provisions" of those awards. Parts 1 to 9 of the Agreement (cll 1-60) were said (cl 7.1) to provide the minimum terms and conditions applying at each of the sites of the Company specified in cl 4. The balance of the Agreement (Pts 10-18) made particular provisions for different work sites. The Agreement was made against the background provided by Pt VIB of the Workplace Relations Act 1996 (Cth). The object of that Part was stated10 to be "to facilitate the making, and certifying by the [Australian Industrial 10 s 170L. Relations] Commission, of certain agreements, particularly at the level of a single business or part of a single business". in Div 3 (ss 170LN-170LS) for the Commission to certify agreements "to settle, further settle or maintain the settlement of, or to prevent, industrial disputes"11 or "to prevent industrial situations from giving rise to industrial disputes"12. To be certified by the Commission, an agreement had to be "approved by a valid majority of the persons employed at the time whose employment will be subject to the agreement"13. Part VIB provided The Agreement was certified by the Commission on 9 June 1998. The application for certification was made under Div 3 of Pt VIB as an agreement about an industrial dispute or industrial situation. The certification described the Agreement as being made between "Australian Paper Limited as agent for Amcor Limited" and the Unions. The Agreement itself provided (cl 8) that it was to come into operation from the date of certification by the Commission. Clause 55.1.1 of the Agreement The central issue in the matter is whether, in the events that have happened, cl 55.1.1 of the Agreement was engaged. That clause was one of several grouped under the heading "Severance Payments". It provided: "Should a position become redundant and an employee subsequently be retrenched, the employee shall be entitled to the following payments: (a) All accumulated sick leave credits; (b) All accumulated annual leave credits; Pro-rata long service leave if the employee concerned has five or more [years'] continuous service with the Company; Three weeks' pay at the employee's ordinary weekly wage rate for each full year of service and pro-rata for part years provided that this amount does not exceed the amount the employee would have received up to nominal retirement age." 11 s 170LN(a). 12 s 170LN(b). 13 s 170LR(1). It will be noticed that the clause speaks of a "position becom[ing] redundant" and an "employee subsequently be[ing] retrenched". How are those expressions to be understood? The competing contentions The Union contended that cl 55.1.1 was engaged if, because the employer no longer had a need for the work that the employee was performing, the employee was no longer required by that employer to do work or perform duties of a particular kind. It followed, so the Union contended, that upon Amcor ceasing to carry on this part of its business, and terminating its contracts of employment with the employees, cl 55.1.1 required Amcor to make the payments for which the clause provided, regardless of whether the employees were offered and at once took up work with another company. Amcor contended that cl 55.1.1 was not engaged unless a "position in the business" was abolished and that the identity of the employer of the person occupying that position was irrelevant. It submitted that the positions in the business remained unaffected by the various transactions that occurred. The Minister's submissions were to generally the same effect. Neither side's contentions attached significance to whether an employee took up the offer made by Paper Australia. The Union on the one hand, and Amcor and the Minister on the other, submitted, for different reasons, that this was irrelevant. The Union submitted that it was irrelevant because all that was material was whether the particular employer any longer required employees to do work or perform duties of the kinds they had undertaken before termination. Amcor and the Minister submitted that it was irrelevant because, regardless of who filled the position, the position in the business remained unaffected by the transactions that had occurred. Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate. Other provisions of cl 55 Clause 55.1.2 provided for the minimum payment for employees with up to and including one year of service. Clause 55.1.3 defined what was meant by the ordinary weekly wage rate. Clause 55.1.4 then provided that the payments "are subject to the employee concerned continuing in employment to a date notified by the Company to the Union" and that an individual employee's "special circumstances" might be taken into account "provided this does not prevent production continuing to the agreed date". Clauses 55.2 and 55.5 provided for the cases where an employee became "redundant and [was] transferred to a lower paid job" (cl 55.2) and where an employee accepted "an offer to transfer to another location" (cl 55.5). Both these cases assumed that the employee, or the "position", had become redundant but that the employee's employment continued. No clear distinction was drawn between the employee being redundant and the position being redundant. Thus, cl 55.2 spoke of "[s]hould an employee become redundant" and then said that the employee should "retain the hourly rate applicable to the redundant position" (emphasis added). Clause 55.3 used "retrenchment" to refer to termination of employment. An employee who opted for "transfer ... in lieu of retrenchment" was given a time during which to change his or her mind and "accept retrenchment terms". Similarly, cl 55.6 spoke of a "retrenched employee" responding to an offer of "re-employment". Further light is cast on the meaning of "redundancy" and "retrenchment" in cl 55.1.1 by cl 55.7, which stipulated the obligations of the parties to assist "retrenched employees". That clause provided: In terminating the employment of an employee on account the of redundancy, requirements of Subdivision C of Division 3 of Part VIA of the Act. the Company will comply with 55.7.2 The Company and the union will co-operate: to assist retrenched employees to obtain Government compensation as applicable; to try to find alternative employment for retrenched employees outside the Company; and to provide retraining for employees." The provisions of the Act to which cl 55.7.1 referred (subdiv C of Div 3 of Pt VIA of the Act) regulated the termination of employment by an employer. They included provisions (s 170CL) obliging the employer to give written notice to the Commonwealth Employment Service of the intention to terminate the employment of 15 or more employees "for reasons of an economic, technological, structural or similar nature". Evidently then, cl 55.7 used the expression "retrenched employees" to refer to those whose employment had been terminated and terminated "on account of redundancy". Were this not so, the reference to provisions dealing with termination of employment and requiring notice to the Commonwealth Employment Service would not have been apt. Some other provisions of the Agreement should be noted. Other provisions of the Agreement First, cl 54 of the Agreement dealt with "Employment Security". It said that, providing employees demonstrated a continuing commitment to the Agreement, "no employee will be involuntarily retrenched, except as provided in sub clause 54.2" (a clause that required the parties to enter into negotiation in good faith if there were "major changes in circumstances"). If workforce reductions were required, they were to be "achieved through voluntary terminations in accordance with the Redundancy provisions" of the Agreement. Secondly, as might be expected, provision was made (in Pt 5 of the Agreement) for various forms of leave – including annual leave, sick leave and long service leave. These entitlements, particularly to sick leave and long service leave, accumulated over time. Thirdly, although the provisions of the Agreement concerning superannuation mentioned a fund that appears to have been associated with Amcor (the APM (1987) Superannuation Fund), funds not associated with Amcor could be designated by employees as recipients of superannuation contributions they made or were made on their behalf by their employer. Fourthly, within Pt 4 of the Agreement, dealing with "Wages and Allowances", provision was made (cl 26) for what was called a "gainshare payment". The amount of this payment was to be "based on the Company's profitability measured by Return on Investment". Return on Investment was to be calculated "by expressing the Company's Profit Before Interest and Tax ... as a percentage of the Funds Employed in the business". It was provided that "[t]he average results of the Amcor Printing Papers Group and Amcor Fibre Packaging's Australian operations will be used in this calculation". Plainly, then, these provisions assumed that the business operations conducted by Amcor at the time of making the Agreement would continue uninterrupted by an event like the separation of the paper and packaging businesses, the paper operations of which, after demerger, were to be conducted by PaperlinX Ltd, and the packaging operations of which would continue to be operated by Amcor. But apart from these provisions about gainshare payments, none of the provisions of the Agreement depended for its operation upon the employer being the original employer which was party to the Agreement or even a company which was a part of the Amcor group of companies. So, for example, neither the provisions for the various forms of leave nor the provisions for superannuation assumed that the employer was a part of the Amcor group. The explanation for that lies in the legislative background against which the Agreement was made and the provisions under which it was certified. The legislative background Three features of the legislative background to the Agreement must be noticed. First, there is the background provided by the introduction, by the Commission's predecessor (the Australian Conciliation and Arbitration Commission), of awards prescribing the entitlements of employees upon redundancy. Applicable standards were identified in the Termination, Change and Redundancy Case14. Secondly, some account must be taken of the provisions of Div 3 of Pt VIA of the Act regulating the minimum entitlements of employees on termination of employment. Those provisions evidently reflect general standards of the kind identified in the Termination, Change and Redundancy Case. Thirdly, the Act provides15 that certified agreements made about industrial disputes or industrial situations are to bind not only the particular employer with whom the agreement is made but also successor employers. The legislative background – awards and redundancy In 1981, the Australian Council of Trade Unions made claims that led, ultimately, to the making of awards providing terms governing the termination of employment, providing for consultation about major changes likely to have significant effects on employees, and providing for terms governing what was to happen in cases of redundancy. The Commission first published reasons determining issues of principle16. Having heard further submissions from the parties, the Commission then published a supplementary decision17 in which it settled the form of order to be made. The Commission said, in its supplementary decision18, that it had "some difficulty in finding a suitable expression" to make its intention clear about what 15 s 170MB. 16 Termination, Change and Redundancy Case (1984) 8 IR 34. 17 Termination, Change & Redundancy Case (1984) 9 IR 115. 18 (1984) 9 IR 115 at 128. constituted "redundancy". In its earlier decision, it had referred19 to a number of definitions of redundancy. Chief among those was the decision by Bray CJ in R v Industrial Commission (SA); Ex parte Adelaide Milk Supply Co-operative Ltd20 which was understood21 as emphasising that redundancy refers "to a job becoming redundant and not to a worker becoming redundant". For present purposes, what is important is that the Commission appears to have been seeking a form of words that would accommodate two features. First, as was said in the Commission's supplementary decision22, it "did not intend the redundancy provisions to apply where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business". Secondly, the Commission did not intend redundancy provisions to be engaged by the transmission of a business. In its earlier decision, the Commission had emphasised23 that it did "not envisage severance payments being made in cases of succession, assignment or transmission of a business". That is, the Commission regarded termination of employment by a particular employer as not sufficient to engage the redundancy obligations, even if that employer was ceasing any participation in the particular business. The focus of the provision was upon the work undertaken by the employee (the "job"), not upon the identity of either the employee or the employer. The relevant inquiry was whether employment in a particular kind of work then being undertaken was to come to an end. If that employment was to come to an end, it was necessary to consider why that was to happen. Was it because the employer no longer wanted the job, then being done by the employee, done by anyone? Or was it "due to the ordinary and customary turnover of labour"24? And, as the Commission's evident concerns about drafting show, these alternatives were not, and are not to be, understood as exhausting the cases that might have to be considered. 19 (1984) 8 IR 34 at 55-56. 20 (1977) 16 SASR 6 at 8. 21 (1984) 8 IR 34 at 56. 22 (1984) 9 IR 115 at 128. 23 (1984) 8 IR 34 at 75. 24 (1984) 9 IR 115 at 128. The legislative background – the Act and termination of employment The provisions of Div 3 of Pt VIA of the Act (ss 170CA-170HC) established procedures for conciliation and arbitration in relation to certain matters relating to the termination or proposed termination of an employee's entitlement in certain circumstances. Many of the provisions were directed to cases where it was alleged that the termination was harsh, unjust or unreasonable and those provisions do not bear upon the issues in these appeals. Two provisions do. First, as has already been noted, s 170CL obliged an employer to notify the Commonwealth Employment Service if it intended to terminate the employment of 15 or more employees for reasons of an economic, technological, structural or similar nature. Secondly, s 170CM provided for the required period of notice of termination to be given by an employer. The period of notice depended upon the employee's period of continuous service with the employer. The section provided25 that regulations might exclude from the operation of the section terminations of employment "occurring in specified circumstances that relate to the succession, assignment or transmission of the business of the employer concerned". Division 1 of Pt 5A of the Workplace Relations Regulations (regs 30A-30CD) included such a provision. Regulation 30CD excluded from the operation of s 170CM a termination of employment that occurred because of the succession, assignment or transmission of the business of an employer if certain conditions were met. The detail of those conditions is not relevant to the present issues. What is important is that the Act provided certain minimum conditions that were to apply where there was a termination of employment. Those conditions could be engaged where there was a termination because the employer no longer wanted the job that an employee was doing to be done by anyone. But the Act also recognised (in s 170CM) that succession cases may require different treatment. The legislative background – succession provisions As is apparent from what has already been said, the Act provided for cases where a new employer was a successor, transmittee or assignee of the whole or a part of the business of an employer bound by a certified agreement. Section 170MB provided that if the application for certification of the agreement stated that it was made under Div 3 (concerning agreements about industrial disputes and industrial situations) the new employer was bound by the certified 25 s 170CM(8). agreement "to the extent that [the agreement] relates to the whole or the part of the business". Amcor did not contend in these appeals that s 170MB applied. It will be necessary later to say something further about this aspect of the matter. What is presently important is that, regardless of the terms of a certified agreement, the agreement binds any new employer who is the successor, transmittee or assignee of the whole or a part of the business concerned. Obviously, if an agreement is drafted (as the gainshare provisions of the Agreement were drafted) in terms that are specific to a particular employer, there may be some question about how provisions of that kind are to be applied if there is a succession. But these are difficulties that would have to be solved. Their existence does not deny the operation of s 170MB. There is a further point that follows from s 170MB. If the section is engaged, and a new employer becomes bound by the certified agreement, those provisions of the agreement which depend for their operation upon the length of an employee's service (like provisions for leave) may well have to be construed as depending upon the combined length of service with both the old and the new employer. That is, it may well be that the certified agreement would be construed, requiring in such circumstances, as neither permitting nor differentiation between service with one employer and service with the other. These, however, are questions which were not pursued in argument and need not be decided. The construction of cl 55.1.1 The expression "[s]hould a position become redundant and an employee subsequently be retrenched" can be construed properly only if due account is taken of each of the matters we have mentioned: the other provisions found in cl 55 and elsewhere in the Agreement, and the matters of legislative background to which we have referred. The succession provisions of the Act show that if an employer sells its business to another, and the former employer no longer carries on that kind of business, a certified agreement will continue to regulate the relations between the new employer and its employees to the extent to which the agreement relates to the whole or part of the business to which the new employer is successor. This requires the conclusion that the reference in cl 55.1.1 to "a position [becoming] redundant" cannot be read, as the Union contended, as requiring no more than that the particular employer no longer has a need for any employee to perform tasks of the kind undertaken by the employee. Reading the phrase as satisfied by those circumstances alone would give no sufficient content to "position". "Position" was not used in the Agreement as a legal term of art. It was used in a colloquial sense. In the collocation of words found in cl 55.1.1 (when understood against the background of the various considerations earlier mentioned) "position" refers to a position in a business – a business to or of which another employer may be successor, transmittee or assignee (whether immediate or not). If, for example, there had been some change in the terms and conditions offered by the new employer from those offered by Amcor, or there had been some change in the tasks to be undertaken by the employee, there may have been some question about whether the "position" continued. Issues of that kind do not arise in the present matter. This conclusion about the meaning of "position" is reinforced by a number of other considerations. First, there is the treatment, in cl 55.1.1, of retrenchment as a further necessary element for it to be engaged, and there are those other provisions of cl 55 which are engaged only if the employee concerned is no longer employed in the business. These provisions suggest that a "position" is to be identified in relation to a business rather than identified by reference to employment by a particular employer. Secondly, reading the provisions as focusing upon a position in a business is consistent with the approach to redundancy taken by the Commission in the Termination, Change and Redundancy Case. There, as already noted, the emphasis was upon a "job" becoming redundant rather than a worker becoming redundant. As the Commission pointed out26, the definition of "redundancy" which it adopted from the Adelaide Milk Supply Co-operative Case recognised that "redundancy situations may not necessarily involve dismissals" and emphasised that the job or work had disappeared through no fault on the part of the employee. To find that a position is redundant whenever an employer leaves an industry (regardless of whether another employer continues to operate the business concerned) would give insufficient emphasis to the need to identify whether a "job" had become redundant. No doubt, as the Union submitted, the clause now in question is different from the model clauses which the Commission adopted in its supplementary decision in the Termination, Change and Redundancy Case. It follows that what is said in the decisions in that case is not determinative of the present issue. Nonetheless, the clause now in question is informed by considerations similar to those which the Commission sought to reflect in the drafting it adopted. So much follows from the emphasis given, in cl 55.1.1, to the concept of "position". 26 (1984) 8 IR 34 at 56. The Court's decisions in PP Consultants Pty Ltd v Finance Sector Union27 and Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd28 deal with some of the difficulties that arise in identifying whether an employer is the successor, assignee or transmittee of the business of another employer. Those decisions, therefore, consider what is meant by the "business of an employer". The issue which arises in this case is related to, but is not identical with, the issues that were decided in those cases. The construction of cl 55.1.1 which we adopt construes "position" as referring to a "position in a business", a "job". That may invite (and in this case requires) some consideration of what is the "business" concerned, but it does not require consideration of a compound expression like the expression considered in PP Consultants and in Gribbles, "the business or part of the business of an employer who was a party to the industrial dispute" (emphasis added). Once Amcor sold its paper business to Paper Australia, Amcor's connection with the business of manufacturing paper was limited to the supply of the labour, which Amcor employed, to the company which owned the manufacturing plant and conducted the business of making and selling paper. It may be assumed that the intervention of this step, before termination of employment, demerger and re-employment, provided the basis for Amcor not relying on the succession provisions of s 170MB. It is, however, not necessary to consider whether the sale of assets by Amcor to Paper Australia is relevant to the application of s 170MB. In particular, it is unnecessary to consider what is meant by the parenthetical expression "whether immediate or not" which qualifies the requirement of s 170MB(1)(c) that "a new employer [become] the successor, transmittee or assignee ... of the whole or a part of the business concerned". None of these issues needs to be addressed because the "positions" with which this case is concerned were positions in a business of making and selling paper. None of those positions became redundant. Neither the sale of assets by Amcor nor the later termination of employment by Amcor meant that the work then being undertaken by the employees was no longer required by the company which conducted the business in which the positions existed. The "job" of no employee was redundant. Clause 55.1.1 was not engaged. 27 (2000) 201 CLR 648. 28 [2005] HCA 9. Conclusion and orders For these reasons, each appeal should be allowed. The orders made by the Full Court of the Federal Court of Australia on 28 March 2003 should be set aside. In their place, there should be orders that the appeal to that Court is allowed, the orders of Finkelstein J made on 12 July 2002 are set aside and, in their place, there be orders that the application is dismissed. Although the Union sought an order for costs against the Minister if the Minister's appeal failed, neither the Minister nor Amcor sought costs, either in this Court or the courts below, if the appeals succeeded. It follows that there should be no order for costs. Kirby KIRBY J. These appeals, from a judgment of the Full Court of the Federal Court of Australia29, concern the construction of the Australian Paper/Amcor Fibre Packaging Agreement 1997 ("the Agreement"). The Agreement was certified by the Australian Industrial Relations Commission ("the Commission") in June 1998, in accordance with the Workplace Relations Act 1996 (Cth) ("the Act"), Pt VIB. The question before this Court is whether the construction adopted by each of the judges of the Federal Court, both at first instance30 and in the Full Court, providing that the appellant, Amcor Ltd ("Amcor"), is obliged to pay certain "severance payments"31 to employees whom it was said to have retrenched, represented the correct or preferable construction of the Agreement in the circumstances. I agree in the orders favoured by the other members of this Court. Amcor's appeal must be allowed. However, the question of construction is not, in my view, clear-cut. To show why this is so, and out of respect for the learned judges of the Federal Court, who reached an opposite conclusion, I will refer in more detail to their reasons. The Federal Court has considerable experience in the interpretation of industrial awards and agreements. The fact that the judges of that Court unanimously concluded in favour of the meaning urged by the Construction, Forestry, Mining and Energy Union ("the Union") and with the individual respondent employee's submissions causes me to pause before expressing my preference for the opposite construction. However, in the end, I favour the interpretation now reached by this Court. I will explain the somewhat different course that brings me to that result. The facts, the Agreement and the legislation The background facts are explained in the reasons of Gummow, Hayne and Heydon JJ ("the joint reasons")32 and, in greater detail, in the reasons of Callinan J33. Also set out there are the applicable provisions of the Agreement34, 29 Amcor Ltd v Construction, Forestry, Mining and Energy Union [2003] FCAFC 57 per Moore, Marshall and Merkel JJ. 30 Construction, Forestry, Mining and Energy Union v Amcor Ltd (2002) 113 IR 112 31 So-called in the heading to cl 55.1 of the Agreement. 32 Joint reasons at [16]-[17]. 33 Reasons of Callinan J at [118]-[123]. 34 Joint reasons at [20]-[26]; reasons of Callinan J at [124]. Kirby notably the provisions of cl 55.1.1 upon which the disputed entitlements of the former employees of Amcor depend35. Also set out in other reasons, or described there, are the provisions of the Act36 that constitute the legislative background against which the Agreement was made and certified. It was a background that would have been in the minds of both parties (Amcor and its agent on the one side and the Union on the other) who negotiated the Agreement and hammered out its terms. The legislative background is therefore part of the common knowledge attributable to the parties to the Agreement. So far as it is relevant, it would ordinarily be assumed that, in agreeing as they did, the parties intended the Agreement to take its place within the industrial setting created by the Act. To some extent, that industrial setting also incorporates not only the provisions of the Act dealing with the special problem of redundancy in employment under federal awards and certified agreements37 but also the consideration by courts and industrial tribunals during the past three decades of the issue of redundancy in employment. During that time, as is a matter of common knowledge, rapid advances of technology have presented instances of redundancy in employment (often through no particular fault of employers and no fault at all of employees) that called forth judicial38, arbitral39 and legislative responses40. As explained elsewhere, some of these developments illustrated the difficulty of defining "redundancy" for the purpose of measures protecting the industrial privileges of those whose employment was affected by such change41. 35 Joint reasons at [26]; reasons of Callinan J at [124]. 36 Joint reasons at [41]-[49]; reasons of Callinan J at [132]-[133]. 37 The Act, Div 3 of Pt VIA, especially ss 170CL, 170CM referred to in the joint reasons at [45]-[46]. 38 eg R v Industrial Commission (SA); Ex parte Adelaide Milk Supply Co-operative Ltd (1977) 16 SASR 6 at 8 per Bray CJ; cf Stones and CEPU v Simplot Australia Pty Ltd (1997) 42 AILR ¶3-594. See joint reasons at [43]; reasons of Callinan J at 39 Termination, Change and Redundancy Case (1984) 8 IR 34; Termination, Change & Redundancy Case (No 2) (1984) 9 IR 115. See joint reasons at [42]-[44], [54]- 40 The Act, s 170MB. 41 Joint reasons at [44]. Kirby All of these are useful details of a background character. All are relevant in the construction of the Agreement's critical clause, the meaning of which is primarily in issue in these appeals (cl 55.1.1). In the interpretation of the Constitution and of legislation, Australian courts have passed beyond the age of the magnifying glass. No longer do courts (or industrial tribunals) seek to give meaning to contested language considered in isolation from the context in which the words are used and the purpose for which the words were apparently chosen. Nowadays, the same insistence on context, as well as text, permeates the approach to interpretation that is taken to legally binding agreements42. Indeed, before this approach became normal in the courts, in the interpretation of contested instruments it was often the approach adopted for the construction of industrial texts. This was in keeping with an inclination of such tribunals towards practical, as distinct from purely verbal, constructions in that area of the In the present case, the Union's submission was that these generalities were all very well, but that in the end, the Court had to give effect to the language of the Agreement. Clearly, this is correct. Interpretation is always a text-based activity. But where does it lead in this instance? The supposed unfairness of the Union's interpretation One danger of a generalist court, such as this, construing an Agreement designed to have effect in a particular legal environment, is that of ignorance or oversight of considerations that may throw a different light upon the arguments of the parties44. This does not mean that special problems in the law are somehow disjoined from the application of broad doctrines which this Court must uphold. But there is a risk that issues will be disconnected from context so 42 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436 at 449 [69]; 186 ALR 289 at 307; Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 76 ALJR 246 at 248 [11]; 185 ALR 152 at 155; cf B & B Constructions (Aust) Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227 at 234-235; McLauchlan, "The New Law of Contract Interpretation", (2000) 19 New Zealand Universities Law Review 147 at 175-176; Kirby, "Towards a Grand Theory of Interpretation: The Case of Statutes and Contracts", (2003) 24 Statute Law Review 95 at 96-99. 43 Geo A Bond & Co Ltd (in liq) v McKenzie (1929) 28 AR (NSW) 498 at 503-504 per Street J; Modra Homann Wooltana Fertilisers Ltd v Hatch (1941) 15 SAIR 253; In Re Undertakers (Cumberland) Award (1946) 45 AR (NSW) 192. 44 Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 78 ALJR 1231 at 1267 [200]; 209 ALR 116 at 166. Kirby that they are misunderstood by newcomers unfamiliar with the particular legal terrain. Much play was made in argument in this Court by Amcor concerning the suggested unfairness of the industrial outcome for which the Union argued. To impose on Amcor an obligation to pay its former employees severance payments under cl 55.1.1 of the Agreement, when they had not lost a day's employment, when they had been re-engaged by a company associated with Amcor, when this had occurred with their inferred agreement, when some of them, at least, were not pressing to enforce the claim against Amcor45 and when all that had really happened was an internal rearrangement of the corporate structure of the employer companies, was suggested to be such a horrible industrial outcome that it could not have been what the Agreement provided. Reflections of these submissions are recorded in the reasons of the primary judge in the present case46, and are referred to in the reasons of Callinan J47. However, in describing the outcome (which he later upheld) as a possible "affront to commonsense", the primary judge was merely stating what he described as "one view"48. There was, however, another view, as his Honour ultimately explained. As the Federal Court has demonstrated in earlier decisions, it is undesirable to adopt a purely result-oriented approach to the interpretation of such industrial agreements. Ultimately, a court's duty under the Constitution is to give effect to the meaning of each such document as expressed in its words. This is true where the argument is an attempt by a union to secure a "better bargain" than that which was agreed upon and expressed in the instrument49. However, a neutral application of legal principles requires that the same outcome should follow where the terms of the subject agreement are such as to result in a "worse bargain" for the employer than, in retrospect, the employer ought to have provided for, might have expected and even might have deserved in an industrial sense. In superintending the interpretation of the agreement in question in the present case, this Court, as the repository of the general law, must keep in mind the dangers that can attend interpretations of written texts based only on intuition. 45 Amcor [2003] FCAFC 57 at [37]. 46 (2002) 113 IR 112 at 112, 117. 47 Reasons of Callinan J at [129]. 48 (2002) 113 IR 112 at 112. 49 Commonwealth Bank of Australia v Finance Sector Union of Australia (2002) 125 FCR 9 at 29 [30]. Kirby What cuts one way on one occasion may cut the other on the next. All of this was considered by the Full Court50. It is important that this Court should take the same considerations into account in discharging its function. Moreover, in response the Full Court (presumably to anguished complaints on the part of Amcor similar to those that we heard) drew attention to provisions of the Act, easily overlooked, that afforded various solutions to the complaints of unfairness said to arise from the construction urged by the Union51. Thus, Marshall and Merkel JJ emphasised that it was the duty of a court52 to ascertain the proper meaning of the Agreement having regard to any relevant context whilst not offending applicable principles of construction53. Their "It is not to the point that some people may consider it to be unfair to allow employees to receive severance payments whilst they continue to be employed, albeit by another employer. It is equally not to the point that others may consider it not unfair for such payments to be made, given that in the Amcor reconstruction the employees were given no real choice in relation to the cessation of their employment. Further, in some cases, there may be no guarantee of the solvency of the new employer in years to come." This is obviously a valid response to a complaint by any disaffected party to a certified agreement about an outcome, required by the text, that is disappointing and allegedly unjust to it. It was common ground that, notwithstanding the terms of the Agreement55, Amcor had not consulted the Union or attempted to co-operate with it in any way in devising the outcome for the employees that was to flow from its corporate restructuring. This was hardly a model case of modern industrial relations. It is not entirely surprising to me that the result of it was a consideration by the Union, which had been ignored, of its own rights as a party to the Agreement with Amcor and of the rights of its members who were employees of Amcor and who were retrenched as a result of the unilateral restructuring. 50 [2003] FCAFC 57 at [51]-[52]. 51 [2003] FCAFC 57 at [50]. 52 Under the Act, s 178. 53 Seamen's Union of Australia v Adelaide Steamship Co Ltd (1976) 46 FLR 444 at 54 [2003] FCAFC 57 at [49]. 55 The Agreement, cll 55.7.1, 55.7.2. See joint reasons at [34]. Kirby I would therefore take the complaints about unfairness, by an employer who proceeded in such an apparently high-handed way, with a pinch of salt. If a party acts in such a fashion, it cannot really complain if those who are on the receiving end look to their legal rights. Ordinarily, it is this Court (including in the context of industrial relations cases56) which is foremost in upholding the legal rights of parties, according to the letter. The only difference in this case is that it is the Union that is insisting on what it claims to be its legal rights and those of its members and employees of Amcor. No different standard may be applied in such instances. That is not all. The Full Court pointed to a provision of the Act, known to those familiar with this area of the law, but easily overlooked by generalists57. If before the retrenchment of employees by Amcor (that is, prior to 31 March 2000) Amcor and the Union had approached the Commission to vary the Agreement to obviate any need for severance payments to be made upon the termination proposed, such a variation might have been made58. Alternatively, as the Full Court also pointed out59, Amcor had the standing on its own to approach the Commission60 to remove any ambiguity or uncertainty in the Agreement so as to cover the particularities of this case. Further, the provision of relief to the Union under the Act, in circumstances such as the present, was discretionary61. Discretionary considerations were duly pressed by Amcor upon the primary judge62. Whether, in all of the circumstances, such considerations might properly have afforded relief from the Federal Court to Amcor, or whether some other and different relief might have been afforded by the Commission under its powers, are questions that are not before this Court. It is sufficient to remind ourselves that such avenues of relief from the suggested unfairness were available to 56 See Electrolux Home Products Pty Ltd (2004) 78 ALJR 1231 at 1255 [130]; 209 ALR 116 at 149-150; Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9 at [7]. 57 [2003] FCAFC 57 at [50]. 58 Under the Act, s 170MD. 59 [2003] FCAFC 57 at [50]. 60 Under the Act, s 170MD(6). 61 Under the Act, s 178(6). 62 Construction, Forestry, Mining and Energy Union v Amcor [2002] FCA 878 at [7]. Kirby Amcor in this case. Had they been pursued vigorously, they might have provided a more appropriate setting within which to weigh the competing arguments of industrial fairness than the one presented by the Union, pressed to a legal claim in default of the mutuality that once was customary. As the judges of the Federal Court correctly pointed out, before them the issue was, and was only, the meaning and application of the Agreement, specifically cl 55.1.1. That issue required the identification of the legal rights of the parties under the Agreement. Such rights would not be determined by judges blind-folded to the industrial context. Yet in the end their duty, as in all tasks involving a judicial construction of a text having legal force, was to give effect to that text. The judges of the Federal Court, in my view, were correct in adopting that approach63. Textual considerations support the Union Severance payments on retrenchment: As the judges of the Federal Court demonstrated, there are numerous textual considerations in the Agreement to support the arguments of the Union. The first of these is the general description of the payments provided for in cl 55.1. They are described as "severance payments". There is no doubt that Amcor's former employees had their employment relationship with Amcor "severed" on 31 March 2000. Therefore, it would not be surprising were the Agreement to provide for payments to be made to the employees in such circumstances. One of the two preconditions in cl 55.1.1 of the Agreement for entitlement to severance payments was that the employee be "retrenched". Although the Minister for Employment and Workplace Relations submitted to the contrary, the Full Court concluded64 that, in the circumstances that had occurred and within the Agreement, Amcor's employees were "retrenched". Where such unilateral termination of employment occurs (as it undoubtedly did in this case), the prima facie result is the "retrenchment" of the employees65. I agree with the Full Court that a retrenchment by one employer does not cease to be a retrenchment simply because the employee is immediately employed by another employer following such retrenchment. So the starting point of analysis of the terms of cl 55.1.1, for 63 (2002) 113 IR 112 at 112 per Finkelstein J; [2003] FCAFC 57 at [2] per Moore J, [53] per Marshall and Merkel JJ. 64 [2003] FCAFC 57 at [46] per Marshall and Merkel JJ. See also at [4] per Moore J. 65 R v Industrial Court (SA); Ex parte General Motors-Holden's Ltd (1983) 35 SASR 161 at 187; Hawkins v Commonwealth Bank of Australia (No 2) (1996) 70 IR 213 Kirby the judges of the Federal Court, was the fulfilment of one of the two conditions provided in it. Positions in "particular" employment: Secondly, whilst "redundancy" is the heading to cl 55 and "redundant" is the word used in cl 55.1.1 in connection with the first precondition to the payments, the words are used in a special way. What must become "redundant" is not an employee but "a position". This notion is given textual emphasis in two ways. In cl 55.2, by way of contrast, the Agreement speaks of the employee becoming redundant and being transferred to a lower paid job. As well, cl 55.2(a) repeats the reference to "the redundant position". What is the meaning of "position" in this context? Is it, as Amcor urged, a disembodied notion of the work or "job", disjoined from the particular employer or any specific employer? Or is it the position held by the employee with the employer concerned? Amcor's submissions before this Court urged the disjuncture, under the Agreement, between the work and the specific employer providing the work. I agree with the other members of this Court that the Agreement, viewed as a whole, presumes such a disjuncture. However, it must be acknowledged that there are a number of textual considerations (pointed out by the Federal Court) that appear to indicate a contrary conclusion. Chief amongst these is the fact that the Agreement is not an award addressed to an identified industry. Of its character, it is specific, relevantly, to its parties: the Union and Amcor. In such a context, it would seem odd for the Agreement, being between specific parties, to address itself to a work "position" in the abstract, as distinct from the "position" in the specific employment which was the subject of the Agreement. That was, and was only, the position of an employee in the employment of Amcor. In his reasons, Moore J persuasively explained this point66: "The employer party to the Agreement is identified in cl 3 as Amcor Ltd ('Amcor') … In that clause, Amcor is identified as 'the Company'. At many points in the Agreement the word 'Company' is used in a context where the 'Company' is obviously a reference to the employer. … The Agreement creates rights and imposes obligations in an employment context on both an employer (or conceivably employers) and its (or conceivably their) employees. However read as a whole, it is tolerably clear that the Agreement confers those rights and imposes those obligations on one employer, Amcor." 66 [2003] FCAFC 57 at [2]. Kirby The employer-specific benefits: Thirdly, there is additional textual reinforcement for this interpretation of "position" by the employment-specific character of the benefits identified in the sub-paragraphs of cl 55.1.1. It is those benefits that are to constitute the "severance payments". Thus, the benefits include "accumulated sick leave credits", "accumulated annual leave credits" and "pro-rata long service leave". All of these are highly specific to the employment of the employee with a particular employer, namely "the Company", Amcor. This is a further textual point made in the Full Court by Moore J67. For his Honour, the express reference to "unrealised benefits the employee may otherwise have enjoyed if employment [with Amcor] had continued" is an indication in the document that "[t]hese unrealised benefits are based on prior service with Amcor". That fact led Moore J to conclude that the express references to the severance payments strongly pointed to the intention of the parties to the Agreement that "the clause would operate when employment with Amcor came to an end with the proviso, of course, that it was when the employee was redundant"68. This consideration tended to contradict the submission of Amcor that the clause was concerned with a "position" disjoined from employment with any employer in particular, including with Amcor. For the Federal Court, the disjunctive theory did not fit with the employer-specific nature of the benefits for which the Agreement provided. The employer no longer needed the positions: Fourthly, once the view was taken that cl 55.1.1 referred only to "a position" with a particular employer (Amcor) the question whether such position "became redundant" was to be answered solely within the employment structure of that employer. Whatever arguments might exist concerning the non-redundancy of the employees, the restructuring of Amcor witnessed the redundancy of the "position" at least so far as Amcor's future needs were concerned. Amcor had moved out of the employment of employees in such a "position". Its employment establishment no longer needed such employees. The "position" was deleted from Amcor's employment catalogue. The fact that the "position" later reappeared in the employment establishment of other (even associated) employers was irrelevant to the language of cl 55.1.1 of the Agreement between the parties. That fact might give rise to other legal questions. But so far as cl 55.1.1 was concerned, the appearance of a position in the employment of someone else was adventitious. True though it was that such re-employment was the known intention and design of Amcor as part of its corporate restructure, for the purposes of the Agreement viewed on its 67 [2003] FCAFC 57 at [5]. 68 [2003] FCAFC 57 at [5]. Kirby own, this was irrelevant: it did not affect the liability of Amcor under the instrument which it had negotiated with the Union, and on which the Union relies. Vulnerability of benefits following retrenchment: Fifthly, to reinforce this view of the text, the Union was able to point to the purpose of the severance payments, being to protect employees in the specified circumstances by obliging employers to make adequate provision against redundancies and retrenchment for vulnerable employee credits for sick leave, annual leave and long service leave. Apart from the risks of measures expressly designed to avoid such obligations by the simple expedient of terminating employees, engaging them in the employ of a new insolvent company and then asserting that their "positions" were not redundant, the Union stressed that sick leave, annual leave and long service leave were highly employer-specific. The Union expressed scepticism concerning the suggested solutions offered by Amcor to the possible circumvention of the protection of cl 55.1.1 by techniques of retrenchment of employees of the party to such an Agreement and resuscitation of their "positions" with other employers where practical continuity of entitlements and recovery of benefits in the medium or long-run might be doubtful. These considerations were advanced as explanations, in the particular industrial context, of the need to view an employment "position" referred to in cl 55.1.1 as specific to the designated employer and not wholly at large as a theoretical "job" description. Ignoring fortuitous re-engagements: Sixthly, the failure of Amcor to notify the Union and negotiate with it over the attempted re-employment of the employees by another (associated) company was another argument deployed by the Union to suggest a breach by Amcor of its own obligations under the Agreement. Arguably, it was put, it amounted to a failure by Amcor to "give the maximum possible notice to the [U]nion of any permanent change affecting employment" as required by cl 55.4.1 of the Agreement and to initiate any "transfer" of employment or re-employment69 contemplated by the Agreement and the co-operation which the parties to the Agreement (relevantly Amcor and the Union) promised each other when they originally executed it70. In the event, in this case, the employees were accommodated by another employer related to Amcor. However, the Union made the point that this Court should construe the Agreement bearing in mind that such fortuitous re- engagement might not always be available, especially in circumstances of such 69 The Agreement, cll 55.5 (transfer to another location), 55.6 (re-employment). 70 The Agreement, cl 55.7.2. Kirby apparent employer unilateralism and high-handedness. The Agreement stood on its own terms. It gave rise to legal rights. If the Union were correct in its submission that "position" in cl 55.1.1 was employer-specific, those legal rights attached to Amcor. As such, the intervention of employment "positions" with other employers was, on this construction of the Agreement, factually accidental and legally irrelevant. It might not arise in other cases. On this footing, the Union urged an interpretation of the Agreement anchored firmly in its text. Consent a prerequisite to certification: Seventhly, a consideration lending to the employer-specific construction of cl 55.1.1 is the some support requirement of the Act that, to secure certification of an agreement by the Commission, it is necessary for the proposed agreement to be "approved by a valid majority of the persons employed at the time whose employment will be subject to the agreement"71. This requirement adds strength to the notion that the Agreement is specific to the parties to it. It addresses specifically the interests of the employees of Amcor concerned who have the chance to vote on the acceptance and hence, when it refers to "a position", that word is addressed to a position of an employee of the identified employer, not a "position" at large with Contextual considerations favour Amcor The imprecision of industrial instruments: By reference to the reasoning in the Full Court, I hope that I have demonstrated that the Union's arguments are far from weak. On the contrary, I consider that they are strong and I can understand the textual reasons that brought the judges of the Federal Court to the conclusions that they expressed. Nevertheless, I have ultimately come to accept that contextual considerations favour the construction urged by Amcor. I do not say that the contextual considerations are overwhelming. However, certified agreements such as this commonly lack the precise drafting of legislation73. As appears from a scrutiny of the provisions of the Agreement, it bears the common hallmarks of colloquial language and a measure of imprecision. Doubtless this is a result of the background of the drafters, the circumstances and possibly the urging of the preparation, the process of negotiation and the omission to hammer out every detail – including possibly 71 The Act, s 170LR(1). 72 cf the joint reasons at [24]. 73 Australian Communication Exchange Ltd v Deputy Commissioner of Taxation (2003) 77 ALJR 1806 at 1816 [56]; 201 ALR 271 at 284. Kirby because such an endeavour would endanger the accord necessary to consensus and certification by the Commission74. An indication that this is so can be seen in the apparently interchangeable references in the Agreement to the redundancy of "a position" and the redundancy of "an employee"75. The Agreement does not maintain a strict differentiation between the two notions, a point remarked upon by the Federal Court. Moreover, in providing for various circumstances where an employee or a position may be redundant, the Agreement mentioned four possibilities, although it is conceivable that three of them might overlap76. The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement77. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court78, of interpreting industrial instruments and especially certified agreements79. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed80: "It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely 74 cf Australian Communication Exchange Ltd (2003) 77 ALJR 1806 at 1815-1816 [54], [56]; 201 ALR 271 at 284. 75 For example the Agreement, cll 55.1.1, 55.2. 76 [2003] FCAFC 57 at [3] per Moore J, [41]-[42] per Marshall and Merkel JJ; cf the Agreement, cll 55.1.1, 55.2, 55.3, 55.5. 77 Australian Communication Exchange Ltd (2003) 77 ALJR 1806 at 1815-1816 [54], [56]; 201 ALR 271 at 284. 78 See, for example, Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1 at 5 per Mason CJ, Brennan, Dawson, Toohey and McHugh JJ, on the construction of the words "ordinary time rate of pay". 79 Australasian Meat Industry Employees Union v Coles Supermarkets Australia (1998) 80 IR 208 at 212 per Northrop J. 80 (1996) 66 IR 182 at 184 (emphasis added). See reasons of Callinan J at [129]- Kirby of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which And meanings which avoid might tend to some other reading. inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand." In the context, therefore, to conceive of a "position" as disjoined from the employment establishment of the particular company party to the Agreement (Amcor) does not occasion offence. In a more precise document, with a different context, history and purpose, the opposite conclusion might be reached. But giving this document the broad interpretation that is appropriate to a certified agreement under the Act, the submission advanced by Amcor is acceptable. But does it represent the preferable construction? "Redundant" and "retrenched" in context Reading words in context: Clause 55.1.1 establishes two requirements for redundancy payments to become due: first, a position must become "redundant" and, secondly, the employee must "subsequently be retrenched". In construing legal documents, courts interpret each phrase used in the context of the entire text81. The use of the terms "redundant" and "retrenched" elsewhere in the Agreement cast light on the meaning to be given to cl 55.1.1. I agree with the joint reasons82 that the manner in which these terms are employed elsewhere in the Agreement suggests that, when its drafters referred to positions becoming "redundant", they meant something more than a mere change of employer. Of itself this would not, under the Agreement, create redundancy. "Redundant" in the Agreement: For cl 55.1.1 to be engaged, the first requirement is that a position become "redundant". Clauses 55.2 and 55.5 refer to employees becoming "redundant" in two situations, "transfer to a lower paid job" and "transfer to another location" within the company. Necessarily, the reason such employees are considered "redundant" by the Agreement is that the 81 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381; see also Taylor v Public Service Board (NSW) (1976) 137 CLR 208 at 213 per 82 Joint reasons at [31]-[35], [50]-[53]. Kirby positions in which they were formerly employed have come to an end. Otherwise, such a transfer would constitute no more than a demotion or relocation. Reference in cl 55.2 to the effect that an employee "become redundant and be transferred to a lower paid job"83 indicates that something has happened to the original position to cause the transfer to occur. Secondly, although their employment continues, the employees in these situations are no longer performing the same task. By definition, were they to continue performing the same task, the position would not have become redundant. Nowhere in the Agreement is there reference to a "redundancy" where the position continues to exist, or where the employee continues to perform the identical function as he or she has previously done. "Retrenched" in the Agreement: The only occasions on which the Agreement uses the term "retrenched" are in the context of termination of employment with the effect of rendering the person concerned unemployed. Clause 55.7 obliges the parties to "find alternative employment for retrenched employees outside the Company"; to "assist retrenched employees to obtain Government compensation"; and to comply with the provisions of Div 3 of Pt VIA of the Act (exclusively concerned with termination of employment). It is assumed that a "retrenched employee" may require such help. I agree with the joint reasons84 that such assistance is only relevant to a person who has been terminated and become unemployed. It would be a curious requirement to impose with respect to an employee who continues working unabated. Indeed, such a construction would render cl 55.7 mischievous in its application. As the joint reasons also point out85, the "gainshare payment" provisions in cl 26 of the Agreement assume the employee's ongoing status within the enterprise, independent of structural change at the level of company ownership. Such arrangements, which are now common to industrial agreements, suggest that the positions in which such entitlements are generated also exist independently of such change. The objects of the Act: Certified agreements, such as the one presently under consideration, derive their binding force from the Act. As such, it is useful to consider the principal object of the Act in the light of the result in this case. Although not determinative in so large an Act, frequently amended since its original enactment in 1996, its principal object is a relevant consideration when one of its terms, or the terms of an instrument deriving from it, is in dispute. If 83 Emphasis added. 84 Joint reasons at [34]-[35]. 85 Joint reasons at [40]. Kirby possible, a court will construe a disputed clause in a way that is consistent with the purpose and object of the Act in question86. As this Court has observed87, such instruments are construed on the prima facie footing that its provisions are intended to give effect to harmonious goals. The principal object of the Act is "to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia"88. That object favours a construction, if available, of industrial agreements that will operate fairly to both sides and foster a co-operative workplace environment. As Callinan J notes in his reasons89, one of the purposes of an industrial instrument is to promote harmony in the workplace. With this background in mind, a concession by the primary judge in a given case that the result reached by him was potentially "contrary to commonsense", and even "unfair"90, would suggest that such a result was not that intended by the Act, nor by the Agreement certified under it, for the purpose of bringing to fruition the Act's objective in the Amcor workplace. In such a situation it is proper for this Court to scrutinise the instrument to examine whether there is a misconstruction on the part of the primary judge that has caused the result to miscarry. In this case there has been such a misconstruction. The meaning attributed to "redundant" by the judges of the Federal Court does not accord with the meaning of the word as it is repeatedly used in the Agreement. The positions did not cease to exist. They were therefore not "redundant". Redundancy under the Act: The fact that the Agreement was prepared for the certification of the Commission in accordance with the Act reinforces the lastmentioned point. It gives emphasis to the consideration that, where the Agreement talks of "redundancy", as it does in the heading to cl 55 and in the use of the adjective "redundant" throughout that clause, it does so in the special context of the meaning that has gathered around that word in Australia generally and in the industrial relations context in particular. 86 Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423. 87 Project Blue Sky Inc (1998) 194 CLR 355 at 381-382 [70] per McHugh, Gummow, 88 The Act, s 3 (emphasis added). 89 Reasons of Callinan J at [131]. 90 (2002) 113 IR 112 at 112, 117 per Finkelstein J. Kirby So viewed, judicial and arbitral decisions and statutory provisions suggest that what is essentially of concern in relation to redundancy in this context is the deprivation of long-term employment without fault on the part of the employee91. From the earliest considerations of the notion of redundancy by Australian industrial tribunals92, the concern has been over the specific injustice that results for employees who are retrenched after lengthy service93 and, as a result, face particular problems of re-employment arising from their past specialised skills, the unavailability of alternative work, the diminished career and security expectations and, in some cases, their age consequent upon long service with the employer who retrenches them for redundancy reasons94. In such circumstances, the immediate re-engagement of the relevant employees under identical or closely equivalent conditions would usually be regarded as a circumstance taking the case out of classification as one involving industrial "redundancy"95. Whilst, therefore, cl 55.1.1 of the Agreement has to be construed according to its terms, those terms, by referring to "a position" that becomes "redundant", must be accepted as referring to the particular problem which has been addressed in industrial relations law and practice in Australia over the past thirty years. This is the problem of employees becoming redundant, that is, being in excess of usefulness, superfluous to the needs of the relevant enterprise. So viewed, the circumstances of the present case, in many ways unique96, did not 91 Australian Federation of Air Pilots v Ansett ANA (1968) 122 CAR 951; cf In re Clerks (State) Award [1976] AR (NSW) 417 at 427-434. 92 Termination, Change & Redundancy Case (No 2) (1984) 9 IR 115 at 128; cf Arup, "Redundancy and the Operation of an Employment Termination Law", (1983) 9 Monash University Law Review 167; Yerbury and Clark, "Redundancy and the Law: the Position in mid-1983", (1983) 25 Journal of Industrial Relations 353; Shaw, Walton and McClelland, "New Dimensions in the Law Governing Termination of Employment", (1988) 1 Australian Journal of Labour Law 195. 93 The increase in the number of award provisions relating to redundancy was initially ascribed to the increasing rate of technological change: Mills and Sorrell, Federal Industrial Law, 5th ed (1975) at 148 [233]. 94 See Howard Smith Industries Ltd v The Seamen's Union of Australia (1968) 126 CAR 608; Merchant Service Guild of Australia v Department of Main Roads (NSW) (1971) 140 CAR 875; Brickworks Ltd v Brick Carriers' Association (1983) 25 AILR ¶53. 95 See Poon Bros (WA) Pty Ltd v Federated Liquor and Allied Industries Employees' Union (1983) 25 AILR ¶220. 96 cf joint reasons at [55]; reasons of Callinan J at [144]. Kirby enliven the kind of situation to which cl 55.1.1 should be taken to have been addressed. Put another way, cl 55.1 of the Agreement was designed, as the heading indicates ("Redundancy"), to provide remedies for a case of redundancy as ordinarily understood in this context. Redundancy with retrenchment as ordinarily understood in the context does not extend to the circumstances of this case. By reason of its certification, the Agreement was clearly intended to operate in conjunction with the provisions of the Act addressed to problems of termination of employment97. This fact reinforces the inference that the Agreement used the notion of redundancy in the ordinary industrial sense. I acknowledge that the language of cl 55.1.1 of the Agreement is in some respects different from the model or template provision originally proposed by the industrial tribunal for cases of redundancy98. To that extent, it might suggest that the parties to the Agreement decided to strike out on their own and that they should be held to their Agreement according to its terms. On the other hand, that Agreement had to operate in the environment of the Act with its specific provisions for redundancy99. This suggests that the parties would not have intended a meaning of "redundancy" different from the meaning of the notion in the Act under which the Agreement had been certified. The former federal industrial tribunal, in its principal decisions on redundancy, made it clear that "it was not our intention that the redundancy provisions should apply to the 'ordinary and customary turnover of labour'; an expression used by Mr Justice Fisher in his decision related to the Employment Protection Act in New South Wales"100. These contextual considerations lend additional support to Amcor's argument that the words "a position become redundant" in cl 55.1.1 of the Agreement should be given a broad reading and not one that is strictly literal, confining the word "position" only to "a position with Amcor". Application to employer successors: There is one further statutory problem for the Union's employer-specific interpretation of "a position". This is 97 The Act, ss 170CA-170HC. See joint reasons at [45]-[46]. 98 Termination, Change and Redundancy Case (1984) 8 IR 34 at 76. The Australian Conciliation and Arbitration Commission's model clause was expressed as follows: "an employee whose employment is terminated due to redundancy shall be entitled to the following severance payments …". 99 See, for example, the Act, s 170CL, referred to in the joint reasons at [46]. 100 Termination, Change & Redundancy Case (No 2) (1984) 9 IR 115 at 128. Kirby presented by the requirement of the Act101 that a certified agreement under the Act will bind a new employer who is a successor, transmittee or assignee of the whole or a part of the business of a former employer. In a stroke, this statutory provision – which is an important protection for the members of the Union – makes very difficult, if not impossible, the construction of cl 55.1.1 that confines the meaning of "a position", as there provided, solely to "a position" with the original employer, namely the Company (Amcor). Because of the statutory provision for transmission of employer liabilities under a certified agreement, it must be possible to read "a position", in cl 55.1.1 of the Agreement, as relating not only to a position with Amcor but also to a position with a successor, transmittee or assignee of Amcor102. Once this outcome is acknowledged (as the Act requires), the restriction of "a position" to "a position with Amcor" evaporates. It is not to the point that the present case is not, or may not be, an instance of such transmission under the Act. The mere possibility of such an application of the Act to the Agreement refutes the purist or literal interpretation of cl 55.1.1 urged for by the Union. Conclusion: the better view of the contested clause The likelihood is that considerations such as the lastmentioned one did not enter into the minds of those who drew cl 55.1.1103. However that may be, the task of construction is an objective, not a subjective, one. The Agreement, being certified under the Act, is to be understood in its statutory context. In such a context, the strict textual interpretation urged for by the Union is shown to have flaws. This leads the mind back to the notion of redundancy more generally in the Australian industrial relations setting. Viewing cl 55.1.1 of the Agreement in that way, the better view of its meaning is that, in the events that happened, the employees' "positions" did not become redundant. They continued to exist and were taken over by a company related to Amcor as part of its restructuring. The first condition for the operation of cl 55.1.1 was not fulfilled. This conclusion requires that the appeals be allowed. 101 The Act, s 170MB. 102 cf joint reasons at [47]-[49]. 103 Australian Communication Exchange Ltd (2003) 77 ALJR 1806 at 1816 [56]; 201 ALR 271 at 284. Kirby Orders I agree in the orders proposed in the joint reasons. Callinan Issue The question in this case is whether some former employees of a company became entitled to redundancy payments upon the cessation of their employment, even though they were subsequently engaged by the transmittee of the company's business, on the same terms and conditions, and with no loss of entitlements. The answer depends upon the construction of a certified agreement binding upon the parties to the appeal. Facts Until 1998, the appellant owned and operated four paper manufacturing mills in New South Wales, Queensland and Tasmania. The terms and conditions of employment of the appellant's employees were governed by an agreement ("the Agreement") certified by the Australian Industrial Relations Commission on 9 June 1998. The parties to the Agreement included, among others, the appellant and the first respondent, the Construction, Forestry, Mining and Energy Union. No employees were named as parties to the Agreement, although nothing turns on that in this appeal. There were also nine other agreements, the "satellite agreements", between the appellant and the first respondent, the purpose of which was to make provision for circumstances peculiar to each of the nine plants operated by the appellant. The clauses of the Agreement with which this appeal is concerned are unaffected by those satellite agreements. As a result of a corporate restructuring in June 1998, the appellant disposed of two of its paper mills (Shoalhaven and Maryvale) to a wholly owned subsidiary, Paper Australia Pty Ltd ("Paper Australia"). The assets of its other two mills (Burnie and Wesley Vale) were leased to Paper Australia and then sold to that company on 12 April 2000. Although it commenced operating the mills, upon its acquisition and leasing of them, Paper Australia did not engage the employees who worked in them. According to the terms of an agreement dated 14 December 1998 but deemed to have been effective from 1 July 1998, made between the appellant and Paper Australia, the employees continued to be employed by the appellant. That agreement provided that Paper Australia would discharge all of the appellant's obligations in respect of those employees. In February 2000, the appellant announced that it proposed to separate its packaging business from its fine paper manufacturing business. The separation was effected by a reduction of capital and a scheme of arrangement involving a demerger. The appellant's shares in Paper Australia were transferred to PaperlinX Ltd, another of its wholly owned subsidiaries. In the result the packaging business remained that of the appellant and the fine paper manufacturing business came to be owned by a company that was now a subsidiary of PaperlinX which was floated as a public company. To complete Callinan the separation, it was necessary for the appellant to make arrangements for the employees who worked at the four paper mills to be employed by Paper Australia. The proposal was that the appellant terminate their employment and Paper Australia offer to engage them. Accordingly, the appellant wrote to the employees of the four paper mills on 21 February 2000 notifying them that their employment by the appellant would end on 31 March 2000. The letter stated: "For your understanding and reassurance: • your employment will continue within the PaperlinX companies under the same terms and conditions; and • all your current benefits including continuity of service, salary/wage, superannuation and leave entitlements will remain unchanged. In relation to superannuation, arrangements are in place for all staff and employees who are members of the Amcor Superannuation Fund to continue in that fund. Employees who are members of the Pulp and Paper Workers' Superannuation Fund will also continue in that fund. There is no effect on superannuation benefits. Please accept this letter as notice that your employment with Amcor Limited will cease on 31st March 2000. Also enclosed is a letter of offer of employment from Paper Australia Pty Ltd, commencing 1st April Enclosed with the letter of termination was a letter of offer of employment from Paper Australia. The relevant part of the letter read: "I am writing to offer you employment with the operating company of your business, Paper Australia Pty Ltd (trading as Australian Paper), on the same terms and conditions as you currently enjoy. All benefits will be preserved, including continuity of service for all employment-related purposes, salary/wage, superannuation and accrued leave entitlements. We encourage you to accept this offer of employment effective 1st April 2000. Your acceptance of this offer will be confirmed by you reporting for duty at your usual workplace on your first normal working day on or after 1st April 2000 or, if you are on approved leave, on the first working day following the end of that leave." Employees accepted the offer by attending work on 1 April 2000. They continued to perform the same tasks as they had previously. The terms and conditions of their employment, including rates of pay and entitlements to leave were unaltered. Callinan At no stage did the appellant consult either the first respondent or its employees to inform them of its intentions with respect to the latter's employment before making the arrangements that it did. On 15 June 2000, the first respondent filed an application and statement of claim in the Federal Court. The first respondent sought orders pursuant to s 178104 of the Workplace Relations Act 1996 (Cth) (the "Act") imposing penalties upon the appellant for an alleged breach of cl 55 of the Agreement. The first respondent also sought orders that the appellant pay outstanding amounts owing to employees and interest thereon being amounts in respect of annual leave, long service leave and sick leave. Clause 55 is as follows: "REDUNDANCY Severance Payments Should a position become redundant and an employee subsequently be retrenched, the employee shall be entitled to the following payments: (a) All accumulated sick leave credits; (b) All accumulated annual leave credits; Pro-rata long service leave if the employee concerned has five or more years' continuous service with the Company; Three weeks' pay at the employee's ordinary weekly wage rate for each full year of service and pro-rata for part years provided that this amount does not exceed the amount the employee would have received up to nominal retirement age. The minimum payment for an employee with up to and including one year of service shall be three weeks' pay and the minimum payment for an employee with more than one year and up to and including two years' of service shall be six weeks' pay. The ordinary weekly wage rate is defined as the rate paid for the employee's normal classification, excluding overtime, 104 Although s 178 is a penalty provision, it also provides for the payment to employees of any unpaid entitlements, including superannuation, see s 178(6)-(7). Callinan but including (as applicable) shift allowance, skill and supervisory allowances, personal rates and all-purpose over- award payments. These payments are subject to the employee concerned continuing in employment to a date notified by the Company to the union. An individual employee's special circumstances may be taken into account provided this does not prevent production continuing to the agreed date. Transfer to Lower Paid Job Should an employee become redundant and be transferred to a lower paid job, the employee concerned shall: retain the hourly rate applicable to the redundant position on the basis of five weeks for each year of service and pro-rata for part years, up to a maximum of twelve months. Except for National Wage Case decisions or other increases based on the maintenance of the real value of wages, increases which occur after transfer will be absorbed up to the extent of the make-up. forfeit the right to retain the higher hourly rate of a redundant position if they refuse appointment to a higher paid position. the particular shall have accrued entitlements for long service leave, annual leave and sick leave up to the date of transfer calculated at the higher hourly rate applicable classification immediately prior to transfer, and a letter detailing the amount the calculation and guaranteeing calculated as a minimum payment they subsequently become eligible for such a payment will be given to the employee concerned. employee's General Option An employee who has opted for transfer to another classification in lieu of retrenchment shall have three months in which to change their mind and accept retrenchment terms which were available at the time of transfer. Callinan Undertakings By The Parties The Company undertakes to give the maximum possible notice to the union of any permanent change affecting employment, and not less than one month to each person whose employment is to be affected. It is understood by the parties that: the aim is to ensure that one month's notice does not become the standard period of notice; long term notice may create unnecessary concern unless there is a high degree of certainty that an individual will be affected by the change. The union and employees on their part, in the light of undertakings by the Company, undertake to ensure that: (a) During the period of notice given by the Company, operations will continue as normal; (b) With the aim of minimising retrenchments, they will accept employment of fixed-term labour and the working of overtime after consultation with replacement of people management voluntarily leaving during the notice period. to avoid Transfer to Another Location Where an employee accepts an offer to transfer to another location, and this necessitates selling their home and buying a home in another locality, they will be reimbursed the selling and legal costs for the two transactions, including removal costs and fares for themselves and their family, plus two weeks pay toward incidental expenses. In such cases no redundancy payments will apply to the employee. Re-employment In the event that the retrenched employee responds within fourteen days to an offer of re-employment, it is understood that the Company will maintain continuous service and preserve benefits relating to accumulated long service leave at the date of retrenchment. Callinan General In terminating the employment of an employee on account of redundancy, the requirements of Subdivision C of Division 3 of Part VIA of the Act. the Company will comply with The Company and the union will co-operate: to assist retrenched employees to obtain Government compensation as applicable; to try to find alternative employment for retrenched employees outside the Company; and to provide retraining for employees. Exclusion These retrenchment conditions do not apply where an employee retires due to age or ill-health or elects to retire early for personal reasons." Decision at first instance The trial in the Federal Court commenced on 20 March 2002 before Finkelstein J. The first respondent contended that the employees who were given notice by the appellant that their employment was terminated, had been made redundant within the meaning of cl 55 and had accordingly become entitled to severance payments. The first respondent claimed that the fact that most of the appellant's employees took up employment with Paper Australia did not deny the proposition that they had been made redundant. The appellant contended that no redundancy had occurred because the employees had continued to do the same work for the same remuneration at the same places with no diminution of their rights. Finkelstein J, on 13 May 2002 held that the appellant was liable to make the payments to the employees under cl 55.1 of the Agreement. His Honour's journey to that conclusion was an uneasy one. At the beginning of his reasons for judgment he said this105: "On the last occasion upon which I was required to construe an industrial instrument, I could apply the rule that the words mean what they say. But things are not always so easy. If the same rule were to be applied in this case then, on one view, the result may be an affront to commonsense." 105 (2002) 113 IR 112 at 112. Callinan And later, he said that it was "both contrary to commonsense and unfair" that the outcome of this case should be the opposite of what had been held in the leading industrial test case Termination, Change and Redundancy Case106 (the "TCR case"). In that case the Australian Conciliation and Arbitration Commission, as it then was, observed that it was not envisaged that severance payments would be made in cases of succession, assignment or transmission of a business107. On 27 June 2002, a notice of motion was filed by the second respondent, Mr Anderson, an employee of the appellant, seeking orders that he be added as a respondent to the proceeding on his own account, and as representing a number of other employees identified in his application. On 12 July 2002, Finkelstein J allowed this application and made an order for the payment of $88,677.30 to the second respondent on the same basis as the other orders that he had made. Decision of the Full Court The appellant appealed to the Full Court of the Federal Court (Moore, Marshall and Merkel JJ). The Minister for Employment and Workplace Relations intervened there, pursuant to s 471 of the Act, to support the appellant in its appeal. In dismissing the appeal, Marshall and Merkel JJ held that the trigger for the operation of cl 55, and the appellant's obligation to make severance payments, was its decision that it no longer required any of its employees to perform the work for it that they had formerly carried out. Their Honours were of the view that the hiring of the employees by a new employer was irrelevant to the question whether those employees had been retrenched within the meaning of cl 55 of the Agreement. Their Honours said108: "We agree with the primary judge that, properly interpreted, the word 'position' in cl 55 should be construed as referable to 'a job that an employee is performing for a particular employer'. When cl 55 is considered as a whole it is apparent that the expressions 'should a position become redundant' and 'should an employee become redundant' are used interchangeably. In that regard cl 55.1.1 which refers to a position becoming redundant, may be compared to cl 55.2, which refers to an employee becoming redundant." Moore J whilst adding some comments of his own generally agreed with the reasons of Marshall and Merkel JJ. 106 (1984) 8 IR 34 at 102-103. 107 (1984) 8 IR 34 at 75. 108 Amcor Ltd v Construction, Forestry, Mining and Energy Union [2003] FCAFC 57 Callinan Appeal to this Court The appellant argues in this Court that its liability to make severance payments to its employees under cl 55.1.1 was contingent upon the satisfaction of two conditions: that "positions" had become redundant; and, in consequence of that, the employees were retrenched. It argued that such liability never arose because, although the employees may have been dismissed by the appellant, their positions of employment had not been made redundant. It contended that redundancy was to be determined, not by whether there was a change of employer, but rather, by whether there was a discontinuity of employment in a particular position: that is, a cessation of employment to do the same work in the same place in unchanged conditions of employment. As the employees had enjoyed continuity of employment in their same positions, albeit with a new employer, the cessation of their employment with the appellant did not, of itself, therefore constitute a redundancy of position for the purpose of cl 55.1.1. The submissions of the Minister were to a similar effect. He did however call in aid of the construction advanced by him a statement by Madgwick J in Kucks v CSR Ltd109: "It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand." There is substance in the observations of Madgwick J in Kucks which I have quoted although it is not with any jargon of the workplace or a particular industry that the Court is concerned in this case. An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair 109 (1996) 66 IR 182 at 184. See also Northrop J in Australasian Meat Industry Employees Union v Coles Supermarkets Australia (1998) 80 IR 208 at 212. Callinan and just treatment of both employer and employees, and generally to promote harmony in the workplace. It is with the third of these that cl 55 of the Agreement is particularly concerned. It is important to keep in mind therefore the desirability of a construction, if it is reasonably available, that will operate fairly towards both parties. In this connexion it is not without significance that the primary judge adopted a construction which he thought to be not only arguably absurd, but also potentially unjust to the appellant. There is no doubt that there are repeated references in the Agreement to the appellant as the employer. On the other hand there are clauses in it and the satellite agreements binding on the parties specific to particular work sites and actual tasks to be performed, and the positions of those employees who were to perform them (eg cll 4 and 7). Clause 26 should also be noticed. It makes provision for profit sharing by the employees, and relates employees' annual entitlements to the return on investment of funds employed "in the business" and the average results of the "appellant group". Despite s 170MB110 of the Act, this 110 At the relevant time, s 170MB provided: "Successor employers bound an employer is bound by a certified agreement; and at a later time: (i) if the application for certification of the agreement stated that it was made under Division 2 – a new employer that is a constitutional corporation or the Commonwealth; or (ii) if the application stated that it was made under Division 3 – a new employer; becomes the successor, transmittee or assignee (whether immediate or not) of the whole or a part of the business concerned, then, from the later time: the new employer is bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and the previous employer ceases to be bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and a reference in this Part to the employer includes a reference to the new employer, and ceases to refer to the previous employer, to the extent that the context relates to the whole or the part of the business. (Footnote continues on next page) Callinan provision does not sit entirely comfortably with a proposition that the employees are employed in the same employment in the same positions because their entitlements do have the appearance of benefits unique to a particular relationship between employees and a particular employer of them. Other provisions of the Act which provide a framework for the certification and interpretation of the Agreement are of little assistance in construing the Agreement. Sections 170LB and 170LC of the Act do deal with the concept of a business but they also refer to "an employer". They accordingly give no indication of the preferable construction of the Agreement. Nor is it possible to obtain any assistance from ss 170MC and 170MD which contemplate an extension or variation of a certified Agreement. These provisions could perhaps have been sought to be invoked by the first respondent but it chose not to do so, leaving it for the Federal Court and this Court rather than the certifying tribunal to resolve the dispute the subject of the proceedings. Nothing however turns on that. In the event I have formed the opinion that the preferable of the available constructions is that the conditions stated in cl 55.1 have not been satisfied for these reasons. It is relevant, but alone, would not be decisive, that the employees here have suffered and will suffer no disadvantage. The result which the primary judge thought himself bound to pronounce was one that he thought could fairly be described as an affront to commonsense and unfair. That observation which is a correct one at least suggests that it is a result that the parties would not have intended when they made the Agreement. It is a duality of conditions that cl 55.1 requires to be satisfied: first, redundancy of a position, that is of a particular position of an employee, and secondly, retrenchment of the employee. Let it be accepted, as I think it must be, that the appellant's termination of the employees' employment constituted retrenchment of them, the question remains whether the positions of the employees became redundant. It is not possible, I think, to hold that a position has become redundant when the person filling it, continues to fill it, albeit with a different employer, and continues to do exactly the same work, at the same place for the same remuneration (except perhaps for a share of profits) during the same hours of work. And as for the share of profits, it may be – I express no concluded opinion on this because it was the Court that drew the parties' attention to the matter, and (2) Subsection (1) does not affect the rights and obligations of the previous employer that arose before the later time." Callinan the parties' advanced no considered arguments in relation to it – that the entitlement to it remains even though the two bases for its calculation are the amount of capital employed, and the profits made by a corporation, or the group of which it forms part, that is no longer their employer and has no other relevance to them. The internal indications in cl 55 certainly do not point one way. Clause 55.1.4 refers to the "Company", meaning thereby the appellant. So too, cl 55.4 requires the Company, that is the appellant, to give the maximum possible notice to the union of any permanent change affecting employment. It is likely that the demerger was a permanent change affecting the employees' employment. The requirement of notice by the appellant again suggests that the position of an employee, is a position as an employee of the particular employer, the appellant. On the other hand, cl 55.4.2 states one of the purposes of the requirement of notice is the minimisation of retrenchments, and cl 55.7.2 requires that the parties co-operate to assist "retrenched employees" to obtain Government compensation and to find alternative employment, and to be retrained. In the events that happened here no occasion arose for the seeking of alternative employment, compensation or retraining, a matter which implies not only that the employees have not been made redundant but also that they may not have even been retrenched within the meaning of cl 55.1.1 of the Agreement. The construction which I prefer is generally consistent with statements made in industrial tribunals in which industrial arrangements, awards and agreements have been considered. the TCR case111, the Australian Conciliation and Arbitration Commission considered that the purpose of severance pay was to compensate employees for the loss of non-transferable credits, such as accrued sick leave and long-service leave, as well as the inconvenience and hardship occasioned by redundancy112. The Commission said113: "However, we would make it clear that we do not envisage severance payments being made in cases of succession, assignment or transmission of a business." 112 (1984) 8 IR 34 at 73. 113 (1984) 8 IR 34 at 75. Callinan These comments were cited with approval by Ryan J in Stones & CEPU v Simplot Australia Pty Ltd114 and the Industrial Relations Commission in AMWU v United Milk Tasmania Limited115. In the former case, his Honour was required to construe a redundancy provision in an agreement that had no terms dealing with a transmission of business. Ryan J was of the view that the agreement should be read in light of the TCR case116 and did not contemplate the allowance of severance pay in circumstances in which there was a transmission of business117. In the other case that I have cited, the Commission dismissed an appeal from a decision of Commissioner Leary that five employees had not been made redundant upon a transmission of their employer's business to another company, which had offered to employ them, albeit at a lesser rate of pay. The Commission said118: "It would be unusual, bearing in mind the decision in the [TCR case], for an employer to be ordered to pay severance pay where there was a transmission of business and the employees continued their employment with the transmittee with their accrued entitlements maintained." The construction which I prefer has the advantage also, that it gives better effect to the primary meaning of the word "redundant" which the Oxford English Dictionary (2nd ed) 1989 gives as "abundant" and "superfluous, excessive, unnecessary; having some additional or unneeded feature or part". Although the employees here may have become superfluous to the requirements of the appellant, their positions did not. Section 170MB of the Act as it then stood has no direct bearing on this case but its presence and the presence of s 149(1)(d)119 are not irrelevant. What 114 (1997) 42 AILR ¶3-594. 115 Industrial Relations Commission, Print No S7351, 23 June 2000. 116 (1997) 42 AILR ¶3-594 at 3,494. 117 (1997) 42 AILR ¶3-594 at 3,494. 118 Industrial Relations Commission, Print No S7351, 23 June 2000 at [13]. 119 "Persons bound by awards Subject to any order of the Commission, an award determining an industrial dispute is binding on: (Footnote continues on next page) Callinan these sections are concerned with is the transmission of a "business" and their purpose is to ensure that when that occurs120, the transmittee be bound by a relevant certified agreement or award. There can be little doubt that Paper Australia, the new employer, was a transmittee of the business in which the employees were employed. To give cl 55 of the Agreement the meaning and operation that the Federal Court would give it would be to produce in the nature of disconformity between s 170MB of the Act and it in the sense that it would give the latter little or no relevant application to Paper Australia as a transmittee of a business in relation to the benefits in question. The result which I would hold to be the correct one is at least consistent with the ends that both of the sections seek to achieve. It was not argued by the appellant, and nor could it be for reasons which I shortly mention, that any claims on behalf of the employees were estopped by their continuing to do the work that they did after receipt of the letter offering them employment with their new employer, or that as a consequence of a tripartite contract between the appellant, their new employer and them, they had accepted, and were now contractually bound to accept, that they should look only to their new employer for their relevant entitlements because the offer that they accepted, both to cease work for the appellant and take up employment with Paper Australia, was an offer to substitute the latter as their employer, and the party obliged to confer the relevant benefits. This is so because certified agreements exist independently of contract, and it has been held by this Court that they operate with statutory force121. Employers and employees are bound by their terms and are incapable of contracting out of them, or derogating from them although employers may confer additional benefits on their employees by contract122. any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer." 120 See PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 201 CLR 121 Josephson v Walker (1914) 18 CLR 691 at 700 per Isaacs J; Ex parte McLean (1930) 43 CLR 472 at 479 per Isaacs CJ and Starke J; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 421 per Brennan CJ, Dawson and Toohey JJ. 122 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 421 per Brennan CJ, Callinan I do not overlook that care needs to be exercised for the protection of employees against their termination and denial to them of benefits, by unscrupulous employers, by, for example their transmission of mere shells of business enterprises, and the evasion of their obligations by putting their assets beyond the reach of employees otherwise entitled to recourse to them to gain their entitlements. It is likely that in that situation, a proper analysis of the true facts will show that employees' "positions" have in fact become, or will soon be redundant, and that therefore both of the relevant conditions have been satisfied. Every case will depend on its own specific facts. Nothing turns in my view however upon the fact that before the restructure was fully implemented, the appellant ceased to be the operator of the business or businesses in which the employees were employed. During this period, their work, their workplace, their remuneration, and the way in which their other entitlements accumulated were unchanged. They were not made redundant then anymore than they were when the transmittee of the appellant's business became their employer. It follows that the appeals must be allowed, the orders of the Full Court of the Federal Court of Australia be set aside, and that it be ordered that the respondents' applications be dismissed.

HIGH COURT OF AUSTRALIA APPELLANT AND RESPONDENT Hoyts Pty Limited v Burns [2003] HCA 61 9 October 2003 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 8 February 2002 and, in lieu thereof, order that the appeal to that Court be dismissed. On appeal from the Supreme Court of New South Wales Representation: D F Jackson QC with A J McInerney for the appellant (instructed by Herbert Geer & Rundle) B W Walker SC with P A Regattieri for the respondent (instructed by R J Rimes) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Hoyts Pty Ltd v Burns Negligence – Causation – Failure to warn customers that cinema seats retracted automatically – Respondent injured attempting to sit on a retracted seat – Whether Court of Appeal erred in interfering in primary judge's finding that warning sign would not have altered respondent's conduct. Appeal – Rehearing before Court of Appeal – Relevance of credibility findings – Whether primary judge's conclusion based upon assessment of credibility of party – Whether Court of Appeal erred in disturbing such conclusion – Whether Court of Appeal omitted to find error before substituting its own conclusion on the evidence. McHUGH, GUMMOW, HAYNE AND CALLINAN JJ. This appeal raises no difficult question of principle. It requires this Court to decide whether an intermediate Court of Appeal was justified in reversing orthodox and carefully considered findings of fact and credibility by a trial judge. The facts The appellant owns and exhibits films at the Hoyts Cinema Complex at Bankstown in Sydney. The respondent, who was working as a teacher's aide specializing in disabled children, attended the appellant's cinema complex on 17 March 1997. She was then aged about 47. She was accompanied by five adults and eight disabled young children. Her particular responsibility was Joshua, a boy of four years of age who could crawl very quickly but still required a wheelchair. The respondent did not go to the cinema regularly. She had never been to the Bankstown complex before. Indeed, by 17 March 1997 she had not been inside a picture theatre for many years. Neither outside or inside the theatre nor on the screen at any time was there exhibited a sign referring in any way to the seats in the theatre. The group of which the respondent was a member went down an aisle of the particular theatre where the film that they wished to see was being shown. They seated themselves in the front row. The lights of the theatre were on when the respondent entered. Because each seat automatically rose to rest at an angle of 70 degrees to the floor when there was no weight upon it, the respondent's seat must have been in an upright position immediately before she sat down on it. In order to sit upon it she must have exerted force of some kind upon it, either by pushing it or sitting down on it, to bring it to a position generally parallel to the floor. When the respondent seated herself, Joshua was in his wheelchair just to the right in front of her. After a time the lights darkened and the film started. Some light was emitted from the screen. Joshua became very agitated. He began to scream. The respondent thought that if he were taken out of his wheelchair he might calm down. As soon as the respondent placed him on the floor he quickly crawled away from her. She left her seat to retrieve him. He was screaming and kicking and apparently continued to do so as she attempted to resume her seat which had of course by then become upright again. This is how the respondent accounted for what followed: "Well, I had hold of him with my right arm, felt for what I thought was the seat, I sat down, I moved my arm like this and held him and when I sat down there wasn't any seat there but by the time I realised I had gone past the point of no return I couldn't stand up. ... I hit the metal bar and fell forward. ... The very bottom of my spine, the tailbone." The respondent suffered injuries as a result of the events which have just been described. The trial The respondent brought proceedings in the New South Wales District Court against the appellant for damages for negligence. The particulars that she alleged, and which involve what in this Court remain live issues, were that the appellant was negligent in failing to warn the respondent of the dangers from seats folding up when no weight was upon them and in failing to warn the respondent that, when looking after disabled children, her seat would rise should she need to leave the seat for any reason. The action was heard by Gibb DCJ in February 2001. Each of the parties engaged an expert whose written report was received in evidence. Neither of the experts gave oral evidence. The respondent's expert, Dr Emerson, an engineer, described himself as a In addition to asserting a number of specialist in accident analysis. argumentative matters he said that projecting obstructions, the hinged steel brackets which supported the seats, could have been eliminated by a better engineering design. It was not necessary for the brackets to be constructed so as to project 60 mm from the base of the seat: flat brackets "located closer to the underneath section of the chair without the need to project so far" would have sufficed. He also said that if this form of seating were to be used, the metal brackets should be covered with high density rubber or foam. Alternatively, the seats could be fixed as was the situation in a number of other theatres. He also suggested the provision of a sign to indicate to patrons that the seats had an automatic return to the upright position. The appellant's expert, Mr Eager, also an engineer, was of a quite different opinion. He was unaware of any Australian Standard covering theatre seating design. The installation of seats of the kind in use at Bankstown was a frequent occurrence. It had the advantage of allowing easier access by patrons and cleaners. The theatre complex at Bankstown had been in operation for about 10 years. It had a seating capacity of more than 2,400 people. No other previous incident of the kind which the respondent alleged to have occurred had been recorded. Notwithstanding that the respondent had alleged as a particular of negligence a failure to warn, the respondent initially gave no evidence of the effect that any warning had it been given might have had upon her. At the close of the appellant's case the respondent applied for leave to adduce further evidence to repair this omission. The application was opposed but over objection the primary judge allowed evidence as follows to be given: "[Counsel for the respondent]: Q. If you had been made aware by the way of signs as you came into the theatre, or a sign placed in front of your feet where you sat in the front row, or by a warning sign on the screen that these seats would retract and go back to an upright position by that, when you picked up the child and went back to the seat what would you have done in relation to placing yourself on that seat? [A.] Had there been signs there to warn me I would have been aware that the seat would retract and I would have made sure that the seat was completely down and held it down before I sat down. [Counsel]: That's the evidence of the [respondent], your Honour, on this position. CROSS-EXAMINATION [Counsel for the appellant]: Q. Mrs Burns, to be frank you don't know what your reaction would have been if there were signs, do you? I would have taken notice of the signs, had there been signs, and I would have been aware more aware to make sure, would have been aware to make sure that the seat, I had to pull the seat to sit down, yes. You see, you did have to pull the seat to sit down, didn't you? I didn't know that at that time. Q. Well, I suggest to you that you did, because you had to pull the seat down to sit on it, did you not? That was in the first instance. And it was under pressure that you pulled it down? I actually sat at the same time as I pulled the seat down. You knew that you had to put pressure on the seat from the time you started to push it down to be able to sit on it? No, I was not aware of that at all, I'm sorry. You see, how can you say now if there were signs in the theatre, that you would become aware of them? OBJECTION. HER HONOUR: I think it is a fair question in cross-examination. [Counsel for the appellant]: Q. How can you say now that if there were signs in the theatre that you would have become aware of them? Because I would have read the signs. How do you know you would have read them? A. Well, if there had of been signs on the walls, or on the floor, or on the screen, I would have read the sign. I can only say I would have read the signs. Do you agree what you are saying is mere speculation about what you would have done? That's very hard. No, I would still say that had there of been signs I would have read them and known that the seat retracted. You see, you came to the theatre with what you say was a group of highly disabled children, didn't you? That's correct. And these children needed a fair degree of care, didn't they? They do. And you had children spread in front of you, between you and the screen, didn't you? I had one to my right and one on a bean bag to my left that was for the other person, yes. So you don't know, you can't say now that [if] there were signs whether you would have seen them, or not? If the signs were as I came through the door, on the walls or in front of the screen itself, or on the front of the stage, I would have obviously seen them. How is it so obvious that you would have seen them? For the same way you can see the exit sign which was to my right. There was a sign with lights around it. It was quite noticeable. You couldn't help but miss that's where the exit was. You see, I suggest to you what you are saying is purely speculation of what you might have done if there were signs there. OBJECTION. QUESTION ALLOWED. I'm sorry, if I had of seen signs I would have been more aware to know I would have known the seat automatically retracts and I would have made sure that having that knowledge that I would have made sure that the seat was down." The primary judge reserved her decision. When she gave it she found against the respondent whom she described as an unreliable witness, whose evidence was to be treated with caution. Her Honour referred to a difference between the version of the accident that the respondent gave to Dr Emerson and the version that she gave in evidence, but we do not think that very much turns on that. She found that the respondent attempted to seat herself when under a misapprehension as to the height of the seat. The primary judge referred to the absence of the incidence of any similar events. She held that the cause of the respondent's injury was her miscalculation as to the position of the seat. Her Honour said that she did not find "that provision of the (front row) retracting seating as provided with the metal supporting pedestal was unreasonable in the circumstances of the cinema and its commercial operations, including the circumstances in which [the respondent] attended". The seats were not inherently dangerous because they retracted automatically when not under pressure, or because they were fitted with a protruding pedestal support structure. There was no relevant breach of duty by the appellant. Her Honour then considered the question of the need or otherwise for a warning. She pointed out that there was no evidence as to how and where a warning should have been given or the form that it might have taken. She was satisfied that a warning would have ensured that the respondent became aware that the seats retracted automatically when not under pressure but it did not follow that awareness would have changed her course of conduct. "What she would have done differently is a matter of pure speculation." Her Honour was of the opinion that the respondent's testimony to the contrary was not of "any weight, or credibility". She sought to locate the seat by touch and she may well have done exactly the same had she adverted to the fact that it retracted automatically. Her Honour concluded that portion of her judgment dealing with liability as follows: "I am not satisfied that a warning would have had any impact upon [the respondent's] consciousness or conduct in the circumstances. I do not find that had a warning [been] given, [the respondent] would have done other than as she did, with the same consequence. Assuming (although this is speculative) [the respondent] had read a warning to the effect that the seat pivoted upright automatically when not under pressure, I am not satisfied that [the respondent] would have acted upon such a warning and desisted from pursuing the course of conduct she adopted - relevantly seeking to seat herself without looking directly at her seat, holding the struggling Joshua in one arm across her chest, and locating the seat by touch. The [respondent's] claim of negligence by reason of lack of warning fails." The Court of Appeal An appeal by the respondent to the Court of Appeal of New South Wales (Sheller and Heydon JJA and Ipp AJA) succeeded.1 The leading judgment was given by Sheller JA with whom the other members of the Court agreed. The issues on the hearing of the appeal were the need or otherwise for a warning and its efficacy had it been given. Sheller JA said that the primary judge did not address the question whether a reasonable person in the position of the appellant would have foreseen that some persons returning to their seats in the dark might have assumed that the seats were still down as they left them because they did not know or realize that the seats were automatically retractable. His Honour had no doubt that a reasonable person conducting a cinema with automatically 1 Burns v Hoyts Pty Ltd [2002] Aust Torts Rep ¶81-637. retractable seats would foresee a risk of injury to persons returning to seats in the dark. "The chance of its occurring may be slight but the risk of injury if it does occur is substantial."2 A sign, "Take care. Seats retract automatically. Ensure your seat is down before you sit"3 should have been displayed in the foyer. His Honour went on to say that despite the primary judge's rejection of the respondent's evidence upon her recall there was4 "an overwhelming inference that a person, who did not know from observation or experience that the seats retracted automatically when she stood up but who read on a warning notice that they did, would have included that added piece of knowledge in the thinking processes in play when returning to the seat and would have taken care to ensure that the seat was down before she sat. ... This is not a case in which the impetuous nature of the [respondent's] conduct was such that it was unlikely that a mere sign would have deflected her from putting the seat down before she sat. The fact that the most upright plaintiff's recollection, after suffering a disaster, may move in the direction of saying that if only they had been warned they would have done something else, does not rule out a finding that they would, even if the evidence itself may be regarded as of less weight in the circumstances in which it was given. As [the primary judge] pointed out, the [respondent] was an intelligent and capable woman." The appeal to this Court The appellant has appealed to this Court upon the following grounds: "The Court of Appeal erred in: disregarding the trial Judge's finding that the Respondent's conduct would not have been different if a warning sign had been erected; not dealing with the trial Judge's finding as to the actual conduct of the Respondent immediately prior to her injury." 2 Burns v Hoyts Pty Ltd [2002] Aust Torts Rep ¶81-637 at 68,347 [20]. 3 Burns v Hoyts Pty Ltd [2002] Aust Torts Rep ¶81-637 at 68,347 [22]. 4 Burns v Hoyts Pty Ltd [2002] Aust Torts Rep ¶81-637 at 68,347 [23]. The appeal should be upheld. The reasons why this is so may be shortly stated and are these. First, the findings by the primary judge were based not only on a general impression of the respondent but also upon specific instances of unreliability, albeit not of conscious dishonesty. Secondly, the Court of Appeal had no sufficient regard to the circumstances in which the respondent came to give the evidence as to what she might or would have done had a warning sign been erected, in effect as an afterthought, at the close of the appellant's case. We do not suggest that this should be regarded as a decisive matter but it is at least as relevant a matter as the timing of a similar belated passage of evidence in Rosenberg v Percival5. And just as the evidence there was unpersuasive, the respondent's evidence here was unconvincing. Thirdly, with respect, it is not a likely, let alone "an overwhelming inference" that a person generally unfamiliar with retractable seats would have acted upon, or in any way have been affected by, a sign of the kind suggested. Apart from any question of whether the sign would have been read, it is far from clear that such a warning would invariably have been heeded. Fourthly, the so-called "overwhelming inference" was drawn in respect of a generality of persons, rather than the relevant person, the respondent, in respect of whom specific observations and comments had been made by the primary judge, and it was an inference that took no account of the particular circumstances that might affect an individual's conduct. Fifthly, and most importantly, the Court of Appeal had no proper regard to the fact that the respondent was so distracted by the disturbed child when she sat down that she was unlikely to have been acting with deliberation, and with any conscious awareness of a warning sign seen some time before, rather than impulsively. Having had her evidence rejected by the primary judge, the respondent then had the heavy burden of demonstrating from other evidence that she would have considered the warning and pulled the seat down before attempting to resume it. However, nothing in the evidence pointed positively to that (2001) 205 CLR 434 at 443-444 [24]-[27] per McHugh J, 463-464 [91]-[92] per Gummow J, 486-487 [158]-[159] per Kirby J, 504-505 [220]-[223] per Callinan J. conclusion. Indeed, the circumstances in which the respondent found herself suggested that she would have acted as she did. Hence the ultimate finding by the primary judge in the passage set out earlier in these reasons, where her Honour understandably used the term "speculative" to identify the hypothesis on which it was necessary to proceed. In the Court of Appeal, having identified an inference, said to be overwhelming, which was expressed in universal terms, the only qualification then offered with respect to the position of the respondent was that she was not a person whose conduct was "impetuous". However, that did not meet the circumstances of the particular case and the importance attached by the primary judge to the stressful and distracting situation in which the respondent attempted to resume her seat. There was no basis for intervention by the Court of Appeal in this case. The appeal should be allowed with costs. The orders of the Court of Appeal should be set aside and in place thereof the appeal to that Court should be dismissed. The respondent should pay the appellant's costs at first instance and of the appeal to the Court of Appeal. Kirby KIRBY J. The issues raised by this appeal6 concern whether the New South Wales Court of Appeal erred in disturbing a judgment reached at trial and, in that regard, whether the primary judge erred in dismissing the complaint that the plaintiff's injuries were caused by the negligent failure of the defendant to provide a suitable warning against the risk that befell her. The facts The relevant facts: Most of the facts relevant to my conclusions are set out in the reasons of McHugh, Gummow, Hayne and Callinan JJ ("the joint reasons")7. Ms Diane Burns (the respondent) was injured on 17 March 1997 at a cinema complex in Bankstown, near Sydney, owned by Hoyts Pty Ltd (the appellant). Whilst trying to control a four year old handicapped boy in her charge, who was screaming and kicking as she returned with him towards her seat in the darkened cinema, the respondent went to sit down. She moved her arm as if to feel for her seat. She was not aware that the seat was designed to retract towards the vertical plane. She only realised this when she had "gone past the point of no return". In consequence, she fell to the floor, missing the elevated seat and striking her coccyx at the base of her spine upon an uncovered protruding metal bar ("the pedestal"). That bar was part of the seat mechanism, positioned underneath the retracted seat. As a result of this blow, the respondent sustained a disc injury. Although the primary judge found that some of her testimony about her disabilities was "distorted by considerable exaggeration"8, she accepted that the impact of the pedestal on the spine had caused "serious consequences" especially coming on top of other disabilities from which the respondent suffered. The respondent sued the appellant in negligence. To establish the duty of care, and to define its scope, she alleged that she was an entrant on the appellant's premises pursuant to a contract negotiated for reward with the appellant. In these circumstances (which were not disputed) the duty owed by the appellant to the respondent was that of ensuring that "the premises are as safe for [the mutually contemplated] purpose as reasonable care and skill on the part of any one can make them"9. That explanation of the warranty relating to the safety of premises implied in a contract between an occupier and a person who enters under the 6 From a judgment of the Court of Appeal in Burns v Hoyts Pty Ltd [2002] Aust Torts Rep ¶81-637. Joint reasons at [2]-[8]. 8 Burns v Hoyts Pty Ltd, unreported, 20 February 2001, Gibb DCJ ("Reasons of the primary judge") at 20. 9 Maclenan v Segar [1917] 2 KB 325 at 332-333. Kirby contract has been accepted by this Court as a correct statement of the law10. It has also been accepted (and was not challenged in this appeal) that the restatement of the principles of the common law governing the liability of an occupier of premises11 has not replaced the particular duty owed to entrants In some ways (as would be expected by reason of the mutuality of the purposes of occupier and contractual entrant) the standard of care expected in cases involving contractual entrants is somewhat higher than that required where the relationship of the parties rests on nothing more than the "neighbourhood" principle13. Nevertheless, it remains a duty to exhibit "reasonable care and skill". It is not a duty of insurance against any risk of injury. The issues at trial: The respondent framed her case in various ways. Ultimately, two propositions were advanced to support her claim against the appellant in negligence. They were that the appellant had breached the duty owed to her in: Providing a seat of negligent design, with an unnecessary defect caused by the protrusion of the pedestal below the retracted seat which could expose to a risk of serious injury a person, such as the respondent, who for whatever reason missed the seat and fell to the floor; and Failing to warn the respondent and others who, like her, might be unaware of the design of the seat that caused it to retract towards the vertical plane, that this presented a danger against which persons resuming their seats should be conscious so that, before sitting, they would "force the seat down again". It is easy to feel sympathy for the respondent, working as a teacher's aide, trying to maintain control over the seriously handicapped child in her care. She was not young. She was slim and small in stature. She had a pre-existing unrelated disability in her right arm that limited her power of physical control over the young boy, disabled but highly mobile who was making a lot of noise 10 Watson v George (1953) 89 CLR 409 at 424; cf Jones v Bartlett (2000) 205 CLR 11 As in Hackshaw v Shaw (1984) 155 CLR 614; Papatonakis v Australian Telecommunications Commission (1985) 156 CLR 7 and Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479. 12 Calin v Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 38. 13 Donoghue v Stevenson [1932] AC 562 at 580. Kirby and disrupting the enjoyment of the film by others. The respondent gave evidence that she was not a regular film-goer; had not previously attended that cinema; and indeed had not been to a cinema since her own children were young14. The findings of the primary judge Finding as to injury: The primary judge accepted that the respondent did not know that the cinema seats, including her seat, had been retracted when she arrived at the cinema, the lights being then illuminated. Although, of necessity, she would have had to push her own seat down before initially occupying it, the judge accepted that "[s]he did not notice that her seat retracted when she got up to collect [the boy] immediately before the accident"15. The judge continued16: "I find that Ms Burns attempted to seat herself when under a misapprehension as to the height of the seat - assuming it to be where she had felt, being somewhat higher than it actually was. She recognised that there was a problem, but was unable to control her descent when the error became apparent (in part at least because she was carrying [the boy] and had only one arm free). Having located what she (mistakenly) thought was the edge of the lowered seat base, [she] then lowered herself so that she made no contact with the seat - ie, outside of the edge of that which she had located but mis-identified as the seat base. She thus attempted to lower herself through a plane that was outside the edge of what she thought was the seat base. [She] then speared (plunged?) down and backwards at an angle that was sufficient to ensure that she cleared the inclined seat base but collided with the recessed pedestal." Finding as to seat and design: The course taken at trial is explained in the joint reasons17. The primary judge gave short shrift to any suggestion that the cinema seats were dangerous in themselves and that retracting seats, which did not stay in a down position, were enough to make out a case of negligent breach 14 Reasons of the primary judge at 1. 15 Reasons of the primary judge at 6. 16 Reasons of the primary judge at 10. 17 Joint reasons at [9]-[17]. Kirby of duty18. Her Honour then turned to the complaint about the design of the particular seat containing the pedestal. She rejected that case, whilst noting the evidence of the respondent's expert, Dr Emerson, that it would have been possible to design a seat in which the pedestal was replaced with a hinge that was "flat and free of sharp edges [which do] not protrude and cause a hazard" or to cover such metal edges with "a high density rubber or foam to minimise the potential for injury"19. By reference to decisions of this Court concerning the requirements of accident prevention20, the primary judge dismissed the claim so far as it was based on the features, including the design features, of the cinema seat. She also found that, having regard to the way the respondent fell, any such design modifications would not have prevented the injury in the way the respondent received it. The issue of a warning sign: These conclusions left the respondent's case based on the appellant's alleged failure to warn. It was common ground that there was no warning, at least in the form of a notice displayed in the vestibule or included in the shorts, screened before the lights of the cinema were extinguished for the film, warning patrons that their seats would retract or pivot upwards when not under pressure21. The respondent's case concerning the warning that she claimed to be necessary was presented at trial in very general terms. True, the provision of a sign indicating that seats had an automatic return to the upright position was included in Dr Emerson's advice as one of the counter-measures that could have been taken by the appellant to avoid injury to a person such as the respondent22. However, there was no real elaboration of what any such sign would say; where it would be displayed to ensure it was noticed; and whether it would be screened in the cinema and if so whether, by that stage, any such warning sign would be too late because, by definition, most patrons would already be seated and those not distracted would already probably have noticed the design feature that led to automatic retraction of the seats when not in use. All such issues were left in a state of generality. No evidence was tendered to indicate that any such signs were displayed in other cinemas, theatres or public venues where retractable seats have long existed. 18 Reasons of the primary judge at 15-17. 19 Reasons of the primary judge at 16. 20 The primary judge in her reasons at 16, referred to Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301 and the dissenting reasons of McHugh J in Jones v Bartlett (2000) 205 CLR 166. 21 Reasons of the primary judge at 18. 22 Noted by the primary judge in her reasons at 16. Kirby After the conclusion of the evidence in the respondent's case, the primary judge pointed out that she had what she called "a spectacular lack of evidence as to what [the respondent] would have done if she was warned". There followed an exchange with counsel as to whether any such evidence would be admissible or helpful. However, the judge having raised the point, respondent's counsel (understandably enough) applied to reopen the evidence. Over objection for the appellant, the primary judge permitted the respondent to be recalled. The respondent then stated that "had there been signs there to warn me I would have been aware that the seat would retract and I would have made sure that the seat was completely down and held it down before I sat down". The respondent was cross-examined on this assertion. She stuck by her evidence. The exchange is extracted in the joint reasons23. The primary judge made a number of general observations about the credibility of the respondent. She accepted a submission for the appellant that she should treat the respondent as "being of little credit and view her evidence with considerable caution". Yet she went on to qualify this conclusion stating24: "I do not find that she was deliberately dishonest. On the contrary, I am of the view that Ms Burns now believes that of which she testified to be true. But that belief is not well founded." There are similar passages elsewhere in the reasons25. Against the background of these general findings, the primary judge added a specific conclusion in relation to the additional testimony that the respondent had been allowed to give concerning the effect that viewing a hypothetical warning sign would have had upon her. On this point, the judge was quite emphatic. She did not accept that the respondent's belated evidence had "any weight, or credibility"26. She pointed to the fact that the respondent was holding a struggling child, manoeuvring back to her seat and had imperfectly attempted to satisfy herself as to the location of the seat by touch. The judge concluded "[w]hat she would have done differently is matter of pure speculation"27. 23 Joint reasons at [13]. 24 Reasons of the primary judge at 1. 25 Reasons of the primary judge at 6. 26 Reasons of the primary judge at 19. 27 Reasons of the primary judge at 19. Kirby On the basis of this conclusion about the negative impact which any warning sign would have had upon the respondent's consciousness or conduct in the circumstances, the primary judge dismissed the claim based on the alleged lack of warning. It followed that the respondent's action failed. Judgment was entered for the appellant. The decision of the Court of Appeal Against that judgment, the respondent appealed to the Court of Appeal. In her grounds of appeal, she challenged the findings and conclusions of the primary judge. Specifically, she persisted with her claim based on the alleged design defect of the cinema seat as well as the alleged failure to give a warning of the retractable feature of the seat. The Court of Appeal, whilst noting the way in which, at trial, the case had been presented in terms of the alleged defect of the seat design28 confined itself to the issue of the lack of warning of the retractable features of the seat29. It did so on the basis that other grounds of appeal (including those relating to the suggested defects of design) were not pressed in argument30. The Court of Appeal defined the scope of the duty of care in terms of the general principles of negligence. In this respect it did not appear to notice the point made by this Court, following an earlier claim also based on a cinema injury, in Calin v Greater Union Organisation Pty Ltd31. That case affirms the continuing operation, in circumstances of contractual entrants, of the principles stated in Watson v George32. Nothing appears to turn on this different formulation of the scope of the duty of care accepted by the Court of Appeal. In this Court, the respondent did not suggest to the contrary. No notice of contention was filed raising this point, asserting a larger duty of care or seeking to revive the case at trial based upon the design defects of the cinema seat with its protruding pedestal. 28 [2002] Aust Torts Rep ¶81-637 at 68,344-68,345 [12]. 29 [2002] Aust Torts Rep ¶81-637 at 68,344 [13]. 30 [2002] Aust Torts Rep ¶81-637 at 68,346 [17]. 31 (1991) 173 CLR 33 at 38; cf at 44. 32 (1953) 89 CLR 409 at 424. Kirby The Court of Appeal's treatment of the suggested error of the primary judge was confined to two paragraphs of its reasons33. In the first, it postulated a simple and inexpensive warning in the cinema foyer bearing the words "Take care. Seats retract automatically. Ensure your seat is down before you sit". In the second, the Court of Appeal noted the primary judge's rejection of the respondent's additional evidence, when she was recalled. However, it went on to state that there was "an overwhelming inference" that a person so warned "would have included that added piece of knowledge in the thinking processes in play when returning to the seat and would have taken care to ensure that the seat was down before she sat"34. It was on this basis that the Court of Appeal proceeded to reach its own conclusion "on the material placed before the District Court"35. On that footing, judgment was entered for the respondent. A new trial was ordered to assess the damages. In this Court, the appellant contended that the Court of Appeal had erred in the performance of its appellate functions. Specifically, the appellant argued that, in the proper discharge of those functions, there was no basis for substituting an inference (still less an "overwhelming inference") that the posited warning would have caused the respondent to avoid the injury that befell her, contrary to the findings of the primary judge. The appellate error issue The first question is whether the Court of Appeal erred in the discharge of its functions in substituting its opinion on the issue related to the effect of a warning sign for that reached by the primary judge having regard to the adverse finding about the credibility of the respondent's evidence on that issue. That question takes this Court once again to a matter that has occupied it in a number 33 [2002] Aust Torts Rep ¶81-637 at 68,347 [22]-[23] per Sheller JA, Heydon JA and Ipp AJA agreeing. 34 [2002] Aust Torts Rep ¶81-637 at 68,347 [23]. 35 [2002] Aust Torts Rep ¶81-637 at 68,347 [25]. 36 eg State Rail Authority (New South Wales) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306; 160 ALR 588; Fox v Percy (2003) 77 ALJR 989; 197 ALR 201; Shorey v PT Limited (2003) 77 ALJR 1104; 197 ALR 410; Joslyn v Berryman (2003) 77 ALJR 1233; 198 ALR 137; Whisprun v Dixon (2003) 200 ALR 447. Kirby It is important to note that, in the discharge of its constitutional function37, this Court is not (as the Court of Appeal is) conducting an appeal by way of rehearing. As was pointed out in Fox v Percy38: "Our sole duty … is to determine whether error has been shown on the part of the Court of Appeal. This Court is not engaged in a rehearing. As such, it is not this Court's task to decide where the truth lay as between the competing versions of … the parties. Nevertheless, in considering the supposed error of the Court of Appeal, it is necessary to understand how, respectively, the primary judge came to his conclusion and the Court of Appeal felt authorised to reverse it." I would reject the suggestion that the Court of Appeal intruded upon the primary judge's factual conclusions without first determining for itself that her Honour had erred in deciding as she did39. Nor do I see in the reasons of the Court of Appeal any impermissible want of attention to the findings and conclusions of the primary judge. Those that were relevant were carefully described. There is no rudimentary mistake of this kind that calls for this Court's intervention in what, before us, is a strict appeal40. Nor do I believe that the oft stated41, and recently affirmed42, principle of restraint, limiting reversal of a primary judge's conclusion based on findings dependent on an assessment of the credibility or demeanour of a witness, was offended by the course that the Court of Appeal took in its reasoning. Once its jurisdiction was invoked, as it was by the respondent, the Court of Appeal was obliged by statute43 to decide the matter under appeal following a rehearing 37 Constitution, s 73. 38 (2003) 77 ALJR 989 at 996 [32]; 197 ALR 201 at 210. 39 cf Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 879-880 [65]; 179 ALR 321 at 40 Eastman v The Queen (2000) 203 CLR 1 at 12-13 [16]-[17], 24 [68], 35 [111]- [112], 96-97 [290]; cf 81-82 [248]-[249], 123 [370]-[371]. See also Fox v Percy (2003) 77 ALJR 989 at 995-996 [32]; 197 ALR 201 at 210. 41 Jones v Hyde (1989) 63 ALJR 349 at 351-352; 85 ALR 23 at 27-28; Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179; Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479, 482-483. 42 Fox v Percy (2003) 77 ALJR 989 at 995 [28]-[29], 1001 [65]; 197 ALR 201 at 209, 217; Whisprun v Dixon (2003) 200 ALR 447 at 470-472 [90]-[96]. 43 Supreme Court Act 1970 (NSW), s 75A. Kirby conducted, as in this case, on the record. By statute, the Court of Appeal enjoyed all the "powers and duties of the court … from whom the appeal is brought, including powers and duties concerning … the drawing of inferences and the making of findings of fact"44. Whilst an appellate court, which does not see or hear witnesses give their testimony, may not ordinarily reach conclusions different to those of the trial judge where such conclusions are dependent upon advantages enjoyed at trial and not on appeal, neither the character of the primary judge's conclusions nor the way her Honour expressed them presented an obstacle forbidding the Court of Appeal from performing its statutory powers and duties. In her expression of her assessment of the credibility of the respondent, the primary judge was quite careful. There was no blanket rejection of the respondent's testimony.45 On the contrary, different conclusions were expressed in relation to different parts of the respondent's evidence, in so far as it was relevant respectively to liability and damages. On the issue of liability, the primary judge accepted that the respondent was personally honest. She simply concluded that the respondent was mistaken in her assertions of what she would have done had she seen a warning notice alerting her to the fact that the cinema seats retracted. It is important to remember that the evidence on this point was only introduced because the primary judge called the suggested evidentiary omission to notice. Both trial counsel for the respondent and, later, trial counsel for the appellant protested that the "evidence" about what would have been done if a sign had been displayed was a matter of "speculation". So indeed it was. Whether or not, strictly, such evidence is admissible, it is commonly received in Australian courts46. Presumably this practice emerged once it was established that the relevant test of causation applicable in Australia was a subjective one47. Nevertheless, the evidence of what a claimant would have done if a non-existent 44 Supreme Court Act, s 75A(6)(b). 45 cf Whisprun v Dixon (2003) 200 ALR 447 at 451 [12]-[13]. 46 Chappel v Hart (1998) 195 CLR 232 at 272-273 [93.7]; Rosenberg v Percival (2001) 205 CLR 434 at 483-487 [153]-[159]; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 572. 47 In Canada and the United States of America an objective test has been adopted: Reibl v Hughes (1980) 114 DLR (3d) 1 at 16; Arndt v Smith [1997] 2 SCR 539; Canterbury v Spence 464 F 2d 772 at 791 (1972). However, the test in Australia is a subjective one: Rogers v Whitaker (1992) 175 CLR 479 at 492; Nagle v Rottnest Island Authority (1993) 177 CLR 423 at 433; Chappel v Hart (1998) 195 CLR 232 Kirby warning had been given by a hypothetical sign is so hypothetical, self-serving and speculative as to deserve little (if any) weight, at least in most circumstances48. In the present case, the evaluation of what the respondent would have done, if a sign of the kind devised by the Court of Appeal had been displayed, is truly a matter of hypothesis based upon an evaluation of circumstances that did not in fact occur, rather than an assessment of whether the respondent was telling the truth about her postulated belief in what she said in the additional evidence that the judge allowed. The primary judge's rejection of that evidence was not, ultimately, based (as she made clear) on a conclusion that the respondent's evidence in that regard should be dismissed because it amounted to deliberate lies. Instead, it was based upon the judge's assessment of the probabilities, reliant in turn, as she put it, on all the circumstances49. It was by reference to those circumstances that the judge decided that a warning would not have had any impact on the respondent's consciousness or conduct. In respect of drawing inferences about, and evaluating those circumstances, the Court of Appeal was, generally speaking, in as good a position to reach its own conclusions as was the primary judge. In Chappel v Hart50 McHugh J, as if foreseeing a case such as the present, remarked: "[G]iven that most plaintiffs will genuinely believe that they would have taken another option, if presented to them, the reliability of their evidence can only be determined by reference to objective factors, particularly the attitude and conduct of the plaintiff at or about the time when the breach of duty occurred. For that reason, the restrictions on appellate review laid down in Abalos … and other cases are likely to have little application." This is not, therefore, a case where credibility findings stood as a barrier to the performance by the Court of Appeal of its appellate functions. I agree with this much in the reasons of Callinan J in Fox v Percy51: Errors of fact (including 48 A point made in Ellis (1989) 17 NSWLR 553 at 582 per Samuels JA; cf at 560; Chappel (1998) 195 CLR 232 at 272 [93.7]; Rosenberg (2001) 205 CLR 434 at 486 49 Reasons of the primary judge at 20. 50 (1998) 195 CLR 232 at 246, fn 64. 51 (2003) 77 ALJR 989 at 1012 [131], 1014 [139], 1015-1017 [145]-[149]; 197 ALR Kirby in factual inferences) occur at trial. They can have very serious and sometimes unjust consequences. The statutory functions of appellate courts provide an important means to correct such errors. The invocation of credibility in the findings at first instance does not, without more, impose in every case an automatic barrier against the performance of appellate review as mandated by Parliament52. The joint reasons in Fox v Percy make this clear53. So does the statute. In each case it is necessary to analyse the role, if any, that credibility has actually played in the critical findings of the primary judge. The mere mention of credibility by the primary judge does not slam the door to effective appellate review of factual findings. It did not do so in this case. It remained for the Court of Appeal to perform its functions as explained by this Court in Warren v Coombes54 and later cases. There was therefore no error in this respect in the Court of Appeal's appellate approach. The requirement of a warning and causation The High Court's role: This leaves, however, the second attack of the appellant on the Court of Appeal's conclusion. In performing its function in a strict appeal, this Court is authorised by the Constitution, as carried into effect by the Judiciary Act 1903 (Cth)55, to "give such judgment as ought to have been given in the first instance". To this end, this Court is obliged to consider the way in which the Court of Appeal performed its function of rehearing and, allowing for any advantages that that Court may itself have enjoyed56, to substitute a judgment, being that which the Court of Appeal should have entered if error of law or fact is demonstrated57. 52 (2003) 77 ALJR 989 at 1016-1017 [148]; 197 ALR 201 at 238-239. 53 (2003) 77 ALJR 989 at 995 [30]-[31]; 197 ALR 201 at 209-210. 54 (1979) 142 CLR 531 at 551; cf Fox v Percy (2003) 77 ALJR 989 at 994-995 [25]- [29]; 197 ALR 201 at 208-209. 56 cf Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362 at 370; Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 879-880 [65]; 179 ALR 321 at 336-338; Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 77 ALJR 398 at 416-417 [95]; 194 ALR 485 at 510. 57 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 107-110. Kirby It is here, with respect, that I part company from Sheller JA, who gave the reasons for the Court of Appeal. I pay due regard to the fact that three experienced judges of the Court of Appeal concluded that the added ingredient of a warning notice would have been sufficient to forestall the injury to the respondent in the manner in which it happened. However, like the other members of this Court, I am unconvinced that the primary judge was wrong in her conclusion to the contrary. Cases on warning signs: The centrepiece of the respondent's argument, in defence of the conclusions of the Court of Appeal, was the reasoning of the majority of this Court in Nagle v Rottnest Island Authority58. Nagle was a case in which a plaintiff was injured when he dived into water at a swimming reserve and hit a submerged rock sustaining profound injuries. The statutory authority in charge of the reserve had promoted it for recreational purposes. It conducted the reserve "effectively … as a business, deriving revenue from visitors"59. The trial judge in Nagle had upheld the diver's submissions that the authority owed him a duty of care that extended to the provision of a warning about the presence of submerged rocks; that the risk of injury was reasonably foreseeable; and that the failure to provide a warning had constituted a breach of the duty of care. However, he dismissed the claim on the footing that the absence of a warning had not caused the diver's injuries. In short, it would not have averted the harm suffered60. Although the Full Court of the Supreme Court of Western Australia unanimously rejected the trial judge's analysis of causation61, by majority, it dismissed the diver's appeal on the basis that the authority had owed no duty to the appellant. In this Court, the primary judge's approach was upheld, except that his conclusion on the causation issue was reversed, resulting in a judgment in favour of the injured diver. The respondent in this appeal urged that consistency with the approach taken in Nagle sustained the result to which the Court of Appeal had come and the judgment in her favour. Even the dissenting opinion of Brennan J in Nagle62 determined the case against the plaintiff on the footing that there was no duty of care owed in the circumstances. On the issue of causation, Brennan J, like the majority, had been willing to accept that "a notice might have transformed the 58 (1993) 177 CLR 423. 59 (1993) 177 CLR 423 at 427. 60 (1993) 177 CLR 423 at 433. 61 Nagle v Rottnest Island Authority [1991] Aust Torts Rep ¶81-090. 62 Nagle (1993) 177 CLR 423 at 443. Kirby plaintiff's knowledge of the existence of [a danger] into a more lively appreciation of the danger"63. There is a resonance in these words with the language used in the Court of Appeal to explain its conclusion in this case. Since Nagle, two further cases involving the suggested failure to provide warnings have come before this Court. In neither case (nor in the present appeal) was the authority of Nagle questioned. In each case, there were differences of view concerning the suggested breach of duty to the injured plaintiff and whether the discharge of the duty of care in the circumstances required the provision of a specific warning. In neither case was the obligation to provide a warning upheld. Accordingly, in neither case was the issue of causation reached. In Romeo v Conservation Commission (NT)64 the case concerned the alleged failure of an authority to provide a barrier and a warning sign at the top of a cliff in a nature reserve to discourage persons in an intoxicated state, like the plaintiff, from approaching the cliff edge, the dangers of which were otherwise obvious. In Woods v Multi-Sport Holdings Pty Ltd65 the case concerned the suggested need to provide a warning against the special risks of indoor cricket with a ball having a commonly demonstrated propensity to enter the eye socket because of its softer, porous material. In Romeo, in the context of the issues fought in that case, I remarked66: "Where a risk is obvious to a person exercising reasonable care for his or her own safety, the notion that the occupier must warn the entrant about that risk is neither reasonable nor just." The dangers of taking this comment out of context and viewing it as a universal proposition of law were noticed in Woods67. In every case, it is necessary to evaluate the suggested need for, and effectiveness of, a warning by reference to the proved circumstances. In Woods, together with McHugh J68, I considered that the failure of the indoor cricket company which, for reward, provided facilities to entrants to its 63 (1993) 177 CLR 423 at 444. 64 (1998) 192 CLR 431. 65 (2002) 208 CLR 460. 66 (1998) 192 CLR 431 at 478 [123]. 67 (2002) 208 CLR 460 at 474 [45], 499-500 [127]. 68 (2002) 208 CLR 460 at 484 [80]-[81]. Kirby premises for the playing of that game, to provide a warning of the kind propounded69, constituted a breach of the duty of care owed to the players. Both McHugh J and I70 accepted that the issue of whether any such notice would have been effective to deter the plaintiff, a novice player, from playing and being injured involved a conclusion of fact that had to be determined in a retrial. However, a majority of this Court71 rejected the need for a notice, considering that the particular risks were self-evident and inherent in voluntary participation in the sport. The duty to warn entrants: Where does this series of decisions leave the requirement to give entrants upon premises a notice concerning risks present in the place? It would be erroneous for us to approach the present appeal on the basis that a warning sign was required if the authority of this Court was now to the contrary. No concession of the appellant or confirmation of its grounds of appeal could oblige this Court to approach the appeal in a way that was discordant with legal authority. However, whilst Nagle stands, it cannot be said that there is no such obligation. True, Romeo and Woods appear less favourable to the obligation to provide notices and more emphatic of the need in every case to show that the warning in such a notice would have prevented the injury that ensued72. To decide whether, in a particular case, a notice is required, it is necessary to take into account the social considerations that the law is seeking to advance. From the point of view of the occupier, it is seeking to encourage attention to, and consideration of, accident prevention by the party ordinarily with the superior means and interest to "keep abreast of publicly available or expert knowledge concerning the risks of injury in such activities"73. From the point of view of the entrant, the law is seeking to uphold that person's entitlement to make informed choices concerning the kind of risks in which he or she will participate on the basis of knowledge provided by the occupier. At the heart of the latter objective lies a conception of respect for individual autonomy that probably has its source in notions of fundamental human rights and human dignity74. 69 (2002) 208 CLR 460 at 484 [80]. 70 (2002) 208 CLR 460 at 484 [81]-[82], 501 [132]. 71 (2002) 208 CLR 460 at 474 [43] per Gleeson CJ, 501 [135], 503-504 [144] per Hayne J; 509 [159] per Callinan J. 72 Woods (2002) 208 CLR 460 at 484 [81]. 73 Woods (2002) 208 CLR 460 at 477 [60] per McHugh J. 74 Rosenberg (2001) 205 CLR 434 at 480 [145]. Kirby Considerations relevant to the obligation to provide a warning notice will include (1) whether the occupier has an economic or other interest in the entry of the plaintiff75; (2) whether, because of previous incidents, public discussion or otherwise the occupier could be expected to know of any particular risks against which warnings should be given76; (3) whether there was any hidden feature of the place or activity that might not be plain to an ordinary entrant but which should be known to, or reasonably discoverable by the occupier, calling for a warning77; (4) whether, if the risk eventuated, the consequences would be likely to be minor or significant for the person affected78; (5) whether the imposition of a requirement to give a notice could be confined to a particular place or places or would have large implications, costs and other consequences79; and (6) whether the nature of the activity in question was such as to render the presence of a sign irrelevant to the actual prevention of injury80. These, and doubtless other, considerations must be weighed in the particular circumstances, to decide whether the duty of care owed to the entrant extended to the provision of a warning and, if it did, whether a sign containing the warning would have prevented injury in the particular case. Decisions upon such questions are primarily the responsibility of trial judges or where they still exist, juries. But where an appeal is brought, appellate courts may, in appropriate cases, correct erroneous decisions reached at trial, as this Court did in Nagle81. 75 Nagle (1993) 177 CLR 423 at 427; Woods (2002) 208 CLR 460 at 477 [60]; cf Calin (1991) 173 CLR 33 at 38. 76 Woods (2002) 208 CLR 460 at 500 [128]. 77 Such as the porous features of the indoor cricket ball as considered by the minority in Woods (2002) 208 CLR 460 at 500-501 [129]. 78 Such as quadriplegia from striking submerged rocks difficult to see in certain circumstances in Nagle (1993) 177 CLR 423 at 426. 79 Such as the disfigurement of public places to little gain in accident prevention: Romeo (1998) 192 CLR 431 at 485 [140]; cf Allen, "Liability of a public authority as occupier: Romeo v Conservation Commission of the Northern Territory", (1997) 5 Torts Law Journal 7 at 16. 80 As the injury to an intoxicated person on a cliff edge in Romeo (1998) 192 CLR 431 or injury to a person who has attended ready to play indoor cricket as in Woods (2002) 208 CLR 460. 81 Nagle (1993) 177 CLR 423. Kirby The present appeal: With these considerations in mind, I return to the facts of the present appeal. Assuming that the provision of some form of warning sign would have been appropriate (a matter that the appellant did not formally concede) the circumstances, a sign of the kind postulated by the Court of Appeal would have prevented the respondent's injuries. issue for decision was whether, the factual Two reasons given by the primary judge for a negative answer to this question were not addressed, sufficiently or at all, in the reasons of the Court of Appeal. The first was that the respondent was materially distracted and preoccupied by a highly agitated child in her care and therefore unlikely to take into account the message in a sign, which message could only have been conveyed fleetingly if at all. The second, related, consideration was that the respondent's movement in seating herself was not a deliberate, conscious one. As indicated by her imperfect attempt to gauge the presence and height of the seat behind her, it was a hurried, virtually instinctive move, unsurprising in the circumstances. Conclusion: no error at trial: It was open to the primary judge to conclude that no added ingredient of notice of the retractable feature of the cinema seats would have altered the respondent's conduct in the circumstances. Although it was not impetuous, it was not advertent or carefully executed conduct. To this extent, the case was factually different from that presented in Nagle. Although in each case the occupier had an economic interest in the presence of the respective entrants, in Nagle it was the evidence of the plaintiff's "cautious approach to diving"82, accepted by the trial judge and revealed in uncontradicted evidence, that persuaded a majority of this Court that the plaintiff would have been deterred from diving by the installation of an appropriate sign. There was no such factual foundation in the present case to warrant reversing the primary judge's conclusions. To some extent those conclusions would have been influenced by an assessment of the respondent's likely conduct in the circumstances hypothesised. It was in this respect, rather than in evaluations of credibility, that the primary judge had advantages that could not be wholly recaptured by the Court of Appeal. They lent weight to the conclusion that her Honour reached on the evidence. That conclusion was not shown to be wrong. This opinion is sufficient to require the restoration of the primary judge's judgment in favour of the appellant. It is unnecessary to decide whether the discharge of the appellant's duty of care extended to the obligation to provide a warning sign such as the Court of Appeal devised. But it would be a mistake to infer from Romeo and Woods that the provision of warnings by occupiers to entrants upon their premises is no longer part of the law. Nagle clearly holds to 82 Nagle (1993) 177 CLR 423 at 433. Kirby the contrary. Common sense and frequent experience confirm that notices can be important means of accident prevention. Orders I agree in the orders proposed in the joint reasons.

HIGH COURT OF AUSTRALIA Matter No P37/2018 HELICOPTER TJUNGARRAYI & ORS APPELLANTS AND STATE OF WESTERN AUSTRALIA & ORS RESPONDENTS Matter No P38/2018 KN (DECEASED) AND OTHERS (TJIWARL AND TJIWARL #2) APPELLANTS AND STATE OF WESTERN AUSTRALIA & ORS RESPONDENTS Tjungarrayi v Western Australia KN (deceased) and Others (Tjiwarl and Tjiwarl #2) v Western Australia [2019] HCA 12 17 April 2019 P37/2018 & P38/2018 ORDER Matter No P37/2018 Appeal allowed. Set aside the orders of the Full Court of the Federal Court of Australia made on 16 March 2018 in proceeding WAD 444 of 2017 and, in their place, order that the appeal to the Full Court be dismissed. Matter No P38/2018 Appeal allowed. Set aside orders 1 and 2(c) made by the Full Court of the Federal Court of Australia on 1 February 2018 in proceeding WAD 218 of 2017 and, in place of order 1, order that the appeal be allowed in part. On appeal from the Federal Court of Australia Representation S A Glacken QC with S J Wright SC for the appellants in each matter (instructed by Central Desert Native Title Services) J A Thomson SC, Solicitor-General for the State of Western Australia, with G J Ranson for the first respondent in each matter (instructed by State Solicitor's Office (WA)) Submitting appearances for the third respondent in P37/2018 and the third to tenth, twelfth, thirteenth and sixteenth respondents in P38/2018 No appearance for the second respondent in P37/2018 and the second, eleventh, fourteenth and fifteenth respondents in P38/2018 Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tjungarrayi v Western Australia KN (deceased) and Others (Tjiwarl and Tjiwarl #2) v Western Australia Aboriginals – Native title rights – Extinguishment of rights – Where s 47B of Native Title Act 1993 (Cth) provides that any historic extinguishment of native title rights and interests is to be "disregarded" for purposes of claim for determination of native title rights and interests over vacant Crown land – Where s 47B(1)(b)(i) provides that provision does not apply if relevant area is covered by "lease" – Where s 242(2) relevantly provides that "[i]n the case only of references to a mining lease, the expression lease also includes a licence ... or an authority" – Where native title claim groups sought native title determinations over land including parcels of unallocated Crown land – Where claim areas intersected with areas covered by petroleum exploration permits granted under Petroleum and Geothermal Energy Resources Act 1967 (WA) or mineral exploration licence granted under Mining Act 1978 (WA) ("exploration tenements") – Where native title right to exclusive possession had been extinguished – Whether exploration tenements were "lease[s]" within exclusion in s 47B(1)(b)(i). Words and phrases – "declared to be or described as a lease", "disregarded", "extinguishment", "historic extinguishment", "in the case only of references to", title", "lease", "mineral exploration "non-extinguishment principle", "petroleum exploration permit", "principle of non-discrimination", "textual reference". licence", "mining lease", "native Mining Act 1978 (WA), Pt IV Div 2. Native Title Act 1993 (Cth), ss 47B, 242, 243, 245, 253. Petroleum and Geothermal Energy Resources Act 1967 (WA), Pt III Div 2. KIEFEL CJ, BELL, KEANE AND EDELMAN JJ. Generally speaking, when native title rights and interests are extinguished the extinguishment is permanent1. The rights and interests do not revive even if the act that caused the extinguishment ceases to have effect2. However, where any of s 47, s 47A or s 47B of the Native Title Act 1993 (Cth) ("the NTA") applies, prior extinguishment of native title rights and interests may be "disregarded" for the purposes of a claim to establish native title. In particular, s 47B provides that any historic extinguishment of native title rights and interests is to be disregarded for the purposes of a claim for a determination of native title rights and interests over vacant Crown land. However, by virtue of s 47B(1)(b)(i), the provision does not apply if the relevant area of land is "covered by a ... lease". These appeals raise for consideration the meaning of the word "lease" in this context. The claims Each of the present appeals arises out of a claim for a determination of native title by a claim group. In each claim there were, in the terminology of the Land Administration Act 1997 (WA) ("the LAA"), parcels of unallocated Crown land occupied by claim group members3. In each claim the traditional laws and customs acknowledged and observed by the native title claim group in relation to the claim area conferred rights to possession, occupation, use and enjoyment of the claim area to the exclusion of all others. The right to exclusive possession had been extinguished by acts of partial extinguishment that occurred before the enactment of the NTA, but non-exclusive rights to access, use and remain on the claim area remained recognisable as native title rights. In each claim the claim group argued that the right to exclusive possession could be recognised as a native title right if the historic extinguishment of that right could be disregarded under s 47B of the NTA. The State of Western 1 Native Title Act 1993 (Cth), s 237A; Fejo v Northern Territory (1998) 195 CLR 96 at 131 [56]-[58]; [1998] HCA 58; Western Australia v Brown (2014) 253 CLR 507 at 523 [39]; [2014] HCA 8. 2 See Native Title Act 1993 (Cth), s 237A. 3 Section 3(1) of the LAA defines "unallocated Crown land" to mean land "in which no interest is known to exist, but in which native title within the meaning of the [NTA] may or may not exist" and land "which is not reserved, declared or otherwise dedicated under [the LAA] or any other written law". Bell Edelman Australia countered that s 47B did not apply to the extent that the relevant areas were covered by petroleum exploration permits or mineral exploration licences because each such permit or licence was a "lease" within the exclusion in s 47B(1)(b)(i). In Matter No P37 of 2018 ("the Ngurra matter"), the issue is whether a petroleum exploration permit granted under the Petroleum and Geothermal Energy Resources Act 1967 (WA) ("the Petroleum Act") is a "lease" within the meaning of s 47B(1)(b)(i). The issue arose because parts of the claim area intersected with parts of the permit areas covered by petroleum exploration permits EP 451 and EP 477. In Matter No P38 of 2018 ("the Tjiwarl matter"), the issue is whether a mineral exploration licence granted under the Mining Act 1978 (WA) is a "lease" within the meaning of s 47B(1)(b)(i). The issue arose because parts of the claim area intersected with parts of the licence areas covered by several mineral exploration licences. By the time of the appeal to the Full Court of the Federal Court, only mineral exploration licence E57/676 was in issue. For convenience, petroleum exploration permits and mineral exploration licences will be referred to collectively as "exploration tenements". Native Title Act Section 47B deals with claims for native title determinations pursuant to s 225 of the NTA relating to vacant Crown land. Section 47B(1) identifies the circumstances in which the provision applies. It is in the following terms: "This section applies if: a claimant application is made in relation to an area; and (b) when the application is made, the area is not: covered by a freehold estate or a lease; or reservation, proclamation, dedication, covered by a condition, permission or authority, made or conferred by the Crown in any capacity, or by the making, amendment or repeal of legislation of the Commonwealth, a State or a Territory, under which the whole or a part of the land or waters in the area is to be used for public purposes or for a particular purpose; or Bell Edelman (iii) subject to a resumption process (see paragraph (5)(b)); and (c) when the application is made, one or more members of the native title claim group occupy the area." By operation of s 47B(2), any previous extinguishment by the creation of any prior interest in relation to the claim area must be disregarded for all purposes under the NTA in relation to the application identified in s 47B(1). Further, s 47B(3) relevantly provides: "If the determination on the application is that the native title claim group hold the native title rights and interests claimed: the determination does not affect: the validity of the creation of any prior interest in relation to the area". Within Div 3 of Pt 15 of the NTA, s 241 provides that "[t]his Division contains definitions relating to leases". Section 242 provides: "(1) The expression lease includes: a lease enforceable in equity; or a contract that contains a statement to the effect that it is a lease; or anything that, at or before the time of its creation, is, for any purpose, by a law of the Commonwealth, a State or a Territory, declared to be or described as a lease. In the case only of references to a mining lease, the expression lease also includes a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory." A licence or authority that would not otherwise be recognised as a lease may be a lease for the purposes of select provisions of the NTA by reason of the operation of s 242(2). So much is expressly recognised by s 243(2). Section 243 provides: Bell Edelman "(1) Subject to subsection (2), the expression lessee includes any person who, by assignment, succession, sub-lease or otherwise, acquires, enjoys or is entitled to exercise any of the interests under the lease of a lessee (including of a person who is a lessee because of another application or applications of this section). In the case of a lease that is a mining lease because of subsection 242(2) (which covers licences and authorities given by or under laws), the expression lessee means: the person to whom the licence mentioned in that subsection was issued, or the authority so mentioned was given; or any person who, by assignment, succession or otherwise, acquires or enjoys the licence or authority or is entitled to exercise rights under the licence or the authority." Sections 242(2) and 243(2) contemplate that an authority or licence may be identified as "a lease that is a mining lease" for the purposes of an operative provision of the NTA by reference to a mining lease in that provision. Section 245 defines a "mining lease" as one kind of lease. Section 245(1) provides: "A mining lease is a lease (other than an agricultural lease, a pastoral lease or a residential lease) that permits the lessee to use the land or waters covered by the lease solely or primarily for mining." As s 241 declares, ss 242 and 245 are "definitions relating to leases". Section 242(2) works together with s 245(1) so that where an operative provision of the NTA refers to a mining lease, the mining lease to which reference is made is taken to include a licence or authority that would not otherwise be recognised as a lease for the purposes of the Act. But the meaning of the term "mining lease" in s 245(1) is not itself expanded by the operation of s 242(2). To read the provisions in that way would be to fail to recognise that they work together to provide definitions relating to leases, and would deprive the condition upon the operation of s 242(2) expressed in its prefatory words of its intended effect. It would be as if the prefatory words of s 242(2) were "[i]n the case of s 245(1)". Division 4 of Pt 15 contains further definitions. In particular, s 253 defines "mine" in the following way: Bell Edelman "mine includes: explore or prospect for things that may be mined (including things covered by that expression because of paragraphs (b) and (c)); or extract petroleum or gas from land or from the bed or subsoil under waters; or quarry; but does not include extract, obtain or remove sand, gravel, rocks or soil from the natural surface of land, or of the bed beneath waters, for a purpose other than: extracting, producing or refining minerals from the sand, gravel, rocks or soil; or processing the sand, gravel, rocks or soil by non-mechanical means." Exploration tenements The rights conferred by the exploration tenements in this case are characteristic of the kind of licence or authority that may be taken to have been in the contemplation of the drafter of s 242(2) of the NTA. It is readily apparent from a review of the rights conferred on holders of exploration tenements that the relatively exiguous rights so conferred are a far cry from the rights characteristic of a lease in the usual sense of the word, particularly the right of exclusive possession4. Division 2 of Pt III of the Petroleum Act provides for the grant of petroleum exploration permits and petroleum drilling reservations. application for a petroleum exploration permit may be made under ss 30 and 31. The application may be refused or granted under s 32. The rights conferred by a petroleum exploration permit are set out in s 38(1), which provides: "A petroleum exploration permit, while it remains in force, authorises the permittee, subject to this Act and in accordance with the conditions to 4 Radaich v Smith (1959) 101 CLR 209 at 222; [1959] HCA 45; Goldsworthy Mining Ltd v Federal Commissioner of Taxation (1973) 128 CLR 199 at 213; [1973] HCA 7; cf Mabo v Queensland [No 2] (1992) 175 CLR 1 at 69; [1992] HCA 23. Bell Edelman which the permit is subject, to explore for petroleum, and to carry on such operations and execute such works as are necessary for that purpose, in the permit area." Section 43 provides that a petroleum exploration permit may be granted subject to such conditions as the Minister specifies in the permit, including conditions with respect to work in or in relation to the permit area. Section 15 provides that, subject to the Act and certain conditions, the authority conferred by s 38 is exercisable on any land within the permit area. Section 91B provides that conditions may prohibit the holder from entering specified land. Section 117 provides that operations must be conducted in a manner that least interferes with the surface of any land and with other rights and uses. Division 2 of Pt IV of the Mining Act provides for the grant of mineral exploration licences. An application for a mineral exploration licence may be made under s 58, and the application may be refused or granted under s 59. Section 62 provides that expenditure conditions attach to a licence, and s 63 provides for conditions not to use ground disturbing equipment without approval of a works program and to backfill all disturbances. Other conditions may be imposed under s 63AA to prevent injury to land. The rights conferred on the holder of a mineral exploration licence are set out in s 66: "An exploration licence, while it remains in force, authorises the holder thereof, subject to this Act, and in accordance with any conditions to which the licence may be subject – to enter and re-enter the land the subject of the licence with such agents, employees, vehicles, machinery and equipment as may be necessary or expedient for the purpose of exploring for minerals in, on or under the land; to explore, subject to any conditions imposed under section 24, 24A or 25, for minerals, and to carry on such operations and carry out such works as are necessary for that purpose on such land including digging pits, trenches and holes, and sinking bores and tunnels to the extent necessary for the purpose in, on or under the land; to excavate, extract or remove, subject to any conditions imposed under section 24, 24A or 25, from such land, earth, soil, rock, stone, fluid or mineral bearing substances in such amount, in total Bell Edelman during the period for which the licence remains in force, as does not exceed the prescribed limit, or in such greater amount as the Minister may, in any case, approve in writing; to take and divert, subject to the Rights in Water and Irrigation Act 1914, or any Act amending or replacing the relevant provisions of that Act water from any natural spring, lake, pool or stream situate in or flowing through such land or from any excavation previously made and used for mining purposes and subject to that Act to sink a well or bore on such land and take water therefrom and to use the water so taken for his domestic purposes and for any purpose in connection with exploring for minerals on the land." Pursuant to s 67, the holder of a mineral exploration licence has priority for the grant of a mining lease, which confers rights to extract minerals, or a general purpose lease to use the land for purposes directly connected with mining operations, in respect of any part of the land the subject of the licence. The Tjiwarl matter In the Federal Court of Australia, Mortimer J held that the mineral exploration licence was not a "lease" within the meaning of s 47B(1)(b)(i)5. On appeal, the Full Court of the Federal Court of Australia (North, Dowsett and Jagot JJ) disagreed, holding that the mineral exploration licence was a "lease" within s 47B(1)(b)(i). Their Honours reasoned as follows6: "The defined word 'mine' in s 253 of the NTA is a verb. The verb includes 'explore or prospect for things that may be mined'. By s 253, this meaning must be given to 'mine' in the NTA, unless the contrary intention appears. It follows that cognate words, such as 'mining', are to be construed consistently with the word 'mine' (s 18A of the Acts Interpretation Act 1901 (Cth)). The scheme established by Div 3 of Pt 15 is clear. There is no reason not to give the word 'mining', wherever it appears in Div 3, the meaning given to 'mine' by s 253. Accordingly, when s 245 refers to a 5 Narrier v Western Australia [2016] FCA 1519 at [1207]. 6 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 539 Bell Edelman mining lease being a lease that permits land to be used solely or primarily for the purpose of 'mining', the word 'mining' is to be given the same meaning as 'mine' in s 253. As a result, a lease that permits the lessee to use land solely or primarily for exploring or prospecting for things that may be mined is a lease that permits use of the land solely or primarily for mining. Where the contrary is intended, as for example in s 26C(4)(c)(i) of the NTA, express words are used. Thus, s 26C(4)(c)(i) refers to 'mining for opals or gems (other than mining consisting of exploring, prospecting or puddling)'. And to work out what 'lease' and 'lessee' mean in s 245, the answers are to be found in s 242(2) (references to 'mining lease' includes a licence issued or authority given) and s 243(2) (in the case of a lease that is a mining lease because of s 242(2), the expression lessee means the person to whom the licence was issued or authority given and their successors)." Their Honours went on to describe as "untenable" the argument that s 242(2) applies only where the words "mining lease" appear in the operative provision of the NTA, so that s 47B(1)(b)(i) was not engaged by the mineral exploration licence. Their Honours held that in the context of Div 3 of Pt 15, "mining leases" are a kind of lease, and that the purpose of ss 242(2) and 243(2) is to ensure that instruments described in the laws from which they are derived as licences or authorities to mine7 are taken to be mining leases, and thus leases, for the purposes of the NTA8. Their Honours concluded9: "The reference to 'lease' in s 47B(1)(b)(i) of the NTA thus includes any mining lease. And 'mining lease' includes any licence to mine. And a licence to mine includes a licence to explore or prospect things to mine. As a matter of construction, accordingly, the primary judge erred in concluding ... that a 'mining lease' involves a narrower concept than that of the defined verb 'mine'." 7 Which includes exploring or prospecting for things to mine by virtue of s 253. 8 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 540 9 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 540 Bell Edelman The Ngurra matter In the Federal Court, Barker J followed Mortimer J's decision at first instance in the Tjiwarl matter, and held that neither of the petroleum exploration permits is a "lease" within s 47B(1)(b)(i)10. On appeal to the Full Court, the claim group conceded, subject to a presently immaterial qualification, that the decision of the Full Court in the Tjiwarl matter was not distinguishable, and accepted that the Court would be bound to follow it. The Full Court (North, Jagot and Rangiah JJ) declined11 to hold that the decision of the Full Court in the Tjiwarl matter was wrong, and proceeded to apply the same reasoning to the petroleum exploration permits in Section 242(2) of the Native Title Act Section 242(2) is expressly conditioned in its operation by the prefatory words, "[i]n the case only of references to a mining lease". This condition requires a "reference" to a mining lease in the operative provision of the NTA in any particular case. The condition is not satisfied by an operative provision that does not make reference to a mining lease. In each matter, the Full Court's reasoning fails to recognise that, according to the ordinary and natural meaning of s 242(2), it is engaged only where the operative provision of the NTA contains an express textual reference to a "mining lease". In each case, the Full Court applied s 242(2) as if the opening words of s 242(2), "[i]n the case only of references to a mining lease", were "[i]n the case of a mining lease". Nothing in the context in which s 242 appears suggests that the prefatory words of s 242(2) should not be given effect according to their ordinary and natural meaning. In this regard, reference may be made to various provisions of 10 Helicopter Tjungarrayi on behalf of the Ngurra Kayanta People v Western Australia [No 2] [2017] FCA 587 at [53]. 11 Attorney-General (Cth) v Helicopter-Tjungarrayi (Ngurra Kayanta & Ngurra Kayanta #2) (2018) 359 ALR 256 at 259 [7]. 12 Attorney-General (Cth) v Helicopter-Tjungarrayi (Ngurra Kayanta & Ngurra Kayanta #2) (2018) 359 ALR 256 at 260 [12]. Bell Edelman the NTA which refer to a "lease (other than a mining lease)"13. It was suggested in the reasons of the Full Court in the Tjiwarl matter14 that these provisions manifest a convention on the part of the drafter of the NTA expressly to exclude mining leases from the scope of operative provisions when that was the intention of the legislation. It was suggested in argument that this drafting convention was consistent only with the conclusion of the Full Court. This suggestion must be rejected. It fails to appreciate that the express exclusion of mining leases from these provisions is necessary to exclude mining leases altogether from their scope of operation. In other words, these provisions exclude all mining leases that fall within s 242(1). These exclusions are not concerned with whether or not the references to "mining lease" in their context are to be taken to include a licence or authority pursuant to s 242(2). The view that the Full Court in each matter failed to give effect to the prefatory words of s 242(2) draws support from the text and purpose of s 47B itself. Section 47B of the Native Title Act The exclusions in s 47B(1)(b) from the statutory imperative to "disregard" the prior extinguishment of native title should not be construed more widely than is necessary to give effect to their terms. In this regard, s 47B(3)(a)(i) ensures that a successful native title determination, aided by the obligation to "disregard" the prior extinguishment of native title provided for by s 47B(2), will not adversely affect the validity of any prior interest granted by a government in relation to the area. The evident purpose of s 47B is to facilitate the grant of native title under the NTA, notwithstanding historic extinguishment, where the land in question is actually occupied by the native title claimants and the claimed native title would not be inconsistent with extant rights of a holder of the fee simple or a lease. The collocation of "freehold" with "lease" in s 47B(1)(b)(i) is eloquent of the nature of the extant interest in land that is regarded as an obstacle to a successful native title determination with the aid of s 47B. The interest of the holder of a freehold 13 Namely, ss 21(3)(a), 23B(2)(c)(viii), 24IC(4)(c), 43A(2)(a)(i). 14 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 540 Bell Edelman estate or a lease under the general law was sufficient to extinguish native title rights and interests under the common law15. It makes little sense, in terms of the evident purpose of s 47B, that extant exploration tenements should be an insuperable obstacle to the availability of native title when the grant of the rights characteristically conferred by exploration tenements would not have extinguished native title rights and interests under the common law in the first place16. Further, when the grant of an exploration tenement is not treated by the general law as inconsistent with the continued subsistence of ordinary freehold title, it is not to be supposed that the NTA treats native title rights and interests less favourably in the absence of a clear expression of that intention17. On the other hand, it is in full accord with the evident purpose of s 47B that the relatively low level of the intensity of use and occupation of land characteristically authorised by exploration tenements18 should not deny the possibility of a grant of native title to native title claimants who are in actual occupation of the land. Further, the rights conferred on the holders of exploration tenements are as capable of co-existing with native title rights and interests as they are with the rights of owners of freehold title under the general law. Whether the position is otherwise in relation to lands the subject of a mining lease in the narrower sense defined by s 245(1)19 is an issue that need not be resolved for the determination of these appeals. The only question which needs to be decided is whether the exploration tenements are "leases" within s 47B(1)(b)(i). The exploration tenements in question are leases for the purposes of the NTA only where s 242(2) operates to produce that result, and, as has been seen, the condition of its operation has not been met in the case of s 47B(1)(b)(i). 15 Wik Peoples v Queensland (1996) 187 CLR 1 at 71, 108, 135, 176; [1996] HCA 40; Fejo v Northern Territory (1998) 195 CLR 96 at 131 [56]-[58]. 16 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 68-69. 17 cf Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 437-438; [1995] HCA 47; Western Australia v Ward (2002) 213 CLR 1 at 105-107 [121]-[124]; [2002] HCA 28. 18 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 68-69. 19 cf Western Australia v Ward (2002) 213 CLR 1 at 162-163 [299]. Bell Edelman Conclusion and orders The appeals should be allowed. In Matter No P37 of 2018, the orders of the Full Court of the Federal Court made on 16 March 2018 in proceeding WAD 444 of 2017 should be set aside, and in their place it should be ordered that the appeal to the Full Court be dismissed. In Matter No P38 of 2018, orders 1 and 2(c) made by the Full Court of the Federal Court on 1 February 2018 in proceeding WAD 218 of 2017 should be set aside, and in place of order 1 it should be ordered that the appeal be allowed in part. I agree with the orders proposed by Kiefel CJ, Bell, Keane and Edelman JJ and I agree with their Honours' construction of s 242(2) of the Native Title Act 1993 (Cth) ("the NTA"). I write separately to reject a logically anterior argument of the appellants concerning the construction of s 47B(1)(b)(i) and to address the reasons given by the Full Court of the Federal Court for its construction of s 242(2). Construction of s 47B(1)(b)(i) At its most ambitious, the appellants' argument is that the term "lease" in s 47B(1)(b)(i) is to be read in collocation with that section's reference to a "freehold estate" to connote only a leasehold estate in the land and so to exclude in its entirety the extended definition of "lease" in s 242. The argument is made by invoking the evidently intended beneficial operation of s 47B and is sought to be supported by the reasons expressed in Northern Territory v Alyawarr for preferring the narrower of two textually available constructions of the expression "public purposes" in s 47B(1)(b)(ii)20. The principle that beneficial legislation is to be construed beneficially is a manifestation of the more general principle that all legislation is to be construed purposively21. Application of that more general principle to the NTA is mandated by the requirement of s 15AA of the Acts Interpretation Act 1901 (Cth) that the construction of a provision of a Commonwealth Act that would best achieve the purpose or object of such an Act is to be preferred to each other interpretation. The principle assists in making constructional choices between competing interpretations that are textually available22. The principle legitimately weighs in favour of a construction which gives s 47B wider application if and to the extent that a constructional choice is open on the text of the NTA. That is how the principle was appropriately applied in To attempt to apply the principle to exclude application of the definition of "lease" in s 242 to the term "lease" in s 47B(1)(b)(i), however, is to stretch the principle too far. To be borne in mind is that "no legislation pursues its purposes 20 (2005) 145 FCR 442 at 494-495 [187]. 21 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2016) 260 CLR 232 at 270 [92]; [2016] HCA 50. 22 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2016) 260 CLR 232 at 255-256 [32], explaining R v Kearney; Ex parte Jurlama (1984) 158 CLR 426 at 433, 435; [1984] HCA 14. See also R v Toohey; Ex parte Attorney-General (NT) (1980) 145 CLR 374 at 388-390; [1980] HCA 2. at all costs" and that "it frustrates rather than effectuates legislative intent simplistically to assume that whatever furthers the statute's primary objective must be the law"23. The unqualified use in s 47B(1)(b)(i) of the term defined in s 242 for the purposes of the whole of the NTA is indicative of a legislative choice that the definition in s 242 is to apply. Section 242(1)(c)'s inclusion within the definition of "lease" of "anything that, at or before the time of its creation, is, for any purpose ... declared to be or described as a lease" by a State law was held in Western Australia v Ward to be sufficient to pick up mining leases granted under the Mining Act 1978 (WA)24. The consequence of such mining leases being picked up by s 242(1)(c) as "leases" within the meaning of the NTA was that those leases were held in Ward also to be "mining leases" within the meaning of the NTA by operation of the definition of "mining lease" in s 245(1)25. Neither a mineral exploration licence granted under the Mining Act nor a petroleum exploration permit granted under the Petroleum and Geothermal Energy Resources Act 1967 (WA) ("the Petroleum Act") is declared to be or described as a "lease" under Western Australian law. So, s 242(1)(c) does not operate to pick up either such a licence or such a permit as a "lease" within the meaning of the NTA. As the Full Court correctly recognised in each of the decisions under appeal, if a mineral exploration licence granted under the Mining Act or a petroleum exploration permit granted under the Petroleum Act is to meet the description of a "lease" within s 47B(1)(b)(i), that result could be brought about only through the operation of s 242(2). The determinative issue in each appeal is therefore as to the construction of s 242(2). The Full Court's construction of s 242(2) Section 242(2) provides that "[i]n the case only of references to a mining lease, the expression lease also includes a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory". Section 242(2), 23 Rodriguez v United States (1987) 480 US 522 at 525-526 (emphasis in original), quoted in Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619 at 633 [41]; [2013] HCA 36 and New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2016) 260 CLR 232 at 271 [93]. 24 (2002) 213 CLR 1 at 162 [298]-[299]; [2002] HCA 28. 25 (2002) 213 CLR 1 at 162 [298]-[299]. like any other statutory definition, "should be approached on the basis that Parliament said what it meant and meant what it said"26. The Full Court construed s 242(2) to have the effect that any reference in the NTA to a "lease" is to be read as encompassing a "mining lease" and, as so read, is to be understood as encompassing a licence or authority to mine given by or under a Commonwealth, State or Territory law. The Full Court reached that construction having regard two considerations. The first consideration was its inference from the language of the definitions in ss 242, 243, 245 and 253, and also from passages in a Supplementary Explanatory Memorandum to the Bill for the NTA27, of a "legislative intention to treat all licences and authorities to mine as leases for the purpose of the NTA"28. The purpose of ss 242(2) and 243(2), in the Full Court's opinion, was to "ensure that instruments described as licences or authorities to mine (which include exploring or prospecting for things to mine by s 253) are taken to be a mining lease, and thus a type of lease for the purposes of the The second consideration to which the Full Court had regard was that, throughout the NTA, specific exclusions of a "mining lease" from references to a "lease" are effected by use of the formula "a lease (other than a mining lease)". It would not be necessary to exclude a "mining lease" from a reference to a "lease", the Full Court said, unless such a reference would otherwise include a "mining 26 Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 420; [1994] HCA 54. See also PMT Partners Pty Ltd (In liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 310; [1995] HCA 36. 27 Australia, Senate, Native Title Bill 1993, Supplementary Explanatory Memorandum at 17. 28 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 539- 29 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 540 [76]. See also Attorney-General (Cth) v Helicopter-Tjungarrayi (Ngurra Kayanta & Ngurra Kayanta #2) (2018) 359 ALR 256 at 259-260 [11]-[12]. 30 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 540 [76], referring to ss 21(3)(a), 23B(2)(c)(viii), 24IC(4)(c) and 43A(2)(a)(i) of the NTA. See also ss 230(b), 232A(2)(e)(i) and 232C(b)(i) of the NTA. In my opinion, the considerations which led the Full Court to adopt its construction of s 242(2) – that any reference in the NTA to a "lease" extends to a licence or authority to mine given by or under a Commonwealth, State or Territory law – are at best equivocal. The Supplementary Explanatory Memorandum to the Bill for the NTA undoubtedly pointed to a legislative intention, apparent on the face of ss 242(2) and 243(2), to treat licences or authorities to mine in the same way as "mining leases". But it contained nothing to indicate a legislative intention to treat all licences or authorities to mine given by or under Commonwealth, State or Territory laws as "leases" for all purposes of the NTA. Logically, exclusion of a "mining lease" from a reference to a "lease" by use of the formula "a lease (other than a mining lease)" compels not the conclusion that all "mining leases" are "leases" but only the conclusion that some "leases" are "mining leases". The exclusion works to remove from a "lease" a "mining lease" that is a "lease" by operation of s 242(1)(c), and does nothing more. The fundamental difficulty with the Full Court's construction is that it fails to engage with the prefatory words of s 242(2), by which the extension of "lease" to include a licence issued, or an authority given, is applicable "[i]n the case only of references to a mining lease". Naturally read in the context of a definitional provision, the expression "references to a mining lease" connotes textual references to a "mining lease". Properly construed, all that s 242(2) does is to require that a textual reference in the NTA to a "mining lease" be read as extending to a mining licence issued, or a mining authority given, by or under a Commonwealth, State or Territory law. Accordingly, s 242(2) does not inform the construction of s 47B(1)(b)(i). Because s 47B(1)(b)(i) does not contain a textual reference to a "mining lease", there is no occasion for s 242(2) to expand the meaning of "lease" in s 47B(1)(b)(i) beyond the meaning set out in s 242(1). to complement No doubt, it would have been possible to draft ss 242, 243, 245 and 253 of the NTA differently so as to include all of the incidents of any textual reference to a "mining lease" within the one definitional section. That the sections have not been drafted that way does not detract from their coherence. Each section the others without duplication or conflict. operates Section 242(2) confines itself to explicating the meaning of "lease" within the expression "mining lease". The operation of s 242(2) to expand the meaning of "lease" within the expression "mining lease" then provides the occasion for the expanded meaning of "lessee" in s 243(2). The expanded meaning of "lease" in s 242(2) and the expanded meaning of "lessee" in s 243(2) then combine to give precise content to the expressions "lease" and "lessee" as used in the definition of "mining lease" in s 245(1). Sections 2 and 18A of the Acts Interpretation Act operate to ensure that the meaning of "mining" in each of those interlocking definitions corresponds with the definition of "mine" in s 253 of the NTA. Nettle NETTLE J. The question for decision in these appeals is whether an exploration licence granted under the Mining Act 1978 (WA)31 or two petroleum exploration permits granted under the Petroleum and Geothermal Energy Resources Act 1967 (WA)32 each constitute a "lease" within the meaning of s 47B(1)(b)(i) of the Native Title Act 1993 (Cth) ("the NT Act"). For the reasons which follow they do not. Relevant statutory provisions Non-extinguishment principle Division 2 of Pt 15 of the NT Act defines a "past act" as, relevantly, an act which occurred before 1 January 1994 when native title existed in relation to particular land and waters33. The Division defines four categories of "past act": a Category A past act34, which in substance is defined as either the grant of a freehold estate or "a commercial lease, an agricultural lease, a pastoral lease or a residential lease" granted before 1 January 1994 and extant as at 1 January 1994; a Category B past act35, which in substance is defined as the grant of a lease (other than a Category A past act or a mining lease) granted before 1 January 1994 and extant as at that date; a Category C past act36 consisting of the grant of a mining lease; and a Category D past act37, which is defined as any past act that is not a Category A, B or C past act. Section 15 of the NT Act provides in relation to past acts which are attributable to the Commonwealth38 that, in substance, a Category A past act extinguishes the native title concerned; a Category B past act extinguishes native 31 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521. 32 Attorney-General (Cth) v Helicopter-Tjungarrayi (Ngurra Kayanta & Ngurra Kayanta #2) (2018) 359 ALR 256. 33 NT Act, s 228. 34 NT Act, s 229. This section also refers to s 245(3), dealing with the dissection of mining leases, which is not relevant for the purposes of this judgment. 35 NT Act, s 230. 36 NT Act, s 231. 37 NT Act, s 232. 38 The NT Act permits the States and Territories to validate certain past acts with the same effect as s 15: NT Act, s 19. Nettle title to the extent of inconsistency between the act and native title; and a Category C or a Category D past act engages the "non-extinguishment principle". Division 2 of Pt 15 also defines39 an "intermediate period act" as, relevantly, an act which took place between 1 January 1994 and 23 December 1996 when native title existed in relation to particular land and waters. The Division then provides for four categories of intermediate period acts: a Category A intermediate period act40, which is in substance the grant or vesting of a freehold estate and of certain leases (other than a mining lease); a Category B intermediate period act41, which is in substance the grant of a lease that is not a Category A intermediate period act or certain leases including a mining lease; a Category C intermediate period act42, which is the grant of a mining lease; and a Category D intermediate period act43, which is any intermediate period act that is not a Category A, B or C intermediate period act. Section 22B of the NT Act provides in relation to intermediate period acts which are attributable to the Commonwealth44 that, in substance, a Category A intermediate period act extinguishes native title in relation to all land or waters concerned; a Category B intermediate period act extinguishes native title to the extent of inconsistency between the act and native title; and a Category C or a Category D intermediate period act engages the "non-extinguishment principle". Section 238 of the NT Act defines the "non-extinguishment principle" in effect by means of a set of rules which prescribe the effect on native title rights and interests of acts that are either wholly or partially inconsistent with the continued existence, enjoyment or exercise of the native title rights and interests. Section 238(2) provides in substance that, although an act to which the non-extinguishment principle applies may affect native title in relation to land or waters, the native title rights and interests are not extinguished either wholly or partially. Sub-sections (3) and (4) of s 238 provide that, if the act is wholly inconsistent with the continued existence, enjoyment or exercise of the native title rights and interests, they continue to exist in their entirety but have no effect 39 NT Act, s 232A. 40 NT Act, s 232B. 41 NT Act, s 232C. 42 NT Act, s 232D. 43 NT Act, s 232E. 44 The NT Act permits the States and Territories to validate certain intermediate period acts with the same effect as s 22B: NT Act, s 22F. Nettle in relation to the act and, if the act is partially inconsistent with the continued existence, enjoyment or exercise of the native title rights and interests, they continue to exist in their entirety but have no effect in relation to the act to the extent of the inconsistency. Section 238(6) provides in substance that when and if the act or its effects cease to operate, the native title rights and interests again take effect in full. Pertinently, s 238(8) provides that: "An example of the operation of this section is its application to a category C past act consisting of the grant of a mining lease that confers exclusive possession over an area of land or waters in relation to which native title exists. In such a case the native title rights and interests will continue to exist but will have no effect in relation to the lease while it is in force. However, after the lease concerned expires (or after any extension, renewal or re-grant of it to which subsection 228(3), (4) or (9) applies expires), the rights and interests again have full effect." Application of non-extinguishment principle to vacant Crown land Section 47B was introduced45 into the NT Act by the Native Title Amendment Act 1998 (Cth) as part of a suite of amendments consequent on this Court's decision in Wik Peoples v Queensland46. It was designed to allow native title claimants who are in occupation of vacant Crown land over which native title has been extinguished, but over which there are no longer competing third party rights, to engage the non-extinguishment principle and so claim native title its prior extinguishment47. with Section 47B(1) provides that: land notwithstanding respect that "This section applies if: a claimant application is made in relation to an area; and (b) when the application is made, the area is not: covered by a freehold estate or a lease; or 45 Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 68 [5.56]. 46 (1996) 187 CLR 1; [1996] HCA 40. 47 See Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 62-63 [5.29]; Australia, Senate, Parliamentary Debates (Hansard), 11 March 1998 at 863. Nettle covered by a reservation, proclamation, dedication, condition, permission or authority, made or conferred by the Crown in any capacity, or by the making, amendment or repeal of legislation of the Commonwealth, a State or a Territory, under which the whole or a part of the land or waters in the area is to be used for public purposes or for a particular purpose; or (iii) subject to a resumption process (see paragraph (5)(b)); and (c) when the application is made, one or more members of the native title claim group occupy the area." Section 47B(2) provides, in substance, that, except in the three circumstances identified in s 47B(1), any extinguishment of native title rights and interests by any prior interest in relation to the area claimed in the application must be disregarded. Section 47B(3) provides, in substance, that, although the validity of the prior interest remains unaffected, its effect on the native title rights and interests is to be determined in accordance with the non-extinguishment principle. "Lease" and "mining lease" Section 242 of the NT Act defines "lease" as follows: "(1) The expression lease includes: a lease enforceable in equity; or a contract that contains a statement to the effect that it is a lease; or anything that, at or before the time of its creation, is, for any purpose, by a law of the Commonwealth, a State or a Territory, declared to be or described as a lease. References to mining lease In the case only of references to a mining lease, the expression lease also includes a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory." (emphasis added) Nettle Section 243(2) provides in relation to the definition of "lessee" that: "Lessee of certain mining leases In the case of a lease that is a mining lease because of subsection 242(2) (which covers licences and authorities given by or under laws), the expression lessee means: the person to whom the licence mentioned in that subsection was issued, or the authority so mentioned was given; or any person who, by assignment, succession or otherwise, acquires or enjoys the licence or authority or is entitled to exercise rights under the licence or the authority." Section 245(1) defines "mining lease", relevantly, as follows: "A mining lease is a lease (other than an agricultural lease, a pastoral lease or a residential lease) that permits the lessee to use the land or waters covered by the lease solely or primarily for mining." Section 253 provides for multiple definitions and, relevantly, defines "mine" thus: "mine includes: explore or prospect for things that may be mined (including things covered by that expression because of paragraphs (b) and (c)); or extract petroleum or gas from land or from the bed or subsoil under waters; or quarry; but does not include extract, obtain or remove sand, gravel, rocks or soil from the natural surface of land, or of the bed beneath waters, for a purpose other than: extracting, producing or refining minerals from the sand, gravel, rocks or soil; or processing the sand, gravel, rocks or soil by non-mechanical means." The NT Act does not define "mining" but s 18A read with s 2(2) of the Acts Interpretation Act 1901 (Cth) provides in effect that, unless the contrary intention appears, where a word or phrase is given a particular meaning in an Nettle Act, other parts of speech and grammatical forms of that word or phrase have corresponding meanings. There is nothing in the NT Act which suggests a contrary intention. Thus, for the purposes of "mining lease" the meaning of the participial adjective "mining" corresponds to the verb "mine" as defined by s 253. Section 246 defines a "commercial lease", relevantly, as: "(1) A commercial lease is a lease (other than a mining lease) that permits the lessee to use the land or waters covered by the lease solely or primarily for business or commercial purposes." (emphasis added) Proceedings at first instance In Narrier v Western Australia, the primary judge (Mortimer J) held48 that an exploration licence granted under the Mining Act was not a "mining lease" and, thus, was not a "lease" for the purposes of s 47B(1)(b)(i). Following the decision in Narrier, the primary judge in Helicopter Tjungarrayi on behalf of the Ngurra Kayanta People v Western Australia [No 2] (Barker J) held49 that each of two petroleum exploration permits granted under the Petroleum and Geothermal Energy Resources Act was not a mining lease and therefore not a lease. Both primary judges held50 that, despite the definition of "mine" in s 253, s 245(1) defines "mining lease" more narrowly as a mining lease which requires the subject land to be used solely or primarily for mining, and that there was no evidence that the licence or permits in question permitted the holder to use the land or waters solely or primarily for mining. Proceedings on appeal to the Full Court of the Federal Court of Australia On appeal from the decision of the primary judge in Narrier, the Full Court of the Federal Court (North, Dowsett and Jagot JJ) held51 that there was no reason not to give the word "mining" in Div 3 of Pt 15 of the NT Act the meaning which corresponds to "mine" in s 253, and thus that no more was 48 [2016] FCA 1519 at [1208]. 49 [2017] FCA 587 at [59]. 50 Narrier v Western Australia [2016] FCA 1519 at [1207]; Helicopter Tjungarrayi on behalf of the Ngurra Kayanta People v Western Australia [No 2] [2017] FCA 51 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 539 Nettle needed to establish that the exploration licence was a mining lease for the purposes of s 245(1) than that the licence permits the licensee to use the land or waters covered by the licence solely or primarily for mining in that sense. The Full Court rejected52 the native title claim group's contention that s 242(2) operates only upon the words "mining lease" wherever they appear as such. Their Honours held that the purpose of ss 242(2) and 243(2) is to ensure that instruments described as "licences" or "authorities to mine" (which includes exploring or prospecting for things to mine) are taken to be a "mining lease", and thus a type of "lease" for the purposes of the NT Act. Accordingly, the area covered by the exploration licence in question was held not to be land to which s 47B of the NT Act applied. On appeal from the decision of the primary judge in Tjungarrayi, the Full Court of the Federal Court (North, Jagot and Rangiah JJ) followed that Court's decision in Narrier and held53 that the exploration permits were mining leases and, thus, were leases for the purposes of s 47B(1)(b)(i). Meaning of "lease" in s 242(1) The Full Courts in Narrier and Tjungarrayi were correct in their construction of ss 242, 243 and 245(1). They were right to hold that the combined effect of those provisions is that an exploration permit or licence is a "mining lease" within the meaning of s 245(1) and, therefore, a "lease" within the meaning of s 242. But the Full Court in each case were not correct in holding that "lease" in s 47B(1)(b)(i) includes a "mining lease". As will be explained, "lease" in s 47B(1)(b)(i) is used in the sense of "lease (other than a mining lease)" in the same way that it is used in that sense in several other provisions of the NT Act. In Western Australia v Ward, a majority of this Court held54 that a "mining lease" within the meaning of s 245(1) is a "lease" within the meaning of s 242. It was not suggested in these appeals that that point was wrongly decided. What is in issue is whether a "mining lease" within the meaning of s 245(1) includes "a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory" within the meaning of s 242(2). 52 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 540 53 Attorney-General (Cth) v Helicopter-Tjungarrayi (Ngurra Kayanta & Ngurra Kayanta #2) (2018) 359 ALR 256 at 260 [12], 264 [25]. 54 (2002) 213 CLR 1 at 162-163 [299] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; [2002] HCA 28. Nettle Other things being equal, it would be open to read the words "in the case only of references to a mining lease" in s 242(2) as having one or other of two meanings: either that, in the case of a mining lease, the expression "lease" includes a "mining lease" and a licence or authority of the kind specified in s 242(2); or that, wherever in the NT Act, other than in the definition of "mining lease" in s 245(1), there is a reference to a "mining lease", the reference is to be read as including a licence or authority of the kind specified in s 242(2). There are, however, at least five features of the NT Act which point in favour of the former construction and against the latter. First, s 242(2) is part of s 242, and so, in form and therefore as a matter of apparently intended effect, it is definitive of a "lease", not a "mining lease". It is as if s 242(2) stated "in the case of a mining lease". In effect, s 242(2) extends the concept of "lease" for the purposes of the NT Act. Secondly, the use of the expression "in the case only of references to a mining lease" is, in form and so as a matter of apparently intended effect, equally applicable to all references to "mining lease" within the NT Act. That includes the most proximate and obvious reference to "mining lease", in s 245(1). Thus, reading ss 242(2) and 245(1) together in the definitional context in which they appear, and with the aid of the definition of "mine" in s 253 and the effect of s 18A of the Acts Interpretation Act, "mining lease" in the reference to "mining lease" in s 245(1) presents as a lease that permits the lessee to use the land or waters covered by the lease solely or primarily for mining and also includes a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory to use the land or waters covered by the licence or authority solely or primarily for exploring or prospecting for things that may be mined or for extracting petroleum or gas from land or from the bed or subsoil under waters. Thirdly, s 243(2) refers to "a lease that is a mining lease because of subsection 242(2) (which covers licences and authorities given by or under laws)". Section 243(2) thus necessarily proceeds from the premise that the effect of s 242(2) combined with s 245 is to include a licence within the meaning of "mining lease" and so within the meaning of "lease". If that were not the case, s 243(2) should have been drafted in terms that: "in the case of a reference to a mining lease". Fourthly, if s 242(2) were not intended to inform the meaning of s 245, there would be little point in the enactment of s 242(2). It was submitted before this Court that, rather than informing the meaning of s 245(1), the purpose of s 242(2) was to ensure that, in those provisions of the NT Act which expressly exclude "mining lease" from "lease", the exclusion should be taken to include a licence or an authority within the meaning of s 242(2): for example, s 23B(2)(c)(viii) defines a previous exclusive possession act as including, inter alia, "any lease (other than a mining lease)"; s 24IC(4)(c) deals with future acts Nettle which are permissible lease renewals and refers to a "perpetual lease (other than a mining lease)"; s 43A(2)(a)(i) deals with an exception to the right to negotiate with respect to an area that is, inter alia, covered by a "lease (other than a mining lease)"; s 230(b) defines Category B past acts as the grant of a lease where "the lease is not a mining lease"; s 232A(2)(e)(i) states that an intermediate period act must not be preceded by a "lease (other than a mining lease)" covering the land affected by the act; and s 232B(3)(g) defines a Category A intermediate period act as including a "lease (other than a mining lease)". But the submission makes little sense. Ex hypothesi, but for s 242(2) a licence or an authority within the meaning of s 242(2) would not be included in "mining lease" in s 245(1) or, therefore, in "lease" in s 242(1). There would be little point in enacting s 242(2) if its only purpose were to exclude from the definition of "mining lease" what would not have been in "mining lease" but for the enactment of s 242(2). Fifthly, the extrinsic materials show that it was intended that "mining lease" include a mining or exploration permit or licence. The Explanatory Memorandum to the Native Title Bill 1993 (Cth) explained55 the definition of "mine" as follows: "'mine' The definition of this term is not an exhaustive one and is wider than what might be thought to be the ordinary meaning of the term. It includes exploring or prospecting for anything that may be mined. It also includes extracting petroleum, gas or water from land or from the bed or subsoil under waters, and quarrying. The definition is also picked up [sic] the derivatives of 'mine' such as 'mining' and 'mined'." (emphasis added) After the Native Title Bill was first introduced to Parliament, the Government proposed a number of amendments as a result of continued consultation with interested parties and a majority report of the Senate Standing Committee on Legal and Constitutional Affairs56. Section 242(2) formed part of those amendments. A Supplementary Explanatory Memorandum which dealt with the amendments stated57 in respect of s 242(2): 55 Australia, House of Representatives, Native Title Bill 1993, Explanatory Memorandum Part B at 104. 56 Australia, Senate, Native Title Bill 1993, Supplementary Explanatory Memorandum at 2. 57 Australia, Senate, Native Title Bill 1993, Supplementary Explanatory Memorandum at 17. Nettle "The addition of subclause (2) provides that for the purposes of mining leases only, licences or authorities to mine are to be treated in the same way as mining leases. This amendment is part of a package of amendments to treat licences and authorities to mine in the same way as mining leases. The related amendments are found in amendments 66 and 67." (emphasis added) The Supplementary Explanatory Memorandum further stated58, with respect to related amendments 66 and 67 concerning the expanded definition of "lessee" in s 243(2): "This clause defines what is meant by the term 'lessee' for the purposes of this Bill. The addition of subclause (2) makes it clear that for the purpose of a mining licence or authority that is a mining lease because of subclause 227(2) [now s 242(2)] a person holding such a licence or authority is to be regarded as a lessee for the purposes of the Bill. These amendments are also consequential upon the treatment of mining licences and authorities which give similar rights to mining leases in the same manner for the purposes of this Bill." There is no suggestion in any of the extrinsic materials that the intention was to confine the operation of s 242(2) to express references to "mining lease" in substantive provisions of the Act. All indications are that it was designed to ensure that mining or exploration licences or authorities are treated as mining leases. It should be concluded that a "mining lease" as defined by s 245(1) of the NT Act means a "lease" that permits the lessee to use the land or waters covered by the lease solely or primarily for mining and also includes a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory to use the land or waters covered by the licence or authority solely or primarily for exploring or prospecting for things that may be mined or for extracting petroleum or gas from land or from the bed or subsoil under waters. And consistently with this Court's decision in Ward, it should be held that a "lease" within the meaning of s 242(1) of the NT Act includes a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory to use the land or waters covered by the licence or authority solely or primarily for exploring or prospecting for things that may be mined or for extracting petroleum or gas from land or from the bed or subsoil under waters. 58 Australia, Senate, Native Title Bill 1993, Supplementary Explanatory Memorandum at 17. Nettle Meaning of "lease" in s 47B It does not follow, however, that "lease" in s 47B(1)(b)(i) includes "mining lease". Like all statutory definitions, the definition of "lease" in s 242(1) yields to contrary intention59 and here a contrary intention is apparent. Granted, there are a number of provisions in the NT Act which expressly exclude "mining lease" from "lease". In addition to those already mentioned, s 21(3)(a), which was inserted into the NT Act at the same time as s 47B, provides an overview of the validation of intermediate period acts and refers to "a grant of a freehold estate or a lease (other than a mining lease)". And assuming consistency of approach, it would be open to conclude on that basis that, where it is intended in the NT Act to exclude "mining lease" from "lease", "mining lease" is expressly excluded, and, otherwise, "mining lease" is to be taken as included. But the practice of expressly excluding "mining lease" from "lease" when it is intended that it be excluded is not consistent throughout the NT Act. For example, in s 24LA, which deals with low impact future acts, sub-s (1)(b)(ii) provides for an exclusion in these terms: "the act does not consist of, authorise or otherwise involve ... the grant of a lease over any of the land or waters". There is no express exclusion of "mining lease" from "lease" but it is apparent from the fact that s 24LA(1)(b)(v) separately excludes "mining (other than fossicking by using hand-held implements)" that it was not intended that "lease" should include "mining lease". In s 24GE, which validates future acts consisting of rights granted to third parties on non-exclusive agricultural or pastoral leases, including a future act which "confers on any person (including the lessee) a right ... to extract, obtain or remove sand, gravel, rocks, soil or other resources (except so far as doing so constitutes mining)", it is apparent from the fact that s 24GE(1)(d) excludes a future act that is "the grant of a lease" and s 24GE(1)(e) includes a future act that confers a right to extract sand, gravel, rocks or other resources that "lease" does not include "mining lease"60. There are also provisions such as s 24JAA(1)(b)(i) and s 24JA(2)(d), which refer to "lease" without an express exclusion of "mining lease", where it is obvious that, because those provisions pertain to the construction, operation, use etc of public facilities to benefit Aboriginal peoples or Torres Strait Islanders, and the granting of leases to statutory authorities respectively, those provisions could not apply to mining 59 In the Matter of The Fourth South Melbourne Building Society (1883) 9 VLR (E) 54 at 58; Transport Accident Commission v Treloar [1992] 1 VR 447 at 449 per McGarvie and Gobbo JJ; Buresti v Beveridge (1998) 88 FCR 399 at 401. See also Pearce and Geddes, Statutory Interpretation in Australia, 8th ed (2014) at 261-262 60 See Australia, Senate, Parliamentary Debates (Hansard), 5 December 1997 at Nettle leases. In sum, in each case, the context dictates that "lease" does not include "mining lease". The context for the construction of s 47B is principally informed by its engagement of the non-extinguishment principle as prescribed in s 238. As was earlier noted, s 47B(3) provides, in substance, that, although the validity of the creation of a prior interest remains unaffected, its effect on the native title rights and interests in question is to be determined in accordance with the non-extinguishment principle. And the non-extinguishment principle defined in s 238(3) and (4) provides in substance that, if the act is wholly inconsistent with the continued existence, enjoyment or exercise of the native title rights and interests, they continue to exist in their entirety but have no effect on the act and, if the act is partially inconsistent with the native title rights and interests, they continue to exist but have no effect on the act to the extent of the inconsistency. Section 238(6) has the effect that when and if the act expires or ceases to have effect, the native title rights and interests again take effect in full. And importantly, s 238(8) posits as an example of an act to which the non- extinguishment principle applies the act of granting a mining lease, and explains that, although the native title rights and interests will have no effect on the mining lease, upon its expiration the native title rights and interests will once again have full force and effect. If "lease" in s 47B(1)(b)(i) included "mining lease", it would mean that a mining lease, which itself engages the non-extinguishment principle, would preclude the application of the non-extinguishment principle to the creation of any prior interest in land which is vacant Crown land, at least until after the mining lease expires. Textually, that bespeaks a contrary intention that, in s 47B(1)(b)(i), "lease" does not include "mining lease". This is supported by the legislative history of s 47B. Historical development of specific sections of NT Act (i) Mining leases From the outset of the NT Act, the Parliament drew a distinction between, on the one hand, leases thought to confer exclusive possession, such as commercial, agricultural, pastoral and residential leases – which the NT Act treats61 as extinguishing native title – and, on the other, mining leases – which leave62 native title intact. In June 1993, before the introduction of the Native 61 NT Act, ss 229(3)(a), 15(1)(a). 62 NT Act, ss 231, 15(1)(d). Nettle Title Bill63, the Government released a discussion paper, entitled "Mabo: The High Court Decision on Native Title", in which it provided reasons for the distinction later drawn in the Bill, and now in the NT Act, between Category A, B, C and D past acts. The paper discussed64 four broad legislative options to provide for the validation of existing grants of interests in land made after 31 October 1975 when the Racial Discrimination Act 1975 (Cth) came into force and to make native title subject to the grants. They were: (1) legislation to confirm the continued existence of native title in all cases but subject to validated grants, with compensation; (2) legislation to confirm the continued existence of native title where possible but subject to validated grants, with compensation, and recognise the extinguishment of native title where necessary to validate grants, with compensation; (3) the same legislative approach as in (2) but only upon a trigger, possibly a relevant finding of a court or tribunal that the grant is actually invalid; and (4) legislation to provide for the validation of grants but leave for later determination by a court what impact that would have on native title, and provide for compensation in light of that. The paper opined65 that options (2) and (3) "would have the merit of minimising the extinguishment of native title resulting from the validation of grants", and could be made to operate as follows: (a) where the native title interest and the grant coexist without the grant extinguishing or affecting the native title; (b) where the grant and the native title interest are able to be made to coexist, which "is possible, for example, with the grant of a mining lease, where provision could be made for the native title to continue to exist subject to the lease for the period of the lease, and then to revive to its pre-lease extent"; and (c) where the grant and the native title interest cannot be made to coexist, for example native title and a grant of freehold. As to (a), the paper stated66 that as there is no conflict between the grant and native title there is therefore no need for remedial action. By contrast, as to 63 The Native Title Bill was read for the first time on 16 November 1993: see (Hansard), Australia, House of Representatives, Parliamentary Debates 16 November 1993 at 2877. 64 Department of the Prime Minister and Cabinet, "Mabo: The High Court Decision on Native Title", Discussion Paper, June 1993 at 43-44. 65 Department of the Prime Minister and Cabinet, "Mabo: The High Court Decision on Native Title", Discussion Paper, June 1993 at 44-45. 66 Department of the Prime Minister and Cabinet, "Mabo: The High Court Decision on Native Title", Discussion Paper, June 1993 at 45. Nettle (c), it was observed67 that two steps would be necessary: extinguishment of the native title that would have been extinguished but for the operation of the Racial Discrimination Act, and validation of any grants that were wholly or partly invalid by operation of that Act. Most significantly for present purposes, it was observed68 in relation to (b): "[T]he native title need not be extinguished. The native title could be confirmed subject to, or restricted by, the grant for the period of the grant, with compensation for that restriction, and the grant validated. In effect, this approach would modify the common law position set out in Mabo (No 2)[69] that a grant inconsistent with native title rights extinguishes those rights. This would therefore involve: the Commonwealth or the States and Territories confirming, and providing title notwithstanding certain types of grants made since 1975, but subject to or restricted by those grants and with compensation for that impairment; and existence of, native continued the for the States and Territories validating Commonwealth its grants. their grants and the In addition to the desirability in principle of protecting native title to the maximum extent possible ... This approach has its most obvious application in relation to mining leases. It is the same as that generally followed when a mining lease is issued over, for example, a freehold property. In the case of other finite leases (eg tourism), however, the general principle could be more difficult to apply." (emphasis added) Consequent upon the the discussion paper, Government released a paper entitled "Mabo: Outline of Proposed Legislation on Native Title" which outlined key provisions of the proposed Native Title Bill. in September 1993 67 Department of the Prime Minister and Cabinet, "Mabo: The High Court Decision on Native Title", Discussion Paper, June 1993 at 46-47. 68 Department of the Prime Minister and Cabinet, "Mabo: The High Court Decision on Native Title", Discussion Paper, June 1993 at 45-46. 69 Mabo v Queensland [No 2] (1992) 175 CLR 1; [1992] HCA 23. Nettle It grouped70 past grants, according to type, into three categories (named Categories 1 to 3). Category 1 grants were described as comprised of, inter alia, freehold estates and "a leasehold estate that is a residential, pastoral, tourist or other lease prescribed in regulations made under this Act other than a Category 2 grant". A Category 2 past grant was defined as "mining (including petroleum) grants". The paper emphasised that the validation of Category 2 past grants did not involve the extinguishment of native title, and that the native title holders would be able to reassert their rights when the period of the grant had ended or the grant had been surrendered, rescinded, forfeited or purchased by native title owners. The paper added that, in the case of any mining lease which gave exclusive possession of the lease area, native title rights could not be exercised in the area for the period of the lease, but could be exercised thereafter. To the same effect, in a statement on 2 September 1993 accompanying the paper, the then Prime Minister, Mr Keating, announced71 with respect to the main provisions of the proposed Native Title Bill: "[T]he Bill will not leave up in the air what implications this validation of past grants has for existing native title. It will make clear that for freehold, and for residential, pastoral and tourist leasehold grants, the validation extinguishes any native title rights inconsistent with those grants. For mining leases, and lesser interests over land such as licences and permits, the validation will not extinguish the native title. But the Bill will confirm that any native title is subject to the lease or licence for as long as it runs. I emphasise that this is totally consistent with existing practice in relation to mining leases over other private interests in land." (emphasis added) So also, in the Second Reading Speech in the House of Representatives, 70 Commonwealth of Australia, "Mabo: Outline of Proposed Legislation on Native Title", September 1993 at 34-36. 71 "Statement by the Prime Minister, the Hon P J Keating, MP: Mabo Legislation", 2 September 1993 at 2. See also Commonwealth of Australia, "Mabo: Summary Guide to Proposed Legislation on Native Title", September 1993 at 2; Department of the Parliamentary Library, Parliamentary Research Service, "Native Title Bill 1993", 23 November 1993 at 6. 72 Australia, House of Representatives, Parliamentary Debates (Hansard), 16 November 1993 at 2880. See also the observations of Mr Crean, the then Minister for Primary Industries and Energy, in debate: Australia, House of Representatives, Parliamentary Debates (Hansard), 24 November 1993 at 3533. Nettle "Validation of mining leases will not extinguish native title rights, which can again be exercised in full after the grant, and any legitimate renewals, have expired. This is not discrimination against the mining industry, or some radical departure from existing practice. Let me quote, for example, section 113 of the Western Australian Mining Act. It states: When a mining tenement expires or is surrendered or forfeited, the owner of the land to which the mining tenement related may take possession of the land forthwith ... How can we offer native titleholders any less?" The Explanatory Memorandum the Native Title Bill further emphasised73 the intended distinction between mining leases and other leases in a discussion of cl 231 of the Bill, concerning the definition of commercial lease (now s 246(1) of the NT Act), as follows: "In order to be a commercial lease a lease must permit the lessee to use the land or waters covered by the lease solely or primarily for business or commercial purposes. Such purposes are not defined but are left to be interpreted according to the general law having regard to the particular circumstances of each case. Subclause 231(2) provides examples of the use of land for business or commercial purposes. Whether such use is the sole or primary use will be a question for determination in the circumstances of each particular case. Ordinarily a mining lease would be a commercial lease but mining leases have been excluded from this definition. Mining leases form a special category ... An agricultural or pastoral lease can still be a commercial lease. The definitions of an 'agricultural lease', 'pastoral lease' and 'residential lease' are not intended to limit what can fall within the definition of a 'commercial lease'." (emphasis added) (ii) 1997 amendments As mentioned earlier, s 47B was enacted as part of a suite of amendments introduced into the NT Act primarily to overcome uncertainties arising from this Court's decision in Wik regarding the extent of extinguishment of native title by 73 Australia, House of Representatives, Native Title Bill 1993, Explanatory Memorandum Part B at 96-97. Nettle grants of interest made prior to that decision74. One of the principal purposes of the amendments was to introduce Div 2B of Pt 2 of the NT Act in relation to the confirmation of past extinguishment of native title by certain valid or validated acts. As was explained75 in the Explanatory Memorandum to the Native Title Amendment Bill 1997 (Cth), it was intended that those provisions would limit uncertainty in relation to the extinguishment of native title by grants of interest: "The purpose of the proposed amendments dealing with confirmation of extinguishment of native title is to limit this uncertainty. The effect will be to confirm that native title is extinguished on exclusive tenures (such as freehold and residential leases) and extinguished to the extent of any inconsistency on non-exclusive agricultural and pastoral leases. Consistent with the Wik decision, the rationale for such confirmation is that the rights conferred and/or the nature of the use of the land is such that the exclusion of others (including native title holders) must have been presumed when the tenure was granted. The amendments will put the matter beyond doubt." The scheme of Div 2B was to introduce the concepts of "previous exclusive possession acts"76 and "previous non-exclusive possession acts"77 and to provide that, if acts to which the Division applies are previous exclusive possession acts, the acts will have completely extinguished native title78, and, if acts to which the Division applies are previous non-exclusive possession acts, the acts will have extinguished native title to the extent only of any inconsistency79. Those provisions were augmented by s 61A, which provides in substance that, subject to s 61A(4), a claimant application cannot be made over an area where there has been a previous exclusive possession act – thereby reflecting "the fact that such acts have been confirmed as extinguishing native title"80; and a claimant 74 See Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 4 [1.5], 35-36 [4.3]-[4.5]. 75 Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 53 [5.3]. 76 NT Act, s 23B. 77 NT Act, s 23F. 78 NT Act, ss 23C, 23E. 79 NT Act, ss 23G, 23I. 80 Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 275 [25.26]. Nettle application over an area in relation to which there has been a previous non-exclusive possession act cannot claim exclusive possession in relation to that area – "because such acts of their nature mean that the native title holders can no longer have exclusive possession of the area concerned"81. The significance of exclusive possession was further emphasised in a newly introduced Sch 1 to the NT Act, containing lists of leases and other interests considered, on the basis of common law, to have conferred exclusive possession and thereby to have extinguished native title ("Scheduled interest")82, and by the inclusion of a Scheduled interest in the definition of a previous exclusive possession act in s 23B(2). Notably, the definition of a Scheduled interest in s 249C expressly excludes mining leases. Most significantly, however, s 61A(4) provides that s 61A operates subject, among other provisions, to s 47B, which, as has been seen, permits the extinguishment by a previous exclusive possession act or a previous non-exclusive possession act to be disregarded where the section applies. Evidently, therefore, the object of the exercise was to exclude mining leases from the range of interests which could stand in the way of the recognition of native title under s 47B. As Senator Campbell stated83 during the Second Reading Speech for the Native Title Amendment Bill in the Senate, the purpose of s 47B is to enable indigenous people who are in occupation of an area of vacant Crown land over which there are no longer any competing third party rights to claim native title and have the court disregard the previous extinguishment of native title. Similarly, as Senator Minchin, the then Special Minister of State and Minister Assisting the Prime Minister, added in the course of debate84: "[W]here Aboriginal people are on a reserve or occupying vacant crown land over which a past lease has affected either partial or full extinguishment, it is to be disregarded for the purposes of determining the native title claims. I think it is only fair and proper to set aside the common law effect of that past grant in order that Aboriginal people currently occupying that land, either by reserve or vacant crown land, can make a full native title claim regardless of the past extinguishing effect of previous grants." 81 Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 275 [25.27]. 82 See NT Act, s 249C. See also Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 413 [36.2]. 83 Australia, Senate, Parliamentary Debates (Hansard), 11 March 1998 at 863. 84 Australia, Senate, Parliamentary Debates (Hansard), 5 December 1997 at 10510. Nettle Conclusions on s 47B(1)(b)(i) Given that, before the enactment of s 47B, the non-extinguishment principle applied, and that it continues to apply, to land in respect of which native title has not been extinguished by a Category A or B past act but which is affected by a Category C or D past act – by engaging the non-extinguishment principle in relation to Category C and D past acts – and given, further, that the object of s 47B(1)(b)(i) is to disregard the extinguishment of native title by Category A and B past acts in relation to vacant Crown land – and to deal with the "creation of a prior interest" by engagement of the non-extinguishment principle – it would be ex facie illogical if s 47B did not apply to vacant Crown land the subject of a Category C past act. The same reasoning would apply with respect to land the subject of a Category D past act. By contrast, the purpose of s 47B(1)(b)(ii) is to exclude the operation of s 47B in cases of land reserved, proclaimed, dedicated or conditioned for designated public purposes or a particular purpose, which, as the Full Court of the Federal Court has observed85, is no doubt intended to minimise the impact of native tile determination applications on areas set aside by proclamation or otherwise under statutory authority for public or particular purposes. Clearly enough, in such cases, different considerations apply86. Section 47B(1)(b)(i) may also be contrasted with s 44H of the NT Act, which provides in substance that, for the avoidance of doubt, if the grant, issue or creation of a lease, licence, permit or authority is valid (including because of any provision of the NT Act) and requires or permits the doing of any activity, an activity done in accordance with the lease, licence, permit or authority prevails over the native title rights and interests and any exercise of them but does not extinguish them. In that context, despite the reference to both lease, and licence, permit or authority, it appears that "lease" means lease in its defined sense of including a mining lease and therefore an exploration or prospecting permit or licence, and that the reference to licence, permit or authority is to embrace licences, permits or authorities to carry out activities other than mining, exploration or prospecting87. Ultimately, s 47B(1)(b)(i) permits of a constructional choice: between a meaning which would allow the non-extinguishment principle to operate in 85 Northern Territory v Alyawarr (2005) 145 FCR 442 at 494-495 [187]. 86 See and compare Banjima People v Western Australia (2015) 231 FCR 456 at 496- 498 [110]-[117]; Tucker (on behalf of the Banjima People) v Western Australia [No 2] (2015) 328 ALR 637 at 647-648 [33]. 87 See and compare Banjima People v Western Australia [No 2] (2013) 305 ALR 1 at Nettle relation to vacant Crown land affected by a mining lease and a meaning which would not. As has now been seen, the former fits with considerations of context, purpose and legislative history88, while the latter does not. Since inconvenient and improbable constructions are not lightly to be imputed to the legislature where an alternative construction is open89, it should be concluded that the purpose of s 47B(1)(b)(i) is to prevent s 47B operating on land encumbered by Category A or B past acts and to allow the non-extinguishment principle to operate with respect to vacant Crown land the subject of competing interests that do not extinguish native title or are capable of operating subject to the non-extinguishment principle. On that basis, it follows that "lease" in s 47B(1)(b)(i) does not include a "mining lease" – it means "lease (other than a mining lease)" – and, therefore, that "lease" in s 47B does not include a petroleum exploration permit or an exploration licence. Conclusion and orders The appeals should be allowed. In Matter No P37 of 2018, the orders of the Full Court of the Federal Court made on 16 March 2018 should be set aside and in their place it should be ordered that the appeal to the Full Court be dismissed. In Matter No P38 of 2018, Orders 1 and 2(c) made by the Full Court of the Federal Court on 1 February 2018 should be set aside and in place of Order 1 it should be ordered that the appeal be allowed in part. 88 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[71] per McHugh, Gummow, Kirby and Hayne JJ; [1998] HCA 28; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at 368 [14] per Kiefel CJ, Nettle and Gordon JJ, 374 [35]-[37] per Gageler J; [2017] HCA 34. 89 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320-321 per Mason and Wilson JJ; [1981] HCA 26; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ; [1997] HCA 2. 111 GORDON J. Each of the appellants, acting on behalf of a native title claim group – respectively, the Ngurra people and the Tjiwarl people – made native title determination claims under the Native Title Act 1993 (Cth) over vacant Crown land which was partly subject to a mineral exploration licence or a petroleum exploration permit. Each claim group was determined to have native title rights and interests in the vacant Crown land but it was determined that their rights to exclusive possession had been extinguished by other prior valid historic acts90. Section 47B(2) of the Native Title Act, under the headings "Vacant Crown land covered by claimant applications" and "Prior extinguishment to be disregarded", provides that, for all purposes under the Native Title Act in relation to a claimant application over vacant Crown land, any extinguishment of native title rights and interests in a claim area by the creation of any prior interest in relation to the area must be disregarded. That is, when determining, under s 225 of the Native Title Act, whether native title exists in relation to a particular area of vacant Crown land, the historic extinguishment of the native title by any prior interest is to be "ignored"91. However, in certain circumstances, the historic prior interests are not to be ignored. The effect of s 47B(1)(b) is that the historic prior interests are not to be ignored if, at the time the application is made, the area is, relevantly: (i) "covered by a freehold estate or a lease"; (ii) "covered by a reservation, proclamation, dedication, condition, permission or authority, made or conferred by the Crown in any capacity, or by the making, amendment or repeal of legislation of the Commonwealth, a State or a Territory, under which the whole or a part of the land or waters in the area is to be used for public purposes or for a particular purpose"; or (iii) "subject to a resumption process". In the Ngurra appeal92, the Full Court of the Federal Court of Australia accepted that petroleum exploration permits are capable of constituting a 90 See Helicopter Tjungarrayi on behalf of the Ngurra Kayanta People v Western Australia [No 2] [2017] FCA 587 at [1]; Narrier v Western Australia [2016] FCA 91 Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 69 [5.60]. 92 Attorney-General (Cth) v Helicopter-Tjungarrayi (2018) 260 FCR 247. In the Tjiwarl matter at first instance, Western Australia did not press its submission regarding s 47B(1)(b)(ii), given the findings of the Full Court in Tucker (on behalf of the Banjima People) v Western Australia [No 2] (2015) 328 ALR 637: see Narrier [2016] FCA 1519 at [1194]; see also Banjima People v Western Australia (2015) 231 FCR 456 at 496-498 [107]-[118]. permission or authority under which land is to be used for a particular purpose within s 47B(1)(b)(ii)93. However, their Honours held that "[g]iven the nature of the actual physical works to the land appear[ed] to be relatively confined (two exploration wells) and the land the subject of the permits authorised to be used [was] large", their Honours were not satisfied that the permits before the Court could be characterised as ones under which the whole or any part of the land was to be used for the particular purpose of exploring for petroleum, and therefore that the permits did not engage s 47B(1)(b)(ii)94. That finding was not challenged on appeal to this Court. Thus, in these appeals, the issue is whether the Full Court of the Federal Court was in each case correct to conclude95 that a mineral exploration licence or petroleum exploration permit is a "lease" within the meaning of s 47B(1)(b)(i). The answer is "no". The text and structure of the Native Title Act – and, in particular, s 47B(1)(b) – do not support, and do not require, the shoe-horning of a mineral exploration licence or a petroleum exploration permit into a "lease" within the meaning of s 47B(1)(b)(i). Division 3 of Pt 15 of the Native Title Act "contains definitions relating to leases"96. Section 242(1), in Div 3 of Pt 15, provides that the expression "lease" includes (a) a lease enforceable in equity, (b) a contract that contains a statement to the effect that it is a lease, or (c) "anything that, at or before the time of its creation, is, for any purpose, by a law of the Commonwealth, a State or a Territory, declared to be or described as a lease". It is an inclusive definition; it extends beyond a common law lease; it includes any instrument that is described by law as a lease. Thus, as this Court held in Western Australia v Ward97, the definition of "lease" in s 242(1) includes a mining lease granted under s 71 of the Mining Act 1978 (WA)98. 93 Attorney-General (Cth) (2018) 260 FCR 247 at 256 [30]-[31]. 94 Attorney-General (Cth) (2018) 260 FCR 247 at 258-259 [37]-[38]. 95 BHP Billiton Nickel West Pty Ltd v KN (Deceased) (2018) 258 FCR 521 at 537-541 [65]-[81]; Attorney-General (Cth) (2018) 260 FCR 247 at 250-251 [8]- 96 Native Title Act, s 241. See also Native Title Act, s 9. 97 (2002) 213 CLR 1 at 158-159 [288], 162-163 [298]-[299]; [2002] HCA 28. 98 See also Australia, House of Representatives, Native Title Bill 1993, Explanatory Memorandum Part B at 94. At this point, it is important to recognise that neither a mineral exploration licence under the Mining Act, nor a petroleum exploration permit under the Petroleum and Geothermal Energy Resources Act 1967 (WA), is declared to be or described as a lease and therefore neither satisfies s 242(1)(c) of the Native Title Act. Section 242(2), headed "References to mining lease", provides that: "In the case only of references to a mining lease, the expression lease also includes a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory." (emphasis added) The question is whether s 242(2) extends the definition of "lease" to include mining leases, mining licences and other authorities to mine throughout the Native Title Act or only when the Act refers to "lease" in the expression "mining lease". The answer is the latter. That conclusion is compelled by the text and structure of the Native Title Act and its legislative history. Section 242(2), in its terms, adopts a drafting technique which is used throughout the Native Title Act99. That sub-section provides that "[i]n the case only of references to a mining lease", the expression "lease" is to be given an extended meaning (emphasis added). The contrary view depends upon using the wider meaning given by s 242(2) to extend "lease" and not as s 242(2) requires – that the wider meaning operate only in the case of references to a "mining lease". Section 242(2) operates in a similar way to s 226(1), which alters the meaning of "act" in references to an act affecting native title and in other references in relation to native title. In each provision, the meaning of the word affected – "lease" or "act" – is changed when that word is used in a particular phrase or context in the Native Title Act. Section 242(1) and (2) operate in the same way. The word "lease", when used on its own in the Native Title Act, includes, among other things, those instruments declared by law to be a lease100. An instrument declared or described as a mining lease by law is a "lease" that satisfies s 242(1)101. But "lease" as it appears in the expression "mining lease" has an extended meaning that includes licences issued, and authorities given, by a law of the 99 See, eg, Native Title Act, ss 23B(2)(c)(vii), 24IC(2A)(b), 24MC, 24NA(1), 26(3), 44, 47A(4), 157(5), 184, 190E(12), 203FH(6)-(8), 226(1), 232B(3)(f), 238(1), 244(1) and 251D. 100 Native Title Act, s 242(1). 101 Ward (2002) 213 CLR 1 at 158-159 [288], 162-163 [298]-[299]. Commonwealth, a State or a Territory, by reason of s 242(2). Thus, where the expression "mining lease" is adopted in the Native Title Act, it captures a number of different kinds of instruments. In s 245(1), a "mining lease" is defined as a "lease" that "permits the lessee to use the land or waters covered by the lease solely or primarily for mining". However, as explained, references to the words "mining lease" in the Native Title Act also include "a licence issued, or an authority given, by or under a law of the Commonwealth, a State or a Territory", by operation of s 242(2). Thus, not every instrument that is captured by a reference to a "mining lease" will also be captured by a reference to a "lease" when "lease" is used on its own in the Native Title Act. That last statement requires unpacking. Where the word "lease" is used on its own, all that is required for an instrument to be caught is that the instrument meets the definition of "lease" in s 242(1). Division 3 of Pt 15 then provides definitions of particular types of leases by reference to characteristics additional to the broad definition of "lease" in s 242(1). A "mining lease" as defined in s 245(1) is one of those particular types of leases. Section 243(2) does not alter the construction of s 242(1) and (2). Section 243(2) goes no further than to ensure that in any provision in which the extended meaning of mining lease applies by operation of s 242(2), the use of the word "lessee" is given content that operates sensibly with respect to any licence or authority brought within the operation of the relevant provision. That construction of s 242(1) and (2) is reinforced by the legislative context and history of the Native Title Act. First, the Act proceeds on the principle of non-discrimination under which native title holders are, in many ways, to be treated the same as holders of freehold102. Second, consistent with that principle of non-discrimination, that construction of s 242(1) and (2) is reinforced by the references to "mining lease" in Pt 2 of the Native Title Act. Division 2 of Pt 2 concerns the validation of past acts. In that Division, if the past act is a grant of a "mining lease", the act is a "Category C past act"103 to which the non-extinguishment 102 See Australia, House of Representatives, Parliamentary Debates (Hansard), 16 November 1993 at 2880; Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 437-438; [1995] HCA 47; Ward (2002) 213 CLR 1 at 105-107 [121]-[124]; but see at 95 [94]-[95]. 103 Native Title Act, s 231. principle applies104. Division 2B of Pt 2, in addressing confirmation of past extinguishment of native title by certain valid or validated acts, provides that a mining lease is not a "previous exclusive possession act"105. Moreover, because a "mining lease" is not an event which extinguishes native title, when certain types of mining lease are granted over native title land, native title holders are granted rights, among others, to negotiate106 and to compensation under the similar compensable interest test107. And, as the Second Reading Speech to the Native Title Bill 1993 (Cth) records, it was Parliament's intention to treat as a non-extinguishing event not only the grant of a mining lease but any mining tenement. As the then Prime Minister said108: "Validation of mining leases will not extinguish native title rights, which can again be exercised in full after the grant, and any legitimate renewals, have expired. This is not discrimination against the mining industry, or some radical departure from existing practice. Let me quote, for example, section 113 of the Western Australian Mining Act. It states: When a mining tenement expires or is surrendered or forfeited, the owner of the land to which the mining tenement related may take possession of the land forthwith … How can we offer native titleholders any less?" Under the Mining Act 1978 (WA), a "mining tenement" was at the time, and remains109, defined as, among other things, a prospecting licence, exploration 104 See Native Title Act, ss 15(1)(d), 228, 231 and 238. The same approach is adopted in Div 2A, dealing with the validation of intermediate period acts: see Native Title Act, ss 22B(d), 232A and 232D. 105 Native Title Act, s 23B(2)(c)(i) and (viii), read with s 249C(1) (subject to ss 23B(2)(c)(vii) and 245(3)). 106 Native Title Act, ss 25 and 26(1A)-(1). 107 Native Title Act, ss 17(2)(c) and 240. 108 Australia, House of Representatives, Parliamentary Debates (Hansard), 16 November 1993 at 2880. 109 The definition of "mining tenement" was extended to include a "retention licence" with effect from 1 July 1994: see Mining Amendment Act 1993 (WA), s 10(2). licence, mining lease, general purpose lease or a miscellaneous licence granted or acquired under that Act110. Thus, s 242(2) is intended to ensure that where the expression "mining lease" is used, licences or authorities to mine are treated in the same way as a mining lease, do not extinguish native title and, depending on the circumstances, provide to native title holders a right to negotiate and to compensation. That construction is further reinforced by other provisions in the Native Title Act. Throughout the Act, there are provisions which apply to a "lease (other than a mining lease)"111 or where "the lease is not a mining lease"112. These provisions recognise that a mining lease is a "lease"113 within s 242(1) but that it separately has an extended meaning under s 242(2). Where these forms of expression are used, the Act is intended to apply to a lease but not to a mining lease at all – neither the definition within s 242(1) nor as expanded by s 242(2). Thus, s 242(2) operates to extend the meaning of "lease" in the expression "mining lease" to licences and authorities to mine in circumstances where the Native Title Act treats mining tenements as non-extinguishing events and confers certain rights on native title holders114. How does that construction then sit with s 47B? Section 47B is "a statutory mechanism designed to allow native title claimants who are in occupation of vacant Crown land to overcome the effect of past extinguishment and have their claim determined by the court"115. Section 47B(1)(b) identifies a field of exclusions from that general proposition. That is, it identifies with precision (in sub-paras (i)-(iii)) those competing interests which exist, at the time that the application for determination of native title is made, that permit the prior extinguishment to continue while that competing interest exists. 110 Mining Act 1978 (WA), s 8(1). 111 Native Title Act, ss 21(3)(a), 23B(2)(c)(viii), 24IC(4)(c), 43A(2)(a)(i), 232A(2)(e)(i), 232B(3)(g) and 246(1). 112 Native Title Act, ss 230(b) and 232C(b)(i). 113 At least because of Native Title Act, s 242(1)(c). 114 See, eg, Native Title Act, ss 23B(2)(c)(vii)-(viii), 24IC(4)(c), 26(1)(c)(i), 231 and 115 Australia, House of Representatives, Native Title Amendment Bill 1997, Explanatory Memorandum at 68 [5.56]. Section 47B(1)(b) employs a drafting technique used throughout the Native Title Act116: it starts with what might be described as the most extensive common law rights and interests in land to which the provision is intended to apply – such as freehold estates and leases – and then cascades down to lesser rights and interests – such as licences, permits and authorities. It may be that, on a given set of facts, a particular right or interest is captured by more than one paragraph of a provision. Or, in others, it may be that the particular right or interest is "cut off" at an early stage of the provision (where the paragraphs are cumulative). But if a particular right or interest is not – on the facts of the case – captured by any of the paragraphs of a provision, then it is not captured. To extend s 47B(1)(b)(i) to licences and authorities would be to stretch the meaning of "lease", a greater interest, to encompass a type of interest that is already addressed in s 47B(1)(b)(ii): a "permission or authority" made or conferred by Commonwealth, State or Territory legislation, under which land "is to be used ... for a particular purpose". As stated earlier, it was not contended that the Full Court in the Ngurra appeal erred in concluding that a petroleum exploration permit is capable of constituting a permission or authority under which land is to be used for a particular purpose. Indeed, for present purposes, it is sufficient to note that the words "permission or authority" in s 47B(1)(b)(ii) are intended to reflect the fact that less extensive interests, such as a permit or authority, made or conferred in the context of the remainder of s 47B(1)(b)(ii), will be sufficient to defer the fact that historic extinguishment of the native title by any prior interest is to be "ignored". Thus, in that context, s 47B(1)(b)(i) refers to a "lease", which, by its terms, includes a mining lease that satisfies the requirements of s 242(1). But that reference to "lease" does not, and is not intended to, extend to include the wider meaning of "mining lease" provided in s 242(2). Section 24LA of the Native Title Act provides no support for a contrary view. Section 24LA, dealing with low impact future acts, lists a number of acts that are not of that nature. The "grant of a lease" as well as "mining (other than fossicking by using hand-held implements)" are two of the listed acts. That both are listed is unsurprising. To "mine" is defined in s 253 of the Native Title Act as including to "explore or prospect for things that may be mined" and to quarry. The reference to mining should not be equated with a "mining lease" because, consistently with the drafting technique described earlier, the word "mining" in this context may include interests less extensive than the grant of a mining lease 116 See, eg, Native Title Act, ss 14(2), 19(2), 24GD(1), 24GE(1), 24ID(1), 24LA(1)(b) and 43A(2). The technique is also employed in the allocation of past acts and intermediate period acts into Category A, B, C and D classifications: see Native Title Act, ss 229-232 and 232B-232E. including, for example, interests arising from a joint venture agreement or a commercial agreement between corporations or individuals. Indeed, in s 24LA(1)(b)(v), the reference is to any future "act"117 that "does not consist of, authorise or otherwise involve" mining. Accordingly, contrary inappropriate to construe "lease" in s 47B(1)(b)(i) as including a reference to "mining lease" as expanded by s 242(2). to Western Australia's submissions, For those reasons, I agree with the orders proposed by Kiefel CJ, Bell, 117 Defined as including the grant of a "licence, permit, authority or instrument" and "an act having any effect at common law or in equity": Native Title Act, s 226(2)(b) and (f).

HIGH COURT OF AUSTRALIA CSR LIMITED & ANOR APPELLANTS AND JARRADD EDDY AS ADMINISTRATOR AD LITEM REPRESENTING THE ESTATE OF RESPONDENT CSR Limited v Eddy [2005] HCA 64 21 October 2005 S523/2004 & S524/2004 ORDER Appeal allowed in Matter No S523 of 2004. Appeal dismissed in Matter No S524 of 2004. Set aside order (1) of the Court of Appeal of the Supreme Court of New South Wales dated 26 November 2003 and, in its place, order that: the appeal to that Court is allowed; and the judgment of the Dust Diseases Tribunal of New South Wales dated 4 April 2003 be reduced to $300,419.49. Appellants to pay the costs of the respondent in this Court. On appeal from the Supreme Court of New South Wales Representation: D F Jackson QC with T G R Parker for the appellants in both matters (instructed by Makinson & d'Apice Lawyers) M J Joseph SC with F L Austin and S P W Glascott for the respondent in both matters (instructed by Alex Stuart & Associates) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Negligence – Damages – Asbestos-related disease – Compensation for plaintiff's inability to provide domestic assistance to wife – Whether damages are recoverable where a personal injury prevents a plaintiff from providing gratuitous personal or domestic services for another person ("Sullivan v Gordon damages") – Whether Sullivan v Gordon damages are analogous to Griffiths v Kerkemeyer damages – Whether Sullivan v Gordon should be accepted as part of the common law of Australia – Whether Sullivan v Gordon damages could be recovered for those years in which services may have been provided after the plaintiff's death up until the expected date of death but for the tort. Costs – Resolution of legal point – Relevance of recurrent litigant – Relevance of plaintiff with no interest in legal position beyond litigation. GLEESON CJ, GUMMOW AND HEYDON JJ. The defendants (who are the appellants in this Court) admitted liability for negligently exposing the plaintiff to asbestos and thereby causing him to contract mesothelioma. The trial judge, Judge O'Meally, the Dust Diseases Tribunal of New South Wales, ordered the appellants to pay $465,899.49 in damages to the plaintiff1. The New South Wales Court of Appeal dismissed an appeal against the President of The appellants now appeal against those orders3. The point at issue relates to one element in the damages: the figure of $165,480. That sum was described in the courts below as "Sullivan v Gordon damages"4. It was awarded as compensation for the plaintiff's inability, after the onset of mesothelioma, to continue to provide domestic assistance to his wife, who suffered from osteoarthritis. She found it difficult to bend and twist and thus to do housework and gardening. Before the onset of mesothelioma, the plaintiff had helped with vacuuming, cleaning, gardening and general maintenance, so far as a pre-existing injury permitted. At the time of the trial in 2003 the plaintiff was aged 61, and it was agreed that he was expected to die in 2004. The plaintiff's wife was aged 60. The figure of $165,480 was calculated on the basis that services would have been rendered for another 20 years, that the plaintiff would have rendered them for one and a half hours a day, and that the cost was $25 per hour. The product of that calculation was discounted by 20 percent for contingencies. No issue is now taken with the correctness of the figure awarded provided the relevant head of damage is recoverable in law, nor, after argument, was any taken at the trial. It is to be noted that the Sullivan v Gordon damages of $165,480 were awarded in addition to general damages of $165,000 and damages under Griffiths v Kerkemeyer5 of $71,640 for the period before trial and for the period between the trial and the plaintiff's expected date of death6. 1 Thompson v CSR Ltd (2003) 25 NSWCCR 113. 2 CSR Ltd v Thompson (2003) 59 NSWLR 77 (Handley, Sheller and Ipp JJA). The matter of costs was dealt with separately in CSR Ltd v Thompson (No 2) [2004] NSWCA 11. 3 The plaintiff died after the appeal to the Court of Appeal was instituted but before it was determined. The respondent in this Court is, by order of this Court, an administrator ad litem representing the plaintiff's estate. 4 Sullivan v Gordon (1999) 47 NSWLR 319. (1977) 139 CLR 161. 6 Thompson v CSR Ltd (2003) 25 NSWCCR 113 at 123-124 [42]. In New South Wales the right to Sullivan v Gordon damages stems from a decision of the Court of Appeal bearing that name7. In the present proceedings the appellants challenged the correctness of Sullivan v Gordon at first instance, but the primary judge correctly held himself to be bound by it8. The appellants also challenged its correctness in the Court of Appeal, but the Court of Appeal understandably refused to grant leave to re-argue it on the ground that it was a very recent decision by a bench of five judges specially constituted to determine the correctness of a contrary earlier decision of that Court9. The issues There are four questions for decision: (a) whether, where a personal injury prevents the plaintiff from providing gratuitous personal or domestic services for another person, the damages recoverable can include an amount calculated by reference to the commercial value of the services; (b) whether that head of damages is recoverable, in the case of an injury leading to death, for the "lost years", that is, in this case, for the 19 years in which the services might have been provided after the plaintiff's actual death up until the date to which he was expected to have lived had the tort not been committed; (c) whether, in the event of the answers to (a) or (b) being favourable to the appellants, the matter should nevertheless be remitted for reconsideration of the figure awarded for general damages; and (d) whether the answer to any of the first three questions should result in alteration to the Court of Appeal's costs order. Each question should be answered in the negative. 7 Sullivan v Gordon (1999) 47 NSWLR 319. 8 Thompson v CSR Ltd (2003) 25 NSWCCR 113 at 123 [40]. 9 CSR Ltd v Thompson (2003) 59 NSWLR 77 at 80 [12]. The state of the law In considering the arguments of the parties, it is convenient to summarise the legal background against which they must be evaluated. First, in Griffiths v Kerkemeyer10 this Court (Gibbs, Stephen and Mason JJ) held that in a claim for personal injury the plaintiff was entitled to recover an amount equivalent to the commercial cost of nursing and domestic services which had been provided in the past and would be provided in the future by the family or friends of the plaintiff. Secondly, in Van Gervan v Fenton11 Mason CJ, Brennan, Toohey, Gaudron and McHugh JJ affirmed the view of Stephen and Mason JJ in Griffiths v Kerkemeyer that the true basis of the claim was the need of the plaintiff for the services; that the plaintiff did not have to show that the need was or might be productive of financial loss; and that the plaintiff's damages were not to be determined by reference to the actual cost to the plaintiff of having the services provided or by reference to the income forgone by the provider, but by reference to the cost of providing those services generally in the market. Thirdly, in one jurisdiction there is legislation reversing the rules stated in the Griffiths v Kerkemeyer line of cases12, and in other jurisdictions there is legislation restricting the availability or the quantum of this head13. Fourthly, some jurisdictions, whether by purported application of the rules in Griffiths v Kerkemeyer, or by extension of them, or otherwise, permit recovery of damages reflecting the impaired capacity of plaintiffs to provide domestic services to their families. This claim was rejected in New South Wales by 10 (1977) 139 CLR 161. 11 (1992) 175 CLR 327 at 332-333, 340 and 347. 12 Common Law (Miscellaneous Actions) Act 1986 (Tas), s 5. 13 Motor Accidents Compensation Act 1999 (NSW), s 128; Civil Liability Act 2002 (NSW), s 15 (which does not apply to dust diseases litigation: s 3B(1)(b)); WorkCover Queensland Act 1996 (Q), s 315; Civil Liability Act 2003 (Q), s 59; Accident Compensation Act 1985 (Vic), s 134AB(24)(b); Transport Accident Act 1986 (Vic), s 93(10)(c); Wrongs Act 1958 (Vic), s 28IA; Motor Vehicle (Third Party Insurance) Act 1943 (WA), s 3D; Civil Liability Act 2002 (WA), s 12; Personal Injuries (Liabilities and Damages) Act 2003 (NT), s 23. Reynolds and Mahoney JJA (Glass JA dissenting) in Burnicle v Cutelli14. That case was followed by a majority (Kennedy and Olney JJ, Wickham J dissenting) of the Full Court of the Supreme Court of Western Australia in Maiward v Doyle15. To those jurisdictions can be added Scotland16. However, the Queensland Court of Appeal (Macrossan CJ, Davies JA and Fryberg J) accepted the claim in Sturch v Willmott17. So did the English Court of Appeal in Daly v General Steam Navigation Co Ltd18 and the Full Court of the Federal Court of Australia sitting on appeal from the Supreme Court of the Australian Capital Territory19. A bench of five members of the New South Wales Court of Appeal in Sullivan v Gordon then adopted a concession by counsel that Sturch v Willmott was correct and Burnicle v Cutelli was incorrect20. Since then, Sullivan v Gordon 14 [1982] 2 NSWLR 26. This was consistent with earlier authority: Pegrem v The Commissioner for Government Transport (1957) 74 WN (NSW) 417 (Street CJ, Owen and Walsh JJ); Simmonds v Hillsdon [1965] NSWR 837 at 839 per Brereton J; Regan v Harper [1971] Qd R 191 at 194-195 per Hoare J. 15 [1983] WAR 210. 16 According to the Scottish Law Commission, Damages for Personal Injuries: Report on (1) Admissibility of Claims for Services (2) Admissible Deductions, Scot Law Com No 51, (1978), par 35, to receive the claim "in the light of the existing principles of the law of reparation in Scotland … at first sight seems startling". This is because in Scots law "damages necessarily involve a loss, either actual or prospective": Edgar v Lord Advocate 1965 SC 67 at 71 per Lord President Clyde. legislative change was Because recommended (pars 34-44) and effected (Administration of Justice Act 1982 (UK), the claim was unknown to Scots law, 17 [1997] 2 Qd R 310. It had been accepted earlier in Waters v Mussig [1986] 1 Qd R 224 (Kneipp J). 18 [1981] 1 WLR 120; [1980] 3 All ER 696. See also Lowe v Guise [2002] QB 1369. 19 Cummings v Canberra Theatre Trust unreported, Full Court of the Federal Court of Australia, 18 June 1980 (Brennan, McGregor and Fisher JJ), discussed and followed in Hodges v Frost (1984) 53 ALR 373 at 384-385 per Kirby J, Gallop and 20 (1999) 47 NSWLR 319 at 331-332 [59]. has been followed in Western Australia21 and the Australian Capital Territory22. The opposite view has been taken by a majority of the Full Court of the Supreme Court of South Australia23. Principles similar to those stated in Sullivan v Gordon are applied there have been dissenting judgments25. In the United States there is an avenue of recovery for "a homemaker who is not a wage earner but whose earning capacity is devoted to providing household services"26. This was done by extension of principles relating to loss of earning capacity. in Canada24, although Finally, the Sullivan v Gordon principle has been assumed, subject to various limitations to be examined later, by the legislatures in Queensland27 and Victoria28, and enacted in the Australian Capital Territory29. 21 Easther v Amaca Pty Ltd [2001] WASC 328 (Scott J: the contrary Full Court decision in Maiward v Doyle, although referred to at [107], was not discussed); Thomas v Kula [2001] WASCA 362 (Wallwork J, Roberts-Smith J, Pidgeon AUJ: Maiward v Doyle was not discussed). 22 Brown v Willington [2001] ACTSC 100 (Crispin J). 23 Weinert v Schmidt (2002) 84 SASR 307 (Perry and Williams JJ, Gray J dissenting). The majority gave only brief reasons, but for Perry J's approach see Kite v Malycha (1998) 71 SASR 321 at 340-342. 24 See the authorities summarised in Carter v Anderson (1998) 160 DLR (4th) 464 at 470-475 (Nova Scotia Court of Appeal). 25 For example, those of Taylor and Ryan JJA in Kroeker v Jansen (1995) 123 DLR (4th) 652 at 663-674 (British Columbia Court of Appeal). 26 Dobbs, Law of Remedies: Damages – Equity – Restitution, 2nd ed (1993), vol 2 at 27 Civil Liability Act 2003 (Q), s 59(3). 28 Wrongs Act 1958 (Vic), s 28ID. In addition, in Sullivan v Gordon (1999) 47 NSWLR 319 at 335 [73]-[75] itself the relevant damages were treated as subject to the limits placed on Griffiths v Kerkemeyer damages by the then equivalent to the Motor Accidents Compensation Act 1999 (NSW), s 128, namely s 72 of the Motor Accidents Act 1988 (NSW). If this conclusion was correct, it was unintended, since in 1988 New South Wales law did not recognise Sullivan v Gordon damages. 29 Civil Law (Wrongs) Act 2002 (ACT), s 100, replacing Law Reform (Miscellaneous Provisions) Act 1955 (ACT), s 33. The arguments of the respondent in this Court call for the resolution of the question whether the common law of Australia is reflected in the Sullivan v Gordon authorities. If the answer is yes, the authorities opposed to Sullivan v Gordon must be overruled; if no, the Sullivan v Gordon authorities must be. Sullivan v Gordon as authority The status of Sullivan v Gordon as an authority is heavily qualified by the procedural course which that case took. It was argued on two separate occasions. On the first occasion three judges sat. Neither party referred to Burnicle v Cutelli, although the court evidently did. It directed that the matter be re-listed before five judges for further argument on the correctness of that case. "[I]f that decision was to stand, it would govern the outcome of this part of the appellant's claim so as to restrict the plaintiff to having this part of her lost capacity reflected in general damages only. Although making no reference to Burnicle v Cutelli, the trial judge clearly applied the principle stated by the majority that such a claim sounds only in general damages." She then criticised Burnicle v Cutelli, and continued31: "On the further argument in the matter, senior counsel for the respondent [defendant] accepted that Burnicle v Cutelli appears no longer to be good law. It will be clear from what I have said that I consider that to be the case." These events placed the Court of Appeal in a difficult position. It is of course commonplace for the courts to apply received principles without argument: the doctrine of stare decisis in one of its essential functions avoids constant re-litigation of legal questions32. But where a proposition of law is incorporated into the reasoning of a particular court, that proposition, even if it forms part of the ratio decidendi, is not binding on later courts if the particular 30 Sullivan v Gordon (1999) 47 NSWLR 319 at 331 [57]. 31 Sullivan v Gordon (1999) 47 NSWLR 319 at 331 [58]-[59]. 32 Moragne v States Marine Lines Inc 398 US 375 at 403 (1970) per Harlan J (for the Court); Planned Parenthood of Southeastern Pennsylvania v Casey, Governor of Pennsylvania 505 US 833 at 854 (1992) per O'Connor, Kennedy and Souter JJ (for the Court). court merely assumed its correctness without argument33. "[T]he presidents, … sub silentio without argument, are of no moment"34. Sullivan v Gordon, of course, cannot be criticised for proceeding by assumption, or sub silentio. The court focused very directly on the question of whether Burnicle v Cutelli should be overruled. But Sullivan v Gordon cannot be regarded as having proceeded by argument. None is recorded, and it flows from the stand of the parties at each of the hearings that very little, if anything, is likely to have been said against overruling Burnicle v Cutelli. No amicus curiae appeared to defend it. The normal function of forensic argument in pointing out difficulties in and necessary qualifications to the competing propositions advanced by adversaries could not be fulfilled. Hence the great advantages of adversarial debate were not available to the court. In Miliangos v George Frank (Textiles) Ltd35 Lord Simon of Glaisdale said: "although certainly a case is not decided per incuriam merely because it is argued on one side only … , the absence of a contrary argument will sometimes make it easier to establish a per incuriam exception, and in any case a judgment in undefended proceedings or a decision on an uncontested issue tends to have less authority than one given after argument on both sides." Further, Sullivan v Gordon, unlike other cases in which binding authorities have been overruled despite the absence of adversarial argument36, was not a case in which there was any dissenting judgment which the majority reasoning might have taken account of and profited from. 33 Baker v The Queen [1975] AC 774 at 787-789 per Lords Diplock, Simon of Glaisdale and Cross of Chelsea and Sir Thaddeus McCarthy (holding the Court of Appeal for Jamaica not bound by a Privy Council decision in which "the Board were doing no more than assuming for the purpose of disposing of the particular case, and without any further consideration on their own part, that the proposition of law relevant to the issue of fact in dispute between the parties to the appeal had been formulated correctly by counsel for both parties in agreement with one another"). See also National Enterprises Ltd v Racal Communications Ltd [1975] Ch 397 at 405-406 per Russell LJ, 407 per Cairns LJ and 408 per Sir John Pennycuick; Barrs v Bethell [1982] Ch 294 at 308 per Warner J; In re Hetherington, decd [1990] Ch 1 at 10 per Sir Nicolas Browne-Wilkinson VC. 34 R v Warner (1661) 1 Keb 66 at 67 [83 ER 814 at 815]. 35 [1976] AC 443 at 478. 36 For example Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349. However, whatever the weaknesses of Sullivan v Gordon as an authority, the essential questions must turn on the strength of the reasoning employed in it and cases like it. In this appeal that reasoning was both attacked and defended. Special and general damages There is one aspect of Burnicle v Cutelli which should be noted. The majority did not deny that the lost capacity of injured plaintiffs to assist their families was compensable: it merely said that, if the loss was to be compensated, compensation was to be given not as special damages but as part of general damages. Thus Reynolds JA said37: "[A]n assessment must be made as a component of an award of general damages, just as must be done in respect of any other deprivation which does not produce financial loss. The injured plaintiff has in such a case as this lost part of a capacity, the exercise of which can give to her pride and satisfaction and the receipt of gratitude, and the loss of which can lead to frustration and feelings of inadequacy." And Mahoney JA spoke to the same effect38. The effect of their reasoning was to deny that compensation for this type of loss was to be calculated by reference to the market cost of replacing the services39. Hence when those who support Sullivan v Gordon say that an injured plaintiff who loses the ability to care for a disabled relative loses "something of real value" to the plaintiff as well as the relative40, they are saying something true, but inconclusive: there is a loss, but it can be compensated as part of general damages. It does not follow from that fact that general damages will compensate for all aspects of the loss of capacity. Nor does it follow that the value of the plaintiff's loss of capacity can be measured by the cost of obtaining care for the disabled relative from professionals. Does Sullivan v Gordon follow from Griffiths v Kerkemeyer? The respondent contended both that Sullivan v Gordon fell within the rules in Griffiths v Kerkemeyer and that it was supportable by analogy with those rules. 37 [1982] 2 NSWLR 26 at 28. 38 [1982] 2 NSWLR 26 at 36. 39 [1982] 2 NSWLR 26 at 28-29 and 36-37. 40 Lowe v Guise [2002] QB 1369 at 1385 [38] per Rix LJ. The appellants' arguments turned on the proposition that either the principle in Sullivan v Gordon fell within Griffiths v Kerkemeyer or it did not; if it did not, the authorities asserting it had effected an anomalous and unwarrantable extension of the law and should be overruled. The proposition was structured in that way because of the majority reasoning in Sullivan v Gordon. The reasoning in Sullivan v Gordon. In Sullivan v Gordon the majority reasoning is that of Beazley JA, with whom Spigelman CJ, Powell and Stein JJA concurred. Perhaps because the party in whose interest it was to defend Burnicle v Cutelli conceded that it was not good law, and perhaps because none of the five judges dissented, the majority reasons were brief. After setting out the authorities, Beazley JA referred to the following statement of Reynolds JA in Burnicle v Cutelli41: "There are two losses: one to the recipients of the services and the other to the plaintiff personally. It is easy to quantify the losses to the recipients as being the value to them of the lost services. The difficulty lies in seeing how in principle the loss to [the plaintiff] is to be measured in the same way as the loss to the recipients. I am unable to find assistance in … Griffiths v Kerkemeyer … which … deals with another question, the compensation of an injured person in whom has been created a need, the satisfaction of which calls for the provision of services for which it is reasonable to pay." "… I cannot see any logical basis for the distinction drawn in Burnicle v Cutelli between the measure of damages in a traditional Griffiths v Kerkemeyer claim and the measure of damages for the loss sustained by the inability to care for a dependant child. The decision does not, in my opinion, reflect the true nature of a claim of this type, based as it is in a loss of pre-accident capacity which gives rise to a specific post-accident need". 41 [1982] 2 NSWLR 26 at 28. 42 (1999) 47 NSWLR 319 at 331 [58]. She continued43: "A person who has lost the capacity to care for a child or children is entitled to be compensated on the same basis as a traditional Griffiths v Kerkemeyer claim." This reasoning plainly views the Sullivan v Gordon head of recovery as based on the rules in Griffiths v Kerkemeyer. Similar reasoning appears to underlie the first reason which the fifth judge, Mason P, gave for overruling Burnicle v Cutelli: he referred to the "plaintiff's accident-created need", being a need to care for other members of the family which was not distinct in principle from the need to care for themselves44. The actual basis of Griffiths v Kerkemeyer. However, the Griffiths v Kerkemeyer line of cases does not turn on a "post-accident" or an "accident- created need" in the abstract. In Van Gervan v Fenton45 Mason CJ, Toohey and McHugh JJ said: "the true basis of a Griffiths v Kerkemeyer claim is the need of the plaintiff for those services provided for him or her". That passage was concurred with by Brennan J46 and quoted with approval by Gaudron J47. When later in their judgment Mason CJ, Toohey and McHugh JJ referred to "need", it was to "need" in that sense. Thus they immediately thereafter asserted the proposition that "it is the need for the services which gives the plaintiff the right to an award for damages"48. They reiterated it later when they spoke of "the services required by the injured person"49 and "the services which the plaintiff reasonably needs"50. Although Dawson J did not agree with the majority's approach in Van Gervan v Fenton, he accepted in Kars v Kars that the basis of Griffiths v Kerkemeyer was that a "plaintiff receives the value of services voluntarily provided by way of damages as compensation for the loss suffered by 43 (1999) 47 NSWLR 319 at 331-332 [59]. 44 (1999) 47 NSWLR 319 at 322 [2] (a). 45 (1992) 175 CLR 327 at 333 (emphasis added). 46 (1992) 175 CLR 327 at 340. 47 (1992) 175 CLR 327 at 347. 48 (1992) 175 CLR 327 at 333. 49 (1992) 175 CLR 327 at 334. 50 (1992) 175 CLR 327 at 337. reason of the injuries which manifests itself in the form of a need for those services", and what was in issue was "the voluntary provision of services to a plaintiff"51. The majority in Kars v Kars (Toohey, McHugh, Gummow and Kirby JJ) described the principle as permitting recovery of damages "in respect of the cost to a family member of fulfilling the natural obligations to attend to the injuries and disabilities caused to the plaintiff by the tort."52 The later reference to "the injured plaintiff's … needs" must be understood in the same sense53. So must references to the plaintiff's needs in Grincelis v House54. In short, as the appellants submitted, Griffiths v Kerkemeyer damages are awarded to plaintiffs to compensate them for the cost (whether actually incurred or not) of services rendered to them because of their incapacity to render them to themselves, not to compensate them for the cost of services which because of their incapacity they cannot render to others. In each instance there may be a "need" for services, but it is a different kind of need, and the recipient of the services is different. The respondent criticised the argument advanced for the appellants by saying that it falsely characterised the plaintiff's reduced capacity to help his wife as causing a loss to his wife, but not to him. That criticism may be fair up to a point, because the reduction in capacity is itself a loss to the plaintiff. But the criticism is not a valid criticism of the proposition that the plaintiff's loss is different from the loss remedied by the rules in Griffiths v Kerkemeyer. It follows that so far as the reasoning in Sullivan v Gordon rested on the view that a Sullivan v Gordon claim has the same basis as a Griffiths v Kerkemeyer claim, it is erroneous55. It cannot be said that the Sullivan v Gordon problem falls within the rules stated in the Griffiths v Kerkemeyer line of cases, or within any proposition logically deducible from those rules. 51 (1996) 187 CLR 354 at 360-361 (emphasis added). 52 (1996) 187 CLR 354 at 368 (emphasis added). 53 (1996) 187 CLR 354 at 372. 54 (2000) 201 CLR 321 at 332 [25] per Kirby J. 55 In Sturch v Willmott [1997] 2 Qd R 310 at 315-317 and 321 Macrossan CJ and Davies JA appear to have taken the correct view that the recovery they permitted could not be supported by the rule in Griffiths v Kerkemeyer; so did Glass JA in Burnicle v Cutelli [1982] 2 NSWLR 26 at 34. Can the outcome in Sullivan v Gordon be supported in any other way? Two ways were suggested – reasoning by analogy with Griffiths v Kerkemeyer, and "policy" reasoning. Is there an analogy between Sullivan v Gordon and Griffiths v Kerkemeyer? The respondent relied on an "analogy with Griffiths v Kerkemeyer". For the following reasons no analogy should be drawn. Controversial character of Griffiths v Kerkemeyer. First, the principle of Griffiths v Kerkemeyer is controversial, as evidenced by the number of legislative reversals or qualifications of it. There is also judicial dissatisfaction with it56. It can produce very large awards – some think disproportionately large compared to the sums payable under traditional heads of loss. Anomalous character of Griffiths v Kerkemeyer. Secondly, Griffiths v Kerkemeyer is anomalous in departing from the usual rule that damages other than damages payable for loss not measurable in money are not recoverable for an injury unless the injury produces actual financial loss. A plaintiff who has suffered negligently caused personal injury is traditionally seen as able to recover three types of loss. The first covers non-pecuniary losses such as pain and suffering, disfigurement, loss of limbs or organs, loss of the senses – sight, taste, hearing, smell and touch; and loss of the capacity to engage in hobbies, sport, work, marriage and child-bearing. Damages can be recovered in relation to these losses even if no actual financial loss is caused and even if the damage caused by them cannot be measured in money. The second type of loss is loss of earning capacity both before the trial and after it. Although the damages recoverable in relation to reduced future income are damages for loss of earning capacity, not damages for loss of earnings simpliciter, those damages are awardable only to the extent that the loss has been or may be productive of financial loss57. Hence "the valuation of the loss of 56 For example Van Gervan v Fenton (1992) 175 CLR 327 at 346 per Deane and Dawson JJ; Grincelis v House (2000) 201 CLR 321 at 332-333 [25]-[28] per Kirby J and 338-343 [50]-[60] per Callinan J. 57 Graham v Baker (1961) 106 CLR 340 at 347 per Dixon CJ, Kitto and Taylor JJ; Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 5 and 18 per Deane, Dawson, Toohey and Gaudron JJ and McHugh J respectively. earning capacity involves the consideration of what moneys could have been produced by the exercise of the [plaintiff's] former earning capacity"58. The third type of recoverable loss is actual financial loss, for example, ambulance charges; charges for medical, hospital and professional nursing services; travel and accommodation expenses incurred in obtaining those services; the costs of rehabilitation needs, special clothing and special equipment; the costs of modifying houses; the costs of funds management; and the costs of professionally supplied home maintenance services. It is not necessary for the costs actually to have been incurred by the time of the trial, but it is necessary that they will be incurred. The traditional view of the law was stated by Dixon CJ in Blundell v Musgrave59: "[B]efore a plaintiff can recover in an action of negligence for personal injuries an item of damages consisting of expenses which he has not yet paid, it must appear that it is an expenditure which he must meet so that at the time the action is brought, though he has not paid it, he is in truth worse off by that amount. Generally speaking the question whether he must meet the expense is to be decided as a matter depending upon his legal liability to pay it." That principle permits recovery by plaintiffs who, though at the time of the trial they have not made contracts for the provision of future care, will have to do so in future if they are to receive it60. Dixon CJ appears to have accepted this in a later statement in the same case61: "[T]he basis on which a plaintiff recovers expenses as special damages is that he will have to pay them whether he obtains the amount from the defendant as damages or not." 58 Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649 at 658 per 59 (1956) 96 CLR 73 at 79. 60 It was on the basis of that reasoning that in Scotland Griffiths v Kerkemeyer damages were refused: Edgar v Lord Advocate 1965 SC 67 (Lord President Clyde and Lords Carmont and Migdale, Lord Guthrie dissenting). 61 Blundell v Musgrave (1956) 96 CLR 73 at 79. Dixon CJ was in dissent, but not on these principles; Fullagar J (also dissenting) agreed with them62. The majority (McTiernan, Williams, Webb and Taylor JJ) assumed them to be sound, differing from the dissenters only on whether there was in that case an obligation to pay. So far as Griffiths v Kerkemeyer permits plaintiffs to recover the costs of nursing and home care services which are to be paid for, it accords with these principles. So far as it permits recovery of those costs even though the services may never be supplied or may never be paid for, it is not only exceptional, but anomalous. Different fields of operation. Thirdly, there is an important difference between the field in which Griffiths v Kerkemeyer applies and the field in which Sullivan v Gordon applies. In applying Griffiths v Kerkemeyer it is relatively easy to estimate the extent of the plaintiff's needs for personal care or services, and to calculate, by reference to the costs of professionals providing that care or those services, what the damages should be (even if it is possible or likely that the care will not be provided, either at all or by paid professionals). But the "need" of the plaintiff to care for others is much harder to evaluate. To examine it by reference to what care the plaintiff ought to have provided in the past would trigger invidious inquiries. To examine it by reference to what care the plaintiff in fact provided in the past would require investigation as to whether the intensity of the plaintiff's interests in providing the services might have been likely to change after the tort because of possible future events like divorce or the birth of new children, or for other reasons. The Sullivan v Gordon problem is not the practical one of calculating costs. It is the legal problem of deciding what test should be employed in deciding what costs need to be calculated. To that Sullivan v Gordon problem there is no Griffiths v Kerkemeyer parallel. Different approach to the "lost years". Fourthly, although Sullivan v Gordon as applied by the Court of Appeal in the present case permits recovery for the "lost years", ie the period within which the injured plaintiffs would have provided services but for the shortening of their lives by reason of the tort, there is no equivalent recovery under the rules in Griffiths v Kerkemeyer. This points against the existence of any analogy. Appeal to incongruity. The supposed analogy between Griffiths v Kerkemeyer and Sullivan v Gordon is sometimes derived from a supposed incongruity – permitting an injured plaintiff to recover Griffiths v Kerkemeyer damages for assistance in housework or gardening which the plaintiff cannot engage in, but not to recover Sullivan v Gordon damages for assistance with the care of a disabled relative which the plaintiff cannot engage in. Thus in Lowe v 62 Blundell v Musgrave (1956) 96 CLR 73 at 92. Guise63 Rix LJ was critical of the position under which "the loss of an injured person's ability to look after the family garden would be compensated, but the loss of his ability to look after his brother would not be". It is in fact far from clear that there is an incongruity in view of the differences between the field in which Griffiths v Kerkemeyer applies and the field in which Sullivan v Gordon applies. In any event there would be no incongruity if recovery under Griffiths v Kerkemeyer and Sullivan v Gordon were limited to costs that would be incurred. But it was no part of the respondent's submission that the law be reshaped along these lines. Conclusion. In Sturch v Willmott64 Macrossan CJ perceived an analogy between Griffiths v Kerkemeyer awards and awards now referred to as Sullivan v Gordon awards. He said: "The common element between the two factual categories is the disablement of a plaintiff and the justice of arranging assessments so that wrongdoers do not profit through having their damages reduced by the gratuitous efforts of care providers which are not intended to achieve that result." However, he accepted that the analogy was "very general". Indeed the supposed common element is so general that it does not permit the rules in Griffiths v Kerkemeyer to be used as premises for the conclusion reached in Sullivan v Gordon. Griffiths v Kerkemeyer is well-established, no challenge was made to it in this case, and nothing in this judgment is intended to encourage any future challenge. But to borrow the words of Lord Reid in another context, it is in some ways an "undesirable anomaly", and it should not be applied to "any class of case where its use [is] not covered by authority."65 Is Sullivan v Gordon supportable on "policy" grounds? The respondent's "policy" arguments outlined. The other avenue of support for Sullivan v Gordon relates to arguments based on "policy"66. While much of the advocacy for Sullivan v Gordon consists merely of dogmatic assertions and statements of velleity, particularly by law reform agencies67, the following arguments of the respondent, which to some extent involved "policy" 63 [2002] QB 1369 at 1385 [39]. 64 [1997] 2 Qd R 310 at 319. 65 Cassell & Co Ltd v Broome [1972] AC 1027 at 1086. 66 This was how Rix LJ frankly put it in Lowe v Guise [2002] QB 1369 at 1385 [38]. 67 For example, Royal Commission on Civil Liability and Compensation for Personal Injury: Report: Volume 1, (1978), Cmnd 7054-I, pars 352-354. contentions, rose higher than that. Injured plaintiffs who can no longer provide services to others as fully as they did before the tort have suffered loss of or impairment to their capacity to provide those services to others. That loss of or impairment to capacity is capable of valuation by reference to the market value of the services. Hence it is a compensable form of damage68. It is a head of damage for which appropriate compensation is not to be found by relying only on recovery for loss of amenities as part of general damages, for commonly supply of the services does not generate the pleasurable feelings often connected with amenities which have been lost69. A particular reason why compensation should be permitted for it is that if the work is not done, the health and safety of families will suffer, and if compensation is refused, the injured plaintiff's family will suffer hardship70. The respondent also argued that the authorities opposed to Sullivan v Gordon were flawed by two fallacies. One was that they concentrated too much on the loss to the persons assisted by the injured plaintiff's pre-accident activities, and not enough on the loss of the plaintiff's capacity. The other was that, by stressing the voluntary nature of the plaintiff's pre-accident activities, they obscured the fact that the plaintiff's capacity had economic value. "Policy" arguments in the cases. These and related arguments are commonly employed by academic lawyers and law reform agencies but do not lack judicial support. Thus in Sturch v Willmott71 Davies JA said: "There are, however, strong policy reasons in favour of measuring the damages in cases … of loss or diminution of capacity by a spouse/parent to provide domestic services formerly provided by her … to her spouse/children, by reference to the commercial replacement cost."72 68 Skelton v Collins (1966) 115 CLR 94 at 129 per Windeyer J. 69 Carter v Anderson (1998) 160 DLR (4th) 464 at 473 per Roscoe JA for the Nova Scotia Court of Appeal. 70 Carter v Anderson (1998) 160 DLR (4th) 464 at 473 per Roscoe JA for the Nova Scotia Court of Appeal. 71 [1997] 2 Qd R 310 at 321. 72 See also Carter v Anderson (1998) 160 DLR (4th) 464 at 473, where Roscoe J, speaking for the Nova Scotia Court of Appeal, summarised its reasons for following intermediate appellate courts in Saskatchewan, British Columbia, Alberta, Prince Edward Island and Newfoundland in adopting Sullivan v Gordon principles. He gave four. "One is … that otherwise the wrongdoer may be advantaged at the expense of the plaintiff or her gratuitous helper."73 He put the second thus: "There are also policy reasons which favour placing an economic value on the domestic contribution of a spouse to her family and treating the loss or diminution of the capacity to make that contribution as the spouse's loss rather than, as in former times, her husband's."74 The third reason was: "[I]n some cases it may be impossible to disentangle the services which the plaintiff formerly provided to her family from those which she provided for herself"75. Fourthly, he said that the loss or diminution in a plaintiff's capacity to provide domestic services was76: "analogous to a loss or diminution of earning capacity and should ordinarily be measured by the replacement cost of the services which, by reason of her loss or diminution, the plaintiff is no longer able to provide." It is proposed now to identify some consequences of the contentions thus summarised; to examine the extent to which Sullivan v Gordon has received statutory recognition; to notice some difficult features of the authorities on which the respondent relied; and to explain why, if the principle in Sullivan v Gordon is thought desirable, its introduction should be left to the legislature. 73 [1997] 2 Qd R 310 at 321. 74 In Sullivan v Gordon (1999) 47 NSWLR 319 at 322 [2] (c) Mason P employed a similar argument, and Beazley JA quoted the passage at 330 [52]. See also Sharman v Evans (1977) 138 CLR 563 at 598 per Murphy J (in a different context); Lowe v Guise [2002] QB 1369 at 1385 [38] per Rix LJ. 75 Mason P reasoned to the same effect in Sullivan v Gordon (1999) 47 NSWLR 319 at 322 [2] (b). 76 [1997] 2 Qd R 310 at 322. Beazley JA quoted this passage in Sullivan v Gordon (1999) 47 NSWLR 319 at 330 [52]. The exceptional character of Sullivan v Gordon. It is a general principle of the law relating to the recovery of damages for negligently inflicted personal injury that if the negligence has caused financial loss, it is recoverable as special damages, and if it has caused non-financial loss, that loss is recoverable as a component of an award of general damages77. While the courts (whether trial is by jury or by judge alone) take into account the particular ways in which incapacities are said to have revealed themselves after the injury, they do not, unless they are for some good reason specifically requested to do so, fragment the damages in the sense of arriving at separate conclusions about the amount of damages to be awarded for the loss or impairment of each particular capacity. Plaintiffs who, by reason of their injuries, lose the capacity to participate in social or sporting or religious organisations, thereby incidentally ceasing to provide services to those organisations, are compensated for that loss through an undifferentiated element of general damages. So, independently of Sullivan v Gordon, are plaintiffs who lose the capacity to perform domestic services. The effect of Sullivan v Gordon, on the other hand, is that it separates off one aspect of the post-injury diminution in the capacity of plaintiffs and holds that compensation for that particular diminution is not to come as part of a global award of general damages, but by a specific head of special damages. There is no other instance where the diminished capacity of an injured plaintiff is compensated by special damages apart from the exception of Griffiths v Kerkemeyer itself, and the quasi-exception of compensating for diminished capacity to earn by calculating the present value of the future income stream of plaintiffs, usually by reference to their earnings at the time of the accident. It may not matter, except in order to preserve continuity with traditional linguistic usages, whether the issue is posed as being one turning on what damages are recoverable as general damages and what are recoverable as special damages. The substantive issue is, assuming impairment of capacity, how the damages for that impairment are to be assessed. The question is whether there are good legal reasons to select as the basis of calculating damages for the plaintiff's impaired capacity to care for others the sums which those others would have to pay in the market to get the same care. A sub-question, to which there is diversity of response, is how far the impairment of the plaintiff's capacity to provide services is a loss to the plaintiff and how far it is a loss to the recipient of the services. "Doubtless it is more blessed to give than to receive, but surely, when services are terminated, their loss is felt by the person who received them 77 Burnicle v Cutelli [1982] 2 NSWLR 26 at 28 per Reynolds JA. rather than by the person now unable to give them. To say, contrary to the fact, that the loss is the giver's may give rise to a problem of valuation: the value of not having a gift to give may be quite different from its value to the recipient if you gave it."78 Sullivan v Gordon recovery as a loss of earning capacity. In Sturch v Willmott79 Davies JA drew an analogy between the plaintiff's loss of capacity to provide services to others and the plaintiff's loss of capacity to earn. If that analysis is sound, it highlights how Sullivan v Gordon recovery operates as an exception to the general rule80 that damages for loss of earning capacity are only recoverable to the extent that that loss was or might be productive of financial loss. On general principle, if a salaried ambulance worker and a volunteer ambulance worker are injured by the same tort which impairs their capacity to perform ambulance work, the former can recover damages calculated by reference to the probable earnings of ambulance workers, but not the latter81. Recovery by an unpaid supplier of domestic services of the commercial cost of replacing those services is a striking exception to general principle. Sullivan v Gordon and losses to the family. The respondent's "policy" arguments for Sullivan v Gordon recovery stressed the importance of that recovery as a means of avoiding "loss to the family"82. The law of tort concentrates on compensating injured plaintiffs. Analysing recovery by injured plaintiffs as a means of avoiding loss to their families highlights another 78 Weir, "Compensation for Personal Injuries and Death: Recent Proposals for Reform", in The Cambridge-Tilburg Law Lectures: First Series 1978, (1979) 1 at 79 [1997] 2 Qd R 310 at 322. The analogy apparently exists in the United States: see above at [9]. 80 See above at [30]-[31]. 81 Kite v Malycha (1998) 71 SASR 321 at 342 per Perry J. 82 See Lowe v Guise [2002] QB 1369 at 1380-1381 [26]-[27], 1382 [29]-[30] and 1385 [38] per Rix LJ. The respondent relied on a passage in Carter v Anderson (1998) 160 DLR (4th) 464 at 473 per Roscoe JA for the Nova Scotia Court of Appeal stressing the importance of the work of injured plaintiffs in maintaining "the health and safety of the family". exceptional aspect of Sullivan v Gordon. The Scottish Law Commission has put a justification for this approach83: "Within the family group, for practical reasons, a system of division of labour and pooling of income obtains in which, though in law the [plaintiff's] services are rendered gratuitously, they are in practice a species of counterpart for the benefits which that member receives as a member of the family group. If by reason of an accident a member of the family group loses the ability to offer the appropriate counterpart for the benefits he receives, he should be compensated for this loss." This is elegant reasoning, but it reveals how remote the loss compensated is from conventional loss and how in substance it is the family which benefits from the award of compensation for the loss even though the "family" is not the plaintiff. Sullivan v Gordon as an indirect benefit to recipients of care. This in turn reveals another principle to which Sullivan v Gordon recovery would be an exception. The understanding underlying the award of Sullivan v Gordon damages is that it gives the plaintiff the opportunity to acquire at commercial rates the services which the plaintiff rendered in the past so that the advantages which the recipients of the services enjoyed in the past will continue in the future. It is true that the plaintiff is not obliged to do that, any more than plaintiffs who recover Griffiths v Kerkemeyer damages for the future are obliged to spend them on securing the provision of care for themselves, for in Australian law there is no trust affecting those damages84. But the understanding that injured plaintiffs or persons acting on their behalf will arrange for the services to be acquired will no doubt be fulfilled in many cases. In that practical sense, Sullivan v Gordon awards benefit not only the plaintiff but also the persons cared for. The recovery of the market value of the services which plaintiffs can no longer supply to others creates an indirect avenue of compensation to the persons no longer supplied. The common law gave only limited direct avenues of recovery to those who have lost the benefit of an injured plaintiff's services: the 83 Damages for Personal Injuries: Report on (1) Admissibility of Claims for Services (2) Admissible Deductions, Scot Law Com No 51, (1978), par 38. 84 Griffiths v Kerkemeyer (1977) 139 CLR 161 at 177 per Stephen J and 193-194 per Mason J; Kars v Kars (1996) 187 CLR 354 at 371-372 per Toohey, McHugh, husband's action per quod consortium amisit85; the employer's action per quod servitium amisit86; and the torts of seduction, enticement and harbouring, by which a father could recover for the loss of his daughter's domestic services87. These avenues are now sometimes seen as "antique"88. Hence the existence of the husband's action for loss of consortium was not held to justify recognition of an equivalent action in wives89. Although the action per quod consortium amisit has been extended by statute in South Australia90 and has been recognised and modified in Queensland91, it has been abolished92 or radically limited93 in most jurisdictions. The torts of seduction, enticement and harbouring have been abolished in South Australia, the Australian Capital Territory and England94 and for decades have not been relied on elsewhere. The action per quod servitium amisit has been abolished in England95 and in large measure in Victoria96 and the 85 Toohey v Hollier (1955) 92 CLR 618. 86 Commissioner for Railways (NSW) v Scott (1959) 102 CLR 392 at 439-464 per 87 For example Brownlee v MacMillan [1940] AC 802 at 809-810. 88 Burnicle v Cutelli [1982] 2 NSWLR 26 at 31 per Glass JA. 89 Best v Samuel Fox & Co Ltd [1952] AC 716. 90 Civil Liability Act 1936 (SA), s 65 (formerly Wrongs Act 1936 (SA), s 33, which was in force at the time of the events leading to the plaintiff's injury). 91 Law Reform Act 1995 (Q), s 13; Civil Liability Act 2003 (Q), s 58. 92 Law Reform (Marital Consortium) Act 1984 (NSW), s 3; Common Law (Miscellaneous Actions) Act 1986 (Tas), s 3; Law Reform (Miscellaneous Provisions) Act 1941 (WA), s 3; Civil Law (Wrongs) Act 2002 (ACT), s 218; Administration of Justice Act 1982 (UK), s 2(a). 93 Transport Accident Act 1986 (Vic), s 93(1) and (2); Motor Accidents (Compensation) Act (NT), s 5; Work Health Act (NT), s 52. 94 Civil Liability Act 1936 (SA), s 68; Civil Law (Wrongs) Act 2002 (ACT), s 210; Administration of Justice Act 1982 (UK), s 2(c)(ii) and (iii). 95 Administration of Justice Act 1982 (UK), s 2(b) and (c)(i). 96 Transport Accident Act 1986 (Vic), s 93(1) and (2). Northern Territory97. There are admittedly statutory exceptions to the ban on recovery by those who have lost the services of the deceased, but they are carefully confined98. In the United States, the respondent submitted, Sullivan v Gordon damages were recoverable by reason of a widening of the action per quod consortium amisit99. It does not follow from the action per quod consortium amisit, by which a husband recovers for loss of his wife's services, that the husband should be able to obtain compensation for his failure to provide services to the wife (or vice versa). And, in view of the varied, but generally hostile, legislative response to the action per quod consortium amisit in Australia, it would not be right to extend it. There are reasons for not creating a further exception to the common law position denying direct recovery to those who have lost the benefit of an injured plaintiff's services by giving them indirect benefits via Sullivan v Gordon. Where a tort causes a supplier of services to cease to supply them to the recipients, to prohibit recovery (subject to very limited exceptions) by the former recipients of the commercial value of the services, while permitting recovery by the supplier of that value, would be anomalous, even if it were intrinsically desirable. The permission would in a practical sense circumvent the prohibition, and would swamp the exceptions to the prohibition. It would cut across the common law refusal to allow a wife to sue for loss of the services her injured husband provided to her, for by allowing the injured husband to recover moneys for the commercial value of those services, it would ensure that normally the wife would enjoy in a practical sense the value of the award. A more specific anomaly would arise on the facts of this case, which took place in South Australia, if the litigation had taken place in a South Australian 97 Motor Accidents (Compensation) Act (NT), s 5 and Work Health Act (NT), s 52. 98 For example Compensation to Relatives Act 1897 (NSW); Civil Liability Act 1936 (SA), Pt 5 (formerly Wrongs Act 1936 (SA), Pt 2) and other legislation following Lord Campbell's Act – the Fatal Accidents Act 1846 (UK). A quasi-exception is found in legislation ensuring the survival of causes of action available to the deceased victim of a tort, eg Law Reform (Miscellaneous Provisions) Act 1944 (NSW), s 2. 99 Edmonds v Murphy 573 A 2d 853 at 870-871 (Ct Spec App, Md, 1990) was referred to. court. The extension by the South Australian legislature of the action per quod consortium amisit to wives marks the limit which it sees as appropriate for recovery by recipients of services from injured plaintiffs. It is questionable whether the common law in these circumstances should be extended beyond that limit in the manner recognised in Sullivan v Gordon. The extension might also lead to a risk of double recovery: the defendant would have to pay an injured husband the market value of the services which that husband could not provide in future, while also paying the wife what she has lost under the statutory cause of action. There is no simple way of avoiding this outcome unless the unattractive course were taken of reading words into the South Australian statute, or unless a further qualification were imposed on Sullivan v Gordon recovery. The second possibility provides a further argument against recognising Sullivan v Gordon recovery in the first place. It is not surprising that the Supreme Court of South Australia has refused to recognise Sullivan v Gordon recovery100. Statutory modification of Sullivan v Gordon. A possible ground for not overruling Sullivan v Gordon might exist if it had achieved certain types of legislative recognition. An example would arise if the legislatures had enacted legislation which assumed its existence and correctness, particularly if the legislation was only workable on the assumption of its correctness101. Only three Australian legislatures have dealt with the problem to which In 2003 the Queensland Parliament enacted s 59(3) of the Civil Liability Act: "Damages are not to be awarded for gratuitous services replacing services provided by an injured person, or that would have been provided by the injured person if the injury had not been suffered, for others outside the Section 59(3) assumes that at common law damages are available for services provided by the injured person – a sound assumption in Queensland if Sturch v Willmott102 were correct. Section 59(3) limits recovery to non-gratuitous services outside the household. Section 59(3) is an example of Lord Reid's principle: 100 Weinert v Schmidt (2002) 84 SASR 307. 101 For example, Transco plc v Stockport Metropolitan Borough Council [2004] 2 AC 1 at 9 [6] per Lord Bingham of Cornhill. 102 [1997] 2 Qd R 310. "the mere fact that an enactment shows that Parliament must have thought that the law was one thing does not preclude the courts from deciding that the law was in fact something different"103. Section 59(3) is not an example of legislation unworkable unless an assumption as to the common law is correct104. To overrule Sturch v Willmott and Sullivan v Gordon would not make s 59(3), which simply limited the common law rule, unworkable. By itself that legislative decision is not a conclusive or even persuasive guide to the content of the common law; it merely reflects a legislative policy choice. Section 28ID of the Wrongs Act 1958 (Vic) provides: "No damages may be awarded to a claimant for any loss of the claimant's capacity to provide gratuitous care for others unless the court is satisfied that – the care – was provided to the claimant's dependants; and (ii) was being provided for at least 6 hours per week; and (iii) had been provided for at least 6 consecutive months before the injury to which the damages relate; or there is a reasonable expectation that, but for the injury to which the damages relate, the gratuitous care would have been provided to the claimant's dependants – for at least 6 hours per week; and for a period of at least 6 consecutive months." This is like the Queensland legislation in assuming a common law position but cutting it back in particular aspects. 103 Birmingham Corporation v West Midland Baptist (Trust) Association (Inc) [1970] AC 874 at 898. 104 See, generally, Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 603-604, 611-615 per Gummow J. The only other Australian legislative initiative was taken by the Australian Capital Territory. Section 100 of the Civil Law (Wrongs) Act 2002 (ACT) provides in part: "(1) A person's liability for an injury suffered by someone else because of a wrong includes liability for damages for any resulting impairment or loss of the injured person's capacity to perform domestic services that the injured person might reasonably have been expected to perform for his or her household if he or she had not been injured. In an action for the recovery of damages mentioned in subsection (1), it does not matter – (a) whether the injured person performed the domestic services for the benefit of other members of the household or solely for his or her own benefit; or that the injured person was not paid to perform the services; that the injured person has not been, and will not be, obliged to pay someone else to perform the services; or that the services have been, or are likely to be, performed (gratuitously or otherwise) by other people (whether members of the household or not)." Legislation to this effect was introduced in 1991 as s 33 of the Law Reform (Miscellaneous Provisions) Act 1955 (ACT)105. It thus postdates the first English case recognising Sullivan v Gordon recovery in 1980106. But it predates all Australian cases recognising it except for two decisions of the Full Court of the Federal Court of Australia on appeal from the Supreme Court of the Australian Capital Territory107. Apart from them, in 1991 the Australian 105 Law Reform (Miscellaneous Provisions) (Amendment) Act (No 2) 1991 (ACT), s 5. 106 Daly v General Steam Navigation Co Ltd [1981] 1 WLR 120; [1980] 3 All ER 696. 107 See Cummings v Canberra Theatre Trust unreported, Full Court of the Federal Court of Australia, 18 June 1980 (Brennan, McGregor and Fisher JJ), discussed in Hodges v Frost (1984) 53 ALR 373 at 384-385 per Kirby J, Gallop and Morling JJ concurring. common law, as reflected in decisions of intermediate appellate State courts, was against Sullivan v Gordon recovery108. Section 33 reflects a legislative decision that the law in the Australian Capital Territory should be as stated in the cases decided on appeal from the Supreme Court of the Australian Capital Territory, not as stated in the State courts. It was a response to a 1986 report of the Australian Law Reform Commission recommending the change as desirable in view of a concurrent recommendation to abolish the action per quod consortium amisit109. The legislative assumption thus appears to be that Sullivan v Gordon is not part of the common law, for if it were, the legislation would have been unnecessary110. Further, the reasoning lacks force as a justification for effecting judicial, as distinct from legislative, change in the common law, because while the action per quod consortium amisit has been abolished in one jurisdiction and limited in other jurisdictions, it survives to some degree111. Even if it were possible to infer from the Queensland and Victorian legislation any relevant legislative assumptions, a central difficulty would remain. The controversy concerns the existence of a common law doctrine. In Australia there is a single common law. If every legislature had enacted legislation assuming the correctness of the Sullivan v Gordon doctrine, that might be a pointer towards its existence as a matter of common law. But there is no consistent pattern of State legislation of that kind112. Difficulties in Glass JA's reasoning. Although the respondent relied on the reasoning of Glass JA in Burnicle v Cutelli, he, like Reynolds JA and Mahoney JA, refused recovery. He did so because he saw recovery as dependent on whether there was a "reasonable necessity of providing [the] service [formerly 108 Burnicle v Cutelli [1982] 2 NSWLR 26; Maiward v Doyle [1983] WAR 210. 109 Community Law Reform for the Australian Capital Territory: Second Report: Loss of Consortium: Compensation for Loss of Capacity to do Housework, Report No 32, (1986), pars 18-44. 110 On the other hand, in Brown v Willington [2001] ACTSC 100 at [109] and [117] Crispin J saw the statutory claim as overlapping, but not coextensive with, 111 See [44] above. 112 See Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 62-63 [24]-[27] per Gleeson CJ, Gaudron and Gummow JJ, discussing the related issue of whether the common law can be developed by analogy to legislative developments. supplied by the plaintiff] at a commercial cost"113. The claim was based on the work of the injured plaintiff's daughter in cleaning, cooking and laundering for her mother (the plaintiff), her invalid father, her unemployed brother and her school age sister. "The defendant is entitled to say that the domestic burden she bears could be substantially lightened if her mother, brother or father gave her some assistance and that it is not reasonably necessary to procure her services at a cost."114 Although that entitlement would not avail the present appellants, this qualification was not supported by the respondent. It does, however, highlight uncertainty about how the Sullivan v Gordon principle is to be defined. Difficulties in Daly's case. The result in Daly v General Steam Navigation Co Ltd115 is defensible to the extent of its being in part an application of Griffiths v Kerkemeyer. The plaintiff recovered for the cost of employing a person to help her with housekeeping tasks carried out for the benefit of herself and her family, although no such person had been or would be employed, the work in fact having been done by her husband and other relatives. The decision, delivered ex tempore, has the curious feature that recovery was said to be allowable for the future on the basis of the cost of employing someone to do the work, whether or not the plaintiff intended to employ anyone, but for the past only on what was spent in employing someone, or on what earnings the plaintiff's husband lost in giving up work to assist her. This is insupportable, because the two approaches cannot stand together. The English Law Commission thought that the common law would develop so as to eliminate the contradiction116. But Potter LJ declined to recognise or bring about that development in Lowe v Guise117. Difficulties in Lowe v Guise. Lowe v Guise was decided on assumed facts118. The claim in that case, an English case, would have been recognised in Scotland as a result of legislation applying only to Scotland – the Administration 113 [1982] 2 NSWLR 26 at 34. Glass JA's judgment was also relied on in, for example, Sullivan v Gordon (1999) 47 NSWLR 319 at 330 [48] itself. 114 Burnicle v Cutelli [1982] 2 NSWLR 26 at 35. 115 [1981] 1 WLR 120; [1980] 3 All ER 696. 116 Damages for Personal Injury: Medical, Nursing and Other Expenses; Collateral Benefits, Law Com No 262, (1999), pars 3.88-3.92. 117 [2002] QB 1369 at 1390 [57]. 118 [2002] QB 1369 at 1386 [41] and 1390 [58]. of Justice Act 1982 (UK), s 9. The Court of Appeal said that the essential question was whether a claim which would succeed in Scotland had to fail in England because Parliament had not seen fit to enact a similar provision for England. The Court of Appeal was acutely anxious to avoid what it saw as incongruity of outcome, and this was important in causing it to reverse either a contrary decision, or strong dicta, of its own given less than three years earlier in Swain v London Ambulance Service NHS Trust119. For Scotland, but not for England, Parliament enacted a form of Griffiths v Kerkemeyer recovery in s 8 of the Administration of Justice Act 1982 and a form of Sullivan v Gordon recovery in s 9. Rix LJ in Lowe v Guise120 said that the reason was that "Parliament believed that in England the common law had developed or was capable of developing along the lines recommended by" the Pearson Report in 1978121, the English Law Commission in 1973122 and the Scottish Law Commission in 1978123. But what lines, precisely? The Scottish Law Commission124 recommended, and Parliament enacted, a statutory duty on the plaintiff to account to the relative who has rendered care to the plaintiff for the damages recovered: s 8(2) of the Administration of Justice Act 1982. The Scottish Law Commission differed on this point from the Pearson Report125 and 119 Unreported, Court of Appeal (Civil Division), 12 March 1999: the key passages are set out in Lowe v Guise [2002] QB 1369 at 1376-1379 [20]-[22]. Rix LJ contended that Swain's case had no ratio: at 1385 [37]. Potter LJ, a party to Swain's case, said that it had not bound the trial judge to find as he did: at 1387 120 [2002] QB 1369 at 1383 [34]. 121 Royal Commission on Civil Liability and Compensation for Personal Injury: Report: Volume 1, (1978), Cmnd 7054-I, pars 352-354. 122 Report on Personal Injury Litigation – Assessment of Damages, Law Com No 56, (1973), par 157. 123 Damages for Personal Injuries: Report on (1) Admissibility of Claims for Services (2) Admissible Deductions, Scot Law Com No 51, (1978), pars 34-44. 124 Damages for Personal Injuries: Report on (1) Admissibility of Claims for Services (2) Admissible Deductions, Scot Law Com No 51, (1978), pars 21-23 and 29-32. 125 Royal Commission on Civil Liability and Compensation for Personal Injury: Report: Volume 1, (1978), Cmnd 7054-I, pars 347-349. the English Law Commission126. Thereafter the common law of England relating to Griffiths v Kerkemeyer was altered by the House of Lords in Hunt v Severs127 by holding that there was a trust over moneys recovered by an injured plaintiff in relation to care to be supplied to the plaintiff, the beneficiary being the carer. That is not a proposition known to Australian law128. Rix LJ in Lowe v Guise referred to the view of the English Law Commission in 1999129 that the loss recoverable under Sullivan v Gordon "should be compensated as a pecuniary loss to the claimant where he or she has paid or will pay for the work to be done, as a loss to the third party where that third party has carried out, and will carry out the work for free, and as an element of non-pecuniary loss where the claimant has struggled on with the work regardless and will continue to do so." He also referred to that Commission's view that it was unnecessary to recommend legislative enactment of this position because "the common law can be expected to reach" it130. He did not refer to the Law Commission's recommendations (which correspond with the Administration of Justice Act 1982, s 9) that where damages are awardable for past work, the plaintiff should be under a personal obligation to account to the person who did the work, but that there should be no obligations of that kind to pay third parties for work done in the future. Indeed he implicitly rejected the latter recommendation, because he said of the injured plaintiff in that case, whose inability to care for his disabled brother in the future as he had in the past was expected to be overcome partly by his mother: "To the extent that his mother has by her own additional care mitigated the claimant's loss, it may be that the claimant would hold that recovery in trust for his mother."131 There is no persuasive value for Australian courts in Lowe v Guise. That is because its conclusions are arrived at by reasoning which seeks at times to 126 Report on Personal Injury Litigation – Assessment of Damages, Law Com No 56, (1973), par 155. 128 Griffiths v Kerkemeyer (1977) 139 CLR 161; Kars v Kars (1996) 187 CLR 354. 129 Damages for Personal Injury: Medical, Nursing and Other Expenses; Collateral Benefits, Law Com No 262, (1999), pars 3.88-3.90. 130 Damages for Personal Injury: Medical, Nursing and Other Expenses; Collateral Benefits, Law Com No 262, (1999), par 3.92. 131 [2002] QB 1369 at 1385 [38] per Rix LJ. relate itself closely to, and at times departs from, legislation enacted in one part but not another part of to unharmonious recommendations by Law Commissions and a Royal Commission in the United Kingdom, particularly where local law reform bodies have not made those recommendations and where the content of those recommendations diverges sharply from Australian law. the United Kingdom and Where is the line to be drawn? The respondent contended that recovery should be limited by reference to services in the nature of domestic work which the injured plaintiff had been providing before the tort, which the plaintiff was morally or legally obliged to provide, which were reasonably necessary, which were generally recognised as having a commercial value, and which went beyond what was generally provided by persons in the relationship between the plaintiff and those receiving the services132. But the respondent did not state a legal principle justifying the extending of recovery to or the limiting of recovery at that point. If what is crucial is impairment in the plaintiff's capacity, a question must arise as to why any of these limitations are to be accepted. How far, then, does the Sullivan v Gordon principle go? To loss of capacity to care for close family members (de jure or de facto), or any family members (de jure or de facto), or foster children, or members of the plaintiff's household133, whether "immediate" or "extended"134; and if to any of these classes, only to dependent members of them, or all members of them? If only to close family members, what is "closeness"? If only to dependent members, what is "dependency"135? If the test turns on damage to capacity, why should recovery not extend beyond domestic services? Should it apply beyond domestic services to the wide range of educative services healthy parents supply their children of an academic, sporting or cultural kind? "And if the incapacity to give gratuitous services is a loss to the 132 Reliance was placed on Lowe v Guise [2002] QB 1369 at 1386 [41] per Rix LJ and 1388 [52] per Potter LJ. For a discussion of the difficulties in setting limits to recovery, see Sullivan v Gordon (1999) 47 NSWLR 319 at 322-324 [2]-[15] per Mason P. 133 As in the Australian Capital Territory: Civil Law (Wrongs) Act 2002 (ACT), s 100. 134 The terms are those of Macrossan CJ in Sturch v Willmott [1997] 2 Qd R 310 at 319: he favoured both. 135 The Scottish legislation permitting recovery turns on a complex definition of "relative": Administration of Justice Act 1982 (UK), s 13(1). The Law Commission, Report on Personal Injury Litigation – Assessment of Damages, Law Com No 56, (1973), par 157 said the class should be dependants under the Fatal Accidents Act 1846 (UK). giver, ought one not to pay the pious spinster whose charitable works are inhibited by injury?"136 Or should it extend to services provided to friends, or to neighbours? Should it extend to plaintiffs who customarily visited or helped many hospital patients, or old people, or destitute people; or provided volunteer emergency services to others even though they were complete strangers to that plaintiff137? Does the test turn on a legal duty to provide services, or on a moral duty to do so, or on what services the plaintiff might reasonably have been expected to perform if there had been no injury138, or on what services were or might have been expected to have been rendered before the injury139 or on a mere practice of having provided services? If the injury to the plaintiff causes a loss of capacity which has not been utilised in the past to help others, should that loss be compensated under this head? What inquiry should be made into the likelihood that a capacity which has been utilised to help others before the injury would have continued to be utilised after it? Since that likelihood may vary as between fragile and enduring relationships, and since it may have been likely to diminish as the plaintiff became older or more fatigued, is it open to or obligatory for the court to engage in assessment of whether care would continue to be provided, for how long, and at what level? Is this inquiry to be regarded as invidious140? Should the same damages be payable to an injured homemaker who did little housework and fed the family on fast food as to an injured homemaker who spent all day working in the home? Or would an inquiry into the plaintiff's levels of skill in and application to the performance of domestic tasks be invidious141? Should the injured plaintiffs be under an obligation to account for any recovery to the persons to whom the plaintiffs can no longer perform services? 136 Weir, "Compensation for Personal Injuries and Death: Recent Proposals for Reform", in The Cambridge-Tilburg Law Lectures: First Series 1978, (1979) 1 at 137 See the questions posed by Macrossan CJ in Sturch v Willmott [1997] 2 Qd R 310 at 315 and 317-318. 138 As in the Australian Capital Territory: Civil Law (Wrongs) Act 2002 (ACT), s 100. 139 As in Scotland: Administration of Justice Act 1982 (UK), s 9(3)(a). 140 See the points made, in a Griffiths v Kerkemeyer context, in Van Gervan v Fenton (1992) 175 CLR 327 at 336 per Mason CJ, Toohey and McHugh JJ; Grincelis v House (2000) 201 CLR 321 at 343 [62] per Callinan J. 141 Kite v Malycha (1998) 71 SASR 321 at 342 per Perry J. The respondent argued that his success in this case did not depend on these problems being solved, and that their solution could await other cases. This overlooks the need to identify an underlying principle justifying recovery. There is something to be said for and against each of the possibilities just raised, no doubt142. The appellants contended that the particular choices to be made were not compelled either by existing legal principle or by any of the forms of legal reasoning employed in developing the common law. They were policy choices to be made, if at all, by legislatures. Factors relevant to developing the common law. In argument various factors pointing for and against the merits of changing the common law as stated in Burnicle v Cutelli were mentioned. The respondent relied on the following factors as reasons not to return to the New South Wales position in Burnicle v Cutelli: that it was unjust and inconvenient; that it was out of line with many other common law jurisdictions; and that there had been no statutory repeal of Sullivan v Gordon, and some legislative recognition of it. On the other hand, there was no contradictor in Sullivan v Gordon; it is difficult clearly to formulate the principle on which it rests; it cannot readily be fitted coherently into the general law of tort; and there has in the past been considerable judicial disagreement about it. If Sullivan v Gordon were thought to represent a desirable principle, it would be better for that principle to be stated clearly in legislation after reviewing the whole of the relevant field, particularly since to some degree it is not a mere matter of lawyers' law, but raises political issues about the legitimate extent of recovery. These stem from the potential scale of recovery. As increasing numbers of people live to great ages, creating a wider need for care, the question of how far defendants who have tortiously injured the carers of those people should be liable becomes both an important question and a question on which the opinions of citizens may differ sharply. The same is true where a young plaintiff has been caring for a young person143, so that very large awards might be made in circumstances where there is no guarantee that the care would have continued. 142 See Graycar, "Compensation for Loss of Capacity to Work in the Home", (1985) 10 Sydney Law Review 528; Kutner, "Damages for Injuries to Family Members: Does Reform Mean Abolition?", (1993) 1 Torts Law Journal 231 at 250-264 and 143 As in Lowe v Guise [2002] QB 1369. The respondent's arguments, then, are not necessarily to be rejected for flaws in the policy reasoning on which they rest; they are to be rejected because they rest on policy reasoning which it is more appropriate for legislatures to weigh than for courts. In these circumstances, if it is desired to confer the rights recognised in Sullivan v Gordon on plaintiffs, the correct course to follow is that taken in the Australian Capital Territory and Scotland: to have the problem examined by an agency of law reform, and dealt with by the legislature if the legislature thinks fit144. Conclusion. All the Australian cases supporting Sullivan v Gordon as a principle of Australian common law should be overruled145. Does Sullivan v Gordon apply to the "lost years"? Since the Australian common law does not recognise Sullivan v Gordon recovery in relation to the period before the plaintiff's death, it does not do so thereafter either. Remission A question arose whether, if the appellants' arguments succeeded, the matter should be remitted in order to examine whether the amount allowed for general damages should be increased. This question should be answered in the negative. 144 For the Australian Capital Territory, see Australian Law Reform Commission, Community Law Reform for the Australian Capital Territory: Second Report: Loss of Consortium: Compensation for Loss of Capacity to do Housework, Report No 32, (1986), pars 18-44; and the Civil Law (Wrongs) Act 2002 (ACT), s 100. For Scotland, see the report of the Royal Commission on Civil Liability and Compensation for Personal Injury: Report: Volume 1, (1978), Cmnd 7054-I, Ch 12; Law Commission, Report on Personal Injury Litigation – Assessment of Damages, Law Com No 56, (1973), par 157 and Scottish Law Commission, Damages for Personal Injuries: Report on (1) Admissibility of Claims for Services (2) Admissible Deductions, Scot Law Com No 51, (1978), pars 34-44, together with the Administration of Justice Act 1982 (UK), s 9 (discussed in Lowe v Guise [2002] QB 1369 at 1373-1378 [15]-[20]). 145 That is, those referred to in notes 17 and 19-22 above. The proposition that a plaintiff whose capacity to assist others before the tort can be regarded as an amenity may recover compensation for loss or impairment of that amenity, as part of general damages, has been long recognised146. It was accepted in Sullivan v Gordon147, Lowe v Guise148 and Carter v Anderson149. This head of recovery was available to the plaintiff at the trial in this case. Either it was relied on before the trial judge when the plaintiff claimed $180,000 general damages or it was not. If it was, it was included in the trial judge's award of $165,000 for general damages. If it was not, there is no reason why the respondent should be given the opportunity belatedly to seek more in a second trial on that question. Further, the amount recoverable, whether or not it has already been recovered, is likely to be relatively small, if only because of the much graver seriousness of the other factors going to the general damages awarded and because of the short period – less than two years – in which the relevant capacity was impaired. There is no injustice in depriving the respondent of the chance to obtain that amount in view of the fact that most of what the plaintiff claimed under Sullivan v Gordon was allowed under Griffiths v Kerkemeyer. The figure of $165,480 was justified in this Court by reference to (inter alia) gardening services, looking after a car, painting the house and maintaining the house. The Court of Appeal saw things differently: for it the figure of $165,480 represented the plaintiff's "loss of capacity to care for his disabled wife"150. These words apparently refer to the plaintiff's loss of capacity to assist his disabled wife in cleaning the house. Apart from that, what he lost was the capacity to carry out gardening, maintenance, and mechanical work on the family car. As pleaded, the plaintiff's claim for Griffiths v Kerkemeyer damages and his claim for Sullivan v Gordon damages were partly separate and partly intermingled. Relevantly the statement of claim gave the following particulars: "As a consequence of the injuries above, the Plaintiff has been unable and/or restricted to carry out work in and about his own home which he 146 Simmonds v Hillsdon [1965] NSWR 837 at 839 per Brereton J; Burnicle v Cutelli [1982] 2 NSWLR 26 at 28 per Reynolds JA. 147 (1999) 47 NSWLR 319 at 329-330 [46] and 331 [57] per Beazley JA. 148 [2002] QB 1369 at 1380-1381 [26]-[27] per Rix LJ. 149 (1998) 160 DLR (4th) 464 at 473 per Roscoe JA. 150 CSR Ltd v Thompson (2003) 59 NSWLR 77 at 79 [7]. was formerly able to perform. Further, the Plaintiff has required, and will continue to require care and assistance from family members. Further, the Plaintiff makes a claim for the loss of his capacity to provide services to his household and wife and/or pursuant to the principles set down in Sullivan v Gordon … … These services included vacuuming, mopping the floor and cleaning the bathroom. Prior to his contraction of mesothelioma, the Plaintiff spent, on average, 3-4 hours each day providing services to his wife and household. Such services included mowing the lawn; edging; maintaining the garden; pruning; trimming trees; hosing the gardens; outside maintenance; cleaning the car; vacuuming; turning mattresses; assisting his wife shop; running errands for his wife; and paying bills." Virtually all of the services were not services to the wife alone, but would also have brought benefits to the plaintiff himself and the other member of the household, the wife's mother. The plaintiff's written submissions to the primary judge contended that under Griffiths v Kerkemeyer the plaintiff was entitled to recover for paid services in relation to gardening, looking after the car and painting the house; while under Sullivan v Gordon the plaintiff was entitled to recover for paid services in relation to cleaning and shopping. Past Griffiths v Kerkemeyer damages were agreed at $21,828 (with interest of $945). Griffiths v Kerkemeyer damages for the future were agreed at $49,812. Assuming that the respondent's characterisation in this Court of the plaintiff's losses is correct, although they cannot be allowed under the Sullivan v Gordon principle because it does not exist, most of them were in fact allowed at trial under Griffiths v Kerkemeyer. Even if that characterisation is not correct, the minds of the parties and the court were sufficiently concentrated by the evidence not merely on the financial consequences of the plaintiff's loss of capacity, but on the fact of that loss of capacity considered as a loss of amenity. In these circumstances it would be a waste of the parties' financial resources and the court's time to engage in a further trial to decide whether general damages should be increased. After the close of oral argument the appellants sought leave to rely on further written submissions which were directed to withdrawing what was described as a concession made in the course of oral argument. That concession went only to the question of whether there should be a remission of the proceedings for further assessment of general damages. Accordingly it is not necessary to consider whether leave to rely on the further written submissions should be granted. Costs The appellants submitted that if the appeal succeeded they should have their costs both in the Court of Appeal and in this Court. The basis of this submission was that the Court of Appeal ordered, in relation to the proceedings before it concerning Sullivan v Gordon, that the appellants pay the costs, and that those costs be assessed on an indemnity basis from 3 June 2003. On that day the plaintiff offered to accept $115,470 in settlement of the appeal. On 17 June 2003, the appellants made a counteroffer of $35,000 which was rejected. The plaintiff's successful resistance to the challenge to Sullivan v Gordon not only caused the appeal to be dismissed, but also meant that the plaintiff had bettered his offer while the appellants had not bettered theirs. The appellants contended that if Sullivan v Gordon were overruled in this Court, the foundation for the costs orders would have disappeared. It is notorious that over many years the first appellant and other members of the group of companies to which it belongs mined asbestos, and manufactured and supplied asbestos-based products. Very large numbers of their employees have been exposed to asbestos; many of them have contracted asbestosis and mesothelioma as a result; many admissions or findings that these diseases were caused by their negligence in this respect have been made; many will be made in future. The appellants challenged Sullivan v Gordon below, applied for special leave to appeal, and prosecuted the appeals, in order to vindicate their long-term commercial interests, for success will unquestionably tend to reduce the quantum litigation, of which, of damages payable by unfortunately, there appears likely to be a large quantity in future years. in asbestos-related them In contrast, the plaintiff had no interest in the legal position beyond this particular litigation. Since the plaintiff's death the same is now true of the respondent, the administrator ad litem. It was entirely reasonable for the plaintiff to seek an award of Sullivan v Gordon damages in the Dust Diseases Tribunal of New South Wales, since that court was bound by the decision of a five-judge Court of Appeal in that case. The challenge to Sullivan v Gordon before the primary judge (which was inevitably rejected), in the Court of Appeal (which was not surprisingly repelled) and in this Court (which has succeeded) made this case a test case, designed to resolve a conflict amongst the intermediate appellate courts of the States and the Australian Capital Territory. It is common in this Court in cases where the resolution of a point is desirable from the point of view of a large and recurrent litigant, whether corporate (for example, an insurance company) or governmental (for example, the Commissioner of Taxation or the Australian Competition and Consumer Commission), but the other party to the litigation is not a recurrent litigant and is not well-positioned to meet adverse costs orders on the point being tested, for the grant of special leave to be made conditional on appellants paying the other side's costs in any event and on appellants not seeking to disturb costs orders in the courts below which were favourable to the other side. At the hearing of the special leave application, the respondent contended that special leave should only be granted on terms of that kind. The application was reserved to be dealt with on the hearing of the appeals. The appellants contend that these terms should not apply because of the costs offers made in June 2003, and because the appeals to this Court were only rendered necessary because of the plaintiff's decision to institute the proceedings in New South Wales (where Sullivan v Gordon applied) rather than South Australia (where it did not). These matters do not make the imposition of the terms requested by the respondent unjust. In the circumstances described above, it is appropriate that those terms as to costs apply. They are reflected in the orders proposed below, paragraph 2 of which will leave the costs orders of the Court of Appeal undisturbed. Orders The following orders should be made: The appeal in relation to the award of Sullivan v Gordon damages (Matter No S523 of 2004) is allowed. The appeal in relation to costs (Matter No S524 of 2004) is dismissed. Order (1) of the Court of Appeal of New South Wales dated 26 November 2003 is set aside and, in lieu thereof, it is ordered that: the appeal to that Court is allowed; and the judgment of the Dust Diseases Tribunal of New South Wales dated 4 April 2003 be reduced by $165,480.00 from $465,899.49 to The appellants pay the costs of the respondent in this Court. McHugh 83 McHUGH J. The principal issue in this appeal is whether a plaintiff may recover damages for the loss of capacity to perform gratuitous work for the benefit of his or her disabled spouse. In Griffiths v Kerkemeyer151, this Court held that an injured person may recover from a tortfeasor the commercial cost152 of domestic services provided to him or her to satisfy a need created by the injury, regardless of whether or not those services are provided gratuitously. Central to the issue in this appeal is whether the principle upon which Griffiths v Kerkemeyer was decided applies, or should be extended, to a claim for the costs incurred in replacing the provision of gratuitous services by the plaintiff to a spouse or other person. If that case does cover this class of claim, either directly or by a principled extension, a further question arises: does it apply to a period after the plaintiff's death, so that the plaintiff may recover the cost of providing care to dependants during the "lost years" of his life? The duration of the "lost years" is the difference between the plaintiff's life expectancy prior to the injury, and the actual date of the plaintiff's death. In Sullivan v Gordon153, the Court of Appeal of the Supreme Court of New South Wales held that the Kerkemeyer principle applied to such cases. In effect, it followed the decision of the Queensland Court of Appeal in Sturch v Willmott154 where Macrossan CJ recognised that to allow the plaintiff to recover the cost of providing services to others was probably an "extension" of Griffiths v Kerkemeyer155. In turn, Sullivan has influenced the development of the law of damages in several States156. The New South Wales Court of Appeal applied it in this case after refusing the appellants leave to argue that the Dust Diseases Tribunal of that State had erred in awarding damages in accordance with the decision in Sullivan v Gordon. 151 (1977) 139 CLR 161. 152 Van Gervan v Fenton (1992) 175 CLR 327. 153 (1999) 47 NSWLR 319. 154 [1997] 2 Qd R 310. 155 [1997] 2 Qd R 310 at 316. 156 Easther v Amaca Pty Ltd [2001] WASC 328; Brown v Willington [2001] ACTSC 100; cf Weinert v Schmidt (2002) 84 SASR 307. McHugh Statement of the case In September 2002, John Leonard Thompson sued CSR Limited, the first appellant, and Midalco Pty Limited, the second appellant, for damages in the Dust Diseases Tribunal of New South Wales. In the action, he claimed that, as a result of exposure to asbestos dust and fibre, he had developed malignant mesothelioma. The appellants admitted liability. The parties conducted the litigation on the basis that Mr Thompson was expected to die from mesothelioma in February 2004. In the event, he died some months earlier. O'Meally P, who tried the action, awarded Mr Thompson damages of $465,899.49. Included in the award was the amount of $165,480 for Mr Thompson's loss of capacity to care for his disabled wife including care that would be needed after his death. This head of damages was described as the Sullivan v Gordon157 head of damages. The wife suffered from osteoarthritis and was unable to undertake heavy domestic duties in and around the house. Mr Thompson performed these tasks until he became too debilitated to do so. The appellants appealed to the Court of Appeal of the Supreme Court of New South Wales on the ground that O'Meally P erred in allowing Sullivan v Gordon damages. The Court of Appeal rejected the appellants' application for leave to re-argue Sullivan v Gordon and upheld the award made by O'Meally P. The categories of special damages should not be extended The distinction between general and special damages is central to this case. Until the decision of this Court in Griffiths v Kerkemeyer158, the Court had employed the traditional usage of the terms. In Paff v Speed159, Fullagar J defined the difference between them in the following way: "Special damages are awarded in such cases in respect of monetary loss two actually suffered and expenditure actually characteristics are (1) that they are assessed only up to the date of verdict, and (2) that they are capable of precise arithmetical calculation or at least of being estimated with a close approximation to accuracy. The familiar examples are medical and surgical fees paid or payable, ambulance and hospital expenses, and loss of income. Where the plaintiff has been employed at a fixed wage or salary, his loss of income can commonly be incurred. Their 157 (1999) 47 NSWLR 319. 158 (1977) 139 CLR 161. 159 (1961) 105 CLR 549 at 558-559. McHugh calculated with exactness. Where the plaintiff has not been employed, but is, for example, a professional man, his monetary loss can be estimated without difficulty by reference to his past earnings. In a high proportion of cases the amount of the 'special damages' is agreed between counsel for the plaintiff and counsel for the defendant. 'General damages' on the other hand, are, of their very nature, incapable of mathematical calculation, and (although the expression is apt to be misleading) commonly very much 'at large'. They are at large in the sense that a jury has, in serious cases, a wide discretion in assessing them. Also general damages may be assessed not with reference to any limited period, but with reference to an indefinite future. Damages may be awarded for 'pain and suffering', and such damages are assessable for past, present and future pain and suffering. But here calculation is obviously impossible, and damages for pain and suffering should clearly be regarded as 'general' and not 'special' damages. In fact, the question of general damages is generally, I think, put to a jury under three heads – (1) 'economic loss', (2) loss of 'amenities' or 'enjoyment of life', and (3) pain and suffering." On this theory of the difference between general and special damages, then, the claim by Mr Thompson for damages concerning assistance to his wife was one of general damages. In the strict sense, the damages sought were compensation for an immeasurable lost capacity to care for his wife. However, since the decision in Griffiths v Kerkemeyer, the distinction between special and general damages in some cases has been blurred, if not rendered entirely redundant160. In contrast to the traditional claim for special damages, the damages awarded in Griffiths v Kerkemeyer were not confined to the date of the verdict. They covered the future. Griffiths v Kerkemeyer also recognised that the relevant loss was the loss to the plaintiff of his capacity, as represented by his need for assistance. The value of that loss was perceived to be the value of the services needed to provide that assistance. Mason J said that161 "[i]n general the value or cost of providing voluntary services will be the standard or market cost of the services". Hence, it was irrelevant that the need was met by the gratuitous services of a wife or other household member, or indeed, any other person. 160 Van Gervan v Fenton (1992) 175 CLR 327 at 342, where Deane and Dawson JJ said: "As Stephen J pointed out in Griffiths v Kerkemeyer, however, the distinction between special and general damages has little conceptual relevance to torts such as negligence where identified special damage is not a prerequisite of the cause of action." 161 (1977) 139 CLR 161 at 193. McHugh Griffiths v Kerkemeyer illustrates the truth of Holmes' dictum162 that the "life of the law has not been logic: it has been experience." As a matter of principle, Griffiths v Kerkemeyer damages are an anomaly. There is no reason in principle why the inability of an injured person to meet his or her needs should be regarded as a special case, no reason why that inability should be distinguished from incapacities such as restriction of use or movement or the pursuit of social, sporting or business activities. Incapacities falling into the latter categories are compensated under the head of general damages. They are compensated in the same way as pain and suffering under the general head of the loss of enjoyment of life. They are not given a special award of damages. In principle, neither should incapacity resulting in the need for services, except in respect of liabilities incurred up to the date of verdict. It is true that, for a long period before Griffiths v Kerkemeyer was decided, common law judges, sitting without a jury, almost invariably calculated any future loss of income as a special head of damages. Even in jury trials – at least in New South Wales – counsel addressed the jury on the basis that the lump sum verdict would include a specific sum for any future loss of wages. This practice was deplored by Barwick CJ in Arthur Robinson (Grafton) Pty Ltd v Carter163. His Honour pointed out – correctly in my opinion – that the subject of compensation was "the loss of earning capacity" and that reference to a sum representing the present value of predicted weekly loss of wages was "the merest guide and insusceptible of forming the basis of a calculated amount."164 Nearly 30 years ago, the thesis of Professor Patrick Atiyah's Inaugural Lecture at Oxford165 was that, since about 1850, the strict application of general rules to determine legal issues has been in decline. Individualised justice has come to prevail over the application of general rules. If a rule leads to a result in a particular case that is inconvenient or contrary to contemporary notions of fairness or justice, the tendency of the judicial process has been to ignore or distinguish the rule. It is not enough that the rule is sound and applies fairly in the majority of cases. In his Lecture, Professor Atiyah used the term "principle" instead of "rule". But the context makes it clear, as Professor Julius Stone has pointed out, 162 Holmes, The Common Law, (1881) at 1. 163 (1968) 122 CLR 649 at 660-661. 164 (1968) 122 CLR 649 at 660. 165 (1980) 65 Iowa Law Review 1249 at 1251. This essay reproduces the text of Professor Atiyah's inaugural lecture delivered before the University of Oxford on 17 February 1978. McHugh that, when Professor Atiyah used the term "principles", he was using it in the sense of "what we usually call 'rules', that is, precepts prescribing detailed legal consequences for precisely predicated sets of facts"166. Professor Atiyah asserted167 "that the courts have become highly pragmatic and a great deal less principled." His thesis was powerfully criticised by Professor Stone168. Whether or not one sides with Professor Stone in this jurisprudential debate – as I do – no one familiar with the course of authority in recent decades could fail to see that courts are far more pragmatic than they once were. If the courts perceive a rule as requiring an unfair or unjust result in a particular case, they are likely to distinguish the rule, make an exception to it or even in some cases abolish it. Courts are much more ready to do this than they once were. Pragmatism has become a powerful force in the law as well as in politics and philosophy. Judge Posner has even argued that all judicial decisions should be based on pragmatism in the sense of practical reasoning169. One can accept – as I do – that the first statement of a legal rule is not its final statement and that the utility of the common law requires it to be constantly updated to serve the current needs of society. Nonetheless, the common law would become unpredictable if judges were free to decide cases in accordance with their own notion of what justice requires or what is the most practical way to settle a dispute that comes before the court. So far as is possible, the body of legal rules should constitute a coherent whole. As Lord Devlin pointed out in Hedley Byrne & Co Ltd v Heller & Partners Ltd170: "The common law is tolerant of much illogicality, especially on the surface; but no system of law can be workable if it has not got logic at the root of it." One may think that the decision in Griffiths v Kerkemeyer was a just decision that rightly helped to shift the burden from the carers of injured persons to the pockets of the insurers who stand behind most defendants in personal injury cases. Yet even today after many years of applying it, it is not easy to 166 Stone, "From Principles to Principles", (1981) 97 Law Quarterly Review 224 at 167 (1980) 65 Iowa Law Review 1249 at 1251. 168 Stone, "From Principles to Principles", (1981) 97 Law Quarterly Review 224. 169 Posner, The Problems of Jurisprudence, (1990) at 454-469; Overcoming Law, 170 [1964] AC 465 at 516. McHugh accept that it logically fits in with the principles for assessing damages in such cases. But whether or not that is so, the rule in Sullivan v Gordon is even further removed from a logical application of the principles for assessing damages in personal injury cases. And it is not a logical extension of or valid analogy with the rule in Griffiths v Kerkemeyer. Griffiths v Kerkemeyer was the culmination of a course of authority which had commenced in England and held that an "injured plaintiff can recover the value of nursing and other services gratuitously rendered to him by a stranger to the proceedings"171. Initially, it may have been based on the view that, as a matter of ordinary fairness, the person providing the gratuitous services should be reimbursed for the services provided172. Lord Denning went so far as to hold that the plaintiff held this part of the damages in trust for the person providing the services173. Later decisions seem to have been based simply on the view "The defendants' wrong has created a need for the services. Nursing and attendance are services which can only be provided by expenditure of effort or money, or both: an estimate must be made of the capital value of such effort and money, past and future, and compensation awarded accordingly. How or on what terms they are provided is not of critical importance ..." Similar considerations obviously influenced Stephen J in Griffiths v Kerkemeyer175 where his Honour said: "The perils of the road, combined with advances in medical knowledge and treatment, ensure that every year a number of road victims survive as helpless invalids, requiring constant attention during many years in the future. For some of them satisfactory care in home surroundings is both possible and adequate, indeed it may have distinct psychological advantages as compared with a life-time in hospital. But it necessarily entails devoted care on someone else's part, often a wife or woman 171 Hay v Hughes [1975] QB 790 at 807. 172 Allen v Waters & Co [1935] 1 KB 200; Schneider v Eisovitch [1960] 2 QB 430; Cunningham v Harrison [1973] QB 942. 173 Cunningham v Harrison [1973] QB 942 at 952. 174 Davies v Borough of Tenby [1974] 2 Lloyd's Rep 469 at 479. 175 (1977) 139 CLR 161 at 170-171. McHugh relative who may have to abandon her ordinary employment to nurse the plaintiff and who will in any event find the task a demanding one. In the past it has been customary to disregard the value of such voluntary services when assessing damages in such cases. The result has been to benefit defendants, their insurers and, ultimately, the community at large at the expense of those who, behaving 'like an ordinary decent human being' ... have voluntarily undertaken the care of a loved one maimed on the roads ..." Numerous Australian courts have recognised that the principle established by Griffiths v Kerkemeyer was exceptional in permitting the plaintiff to claim special damages for the loss of capacity to care for him or herself and the resultant need for services from another176. But, as members of this Court have pointed out, it is now too late to reverse it by judicial decision177. In holding that a plaintiff could recover the value of gratuitous services, Griffiths v Kerkemeyer was bound to unsettle the long established rule178 that an item of special damages could only be recovered as compensation in respect of a liability paid or incurred. Stephen J recognised this in Griffiths v Kerkemeyer when he noted179 that "in this particular area of the law [the principle] deprives of all substantive significance the distinction between special and general damages". As a result, Australian courts have extended the Griffiths v Kerkemeyer principle to other cases of gratuitous services which previously would not have been the subject of compensation. They have extended it: to care provided by a plaintiff-mother to her children180; to cleaning work performed by a plaintiff-wife in her husband's hairdressing salon181; and 176 For example, Grincelis v House (2000) 201 CLR 321 at 330 [19]; Hodges v Frost (1984) 53 ALR 373 at 378. 177 Kars v Kars (1996) 187 CLR 354 at 372. 178 Blundell v Musgrave (1956) 96 CLR 73. 179 (1977) 139 CLR 161 at 179 (emphasis added). 180 Sullivan v Gordon (1999) 47 NSWLR 319. 181 Randall v Dul (1994) 13 WAR 205. McHugh to the cost of care for a plaintiff-mother's children for the period of time after her injury-caused death until they no longer required such care182. The decisions in these cases show that Griffiths v Kerkemeyer has not only unsettled the distinction between general and special damages but it has had unsettling consequences for the legal principles governing the doctrines of loss of consortium and per quod servitium amisit. In Wright v Cedzich183, this Court and, in Best v Samuel Fox & Co Ltd184, the House of Lords held that the action for loss of consortium – an action available to a husband – was not available to a wife. In Best, Lord Porter said185: "Even if it be conceded that the rights of husband and wife ought to be equalized I agree with the Lord Chief Justice that today a husband's right of action for loss of his wife's consortium is an anomaly and see no good reason for extending it. If the change is to be made I should prefer to abolish the husband's right rather than to grant the like remedy to the wife." In permitting a wife to recover damages for her lost capacity to provide services to her husband, the Sullivan v Gordon extension duplicates the husband's action for loss of consortium and indirectly allows the wife to recover compensation for services which Wright and Best held were not recoverable at common law. Moreover, in allowing the husband to recover, in substance Sullivan revives a cause of action that a number of Australian legislatures have either abolished186 or limited187. Moreover, in permitting a wife to recover for loss of services that she performed gratuitously in her husband's business, the extension of Griffiths v Kerkemeyer has indirectly outflanked the action per quod servitium amisit. That action was confined to the loss of services rendered by an employee188. 182 Sturch v Willmott [1997] 2 Qd R 310. 183 (1930) 43 CLR 493. 185 [1952] AC 716 at 728. 186 Law Reform (Miscellaneous Provisions) Act 1941 (WA), s 3; Law Reform (Marital Consortium) Act 1984 (NSW), s 3; Common Law (Miscellaneous Provisions) Act 1986 (Tas), s 3; Civil Law (Wrongs) Act 2002 (ACT), s 218. 187 Transport Accident Act 1986 (Vic), s 93; Motor Accidents (Compensation) Act (NT), s 5; Work Health Act (NT), s 52. 188 Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (1955) 92 CLR 113. McHugh In Sturch v Willmott, Macrossan CJ said that once it was decided that damages were available for services previously provided by the plaintiff to another, it was difficult to "[limit] the ambit of a defendant's liability to compensate."189 His Honour said190: "Many plaintiffs, before being injured, may have been performing voluntary services for persons outside their immediate households and doing so, not in response to anything which could be regarded as necessity, but simply as a result of a free and unpressured choice." The respondent attempted to justify retaining the decision in Sullivan v Gordon by contending that such damages could be limited to the loss suffered by a household. In Sullivan v Gordon191, Mason P supported this approach saying: "Different considerations probably apply in the case of persons for whom no legal obligation of care exists and who are not members of the plaintiff's household being cared for at the time of the accident (for example, aging parents). The right recognised here almost certainly does not involve exclusively moral obligations of care of persons outside the immediate household ..." But there are many difficulties with the limitation suggested by the respondent. It is an arbitrary limitation that bears no relationship to the principles upon which damages for personal injury are assessed. Given those principles, the suggested limitation lacks a foundation in logic. Why should it be arbitrarily confined to the care of members of the household and not to other close relatives who need care? Why should it be arbitrarily confined to care and not to the need for assistance? And if the need for assistance is the criterion why should the defendant have to pay damages because a wife can no longer work in her husband's hairdressing shop, a class of case that has been held to fall within the Sullivan v Gordon extension? The basis for the limitation appears to be the unstated premise that a loss of capacity for one member of a household is a loss to the entire household because a family is an economic unit. However, this immediately gives rise to the question of how "household" should be defined. Is it limited to legal marriages, or de facto marriages? Does it extend to any person residing in the same dwelling? What of parents who must care for their disabled adult children 189 [1997] 2 Qd R 310 at 318. 190 [1997] 2 Qd R 310 at 318. 191 (1999) 47 NSWLR 319 at 324 [15]. McHugh or grandparents who have spent time in the homes of their children caring for grandchildren who do not live with the grandparents? Why should this head of damages not extend to nieces and nephews taking care of aunts and uncles? Other persons that would seem to have moral claims as strong as those of members of the household include siblings, siblings-in-law, ex-partners, future children192 and friends and neighbours. Intuitively attractive though the notion of the household limitation may be as a brake on this head of damage, on examination it is an arbitrary limitation lacking an acceptable basis in legal logic, moral obligation and social policy. The "household" limitation is not a solution to the problem of limiting Sullivan v Gordon. Need and loss of capacity There has been some discussion throughout the cases in this area as to whether the correct conceptual approach is to be found by viewing the compensable loss as a need or as a loss of capacity. In Burnicle v Cutelli193, "I am unable to see any reason in point of doctrine why the conceptual approach … adopted in Donnelly v Joyce and Griffiths v Kerkemeyer ... should include a need for nursing services due to an impaired capacity to do for oneself but should exclude the need for domestic services due to an impaired capacity to do for one's family. … Granted that the impairment of a capacity to attend to one's own toilet and similar needs is compensable I am unable to distinguish in point of principle the impairment of the capacity to keep house for one's family. Damages would be recoverable in each case by setting an objective value upon the depreciation of an economic asset. The financial saving involved in the exercise of each of these two capacities is demonstrated by the financial cost which may be entailed by the inability to exercise it." Glass JA dissented in Burnicle v Cutelli, but his views prevailed in Sullivan v Gordon upon a concession by counsel that Burnicle had been wrongly decided. This statement of Glass JA can be accepted so long as the loss of capacity to provide domestic services for one's family is treated as part of the plaintiff's claim for general damages. But it cannot be accepted in so far as 192 See reasons of Beazley JA in Sullivan v Gordon (1999) 47 NSWLR 319 at 332 193 [1982] 2 NSWLR 26. 194 [1982] 2 NSWLR 26 at 34-35. McHugh Glass JA intended his statement – as he surely did – to justify a separate head of damages equivalent to a claim for special damages. The special head of damages that Griffiths v Kerkemeyer sanctioned was based on need, not loss of capacity. It was the plaintiff's need that was regarded as decisive in Griffiths v Kerkemeyer. In Nguyen v Nguyen195, Dawson and Toohey JJ and I interpreted Griffiths as holding that "the plaintiff's loss … was represented by [his] need." In Van Gervan v Fenton196 Mason CJ, Toohey J and I said that passage correctly interpreted the majority view in Griffiths. We also said that that view was consistent with the salient passage of Donnelly v Joyce upon which the majority in Griffiths based their judgment. That passage reads197: "The plaintiff's loss, to take this present case, is not the expenditure of money to buy the special boots or to pay for the nursing attention. His loss is the existence of the need for those special boots or for those nursing services, the value of which for purposes of damages – for the purpose of the ascertainment of the amount of his loss – is the proper and reasonable cost of supplying those needs." (emphasis added) Because the costs of care associated with servicing an injury-caused need are relatively easy to quantify, Griffiths v Kerkemeyer damages have been dealt with as a head of special damages. Yet even if one were to accept that it is the loss of capacity, rather than the specific need, that is relevant, that would not justify establishing a separate head of special damages for the purposes of compensating a Sullivan v Gordon-type loss. An analogy is often drawn between this head of damages and the damages awarded for loss of earnings. The conceptual basis for loss of earnings is undoubtedly the lost capacity to earn. Yet, traditionally loss of earnings is one of the headings of general damages. I have already pointed out that, in Arthur Robinson (Grafton) Pty Ltd v Carter198, Barwick CJ lamented the fact that there is any tendency to create a head of special damages in relation to lost earnings. However, quantifying loss of earning capacity by reference to the plaintiff's potential loss of earnings is not an analogy that can be validly compared with a claim for Sullivan v Gordon-type damages without a revolution in the principles concerning the assessment of damages for personal injury. The present value of the potential loss of earnings may be regarded as a powerful indicator of the value of the plaintiff's earning capacity in the same way that the 195 (1990) 169 CLR 245 at 262. 196 (1992) 175 CLR 327 at 333. 197 [1974] QB 454 at 462. 198 (1968) 122 CLR 649 at 658. McHugh present value of the predicted earnings of a business are regarded as fairly reflecting its capital value. As long as the departure from principle involved in assessing claims for loss of earning capacity is treated as a narrow exception, the principles involved in assessing damages for personal injury can be maintained. That could not be the result if every incapacity of an injured person was to be treated as a special head of damages whose value was measured by the market value of the activities that could have been used or supported by that capacity. If that approach were adopted, the concept of a lump sum payment for the plaintiff's injury would be replaced by the market value totals of the actual and supposed capacities of each plaintiff. The incapacity to play golf or go to concerts would be evaluated in terms of what golfers or concert-goers were prepared to pay for the pleasure of their pastimes. Whether or not a plaintiff's lost capacity to care for others is realistically capable of being given a market value, to introduce it as a new category of special damages would distort the long established principles for assessing damages in personal injury actions. If the law of damages is to retain its coherence, overruling Sullivan v Gordon is a necessity. It is a decision inconsistent with long established principle and, with great respect to those who have held to the contrary, it finds no support in Griffiths v Kerkemeyer. The critical difference between Griffiths v Kerkemeyer and the cases that have extended it is that Griffiths v Kerkemeyer damages arise as a direct result of the creation of a need in the plaintiff of the provision of the particular services. It is therefore inherently limited. By contrast, no inherent limit exists for Sullivan v Gordon-type damages. The oft-used example of voluntary work for Meals on Wheels is but one instance of gratuitous work that is not performed out of any legal obligation, but which nonetheless has a significant economic value. Commentators have pointed out that domestic work is not entirely analogous to this type of civil society engagement because domestic work is not optional199. Somebody must do it200. This is undeniable. Using the term "voluntary", therefore, is apt to mislead in this context because it focuses attention on the type of work being done and whether it is remunerated. But the correct question is whether the work is being performed in response to an injury-caused need of the plaintiff201. This is the essence of the error in Sullivan v Gordon: it moved from the needs of the plaintiff which Griffiths sanctioned to the needs of third parties. It elided the 199 For example, Graycar, "Compensation for Loss of Capacity to Work in the Home", (1985) 10 Sydney Law Review 528. 200 Graycar, "Compensation for Loss of Capacity to Work in the Home", (1985) 10 Sydney Law Review 528 at 553. 201 Graycar, "Compensation for Loss of Capacity to Work in the Home", (1985) 10 Sydney Law Review 528 at 549. McHugh plaintiff's injury-caused needs with the pre-injury needs of others, albeit using one of the policy considerations behind Griffiths v Kerkemeyer, namely that innocent parties should not suffer unrecoverable losses as a result of the tortfeasor's negligence202. However, it is not enough that the policies supporting Griffiths v Kerkemeyer damages and Sullivan v Gordon damages are consistent. Sullivan v Gordon is not supported by anything decided or said in Griffiths v Kerkemeyer. Sullivan v Gordon damages are not concerned with the injured person's needs but the needs of a third party for whom the injured person has provided services. Sullivan v Gordon and the cases that follow it or were decided on the same or similar grounds are wrong in law and must be overruled. Instead of treating Mr Thompson's lost capacity to care for his wife as a special head of damage, the proper approach was to compensate his loss by making provision for it in the award of general damages. His lost capacity was compensable under the headings of loss of amenity, loss of enjoyment of life, and the distress and perhaps the psychological pain and trauma, that he would undergo as a result of his inability to care for his disabled wife. The way that Mr Thompson particularised his losses in his submissions makes this clear. He claimed that his "loss of capacity" included: an incapacity to garden the family home and to perform general house maintenance. This included, but was not limited to gardening and lawn care, maintenance and operation of the irrigation system, the cleaning of gutters, and the repair and fixing of fences; and an incapacity to undertake mechanical work on the family car, such as the performance of light mechanical repairs, the rotation of the tyres, the changing of oil and oil filters; and an incapacity to assist his wife in undertaking the heavy domestic duties required in and around the house." To the extent that Mr Thompson took pleasure in gardening and attending to the car, he would be entitled to damages for loss of amenity and enjoyment of life. To the extent that his injury prevented him from performing these tasks and necessitated the provision of services from another person, there is no reason why he would not be eligible for Griffiths v Kerkemeyer damages at the market 202 In Graham v Baker (1961) 106 CLR 340, this Court held that damages are awarded not merely for diminished earning capacity but because that diminution is or may be productive of "financial loss". In Griffiths v Kerkemeyer the Court reconciled this principle with an award of damages for gratuitously provided services by determining, as a matter of policy, that the wrongdoer should not benefit from the fact that care was provided by family members and others free of charge. McHugh rate for those services. The same is true in relation to the domestic duties that he had performed around the house. As the Federal Court of Australia said in Hodges v Frost203, "[h]ere, the needs were the commingled needs of husband and wife, but no less the needs of the [husband] because they were in some cases mutual." It is an unfortunate aspect of this case that the case was pleaded on the basis that the domestic work was performed for the benefit of the wife. This is no criticism of the deceased's legal advisers. They relied on Sullivan v Gordon. No doubt the case was pleaded in the way it was because of Mr Thompson's desire to make provision for the care that his wife would require during the "lost years" after his death. But unfortunately the way that the case was pleaded now means that the agreed amount of general damages is lower than the damages he would otherwise have obtained. Given the way that the case was conducted before the Dust Diseases Tribunal and the agreement of the parties as to general damages, it would be contrary to the long standing practice of this and other appellate courts to remit the case for a further trial to decide whether the general damages should be increased. Costs The appellants contended that, if the substantive appeal were allowed, they should have their costs in the Court of Appeal and in this Court. I can see no basis for refusing the appellants their costs of the proceedings in this Court. It is true that the first appellant and its subsidiaries have been sued in a number – probably a large number – of actions for negligence arising out of the manufacture and supply of asbestos-based products. It seems likely – at all events it is quite possible – that success in the substantive appeal will have financial advantages for the appellants that extend beyond those obtained in setting aside Mr Thompson's claim for Sullivan v Gordon damages. Probably, they are defendants in a number of cases in which this type of damages are being, and in the future will be, sought against the first appellant or its subsidiaries. But the appellants' relationship to Sullivan v Gordon-type damages is not of the same kind as that of the Commissioner of Taxation's relationship to income tax issues, the Australian Competition and Consumer Commission's relationship to trade practices issues or a local government council's relationship to rating issues. A decision on an insurance policy may have an effect on numerous insurance policies issued by insurers. But so far, this Court has not adopted a practice of ordering an appellant-insurer to pay the costs of both parties in this Court and in the courts below. From time to time, the Court may make it a condition of the grant of special leave that an insurer pay the costs in this Court 203 (1984) 53 ALR 373 at 388. McHugh and not disturb the costs orders made in the courts below. But a different area is reached when special leave has been granted without such a condition and the insurer succeeds in the appeal. Unless the insurer has been guilty of some misconduct, the usual order for costs is that costs follow the result. When the Court granted the appellants special leave to appeal in this case, it did not require them to undertake that they would pay the costs in this Court irrespective of the result. Nor did it require an undertaking that they would abide by the costs orders made in the Dust Diseases Tribunal and the Court of Appeal. In these circumstances, I can see no principled justification for requiring them to pay both parties' costs in this Court. The most that can be said in favour of such an order is that overruling Sullivan v Gordon may affect the assessment of damages in an unspecified number of cases in which the first appellant or its subsidiaries are defendants. But Sullivan v Gordon claims were not confined to the first appellant or its subsidiaries. They applied to defendants generally. And one may safely guess that a number of insurance companies would have many more claims for this kind of damages than the appellants have or are likely to have. Similarly, I can see no reason why the appellants should not have their costs in the Court of Appeal. The Court of Appeal, acting on the erroneous assumption that Sullivan v Gordon was good law, ordered the appellants to pay Mr Thompson indemnity costs. On any view of what is fair and reasonable, that order should be set aside. And I can see no reason why the costs in the Court of Appeal should not follow the event. Order The appeals must be allowed. The order of the Court of Appeal of New South Wales dismissing the appellants' appeal against the judgment of the Dust Diseases Tribunal of New South Wales should be set aside. In place thereof should be substituted an order that judgment for the plaintiff be entered in the sum of $300,419.49. The respondent should pay the appellants' costs in this Court and in the Court of Appeal of New South Wales. Callinan CALLINAN J. I agree with the reasons and conclusions of the Chief Justice, Gummow and Heydon JJ on the substantive issues in these appeals. With respect however I take a different view on the issue of costs. It is true, as the appellants submit, that as they have succeeded here by having the judgment of the Court of Appeal set aside, they have dislodged the foundation for that Court's order for costs. Notwithstanding this, the respondent submits that the appeals to this Court are analogous with an appeal in a tax case by the Commissioner against a taxpayer, in which the Court often orders that the Commissioner pay the taxpayer's costs of the appeal, without disturbing orders for costs made in the latter's favour below. There are however two important points of distinction here. The first is that offers for the commercial resolution of the matter were exchanged below, and the result in the Court of Appeal formed the basis for the special order for indemnity costs in favour of the respondent there. Secondly, the law on the question raised by these appeals was then far from settled: different intermediate appellate courts had taken different views. In this case the tort was committed in South Australia. If the appellants had been sued in a South Australian court, the governing authority would have been Weinert v Schmidt204 and the result would have gone the other way. It is only because the appellants were sued in the Dust Diseases Tribunal of New South Wales which was able to exercise long arm jurisdiction205 and which was bound by Sullivan v Gordon206, that it has been necessary for the appellants to mount the appeals to this Court. The respondent urges that it is the first appellant who has the greater interest in the outcome because of the precedential value of a decision in its favour on appeal: it has many like cases pending. Unfortunately for the respondent the comparison between this and the tax cases is not well made. The respondent did seek, on the application for special leave, special protective orders with respect to costs but the Court did not however, as it sometimes does in tax cases, require an undertaking by the appellants, as a condition of the grant of special leave, that earlier costs orders not be sought to be disturbed, and that the costs of a successful appeal not be dependent upon the result of it. The two other relevant and more important considerations are, first, that the common law, despite the New South Wales decisions in and since Sullivan v Gordon, could not have been regarded as 204 (2002) 84 SASR 307. 205 Contrast BHP Billiton Ltd v Schultz (2004) 79 ALJR 348; 211 ALR 523. 206 (1999) 47 NSWLR 319. Callinan settled, particularly in light of the different decisions in other jurisdictions. The risks therefore of maintaining a continuing entitlement in litigation to the contentious component were obvious. Furthermore, it should have been equally obvious that the approach to this case was an entirely commercial, and conventionally adversarial one, because each of the parties made offers of compromise, with a view to improving that party's position on costs, apparently carefully calculated by reference to the risks that each was facing. Settlements are encouraged by the courts in the public, as well as the parties', interests. The purpose that they are intended to serve is not to be subverted in a particular case simply because one of the parties has miscalculated his prospects. The respondent should therefore have to pay the appellants' costs of both appeals. The orders of the Court should be: Appeals allowed in both matters. Set aside the judgment and orders of the Court of Appeal of New South Wales dated 26 November 2003 and in lieu thereof, order that the appeal be allowed and judgment be reduced from $465,899.49 the Set aside order 1 of the orders of the Court of Appeal of New South Wales dated 17 February 2004 and in lieu thereof, order that the respondent pay the appellants' costs of the appeal to that Court. Order that the respondent pay the appellants' costs of the appeals to this Court.

HIGH COURT OF AUSTRALIA PLAINTIFF S195/2016 PLAINTIFF AND MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ORS DEFENDANTS Plaintiff S195/2016 v Minister for Immigration and Border Protection [2017] HCA 31 17 August 2017 ORDER The questions stated by the parties in the special case dated 14 March 2017 and referred for consideration by the Full Court be answered as follows: Question 1 Was the designation of [Papua New Guinea] as a regional processing country on 9 October 2012 beyond the power conferred by s 198AB(1) of the [Migration Act 1958 (Cth)] by reason of the [decision in Namah v Pato Answer Question 2 Was entry into: the 2013 Memorandum of Understanding; the Regional Resettlement Arrangement; the 2014 Administrative Arrangements; and the Broadspectrum Contract, beyond the power of the Commonwealth conferred by s 61 of the Constitution and/or s 198AHA of the [Migration Act 1958 (Cth)] by reason of the [decision in Namah v Pato (2016) SC1497]? Answer Question 3 Was the direction made by the Minister on 29 July 2013 beyond the power conferred by s 198AD(5) of the [Migration Act 1958 (Cth)] by reason of the [decision in Namah v Pato (2016) SC1497]? Answer Question 4 Was the taking of the plaintiff to [Papua New Guinea] on 21 August 2013 beyond the power conferred by s 198AD of the [Migration Act 1958 (Cth)] by reason of the [decision in Namah v Pato (2016) SC1497]? Answer Question 5 Is the authority for the Commonwealth to undertake conduct in respect of regional processing arrangements in [Papua New Guinea] conferred by s 198AHA of the [Migration Act 1958 (Cth)] dependent on whether those arrangements are lawful under the law of [Papua New Guinea]? Answer Question 6 Is the Commonwealth precluded from assisting [Papua New Guinea] to take action pursuant to the orders outlined at paragraph 35 [of the special case] by reason of the [decision in Namah v Pato (2016) SC1497]? Answer Question 7 Who should pay the costs of the special case? Answer The plaintiff. Representation T Molomby SC with J Williams for the plaintiff (instructed by O'Brien Solicitors) S P Donaghue QC, Solicitor-General of the Commonwealth and G R Kennett SC with A M Mitchelmore and P D Herzfeld for the first and second defendants (instructed by Australian Government Solicitor) S B Lloyd SC with H Younan for the third defendant (instructed by Corrs Chambers Westgarth) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Plaintiff S195/2016 v Minister for Immigration and Border Protection Migration – Regional processing – Where plaintiff "unauthorised maritime arrival" – Where plaintiff taken to regional processing centre in Papua New Guinea pursuant to s 198AD of Migration Act 1958 (Cth) – Where Commonwealth entered into arrangements with Papua New Guinea and took other actions in relation to regional processing functions – Where Supreme Court of Papua New Guinea held treatment of unauthorised maritime arrivals at Manus Island regional processing centre contrary to law of Papua New Guinea – Whether Commonwealth had power to enter into arrangements – Whether certain past and potential future actions of Commonwealth, its officers, and Minister invalid under Constitution or s 198AHA of Migration Act 1958 (Cth) by reason of Supreme Court decision – Whether arrangements entered into by Commonwealth not "arrangement[s]" for purpose of s 198AHA by reason of Supreme Court decision. Constitutional law (Cth) – Legislative and executive power – Whether Constitution denies Commonwealth legislative or executive power to authorise or to take part in activity in another country that is unlawful under domestic law of that country. law of another country", "ministerial Words and phrases – "domestic designation", "ministerial direction", "regional processing arrangements", "regional arrangement", "unauthorised maritime arrival". resettlement processing country", "regional Migration Act 1958 (Cth), ss 198AB(1), 198AD, 198AHA. KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE, GORDON AND Background The plaintiff is an Iranian national who claims to be a refugee within the meaning of Art 1 of the Refugees Convention1. On 24 July 2013, he entered the migration zone at Christmas Island and became an "unauthorised maritime arrival" ("UMA") within the meaning of the Migration Act 1958 (Cth) ("the Act"). On 26 August 2013, he was taken by officers of the Commonwealth under s 198AD(2) to the Independent State of Papua New Guinea ("PNG"), which a predecessor of the Minister for Immigration and Border Protection ("the Minister") had on 9 October 2012 designated a "regional processing country" under s 198AB(1) ("the Ministerial Designation"). The plaintiff's taking to PNG was in accordance with a direction made by the Minister on 29 July 2013 under s 198AD(5) ("the Ministerial Direction"). The constitutional validity of ss 198AB and 198AD, and the statutory validity of the Ministerial Designation and the Ministerial Direction, were considered and upheld by this Court in Plaintiff S156/2013 v Minister for Immigration and Border Protection2. The constitutional validity of s 198AHA, another provision of central relevance to the resolution of this case, was subsequently considered and upheld by this Court in Plaintiff M68/2015 v Minister for Immigration and Border Protection3. Having been taken to PNG, the plaintiff became subject under PNG law to general directions of the PNG Minister for Foreign Affairs and Immigration ("the PNG Minister") which required him to reside at the Manus Regional Processing Centre ("the Manus RPC"), where he remains. The Manus RPC has at all relevant times been operated by Broadspectrum (Australia) Pty Ltd ("Broadspectrum") (formerly known as Transfield Services (Australia) Pty Ltd) in accordance with the terms of a contract entered into between Broadspectrum 1 Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). (2014) 254 CLR 28; [2014] HCA 22. (2016) 257 CLR 42; [2016] HCA 1. Bell Nettle Gordon Edelman and the Commonwealth entitled "Contract in relation to the Provision of Garrison and Welfare Services at Regional Processing Countries" ("the Broadspectrum Contract"). The plaintiff applied to the Immigration and Citizenship Service Authority of PNG to be recognised as a refugee under PNG law. That application was unsuccessful. On 12 December 2016, the PNG Minister determined that the plaintiff was not a refugee, ordered his removal from PNG and directed that he be kept in custody pending removal. No step has yet been taken to implement the order or the direction. In the meantime, on 26 April 2016, the Supreme Court of PNG gave judgment in Namah v Pato4 ("the Namah Decision"). It will be appropriate to refer to the Namah Decision in some more detail in due course. Suffice it at this point to note that the Supreme Court found that treatment of UMAs at the Manus RPC contravened provisions of the Constitution of PNG. The special case By special case in a proceeding commenced in this Court's original jurisdiction by the plaintiff against the Commonwealth, the Minister and Broadspectrum, questions have been stated by the parties for the opinion of the Full Court concerning the effect, if any, of the Namah Decision on the validity under the Australian Constitution and under the Act of actions which have been taken, or which might be taken, by the Commonwealth or the Minister or other officers of the Commonwealth in relation to regional processing in PNG. Five questions, one of which is in four parts, identify seven specific past actions and one potential future action for consideration in light of the Namah Decision. Grouping the past actions thematically and in broadly chronological order, the first, identified in Question 2(b), was the entry into by the Commonwealth (represented by the Prime Minister) on 19 July 2013 of a "Regional Resettlement Arrangement between Australia and Papua New Guinea" ("the Regional Resettlement Arrangement") under which PNG agreed to accept UMAs from Australia "for processing and, if successful in their application for refugee status, resettlement". The Regional Resettlement Arrangement provided and continues Bell Nettle Gordon Edelman to provide for transferred UMAs to be accommodated in a regional processing centre to be managed and administered by PNG under PNG law, with support from Australia. The second of the past actions, identified in Question 2(a), was the entry into by the Commonwealth (represented by the High Commissioner to PNG) on 5 August 2013 of a "Memorandum of Understanding between the Government of the Independent State of Papua New Guinea and the Government of Australia, relating to the Transfer to, and Assessment and Settlement in, Papua New Guinea of Certain Persons, and Related Issues" ("the 2013 Memorandum of Understanding"). The 2013 Memorandum of Understanding superseded a the similarly styled memorandum of understanding entered Commonwealth and Competitiveness) on 8 September 2012. The 2013 Memorandum of Understanding provides – as did the 2012 memorandum of understanding – for Australia to transfer UMAs to PNG, for PNG to accept UMAs transferred from Australia, for PNG for that purpose to "host" a processing centre in Manus Province, for Australia to bear the direct costs agreed by the parties to arise out of its implementation, and for the Government of Australia and the Government of PNG each to "conduct all activities in respect of this MOU in accordance with its Constitution and all relevant domestic laws". into by for Trade represented by the Minister (then The third of the past actions, identified in Question 2(c), was the entry into by the Commonwealth (represented by a Deputy Secretary of the Department of Immigration and Border Protection) on 17 July 2014 of "Administrative Arrangements for Regional Processing and Settlement in Papua New Guinea (PNG)" ("the 2014 Administrative Arrangements"). The 2014 Administrative Arrangements made and continue the implementation of the Regional Resettlement Arrangement and the 2013 Memorandum of Understanding. They provide for a regional processing centre in PNG to be established by Australia and managed by an administrator appointed under PNG law, for the management of the centre to be supported by contracted service providers, and for the management of the relevant contracts to be the responsibility of Australia. They provide for staff involved in the operation of the centre to be subject to the laws of PNG. They acknowledge that those staff may include Australian and PNG officers as well as contracted service providers. to make detailed provision for The fourth of the past actions, identified in Question 2(d), was the entry into by the Commonwealth (represented by the Department of Immigration and Bell Nettle Gordon Edelman Border Protection) of the Broadspectrum Contract. The Broadspectrum Contract was first entered into on 24 March 2014 and has since been amended. Under it, Broadspectrum relevantly agreed and continues to agree with the Commonwealth to provide a range of services in respect of UMAs transferred to PNG, including accommodation and security services at the Manus RPC. Broadspectrum also relevantly agreed and continues to agree with the Commonwealth to perform its contractual obligations at the Manus RPC in compliance with PNG law and not to permit any act or omission that might cause the Commonwealth to be in breach of the Regional Resettlement Arrangement or the 2013 Memorandum of Understanding. The fifth, sixth and seventh of the past actions identified by the parties for consideration in light of the Namah Decision were the Ministerial Designation and the Ministerial Direction, the validity of which was previously upheld in Plaintiff S156/2013, and the taking of the plaintiff to PNG under s 198AD(2). They are the subject-matters of Questions 1, 3 and 4 respectively. Also raised for consideration by the special case is the effect, if any, of the Namah Decision on the validity of such future action as the Commonwealth might take, whether by its officers or through the provision of services for which it has contracted, to assist PNG in removing the plaintiff from PNG and in keeping him in custody pending removal pursuant to the order made and direction given by the PNG Minister on 12 December 2016. That is the subject- matter of Question 6. Finally, Question 5 of the special case raises for consideration what appears on its face to be a more general question as to whether the authority for the Commonwealth to undertake conduct in respect of regional processing arrangements in PNG conferred by s 198AHA of the Act depends on whether those arrangements are lawful under the law of PNG. That question is apparently intended by the parties not to be confined to a consideration of the effect of the Namah Decision. No point has been taken about the standing of the plaintiff to raise a question cast in such general terms or about the appropriateness of answering it in order to resolve rights and duties in issue in the proceeding. Sources of authority The first three of the past actions identified by the parties for consideration in light of the Namah Decision – the entry into by the Commonwealth of the Regional Resettlement Arrangement, the 2013 Memorandum of Understanding Bell Nettle Gordon Edelman and the 2014 Administrative Arrangements – were all undertaken in the exercise of the non-statutory executive power of the Commonwealth conferred by s 61 of the Constitution. The fifth, sixth and seventh of the past actions identified by the parties for consideration in light of the Namah Decision – the Ministerial Designation, the Ministerial Direction and the taking of the plaintiff to PNG – were made in the exercise of the specific statutory power conferred on the Minister by s 198AB(1) and in the performance of the specific statutory duties imposed by s 198AD(2) and (5) on an "officer" (as defined for the purposes of the Act5) and on the Minister respectively. The fourth of the past actions identified for consideration in light of the Namah Decision – the entry into by the Commonwealth of the Broadspectrum Contract – falls within the scope of the statutory power retrospectively conferred on the Commonwealth by s 198AHA as interpreted in Plaintiff M68/20156, provided only that the 2013 Memorandum of Understanding or the Regional Resettlement Arrangement constituted an "arrangement" within the meaning of that section. The same is true of such future action as the Commonwealth might take to assist PNG in removing the plaintiff from PNG and in keeping him in custody pending removal pursuant to the order made and direction given by the PNG Minister on 12 December 2016: removal of a UMA whose application for refugee status in a regional processing country has failed and detaining the UMA for the purpose of removal readily answer the description of action taken "in connection with" the role of that country as a regional processing country so as to be a "regional processing function" within the meaning of s 198AHA. Aside from any consequences flowing from the Namah Decision, the questions stated by the parties do not otherwise raise any issue of whether s 198AHA is a valid law of the Commonwealth insofar as it supports those actions. Although s 198AHA is expressed not to limit the executive power of the Commonwealth, if and to the extent that the statutory power s 198AHA confers 5 See s 5(1) of the Act, definition of "officer". (2016) 257 CLR 42 at 110 [180]. See also at 71 [45]-[46], 87 [101], 125 [242]- Bell Nettle Gordon Edelman is available to support the impugned actions, there is no need to consider whether the non-statutory executive power of the Commonwealth conferred by s 61 of the Constitution was separately available. The effect of the Namah Decision The plaintiff's argument for invalidity of the identified past and future actions in light of the Namah Decision was distilled in the course of oral argument into two propositions. First, as a basis on which to invalidate all of the impugned actions, the plaintiff advanced the novel and sweeping proposition that the Constitution denies to the Commonwealth any legislative or executive power to authorise or take part in activity in another country which is unlawful according to the domestic law of that country. Second, as a distinct basis on which to invalidate those impugned actions which were in the past or might in the future be authorised by s 198AHA, the plaintiff asserted that the effect of the Namah Decision was to deny the character of an "arrangement" within the meaning of that section to the 2013 Memorandum of Understanding and the Regional Resettlement Arrangement, with the result that the section has not been triggered so as to apply in relation to the regional processing functions of PNG. Neither proposition is tenable. As to the first, what is telling is that the plaintiff could marshal no authority to support it and made no attempt to anchor it to the text or structure of the Constitution7. The course of authority in this Court leaves no room for doubt that neither the legislative nor the executive power of the Commonwealth is constitutionally limited by any need to conform to international law8. Equally there should be no doubt that neither the legislative nor the executive power of the Commonwealth is constitutionally limited by any need to conform to the domestic law of another country. Whether action taken by a Commonwealth officer in another country complies with the domestic law of that country might have consequences for that officer and for others under the domestic law of that country and might have consequences for Australia under international law in addition to any consequences it may have under Australian law applying extra-territorially. Absent some express or implied limitation 7 See Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 566- 567; [1997] HCA 25. 8 AMS v AIF (1999) 199 CLR 160 at 180 [50]; [1999] HCA 26. Bell Nettle Gordon Edelman imposed by a law enacted by Parliament, however, the compliance or non- compliance of the action with the domestic law of another country is a circumstance which has no bearing on such statutory authority or executive capacity as the officer might otherwise have to take that action. The statutory premise on which the second of the plaintiff's propositions appears to be founded is that an arrangement or understanding which the Commonwealth has entered into with another person or body in relation to the regional processing functions of another country is not an "arrangement" for the purpose of s 198AHA if that other person or body lacked lawful authority or capacity to enter into it. The premise is contradicted by the express terms of the definition of "arrangement" in s 198AHA(5). The definition is specifically framed to encompass an arrangement, agreement, understanding, promise or undertaking which is not legally binding. Even if the 2013 Memorandum of Understanding and the Regional Resettlement Arrangement were beyond the power of PNG under the PNG Constitution, each would remain an arrangement or understanding in fact and, on that basis, each would remain an arrangement within the scope of s 198AHA. Both of the plaintiff's propositions appear, in any event, to proceed on a misunderstanding of the Namah Decision. The Namah Decision arose from an application made in the original jurisdiction of the Supreme Court of PNG for declaratory and injunctive relief against the PNG Minister, the National Executive Council and PNG. The case proceeded on facts asserted by the applicant in a proposed statement of agreed facts which was treated by the Supreme Court as uncontested by reason of the respondents failing to dispute them in a timely way. The detail of those facts is not recorded in the reasons for judgment of the Supreme Court. The relief granted by the Supreme Court comprised declarations to the effect that treatment of UMAs at the Manus RPC contravened specified provisions of the PNG Constitution and was beyond the power available under specified PNG law. The relief granted also included an order expressed in terms that "[b]oth the Australian and Papua New Guinea governments shall forthwith take all steps necessary to cease and prevent the continued unconstitutional and illegal detention of the asylum seekers or transferees at the [Manus RPC] and the continued breach of the asylum seekers or transferees Constitutional and human rights". Bell Nettle Gordon Edelman The Supreme Court in the Namah Decision plainly held that treatment of UMAs at the Manus RPC as at 26 April 2016 contravened provisions of the Constitution of PNG and was unsupported by PNG law. The Supreme Court might also be interpreted as having held that the forceful bringing of UMAs to the Manus RPC under the purported authority of PNG law contravened provisions of the Constitution of PNG and was unsupported by PNG law. What the Supreme Court plainly did not hold was that entry into of the Regional Resettlement Arrangement, the 2013 Memorandum of Understanding or the 2014 Administrative Arrangements was beyond the power of the PNG Minister, the National Executive Council or PNG or contravened any provision of the PNG Constitution. Each of those instruments, as has already been noted, contains a provision specifically providing for its implementation to comply with PNG law. The nature of the statutory authority conferred by s 198AHA The more general question raised by the special case as to whether the authority of the Commonwealth to undertake conduct in respect of regional processing arrangements in PNG under s 198AHA depends on whether those arrangements are lawful under the law of PNG is answered by the statement in s 198AHA(3) that s 198AHA(2) "is intended to ensure that the Commonwealth has capacity and authority to take action, without otherwise affecting the lawfulness of that action". As explained in Plaintiff M68/20159: "Section 198AHA(3) is important in clarifying that s 198AHA(2) is directed to nothing other than ensuring that the Commonwealth has capacity and authority to take action and that it does not otherwise affect the lawfulness of that action. That is to say, s 198AHA(2) is directed to nothing other than conferring statutory capacity or authority on the Executive Government to undertake action which is or might be beyond the executive power of the Commonwealth in the absence of statutory authority. The section has no effect on the civil or criminal liability of the Executive Government or its officers or agents under Australian law or under the law of a foreign country. The lawfulness or unlawfulness of (2016) 257 CLR 42 at 110 [181]. See also at 71-72 [45]-[46], 87 [101], 126 [249], Bell Nettle Gordon Edelman Executive Government action under Australian law or under the law of a foreign country conversely does not determine whether or not that action falls within the scope of the statutory capacity or authority conferred by the section." The answer to the more general question is: no. Answers to questions The questions stated and their answers are as follows: 1. Was the designation of PNG as a regional processing country on 9 October 2012 beyond the power conferred by s 198AB(1) of the Migration Act by reason of the Namah Decision? Answer: 2. Was entry into: the 2013 Memorandum of Understanding; the Regional Resettlement Arrangement; the 2014 Administrative Arrangements; and the Broadspectrum Contract, beyond the power of the Commonwealth conferred by s 61 of the Constitution and/or s 198AHA of the Migration Act by reason of the Namah Decision? Answer: 3. Was the direction made by the Minister on 29 July 2013 beyond the power conferred by s 198AD(5) of the Migration Act by reason of the Namah Decision? Answer: Bell Nettle Gordon Edelman 4. Was the taking of the plaintiff to PNG on 21 August 2013 beyond the power conferred by s 198AD of the Migration Act by reason of the Namah Decision? Answer: Is the authority for the Commonwealth to undertake conduct in respect of regional processing arrangements in PNG conferred by s 198AHA of the Migration Act dependent on whether those arrangements are lawful under the law of PNG? Answer: Is the Commonwealth precluded from assisting PNG to take action pursuant to the orders outlined at paragraph 35 [of the special case] by reason of the Namah Decision? Answer: 7. Who should pay the costs of the special case? Answer: The plaintiff.

HIGH COURT OF AUSTRALIA SZOQQ AND APPELLANT MINISTER FOR IMMIGRATION AND CITIZENSHIP & ANOR RESPONDENTS SZOQQ v Minister for Immigration and Citizenship [2013] HCA 12 10 April 2013 ORDER Appeal allowed. Set aside the orders of the Full Court of the Federal Court of Australia dated 23 March 2012 and, in their place, order that: the appeal to that Court be allowed; the order of the Federal Court dated 4 November 2011 be set aside and, in its place, order that: a writ of certiorari issue directed to the second respondent quashing its decision dated 2 September a writ of mandamus issue directed to the second respondent requiring it to review, according to law, the decision made by a delegate of the first respondent on 26 May 2009 to refuse the appellant a Protection (Class XA) visa; and (iii) the first respondent pay the appellant's costs in the Federal Court; and the first respondent pay the appellant's costs in the Full Court of the Federal Court. First respondent to pay the appellant's costs in this Court. On appeal from the Federal Court of Australia Representation T A Game SC with N C Poynder for the appellant (instructed by Gilbert + Tobin Lawyers) G R Kennett SC with H Younan for the first respondent (instructed by DLA Piper Australia) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS SZOQQ v Minister for Immigration and Citizenship Immigration – Refugees – Judicial review – Minister's delegate found appellant had well-founded fear of political persecution if returned to Indonesia – Minister's delegate concluded Australia owed no "protection obligations" to appellant because appellant convicted of "particularly serious crime" – Whether "protection obligations" in s 36(2)(a) of Migration Act 1958 (Cth) ("Act") limited to non-refoulement obligation in Art 33(1) of Convention relating to the Status of Refugees as amended by Protocol relating to the Status of Refugees – Whether s 91U of Act confines scope of Australia's "protection obligations" in s 36(2)(a) of Act – Whether Minister bound to consider if grant of visa not prevented by s 501 of Act. Words and phrases – "non-refoulement", "particularly serious crime", "protection obligations". Migration Act 1958 (Cth), ss 36, 91U, 501. Convention relating to the Status of Refugees as amended by the Protocol relating to the Status of Refugees, Arts 1, 33. FRENCH CJ. I agree with the orders proposed by Keane J for the reasons given by his Honour. Hayne HAYNE J. I agree with Keane J. Crennan CRENNAN J. I agree with the orders proposed by Keane J for the reasons given by his Honour. KIEFEL J. I agree with the orders proposed by Keane J for the reasons given by his Honour. BELL J. I agree with Keane J. Bell I agree with Keane J. KEANE J. The appellant is an Indonesian national from the West Papuan province of Irian Jaya who was active in the Free Papua Movement from a young age. In 1973 he was detained and tortured by Indonesian officials. In March 1975, he suffered serious injury after being shot by members of the Indonesian military. In June 1985 the appellant was granted temporary entry into Australia. In November 1993 he was granted a Domestic Protection (Temporary) Entry Permit. On 22 January 1996 he was granted a protection visa. The appellant returned to Irian Jaya in September 1996 in order to visit his father, whom he believed to be in prison. On arrival, he was detained and physically assaulted by the Indonesian military. He escaped and returned to Australia on 22 July 1997. Back in Australia, the appellant was arrested on 27 May 2000 on a charge of having assaulted his de facto spouse. She died four days after the assault as a result of injuries inflicted by the appellant. The appellant subsequently pleaded guilty to a charge of manslaughter and was sentenced to seven years' imprisonment with a non-parole period of two years and six months. On 5 March 2003, pursuant to the "character test" provisions of s 501 of the Migration Act 1958 (Cth) ("the Act"), the first respondent cancelled the appellant's protection visa. On 12 December 2008, after a number of requests by the appellant, the first respondent determined in accordance with s 48B of the Act that it was in the public interest to allow the appellant to make a further application for a protection visa. An application in that regard was lodged on 19 December 2008. On 26 May 2009 a delegate of the first respondent determined that the appellant had a well-founded fear of political persecution within the meaning of Art 1A(2) of the Convention relating to the Status of Refugees as amended by the Protocol relating to the Status of Refugees, referred to in the Act ("the Refugees Convention"), should he be returned to Indonesia. However, the delegate determined that the appellant was not a person to whom Australia owed "protection obligations" under the Refugees Convention. The delegate took this position because the appellant, having been convicted of a "particularly serious crime", constituted a danger to the community, and was not a person to whom Australia had protection obligations under the Refugees Convention for the purposes of the criterion for a protection visa prescribed by s 36(2)(a) of the Act. Accordingly, the delegate decided that the appellant was precluded from obtaining a protection visa. The delegate's decision was affirmed by the Administrative Appeals Tribunal ("the Tribunal"), the primary judge1 and the Full Court of the Federal Court2. The only argument advanced for the appellant in the Tribunal and in the courts below was that Art 33(2) of the Refugees Convention, by which the non-refoulement obligation in Art 33(1) may be defeated, required a balancing of the danger faced by the appellant should he be returned to Indonesia against the danger he poses to the Australian community. This argument proceeded on the assumption that the "only protection obligation" owed to the appellant by Australia was the non-refoulement obligation in Art 33(1) of the Refugees Convention. The argument was resolved against the appellant on the footing that Art 33(2) of the Refugees Convention does not contemplate a balancing exercise of the kind for which he contended. NAGV In NAGV and NAGW of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs3 ("NAGV"), a decision published on 2 March 2005, Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ held that s 36(2) of the Act, in referring to "a non-citizen in Australia to whom Australia has protection obligations under [the Refugees Convention]", does no more than describe a person who is a refugee within Art 1 of the Refugees Convention. On this approach, the fact that the non-refoulement obligation in Art 33(1) would not be breached by returning a refugee to his or her country of nationality does not mean that that obligation, and other obligations owed to refugees under the Refugees Convention, do not exist. Their Honours explained4: "Section 36(2) does not use the term 'refugee'. But the 'protection obligations under [the Convention]' of which it does speak are best understood as a general expression of the precept to which the Convention gives effect. The Convention provides for Contracting States to offer 1 SZOQQ v Minister for Immigration and Citizenship (2011) 124 ALD 18. 2 SZOQQ v Minister for Immigration and Citizenship (2012) 200 FCR 174. (2005) 222 CLR 161 at 173-174 [32]-[33], 176 [42], 187 [84]; [2005] HCA 6. (2005) 222 CLR 161 at 173-174 [32]-[33]. See also Plaintiff M47/2012 v Director- General of Security (2012) 86 ALJR 1372 at 1386 [23], 1390 [37]-[38], 1404-1405 [441], 1469 [479]; 292 ALR 243 at 252-253, 258, 278, 293, 309, 346, 357, 358, 367; [2012] HCA 46. 'surrogate protection'5 in the place of that of the country of nationality of which, in terms of Art 1A(2), the applicant is unwilling to avail himself6. That directs attention to Art 1 and to the definition of the term 'refugee'. Such a construction of s 36(2) is consistent with the legislative history of the Act. This indicates that the terms in which s 36 is expressed were adopted to do no more than present a criterion that the applicant for the protection visa had the status of a refugee because that person answered the definition of 'refugee' spelled out in Art 1 of the Convention." Their Honours went on to say7: "Having regard to the subject, scope and purpose of the Reform Act, the adjectival phrase in s 26B(2) (repeated in s 36(2)) 'to whom Australia has protection obligations under [the Convention]' describes no more than a person who is a refugee within the meaning of Art 1 of the Convention. That being so and the appellants answering that criterion, there was no superadded derogation from that criterion by reference to what was said to be the operation upon Australia's international obligations of Art 33(1) of the Convention." This Court's decision in NAGV was not adverted to by the parties before the Tribunal or the courts below. Accordingly, its implications for the exercise of the discretion conferred by s 65 of the Act on the Minister to grant or refuse a protection visa were not addressed. In this Court the appellant contended that all the proceedings below miscarried because, contrary to the assumption on which his case proceeded, the "protection obligations" referred to in s 36(2)(a) of the Act are not limited to the non-refoulement obligation in Art 33(1) of the Refugees Convention. The appellant submitted that the decision in NAGV means that he is a person in respect of whom Australia has "protection obligations" under the Refugees 5 See Minister for Immigration and Multicultural Affairs v Respondents S152/2003 (2004) 222 CLR 1 at 8-9 [20]; [2004] HCA 18. 6 Section A(2) states: "owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence, is unable or, owing to such fear, is unwilling to return to it." (emphasis added) (2005) 222 CLR 161 at 176 [42]. Convention. Further, it was said the first respondent was bound but failed to consider whether the grant of a visa to the appellant was not otherwise prevented by s 501 of the Act. In this Court, the first respondent did not seek to dispute the correctness of the decision in NAGV. In an attempt to resist the conclusion that the proceedings in the Tribunal and the courts below did indeed miscarry, counsel for the first respondent argued that s 91U of the Act alters the operation of s 36(2) of the Act. It was said that the decision in NAGV is not determinative of this case because s 91U was not in force at the time relevant to the decision in NAGV. Counsel for the appellant countered that s 91U is concerned only to give content to the expression "particularly serious crime"; it does not, either expressly or impliedly, purport to alter the operation of s 36(2) of the Act. The first respondent conceded that if the argument in relation to the effect of s 91U of the Act is resolved in the appellant's favour, the orders of the Tribunal and the courts below must be set aside and the appellant's application for a visa considered again by the Tribunal. Before I turn to discuss the parties' arguments, I should set out those provisions of the Act and the Refugees Convention to which reference has been made and the other provisions which bear upon the arguments. The Act and the Refugees Convention At all material times s 36 of the Act relevantly provided: "Protection visas There is a class of visas to be known as protection visas. (2) A criterion for a protection visa is that the applicant for the visa is: a non-citizen in Australia to whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol; …" Article 33 of the Refugees Convention provided: "Prohibition of Expulsion or Return ('Refoulement') No Contracting State shall expel or return ('refouler') a refugee in any manner whatsoever to the frontiers of territories where his life or freedom would be threatened on account of his race, religion, nationality, membership of a particular social group or political opinion. The benefit of the present provision may not, however, be claimed by a refugee whom there are reasonable grounds for regarding as a danger to the security of the country in which he is, or who, having been convicted by a final judgment of a particularly serious crime, constitutes a danger to the community of that country." Section 91U of the Act relevantly provided: "Particularly serious crime For the purposes of the application of this Act and the regulations to a particular person, Art 33(2) of the Refugees Convention as amended by the Refugees Protocol has effect as if a reference in that Article to a particularly serious crime included a reference to a crime that consists of the commission of: a serious Australian offence (as defined by subsection (2)); For the purposes of this section, a serious Australian offence is an offence against a law in force in Australia, where: the offence: involves violence against a person; ... … and the offence is punishable by: imprisonment for life; …" Section 65 of the Act relevantly provided: "Decision to grant or refuse to grant visa (1) After considering a valid application for a visa, the Minister: if satisfied that: (iii) the grant of the visa is not prevented by section … 501 (special power to refuse or cancel) or any other provision of this Act or of any other law of the Commonwealth; … is to grant the visa; or if not so satisfied, is to refuse to grant the visa. Section 499 of the Act relevantly provided: "Minister may give directions (1) The Minister may give written directions to a person or body having functions or powers under this Act if the directions are about: the performance of those functions; or the exercise of those powers. (1A) For example, a direction under subsection (1) could require a person or body to exercise the power under section 501 instead of the power under section 200 (as it applies because of section 201) in circumstances where both powers apply. Subsection (1) does not empower the Minister to give directions that would be inconsistent with this Act or the regulations. (2A) A person or body must comply with a direction under subsection Section 500 of the Act relevantly provided: "Review of decision (1) Applications may be made to the Administrative Appeals Tribunal for review of: decisions of a delegate of the Minister under section 501; or a decision to refuse to grant a protection visa, or to cancel a protection visa, relying on one or more of the following Articles of the Refugees Convention, namely, Article 1F, 32 Section 501 of the Act relevantly provided: "Refusal or cancellation of visa on character grounds Decision of Minister or delegate—natural justice applies The Minister may refuse to grant a visa to a person if the person does not satisfy the Minister that the person passes the character test. Note: Character test is defined by subsection (6). Character test For the purposes of this section, a person does not pass the character test if: the person has a substantial criminal record (as defined by subsection (7)); or in the event the person were allowed to enter or to remain in Australia, there is a significant risk that the person would: engage in criminal conduct in Australia; or harass, molest, intimidate or stalk another person in Australia; or (iii) vilify a segment of the Australian community; or incite discord in the Australian community or in a segment of that community; or represent a danger to the Australian community or to a segment of that community, whether by way of being liable to become involved in activities that are disruptive to, or in violence threatening harm to, that community or segment, or in any other way. Otherwise, the person passes the character test. Substantial criminal record For the purposes of the character test, a person has a substantial criminal record if: the person has been sentenced to a term of imprisonment of 12 months or more; … Definitions In this section: court includes a court martial or similar military tribunal. imprisonment includes any form of punitive detention in a facility or institution. sentence includes any form of determination of the punishment for an offence. Note 1: Visa is defined by section 5 and includes, but is not limited to, a protection visa. Note 2: For notification of decisions under subsection (1) or (2), see section 501G. Note 3: For notification of decisions under subsection (3), see section 501C." Discussion The first respondent argued that NAGV was not concerned (as this case is) with a decision based on the "particularly serious crime" limb of Art 33(2) of the Refugees Convention. The operation of that limb is said to be affected by the operation of s 91U of the Act, which was introduced into the Act by the Migration Legislation Amendment Act (No 6) 2001 (Cth) ("the 2001 Amending Act") to define "particularly serious crime". The introduction of s 91U took effect after the decision under review in NAGV and, as a result, the reasoning in NAGV does not apply, so it is said, to the "particularly serious crime" limb of Art 33(2). In support of this submission, the first respondent argued that the language of s 91U evinces a legislative intention that the "particularly serious crime" limb of Art 33(2) was to have a particular "effect" for the purposes of the Act. According to the first respondent, that effect was that Art 33(2) was to apply to negative the existence of "protection obligations" to a person under s 36(2) of the Act. The first respondent urges this interpretation of s 91U for the following reasons: Section 91U would be otiose if it does not have the effect of applying Art 33(2) of the Refugees Convention to limit the persons to whom Australia has "protection obligations" in s 36(2). The Minister's Second Reading Speech for the Bill8 for the 2001 Amending Act and the Explanatory Memorandum to the Migration Amendment (Complementary Protection) Bill 2011 (Cth) (par 39) indicate that s 91U was intended to curtail the broad interpretation taken by the courts concerning the existence of "protection obligations". The first respondent's contention that s 91U of the Act is apt to confine the scope of persons to whom Australia has "protection obligations" in s 36(2)(a) has no textual basis. Section 36(2)(a) of the Act does not refer to Art 33(2), or the expression "particularly serious crime". The text of s 91U gives content to the expression "particularly serious crime". It does not purport to affect the operation of s 36(2)(a). Section 91U is not expressed in terms which are apt to translate into the terms of s 36(2) the operation of Art 33(2) of the Refugees Convention to provide for the extinguishment of the non-refoulement obligation in Art 33(1), much less all of Australia's other extant protection obligations. It may also be said that the first respondent's argument, if accepted, would produce the odd outcome that the two limbs of Art 33(2) have different applications via s 36(2)(a). It is not apparent why such an outcome would have been intended. I do not accept the first respondent's suggestion that, unless s 91U is understood as working an alteration of s 36(2)(a), it would be left with no work to do. The appellant argues that it might be considered for the purposes of s 65(1)(a)(iii) and s 501 of the Act. The first respondent disputes that s 91U is relevant for the purposes of s 501 because that section does not refer in terms to "particularly serious crime". However that may be, s 91U can readily be seen to be apt to aid the operation of s 499. And, bearing in mind the terms of s 499(2), it could also aid the making of regulations under s 31(3) of the Act. 8 Australia, House of Representatives, Parliamentary Debates (Hansard), 28 August In addition, pursuant to s 31(3) a regulation might prescribe, as an additional criterion for the grant of a protection visa of the class referred to in s 36 of the Act, that a person not be a person to whom the "particularly serious crime" limb of Art 33(2) of the Refugees Convention applies. As to the first respondent's second point, the Minister's Second Reading Speech sheds no light on the problem of present concern. That is hardly surprising, given that it predates the decision in NAGV. And as I have noted, in this Court the first respondent did not seek to challenge the correctness of NAGV. Conclusion and orders The appellant's submission that the proceedings below miscarried must be accepted. The appeal must be allowed to enable the appellant's application for a protection visa to be considered according to law. The appellant seeks his costs of the proceedings in the courts below and in this Court. Having regard to the failure of the parties to identify the point on which the appeal to this Court turns, and the arid exercise in which the parties have involved the courts before which this matter has come, I have given consideration to the possibility that there should be no order as to costs. I have, however, come to the conclusion that, bearing in mind that the parties were equally at fault in this regard, this consideration is not sufficient to displace the usual rule that costs should follow the event. I would make the following orders: Appeal allowed. Set aside the orders of the Full Court of the Federal Court of Australia dated 23 March 2012 and, in their place, order that: the appeal to that Court be allowed; the order of the Federal Court dated 4 November 2011 be set aside and, in its place, order that: a writ of certiorari issue directed to the second respondent quashing its decision dated 2 September 2010; a writ of mandamus issue directed to the second respondent requiring it to review, according to law, the decision made by a delegate of the first respondent on 26 May 2009 to refuse the appellant a Protection (Class XA) visa; and (iii) the first respondent pay the appellant's costs in the Federal Court; and the first respondent pay the appellant's costs in the Full Court of the Federal Court. First respondent to pay the appellant's costs in this Court.

HIGH COURT OF AUSTRALIA AND THE QUEEN APPELLANT RESPONDENT Baker v The Queen [2004] HCA 45 1 October 2004 ORDER Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation: B W Walker SC with A P Cook for the appellant (instructed by Legal Aid Commission of New South Wales) M G Sexton SC, Solicitor-General for the State of New South Wales with R D Cogswell SC and J G Renwick for the respondent and intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for New South Wales) Interveners: the H C Burmester QC with N L Sharp Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) intervening on behalf of R J Meadows QC, Solicitor-General for the State of Western Australia with K H Glancy intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor's Office for Western Australia) C J Kourakis QC, Solicitor-General for the State of South Australia with C D Bleby intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor's Office for South Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Constitutional law (Cth) – Judicial power of Commonwealth – Vesting of federal jurisdiction in State courts – Act empowering State court to determine a minimum term and an additional term for persons serving an existing sentence of life imprisonment – Act prohibiting such determination in respect of prisoners the subject of a non-release recommendation by the original sentencing judge unless "special reasons" the determination – Whether incompatible with State court being a suitable repository of judicial power of the Commonwealth. justified making Constitutional law (NSW) – Separation of powers – Power of State Parliament to confer function incompatible with exercise by State court of judicial power of the Commonwealth – Where class of affected persons closed and known – Whether judicial discretion preserved – Whether judicial function prescribed by Act compatible with State court being a suitable repository of judicial power of the Commonwealth. Words and phrases – "special reasons". Constitution, Ch III. Sentencing Act 1989 (NSW), s 13A. Sentencing Legislation Further Amendment Act 1997 (NSW). GLEESON CJ. This is an appeal from a decision of the Court of Criminal Appeal of New South Wales1 (Ipp AJA, Dunford and Bergin JJ) which dismissed an appeal from a decision of Greg James J of the Supreme Court of New South Wales declaring that the appellant was not eligible for a determination under s 13A of the Sentencing Act 1989 (NSW) as it stood at the relevant time. The legislation has since been changed in various respects, but nothing turns on that. In reaching his conclusion, the primary judge applied the provisions of sub- s (3A) of s 13A. Section 13A dealt with persons serving existing life sentences, that is to say, sentences of imprisonment for life imposed before or after the commencement of the section. The appellant was such a person. How that came about is explained in the reasons of other members of the Court. The primary judge referred to "the appalling nature of the [appellant's] crimes and their surrounding circumstances". In view of the issue argued on this appeal, it is unnecessary to elaborate on that. Sub-section (2) of s 13A entitled a person serving an existing life sentence to apply to the Supreme Court for the determination of a minimum term and an additional term for the sentence. In effect, such a determination, when made, would alter an indeterminate to a determinate sentence, and would fix a minimum period as the least period which the prisoner would have to serve before being eligible for release on parole. Sub- section (9) of s 13A set out matters to which the Supreme Court, in exercising its functions under s 13A, was to have regard. Section 13A distinguished between the general class of persons serving an existing life sentence and a particular class to which the appellant belonged, that is to say, persons who were the subject of a non-release recommendation. A non-release recommendation was defined by sub-s (1) as a recommendation or observation, or an expression of opinion, by the original sentencing court that the person should never be released from imprisonment. Sub-section (9)(a) threw further light on that by referring to "the knowledge of the original sentencing court that a person sentenced to imprisonment for life was eligible to be released on licence under section 463 of the Crimes Act 1900 and of the practice relating to the issue of such licences". In some cases, including the case of the appellant, sentencing judges had recommended against the possibility of release on licence. There was no statutory basis for such recommendations, and they had no legal effect beyond the significance that any other judicial observation about an offender in the course of sentencing might have had where a question of release on licence came to be considered by the Executive. Sub-section (3) provided that, if a person was the subject of a non-release recommendation, he or she could not make an application under s 13A for 20 years from the commencement of the sentence. Of particular relevance to this appeal is sub-s (3A), which provided: 1 Baker (2002) 130 A Crim R 417. "A person who is the subject of a non-release recommendation is not eligible for the determination of a minimum term and an additional term under this section, unless the Supreme Court, when considering the person's application under this section, is satisfied that special reasons exist that justify making the determination." The primary judge was not satisfied that special reasons existed within the meaning of sub-s (3A). The merits of that conclusion were argued in the Court of Criminal Appeal, but are not before this Court. It may be noted, however, that the argument before the primary judge and the Court of Criminal Appeal on that issue proceeded upon the assumption that the requirements of sub-s (3A) were not devoid of content, even though they may have been difficult for the appellant to satisfy. The ground of appeal to this Court is that the 1997 legislation which amended s 13A to introduce special provisions about people who were the subject of non-release recommendations was invalid. The sole ground of invalidity, which was also considered and rejected by the Court of Criminal Appeal, was expressed in the appellant's notice under s 78B of the Judiciary Act 1903 (Cth) as follows: "The appellant seeks to raise an argument that the requirement in the legislation that he show that there are 'special reasons' to justify a determination of his life sentence [sic] is invalid as being inconsistent with the exercise by the Supreme Court of federal judicial power." The kind of inconsistency relied upon is that identified in Kable v Director of Public Prosecutions (NSW)2. The principle for which that case stands as authority is that, since the Constitution established an integrated Australian court system, and contemplates the exercise of federal jurisdiction by State Supreme Courts, State legislation which purports to confer upon such a court a function which substantially impairs its institutional integrity, and which is therefore incompatible with its role as a repository of federal jurisdiction, is invalid. The strength of that principle lies in its constitutional legitimacy. It was not an invention of a method by which judges may wash their hands of the responsibility of applying laws of which they disapprove. In some of the judgments in Kable, references were made to public confidence in the courts. Confidence is not something that exists in the abstract. It is related to some quality or qualities which one person believes to exist in another. The most basic quality of courts in which the public should have confidence is that they will administer justice according to law. As Brennan CJ said in Nicholas v The Queen3: (1996) 189 CLR 51. (1998) 193 CLR 173 at 197 [37]. "It is the faithful adherence of the courts to the laws enacted by the Parliament, however undesirable the courts may think them to be, which is the guarantee of public confidence in the integrity of the judicial process and the protection of the courts' repute as the administrator of criminal justice." Senior counsel for the appellant expressly disclaimed any suggestion that the retrospective operation of the law was relevant to his argument. He was right to do so. Retrospectivity is a slippery concept, especially in its application to laws affecting the sentencing and custodial regimes which apply to prisoners already serving sentences. Such regimes are almost always affected in various ways by legislative, judicial, and administrative decision-making. To take the most obvious example, conditions of incarceration alter from time to time with changes in executive policy. In New South Wales, the system of release on parole historically involved both judicial and administrative decisions, and the interaction of that system with administrative procedures concerning remission of sentence gave rise to the problems that were addressed by the Sentencing Act 1989 (NSW). The history of those problems, and an explanation of the legislative solution, may be seen in R v Maclay4. As the judgment in that case makes clear, and as should in any event be obvious, legislative and administrative changes to systems of parole and remissions usually affect people serving existing sentences. The longer the original sentence, the more likely it is that an offender will be affected by subsequent changes in penal policy. It is unnecessary to go into the history of legislation in New South Wales concerning sentencing in cases where imprisonment for life is fixed as the penalty, whether that be mandatory or the maximum. There have been a number of such changes in recent years. Some of the history before 1997 was set out by Hunt CJ at CL in Kalajzich5. An important practical matter was the administrative practice of release on licence, which was referred to in s 13A(9)(a). It was the knowledge by sentencing to non-release recommendations of the kind referred to in s 13A(1), (3), and (3A). I expressed my concerns about such a recommendation in Jamieson, Elliott and Blessington6. Nevertheless, there were widely known cases in which judges made such recommendations. Other judges, without making non-release recommendations, made denunciatory remarks on sentencing, or pointed references to particular features of a case, which might have indicated a view that a sentence of life imprisonment should continue until death. It is to be remembered that prisoners who were released on licence continued to serve their sentences in the that practice judges of that gave rise (1990) 19 NSWLR 112. (1997) 94 A Crim R 41 at 47-49. (1992) 60 A Crim R 68 at 80. community. The licences were often subject to stringent conditions, breach of which could result in return to prison. Furthermore, release did not always mean release into the community; it might mean release into a psychiatric institution, sometimes without any realistic expectation of recovery. Statistical information about the average time spent in prison by persons sentenced to life imprisonment is of little assistance unless it is broken down in a manner that deals with the most heinous crimes. The expectations of the appellant at the time of his sentencing would have to be related, not to the "average" case, but to the worst cases and, in particular, to cases where non-release recommendations were made. In 1990, the Crimes Act 1900 (NSW) was amended by the introduction of s 19A, which provided that a person sentenced to penal servitude for life for the crime of murder was to serve that sentence for the term of the person's natural life. One offender sentenced under that provision was a man unrelated to the appellant but also named Baker. He had been convicted of the murders of six people and of wounding another with intent to murder7. Information about averages means little for cases of that kind. When the 1997 amendments to s 13A, the subject of the present constitutional challenge, were made, there was a limited number of prisoners serving life sentences who had been the subject of non-release recommendations. Their identities, and the circumstances of their crimes, were widely known. The New South Wales Parliament decided that, in the scheme of s 13A, they should be treated as exceptional cases. It made special, and different, provision for them. As a matter of legislative power, the Parliament was entitled to do so. Senior counsel for the appellant acknowledged in the course of argument that, if Parliament had simply named the persons in question and excluded them from the operation of s 13A, then his Kable argument would not have arisen. It might be argued, as a matter of legislative policy, that it was unreasonable of Parliament to single out for special, and disadvantageous, treatment those prisoners who had been sentenced by judges who were willing to make non- release recommendations when others who had also committed heinous crimes might have escaped such recommendations because of the inclinations of a particular sentencing judge. As a matter of policy, I see the force of that argument, but its significance in terms of legislative power is another matter. Parliament may have taken the view that at least those people in the position of the appellant should be subject to a special regime, and if others whose crimes were just as serious were given the benefit of more favourable treatment then that would have to be accepted. It is evident from the parliamentary material referred to in argument that the view was taken that public opinion demanded some form of legislative recognition of the fact that, included amongst prisoners serving life sentences, there were people whose crimes were so extreme that sentencing 7 R v Baker unreported, Court of Criminal Appeal of New South Wales, 20 September 1995. judges had been moved to recommend that they should never be released. As a matter of legislative power, it was open to the New South Wales Parliament to enact legislation reflecting such opinion. The distinction drawn by the legislature was not arbitrary. If, for any reason, one wanted to identify prisoners who had committed the most heinous crimes, searching for those who had been the subject of a non-release recommendation would be at least a good start. In the view of some people, it would be unreasonable to stop there, and unfair to discriminate solely on that ground. Choices of that kind, however, are generally within legislative competence. Persons who were the subject of a non-release recommendation had one thing in common: the legislature knew that the judges who sentenced them thought that their crimes were so serious that, in their cases, imprisonment for life should mean exactly that. There may have been other cases where sentencing judges held the same opinion, but did not express it. Even so, the fact that a particular judge expressed such an opinion is, as a matter of fact, indicative of the gravity of the conduct of an offender. It was within the power of the Parliament to select such an expression of opinion as an indication that the offending was of the most serious kind. The Parliament was entitled to create a special regime for the most serious offenders, and to select as the criterion for distinguishing the most serious offenders the making of a non-release recommendation. The selection was not arbitrary, and the criterion was not irrelevant. If it was unfair, its unfairness could have been thought to lie in the consequence that some other offenders of a most serious kind received more favourable treatment. There is a further consideration that Parliament is entitled to take into account when legislating about crime and punishment. Parliament is not functioning in a hermetically sealed environment. The public are aware that there are some prisoners whose crimes have attracted judicial condemnation of the utmost severity, and that such condemnation, at least in the past, has sometimes taken the form of an expression of opinion that a particular prisoner should remain in custody for life. The complex legal and political issues that surrounded the 1989 "truth-in-sentencing" legislation in New South Wales resulted from a notorious difference between the appearance and the reality of some sentences. When Parliament decided to permit prisoners who had been sentenced for "life" to apply for determinate sentences, which to the public would almost certainly appear to be lower than their original sentences, it was foreseeable that it would want to address, and perhaps reserve for special treatment, the most extreme cases, however those cases were to be identified. The weight of the appellant's Kable argument was put upon the requirement of "special reasons" in s 13A(3A). In the context of s 13A, that requirement was said to be devoid of content, and illusory. On that premise, in its application to people the subject of non-release recommendations, s 13A involved the Supreme Court in a charade. The legislature was using the forms of judicial procedure to mask the reality of the legislative decree, which was that these people were never to be released. On that premise, as a matter of principle, the case would be very close to Kable. It is the premise that is in contest. Both in form and in substance, sub-s (3A) was a qualification upon the power of the Supreme Court to make a determination of a minimum term and an additional term in the case of a person serving an existing life sentence. Before s 13A was first introduced, sentences of life imprisonment were indeterminate. Section 13A empowered the Supreme Court to re-determine existing life sentences, make a determination of a minimum term and an additional term, and open the way to the possibility of parole. The additional term could have been for the remainder of a person's natural life (s 13A(4)). In its application to persons other than persons the subject of a non-release recommendation, the section (in sub-s (9)) required the Supreme Court to have regard to the practice of release on licence earlier mentioned, to certain kinds of post-sentence report on the offender, to the need to preserve the safety of the community, to the offender's age, and to "any other relevant matter". In the case of a person the subject of a non-release recommendation, sub-s (3A) provided that such a person was not eligible for a determination absent "special reasons ... that justify making the determination". In addition, sub-s (10A) required the Supreme Court to have regard to and give substantial weight to any relevant recommendations, observations and comments made by the original sentencing court. There is nothing unusual about legislation that requires courts to find "special reasons" or "special circumstances" as a condition of the exercise of a power8. This is a verbal formula that is commonly used where it is intended that judicial discretion should not be confined by precise definition, or where the circumstances of potential relevance are so various as to defy precise definition. That which makes reasons or circumstances special in a particular case might flow from their weight as well as their quality, and from a combination of factors. It is the duty of a court to give meaning to the requirement of "special reasons" in sub-s (3A) unless that is impossible. That elementary principle of statutory interpretation cannot be ignored. Section 31 of the Interpretation Act 1987 (NSW) provides that an Act shall be construed so as not to exceed legislative power. In Residual Assco Group Ltd v Spalvins9, Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ said: eg United Mexican States v Cabal (2001) 209 CLR 165. (2000) 202 CLR 629 at 644 [28]. "If the choice is between reading a statutory provision in a way that will invalidate it and reading it in a way that will not, a court must always choose the latter course when it is reasonably open. Courts in a federation should approach issues of statutory construction on the basis that it is a fundamental rule of construction that the legislatures of the federation intend to enact legislation that is valid and not legislation that is invalid." As Bowen LJ said in Curtis v Stovin10, "if it is possible, the words of a statute must be construed so as to give a sensible meaning to them". It is inappropriate and impermissible to use speeches made in Parliament to seek to evade the statutory command in s 31 of the Interpretation Act, or fundamental principles of statutory interpretation. The use that can be made of such extrinsic material is governed by s 34 of the Interpretation Act. Where a dispute about the meaning of a statutory provision, such as that involved in the present case, arises the Court is not entitled to treat what was said by a member of Parliament in the course of political debate as some kind of evidence of legislative bad faith. The duty of the Court, reinforced by the Interpretation Act, in the light of which all New South Wales legislation is enacted, is to give meaning to the whole of s 13A unless it is impossible to do so. The only issue of statutory interpretation that was raised in argument, and that arises for decision, is whether the expression "special reasons" is devoid of content, so that it is impossible for any case to satisfy the requirement. It is not to be overlooked that, now that the appellant is left only with his Kable argument, it suits his purposes to contend that he can never make out a case of "special reasons". That was not his primary argument in the Supreme Court, where his counsel was strongly contending that the requirements of sub-s (3A) could be, and were, satisfied. Furthermore, if Australia's obligations under international instruments are to be invoked as an aid to statutory interpretation, it is difficult to see the reasoning by which those obligations can support an interpretation of sub-s (3A) that deprives it of meaning and practical effect. If anything, those obligations should support, rather than oppose, a view that sub- s (3A) has a meaning. Senior counsel for the appellant did not invoke international norms or treaties in support of his argument that "special reasons" is an expression devoid of content. Had he done so, he would have been confronted with an obvious logical problem. On the other hand, if he were right on his construction point, and if sub-s (3A) were a meaningless charade, Kable would take him directly to his intended destination. The structure of s 13A is to distinguish between ordinary cases for the application of the section and a special class of case, being the cases referred to 10 (1889) 22 QBD 513 at 517. for making take account of the determination must in sub-ss (3)(b) and (3A). In the special cases, it is necessary for there to be "special reasons" to justify the making of a determination. By hypothesis, the occasion for a search for "special reasons" is that which makes the cases special, that is to say, the non-release recommendation. Bearing in mind sub-s (10A), the justification the recommendation and the reasons that were given for it. In the ordinary case, the Supreme Court is directed by sub-s (9) to have regard to all relevant matters. Its attention is also directed specifically to certain matters. It would be absurd to construe "special reasons" in sub-s (3A) as excluding from consideration any matter covered by sub-s (9), because sub-s (9) covers all relevant matters. That would leave for consideration only irrelevant matters. The legislation does not require such a construction, and the principles of statutory interpretation referred to earlier argue strongly against it. Questions of weight and degree may arise. To take one specific example, sub-s (9) directs attention to the age of an offender at the time of the commission of the offence as a relevant matter in the ordinary case. In a particular case, the offender may have been a juvenile at the time of the offence. (This example, it should be added, is not purely hypothetical. One of the persons the subject of a non-release recommendation was 14 at the time of the offence.) It would be open to a judge to treat that as a special reason for the purposes of sub-s (3A). By reason of sub-s (9), age is always relevant, although in some cases its significance may be small. In a particular case, it may have a special significance. It would not necessarily be conclusive, but it would be open for consideration. To take another example, mentioned in the Court of Criminal Appeal, assistance given to the authorities in the detection of crime, sometimes involving extreme danger, could be a relevant matter in the ordinary case. There may also be particular circumstances in which, either alone or in combination with other factors, it could amount to a special reason in one of the special cases. Examples of this kind cannot be dismissed as fanciful. We are not dealing with an argument that it is difficult to satisfy the requirements of sub-s (3A). We are dealing with an argument that it is impossible to satisfy the requirements because the statutory phrase "special reasons" is, in this context, devoid of content. We are dealing with a legal argument aimed at demonstrating invalidity, not a political argument aimed at demonstrating the desirability of legislative amendment. The appellant's submission, that it will always be impossible to establish "special reasons" under sub-s (3A), was not simply a rhetorical overstatement of a complaint about unfairness. It was the basis for the contention that, in its application to persons the subject of non-release recommendations, the legislative scheme was a charade, and the Supreme Court's judicial process was being used merely to implement a legislative intention that such persons would never be released. In order to make that argument good, it is not sufficient to show that it is difficult to establish special reasons, or that successful applications are likely to be rare. It is necessary to show that it is impossible to establish special reasons, and that no application could succeed. That has not been shown. The appeal should be dismissed. 21 McHUGH, GUMMOW, HAYNE AND HEYDON JJ. The sole ground in this appeal from the New South Wales Court of Criminal Appeal11 is error by that Court in holding that the Sentencing Legislation Further Amendment Act 1997 (NSW) ("the 1997 Act") was valid and did not purport to vest in the Supreme Court functions incompatible with the exercise by the Supreme Court of the judicial power of the Commonwealth. The reference to incompatibility is to the reasoning in Kable v Director of Public Prosecutions (NSW)12. In that case, it was held that the Community Protection Act 1994 (NSW) was invalid on the ground that the exercise of the jurisdiction conferred by it upon the Supreme Court was incompatible with the integrity, independence and impartiality of the Supreme Court as a court in which federal jurisdiction also had been invested by laws made under s 77(iii) of the Constitution. Subsequently, in HA Bachrach Pty Ltd v Queensland13, in the course of upholding the validity of certain Queensland legislation and deciding that there was no incompatibility of the nature identified in Kable, the following was said in the joint judgment of five members of the Court14: "It will be apparent that the Queensland Supreme Court (including the Court of Appeal) is not a federal court created by the Parliament within the meaning of s 71 of the Constitution, and that the litigation pending in the Court of Appeal did not involve the exercise by it of federal jurisdiction invested pursuant to a law made by the Parliament under s 77(iii) of the Constitution. Hence the reliance by the plaintiff upon the decision with respect to the Supreme Court of New South Wales in Kable v Director of Public Prosecutions (NSW). However, Kable took as a starting point the principles applicable to courts created by the Parliament under s 71 and to the exercise by them of the judicial power of the Commonwealth under Ch III. If the law in question here had been a law of the Commonwealth and it would not have offended those principles, then an occasion for the application of Kable does not arise. The submissions for the first and third defendants and for the interveners correctly proceeded on that footing." 11 Baker (2002) 130 A Crim R 417. 12 (1996) 189 CLR 51. 13 (1998) 195 CLR 547. 14 (1998) 195 CLR 547 at 561-562 [13]-[14] (footnote omitted). That this passage indicated the appropriate approach in the present appeal was accepted by counsel for the appellant and supported by the New South Wales Solicitor-General, who appeared for the respondent and for the Attorney- General for that State, and by counsel for the Attorney-General of the Commonwealth who appeared in support of the opposition to the appeal. If the provisions of the 1997 Act under challenge had been laws of the Commonwealth, they would have complied with the principles found in Ch III of the Constitution for the exercise of federal jurisdiction by federal courts and by State courts invested pursuant to a law made under s 77(iii) of the Constitution. That being so, the appellant's attack on validity cannot succeed. The facts The appellant was born on 16 January 1948. On 20 June 1974, after an eight day trial before Taylor J and a jury, the appellant and his co-accused were convicted on four counts, the first two of which were murder and conspiracy to murder. On the first two counts they were sentenced to life imprisonment. The sentences on the other two counts were concurrent with the life sentences and have expired. The appellant has been in custody since 13 November 1973 when he was arrested. In his remarks on sentence, Taylor J detailed the circumstances of the offence and added: "I believe that you should spend the rest of your lives in gaol and there you should die. If ever there was a case where life imprisonment should mean what it says – the imprisonment for the whole of your lives – this is it." It has been accepted that, in making these remarks, Taylor J was recommending that the appellant and his co-accused never be released. At the time of these events, s 19 of the Crimes Act 1900 (NSW) ("the Crimes Act") stated: "Whosoever commits the crime of murder shall be liable to penal servitude for life." There was then no stipulation for minimum or "non-parole" terms. However, s 463 of the Crimes Act made provision for what the side note identified as "tickets-of-leave". In particular, sub-s (1) stated: "The Governor may grant to any offender a written license to be at large, within limits specified in the license, but not elsewhere, during the unexpired portion of his sentence, subject to such conditions indorsed on the license as the Governor shall prescribe, and while such offender continues to reside within the limits specified, and to perform the conditions so prescribed, his sentence shall be suspended." Section 463 had replaced a similar provision in s 409 of the Criminal Law Amendment Act 1883 (NSW)15. The grant by the executive government of "tickets-of-leave" had an earlier history in New South Wales as an adjunct to the transportation system, dating from the days of Governor Phillip16. Under the system continued by s 463 of the Crimes Act, there was always the prospect of release on licence. In Kalajzich, Hunt CJ at CL described this as "a prospect which almost universally became fact"17. However, s 463 was repealed in 1989, as was s 1918. The Sentencing Act 1989 NSW ("the 1989 Act") introduced a detailed system for the making of parole orders19 and has been amended from time to time. Whilst s 463 remained in force, the judicial power to impose sentence upon a person convicted of murder was confined: the only sentence that could be passed was that the offender suffer penal servitude for life. Upon passing that sentence the judicial power was exhausted. Whether the offender served the sentence in prison or at large was a matter which then was to be decided by the Executive, not a court. If the Executive exercised the power given by s 463, the offender obtained a mercy. But in no sense (whether as a matter of substance or as a matter of form) can later legislation, altering the circumstances in which 15 46 Vict No 17. 16 Woods, A History of Criminal Law in New South Wales: The Colonial Period, 1788-1900, (2002) at 126, 165-167; "Ticket of Leave", in The Australian Encyclopaedia, (1965), vol 8 at 497-498. 17 (1997) 94 A Crim R 41 at 48. 18 By, respectively, the Prisons (Serious Offenders Review Board) Amendment Act 1989 (NSW), s 5 and the Crimes (Life Sentences) Amendment Act 1989 (NSW), Sched 1, Item 3. 19 See Bugmy v The Queen (1990) 169 CLR 525 at 530-531, 536-537. such mercy could or would be extended to a prisoner sentenced to life imprisonment, make that sentence of life imprisonment more punitive or burdensome to liberty. Whether the power to reduce the effect of a life sentence is given to a court (as the legislation now in question did) or is retained by the Executive, the original sentence passed on the offender could not be and was not extended or made heavier. With respect to the operation of the 1989 Act upon sentences existing at the time of its commencement, such as those of the appellant, the term "retrospective" was used in some of the submissions. Some care is required in such usage. The point is made as follows by McHugh and Gummow JJ in The Commonwealth v SCI Operations Pty Ltd20: "However, in Coleman v Shell Co of Australia21, Jordan CJ pointed out that 'there has been some ambiguity in the use of the word "retrospective"'. His Honour went on to distinguish between a statute which provided that as at a past date the law shall be taken to have been that which it was not, and the creation by statute of further particular rights or liabilities with respect to past matters or transactions22." The 1989 Act falls in that second category identified by Jordan CJ. This litigation turns upon the alleged invalidity of amendments made by the 1997 Act to the 1989 Act23. Before that amendment, s 13A of the 1989 Act provided in sub-s (2): 20 (1998) 192 CLR 285 at 309 [57]. See also Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 282 [25]-[27]. 21 (1943) 45 SR (NSW) 27 at 30. See also Fisher v Hebburn Ltd (1960) 105 CLR 188 at 194; Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537 at 564, 578; Robertson v City of Nunawading [1973] VR 819 at 823-824; La Macchia v Minister for Primary Industry (1986) 72 ALR 23 at 26-27; Rodway v The Queen (1990) 169 CLR 515 at 518-519; Pearce and Geddes, Statutory Interpretation in Australia, 4th ed (1996), par [10.4]; and cf Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 89. 22 Coleman (1943) 45 SR (NSW) 27 at 31. 23 The 1989 Act has since been repealed by the Crimes Legislation Amendment (Sentencing) Act 1999 (NSW), Sched 1, and replaced by the Crimes (Sentencing Procedure) Act 1999 (NSW). The latter statute in turn has been amended by the Crimes Legislation Amendment (Existing Life Sentences) Act 2001 (NSW). "A person serving an existing life sentence may apply to the Supreme Court for the determination of a minimum term and an additional term for the sentence." On such an application, the Supreme Court had the power conferred by sub-s (4). This stated: "The Supreme Court may, on application duly made for the determination of a minimum term and an additional term for a sentence: set both: a minimum term of imprisonment that the person must serve for the offence for which the sentence was originally imposed; and an additional term during which the person may be released on parole (being either an additional term for a specified period or for the remainder of the person's natural life); or decline to determine a minimum term and an additional term." Section 13A was an illustration of legislation which performed a double function of creating new rights and conferring jurisdiction to administer a remedy24. These rights and that remedy were subsequent to, and independent of, the determination of the criminal guilt of the appellant and the imposing of the sentences by Taylor J. Undoubtedly the earlier steps had appertained exclusively to the exercise of judicial power. The effect of an order under s 13A, setting for an existing life sentence both a minimum term of imprisonment and an additional term during which the prisoner might, by the exercise of statutory authority given a non-judicial body, be released on parole, is to alter or vary the order of the sentencing judge. Accordingly, the new jurisdiction conferred by s 13A may readily be seen as attracting the exercise of judicial power. On a "functional analysis" of the separation of powers, the new jurisdiction takes its character from the nature of 24 James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 at 64-65 [22]- the institution to which it is entrusted25. Whilst accepting this may be so in appropriate contexts, the appellant denies that here there is such a context. Section 13A(3) imposed a requirement upon those serving existing life sentences of eligibility to make an application. It stated: "Any such person is not eligible to make an application unless the person has served at least 8 years of the sentence concerned." That sub-section was omitted by the 1997 Act and a provision inserted, the validity of which is under challenge. Item 2 of Sched 1 to the 1997 Act stated: "Omit section 13A(3). Insert instead: (3) A person is not eligible to make such an application unless the person has served: at least 8 years of the sentence concerned, except where paragraph (b) applies, or at least 20 years of the sentence concerned, if the subject of a non-release person was recommendation. the (3A) A person who the subject of a non-release recommendation is not eligible for the determination of a minimum term and an additional term under this section, unless the Supreme Court, when considering the person's application under this section, is satisfied that special reasons exist the determination." justify making (emphasis added) that The appellant contends that the emphasised passages are invalid. The effect would be that Item 2 of Sched 1 omitted the previous s 13A(3) but replaced it by a provision with the same operation. It is unnecessary to deal with the questions of severance which would be involved26. This is because the primary submission 25 R v Davison (1954) 90 CLR 353 at 368-369; HA Bachrach Pty Ltd v Queensland (1998) 195 CLR 547 at 562 [15]; Sue v Hill (1999) 199 CLR 462 at 516-517 [134]- [135]; Luton v Lessels (2002) 210 CLR 333 at 373-374 [123]-[125]. 26 Discussed, for example, by Dixon J in R v Poole; Ex parte Henry [No 2] (1939) 61 CLR 634 at 652 and by Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ (Footnote continues on next page) respecting the invalidity of the emphasised passages in Item 2 should not be accepted. Item 1 of Sched 1 (the validity of which is not challenged) inserted a definition of the expression "non-release recommendation" into sub-s (1) of s 13A. The definition read: "non-release recommendation, in relation to a person serving an existing life sentence, means a recommendation or observation, or an expression of opinion, by the original sentencing court that (or to the effect that) the person should never be released from imprisonment." It is common ground that the remarks by the sentencing judge in this case answered the description of "non-release recommendation" thereby attracting the disqualification in the new s 13A(3A). Before considering the submissions on the question of invalidity, it is convenient to say more of the course to date of the present litigation. The 1997 Act came into force on the date of assent, 9 May 199727. Thereafter, on 1 August 1997, the appellant applied to the Supreme Court pursuant to s 13A for an order determining the minimum term and an additional term for the life sentence imposed on him on 20 June 1974. The application came before a judge of the Court who dismissed the application on the footing that the appellant was not eligible to make it. Section 13A(12)(b) provides that an appeal lies to the Court of Criminal Appeal in relation to a decision to decline to make a determination of a minimum term and an additional term. The sub-section also provides that the Criminal Appeal Act 1912 (NSW) applies to such an appeal in the same way as it applies to an appeal against sentence. An appeal was taken to the Court of Criminal Appeal28, apparently in reliance upon par (b) of s 13A(12), against the declaration of non-eligibility. The appeal was dismissed. In the course of its reasons, the Court of Criminal Appeal gave examples of what might conceivably be regarded as "special reasons" within the meaning in Victoria v The Commonwealth (Industrial Relations Act Case) (1996) 187 CLR 28 Ipp AJA, Dunford and Bergin JJ. of s 13A(3A)29. The Court differed from the interpretation given that requirement by the primary judge. However, it concluded that none of the four reasons advanced for the appellant as constituting special reasons answered the statutory description. In the course of dealing with the question of statutory construction, the Court referred to authority indicating that the words "special reasons" appear in numerous statutory provisions and, as words of indeterminate reference, will always take their colour from their surroundings30. It is unnecessary and beyond the grant of special leave to appeal for this Court to embark upon an examination of the question whether the Court of Criminal Appeal erred in its consideration of the phrase and of its application to the particular facts of the case. This is because the submission by the appellant is that it is impossible to give any kind of practical content to the qualification for the entertainment by the Supreme Court of an application under s 13A. Counsel for the appellant accepted that his argument depended upon the proposition that the qualification to s 13A(3A), requiring the Supreme Court to be satisfied that "special reasons" exist that justify making the determination, was a criterion devoid of meaning. Because the qualification was devoid of meaning, it followed, so the appellant's argument proceeded, that the Supreme Court would be engaged in "a charade" in seeking to identify the reasons said to be "special". All the matters that could constitute "special reasons" were matters that would necessarily be taken into account in the task of making a determination. The premise for the appellant's argument is incorrect. The qualification to s 13A(3A) may be attended by difficult questions of construction. Whether or not that is so, it is a qualification to which meaning not only can, but must, be given in the context of the facts advanced in any particular case as warranting the description "special reasons". The fact that reasons identified as "special" may (indeed almost certainly would) be relevant to the exercise of the power of determination does not strip the expression "special reasons" of meaning. It is important, as Gaudron J stressed in Sue v Hill31, in construing such a broadly expressed conferral of authority that it is to be exercised by a court, not by an administrator. There are numerous authorities rejecting submissions that 29 Baker (2002) 130 A Crim R 417 at 428. 30 R v Simpson (2001) 53 NSWLR 704 at 717. 31 (1999) 199 CLR 462 at 520-521 [148]-[149]. the conferral of powers and discretions for exercise by imprecisely expressed criteria do deny the character of judicial power and involve the exercise of authority by recourse to non-legal norms. A well-known example is the upholding in R v Commonwealth Industrial Court; Ex parte The Amalgamated Engineering Union, Australian Section32 of the conferral upon a federal court of a power of disallowance of rules of industrial organisations for imposing upon that were "oppressive, unreasonable or unjust". members conditions Subsequently, in R v Joske; Ex parte Shop Distributive and Allied Employees' Association33, Mason and Murphy JJ observed: judicial discretions with no "[T]here are countless specification of the criteria by reference to which they are to be exercised – nevertheless they have been accepted as involving the exercise of judicial power." instances of The appellant also challenged selection as the "trigger" to s 13A(3A) of the criterion that the applicant be the subject of a non-release recommendation. It was not entirely apparent whether this objection was independent of or an element in the primary complaint respecting the expression "special reasons". In any event, there is no substance in the point. Counsel for the Attorney-General of the Commonwealth correctly submitted that the selection of this "trigger" was but an instance of the proposition that, in general, a legislature can select whatever factum legislative consequence34. the "trigger" of a particular it wishes as It may be observed that the appellant did not challenge that specification of eligibility concerned with the period for which the sentence has been served; the appellant met the criterion of 20 years. The objection appeared to fix upon the circumstance that those persons serving an existing life sentence where there had been no non-release recommendation would be treated under the legislation without the additional requirement of special reasons imposed upon persons such as the appellant. It was submitted by the appellant, in substance, that s 13A, as a result of the changes made by the 1997 Act, operated differentially between those serving existing life sentences and that the members of that class were 32 (1960) 103 CLR 368. 33 (1976) 135 CLR 194 at 215-216. See also Sue v Hill (1999) 199 CLR 462 at 486 34 See, for example, Re Macks; Ex parte Saint (2000) 204 CLR 158 at 178 [25], subdivided by the criterion of non-release recommendation. In some respects, notably s 92 and s 117, the Constitution restrains the exercise of State legislative power by reference to notions of disability or discrimination. But it was not submitted that the present case falls within any of these categories. Nor was an attempt made to imply a restriction upon State legislative power akin to the express provision proscribing denial of "the equal protection of the laws" found in s 1 of the Fourteenth Amendment to the United States Constitution. Such an attempt, at a federal level, respecting the powers of the Parliament, would have to overcome the reasoning of the majority in Leeth v The Commonwealth35. That reasoning gives no encouragement to the implication of a constitutional restriction upon State legislative power. The appellant relied in this connection upon remarks made by the New South Wales Court of Criminal Appeal in Jamieson, Elliott and Blessington36. The Court there expressed the view that it had been inappropriate for the trial judge to recommend, as part of his remarks on sentence, that the appellants should never be released, especially where two of the offenders were young persons and there were so many different possibilities as to what might happen in the future. The Court pointed out that there appeared to be no statutory basis for making such a recommendation and none for appealing against it. The present appellant fixes upon Jamieson as stating all that might be said upon the subject. However, the matter is more complex. There is a long history, both in England and Australia, of recommendations by trial judges to the Executive respecting the carrying out of mandatory sentences. In an age of draconian penal systems and before the establishment of courts of criminal appeal, these procedures to engage the attention of the Executive were "an indispensable element in the administration of criminal justice"37. The statements by the judges under this system recommended both for and against the exercise of clemency by the Executive38. Juries also might ask the trial judge to recommend a defendant for clemency39. The celebrated trial in the New South 35 (1992) 174 CLR 455. 36 (1992) 60 A Crim R 68 at 80. 37 Radzinowicz, A History of English Criminal Law, (1948), vol 1 at 114. See also Langbein, The Origins of Adversary Criminal Trial, (2003) at 60-61, 324-325. 38 Radzinowicz, A History of English Criminal Law, (1948), vol 1 at 114. 39 Langbein, The Origins of Adversary Criminal Trial, (2003) at 324. Wales Supreme Court of R v Dean includes a striking instance of this practice40. Indeed, it is possible that the trial judge might invite the jury to recommend It is true that that exercise of judicial power identified in the expression "trial and conviction on indictment" ordinarily is exhausted by a finding of guilt or acceptance of a plea of guilty followed by sentence42. However, the practices described above would have been understood when the Constitution was adopted as encompassed in the requirement in s 80 of certain trials to be "by jury". To the extent that they might not otherwise involve the exercise of judicial power as generally understood, they nevertheless were properly to be supported as one of the historical instances identified in R v Davison43. It follows that there is nothing repugnant to the notion of judicial power in the taking of such a past recommendation as a legislative criterion for the operation of a subsequent regime such as that provided for the Supreme Court by s 13A. Reference also was made in argument to what was said to be the small class of persons (apparently 10 in number) who, at the enactment of the 1997 Act, were serving existing life sentences in respect of whom there were non-release recommendations. It did not appear that any independent submission respecting invalidity was based upon that circumstance. In any event, what was said in Nicholas v The Queen44 respecting Liyanage v The Queen45 and the limited application of the federal law in question in Nicholas to identifiable cases would answer such a submission. In the circumstances of the present case, it could not be said that the appellant was the sole and direct "target" of the 1997 40 Woods, A History of Criminal Law in New South Wales, (2002) at 410-411. 41 During the trial in R v Adams, Devlin J, at least, contemplated as a legitimate course "an invitation to the jury to recommend mercy if they thought it deserved": Devlin, Easing the Passing: The Trial of Dr John Bodkin Adams, (1985) at 125. 42 Putland v The Queen (2004) 78 ALJR 440 at 447 [32]; 204 ALR 455 at 464. 43 (1954) 90 CLR 353 at 369. 44 (1998) 193 CLR 173 at 191-193 [27]-[29], 203 [57], 211-212 [83]-[84], 238-239 Act, so it is unnecessary to determine what would have been the consequences of such a conclusion. The doctrine in Kable is expressed to be protective of the institutional integrity of the State courts as recipients and potential recipients of federal jurisdiction46. If the State law in question confers jurisdiction of a nature which would meet the more stringent requirements for the exercise by the Supreme Court of judicial power under investment by federal law, there is no occasion to enter upon the question of whether the less stringent requirements of Kable are met. Counsel for the Attorney-General of the Commonwealth encapsulated the point in his submissions that, if a law satisfied the stricter tests required with respect to the judicial power of the Commonwealth, then the Court did not have to go on to ask whether it satisfied the lesser hurdle presented by the reasoning in Kable. The appeal should be dismissed. 46 North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 78 ALJR 977 at 985 [29]; 206 ALR 315 at 326. Kirby KIRBY J. This appeal, from orders of the New South Wales Court of Criminal Appeal47, involves another instance48 of the invocation of the constitutional doctrine expressed in Kable v Director of Public Prosecutions (NSW)49. Although that doctrine has been referred to on numerous occasions before intermediate courts50, so far it has only once been held applicable51. This might demonstrate scrupulous observance by State legislatures of the constitutional strictures in Kable. Or it might suggest an unduly narrow appreciation of the doctrine, in effect treating Kable as a constitutional guard-dog that would bark but once. In this appeal, no party or intervener challenged the majority reasoning in Kable. Nor, for that matter, did the appellant seek to rely upon a second potential constitutional implication. This would defend an implied right to due process based upon suggested assumptions of equal treatment of persons before the Judicature referred to in the Constitution52. I can reach my conclusions without considering any such constitutional implications. 47 Baker (2002) 130 A Crim R 417. 48 See H A Bachrach Pty Ltd v Queensland (1998) 195 CLR 547; Silbert v Director of Public Prosecutions (WA) (2004) 78 ALJR 464; 205 ALR 43; Silbert v Director of Public Prosecutions (WA) (2002) 25 WAR 330; North Australian Aboriginal Legal Aid Service v Bradley (2004) 78 ALJR 977; 206 ALR 315; Fardon v Attorney- General (Q) [2004] HCA 46. 49 (1996) 189 CLR 51. 50 R v Moffatt [1998] 2 VR 229; Felman v Law Institute of Victoria [1998] 4 VR 324; Northern Australian Aboriginal Legal Aid Service Inc v Bradley (2002) 122 FCR 204; A-G (Qld) v Fardon [2003] QCA 416; Director of Public Prosecutions (Cth) v Tan [2003] NSWSC 717; R v England [2004] SASC 254. 51 Re Criminal Proceeds Confiscation Act 2002 (Q) [2003] QCA 249 per Williams JA; White and Wilson JJ concurring. 52 Polyukhovich v The Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 at 606-614; Leeth v The Commonwealth (1992) 174 CLR 455 at 483-489, 501-503, cf 466-469; Kruger v The Commonwealth (1997) 190 CLR 1 at 95, 112-113; see Parker, "Protection of Judicial Process as an Implied Constitutional Principle", (1994) 16 Adelaide Law Review 341 at 350-354. Kirby Whilst the majority in Kable explained the "extraordinary"53 features of the New South Wales legislation there considered54, their reasons do not suggest that the case endorsed an ad hoc determination, devoid of general application. By propounding a principle grounded in notions of "incompatibility" with the language and purposes of Ch III of the Constitution55 (or, as it has elsewhere been expressed, "repugnance"56 with Ch III), a principle of general operation was stated. On the face of things, a constitutional rule, so expressed, requires a court to look at the legislation impugned from the standpoint of substance, not mere form57. Being a constitutional doctrine, the rule in Kable requires the measurement of the challenged legislation as it could operate in fact; not a narrow approach befitting consideration of the validity of regulations made under a Dog Act. To apply Kable, it is essential to have a theory about the operation of courts in the integrated Judicature of the Australian Commonwealth. In particular, as relevant to the present case, it is necessary to have a conception of the operation of a Supreme Court of a State, whose continued existence is expressly provided for in, and so guaranteed by, the Constitution58. The facts and applicable legislation Background facts and law: Most of the facts necessary for my opinion are contained in the reasons of the other members of the Court59. Also stated there is a history of the legislation resulting in the insertion of s 13A in the Sentencing 53 Kable (1996) 189 CLR 51 at 98. 54 Kable (1996) 189 CLR 51 at 62-63, 102-106, referring to the Community Protection Act 1994 (NSW), ss 3, 5. 55 Grollo v Palmer (1995) 184 CLR 348 at 365; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1. 56 Kable (1996) 189 CLR 51 at 103-104 per Gaudron J; John Fairfax Publications Pty Ltd v Attorney-General (NSW) (2000) 158 FLR 81 at 88 [43] per 57 See Ha v State of New South Wales (1997) 189 CLR 465 at 498. 58 Constitution, s 73. See also covering cl 5, s 106. 59 Reasons of McHugh, Gummow, Hayne and Heydon JJ ("joint reasons") at [25]- [38]; reasons of Callinan J at [146]-[151]. Kirby Act 1989 (NSW) ("the Act")60 and the later further amendments to that section. The section instituted a separate category for a limited subclass of prisoners in New South Wales serving a sentence of life imprisonment61. I incorporate the foregoing details by reference. I wish only to add some facts drawn from the record of parliamentary debates called to our notice and derived from the Court record. The parliamentary debates: Without objection, this Court was taken to the record of debates in the New South Wales Parliament by which the former regime of indeterminate life sentences for persons convicted of the crime of murder62, with subsequent review within the executive government, was modified by statute63. Relevantly, it was changed to take into account a parliamentary purpose to "ensure truth in sentencing"64. Part of the speech of the then State Minister for Police65, who introduced the 1997 Bill to enact the provisions challenged in this appeal, is reproduced in 60 By the Sentencing Legislation Further Amendment Act 1997 (NSW), with effect from 9 May 1997. 61 By reference to the making by the sentencing judge of a "non-release recommendation", as defined. See joint reasons at [33]-[35]; reasons of Callinan J 62 Crimes Act 1900 (NSW), s 19 amended by the Crimes (Amendment) Act 1955 (NSW), s 5(b). 63 Section 19 of the Crimes Act 1900 (NSW) was further amended by the Crimes (Homicide) Amendment Act 1982 (NSW), s 3, Sched 1(1) and by the Miscellaneous Acts (Community Welfare) Repeal and Amendment Act 1987 (NSW), s 7, Sched 3. Section 19 was repealed by the Crimes (Life Sentences) Amendment Act 1989 (NSW), s 3, Sched 1(3) and a new s 19A inserted by s 3, Sched 1(4). 64 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 30 November 1989 at 14052: Mr J Dowd (Attorney-General) speaking to the introduction of the Crimes (Life Sentences) Amendment Bill 1989 (NSW) which introduced the new s 19A into the Crimes Act 1900 (NSW). See also the speech of Mr J Hannaford (Attorney-General), New South Wales, Legislative Council, Parliamentary Debates (Hansard), 9 November 1993 at 4948, cited by McInerney J in Application of Kevin Garry Crump unreported, Supreme Court of New South Wales, 24 April 1997 at 5-7. 65 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8337. Kirby the reasons of Callinan J66. The extract, in which the appellant and nine other life prisoners are identified by name, and repeatedly described as "animals"67, helps to make clear the parliamentary objective of the added provisions thereby inserted into s 13A. Sufficient certainly appears to indicate that the objective which the Minister urged on Parliament was to keep the appellant and the other named prisoners locked up forever – just as, in society, wild animals are permanently confined. It is also clear68 that the legislation was introduced in response to a then recent decision in the Supreme Court of New South Wales by which, under s 13A in its earlier form, a judge had "redetermined" the life sentence of the appellant's co-accused, Mr Kevin Crump69. By virtue of this redetermination, Mr Crump was to be eligible for release on parole on 13 November 2003. Read in its entirety, the Minister's speech leaves no doubt that the purpose of the Bill introducing the impugned provisions was to ensure that, in its application to the appellant and the other named prisoners, there would be no repetition of the possibility opened up by the order made in the case of Mr Crump. It is not a reflection on the right of members of the New South Wales Parliament to speak in the chamber as they please70 to draw attention to some of the further indications of the Minister and other members concerning the purpose of the legislation. So much has been done by virtually all of the judges who have had to consider these unusual statutory provisions. Doing so is compatible with legislation enacted by the New South Wales Parliament governing the ascertainment of the meaning and purpose of a statute of that Parliament. This Court is entitled to take the Minister's Second Reading Speech at face value71. The speech contains numerous criticisms of the previous government which had enacted the legislation that, applied to Mr Crump, had resulted in a redetermination of his life sentence, presenting a possibility of his future release 66 See reasons of Callinan J at [165]. 67 The reference to "animals" is repeated elsewhere in the Minister's speech. 68 See passage cited by Callinan J at [165]. 69 Application of Kevin Garry Crump unreported, Supreme Court of New South Wales, 24 April 1997 per McInerney J. 70 See Egan v Willis (1998) 195 CLR 424 at 493-494 [134] with reference to the Bill of Rights 1688, Art 9. 71 Interpretation Act 1987 (NSW), s 34(2)(f). Kirby on parole. Addressing the 1997 provisions amending s 13A, the Minister could not have been clearer72: "I now turn to the amendments in the bill. They are designed to do five things. First, the bill tells judges that we, the Parliament and the community, do not expect these most serious offenders ever to be released." Whilst the Minister goes on to explain the provisions of s 13A(3A) and the need for "special reasons" why the sentence should be "redetermined at all"73, the ultimate objective of the impugned provisions is made plain from an earlier explanation that the Minister gave74: "The Kable experience has shown this Parliament the invalidity of individual-specific legislation. … And so the Government is proposing real change. Proposing legislation that is constitutionally sound is the Government's primary objective so as not to give Crump and these nine other animals any hope for the future. The public expects nothing less. It expects real change not insane responses that will not work. … This bill is effectively the toughest sentencing legislation ever introduced into this Parliament. It will provide the bleakest possible futures for these men – amongst the most dangerous in custody in this State." The Opposition speaker who immediately followed the Minister quoted the Premier in the afternoon edition of a newspaper as saying, "The legislation now before the House will ensure Kevin Crump will never be released."75 To guarantee this objective, the Opposition speaker proposed an amendment "to 72 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8338 (emphasis added). 73 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8338. 74 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8337 (emphasis added). 75 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8339. Kirby make it very clear … that Mr Crump will spend the rest of his days in gaol."76 "Problems existed in regard to life sentences being served by those who had been convicted and sentenced before truth in sentencing legislation was introduced. Some difficulties involving retrospectivity are still being unravelled. That is why this legislation is before the House. No-one could possibly quibble with the proposition that … Baker and others of that extreme ilk should remain in gaol for the rest of their lives." In the Legislative Council, the speech of the Attorney-General was free of most of the rhetoric just quoted. But the ensuing debate indicated the bidding contest in extreme punishments in which the members of Parliament had become legislation has attracted involved. commentary78. Subject to the Constitution, only the courts of this country stand as guardians of proportionality and the avoidance of serious excesses and departures from the international law of human rights to which Australia has subscribed. Kable was a case where this Court responded. This feature of recent sentencing The appellant's case: In order to measure the assertions made about the appellant in Parliament against the established evidence, it is relevant to have regard, as well, to the findings of the primary judge79 (G R James J). Applying the amended terms of s 13A of the Act, without benefit of any argument suggesting the invalidity of the added provisions, his Honour felt obliged by its terms to reject the submission that "special reasons exist[ed] that justify making the determination [that the life sentence be replaced by a minimum term and additional term]."80 The limited grant of special leave in the present appeal confines this Court to the Kable point. It excludes this Court from reconsidering, as such, the challenges relating to the primary determination that 76 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8339-8340. 77 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8340 (emphasis added). 78 Gleeson, "Who Do Judges Think They Are?", (1998) 22 Criminal Law Journal 10 at 15; Morgan, "Going Overboard? Debates and Developments in Mandatory Sentencing, June 2000 to June 2002", (2002) 26 Criminal Law Journal 293; Cowdery, Getting Justice Wrong, (2001) at 18-19. 79 R v Baker [2001] NSWSC 412. 80 The Act, s 13A(3A). Kirby the appellant was ineligible for sentence redetermination for want of "special reasons" under the Act. However, it is pertinent to note the findings which the primary judge made about the appellant in order to evaluate the actual impact of the impugned provisions. Those findings appear in stark contrast to many of the statements made in Parliament about the appellant and the legislation designed to keep him in prison for the rest of his life. The primary judge concluded that, in the case of the appellant, "the statistical risk of recidivism is very low and … the particular prospect of the [appellant's] achieving rehabilitation ... is very high"81. His Honour said that the "evidence as to rehabilitation prospects was ... very powerful"82. Indeed, he said that it "was not, to any real extent, challenged"83. He quoted evidence describing the appellant's conduct in prison as "absolutely exemplary, with no suggestion of any conduct as would pose a risk to the community."84 He referred to corroborated evidence that the appellant had "tried as best he could to behave as a peacemaker in the prison system even when assaulted."85 He noted the appellant's own acknowledgment that he would take time to adjust to being in the community after nearly three decades of incarceration86. He quoted expert medical evidence deposing that the appellant "has accepted his sentence uncomplainingly and has shown, for many years, a consistent attitude of remorse and insight."87 This evidence, in the opinion of the primary judge, supported the view that the appellant "could go into the community without re-offending violently."88 A forensic psychologist was quoted by G R James J, with apparent approval, to the effect that the appellant's behaviour within the prison system was "exemplary", his work performance "excellent" and that he had achieved "a great deal"89 by way of rehabilitation. The report of the Serious Offenders Review 81 [2001] NSWSC 412 at [105]. 82 [2001] NSWSC 412 at [108]. 83 [2001] NSWSC 412 at [108]. 84 [2001] NSWSC 412 at [109]. 85 [2001] NSWSC 412 at [110]. 86 [2001] NSWSC 412 at [110]. 87 [2001] NSWSC 412 at [111]. 88 [2001] NSWSC 412 at [111]. 89 [2001] NSWSC 412 at [112]. Kirby Council, also quoted and apparently accepted, indicated that if the appellant's indeterminate sentence were redetermined, a progressive plan would be put in place to reduce his security classification in preparation for his eventual return to the community. The Council noted that "[the appellant] has endeavoured to use his time constructively and has demonstrated personal development throughout his period of incarceration."90 The primary judge concluded that there was nothing in the material before him that had "any adverse effect on the application."91 In short, the appellant's crimes were committed when he was 25 years of age. At that time, he had a very poor criminal record and an alcohol problem. The crimes were terrible. However, the prison record spoke with a single voice. It did not support the conclusion that the appellant was now "dangerous" or a wild "animal". To the contrary, he had become a model worker and prisoner whom the judge concluded presented a "very low" risk of future dangerousness or recidivism and "very good" prospects of rehabilitation92. It is necessary to make reference to this uncontested evidence in order to measure the practical effect of the impugned provisions of s 13A of the Act and its constitutional validity viewed in this light. If the legislation is valid, it effectively closes the door to the release of the person so described. According to the parliamentary debates, it does so deliberately in the case of this appellant and nine other prisoners identified by name. The question is whether, viewing the legislation in terms of substance and not form, the function which the amended s 13A of the Act caused the primary judge and the Court of Criminal Appeal to perform is one that may validly be imposed upon judges of a State Supreme Court of this country. If the issue is not presented in the foregoing way, there is a real danger that it will be answered by a disembodied analysis, devoid of the quality of constitutional principle deriving from Ch III of the Constitution. That is not the way that invocation of the incompatibility (or "repugnance") doctrine expressed in Kable should be decided. The Kable principle The essence of the principle: The decision in Kable does not yield a clear, single statement of principle. There are differences in the way the judges in the 90 [2001] NSWSC 412 at [115]. 91 [2001] NSWSC 412 at [117]. 92 [2001] NSWSC 412 at [122]. Kirby majority express the implication of incompatibility (or repugnance) that led them severally to the conclusion that the Community Protection Act 1994 (NSW), in contest there, was constitutionally invalid. Thus, in his reasons, Toohey J drew an analogy to the then recent decision of this Court in Grollo v Palmer93. That was a case in which the Court considered the limitations on the ability of the Federal Parliament to confer non-judicial powers upon federal judges acting in their personal capacity94. In that was "incompatible … with the proper discharge by the judiciary of its responsibilities as an institution exercising judicial power."95 He concluded that the principle applied to the Supreme Court of a State because the imposition of non-judicial functions of such a nature diminished public confidence in the integrity of the judiciary as an institution96. that no function could be conferred In her reasons, Gaudron J also derived from Ch III of the Constitution the duty of this Court to protect the "integrity of the judicial process" and the "integrity of the courts"97. Her Honour explained this obligation in terms of the maintenance of public confidence in the courts, a quality that would be lost if courts did not "act consistently ... [with] proceedings … conducted according to rules of general application."98 In his reasons, McHugh J held that a law which would compromise the "institutional impartiality" of a Supreme Court, and which "undermined the ordinary safeguards of the judicial process", was incompatible with the exercise by such a court of the federal judicial power99. His Honour also explained this consequence in terms of the danger, if State courts were not, or not seen to be, independent of State legislatures and executives100, that they would lose the confidence of the "ordinary reasonable member of the public". It would 93 (1995) 184 CLR 348. See Kable (1996) 189 CLR 51 at 96. 94 See also Wilson (1996) 189 CLR 1. 95 (1996) 189 CLR 51 at 96. 96 (1996) 189 CLR 51 at 98. 97 (1996) 189 CLR 51 at 104. 98 (1996) 189 CLR 51 at 107. 99 (1996) 189 CLR 51 at 121. 100 (1996) 189 CLR 51 at 116-117. Kirby compromise the essential institutional impartiality of a Supreme Court if a law made it the "instrument of a legislative plan, initiated by the executive government, to imprison the appellant by a process that is far removed from the judicial process that is ordinarily invoked when a court is asked to imprison a person."101 In his reasons, Gummow J said that laws that sapped both a Supreme Court's appearance of "institutional impartiality" and the maintenance of public confidence in the judiciary102 would be incompatible with Ch III of the Constitution. Particularly would this be so where the judiciary was apt to be seen as "but an arm of the executive which implements the will of the legislature."103 The fiction of public confidence: Although a common element in the reasoning of the majority in Kable was the reference to the danger of losing public confidence in the integrated Judicature of Australia, I do not consider that this amounts to a separate, or sufficient, criterion for invalidating a State law104. A court is not well placed to estimate with precision the impact, if any, of particular legislation upon public opinion. At most, the reference to this consideration constitutes a legal fiction, constructed by judges in an attempt to explain and objectify their conclusions105. In this country, judges do not enjoy an "uncontrolled and uncontrollable power of judicial veto over the exercise of legislative power."106 Public responses to an impugned law mostly arise, if at all, well after the enactment. They cannot therefore be grounded in the text and structure of the Constitution that predate the law107. It follows that I do not regard the impact on public estimation of courts, if any, or of provisions such as those impugned in these 101 (1996) 189 CLR 51 at 122; see also at 117-119. 102 (1996) 189 CLR 51 at 133. 103 (1996) 189 CLR 51 at 134. 104 See my reasons in Fardon [2004] HCA 46 at [144]. 105 See Silbert (2004) 78 ALJR 464 at 468-469 [26] of my own reasons; 205 ALR 43 106 Nicholas v The Queen (1998) 193 CLR 173 at 197 [37] per Brennan CJ. See also at 275-276 [242] per Hayne J and at 257 [201]-[203] of my own reasons. 107 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 566-567. Kirby proceedings, as a necessary test for invalidity under the Kable principle108. Such reactions, if they happen, are a response to the invalidating feature of the law, not the definition of that feature. Thus, the reference to "public confidence" in the reasoning of the majority in Kable is simply an explanation of a consequence over time, if a law were to be upheld imposing functions on a State Supreme Court incompatible with ("repugnant to") the exercise by such a court of federal jurisdiction109. Obviously, such outcomes are to be prevented, and avoided, if the Constitution permits that result. A principle of general operation: Necessarily, the Kable principle so explained, and grounded as it must be in the text and structure of Ch III of the Constitution, tenders for decision a consideration that is somewhat "elusive"110. In relation to it, it is impossible to frame criteria that are "at once exclusive and exhaustive"111. About the compliance of a particular law with the requirements of Ch III, informed minds will sometimes differ112. Nevertheless, the history of invasions of the judicial power in other countries113, and even of the more modest incursions attempted in Australia, justify an approach on the part of the judiciary that is vigilant to defend the integrity of the branch of government which the Constitution places in their charge114. The principle expounded in Kable was one of general operation, derived from the Constitution; from the integrated character of the Judicature, federal and State; from the peculiar arrangement for the vesting of federal jurisdiction in State courts; and from the role of this Court at the apex of the entire system115. 108 Handsley, "Public Confidence in the Judiciary: A Red Herring for the Separation of Judicial Power", (1998) 20 Sydney Law Review 183 at 195. 109 See Silbert (2004) 78 ALJR 464 at 468-469 [26] of my own reasons; 205 ALR 43 110 See Nicholas (1998) 193 CLR 173 at 256 [201] of my own reasons. 111 See Nicholas (1998) 193 CLR 173 at 256 [201] of my own reasons. 112 As they do in this case and in Fardon [2004] HCA 46 and as they did in Kable (1996) 189 CLR 51 and in Nicholas (1998) 193 CLR 173. See also the dissenting opinion of Wallwork J in the Western Australian Court of Criminal Appeal in Silbert (2002) 25 WAR 330, and of McMurdo P in Fardon [2003] QCA 416. 113 See Fardon [2004] HCA 46 at [188]-[189] of my own reasons. 114 Nicholas (1998) 193 CLR 173 at 257 [201]. 115 Kable (1996) 189 CLR 51 at 111. Kirby From these constitutional characteristics of the Australian Judicature, this Court derived the conclusion that a State Parliament may confer jurisdiction upon a State Supreme Court as it chooses, but only so far as that jurisdiction is not incompatible with the exercise of federal jurisdiction by such a court116. As I said in Silbert v Director of Public Prosecutions (WA)117: "Kable holds that Ch III of the Constitution limits the power of State Parliaments to confer non-judicial functions or non-judicial characteristics on State courts that are incompatible with, or repugnant to, the core requirements of such courts as potential recipients of federal jurisdiction, as provided for in the Constitution. The core requirements referred to include those of the manifest independence and impartiality of the judiciary in the discharge of their functions. This includes independence from legislative directions over individual judicial decisions and in the findings of fact and law that are necessary to them." Initial commentators on Kable described the propounded principle as "far- reaching"118. For them, it represented a significant modification of the former doctrine that the Federal Parliament, when investing federal jurisdiction in State courts, was bound to accept those courts exactly as it found them119. After Kable, that earlier doctrine must be taken to be qualified. The implication that State courts, notably the Supreme Courts mentioned in the Constitution, must remain suitable receptacles for the vesting of federal jurisdiction imposes constraints not previously appreciated upon State legislation affecting the State jurisdiction of such courts. 116 Kable (1996) 189 CLR 51 at 106. 117 (2004) 78 ALJR 464 at 468 [25] of my own reasons (footnotes omitted); 205 ALR 118 Campbell, "Constitutional Protection of State Courts and Judges", (1997) 23 Monash University Law Review 397 at 408; Miller, "Criminal Cases in the High Court of Australia", (1997) 21 Criminal Law Journal 92 at 100; Walker, "Disputed Returns and Parliamentary Qualifications: Is the High Court's Jurisdiction Constitutional?", (1997) 20 University of NSW Law Journal 257 at 271; Bagaric and Lakic, "Victorian Sentencing Turns Retrospective: The Constitutional Validity of Retrospective Criminal Legislation after Kable", (1999) 23 Criminal Law Journal 145 at 158. 119 A point made by Brennan CJ and Dawson J in dissent in Kable (1996) 189 CLR 51 at 67, 83 referring to The Commonwealth v Hospital Contribution Fund (1982) 150 CLR 49 at 61. See also Kable (1996) 189 CLR 51 at 109-110 per McHugh J. Kirby Having propounded this implication of the Constitution, this Court should not now unduly narrow its operation. It exists, not for the protection of the judiciary, as such, but for the protection of all people in the Commonwealth. Upholding the constitutional implication expressed in Kable is at least as important for the defence of the independence and integrity of the judiciary in this country as giving effect to a hitherto undiscovered constitutional implication limiting the imposition of federal taxes on some State judicial pension rights120. In defining constitutional implications affecting the judiciary, and in giving them operation, this Court should be even-handed in its approach. Particularly is this so in a case where no one suggested that Kable was wrongly decided or in need of reconsideration. The test of federal lawmaking: It is true121 that since Kable, in H A Bachrach Pty Ltd v Queensland122 it was suggested by this Court that the principle stated in Kable could be tested by asking whether an impugned State law, if it were a federal law, would have offended the principles applicable to federal courts created pursuant to Ch III of the Constitution123. This, indeed, may sometimes be a useful step in the path of reasoning about Kable submissions. However, because the approach described in Bachrach involves an hypothesis prone to artificiality (given the subject matters normal to federal and State legislation respectively), care must be taken to avoid unnecessary dependence on such fictions124. The safer course is to measure the State legislation by reference to the Kable standard, and not to become unduly diverted by considering what would have been the case if the State law were something it was not. Bachrach was a simple case requiring differentiation between a statute affecting rights in issue in pending litigation and an invasion of the judicial power125. The question presented by the State legislation in the present case is more complex, as I shall show. 120 See Austin v The Commonwealth (2003) 77 ALJR 491; 195 ALR 321. 121 cf joint reasons at [22]. 122 (1998) 195 CLR 547. 123 (1998) 195 CLR 547 at 561-562 [13]-[14]. 124 Silbert (2004) 78 ALJR 464 at 470 [32]-[33] of my own reasons; 205 ALR 43 at 51; Fardon [2004] HCA 46 at [144] of my own reasons. 125 (1998) 195 CLR 547 at 562-563 [17], citing R v Humby; Ex parte Rooney (1973) 129 CLR 231 at 250. Kirby Evaluating particular challenges: It is a serious step for a court to hold that legislation enacted by an elected Parliament is constitutionally invalid126. The Constitution gives expression to principles of parliamentary democracy, both federally127 and in the States128. Normally, a law enacted by such a Parliament will be upheld by the courts. It is not their province to invalidate laws simply because such laws are regarded as bad, unjust, ill-advised or offensive to notions of human rights129. It may also be accepted that the legislation in question in the present case was not confined to the case of a single identified person, as was the Community Protection Act under consideration in Kable130. The parliamentary debates show that the drafter and the legislators were very conscious of the problem presented to them by Kable. They therefore took pains to express the impugned provisions in terms of apparent generality. It must also be accepted that the reference to "special reasons"131 in the Act is not unknown to Australian legislation. Provisions exist132 in other legislation, federal and State, providing for the exercise of judicial power by reference to that criterion. In several cases, judges have given content to the expression without facing any suggestion that it is devoid of meaning or incompatible with the judicial function133. 126 Universal Film Manufacturing Co (Australasia) Ltd v New South Wales (1927) 40 CLR 333 at 347, 356; cf Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 473-474 [248]-[252]; Fardon [2004] HCA 46 at [139] of my own reasons. 127 Constitution, ss 1, 7, 24. 128 Constitution, s 107. See also ss 41, 106. 129 Nicholas (1998) 193 CLR 173 at 239 [167] per Gummow J, 272 [233], 275-276 [242] per Hayne J; Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399 at 415-416 [30]-[31]; Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 78 ALJR 737 at 768 [171]; 206 ALR 130 at 173; cf Building Construction Employees and Builders' Labourers Federation of New South Wales v Minister for Industrial Relations (1986) 7 NSWLR 372 at 401-405. 130 Community Protection Act 1994 (NSW), s 3(1) and (3). 131 The Act, s 13A(3A). 132 See, for example, Extradition Act 1988 (Cth), s 15(6). 133 United Mexican States v Cabal (2001) 209 CLR 165 at 185-186 [52]-[53]; cf Wentworth v Rogers [No 12] (1987) 9 NSWLR 400 at 411. Kirby These and other considerations demonstrate that this appeal does not present an incontestable case. In this Court, it is often thus. It remains, however, for the Court to consider the legislation as a whole against the criterion of incompatibility ("repugnance") with Ch III of the Constitution. The fact that there are arguments on both sides simply demands of this Court a closer attention to the principle in Kable and to its application in the present circumstances. Reasons for incompatibility and repugnance The parliamentary purpose: Mine is a minority opinion. I will state as briefly as I can the reasons that lead me to the conclusion that the impugned provisions of the Act are incompatible with ("repugnant to") the Kable principle. The parliamentary record from which I have quoted makes it quite clear that the purpose of the impugned provisions134 was to tell "judges that we, the Parliament and the community, do not expect these most serious offenders ever to be released."135 To the extent that this Court, performing the task mandated by Kable, is in any doubt concerning the intended operation of the impugned provisions, such doubt is removed, as a matter of substance, by the Minister's repeated statements to the State Parliament to the foregoing effect. It is also reinforced by the statements made for the Opposition which demanded an even more "ironclad guarantee" against release of the named prisoners, including the appellant136. This, then, was the objective of Parliament and the setting and atmosphere in which the amending Act137 was adopted. The 1997 debates suggest that the introduction of provisions in the Act, expressed in terms of apparent generality, was aimed at nothing more than overcoming the dangers of invalidity disclosed by the "Kable experience"138. Reading these passages should create a heightened vigilance on the part of a court such as this, whose duty is to protect the integrity of the judicial power and, relevantly, to repel attempts to "dress up" as a judicial function the making of 134 Introduced by the Sentencing Legislation Further Amendment Act 1997 (NSW). 135 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8338. 136 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8341. 137 Sentencing Legislation Further Amendment Act 1997 (NSW). 138 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8337. Kirby orders which, in truth, are designed to implement the clearly stated parliamentary objective that the named "animals", including the appellant, never "see the exit sign at the prison gate."139 Identified subjects of the law: It is true that the impugned provisions are not confined to the appellant as an individual (as was the case of the legislation in question in Kable). Further, the law is ostensibly expressed in terms of a law of general application140. However, in its operation it is clearly confined to the nominated prisoners, including the appellant. They were ten in number. To this extent, the legislation is ad hominem in nature. It is to be distinguished from the legislation upheld by the majority of this Court in Nicholas v The Queen141. There, although enacted in the knowledge of known cases immediately affected (said to have been five in number), the impugned provision of the Customs Act 1901 (Cth)142 was stated in terms of general application, not speaking to a limited class143. In this way, it was held in Nicholas that the law in question avoided the invalidation principle explained by the Privy Council in Liyanage v The Queen144. In the appellant's case, by way of contrast, there could never be any addition to the class of prisoners serving existing life sentences against whom there was a judicial "non-release recommendation" made at the time they were originally sentenced. The class was known. It was closed by the defined circumstances. To that extent the amending law addressed a small, identifiable category of individuals who represented the remainder of a larger group of persons serving life sentences in the sentencing of whom no similar judicial observation about non-release had been made. 139 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8337. 140 See also Fardon [2004] HCA 46 at [176], which concerned a law similarly expressed. 141 (1998) 193 CLR 173. 142 Section 15X. 143 (1998) 193 CLR 173 at 191-193 [27]-[28] per Brennan CJ, 238-239 [163] per Gummow J, 279 [255] per Hayne J. 144 [1967] 1 AC 259 at 290. In Liyanage, like the present case, the legislation was addressed not to one individual (as in Kable) but to a small group of prisoners held in custody who had allegedly been involved in an attempted coup d'état. Kirby The nomination of the prisoners by the Minister in his Second Reading Speech makes clear what the legislation reveals on proper analysis of its text. This was an attempt to involve the judiciary in the performance of punitive decisions effectively already determined by Parliament itself. As such, it would be impermissible if attempted in federal legislation in respect of a federal court. It is equally impermissible in the case of a State court for the reasons expressed in Kable145. Retroactive punishment: The will of the Parliament of New South Wales, enacted in 1997 in terms of the impugned provisions, undoubtedly has the effect of altering the punishment which the appellant and other affected prisoners were to suffer under the judicial sentence imposed upon them at the time of their initial convictions146. Of course, it is possible to argue to the contrary by reference to the fact that the impugned law did not alter the life sentences being served by prisoners such as the appellant, but merely attached consequences to the prospective redetermination of such sentences, a normal incident of changes to correctional and parole systems147. Or that the judicial function was spent by the imposition of the life sentence148. A law of general application may indeed apply to facts that occurred before the enactment of the law and yet be valid, causing no offence to the exercise of the judicial power149. However, such an analysis, in the present case, would address only the form of the legislation. Where issues of constitutional inconsistency ("repugnance") are at stake, the applicable standard is concerned with the substance of the impugned law's operation, not just its form. Reading the language of the impugned provisions and especially alongside the record of the Parliamentary debates, there can be no doubt that their substantive purpose was to impose upon the appellant, and the other named prisoners, special, personal and additional punishment that would not otherwise have applied to them under their original sentence, burdening their potential liberty. 145 See Nicholas (1998) 193 CLR 173 at 260-264 [202]-[208]. 146 See reasons of Gleeson CJ at [7]. 147 See reasons of Gleeson CJ at [7]-[8]. 148 See joint reasons at [29]. 149 Nelungaloo Pty Ltd v The Commonwealth (1948) 75 CLR 495 at 503-504; Humby (1973) 129 CLR 231 at 250; Polyukhovich (1991) 172 CLR 501 at 533; Nicholas (1998) 193 CLR 173 at 259 [201]. Kirby In this sense, the impugned law is in substance one that has, and was designed to have, serious retroactive effects on the appellant's entitlement to liberty. By superimposing that consequence upon the operation of the life sentence imposed by the judge upon the appellant at his trial, Parliament has intruded, with retroactive effect, upon the operation of a judicial sentence. Moreover, it has recruited the State judiciary to play a particular part in that outcome. In these respects, the impugned law crosses the boundary between permissible and impermissible legislation of retrospective effect150. It involves a legislative "usurpation of judicial power"151. It is one thing for a Parliament, by legislation of retrospective operation, to reduce or ameliorate a judicial sentence for identified reasons. In terms of constitutional principle, it is quite a different thing for a Parliament, by a law of retroactive operation, to render a judicial sentence effectively more punitive and more burdensome to liberty than that imposed by a judge in accordance with the law at the time of sentence. Yet that is clearly what the 1997 amendments, targeting the appellant, were intended to achieve and, if valid, would achieve. Were this to become a general, or even common rule, it would render the judiciary the mere agents of the demands by members of Parliament to add new burdens to the punishment of the appellant and other "animals". Indeterminate life sentences: This last point is reinforced when it is appreciated that, at the time the appellant received his life sentence, that sentence did not, in New South Wales, literally commit a prisoner such as the appellant to prison for the term of his natural life. At that time, life imprisonment was the only penalty imposed in respect of the appellant's conviction of murder152. In a case such as the appellant's, the sentencing judge had no discretion to do otherwise. It follows that, by way of contrast with other sentences for a fixed term, with or without a specified non-parole period, the appellant's life sentence was an "indeterminate sentence". In accordance with the statutory scheme then applicable in New South Wales, the appellant, under that sentence, had a reasonable expectation, after the passage of a substantial interval and on the making of an appropriate application, that he would be considered for release by the body with the statutory function of deciding such applications. 150 See Nicholas (1998) 193 CLR 173 at 259 [201]. 151 Polyukhovich (1991) 172 CLR 501 at 706 per Gaudron J. See also at 703-705. 152 Crimes Act 1900 (NSW), s 19 as it then stood. Kirby A supervening change in the law that, in substance, removed such a right to apply for an exercise of a real discretionary power (or that increased substantially the period that prisoners serving life sentences would first expect to serve in custody) constituted a fundamental variation in the nature of the sentence and punishment that was judicially imposed. Only the most formalistic approach to the sentence passed on the appellant would produce a contrary conclusion. One of the established functions which, by its nature or because of historical considerations, has become established as essentially and exclusively judicial in character is the judgment and punishment of criminal guilt153. That rule requires special vigilance when a later attempt is made by a legislature to alter the effect of the earlier judicial order to make a sentence, in effect, more punitive and burdensome to liberty. Against this background, it is misleading to treat the appellant's sentence to "penal servitude for life"154, imposed on him in 1974, at face value. In law and fact it was, at that time, an indeterminate sentence. Typically it involved (in most cases) actual incarceration for an extended, but finite, period of years. As Professor Freiberg and Mr Biles explained in their 1975 work The Meaning of 'Life': A Study of Life Sentences in Australia, the sentence of life imprisonment by 1974 was "a misnomer … [R]arely will a person actually be kept in custody for the rest of his or her life". The authors went on155: "While there are some prisoners who die in custody and others who are supposedly incarcerated for the term of their natural life … for most there is a possibility of release at some date." In the foregoing analysis of life sentences (which substantially coincided with the sentencing of the appellant), it is disclosed that the then current average term of commuted and life sentence prisoners in custody in New South Wales, of the age of the appellant at the time of their sentence, was 14 years and four 153 See Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27 per Brennan, Deane and Dawson JJ; Nicholas (1998) 193 CLR 173 at 186-187 [16]; Re Macks; Ex parte Saint (2000) 204 CLR 158 at 203-204 [116], 234 [211], 266 [301]; Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1103 [10], 1128-1129 [153], 1147-1148 [265]-[267]; 208 ALR 124 at 128, 163, 190; Fardon [2004] HCA 46 at [151]-[152]. See also joint reasons at [31]. 154 Crimes Act 1900 (NSW), s 19 as it then stood. 155 Freiberg and Biles, The Meaning of 'Life': A Study of Life Sentences in Australia, (1975) at 22 (footnotes omitted). Kirby months156. However, the analysis also has relevance to the life sentences imposed in the worst cases157. In the four decades prior to the appellant's convictions, the longest term served by a New South Wales prisoner upon release was one of 30 years, six months158. This corresponds closely with the time that the appellant has now spent in incarceration. At the time of the analysis, of those still imprisoned in New South Wales who had then served more than the above average, only one had served 44 years. Eight had served 20-30 years, and the rest had served an average term of 16 years and three months159. These figures in relation to New South Wales prisoners bear comparison with the time served by life prisoners in overseas jurisdictions to that time. Of course, there are dangers in averages and international comparisons, given relevant sentencing factors, deaths of some life prisoners in custody, separate statutory provisions for the criminally insane and so on. However, the average time of incarceration served by life prisoners around the world when Freiberg and Biles' report was written was remarkably similar. It was about 15 years160. Although there were exceptions, in New South Wales they were comparatively few. It follows that this was the penal system into which the sentencing judge sent the appellant by the sentencing orders he pronounced in his decision in 1974. At the time of that sentence, the judge would have known this perfectly well. The appellant would also have been able to discover it if he had enjoyed access to proper advice. Thus, the reality is that the impugned legislation of 1997 was designed retroactively to alter this consequence of the appellant's indeterminate sentence as judicially imposed. This Court may ignore that reality as it pleases. But it cannot change it. The impugned law was intended to recruit later judges of the State Supreme Court to increase the true custodial burden of the former judicial sentence according to a new formula of punishment, not fixed by the judge at the time of sentence, but altered by Parliament 23 years later with retroactive operation. 156 Freiberg and Biles, The Meaning of 'Life': A Study of Life Sentences in Australia, (1975) at 77 (Table 17). 157 cf reasons of Gleeson CJ at [7]. 158 Freiberg and Biles, The Meaning of 'Life': A Study of Life Sentences in Australia, (1975) at 54 (Table 10). 159 Freiberg and Biles, The Meaning of 'Life': A Study of Life Sentences in Australia, (1975) at 91 (Table 18). 160 Freiberg and Biles, The Meaning of 'Life': A Study of Life Sentences in Australia, (1975) at 94 (Table 19). Kirby The imposition of punishment, or added punishment, by the operation of a new law having retroactive effect is not only contrary to our legal tradition and offensive to its basic principles161. It is also incompatible with the fundamental rules of universal human rights forbidding retroactive criminal punishment162. In the European treaty system this is one of the comparatively few stated rights that is non-derogable – so crucial is it regarded163. Before the European Convention came into operation in England, Lord Reid expressed the revulsion of the common law to the retrospective imposition of penal liability. In Waddington v Miah164, his Lordship said: "[I]t is hardly credible that any government department would promote or that Parliament would pass retrospective criminal legislation." However, the incredible sometimes happens – and, in effect, the provision to enlarge the judicial punishment of the appellant and of the small group of "animals" in his class, is an instance against which Lord Reid warned. Co-accused's redetermination: The impugned provisions were also clearly enacted as an immediate response to the redetermination of the life That sentence redetermination, which had applied to Mr Crump the then applicable law, prompted the introduction of the amendments, applicable to the appellant's case, against which he complains. the appellant's co-accused, Mr Crump. imposed on There was no appeal by State authorities against judicial redetermination order in Mr Crump's case165. Although the ordinary principle of the 161 See Fardon [2004] HCA 46 at [180]-[185]. 162 See International Covenant on Civil and Political Rights done at New York on 19 December 1966, [1980] Australian Treaty Series No 23, Art 15.1; European Convention for the Protection of Human Rights and Fundamental Freedoms done at Rome on 4 November 1950, European Treaty Series No 5, Art 7.1; R (on the application of Uttley) v Secretary of State for the Home Department [2003] 1 WLR 2590; [2003] 4 All ER 891. See also Welch v United Kingdom (1995) 20 EHRR 247; Ibbotson v United Kingdom [1999] Crim LR 153 (European Court of Human Rights). 163 Lester and Pannick, Human Rights Law and Practice, 2nd ed (2004) at 255 [4.7.1]. 164 [1974] 1 WLR 683 at 694; [1974] 2 All ER 377 at 379. 165 See Baker [2001] NSWSC 412 at [58]. Kirby parity in sentencing166 is not available to assist the appellant in his constitutional challenge (and although a further statute was later introduced in an endeavour to prevent or impede Mr Crump's release on parole after November 2003)167, the resulting disparity is a vivid illustration of what can occur when a legislature, in response to earlier judicial sentencing orders, enacts new laws designed to prevent the operation of a true law of general application governing criminal punishment. It is a further reason for heightened vigilance on the part of this Court the implementation of such ad hominem laws. involve State Supreme Court the attempt judges An arbitrary and discriminatory criterion: An additional indication of the invalidity of the impugned law can be seen in its seriously arbitrary and discriminatory character. By its superimposition of criteria, relevant to the completion of the initial custodial part of the appellant's life sentence, dependent upon the making of a "non-release recommendation"168, the New South Wales Parliament chose as a "trigger" for the new legislation an earlier judicial act that, at the time it occurred, had no normative legal operation. Given that Parliament had earlier fixed the applicable sentence for conviction of murder169, it was not part of the sentencing judge's legal function to attempt to change or re-express that sentence. Under the law at the time of the sentence, the actual duration of custody was left to administrative bodies. They, and not the sentencing judge, were responsible in law for determining any later release to the community of a prisoner in the position of the appellant so that he would serve the remainder of his sentence in the community. The administrative authorities might judge's "recommendation" into account in performing their functions. They might not. They were not bound in law to do so. Such bodies would have been aware of the differing such "recommendations". They would also be aware that, in particular cases, to attach serious custodial consequences to such "recommendations" could work a serious injustice. take a sentencing temperaments and inclinations of to venture judges 166 Lowe v The Queen (1984) 154 CLR 606 at 610-612. 167 Crimes (Administration of Sentences) Act 1999 (NSW), s 154A. 168 The Act, ss 13A(1) and 13A(3A), inserted by Sentencing Legislation Further Amendment Act 1997 (NSW), s 3, Sched 1(1), 1(2). 169 Relevantly, by the Crimes Act 1900 (NSW) as it then stood. Kirby Present judges, obliged by the impugned provisions to attach the gravest punitive consequences to "non-release recommendations" made 30 years earlier by some judges, would also be aware of the differences of personality, temperament and emotion that often lay behind such recommendations. They would know that identified judges occasionally became more emotional than others in passing sentence. Particularly where an offence is shocking and disturbing, this Court has said that it is usually desirable that judicial emotions be kept in firm check when disposing of criminal sentences170. Indeed, this principle was stated by the Court precisely because of the need to caution against emotive utterances. However, not all judges have conformed to such an approach. For Parliament to select non-normative, non-binding and possibly emotional remarks in one judge's reasons for sentence as the ground, decades later, to control the judicial orders of contemporary judges is to impose on the latter obligations of arbitrary conduct by reference to a discriminatory criterion. The arbitrary and discriminatory nature of the chosen criterion is demonstrated, first, by the fact that, although persons such as the appellant are now excluded (barring such "special reasons") from the possibility of a redetermination of sentence, redeterminations of life sentences have been made, both before the 1997 amendment and afterwards, in crimes of comparable gravity (including crimes by triple murderers)171, without any requirement for "special reasons" as specified in the Act. In the latter case, such redetermination was possible under the Act, not because the offences were less serious172, but only because the case was not burdened by a contemporaneous judicial "non-release recommendation" of no apparent legal effect when it was uttered. Secondly, the criterion is discriminatory because the later judges will be aware that some sentencing judges 20 or 30 years earlier would never have made such a "non-release recommendation". They would not have done so, although the facts of the case before them might be as bad as, or even worse than, those now attracting the statutory consequence in the case under consideration. When, 170 Ryan v The Queen (2001) 206 CLR 267 at 302 [119], 306 [134]. 171 Constantinou (1999) 108 A Crim R 73; see also R v McCafferty unreported, Supreme Court of New South Wales, 15 October 1991 per Wood J; R v Rees unreported, Supreme Court of New South Wales, 12 August 1993 per Smart J (affirmed by R v Rees unreported, New South Wales Court of Criminal Appeal, 22 September 1995 per Gleeson CJ, Grove and Simpson JJ). 172 In Constantinou (1999) 108 A Crim R 73, the prisoner had been convicted of three charges of murder, four of robbery with striking and wounding, and one of robbery with striking. Kirby for example, Roden J passed sentence upon John Ernest Cribb in the Supreme Court of New South Wales, his Honour remarked characteristically173: "I regard it as no part of my function to seek to express the horror and revulsion that is felt in the community when offences of this nature are committed. My task is simply to impose sentence according to law." The more reticent judges would also have been aware that, of its character, an indeterminate sentence, especially with young offenders, would result in the close examination of the prisoner's case from time to time and commonly in the prisoner's release to serve the balance of the life sentence in the community. Thus, in sentencing Shirley Conlon to penal servitude for life for murder in December 1978, Slattery J, in the Supreme Court of New South Wales, declined to make any recommendation about her future release. He did this on the stated ground that it would "be of little value", although he indicated that the type of crime of which the prisoner had been convicted was one for which "the community would expect the wrong-doer to be incarcerated for a long time, if not forever."174 When, in 1992, that prisoner sought redetermination of her life sentence under s 13A of the Act, as then providing, her case came again before Slattery J, who was still in office. A minimum term of 15 years with an additional term of 12 years was fixed by his Honour, notwithstanding his earlier comment. In the "redetermination", based on the detailed evidence then available, Slattery J pointed out that there had been little, if any, need for psychiatric and psychological evidence concerning the prisoner at the time of the original sentence. This was so because of the mandatory punishment fixed by law. A later judge, obliged to consider the appellant's application under the impugned provisions, would know that, in the nature of things, the appellant had no facility at his sentencing proceedings to challenge the "recommendation" made by the sentencing judge in his case. Thus, it would not then have been competent for the appellant to tender evidence in rebuttal of the judge's conclusion, even if exceptionally or intuitively he had been warned that some such recommendation was likely to be expressed. The appellant could not appeal against the "recommendation". The sentencing judge himself could not have predicted that, a quarter of a century later, the State Parliament would attach consequences of great seriousness for the liberty of the appellant that would cut across the sentence imposed on him in accordance with the sentencing law and judicial process applicable in 1974. 173 R v Cribb unreported, Supreme Court of New South Wales, 22 May 1979 at 2. 174 R v Conlon unreported, Supreme Court of New South Wales, 8 December 1978 at Kirby In 1992, the making of such judicial "recommendations" was expressly disapproved by the Court of Criminal Appeal of New South Wales175. As that Court then pointed out, "especially where the offender is a young person, and there are so many different possibilities as to what might happen in the future, it is normally not appropriate for a sentencing judge to seek to anticipate decisions that might fall to be made by other persons, and in other proceedings, or under other legislation, over the ensuing decades."176 Every one of those words applies to the remarks of the judge sentencing the present appellant. Contemporary judges of the Supreme Court of New South Wales know, and act upon, the 1992 instruction. Yet, in a case such as the present, by the impugned provisions of the Act, they are obliged to attach to the "recommendation" the most serious consequences for the appellant's liberty in order to fulfil the stated purpose of Parliament. in 1992, designed Indeterminate sentence and change: The observations of the Court of to discourage such "non-release Criminal Appeal recommendations", did no more than to acknowledge the fact that individuals, especially if young when sentenced, sometimes change over time. They are not the same person years and decades later as they were when originally sentenced. According to the evidence in this case, accepted by the primary judge, the appellant is a completely different person from the person sentenced for terrible crimes in 1974. This was one of the reasons that lay behind the system of indeterminate sentences in force at that time: to acknowledge and promote the potential for individual change and reform; to encourage good conduct whilst serving the mandatory life sentence under an arduous prison classification; and to hold out hope for the prisoner's future, consistent with notions of individual redemption and human dignity. in 1997 represents a The indeterminate sentence imposed on the appellant was duly served by him for more than two decades before the impugned law was enacted. The change adopted to recruit contemporary judges of the Supreme Court of New South Wales into giving effect to the imposition of a sentence decided by the legislature, different in effect from that applicable at the time of the offence, conviction and original sentence. It is true that a sliver of a judicial function appears to be maintained by reference to the existence of "special reasons". I will deal with that argument thinly veiled attempt 175 Jamieson, Elliott and Blessington (1992) 60 A Crim R 68 at 80 per Gleeson CJ (Hope AJA and Lee AJ concurring). 176 (1992) 60 A Crim R 68 at 80. Kirby shortly. However, the real purpose of the State Parliament can be seen not only in the terms of the law challenged in these proceedings and parliamentary statements about it. It also appeared in legislation later enacted amending the Crimes (Administration of Sentences) Act 1999 (NSW)177. That law curtails release of a prisoner such as the appellant, even if he were able to secure a redetermination of an existing life sentence. In effect, it prevents release unless the prisoner is moribund and has demonstrated that he or she does not pose a risk to the community. "Special reasons" in context: I have already acknowledged that the reservation to judges of a discretionary determination by reference to the existence of "special reasons" may sometimes constitute a permissible, even orthodox, exercise of judicial power. However, that is not the present case. It is a mistake, in the construction of legislation, before considering issues of constitutional validity178, to take a phrase such as "special reasons" out of context and then to conclude that the phrase is conformable with the judicial function. It is necessary to read that phrase in the context in which it appears179. So read, the true character of the "special reasons" reserved to judges of the Supreme Court by the impugned law becomes plain. It appears to be a law of general application allowing exceptions to draconian provisions for a special case. Yet, when examined, this is not really so. Certainly, this is the way "special reasons" are interpreted, if the opinion of the primary judge in the appellant's case (confirmed by the Court of Criminal Appeal) constitutes any indication. The history of the legislation (not to say the record of the parliamentary debates) confirms the legislative object to keep the named prisoners from ever being released. On the face of things, in this context, "special reasons" for the redetermination of a life sentence cannot include the fact that the sentence is a very long one; that a long interval in custody has already been served; or that the 177 By s 154A of that Act, Parliament has given directions to the Parole Board limiting to a "non-release release on parole recommendation" to cases where the offender is in imminent danger of dying or is incapacitated so as no longer to be able to do harm to any person and has demonstrated that he or she does not pose a risk to the community. The constitutional validity of that section is not before this Court in the appeal. the case of prisoners subject 178 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 186; R v Hughes (2000) 202 CLR 535 at 565-566 [66]. 179 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 396-397, approving R v Brown [1996] AC 543 at 561 per Lord Hoffmann. Kirby life prisoner has behaved properly and has good prospects of rehabilitation180. These are "ordinary" reasons for making a redetermination. There is nothing really "special" about them, in the sense of unusual, exceptional, out of the ordinary or not to be expected181. This was the view taken by the Court of Criminal Appeal in this case182. For the purposes of this appeal, that construction of the legislation should be accepted. What is involved here is not, as has been suggested, legislative mala fides183. Far from it. What is involved is a pursuit of doubtless sincere views that are, in my respectful opinion, happily incapable of having effect under the Constitution. The stated opinions of the Minister are on the public record. They relate to the intended operation of the impugned provisions of the Act by the Government proposing the provisions. Such parliamentary speeches are frequently examined now to assist in the construction of legislation184. Courts began to do this under the common law before the facultative provisions to that effect were added to the interpretation statutes185. We should not turn a blind eye to such statements because, in this instance, they are inconvenient and tend to manifest constitutional invalidity in the legislative product. The specific issue of a wider interpretation of "special reasons"186 is not before this Court, having regard to the finding of the courts below and the limited grant of special leave. I would reserve any final view on that question to a case in which it is squarely raised by the grounds of appeal. We are here dealing with the appellant's case. Despite the large body of virtually uncontested evidence supporting him, no "special reasons" were found. Thus, the manner in which the Act is presently being administered confirms the complaint made in this Court of Kable invalidity. 180 See the limitations on judicial discretion in Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 at 503-504 [69]-[72]. 181 Cabal (2001) 209 CLR 165 at 185-186 [52]; B v Gould (1993) 67 A Crim R 297 at 182 Baker (2002) 130 A Crim R 417 at 428 [53]. 183 cf reasons of Gleeson CJ at [15]. 184 See Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 517-518 per Mason CJ, Wilson and Dawson JJ; B v Medical Superintendent of Macquarie Hospital (1987) 10 NSWLR 440 at 450 of my own reasons. 185 See Interpretation Act 1987 (NSW), s 34(2)(f). 186 See reasons of Gleeson CJ at [16]-[17]; reasons of Callinan J at [175]-[176]. Kirby There are, in any case, a number of features in the surrounding provisions that appear to lend support to the construction of the Act adopted by the courts below. The references in s 13A(9) to the availability of early release under the former law, to prospects of rehabilitation, to safety of the community and to the age of the person at the relevant times and in s 13A(10A) to the reasons for the original sentence, all suggest that such considerations are not to be treated as "special". Likewise, the introduction of highly restrictive instructions to the Parole Board, even if the prisoner were miraculously to secure redetermination under s 13A, confirms (together with the increase in the prescribed minimum time for application187) that "special reasons" in this statutory context are, and are intended to involve, something far beyond the normal considerations ordinarily taken into account in relation to release decisions affecting life prisoners. In this statutory context, it is therefore unsurprising that the primary judge could not envisage what future "special reasons" might exist188. I take this to be so because of the difficulty, in the given context, of imagining what such "special reasons" could possibly be. The Court of Criminal Appeal suggested, as now do other members of this Court189, that meritorious service to prison authorities or to other prisoners or to the broader community might be regarded as "special"190. However, these are likewise so arbitrary and discriminatory, depending as they do on chance possibilities ordinarily out of the prisoner's own control, that they simply confirm that the apparent ray of hope for a real judicial function that was apparently left by Parliament was merely included to overcome what the Minister had described as "the Kable experience"191. They are not there to provide any true judicial role, apt to the circumstances serious for individual liberty with which the judge was confronted on a "redetermination" application. In effect, such an "exception" was therefore included to permit the conscription of judges of the New South Wales Supreme Court into a charade pretending to the availability of discretion for fantastic possibilities of heroic 187 Crimes Legislation Amendment (Existing Life Sentences) Act 2001 (NSW), s 3, Sched 1 cl 2 amending cl 2(2)(b) of Sched 1 of the Crimes (Sentencing Procedure) Act 1999 (NSW). This provision is to be read together with that purporting to permit a court to direct that a person may "never re-apply to the Court" or "not re- apply for a period exceeding 3 years". See the Act, ss 13A(8A), 13A(8C). 188 [2001] NSWSC 412 at [124]. 189 See reasons of Gleeson CJ at [17]; reasons of Callinan J at [176]. 190 (2002) 130 A Crim R 417 at 428 [55]. 191 See above at [64]. Kirby prison rescues or intramural community service when in truth it was intended to ensure that the judges could never, in law or fact, order the eligibility for release of any of the named offenders. I agree with the appellant's submission that to construct a judicial role of such minuscule proportions, operating by irrational and discriminatory considerations, triggered by an arbitrary criterion such as the making (by some judges only) of a "non-release recommendation" decades earlier, imposes on the State judiciary a function incompatible with ("repugnant to") that implied by the Constitution as belonging to State courts that may be vested with federal jurisdiction. reference It is true that a court must strive to interpret an Act of the State Parliament as conforming to legislative power192. However, for the reasons that I have explained, the recruitment of Supreme Court judges to take part in a system designed to have no real content and only to be applicable, as found, to instances of superhuman courage or saintly virtue does not save the validity of the impugned law. Nor can any State interpretation statute produce a contrary conclusion. International human rights law: In considering the functions that may be imposed on Australian judges, conformably with Ch III of the Constitution, regard may also be had, in my view, to international law, particularly as such law expresses universal principles of human rights and human dignity193. Unless incorporated by domestic law, such international norms do not, as such, bind Australian courts194. Nevertheless, they are part of the contemporary context in which the Constitution, as a living body of law, falls to be construed by this Court. The Supreme Court of the United States of America, long resistant to the consideration of international law in the interpretation of the national constitution, has increasingly in recent times turned to derive assistance for this task from "the values shared with a wider civilisation"195. Those values too are 192 Interpretation Act 1987 (NSW), s 31. See reasons of Gleeson CJ at [14]. 193 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 657-658; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 417-419 [166]-[167]; Austin (2003) 77 ALJR 491 at 543-544 [257]; 195 ALR 321 at 392; Al-Kateb (2004) 78 ALJR 1099 at 1128-1131 [152]-[166]; 208 ALR 124 at 163-166. 194 Re Kavanagh's Application (2003) 78 ALJR 305 at 309 [22]-[23]; 204 ALR 1 at 6-7; B (2004) 78 ALJR 737 at 768 [171]; 206 ALR 130 at 173. 195 Lawrence v Texas 539 US 558 at 576 (2003) per Kennedy J (for the Court). See also Atkins v Virginia 536 US 304 at 316-317, fn 21 (2002) per Stevens J, with (Footnote continues on next page) Kirby not binding. But they are a helpful contextual consideration for the performance of this Court's constitutional functions196. Including in Australia. The provisions of the impugned law, read against the background of the parliamentary purpose and in the context of cognate changes introduced to give effect to that purpose, offend the international law of human rights and fundamental freedoms. The most obvious offence appears in the case, not of the present appellant, but of another of the ten prisoners named by the Minister in his Second Reading Speech. I refer to Mr Blessington. At the time of the offence for which Mr Blessington was convicted and sentenced, he was 14 years of age. He is now subject to the same legislation as that challenged in the appellant's case. He applied for leave from this Court to be heard as an intervener in the appellant's appeal, because of the direct relevance of the decision in the appellant's case to his legal entitlements which were pending. By majority, this Court refused that leave. As I indicated at the time of that refusal, I would have granted Mr Blessington the right to be heard. Principle, and an effective lifetime of actual incarceration, warranted our consideration of counsel's supplementary submission estimated to take less than an hour197. That submission bore on the extreme nature of the legislation under consideration in this case. It brought the appellant's arguments into even starker relief. The application of the impugned provisions to Mr Blessington's sentence would appear to bring Australia into clear breach of the Convention on the Rights of the Child198. By Art 37 of that Convention, to which Australia is a party, it is provided, relevantly, that: "Neither capital punishment nor life imprisonment without possibility of release shall be imposed for offences committed by persons below eighteen years of age". On a true construction of the impugned law, Mr Blessington's "possibility of release" is, in my view, a chimera, and deliberately so. If that is the case, the whom O'Connor, Kennedy, Souter, Ginsburg and Breyer JJ joined. See Al-Kateb (2004) 78 ALJR 1099 at 1135 [188]; 208 ALR 124 at 172. 196 See Koh, "International Law as Part of Our Law", (2004) 98 American Journal of International Law 43. 197 cf Levy v Victoria (1997) 189 CLR 579 at 650-652; Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 134-137 [102]-[109]. 198 Done at New York on 20 November 1989, [1991] Australian Treaty Series No 4. Kirby impugned law is in conflict with binding international obligations expressing universal human rights and fundamental freedoms. Whilst the case of the appellant, Mr Baker, measured against international law, is not so clear, there do appear to be serious departures, in respect of the impugned law, from obligations accepted by Australia under the International Covenant on Civil and Political Rights ("ICCPR")199. In particular, it would appear that Arts 6.1, 7, 9.1, 14.1 and 15.1 may be engaged by the appellant's case. The last-mentioned article includes the obligation that no heavier penalty be imposed on a person held guilty of a criminal offence "than the one that was applicable at the time when the criminal offence was committed." It also provides that "[i]f, subsequent to the commission of the offence, provision is made by law for the imposition of a lighter penalty, the offender shall benefit thereby." The course of the legislative history governing life sentences in New South Wales, described above, appears to have deprived the appellant of rights stated in this article of the ICCPR. Australian courts regularly construe ordinary statutes, so far as possible, to ensure that they do not operate in breach of international law200, or, as it used to be put, "the comity of nations"201. There is no reason why this Court should construe the Australian Constitution, a special statute, in a different, more restrictive and more parochial way202. On the contrary, because the ultimate source of the binding power of the Australian Constitution lies in the sovereign will of the people of Australia, it should be accepted that their Constitution will be construed in the same way as ordinary statutes are. No other approach would reflect that sovereign will. No other approach is compatible with the operation of 199 Done at New York on 19 December 1966, [1980] Australian Treaty Series No 23. 200 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 492 [29]-[31] per Gleeson CJ. See also Chu Kheng Lim (1992) 176 CLR 1 at 38; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 287; Coco v The Queen (1994) 179 CLR 427 at 437. 201 See O'Connor J in Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 363; Mason, "The tension between legislative supremacy and judicial review", (2003) 77 Australian Law Journal 803 at 808-809. 202 Al-Kateb (2004) 78 ALJR 1099 at 1131-1136 [169]-[191]; 208 ALR 124 at 167- Kirby national constitutions203, or with the jurisprudence of other final courts204, in the contemporary world. Conclusions: Kable applies: To the extent that there are (as I would concede) certain ambiguities and uncertainties in the ambit of the Kable principle, as so far elucidated, this Court should apply the principle in a way that avoids needless disharmony with the universal obligations of international law205. In particular, it is offensive to those obligations to require State judges to go through the paces enacted by the impugned provisions when the clear purpose, and the manifest effect, of such provisions was to involve the judges in a function without real content for the liberty of a prisoner except to give effect to a law that deliberately prevents the named persons from having any real chance of redetermination of their life sentences as the Act pretends to provide them. Insofar as they are applicable, I incorporate into these reasons, without repeating them, other reasons and arguments expressed by me in Fardon v Attorney-General (Q)206, where some analogous issues arise. The two State enactments challenged in the present case and in Fardon are extreme examples of invasions of the real functions secured to the State judiciary by the Australian Constitution as stated in the decision in Kable. The fact that in neither instance does this Court find the principle in Kable applicable shows that that decision is a dead letter. At least it is so until a future time perceives its importance for the protection of fundamental rights in this country. Conclusions and orders The appellant has made good his challenge to ss 13A(3)(b) and 13A(3A) of the Act, by the operation of the constitutional principle expressed by this 203 Al-Kateb (2004) 78 ALJR 1099 at 1134-1136 [184]-[190]; 208 ALR 124 at 170- 204 Van Ert, Using International Law in Canadian Courts, (2002); Re Public Service Employee Relations Act [1987] 1 SCR 313 at 348-349; Suresh v Canada [2002] 1 SCR 3 at 38 [60]; S v Makwanyane 1995 (3) SA 391 at 412-415 [33]-[39] per Chaskalson P; S v Williams 1995 (3) SA 632; Azanian Peoples Organisation v President, Republic of South Africa 1996 (4) SA 671 at 688 [26]. See also Claydon, "International Human Rights Law and the Interpretation of the Canadian Charter of Rights and Freedoms", (1982) 4 Supreme Court Law Review 287. 205 See the reference of Gleeson CJ to international and regional human rights law in North Australian Aboriginal Legal Aid Service (2004) 78 ALJR 977 at 979 [3]; 206 ALR 315 at 317-318. 206 [2004] HCA 46. Kirby Court in Kable. I agree with the appellant's submission that, notwithstanding the provisions of the Interpretation Act 1987 (NSW)207, this Court should not leave in place portion of the offending law as amended, when it cannot be confident that such portion would have been enacted had the New South Wales Parliament appreciated the invalidity of the change that it attempted in 1997. It follows that the appeal should be allowed. The judgment and orders of the Court of Criminal Appeal of New South Wales should be set aside. In their place it should be declared that ss 13A(3)(b) and 13A(3A) of the Sentencing Act 1989 (NSW), as in force on 1 August 1997, were invalid. It should be ordered that the appeal from the judgment and orders of G R James J to the Court of Criminal Appeal be upheld. The declaration made by his Honour should be set aside. The appellant's application should be remitted to the Supreme Court of New South Wales for determination according to law. 207 Section 31(2). Callinan CALLINAN J. The issue which this appeal raises is whether a New South Wales enactment which takes as criteria for its application, the prior making of a recommendation of a judge that a person sentenced to life imprisonment serve that sentence in full, in circumstances in which not all judges customarily made a recommendation of that kind, and the demonstration of special reasons for an earlier release, requires judges, impermissibly, to exercise non-judicial power. Facts In late 1973 the appellant was charged, together with another person, with murder, conspiracy to murder, and two counts of malicious wounding of a police officer with intent to prevent lawful apprehension. The circumstances of the crimes were horrendous. The appellant worked on a farm near Collarenebri, New South Wales, on which Mrs Morse lived with her husband and their three children. He had come to know the children and had been the beneficiary of kindnesses by Mrs Morse. After he had left the farm he and a man named Crump began surveillance of it to await an occasion when Mr Morse was absent from it. When that occasion arose they stole his car and other property, assaulted, bound, blindfolded and gagged Mrs Morse, abducted and twice raped her, self-evidently keeping her in a state of terror, and then murdered her. The appellant was convicted of all of the offences and on 20 June 1974 was sentenced to life imprisonment on his conviction for murder (a victim other than Mrs Morse) and conspiracy to murder Mrs Morse, and to 15 years hard labour for the other offences. The charges were laid and determined in New South Wales, where the conspiracy to murder Mrs Morse was made, and not in Queensland, where her murder was committed. At the time of the convictions, life imprisonment was the mandatory sentence for murder and the maximum sentence for conspiracy to murder. In sentencing the appellant and his co-offender, the trial judge Taylor J said: "I believe you should spend the rest of your lives in gaol and there you should die. If ever there was a case where life imprisonment should mean what it says ... this is it." There is no doubt that his Honour's statement amounts to a "non-release recommendation" within the statutory definition contained in s 13A(1) of the relevant enactment which I will set out later. The appellant remains in custody where he has been held for the last 30 years. He has served the whole of the sentences imposed in relation to the wounding of a police officer and continues to serve the sentences of life imprisonment. On 1 August 1997 the appellant applied, pursuant to s 13A of the Sentencing Act 1989 (NSW) ("the Sentencing Act"), to the Supreme Court of Callinan New South Wales for an order determining a minimum term, and an additional term for the life sentences imposed upon him. The Sentencing Act was repealed by the Crimes Legislation Amendment (Sentencing) Act 1999 (NSW) which came into force on 3 April 2000. It was common ground, however, that the appellant's application should be dealt with under s 13A of the repealed Act which was as follows: In this section: existing life sentence means a sentence of imprisonment for life imposed before or after the commencement of this section, but does not include a sentence for the term of a person's natural life under section 19A of the Crimes Act 1900 or section 33A of the Drug Misuse and Trafficking Act 1985. non-release recommendation, in relation to a person serving an existing life sentence, means a recommendation or observation, or an expression of opinion, by the original sentencing court that (or to the effect that) the person should never be released from imprisonment. (2) A person serving an existing life sentence may apply to the Supreme Court for the determination of a minimum term and an additional term for the sentence. (3) A person is not eligible to make such an application unless the person has served: at least 8 years of the sentence concerned, except where paragraph (b) applies, or at least 20 years of the sentence concerned, if the person was the subject of a non-release recommendation. (3A) A person who is the subject of a non-release recommendation is not eligible for the determination of a minimum term and an additional term under the Supreme Court, when considering the person's application under this section, is satisfied that special reasons exist that justify making the determination. this section, unless The Supreme Court may, on application duly made for the determination of a minimum term and an additional term for a sentence: set both: Callinan a minimum term of imprisonment that the person must serve for the offence for which the sentence was originally imposed, and an additional term during which the person may be released on parole (being either an additional term for a specified period or for the remainder of the person's natural life), or decline to determine a minimum term and an additional term. (4A) In considering such an application, the Supreme Court is to have regard to all the circumstances surrounding the offence for which the life sentence was imposed, and all offences, wherever committed, of which the person has been convicted at any time (so far as this information is reasonably available to the Supreme Court). (5) A minimum term set under this section is to commence on the date on which the original sentence commenced or, if the person was remanded in custody for the offence, the date on which the first such remand commenced. If the Supreme Court sets a minimum term and an additional term under this section, the sentence comprising those terms replaces the original sentence of imprisonment for life. (7) A minimum term and an additional term set under this section are to be taken to have been set under this Part but are not required to comply with the other provisions of this Part. If the Supreme Court declines to determine a minimum term and an additional term, the Court may (when making that decision) direct that the person who made the application: never re-apply to the Court under this section, or not re-apply to the Court under this section for a specified period. (8A) If the Court gives a direction under subsection (8) that a person may never re-apply to the Court under this section, the person is to serve the existing life sentence for the term of the person's natural life. If the Court does not give a direction under subsection (8), the person may not re-apply within the period of 3 years from the date Callinan of the Court's decision to decline to determine a minimum term and an additional term. (8C) A direction under subsection (8) that a person may never re-apply to the Court under this section or not re-apply for a period exceeding 3 years may be given only if: the person was sentenced for the crime of murder, and it is a most serious case of murder and it is in the public interest that the determination be made. The Supreme Court, in exercising its functions under this section, is to have regard to: the knowledge of the original sentencing court that a person sentenced to imprisonment for life was eligible to be released on licence under section 463 of the Crimes Act 1900 and of the practice relating to the issue of such licences, and any report on the person made by the Review Council and any other relevant reports prepared after sentence (including, for example, reports on the person's rehabilitation), being in either case reports made available to the Supreme Court, and the need to preserve the safety of the community, and the age of the person (at the time the person committed the offence and also at the time the Supreme Court deals with the application), and may have regard to any other relevant matter. (10) The regulations may make provision for or with respect to reports referred to in subsection (9), including provisions relating to the matters to be dealt with in reports and the making of reports available to the Supreme Court. (10A) The Supreme Court, in exercising its functions under this section: (a) must have regard to and give substantial weight to any relevant recommendations, observations and comments made by the original sentencing court when imposing the sentence concerned, and Callinan (b) must give consideration to adopting or giving effect to their substance and the intention of the original sentencing court when making them, and (c) must, to the extent that it declines to adopt or give effect to those matters, state its reasons for doing so. (11) The Supreme Court may make a determination for a minimum term and an additional term for a sentence even though the Court was not the sentencing court, or the Court is not constituted in the same way as it was when the applicant was sentenced. (12) An appeal lies to the Court of Criminal Appeal in relation to: the determination of a minimum term and an additional term under this section, or a decision to decline to make such a determination, or a direction that a person may never re-apply for such a determination or not re-apply for a period exceeding 3 years. The Criminal Appeal Act 1912 applies to such an appeal in the same way as it applies to an appeal against a sentence. (13) The reference in subsection (4A) to an offence of which a person has been convicted: includes: a finding that an offence has been proved without proceeding to a conviction against the person, or any offence taken into account when sentence was passed against the person, but does not include: an offence that has been quashed or set aside within the meaning of Part 4 of the Criminal Records Act an offence of a class or description prescribed by the regulations for the purposes of this paragraph." Callinan The judgment at first instance The application was heard in the Supreme Court of New South Wales, by Greg James J208. The appellant submitted that in the circumstances of his good conduct in gaol, and having regard to reports showing that he had strong prospects of rehabilitation, a minimum term should be applied to his life sentences so that in the future he could be considered for parole. The appellant also relied on the fact that his co-offender's sentence had been redetermined, and argued that in accordance with orthodox principles of sentencing his should be treated similarly. The Crown submitted that s 13A prevented the appellant from making the application because no special reasons existed to support or justify it. The Crown also argued that the Court should direct that the appellant never re-apply under the section. After examining the legislative history of the section, previous decisions in relation to it, and the recommendation of the sentencing judge, his Honour declared that the appellant was not eligible to make the application209. His Honour held that the appellant's case could be distinguished from his co- offender's because of subsequent amendments to the Sentencing Act effected by the Sentencing Legislation Further Amendment Act 1997 (NSW). That Act amended s 13A, by, among other things, inserting a new s 13A(3) and introducing s 13A(3A). He held that the appellant failed to meet the conditions imposed by s 13A(3A) of the Sentencing Act which his co-offender was not required to satisfy. His Honour was not convinced that "special reasons" existed to support the making of a determination210. His Honour declined, however, to make an order preventing the appellant from ever making another application under s 13A as it was not possible, in his Honour's view, to foresee whether "special reasons" may come into existence in the future which would entitle the appellant to make a further application211. 208 R v Baker [2001] NSWSC 412. 209 R v Baker [2001] NSWSC 412 at [123]-[125]. 210 R v Baker [2001] NSWSC 412 at [122]-[123]. 211 R v Baker [2001] NSWSC 412 at [124]. Callinan Appeal to the New South Wales Court of Criminal Appeal The appellant appealed to the New South Wales Court of Criminal Appeal (Ipp AJA, Dunford and Bergin JJ)212. He argued there that the primary judge wrongly decided two matters: that the appellant was ineligible to make an application under s 13A; and that the primary judge was therefore not obliged to make a determination under s 13A(4). In the alternative, the appellant submitted that if the primary judge did make a determination under s 13A(4), he erred in the test he applied as to the existence of "special reasons" under s 13A(3A). The appellant also submitted that the amending Act which introduced sub-s (3A) in s 13A of the Sentencing Act was invalid in so far as it purported to vest functions in the Supreme Court of New South Wales that are incompatible with the exercise by that Court of the judicial power of the Commonwealth. The Court (Ipp AJA, Dunford and Bergin JJ agreeing) dismissed the appeal. Ipp AJA was of the opinion that Greg James J had made a determination under s 13A213 and that he had applied the appropriate test with respect to "special reasons"214. His Honour noted that the phrase "special reasons" was intended to raise the threshold of satisfaction required of a court in deciding whether to determine a minimum and an additional term. Special reasons were ones which were "out of the ordinary, unusual, and not to be expected"215. As to the third ground of appeal, the invalidity of the amending Act which introduced sub-s (3A) in s 13A of the Sentencing Act, Ipp AJA noted216 that it was not in dispute that a determination under s 13A(4) would amount to the exercise of federal jurisdiction for the reasons expressed by Toohey J in Kable v Director of Public Prosecutions (NSW)217. Ipp AJA also accepted that if it could be shown that there was no judicial function to be performed under s 13A because, for example, the test of special reasons was impossible to satisfy, the legislation would be invalid218. 212 Baker (2002) 130 A Crim R 417. 213 Baker (2002) 130 A Crim R 417 at 427 [46]-[47]. 214 Baker (2002) 130 A Crim R 417 at 429 [59]. 215 Baker (2002) 130 A Crim R 417 at 427-428 [52]. 216 Baker (2002) 130 A Crim R 417 at 430 [73]. 217 (1996) 189 CLR 51 at 94-96. 218 Baker (2002) 130 A Crim R 417 at 431 [74]-[75]. Callinan His Honour was satisfied, however, that the test of special reasons was a test capable of being satisfied. Further, the determination of a minimum and an additional term in accordance with s 13A involved the making of a decision in accordance with conventional judicial method. The Supreme Court was required "undertake a traditional and familiar judicial exercise, namely, the determination of the existence of factors which condition the power of the Court to afford relief to persons falling within a defined category. Having found that the factors exist, the Court is required to exercise a judicial discretion in determining whether relief should be granted." "a device by parliament to ensure that persons such as the appellant would never be released from prison." Based on the same reasoning, his Honour also rejected the appellant's argument that the operation of the legislation usurped judicial power because it purported to dictate the manner of the exercise of judicial discretion. The requirement of special reasons was, in effect, a legislated provision for the weighing of the different factors to be taken into account in the sentencing process221. Ipp AJA said222: "The legislation presently under consideration does not intrude into the essential judicial function of exercising, impartially, an objective and independent discretion. The court is not required to exercise power in a manner that is inconsistent with the judicial process223. The Act does not compromise the institutional impartiality of the court, nor does it undermine the ordinary safeguards of the judicial process224. Nothing that the court is required to do by the legislation would cause any loss of 219 Baker (2002) 130 A Crim R 417 at 432 [84]. 220 Baker (2002) 130 A Crim R 417 at 431 [76]. 221 Baker (2002) 130 A Crim R 417 at 432 [85]-[88]. 222 Baker (2002) 130 A Crim R 417 at 433-434 [92]. 223 See Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 98 per 224 See Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 121 per Callinan confidence in the judicial process. In my view, the introduction of the requirement of special reasons did not usurp judicial power." Ipp AJA also rejected the argument that the legislation was invalid because the requirement of special reasons could, as seems to be the fact, apply to nine persons only. That the legislation may be aimed at a small number of people does not make it invalid225. Nor does the arbitrary nature (if such it be) of the making of a recommendation for non-release by a sentencing judge have any bearing on the validity of the legislation226. The appeal to this Court The appellant appeals to this Court on one ground only, that: "The Court of Criminal Appeal erred in holding that the Sentencing Legislation Further Amendment Act 1997 was valid and that it did not purport to vest functions in the Supreme Court of New South Wales that are the the exercise of Commonwealth by the Supreme Court of that State." judicial power of incompatible with Some further reference to the relevant proceedings, the legislation and its history should now be made. Before 1955, s 19 of the Crimes Act 1900 (NSW) ("the Crimes Act") provided that the penalty for murder was death. In that year, s 19 was amended and penal servitude for life was substituted as the penalty for murder227. This was the position at the time of the appellant's conviction in June 1974. At that time, it was possible that the appellant might, at a future date, be granted a licence from the Executive to be conditionally at large on, in effect, a ticket of leave, for the unexpired portion of his sentence228. In 1982, s 19 of the Crimes Act was amended to enable a judge to pass a sentence of shorter duration upon a person convicted of murder in cases where the person's culpability was diminished by mitigating circumstances229. At the time of the appellant's conviction, the crime of conspiracy to murder was punishable by imprisonment 225 Baker (2002) 130 A Crim R 417 at 434 [94]. 226 Baker (2002) 130 A Crim R 417 at 436 [103]. 227 See Crimes (Amendment) Act 1955 (NSW), s 5. 228 Crimes Act, s 463. This section was repealed by s 5 of the Prisons (Serious Offenders Review Board) Amendment Act 1989 (NSW) which was assented to on 21 December 1989 and commenced operation on 12 January 1990. 229 See Crimes (Homicide) Amendment Act 1982 (NSW), Sched 1, Item 1. Callinan for life230. This statutory penalty was subsequently amended in 1989 and replaced with a maximum penalty of twenty-five years imprisonment231. On 5 March 1990, Crump, the co-offender, made an application for a determination of a minimum term and an additional term pursuant to s 13A of the Sentencing Act. This was rejected by the Supreme Court (Loveday J) on 10 December 1992. The appellant made a similar application which was refused by Sully J on 10 May 1993. Crump made a further application for a determination which was dealt with by McInerney J on 24 April 1997. His Honour re-sentenced Crump to a minimum of thirty years imprisonment from 13 November 1973 with an additional term of the remainder of his life. For the crime of conspiracy to murder, a term of twenty-five years dating from 13 November 1973 was fixed. On 8 May 1997 a Bill entitled the Sentencing Legislation Further Amendment Bill was introduced. The appellant's counsel submitted that it was apparent from the second reading speeches in the Legislative Assembly and the Legislative Council that the Bill was directed at, in consequence of the order made in Crump's application, a group of several named persons including the appellant. Among other things, the responsible Minister said this232: "Allan Baker, Kevin Crump, Michael Murphy, Leslie Murphy, Gary Murphy, John Travers, Michael Murdoch, Stephen Jamieson, Matthew Elliot, Bronson Blessington – these animals represent pure evil. These animals deserve never to see the exit sign at the prison gate. These animals are reviled and shunned by anyone who has ever heard of their heinous crimes. There is not a person in our community who does not need protection from these animals and the security of knowing they will never again be free. The decision of the Supreme Court in redetermining Kevin Garry Crump's life sentence has caused grave concern in the community. Crump and Baker committed one of the most revolting crimes this nation has ever seen. Put simply, they deserve to die in gaol. Every honourable member of this House should be aware, in Crump's case, of what the sentencing judge, Justice Taylor, said in 1974. He said: 230 Crimes Act, s 26. 231 See Crimes (Life Sentences) Amendment Act 1989 (NSW). This Act was assented to on 21 December 1989 and commenced operation on 12 January 1990. 232 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 May 1997 at 8337. Callinan 'If, in the future, some application is made that you be released on the grounds of clemency or mercy, then I would venture to suggest to those who are entrusted with the task ... that the measure of your entitlement ... should be the clemency or mercy you extended to this woman when she begged for her life.'" It was shortly after the enactment of the Bill that the appellant made the application in reliance on s 13A for an order determining his sentence with which this Court is concerned. The appellant's arguments It is the appellant's submission that applicable legislation before the enactment which governs this application and sentencing principles required the Supreme Court to have regard to several matters such as the circumstances of both the offence and the offender at the time of its commission, and the prisoner's subsequent history while in prison233. The Court was required to have regard to, as opposed to being required to give effect to, any "relevant recommendations, observations and comments" made by the original sentencing court234. The comments of Taylor J when sentencing the appellant, to the effect that he should spend the rest of his life in gaol were "relevant comments" within the meaning of s 13A(10A)(a) and amounted to a "non-release recommendation" within the meaning of s 13A(1) following the 1997 amendments of the Sentencing Act. The appellant accepts that the fact that a mischief may have, as here, been precisely identified by reference to the activities or history of named persons who may be few in number could not, of itself, sensibly deprive Parliament of the capacity to legislate in a way calculated to meet that mischief. The appellant submitted that the comments of Taylor J when sentencing the appellant were not, however, properly characterizable as a judicial pronouncement or order235. Not all judges sitting in the criminal jurisdiction of New South Wales made statements or recommendations of the kind made by Taylor J in this case in 1974. The appellant contended that such statements as were made were not made after giving an offender an opportunity to make a submission that they should not be made. They were recommendations that should not have been made in any circumstances. At a time when only some, as opposed to all judges customarily expressed views as to the full service of a term 233 Sentencing Act, s 13A(9). 234 Sentencing Act, s 13A(10A)(a). 235 cf the remarks of Gleeson CJ, Hope AJA and Lee AJ agreeing, in Jamieson, Elliott and Blessington (1992) 60 A Crim R 68 at 80. Callinan of life imprisonment, those who did were trespassing upon the territory of the Executive whose role it was to decide whether to release a prisoner before his term was served: but worse, judges so recommending were creating a situation of inequality before the law, by exposing those whose life sentences were the subject of a recommendation to a greater likelihood of continued detention than those whose crimes may have been as grave, or worse, but whose sentences were imposed in the absence of such a statement. Whether, however, such recommendations were made or not, the appellant submits, most prisoners serving sentences of life imprisonment did have an expectation, or some hope at least, of earlier release. I did not take it to be disputed that the last of these propositions was accurate. Nor, however, did either party contend that there was other than a long history of the inclusion in the remarks of many, but not of course all, judges of recommendations with respect to the service of the sentences imposed. As to that I would make this observation. If a person knows or is deemed to know the penalty for his crime, submissions that he or counsel on his behalf may make, may reasonably be expected to be directed towards all aspects of it, including the possibility of commentary by a trial judge. With respect to such callous crimes as these it is almost beyond argument that the appellant's counsel at his trial would have foreseen the possibility that a judge might well make a recommendation about the appellant's actual period of detention in prison. Even if, however, all of the appellant's submissions so far were correct, it is not entirely clear what legal consequences the appellant contends should follow. The purpose of reliance upon them seems to be to demonstrate how fragile, uncertain, arbitrary, discriminatory and therefore unfair and unreasonable, legislation that takes as a basis for its application, the making or otherwise of an unnecessary recommendation of the relevant kind, is, and also to provide a basis for a submission, that if the legislative criteria for penal servitude depart from what can be seen to be logical, equal, and general in application, and fair and reasonable in some objectively ascertainable sense, then a court which applies those criteria will not be exercising judicial power. With respect to the first of these purposes, it was almost as if the appellant were contending for the implication of an inhibition upon State legislative power of a kind actually expressed in the Fourteenth Amendment to the Constitution of the United States which prohibits the denial of equal protection of the law. The appellant's principal submissions were put in this way: "The arbitrariness or non-logical quality of the requirement imposed by subsec 13A(3A), [of] special reasons ... appear[s] from the impossibility of sensibly demonstrating any reason for a re-determination, outside those explicitly or inherently called up in every case, ordinarily, by the other provisions of sec 13A and the nature of a re-determination. It detracts from the judicial nature of the exercise that the intellectual weapons of deduction and application in the process of statutory Callinan interpretation and the fitting of a particular set of facts to the construed statute are used on a wild goose chase. The appearance of judicial process dresses up what effectively emerges as a legislated impossibility by which the appellant must fail by default of showing the elusive special reason. The vice of the legislation is its involvement of judges who may exercise the judicial power of the Commonwealth in such a mockery. For these reasons, the Court of Criminal Appeal erred by rejecting the arguments noted at (2002) 130 A Crim R 417 at 431 [75], [78]. Whether the legislature could simply have disqualified certain persons from making re- determination applications is another question altogether, and purely hypothetical. Underlying the whole of the arbitrariness argument is that subsec 13A(3A) requires special reasons, which ought as a matter of legal process emerge from the nature of some cases by comparison with each other, for cases (as it happens just nine in number) defined simply and solely by their history including a non-release recommendation. That discrimen is illogical because it is manifestly not the case that only the worst cases attracted such judicial comments and it was not the case that all the worst cases attracted such comments. Many judges confined themselves – properly, as it happens – to descriptions and findings of the offence and the offender. In so doing, they often used words of the utmost condemnation, such as to eg [sic] render an appeal against severity extremely difficult on orthodox grounds. But because such judges did not or perhaps would never make non-release recommendations, offenders sentenced by them do not have to show special reasons, let alone wait for twenty re-determination application. in a Consideration of the cases ... demonstrates the arbitrariness of the discrimen chosen for para 13A(3)(b) and subsec 13A(3A). Support for the argument is found in the comment by Lord Diplock delivering the advice of the Privy Council in Ong Ah Chuan v Public Prosecutor236, in relation to arbitrariness in statutory sentencing discrimination imposed on a court against the background of a constitutional guarantee of equality before the law. For these reasons, it was erroneous [for] the Court of Criminal Appeal to regard the arbitrary nature of the impugned provisions as not relevant to their validity237. thirty) years, (now The parliamentary debate, as well as the nature of existing life sentences in a system where prisoners could not be forgotten, shows that 236 [1981] AC 648 at 673-674. 237 (2002) 130 A Crim R 417 at 436 [103]. Callinan this legislation was aimed at a known vituperated class, small in number. ... [T]he combination of that legislative history and background and the dubious nature of the special reasons requirement runs [the relevant] provisions foul of the principle illustrated in Liyanage v The Queen238, discussed in Nicholas v The Queen239. It may be that some of their Honours saw significance in the fact that the statute in question in Nicholas, although plainly enacted in the knowledge of known cases, was not in terms speaking of a limited class240. In this case, by contrast, there could never have been any addition to the class of prisoners serving existing life sentences against whom there had been a non-release recommendation made when they were originally sentenced. Worse, from the point of view of validity of the law, is the evident parliamentary perception of the closed small class that they represented the remainder of a larger group all members of which as a matter of policy should have suffered the same restrictions as subsec 13(3A) was to impose." In consequence, the appellant submits, in determining an application under s 13A the Supreme Court is not exercising judicial power, it is engaging in a futility, the section leaves nothing for the Court to decide, and the language of the section prevents all, or any genuine judicial deliberation and determination: that pre-emption of that kind is an affront to true judicial activity significantly reducing public expectations with respect to the institution of the judiciary, and involving an attack upon its integrity, and an incompatibility with, and usurpation of judicial power of the kind which Kable241 holds to be impermissible. In my opinion the appeal must fail. The appellant has not made out that the entertaining and determination of an application under s 13A of the Sentencing Act is not an exercise of judicial power. Legislative requirements that a judicial determination depend upon the demonstration of exceptional or special matters, events, circumstances, or reasons, are far from unique and have been the subject of much judicial deliberation. Regularly this Court is called upon to decide whether special leave to appeal should be granted. Speaking of 239 (1998) 193 CLR 173 at 191-193 [28] per Brennan CJ, 221 [113] per McHugh J, 233 [147]-[148] per Gummow J, 261 [205] per Kirby J, 278-279 [252]-[253] per 240 (1998) 193 CLR 173 at 191-193 [28] per Brennan CJ, 233 [147]-[148] per Gummow J, 278-279 [252]-[253] per Hayne J. 241 (1996) 189 CLR 51. See for example at 98-99 per Toohey J, 104, 107 per Gaudron J, 119-122 per McHugh J. No party sought to challenge the correctness of this case. Callinan the expression "exceptional circumstances" in s 2 of the Crime (Sentences) Act 1997 (UK) required for a decision not to impose a sentence of life imprisonment, Lord Bingham of Cornhill CJ said in R v Kelly (Edward)242: "We must construe 'exceptional' as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered." "Special reasons" in my opinion share those characteristics. It is not necessary to catalogue the matters which could constitute special reasons within s 13A(3A) of the Sentencing Act. It may be that it is only in combination, or in increasing degrees of relevance and importance that circumstances may come to be, or provide special reasons. The fact that one or more of them may have been, or should have been taken into account in fixing the original sentence may not necessarily mean that some or other of those circumstances, whether they have in some way changed or evolved, may not come to constitute in the future, alone, or with others, "special reasons". Indeed, s 13A(4A) of the Sentencing Act, not surprisingly requires the Supreme Court to look back and to take into account the circumstances of the offence, and other offences of an applicant. Section 13A(10A) states other matters to which regard must be had. Neither sub-section, however, precludes consideration of other matters. Everything is to depend upon all that is relevant and known to the Supreme Court at the time of the application. This may perhaps include such matters as improved prospects of rehabilitation, senility, disability, genuine contrition, an act or acts of heroism in prison, a reduced need for deterrence, the discovery of fresh facts, and a marked change in sentencing patterns, taken of course with the matters to which the Court is to have regard, the circumstances of the offence and other offences of the offender. I express no concluded view on these matters. The experience and wisdom of the law counsel reticence in any attempt to foresee the future, or to give in advance the complexion of special to what may, but has so far not occurred or come into contention. The appellant's further submission, that everything that might ever conceivably be regarded as special is not in truth more than an ordinary sentencing consideration, that the search therefore for special reasons is a futility, and a search for a futility is not an exercise in which a court can genuinely 242 [2000] QB 198 at 208. Callinan judicially engage should similarly be rejected. There is real content, as I have just pointed out, in what the Supreme Court has to decide under s 13A(3A) of the Sentencing Act. In making such a decision the Court is not therefore embarking on a futility. In deciding the application in the present case the Court was undertaking an orthodox and conventional judicial exercise. The section does not call for the application of the principles in any of their different formulations in Kable. The appeal should be dismissed.

HIGH COURT OF AUSTRALIA Matter No P7/2018 MIGHTY RIVER INTERNATIONAL LIMITED APPELLANT AND BRYAN HUGHES AND DANIEL BREDENKAMP AS DEED ADMINISTRATORS OF MESA MINERALS LIMITED & ANOR RESPONDENTS Matter No P8/2018 MIGHTY RIVER INTERNATIONAL LIMITED APPELLANT AND MINERAL RESOURCES LIMITED & ORS RESPONDENTS Mighty River International Limited v Hughes Mighty River International Limited v Mineral Resources Limited [2018] HCA 38 Date of Order: 19 June 2018 Date of Publication of Reasons: 12 September 2018 P7/2018 & P8/2018 ORDER In each matter, the appeal is dismissed with costs. On appeal from the Supreme Court of Western Australia Representation C R C Newlinds SC with D R Sulan and P R Gaffney for the appellant in both matters (instructed by Nova Legal) N C Hutley SC with J K Taylor for the respondents in P7/2018 and the second and third respondents in P8/2018 (instructed by Clayton Utz) J T Gleeson SC with B R Kremer for the first respondent in P8/2018 (instructed by Bennett + Co) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Mighty River International Limited v Hughes Mighty River International Limited v Mineral Resources Limited Companies – Voluntary administration – Deed of company arrangement – Where administrator required to form opinion about certain matters as soon as practicable after administration begins – Where administrator required to convene meeting of creditors within convening period – Where convening period may be extended by court order – Where company executed deed which imposed moratorium on creditors' claims while administrators conducted further investigations – Where deed provided no property of company available for distribution to creditors – Whether deed impermissibly extended convening period – Whether administrators formed the requisite opinions – Whether deed should have specified some property available for distribution to creditors – Whether deed a valid deed of company arrangement – Whether deed should be declared void. Words and phrases – "arrangement alternative to liquidation", "convening period", "deed of company arrangement", "DOCA", "holding DOCA", "in the interests of creditors", "moratorium on claims", "property of the company available for distribution to creditors", "to be available to pay creditors' claims", "voluntary administration". Corporations Act 2001 (Cth), Pt 5.3A, ss 438A, 439A, 444A, 445G. KIEFEL CJ AND EDELMAN J. Introduction Part 5.3A of the Corporations Act 2001 (Cth) is concerned with "[a]dministration of a company's affairs with a view to executing a deed of company arrangement". It aims to maximise the chance of survival of the business of an insolvent company, or, if that is not possible, to provide a better return to creditors than would result from an immediate winding up of the company. These appeals concern the validity of a deed of company arrangement that, amongst other things, provided for a moratorium on creditors' claims, and contained a requirement that the administrators conduct further investigations and report to creditors concerning possible variations to the deed within six months. The administrators considered the deed to be in the interests of creditors and a better alternative than immediate liquidation. At first instance before Master Sanderson in the Supreme Court of Western Australia, and on the appeals to the Court of Appeal of the Supreme Court of Western Australia, the relief sought by Mighty River International Limited ("Mighty River"), which was a creditor of Mesa Minerals Limited ("Mesa Minerals"), included a declaration that the deed was void. The various, sometimes interrelated, bases upon which this claim was made were that: (i) the deed was contrary to the object of Pt 5.3A; (ii) the deed invalidly sought to circumvent or sidestep the requirement in s 439A(6) for a court order extending the short convening period during which a second meeting of creditors must be convened by an administrator; and (iii) the deed did not comply with an alleged requirement in s 444A(4)(b) to distribute some property of Mesa Minerals. In oral submissions on the appeals to this Court, Mighty River made the new submission that the deed should be declared to be void because the administrators had failed to form the opinions required by s 438A(b) and, at the relevant time, s 439A(4). On 19 June 2018, at the conclusion of oral submissions, the Court ordered that each of the appeals be dismissed with costs. These are our reasons for joining in that order. Part 5.3A of the Corporations Act Prior to 1992, there were four methods available to a company with solvency issues to deal with its affairs on a voluntary basis: (i) a scheme of arrangement; (ii) official management; (iii) creditors' voluntary winding up; and Edelman (iv) Court winding up1. In 1988, the Australian Law Reform Commission's General Insolvency Inquiry ("the Harmer Report") identified two unsatisfactory aspects of the creditors' voluntary winding up process. First, there was an absence of ordered administration between the time of calling meetings and the appointment of a liquidator. Secondly, there was a lack of independent information about the financial affairs and conduct of the business of the company at the meeting of creditors2. The Harmer Report recommended that the existing form of creditors' voluntary winding up should be abandoned3. It recommended a new voluntary procedure that would have the benefit of speed and flexibility for creditors4. The Harmer Report recommended that the Court should not be required to sanction any part of the new procedure although it should have a general supervisory power, principally to remove an administrator, to give directions on meetings, and to avoid or terminate a deed5. The essence of the new procedure would be a short period of control by an administrator, followed by a meeting of creditors. One option at the meeting of creditors would be the entry into a deed of company arrangement6. The Harmer Report's recommendation was adopted in 1992 by the introduction of what is now Pt 5.3A of the Corporations Act7. Although Pt 5.3A implemented numerous changes to the creditors' voluntary winding up process, it continued the major underlying principle of existing legislation, namely, "orderly 1 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 25 [45]. 2 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 27 [49]. 3 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 32 [57]. 4 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 29-30 [54]-[56]. 5 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 32 [56]. 6 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 30-31 [56]. 7 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [21]. Edelman dealing with a company's affairs"8. Indeed, as the plurality of this Court observed in Lehman Bros Holdings Inc v City of Swan9, the general premises of the administration process – including that the future of the company is committed to a body of all creditors as a whole – had "long underpinned statutory compositions and arrangements in individual bankruptcy". The chief difference between Pt 5.3A and earlier provisions for statutory composition and arrangements in corporate insolvency was "the role played by the Court. Earlier provisions required court approval before the scheme was effective; Pt 5.3A provides for disallowance by the Court after the deed has been made." (emphasis in original) The object of Pt 5.3A is set out in the opening section of the Part, s 435A. That object is to administer an insolvent company in a way that (a) maximises the chance of the company, or its business, continuing in existence, or (b) if that is not possible, provides a better return for the company's creditors and members than would result from an immediate winding up of the company. This object is pursued by an intended flexibility or, put another way, by a wide variety of different possible deeds of company arrangement10. These possibilities include extinguishing or varying debts and imposing moratoria on claims. As Finkelstein J observed in Commonwealth v Rocklea Spinning Mills Pty Ltd11, "Pt 5.3A assumes that it might often be necessary to extinguish by composition or bar certain claims". Similarly, in the Explanatory Memorandum to the Bill that introduced what became Pt 5.3A, it was suggested that a deed of company arrangement may commonly provide for "some form of compromise of debts, such as repayment of debts by delayed instalments"12. Consistently with this object, Pt 5.3A creates a structured, sequential process for the creation and duration of a deed of company arrangement. Five steps should be emphasised in the sequential process that gives rise and effect to a deed of company arrangement. 8 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 49 [97]. (2010) 240 CLR 509 at 521 [31]-[32]; [2010] HCA 11. 10 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 November 1992 at 2404; Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [448], [577]. 11 (2005) 145 FCR 220 at 229 [30]. 12 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [577]. Edelman First, following the first creditors' meeting required by s 436E, a second creditors' meeting must be held within the convening period prescribed by s 439A(5). That convening period is either 20 or 25 business days depending upon the date when the administration begins. At the time of the events relevant to these appeals, notice of that meeting was required by s 439A(4) to be accompanied by a report about the company's affairs and a statement that included the administrator's opinion about various matters. Section 439A(6) provides that the Court may extend the convening period upon an application made during or after the convening period. By s 439B(2), as it then stood, the second creditors' meeting could be adjourned, but not for more than a total of 45 business days. By s 439C(a), at the second creditors' meeting the creditors may resolve that the company execute a deed of company arrangement. Section 444A(1) provides that if the creditors so resolve then s 444A applies. Secondly, by s 444A(3), the administrator must prepare an "instrument" setting out the terms of the deed. The instrument is required to specify various matters. Where an instrument is prepared under s 444A, then s 444B(1) provides that s 444B applies. Thirdly, by s 444B(5), the instrument must be executed by (i) the company and, (ii) either beforehand or as soon as practicable afterwards, the proposed administrator of the deed. By s 444B(2), the company must execute the deed within 15 business days after the end of the meeting of creditors or any further period as extended by the Court. If s 444B(2) is contravened, the effect of ss 444B(7), 446A(1)(b), and 446A(2) is that the company is taken to have resolved that it be wound up voluntarily. Fourthly, if the company and the deed's proposed administrator execute the instrument within the required time, s 444B(6) provides that "the instrument becomes a deed of company arrangement". By s 444G, the deed of company arrangement binds the company, its officers and members, and the deed's administrator. Fifthly, the deed of company arrangement can, in the circumstances provided in Div 11, be varied, terminated, or avoided. At the relevant time, by s 445A, the deed could be varied by a resolution passed at a meeting of creditors convened by the deed's administrator under s 445F. In addition to the administrator's power to terminate the deed in certain circumstances, the Court also has powers to terminate or avoid the deed. As for termination, s 445D provides for various circumstances in which the Court can terminate a deed of company arrangement. In very broad terms, at the relevant time, those circumstances included where particular false or misleading information was given in a report or statement under s 439A(4), and where the deed or a provision of it, or an act or omission done or proposed to be Edelman done under it, would result in oppression or unfair prejudice to one or more creditors, or would be contrary to the interests of the creditors as a whole. There was, and remains, a catch-all power for the Court to terminate a deed of company arrangement under s 445D(1)(g) "for some other reason". This could include an abuse of the provisions of Pt 5.3A, which abuse could also empower the Court to order, under s 447A(2)(b), that the administration of a company should end. As for avoidance, under s 445G(2) the Court has a power, on application, to declare the deed, or a provision of it, void if it was not entered into in accordance with Pt 5.3A or if it did not comply with Pt 5.3A. An application to have the deed, or a provision of it, declared void can be brought by the administrator of the deed, a member or creditor of the company, or the Australian Securities and Investments Commission. The administration of Mesa Minerals Mesa Minerals is a mining company whose key assets include a 50% joint venture interest in two manganese projects. Mineral Resources Limited ("Mineral Resources"), the first respondent in the second appeal, is the parent company of the other joint venture partner. It holds almost 60% of the issued capital of Mesa Minerals. Mighty River holds just over 13.5% of the issued capital of Mesa Minerals. On 13 July 2016, Mesa Minerals was placed into voluntary administration and Mr Hughes and Mr Bredenkamp, who are respondents in each of these appeals, were ("the Administrators"). Section 435C(1)(a) of the Corporations Act has the effect that the administration of Mesa Minerals commenced on that date. administrators appointed The first meeting of Mesa Minerals' creditors was held on 25 July 2016, within eight business days of the administration beginning, as required by s 436E(2) of the Corporations Act. The statutory purpose of that meeting was to consider whether a committee of creditors the Corporations Act as a committee of inspection) should be appointed (s 436E(1)) and whether to appoint someone else as administrator (s 436E(4)). (now described On 10 August 2016, the Administrators issued a notice to creditors of the second creditors' meeting, accompanied by a s 439A report and statement to the creditors in which they set out the creditors' options for the future of Mesa Minerals: (i) to end the administration; (ii) to wind up the company; or (iii) for Mesa Minerals to execute a deed of company arrangement. The Administrators opined that it was not in the creditors' interests for the administration to end, or for Mesa Minerals to be wound up, but that a "Recapitalisation DOCA", which they intended to present at the forthcoming meeting of creditors, was in the creditors' interests. The Administrators set out Edelman the key terms of the proposed Recapitalisation DOCA, noting that its objective would be "to provide sufficient time for the Administrators to conduct further investigations restructure or recapitalisation". the possibility of a to explore ... and On 13 October 2016, following an adjournment of the second meeting of Mesa Minerals' creditors, the Administrators provided a supplementary report to "provide[] an update on matters presented in the [s] 439A Report". The Administrators said that the primary focus since the adjournment was to investigate whether recovery claims against the directors of Mesa Minerals, which Mighty River suggested should be pursued, had any value. The Administrators described the investigations that had been conducted, including (i) whether the directors had failed to act in the best interests of Mesa Minerals by not progressing certain manganese projects, and (ii) whether the directors had acted The to benefit Mineral Resources at Mesa Minerals' expense. Administrators said that the investigations were "on-going and will continue during the proposed Recapitalisation DOCA period or the liquidation period depending upon which resolution for the future of the Company that creditors pass at the upcoming meeting". The Administrators again set out the three options available to the creditors at the forthcoming meeting and again expressed the opinion that the first two options were not in the best interests of the creditors but that the proposed Recapitalisation DOCA best served the interests of creditors. The adjourned second meeting of creditors was held on 20 October 2016. A majority of creditors voted the proposed Recapitalisation DOCA. On 3 November 2016, a deed of company arrangement was executed. It was described as a Deed of Company Arrangement – Recapitalisation ("the Deed"). The Deed was in the terms proposed by the Administrators. In the background section, it recited that its objective was to provide sufficient time for the Administrators to: in favour of entry into "conduct further investigations into the Company's property and affairs, and to explore the possibility of a restructure or recapitalisation of the Company to determine the likely outcomes to creditors and form an opinion as to whether a deed of company arrangement or liquidation is in the best interests of creditors of the Company." Clause 9 of the Deed included provisions that the Administrators were to "investigate any claims that they are aware the Company may have against any third parties", to "seek Proposals to reconstruct the Company with a view to reaching a position where the Company's securities may be re-quoted for trading on the ASX, including Proposals for the partial or full sale of the Company's assets", and, prior to any proposal being accepted, to convene a further meeting of creditors to put to them such a proposal, together with "the key terms of any Edelman further deed of company arrangement (or proposed variation to this deed), creditors' trust deed or other mechanism designed to give effect to the Proposal". Under Pt 5.3A of the Corporations Act, this could only be achieved by a variation of the Deed. Clause 10 of the Deed provided that there would be a moratorium, during which time no steps could be taken by creditors to wind up Mesa Minerals, institute or prosecute any proceedings, enforce debts, exercise any rights of set- off or defence, cross-claim or cross-action to which the creditor would not have been entitled on winding up, or commence arbitration against the company. The Deed also provided in cl 8 that, subject to its variation, "there will be no property of the Company available for distribution to Creditors under this deed". By 3 May 2017, six months after the execution of the Deed, the Administrators were required to provide a report including the results of their investigations. Although a meeting of the creditors was convened on 3 May 2017, and a variation to the Deed was later executed, it is the Deed, executed on 3 November 2016, which was before the Master and the Court of Appeal, and with which this Court is concerned. The proceedings in the Courts below Mighty River's originating process the Administrators and Mesa Minerals: (i) declaring that the Deed was of no force and effect; (ii) terminating or setting aside the Deed; and (iii) setting aside the resolution passed by turn, Mineral Resources sought relief against Mesa Minerals, the Administrators, and Mighty River, being (i) a declaration under s 445G(2) that the Deed was not void, or alternatively, (ii) an order under s 445G(3) validating the Deed. sought orders against the second meeting. the creditors at At first instance, Master Sanderson dismissed Mighty River's claims and made a declaration that the Deed was not void. Mighty River's submissions before the Master included that the Deed was a "holding DOCA", which was not permitted by the Corporations Act because it was not consistent with: (i) the object of Pt 5.3A; (ii) the mandatory requirement that some property be available for distribution to creditors under s 444A(4)(b); or (iii) the role of the Court to extend the convening period13. The Master rejected these submissions, finding that: (i) the Deed was consistent with the object of Pt 5.3A; (ii) it was permissible for the Deed to provide that no property is available for distribution; and (iii) Pt 5.3A permits time to be extended by two "gateways" – an extension 13 Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69 at [5], Edelman of time under s 439A(6) or a "holding DOCA". The Master said that underlying Mighty River's submissions was a claim that the creditors would not be disadvantaged by the liquidation process. He concluded that it was "hard to see any advantage to anyone from immediate liquidation"14. The liquidators would follow the same process of realising Mesa Minerals' assets as the Administrators, but with the difference that the listed shell would be destroyed. Mighty River had initially alleged that the s 439A report omitted various material information. If accurate, that could have led to termination under s 445D. But Mighty River abandoned that s 439A claim before the Master15. Nevertheless, one ground of appeal to the Court of Appeal was that the Deed should be terminated under s 445D, for various reasons unrelated to the s 439A report16. That section permits termination in circumstances that included the provision to creditors, in the report or statement, of information that was false or misleading, or the omission of material information in the report or statement. None of those circumstances was relied upon by the Court of Appeal and no ground of special leave to this Court alleged that the Deed should have been terminated by the Court under s 445D. In the Court of Appeal, the essential questions raised by the grounds of appeal were whether the Deed was invalid because (i) contrary to s 444A(4)(b), it did not specify some property of Mesa Minerals to be available to pay creditors' claims, or (ii) it created a moratorium period for creditors' claims and, without an order of the Court under s 439A(6), extended the time for investigation and preparation of a restructuring proposal by the Administrators beyond the convening period17. In separate judgments, each member of the Court of Appeal (Buss P, Murphy and Beech JJA) held that the Deed was valid. Their Honours held that s 444A(4)(b) only required specification of the extent to which the property of Mesa Minerals is to be made available for distribution to creditors18; this obligation was fulfilled by the provision in the Deed that "no property" be available for distribution. They also held that the Deed did not "sidestep" s 439A(6); although it permitted further investigations outside the convening period, it was consistent with the object of Pt 5.3A because it was directed 14 Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69 at 15 Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69 at [19]. 16 Mighty River International Ltd v Hughes (2017) 52 WAR 1 at 24 [105(5)]. 17 Mighty River International Ltd v Hughes (2017) 52 WAR 1 at 25-26 [110]-[111]. 18 Mighty River International Ltd v Hughes (2017) 52 WAR 1 at 35-36 [148], 48 Edelman towards achievement of a better return to creditors than they would obtain on an immediate winding up19. Mighty River's appeal to this Court Mighty River asserted that a deed described as a "holding DOCA" was not valid or should be declared to be void. The expression "holding DOCA", as described by Buss P, was apparently used to describe a deed that (i) did not specify property that will be available to satisfy the claims of the company's creditors, and (ii) had the express purpose of creating a moratorium period to allow for further investigations to consider whether to present a further proposal But, as Murphy JA observed, the label "holding DOCA" is best avoided21. It is not a legislative expression and, insofar as it purports to describe the purpose of the deed, the adjective directs attention away from the terms of the deed and purports to create an ill-defined sub-class of deed of company arrangement. Shorn of the nomenclature of "holding DOCA", Mighty River had essentially two submissions. In logical order, the first was that the Deed was not a valid deed of company arrangement, principally because it was an agreed extension of time that had not been ordered by the Court under s 439A(6) and was contrary to the object of Pt 5.3A. The second submission was that, if the Deed was a deed of company arrangement, then it should have been declared void by the Master under s 445G(2). That sub-section includes a power for the Court to make an order declaring a deed of company arrangement to be void either "on the ground specified in the application [under s 445G(1)] or some other ground". The grounds upon which Mighty River relied were that the Deed contravened ss 438A(b) and 439A(4), or s 444A(4)(b), or both. Was the Deed a deed of company arrangement consistent with the object of Pt 5.3A? In written submissions, Mighty River said that the Deed was contrary to the object of Pt 5.3A and had "sidestepped" the required application to the Court for an extension of time under s 439A(6). Mighty River submitted that it was no answer to the alleged sidestepping of s 439A(6) that it could move for a court order under s 445D to terminate the Deed, because, under s 445D, Mighty River would bear the onus of persuading the Court that it should make 19 Mighty River International Ltd v Hughes (2017) 52 WAR 1 at 44 [193]-[194]. 20 Mighty River International Ltd v Hughes (2017) 52 WAR 1 at 6 [2]. 21 Mighty River International Ltd v Hughes (2017) 52 WAR 1 at 46 [212]. Edelman such an order. Mighty River also submitted that the alleged sidestepping of s 439A(6) meant that the Deed was not a deed of company arrangement and therefore would not engage s 445G, and the Court would not be permitted to validate the Deed under s 445G(3). If the Deed were, in reality, a deed of extension of time by creditors and not a deed of company arrangement, then s 445G, which is concerned with deeds of company arrangement, would not be engaged. The Deed would simply be invalid. It could not be declared valid under s 445G(3) on the basis that there had been substantial compliance with Pt 5.3A. However, Mighty River's submission that the Deed is not a deed of company arrangement, despite being formally constituted as such, is inconsistent with the general scheme of Pt 5.3A. The scheme of Pt 5.3A treats the formation of a deed of company arrangement as a formal matter. The document prepared by the administrator is described as an "instrument", with various mandatory requirements. A deed of company arrangement exists, by s 444B(6), when the company and the deed's proposed administrator execute the instrument. However, the constitution of a deed of company arrangement merely by these formal elements does not mean that non-compliance with provisions of Pt 5.3A is without consequence. Part 5.3A contains a carefully drafted regime to deal with contraventions of mandatory requirements in the execution process as well as additional rules that permit the formal deed to be terminated or set aside in a wide range of circumstances. An example concerning the execution process is that if the timing requirements for execution in s 444B(2) are contravened, then, as explained earlier, the company is taken to have resolved that it be wound up voluntarily. Or if, before execution, false or misleading material information is given to creditors then the deed can be terminated under s 445D(1)(a) or (b). Another example is that if a majority of creditors resolve under s 439C(a) to execute a deed of company arrangement that is prejudicial to the interests of a minority (s 445D(1)(f)), then, after the deed is formally constituted, the Court has power to terminate the deed. Even for events after execution, there are broad powers for the Court to terminate a deed including if the formally constituted deed cannot be given effect without "injustice" or "undue delay" (s 445D(1)(e)) or "for some other reason" (s 445D(1)(g)). If termination or avoidance occurs, s 445H provides that the termination or avoidance does not affect the previous operation of the deed. The essential protection of that provision is to ensure that "creditors and other parties affected by the operation of a deed of company arrangement will not be disadvantaged"22. 22 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 63 [125]. Edelman Mighty River's more particular submission that the Deed involved an impermissible sidestepping of s 439A(6) also cannot be accepted. Although an extension of time under s 439A(6) can only be obtained by a court order, as Mighty River accepted in oral argument an otherwise compliant instrument that becomes a deed of company arrangement can incidentally extend time for an administrator's investigations pending a subsequent variation to it. The Deed had that incidental effect. Although the s 439A report that was provided to creditors loosely characterised the proposed Deed as "essentially an extension of the Administration Period", that was only its incidental effect. The Deed created and conferred genuine rights and duties. By cl 9, the Administrators were required to investigate potential claims by Mesa Minerals against third parties, and to seek proposals, including by the exercise of various powers, for the restructure of Mesa Minerals with a view to re-quoting its securities for trading on the Australian Securities Exchange. By cl 15, the Administrators undertook to provide reports to the creditors on at least a bi-monthly basis and a final report within six months. The quid pro quo for these duties upon the Administrators was that, by cl 10, the creditors accepted a moratorium on their claims. Mighty River's associated submission, that the Deed is contrary to the object of Pt 5.3A, requires a focus upon the most significant undertaking by the creditors. That undertaking is their agreement, by cl 10, to a moratorium on their claims. There are three reasons why that undertaking, and the Deed itself, are not contrary to the object of Pt 5.3A and do not invalidate the Deed. First, putting to one side the difficulties with Mighty River's submission that the object of Pt 5.3A can be treated as a condition of validity independently of the provisions of the Part, the operation of the Deed aims to fulfil the object of the Part by maximising the chance of Mesa Minerals' survival or otherwise providing a better return to creditors than would result from its immediate winding up. In the s 439A report and the supplementary report that preceded the Deed, the Administrators opined that it was not in the interests of creditors that Mesa Minerals be wound up. Even if an approved variation to the Deed caused all Mesa Minerals' assets to be sold to realise its debts, this would be preferable to winding up Mesa Minerals because, as the Master explained, the valuable listed shell would be preserved. There was evidence before the Master that the value of a listing could be between $400,000 and $900,000. the Deed Secondly, the history of schemes of arrangement shows that it is a valid to provide for a moratorium on claims while purpose for Mesa Minerals' position was further assessed. The common premises shared by a scheme of arrangement and a deed of company arrangement, as described by the joint judgment in Lehman Bros Holdings Inc v City of Swan23, make the former 23 (2010) 240 CLR 509 at 521 [31]-[32]. Edelman an appropriate comparator for the valid operation of the latter. Prior to the introduction of Pt 5.3A, it had been recognised that a scheme of arrangement could be devised with the central or sole purpose of securing a moratorium on claims24. For instance, in National Bank of Australasia Ltd v Scottish Union and National Insurance Co25, the scheme of arrangement that was "duly sanctioned by the Courts concerned" was prepared for the purpose of securing a moratorium to enable the company to "find its feet". When the company could not find its feet, a new scheme was prepared. In F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd26, the New South Wales Court of Appeal unanimously allowed an appeal from the dismissal of a summons to convene a meeting of creditors, effectively sanctioning the scheme involved. The scheme was described by Street CJ27 (with whom Samuels JA agreed28) as "essentially a moratorium scheme" involving "a three year deferment of the enforcement of any rights against the company, including the bringing of proceedings to wind it up"29. If a moratorium-only scheme was, and is, permissible, then a fortiori a deed, which is intended to be a more flexible device for managing a company's affairs, may provide predominantly, or solely, for a moratorium. Thirdly, the provision of only a short convening period before the second creditors' meeting, thus reducing the period of the statutory stay under s 440D, is for the protection of the creditors. That speed and efficiency is not undermined if the creditors subsequently enter a deed of company arrangement to provide for a longer moratorium than would otherwise have been the case. Although the Harmer Report proposals had been based loosely upon the United States regime30, the design for speed and efficiency, and the consequent reduction of the 24 Langley, "The future role of creditors' schemes of arrangement in Australia after the rise of voluntary administrations", (2009) 27 Company and Securities Law Journal 70 at 72. 25 (1952) 86 CLR 110 at 112; [1952] AC 493 at 495. 26 (1977) 3 ACLR 69. 27 (1977) 3 ACLR 69 at 70. 28 (1977) 3 ACLR 69 at 73. 29 See also Beatty v Brashs Pty Ltd (1998) 79 FCR 551 at 554; Re Metinvest BV [2016] EWHC 372 (Ch) at [11]-[12]; In the matter of BIS Finance Pty Ltd [2017] NSWSC 1713 at [27]. 30 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [21]. Edelman period of statutory stay of creditors' claims, was one respect in which the proposals departed from the United States model. In the United States, a stay could be "prolonged for months, even years"31, permitting a debtor to "hold a creditor hostage" as administrative and creditor expenses increase32. In contrast, the purpose of the short convening period in Pt 5.3A and the generally short period of the stay was to "strike[] the right balance between protecting the rights of creditors and providing a period to enable decisions to be taken about the affairs of a company"33. As the Attorney-General said in the Second Reading Speech to the Bill that introduced what became Pt 5.3A34, the emphasis on "speed of action" for the administration and on "appropriate protection of creditors' interests" was "so that [creditors] will find that they are not unduly disadvantaged by the short moratorium proposed". Those objectives are not compromised if creditors choose, in a deed of company arrangement, to extend a moratorium beyond the period that they would otherwise have had outside an administration. Indeed, s 444A(4)(c) contemplates that a deed of company arrangement might include a further moratorium period. Should the Deed have been declared void under s 445G(2)? Apart from its dispute about the validity of the Deed, Mighty River's other submissions focused upon two particular allegations of contravention of Pt 5.3A. The first was an alleged contravention of s 444A(4)(b). That was almost the exclusive focus of Mighty River's written submissions. The second, raised briefly in oral submissions, was an alleged contravention of ss 438A(b) and 439A(4). For the reasons below, the Deed did not contravene those provisions. The instrument did not contravene s 444A(4)(b) The instrument prepared by the Administrators set out the terms of the Deed as required by s 444A(3). Section 444A(4) also required the instrument to specify matters including: 31 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 49 [98]. 32 Lewis, "Trouble Down Under: Some Thoughts on the Australian-American Corporate Bankruptcy Divide", [2001] Utah Law Review 189 at 227. 33 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 48 [95]. 34 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 November 1992 at 2404. Edelman the property of the company (whether or not already owned by the company when it executes the deed) that is to be available to pay creditors' claims; the order in which proceeds of realising the property referred to in paragraph (b) are to be distributed among creditors bound by the deed". "[P]roperty" is defined in broad terms in s 9 as "any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action". Mighty River submitted that s 444A(4)(b) required that the instrument specify some property to be available to pay creditors' claims. It submitted that the instrument prepared by the Administrators contravened s 444A(4)(b) because it provided that, subject to variation, "there will be no property of the Company available for distribution to Creditors under this deed". In contrast, the effect of the respondents' construction was that s 444A(4)(b) required that the instrument specify the property, if any, to be available to pay the creditors' claims. their presence Substantial submissions were made by the parties about the different linguistic considerations favouring either construction. For instance, favouring Mighty River's construction is the omission of the words "any" or "if any" in s 444A(4)(b), despite in ss 444A(4)(c), 444A(4)(e) and 444A(4)(f). In contrast, favouring the respondents' construction, s 444A(4)(b) requires the instrument to specify the property of the company "that is to be available" to pay creditors' claims. It does not require the instrument to specify "some" property to be available to pay creditors' claims. Ultimately, neither construction strains the language of s 444A(4)(b) so as to make it implausible. In any event, the text must be considered in context and in light of its purpose35. The context and purpose of the sub-section support the respondents' construction. The purpose of ss 444A(4)(b) and 444A(4)(h) is to direct attention to a subject that must be addressed in the instrument. That subject is the property, if any, that will be available to pay creditors' claims. The provisions are not concerned to prescribe some minimum obligation upon the administrator to distribute some property, however little, to creditors. The purpose can be seen in 35 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2; SZTAL v Minister for Immigration and Border Protection (2017) 91 ALJR 936 at 940-941 [14], 944 [37]; 347 ALR 405 at 410, 414-415; [2017] HCA 34. Edelman the Harmer Report, which said the following of the required provisions for a proposed deed of company arrangement, as s 444A enumerates36: "If a deed of company arrangement is agreed, it will be a simplified document of much less size and complexity than the present forms of 'scheme documents' that oppress creditors and others. The deed will incorporate (by simple reference) standard provisions contained in a schedule to the companies legislation, as well as many provisions of the legislation dealing with, for example, admissible claims, order of distribution to creditors and avoidance of antecedent transactions (such as preferences and similar voidable transactions)." In other words, although the deed is to be a simplified document, the purpose of the nine paragraphs of s 444A(4) is to direct the attention of the creditors to those particular important matters that must be addressed in the instrument: (a) who will administer the deed; (c) and (d) any moratorium and (f) conditions precedent and subsequent; release of debts; (g) circumstances of termination; and (i) the date by which claims must have arisen to become admissible. All those matters are significant because they differ from the alternative of immediate winding up. Similarly, par (b) requires the property to be divided into two sets, property that is available to pay creditors' claims and, unlike a winding up, property that is not. (e) and There are numerous examples of deeds of company arrangement that involve no property of the company being made available for distribution. These examples, many of which would have been expected at the time Pt 5.3A was enacted, are consistent with the intended flexibility of approach to deeds of company arrangement. That flexibility would be undermined if these deeds were required to provide for the distribution of some property of the company. One example is a deed of company arrangement providing for a debt for equity swap. The provision of equity, whether in the company37 or in another company, does not involve making available for creditors any "property of the company"38. A second example is where creditors' claims are replaced with rights as 36 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988), vol 1 at 31 [56]. In the matter of Paladin Energy Ltd [2018] NSWSC 11 at [23]. 38 Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR 165 at 179 [20]; [2001] HCA Edelman beneficiaries of a creditors' trust, with the trust funded by third parties39. Third parties who might fund such a trust include a parent of the company or a party who wishes to acquire the company with the creditors' claims discharged40. A third example is a transfer of shares in the company from members to creditors, with the written consent of the former, or where the administrator of the deed of company arrangement obtains the leave of the Court. A variant on this example is where an investor makes a lump sum payment to creditors in exchange for a transfer of some or all of the shares of members41. A fourth example, which is most pertinent in this case, is a deed of moratorium only, which allows the company to trade out of solvency difficulties42. In contrast with the clear legislative purpose that supports the respondents' construction, there is no purpose served by Mighty River's construction, which would result in a contravention of s 444A(4)(b) if "some" property were not available for creditors. On its face, Mighty River's construction would permit s 444A(4)(b) to be satisfied if property of merely nominal value were specified for distribution to creditors. The Administrators did not contravene s 438A or s 439A(4) The alternative submission of Mighty River, made briefly in oral argument, was that the Administrators had failed to comply with s 438A(b) and, consequently, s 439A(4), because they had failed to form the opinions that were required by those provisions. The implicit assumption in Mighty River's submission was that the Deed should have been declared void under s 445G(2) for this failure to form the required opinions. Section 438A(b) provides that, as soon as practicable after the administration begins, form an opinion about three matters: (i) whether it would be in the interests of the company's creditors for the company to execute a deed of company arrangement; (ii) whether it would be in the creditors' interests for the administration to end; and (iii) whether it would be in the creditors' interests for the company to be wound up. the administrator must 39 See, eg, Munday Group Pty Ltd v Tsourlinis Distributors Pty Ltd (2010) 5 BFRA 101 at 102 [5]; Re Bevillesta Pty Ltd (2011) 254 FLR 324 at 347-348 [69]; Smith; in the matter of Matrix Metals Ltd (In Liq) [2011] FCA 1399 at [20]-[23]. 40 Commonwealth v Rocklea Spinning Mills Pty Ltd (2005) 145 FCR 220 at 228 [28]. 41 See, eg, Australia, House of Representatives, Corporations Amendment (Insolvency) Bill 2007, Explanatory Memorandum at 100 [7.54]. 42 Commonwealth v Rocklea Spinning Mills Pty Ltd (2005) 145 FCR 220 at 228 [30]. Edelman Section 439A relies, in part, upon s 438A(b). It is concerned with the duties of the administrator to convene the second creditors' meeting. At the relevant time, s 439A(4) required the following: "The notice given to a creditor under paragraph (3)(a) must be accompanied by a copy of: a report by the administrator about the company's business, property, affairs and financial circumstances; and a statement setting out the administrator's opinion about each of the following matters: whether it would be in the creditors' interests for the company to execute a deed of company arrangement; (ii) whether it would be in the creditors' interests for the administration to end; (iii) whether it would be in the creditors' interests for the company to be wound up; and also setting out: his or her reasons for those opinions; and such other information known to the administrator as will enable the creditors to make an informed decision about each matter covered by subparagraph (i), (ii) or (iii); and if a deed of company arrangement is proposed – a statement setting out details of the proposed deed." As noted earlier, before the Master Mighty River had abandoned its complaint that the s 439A report omitted various material information. The Court of Appeal did not conclude, and Mighty River did not allege in this Court, that the Deed should have been terminated under s 445D for any other contravention. The oral submission by Mighty River in this Court, that the Administrators had failed to form the opinions required by s 438A(b), was therefore one that, as Murphy JA had noted, had not been made in the Court of Appeal43, and it was a submission that was more extreme than the submission that had been abandoned. 43 Mighty River International Ltd v Hughes (2017) 52 WAR 1 at 55 [247]. Edelman The most basic difficulty with Mighty River's submission is that the 10 August 2016 report and statement by the Administrators under s 439A plainly concluded, in cl 13, with expressed opinions that "it is not in the interests of creditors that the administration end", "it is not in the interests of creditors that the Company be wound up", and "from the information available ... it is in creditors' interests that the Company execute a Recapitalisation DOCA [substantially in the terms of the Deed]" (emphasis in original). In effect, Mighty River's submission requires the conclusion that those expressed opinions could not have been genuinely held. their reasoning, The opinions expressed by the Administrators were supported by 26 pages of substantial research and including descriptions of investigations. The Administrators considered the history and background of Mesa Minerals, the reasons for Mesa Minerals' financial difficulties (the decline in manganese prices and the withdrawal of future financial support by Mineral Resources), Mesa Minerals' employees' entitlements, its financial position and performance, and the progress of the Administrators' program of realising Mesa Minerals' assets (including an advertising campaign and the engagement of a company with a marketing platform for mining projects and an audience of more than 4,500 parties of interest). They observed that lawyers representing a creditor and shareholder of Mesa Minerals had alleged that the directors had failed to act in the best interests of the company and that it was intended that investigations into that issue be conducted during the period of the proposed Recapitalisation DOCA or liquidation. The Administrators explained that their experience in dealing with listed companies in similar circumstances demonstrated that there was, potentially, a significant benefit in retaining the listing, which could not be retained in a liquidation scenario. The Administrators expressed the opinion that it was not in the interests of creditors for the administration to end because there would then be no orderly mechanism for realisation of assets and distribution to creditors, and creditors might have to petition the Court to have Mesa Minerals wound up at their own expense. The Administrators said that winding up was not in the interests of the proposed Recapitalisation DOCA would provide creditors because "additional time to explore possible options that may facilitate a better outcome for the benefit of all stakeholders" and "the option of liquidation will still be available following execution of the Recapitalisation DOCA in the event that a subsequent [variation to the] DOCA does not provide a superior outcome". The Administrators opined that the proposed Recapitalisation DOCA would not disadvantage any class of creditor and concluded that from the information available it was in the creditors' interests to execute the proposed Recapitalisation DOCA, which became the Deed. The opinions expressed by the Administrators were no less genuine because they were based only upon "the information available". The requirement Edelman in s 438A(b) that an administrator must form the relevant opinions as soon as practicable after the administration begins necessarily requires that the opinions might be formed without the administrator having fully investigated and assessed all relevant matters. Opinions have no fixed voltage. They can be expressed with varying degrees of confidence. They may depend upon the precise terms of the deed proposed. Section 439A(4) did not require the Administrators to provide a quantitative opinion comparing the likely financial recovery under each possible option. There may be circumstances in which there is simply insufficient information for an administrator to express an opinion, even where an alternative is a deed that imposes a moratorium on creditors' claims to allow further time for investigation. In such a case, the only possibility is for the administrator to apply to the Court to extend the convening period under s 439A(6). For instance, in Re Riviera Group Pty Ltd44, one of the administrators gave evidence that the complexity of the administration had precluded the preparation of a satisfactory report within the convening period. That was a sufficient basis for the Court to extend the convening period under s 439A(6). In contrast, in this case, the Administrators' confidence that the proposed Recapitalisation DOCA was preferable to winding up Mesa Minerals was based upon the effect of (i) the terms of the proposed deed, and (ii) the possibility of varying it. That effect was assessed in light of their substantial research and investigations. Since the Deed was a genuine deed of company arrangement, and not an illegitimate extension of time without an order of the Court under s 439A(6), it was legitimate for the Administrators' opinions to be expressed by comparing the terms of the proposed deed with the options of ending the administration or winding up Mesa Minerals. In oral submissions, Mighty River referred to a recital to the Deed, which explained that the objective of the Deed was for the Administrators to "form an opinion as to whether a deed of company arrangement or liquidation is in the best interests of creditors of the Company". This recital does not have the effect that the Administrators' previously expressed opinions in their report were not genuine. The recital is not expressed in the clearest language. For the reasons explained above, the Deed was a deed of company arrangement. In that context, properly construed the opinion described in the recital must be an opinion about whether to propose a variation of the Deed, which, at the relevant time, would have occurred pursuant to s 445A after a duly convened meeting under s 445F. This construction is consistent with cl 8 of the Deed, by which the absence of property available to creditors was expressed to be subject to any variation of the 44 (2009) 72 ACSR 352. Edelman Deed. It is also consistent with cll 9.3, 15(c), and 17 of the Deed, which the recognise Administrators at a further meeting of creditors. the possibility of a variation following a proposal by Conclusion The respondents' primary case was that the Deed was consistent with the object of Pt 5.3A and did not contravene any of the provisions of that Part as alleged. Alternatively, the respondents submitted that if any provision of Pt 5.3A was contravened then, as became common ground in oral submissions, the matter should be remitted to the Court of Appeal for consideration of whether to exercise the power under s 445G(3) to declare the Deed to be valid. For the reasons above, we accepted the respondents' primary case and joined in the orders of this Court dismissing the appeals with costs. My reasons for joining in orders dismissing these appeals at the conclusion of oral argument are substantially reflected in what Kiefel CJ and Edelman J have written, with which I completely agree and the terminology of which I am content to adopt. I write separately to explain in addition my rejection at the level of principle of the argument that the Deed was non- compliant with procedural requirements of Pt 5.3A. The argument that the Deed was non-compliant with procedural requirements of Pt 5.3A had two strands. One was that there was non- observance of s 438A(b) and s 439A(4)(b), constituted by a failure of the Administrators to form and to communicate to creditors an opinion of the requisite character. The other was that there was impermissible circumvention of s 439A(6), constituted by a failure of the Administrators to seek from the Court an extension of the convening period for the second meeting of creditors so as to allow time for the Administrators to complete the investigations required of them by s 438A(a). The two strands of the argument were interwoven to the extent that the opinion required to be formed and communicated to creditors in order for the second meeting of creditors to proceed was suggested to be one which needed to amount to a firm conclusion as to what course was ultimately in the best interests of the creditors. The scheme of Pt 5.3A was said to require such an opinion one way or the other within the convening period set by s 439A(5) or such an extension of the convening period as the Court was satisfied was in the interests of creditors to allow under s 439A(7) on an application under s 439A(6). As a "holding DOCA" which did no more than allow the Administrators further time to conduct further investigations and come back with a firm proposal, so the argument went, the Deed was an attempt to "side-step or outflank" the statutory process by which the Administrators were required by s 438A(a) to complete their investigations under the supervision of the Court. My view was, and remains, that the argument was without merit. Fundamental to the scheme of Pt 5.3A, as recognised in the reasoning of the plurality in Lehman Bros Holdings Inc v City of Swan45, is the policy of allowing creditors themselves to decide, in accordance with the majoritarian decision- making rules prescribed at the relevant time in Pt 5.6 of the Corporations Regulations 2001 (Cth) and now in Div 75 of the Insolvency Practice Rules (Corporations) 2016 (Cth), what course of action is in their own best interests. The purpose of the strict time limits on the convening of a meeting of creditors after a company is placed in administration is to allow creditors to make their own decision as to what course is in their own best interests as soon as is practicable. 45 (2010) 240 CLR 509 at 521-522 [31]-[33]; [2010] HCA 11. The appointment of an administrator under s 436A occurs simply as the result of a resolution of directors of the company. The immediate and automatic effect of ss 440D and 440F is to suspend the rights of creditors. The strict time limits for the convening of a meeting of creditors to decide the company's future under s 439A are designed to ensure that the process moves as quickly as practicable from the statutory moratorium on recovery by creditors to a position agreed by the majority of creditors in a resolution under s 439C. The scheme of Pt 5.3A exhibits no reason why creditors should not be able to decide that it is in their own best interests that a deed of company arrangement be entered into which provides for an agreed moratorium on repayment of the company's debt while further investigations are conducted by a deed administrator under the deed with a view to coming up with a further proposal which could be reflected in an amendment to the deed capable of being agreed to by the creditors under s 445A at a subsequent meeting to be convened by the deed administrator under s 445F. Of course, a deed of company arrangement which imposes a moratorium on repayment of debt while further investigations are conducted by a deed administrator has the potential to be contrary to the interests of a minority of creditors, just as the potential to be contrary to the interests of a minority of creditors is inherent in any deed of company arrangement. That is an eventuality which is addressed within Pt 5.3A by a range of provisions which empower the Court to make orders on the application of a creditor of the company, the company itself, or the Australian Securities and Investments Commission. Sections 445D, 447A and 447E are of particular significance. By s 445D(1)(e), (f) and (g), the Court is empowered to make an order terminating a deed of company arrangement if satisfied that: effect cannot be given to the deed without injustice or undue delay; or the deed is contrary to the interests of creditors as a whole or is oppressive or unfairly prejudicial to, or unfairly discriminatory against, one or some creditors; or the deed should be terminated for some other reason. Section 447A empowers the Court to make such orders as it thinks fit about how Pt 5.3A is to operate in relation to a particular company, including an order that the administration of a company that has executed a deed of company arrangement is to end because provisions of the Part are being abused or for some other reason. Section 447E empowers the Court to make such order as it thinks just if satisfied that the administrator of a deed of company arrangement has done an act or proposes to do an act that is or would be prejudicial to the interests of some or all of the creditors. The only answer suggested in argument to the sufficiency of those remedial provisions to address injustice or inefficiency in the terms or administration of a "holding DOCA" was that they operate to place the onus on minority creditors to establish a basis for the intervention of the Court. So they do. That is how the statutory scheme has been designed to work. The need to establish an affirmative basis for curial intervention is the price paid for a scheme designed to provide for "minimisation of expensive and time-consuming court involvement" and "flexibility of action at key stages in the administration process"46. The scheme works by empowering creditors, deciding by majority, to determine what is in the interests of creditors. And it works by keeping the Court out of the process of making and administering a deed of company arrangement unless an application for intervention is made and a ground for intervention is established. The statutory scheme is that where (within the meaning of s 444A(1)) "at a meeting convened under section 439A, a company's creditors resolve that the company execute a deed of company arrangement" and (within the meaning of s 444B(1)) "an instrument is prepared under section 444A" as required by s 444A(3), that instrument becomes a deed of company arrangement by force of s 444B(6) when executed by the company and the proposed administrator and, as a deed of company arrangement, the instrument becomes binding on all creditors under s 444D(1). The word "under" in s 444B(1) refers to a document made in purported compliance with relevant procedural provisions. Were actual compliance with relevant procedural provisions necessary for the existence of a deed of company arrangement, s 445G(2) – the provision in Pt 5.3A specifically designed to provide a remedy for non-compliance with provisions of that Part – would be self-defeating. That is because, in providing for the Court on application to make an order declaring a deed of company arrangement or a provision of a deed of company arrangement void by reason of non-compliance with procedural requirements leading up to the making of a deed of company arrangement (relevantly including any non-observance of s 438A or s 439A(4)(b) or impermissible circumvention of s 439A(6)), s 445G(2) only applies where a deed of company arrangement exists. "Section 445G(2)" might as well be relabelled "Catch-22". Section 445H makes clear that an order declaring a deed of company arrangement or a provision of it void under s 445G(2), no less than an order terminating a deed of company arrangement under s 445D(1), takes effect only on and from the time of its making. In so doing, s 445H makes explicit the statutory scheme that a non-compliant deed of company arrangement remains a deed of company arrangement binding on the company, the administrator and the creditors unless and until the Court, on application, makes an order to the contrary. 46 Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [449]. NettleJ NETTLE AND GORDON JJ. The issue in these appeals was whether a so-called "Deed of Company Arrangement – Recapitalisation" ("the Deed") entered into by Mesa Minerals Ltd ("the Company") was a deed of company arrangement within the meaning of Pt 5.3A of the Corporations Act 2001 (Cth). For the reasons which follow, it was not. As will be explained, Pt 5.3A of the Corporations Act conceives of administration of a company and the variety of arrangements that may be made the subject of a deed of company arrangement as mutually exclusive. In substance, the Deed did no more than purport to extend the administration of the Company. Relevant statutory provisions The facts of these matters and the relevant statutory provisions are set out in full in the judgment of Kiefel CJ and Edelman J. For present purposes, it suffices to say of the statutory provisions that: Section 435A of the Corporations Act states that the object of Pt 5.3A is to provide for the business, property and affairs of an insolvent company to be administered in a way that maximises the chances of the company, or as much as possible of its business, continuing in existence, or, if that is not possible, in a way that results in a better return for the company's creditors and members than would result from an immediate winding up of the company. Section 435C stipulates that the administration of a company is to begin upon the appointment of an administrator under s 436A, s 436B or s 436C, and that the administration is to end upon the first to happen after the administration begins of the events specified in s 435C(2) and s 435C(3). Section 435C(2) provides that the normal outcome of the administration of a company is that a deed of company arrangement is executed by the company and the deed's administrator, or that the company's creditors resolve under s 439C(b) that the administration should end, or that the company's creditors resolve under s 439C(c) that the company be wound Logically, it is to be expected that the only circumstances in which a company's creditors would resolve that the administration end, as opposed to the company executing a deed of company arrangement or the company being wound up, is where it is found in the course of an administration that the company is not insolvent or is no longer insolvent. Section 435C(3) relevantly provides that the administration of a company may also end because the convening period fixed by s 439A(5) for a meeting of the company's creditors under s 439A ends without a meeting NettleJ being convened in accordance with s 439A and without an application to the court for an extension of the convening period under s 439A(6). resolve the creditors should To ensure that a company's creditors are properly equipped to make a decision whether the company should execute a deed of company the arrangement or whether administration should end or that the company be wound up, s 438A requires an administrator, as soon as practicable after the administration begins and in any event before the end of the convening period for a meeting of the creditors fixed by s 439A(5) or as extended under s 439A(6), to investigate the company's business, property, affairs and financial circumstances and to form an opinion as to whether it would be in the interests of the creditors for the company to execute a deed of company arrangement, or for the administration to end, or for the company to be wound up. that Section 439A(1) requires an administrator to convene the meeting of the company's creditors within the convening period as fixed by s 439A(5), ordinarily within 20 business days after the administration begins or as extended by the court upon application under s 439A(6). Sub-sections (3) and (4) of s 439A require the administrator to provide the creditors with written notice of the meeting accompanied by a report by the administrator about the company's business, property, affairs and financial circumstances and a statement setting out the administrator's opinion as to whether it would be in the creditors' interests for the company to execute a deed of company arrangement, or for the administration to end, or for the company to be wound up. If a deed of company arrangement is proposed, s 439A(4)(c) also requires that the notice and the report be accompanied by a statement setting out details of the proposed deed. Section 447A(1) confers on the court a general power to make such order as it thinks appropriate in relation to how Pt 5.3A is to operate in relation to a particular company. Section 447A(4)(c) provides that an order may be made on the application of the administrator of the company. Extending the convening period fixed by s 439A(5) The period fixed by s 439A(5) for the convening of the meeting of the company's creditors is designedly brief. As the Full Court of the Federal Court NettleJ of Australia observed in Commissioner of Taxation v Comcorp Australia Ltd47, it may be gathered from the terms of the legislation and the words of the Explanatory Memorandum and the Second Reading Speech that the emphasis of Pt 5.3A is on informality and flexibility and on speed of action. The procedure is not designed to allow for the kind of indefinite administrations which can occur under the United States' Ch 11 approach to corporate insolvency48. It is, however, recognised that it is not always practicable for an administrator to gather sufficient information within the convening period to form the requisite opinions under s 438A and communicate them in the notice given to creditors in accordance with ss 439A(3) and 439A(4). Accordingly, the courts are given specific power under s 439A(6), and also general power of varied application under s 447A(1), to extend the convening period. Consistent with the legislative intention of Pt 5.3A that the administration of a company be brought to an end within a short period of time, there is a presumptive expectation that extensions will be brief49. But over time the courts have come to recognise50 that significant extra time may be required, and should be allowed, in 47 (1996) 70 FCR 356 at 363 per Sheppard J, 379-380 per Carr J (Lockhart J agreeing at 358). See also Deputy Commissioner of Taxation (Cth) v Pddam Pty Ltd (1996) 19 ACSR 498 at 510. 48 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 November 1992 at 2404. See also Australia, House of Representatives, Corporate Law Reform Bill 1992, Explanatory Memorandum at [507]-[508]. 49 See and compare Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 at 612; Re Witta Coola Pastoral Co Pty Ltd [1999] NSWSC 148 at [9]; Re Allbuild Construction Co Pty Ltd (Administrators Appointed); Ex parte Featherby [2000] WASC [5]-[7]; Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [8]. 50 See, for example, Re Brash Holdings Ltd (Administrators Appointed) (1994) 13 ACSR 793 at 794-795; Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409 at 431-432 [78]; Re Lift Capital Partners Pty Ltd (Administrators Appointed) [2008] NSWSC 446 at [23]-[33]; Re Octaviar Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2008] QSC 272; Re Lehman Bros Australia Ltd [2008] NSWSC 1132 at [20]; Re Worrell, Storm Financial Ltd (Receivers and Managers Appointed) (2009) 69 ACSR 584 at 594 [43]-[44]; Re ABC Learning Centres Ltd (application by Walker) (No 7) (2009) 71 ACSR 560 at 565-566 [26]-[28], [32]; Re Lombe, Babcock & Brown Ltd (Administrators Appointed) [2009] FCA 349 at [30]-[31], [33]; Re Silvia, FEA Plantations Ltd (Administrators Appointed) [2010] FCA 468 at [19]-[25]. See also Re Riviera (Footnote continues on next page) NettleJ complex cases. Generally speaking, courts have been disposed to grant substantial extensions in cases where the administration has been complicated by, for example, the size and scope of the business, substantial offshore activities, large numbers of employees with complex entitlements, complex corporate structures and intercompany loans, and complex recovery proceedings, and, more generally, where the additional time is likely to enhance the return to unsecured creditors. Provided the evidentiary case for extension has been properly prepared, there has been no evidence of material prejudice to those affected by the moratorium imposed by the administration, and the administrator's estimate of time has had a reasonable basis, the courts have tended to grant extensions for the periods sought by administrators51. As Barrett J rightly observed in Diamond Press Australia Pty Ltd52: "The function of the Court on an application [for an extension under s 439A(6)] is ... to strike an appropriate balance between, on the one hand, the expectation that administration will be a relatively speedy and summary matter and, on the other, the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders." By contrast, it is notable that there is no provision for creditors to extend the length of the convening period. Although s 439B(2) provides that the meeting of creditors convened under s 439A may be adjourned from time to time, it expressly prohibits the adjournment, or the total of the periods of adjournment, exceeding 45 days. The evident purpose of Pt 5.3A is thus to confine administrations to the strict time limits laid down by Pt 5.3A subject only to such extensions as the courts may be satisfied are appropriate to be granted in Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (2009) 72 ACSR 352 at 355 [13]. 51 Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (2009) 72 ACSR 352 at 355-357 [14], [17]-[18]. See and contrast Re Tiaro Coal Ltd (Administrators Appointed) [2015] NSWSC 2055 at [5]-[7]. 52 [2001] NSWSC 313 at [10]. See also Re Hayes, Estate Property Group Ltd (Administrators Appointed) [2007] FCA 935 at [1]; Georges, Re Midas Australia Pty Ltd (Administrators Appointed) (2009) 27 ACLC 43 at 45 [11]; Re Harrisons Pharmacy Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 at [13]; Australian World-Wide Pty Ltd v Palmer [2014] NSWSC 141 at [10]; Re Freeman, Aquaint Holdings Ltd (Administrators Appointed) [2016] FCA 831 at [9]-[12]; Re Secatore, In-Fusion Management Pty Ltd (Administrators Appointed) [2016] FCA 1072 at [12]-[17]. NettleJ exercise of the specific power of extension conferred by s 439A(6) or the general power of varied application conferred by s 447A(1). It cannot be assumed that there is an equal balance of power and symmetry of information between a company and its creditors. Both before a company goes into administration, and while the administrator's investigations are ongoing, creditors do not know the full picture. The asymmetry of information is one of the reasons creditors need protection. Part 5.3A provides that protection by empowering the court to supervise the granting of extensions. Moreover, any potential abuse of creditors is not met by a court taking action under s 445D(1)(f). The uncertainty and delay created would be contrary to the strict time limits evident in Pt 5.3A. The essential nature of a deed of company arrangement under Pt 5.3A As was observed by four members of this Court in Lehman Bros Holdings Inc v City of Swan53, Pt 5.3A of the Corporations Act and the Corporations Regulations 2001 (Cth) give effect to principles not materially different from those which have long underpinned statutory compositions and arrangements in individual bankruptcy54. In effect, a deed of company arrangement is a "streamlined" version of an arrangement or reconstruction under Pt 5.1 of the Corporations Act for payment or satisfaction in whole or part of the debts of the company which is entered into as an alternative to the company being wound up in insolvency under Pt 5.4 of the Corporations Act55. It embodies the terms and conditions on which a company's creditors are lawfully agreed that, as an alternative to the company being put into liquidation, the creditors' debts or claims against the company shall be compromised56 or to some extent resolved by arrangement falling short of compromise57. 53 (2010) 240 CLR 509 at 521 [32] per French CJ, Gummow, Hayne and Kiefel JJ; [2010] HCA 11. 54 See Isles v Daily Mail Newspaper Ltd (1912) 14 CLR 193 at 203 per Isaacs J; [1912] HCA 18. 55 Commissioner of Taxation v Comcorp Australia Ltd (1996) 70 FCR 356 at 363 per Sheppard J, 379-380 per Carr J (Lockhart J agreeing at 358). 56 Lehman Bros Holdings Inc v City of Swan (2010) 240 CLR 509 at 523-524 [38]-[39] per French CJ, Gummow, Hayne and Kiefel JJ. 57 See Shaw v Royce Ltd [1911] 1 Ch 138 at 148-149; Re Guardian Assurance Company [1917] 1 Ch 431 at 440 (reversed on appeal but not on this point: see [1917] 1 Ch 431 at 446ff, especially at 448 per Lord Cozens-Hardy MR, (Footnote continues on next page) NettleJ As was further observed in Lehman Bros58, the word "arrangement" in the collocation "deed of company arrangement" encompasses many forms of compromise – likewise, no doubt, it may encompass many forms of arrangement falling short of compromise – and there is no compelling reason to confine the ambit of the terms and conditions of a compromise or arrangement upon which creditors may lawfully agree. The structure and content of Pt 5.3A connotes that the question of whether a compromise or arrangement of debts or claims on particular terms and conditions is commercially more desirable than the company going into liquidation is a question for the creditors. But it remains, by analogy with the Bankruptcy Act 1966 (Cth)59, that the essence of a Pt 5.3A deed of company arrangement is that it provide for an arrangement alternative to liquidation for the whole or partial payment or satisfaction of creditors' debts or claims against the company or, more generally, for the whole or partial resolution of creditors' debts or claims against the company by alteration of rights on one side or the other. contemplated by Pt X of the kinds of arrangements The execution of the Deed Following the appointment of administrators in this case and the first meeting of the Company's creditors60, the administrators concluded that they were unable to gather sufficient information within the convening period fixed by s 439A(5) to express the requisite opinions under s 439A(4). Instead of making an application, however, under s 439A(6) or s 447A(4)(c) for an extension of the convening period, they issued a report (and subsequently a supplementary report) to creditors recommending that the creditors agree at the meeting convened under s 439A ("the second meeting") to the execution of the Deed to extend the administration of the Company. 450 per A T Lawrence J); Re Opes Prime Stockbroking Ltd (No 2) (2009) 179 FCR 20 at 29 [29]. 58 (2010) 240 CLR 509 at 523-524 [39] per French CJ, Gummow, Hayne and 59 See Australia, House of Representatives, Bankruptcy Legislation Amendment Bill 2004, Explanatory Memorandum at 4 [16]; Bankruptcy Act 1966 (Cth), Pt X (as at 28 May 2004). 60 See Corporations Act 2001 (Cth), ss 436A, 436E. NettleJ In the supplementary report, the purpose of the Deed was stated thus: "[the Deed] is essentially an extension of the Administration Period[61] to allow sufficient time for the Administrators to: conduct further detailed investigations into the Company's business, property and affairs (including the matters identified in this report as requiring further investigation) to form an opinion on the likely outcome to creditors in the event the Company is wound up in liquidation; and progress the process for the sale of the Company's assets restructure and the possibility of a and/or explore recapitalisation of the Company which may provide a more beneficial outcome the for stakeholders immediate winding up of the Company." from than To the same effect, in the recitals to the Deed, it was declared that: "The objective of [the Deed] is to provide sufficient time for the Administrators to conduct further investigations into the Company's property and affairs, and to explore the possibility of a restructure or recapitalisation of the Company to determine the likely outcomes to creditors and form an opinion as to whether a deed of company arrangement or liquidation is in the best interests of creditors of the Company." At the second meeting, which was first adjourned pursuant to s 439B(2) and then reconvened, the creditors resolved that the Deed be executed, and the Deed was executed some two weeks later. The purported effect of the Deed The essential terms of the Deed were as follows: Clause 9.2 provided that the administrators were to carry on the administration of the Company while seeking proposals to reconstruct the Company with a view to reaching a position where the Company's securities might be re-quoted for trading on the Australian Securities 61 The supplementary report defined "Administration Period" as the period between the appointment of the administrators and the date upon which the administration of the Company ends. NettleJ Exchange, including proposals for partial or full sale of the Company's assets. Clause 9.3 provided that, before any proposal could be accepted, the administrators were required to convene a further meeting of the creditors and put the proposal to the meeting. Clause 10 imposed a moratorium on and deferral of debts until termination of the Deed. Clause 15 stipulated that the administrators were required to provide reports to the creditors, on at least a bi-monthly basis, of the progress of the investigations and recapitalisation process; and, ultimately, a report to the creditors outlining the results of the investigations, the proposals received and the proposal, if any, that in the view of the administrators was likely to result in a better return to the creditors than liquidation of the Company or acceptance of any other proposal. Clause 18 provided that the Deed would continue in operation until terminated by order of the court under s 445D of the Corporations Act; resolution of the creditors at a meeting convened under s 445F; or resolution of the creditors under s 445C(b) following a determination of the administrators that they considered that it was no longer practicable or desirable to carry on the business of the Company or to continue to implement the Deed. In short, the Deed purported to effect essentially the same result as a court-ordered extension of the convening period under s 439A(6) or s 447A(1), except that the extension was determined by the creditors and was to be indefinite. The Deed was not a deed of company arrangement within the meaning of Pt 5.3A The Deed did not provide for an arrangement alternative to liquidation for the whole or partial payment or satisfaction of creditors' debts or claims against the Company or the whole or partial resolution of creditors' debts or claims against the Company by alteration of rights on one side or the other. In effect, it purported to provide for no more than the continuation of the administration of the Company and thereby the deferral to a later date of a decision whether the Company should execute a deed of company arrangement or be wound up or that the administration should end. As such, the Deed was not a deed of company arrangement within the meaning of Pt 5.3A, and it ran counter to the evident policy of Pt 5.3A that the only permissible extensions of the convening period fixed by s 439A(5) are those that are granted by the courts under s 439A(6) or s 447A(1). NettleJ The respondents submitted, in substance, to the contrary that, because the Deed provided for a moratorium on debts for the duration of the Deed, provided for the administrators to explore the possibility of restructuring or recapitalising the Company, and required the administrators to provide regular reports on their progress in excess of those required by Pt 5.3A, the Deed was essentially no different from a simple moratorium on debts, which, it was contended, was the paradigm "arrangement" contemplated by the drafters of Pt 5.3A. That submission should have been rejected. The kinds of moratoria on debts which qualify as arrangements under Pt 5.3A are moratoria on debts alternative to liquidation which are calculated to enable a company to trade out of financial difficulties or which are coupled with full or partial releases of debts or claims in return for payment or some other consideration62. They are a means, analogous to arrangements that may be entered into by an individual under Pt X of the Bankruptcy Act63, of avoiding liquidation. The moratorium on debts for which the Deed purported to provide was not an alternative to liquidation calculated to allow the Company to trade out of financial difficulties or otherwise to provide for the satisfaction in whole or part of outstanding debts or claims. Its only purpose and purported effect was to enable the Company to be kept, de facto, in administration and thereby to afford the administrators more time to seek proposals, which, if located, might only then be submitted to creditors for consideration as an alternative to liquidation. The respondents further contended, in substance, that the arrangement for which the Deed provided was essentially no different from the kind of arrangement considered in Comcorp64, where the company's creditors agreed to accept in full and final settlement of their debts the proceeds, if any, of a legal action brought against certain banks and receivers. In the respondents' submission, Comcorp showed that creditors are free to decide that a company will execute a deed like the Deed even though it does not guarantee an immediate, or possibly any, distribution of the company's property to creditors. That submission should also have been rejected. The arrangement in Comcorp provided for creditors to accept terms in full and final settlement of their claims as an alternative to the winding up of the company. That is why it 62 Beatty v Brashs Pty Ltd (1998) 79 FCR 551 at 554. See for example National Bank of Australasia Ltd v Scottish Union and National Insurance Co (1952) 86 CLR 110; [1952] AC 493; F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69. 63 See Bankruptcy Act 1966 (Cth), s 188A. 64 (1996) 70 FCR 356 at 359, 361 per Sheppard J. NettleJ was a deed of company arrangement within the meaning of Pt 5.3A. The fact that it was possible that that arrangement might yield the creditors nothing in the result was beside the point. What mattered was that the creditors were prepared to give up their claims against the company, rather than wind up the company, in return for the chance that the arrangement might yield them a return. By contrast, as has been observed, the Deed did not provide, as an alternative to winding up the Company, for any commitment by creditors to compromise their debts or claims or to any resolution of debts or claims by arrangement of rights on one side or the other. In substance, the Deed purported to provide for no more than that the creditors would defer making a decision, until a later, unspecified date, whether they would then commit to such a compromise or arrangement rather than wind up the Company. For all that could be told at the time of execution of the Deed, there might never be such a compromise or arrangement. And that was not a matter of non-compliance that could be remedied by a court under one or more of s 445D, s 447A or s 447E. No opinions formed in accordance with s 438A that, as soon as practicable after The conclusion that the Deed was not a deed of company arrangement within the meaning of Pt 5.3A draws support from the requirement, imposed by s 438A, the commencement of an administration, the administrator must form an opinion as to whether it would be in the creditors' interests for the company to execute a deed of company arrangement or for the administration to end or for the company to be wound up, and from the requirement, imposed by s 439A, that the notice convening the meeting of the creditors under that section be accompanied by a statement setting out the administrator's opinion as to each of those matters. Authority establishes that the administrator is required to express separate opinions about each of those matters but that they are alternatives65. So, if the creditors of a company resolve that the company execute a deed of company arrangement, the resolution will have the effect of bringing the administration to an end and the company will not be wound up66. Alternatively, if the creditors resolve that the company be wound up or that the administration should end, the company will not then, and may never, execute a deed of company arrangement. What is contemplated by Pt 5.3A, therefore, and in particular by s 439A, is that 65 Commissioner of Taxation v Comcorp Australia Ltd (1996) 70 FCR 356 at 371-372 per Sheppard J, 390-391 per Carr J (Lockhart J agreeing at 358). 66 Corporations Act 2001 (Cth), s 435C(2)(a). See also Commissioner of Taxation v Comcorp Australia Ltd (1996) 70 FCR 356 at 371 per Sheppard J, 390 per Carr J (Lockhart J agreeing at 358). NettleJ administrators will within the convening period or any extension of it form opinions as to whether it would be in the interests of the creditors that the company execute a deed of company arrangement or that the company be wound up or that the administration should end, and provide the requisite opinions to the creditors. The creditors, so armed with those opinions, will at the meeting convened under s 439A, or after any permitted adjournment of it, make a choice, there and then and not otherwise, between the company executing a deed of company arrangement, the company being wound up, and the administration ending. Here, the administrators were unable within the convening period to form the requisite opinions. Their investigations had not proceeded far enough for them to do so. The best they could offer the creditors was an opinion that: "from the information available, ... it is in creditors' interests that the Company execute [the Deed] ... We have formed our view on the basis that it would be premature for the Company to be wound up at the upcoming meeting as we believe [the Deed] allows the Administrators time to determine whether any alternative(s) exist and preserves the option of entering into a subsequent [deed of company arrangement] (if appropriate) which has the potential to maximise the return to stakeholders which would not be available should the Company be wound up immediately." That opinion did not comply with s 439A(4)(b). An opinion that it would be in the creditors' interests for the Company to execute the Deed because it "allows the Administrators time to determine whether any alternative(s) [to winding up] exist and preserves the option of entering into a subsequent [deed of company arrangement when and if the Administrators come up with a proposal capable of returning more to the creditors than a winding up]" is self-evidently not an opinion that would enable the creditors to make a choice there and then between the Company executing a deed of company arrangement, the Company being wound up, and the administration ending. And since the recommendation that the creditors should resolve in favour of the execution of the Deed was not one which, if accepted, would have enabled the creditors there and then to make a choice between the Company executing a deed of company arrangement, the Company being wound up, and the administration ending, it logically follows that the Deed was not a deed of company arrangement within the meaning of Pt 5.3A. The effect of s 444B(6) The respondents contended regardless that, because s 444B(6) provides that an instrument prepared under s 444A and executed by the company and the NettleJ deed's proposed administrator becomes a deed of company arrangement upon execution, it must be taken that the Deed is a deed of company arrangement. That is not so. Section 444B(6) is not a deeming provision but a timing provision. Its purpose is to provide for the point in time at which a deed of company arrangement takes effect. That has substantive consequences under ss 444C and 444D and, if such a deed of company arrangement is not executed until after the time stipulated in s 444B(2), has the consequence, perforce of ss 444B(7) and 446A(2), that the company will be taken to have passed a special resolution under s 491 that the company be wound up. That s 444B(6) is a timing provision and not a deeming provision is borne out by the express stipulation in s 444A(1) that s 444A applies where a company's creditors resolve that the company execute a deed of company arrangement; or, to put it more directly, that s 444A does not apply unless a company's creditors resolve that the company execute a deed of company arrangement. Ex hypothesi, the Deed was not a deed of company arrangement. It follows that the creditors' resolution that the Company execute the Deed was not a resolution that the Company execute a deed of company arrangement within the meaning of s 444A(1). In turn, it follows that s 444A did not apply. The "instrument" referred to in s 444B(6) is an instrument which s 444A(3) requires an administrator to prepare setting out the terms of a deed of company arrangement which the creditors have resolved a company execute. Since s 444A did not apply to the Deed, the Deed was not such an instrument. It follows that s 444B(6) was not engaged. No need for a deed of company arrangement to distribute property to creditors It remains to mention that much of the parties' written and oral submissions before this Court, as before the courts below, was devoted to the appellant's contention that in order to constitute a deed of company arrangement a deed must provide for the distribution of at least some of the property of the company to its creditors. The contention was based on the requirement imposed by s 444A(4)(b) of the Corporations Act that the "instrument" specify the property of the company (whether or not already owned by the company when it executes the deed) that is to be available to the creditors. For the reasons given by Buss P in the Court of Appeal, the contention should be rejected67. As the respondents submitted, there are many kinds of arrangements capable of being made the subject of a deed of company 67 See, in particular, Mighty River International Ltd v Hughes (2017) 52 WAR 1 NettleJ arrangement that do not involve a distribution of the company's property to its creditors. They include, for example, a simple moratorium of the kind earlier mentioned68, a debt for equity swap69, a creditors' trust70, and a transfer of shares to a third party obligee71. So to recognise, however, does not detract from the conclusion that the Deed was not a deed of company arrangement. The discrimen of a deed of company arrangement within the meaning of Pt 5.3A of the Corporations Act is that it embody the terms and conditions on which a company's creditors are agreed, as an alternative to the company being wound up in insolvency under Pt 5.4, upon a compromise of their debts or claims against the company or an arrangement falling short of compromise for resolution of their debts or claims by alteration of rights on one side or the other. Such a deed may provide for the distribution of the company's property to creditors but it need not do so. In each case, it will be a matter for the creditors. Conclusion and orders But for the orders which have been made, we should have allowed the appeals with costs and ordered that orders 1 and 2 of the Court of Appeal of the Supreme Court of Western Australia in each matter be set aside. In their place, we should have ordered that the appeal to the Court of Appeal be allowed with costs and that order 1 of Master Sanderson be set aside. In lieu of that order, we should have declared that the Deed was not a deed of company arrangement within the meaning of Pt 5.3A. We should further have ordered that the matters be remitted to Master Sanderson for determination according to law. 68 See Beatty v Brashs Pty Ltd (1998) 79 FCR 551 at 554. See generally Re Baseline to a deed of company arrangement) (subject Constructions Pty Ltd [2017] NSWSC 1018. 69 See Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR 165 at 179 [20] per McHugh, Gummow, Hayne and Callinan JJ; [2001] HCA 31; Re Paladin Energy Ltd (subject to Deed of Company Arrangement) [2018] NSWSC 11 at [23]. 70 See Commonwealth v Rocklea Spinning Mills Pty Ltd (2005) 145 FCR 220 at 228 [28]; Munday Group Pty Ltd v Tsourlinis Distributors Pty Ltd (2010) 5 BFRA 101 at 102 [5]; Re Bevillesta Pty Ltd (2011) 254 FLR 324 at 347-348 [69]; Re Smith, Matrix Metals Ltd (in liq) [2011] FCA 1399. 71 See Weaver v Noble Resources Ltd (2010) 41 WAR 301 at 306-307 [26], 311-312 [58], [64], [69]-[70]; Re Elite Logistics Holdings Pty Ltd (subject to deed of company arrangement) [2017] NSWSC 1830 at [6].

HIGH COURT OF AUSTRALIA HFM043 AND APPELLANT THE REPUBLIC OF NAURU RESPONDENT HFM043 v The Republic of Nauru [2018] HCA 37 15 August 2018 ORDER Appeal allowed. Set aside the order of the Supreme Court of Nauru made on 22 September 2017 dismissing the appellant's appeal and, in its place, order that: the appeal to the Supreme Court of Nauru be allowed; and the appellant's application for review be remitted to the Refugee Status Review Tribunal, differently constituted, for determination according to law. The respondent pay the appellant's costs of the appeal to this Court. On appeal from the Supreme Court of Nauru Representation C L Lenehan with M L L Albert and E R Tadros for the appellant (instructed by Allens) C J Horan QC with P M Knowles for the respondent (instructed by Republic of Nauru) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS HFM043 v The Republic of Nauru Migration – Refugees – Appeal as of right from Supreme Court of Nauru – Where Secretary of Department of Justice and Border Control determined appellant not refugee – Where Refugee Status Review Tribunal affirmed Secretary's determination – Where Supreme Court of Nauru held Tribunal made error of law – Where Supreme Court of Nauru dismissed appeal – Whether Supreme Court of Nauru erred holding remittal to Tribunal futile. Words and phrases – "dependant", "derivative status", "futile", "refugee", "Refugee Determination Record", "remit", "taken to have been validly determined". Refugees Convention Act 2012 (Nr), ss 3, 5, 6, 31(5). Refugees Convention (Amendment) Act 2014 (Nr). Refugees Convention (Derivative Status & Other Measures) (Amendment) Act KIEFEL CJ, GAGELER AND NETTLE JJ. This appeal from the Supreme Court of Nauru concerns the proper construction of s 31(5) of the Refugees Convention Act 2012 (Nr) ("the Act"), which was introduced into the Act by the Refugees Convention (Derivative Status & Other Measures) (Amendment) Act 2016 (Nr) ("the 2016 Amendment Act"). In January 2014 the appellant applied to the Secretary of the Department of Justice and Border Control of Nauru ("the Secretary") to be recognised as a refugee. Section 5(1) of the Act then provided that: "A person may apply to the Secretary to be recognised as a refugee." Section 6(1) required that: "… the Secretary must determine whether an asylum seeker is recognised as a refugee." Section 9 required that notice be given of that determination. On 21 May 2014 the Act was amended by the Refugees Convention (Amendment) Act 2014 (Nr) ("the 2014 Amendment Act"). Section 5(1A) was inserted into the Act. It provided that in an application under s 5(1): "A person may include family members and dependents [sic] in an application for refugee status." The notion of dependants of an applicant for refugee status having derivative status was confirmed by the definition of that term which was inserted in s 3: "'derivative status' means the status granted to a family member of or dependant of a person who has been determined to be a refugee." Section 6(1) was amended by is owed complementary protection" after the words "as a refugee". Section 6 was further amended by inserting a new sub-s (2), which provided: the words "or inserting "Dependents [sic] of an asylum seeker recognised as a refugee or owed complementary protection must be given derivative status." In September 2014 the Secretary made a determination that the appellant was not a refugee and was not owed complementary protection. The appellant applied to the Refugee Status Review Tribunal for merits review of the determination under s 31(1)(a) of the Act. The Tribunal affirmed the Secretary's Nettle determination in March 2015. The appellant appealed from that decision to the Supreme Court of Nauru. In April 2016 the appellant married Mr B. He had been recognised as a refugee under Pt 2 of the Act. On 23 June 2016 the appellant's solicitors sent an email to the Republic of Nauru's Refugee Status Determination Lawyer stating that she "has recently wed and wishes to inform the Government of Nauru of her dependency on her husband". Three documents were attached to the email: a letter containing submissions in support of her "Application for Derivative Status" and supporting statements by the appellant and her husband. On 4 August 2016 a document entitled "Refugee Determination Record" was issued. It stated that the Secretary had determined that the appellant is "recognised as a refugee" under Pt 2 of the Act. There is no dispute that this refers to her derivative status. On 23 December 2016 the definition of "derivative status" was amended by the 2016 Amendment Act in terms: "'derivative status' means the status given to a person, who is a dependent [sic] of a person who has been recognised as a refugee, given derivative status, or found to be owed complementary protection". Section 5 was amended by substituting sub-s (1A) and inserting new sub-ss (1AA) and (1B): "(1A) A person may include one or more dependents [sic] in an application made under section 5(1). (1AA) A person may apply to the Secretary to be given derivative status. (1B) A person included in an application for refugee status under section 5(1A) is taken to have applied to be given derivative status." Section 5(1B) was deemed to have commenced on 21 May 2014. Section 6 was amended by substituting sub-s (1), repealing sub-s (2) and inserting new sub-ss (2A) and (2B) as follows: "(1) Subject to this part, the Secretary must determine: (a) an application to be recognised as a refugee made under section 5; Nettle (b) an application to be given derivative status made under section 5; or (c) whether a person who has made an application under section 5 is owed complementary protection. (2A) A Refugee Determination Record must be issued to a person who (a) determined to be a refugee; (b) given derivative status; or (c) determined to be owed complementary protection. (2B) Any application made by a person under section 5(1), section 5(1AA) or section 5(1A), that has not been determined at the time the person is given a Refugee Determination Record, is taken to have been validly determined at that time." Section 6(2B) was also deemed to have commenced on 21 May 2014. The definition of "Refugee Determination Record" was inserted in s 3: "… the certificate issued to a person who is owed international protection by Nauru under section 6(2A)". The 2016 Amendment Act further inserted a new s 31(5), which was deemed to have commenced on 21 May 2014: "An application made by a person under section 31(1)(a), that has not been determined at the time the person is given a Refugee Determination Record, is taken to have been validly determined at that time." The Explanatory Memorandum to the 2016 Amendment Act said (page 3) that ss 6(2B) and 31(5) "give legislative effect to the existing practice, whereby the issue of a Refugee Determination Record to a person is taken to conclude the determination of all protection claims made by that person". It went on to say that the insertion of those sub-sections was made retrospective to the time when the concept of derivative status was introduced to the regime by the 2014 Amendment Act, namely 21 May 2014, "in order to ensure legislative support for the existing practice". Nettle On 9 June 2017 the Supreme Court (Khan J) delivered its reasons on the appellant's appeal from the Tribunal. It held that the Tribunal had made an error of law by failing to adjourn the hearing so that the appellant could obtain a full medical report1. His Honour sought and considered further submissions from the parties as to the orders which should be made in the matter. His Honour made an order dismissing the appellant's appeal because in his Honour's view2: "If the decision of the Tribunal is quashed, the Tribunal is now unable to reconsider the matter due to the operation of s 31(5). Therefore an order remitting the matter to the Tribunal would be futile." The respondent concedes that the Supreme Court should also have found that the Tribunal failed to act according to the principles of natural justice by failing to inform the appellant that the question whether Burma (Myanmar) was one of the appellant's countries of former habitual residence was an issue in relation to the review, as the appellant alleges. But the respondent contends that Khan J was correct to hold that s 31(5) had the effect of rendering any orders allowing the appellant's appeal and remitting the matter to the Tribunal for rehearing futile. On the hearing of this appeal a threshold question emerged. The question is whether s 31(5) applies to the appellant. The answer to this question is that it does not. It follows that Khan J erred in holding that s 31(5) meant that it would be futile to remit the matter to the Tribunal. Section 31(5) applies only to persons who have been given a Refugee Determination Record as defined by s 3 of the Act following the 2016 Amendment Act. That definition confines the meaning of a Refugee Determination Record to a document that is issued to a person who is owed international protection by Nauru under s 6(2A). The document that the appellant was given in August 2016 was not and could not be a document given under s 6(2A), which came into effect on 23 December 2016. Unlike other provisions of the 2016 Amendment Act, neither s 6(2A) nor the definition of Refugee Determination Record was given retrospective effect. The document given to the appellant appears to be one which was in practice given in recognition of a dependant's derivative status but which had no basis in statute, as the Explanatory Memorandum referred to above recognised. 1 HFM043 v The Republic [2017] NRSC 43 at [64]-[65]. 2 HFM043 v The Republic (No 2) [2017] NRSC 76 at [29]. Nettle The respondent contends for a purposive construction of s 31(5) on the basis that the Explanatory Memorandum discloses that s 31(5) was intended to apply both to a document issued under s 6(2A) and to a document of the kind given to the appellant. The obvious difficulty with this construction is that it is not one which the terms of s 31(5) admit. Its reference to a Refugee Determination Record can only be to that term as defined in the Act. There is no question as to the meaning of that term such that a circumstance for the use of extrinsic materials arises3. In order for s 31(5) to apply in the way for which the respondent contends it would be necessary to read additional words into it in terms which appear in italics below: "An application made by a person under section 31(1)(a), that has not been determined at the time the person is given a document entitled Refugee Determination Record in the period between 21 May 2014 and 23 December 2016 or a Refugee Determination Record as defined by this Act, is taken to have been validly determined at that time." So much was conceded by the respondent. The task of construction of a statute is of the words which the legislature has enacted. Any modified meaning must be consistent with the language in fact used by the legislature4. Words may be implied to explain the meaning of its text5. The constructional task remains throughout to expound the meaning of the statutory text, not to remedy gaps disclosed in it or repair it6. On any view, as was conceded, to construe s 31(5) in the manner contended for the respondent would go far beyond any implication of legislative intention that may be Interpretation Act 2011 (Nr), s 51(1). 4 Taylor v The Owners – Strata Plan No 11564 (2014) 253 CLR 531 at 548-549 [39]; [2014] HCA 9. 5 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 310-311; [1981] HCA 26. 6 Taylor v The Owners – Strata Plan No 11564 (2014) 253 CLR 531 at 548 [38], Nettle ascertained from the provisions of the statute, including the policy discernible from those provisions7. The respondent's construction cannot be accepted. There should be orders that the appeal from the Supreme Court of Nauru be allowed with costs; the order of that Court set aside; and in lieu thereof it be ordered that the appellant's application for review be remitted to the Refugee Status Review Tribunal, differently constituted, for determination according to law. 7 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 321.

HIGH COURT OF AUSTRALIA COMMONWEALTH OF AUSTRALIA APPELLANT AND RESPONDENT Commonwealth of Australia v Cornwell [2007] HCA 16 20 April 2007 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of the Australian Capital Territory Representation S P Estcourt QC with K L Bennett for the appellant (instructed by Australian Government Solicitor) B W Walker SC with R J Davis and J R C Gordon for the respondent (instructed by Snedden Hall and Gallop) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commonwealth of Australia v Cornwell Limitation of actions – Negligence – Meaning of "first accrues" in s 11(1) of the Limitation Act 1985 (ACT) – The respondent was negligently advised in 1965 that he was ineligible for acceptance as a member of the fund established pursuant to the Superannuation Act 1922 (Cth) – The respondent did not institute proceedings against the appellant until 1999 – Whether the respondent's cause of action first accrued upon his retirement in 1994, or at some earlier time – Whether the respondent's cause of action was statute-barred. Limitation of actions – Concealed fraud – Whether a consideration of s 33 of the Limitation Act 1985 (ACT) is required to resolve the respondent's case. Negligence – Cause of action – Whether the respondent's cause of action accrued upon his retirement in 1994, or at some earlier time. Negligence – Damage – Economic loss – Contingent loss – Superannuation entitlements – Statutory contingencies – Whether the respondent suffered damage when his superannuation entitlements accrued upon his retirement in 1994, or at some earlier time. Superannuation – Defined benefits schemes – Statutory contingencies for the accrual of entitlements – Whether the respondent suffered any damage until the statutory contingencies contained in the Superannuation Act 1990 (Cth) were enlivened upon his retirement in 1994. Superannuation – Membership – Transition between fund established pursuant to the Superannuation Act 1922 (Cth) and that established pursuant to the Superannuation Act 1976 (Cth) – Whether the respondent suffered loss in 1987 when he joined the fund established pursuant to the 1976 Act – Whether the respondent suffered loss when the 1976 Act commenced. Words and phrases – "damage", "deliberately concealed", "entitlement", "first accrues". Limitation Act 1985 (ACT), ss 11, 33. Superannuation Act 1922 (Cth), ss 4, 19, 20, 43, 45-48, 51. Superannuation Act 1976 (Cth), ss 3, 11, 45, 55, 56, 58, 63, 64, 66, 80, 183. Superannuation Act 1990 (Cth), Sched Pt 4. GLEESON CJ, GUMMOW, KIRBY, HAYNE, HEYDON AND CRENNAN JJ. The limitation statute This appeal turns upon the operation of s 11 of the Limitation Act 1985 (ACT) ("the Limitation Act"). Section 11 is in a familiar form, deriving from s 3 of the Statute of Limitations 1623 (Eng) ("the 1623 Act")1. It states: "(1) Subject to subsection (2), an action on any cause of action is not maintainable if brought after the expiration of a limitation period of 6 years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom he or she claims. Subsection (1) does not apply to a cause of action in respect of which another limitation period is provided by this Act." It is not suggested that there is any other such limitation period which would render s 11(1) inapplicable. Before the commencement of the Limitation Act, the 1623 Act had applied in the Territory2; it ceased to be in force there by operation of s 2(2) of the Limitation Act. No reliance is placed upon the limitation regime before that change was made. The respondent, Mr Cornwell, instituted his action in the Supreme Court of the Australian Capital Territory against the appellant, the Commonwealth, on 16 November 1999. He relied upon various causes of action, negligent misstatement, breach of contract, breach of statutory duty and "estoppel". The primary judge (Higgins CJ) held3 that "estoppel" here could found no independent cause of action, that any cause of action in contract was barred by s 11, and that, because the action for negligent misstatement was made out and was not statute barred, it was unnecessary to consider the alleged breach of statutory duty. The question before this Court is whether the action in negligence was commenced after the expiration of a period of six years running from the date on which that cause of action had "first accrue[d]" to the respondent. 1 21 Jac I c 16. 2 Trindade and Cane, The Law of Torts in Australia, (1985) at 632. 3 Cornwell v Commonwealth of Australia (2005) Aust Torts Reports ¶81-779. Kirby Hayne Crennan In HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd4, this Court warned that assumptions which assimilated various causes of action (including those in contract and tort) may not always be sound. In that vein, Lord Mance recently emphasised5: "No issue regarding relevant and measurable damage can arise in contract, since nominal damages can be awarded for any breach." Hence, in the present case, Higgins CJ held that any cause of action in contract had first accrued many years ago, upon breach in 1965. However, to show the existence of a completely constituted cause of action in negligence, a plaintiff must be able to show duty, breach, and damage caused by the breach; accordingly, in the ordinary case, it is at the time when that damage is sustained that the cause of action "first accrues" for the purposes of a provision such as s 11 of the Limitation Act6. In Hawkins v Clayton7, which turned upon a provision of the New South Wales legislation8 relevantly indistinguishable from the Territory legislation, this Court refused to place a particular gloss upon the statutory text. The Court rejected the proposition that, at least in the case of claims in negligence for economic loss, time does not run until the plaintiff discovers, or could on reasonable inquiry have discovered, that damage has been sustained9. Before Higgins CJ, the Commonwealth failed in its defence to the negligence claim based upon s 11. His Honour entered judgment for Mr Cornwell for damages to be assessed. An appeal to the Court of Appeal of (2004) 217 CLR 640 at 649-650 [14]. 5 Law Society v Sephton & Co [2006] 2 AC 543 at 569. 6 Hawkins v Clayton (1988) 164 CLR 539 at 543, 587, 599. (1988) 164 CLR 539. 8 Limitation Act 1969 (NSW), s 14. (1988) 164 CLR 539 at 543, 587, 599-600. Kirby Hayne Crennan the Supreme Court of the Territory (Crispin P, Connolly and North JJ)10 was dismissed on 8 May 2006 and it is from that decision that the appeal is brought by the Commonwealth to this Court. That appeal should be dismissed. The next step in the litigation will be the assessment of damages by the Supreme Court, a matter beyond the scope of these reasons. By notice of contention, the respondent seeks to rely upon s 33 of the Limitation Act to escape the possibility of any adverse operation of s 11 of that statute. Section 33 operates in two classes of case. The first is where "there is a cause of action based on fraud or deceit" (s 33(1)(a)). Higgins CJ held that par (a) could have no application here11 and correctly did so. The second class of case is found where "a fact relevant to a cause of action or the identity of a person against whom a cause of action lies is deliberately concealed" (s 33(1)(b)). The section fixes upon the date the plaintiff discovers, or ought by reasonable diligence to have discovered, the fraud, deceit or concealment, and adjusts the limitation period accordingly. The respondent submits that, by reason of par (b) of s 33(1), the reckoning of the limitation period should be found to have commenced upon a date sufficiently late to bring him within the six year period otherwise stipulated by s 11. Higgins CJ made no apparent finding respecting par (b). It will be necessary to return to the issue raised by reliance upon s 33. It is sufficient at this stage to note the following. First, in cases of "concealed fraud" courts of equity refused to apply by analogy statutes of limitation which operated upon actions at law. Secondly, this doctrine of "concealed fraud" did not furnish an answer on equitable grounds to a plea in a common law court of the 1623 Act or other limitation statute to, for example, an action in tort; it was not possible to plead by way of replication on equitable grounds that the existence of the plaintiff's cause of action had been fraudulently concealed from the plaintiff by the defendant12. Accordingly, in Metacel Pty Ltd v Ralph Symonds Ltd, Sugerman JA said13: 10 [2006] ACTCA 7. 11 (2005) Aust Torts Reports ¶81-779 at 67,210. 12 Hunter v Gibbons (1856) 1 H & N 459 [156 ER 1281]. 13 [1969] 2 NSWR 201 at 203; cf Sheldon v R H M Outhwaite (Underwriting Agencies) Ltd [1996] AC 102 at 111, 120-121. Kirby Hayne Crennan "Concealed fraud remains a special doctrine of courts of equity applicable where relief is sought in those courts and is not applicable in bar of the Statute of Limitations in a pure common law action." Section 33 of the Limitation Act is to be read against that background. Significantly for present purposes, it is addressed to any action, whether legal or equitable in nature. Something more should be said respecting the nature of the respondent's action and of the facts. The facts On 7 May 1962, the respondent commenced employment by the Commonwealth as the only spray painter in the Transport Section of what was then the Department of the Interior ("the Department") at the bus depot at Kingston in the Territory. Although classified as a temporary employee, the respondent was employed full time. On 24 March 1987, the respondent's position was reclassified as a permanent public service position14. On that date, the respondent became a member of the Commonwealth Superannuation Fund ("the 1976 Fund") established by the Superannuation Act 1976 (Cth) ("the 1976 Act"). In 1994, the respondent's employment was transferred from the Commonwealth the Commonwealth superannuation system. Thereafter, the respondent chose to transfer to the scheme ("the 1990 Fund") which was established under the Superannuation Act 1990 (Cth) ("the 1990 Act"). The respondent retired on 31 December 1994 and was paid superannuation benefits referable to his combined membership of the 1976 Fund and the 1990 Fund. the Territory but he remained within that of The respondent's contention, accepted by the primary judge, was that, although he had been classified as a "temporary employee", at a date earlier than 24 March 1987 he had been eligible for acceptance as a member of the fund ("the 1922 Fund") established by the Superannuation Act 1922 (Cth) ("the 1922 Act"), but that he had been dissuaded by misleading advice from applying. This had been proffered negligently to the respondent by his superior officer, Mr Nelson Simpson, at a meeting during July 1965 and he had reasonably relied upon that 14 Foreman Panel Beater, Grade 3. Kirby Hayne Crennan advice15. At the time, the respondent had recently married and was concerned to obtain security for his future. He had completed three years service on 7 May 1965. Mr Simpson was then Manager of the Transport Section of the Department. The respondent, whose evidence was accepted, had asked Mr Simpson: "I would like to know about the superannuation situation. I can't understand why we are not entitled to it." Mr Simpson had responded: "That's right. You're not entitled because you are an industrial and temporary employee, but I will see what I can do." However, Mr Simpson had not subsequently informed the respondent of any further developments. The respondent pleaded that the Commonwealth was vicariously liable for the advice given to him by Mr Simpson and that, in reliance upon that advice, he had "lost the opportunity of joining the Commonwealth Superannuation Fund on and from 8 May 1965 and in consequence upon his retirement on 31 December 1994 received a lesser benefit than that which he would have received had he been admitted to the Fund on and from 8 May 1965". The Commonwealth Superannuation Fund there referred to was the 1922 Fund. Higgins CJ found that the Commonwealth was vicariously liable as alleged and that the respondent had suffered economic loss because his retirement benefit was worth less than it otherwise would have been. Further, his Honour dismissed the defence based upon s 11 of the Limitation Act. He found that, while any contract had been broken by the Commonwealth in 1965, the cause of action in tort had not accrued until the retirement of the respondent on 31 December 1994; before that date any loss suffered by the respondent had been contingent rather than actual. Translated into the terms of s 11 of the Limitation Act, the finding was that 31 December 1994 was the date on which the cause of action in tort for the negligent advice had first accrued to the respondent. 15 See Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 16-17 [47]-[48], 22-24 Kirby Hayne Crennan The nature of the damage In Hawkins v Clayton16, Gaudron J emphasised the importance for actions for negligence causing economic loss in identifying the interest said to be infringed, whether it be the value of property, the physical integrity of property, or the recoupment of moneys advanced. Thereafter, in Wardley Australia Ltd v Western Australia, Mason CJ, Dawson, Gaudron and McHugh JJ observed17: "To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater." "The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected19. With economic loss, as with other forms of damage, there has to be some actual damage20. Prospective loss is not enough." In Law Society v Sephton & Co21, Lord Mance said, with reference to Wardley, that he saw the attraction of an approach: 16 (1988) 164 CLR 539 at 601. 17 (1992) 175 CLR 514 at 527. 18 (1992) 175 CLR 514 at 527. 19 See Cane, Tort Law and Economic Interests, (1991) at 16-17. 20 Forster v Outred & Co [1982] 1 WLR 86 at 94; [1982] 2 All ER 753 at 760. 21 [2006] 2 AC 543 at 569. Kirby Hayne Crennan "the effect of which is that unless and until a remote contingency eventuates the claimant is not expected to issue proceedings which he would not normally issue or wish to issue unless and until that point arrives". Here, the economic loss which the respondent sustained was alleged to be the lesser benefit which he obtained on his retirement, this being worth less than it would have been had he not relied upon the negligent advice given to him in 1965. But to speak simply of a "retirement benefit" and its value is to obscure the nature of the economic loss involved. This does not turn upon proprietary or other rights or obligations created and governed by the general law, such as the indemnity granted by the respondent in Wardley, or the continuing financial obligations undertaken by the lessees in Murphy v Overton Investments Pty Ltd22. What the respondent stood to enjoy upon "retirement" was an "entitlement" conferred by federal statute law. This "entitlement" was his "interest" in the sense used in the above passage from Wardley. The significance attached to retirement on grounds of health, by retrenchment, for cause, upon death and for other reasons depended upon the terms of the particular legislation. What was only in prospect until the falling in of one or more of various contingencies, matured into actual loss only at the end of the respondent's service and upon the falling in of one or more of the statutory contingencies which had to be met for the respondent to be entitled to a statutory benefit. Hence the submission by the respondent that it was only upon his retirement that the relevant statutory contingency fell in upon which the respondent became entitled to a benefit which was limited or diminished and his cause of action first accrued. It is against this background that attention must be given to the respective legislative schemes. The 1922 Act The scheme provided by the 1922 Act was a defined benefits scheme: employees made "contributions" for "units of pension" according to a prescribed scale (ss 19, 20). As it stood in 1965, upon retirement a contributor then became "entitled" to receive a pension determined according to the number of units for 22 (2004) 216 CLR 388. Kirby Hayne Crennan which the contributor was contributing at retirement (s 43). Separate provision was made for the entitlements conferred if retirement was on the ground of invalidity or physical or mental incapacity to perform the contributor's duties (s 45). Provision also was made for payment of pensions to widows and in respect of certain children and orphans (ss 46-48). Section 51(1) provided: "Where a contributor resigns or is dismissed or discharged there shall be paid to him the amount of the actual contributions paid by him under this Act, irrespective of the cause of his resignation, dismissal, or discharge." The definition in s 4(1) of the term "contributor" directed attention to that of "employee". This relevantly brought in a person "employed in a permanent capacity by the Commonwealth, who is by the terms of his employment required to give his whole time to the duties of his employment". However, the special provision made by s 4(5) met the situation of the respondent. This sub-section stated: "Where – a person employed by the Commonwealth otherwise than in a permanent capacity is by the terms of his employment required to give the whole of his time to the duties of his employment; that person has been so employed for a continuous period of not less than three years; and the Public Service Board, or, on appeal from the Public Service Board, the Treasurer, certifies that that person's employment is likely to be continued for a period of at least seven years, the Treasurer may direct that that person be deemed to be an employee within the meaning of this section, and that person shall be deemed to be such an employee as from the date of the direction." The respondent satisfied pars (a) and (b) at the time of his interview with Mr Simpson. He had no entitlement to join the 1922 Fund but, subject to certification under par (c), the Treasurer was empowered to deem him to be an "employee" in the defined sense. Higgins CJ found that, had Mr Simpson followed the matter up and given the respondent accurate information, the Kirby Hayne Crennan respondent would have acted upon it and his application to join the 1922 Fund "almost certainly" would have been approved23. Further, had the respondent thereafter become aware of the true position at a time whilst the 1922 Fund was still accepting new contributors, it may have been open to him, by paying more for each unit, thus to place himself in the same position as if he had joined in 1965. However, the respondent did not appreciate until at least 1996 what had been his position in 1965 under the 1922 Act. As it was, while the 1922 Act remained in force, the respondent made no outlays on units and, in that sense, had been free to apply elsewhere any moneys he might have spent on units. The 1976 Act The appellant contends that the introduction on 1 July 1976 of the 1976 Fund and the closure of the 1922 Fund24 brought about a decisive change in the legal situation. Before that date, any necessary damage to complete the respondent's cause of action in negligence had not occurred and had remained truly "contingent"; thereafter, so it is submitted, "the Respondent's loss was necessarily and irretrievably sustained" and s 11 of the Limitation Act must be applied from that date. The 1976 Act resembled the 1922 Act in making provision for certain temporary employees to be classified as eligible employees for the 1976 Act 23 Cornwell v Commonwealth of Australia (2005) Aust Torts Reports ¶81-779 at 24 The legislative scheme was to migrate ongoing employees from the 1922 Fund to the 1976 Fund. A new s 19A was inserted into the 1922 Act by the Superannuation Amendment Act 1976 (Cth) ("the 1976 Amendment Act") providing, subject to a number of exceptions of a transitional character, that "[c]ontributions shall not be made under this Act on or after 1 July 1976". Section 43 and the other sections of the 1922 Act conferring "entitlements" were also amended so as not to apply to contributors who ceased service after 1 July Kirby Hayne Crennan The 1976 Fund also was a defined benefits scheme. Again, members were required to make contributions (s 45). However, the 1976 Act provided for the calculation of benefits for "eligible employees" by reference to years of "contributory service" rather than by reference to contributions for pension units. The appellant emphasises that, whilst before the introduction by the 1976 Act of the concept of contributory service it would have been possible for a person in the position of the respondent to join the 1922 Fund later than 1965 and pay more for his units in the 1922 Fund, that was not possible after the commencement of the 1976 Act; the respondent, even if he had forthwith joined the 1976 Fund, could not have made up the quantum of his benefits to allow for his 11 years of service since 1965. Pensions under the 1976 Act were calculated as a percentage of final salary, the percentage being fixed by reference to the "period of contributory service"; the greater the number of complete years of contributory service, the higher the percentage of final salary paid as a pension. The "period of contributory service" for the purposes of the 1976 Act was defined to commence on the "first day of service", this being fixed by reference to the day when a person became an "eligible employee" (s 3(1)). As the 1976 Fund was to be open to persons who were previously eligible to join the 1922 Fund, persons who were "employees" for the purposes of the 1922 Act at the time when the 1976 Act commenced, and who continued to be such, were defined to be eligible employees for the purposes of the 1976 Act by par (a) of the definition of "eligible employee" in s 3(1). Such persons who were members of the 1922 Fund were also defined to be "existing contributors" for the purposes of the 1976 Act. Section 183(2) of the 1976 Act authorised regulations to be made "modifying this Act, or a provision of this Act specified in the regulations, in the application of this Act or that provision" to eligible employees. Regulations were later made pursuant to s 183(2) modifying the definition of "period of contributory service" so as to credit persons who commenced service prior to 1 July 1976 with a period of contributory service calculated by reference to the date the person commenced making contributions to the 1922 Fund25. The 25 Superannuation (Period of Contributory Service) Regulations (Cth), reg 4 and Items 1 and 2 of the Schedule, deemed to have come into force on 1 July 1976. Item 1 of the Schedule modified the definition of "period of contributory service" so as to be the aggregate of the period from 1 July 1976 to the last day of service plus the period prescribed under s 194 or s 195. Sections 194 and 195 were part of a new Div 6 of Pt XII of the 1976 Act inserted into the Act only in so far as that (Footnote continues on next page) Kirby Hayne Crennan respondent, therefore, not being a member of the 1922 Fund, could not by recourse to these provisions make up the lost years of service. The 1990 Act The 1990 Act established the 1990 Fund, which was also a defined benefit scheme. The Schedule to the 1990 Act set out the Rules for the administration of the scheme it established. Part 4 dealt with members' benefits and, like the 1922 Act and the 1976 Act, conferred an entitlement to various benefits upon satisfaction of stipulated criteria (rr 4.1.1, 4.2.2, 4.3.1, 4.5.1). The contentions of the parties The appellant submits that the respondent's loss in reliance upon the negligent advice had ceased to be contingent and had "actualised" on 1 July 1976; accordingly his cause of action was statute barred long before 1999. However, the respondent submits that to fix upon 1 July 1976 is to start the clock far too early. He points to the following features of the legislation. Even if admitted as a deemed eligible employee under s 11(1) of the 1976 Act at the inception of the 1976 Fund, the respondent could have had no entitlement to benefits under the 1976 Act until he had satisfied any applicable statutory contingency for the accrual of benefits under the 1976 Fund. In this respect, the 1976 Act followed the pattern of the 1922 Act. To become "entitled" to the "standard age retirement pension" specified in ss 55 and 56 of the 1976 Act, an eligible employee would be required by s 55, among other criteria, to have ceased to be such an employee on or after attaining the specified ages of 60 and 65 years. Likewise, the entitlement to an "early retirement benefit" depended upon satisfaction of various temporal and other criteria for voluntary or involuntary early retirement (s 58). Entitlement to an "invalidity benefit" again depended upon satisfaction of statutory criteria (s 66). In certain circumstances, an election was provided for commutation of pensions otherwise payable (ss 63, Act applied to persons within par (a) of the definition of "eligible employee". See also the Superannuation (Former Contributors for Units of Pension) Regulations (Cth), which were also deemed to have come into force on 1 July 1976 and modified the 1976 Act in relation to persons within par (a) of the definition of "eligible employee". Kirby Hayne Crennan 64). Where there was no entitlement to any of these benefits and an eligible employee ceased to be such otherwise than by reason of death, accumulated contributions made by that person were payable out of the 1976 Fund (s 80). Collateral issues Two matters may be put to one side. The first concerns the measures now made by Pt VIIIB (ss 90MA-90MZH) of the Family Law Act 1975 (Cth) respecting superannuation interests26. Section 90MC states that an interest "is to be treated as property for the purposes of paragraph (ca) of the definition of matrimonial cause" which appears in s 4 (emphasis added). Paragraph (ca) refers to certain proceedings "with respect to the property of the parties to the marriage"; s 79 provides for the alteration of such property interests. That s 90MC is cast as a deeming provision is significant. Further, "splitting orders" may be made which operate whenever "a splittable payment becomes payable in respect of the [superannuation interest in question]" (s 90MT(1)(a)). The reference to that which is "payable" is also significant. The provisions of Pt VIIIB thus provide no indication that the respondent's cause of action for negligent advice "first accrue[d]" (within the meaning of s 11(1) of the Limitation Act) before his retirement at the end of 1994. The second matter concerns the operation of the provision in s 51(xxxi) of the Constitution respecting "the acquisition of property on just terms". The respondent disavowed any reliance upon s 51(xxxi). His case is not that he was deprived by a federal law of rights with the constitutional character of property. The respondent complains that he acted upon advice, negligently given, that membership of the 1922 Fund was shut to him, with the result that what he eventually (after 1987) acquired was less valuable than would otherwise have been the case. Accordingly, it is unnecessary to enter here upon any questions respecting the operation of the mandate of just terms where any prejudicial alterations are made to the rights of subsisting members of federal statutory superannuation and pension schemes27. 26 Part VIIIB was inserted by (Superannuation) Act 2001 (Cth). the Family Law Legislation Amendment 27 cf Theophanous v The Commonwealth (2006) 225 CLR 101. Kirby Hayne Crennan Conclusions respecting accrual of the cause of action The submission upon which the appellant placed great weight, that respecting the significance for the respondent's position of the commencement of the 1976 Act, should not be accepted. It is true that thereafter it was no longer open to the respondent to make up for his years of service since 1965 by paying more for units under the 1922 Fund arrangements so as to have his actual years of service count towards his "period of contributory service" for the purposes of the calculation of benefits under the 1976 Act. But his loss had not then been necessarily and irretrievably sustained, as the appellant would have it. Nor should the appellant's secondary contention in the grounds of appeal be accepted. This is that, until 24 March 1987 when he joined the 1976 Fund, the respondent "continued to accumulate loss and damage" but this then crystallised and the limitation period had closed on 23 March 1993. Even if the respondent had joined the 1922 Fund in 1965, his pension entitlements thereunder would prior to the commencement of the 1976 Act still have been contingent upon meeting the statutory criteria set out earlier in these reasons. The respondent could have been assured that the amount of his actual contributions paid under the 1922 Act were secured to him by s 51(1) were he to resign or to be dismissed or discharged for any cause. But, beyond that, his entitlements were prospective and contingent upon the falling in at a future time of the statutory criteria. The same was true of the respondent's position under the 1976 Act after 24 March 1987 and before his retirement seven years later, subject to the qualification that the amount of his actual contributions would no longer have been paid to him unless the conditions of s 80 were met28. The respondent also correctly emphasised that his was not a "transaction case" where property was sold or acquired29 at a disadvantageous price, or the opportunity was lost of the lucrative exploitation of contractual rights or of some 28 Section 51 of the 1922 Act was amended so as not to apply to persons who resigned, or were dismissed or discharged on or after 1 July 1976: 1976 Amendment Act, s 32. Provision was made in s 177 of the 1976 Act for amounts in the 1922 Fund to be paid to existing contributors, or to be deemed to be an amount of supplementary contributions paid by that person under the 1976 Act. 29 As, for example, HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 654-655 [28]. Kirby Hayne Crennan other commercial opportunity. The appellant submitted that the respondent's loss was "necessarily and irretrievably sustained" when the 1976 Fund commenced and replaced the 1922 Fund in the manner described briefly earlier in these reasons. However, whether in 1976 the respondent would have been better or worse off had he invested elsewhere the contributions he otherwise would have placed for units under the 1922 Fund arrangements is a matter of speculation. He could not be said, consistently with remarks in Sellars v Adelaide Petroleum NL30, in 1976 to have sustained loss of a commercial opportunity which had some value, as a matter of the degree of probabilities and possibilities. On the issues raised by the appellant, the appeal should fail. There remains the respondent's notice of contention and reliance upon s 33 of the Limitation Act. Deliberate concealment The phrase "deliberately concealed" as it appears in s 33 of the Limitation Act has its provenance in United Kingdom legislation, s 32 of the Limitation Act 1980 (UK) ("the 1980 UK Act"). In Cave v Robinson Jarvis & Rolf, Lord Millett explained the matter as follows31: "A defendant was formerly unable to take advantage of the Limitation Acts if he had been guilty of 'concealed fraud'. This equitable doctrine was given statutory effect by section 26(b) of the Limitation Act 1939 [(UK)], which postponed the start of the limitation period where the plaintiff's right of action had been 'concealed by the fraud of [the defendant or his agent]'. This was an inapt and inelegant expression which caused much difficulty. It put the emphasis on the fraud rather than the concealment." Of the 1939 legislation, Brightman J said in Bartlett v Barclays Bank Trust Co Ltd32: 30 (1994) 179 CLR 332 at 353. See also HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 655 [29]-[30]. 31 [2003] 1 AC 384 at 392. 32 [1980] Ch 515 at 537. Kirby Hayne Crennan "'Fraud', in the context of section 26(b), does not mean common law fraud or deceit. But it does seem to envisage conduct which, if not fraudulent in the more usual sense, is unconscionable having regard to the relationship between the parties: see Kitchen v Royal Air Force Association33. 'Fraud' is used in the equitable sense to denote conduct by the defendant or his agent such that it would be against conscience for him to avail himself of the lapse of time." In Australia, a different reading was given to legislation in various jurisdictions which had been modelled upon s 26(b) of the 1939 legislation. Speaking of s 55(1)(b) of the Limitation Act 1969 (NSW), McLelland J in "For my own part, I would regard it as a misuse of language, and unsound, to apply the statutory expression 'fraudulently' in s 55 to any conduct which did not involve some form of dishonesty or moral turpitude." (With respect to the Tasmanian legislation35, Heerey J in Mulcahy v Hydro- Electric Commission36 agreed with that statement by McLelland J.) Thereafter, in Seymour v Seymour, Mahoney ACJ, speaking for the New South Wales Court of Appeal, said37: "In my opinion, there must be in what is involved a consciousness that what is being done is wrong or that to take advantage of the relevant situation involves wrongdoing. At least, this is so in the generality of cases. (There is in this as in many things, the problem of dealing with the person who 'closes his eyes to wrong' or is so lacking in conscience that he is not conscious of his own lack of proper standards.)" 33 [1958] 1 WLR 563; [1958] 2 All ER 241. 34 (1989) 17 NSWLR 381 at 386. 35 Limitation Act 1974 (Tas), s 32(1)(b). 36 (1998) 85 FCR 170 at 246. 37 (1996) 40 NSWLR 358 at 372. Kirby Hayne Crennan Section 33 of the Limitation Act supplements the use of the term "deliberately concealed" in s 33(1)(b) by additional provision in s 33(3). This states: "Without derogating from the generality of subsection (1), deliberate commission of a breach of duty in circumstances in which it is unlikely to deliberate concealment of the facts involved in that breach of duty." to be discovered for some time amounts This text reflects that of s 32(2) of the 1980 UK Act. What amounted to deliberate concealment for the purposes of s 32 of the 1980 UK Act was considered in Cave38. The House of Lords held that what was included was a deliberate breach of duty either concealed or undisclosed and committed in circumstances such that it was unlikely to be discovered for some time, and also the taking of active steps to conceal a breach of duty after becoming aware of it; but what was not included was failure to disclose a negligent breach of duty that the actor was not aware of committing. The respondent accepts that the Territory legislation is based on s 32 of the 1980 UK Act, and refers to Cave. It may be assumed, without now deciding, that what was said in Cave respecting the United Kingdom legislation applies also to s 33 of the Territory legislation. However, on that assumption, it would be unsafe to proceed any further in a consideration of the issues the respondent seeks to raise in his notice of contention respecting deliberate concealment. The respondent asserts a systemic course of misinformation to employees of the appellant, including the respondent, by middle and senior management and over a long period of time. The primary judge made no clear findings to that effect, and certainly no findings which would support deliberate concealment in the sense given that phrase in Cave. Hence it is inappropriate for this Court to supplement its conclusion respecting s 11 of the Limitation Act with any determination that there was an erroneous decision or failure to decide an issue arising under s 33(1)(b) of the Kirby Hayne Crennan Limitation Act. The conclusion respecting s 11 is sufficient to sustain the orders of the Court of Appeal affirming the orders of the primary judge. Conclusion The appeal should be dismissed with costs. Callinan Introduction In an ideal world courts would be able to assess damages with precision. This is an exercise which may only confidently be done in retrospect, when the facts are known and all of the vicissitudes of life have occurred. But the courts have to function in a real world in which competing considerations are in play. One clearly is the desirability that there be as complete and accurate an assessment of compensation for a wrong done as is possible. Another is that it is in the interests of both the person wronged, and the wrongdoer, that the compensation be calculated and provided in a timely way: of the former, so that amelioration and mitigation may begin as soon as possible; of the latter, to enable it to make proper provision for its liability, and to conduct its affairs without the continuing distraction of the possibility of claims against it. As time passes, documents disappear, witnesses die or go away, memories fade, and the chances of a fair trial recede39. Further, it is in the interests of justice, and the peace and wellbeing of society as a whole, that arguments not be prolonged and differences be settled quickly, and when they are that they be settled for all time. I do not think that the last could be put better than it was by Campbell J in "[T]he maintenance of public order, the repose of society, and the quiet of families, require that what has been definitely determined by competent tribunals shall be accepted as irrefragable legal truth." Lawmakers have long been conscious of the tensions. Statutes of Limitation are designed to resolve them. Equity has done so by its invention of the doctrines of application by analogy, laches and acquiescence. In modern times there has been, by the enactment of extension provisions, a recognition that the Statutes, if expressed in an absolute form, may operate unjustly in some circumstances. Even so, courts, and this Court itself very recently, have taken the view that although a statutory extendable time limit of thirty years, applicable to a severely disadvantaged person, had not expired, he should not be permitted to pursue his claim made 29 years after the event, because, so the majority held, a fair trial would not now be possible41. 39 cf Batistatos v Roads and Traffic Authority (NSW) (2006) 80 ALJR 1100 at 1111 [37], but see also at 1142-1143 [225]-[227]; 227 ALR 425 at 435, 477. 40 63 US 352 at 364 (1860); see also D'orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 120 [380] per Callinan J. 41 See Batistatos v Roads and Traffic Authority (NSW) (2006) 80 ALJR 1100; 227 ALR 425. Callinan Yet, in this case, a primary judge, an intermediate court of appeal, and the majority in this Court hold that this respondent may pursue his claim, in tort, for negligent misstatement now more than 41 years after he says that it was made, and concurrently find, not only that the statement in question was then uttered, but also that he would have acted quite differently but for it. Despite those judges' willingness to find those matters, all have effectively held, that, whether the respondent might voluntarily or involuntarily have retired or become disabled, or otherwise have not continued to be employed by the appellant, are "contingencies" as to which findings could not until now be made, and financial consequences attached and quantified, because, it is said, not all of the various contingencies had occurred. The resolution of contingencies In this case the claim by the respondent is a claim for, as it is sometimes described, "pure economic loss": of effectively the reduction in the benefit potentially available to him on retirement had he not been negligently misled. The other judges hold that "the interest" which Wardley Australia Ltd v Western Australia42 required the Court to identify as a first step in the process of establishing damage should be characterized as an entitlement that the respondent stood to enjoy, citing this passage from the joint judgment of Mason CJ, Dawson, Gaudron and McHugh JJ43: "The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected44. With economic loss, as with other forms of damage, there has to be some actual damage45. Prospective loss is not enough." It is, with respect, important to note that their Honours do not suggest there that for the wrong to be actionably complete, all, most, or even a great deal of the damage must actually have occurred. The language used is entirely consistent 42 (1992) 175 CLR 514. 43 (1992) 175 CLR 514 at 527. 44 See Cane, Tort Law and Economic Interests, (1991) at 16-17. 45 Forster v Outred & Co [1982] 1 WLR 86 at 94; [1982] 2 All ER 753 at 760. Callinan with the requirement that, in tort, damage is the gist of the action, and that non- minimal or not insignificant damage will suffice46. It is perhaps arguable that as early as the date of the misstatement in 1965, or a reasonable time thereafter, a matter which it is unnecessary to decide because of the appellant's reliance upon events in 1976 as producing the last of the necessary elements of the tort, non-minimal damage, time began to run. There was certainly at least an opportunity lost in 1965. The law does not necessarily require a plaintiff who has suffered damage to act immediately to rectify it47. An answer to an assertion that there has been loss might however be that the respondent kept, and was free to invest the money otherwise payable to buy units of superannuation, and that it should not be assumed that his use of it would be less advantageous to him than it would have been if expended on the units. Whether that may have been the position in 1965 or, for that matter 1976, as to 1977 there is no doubt that it was a year of real loss to the respondent. I refer to 1977, because regulations made in that year, deemed to have come into force on 1 July 1976, certainly had the effect of making it clear, or confirming that, had the respondent been a contributor from 1965, he would have been eligible for the greatly improved pension benefits available under the 1976 Act48. But before demonstrating how a real "interest", however that be defined, of the respondent was then reduced and became quantifiable, I would point out that it has never been the law of tort, or indeed of the sub-category of it, of tortious conduct causing "pure economic loss", that damage occurs only when the loss is ascertained or ascertainable. The passage as follows from Wardley49 (a case to which I will return) quoted by the majority in this case cannot be taken literally, or, as members of the Court in Wardley elsewhere made plain, as a "To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing 46 Cartledge v E Jopling & Sons Ltd [1963] AC 758 at 771-772 per Lord Reid, 773- 774 per Lord Evershed, 776 per Lord Morris of Borth-y-Gest, 778-779 per Lord Pearce. 47 See Gould v Vaggelas (1985) 157 CLR 215. 48 See footnotes 24 and 25 of the joint judgment. 49 (1992) 175 CLR 514 at 527. 50 (1992) 175 CLR 514 at 527. Callinan damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater." Daily, actions are tried and damages assessed, before all of the contingencies have passed and the loss becomes perfectly ascertainable. Courts regularly estimate damages on the basis of likelihood or probability. In the result, inevitably over-compensation or under-compensation may occur, but experience recalls that there is no reason to suppose that the risk of one is greater than the other. The sort of simple case in tort which comes repeatedly before the courts provides a ready and clear example. A plaintiff is negligently, personally and permanently injured. He may partially recover: his pain may or may not abate; he may never work again, or he may work in a less remunerative capacity; he may lose an opportunity of transfer or promotion, or of working to a greater age; he may, or may not lose the capacity to improve his qualifications by study; employment prospects in his calling might, in the ordinary course, have diminished, and he might have lost his position anyway. These are all contingencies bearing directly on They are contingencies which might take all of an ordinary adult lifetime to play out. But the courts do not await a lifetime. They assess damages, once and for all, on the basis of the probabilities, as to which cogent evidence is called. Indeed, the recent decision of this Court of Golden Eagle International Trading Pty Ltd v Zhang51 is a case in point. There the Court was concerned with the proper choice of life expectancy tables, historical or current. The Court, not surprisingly, preferred the latter, never questioning for a moment that they provided useful evidence directly bearing on the plaintiff's damages, having regard to the contingency of the date of his death. There is no separate or different rule for economic loss. In Golden Eagle, the plaintiff's likely future earnings, but for his injuries, were entirely future unascertained "economic loss" arising out of his injury. the damages recoverable. In Perre v Apand Pty Ltd52 in which there were claims for statutory deceptive conduct, breach of contract, and in tort for "pure economic loss", the Court was asked to entertain a claim for past and prospective losses for a period of some years. In this Court, no assessment (or review of an assessment) was in fact required, as it was at first instance of the primary judge von Doussa J53. His 51 [2007] HCA 15. 52 (1999) 198 CLR 180. 53 see Sparnon v Apand Pty Ltd unreported, Federal Court of Australia, 20 December Callinan Honour embarked upon the exercise of assessment, a purely conventional one, in the familiar way, and had no difficulty in weighing up the many contingencies or chances in play there, including the seasons and the markets, making judgments about them, and assessing damages accordingly in respect of the claim in negligence. I do not accept that it is the law that it is only when a relevant, or as it is put here, the relevant statutory contingency, in this case, of retirement, falls in that a plaintiff (here, the respondent) becomes entitled to an ascertainable interest. The respondent's position The respondent began to work for the appellant in May 1962 with the status of a "temporary employee". In July 1965 the negligent misstatement that he was not entitled to participate in the superannuation scheme provided by his employer was made. On the findings, he would otherwise have applied, probably successfully, to participate. At that point he lost therefore the opportunity of doing so. What would the respondent have got had he joined then? The answer is, a right to receive, in the future, a pension calculated according to a statutory formula based wholly or in part upon his own contributions. 1965 needs however no further consideration as a starting point. This is so because the appellant puts its case this way. It was in 1976 – I would prefer 1977 for the reasons stated – that radical beneficial changes to retirement entitlements occurred. The years of contributory service by contributing members to the superseded scheme were then credited to participants under the new scheme. Thereafter, retirement benefits were calculable solely by reference to years of contributory service and final salary. On retirement, a beneficiary might take his actual contributions plus interest, as a lump sum, or as an addition to a wholly unfunded pension for life. By virtue of his membership, had it existed before 1 July 1976, of the superseded fund, the respondent could, pursuant, perhaps to the 1976, but certainly the 1977 law, have become a member of the new scheme, and have enjoyed the improved benefits for which it provided. I do not doubt that actuaries and accountants calculate the value of such benefits and rights from time to time, and that decisions of great financial moment are made on the basis of them. Here the appellant demonstrated beyond contradiction how, between 1976 or 1977, and 1982, the respondent's right and entitlement could have been calculated, and, in consequence, the monetary value of the diminution of it: "[H]ad the Respondent joined the 1922 Act Fund in 1966, he would have carried over to the [new scheme] 11 years of contributory service, and as at retirement in 1994, would have had 29 years of contributory service, Callinan and an entitlement to a pension calculated as 44.1% of his final salary. Had he joined the [new scheme] on 1 July 1976, he would have had 18 years of contributory service, and his pension would have been 32.4% of final salary. By joining the [new scheme] in 1987 (and retiring on 31 December 1994), he had 7 years of contributory service, and, had he stayed in the [new scheme] his pension entitlement would have been 12.6% of his final salary." (footnote omitted) In 1983, that is, on the expiration of a limitation period beginning in 1977, it would have been possible to measure in money, the difference, in dollars of the day, between the lump sum value of the respondent's entitlement or interest on notional participation, and the lesser value by reason of his actual non- participation consequent upon the misstatement. The difference in 1983, might not have had regard to the possibility of increased salary (with or without promotion) and consequentially increased pension in nominal dollars, but nor should it. He would, on such an assessment, judgment and payment, be receiving his future entitlement in an accelerated way, in the dollars of the day, and would be free to invest it in the future. In assessing the respondent's damages in 1983 the court would have been able to proceed in an orthodox way. Evidence would have been led of the respondent's life expectancy, his health, his current earnings and entitlements, his prospects and his intentions. The court would then have applied the legislation to its findings to ascertain the value, at time of trial, of lost pension or part thereof payable as an income stream on the respondent's likely date of retirement for his probable remaining lifetime. It is not without irony that the judges have had no difficulty in making a finding about his intentions and related matters in 1965 and thereafter, but hold that the other contingencies deny evaluation and assessment before now. The respondent's own likely evidence in a notional trial, in, say, 1982, that he was in good health and intended to work until at least 55, can be seen now to have been borne out by events54. In other words, such evidence then would have been available, entirely credible, and likely to have been accepted. Why, on the issue of "assessment-defying contingencies", should regard not be had to this, when the whole foundation for the respondent's case is his evidence about his likely contemporaneous state of mind about joining a scheme in 1965? Examples of comparable assessments that necessarily take account of contingencies can be multiplied. Even though the measure of damages in deceit is the amount required to put the plaintiff as far as possible in the position that he 54 cf Parker v The Commonwealth (1965) 112 CLR 295 at 310-311 per Windeyer J, where his Honour points out that the vicissitudes of life are not likely to be all one way. Some may be happy ones, some not. Callinan would have been in if he had not acted on the misrepresentation, there will still be cases in which, in order to assess that amount, notional future business profits or losses will need to be calculated55. That exercise will inevitably involve a consideration of the contingencies attendant upon any human activity or enterprise, and a determination as to the probability of the occurrence of each of them, just as it will in any case in which the present value of a future stream of net income has to be assessed. It is not uncommon for courts to be called upon to assess the value of land, not only in cases of contract, but also of tort. That will often require close attention to such contingencies as the obtaining or otherwise of a valuable planning approval56 or permission to subdivide. Every one of these is a familiar curial task as to which it cannot be suggested that the courts do not have the capacity to perform it, or that the commencement and the resolution of litigation must be delayed until each of the contingencies occur or can be eliminated as a possibility. All of this is entirely conventional. It shows that, by reference to established law, and well understood methodology of assessment of damages the respondent did in fact have a measurable valuable interest which he lost by 1977. There was, in short therefore, an assessable, irretrievable loss sustained by the respondent by 1977. The so-called "statutory contingencies", of incapacity or early death, or retirement, each giving rise to a different, but nonetheless better financial consequence for the respondent if he had not been misled in 196557, are no different in kind from the contingencies with which the courts necessarily deal all the time. Indeed, practically nothing is certain or can be guaranteed in life or human affairs. This is why courts must do the best that they can, and assess damages, well understanding that exactitude will usually be impossible. That it is not possible provides no excuse for failing to do it58. The relevant "statutory criteria" here are no different from other criteria in other cases for financial benefit or loss, for example, capacity to work, or perform a contract, changes in the economic climate, the obtaining of a permit or approval, the state of the market place, or indeed practically any event at all that might influence a monetary outcome. It was always open to the respondent from at least 1977 to prove the likelihood or otherwise of each of the relevant statutory contingencies59. 55 Gould v Vaggelas (1985) 157 CLR 215 at 220-221 per Gibbs CJ. 56 cf Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; 167 ALR 57 See the joint judgment at [33]. 58 Chaplin v Hicks [1911] 2 KB 786 at 792-793, 795-797, 798-799. 59 See the joint judgment at [33]. Callinan The significance of Wardley I go back to Wardley60. That case should not be taken as stating a rule of general application with respect to the completion of a tort, and the running of time therefrom, for these reasons. Wardley was concerned with a statutory cause of action only, a claim for deceptive conduct made under s 52 of the Trade Practices Act 1974 (Cth) with respect to which the courts have, under ss 82 and 87 of that Act, a much broader discretion as to remedies than they have in granting relief for causes of action at common law. The judgments in Wardley are replete with statements emphasizing the statutory, and therefore special nature of the causes of action and relief available. One of these is as follows61: "In determining when a plaintiff first suffers economic loss or damage in an action under s 82(1) based on misleading conduct constituting contravention of s 52, it is necessary to have regard to the applicable measure of damages. In this respect, it would not be right to conclude that the measure of damages recoverable under the sub-section necessarily coincides with the measure of damages applicable in an action for deceit or in an action for negligent misrepresentation. The measure of damages recoverable under s 82(1) can only be fully ascertained after a thorough analysis of those provisions in Pts IV and V of the Act for contravention of which the statutory cause of action may be maintained. But the common law measure of damages will in many cases be an appropriate guide, though it will always be necessary to look to the provisions of the Act with a view to ascertaining the existence of any relevant legislative intention." Deane J in particular, was, with respect, careful to make it clear that the Court was not laying down any general principle of common law62: "It is not possible to derive from the authorities63 or from settled principle a simple negative or affirmative answer to the abstract question 60 (1992) 175 CLR 514. 61 (1992) 175 CLR 514 at 526 per Mason CJ, Dawson, Gaudron and McHugh JJ. See also at 534 per Brennan J, 542, 545 per Deane J, 551-552 per Toohey J. 62 (1992) 175 CLR 514 at 540-541. Callinan whether, for the purposes of a limitation provision, the mere incurring of a contingent liability to make a monetary payment in the future suffices to give rise to a cause of action of which loss or damage is a necessary ingredient. Nor, in my view, is it practicable or desirable for the courts to attempt to provide in advance an unqualified affirmative or negative answer to that abstract question. For one thing, the answer may vary according to the facts of the particular case, including the nature and implications of the contingent liability and whether the circumstances were such that, even without the benefit of hindsight, the distinction between contingent and certain loss or damage was illusory rather than real." What also is significant about Wardley is that the statutory deceptive conduct there induced the representee to enter into an indemnity. As the respondent correctly submitted in that case64, at law an action on an indemnity cannot be commenced until the indemnity has been called upon and paid65. It is easy to see why there might be a special rule for cases concerned with indemnities. They, as with guarantees, are expressly given or provided on a contingency, of the failure 63 There are no authorities binding on this Court directly in point and there is conflict in judgments in the decided cases: see, for example, for at least prima facie support for the view that loss or damage is sustained immediately upon the assumption or coming into existence of a contingent liability: Forster v Outred & Co [1982] 1 WLR 86 at 98, 99-100; [1982] 2 All ER 753 at 764, 765; Baker v Ollard & Bentley (a firm) (1982) 126 Sol Jo 593; Gillespie v Elliott [1987] 2 Qd R 509; Deputy Commissioner of Taxation v Zimmerlie [1988] 2 Qd R 500; D W Moore and Co Ltd v Ferrier [1988] 1 WLR 267 at 278, 279-280; [1988] 1 All ER 400 at 409-410, 410-411; Jobbins v Capel Court Corporation Ltd (1989) 25 FCR 226 at 231; Bell v Peter Browne & Co [1990] 2 QB 495 at 502-503, 510; and, for at least analogous support for the rejection of such a view: City of Kamloops v Nielsen [1984] 2 SCR 2 at 39-40; Hawkins v Clayton (1988) 164 CLR 539 at 601; SWF Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR ¶41-045 at 51,612-51,613; Zoneff v Elcom Credit Union Ltd (1990) ATPR ¶41-058 at 51,747-51,748; Broadcasting Corporation of New Zealand v Progeni International Ltd [1990] 1 NZLR 109 at 113; Magman International Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 1 at 17-18, 24-26. 64 (1992) 175 CLR 514 at 518. 65 Collinge v Heywood (1839) 9 Ad & E 633 [112 ER 1352]; Commercial Bank of Australia Ltd v Colonial Finance, Mortgage, Investment and Guarantee Corporation Ltd (1906) 4 CLR 57 at 66, 69; Walker v Bowry (1924) 35 CLR 48; Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213; Bradley v Eagle Star Insurance Co Ltd [1989] AC 957; Van Win Pty Ltd v Eleventh Mirontron Pty Ltd [1986] VR 484 at 488. Callinan and inability of the principal debtor to meet the primary liability. It is in the nature of the transactions in respect of which indemnities or guarantees are customarily given, for example long term debts and mortgages, that they may not be called upon for years or at all66. They can be compared to policies of insurance. They are expressly concerned with risk, and are in a sense a form of insurance against its occurrence. Insurance contracts of indemnity in terms of course, are designed to protect the insured against the materialization of specified risks, that is, of contingencies67. The judgments in Wardley turn as much upon the proper construction of the indemnity as they do upon the special nature of the statutory claim under consideration there. They have little or nothing binding to say about identification of the time of the occurrence of non-minimal damage and the quantification of damages at common law. I can conclude my references to Wardley with a passage from the judgment of Deane J which restates the common understanding that a loss of a chance will, in an appropriate case, sound in damages68: "Where loss or damage has actually been suffered, the assessment of compensation will necessarily take account of a consequent risk of future economic loss flowing from that loss or injury69. Nor is it to deny that the loss of a mere chance of some future economic benefit may itself constitute loss or damage for the purpose of completing a common law cause of action70. The loss of a chance of an economic benefit is not merely a risk of some future loss. The loss of the chance is itself a loss which has actually been sustained and which is, in an appropriate case, capable of sounding in damages. I have added the qualifications 'isolated' and 'prima facie' in what has been written above for the reason that I would not exclude the possibility that the circumstances of a particular case may be such that the incurring of a truly contingent liability to make a payment of money may itself represent immediate loss or damage. For 66 cf Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 543 per 67 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 532 per Mason CJ, Dawson, Gaudron and McHugh JJ. 68 (1992) 175 CLR 514 at 544-545 per Deane J. 69 See, for example, Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 640, 642- 70 See, for example, Chaplin v Hicks [1911] 2 KB 786 at 792-793, 795-797, 798-799; Hall v Meyrick [1957] 2 QB 455; Kitchen v Royal Air Force Association [1958] 1 WLR 563; [1958] 2 All ER 241; The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 90-94, 103-104, 118-126. Callinan example, I would leave until another day consideration of the case where the person incurring the contingent liability incurred it in the ordinary course of carrying on a business involving the undertaking of contingent liabilities." Even if, as is not the case here, a court could not have calculated the damages with reasonable accuracy from 1977 onwards, by reference to the present value of a likely pension on notional retirement, it would at least have been obvious then that a substantial opportunity had been lost, and, therefore, as Deane J pointed out, damage suffered, to which a sum of money could be attributed. The reasoning generally in Wardley does not assist in the resolution of this case. Other matters I agree, having regard to the cases advanced by the parties, that it is unnecessary to consider any question of an acquisition under s 51(xxxi) of the Constitution, of the kind which fell for consideration by this Court in Smith v ANL Ltd71. Fraud and concealment There does remain however, the respondent's contention which relied on s 33 of the Limitation Act 1985 (ACT) which provides as follows: "Fraud and concealment Subject to this section, if— there is a cause of action based on fraud or deceit; or a fact relevant to a cause of action or the identity of a person against whom a cause of action is deliberately concealed; lies the time that elapses after a limitation period fixed by or under this Act for the cause of action begins to run and before the date when a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud, deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by him or her or by a person 71 (2000) 204 CLR 493. Callinan claiming through him or her against a person answerable for the fraud, deceit or concealment. Subsection (1) has effect whether the limitation period for the cause of action would, apart from this section, end before or after the date mentioned in that subsection. (3) Without limiting subsection (1), deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty. For subsection (1), a person is answerable for fraud, deceit or concealment if, but only if— he or she is a party to the fraud, deceit or concealment; or he or she is, in relation to the cause of action, a successor of a party to the fraud, deceit or concealment under a devolution from the party occurring after the date when the fraud, deceit or concealment first occurs. If property is, after the first occurrence of fraud, deceit or concealment, purchased for valuable consideration by a person who is not a party to the fraud, deceit or concealment and does not, at the time of the purchase, know or have reason to believe that the fraud, deceit or concealment has occurred, subsection (1) does not, in relation to that fraud, deceit or concealment, apply to a limitation period for a cause of action against the purchaser or a person claiming through him or her." In regard to the operation of that provision I am indebted to the majority for their review of the authorities. In this case, no deliberate breach of duty occurred: nothing was concealed deliberately or otherwise; nothing unreasonable was done; there was neither dishonesty nor moral turpitude; and no advantage was taken of the respondent. The respondent obtained no finding from the primary judge of a systematic or other course of deliberate concealment, and nor should he have. Such a strong allegation, for its proof, requires a degree of persuasiveness of which the evidence here falls well short72. I would allow the appeal, and set aside the orders of the Court of Appeal and enter judgment for the appellant. 72 Rejfek v McElroy (1965) 112 CLR 517 at 521-522 per Barwick CJ, Kitto, Taylor, Callinan

HIGH COURT OF AUSTRALIA APLA LIMITED & ORS PLAINTIFFS AND LEGAL SERVICES COMMISSIONER OF NEW SOUTH WALES & ANOR DEFENDANTS APLA Limited v Legal Services Commissioner (NSW) [2005] HCA 44 1 September 2005 ORDER Questions asked in the special case answered as follows: Is Part 14 of the Regulation invalid in whole or in part by reason that it: impermissibly infringes the freedom of communication on political and governmental matters guaranteed by the Constitution; impermissibly infringes the requirements of Ch III of the Constitution and of the principle of the rule of law as given effect by the Constitution; impermissibly infringes the freedom of interstate intercourse or alternatively trade and commerce guaranteed by s 92 of the Constitution; (d) exceeds the legislative powers of the State of New South Wales by virtue of the nature of its extra-territorial operation; (e) exceeds any powers to make regulations under the Legal Profession Act, by virtue of the nature of its extra-territorial operation; inconsistent with jurisdiction conferred, regulated or provided for by: the rights, duties, remedies and (A) ss 39(2), 39B, 55A, 55B, 55D, and 78 of the Judiciary Act 1903 (Cth); (B) Divisions 1 and 2 of Part III and Part IVA of the Federal Court of Australia Act 1976 (Cth); (C) ss 52, 53(a), 74B, 74D, 75AD, 82, 86 and 87 of the Trade Practices Act 1974 (Cth); (D) Parts II, IV, V and VI of the Safety, Rehabilitation and Compensation Act 1988 (Cth), together with Parts IV and IVA of the Administrative Appeals Tribunal Act 1975 (Cth); (E) Parts 4, 6 and 7 of the Superannuation (Resolution of Complaints) Act 1993 (Cth), together with Parts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth). If yes to any part of (1), does Part 14 of the Regulation validly prohibit: the First Plaintiff from publishing an advertisement in the form of Annexure A to the Amended Statement of Claim; the Second Plaintiff from publishing: (i) an advertisement in the form of the three advertisements which are Annexure B to the Amended Statement of Claim; (ii) on its website, material substantially in the form of the material contained in Annexures C and D to the Amended Statement of Claim; (iii) a letter in the form of Annexure E to the Amended Statement of Claim to group members of the group on behalf of whom proceedings are brought in Federal Court proceedings N932 of 2001. the Third Plaintiff from publishing an advertisement in the form of Annexure F to the Amended Statement of Claim? Does not arise. If yes to any part of (2), ought the declaratory relief sought in the Amended Statement of Claim be withheld in the discretion of the Court by reason of the facts set out in paragraph 17 in relation to the advertisements which the plaintiffs say they wish to publish but which have not in fact been published? Does not arise. Representation: S J Gageler SC with J K Kirk and P K Cashman for the plaintiffs (instructed by Maurice Blackburn Cashman) No appearance for the first defendant M G Sexton SC, Solicitor-General for the State of New South Wales with M J Leeming for the second defendant (instructed by Crown Solicitor for New South Wales) at the hearing on 5 and 6 October 2004 M G Sexton SC, Solicitor-General for the State of New South Wales with A M Mitchelmore for the second defendant (instructed by Crown Solicitor for New South Wales) at the hearing on 7 December 2004 Interveners: D M J Bennett QC, Solicitor-General of the Commonwealth with R G McHugh and B D O'Donnell intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) R J Meadows QC, Solicitor-General for the State of Western Australia with S J Wright intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for Western Australia) C J Kourakis QC, Solicitor-General for the State of South Australia with J C Cox intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for South Australia) at the hearing on 5 and 6 October 2004 C J Kourakis QC, Solicitor-General for the State of South Australia with A Rao intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for South Australia) at the hearing on 7 December P M Tate SC, Solicitor-General for the State of Victoria with S G E McLeish intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) P D T Applegarth SC with G R Cooper intervening on behalf of the Attorney- General of the State of Queensland (instructed by Crown Solicitor for Queensland) J Basten QC with G J Williams and R A Pepper for Combined Community Legal Centres' Group NSW Inc and Redfern Legal Centre Ltd as amici curiae (instructed by Public Interest Advocacy Centre) at the hearing on 5 and 6 October 2004 J Basten QC with R A Pepper for Combined Community Legal Centres' Group NSW Inc and Redfern Legal Centre Ltd as amici curiae (instructed by Public Interest Advocacy Centre) at the hearing on 7 December 2004 Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS APLA Limited v Legal Services Commissioner (NSW) Constitutional law (Cth) – Legal profession – Advertising of legal services – Validity of the Legal Profession Regulation 2002 (NSW), Pt 14 ("the Regulations") which prohibits advertising of legal services relating to claims in respect of personal injuries. Legal profession – Barristers and solicitors – Whether the Regulations are designed to restrict advertising which promotes the use of a particular barrister or solicitor or any barrister or solicitor. Constitutional law (NSW) – Extra-territorial power of the State of New South Wales – Whether Regulations aimed at the advertising of legal services in New South Wales which also apply to advertising that takes place outside New South Wales are valid. Constitutional law (Cth) – Implied freedom of communication on government or political matters – Whether the restriction on advertising legal services relating to claims in respect of personal injuries effectively burdens the implied freedom of communication on government or political matters – Whether the implied freedom extends to prevent burdens by State law on communications related to the operation of the courts provided for in Chapter III of the Constitution. Constitutional law (Cth) – Chapter III – Rule of law – Whether Chapter III of the Constitution implicitly prohibits any law of the Commonwealth or of a State or Territory which effectively burdens the capacity of litigants or potential litigants to receive information and assistance as may be necessary for them to assert their legal rights and approach courts exercising federal jurisdiction – Whether the Constitution supports a freedom to receive advice or information about the possible exercise of judicial power. Constitutional law (Cth) – s 92 – Freedom of interstate trade and commerce, and interstate intercourse – Distinction between interstate trade and commerce, and interstate intercourse – Whether, where a law burdens interstate intercourse that occurs in or in relation to interstate trade and commerce, it is the trade and commerce limb of s 92 which applies – Whether the restriction on advertising by the Regulations imposes a discriminatory burden of a protectionist kind on interstate trade and commerce – Whether any impediment to interstate intercourse imposed by the Regulations is greater than reasonably required to achieve the object of the Regulations. Constitutional law (Cth) – s 109 – Inconsistency between certain Commonwealth Acts and the Regulations – Whether the Regulations impair or detract from a Commonwealth scheme of legislation and the rights, remedies and jurisdiction contained in such legislation. Constitution, Ch III, ss 92, 109. Legal Profession Act 1987 (NSW), ss 38J, 216. Legal Profession Amendment (Personal Injury Advertising) Regulation 2003 (NSW). Legal Profession Regulation 2002 (NSW), Pt 14. GLEESON CJ AND HEYDON J. The plaintiffs challenge the validity of regulations, made under the Legal Profession Act 1987 (NSW) ("the Legal Profession Act"), which prohibit the advertising of legal services relating to claims for damages, compensation, or other legal entitlements arising out of personal injuries. Such services are described compendiously in the regulations as "personal injury services". In Australia, as in the United States of America, the legal profession is organized and regulated primarily on a State or Territory basis, but such regulation must conform the Commonwealth Constitution1. The plaintiffs contend, on a number of grounds, that the New South Wales regulations are contrary to the Constitution and therefore invalid or, alternatively, are inconsistent with federal laws, and, by virtue of s 109 of the Constitution, are inoperative to the extent of the inconsistency. the requirements of The regulations The regulations in question were made with effect from 23 May 2003. At the time, the Legal Profession Act, in s 38J, provided that a barrister or solicitor may advertise in any way that the barrister or solicitor thinks fit. That permission was qualified by reference to advertising that was false, misleading or deceptive, that contravened certain specified Commonwealth or State legislation, or that contravened any regulations made under the Legal Profession Act. Legislative removal of earlier professional restrictions on advertising by lawyers was partly related to National Competition Policy Agreements between the Commonwealth and the States. In 2002, however, New South Wales modified its policy on advertising by lawyers and, in Pt 14 of the Legal Profession Regulation 2002, made under the general regulation-making power contained in s 216 of the Legal Profession Act, imposed restrictions on the advertising by barristers or solicitors of personal injury services. Those restrictions were tightened by the Legal Profession Amendment (Personal Injury Advertising) Regulation 2003, also made under s 216 of the Legal Profession Act, which amended Pt 14, and which contains the provisions the subject of the present proceedings. The Explanatory Note to the amending regulations of 2003 said: "Existing provisions of the Legal Profession Regulation 2002 place restrictions on the content and method of advertising by barristers and solicitors of personal injury services. 1 See In re Primus 436 US 412 at 440 (1978) per Rehnquist J. The object of this Regulation is to broaden the current restrictions so as to prohibit a barrister or solicitor from publishing or causing or permitting publication of an advertisement that makes any reference to or depicts: personal injury, or (b) matters related to personal injury, such as an activity, event or circumstance that suggests personal injury or a cause of personal injury, or legal services relating to the recovery of money for personal injury. Existing exceptions to advertising restrictions are retained and additional exceptions are provided for. A contravention of the new provisions will be an offence and will also constitute professional misconduct. The new provisions are not intended to prevent legitimate public comment in good faith about personal injury and are not intended to interfere with the delivery in good faith of legal education to the legal profession or the ordinary use of business cards or letterheads." The principal operative provision of the new regulations is cl 139 which relevantly provides: "(1) A barrister or solicitor must not publish or cause or permit to be published an advertisement that includes any reference to or depiction of any of the following: personal injury, any circumstance in which personal injury might occur, or any activity, event or circumstance that suggests or could suggest the possibility of personal injury, or any connection to or association with personal injury or a cause of personal injury, a personal injury legal service (that is, any legal service that relates to recovery of money, or any entitlement to recover money, in respect of personal injury). Maximum penalty: 10 penalty units. (2) A contravention of this clause by a barrister or solicitor is declared to be professional misconduct." Clause 138 defines "advertisement" to mean any communication of information that advertises or otherwise promotes the availability or use of a barrister or solicitor to provide legal services, whether or not that is its only purpose or effect. The clause also contains a wide definition of "publish" which includes publication in the print media, broadcast by radio or television, and display on an Internet website. There are a number of exceptions to the prohibition in cl 139, but they are not presently relevant. There was argument as to the meaning of the expression "a barrister or solicitor" in the above regulations. For the reasons given by Gummow J, we agree that it means "any barrister or solicitor", and not merely some particular barrister or solicitor whose services are advertised or promoted. In 2002, the Premier of New South Wales, in the New South Wales Parliament, made a Ministerial Statement which was accepted by the parties to these proceedings as indicating the general policy behind the 2002 regulations and the 2003 amendments. The Statement was on the topic of "Public Liability Insurance Premiums". It began: "Mudgee Council was recently forced to cancel its annual Christmas carols because it could not afford the $5,000 public liability insurance premium. The Hawkesbury River bridge-to-bridge waterskiing race was cancelled for the first time in 40 years for the same reason. Public liability insurance premiums are causing serious difficulties for the community. Small businesses and community groups are having difficulty obtaining affordable public liability insurance. In addition to the problems with public liability, builders are having difficulty obtaining compulsory home warranty insurance, and professionals cannot obtain professional indemnity insurance." The Premier referred to a number of causes of the problem, and possible solutions. He went on: "Today I am pleased to announce another sensible initiative aimed at pushing down the pressure on rising insurance costs. I mentioned earlier that one of the many factors leading to rising costs is the increase in personal injury claims and the size of compensation payouts when those claims are contested. The trend has been driven by an increasing trend towards litigation in our society. Australia is adopting a culture of blame even when the damage suffered might be minor and temporary. Elements in the legal profession have encouraged a view that someone else must always pay; that litigation is the way to resolve disputes. All it does is increase costs for insurance customers and the wider community. So today I can announce that the Government is introducing restrictions on lawyers advertising for personal injury matters to take effect from 1 April. I have discussed this with members of the Law Society of New South Wales and they are supportive of these changes. I give them credit for that and I thank them for their sympathetic approach to the problem that this represents for the Government of New South Wales. The rules that we propose will stop lawyers advertising personal injury services on television, on radio and in hospitals. For example, patients and visitors will no longer see those offensive advertisements for lawyers in hospital lifts. The new rules will also restrict the kinds of statements that lawyers can make about personal injury work in printed advertisements or advertisements on the Internet. The rules will prevent lawyers engaging in ambulance chasing advertising. This advertising encourages people to claim for every slip and fall, regardless of the merits of the case or their genuine need for compensation. The new rules will counteract the trend to excessive litigation which is evident in parts of our society. On the broader question of public liability insurance the Government is holding discussions with the Insurance Council of Australia, the New South Wales Council of Social Service, arts and sporting organisations, small business and tourism operators and local government representatives." Included in the materials put before the Court by the parties was a letter from the Attorney-General for New South Wales explaining the 2003 amendments: "The [amendments were] made because the Government was concerned that lawyers were ignoring or circumventing the previous restrictions on personal injury advertising and that this could have a detrimental impact on the court system and on the availability of affordable public liability insurance." For completeness, it should be added, although it is not of direct present relevance, that in December 2003, and in September 2004, the Legal Profession Act was amended by the inclusion in s 38J and s 38JA of regulation-making powers specifically related to advertising by legal practitioners. The regulations with which we are concerned were made before that legislation was enacted, but, subject to an argument about extra-territoriality, the plaintiffs do not contend that the regulations were not supported by the Legal Profession Act in the form it then took. The proceedings The first plaintiff, whose name is an acronym for an association of plaintiffs' lawyers, is a company limited by guarantee, registered in New South Wales. Its members are lawyers. Its objectives include protecting and promoting the rights of the injured, and promoting proper and adequate compensation for injured people. The second plaintiff is an incorporated legal practitioner registered under the Legal Practice Act 1996 (Vic), and carries on business as a firm of solicitors under the name "Maurice Blackburn Cashman" in Victoria, New South Wales and Queensland. The third plaintiff is a solicitor who practises in New South Wales as a sole practitioner. The first defendant holds an office established under the Legal Profession Act and has functions which include enforcing regulations made under that Act. The second defendant is the State of New South Wales. To their Further Amended Statement of Claim, the plaintiffs have annexed an advertisement which the first plaintiff wishes to place in the Sydney Yellow Pages directory and in various newspapers circulating within New South Wales. The advertisement, directed to people who may have suffered personal injuries, offers the services of members of APLA. The second plaintiff says that, in the past, it advertised, and wishes to continue advertising, in newspapers printed and circulating within New South Wales, in terms of a document annexed to the pleading. The second plaintiff also has a website on the Internet, the material for which is uploaded onto a computer server in Victoria and can be downloaded in New South Wales, Queensland and elsewhere. Documents illustrating the content of the material placed on the website are annexed to the pleading. The second plaintiff also regularly acts as solicitor for group members in representative proceedings involving personal injuries, including proceedings under Pt IVA of the Federal Court of Australia Act 1976 (Cth). One such action involves claims under ss 52, 53(a), 74B, 74D, 75AD, 82 and 87 of the Trade Practices Act 1974 (Cth). The second plaintiff wishes to communicate with potential parties to such proceedings. The third plaintiff wishes to advertise in trade union journals circulating within New South Wales. The plaintiffs claim that the regulations are invalid on the following grounds: infringe They governmental matters guaranteed by the Constitution. freedom of communication on political and the They infringe the requirements of Ch III of the Constitution and the principle of the rule of law as given effect by the Constitution. They infringe s 92 of the Constitution. Because of their extra-territorial operation they exceed the legislative powers of the State of New South Wales or they exceed the regulation- making powers in the Legal Profession Act. They are inconsistent with specified federal legislation. The federal legislation referred to in the Further Amended Statement of Claim is: the Judiciary Act 1903 (Cth), ss 39(2), 39B, 55A, 55B, 55D, and 78; the Federal Court of Australia Act 1976 (Cth), Pt III Divs 1 and 2; the Trade Practices Act 1974 (Cth), ss 52, 53(a), 74B, 74D, 75AD, 82, 86 and 87; Parts II, IV, V and VI of the Safety, Rehabilitation and Compensation Act 1988 (Cth), together with Pts IV and IVA of the Administrative Appeals Tribunal Act 1975 (Cth); Parts 4, 6 and 7 of the Superannuation (Resolution of Complaints) Act 1993 (Cth), together with Pts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth). Pursuant to O 35 r 1 of the High Court Rules 1952 (Cth) the parties have concurred in stating questions of law arising in the proceedings for the opinion of the Full Court. The questions of law are as follows: Is Part 14 of the Regulation invalid in whole or in part by reason that it: impermissibly infringes the freedom of communication on political and governmental matters guaranteed by the Constitution; impermissibly infringes the requirements of Ch III of the Constitution and of the principle of the rule of law as given effect by the Constitution; impermissibly infringes the freedom of interstate intercourse or alternatively trade and commerce guaranteed by s 92 of the Constitution; exceeds the legislative powers of the State of New South Wales by virtue of the nature of its extra-territorial operation; exceeds any powers to make regulations under the Legal Profession Act, by virtue of the nature of its extra-territorial operation; inconsistent with jurisdiction conferred, regulated or provided for by: the rights, duties, remedies and ss 39(2), 39B, 55A, 55B, 55D, and 78 of the Judiciary Act 1903 (Cth); (B) Divisions 1 and 2 of Part III and Part IVA of the Federal Court of Australia Act 1976 (Cth); ss 52, 53(a), 74B, 74D, 75AD, 82, 86 and 87 of the Trade Practices Act 1974 (Cth); Parts II, IV, V and VI of the Safety, Rehabilitation and Compensation Act 1988 (Cth), together with Parts IV and IVA of the Administrative Appeals Tribunal Act 1975 (Cth); Parts 4, 6 and 7 of the Superannuation (Resolution of Complaints) Act 1993 (Cth), together with Parts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth). If yes to any part of (1), does Part 14 of the Regulation validly prohibit: the First Plaintiff from publishing an advertisement in the form of Annexure A to the Amended Statement of Claim; the Second Plaintiff from publishing: an advertisement advertisements which are Annexure B Amended Statement of Claim; form of the the three the on its website, material substantially in the form of the material contained in Annexures C and D to the Amended Statement of Claim; (iii) a letter in the form of Annexure E to the Amended Statement of Claim to group members of the group on behalf of whom proceedings are brought in Federal Court proceedings N932 of 2001. the Third Plaintiff from publishing an advertisement in the form of Annexure F to the Amended Statement of Claim? If yes to any part of (2), ought the declaratory relief sought in the Amended Statement of Claim be withheld in the discretion of the Court by reason of the facts set out in paragraph 17 in relation to the advertisements which the plaintiffs say they wish to publish but which have not in fact been published?" In relation to question (3), paragraph 17 of the Amended Special Case states that there is no pending prosecution and there are no pending disciplinary proceedings against any plaintiff under or in relation to the regulations and there is no current threat of any such prosecution or disciplinary proceedings save for such threat as may be implicit in a letter in which the first defendant expressed a view that certain proposed advertising by the first plaintiff would be contrary to the regulations. If the regulations are invalid, in whole or in part, then there is no discretionary reason why this Court should not make a declaration to that effect. It is unnecessary to say anything further about this point. The advertising material and other matter referred to in question (2) is set out in the reasons of other members of the Court. The questions asked about that material only arise if an affirmative answer is given to any part of question (1). We shall deal with the issues raised by question (1) in the order in which they appear. By way of general background, however, it is desirable briefly to expand upon the scheme of regulation of legal practice in Australia. The regulation of legal practice Legal practitioners are admitted to practise by the Supreme Court of a State or Territory. Each State or Territory has its own regulatory regime, commonly involving a principal statute2 and rules made pursuant to that statute. 2 Legal Profession Act 1987 (NSW); Legal Practice Act 1996 (Vic); Legal Profession Act 2004 (Q); Legal Practice Act 2003 (WA); Legal Practitioners Act 1981 (SA); Legal Profession Act 1993 (Tas); Legal Practitioners Act 1970 (ACT); Legal Practitioners Act (NT). The Legal Profession Act 2004 (NSW) and the Legal Profession Act 2004 (Vic) each received Royal Assent following conclusion (Footnote continues on next page) There is a substantial, and increasing, degree of uniformity and reciprocity in those regulatory regimes. Generally speaking, the right to practise, and the right of audience in a State or Territory court, depends upon admission by a State or Territory Supreme Court and the holding of a current practising certificate. Practising certificates, which must be renewed periodically, are normally issued by the Law Society or Bar Association of a State or Territory, although that pattern is not universal3. The detail of the requirements for obtaining a practising certificate is presently irrelevant. Complaints against legal practitioners are dealt with pursuant to State or Territory legislation which establishes bodies with disciplinary powers. In each State or Territory, the inherent power of the Supreme Court to discipline legal practitioners is preserved4. A legal practitioner is an officer of the Supreme Court of the State or Territory which admits that person to practise. The Supreme Court maintains a roll of practitioners. The Supreme Court holds out those whose names are on its roll of practitioners as fit and proper persons to be entrusted with the duties and responsibilities of a legal This Court is described in the Constitution as the Federal Supreme Court6, but it does not admit people to practise as legal practitioners. Section 86 of the Judiciary Act 1903 (Cth) ("the Judiciary Act") envisages the possibility of Rules of the High Court providing for the admission of persons to practise as barristers or solicitors in any federal court. There are no such rules. Rather the Judiciary Act, in ss 55B and 55C, accommodates the State and Territory based scheme of admission and regulation in the following manner. Section 55B(1) provides that, subject to s 55B(3), a person who is for the time being entitled to practise as a barrister or solicitor or both in the Supreme Court of a State or Territory has the like entitlement to practise in any federal court. Section 55B(3) provides that such entitlement depends upon a person's name appearing in the Register of Practitioners kept in accordance with s 55C. Section 55C requires that a Register of Practitioners shall be kept at the Registry of the High Court. It is to be kept by of oral argument in this case. These reasons refer to the statutes in force at the relevant time. cf Legal Practitioners Act 1981 (SA), s 16; Legal Practice Act 2003 (WA), s 39. 4 Legal Profession Act 1987 (NSW), s 171M; Legal Practice Act 1996 (Vic), s 172; Legal Profession Act 2004 (Q), s 579; Legal Practice Act 2003 (WA), s 161; Legal Practitioners Act 1981 (SA), s 89(3); Legal Profession Act 1993 (Tas), s 93; Legal Practitioners Act 1970 (ACT), s 73; Legal Practitioners Act (NT), s 52(3). 5 A Solicitor v Law Society of New South Wales (2004) 216 CLR 253. 6 Constitution, s 71. the Chief Executive and Principal Registrar of the High Court. Entry in the Register is determined by reference back to s 55B, which, in effect, means entitlement to practise in the Supreme Court of a State or Territory. Section 55B(4) provides that a person who is entitled to practise in a federal court has a right of audience in any State or Territory court exercising federal or "federal-type" jurisdiction. Section 55C(5) empowers the High Court to order that the name of a person be struck off the Register of Practitioners if it is proved to the satisfaction of the Court that the person has been guilty of conduct that justifies that course. Moves towards uniformity and reciprocity have resulted in what is described as a national legal profession. A State and Territory based system of admission and regulation operates in a practical environment that includes national law firms, individuals with Australia-wide legal practices, an expanding federal court system, and the exercise by State and Territory courts of federal or "federal-type" jurisdiction. In that context, if one State, such as New South Wales, decides to regulate legal practice in a certain respect, it is likely, and perhaps inevitable, that such regulation will have consequences for the conduct of disputes involving the exercise, or potential exercise, of federal judicial power. The Legal Profession Act contains provisions which prohibit a person who does not hold a current practising certificate from acting as a barrister or solicitor, which subject practice as a barrister or solicitor to the barristers or solicitors rules, and which, directly or indirectly, govern, in a variety of ways, the conduct of barristers and solicitors in and out of court7. The entire system of State regulation of the provision of services which include representing people in courts exercising federal jurisdiction, a system that has operated since the time of Federation, assumes that such regulation is not of itself inconsistent with the Constitution or with federal law. Whether such inconsistency exists in the present case is a question to be decided, but it is important to keep the question in perspective. State regulations which restrict certain forms of advertising by legal practitioners operate in a wider regulatory context that governs the provision of legal services. Any State regulation of the provision of legal services is likely to have an effect upon the supply of services in relation to rights and obligations under federal law, or claims brought in courts exercising federal jurisdiction. Whatever system exists in relation to the structure, organization and regulation of the legal profession, it forms part of the context in which federal laws operate, and in which the judicial power of the Commonwealth is exercised. 7 Legal Profession Act 1987 (NSW), ss 38G, 38H, 38I, 38K, 38L, 48B, 48C. Regulation of the supply of legal professional services has always included, and continues to include, self-regulation, reinforced by the supervisory role of the State and Territory Supreme Courts, of which legal practitioners are officers, and which maintain the rolls of practitioners. Historically, being "struck off" a Supreme Court's roll of practitioners was the ultimate sanction for professional misconduct. Professional misconduct was conduct that would reasonably be regarded as disgraceful or dishonourable by members of the profession of good repute and competency8. The status of legal practitioners as officers of a court, developing and maintaining, in co-operation with the judiciary, their own standards of conduct, and owing their right to practise to the court's continuing willingness to hold them out as fit and proper persons, is a system of professional accreditation that has applied in Australia since colonial times9. The profession's own standards of behaviour are not immutable, and have been influenced or overridden in certain respects by legislation. One such respect concerns the matter of advertising. In A History of the New South Wales Bar, published in 1969, and produced by a committee chaired by Sir Victor Windeyer, it is said10: "The Council from its inception was much concerned with questions of advertising; it being fundamental to the Bar's code of ethics that all forms of personal advertisement be prohibited." Solicitors also had a long history of discountenancing "anything which may reasonably be regarded as touting [or] advertising"11. Legislation at a State and Territory level, in relatively recent times, has intervened to override those professional standards. The previous existence of those standards explains the need for s 38J of the Legal Profession Act. Evidently, the New South Wales legislature has had second thoughts. Whatever the policy merits of these changes to the regulatory environment in which lawyers practise, the restraints on conduct effected by the regulations in issue in this case are not significantly different from restraints that applied by virtue of professional self-regulation throughout most of the twentieth century. All that is new is the limitation of those restraints to personal injury services. 8 Myers v Elman [1940] AC 282 at 288-289. 9 The operation of the system in New South Wales was examined in A Solicitor v Law Society of New South Wales (2004) 216 CLR 253. 10 Bennett (ed), A History of the New South Wales Bar, (1969) at 170. 11 Cordery on Solicitors, 5th ed (1961) at 436, quoting Solicitors' Practice Rules 1936 (UK). See also Solicitor's Practice Regulation 1940 (NSW), reg 29(2), made pursuant to the Legal Practitioners Act 1898 (NSW); Atkins, The New South Wales Solicitor's Manual, 3rd ed (1975) at 159, 226-237. Freedom of communication on government or political matters Restrictions on the advertising of goods and services limit freedom of communication. Such restrictions are not unfamiliar. Advertising of tobacco12, therapeutic goods13 and films of certain kinds14, for example, is restricted by Commonwealth legislation. In Cunliffe v The Commonwealth15, this Court upheld the validity of restrictions imposed by the Migration Act 1958 (Cth) upon the giving of immigration assistance to aliens or the making of representations on their behalf, and rejected an argument that those restrictions infringed the implied freedom of communication on government and political matters which results from the requirements of the system of representative government established by the Constitution. The restrictions in question included a restriction on advertising services by way of immigration assistance. The freedom of communication relevant to this case was said, in Lange v Australian Broadcasting Corporation16, to be a requirement of freedom of communication imposed by ss 7, 24 and 64 and 128 of the Constitution. The source of that requirement throws light on the content of the expression "freedom of communication about government or political matters", which was the expression used in the following sentence in Lange. The meaning of that expression is imprecise17. Even so, we are concerned with a freedom that arises by necessary implication from the system of responsible and representative government set up by the Constitution, not a general freedom of communication of the kind protected by the First Amendment to the United States Constitution18. The nature and extent of the freedom is governed by the necessity which requires it. For a law to infringe the freedom it must effectively burden that freedom either in its terms, operation or effect19. 12 Tobacco Advertising Prohibition Act 1992 (Cth). 13 Therapeutic Goods Act 1989 (Cth), Ch 5, Pt 5-1. 14 Classification (Publications, Films and Computer Games) Act 1995 (Cth). 15 (1994) 182 CLR 272. 16 (1997) 189 CLR 520 at 567. 17 Coleman v Power (2004) 78 ALJR 1166 at 1173 [28]; 209 ALR 182 at 191. 18 Coleman v Power (2004) 78 ALJR 1166 at 1184 [89]; 209 ALR 182 at 206. 19 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567. The possibility that an advertisement of the kind prohibited by the regulations might mention some political or governmental issue, or might name some politician, does not mean that the regulations infringe the constitutional requirement. The regulations do not, in their terms, prohibit communications about government or political matters. They prohibit communication between lawyers and people who, by hypothesis, are not their clients, aimed at encouraging the recipients of the communications to engage the services of lawyers. Such communications are an essentially commercial activity20. The regulations are not aimed at preventing discussion of, say, "tort law reform", or some other such issue of public policy. They restrict the marketing of professional services. Restrictions on the marketing of legal services are not incompatible with a system of representative and responsible government, or with the requirements of ss 7, 24, 64 and 128 of the Constitution. If they were, such incompatibility has passed unnoticed for most of the time since Federation. The professional work of lawyers involves them in advising citizens about their legal rights and obligations, and helping them to enforce their rights. In recent years, legislatures decided that it was in the public interest that lawyers should be encouraged to adopt a more mercantile approach to the provision of their services. Some lawyers responded with enthusiasm. Authorities appear to have been surprised to discover that, when lawyers promote their services, litigation increases. Some lawyers may be aggrieved at the recent cooling of official mercantilist ardour. They are, however, drawing a long bow when they claim that restricting their capacity to advertise for business is incompatible with the requirements of responsible and representative government established by the Constitution. Chapter III and the rule of law The rule of law is one of the assumptions upon which the Constitution is based21. It is an assumption upon which the Constitution depends for its efficacy. Chapter III of the Constitution, which confers and denies judicial power, in accordance with its express terms and its necessary implications, gives practical effect to that assumption22. The effective exercise of judicial power, and the maintenance of the rule of law, depend upon the providing of professional legal services so that citizens may know their rights and obligations, and have the 20 cf Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 124-125. 21 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193 per 22 In re Judiciary and Navigation Acts (1921) 29 CLR 257. capacity to invoke judicial power. The regulations in question are not directed towards the providing by lawyers of services to their clients. They are directed towards the marketing of their services by lawyers to people who, by hypothesis, are not their clients. The question for this Court is not whether the uninhibited promotion of legal services will increase what is sometimes described as access to justice. There are policy arguments for and against allowing lawyers to advertise. One argument in favour of such advertising is that it makes legal services more accessible to some citizens, and thereby increases awareness of rights and assists enforcement of rights. We are concerned, however, not with such questions of policy, but with a legal question which is to be resolved, not as a matter of opinion or personal preference, but as a matter of judgment upon a defined issue. State and Territory schemes of regulation of the legal profession form part of the context in which federal jurisdiction is exercised, and have an impact upon the practical circumstances in which the rule of law is maintained. Examples include the division of functions between barristers and solicitors, the recognition of senior counsel, and requirements of practical legal training and continuing legal education. The justification for such regulation is that it is in the public interest. The primary responsibility for deciding where the public interest lies is with the State and Territory legislatures. It is not self-evident that the public interest requires an unrestricted capacity on the part of lawyers to promote their services. More to the point, it is not required by the Constitution. It is a topic on which the Constitution has nothing to say in express terms. If it is said to be a matter of implication, then it is necessary to identify, with reasonable precision, the suggested implication. This has not been done. There is nothing in the text or structure of the Constitution, or in the nature of judicial power, which requires that lawyers must be able to advertise their services. It may or may not be thought desirable, but it is not necessary. The regulations in question do not impede communications between lawyers and their clients. Nor do they restrain or inhibit the provision of legal services, or require lawyers to conceal their existence or their identities. Professional directories, and telephone books, inform the public of the availability of legal services. The effective exercise of the judicial power conferred by Ch III of the Constitution does not depend upon unrestricted communication between the public and anyone willing to provide advice or assistance in enforcing claims or rights. If it did, the laws which confer upon lawyers what amounts to a practical monopoly in the provision of legal services would be invalid. The practitioners who now complain that they cannot advertise as freely as they wish appear to overlook the fact that the regulatory system, of which the advertising restrictions are a part, imposes much wider restrictions on the providing of advice and assistance by people (who may or may not be lawyers) who are not legal practitioners. If Ch III required unrestricted communication, then people like the migration agents considered in Cunliffe23 would also be able to advertise, and provide, legal services. Section 92 The regulations should be understood as dealing with advertising in relation to the providing of legal services in New South Wales24. They are not aimed at interstate communications, and they certainly do not discriminate against them. Even so, their effect would extend to advertising by way of interstate communications. Indeed, if it were not so, evasion of the regulations, especially by means of electronic communications, would be simple. The form of question (1)(c) directs primary attention to that part of s 92 which concerns intercourse, and then to the part that concerns trade and commerce. The reasoning in Cole v Whitfield25 denied that the guarantees of freedom of intercourse and of freedom of trade and commerce were co-extensive, raising the problem of where that leaves intercourse which is part of trade and commerce. In the present case, there being nothing discriminatory or protectionist about the regulations, if it is the test applicable to trade and commerce that operates then the argument for the plaintiffs clearly fails. It is unnecessary to decide whether, as the Commonwealth submitted, the provision of legal services for reward is trade and commerce. It is sufficient to accept the alternative submission that the promotion of legal services by way of paid advertising is trade and commerce for the purposes of s 92. The application to such trade and commerce of the Cole v Whitfield test does not lead to a conclusion of invalidity. The regulations would also prohibit advertising of legal services which may not be part of trade and commerce. Communication is intercourse, and covers advertising which is not part of trade and commerce. Let it be assumed that at least some of the advertising covered by the regulations is in that category. The object of the regulations is not to impede interstate intercourse. The test to be applied therefore is whether the impediment to such intercourse imposed by 23 (1994) 182 CLR 272. 24 Interpretation Act 1987 (NSW), s 12; Solomons v District Court of New South Wales (2002) 211 CLR 119 at 130 [9]. 25 (1988) 165 CLR 360. the regulations is greater than is reasonably required to achieve the object of the regulations26. The object of the regulations is to restrict the advertising of legal services to be provided in New South Wales. That object can only be achieved by a general restriction on the advertising of such services. The impediment to interstate intercourse is no greater than is reasonably required to achieve the object of the regulations. This is not a case in which the application of one test would produce a result different from that produced by the application of another. The Commonwealth argued that where a law burdens interstate intercourse that occurs in or in relation to interstate trade or commerce, the trade and commerce limb of s 92 applies and the validity of the law is to be tested by reference to Cole v Whitfield. This may be correct, but it is unnecessary to decide the point. Extra-territoriality Questions (1)(d) and (e) refer to the extra-territorial operation of the regulations. The regulations are aimed at the advertising of legal services to be provided in New South Wales, but they apply to such advertising even if it takes place outside New South Wales, for example, on the Internet. It is the provision in New South Wales of the advertised services that provides the necessary connection, both with the regulation-making power conferred by s 216 of the Legal Profession Act and with the power of the State Parliament to make laws for the peace, order and good government of New South Wales. That power requires a relevant territorial connection but the test of relevance is to be applied liberally, and even a remote or general connection will suffice27. Here the connection is direct and substantial. Inconsistency with federal legislation The inconsistency relied upon by the plaintiffs for their argument based on s 109 of the Constitution was of the kind identified in Australian Mutual Provident Society v Goulden28, that is to say, impairment of or detraction from a Commonwealth scheme of legislation, and of rights, remedies and jurisdiction confirmed by such legislation. 26 AMS v AIF (1999) 199 CLR 160 at 178-180 [41]-[48], 232-233 [221]. 27 Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 22-26 [7]-[16]. 28 (1986) 160 CLR 330. Australian Mutual Provident Society v Goulden arose out of a claim that a life insurer's refusal to provide a certain disability benefit to a blind man upon the same terms and conditions as such a benefit would be provided to a person with unimpaired vision contravened State anti-discrimination legislation. There was no material from which an actuary could determine how much more likely a blind person was to suffer an incapacitating occurrence than a person who was not blind29. This Court held that the State legislation, insofar as it required the insurer to take on the risk, was inconsistent with the Life Insurance Act 1945 (Cth) ("the Life Insurance Act"). The Court noted that the Life Insurance Act was framed on the basis that it would operate in the context of local laws in the various States and Territories30. For example, at the time, State or Territory company laws governed corporate insurers. The same may be said of the federal laws relied on in this case in relation to the structure and regulation of the legal profession. However, the Court also pointed out that the Life Insurance Act made detailed provision for supervising and regulating the statutory funds of life insurers, such supervision and regulation being aimed at protecting policy holders. It said31: "Central to the practices of the insurance companies which the provisions of the Act are designed to regulate and control are the classification of risks and the setting of premiums." It would alter, impair or detract from the Commonwealth scheme of regulation if a registered life insurance company was prevented by State legislation from classifying different risks differently or from setting different premiums for different risks32. Discrimination in that sense is of the essence of life insurance. If State anti-discrimination legislation prevented life insurers from differentiating between sick or disabled persons and others, then the federal scheme of regulation would be set at naught. That was the context in which reference was made to impairment of a federal scheme of legislation. Preventing lawyers from advertising does not impair the federal legislation referred to in the case stated. Indeed, most of the legislation was originally enacted at a time when restriction on advertising by lawyers was the generally accepted professional standard. None of the federal legislation depends for its efficacy upon the unrestricted promotion of legal services. The rights, powers, and jurisdictions created have full legal effect and operation regardless 29 (1986) 160 CLR 330 at 331. 30 (1986) 160 CLR 330 at 335. 31 (1986) 160 CLR 330 at 336. 32 (1986) 160 CLR 330 at 337. of whether, at any given time, the States or Territories permit or restrict advertising by lawyers. The argument for the plaintiffs appears to be based upon the motive of the New South Wales Parliament, or of the regulation-making authority. That is irrelevant. If the regulations are inconsistent with federal legislation, then they are inoperative to the extent of the inconsistency. It does not matter why they were promulgated. If they are not inconsistent with federal legislation, then they are not inoperative. Again, it does not matter why they were promulgated. Inconsistency between a State law and a federal law does not spring from the political motives of the respective law-making authorities. Section 109 is concerned with inconsistency of laws, not inconsistency of political opinion. Different legislative policies might, or might not, result in inconsistent laws. There is nothing to show that restrictions on advertising by lawyers conflict with any federal legislative scheme. As has been noted, most of the federal laws in question were enacted at a time when such restrictions were normal. Conclusion The questions should be answered as follows: (2) Does not arise. (3) Does not arise. McHugh 47 McHUGH J. The ultimate issue in this case is whether the Legal Profession Regulation 2002 enacted under the Legal Profession Act 1987 (NSW) ("the Act") is contrary to the Constitution. Broadly, the Regulation prohibits barristers and solicitors from advertising their availability to perform legal work in respect of personal injury matters. The plaintiffs33 and amici curiae contend that the prohibition offends the Constitution in several ways. They contend that it: violates the implied freedom of political communication recognised in Lange v Australian Broadcasting Corporation34; violates an implied freedom of communication arising from Ch III of the Constitution; offends the freedom of interstate trade, commerce and intercourse guaranteed by s 92; and conflicts with federal legisation and is inoperative by reason of s 109. They also contend that the Regulation is invalid because it has an extra-territorial operation and is not a law for the peace, welfare and good government of New South Wales. The Regulation, in its relevant form35, came into effect on 23 May 2003. Clause 139 provides: "(1) A barrister or solicitor must not publish or cause or permit to be published an advertisement that includes any reference to or depiction of any of the following: personal injury, any circumstance in which personal injury might occur, or any activity, event or circumstance that suggests or could suggest the possibility of personal injury, or any connection to or association with personal injury or a cause of personal injury, 33 APLA Limited (first plaintiff, then trading as "Australian Plaintiff Lawyers Association", now trading as the "Australian Lawyers Alliance"); Maurice Blackburn Cashman Pty Ltd (second plaintiff); and Robert Leslie Whyburn (third plaintiff). 34 (1997) 189 CLR 520. 35 Legal Profession Amendment (Personal Injury Advertising) Regulation 2003. McHugh a personal injury legal service (that is, any legal service that relates to recovery of money, or any entitlement to recover money, in respect of personal injury). Maximum penalty: 10 penalty units. (2) A contravention of this clause by a barrister or solicitor is declared to be professional misconduct. Clause 138 defines "advertisement" as: "any communication of information ... that advertises or otherwise promotes the availability or use of a barrister or solicitor to provide legal services, whether or not that is its purpose or only purpose and whether or not that is its only effect." There is an extensive definition of "publish". It relevantly includes: publish in a newspaper ... display on an Internet website ... display on any document ... gratuitously sent or gratuitously delivered to any person ..." Clause 140 contains a limited exception for advertising an accredited specialty. It permits listings in a practitioner directory or the display of signs in a practitioner's office. In my opinion, cl 139 is invalid because its object and its effect, as evinced by its terms and setting, is to reduce litigation in respect of personal injury in the courts including courts exercising federal jurisdiction. By necessary implication, Ch III of the Constitution prohibits the States from enacting such legislation. Because the invalid operation of cl 139 is not severable from the rest of the Regulation, that clause and the Regulation are invalid. Clause 139 is also invalid because it prevents litigants and potential litigants from obtaining information about their rights in respect of certain federal causes of action and about the legal practitioners who might provide appropriate advice and representation in respect of those rights. It therefore impairs the capacity of courts exercising federal jurisdiction to hear and determine "matters" that Ch III of the Constitution authorises. Consequently, it violates the principles that inhere in or underlie that Chapter of the Constitution. McHugh Construction The federal Solicitor-General contends that in cll 139 and 140 the phrase "a barrister or solicitor" refers only to particular barristers or solicitors, and not to barristers or solicitors in a general sense36. Throughout its provisions, however, the Regulation employs the phrase, "barrister or solicitor", suggesting that it is directed to legal practitioners in general. Moreover, one object of the legislation was to reduce the number of personal injury suits. That object would not be served if the Regulation permitted general advertisements, enticing members of the public to find a lawyer. Given that neither the ordinary meaning of the words nor the legislative intent supports the limited construction for which the Solicitor- General contends, the broader construction is the preferable construction. Thus, the Regulation prohibits advertising with respect to personal injury services by any lawyer, and not just by the particular lawyer whose services are being promoted. The Solicitor-General also contends that a difference exists between advertising the availability of legal services and informing the public of their legal rights. He relies upon the word "availability" in the definition of "advertisement" in cl 138 to support the distinction. He contends that any publication that linked communication of legal rights in relation to personal injury with the availability of a barrister or solicitor to act in that connection would offend the Regulation but the mere communication of the existence of that right would not37. While it is true that the definition of advertising includes the promotion of the availability of a barrister or solicitor, the Solicitor-General's submission is inconsistent with cl 139(1)(b), which prevents the advertisement of "any circumstance in which personal injury might occur, or any activity, event or circumstance that suggests or could suggest the possibility of personal injury ...". This clause extends, for example, to the publication by Community Legal Centres of materials relating to domestic violence or sexual abuse. Alleged bases of invalidity Freedom of communication The plaintiffs make two submissions with respect to an implied freedom of communication. First, they contend that the type of communication prohibited by the Regulation falls within the protection of political and governmental communication recognised by this Court in Lange38. Second, they contend that 36 Transcript 6 October 2004. 37 Transcript 6 October 2004. 38 (1997) 189 CLR 520. McHugh Ch III contains an implied freedom of communication about legal rights, as distinct from government or political matters. The communications in question do not come within the Lange protection The extent to which communications concerning political and governmental matters are protected by the Australian Constitution can be understood only by reference to the provisions of the Constitution that give rise to the implied freedom. The protection is different in origin and scope from the protection afforded by the First Amendment to the Constitution of the United States. While the case law from that jurisdiction may sometimes provide useful illumination of the Australian freedom of communication doctrine, it does not assist in determining the scope of its protection in a case such as the present. That is because the protection of communications concerning government and political matters in Australia arises by necessary implication from the text of certain sections of that do not mention speech or communication. It does not arise from any general notion of representative government or the value of freedom of expression or a constitutional declaration, as in the First Amendment, that "Congress shall make no law ... abridging the freedom of speech, or of the press". the Constitution The seminal case in Australia is Lange v Australian Broadcasting Corporation39 where this Court defined the scope of the implied freedom for the purpose of the Australian Constitution. In the Court's unanimous judgment, it emphasised that the scope of the freedom from interference with communication is grounded in and consequently must be defined by particular provisions of the Constitution. It "is limited to what is necessary for the effective operation of that system of representative and responsible government provided for by the Constitution."40 Since the decision of this Court in Coleman v Power41, the test for determining whether a law infringes the freedom recognised in Lange is42: When a law of a State or federal Parliament or a Territory legislature is alleged to infringe the requirement of freedom of communication imposed by ss 7, 24, 64 or 128 of the Constitution, two questions must be answered 39 (1997) 189 CLR 520. 40 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 561. 41 (2004) 78 ALJR 1166 at 1185 [92], [94], 1201 [196], 1203-1204 [211], 1207 [228]; 209 ALR 182 at 207-208, 229-230, 233, 238-239. 42 (1997) 189 CLR 520 at 567-568. McHugh before the validity of the law can be determined. First, does the law effectively burden freedom of communication about government or political matters either in its terms, operation or effect? Second, if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and the procedure prescribed by s 128 for submitting a proposed amendment of the Constitution to the informed decision of the people. If the first question is answered "yes" and the second is answered "no", the law is invalid. The first question then is whether the communication falls within the protected area of communication. That is, is it a communication concerning a government or political matter? If the answer to that question is "No", then the question of whether the law is reasonably appropriate and adapted does not arise. The communications in question are not "political or governmental" The plaintiffs provided the Court with a number of proposed publications concerning the provision of legal services by legal practitioners. The judgment of Callinan J refers to them in detail. It is unnecessary for me to set them out. The parties accepted that, if published, each publication would contravene the Regulation. But the plaintiffs contend that the communications concern political or governmental issues, are within Lange's protection and the Regulation cannot apply to them. One publication, for example, refers to efforts of "Premier Bob Carr and Senator Helen Coonan" to stop the recipient of the publication from accessing "legal rights to compensation for" injuries "at work, by a defective product or on defective premises"43. The plaintiffs contend that this communication and communications of this nature concern political or governmental matters. The freedom of political or governmental communication, identified in Lange, is tied to the specific provisions of the Constitution that deal with the requirement for free and direct elections of the Houses of Parliament, executive responsibility to Parliament and the referendum procedure for amending the Constitution. The freedom is necessary to give effect to the requirements of direct elections for the Senate and the House of Representatives in ss 7 and 24 respectively, the involvement of electors in a referendum under s 128, the exercise of executive power by Ministers who are members of the House of Representatives or Senate and thus responsible to the electorate under ss 62 and 64, the control of supply to the Executive by the Parliament in s 83 and the 43 See reasons of Callinan J at [432], where the publication is set out in full. McHugh sittings of Parliament protected by parliamentary privilege under ss 6 and 49 of the Constitution. These provisions of the Constitution necessarily imply a freedom from legislative, executive and common law interference for "[c]ommunications concerning political or government matters between the electors and the elected representatives, between the electors and the candidates for election and between the electors themselves"44. Lange refers to "political or government matters". But those words must be read in the context of the decision. That context leaves no doubt that the term "government" is used to describe acts and omissions of the kind that fall within Chs I, II and VIII of the Constitution. It refers to representative and responsible government. In a broad sense, "government" includes the actions of the judiciary as the third branch of government established by the Constitution. But the freedom of communication recognised by Lange does not include the exercise of the judicial power of the Commonwealth by courts invested with federal jurisdiction or, for that matter, the judicial power of the States. Nothing in Lange or the subsequent decision of this Court in Coleman v Power45 supports the proposition that the exercise of judicial power is within the freedom recognised by Lange. Lange concerned the conduct of a politician. Coleman concerned criticism of a police officer who was alleged to be corrupt. That case was determined on the basis, conceded by the respondents46, that the criticism was a communication on a political or governmental matter. That concession was correct because the police officer was part of the Executive Government of Queensland47. But the mere fact that communications concerning the conduct of police officers are within the scope of the Lange freedom does not mean that communications concerning the courts or judges or the exercise of judicial power are also within the scope of that freedom. There is a difference between a communication concerning legislative and executive acts or omissions concerned with the administration of justice and communications concerning that subject that do not involve, expressly or inferentially, acts or omissions of the legislature or the Executive Government. Discussion of the appointment or removal of judges, the prosecution of offences, the withdrawal of charges, the provision of legal aid and the funding of courts, 44 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560. 45 (2004) 78 ALJR 1166; 209 ALR 182. 46 (2004) 78 ALJR 1166 at 1181 [78]; 209 ALR 182 at 202. 47 (2004) 78 ALJR 1166 at 1182 [80]; 209 ALR 182 at 203. McHugh for example, are communications that attract the Lange freedom. That is because they concern, expressly or inferentially, acts or omissions of the legislature or the Executive Government. They do not lose the freedom recognised in Lange because they also deal with the administration of justice in federal jurisdiction. However, communications concerning the results of cases or the reasoning or conduct of the judges who decide them are not ordinarily within the Lange freedom. In some exceptional cases, they may be. But when they are, it will be because in some way such communications also concern the acts or omissions of the legislature or the Executive Government. The distinction between communications concerning the administration of justice that are within the Lange freedom and those that are not may sometimes appear to be artificial. But it is a distinction that arises from the origins of the constitutional implication concerning freedom of communication on political and government matters. The Lange freedom arises from the necessity to promote and protect representative and responsible government. Because it arises by necessity, the freedom is limited to "the extent of the need."48 Courts and judges and the exercise of judicial power are not themselves subjects that are involved in representative or the constitutional sense. Accordingly, the advertisements that the Regulation prohibits are not themselves communications concerning government for the purpose of the freedom identified in Lange. responsible government Nor are they communications concerning "political" matters in the sense referred to in Lange. That term admits of no ready definition. As Gleeson CJ remarked in Coleman v Power49, in many cases "there may be a degree of artificiality involved in characterising conduct for the purpose of deciding whether a law, in its application to such conduct, imposes an impermissible burden upon the protected kind of communication." It may be impossible to formulate an exhaustive definition of the term "political" for the purpose of the constitutional freedom. Indeed, the plaintiffs did not attempt to do so. But the methodology employed by the Court in Lange assists in determining whether a communication is "political" for the purposes of the Constitution. Lange confined the scope of freedom of communication by requiring a relationship of necessity between the provisions giving rise to the freedom and the communication to be protected. The provisions that the Court identified as giving rise to an implied freedom of communication necessitate some level of communicative freedom in Australian society about matters relevant to executive 48 Board of Fire Commissioners (NSW) v Ardouin (1961) 109 CLR 105 at 118 per 49 (2004) 78 ALJR 1166 at 1173 [28]; 209 ALR 182 at 191-192. McHugh responsibility and an informed electoral choice. The ends required the means. The requirement of necessity indicates that the communication must bear a close relationship to the Ch I, II and VIII sections from which the protection flows. Reliance on the implied freedom, identified in Lange, requires the opposite approach to that involved when a party in the United States relies on the freedom conferred by the First Amendment to the United States Constitution50. In Australia, if the regulatory measure affecting the communication is otherwise within the power of the relevant State or federal government, it is the communicator who must establish the necessity of the communication. A State or federal government whose regulatory measure is impugned is not required to demonstrate the necessity of the measure that burdens the communication. No doubt communications about the desirability of regulations prohibiting or curtailing the ability of lawyers to advertise their services ensure that voters are informed about government policies that affect their access to such information. They are communications for the purpose of the Lange doctrine. So also are communications that inform the public about government policies affecting the capacity and opportunity of individuals to enforce their legal rights. I did not understand the State and federal governments to dispute that cl 139(1) cannot validly apply to communications of these types51. But so far as the communications relied on in this case are concerned, only that part of the advertisement referring to "Premier Bob Carr and Senator Helen Coonan" concerns political or governmental matters within the meaning of Lange. The rest of that advertisement concerns matters that fall outside the protection of Lange. That part of the advertisement which concerns political matter is not so intertwined with non-protected matter that it cannot be severed from it. Accordingly, although cl 139 cannot apply to part of one advertisement, it can apply to the rest of the advertisement, which contravenes the terms of the Regulation. The remaining communications – which are set out in the judgment of Callinan J – are not concerned with government or political matters. 50 For example, Central Hudson Gas v Public Service Commission 447 US 557 at 561-566 (1980) where the Supreme Court laid down a four part test for the valid regulation of commercial speech. The fourth limb is a requirement that the regulation be "not more extensive than is necessary" to serve the government interest. 51 Transcript 6 October 2004. McHugh The communications fall within an implied freedom of communication arising from Ch III of the Constitution The plaintiffs contended that Ch III of the Constitution contains an implied freedom that they defined as follows52: "Chapter III, in particular sections 71, 73, 75, 76 and 77, requires for its effective operation that the people of the Commonwealth have the capacity, ability or freedom to ascertain their legal rights and to assert those legal rights before the courts there mentioned. The effective operation of that capacity, ability or freedom requires that they have the capacity or ability or freedom to communicate and particularly to receive such information or assistance as they may reasonably require for that to occur. The prohibition, in our submission, is one that extends to any law of the Commonwealth or of a State that burdens the assertion of legal rights before the courts, including the correlative communication to which we have referred, and does not – and here we adopt the formulation of Justice Deane in a section 92 context adopted by three members of this Court in AMS v AIF – go beyond what is necessary or appropriate and adapted for the preservation of an ordered society or the protection or vindication of legitimate claims of individuals in an ordered society." Just as the particular provisions of Chs I, II and VIII give rise to certain implications, so too does Ch III – which deals with the federal judiciary and federal jurisdiction. In Ch III, those implications provide a shield against any legislative forays that would harm or impair the nature, quality and effects of federal jurisdiction and the exercise of federal judicial power conferred or invested by the Constitution or laws of the Parliament of the Commonwealth. In Quick and Garran's great work on the Constitution53, the learned authors said: "As there is no necessity for specially declaring that the privileges and immunities of the people of the Commonwealth may not be abridged by the States, so there is no necessity for specifying any procedure by which they may be enforced. They may be described as self-executing. Every privilege or immunity conferred by the Constitution implies a prohibition against anything inconsistent with the free exercise or enjoyment thereof. 52 Transcript 6 October 2004. 53 The Annotated Constitution of the Australian Commonwealth (1901) at 959. McHugh Any law passed by a State, in violation of any constitutional privilege or immunity, would be null and void; the courts would not enforce it." In an earlier passage, the authors gave examples of violations of these constitutional privileges and immunities. In respect of federal courts, they said54: "The people of the Commonwealth having a right to sue in the Federal courts in the prosecution of causes specified by the Constitution, a State could not obstruct the citizens of other States in suing its own citizens in the Federal courts." Chapters I, II and III – in particular, ss 1, 61 and 71 – of the Constitution embody the doctrine of separation of powers55. Section 1 vests the legislative power of the Commonwealth in a Federal Parliament. Section 61 vests the executive power of the Commonwealth in the Queen and declares that it "is exercisable by the Governor-General as the Queen's representative". Section 71 declares that the judicial power of the Commonwealth shall be vested in "the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction." The doctrine of separation of powers itself gives rise to certain implications. It follows irresistibly from the separation of legislative, executive and judicial functions and powers and the vesting of judicial power in the s 71 courts, for example, that the Parliament of the Commonwealth cannot usurp the judicial power of the Commonwealth by itself exercising that power. Nor can it legislate in any manner that would impair the investiture of judicial power in the courts specified in s 71 of the Constitution. Thus, the Parliament of the Commonwealth cannot usurp the judicial power of the Commonwealth by declaring that no federal court can release a person who is unlawfully detained under a federal law56 or by enacting Bills of Attainder57. It need hardly be said that, if the Constitution prohibits the federal Parliament from usurping or interfering with the judicial power of the Commonwealth, it necessarily prohibits the States from doing so. Thus, the States, with or without the consent of the 54 The Annotated Constitution of the Australian Commonwealth (1901) at 959. 55 Attorney-General of the Commonwealth of Australia v The Queen (1957) 95 CLR 529 at 537-538, 539-540; [1957] AC 288 at 311-312, 314-315. 56 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1. 57 Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 536 per Mason CJ, 648-649 per Dawson J, 686 per Toohey J, 721 per McHugh J. McHugh Parliament of jurisdiction58. the Commonwealth, cannot invest federal courts with Nor can the States enact legislation that attempts to alter or interfere with the working of the federal judicial system set up by Ch III. Thus, this Court held that Queensland could not legislate to refer questions or matters concerning Queensland to the Judicial Committee of the Privy Council59. That was because Ch III "enabled the Parliament by appropriate legislation to achieve the result that all of the matters mentioned in ss 75 and 76 of the Constitution (except possibly inter se questions) should be finally decided in this Court"60. The Queensland legislation was invalid because it was "designed to enable the decision of the Judicial Committee to be obtained on questions whose decision, by the Constitution and legislation enacted thereunder, is the responsibility of this Court"61 (emphasis added). Hence, the Queensland law infringed the judicial structure established by Ch III itself and the legislation passed in accordance with it. Similarly, the States cannot enact legislation that compromises the institutional integrity of State courts that exercise or could exercise federal jurisdiction62. To permit the States to do so would infringe the principles upon which Ch III is built. The plaintiffs pointed out that their advertisements and communications are not confined to matters of State law. They concern "matters" that arise under federal law. Indeed, one communication of the plaintiffs concerns representative proceedings in the Federal Court of Australia brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth). Moreover, a cause of action which, when commenced, is in a State jurisdiction, may by reason of a later pleading or argument become a matter in federal jurisdiction63. Under the "autochthonous expedient"64 of our Constitution, State courts may be invested with federal jurisdiction. That jurisdiction is not confined to determining federal causes of action in accordance with express grants of federal jurisdiction; it arises and 58 Re Wakim; Ex parte McNally (1999) 198 CLR 511. 59 The Commonwealth v Queensland (1975) 134 CLR 298. 60 The Commonwealth v Queensland (1975) 134 CLR 298 at 314. 61 The Commonwealth v Queensland (1975) 134 CLR 298 at 315. 62 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 63 Austral Pacific Group Ltd (In liq) v Airservices Australia (2000) 203 CLR 136 at 64 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 268. McHugh transforms all causes of action being heard in a State court into causes of action in federal jurisdiction whenever, in the course of determining one of the causes of action, it is necessary to determine a federal issue. As a result, cl 139 prohibits advertisements concerning causes of action – "matters" – that involve or could involve the exercise of federal jurisdiction and the exercise of federal judicial power. Indeed, the argument for New South Wales candidly conceded that the Regulation was part of a package of legislative reforms whose object was to reduce litigation in respect of personal injury. So the questions of constitutional principle that arise in this part of the case are whether, consistently with Ch III, a State can legislate to reduce litigation in federal jurisdiction or legislate to impair the capacity or opportunity of a person to receive offers of legal assistance concerning the availability or enforcement of causes of action in federal jurisdiction. In determining those questions, three subsidiary constitutional principles must be applied. First, as The Commonwealth v Queensland65 shows, in determining whether State legislation infringes the principles inhering in or the scheme of Ch III, it is proper to take into account not only that that Chapter permits the Parliament of the Commonwealth to legislate on certain subjects but also that it has done so. Hence, the existence of such legislation may not only raise a s 109 question but may provide a factum that gives content to the scheme of and the abstract principles that inhere in Ch III. In The Commonwealth v Queensland, no s 109 question arose because there was no conflict between the Commonwealth laws prohibiting appeals to the Judicial Committee in respect of decisions made in federal jurisdiction and the Queensland law permitting matters concerning Queensland law to be referred to the Judicial Committee. However, the existence of the Commonwealth legislation was an important factor in this Court holding that the Queensland law violated the principles that underlie Ch III of the Constitution. infringes a in determining whether constitutional principle or prohibition, "[o]ne must look for the burden or restriction not only in the language of the legislation but in the operation of the legislation."66 It is therefore "necessary to examine the nature and quality of the restriction in the light of the known and proved economic social and other circumstances of its imposition and of the community in which it is imposed."67 To ignore the practical effect of the legislation would be "to reduce the constitutional prohibition to a legal formulation which may be readily legislation Second, 65 (1975) 134 CLR 298. 66 North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 622 per Jacobs J. 67 North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 624 per Jacobs J. McHugh circumvented."68 Third, in determining where a State can validly affect matters of federal concern, it is necessary to bear in mind that State legislative power69: "consists in the undefined residue of legislative power which remains after full effect is given to the provisions of the Constitution establishing the Commonwealth and arming it with the authority of a central government of enumerated powers. That means, after giving full effect not only to the grants of specific legislative powers but to all other provisions of the Constitution and the necessary consequences which flow from them." (emphasis added) Once these subsidiary principles are applied in the present case, the invalidity of the Regulation is apparent. In accordance with its powers under ss 75, 76 and 77 of the Constitution, the Parliament of the Commonwealth has legislated for causes of action, advertising in respect of which the Regulation prohibits. That is to say, the State of New South Wales seeks to prohibit certain communications concerning the existence or potential existence of certain classes of federal causes of action with the object of reducing litigation in respect of personal injury. In my view, a State has no more power to interfere with such communications – with or without that object – than it has to prevent newspapers reporting cases in federal courts or lawyers acting for parties in federal jurisdiction or to abolish legal professional privilege in respect of federal matters. In Cunliffe v The Commonwealth70, Mason CJ said that the freedom of communication necessary to sustain representative and responsible government extended to the provision of advice and information by lawyers in relation to matters and issues arising under the Migration Act. But, for the reasons I have given, the provision of legal advice and information concerning federal law should be seen as indispensable to the exercise of the judicial power of the Commonwealth and protected by Ch III rather than the freedom identified in Lange. It may be sufficient answer to the claim of the State in this case to say that a State simply has no power to legislate in respect of or in relation to "matters" that arise in federal courts or concern the exercise of federal jurisdiction. In Uther71, Dixon J pointed out that in a federal system, "you do not expect to find 68 North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 607 per Mason J. 69 In re Richard Foreman & Sons Pty Ltd; Uther v Federal Commissioner of Taxation (1947) 74 CLR 508 at 530 per Dixon J. 70 (1994) 182 CLR 272 at 298. 71 In re Richard Foreman & Sons Pty Ltd; Uther v Federal Commissioner of Taxation (1947) 74 CLR 508 at 529. McHugh either government legislating for the other." Similarly, in the absence of a specific head of power, you do not expect either government to legislate in respect of or in relation to the courts of, or the causes of action created by, another government. But, however that may be, the present case goes beyond the abstract question whether the States can legislate in respect of matters concerned with federal courts or jurisdiction. Acting under the powers conferred in Ch III of the Constitution, the Commonwealth has vested courts – including State courts – with federal jurisdiction to determine "matters" concerning personal injury that arise under laws of the Commonwealth or otherwise give rise to federal jurisdiction. The plaintiffs point to ss 39(2), 39B, 55A, 55B, 55D and 78 of the Judiciary Act 1903 (Cth); Divs 1 and 2 of Pt III and Pt IVA of the Federal Court of Australia Act 1976 (Cth); ss 52, 53(a), 74B, 74D, 75AD, 82, 86 and 87 of the Trade Practices Act 1974 (Cth); Pts II, IV, V and VI of the Safety, Rehabilitation and Compensation Act 1988 (Cth), together with Pts IV and IVA of the Administrative Appeals Tribunal Act 1975 (Cth); Pts 4, 6 and 7 of the Superannuation (Resolution of Complaints) Act 1993 (Cth), together with Pts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth). These provisions can be divided into two thematic groups: "those conferring substantive rights, remedies, powers and jurisdiction; and those conferring rights to legal representation"72 including those conferring upon barristers or solicitors rights of audience in courts exercising federal jurisdiction. The Parliament has enacted the above laws in the knowledge that most litigants and potential litigants will be advised and represented by legal practitioners and that the functioning of courts exercising federal jurisdiction will be more efficient if those litigants are advised and represented by lawyers. Law – particularly federal law – is now so complex that few persons, untrained in the law, can know their legal rights and obligations without advice from a qualified legal practitioner. Long ago, the Parliament recognised the central part that legal practitioners play in enforcing federal rights and obligations by legislating to give legal practitioners entitled to practise in a State or Territory jurisdiction the right to practise in any State or federal court exercising federal jurisdiction73. And, as the argument for New South Wales conceded – by implication if not expressly – prohibiting legal practitioners from advertising will reduce the number of actions brought in federal jurisdiction as well as State jurisdictions. Communications between legal practitioner and client, between legal practitioners, and between the administration of justice in Australia. They make up part of the essential elements of judicial processes required under the Constitution, without which judges and practitioners, are critical 72 Plaintiffs' Further Submissions at [6]. 73 Sections 55A, 55B, 55D and 78 of the Judiciary Act 1903 (Cth). McHugh proceedings in federal jurisdiction would become a mockery of the judicial system contemplated by Ch III74. And, without communications between legal practitioners and potential litigants, the number of actions brought in federal jurisdiction would be greatly reduced. It is impossible to accept therefore that Ch III raises no barrier to State legislation interfering with or impairing such communications. The argument of New South Wales and others appeared to accept that the States could not interfere with these communications. But they contended that the Regulation operated before any relationship of practitioner and client had formed and Ch III had been engaged. This was an argument that might have appealed 40 years ago when this Court tested constitutional validity by examining only the legal operation of impugned legislation and ignoring its social and practical effect. But at least since the decision in North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW75 the Court has consistently rejected that approach. It rejected it in 1975 in relation to s 92 of the Constitution in North Eastern Dairy Co Ltd itself. It rejected it in relation to s 90 of the Constitution in 1989 in Philip Morris Ltd v Commissioner of Business Franchises (Vict)76, if not earlier. The legal criteria of liability expressed in impugned legislation do not determine its constitutional validity. Validity is determined after examining "the nature and quality of the restriction in the light of the known and proved economic social and other circumstances of its imposition and of the community in which it is imposed."77 To hold that Ch III protects a communication between a lawyer and a lay person immediately after the lawyer was retained to act but not one made immediately before the formal retainer was created would allow form to triumph over substance. Moreover, in practice the formal client-lawyer relationship is frequently created only after the lawyer has had a preliminary consultation with the client. The protection that Ch III gives to communications between litigants and potential litigants and lawyers does not depend on the existence of retainers but on communications made by lawyers to persons with potential federal rights or obligations. Nor does it depend on the lay person seeking out the lawyer. The communications protected by Ch III are not limited to those made after a retainer has been created or the lay person has consulted the lawyer. 74 Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 607 per Deane J. See also R v Quinn; Ex parte Consolidated Food Corporation (1977) 138 CLR 1 at 11. 75 (1975) 134 CLR 559. 76 (1989) 167 CLR 399 at 432, 450-451, 492. 77 North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 624 per Jacobs J. McHugh Clause 139 prevents potential litigants from obtaining information about their rights in respect of certain federal causes of action and about the legal practitioners who might provide appropriate advice and representation (even on a pro bono basis) concerning those rights. It thus impairs the capacity of courts exercising federal jurisdiction to hear and determine "matters" that Ch III authorises and for which the Parliament has legislated in the expectation that those "matters" will be determined in federal jurisdiction. It is beside the point that Ch III only authorises determination of those "matters" by virtue of "appropriate legislation" enacted under its provisions78. Clause 139 therefore violates the principles that inhere in Ch III79. It also violates the principle inherent in Ch III that persons who have rights under federal law may enforce them in federal jurisdiction with the advice and assistance of qualified legal practitioners in accordance with the traditional judicial process. It does so because cl 139 impairs the capacity of persons with federal rights in respect of certain matters to obtain legal advice and representation in respect of those rights, if indeed it does not prevent them from doing so. State legislation that has these effects is "contrary to the inhibitions which, if not express, are clearly implicit in Ch III."80 Moreover, the object and the effect of the Regulation is to reduce litigation in respect of personal injury. The Regulation does not differentiate between litigation in State jurisdiction and litigation in federal jurisdiction. Its object and its effect is to reduce litigation in respect of personal injury whatever the source of the right to sue for such injury and whatever the court that has jurisdiction to enforce the right. Thus the Regulation has the object and the effect of reducing litigation in federal jurisdiction. In my opinion, the implications to be drawn from Ch III make it clear that the States have no power to interfere in federal jurisdiction by legislation that has the effect or the object of reducing litigation in that jurisdiction. For these reasons, the Regulation cannot constitutionally apply to all advertisements that fall within its terms. It is no answer to the plaintiffs' case on Ch III that, for a long period and until comparatively recently, State laws prohibited legal practitioners from advertising any of their services. Perhaps, State legislation having that effect could validly have applied to advertising concerning the availability of legal services in respect of federal matters on the ground that it was a general law necessary to protect State residents and that it only incidentally had an impact on federal jurisdiction. But, however that may be, a blanket prohibition on lawyers' advertising in respect of all causes of action and legal matters stands in a different category to legislation that permits advertising by lawyers but prohibits 78 The Commonwealth v Queensland (1975) 134 CLR 298 at 314. 79 The Commonwealth v Queensland (1975) 134 CLR 298 at 315. 80 The Commonwealth v Queensland (1975) 134 CLR 298 at 315. McHugh the advertising of services in respect of a narrow class of federal and State rights. A narrow law of that type has an impact only on some available federal causes, is intended to have an impact on them and cannot be justified on the basis that the community needs protection from all advertising by lawyers. No doubt the Parliament of the Commonwealth, acting under the powers conferred by Ch III and s 51(xxxix), may regulate advertising by lawyers in respect of "matters" arising in federal jurisdiction. But what is open to the Parliament under powers expressly granted to it is not open to the States so far as federal jurisdiction is concerned. Nor is the validity of cl 139 saved by cl 140 which provides an exception to the prohibition in cl 139. Clause 140 permits: "the publication of an advertisement that advertises a barrister or solicitor as being a specialist or offering specialist services, but only if the advertisement is published by means of: an entry in a practitioner directory that states only the name and contact details of the barrister or solicitor and any area of practice or accredited specialty of the barrister or solicitor ...". Clause 140 allows the Law Society of New South Wales, for example, to maintain its lists of accredited specialists in personal injury matters. For those who are already aware of their rights or sufficiently informed to make enquiries, this exception to cl 139 enables those persons to obtain advice concerning their federal rights. But to say the least it seems highly unlikely that more than a small percentage of those who have federal rights would be aware of practitioners' directories. And even those who know of them may not be aware that the accredited specialists can assist them. One of the purposes of some of the advertisements of the plaintiffs is to inform citizens that they may have rights of which they are unaware. The enactment of cl 139 is itself eloquent testimony that, without advertisements of the kind that the plaintiffs wish to use, many persons will remain ignorant of their rights and their causes of action will not be enforced. It follows that the Regulation cannot validly apply to advertisements that concern causes of action in federal jurisdiction. Severability The question then is whether the invalid part of the Regulation is severable. New South Wales contends that the Regulation should be read down in accordance with s 31 of the Interpretation Act 1987 (NSW) and the "fundamental rule of construction that the legislatures of the federation intend to McHugh enact legislation that is valid and not legislation that is invalid."81 However, severability will only save legislation if the Court is able to uphold certain parts of that legislation without itself being required to legislate. When a court applies a severability provision and declares that so much of an invalid enactment is valid, it does so by a process of construction. It determines whether the law would be valid if it had been enacted without that part of it that is invalid. And it determines, as a matter of construction, that what remains after the severance gives effect to what the legislature intended to be the law on the subject. Expressly or by inference, therefore, the enactment must contain "a standard or test that can be applied so as to confine the enactment within constitutional power."82 For a court to give effect to its own ideas of how a valid law should operate would require the court to legislate. On its face, cl 139 prohibits any advertisement by a barrister or solicitor that refers to or depicts in any way personal injury or circumstances in which personal injury might occur or refers to a legal service relating to the recovery of money in respect of personal injury. It applies to all advertisements concerning personal injury and legal services relating to personal injury irrespective of whether an injury gives rise to any right of action. In prohibiting these advertisements, it does not distinguish between kinds of personal injury or the sources or nature of any rights, claims or privileges that might arise in respect of those injuries. Nor does it refer to the courts where any right of action concerning personal injury may be enforced. In these circumstances, I do not think that it is possible to read down the Regulation so that it can operate validly. In Victoria v The Commonwealth83, five members of this Court said: "Where a law is expressed in general terms, it may be more difficult to determine whether Parliament intended that it should, nonetheless, have a partial operation. And there is an additional difficulty if it 'can be reduced to validity by adopting any one or more of a number of several possible limitations'84. It has been said that if, in a case of that 81 Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 644 [28]. 82 Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 372; see also Pidoto v Victoria (1943) 68 CLR 87 at 109. 83 (1996) 187 CLR 416 at 502. 84 Pidoto v Victoria (1943) 68 CLR 87 at 111. McHugh kind, 'no reason based upon the law itself can be stated for selecting one limitation rather than another, the law should be held to be invalid'85." There is no term or provision in cl 139 that can be excised so as to give it validity. The Regulation is expressed in general terms. There are a number of limitations that could be used to give it validity. They include inserting words such as "other than federal rights" or "other than rights that involve or may involve federal jurisdiction" or "consistently with Chapter III of the Constitution" or "which concern State law or State courts". No doubt other limitations can be identified that would arguably save the Regulation. But to insert any of these limitations would recast the Regulation and give it a meaning and effect very different from what it has. And, notwithstanding s 31 of the Interpretation Act 1987, it is by no means clear that, if the Regulation cannot validly apply to all advertisements, its makers intended it to have a partial operation. The Regulation is expressed "in a form and with a completeness and definitiveness that give neither place nor means for the application of the general intention in favour of severance."86 Accordingly, in my opinion the Regulation is invalid. This makes it unnecessary to determine the other questions in the special case. Orders The questions in the special case should be answered: (a) No. (b) Yes. (c) Unnecessary to answer. (d) Unnecessary to answer. (e) Unnecessary to answer. Unnecessary to answer. (3) Unnecessary to answer. 85 Pidoto v Victoria (1943) 68 CLR 87 at 111. 86 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 373 per McHugh GUMMOW J. By action commenced by writ of summons and statement of claim in the original jurisdiction, the plaintiffs seek declaratory relief against the Legal Services Commissioner of New South Wales ("the Commissioner") and the State of New South Wales ("the State"). The plaintiffs either provide legal services in relation to compensation and other claims arising out of cases of bodily injury, or are representative bodies whose members are engaged in the provision of such services. They challenge the validity of Pt 14 (cll 138-140D) of the Legal Profession Regulation 2002 (NSW) ("the Regulation"). The Regulation was made under the Legal Profession Act 1987 (NSW) ("the Act") and prohibits the publication of certain forms of advertising offering legal services in relation to personal injury. The State emphasises that the Regulation was designed as one of a number of measures, including the Civil Liability Act 2002 (NSW), to reduce the volume of personal injury litigation and to reduce the growth in the cost of public liability insurance premiums. The plaintiffs seek to turn this purpose of the State to their own account, as will appear later in these reasons. Part 14 of the Regulation took the form in which it is challenged by operation of the Legal Profession Amendment (Personal Injury Advertising) Regulation 2003 (NSW) ("the Amendment Regulation"). The Amendment Regulation stated that it "amended" Pt 14 by omitting the Part and inserting instead the Part in the form now under challenge. There is no attack upon Pt 14 in its original form. The parties concurred in stating the questions of law arising in the proceeding in the form of a special case for the opinion of the Full Court under O 35 r 1 of the High Court Rules 1952 (Cth)87. From the facts and documents stated in the special case, the Court may draw any inference of fact or law which might have been drawn from them if proved at trial (O 35 r 1(4)). The amended special case The critical questions presented in the amended special case filed on 6 October 2004 are raised by question 1 which indicates the various bases upon which invalidity is asserted. The Regulation is delegated legislation. The question poses issues of both lack of State legislative power and invalidity by reason of inconsistency with federal laws. The text of the question assumes the application of the Constitution directly to Pt 14. While this approach has been taken in various cases, including 87 The case was instituted prior to the commencement of the High Court Rules 2004 (Cth). The new Rules contain equivalent provisions in r 27.08. Levy v Victoria88 to which reference was made in argument, it compresses a more complex process of reasoning. The regulation-making power contained in the Act, pursuant to which the Governor, with the advice of the Executive Council, made the Regulation, must be regarded as itself limited by the Constitution. To adapt what was said by Fullagar J in O'Sullivan v Noarlunga Meat Ltd89: "The question therefore resolves itself into whether the regulations are within the constitutional power of the [State]. If Parliament had enacted them directly, would they be valid?" In so far as issues are raised of inconsistency and invalidity by reason of the operation of s 109 of the Constitution, the question resolves itself somewhat differently. The term "invalid" in s 109 means, not beyond power, but "inoperative"90. Further, the phrase in s 109 "a law of a State" in numerous cases has been treated as including regulations made under the authority of a State statute and there has been a direct comparison between the regulations and the relevant Commonwealth law (or award given force by Commonwealth law). The text of question 1 is as follows: Is Part 14 of the Regulation invalid in whole or in part by reason that it: impermissibly infringes the freedom of communication on political and governmental matters guaranteed by the Constitution; impermissibly infringes the requirements of Ch III of the Constitution and of the principle of the rule of law as given effect by the Constitution; impermissibly infringes the freedom of interstate intercourse or alternatively trade and commerce guaranteed by s 92 of the Constitution; 88 (1997) 189 CLR 579. 89 (1954) 92 CLR 565 at 594. 90 Butler v Attorney-General (Vict) (1961) 106 CLR 268 at 274. exceeds the legislative powers of the State of New South Wales by virtue of the nature of its extra-territorial operation; exceeds any powers to make regulations under [the Act], by virtue of the nature of its extra-territorial operation; inconsistent with jurisdiction conferred, regulated or provided for by: the rights, duties, remedies and ss 39(2), 39B, 55A, 55B, 55D, and 78 of the Judiciary Act 1903 (Cth); (B) Divisions 1 and 2 of Part III and Part IVA of the Federal Court of Australia Act 1976 (Cth); ss 52, 53(a), 74B, 74D, 75AD, 82, 86 and 87 of the Trade Practices Act 1974 (Cth); Parts II, IV, V and VI of the Safety, Rehabilitation and Compensation Act 1988 (Cth), together with Parts IV and IVA of the Administrative Appeals Tribunal Act 1975 (Cth); Parts 4, 6 and 7 of the Superannuation (Resolution of Complaints) Act 1993 (Cth), together with Parts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth)." Questions 2 and 3 only fall to be answered if question 1 is answered "yes". Question 2 asks whether, if an affirmative answer is given to question 1, the Regulation validly prohibits the publication of any or all of a number of examples of proposed communications which the plaintiffs wish to publish, included as annexures to the further amended statement of claim. Question 3 then asks whether, given an affirmative answer to question 2, the declaratory relief sought by the plaintiffs should nevertheless be withheld in the discretion of the Court. Before turning to consider the answer given to these questions, it is necessary to consider first the State legislative scheme controlling the advertising of legal services, then the organisation of the plaintiffs and the amici curiae, and the detail of the proposed communications. The legislation In New South Wales, the advertising of legal services is governed by the Act and the Regulation91. At the time the Amendment Regulation was made, s 38J of the Act was headed "Advertising". This provides: "(1) A barrister or solicitor may advertise in any way the barrister or solicitor thinks fit. (2) However, an advertisement must not be of a kind that is or that might reasonably be regarded as: false, misleading or deceptive, or in contravention of the Trade Practices Act 1974 of the Commonwealth, the Fair Trading Act 1987 [(NSW)] or any similar legislation, or in contravention of any requirements of the regulations. (3) A contravention by a barrister or solicitor of subsection (2) is capable of being professional misconduct or unsatisfactory professional conduct, whether or not the barrister or solicitor is convicted of an offence in relation to the contravention." It will be readily apparent that to a significant degree the provision of legal services by barristers and solicitors in New South Wales, as elsewhere in Australia, includes work respecting rights and liabilities arising under federal law as well as under common law and State law. Section 38J appears to operate so that as a matter of State law advertisements complying with that section and which relate to matters of federal law are permitted. Provisions of the type alluded to in s 38J(2)(c) are contained in Pt 14 of the Regulation92. Part 14, headed "Advertising of personal injury services", 91 The present proceeding was instituted and heard before the commencement of the Legal Profession Act 2004 (NSW). After the reservation of judgment, the Regulation was amended by the Legal Profession Amendment (Advertising) Regulation 2005 (NSW) ("the 2005 Regulation") which commenced on 1 July 2005. These reasons deal with the attack upon the validity of the Regulation in the form it took before the 2005 Regulation. 92 The Explanatory Note to the Amendment Regulation states that it was made under ss 38J, 127 and 216 of the Act. The Act was later revised by the Legal Profession Legislation Amendment (Advertising) Act 2003 (NSW) which amended s 38J and inserted in s 38JA a specific power to make regulations with respect to the (Footnote continues on next page) places restrictions on the broad licence granted to solicitors and barristers by s 38J(1) to advertise their legal services in matters relating to personal injury. The central provision of Pt 14 is cl 139. This provides: "(1) A barrister or solicitor must not publish or cause or permit to be published an advertisement that includes any reference to or depiction of any of the following: personal injury, any circumstance in which personal injury might occur, or any activity, event or circumstance that suggests or could suggest the possibility of personal injury, or any connection to or association with personal injury or a cause of personal injury, a personal injury legal service (that is, any legal service that relates to recovery of money, or any entitlement to recover money, in respect of personal injury). Maximum penalty: 10 penalty units. (2) A contravention of this clause by a barrister or solicitor is declared to be professional misconduct. Evidence that a barrister or solicitor has been convicted of an offence under this clause or under clause 73D of the Workers Compensation (General) Regulation 1995[93] is sufficient evidence marketing of legal services. The plaintiffs accepted in argument that the general regulation-making power in s 216 of the Act was itself sufficient to support the Amendment Regulation. The plaintiffs also accepted that, leaving aside any arguments based on the Constitution, the Amendment Regulation fell within the regulation-making power conferred on the Governor by the Act. The result is that there is no need to consider the change later effected by the amendment to s 38J and the insertion of s 38JA. 93 The Workers Compensation (General) Regulation 1995 (NSW) was repealed by operation of s 10(2) of the Subordinate Legislation Act 1989 (NSW) with effect from 1 September 2003. It was replaced by the Workers Compensation Regulation 2003 (NSW) ("the Workers Compensation Regulation") which commenced on that date. Part 19B of the Workers Compensation (General) Regulation 1995, which contained cl 73D, is reproduced as Pt 18 of the Workers Compensation Regulation. Part 18 imposes restrictions on the advertising of legal services relating to work injury which appear to be substantially similar to those imposed with respect to (Footnote continues on next page) of a contravention of this clause by the barrister or solicitor for the purposes of any proceedings under Part 10 (Complaints and discipline) of the Act." There are certain limited exceptions to cl 139 in cll 140 and 140A. These are discussed below. "Advertisement", for the purposes of Pt 14, is defined to mean "any communication of information (whether by means of writing, or any still or moving visual image or message or audible message, or any combination of them) that advertises or otherwise promotes the availability or use of a barrister or solicitor to provide legal services, whether or not that is its purpose or only purpose and whether or not that is its only effect"94. The reference to "publish" in cl 139 is defined in cl 138 to mean: publish in a newspaper, magazine, journal, periodical, directory or other printed publication, or disseminate by means of the exhibition or broadcast of a photograph, slide, film, video recording, audio recording or other recording of images or sound, either as a public exhibition or broadcast or as an exhibition or broadcast to persons attending a place for the purpose of receiving professional advice, treatment or assistance, or broadcast by radio or television, or display on an Internet website or otherwise publicly disseminate by means of the Internet, or publicly exhibit in, on, over or under any building, vehicle or place or in the air in view of persons in or on any street or public place, display on any document (including a business card or letterhead) gratuitously sent or gratuitously delivered to any person or thrown or left on any premises or on any vehicle, or display on any document provided to a person as a receipt or record in respect of a transaction or bet." personal injury advertising by Pt 14 of the Regulation. No challenge was made to the validity of Pt 18 of the Workers Compensation Regulation. The term "personal injury" is defined to include "pre-natal injury, impairment of a person's physical or mental condition, and disease"95. Significantly, the definition of personal injury is not restricted to injury tortiously inflicted, nor is the restriction on advertising imposed by cl 139 limited to advertisements for legal services relating to the recovery of money. While the definition of "personal injury legal service" in cl 139(1)(c) fixes upon legal services to recover money in respect of personal injury, the restrictions imposed by pars (a) and (b) of cl 139(1) are wider and are sufficient to catch a range of legal services unrelated to claims for monetary compensation. That is so because an act causing "personal injury" may have legal consequences that are distinct from any liability to pay monetary compensation. For example, advertisements for legal services in relation to domestic violence and child abuse may also be caught by the Regulation. Reference has been made above, when dealing with s 38J, to advertising with respect to what were described as federal matters. The prohibition upon advertising imposed by Pt 14, on its face, applies indifferently to the provision of personal injury legal services involving rights and liabilities arising under federal, State and common law. The relationship with federal law is critical in understanding the plaintiffs' case, particularly that under pars (b) and (f) of question 1 in the amended special case. It should be added that, as is well illustrated by cases such as Felton v Mulligan96, federal jurisdiction may be engaged in the course of adjudication of a case which, at the outset, disclosed no federal element. Two consequences flow from a breach of cl 139. First, cl 139(1) provides that a contravention of the clause is a criminal offence punishable by fine97. that a contravention also constitutes Secondly, cl 139(2) operates such "professional misconduct" as provided for by s 127(1)(c) of the Act. Under the complaints and discipline procedure established by Pt 10 of the Act, the sanctions imposed for cases of professional misconduct may include the removal of the legal practitioner's name from the roll of legal practitioners in the Supreme Court of New South Wales (or the corresponding roll in another State or Territory in 96 (1971) 124 CLR 367. 97 Clause 140C operates to prevent double jeopardy by providing that a person convicted of an offence under Pt 19B of the Workers Compensation (General) Regulation 1995 (NSW) is not liable for a conviction under Pt 14 of the Regulation in respect of the same publication. the case of "interstate legal practitioners"98), the cancellation of the legal practitioner's practising certificate (or interstate practising certificate) and the imposition of a fine of up to $50,00099. The effect of cl 139(3) is that a conviction under cl 139(1) is, in any later professional misconduct proceedings against a legal practitioner, sufficient evidence of a contravention. No suggestion is made in the present litigation that any of the three plaintiffs have breached the Regulation. Nor is it suggested that any of the plaintiffs (or their employees) face prosecution under the Regulation for any conduct in which they have previously, or are currently, engaged. Nor do they face any disciplinary proceedings under the Act. However, to found the claims the plaintiffs make in this Court, it is sufficient that they wish to engage in conduct as part of their ordinary business practices for which they may encounter prosecution under the law, the validity of which is in question100. There was no challenge to the standing of the several plaintiffs. The parties The first plaintiff, APLA Limited ("APLA"), is a company limited by guarantee and registered in New South Wales pursuant to the Corporations Act 2001 (Cth) ("the Corporations Act"). APLA's membership is restricted to lawyers (some of whom hold practising certificates as solicitors issued under the Act) who subscribe to, and advocate, the objectives of the company. Those objectives are stated as including "to promote access to justice", "to protect and promote the rights of the injured", "to preserve and promote proper and adequate compensation for those who suffer injury or loss as a result of the acts or omissions of others" and "to facilitate the exchange of information between members of the company". As already indicated, no argument was advanced against APLA that, as a corporate body which itself is not a legal practitioner, it lacked a sufficient material interest which would be prejudiced by the operation of the Regulation to support its standing to attack the validity of the Regulation101. 98 "[I]nterstate legal practitioner" is defined in s 48N of the Act to mean a natural person who is admitted to legal practice in another State or Territory, who holds an interstate practising certificate issued or given by a regulatory authority in that State or Territory and whose sole or principal place of legal practice is that State or Territory. 99 s 171C. 100 Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 at 570; Croome v Tasmania (1997) 191 CLR 119 at 127-128, 137-138. 101 cf British Medical Association v The Commonwealth (1949) 79 CLR 201 at 257. The second plaintiff, Maurice Blackburn Cashman Pty Ltd ("MBC"), is registered in Victoria pursuant to the Corporations Act. MBC is registered as an incorporated practitioner in Victoria pursuant to Pt 10 (ss 289-297) of the Legal Practice Act 1996 (Vic). It carries on business as solicitors in Victoria, New South Wales and Queensland under the name "Maurice Blackburn Cashman". MBC has offices in Melbourne, Sydney and Brisbane, and its employees include persons who hold practising certificates as solicitors issued pursuant to the Act. MBC is subject to the same restrictions imposed by the Regulation as are individual solicitors. MBC is entitled to provide legal services in New South Wales under Pt 3 Div 2A (ss 47B-47T) of the Act, as an "incorporated legal practice"102. Section 47I provides that any restriction imposed by or under the Act (and hence by the Regulation) in connection with advertising by solicitors also applies to advertising by an incorporated legal practice. Every incorporated legal practice is required to have at least one director who holds a practising certificate (or interstate practising certificate) as a solicitor (a "solicitor director")103. The effect of s 47I(2) is that a breach of the advertising restrictions imposed by the Act or the Regulation by an incorporated legal practice is taken to have been authorised by that practice's solicitor directors for the purposes of any disciplinary proceedings under the Act. For this reason, both MBC and its solicitor directors are bound by the provisions of the Regulation104. The third plaintiff, Robert Leslie Whyburn ("Mr Whyburn"), is a solicitor, practising in New South Wales as a sole practitioner under the name "Whyburns Legal" (formerly "R L Whyburn & Associates"). Mr Whyburn holds a practising certificate as a solicitor issued pursuant to the Act. The first defendant, the Commissioner, is charged with receiving complaints about professional misconduct by solicitors and barristers, investigating such complaints and instituting disciplinary proceedings under the Act105. For that reason, it is within the Commissioner's responsibilities to 102 An "incorporated legal practice" is defined in s 47C as "a corporation that provides legal services" for fee, gain or reward, other than purely in-house legal services. 103 s 47E(1). 104 The same effect is achieved by cl 138 of the Regulation which expands the definition of the term "solicitor" beyond the definition of that term under s 3 of the Act so that it includes "firm of solicitors, solicitor corporation and incorporated legal practice". The result is that the restriction imposed by cl 139 on individual solicitors is also imposed upon incorporated legal practices. 105 Pt 5A (ss 59B-59I). investigate and prosecute breaches of the Regulation. Following the joinder of the State as second defendant, the Commissioner filed a submitting appearance and took no active part in the proceedings. The amici curiae Combined Community Legal Centres' Group NSW Incorporated ("CCLCG") and Redfern Legal Centre Ltd ("RLC") sought, and were granted, leave to be heard as amici curiae in the proceedings by way of written and oral submissions. CCLCG and RLC made no application to intervene in the proceedings106. (The Commonwealth and the States of Victoria, Queensland, Western Australia and South Australia intervened and presented arguments generally in support of New South Wales.) The amici's arguments were, in general terms, in support of those raised by the plaintiffs and favoured the relief sought by them. What follows is drawn from the unchallenged evidence in support of the application for leave. CCLCG is the "peak organisation" for community legal centres ("CLC") in New South Wales. It has 41 members, which include RLC. They are independent community organisations which provide free legal advice and information, as well as legal education for organisations and community groups in that State107. Each member of CCLCG has a principal solicitor who is responsible for that centre's legal practice108. The principal solicitor presumably has some control over the information and material published by the centre. CLC do not ordinarily act in personal injury cases, but do so where they consider that the litigation is in the public interest. In that capacity, CLC have acted in cases on behalf of indigenous clients, clients with physical and mental disabilities, and prisoners and asylum seekers who claimed that they suffered mistreatment while in care or custody. CLC also provide advice in areas 106 cf Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 392-393 [14]; see also Levy v Victoria (1997) 189 CLR 579 at 600-605, 107 The existence of CLC is contemplated by s 48H of the Act which sets out the key characteristics of a centre and makes special provision for such bodies. Nothing in s 48H or any other part of the Act or in the Regulation exempts CLC from Pt 14 of the Regulation. 108 Section 48H(1)(c) of the Act provides that a centre must have at least one solicitor or barrister with a current practising certificate who is generally responsible for the provision of legal services by the centre. touching on personal injury; for example, in relation to victims' compensation cases and social security cases. The amici apprehend that several publications published by them or their members may breach Pt 14 of the Regulation. First, a number of the CLC publish brochures which identify the areas in which those centres offer legal advice. Secondly, some CLC publish newsletters with current information about the cases being run by the centres, including accounts of the various legal rights being asserted. Thirdly, several CLC maintain websites on which they provide details of the services which they provide, information sheets as to individuals' legal rights and accounts of the cases previously run by the centres. Finally, at least one centre publishes an annual report which includes information about the cases in which it has acted in the past year. This material would have been of assistance in an application to intervene, but that application was not made. In Levy v Victoria, Brennan CJ said109: "The hearing of an amicus curiae is entirely in the Court's discretion. That discretion is exercised on a different basis from that which governs the allowance of intervention. The footing on which an amicus curiae is heard is that that person is willing to offer the Court a submission on law110 or relevant fact111 which will assist the Court in a way in which the Court would not otherwise have been assisted112." In oral submissions, and without opposition by the parties and interveners, counsel for the amici skilfully sought to draw the above material respecting the particular circumstances of the amici into the general consideration of the issues of validity presented by the amended special case. But no application was made (and, absent the status at least of an intervener, it is not apparent how it could have been made by the amici) further to amend the amended special case. It will be necessary to return to the significance of this state of the record later in these reasons. 109 (1997) 189 CLR 579 at 604. 110 See, eg, David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 where the Australian Securities Commission appeared as amicus curiae in a case involving the interpretation of sections of the Corporations Law. 111 eg, a matter of fact relevant to a question of constitutional validity: see South Australia v Tanner (1989) 166 CLR 161 at 179-180. 112 eg, where the parties or one of them declines to address the issue for determination as in R v Tomkins [1985] 2 NZLR 253 at 254; Highland Council (formerly Ross and Cromarty District Council) v Patience, Times Law Reports, 9 January 1997. The proposed communications Annexed to the further amended statement of claim is a series of "communications" (to use a neutral term) which the plaintiffs wish to place in various media and formats in New South Wales and in other States. Those communications can broadly be classed into three categories: print media communications, website material, and material contained in letters sent directly to individuals. It appeared in argument that all parties were content to accept that a barrister or solicitor would breach cl 139 of the Regulation by publication of any of the communications in the annexures in the formats proposed. So much is clear from the manner in which the questions of law are framed in the amended special case, with question 2 (concerning the application of the Regulation to the proposed communications) only arising if the plaintiffs succeed in their constitutional arguments. Nevertheless, it is convenient first to set out the proposed communications, before turning to consider the Regulation. The print media communications Each of the plaintiffs wishes to place some form of communication in print media in relation to the legal services they, or their members, offer. Annexure A to the further amended statement of claim is a communication which APLA wishes to place in the Sydney Yellow Pages and in various New South Wales newspapers ("the APLA communication"). The body of the text of the communication reads: "Have you been injured at work, by a defective product or on defective premises? Despite the best efforts of Premier Bob Carr and Senator Helen Coonan to stop you, you may still have legal rights to compensation for such injuries at law or under the Trade Practices Act (Cth). For information as to your legal rights to compensation contact APLA and we will refer you to one of our members who are lawyers who specialise in bringing such claims to the courts. If you are short of money, we will find you a lawyer who will not seek payment from you unless and until you receive some compensation." The communication goes on to give APLA's postal address and phone, fax, email and web address details. On or about 24 February 2004, APLA wrote to the Commissioner seeking advice as to whether the APLA communication would breach the terms of the Regulation. The Commissioner replied on 2 March 2004 that, while he could not give a definitive answer, he was of the opinion that the APLA communication would constitute an "advertisement" within the meaning of cl 138 of the Regulation, and that the quoted portion of the communication "potentially" breached cl 139 of the Regulation. As a result of this advice, APLA has not placed the proposed communication in either the Sydney Yellow Pages or in any newspaper. Annexure B to the further amended statement of claim is a series of three communications which the predecessor of MBC (a partnership trading under the name "Maurice Blackburn Cashman") ran in newspapers printed and circulated in New South Wales prior to 23 May 2003 ("the MBC newspaper communications"). One of the MBC newspaper communications bears a symbol indicating that the firm is an accredited specialist in personal injury law and comprises the bare statement "ASBESTOS & DUST DISEASES INJURIES" with contact details and a toll free number. The other two communications are more detailed. The first is in the following terms: "Disability Pensioners Super Lump Sums Did you have to stop work because of an injury or illness? If so you could get a superannuation lump sum even if you have already been paid your superannuation or workers compensation. FOR FREE ADVICE CALL". The communication goes on to give a toll free number and the name of a contact person. The last of the MBC newspaper communications states: "SERIOUSLY INJURED? Maurice Blackburn Cashman Provides legal advice in the following areas: Workers Compensation Motor Vehicle Accident claims Medical Negligence Public Liability claims No matter who you are up against, Maurice Cashman will fight to protect you". Insurance disputes Superannuation The communication once again notes that the firm is an "Accredited Specialist in Personal Injury", and gives contact details and a toll free number. Mr Whyburn wishes to publish a communication similar to the MBC newspaper communications. Before 9 May 2003, Mr Whyburn advertised in trade union journals circulating within New South Wales in a form reproduced as Annexure F to the amended statement of claim ("the Whyburn communication"). The communication relevantly reads, "R L Whyburn & Associates provides a wide range of legal services", and proceeds to list a number of practice areas including "Workers' compensation", "Motor vehicle, Property and Personal injury claims" and "Industrial Accident Claims". In addition to contact details for Mr Whyburn's offices, the communication includes a logo for "PeopleLaw" and the statement, "PeopleLaw is an Australasian-wide network of established law firms who share a goal to provide affordable legal services to people." As with MBC, Mr Whyburn has refrained from publishing the communication because of the apprehended operation of Pt 14 of the Regulation. All of these proposed communications are advertisements for the purposes of Pt 14. Each is intended to advertise or otherwise promote "the availability or use of a barrister or solicitor to provide legal services" and each has that as its purpose and likely effect. Each of the proposed communications involves unambiguous references to one or more of the subject-matters in pars (a)-(c) of cl 139(1). The printing of the print media communications and formats proposed would fall within par (a) of the definition of "publish" in cl 138. The website material In addition to its proposed newspaper communications, MBC also wishes to publish information on its website in relation to the legal services it offers. The information published on the website is uploaded onto a computer server situated in Victoria, and is available to be accessed, viewed or downloaded without charge by any person with access to the Internet, regardless of where they are situated. For this reason, material uploaded in Victoria will nevertheless be accessible by persons in New South Wales. Annexures C and D to the further amended statement of claim are printouts of the material MBC wishes to publish on its website ("the MBC website material"). Annexure C is information relating to Comcare, the Commonwealth workers' compensation scheme established by the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Commonwealth Compensation Act") for Commonwealth employees who suffer injury or illness in the course of their employment. In addition to providing information in relation to how to make claims under the Comcare system, the MBC website material explains the interaction of the scheme with common law damages: "In circumstances where injuries have been caused or contributed to by the fault or negligence of a Commonwealth employer, the Comcare system requires that a worker make a final and binding election between pursuing either a Common Law claim for damages or alternatively accepting a lump sum permanent impairment benefit. It is vital that you obtain legal advice before proceeding with this election. … It is very important to note that strict time limits apply to a Common Law claim for damages. You should obtain legal advice as early as possible." The material contained in Annexure D is headed "Superannuation". It includes information relating to superannuation disability benefits and death benefits, and details the process by which such benefits can be claimed. There is an explanation of how to appeal to the Superannuation Complaints Tribunal or the Federal Court if the claim is rejected, and of the time limits that apply in relation to such appeals. The material contains similar information in respect of insurance disability benefits, the Victorian State superannuation scheme and the Commonwealth superannuation scheme, and in respect of the way in which a superannuation or insurance benefit may affect Centrelink payments. The material concludes by providing a contact name and phone number for persons seeking further information. In considering the application of Pt 14, the MBC website material is, generally speaking, susceptible to the same analysis applied to the print media communications above. The one qualification is with respect to the meaning of "publish" in cl 138. Paragraph (d) in the definition of "publish" includes within that term, "display on an Internet website or otherwise publicly disseminate by means of the Internet". There may be a question as to whether, in respect of Internet publications, "publish" refers to the place of upload or to the place of download. However, leaving aside the issues respecting the geographical scope of Pt 14 raised by pars (d) and (e) of question 1 of the amended special case, no separate argument was advanced by the plaintiffs (or any other party) respecting construction. In that context, it may be accepted that, in its terms, Pt 14 prohibits the publication of the MBC website material as proposed. The letter communication The third form of communication which MBC wishes to make is in relation to representative proceedings in the Federal Court. These are provided for by Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"). MBC is currently acting in Pt IVA proceedings N932 of 2001 pending in the New South Wales District Registry of the Federal Court in a claim under the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") for damages and other remedies for personal injury suffered, or potentially suffered, as a result of faulty heart pacemakers. MBC acts for Mr Darcy (described as the "lead applicant") in those proceedings, and acts for many but not for all other group members. MBC wishes to write to those group members who have not retained MBC or any other solicitors in relation to the claim and, inter alia, offer its legal services. Annexure E to the further amended statement of claim is the letter which MBC wishes to send ("the MBC letter"). That letter states an understanding that the addressee has decided not to "opt out" so that "the case continues to affect your legal rights". The letter continues: "It may be in your interests to obtain legal representation. You are entitled to choose your own lawyer to act on your behalf (or to choose not to have any lawyer at all). If you want this firm to act for you for purposes of assessing your individual claim for compensation you will need to enter into a fee & retainer agreement with us. If you would like to obtain a copy of our fee & retainer agreement to consider, please write to us or contact us by telephone." MBC has not sent, and does not currently intend to send, the letter because of a concern that to do so may breach the terms of Pt 14. In relation to the MBC letter, the parties appeared once again to be in general agreement that, in its terms at least, the Regulation operates to prohibit its publication. There was some dispute as to whether the letter would fall within the catch-all phrase, "other printed publication" in par (a) of the definition of "publish" in cl 138. However, even if it would not, the letter appears to be a publication by par (f) of that definition. The Solicitor-General for New South Wales suggested that the letter may not fall within the definition of "advertisement" in Pt 14. It is difficult to see the basis for such a submission. The purpose of the letter is to promote "the availability or use of a barrister or solicitor to provide legal services", both in general terms and specifically with respect to MBC. There is nothing in the broad and general terms of the definition of "advertisement" to suggest that communications to group members in representative proceedings are, as a class, incapable of being advertisements. It may be accepted, then, that, on its face, Pt 14 would prohibit the sending of the MBC letter to the group members as proposed. "A barrister or solicitor" One further issue of construction of Pt 14 of the Regulation should be considered before turning to the questions posed by the amended special case. The Solicitors-General of the Commonwealth and for Victoria submitted that the use of the indefinite article in the phrase, "the availability or use of a barrister or solicitor" in the definition of "advertisement" is to be read as limiting the advertising restriction imposed by the Regulation to those communications identifying "a specific" or "a particular" barrister or solicitor. The consequence of accepting that submission would be that the restriction imposed by cl 139 would be limited to prohibiting advertisements which promote the use of a particular legal practitioner and which are published (or caused to be published) by that practitioner. That construction would greatly narrow the scope for any complaint of invalidity; the Regulation would not impede discussion or communication about individuals' legal rights, absent any promotion of a particular legal practitioner. In support of that construction, the Solicitor-General for Victoria drew attention to the exceptions to cl 139 in cl 140A. That clause relevantly provides: "This Part does not prevent the publication of any advertisement: to any person who is already a client of the barrister or solicitor (and to no other person), or to any person on the premises of a place of business of the barrister or solicitor, but only if the advertisement cannot be seen from outside those premises". (emphasis added) It may be accepted that, whatever otherwise the scope of Pt 14, a barrister or solicitor may advertise to that lawyer's existing clients. But the Solicitor-General seeks to turn cl 140A to further account. The submission is that the phrase "the barrister or solicitor" as it appears in pars (a) and (b) of cl 140A must be construed as a reference to the phrase "a barrister or solicitor" where it appears in the definition of "advertisement" in cl 138. It is said to follow that, within that definition in cl 138 (and so in cl 139), "a barrister or solicitor" means "a particular barrister or solicitor", being the particular barrister or solicitor whose clients and premises are referred to in cl 140A(a) and (b). Applying the exception provided by cl 140A to the term "advertisement" as prohibited in cl 139 would produce the result that Pt 14 of the Regulation prohibits only the publication of advertisements which promote the particular barrister or solicitor responsible for their publication. That construction of cl 139 should not be accepted. The legislative history of the current Pt 14 demonstrates that it was designed to restrict the publication by a barrister or solicitor of communications which advertise or promote the use of any barrister or solicitor, not simply those promoting the services of that particular barrister or solicitor. The current Pt 14 is the progeny of amendments made to the Legal Profession Regulation 1994 (NSW) ("the 1994 Regulation") by the Legal Profession Amendment (Advertising) Regulation 2002 (NSW) ("the 2002 Amendment"). The 2002 Amendment inserted a new Pt 7B into the 1994 Regulation, headed "Advertising of personal injury services", which was then substantially reproduced as Pt 14 of the Regulation, when it replaced the 1994 Regulation in 2002. Clause 139 of the Regulation, as enacted, placed restrictions on the advertising of legal services in relation to personal injury, but advertisements published in printed publications or publicly exhibited in buildings or on any street or public place were generally permissible. Clause 140 provided the meaning of "advertise" for the purposes of Pt 14: "(1) For the purposes of this Part, a person advertises personal injury services when the person publishes or causes to be published a statement that may reasonably be thought to be intended or likely to encourage or induce a person: to make a claim for compensation or damages under any Act or law in respect of a personal injury, or to use the services of a barrister or solicitor in connection with the making of any such claim. It does not matter that the statement also relates to other matters." (emphasis added) Paragraphs (a) and (b) in cl 140(1) were alternatives. By dint of cl 140(1)(a), it was sufficient that the published statement might encourage a person to make a claim for compensation or damages in respect of personal injury for it to constitute an advertisement, even where that statement made no reference to the availability or use of a barrister or solicitor in relation to that claim. Statements which had that effect, but which did not promote the services of particular barristers or solicitors, would nevertheless be prohibited. The Amendment Regulation was designed to go further than the restrictions implemented by the 2002 Amendment, and reproduced in the Regulation as made. The Explanatory Note to the Amendment Regulation stated that the new amendments were intended to "broaden the current restrictions", but not so as to prevent "legitimate public comment in good faith about personal injury [or] to interfere with the delivery in good faith of legal education to the legal profession or the ordinary use of business cards or letterheads". Leaving aside the difficulties associated with the opaque phrase, "legitimate public comment", it is clear from the narrow exceptions particularised in the Explanatory Note that the purpose of the Amendment Regulation was to extend the restrictions to conduct not previously prohibited. It would be surprising, then, if the changes effected by the Amendment Regulation rendered permissible conduct previously prohibited. It is unlikely that the change in the definition of "advertisement" in Pt 14 was designed to permit advertisements promoting the use of barristers or solicitors generally in personal injury cases, where such advertisements had previously been prohibited. The better view is that, subject to the introduction of some specific new exceptions referred to in the Explanatory Note, conduct previously caught by the old Pt 14 was also prohibited under the new Pt 14. The result is that the preferred construction of the phrase "a barrister or solicitor" in the definition of "advertisement" in Pt 14 is that the phrase means "any barrister or solicitor". That in turn means that the conduct proscribed by cl 139 is the publication of an advertisement promoting the use of any barrister or solicitor, not simply one that promotes the use of the barrister or solicitor responsible for the advertisement's publication. I turn now to consider the issues of validity posed in the various paragraphs of question 1. It is convenient to take them out of their stated order. Extra-territorial operation Paragraphs (d) and (e) of question 1 may be considered together. They ask whether "by virtue of the nature of its extra-territorial operation" Pt 14 of the Regulation exceeds the legislative powers of the State and the powers under the Act (which is to be read as a reference to s 216(1)) to make regulations. Section 216(1) is a generally expressed regulation-making power in familiar form113. Subject to the presence of a contrary intention, the reference therein to "any matter" is to be read as "any matter ... in and of New South Wales". Section 12(1) of the Interpretation Act 1987 (NSW) ("the Interpretation 113 Section 216(1) states: "The Governor may, on the recommendation of the Attorney General, make regulations not inconsistent with [the] Act for or with respect to any matter that by [the] Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to [the] Act." Act") so provides. Likewise, and by operation of the same provision, references in the Regulation are to be read in the same fashion. Section 12 applies not only to statutes but to instruments made under statute (s 3(1)). It may be conceded for present purposes that material uploaded onto a computer server outside New South Wales but available to be displayed in New South Wales on an Internet website and to be downloaded there nevertheless is not published in New South Wales within the meaning of the definition of "publish" in cl 138. It is unnecessary to decide the point114. What is apparent is that the legal services, the provision of which is the subject of an advertisement as defined in cl 138, are legal services to be provided in New South Wales. Such a construction agrees with s 12(1) of the Interpretation Act and with the general subject, scope and purpose of the Act, the regulation of the admission and practice in New South Wales of solicitors and barristers. In any event, as Gleeson CJ pointed out in Mobil Oil Australia Pty Ltd v Victoria115: "There is nothing either uncommon, or antithetical to the federal structure, about legislation of one State that has legal consequences for persons or conduct in another State or Territory." In the same case, Gaudron, Gummow and Hayne JJ said116: "It is clear that legislation of a State parliament 'should be held valid if there is any real connection – even a remote or general connection – between the subject matter of the legislation and the State'117. This proposition has now twice been adopted in unanimous judgments of the Court118 and should be regarded as settled. That is not to say, however, that there may not remain some questions first, about what is 114 cf Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575. 115 (2002) 211 CLR 1 at 26 [16]. 116 (2002) 211 CLR 1 at 34 [48]. 117 Pearce v Florenca (1976) 135 CLR 507 at 518 per Gibbs J. 118 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 14; Port MacDonnell Professional Fishermen's Assn Inc v South Australia (1989) 168 CLR meant in a particular case by 'real connection' and, secondly, about the resolution of conflict if two States make inconsistent laws119." In the present case, there is no conflict between laws of several States. Nor can it be denied that there is the requisite "real connection". Further, no question arises of the nature of that reserved by Hayne J in BHP Billiton Ltd v Schultz120. It follows that pars (d) and (e) of question 1 respecting extra-territoriality should be answered adversely to the plaintiffs and, thus, "no". Section 92 of the Constitution Paragraph (c) asks whether Pt 14 impermissibly infringes the freedom of interstate intercourse, or that of trade and commerce, each being "guaranteed" by s 92. The alternative formulation of the question is significant. In Buck v Bavone121, Murphy J identified an "almost absolute" freedom to move across State borders, which arose not from s 92 but from a "fundamental implication of the Constitution". Thereafter, in Miller v TCN Channel Nine Pty Ltd122, Mason J said of this statement that he could not "find any basis for implying a new s 92A into the Constitution". The plaintiffs do not go outside the text of s 92, but seek to construe it in the light of Cole v Whitfield123. The Solicitor-General of the Commonwealth accurately submitted that one consequence of the reasoning in Cole v Whitfield has been an appreciation that the text of s 92 reflects two distinct notions, the first being concerned with laws discriminating against interstate trade and commerce in a protectionist sense and the second with intercourse in the sense of freedom to pass among the States "without burden, hindrance or restriction"124. 119 Port MacDonnell Professional Fishermen's Assn Inc v South Australia (1989) 168 CLR 340 at 374; State Authorities Superannuation Board v Commissioner of State Taxation (WA) (1996) 189 CLR 253 at 285-286 per McHugh and Gummow JJ. 120 (2004) 79 ALJR 348 at 380 [179]; 211 ALR 523 at 566. 121 (1976) 135 CLR 110 at 137. 122 (1986) 161 CLR 556 at 579. 123 (1988) 165 CLR 360. 124 Gratwick v Johnson (1945) 70 CLR 1 at 17. No application was made in the present case for leave to re-open Cole v Whitfield. Nothing in these reasons should be read as encouraging such an endeavour. However, there are some difficulties remaining in dealing with the consequences of Cole v Whitfield. In Nationwide News Pty Ltd v Wills125, Deane and Toohey JJ said that there was "obvious force" in a submission which they described as follows126: "[O]nce it was recognized that the guarantee of interstate intercourse was not confined by the construction given to the guarantee of freedom of interstate trade and commerce, it is necessary to construe it as inapplicable to any intercourse in the course of trade or commerce. Otherwise, it was said, the Court's insistence, in Cole v Whitfield, that s 92 was not intended to operate and did not operate as a source of unfair and potentially divisive preference of interstate trade over intrastate trade would be unavailing." Their Honours went on to say that the submission went too far and that the true resolution of the tension within s 92 was to be found "in the relevant characterization of the particular law"127. However, as was emphasised by Western Australia, the solution proposed by Deane and Toohey JJ assumes a result from the process of characterisation which places the challenged law in one or the other, but not both, limbs of s 92. Yet it is readily apparent that in applying the Constitution a single law can possess more than one character128. The solution which should be accepted is that proposed by the interveners and adopted by the State129. This is that, in determining the validity of a law relating to activities which have the character of "trade, commerce ... among the States" in s 92 which also involve "intercourse among the States", validity is to be assessed exclusively by reference to the first-mentioned character of that law. In this way there is supported the Court's insistence in Cole v Whitfield that s 92 does not operate as a source of unfair and potentially divisive preference of interstate trade over intrastate trade. 125 (1992) 177 CLR 1 at 83. 126 (1992) 177 CLR 1 at 83. 127 (1992) 177 CLR 1 at 84. 128 Re F; Ex parte F (1986) 161 CLR 376 at 387. 129 See also the judgment of Spigelman CJ in Cross v Barnes Towing and Salvage (Qld) Pty Ltd [2005] NSWCA 273 at [38], [40]. It is convenient now to consider the application to the Regulation of what might be called the first limb of s 92. It yet has to be settled by this Court whether either or both the expressions "trade and commerce" in s 51(i) of the Constitution and "trade, commerce" in s 92 apply to the provision of legal services, whether by barristers or solicitors or legal practitioners in "fused" jurisdictions, or by lawyers working for incorporated practitioners such as MBC. In Boland v Yates Property Corporation Pty Ltd130, the matter was considered but not determined by Gaudron J131 and Callinan J132. Earlier, in Street v Queensland Bar Association133, Dawson J favoured the view that the practice of the profession of a barrister had not changed sufficiently since federation to support an argument that, in providing services, a barrister was engaged in trade or commerce. That view was expressed by Dawson J at a time when advertising of the availability of legal services, particularly those of barristers, in the various jurisdictions in Australia was anathema, if not also illegal. The present case arises at a later time and presents the question not whether the provision of legal services has the character of engagement in trade or commerce, but whether the advertising, now otherwise permitted by law, of those services is an activity in trade or commerce. To that the answer must be in the affirmative. The contrary was not seriously suggested in argument. However, this conclusion respecting advertising of legal services does not sufficiently assist the plaintiffs to support any case on the first limb of s 92. That is because Pt 14 cannot be characterised as a protectionist measure within the sense established by Cole v Whitfield and Bath v Alston Holdings Pty Ltd134. There remains the reliance by the plaintiffs upon the second limb. When dealing earlier in these reasons with the submissions respecting the extra- territorial operation of Pt 14, it was explained that a particular advertisement might still fall within the prohibition imposed by Pt 14 where there was some degree of interstate communication, although the legal services in question would be provided in New South Wales. For example, the proposed communications by the plaintiffs include website material uploaded in Victoria but accessible in New South Wales. 130 (1999) 74 ALJR 209; 167 ALR 575. 131 (1999) 74 ALJR 209 at 229 [105]; 167 ALR 575 at 602. 132 (1999) 74 ALJR 209 at 256-257 [238]-[239]; 167 ALR 575 at 638. 133 (1989) 168 CLR 461 at 538-539. 134 (1988) 165 CLR 411. In Bank of NSW v The Commonwealth135, Dixon J, when dealing with what then was seen as the composite expression "trade, commerce, and intercourse", said that it covers the transmission of electric current as an obvious extension of the movement of physical goods and that it covers communication by such means as broadcasting and visual signals. In the present case, there was no real dispute that the "intercourse" referred to in s 92 includes communication by means of the Internet and other electronic methods. However, the intercourse in which the plaintiffs, in particular MBC, wish to engage through the provision of website material is advertising in the nature of "trade, commerce" identified in the first limb of s 92. The circumstance that intercourse also would be involved does not displace the primary and exclusive operation of the first limb of s 92. There is nothing in the definition of "advertising" in Pt 14 which limits to services for reward the provision of legal services by a barrister or solicitor and excludes the provision of gratuitous services by such persons or by non-profit organisations employing them. In those circumstances, counsel for the amici emphasised that the prohibition imposed in Pt 14 may apply to activities outside the potential operation of the first limb of s 92; that being so, those non-trading and non-commercial activities might nevertheless, given the necessary interstate element, attract the operation of the second limb of s 92 as involving "intercourse". That Pt 14 may have such an operation should be accepted. The amici are, as has been indicated, not parties and cannot and do not seek any declaratory relief in respect of proposed communications. Nevertheless, having regard to the detailed arguments that were presented without objection, it is convenient to consider the bearing of the "intercourse" limb of s 92 upon interstate communications advertising or promoting the provision without charge of legal services in New South Wales by non-profit bodies. This is on the assumption, which it is unnecessary to test, that such communications are not in trade or commerce. In Nationwide News136, and later in Cunliffe v The Commonwealth137, Brennan J indicated that discrimination in the protectionist sense understood for the first branch of s 92 was not an indicium of invalidity of a law said to burden interstate intercourse. Rather, as he said in Nationwide News138: 135 (1948) 76 CLR 1 at 381. 136 (1992) 177 CLR 1 at 53-61. 137 (1994) 182 CLR 272 at 333. 138 (1992) 177 CLR 1 at 57. "The general criterion of invalidity of a law which places a burden on interstate intercourse is that the law is enacted for the purpose of burdening interstate intercourse. If the law is enacted for some other purpose then, provided the law is appropriate and adapted to the fulfilment of that other purpose, an incidental burdening of interstate intercourse may not be held to invalidate the law. A law may be found to be enacted for the prohibited purpose by reference to its meaning or by reference to its effect." In Australian Capital Television Pty Ltd v The Commonwealth139, Dawson J also considered what was involved in the freedom of intercourse provided by s 92. His Honour said140: "In so far as it includes the passage of persons and things, tangible or intangible, to and fro across State borders, intercourse obviously extends beyond the realm of protectionism. Nevertheless, it is still necessary, as with freedom of trade and commerce, to ask in relation to freedom of intercourse: free from what? From the beginning it has been recognized that, as with the freedom of trade and commerce, the freedom of intercourse guaranteed by s 92 is not freedom from all restriction; it is not a prescription for anarchy." His Honour went on141 to conclude that laws which "have the object of restricting movement across State borders will offend s 92". He instanced the laws in question in Gratwick v Johnson142 and in R v Smithers; Ex parte Benson143 as laws of that kind. It cannot be fairly suggested that the legislation under challenge in this litigation has the purpose or object of erecting State borders as barriers to the advertising of the forbidden material. However, as had Brennan J in Nationwide News, Dawson J also considered144 that a law which did not have the object of restriction of movement 139 (1992) 177 CLR 106 at 191-196. 140 (1992) 177 CLR 106 at 192. 141 (1992) 177 CLR 106 at 194. 142 (1945) 70 CLR 1. 143 (1912) 16 CLR 99. 144 (1992) 177 CLR 106 at 195. across State borders nevertheless might offend s 92. This could be so if the restriction of movement occurred incidentally but the means adopted to achieve the object of the legislation were inappropriate and disproportionate. His Honour instanced traffic regulations as laws which did impede interstate intercourse but did not deny the freedom guaranteed by s 92. More recently, in AMS v AIF145, Gleeson CJ, McHugh and Gummow JJ said that, in working out the measure of freedom from interference which s 92 now is to be taken to provide in respect of interstate intercourse, the question becomes one whether the impediment imposed on that intercourse is greater than that reasonably required to achieve the objects of the legislation in question. Their Honours pointed out that the circumstance that the order made by the State Family Court in exercise of jurisdiction conferred by State legislation had a practical operation of hindering or restricting movement by the mother (by reason of the requirement that she not change the principal place of residence of the child) was not necessarily fatal to validity. Hayne J said in the same case146: "I agree that custody and guardianship legislation may present a question whether the statute empowers the making of orders that have a practical effect of imposing upon freedom of intercourse an impediment greater than reasonably required to achieve the object of the legislation." This approach should be accepted as the doctrine of the Court. It is apparent, particularly from the remarks of Brennan J in Nationwide News147, that, in speaking in this context of the object or purpose of the law in question, what is posited is an objective inquiry answered by reference to the meaning of the law or to its effect. Moreover, in speaking of an effect which imposes an impediment upon freedom of intercourse which is greater than reasonably required to achieve that object or purpose, no conundrum is presented. It is true that, at one level of analysis, an object or purpose of all legislation is that it operate according to its terms. But it does not follow that any law which has an adverse operation or effect upon interstate intercourse necessarily fails the constitutional criterion of validity under s 92. The level of characterisation required by the constitutional criterion of object or purpose is closer to that employed when seeking to identify the mischief to redress of which a law is directed or when speaking of "the objects of the legislation". The point is illustrated in the paragraph which now follows. 145 (1999) 199 CLR 160 at 178-179 [43]-[45]. 146 (1999) 199 CLR 160 at 233 [221]. See also at 249 [278] per Callinan J. 147 (1992) 177 CLR 1 at 57. In the present case, on the assumption that the prohibition imposed by Pt 14 may apply to interstate communication which answers the description of "intercourse" in s 92, nevertheless, in that operation, Pt 14 is not invalid. This is because the effect of the prohibition on interstate communications is no greater than is reasonably required to achieve the object of Pt 14. That object could not be fully achieved if legal practitioners were permitted to direct from outside New South Wales to persons in New South Wales advertisements promoting the provision in New South Wales of the particular legal services with which the legislation is concerned. Likewise, in Cunliffe, Dawson J had expressed his conclusion as follows148: "The achievement of the object of the legislation in question – the protection of aliens seeking advice or assistance with regard to permanent entry to the country – necessarily interferes with communication. Upon the assumption that some of that communication is between States, the legislation necessarily interferes with interstate communication. But it is clearly not the purpose of the law to impede interstate communication and the extent to which it does so is no more, in my view, than is reasonably required to achieve the purpose of the legislation. Any scheme which would seek to protect aliens against advice of an unsuitable kind must necessarily inhibit communication to some extent. The extent to which Pt 2A of the Migration Act [1958 (Cth)] does so is fairly incidental to the object of the legislation." The result is that par (c) of question 1 which asks whether Pt 14 is invalid in whole or in part by reason that it impermissibly infringes the freedom of interstate intercourse or, alternatively, that of trade and commerce guaranteed by s 92 of the Constitution should be answered "no". Inconsistency Paragraph (f) of question 1 asks whether Pt 14 is invalid in whole or in part by reason of its inconsistency "with the rights, duties, remedies and jurisdiction conferred, regulated or provided for" by any one of some five enumerated groups of federal legislation. Group (A) lists ss 39(2), 39B, 55A, 55B, 55D and 78 of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). Section 39(2) is the well-known provision investing the several courts of the States with federal jurisdiction. Section 39B is a law made pursuant to s 77(i) of the Constitution; it confers original jurisdiction upon the Federal Court with respect to some of the matters within the scope of 148 (1994) 182 CLR 272 at 366-367. ss 75(iii), (v) and 76(ii) of the Constitution. Section 78 of the Judiciary Act provides: "In every Court exercising federal jurisdiction the parties may appear personally or by such barristers or solicitors as by this Act or the laws and rules regulating the practice of those Courts respectively are permitted to appear therein." In Western Australia v Ward149, Hill and Sundberg JJ said of s 78 that it did not confer on a party the right to counsel of the choice of that party; rather, s 78 confers on a party who does not wish to appear in person the right to the services of lawyers who are admitted to practice. Sections 55A and 55D are contained in Pt VIIIA (ss 55A-55H), which is headed "Legal practitioners". Sections 55A and 55D provide for the entitlement of barristers and solicitors to practise in this Court and other federal courts, in State courts exercising federal jurisdiction and in certain Territory courts. Section 55C establishes a Register of Practitioners to be kept at the Registry of this Court. In De Pardo v Legal Practitioners Complaints Committee150, the Full Court of the Federal Court held that there was no inconsistency between the provisions of the Legal Practitioners Act 1893 (WA) and Pt VIIIA of the Judiciary Act; to the contrary, the legislative scheme apparent in Pt VIIIA is complementary to the provisions of the State legislation regulating the admission and control of legal practitioners. Thus, s 55B assumes the existence of provisions of State law entitling a person to practise as a barrister and solicitor in State Supreme Courts and s 55D assumes the existence of provisions in State law for the suspension or removal of that entitlement. Further, s 55E assumes the existence of State laws imposing rights, duties or obligations on legal practitioners in relation to their clients or to the courts, and providing for disciplinary proceedings. In De Pardo151, French J explained that the power in a federal court to regulate the conduct of legal practitioners appearing before it to the extent necessary to ensure the observance of their duties to the court and the integrity of its procedures is an implied incidental power, with its source in Ch III of the Constitution. In that regard, his Honour referred to what had been said in this 149 (1997) 76 FCR 492 at 501. 150 (2000) 97 FCR 575. 151 (2000) 97 FCR 575 at 595-596. Court respecting the power to deal with contempts in Re Colina; Ex parte Torney152. His Honour added153: "All that having been said, the implied incidental powers thus exercisable by federal courts do not impinge in any way upon the legislative frameworks for disciplining practitioners under the supervision of the Supreme Courts of the States and Territories." Group (B) of the legislation listed in par (f) of question 1 goes further. It identifies particular provisions of the Federal Court Act, in particular Divs 1 and 2 of Pt III, together with Pt IVA. Divisions 1 and 2 of Pt III are concerned with the original and appellate jurisdiction of the Federal Court. Part IVA deals with representative proceedings. It will be recalled that Annexure E to the further amended statement of claim is a letter which MBC wishes to send to group members in proceedings under Pt IVA currently pending in the New South Wales District Registry of the Federal Court and in which MBC is acting for the "lead applicant". The subject-matter of this pending proceeding is claims to which Group (C) pertains. Group (C) lists various provisions in Pt V of the Trade Practices Act. Part V is headed "Consumer protection" and contains ss 52, 53(a), 74B and 74D. Group (C) also lists s 75AD, which is in Pt VA, and deals with liability for certain defective goods causing injuries. Group (C) also includes certain of the remedy provisions in Pt VI, namely ss 82, 86 and 87. Group (D) lists Pts II, IV, V and VI of the Commonwealth Compensation Act. Part II provides that Comcare is liable to pay compensation under the statute in respect of certain injuries suffered by certain employees of the Commonwealth, a Commonwealth authority or a "licensed corporation"154 if the injury results in death, incapacity for work or impairment. Part IV is concerned with the relationship between claims under the Commonwealth Compensation Act and other legislation and under the common law. Part V deals with the necessary procedures for claims to compensation and Pt VI with reconsideration and review of determinations. Group (D) also identifies Pts IV and IVA of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"). These are concerned respectively with reviews by the Administrative Appeals Tribunal ("the AAT") of decisions under various statutes, and appeals and references of questions of law to the Federal Court. Section 32 of the AAT Act states that, at 152 (1999) 200 CLR 386 at 394-396 [15]-[19]. 153 (2000) 97 FCR 575 at 596. 154 See the definition in s 4. hearings before the AAT, "a party to the proceeding may appear in person or may be represented by some other person". The significance for the facts of this litigation of Group (D) appears from the proposed MBC website material which is Annexure C to the further amended statement of claim. Finally, Group (E) identifies Pts 4, 6 and 7 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) ("the Superannuation Complaints Act") and Pts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth) ("the Superannuation Supervision Act"). The Superannuation Complaints Act establishes the Superannuation Complaints Tribunal to deal with, to put it shortly, certain complaints regulated superannuation funds and approved deposit funds and with a system of "appeals" to the Federal Court. Parts 27 and 28 of the Superannuation Supervision Act set out the powers of the courts exercising jurisdiction under that Act and related matters. The proposed publication to which Group (E) applies is that in Annexure D to the further amended statement of claim. the administration of respecting Writing extrajudicially in 1955, Sir Owen Dixon pointed to what would have been a wrong turning in the interpretation of the Constitution if the High Court had read s 109 as only engaged by "flat contradiction" between the federal and State laws in question155. He regarded that as being "a pedantic construction than essential conceptions of drawn rather from a verbal formalism federalism"156. In the present case, the plaintiffs rely upon these remarks as a caution against too ready an acceptance of the arguments against them that the prohibition in State law against certain advertising by barristers and solicitors respecting pursuit of rights under common law, State law and federal law does not trespass upon any essential conception of federalism which underpins s 109 of the Constitution. The plaintiffs primarily directed their submissions on inconsistency to the federal laws identified above in Groups (A), (B) and (C). It is convenient first to consider together the submissions respecting these Groups. Reference has been made above to assumed concurrent operation of State law regulating the conduct of the legal profession with the provisions of federal law (particularly Pt VIIIA of the Judiciary Act) respecting legal practitioners. 155 Dixon, "Marshall and the Australian Constitution", (1955) 29 Australian Law Journal 420 at 427. 156 Dixon, "Marshall and the Australian Constitution", (1955) 29 Australian Law Journal 420 at 427. In the Trade Practices Act, the Parliament has (pursuant to s 51 of the Constitution) created norms of conduct with respect to the protection of consumers and created remedies for breach, and (pursuant to ss 76 and 77 of the Constitution) has conferred federal jurisdiction on a range of courts. In particular, s 75AD of the Trade Practices Act157 imposes liability in respect of injuries suffered by an individual because of a defect in certain goods. Other contraventions also may be asserted in circumstances relating to personal injury. An example is the representative proceeding in which MBC presently acts in the Federal Court. Special provision respecting proceedings of that character is made by Pt IVA of the Federal Court Act, which is listed in Group (B). The plaintiffs submit that Pt 14 is a State law which, within the meaning of the authorities, impairs the exercise or enjoyment of the rights and remedies created by the federal law. The plaintiffs correctly emphasise that it would be no 157 Section 75AD states: a corporation, manufactured by it; and trade or commerce, supplies goods they have a defect; and because of the defect, an individual suffers injuries; then: the corporation is liable to compensate the individual for the amount of the individual's loss suffered as a result of the injuries; and the individual may recover that amount by action against the corporation; and if the individual dies because of the injuries – a law of a State or Territory about liability in respect of the death of individuals applies as if: the action were an action under the law of the State or Territory for damages in respect of the injuries; and the defect were the corporation's wrongful act, neglect or default." answer to their case merely to demonstrate that the subject-matters of the two laws are not co-incident158. The plaintiffs go on to submit that the "impairment" doctrine applies because it is "in practical terms" essential to the investment of federal jurisdiction to resolve matters arising under the provisions of the Trade Practices Act that potential claimants have the ability to communicate about such matters with persons qualified to provide legal advice and representation. Those steps in the argument may be accepted for present purposes without ruling upon them. But they do not take the plaintiffs far enough. (In any event, publication of advertisements to existing clients is protected by cl 140A.) The plaintiffs then take the further step that (a) the prohibition in Pt 14 "aims to impede the creation" of relationships between potential claimants and lawyers in relation to claims under federal law and, as a result, (b) there is by that State law an impairment of the enjoyment of federally created rights and s 109 operates. Further, with specific reference to laws made under ss 76 and 77 of the Constitution and conferring or investing federal jurisdiction, the plaintiffs submit that it is essential "in practical terms" to that conferral or investment of federal jurisdiction that potential claimants have the right to seek legal assistance and representation. The prohibition in Pt 14 has as its "practical effect" the impairment of the operation of laws based in ss 76 and 77 of the Constitution. The plaintiffs point to the acceptance by the State that the purpose of the State has been to reduce, through the operation of the prohibition in Pt 14, the volume of personal injury litigation. Why then, the plaintiffs ask, should the Court hesitate to hold that this is the "practical effect" of Pt 14159? Then the plaintiffs submit that, by reason of the indifferent application of Pt 14 to federal and other claims, the whole of Pt 14 is "a completely interdependent and inseparable legislative provision"160 and falls within the phrase in s 109 "the extent of the inconsistency". In response to the submissions by the plaintiffs respecting "practical effect", detailed submissions were made, particularly by the interveners. It did not appear to be disputed that questions of the practical operation of a federal law may arise in dealing with cases of alleged "operational inconsistency", of which 158 Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 78 [32]. 159 cf North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 160 Wenn v Attorney-General (Vict) (1948) 77 CLR 84 at 122. Victoria v The Commonwealth ("the Kakariki")161 is the leading example. However, it is submitted, particularly by Victoria, that in applying s 109 attention otherwise is paid purely to the legal operation of the federal and State laws in question. too broadly. That submission puts Questions of the matter characterisation arise in various ways in the s 109 cases. In Stock Motor Ploughs Ltd v Forsyth162, the question, as Dixon J saw it in his dissenting judgment, was whether the Moratorium Act 1930 (NSW) impaired, in the sense of suspending subject to a discretionary relaxation thereof, the enforcement of existing liabilities incurred unconditionally under the Bills of Exchange Act 1909 (Cth). On the other hand, Evatt J (one of the majority) said163 that the rights of the plaintiff had been suspended by the State law not because he was payee of the defendant's promissory note, but because the plaintiff and defendant were parties to a hire purchase transaction, a subject with which the State law was concerned. Thus, the outcome in Forsyth depended upon the question of characterisation. Where questions of characterisation are involved, it is likely that there will be consideration of the "practical effect" of the laws in question. For example, in Bayside City Council v Telstra Corporation Ltd164, the Court considered, but did not determine, the question whether a federal law on its face supported by s 51 of the Constitution nevertheless may not answer the description of "a law of the Commonwealth" for the purposes of s 109 of the Constitution if it be "aimed at" preventing the exercise of State legislative power rather than dealing with the subject-matter assigned to the Parliament by s 51. New South Wales v The Commonwealth and Carlton165 concerned State and federal legislation respecting the provision of hospital benefits. The legislation of New South Wales and Victoria imposed a monthly levy on organisations providing hospital benefits; the levy was based on the total amount of contributions received from contributors. Mason J said166 that, while the levy was not expressed to be payable out of a fund maintained under the federal legislation and it could be paid out of other resources where the organisation 161 (1937) 58 CLR 618. 162 (1932) 48 CLR 128 at 136. 163 (1932) 48 CLR 128 at 150. 164 (2004) 216 CLR 595 at 628-629 [36]-[37]. 165 (1983) 151 CLR 302. 166 (1983) 151 CLR 302 at 328. carried on some other business, nevertheless the "practical effect" of the State legislation in most cases was that the levy would be paid out of that fund. The question then became whether a payment out of that fund of the State levy was permitted by a special provision in the federal law allowing payment of certain outgoings. The Court held that the payment was permitted so that the State legislation was not inconsistent with the federal law. In Australian Mutual Provident Society v Goulden, the Court stated167: "In the words of Dixon J in Victoria v The Commonwealth168, it 'would alter, impair or detract from' the Commonwealth scheme of regulation established by the [Life Insurance Act 1945 (Cth)] if a registered life insurance company was effectively precluded by the legislation of a State from classifying different risks differently, from setting different premiums for different risks or from refusing to insure risks which were outside the class of risk in respect of which it wished to offer insurance." (emphasis added) Against this background, the Commonwealth put a submission more narrowly expressed than that of Victoria and its supporters. The Commonwealth met the plaintiffs' contention that s 109 is engaged if, in the light of the practical operation of the State law, there is anything more than a de minimis impairment of the enjoyment of a federal right by saying that the question is always one of fact and degree. This approach should be adopted. One may conjecture State laws respecting lawyers which have such an immediate impact on the practical exercise of federal claims of the kind under consideration as to amount to an impairment in the Forsyth sense and so attract s 109. Examples may be State laws denying to legal practitioners their engagement in matters arising under federal law, whether by provision of advice or court or tribunal appearance. Indeed, the Solicitor-General for New South Wales in oral argument appeared to accept that this could not be done. The Solicitor-General of the Commonwealth, accepting this possibility, distinguished a State law which impeded the exercise of a right to sue from one which sought to impede the formation of a wish to sue (or to make a claim before suit). The State law in question here was in the latter category and would achieve its objective indirectly by restraining the advertising of services apt to encourage the formation of a wish to make a claim under federal law. 167 (1986) 160 CLR 330 at 337. 168 (1937) 58 CLR 618 at 630. That proposition should be accepted. The present case falls on the other side of the line drawn by Dixon J in Forsyth. The enjoyment of rights arising under the Trade Practices Act listed in Group (C) is not "directly impaired by State law" in the sense identified there by Dixon J169. It cannot be said of Pt 14 as it was in Goulden170 of the impact of the Anti-Discrimination Act 1977 (NSW) upon the Life Insurance Act 1945 (Cth): "[S]uch legislation would undermine and, to a significant extent, negate the legislative assumption of the underlying ability of a registered life insurance company to classify risks and fix rates of premium in accordance with its own judgment based upon actuarial advice and prudent insurance practice upon which ... the stringent controls and requirements which the [federal] Act imposes in respect of life insurance business of registered life insurance companies are predicated." (emphasis added) In Forsyth171, Dixon J identified as "large" the area within which State law might operate to affect the operation of rights arising under negotiable instruments172, but was influenced by the "peculiar nature" of the moratorium legislation. So, in the present case, a State law which regulates advertisements by lawyers has been made in a federal milieu which, as explained in outlining the legislation in Group (A), assumes the continued existence of State laws regulating the conduct of the legal profession. The State law operates to discourage the wish to make a claim and does so indifferently with respect to personal injury cases of all descriptions; it is not "aimed at" the pursuit of federal claims under, for example, the Trade Practices Act. The same conclusion follows with respect to the federal laws identified in Group (D) and Group (E). Before parting with this section of the special case, two further points should be noted. The first is that the plaintiffs did not rely upon those authorities which expound the notion of "covering the field"173. The second is that no specific argument was directed to Annexure E, the MBC letter which it wishes to send with respect to the Pt IVA proceeding pending in the Federal Court. Were 169 (1932) 48 CLR 128 at 137 (emphasis added). 170 (1986) 160 CLR 330 at 337. 171 (1932) 48 CLR 128 at 140. 172 cf Commercial Radio Coffs Harbour v Fuller (1986) 161 CLR 47 at 50, 56-58. 173 cf Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76-77 [28]. there in force any direction or order by the Federal Court permitting or requiring the despatch of Annexure E, then a question of "operational" inconsistency akin to that considered in P v P174 may have arisen for consideration. The claims by the plaintiffs respecting inconsistency are not made good. The result is that par (f) of question 1 in the amended special case should be answered "no". Implied freedom of political communication The plaintiffs also rely upon the restraint upon legislative power propounded in Lange v Australian Broadcasting Corporation175. The doctrine for which Lange is authority, as reformulated in Coleman v Power176, is as follows. Where a law of a State or federal Parliament or a Territory legislature is alleged to infringe the requirement of freedom of communication imposed by ss 7, 24, 64 or 128 of the Constitution, two questions are to be answered. The first question was stated in Lange as follows177: "First, does the law effectively burden freedom of communication about government or political matters either in its terms, operation or effect178?" The second question, as reformulated in Coleman, asks179: "[I]f the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end [in a manner] which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government"? For the reasons that follow, the plaintiffs do not establish that Pt 14 is a law which satisfies the first limb of Lange. 174 (1994) 181 CLR 583 at 603, 635-636. 175 (1997) 189 CLR 520. 176 (2004) 78 ALJR 1166 at 1185 [93], 1201 [196], 1203-1204 [211]; 209 ALR 182 at 177 (1997) 189 CLR 520 at 567. 178 cf Cunliffe v The Commonwealth (1994) 182 CLR 272 at 337. 179 (2004) 78 ALJR 1166 at 1201 [196]; 209 ALR 182 at 229. An initial question in dealing with the first limb is presented by the term "communication". One issue on which the Court divided in Mulholland v Australian Electoral Commission180 was whether a ballot paper constituted a communication on political or government matters for the purposes of the first limb. Gleeson CJ, McHugh J and Kirby J were of the view that it did181; Gummow and Hayne JJ, Callinan J and Heydon J were of the opinion that it did not182. In the present case, there is no dispute that the advertisements with which Pt 14 is concerned are communications. The next question is to identify those whose freedom is said to be effectively burdened. The plaintiffs' submission is that the direct legal operation of Pt 14 is to impose a prohibition upon legal practitioners and the practical operation of the prohibition is to inhibit the would-be recipient of the communication from receiving legal advice and from going on to assert legal rights. That may be accepted for the purposes of argument, but there remains the necessity for the first limb that the communication be about government or political matters. In this respect, the submissions for the State emphasised the importance of distinguishing those communications burdened by Pt 14 from those which are not. First, there is no burdening of freedom to communicate about Pt 14 itself or to utilise all available means to criticise the policy implemented by Pt 14 and to seek its amendment or repeal. The plaintiffs make specific complaint that Pt 14 burdens communication of legislative and executive policy concerning matters connected with personal injury. However, this characterisation gives insufficient attention to the limited definition of "advertisement" in Pt 14. Secondly, a communication within the first limb of Lange might be combined with an advertisement proscribed by Pt 14, but it would be the material promoting the availability of legal services, not the communication about government or political matters, which attracted the prohibition. An example of such a mixture of materials may be the references to the New South Wales Premier and a federal Minister in the APLA communication which is Annexure A of the further amended statement of claim. However, the addition of such further material in a proposed publication does not deny to the balance the character of an advertisement which may validly be proscribed by Pt 14. 180 (2004) 78 ALJR 1279; 209 ALR 582. 181 (2004) 78 ALJR 1279 at 1288 [30], 1302 [94], 1335 [281]-[282]; 209 ALR 582 at 182 (2004) 78 ALJR 1279 at 1318 [185]-[186], 1348 [337], 1351-1352 [355]; 209 ALR These submissions by the State should be accepted. So also should be the reliance by the State upon what was said in Cunliffe. One of the provisions in Pt 2A of the Migration Act 1958 (Cth), the validity of which was upheld in Cunliffe, was s 114K. This forbad a person (not being a lawyer) from advertising that he or she gave immigration assistance unless that person was a registered agent under the legislation. Such a provision was not expressed as a restriction on political discussion, nor in its practical operation did it do so. Brennan J observed in Cunliffe (in a judgment which was influential in the formulation later adopted in Lange)183: "To control the giving of immigration assistance or the making of immigration representations is not to impose a restriction on political discussion. The immunity from legislative control which the Constitution implies in order to secure freedom of political discussion does not preclude the making of laws to control any activity the control of which might be politically controversial." His Honour added184: "To some extent, Pt 2A may inhibit communications between a citizen and an alien but the freedom to be implied from the terms of the Constitution is not a general freedom of communication." Accordingly, the plaintiffs' case fails at the stage of the first limb of Lange. Neither in its terms, operation or effect does Pt 14 burden freedom of communication about government or political matters. Therefore, par (a) in question 1 of the amended special case should be answered "no". Perhaps with an awareness of these difficulties in the path of this branch of the argument, the plaintiffs in oral (and later in written) submissions reformulated their attack by focusing not upon the system of representative and responsible government to the operation of which Lange was directed, but upon Ch III of the Constitution. To this, par (b) of question 1 in the amended special case, I now turn. Chapter III of the Constitution The plaintiffs began with the proposition that Ch III authorises the bringing before courts exercising federal jurisdiction of controversies about existing legal rights, including common law rights, to be quelled in the exercise 183 (1994) 182 CLR 272 at 329. 184 (1994) 182 CLR 272 at 329. of the judicial power of the Commonwealth. The submission proceeds that this requires that the people of the Commonwealth have the capacity, ability or freedom to ascertain their legal rights and to assert them by approaching courts exercising federal jurisdiction. It is then submitted that this requires the same people, litigants or potential litigants, to have the capacity or ability to receive such information and assistance as may be necessary in a practical sense for them to assert their legal rights and approach courts exercising federal jurisdiction. Then it is said that Ch III implicitly prohibits any law of the Commonwealth or of a State or Territory which unjustifiably, in the sense of the second limb of Lange, burdens that freedom. The above was later in argument identified by the plaintiffs as "the broader implication". The second and "narrower implication" was then defined as posing the question whether in its substantial operation the State law alters, detracts from or impairs the effective exercise of rights in federal jurisdiction or the effective exercise of federal jurisdiction. The plaintiffs accept that the well-established State schemes respecting the prudential regulation of the legal profession do not offend that narrower implication; rather, they enhance the effective exercise of federal jurisdiction. However, Pt 14 is said to go beyond such notions of reasonable regulation. There are several constitutional conceptions involved here. In their application they may overlap, but they are distinct. This became apparent as the argument developed. Counsel for the plaintiffs took the position that the existence and ambit of the narrower implication was "not greatly" affected by consideration of the exclusivity of federal legislative power. However, counsel for the amici curiae identified that exclusivity as a question anterior to any issue of the scope of protections or immunities implied by the structure and text of the Constitution, particularly from Ch III. This case concerns the validity of a State law. To the extent that Pt 14 falls within the zone of exclusive federal legislative power, then, as the amici curiae put it, it follows immediately and without the intrusion of further considerations that Pt 14 is invalid. With that in mind the following propositions respecting the exclusivity of federal legislative power may be noted. First, no part of the judicial power of the Commonwealth can be conferred other than by virtue of, and in accordance with, the provisions of Ch III of the Constitution. This was settled in the Boilermakers' Case185. Secondly, no State legislature may deny the operation of any of the provisions of Ch III. Thus, a 185 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 270. State law which curtailed (or expanded) the scope of the appellate jurisdiction conferred on this Court by s 73 of the Constitution would be invalid186. A State law which sought to withdraw from this Court (or to supplement) the original jurisdiction directly conferred by s 75 of the Constitution would be repugnant to Ch III and be beyond the competence of the State legislature187. Thirdly, the Parliament is authorised by provisions in Ch III to create further federal courts (a power necessarily implied by s 71188), to prescribe the number of Justices of this Court above the original three members (s 71), to fix remuneration (s 72(iii)), to fix retirement ages at less than 70 years for courts created by the Parliament (s 72), to prescribe exceptions and regulations to appellate jurisdiction (s 73), to limit Privy Council appeals (s 74), to confer, define and invest federal jurisdiction (s 77), to confer certain rights to proceed (s 78), and to prescribe numbers of judges for the exercise of federal jurisdiction (s 79) and the places of certain trials (s 80). These grants of legislative power would, in accordance with general principles, carry within them "everything which is incidental to the main purpose of [the] power"189; the extent of this incidental power "will be affected by the nature of the subject matter of the express grant which is in question"190. Thus, it was held in Residual Assco Group Ltd v Spalvins191 that the Parliament had conferred on the Federal Court authority to decide whether or not it had jurisdiction. Fourthly, the powers of the Parliament just mentioned are necessarily exclusive of those of the legislatures of the States192. (It is unnecessary here to 186 Gould v Brown (1998) 193 CLR 346 at 424 [124], 446 [195]; BHP Billiton Ltd v Schultz (2004) 79 ALJR 348 at 359 [55]; 211 ALR 523 at 536-537. 187 Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 591 [68]; cf the limited scope of the State laws upheld in Re Macks; Ex parte Saint (2000) 204 CLR 158 at 179 [30]-[31], 191-193 [74]-[82], 188 Re Governor, Goulburn Correctional Centre; Ex parte Eastman (1999) 200 CLR 189 Le Mesurier v Connor (1929) 42 CLR 481 at 497. See also Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 580 [122] where various formulations of the principle are collected. 190 Russell v Russell (1976) 134 CLR 495 at 530. 191 (2000) 202 CLR 629 at 638 [8]. 192 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 558 [59], 559 [61]; Re Macks; Ex parte Saint (2000) 204 CLR 158 at 187 [58]. enter upon any question of the interrelation between s 52(iii) of the Constitution and the Ch III powers just listed193.) Fifthly, the exclusivity of the powers of the Parliament with respect to the conferring, defining and investing of federal jurisdiction (found in s 77 and supported by ss 78, 79 and 80) has the consequence, well recognised in the authorities194, that the laws of a State with respect to limitation of actions and other matters of substantive and procedural law which are "picked up" by s 79 of the Judiciary Act195 could not directly and of their own force operate in the exercise of federal jurisdiction. This generally results from an absence of State legislative power rather than the operation of s 109 of the Constitution with respect to the exercise of concurrent powers196. However, as Gaudron J explained in Re Macks; Ex parte Saint197, a State law providing that the rights and liabilities of parties were to be other than as established by the order of a federal court established by the Parliament, and made within its grant of jurisdiction, would be invalid by operation of s 109 as altering, impairing or detracting from the operation of the law under s 77(i) defining the jurisdiction of that federal court. Further, a law supported by s 77 may render "inoperative"198 State laws under which State courts would otherwise exercise the jurisdiction spoken of in 193 Section 52(iii) provides that the Parliament shall, subject to the Constitution, have exclusive power to make laws with respect to "other matters declared by this Constitution to be within the exclusive power of the Parliament". 194 Northern Territory v GPAO (1999) 196 CLR 553 at 575 [33], 628 [195]; Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 642 [21]; Solomons v District Court (NSW) (2002) 211 CLR 119 at 134 [21]. 195 And by s 68: see R v Gee (2003) 212 CLR 230 at 255-256 [65]-[67]. 196 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 558 [58]; cf Macleod v Australian Securities and Investments Commission (2002) 211 CLR 287 at 297 197 (2000) 204 CLR 158 at 186 [54]. Gaudron J also explained at 186 [55] that s 109 also would invalidate a State law purporting to authorise a State court to make a contrary determination of such rights and liabilities established by federal court order. 198 The term used by Walsh J in Felton v Mulligan (1971) 124 CLR 367 at 412. s 77(ii) as "belonging" to them. Here, s 109 operates upon those State laws199. There is the further consideration respecting the investment of State courts with federal jurisdiction that "the Commonwealth must take the courts as it finds them, notwithstanding the differences that exist from State to State"200. This is the language of a restraint upon or limit to the scope of the federal legislative power under s 77(iii). Nevertheless, as Kable v Director of Public Prosecutions (NSW)201 indicates, when exercising that federal jurisdiction, State courts are part of the Australian judicial system created by Ch III. Sixthly, the powers of the Parliament which are found in Ch III, and are exclusive of those of the States, themselves have a particular relation to the other legislative powers of the Parliament set out in ss 51 and 52. Those sections are expressed to be "subject to this Constitution" and thus to Ch III202. Further, the constitutional conception of "[t]he judicial power of the Commonwealth" which is found in s 71 speaks of "the function of a court rather than the law which a court is to apply in the exercise of its function"203. Hence the development of the constitutional doctrines associated with the separation of judicial power of the Commonwealth from the federal legislative and executive powers. Reference has been made earlier in these reasons to the limited provisions made by the Judiciary Act with respect to legal practitioners. The State concedes that it will be competent for federal law to make more extensive provisions in this field, including with respect to advertising by legal practitioners. But two questions arise. The first concerns the source of the power to make such a federal law. The second assumes a source of that federal legislative power, but then asks what restraints upon that power are imposed by the doctrines attending the conception of the judicial power of the Commonwealth. As to the source of federal legislative power to regulate the conduct of activities of legal practitioners respecting matters in federal jurisdiction, in argument candidates were found in the implied element of the grants of legislative power in Ch III, and in the express grant in s 51(xxxix). The 199 Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 591-592 [68]. 200 Leeth v The Commonwealth (1992) 174 CLR 455 at 469. 201 (1996) 189 CLR 51. 202 Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 205; Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 203 Leeth v The Commonwealth (1992) 174 CLR 455 at 469. relationship between the two was discussed in Le Mesurier v Connor204 by Knox CJ, Rich and Dixon JJ but has yet to be fully settled205. In the Boilermakers' Case, Dixon CJ, McTiernan, Fullagar and Kitto JJ said206: "Section 51(xxxix) extends to furnishing courts with authorities incidental to the performance of the functions derived under or from Ch III and no doubt to dealing in other ways with matters incidental to the execution of the powers given by the Constitution to the federal judicature. But, except for this, when an exercise of legislative powers is directed to the judicial power of the Commonwealth it must operate through or in conformity with Ch III." For that reason, s 51(xxxix) cannot support a federal law for the exercise of State jurisdiction by a federal court207. The Solicitor-General of the Commonwealth supported the provisions respecting legal practitioners which are made by the Judiciary Act as laws made in exercise of incidental powers of either or both species. He did not contend that the power exercised in this way was exclusive to the Commonwealth; rather, the submission was that here incidental power enabled the Parliament to "extend into" areas of concurrent powers with the States. The submission by the Solicitor-General for Victoria was that there was a measure of exclusive Commonwealth power and a measure of concurrent power and that Pt 14 is an exercise of that concurrent power. Counsel for the amici curiae submitted that (a) the incidental power found within the legislative grants in Ch III must be exclusive; (b) that incidental power derived from s 51(xxxix) cannot be of a different nature when attached to Ch III powers; and (c) the power to make Pt 14 was within the exclusive federal power because there is a real and sufficient connection with the powers to create federal courts and confer federal jurisdiction. If propositions (a) and (b) were accepted, there would be a very real question as to the reality and sufficiency of the connection postulated in proposition (c). 204 (1929) 42 CLR 481 at 497-498. 205 See R v Murphy (1985) 158 CLR 596 at 614; Re Macks; Ex parte Saint (2000) 204 CLR 158 at 185 [51], 211 [139], 235-236 [216], 277 [337]. 206 (1956) 94 CLR 254 at 269-270. 207 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 546 [24], 555 [52], 561-563 However, in any event and as indicated above, the plaintiffs do not put their case in either of its formulations upon exclusivity of federal legislative power. The Commonwealth does not assert that power. The Court should be cautious in entering further upon that question where it is possible to decide the case on grounds that assume that legislative power is concurrent. Thus, it is necessary to return to the implications which would support the restraints upon legislative power, federal and State, which in this case are said by the plaintiffs to lead to the invalidity of Pt 14 in its operation with respect to federally created justiciable rights. Part 14 then is said wholly to fail because it is inseverable. Something first must be said here respecting implications. In McGinty v Western Australia208, Brennan J adopted what had been said by Mason CJ in Australian Capital Television209: "It may not be right to say that no implication will be made unless it is necessary. In cases where the implication is sought to be derived from the actual terms of the Constitution it may be sufficient that the relevant intention is manifested according to the accepted principles of interpretation. However, where the implication is structural rather than textual it is no doubt correct to say that the term sought to be implied must be logically or practically necessary for the preservation of the integrity of that structure." The doctrines respecting the judicial power of the Commonwealth are derived from the actual terms found in Ch III. In the joint judgment in the Boilermakers' Case, their Honours said210: "No part of the judicial power can be conferred in virtue of any other authority or otherwise than in accordance with the provisions of Ch III. The fact that affirmative words appointing or limiting an order or form of things may have also a negative force and forbid the doing of the thing otherwise was noted very early in the development of the principles of interpretation211. In Ch III we have a notable but very evident example." 208 (1996) 186 CLR 140 at 168-169. 209 (1992) 177 CLR 106 at 135. 210 (1956) 94 CLR 254 at 270. 211 Townsend's Case (1554) 1 Plow 111 at 113 [75 ER 173 at 176]. Nevertheless, the formulation of principle in that joint judgment also involved "very general considerations" which "explain the provisions of Ch III of the Constitution"212. Accordingly, the body of authority concerned with judicial power does not readily observe any dichotomy that may have been posited by Mason CJ in Australian Capital Television. However that may be, it cannot be said that the implicit prohibitions which the plaintiffs contend flow from Ch III are, within the meaning of the second limb of Mason CJ's statement, logically or practically necessary for the preservation of the integrity of the structure of the Constitution. In so far as the inhibitions upon legislative power for which the plaintiffs contend fall outside that second limb, it likewise is not required as necessary or proper to render effective the exercise of the judicial power, within the meaning of statements in the Boilermakers' Case213. There are two significant passages in the Boilermakers' Case. The first214 is that "[t]he judicial power, like all other constitutional powers, extends to every authority or capacity which is necessary or proper to render it effective". The second reads215: "What belongs to the judicial power or is incidental or ancillary to it cannot be determined except by ascertaining if it has a sufficient relation to the principal or judicial function or purpose to which it may be thought to be accessory." So it later was held in R v Murphy216 that the committal proceedings, provided for in State and Territory courts by s 68(2) of the Judiciary Act, "have the closest, if not an essential, connexion with an actual exercise of judicial power". The State legislation considered in Re Macks217 conferred rights and imposed liabilities by reference to judgments of federal courts rendered "ineffective" as a result of the reasoning, concerning the cross-vesting scheme, in 212 (1956) 94 CLR 254 at 268. 213 (1956) 94 CLR 254 at 278. 214 (1956) 94 CLR 254 at 278. 215 (1956) 94 CLR 254 at 278. 216 (1985) 158 CLR 596 at 616. 217 (2000) 204 CLR 158. Re Wakim; Ex parte McNally218. In the course of rejecting a submission that the State legislation was repugnant to Ch III of the Constitution, Gaudron J emphasised "what those Acts do not do"219. Her Honour continued220: "They do not and do not purport to interfere with the appellate jurisdiction of this Court, the Federal Court or the Family Court. The appellate jurisdiction of this Court and of those Courts may be exercised to set aside an order that was made without jurisdiction. Moreover, the [State statutes] do not and do not purport to interfere with this Court's jurisdiction under s 75(v) of the Constitution." "Once it is appreciated that the [State statutes] do not interfere with the jurisdiction of this or other federal courts, the argument that they are, on that account or to that extent, repugnant to Ch III of the Constitution must be rejected." The question then becomes, as so often in constitutional law, one (in the language of the Boilermakers' Case221) of "sufficient relation"; here, to the exercise of the judicial power of the Commonwealth. It may be conceded, without deciding, that a law requiring legal representation (albeit not necessarily of the choice of the party) before a court exercising the judicial power of the Commonwealth would have that "sufficient relation", whilst a law denying or forbidding such legal representation would have a "sufficient relation" but one obnoxious to the exercise of the judicial power of the Commonwealth. Other examples may be given. The plaintiffs' opponents stress that, at the time of federation and thereafter, advertising by lawyers was discouraged or forbidden. Nevertheless, that was before the present time when federal statutes reach into many aspects of daily life. The federal legislation identified in Groups (C), (D) and (E) of question 1(f) of the amended special case provides examples. The reliance upon legal and social history provides insufficient support for a denial of the plaintiffs' case. However, the Commonwealth does not require an immunity of legal practitioners from legislative control (as exemplified in Pt 14) in promoting their availability to the effective exercise of judicial power of the 218 (1999) 198 CLR 511. 219 (2000) 204 CLR 158 at 191 [74]. 220 (2000) 204 CLR 158 at 191-192 [74], [77]. 221 (1956) 94 CLR 254 at 278. perform personal injury legal services. It is to be accepted that a law may not validly require or authorise the courts in which the judicial power of the Commonwealth is vested to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power. The extent to which this prohibition protects aspects of "due process" is a matter of debate222. What is presently significant is that involved in these aspects of "due process" is the actual exercise of federal jurisdiction. It is neither of the essential nature of a court nor an essential incident of the judicial process that lawyers advertise. Part 14 operates well in advance of the invocation of jurisdiction. It does not prevent prospective litigants from retaining lawyers, nor prevent lawyers or others from publishing information relating to personal injury legal services and the rights and benefits conferred by federal law. On this aspect of the case, as with that dealing with s 109 of the Constitution, the plaintiffs refer to the avowed purpose of the State to reduce, by means of Pt 14, the volume of personal injury litigation. It is apparent that personal injury litigation may attract the exercise of federal jurisdiction. If the objective includes the reduction of personal injury litigation in federal jurisdiction why should this Court not attribute to Pt 14 the attainment of that objective as the "practical effect" of Pt 14? The reduction of litigation undertaken in federal jurisdiction is then said to be no part of State legislative power and to be obnoxious to Ch III. Much of what is said earlier in these reasons respecting "practical effect" and s 109, in particular the line drawn by Dixon J in Forsyth223 as to the affection of federal rights by State law, by analogy is applicable to the identification of the "sufficient relation" spoken of in the Boilermakers' Case224. Many State laws may operate in a practical sense which is apt to reduce overall the volume of litigation in federal jurisdiction. The ascription of that outcome as an objective of a particular State law does not necessarily entail acceptance of a particular outcome, at least where, as here, other imponderables attend the formation by individuals of a wish to sue or to make a claim before suit. 222 Wheeler, "Due Process, Judicial Power and Chapter III in the New High Court", (2004) 32 Federal Law Review 205. 223 (1932) 48 CLR 128 at 140. 224 (1956) 94 CLR 254 at 278. It may well be, to adapt considerations drawn from the notions of federalism considered recently in Austin v The Commonwealth225, that a State law which placed a particular disability or burden upon the operation of the federal judicial power would be obnoxious to Ch III. The distinctions drawn by Gaudron J in her judgment in Re Macks226 would be illuminating. However, the operation of Pt 14 does not impose a particular disability or burden in the sense identified in Austin and the earlier authorities referred to in that case. The plaintiffs do not make out their case based upon Ch III. Conclusions Question 1 in the amended special case should be answered "no". Questions 2 and 3 do not arise. The special case does not ask any question of costs. This will be for decision by the Justice disposing of the action. 225 (2003) 215 CLR 185. 226 (2000) 204 CLR 158 at 191-192 [74]-[77]. Kirby 255 KIRBY J. Three hundred years ago, in Ashby v White227, Lord Chief Justice Holt remarked: "If the plaintiff has a right, he must of necessity have a means to vindicate and maintain it, and a remedy if he is injured in the exercise or enjoyment of it; and indeed it is a vain thing to imagine a right without a remedy; for want of right and want of remedy are reciprocal." These proceedings, in the original jurisdiction of this Court, are concerned with an attempt by the Executive Government of the State of New South Wales to prevent activities of the plaintiffs in such a way as to injure members of the public in the exercise or enjoyment of rights conferred by federal law and in the access of persons to federal courts and tribunals for the vindication of such rights. Because, conformably with the Constitution, such injury is impermissible, the State law so providing is of no effect. Because it is impossible, and in the circumstances inappropriate, for this Court to attempt severance of the law with respect to its burdens on federal rights and entitlements, the State law wholly fails. It is therefore unnecessary for this Court to decide the other complaints made by the plaintiffs with respect to the validity of the State law. The plaintiffs are entitled to succeed. They should have the relief that they claim. The facts, legislation and common ground The facts: APLA Limited (the first plaintiff) ("APLA"), Maurice Blackburn Cashman Pty Ltd (the second plaintiff) ("MBC") and Mr Robert Whyburn (the third plaintiff), for their respective interests, commenced proceedings in this Court to challenge the validity of Pt 14228 of the Legal Profession Regulation 2002 (NSW), as substituted by the Legal Profession Amendment (Personal Injury Advertising) Regulation 2003 (NSW) with effect from 23 May 2003. It is the validity of the contested provisions of the Regulation, as so amended ("the Regulation"), that is the concern of the plaintiffs' constitutional challenge. The terms of the amended special case and the contents of the statement of claim, as amended during the proceedings, are explained in the reasons of other 227 (1703) 2 Ld Raym 938 at 953 [92 ER 126 at 136] (citation omitted). 228 cll 138-140D. Kirby members of the Court229. Set out there is the text of the questions in the special case230 and a description of the respective interests of the three plaintiffs231 and also of Combined Community Legal Centres' Group (New South Wales) Inc and Redfern Legal Centre Ltd which (over the opposition of the State of New South Wales) were granted leave to make submissions in support of the plaintiffs232. I will not repeat these descriptions. My acceptance of the foregoing material is limited to the factual descriptions set out. Thus, I would not myself draw a distinction between the essential way in which the amici curiae expressed their arguments on the suggested constitutional invalidity of Pt 14 of the Regulation and the way in which the plaintiffs presented their arguments. The amici were concerned to illustrate the extraordinary reach of the challenged law. They did so, amongst other ways, by reference to some of their own activities. However, this was by way of elaboration and submission. It did not necessitate amendment of the special case, beyond the amendment which the plaintiffs had sought, and which was granted by the Court233. The detailed way in which others have described the respective "communications" of APLA and MBC234, both in print and in electronic media235, and of Mr Whyburn in trade union materials236, means that there is no need for me to set them out again. It is enough that these descriptions demonstrate the ways in which, if it be valid, the Regulation reaches into communication amongst 229 Reasons of Gleeson CJ and Heydon J at [11]-[15]; reasons of McHugh J at [47]- [48]; reasons of Gummow J at [102]-[105]; reasons of Hayne J at [374]-[375]; reasons of Callinan J at [429]. 230 Reasons of Gleeson CJ and Heydon J at [17]; reasons of Gummow J at [106]; reasons of Callinan J at [429]. 231 Reasons of Gleeson CJ and Heydon J at [11]-[12]; reasons of Gummow J at [118]- [120]; reasons of Callinan J at [431], [435], [439]. 232 Reasons of Gummow J at [122]-[124]. 233 cf reasons of Gummow J at [127]. 234 Reasons of Gummow J at [130], [132]-[134]. The same descriptions are adopted as appear in those reasons. See also reasons of Gleeson CJ and Heydon J at [19]; reasons of Callinan J at [432], [436]-[439]. 235 Reasons of Gummow J at [137]-[139]. 236 Reasons of Gummow J at [135]. Kirby many persons in the Australian community. It impinges on hard copy, letters, informative articles and communications in electronic form. It operates in New South Wales and in other States, indeed world-wide. It purports to restrict the entitlement of the plaintiffs and many others (such as the amici) to inform people who have, or may have, entitlements to various legal rights that they might enjoy and to tell these people of the steps which they might take to investigate, clarify, consider and (if so desired) pursue those rights in the courts of the Australian Judicature, including federal courts, and also before federal tribunals. Subject to the terms of the Regulation, all affected communications are, and are intended to be, swept up into its extensive ambit. The relevant legislation: Other reasons contain the applicable provisions of the Legal Profession Act 1987 (NSW) ("the LPA"), s 38J, establishing a general rule that "[a] barrister or solicitor may advertise in any way the barrister or solicitor thinks fit"237. This was a significant change from the earlier restrictions of law and professional ethics and practice that had limited advertising to potential or current clients and the public by legal practitioners238. Such change came about following inquiries and official reports conducted in Australia, the United Kingdom and elsewhere. It followed alteration of social perceptions and professional practices. The rule permitting advertising by barristers and solicitors, stated in s 38J of the LPA, was subject to an express qualification forbidding advertisements of a kind that were, or might reasonably be regarded as, "false, misleading or deceptive", in contravention of federal and State trade practices law or "in contravention of any requirements of the regulations". It is the last-mentioned exception that gives the provisions of the Regulation, impugned in these proceedings, their potential force, raising the concern that the plaintiffs express about it. To this concern is added the provision of the LPA which gives the Regulation its teeth, namely s 38J(3). By 237 s 38J(1). See reasons of Gleeson CJ and Heydon J at [2]; reasons of Gummow J at 238 In New South Wales, the position that formerly obtained is described in New South Wales Law Reform Commission, Advertising and Specialisation, Legal Profession Discussion Paper No 5 (1981) at 89-91. As there described, the Legal Practitioners Act 1898 (NSW) and the Solicitors (General) Regulation at that time imposed restrictions on solicitors touting or attracting business unfairly. Regulation 29(2) forbade any solicitor publishing an advertisement without consent in writing of the council of the professional body. Barristers were regulated by the Rules of the Bar Association, Rules 72 and 73. The changes in New South Wales began in 1979, effected by regulations made at that time. Kirby that sub-section, a contravention by a New South Wales legal practitioner of s 38J(2) of the LPA "is capable of being professional misconduct or unsatisfactory professional conduct". It was their anxiety to avoid risking, or placing New South Wales legal practitioners at risk of, professional disciplinary and criminal proceedings (and the potentially serious outcome of any such proceedings for those practitioners) that led APLA in the present case to seek a ruling from the Legal Services Commissioner of New South Wales (the first defendant) concerning the consequences of publishing its proposed communication. In turn, it was his response that led to the proceedings naming the Commissioner as defendant and seeking the relief now under consideration by this Court239. Other reasons set out the provisions of the applicable clauses of the amended Regulation240. They describe the history of the Regulation and the changes to its contents241. Except to the extent that it is necessary for my reasons to expand on this material, I am content to accept these descriptions as the basis for my opinion. Two other categories of legislation in addition to the LPA need to be appreciated in deciding the questions reserved in the special case. First, it is important to notice the Civil Liability Act 2002 (NSW) ("the Civil Liability Act"). That is a law, enacted by the Parliament of New South Wales, with the stated object of reducing the costs of insurance premiums by altering, in the several respects enacted, the rights of plaintiffs to recover damages from defendants (and hence from defendants' insurers). Both sides were keen to invoke this legislation in support of their respective arguments. The State of New South Wales urged that Pt 14 of the Regulation was to be understood as part of a comprehensive package of State laws addressing a legitimate concern of the State lawmakers, namely a suggested "epidemic" of excessive and unjustifiable claims for personal injuries, unmeritorious recovery by plaintiffs and prohibitive 239 As Gummow J has explained, upon the joinder as second defendant of the State of New South Wales, the Commissioner submitted to the orders of the Court, leaving the carriage of the defence of the State law to the State of New South Wales: see reasons of Gummow J at [121]. 240 Reasons of Gleeson CJ and Heydon J at [4]; reasons of Gummow J at [111]-[112]. See also reasons of Callinan J at [442]. 241 Reasons of Gleeson CJ and Heydon J at [7]-[10]; reasons of Gummow J at [148]- Kirby cost burdens imposed on the public and on private insurance242. To respond to these purported excesses (albeit that they may have had more to do with perception than reality243), and to their consequent economic burdens, it was open to the lawmakers, so the State of New South Wales submitted, to take remedial action by enacting and making laws in the way that had been done, including by Pt 14 of the Regulation. With the support of the amici, the plaintiffs complained of the serious overreach of the Regulation. They suggested that the constitutionally valid way to reduce allegedly excessive and unmeritorious claims was the way adopted in the Civil Liability Act. This was, where available, by altering the substantive rights of plaintiffs in personal injuries claims and changing the procedures by which such rights might be vindicated at law. It was not to do what the State had attempted in Pt 14 of the Regulation, namely to acknowledge the existence or possible existence of legal rights, but to place severe impediments upon communication with those who potentially enjoyed those rights concerning the ways in which such persons could ascertain, and pursue, any rights at law that they might be found to have. Still less where some relevant rights arose under federal law, was it permissible for State law, by over-broad provisions, to impede the maintenance and vindication of such federal rights and access to the remedies necessary to make the exercise and enjoyment of such federal rights a reality. In the circumstances of the actual and potential political controversy that had followed the enactment of the Civil Liability Act and the amended Regulation, the plaintiffs also argued that the over-broad and undiscriminating terms of Pt 14 of the Regulation intruded into legitimate communications within Australian society about the justice, politics, proportionality and constitutionality of the inhibitions so placed on legal practitioners, and communications necessary 242 See New South Wales Government, Report to the National Competition Council on the Application of National Competition Policy in New South Wales, (2004) at 23. 243 See Cousins (Commissioner, Australian Competition and Consumer Commission), "Recent ACCC Involvement in Public Liability Insurance Issues", paper delivered at Public Liability Insurance Summit, Sydney, 13-14 June 2002 at 13: "[S]trong links have not been demonstrated between the provision of 'no win no fee' services by legal practitioners or the advertising of legal services and the reported increases in the payout of claims and increases in premiums for public liability insurance." See also Wright and Melville, "Hey but Who's Counting? The Metrics and Politics of Trends in Civil Litigation", in Prest and Anleu (eds), Litigation: Past and Present, (2004) 96 at 96-97, 110-117. Kirby to the effective operation of the Judicature established by the Constitution in the manner that the Constitution envisaged. Secondly, a further series of laws must be mentioned. Such laws were specifically identified amongst the federal legislation invoked by the plaintiffs to support their arguments of inconsistency between the State Regulation and federal laws. Such laws were mainly elaborated after the first hearing before this Court. The federal laws in question afford federal rights and privileges to persons potentially affected by the Regulation (as well as access both to federal and State courts as expressed by, or implied in, Ch III of the Constitution) and to federal tribunals. In support of their constitutional contentions, the plaintiffs invoked the principle of the rule of law to which the Constitution in its entirety gives effect244. The plaintiffs specifically referred to, and relied on, provisions of the Judiciary Act 1903 (Cth) ("the JA"), the Federal Court of Australia Act 1976 (Cth) ("the FCA"), the Trade Practices Act 1974 (Cth) ("the TPA"), the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRCA") together with procedural entitlements granted under the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") and under the provisions of the Superannuation (Resolution of Complaints) Act 1993 (Cth) and the Superannuation Industry (Supervision) Act 1993 (Cth)245. I accept the general description of this legislation, and of the way the parties advanced their respective submissions, as described by Gummow J. However, it will be necessary to add some further references to this federal statutory material. When it is elaborated, and more fully understood, the undiscriminating and impermissible operation of the State laws in relation to the intended operation of applicable federal law sustains the plaintiffs' complaints that the impugned provisions of the Regulation are inconsistent with the federal laws in the sense that inconsistency is used in the Constitution. This conclusion requires the vindication by this Court of the federal rights asserted by the plaintiffs. The Regulation amounts to an impermissible attempt of State law to 244 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193 per Dixon J. See also Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 245 The relevant provisions of question 1 in the special case are set out in the reasons of Gummow J at [106]. Reference to the terms of the federal statutes appears in some of the propounded website materials of MBC: see reasons of Gummow J at [138]-[139]. Some of them are also mentioned in a proposed letter of MBC: see reasons of Gummow J at [141]. As to other provisions of the federal Acts, see reasons of Gummow J at [182], [187]-[189], [191]. Kirby impede effective access to Ch III courts and to State courts exercising federal jurisdiction (and to federal tribunals). This attempt cannot stand with the text, structure and implications of the Constitution. The common ground: There is a measure of common ground in these proceedings. It helps to identify the point of departure of my approach from that of other members of this Court on the constitutional questions246. First, and for the reasons given by Gummow J, there can be no dispute about the standing of each of the plaintiffs to mount their constitutional challenges247. It is enough that each of them wishes to engage (or in the case of APLA has members who wish to engage) in conduct that would be impermissible under the Regulation. This attracts standing to bring the proceedings for constitutional purposes248. It leaves open the question whether, if the effect on the individual plaintiffs were too remote, theoretical or de minimis, relief would eventually be refused. That is an issue raised by the third question reserved. But it presents no obstacle to the presentation of a constitutional matter, the resolution of which engages the jurisdiction of this Court. The amici curiae would also have enjoyed standing, had they brought proceedings or wished to intervene or to be added as plaintiffs. Doubtless in order to minimise their exposure to risks of a costs order, the amici confined their submissions to those designed to assist the Court. Like Gummow J, I pay tribute to the assistance provided by their submissions249. Such assistance bears out the need, in large and complex legal (and especially constitutional) concerns, for this Court to be ready to receive submissions from non-parties that have substantive arguments to the issues which fall for decision250. 246 Concluding that all of the plaintiffs' constitutional attacks on the Regulation fail. See reasons of Gleeson CJ and Heydon J at [46]; reasons of Gummow J at [254]; reasons of Hayne J at [375]; reasons of Callinan J at [428]. 247 Reasons of Gummow J at [116]. 248 Croome v Tasmania (1997) 191 CLR 119 at 127-128, 137-138. 249 See reasons of Gummow J at [126]-[127]. 250 cf Levy v Victoria (1997) 189 CLR 579 at 651-652. In Attorney-General (Cth) v Breckler (1999) 197 CLR 83, the Association of Superannuation Funds of Australia Ltd was, by a majority, refused leave to appear as amicus curiae: see (1999) 197 CLR 83 at 134-137 [102]-[109]; cf Mason, "Interveners and Amici Curiae in the High Court: A Comment", (1998) 20 Adelaide Law Review 173. Kirby Secondly, in evaluating the contested issues of fact, I agree with Gummow J that all of the proposed communications propounded by the plaintiffs would, if published, be "advertisements" for the purposes of Pt 14 of the Regulation251. Each had the purpose, and the likely effect, which the Regulation set out to proscribe. Whether intended to be published by the plaintiffs in the form of a letter, by hard copy print material or in electronic form, each item of propounded communication would fall within the definition of "published" in cl 138 of the Regulation. Thus, each would, according to its terms, attract the purported operation, and sanctions, of the Regulation252. Like Gummow J, I accept that the language, and intention, of Pt 14 of the Regulation was to prohibit the publication of website material as specifically proposed by MBC, and, inferentially, the several texts propounded by APLA and by Mr Whyburn253. Thirdly, I agree in the conclusion expressed by Gummow J concerning the dispute over the meaning of cl 139 of the Regulation, and whether that clause is to be construed as limited to prohibiting advertisements that promote the use of a particular legal practitioner, published by that practitioner. This construction of the Regulation should not be accepted. The Regulation is addressed not only to such communications but to those communications that promote the use of any legal practitioner254. The contrary argument should be rejected. It is incompatible with an accurate analysis of the language of the Regulation, taking into account its obvious and declared purposes. Fourthly, it should also be accepted that the Regulation is within the regulation-making power afforded in the LPA. Whilst there is a disharmony between the broad ambit of the freedom of legal practitioners to advertise "as they think fit", stated in s 38J(1), and the highly restrictive provisions made by the Regulation, as amended, the plaintiffs disclaimed any argument that such inconsistency represented an invalid attempt by the Executive Government (through the power to make regulations) to deny or undermine the operation of the broad freedom enacted by the State Parliament255. I am content to accept the common view, accepted by the parties, of the interrelationship of the LPA and the Regulation, given the concurrence of the plaintiffs and the explicit enactment by Parliament, in the context of advertisements, of provisions contemplating 251 Reasons of Gummow J at [136]. 252 Reasons of Gummow J at [129]. 253 Reasons of Gummow J at [140]. 254 Reasons of Gummow J at [152]. See also reasons of Gleeson CJ and Heydon J at [6]; reasons of McHugh J at [53]. 255 [2004] HCATrans 373 at 169. Kirby derogations from the freedom to advertise set out in "any requirements of the regulations"256. Save for the plaintiffs' argument that the Regulation exceeded the powers to make regulations "by virtue of the nature of its extra-territorial operation"257, the plaintiffs agreed that the Regulation, as amended, fell within the regulation- making power afforded by the LPA258. I shall proceed on that footing. Fifthly, I also agree with the remarks of Gummow J that the effective exercise of the judicial power of the Commonwealth – and I would add the vindication and maintenance of the federal rights and privileges relied on in this case – do not require a general immunity of legal practitioners from legislative control (or from subordinate legislation such as the Regulation) in promoting their availability to perform legal services as such, or to particular categories of legal services such as those to assist, advise and represent persons who have suffered personal injury259. However, as I shall show, that is not the real issue in these proceedings. That issue is whether the LPA and the Regulation, defended by the State and challenged by the plaintiffs, are within relevant State lawmaking power or whether, because they are inconsistent with the Constitution or with valid laws made under it, they exhibit constitutional infirmity such as to invalidate the Regulation and thus to relieve the plaintiffs from its purported burdens. The issues Restricting the essential issues: Having cleared away the foregoing details and the identified measure of common ground that exists between my reasons and those of other members of this Court, I now come to the issues that, in my view, are determinative of the outcome of these proceedings. It is a rule of prudence, and a common practice of this Court in disposing of constitutional questions, ordinarily the consideration of constitutional arguments to those that need to be decided in order to reach orders that dispose of the proceedings260. In this way, immaterial consideration of to confine 256 LPA, s 38J(2)(c). 257 Question 1(e) in the special case. 258 Reasons of Gummow J at [111] fn 92. 259 cf reasons of Gummow J at [247]. 260 Attorney-General for NSW v Brewery Employés Union of NSW (1908) 6 CLR 469 at 590; Universal Film Manufacturing Co (Australasia) Ltd v New South Wales (Footnote continues on next page) Kirby constitutional issues is avoided. The solemn responsibility of this Court, of deciding arguments of constitutional invalidity, is thereby confined to those cases where such questions must be decided in order to reach dispositive orders. In a sense, this practice is the counterpart to this Court's approach, where arguments of constitutional invalidity are raised, first to consider contested questions of statutory interpretation261. Sometimes, the resolution of such questions obviates the necessity to decide constitutional challenges; although not infrequently, in other cases, it will prove impossible, or unhelpful, to consider the meaning of a law disjoined from its constitutional context262. In the present case, the rule supporting the prior consideration of issues of interpretation is of no assistance. In so far as there were disputes over the meaning and ambit of the Regulation, these are resolved in favour of the interpretation urged by the plaintiffs, which confirms the very large ambit of the disputed law, as indicated by its text and obvious purposes. Questions of constitutional invalidity cannot, therefore, be avoided in this case. However, consideration of them should be confined to those that need to be decided so as to arrive at a disposition of this case. In their reasons, Gleeson CJ and Heydon J, Gummow J, Hayne J and Callinan J are obliged to decide each of the objections raised by the plaintiffs. This is because, if upheld, any one of those objections was sufficient, in whole or part, to invalidate the impugned regulations, leading to consequential questions of severance and relief. Each of their Honours concludes that none of the challenges succeeds. That is not my conclusion. In my view, it is possible to reach a decision of invalidity of the Regulation by a comparatively direct route. This involves consideration of the two ways in which, ultimately, the plaintiffs asserted that the Regulation was (1927) 40 CLR 333 at 347. See also Chief Executive Officer of Customs v El Hajje [2005] HCA 35 at [27]-[28] per McHugh, Gummow, Hayne and Heydon JJ, [59]- [60] of my own reasons. The practice of the Court and individual views about the relevance of constitutional issues are necessarily variable: see R v Hughes (2000) 202 CLR 535 at 585 [125]; Residual Assco Group Ltd v Spalvins (2000) 202 CLR 261 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 187; Hughes (2000) 202 CLR 535 at 565-566 [65]-[66]; Residual Assco (2000) 202 CLR 629 at 662 [81]. 262 Chief Executive Officer of Customs v El Hajje [2005] HCA 35 at [74]-[76]. See also Symes v Canada [1993] 4 SCR 695 at 794; Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs 2004 (4) SA 490 at 521-522 [72]. Kirby invalid as incompatible with federal laws and specifically with the plaintiffs' express or implied rights of access for the enforcement of such laws, including by access to the Judicature established by the Constitution. As I have reached a firm view that the plaintiffs succeed on each of these arguments, it becomes superfluous (and would be contrary to prudent practice) to decide additional grounds of attack relied on by the plaintiffs. Those grounds become immaterial, and thus hypothetical for the purpose of deriving orders. I will therefore avoid that course. Observing the same rule of convenience that has led Gummow J and Callinan J severally to approach the questions otherwise than in the order in which they were stated in the paragraphs of question 1 in the special case263, I will take first questions 1(b) and 1(f). For convenience, I will deal first with question 1(f). Because I see that question as interrelated to question 1(b), I will then deal with the issue presented by the latter question. Doing so will render it unnecessary for me to answer the other issues presented in the remaining paragraphs of question 1. This will permit me to proceed directly to questions 2 and 3 and so to discharge the issues presented by the special case. The issues for decision: In the logic of the foregoing analysis, the issues for decision by this Court are, in my opinion, as follows: The inconsistency with federal rights issue: Whether Pt 14 of the Regulation is invalid, in whole or in part, by reason that it is inconsistent with the rights, duties, remedies, powers and jurisdiction conferred, regulated or provided for by identified provisions of federal statute law (or any of them). The infringement of Ch III issue: Whether Pt 14 of the Regulation is invalid, in whole or in part, by reason that it impermissibly infringes the requirements expressed or implied in Ch III of the Constitution and the principle of the rule of law as given effect by the Constitution. The remaining invalidity issues: Whether, in light of the answers to issues (1) and (2), it is necessary to answer any of the other questions presenting constitutional challenges on the part of the plaintiffs to the validity of Pt 14 of the Regulation. The severance issue: Whether, in the light of the answers to the foregoing questions, Pt 14 of the Regulation can be read down so as to escape invalidity, by confining its operation solely to permissible subject matters of State law so as to avoid inconsistency with the vindication and 263 cf reasons of Gummow J at [153]; reasons of Callinan J at [444]. Kirby maintenance of federal rights under federal laws in courts of the Judicature provided in Ch III (and also in federal tribunals). The consequential effect and relief issues: Whether, in light of the answers to the foregoing issues, the Regulation validly prohibits the publication of any, or all, of the proposed communications which the plaintiffs severally wish to publish and, even if it does, whether the relief sought by the plaintiffs should be withheld in the discretion of the Court. Or whether relief should be granted so as to vindicate the Constitution and federal laws validly made under it. The inconsistency with federal rights issue Resulting ambit of the Regulation: As a result of the conclusions about the scope of the Regulation set out above, there can be no doubt that Pt 14 of the Regulation applies (and is intended to apply) to an extraordinarily broad range of activities. This conclusion is of immediate concern because cl 139 of the Regulation creates both a criminal offence and a disciplinary offence involving professional misconduct, the latter obviously foreshadowed by the LPA, s 38J(3). Moreover, whilst the offence might only be committed by a "barrister or solicitor", conduct of other parties, which is caused or permitted by a practitioner, may also be within its terms. The conduct addressed by cl 139 is identified as publication. The definition of "publish" is so broad that it includes virtually every means of communication, including by displaying or publicly disseminating materials over the Internet. Only communication by a legal practitioner to an already existing client is excluded from the operation of the Regulation where it otherwise applies264. Although the subject of a publication must be an "advertisement", that term is defined so that it includes the communication of a broad range of matters that involve providing general information about the law, its operation and legal rights. There is no need for a commercial element to be involved to engage the Regulation. Nor is a purposive element required to attract the Regulation, such as the promotion, or the availability or use, of a barrister or solicitor as a legal adviser or representative. A reference to any legal service that relates to the recovery of, or entitlement to recover, money in respect of personal injury is sufficient to be caught. Even this is not an essential element. It is sufficient that there should be a reference to, or depiction of, an activity or circumstance which "suggests or could suggest the possibility of personal injury" or which has "any connection to or association with" a cause of personal injury265. 264 Regulation, cl 140A(a). See also Regulation, cl 140A(b)-(g). 265 Regulation, cl 139(1)(b). Kirby In so far as there are categories of communication explicitly placed outside the Regulation, they are extremely confined. Apart from publication to an existing client, a publication that relates to the provision of legal aid or other assistance will be excluded. Yet this too will only be excluded where that publication is "by an agency of the Crown"266. Whilst publication in the course of legal education for members of the legal profession is also excluded, this exception is likewise strictly confined. It extends only to protect a "provider of legal education"267. It would not protect a person whose intermittent or honorary activities of public communication left him or her outside the ambit of that phrase. The inhibition on communication is therefore quite remarkable. It would appear to put a legal practitioner in peril of criminal and professional offences were he or she to make a public statement suggesting to an individual, community group or service organisation that legal services might be available to assist a woman subject to domestic violence to obtain an apprehended violence order268; to provide advice to a child in relation to sexual abuse; to afford assistance to a person seeking relief for disability discrimination; to aid a woman seeking a visa on the basis of marriage to an Australian citizen where she has suffered domestic violence at the hands of her husband; to provide immigration assistance to persons who might have suffered persecution in their country of nationality; to speak on such subjects to students in a high school legal studies class; to talk to a meeting of community organisations about changes to the law with respect to workers' compensation; to write a letter to a newspaper referring to difficulties faced by lawyers in visiting clients in prisons or mental hospitals; or to submit an article to a legal journal proposing an increase in legal aid in the areas of domestic violence, sexual abuse, disability discrimination and immigration assistance. Whilst some of these instances might be contentious (and whilst criminal and professional prosecution might be unlikely in some of the suggested cases) the exceptional ambit of the prohibitions in the Regulation cannot be gainsaid. The chilling effect of the Regulation on communications by legal practitioners with potential clients and with civil society was correctly described in argument 266 Regulation, cl 140A(e). 267 Regulation, cl 140A(f). 268 The Legal Profession Amendment (Advertising) Regulation 2005 (NSW) inserted cl 139A into the Regulation, which provides an exception for advertising by a community legal centre in connection with domestic violence or discrimination. This amendment commenced on 1 July 2005. Kirby as extraordinary. No relevant express exceptions are allowed by the Regulation in respect of any rights or privileges conferred by federal legislation. Although the Regulation was amended after the commencement of these proceedings, the opportunity of the amendment was not taken to withdraw from the purported operation of the Regulation, communications otherwise within its ambit that concerned rights and privileges afforded by federal law269. In short, the Regulation is not the delicate work of a master drafter, seeking by filigreed language to avoid any risks of overreach into constitutional areas where State angels might fear to tread, an option that was open to the Parliament and about which it had been advised270. The Regulation is, instead, a legal blunderbuss. It fires its shots at everything within range and beyond. It does so with a scattergun effect – indifferent to any distinction that might exist by reference to rights, privileges and procedures afforded by, and under, federal law. It is this ambit of the Regulation that should alert this Court to the constitutional inconsistency of which the plaintiffs complain. As the plaintiffs correctly put it, Pt 14 of the Regulation is "an extraordinarily crude instrument to achieve the claimed end". Leaving aside its indifference to the distinction between State and federal rights, privileges and procedures affecting persons made subject to its terms and the draconian sanctions it imposes, it does not trouble to differentiate between general information concerning access to justice and the courts and the pursuit of proper claims about legal rights and duties (on the one hand) and ill-timed271, unmeritorious promotion of illegitimate and unreasonable claims having no relevant merit (on the other)272. It ignores numerous expert reports suggesting the ineffectiveness of such overreaching prohibitions to secure their proclaimed objectives273. Whilst such considerations relate to the merits, not the lawfulness, 269 In fact, the Legal Profession Amendment (Advertising) Regulation 2005 (NSW) increases the ambit of Pt 14 of the Regulation by imposing restrictions on advertising upon non-lawyers. 270 Trowbridge Consulting, Public Liability Insurance: Practical Proposals for Reform, Report to the Insurance Issues Working Group of Heads of Treasuries, 271 Florida Bar v Went For It Inc 515 US 618 (1995). 272 cf LPA, ss 198J, 198N. 273 Cousins (Commissioner, Australian Competition and Consumer Commission), "Recent ACCC Involvement in Public Liability Insurance Issues", paper delivered at Public Liability Insurance Summit, Sydney, 13-14 June 2002 at 12, 13, 15; National Competition Council, 2002 Assessment of Governments' Progress in Implementing the National Competition Policy and Related Reforms, (2002), vol 1 (Footnote continues on next page) Kirby of the Regulation, they underline the indifference of those who made the Regulation to a nuanced, carefully targeted law, such as would be attentive to limitations deriving from the Constitution. In making, and maintaining, the Regulation, the State lawmaker was not troubled by any such delicacies. The applicable inconsistency test: It is the duty of this Court to uphold the federal concerns that the plaintiffs have raised in these proceedings. The Court has no higher duty. The supremacy of federal law, within the ambit of its valid operation, is a central feature of the Constitution. Even if s 109 had not been included in the Constitution, such supremacy would have existed for there would otherwise be no way to resolve conflicts between federal and State laws. But it is given emphasis by the express provisions of s 109. For the suggested inconsistency of Pt 14 of the Regulation with the federal laws nominated by them, the plaintiffs disclaimed any reliance upon that aspect of constitutional inconsistency commonly described by use of the metaphor of "covering the field"274. Instead, they relied on suggested instances of "textual collision" between the operation of the State Regulation and the operation of the various federal laws which the plaintiffs nominated. So far as this form of inconsistency is concerned, the test to be applied is that expressed by Dixon J in Victoria v The Commonwealth275. It is a test that has been applied in many cases, both old276 and new277. In the test, Dixon J at 7.7-7.8; National Competition Council, Assessment of Governments' Progress in Implementing the National Competition Policy and Related Reforms: 2003, (2003), vol 2 at 4.9, 4.13-4.14, 4.16; Legal Services Commissioner comments to Legal Profession Advisory Council, reproduced in letter from Vernon Winley on behalf of the Legal Profession Advisory Council to the Attorney-General of New South Wales, 2 August 2001 at 3. See also the report noted by Callinan J in his reasons at [454]. 274 See Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466 at 491-492 per Isaacs J; Ex parte McLean (1930) 43 CLR 472 at 483. 275 (1937) 58 CLR 618. 276 eg Colvin v Bradley Brothers Pty Ltd (1943) 68 CLR 151 at 158, 160, 161-162, 163; Australian Broadcasting Commission v Industrial Court (SA) (1977) 138 CLR 399 at 406; Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237 at 260. 277 eg Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76 [28]. Kirby describes the way that a court should approach a complaint of such inconsistency278: "When a State law, if valid, would alter, impair or detract from the operation of a law of the Commonwealth Parliament, then to that extent it is invalid. Moreover, if it appears from the terms, the nature or the subject matter of a Federal enactment that it was intended as a complete statement of the law governing a particular matter or set of rights and duties, then for a State law to regulate or apply to the same matter or relation is regarded as a detraction from the full operation of the Commonwealth law and so as inconsistent." During argument attempts were made by some of the governmental representatives, who resisted the submissions of the plaintiffs, to impose on the constitutional notion of "inconsistency" rigid classifications, most of them derived from past judicial attempts to explain the features inherent in the notion. Thus, it was urged that, contrary to the submission of the plaintiffs, there was no category for inconsistency explained by reference to the "practical operation" of the respective federal and State laws. According to this view, the words "alter, impair or detract from", when used by Dixon J in the foregoing passage in to operational Victoria v The Commonwealth, applied only inconsistency and did not address considerations such as the "practical operation" of the two laws, in the way urged by the plaintiffs. I would reject such a rigid approach. in relation This Court has repeatedly emphasised the danger of elevating judicial explanations of legal texts to a status where they risk replacing the texts themselves. It is not permissible to over-refine the constitutional concept of "inconsistency". There are no rigid judge-made categories that define when an inconsistency does, or does not, arise under s 109 of the Constitution279. In every case, it is necessary to ascertain the operation of the federal law; then to ascertain whether the operation of the State law, as interpreted, would alter, impair or detract from that operation; and then to make a judgment and reach a conclusion as to whether the constitutionally impermissible alteration, impairment or detraction has occurred. In a federation such as Australia, laws are commonly written against the background of a legal system in which the lawmaking power is shared (relevantly) by federal and State lawmakers. Often, but not always, it will be 278 (1937) 58 CLR 618 at 630. 279 Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed Kirby inferred that the federal law may operate together with a State law. Each is addressed to a different subject matter but the treatment of that subject in each may have some consequences for the way the federal law applies within its own sphere. Thus, since federation, the regulation of the legal profession has continued to be a general responsibility of State lawmakers as it was in colonial times. To a large extent, although not exclusively280, the Federal Parliament, in creating federal courts and providing for the exercise by State courts of federal jurisdiction, has assumed (and sometimes expressly provided) that legal practitioners, regulated by State law, will enjoy rights of audience before federal courts281. This form of interaction between federal and State laws, with their normally harmonious operation the together, Constitution282. the genius of is part of Sometimes, the constitutionally permissible interaction of federal and State law will be replaced by impermissible inconsistency. Various formulae are then deployed by judges to explain the nature and extent of such incompatibility. These formulae frequently address attention to synonyms imputing alteration to, impairment of, or detraction from the operation of a federal law by the operation of the State law concerned. However, in the end, constitutionally speaking, the question is always the same. Relevantly, it is: is the State law inconsistent with the federal law? That question is not answered by reference to the nomenclature of the respective laws283; nor to considerations that are purely formal or textual284. What is required is a judgment "concerned with the reality of contemporaneous inconsistency"285. Where the conclusion of such real inconsistency is reached, s 109 of the Constitution applies. At that point its "terms are unqualified and self-executing"286. Inconsistencies with the TPA: When, therefore, the question of inconsistency with the various federal Acts nominated by the plaintiffs, posed by 280 JA, ss 55A, 55B, 55C, 55D, 55E, 55F, 55G, 55H and s 86 providing for the Rules of the High Court. See also JA, Pt VIIIC. 281 See specifically JA, s 55B. 282 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 599 [185], 601-602 [192]. 283 Tasmanian Steamers Pty Ltd v Lang (1938) 60 CLR 111 at 133 per Dixon J (in dissent). 284 Ha v New South Wales (1997) 189 CLR 465 at 498. 285 University of Wollongong v Metwally (1984) 158 CLR 447 at 478 per Deane J. 286 Metwally (1984) 158 CLR 447 at 478. Kirby the in question here, issue becomes whether s 109 of the Constitution, is presented in respect of the operation of the Regulation the practical impediments presented by the operation of the Regulation, worded as it is in such general and far-reaching terms, as such, alter, impair or detract from the federal rights, remedies, duties, powers and jurisdiction severally expressed, or inherent, in the federal laws in question. In my view, the necessary inconsistency, in this sense, is established. It is established in numerous cases which the plaintiffs have instanced. This can be seen by reference to occasions where the inconsistency with federal law appears. The inconsistencies demonstrated by the plaintiffs fall into either, or both, of two categories. First, there are instances of inconsistency of Pt 14 of the Regulation with federal laws involving substantive rights, remedies, duties, powers and jurisdiction. Secondly, there are instances of inconsistency with federal laws conferring rights to legal representation. In each case, the State law "detracts from or impairs" the operation of the federal laws in question. The first kind of inconsistency may be illustrated by the intended operation of ss 52, 75AD, 82 and 86 of the TPA, s 39(2) of the JA and Divs 1 and 2 of Pt III of the FCA. I will explain what I mean by this conclusion. First, take the TPA. By ss 52(1) and 82(1) of the TPA, the Federal Parliament created a cause of action for loss or damage caused in defined circumstances by misleading or deceptive conduct. Of its nature, such loss or damage could include personal injury. By s 75AD of the TPA, the Parliament created a cause of action enabling an individual who "suffers injuries", because of a defect in goods supplied by a corporation, to obtain compensation287. By s 86 of the TPA, the Parliament conferred jurisdiction and powers to determine matters involving such claims on the Federal Court of Australia288, on the Federal Magistrates Court and on State courts within the limits of their jurisdiction289. By the FCA, Pt III, Divs 1 and 2, the Federal Parliament has conferred on the Federal Court all functions and powers necessary to hear and determine such matters. In this way, the Federal Parliament has enacted provisions intended to create real rights, privileges and remedies that are enforceable, as a practical matter, in the nominated federal courts and in State courts exercising federal 287 Section 75AD and related sections were inserted in the TPA by the Trade Practices Amendment Act 1992 (Cth), which commenced on 9 July 1992. 288 See also JA, s 39B(1A)(c). 289 JA, s 39(2). Kirby jurisdiction. In some instances, the causes of action contemplated by the TPA will concern personal injury. One instance, expressly referred to in the amended special case, par 14 was a proceeding in which MBC is acting on behalf of a client, Mr Darcy. Indeed, s 75AD is an explicit example of a federal law entitling those who fall within its terms to compensation for personal injuries. It clearly says as much. No doubt, as the plaintiffs conceded, the federal provisions, and causes of action, were "intended to operate within the setting of other laws", including State laws290. However, the recognition of this fact is only the beginning of the constitutional analysis. The question remains whether any State law, enacted or made, is inconsistent with the federal provisions because its operation would "alter, impair or detract from the operation of a law of the Commonwealth Parliament"291. In deciding whether there is such an inconsistency, it is necessary first to be clear on what the federal provisions authorise or prohibit292. Thus, this Court held that there was no inconsistency between a provision of a federal law granting a licence lifting a prohibition otherwise applicable on broadcasting and a State planning provision which might impede the building of a radio transmitting aerial. The Court held that the two laws could operate together. However, that was because the federal law was intended only to have a limited effect in authorising what would otherwise be conduct prohibited by federal law. It left the federal law to apply within the context of other laws, including, for example, State planning and defamation laws. It did not address whether or not a radio licensee could construct a transmitter without complying with relevant State laws. So construed, there was no operational conflict between the federal and State laws in question293. 290 Commercial Radio Coffs Harbour v Fuller (1986) 161 CLR 47 at 57. See also Ansett Transport Industries (1980) 142 CLR 237 at 246. 291 Victoria v The Commonwealth (1937) 58 CLR 618 at 630. See also Stock Motor Ploughs Ltd v Forsyth (1932) 48 CLR 128 at 136; Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 at 396-397; Telstra Corporation (1999) 197 CLR 61 at 76 [28]; Re Macks; Ex parte Saint (2000) 204 CLR 158 at 186 [54]; cf at 257 [277]-[278]. 292 Ansett Transport Industries (1980) 142 CLR 237; Commercial Radio Coffs Harbour (1986) 161 CLR 47 at 49-50, 56; Dobinson v Crabb (1990) 170 CLR 218 293 Commercial Radio Coffs Harbour (1986) 161 CLR 47. Kirby The federal causes of action provided for in ss 52, 75AD and 82 of the TPA are in a different class. Obviously, those causes of action are, and are intended to be, enforceable in the specified federal and State courts. Clearly, the Federal Parliament's purpose was to create new rights, remedies, duties and powers in order to carry into effect the objectives identified in the TPA. Those objectives were, relevantly, twofold: to modify conduct of the specified corporations judged to be antisocial and to provide remedies to individuals harmed as a consequence of any breach. It cannot be imagined that the Parliament, in enacting such federal laws, regarded it as sufficient to put them on the federal statute book as a pure symbol or hollow injunction to good conduct. Clearly, the laws were intended to operate in practice. This is where the words of Holt LCJ, with which I began these reasons, become critical. As in that case, so in this294. By enacting as it did, in terms of the nominated provisions of the TPA, it is clear that the Federal Parliament intended that persons falling within the class of those injured by the breach of the TPA were intended to have "the exercise or enjoyment" of those rights, not the "vain thing" of "a right without a remedy". Unless persons affected may be informed about the existence of such rights, and how they may go about enforcing them, the rights will in many cases be entirely theoretical. They will be unknown or, if known, unenforced because of ignorance, uncertainty or fear of the costs and other difficulties of attempting to turn the rights into remedies. Adapting the words of Dixon J in Stock Motor Ploughs Ltd v Forsyth295, a State law purporting to impede the provision of information supportive of those affected in some cases, useful in others and essential in still others for enforcement of the law, would "impair the enjoyment of that right" afforded by the Federal Parliament. Such Parliament could, in support of the effectiveness of its law, have enacted provisions empowering identified persons (such as qualified legal practitioners) to convey knowledge of the federal causes of action to those who were, or might be, affected. Indeed, at least one expert panel had recommended that the Federal Parliament legislate, to the extent of its constitutional power, to remove restraints on advertising by lawyers, in default of State laws so providing296. In the event, such laws were not enacted to render the federal provisions effective. But that was so for the reason 294 Ashby v White (1703) 2 Ld Raym 938 [92 ER 126], above these reasons at [255]. See also R v Macfarlane; Ex parte O'Flanagan and O'Kelly (1923) 32 CLR 518 at 295 (1932) 48 CLR 128 at 136. Dixon J was in dissent in the result in this case. 296 Australia, Access to Justice Advisory Committee, Access to Justice: An Action Plan, (1994) at 129-137, see esp at 137. The proposed law would still have prohibited false, misleading and deceptive advertising. Kirby that the Parliament would have assumed that its law would operate in a community where free discussion of such matters is possible and is uninhibited by disproportionate State restrictions. I agree with the plaintiffs' submission that many non-lawyers have little, if any, detailed knowledge of what their legal rights, privileges and remedies may be; of what courts (or tribunals) may provide a forum for the pursuit of such rights, privileges and remedies; and of the consequences, risks and costs which may accompany their pursuit. This assertion is borne out by common experience of any member of the legal profession who has had dealings with poor and disadvantaged clients. Typically, their legal needs are quite different from those of corporations, the wealthy, or criminal accused and others entitled to public legal aid. These facts are readily illustrated by the reports of public inquiries conducted in Australia concerning the practical constraints that exist on access to legal rights, privileges and remedies297. In this social context, appropriate advertising by the legal profession plays an important role in informing such individuals of their legal rights and effectively enabling their recourse to the professionals and resources necessary for the exercise of such rights298. The importance of this advertising is such as to outweigh the negative consequence of a marginal increase in vexatious claims. In its report on legal advertising, the New South Wales Law Reform Commission concluded299: 297 Australia, Commission of Inquiry into Poverty, Legal Aid in Australia: A Report by the Commissioner for Law and Poverty, Professor Ronald Sackville, (1975). See also Australian Law Reform Commission, Managing Justice: A Review of the Federal Civil Justice System, Report No 89, (2000) at 299-304 [5.1]-[5.11]. 298 On the importance of legal advertising, see United Kingdom, The Monopolies Commission, A Report on the General Effect on the Public Interest of Certain Restrictive Practices so far as they Prevail in Relation to the Supply of Professional Services, (1970) Cmnd 4463, Ch 6; United Kingdom, Monopolies and Mergers Commission, Services of Solicitors in England and Wales: A Report on the Supply of Services of Solicitors in England and Wales in Relation to Restrictions on Advertising, (1976) at 31-34; New South Wales Law Reform Commission, Advertising and Specialisation, Legal Profession Discussion Paper No 5 (1981) at 122-124; New South Wales Law Reform Commission, Third Report on the Legal Profession: Advertising and Specialisation, Report No 33, (1982) at 299 New South Wales Law Reform Commission, Third Report on the Legal Profession: Advertising and Specialisation, Report No 33, (1982) at 100 [11.27]. Kirby "Some opponents of advertising fear that it would stir up unmeritorious or unnecessary litigation, thus harming members of the public and the judicial system. We do not consider that any significant increase in the incidence of such litigation is likely to occur. In any event, a possibility of a slight increase cannot justify preservation of restrictions which, in our view, substantially impede access to appropriate lawyers, and to justice, for many people who have problems calling for judicial resolution. This is especially so since the restrictions particularly affect the to people who are socio-economically disadvantaged." information available The Commission recommended Likewise, in 1994, when the Trade Practices Commission released its final report on the legal profession, the Commission noted that advertising by solicitors was permitted in all States and Territories, subject to various restrictions300. It concluded that "restrictions on advertising can limit the flow of valuable market information to consumers with adverse consequences for competition"301. in all jurisdictions should have the freedom to inform their clients and to attract business by means of advertising and promotion and related forms of information disclosure, subject only to rules which prevent false, misleading and deceptive representations and conduct"302. A 1998 report by the New South Wales Attorney-General's Department found only limited evidence of harm to the public as a result of the removal of restrictions on advertising, and expressed the view that any such harm is outweighed by the public benefit conferred by freedom to advertise303. It concluded that "reintroduction of controls on advertising [by lawyers] does not appear to be justified", that disciplinary proceedings and other remedies were "already adequate"304 to control inappropriate advertising and that such controls "could be justified only if ... the public benefit outweighed their anti-competitive effect"305. that "[l]awyers 300 Australia, Trade Practices Commission, Study of the Professions: Legal: Final Report, (1994) at 171 ("Trade Practices Commission Final Report"). 301 Trade Practices Commission Final Report at 171. 302 Trade Practices Commission Final Report at 178. 303 New South Wales, Attorney-General's Department, National Competition Policy Review of the Legal Profession Act 1987: Final Report, (1998), question 8.2. 304 New South Wales, Attorney-General's Department, National Competition Policy Review of the Legal Profession Act 1987: Final Report, (1998), question 8.3. 305 New South Wales, Attorney-General's Department, National Competition Policy Review of the Legal Profession Act 1987: Final Report, (1998), question 8.4. Kirby In 1975, the Commission of Inquiry into Poverty published its report Legal Aid in Australia306. That report identified barriers to the pursuit and enforcement of legal entitlements that extended far beyond the lack of financial resources. They included lack of information about the legal system, inability to identify a need for legal assistance, language barriers, and various cultural obstacles that still exist307. In 1975, Professor Ronald Sackville, for that Commission, noted one outcome in words that remain applicable308: "Unless all interest groups have access to legal resources to press their claims, the less powerful will find their interests ignored or suppressed. It is no accident that groups which have not had legal assistance readily available to them such as poorer welfare beneficiaries, consumers and tenants have not been able to secure changes that markedly improve their collective position." I am obliged to mention these self-evident propositions because of the contrary conclusion reached in this case by the majority. Unless potential claimants including those who have suffered personal injuries, with entitlements under federal law, such as the TPA, enjoy an ability to communicate about such matters with those who can inform them (usually legal practitioners), the exercise of the rights, duties, remedies, powers and jurisdiction afforded by federal law is impeded, detracted from and undermined. The prohibition in Pt 14 of the Regulation sets out to impede the creation of relationships between potential clients and solicitors or barristers in relation to specified legal problems, including in respect of personal injuries, and thus including potential federal claims under ss 52, 75AD and 82 of the TPA. That is the purpose and effect of the Regulation. Because the State law so provides, it is directly inconsistent with the identified provisions of the federal law. It is therefore invalid under the Constitution. Burdens on predicated federal rights: In some ways the position in the present case is akin to that which arose in Australian Mutual Provident Society v Goulden309. There, a State law purported to prohibit discrimination on the basis 306 Australia, Commission of Inquiry into Poverty, Legal Aid in Australia: A Report by the Commissioner for Law and Poverty, Professor Ronald Sackville, (1975) ("Poverty Inquiry Report into Legal Aid"). 307 Poverty Inquiry Report into Legal Aid at 145-146 [5.67]-[5.71]; see eg Burns, "The Joy Williams Case in the High Court", (2001) 2 Unsolicited 6 at 6-7. 308 Poverty Inquiry Report into Legal Aid at 2 [1.4]. 309 (1986) 160 CLR 330. Kirby of physical disability. However, that State law was held inconsistent with "the essential scheme" of the Life Insurance Act 1945 (Cth) which contemplated differential premium rates, including by reference to the criterion nominated in the State law. This Court there stated of such a State law that, in its application to insurance premiums, it310: "would undermine and, to a significant extent, negate the legislative assumption of the underlying ability of a registered life insurance company to classify risks and fix rates of premium in accordance with its own judgment based upon actuarial advice and prudent insurance practice upon which, as has been mentioned, the stringent controls and requirements which the Act imposes in respect of life insurance business of registered life insurance companies are predicated." The fact that the State law was not explicitly targeted at the operation of the federal law in that case was held immaterial. The fact that the subject matter of the federal law affected by the State law was but a small and particular instance of the operation of the State law was likewise held irrelevant. The fact that the State law addressed a subject matter considered by the State Parliament to be socially important, and even arguably admirable and desirable, was, likewise, held beside the point. If such an intersection of a particular State law and a general federal law was inconsistent with the Constitution in a defined and well-intentioned field of State lawmaking, it is difficult, with respect, for this Court, acting consistently, to uphold the present blunderbuss of State prohibitions when they directly impinge upon the effectiveness of rights conferred by remedial federal legislation. This Court should be as vigilant to protect the rights of vulnerable people like Mr Darcy, as it proved to be in Goulden, in protecting the rights and interests of a large insurance corporation. Inherent in the oft-repeated references of this Court to notions of "operational inconsistency" for the purposes of s 109 of the Constitution is a search for something more than verbal or theoretical intersection of laws311. It is an inquiry into the practical operation of the State law that is impugned and whether, if it operates as its language provides and its purpose appears to intend, it would alter, impair or detract from the operation of the federal law312. In the present case, the answer to that question is, so far as the nominated provisions of 310 (1986) 160 CLR 330 at 337. 311 See eg The Commonwealth v Western Australia (1999) 196 CLR 392 at 417 [61]- [62], 441 [145]; cf at 449-450 [170]-[171]. 312 See eg P v P (1994) 181 CLR 583 at 603. Kirby the TPA are concerned, made easier because of the undiscriminating overreach of the Regulation and the muzzling effect it seeks to impose on all communications of the kind that might otherwise occur in our society to inform those affected of the legal rights, privileges and remedies they enjoy, or might enjoy, under the TPA. The plaintiffs conceded that a State law having minimal effect on the impairment of the ability of those concerned to pursue legal rights, remedies, duties, powers and jurisdiction arising under federal law would not give rise to a material inconsistency. Thus, State traffic laws might sometimes impinge upon the activities of a person pursuing federal rights. Such restrictions would fall outside a constitutional test addressed to whether, in substance and practicality, the State law operated to undermine the achievement of the purposes of the federal law. Similarly, State laws that did no more than to regulate in some particular way the procedures of State courts in which federal jurisdiction might be vested, if otherwise valid, would not give rise to constitutional inconsistency on this ground. This is because, generally speaking, the Commonwealth must accept State courts as it finds them313. Thus, a State law providing for the payment of a filing fee to commence proceedings in a State court would not ordinarily be judged inconsistent with the intended operation of federal laws in such courts providing for relevant rights, remedies, duties, powers and jurisdiction. On the other hand, a State law that applied to matters in federal jurisdiction a discriminatory fee or one that was prohibitively large might well present an inconsistency question314. Borderline cases invoke a judgment. They must be decided by reference to the nature of the polities created by, and the approach to "inconsistency" expressed and implied in, the Constitution. In the present case, the prohibition on communication imposed by Pt 14 of the Regulation does not purport to provide for the procedures or constitution of State courts as such. Its purported purpose and justification was said to be to reduce the volume of personal injury litigation315. It was thereby to reduce the cost of public liability insurance and to increase the availability of such insurance316. Because it was not competent to the State Parliament to abolish, 313 Le Mesurier v Connor (1929) 42 CLR 481; cf Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 102. 314 Kable (1996) 189 CLR 51 at 102-103, 111, 139-143. 315 New South Wales Government, Report to the National Competition Council on the Application of National Competition Policy in New South Wales, (2004) at 23. 316 Written submissions of the State of New South Wales, par 8.2. Kirby the Regulation plainly amend or modify the federal rights conferred by the TPA, the course adopted in the Regulation, accepting the existence and continuance of such federal rights, privileges and remedies, was to attempt to prevent communications about them by those in the best position to make such communications. By attempting to inhibit or prevent the formation of relationships between New South Wales legal practitioners and potential clients, the communication of information (otherwise normally available) about the rights, remedies, duties, powers and jurisdiction necessary or useful to the enforcement of the entitlements provided in the TPA. The purpose and presumed effect of the prohibition, so far as it affects the operation of federal law, is thus to impede, impair and detract from the pursuit by the poor and vulnerable of their entitlements under the identified federal rights, remedies, duties, powers and jurisdiction. Such purpose and effect is not incidental or peripheral to the intended operation of the prohibition imposed by the Regulation. Nor is it minimal or insubstantial. It is central, deliberate, significant and burdensome. It has a particular operation on many of those who fall within the class of persons whose situation the TPA was designed to advance. impedes To the extent of this impediment, the prohibition on communication in Pt 14 of the Regulation is inconsistent with the provisions of the TPA. It is also necessarily inconsistent with the provisions of s 39(2) of the JA and Pt III, Divs 1 and 2 of the FCA. Inconsistencies with the Judiciary Act: The foregoing is sufficient to enliven a constitutional right to relief in favour of the plaintiffs. However, because reference has been made to the JA, it is appropriate to add further grounds by which the plaintiffs establish constitutional inconsistency on the basis of other provisions of that Act. By ss 55A, 55B and 55D of the JA, barristers and solicitors throughout Australia are afforded entitlements under federal law to practise in federal courts and in State courts exercising federal jurisdiction. Separate provision is afforded by other federal laws whereby rights to be represented "by some other person" before federal tribunals have been enacted. Within such laws, these rights can extend to barristers and solicitors317. By s 55B(1) of the JA, a person who is entitled to practise as a barrister or solicitor in the Supreme Court of a State (or Territory) of the Commonwealth has 317 AAT Act, s 32. Under the SRCA, Pt VI, rights of appeal to the Administrative Appeals Tribunal are provided in relation to certain decisions about claims for compensation under that Act. See also Superannuation (Resolution of Complaints) Act 1993 (Cth), s 23 the in relation Superannuation Complaints Tribunal. to representation before to rights Kirby like entitlements to practise in any federal court. Such a person also has a "right of audience" in any court of a State in relation to the exercise by that court of federal jurisdiction318. By s 78 of the JA a correlative right is enacted, permitting litigants in every court exercising federal jurisdiction to appear in person or by "barristers or solicitors as by this Act or the laws and rules regulating the practice of those Courts respectively are permitted to appear therein". The plaintiffs accepted that these provisions of federal law were "intended to operate within the setting of other laws"319. Relevantly, they were intended to operate in conjunction with State laws. Nevertheless, the foregoing provisions of the JA explicitly confer rights both on litigants and on legal practitioners as defined. The existence of such statutory rights necessarily charts a boundary that marks the extent to which, relevantly, any State law may affect the operation of the rights, privileges and remedies conferred by federal law. Thus, whilst the State law affords the general prescription of the regulation of the legal profession in that State, such State law may not validly alter, impair or detract from the operation of the conferral of any federal entitlements, such as those afforded by or under the JA. The plaintiffs fully accepted that the foregoing provisions of the JA did not constitute a guarantee that barristers or solicitors in Australia would gain work in federal jurisdiction or in federal courts or tribunals. However, they submitted, correctly, that the provisions of the JA manifest a recognition by the Parliament that legal representation, as such, is a necessary, and usually desirable, aspect of the operation of federal courts, courts exercising federal jurisdiction and, sometimes, federal tribunals. Against the assumptions inherent in the identified provisions of the JA, a blanket prohibition, such as that appearing in Pt 14 of the Regulation, on communications between legal practitioners and potential clients, the public and civil society impedes in highly practical ways the formation of relationships between practitioners and potential litigants and clients that are essential if the federal rights of representation are to be a reality and not an empty vessel. By impeding the fulfilment of the federally provided rights to legal representation appearing in the JA, Pt 14 of the Regulation, in its intersection with the federal law, injures litigants and potential clients in the exercise and enjoyment of those rights and the privileges and remedies they entail. Specifically, the State law chooses as a target of its operation, communications essential, or at least useful, to the formation of the kind of relationships that the 318 Pursuant to the JA, s 55B(4). This right is subject to qualifications expressed in s 55B(2), (3), (6) and (7). 319 Commercial Radio Coffs Harbour (1986) 161 CLR 47 at 57. Kirby federal law assumes will exist. It deters the formation of such relationships. To that extent, it alters, impairs or detracts from the operation of the federal law as the Federal Parliament envisaged. It is important to understand that what is in issue, in this analysis, is not, as such, the rights and privileges of legal practitioners. It is the right and privilege of a litigant or potential litigant, under federal law, to be legally represented in the pursuit of any claim which that person might have in a federal court, in a State court exercising federal jurisdiction or before a federal tribunal. The effect of the prohibition in the State law is, and was intended to be, undifferentiating in its impact on federally conferred rights, privileges and remedies. It was not incidental or minimal in its effect. It did not fall within the operation of State law specifically envisaged under the terms of the relevant provisions of the JA. The assumptions upon which ss 55A, 55B, 55D and 78 of the JA were written are directly challenged by the operation of Pt 14 of the Regulation. Once again, therefore, the Constitution operates to render the inconsistent State law invalid to the extent of its inconsistency with the language, purposes and assumptions of federal law. A United States analogy: Although there is no explicit provision in the United States Constitution equivalent to s 109 of the Australian Constitution, and although inconsistency doctrine has developed in the Supreme Court of the United States along somewhat different lines, the similarity of the federal character of the constitutions of Australia and the United States makes it helpful to compare the resolution of instances of inconsistency said to be analogous. When regard is had to the cases before the United States Supreme Court, decisions may be found that bear useful comparison with the problem presented in the present case by the intersection of the purported State Regulation and federal laws conferring rights, privileges and remedies. Thus in Nash v Florida Industrial Commission320, the Supreme Court of the United States held invalid a State provision that denied State unemployment benefits to a person because that person had made a complaint against an employer to the National Labor Relations Board. The target of the State law was the exercise by a person of rights, privileges and remedies afforded by federal law. The Supreme Court concluded in Nash that "[i]t appears obvious to us that this financial burden which Florida imposes will impede resort to the [federal] Act and thwart congressional reliance on individual action"321. The Supreme 321 389 US 235 at 239 (1967). See also City of Burbank v Lockheed Air Terminal Inc 411 US 624 (1973); Jones v Rath Packing Co 430 US 519 (1977); Xerox Corp v County of Harris, Texas 459 US 145 (1982). Kirby Court viewed its decision, in such a case, as no more than the application of an old constitutional rule, invoked in Australia almost as often as it has been in the United States322: "In McCulloch v Maryland323, decided in 1819, this Court declared the States devoid of power 'to retard, impede, burden, or in any manner control, the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government.' In Davis v Elmira Savings Bank324, decided in 1896, this Court declared that a state law cannot stand that 'either frustrates the purpose of the national legislation or impairs the efficiency of those agencies of the Federal government to discharge the duties, for the performance of which they were created.'325 And again in Hill v Florida326, decided in 1945, this Court struck down a labor regulation saying it stood '"as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress … "'327." In the instant case, the prohibition in Pt 14 of the Regulation undermines and negates the assumption of efficacy and availability implied in the identified provisions of the TPA, the JA, and other federal laws affording substantive rights and procedural remedies to individuals in Australia and beyond. The federal provisions identified provide for the creation of legal rights, privileges and remedies intended to be meaningful and exercisable in federal courts, State courts exercising federal jurisdiction and, sometimes, federal tribunals. If "it sufficiently appears that the purpose of the Federal law is to bring about the consequences, a State them must be regarded as law which defeats In particular, where conduct is made subject to overlapping federal and State laws and the State law imposes upon a person acting lawfully in pursuance 322 Nash 389 US 235 at 240 (1967). 323 4 Wheat 316 at 436 (1819). 325 161 US 275 at 283 (1896). 326 325 US 538 at 542-543 (1945). 327 325 US 538 at 542 (1945). 328 In re Foreman & Sons Pty Ltd; Uther v Federal Commissioner of Taxation (1947) 74 CLR 508 at 532 per Dixon J. Kirby of rights, privileges and remedies conferred by, or implied in, the federal law, such overlap is conventionally treated by this Court as constitutionally inconsistent329. Such is the case here because, in its over-enthusiastic determination to stamp out all designated communications, the State law imposed both criminal and professional sanctions. To place such burdens upon communications necessary or useful to, and implied in, enacted federal rights is impermissible under the Constitution. It is as much so in this country as it has been held to be in the United States of America. Conclusions as to inconsistency: The result is that the plaintiffs have established inconsistency between the provisions of the federal laws nominated by them and the State law that they challenge, namely Pt 14 of the Regulation. This demonstration of inconsistency enlivens consideration of the issue of severance and remedies the plaintiffs seek under the Constitution. But first it is appropriate to turn to an additional, supplementary, but connected way in which the plaintiffs supported their submission of constitutional invalidity. The infringement of Ch III issue Impeding the judicial branch: Much of the plaintiffs' attack on the validity of Pt 14 of the Regulation was expressed in terms of the burden which that law was said to cast on communication relevant to legislative and executive policy, that is, "communication [on] matters which enables the people to exercise a free and informed choice as electors"330. Thus, reference was made to the interrelationship of issues relevant to electors of the Federal Parliament and of the State Parliaments provided for in the Constitution331. It is true that most of the consideration by this Court of the free expression implication in the Constitution has been directed to that subject as it is relevant to the operation of the legislatures of the representative democracy which the Constitution establishes (Ch I) and the accountable executive government for which it provides (Ch II). No doubt, to some extent, the extremely wide prohibition expressed in the Regulation, and the broad net that it casts, amount to 329 Ex parte McLean (1930) 43 CLR 472 at 483; Viskauskas v Niland (1983) 153 CLR 330 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560. 331 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 142, 168-169, 215-217; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 122; Lange (1997) 189 CLR 520 at 571-572; Coleman v Power (2004) 78 ALJR 1166 at 1181 [77]-[80], 1201 [195], 1207 [229]; 209 ALR 182 at 202- Kirby a burden to some degree upon the freedom of communication about government or political matters. It thus passes the first test laid down by this Court in Lange v Australian Broadcasting Corporation332. This may be said without paying any regard to the somewhat contrived way in which APLA, in the text of its proposed communication, makes explicit reference to named politicians, State and federal, who are there alleged to be impeding the pursuit of "legal rights to compensation"333. I will not pause to consider the possible application of this constitutional implication in this case. In my view it is not the implication that is most relevant here. Unlike McHugh J, I find the inclusion of the names of politicians in the APLA communication somewhat unconvincing as a trigger for constitutional protection334. But just as the Constitution contains implications defensive of the legislature provided for, or envisaged, in its terms (Ch I), so it contains a protected freedom of communication extending to "information concerning the conduct of the executive branch of government"335 (Ch II). And as a matter of basic legal principle, such implications also arise to protect the integrity and operation of the judicial branch of government (Ch III). This Court has repeatedly found implications defensive of the integrated Judicature mentioned in Ch III, derived by necessary inference, from the language, purpose and structure of the Constitution336. If a zone of freedom exists defensive of communications essential to give reality and effectiveness to the legislatures and the executive mentioned in the Constitution, in terms of principle, a similar implication must arise defensive of the reality and effectiveness of the Judicature there provided for. The effective operation of each branch of government is equally vital to achievement of the constitutional design. 332 (1997) 189 CLR 520 at 567-568. 333 See reasons of Gummow J at [130]. 334 Reasons of McHugh J at [70]. 335 Lange (1997) 189 CLR 520 at 561. 336 See eg Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 434 (appointment for life of Justices); R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 (separation of administrative and judicial powers); Dietrich v The Queen (1992) 177 CLR 292 (legal representation); Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 (non-participation of judges in inconsistent functions); Kable (1996) 189 CLR 51 (conferral of powers and functions inconsistent with the exercise of federal jurisdiction); Re Wakim (1999) 198 CLR 511 (investing federal courts invalidly with State jurisdiction). Kirby Scope of the implied freedom: In Cunliffe v The Commonwealth337, Mason CJ addressed the part played by communication as it concerns the Judicature provided for in the Constitution. He did so by reference to the role of freedom of communication in sustaining the representative democracy and government envisaged in the Constitution338: "That freedom necessarily extends to the workings of the courts and tribunals which administer and enforce the laws of this country. The provision of advice and information, particularly by lawyers, to, and the receipt of that advice and information by, aliens in relation to matters and issues arising under the [Migration] Act falls clearly within the potential scope of the freedom." Although other members of the Court in that case did not expressly refer to the freedom essential to the efficient operation of the courts and tribunals, as a matter of principle, the existence of the implication cannot be doubted. In the United States, the Supreme Court has held that "collective activity undertaken to obtain meaningful access to the courts is a fundamental right within the protection of the First Amendment"339. The Australian Constitution does not contain a provision equivalent to the First Amendment. However, as Lange340 and the cases that have followed it341 demonstrate, our Constitution is written on an assumption of a high level of unimpeded communication. Restrictions may exist under both the common law and statute. Where those restrictions impinge upon the assumed operations of the branches of government, a constitutional question is presented. That question is answered, in each case, by reference to the tests expressed in Lange, as clarified most recently in Coleman v Power342, by reference to what I said in Levy v Victoria343. The test is the same whether the 337 (1994) 182 CLR 272. 338 (1994) 182 CLR 272 at 298-299. 339 United Transportation Union v Michigan Bar 401 US 576 at 585 (1971); In re Primus 436 US 412 at 426 (1978). 340 (1997) 189 CLR 520. 341 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 280 [193]; Roberts v Bass (2002) 212 CLR 1; Coleman v Power (2004) 78 ALJR 1166; 209 ALR 182. 342 (2004) 78 ALJR 1166 at 1185-1186 [95]-[96], 1201 [196], 1203-1204 [211]; 209 ALR 182 at 208, 229-230, 233. 343 (1997) 189 CLR 579 at 646. Kirby purported restriction or burden on communication concerns the operation of the legislature or executive government contemplated by the Constitution (Ch I and Ch II) or, as here, the operation of the Judicature (Ch III). In terms of principle and legal concept it could not be otherwise. In this, I respectfully disagree with McHugh J344. Lange is not a constitutional add-on, limited to the law of defamation or political speech. It is not a looseleaf supplement to those legal topics. It is a decision that states a constitutional implication and a methodology for its application. By its nature, that application could not be confined to protecting Chs I and II of the Constitution. Necessarily, the principle – and the holding – in Lange also extend to protecting Ch III and the Judicature for which it provides. In constitutional doctrine above all, this Court must avoid a bits and pieces approach. It should adhere to consistent principles and established methodologies. Communication about access to courts is communication about governmental and political matters. The courts are part of government. They resolve issues that are, in the broad sense, political, as this case clearly demonstrates. Applying the Lange methodology in each case two questions are presented345. First, does the impugned law effectively burden the operation of the relevant parts of the Constitution, either in its terms, operation or effect346? Secondly, if the law does effectively burden the freedom inherent in, and necessary to, the operation of that part of the Constitution, is the law reasonably appropriate and adapted ("proportional") to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of government347? A high level of unimpeded communication is essential to the contemplated operation of Ch I and Ch II of the Constitution. But it is also essential, and for the same reasons, to the contemplated operation of Ch III. In principle, there can be no distinction in the applicable constitutional rule. The foregoing analysis provides the reason why it would be inconsistent with the operation of Ch III of the Constitution for a State law to be enacted that prohibited, or disproportionately impeded, the publication or availability of federal statutory or subordinate legislation. Similarly, a State law attempting to interfere with, or restrict, the availability of judicial reasons of federal courts or 344 Reasons of McHugh J at [63]-[66]. 345 Lange (1997) 189 CLR 520 at 567; Cunliffe (1994) 182 CLR 272 at 337. 346 Lange (1997) 189 CLR 520 at 567. 347 Lange (1997) 189 CLR 520 at 567; Coleman (2004) 78 ALJR 1166 at 1201 [196]; 209 ALR 182 at 229-230; cf Cunliffe (1994) 182 CLR 272 at 300, 324, 339, 387- Kirby rulings of federal tribunals would trigger the twofold test. So would a State law purporting to impose restrictions on the open performance by the courts of their functions, or on communications by news media, civil society organisations and individuals of information on all such courts (or tribunals) and their doings. In every case, laws of such a kind, to the extent that they effectively burdened freedom of communication about the Judicature, its performance and the laws it applies, would have to run the dual constitutional gauntlet. They would have to pass the tests of compatibility with the constitutional prescription and the proportionality of any burden imposed. law) cannot the common Additionally, any such burden would have to conform to the constitutional hypothesis of the rule of law348. That hypothesis lies at the heart of the Judicature provided for in the Constitution. Attempts by law to alter, impair or detract from that hypothesis immediately invite consideration of the prescriptions necessarily implied in Ch III of the Constitution. In short, just as lawmakers (including judges expressing impede communication disproportionately so as to undermine the contemplated operations of a representative democracy and accountable executive expressed and implied in the institutions referred to in Ch I and Ch II of the Constitution, so they cannot impede the level of communication essential to the operation of the Judicature provided for in Ch III. Even if this Court were to confine Lange to a principle protective of communications about the legislature and the executive349, a separate implication of similar or identical scope would arise to protect communications necessary to the operation of the Judicature provided for in Ch III of the Constitution. That operation cannot validly be obstructed by State or federal law. To this extent, I agree with what McHugh J has written350. Application of the implied freedom: The State of New South Wales resisted the operation of a constitutionally protected freedom of communication in this case. In this, it was supported by other governmental interveners. It suggested that Pt 14 of the Regulation was no more restrictive than the traditional laws and practices that had previously constrained "touting" by legal practitioners and advertising by them, either for individual services or more generally. 348 Australian Communist Party (1951) 83 CLR 1 at 193; The Commonwealth v Mewett (1997) 191 CLR 471 at 545-552; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 381 [89]; Plaintiff S157/2002 (2003) 211 CLR 476 at 513-514 [103]-[104]. See also Golder v United Kingdom (1975) 1 EHRR 524 at 535. 349 As McHugh J favours: see reasons of McHugh J at [63]. 350 See reasons of McHugh J at [72]-[91]. Kirby It is true that such restrictions existed in Australian law and that their removal is a relatively recent development. If the legal system, and the Judicature, could survive with such restrictions, it was suggested, Pt 14 of the Regulation was perfectly compatible with the Constitution. It did not amount to a State burden on federal law in the relevant sense. If it did, it was one adapted, or proportional, to serving legitimate purposes of State government in a manner that was compatible with the constitutionally prescribed system of independent courts. So went the State's arguments. In my view, they should be rejected. First, it is important to realise that, so far as the written law was concerned, the "traditional restrictions on advertising", relied on by the State, were only recently included in Australian legislation. To the extent that there were earlier restrictions, most were unwritten and many derived from social norms observed by a "gentlemanly profession". Professional rules restricting direct self-promotion by barristers were of an older provenance than those governing solicitors351. So far as solicitors were concerned, the first rules introducing prohibition on advertising were made by the Law Society of England and Wales in 1934352. The making of those rules probably explains the introduction of similar statutory rules in Australia soon after353. What had previously been little more than "professional etiquette" was translated into law354. However, it was a comparatively recent legal development. Previously, the existence of "a certain amount of advertisement", without danger of proceedings for professional misconduct, was acknowledged355. In the United States, the practice was variable356. As in Australia, legal prohibitions on advertising were comparatively recent developments. In these circumstances, the assertion that legal restrictions on communications by lawyers are ancient is historically incorrect. 351 Golder (1975) 1 EHRR 524 at 535-536. 352 Pursuant to Solicitors Act 1933 (UK). The rules came into force in 1936. See Attanasio, "Lawyer Advertising in England and the United States", (1984) 32 American Journal of Comparative Law 493 at 495-496; Birks, Gentlemen of the Law, (1960) at 275. 353 Solicitor's Practice Regulation 1940 (NSW), reg 29; Solicitors (Professional Conduct and Practice) Rules 1948 (Vic), r 2; Statutory Rules of the Queensland Law Society 1940 (Q), r 89. 354 Goldberg v Law Institute of Victoria [1972] VR 605 at 606. 355 In re A Solicitor [1915] 1 IR 152 at 165 per O'Brien LC. 356 Attanasio, "Lawyer Advertising in England and the United States", (1984) 32 American Journal of Comparative Law 493 at 502-504. Kirby Secondly, even were it otherwise (or if rules of practice and etiquette are taken into account) the existence of past norms cannot control the application of constitutional principles, once they are invoked. The Constitution must be applied as it is understood today. This is so, irrespective of contrary past assumptions357. It sometimes takes decades, and the presentation of particular cases, to reveal the implications and other requirements of the Constitution, including those derived from Ch III. The Constitution is a living document. It speaks from age to age. It responds to the challenges of new times. Some such challenges would not have been attempted in earlier years because of shared assumptions. The Regulation in question here is such a case. Thirdly, the emergence of new constitutional doctrine is stimulated today by the fact that we read the constitutional text with eyes alive to new insights provided by the context in which the Constitution operates. In my view, that context includes developments of international law as that law expresses the principles of human rights and fundamental freedoms358. The right of freedom of expression has repeatedly been described by courts of high authority as a primary right. For example, the House of Lords has said that "without it an effective rule of law is not possible"359. Reading the Australian Constitution today, in the context of such developments, we can be confirmed in deriving an implication about a high level of unrestricted communication essential to the operation of the institutions of government as envisaged in the Constitution from the central place that freedom of expression holds in the international law of human rights and fundamental freedoms360. Many of the governmental interveners urged extreme restraint in the derivation and application of constitutional implications. Some urged that Pt 14 of the Regulation was to be characterised as dealing with a "discrete" State issue upon which the Constitution was wholly silent. However, that argument is factually and legally erroneous. Indeed, the propounded justification for the 357 Boilermakers (1956) 94 CLR 254 at 292-296. 358 Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 657-658; Kartinyeri (1998) 195 CLR 337 at 417-418 [166]; Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1128-1136 [152]-[190]; 208 ALR 124 at 163-173. 359 R v Secretary of State for the Home Department; Ex parte Simms [2000] 2 AC 115 at 125 per Lord Steyn. 360 cf Roper v Simmons 161 L Ed 2d 1 at 27 (2005) per Kennedy J. Kirby relevant law was that it addressed a "complex national issue"361. It was an issue, aspects of which had been investigated by a federal committee362. In any case, the attempt to mark out "discrete" areas of State lawmaking, immune from the operation of the Constitution, is contrary to the basic doctrine of this Court, at least since 1920363. In this area of discourse, it is also inconsistent with the clear recognition by this Court of the interconnected nature of substantially unimpeded communication and of the effective operations of government today364. The interconnections are reinforced by the contemporary media of communications. They are essential to the contemporary operation of the Constitution as it is designed to work. It may be true that re-expressing the Lange rule as I would favour, so that it applies to the judicial branch of government as much as to the legislative and executive, would involve a new step. However, it is one inherent in the principle that Lange expresses. And, in any case, it has long been recognised in this Court that State laws cannot stultify the exercise of federal jurisdiction365. Commonly, such issues are resolved (as may also be done in this case) by reference to constitutional principles of inconsistency which prohibit attempts by State laws to "alter, impair or detract from" the operation of federal laws, including those that engage the Judicature366. In addition to the express invalidation stated in s 109 of the Constitution in respect of cases of inconsistency of laws, there are essential implications that derive, of necessity, from the language and structure of the Constitution, including as it establishes in Ch III an integrated Judicature which is intended to operate effectively as such. 361 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 27 February 2002 at 54, 55-56 (The Hon R J Carr, Premier). 362 Australia, Review of the Law of Negligence: Final Report (Justice D A Ipp, Chairman), (2002). 363 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129; (1921) 29 CLR 406. 364 Coleman (2004) 78 ALJR 1166 at 1182 [80]-[81], 1201 [197], 1207-1208 [228]- [232], cf at 1221 [298]; 209 ALR 182 at 203-204, 230, 238-239, 257. 365 Commissioner of Stamp Duties (NSW) v Owens [No 2] (1953) 88 CLR 168 at 169; John Robertson & Co Ltd v Ferguson Transformers Pty Ltd (1973) 129 CLR 65; Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 588 [59], 591 [68], 613 [141]. 366 Victoria v The Commonwealth (1937) 58 CLR 618 at 630 per Dixon J. See above these reasons at [300]. Kirby To the extent that some governmental parties urged an approach of deference to State lawmaking because of what was said to be the "political" nature of the objection raised by the plaintiffs, I cannot agree. Many, perhaps most, issues about lawmaking powers that are presented by the Constitution are political in a general sense367. That fact does not release the courts from performing their constitutional function. It does not provide a zone of immunity, whether to State or federal lawmakers, from any freedom necessarily inherent in the constitutional design. Once the requisite burden on the constitutional freedom is found and once it is decided that such burden is not adapted to serve a legitimate end of lawmaking but is disproportionate to that end in the manner attempted, the law in question is invalid. It will be invalid on that ground. It will be invalid whether or not the court whose powers are invoked can point to operational inconsistency with specific federal laws or intrusion by the State law into a field of operations that the federal lawmaker has marked out as its own. This Court must then say so. Conclusion: invalid burden on Ch III: When the foregoing analysis is applied to Pt 14 of the Regulation, it leads to a conclusion that the Regulation is invalid as infringing the necessary implications of Ch III and as obstructing its operation as the Constitution envisages. Clearly, the Regulation, in its terms, operation and effect, burdens the freedom of communication about the integrated Australian Judicature in ways relevant to the purpose, functions and utility of the courts in Australia368. The burdens that are imposed by Pt 14 of the Regulation, upon the central functions of the Judicature to determine matters as envisaged by the Constitution, have already been explained in the analysis of the impediments which the Regulation places in the path of communications often essential, and commonly useful, to turn the provision of legal rights, privileges and remedies into a reality369. By placing obstacles in the way of communications concerning the existence of federal causes of action, their availability in particular cases, how advice might be obtained about their application and support given to render them a reality, the lawmaker has impermissibly intruded into communications essential to the operation of federal courts and tribunals. This has been done in a way that limits the freedom of communication essential to the operation of the judicial branch of government. In this way, the first of the tests adapted from this Court's decision in Lange is satisfied. 367 The Commonwealth v Bank of NSW (1949) 79 CLR 497 at 639-640; [1950] AC 368 Constitution, s 77. 369 See above these reasons at [326]. See also reasons of McHugh J at [52]. Kirby When it comes to the re-worded second test in Lange370, the answer is also clear. The impugned law is not "reasonably appropriate and adapted" to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of courts, nor proportional to the operation of such courts as Ch III implies they will operate. Part 14 of the Regulation is undiscriminating as between federal and State causes. It overreaches what might have been reasonably appropriate and adapted to serve the declared end of this particular State lawmaking. It is seriously disproportionate to any legitimate purposes of State law. It accepts that causes of action exist, including under federal law, affording individuals rights, privileges and remedies including in respect of personal injuries. It then attempts to forbid the defined legal practitioners and others from telling those affected about such entitlements and how, in proper cases, they can be pursued in courts of the Australian Judicature, or in federal tribunals. The "manner" in which the State law is made is not compatible with the constitutionally prescribed system of courts (and the constitutionally authorised system of federal tribunals). It deliberately attempts to prevent, or reduce, access to such courts (and tribunals). To this end, it imposes a special burden on the poor, the disadvantaged and the vulnerable who rely on a level of freedom of communication for knowledge and pursuit of their legal rights. It is all very well for corporations and the wealthy to see a lawyer if they wish to ascertain their legal rights. Many Australians cannot afford to do this. They do not know where to start. This Court should not turn its back on the rights of such people to have real access to federal courts and other courts exercising federal jurisdiction by gaining knowledge about their rights under federal law. The State law satisfies the second limb of the test expressed in the adapted Lange formulation. In the result, it contravenes the implied freedom of communication about the Judicature inherent in Ch III of the Constitution and, so far as federal tribunals are concerned, the freedom of communication inherent in Ch II. In any event, quite apart from communication about the Judicature and federal rights, the Regulation imposes a direct burden upon the exercise of rights of access to federal courts. It is not competent to State lawmakers to place such barriers in the way of the discovery and effective pursuit of rights, privileges and remedies accorded by federal law371. They lack any lawmaking power to do so. For them to try may also be incompatible with the hypothesis of the rule of law itself, but it is unnecessary to decide this point. 370 Lange (1997) 189 CLR 520 at 567. See reasons of McHugh J at [58]. 371 Reasons of McHugh J at [80]. Kirby It follows that a second basis of constitutional invalidity of Pt 14 of the Regulation is established. The Regulation conflicts with the implications inherent in, and necessary to, the operation of Ch III of the Constitution. Remaining invalidity, severance and relief issues The remaining invalidity issues: Having identified two clear bases for holding that Pt 14 of the Regulation is invalid under the Constitution, it is unnecessary for me to decide whether the plaintiffs have also established other grounds for the same conclusion. In respect of those other grounds, the Court should respond that it is unnecessary to answer the further questions in the special case. An affirmative answer to those questions could not alter the outcome of the Court's disposition of the proceedings. The severance issue: The State of New South Wales argued that Pt 14 of the Regulation should be read down so as to avoid invalidity. At common law there was a presumption against the severance of invalid parts appearing in a coherent legal document372. It was this presumption that led to the enactment of statutes, permitting and enjoining courts to read and construe contentious laws so as to uphold their validity and to avoid excess of power, whether statutory373 or constitutional374. The principle to be applied in all cases within such statutory prescriptions is that, wherever possible, conformably with the legislative declaration, a law should operate on "so much of its subject matter as Parliament might lawfully have dealt with"375. A difficulty arises where the impugned law affords no textual foundation for applying a "blue pencil" to the offending parts "so that the valid portion could 372 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Whybrow & Co (1910) 11 CLR 1; Owners of SS Kalibia v Wilson (1910) 11 CLR 689; Harrington v Lowe (1996) 190 CLR 311 at 326, 346; cf Director of Public Prosecutions v Hutchinson [1990] 2 AC 783. 373 eg Acts Interpretation Act 1901 (Cth), s 46(1). See also Interpretation Act 1987 (NSW), ss 31, 32. 374 eg Acts Interpretation Act 1901 (Cth), s 15A; cf Interpretation Act 1987 (NSW), 375 Newcastle and Hunter River Steamship Co Ltd v Attorney-General (Cth) (1921) 29 CLR 357 at 369. See also Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at Kirby operate independently of the invalid portion"376. Such is the case here. Assuming for present purposes that Pt 14 of the Regulation could operate validly upon communications in the State of New South Wales in respect of rights and privileges afforded exclusively by that State's law, the Regulation does not attempt to differentiate such subject matters from its purported, and invalid, operation on federal rights, privileges and remedies and their prosecution in federal courts, State courts exercising federal jurisdiction and before federal tribunals. Given the stated object of the lawmakers to impose a comprehensive overarching prohibition of communications about personal injuries and their litigation (evident in any case in the terms of the Regulation) and given that such object, in the generality of its expression, impinges on federal law and the protected freedom, defensive of Ch III, contained in the Constitution, no question of reading down arises. Clearly, the Regulation was intended to operate in an undifferentiating way. To attempt surgery on its language would be to create a law different from that now appearing. Given particularly the opportunities that have arisen for the federal concerns to be cured but without repair, it would be contrary to this Court's judicial function to attempt severance. It cannot be said with any degree of certainty that the maker of this Regulation intended it to operate in some more limited and truncated or nuanced version377. To attempt to convert a blunderbuss into a precision rifle is not a judicial task. The Regulation in question was "either good or bad" in its totality378. In my view, it is bad. It is wholly invalid under the Constitution. Consequential effect and relief issues: There is no reason why, in the discretion of this Court, relief should be withheld from the plaintiffs, or any of them. They have acted prudently and with due speed to defend relevant legal rights, privileges and remedies and the asserted freedom of communication protected by the Constitution. This is not a case of minimal impact of a State law on insignificant federal entitlements, nor of trivial State intrusion into federal legal prescription. It is true that it took the plaintiffs a time to formulate this aspect of their claim in full detail. But when they did, it was not conceded. It was contested. In my view the State of New South Wales has lost the contest. The plaintiffs should have the relief they have sought. 376 Harrington (1996) 190 CLR 311 at 328. 377 Bread Manufacturers of NSW v Evans (1981) 180 CLR 404 at 414; Harrington (1996) 190 CLR 311 at 346. 378 Evans (1981) 180 CLR 404 at 441. In this, I agree with what McHugh J has written on severability: see at [92]-[95]. Kirby Orders The following orders should be made: The questions in the special case should be answered as follows: (a) Yes. (b) Yes. (c) Unnecessary to answer. (d) Unnecessary to answer. (e) Unnecessary to answer. Yes. The State law is inconsistent with each of the named the rights, duties, remedies, federal jurisdiction and powers conferred, regulated or provided by those laws. laws and with (2) No. The State law does not validly prohibit any of the plaintiffs from publishing the identified communications. (3) Unnecessary to answer. Because the special case does not ask any questions in relation to costs, I agree with Gummow J that the costs of the proceedings will be for the decision of the Justice disposing of the action379. 379 Reasons of Gummow J at [254]. Hayne 374 HAYNE J. Part 14 of the Legal Profession Regulation 2002 (NSW) ("the Regulation"), made under the Legal Profession Act 1987 (NSW) ("the Act"), makes it both a criminal offence and professional misconduct for a barrister or solicitor to publish an advertisement that includes any reference to personal injury, or to any legal service that relates to an entitlement to recover money in respect of personal injury. The relevant text of the Regulation and the Act is set out in the reasons of other members of the Court380. The plaintiffs contend that some or all of the regulations contained in Pt 14 ("the impugned regulations") are invalid. They give six grounds for that contention, namely, that the impugned regulations: impermissibly infringe the freedom of communication on government or political matters guaranteed by the Constitution ("the Lange point"381); impermissibly infringe the requirements of Ch III of the Constitution and of the principle of the rule of law as given effect by the Constitution ("the Ch III point"); impermissibly intercourse or alternatively trade and commerce guaranteed by s 92 of the Constitution ("the s 92 point"); freedom of interstate infringe the exceed the legislative power of the State of New South Wales by virtue of the nature of their extraterritorial operation ("the extraterritoriality point"); exceed any powers to make regulations under the Act by virtue of the nature of their extraterritorial operation ("the regulation-making power point"); and are inconsistent with one or more identified laws of the Commonwealth382 and to the extent of the inconsistency are invalid ("the s 109 point"). 380 As is explained in other reasons, the Regulation has since been amended. These reasons deal with the Regulation as it stood at the time the special case was stated by the parties. 381 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. 382 Judiciary Act 1903 (Cth), ss 39(2), 39B, 55A, 55B, 55D, 78; Federal Court of Australia Act 1976 (Cth), Pt III, Divs 1 and 2, Pt IVA; Trade Practices Act 1974 (Cth), ss 52, 53(a), 74B, 74D, 75AD, 82, 86, 87; Safety, Rehabilitation and Compensation Act 1988 (Cth), Pts II, IV, V and VI, together with Pts IV and IVA the Administrative Appeals Tribunal Act 1975 (Cth); Superannuation (Footnote continues on next page) Hayne The parties have joined in stating a special case for the opinion of the Full Court on questions of law which they identify as arising from these contentions. Each of the contentions advanced by the plaintiffs should be rejected and the questions of law answered accordingly. I agree with the reasons given by Gummow J for rejecting the extraterritoriality point, the regulation-making power point and the s 109 point. These reasons deal with the remaining issues. The Lange point The impugned regulations do not inhibit communications on government or political matters. It may be accepted that, in recent years, questions associated with the nature and extent of liability for negligently caused personal injury and death have been the subject of political controversy and debate at all levels of government in Australia. The special case refers to several reports considered by State or Commonwealth governments in this connection: the review of the law of negligence conducted by Ipp J and others in 2002383, a report to the Insurance Issues Working Group of Heads of Treasuries submitted in 2002384 and the report entitled Reform of Liability Insurance Law in Australia385 submitted to the Commonwealth Minister for Revenue and Assistant Treasurer in 2004. In addition, States and Territories have enacted various pieces of legislation over the last five years, the evident aim of which has been to change the nature and extent of that liability386. And no less importantly, the ministerial statement made when regulations restricting advertisements by lawyers in personal injury matters were (Resolution of Complaints) Act 1993 (Cth), Pts 4, 6 and 7, together with Pts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth). 383 Australia, Review of the Law of Negligence Final Report, September 2002. 384 Australia, Trowbridge Consulting Ltd, Public Liability Insurance Practical Proposals for Reform, May 2002. 385 Australia, Reform of Liability Insurance Law in Australia, February 2004. 386 See, for example, Civil Liability Act 2002 (NSW); Wrongs Act 1958 (Vic) as amended by Wrongs and Other Acts (Law of Negligence) Act 2003 (Vic); Wrongs (Liability and Damages for Personal Injury) Amendment Act 2002 (SA); Personal Injuries Proceedings Act 2002 (Q); Civil Liability Act 2002 (WA); Civil Liability Act 2002 (Tas); Personal Injuries (Liabilities and Damages) Act 2003 (NT); Civil Law (Wrongs) Act 2002 (ACT). Hayne first introduced in New South Wales387 said that the new rules would "counteract the trend to excessive litigation which is evident in parts of our society". It is thus apparent that whether the impugned regulations should be made was as much a matter of controversy as whether, and what, changes should be made to the law relating to liability for personal injuries. No doubt it may also be accepted that some particular personal injury litigation will concern matters likely to generate political controversy. This Court's decision in Graham Barclay Oysters Pty Ltd v Ryan388 provides a ready example. There claims were made against the State of New South Wales for damages for personal injury suffered as a result of eating oysters contaminated with hepatitis A virus. Accepting that there are these connections between political controversy or debate and some questions about personal injury litigation or some particular pieces of litigation does not mean that the impugned regulations effectively burden the freedom of communication about government or political matters whether in their terms, operation or effect389. What the impugned regulations preclude is the publication, by a lawyer, of an advertisement including: any reference to or depiction of personal injury; any circumstance in which personal injury may occur or any activity, event or circumstance that suggests or could suggest the possibility of personal injury or any connection to or association with personal injury or a cause of personal injury; or a personal injury legal service. That is, the impugned regulations take as the legal (and practical) focus of their operation the publication of communications about events that have happened or might happen, and have caused or might cause personal injury, and the rights and remedies of individuals. Save in extraordinary circumstances, the rights and remedies in respect of which a personal injury legal service might be engaged will be rights and remedies existing under the law as it stood at the time an injury 387 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 27 February 2002 at 54-55. 388 (2002) 211 CLR 540. 389 Lange (1997) 189 CLR 520 at 567. Hayne was sustained. A communication about any of these subjects is not a communication about government or political matters390. As Brennan J pointed out in Cunliffe v The Commonwealth391, it is necessary to distinguish between laws controlling an activity and laws restricting political discussion about whether that activity should be controlled. The impugned regulations are of the former type, not the latter. They control an activity – lawyers' advertising. They are directed at communications about events (actual or hypothetical) and about rights and remedies. They are not directed at communications about whether the happening of events should be regulated differently or whether available rights and remedies should be changed. These are reasons enough to conclude that the impugned regulations do not inhibit the freedom of communication about government or political matters. There is, however, a further point to be made. The implied freedom of political communication is a limitation on legislative power; it is not an individual right. It follows that, in deciding whether the freedom has been infringed, the central question is what the impugned law does, not how an individual might want to construct a particular communication or (in this case) advertisement. As the Further Amended Statement of Claim in this matter reveals, it is possible to devise an advertisement which combines reference to one or more of the prohibited subjects identified in the impugned regulations with some reference to a matter of political comment or controversy. The draft advertisement appended to the Further Amended Statement of Claim says, among other things, that "[d]espite the best efforts of Premier Bob Carr and Senator Helen Coonan to stop you, you may still have legal rights to compensation" for personal injury. That would be an advertisement which was to be understood as also making a political point. But demonstrating that an advertisement which contravenes the impugned regulations can be constructed in a way that contains political commentary, does not show that the regulations constitute a burden on the freedom of communication about government or political matters. The political point can be made if it is shorn of reference to the subjects with which the impugned regulations deal. In the course of oral argument, the focus of the plaintiffs' attention shifted from the contention that the impugned regulations infringed the implied freedom of political communication to a contention that the regulations infringed an 390 Lange (1997) 189 CLR 520 at 571; Coleman v Power (2004) 78 ALJR 1166 at 1201 [196]; 209 ALR 182 at 229-230. 391 (1994) 182 CLR 272 at 329. Hayne implied freedom derived from Ch III said to be analogous to the implied freedom recognised in Lange v Australian Broadcasting Corporation. The Ch III point The plaintiffs contended that a constitutional implication should be recognised to the effect that the States' legislative powers do not enable the States to make a law impinging upon the freedom of persons to receive advice or information which may lead those persons to engage the judicial power of the Commonwealth. The plaintiffs submitted that the impugned regulations impermissibly infringed that freedom. These contentions should be rejected. Neither the text nor the structure of the Constitution supports such an implication. When is an implication to be drawn? There may be room for debate about the way in which to express the test that is to be applied in deciding whether an implication is to be drawn from the Constitution's text or structure. The better view may be that no single formula will fully capture the circumstances in which an implication has been identified in the past decisions of the Court. What is clear, however, is that account must be taken of both the text and the structure of the Constitution. In R v Kirby; Ex parte Boilermakers' Society of Australia392, it was said that "to study Chap III is to see at once that it is an exhaustive statement of the manner in which the judicial power of the Commonwealth is or may be vested" and that it therefore followed that "[n]o part of the judicial power can be conferred in virtue of any other authority or otherwise than in accordance with the provisions of Chap III". "[A]ffirmative words appointing or limiting an order or form of things" were read as "hav[ing] also a negative force and forbid[ding] the doing of the thing otherwise"393. Although described as a form of textual implication long recognised in the law394, the drawing of the negative implication identified in Boilermakers took account of, and at least in part depended upon, consideration of the Constitution's structure. So much is apparent from the statement, earlier in the joint reasons in Boilermakers395, that "[i]n a federal form of government a part is necessarily assigned to the judicature which places it in a 392 (1956) 94 CLR 254 at 270. 393 (1956) 94 CLR 254 at 270. 394 (1956) 94 CLR 254 at 270 citing in this connection Townsend's Case (1554) 1 Plow 111 at 113 [75 ER 173 at 176]. 395 (1956) 94 CLR 254 at 267-268. Hayne position unknown in a unitary system or under a flexible constitution where Parliament is supreme", and that because it cannot be left to the judicial power of the States to determine either the ambit of federal power or the extent of the residing power of the States, "[t]he powers of the federal judicature must therefore be at once paramount and limited". A like approach is to be seen as underpinning the decision in Melbourne Corporation v The Commonwealth396, a case usually considered to depend more on structural than textual considerations. There Dixon J said that "the efficacy of the system [of government for which the Constitution provides] logically demands that, unless a given legislative power appears from its content, context or subject matter so to intend, it should not be understood as authorizing the Commonwealth to make a law aimed at the restriction or control of a State in the exercise of its executive authority". And what has since come to be known as the Melbourne Corporation doctrine depends upon an implication drawn from the recognition that "[t]he foundation of the Constitution is the conception of a central government and a number of State governments separately organized"397. Even so, it is clear from the reference to the content, context and subject-matter of powers that the conclusion to be derived from structural considerations is reached only having first started by considering the relevant text. In Australian Capital Television Pty Ltd v The Commonwealth398, Mason CJ considered the cases concerning constitutional implications and suggested399 that "[i]t may not be right to say that no implication will be made unless it is necessary". But the possible exception he identified400 was where an implication is sought to be derived from the actual terms of the Constitution. He suggested that in such a case "it may be sufficient that the relevant intention is manifested according to the accepted principles of interpretation". His Honour concluded401 that, where the implication is structural rather than textual, "it is no doubt correct to say that the term sought to be implied must be logically or practically necessary for the preservation of the integrity of that structure". 396 (1947) 74 CLR 31 at 83. 397 Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 82. See also Austin v The Commonwealth (2003) 215 CLR 185. 398 (1992) 177 CLR 106 at 133-135. 399 (1992) 177 CLR 106 at 135. 400 (1992) 177 CLR 106 at 135. 401 (1992) 177 CLR 106 at 135. Hayne It need not be decided in this case whether it is necessary to show logical or practical necessity in every case where the structure of the Constitution is said to carry an implication. Nor is it necessary to decide whether attempting to distinguish between structural and textual bases for an implication (for the purpose of articulating different tests for when an implication is to be drawn) has difficulties that are insuperable. The critical point to recognise is that "any implication must be securely based"402. Demonstrating only that it would be reasonable to imply some constitutional freedom, when what is reasonable is judged against some unexpressed a priori assumption of what would be a desirable state of affairs, will not suffice. Always, the question must be403: what is it in the text and structure of the Constitution that founds the asserted implication? Does the text or structure of the Constitution support the asserted implication? The implication alleged in this case concerns what is said to be a freedom to receive advice or information about the possible exercise of the judicial power of the Commonwealth; it is not an implication concerned with the invocation or exercise of that judicial power. The way in which the alleged implication is described is important. It is said to be a freedom to receive advice or information. The subject of the advice or information which it is said that the legislatures may not inhibit is advice or information which may lead the recipient to engage the judicial power of the Commonwealth. There is, therefore, a wide gap between the subject of the alleged freedom and the matters with which Ch III of the Constitution deals: judicial power and Courts (s 71), judges' appointment, tenure and remuneration (s 72), appellate jurisdiction of this Court (s 73), appeal to Queen in Council (s 74), original jurisdiction of this Court (ss 75-77), proceedings against Commonwealth or State (s 78), number of judges to exercise federal jurisdiction (s 79), and trial by jury (s 80). The implication which the plaintiffs seek to have drawn in this case is one which was said to be necessary to permit the "effective" exercise of resort to federal jurisdiction. The plaintiffs submitted that only if citizens were informed of the possibility that they may have rights which could be vindicated in federal jurisdiction would they seek to enforce those rights. And, so the argument proceeded, because the avowed aim of the impugned regulations was to 402 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 134 per Mason CJ. 403 Lange (1997) 189 CLR 520 at 556, 567. Hayne "counteract the trend to excessive litigation"404, the impugned regulations interfered with or inhibited the vindication of rights by resort to federal jurisdiction. If the premise for this argument is valid, the subsequent steps in reasoning may follow. But these subsequent steps would follow just as much from a premise expressed in terms of what is desirable, as distinct from necessary, to permit "effective" exercise of federal jurisdiction. What must be tested is the validity of the premise from which the argument proceeds, namely, that the implication is necessary. What aspect of constitutional text or structure supports the asserted implication of a freedom to receive advice or information which may lead the recipient to engage the judicial power of the Commonwealth? The plaintiffs point only to matters that may make the asserted freedom desirable. They point to no matter making it a necessary consequence of constitutional text or structure. That is most easily demonstrated by pointing to what the impugned regulations do not do. The impugned regulations do not preclude the seeking of advice or information about whether to invoke the judicial power of the Commonwealth. They concern only a prior step of conveying information (which is either unsolicited or not addressed to any particular recipient) which may provoke a recipient to seek advice or information. The plaintiffs did not contend that the impugned regulations trespass upon any exclusive legislative powers of the Commonwealth conferred by Ch III. The impugned regulations do inhibit the publication of an advertisement referring to the provision of legal services in connection with litigation that would invoke federal jurisdiction or which ultimately turns out to invoke federal jurisdiction405. But Commonwealth legislative power with respect to the subject-matter of advertisements of that kind was not said to be found in the exclusive legislative powers that are conferred by Ch III (powers to create other federal courts406, to prescribe the number of "other Justices" of this Court407, to fix remuneration408, to fix retirement ages for judges of other federal courts409, to prescribe exceptions 404 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 27 February 2002 at 55. 405 Felton v Mulligan (1971) 124 CLR 367. Hayne and regulations to appellate jurisdictions410, to limit Privy Council appeals411, to confer, define and invest jurisdiction412, to confer rights to proceed413, and to prescribe numbers of judges414 and the manner and places of trial415). The impugned regulations focus on steps that are at least one step removed from seeking to engage the judicial power of the Commonwealth. The implication which it is sought to draw from the Constitution, and Ch III in particular, must, therefore, be one that is itself removed a similar distance from the subject-matter of Ch III. That is why it is expressed as an implied freedom to receive (as distinct from give) advice or information that may (but need not) lead a recipient to engage the judicial power of the Commonwealth. But that mode of expression reveals the distance that lies between the content of Ch III and the content of the asserted implication. There is no basis in constitutional text or structure to bridge that gap. Section 92 The plaintiffs contended that the impugned regulations impermissibly burden trade, commerce and intercourse between the States contrary to s 92 of the Constitution. Accepting that the regulations are not protectionist measures, principal focus fell upon whether the regulations impermissibly burden interstate intercourse. These arguments concerning the application of s 92 presented several issues. Is freedom of interstate intercourse a distinct and separate limb of s 92? Is interstate intercourse restricted to non-commercial intercourse, that is, intercourse which is not trade or commerce between the States? Do the impugned regulations impermissibly burden interstate intercourse? Cole v Whitfield The arguments of the parties and the interveners all took the Court's decision in Cole v Whitfield416 as their starting point. That is neither surprising 416 (1988) 165 CLR 360. Hayne nor a matter for criticism. The decision in Cole v Whitfield was intended to be the beginning of a wholly new approach to s 92. No party or intervener submitted that the Court should reconsider Cole v Whitfield. Rather, the arguments centred upon what follows from that new approach, and upon what guidance is to be had from the Court's subsequent decisions in Cunliffe417 and In Cole v Whitfield the Court held that s 92 prohibits laws that discriminate against interstate trade and commerce in a protectionist sense. But the Court said419 that "neither the history of the clause nor the ordinary meaning of its words require that the content of the guarantee of freedom of trade and commerce be seen as governing or governed by the content of the guarantee of freedom of intercourse". And in Cunliffe, a majority of the Court decided420 that to freedom from interstate the freedom of discriminatory burdens of a protectionist kind. intercourse limited is not It may readily be accepted that the three words, "trade", "commerce", and "intercourse" are not synonyms. It has long been recognised, however, that "many transactions which constitute interstate trade and commerce equally constitute interstate intercourse"421. Yet a distinction is drawn in Cole v Whitfield, and the cases that have come after it, between interstate trade and commerce, and interstate intercourse. The content of the guarantee of freedom of interstate intercourse has been treated as being different from the content of the guarantee of freedom of interstate trade and commerce. The text of s 92 The text of s 92 does not readily yield a distinction between interstate trade and commerce, and interstate intercourse. The constitutional expression is "trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation". "[T]rade" and "commerce" may be grouped together and distinguished from "intercourse" if some economic criterion is adopted. But such a distinction can have purpose and utility only if it leads to some different content being given to the freedom for which s 92 417 (1994) 182 CLR 272. 418 (1999) 199 CLR 160. 419 (1988) 165 CLR 360 at 388. 420 (1994) 182 CLR 272 at 307 per Mason CJ, 346 per Deane J, 392 per Gaudron J, 421 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 59 per Brennan J. Hayne provides in relation to interstate trade and commerce from that for which it provides in relation to interstate intercourse. Nothing in the text of s 92 reveals why that should be so. In particular, the text does not readily reveal any basis for treating one of the three elements of a composite expression ("trade, commerce, and intercourse among the States") which forms the subject of an imperative ("shall be absolutely free") as connoting, let alone requiring, the application of some different test from the test to be applied to the other elements. Yet that is the accepted premise from which the determination of the present case must proceed. How, then, is the distinction between interstate trade and commerce, and interstate intercourse to be drawn? Characterisation and practical effect In Nationwide News Pty Ltd v Wills, Deane and Toohey JJ said422 that: "The true resolution of tension between s 92's guarantee of freedom of interstate trade and commerce and the guarantee of freedom of interstate intercourse must ultimately be found, not in removing all intercourse which happens to take place in the course of trade or commerce from the reach of the guarantee of freedom of interstate intercourse but in the relevant characterisation of the particular law." Their Honours then characterised423 the provision at issue in Nationwide News as "a law with respect to the use or publication of words, regardless of whether that use or publication be in trade or commerce" and concluded that the provision at issue was to be judged against the requirement that interstate intercourse be absolutely free. Characterising a law as one with respect to interstate intercourse rather than interstate trade and commerce may be thought to assume that the relevant law can be assigned only one character and that the two categories of reference which are to be considered are distinct. Such an assumption, if made, would not be well founded424. And even if the underlying assumption were not cast in absolute terms but depended instead upon assigning a "principal" or "chief" character to the law, an assumption of that kind would not fit easily with the 422 (1992) 177 CLR 1 at 83-84. 423 (1992) 177 CLR 1 at 84. 424 cf Actors and Announcers Equity Association v Fontana Films Pty Ltd (1982) 150 CLR 169 at 192-193. Hayne recognition that many transactions that constitute interstate trade and commerce equally constitute interstate intercourse. Moreover, if the character of a law turns upon the rights, duties, powers and privileges which it changes, regulates or abolishes425, to take the character of the law, identified in this way, as the starting point for subsequent analysis would be at odds with two critical steps that underpin the decision in Cole v Whitfield. First, the Court said426 that the concept of discrimination (with which the constitutional guarantee of freedom of interstate trade and commerce is centrally concerned) embraces factual discrimination as well as legal discrimination. Secondly, the Court rejected427 the criterion of operation test developed and applied in cases like O Gilpin Ltd v Commissioner for Road Transport and Tramways (NSW)428, Hospital Provident Fund Pty Ltd v State of Victoria429, Grannall v Marrickville Margarine Pty Ltd430 and Mansell v Beck431. If, as Cole v Whitfield holds, the practical effect of a law is relevant in deciding whether it impermissibly discriminates against interstate trade or commerce, how is the law's character (or principal or chief character) to be determined? The particular facts of a case may reveal that the law does have a practical consequence in the circumstances of that case. But if the inquiry is how is that law to be characterised, what is the nature of the process being undertaken? In particular, how is practical effect to be measured? If a distinction is to be drawn between interstate trade and commerce and interstate intercourse, the distinction cannot be found by assigning a single character to the impugned law. A law may have more than a single legal character. Its practical effects will ordinarily be many and varied. Rather, the distinction must lie elsewhere than in an exercise in characterisation which is founded on a classification into two wholly separate categories. And if that is so, the only candidate for consideration in drawing a distinction between interstate trade and commerce and interstate intercourse is an economic criterion. That is, 425 Fairfax v Federal Commissioner of Taxation (1965) 114 CLR 1 at 7. 426 (1988) 165 CLR 360 at 399-400. 427 (1988) 165 CLR 360 at 400-407. 428 (1935) 52 CLR 189 at 205-206. 429 (1953) 87 CLR 1 at 27-28. 430 (1955) 93 CLR 55 at 77-78. 431 (1956) 95 CLR 550 at 564-565. Hayne trade and commerce is to be understood as referring to transactions having a commercial content or purpose, and intercourse is to be understood as referring to other interstate movements or transactions. Any law dealing with interstate intercourse that is a part of interstate trade or commerce would fall to be determined according to whether the law discriminated against trade and commerce in a protectionist sense. As pointed out earlier, the drawing of a distinction between two separate limbs or applications of s 92 can have purpose and utility only if different tests are engaged. The content of those different tests must be related to the distinction that is drawn and it is, therefore, useful to turn now to the examination of what has been said about the relevant test for laws affecting interstate intercourse. Interstate intercourse – what is an impermissible burden? The Court divided in opinion in Cunliffe. The majority (Brennan, Dawson, Toohey and McHugh JJ) concluded that the law in question did not infringe s 92; Mason CJ, Deane and Gaudron JJ were of the view that the law was invalid, not because it contravened s 92, but because it infringed the implied freedom of political communication. All members of the Court in Cunliffe accepted that the constitutional injunction "trade, commerce, and intercourse among the States ... shall be absolutely free" does not mean what it says. Despite what s 92 says, the freedom is not absolute432. The content of the freedom was expressed in various ways and each should be mentioned. Chief Justice Mason said433 that a law which applied in terms to interstate intercourse and imposed a burden or restriction would be invalid but that a law which imposed an "incidental burden or restriction" on interstate intercourse "in the course of regulating a subject matter other than interstate intercourse" would not fail "if the burden or restriction was reasonably necessary for the purpose of preserving an ordered society under a system of representative government and democracy and the burden or restriction was not disproportionate to that end". Similarly, Deane J, with whom Gaudron J agreed434, said435 that a law which incidentally affected interstate intercourse in a non-discriminatory way "in the course of regulating some general activity" would not contravene s 92 "if its 432 (1994) 182 CLR 272 at 307 per Mason CJ, 333 per Brennan J, 346 per Deane J, 366 per Dawson J, 384 per Toohey J, 392 per Gaudron J, 395 per McHugh J. 433 (1994) 182 CLR 272 at 307-308. 434 (1994) 182 CLR 272 at 392. 435 (1994) 182 CLR 272 at 346. Hayne incidental effect ... does not go beyond what is necessary or appropriate and adapted for the preservation of an ordered society or the protection or vindication of the legitimate claims of individuals in such a society". Justice Brennan reiterated436 the view he had expressed in Nationwide News437 that interstate intercourse is not "immune from the operation of laws of general application which are not aimed at interstate intercourse". In his Honour's view, s 92 is directed to laws which impose a burden on the crossing of the border. Justice Dawson said438 that a law which does not have as its object "the erection of State borders as barriers against freedom of intercourse" may incidentally restrict interstate movement as long as the means adopted are not inappropriate or disproportionate. His Honour explained that the means adopted would be inappropriate or disproportionate where the burden to freedom of interstate intercourse is greater than is reasonably required to achieve the legislation's object439. Justice Toohey was of the view440 that s 92 had nothing to say about the law in question. It was a law of general application which neither in its terms nor in its operation imposed any burden on interstate intercourse which it would not impose, absent State borders. By contrast, McHugh J441 concluded that the use of the term "absolutely free" does not mean that interstate intercourse must be free from all regulation, but that the freedom should be impaired only by laws that are necessary "for the government of the nation or its constituent parts". His Honour amplified442 this by stating that a law is necessary in the relevant sense only if there is a "real social need" for the law, and the burden on freedom of interstate intercourse is no more than is proportionate to the legitimate aim pursued. 436 (1994) 182 CLR 272 at 333. 437 (1992) 177 CLR 1 at 58-59. 438 (1994) 182 CLR 272 at 366. 439 (1994) 182 CLR 272 at 366. 440 (1994) 182 CLR 272 at 384. 441 (1994) 182 CLR 272 at 395-396. 442 (1994) 182 CLR 272 at 396. Hayne It is clear that a law which has no purpose or effect other than to impede interstate intercourse is contrary to s 92. Parallels can evidently be drawn between this operation of the intercourse limb of s 92 and understanding s 92 as anti-protectionist in relation to trade and commerce between the States. In both cases, s 92 may be understood as striking down laws aimed at interstate trade, commerce, or intercourse. It is no less evident, however, that the interstate intercourse limb has not been understood as confined to striking down laws aimed at impeding intercourse (whether that "aim" is to be deduced by reference only to legal operation or by reference to the practical operation and effect of the law). Each of the several tests stated in Cunliffe appealed to notions of what is necessary, reasonably necessary, or appropriate and adapted to either an ordered society or to the objects of the relevant legislation. The formulae used in Cunliffe to describe the limitation on the freedom prescribed by s 92 for interstate intercourse differed in their specification of the relevant criterion. Three members of the Court, Mason CJ, Deane and Gaudron JJ, whose views on the application of s 92 in the case did not prevail, referred to the needs of an ordered society. By contrast, Dawson and McHugh JJ referred to the needs or purpose of the law in question; Brennan and Toohey JJ concluded that s 92 does not strike down laws of general application not aimed at interstate intercourse. The proposition that the application of the interstate intercourse limb of s 92 requires reference to a standard external to the law in question (the needs of an "ordered society") was not taken up by any member of the Court in AMS v AIF443. Nevertheless, something more should be said about the proposition and a fundamental question which may be masked by the expression "ordered society". Reference to the needs of an "ordered society" invites examination of the nature of the society to which reference would be made. In particular, would it be a society in which there was to be regulation of the subject-matter with which the impugned law deals? Or would an inquiry about the needs of an ordered society be an inquiry which focused only upon the impugned law and the purposes of that law? So, in the context of the present matter, would it be for the Court to say whether banning certain forms of advertising by lawyers is "necessary" for, or appropriate and adapted to the needs of, an ordered society, or would that be a judgment which was to be treated as having already been made by the legislature? Upon what bases would the Court form a judgment about the needs of such an ordered society if the judgment of the legislature were to be treated as either irrelevant or not determinative? It is difficulties of this kind which are to be seen as underpinning the rejection of reference to a standard external to the law in question and the 443 (1999) 199 CLR 160. Hayne adoption by the majority in Cunliffe and in AMS v AIF of a test that looks to the objects of that law. In AMS v AIF, Gleeson CJ, McHugh and Gummow JJ said444 that where a law, by its practical operation rather than by its terms, imposes a burden or restriction on interstate intercourse, the law will be valid if the burden or restriction imposed is not greater than that reasonably required to achieve the law's objects. Leaving aside, then, laws which are specifically aimed at interstate intercourse, the test stated in the joint reasons in AMS v AIF invites attention to consideration of the objects of the law in question. And as Gummow J concludes in his reasons in the present matter, the principles stated in AMS v AIF should now be accepted as the applicable doctrine. Appeal to a standard external to the law in question (the needs of an ordered society) should be rejected. It is not a view that commands assent in the decided cases. It is a view which presents questions that find no ready answer. There is then one consequence of the conclusions reached in AMS v AIF which should be noticed. Expressing the relevant test by reference to consideration of what is necessary or appropriate and adapted to fulfilment of the purposes of the law in question, entails that few laws not directly aimed at interstate intercourse would fail such a test. And if that is so, the utility of distinguishing between interstate trade and commerce on the one hand, and interstate intercourse on the other, is much reduced. Since Cole v Whitfield the freedom of trade and commerce between the States is to be understood as freedom from a particular kind of law aimed at that activity – protectionist laws. Likewise, the freedom of interstate intercourse is a freedom from laws aimed at that activity. The qualification to the freedom with respect to interstate intercourse (which would strike down laws not aimed at that activity but travelling beyond what is necessary, or appropriate and adapted, to the purposes exhibited by the law in question) is, however, an amplification whose content is problematic. That is because the ambit of the qualification is governed by the purpose of the impugned law. No matter whether practical effect or legal operation is considered, the purpose of the impugned law will include a purpose of regulating the activity in question. To explain why that is so, it is necessary to say something further about what is meant by the expression "the purpose of a law". To attribute "purpose" to a law runs the risk of eliding a useful legal concept expressed in the metaphor of "intention", and the results of some attempted exercise in psychoanalysis of those associated with the making of the law. In the familiar language of the law, there is a risk that an objective concept 444 (1999) 199 CLR 160 at 179 [45]. See also at 233 [221] per Hayne J. Hayne is turned into a subjective inquiry about the purpose of an individual or the purposes of some group of individuals. Identifying the purpose of a law is an exercise in construction. That task must begin with the words in which the law is expressed but, as has been repeatedly noticed445, that is a task that requires more than sitting with the words of the Act in one hand and a dictionary in the other. Determination of the meaning to be given to a law requires consideration of various sources. Although the inquiry must begin and end with the words that are used, account must be taken of the whole of the context in which those words were and are used and, in appropriate cases, account must be taken of the various extrinsic sources to which relevant interpretation legislation permits, and in some cases requires, recourse. In undertaking that task, equal care must be exercised to avoid two errors. First, it is to beg the question to begin by identifying, a priori, some desirable social end as being the relevant legislative purpose and then construe the legislation to accord with that assumption. Secondly, references to legislative intention or purpose must never be permitted to obscure the essentially objective nature of the inquiry. Especially is that so when it is recognised that often, perhaps too often, the search for a single legislative purpose must fail because the relevant statutory formula represents a compromise between competing considerations or competing pressures. But in the end, a court called on to construe the legislation must choose the meaning and operation that the words are to be given in the particular case. And one aspect of the "purpose" of the law in question must be to give effect to that particular operation of the law. Thus, when an appeal is made, as it has been in connection with the freedom of interstate intercourse, to any consideration of what is necessary or appropriate and adapted to the purpose of the impugned law, the test becomes one which, at least in large measure, is self-defining in its operation. By hypothesis, the impugned law is one which has an adverse effect (either legally or in its practical operation) on interstate intercourse. Yet equally, it follows from the task of construction which the court has necessarily had to undertake, that a part of the purpose of the law that is challenged is to have that effect. The ordering of society for which the law provides includes the relevant adverse effect on interstate intercourse. The corollary of these conclusions may very well be that the step taken in Cole v Whitfield to undo the law which had developed in relation to s 92 confines the operation of s 92 in connection with interstate intercourse rather more closely than may be thought to have been anticipated in Cole v Whitfield or in Cunliffe. 445 See, for example, Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 93-94 [25] per Gaudron and Gummow JJ and Judge Learned Hand in Cunard SS Co v Mellon (1922) 284 F 890 at 894. Hayne Whether or not that is so is not a question that needs to be determined. It is sufficient to say that the impugned regulations, in their effect on interstate trade, commerce, and intercourse do not contravene s 92. The impugned regulations are not protectionist measures. In so far as they would inhibit certain interstate communications by persons or bodies, like the amici curiae, who do not pursue commercial ends and whose communications do not form a part of interstate trade and commerce, the impugned regulations do not infringe the freedom of interstate intercourse. First, the impugned regulations are not aimed at impeding interstate intercourse. Secondly, the inhibition which the impugned regulations work on interstate intercourse is no greater than is necessary to achieve their purpose of preventing the advertisement, in New South Wales, of the legal services with which they deal. Question 1 in the amended special case should be answered "No". Questions 2 and 3 do not arise. Callinan CALLINAN J. In these proceedings, commenced by writ and statement of claim in the original jurisdiction of the Court, the plaintiffs challenge the validity of Pt 14 of the Legal Profession Regulation 2002 (NSW) (cll 138-140D)446. The action arises out of particular proposals by the three plaintiffs to advertise in various, not dissimilar ways, but the questions asked go beyond them. The relevant facts and issues have been reduced to facts stated, and questions set out in a special case in which the parties have concurred pursuant to O 35 of the High Court Rules 1952. Because they are essentially constitutional questions the Attorneys-General of the Commonwealth and all of the mainland States have intervened, and the Combined Community Legal Centres' Group (New South Wales) Inc and Redfern Legal Centre Limited, which provide useful legal services on a non-profit basis, sought and were granted leave to appear as amici curiae. They are concerned that matter that they disseminate from time to time might render their staff liable to sanctions under the contested provisions. After hearing argument the Court informed the parties that it would be helpful to hear further argument with respect to possible inconsistency between the contested provisions and federal law. Additional questions were accordingly formulated and argued. The questions in their amended form are as follows: Is Part 14 of the Regulation invalid in whole or in part by reason that it: impermissibly infringes the freedom of communication on political and governmental matters guaranteed by the Constitution; impermissibly infringes the requirements of Ch III of the Constitution and of the principle of the rule of law as given effect by the Constitution; impermissibly infringes the freedom of interstate intercourse or alternatively trade and commerce guaranteed by s 92 of the Constitution; exceeds the legislative powers of the State of New South Wales by virtue of the nature of its extra-territorial operation; exceeds any powers to make regulations under the Legal Profession Act [1987 (NSW)], by virtue of the nature of its extra-territorial operation; 446 Part 14 of the Legal Profession Regulation 2002 (NSW) was substituted by the Legal Profession Amendment (Personal Injury Advertising) Regulation 2003 (NSW) with effect from 23 May 2003. Callinan inconsistent with jurisdiction conferred, regulated or provided for by: the rights, duties, remedies and ss 39(2), 39B, 55A, 55B, 55D, and 78 of the Judiciary Act 1903 (Cth); (B) Divisions 1 and 2 of Part III and Part IVA of the Federal Court of Australia Act 1976 (Cth); ss 52, 53(a), 74B, 74D, 75AD, 82, 86 and 87 of the Trade Practices Act 1974 (Cth); Parts II, IV, V and VI of the Safety, Rehabilitation and Compensation Act 1988 (Cth), together with Parts IV and IVA of the Administrative Appeals Tribunal Act 1975 (Cth); Parts 4, 6 and 7 of the Superannuation (Resolution of Complaints) Act 1993 (Cth), together with Parts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth). If yes to any part of (1), does Part 14 of the Regulation validly prohibit: the First Plaintiff from publishing an advertisement in the form of Annexure A to the Amended Statement of Claim; the Second Plaintiff from publishing: (iii) an advertisement advertisements which are Annexure B Amended Statement of Claim; form of the the three the on its website, material substantially in the form of the material contained in Annexures C and D to the Amended Statement of Claim; a letter in the form of Annexure E to the Amended Statement of Claim to group members of the group on behalf of whom proceedings are brought in Federal Court proceedings N932 of 2001. the Third Plaintiff from publishing an advertisement in the form of Annexure F to the Amended Statement of Claim? If yes to any part of (2), ought the declaratory relief sought in the Amended Statement of Claim be withheld in the discretion of the Callinan Court by reason of the facts set out in paragraph 17 in relation to the advertisements which the plaintiffs say they wish to publish but which have not in fact been published?" The special case had annexed to it some hundreds of pages of documents of uncertain evidentiary status or value, many of which contain unresolved argumentative matter. It would be difficult therefore for the Court to draw any inferences from them despite the discretion to do so conferred by O 35 r 1(4)447 of the Rules. The parties and the facts The first plaintiff, APLA Limited ("APLA"), is a company limited by guarantee the members of which are legal practitioners. Membership is restricted to lawyers who subscribe to, and advocate the objectives of the company, which include the promotion of access to justice, protection of the rights of injured persons, the promotion of proper and adequate compensation for injured persons, the promotion of workplace health and safety in product manufacture, marketing of legal services, and the facilitation of the exchange of information among members of the company, most of whom claim expertise in personal injuries litigation. The objective with which this case is principally concerned appears to be marketing of legal services rather than the altruistic ones stated in the company's charter. APLA wishes to place an advertisement in a Sydney telephone directory and in various newspapers. I will set it and the other proposed advertisements and solicitations out in full because otherwise the true nature and purpose of them may not be readily apparent. 447 Rule 1(4) provided: "The Court may draw from the facts and documents stated in the special case any inference, whether of fact or law, which might have been drawn from them if proved at a trial." Callinan In February 2004, APLA wrote to the Legal Services Commissioner of New South Wales, the first defendant, seeking advice whether the proposed advertisement448 would infringe the contested provisions. The Commissioner is an office holder under the Act whose responsibilities include the investigation and prosecution of complaints against legal practitioners under that Act. In response, the first defendant advised that the advertisement "constitutes a communication of information that would advertise or promote the availability or use of your members to provide legal services for work injury and personal injury claims arising out of work accidents". APLA has not published the advertisement. Appropriately, and in accordance with this Court's decision in R v Australian Broadcasting Tribunal; Ex parte Hardiman449, the Commissioner elected to submit to the jurisdiction of this Court, leaving active participation as the contradictor to the State of New South Wales which was joined as a 448 It is common ground that Mr Carr is the Premier of New South Wales and Ms Coonan, a Minister in the Commonwealth Government. 449 (1980) 144 CLR 13. Callinan defendant. The members of the first plaintiff and the other plaintiffs wish to solicit as clients, persons who may have suffered personal injuries, and to encourage them to sue for damages for personal injuries: their motivation and purpose, as are those of the major communicators they would employ, the commercial media, is profit. In Victoria a group of legal practitioners may practise as a corporation450. The members of the second plaintiff, Maurice Blackburn Cashman Pty Ltd ("MBC"), have chosen to do so, and conduct a legal practice in Victoria, New South Wales and Queensland. MBC has proposed to advertise in three ways. The first proposal consists of three advertisements that appeared in newspapers printed and circulated in New South Wales prior to 23 May 2003. These advertisements are set out below: 450 Legal Practice Act 1996 (Vic), s 291. Callinan Callinan MBC wishes to continue advertising in such terms but has ceased to do so because of concern that they may infringe the contested provisions. MBC's next proposal is to display the following material on its website to be uploaded on to a computer server in Victoria. The first appears under the heading "Comcare" and is as follows: "Comcare is the workers' compensation scheme for Commonwealth employees who suffer injury or illness in the course of their employment. including Telstra, Australia Post, Employees Commonwealth Government Departments and the Australian Defence Forces are entitled to compensation under the scheme. employers Comcare benefits include payment of medical and associated expenses relating to work-related injuries, an entitlement to weekly payments of compensation while an injury-related incapacity for employment exists and lump sums of compensation if the effects of your injury are permanent. If your injuries occurred as a consequence of the negligence or fault of another person, you may also be able to sue for compensation. law relating The to Comcare compensation entitlements can be complicated. Circumstances in which you should contact [MBC] for advice include: If Comcare or your employer reject your claim for compensation or decide to stop payment of some or all of your Comcare benefits; Where you have suffered an injury which is not of a temporary nature. If this occurs you may be able to pursue a lump sum compensation claim or to sue for compensation. If these circumstances apply to you, or if you have any queries in relation to any aspect of your Comcare entitlements, you should contact solicitors at our Melbourne, Brisbane or Sydney offices for advice." The second appears under the heading "Superannuation" and is as follows: "Since 1992, work superannuation has been compulsory. Employers must pay contributions, increasing to 9% of salary into a superannuation fund for their employees if they earn at least $450.00 per month. Many superannuation funds also have disability and death benefits. So do many insurance policies such as life insurance, sickness and accident insurance, income protection and mortgage insurance. Callinan Many people on workers' compensation or Centrelink payments will be able to claim. In order to be paid a superannuation disability benefit, you usually have to show you are totally and permanently disabled. You don't have to be unfit for all work – only for your old job or any other suitable work that fits your education training and experience. Many insurance policies pay benefits if you can't perform your usual job. Others will pay if you suffer from specified illnesses, such as cancer, or a stroke. Most people don't know about their superannuation or insurance rights. If you want to find out, please contact [MBC] for free advice." MBC also wishes to send to people within and outside New South Wales, capable of benefiting from a representative action in the Federal Court of Australia in which various forms of relief under the Trade Practices Act 1974 (Cth) are claimed, in respect of the provision of potentially faulty heart pacemakers, the following letter: "Dear Sir/Madam META 1256 PACEMAKER CLASS ACTION FEDERAL COURT OF AUSTRALIA N932 OF 2001 We are writing to update you on the progress of this class action in which you are a group member. You will recall that this case relates to potentially faulty Meta 1256 pacemakers. Unless you have contacted us in the meantime, the last you probably heard about this case was when an opt out notice was sent to you in mid 2002. We understand that you decided not to opt out and therefore the case continues to affect your legal rights. The lead applicant, Mr Darcy, is claiming damages and other legal remedies against the respondents, not only for himself, but on behalf of you and the other group members who have suffered personal injury or other loss or damage as a result of having had a potentially faulty Meta 1256 pacemaker. The Federal Court has indicated that the trial in this matter is likely to take place in October this year. The trial will be a trial of the case of the lead applicant, Mr Darcy. Once the outcome of Mr Darcy's case is known, and if it is successful, group members including you will be in a position to consider whether or not to make a claim for compensation. In order to Callinan obtain compensation you will need to prove that you suffered loss or damage. It may be in your interests to obtain legal representation. You are entitled to choose your own lawyer to act on your behalf (or to choose not to have any lawyer at all). If you want this firm to act for you for purposes of assessing your individual claim for compensation you will need to enter into a fee & retainer agreement with us. If you would like to obtain a copy of our fee & retainer agreement to consider, please write to us or contact us by telephone. We have been acting in another, similar class action seeking compensation on behalf of Mr Kevin Courtney and other group members who have suffered losses as a result of their potentially faulty Tempo pacemaker. In that action, Mr Courtney sued Medtel Pty Limited and Pacesetter Inc, who are the respondents in this case. The Federal Court determined that case on 5 February 2003. The respondents appealed against the decision of the Federal Court, then the full Federal Court. In December 2003 the High Court refused the respondents' application for special leave, which means that the decision in favour of Mr Courtney cannot be appealed any further. Although the Tempo pacemaker case is not identical to this case, it is very similar and the decisions of the Federal Court and the appeal courts are encouraging. The Federal Court awarded Mr Courtney $9,988.20 compensation plus $1,304.19 interest. The compensation was made up of: $7500 for pain and suffering; $2420 for care provided by Mr Courtney's wife; and $68.20 for past expenses (such as taxi fares and prescription medication). Given that it is unlikely that your individual claim will be considered until at least early next year it is important that you gather together details of your potential claim as soon as you can. A lawyer can do this on your behalf, or you can do it yourself. If you are gathering information about your claim yourself you should gather the following information: Details of any additional medical appointments or hospitalisation that you underwent because of the potential fault in the Meta 1256 pacemaker (such as when the Hazard Alert was issued, if you had surgery to remove the pacemaker, follow up appointments after surgery). How many days you spent in hospital (if you had surgery to remove the pacemaker). Callinan 3. Whether you had a local or general anaesthetic (if you had surgery to replace the pacemaker). 4. Whether you were taking anti-coagulant medication (such as Warfarin) that had to be adjusted before any surgery to replace the pacemaker. 5. Whether you suffered any complications as a result of any surgery to replace the pacemaker and the nature of those complications (such as infection, operation, and haematoma). travelled How you from any additional medical appointments and, if you incurred expenses in connection with that travel, please keep the receipts. to and If you had to purchase any additional medication or pay for services (for example, lawn mowing, or cleaning) as a result of any surgery to have the pacemaker replaced. Details of any care provided to you by your family or friends for free that you needed as a result of the potential fault in the pacemaker. For example, if you had surgery to have the pacemaker removed, care provided following that surgery. If you have any questions about any aspect of this letter please contact [the author]. Yours faithfully The letter is intended to be sent to persons who are group members within the meaning of s 33A451 of the Federal Court of Australia Act 1976 (Cth), and who have no current relationship with MBC. The third plaintiff, Robert Leslie Whyburn ("Whyburn"), has previously advertised and seeks to continue to advertise in trade union journals circulating within New South Wales, the following matter. 451 Section 33A defines "group member" as "a member of a group of persons on whose behalf a representative proceeding has been commenced". Callinan The Regulations The contested provisions in their current form commenced operation on 23 May 2003 and have two principal objectives: to reduce insurance premiums and the volume of personal injury litigation in the courts of New South Wales. Clause 139(1) is stated in comprehensive terms and makes it a criminal offence for a barrister or solicitor to publish an advertisement soliciting or encouraging people to engage him or her to act for them in claims for personal injuries. Clause 140 states an exception in respect of practitioners who advertise a speciality service. The contested provisions should be set out in full: "138 Definitions In this Part: Callinan advertisement means any communication of information (whether by means of writing, or any still or moving visual image or message or audible message, or any combination of them) that advertises or otherwise promotes the availability or use of a barrister or solicitor to provide legal services, whether or not that is its purpose or only purpose and whether or not that is its only effect. personal injury includes pre-natal injury, impairment of a person's physical or mental condition, and disease. publish means: publish in a newspaper, magazine, journal, periodical, directory or other printed publication, or disseminate by means of the exhibition or broadcast of a photograph, slide, film, video recording, audio recording or other recording of images or sound, either as a public exhibition or broadcast or as an exhibition or broadcast to persons attending a place for the purpose of receiving professional advice, treatment or assistance, or broadcast by radio or television, or display on an Internet website or otherwise publicly disseminate by means of the Internet, or publicly exhibit in, on, over or under any building, vehicle or place or in the air in view of persons in or on any street or public place, or display on any document (including a business card or letterhead) gratuitously sent or gratuitously delivered to any person or thrown or left on any premises or on any vehicle, display on any document provided to a person as a receipt or record in respect of a transaction or bet. solicitor includes a firm of solicitors, solicitor corporation and incorporated legal practice. 139 Restriction on advertising personal injury services (1) A barrister or solicitor must not publish or cause or permit to be published an advertisement that includes any reference to or depiction of any of the following: Callinan personal injury, any circumstance in which personal injury might occur, or any activity, event or circumstance that suggests or could suggest the possibility of personal injury, or any connection to or association with personal injury or a cause of personal injury, a personal injury legal service (that is, any legal service that relates to recovery of money, or any entitlement to recover money, in respect of personal injury). Maximum penalty: 10 penalty units. (2) A contravention of this clause by a barrister or solicitor is declared to be professional misconduct. Evidence that a barrister or solicitor has been convicted of an offence under this clause or under clause 73D of the Workers Compensation (General) Regulation 1995 is sufficient evidence of a contravention of this clause by the barrister or solicitor for the purposes of any proceedings under Part 10 (Complaints and discipline) of the Act. 140 Exception for advertising specialty This Part does not prevent the publication of an advertisement that advertises a barrister or solicitor as being a specialist or offering specialist services, but only if the advertisement is published by means of: an entry in a practitioner directory that states only the name and contact details of the barrister or solicitor and any area of practice or accredited specialty of the barrister or solicitor, or a sign displayed at a place of business of the barrister or solicitor that states only the name and contact details of the barrister or solicitor and any accredited specialty of the barrister or solicitor, or an advertisement on an Internet website operated by the barrister or solicitor the publication of which would be prevented under this Part solely because it refers to personal injury or personal injury legal services in a statement of accredited specialty of the barrister or solicitor. In this clause: Callinan accredited specialty of a barrister or solicitor means a specialty in which the barrister or solicitor is accredited under an accreditation scheme conducted or approved by the Bar Council or Law Society. practitioner directory means a printed publication, directory or database that is published by a person in the ordinary course of the person's business (and not by the barrister or solicitor concerned or a partner, employee or member of the practice of the barrister or solicitor). 140A Other exceptions This Part does not prevent the publication of any advertisement: to any person who is already a client of the barrister or solicitor (and to no other person), or to any person on the premises of a place of business of the barrister or solicitor, but only if the advertisement cannot be seen from outside those premises, or in accordance with any order by a court, or pursuant to a disclosure made by a barrister or solicitor under Division 2 of Part 11 of the Act, or to the extent that it relates only to the provision of legal aid or other assistance by an agency of the Crown and is published by or on behalf of that agency, or to the extent that it relates only to legal education and is published to members of the legal profession by a person in the ordinary course of the person's business or functions as a provider of legal education, or that is required to be published by or under a written law of the State. 140B Responsibility for employees and others For the purposes of this Part, evidence that a person who is an employee of a barrister or solicitor, or a person otherwise exercising functions in the barrister's or solicitor's practice, published or caused to be published an advertisement is evidence (in the absence of evidence to the contrary) that the barrister or solicitor caused or permitted the publication of the advertisement. Callinan 140C Double jeopardy A person who has been convicted of an offence under Part 19B of the Workers Compensation (General) Regulation 1995 is not, if that offence would constitute an offence under this Part in respect of the publication of an advertisement, liable to be convicted of an offence under this Part in respect of that publication. 140D Transitional – finalised publications This Part does not prevent the publication of an advertisement in a printed publication the contents of which were finalised (by the publisher of that publication) before the date of publication in the Gazette of the Legal Profession Amendment (Personal Injury Advertising) Regulation 2003." The arguments It is unnecessary for me to deal with the arguments as to the proper construction of the contested provisions. I agree with the construction adopted by Gummow J and his Honour's reasons for it. The plaintiffs in this Court argue that the contested provisions are invalid for these reasons: infringe they governmental matters guaranteed by the Constitution; freedom of communication on political and the they infringe Ch III of the Constitution and "the principle of the rule of law as given effect by the Constitution"; they infringe the freedom of interstate intercourse or, alternatively, trade and commerce guaranteed by s 92 of the Constitution; they exceed the legislative powers of the State of New South Wales by virtue of the nature of their extra-territorial operation; they exceed any powers to make regulations under the Legal Profession Act by virtue of the nature of their extra-territorial reach; and they are inconsistent with laws of the Commonwealth, within the meaning of s 109 of the Constitution because in their practical operation, they detract from or impair the operation of Commonwealth laws falling into either or both of two broad categories. I put aside until later the questions raised about the possible effect of ss 92 and 109 of the Constitution, the operation of the contested provisions upon the representative action started in the Federal Court referred to in the pleadings, actions instituted, or to be instituted in federal courts, the impeding of access to Callinan the courts (a right said to be implied in the Constitution) and the other matters raised by the plaintiffs, and deal first with the asserted fetter upon the implied freedom of communication. Do the provisions infringe the implied freedom of communication in relation to political and governmental matters? (Question 1(a)) The plaintiffs submitted that the contested provisions impermissibly restrict communications between a barrister or solicitor and the public in relation legislative or executive policy, or governmental acts or omissions, relating to personal injuries; legal rights and remedies against New South Wales or its agencies relating to personal injuries; legal rights and remedies against other States and Territories of Australia or their agencies relating to personal injuries; legal rights and remedies against the Commonwealth of Australia or its agencies relating to personal injuries; decisions handed down by courts relating to personal injuries, including decisions handed down by federal courts or by courts exercising federal jurisdiction; proposed legal proceedings relating to personal injuries, including representative proceedings pursuant to court rules or to Pt IVA of the Federal Court of Australia Act; actual representative proceedings relating to personal injuries, including communication with actual or potential group members in the proceeding; legal rights and remedies available under federal legislation relating to personal injuries; limitation periods in relation to legal rights and remedies connected with personal injury; and legal duties connected with personal injuries, or the prevention thereof. Callinan It is unnecessary for me to repeat what I have said in earlier cases452 in relation to the inference by the Court in Lange v Australian Broadcasting Corporation453 of an implied constitutional freedom of communication. I adhere to that. For present purposes I will proceed, as I did in those cases, upon the assumption that the decision in Lange accords with the Constitution and that I am bound to apply it. In Lange454 the Court said this: "First, does the law effectively burden freedom of communication about government or political matters either in its terms, operation or effect? Second, if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and the procedure prescribed by s 128 for submitting a proposed amendment of the Constitution to the informed decision of the people (hereafter collectively 'the system of government prescribed by the Constitution'). If the first question is answered 'yes' and the second is answered 'no', the law is invalid." (footnotes omitted) The test as propounded in that passage really raises I think these questions: what is a "government or political matter"; how is the communication in question to be characterised; and if the communication is of a government or political matter, is it nonetheless appropriate and adapted to serve a legitimate purpose, the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government, and the holding of a referendum under s 128 of the Constitution. In a modern democratic community such as Australia there will always be many self-interest, single, and multiple issue groups pressing governments, both State and federal, to legislate for, and regulate practically every form of temporal Utopia imaginable. Some would seek to make every wish and hope, however 452 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 338-339 [348]; Roberts v Bass (2002) 212 CLR 1 at 101-102 [285]; Coleman v Power (2004) 78 ALJR 1166 at 1219 [289]; 209 ALR 182 at 255; Mulholland v Australian Electoral Commission (2004) 78 ALJR 1279 at 1345 [322]; 209 ALR 582 at 670. 453 (1997) 189 CLR 520. 454 (1997) 189 CLR 520 at 567-568. Callinan personal or idiosyncratic, a government or political matter455. But there must, in the practical world, be some limits. Take as one example discourse on religion. In Australia compulsory secularity in government and other affairs is confined to the affairs of the Commonwealth Government. It is possible that a State might seek to make laws of the kind that s 116456 of the Constitution prohibits the Commonwealth from making. Perhaps even religion could therefore be, or come to be regarded as a political matter. The expression "government or political matter", which is not part of the text of the Constitution and lacks therefore any contextual anchor in it, has nonetheless to be given content. If there were no practical limits to the freedom expounded in Lange the concept of government or political matters would be absolute and unbounded, as wide as, or even wider in operation than, the First Amendment457 to the Constitution of the United States. The form in which this Court posed what the Justices described as the second question in the passage quoted from Lange bears upon, by qualifying, the concept earlier referred to, of a government or political matter. The qualification is that, for the purposes of the freedom, a government or political matter must, in effect, be of real significance to the election of parliamentarians, or the maintenance of responsible and representative government, or the conduct of a referendum pursuant to s 128 of the Constitution. This follows also from the emphasis that this Court put elsewhere in Lange458 upon those provisions in the Constitution that govern the election of senators and members of the House of Representatives, and for the need for protected communications to be ones having a real and practical capacity to interfere with politicians, their free election, and the exercise of their constitutional rights and powers. 455 The Dutch theologian, H M Kuitert, developed the theme, "everything is politics but politics is not everything" in Kuitert, Everything is Politics but Politics is not Everything, (1985). 456 "The Commonwealth shall not make any law for establishing any religion, or for imposing any religious observance, or for prohibiting the free exercise of any religion, and no religious test shall be required as a qualification for any office or public trust under the Commonwealth." 457 "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." 458 (1997) 189 CLR 520 at 559-562. Callinan None of the communications proposed, or indeed anything like them, answer any acceptable practical description or definition of a government or political matter. It would be fanciful to suggest otherwise. It is unimaginable that they could possibly interfere with electors, free elections or an open referendum, or the legitimate exercise of elected politicians' rights and powers. I questioned during argument the status and relevance of a document annexed to the special case, and therefore before the Court, and described as a Report to the National Competition Council on the Application of National Competition Policy in New South Wales made in March 2003. The plaintiffs insisted that the Court could and should have regard to it, even though it is, in my view, adverse to them. It is not of course a document that can be used for the purpose of construing the contested provisions, but it does give some insight into the intention, and intended reach of the contested provisions, and the perceived problem which the New South Wales legislature sought to overcome. The report said this: "The New South Wales restrictions on advertising personal injury services were introduced in response to the problem of reduced access to affordable public liability insurance. The New South Wales Government is moving to strengthen these restrictions as a number of practitioners have sought to circumvent these restrictions. While the causes of this are complex (including the size of compensation claims, the pricing and investment practices of insurance companies including under-pricing in the past, lower investment returns for insurers and rising reinsurance costs) one of the factors that led to increasing premiums appears to have been the sharp rise in the number of public liability claims. Evidence of the growth in such claims was provided in last year's report to the NCC. Further evidence has since been presented to the national Ministerial meetings on public liability insurance and to a joint sitting of the New South Wales Parliament. The cost of such claims is also a significant issue. At the meeting of Ministers on 15 November 2002, PriceWaterhouseCoopers Actuarial advised that claims up to $100,000 comprised approximately 45% of the cost of claims overall. At the joint sitting of the New South Wales Parliament on 18 September 2002, Trowbridge Consulting noted the disproportionate impact that claims in the $20,000 to $100,000 bracket had on the costs flowing from public liability claims. Trowbridge also noted that there had been a significant increase in public liability litigation in New South Wales when compared with other jurisdictions. Callinan The New South Wales Government considers that one of the reasons for the growth in small claims is that advertising by some lawyers encourages people to make personal injury claims. Some of this advertising may have encouraged people to make a claim, regardless of the seriousness of their injury, their genuine need for compensation or the real merits of their claim. Given limits to the capacity of the justice system and the growth in the number of claims, advertising restrictions may also regulate demand for litigation relative to that for other less costly forms of settling disputes or resolving grievances. This will assist to limit the negative externalities arising from increasing numbers of filed claims, in particular non- meritorious claims, which can contribute in court administration and impose efficiency costs that are ultimately borne by the wider community. jams log Any restrictive impact of the advertising rules in New South Wales is outweighed by the potential for a future positive impact on levels of litigiousness in the personal injury area. On balance, the public interest is best served by imposing reasonable restrictions on this type of advertising. The Prime Minister of Australia also described the original removal of advertising restrictions on lawyers as a 'disastrous mistake' to the Commonwealth Parliament on 14 March 2002. The Prime Minister made this statement in the context of answering a question regarding the public liability crisis. The Prime Minister stated that the removal of restrictions has contributed to the 'growth of a litigious mentality in our society'. He also noted more generally in relation to restrictions on litigation that '[w]e cannot have it both ways, and society has got to decide where the balance is struck'. If pressure on insurance premiums and rates of litigation are alleviated by the national process of reform presently underway, including tort law reforms at New South Wales level, the need for these advertising restrictions can then be reviewed. The New South Wales Government considers, however, that the restrictions imposed are critical at this time in the broader interest of the New South Wales community." The contested provisions do not, subject to one matter, on their proper construction, go beyond the solution of the problems identified, New South Wales State problems, of the proliferation of expensive and economically inefficient litigation, as the legislature saw it, in the courts of that State. Some of the language of the contested provisions is general, but it manifests no intention to reduce or obstruct the conduct of other litigation. The restriction in cl 139 applies to any barrister or solicitor practising in New South Wales. The restriction is upon a communication which refers to, or is Callinan connected with personal injury but the restriction is not absolute. Exceptions to it are stated in cl 140. Those matters have little or nothing to do with, or say about electors and their choice of potential representatives, or the conduct of responsible and representative government by elected politicians. And even if they did, they in no way interfere with them, and accordingly impose no burden upon communications of the kind which the implication seeks to protect. The contested provisions in any event, pass the other test posed in Lange. They are, in language, clear intent, and effect, reasonably appropriate and adapted to the legitimate end of stemming what the Parliament of New South Wales considers to be an unacceptable tide of litigation of a particular kind in that State. True it is that the courts may be described as the third arm of government and that access to them is fundamental to democracy. But that does not mean that any person may litigate every difference or dispute in any court at any time. Legislatures both State and federal regulate, indeed restrict access to courts in many ways. The number of judges and courts are matters ultimately of legislative mandate, as are the causes, statutory or otherwise, of action which may be pursued, the jurisdictions in which they may be pursued, the ways, according to the practice rules, in which they must be pursued, and the limitation periods within which they must be brought. Legislatures also frequently restrict or limit access to courts of appeal. The need for special leave to appeal to this Court is an obvious case in point. It may be accepted that communications about the desirability or otherwise of restrictions upon the right to litigate to which I have just referred may be communications about government or political matters, but that in general is not characteristic of the communications here. Rather, they are communications primarily (but not of course exclusively) aimed to encourage, indeed on one view, to incite people to sue for personal injuries. It is difficult to see why, if legislatures may restrict access to the courts, they may not equally restrict advertising designed to encourage people to go to court. The proper characterisation of the contested provisions is as laws to restrict lawyers from soliciting clients, by communications to the public, inviting or encouraging them to sue in the courts. I do not confine the characterisation to suits for damages for personal injuries because, as the plaintiffs and the Attorneys-General correctly point out, the invitations to sue, can be read as invitations to sue for other than damages for personal injuries, and the contested provisions may also restrict communications about those other. There is also this. As I said in Coleman v Power459 the constitutional implication which this Court propounded in Lange and the freedom to which it is 459 (2004) 78 ALJR 1166 at 1219-1220 [290]-[293]; 209 ALR 182 at 255-256. Callinan said to give rise should be invoked only when it is necessary to do so, and when the burden can be seen to be a burden upon what is necessary for the effective operation of the system of responsible and representative government. It is not irrelevant that the targeted publications here are not exclusively but substantially commercially motivated. This Court in Theophanous v Herald & Weekly Times Ltd460 said that speech "which is simply aimed at selling goods and services and enhancing profit-making activities will ordinarily fall outside the area of constitutional protection. Commercial speech without political content 'says nothing about how people are governed or how they should govern themselves'." By any of the criteria stated in, and according to any available formulation of the tests in Lange, the contested provisions do not offend any constitutional implication from the principles stated in that case. Does Pt 14 infringe the freedom of interstate intercourse or, alternatively, trade and commerce guaranteed by s 92 of the Constitution? (Question 1(c)) The question whether the contested provisions infringe s 92 of the Constitution is barely, if at all, arguable and falls to be answered on the basis propounded in Cole v Whitfield461 which was squarely concerned with the operation of s 92 of the Constitution and the correctness of which was not challenged here. The Regulations are not aimed any more at interstate trade, commerce, and intercourse than they are at the effective operation of representative and responsible government. They are, as cl 139 makes clear, aimed at preventing a barrister or solicitor, that is a lawyer in, or practising in New South Wales, from advertising legal services for the pursuit of claims for personal injuries in that State. This follows from the ordinary limits upon the extra-territoriality of State legislation and the narrow and precise definition of barristers and solicitors for the purposes of the contested provisions: a legal practitioner who holds a current practising certificate as a barrister, or an interstate legal practitioner who practises as a barrister in this State" and, a legal practitioner who holds a current practising certificate as a solicitor and barrister, or 460 (1994) 182 CLR 104 at 124-125 per Mason CJ, Toohey and Gaudron JJ. 461 (1988) 165 CLR 360. Callinan an interstate legal practitioner who practises as a solicitor and barrister in this State". It is not suggested that the contested provisions are incapable of having some conceivable effect on advertisements originating, or read outside the State of New South Wales. They are however laws which have as their real object, the prescription or proscription, in a non-discriminatory way, of a particular kind of professional conduct in, or in relation to litigation in the courts of New South Wales462. Even if the advertisements were sought to be published interstate in any relevant sense, their prohibition would not be an impediment to or a burden upon any freedom of interstate trade, commerce or intercourse. Nothing in the contested provisions prohibits or restricts the provision of legal services in New South Wales by personal injury practitioners, wherever situated. At most, they regulate the manner in which clients may be solicited by persons practising as solicitors or barristers in New South Wales. And nothing in them would operate to prevent the free passage of lawyers to and from other places in the Commonwealth to New South Wales. The position is the same whether the communications are made by profit or non-profit organisations and people, and whether they are involved in trade and commerce or not. Does any extra-territorial operation of them render the contested provisions invalid? (Questions 1(d) and (e)) This question also admits of one answer only, a negative one. Dixon J in Broken Hill South Ltd v Commissioner of Taxation (NSW)463 said this464: "[I]t is within the competence of the State legislature to make any fact, circumstance, occurrence or thing in or connected with the territory the occasion of the imposition upon any person concerned therein of a liability to taxation or of any other liability. It is also within the competence of the legislature to base the imposition of liability on no more than the relation of the person to the territory. The relation may consist in presence within the territory, residence, domicil, carrying on business there, or even remoter connections. If a connection exists, it is for the legislature to decide how far it should go in the exercise of its powers." 462 See Cole v Whitfield (1988) 165 CLR 360. 463 (1937) 56 CLR 337. 464 (1937) 56 CLR 337 at 375. Callinan Recently, in Mobil Oil Australia Pty Ltd v Victoria465 Gleeson CJ reiterated the liberality of the test of territorial legislative competence466: "The history, rationale and scope of territorial limitations on the legislative competence of State Parliaments was explained in Union Steamship Co of Australia Pty Ltd v King467. What was there described as a 'new dispensation' in s 2(1) of the Australia Act 1986 (Cth)468 was said perhaps to do no more than recognise what had already resulted from judicial decisions. Typical of such decisions was that of Gibbs J in Pearce v Florenca469, who pointed out that a power to make laws for the peace, order and good government of a State is not limited to laws which operate or apply only to persons or events within the State. Such a power requires a relevant territorial connection between the law and the State, but the test of relevance is to be applied liberally, and even a remote or general connection will suffice." The contested provisions here have much more than a remote or a general connexion with New South Wales. Their concern is with those who do, or would seek to practise in the regulated professions, and who therefore owe special duties to the courts of New South Wales, of solicitors and barristers of that State. The connexion is direct and close. The plaintiffs' arguments with respect to invalidity on the basis of any excessive extra-territorial operation also fail. Do the contested provisions infringe Chapter III of the Constitution or the principle of the rule of law? (Question 1(b)) Question 1(b) asks whether the contested provisions infringe Ch III of the Constitution and "the principle of the rule of law as given effect by the Constitution". There is no express provision of Ch III of the Constitution which in any way deals with, or even remotely touches upon advertising by lawyers (whether engaged in practice for profit or upon a non-profit basis) to solicit clients. 465 (2002) 211 CLR 1. 466 (2002) 211 CLR 1 at 22-23 [9]. 467 (1988) 166 CLR 1. 468 See also Australia Act 1986 (UK), s 2(1). 469 (1976) 135 CLR 507 at 517-518. Callinan In construing Ch III of the Constitution, and in particular, in accepting invitations from parties before it to search for implications from the Chapter it is as well for this Court to keep these matters in mind. The objects of Ch III are essentially these and these only: to establish this Court as a Federal Supreme Court; to ensure the independence and security of tenure of federal judges; to define the original and appellate jurisdiction of this Court; to recognise and necessarily thereby to "constitutionalise" the continued existence of, the State Supreme Courts; to confine appeals to the Privy Council; to empower the Parliament to make laws conferring rights to proceed in federal matters in the State and other federal courts; and to entrench trial by jury for federal indictable offences. The provisions of Ch III are, on their face, ample, explicit, concrete and clear, complete, and not such as to necessitate amplification by implication or otherwise. In Kable v Director of Public Prosecutions (NSW)470 this Court took the view that legislation detracting from the integrity, independence and impartiality of the Supreme Court of New South Wales as a court invested with federal jurisdiction, was incompatible with Ch III. That was tantamount to a holding that there should be inferred from Ch III an implication that non-judicial powers of a particular kind could not be exercised by any court which might exercise federal jurisdiction. That seems to me, with respect, to require the drawing of a very long bow. I would be unwilling to stretch the bow any further, as the plaintiffs here seek to have the Court do. In an essay, "The Interpretation of a Constitution in a Modern Liberal Democracy"471, Sir Anthony Mason acknowledged, in citing the following passage from the Engineers case, that there is in this country a judicial history of hostility to the making of constitutional implications except on a very restricted footing472. "The doctrine of 'implied prohibition' finds no place where the ordinary principles of construction are applied so as to discover in the actual terms of the instrument their expressed or necessarily implied meaning." Sir Anthony Mason went on, in the same essay, to say "implication is an essential and commonplace incident of orthodox interpretation"473. But that undoubtedly correct observation can, with respect, provide no foundation for a departure from the well-understood rules relating to implications, one of which has at least the 470 (1996) 189 CLR 51. 471 Mason, "The Interpretation of a Constitution in a Modern Liberal Democracy", in Sampford and Preston (eds), Interpreting Constitutions, (1996) 13 at 24. 472 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 at 155 per Knox CJ, Isaacs, Rich and Starke JJ. 473 Mason, "The Interpretation of a Constitution in a Modern Liberal Democracy", in Sampford and Preston (eds), Interpreting Constitutions, (1996) 13 at 25. Callinan same operation in statutory, and constitutional interpretation particularly, as in the interpretation of contracts as to which Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW said474: "Accordingly, the courts have been at pains to emphasize that it is not enough that it is reasonable to imply a term; it must be necessary to do so to give business efficacy to the contract. So in Heimann v The Commonwealth475 Jordan CJ, citing Bell v Lever Brothers Ltd476, stressed that in order to justify the importation of an implied term it is 'not sufficient that it would be reasonable to imply the term ... It must be clearly necessary'. To the same effect are the comments of Bowen LJ in The Moorcock477; Lord Esher MR in Hamlyn & Co v Wood & Co478; Lord Wilberforce in Irwin479; Scrutton LJ in Reigate v Union Manufacturing Co (Ramsbottom)480." (emphasis added) The particular, indeed rigorous, application of the "necessity rule" to the Australian Constitution is required by reason of a number of features unique to our Constitution and its composition: the prolonged and fully recorded debates and deliberations preceding it to which modern lawyers have ready access and which show clearly, in most instances, why proposals were adopted or discarded; the substantial public acceptance in Australia of the Constitution before its passage its generally comprehensive and explicit language; the availability of one, and one only mechanism for its amendment, a referendum under s 128; the reluctance, in many referenda of the people of Australia to change it; and, despite the last its enduring efficacy. the United Kingdom; the Parliament of through A case of this kind, in which the question posed, among other things, as to the expansiveness of the power of the Court itself, and the impact of its decisions upon the respective polities of the Federation, is an occasion for especial caution and restraint. 474 (1982) 149 CLR 337 at 346. 475 (1938) 38 SR (NSW) 691 at 695. 476 [1932] AC 161 at 226. 477 (1889) 14 PD 64 at 68. 478 [1891] 2 QB 488 at 491-492. 479 Liverpool City Council v Irwin [1977] AC 239 at 256. 480 [1918] 1 KB 592 at 605-606. Callinan In substance, the plaintiffs seek to set up in respect of Ch III an implication of the kind found by this Court in Lange. When it came to the point they had even more difficulty in formulating the implication contended for and in defining the sorts of circumstances attracting its application, than the courts have had in the cases since Lange481. In the end, the plaintiffs put the matter extraordinarily broadly in this way: "Chapter III, in particular sections 71, 73, 75, 76 and 77, requires for its effective operation that the people of the Commonwealth have the capacity, ability or freedom to ascertain their legal rights and to assert those legal rights before the courts there mentioned. The effective operation of that capacity, ability or freedom requires that they have the capacity or ability or freedom to communicate and particularly to receive such information or assistance as they may reasonably require for that to occur. The prohibition ... is one that extends to any law of the Commonwealth or of a State that burdens the assertion of legal rights before the courts, including the correlative communication to which we have referred, and does not ... go beyond what is necessary or appropriate and adapted for the preservation of an ordered society or the protection or vindication of legitimate claims of individuals in an ordered society." I cannot imagine that the prohibition of advertisements or letters of the kind proposed could in any way impair or inhibit the effective operation of Ch III of the Constitution. Restriction upon them does nothing to prevent the recognition and enforcement of rights under federal law or against the Commonwealth Executive. The contested provisions deal with a different topic, the banning or regulation of a particular form of advertising by particular people. the prohibited They apply communications the work of the courts will continue to be done in an uninhibited way and in the ordinary course. People with federal claims will remain free to pursue them and to engage whom they wish to do so on their behalf. The contested provisions do nothing to detract from the effective operation of Ch III of the Constitution. Their enactment is within the powers of New South Wales to make laws for the peace, order and good government of that State. to barristers and solicitors only. Absent 481 Coleman v Power (2004) 78 ALJR 1166; 209 ALR 182; Del Vecchio v Couchy [2002] QCA 9. Callinan the contested provisions Are (Question 1(f)) inconsistent with various federal laws? The plaintiffs argue that there are two categories of federal law, with which the contested provisions are in conflict, laws conferring substantive rights and remedies, and those that confer rights to legal representation. It follows, they say, that the contested provisions (which may not be sensibly read down) are invalid by reason of the operation of s 109482 of the Constitution. They point first to ss 52, 75AD, 82 and 86 of the Trade Practices Act 1974 (Cth) ("the TPA"), and then to ss 39(2) and 39B of the Judiciary Act 1903 (Cth) and Divs 1 and 2 of Pt III of the Federal Court of Australia Act 1976 (Cth) ("the FCA"). By ss 52(1) and 82(1) of the TPA the Commonwealth Parliament has legislated for a right of action for loss or damages caused by misleading or deceptive conduct. Section 75AD of the TPA creates a cause of action for "injuries" suffered because of a defect in goods supplied by a corporation. By s 86 the Commonwealth Parliament has conferred jurisdiction in the causes of action on the Federal Court, the Federal Magistrates Court and State courts within the limits of their own jurisdiction. The Federal Court is vested with all the powers and functions necessary to hear and determine them pursuant to Divs 1 and 2 of Pt III of the FCA. The causes of action created by the enactments referred to may be relied on in claims for damages for personal injury, as in the representative proceeding brought by the second plaintiff on behalf of Mr Darcy (see in particular s 75AD). The plaintiffs do accept however that the Commonwealth certainly did not intend to cover the field in relation to claims for personal injuries in State courts, or in relation to communications about claims for damages for personal injuries. They also accept that the federal laws are intended to operate in the setting of other laws, including State laws. Nonetheless, they argue that the contested provisions in their operation alter, impair or detract from the Commonwealth laws to which they have referred. I have already identified what I consider to be the correct characterisation of the contested provisions. That identification alone almost forecloses the plaintiffs' case based on inconsistency (s 109). There is no federal law, let alone any federal law covering this field, of the, or, an aspect of, the advertising of legal services for or in personal injuries cases, or other cases in which personal injury or the threat or risk of it may be a factor, in New South Wales. 482 Section 109 of the Constitution provides: Inconsistency of laws When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid." Callinan The notion that a restriction upon advertising by solicitors soliciting personally injured or other clients, alters, impairs or detracts from the pursuit of remedies made available under federal legislation is, I think, far-fetched. People pursuing them are in no way impeded from doing so because lawyers may be subject to State rules about the way in which they may promote themselves or offer their services. Indeed, a restrictive rule about advertising is much less likely to have an obstructive effect upon the making of federal claims, than a rule that the plaintiff must pay a filing fee, or that a plaintiff in a remote area must file his or her process in a metropolitan registry, or that in an action in a State court exercising federal jurisdiction, the rules of court may impose more onerous procedural obligations on plaintiffs than in a federal court. The Commonwealth may well be able legislate partially, or exhaustively if it wishes, for the advertising of federal causes of action, rights to pursue them, and rules relating to, legal practice in federal courts, and, arguably, in State courts exercising federal jurisdiction, but it has not done so here. The provisions of the TPA to which the plaintiffs point create causes of action. A rule about non-advertising cannot defeat, or indeed in any way even impinge upon those causes of action or remedies. And ss 39(2) and 39B(1A)(c) of the Judiciary Act, which do no more than invest federal jurisdiction in State courts and confer jurisdiction upon federal courts are similarly unaffected. The functions of these courts will be unaffected by the proscription of relevant communications and their like. There are some further points which are made, correctly in my opinion, by the Commonwealth. The contested provisions do not inhibit communications between lawyers and their current clients. Nor do they prevent prospective litigants from retaining lawyers. The provisions do not prevent lawyers from advertising their services generally. The contested provisions prohibit only the advertising of personal injury legal services by particular lawyers. In no real sense does the prohibition render persons who may have rights enforceable in federal jurisdiction incapable of being informed about them. The plaintiffs also say that ss 55A, 55B, 55D and 78 of the Judiciary Act are in conflict with the contested provisions. Section 78 of the Judiciary Act does no more than give litigants in all courts exercising federal jurisdiction the right to be represented by such legal practitioners as "by this Act or the laws and rules regulating the practice of those Courts respectively are permitted to appear therein". Representation is one thing, soliciting people to engage particular representation is another. Section 55A permits persons admitted to legal practice in the High Court to practise in any federal court. Section 55B entitles persons who are entitled to practise in the Supreme Court of any State or Territory to practise in any federal court (sub-s (1)), any courts of a State in relation to the exercise by that court of federal jurisdiction (sub-s (4)(a)), and in any court of Callinan any internal Territory in relation to the exercise of "federal-type jurisdiction" (sub-s (4)(b)). And s 55D has the effect of entitling persons on the roll of practitioners of the High Court, a State Supreme Court or a Territory Supreme Court to practise in any Territory that does not have a system of admitting practitioners to practice before that Territory's Supreme Court. The plaintiffs further argue that ss 55A, 55B and 55D of the Judiciary Act have expressly provided the extent to which State/Territory law may affect their operation; relevantly, in creating a register of interstate practitioners under s 55B. That argument should be rejected. The entitlement to practise stated in ss 55A, 55B and 55D operates, as the Commonwealth submits, upon a range of legislative schemes which from time to time regulate the right to practise in State and Territory courts: the Commonwealth provisions are supplementary to or cumulative upon State laws regulating the legal profession. Furthermore, a right to practise is by no means the same as a right to advertise that a practitioner wishes to practise in a particular area. Sections 55A, 55B and 55D of the Judiciary Act operate upon, and assume the existence of, the State and Territory laws regulating the legal profession. Accordingly, provisions such as the contested provisions, which apply equally to State and federal matters, are not inconsistent with those Commonwealth provisions. to which the plaintiffs point, The same reasoning leads to the same conclusion with respect to the other Commonwealth enactments the Safety, Rehabilitation and Compensation Act 1988 (Cth), the Administrative Appeals Tribunal Act 1975 (Cth), the Superannuation (Resolution of Complaints) Act 1993 (Cth) and the Superannuation Industry (Supervision) Act 1993 (Cth). None of the provisions of these refer to or relate directly or indirectly to advertising of services by lawyers. The contested provisions present no obstacles to their operation. Whether lawyers can or cannot communicate that they wish to undertake the pursuit of claims under these enactments does not alter, impair or detract from the operation or objects of them, or the pursuit of federal claims or rights to which they give rise. The contested provisions pass both of the tests stated by Mason J in New South Wales v The Commonwealth and Carlton483: "[The 'alter, impair or detract from'] test may be applied so as to produce inconsistency in two ways. It may appear that the legal operation of the two laws is such that the State law alters, impairs or detracts from rights and obligations created by the Commonwealth law. Or it may 483 (1983) 151 CLR 302 at 330. Callinan appear that the State law alters, impairs or detracts from the object or purpose sought to be achieved by the Commonwealth law. In each situation there is a case for saying that the intention underlying the Commonwealth law was that it should operate to the exclusion of any State law having that effect." That and other statements484 indicate that a slight or marginal or insignificant impact of a State law upon a federal law will not give rise to a constitutional inconsistency. The impact must be one of some significance and such as would have the effect, if the State law were valid, of precluding, overriding or rendering ineffective an actual exercise of federal jurisdiction485. But as I have said, I do not think that even a marginal impact is made here by the contested provisions. I would answer the questions as follows. Is Part 14 of the Regulation invalid in whole or in part by reason that it: impermissibly infringes the freedom of communication on political and governmental matters guaranteed by the Constitution; impermissibly infringes the requirements of Ch III of the Constitution and of the principle of the rule of law as given effect by the Constitution; impermissibly infringes the freedom of interstate intercourse or alternatively trade and commerce guaranteed by s 92 of the Constitution; exceeds the legislative powers of the State of New South Wales by virtue of the nature of its extra-territorial operation; 484 Australian Mutual Provident Society v Goulden (1986) 160 CLR 330 at 339. 485 P v P (1994) 181 CLR 583 at 603. Callinan exceeds any powers to make regulations under the Legal Profession Act, by virtue of the nature of its extra-territorial operation; inconsistent with jurisdiction conferred, regulated or provided for by: the rights, duties, remedies and ss 39(2), 39B, 55A, 55B, 55D, and 78 of the Judiciary Act 1903 (Cth); (B) Divisions 1 and 2 of Part III and Part IVA of the Federal Court of Australia Act 1976 (Cth); ss 52, 53(a), 74B, 74D, 75AD, 82, 86 and 87 of the Trade Practices Act 1974 (Cth); Parts II, IV, V and VI of the Safety, Rehabilitation and Compensation Act 1988 (Cth), together with Parts IV and IVA of the Administrative Appeals Tribunal Act 1975 (Cth); Parts 4, 6 and 7 of the Superannuation (Resolution of Complaints) Act 1993 (Cth), together with Parts 27 and 28 of the Superannuation Industry (Supervision) Act 1993 (Cth). If yes to any part of (1), does Part 14 of the Regulation validly prohibit: the First Plaintiff from publishing an advertisement in the form of Annexure A to the Amended Statement of Claim; the Second Plaintiff from publishing: an advertisement advertisements which are Annexure B Amended Statement of Claim; form of the the three the on its website, material substantially in the form of the material contained in Annexures C and D to the Amended Statement of Claim; (iii) a letter in the form of Annexure E to the Amended Statement of Claim to group members of the group Callinan on behalf of whom proceedings are brought in Federal Court proceedings N932 of 2001. the Third Plaintiff from publishing an advertisement in the form of Annexure F to the Amended Statement of Claim? Unnecessary to answer. If yes to any part of (2), ought the declaratory relief sought in the Amended Statement of Claim be withheld in the discretion of the Court by reason of the facts set out in paragraph 17 in relation to the advertisements which the plaintiffs say they wish to publish but which have not in fact been published? Unnecessary to answer. There is no question of costs raised in the special case. That issue should be determined by the Justice disposing of the action.

HIGH COURT OF AUSTRALIA MILITARY REHABILITATION AND COMPENSATION COMMISSION APPELLANT AND RESPONDENT Military Rehabilitation and Compensation Commission v May [2016] HCA 19 11 May 2016 ORDER Appeal allowed. Set aside paragraphs 2, 3(a) and 3(b) of the order of the Full Court of the Federal Court of Australia made on 30 June 2015, and in their place order that the appeal be dismissed. The appellant pay the respondent's costs of the appeal to this Court. On appeal from the Federal Court of Australia Representation P J Hanks QC with P G Woulfe for the appellant (instructed by Moray & R G McHugh SC with B K Nolan for the respondent (instructed by Legal Minds) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Military Rehabilitation and Compensation Commission v May Workers compensation – Where employee vaccinated in course of employment and later felt unwell, described as "vertigo" – Where evidence did not establish nature and incidents of any physiological or psychiatric change – Whether employee suffered "injury" within meaning of s 4(1) of Safety, Rehabilitation and Compensation Act 1988 (Cth). Words and phrases – "ailment", "disease", "disturbance of the normal physiological state", "injury", "injury (other than a disease)", "physiological change", "psychiatric change", "sudden or identifiable". Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 4(1), 14(1). FRENCH CJ, KIEFEL, NETTLE AND GORDON JJ. The respondent, Mr May, served in the Royal Australian Air Force ("the RAAF") before being discharged. Mr May had become "significantly disabled" by dizziness. This "cut short what might have been a very promising career as a pilot in the RAAF"1. Mr May applied for compensation under s 14(1) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Act") "in respect of an injury suffered by an employee [where] the injury results in death, incapacity for work, or impairment" (emphasis added). The question on this appeal is whether Mr May's dizziness was an "injury" for the purposes of the Act and therefore compensable under s 14 of the Act. The Full Court said it was. For the reasons that follow, that conclusion cannot be supported and the appeal must be allowed. Legislative framework This appeal is concerned with the Act as at 29 November 20022, being the date Mr May lodged his claim. Section 14 of the Act, entitled "Compensation for injuries", relevantly provided: "(1) Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment." (emphasis added) "[I]njury" was defined in s 4(1) of the Act to mean: a disease suffered by an employee; or an injury (other than a disease) suffered by an employee, being a physical or mental injury arising out of, or in the course of, the employee's employment; or 1 Re May and Military Rehabilitation and Compensation Commission [2011] AATA 2 All references in these reasons are to the Act as at that date: see the compilation prepared as at 13 September 2002, taking into account amendments up to Act No 144 of 2001. Nettle Gordon an aggravation of a physical or mental injury (other than a disease) suffered by an employee (whether or not that injury arose out of, or in the course of, the employee's employment), being an aggravation that arose out of, or in the course of, that employment; but does not include any such disease, injury or aggravation suffered by an employee as a result of reasonable disciplinary action taken against the employee or failure by the employee to obtain a promotion, transfer or benefit in connection with his or her employment." (emphasis added) "[D]isease" was defined in s 4(1) to mean: any ailment suffered by an employee; or the aggravation of any such ailment; being an ailment or an aggravation that was contributed to in a material degree by the employee's employment by the Commonwealth …" (emphasis added) "[A]ilment" was defined in s 4(1) to mean "any physical or mental ailment, disorder, defect or morbid condition (whether of sudden onset or gradual development)". Issues Mr May did not contend that he suffered a "disease" within the meaning of par (a) of the definition of "injury" in s 4(1) of the Act. Rather, he claimed he suffered an "injury (other than a disease)" within par (b) of the definition of "injury" in s 4(1) of the Act. This appeal concerns the proper construction of the phrase "injury (other than a disease)" in par (b) of the definition of "injury" in s 4(1) of the Act. That question of construction is determined by reference to the text, context and purpose of the Act3. 3 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[71]; [1998] HCA 28; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]; [2009] HCA 41. Nettle Gordon Facts Mr May was born in 1975. On 6 November 1998, he enlisted in the RAAF. At that time, he was healthy and fit. He was discharged on 30 July 2004 at the rank of Officer Cadet. Between 10 November 1998 and 30 March 2000 (inclusive), in the course of his employment with the RAAF, Mr May was required to undergo a series of vaccinations. He said that he suffered a series of adverse reactions to these vaccinations. On 29 November 2002, Mr May applied under s 14 of the Act for compensation in respect of "low immunity, fatigue, illnesses, dizziness – immune system/whole body", which, he maintained, he sustained as a result of the vaccinations he received while he was employed with the RAAF. On 11 March 2003, a delegate of the appellant denied Mr May's claim, noting that specialists who had examined him had been unable to diagnose any specific condition or determine a cause for his symptoms, and the delegate was therefore unable to connect the claimed condition with his RAAF service ("the determination"). In April 2010, following an application by Mr May, the appellant reconsidered but affirmed the determination. Previous decisions Administrative Appeals Tribunal ("the Tribunal") In 2010, Mr May applied to the Tribunal for a review of that second decision. The Tribunal received extensive medical evidence about Mr May's medical history. The medical evidence relating to his "vertigo" included reports from a number of experts. Dr Barrie, an ear, nose and throat ("ENT") surgeon, reported that "[p]hysical examination reveals normal tests of balance with no gaze nystagmus"4. Dr Halmagyi, a neurophysiologist, "could find no vestibular abnormalities" and no "pathological cause for his minor vestibular symptoms"5. Dr Halmagyi noted that he found no validated example of immunisation causing 4 May [2011] AATA 886 at [25]. 5 May [2011] AATA 886 at [25]. Nettle Gordon vestibular problems and had personally never seen someone in whom he attributed their vestibular problems to an immunisation. Dr Tonkin, an ENT specialist, initially found mild imbalance inconsistent both with Mr May's symptoms and with Eustachian tube dysfunction. Further test results were all negative, including a balance test, which was normal6. Professor Fagan, a second ENT surgeon, reported he could not "find any evidence of any vestibular or central nervous system abnormality"7. Dr Kertesz, a third ENT surgeon, organised tests, the results of which were within normal limits, and noted no diagnosis8. Dr Pohl, a fourth ENT surgeon, noted Mr May's history of imbalance and vertigo associated with nausea and then described his examination findings as unremarkable. A subsequent MRA scan proved normal and Dr Pohl concluded that he was "unable to find a cause for [Mr May's] imbalance and dizziness"9. Dr Lowy, an occupational physician, reported that Mr May's "constellation of symptoms … is not consistent with substantial pathology within his vestibular system"10. Dr Dowe, a fifth ENT surgeon, agreed. Dr Moore, a psychiatrist, concluded that Mr May "does not suffer from a diagnosable psychiatric disorder" and that "no psychiatric disturbance … could better account for his symptoms"11. The Tribunal had "particular regard to" the evidence of Dr Loblay, a physician and the Director of the Allergy Unit at the Royal Prince Alfred Hospital, who gave evidence at the hearing and had many years' experience in the investigation and treatment of immune reactions, both to drugs and to vaccines12. The Tribunal found his evidence convincing and noted his opinion that it is "very unlikely that Mr May has suffered from an immunologically mediated adverse reaction to the vaccinations he was given"13. Dr Loblay also 6 May [2011] AATA 886 at [27]. 7 May [2011] AATA 886 at [28]. 8 May [2011] AATA 886 at [29]. 9 May [2011] AATA 886 at [30]. 10 May [2011] AATA 886 at [31]. 11 May [2011] AATA 886 at [31]. 12 May [2011] AATA 886 at [56]. 13 May [2011] AATA 886 at [56]. Nettle Gordon expressed the view that Mr May's symptoms "could be categorized as a 'functional somatic disorder'"14. Dr Loblay opined that although Mr May was not malingering, his history was "not characteristic of an immune reaction to vaccinations"15 and in his case there was "no biological mechanism consistent with a vaccine generating an immune response"16. Dr Loblay also opined that it was "not uncommon for a person to have symptoms without there being an explanation for the symptoms and without there being a diagnosable disease" and that Mr May's condition was an "illness", being a subjective description of his symptoms17. The absence of damage to the vestibular system meant that Mr May's "vertigo" could not be linked to an immunological reaction. The Tribunal accepted that Mr May was (and became shortly after joining the RAAF) "significantly disabled" by his condition18. The Tribunal "loosely described" Mr May's "condition" as "vertigo"19. Mr May had stated that, following the vaccinations on 10 November 1998, he began to experience a swollen tongue within 30 to 60 minutes, and he felt dizzy and experienced nausea and diarrhoea. The clinical notes at the time indicated that his treating doctors thought he was "probably suffering from a viral illness and possibly bacterial gastroenteritis"20. After that time, he had a history of infections, particularly of the upper respiratory tract. However, the Tribunal accepted that none of the investigations undertaken by specialists had proved definitive and none of the specialist reports had attributed any pathological cause to the "vertigo"21. What then were the findings of fact made by the Tribunal? 14 May [2011] AATA 886 at [32]. 15 May [2011] AATA 886 at [34]. 16 May [2011] AATA 886 at [35]. 17 May [2011] AATA 886 at [35]. 18 May [2011] AATA 886 at [48]. 19 May [2011] AATA 886 at [61]. 20 May [2011] AATA 886 at [53]. 21 May [2011] AATA 886 at [55]. Nettle Gordon First, there was a temporal relationship between the vaccinations and the symptoms described by Mr May (swelling of the tongue, dizziness, nausea and diarrhoea) but there was no medical explanation for his "illness" in the period following the vaccinations, where the "illness" was what Dr Loblay described as a "subjective description of a collection of symptoms"22. Second, there was no objective evidence of Mr May's swollen tongue or dizziness, or pathology to support his account of his symptoms, apart from diarrhoea and upper respiratory tract infections, which were treated and subsequently resolved. Nor was there any objective evidence connecting those conditions with the vaccinations23. Third, there was no biological mechanism consistent with a vaccine generating an immune response. Although doctors diagnosed Mr May at various times as suffering from gastroenteritis and bacterial infections, there was no objective evidence connecting these conditions (which did not appear to be the current cause of his incapacity) with the vaccinations he received24. Fourth, there was no objective evidence of Mr May suffering what the Tribunal had "loosely described as ... vertigo" in the period following his vaccinations; nor was there any substantial pathology to explain his symptoms25. Fifth, although symptoms first emerged a short time after the vaccinations, the medical evidence (for example, of Dr Halmagyi and Dr Loblay) "discount[ed] the possibility" of any connection between the vaccinations given to Mr May and a physical injury that Mr May suffered26. Sixth, although Mr May was "significantly disabled" by "vertigo", the medical evidence indicated a lack of any pathology consistent with his symptoms, which meant that no diagnosis could be made27. 22 May [2011] AATA 886 at [58]. 23 May [2011] AATA 886 at [59]. 24 May [2011] AATA 886 at [60]. 25 May [2011] AATA 886 at [61]. 26 May [2011] AATA 886 at [62]. 27 May [2011] AATA 886 at [62]. Nettle Gordon These findings are important. It will be necessary to return to them. The Tribunal concluded that Mr May had failed to establish his case: he had not demonstrated that he had suffered a physical injury amounting to a "sudden or identifiable physiological change"28 in the normal functioning of the body or its organs attributable to the vaccinations received while serving in the RAAF29. Therefore, Mr May had not suffered an "injury (other than a disease)" for the purposes of par (b) of the definition of "injury" in s 4(1) of the Act. The Tribunal also held that he had not suffered a "disease" within par (a) of the definition of "injury" in s 4(1) of the Act30. Pursuant to s 43 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"), the decision under review was affirmed. Primary judge Mr May then appealed to the Federal Court of Australia under s 44 of the AAT Act. Buchanan J concluded that the Tribunal had given careful consideration to Mr May's "thesis" for his ongoing difficulties but found that the thesis had "very little support in the medical evidence" and in fact was contradicted by the Tribunal's evaluation of that medical evidence31. Buchanan J dismissed the appeal, finding no legal error. Full Court of the Federal Court Mr May then appealed to the Full Court of the Federal Court under s 24 of the Federal Court of Australia Act 1976 (Cth) and, in addition, brought an application to that Court for judicial review of the Tribunal's decision, pursuant to s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B of the Judiciary Act 1903 (Cth). 28 See Kennedy Cleaning Services Pty Ltd v Petkoska (2000) 200 CLR 286 at 298 [35]; [2000] HCA 45. 29 May [2011] AATA 886 at [63]. 30 May [2011] AATA 886 at [64]-[65]. 31 May v Military Rehabilitation and Compensation Commission [2014] FCA 406 at Nettle Gordon The central question in those proceedings was the proper construction of "injury" in s 4(1) of the Act and, in particular, whether the statutory concept of "injury" required a "sudden or identifiable physiological change"32. The Full Court found that the Tribunal made an error in reading "injury" as requiring a "sudden or identifiable physiological change" in every case33. The Full Court concluded that the inquiry posed by the statutory definition of injury was, instead, "whether the person has experienced a physiological change or disturbance of the normal physiological state (physical or mental) that can be said to be an alteration from the functioning of a healthy body or mind"34. The Full Court also held that the Tribunal made an error in considering that there was a requirement for a "diagnosis or medically ascertained cause" for there to be an "injury"35. Instead, the Full Court found that the Tribunal should have recognised that "injury" could be established by the drawing of inferences on a common-sense basis, independent of medical diagnosis36. The Full Court then held that the Tribunal was also wrong to insist upon a causal link between Mr May's vertigo and the vaccinations. The Full Court found that an injury under the Act will occur in the course of employment where The Full Court concluded that there was no debate that Mr May was required to undergo the vaccinations as part of his employment with the RAAF and that he did so; that physical effects arose during performance of his duties38; 32 See Kennedy Cleaning (2000) 200 CLR 286 at 298 [35]. 33 May v Military Rehabilitation and Compensation Commission (2015) 233 FCR 397 34 May (2015) 233 FCR 397 at 444-445 [209]. See also at 425 [110]. 35 May (2015) 233 FCR 397 at 444-445 [209]. See also at 445 [211], 446 [216], 36 May (2015) 233 FCR 397 at 446-447 [217]-[218], [220]. 37 May (2015) 233 FCR 397 at 447-448 [222]-[224]. 38 May (2015) 233 FCR 397 at 448 [224]. Nettle Gordon and that the Tribunal only needed to be satisfied that Mr May suffered an injury during the "protected period of work hours"39. The Full Court allowed the appeal, set aside the orders of Buchanan J and, in their place, relevantly ordered that the decision of the Tribunal be set aside and the matter be remitted to the Tribunal for determination according to law. The matter was remitted to the Tribunal to consider again whether Mr May has suffered an "injury" within the meaning of s 4(1) of the Act and whether the injury arose out of or in the course of his employment. The Full Court recognised that, given the Tribunal's findings about Mr May's vertigo, this matter came "close to a case where there may only be one answer"40. However, the Full Court accepted that a differently constituted Tribunal, properly instructed about what needs to be established for Mr May's "vertigo" to come within the concept of "injury", may take a different approach to significant aspects of the evidence, including Mr May's accounts of what he experienced41. The Full Court dismissed the application for judicial review under the Administrative Decisions (Judicial Review) Act and the Judiciary Act as unnecessary. Contentions On appeal to this Court, the appellant contended that the Full Court applied an incorrect concept of "injury (other than a disease)" and did not recognise that the Act treats "disease" and "injury (other than a disease)" as separate but related bases of liability. In particular, the appellant contended that the Full Court was wrong to hold that "injury (other than a disease)" did not require a "sudden or identifiable physiological change". Mr May contended that there was nothing in the context, structure or purpose of the Act to require a "sudden or identifiable physiological change" and that the basic notion of "physical injury" is "something which involves a harmful effect on the body" or "a disturbance of the normal physiological state which may produce physical incapacity and suffering or death". 39 May (2015) 233 FCR 397 at 448 [226] quoting Kennedy Cleaning (2000) 200 CLR 40 May (2015) 233 FCR 397 at 449 [233]. 41 May (2015) 233 FCR 397 at 449 [233]. Nettle Gordon Meaning of "injury" under s 4(1) of the Act As seen earlier, subject to an exception for disciplinary action and other matters not now relevant, "injury" was defined in s 4(1) of the Act to mean: a disease suffered by an employee; or an injury (other than a disease) suffered by an employee, being a physical or mental injury arising out of, or in the course of, the employee's employment; or an aggravation of a physical or mental injury (other than a disease) suffered by an employee (whether or not that injury arose out of, or in the course of, the employee's employment), being an aggravation that arose out of, or in the course of, that employment; ..." (emphasis added) The set of conditions answering the definition of "injury" in the Act relevantly comprises two sub-sets, "disease"42 and "injury (other than a disease)"43, the latter sometimes referred to, not necessarily helpfully, as injury simpliciter. They comprise separate but related bases of liability44. Each has a different meaning in the statutory scheme. As appears from the definition of "disease", a "disease" for the purposes of the Act must be an ailment or an aggravation of an ailment. That is not sufficient to establish the existence of a disease. The ailment or aggravation thereof has to have been contributed to in a material degree by the employee's employment by the Commonwealth. An "injury (other than a disease)" covers the other sub-set of "injury"45. Various aspects of this limb of the definition of "injury" should be observed. First, the phrase "other than a disease" means that if an employee establishes that 42 par (a) of the definition of "injury" in s 4(1). 43 pars (b) and (c) of the definition of "injury" in s 4(1). 44 See also ss 6 and 7 of the Act, which define certain circumstances in which the employment connections for "injury" and "disease" will be satisfied. 45 par (b) of the definition of "injury" in s 4(1). Nettle Gordon they have a "disease" within par (a) of the definition of "injury", there is no need to consider par (b). Second, an "injury (other than a disease)" suffered by an employee must be "a physical or mental injury arising out of, or in the course of, the employee's employment"46 (emphasis added). That is to say, the physical or mental injury has to have a causal or temporal connection with the employee's employment. Third, that need for a causal or temporal connection in respect of a "physical or mental injury" in par (b) directly raises the question – what does "injury" mean in that paragraph? "Injury" in par (b) is used in its "primary" sense. As Gleeson CJ and Kirby J explained in Kennedy Cleaning Services Pty Ltd v Petkoska, if "something … can be described as a sudden and ascertainable or dramatic physiological change or disturbance of the normal physiological state, it may qualify for characterisation as an 'injury' in the primary sense of that word"47 (emphasis added). That physiological change or disturbance of the normal physiological state may be internal or external to the body of the employee48. It may be, for example, the breaking of a limb49, the breaking of an artery50, the detachment of a piece of the lining of an artery51, the rupture of an arterial wall52 or a lesion to the brain53. Each would be described as an "injury" in the primary sense. 46 par (b) of the definition of "injury" in s 4(1). 47 (2000) 200 CLR 286 at 300 [39]. See also at 298-299 [35], 300-301 [40]. 48 Kennedy Cleaning (2000) 200 CLR 286 at 298-299 [34]-[35]. 49 Hume Steel Ltd v Peart (1947) 75 CLR 242 at 252-253; [1947] HCA 34. 50 Hume Steel (1947) 75 CLR 242 at 252-253. 51 Hume Steel (1947) 75 CLR 242 at 253. 52 Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 332; [1996] HCA 53 Kennedy Cleaning (2000) 200 CLR 286 at 289 [6], [8]. Nettle Gordon However, as the Full Court correctly held54, "suddenness" is not necessary for there to be an "injury" in the primary sense55. A physiological change might be "sudden and ascertainable"56. A physiological change might be "dramatic"57. The employee's condition might be a "disturbance of the normal physiological state"58. That an "injury" in the primary sense can arise, and can be described, in a variety of ways does not mean that "suddenness" is irrelevant. As the Full Court said, "suddenness" is often useful where there is a need to distinguish a physiological change from the natural progress of an underlying (and in one sense, closely related) disease59 (as occurred in Zickar v MGH Plastic Industries Pty Ltd60 and Kennedy Cleaning61). But it is the physiological change – the nature and incidents of that change – that remains central. That an "injury" in the primary sense can arise, and be described, in a recognised by Gleeson CJ and Kirby J variety of ways was Kennedy Cleaning62 when their Honours stated: "[C]onsideration [must] be given to the precise evidence, on a fact by fact basis, concerning the nature and incidents of the physiological change accepted at trial. If this evidence amounts, relevantly, to something that can be described as a sudden and ascertainable or dramatic physiological change or disturbance of the normal physiological state, it may qualify for 54 May (2015) 233 FCR 397 at 424-426 [109]-[114], 426-427 [118], 443-444 [204]- 55 See Kennedy Cleaning (2000) 200 CLR 286 at 298 [35], 300 [39], 301 [40]. 56 Kennedy Cleaning (2000) 200 CLR 286 at 300 [39]. 57 Kennedy Cleaning (2000) 200 CLR 286 at 300 [39]. 58 Hume Steel (1947) 75 CLR 242 at 253; Kennedy Cleaning (2000) 200 CLR 286 at 59 May (2015) 233 FCR 397 at 425 [110]. 60 (1996) 187 CLR 310 at 332. 61 (2000) 200 CLR 286 at 288-289 [5]-[8], 300 [39]. 62 (2000) 200 CLR 286 at 300 [39]. Nettle Gordon characterisation as an 'injury' in the primary sense of that word." (emphasis added) It is against that background that the Act requires the tribunal of fact to give consideration to "the precise evidence, on a fact by fact basis, … accepted at trial"63 and then to ask certain questions in order to determine whether an employee is suffering a "disease" or an "injury (other than a disease)". First, does the evidence amount, relevantly, to something that can be described as an "ailment"64, being a physical or mental ailment, disorder, defect or morbid condition? Second, if so, was that state contributed to in a material degree by the employee's employment by the Commonwealth? If the answer to both those questions is "Yes", there is a "disease" within par (a) of the definition of "injury". Of course, in some cases, the answer to those questions may be admitted. That is, the employee may admit that the answer to the first question, or both the first and the second questions, is "No". If there is not a "disease" within par (a) of the definition of "injury", the tribunal of fact next inquires whether there is an "injury (other than a disease)" within par (b). The third question is – does the evidence demonstrate the existence of a physical or mental "injury" (in the primary sense of that word)? Generally, that will be determined by asking whether the employee has suffered something that can be described as a sudden and ascertainable or dramatic physiological change or disturbance of the normal physiological state65. However, that judicial language is not to be construed or applied as if it were the words of a statute defining a necessary condition for the existence of an "injury (other than a disease)". The language of judgments should not "be applied literally to facts without further consideration of what is conveyed by the reasoning" in the cases from which it is derived, or without regard to the text and scheme of the Act66. 63 Kennedy Cleaning (2000) 200 CLR 286 at 300 [39]. 64 See pars (a) and (b) of the definition of "disease" in s 4(1). 65 Kennedy Cleaning (2000) 200 CLR 286 at 300 [39]. See also at 298 [35]. Or, in the case of mental injury, a psychiatric disorder. 66 See Comcare v PVYW (2013) 250 CLR 246 at 256 [15]; [2013] HCA 41. See also at 256 [16] quoting Brennan v Comcare (1994) 50 FCR 555 at 572. Nettle Gordon If there be an "injury" in the primary sense of the word, the next question is – did that injury arise out of, or in the course of, the employee's employment by the Commonwealth? If that question is answered "Yes", there is an "injury (other than a disease)" within par (b) of the definition of "injury" in s 4(1) of the Act. In some circumstances, if the answer is "No", it may be necessary to ask whether the case is one involving aggravation of an injury. That question does not arise in this appeal. It may be that there are circumstances in which the identification of a physiological change, a disturbance of the normal physiological state or a psychiatric disorder may satisfy the definition of "ailment" (and therefore result in a positive answer to the first question) but the second question is answered "No". But if that is the position on the evidence, there will not be any relevant overlap between a "disease" and an "injury (other than a disease)" in the definition of "injury" in s 4(1) of the Act. It reflects the fact that there are marked differences between arising "out of" or "in the course of" (in par (b)) and "contributed to in a material degree" (for par (a)) in the definition of "injury". And it simply means that the employee was unable to satisfy the different level of employment connection required under par (a) of the definition of "injury" under the Act. This construction of the definition of "injury" in s 4(1) of the Act does not "rob"67 the "disease" limb of utility. The "disease" limb of the definition remains an additional basis of liability68. The proper construction of the Act reflects the importance of the distinction drawn by the Act between "disease" and "injury (other than a disease)" in the definition of "injury" in s 4(1) of the Act and recognises that each creates a different basis for liability under the statutory scheme. Not sufficient for an employee merely to feel unwell The Full Court concluded that the inquiry demanded by the statutory definition of "injury" was "whether the person has experienced a physiological change or disturbance of the normal physiological state (physical or mental) that can be said to be an alteration from the functioning of a healthy body or mind"69 67 Kennedy Cleaning (2000) 200 CLR 286 at 300 [40]. 68 cf Australia, House of Representatives, Parliamentary Debates (Hansard), 27 April 69 May (2015) 233 FCR 397 at 444-445 [209]. See also at 425 [110]. Nettle Gordon (emphasis added). To the extent that conclusion suggested that subjectively experienced symptoms, without an accompanying physiological or psychiatric change, are sufficient to provide a positive answer to the first or third questions set out above, that conclusion should be rejected. That is because, first, it overlooks that the Act provided that the appellant was liable to compensate in respect of "an injury" and that the focus of the Act is on "an injury". Second, it overlooks that the Act draws an important distinction between "disease" and "injury (other than a disease)" and that "disease" and "injury (other than a disease)" are part of different limbs of the definition of "injury" in s 4(1). Each limb deals with a separate basis for something being an "injury". That is the reason for separate questions. Third, as seen earlier, the word "injury" in "injury (other than a disease)" has a different meaning from the defined term "injury" in s 4(1) – it means "injury" in its primary sense. That necessarily requires consideration of the "precise evidence, on a fact by fact basis, concerning the nature and incidents of the physiological change"70. Put another way, the proper construction of the Act recognises that an employee may genuinely complain of being unwell, but, in the context of the "injury (other than a disease)" limb of the definition of "injury", unless that employee can satisfy the tribunal of fact that he or she has suffered an "injury" (in the primary sense of the word), s 14 of the Act will not be engaged. The "nature and incidents of the physiological [or psychiatric] change"71 will determine whether there was an "injury (other than a disease)". The evidence to be adduced, of course, will vary from case to case and, where appropriate, may take into account common-sense inferences drawn from a sequence of events72. To take an extreme example, the dismemberment of a limb involves a physiological change as a matter of common sense. But there must be more than an assertion by an employee that he or she feels unwell. 70 Kennedy Cleaning (2000) 200 CLR 286 at 300 [39]. 71 Kennedy Cleaning (2000) 200 CLR 286 at 300 [39]. 72 cf Adelaide Stevedoring Co Ltd v Forst (1940) 64 CLR 538 at 563-564; [1940] HCA 45. But see also at 569-570. Nettle Gordon Application to Mr May's circumstances What then is Mr May's position? It is not in dispute that Mr May suffered a departure from a state of good health whilst he was employed with the RAAF. The Tribunal accepted that as a fact and made a finding to that effect73. But Mr May must establish that he suffered an "injury" as that term is defined in s 4(1) of the Act. In the present case, the Tribunal held that Mr May did not have a "disease" within par (a) of the definition of "injury" in s 4(1) of the Act. That conclusion was unchallenged in this Court. Rather, Mr May contended that he has an "injury (other than a disease)" within par (b) of the definition of "injury" in s 4(1) of the Act. The Tribunal was not satisfied on the evidence (lay and medical) that Mr May had suffered an "injury". Some of the findings of the Tribunal are worth restating. There was no medical explanation for Mr May's "illness", which had been described as a "subjective description of a collection of symptoms"74. There was no objective evidence of Mr May suffering "vertigo" in the period following his vaccinations, nor was there any substantial pathology to explain Mr May's symptoms75. For example, there was no objective evidence of Mr May's swollen tongue or dizziness, or pathology to support his account of those symptoms, apart from diarrhoea and upper respiratory tract infections, which were treated and subsequently resolved. The medical evidence indicated a lack of any pathology consistent with Mr May's symptoms, which meant that no diagnosis could be made76. Mr May did not suffer from a diagnosable psychiatric disorder and no psychiatric disturbance could better account for his symptoms. Mr May asserted that he felt unwell. The Tribunal accepted that he felt unwell. But the "nature and incidents of the physiological [or psychiatric] change" suffered by Mr May were not established. There was no "injury" in the primary sense of that word. 73 See [19]-[20], [22]-[24] above. 74 May [2011] AATA 886 at [58]. 75 May [2011] AATA 886 at [61]. 76 May [2011] AATA 886 at [62]. Nettle Gordon It followed that it was not established that Mr May suffered an "injury (other than a disease)". As he suffered neither from a "disease" nor from an "injury (other than a disease)", neither of the two separate bases of liability for which the Act provided was made out. Contrary to the conclusion of the Full Court77, this was not a case where a different answer might have been reached if the matter was remitted to the Tribunal. Orders The appeal should be allowed. Paragraphs 2, 3(a) and 3(b) of the Order made by the Full Court of the Federal Court on 30 June 2015 should be set aside and, in their place, there should be an order that the appeal to the Full Court be dismissed. Consistent with the condition attaching to the grant of special leave, the appellant is to pay Mr May's costs of this appeal. 77 May (2015) 233 FCR 397 at 449 [233]. The content of, and relationship between, pars (a) and (b) of the definition of "injury" in the Act were considered by the Full Court of the Federal Court in Australian Postal Corporation v Burch78. Four propositions emerge from the reasoning in that case. Those propositions have not since been doubted. In my opinion, they ought now be regarded as settled. First, "disease" is used in its statutorily defined sense in each of pars (a) and (b). Second, "injury" is used in its ordinary sense in par (b). Third, the bracketed exclusion in the reference in par (b) to "an injury (other than a disease)" serves simply to clarify that the connection with employment required for an injury to meet par (b) has no application to a physical or mental condition which has the connection with employment required to meet the statutory definition of a disease. Fourth, the questions posed by pars (a) and (b) need not be asked in their statutory sequence. There is no need to ask whether a physical or mental condition is a disease in the statutorily defined sense used in par (a), if that physical or mental condition meets the description in par (b). To meet the description in par (b), it is enough that the condition is an injury in the ordinary sense which arises out of or in the course of employment. That brings us to the central question in the present appeal: what exactly is the ordinary sense in which injury is used in the context of the Act? Plainly, injury "is not used in a global sense to describe the general condition of the employee following an incident"79. More than a century of teasing out the ordinary sense in which injury is used in the context of workers compensation legislation has shown that suffering an injury is not confined to "getting hurt" (an injury might be constituted by nothing more than "something going wrong within the human frame itself, such as the straining of a muscle or the breaking of a blood vessel"80) but that suffering an injury involves something more than merely "becoming sick"81. An injury, it has long been repeatedly explained, is some definite or distinct "physiological change" or "physiological disturbance" for the worse which, if not "sudden", is at 78 (1998) 85 FCR 264 at 268. 79 Canute v Comcare (2006) 226 CLR 535 at 540 [10]; [2006] HCA 47. 80 Clover, Clayton & Co Ltd v Hughes [1910] AC 242 at 246, cited in Kavanagh v The Commonwealth (1960) 103 CLR 547 at 553; [1960] HCA 25. 81 Hume Steel Ltd v Peart (1947) 75 CLR 242 at 252; [1947] HCA 34. least "identifiable"82. The universality of that explanation has been questioned83, and the comment has fairly been made that "a distinct physiological change is not itself an expression of clear and definite meaning"84. The expression has nevertheless been shown by repeated usage to have utility as an exposition of the particular sense in which injury has been used, and continues to be used, in the particular legislative context. The Full Court of the Federal Court referred in the decision under appeal to an injury as "a physiological change or disturbance of the normal physiological state (physical or mental) that can be said to be an alteration from the functioning of a healthy body or mind"85. If read as equating a physiological change or disturbance sufficient to constitute an injury with any alteration from the functioning of a healthy mind or body, the reference would in truth involve a significant departure from the particular sense which the repeated explanations of injury in terms of a definite or distinct physiological change or disturbance have sought to convey. Every ailment or worsening of an ailment can at some level be described as an alteration from the functioning of a healthy mind or body. Indeed every manifestation of an ailment or of the worsening of an ailment might potentially be so described. Not every ailment or worsening of an ailment can be described as an injury in the ordinary sense. At least in the case of a physical injury, to suffer an injury is more than just to experience the onset of dysfunction. The understanding of an injury as a definite or distinct physiological change or disturbance was first expounded in cases in which catastrophic consequences of pre-existing medical conditions came to be recognised as capable of constituting injuries86. The exposition has remained particularly 82 Hetherington v Amalgamated Collieries of WA Ltd (1939) 62 CLR 317 at 327-328, 330, 334; [1939] HCA 36 (citing Oates v Earl Fitzwilliam's Collieries Co [1939] 2 All ER 498 at 502); The Commonwealth v Ockenden (1958) 99 CLR 215 at 222- 224; [1958] HCA 37; The Commonwealth v Hornsby (1960) 103 CLR 588 at 597; [1960] HCA 27 (citing in particular James Patrick & Co Proprietary Ltd v Sharpe [1955] AC 1); Kennedy Cleaning Services Pty Ltd v Petkoska (2000) 200 CLR 286 at 298-299 [35]-[36], 300 [39], 303 [50], 304 [54], 308 [67]; [2000] HCA 45. 83 Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537 at 593; [1967] HCA 30. 84 The Commonwealth v Hornsby (1960) 103 CLR 588 at 608. 85 May v Military Rehabilitation and Compensation Commission (2015) 233 FCR 397 86 Cf The Commonwealth v Hornsby (1960) 103 CLR 588 at 597. useful in cases within that category. The analysis undertaken in those cases has always looked beyond mere alterations of physical or mental functioning of the mind or body to the identification of the physiological happenings which have resulted in those alterations: destruction of tissue87, collapse of vertebrae88, rupture of blood vessels89, occlusion of an artery90, development of a lesion91. The point of explaining an injury in terms of a definite or distinct physiological change or disturbance has been to highlight the necessity for such an analysis to be undertaken. The need to identify some underlying physiological occurrence to justify the finding of a physical injury is perhaps best illustrated by the reasoning of the majority in Zickar v MGH Plastic Industries Pty Ltd92, which concerned a worker who collapsed at work after the rupture of a congenital cerebral aneurism. Having said that "[i]f there was no rupture there would be no event answering the description of personal injury", Toohey, McHugh and Gummow JJ added "[b]ut there was such an event and the presence of a disease does not preclude reliance upon that event as personal injury"93. Together with Kirby J94, their Honours concluded that the rupture itself was properly characterised as an injury in the normal sense95. The Full Court was right to point out in the decision under appeal that the Act and the case law do not "preclude an injury being established on the basis of an account by a claimant of the disturbances to her or his body or mind, without the necessity for a diagnosis of a recognised medical condition, or corroborating pathology or medical opinion" and to observe that "[w]hether or not the evidence of a claimant will be sufficient, if it is not supported, corroborated or confirmed 87 Kavanagh v The Commonwealth (1960) 103 CLR 547 at 553. 88 Darling Island Stevedoring and Lighterage Co Ltd v Hankinson (1967) 117 CLR 19; [1967] HCA 10. 89 Accident Compensation Commission v McIntosh [1991] 2 VR 253. 90 Australian Postal Corporation v Burch (1998) 85 FCR 264 at 268. 91 Kennedy Cleaning Services Pty Ltd v Petkoska (2000) 200 CLR 286. 92 (1996) 187 CLR 310; [1996] HCA 31. 93 (1996) 187 CLR 310 at 334. 94 (1996) 187 CLR 310 at 352. 95 (1996) 187 CLR 310 at 335. by independent medical opinion or pathology, will be a matter for the Tribunal's satisfaction on the evidence in each particular case"96. But the Full Court was wrong, in my opinion, to infer that the Tribunal proceeded on a different basis97. The Tribunal demonstrated that it understood the ultimate question which it needed to answer to determine Mr May's claim when it stated its conclusion in terms that it was "not satisfied on the balance of probabilities that Mr May suffered a physical injury – an injury simpliciter – amounting to a sudden or identifiable physiological change in the normal functioning of the body or its The Tribunal, in my opinion, displayed no legal error in answering that question when (on the one hand) it accepted that Mr May experienced debilitating dizziness, which could "loosely" be described as "vertigo", and yet (on the other hand) it found itself unable to be satisfied that the dizziness was enough to show that Mr May had suffered an injury "in the absence of any physiological evidence, pathology or a known diagnosis to explain the symptoms"99. The Tribunal was addressing the sufficiency of the evidence to found a conclusion that Mr May suffered some definite or distinct physiological change or disturbance, in the sense commonly and appropriately used to describe a condition properly characterised as an injury in the ordinary sense. The Tribunal's acceptance that Mr May experienced debilitating dizziness was not enough to compel that conclusion. Common experience provided no guidance, and the medical evidence was inconclusive. For these reasons, I agree with the orders proposed in the joint reasons for judgment. 96 May v Military Rehabilitation and Compensation Commission (2015) 233 FCR 397 97 May v Military Rehabilitation and Compensation Commission (2015) 233 FCR 397 98 Re May and Military Rehabilitation and Compensation Commission [2011] AATA 99 Re May and Military Rehabilitation and Compensation Commission [2011] AATA

HIGH COURT OF AUSTRALIA BRITISH AMERICAN TOBACCO AUSTRALIA SERVICES LIMITED APPELLANT AND CLAUDIA JEAN LAURIE (AS ADMINISTRATRIX OF THE ESTATE OF DONALD HENRY LAURIE AND ON HER OWN BEHALF) & ORS RESPONDENTS British American Tobacco Australia Services Limited v Laurie [2011] HCA 2 9 February 2011 1. Appeal allowed. ORDER 2. Set aside paragraph 2 of the order of the Court of Appeal of the Supreme Court of New South Wales made on 17 December 2009, and in place thereof order that the fourth respondent be prohibited from further hearing or determining proceeding 6057 of 2006 in the Dust Diseases Tribunal of New South Wales. 3. The appellant pay the first respondent's costs of the appeal in this Court. On appeal from the Supreme Court of New South Wales Representation J R Sackar QC with P J Brereton SC and M J O'Meara for the appellant (instructed by Corrs Chambers Westgarth Lawyers) D F Jackson QC with B F Quinn and S Tzouganatos for the first respondent (instructed by Turner Freeman Lawyers) Submitting appearances for the second to fourth respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS British American Tobacco Australia Services Limited v Laurie Courts and judges – Bias – Reasonable apprehension of bias by reason of pre-judgment – Where judge previously made finding on same issue in unrelated interlocutory proceeding – Knowledge and characteristics to be attributed to fair-minded lay observer – Whether fair-minded lay observer taken to understand rules of evidence and procedure – Whether later statements of judge in recusal application relevant to fair-minded lay observer's assessment – Livesey v New South Wales Bar Association (1983) 151 CLR 288. Words and phrases – "fair-minded lay observer", "reasonable apprehension of bias". Introduction In 1986 Mason J said1: "It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party." That observation is applicable to this case. British American Tobacco Australia Services Limited ("BATAS") contends that an interlocutory finding adverse to it in proceedings in the Dust Diseases Tribunal of New South Wales ("the Tribunal") should disqualify the judge who made the finding from presiding at the trial of subsequent proceedings brought against BATAS by another party. The adverse finding was that BATAS had dishonestly concealed the destruction of documents which might be prejudicial to it in litigation and had done so under the pretence of a Document Retention Policy. The judge refused to accede to a motion by BATAS that he disqualify himself from presiding in the subsequent proceedings2. On summonses issued by BATAS for leave to appeal against the judge's decision, and for prohibition against his Honour, the Court of Appeal of New South Wales by majority agreed with the judge. The Court of Appeal dismissed both summonses3. BATAS appealed to this Court against the dismissal of the summons for prohibition. In my opinion the Court of Appeal was correct. The judge made it clear in the interlocutory ruling that he was basing his conclusions on the limited evidence put before him and that a different picture might emerge at trial. His finding would not appear, to a fair-minded lay observer, to give rise to a reasonable apprehension of bias in different proceedings some years later against the same defendant. In my opinion, which differs from that of the majority in this case, the appeal against the decision of the Court of Appeal should be dismissed. The 1 Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352; [1986] HCA 39, a caution endorsed in Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 at 86 per Brennan, Gaudron and McHugh JJ; [1991] HCA 3. See also Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451 at 480. 2 Laurie v Amaca Pty Ltd [2009] NSWDDT 14. 3 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414. difference of views in the Court of Appeal and in this Court reflects the truth of the observation made by Aickin J about the test for apparent bias4: "It is a test which is not always easy to apply for it may involve questions of degree and particular circumstances may strike different minds in different ways." Procedural history Claudia Laurie is the plaintiff in proceedings in the Tribunal against BATAS. She is continuing proceedings against BATAS commenced by her late husband, Donald Laurie, in 2006 alleging that BATAS was negligent in the manufacture, sale and supply of tobacco products which he smoked from 1946 until 1971. Mrs Laurie also sues in her own right as a dependant widow under the Wrongs Act 1958 (Vic) and the Compensation to Relatives Act 1897 (NSW). In her amended statement of claim filed on 13 July 2007, Mrs Laurie alleged, inter alia, that BATAS had a policy of destroying documents in its possession which might have evidenced its negligence. That allegation was made in support of a claim for aggravated damages. The document destruction policy was also pleaded in support of an inference that at all material times BATAS knew, or ought to have known, that the use of its tobacco products could cause lung cancer. The pre-trial management and the trial of the action in the Tribunal were allocated to Judge Curtis, who conducted a number of directions hearings and heard evidence from Mr Laurie in the United States on 26 April 2006. That evidence was transcribed and videotaped. On 9 March 2009, BATAS filed a motion in the Tribunal seeking an order that Judge Curtis disqualify himself from further hearing or determining the proceedings. His Honour dismissed the BATAS motion and ordered that BATAS pay Mrs Laurie's costs. BATAS filed two summonses in the Court of Appeal, one of which sought leave to appeal from the decision of Judge Curtis pursuant to s 32(4)(a) of the Dust Diseases Tribunal Act 1989 (NSW) ("the DDT Act"). By the other BATAS sought prohibition against the judge under s 69 of the Supreme Court Act 1970 (NSW). 4 Re Lusink and Shaw; Ex parte Shaw (1980) 55 ALJR 12 at 16; 32 ALR 47 at 54; see also Builders' Registration Board of Queensland v Rauber (1983) 57 ALJR 376 at 383-384 per Brennan J; 47 ALR 55 at 69; Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 294; [1983] HCA 17. The Court of Appeal by majority (Tobias and Basten JJA, Allsop P dissenting) dismissed both summonses on the basis that a fair-minded lay observer would not reasonably apprehend, as a result of the previous interlocutory finding, that Judge Curtis may not bring an impartial and unprejudiced mind, in Mrs Laurie's proceedings, to the question whether BATAS had committed a fraud. On 28 May 2010, this Court (French CJ, Hayne and Bell JJ) granted special leave to appeal against the decision of the Court of Appeal on the summons for prohibition. The prior ruling by Judge Curtis Judge Curtis made his interlocutory findings against BATAS proceedings commenced by the widow of the late Mr Alan Mowbray against Brambles Australia Ltd ("Brambles"). Mrs Mowbray alleged that her husband had contracted lung cancer as the result of exposure to asbestos while working for Brambles. Brambles cross-claimed against BATAS for contribution on the basis of Mr Mowbray's use of BATAS' tobacco products. Judge Curtis made an order in November 2002 that BATAS give discovery. BATAS claimed legal professional privilege in respect of most of the relevant documents. In May 2006, Brambles obtained an order from Judge Curtis for further discovery from BATAS. In support of its motion for that order, Brambles adduced oral testimony from Frederick Gulson, who had been Company Secretary and in-house solicitor to BATAS5 in 1989-90. It also tendered a transcript of testimony which Mr Gulson had given in proceedings in the US, and an affidavit sworn in February 2003. Judge Curtis ruled initially that certain paragraphs from Mr Gulson's statements were prima facie covered by lawyer-client privilege6. Brambles submitted that the testimony could be admitted by virtue of s 125 of the Evidence Act 1995 (NSW) on the basis that the allegedly privileged communication, which it evidenced, had been made in furtherance of the commission of a fraud. The the dishonest asserted fraud, based upon Mr Gulson's concealment by BATAS, under pretence of a rational non-selective housekeeping policy, known as the Document Retention Policy, of its purpose of destroying prejudicial documents in order to suppress evidence in anticipated litigation. BATAS maintained that its policies and practices did not permit selective testimony, was 5 Then known as WD & HO Wills Australia Ltd. 6 Evidence Act 1995 (NSW), ss 118 and 119. destruction of prejudicial documents. His Honour said of that contention that it remained "a live issue for the trial."7 Counsel for BATAS attacked the credit of Mr Gulson in cross- examination but did not put it to Mr Gulson that he was not telling the truth. Judge Curtis found that Mr Gulson's evidence stood uncontradicted but noted "[h]e has not yet been tested by a contrary version of events."8 He accepted that there might be good reasons why BATAS had not called any rebuttal evidence, "however, I must determine the proceedings now before me on the evidence now before me." (emphasis added) His Honour observed that if BATAS was not selectively destroying scientific documents prejudicial to its position the question arose why lawyers rather than scientists were assigned to judge the value of the research material for the purposes of the policy. His Honour said10: "This may be explained at the trial; however, the evidence of Mr Gulson gives rise to an obvious inference that has not yet been rebutted by BATAS." Judge Curtis's crucial finding for the purposes of s 125 was in the "I am persuaded on the present state of the evidence that BATAS in 1985 drafted or adopted the Document Retention Policy for the purpose of a fraud within the meaning of s 125 of the Evidence Act." (emphasis added) 7 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 599 [45]. 8 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 601 [52]. 9 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 601 [53]. 10 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 602 [55]. 11 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 602 [56]. And further12: "In the absence of evidence to the contrary, I infer that legal advice to the effect that destruction of documents pursuant to the terms of the policy was not contrary to law, was integral to the decision by BATAS to persist with its policy of selective destruction." (emphasis added) His Honour found that communications made for the purposes of obtaining that legal advice were communications in furtherance of the commission of a fraud within the meaning of s 125. The passages of Mr Gulson's evidence in respect of which privilege was claimed referred to communications made in respect of legal advice about the Document Retention Policy. Judge Curtis referred to evidence, corroborative of Mr Gulson's testimony, given in the US proceedings by John Welch, a former Chief Executive Officer of the Tobacco Institute of Australia, and by Dr Jeffrey Wigand, who had worked for a subsidiary of British American Tobacco plc in the US. His Honour noted that Mr Welch's evidence had "not yet been challenged"13 and that he had not been required for cross-examination. His Honour said14: "I find that on the evidence of Mr Gulson, Mr Welch, and Dr Wigand presented on this application, Brambles has sufficiently discharged an onus of demonstrating, prima facie, that it can make good the allegations pleaded in the amended statement of claim summarised in [12] above." In the event, Judge Curtis made orders for further discovery by BATAS. The message conveyed by the repeated qualification in his Honour's findings was clear. Upon different or other evidence, which might be adduced at trial, a different conclusion might be drawn. No fair-minded lay observer could have overlooked that message. 12 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 602 [57]. 13 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 605 [63]. 14 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 607 [69]. Statutory framework – Evidence Act 1995 (NSW) Section 125 of the Evidence Act provides: "125 Loss of client legal privilege: misconduct This Division does not prevent the adducing of evidence of: (a) a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty, or (b) a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power. (2) For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that: the fraud, offence or act, or the abuse of power, was committed, and (b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power, the court may find that the communication was so made or the document so prepared. In this section: power means a power conferred by or under an Australian law." BATAS submitted that Judge Curtis found fraud when it was unnecessary for him to do so for the purposes of s 125. He could have limited himself to determining that there were reasonable grounds for so finding. As to that, s 125(2) sets out a basis upon which the court "may find" that a communication was made in furtherance of a fraud. Whether or not s 125(2) is invoked the end result is that a finding of fraud is made or it is not. The operation of the provision was considered by Santow J in Kang v Kwan15. His Honour held that the standard for establishing reasonable grounds will depend on the circumstances but must be sufficient to "give colour to the charge" at a prima facie level16. An appeal against the decision of Santow J was allowed by the Court of Appeal on the basis that his Honour's findings of fraud in a ruling, applying s 125 and made in the course of the trial, gave rise to a reasonable apprehension of bias17. The Court of Appeal, of which Tobias JA was a member, held unanimously that his Honour had expressed his findings "in emphatic language of absolute finality"18, notwithstanding that he stated that the findings were based on "reasonable grounds". The Court of Appeal did not discuss the minimum content of a "reasonable grounds" finding beyond making clear that it was to be distinguished from a finding "in absolute and unconditional terms"19. For the purposes of determining the existence or non-existence of a reasonable apprehension of bias in this case, in my opinion, no relevant distinction was demonstrated between the finding of fraud that was made by Judge Curtis and expressly stated to be based upon limited and possibly incomplete evidence and a finding of fraud on the basis of reasonable grounds. Ruling on disqualification motion Judge Curtis formulated the question for determination on BATAS' motion that he disqualify himself as20: reasonable fair minded observer might entertain a "whether a apprehension of bias by reason of prejudgment if, in Re Mowbray, I expressed myself in terms of such finality that a reasonable bystander might think that I might not bring an impartial and unprejudiced mind to the questions of whether Mr Gulson is a witness of credit, and whether BATAS intentionally destroyed documents tending to prove knowledge 15 [2001] NSWSC 698. 16 [2001] NSWSC 698 at [37]. Similar approaches were taken by McCallum J in Nuclear Utility Technology & Environmental Corporation Inc v Australian Broadcasting Corporation [2009] NSWSC 78 and by R A Hulme J in Franks v Warringah Council [2010] NSWSC 1318. 17 Kwan v Kang [2003] NSWCA 336. 18 Kwan v Kang [2003] NSWCA 336 at [97]. 19 Kwan v Kang [2003] NSWCA 336 at [50]. 20 Laurie v Amaca Pty Ltd [2009] NSWDDT 14 at [13]. with the intention of placing those documents beyond the reach of litigants." (emphasis in original) His Honour referred to the various qualifications he had made upon his "Far from expressing my conclusions in terms of finality, I took pains to recognise that the assertions by Brambles as to a document destruction policy remained a live issue for the trial, that the evidence of Mr Gulson had not been tested in cross examination, and that there may be good reasons why BATAS, in an interlocutory proceeding, did not wish to take issue with, nor call evidence to contradict, Mr Gulson." His Honour concluded22: "I do not believe that, having read my published reasons in Re Mowbray, any reasonable observer might entertain a reasonable apprehension that I might not bring an impartial and unprejudiced mind to the resolution of the questions of whether Mr Gulson is a witness of truth, and whether or not BATAS engaged in a dishonest document destruction policy." Decision of the Court of Appeal Tobias JA accepted that there was nothing provisional or tentative about the finding made by Judge Curtis given the standard of proof to which he was required to be satisfied before making it. His Honour referred to the emphasis placed by Judge Curtis on the fact that Mr Gulson's evidence was uncontradicted and that he was merely making findings based on the limited evidence before him. Tobias JA characterised the hypothetical fair-minded observer as a person who would have some understanding23: of the nature of the application before Judge Curtis; that hearsay evidence was admissible in such an application but not in other circumstances; 21 Laurie v Amaca Pty Ltd [2009] NSWDDT 14 at [20]. 22 Laurie v Amaca Pty Ltd [2009] NSWDDT 14 at [22]. 23 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at that the findings made were for the limited purpose of allowing inspection of documents otherwise the subject of legal professional privilege; and that BATAS, perhaps for proper tactical reasons, had decided not to call evidence in the interlocutory application to counter Mr Gulson. The fair-minded observer, it was said, would not reasonably apprehend that Judge Curtis might not bring an impartial and unprejudiced mind to the issue with respect to BATAS' document management policies once all admissible evidence had been elicited by all of the parties at trial and after full argument24. Basten JA accepted the applicable principles as set out in the judgment of Tobias JA25. His Honour pointed to the following factors antithetical to a reasonable apprehension of bias26: the earlier determination was made on an interlocutory basis; the Tribunal permitted reagitation of the same issue, which had not been determined on a final basis; the interlocutory determination itself had not been challenged, although [BATAS] had had an opportunity to do so had it thought fit, and interlocutory application was not accompanied by any the objectionable or emotive language otherwise casting doubt on the willingness or ability to reconsider objectively the position earlier adopted." His Honour also referred to provisions of the DDT Act designed to facilitate the admission of evidence used in earlier proceedings and to prevent relitigation of general issues from case to case, as a matter which a fair-minded lay observer should properly take into account27. In my opinion, however, neither provision is 24 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at 25 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at 26 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at 27 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at [142]-[147] referring to ss 25 and 25B of the DDT Act. relevant to a lay observer's assessment of whether an appearance of bias is created by a specific finding of fact, about a particular party, of the kind which is in issue in this case. Basten JA noted that it had not been contended in the Court of Appeal that Judge Curtis had prejudged the issue or was in fact unwilling or unable to consider with an open mind such material and submissions as might be tendered by BATAS for further consideration. Basten JA said he could formulate no reasonable basis for concluding that a fair-minded lay observer would conclude other than that the chance of Judge Curtis being inhibited in a fair consideration of fresh material was remote28. He added that if BATAS were to succeed there would be a real risk of a diminution in public confidence in the administration of justice due to the perception that one litigant, facing an adverse outcome in the absence of persuasive material which would properly permit a different conclusion to be reached, had manipulated the system in the hope of obtaining a more favourable outcome from a different judge29. The latter proposition, with respect, was speculative. However, it was not central to his Honour's reasoning and does not affect the outcome of this appeal. Allsop P dissented. His Honour pointed out that Judge Curtis had made a relevantly unqualified finding of dishonesty and fraud30. It was not merely a conclusion that the evidence was strong enough that if accepted at trial it would ground such a finding. His Honour encapsulated his dissent when he said31: "The grave quality of such a finding by a trial judge and the necessity for the trial judge to be persuaded in his or her mind as to its truth informs my view that a fair-minded lay observer might reasonably think that a judge, who has been so persuaded, might not be able to bring a mind free of the effect of the prior conclusion, so solemnly reached, to bear in dealing with the same issue in respect of the same party on a later occasion." The Court of Appeal dismissed both the summonses brought by BATAS and directed that BATAS pay Mrs Laurie's costs of both proceedings. 28 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at 29 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at 30 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at 31 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at Grounds of appeal The substantive grounds of appeal in this Court were: the majority of the Court of Appeal erred in holding that, for the purposes of assessing whether the fair-minded lay observer might apprehend bias, the fair-minded lay observer is taken to know and appreciate: the distinction between findings made on an interlocutory application and those made at a final hearing; the differences between the rules of evidence applicable in an interlocutory application and those applicable at a final hearing; and (iii) the existence and application of section 25 and 25B of the Dust Diseases Tribunal Act 1989 (NSW); Basten JA erred in considering, as a matter relevant to the application of the apprehension of bias principle, whether an application by a party that a judge disqualify himself or herself is or may be properly viewed as involving a manipulation by the applicant of the rules of apprehended bias to avoid an adverse result which, if acceded to, would undermine public confidence in the administration of justice; and the Court of Appeal should have held the Fourth Respondent [Judge Curtis] is prohibited from hearing proceedings 6057 of 2006 in the Dust Diseases Tribunal of NSW between the Appellant (as defendant) and the First Respondent (as plaintiff) on the grounds of apprehended bias arising by reason of his Honour's judgment in Re Mowbray." The Dust Diseases Tribunal The Tribunal was established by the DDT Act "to hear claims in tort for negligence and breach of statutory duty relating to death or personal injury attributable to specified dust diseases and other dust-related conditions."32 The Tribunal was established against a background of concern about delays in the common law jurisdictions of the Supreme and District Courts of New South 32 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 3 May 1989 at 7398. Wales. The Attorney-General in his Second Reading Speech for the Bill, referring to diseases such as mesothelioma, said: "The Government is committed to these claims being dealt with expeditiously by the creation of a separate tribunal that will provide a fast- track mechanism."33 The Tribunal is a court of record34. Persons qualified to be members of the Tribunal are Judges and acting Judges of the Supreme and District Courts or of any court of equivalent status to either of those courts. The Governor may appoint one of the members of the Tribunal as its President35. The primary jurisdiction of the Tribunal, which is conferred by s 10 of the DDT Act, is to hear and determine proceedings referred to in ss 11 and 12. Section 11 enables a person who is suffering or has suffered from a dust-related condition allegedly attributable or partly attributable to a breach of duty owed by another person, to bring proceedings for damages in respect of that dust-related condition in the Tribunal. Such proceedings "may not be brought or entertained before any other court or tribunal." Proceedings may also be brought under s 11 by persons claiming through a person who died from a dust-related condition. The breach of duty may be a breach of a statutory duty as well as of a duty imposed under the common law36. Section 12 provides for transfer of such proceedings which are brought in or are pending in the Supreme Court or in the District Court. The Tribunal is required to hold its proceedings in open court except to the extent that the rules provide otherwise37. The President is to nominate the member before whom proceedings are to be held38. Relevantly to Mrs Laurie's position in these proceedings, s 17(4) provides: "An executor, administrator, trustee or other legal personal representative may bring or defend proceedings before the Tribunal in the same manner 33 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 3 May 1989 at 7398. 34 DDT Act, s 4. 35 DDT Act, s 7. 36 DDT Act, s 11(2). 37 DDT Act, s 13(1). 38 DDT Act, s 13(2). as if he or she were bringing or defending proceedings in his or her own right." There are also specific provisions of the DDT Act, mentioned earlier, which facilitate the admission of evidence used in earlier proceedings39 and prohibit the relitigation or rearguing of "issues of a general nature" already determined in proceedings before the Tribunal40. In my opinion, neither of these provisions has any particular significance for the present case. The appearance of bias – applicable principles Impartiality is an essential characteristic of courts. As was said in Forge v Australian Securities and Investments Commission41: "An important element … in the institutional characteristics of courts in Australia is their capacity to administer the common law system of adversarial trial. Essential to that system is the conduct of trial by an independent and impartial tribunal." (footnote omitted) In judging whether the appearance of impartiality has been lost difficulties of principle and application can arise. Courts must make their judgments upon criteria referable to a legally constructed, fair-minded lay observer. That means, in effect, that their judgments are made on a subset of the available information. That is because the reasonable apprehension of bias goes to confidence in the courts on the part of litigants and the public, who will not have access to details of the substantive law and all relevant aspects of the practice and procedure of the courts. In determining whether an apprehension of bias has a reasonable basis, the courts are asked to see themselves as others, not judges or lawyers, would see them. As Laws LJ put it in Sengupta v Holmes42: "it is not enough to show that those in the know would not apprehend any bias." A standard for apparent bias dependent upon how the matter appeared to judges and lawyers would be difficult to distinguish, in practical effect, from a standard of actual bias. 39 DDT Act, s 25. 40 DDT Act, s 25B. 41 (2006) 228 CLR 45 at 76 [64]; [2006] HCA 44. 42 [2002] EWCA Civ 1104 at [11]. The maxim that no person can be a judge in his or her own cause is an expression of the requirement of impartiality which extends to the fact and the appearance43. It has deep historical roots44. It was prefigured in Justinian's Institutes, which proposed that a judge "who delivers an unjust or partial decision" should be subject to a pecuniary penalty45. Bracton in the 13th century wrote of the desirability of recusing the judge where "for some reason, fear, hatred or love, he is considered suspect."46 Judicial statements in England of a rule against anybody being a judge in his own cause could be found in decisions of the 17th and 18th centuries47. So too could its application to administrative tribunals or decision-makers exercising "quasi-judicial" functions48. Blackstone's deferential observation that "the law will not suppose a possibility of bias or favour in a judge"49 did not survive the test of time. The importance of the appearance of impartiality in judicial and quasi-judicial decision-making was highlighted in Dimes v The Proprietors of the Grand Junction Canal50. Lord Campbell, in that case, warned all inferior tribunals "to take care not only that in their decrees they are not influenced by their personal interest, but to avoid the appearance of labouring under such an influence."51 The requisite standard required appearance beyond suspicion of bias. It was emphasised in the observation by Bowen LJ in Leeson v General Council of Medical Education and Registration that52: 43 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 364 [87] per Gaudron J; [2000] HCA 63. 44 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 343 [3]. 45 The Institutes of Justinian, Moyle trans, 5th ed (1913), bk IV, Title v at 172. 46 Bracton, De Legibus et Consuetudinibus Angliae, Woodbine ed, Thorne trans (1977), vol 4, f 411 at 280. 47 Earl of Derby's Case (1613) 12 Co Rep 114 [77 ER 1390]; Inter Brookes and the Earl of Rivers (1668) Hardres 503 [145 ER 569]; Wright v Crump (1702) 2 Ld Raym 766 [92 ER 12]; Between the Parishes of Great Charte and Kennington (1742) 2 Strange 1173 [93 ER 1107]. 48 Dr Bonham's Case (1610) 8 Co Rep 113 b [77 ER 646]; Day v Savadge (1614) Hobart 85 [80 ER 235]; City of London v Wood (1702) 12 Mod 669 [88 ER 1592]. 49 Blackstone, Commentaries on the Laws of England, (1768), bk III, c 23 at 361. 50 (1852) 3 HLC 759 [10 ER 301]. 51 (1852) 3 HLC 759 at 793-794 [10 ER 301 at 315]. 52 (1889) 43 Ch D 366 at 385, see also at 390 per Fry LJ. "judges, like Caesar's wife, should be above suspicion". The reasonable or substantial suspicion of bias as a criterion of apparent bias was enunciated in Allinson v General Council of Medical Education and Registration53. Because a reasonable suspicion attributable to a non-lawyer must have some non-judicial vessel, the Court constructed the reasonable person as its arbiter54. That approach was followed by this Court in Dickason v Edwards55. In 1924, in R v Sussex Justices; Ex parte McCarthy56 Lord Hewart CJ made the observation, much quoted in Australian courts, that "it is not merely of some importance but is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done."57 In 1993 the reasonable person whose apprehension was the test of the appearance of bias was retired from duty by the House of Lords in R v Gough58 in favour of a "real danger of bias" test to be administered by the court. That new approach was not accepted by this Court59. The reasonable person was recalled by the Court of Appeal in 2001 by way of a "modest adjustment" to the "real danger of bias" test. The question for the court under the revised test was whether the circumstances "would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the 53 [1894] 1 QB 750 at 758-759 per Lord Esher MR. 54 [1894] 1 QB 750 at 759 per Lord Esher MR. See also R v Sunderland Justices [1901] 2 KB 357 at 373 per Vaughan Williams LJ. The latter case erected a requirement for a "real likelihood of bias". See also Metropolitan Properties Co (FGC) Ltd v Lannon [1969] 1 QB 577 at 599 per Lord Denning MR, discussed in Hammond, Judicial Recusal, (2009) at 36. 55 (1910) 10 CLR 243 at 256-257 per O'Connor J, 258-259 per Isaacs J; [1910] HCA 57 [1924] 1 KB 256 at 259. 58 [1993] AC 646 at 670 per Lord Goff of Chieveley. 59 Webb v The Queen (1994) 181 CLR 41; [1994] HCA 30. same, that the tribunal was biased."60 The revised test was approved by the House of Lords in Porter v Magill61. In 2000, the test in Australia was stated by this Court in Ebner v Official Trustee in Bankruptcy62. It requires two steps. The first is "the identification of what it is said might lead a judge … to decide a case other than on its legal and factual merits." The second is an "articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits."63 In Ebner the constructed observer was the "fair-minded lay observer" concerned only with a reasonable apprehension of bias64. The test is generally applicable to cases of asserted apprehended bias, including cases in which the judge is said to have a pecuniary interest in the outcome of the case which he or she is hearing. This Court rejected the proposition that automatic disqualification applies to such classes of case65. There is a variety of ways in which the impartiality of a court may be or may appear to be compromised. Deane J in Webb v The Queen66 identified four of them as "distinct, though sometimes overlapping, main categories of case." They were: interest – where the judge has an interest in the proceedings, whether pecuniary or otherwise, giving rise to a reasonable apprehension of prejudice, partiality or prejudgment; conduct – where the judge has engaged in conduct in the course of, or outside, the proceedings, giving rise to such an apprehension of bias; 60 In re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700 at 726- 727 [85] per Lord Phillips of Worth Matravers MR. 61 [2002] 2 AC 357 at 494 [102]-[103] per Lord Hope of Craighead. See also R v Abdroikov [2007] 1 WLR 2679 at 2687-2688 [15]; [2008] 1 All ER 315 at 323- 324, and the critique of the fair-minded and informed observer in Olowofoyeku, "Bias and the Informed Observer: A Call for a Return to Gough", (2009) 68 Cambridge Law Journal 388. 62 (2000) 205 CLR 337. 63 (2000) 205 CLR 337 at 345 [8]. 64 (2000) 205 CLR 337 at 344 [6]. 65 (2000) 205 CLR 337 at 356-357 [54]. 66 (1994) 181 CLR 41 at 74. association – where the judge has a direct or indirect relationship, experience or contact with a person or persons interested in, or otherwise involved in, the proceedings; extraneous information – where the judge has knowledge of some prejudicial but inadmissible fact or circumstance giving rise to the apprehension of bias. These four categories were described in Ebner67 as providing "a convenient frame of reference" albeit not necessarily a comprehensive taxonomy. Particular applications of the general principle enunciated in Ebner will be required for the different classes of case in which an apprehension of bias is said to arise and different sets of circumstances within those classes. A gratuitous observation, adverse to a party, made in the course of proceedings or in extra- curial speech is one thing. A finding properly made by a judge in the course of an interlocutory ruling or in earlier proceedings is another. The latter is the area of concern in this appeal. It is an area in which courts should be astute not to defer to that kind of apprehension that is engendered by the anticipation of an adverse outcome, rather than a legitimate concern about partiality. By way of example, the fact that a judge who has made a finding of fact adverse to a party on particular evidence is likely to make the same finding on the same evidence, is not of itself indicative of bias. It could be indicative of consistency subject to the judge having an open mind when it came to argument about the effect of the evidence. This Court at one time held that, in claims of apprehended bias on the part of judicial or "quasi-judicial" officers based on conduct, the apprehended bias must be "real". That standard was explained by the plurality in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd68: "The officer must so have conducted himself that a high probability arises of a bias inconsistent with the fair performance of his duties, with the result that a substantial distrust of the result must exist in the minds of reasonable persons." 67 (2000) 205 CLR 337 at 349 [24]. See also Muir v Commissioner of Inland Revenue [2007] 3 NZLR 495 at 509 [64]. 68 (1953) 88 CLR 100 at 116 per Dixon CJ, Williams, Webb and Fullagar JJ; [1953] HCA 22. The requirement of a "high probability" of bias propounded in R v Australian Stevedoring Industry Board did not persist. R v Australian Stevedoring Industry Board was not referred to and the high probability criterion was not relied upon in R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group69. The apprehended bias asserted in Angliss was based upon a statement contained in reasons for decision published by the Commonwealth Conciliation and Arbitration Commission which tended to favour the principle of equal pay for both sexes. Rejecting an application for prohibition to prevent the members from hearing an equal pay claim, the Court referred to Allinson, Dickason and R v Sussex Justices and said70: "Those requirements of natural justice are not infringed by a mere lack of nicety but only when it is firmly established that a suspicion may reasonably be engendered in the minds of those who come before the tribunal or in the minds of the public that the tribunal or a member or members of it may not bring to the resolution of the questions arising before the tribunal fair and unprejudiced minds." In allowing an appeal against a decision to refuse to order disqualification of a member of a statutory body in Stollery v Greyhound Racing Control Board71, Barwick CJ quoted from R v Sussex Justices, and cautioned that72: "[t]he basic tenet that justice should not only be done but be seen to be done does not, of course, warrant fanciful and extravagant assertions and demands. What justice requires will ever depend on circumstances, and the degree to which it should be manifest that it is being done will likewise be related to the particular situation under examination". A claim of apprehended bias succeeded where a judge in interlocutory proceedings in the Family Court said that he would not accept the evidence of either the husband or the wife unless it were corroborated. In that case, R v Watson; Ex parte Armstrong73, Angliss was quoted by Barwick CJ, Gibbs, Stephen and Mason JJ. Their Honours essayed a "fair-minded person" test74: 69 (1969) 122 CLR 546; [1969] HCA 10. 70 (1969) 122 CLR 546 at 553-554. 71 (1972) 128 CLR 509; [1972] HCA 53. 72 (1972) 128 CLR 509 at 518-519. 73 (1976) 136 CLR 248; [1976] HCA 39. 74 (1976) 136 CLR 248 at 263. "It is of fundamental importance that the public should have confidence in the administration of justice. If fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have confidence in the decision." The judge's statement in Watson precluded the possibility of his acceptance of the uncorroborated evidence of either party on its merits. That situation differs materially from a case such as the present in which a judge makes an interlocutory finding expressly acknowledging the possibility that there might be a different outcome on different evidence or after a full trial. Watson was applied in Livesey v New South Wales Bar Association75 and the principle restated thus76: "a judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it." The Court invoked the "reasonable observer", also designated as the "fair-minded observer", who was presumed to approach the matter on the basis that a judge would ordinarily act so as to ensure both the appearance and the substance of fairness and impartiality. The Court acknowledged the impossibility of any inflexible rule and the need to determine each case by reference to its particular circumstances77. The fact that a judge has expressed a strongly worded view at the outset of a hearing does not prevent characterisation of that view as provisional. In such a case the reasonable apprehension of bias must be "firmly established" before 75 (1983) 151 CLR 288. 76 (1983) 151 CLR 288 at 293-294. Livesey was also invoked in a case of ex parte communication with a Family Court judge by a Family Court counsellor in chambers in Re JRL; Ex parte CJL (1986) 161 CLR 342. 77 (1983) 151 CLR 288 at 299-300. prohibition will issue78. Sometimes the line of judgment is "ill-defined"79. On the other hand, a gratuitous statement in a judgment given in one case adverse to a person not involved in that case against whom a prosecution was pending, was sufficient to disqualify the judge who made the statement from sitting on an appeal arising out of the prosecution80. The scrutiny required of claims of bias based on prior findings by a decision-maker was emphasised, in relation to administrative decisions, by Gaudron and McHugh JJ in Laws v Australian Broadcasting Tribunal81. Their Honours, after referring to R v Australian Stevedoring Industry Board, Angliss and Shaw, said82: "When suspected prejudgment of an issue is relied upon to ground the disqualification of a decision-maker, what must be firmly established is a reasonable fear that the decision-maker's mind is so prejudiced in favour of a conclusion already formed that he or she will not alter that conclusion irrespective of the evidence or arguments presented to him or her." (emphasis added) The requirement that an apprehension of bias, based on judicial conduct, be "firmly established" is consistent with the most recent decisions of this Court and gives content to the requirement that an apprehension of bias, in that class of case, be reasonable. Much debate in this appeal turned on the extent of the knowledge attributable to the fair-minded lay observer for the purpose of determining whether that observer would reasonably apprehend bias. That knowledge does not extend to a knowledge of the law that ordinary experience shows not to be 78 Re Lusink and Shaw; Ex parte Shaw (1980) 55 ALJR 12 at 14 per Gibbs ACJ, Stephen, Murphy and Wilson JJ agreeing, see also the observations of Murphy J at 15; 32 ALR 47 at 50-51, 53. See also R v Simpson; Ex parte Morrison (1984) 154 CLR 101 at 104 per Gibbs CJ; [1984] HCA 25. 79 Vakauta v Kelly (1989) 167 CLR 568 at 571 per Brennan, Deane and Gaudron JJ; [1989] HCA 44. 80 Grassby v The Queen (1989) 168 CLR 1 at 19-21 per Dawson J, Mason CJ, Brennan, Deane and Toohey JJ agreeing; [1989] HCA 45. 81 (1990) 170 CLR 70; [1990] HCA 31. See also Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 at 86 per Brennan, Gaudron and McHugh JJ, citing R v Australian Stevedoring Industry Board. 82 (1990) 170 CLR 70 at 100. the case83. The question was discussed in Johnson v Johnson84, where the plurality said85: "Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx." (footnote omitted) Kirby J also discussed the attributes of the fictitious bystander86: "Such a person is not a lawyer. Yet neither is he or she a person wholly uninformed and uninstructed about the law in general or the issue to be decided. Being reasonable and fair-minded, the bystander, before making a decision important to the parties and the community, would ordinarily be taken to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of all the relevant circumstances." (footnotes omitted) And further87: "a reasonable member of the public is neither complacent nor unduly sensitive or suspicious." (footnote omitted) 83 Vakauta v Kelly (1989) 167 CLR 568 at 585 per Toohey J, Brennan, Deane and Gaudron JJ agreeing; Webb v The Queen (1994) 181 CLR 41 at 52 per Mason CJ 84 (2000) 201 CLR 488; [2000] HCA 48. 85 (2000) 201 CLR 488 at 493 [13]. See also Webb v The Queen (1994) 181 CLR 41 at 73 per Deane J (who was dissenting). 86 (2000) 201 CLR 488 at 508 [53]. 87 (2000) 201 CLR 488 at 509 [53], an observation endorsed by the House of Lords in Lawal v Northern Spirit Ltd [2004] 1 All ER 187 at 193 [14] per Lord Steyn and by the Court of Appeal of New Zealand in Muir v Commissioner of Inland Revenue [2007] 3 NZLR 495 at 514 [96]. I agree with the observation of Kirby J that a fair-minded lay observer would, before forming a view about the existence of a reasonable apprehension of bias, take the trouble to inform himself or herself to the extent necessary to make a fair judgment. The interposition of the fair-minded lay person could never disguise the reality that it is the assessment of the court dealing with a claim of apparent bias that determines that claim. As Professor Olowofoyeku says88: "In the end, despite the pitch on objectivity and the view that the apprehensions of bias must have an objective basis, it is the opinion of the reviewing court on this issue that matters." Professor Olowofoyeku has expressed the view that the judicial construct of the informed observer no longer provides a reliable guide to decision-making on the issue of apparent bias89. However, the utility of the construct is that it reminds the judges making such decisions of the need to view the circumstances of claimed apparent bias, as best they can, through the eyes of non-judicial observers. In so doing they will not have recourse to all the information that a judge or practising lawyer would have. It requires the judges to identify the information on which they are to make their determinations. While it is necessary to be realistic about the limitations of the test, in my opinion it retains its utility as a guide to decision-making in this difficult area. Contentions and conclusions BATAS adopted the reasoning of Allsop P in dissent in the Court of Appeal. It referred particularly to his Honour's observations about the character and quality of the finding of fraud made by Judge Curtis and his actual persuasion of the moral delinquency of BATAS. Allsop P, in a passage quoted "In my view, a fair-minded lay observer might reasonably think that a trial judge might not be able to eradicate the effect of this conclusion from his or her mind in attempting to deal fairly and impartially with the issue on a later occasion." 88 Olowofoyeku, "Bias and the Informed Observer: A Call for a Return to Gough", (2009) 68 Cambridge Law Journal 388 at 396. 89 Olowofoyeku, "Bias and the Informed Observer: A Call for a Return to Gough", (2009) 68 Cambridge Law Journal 388 at 396. 90 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at BATAS made the following discrete points: the present case is similar in character to Livesey; the findings by Judge Curtis in relation to the credit of Mr Gulson might lead a reasonable observer to reasonably apprehend that Judge Curtis had a preconceived opinion about Mr Gulson's evidence; Judge Curtis could have made a lesser finding under s 125 than he did – as to this submission it has been explained earlier in these reasons that, in the circumstances of this case, no significant difference has been demonstrated between the approach that Judge Curtis took and the approach that he would have taken if expressly relying upon s 125(2); the qualified expression by Judge Curtis in his reasons for decision did not overcome the character and gravity of his finding and the actual persuasion of his mind which it reflected; it made no difference that Judge Curtis did not use language that was objectionable or emotive or that he could have expressed himself in emphatic language of absolute finality; the majority in the Court of Appeal attributed to the fair-minded lay observer an overly sophisticated understanding of court procedures; Basten JA was also in error in attributing to the fair-minded lay observer awareness of ss 25 and 25B of the DDT Act – as already explained in my response to this submission these provisions were not material to the assessment of apprehended bias in the circumstances of this case; Basten JA wrongly held that the fair-minded lay observer would have read and taken into account Judge Curtis' reasons for refusing to recuse himself; and Basten JA wrongly took into account the possibility that BATAS, by its application, might be seen to be manipulating the system to secure a hearing before a different judge. In my opinion it is not necessary to go further for the purposes of this appeal than to consider the view of the fair-minded lay observer aware of the following matters: That Judge Curtis made his finding of fraud in dealing with a dispute about whether legal professional privilege meant that certain material could not be used in the Mowbray proceedings. That his finding was made in 2006 in the Mowbray proceedings and that the motion for his recusal was brought in 2009 in the Laurie proceedings. The content of Judge Curtis' reasons for the ruling on the matter of legal professional privilege and the information conveyed by those reasons, including the information they conveyed about the nature of the proceedings and the fact that the ruling was not a final determination of fraud in relation to the Document Retention Policy for the purpose of the The qualifications stated by Judge Curtis in relation to his findings. In this case, the salient features of the judge's finding against BATAS would be apparent to the fair-minded lay observer without assistance from special knowledge of the law, the Tribunal or the rules of practice and procedure. The judge made it clear he was not making a finding which would stand, come what may, as a finding at trial. The observer would need no understanding of the rules relating to the admissibility of hearsay evidence in interlocutory proceedings to come to that conclusion. So much was apparent from the judge's statement of his task, which was to "determine the proceedings now before me on the evidence now before me."91 He referred to things which "may be explained at the trial"92 and qualified his finding of fraud by his statement that he was persuaded to that finding "on the present state of the evidence"93. His reference to the decision by BATAS not to call any rebuttal evidence in the interlocutory proceedings carried with it the clear implication, which an observer would not require a law degree to draw, that it would be open to BATAS to call rebuttal evidence at trial. On this material alone, in my opinion, the fair-minded lay observer would not conclude that there had been firmly established a reasonable fear that Judge Curtis' mind was so prejudiced in favour of his finding of fraud that he would not alter that conclusion irrespective of the evidence or arguments provided to him in the Laurie proceedings. To conclude, as required by Ebner, that the judge might be led to decide the case other than on its legal merits, would require the observer to give no account to the express qualifications made by the judge in his findings in the Mowbray ruling. Even allowing for a reasonable scepticism about human nature, there is nothing in this case to warrant the view 91 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 601 [53]. 92 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 602 [55]. 93 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 602 [56]. that the judge's disclaimers were simply to be put to one side as having little or no weight. The fair-minded lay observer is not in my opinion assumed to have had regard to the reasons for judgment published by Judge Curtis in dismissing the BATAS motion for his recusal. In so saying, it should be acknowledged that there may be cases where reliance may be placed on later statements which withdraw or qualify earlier comments indicate prejudgment94. It is nevertheless difficult to see how, as a general rule, a judge's own explanation for refusing a recusal motion will assist in determining whether the facts and circumstances upon which the judge's ruling is based, were such as to give rise to a reasonable apprehension of bias in the mind of a fair-minded lay observer. that might otherwise In my opinion, the fair-minded lay observer aware of the circumstances in which Judge Curtis made his finding against BATAS and the qualifications which he expressed in relation to it, would not have an apprehension, firmly established on reasonable grounds, that Judge Curtis might undertake the trial of the Laurie proceedings other than impartially. The appeal should be dismissed. 94 See Webb v The Queen (1994) 181 CLR 41 at 73-74 per Deane J; Johnson v Johnson (2000) 201 CLR 488 at 494 [14] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Kwan v Kang [2003] NSWCA 336 at [69]. GUMMOW J. The Dust Diseases Tribunal of New South Wales ("the Tribunal") is established as a court of record by s 4 of the Dust Diseases Tribunal Act 1989 (NSW), and has exclusive jurisdiction to hear and determine actions of a specified kind which otherwise would be heard in the Supreme Court or the District Court of that State95. Section 69 of the Supreme Court Act 1970 (NSW) provides for relief in the nature of prohibition directed to inferior courts such as the Tribunal. Upon appeal from the Court of Appeal that is the remedy now sought in this Court. In the course of litigation in the Tribunal, Judge Curtis dismissed an application to recuse himself. This result was challenged unsuccessfully in the Court of Appeal. An application for leave to appeal was dismissed by that Court and an application for prohibition also failed. The refusal of prohibition is now challenged in this Court. Before turning to the issues on the appeal something first must be said of the litigation in which the recusal application was made. The Laurie litigation On 15 March 2006 Mr Donald Henry Laurie instituted in the Tribunal an action against British American Tobacco Australia Services Limited ("BATAS"), which is the appellant in this Court, Amaca Pty Limited ("Amaca"), the second respondent, and the Commonwealth, the third respondent. Mr Laurie died shortly thereafter, on 29 May 2006. He was 65 years of age. The first respondent, Mrs Laurie, is his widow and she is administratrix of his will under a grant made by the Supreme Court of New South Wales on 14 June 2007. Pursuant to an order made by the Tribunal on 11 July 2007 and upon an amended statement of claim, she continues the action on behalf of the estate and also sues on her own behalf as the dependant widow of her husband. Mrs Laurie alleges that Mr Laurie died as a result of carcinoma of the lung which was a consequence of exposure to and inhalation of, in the course of employment by several employers, asbestos fibres in products manufactured by Amaca, then named James Hardie & Coy Pty Ltd. Amaca, as well as the Commonwealth and the fourth respondent, Judge Curtis, entered submitting appearances in this Court. Mrs Laurie also sues BATAS, alleging breach of a duty to Mr Laurie, a smoker of its tobacco products in the period 1946-1971. In her amended statement of claim filed 13 July 2007, she alleges that not only did BATAS know that the smoking of its tobacco products could cause lung cancer, but that, pursuant to a "document destruction policy", it intentionally destroyed documents 95 See BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at 428-429 [36]-[38]; [2004] HCA 61. that tended to prove this knowledge and did so with the intention of placing these documents beyond the reach of potential litigants such as Mr Laurie. The action has yet to come to trial. The statement of claim by Mr Laurie, filed 15 March 2006, alleged the "document destruction policy" and "document destruction" against BATAS in support of the claim for exemplary damages and BATAS pleaded to these allegations in its defence filed 19 April 2006. The amended statement of claim later filed by Mrs Laurie redirected these allegations to supply a foundation for specific adverse inferences on the negligence claim itself. On 20 April 2006 Judge Curtis was designated the member of the Tribunal to take the evidence of Mr Laurie, who by then was seriously ill and living in the United States. The Tribunal noted an agreement between the parties that his Honour was to be entitled when subsequently hearing and deciding the action "to take into account credit, credibility and demeanour observations made while taking the evidence as examiner". The evidence of Mr Laurie was taken by Judge Curtis in Texas on 26 April 2006, and was transcribed and video taped. The Mowbray litigation Shortly thereafter, in an action to which BATAS was a party and in which it had engaged the same firm of solicitors as it had (and retains) in the present action, Judge Curtis ruled upon an application by Brambles Australia Ltd ("Brambles"). Brambles previously had consented to entry of judgment by the Tribunal in favour of the widow of its employee, Mr Mowbray, who had died from cancer, allegedly caused by asbestos in products upon which he had worked. Brambles asserted that the cancer had also been caused by the smoking of cigarettes manufactured by BATAS and sought, by cross-claim, contribution or indemnity from BATAS. The particular dispute before Judge Curtis in the Mowbray litigation was an application by Brambles that BATAS make further discovery of documents, in particular with reference to an amendment made on 17 May 2006 to its cross-claim alleging intentional destruction by BATAS of prejudicial documents. Judge Curtis noted that these allegations were not new, having been considered in the Victorian proceedings in British American Tobacco Australia Services Ltd His Honour acceded to the application by Brambles and on 30 May 2006 gave detailed reasons for the making of the orders for further discovery ("the 2006 reasons")97. He found that on the evidence called by Brambles, particularly that of Mr Frederick Gulson, BATAS's company secretary and in-house solicitor in 1989-1990, Brambles had sufficiently discharged an onus of demonstrating, prima facie, that it could make good the allegations in the amended cross-claim. The continuation of the Laurie litigation The Laurie litigation next came before the Tribunal (constituted by Judge Duck) on 26 June 2006, a month after BATAS had received the reasons of Judge Curtis in the Mowbray litigation. Mrs Laurie had filed a motion seeking her appointment as administrator ad litem of her husband's estate. This was stood over and was not proceeded with after the grant of probate by the Supreme Court on 14 June 2007. What is of considerable importance for present purposes is that although BATAS appeared at the directions hearing on 26 June 2006, and although the parties had been at issue on the pleadings since 19 April 2006 regarding the "document destruction policy", and although the reasons on the Mowbray application (to which BATAS was a party) had been delivered a month earlier, BATAS made no recusal application respecting Judge Curtis. On 11 July 2007, the Tribunal in the Laurie litigation made the order already described whereby Mrs Laurie became the plaintiff. At a directions hearing on 10 December 2007 before Judge Curtis, the Tribunal was told that there was now pending in the Supreme Court an application by BATAS under the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) that the action be transferred to the Supreme Court of Victoria. The application was to fail, being dismissed by Harrison J on 27 February 2009. In his detailed reasons98, Harrison J described as "patent" the importance of the role that Judge Curtis has already played in taking the evidence in Texas and is yet to play in the resolution of the action in the Tribunal, and continued: "The agreement among the parties that he should be given the power to deal with observations made by him in a particular way was predicated upon his continuing to hear the proceedings to finality. It is in the interests of justice that that agreement not lightly be frustrated." At the hearing in the Tribunal on 10 December 2007, the solicitor for BATAS had informed Judge Curtis that, if the cross-vesting application were to 97 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580. 98 British American Tobacco Australia Services Ltd v Laurie [2009] NSWSC 83 fail, BATAS then would submit that he should not hear the trial, "having regard to some of the prima facie findings that [his] Honour made in the context of the discovery application made by Brambles in the Mowbray case". Apparently in anticipation of any query as to the delay by BATAS since delivery of the 2006 reasons in moving any recusal application, the solicitor for BATAS said at the hearing on 10 December 2007 that it was the first time, since the reconstitution of the action on 11 July 2007, that the matter had been before the Tribunal with the solicitors present. In truth, however, the period of delay had begun long before, on 30 May 2006, with the delivery of the 2006 reasons. The recusal application Eventually, after the dismissal by Harrison J of the cross-vesting application on 27 February 2009, BATAS filed a motion on 9 March 2009 that Judge Curtis disqualify himself from further hearing the Laurie litigation. The application was heard on 15 May 2009 and, on 27 May, his Honour delivered his reasons dismissing the application. His conclusion was99: "I do not believe that, having read my published reasons in Re Mowbray, any reasonable observer might entertain a reasonable apprehension that I might not bring an impartial and unprejudiced mind to the resolution of the questions of whether Mr Gulson is a witness of truth, and whether or not BATAS engaged in a dishonest document destruction policy." BATAS, both before this Court and in the Court of Appeal, submitted that the hypothetical observer would not have regard to the reasons of Judge Curtis on the recusal application or, if they did, such reasons should carry little, if any, weight. But it was remarked in the joint reasons of Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in Johnson v Johnson100, to which further reference is made below, that the hypothetical observer would be no more entitled to make snap judgments than would be the decision maker under observation. Accordingly, and as the joint reasons make clear, later statements which qualify earlier statements may be relevant. There is no logical reason why any temporal element should be brought into that general principle101; it depends upon the circumstances of the particular case. As will become evident later in these reasons, the considered conclusions, such as that stated above, by Judge 99 Laurie v Amaca Pty Ltd [2009] NSWDDT 14 at [22]. 100 (2000) 201 CLR 488 at 494 [14]; [2000] HCA 48. 101 Cf British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at [77] per Tobias JA. Curtis in the recusal application are important for an understanding of the 2006 reasons and the hypothetical observer would attend to them in deciding whether the 2006 reasons had produced a sufficient apprehension of prejudgment. To that perception of the role of the hypothetical observer must be added the consideration is a reasonable that "the ground of disqualification apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party". The words are those of Mason J in Re JRL; Ex parte CJL102, in a passage adopted by Callinan J in Johnson v Johnson103. Mason J also said in that passage104, using words later said by the English Court of Appeal to have "great persuasive force"105, and adopted by the New Zealand Court of Appeal106: "In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment and this must be 'firmly established': Reg v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group107; Watson108; Re Lusink; Ex parte Shaw109. Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour." The references in JRL to the phrase "firmly established" in the joint reasons of all seven Justices of this Court in Angliss and to the subsequent authorities is important. BATAS presented its argument to Judge Curtis and to 102 (1986) 161 CLR 342 at 352; [1986] HCA 39. 103 (2000) 201 CLR 488 at 518 [80]. 104 (1986) 161 CLR 342 at 352. 105 Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451 at 479. See also Sengupta v Holmes [2002] EWCA Civ 1104 at [25]. 106 Muir v Commissioner of Inland Revenue [2007] 3 NZLR 495 at 504. See also Hammond, Judicial Recusal: Principles, Process and Problems, (2009) at 35-36. 107 (1969) 122 CLR 546 at 553-554; [1969] HCA 10. 108 R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 262; [1976] HCA 39. 109 (1980) 55 ALJR 12 at 14; 32 ALR 47 at 50-51. this Court on the false footing that "the threshold of apprehended bias is very low". For that proposition BATAS relied upon a remark by Spigelman CJ in McGovern v Ku-Ring-Gai Council110. However, the expression "low threshold" was immediately qualified by the statement that "an issue of some specificity" is presented in the identification of that which is said to constitute lack of "impartiality" or "prejudice". Nevertheless, references to thresholds in this context are apt to distract attention from the force of what was said by Mason J in JRL and should not be made. The appeal An application by BATAS for leave to appeal to the Court of Appeal (Tobias and Basten JJA; Allsop P dissenting) from the dismissal by Judge Curtis of its motion seeking his disqualification was dismissed on 17 December 2009; the Court of Appeal, by the same majority, also refused an application by BATAS for prohibition directed to Judge Curtis, again on the ground of apprehended bias111. Against the refusal of prohibition BATAS, by special leave, appeals to this Court, on the condition that it pay the costs of Mrs Laurie of the appeal and that costs orders already made not be disturbed. It is important to note that the appeal is brought from the refusal by the Court of Appeal of a prohibition application. That is a discretionary remedy. It was open to the Court of Appeal to refuse prohibition having regard to the delay, waiver, acquiescence or other conduct of BATAS in the course of the litigation in the Tribunal, or other relevant circumstances112. In submissions upon the recusal application it made to Judge Curtis, BATAS had submitted that delay was not a relevant consideration. The submission was made apparently in response to reliance by Mrs Laurie upon the delay by BATAS. The submission by BATAS was not well founded. It cannot be in the interests of the due administration of justice, for example, for a well-resourced litigant, apprised of apparent grounds for a recusal application113, to bide its time in the hope of a favourable outcome on the merits at trial and then complain if it loses the trial. 110 (2008) 72 NSWLR 504 at 508. 111 [2009] NSWCA 414. 112 See Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 89 [5], 106-107 [53], 144 [172]; [2000] HCA 57. 113 Cf R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet Ugarte (No 2) [2000] 1 AC 119 at 127-129, 138. However, no case against BATAS of this character was made by Mrs Laurie to the Court of Appeal. Special leave having been granted, and there being no application for the revocation of that grant and no notice of contention by the first respondent, it is in that unsatisfactory state that the appeal falls for decision. For the reasons which follow, prohibition was correctly refused by the Court of Appeal on the grounds argued before it, and the appeal to this Court should be dismissed. Applicable principles This is not a case where the ground for apprehended bias is identified as an extraneous influence such as financial interest in the outcome of the litigation or personal connection with a litigant. The apprehension upon which BATAS founds its complaint is that Judge Curtis will not approach the Laurie case with an open mind because he appears to have prejudged an issue and cannot or will not reconsider it with an open mind. The controversy in Johnson v Johnson114 turned upon the significance to be attached to remarks by the judge in the course of a trial in the Family Court of Australia. In the joint reasons of five Justices in this Court several points of immediate significance were made. "The hypothetical reasonable observer of the judge's conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is 'a professional judge whose training, tradition and oath or affirmation 114 (2000) 201 CLR 488. 115 (2000) 201 CLR 488 at 493 [12]. L'Heureux-Dubé and McLachlin JJ and Cory J had spoken in similar terms in R v S (RD) [1997] 3 SCR 484 at 501-503 and 532-534 respectively. Cf Helow v Secretary of State for the Home Department [2008] 1 WLR 2416 at 2435 per Lord Mance; [2009] 2 All ER 1031 at 1049-1050. require [the judge] to discard the irrelevant, the immaterial and the prejudicial'116." Secondly, their Honours added117: "Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge118, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation." Thirdly, the conclusions in the joint reasons in Johnson were expressed as follows119: "The judge was not to be understood as intending to express a concluded view on the credibility of either party. In particular, he was not to be understood as intending to express such a view about the credibility of the appellant, who had not yet been called to give evidence. His expectation as to the importance of independent evidence, and documentary material, was understandable120. An apprehension that he had formed a concluded view on the credibility of witnesses, and would not bring an open mind to bear when he decided the case, would have been unwarranted and unreasonable." Fourthly, where, as was the situation in Johnson, the judge in question later explains in court what he or she had intended to convey by an earlier statement in court, the question is whether a reasonable observer would reject that explanation, or whether the explanation could not remove "an ineradicable apprehension of prejudgment"121. 116 Vakauta v Kelly (1988) 13 NSWLR 502 at 527 per McHugh JA, adopted in Vakauta v Kelly (1989) 167 CLR 568 at 584-585 per Toohey J; [1989] HCA 44. 117 (2000) 201 CLR 488 at 493 [13]. 118 Webb v The Queen (1994) 181 CLR 41 at 73 per Deane J; [1994] HCA 30. 119 (2000) 201 CLR 488 at 495 [18]. 120 Cf Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 at 603 [16] per Gleeson CJ, Gaudron, Kirby and Hayne JJ; [1999] HCA 15. 121 (2000) 201 CLR 488 at 494 [14]-[16]. To this may be added an observation in the joint reasons of the whole Court in Angliss122. Their Honours emphasised the significance of the particular subject matter before the decision maker and the questions arising from it, saying of the mind of the decision maker123: "Such a mind is not necessarily a mind which has not given thought to the subject matter or one which, having thought about it, has not formed any views or inclination of mind upon or with respect to it." The reasons on the recusal application In his reasons for refusing the recusal application, Judge Curtis described the circumstances now said by BATAS to give rise to apprehended bias. He noted that the document destruction policy had been pleaded against BATAS in the Mowbray litigation, and continued with an analysis of the 2006 reasons124: "In that matter, Brambles sought an order for further and better discovery in relation to the document destruction policy, and that interlocutory application, opposed by BATAS, came before me for resolution. A question arose as to whether certain otherwise privileged evidence given in an American action by Mr Frederick Gulson, a former Company Secretary and in-house solicitor to BATAS, could be adduced in the proceedings. That question was resolved by my finding that the evidence in question constituted communications 'in furtherance of the commission of a fraud' within the meaning of s 125 of the Evidence Act 1995 [(NSW) ('the Evidence Act')]". Section 125 is concerned with the loss of client legal privilege by reason of certain types of misconduct. The court may hold that the privilege does not prevent the adducing of evidence of a communication made or a document prepared in furtherance of, amongst other things, the commission of a fraud (s 125(1)). If the commission of the fraud is a fact in issue and there are reasonable grounds for finding the fraud was committed, the court "may find that the communication was so made or the document so prepared" (s 125(2)). In such circumstances, it is not necessary for the denial of privilege to make a finding beyond that standard of "reasonable grounds". 122 (1969) 122 CLR 546 at 552-554. 123 (1969) 122 CLR 546 at 554. 124 [2009] NSWDDT 14 at [4]-[5]. After the passage from his reasons on the recusal application set out above, Judge Curtis continued his analysis of the 2006 reasons, saying125: "That finding was based substantially upon my accepting the evidence of Mr Gulson, who was called before me. The allegation of fraud, as I identified it, was not simply that BATAS destroyed prejudicial documents for the purpose of suppressing evidence in anticipated litigation, but that it 'dishonestly concealed this purpose by pretence of a rational non-selective housekeeping policy'." The English Court of Appeal has treated as an extreme and unlikely situation the expression by a judge, called upon to make a preliminary ruling, of the decision in such extreme language as to give rise to an apprehension that further persuasion at trial would be to no avail126. That extreme situation is far from the present case. It needs to be emphasised that it is not said that Judge Curtis at any stage expressed himself in extravagant or extreme terms. Both sets of reasons are laid out in a measured fashion. The complaint now made by BATAS is quite different. The submission is that, in deciding against BATAS in the further discovery application in the Mowbray litigation, his Honour in the 2006 reasons, by failing expressly to frame his findings as being made only on the basis of "reasonable grounds", went beyond the standard sufficient for the satisfaction of s 125 and so made an adverse finding against BATAS at a higher, more prejudicial, standard. That finding then is said to lead to the conclusion that BATAS should have succeeded on its recusal application in the Laurie litigation. Logical connection However, the hypothetical reasonable observer, having regard to the application by Judge Curtis of s 125 in the 2006 reasons, would approach the question of whether apparent bias on the recusal application was sufficiently established in the manner required by the joint reasons in Ebner v Official Trustee in Bankruptcy127, the two sets of joint reasons in Smits v Roach128 and the joint reasons in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd129. The observer would require articulation of the logical connection between 125 [2009] NSWDDT 14 at [5]. 126 Sengupta v Holmes [2002] EWCA Civ 1104 at [34], [47]. 127 (2000) 205 CLR 337 at 345 [8]; [2000] HCA 63. 128 (2006) 227 CLR 423 at 443-444 [53], 444 [56]; [2006] HCA 36. 129 (2006) 229 CLR 577 at 609 [110]; [2006] HCA 55. the matter in the 2006 reasons and the apprehended deviation from the course of deciding, on their merits, the issues in the Laurie litigation. The first matter the observer would note would be the statement by Judge Curtis in the 2006 reasons of the submission by BATAS as to how he should approach the operation of s 125 in the further discovery application made against BATAS with which he was dealing. That statement was130: "For present purposes I accept the submission by BATAS that, consistently with the decisions in Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 222, Kang v Kwan [2001] NSWSC 698 and ATH Transport v JAS (International) [2002] NSWSC 956, a finding of fraud sufficient to enliven s 125 must involve an element of dishonesty." In the first of these three decisions, Hodgson CJ in Eq expressed a tentative view that "fraud" as used in s 125 requires an element of dishonesty131. In the second, Santow J followed that view132, and in the third Barrett J did the same. But it is significant that Barrett J, who was ruling on an application for access to documents produced on subpoena, accepted that to enliven s 125 some evidence was required which at a prima facie level was sufficient to give some colour to the charge of fraud, and concluded that on the material before him that standard had not been met and s 125 did not apply133. However, the effect of the submission made by BATAS to Judge Curtis was that more was required for s 125 to apply against its claim of client legal privilege than the reasonable grounds spoken of in s 125(2). The observer then would note that, BATAS having pitched at that level its case against the operation of s 125, Judge Curtis went ahead to decide the discovery application on the basis of the evidence presented. The observer also would note from the 2006 reasons that BATAS did not rise with any forensic vigour to counter the case put by the applicant, Brambles. On that state of the evidence, and with frequent reiteration that matters might emerge differently at the trial, Judge Curtis ruled against BATAS on the discovery application. Judge Curtis indicated that the standard of proof where dishonesty is alleged must take into account the gravity of that allegation, and that, while 130 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 595. 131 [2001] NSWSC 222 at [63]. 132 [2001] NSWSC 698 at [37]. 133 [2002] NSWSC 956 at [13]-[15]. vitally important to Brambles on the present application, the evidence of Mr Gulson to a large extent was vague and consisted of hearsay. Counsel for BATAS had cross-examined Mr Gulson but subjected him to no more than a peripheral attack. Counsel did not put to him directly that his evidence, largely hearsay but strongly against BATAS, was untruthful, unreliable or actuated by malice. In the 2006 reasons Judge Curtis had said that while there may have been good reasons why BATAS had not joined issue with the evidence of Mr Gulson and had called no evidence to contradict him, the discovery application had to be determined on the evidence then before the Tribunal. His Honour emphasised that there remained a live issue for the trial, being the contention by BATAS that at no time had its policies and practices permitted selective destruction of prejudicial documents. After referring to these matters in the course of his reasons in the recusal application, Judge Curtis continued134: "Under the heading 'Findings of fact relevant to s 125' I stated: 'I am persuaded on the present state of the evidence that BATAS in 1985 drafted or adopted the Document Retention Policy for the purpose of fraud within the meaning of s 125 of the Evidence Act.' And further: 'In the absence of evidence to the contrary, I infer that legal advice to the effect that destruction of documents pursuant to the terms of the policy was not contrary to law, was integral to the decision by BATAS to persist with its policy of selective destruction.'" (emphasis added by Judge Curtis) He then said135: "Far from expressing my conclusions in terms of finality, I took pains to recognise that the assertions by Brambles as to a document destruction policy remained a live issue for the trial, that the evidence of Mr Gulson had not been tested in cross examination, and that there may be good reasons why BATAS, in an interlocutory proceeding, did not wish to take issue with, nor call evidence to contradict, Mr Gulson. 134 [2009] NSWDDT 14 at [16]. 135 [2009] NSWDDT 14 at [20]-[22]. I accept the submission of [counsel for BATAS] that the threshold of apprehended bias is very low. Nevertheless it is a threshold that must be crossed by a reasonable person. That person is not overly suspicious. Conclusion I do not believe that, having read my published reasons in Re Mowbray, any reasonable observer might entertain a reasonable apprehension that I might not bring an impartial and unprejudiced mind to the resolution of the questions of whether Mr Gulson is a witness of truth, and whether or not BATAS engaged in a dishonest document destruction policy." It is in this setting that the first respondent correctly submits that the hypothetical observer, upon reading the 2006 reasons, would appreciate that the judge was qualifying his conclusions by emphasising that if the same issues arose at a later stage in the Mowbray litigation he would decide them on the evidence then led by the parties. His Honour "found fraud" but on the evidence then available and admissible in the Mowbray litigation. Further, as explained earlier in these reasons, upon the prohibition application the subject of the present appeal by BATAS, that observer would have the benefit of the statements made by Judge Curtis on the recusal application. Those statements would remove any apprehension of prejudgment at a trial of the Laurie litigation. There could have been no objection to Judge Curtis trying the dispute between Brambles and BATAS in the Mowbray litigation upon such evidence as then was presented, notwithstanding his earlier ruling on the discovery application. A fortiori, should the Laurie litigation go to trial, the fair-minded lay observer would not, upon the basis of the Mowbray litigation, apprehend that the judge would not bring an impartial and open mind to the resolution of the issues in the Laurie litigation. For the observer there would be lacking the necessary logical connection between the 2006 reasons and the Laurie litigation to support such an apprehension. The reasons in the Court of Appeal The leading majority judgment in the Court of Appeal was delivered by Tobias JA. After referring to statements of principle by this Court in Johnson v Johnson and Parramatta Design he went on136: "[T]he hypothetical fair-minded observer would have some understanding of the nature of the application with which the primary judge was dealing and, in particular, an understanding of the fact that hearsay evidence in 136 [2009] NSWCA 414 at [115]. such an application was admissible whereas in other circumstances it was not and that his Honour's findings were only for the limited purpose of allowing inspection of documents which would otherwise be the subject of client legal privilege. That observer would thus be acquainted with the difference between an interlocutory proceeding and a trial and, in particular, of the significant difference between the evidence admissible in the former as distinct from that admissible in the latter. That observer would also understand that, perhaps for perfectly proper tactical reasons, BATAS had decided not to call evidence in the interlocutory proceedings to counter that of Mr Gulson which it might well call at trial, thus putting a completely different complexion on the issue of BATAS' document management policies." BATAS criticises this attribution to the observer of an appreciation of the significance of the hearsay rule and the distinction between rulings made in proceedings before trial and at trial on other evidence. However, as was emphasised in the second, third and fourth matters referred to above under the heading "Applicable principles", the understanding to be attributed to the lay observer depends upon the circumstances. Here the reasoning of the judge was laid out in the 2006 reasons and explained further in the reasons on the recusal application. The 2006 reasons record a submission that the evidence of Mr Gulson contained inadmissible hearsay, and the reliance by his Honour upon s 75 of the Evidence Act in rejecting that submission. The 2006 reasons record that the evidence of Mr Gulson stands uncontradicted, and that, although he may be, he has not yet been tested by a contrary version of events. In his dissenting reasons Allsop P emphasised that137: "The problem lies in the character and gravity of the finding and the actual persuasion of the mind of the trial judge of the moral delinquency of the party to a degree to warrant the expressed conclusion of fraud." This appears to attribute to the lay observer an incorrect application of the principle in Briginshaw v Briginshaw138 by requiring satisfaction of dishonesty to a degree that no further evidence could dissuade the court from that conclusion. But if the evidence later adduced is different the court in question may be persuaded to a different conclusion and that, Judge Curtis made clear in the 2006 reasons, might be the outcome at a later trial. The reasons on the recusal application underscore the point that there was not the ineradicable apprehension of prejudgment of which BATAS complains. 137 [2009] NSWCA 414 at [13]. 138 (1938) 60 CLR 336; [1938] HCA 34. Conclusion The appeal should be dismissed. BATAS should pay the costs of the first respondent. HEYDON, KIEFEL AND BELL JJ. Introduction Judge Curtis, who is the fourth respondent to this appeal, is a judge of the Dust Diseases Tribunal of New South Wales ("the Tribunal"). In proceedings which are unrelated to the present appeal, his Honour found that the appellant, British American Tobacco Australia Services Limited ("BATAS"), developed and adopted a fraudulent business policy. The existence of that policy is in issue in proceedings which are brought against BATAS by the first respondent, Claudia Jean Laurie. Mrs Laurie's claim has been listed for hearing before Judge Curtis. The question raised by the appeal is whether the apprehension of bias rule disqualifies his Honour from hearing Mrs Laurie's claim. It has not at any stage been alleged, nor could it have been, that his Honour displayed actual bias. The rule requires that a judge not sit to hear a case if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question that the judge is required to decide139. The apprehension here raised is of pre-judgment; it is an apprehension that, having determined the existence of the policy in the earlier proceeding, Judge Curtis might not be open to persuasion towards a different conclusion in Mrs Laurie's proceeding. Background matters Mrs Laurie is the widow of Donald Henry Laurie. Mr Laurie died from lung cancer in May 2006. Shortly before his death he commenced proceedings in the Tribunal claiming damages in negligence against three defendants including BATAS. In the case against BATAS, Mr Laurie pleaded that he had smoked tobacco products for a number of years and that throughout this period BATAS knew, or ought to have known, that smoking tobacco products could cause lung cancer. He claimed that BATAS was in breach of the duty of care that it owed to him. The breaches of duty particularised included making public statements denying that there was reliable evidence that smoking could cause lung cancer and disparaging material in the public domain which indicated the existence of that link. Mr Laurie asserted that BATAS had developed and 139 Livesey v New South Wales Bar Association (1983) 151 CLR 288; [1983] HCA 17; Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63. implemented a policy of destroying documents that may have provided evidence adverse to its interests in litigation. Similar allegations concerning the existence and implementation of a document destruction policy were pleaded in proceedings in the Tribunal brought against Brambles Australia Ltd ("the Mowbray proceedings"). In those proceedings, Judge Curtis found that BATAS had drafted or adopted its Document Retention Policy for the purpose of a fraud140. The finding was substantially based upon acceptance of the evidence of Mr Frederick Gulson, who had been the in-house counsel and company secretary of BATAS. It is likely that Mr Gulson will be called in Mrs Laurie's case to prove the allegations concerning the document destruction policy. BATAS made an application to Judge Curtis asking that he disqualify himself from hearing Mrs Laurie's claim on the ground that his findings in the Mowbray proceedings gave rise to a reasonable apprehension of pre-judgment. The application was refused141. BATAS sought leave to appeal from Judge Curtis's order to the Court of Appeal of the Supreme Court of New South Wales142. BATAS also commenced proceedings in that Court claiming an order prohibiting Judge Curtis from hearing or determining Mrs Laurie's claim143. The Court of Appeal dismissed BATAS's summons for leave to appeal. By majority (Tobias and Basten JJA; Allsop P dissenting) the Court dismissed BATAS's claim for prerogative relief. BATAS appeals by special leave against the order of the Court of Appeal dismissing its summons for prerogative relief. The grant of special leave is conditioned on BATAS paying Mrs Laurie's costs of the appeal in any event and 140 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 602 [56]. 141 Laurie v Amaca Pty Ltd [2009] NSWDDT 14. 142 Section 32(1) of the Dust Diseases Tribunal Act 1989 (NSW) confers a right of appeal to the Supreme Court on a party who is dissatisfied with a decision of the Tribunal in point of law or on a question as to the admission or rejection of evidence. 143 Supreme Court Act 1970 (NSW), s 69. upon there being no disturbance to the costs orders that have already been made in the proceedings. Each of the remaining respondents to the appeal has filed a submitting appearance. For the reasons that follow, the appeal should be allowed and an order made prohibiting Judge Curtis from hearing or determining The Mowbray proceedings The Mowbray proceedings were commenced by the widow of Alan Mowbray, a former employee of Brambles who died of lung cancer in January 2002. Mrs Mowbray claimed that her husband's cancer had been caused by the inhalation of asbestos fibres contained in the brake pads on which he had been required to work. A consent judgment was entered in her favour on 27 February Thereafter Brambles brought a cross-claim against BATAS for contribution144. Brambles asserted that smoking tobacco products manufactured and marketed by BATAS had been a cause of the late Mr Mowbray's cancer. It sought an order that BATAS provide further discovery. The application came before Judge Curtis. In the course of the application Brambles was given leave to amend its cross-claim to make further allegations concerning BATAS's document retention policies. One of these allegations was that BATAS had destroyed prejudicial documents in order to put them beyond the reach of litigants. Another was that it had falsely advanced an innocent housekeeping explanation for that destruction so as to prevent adverse inferences being drawn from it. Each of the parties was represented by senior and junior counsel on the hearing of the discovery application, which occupied several days. Judge Curtis accepted Mr Gulson's evidence. He found it was corroborated by the evidence of Mr Welch, Chief Executive Officer of the Tobacco Institute of Australia between January 1991 and April 1992, and Dr Wigand, Vice-President of Research and Development at Brown and Williamson, a subsidiary of BATAS's parent company, between 1989 and 1993. Also in evidence in Brambles' case on the discovery application was an affidavit sworn by Mr Gulson in February 2003 and a transcript of evidence given by him in proceedings in the United States. Both documents were the subject of a hearsay objection. Since the discovery application was interlocutory, and since Mr Gulson had identified the sources of his information, the hearsay 144 Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5(1)(c). rule did not apply145. Judge Curtis gave two additional reasons for his decision to admit the evidence: Mr Gulson was subject to cross-examination at the hearing and the allegations were not new; and BATAS had had the opportunity to investigate Mr Gulson's claims and to call evidence in rebuttal of them. Parts of the transcript of Mr Gulson's evidence in the United States proceeding and his affidavit were the subject of client legal privilege146. Judge Curtis was required to determine whether this material could be adduced in evidence under s 125(1) of the Evidence Act 1995 (NSW), which permits evidence to be adduced of a communication that is the subject of client legal privilege if the communication is made "in furtherance of the commission of a fraud"147. Proof of fraud for the purposes of s 125(1) is facilitated by sub-s (2), which, relevantly, provides: "(2) For the purposes of this section, if the commission of the fraud … is a fact in issue and there are reasonable grounds for finding that: the fraud … was committed, and a communication was made … in furtherance of the commission of the fraud … the court may find that the communication was so made …" (emphasis added) Judge Curtis did not state that his findings were made merely because there were reasonable grounds for finding fraud. He found fraud under s 125(1) independently of s 125(2). He approached the determination upon the footing that a finding of fraud under s 125(1) must involve an element of dishonesty148. It is implicit that his findings were arrived upon by application of the principles 145 Section 75 of the Evidence Act 1995 (NSW) provides that "[i]n an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source." 146 Evidence Act 1995 (NSW), ss 118 and 119. 147 Evidence Act 1995 (NSW), s 125(1)(a). 148 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 595 [29]. stated by Dixon J in Briginshaw v Briginshaw149. They were expressed as follows. First, "on the present state of the evidence … BATAS in 1985 drafted or adopted the Document Retention Policy for the purpose of a fraud within the meaning of s 125 of the Evidence Act."150 Secondly, "[i]n the absence of evidence to the contrary … I find that the communications made for the purpose of obtaining [advice to the effect that destroying documents pursuant to the Policy was not contrary to law] were communications in furtherance of the commission of a fraud within the meaning of s 125."151 Judge Curtis's findings were dependent upon the evidence of Mr Gulson, which he described as being vague and consisting of Mr Gulson's impressions, interpretations and conclusions as to what he was told152. His Honour allowed cross-examination of Mr Gulson on the application. That cross-examination included cross-examination on matters relevant only to Mr Gulson's credibility153. Mr Gulson acknowledged that he had taken control of a company by means of artificial or sham transactions in order to bring proceedings against a former director for breach of fiduciary duty and that he had made a claim against BATAS for wrongful dismissal which he had not pursued. BATAS submitted that Mr Gulson's evidence on these topics made it unsafe and unsatisfactory to accept his evidence. Judge Curtis rejected this submission154. Notably, senior counsel for BATAS did not challenge Mr Gulson on the substance of his allegations. 149 (1938) 60 CLR 336 at 362; [1938] HCA 34. 150 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 602 [56]. 151 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 602 [57]. 152 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 600 [48]. 153 Section 103(1) of the Evidence Act 1995 (NSW) provides that the credibility rule (which renders inadmissible evidence that is relevant only to a witness's credibility) does not apply to evidence adduced in cross-examination if it has substantial probative value. 154 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 601 [51]. Judge Curtis said that the sting in Mr Gulson's account was not simply that BATAS had destroyed prejudicial documents for the purpose of suppressing evidence in anticipated litigation, but that BATAS had dishonestly concealed this purpose by the pretence of a rational, non-selective housekeeping policy155. This was the dishonesty which Judge Curtis identified as warranting the conclusion of fraud. Judge Curtis was mindful that the application was interlocutory and of the limited challenge that BATAS had advanced to the acceptance of Mr Gulson's evidence. In these respects his Honour stated the following reservations156: "I should make it plain that BATAS has at all times maintained that its document management policies and practices at no time permitted selective destruction of prejudicial documents. The assertion by Brambles to the contrary remains a live issue for the trial. Mr Gulson's evidence stands uncontradicted. He has not yet been tested by a contrary version of events … There may be good reasons why BATAS has not yet joined issue with, and called evidence to contradict, Mr Gulson; however, I must determine the proceedings now before me on the evidence now before me." In the event, Brambles' cross-claim did not go to trial. On 5 July 2006, the Tribunal made orders dismissing it with no order as to costs. The Laurie proceedings Mrs Laurie, on behalf of the estate of her late husband and on her own behalf as his dependant, by amended statement of claim invites the Tribunal to draw inferences adverse to BATAS from the destruction of documents under a document destruction policy. She claims aggravated damages in reliance on the allegations of destruction of documents under the policy. BATAS admits that, from time to time, it destroyed documents in its possession under its document management policies. It admits that some of the documents which it destroyed 155 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 599 [44]. 156 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 599-601 [45], [52], [53]. may have been relevant to matters in issue in the Laurie proceedings. Otherwise it denies the document destruction allegations. The question of whether BATAS adopted and implemented a document retention/destruction policy for the purpose of destroying documents adverse to its interests under the guise of a non-selective policy is a live and significant one in the Laurie proceedings. The Court of Appeal Tobias JA (with whose reasons Basten JA generally agreed) accepted that there was nothing provisional about Judge Curtis's finding of fraud and that essentially the same issue is to be litigated in the Laurie proceedings. However, his Honour considered that the hypothetical observer would have some understanding that the finding was interlocutory and made on hearsay evidence that would not be admissible on a final hearing. His Honour also considered that the observer would appreciate that for tactical reasons BATAS might have decided not to call evidence on the application to counter that of Mr Gulson157. In these circumstances, Tobias JA concluded that the observer would not reasonably apprehend that Judge Curtis might not bring an impartial and unprejudiced mind to the determination of the issue once all admissible evidence had been received and the matter had been fully argued158. Allsop P dissented. His Honour characterised Judge Curtis's finding as an unqualified one of dishonesty and fraud159. In his view, the gravity of the finding was such that a fair-minded lay observer might reasonably doubt that Judge Curtis could eradicate the effect of it when endeavouring to deal fairly and impartially with the same issue in the Laurie proceedings160. The problem, as Allsop P saw it, lay in the gravity of the conclusion of fraud and in Judge Curtis's persuasion of BATAS's moral delinquency to the degree warranting that conclusion161. 157 British American Tobacco Australia Services Ltd v Laurie [2009] NSWCA 414 at 158 [2009] NSWCA 414 at [116]. 159 [2009] NSWCA 414 at [8]. 160 [2009] NSWCA 414 at [8] and [13]. 161 [2009] NSWCA 414 at [13]. The submissions BATAS adopted Allsop P's reasoning. The decision of this Court in Livesey v New South Wales Bar Association162 was relied on in support of it. BATAS submitted that the majority in the Court of Appeal wrongly attributed an overly sophisticated understanding of the rules of evidence and of procedure to the lay observer. A discrete challenge, discussed below, was made to a strand of Basten JA's reasoning concerning the observer's awareness of the Tribunal's governing statute. In Livesey it was said that a fair-minded observer might entertain a reasonable apprehension of bias if a judge sits to hear a case after the judge has, in a previous case, expressed "clear views" about a question of fact constituting a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question163. In that case, the critical allegation made by the New South Wales Bar Association in support of Mr Livesey's asserted unfitness for practice was that he had been a party to a corrupt arrangement involving the deposit of bail monies. The monies had been lodged by Ms Bacon. Two members of the Court of Appeal had made findings in earlier proceedings between Ms Bacon and the Bar Association. In that case, their Honours had rejected her evidence concerning the bail monies and found that Mr Livesey had been an active and knowing participant in the corrupt arrangement164. In these circumstances it was held to have been an error for the two members of the Court of Appeal to hear the proceedings against Mr Livesey. In BATAS's submission, Judge Curtis's reasons convey that his Honour holds a clear view of the existence of the document retention/destruction policy. His Honour's repeated reference to the fact that Mr Gulson's allegations were not new, taken with his observation that BATAS had the opportunity to rebut them, was said to be suggestive of the view that they are unanswerable. Mrs Laurie relied on Judge Curtis's acknowledgment that his findings were made in the context of an interlocutory determination and that the issue of the existence of the document policy remained a live one for the trial. In her 162 (1983) 151 CLR 288. 163 Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 300 per Mason, Murphy, Brennan, Deane and Dawson JJ. 164 Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 297 per Mason, Murphy, Brennan, Deane and Dawson JJ. submission, his Honour's reasons made clear his recognition that different evidence may produce a different conclusion at the trial. Before turning to the apprehension of bias rule and its application, it is convenient to address two aspects of the reasons of the majority below. The evidentiary provisions under the Tribunal's statute In addition to his concurrence with Tobias JA's reasons, Basten JA advanced further reasons for refusing prohibition. These included that the hypothetical observer should be taken to have an understanding of the procedural characteristics of the Tribunal and the evidentiary provisions that are contained in its statute165. Under the statute, historical evidence and general medical evidence concerning dust exposure and dust diseases that has been admitted in earlier proceedings may, with leave, be received in later proceedings whether or not the proceedings are between the same parties166. There is provision for material obtained by discovery or interrogatories in one proceeding to be used in other proceedings whether or not the proceedings are between the same parties167. Issues of a general nature may not be re-litigated in other proceedings without leave168. Basten JA noted that these provisions had not been relied upon in this instance. His Honour said that, nonetheless, the circumstance that a different approach might be available to the Tribunal in respect of "issues of a general nature" was indicative of a statutory intention that the Tribunal not be required to "reassess such matters repeatedly"169. His Honour considered that the fair- minded observer should properly these procedural characteristics of the Tribunal170. into account take BATAS submitted that to attribute knowledge of the Tribunal's statute to the lay observer is to endow that hypothetical construct with a degree of legal knowledge that is likely to be enjoyed only by practitioners who appear regularly before the Tribunal. 165 [2009] NSWCA 414 at [147]. 166 Dust Diseases Tribunal Act 1989 (NSW), s 25(3). 167 Dust Diseases Tribunal Act 1989 (NSW), s 25A. 168 Dust Diseases Tribunal Act 1989 (NSW), s 25B. 169 [2009] NSWCA 414 at [142]-[145]. 170 [2009] NSWCA 414 at [147]. The attributes of the hypothetical observer have been considered in a number of decisions of this Court. In Johnson v Johnson the emphasis was on the need to assess any suggested apprehension of bias in the context of ordinary judicial practice171. At issue in that case was the expression of views by the trial judge in the course of exchanges with counsel. It was accepted that the lay observer must be taken to have some understanding that modern judges, responding to the need for active case management, are likely to intervene in the conduct of the proceedings and in so doing may well express tentative opinions on matters in issue. The application of the apprehension of bias rule depends upon the particular circumstances of each case172. In Laws v Australian Broadcasting Tribunal understanding that defences filed by the Australian Broadcasting Tribunal did not amount to assertions of belief173. the hypothetical observer's assumed knowledge extended The Tribunal is a court of record174. It has exclusive jurisdiction to hear claims for damages for breach of duty in respect of dust-related conditions175. The Tribunal's power to refuse to allow the re-litigation of general issues (and to receive historical evidence and general medical evidence admitted in other proceedings) says nothing about the requirement in actuality and in appearance that its judges be impartial. It would be wrong to decide the present question by taking into account the novel evidentiary provisions that are available to the Tribunal. This is not because to do so is to attribute excessive knowledge to the lay observer but because the existence of those provisions is unconnected to whether a judge of the Tribunal is reasonably apprehended to have pre-judged an issue that is not to be determined by recourse to them. 171 Johnson v Johnson (2000) 201 CLR 488 at 493 [13] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. 172 Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 299-300 per Mason, Murphy, Brennan, Deane and Dawson JJ. 173 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 87-88 per Mason CJ and Brennan J; [1990] HCA 31. 174 Dust Diseases Tribunal Act 1989 (NSW), s 4. 175 Dust Diseases Tribunal Act 1989 (NSW), ss 10(1) and 11. A tort-feasor who is liable to pay damages to a plaintiff in respect of a dust-related condition may bring proceedings in the Tribunal to recover contribution from another tort-feasor under s 11(1A). the hypothetical observer with arcane In any event, neither Basten JA's nor Tobias JA's conclusion depends upon clothing legal knowledge. Their Honours considered that the finding of fraud might not reasonably cause the lay observer to apprehend pre-judgment in circumstances in which Judge Curtis acknowledged that the same issue remained "live" and that different evidence may be received on the final hearing. The disqualification judgment While the issue was not critical to their conclusion, Tobias and Basten JJA differed on whether the hypothetical observer is to be assumed to have read Judge Curtis's reasons on the recusal application. Tobias JA considered that Judge Curtis's disqualification judgment, delivered three years after the discovery judgment, should not form part of the material upon which the lay observer's assessment is made176. Basten JA considered that the disqualification judgment provided an additional basis for declining to grant prohibition. His Honour put it "Where the trial judge expresses willingness and confidence in his or her ability to maintain an open mind and where that view is shared by the appellate judge, for reasons which are in each case articulated, to demand that the trial judge be disqualified tends to demonstrate lack of faith in the proper administration of justice, rather than the contrary. For the courts to adopt such a view does not self-evidently promote public confidence. In such a case, there is a real risk that the applicant is seen to be manipulating the system, not to avoid a prejudiced mind, but to avoid an adverse result based on a fair and unchallenged opinion, established by reference to the facts and circumstances then revealed in the evidence, and which may with proper consistency be maintained in the absence of evidence suggesting a different conclusion." It is clear, as Tobias JA acknowledged, that later statements made by a trial judge may be taken into account in determining whether there exists a reasonable apprehension of pre-judgment178. A later statement may explain an 176 [2009] NSWCA 414 at [77]. 177 [2009] NSWCA 414 at [140]. 178 [2009] NSWCA 414 at [72] per Tobias JA, referring to Johnson v Johnson (2000) 201 CLR 488 at 494 [14] per Gleeson CJ, Gaudron, McHugh, Gummow and earlier statement which might otherwise suggest that the judge has made up his or her mind about a matter. However, recourse to the later statement is not for the purpose of ascertaining whether the judge has expressed a willingness or confidence in his or her ability to maintain an open mind. It is assumed that a judge who is conscious of having formed so clear a view that the judge is unlikely to be persuaded from it would not sit to hear the later case. Ex hypothesi, a court reviewing the decision of a judge to sit to hear a case in circumstances where apprehended pre-judgment is alleged, but not actual bias, will be reviewing the decision of a judge who is confident of his or her ability to decide the case impartially. to address BATAS's submission Judge Curtis's disqualification judgment contains a correct statement of the principles together with extracts from the discovery judgment. His Honour went on that Mr Gulson had been cross-examined "in a red-blooded way" and that the discovery application had been a "mini trial". His Honour considered that it was apparent from the earlier judgment that Mr Gulson's credit had been subjected to no more than a "peripheral attack". The circumstance that cross-examination of Mr Gulson extended to matters relevant only to his credibility, but did not challenge the material parts of his account, has been noted. The substance of the cross-examination is detailed in the discovery judgment. In the event that the discovery judgment gives rise to a reasonable apprehension of pre-judgment, his Honour's subsequent characterisation of the cross-examination as having been no more than a peripheral attack could not serve to allay that apprehension. The recusal judgment adds nothing of moment to the material on which the hypothetical observer's assessment is to be made. Tobias JA was correct in the circumstances of this case to exclude it from consideration. The apprehended bias test It is fundamental to the administration of justice that the judge be neutral. It is for this reason that the appearance of departure from neutrality is a ground of disqualification179. Because the rule is concerned with the appearance of bias, and not the actuality, it is the perception of the hypothetical observer that provides the yardstick. It is the public's perception of neutrality with which the rule is concerned. In Livesey it was recognised that the lay observer might reasonably apprehend that a judge who has found a state of affairs to exist, or 179 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344-345 [6]-[7] per Gleeson CJ, McHugh, Gummow and Hayne JJ; Forge v Australian Securities and Investments Commission (2006) 228 CLR 45 at 77 [66] per Gummow, Hayne and Crennan JJ; [2006] HCA 44. who has come to a clear view about the credit of a witness, may not be inclined to depart from that view in a subsequent case. It is a recognition of human nature. Of course judges are equipped by training, experience and their oath or affirmation to decide factual contests solely on the material that is in evidence180. Trial judges are frequently required to make rulings excluding irrelevant and prejudicial material from evidence. Routine rulings of this nature are unlikely to disqualify the judge from further hearing the proceeding. This is not a case of that kind. It does not raise considerations of case management and the active role of the judge in the identification of issues with which Johnson was concerned. At issue is not the incautious remark or expression of a tentative opinion but the impression reasonably conveyed to the fair-minded lay observer who knows that Judge Curtis has found that BATAS engaged in fraud and who has read his Honour's reasons for that finding. Some further reference should be made to those reasons. former name). (Amatil being BATAS's His Honour drew inferences adverse to BATAS from the appearance of the policy adopted in 1985, styled the "Amatil Ltd Policy on Document Retention/Destruction" Judge Curtis described this policy as "a model of brevity"181. In context this was not an encomium. His Honour considered that it was remarkable that BATAS had replaced a long-standing detailed policy comprised of 45 pages, which prescribed mandatory retention and destruction periods for documents falling within each of 14 categories, with the 1985 policy. He noted that the 1985 policy, in two pages, reduced the categories of documents to three, of which the third, "valuable business documents … in the sense that the business cannot do without it", was subject to the direction that these were to be retained only after the document had been "carefully reviewed to establish that it is truly valuable"182. Judge Curtis discussed Mr Gulson's evidence concerning an English firm of solicitors that had sent a team of three lawyers to Australia to ensure the implementation of the Document Retention Policy. This followed Mr Gulson's 180 Johnson v Johnson (2000) 201 CLR 488 at 493 [12] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. 181 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 597 [36]. 182 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 597 [36]-[37]. report that sensitive smoking and health documents were being held at BATAS's scientific library. Of this evidence, Judge Curtis said183: "This is direct evidence, which has not been challenged or contradicted. In the absence of evidence from BATAS, I find it difficult to understand how it was thought necessary that three English lawyers attend a scientific library to implement a Document Retention Policy which only permitted destruction of documents which were not 'valuable business documents'. If BATAS was not selectively destroying scientific documents prejudicial to its position in future litigation, how is it that lawyers rather than scientists were assigned to judge the value of research material? This may be explained at the trial; however, the evidence of Mr Gulson gives rise to an obvious inference that has not yet been rebutted by BATAS." (emphasis added) The force of the rhetorical question is not lessened by the concluding sentence. The hypothetical observer is reasonable and understands that Judge Curtis is a professional judge. Nonetheless, the observer is not presumed to reject the possibility of pre-judgment184. If it were otherwise an apprehension of bias would never arise in the case of a professional judge. Whenever a judge is asked to try an issue which he or she has previously determined, whether in the same proceedings or in different proceedings, and whether between the same parties or different parties, the judge will be aware that different evidence may be led at the later trial. Judge Curtis's express acknowledgment of that circumstance does not remove the impression created by reading the judgment that the clear views there stated might influence his determination of the same issue in the Laurie proceedings. Allsop P's conclusion was correct. In addition to the possibility of the evidentiary position changing, a reasonable observer would note that the trial judge's finding of fraud was otherwise expressed without qualification or doubt, that it was based on actual persuasion of the correctness of that conclusion, that while the judge did not use violent language, he did express himself in terms indicating extreme scepticism about BATAS's denials and strong doubt about the possibility of different 183 Brambles Australia Ltd v British American Tobacco Australia Services Ltd; Re Mowbray (No 8) (2006) 3 DDCR 580 at 601-602 [55]. 184 Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 299 per Mason, Murphy, Brennan, Deane and Dawson JJ. materials explaining the difficulties experienced by the judge, and that the nature of the fraud about which the judge had been persuaded was extremely serious. In the circumstances of this unusual case, a reasonable observer might possibly apprehend that at the trial the court might not move its mind from the position reached on one set of materials even if different materials were presented at the trial – that is, bring an impartial mind to the issues relating to the fraud finding. Johnson v Johnson185 is distinguishable. Exceptions to the rule Exceptions to the apprehension of bias rule include necessity, waiver and, possibly, special circumstances186. Necessity The Court of Appeal rejected a submission that Judge Curtis's refusal to recuse himself was justified upon the grounds of necessity187. While the Tribunal is a small one and is currently constituted by three judges, the persons qualified to be members of the Tribunal include Judges or Acting Judges of the Supreme and District Courts of New South Wales188. Mrs Laurie did not file a notice of contention seeking to uphold the decision below on the ground of necessity. Waiver Something should be said about the delay in bringing the recusal application. On 20 April 2006, Judge Curtis was appointed to take Mr Laurie's evidence in Texas in the United States, and to be the trial judge. Mr Laurie died on 29 May 2006. The following day Judge Curtis delivered judgment on the On 16 June 2006, discovery application in the Mowbray proceedings. 185 (2000) 201 CLR 488. 186 Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 300 per Mason, Murphy, Brennan, Deane and Dawson JJ; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 88-89 per Mason CJ and Brennan J, 96-98 per Deane J, 102 per Gaudron and McHugh JJ; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [4] per Gleeson CJ, McHugh, Gummow and Hayne JJ. 187 [2009] NSWCA 414 at [119] per Tobias JA. 188 Dust Diseases Tribunal Act 1989 (NSW), s 7(2). It appears that, currently, two appointments have been made of Acting Judges as members of the Tribunal: <http://www.lawlink.nsw.gov.au/lawlink/ddt/ll_ddt.nsf/pages/DDT_judges>. Mrs Laurie filed a notice of motion claiming various orders including to reconstitute the proceedings. There were delays attending the latter. Mrs Laurie obtained a grant of probate in the Supreme Court of New South Wales on 14 June 2007. On 11 July 2007, the Tribunal made an order substituting Mrs Laurie as the plaintiff in the proceedings and giving her leave to file an amended statement of claim. The amended pleading was filed on 13 July 2007. Thereafter the proceedings were subject to further delays as the result of Mrs Laurie's decision to retain new solicitors to act for her. On 9 November 2007, the newly retained solicitors wrote to those acting for BATAS stating their view that Mrs Laurie's claim "should not be litigated" until certain proceedings against BATAS in Victoria were determined. On 6 December 2007, BATAS filed an application in the Supreme Court of New South Wales seeking to have the Laurie proceedings transferred to the Supreme Court of Victoria. At a directions hearing held shortly thereafter, and before the cross-vesting application had been heard, BATAS foreshadowed that it would apply to the Tribunal for an order that Judge Curtis disqualify himself from hearing Mrs Laurie's claim in the event that the proceedings were not transferred. BATAS's cross-vesting application was dismissed on 27 February 2009. On 5 March 2009, the Tribunal made directions in light of the foreshadowed recusal application. On 9 March 2009, BATAS filed its recusal motion. Mrs Laurie does not submit that the delay in bringing the recusal application amounted to a waiver of BATAS's rights. The delay was not agitated before the Court of Appeal as a reason for denying BATAS the prerogative relief claimed in its summons. While the fact of the delay was noted in the submissions filed in this Court, it was not submitted that delay was a circumstance which would justify the refusal of relief in the event that the apprehension of bias rule was engaged. Special circumstances Livesey left open the question whether special circumstances may also amount to an exception to the rule189. This appeal does not raise for consideration what special circumstances might justify a judge sitting to determine a case despite being reasonably suspected of having pre-judged an issue. The fact that Judge Curtis took the evidence of the late Mr Laurie at his 189 Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 299-300 per Mason, Murphy, Brennan, Deane and Dawson JJ. bedside is not relied upon in this respect. In circumstances in which the evidence was transcribed and video-recorded, such a contention would have been forlorn. Orders The appeal should be allowed and the second order of the Court of Appeal should be set aside. An order under s 69 of the Supreme Court Act 1970 (NSW) prohibiting the fourth respondent from further hearing or determining the Laurie proceedings should be made. The appellant should pay the first respondent's costs of the appeal in this Court.

HIGH COURT OF AUSTRALIA PLAINTIFFS AND COMMISSIONER OF POLICE (NSW) & ANOR DEFENDANTS Vella v Commissioner of Police (NSW) [2019] HCA 38 Date of Hearing: 6 & 7 August 2019 Date of Judgment: 6 November 2019 ORDER The questions of law referred to this Court in the special case should be answered as follows: Question 1: Is subsection 5(1) of the Crimes (Serious Crime Prevention Orders) Act 2016 (NSW) invalid (in whole or in part) because it is inconsistent with and prohibited by Chapter III of the Constitution? Answer: Question 2: If the answer to Question 1 is "Yes": to what extent is that subsection invalid? is that part of the subsection severable from the remainder of the Act? Answer: Unnecessary to answer. Question 3: Who should pay the costs of the special case? Answer: The plaintiffs. Representation J K Kirk SC with T O Prince for the plaintiffs (instructed by LawyersCorp Pty Ltd and Birchgrove Legal) M G Sexton SC, Solicitor-General for the State of New South Wales, with S Robertson for the defendants (instructed by Crown Solicitor's Office (NSW)) S P Donaghue QC, Solicitor-General of the Commonwealth, with J S Stellios and S R Bateman for the Attorney-General of the Commonwealth, intervening (instructed by Australian Government Solicitor) C D Bleby SC, Solicitor-General for the State of South Australia, with M E Boisseau for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor's Office (SA)) K L Walker QC, Solicitor-General for the State of Victoria, with R A Minson for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) J A Thomson SC, Solicitor-General for the State of Western Australia, with K J Chivers for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor's Office (WA)) G A Thompson QC, Solicitor-General of the State of Queensland, with F J Nagorcka for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Vella v Commissioner of Police (NSW) Constitutional law (Cth) – Judicial power – Constitution – Ch III – State Parliament – Institutional integrity of State courts – Where s 5(1) of Crimes (Serious Crime Prevention Orders) Act 2016 (NSW) provides that State court may make order if satisfied that specified person has been convicted of serious criminal offence or involved in serious crime related activity and satisfied that reasonable grounds to believe that making of order would protect public by preventing, restricting or disrupting involvement by that person in serious crime related activities – Where s 6(1) of Act provides that order against that specified person may contain such prohibitions, restrictions, requirements and other provisions as court considers appropriate for purpose of protecting public by preventing, restricting or disrupting involvement by that person in serious crime related activities – Where proceedings under Act are civil proceedings – Whether making order exercise of judicial power – Whether powers conferred by Act incompatible with State court's role as repository of federal judicial power – Whether powers conferred by Act substantially impair institutional integrity of State court. Words and phrases – "appropriate", "balancing", "facilitates or is likely to facilitate", "future risk", "institutional integrity", "judicial power", "Kable v (NSW)", "open-textured", "preventing, Director of Public Prosecutions restricting or disrupting", "preventive orders", "real or significant risk", "reasonable grounds to believe", "risk assessment", "serious crime related activities", "serious criminal offence". Constitution, Ch III. Crimes (Serious Crime Prevention Orders) Act 2016 (NSW), ss 3, 5, 6. KIEFEL CJ. The first question stated for the opinion of the Full Court is whether "[s] 5(1) of the Crimes (Serious Crime Prevention Orders) Act 2016 (NSW) [('the SCPO Act') is] invalid (in whole or in part) because it is inconsistent with and prohibited by Chapter III of the Constitution". It requires in the first place that s 5(1) be construed in order to determine its operation and what it requires an eligible court to do. Section 5(1) provides: "An appropriate court may, on the application of an eligible applicant, make an order (a serious crime prevention order) against a specified person if: in the case of a natural person – the person is 18 years old or older, and the court is satisfied that: the person has been convicted of a serious criminal offence, the person has been involved in serious crime related activity for which the person has not been convicted of a serious criminal offence (including by reason of being acquitted of, or not being charged with, such an offence), and the court is satisfied that there are reasonable grounds to believe that the making of the order would protect the public by preventing, restricting or disrupting involvement by the person in serious crime related activities." "Serious criminal offence" has the same meaning as in the Criminal Assets Recovery Act 1990 (NSW) ("CARA"). It is not necessary to set out the definition1. It may simply be observed that it is very wide. "Involved in serious crime related activity" refers to the person having engaged in serious crime related activity, conduct that has facilitated another person's engagement in such activity, or conduct that is likely to facilitate such activity2. 1 CARA, s 6(2), (3) and (4). SCPO Act, s 4(1). Section 6(1) provides: "A serious crime prevention order may contain such prohibitions, restrictions, requirements and other provisions as the court considers appropriate for the purpose of protecting the public by preventing, restricting or disrupting involvement by the person in serious crime related activities." Were the operation of s 5(1) free from judicial interpretation at the time that it was enacted, I would have been inclined to a construction of s 5(1), according to its terms, which gives an eligible court such a limited role that it could be concluded that the court had been enlisted by the legislature to do the work of the executive3. If that conclusion were reached, the answer to Question 1 would be "Yes". Before turning to the context provided by legislative history, I should outline the construction of s 5(1) which may give it the operation to which I have referred. The scheme which ss 5(1) and 6(1) create comprehends an application to an eligible court for an order against an individual by an eligible applicant, such as the Commissioner of Police4. The order sought will contain, as s 6(1) requires, prohibitions, restrictions, requirements or other provisions such as will affect the person's freedom of movement and association. So long as the person is at least 18 years of age and the court is satisfied that the person has been convicted of a serious criminal offence, or has been involved in some serious crime related activity, there remains only one other matter in s 5(1) of which a judge of an eligible court need be satisfied before an order is made. It is that "there are reasonable grounds to believe that the making of the order" would prevent, restrict or disrupt involvement by the person in serious crime related activities. The question under s 5(1) for the eligible court is as to the efficacy of the proposed order, and no more. Section 5(1) does refer to the protection of the public, but it does so in a way which assumes both that that is necessary and that it may be achieved by the making of the order. The need to protect the public follows, inferentially, from the fact of conviction or a finding of involvement in crime and from there being no enquiry as to the risk to the public to be undertaken by the court. The enquiry South Australia v Totani (2010) 242 CLR 1. 4 And also the Director of Public Prosecutions and the New South Wales Crime Commission: see SCPO Act, s 3(1). is not expressed to be whether the public needs protection from the person. Rather, it is as to the efficacy of the order if made. If the making of the order will be effective to prevent, restrict or disrupt the person's involvement in crime, the public is protected. On this construction, much turns on the use of the word "by". The court is only required to have reasonable grounds to believe that the making of the order would protect the public by preventing, restricting or disrupting the person's involvement in serious crime related activities. Moreover, given the nature of the orders to which s 6(1) refers, it will invariably be the case that they will at the least "disrupt" the potential involvement of the person in crime. It would follow that an order would be made in any case in which prohibitions, restrictions, requirements and other provisions of the kind referred to in s 6(1) are sought. There is no other factor in s 5(1) which would militate against the making of an order. On this construction, the discretion suggested by the use of the word "may" in the sub-section would be illusory. Reading s 5(1) with s 6(1) cannot expand the court's role. Section 6(1) is concerned with the types of orders that may be made against a person under s 5(1). True it is that the court is required to consider whether the orders are "appropriate", but once again, the enquiry is not whether they are appropriate "for the purpose of protecting the public", but rather whether they are appropriate "for the purpose of protecting the public by preventing, restricting or disrupting involvement by the person in serious crime related activities". The enquiry is whether they are appropriate, which is to say effective, for the purpose of achieving the necessary disruption. It may be accepted that an assessment of whether orders are appropriate may involve consideration of whether the orders go further than is necessary to achieve that outcome, given the effects of the orders upon the person. The exceptions to some of the orders sought against the plaintiffs in this case furnish examples: the order prohibiting association with known members of a motorcycle gang is expressed not to extend to pre-arranged and approved family events; and the order preventing the plaintiffs from travelling by motor vehicle during certain hours exempts a circumstance of a genuine medical emergency. But it is to give the word "appropriate" in s 6(1) far too much work to do to read it as requiring or permitting the court to assess the risk to the public. Especially is this so when the terms of ss 5(1) and 6(1) make plain that that is an assumed fact. Importantly, it is a fact assumed in the provision which contains the power to make the orders, s 5(1). In South Australia v Totani5, s 10(1) of the Serious and Organised Crime (Control) Act 2008 (SA) gave the Attorney-General, on the application of the Commissioner of Police, power to make a declaration in relation to an organisation if the Attorney-General was satisfied that its members associated for the purpose of organising serious criminal activity and the organisation represented a risk to public safety and order in the State. Section 14(1) of the Act provided: "The Court must, on application by the Commissioner, make a control order against a person (the defendant) if the Court is satisfied that the defendant is a member of a declared organisation." A control order could contain prohibitions concerning the persons with whom the person could associate, and other restrictions. Section 14(1) was held invalid by a majority of the Court on the ground that it authorised the executive to enlist the court to implement decisions of the executive in a manner incompatible with the proper discharge of its federal judicial responsibilities and with its institutional integrity. Section 5(1) of the SCPO Act does not implement a decision of the Commissioner of Police, or other person eligible to apply for serious crime prevention orders. But in identifying a person with a criminal record or involvement with crime, and requiring the making of an order of the kind referred to in s 6(1) so long as it is effective to disrupt that person's possible involvement in criminal activities, s 5(1) enlists the courts. It gives effect to the outcome sought with respect to the person6. Such a conclusion is not open where the statute gives the court the task, when making an order to prevent future wrongdoing, of undertaking its own assessment of the connection between the order proposed and the past or likely future conduct of the person, or its own assessment of the connection between the orders and a continuation of past and possible future acts7. The question whether, properly construed, s 5(1) permits the court to assess the risk to the public is therefore essential to its validity. It is explained in the joint reasons of Bell, Keane, Nettle and Edelman JJ that the SCPO Act was modelled on United Kingdom legislation8. In R v (2010) 242 CLR 1. South Australia v Totani (2010) 242 CLR 1 at 170 [470]. See South Australia v Totani (2010) 242 CLR 1 at 86 [219]. Hancox9, the Court of Appeal of England and Wales construed an equivalent provision of the Serious Crime Act 2007 (UK)10 to require, before an order of this kind is made, that there be a "real, or significant, risk" that the person will be involved in further serious offences, and that the court undertake this future risk assessment. That decision has consistently been followed11. The Court of Appeal went on12 to determine, in connection with an equivalent provision to s 6(1) of the SCPO Act13, that for an order to be appropriate, it must be necessary. It must be justified by the benefit to be gained from the order, and the provisions of the order must be commensurate to the risk, which is to say it must be proportionate. The Court of Appeal, clearly enough, did not interpret the words "by" in the analogue to s 5(1) and "appropriate" in the analogue to s 6(1) in the way described above. The operation which that Court saw as intended must, inferentially, have focused on the word "would" in the analogue to s 5(1) as importing an assessment of future risk. It involves a greater role for the courts in the process leading to the making of the order; one which would not suffer from the problems identified in South Australia v Totani. The decision of the Court of Appeal in R v Hancox was reported in 2010. The SCPO Act was enacted by the New South Wales Parliament in 2016. Where words have been judicially interpreted, it is possible to interpret a subsequent statute as having the meaning so assigned to those words14. It may be assumed that the legislature has adopted the interpretation assigned to the earlier enactment, unless an intention to exclude that interpretation is evident15. That [2010] 1 WLR 1434 at 1437 [9]; [2010] 4 All ER 537 at 540. 10 Serious Crime Act 2007 (UK), s 19(2). See also s 1(1). 11 R v Hall [2015] 1 Cr App R (S) 16 at 131 [16]; R v McGrath [2017] EWCA Crim 1945 at [10]; R v Strong [2017] EWCA Crim 999 at [11]. 12 R v Hancox [2010] 1 WLR 1434 at 1437 [10]; [2010] 4 All ER 537 at 540. 13 Serious Crime Act 2007 (UK), s 19(5). See also s 1(3). 14 Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402 at 411; Bennion, Bennion on Statutory Interpretation, 5th ed (2008) at 599-601; Pearce and Geddes, Statutory Interpretation in Australia, 8th ed (2014) at [3.43]. 15 Townsville Harbour Board v Scottish Shire Line Ltd (1914) 18 CLR 306 at 315; Re Carl Zeiss Pty Ltd's Application (1969) 122 CLR 1 at 6. presumption may be strengthened by the legislative history of the statute. In Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees16, certain references in a report by a Committee which preceded the enactment and in the Second Reading Speech provided that context. In the present case, it is evident that the decision in R v Hancox was known to the Parliament and that it was understood that a court must conclude that there is a real or significant risk that the person will commit serious offences before an order of the kind in question is made. So much is evident from the debate on the relevant provisions in the Bill17. It must therefore be accepted, having regard to the context for s 5(1), that it is to be read as its analogue was in R v Hancox. That interpretation has been adopted in the joint reasons. I agree with those reasons and the conclusions which follow. I would answer the questions stated for the opinion of the Full Court as their Honours propose. (1994) 181 CLR 96 at 106-107. 17 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 3 May 2016 at 60; New South Wales, Legislative Council, Parliamentary Debates (Hansard), 4 May 2016 at 70-71. Bell Nettle Edelman BELL, KEANE, NETTLE AND EDELMAN JJ. Introduction This special case concerns the validity of s 5 of the Crimes (Serious Crime Prevention Orders) Act 2016 (NSW) ("the SCPO Act"). That section, read with s 6, empowers the District Court of New South Wales or the Supreme Court of New South Wales to make "preventive orders" that can restrain the liberty of an individual including without proof of the commission of a crime by that person. The plaintiffs challenge the validity of that legislation on the ground that the legislation is incompatible with the institutional integrity of those State courts, relying upon the doctrine developed from the decision of this Court in Kable v Director of Public Prosecutions (NSW)18. This Court has previously dismissed Kable challenges in decisions concerning preventive order legislation involving terrorism19, organised criminal activity20, and sexual offenders21. None of those decisions was challenged by the plaintiffs. The SCPO Act, and the challenge in this case, involve preventive orders concerning "serious crime related activity". The terms and operation of the SCPO Act are similar in important respects to each of the other regimes. Much of the reasoning of principle underlying the decisions that concluded that those legislative regimes were not incompatible with the institutional integrity of State courts applies also to the SCPO Act. Even if the unchallenged precedent of this Court could be put to one side, the core submission of the plaintiffs should not be accepted. The SCPO Act does not involve the exercise of non-judicial power, nor is it incompatible with the institutional integrity of the District Court or the Supreme Court, because it deploys open-textured phrases which, properly interpreted, give rise to rules requiring the court to conduct an assessment of future risk and to balance criteria within a wide degree of judicial evaluation before making a preventive order. In an area necessarily involving considerable uncertainty it is not antithetical to (1996) 189 CLR 51. 19 Thomas v Mowbray (2007) 233 CLR 307. 20 Wainohu v New South Wales (2011) 243 CLR 181; Condon v Pompano Pty Ltd (2013) 252 CLR 38. 21 Fardon v Attorney-General (Qld) (2004) 223 CLR 575. Bell Nettle Edelman the judicial process for Parliament to require the courts to interpret and to apply open-textured norms rather than "striving for a greater degree of definition than the subject is capable of yielding"22. Ultimately, the plaintiffs' objections to the SCPO Act reduce to an objection to the legislative policy involving a regime of preventive orders that can deprive individuals of liberty even in circumstances where they have not committed any offence in the past and might not be expected to do so in the future. Yet, as Gleeson CJ observed in Fardon v Attorney-General (Qld), "nothing would be more likely to damage public confidence in the integrity and impartiality of courts than judicial refusal to implement the provisions of a statute upon the ground of an objection to legislative policy"23. Background On 5 October 2018, the Commissioner of Police commenced proceedings by summons in the Supreme Court against the plaintiffs in this proceeding, respectively Damien Charles Vella, Johnny Lee Vella, and Michael Fetui. The Commissioner alleged that the first plaintiff is the National President (or, if not, a National Office Bearer), and the other plaintiffs are members, of an organisation known as the Rebels. That organisation was described in the summons, in misleading vernacular24, as an "Outlaw Motor Cycle Gang". By a further amended summons the Commissioner sought orders under the SCPO Act to restrain and prohibit the plaintiffs, for two years, from various activities. The activities described in the summons include, in broad summary and with limited exceptions, the following: (i) approaching, contacting or associating directly or indirectly with persons associated with any Outlaw Motorcycle Gang (a phrase left undefined in the further amended summons) and producing to the police on demand any electronic device and password to ensure compliance with that prohibition; (ii) travelling in any vehicle between the hours of 9 pm and 6 am except in the case of a genuine medical emergency; (iii) attending or approaching specified types of premises associated with the Rebels Outlaw Motorcycle Gang or any other Outlaw Motorcycle Gang; 22 Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 593 [22], quoting M v M (1988) 166 CLR 69 at 78. (2004) 223 CLR 575 at 593 [23]. See also at 601 [42]. 24 South Australia v Totani (2010) 242 CLR 1 at 149 [397]. Bell Nettle Edelman (iv) possessing or having access to an encrypted communications device or possessing an encrypted application/media application; (v) possessing more than one mobile telephone; (vi) possessing any weapon; and (vii) wearing, possessing or displaying any Rebels insignia or any other Outlaw Motorcycle Gang insignia. In the summons, the Commissioner asserted that each of the plaintiffs had been convicted of serious criminal offences. In relation to the first two plaintiffs the alleged convictions included offences of robbery in company, firing a firearm in a manner likely to injure persons or property, and obtaining money by deception. The alleged convictions of the third plaintiff included offences of assault occasioning actual bodily harm, resisting an officer in the execution of duty, and affray. The Commissioner also relied upon allegations that each of the plaintiffs had been involved in serious crime related activity for which he had not been convicted, or was acquitted. Few particulars of each matter of alleged involvement in serious crime related activity were provided. Further, by an assertion unsupported by any particulars, the Commissioner alleged that there were reasonable grounds to believe that the making of an order in relation to each plaintiff would protect the public by preventing, restricting or disrupting involvement by each of the plaintiffs in serious crime related activities. In the special case, the plaintiffs admitted the facts of the convictions and sentences alleged by the Commissioner, and the facts of the charges, withdrawal of charges, acquittals, and charges not proceeded with as alleged by the Commissioner. Despite the breadth of the summons and the lack of clarity in many respects relating to the six steps discussed below, the plaintiffs did not submit that the summons was defective. Rather, the central issue in this proceeding is whether s 5(1) of the SCPO Act is invalid because it is inconsistent with and prohibited by Ch III of the Constitution. Background to the SCPO Act The SCPO Act is concerned with a type of order that has been described as a civil "preventive order"25. Such orders have long antecedents including, as early as the fourteenth century, in binding-over orders, by which justices of the peace and judges could bind over a person without proof of any offence, requiring payment of a sum of money as a pledge, if there were sufficient 25 See, eg, Ashworth and Zedner, Preventive Justice (2014) at 74-94. Bell Nettle Edelman apprehension that the person's activities could breach the peace26. The Court of Chancery granted writs of supplicavit to restrain anticipated breaches of peace involving bodily harm by taking a person into custody, subject to release only upon security for good behaviour27. The severity of the apprehended harm that might attract Chancery's intervention increased over time28. The Court of Chancery also ordered injunctions to restrain the anticipated commission of criminal acts or public wrongs, particularly in cases of "public health or comfort or safety"29, by "balancing the magnitude of the evil against the chances of its occurrence"30; in modern times that power has been substantially confined to situations dealing with statutory duties31, on the general principle that it is not for a court to remedy "what it regards as the defective machinery of a statute"32. With further antecedents in preventive order regimes consequent upon the curial sentencing process33, from the late 1990s the United Kingdom Parliament legislated for civil preventive orders in a wide variety of different contexts including sexual harm, molestation, anti-social behaviour, and disruptive and 26 Thomas v Mowbray (2007) 233 CLR 307 at 329 [16], 356 [116]. See also Sheldon v Bromfield Justices [1964] 2 QB 573 at 577; R v Wright; Ex parte Klar (1971) 1 SASR 103. 27 Blackstone, Commentaries on the Laws of England (1769), bk 4 at 249-250; Story, Commentaries on Equity Jurisprudence as administered in England and America, 14th ed (1918), vol 3 at 513-514. See also Thomas v Mowbray (2007) 233 CLR 28 Jenks, "Writs De Minis and Supplicavit: The History of Surety of the Peace", in Jenks, Rose and Whittick (eds), Laws, Lawyers and Texts (2012) 253 at 262-263. 29 Ramsay v Aberfoyle Manufacturing Co (Australia) Pty Ltd (1935) 54 CLR 230 at 30 Earl of Ripon v Hobart (1834) 3 My & K 169 at 176 [40 ER 65 at 68]. 31 The Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 49-50. 32 Ramsay v Aberfoyle Manufacturing Co (Australia) Pty Ltd (1935) 54 CLR 230 at 243. See also at 249-250, 255-256. 33 Prevention of Crime Act 1908 (UK), s 10. Bell Nettle Edelman unlawful behaviour at football matches34. As Lord Steyn explained in relation to anti-social behaviour orders, "[t]here is no doubt that Parliament intended to adopt the model of a civil remedy of an injunction, backed up by criminal penalties"35. With similar early twentieth century antecedents36, legislative regimes involving the making of preventive orders by courts have also been enacted in Australia in areas including domestic and personal violence37, problem gambling that is ancillary to domestic violence38, public safety and breaches of the peace39, sexual and other dangerous offenders40, groups associated with criminal activity41, and terrorism42. In 2016, the New South Wales Parliament enacted the SCPO Act, relying heavily upon the model of the Serious Crime Act 2007 (UK). 34 Ashworth and Zedner, Preventive Justice (2014) at 75. 35 R (McCann) v Manchester Crown Court [2003] 1 AC 787 at 806 [18]. 36 Habitual Criminals Act 1905 (NSW). 37 Restraining Orders Act 1997 (WA), Pts 1B, 2; Family Violence Act 2004 (Tas); Crimes (Domestic and Personal Violence) Act 2007 (NSW); Domestic and Family Violence Act 2007 (NT); Family Violence Protection Act 2008 (Vic); Intervention Orders (Prevention of Abuse) Act 2009 (SA); Domestic and Family Violence Protection Act 2012 (Qld); Family Violence Act 2016 (ACT). Intervention Orders (Prevention of Abuse) Act 2009 (SA). 39 Peace and Good Behaviour Act 1982 (Qld); Restraining Orders Act 1997 (WA), 40 Criminal Procedure Act 1921 (SA), Pt 4, Div 7; Dangerous Prisoners (Sexual Offenders) Act 2003 (Qld); Child Protection (Offenders Prohibition Orders) Act 2004 (NSW); Crimes (High Risk Offenders) Act 2006 (NSW); Dangerous Sexual Offenders Act 2006 (WA); Serious Sex Offenders Act 2013 (NT); Serious Offenders Act 2018 (Vic). 41 Serious and Organised Crime (Control) Act 2008 (SA); Serious Crime Control Act 2009 (NT); Crimes (Criminal Organisations Control) Act 2012 (NSW); Criminal Organisations Control Act 2012 (WA); Criminal Organisations Control Act 2012 (Vic). Bell Nettle Edelman The operation of the SCPO Act The SCPO Act creates a regime for the making of serious crime prevention orders by the Supreme Court or the District Court of New South Wales43. A serious crime prevention order must not exceed a duration of five years44. This special case is concerned only with natural persons, as to whom a breach of the order has a maximum penalty of $33,000 and imprisonment for five years45. Proceedings for serious crime prevention orders are not criminal proceedings46. Other than in relation to an offence against the SCPO Act, the civil burden of proof and rules of evidence apply and any rules of interpretation or evidence that are unique to criminal law do not apply47. At the hearing of the application, a person against whom a serious crime prevention order is sought can appear and make submissions48. The applicant and the person against whom the order is sought have a right of appeal on any question of law and, with leave, on a question of fact49. The applicant and the person against whom the order is sought can also apply to the same court to vary or revoke the order if there has been a substantial change in the relevant circumstances50. 42 Criminal Code (Cth), Div 104; Terrorism (Police Powers) Act 2002 (NSW); Terrorism (Community Protection) Act 2003 (Vic); Terrorism (Preventative Detention) Act 2005 (Tas); Terrorism (Extraordinary Temporary Powers) Act 2006 (ACT); Terrorism (High Risk Offenders) Act 2017 (NSW). 43 SCPO Act, s 3(1), definition of "appropriate court". 44 SCPO Act, s 7(2). 45 SCPO Act, s 8(b) and Crimes (Sentencing Procedure) Act 1999 (NSW), s 17. 46 SCPO Act, s 13(1). 47 SCPO Act, s 13(2). 48 SCPO Act, s 5(4). 49 SCPO Act, ss 11(1), 11(2). 50 SCPO Act, s 12. Bell Nettle Edelman The terms of ss 5 and 6 of the SCPO Act Section 5(1) of the SCPO Act provides: "An appropriate court may, on the application of an eligible applicant, make an order (a serious crime prevention order) against a specified person if: in the case of a natural person – the person is 18 years old or older, and the court is satisfied that: the person has been convicted of a serious criminal offence, the person has been involved in serious crime related activity for which the person has not been convicted of a serious criminal offence (including by reason of being acquitted of, or not being charged with, such an offence), and the court is satisfied that there are reasonable grounds to believe that the making of the order would protect the public by preventing, restricting or disrupting involvement by the person in serious crime related activities." Section 6(1) of the SCPO Act provides: "A serious crime prevention order may contain such prohibitions, restrictions, requirements and other provisions as the court considers appropriate for the purpose of protecting the public by preventing, restricting or disrupting involvement by the person in serious crime related activities." Serious crime related activity is, in short, anything done by a person, whether or not the person was charged or convicted, that is, or was at the time, a serious criminal offence51. What is a serious criminal offence is defined in wide 51 SCPO Act, s 3(1), definition of "serious crime related activity". Bell Nettle Edelman terms52. It includes: drug trafficking offences; offences involving imprisonment for five years or more involving a wide variety of offences such as theft, fraud, money laundering, extortion, violence, blackmail, perverting the course of justice, tax or revenue evasion, illegal gambling, forgery, or homicide; and offences involving the destruction of or damage to property having a value of more than $500. It also extends to offences outside New South Wales, or outside Australia, if the offence there would have been a serious criminal offence if committed within New South Wales. The phrase "involved in serious crime related activity" is defined in s 4(1) of the SCPO Act essentially to require the person to engage in serious crime related activity or to engage in conduct that facilitates, or is likely to facilitate, serious crime related activity. Like the United Kingdom legislation upon which it was modelled53, s 4(1) of the SCPO Act draws from the ordinary meaning of "facilitates", which is "to make easier". However, the ordinary meaning of "facilitates" is restricted by s 4(2) of the SCPO Act, which provides that when determining whether the conduct of a person has facilitated another to engage in serious crime related activity a court may take into account whether the conduct was reasonable in all the circumstances. The concept of facilitating serious crime related activity in s 4(1) is thus narrower than merely conduct that makes the commission of a crime easier. Conduct will be very likely to be reasonable, and not facilitating conduct, if it was done without the intention of assisting the commission of serious crime related activity and without recklessness or reasonable means of knowing that the conduct would assist the commission of serious crime related activity. The balancing process required by ss 5 and 6 of the SCPO Act Sections 5 and 6 of the SCPO Act, when read together, create a power for the court to make a serious crime prevention order. There are six required steps before the court can exercise the power in relation to natural persons. The first step, in s 5(1)(a), requires the natural person to be at least 18 years old. 52 SCPO Act, s 3(1), definition of "serious criminal offence" and Criminal Assets Recovery Act 1990 (NSW), s 6(2). 53 Serious Crime Act 2007 (UK), s 2(3); United Kingdom, Serious Crime Act 2007, Explanatory Notes at [16]. Bell Nettle Edelman The second step, in s 5(1)(b), requires proof that the person against whom the order is sought has been convicted of or been involved in serious criminal offending. This step is backward looking, focusing upon the person's past conviction for a serious criminal offence or past involvement in "serious crime related activity", the definition of which can be described broadly as the commission of a serious criminal offence54. The proof of past conviction for a serious criminal offence might require only the tender of a criminal record certificate55. Either the District Court or the Supreme Court can make a serious crime prevention order based upon such past conviction for a serious criminal offence56. In contrast, an order based upon the proof of past involvement in the commission of a serious criminal offence can only be made in the Supreme Court57. A hearing for an order based on such past involvement might give rise to disputed questions of fact. In resolving those disputes the Supreme Court can admit and consider hearsay evidence if "(a) the court is satisfied that the evidence is from a reliable source and is otherwise relevant and of probative value, and (b) the person against whom the order is sought to be made has been notified of, and served with a copy of, the evidence before its admission"58. However, and conformably with the requirement in s 13(2) that only "civil" rules of evidence apply, the Supreme Court will also take into account the usual principle, in deciding whether a fact has been proved, that without more, the more serious the alleged involvement in unlawful conduct, and the greater the magnitude of the alleged illegality, the more unlikely it will be that a person has acted or will act in the way alleged59. The third step, in s 5(1)(c), requires the court to assess whether there is a real likelihood, in other words a real or significant risk, that the person against whom the order is sought will be involved in serious crime related activity. This step might also involve disputed facts. It is a forward-looking requirement. 54 SCPO Act, s 3(1), definition of "serious crime related activity". 55 Evidence Act 1995 (NSW), s 178. 56 SCPO Act, s 5(1) read with s 3(1), definition of "appropriate court". 57 SCPO Act, s 3(1), definition of "appropriate court", para (b). 58 SCPO Act, s 5(5). 59 Briginshaw v Briginshaw (1938) 60 CLR 336 at 343-344, 350, 361-362. Bell Nettle Edelman The requirement in s 5(1)(c) as to the matters that the court must be satisfied that there are "reasonable grounds to believe" is essentially a requirement of "the existence of facts which are sufficient to induce that state of mind in a reasonable person"60. The court must have reasonable grounds to believe that the making of the order "would" prevent, restrict or disrupt involvement by the person in serious crime related activities and thus "protect the public" from these public wrongs. The conditional verb, "would", is the language of probability or likelihood61 in assessing the effect of the order. Without a real likelihood that the person against whom the order is sought will be involved in serious crime related activities, there is no basis for the order because there could not be any likelihood that the order would prevent, restrict or disrupt such involvement in serious crime related activities. The Court of Appeal of England and Wales has thus correctly, and repeatedly, concluded that the making of a serious crime prevention order under the Serious Crime Act regime, upon which ss 5 and 6 of the SCPO Act were based, requires a real or significant risk that the person will be involved in serious offences62. The need for the court to conclude that there is a real or significant risk that the person will commit serious offences is thus supported by the text of s 5(1)(c) of the SCPO Act and the preceding judicial interpretation of the United Kingdom legislation upon which ss 5 and 6 were based. The third step provides a simple answer to the submission by the plaintiffs that a preventive order could be made against a person who had an historical conviction for an offence of stealing clothing from a department store. Without more, a single historical conviction for such a theft would not be sufficient to give rise to a real or significant risk that the person would commit the same offence, or any other serious offence, in the future. In any event, the fourth and fifth steps below are clear reasons to reject the plaintiffs' submission that a 60 George v Rockett (1990) 170 CLR 104 at 112. See also R v Tillett; Ex parte Newton (1969) 14 FLR 101 at 106. 61 Taylor v New South Wales (1999) 46 NSWLR 322 at 338 [64]. 62 R v Hancox [2010] 1 WLR 1434 at 1437 [9]; [2010] 4 All ER 537 at 540. See also R v Barnes [2012] EWCA Crim 2549 at [9]; R v Hall [2015] 1 Cr App R (S) 16 at 131 [16]; R v McGrath [2017] EWCA Crim 1945 at [10]; R v Strong [2017] EWCA Crim 999 at [11]. Bell Nettle Edelman preventive order could be made against such a person in terms that require the person to reside at, and not to leave, their home or not to enter department stores. The fourth step is also required by s 5(1)(c). It may again involve disputed questions of fact. The court must consider whether the facts establish reasonable grounds to believe that the potential order would have the effect of preventing, restricting, or disrupting the person's involvement in serious crime related activities. This step requires the court to survey the range of possible orders and to consider whether there is a real likelihood that the order will prevent, restrict, or disrupt the person's likely involvement in the serious crime related activities. The verbs – prevent, restrict, or disrupt – are not defined and bear their ordinary meaning including a result that is short of entire prevention but which limits the extent of the person's likely involvement in the serious crime related activities. An example where the fourth step was not satisfied is one of the orders sought in Commissioner of Police v Cole63, which was to restrict the defendants' internet access to the use of a single nominated computer with additional requirements including providing information to a nominated police officer concerning each defendant's internet service provider, username, and passwords. That order was not made, with Davies J observing that there was "no evidence to suggest that computers have been or are likely to be used in any manner that contributes to serious crime related activities"64. The fifth step, from s 6(1) of the SCPO Act, further constrains the orders that can be made. The "prohibitions, restrictions, requirements and other provisions" ordered are required to be such "as the court considers appropriate for the purpose of protecting the public by preventing, restricting or disrupting involvement by the person in serious crime related activities". Although s 6(1) provides that the court "may" impose the restrictions that it considers appropriate, [2018] NSWSC 517 at [52]. [2018] NSWSC 517 at [57]. See also Commissioner of Police v Bowtell [No 2] [2018] NSWSC 520 at [100], [102]. Bell Nettle Edelman this is an enabling word with "compulsory force" when what is sought is "in advancement of public justice"65. The constraint that the court must consider the order to be appropriate for its purpose is a familiar one. "Appropriate", in the sense of "suitable or fitting for a particular purpose"66, embodies the requirements that the order be reasonable and adapted to its purpose. It is particularly a common constraint expressed upon orders, such as civil preventive orders67, that require an assessment of future possibilities. In Mitchell v The Queen68, in the context of a provision that empowered a court to impose a sentence of "strict security life imprisonment" without, if the court considered it appropriate, a non-parole period, this Court said that "[t]he phrase 'considers ... appropriate' indicates the striking of a balance between relevant considerations so as to provide the outcome which is fit and proper". And speaking of the power to make "such order or orders as [the court] thinks appropriate" in s 87 of the Trade Practices Act 1974 (Cth), Mason P said that it allowed "the defendant's as well as the plaintiff's interests to be taken into account in moulding a just response"69. The balancing process operates as follows. On the one hand, the court will consider the likelihood that an order will prevent, restrict, or disrupt serious 65 Julius v Lord Bishop of Oxford (1880) 5 App Cas 214 at 225. See also Victorian Building Authority v Andriotis (2019) 93 ALJR 869 at 887 [108] and the authorities cited there. 66 Macquarie Dictionary, 7th ed (2017), vol 1 at 68, "appropriate", definition 1. See also Oxford English Dictionary, 2nd ed (1989), vol 1 at 586, "appropriate", definition 5. 67 Criminal Procedure Act 1921 (SA), s 99AA(1)(c); Peace and Good Behaviour Act 1982 (Qld), s 27(1)(b); Restraining Orders Act 1997 (WA), s 34(b); Crimes (High Risk Offenders) Act 2006 (NSW), s 11(1); Serious and Organised Crime (Control) Act 2008 (SA), s 22(2); Intervention Orders (Prevention of Abuse) Act 2009 (SA), ss 6(b), 24 read with Problem Gambling Family Protection Orders Act 2004 (SA), s 4(1)(b); Serious Crime Control Act 2009 (NT), s 25(1)(b); Criminal Organisations Control Act 2012 (Vic), ss 45(1), 47(1); Criminal Organisations Control Act 2012 (WA), s 57(1)(b). (1996) 184 CLR 333 at 346. 69 Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 368. Bell Nettle Edelman criminal activities, and the magnitude of the activity that will be so affected. On the other hand, the court will consider the extent to which an order will intrude upon the defendant's liberty, including the scope of the order and the length of its term. In balancing these matters, if there is a less intrusive order that will achieve broadly the same effect as a significantly more intrusive order then the latter will not be appropriate. For instance, in Commissioner of Police v Bowtell [No 2]70 a condition that prohibited the defendants from attending any licensed hotels, pubs, clubs, and bars was not appropriate as it would add little, if anything, to the disruptive effect of other conditions which prohibited the defendants associating with, or contacting, members of any Outlaw Motorcycle Gang. As earlier explained, ss 5 and 6 of the SCPO Act are modelled on the United Kingdom legislation. The drafter may be taken to have been aware of the interpretation placed by the English courts on the requirement that an order be "appropriate"71. Indeed, at the date of its enactment it is evident that members of the New South Wales Parliament were aware of the leading decision of the Court of Appeal of England and Wales in R v Hancox72. In that case, the Court of Appeal held that the requirement that the court consider the serious crime prevention order to be "appropriate" involved the same approach as that which applies to anti-social behaviour orders and travel restriction orders under the Criminal Justice and Police Act 2001 (UK): "[s]uch orders can be made only for the purpose for which the power was given by statute. And they must be proportionate." This conclusion was said also to follow from the European Convention for the Protection of Human Rights and Fundamental Freedoms73. But the principal reason for the conclusion, independently of any Convention concerns, involved the adoption of the Court of Appeal's earlier reasoning from R v Mee74 in relation to which travel restriction orders would be appropriate [2018] NSWSC 520 at [98]-[99]. 71 Re Carl Zeiss Pty Ltd's Application (1969) 122 CLR 1 at 6. [2010] 1 WLR 1434; [2010] 4 All ER 537. See New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 3 May 2016 at 42, 60; New South Wales, Legislative Council, Parliamentary Debates (Hansard), 4 May 2016 at 70- 73 R v Hancox [2010] 1 WLR 1434 at 1437 [10]; [2010] 4 All ER 537 at 540. [2004] 2 Cr App R (S) 81. Bell Nettle Edelman under the Criminal Justice and Police Act75. In that case, the Court said of the length of such an order76: "The length should be that which is required to protect the public in the light of the assessment of the degree of risk which is presented by the facts. But, as we have said, it should be tailored to the defendant to such a degree as the court feels able when balanced against the risk." During oral argument there was dispute about whether an order could ever be appropriate within the terms of ss 5 and 6 of the SCPO Act if the order permitted "detention" of a person. It might be doubted whether the regime contemplates either custodial detention or non-custodial "home detention" rather than, for example, a curfew. But if, as a matter of construction of the sections, an order for custodial detention or "home detention" were possible, and if that construction would make s 5 invalid, then the court could construe s 5 so that it extended only to those orders for which the section might "lawfully be applied"77. Since no such order is sought against any of the plaintiffs, it is unnecessary to decide this issue78. The sixth step is that the court should consider whether any appropriate order should be made. Despite the risk of the person offending, and even with the prohibitions, restrictions and requirements as are appropriate, s 5(1) empowers, but does not require, the court to make the order. The fulfilment of the statutory conditions described in the five steps above confers a discretion upon the court to make the appropriate order79. To adapt an example given in oral submissions by the Solicitor-General of the Commonwealth, the court's discretion might be exercised not to make an order preventing spouses who share a family home with children from having any contact with each other even if the court were to 75 R v Hancox [2010] 1 WLR 1434 at 1437 [10]; [2010] 4 All ER 537 at 540. 76 R v Mee [2004] 2 Cr App R (S) 81 at 438-439 [14]. Interpretation Act 1987 (NSW), s 31(2). See also Newcastle and Hunter River Steamship Co Ltd v Attorney-General for the Commonwealth (1921) 29 CLR 357 78 Knight v Victoria (2017) 261 CLR 306 at 324-325 [33]. 79 See Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at Bell Nettle Edelman consider the order to be appropriate for the purpose of protecting the public by disrupting a criminal enterprise between the spouses. No impairment of a court's institutional integrity by other civil preventive order regimes The plaintiffs submitted that s 5(1) of the SCPO Act is inconsistent with Ch III of the Constitution. They relied upon the principle deriving from the decision of this Court in Kable80. The reasons of the Justices in the majority in that case have been synthesised as follows81: "The principle for which Kable stands is that because the Constitution establishes an integrated court system, and contemplates the exercise of federal jurisdiction by State Supreme Courts, State legislation which purports to confer upon such a court a power or function which substantially impairs the court's institutional integrity, and which is therefore incompatible with that court's role as a repository of federal jurisdiction, is constitutionally invalid." (footnotes omitted) Although it is only extreme legislation that will substantially impair the institutional integrity of a State court, the boundaries of the Kable principle are not sharp. The contours of the categories where State legislation will substantially impair a court's institutional integrity will necessarily emerge slowly. But the categories must develop in a principled, coherent, and systematic way rather than as evaluations of specific instances. Before turning to the particular grounds upon which the plaintiffs submitted that the SCPO Act substantially impairs the institutional integrity of the District Court and the Supreme Court, it is necessary to explain the striking similarities that the SCPO Act has with other preventive order regimes that this Court has previously held not to infringe the Kable principle. Each regime involves criteria that are necessarily imprecise, since the future is not certain, particularly in relation to the assessment of risk (the third step) and the balancing process (the fifth step). As to the question of risk, some legislation requires a (1996) 189 CLR 51. 81 Attorney-General (NT) v Emmerson (2014) 253 CLR 393 at 424 [40]. See also Kuczborski v Queensland (2014) 254 CLR 51 at 98 [139]. Bell Nettle Edelman court to be satisfied that there is "an unacceptable risk"82 or "reasonable cause to believe" in the risk83. Other legislation uses criteria that the person threatened has "reasonable grounds to fear"84 the conduct, or that it is "reasonable to suspect"85 that the conduct will occur, or "likely" that the conduct will occur86, or that the person against whom the order is sought has engaged in conduct and is "likely to do so again"87, or "may again"88 do so. As to the balancing process in the range of conditions in an order, apart from the common use of "appropriate", other 82 Dangerous Prisoners (Sexual Offenders) Act 2003 (Qld), ss 13(1), 13(2); Crimes (High Risk Offenders) Act 2006 (NSW), ss 5B(d), 5C(d); Dangerous Sexual Offenders Act 2006 (WA), s 7(1); Serious Sex Offenders Act 2013 (NT), ss 6(1), 31(1); Terrorism (High Risk Offenders) Act 2017 (NSW), ss 34(1)(d), 34(2)(b); Serious Offenders Act 2018 (Vic), ss 14, 62(2). 83 Child Protection (Offenders Prohibition Orders) Act 2004 (NSW), s 5(1)(a). 84 Domestic and Family Violence Act 2007 (NT), s 18. See also Restraining Orders Act 1997 (WA), s 10D(1); Crimes (Domestic and Personal Violence) Act 2007 (NSW), ss 16(1), 19(1); Family Violence Act 2016 (ACT), s 34(1)(a). Intervention Orders (Prevention of Abuse) Act 2009 (SA), s 6(a). See also Terrorism (Police Powers) Act 2002 (NSW), s 26D; Terrorism (Community Protection) Act 2003 (Vic), s 13E(1); Terrorism (Preventative Detention) Act 2005 (Tas), s 7(1); Terrorism (Extraordinary Temporary Powers) Act 2006 (ACT), 86 Restraining Orders Act 1997 (WA), s 34(a). 87 Family Violence Protection Act 2008 (Vic), s 74(1). See also Restraining Orders Act 1997 (WA), s 10D(1). 88 Family Violence Act 2004 (Tas), s 16(1). Bell Nettle Edelman legislation uses a criterion of "necessity"89, "necessary or desirable"90, "not inappropriate"91, or "sufficient grounds"92. (1) Preventive orders concerning terrorism Division 104 of the Criminal Code (Cth), as considered in Thomas v Mowbray93, establishes a preventive order regime "for the purpose of protecting the public from a terrorist act"94. Section 104.4 gives an issuing court – the Federal Court of Australia, then Federal Magistrates Court95 – the power to issue an interim control order which, when confirmed by the issuing court, can last up to 12 months96. Various conditions are required. Two central conditions concern the risk assessment (the third step) and the balancing process (the fifth step). the Family Court of Australia, or the The risk condition, in s 104.4, is satisfied either by past commission of a criminal offence relating to training with or from a listed terrorist organisation97, or by likely future involvement in a terrorist act. It requires the court to be satisfied on the balance of probabilities either "(i) that making the order would substantially assist in preventing a terrorist act; or (ii) that the person has 89 Crimes (Domestic and Personal Violence) Act 2007 (NSW), ss 17(3), 20(3), 35(1). 90 Family Violence Act 2004 (Tas), s 16(2); Domestic and Family Violence Act 2007 (NT), ss 21(1)(a), 21(1)(b); Family Violence Protection Act 2008 (Vic), s 81(1); Domestic and Family Violence Protection Act 2012 (Qld), ss 37(1)(c), 37(2), 91 Restraining Orders Act 1997 (WA), s 10D(2). 92 Crimes (Criminal Organisations Control) Act 2009 (NSW), s 19(1)(b). (2007) 233 CLR 307. 94 Criminal Code (Cth), s 104.1. 95 Criminal Code (Cth), s 100.1(1), definition of "issuing court". 96 Criminal Code (Cth), s 104.16(1)(d). 97 Criminal Code (Cth), s 101.2. Bell Nettle Edelman provided training to, or received training from, a listed terrorist organisation"98. These criteria give considerable latitude to the court. The notion of "substantial assistance" is inherently imprecise. Further, a "terrorist act" is defined in s 100.1 in terms "which may give an area of choice and discretion"99 and in broadly expressed criteria including action that "creates a serious risk to the health or safety of the public or a section of the public" and action that "seriously interferes with, seriously disrupts, or destroys, an electronic system"100. The balancing condition in s 104.4 requires the court to be satisfied on the balance of probabilities that "each of the obligations, prohibitions and restrictions to be imposed on the person by the order is reasonably necessary, and reasonably appropriate and adapted, for the purpose of protecting the public from a terrorist act"101. In conducting that balancing exercise the court is required to take into account the impact of the order upon the circumstances of the person subject to it (including their financial and personal circumstances)102. The control order that was considered by the issuing Magistrate to meet the balancing criteria subjected Mr Thomas to significant constraints including the following: to remain at his home (or an address notified to the Australian Federal Police) between midnight and 5 am; to report to police three times a week; not to leave Australia without police permission; not to associate with various individuals; and not to use a variety of communications technology either at all, or without approval103. A majority of this Court upheld the validity of this terrorism preventive order regime. Mr Thomas submitted that one basis on which the terrorism preventive order regime was invalid was that it was incompatible with the judicial integrity required by Ch III of the Constitution104: it involved the 98 Criminal Code (Cth), s 104.4(1)(c). 99 Thomas v Mowbray (2007) 233 CLR 307 at 352 [98]. 100 Criminal Code (Cth), s 100.1(2)(e)-(f) read with s 100.1(1), definition of "terrorist act". 101 Criminal Code (Cth), s 104.4(1)(d). 102 Criminal Code (Cth), s 104.4(2). 103 Thomas v Mowbray (2007) 233 CLR 307 at 493-495 [554]. 104 Thomas v Mowbray (2007) 233 CLR 307 at 342 [63]. Bell Nettle Edelman conferral of non-judicial power, or in so far as it did confer judicial power, it authorised the exercise of that power in a manner contrary to Ch III. These submissions were rejected by a majority of this Court in reasoning that applies a fortiori to State legislation105. The reasoning of Gummow and Crennan JJ, in the following respects, was the subject of agreement by Callinan J and Heydon J106. Gleeson CJ also wrote to similar effect107. Their Honours observed that108: (i) the regime involved a judicial procedure109; (ii) the orders which could be made were "a familiar part of judicial power to make orders restraining the liberty of the subject"; and (iii) the evaluation of broadly expressed criteria, including "oppressive", "unreasonable", "unjust", or "just and equitable", had long been recognised as consistent with judicial power110. The various judgments in the majority in Thomas v Mowbray also recognised111 that balancing exercises in many areas of the law involve broadly expressed criteria which constrain the liberty of the subject in circumstances other than in consequence of the commission of a criminal act. Whether those exercises concern bail applications, binding a person over to keep the peace, applications for apprehended violence orders, preventive orders for the continued detention of sex offenders, or even injunctions to constrain the likely commission 105 Thomas v Mowbray (2007) 233 CLR 307 at 343-355 [65]-[110]. See also Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 655-656 [219]. 106 Thomas v Mowbray (2007) 233 CLR 307 at 509 [600], 526 [651]. 107 Thomas v Mowbray (2007) 233 CLR 307 at 330-335 [19]-[30]. 108 Thomas v Mowbray (2007) 233 CLR 307 at 344-348 [71]-[79], 351-352 [94]-[97]. 109 See also Thomas v Mowbray (2007) 233 CLR 307 at 508 [599]. See R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277 at 305. See also R v Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617 at 628. 110 See Insurance Commissioner v Associated Dominions Assurance Society Pty Ltd (1953) 89 CLR 78 at 90; R v Commonwealth Industrial Court; Ex parte The Amalgamated Engineering Union, Australian Section (1960) 103 CLR 368 at 373; Cominos v Cominos (1972) 127 CLR 588 at 593, 599-600, 603-604, 608. 111 Thomas v Mowbray (2007) 233 CLR 307 at 328 [15], 347-348 [79], 507 [595]. Bell Nettle Edelman of an offence, the judicial process and method of applying that balancing exercise is one that develops and refines rules and principles whose clarity increases over time. Like the SCPO Act, the terrorism preventive order regime permits orders to be made against a person who has not committed a crime and is not expected to commit any crime. Nor does s 104.4(1)(c)(i) of the Criminal Code require that any particular act be committed by the person before an order is contemplated. It is enough that the making of the order would "substantially assist" in preventing a terrorist act112. In Thomas v Mowbray itself, the orders were based upon allegations that Mr Thomas, whose convictions had been quashed113, had admitted training with a listed terrorist organisation, had links to extremists who might exploit his vulnerabilities, and was an available resource for the commission of, or assistance to commit, terrorist acts114. (2) Preventive orders concerning sexual offenders In Fardon115, this Court considered whether the terms of Queensland legislation that provides for preventive orders for sexual offenders were incompatible with the institutional integrity of the Supreme Court of Queensland. The Dangerous Prisoners (Sexual Offenders) Act 2003 (Qld) ("DPSO Act") empowers the Supreme Court of Queensland to make an order against a person serving a period of imprisonment for a sexual offence of a violent nature or against children. The Court can order that the person be detained in custody for an indefinite term for control, care or treatment or that the person be released from custody subject to conditions116. The regime contains risk and balancing criteria. The risk criterion is if the person is "a serious danger to the community", defined as involving an unacceptable risk that the prisoner would commit a serious sexual offence if 112 Criminal Code (Cth), s 104.4(1)(c)(i). 113 Thomas v Mowbray (2007) 233 CLR 307 at 488 [537]. 114 Thomas v Mowbray (2007) 233 CLR 307 at 322-323 [1]. 115 (2004) 223 CLR 575. 116 DPSO Act, s 13(5). Bell Nettle Edelman released from custody or released from custody without a supervision order117. The Court might decide that it is "satisfied" only if satisfied to a high degree of probability by acceptable, cogent evidence of sufficient weight to justify the decision118. The balancing criterion applies in relation to the Court's choice of three orders (detention in custody, conditional release, or no order) and, in relation to conditional release, the conditions that it "considers appropriate"119. The Kable challenge to the validity of the sexual offender preventive order regime in Fardon focused upon a variety of aspects of the legislation including civil detention in prison on the basis of a risk of re-offending in the future in the absence of a crime, a trial, and a conviction, what was alleged to be punishment in a manner inconsistent with the essential character of a court and the nature of judicial power, that the prediction of re-offending was unreliable, and that an "unacceptable" risk was an unclear phrase120. However, as the Solicitor-General of the State of Queensland observed, the same phrase had been used in the Bail Act 1980 (Qld) and in the context of denying a parent access to a child121. Six members of this Court dismissed the challenge to the validity of the sexual offender preventive order regime. As Gleeson CJ observed, whilst the legislation conferred "a substantial discretion as to whether an order should be made, and if so, the type of order", the "Queensland Parliament was attempting to ensure that the powers would be exercised independently, impartially, and judicially"122. Similarly, McHugh J saw the three discretionary choices as to the order that the Supreme Court might make as a strength, tending to validity, rather than a weakness of the regime123. Callinan and Heydon JJ observed that the 117 DPSO Act, s 13(2). 118 DPSO Act, s 13(3). 119 DPSO Act, s 13(5)(b). 120 Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 577. 121 Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 579. See also at 593 122 Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 592 [19]-[20]. 123 Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 597 [34]. Bell Nettle Edelman "process of reaching a predictive conclusion about risk is not a novel one"124. The same reasoning must apply to the risk concept in the third step of the analysis under the SCPO Act, which effectively amounts to a requirement that there is a real and significant risk. (3) Preventive orders concerning criminal organisations The Crimes (Criminal Organisations Control) Act 2009 (NSW) ("the CCOC Act") empowered the Supreme Court to make interim and final control orders. There were two criteria. Neither required any unlawful conduct by the person subject to the order, either in the past or the future. The first was the risk criterion. The second criterion was the balancing criterion. The risk criterion required only that the Supreme Court conclude that the person "is a member of a particular declared organisation", or "is or purports to be a former member of a particular declared organisation but has an on-going involvement with the organisation and its activities"125. The assessment of the risk presented by the declared organisation was an anterior issue left to the determination of an "eligible judge", in a persona designata capacity126, as to whether "members of the organisation associate for the purpose of organising, planning, facilitating, supporting or engaging in serious criminal activity" and the "organisation represents a risk to public safety and order" in New South Wales127. The risk criterion of a "risk to public safety and order" was highly elastic. It was concerned only with the organisation with which the individual who was subject to the order might have ongoing involvement and not with any specific threat of harm from the individual. As for the balancing criterion, this required only that the Supreme Court conclude that "sufficient grounds exist for making the control order"128. There was no explanation or definition of the grounds that would be sufficient. 124 Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 657 [225]. 125 CCOC Act, s 19(1). 126 CCOC Act, s 5. 127 CCOC Act, s 9(1). 128 CCOC Act, s 19(1)(b). Bell Nettle Edelman In Wainohu v New South Wales129, the plaintiff challenged the validity of this preventive order regime for criminal organisations on a number of grounds, including that it impermissibly undermined or impaired the institutional integrity of the Supreme Court. Six members of this Court rejected that submission. In a joint judgment, Gummow, Hayne, Crennan and Bell JJ held that although the risk criterion was required to be considered by an eligible judge, Commonwealth legislation would have been valid if the power had been conferred upon a Ch III court130. It followed that a State court could have exercised the same judicial power. As for the balancing criterion, despite the elasticity of "sufficient grounds", their Honours, with whom French CJ and Kiefel J agreed on this point131, held that it was sufficient for validity that the limits to the curial power could be ascertained "by regard to the subject, scope and purpose of the Act including the consequences of the making of an interim control order or control order"132. It is notable that although the preventive order regime for criminal organisations in the CCOC Act contained generally broader and more elastic provisions than the preventive order regime for terrorist acts in the Criminal Code, the joint judgment of Gummow, Hayne, Crennan and Bell JJ in Wainohu v New South Wales133 supported the validity of the scheme by reference to the judgments of Gleeson CJ, Gummow and Crennan JJ, and Callinan J in Thomas v Mowbray134, discussed above. Despite the different formulations, the principles underlying the two preventive order regimes were relevantly alike and it would be incoherent to conclude that one preventive order regime did not undermine the institutional integrity of the court but that the other did. Less than two years later, a challenge was brought against the Queensland preventive order legislation, namely the Criminal Organisation Act 2009 (Qld). 129 (2011) 243 CLR 181. 130 Wainohu v New South Wales (2011) 243 CLR 181 at 225 [91]. 131 Wainohu v New South Wales (2011) 243 CLR 181 at 220 [72]. 132 Wainohu v New South Wales (2011) 243 CLR 181 at 230 [111]. 133 (2011) 243 CLR 181 at 230 [111] fn 222. 134 (2007) 233 CLR 307 at 331-334 [20]-[28] per Gleeson CJ, 344-348 [71]-[82], 350- 351 [88]-[92] per Gummow and Crennan JJ, 507-508 [596] per Callinan J. Bell Nettle Edelman One purpose of the legislation was to "disrupt" and "restrict" the activities of members and associates of organisations involved in serious criminal activity135. Section 18 of the Criminal Organisation Act authorised the Supreme Court of Queensland to make a control order against a person, which remained in force until revoked136. The risk conditions that enabled an order to be made included if the Court was "satisfied" that (i) the person had engaged in serious criminal activity, and (ii) the person "associates with any member of a criminal organisation for the purpose of engaging in, or conspiring to engage in, serious criminal activity"137. Serious criminal activity was defined in terms of similar breadth to the SCPO Act, including an indictable offence punishable by at least seven years' imprisonment138. And the criteria for a criminal organisation included that it was "an unacceptable risk to the safety, welfare or order of the community"139. As for the balancing criterion, s 19 of the Criminal Organisation Act provided, in broader terms than s 6 of the SCPO Act, that the Court could impose conditions that it considered "appropriate". In Condon v Pompano Pty Ltd140 this Court considered, and unanimously rejected, a Kable challenge to this Queensland preventive order regime. The respondents submitted that the regime departed "to a significant degree from the methods and standards which have historically characterised the exercise of judicial power"141. The respondents further submitted that the question of whether an organisation presented "an unacceptable risk to the safety, welfare or order of the community" was not suitable for judicial determination and asserted that "the risk assessment which the Court is required to undertake is an executive, rather than judicial, function"142. Hayne, Crennan, Kiefel and Bell JJ rejected 135 Criminal Organisation Act 2009 (Qld), s 3(1). 136 Criminal Organisation Act 2009 (Qld), s 20(3). 137 Criminal Organisation Act 2009 (Qld), s 18(2). 138 Criminal Organisation Act 2009 (Qld), ss 6(a), 7(1)(a). 139 Criminal Organisation Act 2009 (Qld), s 10(1)(c). 140 (2013) 252 CLR 38. 141 Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 40. 142 Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 41. Bell Nettle Edelman these submissions, concluding that the legislation was "not different in any relevant way from the tasks held to be validly assigned to courts" by the legislation in issue in Thomas v Mowbray and Fardon. Their Honours emphasised that "[c]ourts are often called on to make predictions about dangers to the public"143. An underlying premise of the decisions of this Court upholding the criminal organisation preventive order regimes in New South Wales and Queensland was that fine distinctions could not be drawn to distinguish the terrorism and sexual offender preventive order regimes that were upheld in Thomas v Mowbray and Fardon from these criminal organisation preventive order regimes. The material features were the risk assessment and the balancing exercise. The validity turned upon the risk and balancing criteria, with a focus upon the conduct of an organisation in the criminal organisation context, as well as a focus on the conduct of an individual in the terrorism preventive order legislation and the sexual offender preventive order legislation upheld in Thomas v Mowbray and Fardon. The validity of s 5(1) of the SCPO Act Faced with the decisions discussed above, all of which dismissed Kable challenges to preventive order regimes from different perspectives, the plaintiffs framed their challenge as a scattergun approach occasionally involving submissions in direct opposition to each other. For instance, in written submissions in chief, in written submissions in reply, and in oral submissions, the plaintiffs submitted that the SCPO Act "enlisted" the court to do the bidding of the executive. On this view, as the majority of this Court held in South Australia v Totani, the legislation would be invalid because the court would be deprived of any real opportunity for evaluation144. In contrast, the plaintiffs also submitted that s 6 of the SCPO Act imposed an "evaluative criterion of the broadest kind". It suffices to divide the plaintiffs' submissions into three strands. The first strand of the plaintiffs' submissions was that the SCPO Act undermines the criminal justice system of State courts. The reasons given for this reduce to two. First, it was said that the SCPO Act undermines the finality of the 143 Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 96 [143]. 144 (2010) 242 CLR 1 at 52 [82], 67 [149], 88 [226], 92-93 [236], 160 [436], 173 Bell Nettle Edelman criminal justice system. It was submitted that this occurs where an order is made imposing further restrictions on the liberty of a person who has previously been convicted and punished for a serious offence or where an order is made imposing restrictions on a person's liberty despite the person's acquittal of a serious offence, including after a trial by jury where guaranteed by s 80 of the Constitution. Secondly, it was said that the SCPO Act establishes a regime that would conflict with the criminal justice system. One example of this conflict was said to be the need for a defendant to elect whether to give evidence in the civil preventive order proceedings, with the risk of adverse inferences if evidence is not given and the risk of assisting a later prosecution if evidence is given. Another example was said to be the ability of prosecuting authorities to elect to use the "easier" route of the SCPO Act rather than a criminal prosecution where there are no reasonable prospects of conviction or a criminal prosecution is not in the public interest. The error in these submissions is that they seek to equate the civil preventive order regime with the regime for prosecution and punishment for past criminal offences. It is not to the point to ask whether the traditional use of the label "punishment"145 might be extended to describe orders other than for past offences and where the purpose of the order does not include two of the traditional purposes of punishment: retribution and rehabilitation146. Nor is it to the point whether a civil preventive order regime might be brought within an extended conception of a "criminal justice system". The relevant point is that the regime is separate and distinct from traditional criminal justice and its outcomes can therefore be different without inconsistency. Prosecutions for criminal offences involve trials for offences based upon past conduct. The civil preventive order regime for serious crime is not a trial of any offence. It anticipates future risk, albeit with the past commission of an offence as "a step in the decision" about future risk147. The regimes thus involve different responses to a different 145 See Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 596 [34], 610 [74], 146 See The Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at 506 [55], quoting Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 at 52,152. 147 Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd (2015) 255 CLR 352 at 371 [33]. See also Duncan v New South Wales (2015) 255 CLR 388 at 407-408 [41]. Bell Nettle Edelman subject matter; no conflict and no double jeopardy is involved148. Issues of forensic prejudice to a defendant facing future criminal proceedings can be addressed where necessary by an adjournment or temporary stay of the civil proceedings until the conclusion of the criminal proceedings149. These are familiar considerations for courts. The second strand of the plaintiffs' submissions was that the SCPO Act "enlists" the courts to administer a different, and lesser, form of criminal justice. After pointing to the variety of differences between the system of criminal justice concerned with prosecution of persons for past offences and the preventive order regime established by the SCPO Act, the plaintiffs submitted that the effect of the SCPO Act is that the Act empowers applicants for preventive orders – the Commissioner of Police, the Director of Public Prosecutions, and the New South Wales Crime Commission – with a discretion as to which grade of criminal justice would apply to a person. This strand of submissions again incorrectly assumes an identity between the function and purpose of civil preventive orders and the function and purpose of punishment for past offences. The lack of this identity makes the various differences in the regimes readily explicable. Nor is there any enlistment of the court by the executive. The orders are made by the court with substantial judicial discretion as to whether any order should be made as well as the content of the order. In South Australia v Totani150, Hayne J identified the vice of the legislation there under challenge. His Honour said: "It is the Executive which chooses whether to apply for an order, and the Executive which chooses the members of a declared organisation that are to be made subject to a control order. So long as the person named as a defendant falls within the definition of 'member', the Court cannot refuse the Executive's application; the Court must make a control order ... [T]he Court is acting at the behest of the Executive." The SCPO Act is not affected by this vice. The third strand of the plaintiffs' submissions relied upon the remarks of Gaudron J in Kable that the legislature had attempted to "dress up" the 148 Compare Gray v Motor Accident Commission (1998) 196 CLR 1 at 14 [42]-[43]. 149 See Commissioner of Australian Federal Police v Zhao (2015) 255 CLR 46 at 58- 150 (2010) 242 CLR 1 at 89-90 [229]. Bell Nettle Edelman proceedings as "proceedings involving the judicial process. In so doing, the Act makes a mockery of that process and, inevitably, weakens public confidence in it."151 Contrary to the plaintiffs' written and oral submissions, the reference by Gaudron J to "public confidence" was not suggesting a licence for the Court to declare legislation invalid based upon its perception of the reaction of the public to the application of that legislation. Rather, public confidence represents "the trust reposed constitutionally in the courts"152. That construct of trust depends upon integrity. As Brennan CJ said in Nicholas v The Queen153: "Integrity is the fidelity to legal duty, not a refusal to accept as binding a law which the court takes to be contrary to its opinion as to the proper balance to be struck between competing interests. To hold that a court's opinion as to the effect of a law on the public perception of the court is a criterion of the constitutional validity of the law, would be to assert an uncontrolled and uncontrollable power of judicial veto over the exercise of legislative power. It would elevate the court's opinion about its own repute to the level of a constitutional imperative. It is the faithful adherence of the courts to the laws enacted by the Parliament, however undesirable the courts may think them to be, which is the guarantee of public confidence in the integrity of the judicial process and the protection of the courts' repute as the administrator of criminal justice." In written submissions, the features of the SCPO Act that the plaintiffs submitted are a departure from established judicial methods and procedures included: (i) the civil standard of proof and rules of evidence; (ii) the admission of hearsay evidence where the evidence is from a "reliable source"; and (iii) the hearing being before a judge alone, without a jury. However, all of these matters are, or are consistent with, long-established judicial methods and procedures albeit usually in civil rather than criminal trials. In oral submissions, the plaintiffs relied upon remarks of McHugh J in Kable, in what senior counsel for the plaintiffs accepted to be the "core summary" of the plaintiffs' case, that the SCPO Act is "'not directed to any determination or order which resolves an actual or potential controversy as to existing rights or obligations' which is the benchmark of an exercise of judicial 151 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 108. 152 Moti v The Queen (2011) 245 CLR 456 at 478 [57]. 153 (1998) 193 CLR 173 at 197 [37]. Bell Nettle Edelman power"154. The plaintiffs focused upon the open-textured nature of the criteria by which the court is to evaluate whether to make an order and the terms of the order. This submission is contrary to history, authority and principle. As to history, it is a factor in favour of the judicial character of an exercise of power that it is one which has been treated for centuries as an exercise of judicial power155. As has been explained above, preventive order regimes have antecedents as judicial power dating from the fourteenth century including binding-over orders, writs of supplicavit, injunctions to restrain the anticipated commission of criminal acts or public wrongs, and preventive order regimes consequent upon the curial sentencing process. The historical consideration is reinforced by the usual judicial methods that have accompanied the conferral of these powers on courts. It is true that the SCPO Act lacks express procedural guarantees of the kind identified by this Court as significant to the validity of the legislation in Fardon156. But the absence of express provision of that kind does not mean that such procedures as are necessary to ensure procedural fairness may be avoided. In the absence of a clearly expressed contrary legislative intent, the legislature is taken to intend that express procedures will be supplemented by such requirements for procedural fairness as are necessary to achieve it157. For present purposes, it is unnecessary for this Court to pass upon the likely content of the hearing rule on an application for an order under the SCPO Act: suffice it to say that given the seriousness of the consequences for the subject of 154 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 122 (footnote omitted). 155 Palmer v Ayres (2017) 259 CLR 478 at 494 [37]. See also R v Davison (1954) 90 CLR 353 at 368-370, 382; R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 387, 394; Thomas v Mowbray (2007) 233 CLR 307 at 329 [16]-[17], 357 [120]-[121]; TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 574 156 (2004) 223 CLR 575 at 596-597 [34], 621 [115]. It is also true that the SCPO Act does not expressly require the giving of reasons and that the exemption of eligible judges from the duty to give reasons was the basis of this Court's conclusion that the CCOC Act was invalid in Wainohu v New South Wales (2011) 243 CLR 181. 157 See, eg, Annetts v McCann (1990) 170 CLR 596 at 598; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 85 Bell Nettle Edelman such an order, it is likely to be considerable158. To accept that it were otherwise would be to adopt the kind of "literal and draconian construction" which, as Gageler J cautioned in North Australian Aboriginal Justice Agency Ltd v Northern Territory159, is so often advanced by challengers in constitutional litigation who desire "to maximise the prospect of constitutional invalidity". As to authority, one point that emerges clearly from the decisions in Thomas v Mowbray160, Fardon161, Wainohu v New South Wales162, and Condon v Pompano Pty Ltd163, as we have set out above, is that sharp distinctions should not, and cannot, be drawn between the different open-textured criteria used to shape the judicial evaluative exercise for assessment of risk or the balancing exercise concerning the preventive order to be made. It could hardly be said that this Court could, on the one hand, uphold, as valid exercises of judicial power, criteria such as "an unacceptable risk to the safety, welfare or order of the community", "reasonably necessary", "reasonably appropriate and adapted", "sufficient grounds", and "considers appropriate", but, on the other hand, find invalid the use of criteria in the SCPO Act such as "appropriate for the purpose of protecting the public by preventing, restricting or disrupting involvement" or criteria amounting to an assessment of "real likelihood". In our view, no relevant distinction can be drawn between the regime upheld in Thomas v Mowbray164 and the SCPO Act. Like the terrorism control order regime, the preventive order regime in the SCPO Act involves a judicial procedure for orders that affect the liberty of the subject. In both regimes the person subject to the order need not be the person who it is suspected might 158 Eaton v Overland (2001) 67 ALD 671 at 716 [165]; Gribbles Pathology (Vic) Pty Ltd v Cassidy (2002) 122 FCR 78 at 100 [117]. 159 (2015) 256 CLR 569 at 604 [75]. 160 (2007) 233 CLR 307. 161 (2004) 223 CLR 575. 162 (2011) 243 CLR 181. 163 (2013) 252 CLR 38. 164 (2007) 233 CLR 307. Bell Nettle Edelman commit an offence in the future165. The broadly expressed criteria in Div 104 of the Criminal Code are echoed in the provisions of the SCPO Act. The former uses concepts of whether making the order would "substantially assist" in preventing a "terrorist act"166, which includes broad criteria such as "serious risk"167 and "disrupts"168, and whether the conditions in the order are "reasonably necessary, and reasonably appropriate and adapted, for the purpose of protecting the public from a terrorist act"169. The concepts in the latter involve real risk, as well as notions of appropriateness related to "preventing, restricting or disrupting involvement"170. As to principle, the submission that the SCPO Act preventive order regime is not an exercise of judicial power, or is incompatible with the exercise of judicial power, due to its open-textured nature ultimately misconceives the process of judicial development of rules by reference to general conceptions. There is, at best, a fine distinction between the judicial development of a statutory standard and the development of a judicial standard171. Both proceed by the development and refinement of rules, often by the creation of categories of case, within the general conception. A statute can pick "up as a criterion for its operation a body of the general law" and "in the absence of a contrary indication in the statute, the statute speaks continuously to the present, and picks up the case law as it stands from time to time"172. Generally, broadly expressed criteria can be expected to be given content as "the technique of judicial interpretation [gives] content and more detailed meaning on a case to case basis. Rules and 165 See Thomas v Mowbray (2007) 233 CLR 307 at 352 [97]. 166 Criminal Code (Cth), s 104.4(1)(c)(i). 167 Criminal Code (Cth), s 100.1(2)(e). 168 Criminal Code (Cth), s 100.1(2)(f). 169 Criminal Code (Cth), s 104.4(1)(d). 170 SCPO Act, s 5(1)(c). 171 Australian Securities and Investments Commission v Kobelt (2019) 93 ALJR 743 at 762 [85]; 368 ALR 1 at 23. 172 Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 at 549 Bell Nettle Edelman principles emerge which guide or direct courts in the application of the standard."173 When Lord Atkin created a "general conception" of a duty of care in Donoghue v Stevenson174, what he did was to "open up a category of cases giving rise to a special duty. ... The general conception can be used to produce other categories in the same way. An existing category grows as instances of its application multiply until the time comes when the cell divides."175 General conceptions, whether express or implied, requiring consideration of concepts such as "likelihood", "appropriateness", "disruption", or "interference", might not have the clarity of clear, rigid rules but, as Lord Nicholls of Birkenhead observed in In re Spectrum Plus Ltd (In liq)176: "Rigidity in the operation of a legal system is a sign of weakness, not strength. It deprives a legal system of necessary elasticity. Far from achieving a constitutionally exemplary result, it can produce a legal system unable to function effectively in changing times." It may be accepted that there remains considerable room for judicial evaluation despite the general conceptions of ss 5 and 6, as properly interpreted, being deconstructed into the six steps discussed above. For instance, an important issue in crafting the appropriate precautionary response, particularly in relation to the fifth step, will be the "dual axes" of "assessment of the gravity of the harm in prospect ... [and] the degree of probability that it will actually occur"177. But the process of balancing the magnitude of a risk and its likelihood when determining the burden of alleviating precautions that is reasonable or appropriate is not alien 173 Zines, The High Court and the Constitution, 4th ed (1997) at 195, quoted in Thomas v Mowbray (2007) 233 CLR 307 at 351 [91]. 174 [1932] AC 562 at 580. 175 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 at 524-525. See also Cook v Cook (1986) 162 CLR 376 at 387. 176 [2005] 2 AC 680 at 699 [41]. 177 Ashworth and Zedner, Preventive Justice (2014) at 122. Bell Nettle Edelman to judicial power. It is the very exercise upon which courts engage every day when assessing whether a duty of care has been breached178. For these reasons, there is nothing antithetical to the judicial process, and nothing that could impair the institutional integrity of a State Supreme Court, in open-textured legislation that establishes broad principles to be developed and applied by courts. The application of these rules to persons by courts is the very nature of the judicial process. It may be that, even after the rules become refined and developed, there will remain considerable latitude for courts to craft orders that relate to the particular person. That is how courts of equity operated for hundreds of years. It remains the case, including by the grant of orders restricting liberty by reference to predictive considerations in numerous areas including bail applications, sentencing hearings, custody and access disputes, and almost every day in applications for interim or interlocutory injunctions. It is, therefore, unsurprising that it was not suggested in submissions that the power to make a preventive order is more naturally an executive power than a judicial power. There are good reasons why such powers, if they are to exist, should be exercised by the judiciary. A person subject to an exercise of judicial power should have the power to obtain legal representation, the benefit of a hearing with fair process and generally held in public, an entitlement to written reasons for the decision as to the orders made which demonstrate the application of general rules to the facts of the case, and a power of appeal or to seek leave to appeal. "This is not the way that any arm of the Executive conventionally operates."179 In Thomas v Mowbray, Gleeson CJ observed that the decision by Parliament to confer this power on the judiciary reflected a "parliamentary intention that the power should be exercised judicially, and with the independence and impartiality which should characterise the judicial branch of government"180. The Chief Justice continued, saying that181: "the exercise of powers, independently, impartially and judicially, especially when such powers affect the liberty of the individual, would 178 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48; Vairy v Wyong Shire Council (2005) 223 CLR 422 at 433 [27], 455-456 [105], 480-481 [213]. 179 Thomas v Mowbray (2007) 233 CLR 307 at 508 [599]. 180 Thomas v Mowbray (2007) 233 CLR 307 at 327 [12]. 181 Thomas v Mowbray (2007) 233 CLR 307 at 329 [17]. Bell Nettle Edelman ordinarily be regarded as a good thing, not something to be avoided. … To decide that such powers are exclusively within the province of the executive branch of government would be contrary to our legal history, and would not constitute an advance in the protection of human rights." Section 5(1) of the SCPO Act is valid. Conclusion The questions of law referred to this Court in the special case should be answered as follows: Question 1: Is subsection 5(1) of the Crimes (Serious Crime Prevention Orders) Act 2016 (NSW) invalid (in whole or in part) because it is the inconsistent with and prohibited by Chapter III of Constitution? Answer: Question 2: If the answer to Question 1 is "Yes": to what extent is that subsection invalid? is that part of the subsection severable from the remainder of the Act? Answer: Unnecessary to answer. Question 3: Who should pay the costs of the special case? Answer: The plaintiffs. On application to the Supreme Court of New South Wales or to the District Court of New South Wales by the Commissioner of Police ("the Commissioner"), the Director of Public Prosecutions or the New South Wales Crime Commission, s 5(1) of the Crimes (Serious Crime Prevention Orders) Act 2016 (NSW) ("the SCPO Act") empowers the court, where stated preconditions are met, to make a "serious crime prevention order" ("SCPO") against a person who has been convicted of a "serious criminal offence" or who is found by the court on the civil standard of proof to have been "involved in serious crime related activity". Section 6(1) of the SCPO Act provides that an SCPO "may contain such prohibitions, restrictions, requirements and other provisions as the court considers appropriate for the purpose of protecting the public by preventing, restricting or disrupting involvement by the person in serious crime related activities". An SCPO can be made for a period of up to five years, during which period any contravention of it by the person against whom it is made is a criminal offence. The substantive question in this special case in a proceeding for declaratory relief in the original jurisdiction of the High Court is whether s 5(1) of the SCPO Act is in whole or in part invalid because it is inconsistent with Ch III of the Constitution. My answer is that the provision is wholly invalid for that reason. Supreme Court proceeding The proceeding for declaratory relief arises out of a proceeding on an application under s 5(1) of the SCPO Act that is pending in the Supreme Court of New South Wales in which the Commissioner (the first defendant in the proceeding for declaratory relief) is the plaintiff and Damien Vella, Johnny Vella and Michael Fetui (the plaintiffs in the proceeding for declaratory relief) are defendants. The Commissioner alleges in the Supreme Court proceeding that each defendant in that proceeding is a member of an organisation known as the "Rebels", which the Commissioner refers to as an "Outlaw Motorcycle Gang". By further amended summons in the Supreme Court proceeding, the Commissioner seeks SCPOs prohibiting each defendant in that proceeding for a period of two years from: approaching, contacting or associating directly or indirectly with any person known by the defendant to be a member (or former member), associate (or former associate), hangaround (or former hangaround), nominee (or former nominee) or prospect (or former prospect) of any outlaw motorcycle gang, with the exception for Damien and Johnny Vella of pre-arranged, approved family events; travelling in any vehicle between the hours of 9 pm and 6 am except in the case of a genuine medical emergency; attending or approaching any premises known or suspected by the defendant to be a residence of, a place of employment of, or a place occupied or frequented by, any member (or former member), associate (or former associate), hangaround (or former hangaround), nominee (or former nominee) or prospect (or former prospect) of any outlaw motorcycle gang, with the exception again for Damien and Johnny Vella of pre-arranged, approved family events; possessing or having access to an encrypted communications device or encrypted media application (including but not limited to WhatsApp, Wickr, Snapchat, Hushmail and Confide); possessing more than one mobile telephone; possessing any weapon; and • wearing, possessing or displaying any Rebels insignia, patches or accoutrement and other merchandise. With the exception (depending on the circumstances) of possessing a weapon, each of the prohibitions sought by the summons to be contained in each SCPO would constrain conduct that is otherwise lawful. Reflecting the structure of s 5(1) of the SCPO Act, to the detail of which it will be necessary in due course to turn, the summons indicates that the Commissioner seeks those orders against each defendant in the Supreme Court proceeding on three cumulative grounds. The first is that each defendant is over 18 years of age. The second is that each defendant has been convicted of a "serious criminal offence" or has been involved in other "serious crime related activity". The third is that there are reasonable grounds to believe that making the SCPO against each defendant would protect the public by preventing, restricting or disrupting involvement by him in serious crime related activities. There is no dispute that each defendant in the Supreme Court proceeding has been convicted of serious criminal offences. The convictions were, in respect of each defendant, of offences against provisions of the Crimes Act 1900 (NSW). In relation to Damien Vella, the convictions on which the Commissioner relies are convictions in 2008 of one offence of robbery in company182 and of three offences of obtaining a valuable thing by deception183, each committed in 2006. In relation to Johnny Vella, the Commissioner similarly relies on convictions in 182 Section 97(1) of the Crimes Act. 183 Section 178BA(1) of the Crimes Act. 2008 of one offence of robbery in company and of three offences of obtaining a valuable thing by deception, again, each committed in 2006, as well as on a conviction in 2001 of an offence of larceny184 committed in 2001. In relation to Michael Fetui, the Commissioner relies on a series of more recent convictions. They are a conviction in 2010 of an offence of resisting an officer in the execution of his or her duty185 committed in 2009, a conviction in 2011 of an offence of affray186 committed in 2011, a conviction in 2015 of an offence of assault occasioning actual bodily harm187 committed in 2014, and convictions in 2018 of offences of affray and resisting an officer in the execution of his or her duty committed in 2018. Disputed in the Supreme Court proceeding, and required in that proceeding to be determined by the Supreme Court on the civil standard of proof, is whether each defendant has been involved in serious crime related activity within the meaning of the SCPO Act for which he has not been convicted. The Commissioner alleges in the Supreme Court proceeding that each is a participant in a criminal group contrary to s 93T of the Crimes Act. The Commissioner additionally alleges in relation to Damien Vella and Johnny Vella that each was involved in an offence of assault occasioning actual bodily harm (for which each was charged and acquitted before the District Court of New South Wales in 2007) and offences of shooting with intent to murder188 and discharging loaded arms with intent to inflict grievous bodily harm189 (for which each was charged in 2006 but the charges were not proceeded with before the District Court in 2007). The Commissioner additionally alleges in relation to Michael Fetui that he was involved in an offence of affray (for which he was charged in the Local Court but the charge was withdrawn in 2014) as well as offences of engaging in acts intended to cause grievous bodily harm, participating in a criminal organisation, serious organised crime and affray for which he was charged in Queensland in 2019 in criminal proceedings which remain pending in Queensland. To avoid confusion in nomenclature, I will refer to Damien Vella, Johnny Vella and Michael Fetui (in their capacity as plaintiffs in the proceeding for 184 Section 117 of the Crimes Act. 185 Section 58 of the Crimes Act. 186 Section 93C(1) of the Crimes Act. 187 Section 59(1) of the Crimes Act. 188 Section 29 of the Crimes Act. 189 Section 33A(1) of the Crimes Act. declaratory relief) as "the individuals" and to refer to the Commissioner and the State of New South Wales (in their capacity as defendants in the proceeding for declaratory relief) as "the State". SCPO Act The SCPO Act is relevantly described in its long title as "[a]n Act to provide for the making of serious crime prevention orders". The Explanatory Note to the Bill for the SCPO Act explained its object as being "to enable the Supreme Court and the District Court to make serious crime prevention orders, on the application of the Commissioner of Police, the Director of Public Prosecutions or the New South Wales Crime Commission, so as to prevent, restrict or disrupt involvement by certain persons in serious crime related activities"190. In the Second Reading Speech for the Bill for the SCPO Act in the Legislative Assembly the purpose of the SCPO Act and cognate legislation was said to be "to deliver on the Government's election commitment to introduce tough new powers to give police the upper hand in the fight against serious crime". Those powers were said to "include United Kingdom-style serious crime prevention orders to disrupt the activities of serious criminals"191. The reference was to powers conferred by the Serious Crime Act 2007 (UK) ("the UK SCPO Act"), on which the SCPO Act appears in part to have been modelled. The operation of the SCPO Act is reliant on five key defined terms. The first is "appropriate court", which means the Supreme Court and in some circumstances the District Court192. The second is "eligible applicant", which means any of the Commissioner, the Director of Public Prosecutions and the New South Wales Crime Commission193. The third is "serious criminal offence", which has the same meaning as in the Criminal Assets Recovery Act 1990 (NSW)194. The fourth is "serious crime related activity", which means anything done by a person that is or was at the time a serious criminal offence, whether or 190 New South Wales, Crimes (Serious Crime Prevention Orders) Bill 2016, Explanatory Note at 1. 191 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 22 March 2016 at 60. 192 Section 3(1) of the SCPO Act, definition of "appropriate court". 193 Section 3(1) of the SCPO Act, definition of "eligible applicant". 194 Section 3(1) of the SCPO Act, definition of "serious criminal offence". not the person has been charged with the offence, or, if charged, has been tried, or, if tried, has been convicted or acquitted or had a conviction quashed or set aside on appeal195. The meaning given to "serious criminal offence" in the Criminal Assets Recovery Act196 as imported into the SCPO Act is extremely broad. The definition in the Criminal Assets Recovery Act is expressed to encompass offences against specified provisions of the Crimes Act, of the Firearms Act 1996 (NSW), of the Drug Misuse and Trafficking Act 1985 (NSW) and of the Poisons Act 1966 (NSW)197. It is also expressed to encompass any "offence that is punishable by imprisonment for 5 years or more and involves theft, fraud, obtaining financial benefit from the crime of another, money laundering, extortion, violence, bribery, corruption, harbouring criminals, blackmail, obtaining or offering a secret commission, perverting the course of justice, tax or revenue evasion, illegal gambling, forgery or homicide"198. The individuals pointed out that the effect of that added omnibus provision is to sweep up most of the remaining offences in the Crimes Act. Not confining itself to conduct within New South Wales, the definition is also expressed to encompass offences against a law of the Commonwealth or of another State or a Territory or of a place outside of Australia which would amount to serious criminal offences if committed in New South Wales199. Its operation in that respect is illustrated by the most recent serious crime related activities which the Commissioner alleges in relation to Michael Fetui in the Supreme Court proceeding. Finally, the definition is expressed to encompass an "offence of attempting to commit, or of conspiracy or incitement to commit, or of aiding or abetting", any of the other offences to which it refers200. The remaining defined term on which the operation of the SCPO Act is reliant is "involved in serious crime related activity". The definition of the term is as follows201: 195 Section 3(1) of the SCPO Act, definition of "serious crime related activity". 196 Section 6(2), (3) and (4) of the Criminal Assets Recovery Act. 197 Section 6(2)(a)-(b), (e)-(h) of the Criminal Assets Recovery Act. 198 Section 6(2)(d) of the Criminal Assets Recovery Act. 199 Section 6(2)(i) of the Criminal Assets Recovery Act. 200 Section 6(2)(j) of the Criminal Assets Recovery Act. 201 Section 4(1) of the SCPO Act. "For the purposes of this Act, a person is involved in serious crime related activity if: the person has engaged in serious crime related activity, or the person has engaged in conduct that has facilitated another person engaging in serious crime related activity, or the person has engaged in conduct that is likely to facilitate serious crime related activity (whether by the person or another person)." For the purpose of determining whether the conduct of a person has facilitated another person to engage in serious crime related activity, yet oddly not for the purpose of determining whether the conduct of a person is likely to facilitate serious crime related activity by that person or another person, "a court may take into account whether the conduct was reasonable in all the circumstances"202. The definition of "involved in serious crime related activity" is cast in terms which make the question of whether a person "is involved" in serious crime related activity dependent on whether the person "has engaged" in any of the categories of activity identified in paras (a), (b) or (c). Whilst no party or intervener sought to make anything of that change of tense, the effect of the provision is to make past engagement correspond to present and ongoing involvement. Turning to the detail of the definition, para (a) refers to conduct that constitutes a serious criminal offence. The paragraph for that reason imports a requirement for the existence of the mental element as well as the physical element of such an offence. Paragraphs (b) and (c), in contrast, refer to conduct which need not constitute a criminal offence. Neither para (b) nor para (c) imports any requirement for knowledge of or intention to facilitate serious crime related activity. The concept of facilitation invoked in each of them derives from the ordinary understanding of that terminology. Applying that ordinary understanding, facilitation of serious crime related activity involves nothing more than making conduct that constitutes serious crime related activity easier203. The word "likely" in para (c) has its ordinary meaning, "namely, to convey the notion of a substantial – a 'real and not remote' – chance regardless of whether it is less or more than 50 per cent"204. 202 Section 4(2) of the SCPO Act. 203 Milne v The Queen (2014) 252 CLR 149 at 163 [33]. 204 Boughey v The Queen (1986) 161 CLR 10 at 21. Brought within the concept of involvement in serious crime related activity by para (b) of the definition is accordingly lawful conduct that makes it easier for another person to engage in conduct that constitutes a serious criminal offence or that constitutes other serious crime related activity. Then added by para (c) of the definition is lawful conduct that does no more than to give rise to a real chance of making it easier for someone to engage in conduct that constitutes a serious criminal offence or that constitutes other serious crime related activity. The statutory concept of involvement in serious crime related activity in that way takes the already broad statutory concept of a serious criminal offence and builds around it a personalised penumbra of lawful activities which in some way increase the risk of someone committing a serious criminal offence, including a serious criminal offence that is itself inchoate or accessorial. That penumbral operation is illustrated by an example given in argument by the individuals and not disputed by the State. For a person at risk of committing the serious criminal offence of stealing from a department store (an offence involving theft punishable by five years' imprisonment205), entering a department store becomes involvement in a serious crime related activity. Section 5(1) of the SCPO Act, which must be read in light of each of those definitions, provides: "An appropriate court may, on the application of an eligible applicant, make an order (a serious crime prevention order) against a specified person if: in the case of a natural person – the person is 18 years old or older, and the court is satisfied that: the person has been convicted of a serious criminal offence, the person has been involved in serious crime related activity for which the person has not been convicted of a serious criminal offence (including by reason of being acquitted of, or not being charged with, such an offence), and the court is satisfied that there are reasonable grounds to believe that the making of the order would protect the public by preventing, 205 Section 117 of the Crimes Act. restricting or disrupting involvement by the person in serious crime related activities." A serious criminal offence or serious crime related activity is within s 5(1)(b)(i) or (ii) whether it occurred before or after the commencement of the SCPO Act206. Section 6(1) of the SCPO Act, which is headed "Content of serious crime prevention order", provides: "A serious crime prevention order may contain such prohibitions, restrictions, requirements and other provisions as the court considers appropriate for the purpose of protecting the public by preventing, restricting or disrupting involvement by the person in serious crime related activities." Section 6(2) cuts back on the amplitude of s 6(1) to the extent of providing that an SCPO cannot require a person to answer questions or provide information orally or to provide specified categories of documents or other information. The precise scope of that qualification is not presently material. The procedure for making an SCPO requires that an application for an SCPO normally be served on the person against whom it is sought207. That person is given a right to appear and participate in the hearing of the application208. The proceeding on the application is designated to be a civil proceeding209 in which the rules of evidence applicable in civil proceedings (including as to the burden of proof) apply210. The one exception is that the court is permitted to take into account hearsay evidence, despite any rule relating to the admission of hearsay evidence to the contrary, if the court is satisfied that the evidence is from a reliable source and is otherwise relevant and of probative value and that the person against whom the order is sought to be made has been notified of, and served with a copy of, the evidence before its admission211. 206 Clause 2 of Sch 1 to the SCPO Act. 207 Section 5(3) of the SCPO Act. 208 Section 5(4) of the SCPO Act. 209 Section 13(1) of the SCPO Act. 210 Section 13(2)(b) of the SCPO Act. 211 Section 5(5) of the SCPO Act. Where made, an SCPO must be served on the person against whom it is made212, takes effect from the time of service (or from such later time as might be specified in the order)213 and continues in effect for the period specified in the order214, which can be a period of up to five years215. Although the SCPO can be varied or revoked at any time on application by the applicant for the order or the person against whom it is made216, an application for variation or revocation can only be made by the person against whom the order is made with leave of the court, which can only be granted if the court is satisfied that there has been a substantial change in the relevant circumstances since the order was made or last varied217. For so long as the SCPO remains in effect, the person against whom it is made commits a criminal offence if he or she contravenes the order218. Noting that it would be open to the person to raise by way of exculpation an honest and reasonable mistake as to the existence of facts which, if true, would have taken his or her conduct outside the relevant prohibition in the SCPO219, the offence would be one of strict liability punishable by imprisonment for up to five years. Construction of ss 5(1)(c) and 6(1) of the SCPO Act Preliminary to consideration of the consistency of s 5(1) of the SCPO Act with Ch III of the Constitution is examination of its legal and practical operation. Examination of that legal operation requires attention to the construction of s 5(1) as well as to the construction of s 6(1). 212 Section 5(6) of the SCPO Act. 213 Section 7(1)(a) of the SCPO Act. 214 Section 7(1)(b) of the SCPO Act. 215 Section 7(2) of the SCPO Act. 216 Section 12(1) of the SCPO Act. 217 Section 12(2) of the SCPO Act. 218 Section 8 of the SCPO Act. 219 He Kaw Teh v The Queen (1985) 157 CLR 523 at 533; CTM v The Queen (2008) 236 CLR 440 at 447 [8]. Before the enactment of the SCPO Act, the operation of a somewhat similarly worded provision in the UK SCPO Act220 had been explained in R v Hancox221, a decision of the Court of Appeal of England and Wales to which specific reference was made in the course of debate on the Bill for the SCPO Act in the Legislative Assembly222. The provision was explained to require, for the making of such an order: that there must be a "real, or significant, risk" that the person convicted of having committed a serious offence, against whom the order is sought, will commit further serious offences; and that the order must be "proportionate" in the sense that "it is not enough that the order may have some public benefit in preventing, restricting or disrupting involvement by the [person] in serious crime" but rather that "the interference which it will create with the [person's] freedom of action must be justified by the benefit" and that "the provisions of the order must be commensurate with the risk"223. The explanation in R v Hancox of the need to be satisfied of a "real, or significant, risk" and that the order will be "proportionate" can be accepted as broadly descriptive of the legislatively contemplated nature of the inquiry to be undertaken by the Supreme Court or the District Court in the application of ss 5(1) and 6(1) of the SCPO Act. However, closer analysis is required. Issues of construction bearing on the constitutional validity of s 5(1) arise in relation to both s 5(1)(c) and s 6(1). The word "may" in s 5(1) of the SCPO Act connotes the conferral on the appropriate court of a discretion224. The discretion to make an SCPO is enlivened, on application, if each precondition in paras (a), (b) and (c) of s 5(1) is met. Section 6(1) governs the content of such SCPO as might be made in the exercise of that discretion. Yet it is apparent from the terms of ss 5(1)(c) and 6(1) that those two provisions cannot be applied independently, for the reason that "the order" to which s 5(1)(c) refers can only be an order the content of which complies with 220 Section 19 of the UK SCPO Act. 221 [2010] 1 WLR 1434; [2010] 4 All ER 537. 222 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 3 May 2016 at 42. 223 [2010] 1 WLR 1434 at 1437 [9]-[10]; [2010] 4 All ER 537 at 540-541 (original emphasis). 224 Section 9(1) of the Interpretation Act 1987 (NSW). s 6(1). For an SCPO to be made, it must be determined by the court to meet the requirements of both provisions. To appreciate the judgment calls required of a court in the application of both s 5(1)(c) and s 6(1), it is necessary to begin by unpacking the common language which those provisions employ. Using different parts of speech, each uses the language of protecting "the public by preventing, restricting or disrupting" involvement of the person against whom an SCPO is made in serious crime related activities. The State submitted that protection of the public constitutes a separate and distinct consideration within the analysis required in the application of that language. The word "by" makes plain that it is not. Protection of the public is equated to "preventing, restricting or disrupting" involvement in serious crime related activities. The legislative contemplation is that the public is protected if and to the extent that a person is so prevented, restricted or disrupted. There is no added requirement for a finding of public protection. Importantly, the words "preventing, restricting or disrupting" in both s 5(1)(c) and s 6(1) constitute a composite expression. The expression is of variable content. The expression is indicative of a spectrum of potential impediment to the person against whom an SCPO is made becoming involved in serious crime related activities. At the highest end of the spectrum – prevention – is the effect of stopping the person from becoming involved in serious crime related activities, perhaps involving conduct that constitutes the commission by the person of a serious criminal offence. At the lowest end of the spectrum – disruption – is the erection of some sort of obstacle which makes it more difficult for the person to become involved in serious crime related activities, perhaps involving no more than conduct that gives rise to a real chance of making it easier for some other person to commit a serious criminal offence that is itself inchoate or accessorial. Between those two extremes is a range of potential degrees of impediment to involvement in some or all serious crime related activities. Correspondingly, the words "prohibitions, restrictions, requirements and other provisions" in s 6(1) connote a range of constraints on freedom by which some impediment to involvement in some or all serious crime related activities might be imposed. To return to the example used in argument of a person who would be involved in serious crime related activity by entering a department store, measures which might reduce the risk of the person engaging in that activity and which might therefore be available under s 5(1)(c) to be included in an SCPO would potentially include: a prohibition on approaching within a specified distance of a department store during opening hours, a restriction on travel to the locality of a department store, or a requirement to wear a tracking device. The constraints on freedom which might be imposed within the range are infinitely malleable in their scope and intensity. They might restrict conduct. They might compel conduct. The parties and some interveners disagreed about whether they might extend to some form of detention. There is no need to resolve that disagreement in order to determine the constitutional validity of s 5(1). What s 5(1)(c) in terms requires as a precondition to the making of an SCPO is that the court be "satisfied that there are reasonable grounds to believe that the making of" a particular SCPO "would" prevent, restrict or disrupt involvement in serious crime related activities by the person against whom it is made. The mandated inquiry is inherently forward-looking. The required judgment is inherently predictive. The level of satisfaction signified by the requirement for satisfaction "that there are reasonable grounds to believe" is settled in Australian law. Belief on reasonable grounds requires "an inclination of the mind towards assenting to, rather than rejecting, a proposition" based on objective circumstances sufficient to induce that state of mind in a reasonable person which "may, depending on the circumstances, leave something to surmise or conjecture"225. The requisite belief here can only be that of the appropriate court to which the application for the SCPO is made. The content of "would" in the context of s 5(1)(c) is informed by that understanding. The word in context requires no more than belief on reasonable grounds on the part of the court as to the existence of a real likelihood226 corresponding to a real and not remote chance. Section 5(1)(c) accordingly requires, as a precondition to the making of an SCPO, that the court be persuaded, having regard to the objective circumstances proved by the evidence before it, to incline to the belief that: (1) there is a real and not remote chance, or a real risk, that the person against whom the SCPO is made would be involved in serious crime related activities in the absence of the SCPO; and (2) there is a real and not remote chance that subjection of the person to the particular prohibitions, restrictions, requirements or other provisions to be imposed by the SCPO would in some degree impede that involvement. The requisite satisfaction, in short, is as to the likelihood of the constraints on freedom to be imposed by the SCPO to some extent reducing the risk of the person being involved in serious crime related activities in the future. What s 6(1) adds to s 5(1)(c) is a requirement that the particular prohibitions, restrictions, requirements or other provisions to be imposed by the 225 George v Rockett (1990) 170 CLR 104 at 116. 226 cf New South Wales v Taylor (2001) 204 CLR 461 at 481 [63], 491 [100]. SCPO be considered by the court to be "appropriate" for the purpose of reducing the identified risk of the person being involved in serious crime related activities in the future. The word "appropriate", of course, connotes an evaluative judgment, involving "the striking of a balance between relevant considerations so as to provide the outcome which is fit and proper"227. No doubt, in forming the requisite evaluative judgment as to appropriateness, the court is obliged to weigh its assessment of the degree of risk of the person being involved in serious crime related activities, seemingly in terms of both the likelihood and seriousness of those serious crime related activities, absent the constraints to be imposed by the SCPO against the impact of those constraints on the person's liberty. And no doubt, the court will not consider the constraints to be imposed by the SCPO "appropriate" unless it considers them to be justified by the reduction in risk which they would produce. The word "proportionate" might well be used to describe a constraint which the court considers so justified. The SCPO Act, however, provides neither express nor implicit guidance as to the relative weights to be given to liberty and risk or as to how the ultimate balance is to be struck. Practical operation of s 5(1) of the SCPO Act The practical operation of s 5(1) of the SCPO Act is best illustrated by looking to how it would fall to be applied in the pending Supreme Court proceeding. Each individual being an adult who has been convicted in the past of serious criminal offences, ss 5(1)(a) and 5(1)(b)(i) would be satisfied. The outcome of the contest between the parties as to whether each individual has been involved in serious crime related activity for which he has not been convicted of a serious criminal offence so as also to satisfy s 5(1)(b)(ii) would make no difference to satisfaction of the precondition in s 5(1)(b). The critical contest would be as to the threshold requirement posed by s 5(1)(c): whether the Supreme Court should be persuaded to assent to the proposition that there is a real risk that each individual would be involved in serious crime related activities in the absence of an SCPO. For that purpose, the individual's past convictions of serious criminal offences and any other serious crime related activities which might be proved in the proceeding to the civil standard would be relevant but not determinative. Other evidence bearing on propensity for involvement in serious crime related activities would be relevant. If the Supreme Court were to be persuaded on the evidence before it of a real risk that an individual would be involved in serious crime related activities in 227 Mitchell v The Queen (1996) 184 CLR 333 at 346. the absence of an SCPO, it would be incumbent on the Supreme Court to go on to examine each prohibition contained in the SCPO sought against the individual by the Commissioner to determine: for the purpose of s 5(1)(c), whether the prohibition would in some degree impede the individual's involvement in serious crime related activities; and for the purpose of s 6(1), whether the prohibition is appropriate for that purpose having regard to the extent of its impact on the freedom of the individual. If the Supreme Court determined that a prohibition sought by the Commissioner would impede the individual's involvement in serious crime related activities to a degree which justified its impact on the individual's freedom, the Supreme Court's discretion to make an SCPO containing the prohibition would be enlivened. Absent some reason for the discretion not to be exercised, the SCPO would be made. The result would be the promulgation of a personalised code of conduct to which the individual would thereafter be bound for the two-year period of the SCPO under pain of criminal punishment for contravention. Alone for the individual against whom the SCPO was made, conduct otherwise lawful would become by force of the SCPO criminal conduct. In the United Kingdom, "civil preventive orders" under the UK SCPO Act, and similarly structured legislation which originated in the 1990s and increased gradually in scope in the 2000s228, have been described as amounting to a form of "personal criminal law". They have been identified as giving rise to the "constitutional objection" that, in conferring broad and flexible powers on courts to make them on application by the executive, the United Kingdom Parliament "has effectively breached the separation of powers by giving 'a wholly discretionary judgment of character and disposition' to the courts, which effectively 'collapses legislative and adjudicative functions into the executive function'"229. In Australia, where we have a constitution custodianship of which is the inalienable duty of this Court, considerations of that nature engage directly with Ch III of the Constitution through the principle associated with Kable v Director of Public Prosecutions (NSW) ("Kable")230. 228 Ashworth and Zedner, Preventive Justice (2014) at 75-76. 229 Ashworth and Zedner, Preventive Justice (2014) at 87. 230 (1996) 189 CLR 51. The Kable principle The principle for which Kable is taken to stand as authority was stated sufficiently (not exhaustively231) by Gleeson CJ in Fardon v Attorney-General (Qld) ("Fardon")232. The principle so stated is "that, since the Constitution established an integrated Australian court system, and contemplates the exercise of federal jurisdiction by State Supreme Courts [and other State courts], State legislation which purports to confer upon such a court a function which substantially therefore incompatible with its role as a repository of federal jurisdiction, is invalid". integrity, and which institutional impairs its That statement of the principle captures the constitutionally implied limitation on State legislative power that is presently applicable together with the structural reason for that implication. The limitation is that State legislative conferral on a State court of a function which substantially impairs the institutional integrity of the court is inconsistent with Ch III of the Constitution. Implication of that limitation is necessitated by the constitutional structure because impairment of the court's institutional integrity undermines the capacity of the Commonwealth Parliament to invest the judicial power of the Commonwealth in that court. The constitutional justification for the limitation on State legislative power is accordingly founded on the constitutional justification for Ch III's requirement that the judicial power of the Commonwealth be invested only in institutions sufficiently distinct from other arms of government to answer the description of "courts". Underlying that separation of Commonwealth judicial power is "the recognition that we have inherited and were intended by our Constitution to live under a system of law and government which has traditionally protected the rights of persons by ensuring that those rights are determined by a judiciary independent of the parliament and the executive", "the rights referred to in such an enunciation [being] the basic rights which traditionally, and therefore historically, are judged by that independent judiciary which is the bulwark of freedom"233. Most basic amongst those rights, and characteristically the most jealously safeguarded by courts within our inherited common law tradition, is the right to liberty. Indeed, the underlying constitutional doctrine has been traced to 231 See North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 at 162-164 [26]-[32]; Forge v Australian Securities and Investments Commission (2006) 228 CLR 45 at 76 [63]-[64]. 232 (2004) 223 CLR 575 at 591 [15]. See also Attorney-General (NT) v Emmerson (2014) 253 CLR 393 at 424 [40]. 233 R v Quinn; Ex parte Consolidated Foods Corporation (1977) 138 CLR 1 at 11. Montesquieu's proposition that "there is no liberty, if the judiciary power be not separated from the legislative and executive"234. Chapter III's separation of the judicial power of the Commonwealth to be exercisable only by courts "was not a product of abstract reasoning alone, and was not based upon precise definitions of the terms employed". Rather, it was "based upon observation of the experience of democratic states"235: "It may accordingly be said that when the Constitution of the Commonwealth prescribes as a safeguard of individual liberty a distribution of the functions of government amongst separate bodies, and does so by requiring a distinction to be maintained between powers described as legislative, executive and judicial, it is using terms which refer, not to fundamental functional differences between powers, but to distinctions generally accepted at the time when the Constitution was framed between classes of powers requiring different 'skills and professional habits' in the authorities entrusted with their exercise." The point is not that the characteristics of judicial power and of institutions qualified to exercise it are frozen in time. They are not. The point is that those characteristics are deeply rooted in a tradition within which judicial protection of individual liberty against legislative or executive incursion has been a core value. Continued reference to an independent judiciary as "a safeguard of individual liberty", or in language traceable to Blackstone236 as a "bulwark of freedom", can too easily be dismissed in contemporary Australia as antiquated hyperbole. That is so if regard is not had to the contemporary experience of once- democratic states, also inheritors of the common law tradition, where judicial independence has fallen into neglect and where the characteristics of institutions entrusted with the exercise of judicial power have been permitted to become less distinctive. In Hilton v Wells237, Mason and Deane JJ quoted as applicable to Ch III's separation of Commonwealth judicial power an observation made by Cardozo CJ 234 Montesquieu, The Spirit of Laws (Nugent trans, 1873), bk XI, ch VI at 174 (L'Esprit des Lois, first published 1748). See also R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 390-393. 235 R v Davison (1954) 90 CLR 353 at 380-382. 236 Blackstone, Commentaries on the Laws of England (1765), bk I at 133. 237 (1985) 157 CLR 57 at 82. in the context of addressing the separation of powers under the Constitution of the State of New York238. The observation, as quoted, was as follows: "From the beginnings of our history, the principle has been enforced that there is no inherent power in Executive or Legislature to charge the judiciary with administrative functions except when reasonably incidental to the fulfilment of judicial duties. ... The exigencies of government have made it necessary to relax a merely doctrinaire adherence to a principle so flexible and practical, so largely a matter of sensible approximation, as that of the separation of powers. Elasticity has not meant that what is of the essence of the judicial function may be destroyed". Subsequently, in Wilson v Minister for Aboriginal and Torres Strait Islander Affairs239, Ch III's separation of the "judicial function" from the "political functions of government" was referred to as a "constitutional imperative" buttressing judicial independence "not only by avoiding the occasions when political influence might affect judicial independence but by proscribing occasions that might sap public confidence in the independence of the Judiciary". That recognition of the foundational significance of the separation of the judicial function from the political functions of government to ensuring the actuality and the perception of the independent exercise of judicial power underlay the appropriation and application both in Wilson240 and in Kable241 of the statement of the Supreme Court of the United States in Mistretta v United States242 that "[t]he legitimacy of the Judicial Branch ultimately depends on its reputation for impartiality and nonpartisanship" from which it follows that the reputation of the Judicial Branch "may not be borrowed by the political Branches to cloak their work in the neutral colors of judicial action". The independence of the judiciary is more likely to be destroyed by the creeping normalisation of piecemeal borrowing of judicial services to do the work of the legislature or the executive than by any single act of outright 238 In re Richardson (1928) 160 NE 655 at 657. 239 (1996) 189 CLR 1 at 12. 240 (1996) 189 CLR 1 at 9. 241 (1996) 189 CLR 51 at 133. 242 (1989) 488 US 361 at 407. conscription. Writing soon after Mistretta, Professor Martin Redish made essentially that point. He wrote243: "Generally, the danger is an incremental one: eventually the judicial branch will either have acquired an excess of authority or will have lost much of its requisite integrity, but no single breach could be attributed responsibility for the overall harm. It is presumably for that very reason that separation of powers protections are largely prophylactic in nature: they are designed to prevent damage to the political framework before the truly serious harm intended to be avoided can occur." Judicial determination of whether a particular function conferred on a State court by State legislation infringes Kable's implied limitation on State legislative power must be cognisant of the ongoing importance of the reasons which underlie Ch III's exclusive allocation of the judicial power of the Commonwealth to institutions having sufficient independence from other arms of government to qualify as "courts". It must be cognisant of the risk of the destruction of the institutional integrity of courts by attrition – the "death by a thousand cuts"244 – and such use as it might make of analogical reasoning must be sensitive to that risk. Nowadays, it goes without saying that the institutional integrity of a State court cannot be impaired by State legislative conferral of a function which the Commonwealth Parliament could itself confer on a State court as an incident of the judicial power of the Commonwealth245. It ought also to be recognised that if the Commonwealth Parliament could not itself confer a function on a State court as an incident of the judicial power of the Commonwealth, the reason why the function lies beyond the power of the Commonwealth Parliament to confer on that court can inform determination of whether the function is properly 243 Redish, "Separation of Powers, Judicial Authority, and the Scope of Article III: The Troubling Cases of Morrison and Mistretta" (1989) 39 DePaul Law Review 244 Welsh, "A Path to Purposive Formalism: Interpreting Chapter III for Judicial Independence and Impartiality" (2013) 39 Monash University Law Review 66 at 71, quoting Gerangelos, "Interpretational Methodology in Separation of Powers Jurisprudence: The Formalist/Functionalist Debate" (2005) 8 Constitutional Law and Policy Review 1 at 3. 245 Bachrach (HA) Pty Ltd v Queensland (1998) 195 CLR 547 at 561-562 [14]; Silbert v Director of Public Prosecutions (WA) (2004) 217 CLR 181 at 186 [10]; Baker v The Queen (2004) 223 CLR 513 at 526-527 [22]-[24]; Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 90 [126]. characterised as incompatible with the institutional integrity of the court so as to be also beyond the power of a State Parliament to confer on the State court. Consistently with Kable's "essential notion"246 that Ch III of the Constitution does not "permit[] of different grades or qualities of justice" as between Commonwealth and State courts247, a power that is not judicial because it is corrosive of the independence of the institution on which it is conferred must lie beyond legislative power to confer on a State court, irrespective of the source of that legislative power. Non-judicial power Relying principally on Thomas v Mowbray248, the Solicitor-General of the Commonwealth went so far as to submit that the power conferred by s 5(1) of the SCPO Act is of a kind which could be conferred on a court by Commonwealth legislation as part of the judicial power of the Commonwealth. The submission overstated the effect of that decision. I reject it for the following reasons. "The power to restrict or interfere with a person's liberty on the basis of what that person might do in the future", as Gleeson CJ observed in Thomas v Mowbray, "is not intrinsically a power that may be exercised only legislatively, or only administratively"249. Dispensation of "preventive justice", another description traceable to Blackstone250, is not inherently incompatible with judicial power. Like any other power conferred on a court by Commonwealth legislation, however, a particular power to restrict or interfere with a person's liberty on the basis of what that person might do in the future can only be conferred if the power is, or is incidental to, a power that is properly characterised as "judicial power". Consistently with the reasons for the separation of judicial power being rooted in constitutional history, the content of judicial power has been said to "defy, perhaps it were better to say transcend, purely abstract conceptual 246 Fardon (2004) 223 CLR 575 at 617 [101]. 247 Kable (1996) 189 CLR 51 at 103. 248 (2007) 233 CLR 307. 249 (2007) 233 CLR 307 at 328 [15]. 250 Blackstone, Commentaries on the Laws of England (1769), bk IV at 248. analysis"251. But consistently again with the historical preoccupation of the separation of powers doctrine with the protection of liberty, judicial power has been recognised to have at its core the power of a polity "to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property"252. The "unique and essential function of the judicial power is the quelling of such controversies by ascertainment of the facts, by application of the law and by exercise, where appropriate, of judicial discretion"253. Thus, as it was put in the classic statement of Kitto J in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd254, "a judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons". Paradigmatically within the "general rule", and incontestably "at the heart of exclusive judicial power", is "the power to determine whether a person has engaged in conduct which is forbidden by law and, if so, to make a binding and enforceable declaration as to the consequences which the law imposes by reason of that conduct"255. Never doubted has been that the function of "adjudging and punishing criminal guilt" is "exclusively judicial"256, and repeatedly recognised has been that "involuntary detention of a citizen in custody by the State" other than in "exceptional cases" is consistent with Ch III "only as a consequential step in the adjudication of criminal guilt of that citizen for past acts"257. 251 R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 394. 252 Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 357. 253 Fencott v Muller (1983) 152 CLR 570 at 608. 254 (1970) 123 CLR 361 at 374. 255 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 497. 256 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27. See also Federal Commissioner of Taxation v Munro (1926) 38 CLR 153 at 175; Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 258. 257 Fardon (2004) 223 CLR 575 at 612 [80]. Traditionally, circumstances in which courts have exercised powers to constrain liberty by reference to what a person might do in the future have been confined to instances of the "general rule". Plainest amongst those circumstances has been deprivation of liberty consequent upon an adjudication of criminal guilt, through imposition of a custodial sentence the setting of which is the outcome of a discretionary judgment which takes into account the protection of the community from the risk of reoffending indicated by, amongst other things, the past criminal acts of which an offender has been found guilty258, or in the application of an additional regime of preventive detention that is "attached by legislation to the curial sentencing process upon conviction"259. Examples of early legislation within that category are the Inebriates Act 1912 (NSW) and the Habitual Criminals Act 1905 (NSW). Powers now conferred on a sentencing court by the Crimes (Sentencing Procedure) Act 1999 (NSW) to make a "community correction order"260, a "non- association order"261, or a "place restriction order"262 are within that traditional paradigm. Notwithstanding that they are orders made with a view to the protection of the community, each is within a suite of orders the making of which consequent upon conviction is designed to bring to an end a controversy as to the penal consequences of a past criminal act. Despite contemporary statutory developments in the United Kingdom being of peripheral constitutional relevance in Australia, the importance which R v Hancox has assumed in the interpretation of the SCPO Act makes it not irrelevant to the present analysis to note that the provision in the UK SCPO Act explained in that decision was of much the same character. The provision was expressed to confer an additional power of a court when "dealing with a person" convicted of an offence "in relation to the offence": the order it authorised could not be made except "in addition to a sentence imposed in respect of the offence concerned" or "in addition to an order discharging the person conditionally"263. 258 Veen v The Queen [No 2] (1988) 164 CLR 465 at 476. 259 Fardon (2004) 223 CLR 575 at 613 [83]. See also R v Moffatt [1998] 2 VR 229 at 251-252, referred to in Lowndes v The Queen (1999) 195 CLR 665 at 670-671 260 Section 8 of the Crimes (Sentencing Procedure) Act 1999 (NSW). 261 Section 17A(2)(a) of the Crimes (Sentencing Procedure) Act 1999 (NSW). 262 Section 17A(2)(b) of the Crimes (Sentencing Procedure) Act 1999 (NSW). 263 See s 19(2), (4) and (7) of the UK SCPO Act. Less well appreciated as conforming to the "general rule" was the ancient power of a magistrate to make a "binding over order", the effect of which was to require a person to enter into a "recognisance" (that is, to give an undertaking secured by a sum of money) to "keep the peace" or "be of good behaviour", breach of which would result in forfeiture of the sum of the recognisance. The order enforced, in light of a finding by the magistrate of conduct indicative of a likelihood of its breach264, an existing inchoate obligation to refrain from conduct contrary to morality (contra bonos mores) if not contrary to law (contra pacem)265. An order made in the exercise of the exceptional jurisdiction of a court of equity to enjoin a criminal act266 fits the same pattern in so far as it enforces in the face of an imminent threat of breach an antecedent legal obligation. "[T]he general interest of the public in the observance of the law is not in itself sufficient to justify the Court in granting an injunction"267. The power to detain an accused person in custody or to impose conditions of bail constraining the liberty of the accused person pending trial for a criminal offence is different in so far as it "is not seen by the law as punitive or as appertaining exclusively to judicial power"268. As a power ancillary to the process of adjudging and punishing criminal guilt, it lies within the category of powers not independently judicial in nature which can be committed to courts as "incidents in the exercise of strictly judicial powers"269. Outside the scope of exercise of the judicial power of quelling a controversy about an actual or threatened breach of an antecedent legal obligation, legislative conferral of a power to constrain liberty by reference to what a person might do in the future involves a departure from the "general rule". The constitutionally guaranteed institutional independence of a court provides a 264 Wise v Dunning [1902] 1 KB 167 at 176. 265 Chu Shao Hung v The Queen (1953) 87 CLR 575 at 589-590; South Australia v Totani (2010) 242 CLR 1 at 170-171 [473]-[474]. 266 Ramsay v Aberfoyle Manufacturing Co (Australia) Pty Ltd (1935) 54 CLR 230; The Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 49-50. See also Attorney-General (ex rel Lumley) v T S Gill & Son Pty Ltd [1927] VLR 22. 267 Ramsay v Aberfoyle Manufacturing Co (Australia) Pty Ltd (1935) 54 CLR 230 at 268 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 28. 269 R v Davison (1954) 90 CLR 353 at 368, quoting Queen Victoria Memorial Hospital v Thornton (1953) 87 CLR 144 at 151. strong policy reason to consider that any such power to constrain liberty, if it is to be conferred at all, is best conferred on a court270. Preservation of the constitutionally guaranteed institutional independence upon which the efficacy of such a conferral depends demands, however, that the conferral occur through the legislative formulation of "a judicial process of some refinement"271. That a power to constrain liberty on the basis of what a person might do in the future is not inherently incompatible with judicial power, that a particular power to do so is conferred on a court, and that the particular power so conferred is to be exercised in the context of procedural rules appropriate to civil litigation, are all factors which tend in favour of the characterisation of the particular power as judicial272. Of themselves, however, they are insufficient to impart that character. As Kitto J explained in R v Spicer; Ex parte Australian Builders' Labourers' Federation273, "[t]he reason for concluding in some ... cases that the judicial character of the repository imparts a judicial character to the power is simply that the former provides a ground for an inference, which in those cases there is nothing or not enough in other considerations to preclude, that the power is intended and required to be exercised in accordance with the methods and with a strict adherence to the standards which characterise judicial activities". His Honour went on to explain: "That is not a necessary inference, however, in every case of this kind. The authorised act itself, though not inherently incapable of judicial performance, may be by nature more appropriate for administrative performance. The possible effects of the act when done upon persons, situations and events may be such as to suggest the probability that decisions to exercise or to refrain from exercising the power were intended to be made upon considerations of general policy and expediency alien to the judicial method. The circumstances in which the power is to be exercisable may be prescribed in terms lending themselves more to administrative than to judicial application. The context in which the provision creating the power is found may tend against a conclusion that a there may be other strictly judicial approach intended. And 270 cf Grollo v Palmer (1995) 184 CLR 348 at 367. See also Thomas v Mowbray (2007) 233 CLR 307 at 329 [17]. 271 Fardon (2004) 223 CLR 575 at 614 [85]. 272 Pasini v United Mexican States (2002) 209 CLR 246 at 253-254 [12]. 273 (1957) 100 CLR 277 at 305. considerations of a similar tendency. The problem in such a case ought therefore to be recognised as one of statutory construction, the task being to decide whether or not the provision should be understood as intending that in discharging the responsibility which possession of the power entails the person or body entrusted with it is to act strictly as a judge. The fact that the person occupies a judicial office, or that the body is or is not a judicial tribunal is only one matter to be considered. There may be many others." The holding in that case was that a provision of a Commonwealth law which purported to empower a court to disallow a rule of an industrial organisation on grounds which included the opinion of the court that the rule prevented or hindered members of the organisation from observing the law or imposed unreasonable conditions upon the membership of any member or upon any applicant for membership was invalid. The explanation, in the words of Kitto J, was that "though it empower[ed] a court to do an act ... which is not insusceptible of a judicial performance", the provision was nevertheless "found to mean, on a clear preponderance of considerations, that the function for which it provides is to be performed as an administrative function, with a more elastic technique, and more of an eye to consequences and industrial policy generally, than could properly be expected of a court"274. "Many examples are to be found in the exercise of judicial power of orders which alter the rights of the parties or are the source of new rights" and "there are countless instances of judicial discretions with no specification of the criteria by reference to which they are to be exercised – nevertheless they have been accepted as involving the exercise of judicial power"275. Still, an irreducible requirement for any power conferred on a court to have the character of judicial power remains that its exercise must proceed "upon grounds that are defined or definable, ascertained or ascertainable, and governed accordingly"276. That is to say, the exercise of the power must "be governed or bounded by some ascertainable tests or standards"277. The nature of the criteria to be applied by the 274 (1957) 100 CLR 277 at 305-306. See also at 289-290. 275 R v Joske; Ex parte Shop Distributive and Allied Employees' Association (1976) 135 CLR 194 at 215-216. See also Baker v The Queen (2004) 223 CLR 513 at 523 276 R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277 R v Spicer; Ex parte Waterside Workers' Federation of Australia (1957) 100 CLR court must "be not so indefinite as to be insusceptible of strictly judicial application"278. The decision that the court is authorised to make must not be authorised to be made "upon considerations of general policy and expediency alien to the judicial method"279. As a constituent element of judicial power, that requirement for decision- making criteria to be susceptible of strictly judicial application itself defies abstract conceptual analysis and should not be mistaken for a requirement for linguistic precision in the statutory language by which a particular power is conferred on a court. The focus of the requirement is on ensuring that such criteria as are expressed to govern the exercise of a power conferred on a court are appropriate to the exercise of a power of that nature by an independent judiciary – that their elasticity is not such that, in the already quoted language of Cardozo CJ, "the essence of the judicial function may be destroyed". The latitude of choice traditionally exercisable by a court in making an order constraining liberty in consequence of an adjudication of criminal guilt, or in the context of determining an application for bail, can for that reason be no guide to the latitude of choice that can be committed to a court to constrain liberty in circumstances divorced from the administration of the criminal law. Relevantly at issue in Thomas v Mowbray was whether the authority to make an interim control order ("ICO") conferred on an "issuing court" by s 104.4 of the Criminal Code (Cth) met that minimum requirement of susceptibility of strictly judicial application. Holding that it did, a majority pointed to the "critical" presence in s 104.4 of "what may be said to be adequate legal standards or criteria"280. The differences between the criteria for the making of an ICO set out in s 104.4 of the Criminal Code held in Thomas v Mowbray to be adequate to confer judicial power and the criteria for the making of an SCPO set out in ss 5(1)(c) and 6(1) of the SCPO Act are stark. The court under s 104.4(1)(c) of the Criminal Code was required to be satisfied on the balance of probabilities either that the making of the ICO "would substantially assist in preventing a terrorist act" or that the person against whom it was to be made had provided 278 R v Commonwealth Industrial Court; Ex parte The Amalgamated Engineering Union, Australian Section (1960) 103 CLR 368 at 383. See also Steele v Defence Forces Retirement Benefits Board (1955) 92 CLR 177 at 188. 279 R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277 at 305; Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 at 550-551 280 (2007) 233 CLR 307 at 345 [72]. See also at 509 [600], 526 [651]. training to, or received training from, a listed terrorist organisation. The court under s 104.4(1)(d) was then required to be satisfied on the balance of probabilities that each of the obligations, prohibitions and restrictions to be imposed by the ICO was "reasonably necessary, and reasonably appropriate and adapted, for the purpose of protecting the public from a terrorist act". In forming that state of satisfaction, the court was obliged by s 104.4(2) to "take into account the impact of the obligation, prohibition or restriction on the person's circumstances" as a mandatory consideration. The court under s 5(1)(c) of the SCPO Act, in contrast, needs to be satisfied at the threshold only that there are reasonable grounds to believe that there is a real chance, or real risk, that the person against whom the SCPO is made would engage in, facilitate or increase the likelihood of facilitation of serious crime related activities in the absence of the SCPO. That standard of a real risk or real chance is not of itself insusceptible of strictly judicial application281. The problem is that once the threshold of a real risk is met, s 5(1)(c) requires nothing more for the making of an SCPO than satisfaction on the part of the court that subjection of the person to the prohibitions, restrictions, requirements or other provisions to be imposed by the SCPO would in some unspecified degree decrease that risk of involvement. It requires nothing more than satisfaction that the constraints on behaviour to be imposed on the person against whom the SCPO is made would in some unspecified degree reduce the risk of that person or another person engaging in conduct that constitutes a serious criminal offence. The extent of impediment able to be effected by the prohibitions, restrictions, requirements or other provisions is open-ended. The nature and extent of the risks against which they may be directed are sweeping. The range of potential orders is almost limitless. The latitude of that unguided choice required of the court in the application of s 5(1)(c) of the SCPO Act is undiminished by the added requirement of s 6(1) that the court needs to consider that the prohibitions, restrictions, requirements or other provisions imposed by the SCPO are "appropriate". The statutory question begged by s 6(1) is: appropriate to what end? The statutory answer is supplied nowhere other than by the criterion set out in s 5(1)(c) of the SCPO Act. The differences between the elasticity of the criterion set out in s 5(1)(c) of the SCPO Act for the making of an SCPO and the specificity of the criteria set out in s 104.4 of the Criminal Code for the making of an ICO correspond to a critical difference in the purposes of making the two kinds of order. The purpose 281 cf M v M (1988) 166 CLR 69 at 78; Condon v Pompano Pty Ltd (2013) 252 CLR of making an ICO, as spelt out in s 104.1 of the Criminal Code, was to "protect[] the public" from a "terrorist act", an expression defined in s 100.1 to refer to an action or a threat of action causing or creating a serious risk of causing serious harm to persons or to infrastructure with the intention of advancing an ideological cause and of influencing or intimidating the government or the public. The specific criteria for the making of an ICO set out in s 104.4 were closely tailored to achieve that specific protective purpose. In that respect, as was recognised in Thomas v Mowbray282, there was a close analogy between an ICO and an apprehended violence order ("AVO"), for which broadly equivalent provision is made in legislation in every State and Territory. The Crimes (Domestic and Personal Violence) Act 2007 (NSW) is an example283. For a court to make an AVO (an "apprehended domestic violence order" or an "apprehended personal violence order") under that Act, the court must ordinarily be satisfied on the balance of probabilities that a person has reasonable grounds to fear intimidation or stalking or the commission of an offence against them by another284. The prohibitions or restrictions on the behaviour of the other person that can then be imposed by the AVO are such as appear to the court to be "necessary or desirable ... to ensure the safety and protection of the person in need of protection and any children from domestic or personal violence"285. In contrast to both an ICO and an AVO, an SCPO is made not to provide specific protection against a specific threat of harm from the person against whom it is made. Rather, an SCPO is made in order to make it in some unspecified degree less likely that the person against whom the SCPO is made will engage in conduct that falls within the extremely broad statutory conception of involvement in serious criminal activities. The elasticity of the criteria for its making corresponds to the elasticity of the purpose for which it is made. 282 (2007) 233 CLR 307 at 328-330 [16]-[18], 334 [28], 347-348 [79]. 283 See also Domestic and Family Violence Act 2007 (NT); Domestic and Family Violence Protection Act 2012 (Qld); Family Violence Act 2004 (Tas); Family Violence Act 2016 (ACT); Family Violence Protection Act 2008 (Vic); Intervention Orders (Prevention of Abuse) Act 2009 (SA); Personal Safety Intervention Orders Act 2010 (Vic); Personal Violence Act 2016 (ACT); Personal Violence Restraining Orders Act 2016 (NT); Restraining Orders Act 1997 (WA). 284 Sections 16 and 19 of the Crimes (Domestic and Personal Violence) Act 2007 (NSW). 285 Section 35(1) of the Crimes (Domestic and Personal Violence) Act 2007 (NSW). Finally, much more than an ICO, an SCPO is distinctly rule-like in its operation. An ICO (even where confirmed) could be for a period of no more than one year286 and could be varied or revoked at any time on application by the person against whom it was made if the court was not satisfied that the criteria for its making continued to exist287. In contrast, as has already been noted, an SCPO can be made for a period of up to five years and can be varied or revoked on application by the person against whom it is made only if the court is satisfied that there has been a substantial change in circumstances. For so long as it remains in force, its operation from the perspective of the person against whom it is made is indistinguishable from a legislated code. Where an exercise of a power conferred on a court settles no question as to the existence of any antecedent right or obligation yet results in an order imposing a new and enduring restriction on liberty, some special and compelling feature ought to be found to exist for its inclusion in the category of judicial power to be justified. Characterisation of the power as judicial ought to require at least that the criteria to be applied by the court in making the order are legislatively tailored to the achievement of a legislatively specified protective outcome. That was the case in Thomas v Mowbray. It is not the case here. Whether the power conferred by s 5(1) of the SCPO Act is best characterised as executive or legislative is perhaps an open question. The "general distinction between legislation and the execution of legislation", being "that legislation determines the content of a law as a rule of conduct or a declaration as to power, right or duty, whereas executive authority applies the law in particular cases"288, is insufficient to yield an answer. What matters for present purposes is that the power is not judicial for the reason just stated. Incompatibility The reasons given for the conclusion that the criteria set out in s 5(1) of the SCPO Act for the making of an SCPO are inadequately adapted to exercise by an independent judiciary to warrant characterisation of the power to constrain liberty conferred by that provision as a judicial power are also sufficient to justify the conclusion that the conferral of that power to constrain liberty on the Supreme Court and the District Court substantially impairs their institutional integrity. 286 Sections 104.5(1)(f) and 104.16(1)(d) of the Criminal Code (Cth). 287 Sections 104.18 and 104.20 of the Criminal Code (Cth). 288 The Commonwealth v Grunseit (1943) 67 CLR 58 at 82. The attempt by the State and interveners to support s 5(1) of the SCPO Act by analogy to the provision upheld in Fardon and to the legislation the considered Commonwealth legislation in Thomas v Mowbray, the State legislation in both of those cases was closely tailored to the achievement of a specified protective end. in Wainohu v New South Wales289 is misplaced. Like The provision upheld in Fardon290 enabled the Supreme Court of Queensland, on application, to make in respect of a person serving a sentence of imprisonment either a "continuing detention order" ("that the prisoner be detained in custody for an indefinite term for control, care or treatment") or a "supervision order" ("that the prisoner be released from custody subject to the conditions it considers appropriate that are stated in the order") only if satisfied by "acceptable, cogent evidence" and "to a high degree of probability" that the prisoner constituted "a serious danger to the community" by reason of the existence of an "unacceptable risk that the prisoner will commit a serious sexual offence" in the absence of such an order. The Court was required to have regard to, amongst other things, psychiatric reports indicating an assessment of risk of future serious sexual offending and any participation by the prisoner in rehabilitation programs. A continuing detention order, which was the focus of the analysis in Fardon, was required to be reviewed by reference to the same criterion, and either affirmed or revoked, annually291. The majority specifically found in the "yardstick" of an "unacceptable risk that the prisoner will commit a serious sexual offence" a standard sufficiently precise to admit of judicial application292. No equivalent yardstick is to be found in s 5(1) of the SCPO Act. Before leaving Fardon, it is relevant to note the importance placed by Gummow J, with whom Hayne J relevantly agreed, on a continuing detention order or a supervision order being able to be made only against a "prisoner", being someone "presently detained in custody upon conviction for an offence of the character of those offences of which there is said to be an unacceptable risk of commission if the appellant be released from custody". His Honour remarked that "[t]o this degree there remains a connection between the operation of the [State legislation] and anterior conviction by the usual judicial processes", adding that "[a] legislative choice of a factum of some other character may well have imperilled the validity of [the provision in issue]"293. Although present in the 289 (2011) 243 CLR 181. 290 Section 13 of the Dangerous Prisoners (Sexual Offenders) Act 2003 (Qld). 291 Sections 27 and 30 of the Dangerous Prisoners (Sexual Offenders) Act 2003 (Qld). 292 (2004) 223 CLR 575 at 593 [22], 597 [34], 616-617 [97]-[98], 657 [225]. 293 (2004) 223 CLR 575 at 619 [108]. See also at 647 [196]. provision of the UK SCPO Act considered in R v Hancox, such a connection to an anterior conviction is wholly absent from s 5(1) of the SCPO Act. The legislation considered in Wainohu294, having been found by the majority to be wholly invalid as a result of the infringement of the Kable principle by reference to another aspect of its operation, was said by the majority not independently to infringe the Kable principle by reference to the criteria for the exercise of the power it conferred on the Supreme Court to make a "control order" being cast in terms of satisfaction that the person against whom the order was to be made was a member of a particular declared organisation and that "sufficient grounds" existed for making the order295. The majority commented that, although the legislation did not attempt to prescribe what might be "sufficient grounds" for the making of such a control order, those grounds were to be "ascertained by regard to the subject, scope and purpose of the [legislation] including the consequences of the making of an interim control order or control order", and observed that "the conferral of curial powers by reference to such criteria nevertheless may be susceptible to the exercise of judicial power"296. A control order under that legislation, however, did not involve the Supreme Court in fashioning any code of behaviour for the person against whom it was made. Its only effect was to bring the person within the definition of "controlled member" so as to become subject to specific and limited prohibitions which the legislation itself imposed on a controlled member297. The legislation in that case therefore lacked the feature of elasticity which I consider to be fatal to s 5(1) of the SCPO Act. Mention should finally be made of South Australia v Totani298. A feature of the provision there found to infringe the Kable principle299 was that it left the Magistrates Court of South Australia with no option but to make a "control order", triggering prohibitions for which the legislation itself provided300, once 294 Crimes (Criminal Organisations Control) Act 2009 (NSW). 295 Section 19 of the Crimes (Criminal Organisations Control) Act 2009 (NSW). 296 (2011) 243 CLR 181 at 230 [111]. See also at 220 [72]. 297 Sections 26 and 27 of the Crimes (Criminal Organisations Control) Act 2009 (NSW). 298 (2010) 242 CLR 1. 299 Section 14(1) of the Serious and Organised Crime (Control) Act 2008 (SA). 300 Section 14(5) of the Serious and Organised Crime (Control) Act 2008 (SA). the Magistrates Court was satisfied, on application by the Commissioner of Police, that the person against whom the order was sought was a member of an organisation which had been declared by the Attorney-General. The vice of the provision, in the language of French CJ, was that it "impair[ed] the decisional independence of the Magistrates Court from the executive in substance and in appearance in areas going to personal liberty and the liability to criminal sanctions which lie at the heart of the judicial function"301. In the language of Gummow J, in the implementation of a legislative policy "to disrupt and restrict the activities of ... organisations involved in serious crime" and "to protect the public from violence associated with such criminal members of organisations", the Magistrates Court was "called upon effectively to act at the behest of the Attorney-General to an impermissible degree"302. The provision held to infringe the Kable principle in Totani might be said to have given too little latitude for judgment in constraining personal liberty. The provision here might be said conversely to give too much latitude for judgment in constraining personal liberty. The effect, however, is much the same. Without a lodestar to guide the choice of how much to constrain the otherwise lawful behaviour of a person assessed as having a real chance of involvement in serious crime related activities, the role of the Supreme Court or the District Court must in practice be confined to assessing the appropriateness of the ongoing constraints proposed in the terms of the SCPO that is sought in the application made to it by the Commissioner or the Director of Public Prosecutions or the New South Wales Crime Commission. The judiciary is effectively enlisted by s 5(1) of the SCPO Act to perform a personalised legislative function at the behest of the executive. The judiciary can, of course, be expected to perform any function that might be legislatively imposed on it, as best it can, in a judicial manner. The judiciary can therefore be expected to fashion for itself workable and consistent decision-making criteria to guide the individualised assessment that it is obliged to make in each case in which it is asked by the executive to make an SCPO. Appellate processes can be expected to be invoked and, over time, a body of principle can be expected to develop. So the process of making an SCPO will be judicialised; and so with the judicialisation of the process the distinctive character of the judiciary as the constitutional arbiter of disputes about rights between the citizen and the State will become increasingly less distinct. Incrementally but inexorably the judiciary will be drawn ever more deeply into a 301 (2010) 242 CLR 1 at 52 [82]. 302 (2010) 242 CLR 1 at 67 [149], read with s 4(1) of the Serious and Organised Crime (Control) Act 2008 (SA). process in which institutional boundaries are blurred and by which its institutional independence is diminished. Conclusion The questions raised by the special case should be answered as follows: (1) Yes; (2) The sub-section is wholly invalid; (3) The defendants. 182 GORDON J. Kable v Director of Public Prosecutions (NSW)303 held that a State legislature could not give to a State court the task of deciding that a named individual should be subject to restraints on liberty to reduce the risk of that person committing future crime. As Gaudron J said in Kable, "[p]ublic confidence cannot be maintained in the courts and their criminal processes if, as postulated by [the impugned provision], the courts are required to deprive persons of their liberty, not on the basis that they have breached any law, but on the basis that an opinion is formed, by reference to material which may or may not be admissible in legal proceedings, that on the balance of probabilities, they may do so"304. The Crimes (Serious Crime Prevention Orders) Act 2016 (NSW) ("the SCPO Act"), in issue in these proceedings, goes further. It has the Supreme Court and the District Court of New South Wales305 deciding who, of a wide class of persons, should be subject to special restraints on their individual liberty not on the basis that they breached any law306 (though they may have), or they belong to any particular criminal organisation307, or espouse or pursue views antithetical to maintaining a democratic society308, but on the basis that the court is satisfied that there are reasonable grounds to believe that restraining that individual's liberty would protect the public by preventing, restricting or disrupting involvement by that individual in serious crime related activities309. And that involvement may be no more than conduct that is likely to facilitate serious crime related activity by that person or another person310. The class of persons to which the SCPO Act potentially applies is wide. The bar for restraining the liberty of a person within that class is low. In its legal 303 (1996) 189 CLR 51. 304 (1996) 189 CLR 51 at 107. 305 SCPO Act, s 3(1) definition of "appropriate court". 306 cf Fardon v Attorney-General (Qld) (2004) 223 CLR 575. 307 Wainohu v New South Wales (2011) 243 CLR 181; Condon v Pompano Pty Ltd (2013) 252 CLR 38. 308 Thomas v Mowbray (2007) 233 CLR 307. 309 SCPO Act, s 5(1)(c). 310 SCPO Act, s 4(1)(c). and practical operation, the SCPO Act requires a State court to draft ad hominem rules restraining the personal liberty of a named individual. lessen liberty will always Restraining any person's that person's opportunity to commit some form of crime. The fact that an individual has been charged but not subsequently convicted, or for that matter convicted or, indeed, acquitted, of a crime311 cannot, as postulated by the SCPO Act, require "the courts ... to deprive persons of their liberty, not on the basis that they have breached any law, but on the basis that an opinion is formed, by reference to material which may or may not be admissible in legal proceedings, that on the balance of probabilities"312 there are reasonable grounds to believe that the restraint would prevent, restrict or disrupt criminal activity by them or another person. The questions raised in the special case should be answered in the manner proposed by Gageler J. I agree generally with his Honour's reasons. The circumstances giving rise to the special case, as well as the provisions of the SCPO Act, are set out in the reasons of the other members of the Court. It is unnecessary to repeat them except to the extent necessary to explain these reasons. It is necessary to be wary of what might be called the "domino" effect of cases that have distinguished Kable313. It is a mistake to take what was said in other cases about other legislation and apply those statements without close attention to the principle at stake. The principle at stake here concerns the kinds of issues that may be resolved by the application of judicial power, and the kinds of criteria that may be applied in the exercise of judicial power, in a way that is compatible with the institutional integrity of a State court. The two are intertwined. It is, however, both necessary and useful to say something separately about each, bearing in mind what Kitto J said in R v Davison314: that a distribution of the functions of government amongst separate bodies is a "safeguard of individual liberty", and that that is achieved "by requiring a distinction to be maintained between powers described as legislative, executive 311 SCPO Act, s 5(1)(b). 312 Kable (1996) 189 CLR 51 at 107. 313 See Condon (2013) 252 CLR 38 at 94 [137]. 314 (1954) 90 CLR 353 at 381-382. and judicial" – by reference not to fundamental functional differences between powers, "but to distinctions ... between classes of powers requiring different 'skills and professional habits' in the authorities entrusted with their exercise". It is the legislature that has the power, skills and resources to identify what conduct should be unlawful, to legislate to make that conduct unlawful and then to take any other steps the legislature considers necessary to reinforce the fact that, and to explain why, that conduct is now unlawful. It is the legislature that prescribes norms of conduct which govern the manner in which individuals are required to behave. It is the legislature that determines how best to protect the public against criminal behaviour by determining what conduct should be prohibited, how it should be punished, and what powers and resources the police force should have to detect and prevent crime315. By contrast, it is for the courts, in that context, to adjudge and punish criminal guilt316. The issue which the SCPO Act would have the courts in New South Wales decide is whether and how to impose future special restraint on the liberty of a named individual. The central criteria require no more than that that person has been involved in any of a wide range of criminal offences, regardless of whether that person has been charged, convicted, or even acquitted of the alleged offence or offences; that there are reasonable grounds to believe that making the order would protect the public by preventing, restricting or disrupting the person's involvement in serious crime related activities; and that the order is "appropriate" to that end317. That is, the SCPO Act requires courts to restrain the future liberty of a named individual: not in relation to a "prisoner" presently detained in custody for a serious sexual offence, as in Fardon v Attorney-General (Qld)318; not to prevent harm to an identified individual, as is the issue in an apprehended violence order319; and 315 See, eg, Fardon (2004) 223 CLR 575 at 647-648 [196]-[197]. 316 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27. 317 SCPO Act, ss 3(1) definition of "serious crime related activity", 4(1), 5(1), 6(1). 318 (2004) 223 CLR 575 at 603 [51], 619 [108]. 319 See, eg, Crimes (Domestic and Personal Violence) Act 2007 (NSW). not to prevent existential threats to society, such as terrorism, as in but on the ground that there are "reasonable grounds to believe" that the restraint on the liberty of a named individual would prevent, restrict or disrupt crime, or someone else's involvement in crime. The additional criterion is that the restraint on the liberty of the named individual is "appropriate"321. As Gageler J asks: "appropriate to what end?"322 Treating the word "appropriate" as rescuing the legislation from invalidity would appear to overlook the fact that "appropriate" was the condition for the order in Kable323. When approaching challenged, it is important to avoid the temptation to redraft it. As French CJ said in International Finance Trust Co Ltd v New South Wales Crime Commission, "[t]he court should not strain to give a meaning to statutes which is artificial or departs markedly from their ordinary meaning simply in order to preserve their constitutional validity"324. legislation whose constitutional validity However, the question, "appropriate to what end?", is more fundamental than a mere drafting or construction issue about the word "appropriate". That question is more fundamental because of the interconnected and intertwined aspects of the SCPO Act. First, the class of persons who are intended to be caught by the SCPO Act is defined very widely. The Act applies to any person aged 18 years or older who has been convicted of a serious criminal offence but also applies to a person who "has been involved in serious crime related activity" for which the person has not been convicted (including by reason of being acquitted of, or not being charged with, such an offence)325. That immediately raises the second aspect – the breadth of conduct caught by the SCPO Act. The reference to "serious criminal offence" and "serious crime 320 (2007) 233 CLR 307. 321 SCPO Act, s 6(1). 322 Reasons of Gageler J at [166]. 323 (1996) 189 CLR 51 at 62. 324 (2009) 240 CLR 319 at 349 [42]. 325 SCPO Act, s 5(1)(a) and (b) (emphasis added). related activity" is important but should not distract from the fact that because of the way in which the SCPO Act defines "serious criminal offence", it extends to, among other offences, "an offence that is punishable by imprisonment for 5 years or more and involves theft, fraud, obtaining financial benefit from the crime of another, money corruption, harbouring criminals, blackmail, obtaining or offering a secret commission, perverting the course of justice, tax or revenue evasion, illegal gambling, forgery or homicide"326. Furthermore, the conduct is not limited to conduct within New South Wales and includes an "offence of attempting to commit, or of conspiracy or incitement to commit, or of aiding or abetting" that broad group of offences327. extortion, violence, bribery, laundering, Next, as just seen, the class of persons caught includes those "involved in serious crime related activity". That last phrase – serious crime related activity – is defined to mean anything done by a person that is or was at the time a serious criminal offence, whether or not the person has been charged with the offence, or, if charged, has been tried, or, if tried, has been convicted or acquitted or had a conviction quashed or set aside on appeal328. The class of persons is broadened further by the fact that a person is involved in serious crime related activity if the person has engaged in serious crime related activity; has engaged in conduct that has facilitated another person engaging in serious crime related activity; or has engaged in conduct that is likely to facilitate serious crime related activity whether by that person or another person329. Then, there is the low bar to restraining personal liberty. A court need only be satisfied that there are reasonable grounds to believe that restraining an individual's liberty would protect the public by preventing, restricting or disrupting involvement by that person in serious crime related activities where their involvement may be no more than conduct that is likely to facilitate serious crime related activity by that person or another person330. It is not necessary to prove that restraining a person's individual liberty would prevent, restrict or disrupt a person's involvement in such serious crime related activities. It is 326 SCPO Act, s 3(1) definition of "serious criminal offence", incorporating Criminal Assets Recovery Act 1990 (NSW), s 6(2)-(4). 327 SCPO Act, s 3(1) definition of "serious criminal offence", incorporating Criminal Assets Recovery Act 1990 (NSW), s 6(2)(i) and (j). 328 SCPO Act, s 3(1) definition of "serious crime related activity". 329 SCPO Act, s 4(1). 330 SCPO Act, ss 5(1)(c), 4(1)(c). enough that there be "reasonable grounds to believe" it. In determining these questions, the rules of evidence may not apply – specifically, those in relation to hearsay evidence331. It is in that context that the requirement in s 6(1) that the restraint on a person's individual liberty is "appropriate" is to be considered and assessed. And it is that question, in that context, which identifies the principle at stake. Is that the kind of issue that may be resolved by the application of judicial power, applying those kinds of criteria in the exercise of judicial power, in a way that is compatible with the institutional integrity of a State court? If the SCPO Act is valid, it would require the Supreme Court and the District Court of New South Wales to apply judicial procedures and, it may be expected, to develop a body of decisions about how the provisions operate and apply. But that is beside the point. The question is whether the task set by the SCPO Act is appropriate for the courts. Should a court draft and impose on an identified person, of a very widely defined class of persons who have potentially done no more than engage in conduct likely to facilitate serious crime related activity (whether or not they have been convicted of any offence), "appropriate" special restraints on that person's individual liberty, not to protect a particular person, or to prevent some particular anticipated danger to the safety of others, but because there are reasonable grounds to believe that those restraints on that person's individual liberty would prevent, restrict or disrupt that person from committing a crime or facilitating another to commit a crime? The answer is "no". As States "strain to protect their people"332, there must still be adherence to the rule of law. Thus, even where a State seeks "to fight fire with fire" to repress and prevent, for example, serious terrorist violence, the State "may not use indiscriminate measures which would only undermine the fundamental values they seek to protect"333. Here, the SCPO Act does not seek to fight fire with fire. It seeks to fight a potential fire with fire by requiring a State court to draft ad hominem rules restraining the personal liberty of a named individual. That is not compatible with the institutional integrity of a State court. 331 SCPO Act, s 5(5). 332 Bingham, The Rule of Law (2010) at 158. 333 Bingham, The Rule of Law (2010) at 158-159, quoting Schwimmer, "Preface", in Council of Europe, Guidelines on human rights and the fight against terrorism adopted by the Committee of Ministers on 11 July 2002 at the 804th meeting of the Ministers' Deputies (2002) 5 at 5. Legislation of this kind has been described as enabling the imposition of "personalised penal codes, where non-criminal behaviour becomes criminal for individuals who have incurred the wrath of the community"334. It has "been interpreted as permitting courts to impose wide prohibitions that have the effect of closing off many otherwise lawful and harmless activities"335. Preventive orders are, in essence, "a form of criminalisation: an ex ante criminal prohibition, not an ex post criminal verdict", a function that would conventionally be that of the legislature, not the judiciary336. That is not to say that a control orders regime will necessarily be impermissible in all circumstances. It is clear from Thomas337 that that is not so. The fundamental difference between the SCPO Act, which applies to a broad class with exceedingly low thresholds, "not on the basis that they have breached any law, but on the basis that an opinion is formed, by reference to material which may or may not be admissible in legal proceedings, that on the balance of probabilities, they may do so"338, and the scheme in Thomas, directed at a narrow class in exceptional circumstances with stringent standards to be met, is plain. The problems identified in Kable are not avoided by widening the class to which the law applies or by having the court decide how the liberty of the in Kable, individual should be which required proof that it was more likely than not that Mr Kable would commit a serious act of violence339, the SCPO Act permits restraints on an individual's liberty if there are reasonable grounds to believe that the restraints would prevent, restrict or disrupt involvement by the person in serious crime related activities. restrained. And unlike legislation the 334 Council of Europe, Report by Mr Alvaro Gil-Robles, Commissioner for Human Rights, on His Visit to the United Kingdom, 4th-12th November 2004 (2005) at 37 335 Ashworth and Zedner, Preventive Justice (2014) at 85. 336 Simester and von Hirsch, "Regulating Offensive Conduct through Two-Step Prohibitions", in von Hirsch and Simester (eds), Incivilities: Regulating Offensive Behaviour (2006) 173 at 173, 178 (emphasis in original). 337 (2007) 233 CLR 307. 338 Kable (1996) 189 CLR 51 at 107. 339 (1996) 189 CLR 51 at 62. As the reasons of other members of the Court point out, the SCPO Act is modelled on a law enacted by the Parliament of the United Kingdom340. The United Kingdom law was enacted, and operates, in a radically different context in which there is no constitutional limit upon the tasks that the United Kingdom Parliament may give the courts. As Gummow J said in Momcilovic v The Queen341: "The system of federal government in Australia is constructed upon the recognition that there rests upon the judicature 'the ultimate responsibility for the maintenance and enforcement of the boundaries within which governmental power might be exercised'342. Judicial review of both the validity of legislation and the lawfulness of administrative action is thus an accepted part of the Australian legal landscape. By contrast, in the United Kingdom, ... Diceyan notions of parliamentary sovereignty remain influential. Those notions appear to be treated as compatible with the existence of European structures of law-making and adjudication and with the application of the [Human Rights Act 1998 (UK)] as some superior form of law alongside the application of the European Convention by the European Court of Human Rights. In Jackson v Attorney-General343, Baroness Hale of Richmond, whilst acknowledging that 'Scotland may have taken a different view', observed that '[t]he concept of parliamentary sovereignty', which since the seventeenth century 'has been fundamental to the constitution of England and Wales', means that 'Parliament can do anything'." Neither the enactment of the United Kingdom law, nor the way in which the courts of England and Wales have construed and applied it (within the United Kingdom constitutional context), bears upon the questions this Court must consider. 340 Serious Crime Act 2007 (UK). 341 (2011) 245 CLR 1 at 89-90 [156]-[157] (footnote omitted). 342 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 276. 343 [2006] 1 AC 262 at 318 [159].

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Strong v The Queen [2005] HCA 30 15 June 2005 ORDER Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation: B W Walker SC with G A Bashir for the appellant (instructed by Legal Aid Commission of New South Wales) G E Smith SC with D M L Woodburne for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Strong v The Queen Criminal law – Sentencing – Habitual criminal – Re-determination of sentence – Appellant sentenced for primary offences of stalking and intimidation – Appellant pronounced habitual criminal and sentenced to further concurrent term of imprisonment under the Habitual Criminals Act 1957 (NSW) ("the Act") – Sentences overturned by Court of Criminal Appeal (NSW) – Appellant re-sentenced for primary offences and as an habitual criminal – Whether whole sentence must be re-determined where one component of that sentence has miscarried – Whether appellate court required to determine for itself whether to pronounce appellant habitual criminal – Whether in doing so appellate court is exercising its own jurisdiction and powers – Whether appellate court made such determination – Whether appellate court correctly upheld sentencing judge's pronouncement of the appellant as habitual criminal – Whether appellate court's approach conformed to scrupulously thorough procedures for additional orders of preventative detention under the Act. Words and phrases – "habitual criminal". Habitual Criminals Act 1957 (NSW), ss 4 and 6. GLEESON CJ. The appellant, who has a long criminal history, pleaded guilty to a number of offences, including stalking and intimidating a young woman. The primary judge, Freeman DCJ, imposed sentences involving a total of 8 years' imprisonment, with a non-parole period of 6 years. Later, acting under the Habitual Criminals Act 1957 (NSW) ("the Act"), he pronounced the appellant to be an habitual criminal and imposed a sentence of 14 years' imprisonment under the Act. This was to commence on the same day as the first of the other sentences. The Court of Criminal Appeal1 allowed appeals both against the sentences for the substantive offences and the sentence imposed under the Act. It re- sentenced the appellant, reducing the sentences substantially. In a further appeal to this Court, the appellant contends that the Court of Criminal Appeal erred in law in one respect in the way in which it dealt with the appeal concerning the application of the Act. The point of law which constitutes the basis of the ground of appeal to this Court was not argued in the Court of Criminal Appeal. The members of the Court of Criminal Appeal addressed the grounds of appeal before that Court, and responded in their reasons for judgment to the arguments advanced on behalf of the appellant. There was a division in the Court of Criminal Appeal, but it did not turn upon the point that has been argued in this Court. Unsurprisingly, the reasoning of the members of the Court of Criminal Appeal does not specifically address that point. In the Court of Criminal Appeal, counsel for the appellant, in support of both the application for leave to appeal against the sentences imposed for the substantive offences and the application for leave to appeal against the decision of Freeman DCJ under the Act, relied upon fresh evidence. That evidence took the form of psychiatric reports prepared following the proceedings before Freeman DCJ and, in one case, prepared between the first and second days of the hearing in the Court of Criminal Appeal. Sully J, with whom Dunford J agreed, found error in the reasoning of the primary judge in sentencing for the substantive offences. The nature of that error is not presently relevant. Accordingly, and appropriately, he saw it as the Court of Criminal Appeal's function to re-sentence the appellant for the substantive offences, and, in doing so, took into account, and made detailed reference to, the fresh evidence. He concluded that leave to appeal against the sentences should be granted, that the sentences imposed by Freeman DCJ should be quashed, and that different sentences involving lesser terms should be imposed. Sully J then turned to consider the matter of present relevance, that is to say, the decision made by Freeman DCJ under the Act. There were two elements of that decision: the pronouncement that the appellant was an habitual criminal; and the fixing of a sentence of imprisonment under the Act. 1 R v Strong (2003) 141 A Crim R 56 (Sully and Dunford JJ, Buddin J dissenting). There were nine grounds of appeal in relation to the decision under the Act. Grounds 1, 2, 3, 4, 5 and 7 have no bearing on the present appeal. Ground 6 was that Freeman DCJ "erred in the exercise of his discretion to make a pronouncement, and in passing sentence under [the Act], by failing to take into account the [appellant's] subjective circumstances." That ground was dismissed primarily for the reason that Freeman DCJ did not fail to take into account the appellant's subjective circumstances. Grounds 8 and 9 were as follows: The sentence passed under [the Act] was excessive in all the circumstances. On the basis of the fresh evidence as to mental disorder, the pronouncement of the [appellant] as an habitual criminal and the consequent sentence were not warranted in law." Sully J concluded that there had been "an ultimate miscarriage" in the decision of Freeman DCJ under the Act and "that [the Court of Criminal Appeal] must do what it properly can do by way of correction." He then proposed that the appellant should be re-sentenced under the Act, and that there should be a substantial reduction of the sentence that had been imposed by Freeman DCJ, from 14 years to 8 years. What Sully J said about the two elements of the primary judge's decision is set out in the reasons of Callinan and Heydon JJ. The whole of what he said in that respect must be understood, both in the light of the grounds of appeal and the arguments he was addressing, and in the light of his conclusion that the sentencing discretion of the primary judge under the Act had miscarried. His references to the weight to be given to a sentencing judge's exercise of discretion reflected the way the appellant's case was presented in the Court of Criminal Appeal. In the end, however, Sully J held that there had been discretionary error in sentencing, and that the Court of Criminal Appeal was obliged to intervene. The appellant now complains that Sully J was wrong to deal with the matter upon the basis that the Court of Criminal Appeal was constrained by the principles stated in House v The King2. The appellant submits to this Court that, having quashed the sentences imposed by Freeman DCJ on the substantive offences, the Court of Criminal Appeal was obliged to consider afresh both aspects of the decision under the Act, that is to say, the pronouncement and the sentence. (1936) 55 CLR 499. It is apparent that, just as he had taken the fresh evidence into account in sentencing for the substantive offences, Sully J also took it into account in sentencing under the Act. He said: "The effect of what I would favour by way of re-sentencing on the substantive matters means that the [appellant] will serve 5 years in custody; and, if not granted parole, 7 years in custody. He cannot be released, therefore, before October 2005; and possibly October 2007. A concurrent sentence, passed pursuant to the Habitual Criminals Act, of 8 years, would extend until October 2008, the period of the appellant's detention. A sentence of that order, with such consequences, is in my opinion justly proportioned to the circumstances of the [appellant's] case. The [appellant's] condition is, by any reasonable reckoning, a difficult and troubling one. It requires careful and sensitive on-going monitoring and treatment. The [appellant], however he might be released back into the general community, will need some very careful ongoing supervision. The effect of the sentence passed pursuant to the Habitual Criminals Act will give the relevant authorities some added flexibility in assessing whether, and when, and upon what basis, the [appellant] is to be returned into the general community. It might very well be that, in due course, it will be obvious that the only fair way of dealing with the [appellant] is by taking steps, if it is possible to do so, to have him dealt with as some kind of forensic patient pursuant to the relevant mental health legislation. No doubt matters of that character cannot be rushed; but, if there is to be purely preventive detention at all of the [appellant], then it must be a matter of course that the period of such purely preventive detention is to be the minimum which the evidence suggests will be sufficient to enable the Corrective Services authorities, and the Prison Medical authorities to deal in a properly humane fashion with this [appellant]." From a reading of the whole of his reasons, it is obvious that the references in that passage to the evidence included references to the fresh evidence. It will also be observed that, on the basis of that evidence, Sully J regarded the sentence he proposed under the Act as the minimum period required for the protection of the public. I accept that, having concluded that the sentencing by Freeman DCJ for the substantive offences was affected by error, and that the Court of Criminal Appeal should intervene to re-sentence for those offences, the Court of Criminal Appeal was entitled and obliged to re-consider both elements of the decision under the Act3. The proceedings, however, were conducted in the ordinary cf McGarry v The Queen (2001) 207 CLR 121. manner of adversarial litigation, and the reasons of Sully J reflected, and responded to, the grounds of appeal and the arguments put before him. His references to House v The King are to be understood in that context. Furthermore, although the appeal was presented and argued on the basis that the principles in House v The King were relevant, Sully J considered that, even allowing for the appellate restraint dictated by those principles, this was a case where intervention was appropriate. His acknowledgment of the experience of the primary judge was made in the course of giving reasons for a decision substantially to alter the sentence imposed. I am not able to accept as a serious possibility that the assumed constraints of House v The King resulted in an inappropriate reluctance on the part of Sully J to consider for himself the first element of the decision under the Act. There are two reasons for this. First, the justification for using the Act to deal with the difficult and dangerous situation created by the appellant's threats to his victim, and to a number of other women, was clearly considered and is reflected in the passage quoted above. The idea that Sully J might have isolated the question of the length of the sentence from the question of the propriety of the pronouncement (that is, of invoking the provisions of the Act for the protection of the public) is far-fetched. Secondly, Sully J said that he agreed with Freeman DCJ's decision to pronounce the appellant to be an habitual criminal. He said that Freeman DCJ's decision that the statutory pre-conditions had been established, and that there was "every good reason from the viewpoint of the protection of the public, to pronounce and sentence accordingly", was in his opinion correct. The nature and extent of the need for protection of the public by applying the Act in this case was built into the new sentence that was imposed, and the reasons given for that sentence. In my view, it is sufficiently clear, from his endorsement of the primary judge's decision to apply the Act, from the reasons he gave for his conclusions as to the appropriate outcome under the Act, and from his references to ground 9 and the fresh evidence, that Sully J's refusal to set aside the pronouncement of the appellant as an habitual criminal was not merely the result of appellate restraint in interfering with a discretionary judgment, but was the result of a personal judgment, formed after hearing and taking into account evidence that was not before the primary judge, that the protection of the public required such a pronouncement. By reason of the way in which the case was presented and argued, Sully J in parts of his reasons employed the language of House v The King. In other parts of his reasons, he employed the language of independent appraisal of the situation in the light of new information. He did not refer to the point now in issue, because it was never argued. Furthermore, as he approached the decision under the Act, it was not material to the outcome. It would have made no difference to his final conclusion. The appeal should be dismissed. McHugh 15 McHUGH J. The issue in this appeal is whether the Court of Criminal Appeal of New South Wales erred by failing to re-determine whether the appellant should be pronounced an habitual criminal under the Habitual Criminals Act 1957 (NSW). The appellant contends that the judgment of that Court shows that it disallowed his appeal against the pronouncement by treating that appeal as an appeal against a discretionary judgment. He submits that, after the Court of Criminal Appeal set aside the sentences that led to him being pronounced an habitual criminal, it should have itself determined whether such a pronouncement was required. In my opinion, the argument of the appellant is correct. The appeal must be allowed and the matter remitted to the Court of Criminal Appeal to determine whether that Court should pronounce the appellant an habitual criminal and, if it does, what additional sentence should be imposed on him. Statement of the case The District Court of New South Wales sentenced the appellant to four years imprisonment for the offence of intimidation and five years for the offence of stalking. He was given a total non-parole period of six years. At a further hearing, the District Court pronounced the appellant an habitual criminal holding that he was "now and will continue to be a threat to the community, certainly for the foreseeable future". As a result of making the pronouncement, the District Court sentenced the appellant as an habitual criminal to 14 years imprisonment, a term that was to be served concurrently with the sentences for the intimidation and stalking offences. Subsequently, the Court of Criminal Appeal allowed an appeal against the sentences for intimidation and stalking. A majority of the Court re-sentenced the appellant to three years imprisonment for the intimidation offence and four and a half years imprisonment for the stalking offence with a non-parole period of five years. The Court also gave the appellant leave to appeal against the pronouncement that he was an habitual criminal but dismissed his appeal against that pronouncement. The Court (by majority) also granted leave to appeal against the sentence as an habitual criminal and re-sentenced the appellant to a term of eight years imprisonment in respect of the pronouncement. Subsequently, this Court granted special leave to appeal from the order of the Court of Criminal Appeal on the following ground: "The majority of the Court of Criminal Appeal (the Court) erred in approaching the appeal against the pronouncement and sentence under the Habitual Criminals Act 1957 (the Act), upon the basis that the Court, applying the principles identified in House v The King (1936) 55 CLR 499, was constrained by the decision of the primary judge, whereas the Court, having upheld the appeal against sentence, was obliged to address McHugh itself, afresh, to the questions arising for determination under s 4 of the Act." The Court of Criminal Appeal erred by failing to determine for itself whether the appellant should be pronounced an habitual criminal In determining the appeal against the pronouncement, Sully J, giving the judgment of the majority in the Court of Criminal Appeal, said4: "As to those grounds, the correct starting point is the proposition that his Honour, in pronouncing and sentencing pursuant to the Habitual Criminals Act, was exercising discretionary powers. The contrary was not contended at the hearing before this Court. That being so, it is trite that this Court will not interfere with the primary Judge's exercise of those discretions unless it is plain that they have miscarried; the relevant guiding principles being set out by the High Court of Australia in House v The King5. I do not believe that there is any ambiguity in the learned primary Judge's reasoning. His Honour was convinced, plainly, that the applicant presented as a very dangerous man, whose antecedents suggested that he was a recidivist with, at best, very slender prospects of future rehabilitation; and, as such, a present and likely future threat to women. His Honour deduced, correctly as I respectfully think, that the Act having been invoked, the statutory pre-conditions had been established; and there was, thereupon, every good reason from the viewpoint of the protection of the public, to pronounce and sentence accordingly. I am wholly unpersuaded that his Honour's discretion to pronounce, miscarried. The more difficult question is whether the sentence which his Honour thereupon imposed was, to borrow from House '... upon the facts ... unreasonable or plainly unjust' so as to justify appellate intervention '... on the ground that a substantial wrong has in fact occurred'." (emphasis added) This passage shows to the point of certainty that the majority judges in the Court of Criminal Appeal decided the appeal against the pronouncement as an habitual criminal on the basis that it was an appeal against a discretionary judgment. The judgment of the District Court on the pronouncement issue was, of course, a discretionary judgment. But with great respect, what the learned 4 R v Strong (2003) 141 A Crim R 56 at 81 [96]-[99]. (1936) 55 CLR 499 at 504, 505 per Dixon, Evatt and McTiernan JJ. McHugh judges of the Court of Criminal Appeal overlooked was that, upon setting aside the sentences for the substantive offences of intimidation and stalking, the pronouncement and sentence under the Habitual Criminals Act had to be set aside. Section 4(1) of the Habitual Criminals Act provides: "When any person ... is convicted on indictment and has on at least two occasions previously served separate terms of imprisonment as a consequence of convictions of indictable offences ... then if the judge before whom such person is so convicted is satisfied that it is expedient with a view to such person's reformation or the prevention of crime that such person should be detained in prison for a substantial time, the judge may, in addition to passing sentence upon such person for the offence of which the person is so convicted, pronounce the person to be an habitual criminal and shall thereupon pass a further sentence upon the person in accordance with the provisions of section 6." Section 6 of that Act provides: "(1) The judge who, pursuant to the provisions of section 4, has pronounced a person to be an habitual criminal, shall pass a sentence of imprisonment upon such person for a term of not less than five years nor more than fourteen years. (2) Any sentence of imprisonment being served by any such person at the time the person is pronounced to be an habitual criminal shall be served concurrently with the sentence imposed pursuant to the provisions of subsection (1)." The terms of s 4(1) of the Act make it impossible to divorce the pronouncement of a person as an habitual criminal from the sentence for the offence which leads to the pronouncement. First, the pronouncement is conditional upon and "in addition to passing sentence upon such person for the offence of which the person is so convicted" ("the primary offence"). Second, if the conviction on the primary offence is set aside, the condition upon which the pronouncement operates no longer exists. It is not a tenable view of the section that the pronouncement can stand although the conviction for the primary offence is set aside. Third, the need for a pronouncement and consequential mandatory sentence cannot be separated from the length and type of sentence imposed for the primary offence. Any sentence including the primary sentence that is "being served by any such person at the time the person is pronounced to be an habitual McHugh criminal shall be served concurrently with the sentence imposed pursuant to the provisions of subsection (1)."6 There is much to be said for the view that, when the sentence for the primary offence is set aside, the pronouncement is automatically set aside. But, independently of that consideration, the primary sentence and the pronouncement are so closely connected that, as a matter of principle, an appellate court that sets aside the primary sentence must also set aside the pronouncement and the mandatory sentence that follows it. There can be few, if any, cases where an appellate court, having concluded that an integer of a sentence has miscarried, can refuse to determine afresh the other integers of the sentence. That was the view of this Court in McGarry v The Queen7 where the Court had to consider a primary sentence and an indefinite sentence in legislation where separate provisions governed appeals in respect of each sentence. The Sentencing Act 1995 (WA) empowered a "sentencing judge, if the relevant conditions are met, to 'order the offender to be imprisoned indefinitely' and to do so 'in addition to imposing the term of imprisonment for the offence'."8 In that context, this Court said that "[a]n order for indefinite imprisonment is, then, a part of the sentence which is imposed (just as much as, in other cases, will be a parole eligibility order, or an order suspending the imprisonment)."9 Consequently, the Court held that, if the sentencing discretion in respect of the primary sentence miscarried, the term of indefinite imprisonment also miscarried. In a joint judgment, five members of the Court10 said: "The Criminal Code (WA) makes separate provision for appeals to the Court of Criminal Appeal against an order for indefinite imprisonment (s 688(1a)(a)) and against any other sentence (s 688(1a)(b)). The former lies as of right; the latter lies only with the leave of the Court of Criminal Appeal. That might be thought to suggest that two appellate processes had been engaged in the present case – one concerning the order for indefinite imprisonment and the other concerning the nominal sentence. Even if that were so, it should not obscure the fact that the decision to make an order for indefinite imprisonment, and the decision fixing the nominal sentence, form part of a single sentencing decision. 6 Habitual Criminals Act 1957 (NSW), s 6(2). (2001) 207 CLR 121. (2001) 207 CLR 121 at 126 [7] (emphasis in original). (2001) 207 CLR 121 at 126 [7]. 10 Gleeson CJ, Gaudron, Gummow and Hayne JJ and myself: (2001) 207 CLR 121 at McHugh It follows that if an appellate court concludes that the sentencing judge's discretion miscarried in fixing the nominal term of imprisonment, the whole of the sentence imposed by the sentencing judge, including the order for indefinite imprisonment, should be set aside and the appellate court would then be obliged itself to re-sentence the offender." We went on to say11: "The question would not be, as the Court of Criminal Appeal appears in this case to have thought it to be, whether it had been open to the sentencing judge to make the order for indefinite imprisonment which had been made. The sentencing discretion being shown to have miscarried, there was no occasion or need to consider whether it could be separately demonstrated that the sentencing judge's discretion to make an order for indefinite imprisonment had miscarried. It was for the Court of Criminal Appeal to pass such other sentence as ought to have been passed." It follows from the principle for which McGarry is an authority that the pronouncement that the appellant was an habitual criminal was part of the sentencing decision for which he was imprisoned. Consequently, when the Court of Criminal Appeal set aside the sentences for intimidation and stalking, it was required to set aside the pronouncement and determine afresh whether a pronouncement should be made. Setting aside and re-considering the pronouncement was no different in principle from the action of the Court of Criminal Appeal in setting aside the non-parole periods imposed by the District Court and imposing new non-parole periods for the primary offences. Counsel for the Crown contended that for three reasons the approach of this Court in McGarry was inapplicable to appeals under the Habitual Criminals Act 1957. First, under s 3(a) of the Habitual Criminals Act 1905 (NSW), a declaration that a person was an habitual criminal was "part of the sentence" imposed on that person. In contrast, under the Habitual Criminals Act 1957, the pronouncement and sentence is no longer declared to be part of the one sentence. Under the 1957 Act, the sentence imposed in respect of the pronouncement is "a further sentence" that is imposed "in addition to" the sentence for the primary offence12. Second, s 4(2) of the Habitual Criminals Act 1957 provides that, in certain circumstances, a judge may declare a person an habitual criminal after the person has been convicted by a Magistrate. Counsel for the Crown contended that this meant that the substantive offence and the pronouncement are imposed separately and not as part of a single sentence or decision. He also pointed to different rights of appeal in relation to the substantive sentence imposed by the 11 (2001) 207 CLR 121 at 126 [9] (emphasis in original). 12 Habitual Criminals Act 1957 (NSW), s 4(1). McHugh Magistrate and the pronouncement and further sentence of the judge. Third, as in R v Roberts13, an offender may appeal only against the pronouncement or consequential sentence and not the sentence for the primary offence. In such cases, only the pronouncement or the mandatory sentence imposed in respect of the pronouncement is before the Court of Criminal Appeal. None of these considerations, in my opinion, makes inapplicable the principle for which McGarry is an authority. First, the omission of the 1957 Act to declare that the sentence following the pronouncement is "part of the sentence" is not decisive. It is the sentencing decision – not the individual sentences – that attracts the McGarry principle. That principle does not cease to be applicable because there are separate sentences. In McGarry itself, the indefinite sentence was "in addition to imposing the term of imprisonment for the offence"14. the provisions of s 4(2) dealing with Second, for pronouncements following convictions before a Magistrate do not affect the applicability of the McGarry principle. If the conviction before the Magistrate were set aside in separate proceedings, it could not be contended that the pronouncement of and the sentence for being an habitual criminal must stand. Third, the fact that an appeal may be brought only against the pronouncement or the consequential sentence is a matter of no present relevance. It says nothing as to whether the Court must set aside the pronouncement when the primary sentence is set aside. the same reason, Accordingly, the Court of Criminal Appeal erred when it declared that it was "wholly unpersuaded that [the District Court's] discretion to pronounce, miscarried."15 With great respect to those who hold the contrary opinion, the error of the Court of Criminal Appeal cannot be dismissed because – if it was the case – the argument put by the appellant in this Court was not put to the Court of Criminal Appeal. The error of the Court of Criminal Appeal constituted a miscarriage of justice in the technical sense of that term. It denied the appellant the right to have his appeal decided according to law. As a result, the appellant has been denied the judgment of the Court of Criminal Appeal on a matter that affected his liberty and his reputation. 13 [1961] SR (NSW) 681. 14 Sentencing Act 1995 (WA), s 98(1). 15 (2003) 141 A Crim R 56 at 81 [99]. McHugh Order The appeal must be allowed. The order of the Court of Criminal Appeal must be set aside and the matter remitted to that Court to determine the appellant's appeal against the pronouncement that he is an habitual criminal. Kirby KIRBY J. This is an appeal from a judgment entered, by majority16, by the New South Wales Court of Criminal Appeal17. The issue, presented by the sole ground upon which special leave to appeal was granted, is whether that Court erred in the disposition of the appeal against the pronouncement and sentence of the sentencing judge, made under the Habitual Criminals Act 1957 (NSW) ("the Habitual Criminals Act"). Specifically, it is whether it did so having regard to the appellate court's functions under the Criminal Appeal Act 1912 (NSW) ("the Appeals Act"). The majority of the Court of Criminal Appeal treated the proceedings that challenged the primary judge's pronouncement under the Habitual Criminals Act as contesting the exercise of a discretionary power and hence as governed by the principles stated by this Court in House v The King18. Their Honours declared that they were unpersuaded that the primary judge's exercise of discretion to make the pronouncement under the Habitual Criminals Act had miscarried19. In this Court, the appellant contends that, in the circumstances, the Court of Criminal Appeal was obliged (but failed) to discharge its own functions of resentencing, including in respect of the proceedings under the Habitual Criminals Act. Upon this footing, the deference paid by the majority to the discretion of the sentencing judge was misplaced, justifying the intervention of this Court. The appellant's arguments are correct. Consistency with an unbroken line of authority in this Court, obliging the "regular and scrupulously thorough" observance of procedures mandated by statutes authorising preventive punishment for repeat offenders20, applies in these proceedings to require that the appeal be allowed. The application of the Habitual Criminals Act should be considered afresh on new materials that are now available. 16 Sully J (Dunford J concurring); Buddin J dissenting in part. 17 R v Strong (2003) 141 A Crim R 56. 18 (1936) 55 CLR 499 at 504-505. See (2003) 141 A Crim R 56 at 81 [97]-[99]. 19 (2003) 141 A Crim R 56 at 81 [99]. 20 Thompson v The Queen (1999) 73 ALJR 1319 at 1322-1323 [18]; 165 ALR 219 at 224. See also Chester v The Queen (1988) 165 CLR 611; Lowndes v The Queen (1999) 195 CLR 665; and McGarry v The Queen (2001) 207 CLR 121. Kirby The facts Mr Robert Strong ("the appellant") is an Aboriginal man, now aged forty- six years. He was reared within Aboriginal communities near Armidale in northern New South Wales. He grew up "in depressed economic and social circumstances and lacked normal family life and consistent role models"21. He suffers from intellectual disabilities. He worked briefly in a sheltered workshop; but has spent most of his life unemployed or in prison. His condition was described by Sully J in the Court of Criminal Appeal as involving "a sad picture of … a person whose real psychiatric problems are superimposed upon a background of economic and social disadvantage, and upon a history of drug abuse"22. Prior to the events of 2000 resulting in the present proceedings, the appellant had been convicted of serious offences in 1977 and 1983, connected with sexual assaults upon women. For these, the appellant was sentenced to lengthy periods of imprisonment. He served the full sentence on each occasion, without release to parole23. Although he was released in April 1996, following the completion of the sentence for the 1983 offences24, in January 1997 he was again sentenced to imprisonment for six months on a charge of indecent assault of a female. In January 1998, he was again arrested for an offence of stalking a female victim and sentenced to imprisonment25. It was whilst in prison for the lastmentioned offence that he began writing sexually suggestive letters to a woman with whom he had had no relationship and who, following his release, became the subject of unwanted further attention. The letters to the lastmentioned victim formed the basis of the substantive charge of intimidation26 subsequently presented against the appellant. After his release from prison, the appellant began following and watching this victim. He moved to live opposite her home and shouted abusive and sexually suggestive statements of love for her, knowledge of which, when they came to her attention, 21 Report of T H Trembath, Parole Officer (August 1979) in evidence before the sentencing judge. 22 (2003) 141 A Crim R 56 at 72 [68]. 23 (2003) 141 A Crim R 56 at 89 [118]. 24 (2003) 141 A Crim R 56 at 89 [118]. 25 (2003) 141 A Crim R 56 at 59 [5]. 26 Contrary to the Crimes Act 1900 (NSW), s 562AB. Kirby caused the victim fear and anxiety. This conduct became the basis of the substantive charge of stalking27. In September 2000, an apprehended violence order was served on the appellant requiring him to appear at the Armidale Local Court28. The appellant did not appear. He left Armidale. He was quickly apprehended in Enmore, a suburb of Sydney. Upon his apprehension, he was found to be in possession of a 15 cm serrated blade knife. In addition to the charges of intimidation and stalking, the appellant faced allegations of offensive language29 and being in custody of a knife in a public place30. The appellant pleaded guilty to the substantive offences in the Local Court on 22 November 2000. He was committed for sentence in the District Court pursuant to s 51A of the Justices Act 1902 (NSW). When he came for sentence before the sentencing judge (Freeman DCJ) at Armidale he adhered to his pleas31. The sentencing judge convicted the appellant. In respect of the offence of intimidation, he sentenced him to four years imprisonment with a non-parole period of three years. In respect of the charge of stalking, he sentenced the appellant to five years imprisonment with a non-parole period of three years. The sentencing judge took into account the allegations of using offensive language and being in unlawful custody of a knife32. His Honour made the sentences partly cumulative and partly concurrent. This course resulted in sentences for the substantive offences of eight years imprisonment, with a non- parole period of six years. There the matter might have rested but for an application made to the sentencing judge in June 2001 in Sydney for an order pronouncing the appellant an habitual criminal pursuant to the Habitual Criminals Act and for the imposition of a further concurrent sentence under that Act33. That application 27 Contrary to the Crimes Act 1900 (NSW), s 562AB. 28 (2003) 141 A Crim R 56 at 61 [8]. 29 Contrary to the Summary Offences Act 1988 (NSW), s 4(1)(b). It appears that the appellant was charged under this provision even though it did not exist at the time of the alleged offence: see reasons of Callinan and Heydon JJ at [106]-[108]. 30 Contrary to the Summary Offences Act 1988 (NSW), s 11C(1). 31 (2003) 141 A Crim R 56 at 58 [4]. 32 In accordance with the Crimes (Sentencing Procedure) Act 1999 (NSW), ss 32, 33. 33 (2003) 141 A Crim R 56 at 62 [18]-[19]. Kirby was dealt with on a collection of documents which the prosecution provided to the sentencing judge in advance of the supplementary hearing. No further evidence was called for either party, whether oral or documentary34. The sentencing judge, for reasons that he then published, upheld the prosecution application. He pronounced the appellant to be an habitual criminal under the Habitual Criminals Act. He sentenced him to the maximum term of imprisonment provided by that Act, namely fourteen years, to date (as the other sentences had done) from the day on which the appellant had been taken into custody in Enmore, 4 October 2000. The decision of the Court of Criminal Appeal Unanimous finding of error: The appellant made an application for leave to appeal pursuant to the Appeals Act. The application contested what Sully J (who gave the reasons of the majority in the Court of Criminal Appeal) described as the "substantive offences"35. But it also challenged the pronouncement that the appellant was an habitual criminal under the Habitual Criminals Act; and the sentence imposed under the latter Act, pursuant to that pronouncement36. The Court of Criminal Appeal was unanimous that the appellant had established error under the third ground of appeal relating to the sentences for the substantive offences37. It held that the sentencing judge had erred in refusing to discount the sentence imposed for the stalking offence, given that the appellant had promptly pleaded guilty to that offence. At the least, it was held, the appellant was entitled to "a proper utilitarian discount" for that plea38. This conclusion required that the appellant be resentenced by the Court of Criminal Appeal. It thus became unnecessary (as Sully J pointed out39) to consider separately in the appeal an additional ground of objection to the substantive sentences. This was40 that, on the basis of fresh evidence as to a 34 (2003) 141 A Crim R 56 at 62 [22]. 35 (2003) 141 A Crim R 56 at 63 [27] (heading). 36 (2003) 141 A Crim R 56 at 73-74 [72]. 37 (2003) 141 A Crim R 56 at 68 [50] per Sully J (Dunford J agreeing at 83 [104]; Buddin J agreeing at 83 [107]). 38 (2003) 141 A Crim R 56 at 68 [51] per Sully J. 39 (2003) 141 A Crim R 56 at 69 [61]. 40 Ground 6: (2003) 141 A Crim R 56 at 69 [60]. Kirby mental disorder suffered by the appellant, the original sentences were not warranted in law or were manifestly excessive in the circumstances. The fresh evidence arose out of the tender before the Court of Criminal Appeal of substantial recent evidence of the opinions of psychiatrists concerning the appellant's mental condition. That evidence, which was described by Sully J41, was potentially important in two respects. First, it updated the psychiatric and psychological evidence that had been placed before the sentencing judge in the form of reports those reports had been prepared between 1979 and 1996. supplemented by one of Mr Philip Nolan, psychologist, of February 2001, it was common ground that the latter report had not been placed before the sentencing judge at the time of the sentencing for the substantive offences42. Although the Mr Nolan's 2001 report was subsequently made available sentencing judge in connection with the application under the Habitual Criminals Act. However, as Buddin J observed, "[i]ts utility must have been limited by the fact that it was not prepared for that ... purpose"43. For example, in his report of 2001, Mr Nolan did not have the full details of the offences or access to all of the prior expert reports. Moreover, his report did not address the question presented by that Act. No report was ordered by the sentencing judge from the probation and parole service, despite the language of s 9 of the Habitual Criminals Act. Secondly, the new psychiatric reports were potentially important for the proceedings under the Habitual Criminals Act because, as Sully J was to point out, in reviewing and incorporating extracts from them, they revealed an important development in the thinking of Dr Stephen Allnutt, a specialist forensic psychiatrist. This was to the effect that the appellant could, by 2002, have been recognised as suffering "symptoms of psychosis" that met the recognised legal criteria for a "mental illness"44. A question was therefore presented as to whether the appearance of such an illness might call for treatment and/or management of the appellant's case in the future under mental health legislation, rather than further punishment within the criminal justice system, including under the Habitual Criminals Act. Ultimately, Sully J was to voice recognition of this problem45. However, having regard to his conclusions, it was 41 (2003) 141 A Crim R 56 at 70-72 [63]-[68]. 42 (2003) 141 A Crim R 56 at 90 [119] per Buddin J. 43 (2003) 141 A Crim R 56 at 90 [119]. 44 (2003) 141 A Crim R 56 at 71 [65]. 45 (2003) 141 A Crim R 56 at 82 [101]. Kirby recognition to be given effect only in the context of the penal regime for which the Habitual Criminals Act provides. Having concluded that the sentencing for the substantive offences had miscarried, Sully J proceeded to what he saw as the first task of the appellate court. This was to grant leave to the appellant to appeal against both of the sentences imposed upon the appellant for his substantive offences; to quash those sentences; and to proceed to a resentence in respect of the two convictions46. Dissenting proposal for remitter: In dissent as to this course, Buddin J concluded that the recognition that it had become necessary for the Court of Criminal Appeal to intervene, presented squarely the question of how it should do so in disposing of the appellant's case in that Court47. Under the Appeals Act, the options before that Court, so far as the disposition of the appeal against sentences for the substantive offences was concerned, included, for itself, to "pass such other sentence" (being one "more or less severe [as] warranted in law"48) or to remit the resentencing to the court of trial for determination49. In the ultimate, having regard to what he saw as the connected issues of the application for leave to appeal against the pronouncement that the appellant was an habitual criminal50 and the additional sentence of imprisonment imposed in consequence of that pronouncement51, Buddin J decided that the correct order to be made was to grant leave to appeal; to allow the appeals against the substantive sentences, the pronouncement under the Habitual Criminals Act and the sentence passed in consequence of that pronouncement; to set those dispositions aside and to order the remitter of the entire resentencing of the appellant to the District Court52. Buddin J's reasons for concluding that remitter for resentence was the appropriate course were (1) the initial failure to provide the sentencing judge with up-to-date psychiatric or psychological assessments of the appellant, 46 (2003) 141 A Crim R 56 at 82-83 [103]. 47 (2003) 141 A Crim R 56 at 83 [107]. 48 Appeals Act, s 6(3). 49 Appeals Act, s 12(2). 50 Habitual Criminals Act, s 4(1). 51 Habitual Criminals Act, s 6(1). 52 (2003) 141 A Crim R 56 at 96-97 [147]. Kirby relevant to the determination of the overall punishment of the appellant53; (2) the developing understanding of the appellant's psychiatric condition, reinforced by reports of attempted suicide in custody on the appellant's part54 (a problem not uncommon amongst Aboriginal prisoners55); (3) the affidavit of the appellant's counsel who had appeared on the original sentencing proceedings in the District Court seeking to explain the reasons for failing to seek an adjournment of the application under the Habitual Criminals Act by reference to her concern about the effect of further delay and uncertainty on the appellant's suicidal state56; (4) the exceptional nature of orders to be made under the Habitual Criminals Act57; (5) the importance of the "fresh" or "new" evidence about the appellant's underlying mental health which had not been available to the sentencing judge; (6) the inevitable inter-relationship of the sentences for the substantive offences and any dispositions under the Habitual Criminals Act58; (7) the "draconian" consequences for the appellant of any order made under the Habitual Criminals Act59; (8) the novelty of the application made in the appellant's case under the Habitual Criminals Act (no prior such application having been made since the 1970s60); (9) the repeated insistence by this Court upon special care in the imposition of such additional sentences of preventive detention61; (10) the lack of a pre-sentence report concerning the appellant upon which the Court of Criminal Appeal could proceed to its own sentence62; (11) the passage of two years following the original pronouncement under the Habitual Criminals Act and the need to afford the prosecution a proper opportunity to test the fresh psychiatric evidence proffered for the appellant63; and (12) the advantage that remitter would 53 (2003) 141 A Crim R 56 at 90 [119]-[120]. 54 (2003) 141 A Crim R 56 at 90 [121]. 55 Australia, Royal Commission into Aboriginal Deaths in Custody, (1991) (J H Wootten et al, Royal Commissioners). 56 (2003) 141 A Crim R 56 at 90 [122]. 57 (2003) 141 A Crim R 56 at 91-92 [126]-[130]. 58 (2003) 141 A Crim R 56 at 92-93 [131]-[133]. 59 (2003) 141 A Crim R 56 at 94 [135]. 60 (2003) 141 A Crim R 56 at 93-94 [134]. 61 (2003) 141 A Crim R 56 at 94-95 [136]. 62 (2003) 141 A Crim R 56 at 95 [139]. 63 (2003) 141 A Crim R 56 at 95 [138]. Kirby afford to both parties by preserving to them any future entitlement that they might wish to appeal against orders made under the Habitual Criminals Act, in the light of the new and more satisfactory materials64. Majority approach to resentencing: The majority (Sully J and Dunford J) were not convinced by the foregoing analysis. Because of the limited ground of appeal allowed in this Court, we are not, as such, deciding whether the circumstances that arose in the punishment of the appellant for his admitted offences warranted the approach adopted by the majority (including dismissal of the appeal against the pronouncement under the Habitual Criminals Act and resentencing to a shorter term under that Act) or by Buddin J (involving remitter of the entire task of resentencing, including under the Habitual Criminals Act, to the District Court). In deciding between those respective courses, the judges constituting the Court of Criminal Appeal were exercising powers of a discretionary character, vested in that Court by the Appeals Act. Unless the appellant could demonstrate error in the approach of the majority, this Court would not interfere in that disposition, even if it considered that the course favoured by Buddin J was the preferable one. The suggested error, relied upon by the appellant, is said to have arisen in the passages in the reasons of Sully J in which his Honour stated that the sentencing judge "in pronouncing [that the appellant was an habitual criminal under the Habitual Criminals Act] and sentencing pursuant to [that Act] was exercising discretionary powers", the exercise of which an appellate court will not interfere with "unless it is plain that they have miscarried"65. In that connection, Sully J referred to the well-known treatment of the review of discretionary decisions in House v The King66. His Honour then went "I do not believe that there is any ambiguity in the learned primary Judge's reasoning. His Honour was convinced, plainly, that the applicant presented as a very dangerous man, whose antecedents suggested that he was a recidivist with, at best, very slender prospects of future 64 (2003) 141 A Crim R 56 at 96 [142] referring to Histollo Pty Ltd v Director- General of National Parks and Wildlife Service (1998) 45 NSWLR 661 at 664-665. See also Young v Registrar, Court of Appeal [No 3] (1993) 32 NSWLR 262 at 276- 65 (2003) 141 A Crim R 56 at 81 [96]-[97]. 66 (1936) 55 CLR 499 at 504-505. 67 (2003) 141 A Crim R 56 at 81 [98]-[99]. Kirby rehabilitation; and, as such, a present and likely future threat to women. His Honour deduced, correctly as I respectfully think, that the Act having been invoked, the statutory pre-conditions had been established; and there was, thereupon, every good reason from the viewpoint of the protection of the public, to pronounce and sentence accordingly. I am wholly unpersuaded that his Honour's discretion to pronounce, miscarried." In his reasons, Sully J proceeded to consider, within the limits of House v The King, whether appellate intervention was justified in respect of the maximum sentence that had been imposed by the sentencing judge under the Habitual Criminals Act. He held that it was. He therefore concluded that the appellant should have leave to appeal against both the pronouncement and the sentence imposed under the pronouncement was nonetheless dismissed. However, the sentence under the Habitual Criminals Act was substantially reduced. In effect, the resentence under that Act, favoured by the majority, enlarged the appellant's aggregate sentence of imprisonment by only one year, although, because not subject to reduction for parole68, it removed the possibility of earlier release on parole previously allowed by the revised sentences for the substantive offences. the Habitual Criminals Act. The appeal against The emerging question: The question in this appeal is therefore whether, in the foregoing approach, the majority of the Court of Criminal Appeal erred (1) by failing for themselves to consider the questions arising for determination under s 4 of the Habitual Criminals Act and (2) by deferring inappropriately to the exercise by the primary judge of his powers under that Act, so far as that exercise resulted in the pronouncement that the appellant was an habitual criminal in accordance with that Act. The law of habitual criminals Early English and Australian laws: The common occurrence of repeat offending has produced many legislative attempts to deal with the problem. In 1871, the United Kingdom Parliament enacted the Prevention of Crimes Act affording, in England, a statutory regime for the additional punishment of habitual criminals. Legislation of a like kind was quickly enacted in Australia for the same purpose, namely to provide a power to judges to impose additional punishment in sentencing as a deterrence against repeat offending, to protect the 68 Habitual Criminals Act, s 7 ("Governor may direct habitual criminal's release"). Kirby public and to respond to the presumed existence of an identifiable "criminal class"69. In New South Wales this approach led to the enactment of the Habitual Criminals Act 1905 (NSW)70. That Act permitted a judge, in specified circumstances, to declare a person convicted of identified offences "an habitual criminal"71. Following such a declaration, the person so "declared" could be detained "at the expiration of his sentence" during the pleasure of the Executive72. The detention was under conditions of confinement requiring the person "to work at some trade or avocation", being "offered facilities for selling or otherwise disposing of the products of his labour"73. It was left to the Executive, having determined that the "habitual criminal is sufficiently reformed, or for other good cause", to release the prisoner on licence74. Male and female habitual criminals were to be kept apart75 and alcoholic liquor prohibited in their places of confinement76. The essential object of the system was said to be two- fold: to protect the public and to afford the habitual criminal the opportunity for reform77. The 1957 NSW Act: This legislative scheme was eventually viewed as a failure both in England and in Australia. In 1948, the Criminal Justice Act in England repealed the previous legislation78. It substituted a regime that, in turn, 69 (2003) 141 A Crim R 56 at 83-84 [108] per Buddin J citing New South Wales Law Reform Commission, Sentencing, Report No 79, (1996) at 233-234 [10.19]. 70 Similar legislation was adopted in other Australian States: R v White (1968) 122 CLR 467 at 470 (a case concerning the Habitual Criminals Act 1870 (SA), re- enacted with amendments in Criminal Law Consolidation Act 1935 (SA), s 319(1)(b)). Like legislation was enacted in New Zealand: R v Steele (1910) 29 NZLR 1039; R v Ehrman (1911) 31 NZLR 136. 71 s 3(a). 77 R v Stanley [1920] 2 KB 235 at 240-241. 78 Prevention of Crime Act 1908 (UK). Kirby became the model for the Act invoked in the appellant's case. That Act, the Habitual Criminals Act, adopted by the State Parliament of New South Wales in 1957, consciously followed the later English Act. It did so on the basis that the judiciary had resorted to the 1905 Act, mistakenly but bona fide, particularly in the case of juvenile offenders, as a means of ensuring that prisoners would receive training in a trade79. This, the Minister declared, had not been the intention of that Act. He quoted Dr Norval Norris's description of an habitual criminal as "one who possesses criminal qualities inherent or latent in his mental constitution (but who is not insane or mentally deficient); who has manifested a settled practice in crime; and who presents a danger to the society in which he lives (but is not merely a prostitute, vagrant, habitual drunkard or habitual petty delinquent)"80. It was for that reason that the Habitual Criminals Act was enacted in New South Wales to follow the reforms adopted by the English Act of 194881. In accordance with the stated purpose, the Habitual Criminals Act treated the pronouncement of the person to be "an habitual criminal" as a separate judicial act. It was one to be made on the specified preconditions and not (as such) "part of the sentence of such person"82. The preconditions and the incidents of the pronouncement were tightened in 1957. It remained in the discretion of the judge, if "satisfied that it is expedient with a view to such person's reformation or the prevention of crime that such person should be detained in prison for a substantial time"83. The discretion so to order was intended to be a real one. As this Court explained in R v White84, it was not a power to be exercised where, 79 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 March 1957 at 4071. 80 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 March 1957 at 4070. 81 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 March 1957 at 4073. Provisions for preventive detention for repeat offenders exist in other States and Territories of Australia. These include Sentencing Act 1991 (Vic), ss 18A-18P; Penalties and Sentences Act 1992 (Q), s 163; Criminal Law (Sentencing) Act 1988 (SA), s 23; Sentencing Act 1995 (WA), s 98; Sentencing Act 1997 (Tas), s 19 and Sentencing Act (NT), s 65. 82 Habitual Criminals Act 1905 (NSW), s 3(a). 83 Habitual Criminals Act, s 4(1). 84 (1968) 122 CLR 467. Kirby "notwithstanding a person has three convictions or more, he is not really an habitual criminal"85. Disuse and proposed repeal: For various reasons, from the 1970s, the Habitual Criminals Act, and statutes like it in other jurisdictions, fell into disuse in Australia. In the Australian Criminal Reports series, which began in 1979, there is not a single case involving the application of the Habitual Criminals Act. In part, this may have reflected changing attitudes of prosecutors and in part the view of judges that the assumptions, procedures and consequences of such legislation had been overtaken by later sentencing developments. A similar change had occurred in respect of the somewhat analogous provisions of the Inebriates Act 1912 (NSW) and its equivalents. In proposals for the reform of the law of sentencing as late as 1996, the New South Wales Law Reform Commission recommended the repeal of the Habitual Criminals Act, a development noted by Buddin J86. The Law Reform Commission recorded that the Office of the Director of Public Prosecutions at that time was in favour of repeal of the Habitual Criminals Act and that already the Act had "fallen into disuse"87. Nevertheless, the Act was not repealed. It remains part of the law of the State. Over the last decade, in the way of these things, there has been a revival in Australian law of notions of preventive detention for "the protection of the public"88. This has been given effect in legislation providing for lengthy mandatory imprisonment for repeat offenders89; additional sentences of indefinite detention90; and specific legislation 85 (1968) 122 CLR 467 at 472 per Barwick CJ, 478 per Menzies J (McTiernan, Kitto and Taylor JJ agreeing with Menzies J). 86 (2003) 141 A Crim R 56 at 83 [108] citing New South Wales Law Reform Commission, Sentencing, Report No 79, (1996) at 233-234 [10.19]. 87 New South Wales Law Reform Commission, Sentencing, Discussion Paper No 33, (1996) at 136-137 noted by Buddin J (2003) 141 A Crim R 56 at 84 [109]. 88 (2003) 141 A Crim R 56 at 81 [98]. See also White (1968) 122 CLR 467 at 471. 89 See eg Criminal Code Amendment Act (No 2) 1996 (WA), enacting a new s 401 of the Criminal Code (WA). Northern Territory laws to like effect were repealed in 2001 by the Sentencing Amendment Act (No 3) 2001 (NT), Juvenile Justice Amendment Act (No 2) 2001 (NT) and other cognate laws. See Neal and Bagaric, "After Three Strikes – The Continued Discriminatory Impact of the Sentencing System Against Indigenous Australians: Suggested Reform", (2002) 26 Criminal Law Journal 279 at 280. 90 Under the Criminal Code (WA), s 662 later Sentencing Act 1995 (WA), s 98 considered in Chester (1988) 165 CLR 611. See also Lowndes (1999) 195 CLR (Footnote continues on next page) Kirby addressed to certain long-term prisoners91. So long as such laws are constitutionally valid92, when they are invoked (as here) it is the duty of courts to uphold them and of sentencing judges to apply them in accordance with their language and purpose. In the present appeal, no challenge was raised to the constitutional validity of the Habitual Criminals Act. Invocation of the 1957 Act: The respondent defended the confirmation of the order pronouncing the appellant an habitual criminal under the Habitual Criminals Act. It supported the approach of the majority in the Court of Criminal Appeal. The respondent emphasised the separate character of that order as shown by the terms of the Habitual Criminals Act (particularly when contrasted with legislation of other States and when read in the light of the specific provision for a separate appeal against the pronouncement contained in the Appeals Act93). The respondent submitted that the pronouncement under the Habitual Criminals Act was a distinct and severable penal disposition and was so treated by the majority who had therefore correctly given deference to the discretionary content of the decision of the sentencing judge that sustained the pronouncement. In so far as the Court of Criminal Appeal was obliged, once it granted (as it did) leave to appeal from the pronouncement by the sentencing judge, to reconsider for itself the appropriateness of that pronouncement, the respondent argued that such reconsideration had been sufficiently discharged by the majority. In his reasons, before pronouncing the appellate orders, Sully J had set forth the new and additional medical evidence concerning the appellant. He therefore had that evidence in mind when reaching his conclusion94 that the pronouncement that the appellant was an habitual criminal in accordance with the Habitual Criminals Act should be confirmed. 665; Thompson (1999) 73 ALJR 1319; 165 ALR 219; McGarry (2001) 207 CLR 91 Such legislation was considered in Baker v The Queen (2004) 78 ALJR 1483; 210 ALR 1 dealing with the Sentencing Act 1989 (NSW), s 13A; and in Fardon v Attorney-General (Q) (2004) 78 ALJR 1519; 210 ALR 50 considering the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q). 92 Such as the Community Protection Act 1994 (NSW) considered in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 93 s 5E. 94 (2003) 141 A Crim R 56 at 81 [98]. Kirby The respondent also laid emphasis upon the statement in the reasons of Sully J that, the Habitual Criminals Act having been invoked, the sentencing judge had deduced "correctly as I respectfully think" that the statutory preconditions had been established95. It was said that this phrase sufficiently indicated separate and fresh consideration by the majority in the Court of Criminal Appeal of the correctness of the pronouncement under the Habitual Criminals Act in this case. Errors of the appellate approach: For three reasons, I cannot agree with this analysis. Those reasons derive from: (1) the necessary inter-relatedness of the pronouncement made under the Habitual Criminals Act and the sentences imposed on the appellant for the substantive offences96; (2) the requirement of the appellate court, in the circumstances that had arisen, to exercise its own powers under the Appeals Act, freed of the discretionary judgment of the sentencing judge; and (3) the necessity, repeatedly emphasised by this Court in analogous circumstances, for a scrupulous and thorough observance of procedures established by law before orders such as a pronouncement under the Habitual Criminals Act are made. I will explain these considerations in turn. The inter-connectedness of the pronouncement and sentences Justification of appellate orders: In an attempt to demonstrate that the pronouncement that the appellant was an habitual criminal under the Habitual Criminals Act was separate from the sentences for the substantive offences that were held to have miscarried, the respondent emphasised various textual indications that this was so. These included the omission in the 1957 Act of the reference that had previously appeared to the effect that the declaration that a person was an habitual criminal was "part of the sentence of such person"97; the provision in the Habitual Criminals Act reserving the pronouncement to a judge of the Supreme Court or District Court, if a magistrate has imposed the qualifying sentences for the substantive offences98; and the provision of the 95 (2003) 141 A Crim R 56 at 81 [98]. 96 The decision to make the order of preventive imprisonment and to fix a substantive sentence together "form part of a single sentencing decision". See McGarry (2001) 207 CLR 121 at 126 [8]. 97 Habitual Criminals Act 1905 (NSW), s 3(a); cf R v Roberts [1961] SR (NSW) 681 98 Habitual Criminals Act, s 8(2). Kirby Appeals Act separately affording an appeal to the Court of Criminal Appeal by a person pronounced to be an habitual criminal under the Habitual Criminals Act99. These provisions and the distinct character of the pronouncement order can be acknowledged. However, such considerations do not disjoin the pronouncement under the Habitual Criminals Act from the punishment of the offender for the substantive offences. It could scarcely be so, given that it is the one person who stands for sentence and in respect of whom those with the responsibility of imposing punishment proper to the circumstances must act, keeping in mind the way the separate punishments inter-relate as a totality. In fact, Sully J was conscious of that inter-relationship100. He showed this in the manner in which (and purposes for which) he adjusted the additional sentence of imprisonment imposed under the Habitual Criminals Act. It would be a serious mistake to derive from the legislative history of that Act and its language any conclusion that the pronouncement under the Habitual Criminals Act, and the additional sentence that will follow it, were divorced from the substantive sentences. The orders evidenced error: There are express textual reinforcements for this conclusion. Most importantly, the pronouncement under the Habitual Criminals Act is to be made "in addition to passing sentence upon such person for the offence of which the person is so convicted"101. Moreover, where the pronouncement is made, the judge is thereupon empowered to "pass a further sentence upon the person in accordance with the provisions of section 6"102. Under that section103 any sentence of imprisonment being served by such a person "shall be served concurrently with the sentence imposed pursuant to the [Habitual Criminals Act]". The statutory requirement of concurrence denies any suggestion that the pronouncement and the sentence under the Habitual Criminals Act and the sentences for the substantive offences are disconnected. This conclusion is still further reinforced by the concession, properly made by the respondent, that, in the event that an appeal against the conviction for the substantive offences were to succeed, the pronouncement under the 99 Appeals Act, s 5E. The provisions of the Western Australian law considered in McGarry are similar. See McGarry (2001) 207 CLR 121 at 124-126 [4], [7], [8]. They provide for a separate appeal against the determination. 100 (2003) 141 A Crim R 56 at 82 [101]. 101 Habitual Criminals Act, s 4(1) (emphasis added). 102 Habitual Criminals Act, s 4(1) (emphasis added). 103 Habitual Criminals Act, s 6(2) (emphasis added). Kirby (and Habitual Criminals Act that pronouncement) could not stand. They would have to be quashed. This would be so irrespective of whether the prisoner had appealed separately against the pronouncement under the Habitual Criminals Act, pursuant to the provisions in that respect made by s 5E of the Appeals Act. the sentence passed pursuant It follows that, in so far as the majority in the Court of Criminal Appeal treated the pronouncement under the Habitual Criminals Act as wholly separate from the findings of error affecting both the sentences for the substantive offences committed by the appellant and the sentence that followed the pronouncement under the Habitual Criminals Act, they erred. The pronouncement under the Habitual Criminals Act could not be treated as divorced from the errors earlier found by the Court of Criminal Appeal. When those errors were identified, they afforded a reason obliging the discharge of the pronouncement by the appellate court and the fresh reconsideration by that court ab initio of whether such a pronouncement should, or should not, be made. It may be that Sully J recognised this, to some extent, because the majority granted leave to the appellant to appeal against the pronouncement under the Habitual Criminals Act. However, an error then occurred in disposing of the appeal pursuant to such leave by reference to the discretion of the sentencing judge. The appellate court's exercise of its own powers Erroneous approach of deference: Once errors of sentencing were found (as they were) in the "concurrent" sentences for the substantive offences committed by the appellant and under the Habitual Criminals Act, the orthodox application of House v The King104 obliged the majority of the Court of Criminal Appeal to appreciate that the original exercise of discretionary powers had miscarried. In respect of the substantive offences, the judge had "act[ed] upon a wrong principle" in the treatment of the appellant's plea of guilty. As well, in considering the pronouncement under the Habitual Criminals Act and the concurrent sentence under that Act, the sentencing judge had "not take[n] into account some material consideration". In fixing the additional concurrent sentence at the maximum allowed by the Habitual Criminals Act, the sentencing judge had reached a conclusion "upon the facts [that was] unreasonable or plainly unjust". Moreover, he did not have available to him the additional "fresh" or "new" evidence tendered to the Court of Criminal Appeal suggesting a diagnosis, for the first time, of a recognised mental illness. 104 (1936) 55 CLR 499 at 504-505. Kirby In such circumstances, it was, with respect, erroneous for the majority of the Court of Criminal Appeal to pay deference, as they did, to the discretion of the sentencing judge. That discretionary decision had been shown to be legally flawed. This being so, unless it could be sustained by reference to other and different matters of consideration available to the appellate court, that court's duty was clear. It was to set aside the order and either resentence the appellant for itself, including in respect of the pronouncement, or remit the sentencing to the District Court to be carried out afresh. In McGarry, this Court said105: "[I]f an appellate court concludes that the sentencing judge's discretion miscarried in fixing the nominal term of imprisonment, the whole of the sentence imposed by the sentencing judge, including the order for indefinite imprisonment, should be set aside". The legislation in that case is, it is true, different in some respects from the Habitual Criminals Act. However, the fundamental principle is the same. Separate and independent powers: In deciding the proper course in the circumstances, the material considerations for the exercise of the powers of the Court of Criminal Appeal were not the discretion of the sentencing judge and its exercise by him but the type of considerations that Buddin J identified in his reasons for the order of remitter106. By allowing themselves to be diverted by the reference to the discretionary character of the order of pronouncement instead of addressing the considerations presented by the circumstances of necessary resentencing, the majority in the Court of Criminal Appeal erred in the exercise of their own powers. In the language of House v The King, they allowed "extraneous or irrelevant matters to guide or affect [them]"107. The necessity for scrupulously thorough procedures The rule of scrupulous care: In so far as there is any doubt at all about the foregoing, it should be resolved in this appeal in a way consistent with the unbroken authority of this Court on the approach to be taken to legislation such as the Habitual Criminals Act. In White, in 1968 this Court unanimously stressed the confinement of orders under legislation such as the Habitual Criminals Act to cases really requiring them108. It emphasised the substantial content of the discretionary 105 (2001) 207 CLR 121 at 126 [9]. 106 See above these reasons at [51]. 107 (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ. 108 (1968) 122 CLR 467 at 472, 478. See also R v Riley [1973] 2 NSWLR 107. Kirby power to make such orders and hence the importance of making them only where a consideration of all the circumstances warranted it. In relation to somewhat different legislation, but also providing for preventive detention, this Court has repeatedly stated that the powers conferred "should be confined to very exceptional cases where the exercise of the power is demonstrably necessary"109. In Lowndes v The Queen110, the Court unanimously affirmed the approach of Hayne JA in the Court of Appeal of Victoria in R v Moffatt111 to the effect that, the power being exceptional, the exercise of the power could only be warranted by exceptional circumstances. This was also the approach taken in McGarry112. It led the majority of this Court in that case to insist that full details of the offender's past conduct should be provided to the sentencing judge under conditions that afforded the person affected a proper opportunity to meet the prosecution's case113. That did not happen in the present appellant's case. The respondent argued that these earlier cases were distinguishable. It is true that the Habitual Criminals Act and the legislation considered in the authorities just mentioned, other than White, are different. The Habitual Criminals Act does not provide for indefinite detention. It provides for concurrent and not consecutive sentences. It is enlivened by different considerations. However, what is common is the exceptional addition to the punishment normal to proved offences; the consequent risk of disproportion between the immediate crime and its punishment; and the added punishment "for the purpose of extending the protection of society from the recidivism of the offender"114. The foregoing are the considerations that led in Chester v The Queen, Thompson v The Queen115, Lowndes and McGarry to this Court's insistence upon 109 Chester (1988) 165 CLR 611 at 618. 110 (1999) 195 CLR 665 at 670-671 [11]. 111 [1998] 2 VR 229 at 255. 112 (2001) 207 CLR 121 at 132 [29], [31], 141-144 [60]-[67]. 113 (2001) 207 CLR 121 at 132 [30]. 114 Chester (1988) 165 CLR 611 at 618 citing Veen v The Queen (1979) 143 CLR 458 at 467, 468, 482-483, 495; Walden v Hensler (1987) 163 CLR 561; Veen v The Queen [No 2] (1988) 164 CLR 465 at 472-474, 485-486. 115 (1999) 73 ALJR 1319 at 1319-1320 [2], 1322-1323 [18]; 165 ALR 219 at 220, 224. Kirby serious, individual and scrupulous attention by the judiciary in every case where such exceptional legislation is invoked. Those considerations led me in Thompson116 to say: "Where there was any possibility that an order of indefinite imprisonment might be made, it was essential that the procedures observed should be regular and scrupulously thorough and that the materials, including the pre-sentence reports, should be as adequate and complete as fairness to the prisoner required." In a sense, the importance of basing orders under the Habitual Criminals Act upon up-to-date and complete materials concerning the prisoner, the subject of an application for a pronouncement under that Act, is reflected in the provisions of s 9 of the Act. That section requires that, before sentencing any person under the provisions of the Habitual Criminals Act, a judge "shall consider any report in respect of such person that may be obtained by such judge from the Adult Probation Service". Inadequacy of original materials: When regard is had to the materials that were placed before the sentencing judge, before the pronouncement that the appellant was an habitual criminal in accordance with the Habitual Criminals Act, their inadequacy is immediately apparent. There was no pre-sentence report at all as envisaged by the statute. All but one of the medical reports predated 1996. The more recent psychologist's report, which was at least included in the proceedings under the Habitual Criminals Act (although omitted in the earlier sentencing proceedings), was incomplete when regard was had to the later reports, including of Dr Allnutt, that suggested diagnosis of an identifiable mental illness. These new reports, which were available to the Court of Criminal Appeal, cast serious doubt on the adequacy and sufficiency of the materials placed before the sentencing judge. The sentencing judge expressed the opinion, on the basis of the reports tendered to him, that the "prisoner does not suffer from a mental illness". This was a conclusion that he repeated, indicating the importance that he attached to that evidentiary consideration. The unsatisfactory character of the original proceedings, so important for the liberty of the appellant, is also demonstrated by the complete absence of evidence on the appellant's own behalf. The only explanation for this appeared in the reference to concern that any delay would increase the appellant's anxiety and suicidal feelings117. The affidavits of the appellant in the Court of Criminal the appropriateness of a Appeal were important for consideration of 116 (1999) 73 ALJR 1319 at 1322-1323 [18]; 165 ALR 219 at 224 (footnote omitted). 117 (2003) 141 A Crim R 56 at 90 [122]. Kirby pronouncement under the Habitual Criminals Act. They included reference to the strict custodial conditions in which the appellant was kept; the provision of continuous medication; and the effect of the latter namely that it "calms me down and stops me hearing voices. I feel better than I did before."118 Such evidence, if accepted, could warrant a conclusion that the circumstances of the appellant had changed, so long as he was medically supervised and maintained his medication119. The excuse for the defects in the materials before the sentencing judge, whilst understandable, does not justify the even greater anxiety and the sense of serious injustice as is caused by such an inadequate presentation of the case under the Habitual Criminals Act. In these circumstances, the majority of the Court of Criminal Appeal erred, in light of the materials before them, in concluding that discretionary considerations stood in the way of their reopening the pronouncement under the Habitual Criminals Act and considering afresh whether such pronouncement should be made. With all respect to everyone involved at first instance, the proceedings, and the materials in them, left much to be desired. No doubt that was because of their novelty. But the outcome was seriously flawed. It had draconian potential for the appellant, now and in the future. The only proper solution was one of reconsideration ab initio. This the majority failed to order because of their erroneous belief that the discretionary character of the original disposition presented an obstacle to the discharge of their function in that regard. There was no such obstacle. The inter-related character of the concurrent sentences means that errors had been shown that obliged the Court of Criminal Appeal to reconsider the entire sentencing of the appellant for itself. It was required to do so, in the circumstances, with the benefit of the new or fresh evidence. That evidence was significant. It was corrective of the inadequacies of the proceedings at first instance. Preventive imprisonment and discrimination: Preventive detention laws, triggered by previous convictions, have a tendency to fall more heavily in their operation upon minority and indigenous populations. This has proved true in the United States of America as in Australia and doubtless elsewhere120. The 118 (2003) 141 A Crim R 56 at 72 [68]. 119 R v Griffin (1969) 90 WN (Pt 1) (NSW) 548 at 550, 551. 120 Neal and Bagaric, "After Three Strikes – The Continued Discriminatory Impact of the Sentencing System Against Indigenous Australians: Suggested Reform", (2002) 26 Criminal Law Journal 279 at 284-285; Stolzenberg and D'Alessio, "'Three Strikes and You're Out': The Impact of California's New Mandatory Sentencing Law on Serious Crime Rates", (1997) 43 Crime and Delinquency 457. Kirby discriminatory impact of the preventive detention sentencing laws upon Australian Aboriginals has been called to notice121. This Court, and the Court of Criminal Appeal, should ensure that no such defect is left unrepaired where, as here, the correction is available and is required by resentencing that complies with the law122. As to the contention that the majority did give separate and explicit consideration to the pronouncement under the Habitual Criminals Act, there is ambiguity on the face of the majority's reasons that leaves me in serious doubt123. It is true that Sully J observed that the sentencing judge "correctly as I respectfully think" had held that the statutory preconditions had been established. However, before the appellate court proceeded to make the pronouncement and to impose the additional sentence that followed, important considerations of judgment and discretion had to be weighed by that court. They are not reflected in the review of the pronouncement by the majority of the Court of Criminal Appeal. The references to House v The King and to the discretion of the primary judge were misplaced once the sentences for the substantive offences were quashed, fresh evidence was received and considered on appeal and the matter fell for new determination by the Court of Criminal Appeal itself. Especially was that so because the sentencing judge's opinions, as could be seen, were based on incomplete, out-of-date and wholly inadequate materials. It is possible that, upon a reconsideration of the application under the Habitual Criminals Act, with the provision and examination of up-to-date psychiatric and psychological reports and such "subjective" materials as could be provided for the appellant, the result will be the same. The final order favoured by the majority in the Court of Criminal Appeal significantly reduced the concurrent sentence to be imposed under the Habitual Criminals Act, such that it 121 United Nations Committee on the Elimination of Racial Discrimination, Concluding Observations by the Committee on the Elimination of Racial Discrimination: Australia, CERD/C/304/Add.101 (19 April 2000) at [16]. See Neal and Bagaric, "After Three Strikes – The Continued Discriminatory Impact of the Sentencing System Against Indigenous Australians: Suggested Reform", (2002) 26 Criminal Law Journal 279 at 283. 122 International, regional and national principles of human rights law also impose restrictions on the imposition of additional sentences of preventive detention to ensure proportionality to the circumstances of the case: see Winterwerp v The Netherlands (1979) 2 EHRR 387; Johnson v United Kingdom (1997) 27 EHRR 296; R v Swain [1991] 1 SCR 933; R v Governor of Brockhill Prison; Ex parte Evans (No 2) [2001] 2 AC 19 at 38. 123 (2003) 141 A Crim R 56 at 81 [97]-[99]; cf reasons of Gleeson CJ at [11]-[13]. Kirby the grave consequences for involved no more than the addition of one year's imprisonment to the total revised sentence imposed on resentencing for the substantive offences. However, where there is doubt about the regularity and adequacy of the procedures involved, the pronouncement and additional sentence under the Habitual Criminals Act require that the procedures be carried out again. The attention of the judicial mind will then be given specifically and manifestly to the materials said to justify such an exceptional order. No other approach is consistent with the authority of this Court and with legal principle. the present and future of Conclusion: fresh resentencing: The observance of proper procedures, on clearly adequate and up-to-date materials, is the standard that this Court has demanded in the past. The Habitual Criminals Act itself suggests the need for a pre-sentence report in such cases and this the sentencing judge did not receive. Nor did he have any evidence from the appellant himself who stood at risk of a most serious order having exceptional consequences for liberty. This Court should not depart from its consistent requirement of scrupulous care in cases of such a kind. No lesser standard should be applied. The "wretched" features of this case The prisoner's "wretched plight": It follows from the foregoing that I disagree with the reasons of the majority. I disagree with Gleeson CJ124 because, once it is accepted that the pronouncement under the Habitual Criminals Act miscarried, the making of consequential orders was wholly the responsibility of the appellate court, exercising its own powers. It had to reach its own conclusion on the new materials, not evaluate whether the primary judge, on the imperfect materials before him, was right or wrong in his decision. References to the decision of the sentencing judge on this issue show that the majority in the Court of Criminal Appeal took into account a consideration irrelevant to the proper discharge of their function. That error demands correction. I disagree with Callinan and Heydon JJ that this Court should refuse to answer the questions presented by the ground upon which special leave was granted125. I do not regard that course as justified. Reference by their Honours to the appellant's "wretched plight"126 does not, with respect, find reflection in a like sensitivity to the unsatisfactory way in which the appellant's original sentencing occurred. It had its own "wretched" features, as I have shown. 124 Reasons of Gleeson CJ at [11]-[13]. 125 Reasons of Callinan and Heydon JJ at [111]. 126 Reasons of Callinan and Heydon JJ at [112]. Kirby It is abundantly clear that the Court of Criminal Appeal received fresh evidence in the appellate hearing. The up-to-date psychiatric reports were not before the sentencing judge deciding the application under the Habitual Criminals Act. But they were referred to by Sully J. No formalistic point was raised against the mention of those materials, viz that they were irrelevant to the appellate issues having regard to the grounds filed. It is clear that the experienced counsel appearing in the appeal relied on them to support the appeal, and unsurprisingly so127. The concession by counsel in the Court of Criminal Appeal that the sentencing judge was exercising discretionary powers was rightly made128. No one doubts that the pronouncement invokes the exercise of discretionary powers. But as I have demonstrated, that fact was not determinative, as the majority thought. To deny a "wretched" prisoner the full protection of the law in respect of the imposition of serious additional punishment, important for his liberty, on the ground that no application was made to amend his grounds of appeal in this Court129 is unacceptably formalistic. In my view, no such amendment is required. The issue argued for the appellant is wholly within the ground upon which leave was granted. Formalistic impediments to liberty: Moreover, as this Court held in Gipp v The Queen130 and Crampton v The Queen131, such formal points do not succeed when a matter affecting liberty is still current within the Judicature and pressed in argument. I remind myself that this appeal does not involve a civil claim concerned with civil remedies. It is one that involves the liberty of a human being. This Court has hitherto been vigilant against error in such cases. This is not a time to falter. It cannot be suggested that the point argued in this Court was withheld or down-played in the Court of Criminal Appeal for tactical reasons such as might warrant rebuffing the argument now if it has merit132, as in my view it does. 127 Given ground 9 and the contents of the new evidence; cf reasons of Callinan and 128 Reasons of Callinan and Heydon JJ at [116]. 129 Reasons of Callinan and Heydon JJ at [119]. 130 (1998) 194 CLR 106 at 116 [23]-[24], 153-154 [134]-[136], 161 [164]-[165]. 131 (2000) 206 CLR 161 at 171-172 [12]-[14], 184 [52], 185 [57], 206-207 [122], 216- 132 Gipp (1998) 194 CLR 106 at 161 [165] per Callinan J. Kirby Correctly, the respondent, representing the Crown, did not press such a formal objection upon this Court. If it was ever raised, I would reject it. If it was not, it would be unworthy for the Court to allow it to govern the outcome of the appeal. Although it is inherent in my reasons that I find error on the part of the majority in the Court of Criminal Appeal, I agree that their Honours were conscious that mistakes had happened in the original sentencing process and sought to approach the appeal with proper sensitivity. We are not here to defend that Court from epithets deployed in appellate rhetoric. It can be fully accepted that that Court's functions are difficult and onerous. However, this Court's function is to uphold the law, to give effect to the relevant legislation, to apply settled legal doctrine and to adhere to the Court's own consistent approach in such cases. In the ultimate, that is all that counsel for the "wretched" appellant sought, and correctly so. The appellant, no less than any other person, is entitled to the benefit of such arguments. The result was not inevitable: Nor can it be said that the pronouncement made under the Habitual Criminals Act should be upheld, despite the errors at first instance and mistakes on appeal, because such an order was inevitable and because there is no chance of a different outcome133. No notice of contention was filed for the respondent in this Court asserting that argument. Nor was it advanced at the hearing of the appeal. The more serious the consequence, now and in the future, of the pronouncement under the Habitual Criminals Act, the more important is it that it should be made by the judges only after proper process, based on proper materials, reviewed on appeal with a proper application of the appellate court's powers. That was not done in this case. No formal reasons should be permitted to withhold from the appellant the remedies that would normally follow. Many reasons of legal authority, principle and policy uphold the right of the appellant to relief and resentencing. Orders The appeal should be allowed. Orders 2, 3, 4 and 5 of the orders made by the Court of Criminal Appeal of New South Wales in respect of the proceedings against the appellant under the Habitual Criminals Act 1957 (NSW) should be set aside. In lieu thereof, the proceedings should be remitted to that Court for determination consistently with these reasons. 133 Reasons of Callinan and Heydon JJ at [129]; cf reasons of Gleeson CJ at [13]. Background Counsel for the appellant described his client as a 45 year old Aboriginal man who had spent almost his entire adult life in incarceration; who as an adult had spent no more than two years out of gaol in any one period; who was socially and economically deprived; and who was diagnosed at various times with borderline retardation, mental and personality disorders, and eventually with mental illness. He was charged with two offences contrary to s 562AB of the Crimes Act 1900 (NSW), namely stalking and intimidation ("the Crimes Act offences"). The conduct alleged involved making repeated and alarming proposals of a sexual relationship to a woman scarcely known to the appellant. These experiences must have been very distressing for her: she gave extensive evidence about how they had worried, shocked and scared her134. The appellant was also charged with two offences contrary to the Summary Offences Act 1988 (NSW) ("the summary offences"). One involved offensive language, and was related to the Crimes Act offences. The other concerned an unrelated matter to do with custody of a knife in a public place. The appellant pleaded guilty in the Local Court to the Crimes Act offences and was committed for sentence in the District Court pursuant to s 51A of the Justices Act 1902 (NSW), as it then was135. Sentencing proceedings relating to the Crimes Act offences were conducted before Freeman DCJ on 20 February 2001. The appellant also admitted guilt of the summary offences and Freeman DCJ took them into account on the sentence for the stalking offence. In relation to the offence of intimidation, the appellant was sentenced to four years imprisonment, with a non-parole period of three years. On the stalking offence, taking into account the summary offences, Freeman DCJ sentenced the appellant to the maximum sentence of five years, with a non-parole period of three years, cumulative on the non-parole period of the sentence for intimidation. The effective overall sentence was thus one of eight years with a non-parole period of six years. 134 R v Strong (2003) 141 A Crim R 56 at 63-64 [29]-[34]. 135 The Justices Act was repealed by the Justices Legislation Repeal and Amendment Act 2001 (NSW), with effect from 7 July 2003. On 29 June, in response to a Crown application under the Habitual Criminals Act 1957 (NSW) ("the Act"), Freeman DCJ pronounced the appellant to be an habitual criminal, and sentenced him to 14 years imprisonment, the maximum possible. This sentence was to be served concurrently with the sentences for the substantive offences. An appeal by the appellant to the Court of Criminal Appeal against the sentences for the substantive offences succeeded136. The majority (Sully and Dunford JJ; Buddin J dissenting) re-sentenced the appellant to three years imprisonment for the offence of intimidation. On the offence of stalking, taking the summary offences into account, they sentenced him to four and a half years imprisonment with a non-parole period of two and a half years imprisonment. Since the first sentence was to date from 4 October 2000 and the second to commence on 4 April 2003, the effective overall sentence for the substantive offences was seven years with a non-parole period of five years. The majority granted leave to appeal against the pronouncement of the appellant as an habitual criminal, but dismissed the appeal. However, they also granted leave to appeal against the further sentence, upheld the appeal, quashed the sentence, and re- sentenced the appellant to eight years imprisonment137. A curious aspect of the proceedings It is convenient at this point to identify a curious aspect of the proceedings. Freeman DCJ signed a certificate stating that he had taken the offensive language charge into account on the sentence for the stalking offence, which appears at the end of the "Form 1" required at that time by s 32 of the Crimes (Sentencing Procedure) Act 1999 (NSW) and reg 5(1) of the Crimes (Sentencing Procedure) Regulation 2000 (NSW). According to the certificate, the offence charged was that of offensive language contrary to s 4(1)(b) of the Summary Offences Act 1988 (NSW). At the date of the alleged offence, 3 September 2000, there was no s 4(1)(b). In its 1988 form, the Summary Offences Act did contain a s 4(1)(b), and s 4(1) provided: 136 R v Strong (2003) 141 A Crim R 56. 137 The appellant cannot be released before the expiration of the further sentence under the Act − ie the full period of eight years − as no non-parole period is available in respect of that sentence: s 54 of the Crimes (Sentencing Procedure) Act 1999 (NSW). Hence the reduction in the non-parole period in relation to the sentences for the substantive offences had no effect on the overall time the appellant was required to spend in prison, but may be relevant to any exercise of the Governor's discretion under s 7 of the Act to release the appellant on a licence. "A person shall not − (a) conduct himself or herself in an offensive manner in or near, or within view or hearing from, a public place or a school; or (b) use offensive language in or near, or within hearing from, a public place or a school." The maximum penalty was six penalty units or imprisonment for three months. Section 4 was repealed by the Summary Offences (Amendment) Act 1993 (NSW), with effect from 23 January 1994. Offensive conduct, the subject of the former s 4(1)(a), was dealt with in a new s 4, which relevantly provided: "(1) A person must not conduct himself or herself in an offensive manner in or near, or within view or hearing from, a public place or a school. Maximum penalty: 6 penalty units or imprisonment for 3 months. (2) A person does not conduct himself or herself in an offensive manner as referred to in subsection (1) merely by using offensive language." Offensive language, the subject of the former s 4(1)(b), was dealt with in a new s 4A. Section 4A(1) provided: "A person must not use offensive language in or near, or within hearing from, a public place or a school. Maximum penalty: 6 penalty units." It can be seen that the new s 4A dealt with offensive language in a different manner from the old s 4 − the sanction of three months imprisonment was repealed. Although the charge sheet is silent on the point, the apparent inference which flows from the Form 1 is that Freeman DCJ took into account an offence, punishable by imprisonment, which was not known to the law, rather than a different offence, not punishable by imprisonment, which was known to the law. That inference is supported by a Police Form P139B, by the Court of Criminal Appeal's description of the offence138, and by the appellant's written submissions to this Court. If that inference is correct, the proceedings below were unsatisfactory in that respect. However, neither party drew attention to the point, and, in particular, the appellant did not rely on it. 138 R v Strong (2003) 141 A Crim R 56 at 58 [4]. The ground of appeal Special leave to appeal was granted on the following ground: "The majority of the Court of Criminal Appeal (the Court) erred in approaching the appeal against the pronouncement and sentence under [the Act], upon the basis that the Court, applying the principles identified in House v The King139, was constrained by the decision of the primary judge, whereas the Court, having upheld the appeal against sentence [for the substantive offences], was obliged to address itself, afresh, to the questions arising for determination under s 4 of the Act." That ground raises questions as to the construction of ss 4 and 6 of the Act. In our opinion it is not desirable to answer those questions, because the appeal can be disposed of without doing so. The grounds of appeal in the Court of Criminal Appeal In the Court of Criminal Appeal the appellant was represented by senior and junior counsel experienced in criminal law. In relation to the appeals against the sentences, those counsel advanced precisely drafted and specific grounds of appeal – six for the sentences relating to the substantive offences, nine for the sentence under the Act. Sully J (with whom Dunford J agreed) dealt with them seriatim in a judgment which was not only lengthy, but, with respect, careful and sensitive to the appellant's wretched plight. It is necessary to set out only three of the grounds relied on in relation to the Act: "6. His Honour erred in the exercise of his discretion to make a pronouncement, and in passing sentence under [the Act], by failing to take into account the [appellant's] subjective circumstances. 8. The sentence passed under [the Act] was excessive in all the circumstances. 9. On the basis of the fresh evidence as to mental disorder, the pronouncement of the [appellant] as an habitual criminal and the consequent sentence were not warranted in law." 139 (1936) 55 CLR 499. The "fresh evidence" referred to comprised evidence not available to Freeman DCJ, being two reports of one specialist forensic psychiatrist, and one report of another who had been the appellant's treating psychiatrist. The taking of an additional point In the course of dealing with the appeal against the sentences for the substantive offences, Sully J quoted some passages from, and analysed, the three fresh reports. In rejecting par 6 of the grounds of appeal in relation to the pronouncement and sentence under the Act, Sully J did not deal with the fresh evidence, but only with expert material available to Freeman DCJ, particularly a psychological assessment that had been sought by the appellant's then legal advisers. This is not surprising, since ground 6 was limited to material available When he came to deal with grounds 8 and 9, Sully J said (emphasis added)140: "Grounds 8 and 9 are, in my opinion, the grounds upon which any appeal against [the Act] pronouncement and sentence either stands or falls. As to those grounds, the correct starting point is the proposition that his Honour, in pronouncing and sentencing pursuant to [the Act], was exercising discretionary powers. The contrary was not contended at the hearing before this Court. That being so, it is trite that this Court will not interfere with the primary Judge's exercise of those discretions unless it is plain that they have miscarried; the relevant guiding principles being set out … in House v The King … I do not believe that there is any ambiguity in the learned primary His Honour was convinced, plainly, that the Judge's reasoning. [appellant] presented as a very dangerous man, whose antecedents suggested that he was a recidivist with, at best, very slender prospects of future rehabilitation; and, as such, a present and likely future threat to women. His Honour deduced, correctly as I respectfully think, that the Act having been the statutory pre-conditions had been established; and there was, thereupon, every good reason from the invoked, 140 R v Strong (2003) 141 A Crim R 56 at 81-82 [95]-[100]. viewpoint of the protection of the public, to pronounce and sentence accordingly. I am wholly unpersuaded that his Honour's discretion to pronounce, miscarried. The more difficult question is whether the sentence which his Honour thereupon imposed was, to borrow from House '… upon the facts … unreasonable or plainly unjust' so as to justify appellate intervention '… on the ground that a substantial wrong has in fact occurred'. I am reluctant to differ from as experienced a trial Judge in criminal cases as his Honour. I have to say, however, that I cannot see how, allowing for every proper apprehension about this [appellant], it was a sound exercise of the relevant sentencing discretion to impose the statutory maximum penalty in a range as broad as that of 5 to 14 years. I think that there has been an ultimate miscarriage, and that this Court must do what it properly can do by way of correction." Sully J then proceeded to explain how he arrived at the orders he proposed in substitution for those of Freeman DCJ. In the quoted passages, Sully J does not explicitly consider the "fresh evidence as to mental disorder" referred to in ground 9. Counsel for the appellant, in the course of argument before this Court, said that the appellant's "only point" was that expressed in the ground of appeal on which special leave was granted. But he nonetheless drifted into complaint about this. That complaint should not be treated as a reason for allowing the present appeal, for two reasons. First, it formed no part of the ground of appeal in respect of which special leave to appeal was granted. No application to amend was made. Secondly, the following circumstances must be borne in mind. The appeals were argued before the Court of Criminal Appeal on two days, 5 December 2002 and 14 March 2003. On the latter day, judgment was reserved, and subsequently delivered on 8 May 2003. The third of the three fresh reports was dated 11 March 2003 – three days before the resumed hearing. The Crown did not oppose the reception of the "fresh evidence" on the application for leave to appeal against the pronouncement and the imposition of a sentence of 14 years imprisonment141. The reports were considered and carefully analysed in relation to the appellant's successful appeal against the sentences for the substantive offences. Although Sully J made no reference to the "fresh evidence" in 141 R v Strong (2003) 141 A Crim R 56 at 92 [131]. considering ground 9, it is unthinkable that it was not in his mind, and was not taken into account, in that regard. Was the ground of appeal now relied on put to the Court of Criminal Appeal? When complaint is made of the handling by intermediate courts of appeal (and trial courts) of proceedings before them, it is imperative to keep steadily in mind what it was that those courts were asked to determine. It is unfair for appellants to criticise them for failing to deal with what they were not asked to deal with. Subject at least to the need to prevent possible miscarriages of justice in criminal cases, appellants who make criticisms of that kind face serious obstacles in having those criticisms accepted. The ground of appeal relied on in this Court does not appear in the grounds of appeal relied on in relation to the Act in the Court of Criminal Appeal. As appears from the part of Sully J's reasons for judgment emphasised in the quotation set out above, his Honour was apparently not conscious of any argument that, if the sentences for the substantive offences were to be set aside, the Court of Criminal Appeal should proceed to reconsider the pronouncement and sentence under the Act afresh, without any need to identify an error in Freeman DCJ's discretionary judgment on that subject. Although the appellant was represented in this Court by the same junior counsel as appeared in the Court of Criminal Appeal, different senior counsel appeared. He was not able to assure the Court that the ground now relied on had been put to the Court of Criminal Appeal. Further, there is no trace in Buddin J's reasons for dissenting from the majority of the Court of Criminal Appeal that the ground relied on was put to that Court. In these circumstances, it is plain that the ground now being relied on is being raised for the first time in this Court. That background should be borne in mind while considering the appellant's argument to this Court that the Court of Criminal Appeal, by not acting on the legal position reflected in the ground of appeal relied on in this Court, "utterly misconstrued the position", took up a stand having only a "flawed … justification", and "very clearly and very openly disclosed … reasoning [which] demonstrates error." The argument was that although the Court of Criminal Appeal altered the further sentence passed consequent on the pronouncement, it failed to consider for itself whether the pronouncement should be made: "they did get it right in part, but by an accident, as it were." Counsel spoke of a "grievance we have about the way in which we were dealt with in the Court of Criminal Appeal." The grievance was that: "we have been deprived of an opportunity to have persuaded the Bench that there should not have been a pronouncement." Another way in which the appellant's position was put in the course of oral debate was that the Court of Criminal Appeal had "telescope[d] the process", "surrendered the exercise of … discretion" to pronounce the appellant an habitual offender to the sentencing judge because it "had donned these limiting spectacles", had "put the blinkers on", had "put weights in the saddle that should not have been there", and was wrongly "looking down a lens which has a filter". However, there is no point in this Court considering the ground of appeal which was belatedly relied on unless the failure of the Court of Criminal Appeal to do so can be said to have created the risk of a miscarriage of justice. Even if the Act is to be construed as the appellant contends, and even if the Court of Criminal Appeal ought to have proceeded in accordance with that construction, there is no chance that the outcome would have been different. The appellant says that what the Court of Criminal Appeal should have done, once it decided to interfere with the sentence for the substantive offences, was to consider for itself whether to make a pronouncement and sentence pursuant to s 4 of the Act. What it actually did was to reject the contention that there was any error in the making of the pronouncement, either in the light of the materials before Freeman DCJ or in the light of the fresh evidence, while finding error in the sentence imposed. The considerations which led it to those conclusions included the length and seriousness of the appellant's record, which revealed him "to be a repeat offender in connection with sex-related offences"; the serious nature of the Crimes Act offences, with their impact on the victim; the need to protect society against the appellant; the seriousness of the appellant's mental problems "as a person whose real psychiatric problems are superimposed upon a background of economic and social disadvantage, and upon a history of drug abuse"; and the fact that, in the view of the sentencing judge, a view plainly shared by the majority of the Court of Criminal Appeal, the appellant was "a very dangerous man, whose antecedents suggested that he was a recidivist with, at best, very slender prospects of future rehabilitation; and, as such, a present and likely future threat to women."142 There was ample evidence to support these points. Counsel for the appellant accepted that if the appeal succeeded and a process of re-sentencing proceeded according to the law as he submitted it to be, "it may be [that] the same outcome in substance will be achieved". Had the Court of Criminal Appeal proceeded in the manner urged, that possibility must 142 R v Strong (2003) 141 A Crim R 56 at 63-65 [29]-[36], 67 [47], 70-72 [63]-[68] and 81 [98]. be regarded as a certainty. There is no reason to conclude that those considerations would have led it to any other conclusion if, instead of proceeding in the way it did, it had proceeded in the way advocated by the appellant. The majority of the Court of Criminal Appeal were "wholly unpersuaded that [the sentencing judge's] discretion to pronounce … miscarried"143. While there may be cases of the same general kind as the present in which the point of construction relied on by the appellant may have led to a different result in the its particular Court of Criminal Appeal, circumstances, is not one of them. taking account of this case, For these reasons, no risk of a miscarriage of justice existed in consequence of the Court of Criminal Appeal having proceeded as it did. There is therefore no point in considering what the correct construction of the Act is, since whatever it is, it could not improve the position of the appellant. Order The appeal should be dismissed. 143 R v Strong (2003) 141 A Crim R 56 at 81 [99].

HIGH COURT OF AUSTRALIA ETA067 AND APPELLANT THE REPUBLIC OF NAURU RESPONDENT ETA067 v The Republic of Nauru [2018] HCA 46 17 October 2018 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Nauru Representation G O'L Reynolds SC with J F Gormly and D P Hume for the appellant (instructed by Allens) G R Kennett SC with A Aleksov for the respondent (instructed by Republic of Nauru) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS ETA067 v The Republic of Nauru Immigration – Nauru – Refugees – Application for refugee status – Where Secretary of Department of Justice and Border Control determined appellant not refugee – Where Refugee Status Review Tribunal affirmed Secretary's determination – Whether Tribunal failed to act according to principles of natural justice – Whether Tribunal failed to assess evidence provided by appellant in relation to his claim to have a well-founded fear of persecution by reason of his political opinion – Whether Tribunal failed to give appellant an opportunity to comment on evidence concerning membership of political party – Whether Supreme Court of Nauru erred in affirming Tribunal's determination. Words and phrases – "evidence material to assessment", "principles of natural justice", "well-founded fear of persecution". Refugees Convention Act 2012 (Nr), ss 5, 22(b), 40(1). BELL, KEANE AND GORDON JJ. The appellant, a 32 year old male, is a citizen of Bangladesh. Until he left Bangladesh, the appellant had always lived in the same suburb in Dhaka. the Secretary of On 19 December 2013, the appellant arrived in Australia as an unauthorised maritime arrival and, on 24 December 2013, the appellant was transferred to the Republic of Nauru. On 20 March 2014, the appellant applied the Department of Justice and Border Control ("the Secretary") under s 5 of the Refugees Convention Act 2012 (Nr) ("the Refugees Act") to be recognised as a refugee on the basis that he feared harm by reason of his affiliation with the Bangladesh Nationalist Party ("the BNP") and his actual or imputed opposition to the political group the Awami League. The appellant claimed that he had been involved with, and worked for, the BNP from 2004 to 2008 and had been physically harmed in violent clashes between the BNP and the Awami League. The appellant ended his involvement with the BNP in 2008 and claimed that this was because he "didn't have the time to devote to the BNP" and he "wasn't interested in politics at [that] time"; he was not enjoying the work that he was doing, the "anarchy" had become worse, and he had had enough. The appellant claimed that, after he ceased his involvement with the BNP, members of the Awami League started "pressuring" him to join them. The appellant claimed to fear persecution by reason of his political opinion (due to his support for, and involvement with, the BNP) and by reason of his imputed political opinion (as a person opposed to the Awami League). On 13 March 2015, the Secretary determined that the appellant was not recognised as a refugee and was not a person to whom the Republic of Nauru owed complementary protection. Following an application for review of the Secretary's decision, the Refugee Status Review Tribunal ("the Tribunal") conducted an oral hearing and, on 30 September 2015, affirmed the Secretary's decision. The Tribunal found that the appellant had not suffered harm amounting to persecution in the past by reason of his imputed political opinion and was also not satisfied that his fear of persecution, by reason of his political opinion, was well-founded. The Tribunal also considered that even if it were to accept that some harm might befall the appellant on return to Bangladesh, that harm would be "very localised" – confined to the suburb of Dhaka where his home is – and limited to harm threatened by local members or supporters of the Awami League. On 13 November 2017, the Supreme Court of Nauru affirmed the decision of the Tribunal. Bell In this appeal, which is brought as of right1, the appellant advanced two grounds of appeal. The grounds, in substantially similar terms to the grounds the appellant unsuccessfully advanced before the Supreme Court, were that the Court erred in failing to find that: the Tribunal breached s 22(b) of the Refugees Act in that it "ignored and failed to assess relevant evidence provided by the appellant" in relation to assaults by supporters of the Awami League against persons who had refused to join, or attend meetings with, the Awami League ("the Awami League Assault Evidence"); and the Tribunal breached ss 22(b) and 40(1) of the Refugees Act by not giving the appellant an opportunity to ascertain or comment on whether he was ever a formal member of the BNP, and thereby acted contrary to the principles of natural justice. During the hearing, the appellant was granted leave to amend the second ground to include a reference to information from the BNP website to which the Tribunal had regard2 and to which he alleged the Tribunal failed to give him an opportunity to respond. For the reasons that follow, the appeal should be dismissed. Statutory obligations The appellant's grounds centre on an alleged failure of the Tribunal to comply with certain provisions – ss 22(b) and 40(1) – of the Refugees Act. Section 22, in Div 2 of Pt 3 of the Refugees Act, sets out the "[w]ay of operating" for the Tribunal. It provides that the Tribunal is not bound by s 44 of the Appeals Act 1972 (Nr); s 5 of, and Art 1 of the Schedule to, the Nauru (High Court Appeals) Act 1976 (Cth). See also BRF038 v Republic of Nauru (2017) 91 ALJR 1197 at 1203-1204 [35]-[41]; 349 ALR 67 at 73-74; [2017] HCA 44. 2 See [30]-[31] below. Bell technicalities, legal forms or rules of evidence3 and "must act according to the principles of natural justice and the substantial merits of the case"4. Part 4 governs the procedures for merits review by the Tribunal. Section 40, in Div 2 of that Part, relevantly provides: "(1) The Tribunal must invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the determination or decision under review. Subsection (1) does not apply if: the Tribunal considers that it should decide the review in the applicant's favour on the basis of the material before it; or the applicant consents to the Tribunal deciding the review without the applicant appearing before it." (emphasis added) The Awami League Assault Evidence – Ground 1 The appellant contended that the Tribunal breached s 22(b) of the Refugees Act when the Tribunal allegedly "ignored and failed to assess relevant evidence provided by the appellant". That evidence was described in the following terms: "(a) The evidence was of assaults by Awami League supporters against: a particular young man named by the appellant who, like the appellant, had refused to join the Awami League; and others named by the appellant in the Refugee Status Determination interview who had refused to attend Awami League meetings." The appellant contended that this evidence "was relevant to the well foundedness of the appellant's fear that Awami League supporters intended to harm him". The appellant's complaint was that there was no consideration by the s 22(a) of the Refugees Act. s 22(b) of the Refugees Act. Bell Tribunal of whether assaults on others by the Awami League gave rise to the appellant's well-founded fear of persecution. The appellant submitted that if the Awami League Assault Evidence had been considered by the Tribunal, it would have been expressly dealt with in the Tribunal's reasons. The contention should be rejected. The absence of an express reference to evidence in a tribunal's reasons does not necessarily mean that the evidence (or an issue raised by it) was not considered by that tribunal5. That is especially so when regard is had to the content of the obligation to give reasons6, which, here, included referring to the findings on any "material questions of fact" and setting out the evidence on which the findings are based. There was no obligation on the Tribunal to refer in its reasons to every piece of evidence presented to it. Further, there is a distinction7 between an omission indicating that a tribunal did not consider evidence (or an issue raised by it) to be material to an applicant's claims8, and an omission indicating that a tribunal failed to consider a matter that is material: including one that is an essential integer to an applicant's claim9 or that would be dispositive of the review10. In this matter, there was no error on the part of the Tribunal in relation to the Awami League Assault Evidence, and the Supreme Court was correct to reject that complaint. 5 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 605-606 [31]; [2011] HCA 1. See also Minister for Immigration and Border Protection v SZSRS (2014) 309 ALR 67 at 75 [34]. s 34(4) of the Refugees Act. 7 SZGUR (2011) 241 CLR 594 at 605-606 [31]. 8 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 346 [69]; [2001] HCA 30 quoted in SZGUR (2011) 241 CLR 594 at 605-606 [31]. 9 Minister for Immigration and Border Protection v MZYTS (2013) 230 FCR 431 at 10 Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 236 FCR 593 at 604-605 [47]. Bell Tribunal It is common ground that the Tribunal's reasons did not expressly refer to the Awami League Assault Evidence. However, the Tribunal did refer in its decision record to the appellant's evidence concerning his own treatment by the Awami League. In relation to events before the 2008 election, the Tribunal accepted that the appellant had been physically beaten in altercations between BNP supporters and Awami League supporters. In relation to events after the 2008 election, and the cessation of the appellant's involvement with the BNP, the Tribunal acknowledged that there had been many instances of harassment by the Awami League. On the appellant's account, he had been approached and threatened by the Awami League up to 500 times over a period of approximately five years, from early 2009 to the end of However, the Tribunal observed that the appellant had given no evidence of any actual harm he suffered between 2009 and 2013. That being so, the Tribunal put to the appellant that the Awami League clearly did not intend to harm him or they would have done so on one of their many interactions during this period of time. Nonetheless, the appellant maintained that he had developed a "deep-rooted fear" of being harmed. Moreover, the Tribunal accepted that groups who were perceived as being associated with the BNP or the Awami League engaged in antagonistic behaviour towards their political opposites. Indeed, before the Tribunal, the appellant agreed in response to a Tribunal question that when the BNP was in power, groups of young BNP supporters would harass Awami League supporters; that is, "they were like identifiable gangs". Finally, in relation to an alleged attack on the appellant's parents' home after he had left Bangladesh, the Tribunal was not satisfied that the intruders were looking for the appellant or his brother (a member of the BNP), even though the Tribunal accepted that it was plausible that members of the Awami League broke into the homes of known BNP supporters in the wake of the 2014 election. Given those findings, the Tribunal was not satisfied that the appellant had suffered any harm "amounting to persecution at the hands of the Awami League for reason of his imputed political opinion". The Tribunal was also not satisfied that there was any real possibility of persecution of the appellant in the foreseeable future by reason of his political opinion (or imputed political Bell opinion) and, therefore, the Tribunal concluded that his fears were not well-founded. Supreme Court of Nauru The complaint in relation to the alleged failure of the Tribunal to assess the Awami League Assault Evidence was raised by the appellant in the Supreme Court. There, the appellant conceded that the Tribunal had identified that he did not claim to have been physically harmed. Khan ACJ considered the Awami League Assault Evidence and concluded that it was not "central" to or "corroborative" of the appellant's evidence. His Honour therefore found that there was no failure on the part of the Tribunal to discharge its review obligations in relation to that evidence. His Honour was correct to so conclude. Consideration The absence of a reference to the Awami League Assault Evidence in the Tribunal's reasons did not justify an inference that it was not considered. This was not a case where the reasons of the Tribunal were so comprehensive that the omission was indicative of the evidence having been overlooked11. Rather, as the respondent submitted, the absence of any express reference was consistent with the Tribunal having not found the Awami League Assault Evidence to be persuasive as to, let alone material to the assessment of, the likelihood of the appellant suffering harm amounting to persecution. The question for the Tribunal was the risk of persecution of the appellant. The Tribunal was presented with detailed evidence regarding the appellant's own experiences of being confronted by the Awami League. And, as already noted, the Tribunal challenged the aspects of that evidence which it considered did not stand up to scrutiny. The appellant's own evidence was material to the assessment of the well-foundedness of his fear. The Awami League Assault Evidence was not. At best, the Awami League Assault Evidence might have been explanatory of a subjective fear held by the appellant or might have added some plausibility to the appellant's suggestion that he may suffer harm. But in circumstances where the Tribunal was presented with detailed evidence of the appellant's own treatment by the Awami League, including evidence of threats but no actual physical violence, over a five year period, the Awami League Assault Evidence was not central to the determination of the appellant's claims. 11 Cf SZSRS (2014) 309 ALR 67 at 75 [34]-[35]. Bell Any perceived failure of the Tribunal to consider that evidence further did not cause the Tribunal to breach its obligations under s 22(b) to "act according to the principles of natural justice and the substantial merits of the case". For those reasons, Ground 1 should be dismissed. Formal membership of the BNP – Ground 2 The appellant contended, in substance, that the Supreme Court should have found the Tribunal breached ss 22(b) and 40(1) of the Refugees Act by not giving the appellant an opportunity to ascertain or comment on whether he was ever a formal member of the BNP. Specifically, the appellant alleged: "(a) The Tribunal did not give the appellant the opportunity of being heard in that it did not bring to the attention of the appellant or allow him the opportunity to ascertain or comment on an issue the Tribunal found relevant to relocation: That, contrary to the appellant's claim, the appellant was not ever a formal member of the BNP, and because of this (in part) the appellant had no profile within the BNP that would make him of interest to political activists outside his own suburb in Dhaka. The Tribunal did not give the appellant the opportunity to be heard on the information in paragraph [24] of its reasons, which was information on which the Tribunal relied adversely to the appellant." Paragraph 24 of the Tribunal's reasons was in the following terms: "The Tribunal notes from the BNP official website that membership of the BNP normally requires the new member, who must be over the age of 18, to fill in a prescribed membership form available at the party office and to pay a membership fee of five taka on joining and annually thereafter." (footnote omitted) Tribunal As to particular (a), during the course of the hearing the Tribunal directly asked the appellant whether or not he was a member of the BNP. The appellant was then asked a series of questions about the differences between being a supporter of the BNP and a member of the BNP, what was required to become a Bell member, and what had occurred at the time that he said he became a member. The appellant claimed that when a person becomes a member of the BNP, local officials list the new members' names in a book and this is announced by a leader at the thana level. The Tribunal's reasons record that the appellant could not recall any details of when his membership was so listed and announced, or who was present at any such occasion. As to particular (b), the Tribunal opened its discussion of the appellant's claim that he was a member of the BNP in the terms of its par 24, set out above. The Tribunal then observed that the appellant's description of the process for membership of the BNP did not conform with "this official version" (that is, the information on the website) and that it was not satisfied that the appellant was ever formally a member of the BNP. But that was not the extent of the Tribunal's findings. The Tribunal immediately went on to find that it accepted that the appellant was involved in the BNP through his older brother, himself a member of the BNP. The Tribunal found that he had spent time doing jobs for the party at the direction of his brother and local officials between 2003 and 2008. The Tribunal further found that the appellant would have been identified by members of his local community as a supporter of the BNP because of his visibility putting up posters and attending public rallies. It was therefore unsurprising that the Tribunal considered that, even though the appellant was affiliated with the BNP, he had not suffered harm amounting to persecution by reason of his political opinion, and was not satisfied that his fear of persecution in the future for reason of his political opinion was well-founded. Supreme Court of Nauru This ground was not considered by the Supreme Court. In that Court, the respondent submitted12 that the appellant would need to succeed on both grounds in order to obtain relief. Having found that the appellant had failed in relation to ground 1, the Court considered it was unnecessary to address ground 2. 12 The decision of the Supreme Court records that the appellant "concede[d]" this issue. However, in oral argument before this Court, the respondent clarified that the appellant's concession was subsequently withdrawn in the Supreme Court and that, accordingly, what is recorded in the Supreme Court's reasons is inaccurate: see ETA067 v The Republic of Nauru [2018] HCATrans 114 at 19; ETA067 v The Republic [2017] NRSC 99 at [29]. Bell Consideration The appellant's complaints in this Court are, in substance, that the Tribunal did not bring to his attention or allow him to ascertain that his formal membership of the BNP was in issue so that he could comment or provide further evidence, and did not put to him the evidence from the BNP website. Section 40 of the Refugees Act directs attention to the "issue[] arising in relation to the determination or decision under review". The language of s 40(1) makes it clear that the subject of inquiry is the issue and not individual pieces of evidence. The Tribunal is not required to refer to every piece of evidence and every contention made by an applicant under s 5 of the Refugees Act. the Here, issue, properly framed, was the appellant's affiliation, or purported affiliation, with the BNP. The appellant contended that the Tribunal should have "put [him] on notice of its doubts that [he] was ever a formal member of the BNP by at least asking him why his account of his formal membership should be accepted". That contention should be rejected. The appellant was on notice that the Tribunal doubted that he was a BNP member. The Tribunal asked him to respond to questions based on his account of what was required for membership, including whether and when his name was listed or announced, and whether his brother (himself a BNP member) was present. Accordingly, and consistent with s 40(1), the appellant was "invite[d] … to give evidence and present arguments relating to" his involvement with the BNP, including his formal membership. Moreover, the Tribunal's assessment of the appellant's potential political profile was conducted, correctly, on the basis of the totality of his political activities, not solely the question of formal membership. Indeed, throughout its reasons, the Tribunal considered the appellant's involvement and affiliation with the BNP and accepted that he would be recognised among members of the local community as being part of the BNP. It was therefore plausible that members of the local community would impute him with the political opinion of the BNP, and his formal membership status would be unlikely to alter that position. But despite his visibility and affiliation with the BNP, the Tribunal nonetheless found that the appellant had not suffered any harm amounting to persecution and did not risk suffering harm amounting to persecution in the foreseeable future. That conclusion was correctly reached. Put in different terms, the appellant's membership or lack of formal membership of the BNP was not determinative of the outcome of the Tribunal's review. Ground 2 in this Court, and therefore the question of formal membership, was, however, primarily framed by reference to the issue of relocation. Bell The argument, so far as it goes, was that the appellant's formal membership would have had an impact on his profile within the BNP, meaning that, were he found to be a member, there would have been a greater chance that he would have been identified as holding an opposing view to the Awami League in other parts of Bangladesh, such that even if he were to relocate to another area (within Dhaka or elsewhere in the country) he would have still faced a risk of harm. That argument should be rejected. The argument was predicated (as was the finding of the Tribunal to which it relates) on it being established that the appellant had a well-founded fear of persecution. For the reasons stated earlier, there was no error in the Tribunal's conclusion that the appellant did not have a well-founded fear of persecution, including in the suburb of Dhaka where he lived. Moreover, even if the appellant's well-founded fear of persecution was found to exist, it was isolated to the suburb in which he lived, meaning he could safely return to another part of Dhaka, or Bangladesh, without harm and therefore would not be afforded protection. Accordingly, the issues relevant to relocation need not be considered. Order For those reasons, the appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA Matter No S36/2014 PLAINTIFF AND STATE OF NEW SOUTH WALES DEFENDANT Matter No S37/2014 JUSTIN HAWTHORNE AND PLAINTIFF STATE OF NEW SOUTH WALES DEFENDANT Matter No S38/2014 PLAINTIFF AND STATE OF NEW SOUTH WALES DEFENDANT Tajjour v New South Wales Hawthorne v New South Wales Forster v New South Wales [2014] HCA 35 8 October 2014 S36/2014, S37/2014 & S38/2014 ORDER Matter No S36/2014 The questions asked in the Special Case dated 5 March 2014 be answered as follows: Is s 93X of the Crimes Act 1900 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? Answer: Section 93X of the Crimes Act 1900 (NSW) is not invalid. Is there implied into the Commonwealth Constitution a freedom of association independent of the implied freedom of communication on governmental and political matters? Answer: Does s 93X of the Crimes Act 1900 (NSW) contravene any implied freedom of association referred to in question 2? Answer: Unnecessary to answer. Is s 93X of the Crimes Act 1900 (NSW) invalid because it is inconsistent with the International Covenant on Civil and Political Rights as ratified by the Commonwealth of Australia? Answer: Who should pay the costs of the special case? Answer: The plaintiff. Matter No S37/2014 The questions asked in the Special Case dated 5 March 2014 be answered as follows: Is s 93X of the Crimes Act 1900 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? Answer: Section 93X of the Crimes Act 1900 (NSW) is not invalid. Is there implied into the Commonwealth Constitution a freedom of association independent of the implied freedom of communication on governmental and political matters? Answer: Does s 93X of the Crimes Act 1900 (NSW) contravene any implied freedom of association referred to in question 2? Answer: Unnecessary to answer. Is s 93X of the Crimes Act 1900 (NSW) invalid because it is inconsistent with the International Covenant on Civil and Political Rights as ratified by the Commonwealth of Australia? Answer: Who should pay the costs of the special case? Answer: The plaintiff. Matter No S38/2014 The questions asked in the Special Case dated 5 March 2014 be answered as follows: Is s 93X of the Crimes Act 1900 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? Answer: Section 93X of the Crimes Act 1900 (NSW) is not invalid. Who should pay the costs of the special case? Answer: The plaintiff. Representation G R James QC and P D Lange with E M M James and A Ahmad for the plaintiff in S36/2014 (instructed by Matouk Joyner Solicitors) G O'L Reynolds SC with D P Hume for the plaintiff in S37/2014 (instructed by Matouk Joyner Solicitors) W P Lowe with E M M James for the plaintiff in S38/2014 (instructed by McGowan Lawyers) M G Sexton SC, Solicitor-General for the State of New South Wales and J G Renwick SC with K M Richardson for the defendant in each matter and for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor (NSW)) M G Hinton QC, Solicitor-General for the State of South Australia with N M Schwarz for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) S G E McLeish SC, Solicitor-General for the State of Victoria with P D Herzfeld for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) G R Donaldson QC, Solicitor-General for the State of Western Australia with M Georgiou for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) P J Dunning QC, Solicitor-General of the State of Queensland with G J D del Villar for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld)) B W Walker SC with A M Mitchelmore for the Australian Human Rights Commission, as amicus curiae (instructed by Australian Human Rights Commission) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tajjour v New South Wales Hawthorne v New South Wales Forster v New South Wales Constitutional law – Implied freedom of political communication – Section 93X of Crimes Act 1900 (NSW) made it offence habitually to consort with convicted offenders after receiving official warning in relation to each convicted offender – Plaintiffs charged with offence against s 93X – Whether s 93X infringes implied freedom of political communication. Constitutional law – Implied freedom of association – Whether Constitution contains an implied freedom of association independent of implied freedom of political communication. Constitutional law – Powers of State Parliaments – Provisions of international convention ratified by Australia but not incorporated by statute in Australian domestic law – Whether capable of limiting power of State Parliaments to enact inconsistent legislation. Words burden", "proportionality", "reasonably appropriate and adapted". "effectively phrases and "habitually consort", Crimes Act 1900 (NSW), ss 93W, 93X, 93Y. Introduction It is an offence in New South Wales for a person to habitually consort with two or more convicted offenders after being warned by a police officer that they are convicted offenders and that consorting with a convicted offender is an offence. Section 93X of the Crimes Act 1900 (NSW) ("the Crimes Act")1, which makes it so, has its ancestry in vagrancy laws dating back to medieval England2. Its evident object is the prevention of crime by preventing the formation, maintenance or expansion of criminal networks. Although the verb "consort" has a pejorative flavour, it is capable of application to law-abiding persons3 regularly associating for innocent purposes, including for the purposes of communication and advocacy about governmental or political matters. The primary practical constraint upon its application is the discretion afforded to police officers in deciding whether or not to issue an official warning to a person about consorting with a convicted offender. The validity of s 93X has been challenged by three plaintiffs, Tajjour, Hawthorne and Forster, each of whom has been charged under it. Each charge alleged that between certain times and dates the relevant plaintiff did habitually consort with named convicted offenders after receiving a warning not to consort with those persons. The plaintiffs contend that s 93X impermissibly burdens the freedom of communication on governmental or political matters implied in the Constitution. Tajjour and Hawthorne also assert that there is implied in the Constitution a freedom of association, independent of the implied freedom of communication on governmental or political matters, and that the section contravenes that implied freedom. In addition, Tajjour and Hawthorne contend that the section is invalid because it is inconsistent with the freedom of Inserted by the Crimes Amendment (Consorting and Organised Crime) Act 2012 (NSW), Sched 1 [9]. 2 McLeod, "On the Origins of Consorting Laws", (2013) 37 Melbourne University Law Review 103 at 106–108, 114. 3 Section 93W defines "convicted offender" as a person who has been convicted of an indictable offence and does not set any upper limit on the age of the conviction necessary to fall within that definition. A person may be a "convicted offender" in respect of an old conviction, yet may also be a law-abiding citizen. Some old convictions may be expunged under spent conviction provisions in Pts 2 and 3 of the Criminal Records Act 1991 (NSW), but those provisions do not cover, for example, sexual offences or convictions attracting a sentence of more than six months imprisonment (s 7(1)). association guaranteed by Art 22 of the International Covenant on Civil and Political Rights ("the ICCPR"), to which Australia is a party. Each of the three plaintiffs filed a summons in the Supreme Court of New South Wales seeking a declaration that s 93X is invalid. On 13 May 2013, Beech-Jones J made orders that the question whether s 93X was invalid be decided separately from all other questions in the proceedings and that the proceedings be removed into the Court of Appeal of the Supreme Court of New South Wales. On 14 February 2014, on the application of the Attorney-General for New South Wales, Kiefel and Bell JJ made orders removing the three proceedings into this Court. Directions were given for the serving of draft Special Cases and, on 5 March 2014, Kiefel J made orders referring each Special Case for hearing before the Full Court. For the reasons that follow, s 93X impermissibly burdens the implied constitutional freedom of communication on governmental or political matters and is on that account invalid. There is, therefore, no occasion to consider the argument, advanced by Tajjour and Hawthorne, for a free-standing implied freedom of association. The argument that State legislative power is limited by the right to freedom of association guaranteed under the ICCPR is misconceived. The questions referred in the Special Cases should be answered accordingly. The questions in the Special Cases In the Special Cases relating to Tajjour and Hawthorne, the following questions are stated for the opinion of the Full Court: Is s 93X of the Crimes Act 1900 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? Is there implied into the Commonwealth Constitution a freedom of association independent of the implied freedom of communication on governmental and political matters? Does s 93X of the Crimes Act 1900 (NSW) contravene any implied freedom of association referred to in question 2? Is s 93X of the Crimes Act 1900 (NSW) invalid because it is inconsistent with the International Covenant on Civil and Political Rights as ratified by the Commonwealth of Australia? 5. Who should pay the costs of the Special Case? In the Special Case relating to Forster, only the first and the last questions are referred. It is a feature of the Special Cases that while the agreed facts disclose interference with the freedom of association of each of the plaintiffs, it is not suggested communication about governmental or political matters. there was that interference with any attempted or proposed The construction of s 93X is the first necessary step in determining its validity. Its construction is informed by the history of consorting laws in Australia and judicial decisions interpreting and applying them. Some legislative history Laws directed at inchoate criminality have a long history, dating back to England in the Middle Ages, which is traceable in large part through vagrancy laws. An early example was a statute enacted in 1562 which deemed a person found in the company of gypsies, over the course of a month, to be a felon4. A precursor of consorting laws in New South Wales was s 2 of the Vagrancy Act 1835 (NSW)5, which listed categories of persons deemed "idle and disorderly". Among them it included "the holder of every house … frequented by reputed thieves or persons who have no visible lawful means of support and every person found in any such house in company with such reputed thieves or persons" without giving a good account of lawful means of support and of being in such a house on some lawful occasion. There was no equivalent category under English vagrancy laws. Plainly enough, the 1835 legislation was directed to the prevention of criminal combinations. As Professors Campbell and Whitmore wrote in 19736: "New South Wales in 1835 was still a penal colony and one can understand why at that time it should have been thought necessary to prevent people getting together to hatch crimes." The earliest Australian statutes expressly directed against "habitual consorting" were modelled on s 26(4) of the Police Offences Act 1884 (NZ), which was enacted in 19017. The New Zealand provision included in the 4 McLeod, "On the Origins of Consorting Laws", (2013) 37 Melbourne University Law Review 103 at 113 referring to 5 Eliz 1 c 20. 5 6 Will 4 No 6. 6 Campbell and Whitmore, Freedom in Australia, rev ed (1973) at 135. The offence created by the Vagrancy Act 1835 (NSW), unlike consorting, was constituted by a single incident, ie being "found in any such house" — see the discussion of the equivalent Victorian provision, s 6(1)(b) of the Vagrancy Act 1966 (Vic), in Johanson v Dixon (1979) 143 CLR 376 at 395–396 per Aickin J; [1979] HCA 23. 7 The sub-section was inserted into the Police Offences Act 1884 (NZ) by the Police Offences Amendment Act 1901 (NZ), s 4. categories of persons "deemed … idle and disorderly" persons who "habitually consort[] with reputed thieves or prostitutes or persons who have no visible means of support." The insertion in the vagrancy laws of the Australian States of common form prohibitions of habitual consorting, modelled on the New Zealand provision, began in South Australia in 19288. The purpose of its similarly worded successor9 was described in Dias v O'Sullivan as10: "to prevent the regular meeting of congeries of individuals (persons generally regarded by those, who ought to know, as having vicious propensities), in circumstances where the meetings have the appearance of fraternising." The provision was also described as "a legislative attempt to give legal sanction to St Paul's advice to the Corinthians (amongst whom were many reputed thieves) that 'Evil communications corrupt good manners.'"11 The offence created by the South Australian Act12 was that of being an "idle and disorderly" person. Similar offences were created in New South Wales, Victoria, Queensland and Western Australia13. Griffith CJ explained the operation of the common form vagrancy laws in Lee Fan v Dempsey14, albeit before the inclusion in them of consorting provisions, as follows: "[Section 65 of the Police Act 1892 (WA)] creates only one substantive offence, that of being an idle and disorderly person, and the eight categories of persons are not, properly speaking, definitions of offences, In chronological order, consorting provisions were introduced by the Police Act Amendment Act 1928 (SA), s 5; Vagrancy (Amendment) Act 1929 (NSW), s 2(b); Police Offences (Consorting) Act 1931 (Vic), s 2; Vagrants, Gaming, and Other Offences Act 1931 (Q), s 4(1)(v); Police Offences Act 1935 (Tas), s 6; Police Act Amendment Act 1955 (WA), s 2. 9 Police Act 1936 (SA), s 85(1)(j). 10 [1949] SASR 195 at 199 per Mayo J. 11 Reardon v O'Sullivan [1950] SASR 77 at 82 per Abbott J. 12 Police Act 1916 (SA), s 66(g2). 13 Vagrancy Act 1902 (NSW), s 4(1)(j) read with s 3; Police Offences (Consorting) Act 1931 (Vic), s 2; Vagrants, Gaming, and Other Offences Act 1931 (Q), s 4(1)(v); Police Act 1892 (WA), s 65(9). 14 (1907) 5 CLR 310 at 313; [1907] HCA 54. See also at 317 per Barton J, 320 per but of states of facts which, if proved, will establish that substantive offence." Subsequently, in New South Wales, Victoria and South Australia, the common form prohibition of habitual consorting evolved to a stand-alone consorting offence, not mediated through the deemed status of being an "idle and disorderly" person15. It was a stand-alone offence in Tasmania from the outset16. Consorting laws in Australia had the practical effect of conferring significant powers on police officers. In New Zealand, the Minister of Justice, introducing the Bill for the inclusion of s 26(4) in the Police Offences Act 1884 (NZ), said it gave the police power with respect to people who were not without means, but consorted with thieves and prostitutes and were "well known to the police to be people of bad character"17. It answered Isaacs J's characterisation of vagrancy laws in Lee Fan v Dempsey as protective of the public by preventative rather than punitive means18. In a similar vein, Mayo J in Dias v O'Sullivan the South Australian consorting offence as described "precautionary and preventative, rather than to administer punishment for dishonest planning, criminal transactions, or machinations whilst the group are together."19 the purpose of The first consorting law in New South Wales, s 4(1)(j) of the Vagrancy Act 1902 (NSW), was enacted in 192920. It provided that whosoever "habitually consorts with reputed criminals or known prostitutes or persons who have been convicted of having no visible lawful means of support" would be liable to imprisonment with hard labour for a term not exceeding six months. Its purpose, as stated in the Explanatory Note and the First and Second Reading Speeches to 15 The first stand-alone offences were created by s 25 of the Summary Offences Act 1970 (NSW), s 6(1)(c) of the Vagrancy Act 1966 (Vic) and s 13 of the Police Offences Act 1953 (SA). See also s 33 of the Criminal Law Amendment (Simple Offences) Act 2004 (WA), introducing into the Criminal Code (WA) s 557J(2), concerning consorting by declared drug traffickers, and s 557K(4), concerning consorting by child sex offenders. 16 Police Offences Act 1935 (Tas), s 6. 17 New Zealand, House of Representatives, Parliamentary Debates (Hansard), 24 August 1900 at 237. 18 (1907) 5 CLR 310 at 321. 19 [1949] SASR 195 at 202. 20 Inserted by the Vagrancy (Amendment) Act 1929 (NSW), s 2(b). the Bill, was to give greater powers to the police to deal with "the consorting of criminals"21. It was, at least in part, a response to a perceived problem of criminal gangs known as "razor gangs" in the 1920s22. The Vagrancy Act 1902 (NSW) was repealed in 197023. Its replacement, the Summary Offences Act 1970 (NSW), created the stand-alone offence of habitually consorting, inter alia, with reputed criminals or persons who had been convicted of certain offences24. In 1979, that Act was repealed25 and a new, more narrowly defined, consorting offence was created by s 546A of the Crimes Act26. Section 546A made it an offence for a person to habitually consort with persons who had been convicted of indictable offences, if he or she knew that they had been convicted of indictable offences. A principle underlying the redefinition, as explained in the Second Reading Speech by the Attorney-General and Minister of Justice, was that27: "Unless there are exceptional and compelling reasons for otherwise providing, the basis of criminal liability should be what a person does, or, in appropriate cases, omits to do, rather than the identity of the person". Despite the redefinition and narrowing of the offence, s 546A, like its successor, s 93X, carried forward the concept of "habitual consorting" from the offences in the Summary Offences Act 1970 (NSW) and the Vagrancy Act 1902 (NSW) that preceded it. It is necessary to have regard to how that statutory term 21 New South Wales, Legislative Assembly, Vagrancy (Amendment) Bill 1929, Explanatory Note; New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 25 September 1929 at 325; New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 22 October 1929 at 682. 22 Steel, "Consorting in New South Wales: Substantive Offence or Police Power?", (2003) 26 University of New South Wales Law Journal 567 at 584–586. See also New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 October 1929 at 731. 23 Summary Offences Act 1970 (NSW), s 3(1) and Sched 1. 25 Summary Offences (Repeal) Act 1979 (NSW), s 3. 26 Inserted by the Crimes (Summary Offences) Amendment Act 1979 (NSW), Sched 5, item 3. 27 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 April 1979 at 4924. in the laws of New South Wales and the other States has been interpreted by the courts, in order for its construction in s 93X to be properly informed. The term "habitually consorts", in the offence provisions of the various States, required, in practical terms, proof of more than one occasion of association between a defendant and reputed thieves or criminals. Consorting was construed as "frequent companionship"28. The adverb "habitually" required that it be more than occasional, "so constant as to have created a habit."29 It was not necessary that the consorting be with the same person or persons30. Consorting for an innocent purpose was within the ambit of the offences. In Gabriel v Lenthall, Richards J said that31: "The offence is not being with thieves on occasions when it may be suspected that they are about their nefarious occupation, but simply habitually consorting with them; it is not companionship in thieving, but with thieves." A similar approach was adopted in Queensland in Clarke v Nelson; Ex parte Nelson32. Macrossan SPJ, delivering the judgment of the Full Court, said that Parliament had not inadvertently omitted some justification or excuse for habitually consorting with reputed criminals33. That proposition was endorsed by 28 O'Connor v Hammond (1902) 21 NZLR 573 at 576 per Stout CJ; Reardon v O'Sullivan [1950] SASR 77 at 87 per Paine AJ; Benson v Rogers [1966] Tas SR 97 at 101 per Burbury CJ. 29 O'Connor v Hammond (1902) 21 NZLR 573 at 576 per Stout CJ; Reardon v O'Sullivan [1950] SASR 77 at 87 per Paine AJ; Benson v Rogers [1966] Tas SR 97 at 101 per Burbury CJ. 30 O'Connor v Hammond (1902) 21 NZLR 573 at 576 per Stout CJ; Gabriel v Lenthall [1930] SASR 318 at 323 per Richards J; Auld v Purdy (1933) 50 WN (NSW) 218 at 219 per Street J. See generally Brealy v Buckley [1934] ALR 371 at 372 per Gavan Duffy J. 31 [1930] SASR 318 at 327. 32 [1936] QWN 17. See also Beer v Toms; Ex parte Beer [1952] St R Qd 116 at 126– 127 per Townley J delivering the judgment of the Court. 33 [1936] QWN 17 at 19. this Court in 1979 in Johanson v Dixon34. It was restated in 1983 by King CJ in "Apart from the statute the conduct to be punished may be quite innocent", which led his Honour to add36: "The wisdom and even the justice of such a law may be, and often has been, questioned." The prosecution of persons for habitual consorting required police to have identified repeated occasions of association between the accused and reputed thieves or criminals. The reputation of any person with whom the accused had consorted could be established without proof of its correctness. A reputation known only to police could suffice37. Those characteristics of the consorting provisions conferred wide discretionary powers on police officers to observe, to warn and, if their warnings were ignored on a number of occasions, to charge38. The importance attached to the exercise of appropriate judgment by police officers in the application of the Queensland consorting law was evidenced by the observation of Henchman J in the course of argument in Clarke v Nelson; Ex "The police will not harass a man because he has been a criminal: they will only concern themselves with present criminals." The consorting laws of the States did not in terms so confine police powers. Nor does s 93X. Judgment of an evaluative kind was required of the courts. The question whether a person had been engaged in habitual consorting was a "question of 34 (1979) 143 CLR 376, which concerned s 6(1)(c) of the Vagrancy Act 1966 (Vic) and is considered below. 35 (1983) 32 SASR 379 at 380. 36 (1983) 32 SASR 379 at 380. 37 Dias v O'Sullivan [1949] SASR 195 at 203 per Mayo J. 38 See generally Steel, "Consorting in New South Wales: Substantive Offence or Police Power?", (2003) 26 University of New South Wales Law Journal 567. 39 [1936] QWN 17 at 18. degree"40, involving consideration by the court of the number of times a person had been in company with reputed criminals and all the circumstances41. As was pointed out in Dias v O'Sullivan, each meeting by an accused with a reputed thief did not constitute a separate offence in South Australia. The consorting provision was "directed at the notional relationship (over the averred period), indicated by the series of incidents relied on, as explanatory of the aggregate of those incidents revealing a general practice considered for the purpose of s 85(1)(j) as a single offence."42 Mayo J described the fundamental ingredient of consorting as "companionship", noting that it might be concurrent with innocent activity43: "The fact that people meet (inter alia) to carry on some trade or occupation is not inconsistent with a fraternising contemporary therewith amounting to consorting." The requirement that consorting be habitual involved "a continuance and permanence of some tendency, something that has developed into a propensity, that is present from day to day."44 The decision of this Court in Johanson v Dixon concerned the Victorian consorting provision in s 6(1)(c) of the Vagrancy Act 1966 (Vic)45. It was delivered against the background of a generally consistent body of case law dealing with similar, but not identical, provisions in a number of the Australian States. The applicant, Johanson, who had sought special leave to appeal against a decision of the Full Court of the Supreme Court of Victoria46, faced the difficulty that findings of fact adverse to him had been made by the primary 40 MacDonald v The King (1935) 52 CLR 739 at 743 per Rich J; [1935] HCA 18. 41 Clarke v Nelson; Ex parte Nelson [1936] QWN 17 at 19 per Macrossan SPJ delivering the judgment of the Court; Young v Bryan [1962] Tas SR 323 at 327– 328 per Burbury CJ; Benson v Rogers [1966] Tas SR 97 at 98 per Burbury CJ. 42 [1949] SASR 195 at 199 per Mayo J. 43 [1949] SASR 195 at 201. 44 [1949] SASR 195 at 200 per Mayo J. 45 One of its predecessors, s 69(1)(d) of the Police Offences Act 1957 (Vic), which mediated the consorting provision through the status offence of being an "idle and disorderly" person, was considered in Byrne v Shearer [1959] VR 606. 46 Johanson v Dixon (No 3) [1978] VR 377. judge. Those findings required that special leave be refused47. The Victorian provision created the offence of habitually consorting with reputed thieves, but made it a defence if the person accused, on being so required by the court, gave to the satisfaction of the court a good account of his lawful means of support and also of his consorting. The primary judge had not accepted the truth of the applicant's account. Cadit quaestio. Nevertheless, Mason J, with whom Barwick CJ and Stephen J agreed, went on to consider and reject the applicant's contention that, on its proper interpretation, the statute excluded association for an innocent purpose. To say no more than that the association was innocent or not unlawful was not to give a good account48. It was not for the Crown to prove that the defendant had consorted for an unlawful or criminal purpose49. The words creating the offence made no mention of purpose50. Aickin J came to the same conclusion51. Mason J also explained the verb "consorts"52: "In its context 'consorts' means 'associates' or 'keeps company' and it denotes some seeking or acceptance of the association on the part of the defendant." (citation omitted) While those observations were made in the context of the particular defence of "a good account" provided for in the Victorian provision, the meaning attributed to the term "consorts" followed that adopted in previous decisions of State courts. What was said in Johanson v Dixon informs the construction of the term "habitually consorts" used in s 93X. It is necessary, however, to consider the text of that section and its associated provisions. It differs in some material respects from the Victorian provision considered in Johanson v Dixon, precursor provisions in New South Wales and their equivalents in the other States. 47 (1979) 143 CLR 376 at 382 per Mason J, Barwick CJ and Stephen J agreeing at 379, Aickin J agreeing at 395. 48 (1979) 143 CLR 376 at 384. 49 (1979) 143 CLR 376 at 383. 50 (1979) 143 CLR 376 at 383. 51 (1979) 143 CLR 376 at 396. 52 (1979) 143 CLR 376 at 383 citing Brown v Bryan [1963] Tas SR 1 at 2 per Crisp J. See also at 395 per Aickin J. The statutory provisions Section 93X and its companion provisions were introduced into the Crimes Act in 2012, replacing s 546A53. Section 93X of the Crimes Act provides: "(1) A person who: habitually consorts with convicted offenders, and consorts with those convicted offenders after having been given an official warning in relation to each of those convicted offenders, is guilty of an offence. Maximum penalty: Imprisonment for 3 years, or a fine of 150 penalty units, or both. (2) A person does not habitually consort with convicted offenders unless: the person consorts with at least 2 convicted offenders (whether on the same or separate occasions), and the person consorts with each convicted offender on at least 2 occasions. (3) An official warning is a warning given by a police officer (orally or in writing) that: a convicted offender is a convicted offender, and consorting with a convicted offender is an offence." Section 93W defines "convicted offender" as "a person who has been convicted of an indictable offence (disregarding any offence under section 93X)." The class of persons falling within that description is limited only by the range of offences which are "indictable offences". "Indictable offences" comprise any offences which may be dealt with on indictment54. Moreover, the class is not 53 As to the background to the introduction of s 546A, see New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 23 April 1979 at 4924. 54 Criminal Procedure Act 1986 (NSW), ss 3(1) and 5. temporally confined, in that there is no upper limit on the age of a conviction which would constitute the person convicted a "convicted offender" for the purposes of s 93W. The term "consort" is defined in s 93W to mean: "consort in person or by any other means, including by electronic or other form of communication." That definition assumes a received meaning for the verb "consort", which may be taken to have been based upon the pre-existing judicial interpretation55. Consorting was not defined in any of its prior judicial exegesis solely by reference to "communication". Communication is characterised in the definition not as a species, but as a "means", of consorting. The purpose of the definition, as explained in the Agreement in Principle Speech of the Attorney-General and Minister for Justice, was that "networks established via Facebook, Twitter and SMS will not be immune from these provisions."56 Section 93W has the effect that consorting can be carried on by any form of communication. But it must be communication which constitutes "association" or "keeping company" and can therefore be characterised as "consorting". The Australian Human Rights Commission, in written submissions, contended that the conduct prohibited by s 93X extends to communication between identified persons, with no exception for political communication. For the reasons already given, the offence created by s 93X is not so wide ranging. The constructional question, anterior to the constitutional question in this case, is whether and to what extent association or keeping company by means of, or for the purpose of, communication on governmental or political matters can fall within the offence created by s 93X. As appears from the judicial exegesis of the consorting laws of the Australian States, innocent purpose was never a defence against a charge of habitual consorting57. Section 93Y, which sets out a number of specific 55 Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106–107; [1994] HCA 34. 56 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 February 2012 at 8132. 57 Some of the observations of the Full Court of the Supreme Court of Victoria in Byrne v Shearer [1959] VR 606, which concerned an earlier provision, s 69(1)(d) of the Police Offences Act 1957 (Vic), might have supported a different view, but they were qualified into conformity by the Full Court in Johanson v Dixon (No 3) [1978] VR 377 at 383 per Young CJ, Menhennitt and Murray JJ, consistently with (Footnote continues on next page) "innocent purpose" defences to a charge under s 93X, therefore represents a significant shift in the law in New South Wales. That section provides: "The following forms of consorting are to be disregarded for the purposes of section 93X if the defendant satisfies the court that the consorting was reasonable in the circumstances: consorting with family members, consorting that occurs in the course of lawful employment or the lawful operation of a business, consorting that occurs in the course of training or education, consorting that occurs in the course of the provision of a health service, consorting that occurs in the course of the provision of legal advice, consorting that occurs in lawful custody or in the course of complying with a court order." Those paragraphs provide defences on the evident premise that meeting in the course of any of the listed activities could constitute consorting. The prosecution, in a case based upon consorting with family members, would have to show that what occurred was consorting. That shown, the defence could seek to satisfy the court that it was a "form[] of consorting ... to be disregarded for the purposes of section 93X". The specific defences do not cover consorting that occurs in the course of, or for the purpose of, political discussion, communication or action. That omission weighs against any implication which would exclude consorting for that purpose. the construction adopted by this Court on the application for special leave to appeal against that decision. The Attorney-General and Minister for Justice, in the Agreement in Principle Speech for the Amendment Bill58, cited Johanson v Dixon59 for the proposition that "consorting need not have a particular purpose but denotes some seeking or acceptance of the association on the part of the defendant"60. Referring to the new criteria for habitual consorting in s 93X(2), he identified a purpose of the provision when he said61: "The requirement that the person consorts with more than one offender recognises the fact that the goal of the offence is not to criminalise individual relationships but to deter people from associating with a criminal milieu." A person does not commit the offence of habitual consorting with convicted offenders, contrary to s 93X, unless he or she consorts with them after being warned by a police officer, orally or in writing, that they are convicted offenders and that consorting with them is an offence. That requirement has no precedent in the precursor consorting laws in New South Wales, but is reflected in similar consorting provisions in Western Australia and the Northern Territory62. It appears to reflect what was always a necessary feature of police practice in the enforcement of consorting laws in New South Wales and the other States63. It has the practical effect that a person so warned would find it difficult to say that he or she did not know that the persons with whom he or she was thereafter consorting were convicted offenders. It also confers a discretion on police officers to determine who shall be at risk of prosecution and who shall not. Recognising the practical effect of the law in conferring discretionary powers on 58 Crimes Amendment (Consorting and Organised Crime) Bill 2012 (NSW). 59 (1979) 143 CLR 376 at 383 per Mason J citing Brown v Bryan [1963] Tas SR 1 at 60 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 February 2012 at 8131–8132. 61 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 February 2012 at 8131. 62 Criminal Code (WA), ss 557J(2) and 557K(4); Summary Offences Act (NT), s 55A(1). 63 Steel, "Consorting in New South Wales: Substantive Offence or Police Power?", (2003) 26 University of New South Wales Law Journal 567 at 588–590, 592–593. See also Brunskill, "Consorting", (2003) 11(1) Policing Issues & Practice Journal 1 at 1–2; Victoria, Parliament, Scrutiny of Acts and Regulations Committee, Review of the Vagrancy Act 1966: Final Report, (2002) at 11–12. police, the Attorney-General and Minister for Justice related those powers to the purpose of the provisions64: "This bill puts police in a position to do what they do best every day and make a judgement about whether observed behaviour reaches the level sought to be addressed by the bill, that is, behaviour which forms or reinforces criminal ties." Section 93X and its associated provisions, read in the light of judicial exegesis of earlier consorting provisions in New South Wales and other States, extend to habitual consorting for innocent purposes. There is no express textual basis for excluding consorting for the purpose of communications on governmental or political matters. The next question is whether there is any alternative construction which would avoid that result. If there is, then the principle of legality, protective of the common law freedom of speech on public affairs, would favour that construction. Application of the principle of legality regarding freedom of speech and freedom of association Statutes should be construed, where constructional choices are open, so that they do not encroach, or encroach as little as possible, upon fundamental rights and freedoms at common law65. While the utility of the term "fundamental" in this context is questionable66, freedom of speech has long 64 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 February 2012 at 8132. 65 Potter v Minahan (1908) 7 CLR 277 at 304 per O'Connor J; [1908] HCA 63; Bropho v Western Australia (1990) 171 CLR 1 at 18 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ; [1990] HCA 24; Coco v The Queen (1994) 179 CLR 427 at 436–437 per Mason CJ, Brennan, Gaudron and McHugh JJ; [1994] HCA 15; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11] per Gleeson CJ, Gaudron, Gummow and Hayne JJ, 562–563 [43] per McHugh J, 578 [93]–[94] per Kirby J, 592–593 [134] per Callinan J; [2002] HCA 49; Oates v Attorney-General (Cth) (2003) 214 CLR 496 at 513 [45] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne and Heydon JJ; [2003] HCA 21; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 271 [58] per French CJ, Gummow, Hayne, Crennan and Kiefel JJ; [2010] HCA 23. 66 Momcilovic v The Queen (2011) 245 CLR 1 at 46 [43] per French CJ; [2011] HCA 34. enjoyed special recognition at common law67 and particularly so in relation to the criticism of public bodies68. As TRS Allan wrote in 199669: "The traditional civil and political liberties, like liberty of the person and freedom of speech, have independent and intrinsic weight: their importance justifies an interpretation of both common law and statute which serves to protect them from unwise and ill-considered interference or restriction." Even absent entrenchment by express or implied constitutional guarantee, freedom of speech on public affairs at common law is more than a particular application of the general principle that anybody is free to do anything which is not forbidden by law70. In order to displace it, the Parliament must have chosen clear language which permits no other outcome. The common law freedom of speech in relation to public affairs informed the decision of this Court in Davis v The Commonwealth71 to hold invalid a statute purportedly made in the exercise of the incidental power under s 51(xxxix) of the Constitution. The restrictions it imposed on the use of words 67 The Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 52 per Mason J; [1980] HCA 44; Davis v The Commonwealth (1988) 166 CLR 79 at 100 per Mason CJ, Deane and Gaudron JJ; [1988] HCA 63; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 31 per Mason CJ; [1992] HCA 46; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 31–32 [43] per French CJ, 67–68 [151]–[152] per Heydon J; [2013] HCA 3. See also Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 11 at 151–152; Bonnard v Perryman [1891] 2 Ch 269 at 284 per Lord Coleridge CJ; R v Commissioner of Police of the Metropolis; Ex parte Blackburn (No 2) [1968] 2 QB 150 at 155 per Lord Denning MR; Wheeler v Leicester City Council [1985] AC 1054 at 1063, 1065 per Browne-Wilkinson LJ; Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 203 per Dillon LJ. 68 Ballina Shire Council v Ringland (1994) 33 NSWLR 680 at 690–691 per Gleeson CJ; Derbyshire County Council v Times Newspapers Ltd [1993] AC 534 at 547–549 per Lord Keith of Kinkel. 69 Allan, "The Common Law as Constitution: Fundamental Rights and First Principles", in Saunders (ed), Courts of Final Jurisdiction: The Mason Court in Australia, (1996) 146 at 148. 70 cf Attorney-General v Observer Ltd [1990] AC 109 at 283 per Lord Goff of Chieveley. 71 (1988) 166 CLR 79. and expressions relevant to Australia's bicentennial celebrations were held to be "grossly disproportionate to the need to protect the commemoration"72. Its impact on freedom of expression was relevant to that assessment73: "This extraordinary intrusion into freedom of expression is not reasonably and appropriately adapted to achieve the ends that lie within the limits of constitutional power." Davis, antedating by four years the Court's discernment of the implied freedom of political communication, suggests that a proportionality test, relevant to the constitutional validity of any purposive legislative power, including an incidental power, may involve consideration of the effect of the purported exercise of that power upon common law rights and freedoms. The application of the principle of legality to the construction of s 93X is anterior to the determination of the validity of the section and to any "reading down", if that be possible and necessary, to bring the section within the bounds of the legislative competence of the New South Wales Parliament as required by s 31 of the Interpretation Act 1987 (NSW). Constructional choices precluding or limiting the application of s 93X to consorting by engaging in, or for the purpose of, communication on governmental or political matters would include a reading of "consort" as not extending to association for such a purpose. No such construction, which could engage with the principle of legality, was suggested by the parties. It was not in the interest of the plaintiffs' challenge to validity for them to do so. The State of New South Wales accepted that s 93X extended to consorting with convicted offenders for entirely innocent purposes. Its arguments focussed upon the effects of s 93X on the implied freedom of communication, which it contended are minimal and purely incidental. Section 93X does not prohibit mere communication with convicted offenders. Even if such a construction were open, the principle of legality would operate against it. However, there is no textual or contextual basis for construing s 93X as inapplicable to "habitual consorting" by engaging in, or for the purpose of, communication on governmental or political matters. Such a reading would import a qualification or limitation upon the meaning of "consort" which is inconsistent with its longstanding judicial exegesis, including that in Johanson v Dixon. Nor, having regard to that conclusion, could the Court construe official warnings as lacking legal consequences in relation to consorting in the course of, or for the purposes of, communication on governmental or political matters. The Court should not give a strained meaning to statutes in order to avoid the possibility of constitutional invalidity. Parliament's choice of language must be 72 (1988) 166 CLR 79 at 100 per Mason CJ, Deane and Gaudron JJ. 73 (1988) 166 CLR 79 at 100 per Mason CJ, Deane and Gaudron JJ. respected, even if the unavoidable consequence of that choice is constitutional invalidity74 which cannot be cured by statutorily mandated reading down75. The question which must now be considered is whether s 93X, as applied to consorting in the course of, or for the purposes of, communication on governmental or political matters, infringes the implied freedom of political communication. The implied freedom of political communication The implied freedom of communication on governmental or political matters defines a limit on the legislative power of the Commonwealth, State and Territory Parliaments and informs the common law of Australia. The questions to be asked in determining whether an impugned law exceeds that limit were settled in Lange v Australian Broadcasting Corporation76, and modified in Coleman v Power77. They were recently restated in Unions NSW v New South Wales78. They are: Does the impugned law effectively burden the freedom of political communication either in its terms, operation or effect79? If the provision effectively burdens the freedom, is the provision reasonably appropriate and adapted, or proportionate, to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative government80? In considering each question, it is necessary to bear in mind that the implied freedom operates as a limit upon legislative power, not as a source of 74 International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 at 349 [42] per French CJ; [2009] HCA 49. 75 Interpretation Act 1987 (NSW), s 31. 76 (1997) 189 CLR 520 at 567 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ; [1997] HCA 25. 77 (2004) 220 CLR 1 at 50 [92]–[93], 51 [95]–[96] per McHugh J, 77–78 [196] per Gummow and Hayne JJ; [2004] HCA 39. 78 (2013) 88 ALJR 227; 304 ALR 266; [2013] HCA 58. 79 (2013) 88 ALJR 227 at 236 [35] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; 304 ALR 266 at 276. 80 (2013) 88 ALJR 227 at 237 [44]; 304 ALR 266 at 278. individual rights or freedoms81. As five Justices of this Court said in Unions NSW82: "The central question is: how does the impugned law affect the freedom?" The question whether a law "effectively burdens" the freedom requires consideration of its legal and practical operation. As Hayne J pointed out in Monis v The Queen, it does not require an evaluation of the significance or weight to be attached to that effect83. The submission of New South Wales to the contrary should be rejected. Nor can a negative answer to the question be based on a finding that the law's restriction on the implied freedom will not affect the overall quantum of political discourse, having regard to ways of undertaking that discourse which are unaffected by the restriction84. Such considerations may be involved in the second question. On the other hand, an effective burden is unlikely to be inferred simply from the forensic construction of causal connections between the law and some unlikely hypothetical restriction on the implied freedom. The language of "legitimate ends" and laws "reasonably and appropriately adapted" to them in the second question may be traced back to the judgment of the Supreme Court of the United States delivered by Marshall CJ in McCulloch v Maryland85 in 1819. That judgment concerned the power conferred on the Congress by Art I, §8, cl 18 of the United States Constitution to make laws "necessary and proper" for the exercise of other powers conferred by the Constitution. It was cited by Barton and O'Connor JJ in Jumbunna Coal Mine NL v Victorian Coal Miners' Association86 in connection with the analogous "incidental" power conferred by s 51(xxxix) of the Constitution. Their Honours quoted87 the well-known passage from the judgment of Marshall CJ88: 81 (2013) 88 ALJR 227 at 235 [31]; 304 ALR 266 at 275. 82 (2013) 88 ALJR 227 at 236 [36]; 304 ALR 266 at 277. 83 (2013) 249 CLR 92 at 145–146 [118]–[121]; [2013] HCA 4. 84 (2013) 249 CLR 92 at 146 [122] per Hayne J. 85 17 US 316 at 421 (1819). 86 (1908) 6 CLR 309 at 344 per Barton J, 358 per O'Connor J; [1908] HCA 95. 87 (1908) 6 CLR 309 at 344 per Barton J, 357 per O'Connor J. 88 McCulloch v Maryland 17 US 316 at 421 (1819). "Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional." The criterion of validity to which the second question gives rise first requires that the impugned law serve a "legitimate end". That is a purposive standard, which must be satisfied by any law which effectively burdens the freedom. Satisfaction of that standard attracts to consideration of the law's validity the criterion which has long been applied to laws purportedly made pursuant to grants of purposive law-making powers89 and, as a subset of that category, express or implied grants of incidental law-making powers90. That criterion, that the law be "reasonably appropriate and adapted, or proportionate" to serve the legitimate end, is a species of the genus of proportionality tests. Such tests apply to constitutional grants of purposive powers and to statutory grants of power to make delegated legislation, but not to non-purposive powers91. They apply to what might broadly be called "public interest qualifications" on other constitutional guarantees, particularly s 9292. The term "proportionality" in this context is classificatory. It does not designate a doctrine. Some of the proportionality criteria apply a high threshold test for invalidity, asking whether the impugned law is "capable" or "reasonably capable" of being appropriate and adapted to the relevant purpose93. That kind of formulation has sometimes been 89 As to the distinction between purposive and non-purposive powers see Stenhouse v Coleman (1944) 69 CLR 457 at 471 per Dixon J; [1944] HCA 36. 90 Cunliffe v The Commonwealth (1994) 182 CLR 272 at 322 per Brennan J; [1994] HCA 44. 91 Leask v The Commonwealth (1996) 187 CLR 579 at 593–595 per Brennan CJ, 602–604 per Dawson J, 613–615 per Toohey J, 616–617 per McHugh J, 624 per Gummow J; [1996] HCA 29; Theophanous v The Commonwealth (2006) 225 CLR 101 at 128 [70] per Gummow, Kirby, Hayne, Heydon and Crennan JJ; [2006] HCA 18. 92 Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 472–473 per Mason CJ, Brennan, Deane, Dawson and Toohey JJ; [1990] HCA 1; Betfair Pty Ltd v Western Australia (2008) 234 CLR 418 at 476–477 [101]–[102] per Gleeson CJ, Gummow, Kirby, Hayne, Crennan and Kiefel JJ; [2008] HCA 11. 93 As to the use of high threshold and low threshold proportionality tests see Attorney- General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 34–42 [48]–[62] used in relation to the implied freedom of political communication94. A negative answer to the question, so framed, would be sufficient for invalidity. However, a positive answer is not sufficient for validity. The second question, as recently restated in Unions NSW, requires the low threshold proportionality test for invalidity to be applied in cases involving the implied freedom. In the joint judgment in Unions NSW it was said that95: "The inquiry whether a statutory provision is proportionate in the means it employs to achieve its object may involve consideration of whether there are alternative, reasonably practicable and less restrictive means of doing That passage referred back to the observation in the joint judgment of Crennan, Kiefel and Bell JJ in Monis v The Queen96: "Where there are other, less drastic, means of achieving a legitimate object, the relationship with the legislative purpose may not be said to be proportionate, at least where those means are equally practicable and available. Given the proper role of the courts in assessing legislation for validity, such a conclusion would only be reached where the alternative means were obvious and compelling, as was the Tasmanian legislation in Betfair Pty Ltd v Western Australia. In such circumstances the means could not be said to be reasonably necessary to achieve the end and are therefore not proportionate." (footnotes omitted) The cautionary qualification that alternative means be "obvious and compelling" ensures that consideration of the alternatives remains a tool of analysis in applying the required proportionality criterion. Courts must not exceed their constitutional competence by substituting their own legislative judgments for those of parliaments. 94 Langer v The Commonwealth (1996) 186 CLR 302 at 318 per Brennan CJ, 334 per Toohey and Gaudron JJ; [1996] HCA 43; Levy v Victoria (1997) 189 CLR 579 at 594–595 per Brennan CJ, 614–615 per Toohey and Gummow JJ; [1997] HCA 31. 95 (2013) 88 ALJR 227 at 237 [44] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; 304 ALR 266 at 278. 96 (2013) 249 CLR 92 at 214 [347]. Whether s 93X imposes a burden on the implied freedom of political communication Laws which burden the implied freedom may fall into one or more of the following non-exhaustive list of classes97: law which expressly restricts or prohibits communication on governmental or political matters98; a law which restricts or prohibits communication by reference to characteristics of its content which may or may not involve governmental a law which restricts or prohibits communications by reference to a mode of communication, without regard to the content of the communication; and a law which restricts or prohibits an activity, which is not defined by reference to communication on governmental or political matters, where the law may operate in some circumstances to restrict or prohibit such communication100. Those categories of laws do not attract different levels of scrutiny in the application of the criteria of validity. As Crennan, Kiefel and Bell JJ explain more generally in their Honours' reasons, the test in Lange does not import the range of different kinds of scrutiny, from minimal to strict, adopted in the Supreme Court of the United States. The identification of a legitimate end may be more difficult in the first category than in the fourth101. The question whether 97 See generally Hogan v Hinch (2011) 243 CLR 506 at 555–556 [95]–[96] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; [2011] HCA 4; Wotton v Queensland (2012) 246 CLR 1 at 16 [30] per French CJ, Gummow, Hayne, Crennan and Bell JJ; [2012] HCA 2. 98 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106; [1992] HCA 45; Langer v The Commonwealth (1996) 186 CLR 302. 99 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; Coleman v Power (2004) 220 CLR 1; Hogan v Hinch (2011) 243 CLR 506; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1; Monis v The Queen (2013) 249 CLR 92. 100 Levy v Victoria (1997) 189 CLR 579; Wotton v Queensland (2012) 246 CLR 1. 101 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 169 per Deane and Toohey JJ; Hogan v Hinch (2011) 243 CLR 506 at 555–556 [95] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ. the law is reasonably appropriate and adapted to serve that legitimate end remains the same in each case. The question whether it does so in a manner compatible with the maintenance of the constitutionally prescribed system of representative government may be easier to answer in the affirmative in the fourth category than in the first. Section 93X is in the fourth category. It prohibits an activity which is not simply communication but necessarily involves communication, albeit not necessarily communication on governmental or political matters. However, it does not require the construction of a fanciful hypothesis to conclude that, in its legal effect and practical operation, s 93X may directly or indirectly restrict the implied freedom. Persons could be convicted of habitual consorting even if their consorting was with ex-prisoners for the purposes of agitation for reform of the laws relating to consorting, sentencing, parole, prison conditions or the provision of post-prison rehabilitation services or half-way houses. The inferred burden on the implied freedom is not able to be displaced by any assumption that, as a matter of administrative practice, police officers would not issue official warnings in relation to consorting for such innocent purposes. As appears from s 93Y, habitual consorting for the innocent purpose of engaging in political activity, including communication on governmental or political matters, is not excluded from the offence-creating provision. New South Wales submitted, correctly, that s 93X is not directed at political communication. Further, as it submitted, a person constrained by s 93X retains the freedom to engage in a variety of ways in the kinds of communications which are covered by the freedom. It also correctly submitted that s 93X would only prohibit such communication where it occurs as an incident of consorting with two or more persons convicted of indictable offences in relation to whom warnings have previously been given, and which does not fall within one of the exceptions in s 93Y. Those submissions, however, do not go to the point of the first question. They invite the Court to assess the significance or extent of the effect of s 93X on the implied freedom, including by reference to modes of communication that remain open for persons affected by its prohibitions. In this respect, New South Wales was supported by the Attorneys-General for Victoria and Queensland. For the reasons already given, that invitation should be rejected. Section 93X imposes an effective burden upon the implied freedom of political communication. The next question is whether s 93X serves a legitimate end. Whether the burden is imposed for a legitimate end New South Wales submitted that the legitimate object or end of s 93X is to prevent or impede criminal conduct by deterring non-criminals from consorting in a criminal milieu and deterring criminals from establishing or building up a criminal network. That submission should be accepted. That object is apparent from the text of s 93X and, as part of its context, the objects of precursor consorting laws in New South Wales and similar laws in other States, reflected in the judicial decisions discussed earlier in these reasons. Tajjour and Hawthorne argued that s 93X casts so wide a net that it could not be said to be reasonably adapted to serve a legitimate end. That aspect of their written submissions tended to conflate the question whether the section serves a legitimate end with the proportionality question. While the net cast by s 93X is wide enough to pick up a large range of entirely innocent activity, it clearly does apply to conduct which is properly regarded as likely to result in the formation, maintenance and extension of criminal networks. It evidently relies upon the exercise of police discretion for an appropriately narrow focus in its actual application102. Wide as its net may be, the proposition that s 93X serves a legitimate end must be accepted. Reasonably appropriate and adapted The proportionality question is whether s 93X is reasonably appropriate and adapted to serve its legitimate end in a manner which is compatible with the the constitutionally prescribed system of representative maintenance of government. New South Wales submitted that s 93X is not directed to restricting communication on governmental or political matters. It argued that the effect of the section on such communication is incidental. On its proper construction, s 93X applies to habitual consorting for the sole purpose of communication on governmental or political matters. Its actual application may be limited by the sensible exercise of the police discretion to issue an official warning. While in practical terms that may mean that it is not likely to be applied to consorting for the purpose of political communication, the law does not so constrain the discretion or the application of the section. Where it applies to such activity, its burden on the implied freedom cannot be discounted as merely incidental. It may be that, in some cases, the application of s 93X to consorting with convicted offenders for the purpose of communicating on governmental or political matters will have a double effect — it will prevent or impede the formation, maintenance or expansion of a criminal network and also burden the implied freedom. The first effect serves a legitimate end. The difficulty is that the section, in imposing the burden on the implied freedom, does not 102 The submission of the Attorney-General for Western Australia, however, went too far in contending that the warning feature "excludes the innocent associate and clarifies the object of s 93X." discriminate between cases in which the purpose of impeding criminal networks may be served, and cases in which patently it is not. That there are such cases appears from s 93Y, which makes it clear that it is not the purpose of s 93X to prohibit habitual consorting whatever the circumstances in which it occurs. A range of innocent consorting activities is excluded, albeit the onus is on the defendant to satisfy the court that the consorting was reasonable in the circumstances. The existence of those defences reinforces the conclusion that the burden of s 93X on the implied freedom, measured by the breadth of its application to entirely innocent habitual consorting, is not appropriate and adapted reasonably, or otherwise, to serve the purpose of the section. That conclusion does not require further support by the identification of less restrictive alternatives to s 93X in its present form. Nor does it depend upon the proposition that there is an implied freedom of association, free-standing or incidental to the implied freedom of political communication. The burden on freedom of association imposed by s 93X results in a burden on the implied freedom of political communication. It is not necessary to consider whether there is a free-standing implied freedom of association. In any event, the Court has recently rejected such a concept 103. Section 93X, in its application to the implied freedom, is not reasonably appropriate and adapted to serve its legitimate end. A fortiori, it is not reasonably appropriate and adapted to serve its legitimate end in a manner that is compatible with the maintenance of the constitutionally prescribed system of representative government. It was submitted for Tajjour and Hawthorne that the legislative powers of the Parliament of New South Wales are limited by obligations which Australia, through the Executive Government of the Commonwealth, has assumed at international law under treaties to which it is a party. In particular, it was submitted that the Parliament of New South Wales could not enact a law infringing upon the "right to freedom of association with others" set out in Art 22 of the ICCPR, to which Australia is a party. There is no authority which would support such a proposition. It is incompatible with the long accepted dualism of 103 Wainohu v New South Wales (2011) 243 CLR 181 at 230 [112] per Gummow, Hayne, Crennan and Bell JJ, French CJ and Kiefel J agreeing at 220 [72], 251 [186] per Heydon J; [2011] HCA 24; cf divergent views in Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 225–226 [114]–[115] per McHugh J, 234 [148] per Gummow and Hayne JJ, 277–278 [284]–[286] per Kirby J, 306 [364] per Heydon J; [2004] HCA 41 and Kruger v The Commonwealth (1997) 190 CLR 1 at 91 per Toohey J, 116 per Gaudron J, 142 per McHugh J, 157 per Gummow J; [1997] HCA 27. international law and Australian domestic law104. If given effect by a Commonwealth statute, the freedom of association set out in Art 22 of the ICCPR could be said to enliven the operation of s 109 to invalidate inconsistent State laws. Absent such incorporation, the existence of the Convention obligation is relevant to the interpretation of State laws, analogously to the principle of legality105. The submission would treat as invalid any law of a State inconsistent with, or in contravention of, an obligation assumed by the Executive Government of the Commonwealth. There is no constitutional basis for that submission, which should be rejected. Reading down New South Wales submitted, as a "fall back" position, that if s 93X were found to impose an impermissible burden on the implied freedom, it could be read down pursuant to s 31 of the Interpretation Act 1987 (NSW) so as not to apply to communications protected by the implied freedom. Section 31 of the Interpretation Act 1987 (NSW), reflecting in part s 15A of the Acts Interpretation Act 1901 (Cth), relevantly provides: "(1) An Act or instrument shall be construed as operating to the full extent of, but so as not to exceed, the legislative power of Parliament. If any provision of an Act or instrument, or the application of any such provision to any person, subject-matter or circumstance, would, but for this section, be construed as being in excess of the legislative power of Parliament: it shall be a valid provision to the extent to which it is not in excess of that power, and the remainder of the Act or instrument, and the application of the provision to other persons, subject-matters or circumstances, shall not be affected." 104 Brown v Lizars (1905) 2 CLR 837 at 860–861 per Barton J; [1905] HCA 24; Chow Hung Ching v The King (1948) 77 CLR 449 at 477–478 per Dixon J; [1948] HCA 37; Kioa v West (1985) 159 CLR 550 at 570–571 per Gibbs CJ; [1985] HCA 81; Dietrich v The Queen (1992) 177 CLR 292 at 305–306 per Mason CJ and McHugh J, 321 per Brennan J, 348–349 per Dawson J, 359–361 per Toohey J; [1992] HCA 57. See also Minister for Foreign Affairs and Trade v Magno (1992) 37 FCR 298 at 303–305 per Gummow J. 105 Polites v The Commonwealth (1945) 70 CLR 60 at 77 per Dixon J; [1945] HCA 3. It is a necessary condition of the application of s 31 that the court can identify an application of the relevant provision to a larger class of "persons, subject-matters or circumstances" than the power of the Parliament allows106. By way of example, in R v Hughes107 the words "functions and powers" in s 47(1) of the Corporations Act 1989 (Cth) were treated as limited to functions and powers in respect of matters within the legislative powers of the Parliament of the Commonwealth108. Section 93X does not apply to a class of things like the "functions and powers" in Hughes or the "associations" read down by O'Connor J in Jumbunna Coal Mine NL v Victorian Coal Miners' Association109 to associations party to a dispute within the meaning of s 51(xxxv) of the Constitution. The general words of s 93X present a variety of ways in which the excess of power might be removed. Section 93X and its associated provisions might be reframed so as not to impose a burden on the implied freedom at all, or so as to impose a lesser or conditional burden which would satisfy the proportionality criterion. There is no unique construction which would bring the section within the legislative power of the Parliament. As Latham CJ said in Pidoto v Victoria110: "if a law can be reduced to validity by adopting any one or more of a number of several possible limitations, and no reason based upon the law itself can be stated for selecting one limitation rather than another, the law should be held to be invalid." That passage was referred to in Victoria v The Commonwealth (Industrial Relations Act Case)111. Further, a construction of s 93X to confine its operation by reference to the implied freedom would involve a reading of its text and that of s 93Y, which sets out six express innocent purpose defences, in a way that would be inconsistent with the statutory text and context. It would be 106 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 93 [250] per Gummow, Crennan and Bell JJ; [2009] HCA 23. 107 (2000) 202 CLR 535; [2000] HCA 22. 108 (2000) 202 CLR 535 at 557 [43] per Gleeson CJ, Gaudron, McHugh, Gummow, 109 (1908) 6 CLR 309 at 364. 110 (1943) 68 CLR 87 at 111; [1943] HCA 37. 111 (1996) 187 CLR 416 at 502 per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ; [1996] HCA 56. inconsistent with the scope of the term "consorting", which the Parliament has chosen to use according to its received meaning, and inconsistent with the qualifications on that received meaning reflected in s 93Y. Section 31 does not apply in this case to save s 93X from invalidity. Conclusion The questions in the Special Cases relating to Tajjour and Hawthorne should be answered as follows: Is s 93X of the Crimes Act 1900 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? A1. Yes. Is there implied into the Commonwealth Constitution a freedom of association independent of the implied freedom of communication on governmental and political matters? A2. Not necessary to answer. Q3. Does s 93X of the Crimes Act 1900 (NSW) contravene any implied freedom of association referred to in question 2? A3. Not necessary to answer. Is s 93X of the Crimes Act 1900 (NSW) invalid because it is inconsistent with the International Covenant on Civil and Political Rights as ratified by the Commonwealth of Australia? A4. No. Q5. Who should pay the costs of the Special Case? A5. The defendant. In the Special Case relating to Forster, only the first and last questions were referred. The answer to the first question should be "Yes" and the answer to the last question should be "The defendant". Hayne HAYNE J. Neither the Parliament of the Commonwealth nor the Parliament of any State has power to make a law inconsistent with that freedom of communication on matters of government and politics which is an indispensable incident of the constitutionally prescribed system of representative and responsible government of the Commonwealth. Section 93X of the Crimes Act 1900 (NSW) makes it an offence, punishable by imprisonment, fine, or both imprisonment and fine, habitually to consort with convicted offenders after having been given an "official warning"112 in relation to each of those offenders. Is that law beyond the legislative power of the Parliament of New South Wales? The facts and proceedings The plaintiff in each of these proceedings stands charged with an offence against s 93X. Each has brought proceedings in the Supreme Court of New South Wales seeking a declaration that s 93X is invalid. On the application of the Attorney-General for New South Wales, the whole of each proceeding has been removed113 into this Court. The parties in each proceeding have agreed in stating questions of law in the form of a special case for the opinion of the Full Court. None of the special cases records any agreed fact about what is said to constitute the alleged habitual consorting beyond the names of the persons with whom it is alleged the plaintiff was consorting and the fact that each was a convicted offender. None of the special cases says anything to suggest that any of the alleged occasions of consorting was for a purpose of, or attended by, any communication about any government or political matter. Each plaintiff alleges that s 93X is invalid because it impermissibly burdens the implied freedom of communication concerning government and political matters. Mr Tajjour and Mr Hawthorne further allege that s 93X is invalid because it infringes a freedom of association which they assert should be found to be implied in the Constitution and because s 93X is inconsistent with the International Covenant on Civil and Political Rights114 ("the ICCPR"). The questions stated in the form of special cases ask, in effect, whether the allegations the plaintiffs make should be accepted. They should not. 112 Defined by s 93X(3) as a warning given by a police officer (orally or in writing) that a convicted offender is a convicted offender and that consorting with a convicted offender is an offence. 113 Judiciary Act 1903 (Cth), s 40(1). 114 Done at New York on 16 December 1966; [1980] ATS 23. Hayne Freedom of political communication – principles Because freedom of communication on matters of government and politics is an indispensable incident of that system of representative and responsible government which the Constitution creates and requires, that freedom cannot be curtailed115 by the exercise of legislative or executive power and the common law cannot be inconsistent with it. But the freedom is not absolute and it follows that the limit on legislative power is not absolute. law has The principles governing this limitation on power are well-established. Subject to one qualification, they were not disputed in argument in these cases. Where a legal or practical effect of burdening political communication, it is necessary to decide "whether the provision is reasonably appropriate and adapted, or proportionate, to serve a legitimate end in a manner which is compatible with the maintenance of the prescribed system of representative government"116. the The qualification which must be noted, however, is that, contrary to the submissions of New South Wales and some interveners, the first question posed by Lange117 – whether the impugned law "effectively burdens the freedom of political communication either in its terms, operation or effect"118 – neither permits nor requires consideration of the extent of that burden. As five members of the Court have recently held119, "[t]he identification of the extent of the burden imposed on the freedom is not relevant to this first inquiry". The submissions by New South Wales, and some of the interveners, to the effect that consorting laws would have only a slight or insubstantial effect on political discourse, and that for that reason alone s 93X should be found not to be a law which effectively burdens freedom of communication about government or political matters, are unsound and must be rejected. Rather, application of the established principles must proceed in accordance with the two steps identified in Lange. Does the law have the legal or practical effect of burdening political communication? If it does, is the law proportionate to serve a legitimate end in a manner which is 115 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560; [1997] HCA 25; Monis v The Queen (2013) 249 CLR 92 at 141 [103]; [2013] HCA 4; Unions NSW v New South Wales (2013) 88 ALJR 227 at 235 [31]; 304 ALR 266 at 275; [2013] HCA 58. 116 Unions NSW (2013) 88 ALJR 227 at 237 [44]; 304 ALR 266 at 278. 117 (1997) 189 CLR 520 at 567. 118 Unions NSW (2013) 88 ALJR 227 at 236 [35]; 304 ALR 266 at 276. 119 Unions NSW (2013) 88 ALJR 227 at 236 [40]; 304 ALR 266 at 277. Hayne compatible with the maintenance of the prescribed system of representative government? Answering both of the Lange questions depends upon a proper understanding of the application of the impugned provision. It is necessary, therefore, to say something about what is meant by "consort" and "consorting" in those provisions. Consorting Section 93W provides that, in the relevant provisions, "consort means consort in person or by any other means, including by electronic or other form of communication". Section 93Y provides that certain forms of consorting are to be disregarded "if the defendant satisfies the court that the consorting was reasonable in the circumstances". Both s 93W and s 93Y depend upon giving meaning to the idea of "consort". Neither of those sections sheds much light upon that meaning. New South Wales submitted that "consort" should be given the meaning described by Mason J in Johanson v Dixon120. That meaning has two relevant elements. First, there is an element of associating or keeping company. Second, there must be "some seeking or acceptance of the association on the part of the defendant"121. The plaintiffs did not put forward any alternative meaning. Rather, they submitted that s 93X would have a very wide application, not least because of s 93W and its provision for consorting "by any other means". Implicitly, the plaintiffs seemed thus to accept that "consort" should be given the meaning which has been described. Be this as it may, no reason was given for departing from the meaning given to "consort" by Mason J in Johanson and it should be adopted. It remains necessary to make four further points about s 93X and its associated provisions. First, s 93X, in creating the offence, says nothing at all about the purpose for the consorting. To adopt and adapt what Mason J said122 in Johanson (about differently expressed consorting provisions), this feature of s 93X entails not only that the prosecution need not prove that the consorting was for an unlawful or criminal purpose but also that "consort" and its cognates do not imply that the association is one which has or needs to have any particular purpose. 120 (1979) 143 CLR 376 at 383; [1979] HCA 23. 121 (1979) 143 CLR 376 at 383. 122 (1979) 143 CLR 376 at 383. Hayne Second, s 93X provides that any person who "habitually consorts with convicted offenders", after having been given an official warning in relation to each of the relevant offenders, is guilty of an offence (emphasis added). Again adopting and adapting what Mason J said123 in Johanson, "the gist of the offence ... is habitual association with persons who fall into the designated [class]". For s 93X, the class is constituted by convicted persons in relation to each of whom the accused person has received an official warning. Third, the definition of "consort" given in s 93W refers to consorting "in person or by any other means, including by electronic or other form of communication". The reference in s 93W to modes of consorting does not modify the elements of consorting itself. It follows that consorting, no matter how it is effected, has those elements identified124 by Mason J in Johanson. That is, there must be a sought or accepted (and habitual) association or keeping of (real or virtual) company with persons of the designated class. Fourth, demonstrating those matters in any particular case may not be easy. What would suffice to demonstrate consorting, not in person, but by electronic or other form of communication, will have to be worked out as the need arises. But the difficulties that may arise are problems of proof. They do not bear upon the proper construction of the provisions. This being the way in which s 93X should be construed, how do the relevant principles apply? The first Lange question It may readily be accepted that s 93X is not directed to restricting communication about government or political matters. But by prohibiting habitually consorting with convicted offenders with respect to whom an official warning has been issued, s 93X operates to prohibit occasions on which there could be political communications. By prohibiting the persons to whom the section is directed from habitually seeking out or accepting association with persons of the designated class, s 93X prohibits those persons making political communications between themselves and prohibits them from joining together to make some concerted communication to others about government or political matters. Like the regulations in issue in Levy v Victoria125, which prohibited all but certain persons from entering certain areas of a State Game Reserve during 123 (1979) 143 CLR 376 at 384. 124 (1979) 143 CLR 376 at 383. 125 (1997) 189 CLR 579; [1997] HCA 31. Hayne the first two days of the duck hunting season, s 93X exemplifies126 "a law which has the effect, if not the purpose, of curtailing to some degree the constitutional freedom". Because s 93X has this legal and practical effect, it is a law which "effectively burdens" the constitutional freedom. It becomes necessary, therefore, to consider the second Lange question (as that question is now to be understood and applied in the light of later decisions127 of the Court). Before doing so, however, it is as well to deal directly with the absence of any fact in any of the special cases which would suggest that any of the several acts or occasions of consorting alleged against the plaintiffs had anything to do with any communication about government or political matters. Is the second Lange question reached? Each plaintiff alleged that s 93X is wholly invalid because it has the effect of curtailing the constitutional freedom, does not satisfy the second Lange question and cannot be read down pursuant to s 31 of the Interpretation Act 1987 (NSW)128. If the plaintiffs are right to allege that s 93X does not satisfy the 126 Levy (1997) 189 CLR 579 at 614 per Toohey and Gummow JJ. 127 Coleman v Power (2004) 220 CLR 1 at 50-51 [92]-[96] per McHugh J, 77-78 [196] per Gummow and Hayne JJ, 82 [211] per Kirby J; [2004] HCA 39; Levy (1997) 189 CLR 579 at 645-646 per Kirby J. See also APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322; [2005] HCA 44; Hogan v Hinch (2011) 243 CLR 506; [2011] HCA 4; Wotton v Queensland (2012) 246 CLR 1; [2012] HCA 2; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1; [2013] HCA 3; Monis (2013) 249 CLR 92; Unions NSW (2013) 88 ALJR 227; 304 ALR 266. 128 Section 31 provides, so far as presently relevant: "(1) An Act or instrument shall be construed as operating to the full extent of, but so as not to exceed, the legislative power of Parliament. If any provision of an Act or instrument, or the application of any such provision to any person, subject-matter or circumstance, would, but for this section, be construed as being in excess of the legislative power of Parliament: it shall be a valid provision to the extent to which it is not in excess of that power, and the remainder of the Act or instrument, and the application of the provision to other persons, subject-matters or circumstances, shall not be affected." Hayne second Lange question, but are wrong in their argument that s 93X could not be read down, there is nothing in any of the special cases to suggest that, so read down, s 93X would not fall for consideration and application to these cases. That is, as has been already noted, there is nothing in any of the special cases which suggests that any of the alleged occasions of consorting was for a purpose of, or attended by, any communication about any government or political matter. But whether or how s 93X could be read down cannot be decided without knowing the nature and extent of the excess of legislative power. Section 31 of the Interpretation Act applies only if, but for its application, a provision would exceed legislative power. That is, s 31 "applies only when the law, construed according to its terms, is beyond power"129 (emphasis added). If s 31 does apply, the relevant provision is then to be "construed as operating to the full extent of, but so as not to exceed, the legislative power of Parliament" (emphasis added). As decisions like Pidoto v Victoria130 and Victoria v The Commonwealth (Industrial Relations Act Case)131 show, applying a provision like s 31 to a law expressed in general terms may present some difficulties. It cannot be assumed that those difficulties can always be resolved in such a way that the generally expressed provisions of the impugned law can have a partial operation. It is, therefore, necessary to decide whether s 93X is beyond legislative power. The second Lange question Is s 93X "reasonably appropriate and adapted, or proportionate, to serve a legitimate end in a manner which is compatible with the maintenance of the prescribed system of representative government"132? The purpose or object of s 93X can be described generally as the prevention of crime. The prevention of crime is a legislative end or object compatible133 with the maintenance of representative and responsible government 129 Pidoto v Victoria (1943) 68 CLR 87 at 108 per Latham CJ; [1943] HCA 37. 130 (1943) 68 CLR 87 at 108-109 per Latham CJ. 131 (1996) 187 CLR 416 at 502-503 per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ; [1996] HCA 56. 132 Unions NSW (2013) 88 ALJR 227 at 237 [44] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; 304 ALR 266 at 278. 133 Wotton (2012) 246 CLR 1 at 16 [31]-[32] per French CJ, Gummow, Hayne, Hayne and the freedom of communication which is its indispensable incident. The legislative end s 93X seeks to pursue is legitimate. Section 93X pursues this end by prohibiting habitual association with persons of the designated class. The premise for the prohibition is that stopping association with the designated class will prevent those who are forbidden to consort from using the occasion of their association to consider or explore the possibility of one or more of them (or others) engaging in some criminal act and will thereby prevent crime. In so far as the plaintiffs challenged the validity of this premise, the challenge must fail. Unlike one of the laws134 in issue in Unions NSW135, there is a rational connection between the provisions made by s 93X and the end to which it is directed: preventing crime. Section 93X is rationally connected to a legitimate end136. The plaintiffs submitted that s 93X goes beyond what is necessary to achieve its end, and thus unnecessarily burdens the implied freedom, because the end to which s 93X is directed could be achieved137 by other, less drastic, but equally practicable and available means. These submissions proceeded, at least in part, by comparing the operation of s 93X with one or more of three alternative hypotheses: first, the complete absence of any prohibition on consorting with convicted offenders; second, a prohibition on consorting with convicted offenders which either excluded from the offence, or excused, consorting "for political purposes"; and third, either "tethering criminal liability to a criminal design" by requiring proof of criminal purpose, or providing for a prohibition on consorting with convicted offenders which either excluded from the offence, or excused, consorting "with reasonable excuse". The first alternative (the complete absence of any prohibition on consorting) may be dealt with briefly. To accept that the law is rationally connected to a legitimate end is to accept that the means adopted by the law are capable of realising that end. Once that is accepted, it follows that it is not possible to conclude that absence of the law would realise that end to the same extent. To conclude otherwise would be to deny the validity of the statutory 134 Election Funding, Expenditure and Disclosures Act 1981 (NSW), s 96D. 135 (2013) 88 ALJR 227 at 238-239 [51]-[56]; 304 ALR 266 at 279-280. 136 cf Monis (2013) 249 CLR 92 at 153-154 [145]-[146]; Unions NSW (2013) 88 ALJR 227 at 239 [60] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; 304 ALR 266 at 281. 137 cf Unions NSW (2013) 88 ALJR 227 at 237 [44]; 304 ALR 266 at 278. Hayne premise, that is, to deny that the realisation of the law's means could contribute to the realisation of the law's end. The plaintiffs' arguments invited attention, at least implicitly, to whether consorting offences do prevent crime that would otherwise occur. Those arguments reveal error. It is neither possible nor relevant to examine whether, without s 93X, the incidence of crime would change. It is not relevant to do so because the efficacy of the impugned law is irrelevant to the ultimate question, which is one of legislative power. In deciding that question, this Court cannot, and will not, assess whether the relevant law has in fact achieved, or will in fact achieve, its intended end or object. The relevant inquiry is about how the law relates to the identified end or object and about the nature and extent of the burden the law imposes on political communication. The second alternative (excluding consorting for political purposes) invites the observation that it will usually (perhaps always) be possible to reframe a law which does not directly regulate, but does effectively burden, political communication by providing that the law is not to apply in a way which would burden communication about government and political matters. But two points must be made about that observation. First, observing no more than that a law could be redrafted to avoid intersection with the implied freedom cannot conclude the second Lange question. To hold otherwise would be to strip all content from the second Lange question. Second, while it would be possible to reframe s 93X by carving out an exception from its operation for some (even all) political communication, it by no means follows that a provision reframed in this way would be a less drastic means of achieving, to the same extent as the present law, the end to which s 93X is directed or that the provision would be as practicable and available as the present law. The first point need not be developed further. It will be necessary, however, to say something further about the second point in the course of examining the third alternative. The third alternative embraced alternative forms of law: one limiting the offence to consorting for criminal purposes, the other providing a defence of reasonable excuse. For the purposes of the present inquiry, both forms of law present similar questions. But the differences between the operation of s 93X and a law requiring proof of criminal purpose are greater than the differences between s 93X and a law providing for a general defence of reasonable excuse. It is convenient, therefore, to focus upon the second form of suggested law: a law providing for a general defence of reasonable excuse. This branch of the argument directed attention to other forms of consorting law which have been enacted in Australia and which have provided Hayne for a defence of "reasonable excuse"138 or "good and sufficient reasons for consorting"139. These other forms of consorting law were said to be an equally practicable and available means of achieving the end to which s 93X is directed and a means of achieving that end which was less intrusive on the freedom of political communication. The argument by reference to provisions allowing for proof of a reasonable excuse for consorting assumed that demonstrating that the consorting was for the purpose of (or perhaps attended by) the making or receiving of communications about government or political matters would constitute a "reasonable excuse" or "good and sufficient reasons" for the consorting. That construction of the expressions would be available and, absent some compelling contextual reason to reject it, would very probably be adopted. Yet the argument failed to confront the proposition that occasions of political communication would not exhaust the operation of a generally expressed "reasonable excuse" provision. The operation of such a provision would turn on the availability of a justification or explanation for the consorting. That is, the operation of the provision would depend on the availability of a sufficient reason for the consorting, including a reason founded in what was said or done (or intended to be said or done) in the course of the consorting. To understand the extent to which such a provision would differ from s 93X (as qualified by s 93Y), it is necessary to observe two features of the present provisions. First, the engagement of s 93X does not depend on the reason or purpose for the consorting. The section is directed to association, regardless of the purpose or reason for the association, and regardless of what the participants may say or do in the course of their association. Second, the forms of consorting which "are to be disregarded"140 for the purposes of s 93X are not identified by reference to what is or may be communicated in the course of the consorting. Section 93Y excludes reasonable consorting with a specified class of persons (family members141) and reasonable consorting that occurs "in the course of" any of the specified activities142 (emphasis added). The activities form a closed class of occasions on which consorting may be disregarded. 138 Summary Offences Act 1966 (Vic), s 49F; Summary Offences Act 1953 (SA), s 13; Summary Offences Act (NT), s 55A. 139 Police Offences Act 1935 (Tas), s 6. 140 s 93Y. 141 s 93Y(a). 142 s 93Y(b)-(f). Hayne It follows that a consorting law which provided for a general "reasonable excuse" defence, or for an exception for political communication (by qualifying the content of the offence or providing a defence), would differ radically from s 93X (as qualified by s 93Y). It would shift the focus of the present law from the fact of association in proscribed circumstances to what is said or done during the act of association or to the purpose or reason for the act of association. Neither the sufficiency of the purpose or reason for, nor the relevance of what was said or done in the course of, association with persons of the designated class, would depend upon the acts that constitute the consorting falling within any of the circumstances described in s 93Y. Investigation, prosecution and enforcement of such a law would differ markedly from the equivalent steps taken in relation to s 93X. And the same observations apply, with greater force, to a law which required proof of criminal purposes. It is not possible to say that a law of the kind posited by the plaintiffs would achieve, to the same extent as the present law, the end to which s 93X is directed or that such alternative means would be as practicable as those adopted by s 93X (as qualified by s 93Y). The premise for s 93X is that crime is prevented by prohibiting consorting with designated persons, regardless of what is or may be said or done in the course of the association and (subject to the closed class of occasions identified in s 93Y) regardless of the purpose or reason for the association. It is not possible to say that a law which proceeded from a different premise (that the occasion of consorting can be excused according to what was said or done or to why it was said or done) could further the prevention of crime to the same extent as the present law or that the means adopted by such a law would be as practicable as those adopted by s 93X. It is, then, necessary to consider what is the burden which s 93X imposes on political communication. Section 93X does not impose an undue burden on political communication. In particular, s 93X does not prohibit the expression or dissemination of any political view or any information relevant to the formation of or debate about any political opinion or matter. Rather, the section prohibits some kinds of association between certain persons. It therefore limits the occasions on which political views and information can be formed, expressed or disseminated by or between those persons. Finally, it may be observed that consorting provisions, of a kind not radically different from those made by s 93X, have a long Australasian history143. It was not suggested in argument that any of these earlier forms of consorting provisions had had any discernible, let alone detrimental, effect on the maintenance of the constitutionally prescribed system of government. And while 143 Johanson (1979) 143 CLR 376 at 382-383 per Mason J. See also McLeod, "On the Origins of Consorting Laws", (2013) 37 Melbourne University Law Review 103. Hayne absence of demonstration of harm cannot conclude the second Lange question, its absence, despite the long history of provisions of the relevant kind, is relevant to determining whether the means adopted by s 93X of achieving the end to which it is directed is compatible with the maintenance of that system of government. Section 93X does not go beyond the limit on legislative power fixed by the Lange principle. The other two grounds of attack on validity advanced by Mr Tajjour and Mr Hawthorne, but not Mr Forster, may be dealt with briefly. An implied freedom of association? This Court has held, more than once144, that no "free-standing" right of association is to be implied from the Constitution. That is, "[a]ny freedom of association implied by the Constitution would exist only as a corollary to the implied freedom of political communication and the same test of infringement and validity would apply"145. These conclusions should not be revisited. For the reasons which have been given, this challenge fails. The ICCPR? The provisions of an international treaty to which Australia is a party do not form part of Australian law unless those provisions have been validly incorporated into Australian municipal law146. No party or intervener submitted that the provisions of the ICCPR have been so incorporated. As was explained by McHugh and Gummow JJ in Re Minister for Immigration and Multicultural 144 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 234 [148] per Gummow and Hayne JJ, 306 [364] per Heydon J; [2004] HCA 41; Wainohu v New South Wales (2011) 243 CLR 181 at 220 [72] per French CJ and Kiefel J, 230 [112] per Gummow, Hayne, Crennan and Bell JJ, 251 [186] per Heydon J; [2011] HCA 24. 145 Wainohu (2011) 243 CLR 181 at 230 [112] per Gummow, Hayne, Crennan and 146 See, for example, Chow Hung Ching v The King (1948) 77 CLR 449 at 478; [1948] HCA 37; Bradley v The Commonwealth (1973) 128 CLR 557 at 582; [1973] HCA 34; Simsek v Macphee (1982) 148 CLR 636 at 641-642; [1982] HCA 7; Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 211-212, 224-225; [1982] HCA 27; Kioa v West (1985) 159 CLR 550 at 570-571; [1985] HCA 81; Dietrich v The Queen (1992) 177 CLR 292 at 305; [1992] HCA 57; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 286-287; [1995] HCA 20. Hayne and Indigenous Affairs; Ex parte Lam147, there are several ways in which an unincorporated treaty may affect the resolution of justiciable disputes. But the proposition which Mr Tajjour and Mr Hawthorne advanced was radically different from the uses of unincorporated international treaties referred to in Lam. Mr Tajjour and Mr Hawthorne submitted that the ICCPR "operates as a constraint upon the power of the State to enact contrary legislation, much like the implied freedom of communication on governmental and political matters". The submission must be rejected. The limitation on State legislative power asserted by Mr Tajjour and Mr Hawthorne is not analogous in any way to the implied freedom of political communication. The implied freedom of political communication is derived from the Constitution itself. The asserted limitation on legislative power by reference to unincorporated treaties cannot be derived from the Constitution. Contrary to the submissions of Mr Tajjour and Mr Hawthorne, for a State to legislate in a manner inconsistent with an unincorporated treaty does not intersect with, let alone interfere with, any aspect of the executive power of the Commonwealth. Conclusion and orders For these reasons, the plaintiffs' challenges to the validity of s 93X should be rejected. The first question in each of the three special cases should be answered: "Section 93X of the Crimes Act 1900 (NSW) is not invalid". Questions 2 and 4 in the special cases in both Mr Tajjour's matter and Mr Hawthorne's matter should each be answered: "No". Question 3 in those special cases should be answered: "Unnecessary to answer". Question 5 in each of those special cases, and question 2 in the special case in Mr Forster's matter, should each be answered: "The plaintiff". 147 (2003) 214 CLR 1 at 32-34 [99]-[102]; [2003] HCA 6. CRENNAN, KIEFEL AND BELL JJ. Section 93X of the Crimes Act 1900 (NSW) provides that it is an offence for a person habitually to consort with convicted offenders after having been given a warning by a police officer that each of those persons has been convicted of an indictable offence148 and that consorting with a convicted offender is an offence. For a person to be said to "habitually consort" with convicted offenders, that person must consort with at least two convicted offenders and consort with each of them on at least two occasions149. "Consort" is widely defined150 to mean any form of communication. At the time s 93X was introduced151, the term "habitually consort" had a received meaning. The fundamental ingredient of association of this kind is companionship, or seeking out the company of the other person152. It follows that not every meeting with a convicted offender would qualify as habitually consorting. The fact that the legislation prescribes a minimum level of association necessary for the offence under s 93X does not exclude recourse to the received meaning of "habitually consort" in order to identify what further may be required. Each of the plaintiffs was charged with an offence under s 93X after receiving a warning. The Special Cases do not suggest that, on the occasions alleged to constitute consorting, the plaintiffs were engaged in communicating about government or political matters. Nevertheless the plaintiffs contend that the effect of s 93X is to restrict the ability of persons to communicate on such matters, that the constitutionally guaranteed implied freedom of communication on those matters ("the freedom") is therefore burdened and that s 93X, in consequence, is invalid. The test in Lange v Australian Broadcasting Corporation153, as to whether a legislative provision impinges on the freedom, contains two limbs. The first 148 See Crimes Act 1900 (NSW), s 93W. 149 Crimes Act 1900, s 93X(2). 150 Crimes Act 1900, s 93W. 151 By the Crimes Amendment (Consorting and Organised Crime) Act 2012 (NSW). 152 Dias v O'Sullivan [1949] SASR 195 at 201; Johanson v Dixon (1979) 143 CLR 376 at 383, 391, 395; [1979] HCA 23. 153 (1997) 189 CLR 520 at 567; [1997] HCA 25, as modified by Coleman v Power (2004) 220 CLR 1 at 50-51 [93]-[96], 78 [196], 82 [211]; [2004] HCA 39. enquires whether the freedom is burdened by the legislative provision in its terms, operation or effect; the second contains certain conditions which, if met, permit a conclusion that the provision is valid, despite burdening the freedom. The freedom effects a restriction on legislative power154. It was explained in Unions NSW v New South Wales155 that, in addressing the first limb of the test in Lange, it is important to bear in mind that what the Constitution protects is not a personal right156. It follows that the correct approach to the question whether a legislative provision impermissibly burdens the freedom is to consider how the provision affects the freedom generally, rather than a particular person. Submissions in the matters presently under consideration suggest some misunderstanding about the first limb and about what is necessary to satisfy the requirement that the freedom is "effectively burdened" by the terms, operation or effect of s 93X. Both New South Wales and Victoria referred to the following statement from the joint reasons in Monis v The Queen157: "It may be accepted that an effect upon political communication which is so slight as to be inconsequential may not require an affirmative answer to the first limb inquiry". (emphasis added) It was put by New South Wales that, if s 93X did not restrict the freedom very often, then a negative answer might be given to the enquiry in the first limb of the Lange test. If that were the case, it would not be necessary to consider whether the conditions in the second limb were satisfied. The submission proceeds upon a misreading of the statement in Monis. Read with what follows in the same passage, it is plain that the joint reasons were saying that it was only an effect which would not be regarded as a real effect that would not qualify as a burden. It was not suggested that a qualitative assessment of the degree of the restriction effected by a legislative provision was appropriate 154 Unions NSW v New South Wales (2013) 88 ALJR 227 at 236 [36]; 304 ALR 266 at 277; [2013] HCA 58. 155 (2013) 88 ALJR 227 at 236 [36]; 304 ALR 266 at 276-277. 156 See also Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 73-74 [166]; [2013] HCA 3; Monis v The Queen (2013) 249 CLR 92 at 189 [266]; [2013] HCA 4. 157 (2013) 249 CLR 92 at 212 [343]. at the stage of the first limb. Immediately after the statement referred to above, the joint reasons in Monis continued158: "[B]ut it cannot be suggested that s 471.12 falls within this category, even if its likely effect is hard to quantify. Once a real effect upon the content of political communication is seen as likely, attention must be directed to the second limb of the test. That is because the evident purpose of Lange is to require a justification for a burden placed upon the freedom. This is not to say that the level of the restriction or burden which is imposed is not relevant. Lange itself shows that it is; but it is a question to be addressed in connection with consideration of the second limb of the Lange test." (emphasis added; footnote omitted) This accords with what was said by five members of this Court in Unions NSW159. It was noted that it could be simply resolved whether the provision under consideration in that case limited the freedom, because the provision restricted the source of funds available to meet the costs of political communication. It was then said160: "It follows that the freedom is effectively burdened. The concession made by the defendant, that there is an indirect burden which is more than inconsequential, is inevitable." Shortly thereafter, it was explained161: "The identification of the extent of the burden imposed on the freedom is not relevant to this first inquiry ... Questions as to the extent of the burden and whether it is proportionate to the legitimate purpose of a statutory provision arise later in connection with the second limb inquiries. The question at this point is simply whether the freedom is in fact burdened." (footnote omitted) 158 Monis v The Queen (2013) 249 CLR 92 at 212-213 [343]. 159 (2013) 88 ALJR 227 at 236 [38]-[40]; 304 ALR 266 at 277. 160 Unions NSW v New South Wales (2013) 88 ALJR 227 at 236 [38]; 304 ALR 266 at 161 Unions NSW v New South Wales (2013) 88 ALJR 227 at 236 [40]; 304 ALR 266 at The term "habitually consort" is not to be understood to apply as widely as the plaintiffs contend. There is no real prospect of a person committing an offence because they meet with convicted offenders on some occasions. Nevertheless, s 93X proscribes all forms of communication with convicted offenders in the course of habitual consorting. Its operation therefore extends to include communications of the kind protected by the freedom. The first limb must be answered in the affirmative. Section 93X effectively burdens the freedom. It is the second limb of the Lange test which is the real area for debate in the present matters. The proportionality analysis which is central to the second limb of the Lange test first requires the identification of the legislative purpose of s 93X and the means by which it is sought to be achieved. Unions NSW confirms that it is necessary that there be shown to be a rational connection between the two162. In some jurisdictions, this first stage of the proportionality analysis is referred to as one of "suitability"163. It may be inferred, from the terms of s 93X, that the provision is targeted, albeit indirectly, to the prevention of crime. Convicted offenders who are not able to associate amongst themselves and with others on a regular basis may find it more difficult to organise criminal activities and enlist others to participate in such activities. The desirability of consorting provisions such as this is not relevant to the task before the Court. It is sufficient for the purposes of the initial enquiry under the second limb of the Lange test to observe that the purpose of s 93X is legitimate and the means employed are capable of advancing that purpose. The two are therefore rationally connected. Neither the purpose of s 93X nor the means by which it is sought to be achieved can be said to be incompatible with the maintenance of representative and responsible government164. The question that follows is whether the means chosen by the legislature are proportionate to the purpose pursued. The relevant enquiry identified in 162 See Unions NSW v New South Wales (2013) 88 ALJR 227 at 238 [50], 239 [60]; 304 ALR 266 at 279, 281. 163 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 303. 164 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567; Monis v The Queen (2013) 249 CLR 92 at 193 [277]. Unions NSW165 is whether there are alternative, reasonably practicable means which are capable of achieving that purpose and which are less restrictive in their effect upon the freedom. This second enquiry under the second limb of the Lange test may be described, in a shorthand way, as the test of "reasonable necessity". The "necessity" for the means employed by the legislative provision is made out where no other (hypothetical) alternative exists which would be less harmful to the freedom while equally advancing the legislative purpose166. To qualify as a true alternative for the purposes of the comparison between the impugned legislative provision and a hypothetical provision, the latter must be as practicable as the impugned provision167. That is, the hypothetical measure must be as effective in achieving the legislative purpose. It must be as capable of fulfilling that purpose as the means employed by the impugned provision, "quantitatively, qualitatively, and probability-wise"168. Consequently, not every hypothetical legislative measure which is identified as capable of advancing the same legislative purpose and lessening the restrictive effect on the freedom will qualify as a reasonably practicable alternative. The enquiry proceeds upon the basis of what the legislature could have done to achieve its purpose whilst at the same time limiting the effects upon the freedom as much as reasonably possible. It does not proceed upon the premise that the legislature would adopt a measure which was not as effective in achieving its purpose. To approach the matter otherwise would involve the Court impermissibly substituting the legislative provision under consideration for something else. If no other means can be identified that are as practicable in achieving the purpose but less restrictive to the freedom, it may be concluded that the legislative provision goes no further than is reasonably necessary in achieving its purpose. Attention is then directed to a third enquiry, as to the extent of the burden effected by the legislative provision on the freedom. However, if other means are shown to be available and equally practicable, the impugned 165 (2013) 88 ALJR 227 at 237 [44]; 304 ALR 266 at 278; see also Monis v The Queen (2013) 249 CLR 92 at 214-215 [347]-[348]. 166 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 317. 167 Uebergang v Australian Wheat Board (1980) 145 CLR 266 at 306; [1980] HCA 40; Rowe v Electoral Commissioner (2010) 243 CLR 1 at 134-135 [438]-[439]; [2010] HCA 46. 168 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 324. legislation has gone further than is reasonably necessary. It would follow that the legislature has exceeded the limits of its power to make laws which burden the freedom and no further enquiry is necessary. The plaintiffs Hawthorne and Forster, and the Australian Human Rights Commission as amicus curiae, argue that the legislature could have provided further defences to the offence in s 93X. Section 93Y of the Crimes Act lists only six forms of consorting which are to be disregarded for the purposes of s 93X if the court considers that the consorting was reasonable in the circumstances. They are: consorting with family members; consorting that occurs in the course of lawful employment or the lawful operation of a business; consorting that occurs in the course of training or education; consorting that occurs in the course of the provision of a health service; consorting that occurs in the course of the provision of legal advice; and consorting that occurs in lawful custody or in the course of complying with a court order. Consorting for the purpose of communication on government or political matters is not listed as an exception in s 93Y. It was argued that a more general defence of a reasonable excuse could have been provided, and is provided in other jurisdictions. However, the test of reasonable necessity is not concerned with whether a provision could have been enacted which limits the operation of s 93X generally; it is concerned only with whether there could be a provision which is as practicable as s 93X but has a lesser effect on the freedom. The only defence which might have this effect is one that excepted, from the operation of s 93X, consorting taking place on occasions where communications on government or political matters occurred or where communication on those matters was the purpose of the consorting. Such a defence would achieve a result similar to reading down s 93X – a process which the plaintiff Hawthorne denied was open, on the basis that s 93Y indicates a contrary legislative intention to limit the forms of consorting which might qualify as defences. That submission may be put to one side. The relevant enquiry for present purposes is not whether s 93X can be construed so as to except from its operation communications which are the subject of the freedom. It is whether s 93X, operating with the hypothetical defence, would be as practicable in achieving its legislative object as it is without the defence. If it is, it qualifies as an alternative measure which could have been taken. A defence which would except from the definition of consorting occasions where there is communication on government or political matters is far removed from the defences provided by s 93Y. Putting aside difficulties in drafting a defence of that kind, such a defence would be easily claimed but difficult to investigate, test or challenge, both factually and legally. This would be especially so if the prosecution were required to negative the claim once raised. In reality, the defence would create a gap which is readily capable of exploitation. In these circumstances, it cannot be said that s 93X would operate as effectively with the hypothetical defence. Another of the alternative measures proposed by the plaintiff Hawthorne also fails the requirement that it be equally practicable. It was suggested that s 93X could be confined to consorting which occurred only between convicted offenders. However, this would not be effective to prevent recruitment of non- criminals by convicted offenders. Other hypothetical measures were suggested, such as a law which provides a clearer link with criminal activity or requires the police to form the view that it was reasonably necessary to give a warning in order to prevent future crime. These measures would add another requirement to proof of the offence. Other proposed alternatives were laws that limit the persons who might qualify as convicted offenders, by reference to the nature of or penalty for the offences of which they were convicted, whether the offences were recent, whether there had been multiple offences, as well as other factors. These alternatives may have the effect of reducing the scope of the offence, but it cannot be said with respect to any of them that it would effect a lesser restriction on the freedom than s 93X. No reasonable and equally practicable alternatives having a lesser effect on the freedom have been identified. A conclusion that s 93X goes no further than is reasonably necessary in order to achieve its objective is therefore open. To this point the extent of the effect of s 93X on the freedom has not been considered. In Unions NSW, it was said that the second limb of the Lange test involves questions "as to the extent of the burden [which the legislative provision places on the freedom] and whether it is proportionate to the legitimate purpose" of the provision169. It was not necessary in Unions NSW to address those questions further or to discuss what was involved in them because the legislation there in question did not meet the initial requirement that its measures be rationally connected to its legitimate purpose. The question central to the Lange test is: how does the impugned law affect the freedom? This was identified in Unions NSW in discussing the first 169 Unions NSW v New South Wales (2013) 88 ALJR 227 at 236 [40]; 304 ALR 266 at 277; see also Monis v The Queen (2013) 249 CLR 92 at 213 [343], 215 [350]. limb enquiry170. That the second limb requires consideration of the extent to which the legislative provision burdens the freedom is confirmed by the conclusion stated in Lange, namely that the burden was not "undue"171. The submissions for Western Australia direct attention to whether consideration of the importance of the legislative purpose is involved in the second limb. Those submissions proceed upon the basis that there has been some level of acceptance by this Court of a test of strict proportionality as relevant to the Lange test. The test of strict proportionality, as applied in other jurisdictions that employ proportionality analysis, has recently been described as involving the ultimate question whether the severity of the effect on a right outweighs the importance of the legislative objective172. The tests of proportionality have been well worked out in some legal systems. They may be thought to have the advantage of providing judges with more objective methods of assessment, thus reducing the prospect of mere statements of conclusion, based upon individual notions of whether legislation has gone too far. At the same time, they allow the legislature to understand how the limits of its power will be tested. However, as Professor Barak has said, the way in which one legal system understands proportionality may inspire another legal system, but no more173. The question whether a test of strict proportionality is useful and appropriate in the Australian constitutional context has not been debated in a matter before this Court since Lange. Its determination is likely to involve a number of considerations, not the least of which concerns the role of this Court with respect to the freedom. That role does not involve assessing the loss of a fundamental right or freedom enjoyed by individuals. It involves protecting the freedom in order to preserve the system of representative government. 170 Unions NSW v New South Wales (2013) 88 ALJR 227 at 236 [36]; 304 ALR 266 at 171 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 575. 172 Bank Mellat v HM Treasury (No 2) [2014] AC 700 at 791 [74] per Lord Reed JSC, cited in R (Nicklinson) v Ministry of Justice [2014] 3 WLR 200 at 343 [168]; [2014] 3 All ER 843 at 893. See also Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 340. 173 See Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at The tests of proportionality to which reference has been made above are not to be confused with the categories of scrutiny which have been employed by the Supreme Court of the United States of America174, and which range from minimal scrutiny, requiring only a rational connection between the legislation and a legitimate object, to strict scrutiny, which is applied to fundamental rights and which requires there to be a compelling state interest175. Whilst an aspect of strict scrutiny – that there be no other means available which would be less restrictive of the right – may bear some resemblance to the test of reasonable necessity employed in proportionality analysis, it has been doubted that a true comparison can be drawn between strict scrutiny and proportionality analysis176. The test in Lange does not involve differing levels of scrutiny. In attempting to resolve differences of view expressed in preceding cases about the appropriate method of testing legislation which burdened the freedom, the Court in Lange adopted aspects of proportionality analysis. American jurisprudence, respecting strict scrutiny, has not been accepted by this Court as relevant to the Lange test. There may be questions still to be addressed, in an appropriate case, concerning the role, if any, of the test of strict proportionality in the Lange test. They do not arise for consideration in these matters. Enquiry as to whether a burden is undue or as to the importance of a legislative purpose is necessitated only when the burden effected by the legislation is substantial. The legislation now under consideration is unlikely to have that effect. Section 93X is not directed to the freedom and its effect upon the freedom is incidental. Any limitation on the freedom would only occur in the course of what would qualify as habitual consorting. We would answer the questions in the Special Cases in the terms proposed 174 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 284, 175 Canada employs a similar requirement, of strict scrutiny, but its application is said to be different: Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 516-517. 176 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 516. As to the enquiry involved in strict scrutiny, see Fallon, "Strict Judicial Scrutiny", (2007) 54 UCLA Law Review 1267. Introduction Section 93X of the Crimes Act 1900 (NSW), making guilty of an offence a person who "habitually consorts" with convicted offenders and who again "consorts" with those convicted offenders after having been given an official warning in relation to each of them, adopts language which has been the subject of authoritative language designedly177. To "consort", in this context, means no more than to "associate" or to "keep company"; denoting "some seeking or acceptance of the association", but not implying "that the association is one which has or needs to have a particular purpose"178. The section adopts judicial exposition. that The argument of Mr Tajjour and Mr Hawthorne that the section is invalid as infringing Art 22 of the International Covenant on Civil and Political Rights founders at the threshold; the argument is based on the flawed premise that international law operates of its own force to limit State legislative power. Their argument that the section is invalid as infringing an implied constitutional freedom of association which is independent of the implied constitutional freedom of communication on governmental or political matter similarly founders at the threshold; there is no foothold in the Constitution for such an implication. The argument of Mr Tajjour, Mr Hawthorne and Mr Forster that the section implied constitutional freedom of the communication on governmental or political matter is not wholly without merit, but does not avail them of the consequences they seek. invalid as infringing For the reasons which follow, I consider that the section does infringe the implied constitutional freedom, albeit only in its application to association for a purpose of engaging in communication on governmental or political matter. The section is to that extent invalid, but severable. The section is otherwise valid. Analytical framework The implied governmental or political matter was recognised in Australian Capital Television Pty Ltd v The Commonwealth179 and in Nationwide News Pty Ltd v communication constitutional freedom 177 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 February 2012 at 8131-8132. 178 Johanson v Dixon (1979) 143 CLR 376 at 383; [1979] HCA 23. 179 (1992) 177 CLR 106; [1992] HCA 45. Wills180. It was confirmed in Lange v Australian Broadcasting Corporation181, where it was held to be rooted in ss 7 and 24 and related sections, which establish representative and responsible government under the Constitution, together with s 128, which provides for its amendment by referendum. The implication of the constitutional freedom as explained in Lange proceeds on the understanding that the Constitution has as its purpose "to enlarge the powers of self-government of the people of Australia"182, "is for the advancement of representative government"183, and establishes the electoral processes for which it provides as the principal mechanism both for facilitating and for constraining the exercise of Commonwealth legislative and executive power184. The implication is of a judicially enforceable constitutional limitation on Commonwealth and State legislative and executive power which derives from, and is limited to, "what is necessary for the effective operation of that system"185. What is it that is necessary for the effective operation of the system of representative and responsible government established by the Constitution? In terms adopted in Lange, it is "that the elections to it must be free, with all that this implies in the way of freedom of speech and political organisation"186. The constitutionally protected freedom is to receive and to disseminate information which might ultimately bear on electoral choice187. Within the scope of that freedom is not simply communication on governmental or political matter to 180 (1992) 177 CLR 1; [1992] HCA 46. 181 (1997) 189 CLR 520; [1997] HCA 25. 182 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 557 quoting Official Report of the National Australasian Convention Debates (Adelaide), 23 March 1897 at 17. 183 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 557 quoting Federal Commissioner of Taxation v Munro (1926) 38 CLR 153 at 178; [1926] HCA 58. 184 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 185 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 561. 186 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560 quoting Birch, Representative and Responsible Government, (1964) at 17. 187 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 561. electors (allowing for each individually to make an informed electoral choice) but communication on governmental or political matter between electors (allowing for those electors collectively to communicate with other electors and with government). Very soon after Lange, Gaudron J observed188: "[J]ust as communication would be impossible if 'each person was an island', so too it is substantially impeded if citizens are held in enclaves, no matter how large the enclave or congenial its composition. Freedom of political communication depends on human contact and entails at least a significant measure of freedom to associate with others." Statements in subsequent cases, to the effect that any freedom of association implied by the Constitution would exist only as a corollary of the freedom of communication formulated in Lange189, should be read in light of that observed reality. They should not be read as suggesting that the constitutional protection of freedom of association for governmental or political purposes is in doubt. They should not be read as suggesting that it is secondary or derivative. Association for the purpose of engaging in communication on governmental or political matter is part and parcel of the protected freedom. Part of the legacy of Lange is that the ultimate question of whether or not a law infringes the implied constitutional freedom falls to be determined within a standardised analytical framework. The two steps in that precedent-mandated analysis are together a functional reflection of the nature of the protected freedom. The first step in the analysis is to ask whether the law, in its legal or practical operation, effectively burdens communication on governmental or political matter. The inquiry is into the character of the law assessed and expressed by reference to its tendency to burden communication of that kind. The test of effective burden is qualitative not quantitative. That is the import of the recent statement that "[t]he identification of the extent of the burden imposed … is not relevant to this first inquiry"190. To confine constitutional protection to 188 Kruger v The Commonwealth (1997) 190 CLR 1 at 115; [1997] HCA 27 (footnotes omitted). See also at 88-92, 142. 189 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 234 [148]; [2004] HCA 41; Wainohu v New South Wales (2011) 243 CLR 181 at 230 [112]; [2011] HCA 24. 190 Unions NSW v New South Wales (2013) 88 ALJR 227 at 236 [40]; 304 ALR 266 at 277; [2013] HCA 58. a law which operates to place some "general" constraint on communication on governmental or political matter – in the apparently volumetric sense in which New South Wales and some of the interveners would employ that term – would be inimical to the nature of the freedom to be protected, which exists to ensure that even the smallest minority is not, without justification, denied by law an ability to be heard in the political process. That minority, as the cases illustrate, might be as small as those who seek to engage in non-verbal protests in a hunting area during restricted hours in a hunting season191, or those who seek to express political views to named individuals by means of offensive communications sent through the post192. The function served by the first step in the analysis is twofold. First, it recognises that most laws on most topics will in some circumstances have some effect on some forms of communication. By limiting the protection to laws which effectively burden communication on governmental or political matter, the first step reflects the high purpose and substantive nature of the protected freedom. "In all but exceptional cases", a law does not effectively burden such communication "unless, by its operation or practical effect, it directly and not remotely restricts or limits the content of those communications or the time, place, manner or conditions of their occurrence"193. The first step in this way recognises as beyond the scope of constitutional protection those laws the effect of which on communication on governmental or political matter is insubstantial or adventitious194. In so doing, it forestalls the need for further analysis. To answer that a law does not effectively burden communication on governmental or political matter is to end the inquiry. The other aspect of the function served by the first step in the analysis is no less important. By requiring identification of an effective burden on communication on governmental or political matter at the outset, the first step serves to focus and to calibrate the inquiry mandated by the second step in the analysis. The second step in the analysis, as reformulated in Coleman v Power195, is to ask whether the law is reasonably appropriate and adapted to serve a legitimate 191 Levy v Victoria (1997) 189 CLR 579; [1997] HCA 31. 192 Monis v The Queen (2013) 249 CLR 92; [2013] HCA 4. 193 Coleman v Power (2004) 220 CLR 1 at 49 [91]; [2004] HCA 39. 194 Cf APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 351 [28]; [2005] HCA 44. 195 (2004) 220 CLR 1. end in a manner which is compatible with the system of representative and responsible government established by the Constitution. That second step itself proceeds in two stages196. It requires initially the identification of the object or end which the law is designed to achieve. That identification necessarily occurs by reference to the text and context of the law. The end is not legitimate unless the end is itself compatible with the system of representative and responsible government established by the Constitution. The end of quelling a political controversy or of handicapping political opposition would not answer that description. to serve Where a legitimate end is identified, what is then required by the second step in the analysis is examination of whether, and if so to what extent, the law in its legal and practical operation is tailored to achieve that end. The degree of fit between means and end sufficient to justify a law as reasonably appropriate and adapted that end can be alternatively described as one of "proportionality"197 or of "reasonable necessity" 198. Whatever description is used, the examination is in every case directed to the sufficiency of the justification for the burden on communication on governmental or political matter which the law has been identified to have at the first step in the analysis. The constitutional protection is not against every effective burden on communication on governmental or political matter. The protection is against an effective burden that is "undue"199, meaning "unjustified". This Court has not to date adopted a generic proportionality analysis of the kind used in Canada to determine whether a law burdening an activity within an area of constitutionally protected freedom is "reasonable" and "can be demonstrably justified in a free and democratic society"200. Nor has it overtly adopted a categorical approach of the kind used in the United States to determine 196 Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 61-62 [131]; [2013] HCA 3. 197 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562; Unions NSW v New South Wales (2013) 88 ALJR 227 at 237 [44]; 304 ALR 266 at 278. 198 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 199-200 199 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 568-569, 200 Section 1 of the Canadian Charter of Rights and Freedoms. See R v Oakes [1986] 1 SCR 103 at 138-140. whether a law shown to burden communication answers the First Amendment's description of one "abridging the freedom of speech"201. for a This Court has, however, recognised it to be in the nature of the requirement law which effectively burdens communication on governmental or political matter to be justified in terms of pursuing a legitimate end by means compatible with the system of representative and responsible government established by the Constitution, that the sufficiency of the justification will be calibrated to the nature and intensity of the burden which those means impose on communication on governmental or political matter. So, it has repeatedly been accepted that "a law whose character is that of a law with respect to the prohibition or restriction of [political] communications ... will be much more difficult to justify ... than will a law whose character is that of a law with respect to some other subject and whose effect on such communications is unrelated to their nature as political communications"202. At one end of the spectrum, establishment of a sufficient justification may require "close scrutiny, congruent with a search for 'compelling justification'", constituted by establishing that the law pursues an end identified in terms of the protection of a public interest which is itself so pressing and substantial as properly to be labelled compelling and that the law does so by means which restrict communication on governmental or political matter no more than is reasonably necessary to achieve that protection203. At the other end of the spectrum, establishment of a sufficient justification may require nothing more than demonstration that the means adopted by the law are rationally related to the pursuit of the end of the law, which has already been identified as legitimate. Alternative means of achieving the end which are less burdensome on communication on governmental or political matter have long been recognised as relevant to the inquiry204. But their presence or absence will not necessarily be decisive. The weight they will be accorded will vary with the nature and intensity of the burden to be justified. Relevant to the validity of a particular law 201 Eg United States v Alvarez 183 L Ed 2d 574 at 595-596 (2012). 202 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 169; Levy v Victoria (1997) 189 CLR 579 at 618-619; Hogan v Hinch (2011) 243 CLR 506 at 555-556 [95]; [2011] HCA 4; Wotton v Queensland (2012) 246 CLR 1 at 16 [30]; [2012] HCA 2. 203 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 200 [40] citing Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 204 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 568. may also be any inequality of impact on the communication of divergent political views205. Step 1: Effective burden? The first question in the present case is whether, and if so how, s 93X of the Crimes Act imposes an effective burden on communication on governmental or political matter. Answering that question begins with the observation that the section imposes a criminal prohibition on association. The prohibition is on habitual association with two or more persons within s 93W's definition of convicted person. There are in fact nearly 200,000 persons in New South Wales within that definition206. Most are no longer under sentence or subject to be sentenced. Most are therefore not ineligible to be elected to the Commonwealth Parliament on account of their conviction207. But the analysis would proceed in the same way irrespective of the number of persons within the definition and irrespective of their eligibility to be elected to the Commonwealth Parliament. Answering the question proceeds by observing that the section imposes a criminal prohibition on association with two or more convicted persons irrespective of the purpose of association. That leads to an obvious point, which no party or intervener had an interest in making. The point is that the section will impact differentially on communication on governmental or political matter depending on the purpose of association. Its impact on those who associate to lobby for prison reform will be different from its impact on those who associate to play cards. In its application to an association formed other than for a purpose of engaging in communication on governmental or political matter, the prohibition imposed by the section will have the practical effect of preventing such communication on governmental or political matter as might otherwise occur in the course of that association. Persons who cannot associate to play cards cannot discuss politics between hands. That is an effect on communication on governmental or political matter. But it is an effect which is properly characterised as adventitious, even if it might not in every conceivable circumstance be trivial. It does not amount to an effective burden. 205 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 146; Unions NSW v New South Wales (2013) 88 ALJR 227 at 251 [147]-[148]; 304 ALR 266 at 297-298. 206 New South Wales Ombudsman, Consorting Issues Paper: Review of the use of the consorting provisions by the NSW Police Force, November 2013 at 21. 207 Section 44(ii) of the Constitution. In its application to an association formed for a purpose of engaging in communication on governmental or political matter, however, the prohibition imposed by the section will have the practical effect of preventing or impeding that purpose being realised. That effect on communication on governmental or political matter is qualitatively different. It does amount to an effective burden. New South Wales and some interveners argue that any burden would be negated by the requirement for an official warning as an element of the offence which the section creates. They point out that the giving of that official warning would be subject to collateral review in any prosecution. They point out that an official warning given out of a desire to prohibit or impede political communication would not be for a purpose which the section would be construed to permit even leaving the application of the implied constitutional freedom entirely to one side. That may be so. Yet the official warning could still be given to a person whose association was for a purpose of engaging in political communication without any desire on the part of the police officer giving it to prohibit or impede political communication. The implied statutory constraint on the giving of an official warning provides no assurance that the prohibition on association imposed by the section cannot apply to an association formed for a purpose of engaging in communication on governmental or political matter. The requisite analysis looks to the burden on communication imposed by a law itself in its legal operation or in its practical operation208. The burden here lies in the legal operation of the section in so far as that legal operation extends to an association formed for a purpose of engaging in communication on governmental or political matter. That burden is not removed by the fact, if it be the fact, that the law might be administered to have a practical operation which is narrower than its legal operation209. The section effectively burdens communication on governmental or political matter. Further analysis is therefore required to determine whether that burden is justified. What is important for that further analysis is that the effective burden on communication on governmental or political matter is confined to the application of the section to an association for a purpose of engaging in communication on governmental or political matter. Step 2: Justification? Section 93X is a contemporary version of a consorting law, the policy of which historically has been "to inhibit a person from habitually associating with persons ... because the association might expose that individual to temptation or 208 Wotton v Queensland (2012) 246 CLR 1 at 19 [42]. 209 Cf Ackroyd v McKechnie (1986) 161 CLR 60 at 70; [1986] HCA 43. lead to his involvement in criminal activity"210. The object of the section is to prevent or impede criminal conduct. Preventing or impeding criminal conduct is compatible with the system of representative and responsible government established by the Constitution. The section has a legitimate end. The question is then whether there is sufficient justification for the burden which the section imposes on communication on governmental or political matter in pursuit of that legitimate end. That question can be focussed more precisely. The section pursues its end by prohibiting association. New South Wales, in its written submissions, explained it this way: "Section 93X serves the legitimate objective of preventing or impeding criminal conduct by preventing and disrupting association that might expose that individual to temptation or lead to his involvement in criminal activity. It is the 'association' that is sought to be prevented – prior to the stage at which a 'criminal design' is actually formed." Is s 93X's prohibition on association, prior to the stage at which "criminal design" is actually formed (or perhaps even suspected), justified in its application to association for a purpose of engaging in communication on governmental or political matter? Is application of the prohibition to association for a purpose of engaging in communication on governmental or political matter proportionate to, or reasonably necessary for, preventing or impeding criminal conduct? The question is not – as New South Wales and some interveners seek to frame it – whether the burden which the section imposes on communication on governmental or political matter is proportionate to, or reasonably necessary for, preventing or impeding criminal conduct to the same extent as might potentially be achieved by adopting the section's prophylactic prohibition on association. To frame the question in those or similar terms is to pay insufficient regard to the Coleman v Power reformulation of the second Lange question. It is to lose sight of why the analysis is being undertaken. The implied constitutional freedom is a constraint on legislative design. It limits legislative options. The consequence of the implied constitutional freedom is that there are some legitimate ends which cannot be pursued by some means, the result of which in some circumstances is that some ends will not be able to be pursued to the same extent as they might have been pursued absent the implied constitutional freedom. Means which come at too great a cost to the system of representative and responsible government established by the Constitution must be abandoned or refined. Means which are overbroad may need to be narrowed. This consequence of the implied freedom cannot be avoided by an analysis which seeks to circumvent its 210 Johanson v Dixon (1979) 143 CLR 376 at 385 (emphasis added). application by characterising means adopted by the law which burden communication on governmental or political matter as the end the law pursues. An effective burden on communication on governmental or political matter which takes the form of the application of a prohibition on association for a purpose of engaging in communication on governmental or political matter, in my view, warrants close scrutiny, congruent with a search for compelling justification. Not much turns, however, on the precise calibration of the test of proportionality, or reasonable necessity, warranted by the burden which s 93X imposes. To prevent or impede criminal conduct, s 93X prohibits association. The prohibition is not absolute. Some forms of association are excluded by the availability of the defence in s 93Y. Why is association for a purpose of engaging in communication on governmental or political matter not similarly excluded? The only answer proffered by New South Wales or by any intervener in its support is that exclusion of association for a purpose of engaging in communication on governmental or political matter would be impracticable. The impracticability is argued to arise: first because what is included within communication on governmental or political matter is difficult to define, and second because "[t]hat consorting was for such purposes is an assertion easily made, and most difficult to disprove". Neither basis for the suggested impracticability is attractive, much less compelling. As to the first, any difficulty of defining communication on governmental or political matter provides no justification for ignoring communication on governmental or political matter entirely. As to the second, our system of criminal justice has other means of mitigating the possibility that witnesses might tell lies, and, if they do, imposes no requirement on juries to believe them. The burden imposed by the application of the section to an association for a purpose of engaging in communication on governmental or political matter is not justified. It follows that, in its application to an association for a purpose of engaging in communication on governmental or political matter but not otherwise, the section infringes the implied constitutional freedom. Severance Section 31 of the Interpretation Act 1987 (NSW) is applied by s 5 of that Act to every New South Wales Act "except in so far as the contrary intention appears". Section 31(1) provides that an Act "shall be construed as operating to the full extent of, but so as not to exceed, the legislative power of Parliament". Section 31(2) provides that, if the application of a provision of an Act "to any person, subject-matter or circumstance, would, but for this section, be construed as being in excess of the legislative power of Parliament", "it shall be a valid provision to the extent to which it is not in excess of that power" and "the application of the provision to other persons, subject-matters or circumstances, shall not be affected". Like other severance clauses, of which s 15A of the Acts Interpretation Act 1901 (Cth) has been the most litigated Australian example, s 31 of the Interpretation Act as qualified by s 5 of the Interpretation Act creates a statutory presumption the effect of which is that "the intention of the legislature is to be taken prima facie to be that the enactment should be divisible and that any parts into effect found constitutionally unobjectionable independently of those which fail"211. A "contrary intention" for the purpose of s 31 is not a legislative aspiration that the enactment is to operate fully in the terms in which it is expressed, but "a positive indication [which] appears in the enactment that the legislature intended it to have either a full and complete operation or none at all"212. For the purpose of s 31(2), in particular, such a contrary intention is a positive indication that the legislature did not intend the provision in question to have a distributive application to persons, subject- matters or circumstances to which the provision is expressed to apply but instead intended "all to go free unless all were bound"213. should be carried Where not excluded by the appearance of a contrary intention, a severance clause such as s 31 – s 31(2) no less than s 31(1) – operates as "a rule of construction and not [as] a rule of law"214. As a rule of construction, the severance clause does not authorise a court, "by adopting a standard criterion or test merely selected by itself, to redraft a [provision] so as to bring it within power and so preserve its validity"215. The court "cannot separate the woof from the warp and manufacture a new web"216. That is to say, the court cannot 211 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 371; [1948] HCA 7. 212 Cam & Sons Pty Ltd v The Chief Secretary of New South Wales (1951) 84 CLR 442 at 454; [1951] HCA 59. 213 R v Poole; Ex parte Henry [No 2] (1939) 61 CLR 634 at 652; [1939] HCA 19. 214 Pidoto v Victoria (1943) 68 CLR 87 at 110; [1943] HCA 37. 215 Pidoto v Victoria (1943) 68 CLR 87 at 111. 216 Australian Railways Union v Victorian Railways Commissioners (1930) 44 CLR 319 at 386; [1930] HCA 52. because the court could not take on "the legislative task of making a new law from the constitutionally unobjectionable parts of the old"217. That a severance clause operates only as a rule of construction, however, is no impediment to its application to read down a provision expressed in general words so as to have no application within an area in which legislative power is subject to a clear constitutional limitation218. Such reading down can occur even if the constitutional limitation is incapable of precise definition219, and even if an inquiry of fact is required to determine whether the constitutional limitation would or would not be engaged in so far as the law would apply to particular persons in particular circumstances220. Where reading down can occur, the constructional imperative of a severance clause is that reading down must occur. this Court during the period between It is instructive in this respect to recall that severance clauses were routinely applied by the Bank Nationalisation Case221 and Cole v Whitfield222, when the guarantee in s 92 of the Constitution that "trade, commerce, and intercourse among the States ... shall be absolutely free" was understood to be infringed by a law which "burdened" trade, commerce or intercourse among the States in a manner which was not justified as "reasonable regulation". Absent a severance clause, a provision of a law which had a distributive application to a range of persons, subject-matters or circumstances was invalid in its entirety if the law imposed an unjustifiable burden on trade, commerce or intercourse among the States in any of those applications223. The presence of a severance clause produced a markedly different result: such a provision was invalid only "in so far" as it "would apply" to burden conduct or transactions found to be the subject of trade, commerce or 217 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 372. 218 Victoria v The Commonwealth (1996) 187 CLR 416 at 502-503; [1996] HCA 56. 219 Eg Victoria v The Commonwealth (1996) 187 CLR 416 at 503; Clarke v Federal Commissioner of Taxation (2009) 240 CLR 272 at 307 [66], 317-318; [2009] HCA 220 Eg Bourke v State Bank of New South Wales (1990) 170 CLR 276 at 291-292; [1990] HCA 29; Re Nolan; Ex parte Young (1991) 172 CLR 460 at 487-488; [1991] HCA 29. 221 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1. 222 (1988) 165 CLR 360; [1988] HCA 18. 223 Wilcox Mofflin Ltd v New South Wales (1952) 85 CLR 488 at 523; [1952] HCA 17. intercourse among the States within the meaning of s 92 of the Constitution224. The imperative to read down the provision in the event of invalidity had the additional salutary consequence of removing the need for a court to consider hypothetical or speculative applications of the provision in order to determine the rights of the parties. Barwick CJ explained that consequence as follows225: "Where [a severance clause] is available, and the statute can be given a distributive operation, its commands or prohibitions will then be held inapplicable to the person whose inter-State trade would thus be impeded or burdened. Of course, the question of validity or applicability will only be dealt with at the instance of a person with a sufficient interest in the matter; and, in my opinion, in general, need only be dealt with to the extent necessary to dispose of the matter as far as the law affects that person." In a case where the particular conduct or transaction which the provision burdened was found not itself to be the subject of trade, commerce or intercourse among the States within the meaning of s 92 of the Constitution, the availability of severance meant that no further analysis was required in order to dismiss a challenge to the validity of the provision226. "It is not the practice of the Court to investigate and decide constitutional questions unless there exists a state of facts which makes it necessary to decide such a question in order to do justice in the given case and to determine the rights of the parties"227. The s 92 cases were examples of that practice. Another example can be found in the reasons for judgment of Dixon J in British Medical Association v The Commonwealth, treating as "abstract or hypothetical", and therefore as "outside the scope of the suit", challenges to the validity of specific legislative provisions which were not alleged to affect any immediate right, duty 224 Eg Carter v The Potato Marketing Board (1951) 84 CLR 460 at 481, 486; [1951] HCA 60; Williams v Metropolitan and Export Abattoirs Board (1953) 89 CLR 66 at 76; [1953] HCA 93; Grannall v Marrickville Margarine Pty Ltd (1955) 93 CLR 55 at 71, 75-76, 82; [1955] HCA 6; Nominal Defendant v Dunstan (1963) 109 CLR 143 at 151-152; [1963] HCA 5; Australian Coarse Grains Pool Pty Ltd v Barley Marketing Board (1985) 157 CLR 605 at 669-670; [1985] HCA 38; Ackroyd v McKechnie (1986) 161 CLR 60 at 73-74; Miller v TCN Channel Nine Pty Ltd (1986) 161 CLR 556 at 637; [1986] HCA 60. 225 Harper v Victoria (1966) 114 CLR 361 at 371; [1966] HCA 26. 226 Eg Grannall v Marrickville Margarine Pty Ltd (1955) 93 CLR 55 at 82; Nominal Defendant v Dunstan (1963) 109 CLR 143 at 151-152. 227 Lambert v Weichelt (1954) 28 ALJ 282 at 283. or liability of any party and which would have been severable if invalid228. Another example was the dismissal without consideration of the merits in Commonwealth v Queensland of an action for a declaration that a State law was invalid under s 109 of the Constitution to the extent that it was inconsistent with Commonwealth law, where no facts were alleged and where it was conceded that the State Act would "have some valid operation by reason of the presence in that Act of a reading down provision"229. Another example, much closer to the present case, can be found in the reasons for judgment of McHugh J in Coleman v Power, reading down a statutory prohibition against using "insulting" words in or near a public place so as to have valid operation "except to the extent that it penalised insulting words uttered in discussing or raising matters concerning politics and government"230. A presumption of severance has been identified in the United States as underpinning long-standing and frequently reiterated judicial reticence to consider "facial" challenges to the constitutional validity of legislation231. Prudential considerations often identified as supporting that reticence include avoiding the risk of premature interpretation of statutes on the basis of inadequate appreciation of their practical operation as well as avoiding the formulation of a rule of constitutional law broader than required by the precise facts to which it is to be applied232. The present case illustrates some of the problems of constitutional adjudication in a factual vacuum. The three special cases before the Court recorded no agreement or allegation of any communication on any governmental or political matter. As already noted, no party or intervener had any interest in grappling with the differential impact of the section on communication on governmental or political matter depending on the purpose of the association which might be alleged in a particular case to constitute consorting. Each party chose to present a highly abstracted all-or-nothing argument for or against invalidity. The competing arguments for the most part failed to engage because 228 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 258; [1949] HCA 44. 229 Commonwealth v Queensland (1987) 62 ALJR 1 at 1-2. 230 Coleman v Power (2004) 220 CLR 1 at 56 [110]. 231 Fallon et al, Hart and Wechsler's The Federal Courts and The Federal System, 6th ed (2009) at 162-163; Stern, "Separability and Separability Clauses in the Supreme Court", (1937) 51 Harvard Law Review 76. 232 Eg Washington State Grange v Washington State Republican Party 552 US 442 at they were based on differing assumptions about how s 93X might operate in practice. Severance was relied on by New South Wales only as a fall-back. It may be appropriate in a future case to consider severance as a threshold question. Where it is apparent that an impugned provision would be severable if and to the extent the provision might burden communication on political or governmental matter in a manner which infringes the implied constitutional freedom, there is a real question as to whether arguments about whether or not such a burden is justified are appropriate to be entertained absent demonstration that some right, duty or liability in issue turns on the validity of the provision in its application to burden a particular communication or category of communications on governmental or political matter. The absence from s 93Y of a defence applicable in circumstances of an association for the purpose of engaging in communication on governmental or political matter is not a positive indication that the New South Wales Parliament intended s 93X to have either a full and complete operation or none at all. There is no other indication of an intention contrary to the application of s 31 of the Interpretation Act. Section 93X is severable, and s 31 of the Interpretation Act therefore requires that it be severed. The requirement of s 31 is that s 93X be read down so as not to apply in circumstances where it would infringe the constitutional freedom by placing an undue burden on communication on governmental or political matter. That is achieved by reading the section as having no application in so far as the section would apply to consorting which is or forms part of an association for a purpose of engaging in communication on governmental or political matter. Answers to questions Mr Tajjour, Mr Hawthorne and Mr Forster make no claim that the conduct alleged against them to constitute consorting was or formed part of an association for a purpose of engaging in communication on governmental or political matter. Their argument is that s 93X is invalid in its entirety. Question 1 in each special case should therefore be interpreted to ask whether s 93X is invalid in its entirety. The question as so interpreted should be answered: "No". Questions 2 and 3 in each of Mr Tajjour's and Mr Hawthorne's special cases should each be answered respectively: "No" and "Does not arise". Question 4 in each of those special cases should be answered: "No". Question 5 in each of those special cases, and Question 2 in Mr Forster's special case, should each be answered: "The plaintiff". 181 KEANE J. Each of the plaintiffs currently stands charged in proceedings pending in New South Wales with habitual consorting with convicted offenders in contravention of s 93X of the Crimes Act 1900 (NSW) ("the Act"). In the proceedings in New South Wales, each of the plaintiffs raised the contention that s 93X is invalid under the Constitution of the Commonwealth. Each of the plaintiffs' challenges to the validity of s 93X of the Act came to this Court on a special case pursuant to r 27.08 of the High Court Rules 2004 (Cth). In this Court, the plaintiffs argued that s 93X is invalid on the ground that it is inconsistent with the freedom of communication on political and governmental matters implied by ss 7, 24, 64 and 128 of the Constitution. Two of the plaintiffs, Mr Tajjour and Mr Hawthorne, argued, in addition, that s 93X is offensive to an implied freedom of association guaranteed by the Constitution. They also argued that s 93X is invalid because it is inconsistent with the International Covenant on Civil and Political Rights (1966) ("the ICCPR") as ratified by the Commonwealth. These additional arguments may be disposed of shortly, after the plaintiffs' argument based on the implied freedom of communication has been dealt with. In none of the special cases was it suggested that the factual basis of the charge against the plaintiff involved a communication by or to the plaintiff of a political or governmental matter, whether as part of the social interaction said to be the consorting which gave rise to the charge or as a circumstance denying the possibility of criminal responsibility for a contravention of s 93X. Rather, the plaintiffs argued that s 93X is invalid because its legal effect is to burden communication on political or governmental matters by proscribing the opportunity for such communication. For the reasons which follow, the plaintiffs' challenges to the validity of s 93X fail. Section 93X, properly construed, does not proscribe communication by or between any persons on political or governmental matters. That is because the making of a communication about political or governmental matters does not, of itself, amount to consorting as that term is properly understood. In many cases a communication on political or governmental matters will be made or received without either party knowing that the other is a person convicted of an indictable offence. But even in those cases where one person is aware that the other has been convicted of an indictable offence, mere acquaintance does not make people consorts; and a person's discharge of his or her civic responsibilities is not an occasion of consorting because it lacks the personal intimacy characteristic of consorts. To the extent that a political communication might occur in the course of a social interaction which otherwise answers the description of habitual consorting, s 93X would be engaged by the facts which establish that the interaction in question is properly characterised as consorting. That a political communication might occur in the course of consorting does not excuse the consorting. However, it is not the communication on political or governmental matters that attracts the operation of s 93X, but the facts which establish the consorting. The conclusion that s 93X does not burden communication on political or governmental matters is not reached by a process of reading down of the kind mandated by s 31 of the Interpretation Act 1987 (NSW) in order to avoid the conclusion that it is invalid. Rather, that conclusion is to be drawn from consideration of the text, history and purpose of s 93X. These indicate that s 93X does not extend to proscribe communication by or with any person convicted of an indictable offence on political or governmental matters. The Act Section 93X was introduced into the Act on 9 April 2012 by the Crimes Amendment (Consorting and Organised Crime) Act 2012 (NSW). It provides: "(1) A person who: habitually consorts with convicted offenders, and consorts with those convicted offenders after having been given an official warning in relation to each of those convicted offenders, is guilty of an offence. Maximum penalty: Imprisonment for 3 years, or a fine of 150 penalty units, or both. (2) A person does not habitually consort with convicted offenders unless: the person consorts with at least 2 convicted offenders (whether on the same or separate occasions), and the person consorts with each convicted offender on at least 2 occasions. (3) An official warning is a warning given by a police officer (orally or in writing) that: a convicted offender is a convicted offender, and consorting with a convicted offender is an offence." Consorting is defined by s 93W of the Act as to "consort in person or by any other means, including by electronic or other form of communication." Further, s 93W defines convicted offender as "a person who has been convicted of an indictable offence (disregarding any offence under section 93X)." Section 93Y provides: "The following forms of consorting are to be disregarded for the purposes of section 93X if the defendant satisfies the court that the consorting was reasonable in the circumstances: consorting with family members, consorting that occurs in the course of lawful employment or the lawful operation of a business, consorting that occurs in the course of training or education, consorting that occurs in the course of the provision of a health service, consorting that occurs in the course of the provision of legal advice, consorting that occurs in lawful custody or in the course of complying with a court order." Section 93X and the implied freedom of political communication The plaintiffs' contentions The plaintiffs contended that s 93X burdens the freedom of political communication because it is apt to "capture any form of communication, whether of a political nature or not". Section 93X was said to have the potential to restrict innocent or accidental meetings and discussions with, or between, individuals who have been convicted of an indictable offence. It was said that, because s 93X has the effect of prohibiting all communication, it necessarily has the effect of prohibiting communications on political or governmental matters contrary to the implied freedom. It was further submitted that, because s 93X is broad enough in its reach to apply to entirely innocent communications of a political nature, it is neither reasonably appropriate nor adapted to serving a legitimate end. This submission was said to be supported by the unqualified language of s 93X, the narrow scope of the defences available under s 93Y of the Act, which do not include consorting for the purposes of the discussion of political or governmental matters, and the availability of "less drastic measures" to address the mischief at which s 93X is directed. It is convenient to make some general observations about the implied freedom of political communication before turning to discuss the plaintiffs' submissions in relation to the operation of s 93X. The nature of the implied freedom The implied freedom of political communication is a limitation upon legislative and executive power, arising from ss 7, 24, 64 and 128 of the Constitution, which is necessary to ensure that those provisions operate effectively233. It is important to keep these provisions steadily in view. Section 7 provides, in relation to the Senate as the upper house of the Commonwealth Parliament, that it "shall be composed of senators for each State, directly chosen by the people of the State". And s 24 provides, in relation to the composition of the House of Representatives as the lower house, that it "shall be composed of members directly chosen by the people of the Commonwealth". Section 64 requires Ministers of State for the Commonwealth to be or become a senator or a member of the House of Representatives. Section 128 provides the sole means of altering the Constitution: it requires a proposed law for the alteration to be "submitted in each State and Territory to the electors qualified to vote for the election of members of the House of Representatives." It is necessary that the flow of political communication be kept free in order to maintain the political sovereignty of the people of the Commonwealth. As this Court explained in Lange v Australian Broadcasting Corporation234: "ss 7 and 24 and the related sections of the Constitution necessarily protect that freedom of communication between the people concerning political or government matters which enables the people to exercise a free and informed choice as electors." The constitutional guarantee to the people of the Commonwealth of a free and informed choice as electors ensures free communication between them as equal participants in the exercise of political sovereignty235. The validity of s 93X of the Act is not to be determined by asking whether it infringes some personal right to express oneself in any way that one might choose akin to that created by the First Amendment to the Constitution of the 233 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560-561; [1997] HCA 25. 234 (1997) 189 CLR 520 at 560. 235 Unions NSW v New South Wales (2013) 88 ALJR 227 at 249 [135]; 304 ALR 266 at 295; [2013] HCA 58. United States236. The relevant question is whether the law impairs the freedom of political communication necessitated by ss 7, 24, 64 and 128 of the Constitution. In Unions NSW v New South Wales237, French CJ, Hayne, Crennan, Kiefel and "A legislative prohibition or restriction on the freedom is not to be understood as affecting a person's right or freedom to engage in political communication, but as affecting communication on those subjects more generally. The freedom is to be understood as addressed to legislative power, not rights, and as effecting a restriction on that power. Thus the question is not whether a person is limited in the way that he or she can express himself or herself, although identification of that limiting effect may be necessary to an understanding of the operation of a statutory provision upon the freedom more generally. The central question is: how does the impugned law affect the freedom?" (footnote omitted) Whether s 93X burdens the implied freedom of communication on political and governmental matters is to be answered by reference to the test, usually referred to as the Lange test, which was most recently applied by this Court in Unions NSW v New South Wales238. In this regard, two questions must be answered before the validity of a law can be determined. First, does the law effectively burden freedom of communication about political or governmental matters in its terms, operation or effect? Second, if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and the procedure prescribed by s 128 of the Constitution for submitting a proposed amendment to the Constitution to the informed decision of the people? 236 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560; APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 350 [27], 451 [381]-[382], 478 [451]; [2005] HCA 44; Unions NSW v New South Wales (2013) 88 ALJR 227 at 236 [36], 246 [109]-[110]; 304 ALR 266 at 276-277, 290. 237 (2013) 88 ALJR 227 at 236 [36]; 304 ALR 266 at 276-277. 238 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567; Coleman v Power (2004) 220 CLR 1 at 43 [74], 46 [83], 78 [196], 82 [210], 109 [288]; [2004] HCA 39; Unions NSW v New South Wales (2013) 88 ALJR 227 at 236 [35]; 304 ALR 266 at 276. See also Wotton v Queensland (2012) 246 CLR 1 at 15 [25]; [2012] HCA 2; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 61 [131]; [2013] HCA 3; Monis v The Queen (2013) 249 CLR 92 at 129 [61]; [2013] HCA 4. The proper construction of s 93X The application of the first limb of the Lange test must begin with the ascertainment of the true construction of s 93X in order to understand which social interactions it proscribes239. It is apparent that s 93X is directed at a social interaction of a particular kind which may be effected by, or incidentally include, communication between persons. But it is not directed at all social interactions. The question which the plaintiffs present, for the purposes of the first limb of the Lange test, is whether s 93X has a necessary effect upon those social interactions which consist of communications upon political or governmental matters. One argument advanced by the plaintiffs was that, because s 93W defines "consorting" so as to include consorting "by electronic or other form of communication", it encompasses every communication with or by a person convicted of an indictable offence. That argument may be dealt with immediately. Section 93W serves to ensure that consorting is not limited to personal interactions involving physical presence; but ss 93X and 93W do not operate to proscribe all forms of communication between an individual and a person convicted of an indictable offence. While consorting will usually, if not always, involve some communication between the putative consorts, not every communication between individuals can sensibly be described as consorting. The plaintiffs also urged that "consorting" is a broad term apt to encompass all, or virtually all, communications between individuals on any subject. Senior counsel for Mr Tajjour went so far as to contend that a member of Parliament who sends a weekly newsletter to his or her constituents is thereby habitually consorting with those constituents who happen to have been convicted of an indictable offence. Similarly, it was said that a minister of religion, addressing his or her congregation weekly, would be in peril of contravening s 93X if his or her congregation happened to include persons who had been convicted of an indictable offence. Of course, it was necessary to the plaintiffs' arguments for invalidity that a broad view be taken of the scope of s 93X. But the breadth of s 93X should not be exaggerated. Section 93X is not a modern version of the medieval declaration of outlawry, "caput gerat lupinum" (let him bear the head of a wolf), upon the making of which it became the right and duty of every law abiding subject to 239 Coleman v Power (2004) 220 CLR 1 at 21 [3], 40-41 [64]-[68], 55-56 [110], 68 [158], 80-81 [207], 111 [295]; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 553 [11]; [2008] HCA 4. hunt the outlaw down240. Section 93X does not purport to sever the ties of persons convicted of an indictable offence with civil society. In particular, it does not in terms disqualify any person from the performance of that person's civic responsibilities. And it is difficult to discern any indication of necessary intendment that it should do so. Not every conceivable social interaction between individuals, one or more of whom happens to have been convicted of an indictable offence, amounts to consorting with convicted offenders. Quite apart from s 93Y, no one would sensibly suggest that the sending of a letter of demand by a creditor to a debtor could, of itself, amount to consorting. Equally, an individual who regularly catches the same bus to work as a group of persons previously convicted of indictable offences could not sensibly be said to consort with persons convicted of an indictable offence. Similarly, a pollster who canvasses the political opinions of persons convicted of indictable offences on a regular basis cannot be said to be habitually consorting with those convicted offenders. A member of a political party would not contravene s 93X merely by attending a branch meeting of the party which is also attended by fellow party members who happen to be persons who have been convicted of an indictable offence. Similarly, a political blogger could not be said to consort with convicted offenders by reason of the fact that they are on his or her mailing list. Nor could it be suggested that persons chatting while waiting to vote at a polling booth are consorting with each other. The authorities suggest that these kinds of social interactions are not cases of consorting for two reasons: first, there is no intentional seeking out or acceptance of a personal social relationship with or by a person convicted of an indictable offence241; and secondly, the interaction in question lacks the personal intimacy which characterises the relationship between consorts242. Consorting The offence of consorting has long been deployed in an attempt to limit the spread of criminogenic influences in the community. In New South Wales, consorting was an offence under s 4(1) of the Vagrancy Act 1902 (NSW) by 240 Pollock and Maitland, The History of English Law Before the Time of Edward I, 2nd ed (1898), vol 2 at 449. 241 Beer v Toms; Ex parte Beer [1952] St R Qd 116 at 126; Bryan v White [1962] Tas SR 113 at 118-119. 242 O'Connor v Hammond (1902) 21 NZLR 573 at 575-576; Auld v Purdy (1933) 50 WN (NSW) 218 at 219; Dias v O'Sullivan [1949] SASR 195 at 199-202; Reardon v O'Sullivan [1950] SASR 77 at 86. virtue of an amendment made by the Vagrancy (Amendment) Act 1929 (NSW)243. The offence, although previously a summary offence, remained a part of New South Wales criminal law in s 93X's most recent predecessor, s 546A of the Act. In Johanson v Dixon244, this Court was concerned with the Victorian consorting legislation, which expressly excused from criminal responsibility those consorts who were able to give "a good account" of their conduct. The Court rejected the contention that a defendant who establishes that his or her consorting is for an innocent purpose thereby gives "a good account … of his [or her] so consorting" so as thereby to avoid criminal responsibility for what is otherwise shown to be habitual consorting. It is sufficient to note that the Court accepted the submission of Mr D M Dawson QC, Solicitor-General for the State "'Good account' is an account which excuses the consorting in some way. A good account is not one which merely shows that the consorting amounted to nothing more than consorting." There are differences between the legislation considered in Johanson v Dixon and s 93X of the Act. In particular, s 93X does not use the concept of "good account" as a circumstance excluding criminal responsibility under the section; and s 93Y provides examples of circumstances where the particular purpose of the consorting may afford a defence to a charge of contravening s 93X. Nevertheless, Johanson v Dixon requires that one accept that, s 93Y apart, the circumstance that consorting is for an innocent purpose does not excuse criminal responsibility under s 93X. That is because the proscription of consorting is intended to suppress social interactions which, though themselves innocent, may have a tendency to expand criminal networks. Accordingly, the application of s 93X depends, not on whether the purpose of consorting is innocent, but on whether an occasion of consorting is established by the facts of any given case. Consideration of this issue requires closer attention to the nature of the relationship described as consorting. Consorting as intentional social interaction In Johanson v Dixon, Mason J, with whom Barwick CJ and Stephen J agreed, said that "[i]n its context 'consorts' means 'associates' or 'keeps company'" 243 Steel, "Consorting in New South Wales: Substantive Offence or Police Power?", (2003) 26 University of New South Wales Law Journal 567 at 568. 244 (1979) 143 CLR 376; [1979] HCA 23. 245 (1979) 143 CLR 376 at 378. and that it "denotes some seeking or acceptance of the association on the part of In the same case, Aickin J, with whom Stephen J also agreed, said247: "The ordinary meaning of the words 'to consort' is to 'accompany; to escort or attend, to be a consort to (someone) or to associate oneself with (someone)', and thus to associate with or to keep company with a particular person is to 'consort' with such person. In this respect I agree with the views expressed in Brown v Bryan248 that it denotes some seeking or acceptance of the association with other specified persons on the part of a defendant." The issues in Johanson v Dixon were not such as to require their Honours to explain more fully the nature of the association proscribed as consorting. But it is apparent that their Honours regarded consorting as a social interaction involving more than the mere physical presence of two or more persons at the same location: one aspect of consorting is the intentional seeking out of the company of a person convicted of an indictable offence. Personal intimacy The nature of the association which is sought out is also material to whether the relationship is to be characterised as consorting. To meet casually with an acquaintance is not to consort, both because the meeting is not sought out, and because an acquaintance is not necessarily a consort. It has long been understood that "consorting" involves the seeking out or acceptance of a relationship of personal Hammond250, Stout CJ said: "Consorting would be proved by companionship." One of the meanings given by The Oxford English Dictionary251 to the verb "consort" captures this idea: "To associate in a common lot, to sort together intimacy249. 246 (1979) 143 CLR 376 at 383. 247 (1979) 143 CLR 376 at 395. 248 [1963] Tas SR 1 at 2. 249 Auld v Purdy (1933) 50 WN (NSW) 218 at 219; Dias v O'Sullivan [1949] SASR 250 (1902) 21 NZLR 573 at 575-576. 251 2nd ed (1989), vol 3 at 780. (persons or things)." This understanding reflects the appreciation that the vice at which the law is directed is the potential spread of criminogenic influence by one's choice of companions. In Dias v O'Sullivan252, Mayo J said: "The idea implicit in consorting … suggests a more or less close personal relationship, or at least some degree of familiarity, or intimacy with persons, or attraction from, or an enjoyment of, some feature in common, that results in a tendency towards companionship. Where there is consorting it may be expected to be in obedience to an inclination, or impulse, to gravitate into the presence of, or, if accidentally in such presence, to remain in a group with some other person or persons. The fundamental ingredient is companionship. The fact that people meet (inter alia) to carry on some trade or occupation is not inconsistent with a fraternising contemporary therewith amounting to consorting. If the elements, that I have discussed, are present, the reasons for, or purposes of, any meetings, or every meeting, are irrelevant. The offence does not postulate any criminal activity. It is comradeship with [convicted offenders]. The legislative intent is, as I think, precautionary and preventative, rather than to administer punishment for dishonest planning, criminal transactions, or machinations whilst the group are together." (emphasis added; citations omitted) Mayo J253 discussed the social mischief at which the consorting laws are aimed by reference to the phrase "habitual consorting". His Honour said that habitual consorting is: "the regular meeting of congeries of individuals ... in circumstances where the meetings have the appearance of fraternising. Each instance of such meetings relied on is not a separate offence. The conduct dealt with includes numbers of occurrences over a period. These will be illustrative of tendencies, and collectively may justify an inference that these tendencies are prone to affect the behaviour of the person accused to such a degree as to amount to a habit, that has influenced his conduct during the period alleged in the charge, or at least some part of that period." (emphasis added) 252 [1949] SASR 195 at 201-202. 253 [1949] SASR 195 at 199. It is to be noted that in Johanson v Dixon254, Mason J referred to Dias v O'Sullivan, and to that part of the reasons of Mayo J which included the passages cited above, with evident approval. Extrinsic material In the Agreement in Principle Speech in the Legislative Assembly in respect of the proposed s 93X, the Attorney-General for the State of New South Wales, referring to Johanson v Dixon, confirmed the purpose of the provision in terms which reflect the concern to suppress social interactions which may have a criminogenic tendency255: "The High Court has found that consorting need not have a particular purpose but denotes some seeking or acceptance of the association on the part of the defendant. It does not extend to chance or accidental meetings, and it is not the intention of the section to criminalise meetings where the defendant is not mixing in a criminal milieu or establishing, using or building up criminal networks." (citation omitted) It is tolerably clear that s 93X does not target communications directed indiscriminately to all and any who might be disposed to engage in civic activity. Such communications generally lack the deliberate choice and personal intimacy that give rise to the criminogenic tendency which is the concern of s 93X. It was not suggested, and could not sensibly be suggested, that genuine communications confined to political or governmental matters can themselves be regarded as having that tendency. The proper approach to the construction of s 93X It is also to be borne in mind that the construction of s 93X is to be approached on the basis that the legislation is presumed not to interfere with common law rights and freedoms of individuals "except by clear and unequivocal language for which the Parliament may be accountable to the electorate."256 In seeking to distinguish those communications which are burdened by s 93X from those which are not257, it is well understood by the legislature and 254 (1979) 143 CLR 376 at 385. 255 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 February 2012 at 8131-8132. 256 South Australia v Totani (2010) 242 CLR 1 at 29 [31]; [2010] HCA 39. 257 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 403 courts alike that any limitation upon the common law liberties of speech and association is not to be read expansively. As was said in Lange258, "[u]nder a legal system based on the common law, 'everybody is free to do anything, subject only to the provisions of the law'". Under the common law an individual is free to communicate and associate as he or she wishes. That liberty encompasses the right to enter into such engagements as to the individual seem fit and proper. It also, in the case of contractual engagements, encompasses the right to have those engagements enforced by the courts259. In this respect, as McHugh J said in York v The Queen260: "The common law's conception of liberty is not limited to 'liberty in a negative sense', that is, 'the absence of interference by others'. It extends to a conception of liberty in a 'positive' sense, which is 'exemplified by the condition of citizenship in a free society, a condition under which each is properly safeguarded by the law against the predations of others'." (footnotes omitted) In Australian Communist Party v The Commonwealth261, Dixon J spoke of "the right of association" in this sense as a fundamental aspect of our legal system. It is necessary here to keep in mind that when one speaks of the right of association as Dixon J spoke of it in the Communist Party Case, one is speaking of the freedom of an individual under the common law, not the freedom derived from the constitutional implication, which operates as a denial of power to legislate in a given area of activity. The right of association under the common law is subject to legislative regulation whereas the constitutional implication limits the possibility of legal regulation. Before any question arises of the validity of legal regulation of an activity, one must determine whether a given piece of legislation affects the activity at all; and it is in relation to this step in the analysis that the presumption against interference with the right of association under the common law is to be taken into account. The civic responsibilities which s 93X does not seek to trench upon are not confined to those which arise under the Constitution, but since the plaintiffs' challenge is based on the contention that s 93X is necessarily a burden on communications protected by the implied constitutional freedom, it is convenient to focus upon those communications. As noted earlier in these reasons, the 258 (1997) 189 CLR 520 at 564. 259 Printing and Numerical Registering Co v Sampson (1875) LR 19 Eq 462 at 465. 260 (2005) 225 CLR 466 at 473 [22]; [2005] HCA 60. 261 (1951) 83 CLR 1 at 200; [1951] HCA 5. freedom of communication throughout the Commonwealth necessitated by ss 7, 24, 64 and 128 of the Constitution serves "to preserve the political sovereignty of the people of the Commonwealth."262 The association of the people of the Commonwealth as electors, on which s 24 of the Constitution is expressly predicated, is an association of a unique kind. It is ultimately by virtue of that association that sovereign power is exercised within the Commonwealth by its citizens. It is necessarily a public association; in one sense it might be said to be the ultimate public association, free of the social separation implicit in particular individuals sorting together. Association in this abstract sense, politically important as it is, is the antithesis of the relationship characteristic of consorts: it is not a relationship which involves any seeking out; and it does not involve any notion of personal intimacy or sorting together. Interactions between citizens on the occasion of the performance of their civic responsibilities do not require personal intimacy. To participate in the public affairs of the people of the Commonwealth is not to engage in the personal interaction characteristic of consorting. Further, it was not, and cannot be, suggested that communications on political or governmental matters might of themselves have criminogenic tendencies. Section 93X of the Act is directed at fraternisation with criminals which, as a deliberate choice of companionship, is apt to lead to further criminal activity by the exercise of influence of one companion over the other. Section 93X of the Act is not directed at political communication, or association for the purposes of political communication, at either the State or federal level. It is significant in this regard that the researches of counsel did not reveal that the offence of consorting has ever been held to apply to association for, or communication about, political or governmental matters. To adapt the observations of Gleeson CJ and Heydon J in APLA Ltd v Legal Services Commissioner (NSW)263, if proscriptions upon consorting with criminals are incompatible with the requirements of ss 7, 24, 64 and 128 of the Constitution, "such incompatibility has passed unnoticed for most of the time since Federation." Political communication between consorts Where persons who interact socially, so that they can be said to be consorts, also speak to each other on political or governmental matters, they are no less consorting because their interaction includes that discussion. The 262 Unions NSW v New South Wales (2013) 88 ALJR 227 at 249 [135]; 304 ALR 266 263 (2005) 224 CLR 322 at 351 [29]. occurrence of political discussion between individuals who happen to be consorts does not exclude them from the operation of s 93X of the Act. In APLA Ltd v Legal Services Commissioner (NSW)264, it was held that Pt 14 of the Legal Profession Regulation 2002 (NSW), which prohibited a barrister or solicitor publishing advertisements containing certain kinds of content, was not a burden on communication about political or governmental matters for the purpose of the first limb of the Lange test for the reason that the prohibition was upon "communications [which were] an essentially commercial activity" rather than upon communications about political or governmental matters265. In Levy v Victoria266, a regulation prohibited persons other than holders of a valid game licence from entering a permitted hunting area. The plaintiff was charged with contravening the regulation, and he challenged the validity of the regulation. The regulation survived the Lange test, notwithstanding that each member of the Court either held or assumed that the first limb of that test was satisfied in that the regulation was a burden upon communication about political or governmental matters because it prevented the plaintiff from entering upon the hunting area to make a political demonstration against duck-shooting267. The case proceeded on the footing that the plaintiff entered the hunting area "for the purpose of protesting against the laws of the Victorian Parliament which authorised the holders of valid game licences to shoot game birds"268. That the impugned regulation was a burden upon the implied freedom was "A law which simply denied an opportunity to make [a televised] protest about an the Commonwealth would be as offensive to the constitutionally implied freedom as a law which banned political speech-making on that issue. … the government or politics of issue relevant 264 (2005) 224 CLR 322. 265 (2005) 224 CLR 322 at 351 [28]-[29], 362 [69]-[71], 403-404 [216]-[220], 451 266 (1997) 189 CLR 579; [1997] HCA 31. 267 (1997) 189 CLR 579 at 595, 609, 614, 625-626, 647. 268 (1997) 189 CLR 579 at 592. 269 (1997) 189 CLR 579 at 595. In the present case, the plaintiff entered upon the proclaimed area and, had he not been removed, he would have stayed there to make a dramatic and televised protest against duck shooting and the laws and policies which permitted or encouraged the practice. He was prohibited from being able lawfully to make that protest and he was removed from the proclaimed area in exercise of an authority arising from the provisions of the [impugned regulation]. The conduct in which the plaintiff desired to engage and which was proscribed by [the regulation] was calculated to express and was capable of expressing a political message." In Levy, McHugh J also explained that the effect of the regulation was to prevent political communication as distinct from merely preventing conduct in the course of which a political communication might occur. His Honour said270: "[T]he constitutional implication extends to protecting political messages of the kind involved here and also the opportunity to send those messages. The argument for both parties assumed … that, in the absence of [the regulation], the plaintiff and others were entitled to enter the permitted hunting area to make their protests. Because of this assumption, the proper course is to proceed on the basis that [the regulation] and not the proprietary rights of the Crown or the operation of the general law prevented access to the hunting area." (emphasis in original) So far as the first limb of the Lange test is concerned, Levy can be understood as a case where the impugned regulation prevented communication on political or governmental matters. It does not support the broader proposition that an otherwise valid law infringes the implied freedom because it proscribes an activity in the course of which constitutionally protected communications might occur. To accept the proposition that an activity otherwise proscribed by the criminal law is excused by the mere possibility that the proscribed activity may also be accompanied by a communication on political or governmental matters would be to expand the scope of the implied freedom in an unprecedented fashion. It would also be inconsistent with the decision in APLA Ltd v Legal Services Commissioner (NSW)271. Conclusion: s 93X and the implied freedom of political communication The considerations of text, history and purpose referred to above lead to the conclusion that s 93X of the Act does not proscribe social interactions which 270 (1997) 189 CLR 579 at 625-626. 271 (2005) 224 CLR 322. do not involve the intentional seeking out or acceptance of an interaction with individuals who have been convicted of an indictable offence. Nor does it proscribe personal interactions which lack the irreducible degree of social intimacy required to characterise the relationship as one of companionship or fraternisation. Section 93X operates upon social interactions arranged by or with persons who have been convicted of an indictable offence, and which, by reason of the companionship so engendered, are apt to have criminogenic tendencies. Section 93X cannot fairly be interpreted as stripping a person convicted of an indictable offence of his or her civic responsibilities or the associated liberty to participate in political sovereignty. Section 93X leaves free the exercise of civic responsibilities, the those shared with Commonwealth for the purposes of ss 7, 24 and 128 of the Constitution. the other people of including Accordingly, if a person who happens to have been convicted of an indictable offence issues an invitation to all and sundry to engage in a public demonstration of a point of view about political or governmental matters, or if another person accepts such an invitation, neither the person who issues the invitation nor the person who accepts the invitation is consorting, the one with the other. Similarly, a person convicted of an indictable offence may issue invitations to his or her acquaintances who have also been convicted of an indictable offence to join him or her in a public campaign for the repeal of s 93X without contravening the provision. Even if a convicted person were to speak directly to another about political or governmental matters, that would not be sufficient, of itself, to constitute an act of consorting because the interactions of the kind required to be kept free by ss 7, 24, 64 and 128 of the Constitution are public interactions, which do not exhibit the personal intimacy characteristic of consorts. This is so, not because the purpose of the invitation or acceptance or resultant assembly is an "innocent purpose", but because the circumstances of the interaction do not involve a deliberate seeking out or acceptance of the personal companionship of a person or persons convicted of an indictable offence. the personal interactions between individuals are confined communications on political or governmental matters, they could not be characterised as consorting, because those persons would not be engaged in deliberately sought interactions of personal intimacy apt to generate criminogenic tendencies. Of course, if their contact during a political campaign was such as to include private personal interactions beyond acts of genuine political communication, those acts might amount to conduct properly characterised as consorting notwithstanding their association with the campaign. No doubt, there will be cases which present difficulties of fact in drawing the line, but the necessity of drawing such a line cannot be denied for that would give s 93X an operation which it does not claim. The plaintiffs' contention that s 93X necessarily burdens communications on political or governmental matters must be rejected. A separate implied freedom of association? Mr Tajjour and Mr Hawthorne argued that the freedom of association is an important element of democratic government and is more than a mere extension or "corollary to the implied freedom of political communication." To the extent that association may be, and often is, an aspect of political communication, this submission may be accepted. To the extent that it is contended that the Constitution guarantees a right of association free from legislative intervention separately from the implication to be derived from ss 7, 24, 64 and 128 of the Constitution, that contention is contrary to authority and should be rejected. In Mulholland v Australian Electoral Commission272, it was held that: "There is no such 'free-standing' right to be implied from the Constitution. A freedom of association to some degree may be a corollary of the freedom of communication in Lange v Australian Broadcasting Corporation and considered in subsequent cases. But that gives the principle contended for by the appellant no additional life to that which it may have from a consideration later in these reasons of Lange and its application to the present case." (footnotes omitted) formulated This view was recently confirmed by this Court in Wainohu v New South Wales273: "Any freedom of association implied by the Constitution would exist only as a corollary to the implied freedom of political communication". For the same reasons that s 93X of the Act does not affect the implied freedom of political speech, it does not purport to burden this aspect of the freedom of communication on political and governmental matters. The Commonwealth executive's treaty-making power Mr Tajjour and Mr Hawthorne argued that Australia's signing of the ICCPR prohibited States from enacting legislation which was contrary to the treaty's provisions, relevantly, the right to freedom of association. 272 (2004) 220 CLR 181 at 234 [148]; [2004] HCA 41. 273 (2011) 243 CLR 181 at 230 [112]; [2011] HCA 24. On their behalf, it was urged that if a State could enact legislation contrary to the treaty's provisions, there would be an interference with both the expression of intention made on behalf of the Australian people and the power reserved to the Commonwealth by virtue of s 61 of the Constitution. Accordingly, so it was said, the enactment of s 93X of the Act is ultra vires due to its contravention of Art 22 of the ICCPR. The submission by Mr Tajjour and Mr Hawthorne that the act of the executive government of the Commonwealth imposes a restriction on the State's legislative power unduly exalts the executive power of the Commonwealth over the laws of the States. It is contrary to authority and should not be accepted. The Commonwealth's ratification of the ICCPR did not affect the ability of the States to enact legislation contrary to that Convention. The validity of State legislation is not dependent on its conformity with international agreements made by the Commonwealth where the international agreement has not been given effect by Commonwealth legislation whereby s 109 of the Constitution might be engaged274. Conclusion In Proceedings No S36 and No S37 of 2014, commenced by Mr Tajjour and Mr Hawthorne respectively, the questions stated for the opinion of this Court should be answered as follows: Is s 93X of the Crimes Act 1900 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? Answer: No. Is there implied into the Commonwealth Constitution a freedom of association independent of the implied freedom of communication on governmental and political matters? Answer: No. Does s 93X of the Crimes Act 1900 (NSW) contravene any implied freedom of association referred to in question 2? 274 Dietrich v The Queen (1992) 177 CLR 292 at 305-306, 321, 348-349, 359-360; [1992] HCA 57; Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 38; [1992] HCA 64; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 286-287; [1995] HCA 20. Answer: No. Is s 93X of the Crimes Act 1900 (NSW) invalid because it is inconsistent with the International Covenant on Civil and Political Rights as ratified by the Commonwealth of Australia? Answer: No. 5. Who should pay the costs of the special case? Answer: The plaintiff. In Proceeding No S38 of 2014, commenced by Mr Forster, the questions stated for the opinion of this Court should be answered as follows: Is s 93X of the Crimes Act 1900 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? Answer: No. 2. Who should pay the costs of the special case? Answer: The plaintiff.

HIGH COURT OF AUSTRALIA DION ROBERT TAIAPA APPLICANT AND THE QUEEN RESPONDENT Taiapa v The Queen [2009] HCA 53 16 December 2009 ORDER Extend the time for filing the application for special leave to appeal to 20 February 2009. Special leave to appeal granted. Appeal treated as instituted and heard instanter, and dismissed. On appeal from the Supreme Court of Queensland Representation G D Wendler for the applicant (instructed by John D Weller & Associates) M J Copley SC for the respondent (instructed by Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Taiapa v The Queen Criminal law – Defences – Compulsion – Applicant convicted of possession of and trafficking in a dangerous drug – Whether Court of Appeal erred in holding that evidence did not disclose a case fit for consideration by jury that there were reasonable grounds for applicant's belief that he was otherwise unable to escape the carrying out of the threat within the meaning of s 31(1)(d) of the Criminal Code (Q). Words and phrases – "reasonable belief". Criminal Code (Q), s 31(1)(d). FRENCH CJ, HEYDON, CRENNAN, KIEFEL AND BELL JJ. The applicant, Dion Robert Taiapa, was convicted in the Supreme Court of Queensland of the offences of carrying on the business of unlawful trafficking in a dangerous drug, methylamphetamine, and the possession of a quantity of that drug1. The factual basis of the Crown case was not in issue at the trial. It was the applicant's case that he did the acts that were said to constitute the offences in order to save himself and members of his family from threatened serious harm. He contended that he was not criminally responsible for his admitted conduct in collecting and transporting a substantial quantity of methylamphetamine because he had acted under compulsion within the meaning of s 31(1)(d) of the Criminal Code (Q). The trial judge withdrew the issue of compulsion from the jury's consideration, thereby making the applicant's conviction of each offence inevitable. The applicant appealed against his conviction on the ground that the trial judge erred in not leaving compulsion for the jury's determination. The Court of Appeal of the Supreme Court of Queensland (Keane and Fraser JJA and Lyons J) dismissed the appeal. The applicant applied out of time for special leave to appeal from the order of the Court of Appeal. On 25 June 2009 French CJ, Kiefel and Bell JJ referred his application to extend time in which to bring the application and his application for special leave to the Full Court. The applicant's solicitor provided a satisfactory explanation for the delay in filing the application in an affidavit that was sworn on 18 August 2009. An order extending the time for filing the application should be made. For the reasons that follow, the application for special leave to appeal should be granted, but the appeal should be dismissed. 1 Count 1 charged an offence contrary to s 5(1)(a) of the Drugs Misuse Act 1986 (Q) that, on 22 July 2006 at or near Ingham in the State of Queensland, Dion Robert Taiapa and Robert John Ackers carried on the business of unlawfully trafficking in the dangerous drug methylamphetamine. Count 2 charged an offence contrary to s 9(a) of the Drugs Misuse Act 1986 that, on 22 July 2006 at or near Ingham in the State of Queensland, Dion Robert Taiapa and Robert John Ackers unlawfully had possession of the dangerous drug methylamphetamine, in a quantity exceeding 2.0 grams. Crennan Bell Justification and excuse – compulsion: s 31(1)(d) Section 31(1)(d) of the Criminal Code provides that a person is not criminally responsible for an act or omission2: "when – the person does or omits to do the act in order to save himself or herself or another person, or his or her property or the property of another person, from serious harm or detriment threatened to be inflicted by some person in a position to carry out the threat; and the person doing the act or making the omission reasonably believes he or she or the other person is unable otherwise to escape the carrying out of the threat; and (iii) doing the act or making the omission is reasonably proportionate to the harm or detriment threatened." While it is conventional to describe s 31(1)(d) as providing the defence of compulsion, it is well-settled that if there is some evidence capable of raising the issue, the legal or persuasive burden is on the Crown to exclude the proposition that the accused was acting under compulsion beyond reasonable doubt – that is, exclude any reasonable possibility that the proposition is true3. In deciding whether the evidence sufficiently raises the issue to leave compulsion to the jury, it is necessary for the trial judge to be mindful of the onus of proof. The question is whether, on the version of events most favourable to the accused that is suggested by the evidence, a jury acting reasonably might fail to be satisfied beyond reasonable doubt that the accused was not acting under compulsion4. It 2 The protection of the provision does not extend to certain offences specified in s 31(2) nor to an accused who has by entering into an unlawful association or conspiracy rendered himself or herself liable to have such threats made to the person. 3 R v Mullen (1938) 59 CLR 124 at 136-137 per Dixon J; [1938] HCA 12; Ugle v The Queen (2002) 211 CLR 171; [2002] HCA 25; Murray v The Queen (2002) 211 CLR 193; [2002] HCA 26. 4 Stingel v The Queen (1990) 171 CLR 312 at 334 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; [1990] HCA 61; Van Den Hoek v The (Footnote continues on next page) Crennan Bell was not disputed that the onus on that question – an evidential burden – is on the accused5. It is the accused who must tender evidence, or point to prosecution evidence, to that effect. The facts What follows is a summary of the facts giving rise to the prosecution and of the applicant's account of the circumstances leading to his involvement in the enterprise. The applicant was arrested on 22 July 2006. The police intercepted the vehicle in which he, his co-accused, Robert Ackers, and a young woman were travelling. They located 364.213 grams of methylamphetamine in the course of searching the vehicle. The estimated value of the drug, which varied according to how it was to be sold, was between $459,000 and $1.15 million. The sum of $3,200 in cash was found on the applicant and a further sum of $25,220 in cash was found in the boot of the vehicle. The applicant had a history of marijuana and cocaine use. In the period 1999 to 2002 he had dealt in drugs to support his use of them. His suppliers were two men named Tony and Salvatore. By 2002 he had accumulated a debt to Tony and Salvatore of $60,000. At around this time the applicant was convicted of trafficking in drugs and sentenced to a term of six years' imprisonment. He had not repaid the debt to Tony and Salvatore at the time he was taken into custody. He was released on parole in December 2005. Following his release the applicant and his de facto wife, Kristy Jarvis, moved to Cairns and took up residence in premises in Kidston Street. It was a condition of his parole order that he reside in the Cairns area. On the evening of 29 May 2006 the applicant and Ms Jarvis were at home in the Kidston Street premises. At around 8.00pm the applicant answered a knock on the front door. As he opened the door he was seized around the neck and forced backwards into the lounge room by Tony, who was holding a gun to his face. Salvatore was also present. The two men demanded the repayment of Queen (1986) 161 CLR 158 at 161-162 per Gibbs CJ, Wilson, Brennan and Deane JJ; [1986] HCA 76. It was so at common law: R v Bone [1968] 1 WLR 983; [1968] 2 All ER 644. There is nothing in the Criminal Code altering that position. Crennan Bell their money. They instructed the applicant not to go to the police and threatened that, if he did, he or Kristy would be shot. The two men left, telling the applicant that he had four weeks in which to repay the money and that they would return in a fortnight. Kristy was pregnant with the applicant's child at the time of this confrontation. The applicant and she agreed that she should leave Cairns and return to her home on the Gold Coast. The applicant was not able to accompany her under the terms of his parole order. Kristy left Cairns and returned to the Gold Coast on 2 June. The applicant moved out of the Kidston Street premises and into premises in Alfio Street, Cairns. Thereafter he made unsuccessful attempts to raise the money that he owed to Tony and Salvatore. Ultimately the applicant sought his mother's assistance and she agreed to lend him $29,000 in cash, which she had on hand. On Saturday 15 July Tony and Salvatore confronted the applicant at the Alfio Street premises. They threatened him, again, at gunpoint and taunted him over his unsuccessful attempt to evade them. They rejected his offer to repay them $29,000 immediately and the balance by instalments. They told the applicant that in addition to giving them $29,000 he was to travel to Sydney and collect something for them. They said that they would give him further instructions in this regard the following night. They told the applicant not to try anything stupid or that he, Kristy and his mother would pay for it. They repeated their earlier instruction that the applicant was not to report the matter to the police. The following evening Tony and Salvatore returned to the Alfio Street premises. On this occasion they instructed the applicant that he was to meet a man in Ettalong, which is a township to the north of Sydney, at 11.00pm on Thursday 20 July and to collect two parcels from him. The applicant understood that the parcels would contain prohibited drugs. He was instructed to remove two sections of foam upholstery from under the rear seat of his vehicle and to secrete the parcels in the cavities. They told him that they would return to the Alfio Street premises to collect the parcels and the money on the evening of Sunday 23 July. The applicant did not have a driver's licence at the time of these events. He asked Robert Ackers to drive him to Ettalong. The two of them and a female friend embarked on the trip. The applicant collected the parcels from the man at the nominated time and place. He collected the money from his mother's premises the following day. He was apprehended in the course of the return journey. Crennan Bell The applicant was asked about his reasons for failing to report the threats to the police or to his parole officer. In the course of the cross-examination the following exchange took place between the trial judge and the applicant: "But you understand that the police – it's their job to investigate criminal behaviour and bring people who have committed it before the Court and have them dealt with? – – Yeah, I would have had to go – there's – oh, protection – there was always protection there, but there's no guarantee if I was to put in – be put in police protection, that I'd still be safe. Yes. At any rate, what do you mean by that, that – that you'd – did you weigh these things up, did you? – – Yes." The suggestion that an alternative course of action was to report the matter to the police was raised again later in the course of the cross-examination: "You could have driven the vehicle yourself and called in at a police station and declared yourself to be – – –? – – I could have done that. Yes. I could have done that. But in my – – – – – – a disqualified – – –? – – – – – circumstances – in my position I was in no position whatsoever to be going to the police about it. HIS HONOUR: I'm sorry. What do you mean by that? – – Well, the threats and that were – that were made to me I was in no position at all to do that. I wasn't going to take that risk at all to go to the police. But I mean why do you say that? Because the – the police are the – are the people to whom you report threats made against you, aren't they? – – Yes. They are. Well, I – I don't understand why you say – – –? – – Well – – – – – – in your position? – – – – – well, if I went to – to police they could have put me in protection. There was no – is that a hundred – I don't believe that – that is 100 per cent safe. Secondly, that these blokes, they're not your every day drug dealers. They're – like there's drug dealers and then there's drug dealers. These blokes are up there. Yes? – – And who is to say that they wouldn't – like if I tried setting them up or – they're not going to fall into a booby trap or anything like that, I believe." Crennan Bell The Crown Prosecutor put to the applicant that he had made a choice to engage in the world of drug dealing rather than to take other options that were available to him. The applicant responded saying: "In my position the only option for me was – for me was to do as I was told. I didn't want anyone else getting hurt. I didn't – I especially didn't want a bullet in my head." The applicant's mother and Kristy Jarvis were called in his case and gave evidence that was supportive of the acceptance of his account. The Court of Appeal's reasons The trial judge withdrew the issue of compulsion from the jury because there was no evidence that Tony and Salvatore were in a position to execute the threats at the time the applicant engaged in the conduct. The Court of Appeal (Keane JA, with whose reasons Fraser JA and Lyons J agreed) said that it was an error to hold that it was a requirement of the defence that the person making the threat be in a position to carry it out at the time of the commission of the offence6. The Court of Appeal held that following amendments to s 31(1) in 19977 it is sufficient that the compulsion operating on the mind of the accused is a present threat of future harm8. The Court turned to consider the requirement of s 31(1)(d)(ii). It observed by reference to its earlier decision in R v Smith9 that the question is "whether the [accused] reasonably believed that he was unable otherwise to escape the carrying out of the threat"10. The Court of Appeal said that the relaxation of the statutory requirement of immediacy of connection between the prospect that the threat will be carried 6 R v Taiapa (2008) 186 A Crim R 252 at 258 [30] per Keane JA (Fraser JA and Lyons J concurring); [2008] QCA 204. 7 Criminal Law Amendment Act 1997 (Q), s 13. 8 R v Taiapa (2008) 186 A Crim R 252 at 258 [31]. [2005] 2 Qd R 69. 10 R v Taiapa (2008) 186 A Crim R 252 at 259 [34]. Crennan Bell out and the commission of the offence was not intended to permit those who engage in criminal acts to do so free of criminal responsibility because they are "unreasonably timorous" or because they find it more convenient to comply with a threat than to seek the assistance of the police to remove it11. In this context the Court of Appeal said12: "The requirements of s 31(1)(d)(ii) mean that those who find themselves subjected to pressure to engage in criminal activities cannot avail themselves of the defence of compulsion under s 31(1)(d) of the Criminal Code to excuse their part in criminal activities merely by reason of their subjective willingness to be used as pawns of more aggressive criminals. It is a feature of civilised society that one may render threats of personal violence ineffective by seeking the help of agencies of law enforcement. A defence under s 31(1)(d) can arise for the consideration of the jury only where there is an evidentiary basis for a reasonable belief on the part of the accused that he or she is 'unable otherwise to escape the carrying out of the threat'. If it is to be asserted by an accused that he or she reasonably believed that there was no other means of avoiding a threat than complying with an unlawful demand then the reasonableness of that belief must be considered in the light of the other alternatives available to the accused. That necessarily means that the accused must have a reasonable basis for believing that the law and its enforcement agencies cannot afford protection from the threat." The Court of Appeal noted that the applicant had ample opportunity to alert the police to his predicament13. In the Court of Appeal's opinion there was no evidentiary basis for a conclusion that the applicant's lack of faith in the ability of the police to defeat the threat was based on reasonable grounds and for this reason the trial judge had been right not to leave the issue of compulsion to 11 R v Taiapa (2008) 186 A Crim R 252 at 258 [32]. 12 R v Taiapa (2008) 186 A Crim R 252 at 259 [36]. 13 R v Taiapa (2008) 186 A Crim R 252 at 260 [38]. 14 R v Taiapa (2008) 186 A Crim R 252 at 260-261 [40]-[42]. Crennan Bell The submissions In the written submissions filed on the applicant's behalf the application was said to raise the question of "[w]hether and to what extent s 31(1)(d)(ii) of the [Criminal Code] contains objective limitations on the availability of the defence of … compulsion". On the hearing, counsel for the applicant accepted that par (d)(ii) imports an objective element into the defence. The analysis of the operation of the provision in Smith, which was applied by the Court of Appeal, was not challenged. The applicant and the Crown each submitted that the reasonableness of the grounds for the belief is to be assessed by reference to the circumstances as the accused perceives them. This application does not provide the occasion to consider the correctness of the latter submission, nor the extent to which, if at all, the requirement of reasonable belief for the defence of compulsion under the Queensland Criminal Code differs from the requirement of reasonable belief for the defence of duress under the Commonwealth Criminal Code15. The sole issue raised by the application is whether the Court of Appeal erred in its conclusion that the evidence did not disclose a case fit for consideration by the jury that there were reasonable grounds for the applicant's belief. The applicant points to the evidence that his life and the lives of members of his family were under threat from high-level, armed, drug dealers who had directed him not to report the matter to the police. He did not have information about the identity of Tony and Salvatore sufficient to enable the police to locate them. He was not confident that the police could offer effective protection to him and to his family. In his submission, the matters addressed by the Court of Appeal as demonstrating the absence of reasonable grounds were factual considerations for the jury to weigh. The Crown submits that the Court of Appeal's invocation of public policy, including its reference to the authorities dealing with the common law defence of duress16, is to be understood in the context of the legislative history. 15 See R v Oblach (2005) 65 NSWLR 75. 16 R v Taiapa (2008) 186 A Crim R 252 at 258-260 [32], [37], citing Director of Public Prosecutions for Northern Ireland v Lynch [1975] AC 653 at 670 per Lord Morris of Borth-y-Gest; R v Brown (1986) 43 SASR 33 at 40 per King CJ. See also R v Z [2005] 2 AC 467 at 493 [26]. Crennan Bell Amendments introduced into s 31(1) in 199717 and 200018 widened the defence conformably with developments in the common law defence. These changes, which operated to lessen the strictness of the defence, are said to have been balanced by the requirement created by par (d)(ii) for the existence of reasonable grounds for the belief. The Crown called in aid the provisions of the Police Service Administration Act 1990 (Q) in support of the Court of Appeal's reference to the attributes of a civilised society. Section 2.3 of that Act sets out the functions of the Queensland Police Service, which include the protection of members of the community from the actions of criminal offenders, and the detection of offenders and bringing of offenders to justice. Given that the execution of Tony and Salvatore's threats was not imminent and that the applicant had the opportunity to report the matter to the police, in the absence of evidence raising as a reasonable possibility that the police would not act in accordance with their statutory duty, the Crown submits that the Court of Appeal was correct to hold that no arguable case of compulsion was raised. The legislative history As originally enacted the defence of compulsion under the Criminal Code was confined to threats to kill or to inflict grievous bodily harm directed against the accused by a person who was actually present and in a position to carry out the threat at the time of the conduct19. The requirements that the maker of the threat actually be present and that the threat be directed at the accused personally were removed by the amendments to s 31(1) that were introduced in 199720. The removal of these restrictions mirrored the development of the common law 17 Criminal Law Amendment Act 1997 (Q), s 13. 18 Criminal Law Amendment Act 2000 (Q), s 16. 19 Section 31(4) provided: "When he does or omits to do the act in order to save himself from immediate death or grievous bodily harm threatened to be inflicted upon him by some person actually present and in a position to execute the threats, and believing himself to be unable otherwise to escape the carrying of the threats into execution". 20 Criminal Law Amendment Act 1997 (Q), s 13. The amendments followed the recommendation of the Report of the Criminal Code Advisory Working Group to the Attorney-General, July 1996 at 25-26. Crennan Bell defence of duress21. As amended s 31(1) relieved the accused of criminal responsibility: "(d) when he or she does or omits to do the act in order to save himself or herself or another person from immediate death or grievous bodily harm threatened to be inflicted on him or her or the other person by some person in a position to execute the threats, and believing himself or herself or the other person to be unable otherwise to escape the carrying of the threats into execution." In its present form, set out earlier in these reasons, s 31(1)(d) reflects the further amendments that were introduced in 200022. The scope of the defence was widened to include threats to the property of the accused or of another person. At the same time the requirements of reasonable belief and proportionality were introduced. The 2000 amendments would appear to have been made, at least in part, in response to a recommendation of the Taskforce on Women and the Criminal Code23: "That the defence of duress in section 31 of the Criminal Code be amended to provide that conduct is carried out by a person under duress if he or she reasonably believes that a threat has been made which will be carried out unless an offence is committed; and there is no reasonable way in which the threat could be rendered ineffective; and the conduct is a reasonable response to the threat." The Taskforce's recommendation incorporates aspects of the elements of duress proposed by the Criminal Law Officers Committee of the Standing Committee of Attorneys-General24, which was later enacted as s 10.2(2) of the Criminal Code (Cth). It provides: 21 R v Williamson [1972] 2 NSWLR 281 at 298-299 per Lee J; R v Brown (1986) 43 SASR 33 at 55-56 per Zelling J; R v Abusafiah (1991) 24 NSWLR 531 at 537. 22 Criminal Law Amendment Act 2000 (Q), s 16. 23 Queensland, Report of the Taskforce on Women and the Criminal Code, February 2000, Recommendation 56 at 170; and see Explanatory Notes to the Criminal Law 24 Model Criminal Code, Chapters 1 and 2: General Principles of Criminal Responsibility – Report, December 1992. Crennan Bell "A person carries out conduct under duress if and only if he or she reasonably believes that: a threat has been made that will be carried out unless an offence is committed; and there is no reasonable way that the threat can be rendered ineffective; and the conduct is a reasonable response to the threat." The Taskforce's proposal that the defence of compulsion require that "there is no reasonable way in which the threat could be rendered ineffective" is in line with the statement of the defence of duress at common law. While that defence has been criticised as being in a "vague and unsatisfactory state"25, one element accepted in Australian common law jurisdictions is that the accused "had no means, with safety to himself, of preventing the execution of the threat"26. This concept is addressed in the defence of compulsion by the requirement of reasonable belief that the accused (or the other person who is the subject of the threat) is unable otherwise to escape the carrying out of the threat. Reasonable belief Reasonable belief is a familiar concept in the context of criminal responsibility in the Criminal Code and at common law. Section 271(2) of the Criminal Code speaks of a belief "on reasonable grounds". As Stephen J observed in Marwey v The Queen, to ask whether a person has a reasonable belief is not different in substance from asking whether a person has reasonable grounds for belief27. His Honour explained that in a case in which self-defence under s 271(2) is raised the jury are required to consider two questions. The first is an inquiry as to the state of the accused's mind. The second is an objective 25 R v Hurley [1967] VR 526 at 529 per Winneke CJ and Pape J. 26 R v Hurley [1967] VR 526 at 543 per Smith J. His Honour's statement of the elements of the common law defence has frequently been cited as authoritative: R v Dawson [1978] VR 536; R v Lawrence [1980] 1 NSWLR 122; R v Brown (1986) 43 SASR 33; R v Abusafiah (1991) 24 NSWLR 531. 27 (1977) 138 CLR 630 at 641; [1977] HCA 68. Crennan Bell question that his Honour said is "exclusively concerned with the jury's view of the grounds, whether they constitute reasonable grounds"28. Barwick CJ also observed that it is for the jury to judge whether such grounds exist29. The recognition that the determination of whether grounds are reasonable is a factual question for the jury is not to overlook the anterior question of law, which is whether there is any material upon which it would be open to a reasonable jury to determine the issue favourably to the accused30. Professor Glanville Williams explains the respective functions of judge and jury in this way31: "Burdens are in respect of facts; questions of law are decided by the judge, without any question of burden. But some questions, such as the question of reasonableness, are in an intermediate position. They are value-judgments marking the boundary between criminal and non- criminal conduct, and therefore are really decisions on law; yet they are made by the jury, except that there must be evidence that, in the view of the trial judge, would justify the jury in finding that there has been reasonableness or unreasonableness or whatever." Discussion In concluding that there was no evidence that would justify the jury in finding as a reasonable possibility that there were reasonable grounds for the applicant's belief, the Court of Appeal took as its starting point the assumption stated by King CJ in R v Brown32: "The ordinary way in which a citizen renders ineffective criminal intimidation is to report the intimidators and to seek the protection of the 28 Marwey v The Queen (1977) 138 CLR 630 at 640. 29 Marwey v The Queen (1977) 138 CLR 630 at 638. 30 R v Muratovic [1967] Qd R 15 at 20 per Gibbs J, cited with approval in Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 665 per Wilson, Dawson and Toohey JJ; [1987] HCA 26. 31 Glanville Williams, Textbook of Criminal Law, 2nd ed (1983) at 49. 32 (1986) 43 SASR 33 at 40. Crennan Bell police. That must be assumed, under ordinary circumstances, to be an effective means of neutralizing intimidation. If it were not so, society would be at the mercy of criminals who could force pawns to do their criminal work by means of intimidation." In Brown King CJ considered that in the circumstances of that case the accused's failure to report a threat to the police and to seek the protection of the police for himself and his son was fatal to the common law defence of duress33. His Honour acknowledged that there may be circumstances in which a failure to seek the protection of the police would not deprive an accused of the defence34. His Honour cited the judgment of the English Court of Appeal in R v Hudson35 in this respect36. Hudson was a case in which two teenage girls were convicted of perjury. At their trial Hudson gave evidence that she had been approached by a group of men, including one Farrell, who had a reputation for violence. Farrell warned her that if she gave truthful evidence they would get her and "cut her up". Hudson passed on the warning to her co-accused. Farrell had been present in the public gallery of the court when each of the accused gave the perjured evidence. The trial judge withdrew duress from the jury because there had not been an immediate threat capable of being carried out: the recorder and police officers were present and able to afford protection to the girls at the time each gave her evidence. The appeal raised the question whether the defence of duress may be unavailable if the accused fails to take steps to remove the threat by seeking police protection. The effect upon the defence of a failure by the person threatened to take steps to remove the threat had not previously arisen in an English case. However, the Court of Appeal appears to have accepted the statement in Hurley37 that an ingredient of the defence is the absence of a safe 33 (1986) 43 SASR 33 at 40. King CJ's opinion on this question was a minority one; Zelling J would have allowed the appeal holding that duress was sufficiently raised (at 59) and Millhouse J, while concurring in the order dismissing the appeal, did not adopt King CJ's reasons on this issue (at 61). 34 R v Brown (1986) 43 SASR 33 at 40. 36 R v Brown (1986) 43 SASR 33 at 40. 37 [1967] VR 526 at 543: see above at fn 26. Crennan Bell means of preventing the execution of the threat38. The Court of Appeal observed39: "[Counsel for the Crown] submits on grounds of public policy that an accused should not be able to plead duress if he had the opportunity to ask for protection from the police before committing the offence and failed to do so. The argument does not distinguish cases in which the police would be able to provide effective protection, from those when they would not, and it would, in effect, restrict the defence of duress to cases where the person threatened had been kept in custody by the maker of the threats, or where the time interval between the making of the threats and the commission of the offence had made recourse to the police impossible." The Court continued40: "In the opinion of this court it is always open to the Crown to prove that the accused failed to avail himself of some opportunity which was reasonably open to him to render the threat ineffective, and that upon this being established the threat in question can no longer be relied upon by the defence. In deciding whether such an opportunity was reasonably open to the accused the jury should have regard to his age and circumstances, and to any risks to him which may be involved in the course of action relied upon." Hudson has been the subject of some academic criticism41. However, the proposition that the failure of the accused to take advantage of an opportunity to report the threat to the police does not necessarily defeat the defence has been accepted42. In Hudson the failure of teenage girls to seek police protection in circumstances in which their potential assailant was present in court at the time 38 R v Hudson [1971] 2 QB 202 at 207. 39 R v Hudson [1971] 2 QB 202 at 207. 40 R v Hudson [1971] 2 QB 202 at 207. 41 Glanville Williams described the decision as "surprisingly indulgent": Textbook of Criminal Law, 2nd ed (1983) at 631. 42 R v Brown (1986) 43 SASR 33 at 40 per King CJ; Goddard v Osborne (1978) 18 SASR 481; and see R v Howe [1987] AC 417 at 443 per Lord Griffiths. Crennan Bell they gave their perjured evidence was held not to negate an arguable case that their conduct was excused by duress. In other circumstances, in the absence of an explanation, or reasons apparent from the circumstances, for the failure to seek the protection of the law enforcement authorities there will be no basis on which to leave consideration of duress to the jury. Morris v The Queen43 was a case in the Court of Appeal of Western Australia on the defence of duress under s 10.2(2) of the Criminal Code (Cth) in which the accused failed to report threats to the police. McLure JA observed that prima facie the appropriate means of rendering a threat made by another ineffective is to report the matter to, and obtain the protection of, law enforcement authorities44. Her Honour drew on the observations of Gleeson CJ in Rogers45 with reference to the policy that informs this area of the law46. In Rogers a prisoner sought to rely on the defence to excuse his escape from lawful custody to avoid threatened lethal violence. At issue was the availability of the common law defence of necessity, which shares features in common with the defence of duress47. Gleeson CJ said48: "The corollary of the notion that the defence of necessity exists to meet cases where the circumstances overwhelmingly impel disobedience to the law is that the law cannot leave people free to choose for themselves which laws they will obey, or to construct and apply their own set of values inconsistent with those implicit in the law. Nor can the law encourage juries to exercise a power to dispense with compliance with the law where they consider disobedience to be reasonable, on the ground that the conduct of an accused person serves some value higher than that implicit in the law which is disobeyed." 43 (2006) 201 FLR 325. 44 Morris v The Queen (2006) 201 FLR 325 at 353 [153]. 45 (1996) 86 A Crim R 542 at 546. 46 Morris v The Queen (2006) 201 FLR 325 at 353 [154]. 47 See the discussion in R v Howe [1987] AC 417 at 429 per Lord Hailsham of Marylebone LC; and Fisse, Howard's Criminal Law, 5th ed (1990) at 540. 48 Rogers (1996) 86 A Crim R 542 at 546. Crennan Bell Gleeson CJ rejected the view that the defence of necessity required proof of urgency and immediacy as technical elements. Instead he favoured treating these as factual considerations relevant to the accused person's belief and the reasonableness of the grounds for it49. He went on to observe50: "Reasonableness is not designed to allow people to choose for themselves whether to obey the law. … A reluctance or (as will appear in the case with the present appellant), an unwillingness to go on protection may be understandable, but the principle of necessity is not intended to give prisoners who are threatened a choice between going on protection and removing themselves, permanently or indefinitely, from custody." The decision of the trial judge, that the evidence did not raise an issue of necessity proper to be left to the jury, was upheld51. His Honour's observations set out above are pertinent to the consideration of the issue raised in this application. Conclusion The belief that s 31(1)(d)(ii) posits is that the accused or the other person who is subject to the threat is unable otherwise to escape the carrying out of the threat. "Otherwise" in this context means other than by engaging in the unlawful conduct. It was necessary for the applicant to identify some basis in the evidence raising as a reasonable possibility the existence of reasonable grounds for his belief, that he had no alternative other than to collect and transport a quantity of prohibited drugs in order to avoid the carrying out of the threats made by Tony and Salvatore. This necessarily requires consideration of the basis for the applicant's belief that reporting the matter to the police would not have prevented the carrying out of the threats. The circumstance that the demands and threats made by Tony and Salvatore were made with a gun and were accompanied by instructions not to report the matter to the police does not support the reasonableness of the applicant's belief that he had no option other than to comply with the demands in order to escape the carrying out of the threats. The applicant had, as he 49 Rogers (1996) 86 A Crim R 542 at 547. 50 Rogers (1996) 86 A Crim R 542 at 547. 51 Rogers (1996) 86 A Crim R 542 at 550. Crennan Bell acknowledged, ample opportunity to seek the assistance of the police. He offered three reasons for his failure to do so. The first was that he did not have sufficient information to enable the police to identify Tony and Salvatore. The second was that he did not believe that police protection was "100 per cent safe". The third was that Tony and Salvatore were "not your every day drug dealers" and were unlikely to fall into a booby trap. The Court of Appeal said that the police could have placed surveillance on the applicant's premises and that a controlled delivery of the drugs to Tony and Salvatore might have led to their arrest. It is true that there was no evidence about the investigative methods or the resources available to the police. However, this does not undermine the Court of Appeal's conclusion. There is no reason to doubt it. The applicant's belief that he did not have sufficient information to enable the police to identify Tony and Salvatore does not take into account that the police may have known more about these men than he thought that they did or that the police may have been able to find out more about them than he thought they could. In any event, it does not explain his failure to report the matter to the police in order to seek their protection. The applicant's belief that police protection may not be 100 per cent safe provided no basis for a reasoned conclusion that it was not. It may explain the applicant's preference for complying with However, an unparticularised concern that police protection may not be a guarantee of safety cannot without more supply reasonable grounds for a belief that there is no option other than to break the law in order to escape the execution of a threat. the unlawful demands. The Court of Appeal was correct to hold that no jury, acting reasonably, could fail to be satisfied beyond reasonable doubt that there were not reasonable grounds for the applicant's belief within s 31(1)(d)(ii). Orders For these reasons the following orders should be made. The time for filing the application for special leave to appeal is extended to 20 February 2009; the application for special leave to appeal is granted; and the appeal is dismissed.

HIGH COURT OF AUSTRALIA DIRECTOR OF PUBLIC PROSECUTIONS REFERENCE NO 1 OF 2019 Director of Public Prosecutions Reference No 1 of 2019 [2021] HCA 26 Date of Hearing: 14 May 2021 Date of Judgment: 1 September 2021 ORDER Appeal dismissed. The Director of Public Prosecutions (Vic) pay the acquitted person's reasonable costs. On appeal from the Supreme Court of Victoria Representation B F Kissane QC with J C J McWilliams for the appellant (instructed by Office of Public Prosecutions (Vic)) D A Dann QC with C T Carr SC for the acquitted person (instructed by C. Marshall & Associates) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Director of Public Prosecutions Reference No 1 of 2019 Criminal law – Recklessness – Where s 17 of Crimes Act 1958 (Vic) provides that person who, without lawful excuse, recklessly causes serious injury is guilty of indictable offence – Where Court of Appeal of Supreme Court of Victoria in R v Campbell [1997] 2 VR 585 held that recklessness means person foresaw that serious injury probably will result from act or omission – Where Crimes Act amended following Campbell with significant, substantive and direct effect on s 17 – Where High Court cast doubt on correctness of Campbell in Aubrey v The Queen (2017) 260 CLR 305 – Where accused charged with recklessly causing serious injury under s 17 of Crimes Act – Where trial judge directed jury in relation to recklessness consistently with Campbell – Where accused acquitted – Where Director of Public Prosecutions (Vic) referred correctness of Campbell as point of law to Court of Appeal – Whether Parliament left meaning of recklessness in s 17 of Crimes Act to courts – Whether recklessness in s 17 of Crimes Act has meaning stated in Campbell. Words and phrases – "culpability and criminality", "elements of the existing offences", "expert review of the law", "extensive consultation with key stakeholders", "foresight of possibility", "foresight of probability", "gross violence offences", "injury", "maximum penalty", "offences against the person other than injury", murder", "specialised and politically sensitive fields", "temporal proximity". "re-enactment presumption", "recklessness", "serious Crimes Act 1958 (Vic), s 17. KIEFEL CJ, KEANE AND GLEESON JJ. In Aubrey v The Queen1, this Court confirmed that the degree of recklessness required for the statutory offence of maliciously inflicting grievous bodily harm in New South Wales was foresight of the possibility of harm, not the probability of harm. Foresight that death or grievous bodily harm is a probable consequence is the test for common law murder, as this Court held in R v Crabbe2. The reason for the higher test in the case of common law murder, the Court explained in Crabbe3, is the near moral equivalence of intention to kill or cause grievous bodily harm and the foresight of the probability of death or grievous bodily harm. That rationale does not apply to offences other than murder. That foresight of the possibility of harm was the correct standard of recklessness to apply to statutory offences other than murder was the view taken in England and generally in Australia, in 19854. In Aubrey5 it was observed that nothing said in Crabbe altered or required any change to that approach. Statutory provisions which involved recklessness in offences of that kind had consistently been construed to require foresight of the possibility of harm6. An exception identified in Aubrey7 to that approach was the decision of the Victorian Court of Appeal in R v Campbell8, in 1995. That decision concerned s 17 of the Crimes Act 1958 (Vic), which came into force in 19869 and provided for the offence of recklessly causing serious injury. "Recklessly" was not defined. The (2017) 260 CLR 305 at 327-329 [43]-[47]. (1985) 156 CLR 464. (1985) 156 CLR 464 at 469. 4 Aubrey v The Queen (2017) 260 CLR 305 at 329 [46]. (2017) 260 CLR 305 at 329 [46]. 6 Aubrey v The Queen (2017) 260 CLR 305 at 327-328 [44], referring to by way of example R v Smyth [1963] VR 737 at 738-739; R v Kane [1974] VR 759 at 760; R v Lovett [1975] VR 488 at 493. (2017) 260 CLR 305 at 328 [44]-[45]. 9 Crimes (Amendment) Act 1985 (Vic). Court of Appeal applied the standard of recklessness as requiring foresight of the probability of harm. In so doing, it overturned a line of authority in that State10 which had consistently dealt with the test for recklessness in the way which had been generally accepted before Crabbe. The Court of Appeal in Campbell reasoned11 that, whilst Crabbe concerned murder, the same principles are relevant to the offence under s 17. An earlier decision of the Court of Criminal Appeal, R v Nuri12, had applied a test of probability to the offence of recklessly engaging in conduct endangering life under s 22 of the Crimes Act. The Court in Campbell held that all relevant sections in this group of sections in the Act, including s 17, must apply the same test13. Aubrey14 was concerned with the offence of maliciously inflicting grievous bodily harm in s 35(1)(b) of the Crimes Act 1900 (NSW) where "maliciously" was defined in s 5 to include "recklessly". The New South Wales Court of Criminal Appeal in R v Coleman15 had rejected the reasoning later adopted in Campbell and instead applied the test of foresight of the possibility of harm. This Court held that it was correct to do so16. The reference and the Court of Appeal This matter comes to this Court because the Director of Public Prosecutions for Victoria referred the correctness of the decision in Campbell as a point of law for the opinion of the Victorian Court of Appeal17. The background to the reference was proceedings in the County Court of Victoria involving a charge brought under 10 R v Smyth [1963] VR 737 at 738-739; R v Kane [1974] VR 759 at 760; R v Lovett [1975] VR 488 at 493. [1997] 2 VR 585 at 592-593. [1990] VR 641 at 643. [1997] 2 VR 585 at 593. (2017) 260 CLR 305. (1990) 19 NSWLR 467 at 475-476. (2017) 260 CLR 305 at 329 [47]. 17 Criminal Procedure Act 2009 (Vic), s 308(1) and (2). s 17 of the Crimes Act where the trial judge declined to direct the jury in accordance with Aubrey, considering himself bound to follow Campbell. The accused was acquitted. There can be no doubt that the decision in Campbell is wrong. The question of its correctness was not answered in the joint judgment in the Court of Appeal18. It was not considered necessary to do so because, even if Campbell were "plainly wrong", there were said to be "powerful reasons" for the Court not to apply the test stated in Aubrey. Those reasons essentially arose from the "re-enactment presumption" which applies to the interpretation of statutes19. In the joint judgment it was said20 that the legislature had successively "endorse[d]" the decision in Campbell in legislative amendments it had made since that decision. Parliament having "repeatedly approved" that decision, any change to the test there stated is a matter for Parliament, their Honours held21. The Court of Appeal gave as the answer to the reference that: "Unless and until it is altered by legislation, the meaning of 'recklessly' in s 17 of the Crimes Act 1958 is that stated by the Court of Appeal in [Campbell]." Re-enactment, presumption and inference In Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees22 this Court said that there is abundant authority "for the proposition that where the Parliament repeats words which have been judicially construed, it is taken to have intended the words to bear the 18 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 at 25 [17] per Maxwell P, McLeish and Emerton JJA. 19 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 at 25 [18] per Maxwell P, McLeish and Emerton JJA. 20 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 at 27 [29] per Maxwell P, McLeish and Emerton JJA. 21 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 (1994) 181 CLR 96 at 106. meaning already 'judicially attributed to [them]'". The Court stated the proposition in short form, no doubt because its application was so clear in that case. In a case to which it referred, Barras v Aberdeen Steam Trawling and Fishing Co23, this principle of statutory construction was said to apply where a word of doubtful meaning has received a clear judicial interpretation and the subsequent statute incorporates the same word or phrase in a similar context. It has been said that the presumption should not be relied upon to perpetuate an erroneous construction of a statutory provision24. It is notable that in Alcan the reason why the presumption was applied was not only that the Parliament had re- enacted the provision in almost identical terms with those which had been considered; the decision construing the similar provision had also been accepted in a number of later cases as correctly applying the relevant principle and there was no reason to think that it was in any way affected by error25. It is the duty of appellate courts, and this Court in particular, to correct error. It would seem to follow that the terms of the re-enactment, the circumstances surrounding it, or the context in which it is made must be such that the adoption by the legislature of the meaning assigned by the courts to the statutory term in question is tolerably clear. There have been cases, such as Alcan26 and Electrolux Home Products Pty Ltd v Australian Workers' Union27, where the courts have been able to conclude that there has been a clear case of legislative adoption. The question which may be seen to arise in the cases is whether more is required for the presumption than the repetition of the words in a similar context in a subsequent statute. The "presumption" has been described as a "valuable [1933] AC 402 at 411. 24 Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation (1952) 85 CLR 159 at 174. 25 Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106-107; see also Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 323-325 [7]- [8] per Gleeson CJ, 339-341 [61]-[62] per McHugh J, 370-371 [160]-[162] per Gummow, Hayne and Heydon JJ. (1994) 181 CLR 96. (2004) 221 CLR 309; see also Vella v Commissioner of Police (NSW) (2019) 93 ALJR 1236 at 1243-1244 [19]; 374 ALR 1 at 7. presumption"28 and a "presumption of no great weight"29. Much may depend on other factors, such as legislative history30. Dixon CJ in R v Reynhoudt31 said that it was "quite artificial" to take the mere repetition in legislation of a provision which has been judicially considered as legislative approval of that decision. If that is so, mere legislative inaction must surely be problematic32. In such a circumstance the presumption would not seem to arise. In Flaherty v Girgis33, Mason A-CJ, Wilson and Dawson JJ said that mere amendment of a statute not involving any re-enactment of the words in question could seldom be taken as approval. Even re-enactment of the words in circumstances not involving any reconsideration of their meaning will not do so. In Flaherty v Girgis34, their Honours spoke of this principle of interpretation as involving the drawing of an inference as to parliamentary approval, which in some cases may be difficult: "Whilst it is true that, where an inference can be drawn from the terms in which subsequent legislation has been passed that Parliament itself has approved of a particular judicial interpretation of words in an earlier statute, 28 Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation (1952) 85 CLR 159 at 174. 29 Flaherty v Girgis (1987) 162 CLR 574 at 594 per Mason A-CJ, Wilson and 30 Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106-107; Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at 503 [16]. (1962) 107 CLR 381 at 388; see also Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation (1952) 85 CLR 159 at 174. 32 Bennion, Bailey and Norbury on Statutory Interpretation, 8th ed (2020) at 720 (1987) 162 CLR 574 at 594. (1987) 162 CLR 574 at 594; see also R (N) v Lewisham London Borough Council [2015] AC 1259 at 1304 [53] per Lord Hodge JSC; Bennion, Bailey and Norbury on Statutory Interpretation, 8th ed (2020) at 719 [24.6]. a court should adhere to that interpretation, the difficulty is in discerning the existence of parliamentary approval". In Alcan it was said35 that consideration of the legislative history of a statute may strengthen the presumption. It might also be said that it may enable an inference of parliamentary adoption more readily to be drawn. There are other factors which might be taken into account. The likelihood that the legislature intended to adopt a previous judicial interpretation may be greater when the earlier decision is settled or well-recognised36. The principle has been said to have greater force in specialised and technical fields of the law, where legislation is often amended and judicial decisions carefully scrutinised by those responsible for amendments37. Whatever factors may be necessary to permit with some certainty a conclusion that the legislature has adopted or approved a previous judicial meaning assigned to a word or phrase, it is important to recall that the process in which the presumption is applied is one of statutory construction of the subsequent provision. The presumption is a principle of interpretation. The legislative amendments There were two amendments on which the joint judgment principally relied in concluding that the legislature had adopted the meaning in Campbell. The first, in 1997, effected changes to the maximum sentences for certain offences, including s 17; the second, in 2013, created new offences involving gross violence. The 1997 amendments In 1997 the Sentencing and Other Acts (Amendment) Act 1997 (Vic) ("the Amending Act") altered the maximum penalties for a large number of offences. (1994) 181 CLR 96 at 106-107. 36 Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402 at 447; Bennion, Bailey and Norbury on Statutory Interpretation, 8th ed (2020) at 720 37 Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 346-347 [81]; Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at 502-503 [15]; Herzfeld and Prince, Interpretation, 2nd ed As was pointed out in the joint judgment in the Court of Appeal38, the changes included the penalties for the "causing injury" offences39. The maximum for intentionally causing serious injury (s 16) was increased from 12.5 to 20 years; for recklessly causing serious injury (s 17) from 10 to 15 years; and for intentionally causing injury (s 18) from 7.5 to 10 years. The penalty for the s 17 offence (and for ss 16 and 18) appears at the foot of the section. The alteration of the penalty for the s 17 offence, and two unrelated offences, was effected by providing in a schedule to the Amending Act that: In sections 17, 25 and 27, for the penalty set out at the foot of the imprisonment (15 years section substitute maximum).'." 'Penalty: Level 4 No part of the body of s 17, including the word "recklessly", was enacted as part of the amending provision. The joint judgment40 gave as the explanation for the increase in s 17 the following: "the decision to increase the maximum for recklessly causing serious injury by 50% can only be understood on the basis that the legislature was aware of, and accepted, the Campbell interpretation. That is, the increased maximum was seen to be both necessary and appropriate given the high degree of culpability involved in the causing of serious injury in circumstances where the offender was aware of the probability that serious injury would result and proceeded nonetheless. This was, in effect, a re- enactment of s 17 – with a higher maximum – on the basis of the interpretation adopted in Campbell." The assumption made in the joint judgment as to legislative intention finds no support from the secondary materials relating to the Amending Act. To the contrary, in the Second Reading Speech to the Bill which led to the 1997 38 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 39 Sentencing and Other Acts (Amendment) Act 1997 (Vic), s 60, Sch 1 items 10-12. 40 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 amendments41 it was explained that a wide-ranging revision of maximum sentences involving numerous offences was undertaken by the Victorian government because of perceived public concern about the level of sentences imposed by the courts in Victoria for certain serious offences. The general concern was that higher sentences should be imposed for offences of that kind, including offences against the person. In the Second Reading Speech it was said: "This wide-ranging process of consultation was designed to find out where the sentencing system was failing. A key aim was to identify ways to ensure that the courts pass sentences which reflect community expectations. The community has clearly indicated dissatisfaction with sentencing levels for certain serious offences; this bill will address these concerns so as to restore the faith and confidence of the public in the criminal justice system." There is nothing to suggest that in making the increases to the maximum penalty for many offences the legislature turned its mind to Campbell. The amending provision itself makes no reference to the word "recklessly" or to the s 17 offence more generally. It is not to be overlooked that the presumption is one of interpretation which arises when the legislature enacts the same term or phrase which has been judicially considered. Here, the alteration made to the penalty at the foot of s 17, together with the explanation provided for it, would seem to provide no occasion for the operation of the presumption. The 2013 amendments The Crimes Amendment (Gross Violence Offences) Act 2013 (Vic) introduced offences of intentionally and recklessly causing serious injury "in circumstances of gross violence" into the Crimes Act. The new offences appeared as ss 15A and 15B, the latter dealing with causing serious injury "recklessly". It may be observed that while the word "recklessly" was enacted in the new s 15B the legislature did so in a different context, in connection with the creation of a new offence. The focus of the legislature is likely to have been on matters arising with respect to that offence. Certainly there is nothing said in Parliament during the second reading of the Bill or in the Explanatory Memorandum which directs attention to what the legislature may have taken to be the meaning of "recklessly". There is no legislative history to assist the drawing of such an inference. 41 Victoria, Legislative Council, Parliamentary Debates (Hansard), 27 May 1997 at The joint judgment's finding42, that the decision in Campbell may be seen to have been adopted in s 15B, relies upon the Report of the Sentencing Advisory Council, "Statutory Minimum Sentences for Gross Violence Offences"43, and in particular the statement in it44, with respect to the offence in s 17, that: "[t]he element of 'recklessness' will be satisfied for this offence if the prosecution proves beyond reasonable doubt that the accused foresaw that his or her actions would probably cause serious injury and that he or she was indifferent as to whether or not serious injury would actually result" and the fact that the passage contains a footnote to Nuri45. In the Second Reading Speech46, all that is relevantly said concerning the Report is that consideration had been given to it and that many, but not all, of its recommendations were adopted. This is not a strong basis for an inference of legislative adoption of the particular passage. There are other features of the Report which make it an unreliable basis for an inference as to the intention of the legislature. If an inference is to be drawn on the basis that the attention of the legislature, or those drafting, was given to every aspect of the Report, it would need to take account of a later statement concerning the offences of intentionally causing serious injury and recklessly causing serious injury. In stating what the Crown must prove concerning recklessness it is said that the standard to be applied is foresight of the possibility of serious injury47: 42 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 43 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011). 44 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at 4 [1.20]. [1990] VR 641 at 643. 46 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 47 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at 47-48 [2.203]. "To be guilty of recklessly causing serious injury, the offender must have intended to commit the act or acts that caused the injury, and foresaw that those actions could cause serious injury, but was indifferent as to whether or not serious injury would actually result." (emphasis added) The concerns of the Victorian Parliament might be thought more accurately to be reflected in the Terms of Reference given to the Sentencing Advisory Council48. The Attorney-General sought advice on the introduction of statutory minimum sentences for the offences of intentionally causing serious injury and recklessly causing serious injury, when those offences are committed in circumstances of gross violence. More particularly, the terms of reference sought advice "on the way in which a minimum four-year non-parole period for adults, and a minimum period in detention of two years for children aged 16 or 17, might operate". The Council was not asked to consider the merits of the proposed scheme. The Council was advised by the Attorney-General what the circumstances constituting gross violence were to be. In short summary, the Council was asked to advise on how exceptional circumstances in which a court may sentence below the statutory minimum could best be specified; how factors making an offence one of gross violence could best be specified; the effects of recommendations by the Council on sentencing levels and the numbers of persons serving custodial sentences; and any other matters the Council considered relevant. Conclusion: error should be corrected It cannot be concluded that, subsequent to Campbell, the Victorian Parliament adopted the meaning of "recklessly" given in Campbell by reference to the two amending statutes relied upon in the joint judgment. The Court of Appeal made wrong assumptions about the legislature's thinking concerning the 1997 amendments. In truth, no occasion for the application of the principle of construction arose. There is nothing beyond the mere repetition of the word "recklessly" in the 2013 amendments to support the application of the principle. That fact alone is insufficiently clear to warrant an inference of legislative approval and there are no other factors which support such an inference. 48 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at viii. It is not possible to characterise the broad subject of criminal justice as one of a "specialised and politically sensitive field"49, such as industrial relations and taxation50, to permit an inference to be drawn that the drafters must be taken to be aware of a particular judicial interpretation of the word "recklessly". It is more likely they were concerned with other issues relating to the new offences, as the Terms of Reference suggest. Otherwise one is left to speculate. If the Parliament is taken to be aware of judicial decisions on the topic, it must also be taken to be aware that Campbell overturned a line of authority in Victoria to the contrary, as the Court of Appeal itself said in that case51; that the view generally in Australia as to the standard of foresight at the time of Crabbe was consistent with the cases overturned; and that the Court of Criminal Appeal of New South Wales had applied that standard with respect to a similar offence in 199052, prior to Campbell, and that that position had been maintained53. The mere passage of time since Campbell was decided in 1995 does not provide support for the application of the principle of construction. The inaction of the legislature is not a firm basis for the application of the principle. It may equally be consistent with leaving any correction of an interpretation of a term to the courts, as is often the case. Correcting the decision in Campbell would not be productive of substantial injustice. The criminal justice system in Victoria is able to adapt to the correction. It did so when Campbell overturned a line of authority dating back some 30 or more years. Those who have stood trial since Campbell have not suffered. They have benefitted from the prosecution being required to prove the necessary mental element to a much higher standard. For those who have not yet been tried of an offence under s 17, and to whom the lesser standard will apply, it is difficult to accept that their conduct is likely to have been based on an understanding that in causing serious injury they would not have to face trial on the basis of their foresight of the possibility of such harm. In any event, whilst injustice or inconvenience is an important factor to be taken into account, there is 49 Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 346-347 [81]; Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at 502-503 [15]. 50 Herzfeld and Prince, Interpretation, 2nd ed (2020) at 168 [8.60]. [1997] 2 VR 585 at 593. 52 R v Coleman (1990) 19 NSWLR 467. 53 Blackwell v The Queen (2011) 81 NSWLR 119. no support to be found in principle or authority for the proposition that a court should persist with a manifestly incorrect interpretation on those grounds54. Orders The appeal should be allowed and the opinion of the Court of Appeal given in Order 1 made on 2 July 2020 set aside. In lieu thereof, the point of law raised for opinion should be answered: The meaning of "recklessly" in the offence of recklessly causing serious injury (s 17 of the Crimes Act 1958 (Vic)) is not as stated in R v Campbell [1997] 2 VR 585. It requires that an accused had foresight of the possibility of relevant consequences and proceeded nevertheless. 54 Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1 at 13. GordonJ GAGELER, GORDON AND STEWARD JJ. Section 17 of the Crimes Act 1958 (Vic), which came into force in March 198655, provides that "[a] person who, without lawful excuse, recklessly causes serious injury to another person is guilty of an indictable offence". In 1995, in R v Campbell56, the Court of Appeal of the Supreme Court of Victoria, invoking what was described as "[t]he spirit" of the decision of this Court in R v Crabbe57 and following an earlier decision of the Full Court of the Supreme Court of Victoria in R v Nuri58, held that in order for a person to be convicted of recklessly causing serious injury under s 17 of the Crimes Act, the prosecution must establish that the person foresaw that serious injury probably would result from the act or omission which in fact caused the serious injury59. In reaching that decision, the Court of Appeal declined to follow a line of previous authority60 which held that it was sufficient to establish the mental element of the offences of unlawful and malicious wounding or unlawful and malicious infliction of grievous bodily harm to demonstrate foresight of the possibility of harm. In 2017, in Aubrey v The Queen61, in addressing "recklessness" for the purposes of the offence of maliciously inflicting grievous bodily harm under s 35(1)(b) of the Crimes Act 1900 (NSW), this Court cast doubt on the correctness of Campbell and noted, in particular, that nothing said in Crabbe in relation to the degree of recklessness necessary to establish offences against the person other than murder required any shift from foresight of possibility to foresight of probability of harm. This Court nevertheless recognised that "[t]he requirements in States 55 See Crimes (Amendment) Act 1985 (Vic), s 8. [1997] 2 VR 585 at 593. (1985) 156 CLR 464. 59 Campbell [1997] 2 VR 585 at 592-593. 60 R v Smyth [1963] VR 737; R v Kane [1974] VR 759; R v Lovett [1975] VR 488. (2017) 260 CLR 305 at 328-329 [45]-[46]. GordonJ other than New South Wales may vary according to the terms of each State's legislation"62. This case concerns the present correctness of Campbell. It arises in this way. In February 2017, an accused was relevantly charged under s 17 of the Crimes Act with recklessly causing serious injury to a man who fell to the ground and suffered serious injury to the skull and brain. In August 2019, the accused was tried before a jury in the County Court of Victoria. The trial judge declined the invitation of the Director of Public Prosecutions ("the DPP") to charge the jury in relation to the mental element of recklessness in accordance with Aubrey and, instead, directed the jury consistently with Campbell. The accused was acquitted by the jury. The DPP referred the correctness of the decision in Campbell, as a point of law, to the Court of Appeal for its opinion63. The DPP submitted that, consistent with this Court's decision in Aubrey, the correct interpretation of recklessness for offences against the person other than murder (and, in particular, the offence of recklessly causing serious injury under s 17 of the Crimes Act) is that an accused had foresight of the possibility of the relevant consequences and proceeded nevertheless. The acquitted person, who appeared by counsel64, submitted that the decision in Campbell should remain the law in Victoria. The Court of Appeal (Maxwell P, Priest, Kaye, McLeish and Emerton JJA) unanimously answered the point of law that "[u]nless and until it is altered by legislation, the meaning of 'recklessly' in s 17 of the Crimes Act ... is that stated by the Court of Appeal in ... Campbell". By special leave to appeal, the DPP sought to have this Court reconsider Campbell. As these reasons will explain, the point of law was answered correctly by the Court of Appeal. Section 17 of the Crimes Act As has been observed, s 17 of the Crimes Act came into force in March 1986. It was one of three new offences introduced into the Crimes Act65 – 62 Aubrey (2017) 260 CLR 305 at 329 [47]. 63 Criminal Procedure Act 2009 (Vic), s 308(1) and (2). 64 See Criminal Procedure Act, s 308(3). 65 Crimes (Amendment) Act, s 8. GordonJ injury intentionally66, causing serious injury recklessly67 causing serious and causing injury either intentionally or recklessly68 – based on the fourteenth report of the Criminal Law Revision Committee of England and Wales, published in 198069. The Committee had warned that there was not unanimity as to the meaning of recklessness in the criminal law70 and that failure to define the term would result in a period of uncertainty until defined by the courts71. The Victorian Parliament chose not to define "recklessly". That task fell to the Full Court in 1989 in Nuri when the Court stated that "conduct is relevantly reckless if there is foresight on the part of an accused of the probable consequences of his actions and he displays indifference as to whether or not those consequences occur"72. That meaning of recklessness was then adopted and applied in Campbell in 1995 when the Court of Appeal stated that "the appropriate test to apply" for recklessness in s 17 of the Crimes Act "is that it is possession of foresight that injury probably will result that must be proved"73. That position has stood since 1989 in Victoria74. 66 Crimes Act, s 16. 67 Crimes Act, s 17. 68 Crimes Act, s 18. 69 Victoria, Legislative Council, Parliamentary Debates (Hansard), 25 September 70 United Kingdom, Criminal Law Revision Committee, Fourteenth Report: Offences against the Person (1980) at 3 [6]. 71 United Kingdom, Criminal Law Revision Committee, Fourteenth Report: Offences against the Person (1980) at 3-6 [6]-[12], especially at 3-4 [7]. [1990] VR 641 at 643, citing Crabbe (1985) 156 CLR 464. [1997] 2 VR 585 at 592. 74 See, eg, R v Ruano [1999] VSCA 54 at [8]; R v Le Broc (2000) 2 VR 43 at 60 [56]; R v Kucma (2005) 11 VR 472 at 474 [4], 482 [29]; R v Wilson [2005] VSCA 78 at [17]; R v Pota [2007] VSCA 198 at [26]; R v Abdul-Rasool (2008) 18 VR 586 at 603-604 [67]-[69]; Ignatova v The Queen [2010] VSCA 263 at [36]-[37]; Paton v The Queen [2011] VSCA 72 at [46]-[49], [68]; James v The Queen (2013) 39 VR GordonJ Following the Court of Appeal's decision in Campbell, two relevant enactments were passed which directly concerned s 17 of the Crimes Act – the Sentencing and Other Acts (Amendment) Act 1997 (Vic) ("the 1997 amendments") and the Crimes Amendment (Gross Violence Offences) Act 2013 (Vic) ("the 2013 amendments"). 1997 amendments The 1997 amendments increased the maximum penalty for recklessly causing serious injury in s 17 of the Crimes Act to 15 years' imprisonment, an increase of 50 per cent75. Fifteen years' imprisonment remains the maximum penalty for the offence76. The purpose of the amendments, informed by a "wide-ranging process of consultation", was to "identify ways to ensure that the courts pass sentences which reflect community expectations"77. The amendments followed a "year-long review process"78 including "a Crown Prosecutor interview[ing] over 100 judges, magistrates and other key stakeholders in the criminal justice system to identify problems and solutions to technical defects in the operation of the [Sentencing Act 1991 (Vic)]"79. As the plurality in the Court of Appeal in the present case stated80: 149 at 179 [148]; Ejupi v The Queen [2014] VSCA 2 at [34]; Phillips v The Queen [2017] VSCA 313 at [43]. 75 Sentencing and Other Acts (Amendment) Act, Sch 1, item 11. 76 The 1997 amendments also increased the maximum penalty for intentionally causing serious injury to 20 years' imprisonment and for intentionally causing injury to ten years' imprisonment: Sentencing and Other Acts (Amendment) Act, Sch 1, items 10 and 12. 77 Victoria, Legislative Council, Parliamentary Debates (Hansard), 27 May 1997 at 78 Victoria, Legislative Council, Parliamentary Debates (Hansard), 27 May 1997 at 79 Victoria, Legislative Council, Parliamentary Debates (Hansard), 27 May 1997 at 80 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 GordonJ "[T]he decision to increase the maximum for recklessly causing serious injury by 50% can only be understood on the basis that the legislature was aware of, and accepted, the Campbell interpretation. That is, the increased maximum was seen to be both necessary and appropriate given the high degree of culpability involved in the causing of serious injury in circumstances where the offender was aware of the probability that serious injury would result and proceeded nonetheless. This was, in effect, a re-enactment of s 17 – with a higher maximum – on the basis of the interpretation adopted in Campbell." 2013 amendments Sixteen years later, the 2013 amendments effected three separate but interrelated changes to the criminal law – two amendments to the Crimes Act and an amendment to the Sentencing Act. For present purposes, it is sufficient to focus on the amendments to the Crimes Act – which, again, can only be "understood on the basis that the legislature was aware of, and accepted, the Campbell First, the definitions of "injury" and "serious injury" applicable to all relevant non-fatal offences, including s 17 of the Crimes Act, were revised82. This amendment was "derive[d] from work on possible reforms to fatal and non-fatal offences that the Department of Justice [had] been undertaking for some time"83. In the second reading speech, the Attorney-General explained that the amendments were necessary because of the then existing "very low threshold for offences involving serious injury", which had meant that cases which should have been charged as causing injury and heard and determined in the Magistrates' Court of Victoria were instead charged as causing serious injury and heard in the 81 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19 82 Crimes Amendment (Gross Violence Offences) Act, s 3. 83 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December GordonJ County Court84. The new and "higher threshold for serious injury" was to "make it easier for prosecutors to determine the appropriate offence to charge"85. Second, the 2013 amendments inserted new "gross violence" offences – ss 15A and 15B of the Crimes Act86. The insertion of these new aggravated forms of the existing causing serious injury offences (ss 16 and 17 respectively) was significant. As the Explanatory Memorandum to the amending Bill said87: "New section 15B introduces the new offence of causing serious injury recklessly in circumstances of gross violence, without lawful excuse. The maximum penalty for the offence is level 4 imprisonment (15 years maximum). The new offence has the same maximum penalty as the offence of causing serious injury recklessly (section 17 of the Crimes Act 1958). The new gross violence offences are intended to be a subset of the serious injury offences category under Subdivision (4) of Division 1 of Part I of the Crimes Act 1958. The new offences identify circumstances of offending that level of harm and culpability. Adult offenders who are found guilty of one of the new gross violence offences are liable to be sentenced to a statutory minimum sentence of a term of imprisonment with a non-parole period of at least four years. involve a particularly high There may be serious injury cases that involve a high level of harm and culpability but do not occur in the prescribed circumstances of gross violence. These cases will continue to be dealt with under the existing causing serious injury offences." (emphasis added) The elements of the new gross violence offences were intended to, and did, "use the elements of the existing offences of causing serious injury intentionally 84 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 85 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 86 Crimes Amendment (Gross Violence Offences) Act, s 4. 87 Victoria, Legislative Assembly, Crimes Amendment (Gross Violence Offences) Bill 2012, Explanatory Memorandum at 4. GordonJ or recklessly under sections 16 and 17 of the Crimes Act"88, which (for s 17, at least) included the element of recklessness. In the second reading speech, the Attorney-General reinforced that "[t]he new gross violence offences [were] intended to capture a subset of the serious injury offences cases, namely those that involve a particularly high level of harm and culpability" and, not insignificantly, that "[i]n addition to the usual elements of causing serious injury offences, the prosecution must prove that the offence occurred in one of the listed circumstances of gross violence"89 (emphasis added). In introducing these reforms, the government stated that it had sought advice from, and "carefully considered" a report of, the Sentencing Advisory Council ("the SAC")90. The SAC report was prepared in consultation "with a wide variety of criminal justice, governmental and non-governmental stakeholders" and with the benefit of extensive submissions91. The government adopted many of the SAC's recommendations92. The elements of the existing offences were addressed in the SAC report and, in relation to s 17 of the Crimes Act, it said93: "The element of 'recklessness' will be satisfied for this offence if the prosecution proves beyond reasonable doubt that the accused foresaw that his or her actions would probably cause serious injury and that he or she 88 Victoria, Legislative Assembly, Crimes Amendment (Gross Violence Offences) Bill 2012, Explanatory Memorandum at 4. 89 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 90 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 2012 at 5550, referring to Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011). See Sentencing Act, Pt 9A, especially ss 108B and 108C. 91 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at vii. 92 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 93 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at 4 [1.20]. GordonJ was indifferent as to whether or not serious injury would actually result [R v Nuri [1990] VR 641 at 643]." As has been observed, the 2013 amendments could only be understood on the basis that the legislature was aware of, and accepted, the Nuri (and thus the Campbell) interpretation for the mental element of recklessness. The extrinsic materials expressly state that to be so94. A word or phrase, such as "recklessness", is presumed to have the same meaning at least when it is used in cognate or related provisions of an Act95. That presumption has particular relevance and force where, consistent with a recommendation in the SAC report96, the new gross violence offence introduced in 2013, s 15B, picked up the existing elements of the s 17 offence, and added only the gross violence element, so that s 17 was expressly made, and remains, the alternative verdict to s 15B97. In addressing the 2013 amendments, Parliament was required to, and did, consider the nature and extent of the culpability and criminality of the existing offences – ss 16 and 17 – in creating the more serious offences of gross violence. For s 17 and, therefore, s 15B, the mental element of recklessness was identified and said to be that stated in Nuri and then in Campbell. Re-enactment presumption Where Parliament repeats words which have been judicially construed, it can be taken to have intended the words to bear the meaning already judicially attributed to them98. The so-called "re-enactment presumption" has a long 94 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 2012 at 5550. See also Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at 4 [1.20]. 95 See, eg, Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618; McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633 at 643; Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (In liq) (2015) 257 CLR 544 at 560 [27]; Regional Express Holdings Ltd v Australian Federation of Air Pilots (2017) 262 CLR 456 at 466-467 [21]. 96 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at 19 [2.25]-[2.26]. 97 Crimes Amendment (Gross Violence Offences) Act, s 5. 98 Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106; Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 346-347 [81]; GordonJ its though application has become more discerning history99, "parliamentary processes [have become] more exposed to examination by the courts"100. Applied to a consolidating statute enacted in a legislative context in which periodical consolidation is practised, for example, the presumption can be "quite artificial"101. In specialised and politically sensitive fields, where legislation is often amended and judicial decisions carefully scrutinised by those responsible for amendments, in contrast the presumption can have "real force"102. In such areas, it is "no fiction" to attribute to the designated Minister and Department and, through them, Parliament, knowledge of court decisions dealing with their portfolio103. Even outside fields, the presumption may be applicable because the legislative history shows an interpretation. awareness That awareness may be indicated by a specific legislative response that "followed upon an expert review of the law and presumably the case law"104 including reports of law reform commissions105 and subject-specific advisory specialised and politically Parliament particular sensitive judicial Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at 502 [15]; Brisbane City Council v Amos (2019) 266 CLR 593 at 606 [24], 615 [45], 615-616 [48]-[49], 617-618 [56]; Vella v Commissioner of Police (NSW) (2019) 93 ALJR 1236 at 1243-1244 [18]-[19], 1250 [52]; 374 ALR 1 at 6-7, 15-16. 99 See, eg, Ex parte Campbell; In re Cathcart (1870) LR 5 Ch App 703 at 706; Sargood Bros v The Commonwealth (1910) 11 CLR 258 at 272, 283, 305-306; Pillar v Arthur (1912) 15 CLR 18 at 22; Barras v Aberdeen Steam Trawling and Fishing Co [1933] AC 402 at 412, 438, 442, 446; Platz v Osborne (1943) 68 CLR 100 Zickar v MHG Plastic Industries Pty Ltd (1996) 187 CLR 310 at 329. 101 R v Reynhoudt (1962) 107 CLR 381 at 388. 102 Herzfeld and Prince, Interpretation, 2nd ed (2020) at 168 [8.60]. See also Fortress Credit (2015) 254 CLR 489 at 502 [15], quoting Electrolux (2004) 221 CLR 309 at 103 Fortress Credit (2015) 254 CLR 489 at 502 [15], quoting Electrolux (2004) 221 CLR 309 at 346-347 [81]. 104 Fortress Credit (2015) 254 CLR 489 at 503 [15]. 105 See, eg, Brisbane City Council (2019) 266 CLR 593 at 607-608 [25]-[26]; Jackmain (a Pseudonym) v The Queen (2020) 102 NSWLR 847 at 888-889 [175]. GordonJ committees106. Temporal proximity between a decision and an enactment may also be relevant107. Express reference to a particular judicial decision in the parliamentary debates at the time of enactment may assist108, although the presumption can apply despite the absence of explicit parliamentary reference to the decision in question109. Inevitably, the application of the presumption in any case will turn on its own circumstances having regard to the history of the specific statute under consideration and, in this appeal, that is s 17 of the Crimes Act. Re-enactment presumption and s 17 of the Crimes Act The 1997 and 2013 amendments were significant, substantive and direct. The 1997 amendments increased by 50 per cent the maximum penalty which could be imposed for a contravention of s 17110. And, insofar as the 2013 amendments changed the meaning of "serious injury"111, that altered the scope of liability created by s 17. Plainly, these amendments were not a "[m]ere amendment of a statute not involving any re-enactment of the words in question" or a "re-enactment of the words in circumstances not involving any reconsideration of their meaning"112. 106 See, eg, Re Alcan (1994) 181 CLR 96 at 107; Fortress Credit (2015) 254 CLR 489 107 Electrolux (2004) 221 CLR 309 at 324-325 [8], 346 [81], 370-371 [161]-[162], 398 [251]. See also R v Commonwealth Court of Conciliation and Arbitration; Ex parte Whybrow & Co (1910) 11 CLR 1 at 47. 108 Vella (2019) 93 ALJR 1236 at 1243-1244 [18]-[19], 1250 [52]; 374 ALR 1 at 6-7, 109 See, eg, Electrolux (2004) 221 CLR 309 at 346-347 [81]; Fortress Credit (2015) 254 CLR 489 at 503 [16]. See also Pearce, Statutory Interpretation in Australia, 9th ed (2019) at 127-128 [3.51]; Zickar (1996) 187 CLR 310 at 329, quoting Flaherty v Girgis (1987) 162 CLR 574 at 594. 110 Sentencing and Other Acts (Amendment) Act, Sch 1, item 11. 111 Crimes Amendment (Gross Violence Offences) Act, s 3. 112 Zickar (1996) 187 CLR 310 at 329, quoting Flaherty (1987) 162 CLR 574 at 594. GordonJ As has been observed, temporal proximity between a judicial interpretation and subsequent enactment may be significant. The 1997 amendments were made just two years after Campbell was decided. And while the 2013 amendments were made many years after the decision of the Court of Appeal in Campbell, many subsequent decisions of the Court of Appeal which applied Campbell were decided contemporaneously with those amendments113. The 1997 and 2013 amendments also followed expert reviews and extensive consultation with key stakeholders in the criminal justice system114. Contrary to a submission made by the DPP, the fact that those reviews were not carried out by law reform commissions does not detract from their significance or context115. Criminal law is and had by 1997 become in Victoria a "specialised and politically sensitive field" in the sense contemplated in Electrolux Home Products Pty Ltd v Australian Workers' Union116. Criminal law has a "designated Minister" (the Attorney-General) and a "designated ... Department of State" (the Department of Justice)117. It is "no fiction" to attribute to the Attorney-General and the Department and, through them, Parliament, knowledge of decisions dealing with their portfolio, especially where, as here, the reviews were undertaken at the request of the Attorney-General118. The application of the re-enactment presumption does not depend on expert reviews or specific legislative amendments directed towards the precise issue − 113 See fn 74 above. 114 See, eg, Victoria, Legislative Council, Parliamentary Debates (Hansard), 27 May 1997 at 1058; Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at vii. 115 Re Alcan (1994) 181 CLR 96 at 107; Fortress Credit (2015) 254 CLR 489 at 503 116 (2004) 221 CLR 309 at 346-347 [81], quoted in Fortress Credit (2015) 254 CLR 489 at 502 [15]. See also Jackmain (2020) 102 NSWLR 847 at 888-889 [175]. 117 Electrolux (2004) 221 CLR 309 at 347 [81]. 118 Victorian Community Council Against Violence, Community Knowledge and Perceptions of Sentencing in Victoria: A Report on the Findings of the Consultations (1997) at viii-xv; Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at vii. GordonJ the meaning of recklessness in s 17119. However, adopting and adapting what was said in Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher, it is difficult to imagine that the decisions in Nuri and Campbell – cases concerning the meaning of recklessness – were not known to those involved in the field as interpretive decisions of considerable significance120. This is especially so given that the amending enactments significantly and directly altered the nature and extent of the criminality and culpability of a contravention of s 17 of the Crimes Act. In relation to the 2013 amendments, the SAC report did expressly identify the meaning of recklessness by reference to the decision in Nuri (which Campbell followed)121. The identified error in Campbell − the adoption of a construction of the element of recklessness for the offence of recklessly causing serious injury under s 17 of the Crimes Act that an accused must have foresight of the probability and not the possibility of relevant consequences − is not insignificant. If the meaning of a statute is wrong, it should be corrected. The difference here is that even if, when s 17 was enacted, the mental element of recklessness, consistent with Crabbe, should have been interpreted as the possibility and not probability of relevant consequences, the 1997 and 2013 amendments were based on the nature and extent of the criminality and culpability of a contravention of s 17 as stated in Campbell (which followed Nuri), not Crabbe. Those amendments, and the basis for those amendments, cannot be put to one side. The DPP's reliance on a policy preference for consistency in the meaning of like provisions in different States as a reason for this Court to alter the meaning of s 17 of the Crimes Act is misplaced. The maximum penalty for committing the s 17 offence in Victoria is 15 years' imprisonment, while the maximum penalty for the equivalent New South Wales offence is currently ten years' imprisonment122. Each State has taken a different view on the criminality to be ascribed to the conduct. Other considerations reinforce the conclusion that the foresight of probability test in Campbell should stand unless addressed by the legislature in 119 See, eg, Platz (1943) 68 CLR 133 at 145-146, 146-147; Thompson v Judge Byrne (1999) 196 CLR 141 at 157 [40]. 120 (2015) 254 CLR 489 at 503 [16]. 121 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at 4 [1.20]. 122 Crimes Act 1900 (NSW), s 35(2). GordonJ Victoria. Campbell was decided in 1995, more than 25 years ago, and since that date it has been consistently followed in Victoria123. This Court is reluctant to depart from long-standing decisions of State courts upon the construction of State statutes, particularly where those decisions have been acted on in such a way as to affect rights124. That is especially so here, where unfairness would follow if the meaning of recklessness was changed retrospectively by this Court125 with the result that potentially criminal conduct which occurred before this Court's decision – if that conduct has not yet been charged, or if it has been charged but not tried – would attract the lower standard of recklessness contended for by the DPP and where the DPP conceded that the decision of this Court on s 17 of the Crimes Act would have a "flow-on effect" for other offence provisions in Victoria. Conclusion and orders The appeal should be dismissed. There will also be an order, as the DPP sought, that it pay the acquitted person's reasonable costs. 123 See fn 74 above. 124 Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1 at 13-14, 22-23. 125 Giannarelli v Wraith (1988) 165 CLR 543 at 584-586; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 358-359. Edelman Introduction This appeal is from a decision of the Court of Appeal of the Supreme Court of Victoria126 on a reference brought by the Director of Public Prosecutions127 following an acquittal of the accused person. The Court of Appeal considered the meaning of recklessness in s 17 of the Crimes Act 1958 (Vic). The offence in s 17 is committed where a person, "without lawful excuse, recklessly causes serious injury to another person". The Court of Appeal held that the courts of Victoria should not follow the approach unanimously taken by this Court in Aubrey v The Queen128 to the meaning of "recklessness" in a differently worded New South Wales provision. Instead, it was held that the courts of Victoria should continue to follow the decision of the Court of Appeal of the Supreme Court of Victoria in 1995 in R v Campbell129. The appeal to this Court raises two important questions. The first is the meaning that Parliament intended for the word "recklessly" when s 17 of the Crimes Act was introduced by the Crimes (Amendment) Act 1985 (Vic)130. In light of the answer to the first question, the second question is whether this Court should give s 17 the meaning given to the concept of recklessness in Aubrey or the meaning given in Campbell. The answer to the first question is that Parliament is best understood to have intended to leave the essential meaning and development of the concept of recklessness in s 17 to the judiciary. Parliament had eschewed the strong call to define the concept of recklessness, preferring simply to refer to the developing judicial concept of recklessness by which "in the absence of a contrary indication in the statute, the statute speaks continuously to the present, and picks up the case law as it stands from time to time"131. The intention of Parliament was therefore 126 Director of Public Prosecutions Reference (No 1 of 2019) (2020) 284 A Crim R 19. 127 See Criminal Procedure Act 2009 (Vic), s 308. 128 (2017) 260 CLR 305. 130 Crimes (Amendment) Act 1985 (Vic), s 8. 131 Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 at 549 Edelman that the law as to the meaning of recklessness be developed and incrementally clarified in the manner of the common law132. As to the second question, if the meaning of recklessness in s 17 were able to be developed in an unconstrained manner then, since s 17 concerns an offence of causing serious injury, the developed meaning given by all members of this Court in Aubrey would require recklessness in s 17 to mean: (i) that the accused person foresaw the possibility of harm133 but proceeded nonetheless to take that risk; and (ii) that, although expressed in various ways in Aubrey, the risk was unreasonable in the circumstances known to the accused. To follow the decision in Aubrey would have the salutary effect of overruling Campbell in circumstances in which: (i) the result in Campbell is wrong; (ii) the result is arguably inconsistent with an approach that might have been expected at the time the provision was enacted; (iii) the result is likely to be inconsistent with the approach taken in other States; and (iv) the result is inconsistent with the approach that should be taken to other Victorian offences apart from murder and, possibly, endangerment of life offences. I have, however, and not without considerable hesitation, reached the conclusion that recklessness in s 17 nevertheless should not bear the developed judicial meaning given to recklessness in Aubrey. Instead, the interpretation to be given to recklessness in s 17 should be that of the Court of Appeal in 1995 in Campbell134. This is not a case where this Court is applying an essential meaning intended by Parliament in an unexpected way to new or different circumstances or practices135. Nor is it a case where this Court is applying the essential meaning intended by Parliament in an unexpected way in light of a different understanding of facts and circumstances136. Rather, in circumstances where the essential meaning of "recklessly" in s 17 was left to judicial development, this conclusion involves a judicial application, albeit an application that involves some 132 See, for instance, Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007 at 1021-1022 [63], 1026 [82]-[83], 1028 [93]; 372 ALR 555 at 569-570, 575-576, 578. 133 There was no issue in Aubrey, nor in this case, concerning whether foresight of the possibility of harm requires foresight of harm generally or harm of the same kind that occurred: see Vallance v The Queen (1961) 108 CLR 56 at 59. 135 See R v A2 (2019) 93 ALJR 1106 at 1141 [173]; 373 ALR 214 at 257. 136 See Aubrey v The Queen (2017) 260 CLR 305 at 320 [24]. Edelman inconsistency and lack of principle, which is necessary to preserve the fabric of the law in light of subsequent judicial decisions and statutory changes. There are three significant constraining factors, explained in detail in the reasons below, which lead to this unusual conclusion on the second question. First, although the approach in Aubrey is more principled, prior to the decision in Aubrey the decision in Campbell could not have been thought to be plainly wrong. The difference is not as stark as might first appear between (i) the judicial meaning given to recklessness in Aubrey, and (ii) the judicial meaning given to recklessness in Campbell. In effect, Campbell aligns the meaning of recklessness in cases of offences involving the causing of serious injury with the meaning of recklessness in offences involving murder or, possibly, endangerment of life. Secondly, the decision in Campbell has formed part of the background for amendments to the penalties and related provisions in the Crimes Act. Although this is not a case where a provision – in this case, s 17 – has been subsequently amended or re-enacted with an intention to give the provision a particular meaning137, the judicial development of the meaning of recklessness cannot ignore the subsequent amendment of provisions of the Crimes Act against the background of the judicially determined meaning in Campbell. Thirdly, the judicial meaning of recklessness in Campbell has been adopted in the courts of Victoria for 26 years without any obvious inconvenience. There could be real unfairness in the imposition of a new judicial interpretation which, in effect, would retroactively criminalise uncharged or untried conduct over that long period. Section 17 and the principled meaning of recklessness The developed meanings of recklessness In Aubrey138, one issue was the meaning of an "act ... done recklessly" within the definition of "maliciously" in s 5 of the Crimes Act 1900 (NSW). In the joint judgment of Kiefel CJ, Keane, Nettle and Edelman JJ139, with whom Bell J agreed on this point140, it was observed that, since at least 1883, the notion of recklessness had been judicially developed to embrace "foreseeing the possibility 137 Including a meaning that had been judicially attributed prior to the re-enactment. See Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106. 138 (2017) 260 CLR 305. 139 (2017) 260 CLR 305 at 327-328 [44]. 140 (2017) 260 CLR 305 at 331 [53]. Edelman of consequences and proceeding nonetheless"141. The joint judgment explained that this aspect of the usual judicially applied meaning of "recklessness" had been a long-standing position in Victoria142. But this was not the only meaning of recklessness. An exception to this judicially applied meaning, recognised by this Court in Aubrey, is where recklessness is an element of the offence of common law murder or the offence contained in s 18 of the Crimes Act 1900 (NSW) requiring "reckless indifference to human life"143. The joint judgment in Aubrey144 approved the reasoning of Hunt J in R v Coleman145 that the "contemplation by the accused of the probable consequence of death is required for murder because it has to be comparable with an intention to kill or to do grievous bodily harm". The difference between the meaning of recklessness for most offences (which focuses upon foresight of the possibility of the consequences) and the meaning in the context of murder and, possibly, offences involving reckless indifference to human life (which focuses upon foresight of the probability of the consequences) is not as stark as first appears. A further requirement has always been necessary before recklessness can be found on the test based upon foresight of the possibility of the consequences, although in many cases no further direction to a jury as to this additional requirement will be needed. That further requirement is that the risk must be unreasonable in the circumstances known to the accused. As explained below, this further requirement is not wholly separate from assessments of the probability or possibility of the consequences. Hence, it was said in the joint judgment in Aubrey146 that "the reasonableness of an act and the degree of foresight of harm required to constitute recklessness in so acting are logically connected". 141 See Stephen and Oliver, Criminal Law Manual Comprising the Criminal Law Amendment Act of 1883 (1883) at 7. See also R v Welch (1875) 1 QBD 23. 142 (2017) 260 CLR 305 at 328 [44], citing R v Smyth [1963] VR 737 at 738-739; R v Kane [1974] VR 759 at 760; R v Lovett [1975] VR 488 at 493. 143 (2017) 260 CLR 305 at 328-329 [45]-[46]. See R v Crabbe (1985) 156 CLR 464 at 469; R v Coleman (1990) 19 NSWLR 467 at 473-475. 144 (2017) 260 CLR 305 at 328-329 [46]-[47]. 145 (1990) 19 NSWLR 467 at 476 (emphasis added). 146 (2017) 260 CLR 305 at 330 [49]. Edelman In Aubrey, the joint judgment gave examples of situations which illustrate the need for recklessness to contain the further requirement – in addition to the requirement of foresight of the possibility of the relevant consequence – by reference to acts such as driving a motor car or playing a contact sport147. If recklessness required no more than mere foresight of the possibility of serious injury then any time a person drove a car or played a contact sport the person might be reckless. The joint judgment referred to the "social utility" of these acts and to the willingness of an accused to "run the risk", the notion of which was said to include the reasonableness of the act148. Ultimately, however, it was not necessary for this Court in Aubrey to consider how to articulate the further requirement because no jury direction to that effect was needed: "there was never any question of the jury proceeding on the basis of foresight only of a bare possibility of harm"149. Similarly, in this case it could not have been suggested that there was anything reasonable in the conduct by which serious injury was caused, which was alleged to be a kick by the acquitted person to the head of the victim. In oral submissions in this Court, the appellant dealt with a different example, given by the English Law Commission150: "A professional variety artist, with many years of accident-free experience of juggling, is performing before an audience with a dozen Indian clubs. He admits that he foresaw that in such a performance he might misjudge a throw and wound a spectator but, in view of his long experience and skill, he thought there was no more than a very remote risk of a spectator being so injured. He in fact misjudges a throw, as a result of which a spectator is wounded." The appellant correctly submitted that the juggler would not be reckless. Running the various threads in Aubrey together, the appellant equated the enquiry as to the "social utility" of juggling with the enquiry as to the reasonableness of the act in the circumstances known to the juggler, and with the enquiry as to whether the juggler had "run the risk". These various expressions, however, carry different connotations. The preferable formulation for the further requirement of 147 (2017) 260 CLR 305 at 330 [49]. 148 (2017) 260 CLR 305 at 330 [49]. 149 (2017) 260 CLR 305 at 331 [51]. 150 The Law Commission, Report on the Mental Element in Crime, Law Com No 89 (1978) at 30-31 [57(c)]. Edelman recklessness, which has been adopted the unreasonableness of taking the risk in the circumstances known to the accused. As the joint judgment in Aubrey acknowledged, in cases where it becomes relevant (namely, where it was suggested to be reasonable to take the risk) it may be that "the kind of directions that are now given in England will prove to be of assistance"152. in England151, should be The difficulty with the concept of social utility, apparently suggested by Glanville Williams153 and Professor Fitzgerald154, lies in its association with a Benthamite metric of overall welfare. But the sense in which it was used as a further requirement of recklessness was more closely aligned with an enquiry about the reasonableness of the risk in situations which are either normal or abnormal with the attendant considerations that apply to each. For instance, Glanville Williams said that "driving cars has social utility" and is "regarded as generally reasonable and as justifying the taking of some risks"155. Because the activity is one which is normal, it is one in which society has accepted the reasonableness of the underlying risk156. The same reasonableness enquiry can extend to abnormal activities which Glanville Williams described as involving social utility, such as a field surgeon performing an urgent operation which requires them to run the risk of choosing an unsterilised scalpel157. Again, social utility is a label which conceals the real enquiry – the implicit reasonableness assessment – involving consideration of the "magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have"158. 151 R v G [2004] 1 AC 1034. 152 (2017) 260 CLR 305 at 331 [50]. 153 Williams, Criminal Law: The General Part, 2nd ed (1961) at 52. 154 Fitzgerald, "Carelessness, Indifference and Recklessness: Two Replies" (1962) 25 Modern Law Review 49 at 54-55. 155 Williams, Criminal Law: The General Part, 2nd ed (1961) at 60. 156 See Galligan, "Responsibility for Recklessness" (1978) 31 Current Legal Problems 157 Williams, Criminal Law: The General Part, 2nd ed (1961) at 61. 158 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48. Edelman As to the language of whether the accused was willing to "run the risk" of causing the same kind of harm as that alleged159, this language was first suggested in later editions of Dr Kenny's work on criminal law160. It was followed by Glanville Williams161. The difficulty with that expression is that every foreseen risk will be run when an accused person persists with the relevant conduct. And, as Glanville Williams recognised, almost every activity in society involves risks. In order to avoid running risks, he said, we "should have to abjure canned food, uncooked food, reheated food ... bath-tubs, gas fires, electric fires, coal fires, oil burners, stairs, lifts, machines of every kind"162. In an earlier text he had said that "everyone who drives a car knows that a possible consequence is that he will kill a pedestrian, but a killing is not for that reason reckless"163. The language of "risk-taking", as Glanville Williams observed, is really only legally relevant when it "becomes an act of negligence (whether inadvertent negligence or recklessness)" and this occurs "only when it is unreasonable in the circumstances"164. Writing at around the same time, Professor Hart had spoken of recklessness as "wittingly flying in the face of a substantial, unjustified risk, or the conscious creation of such a risk"165. This notion of an "unjustifiable" or "unreasonable" risk was followed by the American Law Institute in its Model Penal Code166. And, in England in R v G167, Lord Bingham of Cornhill, with whom 159 Pemble v The Queen (1971) 124 CLR 107 at 119; Stokes & Difford (1990) 51 A Crim R 25 at 40; Miller v The Queen (2016) 259 CLR 380 at 419-420 [115]. 160 Turner, Kenny's Outlines of Criminal Law, 16th ed (1952) at 186. Dr Kenny was later the Downing Professor of the Laws of England. 161 Williams, Criminal Law: The General Part, 2nd ed (1961) at 53. 162 Williams, The Mental Element in Crime (1965) at 30. 163 Williams, Criminal Law: The General Part, 2nd ed (1961) at 60. 164 Williams, The Mental Element in Crime (1965) at 30. 165 Hart, "Negligence, Mens Rea and Criminal Responsibility", in Punishment and Responsibility: Essays in the Philosophy of Law (1968) 136 at 137 (emphasis added). 166 American Law Institute, Model Penal Code (1962), §2.02(2). 167 [2004] 1 AC 1034 at 1057 [41]. Edelman the other Lords of Appeal agreed, required that the risk taken was, in the circumstances known to the accused, unreasonable. Once it is appreciated that recklessness always requires the taking of an unreasonable risk, then it can be seen that "[i]f foresight of possibility is to suffice then the justification should be founded on the distinct basis that the nature of the risk does not warrant the taking of even slight chances"168. Other than such cases, the difference between foresight of possibility and foresight of probability can be much reduced by the additional element of unreasonableness. The introduction of s 17 in 1986 Although the background of judicial exposition of an expression can be a significant factor in ascertaining the meaning intended by Parliament, the importance of such judicial background should not be overstated169. The reasoning in Aubrey establishes that, at the time s 17 of the Crimes Act was enacted, recklessness in relation to serious injuries other than death was generally thought to require foresight of the possibility of the injury rather than the probability of the injury. Section 17 commenced operation in 1986 against the background that, in the context of a test for malice in relation to serious injuries, the foresight of the possibility of the consequences had prevailed as a requirement for recklessness in Victoria for more than 20 years170. Nevertheless, the precise meaning of recklessness was not clear. As Gummow, Hayne and Heydon JJ said in Banditt v The Queen171, "[t]he term 'reckless' has various uses as a criterion of legal liability". A different meaning of recklessness had been espoused for at least a decade in the context of murder172, 168 Fisse, "Probability and the Proudman v Dayman Defence of Reasonable Mistaken Belief" (1974) 9 Melbourne University Law Review 477 at 480. 169 See Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation (1952) 85 CLR 159 at 174; R v Reynhoudt (1962) 107 CLR 381 at 388; Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106-107. 170 R v Smyth [1963] VR 737 at 738-739. 171 (2005) 224 CLR 262 at 265 [1]. 172 R v Hyam [1975] AC 55 at 82, 86. See also at 96; La Fontaine v The Queen (1976) 136 CLR 62 at 76-77. Edelman and was described as "settled law"173 the year before s 17 came into force. Further, the additional requirement – the unreasonableness of the accused taking the risk in the known circumstances – had not yet been clearly enunciated. And it had been said of "malice", in which the Victorian approach to recklessness had been developed, that "[f]ew words have caused more trouble both at common law and in the interpretation of statutes"174. In the Second Reading Speech for the Bill that introduced s 17, the Attorney-General for Victoria said that the old sections concerned with malice were to be replaced with new ones. Although the Attorney-General said that the Bill was "not intended in any way to reduce the coverage of these serious offences"175, he also observed that many of the proposals in it had been based on the fourteenth report of the Criminal Law Revision Committee of England and Wales176. That report had observed that there was no unanimity as to the ordinary meaning of the word "recklessness" in the criminal law and that it would be "most unsatisfactory" to leave the term undefined since the courts would soon "find themselves bound to rule upon conflicting submissions by counsel"177. In other words, in the absence of legislative definition, the development of recklessness would be left to the courts. The legislative definition proposed by the Criminal Law Revision Committee was: (i) that the accused foresaw that their act might cause the particular result; and (ii) that the risk of causing that result which they knew they were taking was, on an objective assessment, an unreasonable risk to take in the circumstances known to the accused178. Against this background, the intention of the Victorian Parliament in enacting s 17 must have been to leave the development of the meaning of recklessness in that section to the courts from 1986 when the section commenced. 173 R v Crabbe (1985) 156 CLR 464 at 469-470. 174 Vallance v The Queen (1961) 108 CLR 56 at 59. 175 Victoria, Legislative Council, Parliamentary Debates (Hansard), 25 September 176 Victoria, Legislative Council, Parliamentary Debates (Hansard), 25 September 1985 at 202. See England and Wales, Criminal Law Revision Committee, Fourteenth Report: Offences against the Person (1980). 177 England and Wales, Criminal Law Revision Committee, Fourteenth Report: Offences against the Person (1980) at 3-4 [6]-[7]. 178 England and Wales, Criminal Law Revision Committee, Fourteenth Report: Offences against the Person (1980) at 5 [12]. Edelman Generally for the reasons given in Aubrey in relation to the enactment by the New South Wales Parliament of s 5 of the Crimes Act 1900 (NSW), it might have been expected that the developed meaning of recklessness would require an accused person to have foresight of the possibility, not the probability, of injury of that kind. Indeed, in the Second Reading Speech in the Legislative Assembly it was observed that179: "where serious injury is inflicted there is a sufficient difference in moral turpitude – sufficient to justify distinct defences – between one who does so intentionally in the sense of desiring to cause serious injury and one who does so recklessly – aware that an injury might result to another but goes ahead anyway". If Parliament had taken the approach advocated by the Criminal Law Revision Committee and defined the meaning of recklessness as recommended then if the decision in Campbell had still been given it would have been plainly wrong and there could be little argument against overturning it. Even the usual considerations that require restraint in acceding to a challenge to a long-standing prior decision of this Court "cannot allow previous error to stand in the way of declaring the true intent of the statute" where the prior decision is "plainly erroneous"180. So too, a fortiori, where the prior long-standing decision is from a single judge or intermediate appellate court and is "clearly wrong"181. But where the essential meaning of a term or provision is intended by Parliament to be developed by the courts, the intention of Parliament is given effect by the development of the concept in the manner of the common law182: "A statute can pick 'up as a criterion for its operation a body of the general law' and 'in the absence of a contrary indication in the statute, the statute speaks continuously to the present, and picks up the case law as it stands from time to time'. Generally, broadly expressed criteria can be expected to be given content as 'the technique of judicial interpretation [gives] content 179 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 22 October 1985 at 1040 (emphasis added). See also Victoria, Legislative Council, Parliamentary Debates (Hansard), 25 September 1985 at 201. 180 John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 439-440, referring to Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1 at 13. 181 Blair v Curran (1939) 62 CLR 464 at 531. 182 Vella v Commissioner of Police (NSW) (2019) 93 ALJR 1236 at 1259 [86]; 374 ALR 1 at 27 (footnotes omitted). Edelman and more detailed meaning on a case to case basis. Rules and principles emerge which guide or direct courts in the application of the standard.'" Sometimes the judicial development of such statutory rules is simply described as "common law"183, even where "the relevant common law that is relied on may itself have a statutory basis"184. The description is not inapt because the "scope and purpose of the [term or provision] will expand, contract and diversify to follow the shifts in the common law"185. Just as a court is not confined by an originally expected application when applying the meaning intended by Parliament to new or different circumstances or practices186 or in light of a different understanding of facts and circumstances187, a court is also not confined by the expected application of the provision that was intended to be the subject of "common law" development, although that expectation can provide some anchor to the development of the meaning of the provision. Despite the likely expectations when Parliament passed the Crimes (Amendment) Act 1985 (Vic) and despite the reasons of principle for overturning Campbell, there are three reasons, in combination, why the result in Campbell should not be disturbed in the process of judicial development of the meaning of recklessness in s 17. (1) The decision in Campbell was not plainly wrong The decision in Campbell The issue in Campbell was whether the trial judge had erred in his directions to the jury concerning recklessness. The appellant had relevantly been charged with recklessly causing serious injury contrary to s 17 of the Crimes Act. The evidence was that the appellant's gun was discharged during an argument in which 183 Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007 at 1021-1022 [63], 1026 [82]-[83], 1028 [93]; 372 ALR 555 at 569-570, 575-576, 578. See also (2019) 93 ALJR 1007 at 1012-1013 [2]-[3], 1014 [16], 1016 [26]-[28], 1018 [39], 1019 [46], 1020 [53], [54]; 372 ALR 555 at 557, 559, 562, 565, 566, 567. 184 Burrows, "The Relationship Between Common Law and Statute in the Law of Obligations" (2012) 128 Law Quarterly Review 232 at 235. 185 Gummow, Change and Continuity: Statute, Equity, and Federalism (Clarendon Law Lectures) (1999) at 7. 186 See R v A2 (2019) 93 ALJR 1106 at 1141 [173]; 373 ALR 214 at 257. 187 See Aubrey v The Queen (2017) 260 CLR 305 at 320 [24]. Edelman several bystanders had become involved. Serious injury was caused to one bystander. In his directions, the trial judge told the jury that the offence required the appellant to have fired the gun knowing that serious injury might occur and taking the risk of doing so. All the judges of the Court of Appeal held that the trial judge had erred in the part of his direction which only required knowledge that the serious injury might occur. In a joint judgment, Hayne JA and Crockett A-JA (with whom Phillips CJ relevantly agreed) held that the direction should have required that the jury could not convict unless the conclusion was reached that the accused had foresight that serious injury would probably occur, and that the direction using the word "might" had erroneously substituted a test of possibility for one of probability188. Their Honours relied upon the decisions in R v Crabbe189 and R v Nuri190. In effect, the decision in Campbell applied the exceptional meaning of recklessness – requiring foresight of the probability of serious injury – rather than that which, as this Court in Aubrey later explained, was the more widely understood meaning in Victoria and elsewhere in relation to an offence of that nature. By applying the reasoning in Aubrey it can be seen that the decision in Campbell was wrong. But prior to Aubrey the decision in Campbell could not have been thought to have been plainly wrong, with the associated uncertainty that such thinking would have had for any reliance upon Campbell by Parliament or the public. Different meanings of recklessness As explained above, as a matter of principle the approach to recklessness in the context of serious injury when s 17 was enacted, as now, should require foresight only of the possibility of serious injury rather than foresight of the probability of serious injury. Nevertheless, there is difficulty in concluding that this is a clear, correct meaning of recklessness in circumstances in which: (i) the concept of recklessness was entangled historically with the concept of malice; (ii) recklessness bears a different meaning at least in the context of murder; (iii) there is uncertainty surrounding the manner of defining the additional requirement of unreasonableness before recklessness will be established; and (iv) the additional requirement of unreasonableness may have the effect in many cases of increasing the likelihood of the serious injury that must be foreseen. 188 [1997] 2 VR 585 at 586, 592-593. 189 (1985) 156 CLR 464 at 469-470. 190 [1990] VR 641 at 643. Edelman Another development in the law prior to Campbell further highlights this difficulty. Prior to the decision in Campbell, the decision in Nuri extended the approach in Victoria to recklessness in relation to the element of "reckless indifference to human life" for the offence of murder to offences involving reckless endangerment of life generally. Nuri concerned the offence created by s 22 of the Crimes Act of recklessly engaging in conduct that places or may place another person in danger of death. That general endangerment offence replaced a large number of disparate offences concerning life-endangering behaviour that were previously found in the Crimes Act191. The Court of Criminal Appeal said in Nuri that the "expression 'recklessly' may not give rise to difficulty. It has for long been employed in statutory offences."192 There was no issue in dispute about the appropriate test for recklessness. It was assumed that the meaning of recklessness in the context of murder involving a reckless indifference to human life – which requires foresight by the accused of the probable consequences of their action – was the same in the context of reckless endangerment of human life. The decision in Nuri was not considered by this Court in Aubrey. It is unnecessary in this case to consider whether the further contraction in Nuri was correct. It suffices to say that Nuri is a further illustration of the difficulty of drawing sharp lines around the different meanings of recklessness. The contraction effected by Campbell should not be overstated In Annakin193, the Court of Criminal Appeal of New South Wales correctly observed that "[t]he line of division between probability and possibility is not an exact line, but a probability inevitably in law expresses a higher degree of certainty". Once the additional factor of unreasonableness is recognised as part of the traditional test, the line becomes even further blurred between (i) the traditional meaning of recklessness set out in Aubrey (including unreasonableness of the conduct) and (ii) the meaning in cases of murder and, perhaps, other cases involving reckless indifference to human life. Other things remaining equal, the lower the likelihood of serious injury, the less likely it is that an act will be unreasonable. Nevertheless, there will be cases in which the different meanings of recklessness might lead to different results. In such cases, the application of the meaning of recklessness adopted in Campbell might lead to surprising results. Suppose that an accused person strikes a pedestrian, causing serious injury, while driving without headlights at a high speed. If the driving occurred on a quiet 191 [1990] VR 641 at 643. 192 [1990] VR 641 at 643. 193 (1988) 37 A Crim R 131 at 152. Edelman country road at midnight, when it would not have been foreseen as probable that any person would be on the road, the accused might successfully defend a charge under s 17 of the Crimes Act which alleged that the accused contemplated that serious injury to another was a probable consequence of their action. By contrast, the accused would be much more likely to be convicted in the same circumstances on the basis of proof by the prosecution that in engaging in the act, the unreasonableness of which would not be in question, the accused person contemplated that serious injury to another was a possibility194. (2) Legislative changes surrounding s 17 A heavy focus of the submissions on behalf of the acquitted person, and in the reasoning of the Court of Appeal, was the legislative changes made by the Victorian Parliament to the Crimes Act after the decision in Campbell. Two sets of amendments are relevant. The first set of amendments, in 1997, two years after the decision in Campbell, was contained in the Sentencing and Other Acts (Amendment) Act 1997 (Vic). Those amendments made changes to the penalties in large swathes of criminal legislation, including at least 60 changes to the Crimes Act alone. The changes to the Crimes Act included increasing the maximum penalty for the s 17 offence from ten years' imprisonment to 15 years' imprisonment195. As senior counsel for the acquitted person submitted, the 1997 amendments followed an extensive review by a Crown Prosecutor. Prosecutions under s 17 were a large part of the work of the criminal division of the County Court of Victoria and the Crown Prosecutor interviewed over 100 judges, magistrates, and other stakeholders196. The resulting increase in penalties was not wholly independent of the decision in Campbell, since the requirement from that decision of foresight of a probability of injury necessarily meant that the offending was, at least to some degree, more serious than would have been the case if the foresight required had only been of a possibility of injury. The legislative changes did not involve repeal and re-enactment of s 17 of the Crimes Act with a new meaning to be attributed to s 17. But in circumstances where the intention of Parliament in originally enacting s 17 was to leave the development of recklessness to the courts, and since the statutory maximum 194 See also the example in Blackwell v The Queen (2011) 81 NSWLR 119 at 146 [155]. 195 Sentencing and Other Acts (Amendment) Act 1997 (Vic), Sch 1, item 11. 196 Victoria, Legislative Council, Parliamentary Debates (Hansard), 27 May 1997 at Edelman sentence is context for interpretation of the meaning of s 17, the argument that s 17 should bear the meaning attributed to it in Campbell became stronger in 1997. Just as the "effect of [an] amending Act may be to alter the meaning which remaining provisions of the amended Act bore before the amendment"197, so too an amending Act can constrain or alter the development of an open-textured statutory concept. The second set of amendments occurred in 2013 by the Crimes Amendment (Gross Violence Offences) Act 2013 (Vic). The relevant changes made to the Crimes Act were to replace the definition of "serious injury" for offences, including s 17, and to insert new offences of "gross violence", including an aggravated form of the s 17 offence which involved gross violence198. The reason for the replacement of the definition of "serious injury" was said to be that the relevant offences were engaged at "a very low threshold"199. In other words, even with the higher threshold in Campbell of foresight of probability of injury, the offences were still seen as engaged at a low threshold. But the extent to which the 2013 amendments should constrain the further development of recklessness from the decision in Campbell depends upon whether Campbell could be taken to have been considered by Parliament in enacting the 2013 amendments. On the one hand, it might be said that the 2013 amendments should not substantially constrain the development of the meaning of recklessness in s 17 because, at the time of the 2013 amendments, the correctness of the decision in Campbell had been called into question. In Blackwell v The Queen200, the Court of Criminal Appeal of the Supreme Court of New South Wales had declined to follow Campbell. Beazley JA (with whom James J agreed) relied in part upon the different legislative history of the New South Wales offence201, which then concerned malice rather than recklessness. But her Honour added that the decision in Campbell was "inconsistent with authority in the High Court, New South Wales and in England"202. The decision of the High Court to which her Honour had 197 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 463. See also at 479. 198 Crimes Amendment (Gross Violence Offences) Act 2013 (Vic), ss 3, 4. 199 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 200 (2011) 81 NSWLR 119. 201 Crimes Act 1900 (NSW), s 35 (as the provision then stood). 202 (2011) 81 NSWLR 119 at 134 [78]. Edelman referred was the decision in Banditt203, where, in the context of considering the meaning of recklessness as to consent to sexual intercourse in s 61R(1) of the Crimes Act 1900 (NSW), Gummow, Hayne and Heydon JJ quoted from Sir John Smith with approval: "If D is aware that there is any possibility that P is not consenting and proceeds to have intercourse, he does so recklessly." On the other hand, none of the extrinsic materials concerning the 2013 amendments referred to any of these decisions, or expressed any doubts about the correctness of the decision in Campbell. The existing legal position was considered by the Attorney-General for Victoria, who said in his Second Reading Speech that the government had "carefully considered" a report of the Sentencing Advisory Council204 and that it had "adopted many of" the Council's recommendations205. That report had said of s 17, with a footnote to Nuri206, that the element of recklessness will be satisfied by proof that "the accused foresaw that his or her actions would probably cause serious injury and that he or she was indifferent as to whether or not serious injury would actually result"207. On balance, the 2013 amendments are a source for some constraint in the development of the meaning of recklessness. Together with the 1997 amendments, however, that constraint becomes significant. (3) Unfairness in departing from Campbell The final reason that militates against overruling the decision in Campbell is the unfairness that would result from doing so. In Babaniaris v Lutony Fashions Pty Ltd208, Mason J referred to the strong authority for the view that a decision of long standing should not lightly be disturbed. Those considerations apply, a fortiori, to criminal law cases. The "retroactive removal of an actual freedom coupled with the gravity of consequences that may accompany a breach of the 203 (2005) 224 CLR 262 at 275 [35]. 204 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011). 205 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 December 206 [1990] VR 641 at 643. 207 Sentencing Advisory Council, Statutory Minimum Sentences for Gross Violence Offences (2011) at 4 [1.20]. 208 (1987) 163 CLR 1 at 13. Edelman criminal law" has been described as a "particularly acute example of infraction by the state of individual liberty"209. The unfairness concern enunciated by Mason J was qualified by the "countervailing consideration[]" in the case of statutory interpretation that if an appellate court "is convinced that a previous interpretation is plainly erroneous then it cannot allow previous error to stand in the way of declaring the true intent of the statute"210. But, as explained above, this is not a case where Parliament intended that recklessness bear any particular essential meaning. That meaning was left to judicial development. Further, for the reasons that I have given in sections (1) and (2), the decision in Campbell was not plainly erroneous in 1995 and was certainly not plainly erroneous by the time of the 2013 amendments. There was no suggestion in any of the extrinsic materials surrounding the 1997 or 2013 amendments that the meaning given to recklessness in Campbell had caused any difficulty in directions to juries. By contrast, if Campbell were overturned, it would mean that for 26 years in Victoria anyone who had acted unreasonably with a foresight of the possibility, but not the probability, of serious injury would retroactively be guilty of an offence. Conclusion The Court of Appeal answered the point of law referred to it as follows: "Unless and until it is altered by legislation, the meaning of 'recklessly' in s 17 of the Crimes Act 1958 is that stated by the Court of Appeal in R v Campbell [1997] 2 VR 585." That answer was correct. The combination of the three reasons discussed above entrenched the meaning of recklessness taken in Campbell to the offence under s 17 of the Crimes Act. It may be that the same result is also required for the alternative offence in s 15B, inserted in 2013211, and possibly for offences such as recklessly engaging in conduct that places or may place another person in danger of death212. But the error in Campbell in relation to s 17 has not necessarily entrenched this meaning 209 Juratowitch, Retroactivity and the Common Law (2008) at 52. 210 Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1 at 13. 211 Crimes Amendment (Gross Violence Offences) Act 2013 (Vic), s 4. 212 Crimes Act 1958 (Vic), s 22. Edelman of recklessness for all other offences in the Crimes Act. Without more, it is unlikely that the Campbell decision will require identical elements of other offences to be treated differently the moment that a person steps across the border between New South Wales and Victoria. For instance, there are numerous offences involving recklessness where the laws of New South Wales and Victoria were enacted in nearly identical terms and thus plainly by reference to each other with the need for coherent operation: being reckless as to whether something is proceeds of crime213; being reckless as to whether conduct corrupts a betting outcome of an event214; being reckless as to the spread of fire to vegetation215; and being reckless as to any impairment of access to, or the reliability, security or operation of, any data held in a computer216. Even in the application of the Campbell decision to s 17 in this confined way, the decision of a majority of this Court in this case (including myself) has some unattractive consequences. First, it creates incoherence in the application of the same statutory concept across different Australian States. The s 17 offence of recklessly causing serious injury to another person will be subject to a more onerous test for recklessness than the offence in New South Wales requiring that a person is "reckless as to causing actual bodily harm"217. Secondly, in exceptional cases, the application of the Victorian approach could lead to surprising results218. But, for the three reasons explained above, any development of the meaning of recklessness to address these consequences is a matter for Parliament. The development of the law by the exercise of legislative power, in its usual prospective operation and as a product usually of careful policy consideration, is not constrained in the same way as judicial power. 213 Crimes Act 1900 (NSW), s 193B(3); Crimes Act 1958 (Vic), s 194(3). 214 Crimes Act 1900 (NSW), s 193P(1)(a); Crimes Act 1958 (Vic), s 195E(1)(a). 215 Crimes Act 1900 (NSW), s 203E(1)(b); Crimes Act 1958 (Vic), s 201A. 216 Crimes Act 1900 (NSW), s 308D(1)(c); Crimes Act 1958 (Vic), s 247C(c). 217 Crimes Act 1900 (NSW), s 35. 218 See above at [88].

HIGH COURT OF AUSTRALIA WOOLCOCK STREET INVESTMENTS PTY LTD APPELLANT AND CDG PTY LTD (formerly Cardno & Davies Australia Pty Ltd) & ANOR RESPONDENTS Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 1 April 2004 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Queensland Representation: D F Jackson QC with A M Daubney SC and G D Beacham for the appellant (instructed by Gilshenan & Luton Lawyers) P A Keane QC with P D T Applegarth SC and M A Hoch for the respondents (instructed by Thynne & Macartney) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Woolcock Street Investments Pty Ltd v CDG Pty Ltd Negligence – Duty of care – Where pure economic or financial loss – Whether engineer owed duty of care to subsequent owner of commercial premises – Salient features of relationship giving rise to duty – Vulnerability – Assumption of responsibility – Known reliance (or dependence) – Relevance of latent defects and structural defects. Negligence – Duty of care – Where pure economic or financial loss – Whether engineer owed duty of care to subsequent owner of commercial premises – Construction of dwellings and construction of other buildings – Relevance of the contract with the original owner – Relevance of statutory protection. Practice and procedure – Whether cause of action on agreed facts – Sufficiency of pleading – Limitations on determining separate questions. Words and phrases – "salient features", "vulnerability", "assumption of responsibility", "known reliance (or dependence)", "construction of dwellings and construction of other buildings". Home Building Act 1989 (NSW), ss 18A-18G, 90-99. House Contracts Guarantee Act 1987 (Vic), ss 5-8. Domestic Building Contracts Act 1995 (Vic), ss 8-10. Building Work Contractors Act 1995 (SA), ss 32-35. Building Act 1975 (Q), ss 52-53. Queensland Building Services Authority Act 1991 (Q), ss 68-69, Sched 2. Home Building Contracts Act 1991 (WA), ss 25A-25D. Housing Indemnity Act 1992 (Tas), ss 7-9, 11-14. Building Act 1972 (ACT), ss 62, 64-65. GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ. The issue In 1987, the first respondent, a company carrying on the business of consulting engineers, designed foundations1 for a warehouse and offices in Townsville. The land on which this building (referred to in the pleadings as "the Complex") was to be built was owned by the trustee of a property trust. Some years after the building was finished it was sold by the then trustee of the property trust to the appellant. The contract for the sale of the land did not include any warranty that the building was free from defect and there was no assignment by the vendor of any rights that the vendor may have had against others in respect of any such defects. More than a year after the appellant bought the land, it became apparent that the building was suffering substantial structural distress. It is agreed that the distress was and is due to the settlement of the foundations of the building, or the material below the foundations, or both. The appellant alleges that the first respondent and its employee, the second respondent, each owed it a duty to take reasonable care in designing the foundations for the building. The respondents deny that they owed the appellant any duty of care; they deny that they acted in breach of any such duty; they say that despite advising the then owner of the land to allow them to obtain soil tests, the then owner instructed them to proceed without soil tests and to use structural footing sizes provided by the builder. Did the respondents owe the appellant a duty of care? The procedural context The appellant commenced proceedings in the Supreme Court of Queensland. After it had delivered a further amended statement of claim and each respondent had filed a defence to that pleading, the parties consented to an order stating a case for the opinion of the Court of Appeal. The question asked in the Case Stated was: "On the agreed facts, does the further amended statement of claim delivered on 11 April 2000 disclose a cause of action in negligence against the defendants?" The Case Stated set out some agreed facts, but those added little to the exiguous allegations of fact made in the pleadings. 1 The Case Stated generally spoke of the structure on which the building stood as its "foundations" rather than "footings" and of the material on which those structures sat as material "below the foundations" rather than "foundations". We adopt the language of the Case Stated in these reasons. The critical paragraphs of the appellant's statement of claim asserted that the respondents had owed it a duty of care but said very little about why that was so. It is as well to set out those paragraphs: "6(a) The Complex was, at all material times, to be a permanent structure to be used indefinitely. It was, at all material times, foreseeable that: failure to design the structure of the Complex properly; failure to design the foundations of the Complex properly; (iii) failure to take any or any proper account of the sub-soil conditions under the Complex; and/or failing to construct the foundations properly, would result in an owner of the Complex suffering loss and damage of the kind pleaded in paragraphs 3, 4 and 5 herein. The said loss and damage to the Plaintiff has been caused by reason of the negligence of the First Defendant and/or the Second Defendant in discharge of their respective duties to the Plaintiff." Particulars were given under par 7 of the respects in which it was alleged that there had been a failure to discharge the duties. The appellant's statement of claim took a form that is common enough in claims for negligence. The allegation of duty was rolled up with the allegation of breach. The pleading did allege that the respondents had been engaged to perform engineering work in connection with the construction of the building, a "permanent" structure, and alleged that the adverse consequences of which the appellant complained were foreseeable but it alleged no other matter bearing upon the existence of the asserted duty of care. The question reserved for the opinion of the Court of Appeal could have been understood as inviting attention only to the sufficiency of the appellant's pleading. In both the Court of Appeal and this Court, however, the Case Stated has been treated as requiring an answer to a substantive question of law. That is, argument proceeded on the basis that this Court, and the Court of Appeal, were to assume that whether either respondent owed the appellant a duty of care was a question which could be resolved having regard only: first, to the facts set out in the Case Stated; secondly, to any inference that might reasonably be drawn from those facts; and thirdly, to the facts alleged in the appellant's statement of claim. If a plaintiff is willing to have a point determined by reference only to the facts which that plaintiff chooses to put before the court, and the parties join in seeking determination of the issue, there may appear to be little reason to refuse to decide the point tendered by the parties. It is important, however, to recognise that there may be difficulty in using such procedures in cases in which it is necessary to consider developing, as distinct from applying, common law principles. The dangers of developing common law principle against an artificially constricted body of fact are self-evident. That is why, in some cases, even if the parties join in asking a court to determine a question separate from trial of the facts, it may be prudent for the court to decline to answer the question presented as being one which it is inappropriate to answer2. Indeed, as Bass v Permanent Trustee Co Ltd illustrates3, in some circumstances to answer a question may be contrary to the judicial process. If the question is answered, it is important to identify any limitations which the procedure adopted may impose on the breadth of any principle that is to be identified as having been established or applied. The Court of Appeal The Court of Appeal answered the question reserved: "On the agreed facts, does the further amended statement of claim delivered on 11 April 2000 disclose a cause of action in negligence against the defendants?", "No"4. Both McMurdo P5 and Thomas JA6 (with whose reasons Douglas J7 agreed) concluded that Bryan v Maloney8 established that the builder of a dwelling may owe a duty 2 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 357-358 [51]-[53]. (1999) 198 CLR 334 at 359 [56]. See also Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 at 308-309 [61]. 4 Woolcock St Investments Pty Ltd v CDG Pty Ltd (2002) Aust Torts Reports (2002) Aust Torts Reports ¶81-660 at 68,793 [3]. (2002) Aust Torts Reports ¶81-660 at 68,795 [24]. (2002) Aust Torts Reports ¶81-660 at 68,799 [43]. (1995) 182 CLR 609. of care to a remote purchaser. Their Honours concluded9, however, that those who built or designed commercial buildings did not owe any duty of care to subsequent purchasers. As Thomas JA put the matter10, "there is no good reason, in terms of principle or policy, to extend the decision in Bryan v Maloney to cases other than residential dwellings" (footnote omitted). McMurdo P was of the view that in Fangrove Pty Ltd v Tod Group Holdings Pty Ltd11 the Court of Appeal had earlier considered and rejected what her Honour described12 as "[t]he extension of the Bryan v Maloney principle to commercial buildings" and concluded that there was no reason to depart from that earlier decision13. What did Bryan v Maloney decide? In Bryan v Maloney, the Court (Mason CJ, Deane, Toohey and Gaudron JJ, Brennan J dissenting) decided that the builder of a dwelling house owed a subsequent purchaser, Mrs Maloney, of the house a duty to take reasonable care to avoid the economic loss which the subsequent purchaser suffered as a result of the diminution in value of the house when the fabric of the building cracked because the footings were inadequate. Both Mason CJ, Deane and Gaudron JJ in their joint reasons14, and Toohey J in his separate reasons15, noted that there was no direct relationship between the builder and the subsequent purchaser, but concluded16 that the necessary relationship of proximity existed to warrant finding that the builder had owed the subsequent purchaser a duty of care. (2002) Aust Torts Reports ¶81-660 at 68,794 [8] per McMurdo P, 68,799 [40] per 10 (2002) Aust Torts Reports ¶81-660 at 68,799 [40]. 11 [1999] 2 Qd R 236. 12 (2002) Aust Torts Reports ¶81-660 at 68,793 [5]. 13 (2002) Aust Torts Reports ¶81-660 at 68,794 [8]. 14 (1995) 182 CLR 609 at 617, 619. 15 (1995) 182 CLR 609 at 663. 16 (1995) 182 CLR 609 at 628 per Mason CJ, Deane and Gaudron JJ, 665 per It is important to identify the reasoning that underpinned this conclusion. It is convenient to do that by reference to the joint reasons of Mason CJ, Deane and Gaudron JJ. The reasons of Toohey J, although differently expressed, did not depend upon the application of any principles different from those applied in the joint reasons. The joint reasons began by examining the relationship between the appellant (the builder) and the first owner of the house (Mrs Manion). They, of course, were the parties to the contract in performance of which the builder had built the house. That contract was said17 to be "non-detailed and [to contain] no exclusion or limitation of liability". Accordingly, the content of the contract was said not to preclude the existence of a duty of care owed by the builder to Mrs Manion, not only to take reasonable care to avoid injury to her person or property18 but also to avoid "mere economic loss by Mrs Manion of the kind ultimately sustained by Mrs Maloney when the inadequacy of the footings became manifest"19. That was because "the ordinary relationship between a builder of a house and the first owner with respect to that kind of economic loss is characterized by the kind of assumption of responsibility on the one part (i.e. the builder) and known reliance on the other (i.e. the building owner) which commonly exists in the special categories of case in which a relationship of proximity and a consequent duty of care exists in respect of pure economic loss."20 There was said21 to be nothing to suggest that the relationship between the builder and the first owner was not characterised by such an assumption of responsibility and reliance. Four considerations were then identified as warranting the conclusion that a relationship of proximity also existed with the subsequent owner. First, the 17 (1995) 182 CLR 609 at 622. 18 (1995) 182 CLR 609 at 622-623. 19 (1995) 182 CLR 609 at 623. 20 (1995) 182 CLR 609 at 624. 21 (1995) 182 CLR 609 at 624. house was identified22 as a "connecting link", it being a permanent structure and a significant investment for a subsequent owner like the respondent. Secondly, it was pointed out23 that it was foreseeable that economic loss would likely result from negligent construction of the house. Thirdly, it was said24 that there was no "intervening negligence or other causative event". Finally, the similarities with the relationship between the builder and the first owner as regards the particular kind of economic loss were said25 to be "of much greater significance than the differences to which attention has been drawn, namely, the absence of direct contact or dealing and the possibly extended time in which liability might arise". It is evident, then, that the conclusion that the builder owed a subsequent owner a duty to take reasonable care to avoid the economic loss which that subsequent owner had suffered depended upon conclusions that were reached about the relationship between the first owner and the builder. In particular, the decision in the case depended upon the anterior step of concluding that the builder owed the first owner a duty of care to avoid economic loss of that kind. Both this anterior step, and the conclusion drawn from it, were considered in the context of the facts of the particular case – in which the building in question was a dwelling house. The propositions about assumption of responsibility by the builder and known reliance by the building owner were said26 to be characteristics of "the ordinary relationship between a builder of a house and the first owner" (emphasis added). At least in terms, however, the principles that were said to be engaged in Bryan v Maloney did not depend for their operation upon any distinction between particular kinds of, or uses for, buildings. They depended upon considerations of assumption of responsibility, reliance, and proximity. Most importantly, they depended upon equating the responsibilities which the builder owed to the first owner with those owed to a subsequent owner. 22 (1995) 182 CLR 609 at 625. 23 (1995) 182 CLR 609 at 625. 24 (1995) 182 CLR 609 at 625. 25 (1995) 182 CLR 609 at 627. 26 (1995) 182 CLR 609 at 624. Criticisms of Bryan v Maloney The decision in Bryan v Maloney has not escaped criticism27. Some of those criticisms found reflection in the series of questions posed by Brooking JA in Zumpano v Montagnese28. It is not necessary, in this case, to attempt to deal with all of those criticisms, or to attempt to answer all of the questions posed in Zumpano. Rather, two points should be made. First, for the reasons given earlier, it may be doubted that the decision in Bryan v Maloney should be understood as depending upon drawing a bright line between cases concerning the construction of dwellings and cases concerning the construction of other buildings. If it were to be understood as attempting to draw such a line, it would turn out to be far from bright, straight, clearly defined, or even clearly definable. As has been pointed out subsequently29, some buildings are used for mixed purposes: shop and dwelling; dwelling and commercial art gallery; general practitioner's surgery and residence. Some high-rise apartment blocks are built in ways not very different from high-rise office towers. The original owner of a high-rise apartment block may be a large commercial enterprise. The list of difficulties in distinguishing between dwellings and other buildings could be extended. Secondly, the decision in Bryan v Maloney depended upon the view30 that "the overriding requirement of a relationship of proximity represents the conceptual determinant and the unifying theme of the categories of case in which the common law of negligence recognizes the existence of a duty to take reasonable care to avoid a reasonably foreseeable risk of injury to another". It 27 See, for example, I N Duncan Wallace, "Murphy Rejected: The Bryan v Maloney Landmark", (1995) 3 Tort Law Review 231; Allsop, "Bryan v Maloney and Other Developments in Relation to the Duty of Care in Tort", (1996) 7 Insurance Law Journal 81; Mead, "The Recovery of Economic Loss Arising from Defective Structures – Policy, Principle and the Amorphous Notion of Proximity as a General Concept", (1996) 12 Building and Construction Law 9; Brooking, "Bryan v Maloney – Its Scope and Future", in Mullany and Linden (eds), Torts Tomorrow – A Tribute to John Fleming, (1998) 57. 28 [1997] 2 VR 525 at 528-536. 29 For example, Zumpano v Montagnese [1997] 2 VR 525 at 528-529 per Brooking JA. 30 (1995) 182 CLR 609 at 619. was the application of this "conceptual determinant" of proximity that was seen as both permitting and requiring the equation of the duty owed to the first owner with the duty owed to the subsequent purchaser. Decisions of the Court after Bryan v Maloney31 reveal that proximity is no longer seen as the "conceptual determinant" in this area. Economic loss The damage for which the appellant seeks a remedy in this case is the economic loss it alleges it has suffered as a result of buying a building which is defective. Circumstances can be imagined in which, had the defects not been discovered, some damage to person or property might have resulted from those defects. But that is not what has happened. The defects have been identified. Steps can be taken to prevent damage to person or property. A view was adopted for a time in England32 that, because there was physical damage to the building, a claim of the kind made by the appellant was not solely for economic loss. That view was questioned in Sutherland Shire 31 Hill v Van Erp (1997) 188 CLR 159 at 176-179 per Dawson J, 189 per Toohey J, 210 per McHugh J, 237-239 per Gummow J; Pyrenees Shire Council v Day (1998) 192 CLR 330 at 360-361 [76] per Toohey J, 414 [238] per Kirby J; Perre v Apand Pty Ltd (1999) 198 CLR 180 at 209-210 [74]-[76] per McHugh J, 284 [281]-[282] per Kirby J, 302 [333] per Hayne J; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 13 [3] per Gleeson CJ, 32-33 [73], 33-34 [77] per McHugh J, 56 [149] per Gummow J, 80 [222] per Kirby J, 96-97 [270]-[274] per Hayne J; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 275 [61] per Kirby J; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 630-631 [316] per Hayne J; Sullivan v Moody (2001) 207 CLR 562 at 578-579 [48] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ; Tame v New South Wales (2002) 211 CLR 317 at 355-356 [104]-[107] per McHugh J, 409 [268] per Hayne J; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 583 [99] per McHugh J, 624-625 [234]-[236] per Kirby J. 32 Dutton v Bognor Regis Urban District Council [1972] 1 QB 373 at 396 per Lord Denning MR; Anns v Merton London Borough Council [1978] AC 728 at 759 per Lord Wilberforce. Council v Heyman33 and rejected in Bryan v Maloney34. It was subsequently also rejected by the House of Lords in Murphy v Brentwood District Council35. There is no reason now to reopen that debate and neither side in the present matter sought to do so. The damage which the appellant alleges it has suffered is pure economic loss. Claims for damages for pure economic loss present peculiar difficulty. Competition is the hallmark of most forms of commercial activity in Australia. As Brennan J said in Bryan v Maloney36: "If liability were to be imposed for the doing of anything which caused pure economic loss that was foreseeable, the tort of negligence would destroy commercial competition37, sterilize many contracts and, in the well-known dictum of Chief Judge Cardozo38, expose defendants to potential liability 'in an indeterminate amount for an indeterminate time to an indeterminate class'." That is why damages for pure economic loss are not recoverable if all that is shown is that the defendant's negligence was a cause of the loss and the loss was reasonably foreseeable. In Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad"39, the Court held that there were circumstances in which damages for economic loss were recoverable. In Caltex Oil, cases for recovery of economic loss were seen as being exceptions to a general rule, said to have been established in Cattle v 33 (1985) 157 CLR 424 at 446-447 per Gibbs CJ, 466 per Mason J, 471 per Wilson J, 490 per Brennan J, 504 per Deane J. 34 (1995) 182 CLR 609 at 617 per Mason CJ, Deane and Gaudron JJ, 657 per Toohey J; cf at 643 per Brennan J. 36 (1995) 182 CLR 609 at 632. 37 See per Lord Reid in Dorset Yacht Co v Home Office [1970] AC 1004 at 1027. 38 Ultramares Corporation v Touche 255 NY 170 at 179 (1931) [174 NE 441 at 444]. 39 (1976) 136 CLR 529. Stockton Waterworks40, that even if the loss was foreseeable, damages are not recoverable for economic loss which was not consequential upon injury to person or property. In Caltex Oil, Stephen J isolated a number of "salient features" which combined to constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for breach of which it might recover its purely economic loss41. Chief among those features was the defendant's knowledge that to damage the pipeline which was damaged was inherently likely to produce Since Caltex Oil, and most notably in Perre v Apand Pty Ltd43, the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. "Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant44. So, in Perre, the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant's negligence in sowing a crop which caused the quarantining of the plaintiffs' land. In Hill v Van Erp45, the intended beneficiary depended entirely upon the solicitor performing the client's retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords46, the financier could itself have made inquiries about the 40 (1875) LR 10 QB 453. 41 Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 at 576-578. See also Hill v Van Erp (1997) 188 CLR 159 at 233-234; Pyrenees Shire Council v Day (1998) 192 CLR 330 at 389 [168]; Perre v Apand Pty Ltd (1999) 198 CLR 180 at 254 [201] per Gummow J. 42 (1976) 136 CLR 529 at 576. 43 (1999) 198 CLR 180. 44 Stapleton, "Comparative Economic Loss: Lessons from Case-Law-Focused 'Middle Theory'", (2002) 50 UCLA Law Review 531 at 558-559. 45 (1997) 188 CLR 159. 46 (1997) 188 CLR 241. financial position of the company to which it was to lend money, rather than depend upon the auditor's certification of the accounts of the company. In other cases of pure economic loss (Bryan v Maloney is an example) reference has been made to notions of assumption of responsibility and known reliance. The negligent misstatement cases like Mutual Life & Citizens' Assurance Co Ltd v Evatt47 and Shaddock & Associates Pty Ltd v Parramatta City Council [No 1]48 can be seen as cases in which a central plank in the plaintiff's allegation that the defendant owed it a duty of care is the contention that the defendant knew that the plaintiff would rely on the accuracy of the information the defendant provided. And it may be, as Professor Stapleton has suggested49, that these cases, too, can be explained by reference to notions of vulnerability. (The reference in Caltex Oil to economic loss being "inherently likely" can also be seen as consistent with the importance of notions of vulnerability.) It is not necessary in this case, however, to attempt to identify or articulate the breadth of any general proposition about the importance of vulnerability. This case can be decided without doing so. The appellant's claim On the facts set out in the Case Stated and alleged in the pleadings neither respondent owed the appellant a duty to take reasonable care to avoid the appellant suffering the economic loss which it alleges it suffered. As counsel for the respondents submitted, it was not alleged that the respondents breached any obligation to the original owner. Unlike Bryan v Maloney, it cannot be said, in this case, that the respondents owed the original owner of the land a duty to take reasonable care to avoid economic loss of the kind of which the appellant now complains. It was agreed in the Case Stated that, despite the first respondent obtaining a quotation for geotechnical investigations, the original owner of the land, by its manager, refused to pay for such investigations. (The respondents go further in their pleadings and allege that the original owner directed the adoption of particular footing sizes.) The relationship between the respondents and the original owner of the land was, therefore, not one in which the owner entrusted the design of the building to a builder, or in this case the engineer, under a simple, "non-detailed" contract. It was a relationship in which the original owner 47 (1968) 122 CLR 556; (1970) 122 CLR 628; [1971] AC 793. 48 (1981) 150 CLR 225. 49 (2002) 50 UCLA Law Review 531 at 558-559. asserted control over the investigations which the engineer undertook for the purposes of performing its work. In its pleading the appellant did not allege that the relationship between the respondents and the original owner was characterised by that assumption of responsibility by the respondents, and known reliance by the original owner on the respondents, which is referred to in the joint reasons in Bryan v Maloney50. Such further facts as are agreed, far from supporting any inference that this was the nature of the relationship between the respondents and the original owner, point firmly in the opposite direction. There was not, therefore, what was referred to in Bryan v Maloney51 as "an identified element of known reliance (or dependence)" or "the assumption of responsibility". It follows that the appellant's contention that the respondents owed it a duty of care cannot be supported by the reasoning which was adopted in Bryan v Maloney. What we earlier referred to as the anterior step of demonstrating that the respondents owed a duty of care to the original owner is not made out. The relevance of the contract with the original owner In this case, as in Bryan v Maloney52, it is not necessary to decide whether disconformity between the obligations owed to the original owner under the contract to build or design a building and the duty of care allegedly owed to a subsequent owner will necessarily deny the existence of that duty of care. However, as Windeyer J said in Voli v Inglewood Shire Council53, the terms of the contract between the original owner and the builder (or, in this case, the respondents) "is not an irrelevant circumstance" in considering what duty a builder or engineer owed others54. At the least, that contract defines the task which the builder or engineer undertook. There would be evident difficulty in holding that the respondents owed the appellant a duty of care to avoid economic loss to a subsequent owner if performance of that duty would have required the 50 (1995) 182 CLR 609 at 624. 51 (1995) 182 CLR 609 at 619. 52 (1995) 182 CLR 609 at 624-625. 53 (1963) 110 CLR 74 at 85. 54 See also Hill v Van Erp (1997) 188 CLR 159 at 167 per Brennan CJ. respondents to do more or different work than the contract with the original owner required or permitted55. In Bryan v Maloney, it was found that there was no disconformity between the duty owed to the original owner and the duty owed to the subsequent owner. As Toohey J said56, that case was "uncomplicated by anything arising from the contract between the appellant and Mrs Manion" (the original owner). This case can be determined without deciding whether disconformity of the kind we have mentioned would always deny the existence of a duty of care to a subsequent owner. There are other reasons for concluding that the respondents owed no duty of care to prevent the economic loss of which the appellant complains. No vulnerability Neither the facts alleged in the statement of claim nor those set out in the Case Stated show that the appellant was, in any relevant sense, vulnerable to the economic consequences of any negligence of the respondents in their design of the foundations for the building. Those facts do not show that the appellant could not have protected itself against the economic loss it alleges it has suffered. It is agreed that no warranty of freedom from defect was included in the contract by which the appellant bought the land, and that there was no assignment to the appellant of any rights which the vendor may have had against third parties in respect of any claim for defects in the building. Those facts describe what did happen. They say nothing about what could have been done to cast on the respondents the burden of the economic consequences of any negligence by the respondents. The appellant's pleading and the facts set out in the Case Stated are silent about whether the appellant could have sought and obtained the benefit of terms of that kind in the contract. It may be accepted that the appellant bought the building not knowing that the foundations were inadequate. It is not alleged or agreed, however, that the defects of which complaint now is made could not have been discovered. The Case Stated records that, before completing its purchase, the appellant sought and obtained from the relevant local authority a certificate that the building complied 55 cf Woollahra Municipal Council v Sved (1996) 40 NSWLR 101 at 120 per Priestley JA. 56 (1995) 182 CLR 609 at 665. with the Building Act 1975 (Q) and some subordinate legislation. That the defects now alleged were not discovered by a local authority asked to certify whether the building was "a ruin or so far dilapidated as to be unfit for use or occupation or [was] ... in a structural condition prejudicial to the inhabitants of or to property in the neighbourhood"57 says nothing about what other investigations might have been undertaken or might have revealed. Finally, if it is relevant to know, as was assumed to be the case in Bryan v Maloney, whether buying the building represented a very significant investment for the appellant58, there is nothing in the Case Stated or the appellant's pleading which bears on that question. Overseas authorities Similar questions to the one which is raised in this case have been considered by the courts of other jurisdictions. Some reference has already been made in these reasons to some decisions of the English courts. In addition, we were referred to Canadian59, New Zealand60, Malaysian61 and Singaporean62 authorities and, as well, to a number of decisions of United States State courts. Once it is recognised that foreseeability of negligently caused economic loss is a necessary but not sufficient condition for recovery of such loss, the critical question is: what more must be shown? The core of the appellant's contention in this Court was that because there is no difference in principle between a residential house and a purely commercial development like the one now in issue, the appellant was entitled to recover, just as the plaintiff in Bryan v Maloney had been held entitled to recover. The appellant did not contend that the Court should adopt any new or different principles for dealing with claims for negligently inflicted economic loss. In particular, it did not contend that 57 Building Act 1975 (Q), s 53(2). 58 (1995) 182 CLR 609 at 625. 59 Winnipeg Condominium Corporation No 36 v Bird Construction Co [1995] 1 SCR 85; Martel Building Ltd v Canada [2000] 2 SCR 860; Cooper v Hobart [2001] 3 SCR 537. 60 Invercargill City Council v Hamlin [1996] AC 624. 61 Arab-Malaysian Finance Bhd v Steven Phoa Cheng Loon [2003] 1 MLJ 567. 62 RSP Architects Planners & Engineers (Raglan Squire & Partners FE) v Management Corporation Strata Title Plan No 1075 [1999] 2 SLR 449. principles of a kind which have found favour in other jurisdictions should now be adopted in Australia. It is, therefore, not necessary to discuss those decisions in these reasons. Conclusion and orders The present case arises in a different factual context from that considered in Bryan v Maloney and can be decided without determining whether doubt should now be cast upon the result at which the Court arrived in that case. The actual decision in Bryan v Maloney has now been overtaken, at least to a significant extent, by various statutory forms of protection for those who buy dwelling houses which turn out to be defective. Reference is made to those provisions in the reasons of Callinan J. No doubt, as recognised earlier in these reasons, the principles applicable in cases of negligently inflicted pure economic loss have evolved since Bryan v Maloney was decided. Neither the principles applied in Bryan v Maloney, nor those principles as developed in subsequent cases, support the appellant's contention that on the facts agreed in the Case Stated and alleged in its statement of claim the respondents owed it a duty of care to avoid the economic loss which it alleged it suffered. The appeal should be dismissed with costs. McHugh 37 McHUGH J. The question in this appeal is whether it is a principle of the Australian law of torts that those involved in the design or construction of commercial premises owe a duty to subsequent purchasers of the premises to take reasonable care to ensure that the building is free from defects so as to prevent pure economic loss to those purchasers. In my opinion, the Australian law of torts imposes no such duty. Moreover, although the point does not arise directly for decision, it must follow that, in the absence of a contract, those involved in the design or construction of commercial premises do not owe such a duty in tort to the first owner of the premises. Where there is a contract between the first owner and those involved in the design or construction of the building, notions of assumption of responsibility and reliance may be sufficient to create a duty in tort as well as obligations in contract. Without re-introducing the discarded doctrine of proximity, no distinction can be drawn between the case of a first owner and the case of a subsequent purchaser in the absence of a contract with the defendant. Statement of the case Woolcock Street Investments Pty Ltd ("Woolcock") brings this appeal against an order of the Court of Appeal of Queensland. The effect of the order was that the respondents, in providing services concerning the construction of a building complex, did not owe Woolcock, as a subsequent purchaser of the building, a duty to take care to protect it from pure economic loss. The building consists of warehouses and offices and has no dwellings. It was built for a company that was the trustee of a property trust and owned the land on which the building was erected. By late 1987, construction of the building was substantially completed. Woolcock purchased the building in September 1992 from a company that was the successor trustee of the property trust. The contract for sale of the building contained no warranty that it was free of defects. Nor did it assign to the purchaser any rights that the vendor might have against those involved in the design and construction of the building. Before entering into the contract for sale, Woolcock did not retain an expert to inspect the building and did not inquire of the tenants or their agents whether the premises had any structural defects. Substantial structural distress to the building became apparent in 1994. The distress was caused by the settlement of the foundations or the material below the foundations. Woolcock claims that the damage that it suffered from the subsidence was caused by the negligence of the first and second respondents to the appeal. It claims that it is entitled to damages from the respondents under the principle propounded by this Court in Bryan v Maloney63. In Bryan, the 63 (1995) 182 CLR 609. McHugh Court held that the builder of a dwelling house owes a duty to a subsequent purchaser of the house to take reasonable care to avoid reasonably foreseeable decreases in its value resulting from latent defects in the house. The first respondent to the appeal is a company that carries on business as a consulting engineer. It designed the building and provided supervision services in respect of its construction. The second respondent is a qualified civil engineer who was employed by the first respondent and acted as the project manager in respect of the design and construction of the building. In the performance of its services, the first respondent obtained a quotation from another company as to the cost of investigating the sub-soil conditions under the proposed building. Investigation would have required the digging of auger holes at locations on the site and the testing of samples of soil. However, the company undertaking the development of the site for the owner refused to pay for these investigations. Consequently, the construction proceeded without testing the suitability of the sub-soil for the building that was to be constructed. After discovering the subsidence, Woolcock sued the respondents in the Supreme Court of Queensland for damages claiming that it had suffered economic loss as a result of the respondents' negligent design or negligent supervision during the construction of the building. Subsequently, Atkinson J stated a Case for the Court of Appeal of the Supreme Court of Queensland. The Case Stated asked a single question: "On the agreed facts, does the Further Amended Statement of Claim ... disclose a cause of action in negligence against the defendants?" The Court of Appeal (McMurdo P, Thomas JA and Douglas J) held that that question should be answered "No". Their Honours held that the principle formulated in Bryan v Maloney did not extend and should not be extended to the purchasers of commercial premises. If change in the law is to be made, this Court or the legislature should make it. Subsequently, this Court gave Woolcock special leave to appeal against the order of the Court of Appeal. The action in tort for damages for pure economic loss Since the decision of the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd64, confusion approaching chaos has reigned in the law of negligence. At all events, it has reigned in that branch of negligence law concerned with a plaintiff suffering economic loss that does not result from McHugh injury to the plaintiff's person or property. Hedley Byrne held that a banker might owe a duty to take care to a plaintiff who had requested a credit reference concerning a third party with whom the plaintiff was proposing to deal. On the facts of that case, the House of Lords held that the defendant owed no duty to the plaintiff. But the recognition that, in the absence of a contractual or fiduciary obligation, a person could owe a duty to take reasonable care to prevent pure economic loss to another person has had a dramatic effect on the development of the common law. Until Hedley Byrne, the accepted rule of the common law was that, absent a contractual, fiduciary or statutory duty, persons such as a banker owed no duty to prevent a plaintiff from suffering economic loss not resulting from injury to their person or property65. This was known as the "exclusionary" rule. The principal reason for the common law's reluctance to impose a duty of care in such cases was the fear that imposing liability on the defendant would result in an indeterminate liability in an indeterminate amount to an indeterminate number of persons66. The common law was particularly fearful of the consequences that might flow from permitting actions to be brought in respect of negligent statements because they were likely to cause economic losses more often than they would cause physical injury. Haunting the corridors of the common law was the spectre of the cartographer being held liable to all the passengers and all the owners of a ship and its cargo that had been sunk by the cartographer's negligence in omitting to mark a reef on a map. Not only might a defendant be liable to an indeterminate number of persons who directly suffered pure economic loss as the result of the defendant's negligence but in many cases that negligence might have indirect economic consequences for those involved with those directly injured. Were these secondary victims also to be compensated for losses that the defendant had caused and ought reasonably to have foreseen? Fear of this "ripple" effect67 of the defendant's negligence played its part in inducing the common law to hold that, absent a contractual duty, a person owed no common law duty to prevent pure economic loss to others. In some cases, the common law and statute – Lord Campbell's Act, for example – allowed a person to recover "pure" economic loss in a derivative action based on a breach of a duty owed to a physically injured person. The action per quod servitium amisit was perhaps the best 65 Candlewood Navigation Corporation Ltd v Mitsui OSK Lines Ltd [1986] AC 1 at 66 Ultramares Corporation v Touche 174 NE 441 at 444 (1931). 67 Perre v Apand Pty Ltd (1999) 198 CLR 180 at 221 [106]. McHugh known example of such a common law cause of action68. But otherwise the common law set its face against a claim for pure economic loss that did not arise from a breach of contract or a fiduciary or statutory duty. One can be sure that the Law Lords who decided Hedley Byrne did not foresee the consequences that their decision would have for the law of negligence. Although their Lordships' reasons differ, they appear to have believed that, in the case of negligent statements, a claim for economic loss would lie only where the defendant had or could be supposed to have assumed responsibility for the statement. But, once the Law Lords indicated that the so- called exclusionary rule concerning economic loss was no longer exclusionary, actions for "pure" economic loss could not be confined to claims of negligent statement. As a result, appellate courts in the United Kingdom, Canada, New Zealand and Australia have spent much time deciding whether or not defendants owed a duty of care to prevent pure economic loss to plaintiffs. It is not unfair to say that the results have been less than successful. Not only have the courts of different jurisdictions formulated different principles and rules for determining the issue of duty but ultimate appellate courts have reached conflicting decisions in cases where the material facts were similar, if not identical. Nowhere has the conflict in the ultimate appellate courts of various jurisdictions been more obvious than in the law of negligence concerning defective premises. United Kingdom case law concerning defective premises In England, judicial opinion has varied both as to the nature of the loss suffered by a purchaser of premises who subsequently discovers that they are defective and as to the circumstances that may or may not give rise to a cause of action in respect of the defects. In Anns v Merton London Borough Council69, the House of Lords held that in some circumstances an action might be brought where the plaintiff has suffered financial loss as the result of purchasing a defective building. Lord Wilberforce, who gave the leading speech, formulated a two-stage test of duty that for a time proved influential and is still substantially followed in New Zealand and Canada. He said70: "First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the 68 Commissioner for Railways (NSW) v Scott (1959) 102 CLR 392. 70 [1978] AC 728 at 751-752. McHugh latter – in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise". His Lordship went on to say that, in the case of buildings, the cause of action "can only arise when the state of the building is such that there is present or imminent danger to the health or safety of persons occupying it"71. Lord Wilberforce classified the defect in that case – cracks in the walls and sloping floors – as "material, physical damage"72. In Pirelli General Cable Works Ltd v Oscar Faber & Partners73, the House of Lords confirmed the proposition that the damage in such cases was physical damage. On this classification of the damage, an action brought in respect of defective premises was a straightforward action for damages for injury to property. Accordingly, such a case fell under the principle formulated by the House of Lords in Donoghue v Stevenson74. Classifying the damage as physical, however, created problems for the purchasers of buildings. Such a claim suffered from the difficulty that the cause of action was complete when the damage occurred. If the defect was not discovered until many years after the plaintiff had acquired the premises, the plaintiff might be met with the defence that the action was statute barred. In an earlier decision – Junior Books Ltd v Veitchi Co Ltd75 – however, the House of Lords had classified a claim for the cost of replacing defective flooring as one of pure economic loss. This classification was approved in D & F Estates Ltd v Church Commissioners for England76. There, the House of Lords held that, where a claim is based upon the defective condition of the building, the claim is one of pure economic loss. The House held that such a case is distinguishable from an action where the claim is that the defective premises caused physical injury to the plaintiff or damaged other tangible property of the plaintiff. These latter claims fall under the Donoghue v Stevenson principle. In Murphy v 71 [1978] AC 728 at 760. 72 [1978] AC 728 at 759. 73 [1983] 2 AC 1 at 16. McHugh Brentwood District Council77, the House of Lords confirmed that a claim based on loss arising out of the discovery that premises were defective was a claim for pure economic loss. In D & F Estates Ltd, the House held that the cost of replacing the defective plaster work of a sub-contractor was not an item of damage for which a builder "could possibly be made liable in negligence under the principle of Donoghue v Stevenson or any legitimate development of that principle"78. In Murphy, the House held that neither a builder nor a council that had approved the building plans could be liable for the cost of repairing a defect in a building discovered by a subsequent purchaser before the defect had caused any injury to person or other property. Such a claim was one for pure economic loss. Canadian case law concerning defective premises Canadian courts have reached a diametrically opposed view to that prevailing in the United Kingdom since Murphy. In City of Kamloops v Nielsen79, the Supreme Court of Canada held that an action by a subsequent purchaser of premises to recover the cost of repairing dangerously defective foundations was a claim for pure economic loss but could be maintained. Two years later in Central Trust Co v Rafuse80, the Supreme Court of Canada held that Kamloops had formulated: "a general rule that a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence". This principle was again confirmed by the Supreme Court of Canada in Winnipeg Condominium Corporation No 36 v Bird Construction Co81. In a unanimous judgment, the Supreme Court held that, if defective premises constitute a "real and substantial danger to the inhabitants of the building"82, the 78 [1989] AC 177 at 207. 79 [1984] 2 SCR 2. 80 [1986] 2 SCR 147 at 224. 81 [1995] 1 SCR 85. 82 [1995] 1 SCR 85 at 116. Other suggested criteria were: "a substantial danger to the health and safety of the occupants" at 121 and "foreseeable and substantial danger to the health and safety of the occupants" at 129. McHugh cost of repairing the building is recoverable in an action in negligence from those involved in its construction. New Zealand case law concerning defective premises New Zealand courts have been the most liberal of the courts in common law jurisdictions in permitting an action in negligence for economic loss caused by defective premises83. In Bowen v Paramount Builders (Hamilton) Ltd84, three members of the Court of Appeal regarded the common law as recognising a cause of action on the part of a purchaser who later discovered a defect in premises. The Court treated the case as one of physical damage. Then in Mount Albert Borough Council v Johnson85, Cooke and Somers JJ held that the purchaser of a defective building was entitled to sue "in tort for economic loss caused by negligence, at least when the loss is associated with physical damage"86. However, their Honours held that the right of action accrued only when the defect became apparent or manifest87. After a series of cases where plaintiffs successfully sued councils in negligence over the presence of defects in premises, the issue came before the New Zealand courts again in Invercargill City Council v Hamlin88. A majority of the Court of Appeal held that the plaintiff's cause of action arose when the plaintiff (the first owner) first discovered or ought reasonably to have discovered the defect89 and that the plaintiff could recover against the Council, which had inspected the foundations but negligently failed to note that they were not in accordance with the plans. The Court of Appeal held that there was sufficient proximity between the Council and the first owner because the Council had assumed responsibility for the inspection and the plaintiff had relied on the Council. The Judicial Committee of the Privy Council upheld the majority's 83 Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394; Mount Albert Borough Council v Johnson [1979] 2 NZLR 234; Stieller v Porirua City Council [1983] NZLR 628; [1986] 1 NZLR 84; Brown v Heathcote County Council [1986] 1 NZLR 76; Chase v de Groot [1994] 1 NZLR 613; Invercargill City Council v Hamlin [1994] 3 NZLR 513. 84 [1977] 1 NZLR 394 at 410, 414, 417, 422-423. 85 [1979] 2 NZLR 234. 86 [1979] 2 NZLR 234 at 239. 87 [1979] 2 NZLR 234 at 239. 88 [1994] 3 NZLR 513. 89 [1994] 3 NZLR 513 at 522-524. McHugh decision. So far as the nature of the damage was concerned, Lord Lloyd of "In other words, the cause of action accrues when the cracks become so bad, or the defects so obvious, that any reasonable homeowner would call in an expert. Since the defects would then be obvious to a potential buyer, or his expert, that marks the moment when the market value of the building is depreciated, and therefore the moment when the economic loss occurs." His Lordship thought that the Court of Appeal's perception of the prevailing circumstances in New Zealand justified it taking a different view of the law from that taken in Murphy91. The Judicial Committee held, therefore, that in New Zealand a subsequent purchaser could sue a council that had negligently approved a building that was not in accordance with the approved plans. Australian case law concerning defective premises Australian courts have long held that a person who suffers physical injury as the result of the defective design or execution of building work may sue in tort for the injury92. In Sutherland Shire Council v Heyman93, however, this Court held that the Council owed no duty to the second owners of a house to take reasonable care to ensure that the house had been constructed in accordance with plans that it had approved so as to prevent them suffering economic loss from defects in the house. After buying the house, the owners were forced to expend money to repair cracking and other problems resulting from faulty foundations. No member of the Court was willing to apply the general principle formulated by Lord Wilberforce in Anns v Merton London Borough Council. Gibbs CJ and Wilson J held that the evidence did not establish that the Council had acted negligently in exercising its discretionary power to inspect the premises. Mason, Brennan and Deane JJ held that the Council owed no relevant duty of care to the plaintiffs because they had not relied on any inquiry of the Council concerning the foundations or inspection. Mason, Wilson and Brennan JJ made no finding as to whether the damage giving rise to the action was physical damage or pure economic loss. However, Gibbs CJ held94 that the damage was physical damage. 90 [1996] AC 624 at 648. 92 Voli v Inglewood Shire Council (1963) 110 CLR 74; Florida Hotels Pty Ltd v Mayo (1965) 113 CLR 588. 93 (1985) 157 CLR 424. 94 (1985) 157 CLR 424 at 447. McHugh Deane J held that it was economic, not physical, damage. He held95 that, as a result of the defective foundations, the owners suffered pure economic loss upon the market value of the house falling when the defect was "first known or manifest". By "manifest", Deane J meant "discoverable by reasonable diligence"96. The view of Deane J as to the nature of the damage has prevailed97. It is economic loss, not physical damage. In Bryan v Maloney98, a majority of this Court reached the opposite conclusion from that reached by the House of Lords in D & F Estates Ltd and Murphy v Brentwood District Council. Expressly or inferentially, the Court approved the decisions – but not necessarily the reasoning – in the Canadian and New Zealand cases to which I have referred. The majority (Mason CJ, Deane, Toohey and Gaudron JJ) held that the builder of a house owed a duty to a subsequent purchaser to take reasonable care to avoid reasonably foreseeable decreases in its value arising from the consequences of latent defects caused by the house's defective construction. Brennan J dissented. The ratio decidendi of Bryan v Maloney The first issue in this appeal is whether the ratio decidendi of Bryan v Maloney covers the present case. If it does, Woolcock must succeed. If it does not, a further issue arises as to whether this Court should hold that those involved in the building of commercial premises owe a duty to subsequent purchasers that is similar to the duty owed by a builder to a subsequent purchaser of a dwelling house. The common law distinguishes between the holding of a case, the rule of the case and its ratio decidendi. The holding of a case is the decision of the court on the precise point in issue – for the plaintiff or the defendant. The rule of the case is the principle for which the case stands – although sometimes judges describe the rule of the case as its holding. The ratio decidendi of the case is the general rule of law that the court propounded as its reason for the decision. Under the common law system of adjudication, the ratio decidendi of the case binds courts that are lower in the judicial hierarchy than the court deciding the case. Moreover, even courts of co-ordinate authority or higher in the judicial 95 (1985) 157 CLR 424 at 505. 96 Hawkins v Clayton (1988) 164 CLR 539 at 588. 97 Bryan v Maloney (1995) 182 CLR 609 at 617. 98 (1995) 182 CLR 609. McHugh hierarchy will ordinarily refuse to apply the ratio decidendi of a case only when they are convinced that it is wrong. Prima facie, the ratio decidendi and the rule of the case are identical. However, if later courts read down the rule of the case, they may treat the proclaimed ratio decidendi as too broad, too narrow or inapplicable99. Later courts may treat the material facts of the case as standing for a narrower or different rule from that formulated by the court that decided the case. Consequently, it may take a series of later cases before the rule of a particular case becomes settled. Thus for many years, courts and commentators debated whether the landmark case of Donoghue v Stevenson100 was confined to manufacturers and consumers and whether the duty formulated in that case was dependent upon the defect being hidden with the lack of any reasonable possibility of intermediate examination101. If later courts take the view that the rule of a case was different from its stated ratio decidendi, they may dismiss the stated ratio as a mere dictum or qualify it to accord with the rule of the case as now perceived. What then is the ratio decidendi of Bryan v Maloney? That question can be answered only by examining their Honours' reasoning, which I will summarise. The reasoning in Bryan v Maloney The starting point of the reasoning in the joint judgment102 in Bryan v Maloney was that the builder, Mr Bryan, had constructed a house for a Mrs Manion on land that she owned. Later, she sold the land and the house to another couple who, seven years after the house was built, sold it to the plaintiff, Mrs Maloney103. The trial judge – who found in the plaintiff's favour – had awarded an amount of damages which "would necessarily be expended in remedying the inadequate footings and the consequential damage to the fabric of 99 See generally Llewellyn, The Case Law System in America, (1989) at 14-15, based on lectures given by Karl Llewellyn in 1928-1929 at the Leipzig Faculty of Law while on leave from Columbia University. 101 cf Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49 at 62-68. 102 Mason CJ, Deane and Gaudron JJ. (Toohey J in a separate judgment reached the same result.) 103 (1995) 182 CLR 609 at 615. McHugh the house"104. Thus, the only damage sustained by the plaintiff "was mere economic loss in the sense that it was distinct from, and not consequent upon, ordinary physical injury to person or property"105. Their Honours said that two policy considerations could militate against recognition of a relationship of proximity in a case involving mere economic loss. First, the law was concerned to avoid the imposition of liability "in an indeterminate amount for an indeterminate time to an indeterminate class"106. Second, the common law feared that a duty to take care to avoid economic loss might be inconsistent with community standards in relation to what was ordinarily legitimate in the pursuit of personal advantage107. The builder and Mrs Manion were parties to a contract, but the existence of the contract did not preclude a relationship of proximity between them under the law of negligence108. That did not mean that the existence of a contractual relationship was irrelevant to the existence of proximity or the content of a duty of care under the ordinary law of negligence109. However, the contract between the builder and Mrs Manion "was non-detailed and contained no exclusion or limitation of liability"110. Accordingly, neither the existence nor the content of the contract precluded the liability of Mr Bryan to Mrs Manion or Mrs Maloney under the law of negligence111. Their Honours said that a relationship of proximity clearly existed between the builder and Mrs Manion with respect to ordinary physical injury to her person or property. Accordingly, the builder was under a duty to exercise reasonable care in relation to the building work to avoid any reasonably foreseeable risk of such injury. While the relationship between the builder and Mrs Manion concerning physical injury had to be distinguished from the 104 (1995) 182 CLR 609 at 616. 105 (1995) 182 CLR 609 at 617. 106 (1995) 182 CLR 609 at 618 citing Ultramares Corporation v Touche 174 NE 441 107 (1995) 182 CLR 609 at 618. 108 (1995) 182 CLR 609 at 619-620. 109 (1995) 182 CLR 609 at 621. 110 (1995) 182 CLR 609 at 622. 111 (1995) 182 CLR 609 at 622. McHugh relationship between them concerning mere economic loss, the significance of the distinction varied according to the particular kind of economic loss. The distinction between physical damage to a house by external cause and mere economic loss in the form of diminution in its value when the inadequacy of its footings became manifest by consequent damage to its fabric was "an essentially technical one"112. "Moreover", said their Honours, "the policy considerations underlying the reluctance of the courts to recognize a relationship of proximity and a consequent duty of care in cases of mere economic loss are inapplicable to a relationship of the kind which existed between Mr Bryan and Mrs Manion as regards the kind of economic loss sustained by Mrs Maloney."113 To the contrary, there were strong reasons for acknowledging the existence of a relevant relationship between the builder and the first owner with respect to that kind of economic loss114. Their "In particular, the ordinary relationship between a builder of a house and the first owner with respect to that kind of economic loss is characterized by the kind of assumption of responsibility on the one part (i.e. the builder) and known reliance on the other (i.e. the building owner) which commonly exists in the special categories of case in which a relationship of proximity and a consequent duty of care exists in respect of pure economic loss." Prima facie, a relationship of proximity also existed between the builder and persons such as Mrs Maloney who might sustain physical injury to person or property as a consequence of inadequate footings of part of the house while they or their property were lawfully in the house or in its vicinity116. Whether the relationship that existed between the builder and a subsequent owner possessed the relevant degree of proximity to give rise to a duty to take reasonable care to avoid economic loss had to be considered in the context of the relationships of proximity to which their Honours referred117. Although the only 112 (1995) 182 CLR 609 at 623. 113 (1995) 182 CLR 609 at 623. 114 (1995) 182 CLR 609 at 624. 115 (1995) 182 CLR 609 at 624. 116 (1995) 182 CLR 609 at 624. 117 (1995) 182 CLR 609 at 624-625. McHugh connection between the builder and the subsequent owner was likely to be the house itself, their relationship was marked by proximity in a number of respects118: the house was a permanent structure which was to be used indefinitely and was likely to represent one of the most significant and possibly the most significant investment which the subsequent owner would ever make; it was foreseeable by the builder that the negligent construction of a house with inadequate footings was likely to cause economic loss when the inadequacy became manifest; and no intervening negligence or other causative event would occur between the construction and the sustaining of the economic loss. Their Honours concluded119: "Upon analysis, the relationship between builder and subsequent owner with respect to the particular kind of economic loss is, like that between the builder and first owner, marked by the kind of assumption of responsibility and known reliance which is commonly present in the categories of case in which a relationship of proximity exists with respect to pure economic loss. In ordinary circumstances, the builder of a house undertakes the responsibility of erecting a structure on the basis that its footings are adequate to support it for a period during which it is likely that there will be one or more subsequent owners. Such a subsequent owner will ordinarily have no greater, and will often have less, opportunity to inspect and test the footings of the house than the first owner. Such a subsequent owner is likely to be unskilled in building matters and inexperienced in the niceties of real property investment. Any builder should be aware that such a subsequent owner will be likely, if inadequacy of the footings has not become manifest, to assume that the house has been competently built and that the footings are in fact adequate." I do not think that the ratio decidendi of Bryan v Maloney applies to the case of commercial premises. The ratio can be put no higher than that the builder of a dwelling house owes a duty to a subsequent purchaser to take reasonable care to avoid reasonably foreseeable decreases in its value arising from the consequences of latent defects caused by the house's defective 118 (1995) 182 CLR 609 at 625. 119 (1995) 182 CLR 609 at 627. McHugh construction. Neither the stated reasons of the Court nor the material facts of the case justify any wider conclusion. Certainly, they do not justify the conclusion that the ratio of the case covers commercial premises. That is not to say that the reasoning in Bryan v Maloney – or by analogy its material facts – may not lead to the conclusion that the common law recognises an identical or similar duty in respect of the builder of commercial premises. That requires further analysis. But it does mean that the ratio decidendi of Bryan v Maloney does not automatically determine the result of this appeal. Moreover, a conclusive reason for finding that the ratio of Bryan v Maloney does not cover this case is that the Court decided it when the doctrine of proximity governed the Australian law of negligence, and its reasoning is based on that doctrine. Thus, Mason CJ, Deane and Gaudron JJ said120: "The cases in this Court establish that a duty of care arises under the common law of negligence of this country only where there exists a relationship of proximity between the parties with respect to both the relevant class of act or omission and the relevant kind of damage." It is unnecessary to determine whether the majority Justices would have reached the same result even if the doctrine of proximity was not regarded as binding. The decisive rejection of that doctrine by this Court in Sullivan v Moody121 is sufficient reason for holding that the material facts of Bryan v Maloney cannot be used – even by way of analogy – as persuasive. Facts that are regarded as material for the purpose of one legal doctrine are not necessarily material for another doctrine. The materiality of facts depends on the principle or principles that is or are applied to them. Once the stated principle of a case is rejected or distinguished, the materiality of the particular facts of the case must depend on the new principle or doctrine that governs the case. Since the doctrine of proximity was rejected in Sullivan, the only ratio decidendi that can be extracted from Bryan v Maloney is one based on its principal facts and assumptions. Its ratio is that the builder of a dwelling house owes a duty to a subsequent purchaser who relies on the skill of the builder to protect that person from reasonably foreseeable decreases in value resulting from latent defects in the house. Bryan v Maloney does not govern this case. 120 (1995) 182 CLR 609 at 617. 121 (2001) 207 CLR 562. McHugh The indicia of a duty to prevent pure economic loss as the result of constructing commercial premises In Perre v Apand Pty Ltd122, I listed five principles that I thought were "relevant in determining whether a duty exists in all cases of liability for pure economic loss". They were principles concerned with: reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual, vulnerability to risk, and knowledge of the risk and its magnitude. I went on to say that, in particular cases, other policies and principles may guide and even determine the outcome of the case, but the principles concerning these five categories must always be considered. Accordingly, I turn to consider them and other relevant matters in the context of this case. Reasonable foreseeability The loss that Woolcock suffered in the present case was clearly foreseeable by the respondents. Consulting engineers like the respondents would clearly have foreseen that, if the foundations for the complex were liable to subsidence, the current owner of the building would be put to expense in repairing the damage caused by the subsidence. Courts have long held that engineers engaged in connection with the design of a building have a duty to examine the site to see whether the nature of the sub-soil is adequate for the proposed building123. Reasonable foreseeability of damage, however, is a necessary but not sufficient condition of a cause of action in negligence124. Indeterminacy of liability Indeterminacy of liability is a factor that will ordinarily defeat a claim that the defendant owed a duty of care to persons such as the plaintiff. But it is not likely to be a significant issue in cases concerned with economic loss suffered by the subsequent purchaser of a commercial building that is or becomes defective 122 (1999) 198 CLR 180 at 220 [105]. 123 Moneypenny v Hartland (1826) 2 Car & P 378 [172 ER 171]; Columbus Company v Clowes [1903] 1 KB 244; cf Auburn Municipal Council v ARC Engineering Pty Ltd [1973] 1 NSWLR 513 at 518, 519. 124 Sullivan v Moody (2001) 207 CLR 562 at 576 [42]. McHugh by reason of negligent design or construction. Liability will ordinarily be restricted to the owner of the building when damage manifests itself. Indeterminacy of liability may be a relevant factor where occupants of the building claim damages for economic loss arising out of the defective design or construction of the building. But when the first owner or a subsequent purchaser of a commercial building claims damages for pure economic loss, indeterminacy of liability is not an issue. Autonomy of the individual In Hill v Van Erp125, I pointed out that "Anglo-Australian law has never accepted the proposition that a person owes a duty of care to another person merely because the first person knows that his or her careless act may cause economic loss to the latter person". Speaking generally, a person owes no duty to prevent economic loss to another person even though the first person intends to cause economic loss to that other person. This particular immunity from liability reflects the common law's concern with the autonomy of the individual and its desire to give effect to the choices of the individual by not burdening his or her freedom of action. Thus, as long as a person is legitimately protecting or pursuing his or her commercial interests, the common law does not require that person to be concerned with the effect of his or her conduct on the economic interests of other persons126. Questions concerning the autonomy of individuals do not seem relevant in the context of claims for damages for pure economic loss arising out of the defective design or construction of a building. Those involved in the building are already under a duty to the first owner to avoid physical injury to the owner's person and property. Consequently, imposing a duty to avoid economic loss to the first or a subsequent owner is not inconsistent with the pursuit of the legitimate interests of those who design or construct the building127. Vulnerability to risk Whether or not the plaintiff was vulnerable to the risk of injury from the defendant's conduct is a key issue in determining whether the defendant owed a duty of care to the plaintiff. Indeed, the issue of the purchaser's vulnerability to economic loss is the critical issue in determining whether those involved in the construction of commercial premises owe a duty of care to the purchaser. In this 125 (1997) 188 CLR 159 at 211. 126 Perre v Apand Pty Ltd (1999) 198 CLR 180 at 224 [115]. 127 Bryan v Maloney (1995) 182 CLR 609 at 623-624. McHugh context, vulnerability to risk means not that the plaintiff was exposed to risk but that by reason of ignorance or social, political or economic constraints, the plaintiff was not able to protect him or herself from the risk of injury. Subject to the express terms of the contract, the first owner or purchaser has extensive contractual remedies open to him or her in respect of the negligent construction of the building. The ordinary building contract contains an implied term that the work will be done in accordance with the contractual stipulation, with proper materials128, in a workmanlike manner and that the building will be reasonably fit for its purpose. Similar terms will be implied in the contracts made with other persons who are involved in the design or construction of the building. These contractual remedies will lie against those involved even in cases where sub-contractors have carried out the work or services. Such remedies usually provide sufficient protection against the problems that are likely to be encountered during the first few years of the building's life. But extensive as contractual protection may be – it is unlikely to be narrower than in tort – it suffers from one shortcoming. A cause of action in contract arises upon breach. In the case of a defective building, the breach will frequently occur before the loss-causing defect manifests itself. Hence, the first owner of a commercial building may find that his or her claim in contract is outside the relevant limitation period and statute barred. Nevertheless, by insisting that the construction contract be made under seal, the first owner can ordinarily protect him or herself against most problems concerning a defective building that were reasonably foreseeable. Still, even when the contract is under seal, the first owner may be left with a remedy that is unenforceable. When the defect does not manifest itself for some time, the first owner may find that the builder is insolvent129 or in liquidation, or has gone out of business. If, as is often the case, the defect in the premises results from a sub-contractor's negligence, holding that there is no duty in tort to guard against economic loss arising from the negligent design or construction of a building deprives the first owner of a valuable remedy against the sub-contractor. No doubt it may be possible in some cases for the first owner to enter into contractual indemnities or warranties with the sub-contractor. In other cases, the first owner may be able to sue the sub-contractor on any warranty given by the sub-contractor to the builder. The present case proceeded by way of Case Stated. There is no agreed fact as to whether it is a common practice for builders and their sub-contractors 128 Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454. 129 Invercargill City Council v Hamlin [1996] AC 624 at 634. McHugh to agree to obligations concerning the condition of premises that might be enforced by the first owner of the premises. Leading writers on Australian construction law suggest a prudent principal should enter into a collateral contract with sub-contractors that contains appropriate warranties130. In Australia, professional institutions have endorsed particular contractual warranties whose purpose is to make the sub-contractor liable to the principal131. A subsequent purchaser of a commercial building also has means of protecting him or herself against economic loss arising from the condition of the building. That person can obtain warranties from the vendor. The subsequent purchaser can also have the building examined by relevant experts. But even expert examination may not reveal the presence of latent defects. Moreover, some areas of concern – such as the stability of the foundations of the building – may be examined and tested only at considerable expense. Although the first and subsequent owners may take steps to protect themselves contractually, it is clear that in some cases contractual remedies may not be sufficient to protect an owner against pure economic loss. In these cases, the owner will be compensated for economic loss only if the law of torts provides a cause of action. The defendant's knowledge of the risk and its magnitude The case for imposing a duty is always strengthened if the defendant actually knew of the risk. It is strengthened further if the defendant knew the magnitude of the risk. The significance of the defendant's knowledge of the risk of loss and its magnitude will depend on the facts of each case. However, it would be a rare case where those involved in the construction of commercial premises would not be aware of the risks arising from particular defects and their potential magnitude. In the present case, the respondents were fully aware of the risk – they asked for the site to be tested for the purpose of determining whether there were risks of subsidence. And the inference is irresistible that, as consulting engineers, they were well aware of the magnitude of the damage that the owner of the building would suffer if the risk should eventuate. Other policy factors In addition to the factors that I referred to in Perre v Apand Pty Ltd as relevant, other factors are also relevant in determining whether a duty of care is 130 Dorter and Sharkey, Building and Construction Contracts in Australia: Law and Practice, 2nd ed (looseleaf service) at [5.630]. 131 Bailey, Construction Law in Australia, 2nd ed (1998) at 156. McHugh owed in respect of the negligent design or construction of commercial premises. They include: Responsibility to control third parties The common law has always been reluctant to impose a duty to control others132. In the area of defective building work, the issue of controlling third parties usually arises in respect of sub-contractors. In D & F Estates Ltd133, for example, it was on this ground that the House of Lords refused to hold a builder liable for the negligence of a plasterer who was a sub-contractor. But if, as is usually the case, there is a contract between the owner and builder, the builder will already be under a practical, if not legal, obligation to supervise the work of any employed sub-contractors. Clause 9.5 of the Australian Standard General Conditions of Contract AS 4000-1997 makes the contractor liable to the principal "for the acts, defaults and omissions of subcontractors" unless the contract otherwise provides. Despite the decision in D & F Estates Ltd, issues concerning the control of third parties do not seem significant in the present context in Australia. Outflanking the law of contract Until the decision of the House of Lords in Hedley Byrne134, the received wisdom was that pure economic loss cases belonged to the law of contract, not tort. Even as late as 1986, the Judicial Committee of the Privy Council and the House of Lords appeared to assume that the contract and not tort was ordinarily the source of the remedy for the recovery of negligently caused economic loss135. Indeed, one reason that the House of Lords gave for denying the owner's claim in D & F Estates Ltd136 was that it would outflank the operation of the law of contract. Lord Bridge of Harwich said137 that to require the builder to owe a duty to a subsequent purchaser "would be to impose upon him for the benefit of those with whom he had no contractual relationship the obligation of one who 132 Smith v Leurs (1945) 70 CLR 256 at 262; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 263-264 [18]-[21], 291-293 [108]-[113]. 135 Candlewood Navigation Corporation Ltd v Mitsui OSK Lines Ltd [1986] AC 1 at 17; Leigh and Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785 at 818-819. 137 [1989] AC 177 at 207. McHugh warranted the quality of the plaster as regards materials, workmanship and fitness for purpose". But since Hedley Byrne, the argument that economic loss falls within the domain of contract rather than tort cannot be sustained in Australia and probably cannot be sustained even in England. Nor since the decision of the House of Lords in Donoghue v Stevenson138 is it possible to argue that the law of negligence should not be permitted to outflank fundamental contractual doctrines such as consideration and privity. Until the decision of the House of Lords in White v Jones139 and the decision of this Court in Hill v Van Erp140, it was possible to argue that the law of negligence should not be concerned with the loss of expectancies. But those decisions put an end to that argument. They held that a person could bring an action in tort against a solicitor in respect of the loss of an expectancy under a will. In White v Jones141, Lord Goff of Chieveley said that he did not consider that "damages for loss of an expectation are excluded in cases of negligence". The decisions in Hedley Byrne, Donoghue, White and Hill, therefore, make it difficult to argue that claims in negligence for pure economic loss should be excluded merely because such claims may outflank or undermine fundamental doctrines of the law of contract. In Bryan v Maloney142, this Court rejected the notion that in Australia contract and tort were so neatly compartmentalised that it would be an error to give a remedy in tort for economic loss. So far as the builder and first owner were concerned, Mason CJ, Deane and Gaudron JJ said143: "as a matter of policy, the sanctity of contract or the compartmentalization of the law dictates that liability under the ordinary principles of negligence ... must be excluded as between parties in a contractual relationship notwithstanding the absence of any actual agreement between the parties to that effect". 140 (1997) 188 CLR 159. 141 [1995] 2 AC 207 at 269. 142 (1995) 182 CLR 609 at 624. 143 (1995) 182 CLR 609 at 624. McHugh Once the courts rejected the traditional view that professional persons such as solicitors and architects could only be sued in contract144, it became likely that, in building cases, tortious remedies would extend to third parties affected by the performance of the contract. The better view in all cases – not merely building cases – is that the capacity of a person to protect him or herself from damage by means of contractual obligations is merely one – although often a decisive – reason for rejecting the existence of a duty of care in tort in cases of pure economic loss. Whether the securing of an alternative remedy in contract was really open to a plaintiff who has suffered economic loss depends upon current market conditions and conveyancing practices. In Henderson v Merrett Syndicates Ltd145, the House of Lords held that the existence of various contractual arrangements between the plaintiffs and certain managing agents and underwriters did not prevent the plaintiffs from suing in tort. The market conditions were such that the plaintiffs could not bargain for protection against the risks of the agents and others being careless. Similarly, in Smith v Eric S Bush146, the House of Lords held that a purchaser of a house could sue a careless valuer in tort because, having regard to market conditions, the purchaser was not able to protect herself against the valuer's negligence. Likewise in Bryan v Maloney147, the inability of an ordinary purchaser of a dwelling house to realistically protect him or herself against the builder's negligence influenced this Court to allow the purchaser to sue the builder in tort. As I have pointed out, the Case Stated does not reveal the extent to which, if at all, it is open to the first owner or subsequent purchaser, as a matter of commerce or conveyancing practice, to protect him or herself by contractual remedies against those involved in the negligent design or construction of commercial premises. However, it would be surprising if they could not do so. The first owners and subsequent purchasers of commercial premises are usually sophisticated and often wealthy investors who are advised by competent solicitors, accountants, architects, engineers and valuers. In the absence of evidence, this Court must assume that the first owner of commercial premises is able to bargain for contractual remedies against the builder. It must also assume 144 Groom v Crocker [1939] 1 KB 194; Bagot v Stevens Scanlan & Co Ltd [1966] 147 (1995) 182 CLR 609 at 627-628. McHugh that a subsequent purchaser is able to bargain for contractual warranties from the vendor of such premises. The floodgates argument In determining whether the common law should recognise a duty of care, the possibility that its recognition might lead to a flood of claims is a ground for rejecting the existence of the duty148. However, New Zealand and Canada have long recognised tort claims for economic loss arising out of defective premises without apparently being flooded with litigation. Similarly, the decision of this Court in Bryan v Maloney does not appear to have caused the lists of Australian courts to be flooded with claims that could not have been brought but for that decision. Disproportionate liability In some cases concerned with pure economic loss, it may be necessary in determining whether a defendant should owe a duty of care to consider whether any potential liability of the defendant would be disproportionate to its fault. Claims against auditors by investors or creditors are examples of cases where disproportionate liability has played a role in rejecting plaintiffs' claims that the auditors owed them a duty of care149. However, it is difficult to see how issues of disproportionate liability can be a factor in defective building cases concerned with pure economic loss. First, the loss in value or the cost of repairs to the defective work is likely to bear a proportionate relationship to the contract price for doing or advising in respect of the building work. Second, if the defective building causes physical injury or injury to other property, those involved in the construction will be liable even though the damages payable far exceed the contract price. Lack of a measurable standard of care One objection to the law of torts creating a general duty of care to prevent pure economic loss in relation to "defective" premises is that the question of defectiveness cannot be divorced from the contract price payable for the building work. This problem is not confined to commercial premises but extends to the 148 Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 at 419, 422; cf Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 149 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR McHugh design and construction of all premises. The first owner or purchaser may have been influenced to build or buy by the low price of the building, but that price may reflect the use of inferior quality materials and workmanship150. In most cases, the purpose for which the building is to be used will also have a significant effect on both price and materials and the standard of workmanship. What is regarded as sufficient for a barn is unlikely to be sufficient for a dwelling house. And what is suitable for a horse barn may not be suitable for a barn that is used to store hay. Indeed, price and purpose can seldom be separated. As Brooking J pointed out in Minchillo v Ford Motor Company of Australia Ltd151 in dealing with a claim of economic loss with respect to a truck: "One man's meat is another man's poison. The scribbling block bought for a few cents at the supermarket might serve very well for the correspondence of the artisan, but it would not have done for the Duke. Price is an important consideration: generally speaking, as the saying goes, you get what you pay for." The problem of measuring what constitutes defective quality in building cases for the purpose of the law of tort is a real one. But it is not so great that it automatically requires the common law to hold that no tortious duty of care is ever owed in respect of "defective" premises. Courts have long had to deal with similar problems under the Sale of Goods Acts with respect to such terms as fitness for purpose, merchantable quality and so on. They should be able to formulate reasonable standards for determining whether, having regard to the price and purpose of the premises and relevant market and industry standards, the particular premises were or were not designed or constructed negligently. Circumventing the policy of limitation legislation Law is too complex for it to be a seamless web. But, so far as possible, courts should try to make its principles and policies coherent152. Accordingly, it is always relevant in determining whether to create, extend or formulate a duty in tort to consider whether it is consistent with other legal doctrines, principles and policies. The now accepted doctrine is that, in the case of defective premises, damage does not occur until the defect manifests itself. No cause of action arises in tort until the plaintiff suffers damage. Consequently, those concerned with the design and construction of a building may be required to defend themselves 150 cf Junior Books Ltd v Veitchi Co Ltd [1983] 1 AC 520 at 533. 151 [1995] 2 VR 594 at 598. 152 Sullivan v Moody (2001) 207 CLR 562 at 581 [55]. McHugh against an action in tort many years after completing the task that now gives rise to the claims against them. On the other hand, a cause of action in contract arises when the contract is breached153. Time runs from the breach, not the sustaining of damage. This creates the paradox that those involved in the design or construction of a building may be sued in tort years after the time has expired for suing on the contract that gave rise to the duty. Of course, since Donoghue v Stevenson154, a similar anomaly arises in the case of goods and chattels. But in that area, the time lag between breach of contract and sustaining damage will ordinarily not be as long as in the case of defective buildings. Goods and chattels are usually consumed or used before the expiration of the contractual limitation period. Moreover, imposing duties in respect of pure economic loss in building cases creates other problems. As I pointed out in Brisbane South Regional Health Authority v Taylor155, the policy of the law for nearly 400 years has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. These time limitations have been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates"156. In Taylor157, I went on to say: "The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost158. Second, it is oppressive, even 'cruel', to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed159. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made 153 Lynn v Bamber [1930] 2 KB 72 at 74. 155 (1996) 186 CLR 541 at 551. 156 R v Lawrence [1982] AC 510 at 517. 157 (1996) 186 CLR 541 at 552-553. 158 Jones v Bellgrove Properties Ltd [1949] 2 KB 700 at 704. 159 RB Policies at Lloyd's v Butler [1950] 1 KB 76 at 81-82. McHugh against them160. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period161. As the New South Wales Law Reform Commission has pointed out162: 'The potential defendant is thus able to make the most productive use of his or her resources163 and the disruptive effect of unsettled claims on commercial intercourse is thereby avoided164. To that extent the public interest is also served.' Even where the cause of action relates to personal injuries165, it will be often just as unfair to make the shareholders, ratepayers or taxpayers of 160 New South Wales Law Reform Commission, Limitation of Actions for Personal Injury Claims, Report No 50, (1986) at 3; Law Reform Commission of Western Australia, Limitation and Notice of Actions, Discussion Paper, Project No 36, Pt II, 161 In Limitation of Actions for Latent Personal Injuries, Report No 69, (1992) at 10, the Law Reform Commissioner of Tasmania said: "The need for certainty can be justified in many cases. For example, manufacturers need to be able to 'close their books' and calculate the potential liability of their business enterprise with some degree of certainty before embarking on future development. Under modern circumstances, an award of damages compensation may be so large as to jeopardise the financial viability of a business. The threat of open-ended liability from unforeseen claims may be an unreasonable burden on a business. Limitation periods may allow for more accurate and certain assessment of potential liability." 162 New South Wales Law Reform Commission, Limitation of Actions for Personal Injury Claims, Report No 50, (1986) at 3. 163 Kelley, "The Discovery Rule for Personal Injury Statutes of Limitations: Reflections on the British Experience", (1978) 24 Wayne Law Review 1641 at 164 "Developments in the Law – Statutes of Limitations", (1950) 63 Harvard Law Review 1177 at 1185. 165 The vast majority of defendants in personal injury actions are insured. Consequently, the amount of the verdict will not be met by the defendant. Nevertheless, it is a charge on the revenue of the insurer for the relevant year and is ultimately met by the shareholders of the insurer or the individual proprietors of the insurance business if the insurer is not incorporated. Although the burden of the plaintiff's claim is spread in such cases, the consequences for the proprietors of the insurance business can be significant. When a large number of claims are allowed to be brought out of time, as has been the case in respect of some types of injuries (Footnote continues on next page) McHugh today ultimately liable for a wrong of the distant past, as it is to refuse a plaintiff the right to reinstate a spent action arising from that wrong. The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible166. In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated." To allow an action in tort to be brought more than six or even twelve years after the negligent act has occurred when it could not have been brought in contract flies in the face of these rationales of the statutes of limitation. The respondents owed no duty to Woolcock to protect it from pure economic loss Whether and in what circumstances the law of torts ought to impose on the builder or other persons involved in designing or constructing commercial premises a duty of care to purchasers to prevent economic loss from defects in the premises are difficult questions. The varying reasons and conclusions of ultimate appellate courts throughout the common law world show that this is unequivocally so. Undoubtedly, the availability of a remedy in tort in respect of such losses strengthens claims by first owners and purchasers for compensation for losses arising from lack of care by those responsible for building defects. Hence, the availability of a remedy in tort would advance the cause of corrective justice, one of the rationales of the law of negligence. Moreover, for the reasons that I have given, the existence of a contractual remedy may not always be a sufficient protection for the first owners and purchasers of commercial premises who suffer economic loss as a result of defective premises. Consequently, the availability of a remedy in tort gives greater protection to the owners and purchasers of commercial premises. But other factors point against a remedy in tort. Many defects will not manifest themselves for many years after the erection of the building. Given the or in some industries in recent years, the financial consequences for an insurer can be drastic. 166 New South Wales Law Reform Commission, Limitation of Actions for Personal Injury Claims, Report No 50, (1986) at 3; Law Reform Commission of Western Australia, Limitation and Notice of Actions, Discussion Paper, Project No 36, Pt II, McHugh now accepted doctrine that damage does not occur until the defect manifests itself, those involved in the construction of the building may be required to defend themselves many years after the event. Claims that might have been defended if brought within the normal periods imposed by the statute of limitations may become indefensible in practice. Records may have been destroyed or disappeared; key workers may be untraceable; memories may have long faded. Hence, the capacity of the courts to do justice may be impaired, if not defeated, by the passage of the years. And the capacity of the courts to do justice is impaired rather than improved by the problems to which I have referred in determining an appropriate standard of care. A further consequence of the doctrine that damage does not occur until the defect manifests itself is that those involved in the construction of a building and their insurers may have to wait many years before they can be sure that they are free of potential claims. As one of the rationales of statutes of limitation indicates, this is an undesirable and unsatisfactory result for any commercial enterprise. To overcome the problems caused by the potential delay in bringing actions, builders in particular may be forced or at all events induced to adopt inefficient commercial practices such as using a series of shell companies to make one-off building contracts for each construction project. The likelihood that imposing a duty in respect of building premises will have unsatisfactory consequences for the administration of justice and the efficiency of commerce is a powerful reason for not recognising the duty which Woolcock propounds. But the most powerful reason for rejecting the proposed duty is that the first owners and purchasers of commercial buildings are ordinarily in a position to protect themselves from most losses that are likely to occur from defects in the construction of such buildings. Occasionally, a commercial building may be built or bought for an emotional rather than an economic reason. But in the overwhelming number of cases, commercial buildings are constructed or bought to make money. A commercial building is constructed or bought because it is perceived to be a suitable vehicle for investment. The prudent first owner or purchaser of such a building will compare the likely return on the capital investment with the potential risks including falls in the value of the building that may result from various factors, economic, social and physical. And no prudent purchaser would contemplate buying a building without determining whether it has existing or potential construction defects. Knowledge of its defects, actual or potential, is central to any evaluation of its worth as an investment. In so far as risks are uncertain or unknown, the prudent purchaser will factor the risk into the price or obtain contractual protections or, if necessary, walk away from the negotiations. There are many means of protection open to first owners and purchasers of commercial buildings to cover the risk that the building may have latent McHugh defects. The first owner can enter into contractual arrangements with those involved in the construction. Those arrangements can include warranties concerning the fitness of the building for the purpose for which it was constructed. The first owner can supplement the contractual arrangements with those directly involved by obtaining similar warranties from directors and other persons connected with the construction of the building. The first owner can employ other professionals to check the work of those directly involved in the project. Subsequent purchasers can protect themselves by entering into similar arrangements with their vendor. They can take an assignment of the vendor's rights (if any) against the builders and others. They can minimise the risks of loss from physical defects by obtaining expert investigations of the building. Of course, for the reasons that I have given, contractual protections and expert investigations may turn out to be inadequate. In that event, a remedy in tort – particularly a remedy against secondary parties such as architects, engineers and sub-contractors – would be desirable. But cases where contractual protection will be found deficient are likely to be the exception rather than the rule. Whether exceptional or not, the ultimate question is whether the residual advantages that an action in tort would give are great enough to overcome the disadvantages to which I have referred. This involves a value judgment, and the data that might permit that judgment to be made, if the data exists at all, is not before us. Because that is so, the better view is that this Court should not take the step of extending the principle of Bryan v Maloney to commercial premises. That is, this Court should hold that, in the absence of a contract between the owner of commercial premises and a person involved in the design or construction of those premises, the latter does not owe a duty to the current owner to prevent pure economic loss. Where a contract exists, however, the concepts of assumption of responsibility and reliance may create a duty of care in tort as well as obligations in contract. In Perre v Apand Pty Ltd167, I said: "If the plaintiff has taken, or could have taken steps to protect itself from the defendant's conduct and was not induced by the defendant's conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss." The respondents did not owe the duty pleaded Various steps are open to the purchasers of commercial buildings such as Woolcock to protect themselves against pure economic loss that is consequent on 167 (1999) 198 CLR 180 at 225 [118]. McHugh the discovery of defects in the construction of those buildings. It is true that Woolcock made no investigation or inquiries concerning defects or potential defects in the building that it bought and obtained no warranties in respect of them. But its failure to take reasonable steps that were open to it is not a ground for holding that the respondents owed it a duty to take care in respect of pure economic losses arising from the defects in the foundations of the building. No doubt if Woolcock had insisted on contractual protection from its vendor, it may have had to pay a higher price for the building. But that only shows that, in this area, contract rather than tort is a better, more just and probably more efficient way of dealing with the problem of pure economic losses arising from defective construction. The price of a commercial building almost invariably reflects the inherent and other risks – including the risk of latent defects – of buying the building. In my opinion, the law of negligence is best served by leaving it to the market and the law of contract to determine who should bear the economic loss that arises as the result of a fall in the value of a commercial building consequent upon the discovery of latent defects in the building. Nothing in this judgment is intended to suggest that Bryan v Maloney168 would now be decided differently. Whether a different decision would now be reached under current doctrine almost certainly depends on whether evidence would reveal that the purchasers of dwelling houses are as vulnerable as the Court assumed in that case. Order The appeal should be dismissed with costs. 168 (1995) 182 CLR 609. Kirby 118 KIRBY J. In Zumpano v Montagnese169, Brooking JA noted the opinion of a commentator170 on this Court's decision in Bryan v Maloney171. The comment suggested that in Bryan the Court had "opened Pandora's Box, visiting on builders all the evils of the world". Brooking JA remarked that such observations implied that "there is no more agreement about the limits of the decision than there is about what the lidded vase carried by Pandora really contained"172. According to one version of the mythological story, Pandora's box contained all the blessings of the gods which, on its opening, escaped and were lost. The only exception was hope, which was at the bottom173. Now, full of hope, the appellant comes to this Court seeking an extension of the principle in Bryan, to cover its case. In Zumpano174, Brooking JA went on to observe that: "On the widest view of its ultimate effect, Bryan v Maloney will impose upon builders who erect or alter any kind of building at least a 'prima facie' duty of care to all those who come to own or even only to use or occupy it and that duty will extend to all defects, whatever their nature and extent, and whether or not they result from the work of a subcontractor, provided only that they are 'latent'." On the other hand, his Honour accepted175 that Bryan "might be viewed as a determination based upon the particular facts rather than one applicable to a broad category of cases". He predicted that the problem presented in that case would return to this Court in order to resolve these doubts and difficulties176. So, by special leave in this appeal, it has. 169 [1997] 2 VR 525 at 528. 170 Mead, "The Recovery of Economic Loss Arising from Defective Structures – Policy, Principle and the Amorphous Notion of Proximity as a General Concept", (1996) 12 Building and Construction Law 9. 171 (1995) 182 CLR 609. 172 [1997] 2 VR 525 at 528. 173 Grimal, The Dictionary of Classical Mythology, (1986) at 343. 174 [1997] 2 VR 525 at 528. 175 [1997] 2 VR 525 at 528 referring to the opinion of Clarke JA in Woollahra Municipal Council v Sved (1996) 40 NSWLR 101 at 134. 176 [1997] 2 VR 525 at 534. Kirby The facts and course of the proceedings The facts and decisional history: The relevant facts are set out in the reasons of the other members of this Court177. The reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ ("the joint reasons") explain the somewhat unsatisfactory way in which an issue of legal importance is now presented in a stated case, supplemented by the parties' pleadings and inferences said to be available from this confined material178. The other reasons179 also trace the decisional history of this case in the Supreme Court of Queensland, principally in the Court of Appeal180. Those reasons provide an explanation of what was decided by this Court in Bryan181 and some of the criticisms that have been directed at its holding both in judicial opinions and in academic literature182. This material and the outline of the main arguments of the parties allow me to go directly to my analysis. I will not needlessly repeat the facts. An unsatisfactory procedure: If this case was planned as a vehicle to expand, or confine, the principle in Bryan, it is a somewhat unsuitable one. I can understand the reasons, tactics and hoped-for cost savings that launched the parties upon a contest, effectively over the pleadings. However, the one lesson that has emerged from recent Australian cases about the law of negligence is that the facts and the evidence, taken as a whole, are critical for the resolution of the issues presented by the tort. It is out of the detail of the facts that the "salient features" and pertinent factors will emerge that help the decision-maker to decide whether a duty of care exists, whether it has been breached and, if so, whether that breach caused the plaintiff's damage. In this appeal, this Court must do its best with the unelaborated facts upon the basis of which we were asked to decide the matter. I cannot but think that 177 Reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ ("joint reasons") at [1]- [2]; reasons of McHugh J at [39]-[41]; reasons of Callinan J at [194]-[199]. 178 Joint reasons at [3]-[7]. 179 Joint reasons at [8]; reasons of McHugh J at [42]-[43]; reasons of Callinan J at 180 Woolcock St Investments Pty Ltd v CDG Pty Ltd (2002) Aust Torts Rep ¶81-660. 181 Joint reasons at [10]-[15]; reasons of McHugh J at [63]-[73]. 182 Joint reasons at [16]-[18]; reasons of Callinan J at [209]-[211]. Kirby this course of events has disadvantaged the party seeking recovery. When the boundaries of liability in negligence are pushed forward it is often because detailed evidence, adduced at trial, appears in its totality to call out for a remedy183 or to indicate that one is not appropriate184. The apparent reasonableness of the appellant's claim The nature of the claim: The appellant's claim is for economic loss said to be recoverable by a subsequent purchaser of a commercial building for the design of that building by the respondents or their supervision of its construction. The first respondent is a company of consulting engineers. The second respondent, a qualified civil engineer, was employed by the first respondent. The construction of the building took place between 1987 and 1988. It is at that time that the relevant acts and omissions of negligence were alleged to have occurred. The building contains warehouses and offices, with no residences. It is situated in the city of Townsville. That city abuts the Pacific coast of Queensland. It is a commonplace that buildings erected in the vicinity of water – including an oceanic coastline – are often liable to subsidence. It is elementary that such buildings often need special care in the design and placement of foundations. So it was to prove with the subject building. The appellant did not acquire the title to the building until September 1992. The substantial structural "distress" did not manifest itself until 1994. A defence based on s 10(1) of the Limitation of Actions Act 1974 (Q) was pleaded by the respondents. However, that plea was raised in the alternative to the more fundamental denial by the respondents that any cause of action against them was available in the circumstances pleaded. Putting aside any limitation period, and assuming that otherwise the appellant brought its proceedings in time after first becoming aware of the damage suffered by subsidence of the footings of the building, the notion that the respondents, as civil engineers, are liable in law for the ensuing loss to the appellant is not, on the face of things, surprising. At least it is not so in a legal system that provides remedies against those who are negligent and thereby cause damage to others in respect of whom they ought to have exhibited professional care. 183 As in Hill v Van Erp (1997) 188 CLR 159; Pyrenees Shire Council v Day (1998) 192 CLR 330; Perre v Apand Pty Ltd (1999) 198 CLR 180; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1. 184 As in Romeo v Conservation Commission (NT) (1998) 192 CLR 431. Kirby A commercial building, such as that in issue, is a large financial investment. Ordinarily, in contemporary Australia, one would expect that it would be built carefully with special attention by supervising engineers to the security and stability of its foundations. Such a building is obviously designed to have a certain life. That life may be described as "permanent" or "indefinite"; but at the least it would usually be envisaged that the building would last for more than 10 years without serious or fundamental defects: earthquakes, tidal waves and other unexpected events of nature aside. In the present case there was alleged to have been a latent defect, not readily discoverable by the appellant on reasonable inspection. This was alleged to have been caused by the negligent performance by the respondents of their professional duties. The latent character of the defect was a consequence of the very nature of foundations or footings in such a building. The appellant has no contractual relationship with the respondents. Accordingly, its only relevant legal entitlement against them lay in the law of tort – specifically the tort of negligence. The days are past when professional people could claim that their only duty to others was according to their contracts185. For duties to a larger range of persons, the other concurrent branch of the law of obligations, namely the law of tort, may be invoked. In this country, as in others, the law has increasingly moved away from accepting immunities from liability in negligence on the part of particular classes of professional people186. The nature of the respondents' defaults: The respondents proposed to the original developer that a site investigation by a competent expert should be undertaken. This would have involved the digging of auger holes at various locations of the site and the expert testing of soil samples, by inference, to ensure that the planned foundations were stable and carefully secured against subsidence. The original developer advised that it did not agree to pay for such geotechnical investigations. The respondents acquiesced in that decision. The building went ahead. Now the appellant, a subsequent purchaser, is confronted with evidence of subsidence. By inference, left unattended, this could in time cause direct injury to persons or property. The common law undoubtedly provides that a person who suffers physical injury as the result of defective design or execution of building work may sue in tort187. It would be anomalous if someone seeking to prevent such physical 185 See eg Hill v Van Erp (1997) 188 CLR 159 at 225-231 citing White v Jones [1995] 2 AC 207 at 223-224; Astley v Austrust Ltd (1999) 197 CLR 1 at 20 [44], 23 [48]. 186 Cattanach v Melchior (2003) 77 ALJR 1312 at 1348 [179]; 199 ALR 131 at 180. 187 Voli v Inglewood Shire Council (1963) 110 CLR 74. Kirby injury from happening could not recover the costs of doing so. Prevention is usually better than cure. In the words of the majority in Bryan188: "It is difficult to see why, as a matter of principle, policy or common sense, a negligent builder should be liable for ordinary physical injury caused to any person or to other property by reason of the collapse of a building by reason of the inadequacy of the foundations but be not liable to the owner of the building for the cost of remedial work necessary to remedy that inadequacy and to avert such damage." The appellant must now effect repairs. It seeks to recover the costs of doing so from the respondents whose acts and omissions it alleges were negligent in the circumstances. To the original developer's instruction not to proceed with soil tests, accepted by the respondents, the appellant has an answer. It says that this might be relevant to any claim in contract between the respondents and the developer or the builder who decided to proceed without the tests, although the respondents' professional experience had caused them to recommend such tests. But, as between the present parties, the appellant says that it is irrelevant to its claim in negligence. The respondents did not owe a duty of care only to the building supervisor, builder and immediate owner and initial occupiers of the building. They owed a duty to those, like the appellant, who within a comparatively short time, and within the reasonable contemplation of the respondents, acquired the building without knowledge of the latent defect. That defect arose from the conduct of the respondents in continuing to act as professional engineers, as they did, in respect of the building although an obviously important test, which they had recommended, had been refused. The acquisition of the building by a later purchaser, such as the appellant, was readily foreseeable. So was the reliance of such a purchaser upon the discharge by the respondents of a duty to observe professional care and skill in the design of the building and supervision of its construction. If the developer could control, and effectively veto, the conduct of proper structural tests, the appellant, in effect, asked: why bother to have a professional engineer at all? If the law excused the engineer from liability, it would encourage fly-by-night builders and nominee owners. It would relieve professional engineers of the very responsibility for which they were engaged. That responsibility was to ensure the safety of the building and to protect those who might be expected to purchase and use the building during a reasonable period after construction without having to search for, and correct, latent defects for themselves. 188 (1995) 182 CLR 609 at 628. Kirby Conclusion: an arguable claim: Looked at in this light, the argument of the appellant in support of its claim for recovery against the respondents is not unpersuasive. If upheld, not only would it redress a wrong which arguably arose as a foreseeable consequence of the respondents' acquiescence in the erection of the building without the structural tests that the respondents had proposed. It would also instil proper standards of professional engineering conduct. It would sanction unsafe building practices. It would encourage better building design and supervision. It would protect life, property and investments from the kind of unsafe conduct that allegedly occurred in this case. If the tort of negligence is ultimately concerned with moral issues such as fault and blameworthiness and the protection of those vulnerable from harm done by others who, legally speaking, are their "neighbours"189 – including in business contexts190 – the provision of a legal remedy to the appellant in its proceedings against the respondents would not, without more, be inconsistent with the purposes of the tort. Negligence law is a common law invention. Normally, it will offer solutions that will be considered fair and reasonable to the ordinary person. Courts such as this Court need constantly to remind themselves of this fact. Following the brief description of events set out in the case stated and pleadings, the appellant asked the ultimate question: would it not be fair and reasonable to hold the respondents liable to the appellant for their failure to foresee the likelihood of what so quickly ensued? Clearly, the legal obligation to persuade the Court of its entitlements rests upon the appellant. However, in the sequence of events described, it would not, in my view, be unreasonable to suggest that a forensic burden rests on the respondents to invoke a clear rule of law to exculpate themselves from liability for their apparent carelessness, with its readily foreseeable consequences. Most especially would this be so where the respondents seek summary relief in advance of a full trial of the issues. The proper approach to a pleading issue A particular consideration should be taken into account at the threshold. It is one that is enlivened by the way in which the issue comes before this Court. Because the appellant has not yet had a trial, at which all of its evidence might be adduced, and because the respondents assert an entitlement to an immediate 189 Todd, "Negligence and Policy", in Rishworth (ed), The struggle for simplicity in the law, (1997) 105 at 107-108. 190 Stapleton, "Comparative Economic Loss: Lessons from Case-Law-Focused 'Middle Theory'", (2002) 50 UCLA Law Review 531 at 559. Kirby termination of the action, the issue in the appeal should be approached in a settled and well established way. If there is any reasonable prospect that the appellant might be able to make good a cause of action, it is not proper for a court, in effect, to terminate the appellant's action before trial191. Where the law is uncertain, and especially where it is in a state of development, it is inappropriate to put a plaintiff out of court if there is a real issue to be tried192. The proper approach in such cases is one of restraint. Only in a clear case will answers be given, and orders made, that have the effect of denying a party its ordinary civil right to a trial. This is especially so where, as in many actions for negligence, the factual details may help to throw light on the existence of a legal cause of action – specifically a duty of care owed by the defendant to the plaintiff. The parties consented to the course adopted. However, this Court owes its duty to the law. Its decision in this case affects persons other than the parties. The two foundations of the appellant's action Analogous reasoning: past authority: It was common ground that no decision of this Court concludes the issue of whether a party in the position of the respondents owed a duty of care to a party in the position of the appellant. It follows that to discover and declare the law applicable to the case, this Court is, and the courts below were, obliged to reach a decision by reference to relevant legal authority and applicable considerations of legal principle and legal policy193. Neither party pretended in its submissions to this Court that authority alone resolved the appeal. In written and oral submissions, both parties, correctly, addressed the considerations of legal policy without which resolution of the appeal would be a barren and artificial exercise. To sustain its action against the respondents as conforming to the Australian common law of negligence, the appellant drew particularly upon two 191 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91. 192 See E (A Minor) v Dorset County Council [1995] 2 AC 633 at 694 per Sir Thomas Bingham MR; X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 740- 741; Barrett v Enfield London Borough Council [2001] 2 AC 550 at 557 per Lord Browne-Wilkinson; cf National Mutual Life Association of Australasia Ltd v Coffey & Partners Pty Ltd [1991] 2 Qd R 401 at 407. 193 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 252; Northern Territory v Mengel (1995) 185 CLR 307 at 347. Kirby lines of this Court's authority concerning the law of negligence and specifically the existence of a duty of care. These were (1) the decision in Bryan194, which concerned the liability of a negligent builder to a subsequent purchaser of a domestic dwelling; and (2) the decision in Perre v Apand Pty Ltd195, which concerned the liability of a neighbour for losses suffered by the growing of prohibited potato seeds on a nearby farm, resulting in economic loss. The principles in Bryan and Perre: The appellant argued that the principle in Bryan, read in light of Perre, was not as narrow as Australian courts and commentators had sometimes stated. Alternatively, if it was originally so, the appellant argued that the principle should be reformulated in this appeal, in the light of Perre, so as to uphold the existence of a duty of care on the part of the professional engineers to a subsequent purchaser of the subject building, although that building was a non-residential, purely commercial one and although the appellant's loss at this stage was solely economic. The appellant contested the proposition that an "extension" of the principle in Bryan was really necessary196 or that the holding in that case was limited, in terms, to the liability to subsequent purchasers of builders of domestic dwellings (and by inference other related persons including civil engineers). together with Toohey J, constituted In Bryan, Toohey J expressly confined his conclusion to a case relating to "the building of a house that is a non-commercial building"197. Such a precise limitation of application was not stated in the joint reasons of Mason CJ, Deane the majority. Nevertheless, it is difficult to read the joint reasons in that case in any other way. Not only was that the only factual circumstance considered in Bryan. There are many references throughout the joint reasons that indicate that it was this feature of the building in question that weighed most heavily in overcoming the considerations against upholding a duty of care, which Brennan J collected in his dissent198. Thus the joint reasons referred to the particular relationship between the builder of a dwelling house and its subsequent owners199; the fact that "in this 194 (1995) 182 CLR 609. 195 (1999) 198 CLR 180. 196 As suggested in the Court of Appeal: Woolcock St Investments Pty Ltd v CDG Pty Ltd (2002) Aust Torts Rep ¶81-660 at 68,794 [8] per McMurdo P, 68,799 [40] per 197 (1995) 182 CLR 609 at 665. 198 (1995) 182 CLR 609 at 645-648. 199 (1995) 182 CLR 609 at 624. Kirby country [such a house] is likely to represent one of the most significant, and possibly the most significant, investment which the subsequent owner will make during his or her lifetime"200; and that "the nature of the property involved, namely a building which was erected to be used as a permanent dwelling house, constitutes an important consideration supporting the conclusion that a relevant relationship … existed between … the builder … and …. a subsequent owner"201. On the face of things, therefore, the ratio decidendi in Bryan is concerned, and concerned only, with the duty of a builder (or like person) to subsequent purchasers of a dwelling house. Bryan establishes no wider principle; certainly none as a binding legal rule governing Australian courts; certainly not one binding until re-expressed by this Court or imposed by legislation. The defects of Bryan v Maloney and their repair Defects of the decision in Bryan: Certain features of the decision in Bryan are obviously unsatisfactory. The attempted expression of the holding in terms of a building of a particular kind is but the first of these. In Zumpano202, Brooking JA collected a long series of problems and uncertainties which such a factual discrimen created for those deciding later cases involving allegedly defective building works of various kinds. As some of his Honour's reasoning is described elsewhere, I will not repeat it203. It is enough to say, if I can be pardoned the expression, that the suggested point of distinction in Bryan presents a very shaky and unstable foundation for a viable legal principle that will answer the many later cases that arise where judges are entitled to expect clear and principled guidance. Unfortunately, in this respect, those judges look in vain to Bryan to show the way. That is not all. The decision in Bryan can also now be seen as resting on a defective doctrinal basis. The majority reasons are clearly anchored in the consideration of "proximity" as the propounded point of distinction between 200 (1995) 182 CLR 609 at 625 (original emphasis). 201 (1995) 182 CLR 609 at 630. 202 [1997] 2 VR 525 at 528-536. 203 Joint reasons at [16]; reasons of Callinan J at [202]-[203]. The reasoning of Brooking JA cuts both ways. The respondents used it to urge the overruling or confinement of Bryan as a flawed decision. The appellant used it to show that Bryan was correctly decided but that it needed to be placed on a broader, and more convincing, legal basis. Kirby cases where a duty of care was held to exist and cases where it was missing204. In this, I agree with what is written by the other members of this Court205. Proximity is not irrelevant as a factor in determining the existence of a duty relationship206. This is especially so if it is used as a synonym for the relationship of legal "neighbours". Indeed, this was the essential defect of the use of proximity as the conceptual determinant of the existence of a duty of care. It was question begging. It did little more than offer a legal fiction designed to state, in shorthand, Lord Atkin's neighbour relationship207. Proximity is not now accepted as a sole criterion for explaining when a duty of care exists at law208, any more than other attempted short verbal formulae can do that job: whether "reasonable foreseeability", "reliance", "assumption of responsibility" or existence of a "special relationship". Responses to Bryan's defects: The result of these defects of reasoning in Bryan led to various responses by the parties to this appeal concerning what the Court should do in relation to that decision. In summary, the parties severally submitted: That the Court should accept that Bryan constituted a wrong turning in the law of negligence, and should be overruled, and that the principle should be reinstated that there is no duty of care in negligence on the part of a builder or like professional for economic loss to any subsequent purchaser of a building, whether residential, commercial or otherwise209; That the Court should allow Bryan to remain as authority but effectively confined to its own facts210 or specifically treated as an 204 (1995) 182 CLR 609 at 617, 624-625, 627, 628, 663-665. 205 Joint reasons at [12]-[13], [18]; reasons of McHugh J at [66]-[70], [72]; reasons of 206 Perre v Apand Pty Ltd (1999) 198 CLR 180 at 210 [75], 284 [281], 300-301 [330]. 207 Donoghue v Stevenson [1932] AC 562 at 580. 208 Sullivan v Moody (2001) 207 CLR 562 at 578-579 [48]. 209 This appears to have been the view of Brooking JA in Zumpano v Montagnese [1997] 2 VR 525 at 528 although he was too polite to say so. 210 This was the view suggested by Clarke JA in Woollahra Municipal Council v Sved (1996) 40 NSWLR 101 at 134. Kirby anomalous exception to the general rule of no liability to subsequent purchasers, absent an express contractual stipulation. This was the primary way in which the respondents eventually argued the appeal. Various contentions of policy were advanced to support this view of authority, including the special vulnerability of residential home owners to latent defects that reasonable care would have prevented or repaired and that allegedly have no equivalent relevance to the investment decisions of purchasers of commercial buildings; and That the Court should accept the principle stated in Bryan so far as it goes but re-express it in a broader way, more consonant with subsequent decisions of the Court in cases of economic loss, and specifically Perre. Upon this basis, the appellant argued that the "salient features" of the case warranted acceptance of the proposition that the respondents owed a duty of care to the appellant for breach of which they would be held liable in negligence. Conclusion: need for new principle: Bryan has had its critics211. However, it has also had its defenders212. The latter have viewed Bryan as conformable with other developments of the law of negligence, as elaborated by this Court, including the protection of the vulnerable213. Indeed, the decision in Bryan is one of those described by Professor Stapleton as "fit[ting] well within the Atkinian mould of successful tort law-making [which is] the envy of tort commentators abroad". She has suggested that reversals of such decisions can be left to legislators on the basis of reports of inquiries rather than "judicial activism" instituting what she terms the "dramatic pro-defendant era in tort decisions" in this country in recent times214. 211 See joint reasons at [16]-[18]. 212 eg Stapleton, "The golden thread at the heart of tort law: Protection of the vulnerable", (2003) 24 Australian Bar Review 135 at 142. 213 Pilmer v Duke Group Ltd (In Liq) (2001) 207 CLR 165 at 217-218 [136.2]; Finn, "The Courts and the Vulnerable", (1996) 162 Law Society of the Australian Capital Territory Gazette 61. 214 Stapleton, "The golden thread at the heart of tort law: Protection of the vulnerable", (2003) 24 Australian Bar Review 135 at 140 referring to Luntz, "Torts Turnaround Downunder", (2001) 1 Oxford University Commonwealth Law Journal Kirby Bryan has stood for nearly a decade. It does not need to be reconsidered and overruled to reach a decision in the present appeal. Its reasoning is available for criticism and confinement or extension as new cases require. I would reject, as unnecessary, the application to overrule it. But, clearly, it does not, in itself, provide a solution to the present case215. The most that can be said is that Bryan leaves the law in an unsatisfactory state if a later home owner can recover for a latent and undiscoverable defect but a subsequent buyer of a commercial building cannot. This intuitive conclusion stimulates attention to later decisions of this Court to discover whether they provide a more satisfactory conceptual basis for resolving the issues in the appeal. This takes me to the decisions on the recovery of damages for economic loss and particularly to the Court's pronouncements on that subject in Perre and in Cattanach v Melchior216. But first a question is posed, as it was in Cattanach, as to how the appellant's case is to be classified. Is the present case one of "pure economic loss"? A contestable concession: In its written submissions, the appellant conceded that its claim was for pure economic loss. That may have been an unnecessary and incorrect concession. There is no doubt that the complaint which the appellant makes involves the demonstration of actual physical damage to its property. This is inherent in the allegation of subsidence and structural "distress" to its building caused by the allegedly inadequate and faulty foundations that the respondents approved and instituted. By inference, there is a risk that, without action on the part of the appellant to repair the specified defects, there will ultimately be physical injury to persons in or near the building, including employees of the owners or tenants and members of the public. Certainly, it can be inferred that physical damage to the foundations of the building itself could be proved. The "pragmatic"217 basis for the common law's restriction on the recognition of duties of care to prevent pure economic loss to others was a concern that such loss was liable to be open-ended, indeterminate, very 215 See reasons of McHugh J at [73]. 216 (2003) 77 ALJR 1312; 199 ALR 131. 217 Tame v New South Wales (2002) 211 CLR 317 at 329 [6]; Cattanach v Melchior (2003) 77 ALJR 1312 at 1342 [148]; 199 ALR 131 at 171-172. Kirby substantial and therefore prone to impose an undue burden on economic activity, to the great disadvantage of society218. Physical damage and indeterminacy: Where physical injury to a person or to property could be shown, much of the sting of indeterminacy is taken out of the common law's reluctance to permit recovery of economic loss. The case would not then be one of "pure" economic loss. This is one explanation of why the plaintiffs recovered economic loss in Perre. It is also an explanation of why the majority in Cattanach219 (decided after the present appeal was argued) rejected a view, expressed by the minority in that case220, that the claim there was unrecoverable as pure economic loss. The happening of the unplanned pregnancy in Cattanach dispelled the contention of indeterminacy. It made concrete the financial loss suffered by the parents who unexpectedly discovered that, despite the sterilisation operation and medical advice, the wife was again pregnant. In a similar way in this case, the allegation of actual damage to the appellant's building arguably makes its claim one that escapes the common law's resistance to recovery of pure economic loss. Despite its written submissions, the oral arguments of the appellant did not, in the end, as I understood them, disclaim such a contention221. I do not accept that earlier decisions bind this Court to a different conclusion. At the least, it should be open to the appellant to argue its case in such a way. It should not be denied the opportunity to do so at trial. Perre and Cattanach give it support. By the authority of this Court, the respondents would have been liable for damage to persons or property caused by a total collapse of the building222. To say the least, the distinction between the 218 The words of Cardozo CJ in Ultramares Corporation v Touche 174 NE 441 at 444 (1931) are normally cited, as they were by Brennan J in his dissent in Bryan. See also Perre v Apand Pty Ltd (1999) 198 CLR 180 at 267-268 [243]; cf joint reasons at [21]; reasons of McHugh J at [46]-[47]; reasons of Callinan J at [225]. 219 (2003) 77 ALJR 1312 at 1327 [67]-[68], 1342 [148]-[149], 1371 [300]; 199 ALR 220 (2003) 77 ALJR 1312 at 1316-1317 [19], 1319-1320 [30]; 199 ALR 131 at 136, 221 Woolcock Street Investments Pty Ltd v CDG Pty Ltd transcript of proceedings, 23 June 2003 at 14. 222 See eg Voli v Inglewood Shire Council (1963) 110 CLR 74. Kirby damages recoverable in such a case and the damages claimed by the appellant in the present case is not very persuasive223. The developing law on avoidance of economic harm Developing law on economic loss: A review of recent decisions shows that the law in this country concerning the duty to avoid causing economic loss to others is in a state of development. The original endeavour to confine the tort of negligence to cases which result in "danger to life, danger to limb, or danger to health"224 has given way in recent years to an increasing number of "exceptions" by which the existence of a duty of care and the acceptance of recovery have gradually been treated as separate from the different question of "the nature of the damage"225. The original rule wholly excluding recovery of pure economic loss has increasingly been recognised as capricious and unjust. Only this recognition explains such decisions as Hedley Byrne & Co Ltd v Heller & Partners Ltd226 and Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad"227. Nevertheless, as I pointed out in Perre228, crafting a different and convincing substitute rule that is viable and easy to apply has not proved easy. In Perre229 I favoured, as I did in many other cases before and after, the application of the three-fold test expressed by the House of Lords in Caparo Industries Plc v Dickman230 for deciding whether a duty of care existed in a particular factual situation, which the law of negligence would enforce. This approach requires consideration of reasonable foreseeability and proximity (in the sense of 223 See Bryan v Maloney (1995) 182 CLR 609 at 623 where the joint reasons described it as "essentially technical"; see also at 657 per Toohey J. 224 Old Gate Estates Ltd v Toplis [1939] 3 All ER 209 at 217. 225 Candler v Crane, Christmas & Co [1951] 2 KB 164 at 179 per Denning LJ (diss). 227 (1976) 136 CLR 529 at 576. 228 (1999) 198 CLR 180 at 268-275 [246]-[258]. See eg Pyrenees Shire Council v Day (1998) 192 CLR 330 at 419-420 [243]-[244]. See also reasons of McHugh J at 229 (1999) 198 CLR 180 at 275 [259]. 230 [1990] 2 AC 605 at 617-618 per Lord Bridge of Harwich; cf X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 749; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 626-627 [238]. Kirby "neighbourhood") without attributing to either of these factors the primacy accorded to them in the past and without turning either into a sufficient criterion for acceptance of a duty of care. Caparo also obliges a transparent consideration of the issues of legal policy that tend to favour, or reject, the imposition of a legal duty of care sounding in damages for a negligent breach. Since Perre231, I have been obliged by the holdings of this Court232 to abandon the Caparo approach for the time being. This is so although, in various guises, that approach continues to be applied in the final appellate courts of most Commonwealth countries. I cannot forbear to mention two features of more recent developments that lead me to nurture the hope that this Court may, even yet, come in time to endorse the Caparo approach. The first is the fact that Caparo continues to be observed in the courts of our region and beyond. Thus, in Pacoil Fiji Ltd v The Attorney General of Fiji233, decided since Sullivan v Moody234, the Supreme Court of Fiji Islands preferred to follow the Caparo approach in deciding whether a cause of action in negligence existed rather than to resort to whatever guidance the decisions of this Court could offer on that point. Our guidance, to say the least, is less than clear. It has driven trial judges and intermediate courts in Australia back to the original Atkinian idea that a duty arises from a "close relationship"235, opaque though that expression is. Alternatively, it has sent them searching for collections of "salient features" of the evidence or notions of "vulnerability", which are at best open-ended and somewhat confusing and at worst question begging. Relevant policy considerations: I would also point out that, doubtless influenced by the arguments of the parties, the reasons of the other members of the Court in the present appeal expressly address questions of legal policy, much as Caparo mandates. Callinan J states that "social policy … is a matter for parliament rather than the courts to weigh"236. With respect, this fits ill with what 231 In Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 624-627 [236]- 232 Most especially in Sullivan v Moody (2001) 207 CLR 562 at 579 [49] a case in which I did not participate. 233 Unreported, Supreme Court of Fiji Islands, 11 July 2003 per Gault, Mason and 234 (2001) 207 CLR 562. 235 Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1 at 8 noted in Perre v Apand Pty Ltd (1999) 198 CLR 180 at 253 [198]. 236 Reasons of Callinan J at [229]. Kirby all members of the Court did, and said, in Cattanach237. There Callinan J, in particular, remarked238: "I cannot help observing that the repeated disavowal in the cases of recourse to public policy is not always convincing … [I]t would be more helpful for judges frankly acknowledged their debt to their own social values, and the way in which these have in fact moulded or influenced their judgments rather than the application of strict legal principle." the resolution of the controversy Respectfully, I support these earlier remarks. I regard them as sustaining the transparent approach that Caparo favours for the resolution of the duty of care question. Wherever possible, I favour transparency in the legal process239. If regard is paid to the reasons of the other members of this Court in the present case, most especially those of McHugh J240, they come very close to the transparent weighing of policy considerations that Caparo required. Nevertheless, until this Court reconsiders its stand, I accept the obligation imposed on me by the authority of Sullivan to approach the issue in the appeal more obliquely, as the other members of this Court favoured in Perre. The approach in Perre: Two central considerations were identified in Perre as standing against the existence of a legal duty of care in negligence in cases involving economic loss. The first was that such a duty should not be accepted where it would impose liability for an indeterminate amount for an indeterminate time to an indeterminate class. Secondly, it was held that such a duty would not exist where, to impose it, would infringe the rights of others to protect, or pursue, their own legitimate social or business interests241. 237 (2003) 77 ALJR 1312; 199 ALR 131. 238 (2003) 77 ALJR 1312 at 1369 [291]; 199 ALR 131 at 209. 239 See eg Osmond v Public Service Board of New South Wales [1984] 3 NSWLR 447 at 462-464; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259-261; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 418-421; Wong v The Queen (2001) 207 CLR 584 at 621-622 [101]-[102]; Johnson v The Queen [2004] HCA 15 at [41]. 240 See reasons of McHugh J at [88]-[105]. 241 (1999) 198 CLR 180 at 192 [5] per Gleeson CJ, 199-200 [32]-[33] per Gaudron J, 204 [50] per McHugh J, 241 [168]-[169] per Gummow J, 289-290 [298]-[300] of my own reasons, 299-300 [329] per Hayne J, 322 [395], 324 [402] per Callinan J. Kirby This Court in Perre adopted an "incremental approach" in coming to its conclusion that a duty of care was established for the avoidance of the economic loss claimed in that case242. It emphasised the importance of considering all of the facts concerning the relationship between the defendant and the several parties claiming a duty of care243. What does such an approach produce in the present appeal? The principled application of the tests in Perre v Apand Pty Ltd Salient features: Various features typical of evidence in cases such as the present were highlighted by different members of the Court in Perre. Thus Gummow J244, in words reminiscent of those used by Stephen J in Caltex Oil245, described certain recurring features and arguments as "the salient features of the matter [which] gave rise to a duty of care". In his reasons, McHugh J identified five factors applicable to cases of economic loss. According to McHugh J, these were the reasonable foreseeability of the loss; the avoidance of indeterminate liability; the protection of the autonomy of individuals; the vulnerability to risk; and the extent, if at all, to which the defendant knew of the risk and of its magnitude246. I do not take the other judges in Perre to have adopted an approach significantly different from these. In this case, McHugh J has knocked the "floodgates" argument on the head247. Reasonable foreseeability: If the considerations mentioned by McHugh J in Perre are applied to the present case248, there can be no doubt that, at least arguably, the loss allegedly suffered by the appellant was reasonably foreseeable by the respondents. After all, the respondents had suggested expert ground tests, presumably for a purpose. That purpose was arguably to avoid the erection of a building with the problem of subsidence that is now alleged to have transpired. They agreed to, or acquiesced in, the decision of someone else (against which they may have their own legal remedies) not to proceed with the tests. If there is subsidence and instability in the building, it was not only reasonably foreseeable to the respondents. The risk was actually foreseen. 242 See Perre v Apand Pty Ltd (1999) 198 CLR 180 at 217 [94]. 243 cf Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 569. 244 Perre v Apand Pty Ltd (1999) 198 CLR 180 at 253 [198]. 245 (1976) 136 CLR 529 at 576. 246 Perre v Apand Pty Ltd (1999) 198 CLR 180 at 219-220 [102]-[105]. 247 Reasons of McHugh J at [97]. 248 cf reasons of McHugh J at [74]-[87]. Kirby Indeterminate liability: The liability of the respondents propounded in the case is not indeterminate. Nor are the members of the class affected unascertainable. They are members of the class of future owners and users of the building during the period that the building might reasonably be expected to survive who could be damaged by the respondents' failure to insist on the conduct of ground tests against the risk of subsidence evident within a reasonable time. Exposure to liability was not, on the appellant's proposition, open-ended in terms of time. The appellant disclaimed the assertion of a duty of unlimited or indefinite duration. It submitted that all such claims would, as a maximum, be subject to the applicable limitations statute. That statute would, on the face of things, ordinarily be enlivened by the appearance of a defect in the building "so obvious, that any reasonable homeowner would call in an expert"249. Autonomy: Nor would it unduly interfere in the commercial freedom of the respondents to uphold a duty of care. They were already under a clear duty of care to the original owner. The content of that duty in respect of the appellant would not be different. The only question is whether the duty is taken to have been terminated at the happening of a causally irrelevant event, namely the sale of the building to its first and subsequent purchasers. As such sale might have occurred within a very short time, or after a comparatively long interval (over which the respondents had no control, and which they could not foresee), the termination of their liability by reference to such an event is arbitrary, capricious and unreasonable. It does not, therefore, control the duration and scope of the respondents' professional liability according to the common law of negligence. Such liability depended on considerations more closely connected with the nature and foreseeable consequences of the professional conduct of the respondents as civil engineers. Vulnerability: The vulnerability of the appellant arises from the circumstances of the case. Vulnerability is not confined to cases of poverty, disability, social disadvantage or relative economic power as the majority suggest250. It extends to those who, like the plaintiffs in Perre, might be carrying on a profitable economic enterprise but who are exposed to an insidious risk by the acts of others about which they were unaware and against which they could not reasonably protect themselves. That is also the case here. I accept that the capacity of an entity to protect itself and its interests is an important factor in determining vulnerability. However, it is not the only one. In a commercial context there may be many more to be considered – assumption of 249 Invercargill City Council v Hamlin [1996] AC 624 at 648 (PC). 250 cf Hodgkinson v Simms [1994] 3 SCR 377 at 412; reasons of McHugh J at [80]. Kirby risk, known reliance and commercial pressures, to name but a few. With the benefit of hindsight it is easy to suggest that an entity should have protected itself. However, courts should be reluctant to assume that a commercial entity lacked vulnerability simply because of its commercial character. In the way the present case proceeded, there is no evidence as to the negotiations that took place in relation to the purchase of the property. Evidence at trial might disclose that pressure was placed upon the appellant or that some degree of urgency in the purchase made the appellant vulnerable to the undisclosed defect. There is no evidence that suggests that the appellant constituted a large commercial enterprise with large resources, skill or experience. In my view, it is a mistake to assume that the appellant possessed such characteristics. No doubt the pre-purchase tests that the majority have suggested should have been carried out, would have involved great expense. McHugh J suggests that an entity might be vulnerable to risk as a result of "economic constraints"251. There is no evidence on that point one way or the other. There is no guarantee that tests would have disclosed latent defects in the building. The majority suggest that the appellant could, and should, have obtained contractual warranties from the vendor. Again, there is no evidence to suggest that the appellant had any reason to negotiate such warranties. It is dangerous to assume that, simply by virtue of the commercial character of the entity (or the premises), warranties should have been sought, still more that they would have been agreed to. The very nature of building foundations is that, once put in place, they tend to be concealed by the superstructure of the building erected above them. That was so in the appellant's building. It was still a comparatively new structure. It was a very valuable asset in a regional city. It had been erected under the supervision of professional engineers. The appellant would normally have had no reason to suspect that it was otherwise than properly built upon stable and secure foundations as professionally advised. Its tendency to subside was latent. In my view, the suggestion that the appellant or its solicitor should have obtained an express warranty involves a great deal of wisdom after the event. Such an answer could be proffered in virtually every instance of economic loss and many cases of physical and property damage as well. It cannot represent a general rule of liability exclusion. The negligence of the respondents, so it is said, involved wisdom before the event. The possibility of other remedies and other precautions involving other persons is ultimately irrelevant. The appellant was vulnerable because of the fact that it had no reasonable intermediate 251 Reasons of McHugh J at [80]. Kirby opportunity of discovering, and protecting itself against, the latent defect of which it now complains252. That defect was under the ground and beneath the building. According to the pleadings, it only became known to the appellant when the "distress", which the defect caused to the building, first began to manifest itself in outward signs. Knowledge: The respondents knew, or ought to have known, of the risk to the owner and the consequences of that risk's occurring253. That was the very reason why the respondents had been retained as civil engineers to provide their professional services for the erection of the building. The fact that they recommended special tests indicates that they appreciated that a risk of subsidence existed. That precise risk is now alleged to have manifested itself. Conclusion: a viable case: The preconditions for the existence of a duty of care stated in Perre are therefore made good, certainly on the basis of the reasonable arguability of the appellant's pleaded cause of action. The appellant should have its opportunity at trial, by evidence and argument, to establish that a duty of care existed and was breached in the circumstances. In the state of the authorities of this Court, it cannot be said that the appellant is bound to fail. No insuperable barrier of legal authority exists because of the suggestion that the appellant's claim is, or is substantially, to be classified as one for economic loss. No principled barrier could exist because the appellant is a corporation or because its investment was in a commercial building. Other considerations confirm the duty of care Consumer legislation is irrelevant: In so far as it is relevant to consider issues of legal principle or policy raised in other reasons (as Caparo would certainly require), I will do so briefly for they confirm the conclusion that I have reached by applying the approach taken by this Court in Perre. It is true that in some, but not all, Australian jurisdictions special legislation has been enacted to provide forms of protection for first purchasers of domestic dwellings but not for other, or later or different, purchasers254. It is natural that, as part of consumer protection, legislatures should enact popular laws of such a kind. However, such laws do not exclude the residual operation of the common law in other instances. Least of all do they do so in a case, such as 252 cf Kriegler v Eichler Homes Inc 74 Cal Rptr 749 at 752-753 (1969). 253 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 254 Joint reasons at [35]; reasons of Callinan J at [233]. Kirby the present, which is different from Bryan and upon which this Court has not previously pronounced. There is nothing in the legislation mentioned by the respondents that contradicts the application of established common law principles to the facts propounded by the appellant. It is entitled to have its claim decided in the same way as Perre was decided, on its legal merits by the application of the same general principle. Caveat emptor is irrelevant: The "defence" of caveat emptor is, with respect, irrelevant255. It is, or may be, a defence to any claim that the appellant sought to assert against the vendor from which it purchased the building. However, it is no answer to the appellant's claim in tort against the respondents. The fact that the appellant might have sought a warranty from the vendor is also irrelevant. Why should the appellant reasonably have anticipated a need to obtain such a warranty in a building so recently erected under professional engineering supervision? Would a vendor, and especially a vendor which was itself a later purchaser, have conceivably been willing to give it? What is the usual commercial practice in the purchase of such commercial buildings? Especially where a party is being effectively deprived of its ordinary entitlement to trial of its claims, this Court errs in assuming that the provision of warranties to later purchasers of commercial buildings is either commonly sought or given. Yet substantially on the basis of that possibility, the appellant is put out of court256. The appellant's complaint in law is against the professional civil engineers. It is not against the previous owner or owners. Local authority tests are irrelevant: The fact that the appellant's solicitors conducted routine enquiries of the local government authority257 is also irrelevant. Those tests did not, by the terms of the applicable statutes, extend to – nor could they have been expected to include – tests for a latent defect in the foundations of the building. As I have said, the very complaint that the appellant makes against the respondents is that their conduct had the effect of concealing the resulting defect for a time, until objective signs elsewhere in the building began to disclose the subsidence, necessitating repairs. Applying limitations law: It is suggested that allowing claims against building professionals for latent defects in buildings which they design, supervise or build will subvert any statute of limitations and the policy behind such statutes because the cause of action will not arise until the damage manifests itself, 255 Reasons of Callinan J at [227]. 256 cf Winnipeg Condominium Corporation No 36 v Bird Construction Co [1995] 1 SCR 85 at 126-128 per La Forest J. 257 Reasons of Callinan J at [212]. Kirby possibly many years later258. It is said that this would have a serious and unfair effect on the conduct of such building professionals. In my view, such considerations of delay can be adequately dealt with when a court decides the appropriate standard of care and whether there has been a breach of duty in the circumstances. It is not determinative of the question of whether a duty of care is imposed by the law. If the damage does not manifest itself for many years, this will often have a direct bearing on the standard of care of the builder, architect or engineer259 and also on whether there has been a breach. It will often suggest that the work was carried out to the appropriate standard and thus that no liability arises. In any case, if there is negligence it is unfortunately the nature of the services that such building professionals provide that defects can sometimes manifest themselves years later, with very serious economic and other consequences for those affected. If that is part of the risk of performing such professional building services, those who are neglectful of their duties should not escape ordinary liability which includes the operation of the normal statute of limitations. Otherwise, for a consequence that would ordinarily flow from proved negligence, the statute of limitations is elevated to a new and larger effect than its words provide in shaping the existence of the duty of care. This presses the statute to a protection beyond its language or proper purpose. Applying the incremental approach: I accept that an "incremental approach" is required by authority. However, it is not enough to demand such an approach260. The holding that the professional engineers were liable to the appellant in the circumstances of this case is as incremental as was the decision of this Court in Perre. The criterion of incrementalism is, in any case, rather unhelpful. It simply means that a global approach, as suggested by Caparo, is not accepted. Instead, this Court has elected to proceed from instance to instance, in search of an ultimate principle that, at this time, we can only perceive imperfectly. 258 Reasons of McHugh J at [102]-[105]. 259 As to the standard of care of architects see Voli v Inglewood Shire Council (1963) 110 CLR 74 at 84 per Windeyer J. The same principle applies to engineers: Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners [1975] 1 WLR 1095 at 1101 (CA); [1975] 3 All ER 99 at 104-105. 260 Reasons of Callinan J at [214]; cf Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 481; Caparo Industries Plc v Dickman [1990] 2 AC 605 at 617-618. Kirby Proved negligence and investors' rights: The fact that the appellant is an investor for economic reward is also irrelevant261. The appellant is entitled to equal justice and the neutral application to its case of applicable legal principles. Equality before the law is a postulate of the rule of law. There is now no absolute rule against the existence of a duty of care even in a case of pure economic loss – assuming this to be such a case. The appellant is an entrepreneur; but none the worse for that fact. It seeks a profit; but that is its legal duty to its shareholders. Corporations such as the appellant are not outside the protection of the tort of negligence. The appellant, like the plaintiffs in Perre, is entitled to invoke the courts for the ascertainment and enforcement of its legal rights. Particularly where the applicable law is in a state of development, this Court should not jump to a conclusion that the appellant's case would not be reasonably arguable once all the evidence is adduced at a trial. Overseas authority favours a duty of care The trend in overseas courts: To the extent that it is relevant in matters such as this to endeavour to uphold similar principles of negligence in Australian law to those observed in other common law countries, the decisions called to notice by the parties evidence the same divisions of judicial opinion as exist in this Court in this appeal. In England, the House of Lords in Murphy v Brentwood District Council262 adopted an approach supporting some of the propositions of the respondents, essentially for pragmatic reasons. However, as with all arbitrary rulings, the decision, reversing the earlier authority in Anns v Merton London Borough Council263, has not been universally applauded. Recent decisions of the English courts have upheld the assertion of a duty of care to a subsequent purchaser of a building by a design architect, where the claim involved (as here) damage to the building itself rather than only damage to other property264. The decision in Murphy has not been followed in Canada where the courts have generally adhered to the approach adopted by the House of Lords in Anns265. That case was the progenitor of the Caparo approach. In Winnipeg 261 Reasons of Callinan J at [206]. 264 Bellefield Computer Services v E Turner & Sons Ltd [2003] Lloyd's Rep PN 53; Sahib Foods Ltd v Paskin Kyriakides Sands (a firm) [2003] Lloyd's Rep PN 181. 265 [1978] AC 728. See City of Kamloops v Nielsen [1984] 2 SCR 2 noted in Bryan v Maloney (1995) 182 CLR 609 at 648-651. Kirby Condominium Corporation No 36 v Bird Construction Co266, the Supreme Court of Canada unanimously held that this approach resulted in a conclusion that a building professional owed a duty of care to a subsequent purchaser of the building for economic loss caused by the need to repair the building which contained defects posing a "substantial danger to the health and safety of the occupants". In New Zealand, before the abolition of appeals to the Privy Council, the courts upheld the duty of care by builders to subsequent purchasers. The principle was recognised in Bowen v Paramount Builders (Hamilton) Ltd267. That was a case of a domestic dwelling. It was decided before this Court's decision in Bryan. After the decision of the House of Lords in Murphy, the New Zealand courts continued to apply the approach in Anns, modified in ways similar to the Canadian approach. This was a course of judicial independence in which the Privy Council acquiesced, as appropriate to the different direction that had been taken by the New Zealand common law268. In Malaysia, the courts have declined to follow the approach of the House of Lords in Murphy269. So has the Singapore Court of Appeal270. Within the courts of high authority in the Commonwealth of Nations, the decision of this Court in the present appeal will therefore appear as one that is out of step with majority judicial opinion. As noted by Brennan J in Bryan271 and Thomas JA in the Court of Appeal in this case272, in the United States of America there have been many voices. No 266 [1995] 1 SCR 85 at 121 [43]. 267 [1977] 1 NZLR 394. 268 Invercargill City Council v Hamlin [1996] AC 624. See reasons of McHugh J at 269 Dr Abdul Hamid Abdul Rashid v Jurusan Malaysia Consultants [1997] 3 MLJ 546 (High Court); see also Arab-Malaysian Finance Bhd v Steven Phoa Cheng Loon [2003] 1 MLJ 567 (CA) where reasonable foreseeability appears to have been adopted as the critical test. 270 RSP Architects Planners & Engineers v Ocean Front Pte Ltd [1996] 1 SLR 113; RSP Architects Planners & Engineers v Management Corporation Strata Title Plan No 1075 [1999] 2 SLR 449. 271 (1995) 182 CLR 609 at 651-652. 272 Woolcock St Investments Pty Ltd v CDG Pty Ltd (2002) Aust Torts Rep ¶81-660 at Kirby clear trend has emerged. For example, the divided opinion of the Supreme Court of California in Aas v Superior Court273 shows how universal this legal problem is for all jurisdictions of the common law. At least in my opinion, the dissentients in Aas274 had the better of the argument. George CJ described the conclusion of the majority as an "unfortunate misstep in the development of the law"275; a description I also adopt in relation to the views of the majority of this Court in this appeal. Regional and global consistencies: Wherever precisely the cards fall in the present state of American decisional law, the trend of authority elsewhere, on the whole, lends support to the appellant. In the global and regional economy that is such a feature of the present age and in which Australian investors and civil engineers must now compete, it is undesirable that we should adopt a more restrictive right of recovery whilst our businesses elsewhere are subject to a larger legal duty. At the least, the trend of the case law reinforces the conclusion that the law on this subject remains in a state of active development. That affords further reinforcement for my view that the respondents should be denied what is effectively summary relief. The appellant should be allowed the ordinary facility of a trial of its claim on the basis of all of the relevant evidence that it can adduce. Conclusion and orders The appellant has established error on the part of the Court of Appeal whose orders have the effect of denying it a trial of its action against the respondents. As a matter of law, such a trial would not be futile. The appeal should be allowed with costs. The orders of the Supreme Court of Queensland (Court of Appeal) should be set aside. In place thereof, the question set out in the case stated should be answered "yes". The proceedings should be returned for trial. The respondents should pay the appellant's costs in the Supreme Court of proceedings to date. 273 12 P 3d 1125 (2000). 274 George CJ and Mosk J. 275 12 P 3d 1125 at 1156 (2000). This is an area of the law where "wrong turning[s]" are endemic, as Lord Bridge of Harwich acknowledged in Caparo Industries Plc v Dickman [1990] 2 AC 605 at 619 by reference to Le Lievre v Gould [1893] 1 QB 491. After that decision it took 70 years to be set once again on a "right path". This occurred in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, upholding Denning LJ's dissent in Candler v Crane, Christmas & Co [1951] 2 KB Callinan CALLINAN J. This is a case stated. The principal question that it raises is whether a professional engineer who negligently designed the structure of a building for use as offices and a warehouse is liable for economic loss to a subsequent purchaser of the building. Facts The building has no residential component. Its construction was undertaken by two joint venturers. The second respondent was an engineer employed by the first respondent. The first respondent undertook for payment the design and supervision of the complex. No geotechnical inspection of the site was undertaken before the construction began. This was so because one of the joint venturers was unwilling to meet the cost of it although by implication, at the very least, the respondents must have thought it desirable. The case stated records that, "[t]he routine civil structural supervision by [the first respondent] included routine civil/structural supervision of the construction of the foundations of the Complex." Construction started in the middle of 1987 and was completed by about the end of that year. In September 1992, the appellant, Woolcock Street Investments Pty Ltd, bought the property on which the building stood, from Permanent Trustee Company Limited, a company which had replaced one of the joint venturers, under a contract which contained no warranty that the building was free of defects, and effected no assignment of such rights (if any) as the vendor might have had against third parties, including the respondents, in respect of any structural defects. Before buying, the appellant's solicitors requested the Townsville City Council to make a physical inspection of the building. The Council did so on 18 June 1992 and gave a report to the appellant on 7 July 1992. The Council qualified its report as follows. "Reference is made to your request dated 12 June 1992 for an inspection of this property. I have treated this request as relating to matters arising under the 'Building Act 1975' and the 'Standard Building Bylaws' and to such matters only. Should you wish the inspection to encompass other matters, it will be necessary for you to specify these matters and to pay the appropriate further inspection fees. However, matters of, for example, encroachments, or termite infestation are not covered by this inspection. You should consult a licensed surveyor in the case of encroachments, or an appropriately qualified person in the case of termite infestation. Callinan The property has been inspected under the following headings: Unauthorised structures, alterations or additions. (Section 52) Unsafe or dilapidated buildings or structures. (Section 53) Other matters arising under the Act or Bylaws." The report referred to a number of unauthorized additions and changes to the complex. It did not identify any unsafe or dilapidated structures, or indeed hint at any matters of structural concern. An inspection and report by a plumber in relation to the roof similarly pointed to no serious defects in the building. By 1994, however, structural distress by way of settlement began to manifest itself. The appellant sued the respondents in the Supreme Court of Queensland in negligence. The primary judge, Atkinson J ordered that a case be stated. It was in the form that I have summarized, and came on for hearing before the Court of Appeal of Queensland (McMurdo P, Thomas JA and Douglas J) in early 2002. The case was treated, and correctly so, as a case of pure economic loss. There it was argued by the respondents that the principle stated in Bryan v Maloney276 was confined in application to single dwellings. The argument was generally accepted by Thomas JA (who gave the leading judgment) on the basis that Bryan v Maloney rests heavily on notions of vulnerability, of a special vulnerability of members of the public who buy single dwelling houses. This was so, even though, as his Honour said, houses may on occasions be bought by commercial investors. His Honour was influenced by two other factors: that the remedy, if there were any, was available either under current legislation, or, if it were not, should only become available in accordance with specific legislative provision for it because of the underlying economic and social factors relating to an action of this kind and home ownership generally. The other matter which affected the reasoning of Thomas JA was that to enable the appellant to sue here would have the effect of granting to all purchasers in a line of purchases, a transmissible warranty of quality of indefinite duration. Douglas J agreed with Thomas JA as did in substance McMurdo P. It was accordingly held that the stated case should be answered adversely to the appellant, that is, no. 276 (1995) 182 CLR 609. Callinan The appeal to this Court The appellant's arguments The appellant first submitted that a subsequent purchaser of premises is not absolutely precluded from recovering damages in the nature of pure economic loss from a building professional who was negligent in the design or supervision of a building premises, merely because the design is adapted to a commercial application rather than a residential one: that the building may or may not be a permanent dwelling house, although undoubtedly a relevant matter, is not a conclusive one. In the case of a commercial building – to adapt the words of Mason CJ, Deane and Gaudron JJ in Bryan v Maloney277 – it is plainly foreseeable by any engineer that the construction of a negligently designed building will be likely to cause economic loss to its owner at the time when the inadequacy of the design becomes manifest. There is current authority that would make the engineer liable for physical damage to any person or other property caused by the collapse of the building278, whether it was a commercial building or not279. Any distinction between damages caused in those circumstances and those claimed in the present case is artificial and is not, it was submitted, justified280. The appellant's submissions continued, that to treat the potential for liability as limited to a "permanent dwelling house", and not applicable to other buildings gives rise to significant definitional issues. Many Australians do not reside in a simple, single dwelling house on one allotment. To highlight the anomalous state of the law on the basis of the holding of the Court of Appeal the appellant called in aid some observations of Brooking JA in Zumpano v Montagnese281: (ii) Does Bryan v Maloney apply not only to dwelling houses in the narrow sense but also to other dwellings, for example, 277 (1995) 182 CLR 609 at 625. 278 Voli v Inglewood Shire Council (1963) 110 CLR 74. 279 The hall in Voli was being hired out at the time. 280 In Bryan v Maloney (1995) 182 CLR 609 at 623 Mason CJ, Deane and Gaudron JJ described it as "essentially technical"; Toohey J at 657 regarded the classification of the loss as pure economic loss as "debatable". 281 [1997] 2 VR 525 at 528-529. Callinan residential apartments in a multi-storey development, like the building in Opat v National Mutual Life Association of Australasia Ltd282? Does it apply to 'mixed' buildings, like a shop and dwelling or a building comprising a dwelling and commercial art gallery or a general practitioner's residence combined with surgery? In the case of a 'mixed' building, if the decision is applicable, then does it apply to the whole building, or only to the residential part of it, or does the answer to this question depend on some such notion as that of 'dominant use'? (iii) Does the decision apply to dwellings which are not the principal residence of the purchaser, for example, an apartment in or near the city for occasional use, or a holiday home? (iv) What if the value of the dwelling is only a small part of the total value of the house and land, as where a modest dwelling is bought which stands on a very large piece of land or on land which is, by reason of its location, exceptionally valuable? What of a house forming part of a large rural property stocked with cattle or used for viticulture? What of a rural property with two houses, one intended for occupation by a manager? Do the houses in the last two examples answer the description of Toohey J283, 'a house that is a non-commercial building'? If the decision is not confined to houses, or to houses and other dwellings, then to what other buildings does it apply? The joint judgment284 left open the position of buildings other than permanent dwelling houses, while Toohey J, as just mentioned, limited his decision to 'a house that is a non-commercial building'. In Western Australia, Malcolm CJ has accepted the existence of a duty of care to a subsequent occupier on the part of the builder of a commercial greenhouse285." 283 Bryan v Maloney (1995) 182 CLR 609 at 665. 284 Bryan v Maloney (1995) 182 CLR 609 at 630. 285 CAI Fences Pty Ltd v A Ravi (Builder) Pty Ltd unreported, Supreme Court of Western Australia, 27 December 1990. Callinan The questions raised by Brooking JA do not, as will appear, exhaust the catalogue of questions and anomalies to which the decision in Bryan v Maloney gives rise. The appellant also seeks to rely on some statements in the judgments of this Court in Perre v Apand Pty Ltd286, in particular in the reasons of McHugh J. It urged that some language of his Honour there could readily be adapted to this case. Six propositions were advanced as relevant. Conditions of the kind referred to in that case were present here. The losses suffered by the appellant were a reasonably foreseeable consequence of the respondents' failure to design appropriate foundations and supervise the construction of them. The appellant is a member of a class of subsequent owners of premises from time to time whose membership was readily ascertainable by the respondents. The appellant's business was vulnerably exposed to the respondents' conduct because the appellant was not in a position to protect itself against the effects of the respondents' negligence. The imposition of a relevant duty on the respondents does not expose them to "indeterminate" liability. Nor does it unreasonably interfere with their commercial freedom because they were already under a duty of care to the original owner to take reasonable care. And the respondents knew or ought to have known of the risk to the owner of the building from time to time, and the consequences of the realization of that risk. The imposition of such a duty is unobjectionable in principle, or on grounds of policy. The approach of the Court of Appeal was based, at least in part, upon the assertion that the vulnerability of purchasers of commercial premises may be thought to be significantly less than that of purchasers of dwelling houses. That assumption is not justified. Commercial purchasers, in appropriate circumstances, may be just as vulnerable as residential purchasers. Why is a sole trader, the appellant asks, who purchases a building from which to operate a business, more vulnerable in purchasing a dwelling house than in purchasing commercial premises? The distinction between a purchaser of residential premises and of commercial premises is in reality no more than arbitrary. A finding that a duty of care is owed is efficient and encourages responsible commercial and professional behaviour. As to the respondents' suggestion that the appropriate way for a buyer to protect itself is to obtain a contractual warranty, the appellant's answer is that a vendor who is liable would almost certainly join the negligent professional responsible for the defect: in consequence, the loss would ultimately be borne by the same party, but only after additional legal costs (incurred by the seller) are expended. 286 (1999) 198 CLR 180. Callinan Reasoning I am unable to accept the appellant's submissions for several reasons. The joint judgment of Mason CJ, Deane and Gaudron JJ in Bryan v Maloney repeatedly emphasized that it was because the Court was concerned with a dwelling house and purchaser of it287 that their Honours were drawn to the conclusion that they reached. Their Honours also made assumptions including that a purchaser, in buying a dwelling house in this country is probably making the most significant investment that he or she will make in a lifetime288. Others were that "a subsequent owner is likely to be unskilled in building matters and inexperienced in the niceties of real property investment."289 With respect, I think that what was said by Brennan J in Bryan v Maloney is more persuasive290: "It would be anomalous to have claims relating to the condition of the building by an original owner against the builder determined by the law of contract if the relief claimed by the remote purchaser against the builder would be determined by the law of tort. Such a situation would expose the builder to a liability for pure economic loss different from that which he undertook in constructing the building and would confer a corresponding right on the remote purchaser which the purchaser had not sought to acquire from the vendor291. It would be tantamount to the imposition on the builder of a transmissible warranty of quality. In some jurisdictions, Parliament has provided such a remedy by statute. The social question whether building costs should be inflated to cover the builder's obligation under such a transmissible warranty is an appropriate question for parliaments to consider but, in the absence of compelling legal principle or considerations of justice reflecting the enduring values 287 (1995) 182 CLR 609 at 625-627. 288 (1995) 182 CLR 609 at 625. 289 (1995) 182 CLR 609 at 627. 290 (1995) 182 CLR 609 at 644. 291 See Winnipeg Condominium Corp No 36 v Bird Construction Co (1993) 101 DLR (4th) 699 at 711. The observation of Huband JA with reference to "caveat emptor" is apposite to a remote purchaser's rights in respect of mere defects in a building. The decision of the Manitoba Court of Appeal was reversed by the Supreme Court which considered the defects to be a substantial danger to the health and safety of the occupants: [1995] 1 SCR 85. Callinan of the community, the courts should not decide to extend remedies not hitherto available to remote purchasers of buildings without considering the cost to builders and the economic effect of such an extension. Those are questions which the courts are not suited to consider. The extension of remedies in that direction is properly a matter for Parliament." I regard myself as free to adopt that passage in this, a case of a commercial structure, to which it has in my opinion, a particular relevance, even though his Honour's judgment was a dissenting judgment. This case is distinguishable from Bryan v Maloney, and, if the appellant's claim here were to be allowed, would represent a marked and unwarranted extension of it. There is in my respectful opinion, in any event, reason to question the correctness of Bryan v Maloney itself. It was decided at a time when the jurisprudence of this Court in cases of tort was more heavily influenced by notions of proximity292 than it currently is. But it is not for that reason only that I would question its correctness. Neither the appellant here, nor indeed a purchaser of any premises, whether a dwelling or otherwise, is especially vulnerable, and unable to protect itself as the appellant contends. Here the appellant chose to seek an inspection and report by the local authority under s 53 of the Building Act 1975 (Q) which provided as follows: "Building etc dangerous, neglected or unfit for use or occupation 53 (1) If in the opinion of a local authority formed on reasonable grounds any building or other structure or any part of a building or other structure is dangerous, the local authority may, subject to section 54, by notice in writing, require the owner of the building or structure to do any 1 or more of the following:- shore-up or otherwise secure such building or structure or part; erect a proper hoarding or fence for the protection of persons using any road, path or way upon which the building or structure or part abuts; demolish or take down the building or structure or part; repair the building or structure or part; 292 See for example (1995) 182 CLR 609 at 625 per Mason CJ, Deane and Gaudron JJ. Callinan remove the building or structure or part; as the local authority directs within the time specified in the notice. (2) If in the opinion of a local authority formed on reasonable grounds any building or other structure or any part of a building or other structure is a ruin or so far dilapidated as to be unfit for use or occupation or is, from neglect or other cause, in a structural condition prejudicial to the inhabitants of or to property in the neighbourhood, the local authority may, subject to section 54, by notice in writing, require the owner of the building or structure to do any 1 or more of the following:- demolish the building or structure or part; repair the building or structure or part; remove the building or structure or part; fence the land on which the building or structure or part stands; repair any fence that encloses or is on that land; secure the building or structure or part; within the time specified in the notice. (3) If in the opinion of a local authority formed on reasonable grounds any building or other structure or any part of a building or other structure is in a filthy or dilapidated condition, or is infected with disease, or is infested with lice, bugs, rats or other vermin, or is improperly constructed, or from any other cause is unfit to be used or occupied, the local authority may, subject to section 54, by notice in writing, require the owner of the building or structure to do any 1 or more of the following:- demolish the building or structure or part; cleanse, purify and disinfect the building or structure or part so as to make it fit to be used or occupied; repair the building or structure or part so as to make it fit to be used or occupied; alter the building or structure or part so as to make it fit to be used or occupied; remove the building or structure or part; Callinan within the time specified in the notice. (4) If an owner of a building or other structure to which a notice given to the owner under any provision of this section relates fails to comply with such notice, then:- the local authority may itself cause such steps to be taken and such things to be done as it has, by the notice, required the owner of the building or structure to take or do; and the owner commits an offence against this Act. (5) A notice under this section must state that the person to whom it is given has a right of objection under section 57." It may be, as counsel for the appellant accepts, that the failure of the Council here to discover the defective state of the foundations, could arguably give rise to a right of action against the local authority. The real point however is that a purchaser does have several means of protecting itself, one only of which may be by the obtaining of a report by a local authority. Insistence on a warranty, or condition of fitness or soundness, or the seeking of an inspection and report by an expert, who by making them, will become liable if negligent in not discovering and reporting relevant defects, are others. It is true, as both Brooking JA in Zumpano293 and Thomas JA in this case294 pointed out, that some cases will involve buildings of mixed residential and commercial uses, that the purchase of a small commercial building with or without a dwelling attached, may itself be a major, indeed the most significant investment by a purchaser in his or her lifetime, and that therefore lines of demarcation of cases of liability may not be able tidily and without anomaly to be drawn. The law is not in other areas295 without anomalies. The guarded, incremental approach of the courts to cases of economic loss will inevitably give rise to apparent and perhaps temporary anomalies as principle is developed. 293 [1997] 2 VR 525 at 528-529. 294 (2002) Aust Torts Reports ¶81-660 at 68,797 [32]. 295 For example, see Meagher, Heydon and Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 4th ed (2002) at 417 which outlines that the equitable doctrine of marshalling may be invoked where one claimant has the right to satisfy a claim from two funds and another claimant has the right to resort to one only of the two funds. In such a situation equity may intervene so that the double claimant must exercise its security over the fund to which the single claimant has no claim. Callinan The better view may however be that abstention from extending the operation of Bryan v Maloney to structures other than residences is not anomalous, but that it is the decision in Bryan v Maloney itself that is the anomaly. I mentioned that there were reasons to question its correctness in addition to those mentioned by Brooking JA in Zumpano and Brennan J in his dissenting judgment in Bryan v Maloney. What degree of seriousness of defect must exist before liability can be established; a defect in paintwork296, a departure from one or more of the Australian Standards, and which standards, the presence of ten, twelve, fifty or a hundred loose tiles on a roof, or a crumbling but repairable foundation in one corner only? This is another question to be added to those to which I elsewhere refer and to which Bryan v Maloney gives rise. In Bryan v Maloney the majority made the assumption, it may or may not be correct – no evidence about it was given in the case – that for most people in Australia the purchase of a dwelling will be the most significant investment that a person will make in his or her lifetime. Reliance essentially on assumptions of this kind is fraught with risk. Quite apart from dangers of misapprehension by judges in the absence of evidence, of what is happening in the community, there is also a serious risk of incompleteness297. Another, in my view equally reasonable assumption may be that most purchasers will need to borrow to buy, and that any prudent lender will insist, before lending, for the lender's and the buyer's protection, upon a professional survey of the structure. And as to the assumption that all, indeed most buyers of houses are seeking merely to put a roof over their heads under circumstances of vulnerability, two matters should be noted. The first is that most sellers of residences will shortly become buyers, that therefore, they will at some time be as much in need of a relevant warranty or condition as the buyers to whom they have sold. The second matter is that the majority in Bryan v Maloney failed to have regard to the capital gains tax regime298, which since 1985 has provided for exemptions from capital gains tax on a profitable sale of a principal place of residence, occupied for no fewer than twelve months by the seller, and which almost certainly encourages de facto business investment in houses. Another 296 Goulding v Kirby [2002] NSWCA 393. 297 cf Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 512-513 [166] 298 See now Pt 3-1, Div 118, sub-div 118-B of the Income Tax Assessment Act 1997 (Cth). Callinan equally valid assumption in more recent times may be that house ownership for future investment purposes has increased because of cash grants made under the First Home Owner Grant Act 2000 (Q), an enactment forming part of a co- operative endeavour by State and federal governments. It is unnecessary to explore the validity and completeness of the assumptions made by the majority in Bryan v Maloney any further. Nor is there any need to express any final opinion as to the correctness or otherwise of that decision in order to resolve this case, of a purchase of commercial premises. For the purposes of this appeal it is unnecessary to decide when any relevant period of limitation commenced and whether any limitations enactment could be invoked here. The best position for the purchaser would be that time would not begin to run until the defect manifested itself. If that be the correct position, there may still be problems of indeterminacy, indeterminacy of time, and if not actual indeterminacy of damages, at least uncertainty as to their correct measure. Take the case of a structure, even a dwelling house, theoretically built to last, say forty or fifty years. Assume a buyer acquires the property with the structure erected on it fifteen years into its lifetime. A serious structural defect manifests itself three years later299. I do not say that the law necessarily lacks the ingenuity to devise a means of assessing the loss or damage to the buyer, but any formula for doing so is bound to be complicated, and to involve a large number of imponderables themselves further complicated by such considerations as the need to take account of changes in value of the land in its unimproved state, the relative values of the land and the structure, whether the first eighteen years of life of a structure have an intrinsically greater value than the balance of its life during which the need to provide for natural wear and tear may be greater and more costly, other matters referred to by Brooking JA in Zumpano and the prospect that the structure, even if it had remained sound, would have been demolished or altered in response to changing fashions, diminishing utility or otherwise. All of these matters, and no doubt others that a purchaser's ingenuity may devise, could fall to be considered in litigation against the builder, brought many, many years after the events forming the basis of the action. In Bryan v Maloney, in their Honours' joint judgment, Mason CJ, Deane and Gaudron JJ sought to explain their divergence from the decisions of the 299 cf D & F Estates Ltd v Church Commissioners for England [1989] AC 177 where the defect manifested itself 17 years after the construction. Callinan House of Lords in D & F Estates Ltd v Church Commissioners for England300 and Murphy v Brentwood District Council301 on the ground that302: "[t]heir Lordships' view … seems to us … to have rested upon a narrower view of the scope of the modern law of negligence and a more rigid compartmentalization of contract and tort than is acceptable under the law of this country." Contrary to their Honours' view however, the subsequent case of Astley v Austrust Ltd303 demonstrates that a clear compartmentalization remains a live, indeed a flourishing plant in Australian jurisprudence. Perre v Apand Pty Ltd was referred to extensively in argument. The respondents' submission in relation to it is generally correct. The plaintiffs there were in a very exceptional and vulnerable position in which they had no opportunity of protecting themselves by a contractual term or condition. It was the combination of foresight of the likelihood of harm, knowledge of an ascertainable class of vulnerable persons, the latter's helplessness in the circumstances, the control exercised by the defendant, and the causal link between the control and the damage that proved decisive there. The appellant's attempt to rely on Perre v Apand Pty Ltd here was ill-founded in many respects. I will deal with each of the matters relied on by the appellant. That damage might be suffered as a result of defective design was plainly foreseeable, but little in human affairs is not. Foreseeability, that is reasonable foreseeability, although a necessary element, is of itself not enough to establish liability. Purchasers of a building are members of an identifiable class, but not all of them would have the same use in mind of the building purchased, and over its lifetime the numbers of purchasers could vary greatly. It is quite wrong however to assert that the appellant or indeed any purchaser is vulnerable. Means of protection are readily to hand as I have already indicated. Furthermore, vulnerability alone does not suffice to ground liability. 302 (1995) 182 CLR 609 at 629. 303 (1999) 197 CLR 1. Callinan The appellant denies an indeterminacy of liability. "Indeterminacy" had three elements in its famous first formulation by Cardozo CJ304: "an indeterminate amount for an indeterminate time to an indeterminate class." The appellant's submissions selectively focus on one only of these, of determinacy of class. Commercial freedom may well be put at risk by the imposition of liability on the respondents here. The contract that was freely made between the first respondent and the first owner was one under which the latter chose to take such risks as flowed from its decision not to have a geotechnical investigation made. Parties to a contract between themselves are entitled to allocate risks, obligations and rights as they choose. They should not be obliged to do so in order to give some unknown person in the future rights against one or other of them. If commercial freedom is to be impaired in this way it is better done by statutory intervention. In the meantime the rule of caveat emptor, which is little more than a rule that people should act diligently, prudently and carefully in their own interests should apply. As Stonham in The Law of Vendor and Purchaser puts "The rule of caveat emptor applies to contracts of sale of land. The purchaser takes that which he sees, or which, as a prudent and diligent purchaser, he ought to have seen, and is not entitled to have anything better." Everyone knows that the durability of a building depends upon the soundness of its foundations. The fact that they are below ground does not mean that they cannot be professionally examined and tested. Their state is relevantly there to be seen and assessed. The appellant resorted to social policy. This is a matter for parliament rather than the courts to weigh. In my view, the social considerations which the appellant invoked are probably outweighed in any event by the other matters to which I have referred. The same may be said of the appellant's claims of economic efficiency, an end which is likely to be just as well served by personal prudence by all purchasers as by obligations imposed after the event by the courts. 304 Ultramares Corporation v Touche 174 NE 441 at 444 (1931). 305 Stonham, The Law of Vendor and Purchaser, (1964) at 228 [355]. Callinan In Perre v Apand Pty Ltd, McHugh J contrasted the position of the plaintiffs there with that of plaintiffs in other situations306: "If the plaintiff has taken, or could have taken steps to protect itself from the defendant's conduct and was not induced by the defendant's conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss." To put the matter another way, the appellant has failed to point to a sufficiency of the kind of factors which need to be present and which I thought most relevant in Perre v Apand Pty Ltd307. They need no repetition here. In this area of claims, for economic loss, an evolving area of the law, cases will in practice only be resolved by closely and carefully examining the facts to ascertain whether a sufficiency of factors of a sufficient degree of relevance and importance has been demonstrated. It is better I think to acknowledge and apply that reality than to attempt to state an inflexible principle which is bound, at this stage at least, to fail to meet the justice of the cases which are likely to arise in the future. It is unnecessary to deal with cases in other jurisdictions in any detail. They are summarized in the judgment of Brennan J in Bryan v Maloney. That summary indicates that the question for decision here has been given different answers in different jurisdictions at different times. What the debate in this appeal does show however is that this particular area is better regulated, as it has already in many respects and places been, by legislators308. 306 (1999) 198 CLR 180 at 225 [118]. 307 (1999) 198 CLR 180 at 326-329 [406]-[422]. 308 Statutory warranties that enure for the benefit of owners and successors in title are implied in contracts for residential building work in New South Wales (Home Building Act 1989 (NSW), ss 18A-18G), Victoria (Domestic Building Contracts Act 1995 (Vic), ss 8-10), South Australia (Building Work Contractors Act 1995 (SA), s 32), Tasmania (Housing Indemnity Act 1992 (Tas), ss 7-9) and the Australian Capital Territory (Building Act 1972 (ACT), s 62). Further, statutory insurance or guarantee schemes for residential building work enure for the benefit of owners and successors in title in all States and the Australian Capital Territory: see Home Building Act 1989 (NSW), ss 90-99; House Contracts Guarantee Act 1987 (Vic), ss 5-8; Building Work Contractors Act 1995 (SA), ss 33-35; Queensland Building Services Authority Act 1991 (Q), ss 68-69 and Sched 2; Home (Footnote continues on next page) Callinan The appeal should be dismissed with costs. Building Contracts Act 1991 (WA), ss 25A-25D; Housing Indemnity Act 1992 (Tas), ss 11-14; Building Act 1972 (ACT), ss 64-65.

HIGH COURT OF AUSTRALIA BONDELMONTE AND APPELLANT BONDELMONTE & ANOR RESPONDENTS Bondelmonte v Bondelmonte [2017] HCA 8 Date of Order: 13 December 2016 Date of Publication of Reasons: 1 March 2017 ORDER The appeal be dismissed. The appellant pay the second respondent's costs of this appeal. On appeal from the Family Court of Australia Representation B W Walker SC with R M Schonell SC and S J Williams for the appellant (instructed by Karras Partners Lawyers) Submitting appearance for the first respondent D F Jackson QC with S M Christie for the second respondent (instructed by Legal Aid NSW) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Bondelmonte v Bondelmonte Family law – Family Law Act 1975 (Cth) – Parenting orders – Where children taken overseas by father – Where children stayed with father overseas in breach of parenting orders – Where mother applied for order for return of children – Where children expressed preference to stay with father overseas – Where primary judge made interim orders for return of children to Australia and for living arrangements upon return – Whether erroneous to discount weight given to views expressed by children – Whether father's breach of parenting orders relevant to children's best interests – Whether necessary to ascertain children's views as to living arrangements – Whether parenting orders could be made in favour of strangers to proceedings. Words and phrases – "best interests of the child", "judicial discretion", "parenting orders", "views expressed by the child". Family Law Act 1975 (Cth), ss 60CA, 60CC, 60CD, 60CE, 64C, 65C, 65D, 68L, KIEFEL, BELL, KEANE, NETTLE AND GORDON JJ. The appellant and first respondent in this appeal are respectively the father and mother of three children. The second respondent is the Independent Children's Lawyer ("the ICL") who was appointed by the Federal Circuit Court of Australia to represent the three children in proceedings in the Family Court of Australia with respect to parenting orders. On the hearing of this appeal, the mother did not participate in the proceedings. Submissions in response to those of the father were made by the ICL. This appeal concerns orders made for the return of the two eldest children to Australia from New York, where they remained after the conclusion of a holiday with the father, in breach of a parenting order which had been made by the Family Court of Australia; and it concerns interim orders made for the living arrangements of these children on their return to Australia. At the conclusion of the hearing of this appeal the Court made orders dismissing the appeal, with costs. These are our reasons for making those orders. Background The two eldest children are boys who were aged nearly 17 and nearly 15 at the time the interim orders in question were made by Watts J, on 8 March 2016. The third child is a daughter who was nearly 12 years of age at that time. The mother and father of the children separated in 2010. Parenting orders, made with the agreement of the mother and father on 25 June 2014 ("the 2014 parenting orders"), provided that they were to have equal shared parental responsibility for their children. It was further ordered: "2. That the children live with the husband and the wife as agreed between the parties or at the children's own election. 3. That pursuant to section 65Y(2)(b) of the Family Law Act 1975 the parties shall be permitted the Commonwealth of Australia for the purposes of a holiday provided that the parent travelling overseas with the children provides to the other parent not less than 14 days prior to their departure the following documents and information …" the children out of take It was common ground in the Full Court of the Family Court that order 2 did not permit a child to decide, independently of his or her parents, whether or not the child would live in Australia or abroad. Bell NettleJ After the 2014 parenting orders were made the ICL was appointed. On 2 November 2015, orders were also made for the parents and the children to participate in a Child Responsive Program and the parents were ordered to attend an interview with a family consultant in January 2016 ("the 2015 orders"). As a result of the actions of the father in January 2016, that process was not completed and the boys were not interviewed. The family consultant was not therefore in a position to report to the Family Court as to their views. In January 2016, despite the father not providing the period of notice required by order 3 of the 2014 parenting orders, and under some pressure from him, the mother reluctantly agreed to allow the two boys to travel to New York for a holiday with the father. The girl was not included in the holiday. The boys were flown by the father, business and first class, to New York on 14 January 2016. By 25 January 2016 the father had decided that it would be in his financial interests to remain in the United States rather than to return to Australia. On 29 January 2016 his solicitor informed the mother's solicitor that the father had decided to live indefinitely in the United States and that the boys would remain with him. The mother filed an application to secure the return of the boys, in addition to proceedings brought in the United States under the Hague Convention1 (which did not apply to the elder boy because of his age). The father did not seek any changes to the 2014 parenting orders and sought only to resist the mother's application. The evidence of the father at the hearing of the application was that the boys had each expressed a desire to remain living with him in New York. If the primary judge decided that they should return to Australia, it was necessary for him to consider where the boys were to live on their return. This question was complicated by a number of factors. The father did not say whether he would return to Australia in the event that orders were made for the boys' return. It was therefore not known whether the boys could live with him in the interim. The elder boy had been living with his father for some time after his parents' separation and was effectively estranged from the mother, although she had attempted to maintain contact with him. The younger boy was living with the father, although he divided his time between the mother and father; and the 1 The Hague Convention on the Civil Aspects of International Child Abduction Bell NettleJ daughter remained living with the mother but spent weekends with the father. The evidence was unclear as to the amount of time that the two youngest children were spending with each parent. Accepting that one or both of the boys might elect not to live with her, the mother advised the Family Court that she would not oppose the boys living with the father's mother, a course which the ICL appears to have considered acceptable. The matter could not be resolved on the first hearing date and was adjourned. Counsel for the father then filed further evidence of conversations with the father's mother, to the effect that, due to her frailty, she was unable to care for the boys. The father made no submissions as to alternative possible living arrangements for the boys. Two further options were considered by the primary judge to meet the contingency that the father did not return to Australia and the boys chose not to live with the mother. They were reflected in the orders made by his Honour. In addition to ordering the return of the boys to Australia, his Honour ordered that, in the event that the father returned to Australia with the boys, they could continue to live with him. In the event that the father did not return, the boys were to live with the mother if they chose to do so, or they could live in accommodation provided by the father together with paid supervision services, to which the mother consented in writing (order 9.1). Alternatively each of the boys could live separately with the mothers of respective friends of theirs (order 9.2). Collectively, these orders are referred to in these reasons as "the interim parenting orders". The boys' mother had obtained undertakings by the respective mothers, who each agreed to accommodate a boy. His Honour suspended orders 2 and 3 of the 2014 parenting orders and gave the parties liberty to apply in respect of the implementation of the interim parenting orders. Statutory provisions Section 65D, which is in Pt VII of the Family Law Act 1975 (Cth) ("the Family Law Act"), provides that the court may make such parenting order as it thinks proper. By s 64C a parenting order may be made in favour of a parent of the child "or some other person". Bell NettleJ Section 60CA provides that: "In deciding whether to make a particular parenting order in relation to a child, a court must regard the best interests of the child as the paramount consideration." No issue was raised on this appeal about whether the interim parenting orders made by the primary judge are "parenting orders" within the meaning of the Family Law Act2. Section 60CC(1) requires the court to consider the matters set out in sub-ss (2) and (3), in determining what is in the child's best interests. Section 60CC(2) relevantly provides, in par (a), that a primary consideration is "the benefit to the child of having a meaningful relationship with both of the child's parents". Section 60CC(3) provides for "[a]dditional considerations". They include, relevantly: any views expressed by the child and any factors (such as the child's maturity or level of understanding) that the court thinks are relevant to the weight it should give to the child's views". By s 60CD(2) the court may "inform itself of views expressed by a child" by a number of means, including by a report given to the court by a family consultant under s 62G(2) or, subject to applicable Rules of Court, "by such other means as the court thinks appropriate". However, s 60CE provides that nothing in Pt VII permits the court or any person to require a child to express his or her views in relation to any matter. Other additional considerations to be taken into account under s 60CC(3) include the nature of the relationship of the child with each of the parents (sub-s (3)(b)(i)); the likely effect of any changes in the child's circumstances, including the likely effect on the child of any separation from his or her parents and any other child with whom he or she has been living (sub-s (3)(d)(i) and (ii)); and whether the practical difficulty and expense of spending time with a parent will substantially affect the child's right to maintain personal relations and direct contact with both parents on a regular basis (sub-s (3)(e)). It is a stated principle underlying the objects of Pt VII that children have the right to know and to be cared for by both parents and a right to spend time 2 Family Law Act 1975 (Cth), s 64B(1). Bell NettleJ with both parents on a regular basis (s 60B(2)(a) and (b)). The objects of the Part are to ensure the best interests of children are met by reference to certain criteria, which include ensuring that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children (s 60B(1)(d)). The decision of the primary judge In determining whether to order that the boys be returned to Australia, the primary judge accepted3 the evidence of the father as to the views which had been expressed by the boys, that they wished to continue to live with him in New York. His Honour also had regard to4 evidence of text messages from the younger boy to his mother, to the same effect. His Honour inferred5 from them that "even if the father did not have a direct hand in the authorship of them, there have been extensive conversations between he and [the son] about the father's desire that he be able to relocate with the boys to America". His Honour considered6 that the actions of the father "have significantly prejudiced and almost certainly coloured any statements the boys may make whilst they are in New York". Senior counsel for the father suggested to his Honour that a "wishes report" be obtained from an expert in the United States in relation to the current views of the boys. His Honour doubted the utility of any report as to the boys' views whilst they were living under the influence of the father in New York7. His Honour said8 he would not expect the boys' views to be any different if expressed to a report writer in New York, but that "[t]he weight that I place upon those expressed views are weakened by the circumstances which have been contrived by the father". 3 Bondelmonte v Bondelmonte [2016] FamCA 138 at [32]. 4 Bondelmonte v Bondelmonte [2016] FamCA 138 at [22]. 5 Bondelmonte v Bondelmonte [2016] FamCA 138 at [24]. 6 Bondelmonte v Bondelmonte [2016] FamCA 138 at [31]. 7 Bondelmonte v Bondelmonte [2016] FamCA 138 at [27]-[29]. 8 Bondelmonte v Bondelmonte [2016] FamCA 138 at [32]. Bell NettleJ His Honour also had regard to9 the evidence from the mother that the daughter had become increasingly upset and was repeatedly asking "[w]hen are the boys coming back?". He observed10 that, in his text messages, the younger boy appeared to have "dismissed the roots that he had in Australia and his friends at school and other connections that he has left behind in a quite blasé manner. He does not mention his sister's relationship with him." In considering the best interests of the children, his Honour said11 that not only are the boys' expressed views to be taken into account, but account must be taken of the "relationships that each of the children have with each of their parents and with each other". His Honour considered12 that a family report, prepared in Australia, would look not just at the boys' views but at the dynamics of those relationships and in particular the future of the relationship between the daughter and her father and the younger son and his mother. His Honour expressed13 the view that the father had "significantly jeopardised both of those relationships because of what he has done". The primary judge then turned to consider the boys' living arrangements upon their return to Australia and in particular the mother's proposal that they live separately with the families of their respective friends. As to the elder son, his Honour observed14 that he had been good friends with the friend in question since they were about two years of age. As to the younger son, his Honour noted that the friend in question was the same age as him and they had a longstanding friendship. The father does not dispute these facts. His Honour noted15 that both the ICL and the father's counsel had pointed out that these were not ideal arrangements because the boys would be separated, 9 Bondelmonte v Bondelmonte [2016] FamCA 138 at [26]. 10 Bondelmonte v Bondelmonte [2016] FamCA 138 at [30]. 11 Bondelmonte v Bondelmonte [2016] FamCA 138 at [33]. 12 Bondelmonte v Bondelmonte [2016] FamCA 138 at [34]. 13 Bondelmonte v Bondelmonte [2016] FamCA 138 at [34]. 14 Bondelmonte v Bondelmonte [2016] FamCA 138 at [58]. 15 Bondelmonte v Bondelmonte [2016] FamCA 138 at [59]. Bell NettleJ but said that each was a "possible temporary arrangement" pending a determination by the Court as to whether the boys should be permitted to relocate internationally. In any event, his Honour said16 "[b]ut it may not come to that", given that "the father is a man of significant means" and "has the ability to provide independent accommodation ... and provide for paid supervision services". The father does not challenge these findings. A majority of the Full Court of the Family Court (Ryan and Aldridge JJ, Le Poer Trench J dissenting) dismissed the father's appeal17. The issues The principal contention of the father is that before the primary judge made the orders in question, his Honour was required to give "proper, genuine and realistic consideration"18 to the views of the boys in relation to the interim parenting orders. It is contended that his Honour was wrong to discount the boys' views about remaining in New York because his Honour formed an adverse view of the father's actions. It is further contended that his Honour was required to put in train a process by which the boys' views as to each of the alternative living arrangements, and in particular their possible accommodation with other families, could be ascertained. Such enquiries were necessary to a determination of their best interests and were mandated by s 60CC of the Family Law Act. The other contention is that the parenting orders could not be made in favour of strangers to the proceedings who had not made an application for those orders themselves. A judicial discretion The submissions of the father implicitly accept, as they should, that the question for the Full Court of the Family Court was whether the father had identified an error in the reasoning of the primary judge of the kind referred to in House v The King19. It is only an error of this kind which will permit an 16 Bondelmonte v Bondelmonte [2016] FamCA 138 at [60]. 17 Bondelmonte v Bondelmonte (2016) 55 Fam LR 65. 18 Khan v Minister for Immigration and Ethnic Affairs unreported, Federal Court of Australia, 11 December 1987 at 11 per Gummow J. 19 (1936) 55 CLR 499 at 504-505; [1936] HCA 40. Bell NettleJ appellate court to interfere with parenting orders made by a primary judge under s 65D of the Family Law Act. It is well recognised that orders made in the exercise of a judicial discretion under the Family Law Act, including orders as to the alteration of property interests20, orders as to custody21 and parenting orders22, can be set aside only on a strictly limited basis, in accordance with House v The King23. A parenting order made under s 65D involves the exercise of a judicial discretion because it is made by reference to a paramount consideration of a general kind, the best interests of the child, which involves an overall assessment of a number of other considerations, either statutorily prescribed or considered by the court to be relevant24. The primary considerations in s 60CC(2) are matters to be borne in mind as consistent with the objects of Pt VII. The additional considerations in s 60CC(3) require assessments of the matters there listed by reference to the circumstances of the case. They involve value judgments in respect of which there may be room for reasonable differences of opinion25, as does the overall assessment of what is in the best interests of the child. Of the examples of error given in House v The King26, two are relied upon by the father with respect to his principal contention: failure to take into account a material consideration; and taking into account an irrelevant consideration. Whether the primary judge made errors of this kind must be determined by reference to the requirements of Pt VII of the Family Law Act. The other contention involves other provisions of Pt VII, namely s 65C(c) and s 64C. 20 Norbis v Norbis (1986) 161 CLR 513 at 517-518, 534-535; [1986] HCA 17; Mallet v Mallet (1984) 156 CLR 605 at 610, 621-622, 634; [1984] HCA 21. 21 Gronow v Gronow (1979) 144 CLR 513 at 534; [1979] HCA 63. 22 CDJ v VAJ (1998) 197 CLR 172 at 182 [40]; [1998] HCA 67. 23 (1936) 55 CLR 499 at 504-505. 24 Family Law Act 1975 (Cth), s 60CC(3)(m). 25 Norbis v Norbis (1986) 161 CLR 513 at 518. 26 (1936) 55 CLR 499 at 504-505. Bell NettleJ Error? The focus placed by the father upon the prescribed consideration stated in s 60CC(3)(a) tended to elevate the views expressed by a child to something approaching a decisive status. In some cases, it may be right, in the exercise of a primary judge's discretion, to accord the views expressed by a child such weight, but s 60CC(3)(a) does not require that course to be taken. They are but one consideration of a number to be taken into account in the overall assessment of a child's best interests. The terms of s 60CC(3)(a) itself may be taken to recognise that, whilst a child's views ought to be given proper consideration, their importance in a given case may depend upon factors such as the child's age or maturity and level of understanding of what is involved in the choice they have expressed. Children may not, for example, appreciate the long term implications of separation from one parent or the child's siblings. Section 60CC requires that attention be given by the court to these matters. It is not suggested by the father that the primary judge failed to consider the boys' views as to their return to Australia; nor could it be. His Honour accepted that they had expressed a desire to remain in New York, but considered that there were other matters about which the boys did not appear to have given any thought. Principal amongst them was the effect of their separation from their mother and their sister. The Court was also required to consider the maintenance of the relationship between the father and the daughter. His Honour considered that these matters were best dealt with through the intervention of the family consultant, via the mechanism which had already been established by the 2015 orders. The completion of that process meant that the boys should return to Australia. The primary judge declined to have a "wishes report" undertaken in New York, at the father's request, because his Honour doubted its utility. His Honour was clearly of the view that in conversations that the father had had with the boys and in the lifestyle he was offering them, he was exerting an influence on the boys' choices. It was in that sense that his Honour considered that the views expressed by the boys had been "contrived" by the father27. 27 Bondelmonte v Bondelmonte [2016] FamCA 138 at [32]. Bell NettleJ The argument advanced for the father seeks to rely upon this, and other adverse comments made by the primary judge about the father, as necessarily detracting from a proper consideration of the boys' views. The opinion held by his Honour as to the father's actions, it is submitted, was irrelevant to the consideration mandated by s 60CC(3)(a) of the boys' views and the paramount consideration of what was in the boys' best interests. In this regard the father adopts what had been said by the dissenting judge in the Full Court28, namely that the primary judge was required to look past the father's behaviour in order to determine what was in the best interests of the boys. It would have been remarkable if the primary judge had not commented upon the father's conduct. It involved a breach of the 2014 parenting orders and it had the potential to undermine the possible relationships that family members might have in the future, a matter to which the processes put in place by the 2015 orders had been directed. Furthermore, the father's flagrant disregard of the parenting orders was a matter relevant to the child's best interests under s 60CC(3)(i). It evinced an attitude towards the responsibilities of parenthood that, if left unchecked, would likely send a poor message to boys who, on the evidence, were highly impressionable. It is correct to say that the primary judge gave less weight to the preferences the boys had expressed to remain in New York, but his Honour cannot be said to have been motivated to do so by reason of the father's actions. Had that been the case, his Honour would have been taking into account an irrelevant consideration, but that was not his approach. The primary judge's approach provides no basis for a conclusion that he failed to take into account the boys' wishes, a consideration made relevant and therefore necessary by s 60CC(3)(a). Section 60CC(3)(a) requires that the court take into account not only the views expressed by the child, but also "any factors … that the court thinks are relevant to the weight it should give to the child's views". The factors that the provision gives as relevant are the child's maturity or level of understanding, but plainly the court may consider other matters to be relevant. The factor that the primary judge identified as relevant was the extent to which the boys' views had been influenced by the father, clearly a matter going to the weight to be given to their stated preferences. 28 Bondelmonte v Bondelmonte (2016) 55 Fam LR 65 at 91 [153]. Bell NettleJ The father's other argument concerning the necessary consideration to be given to the boys' views appears to be that s 60CC(3)(a), when read with ss 60CA and 60CD, obliged the primary judge to seek the views of the boys as to the living arrangements which might be the subject of the interim parenting orders on their return to Australia. It is submitted that a dispositive parenting order cannot be made before the views of the child are known concerning the particular parenting order. Section 60CC(3)(a), whether or not read in conjunction with the other provisions in Pt VII, neither expressly nor impliedly requires the court to seek the views of a child. It requires that the views which have been "expressed" by a child be considered. The term "consider" imports an obligation to give proper, genuine and realistic consideration29 but this cannot affect or alter the terms of the provision so as to require a child's views to be ascertained. Section 60CD(2) provides a mechanism by which the court may inform itself of the views expressed by a child, but it does not do so in terms which would oblige the court to do so in every case. It certainly would not oblige the court to do so in the case of interim, temporary arrangements and in respect of each aspect of a parenting order affecting a child. The difficulties which faced the primary judge in determining appropriate orders for the accommodation of the boys have been referred to earlier in these reasons. The difficulties arose because the father chose not to advise the Court whether he would return to Australia and provide that accommodation or whether he would pay for supervised accommodation. The choices then left to the Court were extremely limited. Neither the father nor the ICL suggested alternative arrangements to the third alternative, where the boys were to reside separately with other families. The orders were, however, interim orders and the arrangements temporary. It is not to be overlooked that the primary judge was dealing with an application of some urgency concerning the return of the boys to Australia, not the least because the boys had been due to return to their schooling in Australia. The processes which had been put in train by the 2015 orders needed to be completed and the additional problems created by the father had to be dealt with. A report from the family consultant would be important for the purposes of 29 Khan v Minister for Immigration and Ethnic Affairs unreported, Federal Court of Australia, 11 December 1987 at 11 per Gummow J. Bell NettleJ future, more permanent, parenting orders. In these circumstances it could hardly be said that it was necessary to seek the views of the boys on every aspect of the interim orders affecting them, which, in any event, were hardly likely to assist the Court. However, the point to be made is not just a practical one. It is that the ascertainment of the boys' views on these matters was not statutorily mandated. The fact that, at the hearing before the primary judge, the ICL expressed dissatisfaction with the third alternative living arrangement does not advance the father's case for error. Under s 68L(2)(a) of the Family Law Act, a child's interests may be represented by an ICL. That person has the general duties set out in s 68LA(2), but as s 68LA(4) makes plain, the ICL is not the child's legal representative, and is not by that provision obliged to act on the child's instructions. It would follow that they need not be sought. It is clear that the ICL appreciated the difficulty of the situation given the proposed imminent return of the boys to Australia, a step which, inferentially, the ICL may be taken to have supported. The ICL did not suggest that the boys' views would assist. In any event, it is evident from the submissions made on this appeal that the position of the ICL has changed. The primary judge did take steps to ascertain the boys' views on all topics, by leaving in place the 2015 orders concerning the family consultant, who might ascertain them after the boys' return to Australia. Parenting orders – "any other person" The other contention raised by the father is that the Family Court could not make the parenting order 9.2 in favour of strangers to the proceedings where they had not made an application and where there was no evidentiary basis to establish that they came within the list of possible applicants in s 65C. The ICL's response to this contention is that s 65C(c) refers to a person's standing to bring an application for parenting orders. The persons referred to in order 9.2 were not applicants for parenting orders. They were persons in whose favour such orders were made on the application of the mother. Section 64C provides that a parenting order may be made in favour of a parent of the child "or some other person". Those submissions should be accepted. The father submits, apparently in the alternative, that regardless of the eligibility of the persons referred to in order 9.2 to be included in parenting orders, there was simply not enough known about those persons to justify the making of that parenting order. That contention should be rejected. Far from being strangers to the Family Court, the Court had information that the persons Bell NettleJ were mothers of longstanding friends of the boys; the Court had undertakings from the mothers to offer "nurturing and care" and to implement arrangements for monitoring homework and transport to and from school respectively; and the Court was aware of the proposed sleeping arrangements of the boys. It may be that more information would be desirable before making a long term parenting order in favour of such third parties. But, as has been emphasised, the present case concerned the making of interim orders in circumstances of some urgency. Plainly, in those circumstances, there was sufficient evidence to ground the making of order 9.2.

HIGH COURT OF AUSTRALIA WALKER CORPORATION PTY LIMITED APPELLANT AND RESPONDENT Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5 27 February 2008 S307/2007 & S308/2007 ORDER Appeals dismissed with costs. On appeal from the Supreme Court of New South Wales Representation N J Young QC with J J Webster SC and I J Hemmings for the appellant B W Walker SC with A E Galasso SC and M G Gilbert for the respondent (instructed by Lexlawd) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority Real Property – Compulsory acquisition – Amount of compensation – Market value – Respondent acquired industrial zoned land by compulsory process under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) – Local council resisted attempts to rezone land for residential development before its acquisition – Whether effect of council's conduct on value of land should be disregarded in determining market value under s 56(1) of the Act. Statutes – Interpretation – Land Acquisition (Just Terms Compensation) Act 1991 (NSW) – Section 56(1) of the Act defined market value – Pursuant to s 56(1)(a) any increase or decrease in the value of land caused by the carrying out of, or the proposal to carry out, the public purpose for which land was acquired was to be disregarded – Whether conduct of local council was part of proposal to carry out the public purpose for which land was compulsorily acquired by the respondent – Relevance of common law principles derived from other jurisdictions. Words and phrases – "market value", "proposal", "scheme". Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 55, 56(1)(a). GLEESON CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. On 19 February 2002 the Premier of the State of New South Wales, Mr Carr, issued a News Release under the heading: "NSW GOVERNMENT RETURNS BALLAST POINT TO PUBLIC". The text of the News Release included the following: "One of Sydney Harbour's most significant headlands – Ballast Point – is to be opened up to the public and preserved for future generations, under a plan announced by the State Government today ... The State Government will now commence negotiations to purchase Ballast Point on the Birchgrove Peninsula. Currently, Caltex Petroleum owns the 2.5 hectare site. For some 80 years, Ballast Point has been used as a fuel depot, but the Government now intends to return the land to the public by creating a harbourside park. The acquisition will neatly complete the work begun by former Premier Jack Lang who, in 1926 – directly opposite Ballast Point – returned Balls Head to public ownership. The two headlands will now form permanent green beacons on the western harbour corridor ... To create the new Ballast Point park, it would be necessary for the State Government to take planning control for the land. Ballast Point will be added to the list of state-significant sites with Planning Minister, Dr Refshauge as the consent authority. In addition, it is likely that compensation will need to be paid to Caltex and, possibly, to McRoss Developments Pty Ltd, which has an option to develop the site ... The Sydney Harbour Foreshore Authority has the power to compulsorily acquire land in the interests of protecting and enhancing the natural and cultural heritage of the foreshore area. Ultimately, Sydney Harbour Foreshore Authority would manage the site and ensure that it is maintained for community use." To the circumstances outlined in the News Release the following should be added. At all material times Ballast Point ("the Land") has been situated Crennan within the area of the Municipality of Leichhardt. From 1928 the Land was used as a bulk terminal for the storage and distribution of petroleum products. The name "Ballast Point" had been coined in the 19th century, apparently because ships at deep water anchorages had taken on as ballast stone quarried from the site. A substantial residence named "Minervia" had been built in the 1860s on the ridge at the site. This was demolished in 1929 after the site was purchased by Texaco. McRoss Developments Pty Ltd is now styled Walker Corporation Pty Ltd ("Walker") and is the appellant in this Court. On 2 September 1997, the registered proprietor of the Land, Ampol Petroleum Pty Ltd ("Ampol") had entered into a call option agreement with Walker Group Pty Ltd ("Walker Group"). Ampol had previously been known as Caltex Ltd and Caltex Oil (Australia) Pty Ltd and despite the changes in name was referred to in this litigation as "Caltex". It is convenient here to continue to do so. Shortly before the News Release of 19 February 2002, Walker Group nominated Walker as its nominee under the call option. The option was to acquire the Land for $16,500,000. On 19 April 2002 Walker exercised the option to purchase the Land and contracts were exchanged. The contract between Caltex and Walker was still on foot when on 18 September 2002 the Sydney Harbour Foreshore Authority ("the Foreshore Authority") declared that the Land was acquired by compulsory process under the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ("the Compensation Act") and "for the purposes of the Sydney Harbour Foreshore Authority Act 1998" (NSW) ("the Foreshore Authority Act"). Caltex received as compensation for the compulsory acquisition of its interest in the Land the sum of $14,375,000. This was calculated by deducting from the purchase price of $16,500,000 the sum of $2,125,000 as the estimate of the cost of remediation of the Land, an activity which Caltex was obliged to perform pursuant to its contractual arrangements. No question in the litigation which now comes to this Court turns upon the measure of compensation to Caltex. The dispute fixes upon the entitlement of Walker. In a proceeding in the Land and Environment Court of New South Wales heard by Talbot J, the Court ordered that the compensation payable to Walker pursuant to the Compensation Act was $43,555,138.501. This was arrived at by 1 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2004) 134 LGERA 195. Crennan deducting from the market value of the interest of Walker in the Land, assessed at $60 million, the purchase price as representing the actual cost of completing the contract of sale. Walker had contended that the market value of its interest was $81 million. On appeal by the Foreshore Authority to the New South Wales Court of Appeal (Beazley and Basten JJA and Stein AJA)2 the order of Talbot J was set aside and the matter was remitted to the Land and Environment Court to be dealt with according to law. On that remitter3 Talbot J again fixed the compensation payable to Walker in the sum of $43,555,138.50. On appeal by the Foreshore Authority ("the second appeal"), the Court of Appeal (Handley, Beazley and Basten JJA)4 set aside this order of the Land and Environment Court and once more remitted the matter for assessment of the market value of the interest of Walker in the Land according to law. Basten JA and Beazley JA were parties to both appeals and Basten JA gave the leading judgment in the first appeal. By special leave, Walker appeals against the decisions of the Court of Appeal in both the first and second appeals. For the reasons which follow the appeals to this Court should be dismissed. This will leave standing the remitter order made by the Court of Appeal on the second appeal. It is convenient to turn now to the relevant statutory provisions. The legislation The Foreshore Authority Act constitutes the Foreshore Authority as a corporation (s 10) which for the purposes of any statute is a statutory body representing the Crown (s 11). Among the functions conferred upon it by s 12 are the protection and enhancement of the natural and cultural heritage of the foreshore area and the promotion of orderly and economic development and use of that area. Although the Foreshore Authority came into existence only on 2 Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (2005) 63 NSWLR 407. 3 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2006] NSWLEC 138. 4 Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) (2006) 151 LGERA 186. Crennan 14 December 1998 its functions encompass purposes always within the power of the State itself to effect. Hence in what follows in this judgment, as in the judgments in the Court of Appeal and at first instance, there is no relevant distinction between the Foreshore Authority and the State. Section 17(1) of the Foreshore Authority Act authorises the Foreshore Authority to acquire land "for the purposes of" the Foreshore Authority Act by agreement or by compulsory process in accordance with the Compensation Act. Part 3 of the Compensation Act (ss 37-68) is headed "Compensation for acquisition of land". General provision for compensation is made by s 37. This states: "An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land.5" It will be noted that the entitlement to compensation is consequential upon the acquisition already effected by the acquisition notice. the determination by Part 3 of the Compensation Act lays down procedures for the making of claims for compensation and (in s 47) for the Valuer-General of the amount of compensation to be offered to claimants. In the present case the compulsory acquisition excluded a leasehold interest of Energy Australia. The Valuer-General determined the amount of compensation to be offered to Walker for its interest at $10,100,000, a significantly lesser sum than that subsequently determined in the Land and Environment Court. Walker, pursuant to s 66 of the Compensation Act, lodged an objection with the Land and Environment Court which was then required to hear and dispose of Walker's claim for compensation. Pursuant to s 57 of the Land and Environment Court Act 1979 (NSW), an appeal might be brought to the Court of Appeal from such a decision but only on a "question of law". In each of the appeals to the Court of Appeal, that Court proceeded on the footing that the factual assessment by the 5 The expression "an interest in land" means (s 4(1)): "(a) a legal or equitable estate or interest in the land, or (b) an easement, right, charge, power or privilege over, or in connection with, the land." Crennan primary judge miscarried by reason of error in the construction of the Compensation Act6. The focus of the dispute between the parties is upon the provisions in Pt 3 of the Compensation Act dealing with the determination of the amount of compensation. These are found in Div 4 (ss 54-65). Section 54(1) states the general principle as follows: "The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land." Section 55 contains an exhaustive list of the relevant matters to be considered. It states: "In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): the market value of the land on the date of its acquisition, any special value of the land to the person on the date of its acquisition, any loss attributable to severance, any loss attributable to disturbance, solatium, any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired." (emphasis added) The critical provision is that respecting "market value". This is defined in s 56(1), in terms set out later in these reasons. It is convenient now to say something more of the facts and the events preceding the News Release in 2002. 6 Cf Hope v Bathurst City Council (1980) 144 CLR 1. Crennan The Ballast Point saga The News Release made by the Premier on 19 February 2002 contained the following statements attributed to a Minister who was also the local member in the Legislative Assembly. She was quoted as saying: "The Ballast saga has been a long one. For the past decade, the Ballast Point Campaign Committee and I have shared frustration as we endured false alarms and dawns, confusion over actual ownership of the site and its valid zoning, and ever changing and evolving development proposals, all of which were unacceptable." In the News Release the Premier described the local member as a ceaseless advocate for Ballast Point who had lobbied him constantly on the conversion of the industrial site to parkland. Here may be discerned the issue of the construction of the definition of "market value" in s 56(1) of the Compensation Act which has divided the primary judge and the Court of Appeal. That issue was approached in submissions to this Court as calling for the identification in the circumstances of this case of any decrease in value which was to be disregarded because, in the terms of that definition, it was "caused by ... the proposal to carry out" that public purpose for which the Land was acquired by the Foreshore Authority on 18 September 2002. At that time the bulk of the Land was zoned for industrial use, reflecting the use to which it had been put for many years. The primary judge, Talbot J, had regard to what he saw as "steps" in "the resumption process". This involved a "scheme" to make the Land available as a harbourside park and the "scheme" had begun at a meeting of Leichhardt Council on 10 December 1991. In November 1989 an application had been submitted on behalf of Caltex for the Land to be rezoned from "Waterfront Industrial 4(c)" to "Residential 2(b2)" and thus permit residential development by the construction of 163 home units. The public discussion which followed led to the Council meeting of 10 December 1991, subsequent intervention on behalf of the then State government, and deferral of residential development proposals. Talbot J found that thereafter the market value of the Land had been constrained by actions of the Council to maintain the industrial zoning in order to thwart any change in zoning that would permit development for residential purposes. His Honour held that maintenance of the industrial zoning had reduced Crennan the value of the Land at the time of its eventual resumption in 2002 from what would have been its value at that date for residential development. His Honour said in his first set of reasons7: "The maintenance of the industrial zone as a holding zone can be regarded as a means of freezing the development of the [L]and until the council was in a position, directly or indirectly, to arrange for its acquisition for the public purpose by whatever means became available to it. It was ultimately successful in achieving that purpose vicariously. If the council had not taken the stance it did, the [L]and would have been zoned residential by the making of DLEP 81 consistently with the recommendation of the Commission of Inquiry or by an overriding action by the State Government." The reference to "DLEP 81" is to one of four draft Local Environment Plans prepared by Commissioners of Inquiry for Environment and Planning under the Environmental Planning and Assessment Act 1979 (NSW) ("the EPA Act"). The stated aims and objectives of DLEP 81 in respect of the Land had included the encouragement of residential development appropriate to the scale, character and diversity of the locality and the characteristics of the site. In 1991 the Council rejected a proposal that it adopt DLEP 81 and passed a resolution rejecting intervention by the State Government in its affairs. The Council and the State Government of the day (the administrations of Mr Greiner and, after 1992, of Mr Fahey) were at odds respecting the future of the Land. On two occasions, 1992 and 1995, the relevant Minister of the State sought unsuccessfully to intervene to ensure that a significant part of the Land was used for residential development. A further application by Caltex, made in 1994, for a development approval for residential development of the Land was ultimately unsuccessful. Provision is made in the Local Government Act 1993 (NSW) ("the LG Act") for the acquisition of land by a body such as Leichhardt Council. It is empowered by s 186 to acquire land, including an interest in land, for the purpose of exercising any of its functions including the making available of the 7 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2004) 134 LGERA 195 at 219-220. Crennan land for any public purpose for which it was reserved or zoned under an environmental planning instrument. Section 187(1) stipulates that to such an acquisition the provisions of the Compensation Act apply. However, the effect of s 187(2) is that without the approval of the Minister it is not competent for a council to give a proposed acquisition notice under the Compensation Act. The Leichhardt Council did not undertake any exercise of its own powers of compulsory acquisition. Rather, it resolved in 1991 to seek funds from the State and Commonwealth to acquire the whole of the Land but such funds were not forthcoming. After a general election held in March 1995 the administration of Mr Fahey was replaced by that of Mr Carr, and his government was returned to office at a general election held in March 1999. There followed significant changes in policy respecting the Land. In August 1997 the new Premier issued a statement headed "Sydney Harbour Foreshore". Among the "Guiding Principles" set out in that document was the following: "The first step in determining the future use of a surplus foreshore site should be to establish whether the site or part of the site is suitable for regionally and locally significant open space that will enhance the harbour foreshore open space network." Thereafter the Foreshore Authority Act was enacted and on 19 December 2000 the Minister for Urban Affairs and Planning made the Leichhardt Local Environment Plan 2000 ("LEP 2000") under the EPA Act. This re-zoned part of the Land from "waterfront industrial" to "industrial" and a small part of the Land from "residential" to "industrial". It was this zoning which remained operative in 2002 at the time of the News Release and compulsory acquisition. The decision of the primary judge In his second set of reasons, Talbot J referred to the attempts by Caltex to obtain development consent for the construction of residential accommodation on the Land, as indicative that Caltex had been "winding down" its activities there. His Honour concluded that it was not seriously contemplated by any State or local government authority or by Caltex or Walker that the Land would be used for any industrial purpose save perhaps for a small historical use that might be maintained or established. He concluded that the industrial zoning was a "low Crennan risk device" to ensure that development antipathetic to the creation of a harbourside park did not occur. The primary judge also referred to the involvement of both Leichhardt Council and the Minister in the preparation of LEP 2000 as indicative of a "unity of purpose" displayed by the two arms of government; there was no reason why in the period before the change in the State government the activity of Leichhardt Council alone could not be accepted "as part of the proposal to carry out the public purpose for which the [L]and was acquired [in 2002]". His Honour concluded that: "by 22 December 2000 the market would still have rated the chance of a rezoning to permit the extent of residential development adopted for the purpose of my valuation as it was in 1992, namely, at 100 per cent. If unity of purpose is a prerequisite the time that the proposal was adopted was the date of the making of LEP 2000. However I find that the Mayoral Minute made 6 February 1992, following the preceding decision of the council in December 1991, was a clear and unequivocal decision which formed part of the proposal to acquire the [L]and for the public purpose. I also find no subsequent facts or events, extraneous to the proposal, had the effect of increasing or decreasing the value of the [L]and. Accordingly the consistent refusal to rezone the [L]and for residential purposes and the maintenance of an industrial zoning must be disregarded." The Court of Appeal In its reasons in the second appeal, the Court held that to approach in this way the issues respecting the application of the definition of "market value" in s 56(1) of the Compensation Act was to desert the terms of the statute. The statute speaks not of "the scheme" but of "the proposal", nor does it use expressions such as "steps in the resumption process". In both appeals the Court indicated that the primary task was to construe the legislative text and that the consequence of this was that whilst decisions from other jurisdictions upon other legislation might assist in determining the precedents from which the statutory text was derived, it could not be decisive. Crennan "Common law" and statute Several further points should be made here. The first concerns the role of "the common law" and the significance of observations by the Privy Council in Melwood Units Pty Ltd v Commissioner of Main Roads8. What was in issue there was the operation of the Main Roads Acts 1920-1952 (Q). Their Lordships said9 that notwithstanding the absence of any reference to the matter in the statute: "it is a part of the common law deriving as a matter of principle from the nature of compensation for resumption or compulsory acquisition, that neither relevantly attributable appreciation nor depreciation in value is to be regarded in the assessment of land compensation". The nature of the "common law" spoken of in this passage does not readily appear. Even if there remains in Australia any scope for the operation in this regard of the "war prerogative"10, a remark of Viscount Radcliffe in Burmah Oil Co Ltd v Lord Advocate11 is in point. His Lordship observed that it seemed clear that in the United Kingdom the Crown never claimed or sought to exercise in time of peace a right to take land, except by agreement or under statutory powers, even if it was required for the defence of the realm. Subsequently, Lord Pearson explained that there can be no "common law principle" which is engaged in resumption cases "because compulsory acquisition and compensation for it are entirely creations of statute"12. The reference in Melwood to "the common law" is better understood as a reference to a body of case law which may be built up in various jurisdictions where there are in force statutes in the same terms or, at least, in relevantly similar terms. Moreover, in the United Kingdom there were many judicial [1979] AC 426 at 435. 10 See Johnston Fear & Kingham & The Offset Printing Co Pty Ltd v The Commonwealth (1943) 67 CLR 314 at 318, 325; Mabo v Queensland [No 2] (1992) 175 CLR 1 at 55. 11 [1965] AC 75 at 115. 12 Rugby Joint Water Board v Shaw-Fox [1973] AC 202 at 214. Crennan decisions construing the tersely expressed ss 49 and 63 of the 1845 legislation which, as amended and supplemented from time to time, was given the title Land Clauses Consolidation Act 1845 (UK)13 ("the 1845 Act")14. The caution required in construing modern Australian legislation by reference to "principles" derived in this way is indicated by McHugh J in Marshall v Director-General, Department of Transport15. That case concerned the expression "injuriously affecting" as it appeared in s 20 of the Acquisition of Land Act 1967 (Q); ss 49 and 63 of the 1845 Act had used the same phrase as had the subsequent legislation in various jurisdictions. Differing interpretations had been given to the expression in question. McHugh J noted the similarity in the terms of the legislation and went on16: "But that does not mean that the courts of Queensland, when construing the legislation of that State, should slavishly follow judicial decisions of the courts of another jurisdiction in respect of similar or even identical legislation. The duty of courts, when construing legislation, is to give effect to the purpose of the legislation. The primary guide to understanding that purpose is the natural and ordinary meaning of the words of the legislation. Judicial decisions on similar or identical legislation in other jurisdictions are guides to, but cannot control, the meaning of legislation in the court's jurisdiction. Judicial decisions are not substitutes for the text of legislation although, by reason of the doctrine of precedent and the hierarchical nature of our court system, particular courts may be bound to apply the decision of a particular court as to the meaning of legislation." The 1845 Act enacted a standard code at a time when, as for many years thereafter, compulsory purchase of land generally was authorised by private statutes conferring powers on promoters to take specified lands17. Section 49 13 8 & 9 Vict c 18. 14 This appellation was given to the legislation by s 23 of the Interpretation Act 1889 (UK) 52 & 53 Vict c 63. 15 (2001) 205 CLR 603 at 632-633 [62] 16 (2001) 205 CLR 603 at 632-633 [62]. 17 See the discussion by Lord Reid in West Midland Baptist (Trust) Association (Inc) v Birmingham Corporation [1970] AC 874 at 892. Crennan provided for a jury inquiry relating to "the Value of Lands to be purchased, and also to Compensation claimed for Injury done" and to the delivery of its verdict for: "the Sum of Money to be paid by way of Compensation for the Damage, if any, to be sustained by the Owner of the Lands by reason of the severing of the Lands taken from the other Lands of such Owner, or otherwise injuriously affecting such Lands by the Exercise of the Powers of this or the special Act, or any Act incorporated therewith". Section 63 dealt with the measure of compensation to be assessed by arbitrators, justices and surveyors slightly differently in terms, but equally tersely and The judicial exegesis of these sections encouraged the statement in 1909 in the first edition of Halsbury's Laws of England19: "The numerous cases upon the interpretation of [the Land Clauses Act] and the special Acts have led to the enunciation of certain principles which may be said to govern the whole law of compensation." However, as Lord Pearson explained in Rugby Joint Water Board v Shaw-Fox20, many of these "principles" turned upon the interpretation of the statutory term "value". To somewhat similar effect is the treatment by Dixon J in Nelungaloo Pty Ltd v The Commonwealth21 of the provision made for "claims for compensation" in the National Security (Wheat Acquisition) Regulations in respect of the appellant's wheat crop grown in accordance with its licence under the National Security (Wheat Industry Stabilization) Regulations. Dixon J said22: 18 See the comment of Blackburn J in Holt v Gas Light and Coke Co (1872) LR 7 QB 19 Vol 6, Compulsory Purchase of Land and Compensation, at 32. 20 [1973] AC 202 at 215. 21 (1948) 75 CLR 495. 22 (1948) 75 CLR 495 at 571. Crennan "Now 'compensation' is a very well understood expression. It is true that its meaning has been developed in relation to the compulsory acquisition of land. But the purpose of compensation is the same, whether the property taken is real or personal. It is to place in the hands of the owner expropriated the full money equivalent of the thing of which he has been deprived." "As the object is to find the money equivalent for the loss or, in other words, the pecuniary value to the owner contained in the asset, it cannot be less than the money value into which he might have converted his property had the law not deprived him of it. You do not give him any enhanced value that may attach to his property because it has been compulsorily acquired by the governmental authority for its purposes (Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam24). Equally you exclude any diminution of value arising from the same cause." There may be seen in play here general considerations which have been influential in the fleshing out of compulsory acquisition provisions drawn in brief terms. But as the facts respecting the Land illustrate, the machinery of modern land use regulation has become complex, its procedures protracted and the range of public bodies involved extensive. One result, as the terms of the Compensation Act show, is more comprehensively drawn legislation dealing with compulsory acquisition. It is to this that primary regard must be given. The present case In a broad sense this litigation turns upon the application to the events concerning the Land of the generally expressed proposition in Nelungaloo that there is to be excluded any diminution in value arising from the compulsory acquisition "by the governmental authority for its purposes"25. As will appear, the Foreshore Authority does not quibble with that proposition and accepts that it is expressed in the terms of s 56(1) of the Compensation Act. On the other hand, 23 (1948) 75 CLR 495 at 571. 24 [1939] AC 302 at 318. 25 (1948) 75 CLR 495 at 571. Crennan Walker goes further to draw within the disregard required by the terms of s 56(1) the consequences of the activities of other official actors, in particular those of the Council over a lengthy period. What is to be ignored? This Court in The Crown v Murphy26 was dealing with the 1967 Queensland legislation and referred to a "principle" derived from legislation in other jurisdictions dealing with compulsory acquisition of land. The "principle" was that restrictions on land use maintained as a result of consultation with the resuming authority must be ignored for the purpose of assessing the value of land when resumed by that authority. In a joint judgment, Mason CJ, Brennan, Deane, Gaudron and McHugh JJ said27: "One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed[28]... The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption." With respect to the Land, the Council was not "a resuming authority" within the scope of the first sentence, in which their Honours cited Melwood. But Walker relies upon the second sentence. As authority for the proposition in that sentence of Murphy, their Honours referred to the earlier decision of this Court, dealing with New South Wales legislation, in Housing Commission of NSW v San Sebastian Pty Ltd29. In San Sebastian, this Court applied s 124 of the Public Works Act 1912 (NSW). The terms of s 124 required compensation to be assessed according to 26 (1990) 64 ALJR 593; 95 ALR 493. 27 (1990) 64 ALJR 593 at 595; 95 ALR 493 at 496. 28 Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 at 434. 29 (1978) 140 CLR 196 at 206-207. Crennan the value of the resumed lands at the time of publication of notification of the resumption, "without reference" to any alteration in that value "arising from the establishment of ... public works upon or for which such land was resumed". The Court held that the proposed zoning of the land in question for residential development, contained only in a draft interim development order which came into force a month after the resumption, was a zoning for which the land had been resumed and a step in the process of that resumption; therefore it should be ignored in assessing compensation. Earlier in Minister v Stocks & Parkes Investments Pty Ltd30 this Court had applied s 124 in an analogous situation. Land zoned as part of the "green belt" was resumed for the provision of a school. At the date of the resumption a plan of development of the area had been approved by the State Planning Authority and the plan showed the land in question as zoned "special uses (school)". What s 124 required was compensation assessed without any alteration to the value of the land because it was already known that it was to be the site for a school31. In San Sebastian Jacobs J gave the leading judgment and said, apparently with reference to the concluding words of s 12432: "This provision states in statutory form a principle which had been developed in the cases independently of express statutory provision. See Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands33." Pointe Gourde Reference was made in argument to the significance of what was decided in that case for the issues in the present appeals, and on that subject the following may be said. In Pointe Gourde their Lordships first had emphasised that the outcome of the appeal (from Trinidad and Tobago) turned upon "the actual wording of the enactment"34. The colonial law (in s 11(2)) reproduced s 2(3) of 30 (1973) 129 CLR 385. 31 (1973) 129 CLR 385 at 392. 32 (1978) 140 CLR 196 at 205. 33 [1947] AC 565 at 572. 34 [1947] AC 565 at 571. Crennan the Acquisition of Land (Assessment of Compensation) Act 1919 (UK). This had been passed to modify the perceived effect of Inland Revenue Commissioners v Clay35. That case, however, had concerned valuation for the purposes of land tax legislation36, not compulsory acquisition. In Clay Scrutton J and the Court of Appeal upheld a valuation of the fee simple of a dwelling house at £1,000, where £250 thereof was attributable to the price paid by an adjoining owner which had decided to extend its premises where a nurses' home was conducted. Pointe Gourde arose in very different circumstances. The litigation was a sequel to the Lend Lease arrangements made in 1941 between the United Kingdom and the United States. The United States had special need for a large quantity of stone for the construction of a naval base on Trinidad, near the subject land. Limestone had been quarried there and sold for many years. It was held that s 11(2) of the Trinidad law did not exclude from the compensation award the $15,000 attributable to what would have been increased quarry profits had the land remained in the hands of the appellant. The needs of the United States to quarry stone did not bring the case within the statutory exclusion in respect of "special suitability or adaptability of the land for any purpose", because the exclusion was not concerned with the value attributable to the use elsewhere of the products of the land37. Nevertheless, the component of $15,000 was held to have been correctly excluded. Their Lordships held that this was so because (a) "compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition"38, and (b) here, the relevant "scheme" was not merely the acquisition of the quarry, but included the construction of the naval base in the vicinity39. 35 [1914] 1 KB 339, affd [1914] 3 KB 466. 36 Finance (1909-10) Act 1910 (UK) 10 Edw 7 c 8. 37 [1947] AC 565 at 572. 38 [1947] AC 565 at 572. 39 [1947] AC 565 at 573. Crennan The Privy Council described the proposition (a) as "well settled" and cited statements40 which may be traced back to authorities upon the 1845 Act, including In re Lucas and Chesterfield Gas and Water Board41. The distinction was drawn there (as the Privy Council later had put it42) between allowing for the possibility of enhancement by the carrying out of an undertaking (permissible) and the value of that realised possibility (impermissible). It was, as Buckley LJ put it in Lucas43, the possibility and not the realised possibility of the site being required for the purpose for which it is specially adaptable which ought to be considered. In the United Kingdom, any "Pointe Gourde principle" was not left to case law construing the word "value" in the statutes that superseded the 1845 Act. The Town and Country Planning Act 1959 (UK)44 and the Land Compensation Act 1961 (UK)45, both contained statutory provisions upon the topic46. What was meant in Pointe Gourde and other cases by references to "the scheme" does not readily appear. As is illustrated by the reference earlier in these reasons to Nelungaloo47 the constitutional law of this country includes 40 [1947] AC 565 at 572 citing South Eastern Railway Co v London County Council [1915] 2 Ch 252 at 258; Fraser v City of Fraserville [1917] AC 187 at 194. 41 [1909] 1 KB 16 at 28, 35, 37. 42 In Cedars Rapids Manufacturing and Power Co v Lacoste [1914] AC 569; this was an appeal from Quebec but their Lordships asserted (at 576) that "[t]he law of Canada as regards the principles upon which compensation for land taken is to be awarded is the same as the law of England." 43 [1909] 1 KB 16 at 38. 44 Section 9(2), (7). 45 Section 9. 46 However, in Camrose (Viscount) v Basingstoke Corporation [1966] 1 WLR 1100 at 1107; [1966] 3 All ER 161 at 164, Lord Denning MR said Pointe Gourde still had some concurrent operation with the statutory provisions. 47 (1948) 75 CLR 495. Crennan analysis in many decisions of this Court of statutory "marketing schemes" involving in particular the compulsory acquisition of wheat and other crops with the objective of market "stabilization". In the context of statutory compulsory acquisition of land, a "scheme" may be taken to be a broad expression derived from the promotion in the 19th century of bills for a special statute to permit the construction of canals, railways, dams and other complex infrastructure. The "scheme" referred to the obtaining by the promoters of compulsory powers without which their proposal could not be implemented48. With that background in mind, the description in Pointe Gourde of the resumption of land to assist the construction of an air force base under Lend Lease as part of a "scheme", may readily be understood. The term "scheme" is not found in the Compensation Act but was used throughout his reasons by the primary judge. It is the terms of that legislation that are determinative and it is not to be assumed that they reproduce or attempt to reproduce an understanding of "principles" derived by way of gloss upon the spare terms of ss 49 and 63 of the 1845 Act. The critical provision of the Compensation Act should now be considered. The definition of "market value" Section 56 of the Compensation Act is introduced by s 37 which is set out earlier in these reasons and confers an entitlement to payment of compensation by the resuming authority of the State; here, the Foreshore Authority. Section 56(1) states: "market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and 48 Cf Vyricherla Narayana Gajapatiraju v The Revenue Divisional Officer, Vizagapatam [1939] AC 302 at 319. Crennan any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and any increase in the value of the land caused by its use in a manner or for a purpose contrary to law." (emphasis added) The phrase "public purpose" is defined in s 4(1) as meaning "any purpose for which land may by law be acquired by compulsory process under the [Compensation] Act". Paragraph (a) in the definition of "market value" may be read with par (a) in the statement in s 3(1) of the objects of the Compensation Act. That object is: "to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition". Conclusions The opening words of the definition in s 56(1) ("means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer") reflect what for a century has been taken from Spencer v The Commonwealth49. That case arose under the tersely expressed provisions of the first federal legislation in the field, the Property for Public Purposes Acquisition Act 1901 (Cth). Section 19(1) thereof spoke merely of "the value of the land taken". The result of the judicial exegesis in Spencer was summed up by McHugh J in Kenny & Good Pty Ltd v MGICA (1992) Ltd50 as follows: "Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property51. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will 49 (1907) 5 CLR 418. 50 (1999) 199 CLR 413 at 436 [49]-[50]. 51 Spencer v The Commonwealth (1907) 5 CLR 418. Crennan include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth52: 'We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.' (emphasis added) including The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property." Counsel for the Foreshore Authority in oral submissions did not resist findings by the primary judge to the effect that had it not been for the history of resistance by the Council to the wishes of the Greiner and Fahey Governments for residential redevelopment of the Land, the Land would have been rezoned to permit that development. But that had not come to pass and after 1995 the Carr Government set a quite different course. In particular, that history of resistance by the Council occurred, on the case made by the Foreshore Authority, before there had come into existence "the proposal" upon which par (a) of the statutory definition turns. The Foreshore Authority submitted that (i) the statutory definition required what might be called a Spencer's Case valuation in the sense explained above; but (ii) this was to be followed by any disregard which par (a) required; and (iii) the reference in par (a) of the objects set out in s 3(1) to eventual acquisition indicated that the proposal might predate by a significant period the acquisition of the land in question; (iv) but (iii) did not render applicable to s 56(1) the proposition drawn from San Sebastian53 as to the sufficiency of an "indirect relationship" where the maintenance of the planning restriction by the 52 (1907) 5 CLR 418 at 441. 53 (1978) 140 CLR 196 at 206-207. Crennan Council is seen as "a step in the process of resumption"54; (v) this is because the market value disregard in par (a) looks to the public purpose for which the Land might by law be acquired by the Foreshore Authority by compulsory process under the Compensation Act and to "the proposal" to carry it out; (vi) "the proposal" here was not that of the Council as the proposed resuming authority, or some aggregation over time of the policies of the Council and later of the Carr Government; (vii) to give the statutory expression that operation, as had the primary judge in fixing upon "unity of purpose displayed by the two arms of government", was an error of law. This reasoning should be accepted. The construction of the market value disregard in par (a) for which the Foreshore Authority correctly contends, links "the proposal" to that of the resuming authority. It puts aside anterior discussions or agitations by the Council and others in favour of classifying the Land as public space. In this way there is reflected in the terms of par (a) of s 56(1) a policy to require a disregard only of that increase or decrease (as in this case) in value for which the resuming authority is responsible. Two further points should be noted. The Foreshore Authority correctly accepted that the market value disregard for which par (a) provides is predicated upon the application of Spencer's Case by the opening words of s 56(1). Matters of debate or doubt as to the outcome of controversy respecting use of particular land might affect the perception of the willing but not anxious market participants well before there is "the proposal" which is the means selected by the resuming authority to end the controversy. How that proposition would apply to the facts and valuation process in the present case is beyond the scope of these appeals. The second point concerns the time-scale of "the proposal" of the resuming authority in this case. In its second set of reasons the Court of Appeal expressed some doubt as to the findings of the primary judge. It said that before the announcement of 19 February 2002, the Planning Minister had had "a certain preference, but declined to take a decision which might commit the State Government to significant expenditure". The primary judge had seemed to recognise that it was not until shortly before February 2002 that the State Government itself had adopted the proposal to carry out the public purpose. In its written submissions, Walker sought to place the date of the proposal by the State at some significantly earlier time. 54 The Crown v Murphy (1990) 64 ALJR 593 at 595; 95 ALR 493 at 496. Crennan Resolution of any controversy of this nature must be for the further proceedings in the Land and Environment Court on the remitter ordered by the Court of Appeal on 21 December 2006. Orders The appeals should be dismissed with costs.

HIGH COURT OF AUSTRALIA Matter No A14/2022 APPELLANT AND THE KING Matter No A15/2022 RESPONDENT ALFRED CLAUDE RIGNEY APPELLANT AND THE KING Matter No A16/2022 RESPONDENT APPELLANT AND THE KING Matter No A17/2022 RESPONDENT APPLICANT AND THE KING RESPONDENT Rigney v The King Carver v The King Tenhoopen v The King [2023] HCA 5 Date of Hearing: 6 December 2022 Date of Judgment: 8 March 2023 A14/2022, A15/2022, A16/2022 & A17/2022 ORDER In Matter Nos A14, A15, and A16 of 2022: Appeal allowed. Order 2 of the orders of the Court of Appeal of the Supreme Court of South Australia, made on 10 August 2021, be set aside and in its place there be orders that: the appeal be allowed; the conviction be quashed; and (iii) there be a new trial. In Matter No A17 of 2022: Application for special leave to appeal granted. Appeal allowed. Order 2 of the orders of the Court of Appeal of the Supreme Court of South Australia, made on 10 August 2021, be set aside and in its place there be orders that: the appeal be allowed; the conviction be quashed; and (iii) there be a new trial. On appeal from the Supreme Court of South Australia Representation T A Game SC with K G Handshin KC and K J Edwards (did not appear) for the appellant in A16/2022 (instructed by Access to Justice Law Firm) A L Tokley KC with G N E Aitken for the appellant in A14/2022 (instructed by Noblet & Co) S G Henchliffe KC with A J Culshaw for the appellant in A15/2022 (instructed by Barbaro Thilthorpe Lawyers) S A McDonald SC with G Katsaras for the applicant in A17/2022 (instructed by Legal Services Commission of South Australia) J P Pearce KC with R I Walker for the respondent in each matter (instructed by Office of the Director of Public Prosecutions (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Rigney v The King Carver v The King Tenhoopen v The King Criminal law – Murder – Appeal against conviction – Extended joint criminal enterprise – Murder and constructive murder provided for by ss 11 and 12A of Criminal Law Consolidation Act 1935 (SA), respectively – Where appellants agreed to commit indictable offence of criminal trespass – Where during commission of offence one or more parties to agreement committed intentional act of violence causing death – Where appellants' agreement did not extend to intentional act of violence causing death – Where s 12A deemed perpetrator of intentional act of violence causing death in course of commission of major indictable offence punishable by ten years' imprisonment or more guilty of murder under s 11 – Whether common law doctrine of extended joint criminal enterprise could operate in combination with s 12A to render appellants guilty of murder based on foresight of possibility of commission by a co-venturer of any intentional act of violence. Words and phrases – "agreement", "common purpose", "constructive murder", "derivative liability", "extended joint criminal enterprise", "felony murder", "foresight", "intentional act of violence", "joint criminal enterprise", "murder", "pathway to murder", "primary liability", "primary offender", "primary party", "secondary offender", "secondary party". Criminal Law Consolidation Act 1935 (SA), ss 11, 12A. KIEFEL CJ. The appellants1 were convicted of the murder of Mr Urim Gjabri after a trial in the Supreme Court of South Australia before a judge and a jury. The prosecution case was that each of the appellants together with Jason Paul Howell, who was tried separately, agreed with each other to steal a substantial amount of cannabis from a house in a suburb of northern Adelaide which was being used to grow cannabis (the "grow-house") for commercial purposes. That is to say, the prosecution case was that they were parties to a joint criminal enterprise. The deceased was living in the grow-house. The appellants and Howell travelled to and broke into the grow-house. The deceased was violently assaulted including by blows to his head, one of which was the cause of his death. The appellants and Howell then took the cannabis. The case was largely circumstantial. There was telephone tower evidence which placed each of Howell and the appellants, except for Mr Tenhoopen, in an area near the grow-house on the night in question. Mr Tenhoopen later made admissions to witnesses of being at the grow-house with the other appellants and taking part in the theft of the cannabis. Shortly before the events which led to the death, five persons appeared on CCTV footage walking in the direction of the grow-house. At least one of them was seen on that footage to be carrying a long object, apparently a branch or bat. It was not possible to identify the person who inflicted the blow which killed the deceased. The offence of murder is stated in s 11 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). It provides that a person who commits murder shall be guilty of an offence and shall be imprisoned for life, but does not state what constitutes murder. That definition is supplied by the common law. Murder is generally understood as the unlawful killing of a person with intent to kill or cause serious bodily harm. The common law treated an unintended killing that takes place in the course of, or in connection with, a felony as if it were murder if the felonious conduct involves violence or danger to some person2. For South Australia, the law which is based on that common law rule is contained in s 12A of the CLC Act, which came into effect on 1 January 1995. It provides: "12A—Causing death by an intentional act of violence A person who commits an intentional act of violence while acting in the course or furtherance of a major indictable offence punishable by 1 Mr Tenhoopen is an applicant for special leave to appeal, but it is convenient to refer to the three appellants and Mr Tenhoopen collectively as "the appellants". 2 Arulthilakan v The Queen (2003) 78 ALJR 257 at 263 [27]; 203 ALR 259 at 266, citing Ryan v The Queen (1967) 121 CLR 205 at 240-241. imprisonment for ten years or more (other than abortion), and thus causes the death of another, is guilty of murder." Section 12A has the same effect as the common law rule upon which it is based. It is a deeming provision and provides for what is called "constructive murder", which distinguishes it from what is generally understood at common law to be murder in fact. For conduct to be deemed to be murder under s 12A, it is necessary only that the death of another be caused by a person committing an intentional act of violence, whilst acting in the course of a major indictable offence3. It does not require that the person doing the act intends to kill or cause serious bodily harm. The prosecution case as put to the jury at the conclusion of the trial took both pathways to conviction for the offence of murder under s 11 of the CLC Act: common law murder; or constructive murder as provided by s 12A. For both pathways, the offence in respect of which there was alleged to be a joint criminal enterprise was identified as "Aggravated Serious Criminal Trespass in a Place of Residence with the Intent to Commit Theft", contrary to s 170 of the CLC Act. That offence is punishable by life imprisonment. Both pathways to the offence of murder depended on the application of the principle of extended joint criminal enterprise. That principle depends on the knowledge and foresight of a party to the joint criminal enterprise ("the secondary offender") as to what the person who commits the murder ("the primary offender") might do in the course of the joint criminal enterprise. The prosecution alleged that the appellants were guilty of common law murder by the application of the principle of extended joint criminal enterprise on the basis that they each foresaw the possibility that, in carrying out the agreement to break and enter and steal the cannabis, one of their co-venturers might attack the deceased with an intention to kill or cause grievous bodily harm. The prosecution case respecting the application of the principle to s 12A was that the appellants were each guilty of murder if they contemplated the possibility that in carrying out the enterprise a co-venturer might perpetrate an intentional act of violence which then (in fact) caused the death of the deceased. It is the application of the principle to s 12A which is said to be problematic. The threshold question and the directions The applications for leave to appeal against conviction brought to the Court of Appeal concerned the directions given respecting extended joint criminal enterprise as applied to constructive murder under s 12A. It was not argued, as it 3 Arulthilakan v The Queen (2003) 78 ALJR 257 at 263 [28]; 203 ALR 259 at 266. is now, that the principle of extended joint criminal enterprise should not be held to apply to s 12A, nor was it argued that the directions concerning common law murder were incorrect. In the latter respect some appellants now seek to contend that the trial judge's directions (that the relevant foresight of the appellants was that a co-venturer might inflict "violence" on a person they came across at the grow-house) tended to elide the distinction in the level of violence required to be foreseen by a co-venturer for common law murder on extended joint criminal enterprise principles and constructive murder on extended joint criminal enterprise principles. The contention is without merit. The trial judge separately emphasised the distinction between the two. His Honour framed the issue of violence, on almost every occasion where that term was used, so as to invite the jury to consider two pathways of analysis. His Honour explained the foresight necessary for extended joint criminal enterprise in relation to common law murder as being whether a co-venturer might inflict violence on a person they came across at the grow-house with the intention of causing that person serious bodily harm; and for constructive murder simply an intentional act of violence. His Honour repeated that direction and followed that format throughout the directions. The focus of these appeals is therefore whether the principle of extended joint criminal enterprise can or should be applied to constructive murder under s 12A, and whether it was correct for the trial judge to direct that any intentional act of violence would be sufficient. In this regard the trial judge gave as an example that an act of violence might include striking the back of a person's leg and that a threat or menace of violence could amount to an act of violence within the meaning of s 12A. Because it is not known how the jury reasoned to conviction and which pathway it took, if the appellants are correct in their submissions concerning s 12A the appeals must be allowed and new trials ordered. Joint criminal enterprise and extended joint criminal enterprise The principle or doctrine of joint criminal enterprise, or common purpose, establishes the complicity of a secondary party in the commission of a crime. As explained in McAuliffe v The Queen4, it applies where a venture is undertaken by more than one person acting in concert in pursuit of a common criminal enterprise5. Unlike the liability of accessories such as aiders or abettors, which is based on their contribution to the crime, the wrong in a joint criminal enterprise lies in the mutual 4 McAuliffe v The Queen (1995) 183 CLR 108. 5 McAuliffe v The Queen (1995) 183 CLR 108 at 113. embarkation on a crime with the awareness that an incidental crime may be committed in carrying out the agreement6. Each of the parties to a joint criminal enterprise is equally guilty of the crime that is the object of the enterprise and which is committed, so long as the agreement to commit it (which may be express or inferred) remains on foot. That is so regardless of the part each has played in its commission. Each party is also guilty of any other offence ("the incidental offence") which is committed by a co-venturer that is within the scope of the agreement. The incidental offence will be within the scope of the agreement to commit the first-mentioned crime if the parties contemplate its commission as a possible incident of the execution of their agreement7. The principle of extended joint criminal enterprise liability arises where a party to a joint criminal enterprise foresees, but does not agree to, the commission of an incidental crime in the course of carrying out the agreement8. That is to say, the principle applies where the commission of an incidental offence lies outside the scope of the common purpose9 but is nevertheless contemplated as a possibility10. The parties are each criminally liable for the incidental offence if with foresight of the possibility that it might be committed they nevertheless continue to participate in the enterprise11 and that is so whether the foresight is that of an individual party or is shared by all parties12. Criminal culpability of this kind is consistent with the general principle that a person who assists or encourages the commission of an offence may be convicted as a party to it13. 6 Miller v The Queen (2016) 259 CLR 380 at 398 [34]. 7 McAuliffe v The Queen (1995) 183 CLR 108 at 114; Miller v The Queen (2016) 259 CLR 380 at 388 [4]. 8 Miller v The Queen (2016) 259 CLR 380 at 388 [4]. 9 McAuliffe v The Queen (1995) 183 CLR 108 at 115. 10 McAuliffe v The Queen (1995) 183 CLR 108 at 118; Miller v The Queen (2016) 259 CLR 380 at 396-397 [30]. 11 Clayton v The Queen (2006) 81 ALJR 439 at 443 [17], 444 [20]; 231 ALR 500 at 504-505, 505; Miller v The Queen (2016) 259 CLR 380 at 388 [4]. 12 McAuliffe v The Queen (1995) 183 CLR 108 at 118. 13 McAuliffe v The Queen (1995) 183 CLR 108 at 118. The example given in McAuliffe14 of the application of this principle is where a party knows that another party to the joint criminal enterprise is carrying a weapon which may be used to kill or inflict grievous bodily harm in carrying out the enterprise. The first-mentioned party may not agree to the use of the weapon, indeed they may reject any agreement for its use, but if they nevertheless continue with the venture they will be liable for the consequences. Proof of an accused's foresight of the possibility of the commission of the incidental offence will usually be by inference from what is proved about the circumstances surrounding the crime and what the accused may be taken to have known or understood. The prosecution must prove that the individual concerned foresaw that the crime might be committed and cannot rely upon the existence of the common purpose as establishing that state of mind15. The principle of extended joint criminal enterprise has been criticised. It has been overruled in the United Kingdom16. But it remains the policy of the common law as applying in Australia, as Miller v The Queen17 confirms. It is another question whether it is rationally capable of applying to a provision such as s 12A. Extended joint criminal enterprise and s 12A The principle of joint criminal enterprise has been held to apply to common law felony murder18 and to constructive murder under s 12A19. As to the latter, in Arulthilakan v The Queen20 the application of the principle does not appear to have been doubted. The co-accused of the two appellants stabbed and killed a person in the course of the robbery. Both appellants were aware that he was in possession of the knife which was used. It was observed21 that the plan was to "roll" the deceased. 14 McAuliffe v The Queen (1995) 183 CLR 108 at 115. 15 McAuliffe v The Queen (1995) 183 CLR 108 at 117-118. 16 R v Jogee [2017] AC 387. 17 Miller v The Queen (2016) 259 CLR 380. 18 R v Solomon [1959] Qd R 123 at 126-127. 19 Arulthilakan v The Queen (2003) 78 ALJR 257 at 263 [28]; 203 ALR 259 at 266. See also R v R (1995) 63 SASR 417; R v CMM (2002) 81 SASR 300. 20 Arulthilakan v The Queen (2003) 78 ALJR 257; 203 ALR 259. 21 Arulthilakan v The Queen (2003) 78 ALJR 257 at 263 [29]; 203 ALR 259 at 266. That involved robbery accompanied if necessary by force and the use of force was therefore within the scope of the agreement. No question arises on these appeals concerning the application of that principle to s 12A. It was not the prosecution case that the murder of Mr Gjabri was within the scope of the joint criminal enterprise. It was accepted that the appellants could not be taken to have agreed to what occurred. Rather, reliance was placed upon what they must have foreseen as a possibility in the carrying out of the enterprise. In considering the application of the principle of extended joint criminal enterprise it is important to bear in mind the basis for it and the liability it creates. In McAuliffe22 the Court referred with approval to what Sir Robin Cooke had said in Chan Wing-Siu v The Queen23. He referred to the principle whereby a secondary party acting in concert with a primary offender is criminally liable for acts done by the primary offender of a type which the secondary party foresees but does not necessarily intend. He explained that the principle turns on contemplation. It meets the case of a crime foreseen as a possible incident of the common unlawful enterprise. Importantly, he pointed out that the criminal culpability lies in participating in the venture with that foresight. The principle of extended joint criminal enterprise is concerned in the first place with the thinking of the secondary offender to whom it is applied and then with that person's continued participation with the requisite knowledge or foresight that a crime such as murder might be committed. In McAuliffe24, in the example referred to above, the Court spoke of the party who knows that another party to the joint criminal enterprise is carrying a weapon which that other party might use to kill or inflict grievous bodily harm in carrying out the enterprise. The principle applies and that person is also guilty of murder where they continue to participate in the venture with that knowledge. In Chan25, Sir Robin Cooke suggested as a direction to the jury the question whether the accused contemplated that in carrying out a common unlawful purpose one of his partners might use a knife or a loaded gun with the intention of causing grievous bodily harm. And in R v Hyde26, to which reference was also made in 22 McAuliffe v The Queen (1995) 183 CLR 108 at 115-116. 23 Chan Wing-Siu v The Queen [1985] AC 168 at 175. 24 McAuliffe v The Queen (1995) 183 CLR 108 at 115. 25 Chan Wing-Siu v The Queen [1985] AC 168 at 178. 26 R v Hyde [1991] 1 QB 134 at 139. McAuliffe27, Lord Lane CJ pointed to the mental element necessary to the principle. He explained what had been enunciated in Chan as being if B realises (without agreeing) that A may kill or intentionally inflict serious injury, but nevertheless continues to participate with A, that will amount to a sufficient mental element for B to be guilty of murder if A, with the requisite intent, kills in the course of the venture. B will be liable because he has given encouragement and assistance to A in carrying out an enterprise which B realises may involve murder. The principle of extended joint criminal enterprise is generally considered to have first been discussed in Chan, a case which involved murder at common law. It was not applied in the United Kingdom to cases involving constructive murder. No opportunity arose to consider whether that was possible. That offence was abolished before 1984, when Chan was decided28. This Court was not referred to any decision in the United Kingdom or Australia in which the principle has been applied to a case other than one which concerned murder at common law. In such cases there has been an unlawful killing by the intentional acts of the primary offender. The cases referred to above show that the knowledge or foresight on the part of the secondary offender, necessary for criminal culpability, is of the possibility of acts which may kill or cause serious bodily harm being committed. The question which then arises is what kind of acts a secondary offender may realise might occur in the course of carrying out the enterprise if the principle of extended joint criminal enterprise is applied to s 12A. The answer would seem to depend largely on the meaning to be given to the words "act of violence", having regard to the text and context of the section. If those words are to be understood as limited to an act that is capable of causing death or serious bodily injury, foresight of such an act may be considered sufficient to found criminal culpability for murder consistently with the cases which explain the basis of the principle of extended joint criminal enterprise. It would also follow that the directions given by the trial judge, which gave as examples striking the back of a person's leg or a threat or menace of violence, were incorrect. The construction which the trial judge and the Court of Appeal29 gave does not import notions of causation of death into the words "act of violence". The section itself treats causation as a separate element. Consistently with this 27 McAuliffe v The Queen (1995) 183 CLR 108 at 116-117. In England and Wales by the Homicide Act 1957 (UK), s 1; in Northern Ireland by the Criminal Justice Act (Northern Ireland) 1966 (NI), s 8. It does not seem to have existed in Scotland. 29 Rigney v The Queen (2021) 139 SASR 305 at 312 [13], 345 [124]. understanding, the prosecution case for the application of the principle relied on the appellants having contemplated the possibility that in carrying out the enterprise a co-venturer might perpetrate an intentional act of violence which then (in fact) caused the death of the deceased. The broader view of the words "act of violence" and the operation of causation in s 12A gain support from Arulthilakan30. There it was accepted that the presentation of a knife for the purpose of threatening, intimidating or stabbing the owner of property the subject of the robbery may, as a matter of law, be capable of being regarded as an act of violence. The presentation of the knife may be capable (at law) of being regarded as an act of violence, but it becomes a question of fact as to whether the presentation of the knife caused death31. No doubt was cast upon the correctness of these views in argument on these appeals. Given that the words "act of violence" are to be understood more broadly and not by reference to causation of death or serious injury, it follows that the only foresight which a secondary offender might be said to have, if the principle is applied to s 12A, is that almost any act or threat of violence may take place. This cannot be a sufficient mental element for criminal liability for murder according to the principle of extended joint criminal enterprise. The principle of extended joint criminal enterprise cannot apply to s 12A of the CLC Act. This follows largely as a matter of the construction of that provision. It should not be held to apply because constructive crimes should be confined so far as possible in their operation. They should be so limited in view of the development of the law "towards a closer correlation between moral culpability and legal responsibility"32. Orders I agree with the orders proposed in the reasons of Gordon, Edelman and 30 Arulthilakan v The Queen (2003) 78 ALJR 257 at 262 [23]; 203 ALR 259 at 264- 31 Arulthilakan v The Queen (2003) 78 ALJR 257 at 262-263 [23]-[26]; 203 ALR 259 32 Wilson v The Queen (1992) 174 CLR 313 at 327. Gleeson Jagot GAGELER, GLEESON AND JAGOT JJ. Extended joint criminal enterprise ("EJCE"), as recognised in McAuliffe v The Queen33, was confirmed by the majority in Miller v The Queen34 to be a doctrine of the common law of Australia pursuant to which criminal liability of a "sui generis nature"35 is imposed on a secondary party for an offence committed by a primary party. Pursuant to the common law doctrine of EJCE, criminal liability is imposed on a secondary party for an additional offence36 committed by a primary party where the secondary party has participated with the primary party in the execution of an agreement to commit another offence37 with foresight of the possibility that the primary party might commit the additional offence as an incident of executing their agreement. The justification for the secondary party being criminally liable for the additional offence committed by the primary party in those circumstances is said to lie in "the mutual embarkation on a crime[38] with the awareness that the incidental crime may be committed in executing their agreement"39. The execution of the common purpose and the foreseen attendant risk of an additional crime being committed are said to be a "package deal" in that the secondary party's voluntary assumption of the risk of the additional crime being committed is seen to be implicit in the secondary party's subscription to the agreement which carries that risk40. The dispositive question in each of these appeals is whether the common law doctrine of EJCE operates in the context of s 12A of the Criminal Law Consolidation Act 1935 (SA) ("the CLCA") to produce the result that a secondary (1995) 183 CLR 108. (2016) 259 CLR 380. (2016) 259 CLR 380 at 398 [34]. 36 Often referred to as the "incidental" offence or crime. 37 Often referred to as the "foundational" offence, crime, or felony, the subject of the joint criminal enterprise. 38 Namely, the commission of the foundational offence, crime, or felony. 39 Miller v The Queen (2016) 259 CLR 380 at 398 [34], citing Clayton v The Queen (2006) 81 ALJR 439 at 444 [20]; 231 ALR 500 at 505. 40 Simester, "The Mental Element in Complicity" (2006) 122 Law Quarterly Review 578 at 599, cited in Clayton v The Queen (2006) 81 ALJR 439 at 444 [20]; 231 ALR 500 at 505 and Miller v The Queen (2016) 259 CLR 380 at 398 [33]-[34]. Gleeson Jagot party can be guilty of a murder committed by a primary party where the secondary party has participated in the execution of an agreement to commit a major indictable offence punishable by imprisonment for ten years or more with nothing other than foresight of the possibility that the primary party might commit an intentional act of violence as an incident of carrying out that agreement. The answer turns on the capacity of the common law doctrine to operate harmoniously with the relevant statutory structure and statutory purpose. Section 11 of the CLCA provides that any person who commits murder shall be guilty of an offence. Unlike s 12 of the CLCA (which deals with conspiring or soliciting to commit murder), s 12A of the CLCA (which deals with causing death by an intentional act of violence while acting in the course or furtherance of a major indictable offence of the relevant kind) does not create a standalone offence. Section 12A merely specifies one circumstance in which a person is guilty of the offence of murder created by s 11. Before the Criminal Law Consolidation (Felonies and Misdemeanours) Amendment Act 1994 (SA) ("the Amendment Act"), the circumstances in which a person could be guilty of the offence of murder created by s 11 were left to the common law. As the common law was then understood, an act causing death constituted murder on the part of an accused in two broad categories of case. The first involved circumstances where an act causing death was done with intention on the part of the accused to cause death or really serious bodily harm. The second – known as "felony murder" and sometimes referred to as "constructive murder" – involved circumstances where an act causing death was done in the course of or in furtherance of the commission by the accused of a felony involving violence or danger. In neither category of case did the act causing death in fact need to be done by the accused. It was sufficient for the first category that the act causing death was done by another with the agreement of the accused – as an intended (even if contingently and reluctantly intended) part of a joint criminal enterprise ("JCE") constituted by an agreement between the participants to commit the foundational felony. It was sufficient for the second category that the act causing death was done by any participant in the commission of an agreed foundational felony involving violence or danger, irrespective of the intention or foresight of any of them that the act causing death would or might be done41. There was accordingly no logical necessity to prove any JCE to commit the act of violence which caused death, let alone EJCE in respect of that act of violence, in 41 R v R (1995) 63 SASR 417 at 420-421, 424-425; Criminal Law and Penal Methods Reform Committee of South Australia, Fourth Report: The Substantive Criminal Law Gleeson Jagot order to prove felony or constructive murder as the common law was then understood in South Australia. The Amendment Act made two relevant amendments to the CLCA. First, it inserted s 5D(1). That provision abolished the classification of offences as felonies. As a consequence, the category of felony murder necessarily ceased to exist at common law in South Australia. Second, the Amendment Act simultaneously inserted s 12A into the CLCA as the "statutory replacement" of felony murder42. The statutory replacement differed from its common law predecessor in two important respects. One was that the foundational crime, in the course of or furtherance of which the act causing death needed to occur, was limited to a major indictable offence punishable by imprisonment for ten years or more. The other was that the act causing death was limited to "an intentional act of violence". Implicitly accepted in Arulthilakan v The Queen43, and common ground in these appeals, is that the "act of violence" to which s 12A refers need not be an act done in fact by the accused. It is sufficient that the act of violence be done by another with the agreement of the accused as an intended part of a JCE to commit the foundational crime. Plain on the face of the provision and implicit in that same reasoning in Arulthilakan, however, is that the intention to which s 12A refers by the words "an intentional act of violence" is the intention of the accused. Unless the act of violence is an act intended by the accused, the pathway provided by s 12A to guilt of the offence of murder under s 11 is unavailable. Because the common law doctrine of EJCE operates to impose liability on a secondary party for an offence on the part of a primary party, and because s 12A does not itself create an offence but operates instead only to provide a statutory pathway to guilt of the offence of murder under s 11, the common law doctrine of EJCE is incapable of application to s 12A alone. The question is whether the doctrine can operate to impose liability on a secondary party for an offence of murder on the part of a primary party in respect of which liability is imposed on that primary party under s 11 through the pathway provided by s 12A. 42 South Australia, Legislative Council, Parliamentary Debates (Hansard), 4 August (2003) 78 ALJR 257; 203 ALR 259. Gleeson Jagot For the common law doctrine of EJCE to operate to impose liability on a secondary party in such a circumstance would amount to the creation at common law of liability for the statutorily defined form of murder in s 12A in circumstances which the narrowness of the s 12A pathway to that form of murder is designed to avoid. In particular, it would operate to impose liability for murder on a participant in a foundational major indictable offence as described in s 12A who has nothing other than foresight of the possibility of an intentional commission of an act of violence by another participant. However, the statutory design is to impose liability for murder on a person only if that person has an intention to commit an act of violence. The background of the common law of felony murder was understood to make the liability for murder of every participant in a foundational felony independent of any intention or foresight of any of them that the act which in fact caused death would or might be done. Against this background, the legislative choice made in enacting s 12A as its statutory replacement was to make the criminal liability of each participant for murder by operation of that section depend on the intention of that participant to commit, or agree (contingently, reluctantly, or otherwise) in the commission of, the act of violence. The operation of the common law doctrine of EJCE on s 12A would distort that legislative choice in two respects. It would introduce foresight as a pathway to criminal liability for murder by operation of s 12A, thereby adding a pathway evidently eschewed in the making of the legislative choice. And it would introduce an anomalous distinction between participants in the foundational major indictable offence: the intentional commission of an act of violence being required to render a participant who does the act of violence causing death liable for murder, and mere foresight of the intentional commission of an act of violence causing death being sufficient to render a participant who does not do the act liable for the same offence. Further, the common law doctrine of EJCE cannot be taken to have been so well established as to have been in legislative contemplation at the time of enactment of the Amendment Act. Indeed, recognition of the doctrine occurred only in McAuliffe, which was decided some months afterwards. The common law doctrine therefore cannot be taken, and is not suggested, to have any measure of presumptive application. No strain should be placed on the statutory language to attempt to accommodate it. Given that application of the common law doctrine of EJCE would be in tension with the statutory scheme, it is the common law doctrine which must yield to ensure coherence. Two overarching and overlapping considerations of legal policy lend support to that conclusion. Expressed normatively in language drawn Gleeson Jagot from the majority in Wilson v The Queen44, they are that: (1) the judicial development of the criminal law has for the most part been, and should continue to be, towards a closer correlation between moral culpability and legal responsibility; and (2) the scope of constructive crime should be confined to what is truly unavoidable. The answer to the dispositive question is, accordingly, "no". For that reason, we agree with the orders proposed by Gordon, Edelman and Steward JJ. As retrials are to be ordered, we add for completeness that we agree that the statement by their Honours appropriately expresses the liability of primary and secondary participants in a murder based on the pathway to guilt provided by s 12A of the CLCA45. In particular, we agree that the liability of an accused as a secondary party on that pathway requires proof beyond reasonable doubt that the accused was party to an agreement to commit a major indictable offence of the required kind and that the agreement included the agreement of the accused to the possible commission of an intentional act of violence of the same general nature as that which caused the death. (1992) 174 CLR 313 at 327. See also IL v The Queen (2017) 262 CLR 268 at 309 45 See the reasons of Gordon, Edelman and Steward JJ at [108]. Gordon EdelmanJ GORDON, EDELMAN AND STEWARD JJ. Introduction The central issue in the appeals by Messrs Mitchell, Rigney and Carver, and the application for special leave to appeal by Mr Tenhoopen which was ordered to be heard concurrently, concerns the interaction between the doctrine of extended joint criminal enterprise and the statutory extension to the offence of murder in s 12A of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). There is no dispute that the outcome of Mr Tenhoopen's application for special leave should follow the result of the appeals. It is therefore convenient to refer to all the parties as appellants. The four appellants were charged with murder under s 11 of the CLC Act. The murder was alleged to have been committed during the pursuit of their agreement (together with another accomplice, Mr Howell) to break and enter and steal cannabis from a "grow house". The Crown case was that, during that enterprise, one of the five men killed Mr Gjabri and each of the men was criminally responsible for murder on the basis of either (i) the common law doctrine of extended joint criminal enterprise, or (ii) the common law doctrine of extended joint criminal enterprise together with the doctrine of constructive murder in s 12A of the CLC Act. All four appellants were convicted of murder after trials before a judge (Lovell J) and jury in the Supreme Court of South Australia. Their appeals to the Court of Appeal of the Supreme Court of South Australia (Peek A-JA, Kelly P agreeing and Doyle JA agreeing with additional reasons) were dismissed. In this Court, the grounds of appeal were refined and leave was sought, and granted, for the appellants to raise a substantial new ground. They alleged, in summary, that: (1) the doctrine that extends liability for murder to extended joint criminal enterprise could not be combined with the constructive murder doctrine in s 12A of the CLC Act; (2) alternatively, if the doctrine of extended joint criminal enterprise could be combined with constructive murder under s 12A of the CLC Act, then the trial judge had misdirected the jury as to what needed to be foreseen by each appellant in order for constructive murder under s 12A to have been committed; and (3) the trial judge had misdirected the jury in relation to the elements of extended joint criminal enterprise. For the reasons below, grounds (1) and (3) should be upheld. The trial judge erred by permitting the Crown to combine the doctrine of extended joint criminal enterprise with the doctrine of constructive murder to create, in effect, a new doctrine of constructive, constructive murder. No such doctrine has ever existed and there is no basis to conclude that the South Australian Parliament intended to create such a new doctrine when the CLC Act was amended to introduce s 12A. Gordon EdelmanJ The trial judge also erred by failing to direct the jury that the appellants could not be responsible for murder by application of the doctrine of extended joint criminal enterprise unless they foresaw the possibility that acts committed in the course of the enterprise might cause really serious bodily injury or death. Consistently with Miller v The Queen46, the appellants were required to have foresight of all elements of the offence committed by the principal offender, including the result. Common law doctrines of joint criminal enterprise, extended joint criminal enterprise, and constructive murder In order to explain the relevant operation of ss 11 and 12A of the CLC Act, it is necessary to commence with the three common law concepts which those provisions incorporated or adapted. The three concepts are (i) joint criminal enterprise, (ii) extended joint criminal enterprise, and (iii) constructive murder. (i) Joint criminal enterprise The doctrine of joint criminal enterprise or common enterprise is based on agreement (also expressed as common purpose, design, or enterprise). Whether the agreement is expressed in words or inferred "from the parties' conduct", each party to an agreement to commit a crime will be guilty of the agreed crime and any crime "within the scope of the agreement"47. It is therefore essential to identify what acts and omissions the parties agreed upon48. The agreement need not be express and may be an inference drawn from the parties' conduct49, but it must be subjectively appreciated by the accused50. The scope of such an agreement has therefore been expressed as involving matters that each party subjectively considered. In this respect, "it is essential to identify what the parties did agree upon and what it was that each contemplated might occur"51, which requires consideration of whether each party contemplated the criminal acts "as a possible incident of the execution (2016) 259 CLR 380 at 388 [4]. See also at 416 [100]. 47 Miller v The Queen (2016) 259 CLR 380 at 388 [4]. See also McAuliffe v The Queen (1995) 183 CLR 108 at 114; Gillard v The Queen (2003) 219 CLR 1 at 36 [111]. 48 Gillard v The Queen (2003) 219 CLR 1 at 39 [124]. 49 Miller v The Queen (2016) 259 CLR 380 at 388 [4]. 50 McAuliffe v The Queen (1995) 183 CLR 108 at 114. 51 Gillard v The Queen (2003) 219 CLR 1 at 39 [124] (emphasis in original). Gordon EdelmanJ of their agreement"52. But the jury must be satisfied that each party subjectively agreed (authorised or assented) to the conduct, including the criminal act. Hence, the "true position" for nearly two centuries has been that "if one of the [parties to the agreement] goes beyond what has been tacitly agreed as part of the common enterprise, [the other party] is not liable for the consequences of that unauthorised act"53. Joint criminal enterprise is a principle of primary liability based on a form of agency54. The acts of the perpetrator that are within the scope of the agreement, and therefore done with the authority of the other parties, are attributed to the other parties to the agreement. That is, "if several persons act together in pursuance of a common intent, every act done in furtherance of such intent by each of them is, in law, done by all"55. It is in this sense that joint criminal enterprise is a form of primary liability: all parties are liable as principals in the first degree because those persons who do not physically perform the acts are acting in concert and have the relevant mens rea. Accordingly, the liability of each party is not derivative, but primary56. Hence, all those things done "in accordance with the continuing understanding or arrangement ... which are necessary to constitute the crime" are attributed to all parties to the agreement and "they are all equally guilty of the crime regardless of the part played by each in its commission"57. 52 Miller v The Queen (2016) 259 CLR 380 at 388 [4]. 53 R v Anderson [1966] 2 QB 110 at 118-119. See also R v Collinson (1831) 4 Car & P 565 at 566 [172 ER 827 at 828]; Pearce (1929) 21 Cr App R 79 at 80-81; R v Lovesey [1970] 1 QB 352 at 356. IL v The Queen (2017) 262 CLR 268 at 282 [29], 311 [103], 323-324 [146]-[149]; O'Dea v Western Australia (2022) 96 ALJR 710 at 721 [55]; 403 ALR 200 at 212-213. See also Kadish, "Complicity, Cause and Blame: A Study in the Interpretation of Doctrine" (1985) 73 California Law Review 323 at 354; Dressler, "Reassessing the Theoretical Underpinnings of Accomplice Liability: New Solutions to an Old Problem" (1985) 37 Hastings Law Journal 91 at 110-111. 55 Macklin, Murphy, and Others' Case (1838) 2 Lewin 225 at 226 [168 ER 1136 at 56 Osland v The Queen (1998) 197 CLR 316 at 350 [93]. See also at 383 [174], 413 [257]; IL v The Queen (2017) 262 CLR 268 at 283 [30], 284-285 [34], 287 [40], 297 57 McAuliffe v The Queen (1995) 183 CLR 108 at 114. Gordon EdelmanJ (ii) Extended joint criminal enterprise The doctrine of "extended joint criminal enterprise", as the name suggests, involves an extension, beyond the scope of the agreement, of responsibility for a joint criminal enterprise. In Miller58, the doctrine of extended joint criminal enterprise was expressed to apply where a party to a joint criminal enterprise has not agreed to the commission of a crime but has instead foreseen the commission of that crime in the course of carrying out the agreement and continues to participate in the enterprise. What is to be foreseen is that an incidental crime might be committed59, being all elements of that crime. In Miller60, the joint judgment of five members of this Court described the "paradigm case" of extended joint criminal enterprise as one "where the parties agree to commit a robbery and, in the course of carrying out their plan, one of them kills the intended victim with the requisite intention for murder". The liability of the other parties to the agreement would arise if they "foresaw murder as a possible incident of carrying out the agreed plan". The opening paragraph of the joint judgment in Miller61 made plain what is meant by foresight of the commission of the crime of murder: foresight "that death or really serious bodily injury might be occasioned by a co-venturer" and also foresight that the co-venturer might act with "murderous intention". As senior counsel for Mr Carver correctly submitted, foresight of the possibility of death naturally follows from foresight of really serious bodily injury (a common paraphrase of grievous bodily harm62). This is particularly so since it must also be proved that the accused foresaw the possibility that the perpetrator would act with murderous intent63 and only acts of the general nature of the (2016) 259 CLR 380 at 388 [4]. See also at 416 [100]. 59 McAuliffe v The Queen (1995) 183 CLR 108 at 117-118; Clayton v The Queen (2006) 81 ALJR 439 at 444-445 [26]; 231 ALR 500 at 506; Miller v The Queen (2016) 259 CLR 380 at 388 [4]. (2016) 259 CLR 380 at 390 [10]. (2016) 259 CLR 380 at 387 [1]. 62 See Chan Wing-Siu v The Queen [1985] AC 168 at 174. 63 Miller v The Queen (2016) 259 CLR 380 at 387 [1]. See also Clayton v The Queen (2006) 81 ALJR 439 at 443 [17], 444-445 [26]; 231 ALR 500 at 504-505, 506; R v Taufahema (2007) 228 CLR 232 at 238 [7]. Gordon EdelmanJ attributed act need to be foreseen64. Consistently with liability for murder being imposed upon a primary offender who intends only to cause the consequence of grievous bodily harm, the foresight required of the secondary offender is that "death or really serious bodily injury might be occasioned" by a co-venturer acting with the intention to cause death or really serious bodily injury65. For these reasons, in each of Gillard v The Queen66, Clayton v The Queen67, and Miller, it would not have made a difference whether the foresight of the possible consequence was described as one of only death or as one of either death or grievous bodily harm. Foresight of the possibility of the latter is treated as involving equivalent culpability as foresight of the possibility of the former, in the same way as intention to cause death is treated as involving equivalent culpability as intention to cause grievous bodily harm. In Gillard, the prosecution case of foresight was based on allegations that Mr Preston had been hired to kill the victim and had gone to the victim's workshop with a loaded gun. In Clayton, the prosecution case of foresight was that the assault on the victim lasted 30 to 40 minutes and involved the use of metal poles and a large carving knife. In Miller, the prosecution case of foresight was based on an assault using weapons including a 332 mm long knife, a baseball bat, and a shovel. If, however, a participant in a joint criminal enterprise foresees only the elements of a lesser crime than the crime for which the primary offender is convicted, then the participant can only be convicted of that lesser crime under the principles of extended joint criminal enterprise. For example, a participant in a joint criminal enterprise of robbery might foresee the possibility that the primary offender would cause very serious bodily harm or death to another person but might not foresee the possibility that the primary offender would do so with murderous intent. In that circumstance, even if the primary offender is convicted of murder, the participant can only be convicted of manslaughter under the principles of extended joint criminal enterprise68. 64 Williams, Criminal Law (1953) at 216-218; Hartt, "Parties to the Offence of Murder" (1958) 1 Criminal Law Quarterly 178 at 181. 65 Miller v The Queen (2016) 259 CLR 380 at 387 [1] (emphasis added). See also McAuliffe v The Queen (1995) 183 CLR 108 at 118. (2003) 219 CLR 1. (2006) 81 ALJR 439; 231 ALR 500. 68 Gillard v The Queen (2003) 219 CLR 1 at 14 [25], 15 [31]-[32], 28-29 [77]-[78], 40 Gordon EdelmanJ The rationale for extended joint criminal enterprise must be different from the rationale for joint criminal enterprise since extended joint criminal enterprise may render a participant in a criminal enterprise liable for a crime committed during that criminal enterprise which was foreseen but which fell outside the scope of the agreement69. In this way, rather than being a principle of primary liability stemming from the agreement, extended joint criminal enterprise is a principle of derivative (or "secondary"70) liability71. Rather than being a principle that is dependent upon the scope of the agreement, it is a principle that depends upon whether the accused party to the agreement foresaw that an incidental crime might be committed, that is, a crime which was not "within the common purpose" or agreement72. Rather than having a rationale based upon the attribution of the authorised acts of another, its rationale is that a person is to be regarded as "intentionally assisting in the commission of a crime" when that party "continues to participate in the venture without having agreed to, but foreseeing as a possibility, the act causing death"73 and that act is foreseen as being coupled with the requisite intent74. In other words, the liability of the accused is derived from, and dependent upon, the criminal liability of another for the foreseen crime that was not part of the agreement75. Unlike joint criminal enterprise simpliciter, in extended joint criminal enterprise there is no attribution of the acts in respect of the incidental crime because the secondary participant did not authorise or agree to the commission of the incidental crime. 69 See Gillard v The Queen (2003) 219 CLR 1 at 36 [112]; Clayton v The Queen (2006) 81 ALJR 439 at 443 [17]; 231 ALR 500 at 504-505; Miller v The Queen (2016) 259 CLR 380 at 388 [4]. 70 Simester, "The Mental Element in Complicity" (2006) 122 Law Quarterly Review 578, adopted in the joint reasons in Clayton v The Queen (2006) 81 ALJR 439 at 444 [20]; 231 ALR 500 at 505. See also Miller v The Queen (2016) 259 CLR 380 at 71 See Osland v The Queen (1998) 197 CLR 316 at 341-342 [71]. 72 McAuliffe v The Queen (1995) 183 CLR 108 at 117. 73 Gillard v The Queen (2003) 219 CLR 1 at 13-14 [25]. See also at 38 [118]; Clayton v The Queen (2006) 81 ALJR 439 at 444 [20]; 231 ALR 500 at 505. 74 Miller v The Queen (2016) 259 CLR 380 at 387 [1], 388 [4]. 75 McAuliffe v The Queen (1995) 183 CLR 108 at 117. Gordon EdelmanJ (iii) Constructive murder Prior to the introduction of s 12A of the CLC Act76 on 1 January 1995, South Australia recognised a common law rule, with lengthy antecedents77, that "it is murder to cause death in the commission of or in furtherance of the commission of a felony involving violence or danger"78. At that time, that common law rule of "constructive murder" required only two elements: (1) the commission of an offence capable of being a foundational offence, and (2) that the act causing the death was done in an attempt to commit, or during or immediately after the commission of, that foundational offence79. An offence was capable of being a foundational offence only if it was a felony and if "the felonious conduct involved violence or danger to some person"80. This "felony murder" rule was commonly described, as it was at trial in these cases, as one of "constructive murder". The label of "constructive murder" illustrates the fiction or deeming of murder: a person was to be treated as though they were a murderer where they caused the death of another, without any intention to cause death or grievous bodily harm, in the course of a foundational offence81. The constructive murder rule at common law required that the accused "cause[d] death in the commission of or in furtherance of the commission of a 76 See Criminal Law Consolidation (Felonies and Misdemeanours) Amendment Act 1994 (SA), s 5. 77 R v Jackson (1857) 7 Cox CC 357 at 360-361; R v Franz (1861) 2 F & F 580 at 582 [175 ER 1195 at 1196]; R v Pembliton (1874) LR 2 CCR 119 at 122; Rubens (1909) 2 Cr App R 163 at 167; R v Murray [1924] VLR 374 at 377. See also Stephen, A Digest of the Criminal Law (Crimes and Punishments) (1877) at 144; Kenny, Outlines of Criminal Law (1902) at 136-137. 78 R v Van Beelen (1973) 4 SASR 353 at 403; R v R (1995) 63 SASR 417 at 420. IL v The Queen (2017) 262 CLR 268 at 326 [156]. 80 Ryan v The Queen (1967) 121 CLR 205 at 241; Arulthilakan v The Queen (2003) 78 ALJR 257 at 263 [27]; 203 ALR 259 at 266; IL v The Queen (2017) 262 CLR 268 81 See Pyrenees Shire Council v Day (1998) 192 CLR 330 at 387 [163], referring to Fuller, Legal Fictions (1967) at 71. Gordon EdelmanJ felony involving violence or danger"82. By 1949 it had already been the law consistently for fifty years that "death unintentionally brought about in the commission or furtherance of a felony is only murder in the actor, if the felony is one which is dangerous to life and likely in itself to cause death"83. But this did not resolve whether actions, during or immediately after the foundational offence, would be treated as those of the accused. As to the question of whether an accused person had committed the act and thus caused the death, the constructive murder rule incorporated the common law rules of attribution of acts embodied in joint criminal enterprise84. By those rules, the relevant act causing death was attributed to all parties to an agreement if the act was within the scope of their agreement85. Hence, in R v Ryan and Walker86, Mr Walker, one of the participants in a felony, could be convicted of felony murder because he was a "party to the unlawful use of force"87. As with joint criminal enterprise generally, difficult questions sometimes arose concerning when an act would be within the scope of the agreement. It was held that the agreement need not extend to the precise manner in which the act was committed. It was sufficient for the scope of the agreement to extend to acts of the general nature of the attributed act. Thus, in the course of upholding a conviction for felony murder of a party to an agreement to rob, it was said not to prevent the conviction of that 82 R v Van Beelen (1973) 4 SASR 353 at 403; R v R (1995) 63 SASR 417 at 420. See also Stephen, A Digest of the Criminal Law (Crimes and Punishments) (1877) at 83 Ryan v The Queen (1967) 121 CLR 205 at 240, quoting R v Brown and Brian [1949] VLR 177 at 181 (emphasis added). 84 R v Solomon [1959] Qd R 123 at 126-127; Arulthilakan v The Queen (2003) 78 ALJR 257 at 263 [28]-[29]; 203 ALR 259 at 266. See also the reasons of Kiefel CJ 85 Macklin, Murphy, and Others' Case (1838) 2 Lewin 225 at 226 [168 ER 1136 at 1136]; R v Jackson (1857) 7 Cox CC 357 at 360-361; R v Murray [1924] VLR 374 [1966] VR 553 at 567. Gordon EdelmanJ party that the robbery varied "in the manner of execution of [the] agreed plan ... [O]bviously it must have been a plan to rob with some degree of violence"88. Sections 11 and 12A of the CLC Act Sections 11, 12, and 12A of the CLC Act provide: "11 – Murder Any person who commits murder shall be guilty of an offence and shall be imprisoned for life. 12 – Conspiring or soliciting to commit murder Any person who – conspires, confederates and agrees with any other person to murder any person, whether he is a subject of Her Majesty or not and whether he is within the Queen's dominions or not; solicits, encourages, persuades or endeavours to persuade, or proposes to, any person to murder any other person, whether he is a subject of Her Majesty or not and whether he is within the Queen's dominions or not, shall be guilty of an offence and liable to be imprisoned for life. 12A – Causing death by an intentional act of violence A person who commits an intentional act of violence while acting in the course or furtherance of a major indictable offence punishable by imprisonment for ten years or more (other than abortion1), and thus causes the death of another, is guilty of murder. Note – ie an offence against section 81(2)." A "major indictable offence", to which reference is made in s 12A, is defined in ss 4 and 5 of the Criminal Procedure Act 1921 (SA) as any indictable offence 88 Betts (1930) 22 Cr App R 148 at 155. See also R v Dowdle (1900) 26 VLR 637 at 639; R v Kalinowski (1930) 31 SR (NSW) 377 at 380; R v Solomon [1959] Qd R 123 at 126-127; IL v The Queen (2017) 262 CLR 268 at 326-327 [157]. Gordon EdelmanJ except for "minor indictable offences", which include various categories of offence such as those for which the maximum term of imprisonment does not exceed five years. Section 12A requires "a person" to "commit" an "intentional act of violence" causing the death of another. Thus, the responsibility imposed by s 12A depends upon commission of a particular intentional act of violence by a person. It therefore creates direct or primary liability for murder – its focus is upon the conduct and state of mind of the primary offender, being the person who committed the act and thus caused the death. However, as will be explained, s 12A maintains the common law rules of complicity to the extent that those rules attribute the intentional acts of a primary offender to a secondary offender. The operation of s 11 prior to the introduction of s 12A Prior to the introduction of s 12A, the offence of murder in s 11 was a statutory offence with elements entirely based upon the common law89. There were relevantly three pathways to proof of the offence of murder. First, murder could be proved under s 11 pursuant to the principles of conventional common law murder: that an accused person did an act or omitted to act, with an intention to cause death or grievous bodily harm to another, with the consequence of the death of that other person90. This is the most simple application of the principles of murder. In such cases, murder could also be established by attributing to another accused person the acts of murder if that other accused person was a party to a joint criminal enterprise, provided those acts of murder were within the scope of their agreement. Secondly, murder under s 11 could be proved pursuant to the common law principles of constructive murder. Again, the common law principles of constructive murder could be combined with the rules for attribution of acts embodied in common law joint criminal enterprise. Those common law principles of attribution permitted attribution to the accused of the acts involved in the 89 Arulthilakan v The Queen (2003) 78 ALJR 257 at 269 [63] fn 39; 203 ALR 259 at 275; R v B, FG (2013) 115 SASR 499 at 523 [95]; R v Willoughby [No 2] [2017] SASC 191 at [5]. 90 Putting to one side cases of reckless indifference: Stephen, A Digest of the Criminal Law (Crimes and Punishments) (1877) at 144; Kenny, Outlines of Criminal Law (1902) at 135-136; Pemble v The Queen (1971) 124 CLR 107 at 119; La Fontaine v The Queen (1976) 136 CLR 62 at 75-76; R v Crabbe (1985) 156 CLR 464 at 467-470; Royall v The Queen (1991) 172 CLR 378 at 416. Gordon EdelmanJ foundational offence and the acts causing death provided that the accused was a party to an agreement to commit the foundational offence and that the acts fell within the scope of the agreement. Thirdly, s 11 included the common law rule of extended joint criminal enterprise, which recognised liability for murder by attribution of the liability of a principal offender to the accused, who was party to an agreement, even if the acts of the principal offender were beyond the scope of their agreement91. As explained above, extended joint criminal enterprise deems a person to be guilty of murder if the person was a party to a joint criminal enterprise with the principal offender and foresaw, but did not agree to, the possibility that another party to the agreement would kill or cause really serious bodily harm to another with murderous intent in the course of the criminal enterprise. The effect of s 12A In the second reading speech in the Legislative Council of the Bill that introduced s 12A, the Attorney-General described the felony murder rule in orthodox terms as applying if a person "kills another by an act of violence committed in the course of commission of a felony involving violence"92. Although the Attorney-General made no reference to s 12A incorporating the common law rules of attribution of acts causing death, the Attorney-General said that the Bill had adopted the course of "retaining the [common law] rule to a large degree", adding later that "the scope of the statutory rule is somewhat different as it applies only to serious crimes". Section 12A did not create a separate offence. It is, instead, another pathway to establishing the offence of murder under s 1193. That is, s 12A adapted the common law "constructive murder" rule to provide a pathway to murder whereby an unlawful killing becomes murder if it results from an intentional act of violence whilst acting in the furtherance of a major indictable offence punishable by imprisonment for ten years or more. 91 McAuliffe v The Queen (1995) 183 CLR 108, adapting Chan Wing-Siu v The Queen 92 South Australia, Legislative Council, Parliamentary Debates (Hansard), 4 August 93 Arulthilakan v The Queen (2003) 78 ALJR 257 at 263 [27]-[28]; 203 ALR 259 at 266; IL v The Queen (2017) 262 CLR 268 at 326 [155]. Gordon EdelmanJ In this respect, s 12A is unlike ss 11 and 12, which respectively created distinct statutory offences of murder and conspiring to commit, or soliciting the commission of, murder. Instead, s 12A effectively amended the scope of s 11, where the elements were otherwise defined by common law, by altering the common law constructive murder rule that would otherwise have applied under The requirement in s 12A for "a person" to "commit" the "intentional act of violence" causing the death of another focuses upon the person who commits the particular intentional act of violence. Section 12A thus recognises a pathway in s 11 to direct, or primary, liability for murder. Its focus is upon the conduct and state of mind of the primary offender, who committed the act and thus caused the death. But, consistently with the common law rules of attribution of acts, a person will "commit" an act under s 12A and be liable for constructive murder where the primary offender's intentional act of violence was within the scope of their agreement, so that the primary offender's act can be attributed to the accused94. The prosecution case To establish murder under s 11 of the CLC Act, the prosecution relied upon what were asserted to be the alternative pathways of "common law murder" by extended joint criminal enterprise and "constructive murder" (as defined by s 12A) combined with extended joint criminal enterprise. In opening, the prosecutor asserted that the foundational offences for constructive murder were either robbery95 or a criminal trespass offence of "Aggravated Serious Criminal Trespass in a Place of Residence with the Intent to Commit Theft"96. The trial judge required the prosecutor to elect between these offences as the foundational offence. The prosecutor elected to rely upon the criminal trespass offence. The trial judge rejected a submission by counsel for Mr Rigney that s 12A of the CLC Act required the foundational offence to include an act of violence as a necessary element. As the trial judge directed the jury, the prosecution case, on either common law murder or constructive murder (as defined by s 12A of the CLC Act), had been based on extended joint criminal enterprise. The prosecution alleged a joint criminal enterprise between the appellants and a fifth man who was tried separately 94 Arulthilakan v The Queen (2003) 78 ALJR 257 at 260-261 [16]; 203 ALR 259 at 263; IL v The Queen (2017) 262 CLR 268 at 294 [60], 324 [148]-[149], 328 [160]. 95 CLC Act, s 137. 96 CLC Act, s 170. Gordon EdelmanJ (Mr Howell) to break into a residence and steal a substantial amount of cannabis. The residence was described as a "grow house". The prosecution alleged that during the night of 8 October 2018, the five men travelled to an area close to the grow house in a white Holden Commodore bought by Mr Rigney and a blue Subaru owned by Mr Mitchell. They then left the cars and walked to the grow house, where they broke in with an intention to steal cannabis. Mr Gjabri was living there and guarding the cannabis. They violently assaulted Mr Gjabri with one or more blows to his head, which caused his death at least 35 minutes later. They then loaded the cannabis into Mr Gjabri's car and drove it to where the other two cars had been parked earlier. All the cars then travelled to a location where the cannabis was then transferred from Mr Gjabri's car to Mr Mitchell's blue Subaru. The prosecution had a very strong circumstantial case establishing a joint criminal enterprise. Earlier on 8 October 2018, Mr Rigney had bought a white Holden Commodore and, at his request, had it registered in the name of an acquaintance. CCTV footage showed a car matching that description driving near the grow house and parking in a backstreet, just before the murder. CCTV footage also recorded a car, matching the description of the blue Subaru owned by Mr Mitchell, parking in the same street. Shortly before the murder, telephone tower data indicated the mobile phones of each of the appellants, except Mr Tenhoopen, converged upon an area near the grow house. At that time, five persons were seen on CCTV footage walking together in the direction of the grow house. One was carrying a long object that was described by the trial judge as resembling a stick or possibly a bat. In this Court, senior counsel for the respondent described it as "a long item, linear, that glistened", and the prosecution in opening referred to it as a "long reflective object". The five people shown on the CCTV footage walked past a building site containing bricks, and police later found similar bricks or parts of bricks at the crime scene. Two of the men in the CCTV footage appeared to be smoking and a light was seen to fall to the ground consistent with one of the men dropping a cigarette. A search of that location revealed a cigarette butt on which DNA was found with an extremely strong probability of a match to Mr Carver. A swab taken from a knife found in the laundry at the grow house contained DNA with an extremely strong probability of a match to Mr Carver. A pair of secateurs found in the grow house contained DNA with a very strong probability of a match to Mr Mitchell. Swabs taken from the steering wheel of Mr Gjabri's car contained DNA with an extremely strong probability of a match to Mr Rigney. And Mr Rigney's partner found Mr Gjabri's phone inside the white Holden Commodore bought by Mr Rigney. Gordon EdelmanJ The police searched Mr Gjabri's car and found numerous remnants of cannabis in it. Stolen cannabis was found by the police which contained pieces of yellow tape that were indistinguishable on scientific analysis from yellow tape found by the police in cannabis located at Mr Carver's house. The police found a receipt at the grow house for a box of "Raven" nitrile gloves. The police later found a box of Raven nitrile gloves at Mr Carver's house. DNA on the box was found to have an extremely strong probability of a match to Mr Carver, and fingerprints on the box were matched to Mr Carver and Mr Tenhoopen. Three witnesses (Ms Carson, Ms McCormack and Mr Watts) gave evidence that Mr Tenhoopen had made admissions that he was at the grow house with the other appellants and had taken part in the theft of the cannabis. Mr Mitchell gave evidence in his defence in which he made admissions including that he was driving in the vicinity of the grow house at the relevant time with Mr Carver, Mr Tenhoopen and Mr Howell, that he was told to stop, and that the others then left the vehicle for some indeterminate time. When Mr Tenhoopen and Mr Howell returned to the car, he followed the car driven by Mr Carver. The cars later stopped in a residential street where Mr Tenhoopen and Mr Howell put cannabis in the boot of Mr Mitchell's car. Mr Mitchell said that he then drove to Mr Carver's house, helped to unload the cannabis, and left. Mr Carver's partner gave evidence that Mr Howell had told her that he thought he had killed a man and he proposed to leave town. When she spoke to Mr Carver about that conversation, she said that Mr Carver appeared shocked, scared, and worried, and that he cried. She overheard a subsequent conversation between Mr Carver and Mr Howell where Mr Howell told Mr Carver that he, Mr Howell, might have killed a man and spoke about breaking into a house. The trial judge's directions and the convictions The trial judge directed the jury in relation to both murder and an alternative offence of manslaughter. These appeals are concerned only with the murder offence. The trial judge correctly described the prosecution alternatives as "two different pathways" to the offence of murder and separated those pathways by descriptions of them as common law murder and "constructive murder". The trial judge directed the jury, consistently with the prosecution case, that both pathways relied upon principles of extended joint criminal enterprise. As to the pathway of common law murder by extended joint criminal enterprise, the trial judge correctly directed the jury, on repeated occasions, of the requirements for a primary offender to have committed murder: that the person by a voluntary and deliberate act or acts unlawfully caused the death of another person and did so with the intention either to kill or to cause grievous bodily harm (really serious bodily harm). The trial judge directed the jury that a conclusion of murder Gordon EdelmanJ by a primary offender (whomever the person might have been) could extend to any of the accused by extended joint criminal enterprise. The issue for the jury was said to be: "[D]id the accused contemplate that in carrying out the joint enterprise to break into the house and steal the cannabis that one or more of the accused, if they came across someone in the house, might inflict violence on that person and inflict violence accompanied with that specific intention of causing death, trying to kill Mr Gjabri, or causing him really serious bodily harm." A direction to similar effect was repeated numerous times but at no time did the trial judge direct that, in addition to foresight of the possibility of violence with an intention to cause death or really serious bodily harm, the accused must also contemplate the result of death or really serious bodily harm. As to the pathway of constructive murder combined with extended joint criminal enterprise, the trial judge again correctly directed the jury of the elements of constructive murder for the primary offender: an intentional act of violence, committed in the course or furtherance of the alleged criminal trespass offence, and which caused the death of Mr Gjabri. The trial judge also directed the jury that a conclusion of murder by this route extended the responsibility of the primary offender to any of the accused by what the trial judge described as "extended joint enterprise in relation to the constructive murder". The question for the jury was said to be: "[D]id the accused contemplate that in carrying out the joint enterprise to break into the house and steal the cannabis, if they came across someone in the house, might inflict an intentional act of violence on that person? ... [T]he prosecution do not have to prove that the accused or all of them contemplated that someone, one of their number, might inflict such violence, violence with the intent to cause really serious bodily harm or the intent to kill. For constructive murder, what they have to contemplate is that one of the people in the joint enterprise might inflict an intentional act of violence on Mr Gjabri." The trial judge directed the jury several times in the context of constructive murder that the intentional act of violence contemplated by the accused could be any intentional act of violence at all. The jury were directed that the accused would only have to contemplate that one of their co-accused "might strike Mr Gjabri for example on the back of the leg". The trial judge repeated this example twice when explaining that contemplation of any intentional act of violence would suffice. Gordon EdelmanJ The jury returned verdicts of guilty for each of the appellants of the offence of murder under s 11 of the CLC Act. The jury were not asked to, and did not, take the unusual course of answering a special question as to the pathway upon which the conviction for murder had been reached. This has the effect that an error in relation to the direction concerning either pathway to guilt for murder requires that the convictions be set aside entirely. The decision of the Court of Appeal Each of the appellants before this Court appealed to the Court of Appeal on a number of grounds, all of which were dismissed. Two grounds are relevant to these appeals. In broad effect, they were as follows. The first was that the trial judge erred by directing the jury that an accused person could be guilty of murder by reference to s 12A of the CLC Act when the foundational crime did not involve the commission of an intentional act of violence. The second was that the trial judge erred by directing the jury in relation to constructive murder under s 12A by failing to direct the jury that an accused person must have contemplated the death of the victim arising from an intentional act of violence. Peek A-JA, with whom Kelly P and Doyle JA agreed, rejected the first ground on the basis that the constructive murder rule at common law did not require that the foundational offence contain an element of violence, and s 12A had not introduced such a requirement97. Doyle JA, in additional reasons, observed that while the common law constructive murder rule required that the commission of the felony involved an act that was violent or dangerous, the felony itself did not need to include a violent or dangerous act98. Peek A-JA rejected the second ground on the basis that the contemplation of the death of another was not necessary for constructive murder99. The grounds of appeal in this Court One difficulty with the manner in which the appeals were presented in the Court of Appeal was that the grounds of appeal followed the approach of the trial judge, which combined two different doctrines in the second pathway to murder in s 11: extended joint criminal enterprise and constructive murder. In this Court, with a grant of special leave to appeal, the appellants relied upon a ground of appeal to the effect that the principles of extended joint criminal enterprise could 97 Rigney v The Queen (2021) 139 SASR 305 at 337 [95]-[97], 339 [103]. (2021) 139 SASR 305 at 311 [6]. (2021) 139 SASR 305 at 358 [172]. Gordon EdelmanJ not be combined with those of constructive murder to create a new pathway to proof of murder. This ground is necessarily anterior to the issue considered by the Court of Appeal concerning the elements of proof of murder based on s 12A and extended joint criminal enterprise. As an alternative to the first ground, the appellants (with some variation in formulation) asserted that if the doctrines of extended joint criminal enterprise and constructive murder could be combined, then the trial judge should have directed that the accused must foresee that a co-venturer might, in the course or furtherance of the foundational offence, commit an intentional act of violence that might cause, or was capable of causing, death or really serious bodily harm. The appellants also relied upon a separate ground of appeal that the Court of Appeal erred by holding that common law murder based on extended joint criminal enterprise did not require the prosecution to prove foresight of the possibility of an act causing death or at least an act capable of causing death or really serious bodily harm. Mr Mitchell had an additional ground of appeal that the Court of Appeal erred in considering that it was common knowledge in Australian society that a grow house would likely be guarded and that violence might be necessary to overcome the guard. But during oral argument, senior counsel for Mr Mitchell accepted that this ground was only a "minor point". The ground does not separately establish any legal error and does not assist in resolving the issues of interpretation which are central to these appeals. The first ground of appeal: s 12A does not permit the combination of constructive murder and extended joint criminal enterprise The effect of the directions of the trial judge was that in addition to the three relevant pathways to murder in s 11 that are set out above100, a new, fourth pathway was created: constructive, constructive murder. This new pathway to murder would dispense with the requirement for constructive murder that the accused commit an act, or be attributed an act, causing the death of another. It would replace that requirement for an act, actual or attributed, with the mere foresight of the possibility of an intentional act of violence. There is nothing in either the text, context, or purpose of s 12A to suggest that it was intended to create a new pathway to murder that combined the deeming element of constructive murder with the deeming elements of extended joint criminal enterprise. Moreover, at the time of introduction of s 12A on 1 January 100 Above at [68]-[71]. Gordon EdelmanJ 1995, the doctrine of extended joint criminal enterprise was not recognised in Australia101. As to the text of s 12A, because extended joint criminal enterprise is a form of derivative (not primary) liability, the primary offender's acts are not attributed to a secondary participant. No secondary participant can be "[a] person who commits an intentional act of violence" within the meaning of s 12A. That is because the primary offender's intentional act of violence was not within the scope of the agreement between the parties. Whatever the expression that is used to describe the rules of attribution of acts ("agreement", "common purpose", "joint enterprise"), s 12A does not permit the attribution of an intentional act of violence by a primary offender to a secondary participant where the act was not agreed to, or was not within a common purpose or a common enterprise. Nor does the context or purpose of ss 11 and 12A support the view that s 12A created a new pathway to murder. As explained above, s 12A modified the common law "constructive murder" pathway to murder in s 11. The modifications introduced by the Parliament of South Australia had the effect of amending and restricting the operation of constructive murder. They did not create a new pathway to murder. It would have been a remarkable step for s 12A to have created such a new, expansive pathway. For a long time prior to its abolition in England, the constructive murder rule had itself been deprecated. Sir James Fitzjames Stephen described it as an "astonishing doctrine" and "monstrous"102. In this Court, it has been described as a "harsh" rule, "criticised for over 150 years"103. For s 12A to have created a new, expansive pathway it would, in effect, have expanded constructive murder in the teeth of these criticisms to "constructive, constructive murder". Rather than merely adjusting the operation of the existing common law as the text of s 12A purported to do, s 12A would have created a new pathway of constructive, constructive murder – in effect a new offence104. It would be extraordinary if, without any textual mandate to do so, this Court were to 101 McAuliffe v The Queen (1995) 183 CLR 108, decided on 28 June 1995. 102 Stephen, A History of the Criminal Law of England (1883), vol 3 at 57, 70-71. See also Russell on Crime, 12th ed (1964), vol 1 at 481. 103 IL v The Queen (2017) 262 CLR 268 at 323 [143], 326 [155]. 104 Compare Peters v The Queen (1998) 192 CLR 493 at 515 [53]. Gordon EdelmanJ interpret s 12A as creating such a new pathway to murder, by combining constructive murder (as modified) with extended joint criminal enterprise. The only authority which the respondent pointed to as an attempt to justify the existence of this new pathway to murder was the decision of the Full Court of the Supreme Court of South Australia in R v R105. In that case, the trial judge had directed the jury to the effect that a party to an agreement to commit a robbery would be guilty of constructive murder if the scope of the agreement to rob included violence and a danger to life. The trial judge recognised that the attribution would occur because, by agreement, the person "joins in" the "violent and dangerous crime"106. In the course of his reasoning dismissing the appeals, however, King CJ (with whom the other Justices agreed) said that the act of the actual perpetrator would be attributed to the other parties to the agreement even if the act was "unintended" by, and not within the "contemplation" of, the other parties to the agreement107. The statement by King CJ is consistent with the long-standing authority discussed earlier in these reasons if it is taken to mean that an act of violence within the scope of an agreement will be attributed to all parties, even if they could not have foreseen that it would cause death. But if it is taken to mean that at common law a party to an agreement to commit a felony may have an act attributed to them which was not within the scope of their agreement simply on the basis that, no matter how remote the act, a participant must "accept responsibility for what occurs in the course of [the agreed] felony"108, then the statement is contrary to the long-established principles of common law constructive murder. Indeed, if the statement were read in that way, it would also go further than the double fiction of constructive, constructive murder because it would not even require foresight of the elements of the offence of murder. The appellants' first ground should therefore be upheld. Section 12A does not permit the creation of a new pathway to murder by combining the deeming effects in each of the doctrines of constructive murder and extended joint criminal enterprise. Consequently, it is unnecessary to consider the second ground 105 (1995) 63 SASR 417. 106 (1995) 63 SASR 417 at 419. 107 (1995) 63 SASR 417 at 421. 108 (1995) 63 SASR 417 at 421. Gordon EdelmanJ concerning what the elements of such a wholly new pathway would be, or what directions might have been required to give effect to it. The third ground: erroneous directions concerning extended joint criminal enterprise This conclusion would be sufficient for the appeals to be allowed. But in circumstances where there must be retrials of the appellants, it is necessary also to address the third ground of appeal by focusing only upon the principle of extended joint criminal enterprise at common law and the proper directions in relation to that principle. That ground should also be upheld. The respondent to these appeals did not allege that these appeals could have been dismissed by application of the common form proviso to criminal appeals109. The decision of this Court in Miller110 precluded each appellant from being held responsible for murder by application of the doctrine of extended joint criminal enterprise unless the prosecution established beyond reasonable doubt that he foresaw both that a participant in the joint criminal enterprise might act with murderous intention and that acts committed in the course of the enterprise might cause really serious bodily injury or death. The trial judge directed the jury that they could only find that an accused person was guilty of murder under the pathway of common law murder based on extended joint criminal enterprise if the prosecution had proved beyond reasonable doubt that the accused foresaw that a participant to the joint criminal enterprise might inflict violence with an intention of causing death or really serious bodily harm. But the trial judge erred by failing to direct the jury that for common law murder based on extended joint criminal enterprise the accused must also foresee the consequence of death or really serious bodily harm. In many cases, foresight of this consequence might be a very short step from foresight that a participant might act with murderous intention. The direction that the trial judge should have given in relation to extended joint criminal enterprise is one in which it was explained that conviction depended upon proof beyond reasonable doubt that the accused was a party to an agreement to commit a crime and that the accused foresaw that in the commission of that crime there was a possibility that another person, with intent to do so, would cause really serious bodily harm or death. For the reasons explained above in relation to the first ground, any direction should separate that pathway to conviction for common law murder based on 109 Criminal Procedure Act 1921 (SA), s 158(2). 110 (2016) 259 CLR 380 at 387 [1]. See also at 416 [100]. Gordon EdelmanJ extended joint criminal enterprise from any pathway to conviction for common law murder based upon s 12A of the CLC Act. Where an accused is alleged to be the primary offender under s 12A, it would require a jury to be satisfied beyond reasonable doubt that the accused, while acting in the course or furtherance of committing the major indictable offence alleged by the prosecution, caused the death of the victim by an intentional act of violence. Where, in the case of joint criminal enterprise, an accused is alleged under s 12A to be a party to an agreement to commit the major indictable offence alleged by the prosecution, it would require a jury to be satisfied beyond reasonable doubt that the accused was a party to an agreement to commit that major indictable offence and that the agreement included the possible commission of an intentional act of violence of the same general nature as that which caused the death111. Conclusion Mr Tenhoopen's application for special leave to appeal should be granted and his appeal allowed. Each other appeal should also be allowed. In each appeal, including that of Mr Tenhoopen, there should be orders that: order 2 of the orders of the Court of Appeal of the Supreme Court of South Australia, made on 10 August 2021, be set aside and in its place there be orders that (i) the appeal be allowed, (ii) the conviction be quashed, and (iii) there be a new trial. 111 See also the reasons of Kiefel CJ at [19].

HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION APPELLANT AND QANTAS AIRWAYS LIMITED RESPONDENT Commissioner of Taxation v Qantas Airways Limited [2012] HCA 41 2 October 2012 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court made on 1 September 2011 and in place thereof order that the appeal to the Full Court be dismissed with costs. On appeal from the Federal Court of Australia Representation A H Slater QC with J O Hmelnitsky and C A Burnett for the appellant (instructed by Australian Government Solicitor) R C Cordara SC with C M Sievers for the respondent (instructed by PricewaterhouseCoopers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Qantas Airways Limited Goods and Services Tax – Taxable supply – Supply – Consideration – Overbooking – Attribution of tax period – Airfares that were non-refundable or refundable but unclaimed – Customer cancels or fails to take purchased flight – Promise by airline to use best endeavours to carry passengers and baggage – Whether a taxable supply under A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 9-5 – Whether airline liable to remit to Commissioner GST on non- refundable or unclaimed refundable fares. Words and phrases – "a supply for consideration", "consideration", "taxable supply". A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 7-1, 9-5, 9-10, GUMMOW, HAYNE, KIEFEL AND BELL JJ. Introduction The respondent ("Qantas") and its subsidiaries, including Jetstar Airways Pty Limited ("Jetstar"), provide domestic and international air travel but this litigation concerns only their domestic operations. Both Qantas and Jetstar supply classes of air travel with varying fare rules and conditions of carriage. They engage in "overbooking", a practice of booking more passengers on a flight than there are seats available, in anticipation that not all of those booked will present themselves to board the flight. This is said by Qantas to be a practice common among airlines, and is a practice of long standing by Qantas. At all relevant times Qantas acted under subdiv 48-A of A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("the GST Act"), as the representative member of the corporate group. Each month was a tax period and on that monthly basis Qantas remitted GST as the representative member. The amount in contest in this appeal is the GST on fares received from prospective passengers who failed to take the flights for which reservations and payment had been made. In accordance with the applicable conditions, some fares were forfeited while others were refundable on application within a stipulated period but no refund claim was made. Division 19 of the GST Act makes special provision for "adjustment events" such as a change in the consideration for a supply by reason of a refund of the fare, leading to a decreasing adjustment to the GST. But this dispute is concerned not with refunds but with cases where no refund was claimed or none was available. Qantas did not contend that Div 19 had any direct application. Section 29-5(1) is an important provision in the legislative scheme. The GST is attributable to the tax period in which there is received "any" of the consideration, being the fares paid, or, before that receipt, the invoice is issued. The appellant ("the Commissioner") stresses that the effect of the GST Act is that with respect to any particular transaction the GST is payable only once, at the end of the attributable taxation period. In particular, GST is not payable more than once by reason that the consideration is received in connection with an executory contract which involves more than one supply. Thus, GST on the consideration received is not payable in each of the tax periods in which a series of events occur in performance of an executory contract; the GST is payable once, in the tax period of the first payment or invoice. Bell The fares were calculated to recover from the customer the GST payable on the amount of those fares. On payment of the fare the GST amount was recorded by the airline as a debt due to the Commissioner; the balance was credited to unearned income until the flight was taken or the fare was forfeited. The GST component of the fares for flights not taken was not refunded to customers. The assessments in evidence total $34,275,917; this comprises $26,604,347 in GST in respect of forfeited fares (divided between Qantas as to $16,717,019 and Jetstar $9,887,328) and $7,671,570 in GST in respect of fares where a refund was permitted but no claim to the refund had been made. The litigation Qantas contended that GST was not payable on the unused fares and that the GST which had been paid on them should be refunded by the Commissioner. To resolve the dispute the Commissioner issued assessments for the monthly tax periods from July 2005 to June 2008, including GST on fares received by Qantas in those months in respect of travel not undertaken. By Notice of Objection dated 31 July 2009, Qantas objected to the inclusion of the GST on unused fares. On 9 October 2009 the Commissioner disallowed the objection pursuant to s 14ZY of the Taxation Administration Act 1953 (Cth) ("the Administration Act"). The objection decision was referred to the Administrative Appeals Tribunal ("the AAT") (comprising the President, Downes J, and Senior Member Mr S E Frost), for review under s 14ZZ of the Administration Act. The AAT delivered its reasons on 6 December 20101 and affirmed the disallowance by the Commissioner of the objection by Qantas. Qantas then pursued the matter by an "appeal" under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) to the Federal Court of Australia. The appeal was heard by a Full Court (Stone, Edmonds and Perram JJ). There was no issue that the appeal raised questions of law sufficient to attract jurisdiction under s 442. On 1 September 2011 the Full Court set aside the decision of the AAT, together with the objection decision of the Commissioner, and allowed in full the Notice of Objection by Qantas. By special leave the Commissioner appeals to this Court against the whole of the judgment of the Full Court. For the reasons which follow the appeal (2010) 119 ALD 199. 2 Qantas Airways Ltd v Federal Commissioner of Taxation (2011) 195 FCR 260 Bell should be allowed, the orders of the Full Court should be set aside and in place thereof the appeal to the Full Court should be dismissed. The Full Court decision Stone J agreed with the joint reasons of Edmonds and Perram JJ. Their Honours set out various provisions of the Qantas conditions of carriage as at September 2008 ("the Qantas conditions") and the Jetstar conditions of carriage as at February 2008 ("the Jetstar conditions"). They concluded that it was plain that "what each customer pays for" is carriage by air and continued3: "This is the essence, and sole purpose, of the transaction. The prospective supply is of air travel, dare we say, in the face of [Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd4], 'nothing more or less'. Having recognised the actual travel had not been supplied, and that was the purpose of the booking, that should have been the end of the inquiry. The actual travel was the relevant supply, and if it did not occur there was no taxable supply. Instead, what the Tribunal did was to look for other 'acts' satisfying the definition of supply. It erred in doing so, for even if the identified 'acts' were capable of meeting the definition of supply, they were not 'acts' for which the consideration was provided." This reasoning fixes upon the consideration "for" which a "taxable supply" was provided and identifies this by distilling from the arrangements between airline and customer the "essence and sole purpose" of the transaction5. In this Court, Qantas relied upon this reasoning and claimed support for a "substantive approach" to the legislation by analogy to the decision in Baltic Shipping Co v Dillon6. That litigation concerned an unsuccessful claim by a (2011) 195 FCR 260 at 278. (2008) 236 CLR 342 at 347-348 [13]; [2008] HCA 22. cf the principle that an instrument be stamped "for its leading and principal object": Limmer Asphalte Paving Co v Commissioners of Inland Revenue (1872) LR 7 Ex 211 at 217; Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1 at 10-11, 24, 33-34; [1989] HCA 19; TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 at 582-583 [11]; [2010] HCA 49. (1993) 176 CLR 344; [1993] HCA 4. Bell passenger for return of that part of the fare she had paid which had not been refunded. The claim was for a total failure of consideration by the shipping company7 when the ship sank after the eighth day of what was to be a 14 day cruise. Deane and Dawson JJ8 approached the issue of total failure of consideration by asking "as a matter of substance" what was the consideration promised by the shipping company. Baltic Shipping provides no analogy with situations in which the airline retains the fare in exercise of its entitlement to do so after the passenger does not board the flight; there has been no failure by the airline in its performance. The legislation The determination on this appeal of whether the process of abstraction by the Full Court is justified requires further attention to the operative provisions of the GST Act. The appeal turns upon the construction and application of those provisions. In particular, in the phrase "the supply for consideration" (emphasis added), which appears in the definition of "taxable supplies" in s 9-5(a) and is set out below, the word "for" is not used to adopt contractual principles. Rather, it requires a connection or relationship between the supply and the consideration. Section 7-1 of the GST Act is identified as a "central provision". It relevantly states that GST is payable "on *taxable supplies". The use of the asterisk is a device to alert the reader to the presence of a definition in the Dictionary to the Act. Division 9 (ss 9-1 - 9-99) is headed "Taxable supplies". Section 9-5 answers a question "What are taxable supplies?" by stating that "you" make such a supply if: you make the supply for *consideration; and the supply is made in the course or furtherance of an *enterprise that you *carry on; and the supply is *connected with Australia; and you are *registered, or *required to be registered." It should be noted that s 9-5 goes on to state that the supply is not a "taxable supply" to the extent that it is "*GST-free" or "*input taxed". None of (1993) 176 CLR 344 at 348. (1993) 176 CLR 344 at 378. Bell the supplies in connection with which the unused fares were received were GST-free or input taxed. The term "consideration" is defined in s 9-15 so as to include "any payment, or any act or forbearance, in connection with a supply of anything" (s 9-15(1)(a)), and "any payment, or any act or forbearance, in response to or for the inducement of a supply of anything" (s 9-15(1)(b)). Section 9-10 is headed "Meaning of supply". Sub-section (1) of s 9-10 states that a supply "is any form of supply whatsoever". Sub-section (2) should be set out in full: "Without limiting subsection (1), supply includes any of these: a supply of goods; a supply of services; a provision of advice or information; a grant, assignment or surrender of *real property; a creation, grant, transfer, assignment or surrender of any right; a *financial supply; an entry into, or release from, an obligation: to do anything; or to refrain from an act; or (iii) to tolerate an act or situation; any combination of any 2 or more of the matters referred to in paragraphs (a) to (g)." (emphasis added) The Commissioner relies upon the emphasised portions of pars (b), (e), (g) and Bell With the distinction between "supply" and "taxable supply" in mind, the Court observed in Reliance Carpet9: "The composite expression 'a taxable supply' is of critical importance for the creation of liability to GST. In the facts and circumstances of a given case there may be disclosed consecutive acts each of which answers the statutory description of 'supply', but upon examination it may appear that there is no more than one 'taxable supply'." That is not to deny that the one consideration may be received for more than one supply, although, as noted above10, the GST will be payable once and will be attributable to the first tax period in which any of the consideration is received or invoiced. The substance of the submission by Qantas, variously expressed, is that the Full Court was correct because (i) the dealings between Qantas and Jetstar and prospective passengers were such that there was no more than one projected "taxable supply", namely the supply of air travel, (ii) this supply did not come to pass and (iii) no GST was exigible. In addition to the above general provisions of the statute, various specific provisions with respect to various species of supply are made elsewhere in the GST Act and use phrases of relationship and connection. The specific provisions of the GST Act with which this case was concerned were insufficiently appreciated in submissions by Qantas. It sought to derive from what was said in three cases support for the construction of the general provisions in Div 9 dealing with taxable supplies and consideration, in particular the phrase "the supply for consideration" in the definition of "taxable supply" in s 9-5(a). Travelex Ltd v Federal Commissioner of Taxation11 turned upon subdiv 38-E (headed "Exports and other supplies for consumption outside Australia") and in particular upon the phrase "in relation to rights" in Item 4 of the table appearing in s 38-190, which listed certain supplies which were GST-free; this Court held that the supply of foreign currency notes was sufficiently a supply "in relation to rights" to attract the exemption. Saga (2008) 236 CLR 342 at 346 [5]. 11 (2010) 241 CLR 510; [2010] HCA 33. Bell Holidays Ltd v Commissioner of Taxation12, a decision of the Full Court of the Federal Court, turned upon the phrase "connected with Australia" in par (c) of s 9-5, and upon s 9-25(4), which stipulated that "[a] supply of *real property is connected with Australia if the real property, or the land to which the real property relates, is in Australia"; the decision of Gzell J in TAB Ltd v Commissioner of Taxation13 hinged upon the phrase in Div 126 "relating to the outcome of a *gambling event" in the definition of the term "gambling supply" (s 126-35(1)(b)). Reliance Carpet The emphasis by the Full Court upon Reliance Carpet14 was repeated by Qantas in submissions to this Court. That case was treated as if it supported the contention by Qantas that the sole candidate for a taxable supply was the flight, for which the fare was pre-paid, to the exclusion of supply by reason of the making of the contract of carriage upon payment of the fare. The issue in Reliance Carpet was whether the GST was attracted in respect of the amount of a deposit forfeited by the vendor upon termination for default by the purchaser. Section 99-5 stated that the deposit was not to be treated as consideration for a supply but stipulated that the benefit of this provision was lost if the deposit was forfeited for failure to perform the obligation for the performance of which it was security. Section 99-10 provided that the GST which was payable on a taxable supply for which the consideration was a deposit was attributable to the tax period during which the deposit was forfeited. In Reliance Carpet the Full Court of the Federal Court had accepted15 the primary submission by the taxpayer that there had been no "taxable supply" because (i) the essential or principal supply was the single subject of the tax, (ii) in the instant case that single subject was a supply of real property and 12 (2006) 156 FCR 256. 13 (2005) 223 ALR 309. 14 (2008) 236 CLR 342. 15 Reliance Carpet Co Pty Ltd v Federal Commissioner of Taxation (2007) 160 FCR Bell (iii) the contract had been terminated so that there had been no supply of real property and Div 99 had no work to do. The Full Court said16: "When the [taxpayer] entered into the contract for sale with the purchaser it entered into a contract for the supply of real property; nothing more and nothing less." This Court reversed the decision of the Full Court. The Court said17: "the use of the phrase 'nothing more and nothing less' appears to give insufficient weight both to the definition of 'real property' in the Act, and to the identity of the subject matter of the contract, in accordance with ordinary principles of conveyancing, as the title or estate of the vendor in a parcel of land rather than merely the parcel itself in a geographical sense18", and the Court also observed19: "The circumstance that the deposit forfeited to the taxpayer had various characteristics does not mean that the taxpayer may fix upon such one or more of these characteristics as it selects to demonstrate that there was no taxable supply. It is sufficient for the Commissioner's case that the presence of one or more of these characteristics satisfies the criterion of 'consideration' for the application of the GST provisions respecting a 'taxable supply'. One of the characteristics of the deposit was that upon its payment on 5 February 2002 it operated as a security for the performance of the obligation of the purchaser to complete the Contract and was liable to forfeiture on that failure. That is sufficient for the Commissioner's case." 16 (2007) 160 FCR 433 at 445. 17 (2008) 236 CLR 342 at 348 [13]. 18 cf Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 at 13; [1973] HCA 14; The Commonwealth v Western Australia (1999) 196 CLR 392 at 426 [96]; [1999] HCA 5; Risk v Northern Territory (2002) 210 CLR 392 at 418 [82]; [2002] HCA 23. 19 (2008) 236 CLR 342 at 352 [28]. Bell Division 99, to which reference has been made above, was described by this Court20 as a "wait and see" provision, whereby a deposit was taken to be consideration only when it was forfeited. The case provides no support for the proposition adopted by the Full Court in the present case that it was necessary to extract from the transaction between the airline and the prospective passenger the "essence" and "sole purpose" of the transaction. The Commissioner's case The principal submission by the Commissioner is that the unused fares were received or invoiced in the assessed tax periods and that this was on or pursuant to the making of a contract between the airline and the customer under which the airline supplied rights, obligations and services in addition to the proposed flight. These rights, obligations and services comprised "payment ... in connection with a supply" thereof within the meaning of the definition of "consideration"21, so that there was a taxable supply attributable to that period. This submission requires further attention to the terms of the arrangements between Qantas and Jetstar and the customer. The Qantas and Jetstar arrangements The Full Court stated the following conclusions as to the effect of the Qantas conditions and the Jetstar conditions22. Using "Q" to identify the former and "J" to identify the latter: "(1) A person can make a reservation (Qantas) or booking (Jetstar) without making any payment, but: if Qantas has not received payment for the ticket on or before the specified ticketing time, Qantas may cancel the reservation [Q 4.3] and, in consequence, travel will not be allowed [Q 4.2]; and, if Jetstar has not received payment, the person will not be carried, even if they have a booking [J 4.2]. (2) A person buys a Qantas ticket by paying the applicable fare, applicable fees or charges and all government taxes [Q 5.5]; a person does not buy, but only makes a Qantas reservation [Q 4.1]; a 20 (2008) 236 CLR 342 at 354 [35]. 21 Section 9-15(1)(a). 22 (2011) 195 FCR 260 at 272. Bell person both makes [J 4.1] and pays for a Jetstar booking by paying the applicable fare, applicable surcharges, fees or taxes, and any applicable amounts relating to changes to the booking [J 5.5]. (3) The fare covers the flight for the person and the person's Baggage Allowance from the airport at the place of departure specified on the Ticket (Qantas)/in the booking (Jetstar) to the airport at the place of destination specified on the Ticket (Qantas)/specified in the booking (Jetstar) [Q and J 5.1]. (4) A person may purchase a Qantas ticket without a reservation (an open-dated ticket), but the person will not be able to travel until the person makes a reservation in a specified class of service and on a specified date and flight [Q 4.2]. With Jetstar, a person cannot hold an open booking [J 6.2(a)]. (5) With Qantas, a person cannot fly without making a specified reservation, in a specified class of service and on a specified date and flight [Q 4.2]; with Jetstar, a person cannot travel without a booking on a specific flight [J 6.2(a)]." The critical provision in the Qantas conditions is set out in cl 9.2, headed "Late or Cancelled Flights (Except in Circumstances Beyond Our Control)": "We will take all reasonable measures necessary to carry you and your baggage and to avoid delay in doing so. In doing so and in order to prevent a flight cancellation, in exceptional circumstances we may arrange for a flight to be operated on our behalf by an alternative carrier and/or aircraft. Except: If we: as otherwise provided by the convention or other applicable laws, in circumstances where the delay or cancellation is beyond our control (eg bad weather, runway closure, air traffic control issues) cancel a flight fail to operate a flight reasonably according to the flight schedule Bell fail to stop at your destination or stopover destination, or cause you to miss a connecting flight on your ticket on which you hold a confirmed reservation, you can choose one of the following three options: Option 1 - we will carry you at the earliest opportunity on another of our scheduled services on which space is available without additional charge and, where necessary, extend the validity period of your ticket. Option 2 - we will within a reasonable period of time re-route you to the destination shown on your ticket by our own services or those of another carrier, or by other mutually agreed means (eg by bus) and class of transportation, without additional charge. If the fare and charges for the revised routing are lower than what you have paid, we shall refund the difference, or Option 3 - we will make a refund in accordance with the provisions of 13. Subject to the provisions of 6.9 and 9.1 above, these shall be the only remedies available to you and we shall have no further liability to you unless otherwise specified by the convention or any applicable laws." (emphasis added) Clause 13 makes limited provision for refunds upon application. The term "convention" is defined in cl 1 so as to include the Warsaw Convention, the Hague Protocol, the 1999 Montreal Convention, the Guadalajara Convention, and the Montreal No 4 Convention. The Commissioner makes the undisputed point that none of these, nor the provisions of Pts IV23 and IVA24 of the Civil Aviation (Carriers' Liability) Act 1959 (Cth), is applicable to the present case where what is in issue are flights booked but not utilised. Clause 9 of the Jetstar conditions is headed "Schedules, Late or Cancelled Flights". Paragraph (a) of cl 9.1 states: 23 Headed: "Other carriage to which this Act applies". 24 Headed: "Carriers to be insured against liability to passengers for death or personal injury". Bell "Jetstar does not guarantee it will be able to carry you and your Baggage in accordance with the scheduled date and time of the flights specified. Schedules may change without notice for a range of reasons including but not limited to bad weather, air traffic control delays, strikes, technical disruptions and late inbound aircraft. Flight times do not form part of your contract of carriage with us." Conclusions The Qantas conditions and the Jetstar conditions did not provide an unconditional promise to carry the passenger and baggage on a particular flight. They supplied something less than that. This was at least a promise to use best endeavours to carry the passenger and baggage, having regard to the circumstances of the business operations of the airline25. This was a "taxable supply" for which the consideration, being the fare, was received. The GST payable for that taxable supply was attributable to and included in the calculation of the Qantas net amount for the tax periods in issue in this litigation and the assessments objected to were not shown to be excessive. Orders The appeal should be allowed with costs, the orders of the Full Court of the Federal Court should be set aside and the proceeding in that Court should be dismissed with costs. 25 See Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83 at 101, 107; [1980] HCA 15; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 64-65, 91-92, 116-117, 120, 137-138; [1984] HCA 64. HEYDON J. Members of the travelling public often make a reservation for a flight, pay for it, do not turn up, and then fail to exercise any contractual right they may have to a refund of the fare. This appeal concerns the tax consequences relating to that part of a passenger's fare attributable to goods and services tax ("GST") which has been paid to the appellant. Is it to be retained by the appellant on the basis propounded by the appellant, that there has been a taxable supply – of a reservation and a conditional right to be carried – despite the fact that the relevant passenger never flew? Or is it to be returned to the respondent on the basis propounded by the respondent, that since the relevant passenger never flew, there has not been any taxable supply? The problem raised by the appeal can be answered in brief terms as follows. The expression "taxable supply" appears in s 9-5 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("the Act"). Section 9-5 provides that a taxpayer makes a taxable supply if the taxpayer makes "the supply for consideration". A supply by a taxpayer implies that the taxpayer has supplied something to someone else26. Internal preparations by a taxpayer to supply a service do not themselves constitute a supply27. Hence the respondent's conduct in reserving a seat for a passenger by setting aside a seat in its internal reservation system – which could be reallocated at will, and which did not have to be given to the passenger for whom it had been set aside – was an act of preparation for supply, not a supply. The expression "supply for consideration" connotes a bargained-for exchange of value for performance. What, then, was the bargain? The parties agreed that when a passenger books and pays for a seat with the respondent, arrives at the airport and is flown to his or her destination, the respondent can be said to have made "a supply for consideration". The consideration is the passenger's fare money. But "for" what act did the passenger pay that fare money? As a matter of ordinary English, what was supplied for the passenger's fare money? Was it a promise to provide an air journey? Though in practice usually fulfilled, that promise is highly conditional. Further, it is not specifically enforceable, and unlikely to lead to the recovery of damages for breach. Or is what was supplied for the passenger's fare money an actual air journey? It is submitted that the answer is, again as a matter of ordinary English, "an actual air journey". If so, when a passenger books and pays for his or her 26 Westley Nominees Pty Ltd v Coles Supermarkets Australia Pty Ltd (2006) 152 FCR 27 Canada v Calgary (City) (2012) 344 DLR (4th) 577 at 591 [40] per Rothstein J (McLachlin CJC, LeBel, Deschamps, Cromwell, Moldaver and Karakatsanis JJ concurring): "work preparatory to, or in order to make a supply, does not become a separate service subject to GST." seat but does not arrive at the airport and makes no journey by air, nothing has been supplied for consideration. This reasoning can be expanded a little. Both parties treated Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd28 as a binding authority on the construction of s 9-5 read with s 9-10, which defines "supply". However, it is distinguishable. It affords no positive support to either side. The Full Court of the Federal Court of Australia said29: "what each customer pays for is carriage by air. This is the essence, and sole purpose, of the transaction." The appellant criticised the expression "essence, and sole purpose". The appellant said that this issue did "not address, or arise under, the language of the statute." However, there is authority, which the appellant did not attack, that in assessing what a "taxable supply" is, it is material to examine the "evident purpose" of the transaction30, its "legal substance" and "pith and substance"31, and its "direct object"32. The transaction between the respondent and an intending passenger was not a nullity. It was not a sham. It was not illusory. It was not analogous to a "promise" to supply peas, but if there were no peas, to supply beans, or anything else, or nothing at all. On the appellant's case, the transaction between the respondent and the intending passenger created a duty on the respondent and a correlative right in favour of the intending passenger. The duty on the respondent was to take all reasonable measures to carry the intending passenger and his or her baggage without delay. The transaction was a contract of carriage by air – a conditional contract in numerous respects, but still a contract of carriage by air. Under that contract the respondent promised to supply the service of an air journey. Because the passengers with whom this appeal is 28 (2008) 236 CLR 342; [2008] HCA 22. 29 Qantas Airways Ltd v Federal Commissioner of Taxation (2011) 195 FCR 260 at 278 [56] per Edmonds and Perram JJ (Stone J concurring). 30 Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510 at 521 [32] per French CJ and Hayne J; [2010] HCA 33. 31 Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510 at 524 [47] 32 Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510 at 535 [99] per Crennan and Bell JJ. concerned did not make themselves available to enjoy that service, the respondent did not supply them with any air journeys. The Administrative Appeals Tribunal found as a fact that "the actual carriage of the passenger" was "obviously the purpose of each reservation."33 In a sense the respondent supplied services or created a qualified right or entered a qualified obligation when it accepted the fare and made the reservation. But that stage of the transaction was incidental and preparatory to the central purpose, substance and object of the transaction – an actual air journey. What the intending passenger wanted was not so much a chose in action – a qualified promise to supply an air journey which it would be difficult to enforce legally. The intending passenger wanted the actual supply of an air journey. This, through no fault of its own, the respondent never supplied. The appellant's argument was: "It is not necessary for taxpayers to value what is supplied, nor to identify whether there is more than one component of the supply (or more than one supply) in connection with which the consideration is paid, nor to allocate the consideration among any such components, nor to identify the tax periods in which components might have been supplied: it is payment of consideration which determines when, and how much, GST must be paid. The legislative scheme is that the amount to be paid to (or by) the Commissioner – the net amount for a tax period – is fixed by what consideration is first paid or invoiced in the period. That amount is not retrospectively reduced because in a later tax period one of the supplies for which consideration has been invoiced or paid is not made." (footnotes omitted) On this analysis, the bookings made by the respondent, the tickets issued by the respondent and the payment made by the intending passenger create a supply of services or rights sufficient to attract GST, even if the fare payment is eventually refundable. This analysis would surprise the passenger. It is an analysis which operates entirely independently of the subject-matter of the contract and the bargained-for advantage. What the passenger wants is an actual air journey, not a heavily conditional promise to supply one. The parties agreed that there was only a single taxable supply. The respondent submitted that it made a conditional contract to carry the passenger by air, and that if no air journey took place, it had not supplied anything. On the 33 Qantas Airways Ltd v Commissioner of Taxation (2010) 119 ALD 199 at 205 [10]. other hand, the appellant submitted that when a passenger paid a fare, that passenger was supplied with a reservation in consideration of the fare paid. Thus the appellant concentrated on the making of a promise to supply an air journey. The respondent concentrated on the extent to which an air journey actually took place. The appellant concentrated on what was supplied when the seat was reserved and paid for. The respondent concentrated on what was not supplied when the passenger failed to attend at the time when the promised air journey was supposed to take place. The appellant said that the taxable supply was entering the contract to provide an air journey. The respondent said that the taxable supply was the actual provision, under contract, of an air journey. An interpretation of s 9-5 as fastening on the latter supply conforms more closely to practical reality. It prevents GST from being charged in relation to a promise to supply an air journey which the passenger's conduct prevented from being fulfilled and (in some instances) a promise to refund the fare which the passenger did not seek to have fulfilled. The fare was paid not to get a conditional promise to supply an air flight (which promise did take place) but to get an actual air journey (which never took place). The respondent's position does have a superficially unattractive feature. The respondent seeks to acquire money paid by passengers who intended or expected that it would end up in the hands of the appellant, not those of the respondent. If the respondent's argument is correct, the passengers who have not claimed their fares back have left the respondent in a position to gain money which it was never meant to have. The lack of attractiveness in the respondent's position is not fundamental. So far as the contracts of passengers with the respondent did not give them any right to reclaim their fares, they have no cause for complaint. The position in which they find themselves is a result of their contractual choice. So far as the contracts of passengers with the respondent did give them a right to reclaim their fares which they have not exercised, they have no cause for complaint. The position in which they find themselves is a result of their failure to exercise their contractual rights to repayment. And the appellant cannot complain about not being able to retain money which the Act does not permit it to retain. The appeal should be dismissed essentially for the reasons given by the Full Court. Thus there is no need to deal with the four grounds raised in the respondent's notice of contention, which both parties addressed at length. The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND ZUDA PTY LTD AS TRUSTEE FOR THE HOLLY SUPERANNUATION FUND & ORS RESPONDENTS Hill v Zuda Pty Ltd [2022] HCA 21 Date of Hearing: 5 April 2022 Date of Judgment: 15 June 2022 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Western Australia Representation B W Ashdown for the appellant (instructed by Eastwood Law) M D Cuerden SC with A P Hershowitz for the respondents (instructed by Lawton Gillon) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Hill v Zuda Pty Ltd (Cth) prescribed standards Superannuation – Self managed superannuation fund – Binding death benefit nomination – Where reg 6.17A of the Superannuation Industry (Supervision) Regulations 1994 regulated superannuation funds for payment of member's superannuation benefits to nominated person on or after member's death – Where trust deed for self managed superannuation fund amended to insert "binding death benefit nomination" clause directing trustee as to payment of member's benefits upon member's death – Where appellant challenged validity of binding death benefit nomination clause on basis it did not comply with requirements of reg 6.17A – Whether reg 6.17A applied to self managed superannuation funds. relevantly, for, Precedent – Intermediate appellate courts – Obiter dicta of intermediate appellate courts – Decision-making principles in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89. Words and phrases – "binding death benefit nomination", "compelling reason", "intermediate appellate court", "obiter dicta", "plainly wrong", "regulated superannuation fund", "self managed superannuation fund", "seriously considered dicta", "SMSF", "superannuation". Superannuation Industry (Supervision) Act 1993 (Cth), ss 31(1), 32(1), 34, 55A, Superannuation Industry (Supervision) Regulations 1994 (Cth), regs 6.17, 6.17A, KIEFEL CJ, GAGELER, KEANE, GORDON, EDELMAN, STEWARD AND GLEESON JJ. This appeal is from a judgment of the Court of Appeal of the Supreme Court of Western Australia (Buss P, Murphy and Mitchell JJA)1 on appeal from a decision of a Master of that Court (Sanderson M)2. It concerns the scope of the operation of a provision of the Superannuation Industry (Supervision) Regulations 1994 (Cth) ("the Regulations") made under the Superannuation Industry (Supervision) Act 1993 (Cth) ("the Act"). The substantive question on which the appeal turns is whether the Court of Appeal was correct to conclude that reg 6.17A of the Regulations has no application to a superannuation fund referred to in the Act as a "self managed superannuation fund" ("an SMSF"). The question is one of statutory construction. The Court of Appeal reached that conclusion by adopting the construction of reg 6.17A previously expressed in the Full Court of the Supreme Court of South Australia in what the Court of Appeal characterised as at least "seriously considered dicta". The Court of Appeal adopted the construction on the basis that it did not consider the construction to have been "plainly wrong". There is accordingly a question which has been aired in the appeal about the appropriateness of the method by which the Court of Appeal reached the conclusion. Although the Court of Appeal ought to have reached the conclusion construing the regulation for itself, the Court of Appeal was correct to conclude that reg 6.17A has no application to an SMSF. The appeal must therefore be dismissed. The Act The main object of the Act is to make provision for the prudent management and supervision of certain superannuation funds, approved deposit funds and pooled superannuation trusts3. One of the bases for supervision is that those funds 1 Hill v Zuda Pty Ltd [2021] WASCA 59. 2 Hill v Zuda Pty Ltd [2020] WASC 89. Section 3(1) of the Act. and trusts are structured so as to be subject to regulation in the exercise of the legislative power of the Commonwealth Parliament with respect to "trading or financial corporations"4 in return for which they may become eligible for concessional taxation treatment5. Within the meaning of the Act a superannuation fund is a "regulated superannuation fund" if it has a trustee which is a trading or financial corporation6 and if that trustee has by written notice elected that the Act applies in relation to the fund7. A superannuation fund that is a regulated superannuation fund is also an SMSF within the meaning of the Act if it has fewer than five members, each of which is a director of the trustee, and if certain other conditions are fulfilled8. Part 3 of the Act makes provision for a system of prescribed standards applicable to the operation of regulated superannuation funds, approved deposit funds and pooled superannuation trusts9. Each is encompassed within the description in the Act of a "superannuation entity"10. Within Pt 3, ss 31 and 32 provide for standards to be prescribed by regulations made under s 353 of the Act. Section 31(1) provides for the regulations to prescribe standards applicable to the operation of regulated superannuation funds. Section 32(1) provides for the regulations to prescribe standards applicable to the operation of approved deposit funds. By force of s 34, each trustee of a Section 51(xx) of the Constitution. Section 3(2) of the Act. Section 10(1) (definition of "constitutional corporation") of the Act. Section 19 of the Act. Section 17A of the Act. Section 30 of the Act. 10 Section 10(1) (definition of "superannuation entity") of the Act. superannuation entity is obliged to ensure that the prescribed standards applicable to the operation of that entity are complied with at all times. Part 6 of the Act sets out rules about the content of the "governing rules of superannuation entities"11, including such governing rules as may be contained in trust instruments12. Within Pt 6 are relevantly ss 55A and 59. Section 55A provides: "(1) The governing rules of a regulated superannuation fund must not permit a fund member's benefits to be cashed after the member's death otherwise than in accordance with standards prescribed for the purposes of section 31. If the governing rules of a fund are inconsistent with subsection (1): subsection (1) prevails; and the governing rules are invalid, to the extent of the inconsistency." Section 59 provides: "(1) Subject to subsection (1A), the governing rules of a superannuation entity other than a self managed superannuation fund must not permit a discretion under those rules that is exercisable by a person other than a trustee of the entity to be exercised unless: those rules require the consent of the trustee, or the trustees, of the entity to the exercise of that discretion; or if the entity is an employer-sponsored fund: the the discretion the exercise of contributions that an employer-sponsor will, after the relates 11 Section 51 of the Act. 12 Section 10(1) (definition of "governing rules") of the Act. discretion is exercised, be required or permitted to pay to the fund; or (iii) the exercise of the discretion relates solely to a decision to terminate the fund; or the circumstances in which the discretion was exercised are covered by regulations made for the purposes of this subparagraph. (1A) Despite subsection (1), the governing rules of a superannuation entity may, subject to a trustee of the entity complying with any conditions contained in the regulations, permit a member of the entity, by notice given to a trustee of the entity in accordance with the regulations, to require a trustee of the entity to provide any benefits in respect of the member on or after the member's death to a person or persons mentioned in the notice, being the legal personal representative or a dependant or dependants of the member. If the governing rules of a superannuation entity are inconsistent with subsection (1), that subsection prevails, and the governing rules are, to the extent of the inconsistency, invalid." Unsurprisingly, given that s 59(1) is expressed to have no application to a superannuation entity that is an SMSF and that s 59(1A) operates as an exception to s 59(1), there is no dispute that regulations made under s 353 for the purpose of s 59(1A) can have no application to an SMSF. The Regulations Part 6 of the Regulations is headed "Payment standards". Division 6.2 is headed "Payment of benefits" and relevantly contains regs 6.17 and 6.17A. Regulation 6.17(1) relevantly provides that, for the purposes of ss 31(1) and 32(1) of the Act, the standards set out in reg 6.17(2) are applicable to the operation of regulated superannuation funds and approved deposit funds. The standard set out in reg 6.17(2)(a)(i) permits a member's benefits in a fund to be paid by being "cashed" in accordance with Div 6.3 of the Regulations. That division, headed "Cashing of benefits", relevantly contains regs 6.21 and 6.22. Regulation 6.21(1) relevantly provides that "a member's benefits in a regulated superannuation fund must be cashed as soon as practicable after the member dies". Regulation 6.22 limits the circumstances in which a member's benefits in a regulated superannuation fund can be cashed in favour of a person other than the member or the member's legal personal representative. There is no dispute that regs 6.21 and 6.22 apply to a regulated superannuation fund that is an SMSF. Regulation 6.17A relevantly provides: "(1) For subsections 31(1) and 32(1) of the Act, the standard set out in subregulation (4) is applicable to the operation of regulated superannuation funds and approved deposit funds. For subsection 59(1A) of the Act, the governing rules of a fund may permit a member of the fund to require the trustee to provide any benefits in respect of the member, on or after the death of the member, to the legal personal representative or a dependant of the member if the trustee gives to the member information under subregulation (3). The trustee must give to the member information that the trustee reasonably believes the member reasonably needs for the purpose of understanding the right of that member to require the trustee to provide the benefits. Subject to subregulation (4A), ... if the governing rules of a fund permit a member of the fund to require the trustee to provide any benefits in accordance with subregulation (2), the trustee must pay a benefit in respect of the member, on or after the death of the member, to the person or persons mentioned in a notice given to the trustee by the member if: the person, or each of the persons, mentioned in the notice is the legal personal representative or a dependant of the member; and the proportion of the benefit that will be paid to that person, or to each of those persons, is certain or readily ascertainable from the notice; and the notice is in accordance with subregulation (6); and the notice is in effect. For paragraph[] (4)(c) ..., the notice: (a) must be in writing; and (b) must be signed, and dated, by the member in the presence of 2 witnesses, being persons: each of whom has turned 18; and neither of whom is a person mentioned in the notice; and (c) must contain a declaration signed, and dated, by the witnesses stating that the notice was signed by the member in their presence. (7) Unless sooner revoked by the member, a notice under subregulation (4) ceases to have effect: at the end of the period of 3 years after the day it was first signed, or last confirmed or amended, by the member; or if the governing rules of the fund fix a shorter period – at the end of that period." The heading to reg 6.17A is "Payment of benefit on or after death of member (Act, s 59(1A))". There is no dispute that reg 6.17A(2) is referable solely to s 59(1A) and that neither reg 6.17A(2) nor reg 6.17A(3) has application to an SMSF. The facts and procedural history Zuda Pty Ltd ("Zuda") is the trustee of an SMSF known as the Holly Superannuation Fund ("the Fund") which was created by a deed dated 14 June 2000 ("the Trust Deed"). Mr Alec Kumar Sodhy and his de facto partner Ms Jennifer Patricia Murray were each a member of the Fund and a director of Zuda. Ms Claire Elizabeth Hill is the only child of Mr Sodhy. On 13 December 2011, the Trust Deed was amended to insert a clause described as a "binding death benefit nomination" ("BDBN") according to which, if either Mr Sodhy or Ms Murray died, Zuda was required to distribute the whole of the deceased member's balance in the Fund to the surviving member. Mr Sodhy died on 22 November 2016. Ms Hill subsequently commenced a proceeding in the Supreme Court of Western Australia seeking declaratory and injunctive relief against Zuda and Ms Murray. Ms Hill sought that relief on the basis that the BDBN was of no force and effect by reason of the BDBN having been a notice given to Zuda by each of Mr Sodhy and Ms Murray for the purpose of reg 6.17A(4) which failed to comply with either reg 6.17A(6)(b) or (c) (as to its form) or reg 6.17A(7)(a) (as to its timing). That the BDBN was a notice given to Zuda by each of Mr Sodhy and Ms Murray was undisputed before the Master and the Court of Appeal, and (notwithstanding an attempt by Zuda and Ms Murray to resile from what had been common ground manifested in an application for revocation of special leave to appeal, which is refused) remains undisputed on the appeal. That the notice was not in accordance with reg 6.17A(6)(b) or (c) or reg 6.17A(7)(a) was, and remains, similarly undisputed. The sole issue before the Master and the Court of Appeal was, and the sole substantive issue on the appeal remains, whether reg 6.17A applied to the Fund as an SMSF. Holding that reg 6.17A had no application to an SMSF, the Master summarily dismissed the proceeding13. The Court of Appeal concluded that there was no error in that holding and so dismissed an appeal from that order for summary dismissal. In reasoning to that conclusion, the Court of Appeal acknowledged14 that the view that reg 6.17A had no application to an SMSF had first been expressed 13 Hill v Zuda Pty Ltd [2020] WASC 89 at [22]. 14 Hill v Zuda Pty Ltd [2021] WASCA 59 at [28]. by a single judge of the Supreme Court of Queensland15. The Court of Appeal noted that, despite a tentative expression of opinion in the interim by a single judge of Supreme Court of South Australia which it interpreted as having been to the contrary16, the view that reg 6.17A had no application to an SMSF had subsequently been accepted sequentially in an observation in the Full Court of the Supreme Court of South Australia17 and by another single judge of the Supreme Court of Queensland18. Noting that there "may be some debate" as to whether the observation in the Full Court of the Supreme Court of South Australia was "ratio" or "dicta", the Court of Appeal proceeded on the basis that the observation was at least "seriously considered dicta" which the Court of Appeal was required by the reasoning of this Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd19 to follow unless convinced that it was "plainly wrong"20, which it was not21. On that basis the Court of Appeal considered itself "bound" to construe reg 6.17A as having no application to an SMSF22. 15 Munro v Munro (2015) 306 FLR 93 at 100 [36]. 16 Retail Employees Superannuation Pty Ltd v Pain (2016) 115 ACSR 1 at 89-93 17 Cantor Management Services Pty Ltd v Booth (2017) 16 ASTLR 489 at 495-496 18 Re Narumon Pty Ltd [2019] 2 Qd R 247 at 258 [35]-[36]. (2007) 230 CLR 89. 20 Hill v Zuda Pty Ltd [2021] WASCA 59 at [39]-[41], [50]. 21 Hill v Zuda Pty Ltd [2021] WASCA 59 at [48]. 22 Hill v Zuda Pty Ltd [2021] WASCA 59 at [50]. The methodological question Farah Constructions identified two decision-making principles. The first is that an intermediate appellate court should not depart from seriously considered dicta of a majority of this Court23. The second is that neither an intermediate appellate court nor a trial judge should depart from a decision of another intermediate appellate court on the interpretation of Commonwealth legislation, uniform national legislation or the common law of Australia unless convinced that the interpretation is plainly wrong24 or, to use a different expression, unless there is a compelling reason to do so25. Although both principles are directed to ensuring coherence in the law, the principles are distinct. The first concerns the relationship between an intermediate appellate court and this Court. The second concerns the relationships between intermediate appellate courts and between intermediate appellate courts and trial judges. In that latter context, intermediate appellate courts and trial judges are not bound to follow obiter dicta of other intermediate appellate courts, although they would ordinarily be expected to give great weight to them. The substantive question Turning now to the substantive question left unaddressed by the Court of Appeal, reg 6.17A can be seen from its terms to have been made for two distinct and complementary purposes. Regulation 6.17A(2) and (3) can be seen to have been made for the purposes of s 59(1A) of the Act. Regulation 6.17A(4)-(7) can also be seen to have been made for the purposes of ss 31(1) and 32(1) of the Act. To the extent that reg 6.17A has been made for the purposes of ss 31(1) and 32(1), the trustee of every regulated superannuation fund to which it applies must comply with it. That is required by s 34 of the Act. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 151 [134]. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 151-152 RJE v Secretary to the Department of Justice (2008) 21 VR 526 at 554 [104]. To the extent that reg 6.17A has been made for the purposes of s 59(1A) of the Act, it has the additional consequence that a rule of a regulated superannuation fund to which it applies is invalid if that rule purports to confer a discretion on a member that does not comply with the conditions of reg 6.17A or with those of s 59(1). That is the result of s 59(2) of the Act. Ms Hill submits that reg 6.17A(1) makes the standard set out in reg 6.17A(4) applicable to the operation of all regulated superannuation funds. The alternative, and preferable, interpretation of reg 6.17A(1) is that it simply makes the standard set out in reg 6.17A(4) applicable to the operation of those regulated superannuation funds to which reg 6.17A(4) is in its terms applicable. The standard set out in reg 6.17A(4) in its terms applies only "if the governing rules of a fund permit a member of the fund to require the trustee to provide any benefits in accordance with [reg 6.17A(2)]". Since reg 6.17A(2) has no application to an SMSF, neither does reg 6.17A(4). And since reg 6.17A(4) has no application to an SMSF, neither does reg 6.17A(1). This is consistent with the heading to reg 6.17A referring expressly to s 59(1A) of the Act, which does not apply to an SMSF. It is also consistent with the extrinsic materials and the purposes of reg 6.17A. As explained in the Explanatory Statement for the amendment to the Regulations which introduced reg 6.17A in its original form26, following the insertion of s 59(1A) into the Act in 199927, reg 6.17A(1) "prescribes the standard set out in [reg] 6.17A(4) as an operating standard for the purposes of the [Act]". Regulation 6.17A(1) is designed to have, and has, no wider operation. That the requirements of reg 6.17A(4) concerning the giving of notice by a member of a regulated superannuation fund to the trustee of that fund do not apply to an SMSF is not surprising given that an SMSF is, by definition, a superannuation fund in which members of the fund are also directors of the corporate trustee of the fund. In the context of an SMSF, giving notice of the kind envisaged by reg 6.17A(4) as expounded in reg 6.17A(6) and (7) would be at best an exercise in formality and at worst redundant. The two purposes of reg 6.17A – enabling members to compel trustees to distribute death benefits in accordance with their 26 Superannuation Industry (Supervision) Regulations (Amendment) 1999 (No 3) (Cth), Explanatory Statement. 27 Superannuation Legislation Amendment Act 1999 (Cth). wishes and ensuring that members have sufficient information – are inapt to administration of an SMSF. Contrary to another submission of Ms Hill, the conclusion that reg 6.17A(1) does not apply to an SMSF does not deprive s 55A of operation in relation to an SMSF. The operation of s 55A to a superannuation fund, including an SMSF, is not through the application of reg 6.17A but relevantly through the application of reg 6.17 in conjunction with regs 6.21 and 6.22. Disposition The appeal must be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Nicholls v The Queen [2005] HCA 1 3 February 2005 ORDER Appeal dismissed. On appeal from the Supreme Court of Western Australia Representation: J A Thomson for the appellant (instructed by Mullins Handcock) S E Stone with L J Vanderende for the respondent (instructed by Director of Public Prosecutions (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. HIGH COURT OF AUSTRALIA McHUGH, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJ APPELLANT AND THE QUEEN RESPONDENT Coates v The Queen 3 February 2005 ORDER Appeal allowed. Set aside the order of the Court of Criminal Appeal of the Supreme Court of Western Australia made on 22 October 2002 in CCA 210/00 and in its place order that: the appellant's appeal to that Court be allowed; the appellant's conviction be quashed; and there be a new trial. On appeal from the Supreme Court of Western Australia Representation: M J McCusker QC with J J Edelman for the appellant (instructed by Clark Whyte) S E Stone with L J Vanderende for the respondent (instructed by Director of Public Prosecutions (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Nicholls v The Queen; Coates v The Queen Criminal law – Evidence – Admissibility of admissions made off-video during interview with accused – Whether reasonable excuse for not videotaping admissions – Criminal Code (WA), s 570D(2)(b), (4). Criminal law – Evidence – Admissibility of evidence of prior inconsistent statement of witness – Whether evidence of statement went to issue – Whether admissible as exception to rule against admission of collateral statements – Whether exceptions of bias, interest or corruption applicable – Whether the detail of alleged statement indicating an exception to the collateral evidence rule must be put specifically to the witness in cross-examination. Evidence – Criminal trial – Prior inconsistent statement of witness – Whether admissible as exception to rule against collateral statements – Admissions allegedly made off-video during interview by police – Whether reasonable excuse for not videotaping such admissions. Criminal law – Evidence – Whether evidence of prior inconsistent statement hearsay – Whether exception to hearsay rule. Criminal law – Jury directions – Whether trial judge's direction accorded with McKinney v The Queen – Appropriateness of reference to possible perjury on part of police. Criminal law – Evidence – Admissions – Adequacy of trial judge's direction – Whether need for McKinney direction. Words and phrases – "interview", "reasonable excuse". Criminal Code (WA), s 570D. Evidence Act 1906 (WA), s 21. GLEESON CJ. I agree, for the reasons given by Hayne and Heydon JJ, that in the matter of Nicholls v The Queen the appeal should be dismissed. In particular, I agree with what Hayne and Heydon JJ have said concerning the collateral evidence rule. invited by counsel As will appear from a reading of the reasons of the other members of the Court, the decision to dismiss the appeal in Nicholls v The Queen, which turns upon the matter of collateral evidence, is unanimous. In the course of argument, we were the collateral evidence rule, to re-define characterising it, not as a rule of law, but as a guide to discretionary case management. That invitation has been declined by six members of the Court. Alternatively, it was argued that the excluded evidence fell within one or more of the exceptions to the collateral evidence rule, specifically those relating to bias, interest or corruption. That submission took a number of forms, and has met with somewhat different responses, but, in the view of all members of the Court, it must fail in any event because, in the cross-examination of the critical witness, no proper foundation was laid for the tender of the evidence in question. I also agree, substantially for the reasons given by Hayne and Heydon JJ, that in the matter of Coates v The Queen the appeal should be dismissed. In view of the difference of opinion within this Court on the question of the admissibility of evidence of certain admissions allegedly made by the appellant, I wish to add the following comments. They are directed to the evidence of what was said during "the second break" in the questioning by police of the appellant, which is when the potentially significant admissions were made. It is submitted that the evidence was made inadmissible by s 570D(2) of the Criminal Code (WA) ("the Criminal Code"). So far as presently relevant, that sub-section provided that evidence of an admission by the appellant to police was not admissible unless either it took the form of a videotape on which the admission was recorded, or the prosecution proved, on the balance of probabilities, that there was a reasonable excuse for there not being a recording on videotape of the admission. Sub-section (4)(c) provided that there was a reasonable excuse if the appellant did not consent to the interview being taped. Section 570D was part of a Chapter of the Criminal Code dealing with "videotaped interviews". The expression "interview" was defined to mean "an interview with a suspect by a member of the Police Force" (s 570). The Chapter, apart from s 570D, contained various provisions regulating particular matters relating to videotapes and their use. They do not touch the present problem. The statutory context throws little direct light on the question that now arises. Bearing in mind the two rulings of the trial judge, and the context in which they were made, it is clear that he found that the appellant did not consent to the videotaping of the part of his conversation with the police during which the admissions presently in question were made. The appellant sought and obtained an interruption of the videotaping for the purpose of having a conversation that was not on tape. That finding was upheld by the Full Court. Miller J, in the Full Court, said that "the initiation by Coates himself of the off-video interview" was "a critical factor" in the decision that the evidence was admissible. For the purposes of this appeal, it is important to distinguish between questions of fact, and questions of law concerning the construction of s 570D. At the trial, on an issue as to the application of s 570D(2)(b), the prosecution carried the onus of proving, on the balance of probabilities, that there was a reasonable excuse for there not being a recording on videotape of the admissions. As a matter of fact, the prosecution established to the satisfaction of the trial judge that, at a certain point in the interview then being recorded on videotape, the appellant requested that the videotaping cease, so that he could speak to police without there being a video recording of what he said. The decision of the Full Court creates concurrent findings on that matter of fact. Those findings were open on the evidence, and have not been successfully challenged in this Court. The substantial question for this Court concerns the legal consequence, for the purpose of s 570D, of those findings. Legislation such as s 570D seeks to strike a balance between competing considerations and interests. A search for legislative purpose needs to take account of the fact that legislatures rarely engage in the pursuit of a single purpose at all costs. Problems of statutory construction often arise because the extent to which the legislature intends to pursue a given purpose is unclear. When, as is so obviously the case with s 570D, Parliament adopts a compromise, a court may be left with the text as the only safe guide to purpose. Section 570D(4)(c) assumes that the consent of a suspected person is necessary if the police are to videotape an interview. That assumption was not challenged in argument in this Court. Absence of consent to the interview being videotaped is, by definition, a reasonable excuse for there not being a recording on videotape of an admission made during the interview. Putting to one side, for the moment, the question of the interviewee who consents to some conversations being videotaped but does not consent to others, and subject to any other questions of admissibility that could arise, evidence may be received of an admission by an accused person in the course of an interview where the accused person did not consent to the interview being videotaped. In such a case, the interview is off-camera, but not off the record. Consistently with s 570D, a court may receive evidence of the admission. Because the accused person has not consented to a videotaping of the interview, there is a reasonable excuse for there not being a recording on videotape of the admission. That is the effect of the express language of the statute. No doubt the general purpose of s 570D is to reduce the possibility of police fabrication of admissions, and to limit the potential scope for dispute about "verbal admissions". The reasons for that are too well known to require restatement. Even so, each one of the forms of reasonable excuse provided by s 570D(4) for there not being a videotaped recording of an admission, including absence of consent of the interviewee, is capable of being contrived, or disputed. The present problem arises because, although the section deals expressly with the case where a person being interviewed does not consent to the interview being videotaped, it does not deal expressly with the case of a person who gives consent and later terminates it, either completely, or with respect to some particular subject, or for some limited time. As the facts of the present case illustrate, there could be many reasons why a person would consent to being questioned on videotape about some matters, but not about others. It is difficult to understand why the legislature would have intended to distinguish between the case of a person who, at the commencement of police questioning, refuses to consent to any videotaping, and one who terminates or suspends consent, temporarily or indefinitely. It is the dependence upon the consent of the interviewee that gives rise to the present question, together with the obvious practical possibility that, during the questioning, consent might be terminated or suspended. There is nothing in the section to suggest that consent, once given, covers all that follows without any opportunity for bringing it to an end. It would be unfair if that were so. A person who, at the outset, expects to be questioned about a particular matter might find that the questioning develops in an unforeseen manner. The most natural meaning to give s 570D, in those circumstances, is that termination or suspension of consent has the same consequence, during the period of suspension, or following termination, as an initial refusal to consent. That is the way the trial judge and the Full Court approached the section, and I think they were right. What is the competing possibility? Let it be supposed that a suspect initially consents to an interview being videotaped. Suppose that, at some point in the interview, the police ask the suspect what he knows about X, a criminal. Suppose that, for reasons perhaps related to the known propensities of X, the suspect says, or indicates, that he will answer the question, but not on camera, and the camera is switched off. Section 570D is concerned only with the admissibility of evidence; specifically, the admissibility of admissions made to the police. It does not regulate the power of the police to ask questions, and it does not impose any obligation on a person to answer questions. It does not require the whole, or any particular part, of an interview to be videotaped; it simply deals with a consequence of the absence of a videotape record of an admission. In the example given, whatever the effect of s 570D might be, it does not depend upon whether the person being interviewed is accompanied by a lawyer, or upon whether contemporaneous written notes are made of what is said off camera, or upon whether, when the videotaping is resumed, the police repeat, in front of the camera, what had occurred while the camera was switched off. If some discretionary ruling relating to a matter of fairness is required, those circumstances might become relevant, but they have nothing to do with the question of construction of s 570D now under consideration. The argument for the appellant must be that, by temporarily withdrawing or suspending consent to videotaping, the suspect can say what he pleases about a particular topic without any risk that it might be tendered in evidence against him. That must be so, regardless of what precautions, if any, are taken to eliminate the possibility of dispute or fabrication. It would be so, for example, even if the suspect's lawyer is present and taking notes. That seems a very curious result. It is not one that is required by the language of s 570D, and it does not advance any rational legislative policy. I prefer the view of the section that was taken in the Supreme Court of Western Australia. McHugh 13 McHUGH J. These appeals by Thomas Nicholls and Martin Graeme Coates arise out of their convictions in the Supreme Court of Western Australia for the wilful murder of Clare Garabedian. There are two issues in Nicholls' appeal and four issues in Coates' appeal. The first issue in Nicholls' appeal is whether the trial judge erred in rejecting evidence from a defence witness, Joseph Paul Ross, that the key prosecution witness had said that he was involved in the killing of Garabedian and that neither Coates nor Nicholls was involved in the killing. The second issue in Nicholls' appeal is whether the judge erred in rejecting evidence that the key witness had told Ross that he proposed to give evidence to implicate Nicholls and Coates in the murder. These issues turn on whether the statements were excluded by the collateral evidence rule. In particular, the issues turn on whether the statements were admissible under the "bias" or "corruption" exceptions to that rule or some development of them. The first issue in Coates' appeal is whether the trial judge erred in holding that disputed oral admissions, allegedly made by Coates during a break in a videotaped interview with the police (and not subsequently confirmed on video), were admissible in evidence. That issue turns on whether the break in the interview constituted a separate interview to whose videotaping Coates did not consent and, if so, whether that constituted a "reasonable excuse" for not videotaping the alleged admissions within the meaning of s 570D of the Criminal Code (WA). The second issue in Coates' appeal is whether the trial judge misdirected the jury in relation to the disputed admissions by saying "[a] question that might arise is … who is telling the truth and who is committing perjury". This issue turns on whether the judge's statement accorded with the decision of this Court in The third issue in Coates' appeal is whether the trial judge was required by McKinney to direct the jury concerning the difficulties faced by an accused person when challenging evidence of a disputed admission when the admission is not the sole evidence against the accused. The fourth issue in Coates' appeal is whether the trial judge erred in refusing to admit evidence concerning statements made by the key Crown witness. The statements were to the effect that the key witness was being encouraged to implicate Coates, that Coates was not involved in the murder and that the key witness intended to give false evidence. As in the appeal of Nicholls, this issue turns on whether the statements were excluded by the (1991) 171 CLR 468. McHugh collateral evidence rule and whether they were admissible under the "bias" or "corruption" exceptions to that rule or some development of them. If any of these issues is decided in favour of the appellants, further issues arise under the Crown's Notices of Contention concerning whether any errors made by the trial judge resulted in a substantial miscarriage of justice. In my opinion, Nicholls' appeal should be dismissed because, although Ross's evidence was otherwise admissible, the statutory conditions for its admission were not met. Contrary to the direction in s 21 of the Evidence Act 1906 (WA), the circumstances of the key witness's statement were not sufficiently described to the witness to allow him to deny or admit the statements. Coates' appeal, however, should be allowed because the disputed oral admissions were tendered in evidence in breach of s 570D of the Criminal Code. Statement of the case In a jury trial conducted in August and September 2000 in the Supreme Court of Western Australia, Thomas Nicholls, Martin Graeme Coates and Amanda Kaylene Hoy were tried and convicted for the murder of Clare Garabedian in 1998. The Western Australian Court of Criminal Appeal dismissed appeals against their convictions. Subsequently, this Court gave Nicholls and Coates special leave to appeal against the orders of the Court of Criminal Appeal. The material facts The Crown alleged that Coates had asked Adam John Davis to pick up Garabedian, who worked as a prostitute, and give her a "hot shot" – a heroin overdose. Garabedian was the key Crown witness in other criminal proceedings against Coates and Hoy. Davis said that, for a payment of $2,000, he agreed to give Garabedian the "hot shot". He said that, using Hoy's car and mobile phone, Nicholls' clothes and a bag of heroin supplied by Coates, he picked up Garabedian one night in August 1998. Posing as a client, he took her to a motel. Davis said that he gave heroin to Garabedian, some of which she injected, and then about an hour and a half to two hours later he gave her another shot of heroin at her request. He then rang Hoy from a pay telephone and told her that Garabedian had used most of the heroin. Hoy said that she would leave a package for him under the driver's side wheel of her car, which she told Davis to park in a side street. Davis said that he subsequently collected a package containing a large syringe filled with heroin from under the wheel of Hoy's car. Some time later, Coates and then Nicholls called Davis separately on the motel room telephone and asked whether he had killed Garabedian. Davis told them that he had not done so. McHugh Davis claimed that, about 15 minutes after the telephone call from Nicholls, Coates and Nicholls arrived at the motel room. Garabedian woke up, screamed and tried to make a run for the front door. Coates dragged Garabedian to the ground and Nicholls held a pillow to her face. Davis held her left arm while Coates pushed the syringe into her right arm several times before handing it to Davis, who then injected her in her left arm. Coates then stood on Garabedian's throat. Coates subsequently wiped Garabedian's body with a wet towel and Davis cleaned other areas in the motel room to remove fingerprints. Nicholls collected incriminating items and put them in a pillowcase. The Crown case against Coates was based principally on the evidence of Davis who had pleaded guilty to the murder of Garabedian and had been sentenced to life imprisonment. His sentence was reduced to a minimum of 15 years on the undertaking that he would give evidence against Nicholls, Coates and Hoy. However, the Crown also relied on three other areas of evidence apart from the testimony of Davis: admissions allegedly made by Coates during a break in a videotaped interview with police; evidence of motive: criminal charges had been laid by Garabedian against Coates and Hoy; and evidence that Coates had relied on his brother-in-law, Trevor John Bloomer, who had offered to testify falsely that he was at Coates' house with him on the evening in question. The Crown case also relied on evidence of association and forensic evidence and telephone records placing Coates in the vicinity of the motel when Garabedian was killed. The admissions allegedly made by Coates were unrecorded oral statements to police officers while Coates was in police custody being questioned about Garabedian's death. Detective Senior Constable Hawley gave evidence that, during a videotaped interview, Coates asked to go to the toilet. The videotape was stopped for about 45 minutes (this was the second time the videotape was stopped for a supposed "toilet break"; the first break lasted for four minutes). Hawley testified that, when the videotape was turned off, Coates said to him and Detective Senior Constable Hutchinson: "What are my options?", "What can I do?", "How much will I get?" and "I haven't even got 5 years in me. I'll neck myself." Two other officers, Detective Sergeant Kays and Detective Senior Sergeant Byleveld, gave evidence that they were called into the interview room during this break and that Coates told them that he did not want to go to jail where he would not last five minutes. They gave evidence that Coates also said that he wanted to do a deal and be charged with conspiracy to murder. Coates denied the substance of the police evidence. He also denied that McHugh he had initiated the break. No reference was made to these conversations when the videotaped interview resumed. The police officers made no attempt to get Coates to confirm on videotape the substance of the admissions that he had allegedly made while Nor were any contemporaneous notes taken of the alleged off-camera admissions. Hawley and Hutchinson claimed that they made notes of the conversation on the following day that included notes of the untaped portions. They said that these notes were subsequently lost or mislaid. Kays and Byleveld gave evidence that neither took notes of the conversation they claimed to have had with Coates. the videotape was turned off. The Crown case against Nicholls was also based on the evidence of Davis and on out-of-court statements made by Nicholls to police in a videotaped interview. The Crown case also relied on telephone records that placed Nicholls in the vicinity of the motel at the time when Garabedian was killed. Coates and Nicholls denied Davis's version of events. In cross- examination, Davis could not explain how it was that only his fingerprints were identified in the motel room or the absence of fingerprints or DNA evidence of Coates and Nicholls in the room. No objective or other evidence linked Nicholls to the events that caused Garabedian's death. Nicholls' statements to the police did not amount to a confession of the offence. However, Nicholls admitted in an interview with the police that he had been present with Coates in the motel room when Garabedian woke from a sleep and recognised Coates. Nicholls admitted that he had grabbed Garabedian, but claimed that he then left the motel room. When he returned later, he found that it had been cleaned up, or was in the process of being cleaned up, by Coates. Both Coates and Nicholls sought to tender evidence from a defence witness, Ross, that Davis had told him that Coates and Nicholls were not involved in the killing and that he, Davis, had been encouraged by the police to implicate Coates and Nicholls. The trial judge ruled that the evidence was inadmissible because it was collateral evidence and did not fall within the bias exception to the collateral evidence rule. His Honour directed the jury that, unless they accepted the evidence of Davis, they could not convict Nicholls or Coates. He also directed the jury that, standing alone, the evidence of the unrecorded admissions was insufficient to convict Coates of any offence. The trial judge further directed the jury that the evidence of Nicholls' unrecorded admissions would not alone be sufficient to convict Nicholls, but that it would support the accuracy and truth of Davis's evidence. He did not warn the jury about the danger of relying on the evidence of Coates' unrecorded admissions to the police officers. The trial judge also did not give a McKinney direction in relation to those admissions. The jury found Nicholls and Coates guilty of the wilful murder of Garabedian. McHugh The admissibility of the evidence of Ross (the collateral evidence rule) The evidence sought to be led from Ross At his trial, Nicholls sought to lead evidence from Ross about a conversation that Ross had had with Davis in Casuarina Prison concerning the evidence that Davis was to give at the trial. Counsel for Nicholls told the trial judge that Ross would say that Davis had told him that he was involved in the murder of Garabedian but that neither Coates nor Nicholls was involved in her death. However, Davis had told Ross that he would give evidence implicating Nicholls and Coates in the murder because the police had offered him a deal if he did so. Counsel said that Ross would also say that Davis said that the police had told him what to say and that he, Davis, "was going to come to court and tell lies about that in order to secure the deal that was offered to him by the police to implicate Mr Coates and Mr Nicholls." Counsel for Nicholls sought to lead the During the evidence as an exception to the collateral evidence rule. cross-examination of Davis, counsel for Hoy asked: "Have you ever told anybody that the whole story – you've made up the whole story you've told us about the involvement of Coates and Nicholls is a lie? – No, I haven't. That you were told by police what to say? – No. And that you did it so that you would gain a benefit? – No. Never told anybody that? – No. Quite sure about that? – Very sure. Because it all is a lie, isn't it – the whole thing? – No, it's not." Counsel for Nicholls asked Davis: "Did you in a conversation say that the police had told you what to say in order to implicate others? – No. Did you say in a conversation that you had given Clare Garabedian two shots and that Marty Coates knew nothing about it? – No. Did you say in a conversation that the police had offered you a deal if you cooperated and implicated Marty Coates and others in the murder? – No. Did you in a conversation confirm that yourself and Clare Garabedian had been 'an item' for some time prior to her death? – No, never. McHugh So none of the things that I have put to you were ever said by you in any conversation to anybody? – No." Counsel for Coates did not put any of these matters to Davis. Indeed, counsel for Coates did not put to Davis that he had told a third person that the story he had told police about Nicholls and Coates being in the motel room where Garabedian was killed was untrue and that Coates knew nothing about the killing. Nor did counsel put to Davis that the police had offered him a deal if he implicated Nicholls and Coates and that police officers had told him what to say. Counsel also failed to put to Davis that Davis intended to give false evidence about Coates' involvement in Garabedian's murder. Nevertheless, counsel for Coates sought to lead evidence from Ross that: (a) Davis had told Ross that "Davis was being encouraged to implicate the others [Coates and Nicholls] and that the others indeed were not there and were not involved and didn't know anything about it"; "[Davis] is telling someone in gaol effectively that he intends to give false evidence, that they [Nicholls and Coates] were not involved and yet he intends to give false evidence"; and "[Davis] will acknowledge in his evidence that he is being encouraged to implicate the others". The admissibility of Ross's evidence The trial judge ruled that the proposed evidence of Ross was inadmissible. The Court of Criminal Appeal upheld his ruling2. In the Court of Criminal Appeal, Miller J held that the evidence sought to be led from Ross was collateral and did not go to a fact in issue or a relevant issue. His Honour said that whether Davis had previously made an inconsistent statement about the presence of Nicholls and Coates in the room in which Garabedian was killed did not go to the issue of whether Nicholls and Coates were in fact in the room. The evidence of Ross could only go to the issue of whether Davis had said that Nicholls and Coates were in the room at the relevant time, not whether as a fact they were in the room3. This was a question of credibility. Miller J further found4 that the evidence did not fall within any exception to the rule that answers to collateral 2 Hoy v The Queen [2002] WASCA 275 at [106]-[134] per Miller J, Anderson J agreeing. 3 Hoy [2002] WASCA 275 at [121]-[122] per Miller J. 4 Hoy [2002] WASCA 275 at [124]. McHugh questions are final and conclusive and cannot be rebutted. Miller J5 also upheld the trial judge's finding that "there was nothing to suggest that the relationship or any situation existing as between Davis and Coates/Nicholls established bias" so as to bring the case within that exception to the collateral evidence rule. Submissions of the appellants in this Court In this Court counsel for Nicholls and Coates contended that: the collateral evidence rule did not apply because the evidence of Davis was the core or central evidence in the case, without which neither Nicholls nor Coates could have been convicted. In these circumstances, the issues of credibility and facts in issue were so inextricably linked that the distinction between matters of credit and matters going to the issue was reduced to "vanishing point"; alternatively, Ross's evidence fell within the bias or corruption exceptions to the collateral evidence rule. Counsel for Nicholls and Coates contended that the corruption exception was not limited to a relationship between the witness and one of the parties, but applied whenever a witness demonstrates a willingness to obstruct the discovery of truth by manufacturing or suppressing testimony; and the collateral evidence rule should be relaxed where evidence going to credit has substantial probative value and it is in the interests of justice to admit it. It is appropriate to consider each of these submissions in turn. The collateral evidence rule: statement of the rule, exceptions to the rule and treatment of the rule Statement of the collateral evidence rule The central thesis of the common law concerning the admissibility of evidence is that it is admissible only when it is relevant, that is6: "if it tends to prove a fact in issue or a fact relevant to a fact in issue. A fact is relevant to another fact when it is so related to that fact that, 5 Hoy [2002] WASCA 275 at [126]-[127]. 6 Goldsmith v Sandilands (2002) 76 ALJR 1024 at 1029-1030 [31] per McHugh J; 190 ALR 370 at 377. McHugh according to the ordinary course of events, either by itself or in connection with other facts, it proves or makes probable the past, present, or future existence or non-existence of the other fact." (footnote omitted) In other words, evidence is relevant "if it could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the proceeding."7 In a trial, a balance must be struck between considerations of justice and matters of practicality. Consequently, the general rule concerning admissibility is qualified by other rules of evidence. One qualification concerns evidence of matters collateral to the issues in the case. The collateral evidence rule declares that answers given by a witness to questions put to him or her in cross-examination concerning collateral matters are final. Those answers cannot be contradicted or rebutted by other evidence8. Hence, the rule is often referred to as the "finality" rule. Collateral facts are "facts not constituting the matters directly in dispute between the parties"9 or "facts that are not facts in issue or facts relevant to a fact in issue"10. In most cases, a fact that affects the credibility of a witness is a collateral fact. Hence, an answer given by a witness to a matter that relates to credibility alone – in other words, a collateral matter – is final and cannot be rebutted. Policy considerations provide the rationale for the collateral evidence rule. The reasons for the rule are generally practical: it is based on principles of case management11, such as the desirability of avoiding a multiplicity of issues and of protecting the efficiency and cost-effectiveness of the trial process by preventing the parties from litigating matters of marginal relevance. The rule is also based on the need to be fair to the witness12. 7 Goldsmith (2002) 76 ALJR 1024 at 1025 [2] per Gleeson CJ; 190 ALR 370 at 371. 8 Cross on Evidence, 7th Aust ed (2004) at 573 [17580]. 9 Piddington v Bennett and Wood Pty Ltd (1940) 63 CLR 533 at 546 per Latham CJ; Goldsmith (2002) 76 ALJR 1024 at 1025 [3] per Gleeson CJ; 190 ALR 370 at 372. 10 Goldsmith (2002) 76 ALJR 1024 at 1030 [32] per McHugh J; 190 ALR 370 at 378. 11 White J in the Queensland Court of Appeal in R v Lawrence said that the finality rule "is a case management rule": [2002] 2 Qd R 400 at 416. See also Natta v Canham (1991) 32 FCR 282 at 300. 12 See, eg, Natta (1991) 32 FCR 282 at 298. McHugh Tests for determining collateral matters There are two tests for determining whether a matter is collateral. The first test, articulated by Pollock CB in Attorney-General v Hitchcock13, defines collateral matter by reference to the issues upon which evidence may not be tendered by a party as part of its case during examination in-chief. The second test defines collateral matter in terms of credit. Pollock CB explained the first test in Hitchcock when he said14: "[T]he test, whether the matter is collateral or not, is this: if the answer of a witness is a matter which you would be allowed on your part to prove in evidence – if it have such a connection with the issue, that you would be allowed to give it in evidence – then it is a matter on which you may contradict him." Another formulation of this test is that relevance to an issue other than credit is a necessary condition of admissibility15. This test emphasises the importance that the information must have to prove the material facts in issue. However, it is problematic in that it does not identify the requisite degree of importance that information must have before it can be tendered in-chief. Nor does it identify how a court decides whether a fact is collateral16. For example, the English Court of Appeal said in R v Funderburk17: "The difficulty we have in applying that celebrated test is that it seems to us to be circular. If a fact is not collateral then clearly you can call evidence to contradict it, but the so-called test is silent on how you decide whether that fact is collateral. The utility of the test may lie in the fact that the answer is an instinctive one based on the prosecutor's and the court's sense of fair play rather than any philosophic or analytic process." (emphasis added) Sufficient relevance depends both on the importance of the fact in issue to proving a material fact and the degree to which further evidence can establish 13 (1847) 1 Ex 91 [154 ER 38]. 14 (1847) 1 Ex 91 at 99 [154 ER 38 at 42]. 15 Natta (1991) 32 FCR 282 at 295. 16 Narkle v The Queen (2001) 23 WAR 468 at 479 per Murray J. 17 [1990] 1 WLR 587 at 598; [1990] 2 All ER 482 at 491. McHugh that fact in issue. It is therefore virtually impossible to identify matters that will always be collateral or will always be relevant – each case turns on its own particular facts. The second test for determining whether a matter is collateral is whether it is relevant only to a witness's credit in contrast to matters relevant to the facts in issue that can be rebutted by calling evidence18. The problem with this test is that it is often difficult to maintain the distinction between credit and issue. It is also often difficult to maintain the distinction between evidence that affects only the credit of a witness and evidence that is relevant to a fact in issue. The credibility of a witness is inevitably indirectly relevant to establishing facts in issue. Sometimes, the credibility of a witness is decisive of the facts in issue. It is a matter of degree, both in relation to relevance and to whether a fact is collateral. Whether a fact bears on the credit of a witness depends not only upon what the witness represents to the court19, but also upon the nature of the party's case. Criticisms of the rule Given the deficiencies identified with respect to the tests for determining whether a matter is collateral, it is not surprising that the finality rule itself has been criticised in a number of cases20. In Natta v Canham, for example, the Full Court of the Federal Court said21: "The central rationale of the [rule] ... is less consistent with its characterisation as a hard and fast rule of law than as a well-established guide to the exercise of judicial regulation of the litigation process. While judges will be astute to confine or prevent exploration of secondary issues affecting credibility, the exercise of the judicial function in that regard should not be encumbered by over-nice distinctions between 'collateral' and other matters and the application of enumerated exceptions with a flavour of statutory proviso about them. And even where one of the exceptions can be invoked, as for example where there is an allegation of 18 See Harris v Tippett (1811) 2 Camp 637 at 638 per Lawrence J [170 ER 1277 at 1278]; Piddington (1940) 63 CLR 533 at 545 per Latham CJ; Natta (1991) 32 FCR 19 Goldsmith (2002) 76 ALJR 1024 at 1025-1026 [3] per Gleeson CJ; 190 ALR 370 20 See, eg, Palmer v The Queen (1998) 193 CLR 1 at 23 [53] per McHugh J; Lawrence [2002] 2 Qd R 400 at 406 per McPherson JA; Goldsmith (2002) 76 ALJR 1024 at 1031-1032 [37]-[41] per McHugh J; 190 ALR 370 at 379-381. 21 (1991) 32 FCR 282 at 298. McHugh bias which is denied, 'a court would only permit such a diversion from the material issue if it were satisfied that the interests of justice, namely, the proper investigation of the material issues, demanded it': see Bakopoulos v General Motors Holden's Ltd [1972] VR 732 at 733 per Lush J." The decisions of this Court in Piddington v Bennett and Wood Pty Ltd22 and Goldsmith v Sandilands23 illustrate the difficulties with the rule, as do decisions of the English courts24. One difficulty arises when a court has to determine whether the evidence concerns a collateral matter or a fact in issue or a fact relevant to a fact in issue25. The cases show that courts have blurred the distinction between collateral facts and facts in issue26. Questions of degree are frequently involved when deciding whether collateral evidence should be admitted27. In Palmer v The Queen28, I said, and repeated in Goldsmith29, that the credibility of a witness and the facts which the witness represents in court are both "relevant" matters, and there is no logical distinction between them for this purpose. However, the common law does make a distinction concerning them and generally regards answers to questions on credit as going to collateral issues. This has the result that an opposing party cannot tender evidence to contradict those answers. In Goldsmith, I said30: 22 (1940) 63 CLR 533. 23 (2002) 76 ALJR 1024; 190 ALR 370. 24 Compare Busby (1981) 75 Cr App R 79 and Harris v Tippett (1811) 2 Camp 637 [170 ER 1277]; see also Marsh (1985) 83 Cr App R 165; R v Knightsbridge Crown Court; Ex parte Goonatilleke [1986] QB 1; Chandu Nagrecha [1997] 2 Cr App R 25 Goldsmith (2002) 76 ALJR 1024 at 1031-1032 [40]-[41] per McHugh J; 190 ALR 370 at 380, citing Piddington (1940) 63 CLR 533 and Busby (1981) 75 Cr App R 26 See Goldsmith (2002) 76 ALJR 1024 at 1032 [41] per McHugh J; 190 ALR 370 at 27 Goldsmith (2002) 76 ALJR 1024 at 1046 [103] per Callinan J; 190 ALR 370 at 28 (1998) 193 CLR 1 at 24 [56]. 29 (2002) 76 ALJR 1024 at 1030 [32]; 190 ALR 370 at 378. 30 (2002) 76 ALJR 1024 at 1030 [32]; 190 ALR 370 at 378. McHugh "[L]ogically there is no distinction, so far as relevance is concerned, between the credibility of a witness and the facts to which the witness deposes. The reliability of oral testimony cannot be separated from the credibility of its deponent. But the common law has generally refused to act on the basis that there is no distinction between the credibility of a witness and the facts to which the witness testifies. Because the common law regards answers to questions on credit or credibility as going to collateral issues, in most cases the opposing party cannot tender evidence to contradict those answers." (emphasis added, footnote omitted) Because of what Starke J said in Piddington31, I have long thought that the rule that answers in cross-examination on collateral questions are final is a rule of convenience, not a rule of law or a principle. In Palmer32, I said that evidentiary rules based on the distinction between issues of credit and facts in issue "should not be regarded as hard and fast rules of law but should instead be seen 'as a well-established guide to the exercise of judicial regulation of the litigation process'." In Goldsmith, I said33: "Despite the longevity of the finality rule, it has increasingly come to be regarded more as a flexible standard than a fixed rule of law34. Starke J recognised this in Piddington v Bennett and Wood Pty Ltd35 when he said that the finality rule was 'a rule of convenience, and not of principle'. Similarly, in Natta v Canham36, the Full Court of the Federal Court said that the rule should be regarded 'as a well-established guide to the exercise of judicial regulation of the litigation process'." As a result37: 31 (1940) 63 CLR 533 at 551. 32 (1998) 193 CLR 1 at 23 [53], citing Natta (1991) 32 FCR 282 at 298. 33 (2002) 76 ALJR 1024 at 1031 [39]; 190 ALR 370 at 379. 34 Palmer (1998) 193 CLR 1 at 23 [53]. 35 (1940) 63 CLR 533 at 551, citing Christian J in R v Burke (1858) 8 Cox CC 44 at 36 (1991) 32 FCR 282 at 298. 37 Palmer (1998) 193 CLR 1 at 23-24 [55] per McHugh J. McHugh "For reasons of convenience, it is necessary to maintain the rule that independent evidence rebutting the witness's denials on matters going to credibility is not ordinarily admissible. … If evidence going to credibility has real probative value with respect to the facts-in-issue, however, it ought not to be excluded unless the time, convenience and cost of litigating the issue that it raises is disproportionate to the light that it throws on the facts-in-issue." McPherson JA endorsed this approach in R v Lawrence38. His Honour regarded my remarks in Palmer as "correctly reflecting the state of the law as it now is in Australia."39 The Full Federal Court took a similar view of the finality rule in Natta40, noting academic commentary to the effect that the rule is productive of absurdity and that there has been a tendency in the courts to diverge from the rule when justice so requires. The Court in Natta also said41: "[Notwithstanding the decision of the High Court in Piddington,] the court is not bound to the view that the exclusionary rule is absolute or that the categories of exceptions to it are closed. It is a rule of practice related to the proper management of litigation. A trial judge should not be precluded from determining in an appropriate case that the matter on which a witness' credit is tested is sufficiently relevant to that credit as it bears upon issues in the case that such evidence may be admitted." In Lawrence42, White J characterised the finality rule as a "case management" rule and recognised the capacity for "exceptions" to the rule to develop incrementally where the evidence sought to be adduced to test the witness's credit is sufficiently relevant to the facts in issue. The separate judgments of Kirby J and myself in Goldsmith43 also endorse a more flexible approach to the rule. We treated the rule as a flexible standard rather than a fixed rule of law. 38 [2002] 2 Qd R 400. 39 Lawrence [2002] 2 Qd R 400 at 406. 40 (1991) 32 FCR 282 at 298. 41 (1991) 32 FCR 282 at 300. 42 [2002] 2 Qd R 400 at 416. 43 Kirby J emphasised the need to preserve the actuality and appearance of even- handed justice as a reason for admitting exceptions to the rule: Goldsmith (2002) 76 ALJR 1024 at 1037 [70]; 190 ALR 370 at 388. McHugh The English courts also now support a more flexible approach and relax the finality rule where the interests of justice require it to be relaxed44. If credibility is inextricably linked with the principal issue in the case and that issue is incapable of being verified or tested except by evidence concerning credit, the English Court of Appeal has admitted rebuttal evidence involving prior inconsistent statements45. The relaxation of the rule has occurred principally in sexual misconduct cases, where the difference between questions going to credit and questions going to the issue is often indistinguishable. In Lawrence, Thomas JA noted46 that, at least in relation to sexual offences cases, issues about credit (for example, evidence showing a disposition on the part of the complainant to make or support false complaints) ultimately go to whether or not the offence was committed. His Honour referred47 to R v Lowrie and Ross48, where the Queensland Court of Appeal acknowledged that, although some of the cases could be explained under the "bias" exception to the collateral rule, others were "difficult to explain on any other basis than practice and the obvious injustice of excluding [the collateral facts]." This led the Court in Lowrie and Ross to conclude that although the finality rule itself is clear49: "[i]ndividual situations will no doubt be identified from case to case where it would be unjust to deprive an accused person of the right to lead evidence destructive of the credibility of another witness when the circumstances do not tidily fit within the recognised exceptions". Given the problems with the finality rule and the cases that are not explicable in terms of the rule, common law courts should now regard that rule as a rule of convenience – a rule for the management of cases – rather than a fixed rule or principle. Once it is recognised that it is a rule of convenience, courts should take a more liberal approach to admitting evidence showing a lack of credit or credibility of a witness than the traditional approach of the common 44 See, eg, Funderburk [1990] 1 WLR 587; [1990] 2 All ER 482; Chandu Nagrecha [1997] 2 Crim App R 401. 45 See, eg, Funderburk [1990] 1 WLR 587; [1990] 2 All ER 482; Chandu Nagrecha [1997] 2 Crim App R 401. 46 [2002] 2 Qd R 400 at 410. 47 Lawrence [2002] 2 Qd R 400 at 410. 48 [2000] QCA 405 at [43] per Thomas JA, McPherson JA and Muir J agreeing. 49 [2000] QCA 405 at [43]. McHugh law50. Where the interests of justice are likely to be advanced by admitting evidence tending to destroy the credibility of a witness, courts should hesitate to reject such evidence. Thus, where a circumstance affecting credibility is so inextricably connected with a fact in issue that it will probably determine that fact, a trial judge should generally admit evidence of that circumstance. Evidence of such a circumstance should not be excluded merely because it is not within the established exceptions to the collateral evidence rule. In Natta, the Full Federal Court concluded that a collateral matter could be pursued beyond cross-examination "in the interests of justice, whether or not it came within any of the traditional exceptions to the rule against evidence on collateral issues."51 In R v LSS, however, Thomas JA thought that in sexual offences cases collateral evidence should not be received merely because the facts in issue occurred in private, left few visible traces of having occurred and determination of the issues depended on an assessment of the credibility of the parties52. Thomas JA also said53 that to use the privacy of the occasion and the lack of corroborative evidence "as a basis for departing from the general rule of finality would leave too wide a gap in that important rule." In Bannister v The Queen54, Franklyn J also said that, if the collateral evidence rule applied in sexual offences cases said to have been committed in private where the issue is whether or not the acts complained of occurred at all, and not merely where the only significant issue is consent, it would logically apply "to any offence in respect of which there is no extrinsic evidence and no witness other than the offender and the victim." 50 Cross on Evidence, 7th Aust ed (2004) at 604 [19030]; see also Natta (1991) 32 FCR 282 at 298, 300. 51 (1991) 32 FCR 282 at 300. Murray J endorsed this approach in Narkle (2001) 23 WAR 468 at 475-476. 52 [2000] 1 Qd R 546 at 554-555. Thomas JA was discussing the following statement in Cross on Evidence, 5th Aust ed (1996) at 532 [19070]: "[S]exual intercourse, whether or not consensual, most often takes place in private, and leaves few visible traces of having occurred. Evidence is often effectively limited to that of the parties, and much is likely to depend upon the balance of credibility between them. This has important effects for the law of evidence, since it is capable of reducing to vanishing point the difference between questions going to credit and questions going to the issue." (foonote omitted) 53 LSS [2000] 1 Qd R 546 at 555. 54 (1993) 10 WAR 484 at 494. Murray J agreed with Franklyn J's comments in Narkle (2001) 23 WAR 468 at 480. McHugh The finality rule is important to the efficient conduct of litigation. Without it, the principal issues in trials would sometimes become overwhelmed by charge and counter-charge remote from the cause of action being litigated. In many cases, the finality rule also protects witnesses from having to defend themselves against discreditable allegations that are peripheral to the issues. But the common law should not have any a priori categories concerning the cases where the collateral evidence rule should or should not be relaxed. It should be regarded as a flexible rule of convenience that can and should be relaxed when the interests of justice require its relaxation. Avoiding miscarriages of justice is more important than protecting the efficiency of trials. And in cases where the rule needs to be relaxed, it is unlikely that any question of potential unfairness to a witness will arise. That is because the allegations will be inextricably connected with the issues. If unfairness to a witness is likely to arise – for example, because the witness is not in a position to meet the allegation – the trial judge can take steps to ensure that no unfairness arises. The statements of Thomas JA and Franklyn J to which I have referred are contrary to the approach of the Full Federal Court in Natta55. They should not be followed in so far as they state or imply that the rule should not be relaxed in any particular category of case. The collateral evidence rule should therefore be seen as a case management rule that is not confined by categories. Because that is so, evidence disproving a witness's denials concerning matters of credibility should be regarded as generally admissible if the witness's credit is inextricably involved with a fact in issue. Consistently with the case management rationale of the finality rule, however, a judge may still reject rebutting evidence where, although inextricably connected with a fact in issue, the time, convenience or expense of admitting the evidence would be unduly disproportionate to its probative force. In such cases, the interests of justice do not require relaxation of the general rule that answers given to collateral matters such as credit are final. Application of the collateral evidence rule to the present appeals In the present appeals, the evidence of Ross goes to the credibility of the witness Davis. Whether Davis had said that he had been offered a deal by the police in exchange for falsely testifying that Nicholls and Coates were in the motel room when Garabedian was killed would not prove that Nicholls and Coates were not in the motel room at the time. It would not prove or disprove the killing of Garabedian. The evidence of Ross would not tend to prove or disprove, therefore, a fact in issue in the trial. But if Davis made a statement to 55 (1991) 32 FCR 282 at 300; see also Narkle (2001) 23 WAR 468 at 475-476, 479 McHugh the effect that he intended to give false evidence in order to secure the deal that the police had offered him, it would have had a material bearing on the credibility of his evidence. No jury could reasonably convict Coates or Nicholls on Davis's evidence if Ross's evidence was accepted. In the interests of justice, therefore, Ross's evidence should have been admitted. In Lawrence56, the appellant was convicted of raping a fellow prisoner. In cross-examination the complainant denied that he had told a witness that the complainant was going to set the witness up by telling prison officers that the witness had propositioned the complainant for sex. The Queensland Court of Appeal held that the trial judge had erred in failing to allow the witness to give evidence concerning this statement. The Court held that the evidence – even if it only went to the complainant's credit – became admissible once the complainant denied having made that statement or threat. The decision does seem to stretch even the flexible standard doctrine to its limits. It is difficult to escape the conclusion that the Court thought that the evidence of the witness was admissible because it was true and, hence, critically undermined the credibility of the complainant. Probably, the best justification for the decision is that the evidence, if admitted and accepted, would have showed that the complainant was a person who was prepared to make false claims of rape in prison. It should not be seen as a prior inconsistent statement case. In that respect, the case is like Natta. In Natta, evidence of an out-of-court statement was allowed although it did not concern the facts in issue. In cross-examination during a personal injuries case arising out of a motor vehicle accident, the plaintiff denied that she had told a friend that an easy way of making money was to buy an old car and stage an accident. The Full Federal Court upheld the admission of defence evidence from the friend that contradicted the plaintiff's denial. The Court found that, if true, the fact that the plaintiff had been prepared to propose the pursuit of fictitious claims57: "demonstrated … an approach to the litigation and claim process that called into serious question the extent to which [the plaintiff] could be believed in what she told the court and her doctors in important areas concerning the extent and location of her pain which to a significant degree could not be independently verified." 56 [2002] 2 Qd R 400. 57 Natta (1991) 32 FCR 282 at 300. McHugh Accordingly, I think that the interests of justice required the admission of Ross's evidence. In addition, I think the evidence of Ross was also admissible under the corruption exception to the collateral evidence rule. Exceptions to the collateral evidence rule: bias, interest or corruption Among the circumstances where a witness's answer on a collateral matter is not final and may be contradicted58 is where the witness is biased or has been corrupted. In Piddington, Latham CJ said59: "Any witness may be cross-examined for the purpose of discrediting him. But if questions affect only the credit of a witness and are not relevant to the matters actually in issue in the case, the witness's answers cannot be contradicted by other evidence except in certain exceptional cases. Exceptions to the rule at common law are that after cross-examination of his opponent's witnesses a party may give evidence to show that they are notorious liars, or have given their testimony from a corrupt or other wrong motive, or that they have previously made statements inconsistent with their evidence." Evidence rebutting a witness's evidence may be adduced where the witness is affected by one of three "kinds of emotion constituting untrustworthy partiality"60, namely, bias, interest or corruption. Wigmore refers to emotional partiality in three senses. The first is bias in the sense of "all varieties of hostility or prejudice against the opponent personally or of favor to the proponent personally"61. The second is interest in the sense of "the specific inclination which is apt to be produced by the relation between the witness and the cause at issue in the litigation."62 The third is corruption in the sense of "the conscious false intent which is inferrible [sic] from giving or taking a bribe or from 58 A more extensive list is set out in my judgment in Goldsmith (2002) 76 ALJR 1024 at 1030 [33]-[36]; 190 ALR 370 at 378-379. 59 (1940) 63 CLR 533 at 545. 60 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782 [945] (emphasis omitted). 61 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782 [945] (original emphasis). 62 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782 [945] (original emphasis). McHugh expressions of a general unscrupulousness for the case in hand"63. Wigmore acknowledges that the "theoretical place" of the corruption exception "is not easy to determine. It is related in one aspect to interest, in another to bias, in still another to character (ie, involving a lack of moral integrity)."64 Nevertheless, he observes that the essential discrediting element in relation to evidence showing corruption is "a willingness to obstruct the discovery of the truth by manufacturing or suppressing testimony."65 Cross on Evidence distinguishes bias "in the sense of underlying and undue sympathy or hostility felt by the witness towards a party" from corruption "in the sense of more specific interference with testimony, typically by way of bribery"66. However, Cross on Evidence notes that "similar principles" underpin both methods of attacking the credibility of an opponent's witness67. In Hitchcock, Pollock CB accepted that independent evidence may be given to prove a self-contradictory statement made by a witness or to rebut a denial given by the witness in relation to the witness's state of mind or feelings towards a party. He referred to "those matters which affect the motives, temper, and character of the witness, not with respect to his credit, but with reference to his feelings towards one party or the other."68 Hence, evidence of what a witness said is admissible "to shew what is the state of mind of that witness, in order that the jury may exercise their opinion as to how far he is to be believed."69 While the "interest" and "bias" exceptions to the collateral evidence rule are typically limited to evidence about the feelings of the witness towards one party or the cause at issue, the so-called "corruption" exception is not so confined. In Lawrence, Thomas JA remarked that70: 63 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782 [945] (original emphasis). 64 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 802-803 [956]. 65 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 803 [956]. 66 Cross on Evidence, 7th Aust ed (2004) at 601 [19015]. 67 Cross on Evidence, 7th Aust ed (2004) at 601 [19015]. 68 Hitchcock (1847) 1 Ex 91 at 100 [154 ER 38 at 42]. See also Maguire, Evidence: Common Sense and Common Law, (1947) at 67, cited in Cross on Evidence, 7th Aust ed (2004) at 575 [17580]. 69 Hitchcock (1847) 1 Ex 91 at 101 per Pollock CB [154 ER 38 at 42]. 70 [2002] 2 Qd R 400 at 409. McHugh "An offer to testify corruptly is a good and clear example of the 'corruption' exception. There is no doubt that a legitimate collateral issue is raised in such a case, and that evidence to support such an allegation may be independently called." As indicated earlier, the complainant in that case denied in cross- examination that he had threatened to make a false complaint against a third party. The Queensland Court of Appeal held that the trial judge should have admitted the evidence of the third party against whom the threat was made. Thomas JA doubted71 that evidence in relation to corrupt moral character is limited to a specific corrupt intention in respect of the case in hand, but rather applies where a witness has a motive for being untruthful. Evidence of bias or corruption of a witness has been received in several cases, even though such evidence would not satisfy Pollock CB's test in Such cases include R v Phillips72, LSS73 and Lawrence74. Hitchcock. R v De Angelis75 and Smith v The Queen76 are more orthodox examples of the application of the corruption exception. In Phillips, the English Court of Criminal Appeal held that evidence of bias ought to have been admitted to prove that a child who was a victim of and witness to an alleged incest had admitted that her mother had put her up to making the allegations. The accused denied the offence, claiming that the mother had schooled her child as to what to say. The Court held that the evidence of two women to whom the child had allegedly made the statements went directly to the accused's defence, not to the credibility of the child. Evidence of out-of-court statements was also held to be admissible in LSS, where the accused was charged with incest and other sexual offences against his daughter. The Queensland Court of Appeal held that the trial judge should have admitted evidence from the daughter's brother that he had seen their mother (another Crown witness) coaching the daughter. In the Court's view, the 71 Lawrence [2002] 2 Qd R 400 at 410, 412. 72 (1936) 26 Cr App R 17. 73 [2000] 1 Qd R 546. 74 [2002] 2 Qd R 400. 75 (1979) 20 SASR 288. 76 (1993) 9 WAR 99. McHugh brother's evidence should have been admitted – not only as to what he saw, but also as to what he heard. The Court said that the brother's evidence was inextricably linked with the accused's defence. Thomas JA said77: "[E]vidence demonstrating the coaching of a witness, when there is a clear opportunity for a person apparently hostile to the accused to influence the witness, ought to be able to be called by an accused person." Thomas JA also said that the evidence fell within the exception to the collateral evidence rule in favour of evidence of bias or partiality in a witness. His Honour acknowledged78 that "any hostility on the mother's part was based upon her belief in the truth of her daughter's complaint." However, he said79 that this sort of reasoning was circular when the ultimate issue was the truth of the complaint. Accordingly, his Honour said that80: "[T]he evidence foreshadowed from the brother could cast doubt upon the reliability of the complainant's evidence given the rather extended coaching that is said to have occurred, including encouraging the complainant to 'get emotional'." In Smith81, the Full Court of the Supreme Court of Western Australia held that the trial judge had improperly excluded evidence from a witness for the defence in a sexual offences case. The evidence concerned out-of-court statements made by the complainant that suggested bias on her part against the accused. In cross-examination the complainant, the foster-daughter of the accused, denied that she had made statements to the witness that she had been ejected from the home of her foster family because of her drug taking and had said to the witness: "Don't worry. They will all pay for it."82 The Full Court held that, if accepted, the jury could conclude that the evidence revealed bias on the part of the complainant causing the fabrication of the charges about which the complainant had given evidence. 77 LSS [2000] 1 Qd R 546 at 554, Pincus JA and Ambrose J agreeing. 78 LSS [2000] 1 Qd R 546 at 553. 79 LSS [2000] 1 Qd R 546 at 553. 80 LSS [2000] 1 Qd R 546 at 553. 81 (1993) 9 WAR 99. 82 Smith (1993) 9 WAR 99 at 101. McHugh Evidence of out-of-court statements by a defence witness was also admitted to prove bias in De Angelis83. The Full Court of the Supreme Court of South Australia upheld the admission of evidence from police officers that a witness for the defence had said to them that "if required to go to court [the witness] would lie in order to avoid offending" the accused84. King CJ said85 that the statement was "admissible under the common law rule which allows statements by witnesses indicating bias or partiality to be proved". His Honour said that86: "[A] statement to the effect that a person if required to give evidence will give false evidence out of a desire not to offend certain of the parties is a statement indicating partiality in relation to the parties or the cause, whether that partiality stems from friendship or fear." In R v Umanski87, however, the Full Court of the Supreme Court of Victoria held that a statement, although affecting the credibility of a witness, was not capable of proving bias. The accused in Umanski was charged with incest involving his step-daughter. The accused's wife was an important prosecution witness. The trial judge excluded evidence that the wife had threatened to give her husband up to the police unless she received a share of property from him. The wife denied making the statement. The Full Court held that the evidence was rightly excluded. The Court, "[n]ot without some hesitation", said that such evidence fell short of tending to establish bias or partiality that might lead the wife to give false evidence88. The Court said89: "Had the alleged statement been to the effect that [the accused's wife] would be revenged on her husband or that she would offer false evidence of the offence of incest unless he gave part of his property to her, the case would have been different. What she is alleged to have said, however, was the converse of this. In effect she alleged to have said that she was prepared to drop the case against her husband if he made such a gift to her, 83 (1979) 20 SASR 288. 84 De Angelis (1979) 20 SASR 288 at 295 per King CJ, Jacobs and Legoe JJ agreeing. 85 De Angelis (1979) 20 SASR 288 at 295, citing R v Umanski [1961] VR 242. 86 De Angelis (1979) 20 SASR 288 at 295. 88 Umanski [1961] VR 242 at 244. 89 Umanski [1961] VR 242 at 244. McHugh not that she would invent a charge of incest against him if he did not. No doubt this indicates a willingness on her part to disregard her public duty for a price and so goes to her credit but we consider that this falls far short of evidencing a motive for giving false evidence." Subject to certain limitations relating to relevance, hearsay and, potentially, s 21 of the Evidence Act, rebuttal evidence of corruption on the part of a witness should generally be admissible to show that the witness has a motive for being untruthful. Cross on Evidence acknowledges that it may be that "the only test [for the reception of the evidence] is the importance of the allegation in the context of the case."90 This statement supports the view that the rules relating to the corruption exception should not be rigidly applied, particularly in circumstances where a more liberal approach would operate to be curative of injustice. Probative value of Davis's out-of-court statements If Ross's evidence was admitted, he would say that Davis had said to him that: "[A]lthough he, Davis, ... was involved in the killing of Clare Garabedian neither Coates nor Nicholls was so involved or present in the room but ... nonetheless he was proposing to give evidence to implicate the two of them in the murder." Counsel for Nicholls submitted that the effect of this evidence was that at the time of making the statements, Davis intended to give false testimony at the trial of Nicholls and Coates. Counsel also submitted that the evidence of Davis's intention to give false testimony at the trial provided a basis for inferring that he also possessed that intention at the time of testifying at trial. He contended that this was evidence of Davis's corruption as a witness, and that it had the same probative value as evidence that Davis had accepted a bribe to testify falsely at trial. Counsel for Coates contended that Davis's stated intention to give false evidence implicating Coates was evidence of corruption, that is, "a willingness to obstruct the discovery of the truth by manufacturing or suppressing testimony."91 The Crown submitted that the evidence of Davis's out-of-court statements only went to show that Davis had been offered a deal or that he was being encouraged to implicate Coates and Nicholls. The Crown submitted that evidence that a witness has been offered a bribe is not evidence of a corrupt state of mind. Accordingly, evidence that Davis had been offered a deal or had been 90 Cross on Evidence, 7th Aust ed (2004) at 606 [19040]. 91 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 803 [956]. McHugh encouraged to implicate Nicholls and Coates likewise did not constitute evidence of a corrupt state of mind92. The Crown also contended that the evidence of Davis's out-of-court statements did not disclose an intention to give false evidence. Ross's witness statement did not actually say that Davis said that he, Davis, intended to give false evidence implicating Nicholls and Coates. Rather, this was sought to be inferred from Ross's evidence. As a result, this case was distinguishable from cases such as Lawrence and De Angelis. In those cases, the evidence sought to be led in rebuttal was that the witness had expressly stated an intention to give false evidence, those statements being probative of a corrupt state of mind. The nature of the evidence that Ross would have given is somewhat vague. It is not clear whether Ross would have said that Davis claimed he had been offered a deal by the police or had actually done a deal with the police or whether he actually said that he would give false evidence. However, if admitted, a jury could find that Davis said that he had done a deal with the police and that he intended to give false evidence implicating Nicholls and Coates. If so, it would be evidence of a corrupt state of mind: it would be an example of a specific interference with testimony and evidence of "a willingness to obstruct the discovery of the truth by manufacturing or suppressing testimony." And the jury could infer from this finding that his evidence against Coates and Nicholls was actuated by this state of mind. Whether Ross's evidence is hearsay and, if so, admissible as an exception to the hearsay rule The evidence that Ross would give was not hearsay evidence. The purpose of the evidence was to demonstrate Davis's state of mind, that is, a mental state affected by corruption or bias. The evidence was not intended to prove the truth of the statements. As Pollock CB said in Hitchcock93: "It is certainly allowable to ask a witness in what manner he stands affected towards the opposite party in the cause, and whether he does not stand in such a relation to that person as is likely to affect him, and prevent him from having an unprejudiced state of mind, and whether he has not used expressions importing that he would be revenged on some one, or that he would give such evidence as might dispose of the cause in 92 See Hitchcock (1847) 1 Ex 91 at 101 per Pollock CB, 104-105 per Alderson B, 106 per Rolfe B [154 ER 38 at 42-43, 44, 44-45]; Lawrence [2002] 2 Qd R 400 at 403 per McPherson JA. 93 (1847) 1 Ex 91 at 100-101 [154 ER 38 at 42]. McHugh one way or the other. If he denies that, you may give evidence as to what he has said, not with the view of having a direct effect on the issue, but to shew what is the state of mind of that witness, in order that the jury may exercise their opinion as to how far he is to be believed." (emphasis added) In Walton v The Queen94, Wilson, Dawson and Toohey JJ pointed out that the making of a statement is frequently relevant in considering the mental state and subsequent conduct of the witness, quite apart from the truth of the content of the statement. A question of hearsay arises only if the words are relied upon as establishing some fact narrated by the words. The Crown contended, however, that it was the content of Ross's statements that was critical and not the fact that they had been made. Evidence that Ross had had a conversation with Davis, without more, would not suggest corruption on Davis's part. In so far as the statements had value because of the assertions contained in them, the Crown contended that they constituted a "bare assertion"95 about Davis's state of mind. Accordingly, because they did not amount to conduct from which a relevant inference could be drawn, the statements had to be excluded as hearsay. But these contentions misunderstand the relationship between statements that prove a state of mind and statements that infringe the hearsay rule. What is relevant in the present context is the state of mind of Davis when he gave evidence. That may be inferred from his conduct or from his statements. Ross's evidence could not be used as proof that Davis had actually done a deal with the police: that would be hearsay. If the words demonstrated an intention to give false testimony, however, Ross's statement was evidence of Davis's mental state that established a corrupt motive that affected his testimony. In Smith96, the Full Court of the Supreme Court of Western Australia upheld the admission of out-of-court statements on this basis. It held that evidence was admissible to prove that the complainant in a sexual offences case had said to a witness that she had been ejected from her foster home because of her drug taking and that "[t]hey will all pay for it." The Full Court said that the evidence might have revealed that the complainant had given her evidence from a corrupt or other motive. In Walton97, Wilson, Dawson and Toohey JJ remarked that in some cases: 94 (1989) 166 CLR 283 at 301-302. 95 Walton (1989) 166 CLR 283 at 304 per Wilson, Dawson and Toohey JJ. 96 (1993) 9 WAR 99. 97 (1989) 166 CLR 283 at 302. McHugh "a person's statements about his state of mind will only have probative value if they are truthful and accurate and to rely upon them is to rely to some extent upon the truth of any assertion or implied assertion contained in them. To that extent an element of hearsay may be said to be present." But it is probably more accurate to say that in cases like Smith the contents of the statement revealed bias or corruption and the reasons for that state of mind rather than the truth of their contents. In Smith, the statements were not admitted to prove that the complainant had taken drugs or had been ejected from her foster home. They were admitted to prove that she was biased against the accused for the reasons that she gave. In Phillips, the English Court of Criminal Appeal held that evidence that the complainant's mother had coached her to give evidence was admissible. In LSS, the Queensland Court of Appeal held that evidence was admissible that a witness saw and heard the complainant being coached by her mother. The Court said that this evidence could cast doubt upon the reliability of the complainant's evidence. Ross's evidence concerning Davis's out-of-court statements was not admissible for the purpose of proving the truth of the contents of those statements – that Davis had done a deal with the police or that Nicholls and Coates were not in the motel room at the time of Garabedian's death or were not involved in the murder of Garabedian. The evidence was admissible for the purpose of proving that Davis intended to give false testimony against Nicholls and Coates. That is, the evidence was admissible to prove a corrupt state of mind on Davis's part. The procedure for adducing evidence as an exception to the collateral evidence rule At common law, if a witness does not admit the making of a prior statement, the cross-examiner must identify that statement to the witness. Only if the witness still refuses to admit making the statement may the opposing party prove the oral statement98. Section 21 of the Evidence Act ("Cross-examination as to and proof of prior inconsistent statement") is to similar effect. Section 21 requires that the cross-examiner identify the particular occasion when the supposed statement was made. Only if the witness does not distinctly admit that he or she made the statement can evidence be tendered to prove that he or she in fact made the statement. Section 21 provides: 98 The Queen's Case (1820) 2 Brod & B 284 at 313 [129 ER 976 at 988]; Crowley v Page (1837) 7 C & P 789 at 791-792 per Parke B [173 ER 344 at 345]. McHugh "Every witness under cross-examination in any proceeding, civil or criminal, may be asked whether he has made any former statement relative to the subject-matter of the proceeding, and inconsistent with his present testimony, the circumstances of the supposed statement being referred to sufficiently to designate the particular occasion, and if he does not distinctly admit that he made such statement, proof may be given that he did in fact make it. The same course may be taken with a witness upon his examination in chief or re-examination, if the judge is of opinion that the witness is hostile to the party by whom he was called and permits the question." Section 21 is essentially declaratory of the common law99. It does not abrogate the common law principles100. Proof or admission of the prior inconsistent statement does not constitute evidence of the facts stated101 unless the witness is a party (in which case the statement may amount to an admission). Section 21 prescribes the requirement that must be met before proof of a previous inconsistent statement may be tendered. That requirement is that the circumstances of the statement must be identified to the witness sufficient to designate the particular occasion. In other words, the circumstances in which the prior inconsistent statement was allegedly made must be identified to the witness in sufficient detail so that the witness has the opportunity to admit or fail to "distinctly admit" that he or she made the statement102. Only if the witness fails to "distinctly admit" that he or she made the statement can evidence be led of the making of the inconsistent statement. Counsel for Nicholls and Coates submitted that s 21 of the Evidence Act does not apply to evidence adduced for the purpose of showing a corrupt state of mind. Counsel for Coates submitted that the purpose of proving a prior inconsistent statement is to raise doubt as to the reliability of the witness while the purpose of establishing a corrupt state of mind is "quite different". 99 See The Queen's Case (1820) 2 Brod & B 284 at 313 [129 ER 976 at 988]; Crowley v Page (1837) 7 C & P 789 [173 ER 344]. 100 See Umanski [1961] VR 242 at 244. The Victorian Full Court in that case construed the "permission" in the equivalent s 35 of the Evidence Act 1958 (Vic) as not abrogating common law principles. 101 Hammer v S Hoffnung & Co Ltd (1928) 28 SR (NSW) 280; Askew [1981] Crim LR 102 This is the common law position: The Queen's Case (1820) 2 Brod & B 284 at 313 [129 ER 976 at 988]. McHugh Establishing a corrupt state of mind impeaches the supposed impartiality of the witness. But the common law has long taken the view that the rules concerning proof of a prior inconsistent statement apply to cases where the statement goes to the issue of bias or corruption. The Queen's Case103 is the seminal case on proof of inconsistent statements. There, Abbott CJ, giving the answers of the King's Bench judges to questions from the House of Lords, said that words spoken for the purpose of corruption were no different from words spoken for any other purpose. He said104 that they "fall within the same rule and principle, with regard to the course of proceeding in our courts, as words spoken for any other purpose". The reason for this similarity of treatment is clear. It would be anomalous if the nature and circumstances of the statement were required to be put to a witness as a prior inconsistent statement before the witness's credibility could be attacked, but not if the witness had stated that he or she intended to lie in court. Because s 21 is declaratory of the common law, the common law principles concerning proof of statements indicating bias or corruption apply to cases coming within the section. In addition, the case law also indicates that the section (or its equivalent in other jurisdictions) applies where a party seeks to tender independent proof of statements that tend to prove bias or partiality in a witness105. Moreover, imputing bias or corruption to a witness is a serious allegation. Fairness requires that a person who makes such an imputation should put the matters giving rise to it in sufficient detail to the witness so that the witness understands the allegation and those matters and has an opportunity to deny or explain them. Counsel for Nicholls acknowledged that there was a failure to identify the circumstances of the statements allegedly made by Davis, such as the time, place and occasion of the statements. There was also a failure to identify the speakers, the essence of the conversation and the words used. As a result, both s 21 of the Evidence Act and the common law principle made Ross's evidence inadmissible. Counsel for Hoy only asked Davis whether he had "ever told anybody that the whole story … about the involvement of Coates and Nicholls is a lie", whether he was "told by police what to say" and that he "did it so that [he] would gain a benefit". Counsel for Coates did not put any such suggestion to Davis. Counsel 103 (1820) 2 Brod & B 284 [129 ER 976]. 104 The Queen's Case (1820) 2 Brod & B 284 at 315 [129 ER 976 at 988]. 105 Umanski [1961] VR 242; R v Harrington [1998] 3 VR 531; cf Narkle (2001) 23 WAR 468 at 477-478 per Murray J. McHugh for Nicholls asked Davis whether he had ever said "in a conversation" that the police had offered him a deal if he cooperated and implicated Coates "and others" in the murder, that he had been told by the police what to say in order to implicate "others" and that the story he had given the police about Coates and Nicholls being present in the motel room was "all bullshit". Counsel did not identify whether this was one conversation or several, or whether the statements were made to one person or more than one person. In these circumstances, it is impossible to hold that the circumstances and substance of the statements were Moreover, because the making of the statements was the foundation for an inference of bias or corruption, fairness – and the rule in Browne v Dunn106 in particular – required the precise nature of the corruption allegation to be put to Davis. Fairness required that he have an opportunity to deny that, even if he made the statements, he was biased or was giving false evidence against the accused. The failure of the cross-examiners to put to Davis that they were alleging bias or corruption against him is an additional reason for holding that the trial judge correctly excluded Ross's evidence. Coates' unrecorded admissions The circumstances in which the admissions were made As part of its case against Coates, the Crown relied on several admissions that Coates had allegedly made while he was in police custody. The admissions were made during the second break in a videotaped interview of Coates. Filming was suspended during that time. During the second break, which lasted approximately 45 minutes, Coates allegedly made admissions to Hawley and Hutchinson and made further admissions to Kays and Byleveld. The transcript of the interview indicates that the second break in the filming occurred at the suggestion of either Hawley or Hutchinson who asked Coates: "Q. Do you want to go to the toilet? Do you want to go to the toilet again, do you? Sure. All right, I will suspend the interview again. It's 6 minutes past 5 and I will just turn the tapes off." However, the videotape was apparently less clear about who made the request, because Coates had his head turned away from the camera at the time. McHugh In cross-examination, one of the police detectives, Hawley, said that Coates had initiated the request. Counsel for Coates did not question the other police detective, Hutchinson, on the issue. In his first ruling on the admissibility of admissions made to Hawley and Hutchinson during the second break, the learned trial judge, Murray J, merely noted the police officers' evidence that the suspension of the taping was initiated by Coates and that a break in the process of recording the interview had been contrived. His Honour did not make any finding about who requested the suspension of the interview. In his second ruling on admissions made during the second break to Kays and Byleveld, two more senior police detectives, the trial judge said that it was "clearly open … to conclude that the break which occurred in the interview was at the request of Mr Coates, and that was a toilet break." His Honour also said that "it is clear that the process was commenced by Mr Coates in my opinion and that he was seeking to speak off the camera". Miller J in the Court of Criminal Appeal107 found that Coates had initiated the off-camera interview. Coates' submissions Counsel for Coates submitted that the trial judge erred in admitting the admissions allegedly made by Coates during the 45 minute break in the videotaped interview of Coates. The admissions were not later confirmed on videotape when the videotaped interview was resumed. Section 570D of the Criminal Code relevantly provided that evidence of any admission by an accused person on trial for a serious offence is not admissible unless there is a "reasonable excuse" for there not being a videotaped recording of the admission. Counsel for Coates submitted that the trial judge and the Court of Criminal Appeal erred in finding that there was a "reasonable excuse" in the circumstances for the lack of a videotaped recording of the admission. The legislation At the relevant time, s 570D of the Criminal Code ("Accused's admissions in serious cases inadmissible unless videotaped") provided: In this section – 'admission' means an admission made by a suspect to a member of the Police Force, whether the admission is by spoken words or by acts or otherwise; 'serious offence' means an indictable offence of such a nature that, if a person over the age of 18 years is charged with it, it can not be 107 Hoy [2002] WASCA 275 at [145]-[146]. McHugh dealt with summarily and in the case of a person under the age of 18 years includes any indictable offence for which the person has been detained. (2) On the trial of an accused person for a serious offence, evidence of any admission by the accused person shall not be admissible unless – the evidence is a videotape on which is a recording of the admission; or the prosecution proves, on the balance of probabilities, that there is a reasonable excuse for there not being a recording on videotape of the admission; or the court is satisfied that there are exceptional circumstances which, in the interests of justice, justify the admission of the evidence. Subsection (2) does not apply to an admission by an accused person made before there were reasonable grounds to suspect that he or she had committed the offence. For the purposes of subsection (2), 'reasonable excuse' includes the following – (a) The admission was made when it was not practicable to videotape it. (b) Equipment to videotape the interview could not be obtained while it was reasonable to detain the accused person. (c) The accused person did not consent to the interview being videotaped. (d) The equipment used to videotape the interview malfunctioned." The Code defined "interview" to mean "an interview with a suspect by a member of the Police Force"108. 108 Section 570(1). McHugh Trial judge's rulings At the trial, Murray J made two rulings in relation to the admissions. In the first ruling his Honour said: "[I]t is my opinion that what occurred would constitute a reasonable excuse for there not being a recording of the material on videotape." In his second ruling, Murray J said that there was "no reasonable proposition" that the second break was "a break which was effectively manufactured by the interviewing police officers", that it was a "separate interview process" commenced by Coates and that Coates had not consented to the videotaping of it. Consequently, his Honour ruled that the admissions made by Coates during the second break in the interview were admissible. Findings of the Court of Criminal Appeal The Court of Criminal Appeal upheld the trial judge's decision to allow the reception of the admissions made during the second break. Miller J said that there was a "reasonable excuse" for the failure to videotape Coates' alleged admissions. Critical to this conclusion was the finding that Coates had initiated the 45 minute suspension of the videotaping. Miller J said109: "In the present case, it is the initiation by Coates himself of the off- video interview which is a critical factor in the determination of the admissibility of the admissions allegedly made by him. In my view, the learned trial Judge was quite correct in concluding that there was, within the meaning of s 570D(2)(b) of the Criminal Code, a reasonable excuse for the admissions not being recorded on video tape, namely that Coates did not want his statements recorded on video tape. According to the evidence of the officers he was anxious to speak off tape about the options that he might have if he was to implicate others. In my view, it is quite wrong to suggest that in these circumstances the admissions of an accused person or the admissions of a suspect are inadmissible by reason of the fact that they have not been videotaped." The Crown did not dispute that the statements allegedly made by Coates to Hawley and Hutchinson and to Kays and Byleveld constituted "admissions" for the purpose of s 570D, nor that the charge was a "serious offence". Nor did the Crown contend that there were any "exceptional circumstances" that, in the interests of justice, justified the admission of the evidence under s 570D(2)(c). The issue, then, is whether there was a "reasonable excuse" for there not being a videotaped recording of the admissions within the meaning of s 570D(2)(b). Section 570D(4) defines "reasonable excuse" inclusively. Of the matters listed in 109 Hoy [2002] WASCA 275 at [146]. McHugh s 570D(4), it was not suggested that any of pars (a), (b) or (d) of s 570D(4) applied. As a result, argument before the trial judge, the Court of Criminal Appeal and this Court turned on whether Coates "did not consent to the interview being videotaped" or that something similar to or "allied to" that had occurred, within the inclusive meaning of "reasonable excuse". Interpretation of the legislation Section 570D was inserted into the Code by s 5 of the Acts Amendment (Jurisdiction and Criminal Procedure) Act 1992 (WA). Nothing in the second reading or other speeches in the Legislative Assembly or the Legislative Council throws any light on the problem presented by the facts of the present case. Nevertheless, it is clear that the mischief at which the section is directed is the problem of admissions to the police and the perceived problem of the police "verbal". In Kelly v The Queen, the problem of the police verbal was described as including110: "the possibility of police fabrication and the ease with which experienced police officers can effectuate it, the frequent lack of reliable corroboration of the making of the statement, and the practical burden on an accused person seeking to create a reasonable doubt about the police evidence." (footnote omitted) The broader problem of admissions to police includes not only possible fabrication of admissions or police perjury, but also problems associated with the perception, recording, recollection and transmission to the court of those admissions. It includes problems of pressure, coercion and oppression in relation to the making of the alleged admissions, and misunderstanding, inaccurate recording and misrecollection the perception, recording, in relation recollection and transmission to the court of those admissions111. The Australian States and Territories have adopted a variety of legislative responses to these problems112. As I pointed out in Kelly, the legislation113: 110 (2004) 78 ALJR 538 at 548 [42] per Gleeson CJ, Hayne and Heydon JJ; 205 ALR 111 See Kelly (2004) 78 ALJR 538 at 543-544 [22]-[25] per Gleeson CJ, Hayne and Heydon JJ; 205 ALR 274 at 279-280. 112 Gleeson CJ, Hayne and Heydon JJ describe the different legislative approaches in Kelly (2004) 78 ALJR 538 at 545-546 [30]-[36]; 205 ALR 274 at 282-283. 113 (2004) 78 ALJR 538 at 558 [96]; 205 ALR 274 at 300. McHugh "seeks to protect the rights of accused persons during a period when their rights are vulnerable by reason of the mistaken recollection or lies of police officers. The enactments of the various legislatures are broadly similar in principle although they differ in detail. In general, they identify the period of vulnerability as commencing with the time when the facts raise a suspicion of the accused's guilt. In most jurisdictions, the period is thereafter open-ended. The enactments recognise that miscarriages of justice may occur when there is no mechanical record confirming an allegation by police officers that the accused has confessed to a crime or made a damaging admission after he or she was or ought reasonably to have been seen as a suspect. The evident policy of the enactments is that it is against the interests of justice to admit evidence of such confessions or admissions unless there is a mechanical record of such confession or admission or an acknowledgment of it, or in some jurisdictions that exceptional circumstances justify the admission of the evidence." In Kelly, Gleeson CJ, Hayne and Heydon JJ said114 that the identified purpose or object of the legislation under consideration in that case "does not compel any particular construction of the quite detailed language" of the relevant section. Their Honours said115 that the correct construction depends on the particular words used. On the other hand, I emphasised that the protective purpose of the legislation required a liberal construction of the relevant section116: "Given the mischief to which the Australian legislatures have directed their attention and the policy behind the enactments, it would not be defensible to make the admissibility of confessions or admissions made during the period of vulnerability turn upon fine verbal distinctions between the legislation of particular jurisdictions. Rather, courts construing the various legislative enactments should construe them in the same broad way that Dixon J in Little v The Commonwealth117 thought that protective provisions, such as time limitation provisions, should be construed. As far as the statutory language will permit, the legislation of the various jurisdictions should be interpreted liberally and uniformly to give effect to what is a national policy behind this class of legislation. To so construe the legislation of a particular jurisdiction in this way is not to reject the will of the legislature of that jurisdiction. It is merely another 114 (2004) 78 ALJR 538 at 548 [43]; 205 ALR 274 at 286. 115 Kelly (2004) 78 ALJR 538 at 548 [43]; 205 ALR 274 at 286. 116 Kelly (2004) 78 ALJR 538 at 558-559 [97]-[98]; 205 ALR 274 at 300-301. 117 (1947) 75 CLR 94 at 112. McHugh application of the dictum of Dixon CJ that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed.'118 It also accords with the purposive theory of statutory construction. Purposive construction is the modern approach to statutory construction119. Legislative enactments should be construed so as to give effect to their purpose even if on occasions this may require a 'strained construction' to be placed on the legislation120. The literal meaning of the legislative text is the beginning, not the end, of the search for the intention of the legislature. As Learned Hand J famously pointed out121: 'Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.'" Application of s 570D of the Criminal Code Both the natural and ordinary meaning of "interview" and the purposive construction of s 570D favour interpreting that term in s 570D(4) to cover the entire time during which Coates spoke with and was questioned by the police. The term "interview" is used only in s 570D(4): the rest of the section refers to "any admission" or "the admission" or "an admission" without specifying that the admission must be made in the course of an interview, that is, without designating the occasion of the admission. The policy of the section is that no admission is admissible unless it falls within one of the three paragraphs in s 570D(2). Paragraph (b) – the reasonable excuse exception – is the relevant exception in the present case. That paragraph declares that "evidence of any 118 Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397. 119 Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421-424 per McHugh JA; Bropho v Western Australia (1990) 171 CLR 1 at 20 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ. 120 Kingston (1987) 11 NSWLR 404 at 422 per McHugh JA. 121 Cabell v Markham 148 F 2d 737 at 739 (2nd Cir 1945). McHugh admission ... shall not be admissible unless ... the prosecution proves ... that there is a reasonable excuse for there not being a recording on videotape of the admission". Reasonable excuse includes that the accused "did not consent to the interview being videotaped." The natural meaning of "interview" in s 570D is the entirety of a discussion between a police officer and a suspect carried out on a particular day for the purpose of eliciting statements122 from the suspect concerning the commission of a "serious offence". It is unlikely that the Legislature in using the term intended it to mean each separate question and answer or statement made on a particular occasion, so that each such question and answer or statement constituted an "interview". It seems absurd to think that the Legislature intended the occasion of Coates' interrogation to constitute at least four separate interviews, consisting of two videotaped interviews and two unrecorded interviews during the toilet breaks. A purposive construction also supports interpreting "interview" to mean the entirety of a discussion between a police officer and a suspect carried out on a particular day for the purpose of eliciting statements from the suspect concerning the commission of a "serious offence". Such a construction assists in having a record of the entire discussion between the police officer and the accused on a particular day at a particular place instead of records of parts of the discussion. In accordance with the policy of the section, it also reduces – although it cannot eliminate – the occasions for disputes between accused persons and police officers as to what was said in "interviews", particularly interviews at police stations. A purposive construction also provides an incentive to police officers to have off-camera admissions recorded or at all events referred to when recording resumes. Hence, by interpreting "interview" to cover all exchanges between Coates and the police while he was under caution, s 570D applies to the times when filming was suspended. Because Coates did not withhold consent to the entire series of exchanges being videotaped, his refusal to consent to some of the exchanges being videotaped (if he did) did not fall within the meaning of "reasonable excuse" as defined in s 570D(4)(c). Nor do the circumstances of the disputed admissions warrant their admission under the umbrella of "reasonable excuse" independently of the inclusive exceptions in s 570D(4). The focus of any inquiry directed to the application of the "reasonable excuse" exception must take account of the conduct of the police, as well as the fairness or otherwise to the accused of permitting the admissions to be admitted. In construing similar provisions in 122 cf The New Oxford Dictionary of English, (1998) at 956. McHugh MDR123, Wicks J held that the conduct of the police officers was relevant to the question whether it would be "in the interests of justice" to admit evidence of admissions by the accused. His Honour thought relevant matters included whether non-compliance with the provisions was deliberate or the product of a reckless disregard of the provisions or was inadvertent or otherwise excusable. Such matters are also relevant in determining whether there was a "reasonable excuse" for not recording the admission. Most importantly of all, however, is whether the officers attempted to have the off-camera admission recorded. If, on-camera, the accused denies making an off-camera admission, it will be highly relevant in determining whether there was a "reasonable excuse" "for there not being a recording on videotape of the admission"124. Even then it will be necessary for trial judges to bear in mind the observations of Slicer J in a related context in R v Heinicke125: "[I]t would be a denial of the spirit of the [Tasmanian provision] if courts as a matter of course permitted the reception of a videotaped interview comprising denials followed by a recanting recording interview made after a short unrecorded series of events which were themselves not subject to verification or which had not been fully and openly adopted in the following recorded interview." In this case, Hawley admitted in cross-examination that he had encouraged Coates to speak off-camera, that he deliberately chose to continue the interview off-camera and that this was not proper or careful practice. Hawley also admitted that it would have been possible during the second break in videotaping to have the video turned on and the disputed conversations recorded. Hawley did not say that Coates refused permission to do so. Moreover, there was apparently no attempt by the police, once the videotaping resumed, to have Coates confirm his admissions on tape. The police made no contemporaneous notes of the off-camera conversations, and the notes that Hawley and Hutchinson wrote the following morning were later lost or mislaid. These circumstances indicate a departure from proper police procedure. They indicate that the trial judge and the Court of Criminal Appeal erred in permitting the reception of Coates' admissions in evidence. Moreover, even if the off-camera statements constituted an "interview" to whose recording Coates did not consent, the above circumstances made an overpowering case for the trial judge to exercise his general discretion 123 (2002) 135 A Crim R 19 at 30, citing R v Day (2002) 82 SASR 85 at 89 per 124 Section 570D(2)(b). 125 [2001] TASSC 93 at [23]. McHugh concerning evidence unfairly obtained to exclude the evidence126. The Legislature has set its face against admitting unrecorded admissions by suspects except in special circumstances. When interviewing police officers encourage the making of off-camera admissions, despite the presence of recording equipment, and then fail to refer to the admissions when the recording resumes, the policy of the legislation points strongly to excluding the admissions even though, if the officers' evidence is accepted, the case comes within an exception specified in s 570D(2). Given the legislative policy of recording interviews of suspects wherever possible so that disputes concerning admissions can be reduced to a minimum, attempts to avoid the effect of that policy should be perceived as unfair attempts to obtain evidence and such evidence should be excluded. It is therefore unnecessary to determine whether the trial judge erred in failing to give a McKinney direction in respect of the disputed off-camera admissions. It is also unnecessary to determine whether the trial judge erred in commenting to the jury that the "simple question" in relation to the unrecorded admissions allegedly made by Coates to the police "might well be … who is telling the truth and who is committing perjury in this court in relation to what occurred at that time". Conclusions The issues in the appeal of Nicholls relate to the admissibility of the evidence of the defence witness, Ross. However, for the reasons outlined above, that evidence was for Nicholls, when inadmissible because counsel cross-examining Davis, failed to identify the particular occasion when the alleged prior oral statements were made. While counsel for Nicholls referred to a "conversation", he did not identify whether this was one conversation or several, whether the statements were made to one person or more than one person, or the time, place and occasion of the statements. The fourth ground of appeal in the matter of Coates essentially replicates the ground of appeal in Nicholls concerning the admissibility of the evidence of Ross. However, for the same reasons that require the rejection of Nicholls' appeal on this ground, Coates' appeal on this ground must also fail. It also follows that Nicholls' appeal against his conviction must be dismissed. 126 See McDermott v The King (1948) 76 CLR 501 at 513-515 per Dixon J; R v Lee (1950) 82 CLR 133 at 148-155; Ridgeway v The Queen (1995) 184 CLR 19 at 30-31 per Mason CJ, Deane and Dawson JJ. McHugh However, Coates' first ground of appeal – the inadmissibility of unrecorded admissions made by Coates to police officers during a 45 minute break in a videotaped interview – has succeeded. Evidence against him having been wrongly admitted, his conviction must be quashed unless the Crown has established that nevertheless no substantial miscarriage of justice occurred by reason of the wrongful admission of this evidence. Substantial miscarriage of justice It was made clear to the jury that the unrecorded admissions allegedly made by Coates to the police, by themselves, would not be sufficient to convict Coates of any offences. Indeed, the trial judge twice directed the jury that they could not convict Coates of any offences on the basis of the alleged admissions alone. Furthermore, the evidence against Coates was reasonably strong. There was the direct evidence of Davis, evidence of motive, evidence of a false alibi and other forensic and circumstantial evidence that indirectly implicated Coates. However, if the unrecorded admissions had been excluded, the Crown case against Coates would have been weaker. Coates' unrecorded and clearly inculpatory admissions were important parts of the Crown case against him. As Gummow and Callinan JJ point out in their reasons, such admissions as Coates allegedly made are usually very powerful and persuasive evidence and are capable of tilting the balance in a case. In addition, while it is not possible to identify the precise effect of the exclusion of the admissions, the course of the trial would have been different if the Crown had not been permitted to rely on the admissions. In these circumstances, I am not satisfied that Coates would have been convicted without those unrecorded admissions. Accordingly, the Crown has failed to establish that their admission resulted in no substantial miscarriage of justice so far as Coates was concerned. There must be a new trial in his case. the evidence of Order The appeal of Coates should be allowed, his conviction quashed and a new trial ordered. The appeal of Nicholls should be dismissed. Callinan 115 GUMMOW AND CALLINAN JJ. These appeals raise serious questions as to the admissibility in evidence of unrecorded admissions and of statements of intention to give false evidence made by a key prosecution witness out of court. Facts In August and September 2000, Martin Coates and Thomas Nicholls, the appellants, and Amanda Hoy were tried and convicted in the Supreme Court of Western Australia (Murray J with a jury) of the murder of Clare Garabedian on or about 22 August 1998. The prosecution case The prosecution case against Coates was based principally upon the evidence of Adam Davis. He claimed that Coates had asked him to pick up the victim, a prostitute, and to give her a "hot shot" (a lethal injection of heroin). Davis agreed to do this for $2000. Hoy, who shared a house with Nicholls, told Davis that Clare Garabedian was a witness in other proceedings against Coates and her. Hoy was then pregnant to Coates who frequently visited her and Nicholls's residence. On 22 August 1998, Davis used Hoy's car to collect the deceased, and, posing as a client, took her to a motel in Rivervale. There, Davis administered heroin to Garabedian that was supplied to him by Coates. He then telephoned Hoy to tell her that he needed more heroin. A package containing a syringe filled with heroin was taken to, and left under the wheel of Hoy's car which was parked nearby. Davis collected the syringe, but emptied some of the heroin into the sink because, he claimed, he had become nervous about killing Garabedian. A little later, Davis received separate telephone calls from Coates and then Nicholls, each of whom asked whether he had killed Garabedian. Davis said to them: "My money's run out. I have to go." Fifteen minutes later Coates and Nicholls came to the motel room. Coates pulled the deceased to the ground and Nicholls held a pillow to her face. Davis held her arm while Coates attempted to inject the heroin into her arm several times before handing it to Davis who injected her with heroin. Coates then stood on Garabedian's throat. Afterwards, Coates wiped Garabedian's body with a wet towel and Davis cleaned other areas in the motel room to remove fingerprints. Nicholls gathered incriminating items into a pillowcase for removal. Davis could not explain, under cross-examination, how it was that only his fingerprints remained, and the absence of fingerprints, or DNA evidence of Nicholls or Coates. Coates and Nicholls denied Davis's version of events during interviews of them which were videotaped by police officers. Callinan In addition to the testimony of Davis, the Crown relied for its case against Coates upon admissions allegedly made by him during a suspension of filming of his interview lasting 45 minutes. The trial The Crown submitted that Coates had ample motive to commit the murder: that Garabedian was killed to prevent her from giving evidence in criminal proceedings against Coates and Hoy. The Crown also adduced evidence that Coates's brother-in-law, Trevor Bloomer, had offered to testify, falsely, that he was at Coates's house with him at the time of the murder. Detective Senior Constable Hawley was one of the investigating police officers. He gave evidence about what had occurred when the recording of the interview with Coates was suspended. "He said, 'What are my options?' I said, 'Your options are you can cooperate and tell the truth or you can stick to your current story and take your chances. You know what I'm saying. You have been cautioned and you need to have a very careful think' – sorry 'You have been cautioned and it's up to you to say what you want to say or don't say anything at all. You're in a very serious position and you need to have a very careful think about what you want to say to us. This matter is dealing with the death of a Crown witness.' He said, 'I know. Just talk to me. What am I looking at?' I said, 'You're looking at a very serious offence.' He said, 'What can I do?' I said, 'What do you mean what can you do?' He said, 'How much will I get?' I said, 'I don't know. It's not up to me.' He said, 'I haven't even got 5 years in me. I'll neck myself.' I said, 'I can't make you any promises as I'm not in a position to do so.' He said, 'All right, just talk to me.' Callinan I said, 'I have been talking to you. I've been straight with you all along. Martin, we know what you've been up to. We've had your phone tapped for the last 4 weeks.' He said, 'I know, I know, but how can I get myself out of this situation?' I said, 'I've already told you I can't make any promises. It's up to you. You're the only person that can help yourself at the moment. I think you could start by telling us the truth.' He said, 'I know exactly what happened and it's not how you think. It's nowhere near it. It's 100 miles away from it.' I said, 'Come on then, tell us your side of the story.' He said, 'They went and did it. I was maggoted. I was at home maggoted.' I said, 'Who is "they"?' He said, 'Thomas and f…… idiot.' I said, 'Who is f…… idiot?' He said, 'Adam. That's what happened.' I said, 'What are you going to say on video? We need to get this finished. Are you going to stick to your current "I don't know anything" story or are you going to tell us what really happened?' He said, 'What's in it for me?' I said, 'I can't make you any promises. If you're talking about deals and that sort of thing I'm not the boss. I can get the boss if you want to talk to him.' He said, 'Yes, get him.'" Detective Senior Sergeant Byleveld and Detective Sergeant Kays (neither of whom had been previously present) also spoke to Coates. The following extract from the evidence of Kays sets out what Coates said: "COUNSEL: Coates informed you that he did not want to go to gaol? --- Callinan MURRAY J: Yes, I see? – Mr Coates said he didn't want to go to gaol, that he wouldn't last 5 minutes, and, yeah, that he would hurt himself. He would do himself some harm if he was faced with that prospect. COUNSEL: Did he then say anything to you? --- Yes. He indicated that he wanted to do a deal and that he wanted to be charged with conspiracy to murder. COUNSEL: What did he tell you about that? --- He also indicated that he would give evidence against Davis and Nicholls in exchange for that deal. COUNSEL: Will you tell us what Mr Byleveld told Mr Coates, please? --- He told Mr Coates that we don't do deals, and if he wished to discuss the matter any further then he could do so on video with Detective Senior Constables Hutchinson and Hawley." On the resumption of the interview on-camera, no attempt was made by any police officer to have Coates repeat the inculpatory statements that he had made during its suspension. In evidence, Coates denied that he had made the statements attributed to him during the suspension of the filming. Hawley accepted that he had never suggested to Coates, when the disputed off-camera admissions were being made, that "we need to get back on video" or anything to that effect. He said that he encouraged Coates to speak off-camera and that he "deliberately chose to continue this interview off-camera". No notes were made of the alleged off-camera admissions by either Hawley or Hutchinson until the following day. These officers gave evidence that the notes were subsequently lost or mislaid. Their witness statements were prepared in consultation, and without the benefit of any notes. Both Byleveld and Kays gave evidence that they did not take notes of the conversation they claimed to have had with Coates. Kays said that his witness statement, made 21 months after the interview, was based solely upon his recollection. Byleveld gave evidence that he compiled his witness statement, upon which his oral evidence was based, after speaking with Kays about what he should put into his statement. Objection was taken to the reception of the admissions made off-camera. After reciting the circumstances in which the interview was suspended Murray J ruled as follows: "The question then in my opinion is whether in the circumstances the material may be within the category of material which under section 570D [of the Criminal Code (WA)] constitutes an exception to the general Callinan proposition that in a case such as this evidence of any admission is inadmissible unless recorded on videotape. Reliance is placed generally upon section 570D(2)(b) and (c) which refer respectively to proof that there is a reasonable excuse for there not being a recording on videotape of the admission. What is put there is that this should be understood as a process of the accused person making statements during a break which was taken, if not at his initiative, then with his agreement and so it is a process in which the suspension, as it is put, of the recorded interview occurred in circumstances where both he and the police officers accepted that that would happen. I have noted that the conversation which occurred was initiated according to the police officer's evidence by Mr Coates and not by them. So is that a reasonable excuse for it not being recorded on videotape? Subsection (4) contains definitions of what a reasonable excuse will include but they are not all-inclusive. One of them refers to the accused person not consenting to the interview being videotaped. This is a situation which in my opinion is allied to that in the sense that although there's no direct reference to non-consent to these statements being made whilst the videotape was running, it is a situation in which, as I have said, a break in the process of recording the interview was contrived and the statements were initiated and made by the accused at that time. By analogy and in regard to the circumstances to which I've referred, it is my opinion that what occurred would constitute a reasonable excuse for there not being a recording of the material on videotape. Because then I conclude that it involves the background narrative against which what follows may be interpreted, because it forms part of what is otherwise a mixed video-recorded statement and because it does of itself contain material which might, if the jury were so minded, be properly construed as declarations against interest, it seems to me that the material is admissible and I would not exclude it in the exercise of discretion because it refers at one point in what is said to something that Mr Nicholls was said by Coates to have done. In that respect the material falls well within the rulings I have already made. I would not think it necessary or appropriate in such a case as this to say that what I've described constituted an exceptional circumstance which in the interests of justice would justify the admission of the evidence. I would rest my judgment about that matter on section 570D(2)(b)." His Honour made a further ruling in relation to the evidence of Byleveld and Kays in these terms: Callinan "The matter has to be dealt with in terms of section 570D of the Code of course, so the question would be whether the prima facie inadmissibility of the material secured by that section is to be put to one side because in the present context there is a reasonable excuse for there not being a recording on videotape of what seems to me to be clearly capable of being understood to be an admission in the terms of the section, which therefore in terms of the common law would be clearly admissible and probative evidence. The reasonable excuse phrase that the section contains has in subsection (4) some explanation provided as to what it may mean, but that's not an exclusive list of circumstances which will constitute a reasonable excuse and no others will. Nonetheless, one of them is that the admission was made when it was not practicable to videotape it, and another is that the accused person did not consent to the interview being videotaped. Of course he did consent to the interview being videotaped and there was a videotaped interview, but I think it is clearly open, when one views that process, to conclude that the break which occurred in the interview was at the request of Mr Coates, and that was a toilet break. For myself, and I suppose it is my view which is of some importance in this context when I am ruling about whether the material should be excluded from evidence, there is no reasonable proposition that it was a break which was effectively manufactured by the interviewing police officers. When the toilet break is mentioned there is nothing in the demeanour, or what occurred on the part of any of the three persons present, which would support that conclusion and so this is, what follows, in my view, to be taken as a separate interview process, if you like, which involves a discussion between Mr Coates and police officers. It is fair to say that no police officer at any time during what is sought to be given in evidence said to Mr Coates, 'We can't talk to you about this any further except on the video.'" Later his Honour said: "… it is clear that the process was commenced by Mr Coates in my opinion and that he was seeking to speak off the camera, if that phrase is appropriate, to the police officers and to discuss with them, and the short discussion which follows, is of this content, what options he had to deal with the interview process when as is clear or anticipated it was resumed in an official way on the camera and was recorded. Callinan He volunteers the material to the police officers. I see nothing in the course of that conversation to suggest that there is any point at which it would have been appropriate in the sense that what follows should be held to be inadmissible to say to Mr Coates, 'We can't talk to you any further', that would have been in my opinion artificial in the extreme and he was having the exchange with the police officers which he wished to have and which he initiated. Indeed that continued to the point where when there was a reference to getting the boss Mr Coates asked for that to be done and it was for that reason that the two officers Byleveld and Kays came into the room and introduced themselves to Mr Coates. He complained about his incapacity to serve time in prison, it appears, and then himself informed the officers that he wanted to do a deal and what the nature of that deal was. It was in response to that at a reasonable point in my opinion that Byleveld is said to have told Mr Coates that no deals would be done and if he wanted to talk further about the matter he should continue to do so on the video in the process of an interview which had been in that way suspended. In my opinion the requirements of the section are clearly satisfied to secure the admissibility of that evidence. So far as the lack of a caution is concerned it seems to me that there is no question that I should be satisfied that what occurred so far as Mr Coates' statements are concerned was the making of statements which were entirely voluntary and I could see no grounds upon any application of common law principles outside the ambit of section 570D of the Code for the exclusion of the material." During the trial, counsel for Nicholls put to Davis that he had told another unnamed person (in fact Joseph Ross) that he had lied to the police about Coates's and Nicholls's presence in the motel room on the evening in question. The questioning took this form: "Did you at any time – do you recall a conversation that went along the lines of this: that you had told somebody the story you had given to the police about Marty Coates and Thomas Nicholls being present in the room in which Clare Garabedian was killed was all b... s...? --- No. Do you recall saying in a conversation that it was also b... s... that Marty Coates had gone to Northbridge to point Clare Garabedian out to you? --- No, I never said that. Callinan Did you in a conversation say that the police had told you what to say in order to implicate others? --- No. Did you say in a conversation that you had given Clare Garabedian two shots and that Marty Coates knew nothing about it? --- No. Did you say in a conversation that the police had offered you a deal if you cooperated and implicated Marty Coates and others in the murder? --- The trial judge refused to allow the appellants to lead any evidence from Ross that Davis had told him that Coates and Nicholls were not involved, and that he had been encouraged by the police to implicate them. It should also be noted that the appellants made no attempt to rely on s 21 of the Evidence Act 1906 (WA) which provides as follows: "Cross-examination as to and proof of prior inconsistent statement Every witness under cross-examination in any proceeding, civil or criminal, may be asked whether he has made any former statement relative to the subject-matter of the proceeding, and inconsistent with his present testimony, the circumstances of the supposed statement being referred to sufficiently to designate the particular occasion, and if he does not distinctly admit that he made such statement, proof may be given that he did in fact make it. The same course may be taken with a witness upon his examination in chief or re-examination, if the judge is of opinion that the witness is hostile to the party by whom he was called and permits the question." The trial judge rejected the tender of the evidence of Ross with respect to Davis's statements to him, on the basis that it was collateral to the issues, and fell within no exception to the collateral evidence rule. As to the "bias" or "corruption" exception to the rule, the trial judge held that "[t]here [was] nothing to suggest that the relationship or that any situation existed as between Davis and Coates and Nicholls which establishes the bias in the relevant sense." It was for this reason that the trial judge interrupted, and stopped Ross from giving evidence after he had said, non-responsively, that "some [bloke] … that I've spoken to on a daily period for 4 months and for 4 months every day he told me the same thing, that … that these people weren't even there." The case against Nicholls also was based on the evidence of Davis, and some statements made out-of-court by Nicholls to police in a videotaped interview. There was no objective or other evidence linking Nicholls to the events directly causing Garabedian's death. The statements made out-of-court by Nicholls did not amount to a confession of the offence. The trial judge therefore Callinan directed the jury that unless they accepted the evidence of Davis, they could not convict Nicholls. Nicholls denied the version of events given by Davis. He too sought to lead evidence from Ross similar to that sought to be adduced on behalf of Coates. It was again ruled inadmissible. The interview of Nicholls taped on 7 October 1998 was played in an edited form at the trial. During the interview, Nicholls admitted that he had been present with Coates in the motel room when the victim woke and recognized Coates. Nicholls also admitted that he had grabbed Garabedian, but claimed that he had left the motel room without injuring her. He said that he returned later and found that it had been cleaned, or was then in the process of being cleaned by Coates. The trial judge did not warn the jury about the danger of reliance on the evidence of Coates's admissions. Nor did his Honour give the jury a "McKinney warning"127. It was in these circumstances that the appellants were convicted. The appeal to the Court of Criminal Appeal of Western Australia The appellants appealed to the Court of Criminal Appeal of Western Australia (Anderson, Wheeler and Miller JJ). The principal judgment, with which Anderson J agreed, was delivered by Miller J. With respect to the ground of appeal relating to the rejection of Ross' evidence, his Honour said this: "Although reference was made to the provisions of s 21 of the Evidence Act during the submissions made on appeal, it is clear that the evidence of Ross, if admissible at all, had to be admissible as an exception to the common law rule that the answers of a witness to collateral questions are final. The preconditions to admissibility set out in s 21 of the Evidence Act were never met in this case, counsel for Nicholls disavowing any obligation to designate the occasion on which the statement was supposed to have been made. In this case there was an issue whether or not Coates and Nicholls were in the room at the time Ms Garabedian met her death. The Crown case was that they were and the evidence of Davis to this effect was relied upon. The two accused denied that they were in the room, although it is to 127 McKinney v The Queen (1991) 171 CLR 468. Callinan be noted that in his video record of interview Nicholls admitted to his presence in the room. At trial he denied the truth of what he had said in the video record of interview, but it was for the jury to determine that issue. I am of the opinion that whether Davis may or may not have said on another occasion that Coates and Nicholls were not in the room at the time of Ms Garabedian's death did not go to the issue or a relevant issue. Whether he had previously made an inconsistent statement on the matter was a question of credibility, not a matter that went to the issue of whether the two accused were in fact in the room. At its highest, the evidence of Ross could only go to the question whether [Davis] had said they were or were not in the room, not whether as a fact they were. (See Narkle v The Queen128, where the same point was made in relation to a statement allegedly made by the complainant in the case to a doctor). I would only add that even if the provisions of s 21 of the Evidence Act were relied upon, they would take the matter no further. As Murray J pointed out in Narkle129 the critical question remains whether a statement allegedly made by a complainant or other witness was a statement relative to the subject matter." Miller J also rejected the ground of appeal based on the contested reception of the statements made by Coates off-camera. In so doing his Honour said: "In the present case, it is the initiation by Coates himself of the off- video interview which is a critical factor in the determination of the admissibility of the admissions allegedly made by him. In my view, the learned trial Judge was quite correct in concluding that there was, within the meaning of s 570D(2)(b) of the Criminal Code, a reasonable excuse for the admissions not being recorded on video tape, namely that Coates did not want his statements recorded on video tape. According to the evidence of the officers he was anxious to speak off tape about the options that he might have if he was to implicate others. In my view, it is quite wrong to suggest that in these circumstances the admissions of an accused person or the admissions of a suspect are inadmissible by reason of the fact that they have not been videotaped". 128 (2001) 23 WAR 468 at 476-477 [34]. 129 (2001) 23 WAR 468 at 477-478 [37]-[38]. Callinan In dealing with the contention of the appellants that the trial judge should have given a McKinney direction, Miller J said this: "When the learned trial Judge came to direct the jury about this evidence it was stressed that, standing alone, the evidence could not be sufficient to convict Coates of any offences. The significance of it was put by his Honour in these terms: 'Its real significance would be the extent to which his behaviour in that way is so revealing of a consciousness of guilt as to provide support for the truth and accuracy of Davis' evidence when he implicates Coates. It remains the case, I think, that you keep coming back to Davis and the need to rely upon him if you are to establish guilt and make decisions about guilt in this context as well as in relation to other accused persons.' Counsel for Coates argued that in the event that the off-video confession of Coates was admissible, the learned trial Judge was required to give a 'McKinney' warning in relation to that evidence. That is, a warning in accordance with the decision in McKinney v The Queen130, to the effect that whenever police evidence of a confessional statement allegedly made by an accused person whilst in police custody is disputed and its making is not reliably corroborated, the trial Judge should, as a rule of practice, warn the jury of the danger of convicting on the basis of that evidence alone. I stress that the warning is required to alert the jury to the danger of convicting on the basis of that evidence 'alone'. It must be appreciated that in McKinney v The Queen and Carr v The Queen131, the High Court was concerned with unsigned and uncorroborated records of interview containing disputed confessional statements. They were statements of the type commonly adduced in evidence in criminal trials before the use of video recorded facilities to produce video records of interview such as were adduced in evidence in the present case. In McKinney v The Queen the Court pointed out that an unsigned and uncorroborated record of interview creates a significant problem. Such records of interview may be fabricated and in certain circumstances isolation and powerlessness of a suspect held in police custody may allow for fabrication and may also be conducive to the suspect actually signing a false document132. As the Court pointed out, 130 (1991) 171 CLR 468. 131 (1988) 165 CLR 314. 132 (1991) 171 CLR 468 at 474 per Mason CJ, Deane, Gaudron and McHugh JJ. Callinan audio-visual recording is one means by which a confessional statement may be reliably corroborated133." His Honour set out some of the directions which had been given by the trial judge which it is convenient to repeat here. "[Coates] says, you will recall, that when the break occurred, which was not at his request, there was no significant conversation at all that, indeed he couldn't recall what might have been said shortly to him by Hawley and Hutchinson but they very soon left the room, having no conversation of the kind to which they testified and of course they testified without any other aid to recollection except their recollection, there had been no [notes] which they had kept or made at the time and then Kays and Byleveld, he says, came into the room and immediately commenced to tell him what Davis and Nicholls were saying which implicated him and to give him that in some detail and that took some time. They put that material to him at that stage off-camera, is his evidence. A question that might arise is whether you think that his evidence may be right and the officers might be mistaken about what occurred, but you might find that a very difficult proposition and the question might well be, the simple question, who is telling the truth and who is committing perjury in this court in relation to what occurred at that time? Your consideration of that may be of some assistance to you in relation to the credibility matters generally. But again you would not accept their evidence of course unless – the real question I suppose is whether you accept the evidence of the police officers as to what occurred, which would give what follows a particular significance so far as the evidence against Coates is concerned or whether you would reject their evidence on the basis not necessarily that you accept as being correct what Mr Coates says, but at least that you think it may be true and that you do not reject his evidence of what occurred during this period as being a truthful account." Miller J dealt with the appellant's criticism of these directions in this way: "It would, in this case, have been preferable had his Honour made no reference to the question of perjury, but it must nevertheless be understood that what the High Court was saying in McKinney v The 133 (1991) 171 CLR 468 at 474 per Mason CJ, Deane, Gaudron and McHugh JJ. Callinan Queen134 related to a total challenge to police evidence of alleged confessional statements. Even assuming that what was there said relates to confessional material off-camera during the course of a video record of interview, the High Court pointed out that when considering the possibility that police evidence is untruthful, the question necessarily entails the possibility that police witnesses had perjured themselves. But, as the Court pointed out, that is a different question from the question whether the police had in fact perjured themselves. It is that latter question which the jury should not be asked to consider. In the present case the learned trial Judge did not ask the jury to reach a conclusion whether the police had committed perjury in relation to the off-video statements of Coates. His Honour said that a question might well arise as to who was telling the truth and who was committing perjury, but fell short of indicating to the jury that they were required to answer that question. It would, of course, have been preferable to avoid a reference to the question of perjury at all, but, in my view, it cannot be said that there has been any miscarriage of justice occasioned by his Honour's reference in the course of what was otherwise a very clear and balanced direction in relation to the off-video statements allegedly made by Coates. In my view, there was no requirement for a McKinney direction in relation to the off-video statements of Coates. The totality of what he told the investigating officers was recorded on video save for the period when, at his initiation, there was a break in the video in order that he could discuss 'a deal' with the officers. Even Coates conceded that such a break occurred, although he contended that it was not at his request. Further, he said that there was no significant conversation at all. As the learned trial Judge pointed out to the jury, consideration needed to be given to the way in which the interview was going in the period immediately before the break. His Honour posed the question to the jury whether things were becoming difficult for Coates and whether therefore Coates appeared to be in some difficulty. In any event, his Honour did point out to the jury that they must look carefully at what the officers alleged Coates had told them off-video and 'measure what the evidence of those four officers was against the evidence which Mr Coates gives about what occurred there'. I do not consider that a McKinney warning was required in the circumstances of this case. 134 (1991) 171 CLR 468. Callinan It follows that in my view ground 6 of the grounds of appeal of Coates has no substance and must be dismissed." All members of the Court of Criminal Appeal were of the opinion that there was a "reasonable excuse" for failing to video record Coates's alleged admissions because, "[a]ccording to the evidence of the officers he [Coates] was anxious to speak off-tape about the options that he might have if he was to implicate others" and that it was "the initiation by Coates himself of the off-video interview which is a critical factor." The appeals to the Court of Criminal Appeal of Western Australia were dismissed. The appeals to this Court The appellant, Coates, submits that the Court of Criminal Appeal erred because no evidence had been given that he was "anxious to speak off-tape about the options he might have if he was to implicate others." The evidence of Hawley was that he encouraged Coates to speak off-video and that he "deliberately chose to continue this interview off-camera". Nicholls also contends in this Court that the Court of Criminal Appeal erred in holding that the learned trial judge correctly ruled that the appellant could not lead evidence from the witness Ross to the effect that: the key prosecution witness, Davis, had spoken to Ross; Davis had said to Ross that he was involved in the killing of Clare Garabedian, but that neither Coates nor the appellant was involved in the killing, or present in the room; and, that Davis had said to Ross that he proposed to give evidence to implicate Coates and the appellant in the murder. By a Notice of Contention, the respondent asserts that even if the Court of Criminal Appeal and the trial judge erred in making the decisions that they did with respect to the evidence sought to be led from Ross, the Crown case was otherwise so strong that there has been no substantial miscarriage of justice. The appellant Coates relied on several grounds of appeal. The Court of Criminal Appeal erred in holding that disputed oral admissions, allegedly made by the appellant during a break in a videotaped interview (and not subsequently confirmed on video) were admissible into evidence because, according to disputed police evidence, the admissions were made during a conversation initiated by the appellant, and that constituted a "reasonable excuse" for failing to videotape the alleged admissions. Callinan The Court of Criminal Appeal erred in holding that the trial judge's direction in relation to the disputed admissions (which were not videotaped or recorded and of which no contemporaneous notes were made) that "a question that might arise is ... who is telling the truth and who is committing perjury" was in accordance with the decision in The Court of Criminal Appeal erred in holding that the trial judge was not required by the decision in McKinney v The Queen to give a direction in relation to disputed alleged admissions of the difficulties faced by an accused in challenging that evidence because that was not the sole evidence against the appellant. The Court of Criminal Appeal erred in holding the trial judge was correct in refusing to permit the defence to lead evidence that the key Crown witness had said that: (a) the police had offered him a "deal" if he implicated the appellant; (b) the police told him what to say; (c) the appellant was not involved in the murder; (d) that he proposed to give evidence to implicate the appellant in the murder, and in particular erred in holding that such evidence was excluded by the collateral evidence rule and did not fall within the "bias" exception to that rule. The respondent's notice of contention in Coates's appeal contends that even if any or all of the appellant's grounds of appeal succeed, in the circumstances of the case there has still been no substantial miscarriage of justice. The admissions alleged to have been made off-camera At the relevant time, s 570D of the Criminal Code (WA) provided as follows: "Accused's admissions in serious cases inadmissible unless videotaped (1) In this section – 'admission' means an admission made by a suspect to a member of the Police Force, whether the admission is by spoken words or by acts or otherwise; 'serious offence' means an indictable offence of such a nature that, if a person over the age of 18 years is charged with it, it can not be dealt with summarily and in the case of a person under the age of 18 years includes any indictable offence for which the person has been detained. Callinan (2) On the trial of an accused person for a serious offence, evidence of any admission by the accused person shall not be admissible unless – the evidence is a videotape on which is a recording of the admission; or the prosecution proves, on the balance of probabilities, that there is a reasonable excuse for there not being a recording on videotape of the admission; or the court is satisfied that there are exceptional circumstances which, in the interests of justice, justify the admission of the evidence. Subsection (2) does not apply to an admission by an accused person made before there were reasonable grounds to suspect that he or she had committed the offence. For the purposes of subsection (2), 'reasonable excuse' includes the following – (a) The admission was made when it was not practicable to videotape it. (b) Equipment to videotape the interview could not be obtained while it was reasonable to detain the accused person. (c) The accused person did not consent to the interview being videotaped. (d) The equipment used to videotape the interview malfunctioned." In Kelly v The Queen135, Gleeson CJ, Hayne and Heydon JJ said that the purpose of legislation of this nature was to overcome perceived problems with so-called "verbals", including "the possibility of police fabrication, and the ease with which experienced police officers can effectuate it, the frequent lack of reliable corroboration of the making of the statement, and the practical burden on an accused person seeking to create a reasonable doubt about the police evidence."136 135 (2004) 78 ALJR 538; 205 ALR 274. 136 (2004) 78 ALJR 538 at 547-548 [42]; 205 ALR 274 at 286. Callinan In that case McHugh J said this137: "The enactments recognise that miscarriages of justice may occur when there is no mechanical record confirming an allegation by police officers that the accused has confessed to a crime or made a damaging admission after he or she was or ought reasonably to have been seen as a suspect." If claims by interviewing police officers, that they "did not initiate" an alleged off-camera interview were enough to constitute "reasonable excuse" for a failure to record admissions on camera, the purpose of the legislation could easily be frustrated. The decision of the Court of Criminal Appeal does leave open the possibility that police officers may choose to continue an interview off-camera (without seeking to have an accused afterwards repeat on-camera an admission then made) and seek to secure the admission of the unrecorded evidence on the basis of a contention that they believed the accused was "anxious" to speak off- camera, and that he had initiated the conversation. There is also substance in the submission that the approach of the Court of Criminal Appeal of Western Australia would add to the definition of "reasonable excuse" a definition neither stated nor intended by the legislature, such as, "an admission made during an interview not initiated by the police" or "an admission that a person was anxious to make off-, but not on-camera," a definition which, if adopted, would defeat the purpose of section 570D. The legislation under consideration in Kelly was not identical with the legislation here. It was however designed to meet exactly the same mischief as provoked it, and the statements in that case to which we have referred are accordingly apposite to this case also. There is no doubt that the off-camera statements here would constitute "admissions" under the statutory definition, and that the charge was a "serious offence". The section also makes it clear that it is for the Crown to prove, in the case of off-camera admissions, that there was reasonable excuse for not videotaping them138, or that exceptional circumstances, in the interests of justice, justify the admission of the evidence139. 137 (2004) 78 ALJR 538 at 558 [96]; 205 ALR 274 at 300. 138 Criminal Code (WA), s 570D(2)(b). 139 Criminal Code (WA), s 570D(2)(c). Callinan What occurred in this case answers none of the explicit descriptions of reasonable excuse contained in s 570D(4)(a), (b), (c) or (d). The appellant did not refuse to consent to his interview being videotaped140. We do not overlook that "reasonable excuse" is inclusively defined, and that therefore circumstances not within the explicit definition might still give rise to a reasonable excuse. In our opinion, however, what occurred falls so far short of, and is so different from, any of the defined circumstances that it could not amount to a reasonable excuse; nor could it be objectively regarded as a reasonable excuse. No attempt was made by any police officer to have Coates repeat on-camera what he was alleged to have said off-camera even though there was a reference to what he might say when the video resumed. It has been submitted however that the admission was made when it was not practicable to videotape it141. We disagree. The fact, if it be a fact, that Coates "was anxious to speak off-tape" cannot of itself provide a "reasonable excuse". Anxiety to speak off-tape, especially during a suspension of a lengthy interview on tape, in the absence of unwillingness to consent to the videotaping of the "interview", could not of itself, as here, possibly constitute a reasonable excuse. Because of the absence of any evidence of an unwillingness to consent, it is unnecessary to decide whether s 570D(4)(c) should be read as meaning "… consent to the interview [or any part of it] ... ." Furthermore, there is a real question whether anxiety on the part of Coates to speak off-camera, was, in the circumstances, an inference that was available to the Court of Criminal Appeal, particularly when no invitation was given to Coates, either off-camera or on-camera, to repeat the inculpatory material which the Crown claims he had earlier volunteered. That Coates was anxious to speak off-camera appears to be no more than an assertion by the police officers conducting the interview. This ground of appeal relied on only by Coates therefore succeeds. As to what should flow from that we will consider later. The direction of the trial judge In McKinney v The Queen, four Justices of this Court (Mason CJ, Deane, Gaudron and McHugh JJ) said this142: 140 Criminal Code (WA), s 570D(4)(c). 141 Criminal Code (WA), s 570D(4)(a). 142 (1991) 171 CLR 468 at 476. Callinan "Thus, the jury should be informed that it is comparatively more difficult for an accused person held in police custody without access to legal advice or other means of corroboration to have evidence available to support a challenge to police evidence of confessional statements than it is for such police evidence to be fabricated, and, accordingly, it is necessary that they be instructed, as indicated by Deane J in Carr143, that they should give careful consideration as to the dangers involved in convicting an accused person in circumstances where the only (or substantially the only) basis for finding that guilt has been established beyond reasonable doubt is a confessional statement allegedly made whilst in police custody, the making of which is not reliably corroborated. Within the context of this warning it will ordinarily be necessary to emphasize the need for careful scrutiny of the evidence and to direct attention to the fact that police witnesses are often practised witnesses and it is not an easy matter to determine whether a practised witness is telling the truth. And, of course, the trial judge's duty to ensure that the defence case is fairly and accurately put will require that, within the same context, attention be drawn to those matters which bring the reliability of the confessional evidence into question. Equally, in the context of and as part of the warning, it will be proper for the trial judge to remind the jury, with appropriate comment, that persons who make confessions sometimes repudiate them." Later their Honours added144: "We add some brief comments of a general nature. It should be apparent from the above and from what was said in the judgments of Deane J and Gaudron J in Carr that the basis of a prima facie requirement that a warning be given in future cases involving an uncorroborated confessional statement allegedly made by an accused while involuntarily held in police custody without access to a lawyer or even an independent person who might confirm his account is not a suggestion that police evidence is inherently unreliable or that members of a police force should, as such, be put in some special category of unreliable witnesses. The basis lies, as we have explained, in the special position of vulnerability of an accused to fabrication when he is involuntarily so held, in that his detention will have deprived him of the possibility of any corroboration of a denial of the making of all or part of an alleged confessional statement. That basis is obviously a fortiori in a case such as the present where it is 143 Carr v The Queen (1988) 165 CLR 314 at 335. 144 (1991) 171 CLR 468 at 478. Callinan common ground that the involuntary detention of the applicants in police custody was unlawful." Their Honours continued by referring to the basic requirement in the administration of criminal justice which was engaged here, saying145: "The central thesis of the administration of criminal justice is the entitlement of an accused person to a fair trial according to law. It is obvious that the content of the requirement of fairness may vary with changed social conditions, including developments in technology and increased access to means of mechanical corroboration. In these circumstances what has been said by the Court in the past – even in the recent past – cannot conclusively determine the content of that requirement. Where a majority of the Court is firmly persuaded that the absence of a particular warning or direction in defined circumstances will prima facie indicate that the requirement of fairness is unsatisfied and will give rise to the detriments of the miscarriage of justice and a need of a second trial, it is incumbent upon the Court, in the proper discharge of its judicial responsibilities, to enunciate a prima facie rule of practice that such a warning or direction should be given in those circumstances." The use of the expression "a McKinney warning" should not be understood as obscuring the need for the giving of a direction related to the circumstances of the particular case; there is always the need for an appropriate response to varying circumstances. The trial judge did not warn the jury about the danger of reliance upon the police officers' evidence of Coates's admissions. The trial judge's direction was relevantly this: "A question that might arise is whether you think his evidence may be right and the officers might be mistaken about what occurred, but you might find that a very difficult proposition and the question might well be, the simple question, who is telling the truth and who is committing perjury in this court in relation to what occurred at that time?" The substance of the holding of the Court of Criminal Appeal was that a McKinney warning was not required, and that the principles stated in that case were not misapplied by the trial judge, because his direction only related to a "total" challenge to police evidence of alleged confessional statements, and the trial judge had not directed the jury that they "were required" to resolve the question of perjury. 145 (1991) 171 CLR 468 at 478. Callinan The direction which the trial judge gave should not in our opinion have been given in the form in which it was. The immediate question was whether the off-camera admission had been made. To decide that matter, it was not necessary for the jury to decide whether anyone, in particular the police officers, had committed perjury. To suggest that it was necessary erroneously provided an undesirable distraction from the question which the jury had to answer. To that extent this ground of appeal also succeeds. We do not accept however that the trial judge was obliged to give a McKinney direction. The alleged confessional evidence did not stand alone. There was a very considerable volume of circumstantial evidence implicating Coates. It was for the trial judge, having regard to all of the evidence in the case, to decide whether a McKinney direction was called for. We are unable to say that he was wrong to decline to give it here although the question was not, as the Court of Criminal Appeal formulated it, whether a "total" challenge was made to the police evidence. Collateral evidence rule Excluded evidence of Ross Both appellants contended that the trial judge wrongly excluded the evidence of Ross that, in the words of the trial judge: "Davis … [had] said to [Ross] that although he, Davis, confessed that he was involved in the killing of Clare Garabedian neither Coates nor Nicholls was so involved or present in the room but that nonetheless he was proposing to give evidence to implicate the two of them in the murder". It was also expected that Ross would have given evidence, had he been permitted to do so, that Davis had told him that the police had offered him a "deal" if he implicated Coates "and others". We have set out the relevant part of the cross-examination of Davis with respect to the statements that it is alleged Ross would have proved had he been allowed to do so. It can be seen from it that the cross-examiner made no attempt to identify Ross, or the date, place, or occasion of the alleged statements, although the substance of them was put clearly enough. Even if therefore the evidence sought to be led from Ross could otherwise have been led as an exception to the collateral evidence rule, there is still a question whether the appellants failed to satisfy a precondition of its adduction, that the relevant details of it should have been put to Davis. Strict application of the collateral evidence rule can lead to injustice. The dividing line between collateral evidence and directly probative evidence is often Callinan a very difficult one to draw. In the leading Australian case, Piddington v Bennett and Wood Pty Ltd146, five Justices failed to agree upon the test which should be applied to determine whether the evidence there was in fact merely collateral147. In Goldsmith v Sandilands148, McHugh J preferred the dissenting view of Latham CJ in Piddington to which Callinan J was attracted also but about which Callinan J found it unnecessary to form a concluded opinion as to the preferable test. McHugh J said this in Goldsmith149: "Thus, whether the opportunity to observe a relevant fact is or is not a collateral matter, the practice of the common law courts has been to admit evidence that shows that a witness did not have an opportunity to make the observation150. Common law judges have taken the view that the opportunity to observe an event is so closely connected with the observation that it should not be regarded as a collateral matter falling within the finality rule. So ordinarily a party may contradict an opposing witness' evidence concerning the time, place and lighting of, and distance from, the scene of an event, if the event is itself relevant." In R v Phillips151, the English Court of Criminal Appeal held that an accused should have been permitted to adduce evidence of admissions made out- of-court by prosecution witnesses that their testimony was false. This evidence was held152 to be directed not merely to the credibility of the prosecution witnesses, "but to the very foundation of the appellant's answer to the charge." The editor of Cross on Evidence, has observed, correctly in our respectful opinion, that what was done by the Court there was curative of injustice153. 146 (1940) 63 CLR 533. 147 See the discussion in Goldsmith v Sandilands (2002) 76 ALJR 1024 at 1044-1046 [97]-[103]; 190 ALR 370 at 398-400. 148 (2002) 76 ALJR 1024; 190 ALR 370. 149 (2002) 76 ALJR 1024 at 1030 [34]; 190 ALR 370 at 378. 150 cf Piddington v Bennett and Wood Pty Ltd (1940) 63 CLR 533 at 547 per 151 (1936) 26 Cr App R 17. 152 (1936) 26 Cr App R 17 at 21. See also R v LSS [2000] 1 Qd R 546 at 553-554 [28]. 153 Cross on Evidence, 7th Aust ed (2004) at [33800]. Callinan A similar approach was taken by the Queensland Court of Criminal Appeal in R v Lawrence154. The Court there held that the trial judge had erred in failing to allow evidence to be given by a witness that the complainant had told him that (the complainant) was "going to set [the witness] up by telling officers that ... [the witness] propositioned [the complainant] for sex"155. The trial judge had held that at its highest the evidence showed little more than a propensity to make false allegations. On appeal McPherson JA said that156: "[A] noteworthy feature of all of the cases in which the finality rule has been relaxed is the emphasis that has been placed upon the fact that the matter of credibility was inextricably linked with the principal issue in the case." Thomas JA held157 that evidence of the questions there establishing an offer to testify corruptly "[provided] a good and clear example of the 'corruption' exception" as defined by Wigmore. White J approved comments158 made in academic writing159 and adopted in a decision of the English Court of Criminal Appeal160 that in a case in which "the only issue is consent and the only witness is the complainant" the distinction between "questions going to credit and questions going to the issue [are reduced to] vanishing point"161. Wigmore states162 that corruption as "the essential discrediting element is a willingness to obstruct the discovery of the truth by manufacturing or suppressing testimony": that a "willingness to swear falsely is, beyond any 154 [2002] 2 Qd R 400. 155 [2002] 2 Qd R 400 at 401 [3]. 156 [2002] 2 Qd R 400 at 405 [12]. 157 [2002] 2 Qd R 400 at 409 [20]. 158 [2002] 2 Qd R 400 at 415 [50]. 159 Cross and Tapper on Evidence, 8th ed (1995) at 341. 160 Chandu Nagrecha [1997] 2 Cr App R 401. 161 [1997] 2 Cr App R 401 at 406. 162 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 803 [§956]. Callinan question, admissible as negativing the presence of that sense of moral duty to speak truly which is at the foundation of the theory of testimonial evidence."163 The evidence here, in our opinion, answers the description given by Pollock CB in Attorney-General v Hitchcock164 as evidence "affect[ing] the motives, temper, and character of the witness, not with respect to his credit, but with reference to his feelings towards one party or the other." In R v De Angelis165, the Court of Criminal Appeal of South Australia held that a trial judge was correct in permitting the Crown to call police officers to give evidence of statements made by a witness that "if required to go to court [the witness] would lie in order to avoid offending" the accused. The Court of Criminal Appeal said that those statements were admissible "under the common law rule which allows statements by witnesses indicating bias or partiality to be proved."166 It is unnecessary to make further reference to Wigmore or to any of the numerous other cases in which corruption of a witness has been considered as they are comprehensively reviewed by Hayne and Heydon JJ in their judgment. It is sufficient for us to say that we agree with their Honours' conclusion167 that the evidence sought to be led from Ross was of "corruption" rather than bias on the part of Davis as a witness, although as will appear, we consider it appropriate to express a view about the potential admissibility of such evidence. Hayne and Heydon JJ concluded that the evidence was not admissible on the basis that much more than the substance of it should have been put in cross- examination of Davis. They were of the opinion therefore that it was unnecessary to decide whether Ross' evidence offended the hearsay rule. It is to that question which we will now turn. It is right, with respect, as their Honours say, that Ross' evidence of what he claims Davis said to him certainly bears at least some of the hallmarks of hearsay evidence. It is as well, however, to restate the two principal objections to the reception of hearsay evidence. Human experience tells that few people are capable of fully and accurately repeating oral statements of which they have not 163 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 803 [§957]. 164 (1847) 1 Ex 91 at 100 [154 ER 38 at 42]. 165 (1979) 20 SASR 288. 166 (1979) 20 SASR 288 at 295. 167 See the reasons for judgment of Hayne and Heydon JJ at [269]. Callinan taken at least a contemporaneous note. Even note takers may succumb to a tendency, either conscious or unconscious, to edit, embellish or omit parts of what they have heard or failed to hear. The law is therefore wise to treat hearsay with great caution. The second objection is related to the first. The reliability of the original maker of the statements in question cannot be tested by his or her presence in court and subjection to cross-examination. But the rules against the reception of hearsay evidence have never been, and are not now, absolute. In Lord Pearce's speech in Myers v Director of Public Prosecutions168, which dissented from the result in that case but which has since been influential169, his Lordship said170: "There is not now and never has been a rule for the total exclusion of hearsay without exception. Originally hearsay was usual and admissible. Through the sixteenth and the earlier part of the seventeenth centuries there was no objection to it. But in the later seventeenth century objections to it grew and by the early eighteenth century there was a general exclusion of hearsay evidence, with certain exceptions. There was a transitional period when such evidence was accepted as confirmatory though not as sufficient by itself. And during the eighteenth century some hearsay, namely, evidence of prior statements by a witness, might be accepted to confirm the testimony of that witness. The courts were gradually working out their own compromises to obtain satisfactory machinery for handling evidence and ascertaining the truth. They were adopting the hearsay rule in general with such adaptations and exceptions as would make it work and conduce to just decisions." Lord Pearce continued171: "This process of improvement and evolution was carried out by the inherent power of the courts to conduct its process so as to prevent abuse and secure justice. I see no reason why at some stage the courts should decide that evolution was now complete and that thereafter no further change must occur, however great the absurdity or injustice." 169 See, for example, Bannon v The Queen (1995) 185 CLR 1 at 39. 170 [1965] AC 1001 at 1037-1038. 171 [1965] AC 1001 at 1038. Callinan Accordingly, courts have recognised that the rules against the reception of hearsay evidence must yield to the interests of justice in particular circumstances. Sometimes evidence of statements superficially having the appearance of hearsay are admitted because in truth they are probative of facts in issue. Subramaniam v Public Prosecutor172 is a good example. There, the Judicial Committee advised that the appellant who had been convicted of possession of ammunition contrary to anti-terrorist regulations should have been permitted to give evidence of threats made to him by terrorists as proof of his state of mind, that he had been acting under duress at the time. In one of the cases referred to by Hayne and Heydon JJ, R v LSS173 it was held that the "corruption" of the key prosecution witness could be proved by another witness who saw, and heard the former being coached. The Court of Appeal was of the view that the evidence, necessarily not only of what the latter witness saw, but also what he heard of the coaching should have been allowed. This was consistent with what was said in Phillips174: "The substantive part of his defence was that the children, upon whose evidence alone the case for the prosecution rested, were not speaking for themselves, but for the designer and controller of the whole matter, their mother. Whatever the merits of that defence might have been proved to be, it was, at any rate, a defence which the appellant was entitled to raise. The questions were directed not to the credibility of the two witnesses, but to the very foundation of the appellant's answer to the charge." The last observation of Hewart LCJ, who delivered the Court of Criminal Appeal's decision, is of particular significance: that the evidence was not simply directed to credit but to the very matter in issue, whether the guilt of the accused could be proved, that is, whether he had an answer to the charge175. There are numerous other common law exceptions to the hearsay rule, for example, statements forming part of the res gestae, various forms of dying declarations and the contents of public documents, none of which it is necessary to explore here, except to notice that their existence demonstrates that despite the 172 [1956] 1 WLR 965. 173 [2000] 1 Qd R 546. 174 (1936) 26 Cr App R 17 at 21 per Hewart LCJ, Talbot and Singleton JJ. 175 See R v LSS [2000] 1 Qd R 546 at 553 [28] per Thomas JA. Callinan law's justifiable wariness of hearsay, there are occasions for its reception in the interests of justice. In recent years in this Court there have been differences of opinion as to the admission of further exceptions. One example is Pollitt v The Queen176. There, Mason CJ, Deane and McHugh JJ favoured, although not in the same terms, a relaxation of the hearsay rule in favour of a "telephone" exception, while Dawson, Toohey and Gaudron JJ reserved for further consideration whether there should be such an exception. Thereafter, in Bannon v The Queen177, various observations were made as to whether in an appropriate case hearsay statements should be admissible where the statements were made against the penal interest of the maker or where they were made in circumstances of necessity and were reliable. Only one of the various exceptions does require further consideration: the reception of evidence of admissions made by a party. Indeed such admissions are often the core of the case against an accused in a criminal trial. The rationale for the reception of the admissions is a simple one178: "what a party himself admits to be true, may reasonably be presumed to be so." There are similar arguments that can be advanced in favour of the admission of hearsay statements in proof of a witness', especially a key witness', "corruption". A key witness is not a party in a criminal trial, but if, as did Davis here, he has a real interest in its course or outcome, of different treatment by the police, the sentencing court, and ultimately the parole authorities, he is, in some respects not in a dissimilar position to a party who does have a direct interest in the result. A statement by any witness of dishonest intent with respect to evidence the witness is to give is, in a sense, a statement against interest because it is an admission of an intention to commit perjury. A second argument is that the evidence goes to the foundation of the charge, whether it has been properly brought and maintained, and whether the accused has an answer to it in the sense in which that was said to be so in Phillips. Indeed what was said in Phillips denies that such evidence is hearsay at all, but treats it as probative of an issue. A third argument, that the corruption of a witness would almost always be difficult to prove except by hearsay evidence, is less convincing. Difficulty of proof alone cannot justify the reception of evidence otherwise inadmissible as 176 (1992) 174 CLR 558. 177 (1995) 185 CLR 1. 178 Slatterie v Pooley (1840) 6 M & W 664 at 669 per Parke B [151 ER 579 at 581]. Callinan hearsay. There is no doubt that much is difficult to prove, but difficulty of itself cannot provide reason for the jettisoning of long established rules of evidence. A fourth argument does however have weight. It is that the overwhelming public interest in the conduct of a fair trial, and the integrity and purity of the process, and the corresponding necessity that that process not be subverted by corruption of any kind, including in particular the corruption of a witness, especially a key witness, requires that a rule be recognized to enable corruption to be proved, even by hearsay if that is its true character, if necessary. Taken together, the arguments should, in our opinion, be accepted. Their acceptance is consistent with the view expressed by Wigmore to which we have referred. It is also consistent with the reasoning in De Angelis179, R v LSS180, and Phillips181. True it may be that what the "coach" said to the complainant in R v LSS was original, and not hearsay evidence in the strict sense, of the coaching itself, but the distinction between its character as original evidence and hearsay is not an easy one to draw. These other points should be made. It would be anomalous if evidence of oral coaching could be led from a person who heard the coaching, but not evidence that that person heard the complainant say that she had been coached. The second point is that, in the case of a witness, one of the principal objections to the reception of what he has said out-of-court, that it cannot be tested in court, does not arise. The witness, the maker of the original statement, is available in court to be cross-examined about what he has said out of court. We are of the opinion therefore that in the case of a witness, evidence of statements made out-of-court indicative of the witness' corruption may, subject to what follows, be received. It is unnecessary to decide whether that evidence should be classified as hearsay evidence or direct evidence in the sense in which the Court in Phillips regarded it. There is a further question however, and that is whether it should be a precondition of the admission of that evidence, that the accused or his counsel has put, with particularity, the time, place, and other relevant circumstances of the making of the statements revealing the corrupt intention. As Hayne and Heydon JJ have demonstrated, both the common law and many enactments dealing with the proof of the making of prior inconsistent statements to damage the credit of a witness, insist upon observance of such a precondition. The appellants urge that all that should be necessary is that they comply with the rule 179 (1979) 20 SASR 288. 180 [2001] 1 Qd R 546. 181 (1936) 26 Cr App R 17. Callinan in Browne v Dunn182, and that accordingly all that they were required to do, they did, by putting to Davis the substance, and none, or few of the details of the circumstances of the making, of the statement by him of his corrupt intention. An imputation of corruption as a witness is a very serious imputation. A person making it ought, in fairness, be obliged to put it, and to put it with such a degree of particularity as to enable the witness to understand what is being put, and the circumstances of the making of the statement intended to be adduced against him. Not only fairness requires this, but also these considerations: the affording of an opportunity to the witness to enable him to give his reasons why he did make, or could not have made, the statement attributed to him; the non- prolongation of a trial in the event that the witness be prepared to admit the making of the statement; and that the same rules as apply at common law and by statute, in relation to proof of a previous inconsistent statement, should in general apply to evidence of the kind in question here, to ensure coherence in the law183. And last there is this. Unless there be such a precondition one of the rationales justifying the reception of the evidence would be undermined, that here, unlike in the case of most hearsay statements, the other side does have, and should be obliged to take, the opportunity of testing the reliability of the maker of the statement. That should therefore be the general rule in relation to evidence offered in proof of the corruption of a witness by way of the attribution to the witness of statements made by him out of court. The rule was not complied with here. There was no special circumstance which could justify departure from it. Ross' evidence of Davis's statement was therefore rightly rejected. It is accordingly unnecessary for us to decide whether, had the relevant matter been properly put by the appellants to Davis, the former should be regarded as having put the character of a prosecution witness in issue184, such that evidence of the appellants' character may also have been introduced. Nicholls's appeal must therefore be dismissed as his only ground of appeal related to Ross' excluded evidence. 183 See Sullivan v Moody (2001) 207 CLR 562 at 581 [55] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ. 184 See ss 102-103 of the Evidence Act 1995 (NSW) and s 8 of the Evidence Act 1908 Callinan Miscarriage of justice The remaining question is whether, assuming that the respondent is entitled to rely on the notice of contention to which the appellant takes exception, because the contention was not advanced in the Court of Criminal Appeal, the case was so strong that despite the upholding of one ground of appeal, there has been no substantial miscarriage of justice. Whether there has or has not been a substantial miscarriage of justice is a question of law for an appellate court. Here, on the approach of the Court of Criminal Appeal, no decision, as to absence or otherwise of a miscarriage of justice on the part of that Court was necessary. The respondent made it clear in written submissions to this Court that it would be contending as foreshadowed. The appellants have not been taken by surprise. The respondent is entitled therefore to rely on the notice of contention. The respondent's submissions The respondent submits that there are many reasons why there has been no substantial miscarriage of justice185 even if the trial judge erred in any of the ways submitted by the appellant Coates, or indeed by Nicholls had his only ground of appeal been upheld. The respondent's submission was that the effect of the trial judge's direction to the jury was that, standing alone, the off-camera admissions could not support the conviction of Coates of any offence: accordingly, it could not be said their reception caused Coates to lose a chance that was fairly open to him of 185 See s 689(1) of the Criminal Code (WA) which relevantly provides as follows: "Determination of appeals in ordinary cases (1) The Court of Criminal Appeal on any such appeal against conviction shall allow the appeal, if they think that the verdict of the jury should be set aside on the ground that it is unreasonable or cannot be supported having regard to the evidence, or that the judgment of the court before whom the appellant was convicted should be set aside on the ground of a wrong decision of any question of law or that on any ground there was a miscarriage of justice, and in any other case shall dismiss the appeal: Provided that the Court may, notwithstanding that they are of opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if they consider that no substantial miscarriage of justice has actually occurred." Callinan acquittal. The instruction to the jury by the trial judge was stronger than a McKinney direction. The Court of Criminal Appeal was correct in approving the trial judge's direction with respect to the off-camera admissions. The critical passage in the directions has been set out above in [139] of these reasons. The respondent adds that the off-camera admissions were relatively insignificant by comparison with more compelling evidence: of recorded lies told by Coates about his whereabouts at the time of the murder; his recorded failure to account for telephone records of his involvement in events at Rivervale; his recorded admissions as to his knowledge of the involvement of others in the killing of the deceased; and his tape recorded conversations with Bloomer and then Hoy concerning his false alibi. The decision There is, in our opinion, some, but not enough force in these submissions to persuade us that the appellant Coates has not lost a chance of an acquittal. In reaching this opinion we are influenced in particular by five matters. First, the purpose of s 570D of the Code is clear and is not to be circumvented. "Reasonable excuse" must be given real content. If what occurred here were to be held to constitute reasonable excuse, the decision would be a charter for evasion of the section and the thwarting of its clear purpose. The second matter is the failure of the police officers to invite Coates, on the resumption of the interview on-camera, to repeat what he was alleged just to have said off-camera. If for any reason the view were taken that such an invitation and what might follow would have a prejudicial effect outweighing its probative value, that exchange as the respondent concedes could have been deleted186. The fact that no invitation was offered is however significant. The third matter is the loss of the police officers' notes of what was alleged to have occurred off-camera, an unexplained and suspicious circumstance of itself. The fourth matter is that an admission is usually evidence of a very powerful and persuasive kind, well capable of tilting the balance in practically any case. The fifth matter is that the directions of the trial judge were, in two respects, erroneous. Those errors alone would not perhaps justify the upholding of the appeal, but they must be weighed in the balance together with the other more important matter of the reception of the off-camera admissions. It should also be pointed out that Coates gave evidence emphatically denying what was alleged to have taken place off-camera. These are matters which cannot be ignored, and inevitably cast doubt on so much, which is still quite a deal, of the Crown case as relies on the off-camera admissions. 186 Section 570F of the Criminal Code (WA) provides for the editing of videotapes. Callinan Accordingly we would allow the appeal by Coates, set aside the order of the Court of Criminal Appeal and in place thereof order that the appeal to that Court against conviction be allowed and that the verdict and sentence be quashed. We would dismiss the appeal by Nicholls. Kirby 198 KIRBY J. This is an appeal by two prisoners against a judgment of the Court of Criminal Appeal of Western Australia187, dismissing their appeals to that Court against their convictions of murder. The facts, legislation and issues The facts of the prosecution case against Mr Thomas Nicholls and Mr Martin Graeme Coates are explained in the reasons of other members of the Court188. Also contained there are the relevant provisions of the Criminal Code (WA) ("the Code"). These are s 570D (relating to the videotape recording of interviews with accused persons) and s 689(1) (containing the "proviso" applicable to appeals in which error has been shown but where there is no "substantial miscarriage of justice")189. Also set out in other reasons is s 21 of the Evidence Act 1906 (WA)190 (relating to prior inconsistent statements). Five issues are presented for decision. It is logical to take first the issue relevant to both appellants and then the issues relevant only to Mr Coates' appeal, although the "proviso" issue arises in each matter, upon the assumption that a relevant error is shown. The issues are: (1) The collateral evidence issue: Whether the courts below erred in ruling that the evidence of Mr Joseph Ross was inadmissible to prove that the key witness in the prosecution cases against the appellants, Mr Adam Davis, had said to Mr Ross words to the effect that his statement to police that the appellants were involved in, and present at, the murder of the victim was fake and advanced as a result of an arrangement with police to secure leniency for Mr Davis; (2) The unrecorded admissions issue: Whether the courts below erred in accepting as admissible against Mr Coates admissions allegedly made by him to, or in the presence of, four police witnesses although such admissions were said to have been made by him during a break in the videotaped recording of a police interview, subject to the Code, s 570D; (3) The judicial warning issue: Whether the courts below erred in ruling that it was unnecessary for the trial judge to give a warning to the jury 187 Hoy v The Queen [2002] WASCA 275. 188 See reasons of McHugh J at [21]-[30]; reasons of Gummow and Callinan JJ at [116]-[121]; reasons of Hayne and Heydon JJ at [237]-[243]. 189 Reasons of McHugh J at [94]; reasons of Gummow and Callinan JJ at [193], fn 185; reasons of Hayne and Heydon JJ at [293]. 190 Reasons of Gummow and Callinan JJ [131]. Kirby of the kind required by the decision of this Court in McKinney v The Queen191. Whether the reference by the trial judge to whether the appellant, Mr Coates, or the police witnesses were committing perjury192 was itself a departure from the requirements explained in McKinney193 so as, without more, to require that the appeal by Mr Coates be allowed on that ground; (4) The listening device issue: Whether the Listening Devices Act 1978 (WA)194 applied to the questioning of Mr Coates so that the police could have no "reasonable excuse" within the law of Western Australia, for failing to record on videotape the conversations with Mr Coates during the contested break in the recording and, if so, whether this alone required the exclusion of such evidence and a strong McKinney warning to the jury; and (5) The proviso issue: Whether, if error be shown upon the foregoing issues or any of them, notwithstanding such error, the appeal of each or either of the appellants should be dismissed on the footing that no substantial miscarriage of justice had actually occurred. This issue arises on a notice of contention filed by the prosecution in this Court. The appellants contested the entitlement of the prosecution to raise such an issue for the first time in this Court. Their objection to the contention thus arises as a preliminary question should the Court come to the proviso issue. The collateral evidence issue Admissibility of the collateral evidence: The evidence of Mr Davis against the appellants was clearly critical. The trial judge told the jury, correctly, that, in considering the entire evidence of the lengthy trial, "you keep coming back" to Mr Davis's evidence "and the need to rely upon him if you are to establish guilt [of Mr Coates] and make decisions about guilt in this context as well as in relation to other accused persons"195. 191 (1991) 171 CLR 468 at 476, 478. See reasons of Gummow and Callinan JJ at 192 See extract from the charge to the jury of the trial judge (Murray J) set out in the reasons of Hayne and Heydon JJ at [365]-[366]. 193 (1991) 171 CLR 468 at 476. 194 In force at the time of Coates' interview (7 October 1998). It has since been repealed and replaced by the Surveillance Devices Act 1998 (WA). 195 Trial judge's charge to the jury. See reasons of Hayne and Heydon JJ at [366]. Although addressed to the use to be made of the off-camera admissions allegedly made by Mr Coates, the direction, in terms, had a wider focus. Kirby One can understand the traditional reluctance of the common law to permit the admission of collateral evidence relevant to the issue of credibility196. It has the potential to permit issues to be pursued that are only marginally relevant to the trial or that involve disproportionate expense in time and focus that outweighs its utility. However, proof of the fact that the "key witness" had repeatedly stated that the evidence he had given, or would give, was false; that the evidence was offered in a criminal trial of persons accused of murder as a result of an alleged deal to his own advantage with police; and that it wrongly implicated the accused in the murder of the victim although they were not present when the victim was killed – is so clearly relevant and important to the central issue for trial that a rational system of evidence law would permit that testimony to be placed before the ultimate decision-maker, here the jury, for their evaluation197. At least, it would allow that to happen where the evidence is of substantial probative value and is received under proper conditions. These include those necessary to avoid the trial going off into protracted side issues and to avoid procedural unfairness to the person accused of false testimony on a matter in issue in the trial. The recognition by the common law of the injustice of adhering rigidly to the rule applied by the trial judge in the trial of the appellants is illustrated by the large number of "exceptions" recognised in particular circumstances. This has produced an unacceptably complex set of "rules". They are difficult for judges and trial counsel to remember and to apply with accuracy in the often stressful circumstances of a trial. Clearly, there is a need for a simpler set of rules that observe concepts rather than the wilderness of instances acknowledged by the courts in their so-called "exceptions"198. 196 Palmer v The Queen (1998) 193 CLR 1 at 22-23 [51]-[53]; Gans and Palmer, Australian Principles of Evidence, 2nd ed (2004) at 307-308 [14.2]. See also reasons of McHugh J at [38]-[39]. 197 See reasons of McHugh J at [53], [55]-[56]. 198 A more flexible approach has been endorsed by this Court in Goldsmith v Sandilands (2002) 76 ALJR 1024 at 1025-1026 [3], 1031-1032 [39]-[41], 1037 [70], 1041 [83], 1044 [96]; 190 ALR 370 at 372, 379-381, 388, 394, 397. See also Natta v Canham (1991) 32 FCR 282 at 300; Gans and Palmer, Australian Principles of Evidence, 2nd ed (2004) at 316-317 [14.4.2]. By the Uniform Evidence Act, the decision of sufficient relevance "must be dressed in clothes of relevance beyond credibility alone". See Professor Ligertwood, Australian Evidence, 4th ed (2004) at 555 [7.144]. Kirby The appellants invited this Court to re-fashion the law of evidence in their case, as a judge-made body of law in need of further refinement. However, that would not be an appropriate course. The Australian Law Reform Commission conducted a major national review of evidence law quite recently199. Legislation based on the Law Reform Commission's report has been substantially adopted federally200 and in other Australian jurisdictions201. I am not convinced that this Court should engage in a significant task of law reform when some, at least, of the problems addressed in the appeal would be solved by the adoption of the Uniform Evidence Act that is presumably still under consideration in those Australian jurisdictions that have not yet adopted it. Within the rules of the common law applicable in Western Australia at the time of the appellants' trial (and within the space left by the operation of the Evidence Act of that State) I incline with McHugh J202, and Gummow and Callinan JJ203, to the view that the evidence of Mr Ross should have been admitted in the appellants' trial. At common law it fell within the so-called "corruption" (but not the "bias") exception to the prohibition upon the receipt of the collateral hearsay evidence as proffered from Mr Ross204. My reasons for this conclusion are essentially the same as those of Gummow and Callinan JJ205. Any other conclusion would be difficult to 199 Australian Law Reform Commission, Evidence, Interim Report No 26, (1985); Australian Law Reform Commission, Evidence, Report No 38, (1987). The Uniform Evidence Act makes express what is implicit in the common law. Thus s 102 provides that "Evidence that is relevant only to a witness's credibility is not admissible". But s 103(1) provides that "The credibility rule does not apply to evidence adduced in cross-examination of a witness if the evidence is of substantial probative value". See also s 106. The foregoing rules assume that a distinction can readily be drawn between evidence relevant to "credit" and an "issue" in the case. In fact, that line is often difficult to draw: Ligertwood, Australian Evidence, 4th ed 200 Evidence Act 1995 (Cth). This Act applies in the ACT, see s 4. 201 Evidence Act 1995 (NSW), Evidence Act 2001 (Tas). 202 Reasons of McHugh J at [58], [60]. 203 Reasons of Gummow and Callinan JJ at [175], [187]. 204 See also reasons of Hayne and Heydon JJ at [261]-[269]. 205 See reasons of Gummow and Callinan JJ at [187], referring to Phillips (1936) 26 Cr App R 17; R v LSS [2000] 1 Qd R 546; R v Lawrence [2002] 2 Qd R 400. Kirby reconcile with recent cases in Australia and elsewhere involving this exception. At least, it would be difficult unless those cases could be hived off and treated as explicable only as a special sub-category of cases involving sexual crimes or unless those cases were now disapproved206. To erect a special ad hoc class within the exception would be such an unprincipled subdivision of a general rule of evidence law that I would not willingly embrace that approach, unless it was sustained by particular legislation207. Nor am I convinced that the earlier decisions were wrong. Some of them have existed for a long time and have often been followed208. Those decisions respond to the consideration, recognised by Gummow and Callinan JJ, that a rigid application of the collateral evidence rule can sometimes lead to obvious injustice which the common law is usually astute and flexible enough to avoid. Failure to establish admissibility: It is unnecessary to pursue this issue further because I agree with all other members of the Court that, where the "corruption exception" applies, it is necessary at common law to lay the ground properly for the admission of such evidence209. This requirement is reflected in the express requirement in the Evidence Act applicable to the exception for prior inconsistent statements. That exception is not exhaustive of the common law. It is rather illustrative of a common application of a general principle. The requirement to lay the ground derives from considerations of procedural fairness to the witness whose credit is impugned. It is also protective of the fairness and efficiency of the trial process210. The requirement was not observed in this case, although it was sufficiently drawn to attention. I cannot regard the failure properly to lay the ground for such evidence properly as a mere slip or oversight or mistake that should not redound against the interests of the appellants. Quite possibly, Mr Davis was not questioned with specific reference to the precise occasions on which he had the alleged conversations with Mr Ross because counsel for the appellants were not sure at that time that Mr Ross would give evidence or come up to proof. Possibly, it was because they were unsure of what Mr Ross would eventually say. Possibly, he had previously given conflicting or differing versions. Possibly, counsel did not 206 See reasons of Hayne and Heydon JJ at [287]. 207 See Gans and Palmer, Australian Principles of Evidence, 2nd ed (2004) at 322-333 208 Such as Phillips (1936) 26 Cr App R 17. 209 Reasons of Gummow and Callinan JJ at [189]; reasons of Hayne and Heydon JJ at 210 Reasons of Gummow and Callinan JJ at [189]. Kirby want to be too specific about Mr Ross and his conversations with Mr Davis in prison because they could not be sure that he would be called. Perhaps they were being prudent in respect of his evidence. Whatever the explanation, counsel for the appellants were sufficiently directed to the issue. They did not repair the ultimate lack of identification of the particular occasions of the alleged conversation involving Mr Ross – or even the identity of the person with whom it was alleged to have taken place. The result was that Mr Davis was not given a fair opportunity to confront the true purport and source of his allegedly false evidence that was said to cast doubt on his credibility. He did not get a fair chance to place before the jury his response to Mr Ross's accusation. In the circumstances, which were never thereafter repaired, it would have been unjust to have allowed Mr Ross, in effect, to have a free kick against the evidence of Mr Davis. Conclusion: no material error: In the event, at the trial, Mr Ross gave unresponsive testimony that in fact put his allegations against Mr Davis before the jury211. This makes much of the foregoing analysis a trifle surreal. However, as a matter of law, the ground for the "corruption exception" to the collateral evidence rule was not laid. On that footing, the trial judge was correct to reject the evidence of Mr Ross, tendered on this basis. The Court of Criminal Appeal did not err in upholding that ruling. The consequence is that the appeal by Mr Nicholls must be dismissed. The unrecorded admissions issue Purposive interpretation of the Code: The appeal by Mr Coates, relying on the suggested breach of s 570D of the Code presents the second occasion in a year that this Court has had to address the consequences of a failure of police to record, or put on the record, a videotaped interview, conducted in accordance with statute, an alleged off-camera "admission" by an accused that is subsequently tendered against him at his trial. The other such case was Kelly v The Queen212. In the end, the Court was unanimous in Kelly in dismissing the prisoner's appeal. McHugh J and I did so in accordance with the "proviso" to the Criminal 211 Reasons of Hayne and Heydon JJ at [256]. 212 (2004) 78 ALJR 538; 205 ALR 274. That case was concerned with the application of the Criminal Law (Detention and Interrogation) Act 1995 (Tas), s 8. Kirby Code (Tas)213. While dismissing the appeal on other grounds, the other members of this Court analysed the application of the proviso in a manner similar to that of All members of the Court in Kelly made observations about the purposes and operation of the Tasmanian Act there in question. It is fair, I think, to say that McHugh J215 and I216 were greatly affected in Kelly by the legal history that had preceded the introduction of legislative requirements for electronic recordings of interviews of accused persons by police217; the "mischief" to which the legislation was directed; and the need for a purposive construction of contested provisions, so as to avoid an interpretation that would defeat the achievement of the clear statutory objects. The majority acknowledged these concerns. However, in that case, they reached their preferred construction by reference to what they took to be the requirements of the text of the Tasmanian statute218. Nothing said in Kelly decides the outcome of the present appeal. It concerns different legislation; different provisions for exceptions from the recording obligation; and quite different factual circumstances. All that is in common between the two cases is that the persons involved were suspects in police custody under suspicion of murder; that recording on videotape of an interview between police and suspect took place; that important statements were allegedly made to police (denied by the suspect) that were not recorded on videotape; that it was not suggested that the videotape equipment malfunctioned or was unavailable for any reason; and that the alleged admissions off-camera, that were later recounted by police witnesses at the trial, were not immediately put to the accused on camera so that the accused's response could be recorded contemporaneously and seen by the jury, although this course would have been practicable in the circumstances. 213 s 402(2). See Kelly (2004) 78 ALJR 538 at 553 [75], 571 [172]; 205 ALR 274 at 214 Kelly (2004) 78 ALJR 538 at 552 [69]-[70]; 205 ALR 274 at 292. 215 Kelly (2004) 78 ALJR 538 at 558-561 [96]-[106]; 205 ALR 274 at 300-303. 216 Kelly (2004) 78 ALJR 538 at 565-569 [141]-[164]; 205 ALR 274 at 311-316. 217 Particularly the problem of so-called "police verbals", see Kelly (2004) 78 ALJR 538 at 547-548 [42], 557-558 [93]-[95], 564-565 [136]; 205 ALR 274 at 286, 218 Kelly (2004) 78 ALJR 538 at 548-549 [45]-[49]; 205 ALR 274 at 287-288. Kirby For the reasons which McHugh J and I gave in Kelly, I remain of the view that this Court should give such legislation a purposive construction219. Various verbal or linguistic reasons can be mounted to sustain the construction urged by the respondent. The case would not be in this Court were it otherwise. However, it is not a necessary construction. It tends to defeat the achievement of the objects of the Western Australian Parliament to put an end, so far as possible, to contests of the present kind. True, the Western Australian Parliament did not enact an absolute bar on the reception at trial of unrecorded admissions to police. Circumstances will arise where the provisions of the Code are inapplicable (eg admissions blurted out before the accused person is a suspect) or, although applicable, where the admission is warranted (eg because the prosecution proves that there is a "reasonable excuse"220 for not recording or the court is satisfied of "exceptional circumstances" that justify the admission of the evidence "in the interests of justice"221). Absence of "reasonable excuse": For the reasons given by Gummow and Callinan JJ, the explanations advanced on the part of the police in their evidence at trial did not provide a "reasonable excuse" within the Code for their failure to record the off-camera conversations with Mr Coates. Despite the opinion of the trial judge that Mr Coates asked for a toilet break when the second interruption to the recorded interview occurred, the circumstances of that break are very troubling. So far as the recorded transcript is concerned, it was the police, not Mr Coates, who initiated the break. The police interviewer twice asked Mr Coates if he wanted to break for the toilet. The fact that the question had to be repeated suggests that Mr Coates did not at first respond to the suggestion because he was not expecting (still less indicating) the proposal of a break. His was an odd response if it was Mr Coates who was seeking the break. The use by Mr Coates of the answer to the question "sure", may tend to indicate that he was willing to go along with a police suggestion. In my experience, "sure" is an expression usually used in conversational English as an unenthusiastic word of concurrence, like "alright" – rather than an affirmation by someone who positively desires and initiates the course proposed. However, I acknowledge that much would turn upon the facial expression, body language and tone of the person saying the word. 219 See also reasons of McHugh J at [101]. 220 See the Code, s 570D(2)(b). 221 The Code, s 570D(2)(c). Kirby The trial judge expressed a contrary impression and he saw the police video recording. However, his Honour acknowledged that it was a matter of dispute, not certainty. Ultimately it was for resolution by the jury222. He identified no bodily or non-verbal indications of the request. He left the conflict to the jury. In evidence, Mr Coates denied that he had requested the break. Much later the police reconstructed the alleged oral ("verbal") admissions by Mr Coates that allegedly followed. Objectively, the interruption was a very long one. The police notes that were allegedly prepared were then mysteriously lost. The alleged admissions were not put on the record immediately after the break in the recording. As a matter of law, they did not have to be, under the Code, in order to be admissible at trial. But could there have been a safer and fairer way to ensure transparency of the process that ensued and to demonstrate the integrity of the police conduct than to take that course? The fact that, in some circumstances, the accused might be upset by the police immediately repeating an inculpating statement made off-camera as soon as possible thereafter (and certain risks associated with that course) is less significant than the desirability of laying to rest, as far as possible, disputes such as have now arisen in Kelly and in this case. The accused will be more than upset if the alleged conversation is raised years later at a trial, without contemporaneous notes and in circumstances (as here) of sharp contest. Parliament has now spoken on the matter. And the general purpose of Parliament in these provisions of the Code is to put an end to contested police "verbals"223. The construction preferred by McHugh J and Gummow and Callinan JJ has that effect. With respect, the construction preferred by Hayne and Heydon JJ224 perpetuates the very mischief that the provisions of the Code were intended to prevent. Conclusion: material error: Subject, then, to the decision on the "proviso" issue, the result is that Mr Coates is entitled to succeed in his appeal. He has shown material error on the part of the trial judge in admitting the police He has evidence of demonstrated error in the failure of the Court of Criminal Appeal to correct the trial judge's error. the alleged unrecorded "admissions" off-camera. 222 See reasons of Hayne and Heydon JJ at [356]-[366], extracting part of the charge to the jury. 223 See reasons of McHugh J at [98]-[99]. 224 With which Gleeson CJ agrees at [1], [3]. Kirby The judicial warning issue McKinney warnings continue: I disagree with any suggestion225 that the enactment of legislative provisions controlling the receipt of police evidence of admissions in interviews with suspects may have removed the necessity of the warning of the kind mandated by this Court in McKinney226. The recording legislation varies in its requirements in different parts of Australia. The rule of practice stated in McKinney was a rule of the common law. Hence it is a rule of universal application throughout Australia. To the extent that subsequent legislation leaves unrepaired the allegations of contested unconfirmed admissions to police whilst in police custody, the "mischief" addressed in McKinney remains. To that extent, the rule stated in that case continues to apply. So much is required by an analysis of McKinney which is functional and not purely verbal. Indeed, upon one view, the need for McKinney-type warnings may be increased, not reduced, by the passage of legislation obliging videotaped recordings of police interviews. To the extent that police practices develop, to exploit the boundaries of the legislative language (such as alleged admissions after the termination of a recorded interview as in Kelly or alleged admissions during an interruption whose purpose and course is contested), the need for judicial warning to juries about the dangers identified in McKinney may actually be enlarged. Otherwise, courts will surely witness a rise in the occurrence of "verbals" in gaps found in the legislation. On the theory suggested by Hayne and Heydon JJ, the common law would then stand mute and powerless. The trial judge in Kelly, properly in my view, gave a clear McKinney-type warning to the jury227. He was prudent to do so. The fact that he had done so became a consideration in the application of the "proviso" in that case. I would resist any suggestion that the binding rule in McKinney is under a cloud arising from supervening enactments. Neither as a matter of legal authority, nor as a matter of legal principle or policy is this so. The trial judge posed a question for the jury expressed in terms that could be understood as requiring them to consider whether the police or Mr Coates were guilty of "perjury"228. As this Court pointed out in McKinney229 that is not, 225 See reasons of Hayne and Heydon JJ at [373]. 226 (1991) 171 CLR 468 at 475-476. 227 See Kelly (2004) 78 ALJR 538 at 565 [139]; 205 ALR 274 at 310. 228 See extracts from the charge of the trial judge: reasons of Hayne and Heydon JJ at 229 (1991) 171 CLR 468 at 477. Kirby and never has been, the issue presented in our legal system by a criminal trial. There the issue is relevantly whether the prosecution has proved beyond reasonable doubt the charge brought against the accused. To raise the question of whether police or the accused are guilty of perjury is to suggest that the case is a contest between those parties and that in some way the accused must prove a counter allegation of perjury against the police before he can be acquitted. The Court of Criminal Appeal agreed that it would have been preferable if this direction, framed in this way, had not been given by the trial judge. However, it was not inclined to consider that the jury would have understood the passage in the summing up in the forbidden way. The other members of this Court are inclined to take this benign approach to the error. Clearly, it amounted to a slip. Significance of failure to warn: Because I have already identified an error that is material and because, on its own, the reference to possible police perjury would not undermine the integrity of the trial, I am likewise willing to pass this error by. I have more reservations about the omission to give the McKinney direction, if it should be concluded that the Code did not apply to exclude the contested confession to the police off camera. It is impossible for an appellate court to know what weight (if any) the jury gave to the alleged off-camera admissions ascribed by the police witnesses to Mr Coates. For all that appeal judges know, that evidence may have been critical for the jury as revealing a consciousness of guilt of the crime charged. Perhaps the "admissions" were the evidence, or the ultimate evidence, on which the jury acted in Mr Coates' case. That possibility cannot logically be excluded. The jury's process of reasoning is unknowable230. It is no less possible that the jury took the course suggested because the trial judge instructed the jury that they could not convict Mr Coates on the off-camera admissions alone. That instruction did not, in terms, caution about the use of the admissions in conjunction with other evidence or indeed at all. People like Mr Coates, when accused by police of admissions that are not recorded or otherwise independently confirmed, are in an extremely vulnerable position. They are in police custody. They have no control over the circumstances or the presence of witnesses or other means of authentication. They have a criminal record. Attacking police credibility at the trial may come at the price of the disclosure to the jury of their own past criminal record. Yet accepting everything attributed to them by police may be seriously unfair to them in a particular case. That is why the law seeks to redress the dangers for justice inherent in the situation. It does so, in part, by the legislation now enacted to 230 See Domican v The Queen (1992) 173 CLR 555 at 565-566. Kirby require admissions in interviews between police and suspects to be recorded on video. And to the extent that this redress does not meet the potential problem, it does so by requiring a judicial warning of the kind mentioned in McKinney and the cases which preceded that case. The words in McKinney are not cast in stone. They were the outcome of two decades of authority in this Court dealing with the problems that I have described231. What is required in the way of judicial instruction to the jury depends on the needs of the particular case. In my view it would have been prudent for the trial judge in the present case (as was done in Kelly) to have given a warning of the dangers of convicting Mr Coates using in any way232 the unrecorded, unconfirmed, contested evidence of the alleged admissions to police made off camera and never put to Mr Coates on camera. Conclusion: unnecessary to decide: In the way in which I would decide this appeal, it is ultimately unnecessary for me to resolve the complaint of Mr Coates on this ground of appeal. It is enough for me to say that I think that there is much more in the submission than the other members of this Court are prepared to allow. The listening device issue On the fourth issue, I am in agreement with the analysis of Hayne and Heydon JJ233. There is no merit in the additional or separate argument of Mr Coates based on the Listening Devices Act. However, this conclusion matters not because of my earlier stated opinion, alike with Gummow and Callinan JJ, that the "reasonable excuse" exception to the requirements of s 570D of the Code was not otherwise established by the evidence in this case. 231 Including Carr v The Queen (1988) 165 CLR 314 and Duke v The Queen (1989) 180 CLR 508. For the purposes that lay behind McKinney, see Ligertwood, Australian Evidence, 4th ed (2004) at 213-215 [4.33]-[4.34]. See also Uniform Evidence Act, s 165(1). The function of the common law to supplement such statutory warning requirements is acknowledged by Ligertwood, at 214-215 [4.34]. 232 This is different from telling the jury that they could not convict on such evidence standing alone. See reasons of Hayne and Heydon JJ at [370]. In this sense, I do not agree that the direction given was stronger than a McKinney direction. See reasons of Gummow and Callinan JJ at [194]. 233 Reasons of Hayne and Heydon JJ at [361]-[362]. Kirby The proviso issue The proviso may be raised: It follows that the appellant, Mr Coates, has established error on the part of the primary judge uncorrected by the Court of Criminal Appeal of Western Australia. This conclusion means that this Court is empowered to enter the judgment that the Court of Criminal Appeal should have entered in Mr Coates' case234. There is no merit in the objection on behalf of Mr Coates to the prosecution's reliance for the first time in this Court on the proviso issue under the Code235. By analogy, I would adopt what I said in Kelly when a similar objection was raised on behalf of the prisoner236. There is no relevant procedural unfairness in allowing the prosecution to rely on its contention. The prosecution placed all of the relevant evidence before this Court by filing supplementary appeal books. This Court can consider the arguments for both sides. Finality in the appeal process argues strongly in favour of taking that course. Like Gummow and Callinan JJ237 I acknowledge that, apart from the off-camera admissions introduced into the trial, there was a powerful prosecution case against Mr Coates. Most especially, there was the motive that was proved in his case, to kill the victim who was the only prosecution witness in a pending trial against him and his girlfriend; fact proved by contemporaneous telephone records that (contrary to his initial statement) he was in the vicinity of the motel where the victim was killed; his false alibi and his admissions recorded on that part of the police interview that was videotaped. the established Conclusion: proviso inapplicable: That said, I am convinced by the five considerations to which Gummow and Callinan JJ refer238. Like their Honours, I would conclude that this Court could not dismiss the appeal on the basis of an affirmative decision that no substantial miscarriage of justice has actually occurred. This Court cannot tell what impact the evidence of the off-camera "admissions" by Mr Coates would have had upon the jury. Their potential alone, or when taken in conjunction with the other evidence, was devastating and clearly inculpating. On that footing, there should be a retrial of the count of 234 Judiciary Act 1903 (Cth), s 37. 235 The Code, s 689(1). 236 Kelly (2004) 78 ALJR 538 at 563 [123]-[126]; 205 ALR 274 at 306-307. 237 Reasons of Gummow and Callinan JJ at [193]-[196]. 238 Reasons of Gummow and Callinan JJ at [196]. Kirby murder against Mr Coates. A retrial order upholds the strong policy of Parliament in enacting the recording legislation in a way that the application of the proviso would not. Order I agree in the orders proposed by Gummow and Callinan JJ. 237 HAYNE AND HEYDON JJ. Martin Graeme Coates, Thomas Nicholls and Amanda Kayelene Hoy were charged with the wilful murder at Rivervale of Clare Garabedian ("the victim"). They were convicted after a trial in the Supreme Court of Western Australia before a jury presided over by Murray J between 1 August and 21 September 2000. Their appeals, argued over seven days, were dismissed by the Western Australian Court of Criminal Appeal on 22 October 2002. By special leave, Coates and Nicholls have appealed to this Court. The appeals raise three points. The first point, raised by both appellants, concerns the operation of the rule that a witness's answers to questions in cross- examination on collateral issues are final. The second and third points, raised only by Coates, concern the reception of admissions which were not videotaped, and the directions which should have been given about them. Background The jury verdicts must have rested on an acceptance of the prosecution case, which depended heavily on the evidence of Adam John Davis. Before the trial, Davis had pleaded guilty to murdering the victim, and had been sentenced to life imprisonment (with a minimum term of 15 years to be served before eligibility for release on parole could be considered). Hoy shared a house in Bassendean with Nicholls, and Coates often stayed there. Hoy was Coates's girlfriend and was pregnant to him. On Friday 21 August 1998, Coates asked Davis, in return for $2,000, to approach the victim, who was a prostitute, pose as a client, and give her a heroin overdose (described as a "hot shot"). Coates told Davis that the reason for his request was that the victim was going to give evidence for the prosecution against Hoy and Coates in pending criminal proceedings. There were in fact pending proceedings in which Hoy and Coates were charged with depriving the victim of liberty and assaulting her, occasioning her grievous bodily harm. She was to be the sole Crown witness. Davis told Coates and Hoy that he agreed to this proposal. He did so because he owed $2,000 to a bikie gang, and feared that he might be killed if he did not repay the debt. On the evening of Saturday 22 August 1998, Davis went to the Bassendean house, was given $200 by Hoy to pay for the victim's services, and was given a bag of heroin by Coates with which to kill the victim. He borrowed Hoy's car and mobile phone and left in order to pick the victim up in a park. Hoy and Coates drove ahead of him in order to assist him in identifying the victim. He picked the victim up and took her to the Great Eastern Motor Lodge. There she had a shot of heroin, and another approximately one and a half or two hours later. Davis then left and telephoned Hoy, who said she would get another parcel of heroin to Davis. Davis later collected some heroin and a syringe from underneath Hoy's car. He said that the victim gave herself a third shot of heroin. At about 4.30am, Davis admitted Coates and Nicholls to the motel room. Nicholls left and returned with a large syringe. The victim awoke, screamed and tried to escape. Coates pulled her to the ground, Nicholls held a pillow to her face, Davis held her arm, Coates tried several times to give her a heroin injection, Davis gave her a heroin injection and Coates stood on her throat. The victim died. Nicholls gave evidence denying being present at or involved in the murder. In a record of interview, however, while maintaining an ignorance of any plan to murder the victim by injecting her with heroin, he had admitted being present with Coates in the motel room when the victim awoke just before she was attacked. He said he left in the middle of the fight. Coates also gave evidence denying presence at or involvement in the murder. However, apart from various other admissions proved against him, Detective Sergeant Kays and Detective Senior Sergeant Byleveld gave evidence that he said, in an interview which was not videotaped, that he "wanted to do a deal and that he wanted to be charged with conspiracy to murder". The collateral evidence rule The cross-examination of Davis in relation to Ross. Davis gave evidence in chief for more than a day. The first cross-examiner was counsel for Hoy. He cross-examined Davis for over a day. During his cross-examination, he put to Davis, and Davis denied, that his "story about Coates going down the park to help identify [the victim]" was untrue. He then put to Davis, and Davis denied, that he had told others that the story was untrue. He was then asked: "Have you ever told anybody that the whole story – you've made up the whole story you've told us about the involvement of Coates and Nicholls is a lie?–––No, I haven't. That you were told by police what to say?–––No. And that you did it so that you would gain a benefit?–––No. Quite sure about that?–––Very sure. Because it all is a lie, isn't it – the whole thing?–––No, it's not." After the cross-examination of counsel for Hoy finished, counsel for Coates cross-examined Davis for nearly two days. However, she did not repeat the suggestion made by counsel for Hoy in the passage just quoted. Counsel for Nicholls's cross-examination of Davis lasted nearly two days. Soon after it began he asked the following question: "[D]id you at any time further down the track have any conversations and tell anybody that the story that you had given to the police about Marty Coates and Thomas Nicholls being present in the room in which Clare Garabedian was killed was, to use your word, bullshit?–––No." Counsel for the Crown then objected on the ground that the place and the person to whom Davis allegedly spoke should be identified. The trial judge left the matter to the discretion of counsel for Nicholls. Counsel for Nicholls continued: "Did you at any time – do you recall a conversation that went along the lines of this: that you had told somebody the story you had given to the police about Marty Coates and Thomas Nicholls being present in the room in which Clare Garabedian was killed was all bullshit?–––No. Do you recall saying in a conversation that it was also bullshit that Marty Coates had gone to Northbridge to point Clare Garabedian out to you?––– No, I never said that. Did you also say in a conversation you didn't know why Thomas Nicholls had been implicated at all?–––I never said that. Did you in a conversation say that the police had told you what to say in Did you say in a conversation that you had given Clare Garabedian two shots and that Marty Coates knew nothing about it?–––No. Did you say in a conversation that the police had offered you a deal if you cooperated and implicated Marty Coates and others in the murder?–––No. Did you in a conversation confirm that yourself and Clare Garabedian had been 'an item' for some time prior to her death?–––No, never. So none of the things that I have put to you were ever said by you in any The arguments of counsel at the trial for the reception of Ross's evidence. Joseph Paul Ross was called as a witness by counsel for Nicholls on 11 September 2000, about four weeks after Davis had left the witness box. Counsel for Nicholls sought a ruling on the admissibility of evidence he wished to elicit from Ross. A debate between counsel and the trial judge then took place. It must be understood against the background of the traditional "collateral evidence" rule described by Phipson thus239: "A party may not, in general, impeach the credit of his opponent's witness by calling witnesses to contradict him as to matters of credit or other collateral matters …" The general rule does not apply to evidence of prior inconsistent statements; previous convictions; evidence of reputation for untruthfulness; medical evidence affecting the reliability of a witness's evidence; evidence of bias, interest or corruption; and probably to evidence of some other matters. Some of these instances are on occasion treated as not being collateral, and hence as being outside the ban imposed by the general rule, but they are commonly analysed as exceptions to it. A standard test for what is collateral is that of Pollock CB in Attorney- General v Hitchcock240: "[T]he test, whether the matter is collateral or not, is this: if the answer of a witness is a matter which you would be allowed on your part to prove in evidence – if it have such a connection with the issue, that you would be allowed to give it in evidence – then it is a matter on which you may contradict him." The test is helpfully put by Wigmore241: "Could the fact, as to which the prior self-contradiction is predicated, have been shown in evidence for any purpose independently of the self- contradiction?" It emerged that Ross was being called to give evidence of earlier statements by Davis to the effect that his story to the police, which he was to repeat at the trial, that Coates and Nicholls were involved in the murder was 239 Phipson on Evidence, 15th ed (2000) at 261-262, par 11-37. 240 (1847) 1 Exch 91 at 99 [154 ER 38 at 42]. 241 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 1010, par 1020 (italics in original). false, and that he advanced that story because he had made or had been offered a deal with the police pursuant to which he hoped for leniency242. The argument for the view that Ross's evidence was on a collateral matter was as follows. When Davis said in answer to the questions in cross-examination that Coates and Nicholls were present during the murder, he could be contradicted (as he was) by the testimony of Coates and Nicholls. But when he denied telling anyone that the story he had given the police about Coates and Nicholls being present was untrue, he could not be contradicted unless an exception to the collateral evidence rule applied. Whether Coates and Nicholls were present at the murder was a fact in issue. Whether on some occasion before giving evidence Davis said they were not present was not a fact in issue. Counsel for Coates and Nicholls could not have called evidence in their own case about whether Davis had said on an earlier occasion that they were all not present. To use Wigmore's terms, so far as evidence showed that Coates and Nicholls were not present at the murder, the fact of their absence could be shown through that evidence independently of Davis's self-contradiction. That evidence would have been admissible to raise a reasonable doubt, whether Davis did or did not give evidence that they were present. But Ross's evidence that Davis had said his story that Coates and Nicholls were present was false, and was advanced to secure advantages from the police, could not have been admissible independently of Davis's evidence. It was only tendered to show Davis's self-contradiction and his weaknesses as a witness. It could only be received if it fell within an exception to the collateral evidence rule. Valid or not, that was the thinking underlying the Crown's opposition to Ross's evidence, the trial judge's rejection of it, and the Court of Criminal Appeal's concurrence in that ruling. In the course of the argument before the trial judge, defence counsel spoke by reference to a proof of Ross's evidence which Crown counsel did not have and which is not before this Court. Counsel for Nicholls also intimated that recent discussions with Ross had revealed that he would go beyond his proof. Counsel stated that Ross would say that he had had a conversation with Davis at a specific unit in Casuarina Prison in which Davis said that Coates and Nicholls had not been involved in the murder, and that the police had told Davis to implicate them in order to ensure that Davis received a good discount on his sentence. Counsel 242 In this Court the prosecution advanced an argument that Ross's evidence did not establish bias because the Ross−Davis conversation or conversations took place before the deal was made and before arrangements for Davis to give evidence had been made. Ross's position, as revealed in the cross-examination of Davis and the arguments advanced to the trial judge, creates room for the submission. But if Davis had any dealings with the police of the kind he supposedly told Ross about, he had them before he gave evidence, and they were capable of reflecting badly on the credibility of that evidence. for Coates, who had not cross-examined Davis in relation to the proposed evidence, supported the admissibility of the evidence. In the final form of his submission, counsel for Nicholls submitted that the Ross–Davis conversation revealed that Davis "was going to come to court and tell lies … in order to secure the deal that was offered to him by the police to implicate Mr Coates and Mr Nicholls." The unsatisfactoriness of the instructions on which counsel for Nicholls was working is indicated by the fact that on occasion he said that Davis was to implicate falsely not only Coates and Nicholls, but also Hoy. Between them, counsel contended before the trial judge that the evidence did not go to a collateral issue, but that if it did, it was admissible as a prior inconsistent statement and as going to demonstrate bias or corruption on the part The trial judge's ruling on the proposed evidence of Ross. The trial judge rejected the contention that the Ross evidence was admissible as relating directly to a fact in issue in establishing that neither Coates nor Nicholls was in the room where the victim died, or was otherwise implicated in her death. He did so because of the hearsay character of the evidence if tendered on that basis. The trial judge considered that the evidence went to a collateral issue in the sense defined by Attorney-General v Hitchcock243. The trial judge said that though the evidence established a prior inconsistent statement on the part of Davis, it was not admissible. (It is not now contended that the trial judge erred in this, because the appellants conceded that counsel had not complied with the Evidence Act 1906 (WA), s 21: counsel in cross-examining Davis had not referred to "the circumstances of the supposed statement … sufficiently to designate the particular occasion"244.) Finally, the trial judge said that though the evidence would be admissible if it demonstrated bias on the part of Davis, he considered that it did not: "There is nothing to suggest that [there existed any] relationship or … situation … as 243 (1847) 1 Exch 91 [154 ER 38]. 244 Section 21 provides: "Every witness under cross-examination in any proceeding, civil or criminal, may be asked whether he has made any former statement relative to the subject-matter of the proceeding, and inconsistent with his present testimony, the circumstances of the supposed statement being referred to sufficiently to designate the particular occasion, and if he does not distinctly admit that he made such statement, proof may be given that he did in fact make it …" between Davis and Coates and Nicholls which establishes the bias in the relevant sense." Accordingly, though Ross gave evidence on one issue in chief, he did not deal with the Davis conversation at that time. In the course of his evidence in chief he said he was in a remand centre at the time of giving evidence, and had used drugs. In cross-examination he admitted to a very long and very bad record for possession of drugs, fraud, stealing, receiving stolen goods and forgery. In re-examination he said, non-responsively, that Davis had repeatedly told him all three accused were not present at the time of the murder. The Court of Criminal Appeal upholds the trial judge's ruling. In the Court of Criminal Appeal, Miller J (Anderson J concurring) and Wheeler J agreed that the evidence was inadmissible to prove a prior inconsistent statement by Davis, because s 21 of the Evidence Act had not been complied with. There had not been any designation of the "particular occasion", despite Crown counsel having drawn attention to the need to do so. Miller J also held that the trial judge was correct in regarding the evidence as collateral. "At its highest, the evidence of Ross could only go to the question whether [Davis] had said [Coates and Nicholls] were or were not in the room, not whether as a fact they were." Miller J also said that the trial judge was right to reject the application of the bias exception to the collateral evidence rule for the reasons he gave. Miller J also rejected a contention, not put to the trial judge or pressed to this Court, that Davis's statements to be proved through Ross fell within a "penal interest" exception to the hearsay rule. Submissions of the appellants on the collateral evidence rule. In this Court, counsel for each of Coates and Nicholls submitted, first, that the "collateral evidence" rule did not apply; secondly, that if it did, the bias, interest or corruption exception applied; and, thirdly, that if the rule applied but the exception did not, the law should be changed and relaxed so as to place the evidence outside the rule. The submissions that the collateral evidence rule did not apply and that it should be changed tended to merge into each other. The submissions that it did not apply also tended to merge into whether the bias exception applied in this case, or the prior inconsistent statement exception applied in other cases. Counsel for the appellants submitted that the collateral evidence rule, resting on a distinction between matters of credit and facts in issue, was a rule of convenience, not principle, and was not a strict rule of law, but a guide to discretionary judicial regulation of the litigation process. They submitted that the rule was relaxed where credibility was inextricably linked with the principal issue in the case, and that that was so here: for the inconsistency between what Davis said in court and Ross's evidence of what Davis said out of court went to the core question of whether Coates and Nicholls were in the room when the murder was committed. Counsel also argued that if the collateral evidence rule would otherwise prevent the reception of Ross's evidence, it should be replaced by a rule prohibiting the admission of evidence relating solely to credit except where that evidence has substantial probative value. They also submitted that Ross's evidence was that Davis fabricated the very testimony which he had given in chief, and that it therefore fell outside the collateral evidence ban altogether. It is convenient to deal first with the second of the three points the appellants raised – whether the exception or qualification relating to bias, interest or corruption applied. On this point their arguments had force, though they failed to acknowledge a key difficulty. Did the bias exception apply? Potential bias on the part of witnesses is frequently pointed to in litigation, whether it is said to derive from a relationship of family or blood or business or employment or friendship, or from self-interest (as where a witness is a party or likely to be affected by the success or failure of a party). Often the source of potential bias is obvious or is revealed by the party calling the witness. Often, even though it is not obvious, it is conceded at once in answer to a single question in cross-examination, partly because it is honest to do so and partly because it is foolish not to. The present problem arises only where it is not obvious, not revealed by the party calling the witness, and not conceded by the witness in cross-examination. Wigmore explained that the exception related to three different "kinds of emotion constituting untrustworthy partiality", that is, bias, interest, and corruption.245 He drew a useful distinction between "bias", in the sense of "all varieties of hostility or prejudice against the opponent personally or of favor to the proponent personally"; "interest" in the sense of "the specific inclination which is apt to be produced by the relation between the witness and the cause at issue in the litigation"; and "corruption", in the sense of "the conscious false intent which is inferrible [sic] from giving or taking a bribe or from expressions of a general unscrupulousness for the case in hand"246. These three categories are related, and will often overlap. As Wigmore explained, in relation to evidence showing corruption, "the essential discrediting element is a willingness to obstruct the discovery of the truth by manufacturing or suppressing testimony"247. 245 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782, par 945 (emphasis in original). 246 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782, par 945 (emphasis in original). 247 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 803, par 956. Below they will be described as "bias" unless the context makes another course desirable. Ross's evidence revealed that Davis was prepared to lie on oath in order to ingratiate himself with the police, in the hope that they might influence his sentence. The trial judge and the Court of Criminal Appeal did not consider that that showed bias, because it showed no relationship (of hostility) between Davis on the one hand and Coates and Nicholls on the other. However, that was too narrow an approach to the exception248. The approach of the courts below perhaps reflects too limited a reading of some of the language used by Pollock CB in Attorney-General v Hitchcock249: "It is certainly allowable to ask a witness in what manner he stands affected towards the opposite party in the cause, and whether he does not stand in such a relation to that person as is likely to affect him, and prevent him from having an unprejudiced state of mind, and whether he has not used expressions importing that he would be revenged on some one, or that he would give such evidence as might dispose of the cause in one way or the other. If he denies that, you may give evidence as to what he has said." The word "relation" certainly includes bias cases resting on the existence of a particular, continuing relationship – for example, where the witness under challenge was not only the servant but also the "kept mistress" of the party calling her250. The word "relation" also includes cases resting on a looser relationship between the challenged witness and one party and involving hostility, for example where the witness threatened revenge against the employer 248 It is an approach which is not unique. Evidence that a witness offered to change her evidence in exchange for a bribe has been held not to constitute bias or corruption, only to show a previous inconsistent statement: R v Aldridge (1990) 20 NSWLR 737 at 745-746. 249 (1847) 1 Exch 91 at 100 [154 ER 38 at 42]. 250 Thomas v David (1836) 7 Car & P 350 at 351 [173 ER 156 at 157]. That case incidentally illustrates controversy over definition of the collateral evidence rule, for Coleridge J at 351 [157] said that the evidence was "material to the issue", not "collateral to the issue", and in Melhuish v Collier (1850) 15 QB 878 at 884 [117 ER 690 at 692] he said the principle was whether "the fact was one which the defendant might have proved in chief": sed quaere. by having him gaoled251, or the witness desired to punish a party for having frustrated a marriage arranged for the witness's sister252. The word also extends to cases resting on a looser relationship of goodwill between the witness and one party. But the exception is wider than that. It extends to all "matters which affect the motives, temper, and character of the witness … with reference to his feelings towards one party or the other"253. Thus, bias may be found in a wife's willingness falsely to accuse her husband of incest unless he gave her property254. Bias was found in a child complainant's motive to level a false charge against an accused, who was concerned about the influence of the complainant on his daughter255. Bias may be found in a reluctance to give evidence against an accused due to a fear of reprisals: "a statement to the effect that a person if required to give evidence will give false evidence out of a desire not to offend certain of the parties is a statement indicating partiality in relation to the parties or the cause, whether that partiality stems from friendship or fear"256. Bias was inferred from the attempt by a person claiming to be a victim of an abduction to procure a witness to give false evidence, because the brother of the supposed victim wanted to ensure that the accused was falsely convicted257. Bias may also be established where a witness has been coached by a person who is hostile to the party against whom the witness's evidence has been tendered258. 251 Yewin's Case, unreported, noted in Harris v Tippett (1811) 2 Camp 637 at 638-639 [170 ER 1277 at 1278]. See also R v Shaw (1888) 16 Cox CC 503 (witness seeking revenge due to quarrel); Hall v Marchant [1914] St R Qd 174 (witness wishing to "get even" with employer who had dismissed him without providing a reference); Smith v The Queen (1993) 9 WAR 99 (motive of ward to make false complaint against foster father because he expelled her from his house for taking drugs). 252 Bakopoulos v General Motors Holden's Ltd [1972] VR 732; affirmed Bakopoulos v General Motors Holdens Pty Ltd [1973] VR 190. 253 Attorney-General v Hitchcock (1847) 1 Exch 91 at 100 [154 ER 38 at 42] per Pollock CB. 254 R v Umanski [1961] VR 242 at 244. 255 R v Harrington [1998] 3 VR 531 at 539. 256 R v De Angelis (1979) 20 SASR 288 at 295 per King CJ, Jacobs and Legoe JJ agreeing. 257 Hudd v The Queen (1987) 75 ALR 143 at 146 and 149-150. 258 R v LSS [2000] 1 Qd R 546 at 554 [30]. Moreover, the exception is not limited to the relation between a challenged witness and persons who are, strictly speaking, parties. It can extend to cases where one witness offers a bribe to other witnesses. Thus, in Trial of William Viscount Stafford ("Lord Stafford's Case")259 the accused was charged with treason. A witness, Dugdale, gave evidence that the accused was present at a meeting where it was resolved to kill Charles II260. The accused indicated a desire to call one William Robinson to prove that Dugdale "hath endeavoured to persuade people to swear against me falsely, and offered them money for it"261. When Robinson was called, he said that Dugdale "told me he could furnish me with money, and put me in a way to get money, if I would come in as an evidence against my lord Stafford"262. Lord Stafford's Case was approved in Attorney-General v Hitchcock. Pollock CB said263: "In that case the evidence was to shew that the witness had offered a bribe in the particular case, and the object was to shew that he was so affected towards the party accused as to be willing to adopt any corrupt course in order to carry out his purpose." 259 (1680) 7 How St Tr 1293. 260 (1680) 7 How St Tr 1293 at 1342. 261 (1680) 7 How St Tr 1293 at 1400. 262 (1680) 7 How St Tr 1293 at 1401. To the same effect see Trial of Sir Miles Stapleton (1681) 8 How St Tr 501 at 518-519; Trial of Maha Rajah Nundocomar (1775) 20 How St Tr 923 at 1035-1036. 263 Attorney-General v Hitchcock (1847) 1 Exch 91 at 101 [154 ER 38 at 43]. 264 Attorney-General v Hitchcock (1847) 1 Exch 91 at 103 [154 ER 38 at 43]. In Harris v Tippett (1811) 2 Camp 637 [170 ER 1277] Lawrence J, at nisi prius, refused to permit evidence to be called contradicting a denial by a witness called by the defendant of having attempted to dissuade a witness called by the plaintiff from attending the trial. Harris v Tippett was not cited in Attorney-General v Hitchcock, and Lord Stafford's Case was not cited in Harris v Tippett. It is difficult to say whether the cases are inconsistent, since it is not clear in Harris v Tippett exactly what the defendant's witness said to the plaintiff's witness. Wigmore said that Harris v Tippett "has been universally treated as erroneous" (Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 969, par 1005, n 4) apparently because it confused character and bias (at 1018, par 1023 n 2). Harris v Tippett may be inconsistent with Melhuish v Collier (1850) 15 QB 878 at 881 [117 ER 690 at 691], (Footnote continues on next page) "[W]here the witness endeavoured to bribe another person to give evidence against Lord Stafford, that evidence was receivable, as having a tendency to shew that the man who came himself to give evidence against Lord Stafford, was embittered against him, and had endeavoured to persuade other people to give false evidence on the same side." Further relevant examples of the scope of the bias exception include Attorney-General v Hitchcock, in which the court considered that if the bribe allegedly offered by officers of the Crown in that case had been accepted, the exception would have applied265. The exception may operate where a witness is willing to withdraw allegations against persons being prosecuted if disciplinary proceedings against him are dropped266. A threat to make a false complaint against a person one dislikes is admissible267. Evidence of a witness's having solicited a bribe is admissible268. An offer by a witness for the prosecution to give favourable testimony for the defendant if the defendant's friends arrange for the dropping of a charge is admissible269. Where the defendant is sued for slanderously saying that the plaintiff had knowingly received stolen cattle from a witness for the defendant, who was convicted of stealing the cattle, an offer by that witness to swear that the plaintiff "was in with him in stealing the cattle" in order to obtain a pardon is admissible270. These last three instances, in particular, are very close to the present circumstances. where a witness called by the plaintiff was allowed to state in cross-examination that two other persons to be called as witnesses for the plaintiff "had endeavoured to tamper with her evidence" by offering her money to give particular evidence. It may also be inconsistent with United States authority, eg People v Alcalde 148 P 2d 627 at 630 (SC Cal in banc, 1944) where the Court said: "A witness who has testified to material matters may be cross-examined as to his attempt to bribe other witnesses and it may be shown by other witnesses that he offered bribes to obtain false testimony." 265 (1847) 1 Exch 91 at 106 [154 ER 38 at 44-45] per Rolfe B. 266 R v Denley (1970) Criminal Law Review 583. 267 R v Lawrence [2002] 2 Qd R 400 at 408-413 [22]-[39] per Thomas JA. 268 Jackson v Thomason (1861) 8 Jur NS 134; Alward v Oaks 65 NW 270 (SC Minn in banc, 1895). 269 Roberts v Commonwealth 20 SW 267 at 268 (CA Ky, 1892). 270 Barkly v Copeland 15 P 307 at 309 (SC Cal in banc, 1887). Here, the appellants wanted to call from Ross evidence of matters which could affect the motives, temper and character of Davis with respect to his feelings towards one party – the Crown. It led to an inference that Davis was eager to do the will of the Crown (as expressed to him by the police) even if it meant committing perjury, to the detriment of the appellants. Technically, then, Davis was not influenced by what Wigmore called "bias" (in the sense of hostility or prejudice against one party personally or of favour to the other personally271). Nor was it "interest" (the specific inclination apt to be produced by the relation between the witness and the cause at issue in the litigation272). Rather, it was what Wigmore described as "corruption" (the conscious false intent which is to be inferred from giving or taking a bribe or from expressions of a general unscrupulousness in relation to the case273). According to Ross's account of what Davis said, the police were not offering a bribe in the form of money, but something even more valuable – a measure of liberty. That offer could have been seen by the jury as a means of stimulating in Davis a willingness to obstruct the discovery of the truth by manufacturing false testimony274. It was therefore sufficient to bring Ross's evidence within the corruption exception to the collateral evidence rule. However, it does not follow that the tender of Ross's evidence should have been upheld. It failed to overcome a further barrier: no proper foundation for its tender had been laid by the appellants in their cross-examination of Davis. Laying the foundation. So far as Ross's evidence proved a prior inconsistent statement on the part of Davis, the appellants conceded that the trial judge was correct to reject it for failure to comply with the requirements of s 21 of the Evidence Act. There was no identification of place, time, or speaker, nor was there any precise specification of what Davis allegedly said. This is scarcely surprising in view of the extreme difficulty counsel had in specifying these things to the trial judge in the course of the argument about the admissibility of Ross's evidence on 11 September 1998, four weeks after Davis had left the witness box, and in view of counsel's reliance on the combination of a statement from Ross together with recent instructions derived from Ross. 271 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782, par 945. 272 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782, par 945. 273 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 782, par 945. 274 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 803, par 956. However, the appellants argued that since they were not relying on the prior inconsistent statement exception to the rule that Davis's answers to questions on collateral matters were final, but on the bias exception, their failure to be more specific in cross-examination was immaterial. They said that they only had to comply with the rule in Browne v Dunn275, and that they had done this by the questions put to Davis during cross-examination. It is in fact questionable whether they had, but let it be assumed that they had. One of the questions proposed by the House of Lords and considered by the judges of the King's Bench in The Queen's Case276 was whether: "[W]hen a witness in support of a prosecution has been examined in chief, and has not been asked in cross-examination as to any declarations made by him, or acts done by him, to procure persons corruptly to give evidence in support of the prosecution; it would be competent to the party accused, to examine witnesses in his defence, to prove such declarations or acts, without first calling back such witness examined in chief to be examined or cross-examined as to the fact, whether he ever made such declarations or did such acts?" Abbott CJ gave the unanimous answers of the judges as follows277: "The legitimate object of the proposed proof is to discredit the witness. Now the usual practice of the courts below, and a practice, to which we are not aware of any exception, is this; if it be intended to bring the credit of a witness into question by proof of any thing that he may have said or declared, touching the cause, the witness is first asked, upon cross-examination, whether or no he has said or declared, that which is intended to be proved. If the witness admits the words or declarations imputed to him, the proof on the other side becomes unnecessary; and the witness has an opportunity of giving such reason, explanation, or exculpation of his conduct, if any there may be, as the particular circumstances of the transaction may happen to furnish; and thus the whole matter is brought before the court at once, which, in our opinion, is the most convenient course. If the witness denies the words or declaration imputed to him, the adverse party has an opportunity, afterwards, of contending, that the matter of the speech or declaration is such, that he is not to be bound by the answer of the witness, but may contradict and 276 (1820) 2 Brod & B 284 at 311-312 [129 ER 976 at 987]. 277 (1820) 2 Brod & B 284 at 313 [129 ER 976 at 988]. falsify it; and, if it be found to be such, his proof in contradiction will be received at the proper season." He went on to highlight the danger that the witness might not be available to be recalled during the trial and the general need to prevent surprise. After drawing attention to the fact that the question related not only to alleged "declarations" but also to "acts", he then said278: "Now, such acts of corruption are ordinarily accomplished by words and speeches: an offer of money or other benefit derives its entire character from the purpose for which it is made, and this purpose is notified and explained by words; so that an enquiry into the act of corruption will usually be, both in form and effect, an enquiry as to the words spoken by the supposed corruptor; and words spoken for such a purpose do, in our opinion, fall within the same rule and principle, with regard to the course of proceeding in our courts, as words spoken for any other purpose; and we do not, therefore, perceive any solid distinction with regard to this point between the declarations and the acts mentioned in the questions proposed to us." It should be noted that Abbott CJ's language extended to all prior inconsistent statements, not just those relating to corruption. Though the terms of the question related to declarations made or acts done by the witness to encourage persons to give corrupt evidence on behalf of one party, there is no reason why the same principles would not apply to declarations and acts establishing that the witness was not the corrupting, but the corrupted, party. Nor is there any reason why they would not apply to declarations and acts demonstrating bias and interest as well as corruption. At common law, similar rules apply to the proof of prior inconsistent statements in general. Thus, in Angus v Smith279, Tindal CJ said: "before you can contradict a witness by shewing he has at some other time said something inconsistent with his present evidence, you must ask him as to the time, place, and person involved in the supposed contradiction. It is not enough to ask him the general question, whether he has ever said so and so, because it may frequently happen that, upon the general question, he may not remember having so said; whereas, when his attention is challenged to particular circumstances and occasions, he may recollect 278 (1820) 2 Brod & B 284 at 315 [129 ER 976 at 988]. 279 (1829) M & M 473 at 474 [173 ER 1228 at 1228]. and explain what he has formerly said. I think, as far as my memory serves, the rule was so laid down to this extent in The Queen's case." In Crowley v Page280, Parke B said of prior inconsistent statements that: "in order to lay a foundation for the admission of such contradictory statements, and to enable the witness to explain them, … the witness may be asked whether he ever said what is suggested to him, with the name of the person to whom or in whose presence he is supposed to have said it, or some other circumstance sufficient to designate the particular occasion." In Attorney-General v Hitchcock281 Alderson B said, in relation to questions both about prior inconsistent statements generally and about prior inconsistent statements showing bias, that though it was not "necessary" to question the witness about the matter in cross-examination, it was only "just and reasonable" to do so. However, in that case Pollock CB regarded prior questioning of the witness as not merely just and reasonable but necessary282, and Parke B said the same during argument283. Similarly, in Carpenter v Wall284 Patteson J said: "I like the broad rule, that, where you mean to give evidence of a witness's declarations for any purpose, you should ask him whether he ever used such expressions." In the United Kingdom, the common law rule for admitting prior inconsistent statements was preserved by s 23 of the Common Law Procedure Act 1854 (UK) and its re-enactment as s 4 of the Criminal Procedure Act 1865 (UK). The only purpose of s 23 was to clarify whether a statement could be proved against a witness who neither admitted nor denied making it: it adopted Parke B's view that it could where the circumstances of the statement were put to the witness, and the witness was asked whether he or she had made the 280 (1837) 7 C & P 789 at 791-792 [173 ER 344 at 345]. 281 (1847) 1 Exch 91 at 102 [154 ER 38 at 43]. 282 (1847) 1 Exch 91 at 100-101 [154 ER 38 at 42]. 283 (1847) 1 Exch 91 at 94 [154 ER 38 at 40]. 284 (1840) 11 Ad & El 803 at 804-805 [113 ER 619 at 620] (emphasis added). statement285. The modern Western Australian equivalent of s 23 of the Common Law Procedure Act and s 4 of the Criminal Procedure Act is s 21 of the Evidence Act. There is Victorian authority that in that State the common law in relation to prior inconsistent statements survives the enactment of equivalent legislation286. The same must be true of Western Australia. There is no reason to suppose that in Western Australia the wider common law rule stated in The Queen's Case, requiring the laying of the right foundation in cross-examination of challenged witnesses before calling evidence in rebuttal of their denials of bias, interest or corruption, has not survived too. No case has reversed it and no statute has repealed it. This wider common law rule has survived in the United States as well. Wigmore said the witness must be asked specifically whether he made a statement indicating bias287: "He must [be asked], as a matter of principle; for the same reasons of fairness that require a witness to be given an opportunity of denying or explaining away a supposed self-contradictory utterance … require him also to have a similar opportunity to deny or explain away a supposed utterance indicating bias." There has since been a strong, though not unanimous, line of United States authority to the same effect288: "[I]t is necessary, before the impeaching evidence or the evidence by which it is attempted to show bias or prejudice can be introduced, that the 285 See n 280 above. See United Kingdom, Common Law Commission, Second Report of Her Majesty's Commissioners for Inquiring into the Process, Practice, and System of Pleading in the Supreme Courts of Common Law (1853) at 18-19; Kerr, The Common Law Procedure Act 1854 With Practical Notes (1854) at lxvi and 19; Day, The Common Law Procedure Acts, 2nd ed (1863) at 205. 286 R v Umanski [1961] VR 242 at 244; cf Narkle v The Queen (2001) 23 WAR 468 at 477 [38] per Murray J, Kennedy and Pidgeon JJ concurring. 287 Wigmore on Evidence, Chadbourn rev (1970), vol 3A at 801, par 953. 288 State v Harmon 152 P 2d 314 at 318-319 (SC Wash in banc, 1944). See also Wright v State 201 SW 1107 at 1111 (SC Ark in banc, 1918); Smith v United States 283 F 2d 16 (CA 6th Cir, 1960); State v Shaw 378 P 2d 487 at 489 (SC Ariz in banc, 1963); United States v Marzano 537 F 2d 257 at 265 (CA 7th Circ, 1976); United States v Harvey 547 F 2d 720 at 722 (CA 2nd Cir, 1976); Annot, 87 ALR 2d 407; McCormick on Evidence, 4th ed (1992) at 134-135, par 39. attention of the witness be called to the contradictory statements, the time when and the place where they were made, and the circumstances surrounding the making." It is obviously desirable that what is put to the impeached witness corresponds to what is elicited from the impeaching witness289. There are strong reasons of principle and practice underpinning this common law rule. First, it ensures fairness towards the challenged witness in giving that witness an opportunity to explain what is put by the cross-examiner. Secondly, it reduces surprise on the part of the counsel calling that witness and enables that counsel to prepare to deal with the rebutting evidence to be called by the other side. Thirdly, it may also save time: if the challenged witness accepts the detail of the conversations or acts constituting or demonstrating the bias, interest or corruption alleged, it becomes unnecessary (and depending on the circumstances inadmissible) for the party who made the challenge to call evidence supporting it. The more detail that is put by the cross-examiner to the challenged witness, the more likely it is that the memory of that witness will be stimulated, and the less likely will be the necessity of calling rebutting evidence. Finally, a denial by a witness of a very detailed allegation followed by rebutting proof of its correctness can be very damaging to the credibility of the witness. The wider common law rule was not complied with in this case. The reasons are identical to the reasons why the appellants on their own concession failed to meet the requirements of s 21 of the Evidence Act. The cross- examinations of Davis set out above did not mention Ross. They did not mention the specific place where Davis allegedly spoke to him. They did not mention the specific time when Davis allegedly spoke to him. They were hazy about the content of what Davis allegedly said to Ross. They gave Davis no opportunity to give any "reason, explanation or exculpation of his conduct … as the particular circumstances [might] happen to furnish"290. It would have been erroneous to allow Ross to give evidence of the alleged conversation, when Davis had not been confronted with the evidence that Ross was going to give. Accordingly, the trial judge was correct not to apply the corruption exception. Hearsay? Had counsel complied with the requirement to put the circumstances of corruption to Davis, an issue would have remained whether any hearsay difficulty attended the reception of Ross's evidence. That issue received no attention from the parties in the courts below. It is not necessary for the 289 People v Payton 218 NE 2d 518 at 522 (App Ct Ill, 1966). 290 The Queen's Case (1820) 2 Brod & B 284 at 313 [129 ER 976 at 988]. decision of this appeal to consider it, and we do not think that it is desirable to do so in the circumstances of this case. It would require examination of five difficult questions. First, is the evidence within the hearsay ban? Secondly, if it is, should an exception be recognised? In particular, thirdly, should a new common law exception to the hearsay rule be recognised in circumstances falling outside the legislation derived from the Australian Law Reform Commission's Reports on Evidence, is the exception in question outside those circumstances and, if it is within them, is Ross's evidence within the legislation291? Fourthly, given that, by hypothesis, the issue is a collateral one, what consequences would flow from receiving hearsay evidence pursuant to that exception, and, in particular, how far can the party opposing tender call contrary evidence? Fifthly, where as here that party is the Crown, is the contrary evidence to be called in the Crown case in chief, or is the Crown to be permitted, exceptionally, to call it in reply? Not only are these questions difficult, but the last four are quite novel. The first two questions received only brief and belated attention in argument in this Court. The last three questions received no attention in argument at all. Was the evidence outside the collateral evidence rule? The arguments of the appellants that Ross's evidence was admissible even if it did not fall within the bias exception must be rejected. When the matter was most recently considered by this Court, a majority reaffirmed the received law as to the finality of answers in cross-examination on collateral matters292. There are real difficulties in defining the outer limits of the ban on evidence in rebuttal on "collateral" and "credit" questions. Opinions differ about how far it is legitimate to approach the problem emphasising the importance of flexibility against rigidity, convenience against principle, and case management rather than rigid rules, though the prosecution in this case was prepared to accept the legitimacy of such an approach up to a point. But whatever the difficulties of definition and approach, the law as it stands does not permit any relaxation of the traditional rules merely on the ground that the particular witness's credibility is inextricably linked with the principal issue in the case. If that is illustrated by nothing else, it is illustrated by the analysis in the cases involving evidence rebutting a challenged witness's denials of matters suggesting bias, interest or corruption. That analysis accepts that the key question is whether the witness's state of mind is such as to cause the witness to lie about the principal factual issues. 291 This third group of questions is suggested in the reasons of Kirby J at [204], although the reasons at [205]-[206] do not answer them. 292 Goldsmith v Sandilands (2002) 190 ALR 370 at 372 [3] per Gleeson CJ, 379-381 [37]-[41] per McHugh J, 393-394 [82]-[83] per Hayne J, 397 [96] per Callinan J. The appellants relied on statements to the effect that "where the disputed issue is a sexual one between two persons in private the difference between questions going to credit and questions going to the issue is reduced to vanishing point"293. The appellants sought to widen those statements beyond cases involving sexual offences in private to all cases of strongly disputed credibility. But that line of reasoning has been criticised even in sexual offence cases. It has been accepted in cases where the only significant issue is consent, but not where the issue is whether the acts took place; it has been argued that if it were to apply where the issue is whether the acts took place, it would apply to any offence of which there is no extrinsic evidence and no disinterested witness294. It has also been said that to use it "as a basis for departing from the general rule of finality would leave too wide a gap in that important rule"295. Wherever the merits lie in this debate, here the disputed offence was not a sexual one; neither consent nor the actus reus was in issue; the case concerned the behaviour of not two, but five, persons; that behaviour did not take place on a single occasion in private, but had a background in various places going back more than a day; there was extrinsic evidence, particularly there was confessional evidence. There is no analogy between particular problems raised which may be raised by sexual crimes in private and the problems raised by the present circumstances. independent scientific evidence; and The other authorities on which the appellants relied were either cases in which the controverted statements clearly went to the issue296 or cases falling within an exception to the finality rule297. 293 R v Funderburk [1990] 1 WLR 587 at 597; [1990] 2 All ER 482 at 491 (unlawful sexual intercourse without witnesses). See also Chandu Nagrecha [1997] 2 Cr App R 401 at 406 (indecent assault without witnesses); R v Lawrence [2002] 2 Qd R 400 at 405 [13] per McPherson JA, 415-416 [48]-[51] per White J (rape with no witnesses). 294 Bannister v The Queen (1993) 10 WAR 484 at 494. 295 R v LSS [2000] 1 Qd R 546 at 555 [31] per Thomas JA. See also Narkle v The Queen (2001) 23 WAR 468 at 480-481 [49] per Murray J; Kennedy and Pidgeon JJ agreeing. Chandu Nagrecha [1997] 2 Cr App R 401 was criticised by McHugh J in Goldsmith v Sandilands (2002) 190 ALR 370 at 381 [41] n 43. 296 Watson v Little (1860) 5 H & N 472 [157 ER 1266] (in which the issue was whether the plaintiff was legitimate, the evidence of the witness which was challenged was that he was, and the contradictory evidence was an affiliation order); Miller v White (1889) 16 SCR 445 at 453-454 (in which the issue was (Footnote continues on next page) Should the collateral evidence rule be changed? This is not a case that presents a suitable opportunity to change the received law, let alone any reason to do so. In particular, it has not been shown that the applicable law created any injustice in this case. Assuming that the evidence of Ross – who had an extensive criminal record, and had failed to give clear and consistent information about what he would say to counsel acting for the appellants – might have helped the appellants, there were available to them two perfectly serviceable avenues of admissibility for Ross's evidence, namely the avenue afforded by s 21 of the Evidence Act and the avenue afforded by the exception relating to bias, interest or corruption. Those avenues are governed by clear rules that are easy to comply with. They could have been employed in this case if a proper foundation for them had been laid in the cross-examination of Davis. The appellants argued for the establishment of a much vaguer avenue of admissibility based on the discretionary reception of evidence with substantial probative value. While there are discretionary powers in the law of Western Australia to exclude otherwise admissible evidence the probative value of which is outweighed by its prejudicial effect, there has been no demonstration of the desirability of recognising a discretionary power to receive otherwise inadmissible evidence, or to admit evidence after balancing its weight against the risk of time being wasted by the pursuit of marginally relevant issues. Here the appellants invoked such a power against the prosecution, but if it existed it could be exercised in favour of the prosecution as well as against it. Nothing in the circumstances of, or arguments in, the present case suggests that it does or should exist. which firm a witness was an agent for and his denials in cross-examination that he acted as agent for one could be contradicted by business records of the second). 297 For example, Natta v Canham (1991) 32 FCR 282 (a proposal by the plaintiff to the rebutting witness to stage a motor accident and divide the damages received as a result of it: this was evidence of corruption). See also cases relating to the illegitimate coaching of witnesses such as R v R (D) [1996] 2 SCR 291 at 312-313; R v LSS [2000] 1 Qd R 546 at 554-555 [30]-[32]. The appellants also placed considerable reliance on R v Phillips (1936) 26 Cr App R 17, wherein are recorded some ex tempore pronouncements of Hewart LCJ, Talbot and Singleton JJ. All that the court held was that the proviso could not be applied; its other pronouncements have no authority, because the Crown did not present argument, save on the proviso, to the contrary of that accepted by the Court of Criminal Appeal in upholding the appeal. Unrecorded admissions The factual background. On 7 October 1998, about six weeks after the victim's death, the police interviewed Davis in Brisbane, and soon thereafter arrested and began interviewing Nicholls, Coates and Hoy in Perth. Information obtained from Davis was passed to the officers conducting interviews in Perth. The questioning of Coates, who was then aged 35, and no stranger to police interrogation, commenced at 3.24pm. The interrogation was videotaped. The interviewing officers were Detective Senior Constable Hawley and Detective Hutchinson. The questioning of Coates concluded at 8.46pm, but there were three breaks. One break was from 3.58-4.02pm, during which non-videotaped questioning took place. The second break was from 5.06-5.51pm and again, non- videotaped questioning took place. The third break was from 6.19-7.38pm: during it, unlike the first two, no questioning took place, since the police officers used the time to liaise with colleagues who had been questioning Davis, Nicholls and Hoy, or who were otherwise engaged in investigating the victim's murder, to see whether further questioning of Coates should take place. In the course of the second break, according to the evidence of police officers, Coates made two sets of admissions, which were tendered at the trial. One set of admissions was allegedly made to Hawley and Hutchinson. Another set of admissions was allegedly made to two more senior officers, Detective Sergeant Kays and Detective Senior Sergeant Byleveld. Coates denied making the admissions. None of the police officers took notes of the conversations during the second break. Hawley said that notes were made the next morning when he and Hutchinson discussed what had been said the night before. But he and Hutchinson said the notes were later lost or mislaid. Hawley and Hutchinson prepared their witness statements for trial together without the benefit of notes. Kays and Byleveld made no notes at any time. Kays based his witness statement, made 21 months later, solely on his recollection. Byleveld prepared his statement around the same time, after speaking with Kays. The trial judge was asked to rule twice on what was said during the second break. On 2 August 2000, before the taking of evidence at the trial began, he upheld the admissibility of evidence from Hawley and Hutchinson about the first set of alleged admissions made during the second break. On 21 August 2000, during the trial, he upheld the admissibility of testimony from Kays and Byleveld about the second set of admissions made during the same break. The legislation. Section 570D of the Criminal Code (WA) provided: In this section – 'admission' means an admission made by a suspect to a member of the Police Force, whether the admission is by spoken words or by acts or otherwise; 'serious offence' means an indictable offence of such a nature that, if a person over the age of 18 years is charged with it, it can not be dealt with summarily and in the case of a person under the age of 18 years includes any indictable offence for which the person has been detained. (2) On the trial of an accused person for a serious offence, evidence of any admission by the accused person shall not be admissible unless – the evidence is a videotape on which is a recording of the admission; or the prosecution proves, on the balance of probabilities, that there is a reasonable excuse for there not being a recording on videotape of the admission; or the court is satisfied that there are exceptional circumstances which, in the interests of justice, justify the admission of the evidence. Subsection (2) does not apply to an admission by an accused person made before there were reasonable grounds to suspect that he or she had committed the offence. For the purposes of subsection (2), 'reasonable excuse' includes the following - The admission was made when it was not practicable to videotape it. Equipment to videotape the interview could not be obtained while it was reasonable to detain the accused person. The accused person did not consent to the interview being videotaped. The malfunctioned." equipment used to videotape the interview It was common ground that the "reasonable excuses" referred to in s 570D(4)(a), (b) and (d) did not apply: it was practicable to videotape what was said in the second break, the equipment was not merely obtainable but actually there, and it had not malfunctioned. The first ruling. Before the trial began, counsel for Coates objected to the evidence of Hawley and Hutchinson about what was said during the non- videotaped second break. The argument took place on 2 August 2000 – not on a voir dire, but pursuant to s 611A of the Criminal Code. Among the materials available to the trial judge before making his first ruling were: a document which was called a "deposition" but in truth was a signed witness statement, dated 18 November 1998 (about six weeks after the interview with Coates), made by Hawley from the notes which were later lost; an equivalent document from Hutchinson in similar terms; and a typed version of what had been recorded on the videotaping equipment. The videotape itself had not at that stage been played to the trial judge. Before the first break at 3.58pm, Coates made no admissions. He was asked whether Hoy had dealt in drugs, and said she had at one stage. Shortly after saying that, at 3.58pm, Coates requested that the interview be "paused" while he went to the toilet. He was asked to repeat his request, and then the questioning and videotaping ceased. But Coates did not go to the toilet. According to the statements of Hawley and Hutchinson, and in due course their oral evidence, which Coates did not challenge, Coates said he did not want to go to the toilet; he wanted to talk "off tape". He asked if the tapes were off. Hawley said "What do you want?" Coates said he did not want to talk while videotaping was taking place about Hoy's criminal activities relating to drugs unconnected with the murder. Hawley indicated that he was not obliged to talk about those activities on video, but that the police officers were not supposed to have breaks of the kind taking place, and that if that was all he wanted to say, the videotaping should recommence. This it did at 4.02pm. No objection was taken to the police officers' evidence of the conversations during that first break between 3.58 and Just before 5.06pm, the following is recorded on the transcript of the videotape: "Q. Do you want to go to the toilet? Q. Do you want to go to the toilet again, do you? A. Sure. Q. All right, I will suspend the interview again. It's 6 minutes past 5 and I will just turn the tapes off." Again, Coates did not go to the toilet. Videotaping did not recommence until The trial judge said that, according to the police evidence, the conversation that followed was initiated by Coates and not by them. He stated that "a break in the process of recording the interview was contrived" – though he did not say by whom – and that "the statements [ie the relevant admissions] were initiated and made by the accused at that time". According to the police officers, in the course of the second non- videotaped discussion between Coates, Hawley and Hutchinson, Coates asked what his options were. He was told that he could cooperate and tell the truth, or stick to his current story and take his chances. He was warned that the matter was serious as it involved the death of a Crown witness. He asked: "What can I do?" He then asked: "How much will I get?" He expressed a fear of a lengthy gaol term and said he would do himself harm. He asked: "[H]ow can I get myself out of this situation?" He said: "I know exactly what happened and it's not how you think. It's nowhere near it. It's 100 miles away from it." He then referred to Nicholls and Davis. On being asked whether he would tell the police "what really happened", he said: "What's in it for me?" Hawley said that if Coates was talking about deals, he was not "the boss", but could get "the boss". Coates asked him to do so Hawley and Hutchinson then left the room to get Kays and Byleveld, who were more senior officers. The trial judge found that, while the circumstances were not exceptional within the meaning of s 570D(2)(c), there was a reasonable excuse for there not being a recording on videotape of what Coates said in the second break in the presence of Hawley and Hutchinson. He did not consider that the circumstances fell within s 570D(4)(c), because there was no "direct reference to non-consent to these statements being made whilst the videotape was running". But he saw the circumstances as "allied" to those in s 570D(4)(c), and held that, "[b]y analogy", they constituted a reasonable excuse. The second ruling. By the time the trial judge made the second ruling on 21 August 2000, relating to the evidence of Kays and Byleveld, he had seen the whole of the videotaped part of the discussions between Coates, Hawley and Hutchinson, and had heard the whole of the oral evidence in the trial to that point, including the evidence of Hawley and Hutchinson on 18 August 2000. He had, of course, not yet heard Coates's subsequent denials in evidence before the jury of the admissions attributed to him by the police; but those denials did not go to the issue of admissibility of the officers' evidence under s 570D, and Coates did not seek to give any evidence relevant to admissibility under that section on a voir dire. According to Kays and Byleveld, Coates said that he did not want to go to gaol, that he would harm himself there, that he would do a deal to be charged with conspiracy to murder, and that he would give evidence against Davis and Nicholls in exchange for that deal. Byleveld told Coates that the police "don't do deals" and that if he wished to discuss the matter further he could do so with Hawley and Hutchinson with the videotaping equipment on. In his second ruling, the trial judge said: "Of course he did consent to the interview being videotaped and there was a videotaped interview, but I think it is clearly open, when one views that process, to conclude that the break which occurred in the interview was at the request of Mr Coates, and that was a toilet break. For myself, and I suppose it is my view which is of some importance in this context when I am ruling about whether the material should be excluded from evidence, there is no reasonable proposition that it was a break which was effectively manufactured by the interviewing police officers." Later he said: "[I]t is clear that the process was commenced by Mr Coates in my opinion and that he was seeking to speak off the camera, if that phrase is appropriate, to the police officers and to discuss with them, and the short discussion which follows, is of this content, what options he had to deal with the interview process when as is clear or anticipated it was resumed in an official way on the camera and was recorded." In short, the trial judge found that Coates had withdrawn his consent to the videotaping of the discussion. The trial judge held that there was no point at which it would have been appropriate for Hawley and Hutchinson to tell Coates that it was impossible to talk to him further without videotaping the conversation: "he was having the exchange with the police officers which he wished to have and which he initiated." The trial judge pointed out that when Kays and Byleveld entered the room and Coates broached the question of doing a deal, they said no deals could be done, and that if he wished to talk further he should do so on video. He concluded by saying that the requirements of s 570D had been satisfied. His reasoning differed from that of his first ruling in that, in his first ruling, he did not find that s 570D(4)(c) had been satisfied but that the circumstances were "allied" or analogical. In his second ruling, he treated the discussion between 5.06 and 5.51pm as a "separate interview process", and found that Coates had not consented to the videotaping of it. What videotaping did Coates consent to? The primary avenue of admissibility for the officers' evidence is s 570D(4)(c), which concentrates attention on whether Coates "did not consent to the interview being videotaped". If, at 5.06pm, Coates had been prepared to go on being subjected to videotaped questioning, and if the break then was triggered by the police as a means of adopting more aggressive tactics without being videotaped in doing so, it would not be possible to conclude that s 570D(4)(c) had been satisfied, and very difficult to conclude that there was, in any sense, a "reasonable excuse" for the lack of videotaping. In dealing with this issue, it is necessary to examine in more detail some aspects of the course of events until the end of the second break. At 3.24pm, when the interview began, Coates was told that he was in one of the video interview rooms at the premises, and he acknowledged that. He agreed that the police officers had "brought [him] back here for questioning". He was asked if he was "happy" about that and he agreed he was. He was told that the police wished to ask him questions and record the answers on a camera behind a screen and microphones on a table in the room. After being warned that he was not obliged to say anything unless he wished to, he was told that what he did say would be recorded by the camera and the microphones and could later be used in evidence in court. He said he understood that. Although the police officers did not specifically ask for Coates's consent to their discussions being videotaped, in substance he gave consent to that course by answering the questions without protest. No contention to the contrary was advanced in this Court. At 3.58pm, Coates withdrew his consent to the discussion being videotaped, and the police officers complied. But from 4.02pm, he indicated consent to Hawley's decision to resume the videotaping of the discussion by not protesting at it. At 5.06pm, the videotaping ceased again. Its resumption at 5.51pm was consented to by Coates. That is to be inferred from the fact that when Hawley then told him that the video interview had recommenced, cautioned him, and said that whatever he said was being recorded and could be given in evidence, Coates did not protest and proceeded to answer the questions asked. The crucial issue is whether Coates withdrew his consent to videotaping at 5.06pm or whether the police officers of their own volition decided to cease videotaping, and, to use the trial judge's language, "effectively manufactured" the break. The trial judge's second ruling, unlike the first, was made after the videotape had been played. This second ruling was therefore demeanour-based in the sense that the trial judge detected nothing in the demeanour or conduct of Coates, Hawley or Hutchinson which suggested that Hawley and Hutchinson had "effectively manufactured" the break. This Court was not asked to play the videotape with a view to assessing the demeanour of the participants for itself. In these circumstances great weight must attach to the trial judge's assessment. However, that assessment is supported by five other matters. The trial judge did not explicitly refer to all of them, but he must have been conscious of them. The first relates to the approach taken by counsel for Coates. In the course of argument before the second ruling, counsel for Coates adopted a somewhat different position on how the question of Coates going to the toilet arose at 5.06pm from that which she had adopted before the first ruling on 2 August 2000. On 2 August 2000 she said: "[I]t was not Mr Coates's request to go to the toilet; it was the police suggesting to him that he might want to go to the toilet. … 'Do you want to go to the toilet?' and then he's asked again, 'Do you want to go to the toilet again, do you?' 'Sure', he says." The trial judge then said: "You people have no doubt viewed the video. I haven't but I would have thought that question was put in response to some motion or sign of discomfort." Counsel said: "No, not that I saw on the video, your Honour." But on 21 August 2000, counsel for Coates said: "There has been no evidence that the fact of the interview being off camera was at Coates' instigation. What we have got is him said to be requesting to go to the toilet, although it's still unclear to me – and the transcript has the police making the request, not Mr Coates and it was unclear on watching the video exactly who said something about going to the toilet, but that doesn't and can't equate to, 'I want to have a conversation off camera with you'." It can be seen that on 21 August 2000, counsel was less dogmatic about whether the police initiated the question. That may be because on 18 August, Hawley had given evidence in chief that Coates had asked to go to the toilet. In the course of cross-examination, counsel for Coates said: "Now, you say that – how do you say the conversation with Mr Coates commenced during that second break? ––– He asked to go to the toilet again. Now, on viewing that video to me it was unclear who was doing the asking. Mr Coates seems to have his [head] turned to one side at the time. Are you certain that it was he who asked to go to the toilet or did somebody ask him if he wanted to go to the toilet? ––– No, he certainly asked me. Okay. All right. So if I ––– all right." Counsel did not challenge Hawley further or return to the subject. While in this Court counsel for Coates (who had not appeared at the trial) relied on the transcript of interview, the impressions of counsel for Coates at the trial, which qualify the reliability of the transcript in the light of the videotape, must be given considerable weight. So must the fact that Hawley was not shaken on the point, and the fact that Hutchinson was not questioned on it at all. The submission of counsel for Coates on 21 August 2000 quoted above suggests a new position – that even if Coates initiated the break, that in no way equated to the expression of a desire to have a non-videotaped discussion. Taken in isolation, that point might have force, but it has none when considered with the rest of the circumstances. The second matter which supports the trial judge's assessment is that the line of questioning which the police officers adopted between 4.02 and 5.06pm must have been extremely disturbing for Coates. They put forward a great deal of unpalatable information, he made various admissions in response, and his manner of answering questions as recorded in the transcript revealed increasing alarm about the course of events. This was in sharp contrast with what had happened before 3.58pm. Before 3.58pm, the police had done nothing more than establish various non-incriminating background facts, or facts that, though potentially incriminating (for example, Coates's knowledge of the victim and the fact that Coates had been charged with offences against her), were facts that could easily have been proved without Coates's cooperation. Coates did not admit anything which might have suggested that he knew something about the victim's death or that he had any association with the building where she died. The only aspect of the questioning which apparently disturbed him was questioning about whether Hoy had been selling drugs, and it was that which led him to request a break from videotaping. But from 4.02pm onwards, matters worsened for Coates. In that period he initially propounded an alibi for the night of the victim's murder: he said he had been with Hoy, had returned to their residence at Bassendean, become very drunk, and had stayed there until lunchtime the following day. He denied any involvement in the death of the victim. The questioning then took the following course. First, the police officers elicited an admission that a tattoo on his arm had been done by "Adam Flick", whom Coates knew through Hoy. The police asked Coates if he knew "Flick" as Adam John Davis, but he said that name did not ring a bell. Coates did admit to knowledge that "Flick" was supposed to owe the Jokers (a bikie gang) a lot of money, and that he had gone to Queensland. Coates also accepted that "Flick" knew that Coates and Hoy had been charged with crimes against the victim before her death. The police then informed Coates that Davis had made a statement to police in Queensland indicating knowledge of the victim's death; Coates's shocked responses revealed, contrary to what he had just told the police, that he knew that "Flick" and Davis were the same man and he subsequently confirmed this. The police also informed him that Nicholls and Hoy were in the building at that moment being interviewed about the victim's death. The police then took Coates through various telephone calls made on his mobile telephone on the night of 22-23 August 1998. Some were made to Nicholls from Rivervale (where Coates could not have been if he had been at home drinking in Bassendean, as he had earlier told the police). Some were made to Hoy. The police drew to Coates's attention the fact that the Great Eastern Motor Lodge, where the victim's body was found, was in Rivervale. Coates agreed that the phone records made it look as though he had been in Rivervale making phone calls to Nicholls and Hoy at times from 9.44pm to 5.20am – a period when he was supposedly drinking at home in Bassendean. He could offer no likely explanation for this, and agreed that logic suggested that he was in Rivervale. The police officers then informed Coates that they had been told that at about 4.00am he and Nicholls had been let into a room at the Lodge and that the night watchman had seen Nicholls's vehicle drive past the Lodge quite slowly a couple of times, once with its lights off, with two males inside. The men had observed the night watchman watching them and had then driven off before returning later after the watchman had left. The watchman, however, recorded the registration number. The police officers also said that two men were seen getting out of Nicholls's car, one holding a little box. Coates denied killing the victim, or arranging at the Bassendean house for her killing, or arranging with Hoy for Davis to pick the victim up and take her to the motel room to receive a lethal injection of drugs, or giving Davis drugs, or leaving a syringe with heroin in it near the rear wheel of a vehicle in the Lodge car park, or being at the Lodge298. It was at that point that the topic of Coates going to the toilet again came up. Coates had previous experience of police investigations. He had been in gaol in relation to earlier convictions. He had been in gaol in relation to the 298 In his testimony, he admitted that that at least was untrue, and that he had driven to the Lodge with Nicholls. charges against him and Hoy of deprivation of the victim's liberty and occasioning her actual bodily harm, and was on bail. The inference was strongly available that it was Coates who wanted the videotaping to cease while he endeavoured to extricate himself from the difficulties which the police questioning revealed he was in. Indeed, it seems improbable that the police officers would have wished to interrupt the questioning in view of the pressure it was placing on Coates and the videotaped admissions he had earlier made. The third matter supporting the trial judge's assessment is that Coates had already employed the excuse of wanting to go to the toilet at 3.58pm, when he unquestionably expressed that wish but did not act on it. His real reason for withdrawing consent to videotaping at 3.58pm was that he did not want the police to ask further questions about Hoy's drug dealing. An inference was therefore clearly open that the real reason why the videotaping was suspended at 5.06pm was that Coates had withdrawn his consent to its continuing for another reason – that its increasingly damaging character made it desirable to negotiate a deal without being videotaped. There is a fourth matter, to which the trial judge did explicitly refer, which supports his conclusions. That is what Coates said in the period from 5.06- 5.51pm. He said he wanted to speak about the options he might have if he implicated others, and that is what he then proceeded to do when the interview resumed. There is a fifth matter. Coates's state of mind at 5.06pm may be inferred from the fact that after 5.51pm, his attempt to do a deal with the police officers having failed, he began making even more damaging admissions. He had earlier asserted that he knew nothing about the victim's death, and that he was drunk or asleep on the night of Saturday, 22 August 1998. When the police officers told him that Davis made a statement that day to the police in Queensland, his answer was: "What? That he knows about it? … How could he know anything about her death?" Contrary to that posture, he now said that the victim's death had been spoken about by Nicholls and "Flick"/Davis before he went to bed. He said for the first time that "Flick"/Davis was at the Bassendean house that night. He said that "Flick"/Davis, who was "pretty well sober", explained how easy it would be for him to "get" the victim, whom he described as "a street walker", and kill her with a drug overdose, and that Nicholls said it would be better if "she went away". The implication of others by Coates at this point, in circumstances where he had denied all knowledge of the murder up until 5.06pm, makes it more credible that he spoke to the police officers between 5.06 and 5.51pm of doing a deal by implicating others, and more credible that it was he who initiated the discussion and withdrew his consent to the videotaping. Comparable legislation. In Kelly v The Queen299, the majority described the background to the enactment of provisions like s 570D, and highlighted the variety in the responses of Australian legislatures to the problem of non-recorded admissions by accused persons in the respect relevant to that case. Similar variety exists in relation to the present problem: the legislatures have introduced different exceptions to the general condition precedent to admissibility that there be audiotaping or videotaping or both. While several legislatures have adopted the test of "reasonable excuse" (or its equivalent) to permit the admission of non- videotaped admissions, only three have adopted an equivalent to s 570D(4)(c), which specifies the accused's non-consent to videotaping as a "reasonable excuse" for failure to videotape. Section 570D was introduced in 1992300. In 1995, identical language was employed in s 8(3)(c) of the Criminal Law (Detention and Interrogation) Act 1995 (Tas). That provision now appears as s 85A(2)(c) of the Evidence Act 2001 (Tas) which provides that a "reasonable explanation" includes instances where: "the defendant did not consent to an audio visual record being made of the interview"301. In New South Wales, a "reasonable excuse" in s 281(4) of the Criminal Procedure Act 1986 (NSW) includes (in par (b)) "the refusal of a person being questioned to have the questioning electronically recorded". Section 281 was introduced in 1995302. In South Australia, the problem has been more specifically dealt with. An investigating officer in certain circumstances must make a videotaping of an "interview" with a "suspect" if it is "reasonably practicable" to do so, pursuant to s 74D(1)(a) of the Summary Offences Act 1953 (SA), which was also introduced in 1995303. In deciding whether it is reasonably practicable, one of the matters which must be considered is "a refusal of the interviewee to allow the interview to be recorded on videotape …": s 74D(3)(c). Section 74E(1)(a) provides that in 299 (2004) 78 ALJR 538 at 545-546 [31]-[36]; 205 ALR 274 at 282-283. 300 By the Acts Amendment (Jurisdiction and Criminal Procedure) Act 1992 (WA), 301 As amended by the Justice (Miscellaneous Amendments) Act 2003 (Tas), s 3 and Sch 1. 302 By the Evidence (Consequential and Other Provisions) Act 1995 (NSW), Sch 1 [3] into the Crimes Act 1900 (NSW) as s 424A. 303 By the Statutes Amendment (Recording of Interviews) Act 1995 (SA), s 5. proceedings for an indictable offence, evidence of an interview between an investigating officer and the defendant is inadmissible unless the investigating officer complied with the relevant Part of the Summary Offences Act. Section 74C provides: "In this Part – 'interview' includes – a conversation; or part of a conversation; or a series of conversations …". An examination of the legislation in other jurisdictions shows only that nowhere has any legislature adopted an absolute stand against the reception of non-videotaped admissions, and that different legislatures have made different selections of language and, to some extent, different policy choices. None of the comparable legislation in other jurisdictions throws any particular light on the correct construction of s 570D as it applies to the present problem. The application of s 570D: outline. In the present case, there was a "reasonable excuse" for there not being a recording on videotape of the admissions made in the period 5.06-5.51pm on one of three bases. First, s 570D(4)(c) was satisfied in that the discussion in that period comprised a separate interview, and Coates did not consent to that interview being videotaped. Secondly, and in the alternative, s 570D(4)(c) was nevertheless satisfied on the basis that there was a single interview from 3.24-6.19pm, and while Coates consented to parts of that interview being videotaped, he did not consent to it – that is, the whole of it – being videotaped. Thirdly, if s 570D(4)(c) did not apply, the circumstances fall within the inclusive aspect of the definition of "reasonable excuse" in s 570D(4). More than one "interview". The expression "interview" was not usefully defined in the Criminal Code304. But on any view, the discussion between the police officers and Coates between 7.38 and 8.46pm was a separate interview. Just before 6.19pm, the police indicated that they had no further questions and concluded their dealings with Coates at that time by asking him whether he had any complaints, and whether inducements had been held out or threats made, by saying how he could get a copy of the interview, by telling him he would be 304 Section 570(1) provided only that "interview" meant "interview with a suspect by a member of the Police Force". charged, and by taking two oral swabs. Over an hour then passed in which there was no questioning. When it commenced again, at 7.38pm, the officer stated that he wanted to ask Coates "a few more questions" to "clear up things that were said during your first interview"; Coates agreed to this, and was cautioned again before the questioning began. What of the period between 3.24 and 6.19pm? In that time the police conducted either more than one interview, or only one interview. If they conducted more than one interview, the relevant number must have been six – first, a videotaped interview with Hawley and Hutchinson from 3.24-3.58pm; secondly, a non-videotaped interview from 3.58-4.02pm; thirdly, a videotaped interview from 4.02-5.06pm; fourthly, one non-videotaped interview beginning at 5.06pm; fifthly, another with Kays and Byleveld ending at 5.51pm; and, sixthly, a videotaped interview with Hawley and Hutchinson from 5.51-6.19pm. Each of the six stretches of questioning had a different character. The first and last opened with warnings about the right to silence, about the fact that videotaping was in progress, and about the fact that the videotaped answers could be given in evidence. The third, fourth and fifth did not open in that way, but it would not have been inappropriate if the police had decided that they should305. The second and fifth closed with statements by the police about how questioning, if it was to take place, had to be videotaped. Coates consented to the first, third and last interviews being videotaped, but not, on the trial judge's findings, the second, fourth and fifth. For these reasons, there were sufficient divisions between the six periods to conclude that there was more than one interview, and that there were in fact six. On that view, the questioning which took place between 5.06 and 5.51pm, comprised two successive interviews in which admissions were made. There was a reasonable excuse for there not being a recording on videotape of the admissions made during each of those two interviews because Coates did not consent to them being videotaped. No consent to whole interviews being recorded. Alternatively, it may be that there was only one interview running from 3.24 until 6.19pm. That conclusion would derive some support from the way the police spoke at the time. They spoke just before 6.19pm as if one interview "conducted today" or "this afternoon" was coming to an end, and spoke at 7.38pm of one interview having finished an hour earlier and another beginning at that time. A difficulty in this conclusion is that the substitution of two new questioners suggests that a separate interview took place at least in the latter part of the 5.06-5.51pm period. 305 Indeed, counsel for Coates contended that the lack of a caution at 5.06pm was a ground for rejection of the non-videotaped admissions, considered as part of "a separate interview process", in the judge's discretion: the trial judge disagreed, and no challenge has been made to that exercise of discretion. If there was only one interview between 3.24 and 6.19pm, there was a reasonable excuse for there not being a recording on videotape of those parts of it which contained the admissions. That excuse was that Coates did not consent to the second, fourth or fifth periods of questioning (during which they were made) being videotaped. He consented to the bulk of the interview being videotaped, but not to three particular parts of it. He cannot be said to have consented to "the interview" being videotaped when he did not consent to the whole of it being videotaped. Circumstances fell within inclusive element of definition. If the questioning between 3.24 and 6.19pm is not to be regarded as falling within s 570D(4)(c) in either of the ways just discussed, the circumstances nonetheless fall within the inclusive element of the definition of "reasonable excuse" in s 570D(4). On the trial judge's findings, the police officers deferred to Coates's wishes on two occasions. First, at 3.58pm, Coates withdrew his consent to videotaping in order to prevent questions about Hoy's drug dealing; the police officers said they would not pursue that issue, and they did not pursue it after Coates gave his consent to videotaping resuming. Secondly, at 5.06pm, he withdrew his consent to videotaping in order to seek to secure a favourable deal; the police officers acceded to his withdrawal of consent to videotaping and, at least for a time, listened to him as he sought to secure a deal. The legislation does contemplate that non-videotaped admissions by suspects can be admissible in subsequent proceedings – not only in the "exceptional circumstances" referred to in s 570D(2)(c) but also in the circumstances described in pars (a)-(d) of s 570D(4). Since the definition of "reasonable excuse" in s 570D(4) is not exhaustive, commencing as it does with the word "includes", there must be other circumstances in which admissions made in non-videotaped interviews can be tendered in evidence because there is a reasonable excuse for the failure to videotape them. In this case, a reasonable excuse can be found in the fact that Coates did not want the relevant part of the discussion to be videotaped. The legislation does not confront the police with a choice between conducting videotaped sessions of the questioning of suspects and conducting no questioning at all if the suspect does not consent to videotaping. It recognises that there may be questioning to which the suspect consents, so long as there is no videotaping. It would be anomalous if s 570D were to be construed as permitting reception of an admission from an accused person who, although refusing absolutely any videotaping, was prepared to engage in extensive discussions with the police, while forbidding the reception of an admission from an accused person who consented to extensive videotaping of discussions with the police, but refused to permit a short part of them, in which admissions were made, to be videotaped. The period between 5.06 and 5.51pm was not a short period, but it was considerably less than half of the period during which the discussion proceeded. If Coates had refused his consent to videotaping at the outset but indicated a willingness to answer questions, there would have been nothing unlawful in the police proving the answers to those questions, notwithstanding the absence of videotaping. Coates's factual arguments. Two groups of arguments were advanced by Coates against the correctness of the trial judge's rulings: factual and constructional. So far as the former are concerned, counsel for Coates pointed out to this Court that Hawley admitted that, with Coates's permission, it would have been perfectly possible to leave the videotaping equipment on; that the police officers had not said in evidence that Coates refused permission for the discussion between 5.06 and 5.51pm to be videotaped; that Hawley said in evidence that he "encouraged" Coates to "speak off video" and "deliberately chose to continue [the] interview off camera"; that this was "'deliberately intended' to avoid videotaping requirements"; and that Hawley admitted that he had not followed "proper or careful practice" by encouraging Coates to speak while the discussion was not being videotaped. Counsel for Coates also criticised the Court of Criminal Appeal for saying "[a]ccording to the evidence of the officers [Coates] was anxious to speak off tape about the options that he might have if he was to implicate others" and for saying that it was "the initiation by Coates himself of the off-video interview which is a critical factor".306 Counsel also submitted that no police officer gave evidence that he believed Coates was anxious to speak off tape, and that "neither Kays nor Byleveld gave any suggestion whatever that there was any basis on which they could have possibly believed that Coates would not go on videotape". Before dealing with the detail of these factual arguments, it must be remembered that before the second ruling was made, the trial judge heard the evidence of the police officers Hawley and Hutchinson, had not heard any contrary evidence from Coates, and accepted the evidence of the officers. No application was made to set aside either the first or the second ruling after Coates did give evidence. No basis was put forward for impugning the testimonial honesty of the police officers involved in this case, and no attempt was made to essay the difficult task of demonstrating error in the trial judge's acceptance of their evidence. In that state of affairs, the trial judge's finding that the break was requested by Coates and not manufactured by Hawley and Hutchinson must be accepted. 306 Hoy v The Queen [2002] WASCA 275 at [146] per Miller J. To some degree, the factual submissions of Coates are unsupported by the evidence. Thus, what Hawley actually said in cross-examination was: "In fact you actually encouraged him to speak off video by saying, 'Come on then, tell us your side of the story' didn't you? ––– Yes, I suppose you could say that." So you deliberately chose to continue this interview off camera for a short time, didn't you? ––– Yes. And you would agree with me that that is not proper or careful practice? – –– In hindsight, yes. That what you should have been doing is really as soon as the conversation started was, 'Come on, we really should be having this on video.' Right? ––– Yes." It is particularly to be noted that Hawley did not say any words to the effect that the conduct of the police was "'deliberately intended' to avoid videotaping requirements". Further, it was correct of the Court of Criminal Appeal to say that Coates initiated the off-video discussion because the trial judge found that the break "was at the request of Mr Coates". It was also correct of the Court of Criminal Appeal to say that the officers' evidence demonstrated Coates's anxiety to speak. The officers proved indeed that as soon as the videotaping ceased the questioned suddenly became the questioner; that his opening words were: "What are my options?", "What am I looking at?", "What can I do?" and "How much will I get?"; that he followed them up with references to how he would not survive gaol, and by the statement "How can I get myself out of this situation?" Only then did Hawley say "Come on then, tell us your side of the story". The officers also proved that Coates said "What's in it for me?", and asked to see Kays and Byleveld with a view to striking a deal. Some of the factual arguments are beside the point; they do not demonstrate error in the trial judge's conclusion that Coates initiated the decision to cease videotaping at 5.06pm and did not assent to its resumption until 5.51pm. It therefore does not matter that the police officers did not say that Coates refused his consent to videotaping, nor does it matter that the police officers did not specifically ask him about his consent. Contrary to what Coates suggested, there was evidence that the police officers believed Coates was anxious to speak off tape and there was evidence that they believed that Coates was not consenting. So far as the evidence of Hawley and Hutchinson is concerned, Coates's submission is irreconcilable with the trial judge's finding based on their evidence that the break was requested by Coates and was not manufactured by Hawley and Hutchinson. So far as the evidence of Kays and Byleveld is concerned, the submission is irreconcilable with the fact that Byleveld told Coates that no further discussion could take place unless it was videotaped; with the fact that when Kays left the video room he told Hawley and Hutchinson to "get back in there and put him back on video if he wanted to"; and with the fact that Byleveld believed that "Mr Coates had ceased the video". These items of evidence imply a belief in Kays and Byleveld that it was the wish of Coates that the discussion at that time not be videotaped. Nor is the admissibility of Coates's admissions affected by whether Hawley allowed the discussion to continue off-camera for a short time without pressing Coates for a resumption of videotaping, or whether Hawley had not conformed to proper or careful practice. Counsel for Coates argued that the first ruling could not be defended because the trial judge made it in reliance only on the unsworn witness statements of Hawley and Hutchinson, and they were incapable of constituting sufficient proof of "a reasonable excuse" on the balance of probabilities. That was not a point taken by counsel for Coates before the trial judge when he was considering the arguments before he made his first ruling. Counsel for Coates at that stage acquiesced in the procedure, and did not require a voir dire in which sworn evidence might be taken. The parties appear to have assumed that the evidence the officers would eventually give would conform to what their statements said. Certainly there was no prejudice to Coates, because it turned out to be the case that the officers' evidence, when it came to be given, corresponded with their witness statements. And the second ruling, which confirmed the first ruling, though by somewhat different reasoning, was given with the benefit of the sworn evidence of Hawley and Hutchinson. Coates's legal arguments. Coates rightly argued that s 570D and similar enactments recognise that miscarriages of justice may occur where the prosecution relies on a confession or admission that has not been mechanically recorded. To that may be added the desire of legislatures to minimise time- wasting in forensic combats between accused persons and police officers over whether or not a confession had been made. However, these general appeals to the purposes of the legislation do not point decisively, as a matter of construction, to what particular technique is revealed in the language of the statute as having been chosen by the Western Australian legislature. Counsel for Coates submitted that it would frustrate the purposes of s 570D if a "reasonable excuse" could be found in the mere circumstance that police officers gave evidence that they "did not initiate" a non-videotaped discussion, but believed that the accused was "anxious" to speak out and had initiated the discussion, chose to continue the interview, and then, when videotaping resumed, chose not to have any admissions confirmed. Coates submitted that s 570D should not be construed so as to permit easy evasion by allowing dishonest police officers to get off-camera admissions into evidence by giving perjured testimony that they had thought the suspect no longer wanted the interview recorded. The risk of police officers lying in order to bring s 570D(4)(c) into operation is a risk which could only be overcome by a complete ban on the reception of non-videotaped admissions. Despite s 570D, it would be possible for police officers to tender admissions by mendaciously testifying that the accused was not "a suspect", or that it was "not practicable" to videotape the admissions, or that the equipment could not be obtained in time, or that it malfunctioned. Parliament struck a compromise in enacting the section: it relied on a belief that police officers would in general try to carry out their investigative and testimonial duties honestly. On that assumption, compliance with s 570D would result in a good many admissions being reliably recorded even though difficulties may arise in some marginal cases, and even though there might remain a possible risk of perjury. It is not possible to seek to overcome the possible risk of perjury by construing s 570D to mean what the words do not say. Counsel for Coates advanced a more modest argument: that the beneficial purpose of s 570D could be frustrated by police officers simply giving evidence that they believed a suspect did not want admissions recorded and therefore ceasing to videotape the interview. That is not so, for a mere belief of that kind is insufficient to prove that the suspect did not consent. It does not matter that the police officers did not ask Coates to repeat on- camera the things he had said off-camera. It might have been thought aggressive and even deceitful of them to have done so in those particular circumstances, in view of the fact that he had made it plain that he did not want to talk about certain matters on-camera. It would nullify the regime which permits a suspect to consent or not to consent, if police officers were required to accede to a suspect's wish to speak off-camera, but then to repeat on-camera everything that had been said. Further, though most legislatures have made it a condition of admissibility of non-videotaped admissions that their making be confirmed in a recorded form307, that course has not been adopted in Western Australia. Some of the statutes adopting the former course pre-date the introduction of s 570D in 307 Crimes Act 1914 (Cth), s 23V(1)(b); Criminal Procedure Act 1986 (NSW), s 281(2)(a); Crimes Act 1958 (Vic), s 464H(1)(c) and (e); Summary Offences Act 1953 (SA), s 74D(1)(c); Evidence Act 2001 (Tas), s 85A(1)(b); Crimes Act 1900 (ACT), s 187(3) (applying the Commonwealth legislation in the ACT); Police Administration Act (NT), s 142(1)(a). 1992308. That suggests that the Western Australian legislature deliberately chose not to adopt the course adopted elsewhere. And it militates against Coates's submission that, on the true construction of s 570D, a failure to get the admissions made off-camera repeated on-camera means that there is no "reasonable excuse". Counsel for Coates suggested that nothing in the Second Reading Speech about the Bill containing what became s 570D casts light on its construction. It is true that there is nothing specific about the construction of s 570D(4). But the Attorney-General, after describing the success of a trial scheme for videotaping the interviews of suspects and the advantages of installing appropriate equipment, referred to McKinney v The Queen309. He then said310: "The Bill will ensure that in serious cases an accused's confession will be inadmissible unless it has been videotaped. Exceptions to this rule will be permitted, subject to the court's discretion, to receive evidence of admissions which have not been videotaped, if this is in the interests of justice." The exceptions are s 570D(2)(b) read with sub-s (4), and s 570D(2)(c). The only reference to the "interests of justice" appears in s 570D(2)(c). Yet the Attorney- General's language indicated that he regarded the "reasonable excuse" exception in s 570D(2)(b) as advancing the interests of justice also. A construction of s 570D(4) that would exclude the admissions made between 5.06 and 5.51pm would not serve the interests of justice. Counsel for Coates appeared to submit that the "reasonable excuse" in s 570D(2)(b) both had to exist and had to be the reason why there was no videotaping. In effect, it was submitted that even if Coates did not consent to the videotaping, the real reason why the police questioned him without continuing the videotaping was to serve their own ends, not to conform to his wish to speak "off-camera". That submission is irreconcilable with the trial judge's finding that the break was requested by Coates and not manufactured by Hawley and Hutchinson, and with the evidence discussed above demonstrating the belief of the police officers that Coates would not go on videotape. 308 The Victorian legislation dates from 1988 and the Commonwealth legislation from 309 (1991) 171 CLR 468. 310 Western Australia, Legislative Assembly, Parliamentary Debates (Hansard), 4 June 1992 at 3356. Counsel for Coates also submitted that s 570D(2)(b) required proof of a "reasonable excuse for there not being a recording on videotape of the admission" and s 570D(4)(c) required proof of a lack of consent by the suspect to "the interview being videotaped" – not the part of the interview containing the admission. In short, he submitted that the prosecution had to prove a lack of consent to any interview at all. The contrast between "admission" in s 570D(2)(b) and s 570D(4)(a), and "interview" in s 570D(4)(b)-(d) is curious. However, if sound, this submission would have absurd results. It would mean that if the suspect refused consent to any part of the discussion being videotaped, but proceeded with it and made ten admissions, they could be proved against him, but if he agreed to the discussion being videotaped, save for isolated moments during which he made the same ten admissions, they could not be proved against him. Counsel for Coates also submitted that the Listening Devices Act 1978 (WA)311 applied to the questioning of Coates, and that this meant that the police could not have had a reasonable excuse for failing to videotape any part of the questioning. Section 4(1) of the Act prohibits the use of any "listening device" to record a "private conversation" by a person who is not a party to that conversation; it also prohibits a person (whether a party to the conversation or not) from communicating or publishing "the substance or meaning" of a private conversation that has been recorded in that way312. However, s 4(2) provides that "it is not an offence" for a party to a private conversation to record and publish it if the publication is "no more than is reasonably necessary in the public interest or in the course of his duty or for the protection of his lawful interests". Counsel argued that either the questioning of Coates was not a "private conversation", or that, if it was, s 4(2) applied. Either way, it would have been lawful to videotape the admissions, and the existence of the Listening Devices Act did not create a reasonable excuse for not doing so, since Coates's consent was not required. Even if the questioning of Coates during the relevant period was not a "private conversation", or, if it was, even if the exception in s 4(2) could be held 311 The Listening Devices Act 1978 (WA) was repealed and replaced by the Surveillance Devices Act 1998 (WA), which came into force on 22 November 312 Section 3 relevantly provided: "'private conversation' means any conversation carried on in such circumstances as may reasonably indicate that the parties to the conversation desire it to be confined to those parties, but does not include a conversation made in any circumstances in which the parties to the conversation ought reasonably to expect that the conversation may be overheard." to apply, that would simply mean that any recording of the non-videotaped admissions by the officers, or the subsequent publication of that recording, would not constitute an offence. The Listening Devices Act imposes no obligation to record conversations. There is no explicit link between it and s 570D of the Criminal Code. Whether or not the Listening Devices Act did not render it unlawful to videotape the admissions, it casts no light on the correct construction of s 570D. For all these reasons, no error has been demonstrated in the reception by the trial judge of the admissions made by Coates that were not videotaped. Coates submitted that the trial judge should have given the jury a direction of the kind described in McKinney v The Queen313: "[T]he jury should be informed that it is comparatively more difficult for an accused person held in police custody without access to legal advice or other means of corroboration to have evidence available to support a challenge to police evidence of confessional statements than it is for such police evidence to be fabricated, and, accordingly, it is necessary that they be instructed … that they should give careful consideration as to the dangers involved in convicting an accused person in circumstances where the only (or substantially the only) basis for finding that guilt has been established beyond reasonable doubt is a confessional statement allegedly made whilst in police custody, the making of which is not reliably corroborated. Within the context of this warning it will ordinarily be necessary to emphasize the need for careful scrutiny of the evidence and to direct attention to the fact that police witnesses are often practised witnesses and it is not an easy matter to determine whether a practised witness is telling the truth. And, of course, the trial judge's duty to ensure that the defence case is fairly and accurately put will require that, within the same context, attention be drawn to those matters which bring the reliability of the confessional evidence into question." The trial judge directed the jury as follows on the non-videotaped admissions. He reminded the jury that the relevant discussion had lasted three quarters of an hour. He said that that was a period of time which counsel for Coates: 313 (1991) 171 CLR 468 at 476 per Mason CJ, Deane, Gaudron and McHugh JJ. "particularly invites your attention to as saying it's far too long a break to be accommodated by the sort of discussion which police officers say occurred and the events which police officers say happened during that period." He directed the jurors that they would want to give that "some consideration". He then said: "You will make your own judgment who asks for [the break]. It's asked for apparently as a toilet break and then it occurs." He then summarised the evidence of the four police officers and the evidence of Coates, and said that the competing versions had to be measured carefully against each other. He pointed out that the police officers had not kept any notes made at the time and had testified without any aid to recollection. He then said, in a passage to which counsel for Coates directed specific criticism: "A question that might arise is whether you think that [Coates's] evidence may be right and the officers might be mistaken about what occurred, but you might find that a very difficult proposition and the question might well be, the simple question, who is telling the truth and who is committing perjury in this court in relation to what occurred at that time?" He then said that the real question was whether they accepted the evidence of the police officers, that it was not necessary for them to believe Coates, and that it sufficed if they thought his evidence "may be true". He said that on the evidence of the police officers, the jury might think that Coates had made "implied admissions of guilt", including conscious dishonesty on his part. He continued: "[I]t's perfectly clear that if you took that to be a lying process, if I can describe it in that way, to sum up the nature of the process, alone on that basis you could not convict Coates of any offence. Its real significance would be the extent to which his behaviour in that way is so revealing of a consciousness of guilt as to provide support for the truth and accuracy of Davis's evidence when he implicates Coates. It remains the case, I think, that you keep coming back to Davis and the need to rely upon him if you are to establish guilt and make decisions about guilt in this context as well as in relation to other accused persons." Two criticisms were advanced by Coates. The first was that what he called a "McKinney direction" should have been given and was not given. The second was that the passage in which the trial judge referred to perjury was sufficiently flawed to justify the allowing of the appeal. The first criticism fails. According to the majority in McKinney v The Queen, the direction called for should be given where two conditions are satisfied. One is that the confession is "the only (or substantially the only) basis for finding that guilt has been established beyond reasonable doubt"314. The second is that the making of the confession is not reliably corroborated. If the passage quoted above from McKinney v The Queen were to be treated as a statute, or even as a canonical statement of the common law, and construed with precision, it would not apply here, because the evidence of Hawley about the admissions he heard was corroborated by Hutchinson, and vice versa; and the evidence of Kays as to the admissions he heard was corroborated by Byleveld, and vice versa. However, it is not desirable to construe the passage as if it were a statute. Other passages in the reasons for judgment of the majority reveal that the Court was troubled about the risk of collaboration by police officers315. In these circumstances, the word "corroborated" should perhaps not necessarily be given its normal meaning. But the other condition, that the confession be "the only (or substantially the only) basis" for finding guilt cannot be explained away or read down. Counsel for Coates submitted that it was only "an example given in that case". That is incorrect. The condition was not satisfied here. In the case of Coates, the evidence against him included that of Davis – a witness whose background, behaviour and position left him open to be disbelieved, certainly, but whose evidence was available to be accepted. The evidence against Coates also included admissions made by him in the videotaped parts of the questioning, not only in the form of lies but also in the form of knowledge of the expressed desire of Coates and Nicholls to kill the victim. Coates had a motive to kill the victim – to silence the only eye witness against him and Hoy in pending criminal proceedings. He expressed anger at the victim, and feared that her evidence could lead to him having to serve three or four years' imprisonment. He had an opportunity, demonstrated by telephone records and by admissions, to kill the victim: he was near the scene of the murder at the time it took place. Davis's evidence about what happened was confirmed by medical and forensic evidence, even though it did not directly implicate Coates. While explanations were advanced in the course of the trial in order to nullify the effect of these categories of evidence, they were capable of being accepted by the jury, which meant that neither the non-videotaped admissions nor the evidence of Davis stood alone. Further, the trial judge twice pointed out that, in isolation, the non- videotaped admissions did not form a basis on which Coates could be convicted. 314 (1991) 171 CLR 468 at 476. 315 (1991) 171 CLR 468 at 476-477. That was stronger than the type of direction described in McKinney v The Queen. That type of direction, while centring on the "dangers involved in convicting", assumes that once the dangers have been properly considered it is open to the jury to convict on the admissions. But the direction that the trial judge here gave was that the jury could not convict on the admissions alone. To hold that the kind of direction now called for by Coates was mandatory would involve a very substantial change in the law. Nothing in the reasoning in McKinney v The Queen or in the arguments advanced by Coates suggests that that change should be made. The fundamental obligations of a judge instructing a jury are well known. The trial judge must decide what are the real issues in the case, and then tell the jury, in the light of the law, what those issues are316. There may now be a question whether the warning described in McKinney v The Queen is now appropriate at all. At the time it was decided, only one Australian legislature had attempted to deal with the problems to which the Court in McKinney v The Queen was directing its attention. Now that all Australian legislatures have devised solutions in their own differing ways, it is not clear that the direction described in McKinney v The Queen, in its precise terms, continues to have the same work to do. A competing consideration is that while the dangers that troubled the majority in McKinney v The Queen have generally been reduced by legislation, so far as they remain in particular cases, a warning is still called for. However, the question need not be decided in this case, for the reasons already given. Where there is a real issue about whether evidence of non-videotaped admissions should be accepted, the trial judge may find it appropriate to draw attention to the particular difficulties that may affect acceptance of police evidence about non-videotaped admissions, even if it is not substantially the only evidence against the accused and even if it is corroborated. Whatever duty there was to warn in this case was amply carried out by the trial judge. He pointed to the key problems in accepting the testimony of the police officers – the lack of notes (as counsel for Coates had requested) and the time difficulty. He reminded the jury of counsel's criticisms along those lines. He also spoke of the need for care. He directed them as to the burden and standard of proof on the issue in a 316 Alford v Magee (1952) 85 CLR 437 at 466; Melbourne v The Queen (1999) 198 CLR 1 at 52-53 [143]; RPS v The Queen (2000) 199 CLR 620 at 637 [41]-[42]; Zoneff v The Queen (2000) 200 CLR 234 at 256-257 [55]-[56]; Azzopardi v The Queen (2001) 205 CLR 50 at 69 [49]; KRM v The Queen (2001) 206 CLR 221 at 259 [114]; Doggett v The Queen (2001) 208 CLR 343 at 373 [115]. manner which was not complained about. And he directed them that it would not be possible to convict on the non-videotaped evidence alone. These directions reflected the issues that had arisen in the case and gave the jury sufficient guidance about their resolution. The other criticism made concerned the trial judge's references to perjury. Reliance was placed on a statement in McKinney v The Queen317 that a jury should never be directed in terms which suggest that it is necessary to decide whether police officers have conspired to permit perjury. But the trial judge did not suggest that it was necessary to decide that in this case. He said that it "might well be" a question, not that it was. One reason why he chose that language may be that counsel for Coates did not cross-examine the police officers to suggest that they had been engaged in a conspiracy to commit perjury, and had endeavoured to prevent that possibility arising as an issue. There is a further reason for rejecting both criticisms of the trial judge's directions in relation to the non-videotaped admissions. Before the summing up, counsel were asked if they wished to propose any particular directions. Counsel for Coates did not propose any directions on this subject beyond two suggestions, both of which the trial judge took up – one about the police officers' want of notes, and another about summarising the competing bodies of evidence. After the summing up, counsel spent a considerable time asking for further directions. None were sought on this topic. There is no requirement in Western Australia that leave must be obtained to take a point on appeal which was not taken at trial. However, the things that happened before, and the things that did not happen after the summing up, suggest that counsel for Coates was of the view that the summing up had not unfairly disadvantaged Coates. Because of her familiarity with the context and atmosphere of the trial, she was much better placed than anyone else (and in particular much better placed than her successors or this Court) to judge that question. The fact that no redirection was sought correcting the initial directions suggests that the initial directions were not in need of correction. It may also suggest that counsel elected not to seek a more favourable direction because to do so might have had the disadvantage of highlighting and reminding the jury of the admissions made. The failure to complain is particularly significant in relation to the second of Coates's criticisms, because another way of putting that criticism, if it were sound, is that it reversed the burden of proof. The fact that counsel did not complain about what, if the criticism were sound, would be a very fundamental matter, suggests that it is not sound. 317 (1991) 171 CLR 468 at 477. Orders Both appeals should be dismissed.

HIGH COURT OF AUSTRALIA APPLICANT AND THE QUEEN RESPONDENT King v The Queen [2003] HCA 42 6 August 2003 ORDER 1. Special leave to appeal granted. 2. Appeal dismissed. On appeal from the Supreme Court of Western Australia Representation: J A Sutherland for the applicant (instructed by McDonald & Sutherland) S E Stone with C C Porter for the respondent (instructed by Director of Public Prosecutions (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS King v The Queen Criminal law – Burglary – Offence of committing an offence in the place of another person when in that place without that other person's consent – Criminal Code (WA), s 401(2) – Onus of proof – Onus on prosecution to prove beyond reasonable doubt absence of consent under s 401(2) – Where offence alleged to be committed was breach of restraining order – Where restraining order prohibited entry onto premises – Statutory provision for defence to offence of breach of restraining order if defendant proves on balance of probabilities existence of consent to be on premises – Whether provision relevant – Whether Court of Appeal erred in dismissing appeal from trial judge's jury direction that onus was on prosecution throughout to negative consent. Criminal Code (WA), s 401(2). Restraining Orders Act 1997 (WA), ss 61, 62. GLEESON CJ. This is an application for special leave to appeal against a decision of the Court of Criminal Appeal of Western Australia. Following a trial in the District Court, the appellant was convicted of an offence against s 401(2) of the Criminal Code (WA) ("the Code") (described by Wheeler J in the Court of Criminal Appeal as "aggravated burglary and committing an offence (breach of restraining order)") and also of an offence of deprivation of liberty contrary to s 333 of the Code. It is the first that is presently relevant. The issue to be determined arises out of the compound nature of the offence as charged, and the interrelationship of its elements. The facts The prosecution case, accepted by the jury, was as follows. The applicant and the complainant, who were husband and wife, had separated. The applicant behaved aggressively towards the complainant, and on a number of occasions threatened to kill her. She obtained a restraining order. The terms of the order will be referred to below. In November 1998, the complainant and her children went to a women's refuge. Later, in mid-November, they moved into a house in Forrestfield without revealing their whereabouts to the applicant. At about 6.30 am on 21 November 1998 the applicant, having obtained the address from another source, went to the Forrestfield house. The complainant, before opening the door, asked who was there. The applicant said he was a neighbour. When the complainant opened the door, the applicant pushed his way in and knocked the complainant to the ground. He assaulted the complainant and held her captive for several hours. She finally escaped and rang the police. The applicant was arrested. When arrested, the applicant said that the complainant had invited him to come to the house to fix her car. However, there was evidence of a later telephone conversation in which the applicant told another person that he had obtained his wife's address from a third party. The applicant, who was unrepresented for most of the trial, gave no evidence. It is convenient to mention, for the purpose of putting it to one side, what Wheeler J correctly identified as a red herring. In an interview with the police, the applicant said he had been advised, before 21 November 1998, that, although the restraining order prevented him from doing certain things, including approaching his wife, it would not be a breach of the order if he did those things with her consent. This led the trial judge to give directions to the jury about honest and reasonable mistake. The point seems to have been taken up at the request of the prosecution, speculating as to possible defences that might be raised by the applicant in address. As Wheeler J said, having regard to the evidence, including the two competing versions of how the applicant came to enter the complainant's premises on 21 November 1998, the subject was irrelevant. The applicant told the police that he had been invited to the premises by his wife for the purpose of repairing her car. The complainant denied she had invited the applicant to visit her. She said that when the applicant came to her door he pretended to be someone else. When she opened the door he forced his way in. On either version, there was no room for anything that might have involved ambiguity, or that could have given rise to any mistaken belief on the applicant's part. On the complainant's version, the applicant was obviously not there with her consent. On his version, he was there with her consent and at her invitation. If the applicant had given evidence, it was only by telling a new story, inconsistent with what he had told the police, that any issue of honest and reasonable mistake could have arisen. The restraining order The restraining order, which was in force on the date of the alleged offence, was in the following terms: "Save as provided for in an order of the Family Court of Australia or the Family Court of Western Australia, The [applicant] shall not: be in possession of a firearm/firearms licence or obtain a firearms licence, commit or attempt to commit a violent personal offence, as defined in the Restraining Orders Act 1997, against the person protected, communicate or attempt to communicate by whatever means with the person protected by this order, enter upon any premises where the person protected lives or works or be within 100 metres of the nearest external boundary of such premises, approach within 100 metres of the person protected, cause or attempt to cause damage to the property of the person protected, behave in an intimidatory or offensive manner towards the person protected, behave in a manner that is likely to lead to a breach of the peace, cause or allow any other person to engage in conduct of the type referred to in the preceding paragraphs of this order." On the complainant's evidence, the conduct of the applicant contravened a number of the terms of that order. However, as the trial was conducted, and as the prosecution case was left to the jury, the relevant term was that which prohibited the applicant from entering upon any premises where the complainant lived. That term overlapped to some extent with the term that followed. The trial judge directed the jury on the issue of consent. On that matter, he said the prosecution carried the onus of proof from beginning to end. He reminded them that the defence case was that the applicant was there at his wife's invitation and with her consent. His directions on onus of proof meant that it was for the prosecution to satisfy the jury, beyond reasonable doubt, of the falsity of that case. The charge A breach of a violence restraining order is an offence against s 61(1) of the Restraining Orders Act 1997 (WA). It carries a maximum penalty of imprisonment for 18 months or a fine of $6,000. Proceedings for breach are dealt with in a Children's Court or a court of petty sessions (s 61(3)). Section 62 provides that, subject to a presently irrelevant qualification, it is a defence to a charge of breaching a restraining order for the person who is bound by the order to satisfy the court that the person acted with the consent of the person protected by the order. Thus, The applicant was not charged with a contravention of s 61(1). No doubt the prosecuting authorities took the view that such a charge would not fully reflect the seriousness of his conduct. Indeed, the penalty that was ultimately imposed on him was substantially in excess of the maximum penalty provided by the Restraining Orders Act. The applicant was charged under s 401(2)(a) of the Code. That section provides that a person who commits an offence in the place of another person, when in that place without that other person's consent, is guilty of a crime. The maximum penalty depends upon whether the offence is committed in circumstances of aggravation. The indictment charged that the applicant, being in the place of the complainant without her consent, committed the offence of breach of a violence restraining order. It also alleged that the offence was committed in circumstances of aggravation, but that is presently immaterial. the crime alleged ("the punishable crime") was a contravention of s 401 of the Code, the contravention consisting of committing an offence ("the subsidiary offence") in the place of another person, when in that place without that other person's consent. To use a non-statutory expression, the punishable crime was a crime of home invasion involving the commission of a subsidiary offence. On the facts alleged by the complainant, there were a number of possible subsidiary offences that could have been identified. An obvious example is assault. The subsidiary offence chosen by the prosecution was breach of a restraining order. Once again, on the facts alleged by the complainant, a number of possible breaches of the restraining order could have been identified. As the case was conducted, and left to the jury, the breach was entering upon premises where the protected person lived. The alleged conduct which gave rise to the subsidiary offence (entering upon the complainant's premises in breach of a restraining order) was substantially the same as the conduct which constituted an element of the punishable crime (being in the place of another person without that other person's consent). In the circumstances of this case, the possible difference between entering upon and being in premises was immaterial. The trial judge's directions The trial judge in his summing-up identified the "central issue" as being whether the applicant "was ... in [the complainant's] place without her consent". On that issue, he said, the prosecution carried the onus of proof. In the course of explaining the elements of the punishable crime, the trial judge dealt with the subsidiary offence very briefly. He did so after having told the jury that the prosecution, in order to prove the punishable crime, had to establish that the applicant was in the complainant's place without her consent. He went on: "[N]ow, the violence restraining order is exhibit 4 and the position is that it's clear and unequivocal in its terms and there's no issue but that Mr King was in the place of his wife in breach of that violence restraining order." In context, having regard to what he had said immediately before, he clearly meant that there was no separate and independent issue of breach of the restraining order once the prosecution established absence of consent. His directions meant that, if the prosecution failed to establish absence of consent, the case must fail, but if the prosecution established absence of consent there was no separate issue as to breach of the restraining order. The trial judge made no mention of s 62 of the Restraining Orders Act, or of any defence to a charge of breach of a restraining order provided by that section. The decision of the Court of Criminal Appeal Wheeler J, with whom Wallwork and Steytler JJ agreed, delivered the principal judgment with respect to the convictions. She considered that the trial judge was in error in failing to advert to s 62. She said: "The position in this trial, then, was that there was an accurate direction, in relation to the element of being in the place of Sandra King 'without her consent' that that element had to be proved beyond reasonable doubt before the jury could convict. By reason of the failure to advert to s 62(2) of the Restraining Orders Act, the jury was not also directed that in relation to the element of committing a breach of a violence restraining order, it would have been open to the applicant to prove to them on the balance of probabilities that he was in the place with her consent and that if he satisfied the jury in respect of that matter, that element would not have been proven. In law then, the issue of consent arose at two different places in the indictment and the burden in relation to each was different. The jury was told only that the burden in relation to consent was on the Crown and was not told that there was an element in respect of which an issue of consent might arise where the onus would be upon the accused. The error of law is clear. The question which then arises is whether it is open to this Court to apply the proviso to s 689(1) of the Criminal Code." Wheeler J concluded that it was a proper case for the application of the proviso. She said: "In this case, in the whole of the context of the trial, the issue of whether the Crown had proved lack of consent beyond reasonable doubt was squarely before the jury. It is not possible, as a matter of logic, to reach a view that a jury, which was necessarily satisfied beyond reasonable doubt that the applicant was in the place without Mrs King's consent, might nevertheless have been persuaded by him, upon the same facts that on the balance of probabilities, he did in fact have her consent. In the context of this particular indictment, the failure to put the potential defence pursuant to s 62 of the Restraining Orders Act could only have been, if anything, favourable to the applicant. The reason for saying this, is that there is plainly a potential for confusion when precisely the same factual issue falls to be determined by a jury at different points in the indictment applying a different onus of proof in respect of each. It would require a very careful direction in those circumstances to keep firmly in the forefront of the jury's mind the fact that the first of the elements was one in relation to which the accused person carried no burden at all. In this case, once the issue of consent was determined adversely to the accused beyond reasonable doubt, the finding in relation to breach of the restraining order necessarily must have flown from that." The appeal to this Court In this Court, the applicant contends that the Court of Criminal Appeal was correct to identify error on the part of the trial judge, but incorrect to conclude that there was no miscarriage of justice. The respondent originally supported the whole of the reasoning of the Court of Criminal Appeal but, under pressure of argument, resiled from an acceptance of error on the part of the trial judge. The written submissions for the applicant make the following criticism of the directions of the trial judge: "Specifically, he failed to instruct the jury that a person bound by a restraining order can raise the defence of acting with the consent of the person protected by the order, he instructed the jury that there was no burden upon the Applicant and he instructed the jury that the Applicant was in breach of the order." It is unusual for an accused at a criminal trial to complain that the trial judge failed to tell the jury that the accused carried the onus of proof on a certain issue, and to complain that the judge said that the prosecution bore the onus on that issue. The reason for such an unusual complaint in the present case is connected with the applicant's failure to give evidence at the trial, and with what the trial judge told the applicant as to his position in that regard. Consistently with what he later told the jury, the trial judge told the applicant, when informing him, at the conclusion of the prosecution case, of the courses open to him, that he had a right to silence, that he did not have to prove anything, and that the Crown had to prove everything. This Court is invited to infer that, if the applicant had been told that there was an issue on which he carried an onus of proof, he would have chosen to give evidence. Why we should infer that is not entirely clear; nor is it clear what we are asked to infer as to the evidence he would have given. We were not expressly invited to infer that he would give an account of how he came to enter the premises that was materially different from the account he had given to the police. At all events, that, it is said, is a matter that was overlooked by the Court of Criminal Appeal. The failure to tell the jury, and the applicant, that there was an issue on which the applicant carried the onus of proof is said to have given rise to a miscarriage of justice because it affected the way the applicant conducted his defence. The proceedings, it is said, were "fundamentally flawed". The underlying assumption is that there was an issue on which the applicant carried the onus of proof. It is an assumption I do not accept. In the submissions on behalf of the applicant in this Court, the suggested issue was expressed indirectly and in terms of a "defence" under s 62 of the Restraining Orders Act, rather than directly as an issue of fact. Juries decide issues of fact, not questions of law. It may be appropriate to explain to a jury the legal reason why a particular issue of fact arises for decision, and the legal consequences of a decision on that issue, but what is to be decided by the jury is an issue of fact. In this case, the trial judge told the jury that the central issue of fact in the case was whether the applicant was in the complainant's house without her consent. Wheeler J said "the same factual issue" arose, or would have arisen, under s 62. That cannot be an issue on which both the prosecution and the defence bore the onus of proof. If, by reason of the nature of a given offence, a fact must be established by the prosecution as one of the elements of the offence, then it makes no sense to say that the accused carries the onus of negativing the same fact. In adversarial litigation, both parties cannot bear the ultimate onus of proving or disproving a single fact. The point of an onus of proof is to identify the party who is obliged to establish a fact, and who will bear the legal consequences of failure to do so. There are cases in which an onus may shift; and there is a difference between a legal onus and an evidentiary onus. We are not concerned with questions of that kind. The onus cannot, at one and the same time, be upon both parties in relation to one and the same factual issue. Wheeler J recognised the logical problem in her reasoning dealing with the proviso. However, that reasoning, taken to its logical conclusion, means, not that there was no miscarriage of justice, but that there was no error. I am prepared to accept that, where, for the purposes of a charge under s 401(2) of the Code, the subsidiary offence is breach of a violence restraining order, an accused person in an appropriate case could seek to make out a defence of consent under s 62 of the Restraining Orders Act. It is true that s 62 refers to "a defence to a charge of breaching a restraining order", and that, where a breach of a restraining order is a subsidiary offence for the purposes of s 401(2) of the Code, there is no charge of breaching a restraining order. But that raises a question of construction of s 401, and, in particular, of the meaning of "offence". In a case where s 401(2) picks up s 61 of the Restraining Orders Act as a subsidiary offence, does it also import s 62 as a source of a potential defence? I cannot see why not. Justice requires that it should, and the concept of an "offence" is sufficiently flexible to embrace a reference to a defence provided by the statute that creates the subsidiary offence. The question may be largely theoretical, because an element of the punishable crime created by s 401(2) is that the accused is in the place of another person without that other person's consent. If that element must be established in proof of the punishable crime, then there may be few circumstances in which the conduct that potentially constitutes the subsidiary offence is engaged in with the consent of the other person. Even if s 62 is at least theoretically capable of applying in the case of a charge of a contravention of s 401(2), there may be cases of alleged beaches of restraining order, and alleged contraventions of s 401(2) involving breaches of a restraining order as a subsidiary offence, where there is no room for s 62, with its onus on an accused, to operate. There may be no occasion for an accused person to seek to rely on s 62, in answer to a charge under s 61, where the alleged breach of the terms of a restraining order is necessarily inconsistent with consent of the person protected by the order. Much will depend upon the terms of a particular order. The order in question in the present case, for example, prohibited the applicant from committing a violent personal offence against the complainant, from behaving in an intimidatory manner towards the complainant, and from behaving in a manner likely to lead to a breach of the peace. It is difficult to see how conduct could be shown to contravene those terms of the order unless it occurred without the consent of the complainant (assuming no third party was involved). There may well be other terms of a restraining order that, either expressly or by necessary implication, involve absence of consent. In that event, there may be no work for s 62 to perform. The party alleging breach, in order to establish a breach under s 61, will have to prove a fact which is necessarily inconsistent with consent. However, some, perhaps most, or all, of the terms of a particular restraining order may not be such that breach is necessarily inconsistent with consent. In that case, s 62 creates a potential defence of consent (with the onus on the defendant). So, if the present applicant had been charged under s 61 with a breach of the restraining order, the breach being having possession of a firearm, it would be a defence if he could prove that the complainant requested him to bring a firearm to protect her from serious danger. But if a term of an order were expressed in such a way as to make it necessary, in order to prove breach, to establish a fact inconsistent with consent, then s 62 would not come into play. In the present case, the language of s 401(2) of the Code required the prosecution to establish, as an element of the punishable crime, that the applicant was in the complainant's place without the complainant's consent. The restraining order prohibited the applicant from entering upon the complainant's premises. There were two competing versions as to how the applicant came to be there. The applicant said the complainant asked him to visit her. The complainant denied that. What work was there for s 62 to do? If the prosecution could not satisfy the jury beyond reasonable doubt that the applicant entered upon the complainant's premises without her consent, then the applicant was entitled to be acquitted. The judge so directed the jury. If the prosecution could satisfy the jury of that fact, that was an end to any possible "defence" under s 62. It was no part of the prosecution case that, even if the applicant, as he claimed, had visited the complainant at her request, he was in breach of the restraining order merely by entering upon her premises. No such case was left to the jury. No one suggested that the applicant entered the house with consent, but that such consent was later withdrawn. The prosecution case was that the applicant was not invited to the premises, that he learned of the address from a third party, that he gained entry by pretending he was someone else, and that he forced his way into, and remained upon, the premises without the complainant's consent. It was in that context that the trial judge told the jury that the central issue was whether the complainant consented to the applicant's visit, that the prosecution carried the onus of proof on that issue, and that, once that issue was resolved in favour of the prosecution, there was no separate and independent issue as to breach of the restraining order. In that forensic context, there was no issue of fact on which the applicant carried an onus of proof. As Wheeler J acknowledged, in the circumstances of the case, there was no material difference between the factual content of the element of the punishable crime which the prosecution was required to prove and the factual content of the putative defence to what would otherwise be the subsidiary offence. The judge was right to tell the applicant, and the jury, that the applicant was not required to prove anything. The elements of the punishable crime as charged were such that the prosecution was obliged to establish beyond reasonable doubt that the applicant was in the complainant's place without her consent. The case as particularised, and as supported in evidence, and as left to the jury, was that the applicant entered the premises without the complainant's consent and remained there without her consent. The jurors were told that, if the prosecution could not satisfy them of that, the case must fail. In that context, it would have been erroneous for the judge to tell the jury that there was an issue of consent on which the applicant carried an onus. Conclusion Special leave to appeal should be granted and the appeal should be dismissed. Callinan GUMMOW, CALLINAN AND HEYDON JJ. This is an application for special leave to appeal against the dismissal by the Court of Criminal Appeal of Western Australia of an appeal against convictions. It raises questions as to the proper construction of some provisions of the Criminal Code of Western Australia ("the Code"), and their relationship with another enactment creating an offence the commission of which (but not the availability or otherwise of a statutory defence to which) is an element of Code offences. The facts The applicant was tried and convicted by a jury in the District Court of Western Australia (Nisbet DCJ) on two counts as follows: "(1) On 21 November 1998 at Forrestfield RODNEY NATHAN KING being in the place of SANDRA KING without her consent, being a place ordinarily used for human habitation, committed the offence of breach of a violence restraining order number 1998 000447 (AR) AND THAT RODNEY NATHAN KING detained SANDRA KING [contrary to s 401(2)(a) of the Code] AND THAT immediately before the commission of the offence RODNEY NATHAN KING knew or ought to have known that there was another person in the place. (2) AND FURTHER that on 21 November 1998 at Perth RODNEY NATHAN KING unlawfully detained SANDRA KING [contrary to s 333 of the Code]." The applicant and the complainant who were separated at the time of the offences had by then been married for about 13 years. There were three children of the marriage aged 8, 5 and 3. By arrangement, the applicant had moved out of the matrimonial home although he returned to it from time to time to see the children while the complainant was at work. After a period however, she obtained a Violence Restraining Order which was served on the applicant on 9 October 1998. Between that date and 8 November 1998, despite the order, the complainant met the applicant on a number of occasions to enable him to spend time with their children. He remained aggressive towards the complainant and made many threats to her, including to kill her. On 8 November 1998 she sought refuge with the children at a women's refuge. On 13 November, she moved to a house in Forrestfield without revealing her whereabouts to the applicant. On 21 November 1998, having found out the complainant's address at Forrestfield, the applicant drove to it between 6.30 and 7.00 am. He knocked on the door to the house. Before she opened it to him, the complainant asked who was there. He replied, "It's just a neighbour". She unlocked the door. The applicant pushed Callinan it open, and, in doing so, knocked her to the ground. She screamed and became hysterical. The applicant pulled her to her feet and slapped her. She ran from the house still screaming but soon returned because her children were there. The applicant took the complainant into the kitchen and sat her on a chair in a corner. He told her not to move. He told the children that she was a ghost, that she was going to burn, and that they would smell her burning. When his back was turned, she ran into another room to call the police but he stopped her and forced her to return to the kitchen. That forced return became the basis of count 2, deprivation of liberty. Thereafter, the complainant offered to go to the shops to buy some milk but the applicant rejected the offer, saying that he did not trust her. He himself took her and the children in his car to two garages to buy milk and cigarettes. When he left the car, he told her to stay there. Later he drove her and the children to Hamilton Hill to collect his wages before returning to Forrestfield. Some time after 1.00 pm, the applicant left the house in order to attend to one of the children, who had fallen from his bicycle. The complainant then rang an emergency number to seek police assistance. Police officers responded and arrested the applicant. The applicant told the police officers who interviewed him that he had been at the complainant's residence at her request for him to assist her to fix her car. The applicant was bound at the material time by the Violence Restraining Order which imposed many restrictions on him: "The [applicant] shall not: be in possession of a firearm/firearms licence or obtain a firearms licence, commit or attempt to commit a violent personal offence, as defined in the Restraining Orders Act 1997, against the person protected, communicate or attempt to communicate by whatever means with the person protected by this order, enter upon any premises where the person protected lives or works or be within 100 metres of the nearest external boundary of such premises, approach within 100 metres of the person protected, cause or attempt to cause damage to the property of the person protected, behave in an intimidatory or offensive manner towards the person protected, Callinan behave in a manner that is likely to lead to a breach of the peace, cause or allow any other person to engage in conduct of the type referred to in the preceding paragraphs of this order." It is convenient at this point to set out the relevant statutory provisions. Section 333 of the Code provides as follows: "333 Deprivation of liberty Any person who unlawfully detains another person is guilty of a crime and is liable to imprisonment for 10 years." Section 401 of the Code relevantly states: "401 Burglary (1) A person who enters or is in the place of another person, without that other person's consent, with intent to commit an offence in that place is guilty of a crime and is liable – if the offence is committed in circumstances of aggravation, to imprisonment for 20 years; if the place is ordinarily used for human habitation but the offence is not committed in circumstances of aggravation, to imprisonment for 18 years; or in any other case, to imprisonment for 14 years. Summary conviction penalty for an offence to which paragraph (b) or (c) applies: in a case to which paragraph (b) applies: imprisonment for 3 years or a fine of $12 000; or in a case to which paragraph (c) applies: imprisonment for 2 years or a fine of $8000. (2) A person who commits an offence in the place of another person, when in that place without that other person's consent, is guilty of a crime and is liable – if the offence is committed in circumstances of aggravation, to imprisonment for 20 years; Callinan if the place is ordinarily used for human habitation but the offence is not committed in circumstances of aggravation, to imprisonment for 18 years; or in any other case, to imprisonment for 14 years. Summary conviction penalty for an offence to which paragraph (b) or (c) applies (subject to subsection (3)): in a case to which paragraph (b) applies: imprisonment for 3 years or a fine of $12 000; or in a case to which paragraph (c) applies: imprisonment for 2 years or a fine of $8000." Sections 61 and 62 of the Restraining Orders Act 1997 (WA), which are also relevant, provide as follows: "61 Breach of a restraining order (1) A person who is bound by a violence restraining order and who breaches that order commits an offence. Penalty: if the duration of the order is 72 hours or less, $2000 or imprisonment for 6 months; or otherwise, $6000 or imprisonment for 18 months. (2) A person who is bound by a misconduct restraining order and who breaches that order commits an offence. Penalty: $1000. Proceedings for a breach of a restraining order are to be brought – if the alleged offender is a child, in the Children's Court; or otherwise, in a court of petty sessions. Consent as a defence Subject to subsection (2), it is a defence to a charge of breaching a restraining order for the person who is bound by the order to satisfy the court that the person acted with the consent, as defined in Callinan section 319(2)(a)1 of The Criminal Code, of the person protected by the order. The defence set out in subsection (1) is not available in respect of a breach of a restraining order if the person protected by the order is a child or a person for whom a guardian has been appointed under the Guardianship and Administration Act 1990. If a person charged with breaching a restraining order establishes a defence under subsection (1), the court hearing the charge may cancel the order." The trial In the course of the prosecutor's opening this was said to the jury: "The accused says, to the police anyway, that she invited him over and obviously, if that's right, then she did consent and because of the way the rules of law work, the accused doesn't have to prove that she consented. The Crown has to prove that she didn't." At the end of the prosecution case the trial judge said this to the applicant who was then unrepresented: "Mr King, last night I explained to you in the absence of the jury that at this stage of the trial you have the right to continue with your right to silence, which you have enjoyed from the beginning of the trial process right up to this stage, and you may now, if you wish, elect to go into evidence or not. It's your right to remain silent if you wish. It's your right not to give evidence. You don't have to prove anything. There is no burden of proof on you in this trial. The Crown has to prove each and every element of the two offences it alleges against you beyond reasonable doubt. It says, by closing its case, that that stage of the trial has been reached. So the matter is now for you to decide, to exercise 1 Section 319(2)(a) relevantly provides: 'consent' means a consent freely and voluntarily given and, without in any way affecting the meaning attributable to those words, a consent is not freely and voluntarily given if it is obtained by force, threat, intimidation, deceit, or any fraudulent means." Callinan your right to give evidence if you chose [sic], or not, if you chose [sic]. It's a matter for you. What – have you made a decision about this?" The applicant responded by saying that he would "go last to the jury", meaning that he would not adduce or call evidence, and would take the opportunity of making the last address to the jury. In his directions to the jury the trial judge said: "Strictly, the burden of proof is on the prosecution from the beginning of the criminal trial process to the end. It never shifts to the accused person, to any accused person. No accused person has to prove anything." Later his Honour said this: " ... the position is that it's clear and unequivocal in its terms and there's no issue but that Mr King was in the place of his wife in breach of that violence restraining order. He says, in his video record of interview to the police, that he thought that if he was invited he wouldn't be in breach of the order. Now, that is what is properly called an opinion of law. He is saying what his opinion was as to the effect of a court order. That's a matter of law. If he was mistaken as to a question of law then, frankly, that does not afford him any defence. I will say it again: the court order and its meaning and its effect is a matter of law and if he mistakenly believed that he would not be committing a breach of a violence restraining order if he went into those premises at his wife's invitation, then that mistake affords him no defence." The Court of Criminal Appeal The applicant appealed to the Court of Criminal Appeal of Western Australia (Wallwork, Steytler and Wheeler JJ) against both of his convictions and sentence. The leading judgment with respect to the convictions was given by Wheeler J with whom the other members of the Court agreed. The only relevant ground of appeal was that the trial judge had erred, by failing, with respect to s 62 of the Restraining Orders Act, to direct the jury that the applicant might have, under that section a defence, if he could establish or had established on the balance of probabilities, that the complainant had consented to his presence at her residence. Her Honour was of the clear view that the ground was made out. No one at the trial, she said, had adverted as the parties should have, to s 62(1) of the Callinan Restraining Orders Act. Her Honour's reasons are substantially stated in the following passage2: "His Honour's direction was plainly wrong in law. Leaving aside the question of mistake, which seems to be a red herring first raised by the prosecution in speculating what the defence might be and later taken up in a number of points, it plainly would have been open to the applicant, as a matter of law, to satisfy the jury that he acted with the consent of Mrs King, she being the person protected by the order. If so, s 62(2) would have applied. The evidence that he acted with her consent, which was before the court, was his statement to the police during the course of the videotaped record of interview that she had invited him to help fix her car." Some remarks which were made by her Honour in dealing with the appeal against sentence (as to which Steytler J dissented) are also relevant to the way in which the trial judge approached the issue of consent, which was, as has already appeared, the only real issue in the case. Her Honour said3: "In this case, in the whole of the context of the trial, the issue of whether the Crown had proved lack of consent beyond reasonable doubt was squarely before the jury. It is not possible, as a matter of logic, to reach a view that a jury, which was necessarily satisfied beyond reasonable doubt that the applicant was in the place without Mrs King's consent, might nevertheless have been persuaded by him, upon the same facts that on the balance of probabilities, he did in fact have her consent. In the context of this particular indictment, the failure to put the potential defence pursuant to s 62 of the Restraining Orders Act could only have been, if anything, favourable to the applicant. The reason for saying this, is that there is plainly a potential for confusion when precisely the same factual issue falls to be determined by a jury at different points in the indictment applying a different onus of proof in respect of each. It would require a very careful direction in those circumstances to keep firmly in the forefront of the jury's mind the fact that the first of the elements was one in relation to which the accused person carried no burden at all. In this case, once the issue of consent was determined adversely to the accused beyond reasonable doubt, the finding in relation to breach of the restraining order necessarily must have [flowed] from that." 2 King v The Queen [2001] WASCA 198 at [30]. 3 King v The Queen [2001] WASCA 198 at [40]. Callinan In the event however her Honour was of the view that the error that she had identified had not occasioned any substantial miscarriage of justice.4 The application to this Court The applicant seeks special leave to appeal to this Court against conviction upon the same ground as he argued in the Court of Criminal Appeal: "The Court of Criminal Appeal erred in law in dismissing the Appellant's appeal against conviction by applying the proviso to section 689(1) [of the] Criminal Code. Particulars The trial was fundamentally flawed because the learned trial Judge failed correctly to explain the law concerning one of the elements (namely "committed the offence of breach of restraining order") of the charge of aggravated burglary and having done so he failed to leave that element to the jury. The Appellant lost a chance which was fairly open to him of being acquitted as a consequence of that failure." The application was argued fully as if on an appeal. Before dealing with the applicant's arguments some further reference should be made to the Violence Restraining Order and the respects in which the 4 The relevant section of the Code is: "689 Determination of appeals in ordinary cases (1) The Court of Criminal Appeal on any such appeal against conviction shall allow the appeal, if they think that the verdict of the jury should be set aside on the ground that it is unreasonable or cannot be supported having regard to the evidence, or that the judgment of the court before whom the appellant was convicted should be set aside on the ground of a wrong decision of any question of law or that on any ground there was a miscarriage of justice, and in any other case shall dismiss the appeal: Provided that the Court may, notwithstanding that they are of opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if they consider that no substantial miscarriage of justice has actually occurred." Callinan applicant was, or could have been in breach of it. If, as seems unlikely, there was any basis for a belief by the applicant that the complainant consented to his presence on the premises on his first arrival there, that belief could not have persisted following the excursion to buy milk and cigarettes and the re-entry of the applicant upon the complainant's residence with the complainant still under his restraint. There was evidence of further breaches: of the commission of actual violence, intimidatory behaviour and breaches of the peace. There was therefore abundant evidence to establish both of the offences charged. In our opinion what might appear at first sight to be a paradox, that on the one hand the respondent has the onus of proof beyond reasonable doubt throughout, including of negativing consent, but on the other, because the commission of an offence under s 61 of the Restraining Orders Act, was an element of the offence charged, there was an onus upon the applicant to prove consent on the balance of probabilities, can be resolved by the reconciliation of the relevant provisions of the Code and the Restraining Orders Act as a matter of statutory construction. Section 62(1) of the Restraining Orders Act states that "... it is a defence to a charge of breaching a restraining order ...". The charge to which s 62 refers is a charge under s 61 of the Act, and not otherwise. The applicant was not charged with the offence for which s 61 provides. He was charged with different offences altogether from an offence under the Restraining Orders Act. Accordingly, no occasion arose for him to seek to rely on a defence under s 62, a defence, it might be said, which would impose an onerous obligation upon him with which he would not be burdened in defending charges under the Code. The commission of an offence under s 61 of the Restraining Orders Act was an element of the first count under s 401 of the Code, with which he was charged: the presence or absence of a special statutory defence to a charge under s 62 was not. An analogy may be drawn between this case and two other cases in this Court. In Meyer Heine Pty Ltd v China Navigation Co Ltd5 the respondent was sued under the Australian Industries Preservation Act 1906 (Cth) which provided, by s 4(3), that it was a defence to a charge of an offence under that Act, that the relevant activity was not to the detriment of the public and was not unreasonable, the onus of proving which on the balance of probabilities lay on the defendant. That case shows that what may provide a defence to one category of proceedings (criminal or quasi criminal) might not necessarily provide a defence to civil proceedings founded upon the same enactment. Similarly, in (1966) 115 CLR 10 at 26-27 per Kitto J. Callinan Sovar v Henry Lane Pty Limited6 it was held that proof of a matter by a defendant which would provide a defence to quasi-criminal proceedings under the Factories, Shops and Industries Act 1962 (NSW) would not of itself defeat a civil claim for breach of statutory duty under that Act. It follows that the trial judge did not misdirect the jury as contended, and made no error in not drawing to the attention of the applicant, that he could, if he wished, call or adduce evidence with a view to establishing, on the balance of probabilities, that he had received the consent of his wife when he entered her premises. The trial judge repeatedly made it clear to the jury that consent or otherwise was the central issue in the trial, and that it was for the respondent throughout to negative it. The reconciliation of the statutory provisions in this way also ensures the "coherence of the [criminal] law"7. It means that the occasion for confusing directions as to onuses will be avoided. It reinforces the elementary principle of the criminal law that unless express statutory provision to the contrary be made, the onus lies upon the Crown throughout, to negative defences sufficiently raised. It also means that the provisions of Ch 5 of the Code relating to criminal responsibility can freely operate without the intrusion of other irrelevant matters such as the availability or otherwise of a limited defence under other enactments. It follows that an appeal would fail and no occasion for the application of the proviso would arise. The point of principle is an important one. We would grant special leave to appeal but dismiss the appeal. (1967) 116 CLR 397 at 406-407 per Kitto J, 410-411 per Taylor J, 416 per 7 Sullivan v Moody (2001) 207 CLR 562 at 581 [55] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ. Kirby KIRBY J. This application for special leave to appeal was referred to the Court as it is now constituted to be heard as on the return of an appeal. That course was adopted because of concerns felt by a panel of the Court before whom the application originally came8. It appeared to the panel that points relevant to the correctness of the applicant's conviction and sentence might not be sufficiently elucidated by the applicant himself. At the time, he was not legally represented. Prior to the return of the application before us, arrangements were made for the applicant to be represented by counsel. His counsel indicated that the point about the applicant's sentence was abandoned. That left the point relevant to the correctness of the applicant's conviction. The facts and the course of the trial The background facts concerning the trial and conviction of Mr Rodney King ("the applicant") are set out in other reasons9. Also appearing there are the relevant provisions of the statutes that govern the case. Those provisions include the terms of ss 61 and 62 of the Restraining Orders Act 1997 (WA)10 ("the Act") and ss 333 and 401(2) of the Criminal Code (WA) providing the statutory offences of deprivation of liberty and burglary with which the applicant was charged11. The provisions of s 689 of the Criminal Code, governing criminal appeals and containing the proviso are in standard terms. They too are set out in other reasons12. I will not repeat any of this material. I will, however, say a little more about the course of the applicant's trial, which took place in the District Court of Western Australia before the trial judge (Nisbet DCJ) and a jury. At the commencement of the trial, the applicant was represented by counsel. Counsel informed the trial judge that he had only been instructed late, that certain necessary subpoenas had not been issued and that the applicant wished additional witnesses to be called. The first witness in the trial was the applicant's wife. At the end of her testimony in chief, the applicant's counsel commenced his cross-examination. However, a point was soon reached when the applicant intervened and dismissed his counsel on the stated basis that he was insufficiently aware of the details of 8 Gaudron and Gummow JJ on 25 October 2002. 9 Reasons of Gleeson CJ at [2]-[14]. Reasons of Gummow, Callinan and Heydon JJ ("the joint reasons") at [28]-[32], [36]-[43]. 10 The joint reasons at [35]. 11 The joint reasons at [33]-[34]. 12 The joint reasons at [43], fn 4. Kirby the case to be able to put the applicant's version of events properly to the wife and to the court. Counsel withdrew. This left the trial judge in the difficult position of continuing the trial with the applicant unrepresented. The applicant's cross-examination of the wife extended over two days. In the absence of the jury, the trial judge explained to the applicant the basic rules which the course of the trial would follow. Specifically, he told him that, at a certain point, it would be necessary for him to decide whether he would elect to give evidence. He explained that if he did not, he would have the last address to the jury. In accordance with this advice, at the close of the prosecution case, the trial judge returned to the question of whether the applicant would "elect to go into evidence or not". He reminded the applicant that it was his right to remain silent if he wished. He again explained the order of addresses to the jury. He pointed out that "[t]he Crown has to prove each and every element of the two offences it alleges against you beyond reasonable doubt". He made no reference to any suggested significance of the provisions of the Act, as they might bear on the elements of the offences contained in the indictment. Nor did he elaborate the way in which any failure by the applicant to give evidence concerning the issue of consent, that he alleged his wife had given to his visit to her new place of residence, might affect the establishment of the relevant count. As it was, if the applicant gave no evidence on the issue of the wife's consent and invitation, he was left with the antagonistic sworn and tested evidence of the wife and of other prosecution witnesses ranged against his own unsworn assertions in the police record of interview (tendered in the prosecution case); his questions of the wife and statements to be made in his address to the jury. In the absence of the jury, the trial judge told the applicant: "… I do want to stress that it is the Crown's job to prove each and every element of these two offences beyond reasonable doubt. … You don't have to prove anything. The Crown has to prove everything. So you have a right to silence. You have a right to remain silent. You enjoy that right now and you do not have to go into evidence, but if you want the jury to consider your story the only way you can give it to them is by getting a witness to agree with it in response to a question … and that becomes part of the evidence before the court, or by producing some document or thing that supports your story, that then goes into evidence and a witness agrees with it, or by calling evidence yourself." Following an extensive discussion with the trial judge, the applicant ultimately elected not to give sworn evidence. As had been explained to him, that election obtained for him the advantage of the last address to the jury. Kirby The trial judge's instructions to the jury Following the close of addresses by the prosecutor and the applicant, the trial judge instructed the jury on the applicable law. When addressing the elements of the offence against s 401(2) of the Criminal Code, the trial judge gave the jury directions on the onus and standard of proof. He told them, in conventional terms, that the burden was on the prosecution "from the beginning of the criminal trial process to the end" and required proof beyond reasonable doubt. He went on to say: "It never shifts to the accused person, to any accused person. No accused person has to prove anything." The trial judge repeated this instruction when he came to explain to the jury the elements of the offence against s 401(2) of the Criminal Code, one of which was that the accused was "in the place of another person … without that other person's consent"13. On that question the trial judge reminded the jury that the prosecutor, in her opening address, had said that this was the issue that would mostly occupy the attention of the jury. The trial judge pointed out that "as the case has unfolded [it] has become the central issue here; that is, was [the applicant] in [the wife's] place without her consent?" On this matter, the prosecutor had accepted that it was for the prosecution to prove that the wife did not consent. Correctly, the trial judge confirmed that such was the law. It was at this point that the trial judge introduced, as relevant to the need for the prosecution to establish that the applicant had committed "an offence"14, a reference to this alleged breach of the restraining order. By s 61(1) of the Act, it is provided that a person, bound by such an order and who breaches it, "commits an offence". It was because this was the "offence" upon which the prosecution relied to establish for the purposes of s 401(2) of the Criminal Code that the applicant had committed "an offence in the place of another person", that it was necessary for the trial judge to explain to the jury the significance of the breach of the restraining order. The order was itself an exhibit in the trial. The trial judge said: "… [T]he position is that it's clear and unequivocal in its terms and there's no issue but that [the applicant] was in the place of his wife in breach of that violence restraining order. He says, in his video record of interview to the police, that he thought that if he was invited he wouldn't be in 13 Criminal Code, s 401(2). 14 Criminal Code, s 401(2). Kirby breach of the order. Now, that is what is properly called an opinion of law. … If he was mistaken as to a question of law then … that does not afford him any defence. I will say it again: the court order and its meaning and its effect is a matter of law and if he mistakenly believed that he would not be committing a breach of a violence restraining order if he went into those premises at his wife's invitation, then that mistake affords him no defence. I'll come back to the question of consent and mistake directly but I want you to be clear on that. A mistake of the legal effect of the violence restraining order is not a defence." The trial judge proceeded to give directions to the jury on that element of the offence against the Criminal Code that involved being in another's place "without that other person's consent". In this regard he referred to the applicant's recorded interview with the police. There followed separate directions concerning the second count of the indictment. There were no relevant requests for redirection. The jury, after a retirement of an hour, found the applicant guilty of both offences. He was convicted and sentenced to an effective eight years imprisonment, seven years taking into account time that he had spent in custody, back dated to the date he went into custody. The applicant sought leave to appeal against his conviction and his sentence15. His application duly came before the Court of Criminal Appeal of Western Australia. The decision of the Court of Criminal Appeal The Court of Criminal Appeal was unanimous on the conviction appeal. The reasons of the Court on that issue were given by Wheeler J16. Her Honour pointed out that, during the trial, no one had adverted to s 62(1) of the Act. After setting out the terms of that sub-section, Wheeler J concluded that the direction of the trial judge concerning the applicant's opinion about the effect of the court order was "plainly wrong in law"17. She went on: "… [I]t plainly would have been open to the applicant, as a matter of law, to satisfy the jury that he acted with the consent of [the wife], she being the person protected by the order. If so, s 62(2) would have applied. The evidence that he acted with her consent, which was before the court, was 15 King v The Queen [2001] WASCA 198 at [20]. 16 Wallwork J agreeing at [1] and Steytler J agreeing at [3]. 17 [2001] WASCA 198 at [30]. Kirby his statement to the police during the course of the videotaped record of interview that she had invited him to help fix her car." After reviewing the trial judge's directions on the issues of consent and mistake (the latter of which Wheeler J regarded as a "red herring")18, her Honour continued19: "By reason of the failure to advert to s 62(2) of the [Act], the jury was not also directed that in relation to the element of committing a breach of a violence restraining order, it would have been open to the applicant to prove to them on the balance of probabilities that he was in the place with her consent and that if he satisfied the jury in respect of that matter, that element would not have been proven." It is clear that, for Wheeler J, the issue of consent "arose at two different places in the indictment". It arose in the provision in s 401(2) of the Criminal Code (which states explicitly, as an element of the offence, that the person is in the place of another "without that other person's consent"). But it also arose in an indirect way in relation to the "offence" which it was alleged the applicant had committed in that place. That "offence", being the offence provided under the Act20 of breach of a restraining order, contained within its provisions the possibility of a defence of consent. Her Honour observed21: "The jury was told only that the burden in relation to consent was on the Crown and was not told that there was an element in respect of which an issue of consent might arise where the onus would be upon the accused. The error of law is clear." A misdirection of law being established, the only issue for the Court of Criminal Appeal was whether, notwithstanding the misdirection, the case was one calling for the application of the "proviso"22. 18 [2001] WASCA 198 at [30]. 19 [2001] WASCA 198 at [36]. 20 The Act, s 61(1). 21 [2001] WASCA 198 at [36]. 22 Criminal Code, s 689(1). Kirby In the opinion of Wheeler J, with whom the other judges agreed, the proviso applied23. In support of that conclusion, Wheeler J relied on two essential considerations. The first was the implied satisfaction of the jury that the prosecution had proved lack of consent as an express ingredient of the offence, and had done so beyond reasonable doubt. In her Honour's view, this necessarily satisfied the other way that consent was raised in the form of the potential reliance of the applicant on the defence provided by s 62 of the Act24: "In this case, once the issue of consent was determined adversely to the accused beyond reasonable doubt, the finding in relation to breach of the restraining order necessarily must have [flowed] from that." Secondly, Wheeler J concluded that the evidence in relation to the wife's lack of consent was, in any event, "overwhelming"25. She referred to the sworn testimony of the wife, to the evidence of a neighbour who had seen the wife apparently distressed soon after the applicant's arrival at her place of residence; a tape recorded telephone conversation with the applicant and the admissions made by the applicant in the videotaped record of interview with police. On this basis Wheeler J concluded that no substantial miscarriage of justice had occurred. This conclusion sustained dismissal of the applicant's challenge to the conviction26. The other judges of the Court of Criminal Appeal agreed. Accordingly, the appeal against conviction was dismissed. On the return of the application before this Court, both parties in their written submissions accepted the accuracy of the conclusion of the Court of Criminal Appeal. They accepted that, in the respect identified by Wheeler J, the trial judge had misdirected the jury on an element of the "offence" alleged and, that therefore the issue was whether the proviso was properly applied or not. However, during argument in this Court, the application took a different turn. The issues The applicant's sentence: In the original application for special leave the applicant sought to challenge his sentence of seven (effectively eight) years imprisonment. In the Court of Criminal Appeal, Steytler J dissented in the 23 cf Krakouer v The Queen (1998) 194 CLR 202 at 212 [23]-[24] as cited by Wheeler J. See [2001] WASCA 198 at [37]-[38]. 24 [2001] WASCA 198 at [40]. 25 [2001] WASCA 198 at [44]. 26 [2001] WASCA 198 at [46]. Kirby appeal against sentence. He did so on the basis of the limited backdating of the custodial sentence ordered by the trial judge and the refusal to provide for parole. The majority disagreed and confirmed the sentence. With respect, the sentence does appear appealably excessive having regard to the circumstances of the statutory "burglary", the "offence" nominated by the prosecution, the maximum punishment applicable for that "offence" against the Act, the total duration of the criminality and the circumstances described in the evidence. However, because that issue was expressly withdrawn when the application was returned before this Court as presently constituted, I must put it out of consideration. In particular, I must be careful not to allow my concern about the applicant's sentence to affect my approach to the issues he raises in his continuing challenge to his conviction. The applicant's conviction: Upon that challenge, the following issues arise: (1) Did the trial judge err in the direction he gave the jury concerning the elements of the offence in s 401(2) of the Criminal Code? If so, did the Court of Criminal Appeal err in its conclusion that once lack of "consent", as an express element of the crime, was found by the jury to have been proved beyond reasonable doubt, it necessarily followed that the "offence" of breach of the violence restraining order under s 61(1) of the Act was established, notwithstanding the defence provided to such "offence" in s 62(1) of the Act? (3) Did the Court of Criminal Appeal err in failing to conclude that a wrong direction on a question of law by the trial judge or error in the conduct of the trial occasioned relevant procedural unfairness to the applicant amounting to a miscarriage of justice? (4) Having regard to the answers to the foregoing, did the Court of Criminal Appeal err in holding that the case was one for the application of the proviso to s 689(1) of the Criminal Code? Or was the proviso inapplicable in the circumstances either on the ground that (a) the conduct of the trial was fundamentally flawed; or (b) otherwise a substantial miscarriage of justice had occurred obliging the retrial of the applicant? The trial judge's error of law It is elementary that a judge, presiding in a jury trial, must instruct the jury accurately on the elements of the offence or offences with which the accused is charged. If the offence is provided by statute, this involves informing the jury of the provisions of the applicable statute and explaining the elements of the offence by reference to the evidence and, where appropriate, the arguments of the parties. Explaining those elements is a central function of the judge. A mistake in doing so is not necessarily fatal to the lawfulness of a trial and the safety of a Kirby conviction27. Yet it commonly will be so for the jury has no other source of accurate instruction about the law which they are to apply to the facts as they find them. This Court was told that in Western Australia, unlike other Australian States, the practice is not observed of providing the jury with written instructions on critical matters of law, that set out, or refer to, the provisions of applicable legislation. The provision of such written instructions may be useful, where they exist, in curing minor verbal infelicities in the trial judge's oral directions28. None were provided here. I am prepared to accept that the trial judge's directions to the jury, on the meaning of that element of the offence in s 401(2) of the Criminal Code that refers to "without that other person's consent", were accurate and sufficient. But, that left it for the trial judge to explain that a further precondition to the jury's verdict of guilty of such an offence was that the prosecution was obliged to prove beyond reasonable doubt that the applicant had committed "an offence" in the "place" of his wife, which was "ordinarily used for human habitation". So far as the "place" and "human habitation" were concerned, the trial judge correctly instructed the jury that those elements had been proved by the evidence and were not in contest. But that left the need for accurate instruction about the "offence" which the prosecution had identified and on which it relied. It was clear from the start of the trial that the applicant's real dispute about his guilt of the offence against s 401(2) of the Criminal Code concerned his allegation of the wife's consent and whether what he had done was "an offence" in the circumstances. He said that he had been invited to the place by the wife in order to repair her car. He did not give sworn evidence of this; but it was clear that this was his defence. So much was indicated by what he said in the recorded interview with police admitted into evidence; by his questioning of the wife; and by his oral exchanges with the judge that inferentially reflected what he would have said to the jury in his address (which was not recorded). These considerations made it important that the trial judge should explain the elements of the "offence" in question and all of them. Although there were other potential "offences" which the prosecution could have nominated to constitute that component of the charge in the first count of the indictment, the trial proceeded on the footing that the relevant "offence" was one against s 61(1) of the Act. The applicant did not contest that he was bound by a violence restraining order made under the Act. His contest related to whether he had 27 Krakouer v The Queen (1998) 194 CLR 202. 28 cf Heron v The Queen (2003) 77 ALJR 908 at 916-917 [49]; 197 ALR 81 at 93. Kirby breached that order and, if there was a "technical" breach, whether the specific invitation of the wife and/or the course of their conduct after the order was made, amounted to a defence to the "offence" by reference to the terms of s 62(1) of the Act. In the way the trial proceeded, the alleged course of the parties' conduct fell away because the applicant asserted that he had a specific invitation and therefore the wife's express consent. A preliminary question is presented as to whether it was sufficient for the prosecution to show that the applicant was in breach of the order under the Act, so that any defence that he might have, pursuant to s 62(1), would not deprive that breach of amounting to the commission of an "offence", sufficient (without more) to sustain that element in s 401(2) of the Criminal Code. Because the applicant had elected to dismiss his counsel, the trial judge had no assistance on the meaning of "offence"; nor was adequate assistance on this question given by the prosecutor. I am very conscious of the difficulties which the trial judge faced in the circumstances. A majority of this Court29 has now concluded that, where s 401(2) of the Criminal Code refers to an "offence", and where the "offence" relied upon is (as here) a breach of s 61(1) of the Act, the defence available to the accused by s 62 of the Act is not incorporated into the reference to the "offence" in s 401(2) of the Criminal Code. I accept that this is an arguable interpretation of the interaction of the Criminal Code and the Act. Adopting it has certain advantages. It recognises the differentiation within the Act between the "offence" in s 61(1) and the "defence" provided by s 62 of the Act. It recognises that a breach of a restraining order is, on the face of things, a criminal wrongdoing and an "offence" which normally warrants punishment. It avoids the need to give the jury for this purpose potentially confusing instructions to the effect that the onus of establishing any defence under s 62 of the Act would be on the accused according to the civil standard and not the criminal standard. It reaffirms the normal rule of criminal trials that the accused need prove nothing and that the burden of proof of all elements of an offence remains on the prosecution throughout. Despite these attractions, this is not, in my view, the correct or preferable construction of the two statutes as they interact in such a case. It is not the appropriate way to resolve the apparent paradox presented by their intersection. In this I agree with the approach of the Court of Criminal Appeal. As a matter of principle, the correct interpretation of the Act, in the context of s 401(2) of the Criminal Code, necessitates reading the two provisions together to decide whether the relevant "offence" has been committed. This 29 The joint reasons at [47]-[54]; cf reasons of Gleeson CJ at [19]-[22]. Kirby follows from the fact that the commission of an "offence" is a precondition to the establishment of the very serious crime postulated by s 401(2) of the Criminal Code. Were an accused to have a watertight defence of consent, as contemplated by s 62(1) of the Act, the inculpating ingredient of an "offence", as mentioned in s 401(2), would not then be established. Indeed, if the person bound by the order under the Act could satisfy the decision-maker that he or she had acted with the consent of the person protected by the order, an issue might arise as to whether a "breach" of the order had been committed at all so as to constitute an "offence" against s 401(2). In a particular case the establishment of the defence could negative the "offence" and show that there was no true "breach" of the order. Alternatively, it could show that any "breach" was purely technical and such as to fall short of the kind of "offence" contemplated in s 401(2). Any other reading of the requirement of s 401(2) of the Criminal Code to establish the commission of an "offence", where the "offence" propounded is a breach of a violence restraining order under the Act, would be artificial in the circumstances. It would ignore the obvious purpose of s 401(2) of the Criminal Code. That is to attach very serious consequences to the commission of an "offence" in another person's place. If, for example, a husband, bound by such a restraining order, received an urgent request by a wife, protected by such an order, to come to the aid of a sick or injured child, it is inconceivable that s 401(2) would be read as providing that the husband committed the serious "offence" against the Criminal Code postulated simply by entering the place of the wife in response to her invitation (ie acting with her consent). To the extent that there is any doubt concerning the importation of the defence in s 62 of the Act into the notion of the "offence" referred to in s 401(2) of the Criminal Code where a breach of s 61(1) of the Act is the "offence" relied upon, I would resolve that doubt by holding that the "offence" contemplated is the one envisaged by reading ss 61 and 62 of the Act together. The alternative view now favoured by the majority leaves it open to punish an accused, at the option of the prosecutor, for an aggravated "offence" based on a breach of the Act while depriving the accused of the defence which Parliament has explicitly enacted with respect to that "offence" in the Act. It would require much clearer statutory language than appears in the intersecting legislation to drive me to such a construction. It could not be said that the issue of the wife's consent, as an exculpation of the "offence" element in the charge under s 401(2) was a minor or uncontested issue in the trial of the applicant. On the contrary, as the trial judge correctly told the jury, the critical question raised by the applicant in the trial was that of the wife's consent. This made it important that the element of the "offence" be accurately explained to the jury. This, in turn, made it important that the ingredients of the "offence", as provided by the Act, be correctly described. The jury should have been told that, where a breach of a restraining order was shown (as for example conduct in contravention of the terms of the order), the applicant would have a defence to such an offence against the Act if he had proved, on the Kirby balance of probabilities, that he was acting with the consent of the person protected by the order, in this case the wife. Although the applicant obliquely raised this issue at the trial, the trial judge, addressing the "red herring" of honest and reasonable mistake, instructed the jury as a matter of law that the applicant's belief of the existence of consent was no defence to the commission of an offence. So far as the "offence" against the Act was concerned, this was an incorrect statement of law. The Court of Criminal Appeal was correct to so conclude. It follows that the Court of Criminal Appeal was right in its opinion that an error of law had occurred in the trial judge's directions to the jury on the ingredients of the offence in the first count of the indictment. The respondent initially accepted that there had been such a misdirection. However, in this Court, following questions and comments from the Court, the prosecutor sought to withdraw that concession. In my view, the prosecutor's first thoughts were right. The initial concession was correctly made. An error of law having been established in the explanation to the jury of an element of the offence, the applicant has demonstrated a basis for intervention to require a new trial. The two ingredients of consent Notwithstanding the established error, the Court of Criminal Appeal decided to apply the proviso. The decision in that regard belonged to the Court of Criminal Appeal in accordance with the Criminal Code. Given the role of that Court and the functions of this Court, we should not attempt, without good reason, to second guess decisions of a court of criminal appeal on such questions30. Correctly, the Court of Criminal Appeal pointed to the strong evidentiary case against the applicant. But another consideration weighed heavily with that Court. This was the suggestion that, once lack of consent as an element of the offence against the Criminal Code was proved beyond reasonable doubt (as by inference it was by virtue of the jury's verdict of guilty), it necessarily followed that the "offence" constituted by breach of the restraining order was also established so that the presence of consent as a defence to that offence could equally be taken to have been excluded by the jury's verdict. In a sense, the latter consent was more clearly shown because upon it the applicant himself had carried the burden of persuasion. Potentially, there is a logical flaw in this reasoning. There were two ingredients to the offence charged in respect of which consent had to be 30 Postiglione v The Queen (1997) 189 CLR 295 at 337. Kirby considered. One was the explicit reference to "consent" in the terms of s 401(2) of the Criminal Code (which refers in terms to being present in a place "without that other person's consent"). The other was the implicit reference to consent as a defence to the "offence" which the prosecution had propounded as the "offence" committed by the applicant at the wife's place, being his alleged breach of the order under the Act. The two ingredients are not exactly the same. The explicit reference to "consent" refers to entering or being in the "place". The implicit element of lack of consent refers to the breach of the restraining order under the Act. Whilst the two issues are very similar and the relevant evidence will often overlap, they are distinct, being concerned with two successive ingredients in the "offence" provided by the Criminal Code and relating to conduct, potentially at different points of time. However, although there was an error on the part of the trial judge the question remains whether, in the circumstances, the error was merely technical. In the way the applicant's trial was conducted, did it deprive the applicant of the possibility of an acquittal? Did it result in no miscarriage of justice so that the Court of Criminal Appeal was authorised to dismiss the appeal by invoking the proviso? The suggested departure from procedural fairness To answer these questions it is necessary to return to the conduct of the trial. Because the applicant was unrepresented for the greater part of the trial, it was the duty of the trial judge to provide him with such information and advice concerning his rights as was necessary to put him in a position where he could make "an effective choice whether he should exercise those rights"31. This is so, although the dismissal of counsel followed the applicant's own decision. Whilst making it clear that the judge is not advising an accused on how rights should be exercised or the case conducted, the judge must assume the difficult task of ensuring that the accused is made aware of the important choices that have to be made. Such choices are informed by practical and forensic circumstances, not simply legal principles. In this case the trial judge certainly attempted to explain the decisions that the applicant faced. However, in this Court the applicant argued that because of the incorrect view that the prosecutor, and subsequently the trial judge himself, expressed about the elements of the offence in the first count, he was not afforded an effective choice on the most critical decision he had to make. This concerned whether he should give oral evidence. On the basis of the trial judge's advice that the burden of establishing all relevant facts rested on the prosecution alone, the applicant's decision not to give evidence was, so it was said, a rational 31 R v Gidley [1984] 3 NSWLR 168 at 181. Kirby one. But once it was accepted that, to determine the existence or otherwise of the ingredient of an "offence" against the Act, it was relevant for the jury to take into account any evidence that the applicant might have given on the issue of his defence to such a postulated "offence", the decision took on a different complexion. Had the applicant been informed accurately concerning the elements of the charge he faced on the first count (and the significance in that connection of his failure to give evidence in relation to a defence to the propounded "offence") counsel argued before this Court that the applicant might well have elected to give evidence. Had he given evidence, it was possible that his testimony would have persuaded the jury that the wife had indeed given her consent to his visit to her place. In default of such evidence, the jury were obliged to proceed upon little more than the record of his unsworn interview with the police. Because that interview was controlled by police questioning, and did not follow a course designed to favour the applicant's interests, it could scarcely be equated to the potential worth, in a jury's eyes, of the applicant's sworn version of events. In short, the applicant's case was that his failure to give evidence was influenced by the trial judge's mis-statement of the law relevant to the "offence" ingredient of the charge. The trial judge's mistaken appreciation of the point and statements about the elements of the offence to the applicant not only caused the jury to fail to consider all of the relevant legal issues appropriately. It also potentially misled the applicant as to the manner in which he should conduct his own defence. Because, at the time, he was unrepresented this defect, in the course that the proceedings took, could not be regarded as insignificant. It involved a miscarriage of justice and required a retrial. So went the case for the applicant. For a time I was persuaded by it. Influential upon my initial impression was a feeling that the trial judge's explanation about the applicant's right to silence and his entitlement to the last address, whilst technically impeccable, may in the context have misled the applicant concerning the realities of his trial. Most modern juries know that an accused is entitled to give evidence. If he or she fails to do so, some juries may respond adversely to the omission to state on oath the accused's version of events and to submit to cross-examination, with the risks that that entails. In the ordinary course, these are the considerations that counsel would have explained to the applicant. They were not explained, or explained fully, by the trial judge. This may have led the applicant into a false confidence about the course he then embarked upon. It is impossible to say whether, had the applicant been accurately, fully and privately advised, he would have given evidence and, if he did, what impact that evidence might have had on the jury. No affidavit of any such suggested evidence was proffered to the Court of Criminal Appeal. So where does this leave the conclusion of that Court that the proper outcome in the appeal was the application of the proviso? Kirby Application of the proviso to the case No radical or fundamental error: The applicant primarily contended that the mistakes that had occurred at his trial constituted a failure in the trial process of the kind that could be described as "[e]rrors … so radical or fundamental that by their very nature they exclude the application of the proviso"32. On that footing, he submitted that the proviso did not apply to save proceedings that had so significantly miscarried33. This suggested category, demanding a retrial of significantly flawed criminal proceedings resulting in a conviction, has frequently been mentioned in the cases34. However, rarely, has it been the foundation of appellate orders35. That this is so is scarcely surprising. Normally, as in this case, the statute that gives jurisdiction and power to a court of criminal appeal is the same statute that contains the legislative instruction for the disposition of criminal appeals where a legal error at trial is shown. That instruction includes the requirements of the proviso. On the face of things, therefore, the proviso governs all cases where error is demonstrated: whether such error is fundamental or non-fundamental. Supposing that a category of "radical or fundamental" error exists that, in some way, relieves a court of criminal appeal from applying the saving requirements of the proviso, the applicant's case is certainly not to be so classified. In difficult circumstances, without full assistance from both parties, the trial judge attempted to perform the duties cast upon him when the accused became unrepresented. A mistake occurred in his instruction of the jury. Yet the prosecution case was far from a weak one. Evidence relevant to consent, and material for the applicant pertinent to that issue, had been placed before the jury. All that was apparently omitted was any sworn evidence which the applicant might have elected to give. He might, or might not, have given such evidence had he been accurately informed of the possible significance of evidence addressed to one of the ingredients of the offence with which he was charged: namely, whether he had a defence to the suggested "offence" of being in the 32 Wilde v The Queen (1988) 164 CLR 365 at 372-373. 33 R v Henderson [1966] VR 41 at 43; Couper (1985) 18 A Crim R 1 at 7-8; Wilde v The Queen (1988) 164 CLR 365 at 373 citing R v Hildebrandt (1963) 81 WN (Pt 1) (NSW) 143 at 148; Green v The Queen (1997) 191 CLR 334 at 371 per McHugh J. 34 See eg Mraz v The Queen (1955) 93 CLR 493 at 514; Glennon v The Queen (1994) 179 CLR 1 at 9; Heron v The Queen (2003) 77 ALJR 908 at 915 [41]; 197 ALR 81 at 91. 35 cf Stanton v The Queen (2003) 77 ALJR 1151 at 1163-1164 [72]; 198 ALR 41 at 58 per Gummow and Callinan JJ (in dissent). Kirby wife's place contrary to the order made under the Act. What follows from this possibility? Does it require a retrial in this case? No relevant miscarriage of justice: The Court of Criminal Appeal decided the appeal by the application of the proviso according to its terms.36 The application to this Court must be approached in accordance with the ordinary the proviso involving an principles governing matters notwithstanding a misdirection of law in the course of the trial37. invocation of I accept that special vigilance is appropriate in a case like this where the applicant was unrepresented at a time when critical decisions about the adequacy and correctness of the trial judge's directions to the jury had to be made. I also accept that the correct explanation to the jury of the elements of the offence is extremely important. Where there is a mistake in the trial judge's directions in this regard it is less likely that the proviso will be applied than in other cases. Recent observations suggest that, as a general rule, the proviso may be applied less commonly today than was previously the case38. This may be the result of an appreciation by appellate courts that, to some extent at least, the mere fact that a prisoner demonstrates that a legal error has occurred in the instruction to the jury establishes that a miscarriage of justice of a particular kind has happened39. Neither in this Court nor in the Court of Criminal Appeal was a complaint made that the trial judge did not invite the applicant's attention to the practical, as distinct from, the legal, consequences of giving no evidence before the jury. In these circumstances I must put the anxiety that I feel about the trial judge's explanations to the applicant in that regard to one side. In this way, the decision comes down to whether the failure of the trial judge to explain to the applicant the possible relevance of the ingredients of the "offence", and the significance in 36 Criminal Code, s 689(1). 37 Zoneff v The Queen (2000) 200 CLR 234 at 246 [26]; cf 267-268 [85]-[89]; Conway v The Queen (2002) 209 CLR 203 at 220 [38], 232 [80]; Heron v The Queen (2003) 77 ALJR 908 at 915-917 [43]-[52]; 197 ALR 81 at 91-94. 38 Whittaker (1993) 68 A Crim R 476 at 484; Gilbert v The Queen (2000) 201 CLR 414 at 438 [86]; Doggett v The Queen (2001) 208 CLR 343 at 384-385 [153]. 39 Driscoll v The Queen (1977) 137 CLR 517 at 524; Domican v The Queen (1992) 173 CLR 555 at 565-567; Green v The Queen (1997) 191 CLR 334 at 346, 371- 372; KBT v The Queen (1997) 191 CLR 417 at 423-424; Farrell v The Queen (1998) 194 CLR 286 at 293-294, 326; Festa v The Queen (2001) 208 CLR 593 at Kirby that regard of the defence provided by s 62 of the Act, might possibly have deprived the applicant of the necessary impetus to give evidence about the invitation that he said his wife had given him, with the consequences that such sworn evidence might have had for the jury's deliberations and their verdict on the first count. In judging that question in a practical context it is relevant to take into consideration that, in this case, the applicant's defence to the "offence" against the Act was not, in substance, different from his defence to the "offence" against s 401(1) of the Criminal Code. In fact, it was the same. And it was very simple. He did not dispute the application of the order under the Act. Instead, he said, relevantly, that he was excused from the apparent breach of the order because the wife had invited him to her new place of residence to repair her car. That, he said, answered s 401(1) of the Criminal Code. It rendered that provision inapplicable for two reasons. The prosecution could not prove that the applicant was there "without [the wife's] consent". It could also not prove that he committed an "offence", namely breach of the Act, when regard was had to the defence available to him under s 62. Because the applicant's defence was already before the jury in the form of his statement to the police, his questioning of the wife and, inferentially, his address to the jury, and was rejected by the jury in convicting the applicant, it cannot be said that the jury did not consider and decide the point in this case. It is true that the applicant did not give evidence, as he might have done. However, that was the result of an election that he made following advice from the trial judge which, so far as it went, was legally accurate. To a very large extent, the difficulties which the applicant faced, real and practical as they were, followed his dismissal of his counsel and his attempt thereafter, without legal assistance, to represent himself. The evidence sustaining the absence of consent was strong. It was by no means confined to the evidence of the wife. Given, therefore, the commonality of the answer which the applicant gave to the elements of the first count of the indictment and the adverse decision of the jury on that contest in respect of the issue of "consent", I am unconvinced that, had the jury been properly instructed on the element of the "offence" involved in the charge presented by the first count, a different result might have ensued. Nor am I convinced that explanation of that element by the trial judge might have made the difference to propel the applicant into the witness box where the other pressing circumstances of his trial had failed to do so. Kirby It was therefore open to the Court of Criminal Appeal to apply the proviso and to confirm the applicant's conviction notwithstanding the error of law that arose in the instruction of the jury. Upon the issues argued in this application, no error has been shown to entitle this Court to disturb the order of the Court of Criminal Appeal. Order Special leave should be granted but the appeal should be dismissed.

HIGH COURT OF AUSTRALIA AND THE QUEEN APPELLANT RESPONDENT [2013] HCA 27 5 June 2013 ORDER Grant of special leave to appeal of 15 February 2013 against the whole of the judgment and order of the Court of Criminal Appeal of New South Wales given and made on 24 May 2011 revoked. Special leave to appeal against the appellant's conviction on count 2 on 31 July 2012 granted. Leave to amend the notice of appeal granted. Treat the appeal as instituted and heard instanter. Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation I M Barker QC with P R Coady for the appellant (instructed by Eddy Neumann Lawyers) P W Neil SC with S M McNaughton SC for the respondent (instructed by Commonwealth Director of Public Prosecutions) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Conspiracy – Where appellant charged with conspiracy to defraud Commonwealth contrary to ss 86(1) and 29D of Crimes Act 1914 (Cth) – to dishonestly cause loss to Where appellant charged with conspiracy Commonwealth contrary to s 135.4(5) of Criminal Code (Cth) ("Code") – Where both charges related to single scheme to defraud Commonwealth of taxation revenue – Where two charges necessary because of legislative change – Whether s 135.4(5) of Code required prosecution to prove appellant entered into agreement after commencement of provision – Whether "state of affairs" could be physical element of s 135.4(5) of Code – Whether being party to an existing agreement a "state of affairs" – Whether s 135.4(5) of Code given retrospective effect if offence satisfied by continuation of agreement formed before commencement of provision. Words and phrases – "agreement", "conspiracy", "state of affairs". Crimes Act 1914 (Cth), ss 29D, 86(1) and 86(2). Criminal Code (Cth), ss 4.1, 4.2, 135.4(5) and 135.4(9). FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL AND KEANE JJ. The appellant and three co-accused were charged on indictment with two counts of conspiracy. The first count alleged that the four accused and another person conspired to defraud the Commonwealth between 1 January 1997 and 23 May 2001 contrary to ss 86(1) and 29D of the Crimes Act 1914 (Cth) ("the Crimes Act"). The second count, as subsequently amended, alleged that the four accused and another person conspired to dishonestly cause a loss to the Commonwealth between 24 May 2001 and 23 October 2006 contrary to s 135.4(5) of the Criminal Code (Cth) ("the Code"). The two counts were particularised as arising out of a single scheme to defraud the Commonwealth of taxation revenue which began in 1997 and continued until 2006. The second count was necessary because s 29D of the Crimes Act was repealed with effect from 24 May 2001. Section 86(2) of the Crimes Act, which provided for a greater penalty where a person conspired to defraud the Commonwealth under s 29D, was also repealed from that date. As and from 24 May 2001, the offence of conspiracy to defraud the Commonwealth was contained exclusively in s 135.4 of the Code1. The appellant's principal contention is that count 2 was charged contrary to the provisions of the Code in that the particulars demonstrated that count 2 did not allege the making of a new conspiracy on or after 24 May 2001. As a result the count was bad. That contention was developed in a number of arguments which we will discuss after first summarising the course of proceedings. The course of proceedings On 27 April 2011, before the appellant's trial, the appellant sought a permanent stay of the proceedings on the second count in the indictment on the ground that it was an abuse of process, in that there was neither an allegation nor proof of a second agreement being made after 23 May 2001 so as to constitute a second conspiracy. The application for the stay was refused by the learned 1 Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth) ("the Amendment Act"). Hayne Crennan Bell primary judge, Simpson J2. An appeal against her Honour's decision to the New South Wales Court of Criminal Appeal ("the CCA") was dismissed3. Before the primary judge, the appellant argued that given the allegations against each accused involved the making of only one agreement, in 1997, it was not open to the prosecution to charge a further offence under the Code. The primary judge rejected that argument, holding that the appellant's arguments were based on the "fundamental misconception … that the offence of conspiracy depends upon the formation of, or entry into, an agreement, as distinct from the existence of, or participation in, such an agreement."4 (emphasis in original) The CCA upheld the primary judge's decision. Johnson J, with whom Tobias AJA and Hall J agreed, said that "the offence of conspiracy depends upon the existence of, or participation in an agreement, and not the precise timing of its formation."5 An application to this Court for special leave to appeal against the decision of the CCA was refused on 15 June 2011. After a trial and upon the verdict of a jury, the appellant was convicted of both counts of conspiracy on 31 July 2012. Thereupon, the appellant made a fresh application to this Court for special leave to appeal against the decision of the CCA of 24 May 2011. That application was granted on 15 February 2013; but because the appellant has been convicted of the offence charged in count 2, an appeal against the CCA's order dismissing the appellant's appeal against the refusal of the primary judge to grant a permanent stay of prosecution, would be incompetent. 2 R v Agius [2011] NSWSC 367. 3 Agius v The Queen (2011) 80 NSWLR 486. [2011] NSWSC 367 at [34]. (2011) 80 NSWLR 486 at 502 [62]. Hayne Crennan Bell That having been said, the order of the CCA was an order which affected the final result of the appellant's trial in that, if the stay had been granted, the appellant could not have been convicted of the offence. Accordingly, an appeal would lie by special leave against the final judgment of 31 July 2012 convicting the appellant6. When this appeal was called on for hearing, the attention of the appellant's counsel was drawn to this irregularity in the form of the appeal; and counsel were invited to amend the notice of appeal to seek to have the conviction on the second count set aside on the grounds that the CCA erred in: holding that proof of the conspiracy alleged in the second count did not require evidence of an agreement entered into on or after 24 May 2001; and holding that under the Code an offence of conspiracy could be established by an agreement entered into by the appellant before s 135.4(5) of the Code commenced in operation on 24 May 2001. The Court proceeded to hear argument on those grounds. For the reasons which follow, the arguments advanced by the appellant should be rejected. The decisions of the primary judge and the CCA were correct. First, it is necessary to understand the terms of the legislation under which the appellant and his co-accused were charged. The charged offences As at 1 January 1997 until immediately prior to 24 May 2001, s 29D of the Crimes Act relevantly provided: "A person who defrauds the Commonwealth ... is guilty of an indictable offence. Penalty: 1,000 penalty units or imprisonment for 10 years, or both." 6 See Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 at 483 [5]-[6]; [2002] HCA 22. Hayne Crennan Bell During the same period, s 86 of the Crimes Act relevantly provided: "(1) A person who conspires with another person to commit an offence against a law of the Commonwealth punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence and is punishable as if the offence to which the conspiracy relates had been committed. (2) Despite subsection (1), if the person conspires with another person to commit an offence against section 29D of this Act, the conspiracy is punishable by a fine not exceeding 2,000 penalty units, or imprisonment for a period not exceeding 20 years, or both." From 24 May 2001, s 135.4 of the Code relevantly provided: "(5) A person is guilty of an offence if: the person conspires with another person to dishonestly cause a loss, or to dishonestly cause a risk of loss, to a third person; and the first-mentioned person knows or believes that the loss will occur or that there is a substantial risk of the loss occurring; and the third person is a Commonwealth entity. Penalty: Imprisonment for 10 years. For a person to be guilty of an offence against this section: the person must have entered into an agreement with one or more other persons; and the person and at least one other party to the agreement must have intended to do the thing pursuant to the agreement; and Hayne Crennan Bell the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement. (12) A person cannot be found guilty of an offence against this section if, before the commission of an overt act pursuant to the agreement, the person: (a) withdrew from the agreement; and took all reasonable steps to prevent the doing of the thing." The parties' submissions Need for a second agreement The appellant submitted that, absent the making of a second agreement after the commencement of s 135.4(5) of the Code, the second count was bound to fail because an essential element of the offence created by s 135.4(5) was the formation of the conspiracy. The appellant argued that the conduct criminalised by s 135.4(5) is the formation of the offensive agreement. In this regard, the appellant relied upon a general view of what is involved in the concept of conspiracy and on s 135.4(9)(a), which could not be satisfied by an event occurring before s 135.4(5) commenced on 24 May 2001. The respondent countered that, for the purposes of s 135.4(5), the accused must be a party to an agreement on or after the commencement of s 135.4(5). Counsel for the respondent adverted to the observation of French CJ in R v LK that "[t]he offence of conspiracy ... is committed where there is an agreement" (emphasis added) to commit an offence7. That requirement was satisfied here by the circumstance that the appellant was a conspirator, in the sense that the combination between the offenders continued, after 23 May 2001. Contextual support for the proposition that participation in, rather than entry into, an agreement is the physical element of s 135.4(5) was said to be afforded by the terms of the defence of withdrawal from the agreement under s 135.4(12) of the (2010) 241 CLR 177 at 183 [1]; [2010] HCA 17. Hayne Crennan Bell Code. Further support for this submission was said to be provided by the decision of the House of Lords in Director of Public Prosecutions v Doot8, which was followed and applied in both the primary judgment9 and in the decision of the CCA10. The appellant argued that Doot is not a helpful analogy because it was decided according to the common law of England, which "sits awkwardly" with the Code. As to s 135.4(9)(a) of the Code, the respondent argued that this provision is not concerned to add to the elements of the offence, which are fully stated by State of affairs The appellant also argued that the primary judge11 and the CCA12 erred in holding that the physical element of the offence constituted by s 135.4(5) was a "state of affairs" under s 4.1 of the Code. It was said that the CCA's view of "state of affairs" was not applicable to cases like the present, which involved the making of an agreement. The respondent countered that s 4.1(2) of the Code expressly contemplates that a physical element of an offence may be "conduct" and that "conduct" may include a state of affairs. Accordingly, s 4.1 of the Code enables the physical element of the offence to be satisfied by a state of affairs, namely the existence of a conspiratorial agreement between the appellant and his co-conspirators after the commencement of s 135.4(5). The requirement of s 135.4(5) that there be a conspiratorial agreement was satisfied because the antecedent agreement continued to exist and to be implemented. [2011] NSWSC 367 at [36]-[38]. 10 (2011) 80 NSWLR 486 at 499-501 [51]-[52], [57]. 11 [2011] NSWSC 367 at [45]. 12 (2011) 80 NSWLR 486 at 504 [79]. Hayne Crennan Bell Retrospectivity and legislative history The appellant submitted that the interpretation of s 135.4(5) adopted by the primary judge and the CCA gives the provision a retrospective effect which cannot be reconciled with ordinary principles of statutory interpretation whereby clear words are required to criminalise conduct which was lawful when it occurred, or with the transitional provisions applicable to the Code. It was common ground between the parties that the transitional provisions13 had the effect of preserving criminal responsibility for conduct prior to 24 May 2001 after ss 29D and 86(2) of the Crimes Act were repealed; but the appellant sought to go further, contending that, by reason of the transitional provisions related to the repeal of ss 29D and 86(2) of the Crimes Act, the Crown did not "need" to charge two counts of conspiracy in respect of an agreement formed before 24 May 2001 and with steps taken in furtherance of the conspiracy from 1997 to 2006. A second agreement a necessity? It may be noted that each of the arguments advanced on the appellant's behalf involves reliance upon the proposition that the conduct criminalised by s 135.4(5) of the Code was the formation of a conspiracy between the conspirators rather than conspiring. It is important in that context to bear in mind the distinction made by Mason CJ, Wilson, Deane, Dawson and Toohey JJ in Ahern v The Queen where their Honours said14: "In conspiracy cases a clear distinction is to be made between the existence of a conspiracy and the participation of each of the alleged conspirators in it. Conspiracy is the agreement of two or more persons to do an unlawful act ... and it is the fact of the agreement, or combination, to engage in a common enterprise which is the nub of the offence." 13 Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth), Sched 2, Item 418. 14 (1988) 165 CLR 87 at 93; [1988] HCA 39. Hayne Crennan Bell The appellant sought to support his central proposition by reference to the discussion, in LK, of s 11.5(1) of the Code, a provision cast in materially similar terms to s 135.4(5) of the Code. There, Gummow, Hayne, Crennan, Kiefel and Bell JJ, with whom Heydon J agreed, said15: "Intentional entry into an agreement to commit an offence contrary to s 11.5(1) exposes a person to liability for conspiring to commit that offence should any party to the agreement do an act in furtherance of it." The appellant seized upon the word "entry" in this passage. But their Honours were not concerned to expound the term "conspires" with an eye to the issue of present concern. That this is so can be seen from a later passage where their Honours went on to say16: "The offence has a single physical element of conduct: conspiring with another person to commit a non-trivial offence." In this respect, there was no point of difference between the observations of the plurality and the observations of the Chief Justice17, which, as mentioned above, were relied upon by the respondent. The decision of the House of Lords in Doot affords persuasive support for the approach of the courts below. That was a case in which the House of Lords held that a conspiracy may exist contrary to the common law of England, even though it was originally formed outside the jurisdiction18. Lord Pearson explained that, at common law, parties are taken to "conspire" after the formation of their agreement for so long as they adhere to their agreement. His Lordship said19: 15 (2010) 241 CLR 177 at 233 [136]. 16 (2010) 241 CLR 177 at 234 [141]. 17 (2010) 241 CLR 177 at 183 [1]. 18 The provisions of ss 15.4 and 135.5 of the Code deal with conspiracies formed outside the jurisdiction. 19 [1973] AC 807 at 827. Hayne Crennan Bell "When the conspiratorial agreement has been made, the offence of conspiracy is complete, it has been committed, and the conspirators can be prosecuted even though no performance has taken place20. But the fact that the offence of conspiracy is complete at that stage does not mean that the conspiratorial agreement is finished with. It is not dead. If it is being performed, it is very much alive. So long as the performance continues, it is operating, it is being carried out by the conspirators, and it is governing or at any rate influencing their conduct. The conspiratorial agreement continues in operation and therefore in existence until it is discharged (terminated) by completion of its performance or by abandonment or frustration or however it may be." The appellant's argument that Doot is not helpful, because it reflects the common law of England, which "sits awkwardly" with the Code, is contrary to the authority of this Court's decision in LK. In LK, this Court held that, except as expressly modified by the statutory text, common law concepts informed the provisions of the Code concerned with conspiracy21. That this should have been so is hardly surprising given that the terms "conspiracy" and "conspire" are not defined in the Code. As Spigelman CJ explained in R v RK and LK in terms approved on appeal by this Court22: "[T]he references to 'conspiracy' in the Code are of a technical legal character for purposes of the application of these principles. The terminology which the drafters of the code used were words and phrases which had well established legal meanings. ... [T]he references to 'conspiracy' in the Code were also intended by the drafters of the Code to be 'fixed by the common law', subject to any (compare R v Wyles; Ex parte express statutory modification Attorney-General (Qld)23)." 20 R v Aspinall (1876) 2 QBD 48 at 58-59 per Brett JA. 21 (2010) 241 CLR 177 at 206 [59], 210 [72], 218 [93]. 22 (2008) 73 NSWLR 80 at 90-91 [47]-[49]. 23 [1977] Qd R 169 at 177-182. Hayne Crennan Bell A second respect in which LK has a direct bearing on the resolution of this case lies in this Court's reasoning, which is inconsistent with the view that s 135.4(9)(a) is an element of the offence in s 135.4(5) of the Code24. Section 135.4(9)(a) is not the specification of a physical element of the offence. The reference in s 135.4(9)(a) to "an agreement" is to the agreement being the conspiracy that is criminalised in s 135.4(5). To adapt what was said by the plurality in LK (in relation to the analogous pars (a) and (b) of s 11.5(2)), pars (a) and (b) of s 135.4(9) are "epexegetical of what it is to 'conspire' with another person to commit an offence within the meaning of" s 135.4(5)25. Their Honours went on to explain that the equivalent to s 135.4(9)(a) served to clarify a point made by the Gibbs Committee26: "The mental element necessary to constitute the crime of conspiracy has been said to be the intention to do the unlawful act which was the subject of the agreement, but it seems more accurate to say that what is required is an intention to be a party to an agreement to do an unlawful act". (emphasis of the plurality in LK; footnote omitted) In this regard, the primary judge observed that27: "It would be highly artificial – to an absurd degree – to suggest that an agreement that had its inception prior to the commencement of the relevant provisions of the Code, but that continued, and continued to be implemented, thereafter, could not be prosecuted under the Code because the alleged conspirators failed, on the change of legislation, to renew, or remake, their agreement." The CCA also rejected the contention that s 134.5(9)(a) required in this case that "a person must have entered into an agreement with one or more other 24 (2010) 241 CLR 177 at 205-206 [57], 231-232 [131]-[133]. 25 (2010) 241 CLR 177 at 232 [133]. 26 (2010) 241 CLR 177 at 232 [133] citing Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters (July 1990) at 393 [40.1] extracted in LK at 223 [105]. 27 [2011] NSWSC 367 at [40]. Hayne Crennan Bell persons on or after 24 May 2001."28 Consistently with this Court's decision in LK as applied by the CCA in this case, s 134.5(9)(a) does not define an element of the offence of conspiracy. It requires, before a person can be found guilty of an offence against the section, that the Crown prove the existence of or participation in an agreement. It does not require that the Crown prove that the agreement was formed on or after 24 May 2001. State of affairs The appellant argued that s 135.4(5) criminalised active conduct, namely entry into an agreement. The respondent countered that s 4.1 applies to a state of affairs. The relevant state of affairs existed on and after commencement of s 135.4(5), which criminalised adherence to the combination after 23 May 2001. Chapter 2 of the Code applies, by s 2.2(1), its codification of general principles of criminal responsibility to all offences against the Code. By s 3.1 of the Code, it is provided: "(1) An offence consists of physical elements and fault elements. (2) However, the law that creates the offence may provide that there is no fault element for one or more physical elements. The law that creates the offence may provide different fault elements for different physical elements." At the relevant time, s 4.1 of the Code provided: "(1) A physical element of an offence may be: conduct; or a circumstance in which conduct occurs; or a result of conduct. 28 (2011) 80 NSWLR 486 at 503-504 [72]. Hayne Crennan Bell In this Code: conduct means an act, an omission to perform an act or a state of affairs. engage in conduct means: do an act; or omit to perform an act." Section 4.2 of the Code provides relevantly: "(1) Conduct can only be a physical element if it is voluntary. If the conduct constituting an offence consists only of a state of affairs, the state of affairs is only voluntary if it is one over which the person is capable of exercising control." Sub-sections (1) and (2) of s 4.1 expressly postulate that one may engage in conduct which is a state of affairs. The court must interpret the Code so as to conform to this postulate. The CCA correctly held29 that the physical element of s 135.4(5) could be satisfied by "conduct" in its extended sense, which, by virtue of s 4.1 of the Code, includes a state of affairs. The term "state of affairs" is not defined. It is not necessary for present purposes to undertake an exhaustive consideration of its content. It is sufficient to indicate our agreement with the reasoning of the CCA, which involved the 29 (2011) 80 NSWLR 486 at 504 [76]. 30 (2011) 80 NSWLR 486 at 504-505 [79]-[82]. Hayne Crennan Bell The ordinary meaning of a "state of affairs" is "the way in which events or circumstances stand disposed (at a particular time or within a particular sphere)."31 The term so understood accommodates the concept of a continuing offence. . An ongoing conspiracy is a continuing offence and thereby conduct within Being a party to an ongoing conspiracy is conduct constituted by a state of affairs and thereby conduct within the meaning of the Code. the meaning of the Code. So far as each party to the agreement is concerned, continued participation in an agreement is a state of affairs over which each participant is capable of exercising control. So much is expressly recognised by s 135.4(12) of the Code. Each day that a party adheres to the agreement is another day on which the offence of conspiracy is committed. To be a party to an agreement satisfies the physical element of an offence in that it is voluntary conduct, which is, as a matter of ordinary language, a state of affairs; and indeed a state of affairs over which that party is capable of exercising control so as to enable one to speak of that party as engaging in the conduct. Thus, in Muslimin v The Queen, French CJ, Gummow, Hayne, Heydon and Kiefel JJ described a law which made it an offence to have possession or charge of a particular kind of chattel as a proscription "directed not to [an] activity but to the existence of a state of affairs"32. Similarly, in Beckwith v The Queen, a decision from which the appellant sought to derive support, Gibbs J (as his Honour then was) said of the statute there under discussion33: 31 The Oxford English Dictionary, 2nd ed (1989), vol 16 at 551, "state", sense 5a. 32 (2010) 240 CLR 470 at 479 [16]; [2010] HCA 7. 33 (1976) 135 CLR 569 at 575; [1976] HCA 55. Hayne Crennan Bell "The words 'has in his possession' are not synonymous with 'gets possession of'; the latter expression connotes activity, the former a state of affairs." Nor does the appellant's reference to the observations of McHugh J in Krakouer v The Queen34 advance his argument under this heading. The observations of McHugh J repeat the warning of Jordan CJ35 against a court assuming to remedy an apparently inadvertent legislative omission to proscribe conduct of a particular kind by giving a "penal provision a wider scope than its language admits." Continuing adherence to an agreement made at an earlier point in time is, as a matter of ordinary language, readily described as a state of affairs. Retrospectivity The contentions advanced on the appellant's behalf fail to appreciate that s 135.4(5) has not been given retrospective effect by the decisions of the courts below. The offence with which he was charged in the second count did not involve an allegation that he breached s 135.4(5) by making an agreement before that provision came into force. His offence was in being party to an agreement after the provision came into force. The transitional provision in the Amendment Act, Sched 2, Item 418, which related to the repeal of ss 29D and 86(2), provided relevantly: "(1) Despite the ... repeal of a provision by this Schedule, that provision continues to apply, after the commencement of this item, in relation an offence committed before the commencement of this item; or proceedings for an offence alleged to have been committed before the commencement of this item; or 34 (1998) 194 CLR 202 at 223 [62]; [1998] HCA 43. 35 Ex parte Fitzgerald; Re Gordon (1945) 45 SR (NSW) 182 at 186. Hayne Crennan Bell any matter connected with, or arising out of, such proceedings; as if the ... repeal had not been made." This transitional provision preserves the operation of s 29D to criminalise conduct which occurred before 24 May 2001; it does not purport to extend the operation of those provisions beyond that date. From 24 May 2001, it is s 135.4(5) which operates to criminalise adherence to an agreement whenever the agreement might have been made. In the course of oral argument on the appeal it became apparent that the appellant's submission that the Crown did not "need" to charge two counts of conspiracy could not be taken at face value. The appellant's counsel did not accept that a conviction on count 1 justified a sentence which reflected the criminality involved in the appellant's adherence to the conspiracy between 24 May 2001 and 23 October 2006. Conclusion and orders The grant of special leave to appeal of 15 February 2013 should be revoked and, in its place, special leave granted to appeal against the appellant's conviction on count 2 on 31 July 2012. Leave to amend the notice of appeal should be granted. The appeal against the conviction on count 2 should be dismissed. We would make the following orders: Grant of special leave to appeal of 15 February 2013 against the whole of the judgment and order of the Court of Criminal Appeal of New South Wales given and made on 24 May 2011 revoked. Special leave to appeal against the appellant's conviction on count 2 on 31 July 2012 granted. Leave to amend the notice of appeal granted. Treat the appeal as instituted and heard instanter. Appeal dismissed. GAGELER J. Adopting its abbreviations, I join in the orders proposed in the joint reasons for judgment and agree with the reasons there stated for rejecting the second and third arguments of the appellant. These are my reasons for rejecting the first argument of the appellant. The effect of the holding in LK36 is that: the physical element of the offence of conspiracy created by s 135.4 of the Code is to be found in s 135.4(5); and the word "conspires" is to be understood by reference to the common law, subject to express statutory modification by other provisions in s 135.4 and elsewhere in the Code. The common law meaning of "conspires" being picked up subject to express statutory modification, the reasoning of the House of Lords in Doot37 is not in all respects applicable to the offence of conspiracy created by s 135.4 of the Code. The question answered in Doot (whether an agreement made outside territorial jurisdiction can be tried as a conspiracy) is answered in respect of s 135.4 by s 135.5 and s 15.4. The passage in the speech of Lord Pearson quoted in the joint reasons for judgment must be qualified: the first sentence by s 135.4(9)(c); the last sentence by s 135.4(12)(b). Subject to s 135.4(9) and s 135.4(12), the central proposition for which Doot is authority at common law is nevertheless applicable to the physical element of the offence of conspiracy created by s 135.4 of the Code that is to be found in s 135.4(5): the physical element of conspiracy may be satisfied by continuing adherence to an existing agreement. Viscount Dilhorne put it this way38: "When there is agreement between two or more to commit an unlawful act all the ingredients of the offence are there and in that sense the crime is complete. But a conspiracy does not end with the making of the agreement. It will continue so long as there are two or more parties to it intending to carry out the design." 36 (2010) 241 CLR 177 at 206 [59], 210 [72], 224 [107]; [2010] HCA 17. 38 [1973] AC 807 at 822-823. He went on to refer to conspiracy as a "continuing offence" at common law39. That proposition was endorsed as part of the common law of Australia in Savvas v The Queen40. The question on which the fate of the first argument of the appellant turns is whether the express statutory requirement of s 135.4(9)(a) (that a person "must have entered into an agreement with one or more other persons" to be guilty of the offence created by s 135.4) modifies the content given to the word "conspires" in s 135.4(5) by the application of that common law proposition so as to make the act of entering into an agreement part of the physical element of the offence created by s 135.4. In my view, it does not. The focus of the text of s 135.4(9)(a) is not on the act of entering into an agreement with one or more other persons. It is rather on the existence of an agreement entered into with one or more other persons. That focus is confirmed by reference to the legislative history to which attention was drawn in LK41. In recommending the retention of the offence of conspiracy, the Interim Report of the Review of Commonwealth Criminal Law Committee chaired by Sir Harry Gibbs observed that the word "conspires" then appearing in s 86 of the Crimes Act appeared to import common law principles of conspiracy42 and quoted in full the following "frequently cited definition of conspiracy at common law"43: "A conspiracy consists not merely in the intention of two or more but in the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means. So long as such a design rests in intention only it is not indictable. When two agree to carry it into effect, the very plot is an act in itself, and the act of each of the parties, promise against promise, actus contra actum, capable of being enforced if lawful, punishable if for a criminal object or for the use of criminal means". 39 [1973] AC 807 at 823. 40 (1995) 183 CLR 1 at 8; [1995] HCA 29, citing Doot [1973] AC 807 at 823 and R v G, F, S and W [1974] 1 NSWLR 31 at 43-44. 41 (2010) 241 CLR 177 at 203-204 [51]-[53], 220-222 [99]-[101]. 42 Review of Commonwealth Criminal Law, Interim Report: Principles of Criminal Responsibility and Other Matters (July 1990) at 361 [34.11]. 43 At 358 [34.8], quoting Mulcahy v The Queen (1868) LR 3 HL 306 at 317. The subsequent report of the Criminal Law Officers Committee of the Standing Committee of Attorneys-General made clear that the prototype for s 135.4(9)(a) was to be read in juxtaposition to the prototype for s 135.4(9)(b) and that they were in combination directed to teasing out the essential distinction made in that common law definition. They were explained as having been drafted so as to "clearly separate the agreement component of the conspiracy from the intent to commit an offence pursuant to that agreement"44. When that focus is appreciated, s 135.4(9)(a) can be seen to be directed not to modifying the content given to "conspires" by the common law but to reinforcing that content by making clear that a person who "conspires" is necessarily a person who "agrees". In so doing, it is consistent with the physical element of conspiracy being satisfied by continuing adherence to an existing agreement. I am unable to dismiss the first argument of the appellant quite as emphatically as did the primary judge in the observation quoted in the joint reasons for judgment. That is because I am unable to read any part of s 135.4 as addressed to transitional considerations. However, for the reasons I have given, I think the better view to be that s 135.4(9)(a) does not modify the common law meaning of "conspires" in s 135.4(5) so as to make the act of entering into an agreement part of the physical element of the offence created by s 135.4. Consistently with s 135.4(9)(a), a person "conspires" within the meaning of s 135.4(5) by continuing to adhere to an existing agreement. 44 Australia, Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (1992) at 99. See also Australia, Senate, Criminal Code Bill 1994, Explanatory Memorandum at 40.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT [2014] HCA 29 13 August 2014 ORDER Appeal allowed. Set aside the order of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 5 June 2013 and, in its place, order that: the appeal be allowed; the appellant's conviction be quashed; and a new trial be had. On appeal from the Supreme Court of New South Wales Representation T A Game SC with D P Barrow for the appellant (instructed by Blair Criminal Lawyers) J H Pickering SC with J A Girdham SC for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Evidence – Admissibility – Opinion evidence – Section 79(1) of Evidence Act 1995 (NSW) exception for evidence of opinion based wholly or substantially on specialised knowledge based on training, study or experience – Prosecution adduced evidence of anatomist regarding physical characteristics common to persons depicted in images – Whether opinion based wholly or substantially on specialised knowledge. Words and phrases – "opinion rule", "specialised knowledge", "training, study or experience", "wholly or substantially". Evidence Act 1995 (NSW), ss 76, 79. FRENCH CJ, KIEFEL, BELL, GAGELER AND KEANE JJ. The appellant was convicted of the armed robbery of an employee of a suburban hotel following a trial in the District Court of New South Wales (Bozic DCJ and a jury). Closed-circuit television cameras ("CCTV") recorded the robbery. At the trial, over objection, the prosecution adduced evidence from an anatomist, Professor Henneberg, of anatomical characteristics that were common to the appellant and to one of the robbers ("Offender One"). Professor Henneberg's opinion was based on viewing the CCTV images of the robbery and images of the appellant taken while he was in custody. The appellant appealed against his conviction to the Court of Criminal Appeal of the Supreme Court of New South Wales (Macfarlan JA, Campbell J and Barr AJ)1. He challenged the admission of Professor Henneberg's evidence, contending that it was not within the exception to the "opinion rule"2 for which s 79(1) of the Evidence Act 1995 (NSW) ("the Evidence Act") provides. The Court of Criminal Appeal that Professor Henneberg's evidence had been rightly admitted because it was evidence of opinion based on specialised knowledge based on Professor Henneberg's training, study and experience3. In the alternative, the Court of Criminal Appeal held that Professor Henneberg's evidence had been rightly admitted because repeated viewing of the images had rendered him an "ad hoc expert"4. The appeal was dismissed. contention, holding rejected his On 14 March 2014, French CJ and Keane J granted special leave to appeal. The appellant's first ground of appeal asserts that the Court of Criminal Appeal erred in holding that the evidence of Professor Henneberg "involved an area of specialised knowledge based on training, study or experience" and in holding that Professor Henneberg's opinion was wholly or substantially based on that area of specialised knowledge. The second to fourth grounds are particulars that the alternative, asserts fifth ground, The first. the 1 Honeysett v The Queen [2013] NSWCCA 135. 2 The opinion rule is set out in s 76(1) of the Evidence Act 1995 (NSW), which states: "Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed." 3 Honeysett v The Queen [2013] NSWCCA 135 at [66] per Macfarlan JA. 4 Honeysett v The Queen [2013] NSWCCA 135 at [60], citing R v Tang (2006) 65 NSWLR 681. Bell Professor Henneberg's evidence did not meet the basal test of relevance5 and for that reason was inadmissible6. For the reasons to be given, the fifth ground is not reached. Professor Henneberg's opinion was not based on specialised knowledge. It follows that the decision to admit the evidence was a wrong decision on a question of law7. The respondent did not submit that, in the event legal error was established, the appeal should be dismissed under the proviso in s 6(1) of the Criminal Appeal Act 1912 (NSW). The appeal must be allowed, the orders of the Court of Criminal Appeal of New South Wales set aside and a new trial ordered8. The factual background The robbery took place inside the hotel on 17 September 2008 after the close of trading. Three employees were present at the time. Each of the three robbers was disguised and each had some form of weapon. Offender One was holding a pink-handled hammer; wore dark clothing covering the trunk and limbs; and wore a covering of white material, shrouding the head and face, leaving only a narrow slit exposing the eyes. Offender One's hands were gloved. A gap between sleeves and gloves revealed a small area of skin. The descriptions of Offender One given by the witnesses were necessarily vague. Estimates of Offender One's height varied from five foot two inches to "about six [foot] or so". One witness described Offender One as "thinnish" and "kind of brown around the eyes … he's not like a white looking guy". Another witness said that Offender One had "dark skin, dark eyebrows" and that he 5 Section 55(1) of the Evidence Act provides that evidence "that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding". 6 Section 56(2) of the Evidence Act provides that evidence "that is not relevant in the proceeding is not admissible". 7 Criminal Appeal Act 1912 (NSW), s 6. 8 The power to order a new trial is provided in s 8(1) of the Criminal Appeal Act 1912 (NSW). On the hearing of the appeal the appellant accepted that, in the event his appeal was allowed, the appropriate consequential order was to order a new trial. Bell "looked Indian or …". Two witnesses described the head covering worn by Offender One as consistent with being a white t-shirt. The pink-handled hammer was left at the scene of the robbery. The three robbers fled in a vehicle, which one witness identified as an Audi RS4. On 25 November 2008, the police recovered a stolen Audi RS4. The evidence pointed strongly to this vehicle as the robbers' getaway vehicle. A sports bag was found inside the vehicle. It contained a white t-shirt, which might have been the head covering worn by Offender One. Analysis of a sample taken from the pink-handled hammer contained DNA which had the same DNA profile as that of the appellant. Analysis of a sample taken from the inside neck of the t-shirt also contained DNA which had the same DNA profile as that of the appellant. The prosecution case was circumstantial and largely depended upon the DNA evidence. The appellant gave evidence denying involvement in the robbery. The appellant is Aboriginal. He said that he had been staying in an area known as "the Block" in Redfern at the time of the robbery. He led evidence of the practice of sharing clothing among members of the Aboriginal community at the Block. The voir dire The objection to the admission of Professor Henneberg's evidence was determined at a voir dire hearing which was conducted before the jury was empanelled. No oral evidence was adduced at the hearing. The evidence at the hearing included: two expert certificates9 signed by Professor Henneberg; an expert certificate signed by Dr Sutisno, an anatomist; and one signed by Glenn Porter, a forensic photographer. The latter two certificates were tendered in the appellant's case and contained criticisms of Professor Henneberg's opinion and methodology. The second of Professor Henneberg's certificates responded to some of those criticisms. Professor Henneberg identified his specialised knowledge, based on his training, study and experience, as biological anthropology and anatomy. He has a doctorate and post-doctoral qualifications in biological anthropology. At the date of his evidence, Professor Henneberg occupied the Wood Jones Chair of Anthropological and Comparative Anatomy in the School of Medical Sciences at 9 Evidence Act, s 177. Bell the University of Adelaide. Professor Henneberg also identified "forensic identification" as within his specialised knowledge, stating that he has practised this discipline (also described as "anatomical identification") since 1976 and has published the results of his forensic research in peer-reviewed international journals and in books. He described forensic identification as the comparison of individuals based on the inspection of images. He stated that he has provided "numerous expert certificates to police" and that his evidence has been admitted in Australian courts. Professor Henneberg's curriculum vitae recorded his research interests as "[h]uman evolution and microevolution, evolution of human brain, theory of biocultural evolution, human ecology, population genetics, paleodemography and historic demography, palaeopathology human physical growth and development, anatomical variation, body composition, ergonomy". The titles of the many articles authored by Professor Henneberg that are listed in his curriculum vitae appear to reflect these wide research interests. Professor Henneberg stated that the police had asked him to conduct anatomical comparisons of an offender and a known person. He had been supplied with a disc containing a copy of the CCTV recording of the robbery and asked to identify the anatomical features of Offender One. He had been supplied in a separate envelope with two discs containing images of the appellant. These included video recordings showing the appellant moving about his cell and carrying out various activities. These recordings and some still photographs of the appellant were all taken on 16 January 2009. Professor Henneberg made his assessment of the physical characteristics of Offender One before he opened the envelope containing the images of the appellant. He did this to avoid the psychological phenomenon of "displacement", which is the tendency to read the features of a known person into poor quality images. Professor Henneberg expressed this opinion of the physical characteristics of Offender One: "He is an adult male of ectomorphic (thin, 'skinny') body build. His shoulders are approximately the same width as his hips. His body height is medium compared to other persons, and to familiar objects (eg doorways) visible in the images from the [offence]. He carries himself very straight, so that his hips are standing forward while his back has a very clearly visible lumbar lordosis (the small of his back is bent forward) overhung by the shoulder area. Although the offender covers his head and Bell face with a cloth (what looks like a T-shirt) … the knitted fabric is elastic and adheres closely to the vault of his skull (= braincase). This shows that his hair is short and does not distort the layout of the fabric. The shape of the head is clearly dolichocephalic (= long head, elongated oval when viewed from the top) as opposed to brachycephalic (= short head, nearly spherical). The offender is right-handed in his actions. … Although most of the body of the offender is covered by clothing, head wrap and gloves, an area of naked skin above his wrist (between the glove and the sleeve) in images … is visible and can be compared to the skin colour of a female hotel employee on the same images." Professor Henneberg expressed this opinion of the physical characteristics of the appellant: "[The appellant] is an adult male of ectomorphic (= slim) body buil[d]. His hips and shoulders are of approximately the same width. His stance is very straight with well marked lumbar lordosis and pelvis shifted forward. His skull vault is dolichocephalic when viewed from the top. Comparison of lateral (side) and front views of his head also indicates the head ... is long but narrow. His skin is dark, darker than that of persons of European extraction, but not 'black'. … He is right-handed – uses his right hand to sign documents." Professor Henneberg concluded that "[t]here is [a] high degree of anatomical similarity between [Offender One] and [the appellant]". His opinion was strengthened by the fact that he was unable to discern any anatomical dissimilarity between the two individuals. Professor Henneberg's method of "forensic identification" can be shortly described. Professor Henneberg looks at an image of a person and forms an opinion of the person's physical characteristics. His opinion is not based on anthropometric measurement or statistical analysis. Professor Henneberg stated that statistical analysis may yield reliable results when anthropometric measurements can be taken or the photographs are taken at the same angle and in prescribed body positions. Surveillance images and standard police photographs are not of this standard. He explained that his examination of images does not differ from that of a lay observer save that he is an experienced anatomist and he has a good understanding of the shape and proportions of details of the human body. Much of Dr Sutisno's and Mr Porter's evidence was directed Professor Henneberg's capacity to express an opinion of the high degree of Bell anatomical similarity between Offender One and the appellant. As will appear, the prosecution did not seek to adduce Professor Henneberg's opinion in this respect. Dr Sutisno and Mr Porter were critical of Professor Henneberg's failure to explain how artefacts produced by lens distortion had been taken into account in the identification of the physical characteristics of Offender One. In light of the quality of the images and the head to foot clothing worn by Offender One, Dr Sutisno disputed the capacity to make an assessment of that individual's height, gender, maturity, build and hair that Professor Henneberg's conclusion respecting the last-mentioned characteristic was "purely guess work and extremely subjective". Mr Porter, who at the date of his certificate had submitted a PhD thesis for examination on the subject of the reliability of CCTV studies of images, was not aware of any She considered length. Opinion evidence under the Evidence Act Before turning to the reasons given by Bozic DCJ for holding that Professor Henneberg's evidence was admissible, there should be reference to the provisions of Pt 3.3 of the Evidence Act, which governs opinion evidence, and to decisions of the New South Wales Court of Criminal Appeal concerning the admissibility of opinion evidence of anatomical comparison, sometimes described as "body mapping". Section 76(1) of the Evidence Act states a rule of exclusion: "Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed." An opinion is an inference drawn from observed and communicable data10. Professor Henneberg's identification of Offender One's physical characteristics consisted of inferences from his observations of the CCTV images. It was evidence of opinion. The evidence was adduced to prove the existence of a fact about the existence of which the opinion was expressed. The evidence was inadmissible unless it came within one of the exceptions to the opinion rule in Pt 3.3 of the Evidence Act. The exception on which the prosecution relied is contained in s 79(1) of the Evidence Act: 10 Lithgow City Council v Jackson (2011) 244 CLR 352 at 359 [10] per French CJ, Heydon and Bell JJ; [2011] HCA 36; Wigmore, Evidence in Trials at Common Law, Chadbourn rev (1978), vol 7, §1917; Law Reform Commission, Evidence, Report No 26 (Interim), (1985), vol 1 at 76 [156]. Bell "If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge." Section 79(1) states two conditions of admissibility: first, the witness must have "specialised knowledge based on the person's training, study or experience" and, secondly, the opinion must be "wholly or substantially based on that knowledge". The first condition directs attention to the existence of an area of "specialised knowledge". "Specialised knowledge" is to be distinguished from matters of "common knowledge"11. Specialised knowledge is knowledge which is outside that of persons who have not by training, study or experience acquired an understanding of the subject matter. It may be of matters that are not of a scientific or technical kind and a person without any formal qualifications may acquire specialised knowledge by experience. However, the person's training, study or experience must result in the acquisition of knowledge. The Macquarie facts, truths, or Dictionary defines "knowledge" as "acquaintance with principles, as from study or investigation"12 (emphasis added) and it is in this sense that it is used in s 79(1). The concept is captured in Blackmun J's formulation13 in Daubert v Merrell Dow Pharmaceuticals Inc: "the word 'knowledge' connotes more than subjective belief or unsupported speculation. … [It] applies to any body of known facts or to any body of ideas inferred from such facts or accepted as truths on good grounds"14. The second condition of admissibility under s 79(1) allows that it will sometimes be difficult to separate from the body of specialised knowledge on which the expert's opinion depends "observations and knowledge of everyday 11 Evidence Act, s 80(b). 12 Macquarie Dictionary, rev 3rd ed (2001) at 1054. 13 The formulation stated was with respect to r 702 of the Federal Rules of Evidence. At that time, the rule provided: "If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise." 14 509 US 579 at 590 (1993), cited in R v Tang (2006) 65 NSWLR 681 at 712 [138] Bell affairs and events"15. It is sufficient that the opinion is substantially based on specialised knowledge based on training, study or experience. It must be presented in a way that makes it possible for a court to determine that it is so based16. As explained in the joint reasons in Dasreef Pty Ltd v Hawchar, the starting point in determining the admissibility of evidence of opinion is relevance: what is the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving17. It is to be noted that at trial Professor Henneberg's opinion was tendered to prove that Offender One and the appellant shared similar physical characteristics in support of a conclusion of identity. R v Tang and Morgan v The Queen In R v Tang, the Court of Criminal Appeal dealt with a challenge to evidence that a person depicted in still frames taken from a CCTV recording of a robbery was the same as a person depicted in a police photograph. The evidence in that case was given by Dr Sutisno. Her opinion took into account her assessment of the "relatively upright posture" of the person in each of the images18. The observation was an essential element of her opinion of identity19. Spigelman CJ (Simpson and Adams JJ concurring) cautioned against introducing an extraneous idea such as "reliability" into the determination of admissibility under s 79(1)20. Importantly, his Honour laid emphasis on the requirement of knowledge by reference to the statement in Daubert set out earlier 15 Velevski v The Queen (2002) 76 ALJR 402 at 427 [158] per Gummow and Callinan JJ; 187 ALR 233 at 268; [2002] HCA 4. 16 HG v The Queen (1999) 197 CLR 414 at 427 [39] per Gleeson CJ; [1999] HCA 2. 17 (2011) 243 CLR 588 at 602 [31] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2011] HCA 21. 18 R v Tang (2006) 65 NSWLR 681 at 688 [26]. 19 R v Tang (2006) 65 NSWLR 681 at 712 [136]. 20 R v Tang (2006) 65 NSWLR 681 at 712 [137]. Bell in these reasons21. The opinion that the individual displayed "relatively upright posture" was not wholly or substantially based on Dr Sutisno's specialised knowledge of anatomy22. His Honour found that it had not been established at the trial that the comparison of physical attributes – "body mapping" – constituted an area of "specialised knowledge" capable of supporting an opinion of identity23. In Morgan v The Queen, opinion evidence given by Professor Henneberg as to the high degree of anatomical similarity between images of a disguised offender recorded by CCTV and police photographs of the accused was found to have been wrongly admitted24. The Court of Criminal Appeal was critical of the lack of research into the reliability of Professor Henneberg's method25. It was also critical of the lack of explanation of Professor Henneberg's capacity to detect anatomical similarity between individuals in circumstances in which no part of the body of the person depicted in CCTV images was exposed26. The voir dire determination No doubt mindful of the statements in Tang, the prosecution did not apply to tender at the trial Professor Henneberg's opinion of the "high degree of anatomical similarity" between Offender One and the appellant. The voir dire was conducted on the understanding that Professor Henneberg's evidence would be confined to three topics: the physical characteristics of Offender One; the physical characteristics of the appellant; and the absence of observable anatomical dissimilarity between the two. 21 R v Tang (2006) 65 NSWLR 681 at 712 [138], citing 509 US 579 at 590 (1993) per 22 R v Tang (2006) 65 NSWLR 681 at 713 [140]. 23 R v Tang (2006) 65 NSWLR 681 at 714 [146]. 24 (2011) 215 A Crim R 33 at 61 [146] per Hidden J (Beazley JA agreeing at 35 [2], Harrison J agreeing at 62 [155]). 25 Morgan v The Queen (2011) 215 A Crim R 33 at 59 [138]. 26 Morgan v The Queen (2011) 215 A Crim R 33 at 60 [140]. Bell Consistently with the statement in Dasreef, Bozic DCJ first asked whether "the opinion [is] relevant, including whether the field of knowledge is one in which expert opinion can properly be called". His Honour concluded that Professor Henneberg's evidence of the similarities between Offender One and the appellant was a relevant item of "circumstantial identification evidence". He moved to a consideration of whether Professor Henneberg possessed specialised knowledge based on his training, study or experience. His Honour found that Professor Henneberg has specialised knowledge based on study and experience in relation to anatomy and anatomical features and experience in the application of that knowledge to the observation of CCTV images and still photographic images. He concluded that Professor Henneberg's opinion as to similarities was based wholly or substantially on that knowledge. that reference illustrated His Honour conclusion by Judge Bozic considered that Professor Henneberg's opinion complied with the obligation to furnish the trier of fact with the criteria to enable it to be tested27. Professor Henneberg's second certificate, in which he explained that he assessed that Offender One was an adult "on the basis that the individual was not one metre short and the limb to trunk proportions were within adult range, bearing in mind that children have short extremities in proportion to trunk and large heads in relation to the body". Judge Bozic appears to have accepted that Professor Henneberg's specialised knowledge included his experience in the conduct of "forensic identification" as earlier described. His Honour took into account the criticisms of Professor Henneberg's method made by Dr Sutisno and Mr Porter. He said that expert evidence based on factual material that is deficient or unreliable is not for that reason inadmissible. His Honour did not, in terms, consider whether an opinion of the characteristics of a human body based on looking at CCTV images is an area of specialised knowledge. exercise declined Judge Bozic reject Professor Henneberg's evidence under ss 135 and 137 of the Evidence Act. His Honour concluded that the evidence of similarity between Offender One and the appellant was "of potentially significant probative value". The conclusion took into account that the prosecution case was circumstantial and otherwise dependent on the DNA evidence. discretions the 27 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at 729 [59] per Bell The trial Professor Henneberg's evidence in the trial accorded with the opinions in his certificates. In the course of evidence-in-chief the CCTV footage of the robbery was played and Professor Henneberg pointed out the physical characteristics that he discerned in Offender One. Evidence-in-chief continued: Professor as part of your comparison were you aiming to find any discernible differences? Yes that's the first thing I was looking for. [If] one obvious difference between the offender and the accused is found is that sufficient to exclude the accused? If it's an obvious and consistent difference yes it is. Did you find any differences? Professor Henneberg gave a fuller account of the basis for his conclusions in the course of oral evidence. He considered that it would have been obvious to anyone looking at the CCTV footage that Offender One is male. He concluded that Offender One was an adult based on comparing Offender One's body size with familiar objects and with the other persons depicted in the CCTV images. He concluded that Offender One was a male because he did not appear to have breasts nor the distribution of fat deposits around the hips and buttocks that are consistent with the characteristics of a female. He concluded that Offender One's hair was short because the shape revealed by the fabric adhering to the head was consistent with a characteristic shape of the human brain case. He concluded that Offender One was of skinny build because the clothing worn by the offender was not very bulky and clothing hangs closer to the central line of the body in the case of a thin person, a feature observable in the images of Offender One. He also observed that Offender One did not appear to have a protruding stomach. Professor Henneberg accepted that to a certain degree loose-fitting clothing makes it difficult to tell the shape of a person's spine. He explained that each and every person has lumbar lordosis; it is a normal anatomical feature. His conclusion that Offender One was of medium height was an approximation based on comparing the offender to other objects, such as doors. Bell The Court of Criminal Appeal The appellant argued the Court of Criminal Appeal that Professor Henneberg's evidence at his trial was "essentially identical" to his evidence in Morgan and should have been rejected for that reason28. The focus of Macfarlan JA's analysis (with which the other members of the Court agreed) was directed to the rejection of that submission. His Honour observed that the opinion in Morgan, of the existence of a high level of anatomical similarity, had come close to evidence of identification29. As such it was strongly arguable that admission of that evidence would have conflicted with authority, including Tang30. His Honour commented that the difficulty with opinion evidence of that kind is the absence of established criteria for determining the number and type of similarities that would support it31. He distinguished Morgan because Professor Henneberg had not given evidence in the appellant's trial of a conclusion drawn from his observations of identified common characteristics32. evidence of Macfarlan JA said that the evidence that Professor Henneberg had not discerned dissimilarity between the persons depicted in the two sets of images was not that "[Professor Henneberg's] evidence, and the CCTV footage itself, would have made it clear to the jury that the clothing of the offender made it very difficult to do more than identify a very limited number of characteristics"34. In the circumstances, his Honour said that the jury could not have reasonably His Honour similarity33. considered 28 Honeysett v The Queen [2013] NSWCCA 135 at [57]. 29 Honeysett v The Queen [2013] NSWCCA 135 at [56]. 30 Honeysett v The Queen [2013] NSWCCA 135 at [56], referring to R v Tang (2006) 65 NSWLR 681; Murdoch v The Queen (2007) 167 A Crim R 329 and R v Gardner [2004] EWCA Crim 1639. 31 Honeysett v The Queen [2013] NSWCCA 135 at [56]. 32 Honeysett v The Queen [2013] NSWCCA 135 at [57]. 33 Honeysett v The Queen [2013] NSWCCA 135 at [68]. 34 Honeysett v The Queen [2013] NSWCCA 135 at [68]. Bell understood Professor Henneberg's evidence as an assertion that there were no points of difference between the two individuals35. Macfarlan JA did not give separate consideration to the preconditions for admissibility under s 79(1). His Honour appears to have accepted Bozic DCJ's analysis in these respects. The critical passage in his Honour's reasons is set out "In addition to his formal qualifications in anatomy, Professor Henneberg is a person of extensive practical experience in examining CCTV footage, with all its deficiencies, and attempting to identify characteristics of persons depicted in it. The view he expressed on this topic is necessarily subjective and not amenable to elaboration beyond the reasons he gave, or to measurement and calculation." The submissions The appellant submits that an opinion that is "necessarily subjective" and "not amenable to elaboration" or to "measurement and calculation" is not one that is wholly or substantially based on "specialised knowledge". He contends that in order to constitute an area of "specialised knowledge" there must be an independent means of gauging the reliability and validity of an opinion based on that knowledge. On the hearing of the appeal, the respondent did not support Bozic DCJ's analysis that Professor Henneberg has specialised knowledge based on his experience examining CCTV images. The only specialised knowledge on which the respondent now seeks to support Professor Henneberg's evidence is his knowledge of anatomy. The respondent argues that the appellant's challenge to the reliability of Professor Henneberg's method is not to the point. This is because Professor Henneberg did not give evidence in the trial of identification based on anatomical comparison. It is said that his evidence was no more than an account of the characteristics of the body of the person depicted in each set of images and was incapable of supporting a conclusion of identity: it was evidence of opinion wholly or substantially based on Professor Henneberg's specialised knowledge of anatomy. 35 Honeysett v The Queen [2013] NSWCCA 135 at [68]. 36 Honeysett v The Queen [2013] NSWCCA 135 at [63]. Bell In this Court the respondent submitted the fact that Professor Henneberg's evidence had been adduced to prove was that the appellant was not excluded as Offender One. The submission should not go unremarked. The contention that Professor Henneberg's evidence was adduced to prove no more than that the appellant could not be excluded as the offender was not the basis on which it was tendered. As earlier noted, the evidence was admitted as an item of circumstantial evidence to support a conclusion of identity. This was the use made of the evidence by the prosecutor at the trial. In her closing address, the prosecutor took the jury through each of the physical characteristics of Offender One identified by Professor Henneberg and continued: "[W]hen [Professor Henneberg] assessed then the [appellant] from the known images he found all those characteristics to be the same. … I'd suggest that you would accept his evidence as being of assistance to you, because it's reliable science and it is something that he can explain, even though you may not be able to see all of the things that he's been able to see." It will be recalled that Bozic DCJ declined to exclude the evidence because of its significant probative value as "circumstantial identification evidence". In due course his Honour directed the jury that "the similarities observed by Professor Henneberg between the CCTV footage at the [hotel] and the footage of the [appellant] in custody at the police station" were one of the circumstances upon which it was open to draw the conclusion of guilt. The respondent is nonetheless right to say that the appeal does not raise an issue of whether "body mapping" was shown at the trial to constitute an area of "specialised knowledge"37. In light of the concession that Professor Henneberg's specialised knowledge was confined to anatomy, the appeal does not provide the occasion to consider the appellant's larger challenge respecting the requirement of an independent means of validation before an opinion may be found to be based on "specialised knowledge". 37 See R v Gray [2003] EWCA Crim 1001; R v Gardner [2004] EWCA Crim 1639; R v Tang (2006) 65 NSWLR 681; Murdoch v The Queen (2007) 167 A Crim R 329; R v Atkins [2010] 1 Cr App R 8; Morgan v The Queen (2011) 215 A Crim R 33; Otway v The Queen [2011] EWCA Crim 3; Shepherd v The Queen [2012] 2 NZLR Bell Professor Henneberg's opinion was not based on his undoubted knowledge of anatomy. Professor Henneberg's knowledge as an anatomist, that the human population includes individuals who have oval shaped heads and individuals who have round shaped heads (when viewed from above), did not form the basis of his conclusion that Offender One and the appellant each have oval shaped heads. That conclusion was based on Professor Henneberg's subjective impression of what he saw when he looked at the images. This observation applies to the evidence of each of the characteristics of which Professor Henneberg gave evidence. The respondent accepted that, with the possible exception of the opinion that Offender One and the appellant are both right-handed, it would have been open to prosecuting counsel in the course of her closing address to have invited the jury to inspect the images and find that Offender One and the appellant share each of the characteristics identified by Professor Henneberg without the necessity of evidence. The reservation respecting right-handedness was based on the circumstance that Professor Henneberg's master's thesis was on the topic of handedness. However, Professor Henneberg's specialised knowledge of handedness was not the basis of his opinion. Professor Henneberg inferred that Offender One and the appellant are each right-handed because he observed that Offender One used his right hand to remove cash from the till and the appellant used his right hand to write his name and insert a swab into his mouth. Professor Henneberg's evidence gave the unwarranted appearance of science to the prosecution case that the appellant and Offender One share a number of physical characteristics38. Among other things, the use of technical terms to describe those characteristics – Offender One and the appellant are both ectomorphic – was apt to suggest the existence of more telling similarity than to observe that each appeared to be skinny. Professor Henneberg's opinion was not based wholly or substantially on his specialised knowledge within s 79(1). It was an error of law to admit the evidence. 38 HG v The Queen (1999) 197 CLR 414 at 429 [44] per Gleeson CJ; Morgan v The Queen (2011) 215 A Crim R 33 at 61 [145] per Hidden J. Bell Ad hoc expertise As earlier noted, an alternative basis for the Court of Criminal Appeal's conclusion that Professor Henneberg's evidence was admissible was as an ad hoc expert. Macfarlan JA said that Professor Henneberg's detailed examination of the CCTV footage over a lengthy period had qualified him as such39. In Butera v Director of Public Prosecutions (Vict)40 this Court endorsed the statement of Cooke J in R v Menzies41 that a person may "be a temporary expert in the sense that by repeated listening to the tapes he has qualified himself ad hoc". In issue was the admission of the transcript of a tape recording as an aid to assist the jury in its understanding of an indistinct recording. Butera and Menzies concerned the common law of evidence. The particular problem that they addressed is the subject of provision under the Evidence Act42. Whether the New South Wales Court of Criminal Appeal is right to consider that the repeated listening to an indistinct tape recording or viewing of videotape or film may qualify as an area of specialised knowledge based on the listener's, or viewer's, experience does not arise for determination in this appeal43. The respondent acknowledged that Professor Henneberg had not examined the CCTV footage over a lengthy period before forming his opinion. In this Court, the respondent does not maintain the submission that Professor Henneberg's opinion was admissible as that of an ad hoc expert. Orders For these reasons the following orders should be made. Appeal allowed. 39 Honeysett v The Queen [2013] NSWCCA 135 at [60]. 40 (1987) 164 CLR 180; [1987] HCA 58. 41 Butera v Director of Public Prosecutions (Vict) (1987) 164 CLR 180 at 188 per Mason CJ, Brennan and Deane JJ, citing [1982] 1 NZLR 40 at 49. 42 Evidence Act, s 48(1)(c). 43 R v Tang (2006) 65 NSWLR 681 at 709 [120], referring to Butera v Director of Public Prosecutions (Vict) (1987) 164 CLR 180; R v Leung (1999) 47 NSWLR 405 and Li v The Queen (2003) 139 A Crim R 281. Bell Set aside the order of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 5 June 2013 and, in its place, order that: the appeal be allowed; the appellant's conviction be quashed; and a new trial be had.

HIGH COURT OF AUSTRALIA COMMISSIONER OF STATE REVENUE APPELLANT AND ACN 005 057 349 PTY LTD RESPONDENT Commissioner of State Revenue v ACN 005 057 349 Pty Ltd [2017] HCA 6 8 February 2017 M88/2016 & M89/2016 ORDER Matter No M88/2016 Appeal allowed. Set aside pars 2 to 7 of the order of the Court of Appeal of the Supreme Court of Victoria made on 8 December 2015, and in their place order that the appeal to that Court is dismissed with costs. The amended assessments issued by the appellant in compliance with par 3(a) of the order of the Court of Appeal of 8 December 2015 be set aside. The respondent repay to the appellant $1,248,753.38, together with interest pursuant to s 58 of the Supreme Court Act 1986 (Vic) on and from the date of payment of that amount by the appellant to the respondent. The respondent pay the appellant's costs of the appeal to this Court. Matter No M89/2016 Appeal allowed. Set aside pars 2 to 5 of the order of the Court of Appeal of the Supreme Court of Victoria made on 8 December 2015, and in their place order that the appeal to that Court is dismissed with costs. The respondent pay the appellant's costs of the appeal to this Court. On appeal from the Supreme Court of Victoria Representation R M Niall QC, Solicitor-General for the State of Victoria with C G Button and N A Kotros for the appellant (instructed by Solicitor for the Commissioner of State Revenue) N J Young QC with T M Grace and C van Proctor for the respondent (instructed by Daniel Allison & Associates) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of State Revenue v ACN 005 057 349 Pty Ltd Taxation – Land tax – Where land tax assessments were paid – Where Commissioner did not amend assessments after error detected – Whether Commissioner under duty compellable by mandamus to amend and refund excess land tax – Whether Commissioner's refusal to amend amounted to conscious maladministration – Whether amended assessment had effect that excess tax was never land tax – Whether proceedings were barred under Land Tax Act 1958 (Vic). Words and phrases – "amended assessment", "charged, levied and collected", "completeness and accuracy", "conscious maladministration", "land tax", "tax paid under, or purportedly paid under". Land Tax Act 1958 (Vic), ss 19, 90AA, 92A. KIEFEL AND KEANE JJ. We agree that the appeals should be allowed for the reasons given by Bell and Gordon JJ. There are two aspects of the decision of the Court of Appeal upon which we wish to add some further observations. Conscious maladministration The Court of Appeal concluded1 that the Commissioner: "refused to perform his duty [under s 19] without good reason or justification; in the circumstances of the case he has acted with conscious maladministration." Even if, as the Court of Appeal concluded, the Commissioner erred in his understanding of the effect of s 90AA of the Land Tax Act 1958 (Vic) ("the Land Tax Act") upon the proper exercise of the discretion conferred on him by s 19, that misunderstanding, without more, did not justify the Court of Appeal's view that there had been a conscious maladministration of the Land Tax Act by the Commissioner. There was no suggestion, nor any factual basis for a suggestion, that the Commissioner acted otherwise than in good faith in the exercise of his powers. It needs to be borne in mind, in this regard, that the respondent only became aware of the duplication error when it was drawn to its attention by the Commissioner; and that the Commissioner made refunds of tax incorrectly collected to the extent consistent with his view of the limits of the statutory appropriation of moneys for that purpose from the public funds of the State. There was no reason to regard the Commissioner's refusal to exercise his discretion under s 19 in the respondent's favour as other than the conscientious exercise of his powers in good faith. It should not have been characterised as conscious maladministration. To apply that description to the Commissioner's conduct is unfair to the Commissioner. And to apply the concept of conscious maladministration to an honest mistake would drain it of its content2. In any event, as it happens, the Commissioner was not mistaken in his understanding of the considerations bearing upon the exercise of the discretion conferred on him by s 19. 1 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 2 Cf Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at 153-154 [11]-[15]; [2008] HCA 32. The scope of s 19 The Court of Appeal concluded that the Commissioner was obliged to "exercise the power under s 19 to amend and to give effect to the amendments by making a refund."3 In this regard, the Court of Appeal erred in failing to appreciate, as the primary judge rightly held4, that the statutory regime of objections5 and appeals6 set out in the Land Tax Act, together with the process for claiming a refund set out in s 90AA, manifests an unmistakable legislative intention that the only scope for the Commissioner to refund money overpaid under an assessment is afforded by s 90AA(2) and (3) of the Land Tax Act. Section 92A is express confirmation of this legislative intention. The expenditure of the public funds of the State of Victoria is not within the province of the judiciary; it is within the exclusive control of the legislature7. The Court of Appeal failed to appreciate that the scope of the Commissioner's authority to make a refund was both provided by, and at the same time confined to, s 90AA(6) of the Land Tax Act. The absence of any other statutory authority to make a refund from public funds meant that a refund to the respondent would While it may be said of s 19 that it functioned "as a mechanism to ensure the integrity of the system of tax collection under the [Land Tax Act], namely, 3 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 4 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 at 5 Land Tax Act, s 24A. 6 Land Tax Act, s 25. 7 Dietrich v The Queen (1992) 177 CLR 292 at 323; [1992] HCA 57. See also at 8 Auckland Harbour Board v The King [1924] AC 318 at 327. See also Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 55 [111], 73 [178], 113 [320], 210-211 [601]; [2009] HCA 23; Williams v The Commonwealth (2012) 248 CLR 156 at 179-180 [4], 216-217 [83], 233 [138], 281 [289]-[290], 359 [548], 374 [597]; [2012] HCA 23; Williams v The Commonwealth [No 2] (2014) 252 CLR 416 at 455 [25]; [2014] HCA 23. that the Commissioner collects the correct amount of tax"9, that mechanism could operate only within the context of the Land Tax Act considered as a whole. In that context, the effluxion of a fixed period of time required that the prospect of recovering tax incorrectly collected must be brought to an end. The legislation thus gives effect to a policy choice to secure the certainty of the revenue after a reasonable opportunity to dispute the propriety of an exaction had been afforded to the taxpayer. That policy choice was lawfully available to the legislature. The circumstance that the duplication error was an obvious error in the assessment process – once it was discovered – does not give rise to an occasion to limit the effect of the legislature's choice. Provisions such as s 90AA, which impose a time limit upon the recovery of tax incorrectly assessed, are familiar and readily intelligible legislative measures designed to protect the revenue. There is no good reason to strain against the ordinary and natural meaning of the language of s 90AA as giving effect to the policy choice made by the legislature. That policy choice is plainly intended to be effective even in cases where it is clear that the assessments which led to the claimed overpayments were excessive. Accordingly, the circumstance that the Commissioner knew at the time of exercising the discretion conferred by s 19 that his earlier assessments were excessive was not a sufficient basis for him to disregard the terms of s 90AA. Neither the Commissioner, nor a court, is at liberty to disregard the express provisions of s 90AA and s 92A, and the absence of statutory authority to make a payment of a refund out of public funds. Given that recovery by the respondent of excess land tax would have been contrary to s 90AA, and that the payment of a refund by the Commissioner was not otherwise authorised by any statutory provision permitting the Commissioner to expend public funds for that purpose, the Commissioner was right to recognise that his want of authority lawfully to make a refund from the public funds of the State was a sufficient reason to conclude that there was no utility in amending his earlier assessments. 9 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at BellJ BELL AND GORDON JJ. The respondent in each appeal, an owner of two adjoining properties ("the taxpayer"), was assessed for land tax under the Land Tax Act 1958 (Vic) ("the LTA")10. Each assessment for the years 1990 to 2002, with which these appeals are concerned, listed those two adjoining properties at the relevant date: one described as "2 Ottawa Rd, Toorak, 3142" and the other as "65 Albany Rd, Toorak, 3142"11. Each assessment was paid. In December 2007, the adjoining properties were transferred to a related company, Streetriver Pty Ltd. Streetriver was assessed for land tax for the years 2008 to 2011. On 23 March 2012, a senior revenue officer of the appellant, the Commissioner of State Revenue ("the Commissioner"), informed Streetriver that an error had been detected in the 2008 to 2011 assessments. The error was that the valuation that was applied for land tax purposes to 2 Ottawa Road encompassed both 2 Ottawa Road and 65 Albany Road. The property listed in the 2008 to 2011 assessments as "65 Albany Rd, Toorak, 3142" had been the subject of land tax twice – it was a "duplicate property". The Commissioner issued a refund cheque in favour of Streetriver for excess land tax paid for the years 2008 to 2011. The taxpayer subsequently formed the view that the 1990 to 2002 assessments, issued to it before it transferred the properties to Streetriver, contained the same duplication error. The taxpayer sought to lodge objections to those assessments under s 24A of the LTA. By that time, the time limit for making those objections under the LTA had expired. The Commissioner refused to consider the objections. The taxpayer requested that the Commissioner issue amended assessments for those years pursuant to s 19 of the LTA. That request was refused by the Commissioner. A delegate of the Commissioner wrote to the taxpayer on 15 August 2013 in the following terms: "The decision of the Commissioner is not to make any amendment to the assessments. The discretion conferred by section 19 must be exercised having regard to [the] subject matter, scope and purpose of the [LTA] as a whole. 10 The LTA was repealed by the Land Tax Act 2005 (Vic), which came into operation on 1 January 2006: see ss 2 and 116 of the Land Tax Act 2005 (Vic). The provisions of the LTA continue to apply in these appeals: see cl 6(2) of Sched 3 to the Land Tax Act 2005 (Vic), which provides that the LTA "continues to apply to land tax for or in any tax year prior to 2006". 11 Assessments for the years 1990 to 2001 were not in evidence. For those years, only reports containing the information used to raise the assessments were available. BellJ The primary reason for the Commissioner's decision is that, whether or not each of the assessments were now amended as requested, and even putting to one side the fact that no objection was lodged in accordance with section 24A, [the taxpayer] would not be entitled to the consequential relief sought; that is, pursuant to section 90AA of the [LTA], [the taxpayer] would still not be entitled to the refund it seeks." Section 90AA of the LTA relevantly provided that proceedings "for the refund or recovery of tax paid under, or purportedly paid under," the LTA (including proceedings seeking relief in the nature of mandamus) must not be brought against the Commissioner, or otherwise, unless an application for refund of the payment was lodged with the Commissioner within three years of the payment being made. the taxpayer commenced the Commissioner in the Supreme Court of Victoria – the first by an originating motion seeking mandamus "on judicial review" directing the Commissioner to issue amended assessments and to refund to the taxpayer the land tax overpaid for the years 1990 to 2002, being $363,680 ("the excess amount"), with interest, and the second by a writ indorsed with a statement of claim seeking restitution of the excess amount with interest. two proceedings against The primary judge (Sloss J) dismissed the proceeding commenced by originating motion and, in relation to the proceeding commenced by writ, entered judgment for the Commissioner and otherwise dismissed the proceeding12. The taxpayer sought leave to appeal in both proceedings to the Court of Appeal of the Supreme Court of Victoria. The Court of Appeal (Hansen and Tate JJA and Robson AJA) granted leave and allowed each appeal. The Court of Appeal's reasoning was to the effect that: The Commissioner's duplication error for the years 1990 to 2002 deprived the Commissioner of any authority to retain the excess amount of land tax, with the result that the excess amount was not land tax within the meaning of the LTA13. (2) Despite the discretionary terms of the Commissioner's power under s 19 of the LTA to amend an assessment, the Commissioner knew 12 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76. 13 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at BellJ that alterations to the 1990 to 2002 assessments were necessary to ensure their completeness and accuracy, and that knowledge enlivened his statutory duty to exercise the power under s 1914. When enlivened, the statutory duty could only be exercised one way – to amend the assessments and to give effect to the amendments by way of refund15. limit or affect the LTA did not Section 90AA of the Commissioner's power under s 19 to amend an assessment or give effect to an amended assessment by refunding an amount that the Commissioner has declared by the amended assessment not to be land tax, as s 19 of the LTA was an "integrity mechanism" integral to the statutory scheme of the LTA16, which did not circumvent the objection and refund regime of the LTA17. The Commissioner's refusal to issue amended assessments to the taxpayer in respect of the 1990 to 2002 years, in circumstances where he knew they were inaccurate, amounted to conscious maladministration by the Commissioner, as it constituted a "wilful refusal" to perform his "duty" under s 19 "without good reason or justification"18. That manifested a jurisdictional error, for which relief in the nature of mandamus was available19. Despite the express terms of s 90AA, the Court of Appeal held that the taxpayer was entitled not only to bring the two proceedings but also to an order in the first proceeding in the nature of mandamus directing the Commissioner to 14 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 15 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 16 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 17 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 18 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at [159]; see also at [4], [155]. 19 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at BellJ issue amended assessments to the taxpayer for the years 1990 to 2002 and to repay the excess amount to the taxpayer. The Court of Appeal also ordered interest under s 58 of the Supreme Court Act 1986 (Vic) on the excess amount from the date of each payment comprising the excess amount and compound interest on the excess amount from 15 August 2013, as well as costs. The Commissioner appeals to this Court against the orders in both proceedings. The Commissioner's appeals should be allowed with costs. The Court of Appeal's analysis was contrary to the text, context and purpose of the LTA. In particular, both proceedings were precluded by the express terms of s 90AA of the LTA. Further, as these reasons will demonstrate, the amendment power given to the Commissioner in s 19 of the LTA is discretionary; it is not a power that, upon satisfaction of certain conditions, must be exercised20. What the Court of Appeal identified as the purpose of that power – "completeness and accuracy" of assessment to ensure the integrity of the system of collection of land tax – is properly to be determined by reference to the operation of all of the provisions of the LTA. Questions of conscious maladministration did not arise in this case. There was no basis for finding that there had been conscious maladministration. Legislative framework of the LTA These appeals concern the imposition of land tax under the LTA. As this Court has said many times, the starting point in construing a statute is the statutory text21; no less is that so for the LTA. The LTA was an Act "to consolidate the Law" providing for a tax on land and for assessment of land22. Land tax was "assessed charged levied and 20 cf Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 at 134-135; [1971] HCA 12. 21 See, eg, Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[70]; [1998] HCA 28; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]; [2009] HCA 41; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]; [2012] HCA 55. 22 Long title of the LTA. BellJ collected" by the Commissioner each year on the total unimproved value of all land owned by a land owner23. The structure of the LTA was not unlike other taxing statutes. It provided for both the imposition of tax on a taxpayer (here, an owner of land)24 and the assessment of that tax, it set out procedures for a taxpayer to object to an assessment and to seek review of the Commissioner's decision on that objection25, and it contained provisions for the Commissioner to recover the land tax assessed and payable irrespective of those procedures of objection and review26. The Commissioner's powers to assess both the land tax on land owned by a land owner and the land tax payable by that land owner were addressed in ss 17 to 19 of the LTA. Section 17 provided the Commissioner's general assessing power – the power to cause an assessment to be made of the taxable value of land owned by any taxpayer and of the land tax payable. Section 18, which is not relevant to these appeals, provided that the Commissioner had the power to make a "default assessment" of land tax in certain circumstances. Section 19, which is central to the taxpayer's contentions, dealt with the Commissioner's power to issue amended assessments and provided: "The Commissioner may from time to time amend an assessment by making such alterations or additions to it as he thinks necessary to ensure its completeness and accuracy, and shall notify to the taxpayer affected every alteration or addition which has the effect of imposing any fresh liability or increasing any existing liability and unless made with the consent of the taxpayer every such alteration or addition shall be subject to objection in the same manner and to the same extent as the original assessment but the validity of an assessment shall not be affected by reason only that any of the provisions of [the LTA] have not been complied with." 23 s 8(1) of the LTA, subject to some exceptions that are not presently relevant. See also s 6 of the LTA. 24 Pt II of the LTA; see especially s 8. 25 Pt III of the LTA. 26 Pts IV and V of the LTA; see especially ss 39 and 57; see also s 38. BellJ It will be necessary to return to consider this section in greater detail later in these reasons. Before doing so, it is necessary to complete the review of the scheme of the LTA. Section 20(1) was a conclusive evidence provision, similar to those in federal income tax legislation27. It relevantly provided that production of an assessment was "conclusive evidence of the due making of the assessment" and, except in proceedings on review or appeal against the assessment, "conclusive evidence that the amount and all the particulars of the assessment are correct". Once an assessment was made, s 21(1) provided that the Commissioner was required to serve "notice in writing of the assessment" on the taxpayer. A taxpayer who was dissatisfied with an assessment of land tax "charged, levied and collected"28 under the LTA had up to 60 days after service of the notice of assessment to lodge a written objection with the Commissioner that stated "fully and in detail the grounds on which [the taxpayer] relies"29 (emphasis added). The Commissioner was required to give the taxpayer written notice of his decision on that objection30. If the taxpayer was dissatisfied with the Commissioner's decision on that objection, s 25(1) provided that the taxpayer could, within 60 days after being given notice of the objection decision, request the Commissioner either to refer the decision to the Victorian Civil and Administrative Tribunal for review, or to treat the taxpayer's objection as an appeal and have it set down for hearing in the Supreme Court of Victoria. The procedures to be adopted in proceedings on references and appeals were then set out in ss 26 to 29 of the LTA. Land tax for each year was due and payable on the date stated in the notice of assessment31. Once assessed, every sum payable for tax was deemed to be a debt due to Her Majesty by the land owner and was required to be paid to 27 See, eg, Item 2 of the table in s 350-10(1) of Sched 1 to the Taxation Administration Act 1953 (Cth). See also s 177 of the Income Tax Assessment Act 1936 (Cth) in force immediately before 1 July 2015. 28 See also ss 6 and 8 of the LTA. 29 s 24A(1) of the LTA. 30 s 24A(4) of the LTA. 31 s 57 of the LTA. BellJ the Commissioner32. The tax was recoverable by the Commissioner on behalf of the Crown in right of Victoria33 regardless of whether the taxpayer had lodged an objection or had exercised its rights of review or appeal34. If an assessment was subsequently altered on objection or because of a review or appeal, an assessment was to be made, excess amounts refunded and amounts short-paid recovered as arrears35. No statute of limitations barred or affected any action or remedy for recovery of tax36. It is apparent from these provisions that the scheme of the LTA was to raise revenue and to provide certainty of that revenue to the State of Victoria. Other provisions of the LTA reinforced that scheme37. In particular, s 90AA, headed "Refund of tax", prescribed a three year time limit on taxpayers seeking a refund of, or to recover, land tax paid. It provided: "(1) Proceedings for the refund or recovery of tax paid under, or purportedly paid under, [the LTA] … must not be brought, whether against the Commissioner or otherwise, except as provided in this section. If a person claims to be entitled to receive a refund of or to recover tax paid under, or purportedly paid under, [the LTA], the person must lodge with the Commissioner within 3 years after the payment was made an application in the prescribed form for the refund of the payment. a person has lodged an application for the refund of an amount in accordance with sub-section (2); and 32 s 39 of the LTA. 33 s 59 of the LTA. See also CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) (2005) 224 CLR 98 at 108 [7]; [2005] HCA 53. 34 s 38(1) of the LTA. 35 s 38(2) of the LTA. 36 s 67 of the LTA. 37 See, eg, ss 64 (procedure for assessing "the owner" when the name of the land owner cannot be ascertained) and 66 (land tax to be a first charge on land) of the LTA. BellJ the Commissioner has not, within the period of 3 months after the application was lodged— refunded the amount; or (iii) applied sub-section (6)(d); or the amount accordance with refunded part of remainder in accordance with sub-section (6)(d)— the amount and applied the or has, in writing given to the person within that period, refused to make a refund, the person may, within 3 months after the end of that period or after that refusal, whichever first occurs, bring proceedings for the recovery of the amount, or, if the Commissioner has refunded or applied part, the remainder of the amount. Sub-section (3) applies whether or not the period for bringing proceedings for the refund or recovery of the amount prescribed by section 20A(1) of the Limitation of Actions Act 1958 has expired. Sub-sections (1) and (2) do not apply to a person if the person claims to be entitled to receive a refund or to recover tax paid under, or purportedly paid under, [the LTA] by reason of the invalidity of a provision of [the LTA]. an application for a refund is lodged with the Commissioner in accordance with sub-section (2); and the Commissioner finds that an amount has been overpaid by the applicant— the Commissioner— (c) must refund the overpaid amount; or (d) must— apply the overpaid amount against any liability of the applicant to the State, being a liability arising under, or by reason of, an Act of which the Commissioner has the general administration; and BellJ refund any part of the overpayment that is not so applied. If, under this section, the Commissioner determines to refund an amount, the amount is payable from the Consolidated Fund which is to the necessary extent appropriated accordingly. In this section, 'proceedings' includes— seeking the grant of any relief or remedy in the nature of certiorari, prohibition, mandamus or quo warranto, or the grant of a declaration of right or an injunction; or seeking any order under the Administrative Law Act 1978." (emphasis in italics added) Some particular aspects of s 90AA should be noted at the outset. The three year time limit on taxpayers seeking the refund or recovery of land tax included any such proceeding seeking "relief or remedy in the nature of certiorari, prohibition, mandamus or quo warranto, or the grant of a declaration of right or an injunction" or orders under the Administrative Law Act 1978 (Vic)38. That s 90AA was intended to operate in that manner is apparent from s 92A of the LTA, which expressly acknowledged that s 90AA limited the jurisdiction of the Supreme Court of Victoria by providing that "[i]t is the intention of this section to alter or vary section 85 of the Constitution Act 1975 to the extent necessary to prevent the Supreme Court entertaining proceedings of a kind to which section 90AA(1) applies, except as provided in that section". Next, the three year time limit on taxpayers seeking the refund or recovery of land tax was in respect of not only land tax "paid under" the LTA39 but also land tax "purportedly paid under" the LTA40. However, as s 90AA(5) provided, the time limit did not apply if a person claimed to be entitled to receive a refund or to recover tax paid under, or purportedly paid under, the LTA by reason of the invalidity of a provision of the LTA. That carve out is significant. The legislature explicitly set out limited circumstances in which the time limit would not apply. 38 s 90AA(8) of the LTA. 39 See ss 38, 39, 57 and 59 of the LTA. 40 cf Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at 151 [2], 157 [25], 162-163 [49]; [2008] HCA 32. BellJ Finally, s 90AA(7) provided the Commissioner determines to refund an amount, the amount is payable from the Consolidated Fund which is to the necessary extent appropriated accordingly" (emphasis added). That was the only appropriation in the LTA. that "[i]f, under this section, Relevant legislative history of s 90AA That s 90AA operated to impose a time limit on taxpayers seeking the refund or recovery of land tax and to otherwise limit the jurisdiction of the Supreme Court of Victoria with respect to those claims, and was intended to do so, is also apparent from its legislative history. The LTA contained provisions similar to s 90AA when it was enacted as a consolidating Act in 1958. At that time, s 90(3) required applications for refunds to be made within three years from the date of the overpayment, or within three months of a decision in respect of an objection. In 1974, s 90(3) – and sub-ss (2) and (4) – were repealed and replaced by a new s 90(2), which had the effect of removing any time limit by which applications or proceedings needed to be lodged or commenced respectively, and instead allowed the Commissioner to refund tax where he found "in any case that tax has been overpaid"41. In the Second Reading Speech for the amending Bill, the then Premier and Treasurer stated that "[t]he time limit has on occasions led to the unfortunate situation in which a taxpayer had overpaid land tax, not discovered the overpayment until some time afterwards, and been subsequently debarred by sub-section (3) of section 90 from obtaining a refund"42. In 1992, however, a new s 90(2) was substituted to re-impose a three year time limit, beginning from the date of overpayment, within which an application for a refund was to be lodged43. That amendment was made in response to the decision of the Full Court of the Supreme Court of Victoria in Royal Insurance 41 s 2 of the Land Tax (Amendment) Act 1974 (Vic). 42 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 6 March 1974 43 s 16 of the State Taxation (Amendment) Act 1992 (Vic). BellJ Australia Ltd v Comptroller of Stamps (Vic)44. In the Second Reading Speech for the amending Bill, the then Treasurer stated that45: refund overpaid duty "The Full Court of the Supreme Court of Victoria has recently decided that a refund provision in the Stamps Act places an obligation on the circumstances. commissioner The commissioner is seeking special leave to appeal the decision to the High Court. If special leave is denied or if the appeal is eventually dismissed by the High Court, under existing refund provisions the commissioner will be obliged to refund amounts overpaid no matter how long ago the overpayment occurred. all The government considers that taxpayers who have overpaid tax or duty are entitled to a refund of that tax or duty. However, there must be a point in time in which taxation matters are finalised. The amendments proposed by the Bill ensure that taxpayers are entitled to refunds of tax or duty overpaid up to three years before the date the application for a refund is lodged with the State Revenue Office." Then, in 1993, s 90(2) was repealed and ss 90AA and 92A were inserted46. The Second Reading Speech for that amending Bill recorded that the sections were inserted to address claims by members of the legal community that taxpayers could "take action outside the statutory refund scheme to recover overpaid taxes dating back more than three years, under the common law"47. The then Treasurer stated that the concern was that if that "argument were accepted by the courts the intention of the 1992 legislation would be frustrated"48. The amendments were therefore intended to "apply to proceedings which seek to 44 (1992) 23 ATR 528. The decision was upheld in Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd (1994) 182 CLR 51; [1994] HCA 61. 45 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 6 November 46 ss 21, 22, 25 of the State Taxation (Further Amendment) Act 1993 (Vic). Sections 90AA and 92A stayed in that form until the LTA was repealed. 47 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 21 October 48 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 21 October BellJ use administrative law procedures to require things to be done which may result in a refund, as well as to proceedings which seek a refund directly"49. In the same Second Reading Speech, the then Treasurer also stated that, by inserting s 92A, the Parliament intended to alter the Constitution Act 1975 (Vic) to limit the jurisdiction of the Supreme Court of Victoria so that50: "refunds of overpaid ... land tax ... – other than refunds claimed on the grounds of invalidity of provisions in [the LTA] – are only to be made where the person seeking the refund has lodged an application for the refund with the Commissioner of State Revenue within three years of the date of the overpayment. The purposes of [provisions of the Bill that, amongst other things, inserted s 90AA] would not be achieved if the Supreme Court could entertain an action seeking such a refund notwithstanding that no application for a refund had been lodged with the commissioner within three years of the overpayment." time, the same the Limitation of Actions Act 1958 (Vic) ("the Limitation Act") was amended51 to make clear that the one year limitation period for the commencement of proceedings seeking a refund of a tax payment in that Act, which had existed for many years, continued to apply unless another Act (such as the LTA) specifically provided for a longer period within which proceedings may be commenced52. At that point, the limitation period prescribed in the LTA for the commencement of proceedings seeking a refund was three years from the date of payment53. The legislative history reveals that, over the lifespan of the LTA, the legislature balanced the interests of taxpayers and the Commissioner in different ways at different points in time. But there is no doubt that the 1992 and 1993 amendments were intended to provide certainty to the revenue. To reiterate 49 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 21 October 50 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 21 October 51 s 4 of the Limitation of Actions (Amendment) Act 1993 (Vic), which substituted a new s 20A of the Limitation of Actions Act 1958 (Vic). 52 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 21 October 1993 at 1254; see also at 1207. 53 s 90AA(2) of the LTA. BellJ what the then Treasurer said in 1992: "there must be a point in time in which taxation matters are finalised"54. Conclusion as to the LTA scheme The scheme of the LTA was that, once an assessment was made by the Commissioner, the amount specified in that assessment would become a debt, payable as land tax on the date specified in the assessment for payment. That amount remained payable for land tax on the date specified in the assessment even if the assessment was challenged by a taxpayer who was dissatisfied with an assessment and who served an objection on the Commissioner in accordance with the LTA. The fact that an objection was pending did not affect the assessment, and the tax assessed could be recovered by the Commissioner as if no objection had been served by the taxpayer. The provisions of the LTA that dealt with collection and recovery of land tax constituted a scheme that covered the field55 and "implement[ed] a long-standing legislative policy to protect the interests of the revenue"56, the operation of which may, in some cases, be harsh. Issues It is against that legislative framework that the decision of the Court of Appeal, sought to be upheld by the taxpayer, is to be considered. It is appropriate to consider the reasoning of the Court of Appeal by assessing the four propositions set out above57. That involves considering four issues – whether the excess amount was "tax paid" under the LTA; the proper construction of s 19 of the LTA; whether s 90AA applied to preclude the taxpayer bringing either of the proceedings; and the finding of conscious maladministration. Finally, it will be necessary to consider the appropriate relief, if any, that ought to have been granted to the taxpayer. 54 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 6 November 55 cf Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 at 66; [1988] HCA 29. 56 cf Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 at 492 [44]; see also at 491-493 [40]-[45]; [2008] HCA 41. 57 See [19] above. BellJ The excess amount was "tax paid" under the LTA For each year from 1990 to 2002, the Commissioner "assessed charged levied and collected" land tax on the properties that the taxpayer owned58. Each assessment of land tax was made by the Commissioner under s 17 of the LTA. Each amount assessed was a "sum payable" for land tax by the taxpayer under s 39 of the LTA. Every sum payable for land tax, when it fell due, was a debt due to Her Majesty and that debt was payable to and recoverable by the Commissioner, whether or not the taxpayer had made an objection on the grounds that the amount assessed was excessive or the amount in fact exceeded the value of the land upon which the assessment was based59. An amount paid in answer to an assessment – and there is no dispute in these appeals that the taxpayer paid the amount assessed in answer to each assessment for the years 1990 to 2002 – was "tax paid under, or purportedly paid under," the LTA. What then were the bases for the Court of Appeal's finding60, which the taxpayer sought to uphold on appeal to this Court, that part of the amounts the taxpayer paid in answer to each of the 1990 to 2002 assessments – the excess amount – was not tax paid under the LTA? The Court of Appeal held that the excess amount was not tax paid because it was "wrongly collected"61, as there was "no authority" to demand or retain payment and therefore no tax debt, for two reasons. First, s 19 of the LTA imposed a statutory duty on the Commissioner to amend a land tax assessment once he knew that the assessment was incomplete or inaccurate, and to give effect to the amendment by refund62. Second, because the excess amount paid to the Commissioner was not land tax under the LTA, the Commissioner did not have authority to demand or retain the excess amount63. As the Commissioner 58 s 8 of the LTA. 59 See ss 24A, 38, 39, 57, 59. 60 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 61 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 62 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 63 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at BellJ submitted on appeal to this Court, that construction of the LTA should be rejected. As explained above, that second reason is wrong. In these appeals, the taxpayer paid the amount assessed in answer to each assessment for the years 1990 to 2002 and that was "tax paid under, or purportedly paid under," the LTA. Before turning to consider the Court of Appeal's construction of the LTA, it should be noted that it was not until a decade after the tax recorded in the 1990 to 2002 assessments was paid by the taxpayer that the duplication error in the 2008 to 2011 assessments was identified. Further, no amended assessments to correct the duplication error in the 1990 to 2002 assessments64 were issued to the taxpayer for the years 1990 to 2002 – the Commissioner refused to do so. So, did s 19 of the LTA compel the Commissioner to issue amended assessments and refund the excess amount, and, if so, was the excess amount paid to the Commissioner therefore not land tax within the meaning of the LTA? The answer to both questions is "no". The Court of Appeal erred in its construction of s 19 No duty to exercise power under s 19 The Court of Appeal held that the statutory power conferred on the Commissioner by s 19 was such "that once the Commissioner has knowledge that an assessment is inaccurate, and that an amended assessment is necessary to ensure the accurate assessment of land tax, … the Commissioner has a duty to exercise [the] power under s 19"65. That conclusion is contrary to the whole of the text of s 19, as well as its context and its purpose, and is not supported by authority. In its terms, s 19 was discretionary. It provided that the Commissioner "may from time to time amend an assessment" (emphasis added). Section 19 went only as far as "an assessment". As seen earlier, an assessment relating to 64 The Court of Appeal found that the 1990 to 2002 assessments contained the duplication error: see ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at [158]. That finding was not challenged by the Commissioner on appeal to this Court. 65 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at [139]; see also at [124]. BellJ land tax "charged, levied and collected" could only be challenged by way of objection, within prescribed time limits66. Section 19 then provided that in respect of an amended assessment that had the effect of imposing any fresh liability or increasing any existing liability, every alteration or addition not made with the consent of the taxpayer "shall be subject to objection in the same manner and to the same extent as the original assessment". When read as a whole, the purpose of s 19 was twofold: first, to ensure that the Commissioner had the power to increase an assessment or impose fresh liabilities; and, second, to ensure that where a fresh liability or increased existing liability was imposed, the tax was contestable67. Of course, if the power in s 19 was exercised to reduce the amount of an assessment, what then was to occur was to be found in the balance of the LTA. There was no express reference to a power of refund or to an appropriation in s 19. In other words, s 19 was to be read with, and as part of, the legislative scheme of the LTA. It is relevant to consider not only Pt III of the LTA, which provided for returns by taxpayers, as well as valuations and assessments of land tax, but also Pt VI, which provided for (including in s 90AA) the refund or recovery of tax paid under, or purportedly paid under, the LTA. If the amount assessed had been paid and the taxpayer had sought a refund or recovery of tax paid, then the LTA provided the taxpayer with such a right in s 90AA, but only if the conditions in that section, including the time limit, were satisfied. These provisions must and do inform the exercise of the power in s 1968. The scheme of the LTA provided the Commissioner with an express power of refund and made a consequential appropriation of the Consolidated Fund, both in s 90AA. If the Court of Appeal's construction of s 19 was correct (and it is not), a power of refund and appropriation would need to be implied into s 1969, obviating the need for s 90AA. That construction should be rejected. 66 s 24A of the LTA. 67 See Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 465-468; [1995] HCA 44. cf MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 at 639-641; [1984] HCA 20. 68 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 496, 505; [1947] HCA 21; O'Sullivan v Farrer (1989) 168 CLR 210 at 216; [1989] HCA 61; Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 [22], 84 [31]; [1998] HCA 11; North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 591 [34]; [2015] HCA 41. 69 cf ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 BellJ The objection and refund regime of the LTA was a "code" that did not admit of a construction of s 19 that elevated it to a source of refund or recovery, independent of that regime70. The objection and refund "code" was not one option among many, but was rather the only means by which a taxpayer could object to an assessment under which land tax had been "charged, levied and collected" or seek recovery or a refund of tax paid or purportedly paid under the LTA. Further, contrary to the submissions of the taxpayer, the construction adopted by the Court of Appeal is not supported by authority. Contrary to the conclusion reached by the Court of Appeal71, Finance Facilities Pty Ltd v Federal Commissioner of Taxation72 does not support the conclusion that the power to amend in s 19 was a statutory duty that the Commissioner was compelled to exercise. Powers granted by facultative language may impose a duty to exercise those powers73 where, as a matter of statutory construction, the legislation imposes a duty on the holder of the power to exercise the power when prescribed pre-conditions are met74. As seen earlier, having regard to the discretionary text of s 19 and its role and position in the broader statutory context of the LTA, s 19 was not one of those powers. The taxpayer also contended that the decision of this Court in Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd75 was authority for the propositions that once an overpayment had been found, the discretion in s 19 had to be exercised by making a refund, and that the amounts refunded therefore were never land tax paid under the LTA. That decision does not assist the taxpayer. 70 cf Deputy Federal Commissioner of Taxation v Brown (1958) 100 CLR 32 at 49; [1958] HCA 2; Moorebank (1988) 165 CLR 55 at 66. 71 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 72 (1971) 127 CLR 106. 73 Julius v Lord Bishop of Oxford (1880) 5 App Cas 214 at 222-223; R v Mahony; Ex parte Johnson (1931) 46 CLR 131; [1931] HCA 36; Leach v The Queen (2007) 230 CLR 1 at 17-18 [38]; [2007] HCA 3. 74 See, eg, Finance Facilities (1971) 127 CLR 106 at 134-135; cf s 45 of the Interpretation of Legislation Act 1984 (Vic). 75 (1994) 182 CLR 51. BellJ Royal Insurance considered an express statutory power to refund overpayments of stamp duty expressed in facultative terms and using the word "may"76 in circumstances where stamp duty had been paid by the taxpayer in ignorance of certain retrospective amendments to the taxing Act that exempted the taxpayer from stamp duty. Mason CJ held that the power to refund, in circumstances where the Commissioner found there to be an overpayment, should be exercised in a manner consistent with the taxpayer's common law rights and that the facultative nature of the power should not be treated as giving rise to a discretion that would defeat a common law claim77. That is not these appeals. the overpayment, the discretionary power may be treated as a source of authority for the Commissioner to retain the overpaid amounts where there are "circumstances disentitling the payer from recovery"78. Those circumstances included where the taxpayer did not have a common law right to recover, or where the right was time-barred (as here)79. In those circumstances, the discretion to refund should not be construed as giving rise to a duty because the exercise of discretion to refuse a refund would be justified80. Brennan J, with whom Toohey and McHugh JJ agreed, also found that the power was discretionary and emphasised that the Commissioner was "under no duty to make a refund unless there be an antecedent liability to do so"81. As Mason CJ recognised, notwithstanding knowledge of In these appeals, as will be explained below, the Commissioner was under no such antecedent liability to amend the assessments or to make a refund because s 90AA applied to bar the taxpayer's attempts to establish such a liability. Effect of an amended assessment For the reasons stated earlier, the excess amount was land tax paid under the LTA82. 76 s 111(1) of the Stamps Act 1958 (Vic). 77 Royal Insurance (1994) 182 CLR 51 at 64-65. 78 Royal Insurance (1994) 182 CLR 51 at 64. 79 Royal Insurance (1994) 182 CLR 51 at 65. 80 Royal Insurance (1994) 182 CLR 51 at 65. 81 Royal Insurance (1994) 182 CLR 51 at 87; see also at 86, 89. 82 See [49] above. BellJ On appeal to this Court, the taxpayer further contended that if an amended assessment issued under s 19 of the LTA reduced a tax debt, the excess amount paid was never land tax paid under the LTA and that amount recovered by the Commissioner was not land tax under the LTA. That contention should be rejected. It is again contrary to the scheme of the LTA83 and contrary to authority. Every assessment issued by the Commissioner under s 17 of the LTA could, at some point, be amended by the Commissioner under s 1984. The amended assessment, which could show a different amount, was conclusive that the amount it showed at that time was the true amount of tax payable. That was the aim of s 1985. The power in s 19 to amend an assessment did not involve the re-exercise of the s 17 assessment power or the substitution of an assessment in place of the original assessment. The amended assessment operated on and from the date that it was issued86. The amended assessment did not have the effect that the original assessment that "charged, levied and collected" land tax under the LTA was somehow altered so that that land tax subsequently ceased to be land tax within the meaning of the LTA. As Isaacs J said in Federal Commissioner of Taxation v Hoffnung & Co Ltd, when an alteration or addition is made to an assessment, the assessment "henceforth exists as altered or added to, and not as previously existing plus independent alteration or addition"87 (emphasis in bold added). That result is not surprising. It must be recalled that the production of an assessment was conclusive evidence both of the due making of the assessment and that the amount and all the particulars of the assessment were correct, except in proceedings on review or appeal against the assessment88. When an assessment was served, amounts of land tax payable were fixed and were to be taken as fixed for all purposes, except those of review or appeal under Pt III of 83 See [46] above. 84 cf Trustees, Executors and Agency Co Ltd v Commissioner of Land Tax (1915) 20 CLR 21 at 35-36, 40, 43; [1915] HCA 35. 85 cf Trustees (1915) 20 CLR 21 at 41. 86 cf Trustees (1915) 20 CLR 21 at 41. 87 (1928) 42 CLR 39 at 54; [1928] HCA 49. 88 s 20 of the LTA. BellJ the LTA89. The power of amendment "pre-supposes that an assessment is something creating a legal obligation"90. And that logic underpinned the structure of s 19. It provided that every such alteration or addition that had the effect of imposing any fresh liability or increasing any existing liability "shall be subject to objection in the same manner and to the same extent as the original assessment". As Latham CJ said in Trautwein v Federal Commissioner of Taxation91, in relation to an analogous provision in the Income Tax Assessment Act 1922 (Cth), "[a]n amended assessment is not an entirely new assessment substituted for its predecessor so as to open up again full rights of appeal". For example, if an amendment of an assessment increases a liability or has the effect of imposing a fresh liability, the original assessment otherwise stands and the amended assessment is open to objection only by reference to the items or elements introduced or affected by the amendment92. The effect of an amended assessment on an original assessment is not altered because the amendment reduces or removes a liability imposed under the original assessment. Indeed, if a contrary conclusion were adopted, then a taxpayer would arguably not have paid an amount of "relevant tax" to the Commissioner under the Taxation (Interest on Overpayments) Act 1986 (Vic) and would not be entitled to interest on that overpayment under that Act. Section 90AA applied to the taxpayer's claims Section 90AA applied to, and barred, the taxpayer's claims to a refund. Section 90AA(1) provided that "[p]roceedings for the refund or recovery of tax paid under, or purportedly paid under, [the LTA] … must not be brought, whether against the Commissioner or otherwise, except as provided in this section". Under s 90AA(2), an application for refund of the payment had to be lodged with the Commissioner within three years of the payment being made. Proceedings could have been brought by a taxpayer where, within three months after the application for refund of the payment was lodged, the Commissioner had not refunded the overpaid amount (or not applied it against another liability 89 cf Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 at 253; [1963] HCA 51. 90 cf Batagol (1963) 109 CLR 243 at 253. 91 (1936) 56 CLR 63 at 94; see also at 102, 107-108; [1936] HCA 77. 92 cf Trautwein (1936) 56 CLR 63 at 109. BellJ the taxpayer has to the State) or had refused to make a refund, whichever occurred first93. "Proceedings" was defined in s 90AA(8) to include proceedings seeking the grant of relief or remedy in the nature of mandamus. Each proceeding commenced by the taxpayer – the first by originating motion seeking mandamus "on judicial review" directing the Commissioner to issue amended land tax assessments and to refund to the taxpayer the excess amount, and the second by writ indorsed with a statement of claim seeking restitution of the excess amount – was a claim to a refund of "tax paid under, or purportedly paid under," the LTA and was barred. No application for refund had been lodged with the Commissioner within three years of the land tax being paid. As seen earlier94, the duplication error in the 1990 to 2002 assessments did not deprive the excess amount "charged, levied and collected" of the nature of being tax "paid under, or purportedly paid under, [the LTA]", and a limitation period does not render the tax incontestable. Moreover, even if the failure of the Commissioner to amend the assessments constituted a failure to exercise jurisdiction (and it did not), s 90AA was a bar to the proceedings. That conclusion is compelled not only by the express terms of s 90AA (the extended definition of "proceedings" in s 90AA(8)) but also by the scheme of the LTA. The taxpayer's contention that, in the event s 90AA applied to both proceedings (which it did), s 27 of the Limitation Act – which operates to postpone limitation periods in certain circumstances – meant that the limitation period in s 90AA commenced from the time that the taxpayer discovered the duplication error or from when such error was reasonably discoverable, should also be rejected. However, s 27 of the Limitation Act only applies in relation to a period of limitation prescribed by the Limitation Act – here, relevantly, s 20A(1) of the Limitation Act. Section 20A(1) did not apply to these appeals because s 90AA(4) expressly excluded its operation. Any other construction of s 90AA(4) would be contrary to its express terms and would be contrary to the scheme of the LTA, and circumvent the objection and refund regime. Moreover, it will be recalled that the amending Bills inserting both s 20A of the Limitation Act and s 90AA of the LTA were introduced by the government at the same time. Section 20A was intended to preserve the operation of the long-existing 93 s 90AA(3) of the LTA. 94 See [49] above. BellJ one year limitation period for the recovery of tax in certain circumstances95, not to undercut the specific limit imposed by s 90AA. The taxpayer sought to advance a contention in this Court that the decision in Trustees, Executors and Agency Co Ltd v Commissioner of Land Tax96 was authority for the proposition that s 90AA was limited in its operation to matters of "account and payment" or that it did not limit or affect proceedings being brought to compel performance of a duty under s 19 of the LTA. That decision does not support the taxpayer's contentions and is distinguishable. Trustees dealt with the Land Tax Assessment Act 1910 (Cth). What was in issue in that case was whether the power in s 20 of that Act to alter or to add to an assessment could be exercised more than once97. In general terms, the facts were as follows98. The Commissioner of Land Tax assessed on one basis, and land tax stated in that assessment was subsequently paid. Less than two years later, the Commissioner issued amended assessments and refunded the excess amount that had been paid. Then, shortly after the expiration of two years from the original payment, the Commissioner further amended the assessment on the basis that the original assessment was correct. The taxpayer contended that the power to amend in s 20 was limited by ss 59 and 60 of that Act (the latter imposing a three year limitation on the power of the Commissioner to make refunds) either alone or in conjunction with the doctrine that money paid under a mistake of law cannot be recovered back99. The taxpayer's contentions were rejected. Griffith CJ stated100: "The amount of land tax payable is determined by the existing assessment, which may, subject to the limitations of sec 21, be altered from time to time, either by way of increase or diminution. Whatever amount appears by an existing assessment to be the land tax payable is, until paid, a debt due by the taxpayer to the Crown. If he has not paid so much, he is bound 95 See Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 21 October 96 (1915) 20 CLR 21. 97 Trustees (1915) 20 CLR 21 at 32-33. 98 See Trustees (1915) 20 CLR 21 at 30-32. 99 Trustees (1915) 20 CLR 21 at 33. 100 Trustees (1915) 20 CLR 21 at 35-36; see also at 37, 40-41, 43-44. BellJ to pay the deficiency; if he has paid more, he is entitled to a refundment of the excess (subject to the limitation, if any, imposed by sec 60), and so Trustees is not authority for the proposition that the taxpayer sought to advance here. The contention is contrary to the legislative history and the scheme of the LTA – a scheme that covers the field. Moreover, the contention would render the objection and refund regime, including s 90AA, otiose. No conscious maladministration "Allegations that statutory powers have been exercised corruptly or with deliberate disregard to the scope of those powers are not lightly to be made or upheld"101. conscious maladministration, is not to be made unless plainly alleged and clearly proved. finding of maladministration, alone let The Court of Appeal found that the Commissioner's "actual refusal" in August 2013 to amend the 1990 to 2002 assessments was "conscious maladministration" of the LTA102; a "wilful refusal of the Commissioner to perform his duty without good reason or justification"103. No finding of that kind had been sought by the taxpayer in its pleadings and the argument was first raised in oral submissions before the primary judge104. There was no basis for making it. In 2012, a decade after the last of the assessments were issued for the years 1990 to 2002, the taxpayer formed the view that there had been a duplication error in those assessments. The taxpayer made no challenge to the validity of those assessments105. The taxpayer requested that the Commissioner As seen earlier, amend the assessments under s 19 of the LTA. 101 Futuris (2008) 237 CLR 146 at 165 [60]. 102 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 103 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 104 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 at 105 cf Futuris (2008) 237 CLR 146. BellJ the Commissioner was not under any duty to amend the assessments or refund the excess amount, contrary to the finding of the Court of Appeal106. It was not contended, and there was no basis to find, that the refusal by the Commissioner to amend the assessments was not bona fide, being based on a construction of the LTA that not only was open and accepted by the primary judge107, but, as established above, also was correct. As there was no duty to amend, there was no basis to conclude, as the Court of Appeal did, that the Commissioner wilfully refused to amend, knowing that he was legally obliged to make the amendment. Moreover, as the Commissioner contended, even if the failure of the Commissioner to amend the assessments constituted a failure to exercise jurisdiction (and it did not), that failure would have been based on an erroneous construction of the LTA. Such a failure, by itself, would not have provided a basis to conclude that the Commissioner refused to amend the assessments knowing that he was legally obliged to make the amendment. In short, even taking the taxpayer's case at its highest, conscious maladministration would not be established. In the circumstances, the Court of Appeal should not have ordered relief in the nature of mandamus directing the Commissioner to issue amended assessments to the taxpayer for the years 1990 to 2002, and to repay the excess amount to the taxpayer. Nor should the Court of Appeal have ordered interest under the Supreme Court Act 1986 (Vic) on the excess amount from the date of each of the payments making up the excess amount, compound interest on the excess amount from 15 August 2013 or costs. No restitution and no entitlement to interest Each of the 1990 to 2002 assessments issued to the taxpayer created a debt when the amounts fell due that was discharged by payment. In that circumstance, there can be no restitution. Payment, including payment of the excess amount, was made in discharge of a legally enforceable obligation to 106 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSCA 332 at 107 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 at BellJ pay108. The taxpayer's contention that the Commissioner was unjustly enriched should be rejected. Both the proceeding commenced by originating motion and the proceeding commenced by writ indorsed with a statement of claim were "[p]roceedings for the refund or recovery of tax paid under, or purportedly paid under," the LTA within the meaning of s 90AA of the LTA. The applications were filed more than three years after payment was made. The Supreme Court was prevented from entertaining both proceedings. The taxpayer was not entitled to any payment, such that any entitlement to interest under the Supreme Court Act 1986 (Vic), or to compound interest, did not arise. Orders Each appeal should be allowed with costs. The orders of the Court of Appeal of 8 December 2015 made in both proceedings should be set aside, save for par 1 of both orders, and, in their place, it should be ordered that the appeal be dismissed and the taxpayer pay the Commissioner's costs of the proceedings in that Court. For the avoidance of doubt, the amended assessments issued by the Commissioner in compliance with par 3(a) of the Order of the Court of Appeal of 8 December 2015, made in proceeding S APCI 2015 0029, should be set aside. The taxpayer should repay to the Commissioner $1,248,753.38 paid by the Commissioner to the taxpayer, together with interest pursuant to s 58 of the Supreme Court Act 1986 (Vic)109 on and from the date of payment of that amount by the Commissioner to the taxpayer. 108 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 392, 405; [1992] HCA 48. 109 Such an order being made pursuant to s 37 of the Judiciary Act 1903 (Cth). See L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 at 594; [1982] HCA 59; Nicol v Allyacht Spars Pty Ltd [No 2] (1988) 165 CLR 306 at 312; [1988] HCA 48. GAGELER J. For the reasons given by Bell and Gordon JJ, and for the additional reasons given by Kiefel and Keane JJ, I would allow each appeal with costs and make the consequential orders proposed by Bell and Gordon JJ. I add my own response to the argument of the taxpayer on the central issue of the relationship between ss 19 and 90AA of the Land Tax Act. Section 90AA was explained by the Victorian Treasurer at the time of its introduction in 1993 to be one of a number of similarly worded provisions in State taxation legislation designed to provide certainty and finality to Victoria's revenue collections by providing that, except in the case of a claim for a refund based on an argument that a statutory provision is invalid, proceedings for a refund cannot be brought unless an application for the refund has first been made to the Commissioner within three years of the payment in question110. Axiomatically, a construction that would give effect to that legislative design is to be preferred to a construction that would not111. Section 90AA(1) is expressed to prohibit "[p]roceedings for the refund or recovery of tax paid under, or purportedly paid under", the Land Tax Act. Section 92A spells out that the prohibition prevents the Supreme Court of Victoria entertaining proceedings of the kind to which s 90AA(1) refers. By defining "proceedings" to include seeking the grant of any relief or remedy in the nature of certiorari, prohibition, mandamus or quo warranto, or the grant of a declaration of right or an injunction, as well as to include seeking any order under the Administrative Law Act 1978 (Vic), s 90AA(8) makes clear that proceedings prohibited by s 90AA(1) are not confined to proceedings in which the refund or recovery of tax paid is part of the relief claimed. The prohibition judicial review of any extends administrative action or inaction on the part of the Commissioner where the object of the proceeding is to obtain a refund or recovery of tax paid under, or purportedly paid under, the Land Tax Act. to encompass any proceeding seeking The comprehensiveness of the prohibition imposed by s 90AA(1) on proceedings whose object is the refund or recovery of tax paid under, or purportedly paid under, the Land Tax Act is given emphasis by the exceptions from it, which are limited to those for which the remainder of s 90AA goes on to provide. Section 90AA(3) creates the principal exception, for proceedings commenced within three months after refusal by the Commissioner to allow under s 90AA(6) a refund claimed under s 90AA(2) within three years after payment. Section 90AA(5) creates the only other exception: for proceedings 110 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 21 October 111 Section 35(a) of the Interpretation of Legislation Act 1984 (Vic). based on a claim of invalidity of a provision of the Land Tax Act, which by force of s 20A of the Limitation of Actions Act 1958 (Vic) must be commenced within one year of the date of payment. Section 19, empowering the Commissioner to "amend an assessment by making such alterations or additions to it as he thinks necessary to ensure its completeness and accuracy", forms part of the administrative machinery of the Land Tax Act which the prohibition in s 90AA(1) overlays. A proceeding which seeks judicial review of action or inaction on the part of the Commissioner under s 19 is a proceeding which falls within the scope of the prohibition in s 90AA(1) if the object of the proceeding is the refund or recovery of tax paid under, or purportedly paid under, the Land Tax Act. The gist of the taxpayer's argument is that a proceeding which seeks mandamus to compel the Commissioner to amend an assessment under s 19 as a step in recovering an amount paid in response to an inaccurate original assessment is not within the scope of the prohibition in s 90AA(1) for the reason that the object of the proceeding cannot be characterised as the refund or recovery of "tax" paid under, or purportedly paid under, the Land Tax Act. The amount paid in response to the inaccurate original assessment cannot be characterised as "tax" within the context of such a proceeding, it is said, because correction of the assessment pursuant to the order of mandamus will operate to establish "ab initio" that the amount assessed and paid was not the amount that was required to be assessed and paid under that Act. The taxpayer borrows the expression "ab initio" from the reasons for judgment of Isaacs J in Trustees, Executors and Agency Co Ltd v Commissioner of Land Tax112. Explaining the effect of amendment of an assessment under a provision of the Land Tax Assessment Act 1910 (Cth), expressed in terms materially identical to s 19 of the Land Tax Act, Isaacs J stated that "[t]here is at any given moment but one assessment by the Commissioner, and that is conclusive ... as to amount, except on appeals"113. "It is subject to correction by the Commissioner", his Honour continued, "and when altered or added to … it operates ab initio as to the amount of the debt payable" with the result that "[t]he assessment when amended is conclusive that the amount it shows at a given moment was the true amount as at the taxable date"114. The taxpayer's argument seeks in that way to equate the effect for the purposes of s 90AA(1) of an assessment that is amended under s 19 of the Land 112 (1915) 20 CLR 21; [1915] HCA 35. 113 (1915) 20 CLR 21 at 41. 114 (1915) 20 CLR 21 at 41. Tax Act with the effect for the purposes of s 20A of the Limitation of Actions Act, as it then stood, of the amendment to the Stamps Act 1958 (Vic) considered in Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd115. The amendment operated retrospectively to abrogate liability to pay stamp duty. Amounts paid as stamp duty during the period of that retrospective operation were held in consequence of the amendment not to answer the description of amounts "paid under the authority or purported authority of any Act"116. The flaw in the argument is that it overstates the legal effect of the exercise of the power conferred by s 19, and in so doing understates the comprehensiveness of the prohibition imposed by s 90AA. Amendment of an assessment under s 19 has no greater effect than the Land Tax Act gives to the assessment as amended. Nothing in the reasoning of Isaacs J in Trustees suggests to the contrary. An assessment as amended operates by force of s 20(1)(b) as conclusive evidence that the amount and all particulars of the amended assessment are correct. To the extent that the amount or particulars of the amended assessment differ from the amount or particulars of the original assessment, the assessment as amended is conclusive evidence that the amount or particulars of the original assessment were incorrect. Amendment of an assessment does not, however, operate to change the historical fact of the original assessment having been issued. Most importantly, amendment of the assessment does not operate to alter the historical legal consequences of the original assessment having been issued. The analogy to the retrospective amendment considered in Royal Insurance is for that reason incomplete. The reference in s 90AA(1) to "tax paid under, or purportedly paid under", the Land Tax Act is to payment as an historical event. Within the meaning of s 90AA(1), tax paid under the Land Tax Act is tax that was paid in discharge of the liability imposed on a taxpayer through the operation of ss 38, 39 and 57 of the Land Tax Act operating on an original assessment. The tax historically so paid remains tax paid under the Land Tax Act even after amendment of the assessment. Where an amendment decreases the amount of tax from that originally assessed, such entitlement as the taxpayer might have to get back an amount previously overpaid is limited to such entitlement as is conferred by s 90AA(2), 115 (1994) 182 CLR 51; [1994] HCA 61. 116 (1994) 182 CLR 51 at 80. (3) and (6) operating in light of the assessment as amended. Tax paid in discharge of the liability imposed on the taxpayer through the operation of ss 38, 39 and 57 on the original assessment was and remains tax paid under the Land Tax Act within the meaning of s 90AA(2) in the same way as it remains tax paid under the Land Tax Act within the meaning of s 90AA(1). An amount of tax so paid that is shown by an amended assessment to have been overpaid is claimable under s 90AA(2) within three years after payment. Where claimable and claimed under s 90AA(2), the amount is refundable under s 90AA(6), in default of which the amount is recoverable as permitted by s 90AA(3). Not otherwise. The proceeding for mandamus which the taxpayer commenced in the Supreme Court of Victoria was for the refund or recovery of tax paid under, or purportedly paid under, the Land Tax Act within the meaning of s 90AA(1). The Supreme Court of Victoria was prevented by that provision from entertaining the proceeding.

HIGH COURT OF AUSTRALIA TELSTRA CORPORATION LIMITED PLAINTIFF AND COMMONWEALTH OF AUSTRALIA & ORS DEFENDANTS Telstra Corporation Limited v The Commonwealth [2008] HCA 7 6 March 2008 ORDER The questions reserved in the case stated dated 11 July 2007 be answered as follows: Question One In their application to the ULLS, are any of: (iii) section 152AL(3) of the TPA; section 152AR of the TPA; or any other provision(s) in Part XIC of the TPA, beyond the legislative competence of the Parliament by reason of section 51(xxxi) of the Constitution? Answer (i) and (ii) No. (iii) It is not appropriate to answer this question. Question Two If the answer to any part of Question One is "Yes", can the relevant provision(s) be read down so that it is valid and, if so, how? Answer This question does not arise. Question Three In their application to the LSS, are any of: (iii) section 152AL(3) of the TPA; section 152AR of the TPA; or any other provision(s) in Part XIC of the TPA, beyond the legislative competence of the Parliament by reason of section 51(xxxi) of the Constitution? Answer (i) and (ii) No. (iii) It is not appropriate to answer this question. Question Four If the answer to any part of Question Three is "Yes", can the relevant provision(s) be read down so that it is valid and, if so, how? Answer This question does not arise. The plaintiff pay the costs of the case stated. Representation A C Archibald QC with N Perram SC and J K Kirk for the plaintiff (instructed D M J Bennett QC, Solicitor-General of the Commonwealth with C J Horan for the first defendant (instructed by Australian Government Solicitor) N J Young QC with M H O'Bryan for the second defendant (instructed by Australian Government Solicitor) N J O'Bryan SC with M J Hoyne for the third, fifth, seventh, eighth, eleventh, twelfth and thirteenth defendants (instructed by Herbert Geer & Rundle) S J Gageler SC with S J Free for the fourth and sixth defendants (instructed by Clayton Utz Lawyers) M Sloss SC with D B Clough and K L Walker for the ninth and tenth defendants (instructed by Nicholls Legal) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Telstra Corporation Limited v The Commonwealth Constitutional law (Cth) – Limitations on legislative powers – Acquisition of property on just terms – Declaration by the Australian Competition and Consumer Commission ("the Commission") that certain telecommunications services were "declared services" for the purposes of the Trade Practices Act 1974 (Cth) ("the Act") – The plaintiff owned the infrastructure needed to provide the declared services – Requirement in s 152AR of the Act that other service providers be given access to the plaintiff's infrastructure for the purpose of providing the declared services in direct competition with the plaintiff – Further requirement in s 152AY of the Act that access to infrastructure be given on terms and conditions agreed between the plaintiff and the access seeker or, in the absence of such agreement, pursuant to one of two alternative methods that relied upon the approval or determination of the Commission (with the Australian Competition Tribunal exercising review powers) – Whether the Commission's declaration and the subsequent obligation on the plaintiff to make its infrastructure available to its competitors effected an acquisition of property other than on just terms. Communications law – Telecommunications services – Infrastructure to provide declared services – Requirement that other service providers be given access to plaintiff's infrastructure for the purpose of providing declared services in direct competition with the plaintiff – Whether obligation to provide access effected an acquisition of property other than on just terms. Constitution, s 51(xxxi). Trade Practices Act 1974 (Cth), Pt XIC. GLEESON CJ, GUMMOW, KIRBY, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. Since the 1880s Australia has had a public switched telephone network ("PSTN"). The PSTN is a large and complex piece of infrastructure widely dispersed throughout Australia. The telephone which is connected in most residential and business premises immediate manifestation of that infrastructure. This proceeding, however, focuses upon the twisted pairs of copper or aluminium based wire which run from an end-user's premises to a local exchange and are known as "local loops". There are about 10.1 million local loops in operation. The plaintiff, Telstra Corporation Limited ("Telstra"), is a publicly listed corporation. It installs, owns and maintains those local loops. Telstra owns about 5,120 local exchanges. in Australia the The litigation In this litigation, Telstra asserts that, contrary to s 51(xxxi) of the Constitution, the telecommunications access regime provided for by Pt XIC of the Trade Practices Act 1974 (Cth) effects an acquisition of Telstra's property in some of its local loops, other than on just terms. Telstra commenced proceedings in this Court by application for an order to show cause directed to the Commonwealth, the Australian Competition and Consumer Commission ("the ACCC") and 11 other telecommunications service providers. Telstra sought prohibition in several forms and declarations. Telstra subsequently filed a statement of claim setting out its claims in more detail and the parties agreed on facts to be stated, and questions reserved for consideration of a Full Court, pursuant to s 18 of the Judiciary Act 1903 (Cth). It is the questions reserved by that Stated Case that now fall for consideration. The questions reserved direct particular attention to two provisions of Pt XIC of the Trade Practices Act: ss 152AL(3) and 152AR. The questions reserved ask (in effect) whether s 152AL(3) or s 152AR, or any other provisions in Pt XIC of the Trade Practices Act, in their application to two forms of use of local loops, are beyond the legislative competence of the Parliament by reason of s 51(xxxi) of the Constitution. These reasons will demonstrate that the impugned provisions are not beyond power for the reason asserted. Two forms of use of local loops The telephone service could once be used only for transmitting sounds. Now, the PSTN and the local loops as part of that network can be used to carry Kirby Hayne Crennan not only telephone communications but also data communications including internet access services. The local loops in issue in this matter are local loops that are used in two different ways. First, there are "unconditioned local loops" by means of which a supplier of telecommunications services provides services to the end-user to whose premises the loop is connected. The loops are "unconditioned" in that the electrical characteristics of the loops are not changed by equipment located along the loop. Services using local loops in this way are referred to as "ULLS" ("unconditioned local loop services"). Secondly, there are local loops used for a high frequency unconditioned local loop line sharing service by which one supplier uses the low frequency or "voiceband" part of the frequency spectrum for a voiceband PSTN service to the end-user's premises, but another supplier uses the high frequency ("non-voiceband") part of the spectrum for high bandwidth carriage services to those premises. Services using local loops in this way are referred to as "LSS" ("line sharing services"). Both forms of use of local loops require physical connection of the local loop to other equipment of the relevant supplier of telecommunications services. If the local loops are used by a supplier other than Telstra, they are connected to that supplier's equipment. That connection is made in Telstra's local exchange and differs according to which form of use of the local loop is to be made. Telstra emphasised the physical disconnection of the local loop from Telstra's equipment, and its physical connection to the equipment of its competitor. Telstra pointed to these facts as showing that its property had been acquired and that Telstra was deprived of the use of its property for as long as the local loop remained connected to its competitor's equipment. Before dealing with the legislative provisions and administrative acts that Telstra alleges give rise to acquisitions, it is important to describe some of the steps which preceded the enactment of the telecommunications access regime that is now provided for by Pt XIC of the Trade Practices Act (the part of that Act in which the impugned provisions, ss 152AL(3) and 152AR, appear). In particular, it is necessary to describe how the competitive provision of telecommunications services by Telstra in competition with other corporations has come about. These steps are necessary because they reveal that although it is right to say that Telstra bought and paid for the PSTN, and thus owns it, it has never had rights in respect of the assets of the PSTN of the nature or amplitude which its arguments assumed. Kirby Hayne Crennan Some matters of history Before Federation, the telephone services that then existed in Australia were provided by the colonial governments. Section 69 of the Constitution provided for the transfer to the Commonwealth of the posts, telegraphs and telephone departments of the public service in each State and one of the heads of legislative power of the Parliament enumerated in s 51(v) is power to make laws with respect to "postal, telegraphic, telephonic, and other like services". From Federation until June 1976, the Commonwealth owned Australia's PSTN, and the Commonwealth operated the Postmaster-General's Department. that network through The Post and Telegraph Act 1901 (Cth) ("the 1901 Act") specified1 a number of colonial statutes which ceased to apply to the postal and telegraphic services of the Commonwealth. Among them was The Post and Telegraph Act 1893 (WA), s 65 of which conferred an "exclusive privilege" upon the Postmaster-General of that colony. This provision was adapted as s 80 of the 1901 Act which included in the subject-matter of the exclusive privilege of the Commonwealth Postmaster-General the erection and maintenance of telegraph lines and the transmission of telegraphic and telephonic communications. The issues in this litigation arise against a legislative background of relaxation of the public monopoly position for which s 69 of the Constitution and the 1901 Act provided. in July 1975 by The 1901 Act was repealed the Postal and Telecommunications Commissions (Transitional Provisions) Act 1975 (Cth) ("the Transitional Provisions Act")2. Pursuant to s 29 of the Transitional the Postmaster-General, Provisions Act, transferred the assets constituting the PSTN, owned by the Commonwealth and "held or used in connection with, or arising from, the undertakings of the Postmaster-General's Department", to the body then called the Australian The Australian Telecommunications Telecommunications Commission. Commission was established by s 4 of the Telecommunications Act 1975 (Cth) the relevant Minister of State, 1 Section 2, Sched 1. 2 Section 4, Sched 1. Kirby Hayne Crennan ("the 1975 Telecommunications Act"). It was established3 as a body corporate but it was subject to ministerial direction4. Section 94 of the 1975 Telecommunications Act, in broad terms, provided that persons other than the Australian Telecommunications Commission were not to construct, maintain or operate telecommunications installations. Section 71 obliged the Commission to pay to the Commonwealth "at such times, and by such instalments, as the Treasurer from time to time determines" the difference between the amount determined by the Treasurer that "should, in his opinion, be taken to be the value of the rights, property and assets vested in the Commission" by s 29 of the Transitional Provisions Act and the amount determined in the same manner as the sum of the amounts of liabilities assumed by the Commission. The total value of assets was determined by aggregating budget appropriations for telecommunications since 1901. The resulting debt was about $4 billion. From 1 January 1989, the Australian Telecommunications Commission was preserved and continued in existence as a body corporate under the name of the Australian Telecommunications Corporation5. The Corporation remained subject to ministerial direction. In November 1991, Telstra was incorporated under the Corporations Law of the Australian Capital Territory as a company limited by shares. Telstra was then called Australian and Overseas Telecommunications Corporation Limited and became the successor of the Australian Telecommunications Corporation. Section 11 of the Australian and Overseas Telecommunications Corporation Act 1991 (Cth) ("the AOTC Act")6 operated with effect from 1 February 1992, and vested all the property and rights of the Australian Telecommunications Corporation (as well as the property and rights of another entity – OTC Limited) and certain liabilities in Telstra. Thus, from 1 February 1992, the assets of the 3 Telecommunications Act 1975 (Cth) ("the 1975 Telecommunications Act"), ss 4, 4 The 1975 Telecommunications Act, s 7. 5 Telecommunications Amendment Act 1988 (Cth), s 6. 6 Subsequently renamed the Telstra Corporation Act 1991 (Cth). Kirby Hayne Crennan PSTN were vested in Telstra, and Telstra became responsible for the balance of the debt that had been fixed under the 1975 Telecommunications Act. When Telstra was incorporated, and at the time the assets of the PSTN were vested in Telstra, the Commonwealth was Telstra's sole shareholder. Section 8 of the AOTC Act provided that the Commonwealth "must not transfer any of its shares" in Telstra and that neither the Commonwealth nor Telstra was to do anything to cause or contribute to the Commonwealth no longer holding and controlling the exercise of voting rights attaching to the voting shares in Telstra. Telstra was subject to ministerial direction7, but s 26 of the AOTC Act provided that Telstra was taken not to have been incorporated or established for a public purpose or for a purpose of the Commonwealth, was taken not to be a public authority or an instrumentality or agency of the Crown and was taken not to be entitled to any immunity or privilege of the Commonwealth "except so far as express provision is made by this Act or any other law of the Commonwealth, or by a law of a State or of a Territory, as the case may be". The PSTN was vested in Telstra, with effect from 1 February 1992, against a legislative background of which the most prominent feature was the Telecommunications Act 1991 (Cth) ("the 1991 Telecommunications Act"). Subject the 1991 Telecommunications Act commenced on 1 July 19918 and all of its provisions had commenced before the PSTN was vested in Telstra. to some exceptions that are not now important, One of the stated objects of the 1991 Telecommunications Act was "creating a regulatory environment for the supply of telecommunications services which promotes competition and fair and efficient market conduct"9. Part 8 of the 1991 Telecommunications Act (ss 136-172) was directed to that end. It provided for access by "carriers" (holders of either a general telecommunications licence in force under Pt 5 of that Act or a public mobile licence in force under 7 Australian and Overseas Telecommunications Corporation Act 1991 (Cth), s 9. 9 Telecommunications Act 1991 (Cth) ("the 1991 Telecommunications Act"), s 3(i). Kirby Hayne Crennan that Part)10 to networks and services of other carriers. Telstra was one such carrier11. The object of Pt 8 of the Act was described12 as being: "to promote the long-term interests of consumers of telecommunications services by: and promoting the telecommunications industry generally and among carriers; and competition protecting enabling the carriers to compete with each other on an equal telecommunications networks and basis supplying telecommunications services." in providing Section 136(2) provided that this object would be achieved by: protecting each carrier from the misuse of market power by other carriers in relation to access to essential facilities or access to consumers; and giving each carrier the right: to interconnect its facilities to networks of the other carriers; and to obtain access to services supplied by the other carriers; and to do so on terms and conditions that: (iii) are fair to the first-mentioned carrier and to the other carriers concerned; and 10 Definitions of "carrier", "general carrier" and "mobile carrier" in s 5. 11 Telstra was granted a general telecommunications licence under Pt 5 of the Act with effect from 1 February 1992. Kirby Hayne Crennan promote telecommunications services; and long-term the interests of consumers of removing obstacles to consumers having equal access to the telecommunications services supplied by the various carriers; and encouraging the telecommunications infrastructure." efficient use of, and investment Detailed provision was made by ss 137-172 of the 1991 Telecommunications Act for implementing the access rights of carriers to the "facilities that [another] carrier operates or uses, or intends to operate or use, as part of, in, or in connection with, a network of the carrier"13. Thus the PSTN was vested in Telstra, and Telstra operated as a "carrier" under the 1991 Telecommunications Act, under a regulatory regime by which other carriers had the right to interconnect their facilities to Telstra's network and to obtain access to services supplied by Telstra, and Telstra had like rights with respect to other carriers. Telstra's ownership of the assets of the PSTN vested in it in 1992 was subject to the statutory rights of access to the use of those assets by other carriers. This description of some of the legislative and other history that lies behind the present litigation takes matters only as far as 1992. Telstra was then wholly owned by the Commonwealth. That remained the position until, by three separate share offerings in 1997, 1999 and 2006, the Commonwealth sold the majority of its shares to members of the public and then transferred the balance of its shares to the "Future Fund" established under the Future Fund Act 2006 (Cth). The legislation that is in issue in this litigation was not enacted until 1997 and it is necessary to identify and describe those provisions in detail. The impugned provisions – s 152AL(3) Section 152AL provides (so far as now relevant): 13 s 137, definition of "network facilities". Kirby Hayne Crennan "Eligible service For the purposes of this section, an eligible service is: a listed carriage service (within the meaning of the Telecommunications Act 1997); or a service that facilitates the supply of a listed carriage service (within the meaning of that Act); where the service is supplied, or is capable of being supplied, by a carrier or a carriage service provider (whether to itself or to other persons). Declaration made after public inquiry The Commission may, by written instrument, declare that a specified eligible service is a declared service if: the Commission has held a public inquiry under Part 25 of the Telecommunications Act 1997 about a proposal to make the declaration; and the Commission has prepared a report about the inquiry under section 505 of the Telecommunications Act 1997; and the report was published during the 180-day period ending when the declaration was made; and the Commission is satisfied that the making of the declaration will promote the long-term interests of end-users of carriage services or of services provided by means of carriage services. Note: Eligible services may be specified by name, by inclusion in a specified class or in any other way." Section 152AL permits the ACCC to declare listed carriage services (which include14 a carriage service between two points in Australia) to be a 14 Telecommunications Act 1997 (Cth) ("the 1997 Telecommunications Act"), s 16. Kirby Hayne Crennan declared service. A "carriage service" is defined15 as "a service for carrying communications by means of guided and/or unguided electromagnetic energy". If a service is a declared service, the carrier and the carriage service provider that provide that declared service must meet the "standard access obligations" prescribed by s 152AR. The two forms of local loop described earlier in these reasons (ULLS and LSS) are declared services. Each form of local loop is a service that facilitates the supply of a listed carriage service. Pursuant to s 152AL(3) the ACCC has declared the ULLS16 to be a "declared service" for the purposes of Pt XIC. One declaration was made on 11 August 1999, varied in May 2000, and expired on 31 July 2006. A further declaration was made with effect from 1 August 2006 to 31 July 2009. Pursuant to the same provision (s 152AL(3)) the ACCC has declared the LSS17 to be a declared service. That declaration is still in force. Various other services have been declared under s 152AL. It is not necessary to notice the details of the other services that have been thus declared. 15 The 1997 Telecommunications Act, s 7. 16 Defined in the relevant declaration as "the use of unconditioned communications wire between the boundary of a telecommunications network at an end-user's premises and a point on a telecommunications network that is a potential point of interconnection located at or associated with a customer access module and located on the end-user side of the customer access module". 17 Defined in the relevant declaration as "the use of the non-voiceband frequency spectrum of unconditioned communications wire (over which wire an underlying voiceband PSTN the boundary of a telecommunications network at an end-user's premises and a point on a telecommunications network that is a potential point of interconnection located at, or associated with, a customer access module and located on the end-user side of the customer access module". is operating) between service Kirby Hayne Crennan The impugned provisions – s 152AR As pointed out earlier, s 152AR prescribes one consequence of a service being a declared service: the provider of the service must comply with the standard access obligations. As the expression "standard access obligations" may suggest, the party that provides the service to which the obligation attaches (here, Telstra) must supply the service, when requested to do so by another service provider, so that the latter can use the service to provide carriage services. Section 152AR prescribes what steps the party providing the service (here, the use of local loops) must take to ensure its utility to the service provider that seeks to use it. Section 152AR provides, so far as now relevant: "(1) This section sets out the standard access obligations. Access provider and active declared services For the purposes of this section, if a carrier or a carriage service provider supplies declared services, whether to itself or to other persons: the carrier or provider is an access provider; and the declared services are active declared services. Supply of active declared service to service provider (3) An access provider must, if requested to do so by a service provider: supply an active declared service to the service provider in order that the service provider can provide carriage services and/or content services; and take all reasonable steps to ensure that the technical and operational quality of the active declared service supplied to the service provider is equivalent to that which the access provider provides to itself; and take all reasonable steps to ensure that the service provider receives, in relation to the active declared service supplied to fault detection, handling and the service provider, Kirby Hayne Crennan rectification of a technical and operational quality and timing that is equivalent to that which the access provider provides to itself. Exceptions This section does not impose an obligation on an access provider if there are reasonable grounds to believe that: the access seeker would fail, to a material extent, to comply with the terms and conditions on which the access provider complies, or on which the access provider is reasonably likely to comply, with that obligation; or the access seeker would fail, in connection with that obligation, to protect: the integrity of a telecommunications network; or the safety of individuals working on, or using services supplied by means of, a telecommunications network or a facility." The implementation of the standard access obligations is spelled out further in s 152AY. That section obliges the person required to comply with any or all of the standard access obligations to do so on such terms and conditions as are agreed with the access seeker (s 152AY(2)(a)) or, failing agreement, according to whichever of two alternative methods of determining those terms and conditions is engaged. In determining whether particular terms and conditions are reasonable s 152AH(1) provides that, for the purposes of Pt XIC, regard must be had to six matters: "(a) whether the terms and conditions promote the long-term interests of end-users of carriage services or of services supplied by means of carriage services; Kirby Hayne Crennan the legitimate business interests of the carrier or carriage service provider concerned, and the carrier's or provider's investment in facilities used to supply the declared service concerned; the interests of persons who have rights to use the declared service concerned; the direct costs of providing access to the declared service concerned; the operational and technical requirements necessary for the safe and reliable operation of a carriage service, a telecommunications network or a facility; the economically efficient operation of a carriage service, a telecommunications network or a facility." Section 152AH(2) provides that sub-s (1) does not, by implication, limit the matters to which regard may be had. If a person required to comply with standard access obligations and an access seeker do not agree on terms and conditions, the first of the alternative methods of determination that may be engaged hinges about "an access undertaking" which, in effect, is a statement by a carrier or carriage service provider of the terms and conditions on which it will make its services available. Those terms and conditions must be approved by the ACCC or the Australian Competition Tribunal under Div 5 of Pt XIC (ss 152BS-152CGB) before the undertaking is effective. The second method is engaged if either there is no access undertaking or the undertaking does not specify terms and conditions about a particular matter. In either of those events the terms and conditions are to be determined by the ACCC under Div 8 of Pt XIC (ss 152CL-152EB). Division 8 of Pt XIC deals with the arbitration of disputes about access. In finally determining a dispute about access the ACCC must take into account a number of matters specified in s 152CR(1), and the ACCC may take into account any other matters it thinks relevant. The matters which must be taken into account are, in substance, the six matters specified in s 152AH(1), together with a seventh consideration: "the value to a party of extensions, or enhancement of capability, whose cost is borne by someone else". Kirby Hayne Crennan The considerations identified in both s 152AH and s 152CR include promoting the long-term interests of end-users as well as "the legitimate business interests" of the carrier or provider. There may be cases, then, in which the application of the statutory considerations would require the ACCC to fix terms and conditions which differ from those that would be fixed in arm's length bargaining by two commercial parties concerned only for their individual legitimate business interests. That this may be the consequence of applying these provisions is reinforced by consideration of the relevant statutory objects. All of the provisions that have been mentioned (ss 152AL(3) and 152AR, the validity of which is challenged, and ss 152AH, 152AY and 152CR) take their place in Pt XIC of the Trade Practices Act. Part XIC of the Trade Practices Act was inserted in that Act by the Trade Practices Amendment (Telecommunications) Act 1997 (Cth) ("the 1997 Trade Practices Act"). The Telecommunications Act 1997 (Cth) ("the 1997 Telecommunications Act") was enacted shortly before the 1997 Trade Practices Act. The 1997 Telecommunications Act provided18 that the main object of that Act, when read together with Pts XIB and XIC of the Trade Practices Act, is to provide: "a regulatory framework that promotes: the long-term interests of end-users of carriage services or of services provided by means of carriage services; and the efficiency and international competitiveness of the Australian telecommunications industry." The object of Pt XIC of the Trade Practices Act is stated in s 152AB(1) as being "to promote the long-term interests of end-users of carriage services or of services provided by means of carriage services". Section 152AB(2) now provides that, for the purposes of Pt XIC, in determining whether a particular thing promotes the long-term interests of end-users, regard must be had to the extent to which the thing is likely to result in the achievement of three objectives stated in s 152AB(2)(c)-(e): Kirby Hayne Crennan the objective of promoting competition in markets for listed services; the objective of achieving any-to-any connectivity in relation to carriage services that involve communication between end-users; the objective of encouraging the economically efficient use of, and the economically efficient investment in: the infrastructure by which listed services are supplied; and any other infrastructure by which listed services are, or are likely to become, capable of being supplied."19 The objects thus identified in the 1997 Telecommunications Act and in Pt XIC of the Trade Practices Act are wider than and different from that narrow self-interest which, statute apart, is all that one participant in a market would ordinarily consult when striking a bargain with another participant in that market. If then, as Telstra submitted, terms and conditions may be fixed for its compliance with standard access obligations in respect of local loops used in the two ways described (ULLS and LSS) which are terms that differ from those that would be fixed in arm's length bargaining between it and the access seeker, the provisions that lead to that result provide, so the argument proceeded, for an acquisition of property otherwise than on just terms. Telstra submitted that this conclusion is not denied by the provisions of s 152EB which deal expressly with the subject of just terms. It is convenient to deal with that argument at once. Section 152EB Section 152EB is the final provision of Div 8 of Pt XIC. It will be the resolution of disputes about access. that Div 8 regulates recalled Section 152EB provides: 19 Paragraph (e)(ii) was added to s 152AB(2) by item 1 of Sched 9 to the Telecommunications Legislation Amendment (Competition and Consumer Issues) Act 2005 (Cth). Kirby Hayne Crennan a determination would result in an acquisition of property; and the determination would not be valid, apart from this section, because a particular person has not been sufficiently compensated; the Commonwealth must pay that person: a reasonable amount of compensation agreed on between the person and the Commonwealth; or failing agreement – a reasonable amount of compensation determined by a court of competent jurisdiction. In assessing compensation payable in a proceeding begun under this section, the following must be taken into account if they arise out of the same event or transaction: any damages or compensation recovered, or other remedy, in a proceeding begun otherwise than under this section; compensation awarded under a determination. In this section: acquisition of property has the paragraph 51(xxxi) of the Constitution." same meaning as Telstra submitted that s 152EB does not save the impugned provisions (ss 152AL(3) and 152AR) from invalidity. The argument proceeded by the following steps. First, it was said that the relevant acquisitions "occur by the imposition of the [standard access obligations] on carriers [or] providers pursuant to s 152AR". Secondly, those obligations come into operation when a service provider makes the relevant request, and thus the acquisitions effected by the standard access obligations occur as soon as the relevant request is made. (As Telstra rightly pointed out, upon making the request, the access seeker has an Kirby Hayne Crennan enforceable right20 to use the relevant loop.) Thirdly, Telstra submitted that s 152EB should be read as engaged only in respect of determinations that effect an acquisition, and that the only relevant determinations are those identified by s 152CL: determinations made by the ACCC under Div 8. Thus, so the argument concluded, s 152EB did not speak to any acquisition effected by s 152AR because the relevant acquisition is effected by the access seeker's request engaging the standard obligations under s 152AR, not by any determination which the ACCC makes under Div 8. Telstra's submissions about s 152EB should not be accepted. The in s 152EB(1)(a) "a submissions depend upon reading determination would result in an acquisition of property" as confined to determinations which effect an acquisition. The provision should not be construed so narrowly. the expression Access disputes may relate to the terms and conditions on which a carrier or provider is to comply with standard access obligations (s 152CM(1)) or to "one or more aspects of access" to a declared service in respect of which one or more standard access obligations apply (s 152CM(2)). Defining access disputes in these ways, in which the engagement of standard access obligations is a necessary element, is not consistent with treating acquisitions effected by the standard access obligations as a class distinct from acquisitions effected by a determination. Drawing a distinction of that kind was a critical step in Telstra's argument but both text and context deny its validity. Section 152EB(1)(a) does not refer to acquisitions that are effected by a determination. Paragraph (a) of s 152EB(1) invites attention to whether a determination results in an acquisition of property and par (b) amplifies the premise upon which the obligation to pay compensation is imposed by reference to the determination being otherwise invalid "because a particular person has not been sufficiently compensated". Given first, that the determinations to which s 152EB is directed are determinations of access disputes and second, that access disputes are defined by reference to compliance with standard access obligations, the distinction upon which Telstra's argument about s 152EB depended should not be drawn. 20 s 152BB. Kirby Hayne Crennan Telstra's central complaint in this litigation was that compliance with its standard access obligations in respect of either ULLS or LSS would see it deprived of the use of those local loops and that it would not be recompensed for that loss of use at a level that amounts to just terms. The ultimate measure of the compensation Telstra could receive for providing access to the local loops to an access seeker would be compensation fixed in accordance with Div 8 in resolving a dispute about the terms and conditions on which Telstra would comply with its standard access obligations. Considered in the context of the whole of Pt XIC, s 152EB should be read as imposing on the Commonwealth an obligation to pay compensation if the resolution of an access dispute in accordance with Div 8 would result in an acquisition otherwise than on just terms. And that outcome of acquisition otherwise than on just terms is the outcome which Telstra asserts follows from it being required to comply with standard access obligations in respect of the local loops in issue in this case. It follows that if, as Telstra alleges, s 152AL(3) and s 152AR do effect an acquisition of property, just terms for that acquisition are afforded by the operation of s 152EB and Telstra's allegations of invalidity fail. It is nonetheless important to go on to consider whether, apart from s 152EB, there would be an acquisition of property otherwise than on just terms. Acquisition of property? It is well established that s 51(xxxi) of the Constitution is concerned with matters of substance rather than form and that "acquisition" and "property" are to be construed liberally21. Moreover, "acquisition" is to be understood in the "compound conception, namely, 'acquisition-on-just-terms'"22. 21 Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 276 per Latham CJ, 284-285 per Rich J; Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349-350 per Dixon J; Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 370-372 per Dixon CJ; Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-202 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 303-304 per Mason CJ, Deane and Gaudron JJ; Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 at 49 [128]-[129] per McHugh J. 22 Grace Brothers Pty Ltd v The Commonwealth (1946) 72 CLR 269 at 290 per Kirby Hayne Crennan In the present case it is also useful to recognise the different senses in which the word "property" may be used in legal discourse. Some of those different uses of the word were identified in Yanner v Eaton23. In many cases, including at least some cases concerning s 51(xxxi)24, it may be helpful to speak of property as a "bundle of rights". At other times it may be more useful to identify property as "a legally endorsed concentration of power over things and resources"25. Seldom will it be useful to use the word "property" as referring only to the subject-matter of that legally endorsed concentration of power. These considerations are important in the present matter because of the differing emphases given by the parties to features of the facts of the present matter. As noted earlier, Telstra emphasised the physical disconnection of the local loops from its equipment and the physical connection of those loops to a competitor's equipment as indicating that there had been an acquisition of property. These physical acts indicated, so Telstra submitted, that Telstra was deprived of the use of the local loops in question. It submitted that it "owns" the infrastructure but loses "control of and the ability to use the infrastructure in respect of which the right" is granted to the other service provider. By contrast, some of the defendants sought to shift the focus of argument from the physical steps taken of connection and disconnection of elements of an electrical circuit to whether it could be said that a competitor took "possession" of loops made available by Telstra in compliance with its standard access obligations. In this respect the Commonwealth and the ACCC emphasised that it is Telstra that must undertake all physical connections to the local loop and that it is Telstra that installs, repairs and maintains the loop and it follows, so it was submitted, that Telstra retains "possession" of the loop. Other defendants sought the to emphasise whether and when Telstra might supply any of 23 (1999) 201 CLR 351 at 365-367 [17]-[20] per Gleeson CJ, Gaudron, Kirby and Hayne JJ, 388-389 [85]-[86] per Gummow J. 24 Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 285 per Rich J. 25 Gray, "Property in Thin Air", (1991) 50 Cambridge Law Journal 252 at 299 cited in Yanner v Eaton (1999) 201 CLR 351 at 366 [18] per Gleeson CJ, Gaudron, Kirby Hayne Crennan telecommunications services required by the end-user to whose premises the loop in question was connected. And in this last respect, emphasis was placed upon the fact that it is the end-user's choice of carrier which determines whether a particular telecommunications carrier seeks to use a local loop for voiceband or non-voiceband communications. End-users can and do change carriers and so long as the end-user chooses not to deal with Telstra, Telstra has no use for the local loop that is connected to that end-user's premises. These aspects of the matter were emphasised in aid of the proposition that steps taken to comply with Telstra's standard access obligations were too transient to amount to an acquisition of property. All of these attempts at characterising the legal consequences of the engagement of Telstra's standard access obligations may be understood as attempts at comparing the "legally endorsed the differences between concentration of power" over a local loop before and after an access seeker requests the use of that loop. Each form of summary characterisation sought, directly or indirectly, to draw analogies with other, more familiar forms of dealing with property. In particular, Telstra's repeated references to exclusion from use of the local loops may be understood as inviting comparison with the use that may be made of land or a movable chattel but it may also be understood as presupposing both desire and the ability to make some alternative use of the item in question. It is not productive to analyse analogies of the kind just identified with a view to identifying the extent to which they are apt. And it is not useful to attempt to resolve the constitutional issues which are presented by applying descriptive expressions of the kinds deployed in argument ("Telstra ... loses control of and the ability to use the infrastructure"). Especially is this so where the defendants submit, as they did, that the rights in issue in this case, rights of use of local loops, were statutory rights inherently susceptible of change, that there was no compulsory acquisition and that there was "no deprivation of the reality of proprietorship" of the local loops. Each of these branches of the defendants' arguments sought to invoke particular elements of the long line of cases in this Court in which s 51(xxxi) has been considered. At times argument proceeded as if discrete exceptions to the application of s 51(xxxi) can be identified as established in those decisions. So to approach the application of s 51(xxxi) may invite error. Rather than begin from some constructed taxonomy of rule and exceptions to a rule, it is necessary to begin by recognising the force of the observation by Brennan CJ, Toohey, Kirby Hayne Crennan Gaudron, McHugh and Gummow JJ in Victoria v The Commonwealth (Industrial Relations Act Case)26 that: "It is well established that the guarantee effected by s 51(xxxi) of the Constitution extends to protect against the acquisition, other than on just terms, of 'every species of valuable right and interest including ... choses in action'27." (emphasis added) Further, references to statutory rights as being "inherently susceptible of change" must not be permitted to mask the fact that "[i]t is too broad a proposition ... that the contingency of subsequent legislative modification or extinguishment removes all statutory rights and interests from the scope of s 51(xxxi)"28. Instead, analysis of the constitutional issues must begin from an understanding of the practical and legal operation of the legislative provisions that are in issue. In the particular circumstances of this case it is of especial importance, in undertaking that task of understanding the operation of the relevant provisions, to recognise that the particular provisions of Pt XIC that are impugned in this litigation must not be divorced from their statutory context, and must not be understood in isolation from the history of the provision and regulation of telephone and telecommunications services in Australia. There are three cardinal features of context and history that bear upon the constitutional issues which are raised. First, the PSTN which Telstra now owns (and of which the local loops form part) was originally a public asset owned and operated as a monopoly since Federation by the Commonwealth. Second, the successive steps of corporatisation and privatisation that have led to Telstra now 26 (1996) 187 CLR 416 at 559, cited in Attorney-General (NT) v Chaffey (2007) 81 ALJR 1388 at 1393 [21]; 237 ALR 373 at 378. 27 Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 290. See also Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 299, 349; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 509; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 172, 28 Attorney-General (NT) v Chaffey (2007) 81 ALJR 1388 at 1393-1394 [24]; 237 ALR 373 at 379. Kirby Hayne Crennan owning the PSTN (and the local loops that are now in issue) were steps which were accompanied by measures which gave competitors of Telstra access to the use of the assets of that network. In particular, as noted earlier in these reasons, the step of vesting assets of the PSTN in Telstra, in 1992, was preceded by the enactment of the 1991 Telecommunications Act. At all times thereafter Telstra has operated as a carrier, first under the 1991 Telecommunications Act, and later under the 1997 Telecommunications Act, within a regulatory regime by which other carriers have the right to interconnect their facilities to Telstra's network and to obtain access to services supplied by Telstra, and Telstra has like rights with respect to other carriers. Telstra has never owned or operated any of the assets that now comprise the PSTN except under and in accordance with legislative provisions that were directed to "promoting ... competition in the telecommunications industry generally and among carriers"29 and sought to achieve this goal by "giving each carrier the right ... to obtain access to services supplied by the other carriers"30. And the third feature of context and history which is of cardinal importance is that in 1992, when the assets of the PSTN were vested in Telstra, Telstra was wholly owned by the Commonwealth. When proper account is taken of these three considerations, it becomes apparent that Telstra's argument that there is an acquisition of its property otherwise than on just terms is, as Dixon J said in British Medical Association v The Commonwealth31, "a synthetic argument, and ... unreal". The argument is synthetic and unreal because it proceeds from an unstated premise that Telstra has larger and more ample rights in respect of the PSTN than it has. But Telstra's "bundle of rights" in respect of the assets of the PSTN has never been of the nature and amplitude which its present argument assumes. Telstra's bundle of rights in respect of the PSTN has always been subject to the rights of its competitors to require access to and use of the assets. And the engagement of the impugned provisions (ss 152AL(3) and 152AR) does not impair the bundle of 29 1991 Telecommunications Act, s 136(1)(a). 30 1991 Telecommunications Act, s 136(2)(b)(ii). 31 (1949) 79 CLR 201 at 270. Kirby Hayne Crennan rights constituting the property in question in a manner sufficient to attract the operation of s 51(xxxi)32. Telstra succeeded to the ownership of the assets comprising the PSTN under legislative arrangements which may be described (not inaccurately) as requiring Telstra and its predecessors to buy, and pay for, those assets. It was not (and could not be) suggested that vesting those assets (and the associated liability to pay for the assets) in Telstra was other than a transfer of the assets to be held and used in accordance with and subject to the then regulatory regime contained in the 1991 Telecommunications Act. And it was not (and could not be) said that any question of acquisition of property was presented by the legislation which vested the assets in Telstra. Those assets were held by a Commonwealth statutory corporation and had previously been held directly by the Executive Government. The 1991 laws vesting the PSTN and other assets in Telstra, and establishing a regulatory regime providing for access by Telstra's competitors to Telstra's network and services, were not laws with respect to the acquisition of property. In so far as those laws dealt with matters of property, they effected alterations in the property interests of, on the one side, a Commonwealth statutory corporation and, on the other side, a corporation wholly owned by the Commonwealth. It matters not that the latter corporation was taken not to have been incorporated or established for a public purpose or a purpose of the Commonwealth, was taken not to be a public authority or an instrumentality or agency of the Crown and, subject to some exceptions whose content is not now important, was not entitled to any immunity or privilege of the Commonwealth. What is important is that the rights in the assets vested in Telstra were rights to use the assets in connection with the provision of telecommunications services but those rights were always subject to a statutory access regime which permitted other carriers to use the assets in question. The subsequent repeal of the 1991 Telecommunications Act and enactment of the 1997 Telecommunications Act altered the regulatory regime in various ways but in one critical respect the regulatory regime did not change. Under the 1997 Telecommunications Act, as under the earlier legislation, other participants in the telecommunications market have access rights to Telstra's 32 Smith v ANL Ltd (2000) 204 CLR 493 at 505-506 [23] per Gaudron and Kirby Hayne Crennan network. The legislative provisions for exercise of those rights effect no acquisition of Telstra's property in the local loops in issue. The questions reserved should be answered accordingly. No separate argument having been directed to any provision of Pt XIC other than the two impugned provisions, the questions asking about invalidity of other provisions of that Part should not be answered. The questions should therefore be answered: Question One In their application to the ULLS, are any of: (iii) section 152AL(3) of the TPA; section 152AR of the TPA; or any other provision(s) in Part XIC of the TPA, beyond section 51(xxxi) of the Constitution? legislative competence of the the Parliament by reason of Answer (i) and (ii) No. (iii) It is not appropriate to answer this question. Question Two If the answer to any part of Question One is "Yes", can the relevant provision(s) be read down so that it is valid and, if so, how? Answer This question does not arise. Question Three In their application to the LSS, are any of: (iii) section 152AL(3) of the TPA; section 152AR of the TPA; or any other provision(s) in Part XIC of the TPA, Kirby Hayne Crennan beyond section 51(xxxi) of the Constitution? legislative competence of the the Parliament by reason of Answer (i) and (ii) No. (iii) It is not appropriate to answer this question. Question Four If the answer to any part of Question Three is "Yes", can the relevant provision(s) be read down so that it is valid and, if so, how? Answer This question does not arise. Telstra should pay the costs of the Stated Case.

HIGH COURT OF AUSTRALIA COMMISSIONER OF STATE REVENUE APPELLANT AND PLACER DOME INC (NOW AN AMALGAMATED ENTITY NAMED BARRICK GOLD CORPORATION) RESPONDENT Commissioner of State Revenue v Placer Dome Inc [2018] HCA 59 5 December 2018 ORDER Appeal allowed. The Order of the Court of Appeal of the Supreme Court of Western Australia made on 11 September 2017 be set aside and, in its place, it is ordered that the appeal to that Court be dismissed with costs. The respondent pay the appellant's costs of this appeal. On appeal from the Supreme Court of Western Australia Representation N C Hutley SC with B L Jones for the appellant (instructed by State Solicitor's Office (WA)) N J Young QC with A C Willinge for the respondent (instructed by Ernst & Young Law Pty Ltd) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of State Revenue v Placer Dome Inc Stamp duties – Land-holding corporations – Acquisition of controlling interest – Whether corporation a "listed land-holder corporation" within meaning of Pt IIIBA of Stamp Act 1921 (WA) – Whether value of land to which corporation entitled 60 per cent or more of value of property to which it was entitled – Valuation methodologies – Whether corporation had legal goodwill – Meaning of legal goodwill – "Added value" approach to goodwill considered – Going concern value and goodwill distinguished. Words and phrases – "acquisition", "assessment", "controlling interest", "custom", "discounted cash flow methodology", "going concern value", "goodwill", "listed land-holder corporation", "net asset value multiple", "property", "sources of goodwill", "stamp duty", "synergies", "top down". Stamp Act 1921 (WA), Pt IIIBA. Taxation Administration Act 2003 (WA), ss 34, 37, 40. State Administrative Tribunal Act 2004 (WA), s 29. KIEFEL CJ, BELL, NETTLE AND GORDON JJ. Part IIIBA of the Stamp Act 1921 (WA) was introduced to prevent duty on transfers of land being avoided through schemes that involved the use of corporate structures and share sales. The purpose of the Part is to equalise duty in relation to conveyances of land so that the duty is the same whether the land is conveyed directly or as a result of a transfer of shares1. The Part ensures that the buyer of an entity will be subject to ad valorem duty if the entity's underlying value is principally derived from land. This appeal concerns one aspect of Pt IIIBA, Div 3b, which deals with "listed land-holder corporations". A listed land-holder corporation is an entity2 entitled, at the time of acquisition, to land in Western Australia with an unencumbered value of not less than A$1 million and where 60 per cent or more of the value of all of its property3 is land (regardless of the location of that land)4. Placer Dome Inc ("Placer") was a substantial gold mining enterprise5 with land and mining tenements around the world, including in Western Australia. In 2005, Barrick Gold Corporation ("Barrick") was the second largest global gold mining enterprise6 assessed by market capitalisation and gold reserves, and the 1 Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437 at 439-440, 448-449, 457; Commissioner of State Revenue v OZ Minerals Ltd (2013) 46 WAR 2 The entity must be a body corporate that is registered or incorporated outside Western Australia and is listed on a recognised financial market: s 76ATI(1) of the Stamp Act. 3 Other than excluded property, being property defined in s 76ATI(4) of the Stamp Act as including, amongst others: cash or money in an account at call; negotiable instruments; rights or interests under a sales contract; money lent by the corporation or a trustee or a related corporation referred to in s 76ATI(6) to various defined persons; licences, patents or other intellectual property relating to, relevantly, the exploitation of minerals; stores, stockpiles or holdings of minerals or primary products (whether processed or unprocessed) produced by the corporation or a related person; and future tax benefits. s 76ATI(2) of the Stamp Act. 5 Placer was listed on the Toronto, New York and Australian Stock Exchanges, amongst others. 6 Barrick was listed on the Toronto and New York Stock Exchanges, amongst others. Bell Nettle Gordon third largest by gold production. Barrick announced a hostile, and ultimately successful, takeover of Placer. The acquisition was the largest transaction of its kind in the gold industry. When Placer and Barrick were amalgamated in May 2006, the amalgamated entity became the world's largest gold mining business. After Barrick acquired a controlling interest in Placer7, the Commissioner of State Revenue ("the Commissioner") issued an assessment to Barrick under the Stamp Act which stated, relevantly, that Placer was a "listed land-holder corporation" and ad valorem duty of A$54,852,300 was payable. Barrick objected8, the Commissioner disallowed the objection, and Barrick applied to the State Administrative Tribunal9 for a review of the Commissioner's decision to disallow the objection. Whether Placer was a "listed land-holder corporation" caught by Div 3b of Pt IIIBA of the Stamp Act turned on a single issue – did the value of all of Placer's land, regardless of its location, meet or exceed 60 per cent of the value of all of Placer's property, namely 60 per cent of $12.8 billion ($7.68 billion)10. Section 76ATI(2)(b) of the Stamp Act required a comparison to be drawn, at the date of acquisition, between the value of all the land to which Placer was entitled and the value of all the property to which Placer was entitled, other than certain excluded property. The statutory purpose for which the values were to be determined was to ascertain whether Placer's underlying value was principally in its land or non-land assets. In undertaking that statutory valuation exercise, the parties did not agree on the valuation methodology to be used or whether the value of all of Placer's land met or exceeded the 60 per cent threshold. A key question was whether Barrick was correct to contend that the property of Placer, prior to its acquisition by Barrick, included goodwill with a value of $6.506 billion. If it did, then the value of Placer's land was less than the 60 per cent threshold. 7 Within the meaning of s 76ATK(2) of the Stamp Act. 8 Under s 34(1) of the Taxation Administration Act 2003 (WA). 9 Under s 40(1) of the Taxation Administration Act 2003 (WA). 10 All references are to US dollars except where noted. Bell Nettle Gordon The Commissioner contended that a "top down" valuation method should be adopted. A "top down" approach is a shorthand description of a valuation methodology which starts with the value of the total property, before subtracting the value of assets which are not land, in order to produce a residual value which is then attributed to land11. Adopting that methodology, the Commissioner contended that immediately before Placer's acquisition by Barrick, Placer had no material property comprising goodwill with the inevitable result that the value of Placer's land exceeded the 60 per cent threshold. Barrick disagreed. It contended that Placer's land should be valued directly, using a discounted cash flow ("DCF") methodology, and that the resulting valuation of Placer's land was less than the 60 per cent threshold. Barrick further contended that even if a "top down" approach were adopted, the result would be no different because, immediately before the acquisition, Placer owned property being goodwill with a value of more than $6 billion. The Tribunal dismissed Barrick's review application. The Tribunal concluded that, for the purposes of the Stamp Act, the value of Placer's land should be determined by adopting the "top down" method12; that the value of Placer's land was the residual of calculating the value of all of Placer's property less the value of its non-land assets13; and, further, that Placer's assets did not include any material legal goodwill14. Barrick appealed to the Court of Appeal of the Supreme Court of Western Australia. The Court of Appeal allowed Barrick's appeal on the basis that the Tribunal had failed to distinguish between the value of Placer's land and the value of its business as a going concern. The Court of Appeal held that Placer's land should be valued using the Spencer15 valuation principles; that the "top down" method was unsuitable because Placer's non-land assets, including 11 See EIE Ocean BV v Commissioner of Stamp Duties [1998] 1 Qd R 36 at 38, 12 Placer Dome Inc (Now an amalgamated entity named Barrick Gold Corporation) and Commissioner of State Revenue [2015] WASAT 141 at [256]-[262], [265]. 13 Placer [2015] WASAT 141 at [265]. 14 Placer [2015] WASAT 141 at [377], [379]. 15 Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82. Bell Nettle Gordon goodwill, could not be valued with any accuracy; and, further and in any event, that Placer had a substantial amount of legal goodwill16. For the reasons that follow, the Commissioner's appeal should be allowed. A "top down" method was appropriate. At the date of acquisition by Barrick, Placer had no material property comprising legal goodwill. Placer was a land rich company. For the purposes of the statutory valuation exercise, Barrick did not establish that the value of all of Placer's land, as a percentage of the value of all of Placer's property, did not meet or exceed the 60 per cent threshold. Moreover, Barrick's contention that goodwill for legal purposes was or should be treated as synonymous with what it described as the "added value" concept of goodwill or "going concern value" should be rejected. Statutory framework In assessing value, the starting point is the particular statutory scheme. That scheme provides the legal context in which the valuation exercise is to be undertaken and that context determines the relevant principles of valuation to be applied17. Where a person acquires a controlling interest in a listed land-holder corporation, the corporation is obliged under the Stamp Act to lodge a dutiable statement with the Commissioner in respect of that acquisition18. A dutiable statement is chargeable with duty at a specified rate19 – here, on the basis of the 16 Placer Dome Inc v Commissioner of State Revenue (2017) 106 ATR 511 at 526 17 Federal Commissioner of Taxation v Resource Capital Fund III LP (2014) 225 FCR 290 at 302 [47] citing Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 and quoting Leichhardt Council v Roads and Traffıc Authority (NSW) (2006) 149 LGERA 439 at 18 s 76ATG(1) of the Stamp Act. Section 76AB(1) provides that a person may, within two months after making an acquisition, request the Commissioner to determine whether a dutiable statement is required to be lodged. Placer made such a request and the Commissioner made a determination under s 76AB(3). 19 s 76ATH of the Stamp Act. Bell Nettle Gordon unencumbered value of the land and chattels in Western Australia to which the relevant corporation was entitled at the time of the acquisition20. The statutory valuation exercise requires a comparison to be drawn, at the date of acquisition, between the value of all the land to which the corporation is entitled and the value of all the property to which the corporation is entitled, other than certain excluded property21. A number of aspects of that statutory valuation exercise should be noted. The statutory context, and the purpose for which the values are to be determined, is directed to ascertaining whether an entity's underlying value is principally in its land or non-land assets. The valuation must take into account, and be consistent with, the relevant statutory definition of "land". That definition includes mining tenements, and also includes any interest or estate in land, or anything fixed to the land "including anything that is, or purports to be, the subject of ownership separate from the ownership of the land"22. Next, in determining the value of all land and all property to which a corporation is entitled23, the "ordinary principles of valuation" are to be applied24. There was no dispute that the "ordinary valuation principles" were those stated in Spencer: the value is the price which a hypothetical willing but not anxious seller could reasonably expect to obtain and a hypothetical willing but not anxious buyer could reasonably expect to pay after proper negotiations between them have concluded and without overlooking any ordinary business consideration25. And there was no dispute that those ordinary valuation principles required both the seller and the buyer to be taken to be "perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, 20 s 76ATL of the Stamp Act. 21 s 76ATI(2)(b) of the Stamp Act. 22 s 76(1) of the Stamp Act. 23 For the purposes of s 76ATI(2)(b) of the Stamp Act. 24 s 33(1)(c) of the Stamp Act. 25 (1907) 5 CLR 418 at 441. Bell Nettle Gordon proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property"26. However, the Stamp Act modified the application of the ordinary valuation principles to the valuation of both land and property in two important respects. First, when applying the ordinary valuation principles, s 33(1)(c) of the Stamp Act stated that specific assumptions were to be adopted – relevantly, that: "(i) … a hypothetical purchaser would, when negotiating the price of the land or other property, have knowledge of all existing information relating to the land or other property; and no account is to be taken of any amount that a hypothetical purchaser would have to expend to reproduce, or otherwise acquire a permanent right of access to and use of, existing information relating to the land or other property." Second, the Stamp Act stated that particular property was not to be included in the statutory valuation exercise27. One category of excluded property was "a licence or patent or other intellectual property (including knowledge or information that has a commercial value) relating to any process, technique, method, design or apparatus to … locate, extract, process, transport or market minerals"28. In the valuation of both land and property for the purposes of the Stamp Act, there were therefore two interconnected requirements – an assumption that a hypothetical purchaser knew how to exploit the land and property and that the value of knowledge comprising intellectual property was excluded. It will be necessary to return to consider these requirements later in these reasons. 26 Spencer (1907) 5 CLR 418 at 441. 27 s 76ATI(4) of the Stamp Act. 28 s 76ATI(4)(f)(i) of the Stamp Act. Bell Nettle Gordon Earlier authorities Before turning to the particular circumstances of this appeal, it is necessary to say something further about the significance of the statutory context. Consistently with a number of decisions of this Court29, the Tribunal correctly stated that ordinary principles of valuation suggest "true value" is that which lies between the most the buyer is willing to pay and the least the seller is willing to accept – the price which a hypothetical willing but not anxious vendor could reasonably expect to obtain and a hypothetical willing but not anxious purchaser could reasonably expect to pay after proper negotiations between them have been concluded30. However, this Court has recognised the need for caution when taking valuation principles identified in one context and seeking to apply them to a different context31. Spencer concerned a valuation dispute in the context of the compulsory acquisition of the plaintiff's land by the Commonwealth; the statutory context and focus was on the need to compensate the plaintiff for his loss32. The seminal passage from Isaacs J's judgment has already been cited33. The approach in Spencer was applied by the High Court in Abrahams v Federal Commissioner of Taxation34, which concerned the valuation of shares for the purposes of estate duty. However, in a subsequent case, Commissioner of 29 Spencer (1907) 5 CLR 418 at 441; Perpetual Trustee Co (Ltd) v Federal Commissioner of Taxation (1942) 65 CLR 572 at 579; [1942] HCA 4; Abrahams v Federal Commissioner of Taxation (1944) 70 CLR 23 at 29; [1944] HCA 32; Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 at 367; [1947] HCA 10; Executors of Estate of Crane v Commissioner of Taxation (Cth) (1974) 49 ALJR 1 at 2; 5 ALR 30 Placer [2015] WASAT 141 at [156]-[157]. 31 See Commissioner of Succession Duties (SA) (1947) 74 CLR 358 at 361, 370, 32 (1907) 5 CLR 418 at 435, 441-442. 33 Spencer (1907) 5 CLR 418 at 441. See [17] above. 34 (1944) 70 CLR 23 at 29. Bell Nettle Gordon Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd, the Court sounded a note of caution35. Dixon J expressed it in these terms36: "[T]here is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate." (emphasis added) That passage was cited with approval in 1974 by Stephen J in Executors of Estate of Crane v Commissioner of Taxation (Cth)37, which also concerned the valuation of shares for the purposes of estate duty. His Honour said that the task of valuation in that appeal was "no more than to ascertain 'a proper measure of liability to tax' in respect of [the] shares"38 and that that involved "the postulating of a hypothetical sale to a purchaser as at the date of death and in circumstances in which neither party is anxious but each is willing to become a party to such a sale; the value will be the price at which such a sale would, after proper negotiation between the parties, have been concluded"39. The position under Pt IIIBA of the Stamp Act is analogous – the task is to determine if the entity's underlying value is principally derived from land, for the purpose of ascertaining liability to tax. It is in the specific statutory context of Div 3b of Pt IIIBA that the facts and the statutory valuation exercise in fact undertaken must be considered. 35 (1947) 74 CLR 358 at 361, 370, 373-374. 36 Commissioner of Succession Duties (SA) (1947) 74 CLR 358 at 373-374. 37 (1974) 49 ALJR 1; 5 ALR 38. 38 Crane (1974) 49 ALJR 1 at 4; 5 ALR 38 at 45 citing Commissioner of Succession Duties (SA) (1947) 74 CLR 358 at 373. 39 Crane (1974) 49 ALJR 1 at 2; 5 ALR 38 at 41. Bell Nettle Gordon Facts and the statutory valuation exercise in fact undertaken Placer Before it was acquired by Barrick, Placer was the fifth largest global gold mining company assessed by market capitalisation, the third largest by gold reserves and the fourth largest by gold production. At the time of acquisition, it operated 16 gold mines, five development projects and seven exploration projects in North America, South America, Australasia and South Africa and employed approximately 13,000 people. It had land-holdings, including mining, development and exploration interests, around the world. Placer's only material revenue was from the sale of gold, which it sold as refined elemental metal40. The acquisition In October 2005, Barrick made an offer to acquire all of the ordinary shares of Placer. Barrick's offer represented, approximately, a 27 per cent premium to the average closing stock price of Placer. Mr Sokalsky, at the time of the acquisition the Executive Vice President and Chief Financial Officer of Barrick the Chief Executive Officer and President of Barrick), (later appointed put forward the following points to the Barrick Board about the Placer acquisition (in the order they appeared in the slide presentation): Transaction makes Barrick largest gold company with a political risk profile better able to handle subsequent acquisitions Considerable synergies make the deal accretive and provides a stronger development pipeline for growth". In evidence before the Tribunal, Mr Sokalsky agreed that the ordering of these points ahead of the remaining points on the slide reflected the strongest aspects of the takeover for Barrick and that those matters had value not able to be precisely quantified. These matters are significant. It will be necessary to consider them further in the context of Barrick's contention that the property of Placer, prior to its acquisition by Barrick, included goodwill with a value of $6.506 billion. 40 Placer also produced and sold copper, though to a much lesser extent. Bell Nettle Gordon In November 2005, Placer's Board recommended to Placer shareholders that they reject Barrick's offer. Mr Tomsett, then President and CEO of Placer, said: "We have 16 operations in seven countries. We are truly global – possessing the skills and expertise required to operate around the world. Our mines are located in some of the world's most prolific gold-producing areas. You can't replicate a portfolio that includes the Red Lake and Timmins Districts in Canada, South Carlin trends in the US, the Mara shear in Tanzania, and Kalgoorlie greenstone belts in Australia amongst others. We've been building significant land positions around all our mines. It's been our quiet but determined strategy for the last five years. Those land positions have significantly contributed to reserve growth of 60% since 2001. Those land positions and talented people have made us the only senior gold-mining company to have replaced reserves from our operating mines in each of the last four years. And I'm confident that 2005 will mark the fifth consecutive year. Quality land is what this business is all about, and we have lots of it. We also have growth – significant development projects – Cortez Hills, Pueblo Viejo, Donlin Creek, Mt Milligan and Sedibelo. Most companies are lucky to have one development project." (emphasis added) In December 2005, Barrick agreed to make an increased offer to purchase all of Placer's shares. On 4 February 2006 ("the acquisition date"), Barrick acquired a controlling interest in Placer within the meaning of s 76ATK(2) of the Stamp Act, upon receiving acceptances of its revised offer in relation to at least 90 per cent of Placer's common shares. On 8 March 2006, Barrick became the sole shareholder of Placer by acquiring the remaining common shares of Placer. The price Barrick paid to acquire Placer (grossed up for liabilities) was $15.346 billion. Statutory valuation exercise – areas of agreement and dispute In undertaking the statutory valuation exercise – namely, ascertaining whether the value of all of Placer's land, regardless of its location, met or exceeded 60 per cent of the value of all of Placer's property, for the purposes of Pt IIIBA of the Stamp Act – the parties agreed that: Bell Nettle Gordon the value of all of the property to which Placer was entitled at the acquisition date was $15.3 billion, being the price Barrick paid to acquire Placer; Placer was entitled to land in Western Australia with an unencumbered value of not less than A$1 million; the value of all property directed to be excluded by s 76ATI(4) of the Stamp Act was $2.5 billion; the capitalised value of the "synergies" to be derived from combining Placer's and Barrick's operations (expected to arise from savings in administration and the cost of operating various global offices, exploration, operations and technical services and from arrangements with respect to finance and tax) was between $1.6 billion and $2 billion (between $200 million and $250 million annually); and the ordinary principles of valuation were those set out in Spencer. In order to understand the dispute about whether the value of all of Placer's land, regardless of its location, met or exceeded the 60 per cent threshold as well as why, in the circumstances of this appeal, the direct land valuation approach using a DCF methodology was inappropriate, it is necessary to understand Barrick's accounting for its acquisition of Placer. Acquisition accounting As a listed entity on the New York Stock Exchange and registrant, and as a Canadian foreign filing entity, Barrick was required to comply with the United States generally accepted accounting principles ("US GAAP"). Financial Accounting Standards Board ("FASB") standards establish US GAAP for financial accounting. The FASB Statement of Financial Accounting Standard ("FAS") No 141 – "Business Combinations" – applied to Barrick41. It applied because FAS No 141 contained the required basis of acquisition accounting for Barrick's acquisition of Placer – "the purchase accounting technique". 41 FAS No 141 (and FAS No 142) applied by force of the Securities Exchange Act of 1934, 15 USC (especially §78m) and the applicable regulations, Commodity and Securities Exchanges, 17 CFR (especially §210.4-01). Bell Nettle Gordon The application of this technique entails the need, in every acquisition, for a purchase price allocation exercise to be undertaken, in which the identifiable assets and liabilities of the acquired business are ascribed their fair market value with the excess of purchase consideration over the net fair value of assets acquired being ascribed to goodwill. The operative definition of fair value, as identified by Barrick's expert, was "[t]he amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale". Mr Patel of Ernst & Young LLP ("EY") was engaged by Barrick in 2006 (following the acquisition) to perform a "valuation analysis" to provide a "fair value" of Placer's tangible and intangible assets as at the time of the acquisition, for the purposes of Barrick's financial reporting obligations. EY's valuation work culminated in EY's purchase price allocation report dated 19 February 2007 ("the EY PPA Report"). The EY PPA Report was undertaken in accordance with US GAAP and, in particular, in accordance with FAS No 141. The EY PPA Report valued the total property of Placer at $15.346 billion, the purchase price. Using a DCF methodology, EY valued Placer's land assets at $5.694 billion. EY valued Placer's assets in total at $8.84 billion42. To reconcile the amount of $8.84 billion with the purchase price ($15.346 billion), Mr Patel included in Placer's assets an item called "goodwill" with a value of $6.506 billion. That item was a "derivative" amount representing the residual amount of the purchase consideration after identification of the fair value of the acquired identifiable tangible and intangible assets or, in other words, the excess of the cost after deduction of all of the identified assets acquired. That approach to goodwill was in accordance with the requirements of the FASB and, in particular, the definition of goodwill in FAS No 141. the amount of The EY PPA Report was then used as the basis for the value of goodwill reported in Barrick's 31 December 2006 financial statements, which were filed with ("the US SEC"). On 8 November 2006, in a letter to the US SEC, Barrick explained the allocation of goodwill as follows: the US Securities and Exchange Commission 42 Those assets were identified as property, plant and equipment, mining interests, development projects, exploration projects and "intangibles". Bell Nettle Gordon "In conclusion the amount of value not captured in tangible and identifiable intangible assets on acquisition of a gold mining company is initially presumed to be captured in goodwill, the principal elements of which are the ability to sustain and grow reserves and the ability to realize synergies from the business combination. Barrick believes that the elements of goodwill described above in relation to the acquisition of [Placer] are most closely associated with the management of portfolios of mines and exploration properties. Barrick believes that the allocation of goodwill should reflect this association and the manner in which goodwill arises." (emphasis added) Two matters should be noted about the fact that the letter records that the $6.506 billion allocated to goodwill reflected, at least in part, the expectation of future events: namely, the ability to "sustain and grow reserves" and "the ability to realize synergies from the business combination". First, the letter was consistent with the views expressed by Mr Sokalsky to the Barrick Board in October 2005 to which reference has been made43 – that there was value in the synergies arising out of, or as a consequence of, the acquisition. Second, and no less significantly, Mr Sokalsky agreed in evidence that the fact that the transaction made Barrick the largest gold mining company with a political risk profile better able to handle subsequent acquisitions had a "tremendous amount of value". Thus, the $6.506 billion goodwill allocation included a value reflecting the expectation of these future events, which events did not exist prior to the acquisition date. Critically, there was a value in the goodwill allocation that was not value which inhered in Placer. It will be necessary to return to these matters later in these reasons when addressing Barrick's contention that those events were sources of goodwill to be included in the statutory valuation exercise. Not only did the "goodwill" in the EY PPA Report, and in Barrick's financial statements, include the value of these future events, but the "goodwill" in the EY PPA Report was the single highest valued item, comprising more than 40 per cent of the total purchase price of Placer ($6.506 billion as a percentage of $15.346 billion) and more than 50 per cent of the value of all property to which Placer was entitled, for the purposes of s 76ATI(2)(b) of the Stamp Act ($6.506 billion as a percentage of $12.8 billion). As the Court of Appeal noted, such a result for a land rich company was surprising. 43 See [30] above. Bell Nettle Gordon The DCF valuations Barrick's contention that, immediately before its acquisition by Barrick, Placer owned property comprising goodwill with a value of $6.506 billion was a significant issue. As stated earlier, the Commissioner contended that if the goodwill allocation did not represent goodwill at law then, a priori, the value of all land of Placer exceeded the statutory threshold and Placer was a "land-holder" within the meaning of s 76ATI(2) of the Stamp Act. On the other hand, Barrick contended that the sole statutory issue was whether the value of the land assets held by Placer at the time it was acquired by Barrick exceeded the statutory threshold in s 76ATI and the appropriate valuation methodology was a DCF methodology. The difficulty for Barrick was that the DCF methodology of valuing the land assets, as applied by its experts, yielded a large gap between the valuation of Placer's land assets and the purchase price paid. That gap necessarily raised a question about the reliability of the DCF valuations and, in turn, a question about the content of the $6.506 billion allocated to goodwill in that It is therefore necessary to consider the DCF valuations relied upon by the parties' experts to understand the need for, and significance of, a "top down" approach in addressing the statutory valuation question in the circumstances of this appeal. Each valuer estimated the fair market value of the land assets based on the after-tax cash flows that the asset could be expected to generate over an appropriate remaining useful their present value – a DCF calculation – and each valuer used Placer's strategic business plans in their DCF calculations. life, discounted A critical integer in generating the cash flows was the estimated gold prices, which are set by transactions on international metals exchanges to which the identity of the parties – whether as vendor or as purchaser – is irrelevant44. Gold miners are price takers, not price makers; the reputation or capability of the 44 An expert for Barrick explained that "[i]n any commodity-based business it would be difficult to assert that value belonged to trademarks or trade names and similarly to customer relationships because no product differentiation exists in the marketplace". Bell Nettle Gordon miner, smelter or vendor is irrelevant. And the gold price is difficult to predict45. As one of Barrick's experts acknowledged in evidence before the Tribunal, estimates of future gold prices could be "quite dramatically wrong", predictions could be pretty unreliable and, as a result, his reports could turn out quite inaccurate. Further, when a gold mining company is sold, the market price at which the company is sold is often a multiple, described as the "net asset value multiple" (or the "NAV multiple"), of the DCF value of the assets of the company. As Mr Patel stated in evidence, "[i]n the gold mining space this is likely to happen [but it] doesn't mean your [DCF] is wrong" if there are identifiable bases for the NAV multiple. Put in different terms, the DCF valuation may still yield a reliable estimate of value if the gap can otherwise be explained. Here, the gap could not be explained. Of course, there may be instances where a DCF analysis of a gold mining company's assets, cross-checked against the market value of the entity, could yield a reliable estimate of value where the gap between those values could be explained. One example might be where the gold mining company was generating above-market returns. This was not such a case. After Barrick's acquisition of Placer, it was required to prepare and lodge consolidated financial statements. It adopted the conventional accounting practice of allocating to Placer's assets amounts nominated as their "fair value", and allocating the residual of the purchase price, $6.506 billion, to "goodwill". When Barrick came to address the statutory valuation of Placer's land for the purposes of the Stamp Act, Barrick contended that the DCF calculation directed to valuing each mining tenement according to its best potential use was the standard, and not an inappropriate, methodology and that the residual accounting amount – the gap of $6 billion – was attributable to and equal to the value of Placer's legal goodwill. Barrick identified a number of "sources" for Placer's goodwill: personnel; technological capabilities; innovative mining techniques; management; size, structures and systems; ability to harvest efficiencies and economies of scale; ability to expand its business; "synergies"; and going concern value. 45 The gold prices used by (and therefore the DCF calculations of) the valuer called by the Commissioner were discredited in the Court of Appeal and may be put to one side. Bell Nettle Gordon Barrick's contention that, in undertaking the statutory valuation exercise, the appropriate approach was directly valuing the land (with the residual allocated to goodwill) should be rejected on one or more of the following bases: the $6 billion was not legal goodwill; a number of the identified "sources" were excluded by the Stamp Act from the statutory valuation exercise; a number were of no material value separate from the land; and a number were of no material value. In undertaking the statutory valuation exercise in the circumstances of Barrick's acquisition of Placer, the direct valuation approach of valuing Placer's land using a DCF analysis was inappropriate. It was not a reliable method of valuing Placer's assets. Goodwill "'Goodwill' is notoriously difficult to define"46. It is a legal term as well as an accounting, or business, term47. That the legal definition of goodwill differs from that adopted by accountants and business persons48 is not surprising. As has been stated, "[g]oodwill, to accountants, clearly means something different than goodwill to lawyers. There is no concept of negative goodwill in law. Goodwill for accounting purposes is essentially subjective, reflecting the excess that a purchaser is willing to pay for a business or the discount a seller is willing to accept for the same. In this sense, it is essentially a balancing item. However, as a matter of law, the existence or otherwise of goodwill is objectively The approach to goodwill adopted in the EY PPA Report was that of the accountants – a "derivative" amount representing the residual amount of the purchase consideration after identification of the fair value of the acquired identifiable tangible and intangible assets, or the excess of the cost after deduction of all of the identified assets. 46 Hepples v Federal Commissioner of Taxation (1992) 173 CLR 492 at 519; [1992] HCA 3 quoted in Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 611 [12]; [1998] HCA 42. 47 Murry (1998) 193 CLR 605 at 612 [13]. See generally Leake, Commercial Goodwill, 2nd ed (1930), Ch 1. 48 Murry (1998) 193 CLR 605 at 612 [13]. 49 Bridge et al, The Law of Personal Property, 2nd ed (2018) at 196 [9-014] (footnote omitted). Bell Nettle Gordon By way of contrast, courts define, and identify, goodwill in differing factual and legal contexts. The definition in one context is more often than not inappropriate in another context. As the majority said in Federal Commissioner of Taxation v Murry50, "the nature of goodwill as property may be the focus of the legal inquiry", "the value of the goodwill of a business may be the focus of the inquiry", or "identifying the sources or elements of goodwill may be the focus of the inquiry". That list is not exhaustive. Of particular significance in seeking to define goodwill as a legal term has been the importance of the varying statutory contexts in which the legal question has arisen51. This appeal is no different. The factual and legal context is both particular and specific. There is no dispute that the foundations of goodwill for legal purposes rested on patronage. In the early English cases, goodwill was understood as a kind of customer loyalty52. As Lord Eldon LC said in Cruttwell v Lye53, goodwill was "nothing more than the probability, that the old customers will resort to the old place" (emphasis added). The significant implication was, and remains, that goodwill is "intangible and ephemeral rather than tangible and permanent"54. In Inland Revenue Commissioners v Muller & Co's Margarine Ltd55, Lord Lindley said: "Goodwill regarded as property has no meaning except in connection with some trade, business, or calling. In that connection I understand the word to include whatever adds value to a business by 50 (1998) 193 CLR 605 at 611 [12]. 51 See, eg, Minister for Home and Territories v Lazarus (1919) 26 CLR 159; [1919] HCA 12; The Commonwealth v Reeve (1949) 78 CLR 410; [1949] HCA 22; Murry (1998) 193 CLR 605. 52 See Murry (1998) 193 CLR 605 at 612 [15]. See also Osborn, "Rethinking Goodwill: The Murry Legacy", (2012) 7(2) Journal of Applied Research in Accounting and Finance 31 at 33-34. 53 (1810) 17 Ves Jun 335 at 346 [34 ER 129 at 134]. 54 Hey, "Goodwill – Investment in the Intangible", in Currie, Peel and Peters (eds), Microeconomic Analysis: Essays in Microeconomics and Economic Development, 55 [1901] AC 217 at 235. Bell Nettle Gordon reason of situation, name and reputation, connection, introduction to old customers, and agreed absence from competition, or any of these things, and there may be others which do not occur to me. In this wide sense, goodwill is inseparable from the business to which its [sic] adds value, and, in my opinion, exists where the business is carried on. Such business may be carried on in one place or country or in several, and if in several there may be several businesses, each having a goodwill of its own." (emphasis added) In that same case, Lord Macnaghten gave another key definition of goodwill56: "It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates." (emphasis added) However, in subsequent years, the idea that goodwill rested on patronage – attracting customers through the door – came to be seen as too confined, but not irrelevant. That can be most readily seen in the decision of the High Court in Box v Commissioner of Taxation57. The issue was whether a payment in relation to a restrictive covenant constituted goodwill for the purposes of the Income Tax Assessment Act 1936 (Cth). The plurality recognised that although at first the tendency was to place upon goodwill the limited meaning of nothing more than the probability that the customers would resort to the old place of business, a wider view then prevailed58. The wider view was – and, as will be seen, remains – that "the real value of the goodwill had nothing to do with any particular site but consisted in the 56 Muller [1901] AC 217 at 223-224. 57 (1952) 86 CLR 387; [1952] HCA 61. 58 Box (1952) 86 CLR 387 at 395-396. Bell Nettle Gordon formation of a personal connection with a large number of purchasers"59 (emphasis added). Custom was now recognised to encompass more than patronage, in the sense of customers frequenting a particular premises. The way in which business was conducted and custom was attracted now was far more sophisticated. As the plurality said in Box, those personal connections extended to "every positive advantage that has been acquired by the old firm in carrying on its business, whether connected with the premises in which the business was carried on, or with the name of the firm, or with other matter carrying with it the benefit of the business"60. In relation to Lord Lindley's description of goodwill as "whatever adds value to a business"61, the plurality recognised that "different businesses derive their value from different considerations"; that "[t]he goodwill of some businesses is derived almost entirely from the place where they are carried on, ... and partly from the reputation built up around the name of the individual or firm or company"; that "some goodwills derive their value partly from the locality where the business is carried on"62. The plurality clearly did not suggest that "custom" was irrelevant to goodwill – rather, that the notion of custom as being confined to a customer resorting to the old site of a business had become too narrow. that "some goodwills are purely personal"; and Thus, the notion of custom encompassed connections between a business identity and customers, however those connections were made. This expansion of the view of goodwill from being sourced in a place of business to recognising that there were other sources – such as the personality of those that ran the business or the way it was conducted – did not diverge from the idea that custom was central to goodwill. Custom was and remains central. What had occurred was that the law now recognised that custom could be generated by and from different sources. That expansion of what might generate custom was addressed even before the decision in Box, by Rich J in Federal Commissioner of Taxation v 59 Box (1952) 86 CLR 387 at 399. 60 (1952) 86 CLR 387 at 396 citing Trego v Hunt [1896] AC 7 at 17. See also Churton v Douglas (1859) Johns 174 at 188 [70 ER 385 at 391]. 61 Muller [1901] AC 217 at 235. 62 Box (1952) 86 CLR 387 at 397. See also Leake, Commercial Goodwill, 2nd ed Bell Nettle Gordon Williamson63. His Honour discussed the "cats, dogs, rats and rabbits" categorical analysis of goodwill as follows: "The cat prefers the old home to the person who keeps it, and stays in the old home although the person who has kept the home leaves, and so it represents the customer who goes to the old shop whoever keeps it, and provides the local goodwill. The faithful dog is attached to the person rather than to the place; he will follow the outgoing owner if he does not go too far. The rat has no attachments, and is purely casual. The rabbit is attracted by mere propinquity. He comes because he happens to live close by and it would be more trouble to go elsewhere. These categories serve as a reminder that the goodwill of a business is a composite thing referable in part to its locality, in part to the way in which it is conducted and the personality of those who conduct it, and in part to the likelihood of competition, many customers being no doubt actuated by mixed motives in conferring their custom." (emphasis added) The value of that categorical analysis of goodwill has been questioned as potentially misleading64. But there are two points to be made about that categorical analysis. First, neither in Box nor in Williamson was there divergence from the idea that custom was central to goodwill; and, second, those decisions (and the analysis) emphasise that goodwill – custom – could be generated from a number of sources. Murry The decision of this Court in Murry in 1998 marked a watershed. It is therefore necessary to address the decision in some detail. It cannot, and should not, be understood by taking a few isolated passages out of their context and treating those passages as a comprehensive summary of what was decided. Moreover, the legal and factual context of the decision is significant. The legal issue was whether, under the Income Tax Assessment Act 1936, by reason of an exempting provision, the capital gain from a disposal of a business or an interest in a business was deemed to be reduced by half because the disposal included the goodwill of the business. Goodwill was not defined in the Act. The factual context was the disposal of a licence to operate a taxi. 63 (1943) 67 CLR 561 at 564; [1943] HCA 24 citing Whiteman Smith Motor Co v Chaplin [1934] 2 KB 35 at 42, 49. 64 See, eg, Whiteman [1934] 2 KB 35 at 49-50 per Maugham LJ. Bell Nettle Gordon The majority held that the taxpayer (and her husband) did not dispose of a business within the meaning of the exempting provision and nor did they dispose of an interest in a business which included the goodwill of the business. In addressing that legal and factual context, the majority considered the nature of goodwill, goodwill as property, the sources of goodwill, and then the value of goodwill. It is instructive to consider the majority's reasons by reference to those matters. Nature of goodwill65 In considering the nature of goodwill, the majority stated that although goodwill is notoriously difficult to define, its existence "depends upon proof that the business generates and is likely to continue to generate earnings from the use of the identifiable assets, locations, people, efficiencies, systems, processes and techniques of the business"66. Second, the majority restated that which had been addressed by the Court in Box and Williamson, that the legal definition of goodwill that emphasised patronage – that old customers will resort to the old place – had been expanded, and included that which Lord Lindley had described as "whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers, and agreed absence from competition, or any of these things, and there may be others"67. Third, and of importance to understanding the reasoning in Murry, "the attraction of custom still remain[ed] central to the legal concept of goodwill"68. Fourth, it seemed "impossible to achieve a synthesis of the legal and the accounting and business conceptions of goodwill"69. And, finally, the legal concept of goodwill has three different aspects – property, sources and value – and what unites those aspects is the "conduct of a business"70. It was each of 65 Murry (1998) 193 CLR 605 at 611-615 [12]-[22]. 66 Murry (1998) 193 CLR 605 at 611 [12]. 67 Muller [1901] AC 217 at 235 quoted in Murry (1998) 193 CLR 605 at 613 [16]. 68 Murry (1998) 193 CLR 605 at 614 [20]. 69 Murry (1998) 193 CLR 605 at 614 [21]. 70 Murry (1998) 193 CLR 605 at 614-615 [22]. Bell Nettle Gordon these aspects that the majority then addressed. As will become evident, for each aspect, the attraction of custom remained the critical focus of, and central to, the legal concept of goodwill. Goodwill as property71 The majority accepted that goodwill for legal purposes is property because "it is the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means that have attracted custom to it", being a "right or privilege that is inseparable from the conduct of the business"72 (emphasis added). In other words, the law would seek to protect those rights or privileges in order to preserve the custom attracted to that business. The sources of goodwill73 In seeking to identify the sources of goodwill, the starting point for the majority was, again, custom74: "[t]he goodwill of a business is the product of combining and using the tangible, intangible and human assets of a business for such purposes and in such ways that custom is drawn to it" (emphasis added). And, significantly, goodwill was identified as having sources, not elements75. That distinction was and remains important because the sources of goodwill have a unified purpose and result – to generate or add value (or earnings) to the business by attracting custom. And the sources of goodwill of a business were recognised as not being static: "[t]he sources of the goodwill of a business may change and the part that various sources play in maintaining the goodwill may vary during the life of the business"76. Critically, the majority addressed what they described as the "[t]ypical sources of goodwill" – "manufacturing and distribution techniques, the efficient use of the assets of a business, superior management practices and good 71 Murry (1998) 193 CLR 605 at 615 [23]. 72 Murry (1998) 193 CLR 605 at 615 [23] (footnote omitted). 73 Murry (1998) 193 CLR 605 at 615-624 [24]-[47]. 74 Murry (1998) 193 CLR 605 at 615 [24]. 75 Murry (1998) 193 CLR 605 at 616 [24]. 76 Murry (1998) 193 CLR 605 at 623 [45]. Bell Nettle Gordon industrial relations with employees"77. The reason given for why they were "typical sources" was that "they motivate service or provide competitive prices that attract customers"78 (emphasis added). In addressing the sources of goodwill for legal purposes, the majority also recognised that in some businesses, price and service may have little effect on attracting custom. The goodwill may instead derive from custom being attracted because of location, statutory monopolies including patents and trademarks and expenditure such as advertising79. Thus, recognising that there will be sources of goodwill that generate custom, and that there is a need to identify those sources80, the majority reinforced the idea that goodwill for legal purposes is property and that "[t]o the extent that the proprietor of a business has the right or privilege to conduct the business in the manner and by the means which have attracted custom to the business, the courts will protect the sources of the goodwill of the business, so far as it is legally possible to do so"81 (emphasis added). Next, recognised the majority that goodwill has no existence independently of the conduct of a business and goodwill cannot be severed from the business which created it82. Thus, the sale of an asset of a business does not involve any sale of goodwill unless the sale of the asset is accompanied by or carries with it the right to conduct the business83. 77 Murry (1998) 193 CLR 605 at 616 [25]. 78 Murry (1998) 193 CLR 605 at 616 [25]. 79 Murry (1998) 193 CLR 605 at 616 [26]-[27]. 80 Murry (1998) 193 CLR 605 at 617-618 [30]. 81 Murry (1998) 193 CLR 605 at 617 [29]. 82 Murry (1998) 193 CLR 605 at 620 [36] citing Muller [1901] AC 217, Bacchus Marsh Concentrated Milk Co Ltd (In liq) v Joseph Nathan & Co Ltd (1919) 26 CLR 410; [1919] HCA 18, Box (1952) 86 CLR 387, Geraghty v Minter (1979) 142 CLR 177 at 193; [1979] HCA 42 and Hepples (1992) 173 CLR 492. 83 Murry (1998) 193 CLR 605 at 618 [31]. Bell Nettle Gordon The value of goodwill84 As custom is central to the nature and sources of goodwill, the majority recognised that the value of the goodwill of a business varies with the earning capacity of the business and the value of the other identifiable assets and liabilities85. Unsurprisingly, the methodologies used to value goodwill vary between businesses and, further, the methodology adopted to value goodwill is fact specific. So, for example, the majority suggested that where a business is profitable and expected to continue to be so, goodwill may be valued by adopting the accounting approach86. But it is critical to understand the "accounting approach" being addressed. The accounting approach in Murry was described as "the difference between the present value of the predicted earnings of the business and the fair value of its identifiable net assets"87. That methodology is not the same as comparing the fair value of Placer's identifiable net assets to the purchase price of the business, the accounting approach adopted by Barrick. The matter may be tested by reference to the facts in this appeal. Goodwill based on the Murry accounting approach would be valued by reference to the difference between the present value of the predicted earnings of Placer (a DCF calculation) and the fair value of Placer's identifiable net assets. That is not the same as valuing goodwill by ascertaining the difference between Placer's identifiable tangible and intangible assets and its purchase price. Not only is the Murry accounting approach different from that adopted by Barrick in relation to Placer, but the majority in Murry advised caution in adopting the Murry accounting approach. The cautions were multilayered. First, although it might be appropriate to value goodwill in a profitable business as the difference between the projected earnings of the business and its net assets, it is essential that the net assets are not only properly identified but properly 84 Murry (1998) 193 CLR 605 at 624-625 [48]-[52]. 85 Murry (1998) 193 CLR 605 at 624 [48]. 86 Murry (1998) 193 CLR 605 at 624 [49]. 87 Murry (1998) 193 CLR 605 at 624 [49]. 88 Murry (1998) 193 CLR 605 at 624 [49]. Bell Nettle Gordon The caution may be explained in these terms. Adopting the Murry accounting approach, goodwill is valued through a subtractive method: subtracting the value of the net assets from the projected earnings. If the net assets are not correctly identified and valued, then as a matter of logic, goodwill will not be properly valued. So, for example, if there are other intangible assets which are not goodwill, such as a trademark, and they are not properly identified and valued, there will be a failure to properly value the goodwill89. The second caution concerned businesses trading at a loss. In that situation, the Murry accounting approach was not appropriate for valuing goodwill90. That conclusion necessarily followed from the integers of the Murry accounting approach. Where a business is trading at a loss, there will be no gap between predicted earnings and the fair value of the net assets. But the absence of a gap does not necessarily mean there is no goodwill. For example, there may be goodwill derived from advertising in an unprofitable business. The question which then arises is how that goodwill is to be valued. Murry suggests that the value of the goodwill may be the difference between the revenues generated by the custom brought in from the advertising and the operating expenses (other than a share of fixed costs) incurred in earning those revenues, namely the price of the advertising91. A third, and related, caution was expressed in Murry in relation to the valuation of goodwill for legal purposes. Without being prescriptive (and, as this analysis demonstrates, that is impossible given the varying legal and factual contexts and the varying nature of the businesses being considered), the majority cautioned against attributing a value to goodwill which actually inhered in an asset which was a source of goodwill. As the majority stated, a purchaser of a business does not wish to pay twice for the same source of earning power92. In considering the specific issue in Murry – whether a taxi licence was a source of goodwill (and it was not) – the majority recognised that goodwill distinguishes an established business from a new business. That is, once a business is operating, the business may develop certain advantages: the business might attract a regular clientele, it might enjoy a reputation for reliability or 89 See Murry (1998) 193 CLR 605 at 625 [51]. 90 Murry (1998) 193 CLR 605 at 624-625 [50]. 91 Murry (1998) 193 CLR 605 at 625 [50]. 92 Murry (1998) 193 CLR 605 at 625 [51]. Bell Nettle Gordon service, or it might employ highly skilled employees able to generate above-average earnings. These advantages will constitute goodwill because they will generate custom greater than the industry average93. If the business is selling goods and services which are virtually indistinguishable from others sold in that same market, above-average earnings will be difficult to achieve. But if above-average earnings are achieved, it suggests the existence of goodwill; it suggests that the business has attracted custom greater than the industry average. The measure of value of that goodwill is how much the earnings exceed the norm94. That is, the business is getting more value out of the assets than its competitors because the business is bringing in more custom. That is not the same as going concern value, another concept or approach, which exists as an intangible separate from goodwill even where there is no custom95. Added value approach Since Murry, a debate has ensued as to there being a distinction between what has been described as the "broad" and "narrow" views of what comprises goodwill for legal purposes. Dicta in a number of later decisions96, as well as academic writings97, have suggested that Murry, or at least some isolated passages in the majority's reasons in Murry, not only recognised, but adopted, 93 Murry (1998) 193 CLR 605 at 627-628 [61]. 94 Murry (1998) 193 CLR 605 at 627-628 [61]. 95 See, eg, Omaha v Omaha Water Co 218 US 180 at 202-203 (1910); Des Moines Gas Co v Des Moines 238 US 153 at 164-165 (1915); Haberle Crystal Springs (2nd Cir 1929); Brewing Co v Clarke 30 F 2d 219 at 221-222 Tele-Communications Inc v Commissioner of Internal Revenue 95 TC 495 at 521-522 (1990); Ithaca Industries Inc v Commissioner of Internal Revenue 97 TC 253 at 264 (1991); Corpus Juris Secundum (2008 ed), vol 38A, "Goodwill", §4. 96 Commissioner of Territory Revenue v Alcan (NT) Alumina Pty Ltd (2008) 24 NTLR 33 at 68 [112], 69 [114]; see also at 66-67 [106]-[107]; Placer (2017) 106 ATR 511 at 532 [83], 535 [97], 562 [231], 563 [237], 564 [242]-[243], [246]. See also Hepples (1992) 173 CLR 492 at 542; cf Murry (1998) 193 CLR 605 at 614 [21]. See generally Transalta Corporation v The Queen 2012 DTC 5041 at 97 See, eg, Osborn, "Rethinking Goodwill: The Murry Legacy", (2012) 7(2) Journal of Applied Research in Accounting and Finance 31. Bell Nettle Gordon a broader concept of goodwill which has been described as the added value approach. That debate was central to Barrick's contentions in this Court. Barrick contended that in Box98, Hepples v Federal Commissioner of Taxation99 and Murry100 the High Court had rejected the narrow conception of goodwill founded on patronage in favour of a broader added value concept which included every positive advantage, and whatever adds value, including privileges or advantages that differentiate an established business from a business just starting out. Under the added value approach to goodwill, goodwill is conceptualised as a bundle of rights and privileges to use the assets of the business to produce income; and goodwill is everything that adds value to a business and every possible advantage101. This debate has been identified as the "patronage" approach versus the "added value" approach102. Under the added value approach, sources of goodwill are said to exist separate to those which attract custom103. The contention that the added value approach has been or should be adopted as the definition of goodwill for legal purposes is rejected. Murry did not broaden the legal concept of goodwill to include sources which did not generate or add value (or earnings) to the business by attracting custom. The "typical sources" of goodwill acknowledged in Murry104 were "typical sources" because "they motivate service or provide competitive prices that attract customers"105 (emphasis added). And Murry106 and the decision 98 (1952) 86 CLR 387. 99 (1992) 173 CLR 492. 100 (1998) 193 CLR 605. 101 Osborn, "Rethinking Goodwill: The Murry Legacy", (2012) 7(2) Journal of Applied Research in Accounting and Finance 31 at 32, 37. 102 Osborn, "Rethinking Goodwill: The Murry Legacy", (2012) 7(2) Journal of Applied Research in Accounting and Finance 31 at 43-44. 103 Osborn, "Rethinking Goodwill: The Murry Legacy", (2012) 7(2) Journal of Applied Research in Accounting and Finance 31 at 44. 104 See [73] above. 105 (1998) 193 CLR 605 at 616 [25]. 106 (1998) 193 CLR 605 at 612 [15]. Bell Nettle Gordon which preceded it, Box107, recognised that in the modern world, patronage – in the sense of customers through the door – was no longer the sole means of generating or adding value (or earnings) to a business by attracting custom. But, in both decisions, the recognition that there were other sources of goodwill was itself considered in terms of the ability of those other sources to attract custom108. In support of the contention that the added value approach to goodwill now should be adopted, Barrick relied upon the decision of the Court of Appeal of the Supreme Court of the Northern Territory in Commissioner of Territory Revenue v Alcan (NT) Alumina Pty Ltd109. A majority of the Court of Appeal held that a mining company had goodwill by reference to, among other things, its geographic location – its proximity to Asia. The majority disagreed on what constituted goodwill for legal purposes110. Southwood J analysed the identified sources of goodwill in terms of an attractive force which brings in custom111. Angel J, on the other hand, held that the patronage concept of goodwill had been rejected in favour of the added value approach and that goodwill was what distinguished an established business from a new business112. Alcan does not assist Barrick. The majority did not adopt the added value approach. Angel J proceeded on a misunderstanding of what had been decided in Murry and in the other authorities. The patronage concept of goodwill, to which custom was central, has not been rejected. Instead, the sources of goodwill have been widened to include those sources which generate or add value (or earnings) to a business by attracting custom. Goodwill at law does not extend to include every fact or matter that adds value to a business. For the reasons given below, the assumption upon which Angel J proceeded, that goodwill was what 107 (1952) 86 CLR 387 at 395-397. 108 See Box (1952) 86 CLR 387 at 396; Murry (1998) 193 CLR 605 at 615-624 109 (2008) 24 NTLR 33. 110 Alcan (2008) 24 NTLR 33 at 66 [104], 67 [107], 68 [112], 69 [114], 70 [120] per Angel J, 70 [122], 73 [133], 74-76 [136]-[143] per Southwood J; cf at 62 [83], 63 [85]-[86], 66 [103] per Martin (BR) CJ. 111 Alcan (2008) 24 NTLR 33 at 74-76 [136]-[143]. 112 Alcan (2008) 24 NTLR 33 at 68 [112], 69 [114]. Bell Nettle Gordon distinguished an established business from a new business, cannot be accepted as correct. Barrick also placed reliance upon a case decided in Canada113, and a case decided in Hong Kong114, in support of its added value approach to goodwill. Neither decision is determinative of goodwill for legal purposes. Each was decided in a specific and particular legal and factual context. The Canadian case concerned the existence and valuation of goodwill for income tax purposes, in a statutory context requiring both regulatory and industry practice, as well as auditing and valuation standards and practices, to be taken into account115. The Hong Kong decision was an appeal which only briefly discussed the nature of goodwill in the context of considering the tort of passing off116. Conclusion on goodwill for legal purposes Goodwill for legal purposes does not extend to every positive advantage, and whatever adds value, including privileges or advantages that differentiate an established business from a business just starting out. Goodwill for legal purposes does extend to those sources which generate or add value (or earnings) to the business by attracting custom, whether that be from the use of identifiable assets, locations, people, efficiencies, systems, processes, or techniques of the business, or from some other identifiable source. And those sources of goodwill for legal purposes have a unified purpose and result – to generate or add value (or earnings) to the business by attracting custom. Economic view of goodwill That legal view of goodwill is reinforced by, and is not inconsistent with, the economic view of goodwill. In economic terms, goodwill acts on demand117. 113 Transalta 2012 DTC 5041. 114 Tsit Wing (Hong Kong) Co Ltd v TWG Tea Co Pte Ltd (No 2) (2016) 19 HKCFAR 115 Transalta 2012 DTC 5041 at 6758 [7]; see also at 6767-6768 [65]-[70], 6769 [75]. 116 Tsit Wing (2016) 19 HKCFAR 20 at 33-34 [25]-[26]. 117 Foreman, "Economies and Profits of Good-Will", (1923) 13 The American Economic Review 209 at 209, 215. See also Foreman, "Conflicting Theories of Good Will", (1922) 22 Columbia Law Review 638 at 638; Commons, Legal (Footnote continues on next page) Bell Nettle Gordon Economists recognise that goodwill increases demand for a business' goods or services, which, in turn, enables the business benefiting from the goodwill to sell more, increase its price, or both, whilst at the same time recognising that demand may be increased by any number of factors which would not qualify as goodwill, such as product differentiation118. The basic underlying principle of goodwill for economists has been described as "reciprocity"119, where the attention is focused on the things that the buyer receives from the seller but which the buyer cannot demand as part of the transaction and on the things which the seller receives from the buyer which the seller cannot demand as part of the transaction120. The premise underlying "reciprocity" is that the provision of these items by one party to the other party "builds up in the mind of the receiving party some goodwill felt towards the other party. The greater the provision, the greater the increase in the stock"121. Foundations of Capitalism, (1924) at 206; Robinson, The Economics of Imperfect Competition, (1961) at 75, 89. See generally Hey, "Goodwill – Investment in the Intangible", in Currie, Peel and Peters (eds), Microeconomic Analysis: Essays in Microeconomics and Economic Development, (1981) 196. 118 Genser, "The Economic Case for the Coexistence of Monopoly Power and Goodwill in the Cable Television Industry", (1994) 16 Hastings Communications and Entertainment Law Journal 265 at 273. See also Robinson, The Economics of Imperfect Competition, (1961) at 89-90. 119 Commons, Legal Foundations of Capitalism, (1924) at 271. See also Commons, Industrial Goodwill, (1919) at 19 quoted in Foreman, "Economies and Profits of Good-Will", (1923) 13 The American Economic Review 209 at 216; Hey, "Goodwill – Investment in the Intangible", in Currie, Peel and Peters (eds), Microeconomic Analysis: Essays in Microeconomics and Economic Development, 120 Hey, "Goodwill – Investment in the Intangible", in Currie, Peel and Peters (eds), Microeconomic Analysis: Essays in Microeconomics and Economic Development, 121 Hey, "Goodwill – Investment in the Intangible", in Currie, Peel and Peters (eds), Microeconomic Analysis: Essays in Microeconomics and Economic Development, Bell Nettle Gordon This underlying principle of goodwill for economists – that of "reciprocity"122 or factors that increase demand – is analogous to that which underpins goodwill for legal purposes, namely "custom". As Commons, a leading economist in the 1920s, explained, "goodwill can be seen and felt – seen not in commodities, but in the transactions of business; and felt, not in consumption and production, but in the confidence of patrons, investors and employees"123 (emphasis added). Going concern value not goodwill It is then necessary to address Barrick's contention that the $6.506 billion identified as "goodwill" in Barrick's financial statements lodged with the US SEC was goodwill or going concern value and that goodwill for legal purposes and going concern value were interchangeable. That contention also should be rejected. Goodwill for legal purposes is different from, and is not to be confused with, the "going value" or the going concern value of a business. These terms are not separate methods of valuing the same intangible124. The distinction between them is clear and, in the context of this appeal, important. As seen earlier, goodwill represents a pre-existing relationship arising from a continuous course of business – to which the "attractive force which brings in custom" is central. Without an established business, there is no goodwill because there is no custom. A collection of assets has no custom125. Going concern value, on the other hand, is the ability of a business to generate income without interruption even where there has been a change in ownership126. It has been recognised as a property right by the Supreme Court of 122 Commons, Legal Foundations of Capitalism, (1924) at 271. 123 Commons, Legal Foundations of Capitalism, (1924) at 273 quoted in Hey, "Goodwill – Investment in the Intangible", in Currie, Peel and Peters (eds), Microeconomic Analysis: Essays in Microeconomics and Economic Development, 124 Corpus Juris Secundum (2008 ed), vol 38A, "Goodwill", §4. 125 See, eg, Murry (1998) 193 CLR 605 at 627 [60]. 126 Corpus Juris Secundum (2008 ed), vol 38A, "Goodwill", §4; Ithaca Industries 97 TC 253 at 264 (1991). Bell Nettle Gordon the United States127. In general terms, in a number of US decisions, it has been described as what differentiates an established business from one just starting; and, importantly, is present even when there is no goodwill128. For present purposes, the difference is best understood in the terms identified and discussed in Murry. Goodwill is property in the nature of the right or privilege to conduct the business by "means which have attracted custom to the business"129 (emphasis added). The courts will protect that property – those means of attracting custom to the business – irrespective of the profitability or value of the business, so far as it is legally possible to do so130. Going concern value is not of that nature: it is not the right or privilege to conduct the business by means which have attracted custom to the business and, thus, going concern value does not comprise the means of attracting custom to the business which the courts will or can protect. Barrick contended that two decisions of the US Supreme Court131 "recognise[] that the value of a profitable going concern business will differ significantly from the aggregate value of its identifiable assets … even if the business is a regulated utility which cannot claim to have any goodwill in the narrow sense that it possesses an attractive force that brings in … custom". So much may be accepted. But going concern value treats goodwill, if it exists, as no more than a component of going concern value132. The two concepts are not synonymous and should not be confused with each other133. Once that is 127 Des Moines Gas Co 238 US 153 at 165 (1915). 128 See Omaha Water Co 218 US 180 at 202 (1910); Des Moines Gas Co 238 US 153 at 164-165 (1915); Haberle 30 F 2d 219 at 221-222 (2nd Cir 1929); Tele-Communications Inc 95 TC 495 at 521-522 (1990); Ithaca Industries 97 TC 129 Murry (1998) 193 CLR 605 at 617 [29]. 130 Murry (1998) 193 CLR 605 at 614 [20], 617 [29]. 131 Omaha Water Co 218 US 180 (1910); Des Moines Gas Co 238 US 153 (1915). See also Tele-Communications Inc 95 TC 495 (1990). 132 Corpus Juris Secundum (2008 ed), vol 38A, "Goodwill", §4 citing Gaydos v Gaydos 693 A 2d 1368 (Pa 1997). 133 Corpus Juris Secundum (2008 ed), vol 38A, "Goodwill", §4 citing Los Angeles Gas & Electric Corp v Railroad Commission of California 289 US 287 (1933). Bell Nettle Gordon recognised, it will be seen that in the context of the legal and factual issues raised in the present appeal, the notion of going concern value as the difference between an established plant and one just starting up has no impact on the valuation of Placer's property for the purposes of the land rich provisions of the Stamp Act. Part IIIBA of the Stamp Act was introduced to prevent duty on transfers of land being avoided through schemes that involved the use of corporate structures and share sales. The purpose of the test in s 76ATI(2)(b) is to determine whether an entity's underlying value is principally in its land or non-land assets. The statutory valuation exercise in s 76ATI(2)(b) thus requires a comparison between the value of "all land to which the corporation is entitled" (emphasis added) and "all property to which [the corporation] is entitled". There are four things about that which are to be noted. First, the statutory valuation exercise looks to the land and property of the corporation. Hence, as the Commissioner in effect submitted, in the case of a corporation which is a going concern, the statutory valuation exercise requires comparison of the value of land as part of the going concern with the total property of the going concern. It follows that, if and insofar as the going concern value of the corporation may inhere in the value of the land, there is no statutory or other warrant for stripping going concern value out and attributing it with a value separate from the land. It is part of the value of the land. Second, the statutory valuation exercise requires assumptions that the hypothetical purchaser knew how to exploit the land134, and that the value of intellectual property and knowledge is to be excluded from the calculation135. These statutorily prescribed assumptions mandate that Barrick be given the attributes of an established business owner (namely, that Barrick knew how to exploit the property already). Third, and relatedly, given that in Placer's case the vast bulk of any going concern value would necessarily have been attributable to that knowledge and intellectual property, any assessment of the difference in value between what would differentiate Placer, as an established business, from a mining company just starting out would not only not be warranted but would also run counter to the statutory assumptions and, thus, contrary to the requirements of the statutory valuation exercise. 134 s 33(1)(c) of the Stamp Act. 135 s 76ATI(4)(f) of the Stamp Act. Bell Nettle Gordon Fourth, and in any event, while it is possible that there may have been factors other than knowledge and intellectual property which, to some extent, contributed to Placer's going concern value, the evidence left it totally unclear how any such residual going concern value could be identified, valued, and then distributed between Placer's land and property for the purpose of the statutory valuation exercise. The difficulty is demonstrated by the fact that all valuers used Placer's strategic business plans in the valuations of Placer's land assets using a DCF model. As observed by the Court of Appeal, that methodology valued an operating business, not just the land. No comprehensive attempt was made to differentiate between the value of the business using the DCF methodology and the value of the land other than an incomplete attempt to assess the costs which would have been incurred by a purchaser recreating the mining business. None of Barrick's valuers in their DCF calculations attempted to sever the value of Placer's land assets from its business. In support of the contention that the $6.506 billion identified as "goodwill" in Barrick's accounts comprised going concern value, Barrick placed reliance upon several United States decisions136. Those decisions do not assist Barrick's argument. Each was decided in a specific context. They recognise that there is value in a going concern as opposed to a collection of assets. As a matter of common sense that is unsurprising. But they also confirm that going concern value is separate from legal goodwill. The decision in Haberle Crystal Springs Brewing Co v Clarke137 is sufficient to make the point. Haberle's taxes were computed without allowing any deduction for obsolescence – meaning the shortening of the useful economic or commercial life of an asset before the end of its physical life138 – of its goodwill. The issue was whether Haberle could deduct for the obsolescence of goodwill. The court held that a going business has a value over and above the aggregate value of the tangible property employed in it; and such excess of value was nothing more than the recognition that, used in an established business that has won the favour of its customers, tangibles may be expected to earn in the future as they have in the past139. The court recognised that the owner's privilege 136 Omaha Water Co 218 US 180 (1910); Des Moines Gas Co 238 US 153 (1915); Haberle 30 F 2d 219 (2nd Cir 1929); Tele-Communications Inc 95 TC 495 (1990). 137 30 F 2d 219 (2nd Cir 1929). 138 Haberle 30 F 2d 219 at 220 (2nd Cir 1929). 139 Haberle 30 F 2d 219 at 221-222 (2nd Cir 1929). Bell Nettle Gordon of so using those assets, and the privilege of continuing to deal with customers attracted by the established business, was property of value140. In short, the owner of a going concern business enjoyed two privileges stemming from ownership: continuing to use the assets to generate income; and continuing to deal with customers (the latter being goodwill). The second was said to depend on the first. As has been recognised, as an established business, Placer may have had some residual going concern value over and apart from the information and intellectual property required to be excluded from the statutory valuation exercise by s 76ATI(4)(f). But, in the context of the statutory valuation exercise required to be, and in fact, undertaken, Barrick did not establish, and could not establish, going concern value as a source of goodwill for legal purposes. "Sources" identified by Barrick It is then necessary to address Barrick's further contention that even if goodwill for legal purposes did not extend to include sources which added value regardless of whether the identified source generated or added value (or earnings) to the business by attracting custom, at the date of acquisition there was "ample evidence" that Placer had goodwill for legal purposes with a value of $6.506 billion. The objective "sources" of goodwill identified by Barrick were: Placer's personnel, who were said to have proven capacity to develop and expand the business ("Personnel"); the technical capacity of the personnel ("Technical Capability"); Placer's innovative mining techniques, which were said to have enabled Placer to extract lower-grade ores, giving it a competitive advantage over other miners ("Techniques"); the strong and experienced project group and mine managers ("Management"); 140 Haberle 30 F 2d 219 at 222 (2nd Cir 1929). See also Osborn, "Rethinking Goodwill: The Murry Legacy", (2012) 7(2) Journal of Applied Research in Accounting and Finance 31 at 47. Bell Nettle Gordon the size, structures and systems that enabled Placer to harvest efficiencies and economies of scale ("Systems"); the synergies ("Synergies"); and the going concern value comprising "the value of all the rights and privileges to conduct Placer's business". The last – the going concern value – has been addressed141, but it remains necessary to address whether the other identified "sources" generated or added value (or earnings) to the business by attracting custom and thereby comprised goodwill for legal purposes. As will be seen, none of these matters taken individually or collectively is of that character. Some of the "sources" are expressly excluded from the statutory valuation exercise. For some of the "sources", there is no evidential basis that they in fact exist. And none of the "sources" could generate goodwill of any material value because Barrick could not and did not establish that any of the "sources" could generate or add value (or earnings) by attracting custom to Placer's business. Before turning to consider each "source" in turn, it is important to restate that the analysis of each source is for the purpose of the statutory valuation exercise and in the context of the facts at the date of acquisition. Personnel and Management The Court of Appeal found that Placer's personnel had demonstrated the capacity to develop the business through an exploration program and their technical capability. Barrick relied on this finding. In relation to Management, Barrick further contended that Placer's project group and mine managers could constitute a material source of Placer's goodwill. These sources overlap and may be considered together. These sources were not capable of generating any goodwill of any material value. There was nothing to suggest that these sources generated or added value (or earnings) to Placer's business by attracting custom. In fact, the evidence was to the contrary. Witnesses for both the Commissioner and Barrick accepted that Placer's workforce was not unique and that another mining company could have competently operated the mines. And that evidence was 141 See [96]-[108] above. Bell Nettle Gordon consistent with Barrick's internal view of Placer's personnel. As seen earlier, a major driver of Barrick's acquisition of Placer was the prospect of synergies. As much as 25 per cent of the synergies arose from savings in administration from closing redundant offices and eliminating duplication. The capitalised value of the synergies was accepted by the parties to lie between $1.6 billion and $2 billion. Thus, the savings in administration and the use of global offices were of real value. Indeed, not only did Barrick think that it could better manage Placer's assets but there was an expectation that Placer's executive team would leave post-acquisition. The proposition that a material source of Placer's $6 billion in goodwill was the ability of Placer's personnel to develop and expand Placer's business or its project group and mine managers is implausible in the face of evidence that a major driver of Barrick's acquisition was streamlining the operations of the amalgamated entity, which meant redundancies and office closures. Technical Capability Barrick contended that Placer had a technically competent workforce who had a proven record of their ability to develop innovative mining techniques. Again, this source was not capable of generating any relevant goodwill or any goodwill of any material value. There was a legal and factual difficulty with Barrick's contention. As explained earlier, the statutory valuation exercise excluded142: "(f) a licence or patent or other intellectual property (including knowledge or information that has a commercial value) relating to any process, technique, method, design or apparatus to — locate, extract, process, transport or market minerals; or grow, rear, breed, maintain, produce, harvest, collect, process, transport or market primary products". Much of the value attributed to technical capability would fall within one or more elements of this provision. 142 s 76ATI(4)(f) of the Stamp Act. Bell Nettle Gordon Further, s 33(1)(c) of the Stamp Act provides that, when determining the value of land or property for the purposes of the Stamp Act, it is to be assumed that a hypothetical purchaser would, when negotiating price, have knowledge of all existing information relating to the land; and no account is to be taken of any amount that a hypothetical purchaser would have to expend to reproduce, or otherwise acquire a permanent right of access to and use of, existing information relating to the land. Thus, the technical capabilities of Placer employees as to how to exploit the relevant mines were excluded from the statutory valuation exercise. However, Barrick contended that this "source" was not excluded or removed as a source of goodwill just because the Stamp Act excluded technical capability which comprised, or was sufficiently developed to constitute, intellectual property. That is, Barrick contended that there was technical capability which was not intellectual property but which comprised a source of goodwill. Barrick's contention should be rejected. As the preceding section explains, there was nothing to suggest that Placer's personnel had any unique expertise or abilities. Moreover, there was nothing to suggest that the abilities of Placer's personnel (separate from that which would be captured by s 76ATI(4)(f)) could constitute a material source of Placer's alleged goodwill and, moreover, even if Placer's personnel had those abilities or that information, those attributes would have been excluded under s 33(1)(c) of the Stamp Act. Techniques The Court of Appeal also relied on technology, by referring to innovative mining techniques used by Placer, to justify its finding that Placer had substantial goodwill. Given the terms of s 76ATI(4)(f) and the EY PPA Report, that was an error. Under the Stamp Act, any knowledge with a commercial value related to exploiting minerals held by Placer was excluded from the statutory valuation exercise by s 76ATI(4)(f). And, factually, the EY PPA Report stated that based on EY's discussions with management, EY had concluded that no significant value existed in the technology intangibles of Placer with the exception of the "Hot Cure" process. The Hot Cure process was valued at approximately $17 million. That is a long way from contributing to goodwill of $6.506 billion. Bell Nettle Gordon Systems Barrick then submitted that Placer's management structures and systems were utilised for the purpose of enhancing profitability and efficiency in the context of a large global business and included the strategic business plans at each operating mine and a recent redesign of business processes. In addition, Barrick submitted that Placer's size, global structure and management systems and the skills and expertise of its personnel enabled it to harvest efficiencies and economies of scale, and created the capacity to expand and develop the business by identifying new projects as existing mines were depleted. The Court of Appeal found Placer had developed systems including strategic business plans at each mine. The Court of Appeal also found that in the year preceding the acquisition, Placer had commenced a redesign of its business processes and referred to evidence of "efficiencies and economies of scale"143. These sources also were not capable of generating any relevant goodwill or any goodwill of any material value. Personnel and management have been addressed in the preceding sections, which included aspects of Placer's management structures and systems. Indeed, not only did Barrick consider that it could better manage Placer's assets but, post-acquisition, many of Placer's offices were closed. Moreover, as noted earlier, in the presentation to the Barrick Board prior to its acquisition of Placer, Barrick's focus was that the transaction would make Barrick the largest gold mining company with a political risk profile better able to handle subsequent acquisitions and, further, that the transaction would create the largest gold mining company in terms of market capitalisation, reserves and production. Placer's management structures and systems were not mentioned, let alone an identified focus. As a matter of common sense, Placer's size would have allowed it to take advantage of economies of scale. However, what is unclear is how size alone can be a source of legal goodwill. As the Commissioner submitted, the mere fact that a property-owning company has land which is rezoned does not of itself add to the company's goodwill. Moreover, Placer's size was inexorably linked to the size of its land-holdings. As Mr Tomsett reminded Placer shareholders when urging them to reject the Barrick offer, quality land (and lots of it), which 143 Placer (2017) 106 ATR 511 at 523 [45]. Bell Nettle Gordon included significant development projects, was what Placer's business was all about144. To say that Placer's size was a source of its goodwill is only to identify a question: what was it about the size that attracted custom and generated value? The answer must be, in large part, the size of the land-holdings. There was nothing to suggest that the answer, or even a material part of the answer, lay in Placer's management, structures or systems. Synergies Barrick further submitted that "[t]he scale, structure and features of Placer's business offered synergies … and those benefits would be equally available to any large international gold mining company or consortium". Barrick described the synergies as "potentialities to improve margin and profitability" that were a "function of the right to conduct the Placer business". The Commissioner submitted that the synergies were not a source of Placer's goodwill but cost savings to Barrick. The Commissioner's contention should be accepted. The synergies were described in the November letter Barrick sent to the US SEC to which reference has already been made145. The letter stated that in Barrick's evaluation of the potential acquisition of Placer, Barrick identified potential synergies in large part realisable due to the proximity of the Barrick and Placer operations and also due to the regional business structure followed by Barrick. The letter described where the synergies would come from, and their percentage value, as follows: (1) Administration and offices globally: "Barrick expects this area to contribute about 25% of the total synergies based on the closure of redundant offices around the world. Savings in general and administrative expenses are expected to come from shared business practices, and the elimination of duplication in offices and overheads in all regions." Exploration: "This area contributes about 25% of the total synergies. In Exploration, Barrick plans to consolidate land positions in each region on the most prospective belts and prioritize the combined pipeline of exploration projects in each region." 144 See [31] above. 145 See [40] above. Bell Nettle Gordon (3) Operations and technical services: "This area comprises about 30%. In Operations, Barrick plans to optimize and share mining and processing infrastructure in Nevada, Australia and Tanzania; reduce energy costs and inventory levels through joint infrastructure; and reduce operating costs through implementation of combined best practices at all locations. In procurement, Barrick expects to generate significant savings from improved purchasing power of the combined company through its global and regional supply chain groups." Finance and tax: "Barrick sees opportunities for debt consolidation, reduced fees and costs, and tax planning, which comprise about 20% of the total synergies. With finance and tax, Barrick expects to realize jurisdictional tax synergies and enjoy both debt optimization and a lower overall cost of capital." Capital project: "Barrick also expects to realize capital project synergies. Through the sequential development of the combined project pipeline, Barrick expects to be able to transfer development teams, equipment and a comprehensive knowledge base the next. The increased scale of the pipeline after the acquisition of [Placer] should also enable in-house management of engineering, procurement and contract management." from one project Barrick concluded in these terms: "In conclusion the amount of value not captured in tangible and identifiable intangible assets on acquisition of a gold mining company is initially presumed to be captured in goodwill, the principal elements of which are the ability to sustain and grow reserves and the ability to realize synergies from the business combination. Barrick believes that the elements of goodwill described above in relation to the acquisition of [Placer] are most closely associated with the management of portfolios of mines and exploration properties. Barrick believes that the allocation of goodwill should reflect this association and the manner in which goodwill arises." (emphasis added) As these extracts reveal, at least in Barrick's eyes, the $6.506 billion was attributable to the potential of Placer's reserves and the potential for synergies. A few points must be made. The reserves were property of Placer that existed prior to the acquisition date. In contrast, the synergies were not property of Placer. The synergies were an asset of the amalgamated entity. The synergies reflected that Barrick planned Bell Nettle Gordon to do things as an amalgamated entity to strip out cost. The synergies arose on or after amalgamation; they were a reason for the amalgamation. Placer could not achieve any of the synergies on its own because they did not exist absent the amalgamation. In the context of the statutory valuation exercise in issue in this appeal, the synergies were not part of Placer's property and were thereby excluded from the statutory valuation exercise. The intellectual property synergies referred to in Barrick's October Board presentation were also irrelevant. Not only were the intellectual property synergies an asset of the amalgamated entity and not part of Placer's property but s 76ATI(4)(f) excluded intellectual property as an item of property from the statutory valuation exercise. Moreover, there is no legal foundation to support the contention that an asset that arises post-acquisition – after the character, reputation, mode of operating, and all other intangible characteristics and positive attributes of the business have been amalgamated – can or should be construed as a positive attribute of the original business, or an aspect of its goodwill. And, if it matters (and it does not), the synergies would not even comprise a source of going concern value because, again, they arise post-acquisition. The Court of Appeal found that the synergies were a source of goodwill because "anything which contributes to the value of the business, assessed in [Spencer] terms, is properly valued as part of its goodwill, including, in this case, the value which a hypothetical purchaser would attribute to the savings and efficiencies to be derived from the integration of [Placer's] business into its own"146. That analysis is wrong, legally and factually. It proceeds on an incorrect understanding of what constitutes goodwill for legal purposes and it considers facts and matters which did not exist at the date by reference to which the statutory valuation exercise was to be undertaken – the acquisition date. Conclusion The preceding analysis of the "sources" relied upon by Barrick to support the allocation of $6 billion to goodwill reinforces a number of matters identified by the majority in Murry. First, any valuation exercise must be undertaken in the legal and factual context in which it arises. The statutory valuation exercise in s 76ATI(2)(b) requires a comparison between the value of "all land to which the corporation is 146 Placer (2017) 106 ATR 511 at 535 [97]. Bell Nettle Gordon entitled" and "all property to which [the corporation] is entitled". That statutory context is one which requires comparison of the value of land as part of the going concern with the total property of the going concern at the acquisition date. Second, at the acquisition date, there were no sources of goodwill that could explain the $6 billion gap which was attributed by Barrick to goodwill. That unexplained gap suggests that the DCF calculations used by Barrick's valuers to value Placer's land, its principal asset, were wrong. Put in different terms, the danger identified by the majority in Murry of attributing a value to goodwill which actually inheres in an asset was readily apparent147. Third, goodwill has sources, not elements, and the sources of goodwill for legal purposes are those which generate or add value (or earnings) to the business by attracting custom. But, in seeking to identify the sources that generate the custom of the business, it is important to recognise that goodwill has no existence independently of the conduct of that business; goodwill cannot be severed from the business which created it. At the acquisition date, Placer was a land rich company which had no material property comprising legal goodwill. Barrick has not demonstrated that the value of all of Placer's land, as a percentage of the value of all of Placer's property, did not exceed the 60 per cent threshold. There is, however, a remaining issue to be determined about the form of the orders to be made. Value of the land in Western Australia and remitter The Commissioner sought to have the orders of the Court of Appeal set aside and, in their place, an order dismissing the appeal to that Court. The effect of that order would be to reinstate the orders of the Tribunal, which did not disturb the Commissioner's assessment. In the assessment made on 8 April 2013, the Commissioner determined both that Placer was a listed land-holder corporation within the meaning of s 76ATI(2) of the Stamp Act and that the amount of duty payable was A$54,852,300. That assessment was based on a value of land and chattels in Western Australia to which Placer was entitled, at the acquisition date, of A$1,015,900,000. Both in this Court, and in the Court of Appeal, Barrick put in issue the valuation of the land in Western Australia used to calculate the amount of duty 147 See [83] above. Bell Nettle Gordon payable. Barrick contended that because the Tribunal erred in accepting the estimated gold prices relied upon by an expert retained by the Commissioner, and those gold prices were fundamental not only to the question of whether duty was payable, but also to the amount of duty, the decision of the Tribunal cannot stand. Thus, according to Barrick, if the Commissioner were to succeed in other respects (as she has), it would remain appropriate to order, as the Court of Appeal did, that the matter be remitted to the Tribunal (differently constituted). The Commissioner rejected that contention. She submitted that Barrick challenged the assessment on the basis that it was not a land-holder and that the assessment should be set aside entirely, and that if the Commissioner were successful, then Barrick had failed to discharge its onus of proving the assessment was incorrect and thus there was no need for the matter to be remitted to the Tribunal. The matter should not be remitted to the Tribunal. First, Barrick has not identified any fact or matter which suggests that, let alone demonstrates why, the Commissioner's valuation of the Western Australian land was wrong. Simply pointing to the fact that the Commissioner's valuation of the Western Australian land was affirmed before the Tribunal by reference to expert evidence from the Commissioner (which is no longer relied upon) does not demonstrate that the valuation itself was wrong. Second, and no less significantly, the DCF methodology of valuing the land assets as applied by Barrick's experts yielded a large gap between the valuation of Placer's land assets and the purchase price paid. That gap necessarily raised a question about the reliability of the DCF valuations and, in turn, a question about the content of the $6.506 billion allocated to goodwill in Barrick's accounts. Barrick did not and could not explain the large gap as representing the value of an asset which inhered in Placer at the acquisition date. In those circumstances, Barrick has not discharged the onus it bore of demonstrating that the assessment was invalid or incorrect148. The matter should not be remitted to the Tribunal. Conclusion and orders The appeal should be allowed with costs. 148 s 37(2) of the Taxation Administration Act 2003 (WA). Bell Nettle Gordon The orders of the Court of Appeal of the Supreme Court of Western Australia made on 11 September 2017 should be set aside and, in their place, it should be ordered that the appeal to that Court be dismissed with costs. 153 This appeal is concerned with the application of the "land rich" corporation regime in Pt IIIBA of the Stamp Act 1921 (WA) to the acquisition by Barrick Gold Corporation ("Barrick") in an on-market takeover in 2006 of a controlling interest in Placer Dome Inc ("Placer"), a publicly listed corporation which owned gold mining and exploration tenements in Western Australia and elsewhere throughout the world. The statutory question at the heart of the appeal is whether, as at the time of the acquisition, "the value of all land to which [Placer was] entitled, whether situated in Western Australia or elsewhere, [was] 60% or more of the value of all property to which it [was] entitled" other than certain excluded property149. If that question is answered in the affirmative, Barrick was liable to pay stamp duty calculated by reference to the unencumbered value of "the land and chattels situated in Western Australia to which the corporation [was] entitled"150. Although I reject central tenets of the argument of the Commissioner of State Revenue as to the identification of the property to which Placer was entitled and as to the appropriateness of adopting a "subtractive" or "top down" approach to determining the value of the land to which Placer was entitled, I conclude that the appeal from the judgment of the Court of Appeal of the Supreme Court of Western Australia151 should be allowed and that the decision of the State Administrative Tribunal152, affirming the decision of the Commissioner to disallow an objection to an assessment of stamp duty, should be reinstated. The basis for that conclusion is my opinion that Barrick failed to discharge the onus placed on it as taxpayer of showing on the material before the Tribunal that the statutory question should be answered in the negative. The "land rich" ratio Application of the "land rich" ratio involves determining, as at the time of the acquisition of a controlling interest in a corporation, the ratio of "the value of all land to which the corporation is entitled" to "the value of all property to which it is entitled". Two uncontroversial aspects of the requisite determination set the context for considering aspects of the statutory numerator and of the statutory denominator that are in contest. 149 Section 76ATI(2)(b) of the Stamp Act. 150 Section 76ATL(1) of the Stamp Act. 151 Placer Dome Inc v Commissioner of State Revenue (2017) 106 ATR 511. 152 Placer Dome Inc and Commissioner of State Revenue [2015] WASAT 141. First, the reference to "value" invokes the well-settled and well- understood principle of valuation that value is to be determined as the price that would be negotiated in an arm's length transaction between a hypothetical willing but not anxious seller and a hypothetical willing but not anxious purchaser, each having knowledge of all existing information bearing on the value of the subject matter of the transaction153. Invocation of that principle is confirmed by the statutory instruction that, "when applying the ordinary principles of valuation", "it is to be assumed that a hypothetical purchaser would, when negotiating the price of the land or other property, have knowledge of all existing information relating to the land or other property", to which it is added that "no account is to be taken of any amount that a hypothetical purchaser would have to expend to reproduce, or otherwise acquire a permanent right of access to and use of, existing information relating to the land or other property"154. The latter part of the instruction makes clear that all of the existing information which the hypothetical purchaser of the land or other property is assumed to have when negotiating a price for that land or other property pre-acquisition is also to be assumed to remain available to the purchaser at no cost so as to enable that purchaser to put the land or other property to its highest and best use post-acquisition. But the latter part of the instruction does not go beyond requiring the information assumed to be available to the purchaser post-acquisition to be information which actually existed at the time of the hypothesised sale. Second, though the seller and the purchaser are hypothetical, the subject matter of the hypothesised transaction is the actual subject matter to be valued and the context of the hypothesised transaction is the actual market for that subject matter155. The land and other property relevant to the application of the statutory ratio being statutorily identified as that "to which the corporation is entitled", the identification and valuation of that land and other property must in each case be on the basis of the hypothetical seller selling and the hypothetical purchaser purchasing an entitlement to land or other property of the same nature and in the same condition as the land or other property which the corporation has 153 See Spencer v The Commonwealth (1907) 5 CLR 418 at 440-441; [1907] HCA 82; Deputy Federal Commissioner of Taxation v Gold Estates of Australia (1903) Ltd (1934) 51 CLR 509 at 515; [1934] HCA 41; Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 at 367, 373-374; [1947] HCA 10. 154 Section 33(1)(c) of the Stamp Act. 155 Eg Federal Commissioner of Land Tax v Duncan (1915) 19 CLR 551 at 554-556; [1915] HCA 12; The Commonwealth v Arklay (1952) 87 CLR 159 at 170-171; [1952] HCA 76. at the time of the acquisition of a controlling interest in it. That is important to determining both the statutory numerator and the statutory denominator in ways which will need to be explained. The denominator The statutory denominator is set as "the value of all property to which [the corporation] is entitled" other than "property" within a category that is directed to be excluded. Identification and valuation of property that is the subject matter of the transaction hypothesised by the statutory denominator must proceed on the assumption that, where the corporation has an entitlement to conduct a business as a going concern, the hypothetical seller and the hypothetical purchaser of all of the property of the corporation transact for an entitlement to conduct the same business as a going concern. "Property" is not "a monolithic notion of standard content and invariable intensity"156. "Accordingly, to characterise something as a proprietary right ... is not to say that it has all the indicia of other things called proprietary rights. Nor is it to say 'how far or against what sort of invasions the [right] shall be protected, because the protection given to property rights varies with the nature of the right'"157. Statutory use of the term "property" correspondingly invokes a protean concept, the content of which is informed by the statutory context158. That "property" has a broad meaning in this statutory context is indicated by the scope of the "property" statutorily excluded. For most legal purposes, information alone is not treated as proprietary in character unless it is confidential159. Yet amongst the categories of "property" directed to be excluded 156 Yanner v Eaton (1999) 201 CLR 351 at 366 [19]; [1999] HCA 53, quoting Gray and Gray, "The Idea of Property in Land", in Bright and Dewar (eds), Land Law: Themes and Perspectives, (1998) 15 at 16. 157 Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at 577 [135]; [2004] HCA 56, quoting Carpenter, "Interference with Contract Relations", (1928) 41 Harvard Law Review 728 at 733. 158 Eg Kennon v Spry (2008) 238 CLR 366 at 396-398 [89]-[92], 408 [126]; [2008] HCA 56; Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers Appointed) (In liq) (2013) 251 CLR 592 at 603-604 [35]-[38], 615 [76]; [2013] HCA 51. 159 Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 at 121. in this statutory context is "intellectual property (including knowledge or information that has a commercial value) relating to any process, technique, method, design or apparatus to ... locate, extract, process, transport or market minerals"160. Knowledge or information that has a commercial value is thereby treated for this statutory purpose as "property" whether or not it is confidential. More important for present purposes is that the content of the term "property" is informed in this statutory context by the amplified reference to "all property" to which the corporation is entitled, a reference which encompasses all property of a corporation which has an entitlement to conduct a business as a going concern. An entitlement to conduct a business as a going concern has never been doubted to be capable of being conveyed by a seller to a purchaser161. When conveyed to the purchaser, an entitlement of that nature has long been protected by injunction from derogation by the seller162 by reference to the principle that "[a] vendor of any form of property incurs an implied obligation not to destroy, defeat or impede the enjoyment by the purchaser of the subject of the sale"163. is recognised as "property" – Thus, Federal Commissioner of Taxation v Murry164 explained that "the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means which in the past have attracted custom to the business" traditionally described as "goodwill" – which can be conveyed by a seller to a purchaser, so as to remain the property of the purchaser within the protection of the law for so long as the purchaser in fact conducts substantially the same business in substantially the same manner. "Goodwill" was explained to be "an indivisible item of property", "inseparable from the conduct of a business" yet "legally distinct from the sources – including other assets of the business – that have created the goodwill"165. 160 Section 76ATI(4)(f)(i) of the Stamp Act. 161 Bacchus Marsh Concentrated Milk Co Ltd (in Liquidation) v Joseph Nathan & Co Ltd (1919) 26 CLR 410 at 438-439; [1919] HCA 18. 162 Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 at 617 [29]; [1998] HCA 42; Labouchere v Dawson (1872) LR 13 Eq 322 at 325-326; Trego v Hunt [1896] AC 7 at 25. 163 Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1 at 11; [1946] HCA 48. 164 (1998) 193 CLR 605 at 623 [45]. 165 (1998) 193 CLR 605 at 608-609 [4]. Not raised on the facts in Murry and left open by the reasoning in that case is whether "goodwill" is confined to what has traditionally been described as "the attractive force which brings in custom"166 or extends more generally to "whatever adds value to a business"167. Historically, and as reiterated in Murry, "attractive force" has been seen to be "central" to the legal concept of goodwill168, and Australian cases before Murry in which the more general meaning was alluded to were all cases in which the value that was added to a business was the value of the favourable disposition of customers169. But it does not follow that attractive force is essential to goodwill or, if it is, that goodwill is exhaustive of the value that inheres in an entitlement to conduct a business as a going concern. To treat attractive force as essential to goodwill and then to go on to treat goodwill as exhaustive of the value that inheres in an entitlement to conduct a business as a going concern would, as Southwood J pointed out subsequent to Murry, fail to give legal recognition to the obvious fact that "[a] business may be successful and create excess value without substantial customer preference"170. Amongst the "positive advantages which may arise from the continuity of organisation of the business", and which may therefore add value to an entitlement to conduct the business as a going concern, his Honour usefully instanced "good relations with suppliers of the business, good industrial relations, the quality of management, the configuration of plant and equipment, the technical skills of management and senior staff, technological skills, credit management and capital raising ability, all of which may add value to the 166 Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 at 224, quoted in Murry (1998) 193 CLR 605 at 613 [17]. 167 Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 at 235, quoted in Murry (1998) 193 CLR 605 at 613 [16]. 168 (1998) 193 CLR 605 at 614 [20]. 169 Bacchus Marsh Concentrated Milk Co Ltd (in Liquidation) v Joseph Nathan & Co Ltd (1919) 26 CLR 410 at 438; Box v Commissioner of Taxation (1952) 86 CLR 387 at 396-397, 399; [1952] HCA 61; Federal Commissioner of Taxation v Connolly (1953) 90 CLR 483 at 486-487, 488; [1953] HCA 50; Hepples v Federal Commissioner of Taxation (1992) 173 CLR 492 at 519-520, 542-543; [1992] HCA 170 Commissioner of Territory Revenue v Alcan (NT) Alumina Pty Ltd (2008) 24 NTLR 33 at 73 [133]. business by reducing costs and increasing profits without necessarily maintaining or increasing custom"171. Whilst "[t]he books abound in definitions of good will", Cardozo J observed in the Court of Appeals of New York nearly a century ago, "[m]en will pay for any privilege that gives a reasonable expectancy of preference in the race of competition"172. In the same vein and at around the same time, delivering the unanimous decision of the United States Court of Appeals for the Second Circuit, of which Learned Hand J was a member, Swan J said173: "A going business has a value over and above the aggregate value of the tangible property employed in it. Such excess of value is nothing more than the recognition that, used in an established business that has won the favor of its customers, the tangibles may be expected to earn in the future as they have in the past. The owner's privilege of so using them, and his privilege of continuing to deal with customers attracted by the established business, are property of value." The latter privilege, Swan J noted, "is known as good will"174. The former privilege, which he had also referred to as "property of value", he had no occasion to name. The two elements of the privilege of a business-owner to which Swan J referred are reflected in the distinction then recognised and still recognised in taxation and regulatory contexts in the United States between: the "goodwill" of a business, comprising "that element of value which inheres in the fixed and favorable consideration of customers, arising from an established and well-known and well-conducted business"175; and the "going concern value" of a business, comprising that element of value which inheres in "the ability of a business to generate income without interruption, even though there has been a change in ownership"176 and encompassing the value of an assembled 171 Commissioner of Territory Revenue v Alcan (NT) Alumina Pty Ltd (2008) 24 NTLR 33 at 73 [133]. 172 In re Brown 150 NE 581 at 582 (1926). 173 Haberle Crystal Springs Brewing Co v Clarke 30 F 2d 219 at 221-222 (1929). 174 Haberle Crystal Springs Brewing Co v Clarke 30 F 2d 219 at 222 (1929). 175 Des Moines Gas Co v City of Des Moines 238 US 153 at 165 (1915). 176 Ithaca Industries Inc v Commissioner of Internal Revenue 97 TC 253 at 264 (1991); affirmed 17 F 3d 684 (1994). workforce177 as well as the value of an assembled plant178. "The difference between a dead plant and a live one is a real value", the Supreme Court of the United States has said, "and is independent of ... any mere good will as between such a plant and its customers"179. "That there is an element of value in an assembled and established plant, doing business and earning money, over one not thus advanced", the Supreme Court has opined, is "self-evident"180. Going concern value, no less than goodwill, the Supreme Court has recognised as "property"181. Australian courts have not "thrown the protection of an injunction around all the intangible elements of value, that is, value in exchange, which may flow from the exercise by an individual of his powers or resources whether in the organization of a business or undertaking or the use of ingenuity, knowledge, skill or labour"182. We have not treated as property all that can be monetised. However, I see no reason why an Australian court should not recognise the entitlement of a business-owner to continue to use the organisation of an existing business without interruption as a proprietary aspect of what was referred to in Murry as "the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means which in the past have attracted custom to the business"183. In that respect, I see no reason why an Australian court might not in an appropriate case protect that entitlement by injunction against derogation by the former owner, for example by enjoining the former owner from soliciting suppliers in the same way and on the same basis as it might enjoin the former owner from soliciting customers184. And in the 177 Ithaca Industries Inc v Commissioner of Internal Revenue 97 TC 253 at 264 178 Des Moines Gas Co v City of Des Moines 238 US 153 at 165 (1915). 179 City of Omaha v Omaha Water Co 218 US 180 at 202 (1910). 180 Des Moines Gas Co v City of Des Moines 238 US 153 at 165 (1915). 181 Des Moines Gas Co v City of Des Moines 238 US 153 at 165 (1915); Los Angeles Gas & Electric Corp v Railroad Commission of California 289 US 287 at 313 182 Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414 at 444- 445; [1984] HCA 73, quoting Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 509; [1937] HCA 45. 183 (1998) 193 CLR 605 at 623 [45]. 184 Murry (1998) 193 CLR 605 at 617 [29]. event of a business-owner suffering an interference to the conduct of an existing business as a consequence of the tortious conduct of a third party, I see no reason why an award of damages by an Australian court might not in an appropriate case compensate for injury to the organisation of the business in the same way and on the same basis as it might compensate for injury to customer relations185. Whether or not such protection or compensation for injury would be available to a business-owner under the general law in Australia, however, I see no reason why the ability of a corporation, at the time of acquisition of a controlling interest in it, to continue to use the organisation of its own existing business should not be included within the statutory reference to "all property" to which the corporation is entitled at that time, given the self-evident contribution of that entitlement to the price which a willing but not anxious purchaser could be expected to pay to a willing but not anxious seller. With reference to Murry, the Canadian Federal Court of Appeal has taken the view in the context of examining the taxation consequences of the acquisition of a business as a going concern that "efficient management" and "the potential for new business opportunities" flowing from business can be viewed as goodwill186. The view which I prefer, and which I consider to be consonant with the reasoning in Murry so far as that reasoning went, is that an entitlement to conduct a business as a going concern is a single item of property the value of which (if any) in a given case might be found to lie in either or both of two sources that might be found to be more or less distinct. One is the continuity of relationships with customers. The second is the continuity of organisation of the business. The traditional label "goodwill" is appropriately applied to the first of those sources of value. The label "going concern value" is appropriately applied to the second. There is no question that Placer lacked goodwill in that sense at the time of the acquisition of a controlling interest in it by Barrick. Materially, its only product was gold – an undifferentiated product which it sold into a world market at a world price. Whether Placer could be inferred to have had at that time any material going concern value is a topic on which the Tribunal and the Court of Appeal took different views. Consideration of that topic is best deferred until after consideration of the statutory numerator. 185 Murry (1998) 193 CLR 605 at 618 [30]. 186 Transalta Corporation v The Queen 2012 DTC 5041 at 6766 [56]. The numerator The statutory numerator is set as "the value of all land to which the corporation is entitled" at the time of acquisition of a controlling interest in it. The meaning of the term "land", not unlike the meaning of the term "property", is context dependent187. The meaning here is informed by specific statutory instructions that extend the definition of "land" to include both a "mining tenement" and "anything fixed to the land" and that define "mining tenement" to include "the specified piece of land in respect of which the mining tenement is ... granted or acquired"188. Two aspects of the inquiry into value required to determine the statutory numerator are significant. First, it follows from the extended definition of "land" that, in its application to mining tenements on which mining operations are occurring at the time of acquisition of a controlling interest in the corporation, the land to be valued includes all structures located on the land which is the subject of those mining tenements in the working condition in which the structures exist at that time. The fact that a mining plant is assembled and "live" on the tenement at that time is a fact which contributes to the value of the tenement itself. The notion that an individual mining tenement could be valued using a "restoration valuation methodology" so as to reflect what was described in the valuation evidence as the value of "an idle mine with plant and equipment in 'care and maintenance' mode" was rightly rejected by the Tribunal189. Second, it follows from the requirement for "the value of all land" to be compared with "the value of all property" that all of the land to which the corporation is entitled is to be treated as a bundle. Just as the denominator is determined by inquiring into the price that would be negotiated in an arm's length transaction between a hypothetical willing but not anxious seller and a hypothetical willing but not anxious purchaser for the totality of the property to which the corporation is entitled, so the numerator must be determined by inquiring into the price that would be negotiated in an arm's length transaction between a hypothetical willing but not anxious seller and a hypothetical willing 187 Section 76(1) of the Stamp Act (definition of "land"). 188 Section 76(1) of the Stamp Act (definition of "mining tenement"), read with s 8(1) of the Mining Act 1978 (WA). Cf Epic Energy (Pilbara Pipeline) Pty Ltd v Commissioner of State Revenue (2011) 43 WAR 186 at 192 [19]-[20]. 189 [2015] WASAT 141 at [282]. but not anxious purchaser for the totality of the land to which the corporation is entitled. If "the value of all property" is determined on the basis that the totality of the property would be sold together, but "the value of all land" is determined on the basis that the land would be sold piecemeal, the resultant ratio would be distorted to the extent that the assembling of the property or land might result in a price greater than the sum of the prices of the component items of property or parcels of land. For reasons I will explain, in my opinion, that second aspect of the inquiry is ultimately the statutory numerator to determine into value required determinative of the appeal. Determining the integers in this case Despite the fact that Barrick appears to have paid a premium of 25 per cent above the prevailing market price of Placer's shares, Barrick and the Commissioner agreed before the Tribunal that the amount Barrick paid to acquire those shares represented the best evidence of the price that would be negotiated in an arm's length transaction between a hypothetical seller and a hypothetical purchaser for the totality of the property to which Placer was then entitled. Adjusted to account for the liabilities which Placer then had, the purchase price indicated that the value of all property to which Placer was then entitled was $15.3 billion190. For the purpose of determining the denominator of the statutory ratio, Barrick and the Commissioner also agreed before the Tribunal the value of the excluded property to which Placer was then entitled. Although it emerged on the hearing of the appeal that there was a difference between them as to the scope of what was encompassed within the excluded category of knowledge or information that has commercial value relating to any process, technique, method, design or apparatus to locate, extract, process, transport or market minerals, the amount of all excluded property was agreed to be $2.5 billion. The result was that Barrick and the Commissioner were agreed before the Tribunal that the value of all property other than excluded property to which Placer was entitled at the time of the acquisition of the controlling interest in it by Barrick was $12.8 billion. Ostensibly, at least, the value of the statutory denominator was uncontentious. The contest before the Tribunal and on appeal to the Court of Appeal was focused on the determination of the statutory numerator. The contest was as to whether the value of all of the land in Western Australia and elsewhere throughout the world to which Placer was entitled at the time of the acquisition 190 All references are to US dollars. of the controlling interest in it by Barrick was at least 60 per cent of $12.8 billion, being $7.68 billion. Other than gold mining and exploration tenements, the value of the land to which Placer was then entitled was implicitly accepted by both parties to be immaterial. As issue was joined before the Tribunal, Barrick, as taxpayer, accordingly assumed the evidentiary and persuasive onus of establishing on the material before the Tribunal that the value of the gold mining and exploration tenements in Western Australia and elsewhere throughout the world to which Placer was entitled was less than $7.68 billion. To discharge that onus, Barrick relied on expert valuations of Placer's gold mining and exploration tenements. The two principal valuations on which Barrick relied (ignoring a valuation based on restoration valuation methodology) were those of Mr Lee and Mr Patel, who valued the tenements at $5.3 billion and $5.7 billion respectively. Those valuations were met with competing expert valuations on which the Commissioner relied. The principal valuation on which the Commissioner relied was that of Mr Lonergan, who valued the tenements at between $11.8 billion and $12.3 billion. Understanding those valuations the methodology employed important. On the common understanding that the highest and best use of Placer's gold mining and exploration tenements lay in the continued exploitation of mineral resources and that a hypothetical willing but not anxious seller and a hypothetical willing but not anxious purchaser of a mining or exploration tenement would each adopt the same methodology to ascribe a value to that use, the valuers agreed that the gold mining and exploration tenements were to be valued by reference to the discounted cash flow forecast to be generated from mining operations on those tenements. Treating each existing mining project as a separate "enterprise", the valuers each determined the present value of the projected cash flow from sales of gold mined from proven and probable reserves over the projected life of the project. Each calculated the total value of the gold mining and exploration tenements simply as the sum of the present values of the individual mining projects. Discounted cash flow methodology is, of course, reliant on predictions. The principal difference between the valuations of Mr Lee and Mr Patel, on the one hand, and that of Mr Lonergan, on the other hand, lay in their predictions of the long-term prices of gold. Mr Lee and Mr Patel based their predictions on management and industry consensus forecasts at the time of acquisition of future spot prices. Mr Lonergan based his prediction on prices assessed by reference to gold futures contracts at the time of acquisition. The Tribunal preferred the approach of Mr Lonergan191. In an aspect of the Court of Appeal's reasoning that is unchallenged in this appeal, the Court found Mr Lonergan's reliance on prices assessed by reference to gold futures contracts to have been erroneous192. The valuation at which Mr Lonergan arrived must therefore be treated for the purpose of this appeal as an unreliable guide to the value of the statutory numerator. The obvious difficulty with the remaining valuations, those of Mr Lee and Mr Patel, is that they left a very large difference between the value of the gold mining and exploration tenements as indicated by their valuations and the value of all of Placer's property which it was agreed was indicated by the price Barrick paid to acquire Placer. How could it be said of a gold mining company, whose only material source of revenue was from the mining of gold, that barely a third of the value of the total property to which it was entitled lay in its gold mining and exploration tenements? Mention was made before the Tribunal of an industry practice or rule of thumb according to which a multiplier, referred to as the "net asset value multiple" or the "gold premium", is applied to reconcile that value with the market value of a gold mining company. The multiplier was in the range of 1.2 to 2.5 times the value of mining tenements derived through the application of discounted cash flow methodology. The basis for the application of such a multiplier was unexplored before the Tribunal beyond brief reference in the cross-examination of Mr Patel to him considering three reasons why its application would be appropriate: the possibility of finding more gold in the existing tenements or in new tenements; the possibility of the gold price exceeding consensus forecasts; and the option available to the operator of the mine of varying production levels in response to changes in the gold price. Neither Barrick nor the Commissioner relied on the multiplier before the Tribunal and experts on both sides specifically rejected its application on the basis that it lacked intellectual rigour. The Tribunal in those circumstances put the multiplier to one side193. The practice of applying a multiplier can nevertheless be taken as recognition within the gold mining industry that the business of a gold mining company ordinarily has value beyond that revealed by the application of a standard discounted cash flow analysis to its existing mining operations. To the extent to which it was incumbent on Barrick to explain the difference between the value of the gold mining and exploration tenements to 191 [2015] WASAT 141 at [381]. 192 (2017) 106 ATR 511 at 535 [98], 547-549 [157]-[164], 553 [185], 559 [217]. 193 [2015] WASAT 141 at [347]-[353]. which Placer was entitled (a task which Barrick steadfastly refused to embrace as part of its persuasive burden), Barrick attributed that difference to "goodwill", corresponding to what I have referred to as going concern value. The Commissioner disputed that any such going concern value, even if it could be treated as property of Placer, was shown on the material before the Tribunal to be substantial. Quite properly, Barrick did not seek to gain direct support for the existence of substantial going concern value from accounting practice. Barrick did, however, place reliance on the reasons it had advanced to justify recording as "goodwill", in financial statements required by the United States Securities and Exchange Commission to be prepared in accordance with United States generally accepted accounting principles194, an amount of $6.5 billion, being the difference between the price it paid for the shares in Placer and the fair value which it attributed to Placer's net assets. The reasons there advanced, Barrick argued, similarly supported recognition of Placer having had substantial going concern value at the time of acquisition. Barrick explained in its financial statements: "In a gold mining context, the current and future product is gold, and the depletion of the existing portfolio of reserves and mineralized materials does not usually define the economic end of the mining company. The going concern value of a mining business will be indefinite to the extent that there is an expectation that management will be able to locate attractive investment opportunities in the future at either its existing mineral properties or by locating other prospective mineral properties, ie, find additional mineral reserves. The existence of this component of goodwill in the acquisition of Placer Dome can be inferred because the historic market capitalization of Placer Dome reflected a premium to the underlying [net asset value]." Barrick further explained in its financial statements that the amount of $6.5 billion recorded as "goodwill" in the acquisition of Placer was contributed to by "synergies" from the combination of Barrick's mining operations with those of Placer in the form of cost savings and economies of scale which, at the time of purchase of Placer, Barrick expected to realise. The capitalised value of those synergies was uncontroversially in the range of $1.6 billion to $2 billion. 194 Financial Accounting Standards Board, Statement of Financial Accounting Business Combinations (2007); Financial Accounting Standards No 141: Standards Board, Statement of Financial Accounting Standards No 142: Goodwill and Other Intangible Assets (2001). Evidence given before the Tribunal by Barrick's Chief Financial Officer at the time of the acquisition was to similar effect. He explained that the amount recorded as "goodwill" in Barrick's financial statements represented, in addition to "the fair value of the expected synergies and other benefits which could be realised upon the integration of Placer Dome's business into Barrick's", "the fair value of the going concern element of Placer Dome's business – including the value attributable to the ability of management to integrate the business and ensure that existing revenue streams and the value of the assets working together were maintained, sustained and grown by locating attractive investment opportunities in the future at either its existing mineral properties or by locating additional mineral reserves". Mr Lee in his evidence advanced a more general justification for that approach. Having posed the question, "Why should goodwill arise on a mining transaction?", Mr Lee answered it as follows: "In a mining context such as the acquisition of Placer Dome, goodwill represents the avoided cost of having to assemble a portfolio of operating mines, mines that are generating cash flow, with the management teams in place, the anticipation of synergies expected to arise from the combination of the Placer Dome business with the Barrick business and at least in part, the expectation, that the management team will be able to keep the company in operation, long after the existing mines are depleted." Mr Lee elsewhere in his evidence explained that savings in production costs, economies of scale and reductions in risk were available to a mining company which had what he again referred to as a "portfolio" of mines and development projects, and that those advantages would not be available to a company which had only a single mine. Barrick emphasised in other evidence and submissions before the Tribunal that, at the time of acquisition, Placer had an ongoing profitable business which had been operating for more than 100 years, was the fifth largest publicly listed gold producing company in the world, employed a workforce of some 13,000 employees worldwide, held proven and probable gold reserves which had increased by 60 per cent over the previous five years, operated 16 existing mining projects in seven countries and had an additional seven exploration areas which it had identified as of interest, and had a demonstrated capacity to develop and expand its gold mining operations by identifying and developing new mining projects as the resources of existing mines were depleted. Barrick drew attention to the overview of Placer's business strategy contained in Placer's 2004 annual report, its last annual report before its acquisition by Barrick. The annual report explained that Placer had a strategy of "continuing to build upon its high-quality portfolio of gold producing assets". Amongst the ways in which Placer went about implementing that strategy were: investing in personnel and systems, "[b]uilding land positions near current infrastructure and in geological systems where gold discoveries have been repetitive" and "[e]xploring aggressively on these land packages". The result was that Placer had a "longer-term expectation" of having a "high-quality, geographically balanced portfolio of operations". Barrick also drew attention to its own strategic goal in acquiring Placer. The acquisition was justified in a proposal adopted by its Board as providing a "stronger development pipeline for growth". Without expressing a view on whether going concern value is proprietary in nature, the Tribunal went so far as to deny that there was evidence before it sufficient to establish that Placer had going concern value of any significance. The Tribunal found that there was none195. The Tribunal's finding that Placer had no going concern value at the time of acquisition by Barrick appears to have fed into another strand of reasoning on which the Tribunal relied to reject the value of the statutory numerator indicated by the valuations of Mr Lee and Mr Patel. That strand of reasoning began with the Tribunal adopting the view that the value of the statutory numerator could be derived by the "simple arithmetical calculation" of taking the agreed value of the statutory denominator and deducting from it the value of all property that could be shown not to be land196. Finding, in the absence of any significant going concern value, that Barrick had failed to prove that Placer held significant property which was not land, the Tribunal concluded that the statutory numerator was not substantially less than the statutory denominator197. Taking the view that going concern value where it exists is proprietary in character198 – a view which for reasons already given I consider to be correct – the Court of Appeal found the Tribunal to have been wrong in fact to conclude that the evidence before it was insufficient to establish that Placer had significant going concern value199 and wrong as a matter of valuation principle to apply a 195 [2015] WASAT 141 at [377]-[379]. 196 [2015] WASAT 141 at [265]. 197 [2015] WASAT 141 at [382]. 198 (2017) 106 ATR 511 at 524 [47]. 199 (2017) 106 ATR 511 at 524-525 [49], 534 [95]. subtractive or top down approach in the circumstances of the case200. In both respects, I consider the reasoning of the Court of Appeal to be sound. As to the facts, the Court of Appeal in my opinion was correct to conclude from the evidence that the synergies available to and expected to be realised by Barrick would be available to and expected to be realised by a hypothetical purchaser of Placer's business and, on that basis, to treat the capitalised value of those synergies as a component of going concern value201. I reject the submission of the Commissioner that such synergies could not have added to the value of the entitlement to conduct Placer's business as a going concern because they represented inefficiencies in the conduct of that business in respect of which a hypothetical purchaser would benefit from changing the business rather than from continuing to conduct the business in substantially the same way as it had been conducted before. Accepting that synergies can in one sense be characterised as having been inefficiencies in the conduct of Placer's business, it is sufficient that the availability of the synergies from which the hypothetical purchaser could be expected to benefit added to the price which the hypothetical purchaser could have been expected to pay for the entitlement to continue to conduct that business. I reject tenements202. the submission of The Court of Appeal, in my opinion, was also correct to infer from the scale and scope of Placer's gold mining operations that substantial value inhered in its continuing business operations beyond the value of its existing portfolio of mining and exploration the Commissioner that all of the value of those continuing business operations necessarily inhered in its existing portfolio of mining and exploration tenements because gold production from those tenements was Placer's only material source of revenue, or that any significant additional value is necessarily attributable to the statutorily excluded category of property constituted by knowledge or information that has commercial value relating to processes, techniques and methods, and designs to locate, extract, process, transport or market gold. The submission in both respects conflates the value of presently existing property (Placer's portfolio of mining and exploration tenements, or its relevant knowledge or information of commercial value) with the value of the capacity to develop that property and to use it in such a way as to generate additional property in the future. As to the valuation methodology, there can be nothing inherently wrong with a subtractive approach to the determination of the statutory numerator in a 200 (2017) 106 ATR 511 at 526 [56]-[57], 533-534 [91]-[92]. 201 (2017) 106 ATR 511 at 523-524 [45], 524 [48]. 202 (2017) 106 ATR 511 at 523 [41]-[44]. case where it is possible to identify and to value property other than land with reasonable precision203. The approach, however, is problematic where the property other than land that can be identified cannot readily be valued with reasonable precision. More fundamentally, the approach is mathematically nonsensical where the property other than land that can be identified includes an entitlement to carry on a business having going concern value and where a part of that going concern value might lie in the existence of a portfolio of land. To subtract the total going concern value from the total value of "all property" to which the business-owner is entitled would not in such a case yield a result equivalent to the value of "all land". Tellingly, although the Commissioner argued for application of the subtractive methodology in closing submissions before the Tribunal, the Commissioner did not suggest that anything contained in the extensive valuation evidence before the Tribunal supported its application in the circumstances of the case. To accept the soundness of the Court of Appeal's criticism of the Tribunal, however, is not to accept that Barrick is to be taken by reason of the evidence of Mr Lee and Mr Patel to have discharged its evidentiary onus before the Tribunal, or that (if not) the order of the Court of Appeal remitting the matter to the Tribunal for reconsideration was appropriate. As the evidence of Mr Lee spelled out, at least a substantial part of the going concern value of Placer, including some part of the $1.6 billion to $2 billion in synergies available to and expected to be realised by a hypothetical purchaser of Placer's business, was attributable to the fact of Placer's gold mining and exploration tenements forming an assembled portfolio rather than being sold separately. Indeed, Placer's annual report described the goal of its business strategy in terms of having a high-quality, geographically balanced portfolio of mining operations. On Barrick's own case, therefore, a substantial part of the going concern value of Placer's business was attributable to the assembled whole of Placer's portfolio of mining assets being more valuable to a hypothetical purchaser than the sum of the values of the individual mining operations were those mining operations to be acquired separately. Yet the evidence of Mr Lee and Mr Patel on which Barrick relied to value Placer's gold mining and exploration tenements in the range of $5.3 billion to $5.7 billion valued those tenements only as the sum of the values of the individual mining operations each treated as a separate enterprise. Left entirely out of account was such additional amount as might be expected to have been paid by a hypothetical purchaser in order to purchase the assembled whole. 203 Cf EIE Ocean BV v Commissioner of Stamp Duties [1998] 1 Qd R 36 at 38. Whether the hypothetical purchaser would have been inclined to adopt the industry practice of applying a "gold premium" in the form of a multiple in the range of 1.2 to 2.5 to Mr Lee's and Mr Patel's discounted cash flow calculations, it is inappropriate to speculate. The extent to which a hypothetical purchaser would have attributed value to the assembled whole of Placer's portfolio of gold mining and exploration tenements was not explored in the evidence on which Barrick relied. That gap in the evidence is enough for the appeal to be decided in favour of the Commissioner. That the going concern value of the entitlement to carry on a business as a going concern must be included in the denominator of the "land rich" ratio does not mean that the whole of the going concern value must be excluded from the numerator. The numerator, as has been explained, must be determined by inquiring into the price that would be negotiated in an arm's length transaction between a hypothetical seller and a hypothetical purchaser for the totality of the land to which the corporation in question was entitled at the time of acquisition. The question required to be addressed in determining the statutory numerator was as to the value of the entire portfolio of Placer's gold mining and exploration tenements treated as a portfolio. The flaw in Barrick's case before the Tribunal was that Barrick failed to address that question. Conclusion The State Administrative Tribunal Act 2004 (WA)204 read with the Taxation Administration Act 2003 (WA)205, as the Court of Appeal held in an important aspect of its reasoning unchallenged in the appeal206, placed on Barrick as taxpayer the onus of establishing that the assessment to which its objection related was "invalid or incorrect"207. Having contended that the assessment was incorrect in its entirety on the basis that Placer did not meet the "land rich" ratio, and having failed on the material placed before the Tribunal to establish that ground of objection, Barrick has not demonstrated any basis for an order of remitter which would provide another opportunity for it to attempt to make out that ground. It is also too late 204 Section 29(1). 205 Section 37(2). 206 (2017) 106 ATR 511 at 553-558 [188]-[214]. 207 Section 37(2) of the Taxation Administration Act. for Barrick now to complain that the assessment was incorrect for the reason that it proceeded on an incorrect determination of the unencumbered value of the land and chattels situated in Western Australia to which Placer was entitled. For these reasons, I agree with the orders proposed by the plurality.

HIGH COURT OF AUSTRALIA PLAINTIFF AND STATE OF VICTORIA DEFENDANT Minogue v Victoria [2019] HCA 31 11 September 2019 ORDER The questions formally stated for the opinion of the Full Court should be answered as follows: Is s 74AB of the Corrections Act 1986 (Vic) invalid? Answer: No. (b) Does the validity of s 74AAA of the Corrections Act arise in the circumstances of this case? Answer: No. If the answer to question (b) is "yes", is s 74AAA of the Corrections Act invalid? Answer: Does not arise. (d) Who should pay the costs of the Special Case? Answer: The plaintiff. Representation C J Horan QC and A F Solomon-Bridge with R A Minson for the plaintiff (instructed by Darebin Community Legal Centre) P J Hanks QC and A D Pound with S Zeleznikow for the defendant (instructed by Victorian Government Solicitor) M G Sexton SC, Solicitor-General for the State of New South Wales, with J E Davidson for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor's Office (NSW)) C D Bleby SC, Solicitor-General for the State of South Australia, with E M G Crompton for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor's Office (SA)) J A Thomson SC, Solicitor-General for the State of Western Australia, with F B Seaward for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor's Office (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minogue v Victoria Constitutional law – State Parliament – Constitution – Ch III – Where plaintiff convicted of murder of police officer – Where plaintiff sentenced imprisonment for life with non-parole period – Where plaintiff's non-parole period expired – Where s 74AB of Corrections Act 1986 (Vic) prevented making of parole order in respect of plaintiff unless Adult Parole Board satisfied plaintiff in imminent danger of dying or seriously incapacitated and does not have physical ability to harm any person, and does not pose risk to community – Where s 74AB identified plaintiff by name and applied only to plaintiff – Where plaintiff not in imminent danger of dying or seriously incapacitated – Where s 74AAA of Corrections Act imposed conditions for making parole order if person convicted of murder and victim police officer – Whether ss 74AB and 74AAA contrary to Ch III of Constitution and therefore invalid – Whether ss 74AB and 74AAA impermissibly legislatively resentenced plaintiff – Whether ss 74AB and 74AAA impose additional or separate punishment to that imposed by sentencing court – Whether s 74AB distinguishable from provision upheld in Knight v Victoria (2017) 261 CLR 306; [2017] HCA 29 – Whether Knight and Crump v New South Wales (2012) 247 CLR 1; [2012] HCA 20 should be reopened. Words and phrases – "additional or separate punishment", "judicial power", "legislative punishment", "legislatively resentenced", "life imprisonment", "minimum term", "more punitive or burdensome to liberty", "non-parole period", "opportunity to be considered for release on parole", "parole", "severity of the punishment", "substantive operation and practical effect". Constitution, Ch III. Corrections Act 1986 (Vic), ss 74AAA, 74AB, 127A. KIEFEL CJ, BELL, KEANE, NETTLE AND GORDON JJ. On 24 August 1988, the plaintiff was convicted of the murder of Angela Rose Taylor, a constable in the Victorian police force, and was sentenced by the Supreme Court of Victoria to imprisonment for life. The Court set a non-parole period of 28 years, during which term the plaintiff would not be eligible to be released on parole1. The plaintiff's non-parole period ended on 30 September 2016. On 3 October 2016, the plaintiff applied to the Adult Parole Board ("the Board") for parole. That application remains on foot and has not been determined. On 14 December 2016, a new provision in the Corrections Act 1986 (Vic) ("the Act"), s 74AAA, commenced operation2. As originally enacted, s 74AAA relevantly provided that the Board must not make a parole order under s 74 or s 78 of the Act in respect of a prisoner convicted and sentenced to a term of imprisonment with a non-parole period for the murder of a person who the prisoner knew was, or was reckless as to whether the person was, a police officer, unless, among other things, the Board was satisfied that the prisoner was in imminent danger of dying, or was seriously incapacitated and, as a result, no longer had the physical ability to do harm to any person3. The plaintiff commenced proceedings in this Court seeking to challenge the constitutional validity of s 74AAA (as originally enacted) and, on 20 June 2018, this Court relevantly held (without deciding the constitutional issue) that s 74AAA of the Act (as then in force) did not apply to the plaintiff4. On 1 August 2018, the Act was further amended5 to insert a new s 74AB and to substitute ss 74AAA and 127A. The new s 74AB applies specifically to 1 Penalties and Sentences Act 1985 (Vic), s 17(1) and (2). The "minimum term" referred to in that section is now described as the "non-parole period": see Sentencing Act 1991 (Vic), s 3(1) definition of "non-parole period"; Corrections Act 1986 (Vic), s 74(1); Knight v Victoria (2017) 261 CLR 306 at 316 [1]; [2017] HCA 29. Justice Legislation Amendment (Parole Reform and Other Matters) Act 2016 (Vic), s 3 read with s 2(1). 3 See Minogue v Victoria (2018) 92 ALJR 668 at 672-673 [7]-[9]; 356 ALR 363 at 366-367; [2018] HCA 27. 4 Minogue (2018) 92 ALJR 668; 356 ALR 363. 5 Corrections Amendment (Parole) Act 2018 (Vic), ss 4-6 read with s 2. Bell Nettle Gordon the plaintiff; it sets out "[c]onditions for making a parole order for Craig Minogue". It provides: "(1) The Board must not make a parole order under section 74 or 78 in respect of the prisoner Craig Minogue unless an application for the order is made to the Board by or on behalf of the prisoner. The application must be lodged with the secretary of the Board. (3) After considering the application, the Board may make an order under section 74 or 78 in respect of the prisoner Craig Minogue if, and only if, the Board − is satisfied (on the basis of a report prepared by the Secretary to the Department) that the prisoner − is in imminent danger of dying or is seriously incapacitated and, as a result, he no longer has the physical ability to do harm to any person; and has demonstrated that he does not pose a risk to the community; and is further satisfied that, because of those circumstances, the making of the order is justified. The Charter of Human Rights and Responsibilities Act 2006 has no application to this section. (5) Without limiting subsection (4), section 31(7) of the Charter of Human Rights and Responsibilities Act 2006 does not apply to this section. In this section, a reference to the prisoner Craig Minogue is a reference to the Craig William Minogue who was sentenced by the Supreme Court on 24 August 1988 to life imprisonment for one count of murder." Section 74AB applies to the plaintiff regardless of whether, before the commencement of that section, the plaintiff had become eligible for parole, or the plaintiff had taken any steps to ask the Board to grant the plaintiff parole, or the Bell Nettle Gordon Board had begun any consideration of whether the plaintiff should be granted parole6. On the other hand, the substituted s 74AAA, headed "Conditions for making parole order for prisoner who murdered police officer", is in general terms. It applies if a person has been convicted of murder and the victim was a police officer. The Board must be satisfied that, relevantly, the person intended to cause, or knew that it was probable that their conduct would cause, the death of, or really serious injury to, a police officer. Because it is not necessary to consider the validity of the substituted s 74AAA, its text need not be set out. On 23 October 2018, the plaintiff commenced proceedings in this Court challenging the constitutional validity of s 74AB and, if it applied, s 74AAA on the ground that the provisions impermissibly legislatively resentenced the plaintiff and that that legislative resentencing was beyond the powers of the Victorian Parliament. Specifically, the plaintiff contended that s 74AB and, if it applied, s 74AAA are contrary to Ch III of the Constitution insofar as: first, the substantive operation and practical effect of the provisions are to impose an additional or separate punishment to the punishment imposed by the Supreme Court at the time of sentencing by extending the non-parole period or by increasing the severity of the plaintiff's punishment; second, the provisions constitute cruel, inhuman or degrading treatment or punishment contrary to Art 10 of the Bill of Rights 16887; or third, the provisions are inconsistent with the constitutional assumption of the rule of law8. The defendant, the State of Victoria, contended that s 74AB is valid and does not constitute legislative punishment, and that the question of the validity of s 74AAA did not arise in this case. The Attorneys-General for New South Wales, South Australia and Western Australia intervened in support of the defendant9. 6 Corrections Act, s 127A(2)(a). 7 See Imperial Acts Application Act 1980 (Vic), ss 3 and 8. 8 A fourth argument, regarding s 118 of the Constitution, was not pressed at the hearing of this matter. 9 The International Commission of Jurists (Victoria) applied for and was refused leave to intervene as amicus curiae. Bell Nettle Gordon Four questions were stated for the opinion of the Court: Is s 74AB of the Act invalid? (b) Does the validity of s 74AAA arise in the circumstances of this case? If the answer to question (b) is 'yes', is s 74AAA invalid? (d) Who should pay the costs of the Special Case?" The questions should be answered: (a) No. (b) No. (c) Does not arise. The plaintiff. Section 74AB is relevantly indistinguishable from the provision upheld by this Court in Knight v Victoria10. In Knight, the Court refused to reopen and overturn its decision in Crump v New South Wales11. The decisions in Knight and Crump compel the conclusion that s 74AB does not alter the plaintiff's sentence, or impose additional or separate punishment on the plaintiff beyond the punishment imposed by the Supreme Court at the time of sentencing, and does not involve the exercise of judicial power. Section 74AB does no more than alter the conditions to be met before the plaintiff can be released on parole12. And, contrary to the plaintiff's alternative submissions, neither Crump nor Knight should now be reopened. As neither the substantive operation nor the practical effect of s 74AB is to impose punishment on the plaintiff, it is unnecessary to consider the plaintiff's second and third contentions. 10 (2017) 261 CLR 306. 11 (2012) 247 CLR 1; [2012] HCA 20. 12 Crump (2012) 247 CLR 1 at 29 [72]; see also at 19 [35], 26-27 [60], 29-30 [74]. Bell Nettle Gordon Operation and effect of s 74AB − no legislative punishment Section 74AB is in substantively identical terms to the provision upheld in Knight13. The principal difference is that s 74AB refers to the plaintiff (rather than Mr Knight). Section 74AB is directed to the Board. It restricts the circumstances in which the Board may make a parole order under s 74 or s 78 of the Act in respect of the plaintiff. First, the section prevents the Board from making an order granting parole unless the plaintiff has lodged an application for parole with the secretary of the Board14. Second, it provides that the Board "may" order that the plaintiff be released on parole "if, and only if" the Board is satisfied, among other things, that the plaintiff is in imminent danger of dying or is seriously incapacitated and that, as a result, he no longer has the physical ability to do harm to any person15. The plaintiff is not at present in imminent danger of dying; nor is he seriously incapacitated. In Knight, the Court unanimously concluded that the relevant provision did not interfere with the sentence imposed on Mr Knight in a manner that was contrary to Ch III of the Constitution16 and did not, in its "legal form [or] in its substantial practical operation", interfere with, set aside, alter or vary the sentence imposed by the Supreme Court17. In this proceeding, the plaintiff sought to build on the undisputed proposition treatment, or additional punishment or punitive treatment, as a consequence of criminal guilt is an exclusively judicial power or function18. The plaintiff contended that, imposition of punishment, or punitive that the 13 (2017) 261 CLR 306 at 320-321 [18]. See also Corrections Act, s 74AA. 14 Corrections Act, s 74AB(1) and (2). 15 Corrections Act, s 74AB(3). 16 (2017) 261 CLR 306 at 317 [5], 322 [23], 326 [38] (question (a) of the special case). 17 Knight (2017) 261 CLR 306 at 317 [6]; see also at 323 [25]. See also Crump (2012) 247 CLR 1 at 27 [60]. 18 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27; [1992] HCA 64; Crump (2012) 247 CLR 1 at 16 [27], 20-21 [41]-[42]. Bell Nettle Gordon notwithstanding the decision in Knight, the substantive operation and practical effect of s 74AB were impermissibly to legislatively resentence the plaintiff in two respects. First, the plaintiff contended that the substantive operation and practical effect of s 74AB are to extend the non-parole period by rendering him ineligible for parole for an indefinite period beyond the non-parole period imposed by the Supreme Court and, thus, to impose an additional or separate punishment to the punishment imposed by the Supreme Court at the time of sentencing. Second, the plaintiff contended that s 74AB increases the severity of the plaintiff's punishment by causing the plaintiff to lose an opportunity to be released on parole during that period. Section 74AB does not do these things. The plaintiff's contentions are contrary to several long-standing propositions. Since at least the 1970s it has been recognised that there is a distinction between a judge exercising judicial power in sentencing, and the executive determining whether a person, still serving a sentence but eligible for release on parole, should be released on parole19. Once a person is sentenced, the exercise of judicial power is spent and the responsibility for the future release of the person while still under sentence passes to the executive branch of the Here, the plaintiff was sentenced to imprisonment for life. The Court set a non-parole period of 28 years21. that sentence, judicial power was exhausted and the responsibility for the future of the plaintiff passed to the executive. That the responsibility for a prisoner's future passes to, and rests with, the executive is because a prisoner's eligibility for release on parole is not part of the sentencing or resentencing determination made by a court, but, rather, is a consequence of a determination made under the statutory Upon the passing of 19 Power v The Queen (1974) 131 CLR 623 at 627; [1974] HCA 26; Bugmy v The Queen (1990) 169 CLR 525 at 534, 536; [1990] HCA 18; Leeth v The Commonwealth (1992) 174 CLR 455 at 471-472, 476, 490-491; [1992] HCA 29; Baker v The Queen (2004) 223 CLR 513 at 528 [29]; [2004] HCA 45; Elliott v The Queen (2007) 234 CLR 38 at 41-42 [5]; [2007] HCA 51; Crump (2012) 247 CLR 1 at 16-17 [27]-[28], 20-21 [41]-[42]; Knight (2017) 261 CLR 306 at 323 20 Baker (2004) 223 CLR 513 at 528 [29]; Crump (2012) 247 CLR 1 at 16-17 [28], 20-21 [41], 26 [58], quoting Elliott (2007) 234 CLR 38 at 41-42 [5]. 21 Under Penalties and Sentences Act 1985, s 17 (as then in force). Bell Nettle Gordon scheme for release on parole then in place22. As was said in Crump, "[a]s a matter neither of form nor substance did the sentencing determination [of a non-parole period] create any right or entitlement in the plaintiff to his release on parole"23. In the case of the plaintiff, at all times, there remained only one sentence24 − imprisonment for life. The fixing of the non-parole period of 28 years said nothing about whether the plaintiff would be released on parole at the end of that non-parole period25. It left his life sentence unaffected as a judicial assessment of the gravity of the offence committed26. Indeed, the plaintiff has no right to be released on parole and may be required to serve the whole of the head sentence27. At best, the non-parole period provided the plaintiff with hope of an earlier conditional release but always subject to and in accordance with legislation in existence at the time governing consideration of any application for parole28. Put in different terms, the fixing of a non-parole 22 Crump (2012) 247 CLR 1 at 12 [14], 20 [37], quoting R v Shrestha (1991) 173 CLR 48 at 72-73; [1991] HCA 26. See also Knight (2017) 261 CLR 306 at 23 (2012) 247 CLR 1 at 26 [60]; see also at 29 [73]. See also Knight (2017) 261 CLR 306 at 323 [27]; Minogue (2018) 92 ALJR 668 at 674 [17]-[18], 686 [104]; 356 ALR 363 at 369, 385. 24 Power (1974) 131 CLR 623 at 628-629; Lowe v The Queen (1984) 154 CLR 606 at 615; [1984] HCA 46; Crump (2012) 247 CLR 1 at 17 [28]. 25 Knight (2017) 261 CLR 306 at 323 [27]. 26 Crump (2012) 247 CLR 1 at 17 [28], quoting Lowe (1984) 154 CLR 606 at 615; see also at 616, 624. 27 PNJ v The Queen (2009) 83 ALJR 384 at 387 [11]; 252 ALR 612 at 615; [2009] HCA 6; Minogue (2018) 92 ALJR 668 at 674 [17]; 356 ALR 363 at 369. 28 See Bugmy (1990) 169 CLR 525 at 531, 536; Shrestha (1991) 173 CLR 48 at 69. Bell Nettle Gordon period does no more than provide a "factum by reference to which the parole system" in existence at any one time will operate29. Moreover, the power to release a prisoner on parole after the expiry of the non-parole period is a matter for the executive, subject to the statutory scheme and administrative policies applicable to the exercise by the Board of the executive function of determining whether to release the prisoner on parole. No less importantly, the legislative scheme, as well as practice and policies, regarding the parole system may validly change from time to time30. And that is what has occurred here. The changes made by s 74AB are legislative amendments to the parole system to prevent the Board from ordering that the plaintiff be released on parole unless satisfied, among other things, that the plaintiff is in imminent danger of dying or is seriously incapacitated and that, as a result, he no longer has the physical ability to do harm to any person. The plaintiff's non-parole period has expired and, thus, contrary to the plaintiff's submissions, he remains eligible for parole even though the circumstances in which parole may be granted by the Board have been severely constrained. As this Court said in Crump and in Knight, legislative amendments to the parole system that impose "strict limiting conditions upon the exercise of the executive power to release" a prisoner, like those in s 74AB, "may be said to have altered a statutory consequence of the sentence" but such amendments do not impeach, set aside, alter or vary the legal effect of the sentence under which a prisoner suffers deprivation of liberty31. As the Court said in Knight in relation to the substantively identical provision to s 74AB, "[b]y making it more difficult for [the plaintiff] to obtain a parole order after the expiration of the minimum term, [the section] does nothing to contradict the minimum term that was fixed"32. 29 Crump (2012) 247 CLR 1 at 26 [60]; Minogue (2018) 92 ALJR 668 at 674 [17]; 356 ALR 363 at 369. See also Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 610 [73], 619 [108]; [2004] HCA 46. 30 Crump (2012) 247 CLR 1 at 17 [28], 19 [36], 26 [59], 28-29 [71]-[72]. See also Baker (2004) 223 CLR 513 at 520 [7]; Minogue (2018) 92 ALJR 668 at 675 [20], 687 [107]; 356 ALR 363 at 369, 386. 31 Crump (2012) 247 CLR 1 at 19 [35]; see also at 19 [36], 26-27 [60], 29 [72], [74]; Knight (2017) 261 CLR 306 at 323-324 [28]-[29]. 32 (2017) 261 CLR 306 at 323-324 [29]. Bell Nettle Gordon The plaintiff's contention that s 74AB constitutes the imposition of "additional punishment" and thus a "separate exercise" of judicial power by the State Parliament is contrary to each of the foregoing premises. Section 74AB does not alter or contradict the plaintiff's non-parole period. It also does not extend, or add to, that non-parole period. The non-parole period remained 28 years. Further, s 74AB did not make the plaintiff's sentence of life imprisonment "more punitive or burdensome to liberty"33. A sentence of life imprisonment is the maximum penalty that can be imposed in Victoria34. Where a non-parole period is imposed, it forms part of that overall sentence35. Whether a prisoner serves the rest of that sentence in prison or at large on parole, once a non-parole period has expired, is a matter for the executive. The plaintiff retains his ability to make an application for parole36. But he has no right to be released on parole37. And while the plaintiff might have hoped that the previous statutory regime would still be in force when the non-parole period expired, he had no right or entitlement that that regime should continue to apply to him38. The plaintiff has not lost any opportunity to be considered for release on parole − he is still eligible to be granted parole, by reason of the expiration of the non-parole period, but the circumstances in which parole may be granted by the executive have been severely constrained. His punishment is no more severe; it remains a sentence of life imprisonment. Thus, s 74AB did not replace a judicial judgment with a legislative judgment39 and neither the enactment, nor the substantive operation and practical 33 Baker (2004) 223 CLR 513 at 528 [29], quoted in Knight (2017) 261 CLR 306 at 324 [29]. cf Lowe (1984) 154 CLR 606 at 625; Olsen v Sims (2010) 28 NTLR 116 34 See Sentencing Act 1991, s 109(1). 35 See Penalties and Sentences Act 1985, s 17(1); Sentencing Act 1991, s 11(1). 36 See Corrections Act, s 74AB(1). 37 See [15] above. 38 Crump (2012) 247 CLR 1 at 28-29 [71]. 39 See Crump (2012) 247 CLR 1 at 20-21 [41] and Knight (2017) 261 CLR 306 at 323-324 [29], both citing Baker (2004) 223 CLR 513 at 528 [29]. Bell Nettle Gordon effect, of s 74AB was a separate exercise of judicial power. Section 74AB is valid and is not contrary to Ch III of the Constitution. The fact that the restrictions in s 74AB apply only to a single named prisoner, as in Knight40, does not alter those conclusions. Of course, "[t]here are circumstances in which the party-specific nature of legislation can be indicative of the tendency of that legislation to interfere with an exercise of judicial power"41 but, like the position in Knight, this is not one of them. Crump and Knight should not be reopened Contrary to the plaintiff's alternative submissions, the decisions in Crump and Knight should not be reopened42. As has been seen, Crump and Knight rested on principles "carefully worked out in a significant succession of cases"43. There were no material "difference[s] between the reasons of the justices constituting the majority"44 in Crump, and in Knight the Court delivered a reopen and overrule Crump. unanimous Those decisions reflect that it is generally legislatively competent for State Parliaments to make "special, and different, provision"45 for exceptional cases of judgment which declined 40 (2017) 261 CLR 306 at 320-321 [18], 323 [25]. See also Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 64, 121, 125; [1996] HCA 24; Fardon (2004) 223 CLR 575 at 590 [13]-[14], 592 [19]. 41 Knight (2017) 261 CLR 306 at 323 [26]. 42 See generally Queensland v The Commonwealth (1977) 139 CLR 585 at 599, 602, 620; [1977] HCA 60; John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439; [1989] HCA 5; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 352-353 [70]; [2009] HCA 2; Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1 at 19 [28]; [2016] HCA 16. 43 John (1989) 166 CLR 417 at 438. 44 John (1989) 166 CLR 417 at 438. 45 Baker (2004) 223 CLR 513 at 521 [8]. Bell Nettle Gordon prisoners. And the decisions have since been "independently acted on in a manner which militate[s] against reconsideration"46. Other grounds of alleged invalidity of s 74AB As s 74AB does not, either in its substantive operation or its practical effect, impose additional or separate punishment on the plaintiff beyond the punishment imposed by the Supreme Court at the time of sentencing, the plaintiff's further contentions, that s 74AB is invalid because it imposes cruel, inhuman or degrading punishment contrary to Art 10 of the Bill of Rights or because it is inconsistent with the constitutional assumption of the rule of law, fall away. Alleged invalidity of s 74AAA As the plaintiff ultimately accepted, if s 74AB is valid (as it is), there is no need or scope for the operation of s 74AAA and in his case it is therefore unnecessary to consider its validity. Questions and answers The questions formally stated for the opinion of the Full Court should be answered as follows: Is s 74AB of the Corrections Act 1986 (Vic) invalid? Answer: No. (b) Does the validity of s 74AAA of the Corrections Act arise in the circumstances of this case? Answer: No. If the answer to question (b) is "yes", is s 74AAA of the Corrections Act invalid? 46 John (1989) 166 CLR 417 at 438-439. See, eg, Sentence Administration (WA); Western Australia, Amendment Legislative Assembly, Parliamentary Debates (Hansard), 6 November 2018 at (Multiple Murderers) Act 2018 Bell Nettle Gordon Answer: Does not arise. (d) Who should pay the costs of the Special Case? Answer: The plaintiff. GAGELER J. Dr Minogue acknowledges that s 74AB of the Corrections Act 1986 (Vic) is relevantly indistinguishable from the provision upheld in Knight v Victoria47. He puts an argument against the validity of s 74AB which, he says, was not put and considered in Knight and is therefore left open by the holding in Dr Minogue's argument, as I understand it, starts with the proposition that s 74AB has the purpose and practical effect of subjecting him to a life without meaningful prospect of parole. That treatment, he argues, amounts to legislative infliction of punishment as a consequence of criminal guilt separate from and additional to that imposed by the Supreme Court of Victoria at the time of sentencing and to "cruel and unusual punishments" within the meaning of Art 10 of the Bill of Rights 1688. Either characterisation, he goes on to argue, is enough to take s 74AB beyond the legislative capacity of the Parliament of Victoria. For my own part, I do not think that it can be gainsaid that s 74AB has the purpose and practical effect of subjecting Dr Minogue to a life without meaningful prospect of parole. Consistently with what I said in Minogue v Victoria48, I accept that he is accordingly "treated or punished in a cruel, inhuman or degrading way" and, as a person "deprived of liberty", is not "treated with humanity and with respect for the inherent dignity of the human person" within the meaning of ss 10(b) and 22(1) of the Charter of Human Rights and Responsibilities Act 2006 (Vic). To accept that s 74AB has the purpose and practical effect of subjecting Dr Minogue to a life without meaningful prospect of parole, however, is short of accepting that Dr Minogue's treatment by s 74AB amounts to "punishment" in the one sense in which that term might arguably have present constitutional significance – as connoting a Deprivation of liberty consequent upon a determination of criminal guilt is, without more, an exercise of judicial power. "Punishment", in the generic sense of State infliction of involuntary hardship or detriment, is not50. legislative exercise of 47 (2017) 261 CLR 306; [2017] HCA 29. 48 (2018) 92 ALJR 668 at 682 [72], 683 [79]; 356 ALR 363 at 379, 380; [2018] HCA 49 Duncan v New South Wales (2015) 255 CLR 388 at 405 [31], 408 [43], 410 [51]; [2015] HCA 13. See Carney, "The exercise of judicial power by State Parliaments" (2017) 44 Australian Bar Review 204 at 207-211. 50 Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 12 [17]; [2004] HCA 49. The explanation in Knight51 and in Crump v New South Wales52 of the distinction between the judicial power exercised when sentencing an offender and the executive power exercised if and when determining whether to release a prisoner on parole denies to s 74AB the character of a law that interferes with a prior exercise of judicial power. The effect of the explanation is that Dr Minogue was and continues to be deprived of his liberty by force of the life sentence imposed on him by the Supreme Court and that the legislative removal of a meaningful prospect of release on parole does not render the life sentence more restrictive of his liberty or otherwise impose greater punishment for the offence of which he was convicted. The same explanation denies to s 74AB the character of a law that is itself an exercise of judicial power. Although not put in either of those cases, Dr Minogue's argument is foreclosed by the reasoning in both of them. I agree with Kiefel CJ, Bell, Keane, Nettle and Gordon JJ that Knight and Crump should not be reopened, and I agree with their answers to the questions posed by the parties in the special case. 51 (2017) 261 CLR 306 at 323-324 [26]-[29]. 52 (2012) 247 CLR 1 at 16-17 [28], 26-27 [60]; [2012] HCA 20. Edelman EDELMAN J. The facts and background of this special case are set out in the joint judgment of Kiefel CJ, Bell, Keane, Nettle and Gordon JJ, with which I generally agree. The judicial power of sentencing The sentencing of offenders, including the fixing of a non-parole period, has been said to be "as clear an example of the exercise of judicial power as is possible"53. Common characteristics of the exercise of judicial power in sentencing an offender include: (i) following a hearing that affords natural justice, (ii) the exercise of authority over a particular person, (iii) by reference to a past criminal act, and (iv) for the purposes of punishment. The boundaries of each of these characteristics are elastic and no single characteristic is a necessary or sufficient element of judicial power. The plaintiff was sentenced in circumstances in which the relevant legislation required the court, unless it considered it inappropriate, to fix "as part of the sentence"54 a minimum term during which an offender was not eligible to be released on parole. It is well established that the fixing of a non-parole period is "an integral part"55 of the process of sentencing offenders. It is also well established that a non-parole period is "part of"56 or a "component of"57 the sentence imposed upon an offender. It is "undoubtedly part of the punishment imposed"58. As the joint judgment explains, in contrast with the judicial power of sentencing, the power to determine whether a person should be released on 53 Leeth v The Commonwealth (1992) 174 CLR 455 at 470; [1992] HCA 29. See also Crump v New South Wales (2012) 247 CLR 1 at 16 [27]; [2012] HCA 20. 54 Penalties and Sentences Act 1985 (Vic), s 17(1), (2). See now Sentencing Act 1991 (Vic), s 11(1). 55 R v Shrestha (1991) 173 CLR 48 at 61; [1991] HCA 26; Leeth v The Commonwealth (1992) 174 CLR 455 at 491. 56 R v Shrestha (1991) 173 CLR 48 at 60; see also at 69; Leeth v The Commonwealth (1992) 174 CLR 455 at 465; Knight v Victoria (2017) 261 CLR 306 at 323 [27]; [2017] HCA 29. 57 Leeth v The Commonwealth (1992) 174 CLR 455 at 491; Postiglione v The Queen (1997) 189 CLR 295 at 302; [1997] HCA 26. 58 Leeth v The Commonwealth (1992) 174 CLR 455 at 471. See also PNJ v The Queen (2009) 83 ALJR 384 at 387 [11]; 252 ALR 612 at 615; [2009] HCA 6. Edelman parole is an executive power. By "providing the prisoner a basis for hope of earlier release"59, parole has a rehabilitative purpose. Nevertheless, there "is but one sentence, that imposed by the trial judge, which cannot be altered by the paroling authority"60. Legislative exercise of judicial power Underlying many of the plaintiff's submissions was an assumption which, stated at its narrowest, is as follows: it is an impermissible "legislative exercise of judicial power"61 for a State Parliament to enact a law which has the purpose of punishing a person by altering the person's minimum period of non-parole. Ultimately, it is unnecessary to consider whether, or when, an exercise of judicial power by the legislature will be invalid. The fundamental reason why the plaintiff's submissions fail is that their premise, that the enactment of s 74AB of the Corrections Act 1986 (Vic) is an exercise of judicial power, is incorrect. Even on the plaintiff's assumption that there is a zone in which the exercise of judicial power by the legislature is invalid, a written law will not be an exercise of judicial power merely because it has the practical operation or effect, or practical "consequence"62, of altering a person's minimum period of non-parole. A law that amends the conditions required for a grant of parole by the executive might have the practical effect of altering a person's minimum period of non-parole but, without more, it is not a law targeted at a particular person for a particular criminal act. And it is not a law imposed for the purposes of punishment for that act: "Legislative detriment cannot be equated with legislative punishment."63 Hence, s 74AB of the Corrections Act is not an exercise of judicial power merely because it may be that, as the Statement of Compatibility to the Corrections Amendment (Parole) Bill 2018 (Vic) accepted to be arguable, "the practical effect of these reforms is equivalent to replacing a 59 Bugmy v The Queen (1990) 169 CLR 525 at 536; [1990] HCA 18. See also R v Shrestha (1991) 173 CLR 48 at 69. 60 Power v The Queen (1974) 131 CLR 623 at 629; [1974] HCA 26. See also Crump v New South Wales (2012) 247 CLR 1 at 17 [28]. 61 Duncan v New South Wales (2015) 255 CLR 388 at 408 [43]; [2015] HCA 13. 62 Crump v New South Wales (2012) 247 CLR 1 at 19 [36]. See also Minogue v Victoria (2018) 92 ALJR 668 at 678 [47]; 356 ALR 363 at 374; [2018] HCA 27. 63 Duncan v New South Wales (2015) 255 CLR 388 at 409 [46]. Edelman court sentence that includes a non-parole period with an effective sentence that does not include a parole period"64. A more difficult issue is the validity of a written law that does not merely have the same practical effect as altering a punitive sentence but is itself enacted for the purposes of imposing additional punishment on a particular person, and thus amending their sentence, for the past offence. For instance, if a person were sentenced to a maximum term of ten years' imprisonment with a non-parole period of four years, the issue of whether a written law was an invalid exercise of judicial power may arise if legislation were subsequently passed which purported to extend the non-parole period of that person to eight years for the purpose of increasing the severity of the punishment for the offence65. All three of the "large" questions identified by French CJ in Crump v New South Wales66 would be raised: whether a law of a State altering a judicial decision would be a purported exercise of judicial power by the legislature of the State; whether the State Constitution authorises the exercise of judicial power by the legislature; whether, in any event, the State legislature is prevented from enacting such a law by an implication drawn from the provisions of Ch III of the Constitution." The Corrections Act, s 74AB There were statements made in Parliament in the course of the passage of the Corrections Amendment (Parole) Act 2018 (Vic), which inserted s 74AB into the Corrections Act, that might suggest that the provision had the goal of amending the plaintiff's non-parole period, and therefore his sentence, for the purposes of punishment for the past offence. They included statements referring to the plaintiff's crime and saying that the section will "ensure that Dr Minogue is denied parole"67, that he "will never, ever get access to parole", that "[he] never 64 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 24 July 2018 65 See Lowe v The Queen (1984) 154 CLR 606 at 620; [1984] HCA 46. 66 (2012) 247 CLR 1 at 18 [33] (footnote omitted). 67 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 24 July 2018 Edelman gets out of prison"68, and that he will "die in jail"69. Similar statements were made in the New South Wales Parliament in respect of the Bill that introduced s 154A of the Crimes (Administration of Sentences) Act 1999 (NSW) in relation to Mr Crump70 and in the Victorian Parliament in respect of the Bill that introduced s 74AA of the Corrections Act in relation to Mr Knight71. However, in this case, as in Crump v New South Wales72 and Knight v Victoria73, those statements are better understood as referring to the practical effect of the provision upon the plaintiff rather than suggesting that s 74AB of the Corrections Act was enacted for the purposes of punishment for past offences by the plaintiff. In this case, this is for three reasons. First, other statements made in the course of the passage of the Corrections Amendment (Parole) Act focus upon the plaintiff only as a member of a class of persons to whom the amendments to the parole regime in that Act were generally directed. For instance, statements that "[t]he government will ensure that Dr Minogue and other prisoners who murder police officers are not released on parole" and that Victorians will be provided with "complete certainty that Dr Minogue, and any other person who committed the same abhorrent crime, is locked behind bars and fully serve their prison sentence" show that the law was not intended to apply ad hominem punishment74. Although the plaintiff's circumstances might have been a motive for the law, s 74AB formed only part of the amendments to a parole regime that applies to a class of persons generally. Secondly, even if s 74AB of the Corrections Act were read independently of s 74AAA and as directed only at the plaintiff, and not as part of the wider 68 Victoria, Legislative Council, Parliamentary Debates (Hansard), 21 June 2018 69 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 21 June 2018 70 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 30 May 2001 at 13972-13973. 71 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 March 2014 72 (2012) 247 CLR 1. 73 (2017) 261 CLR 306. 74 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 24 July 2018 Edelman amendments to the parole regime, other aspects of the context of s 74AB reveal that its purpose is the prospective protection of the public by amendment of conditions concerning eligibility for parole rather than an additional retrospective sanction for the plaintiff's offence. In the Second Reading Speech to the Corrections Amendment (Parole) Act the Minister said that the "main purpose of the Bill is to enhance community safety"75. Section 1 of the Corrections Amendment (Parole) Act provides that its purpose, and thus the purpose of s 74AB, is "to amend the Corrections Act 1986 in relation to the conditions for making a parole order for certain prisoners convicted of the murder of a police officer, including the prisoner Craig Minogue". The Explanatory Memorandum to the Corrections Amendment (Parole) Bill refers to cl 1 and reiterates that the purpose of the Bill is "to provide restrictive conditions for making a parole order for certain prisoners"76. The Statement of Compatibility to that Bill also refers to the "important purpose [of] protecting society"77, and provides that the amendments "only alter the conditions on which the Board may order release on parole during the currency of the sentence, and after the expiration of a non- parole period"78. Thirdly, there are reasons of authority. Ultimately, the purpose of every legislative act must be considered in its own context. It is possible, although unlikely, that provisions with identical words might have different meanings and might be enacted for different purposes. Hence, the decisions of this Court in Crump v New South Wales79 and in Knight v Victoria80 do not strictly compel the conclusion that the purpose of s 74AB of the Corrections Act was to amend the conditions of parole rather than to vary the plaintiff's sentence for punitive purposes. Nevertheless, since s 74AB was closely modelled on the provision 75 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 24 July 2018 76 Victoria, Corrections Amendment (Parole) Bill 2018, Explanatory Memorandum 77 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 24 July 2018 (Hansard), at 2238; Victoria, Legislative Council, Parliamentary Debates 25 July 2018 at 3276. 78 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 24 July 2018 (Hansard), at 2236; Victoria, Legislative Council, Parliamentary Debates 25 July 2018 at 3274. 79 (2012) 247 CLR 1. 80 (2017) 261 CLR 306. Edelman relevant to Mr Knight81, which was, in turn, modelled on the New South Wales provision relevant to Mr Crump82, a powerful factor in the assessment of the purpose of s 74AB is the purpose that this Court accepted had motivated those provisions: to amend the conditions for parole orders83, so that the conditions would function as "a factum by reference to which the parole system ... operated"84. For these reasons, s 74AB of the Corrections Act does not involve punishment in the traditional sense: usually a State sanction imposed by a court or tribunal upon an offender for a past offence85. However, the function of punishment cannot necessarily be neatly contained in this traditional sense. It has been recognised in this Court that there is no clear line between a protective purpose and the other general purposes of punishment86. Once it is including that punishment embraces a number of purposes, recognised prevention, "the claim that a measure is primarily preventive does not necessarily take it outside the realm of punishment"87. Hart once observed that a prisoner who was told that his sentence was extended as a measure of social protection rather than punishment "might think he was being tormented by a barren piece of conceptualism – though he might not express himself in that way"88. 81 Victoria, Corrections Amendment (Parole) Bill 2018, Explanatory Memorandum 82 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 13 March 2014 at 746. See Knight v Victoria (2017) 261 CLR 306 at 321 [19]. 83 Knight v Victoria (2017) 261 CLR 306 at 320 [17]. 84 Crump v New South Wales (2012) 247 CLR 1 at 26 [60]. 85 See Hart, Punishment and Responsibility: Essays in the Philosophy of Law (1968) at 4-5, quoted in Al-Kateb v Godwin (2004) 219 CLR 562 at 650 [265]; [2004] HCA 37. 86 Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at 145 [32], 146 [35]; [2004] HCA 42; Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 613 [82]; [2004] HCA 46. 87 Zedner, "Penal subversions: When is a punishment not punishment, who decides and on what grounds?" (2016) 20 Theoretical Criminology 3 at 7. 88 Hart, Punishment and Responsibility: Essays in the Philosophy of Law (1968) Edelman If s 74AB of the Corrections Act imposed punishment upon the plaintiff in the traditional sense then this might be conclusive of its character as an exercise of judicial power89. Ultimately, however, the fundamental issue in this case is not the boundaries of the concept of punishment or whether preventive orders could be characterised as falling within an extended conception of punishment. The issue is whether s 74AB of the Corrections Act is an exercise of judicial power. Section 74AB does not bear sufficient hallmarks to be characterised as an exercise of judicial power. It does not impose punishment in the traditional sense. It is forward looking, rather than imposing additional punishment for a past offence. Although it would be significant, but not conclusive90, if all of the amendments to the parole regime were directed only at the plaintiff91, s 74AB of the Corrections Act is part of a regime of amendments that is of general application even if its enactment may have been motivated by an intention to respond to the plaintiff's circumstances. It was enacted by the legislative process. Like the laws considered in Crump v New South Wales92 and in Knight v Victoria93, it is a legislative exercise of only legislative power. Conclusion Section 74AB of the Corrections Act was not enacted for the purposes of punishing the plaintiff by altering his minimum period of non-parole. It was not an exercise of judicial power by the legislature. I agree with the answers to the stated questions given by Kiefel CJ, Bell, Keane, Nettle and Gordon JJ. 89 Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 434 at 444; [1918] HCA 56; Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 27; [1992] HCA 64. See also Magaming v The Queen (2013) 252 CLR 381 at 396 [47], 399-400 [61]-[62]; [2013] HCA 40; Duncan v New South Wales (2015) 255 CLR 388 at 407 [41]; Falzon v Minister for Immigration and Border Protection (2018) 262 CLR 333 at 340 [14]-[15], 357 [88]; [2018] HCA 2. 90 See Knight v Victoria (2017) 261 CLR 306 at 323 [26]. 91 See Murray, "Ad Hominem Parole Legislation, Chapter III and the High Court" (2018) 43 University of Western Australia Law Review 275 at 281. 92 (2012) 247 CLR 1. 93 (2017) 261 CLR 306.

HIGH COURT OF AUSTRALIA APPELLANT AND QANTAS AIRWAYS LIMITED & ANOR RESPONDENTS Povey v Qantas Airways Limited [2005] HCA 33 23 June 2005 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Victoria Representation: J B R Beach QC with B F Quinn for the appellant (instructed by Slater & J L Sher QC with S A O'Meara for the first respondent (instructed by Minter Ellison) A J Meagher SC and A S Bell for the second respondent (instructed by Ebsworth & Ebsworth) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Povey v Qantas Airways Limited Aviation – Carriage by Air – Liability of carrier – International Convention imposing liability for damage sustained in the event of bodily injury suffered by a passenger, if the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking – Appellant allegedly contracted deep venous thrombosis while a passenger on long-haul international flight on aircraft operated by the respondents – Whether appellant should have been warned of the risk of deep venous thrombosis – Whether appellant should have been given advice on precautions that would minimise risk of its occurrence – Whether appellant's contracting deep venous thrombosis was an accident that took place on board the aircraft within the meaning of Art 17 Warsaw Convention 1929 as amended by the Hague Protocol 1955 and by Montreal Protocol No 4 1975. International Law – Treaties – Construction – Requirement of uniform interpretation by contracting states – Under Art 31 Vienna Convention on the Law of Treaties interpretation to be conducted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose. Procedure – Summary judgment – Whether appellant's claim revealed an arguable cause of action – Whether claims bound to fail – Whether the pleading should be struck out and the action permanently stayed. Words and phrases – "accident", "unexpected", "unusual". Civil Aviation (Carriers' Liability) Act 1959 (Cth). Convention for the Unification of Certain Rules Relating to International Carriage by Air opened for signature at Warsaw on 12 October 1929 (the Warsaw Convention) as amended by the Protocol to amend the Warsaw Convention opened for signature at The Hague on 28 September 1955 (the Hague Protocol) and by the Protocol done at Montreal on 25 September 1975 (the Montreal Protocol No 4), Art 17. Convention on the Law of Treaties done at Vienna on 23 May 1969, Art 31. GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ. More than 75 years ago, when international air travel was in its infancy, Australia became party to the Convention for the Unification of Certain Rules Relating to International Carriage by Air ("the Warsaw Convention")1. Those Rules included rules regulating the liability of carriers to passengers. Since the Warsaw Convention was done on 12 October 1929, several further international agreements have been made to regulate international carriage by air and, among other things, modify the rules regulating carriers' liability. Those further agreements include the Protocol to amend the Warsaw Convention made at The Hague in 1955 ("the Hague Protocol")2, the Convention, Supplementary to the Warsaw Convention, done at Guadalajara in 1961 ("the Guadalajara Convention")3, the Protocol done at Montreal on 25 September 1975 and called the Additional Protocol No 3 to Amend the [Warsaw Convention] (which has not come into force), and the Protocol done at Montreal on 25 September 1975 and called the Montreal Protocol No 4 to Amend the [Warsaw Convention] ("the Montreal Protocol No 4")4. The Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Carriers' Liability Act") provides that each of the Warsaw Convention5, the Warsaw Convention as amended by the Hague Protocol6, the Guadalajara Convention7, and the Warsaw Convention as modified by the Hague Protocol and the Montreal Protocol No 48 has the force of law in Australia in relation to any carriage by air to which the relevant agreement applies, irrespective of the nationality of the aircraft performing the carriage. [1963] ATS 18; see also Carriage by Air Act 1935 (Cth). [1963] ATS 18. [1964] ATS 4. [1998] ATS 10. s 25A. s 25K. This appeal concerns the carriage of the appellant by air by Qantas Airways Limited ("Qantas") from Sydney to London via Bangkok and return by British Airways Plc ("BA") from London to Sydney via Kuala Lumpur. The appeal to this Court, and the proceedings in the Court of Appeal of Victoria have been conducted on the basis that the Warsaw Convention as modified by the Hague Protocol and the Montreal Protocol No 4 applied to the appellant's carriage. It is convenient to refer to the Warsaw Convention, as so modified, as "Montreal No 4". The appellant commenced a proceeding in the Supreme Court of Victoria against the Civil Aviation Safety Authority ("CASA"), Qantas and BA. He alleged that, "[d]uring the course of or following the flights" from Sydney to London and return, he suffered from deep venous thrombosis ("DVT") "caused by the conditions of and procedures relating to passenger travel upon the flights". The "conditions" and "procedures" referred to included what was said to be cramped seating from which it was not easy to move, the discouraging of movement about the cabin, and the offering of alcohol, tea and coffee during the flights. Against CASA, the appellant claimed damages for negligence. Against Qantas and BA ("the carriers"), the appellant claimed damages pursuant to the Carriers' Liability Act and Art 17 of Montreal No 4. The claim against CASA may be put to one side. CASA was not a party to the proceedings in this Court. These proceedings concern only the claims the appellant makes against the carriers under the Carriers' Liability Act. The issue Does the appellant's claim against the carriers reveal an arguable cause of action? Or, if the allegations of fact made by the appellant were established, would the claim nonetheless fail9? In particular, is it arguable that the carriers not warning passengers of precautions they could take to minimise or eliminate the risk of DVT, or the conditions of the flights, or both the absence of warning and the flight conditions could constitute an "accident" within the meaning of Art 17 of Montreal No 4? To explain why the issue is framed in this way, it is necessary to say something shortly about the procedures taken in the courts below and then to 9 Dey v Victorian Railways Commissioners (1949) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. consider the relevant provisions of the Carriers' Liability Act and of Montreal The proceedings below After obtaining some further particulars of the appellant's claim, Qantas and BA each moved to obtain summary judgment alleging that the claims made against them were bound to fail. Those applications failed at first instance10. Each of the carriers appealed to the Court of Appeal of Victoria. That Court allowed the appeal11 and, by majority (Ormiston and Chernov JJA, Ashley AJA dissenting), ordered that the appellant's pleading against the carriers be struck out and the action against them permanently stayed. The courts below treated the carriers' applications as if they were demurrers to the appellant's pleading. If the facts alleged were proved, would a cause of action be established? By special leave the appellant now appeals to this Court. Article 17 Article 17 of Montreal No 4 provides that a carrier "is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger". But that liability is subject to an important qualification. The carrier is liable "if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking" (emphasis added). The appellant contended that "accident" is to be given no narrow meaning. It was submitted that "accident" extends beyond acts occurring on board an aircraft (or in the course of operations of embarking or disembarking); it was said that it embraces at least some kinds of omissions. In particular, so the appellant contended, "accident" extends to omissions of warning (or the "failure" to warn) of the known dangers of, and precautions to be taken against, the occurrence of DVT, and extends to the flight conditions encountered, or to the combination of the "failure" to warn and the flight conditions. The appellant argued that it was, therefore, arguable that the facts alleged revealed a cause of action against the carriers. 10 Povey v Civil Aviation Safety Authority & Ors [2002] VSC 580. 11 Qantas Ltd v Povey [2003] VSCA 227. The appellant's pleading identified his cause of action as arising under both Art 17 and the Carriers' Liability Act. For the purposes of Australian law, however, the appellant's claim against the carriers must be understood as a claim founded only in the Carriers' Liability Act. Because the entry into the international agreement can create no rights in Australian domestic law without there being legislation giving effect to those rights, the source of the right which the appellant seeks to enforce must be found in the Carriers' Liability Act12. Nonetheless, it is convenient to articulate the central issue as one about the construction of Art 17 of Montreal No 4. To explain why the issue is framed by reference to Montreal No 4 it is necessary to recognise the ways in which the Carriers' Liability Act and the several conventions referred to in that Act intersect. The Carriers' Liability Act Part IIIC of the Carriers' Liability Act (ss 25J-25N) deals with carriage to which Montreal No 4 applies. Parts II, III and IIIA deal respectively with carriage to which the Warsaw Convention and the Hague Protocol applies, carriage to which the Warsaw Convention without the Hague Protocol applies, and carriage to which the Guadalajara Convention applies. Part IV of the Act (ss 26-41) deals with other carriage to which the Carriers' Liability Act applies, including carriage by Australian domestic carriers interstate, or between a place in a Territory and another place in that Territory, or a place in Australia. As earlier noted, Pt IIIC (and s 25K in particular) provides that Montreal No 4 has the force of law in Australia in relation to any carriage by air to which the Convention applies. In addition, s 25L provides that certain provisions of Pt IV of the Act (ss 35-39) apply to carriage to which Montreal No 4 applies in the same way as they apply to carriage under Pt IV. For that purpose, a reference in s 37 to Pt IV is taken to be a reference to Pt IIIC and any other reference in ss 35 to 39 to Pt IV "is taken to be a reference to the Convention"13. By this means, s 36 of the Carriers' Liability Act (subject to certain presently irrelevant 12 Chow Hung Ching v The King (1948) 77 CLR 449 at 478; Bradley v The Commonwealth (1973) 128 CLR 557 at 582; Simsek v Macphee (1982) 148 CLR 636 at 641-642; Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 211-212, 224-245; Kioa v West (1985) 159 CLR 550 at 570; Dietrich v The Queen (1992) 177 CLR 292 at 305; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 287. 13 s 25L. qualifications found in s 37) applies to provide that the liability of a carrier under Pt IIIC in respect of personal injury suffered by a passenger (not being an injury that has resulted in the death of the passenger) "is in substitution for any civil liability of the carrier under any other law in respect of the injury". The application of ss 35 to 39 to carriage to which Montreal No 4 applies (like the equivalent provision found in Pt II in respect of carriage to which the Warsaw Convention, as modified by the Hague Protocol, applies14) treats the provision which gives the relevant international instrument the force of law in Australia15 as creating the liability of a carrier in respect of death or personal injury and then qualifying the liability in the manner and to the extent specified in ss 35 to 39. In particular, the liability of a carrier in respect of personal injury, when the carriage is subject to Montreal No 4, is in substitution for any civil liability of the carrier under any other law in respect of the injury. For present purposes, none of the other provisions of ss 35 to 39 need be noticed. A text of each of the conventions mentioned earlier is set out in the Schedules to the Carriers' Liability Act. Montreal No 4, the convention with which these proceedings are concerned, appears in Sched 5. Section 8 of the Carriers' Liability Act provides that the text of the conventions is taken to be as it is set out in the relevant Schedules. But if there is any inconsistency between the text of a convention as set out in the Schedule and the text that would result if the authentic French texts of the instruments making up the convention were read and interpreted together as one single instrument, it is the latter text that prevails16. No party to the present proceedings asserted that there was any such inconsistency. Schedule 5 to the Carriers' Liability Act records that the text in the Schedule contains the operative provisions of the Warsaw Convention as modified by Ch 1 of the Hague Protocol and Ch 1 of the Montreal Protocol No 4, together with the remaining provisions of the Hague Protocol and the Montreal Protocol No 4. Chapter 1 of the resulting text of Montreal No 4, set out in Sched 5, deals with the scope of the Convention and contains certain definitions; Ch II deals with documents of carriage; Ch III regulates the liability of the carriers; Ch IV contains provisions relating to combined carriage (partly by air 15 Section 25K with respect to Montreal No 4, and s 11 with respect to the Warsaw Convention as modified by the Hague Protocol. and partly by another means of carriage); Ch V sets out general and final provisions. It is convenient, at this point, to say something more about the provisions of Montreal No 4, while at the same time noticing some of the questions presented by those provisions. Montreal No 4 In the argument of the present matter, attention was focused almost exclusively upon the provisions of Ch III (Arts 17-30A) of Montreal No 4. Some passing reference, however, was made to Art 1(3), which provides that carriage to be performed by several successive air carriers is deemed, for the purposes of the Convention, "to be one undivided carriage if it has been regarded by the parties as a single operation". Reference was made to this provision in aid of a contention that the appellant's carriage by Qantas and BA from Sydney to London and return (in the space of four days) was to be treated as one undivided carriage. If that contention is right, Art 30 of Montreal No 4 was engaged and (among other things) each carrier accepting the appellant was deemed to be one of the contracting parties to the contract of carriage "in so far as the contract deals with that part of the carriage which is performed under his supervision". In this appeal, however, it is not necessary to consider whether the contention about the operation of Art 1(3) is right. Reference was made to a number of provisions of Ch III of Montreal No 4 as casting light upon the meaning to be given to the text of Art 17. In order to examine those arguments it is convenient to begin by noticing the general structure of Ch III. The first three provisions of the Chapter impose liabilities on a carrier. Article 17 deals with a carrier's liability for death or wounding of or other bodily injury to a passenger; Art 18 concerns liability for destruction or loss of or damage to registered baggage; Art 19 provides for liability for damage occasioned by delay. As already noted, Art 17 requires that "the accident" which caused the damage took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Article 18 requires that "the occurrence" which caused the damage took place during the carriage by air. The next three provisions limit the liabilities thus created. Article 20 provides that the carrier is not liable "if he proves that he and his servants and agents have taken all necessary measures to avoid the damage or that it was impossible for them to take such measures". Article 21 provides for cases where the carrier proves that the damage was caused by or contributed to by the negligence of the person suffering the damage. Article 22 imposes a cap on the liabilities of the carrier at amounts which are fixed or calculable according to the relevant formula. In the carriage of persons the carrier and the passenger may "by special contract ... agree to a higher limit of liability"17. Article 23 provides (among other things) that "[a]ny provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in this Convention shall be null and void". Article 24 appears intended to make the liabilities created, and the conditions and limitations of liability imposed, by Montreal No 4 exclusive of at least some other rights. It provides that in the carriage of passengers and baggage "any action for damages, however founded, can only be brought subject to the conditions and limits set out" in the Convention. Of the remaining provisions of Ch III, detailed reference must be made to only one: Art 25. That Article provides for the circumstances in which the limits of liability specified in Art 22 shall not apply. It provides that those limits do not apply if it is proved that the damage resulted from "an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result". In addition, in the case of such an act or omission of a servant or agent, it must also be proved that the servant or agent was acting within the scope of employment. The appellant pointed to the references in Art 25 to damage resulting from "an act or omission of the carrier, his servants or agents" as demonstrating that the reference in Art 17 to "accident" was not to be understood as confined to events or happenings but as extending to omissions (in this case the omission of advice or warning about DVT). Principles of construction There was no dispute between the parties about the principles that govern construction of an international agreement like Montreal No 4. The guiding principles of treaty interpretation are found in the Vienna Convention on the Law of Treaties18. Article 31 provides that a treaty must be interpreted in good faith, in accordance with the ordinary meaning of the terms in their context and in the light of the object and purpose of the treaty. Interpretative assistance may be 17 Art 22(1). 18 [1974] ATS 2. gained from extrinsic sources19 in order to confirm the meaning resulting from the application of Art 31, or to determine the meaning when interpretation according to Art 31 leaves the meaning "ambiguous or obscure" or "leads to a result which is manifestly absurd or unreasonable". Importantly, international treaties should be interpreted uniformly by contracting states20. But, of course, the ultimate questions are, and must remain: what does the relevant treaty provide, and how is that international obligation carried into effect in Australian municipal law? Some accepted bases of the parties' arguments In arguing the present matter, the parties accepted certain propositions about the Warsaw Convention which they took to be established by the decisions of other courts. In particular, neither side submitted that the decisions of the Supreme Court of the United States in Air France v Saks21, El Al Israel Airlines Ltd v Tsui Yuan Tseng22 or Olympic Airways v Husain23 or the decision of the House of Lords in Sidhu v British Airways Plc24 (followed in Tseng) were wrong. There is no occasion to consider whether, as was held in Tseng and in Sidhu, in cases where the relevant Convention provides no remedy, no other remedy is available either at common law or otherwise, or to consider whether that conclusion would present any constitutional question. Nor is there any occasion to consider whether any separate or different questions from those argued by the parties to this appeal would be presented by deliberate acts of 19 Art 32. 20 Shipping Corporation of India Ltd v Gamlen Chemical Co A/Asia Pty Ltd (1980) 147 CLR 142 at 159 per Mason and Wilson JJ; Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1998) 196 CLR 161 at 186 [70] per McHugh J, 213 [137] per Kirby J; Siemens Ltd v Schenker International (Australia) Pty Ltd (2004) 216 CLR 418 at 466-467 [153]-[154] per wrongdoing such as intentional assaults by other passengers25 or attacks by others from outside the aircraft26. Rather, argument was confined to what "accident" means in Art 17. The arguments advanced by the parties began from the premise that a passenger's injury is caused by an accident only if "caused by an unexpected or unusual event or happening that is external to the passenger"27. Each side recognised that this definition may require what the Supreme Court of the United States in Saks28 called flexible application, but each side's argument began from the words that have been quoted. Where the arguments diverged was at the point of identifying what is meant by "an unexpected or unusual event or happening that is external to the passenger". The competing contentions The appellant's argument took three steps. First, it was said that no distinction should be drawn between acts and omissions or between "events" or "happenings" on the one hand and "non-events" or "inaction" on the other. Secondly, it was said that what was "unexpected or unusual" was to be judged from the perspective of a reasonable airline passenger, not according to what may be the particular airline's policies and procedures, or what may be general industry practice. Thirdly, it was said that an "accident" might occur during the whole of a flight. Thus, so the argument proceeded, the conjunction of positive and negative conditions for the duration of a flight, where the reasonable passenger would expect an airline, knowing of a life-threatening risk, to warn passengers of that risk or the measures to avoid it, was an "accident" which took place on board the aircraft. The carriers emphasised the need to identify an "accident" as one that "took place on board the aircraft or in the course of any of the operations of embarking or disembarking". They submitted that the appellant's analysis was conducted at too high a level of abstraction which obscured the need to identify a "happening" or "event" which could be located as taking place on board or in the course of the operations identified. So, the carriers' argument proceeded, 25 Morris v KLM Royal Dutch Airlines [2002] 2 AC 628. 26 cf Air France v Saks 470 US 392 at 405 (1985). 27 Saks 470 US 392 at 405 (1985). 28 470 US 392 at 405 (1985). although it was neither necessary nor relevant to ask whether the cause of the accident was an act or omission or some combination of acts and omissions, there must have been some unintended and unexpected occurrence which produced the hurt or loss by which damage was sustained29. In this case, the carriers submitted, there was no occurrence. What was alleged to be a "failure to warn" was not an occurrence – it was something that did not happen. And, as the carriers submitted, what were alleged to be the relevant "flight conditions" were not unintended or unexpected – they were the conditions which the appellant's pleading alleged to be "the standard conditions of and procedures relating to passenger travel" on the relevant flights. An "accident"? As was pointed out in Saks30, the Warsaw Convention was drafted in French by continental jurists. And as an international treaty, it would be wrong to read Montreal No 4 as if it reflected some particular cause of action or body of learning that is derived from, say, the common law31. It was said in Saks32 that "the French legal meaning of the term 'accident' differs little from the meaning of the term in Great Britain, Germany, or the United States". Both in French, and in Anglo-American legal discourse (and, we would add, so too in Australian legal discourse) "accident" may be used to refer to the event of a person's injury or to the cause of injury. By contrast, "accidental" is usually used to describe the cause of an injury rather than the event and is often used as an antonym to "intentional". In Art 17, "accident" is used to refer to the event rather than the cause of injury33. And that event is one which Art 17 requires to be located at a place ("on board the aircraft") or otherwise to be fixed by reference to circumstances of time and place ("in the course of any of the operations of embarking or disembarking"). 29 cf Fenton v J Thorley & Co Ltd [1903] AC 443 at 453 per Lord Lindley. 30 470 US 392 at 399 (1985). 31 Great China Metal (1998) 196 CLR 161 at 171-172 [22] per Gaudron, Gummow 32 470 US 392 at 399 (1985). 33 Saks 470 US 392 at 400 (1985). Further, in understanding what is meant by "accident", it is necessary to give proper weight to the way in which Art 17 relates three different concepts. Article 17 refers to "damage", to "the death or wounding of a passenger or any other bodily injury suffered by a passenger", and to "the accident which caused the damage so sustained". The damage sustained is treated as being distinct from the accident which caused the damage, and both the accident and the damage are treated as distinct from the death, wounding or other personal injury. What that reveals is that the "accident", in the sense of "an unfortunate event, a disaster, a mishap"34 is not to be read as being sufficiently described as an adverse physiological consequence which the passenger has suffered. It may be accepted that its happening was not intended. In that sense, what is alleged to have happened may be described as "accidental". But suffering DVT is not an accident. Rather, as the parties to this appeal accepted, "accident" is a reference to something external to the passenger. It may also be accepted that an "accident" may happen because of some act or series of acts, or because of some omission or series of omissions; it may happen because of some combination of acts and omissions. If that were not already clear, the reference in Art 25 to damage resulting from "an act or omission of the carrier, his servants or agents" would point in that direction. It by no means follows, however, that asking whether an event was brought about by an act or omission and then classifying the act or omission as "accidental" as distinct from "intentional" is the same as asking whether there has been an "accident" on board an aircraft. In particular, recognising the difficulties in seeking to classify causes of an accident as acts or omissions, or as intended or unintended acts or omissions, does not deny the need, under Art 17, to identify that an accident has occurred on board or in the course of the operations of embarking or disembarking. No other provision of Montreal No 4 suggests any contrary construction of Art 17. No doubt as Saks indicates35, the concept of "accident" is not to be overrefined. It is a concept which invites two questions: first, what happened on board (or during embarking or disembarking) that caused the injury of which complaint is made, and secondly, was what happened unusual or unexpected? And as already pointed out, showing only that while on board or in the course of 34 The Oxford English Dictionary, 2nd ed (1989), vol 1 at 74, "accident" meaning I, 35 470 US 392 at 405 (1985). embarking or disembarking a passenger sustained some adverse physiological change does not identify the occurrence of an accident. As the facts in Husain demonstrate, the course of events surrounding death or injury to an airline passenger may present difficulties in determining whether there has been an accident. Husain concerned the death of a passenger on board an aircraft as a result of exposure to cigarette smoke. A flight attendant had refused requests to move the passenger to a seat further away from those who were smoking on board. The difficulties in determining whether that course of events constituted an accident is sufficiently identified by reference to the competing contentions of the petitioner and the respondents in the Supreme Court of the United States and the contention made by the United States as amicus curiae supporting the respondents (the relatives and legal personal representatives of the deceased passenger). The respondents described36 the question presented in the proceedings in the Supreme Court as being "[w]hether the repeated insistence by an airline flight attendant that an asthmatic passenger remain in an assigned seat amidst life-threatening smoke – in direct violation of standard industry practice and the policy of her own airline – is an 'unusual' occurrence and thus, under the principles established in [Saks], constitutes an 'accident' for purposes of Article 17 of the Warsaw Convention". The United States, as amicus curiae, described37 the question as being "[w]hether an airline's unreasonable refusal to assist a passenger who becomes ill during an international flight, in violation of industry standards and the airline's own policies, constitutes an 'accident' within the meaning of Article 17 of the Warsaw Convention". By contrast, Olympic Airways, the petitioner in the United States Supreme Court described38 the question as being "[w]hether the court below improperly held that the 'accident' condition precedent to air carrier liability for a passenger's death under Article 17 of the Warsaw Convention can be satisfied when a passenger's pre-existing 36 Olympic Airways v Husain, 02-1348, Brief for Respondents at i. 37 Olympic Airways v Husain, Brief for the United States as Amicus Curiae supporting Respondents at I. 38 Olympic Airways v Husain, Brief of Petitioner, Olympic Airways at i. medical condition is aggravated by exposure to a normal condition in the aircraft cabin, even if the air carrier's negligent omission may have been in the chain of causation?" These different formulations of the question that arose in Husain reveal at least two things. First, unsurprisingly, each sought to emphasise particular aspects of the circumstances surrounding the passenger's death. Secondly, each sought to identify whether something unusual or unexpected had happened on board the aircraft. The United States, as amicus, emphasised the response, or lack of response, to a medical emergency. The respondents emphasised the flight attendant's refusal to move the passenger. The airline sought to say, in effect, that nothing had happened on board that was unusual or unexpected; even if the flight attendant did not react as she should have reacted, there was no accident. As already pointed out, neither side in the present appeal sought to challenge the correctness of what was decided in Husain. Moreover, questions of the kind considered in Husain do not arise in this case because it is central to the appellant's case that nothing happened on board the aircraft which was in any respect out of the ordinary or unusual. Further, what he alleges to be the relevant flight conditions were not said to be unusual or unexpected in any respect. (Indeed, as against CASA, he alleges in his statement of claim that the conditions were "the standard conditions of and procedures relating to passenger travel" on such flights.) And only by the mechanism of describing the absence of warning as a "failure to warn" did the appellant seek to suggest that the absence of warning was in any respect unusual or unexpected on the flights concerned. References to "failure" to warn in this context are irrelevant and unhelpful. They are irrelevant because they must proceed from unstated premises about the content or origin of some duty to warn. There is no basis for introducing, for example, concepts of the common law of negligence to the construction or application of an international treaty like Montreal No 4. And unless there is resort to some standard of legal behaviour to determine whether what happened was a "failure", the description of what happened as a failure is, in truth, no more than an assertion that there was no warning. The references to failure are unhelpful because they suggest that the only point at which some relevant warning could or should have been given is on board the aircraft. But if some warning was necessary or appropriate, it is not apparent why it should not have been given at a much earlier point of making arrangements to travel by air, rather than on board the aircraft. Further, reference to failure is unhelpful because it diverts attention from what it is that happened on board to what might have, could have, or perhaps should have happened there and why that should be so. If, as earlier indicated, it is appropriate to ask "what happened on board?" the answer in this case is that the appellant alleges that nothing unexpected or unusual happened there. The allegations which the appellant makes, if proved, would not establish a cause of action against the carriers. That conclusion is consistent with the decisions reached in intermediate courts of appeal in the United States and in England about the application of the Warsaw Convention and subsequent treaties to cases of DVT. In In re Deep Vein Thrombosis Litigation39, the Court of Appeal of England and Wales held that the word "accident" in the Warsaw Convention as modified by the Hague Protocol was to be given a natural and sensible, but flexible and purposive meaning in its context40 and that for there to be an accident within the meaning of the relevant article, there had to be an event external to the passenger which impacted on the body in a manner which caused death or bodily injury and the event had to be unusual, unexpected or untoward41. The Court held42 that inaction was a non-event which could not properly be described as an accident. Not warning of the risk of DVT and not giving advice on the precautions that would minimise that risk were not events43. The conditions in which passengers travelled on flights (with cramped seating and the like) were not capable of amounting to an event that satisfied the first limb of the definition of an accident which "took place on board the aircraft or in the course of any of the operations of embarking or disembarking"44. In the United States, the Court of Appeals for the 5th Circuit45 and the Court of Appeals for the 9th Circuit46 have also held that development of DVT 40 [2004] QB 234 at 244 [9], 245 [15], 246 [20]. 41 [2004] QB 234 at 246-249 [19]-[38]. 42 [2004] QB 234 at 248 [29]. 43 [2004] QB 234 at 248 [29]. 44 [2004] QB 234 at 248 [28]. 45 Blansett v Continental Airlines Inc 379 F 3d 177 (2004). 46 Rodriguez v Ansett Australia Ltd 383 F 3d 914 (2004). was not, in the circumstances alleged in those cases, an accident within the meaning of the Warsaw Convention. Although the appellant sought to gain some comfort from a statement made in the opinion in Rodriguez47 to the effect that that Court did not need to decide whether an airline's failure to warn of DVT can constitute an accident, that aspect of the Court's opinion is no more than a reflection of the narrowness of the issue tendered for its decision. It is not, as the appellant's argument tended to suggest, to be translated into any positive proposition of law. For these reasons, the appeal to this Court should be dismissed with costs. 47 383 F 3d 914 at 919 (2004). McHugh 47 McHUGH J. The principal question in this appeal is whether there can be an "accident" for the purpose of Art 17 of the Warsaw Convention if a passenger on an aircraft suffers Deep Vein Thrombosis ("DVT") by reason of any of the following matters: the flight conditions; the failure of the air carrier to warn the passenger of the risk of DVT; the failure to advise the passenger of precautions that he should take to minimise the risk of DVT; the discouraging of the passenger from moving about the aircraft; the encouraging of the passenger to remain in his seat during the flight; or the supply of alcohol and caffeine beverages during the flight. In my opinion, there can be an "accident" for the purpose of Art 17 when the employees of an air carrier engage in conduct that causes an injury that is not intended or reasonably foreseeable. As a result, it would be open to a tribunal of fact to find that a passenger's injury is caused by an "accident" when it is the result of the employees of a carrier: discouraging the passenger from moving about the aircraft; encouraging the passenger to remain seated during the flight; or supplying alcoholic or caffeine beverages to the passenger. Statement of the Case The appellant, Brian William Povey, sued the respondents, Qantas Airways Ltd ("Qantas") and British Airways Plc ("British Airways"), and the Civil Aviation Safety Authority ("CASA") in the Supreme Court of Victoria for damages for personal injury. In his Statement of Claim, he alleged he sustained the injury (DVT) as a result of travelling on the respondents' airlines from Sydney to London and return. Acting under s 23.01 of the Supreme Court (General Civil Procedure) Rules (Vic) ("the Rules"), Qantas and British Airways, but not CASA, applied to the Court for summary judgment or an order staying the proceedings. Acting under s 23.02 of the Rules, they also sought an order striking out Mr Povey's Statement of Claim on the ground that the claims were bound to fail. Bongiorno J dismissed the applications. Qantas and British Airways appealed to the Court of Appeal of Victoria against the orders dismissing their applications. A majority of that Court (Ormiston and Chernov JJA, Ashley AJA dissenting) McHugh allowed the appeal and ordered that the Statement of Claim be struck out and the action against Qantas and British Airways be permanently stayed. This Court gave Mr Povey special leave to appeal against those orders, as a result of which he brings this appeal. The material facts Travelling in economy class on a Qantas carrier, Mr Povey flew from Sydney to London via Bangkok on 15-16 February 2000. He returned to Sydney via Kuala Lumpur on a British Airways flight on 18-20 February 2000. In his Statement of Claim, he claims that, as a result of the flights, he suffered DVT. The thrombosis caused a stroke, pulmonary and paradoxical embolisms, chronic chest, lung and leg pain, breathing difficulties, impaired mobility, thrombosis of the right leg and shock, anxiety and depression. Paragraph 6 of his Statement of Claim asserts that the DVT was caused "by the conditions of and procedures relating to passenger travel upon the flights", which included: a confined and restricted physical environment in which the [appellant] was immobilised for long periods of time in a seated position; impediments to [him] getting out of his seat during the flights; the offer and supply of alcoholic beverages, tea and coffee to the [appellant] during the flights; discouraging [him] from moving around the cabin of the aircraft and encouraging [him] to remain seated during the flights; [the appellant] not being provided with any information or warning about the risk of DVT or information about the measures which [he] could take to reduce such risk." For the purpose of this appeal, these facts have to be accepted as proved. The law In his Statement of Claim, Mr Povey claims that Qantas and British Airways are liable to pay him compensation in accordance with Art 17 of the Warsaw Convention as Amended by the Hague Protocol of 1955. That Convention has the force of law in Australia by virtue of s 11(1) of the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Act"). The appeals to the Court of Appeal and this Court, however, were conducted by reference to the Convention as Amended by the Hague Protocol of 1955 and the Montreal Protocol No 4 of 1975, which has the force of law in Australia by virtue of s 25K of the Act. McHugh Hence, it is to the terms of the Warsaw Convention as amended by these two Protocols that one must look to determine the civil liability of Qantas and British Airways for Mr Povey's personal injury. That is because s 36 of the Act substitutes a carrier's "civil liability ... under any other law in respect of" a passenger's personal injury with liability under the Convention. Section 36 is operative in this case, by virtue of s 25L, because the carriage of Mr Povey on these flights was governed by the Montreal Protocol No 4. And the Convention is applicable to this dispute in accordance with Art 1 of the Convention because the flights involved the "international carriage of persons, baggage or cargo performed by aircraft for reward." Article 17 of the Convention states: "The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking." Article 22 of the Convention limits the carrier's liability to 250,000 francs. But, in accordance with Art 25, that limit does not apply where "the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result". The critical question in the appeal is whether anything took place on board the aircraft that is capable of being described as "the accident which caused the damage". If there is, Mr Povey's Statement of Claim cannot be struck out and the case must go to trial. The source of Mr Povey's claim Mr Povey's Statement of Claim asserts that his cause of action arose under the Act and Art 17. But it is the Act, not Art 17, which gives him a cause of action, if he has one. Australia's entry into an international agreement does not itself create rights or liabilities or impose duties enforceable under the domestic law of this country48. Legislation that gives effect to an international agreement is required before the contents of the agreement have any significance in Australian law. It is Pt IIIC of the Act, and as I have indicated, s 25K in 48 Dietrich v The Queen (1992) 177 CLR 292 at 305; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 286-287. McHugh particular, that gives the Montreal Protocol No 4 the force of law in Australia. Nevertheless, the liability of Qantas and British Airways in this case is measured by the terms of Art 17. Article 17 must be construed in the context of an international agreement that constitutes a Code governing the liability of air carriers from many countries. So, although this Court is concerned with rights and liabilities created by an Australian statute, Australian courts should not take an insular approach to the construction of Art 17. Nor should it be interpreted by reference to presumptions and technical rules of interpretation applied in construing domestic statutes or contracts. Instead, an Australian court should apply the rules of interpretation of international treaties that the Vienna Convention on the Law of Treaties49 has codified50. Article 31 of that Treaty declares that a treaty must be interpreted in good faith, in accordance with the ordinary meaning of its terms and their context and in the light of the treaty's object and purpose. Article 32 declares that resort may be had to extrinsic sources to confirm the meaning in certain circumstances. Those sources may be consulted to confirm the meaning that results from applying Art 31. They may also be used to ascertain the meaning where the application of Art 31 results is manifestly absurd, unreasonable, ambiguous or obscure. As I pointed out in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp, Berhad51: in a meaning that "[The] extrinsic sources include the travaux préparatoires and the circumstances of the conclusion and history of the negotiation of the treaty. Primacy must be given, however, to the natural meaning of the words in their context ..." Article 17: "the accident which caused the damage" In its legal context, the ordinary meaning of an "accident" is an event, happening or occurrence that is unusual, fortuitous, unexpected or unforeseen. Usually, the event or happening causes damage to persons or property or has an effect on a person or on matter, tangible or intangible. In Fenton v Thorley & Co Ltd, Lord Lindley said52: 49 Australian Treaty Series, (1974) No 2. 50 Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225; Great China Metal Industries Co Ltd v Malaysian International Shipping Corp, Berhad (1998) 196 CLR 161. 51 (1998) 196 CLR 161 at 186 [70]. 52 [1903] AC 443 at 453. McHugh "[A]n accident means any unintended and unexpected occurrence which produces hurt or loss. But it is often used to denote any unintended and unexpected loss or hurt apart from its cause; and if the cause is not known the loss or hurt itself would certainly be called an accident. The word 'accident' is also often used to denote both the cause and the effect, no attempt being made to discriminate between them." In Air France v Saks53, in an unanimous Opinion, the United States Supreme Court held that this definition of "accident" is a guide to the term "accident" in Art 17. This Court applied Lord Lindley's definition in Australian Casualty Co Ltd v Federico54 in interpreting an insurance policy that contained the definition "bodily injury ... caused by an accident". In Art 17, "accident" does not refer to the hurt or loss suffered. It refers to the cause of the hurt or loss. In Art 17, the term is used to refer to that "which caused the damage". The damage must be "sustained in the event of the death or wounding of a passenger or any other bodily injury" (emphasis added). Logic dictates, then, that the "accident" must be the cause of "the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger", in which damage was sustained. But although Art 17 makes the causal element of an "accident" the decisive element, there can be no "accident" unless the causal element has an effect. Indeed, causation itself implies an effect. Moreover, the notion of an "accident" that has no consequence or effect is incomprehensible. Consequently, although the definition in Art 17 operates by reference to the act or event that causes the harm – and not the harm itself – the nature and extent of the harm caused are significant factors in determining whether the act or event that caused it has the quality of an "accident". This emphasis on the causal element of an "accident" in Art 17 is consistent with international authority interpreting the term. In Saks55, the United States Supreme Court held that a significant feature of "both the French and the English texts" of the Warsaw Convention is that "the text of Article 17 refers to an accident which caused the passenger's injury, and not to an accident which is the passenger's injury."56 To support this interpretation, the Supreme Court cited the comments of the President of the Drafting Committee of the Warsaw Convention in explaining the different wording of the otherwise similar Arts 17 53 470 US 392 at 398-399 (1985). 54 (1986) 160 CLR 513. 56 470 US 392 at 398 (1985) (emphasis in original). This interpretation was followed in Olympic Airways v Husain 540 US 644 (2004). McHugh and 18 (which concerns damage to baggage). The President said that as "there are entirely different liability cases ... we have deemed that it would be better to begin by setting out the causes of liability for persons, then for goods and baggage, and finally liability in the case of delay."57 Further, in In re Deep Vein Thrombosis Litigation58, the Court of Appeal for England and Wales followed Saks and held that "one would normally expect the untoward event to cause the death or injury directly."59 Categories of causes of "accidents" Common law cases group a wide array of untoward events and happenings under the umbrella concept of "accident". And the experience of those cases throws light on the meaning of the term "accident" in Art 17. The concept of "accident" may be categorised in terms of events involving human actions and in terms of happenings that do not involve human action, eg mechanical or technological operations and "acts of nature". The difference between the categories lies in the divergent reasons that result in happenings being classified as non-deliberate. In the non-deliberate categories are those happenings that are unexpected, unusual or not designed. An example of this category is the factual situation in Saks, which concerned the mechanical operation of the jetliner's pressurisation system. The US Supreme Court defined an "accident" for the purpose of Art 17 as "an unexpected or unusual event or happening that is external to the passenger."60 It held that no "accident" had occurred on Ms Saks' flight, because "the aircraft's pressurization system had operated in the usual manner."61 Because her injury was not caused by a happening that was unexpected or unusual, there was no "accident". In Olympic Airways v Husain62, the US Supreme Court affirmed the interpretation that it had given to Art 17 in Saks. In Husain, the US Supreme 57 Second International Conference on Private Aeronautical Law, 4-12 October, 1929, Warsaw, comments of Mr Giannini, President of the Committee, at 205 (emphasis added), cited 470 US 392 at 402-403 (1985). 59 [2004] QB 234 at 246 [21] per Lord Phillips of Worth Matravers MR (emphasis added). 60 470 US 392 at 405 (1985). 61 470 US 392 at 395 (1985). McHugh Court noted that "[t]he term 'accident' has at least two plausible yet distinct definitions", being "a happening that is not ... intended" and "an unusual, fortuitous, unexpected, unforeseen, or unlooked for event, happening or occurrence". But the Court concluded that Saks authoritatively "discerned the meaning of 'accident' under Article 17 of the Convention as an 'unexpected or unusual event or happening that is external to the passenger'."63 With great respect to the US Supreme Court, however, the Saks definition of "accident" does not exhaustively define the scope of Art 17. At all events, it does not exhaustively define it without explanation. In Saks, it would have made no sense for the Court to describe the operation of the pressurisation system as "a happening that is not ... intended". The system operated independently of any actor who could have formed an intention to do an act that had consequences that were not intended or expected. For this reason, the Court relied on authorities that defined "accident" in terms of "an occurrence associated with the operation of an aircraft".64 But it would be contrary to one of the objects of the Convention to hold that Art 17 must be given only one of two available meanings that the Supreme Court has acknowledged. One of the objects of the Convention is to provide compensation for injured passengers without the need to prove fault on the part of the air carrier. The price that is paid for this benefit is a limitation on the amount of compensation payable and the imposition of a condition that "the accident which caused the damage ... took place on board the aircraft or in the course of any of the operations of embarking or disembarking." The Convention's object of compensating passengers without proof of fault, however, would be undermined by a refusal to give the term "accident" one of the ordinary meanings of which it is capable. The wording of Art 17 makes clear that the "accident" is associated with something that "took place on board the aircraft". This may include, for example, the actions of flight attendants. Those actions fall under the first category of events that are "accidents", that is to say, intended or voluntary acts that have unintended, unexpected or reasonably unforeseeable consequences. The criminal law of Australia is familiar with the notion of an "accident" occurring when a voluntary or intended act has unintended, unexpected or 63 540 US 644 at 651 n 6 (2004). 64 DeMarines v KLM Royal Dutch Airlines 724 F 2d 1383 at 1385 (1984), cited 470 US 392 at 396 (1985). McHugh reasonably unforeseeable consequences65. Thus, for the purpose of the Criminal Code (Q), voluntary or intended acts of a person that cause harm to another may constitute an "accident" where the harm was not intended or reasonably foreseeable. In Kaporonovski v The Queen, Gibbs J said66 that "[i]t must now be regarded as settled that an event occurs by accident within the meaning of the rule if it was a consequence which was not in fact intended or foreseen by the accused and would not reasonably have been foreseen by an ordinary person". Consequently, this category of "accident" covers cases of intentional conduct that has consequences that were not intended or reasonably foreseeable, for example, a punch to the victim's neck that caused a subarachnoid haemorrhage because of the victim's predisposition to such a haemorrhage67. In R v Van Den Bemd68, a majority of this Court refused the Crown special leave to appeal against a decision that held that a death occurred "by accident" when the "death was such an unlikely consequence of [the accused's] act an ordinary person could not reasonably have foreseen it." A flight attendant's act of running a food trolley over the foot of a sleeping passenger fits easily within this meaning of "accident" even though the happening is not unusual. It may be an "accident" – depending on the foreseeability issue – because the flight attendant's voluntary or intentional act of wheeling the trolley was not intended to run over the passenger's foot. Similarly, an "accident" occurs when a flight attendant directs a passenger to sit in a seat that collapses. It would be an artificial and narrow view of Art 17 to hold that in such a case it was the collapse of the seat that was the "accident". The direction is as much a part of the "accident" as the collapse of the seat. If the attendant was charged with the offence of doing an act that caused bodily harm to the passenger, no one would doubt that the defence of "accident" would be available to the flight attendant. The US Supreme Court recognises that the direction or conduct of a flight attendant that results in injury can constitute an "accident" at all events if the direction or conduct does not accord with industry standards. In Olympic Airways69 – decided after Saks – the Court held that an "accident" had occurred for the purpose of Art 17 when the death of a passenger resulted from a flight 65 See Kaporonovski v The Queen (1973) 133 CLR 209; R v Van Den Bemd (1994) 179 CLR 137, appeal from [1995] 1 Qd R 401. 66 (1973) 133 CLR 209 at 231. 67 R v Van Den Bemd (1994) 179 CLR 137. 68 (1994) 179 CLR 137 at 141 quoting from Court of Appeal. McHugh attendant's refusal to move an asthmatic passenger from a seat near a smoking section. The Court rejected Olympic's argument that the injury-producing event was the ambient cigarette smoke which was "normal" at the relevant time. The Court said that Olympic's "'injury producing event' inquiry – which looks to 'the precise factual "event" that caused the injury' – neglects the reality that there are often multiple interrelated factual events that combine to cause any given injury."70 The Supreme Court also held that the intentional conduct of a flight attendant could constitute an "accident" for the purpose of Art 17. Properly understood, I doubt that the Supreme Court of the United States in Saks intended to exclude from the concept of "accident" in Art 17 cases where the injury is the unintended and unforeseeable consequence of the voluntary or intended act of a person other than the plaintiff. It is true that the Court71 "conclude[d] that liability under Article 17 of the Warsaw Convention arises only if a passenger's injury is caused by an unexpected or unusual event or happening that is external to the passenger." It is also true that in Olympic Airways72 the Supreme Court applied the Saks definition and found the departure from industry standards and company policy as the "unusual event". But in Saks the Court immediately went on to say73 that its "definition should be flexibly applied after assessment of all the circumstances surrounding a passenger's injuries." The Court gave examples of this flexible application of its definition. They included "torts committed by terrorists or fellow passengers."74 If the Supreme Court's definition of "accident" does exclude cases where the voluntary act of a person other than the plaintiff causes harm to the plaintiff that was not intended nor reasonably foreseeable, the definition went beyond what the Court had to decide. As the Supreme Court noted in Saks75, the issue before it was "whether a loss of hearing proximately caused by normal operation of the aircraft's pressurization system is an 'accident' within the meaning of Article 17". In determining that issue, the Court had to consider the meaning of "accident" but it could not make a binding declaration that gave that term a meaning beyond what was necessary to decide that case. On one view Saks decides no more than that, for the purpose of Art 17, no "accident" occurs when 70 540 US 644 at 653 (2004). 71 470 US 392 at 405 (1985). 73 470 US 392 at 405 (1985). 74 470 US 392 at 405 (1985). 75 470 US 392 at 395 (1985). McHugh the injury sustained is the result of the "normal operation" of the aircraft. Another and narrower view is that it decides that no "accident" occurs for the purpose of the Article "when the injury indisputably results from the passenger's own internal reaction to the usual, normal, and expected operation of the aircraft"76. Another and wider view is that it decided that it is the cause not the injury that is the accident. No doubt other formulations of the rule for which Saks stands can be made. But whatever they may be, they can authoritatively bind only where the alleged "accident" is the result of the normal operation of the aircraft. Of the material facts involved in Saks, the normal operation of the aircraft was the decisive fact, and statements in Saks must be read with that in mind. Cases are only authority for what they decide. When a court makes a statement that goes beyond the issue it had to decide, the extended statement is dictum and binding on no-one. Later courts commonly treat the material facts of a case as standing for a narrower or broader ratio decidendi than that expounded by the court that decided the case. As I pointed out in Woolcock Street Investments Pty Ltd v CDG Pty Ltd77: "If later courts take the view that the rule of a case was different from its stated ratio decidendi, they may dismiss the stated ratio as a mere dictum or qualify it to accord with the rule of the case as now perceived." No one should doubt the importance of the domestic courts of parties to an International Convention achieving uniformity in interpreting and applying the Convention's provisions. But this does not mean that a domestic court of a contracting party must mechanically apply statements made by a court of another contracting party when the precise issue before that court was significantly different from that which confronts the domestic court. To require the courts of other contracting parties to do so would mean that the first curial statement on the subject would be controlling. Where, as here, the statement of the court of another contracting party was made in circumstances vastly different from those that confront this Court, we should not automatically apply it. Of course, the reasoning and the decision of the foreign court must be closely examined and respected. Where the statement is made by a court of the stature of the US Supreme Court, it is especially important that the courts of another contracting party refuse to apply the Supreme Court's interpretation of Convention provisions only after the most careful consideration. Ordinarily, a court of another forum should only refuse to apply it 76 470 US 392 at 406 (1985). 77 (2004) 216 CLR 515 at 543 [61]. McHugh when it is convinced that it is wrong or goes beyond what was necessary for decision or where it is necessary to do justice to a party before the forum court. In my opinion, the Saks definition, if read literally and as intended to be exhaustive, is too widely stated. It excludes cases where the causative conduct of a human actor has unintended and reasonably unforeseeable consequences and which, in ordinary speech, would constitute an "accident". Holding that such conduct can be an "accident" is not inconsistent with Art 17's insistence that the "accident" be the cause of the injury or damage. Indeed, the Supreme Court's decision in Olympic Airways can only be understood on this basis. With great respect to the Supreme Court in Saks78, it went too far in insisting that the harm- causing occurrence must always be "caused by an unexpected or unusual event or happening that is external to the passenger." That statement can be readily accepted when the issue concerns happenings that do not involve human action, eg mechanical or technological operations and "acts of nature". But it would place an undue restriction on the scope of Art 17 to hold that it applies to events involving human actions. It follows that, if Mr Povey's Statement of Claim pleads that "an unexpected or unusual event" caused his damage or that a voluntary or intended act caused an unintended and reasonably unforeseeable injury, the Statement of Claim cannot be struck out. 6(a) and (b): The state of the cabin The flight conditions, as pleaded in particulars (a) and (b) of par 6 of the Statement of Claim, do not fall under either category of "accident". The physical environment was not "confined and restricted", and Mr Povey was not impeded from "getting out of his seat during the flights", by virtue of any act or because of any event or happening. 6(c) and (d): Acts done by the flight attendants Both particulars (c) and (d) enumerate acts that were done by the employees of Qantas and British Airways that "took place on board the aircraft". Both particulars may be considered "accidents" if it can be proved that: the flight attendants offered Mr Povey "alcoholic beverages, tea and coffee" during the flights and discouraged him "from moving around the cabin of the aircraft"; and 78 470 US 392 at 405 (1985). McHugh the acts were not done with the intent or the foresight that Mr Povey's consumption of the beverages or limited movement would cause the onset of DVT. Upon the assumption that those propositions can be proved, particulars (c) and (d) state facts that are capable of constituting an "accident" for the purpose of Art 17. They allege matter that can prove Mr Povey's cause of action. Consequently, they cannot be struck out. 6(e) Failure to warn: Omissions as "accidents" Particular (e) of par 6 pleads an omission. It asserts that the "accident" was Mr Povey "not being provided with any information or warning about the risk of DVT or information about the measures which [he] could take to reduce such risk." A bare omission, ie, an absence of action, does not fit under the umbrella of "accident". The causal element of an "accident" generally requires a happening or occurrence. In my opinion, the Supreme Court was largely correct in Saks in recognising that in the context of Art 17 the concept of "accident" requires an external causative event. In some circumstances, however, an omission may constitute an event or occurrence for the purpose of Art 17, as when there is a failure to carry out a duty, practice or expectation. In Olympic Airways, the Supreme Court held that the refusal to shift the passenger contrary to industry practice and company policy was an "accident". An omission may also constitute an "accident" when it is part of or associated with an action or statement. Thus, omitting to keep a proper lookout in the course of pushing a food trolley or refusing to do something as in Olympic Airways may be an element in an "accident". But a bare omission to do something cannot constitute an "accident". If the omission is unintended in the sense that it is not contemplated, it is not a voluntary act that has unintended and reasonably unforeseeable consequences. If the omission is deliberate in the sense of considering an action and rejecting it, no external event or happening occurs. Furthermore, a bare omission is not something that is unexpected or unusual. A bare omission does not fall into either of the categories of "accident" to which I have referred. Accordingly, the failure of Qantas and British Airways to take steps that would have prevented the injury, as pleaded in particular (e) of par 6 of the Statement of Claim, is not an "accident" within the meaning of Art 17. Order The appeal should be allowed in respect of particulars (c) and (d) of par 6 of the Statement of Claim but otherwise dismissed. The order of the Court of Appeal of Victoria should be set aside. In its place should be substituted an order McHugh that the appeal to that Court be allowed in respect of particulars (a), (b) and (e) of par 6 of the Statement of Claim but otherwise the appeal to that Court be dismissed. Because Mr Povey has succeeded on the point of principle involved in the case, Qantas and British Airways should pay the costs in this Court and in the Court of Appeal despite Mr Povey being unsuccessful in respect of three particulars of his claim. Kirby KIRBY J. Since ancient times, human beings have known of the dangers of flight. The mythologies of Greece, Crete, Persia and other lands include stories of injurious attempts by men and women to soar into the firmament79. In his Metamorphoses80, Ovid describes the winged flight of Daedalus and Icarus, brought to an end by the youth's reckless attempt to soar too high. The appellant in this case likewise complains of an injury caused by his air travel. However, whereas Icarus had only his father Daedalus to assist him in his peril, the appellant has the Warsaw Convention81. To that Convention he has appealed. But as I shall explain, it is of no greater avail. The Warsaw Convention and the international rule of law In SS Pharmaceutical Co Ltd v Qantas Airways Ltd82, in relation to a predecessor to the Warsaw Convention applicable in this appeal83, I observed that "it is essential that … perfectly natural reactions to the predicament of … the passenger or family in the case of death or injury … should be subjected to the dispassionate application of the international instrument, properly construed". If the result of such a construction is deemed unsatisfactory, "it will be an argument for improved international arrangements, enhanced domestic legislation or for securing the protection of private insurance". It does not justify a court of law "adopting a construction … which is different from that intended by, and expressed in, the article". Because of the "disgraceful shambles" of the Warsaw Convention and its later modifications84, and the conflicting interests, national and economic, that 79 The Psalmist alludes to flight in Ps 91:12: see Johnson v American Home Assurance Co (1998) 192 CLR 266 at 268 [4]. 80 Ovid, Metamorphoses, Book VIII, Metamorphoses, (1998) at 176-178. ll 183-235; see Melville (tr), Ovid: 81 Convention for the Unification of Certain Rules Relating to International Carriage by Air, [1963] Australian Treaty Series No 18, opened for signature at Warsaw on 12 October 1929, as amended at the Hague, 1955, and by Protocol No 4 of Montreal, 1975 (together referred to in these reasons as "the Warsaw Convention"). 82 [1991] 1 Lloyd's Rep 288 at 295 (NSWCA). 83 See Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("Carriers' Liability Act"), s 5, definition of "the Warsaw Convention as amended at the Hague". 84 [1991] 1 Lloyd's Rep 288 at 296. See Lowenfeld and Mendelsohn, "The United States and the Warsaw Convention", (1967) 80 Harvard Law Review 497 ("Lowenfeld and Mendelsohn"). Kirby have contributed to the present texts, those who have the obligation of construing such provisions "should not be unduly surprised at arriving at an apparently inequitable result"85. The international rule of law is not achieved by distorting or stretching beyond snapping point the interpretation of the text of international instruments, however unfair the result required by its text may seem. Mr Brian Povey (the appellant) attempts, in this appeal, to recover for the damage sustained by him by reason of "bodily injury" that he claims to have suffered as a result of an international air carriage on a round trip from Sydney to London. The carriage was conducted by the first respondent, Qantas Airways Limited ("Qantas"), and the second respondent, British Airways Plc ("British Airways"). The "bodily injury" alleged by the appellant is deep venous thrombosis ("DVT"). The appellant claims, and wishes to present a case at trial, that the respondent airlines knew that there was a risk of DVT in the conduct of such long flights to and from Australia but that, at the relevant time, they "deliberately chose not to warn of it"86. The respondents deny this. However, in advance of a trial, they sought summary relief against the appellant's action87. Whilst they failed to secure orders granting judgment or a permanent stay of the proceedings before the primary judge (Bongiorno J)88, in the Court of Appeal of the Supreme Court of Victoria a majority supported the grant of such relief89. In this Court, by special leave, the appellant now contests the judgment against him that followed in the intermediate court. The basis for the provision of relief to the respondents was the conclusion of the majority of the Court of Appeal that, on the facts alleged and particularised in his pleadings (included as amended pursuant to leave granted at first instance by the primary judge)90, the appellant had not alleged, nor was it reasonably arguable, that the condition of DVT satisfied the relevant test for liability under 85 [1991] 1 Lloyd's Rep 288 at 297. 86 [2004] HCATrans 490 at 1180. 87 cf Damon v Air Pacific unreported, Central District Court of California, 10 September 2003 at [1]-[2]. Summary relief was sought pursuant to the Supreme Court (General Civil Procedure) Rules (Vic), ss 23.01, 23.02. Alternatively, the claim relied upon the inherent powers of the Supreme Court of Victoria. 88 [2002] VSC 580 at [42]-[45]. 89 [2003] VSCA 227 at [41] per Ormiston JA, [48] per Chernov JA. 90 [2002] VSC 580 at [45]. Kirby Art 17 of the Warsaw Convention, namely that the condition had been caused by an "accident" that "took place on board the aircraft or in the course of any of the operations of embarking or disembarking"91. One member of the Court of Appeal (Ashley AJA) would have permitted the proceedings to go to trial on a limited basis92. His Honour's conclusion gave effect to the view that part, but not all, of the case that the appellant sought to pursue could possibly constitute an "accident", as required. In my opinion, in the manner in which the proceedings have been argued (effectively as a demurrer to the case propounded by the appellant in his pleadings and particulars), the approach of the majority in the Court of Appeal is to be preferred. The appeal should be dismissed. The facts The primary facts alleged: The appellant alleged that between 15 and 16 February 2000 he travelled as a passenger in economy class seats on flights from Sydney to London via Bangkok on an aircraft operated by Qantas. He arrived in London on 16 February 2000. He returned to Sydney via Kuala Lumpur on an aircraft operated by British Airways, also in economy class. The return flight involved departing London on 18 February 2000 and arriving in Sydney on the morning of 20 February 2000. The appellant alleged that during, or immediately following, the foregoing flights he suffered from DVT and, as a consequence, sustained bodily injuries. These included the development of pulmonary embolism, resulting in cerebral damage ("stroke") with consequential impaired mobility and breathing difficulties. The appellant's proceedings were effectively a test case for hundreds of other actions commenced, and pending, in the Supreme Court of Victoria. Those actions have been brought by persons claiming damages from airlines in respect of DVT resulting in injuries of varying degrees of seriousness. They include cases maintained on behalf of the estates and dependants of passengers who have died allegedly as a consequence of the development of DVT. In addition to suing Qantas and British Airways, the appellant pursued a claim in negligence against the Australian Civil Aviation Safety Authority ("CASA")93. Those proceedings are in abeyance, pending the outcome of this appeal. 91 The language of Art 17, the applicable provision of the Warsaw Convention. See Carriers' Liability Act, Sched 5. 92 [2003] VSCA 227 at [217]. 93 Established by the Civil Aviation Act 1988 (Cth), s 8. Kirby As originally pleaded, the appellant alleged that his injury had been "caused by the conditions of and procedures relating to passenger travel upon the flights". These were described as "the flight conditions". They were particularised as including a confined and restricted physical environment involving immobilisation for long periods; impediments to getting out of the seat during the flights; the repeated offer and supply of alcoholic beverages and coffee during the flights; discouragement from moving around the cabin and encouragement to remain seated; and not providing the appellant with any information or warning about the risk of DVT or the measures that could be taken to reduce such risk94. The respondent airlines sought further particulars. These elicited the facts that the "accident" was alleged to be comprised of "the flight conditions" and that it had occurred for the duration of the flight to and from the United Kingdom, first symptoms of DVT being experienced on the final leg of the journey between Kuala Lumpur and Sydney95. The appellant's claim against the airlines was brought in the State of Victoria under the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the Carriers' Liability Act"). That Act gives the force of law to provisions of the Warsaw Convention, as it has been amended from time to time with consequences for claims against carriers brought in Australia96. In the Court of Appeal, and in this Court, it was accepted, correctly, that the version of the Warsaw Convention applicable to the appellant's carriage was that of the Convention as amended by the Hague Protocol and by Protocol No 4 of Montreal of 197597. The applicable version was misdescribed before the primary judge. However, nothing turned on this mistake as the provisions of the relevant article (Art 17) were unchanged in the successive versions. The course of proceedings: After the respondent airlines filed their defences, denying that the appellant had suffered DVT and consequent injuries and asserting that any such DVT and injuries were not caused by an "accident" within the meaning of Art 17 of the Warsaw Convention, they moved for immediate relief. They sought the entry of summary judgment in their favour and a permanent stay of proceedings98 or an order striking out those paragraphs of the statement of claim in which claims were pleaded against them99. 94 [2003] VSCA 227 at [52]. 95 [2003] VSCA 227 at [54]. 96 Carriers' Liability Act, s 11(1). 97 Set out in the Carriers' Liability Act, Sched 5. 98 Pursuant to the Supreme Court (General Civil Procedure) Rules (Vic), s 23.01. 99 Pursuant to the Supreme Court (General Civil Procedure) Rules (Vic), s 23.02. Kirby The decision of the primary judge upheld the complaint that the appellant's claim, as originally pleaded, disclosed no "accident" within Art 17 of the Warsaw Convention. However, his Honour held that if the alleged "accident" were particularised in a form expressed during argument before him, the claim might disclose an "accident". Hence, the summons for peremptory relief was dismissed. The appellant was given leave to file fresh particulars of the matters relied on as constituting the "accident" alleged in the statement of claim. Qantas and British Airways thereupon sought, and obtained, leave to appeal to the Court of Appeal100. Meantime, the appellant duly provided the anticipated further particulars ordered by Bongiorno J101. These maintained that the "accident", causing the appellant's bodily injuries, comprised "the flight conditions" previously particularised. However, they added two additional and associated particulars, namely that at the time of the respective flights, Qantas and/or British Airways knew that the flight conditions were capable of causing, or increasing the risk of causing, the passengers on the flight to experience DVT; and that they knew of preventive measures that might have minimised such risk, while the appellant and other passengers had no such knowledge. Accordingly, it was "unexpected or unusual" that the appellant was "subjected to such flight conditions". The particulars further alleged that the appellant and other passengers were not provided with any information or warning about the risk of DVT or measures which they could take to reduce such a risk, despite being entitled to be provided by the carriers with such warnings and information about that risk. Because the provision to passengers of warnings and information about any such risk was "usual, commonplace and expected", the failure of Qantas and British Airways to afford such warnings and information was unexpected and unusual. It was thus an "accident" within Art 17 of the Warsaw Convention. The majority in the Court of Appeal, in separate reasons, accepted (as the primary judge had held) that the claim, as originally pleaded, did not identify an "accident" that was a prerequisite to the bringing of the proceedings. Nor did the majority consider that the additional particulars made any difference. They concluded that, to be an "accident" within the Warsaw Convention, it was necessary that there should have been an "event or happening". The most that was alleged in the case was inactivity (a failure to warn passengers in the circumstances of the flight conditions that were otherwise expected and usual at the time). This could not amount to an "accident", as required102. 100 Leave to appeal was granted on 14 March 2003 by Buchanan and Vincent JJA. 101 [2002] VSC 580 at [46]. 102 [2003] VSCA 227 at [38]-[39] per Ormiston JA, [46]-[47] per Chernov JA. Kirby In coming to this conclusion, the majority applied its understanding of the holding of the Court of Appeal of England and Wales in In re Deep Vein Thrombosis and Air Travel Group Litigation103. To the extent that there was any disparity between the approach adopted in that Court from that taken in later United States decisions104, said to relate to "accidents" involving omission to act, the majority preferred the approach of the English Court. The minority judge in the Court of Appeal accepted that part of the case as pleaded and particularised by the appellant could not constitute an "accident". That part concerned static conditions of the aircraft (the confined and restricted physical environment) and the alleged failure of the respondents to provide any information or warning about the risk of DVT or the measures that could be taken by passengers to reduce such risk. His Honour held that the appellant should have the opportunity of a trial on the pleaded combination of positive and negative conditions on board the aircraft, alleged to have constituted an "accident", and the pleaded failure to warn passengers. This, in combination with the particularised positive conduct (such as the creation of impediments to getting out of the seat, the offer and supply of alcoholic drinks and coffee and the discouragement from moving around the cabin), could, as a matter of law, if proved, amount to an "accident". The minority opinion thus reflected, to some degree, the approach of the primary judge. This was that, within the language and purpose of the Warsaw Convention as construed by judicial authority, affirmative action on the part of the airlines and their employees could convert "pure omissions" into the type of "event" or "happening" that could amount to an "accident", and thereby attract the operation of the Warsaw Convention. The issues Before this Court, the appellant argued that all of the judges of the Court of Appeal below had taken a needlessly narrow view of the meaning of "accident" in this context. However, at the least, he submitted that the view foreshadowed by the primary judge and accepted by the minority opinion in the Court of Appeal should be confirmed by this Court. In this way, the issues propounded by the appellant for the decision of this Court were as follows: 103 [2004] QB 234 ("DVT Litigation"). 104 Notably Husain v Olympic Airways 116 F Supp 2d 1121 (2000); on appeal 316 F 3d 829 (9th Cir 2002). At the time of the Court of Appeal's decision, the Supreme Court of the United States had heard argument and reserved judgment in Husain, which was subsequently affirmed: 540 US 644 (2004). Kirby The failure to warn issue: Whether the pleaded failure of the respondents to warn passengers of the risk of DVT and to advise them of the precautions that they could take to eliminate such risk is capable of constituting an "accident" within the Warsaw Convention; the pleaded The combination of circumstances combination of positive and negative conditions on board the aircraft of the respondents, that are alleged to have caused the appellant's injuries, is capable of constituting an "accident" within the Warsaw Convention; and Whether issue: The continuous circumstances issue: Whether the pleaded failure to warn or the pleaded combination of circumstances which continued throughout the airline flights, and which did not occur at a single identifiable instant or moment, is capable of constituting an "accident" within the Warsaw Convention. The applicable legislation and the Warsaw Convention law, legislation: The applicable Under Australian the Warsaw Convention is not, of its own force, part of municipal law. However, by s 11 of the Carriers' Liability Act, the provisions of the Warsaw Convention have, subject to that Act, "the force of law in Australia in relation to any carriage by air to which the Convention applies, irrespective of the nationality of the aircraft performing that carriage". By ss 12 and 13 of the Carriers' Liability Act, provision is made in relation to liability imposed by the Warsaw Convention on a carrier in respect of the death (s 12) or injury not resulting in death (s 13) of a passenger. By the law of negligence in Australia, failure to warn of risks inherent in specialised activity may, in some circumstances, amount to a breach of a relevant legal duty, giving rise, where damage is caused, to a legal right of recovery105. Part IIIC of the Carriers' Liability Act governs the present case and applies to it the "Montreal No 4 Convention"106. By s 25K of that Act, the Montreal Convention so defined "has the force of law in Australia in relation to any carriage by air to which the Convention applies, irrespective of the nationality of the aircraft performing that carriage". By s 25L, certain provisions of Pt IV of 105 See eg Rogers v Whitaker (1992) 175 CLR 479 at 484; Chappel v Hart (1998) 195 CLR 232 at 239 [9], 254 [58], 276-278 [95]-[99]. 106 Defined in s 5 of the Carriers' Liability Act to mean "the Convention that is, under Article XV of the Montreal Protocol No 4, known as the Warsaw Convention as amended at The Hague, 1955, and by Protocol No 4 of Montreal, 1975". Kirby the Carriers' Liability Act apply to carriage to which the Montreal No 4 Convention applies. Such applied provisions include s 36, otherwise found in Pt IV. By that section, subject to immaterial exceptions, "the liability of a carrier under this Part in respect of personal injury suffered by a passenger, not being injury that has resulted in the death of the passenger, is in substitution for any civil liability of the carrier under any other law in respect of the injury". It is in this way that the Carriers' Liability Act imposed liability on the respondent air carriers but exempted them from what would otherwise have been their ordinary liability for negligence at common law. Instead of ordinary liability, the Act substitutes the liability for which it provides, relevantly in terms of the Montreal No 4 Convention variant of the Warsaw Convention107. The Montreal No 4 Convention: The Montreal No 4 Convention108 contains in Ch III ("Liability of the Carrier") a number of provisions critical for the issues argued in this appeal. In the terms of the English language text, which is Sched 5 to the Carriers' Liability Act, the provisions that need to be noticed are found in Arts 17, 18, 22, 23 and 25. Those Articles read: "Article 17 The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Article 18 The carrier is liable for damages sustained in the event of the destruction or loss of, or damage to, any registered baggage, if the occurrence which caused the damage so sustained took place during the carriage by air. Article 22 In the carriage of persons the liability of the carrier for each passenger is limited to the sum of two hundred and fifty thousand francs. Where, in accordance with the law of the court seised of 108 [1998] Australian Treaty Series No 10. Kirby the case, damages may be awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed two hundred and fifty thousand francs. Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability. Article 23 Any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in this Convention shall be null and void[.] Article 25 In the carriage of passengers … the limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment." that Article 17 is the most important. It contains the requirement for an "accident". That requirement is stated in curious terms, apparently as an assumption the damage sustained was caused by an "accident". Nevertheless, it was uncontested that only damage so sustained (namely, in an "accident"), would enliven the carrier's liability for which Art 17 provided. No definition of the word "accident" is contained in the Warsaw Convention. Nor is the word defined in the Carriers' Liability Act. Article 18 is included because, by contrast to Art 17, it presupposes an "occurrence" causing the damage that is sustained. There is another reflection of this idea in Art 19 which renders the carrier liable for damage "occasioned" by delay in the carriage. Article 22 is relevant because it identifies the maximum sum that may be recovered from the carrier in respect of its liability "for each passenger". It provides expressly for one element of continuity of municipal law, namely in the case where the law of the forum allows damages to be awarded in the form of periodical payments. There is no express indication that an "accident" within Art 17 may include continuous events. Article 25 is set out because it provides that the cap upon recovery stated in Art 22 (in terms impliedly referring to Art 17) is to be lifted where the "damage" (a word also used in Art 17) results "from an act or omission of the Kirby carrier" (emphasis added). According to the appellant, this provision in Art 22 represents an express acknowledgment in the Montreal No 4 Convention that damage "so sustained", that is, in an "accident", can be sustained from an "accident" that is, or includes, an "omission of the carrier" – not just acts of commission. Matters not in dispute Factual matters and issues: In order to focus attention precisely upon the essential issues for decision in this appeal, it is useful to clear away a number of matters that are not relevant, at least at this stage of the proceedings. First, this Court is not concerned with any possible question as to the constitutional validity of the Carriers' Liability Act, in so far as that Act purports to give effect to an international treaty that deprives persons, who may otherwise be so entitled, of the benefit of causes of action against air carriers. No issue was raised that the Act provided for an acquisition of property that must, in a federal law in Australia, be effected "on just terms"109. This issue was raised by the Court in the special leave hearing110. The approach of the appellant has been to assert an ambit of entitlement under the Warsaw Convention which, if upheld, would arguably involve no breach of the constitutional just terms requirement in his case. On this footing, the constitutional issue may be ignored. Secondly, the appellant's proceedings against CASA are unaffected by the issues in the appeal. The claim in negligence against that authority awaits hearing once the status of the claims against the respondent carriers is known. Thirdly, various factual questions, contested by the defences filed by the carriers, have not been explored, still less determined. Thus, the appellant's claim that he had suffered DVT is not admitted on the pleadings. However, because the respondents' applications for summary relief have been dealt with as on the return of a demurrer, it has been assumed, for the purposes of these proceedings, that the appellant could prove at trial each and every factual assertion that he has made in his pleadings. Thus, it is assumed for present purposes that he suffered DVT and that he could show, by evidence, that the respondents gave no warning about the condition or the means of alleviating its risks, although they well knew about the risks. Many of the cases concerned 109 Constitution, s 51(xxxi). See Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297. 110 [2004] HCATrans 345 at 63. Kirby with applications by air carriers for summary judgment have involved such assumptions, that being an approach normal to the peremptory procedure111. Fourthly (and connected to the last point), it may also be assumed that the appellant could establish a necessary causal link between the alleged acts and defaults of the respondent carriers although, as has been observed, this is a very large assumption to make in the circumstances of such a case112. Fifthly, the Warsaw Convention, in its manifestation in the Montreal No 4 Convention, provides for four authentic texts, one of which is in the English language. However, in the case of any inconsistency, it is provided that "the text in the French language" shall prevail113. A difference in the official translation of Art 17 from that appearing in the Schedule to the Carriers' Liability Act in Australia appears in the official United States version quoted by the Supreme Court of the United States in Air France v Saks114. Nothing turns on the difference. Although it has not been uncommon for judges, particularly in the United Kingdom, to make reference to the French language text for particular purposes115, no relevant point of ambiguity in the meaning of Art 17 (and specifically of the word "accident") was suggested. On the contrary, the authorities hold that "accident" has the same meaning in the French language as in the English116. Sixthly, although the primary judge was led by the approach of the parties to apply an incorrect version of the Warsaw Convention to the facts, it was common ground in the Court of Appeal, as in this Court, that the Montreal No 4 111 See eg Blansett v Continental Airlines Inc 379 F 3d 177 at 179 (5th Cir 2004). 112 DVT Litigation [2004] QB 234 at 258 [67]. 113 Warsaw Convention, closing paragraph. See Carriers' Liability Act, Sched 5. 114 470 US 392 (1985). The words "Le transporteur est responsable du dommage" are translated in the "official American translation" as "the carrier shall be liable for damage". See Saks 470 US 392 at 397 (1985). The English language translation contained in Sched 5 of the Carriers' Liability Act is more literal, namely "the carrier is liable". The same translation is accepted in England: see DVT Litigation [2004] QB 234 at 242 [4]. Nothing turns on the difference of translation. 115 eg Morris v KLM Royal Dutch Airlines [2002] 2 AC 628 at 633 [3], 634 [7], 636 116 Saks 470 US 392 at 399-400 (1985) per O'Connor J (for the Court). See also [2003] VSCA 227 at [5], [19] per Ormiston JA, [90]-[91] per Ashley AJA. Kirby Convention was the applicable one and that nothing turned on the earlier mistake117. Seventhly, although the ticket upon which the appellant travelled was issued by British Airways and the first symptoms and alleged manifestation of DVT were said to have occurred on a sector of the journey when the appellant was being carried by British Airways, no point of distinction was made, for the purposes of the appeal, between Qantas (which had carried the appellant from Sydney to London) and British Airways118. The short turn-around of the appellant's flight from Sydney to London and his return within a total of five days made the case a singularly appropriate one from the point of view of prolonged immobilisation. Under Art 17 of the Warsaw Convention, it is enough that the "accident" took place "on board the aircraft" or otherwise as there provided. The death or wounding or other bodily injury need not happen in those defined places. The respondent carriers were content to make common ground and to be treated, and to treat each other, collectively as "the carrier"119. Approach to summary relief: Similarly, there was no dispute concerning the principles that applied to the respondents' applications for summary disposition120. It was accepted that relief of the kind sought should only be extended to the respondents in the clearest case121. The appellant urged that the matter should go to trial so that the full facts might be adduced before any attempt was made to apply the law of the Warsaw Convention to them122. 117 [2003] VSCA 227 at [1] fn 2, [63]. Some care needs to be taken in considering decisions on the Warsaw Convention because of the fact that different versions of the Warsaw Convention apply. For example, the United States of America was not a party to the Hague Protocol. 118 At one stage it was suggested in argument that the carriage was a "combined carriage" within Art 31 of the Warsaw Convention, although that article appears to deal with issues presented by carriage that involves both air and non-air transport. The reliance on Art 30 (carriage performed by successive carriers) was more to the point. See especially Warsaw Convention, Art 30(2). 119 [2003] VSCA 227 at [50]. 120 Reference was made to Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; Agar v Hyde (2000) 201 CLR 552 at 575-576 [57]. 121 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 122 [2003] VSCA 227 at [80]. Kirby No reference was made in the Court of Appeal decision to the recent emphasis in England123 (and in opinions in this country124) to the effect that particular care is required "where the legal viability of a cause of action is unclear … or in any way sensitive to the facts". In the present case, the pleadings were closed. The revised particulars were complete. The journeys were clear and concluded within the space of days. A great deal of time of appellate courts has been consumed in legal argument based on factual hypotheses. Not so long ago, in most parts of Australia, the factual issues in a case such as the present would normally have been determined by a civil jury. Many Australian cases await the outcome of this appeal, chosen as a paradigm instance. In such significant litigation, there were arguments for proceeding promptly to a trial of the facts so that appellate conclusions could be based on findings derived from the evidence of witnesses rather than pleadings and particulars drawn by lawyers. Nevertheless, no complaint was made about the approach of the judges below to summary disposition. Indisputably, the right words of caution were uttered125. Approach to Warsaw Convention meaning: There was also no real contest about the approach that should be taken to interpreting Art 17 of the Warsaw Convention. First, the Convention, in its successive manifestations, is an international code governing the liability of air carriers to whom it applies126. As such, it is intended to be applied, and interpreted, so as to achieve uniformity of application. The intention of excluding the application of domestic law127 implies a purpose of excluding purely domestic approaches to the construction of contested words and phrases. If such an international approach were not taken to ascertaining the meaning of the Warsaw Convention, it would undermine the achievement of a consistent application of the text128. 123 E (A Minor) v Dorset County Council [1995] 2 AC 633 at 694. 124 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 565- 125 See especially [2003] VSCA 227 at [147]. 126 Sidhu v British Airways Plc [1997] AC 430 at 453. 127 Carriers' Liability Act, s 13. 128 Shipping Corporation of India Ltd v Gamlen Chemical Co A/Asia Pty Ltd (1980) 147 CLR 142 at 159; De L v Director-General, NSW Department of Community Services (1996) 187 CLR 640 at 675-676, 687-688; Great China Metal Industries (Footnote continues on next page) Kirby Secondly, it must be recognised that the Warsaw Convention, in its successive forms, represents the product of an international compromise. As the relevant historical material129 discloses, there have, virtually from the start, been contests not only between the interests of carriers and passengers or consignors of cargo but also between States with differing interests, having regard to the worth and expectation of their citizens and the capacity of carriers to meet claims arising out of "accidents"130. A study of the minutes of the Second International Conference on Private Aeronautical Law that preceded the adoption of the Warsaw Convention in its original form in 1929 bears out the conclusion that the text ultimately endorsed was not so much the product of considerations of principle, justice and equity as of international and domestic politics, business pressures, a consideration of the technical advances in aviation, as well as changing policy judgments and the differing approaches of municipal judges to such claims131. These considerations have continued to affect the later revisions of the text. In this respect, the Warsaw Convention is similar to many international treaties that are the products of compromise. The disparate economic interests at stake make it unsafe to approach the meaning from a traditional point of view, reflected in the assumptions of municipal law. Instead, it is important to give the words of such an instrument a broad, purposive construction132. High amongst its undoubted purposes was the intention to adopt and maintain a uniform and international regime that gave a common effect to the language in which that regime was expressed133. Co Ltd v Malaysian International Shipping Corporation, Berhad (1998) 196 CLR 161 at 176 [38], 186-187 [71], 213-214 [137]-[138]; cf SS Pharmaceutical [1991] 1 Lloyd's Rep 288 at 294. 129 See, for example, Horner and Legrez (tr), Second International Conference on Private Aeronautical Law: Minutes, (1929). 130 Lowenfeld and Mendelsohn at 546, 596. 131 Lowenfeld and Mendelsohn at 601-602. 132 James Buchanan & Co v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141 133 Morris [2002] 2 AC 628 at 677-679 [146]-[150] per Lord Hobhouse of Woodborough; see also at 633 [5], 634 [7]. Kirby Thirdly, because the Warsaw Convention is intended to have a uniform operation, in substitution for a multitude of differing outcomes affecting an international industry of ever-growing size and importance, it is imperative that domestic courts should give close attention to relevant rulings made by the courts of treaty partners. No other approach would secure a coherent body of treaty law134. This does not mean that domestic courts surrender their own constitutional obligations to decide contests, according to law, on the basis of the evidence and arguments placed before them. It simply means that such courts recognise the contestable character of most questions of interpretation, at least once they advance to the higher levels of the court system. This is as true of international treaties as of disputes over the meaning of local statutes or private texts135. Perhaps it is more so because international texts are commonly more ambiguous in their language and application. This is because of the often multifarious interests that need to be accommodated; the imperfect attempt to express complex ideas in different languages; and the differing levels of expertise and clear thinking that can influence the drafting process. It is for such reasons that, in a case such as the present, faced with a problem upon which earlier courts of high authority in other treaty States have spoken, an Australian court will be slow to adopt a different view, whilst recognising that all courts are not equal in authority and persuasiveness136 and that the barrier of language may sometimes prevent practical access to important decisions in languages other than English137. Because of the significant part played by the aviation industry of the United States of America in world-wide civil aviation and the size and number of contested claims under the Warsaw Convention decided by the courts of that country, it is inevitable that, where such courts have spoken (and particularly the 134 cf Husain 540 US 644 at 658, 662 (2004) per Scalia J. 135 News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 at 580 [42]; cf Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1136 [191]; 208 ALR 124 at 173. 136 Sidhu [1997] AC 430 cited in DVT Litigation [2004] QB 234 at 260 [77]. As well, upon some questions, courts of high authority may have spoken to different effect. 137 Thus in SS Pharmaceutical [1991] 1 Lloyd's Rep 288 at 294, 295, reliance was placed upon the decision of the Cour de Cassation of Belgium in Tondriau v Air India (1977) RFDA 193. In the present case, reference was made in argument to a decision of a German court: Volander v Deutsche Lufthansa unreported, Frankfurt am Main Oberlandesgericht, 29 October 2001. Kirby Supreme Court of the United States), other final courts, such as this, will pay special attention to their reasons because of their significance for international uniformity of the interpretation of the Warsaw Convention, viewed as a practical Fourthly, in construing an international treaty, such as the Warsaw Convention applicable to this Australian claim, regard may be had under the Vienna Convention on the Law of Treaties139 to supplementary sources in determining the meaning of a treaty provision that is ambiguous or obscure. Such sources may include the travaux préparatoires on the preparation of the treaty and materials about the circumstances of its conclusion. The availability of such materials is now not contested140. Indeed, it is now less likely to be so in Australia, given the developments in legislation141 and in the common law142 favouring purposive over purely literal approaches to interpretation. In the present case, the word "accident" is neither defined nor elaborated. So it is important that it should not be given a meaning that is unduly narrow or technical or needlessly defensive of the interests of one side to the contest, notably air carriers. The Warsaw Convention must apply to a myriad of circumstances of almost infinite variety. Whilst the travaux préparatoires show the compromises that were struck in adopting the text of the Warsaw Convention, they also indicate that the recovery by passengers of acceptable compensation for damage, consequent upon injury, as defined, was an objective of the Warsaw Convention. As the later history indicates, including at one stage the threatened denunciation of the Warsaw Convention by the United States (on the ground of inadequate provision for compensation)143, it would be a mistake to read the Warsaw Convention as being wholly unconcerned with justice to injured passengers. If a plaintiff, such as the appellant, could show that airlines with the requisite knowledge deliberately or recklessly withheld essential information from passengers (assuming that to be provable) the imposition of liability for 138 Morris [2002] 2 AC 628 at 633 [5], 634 [7]. 139 [1974] Australian Treaty Series No 2. See SS Pharmaceutical [1991] 1 Lloyd's Rep 288 at 298. 140 Sidhu [1997] AC 430 at 442. 141 Acts Interpretation Act 1901 (Cth), s 15AA and 15AB. 142 eg Bropho v Western Australia (1990) 171 CLR 1 at 20; cf Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 517-518. 143 Lowenfeld and Mendelsohn at 546-552. Kirby consequent serious damage involving injury or death would not be entirely surprising, given the overall objects of the treaty144. Fifthly, as many cases illustrate, the ultimate focus of the decision-maker must be upon the words of the Warsaw Convention. It is not upon the language of judges who seek, in their own words, to explain and elaborate the treaty text145. As Lord Hobhouse of Woodborough explained in Morris v KLM146: "Whilst it is important to have regard to the international consensus upon the understanding of the provisions of international conventions and hence to what the courts in other jurisdictions have had to say about the provision in question, the relevant point for decision always remains: what do the actual words used mean?"147 The words of such treaties, being intended to apply to circumstances as they exist from time to time, are always subject to re-examination as later circumstances throw light on their meaning148. However, it is a serious mistake to ignore or down-play the language, structure and apparent purpose of the text149. Ultimately, whatever help may be given from other sources, interpretation of contested language is a text-based activity150. Specifically, judicial exegeses may not replace the language of Art 17. Courts may give guidance. However, they cannot substitute judicial words for the words of the international agreement which, in this case, the Australian Parliament, within powers that are not disputed, has declared to be part of the law of this country151. 144 Warsaw Convention, Art 25. 145 DVT Litigation [2004] QB 234 at 260 [78] per Judge LJ; cf [2003] VSCA 227 at 146 [2002] 2 AC 628 at 677-678 [147]. 147 With reference to Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328; James Buchanan [1978] AC 141; Fothergill v Monarch Airlines Ltd [1981] AC 251; Sidhu [1997] AC 430. 148 Morris [2002] 2 AC 628 at 668-669 [122]-[123], 678-679 [149]. 149 Kotsambasis v Singapore Airlines Ltd (1997) 42 NSWLR 110 at 114. 150 Trust Co of Australia Ltd v Commissioner of State Revenue (2003) 77 ALJR 1019 at 1029 [68]; 197 ALR 297 at 310; Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 78 ALJR 585 at 602 [87], 606 [105]; 205 ALR 1 at 24, 29. 151 DVT Litigation [2004] QB 234 at 261 [85] per Kay LJ. Kirby Sixthly, it is inevitable that, in giving meaning to the contested language of an international instrument, drawn in a form and expressed in a language by a drafter who is not of the common law tradition152, cases will arise that are close to the borderline that distinguishes claims that fall within from those that fall outside the Warsaw Convention's operation153. This is an inevitable feature of the construction of contested treaty language. It is illustrated in the divided decisions of national final courts. Avoiding differences in every case is impossible, given the nature of the task. Many of the foregoing considerations, like many of the canons of statutory interpretation applied by common law courts, tug the mind in opposite directions. Thus, deference to international comity will sometimes appear to be in conflict with the ultimate judicial duty to give meaning to the words of the treaty. What one judicial observer regards as ambiguous or obscure, mandating an appeal to extrinsic materials, another will see as clear and incontestable, demanding but one outcome based on the text. The most that the foregoing affords is a list of considerations that the decision-maker will keep in mind as the competing factors are weighed, leading to an outcome. The most important of the principles that distinguish this category of construction from most others is the special effort that should be paid to achieving uniformity of approach to the meaning of an international treaty. The price exacted for the building of the international rule of law is a proper attempt on the part of municipal judges, who thereby exercise a kind of international jurisdiction154, to perform tasks of interpretation, so far as possible, in ways that are compatible with the decisions of respected courts of high authority in other lands, struggling with the same or similar problems155. 152 [2003] VSCA 227 at [96]. 153 cf Rosman v Trans World Airlines Inc 34 NY 2d 385 at 399 (1974), cited in Morris [2002] 2 AC 628 at 641 [20]; DVT Litigation [2004] QB 234 at 261 [83] per 154 Al-Kateb (2004) 78 ALJR 1099 at 1131 [168]; 208 ALR 124 at 167, citing Brownlie, Principles of Public International Law, 5th ed (1998) at 584. See also Reference re Succession of Québec [1998] 2 SCR 217 at 234-235 [20]-[22]. 155 In this I agree with the comment of Scalia J in Husain 540 US 644 at 658, 662 Kirby If the outcome derived by these techniques sometimes appears unjust to local litigants, the injustice may be called to notice by the courts concerned156. the Sufficient criticisms by courts and others may ultimately enliven cumbersome process of treaty re-negotiation and amendment or national supplementation of treaty rights. This has happened in the past with the Warsaw Convention, as the several schedules to the Carriers' Liability Act illustrate. What is impermissible is an attempt to manipulate the language of the international treaty to avoid an outcome that seems harsh by contemporary domestic perspectives. Few developments would so undermine the growing development of international law as this. The meaning of "accident" Ordinary meanings of the word: The word "accident", appearing in Art 17, is a common word of everyday speech in the English language. It is not a word with a technical or peculiar legal meaning, at least outside specific statutory contexts. It follows that a court, asked to interpret the word appearing in Art 17, will have regard to the usual sources: its own understandings and experience with language; dictionary definitions; and (where they exist) judicial elaborations appearing in cases that bear some analogy. Ordinary experience teaches that "accident", whether as a noun or adjective ("accidental") can commonly have different meanings, depending on the context. Thus the context will sometimes show that the word is used to mean an unintended event or happening – such as an accidental, as distinct from a deliberate, event. In other cases, the word will imply that the occurrence has occurred by the operation of chance, as distinct from by design or prior planning. Such distinctions have been noticed in judicial authority, including that referring to Art 17 of the Warsaw Convention157. Dictionary definitions also confirm this differential use of the word, rendering it essential to have regard to the context in order to establish whether one or both meanings are intended. Thus, the Macquarie Dictionary158 gives as relevant meanings "1. an undesirable or unfortunate happening; casualty; mishap. 2. anything that happens unexpectedly, without design, or by chance. 3. the operation of chance … 4. a non-essential circumstance; occasional 156 As it was in SS Pharmaceutical [1991] 1 Lloyd's Rep 288 at 306-307; cf [2003] VSCA 227 at [27]. 157 See Husain 540 US 644 at 651 fn 6, 657 (2004). 158 Federation ed, (2001), vol 1 at 11. Kirby characteristic". The New Shorter Oxford English Dictionary159 gives as the primary meaning "[a] thing that happens". The secondary meaning is given as "[c]hance, fortune". Other dictionaries offer definitions making repeated reference to the necessity of an incident, event or mishap160. The dictionary definitions confirm my own understanding of the meaning of the word. Allowing that it may connote unintended, unplanned or unfortunate happenings, the common thread in the contemporary meanings of the word "accident" in the English language is found in the requirement for a happening, a mishap or events of various kinds. In ordinary parlance, the absence of a happening, mishap or event may be an "occurrence". However, depending on the context, it will not usually qualify as an "accident". Analogous court opinions: Reminding myself once again of the primacy of the French language text161 (but also that no difference is said to exist in the French and English meanings162) and remembering the need to avoid parochial judicial analogies, it is confirmatory of the use of the word in everyday speech to notice what senior judges have said about it. Sometimes the context will show that the word "accident" is used to mean an unintentioned event or happening – such as an accidental as distinct from deliberate event. In other cases, the word will imply that the occurrence in question has occurred by the operation of chance, as distinct from by design or planning. Such distinctions have been noticed in judicial authority, including that referring to Art 17 of the Warsaw Convention. Thus, in Saks, O'Connor J 159 (1993), vol 1 at 13; cf DVT Litigation [2004] QB 234 at 247 [24]. 160 Thus the Encarta World English Dictionary, (1999) at 10 gives as the primary definition "the way things happen without any planning, apparent cause or deliberate intent". The secondary definition is "a collision or similar incident involving a moving vehicle, often resulting in injury or death". There are subsidiary definitions referring to events and incidents. 161 The French language text of Art 17 reads: "Le transporteur est responsable du dommage survenu en cas de mort, de blessure ou de toute autre lésion corporelle subie par un voyageur lorsque l'accident qui a causé le dommage s'est produit à bord de l'aéronef ou au cours de toutes opérations d'embarquement et de débarquement". See Saks 470 US 392 at 397 fn 2 (1985). 162 The New Shorter Oxford English Dictionary points out that the English word originated from the identical French word, both words being derived from the Latin accidere through the present participle. See also Encarta World English Dictionary, (1999) at 10, which states that the word "accident" entered the English language in the fourteenth century. Kirby (writing the opinion of a unanimous Supreme Court163) quoted with approval the observation of Lord Lindley in Fenton v J Thorley and Co164: "The word 'accident' is not a technical legal term with a clearly defined meaning. Speaking generally, but with reference to legal liabilities, an accident means any unintended and unexpected occurrence which produces hurt or loss. But it is often used to denote any unintended and unexpected loss or hurt apart from its cause; and if the cause is not known the loss or hurt itself would certainly be called an accident." In this Court, in Australian Casualty Co Ltd v Federico165, it became necessary to interpret an insurance policy providing for indemnity for disability defined to mean "bodily injury … caused by an accident". The majority reasons of Wilson, Deane and Dawson JJ cited and applied Lord Lindley's definition in Fenton. Their Honours used the word "mishap" as a synonym for "accident"166. They gave a number of illustrations involving an injury caused by an "accident". All of the illustrations involved a distinct happening or event. In none of the instances cited in Federico was it suggested that an absence of a happening or event could constitute an "accident". These meanings, arising in different contexts, do not, of course, control the construction of the word "accident" appearing in Art 17 of the Warsaw Convention. However, they serve to affirm, as O'Connor J put it in Saks, that an "accident" normally connotes a mishap, happening or event. The Saks definition: In Saks167, O'Connor J accepted that the word "accident" in Art 17 of the Warsaw Convention should be given a broad definition in keeping with the multifarious cases to which the Convention is bound to apply. However, for various reasons, her Honour concluded (and the Court agreed) that "liability under Article 17 of the Warsaw Convention arises only if a passenger's injury is caused by an unexpected or unusual event or happening that is external to the passenger"168. 163 470 US 392 at 398 (1985). 164 [1903] AC 443 at 453. 165 (1986) 160 CLR 513. 166 (1986) 160 CLR 513 at 527, 528. 167 470 US 392 at 404-405 (1985). 168 Saks 470 US 392 at 405 (1985). Kirby The need for a broad and flexible application of this definition is clear. Thus, its application has to be broad enough to encompass deliberate torts committed on or near an aircraft by terrorists or fellow passengers169. To this extent, the word "accident" is certainly expanded beyond one of its meanings in everyday speech, namely that which involves non-deliberate conduct. However, drawing on the language, structure and history of the development of the Warsaw Convention – and authority to that time on its meaning – the decision in Saks demands three elements to constitute an "accident" within Art 17. These are (1) a cause separate from the "injury" itself; (2) an "event or happening" that is unexpected or unusual; and (3) an event that is external to the passenger. The reasoning in Saks has been applied in many courts since it was decided170. The appellant in this case was ambivalent about O'Connor J's definition. He said he could still succeed within it; but he criticised it as unduly restrictive in its insistence on an "event or happening". The accident and injury are separate: This Court should follow the definition in Saks. It should do so in relation to the first two elements of O'Connor J's definition because they are clearly correct. It should do so in relation to the third specified element, because it has often been applied and the appellant did not contest it. As to the differentiation between the "accident" and the "injury", a simple examination of the text of Art 17 of the Warsaw Convention confirms the deliberate inclusion of this distinction in the definition. Article 17 delineates "accident" and "injury" to the passenger along the conventional lines of cause and effect. The Article obviously postulates such a differentiation. The "injury" is personal to the passenger. It is consequential upon the "accident". In the text, the two are separate and sequential. It is the duty of courts, giving meaning to the text, to keep them so. "Accident" involves an event or happening: Similarly, the reasoning in Saks supports the proposition that, used in this context, "accident" connotes an "unexpected or unusual event or happening". Perhaps "unusual" is, as the primary judge in this case suggested, contestable. However, certainly the treatment of "accident" in this context as an "unexpected event, mishap or happening" is fully sustained. As O'Connor J pointed out in Saks, the differentiation between the reference to "accident" in Art 17 (dealing with bodily injury suffered by a passenger) and "occurrence" in Art 18 (dealing with 169 Saks 470 US 392 at 405 (1985). 170 See, for example, Morris [2002] 2 AC 628 at 655 [71]; DVT Litigation [2004] QB Kirby destruction or loss of baggage or goods) indicates that the distinction is a deliberate one. Otherwise, the more neutral and common word "occurrence" would have been used. The distinction is certainly clear in the French language text. It must therefore be given effect171. Moreover, in so far as there is an ambiguity, and regard is had to the history of the development of the Warsaw Convention, that history shows that the differentiated insertion of the word "accident" in Art 17 was deliberate. The original draft made no such distinction172. It follows that to subsume "accident" with a mere "occurrence" would defy the text. The drafting history as well as the apparent intention of those who adopted Art 17 in its present form confirm this impression. These elements of history, read with later attempts to broaden liability on the ground that the notion of "accident" was too narrow173 make the present point ever plainer. The word "accident" has survived into the Montreal No 4 Convention as a decision of the relevant States parties to adhere to a deliberately narrow word, imposing a specific and additional requirement on those passengers making a claim for damage caused to them in the defined circumstances. The happening of an "injury" or of "damage" or death to the passenger is not enough. An "accident" must additionally be shown. That connotes a separate, distinct and sequential event or happening, just as Saks held. Non-events and non- happenings do not qualify as "accidents" in this context. Events external to the passenger: It will be remembered that the third element of the definition of "accident" adopted in Saks is that the qualifying event or happening must be "external to the passenger". This remark was a part of the definition necessary to the facts in Saks. That case concerned a pathological event that occurred internally to the passenger, Ms Saks. The event was in the nature of a physiological change happening within the mechanisms of her left ear. Allegedly, the change was occasioned by the operation of the aircraft's pressurisation system during its descent in its flight from Paris to Los Angeles. Whatever occurred caused Ms Saks to become permanently deaf in her 171 See Saks 470 US 392 at 397-398 (1985). In the French text of Art 17 the Convention reads, relevantly: "lorsque l'accident qui a causé le dommage". In Art 18 the text reads: "lorsque l'événement qui a causé le dommage" (emphasis added). 172 Saks 470 US 392 at 401 (1985). The original draft made the carrier "liable for damage sustained during carriage". 173 Saks 470 US 392 at 403-404 (1985). The reference is to the debates at Guatemala City International Conference on Air Law of 1971. Kirby left ear. Yet could it be said that she suffered an internal "accident" (the pathological change within the ear mechanism) which was both "unexpected", "unusual" and "an event or happening" separate from the consequent "injury" and "damage", namely deafness? The Supreme Court of the United States held that it could not. Clearly, it was influenced in its decision by a series of cases in which courts in the United States found that internal physiological changes were not "accidents" within Art 17 of the Warsaw Convention174. One of those cases175, which involved rejection of a claim by a passenger who contended that sitting in the airline seat during a normal flight had aggravated thrombophlebitis, concerned factual circumstances in some ways similar to the claim of the appellant in relation to DVT. The Supreme Court insisted that the "accident" must be external. There is not a lot of textual support in the Warsaw Convention for this conclusion. On the contrary, the text of Art 17 uses the word "accident" as the necessary cause of the "damage so sustained". Thus, arguably, if such "damage" were sustained by an internal "accident" (should that be possible) so long as it happened "on board the aircraft" or "in the course of" the specified "operations", that would be enough. In my view, the happening or event in such special and temporal circumstances would be sufficient to attract the liability of the carrier. Such an approach to "internal" accidents is not unknown in the law, at least within Australia. Thus in Kavanagh v The Commonwealth176, an appeal concerning the meaning of the Commonwealth Employees' Compensation Act 1930 (Cth), the majority of this Court177 held that there could be "injury by accident" within s 9(1) of the Act although the injury was not attributable to any external agency, but resulted from some force or pressure exerted from within the worker's own body. The worker in that case, whilst at work, became ill. He vomited and was found to have suffered a ruptured oesophagus as a result. The cause of the vomiting could not be explained. Soon after, he died in hospital His widow recovered from conditions traced to the internal rupture. compensation. This Court held that there had been a "personal injury by 174 Saks 470 US 392 at 405 (1985) and cases there cited. 175 See Scherer v Pan American World Airways, Inc 54 App Div 2d 636; 387 NYS 2d 580 (1976), briefly described in Saks 470 US 392 at 405 (1985) to hold that "sitting in airline seat during normal flight which aggravated thrombophlebitis not an 'accident'". 176 (1960) 103 CLR 547. 177 Dixon CJ, Fullagar and Menzies JJ; Taylor and Windeyer JJ diss. Kirby accident" arising in the course of the employment. The employer's argument178, that it was necessary to show some external incident of the employment as a contributing factor to the injury, was not accepted by this Court. Although the Warsaw Convention is far distant from this line of Australian compensation cases, the point of controversy is not so different. The Convention, it is true, postulates the existence of an "accident" whereas, in Kavanagh the word appears in the adverbial clause "by accident" which the Court there construed. I will not pursue this issue further. The appellant did not raise it in his arguments in the courts below. Nor, when it was raised during submissions, was it embraced by the appellant179. In such a sharply contested case competently presented, I am content to accept the third element of O'Connor J's definition in Saks. I am encouraged to do so by the way in which the definition has been assumed by all others who have considered it to be correct and especially because the appellant has been content to proceed on that footing. This is the kind of circumstance where a judge in a national court should sink personal hesitations in deference to a strong trend of past judicial authority. No "accident" has been pleaded The start of analysis: Once the foregoing point has been reached, and the Saks definition of "accident" accepted by this Court, the difficulties of stretching the language of Art 17 of the Warsaw Convention to fit the claim of the appellant, as pleaded, are manifest. When it is accepted that the facts of the case pleaded must qualify as an "accident" and that the appellant must show that his injury was caused by an unexpected or unusual event or happening external to his person, none of the facts alleged in the appellant's case, whether taken separately or in combination, constitutes an "accident" of the required kind. The facts pleaded represent a description of the "conditions" existing on the applicable flights. It may be accepted that the appellant did not know about DVT or the protective measures that could minimise the risk of its onset. To that extent, the condition of DVT and its sequelae may have been unexpected or unusual so far as the appellant was concerned. However, this is not sufficient to turn such circumstances, essentially passive, into an "event or happening" so as to constitute the "accident" essential to recovery under Art 17. 178 (1960) 103 CLR 547 at 549-550; cf Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310; Kennedy Cleaning Services Pty Ltd v Petkoska (2000) 200 CLR 286. 179 [2004] HCATrans 490 at 14-18, 776-778. Kirby Nor were the design of the aircraft seats, the distance between them, the consequential obstruction to movement, the presence of trolleys in the aisles, the regular service of alcoholic beverages and coffee and the announcements to remain seated, whether separately or in conjunction, "an event" or "events". It follows that there was no happening or mishap in this context. Moreover, there was nothing "unexpected" or "unusual" about any of the stated circumstances. It is not alleged that, in any way, any of them departed from the norm of international travel in economy class as it existed at the time of the appellant's carriage. On the contrary, the "flight conditions" of which the appellant now complains, including the alleged failure to warn him and other passengers of the risk of DVT and means of avoiding it, are alleged in the appellant's pleading themselves to have been "standard conditions of and procedures relating to passenger travel on prescribed flights"180. If it could be proved that Qantas and British Airways had the knowledge and expectations concerning DVT and its effect on passengers, this would not convert their failure to warn and inform about DVT into an "event" or "happening". Still less would such failure be an event or happening that was "unexpected" or "unusual". The combination of circumstances relied upon, and their continuous existence during the flight, do not alter this conclusion. The requirement of the Warsaw Convention that there must be an "accident", being an event or happening existing in space and time separate from the passenger, imposes the obligation to plead and prove more than the existence of circumstances inherent in the ordinary conduct of carriage by aircraft at the time that the damage and injury or death occurred. It follows that the judges of the Supreme Court of Victoria were correct to conclude that the omission of the respondent airlines to warn their passengers of the risk of DVT and to advise them of preventive measures that they could take, even if proved, would not, as such, constitute an "accident" within Art 17. Moreover, the majority of the Court of Appeal was correct to conclude that the pleaded combination of positive and negative conditions on board the relevant aircraft, together with their persistence throughout the flights, could not convert the alleged failure to warn into an "accident" within Art 17. Criticisms of the conclusion: The appellant criticised this conclusion on a number of grounds. He adhered to his submission that omissions or "non-events" could in some circumstances constitute an "accident" within Art 17 of the Warsaw Convention. 180 Statement of Claim, par 11(a). See also Amended Defence, par 8(a). Kirby There is no doubt that the metaphysical distinction between acts and omissions can frequently be a disputed one. Viewed from one perspective, a sequence of events might be described as an "act" or an "omission". Thus the failure of a crew member on board an aircraft to engage essential equipment, so as to maintain a proper pressure of oxygen for the duration of a flight, might be classified as an "omission" in one sense. But it would also clearly be capable of classification as a commission or an act, event, happening or mishap. Certainly, this would be so if the engagement of the equipment was an expected or usual event for the flight. Likewise, the omission to stow baggage safely in an overhead container or to ensure that a loaded container was properly closed and stabilised before take-off or landing would be an omission in one sense. But it would also (depending on the circumstances) be capable of constituting an unexpected or unusual event. As was said in Saks181, flexibility is required in the application of the word "accident" to differing facts. Cases have arisen in which courts have held that an "accident" has occurred following conduct that might on one view be described as an omission182. It is unnecessary for this Court to decide its view on the correctness or otherwise of the decisions in such cases. In many of them, it is possible to explain the conclusion that an "accident" was shown by viewing the impugned conduct on the part of the flight crew as an affirmative event. Where usual or standard procedures at the time required the engagement of particular equipment, or the checking and closure of containers, the failure to act in such ways can readily be viewed as "accidental" and the product of an "accident". However, in every case, it remains necessary to plead and prove facts that rise to the description of an "accident". It is not enough to plead and prove the conditions or circumstances that existed which do not answer to this description, as it has been explained in Saks. Article 25 and self-assessment: A most telling point made for the appellant was his argument that Art 25 of the Warsaw Convention (as appearing in the Montreal No 4 Convention) specifically contemplates omissions on the part of a carrier, its servants or agents. Thus, it was argued, if such omissions, occurring with intent to cause damage or recklessly and with knowledge that damage would probably result, produced the consequence that the limits on liability of carriers specified in Art 22 (giving effect to Art 17) were lifted, it would be curious if the "accident" of which Art 17 speaks did not also include such "omissions". 181 470 US 392 at 406 (1985). 182 cf DVT Litigation [2004] QB 234 at 253-255 [47]-[55]. Kirby Yet upon analysis this point melts away. There is no doubt the "events" and "happenings" that may constitute "accidents" within Art 17 can include "omissions" as well as affirmative acts. The instances already cited demonstrate this. But it is still necessary, if recovery is to occur for bodily injury suffered by a passenger, that the facts pleaded and proved should answer the description of an "accident" that has "caused the damage so sustained" at the specified place and within the specified time. Otherwise, an "omission", such as a so-called "pure omission", will not engage Art 17. Article 25 lifts the restriction which Art 22, read with Art 17, imposes on the recovery for damage from a carrier. However, Art 25 does not purport to remove the requirement to plead and prove "the accident" to which Art 17 refers. That requirement remains and, as has been shown, it was deliberately added as a precondition to recovery applicable to a claim in respect of the death or wounding of a passenger or any other bodily injury suffered by a passenger. The appellant challenged what he suggested was the undue deference exhibited by the United States cases towards the determinations by carriers themselves (or their regulatory agency) of the standard to constitute "the usual, normal, and expected operation of the aircraft"183. Thus, the appellant suggested that it was a mistake to deny the existence of an "accident" simply because airlines, in adopting the configuration of their seating arrangements, food and beverage services, public announcements and provision of written and oral warnings about DVT, had complied with industry practice at a given time (or even with any requirements of government agencies that then prevailed). The appellant suggested that inherent in this approach was a view that it could be left to the carriers themselves, or their regulatory bodies, to determine their own liability for "accidents". This, the appellant said, was incompatible with the imposition of the objective standard of the Warsaw Convention which judged whether an "accident" had occurred objectively and not whether it had occurred according to the views and practices of the relevant carriers, carriers generally or their regulatory agencies. This submission had resonances with the earlier rejection by this Court, in the context of liability for negligence at common law, of the earlier law that exempted medical practitioners from liability in negligence if they conformed to "a practice accepted at the time as proper by a responsible body of medical opinion even though other doctors adopt a different practice"184. 183 Saks 470 US 392 at 406 (1985). 184 Sidaway v Governors of Bethlem Royal Hospital [1985] AC 871 at 881 per Lord Scarman, describing the so-called Bolam test: see Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 at 586-587; [1957] 2 All ER 118 at 121, disapproved in Rogers v Whitaker (1992) 175 CLR 479 at 484. Kirby However, this point also collapses under analysis. It is true that, in judging whether an "accident" has occurred, attracting Art 17 of the Warsaw Convention, it could not be left to individual carriers, carriers generally or their regulatory agencies to determine that fact or the existence of an essential ingredient. However, this was not the way that Saks or any of the cases that have followed it, have used airline industry practice. Certainly in Saks, that use was confined to demonstrating that any event or happening that occurred was not part of "routine travel procedures" at the time, objectively viewed. To qualify as an "accident", the facts and circumstances pleaded and proved had to take the case outside the routine, ordinary, normal procedures of flying. They must render the facts and circumstances "an unexpected or unusual event or happening that is external to the passenger"185. Approached in this way, there is no offence to the principle that the Warsaw Convention must be construed objectively without permitting a carrier, carriers generally or regulatory agencies to fix in-flight standards. Those standards are not immutable. The history of the expansion of air carriage and of improved passenger and cargo safety over the course of the twentieth century bears witness to the ever-improving standards that have been attained. Today, if a flight crew omitted to provide warnings to passengers about DVT, and failed to follow any settled requirements to make announcements and to display instructive films about the subject in defiance of carrier instructions and regulatory requirements (if any), such refusal or oversight might amount to an "accident". Almost certainly, it would involve the failure of the flight crew to comply with carrier protocols mandating announcements and other warnings. It would be an unexpected or unusual event. This is not what the appellant has pleaded in the present case. His complaint that the courts in the past have shown an undue willingness to allow carriers and others to determine the warnings and information concerning DVT to such considerations has been confined to that element which is prerequisite to the existence of an "accident", namely that the event or happening was "unexpected or unusual" at the time the "accident" was alleged to have occurred. is unpersuasive. The reference Reliance on Husain: Much of the appellant's argument in this Court was based on a decision of the Supreme Court of the United States since Saks, namely Husain involved a claim arising out of the death of a passenger on a flight from Athens to San Francisco. The passenger suffered from severe asthma. His 185 Saks 470 US 392 at 405 (1985). Kirby wife, discovering that they had been seated in the economy cabin only three rows in front of the smoking section requested re-seating by a flight attendant. The latter told the wife to "have a seat". The wife persisted with her request and was told, incorrectly, that the cabin was "totally full". She was informed that the attendant was "too busy" to help. The passenger suffered extreme breathing difficulties during the flight, collapsed and died. His widow brought proceedings for damages against the carrier. The carrier asserted that the circumstances did not disclose an "accident" within Art 17 of the Warsaw Convention, as applicable to claims brought in the United States187. The United States District Court held that the flight attendant's refusal to re-seat the passenger amounted to an "accident"188. The Court of Appeals for the Ninth Circuit affirmed this decision189. By majority190, the Supreme Court of the United States upheld the decision, confirming the claim as within the Convention. It was not in dispute in Husain that the definition of "accident" in Saks should be applied; that attention should be paid to relevant national and international authority; and that care should be taken, so far as possible, to ensure the uniform application of the Warsaw Convention by the courts of the States parties to it. The majority of the Supreme Court concluded that the case involved "unusual or unexpected" conduct on the part of the carrier. I agree with the submission for Qantas that Husain was not a case about mere inaction. The Supreme Court in Husain recognised, as Saks had done earlier, that "[a]ny injury is the product of a chain of causes"191. As the majority explained192: "Petitioner's focus on the ambient cigarette smoke as the injury producing event is misplaced … [P]etitioner's 'injury producing event' inquiry – which looks to 'the precise factual "event" that caused the injury' – neglects the reality that there are often multiple interrelated factual events that combine to cause any given injury … In Saks, the Court recognized that any one of these factual events or happenings may be a link in the chain of causes and – so long as it is unusual or unexpected – could constitute an 'accident' under Article 17." 187 See Husain 540 US 644 at 646 fn 1 (2004). 188 Husain v Olympic Airways 116 F Supp 2d 1121 at 1134 (2000). 189 Husain v Olympic Airways 316 F 3d 829 at 837 (9th Cir 2002). 190 Thomas J for the Court; Scalia J (with whom O'Connor J agreed as to part) dissenting. Breyer J took no part in the decision. 191 Husain 540 US 644 at 652 (2004), citing Saks 470 US 392 at 406 (1985). 192 Husain 540 US 644 at 653 (2004). Kirby For the majority in Husain, the flight attendant's refusal to assist on three separate occasions was also a "factual 'event'"193. The "rejection of an explicit request for assistance would be an 'event' or 'happening' under the ordinary and usual definitions of these terms"194. By the time that Husain was decided by the Supreme Court of the United States, judicial reasons were available to United States courts in the DVT litigation being conducted in England195. The Supreme Court also had the reasons of the Victorian Court of Appeal in this Australian case196. The majority in Husain did not consider the conclusion in either of those proceedings to be inconsistent with their reasons, itself a significant comment197. They pointed to the "substantial factual distinctions between these cases" and cited the express statement to that effect recorded in the English decision. The latter had laid emphasis upon the refusal of the flight attendant to provide an alternative seat that formed "a more complex incident" whereby the passenger was exposed to smoke in circumstances properly described as "unusual and unexpected"198. The dissenting opinion in the Supreme Court was, however, unimpressed by such factual distinctions. Thus, Scalia J interpreted the majority's holding that "mere inaction can constitute an 'accident' within the meaning of the Warsaw Convention"199. His Honour (with the support of O'Connor J who had written the Supreme Court's opinion the approach adopted by in Saks) preferred Ormiston JA in the Court of Appeal in the present case and by Lord Phillips of Worth Matravers MR in DVT Litigation. By these approaches, inaction on the part of the flight crew "is not an event; it is a non-event. Inaction is the antithesis of an accident."200 193 Husain 540 US 644 at 653 (2004). 194 Husain 540 US 644 at 655 (2004). 195 Husain 540 US 644 at 655 fn 9, 659 (2004); see DVT Litigation [2004] QB 234. 196 Referred to in Husain 540 US 644 at 655 fn 9, 660 (2004); see [2003] VSCA 227. 197 Husain 540 US 644 at 655 fn 9 (2004). 198 DVT Litigation [2004] QB 234 at 254 [50]. 199 Husain 540 US 644 at 658 (2004). 200 DVT Litigation [2004] QB 234 at 247 [25], cited by Scalia J in Husain 540 US 644 Kirby It is unnecessary for this Court to choose between the conflicting opinions expressed in Husain. As was predicted in Saks, and is self-evident, cases will present that are at the borderline of establishing an "accident" or failing to do so. There were peculiar features of the confrontation between the wife, the passenger and the flight attendant in Husain that arguably lifted that case from classification as a "non-event" into classification as an unexpected or unusual happening or event and hence an "accident". Especially is this so because, in Husain, the District Court found that the conduct of the flight attendant was in "blatant disregard of industry standards and airline policies" applicable at the time201. Husain Conclusion: is distinguishable: Husain, a case about confrontation and refusal, is clearly distinguishable from the present case on the facts pleaded by the appellant. The Supreme Court of the United States was careful to note that the "conclusion" it had reached was "not inconsistent" with the decision in DVT Litigation, a formula noticed by the dissentients202. Any criticism of the logic of the reasoning of the two opinions in Husain is not this Court's business. It is enough to be satisfied, as I am, that there is nothing in Husain that indicates a reversal of the influential definition of "accident" adopted by the Supreme Court in Saks. On the contrary, that definition was applied. Moreover, even the dissentients recognised the way in which affirmative and unusual action by flight crew could change an omission to act (or "non-event") into an event or happening. They favoured remanding the proceedings to the District Court to consider whether the flight attendant's misrepresentation about the plane being "full", independent of any failure to re-seat the passenger, was an "accident that caused [his] death"203. In the present case, it is not alleged that there was any similar confrontation between the appellant and either the Qantas or British Airways flight attendants or staff. Nothing is pleaded that was peculiar or special to the appellant. It is not alleged that the conditions on board the aircraft represented, in any way, a departure from those to be expected or normal at the time. On the contrary, the opposite is pleaded. It follows that, in my view, nothing in Husain assists the appellant in this appeal. Nothing in the reasoning of the majority suggests the need to correct the conclusion to which the majority of the Court of Appeal came in this case. 201 116 F Supp 2d 1121 at 1134 (2000). 202 540 US 644 at 661 (2004) per Scalia J. 203 Husain 540 US 644 at 667 (2004) per Scalia J. Kirby Consistency with international authority North American cases: Accepting that it is highly desirable, and one of the purposes of the Warsaw Convention, that there be uniformity and certainty in the application of the Convention in the courts of different States parties204, it is instructive also to consider whether the foregoing conclusion, arrived at by my own analysis, would involve any departure from the approach to like claims on the part of courts in other jurisdictions. Far from indicating a departure, consideration of the decisions so far reached in DVT litigation in other countries indicates that the conclusion reached by the majority in the Court of Appeal in this case conforms to the approach of courts of other countries. It is appropriate to begin with cases in the United States because the Supreme Court of that country has now twice, albeit without full consideration, passed upon the issue of DVT claims. It did so (as has been shown) in the comment in Husain concerning the conclusion of the English and Australian litigation in DVT claims to that time. But there is more than this. In Blansett v Continental Airlines Inc205, the Court of Appeals for the Fifth Circuit considered the claim of a plaintiff who alleged against a carrier that he had suffered DVT during the course of a flight. Reference was made to the absence from federal flight safety regulations of any requirement that air carriers should warn passengers of the risk of DVT or of the means of avoiding or minimising that risk206. The Court of Appeals considered the applicability of the decision in Husain. It distinguished that case on the footing that the Supreme Court has held that "some kinds of inaction can constitute an 'accident'"207. However, it held that Husain was not an instance of "mere inertia" that would represent a "non-event"208. It was one that involved "an event both unexpected and unusual". Addressing the case before it, the Court in Blansett concluded209: 204 See these reasons at [140]-[143]. 205 379 F 3d 177 (5th Cir 2004). 206 379 F 3d 177 at 182 (5th Cir 2004). 207 379 F 3d 177 at 181 (5th Cir 2004). 208 One judge of the Court of Appeals (Judge Dennis) disagreed with the distinction between "mere inertia" and "inertia plus unusual circumstances" but regarded the difference as immaterial. See Blansett 379 F 3d 177 at 181 fn 4 (5th Cir 2004). 209 379 F 3d 177 at 182 (5th Cir 2004). Kirby "[N]o jury may be permitted to find that Continental's failure to warn of DVT constituted an 'accident' under article 17. Continental's policy was far from unique in 2001 and was fully in accord with the expectations of the FAA. Its procedures were neither unexpected nor unusual." Whilst this Court's decision in the present case stood for judgment, the parties informed us that the Supreme Court of the United States had denied certiorari to Mr Blansett. Although this does not affirm the reasoning of the Court of Appeals, it suggests an unwillingness on the part of the Supreme Court to question the conclusion reached. Meantime, in other cases in the United States, courts have held that the failure of airlines to warn of the risk of DVT, at a time comparable to that of the appellant's flight, did not constitute an "accident"210. In Canada, in McDonald v Korean Air, a passenger's DVT-based claim was rejected at first instance due to his failure to establish "accident"211. The Ontario Court of Appeal (which included Abella J212) unanimously dismissed an appeal from that decision, without extended reasons213. An application for leave to appeal to the Supreme Court of Canada was refused214. English cases: A similar conclusion was reached, unanimously, by the Court of Appeal of England and Wales in DVT Litigation215. That Court affirmed the decision at first instance of Nelson J216 which had held that, on the basis of an agreed "matrix of facts", the claimants did not have an entitlement under Art 17 of the Warsaw Convention for DVT allegedly suffered by them. In particular, Nelson J concluded that the facts did not disclose an "accident" for the purposes of Art 17. The Court of Appeal affirmed that conclusion. It held that an "accident" had to be an event or happening external to the passenger that impacted on the passenger's body in a manner causing death or bodily injury. It upheld the requirement that such an event had to be unusual, unexpected or untoward, although it could be fleeting or might continue for an extended period. 210 eg Rodriguez v Ansett Australia Ltd 383 F 3d 914 (9th Cir 2004). A petition for certiorari to the Supreme Court of the United States was subsequently denied. 211 (2002) 26 CCLT (3d) 271. See DVT Litigation [2004] QB 234 at 257 [65]. 212 Subsequently a Justice of the Supreme Court of Canada. 213 McDonald v Korean Air (2003) 171 OAC 368. 214 McDonald v Korean Air (2003) 191 OAC 398 (note). 216 [2003] 1 All ER 935. Kirby In its reasons, the Court of Appeal rejected the suggestion that inaction, being the operation of allegedly cramped seating and other cabin conditions that were integral and permanent features of the aircraft and carriage throughout the flight at the time it occurred, was capable of amounting to an "event" so as to constitute an "accident". Lord Phillips MR, in the context of the Warsaw Convention, rejected the notion that "inaction itself can ever properly be described as an accident"217. He considered that his conclusion was reinforced218 by the fact that Art 17 postulated that the accident must "take place" at the designated places and within the specified times. Something that does not "take place" cannot amount to the unexpected or unusual event or happening that is necessary to constitute an "accident". The Court of Appeal also accepted the inevitability of borderline cases. Thus, the Master of the Rolls referred to the decisions of the District Court and Court of Appeals in Husain (which had not then reached the Supreme Court). He expressed himself as having no difficulty with "the result in this case", although he questioned some of the reasoning219. Clearly, he saw the case as one of "refusal to provide an alternative seat" which thus "formed part of a more complex incident"220. His Lordship's analysis was persuasive for the majority of the Court of Appeal in the present case. Acknowledging the judgment that is required by the facts pleaded or proved in every case, I too would follow it. As the law stands in England on this subject, it presents a barrier to claims under the Warsaw Convention such as those brought to this Court by the appellant. The House of Lords has granted the plaintiffs in the English DVT litigation leave to appeal from the judgment of the Court of Appeal. The decision of their Lordships is not yet available. Other decisions: The respondent airlines drew to notice the decisions of other courts at first instance that have rejected claims similar to those of the appellant as being outside the requirement of "accident" contained in Art 17 of the Warsaw Convention221. In none of these cases has the plaintiff succeeded. 217 DVT Litigation [2004] QB 234 at 247 [25]. 218 DVT Litigation [2004] QB 234 at 248 [26]. 219 DVT Litigation [2004] QB 234 at 254 [50]. 220 DVT Litigation [2004] QB 234 at 254 [50]. 221 For example, Van Luin v KLM Airlines t/a KLM Royal Dutch Airlines (2002) 1 DCLR (NSW) 25; Rynne v Lauda-Air Luftfahrt AG [2003] QDC 4; Louie v British Airways Ltd unreported, District Court of Alaska, 17 November 2003. Kirby None of the available reports suggests a need to reconsider any of the foregoing reasoning. On the contrary, in the current state of authority, the rejection of the appellant's claim, as pleaded, would conform to the uniform approach of national courts in diverse legal systems applying a generally consistent interpretation of "accident" to exclude claims such as the present. The attempt by the appellant to give his claim the allure of an affirmative "event or happening" by referring to a so-called "pleaded combination of circumstances" and "pleaded continuous circumstances" fails. In the end, the combination and continuous circumstances amount to nothing but aircraft conditions. They do not rise, as pleaded, to an "event" or "happening". Still less do they qualify for description as an event or happening that was "unexpected" or "unusual" in the circumstances of the carriage at that time. Conclusion and order The result is that the conclusion reached by the majority of the Court of Appeal was correct. The orders made by that Court involve no error. The appeal to this Court should be dismissed with costs. Callinan CALLINAN J. No one who has ever endured the discomfort of a long journey by air in the seemingly ever diminishing personal space provided by airlines for economy class passengers, could fail to sympathize with the plight of this appellant. But whether the respondents could and should have done better in this and other respects for him on his long flights the subject of his appeal, is not the question. Rather, it is, as the joint judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ explains, whether on the facts alleged by the appellant, he may be able to make out against the respondents a case of accident within the meaning of "accident" as that word is used in Art 17 of the Warsaw Convention 1929 as modified from time to time. The answer to that question must, I think, be a negative one. The Court of Appeal of England and Wales in In re Deep Vein Thrombosis Litigation222 took the view that such an accident could not be regarded as having happened unless an event of an unusual, unexpected or untoward kind, external to the passenger, which had adversely affected his health or life, had occurred: mere inaction could not constitute an event or an accident. I agree with that view. Some further points may be worth making. As the joint judgment also points out223, the words and concepts contained in the Convention have from time to time been "flexibly applied". Flexible application may lead to both uncertain, and, on occasions, strained or artificial application, the latter the product of an understandable judicial resistance to the rigidity and harshness of a rule admitting compensation relevantly for an accident only. Why, it may be asked should a carrier by air be exonerated if it has negligently injured a passenger simply because there has not been an accident? Great technological strides rendering air travel much safer and predictable have notoriously been made, even in the 30 years since the last, relevant modification of the Convention. It is at least open to question whether air carriers and their insurers are enjoying, as arguably sea carriers also are, the benefit of an anachronistic approach to the perils of travel as defined by outmoded international instruments, a point that I sought to make with respect to the expression used in the Hague Rules, the "perils of the sea"224, in Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad225. Perhaps the time has come to revise these 222 [2004] QB 234 at 246-249 [19]-[38] per Lord Phillips of Worth Matravers MR with whom Judge LJ agreed. 223 See the joint judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ at [28]- 224 The Hague Rules, Arts III and IV. 225 (1998) 196 CLR 161 at 242-244 [225]-[230]. Callinan instruments in the light of increased knowledge and improved technology, in the interests both of consumers, and greater certainty of application. I agree with the joint judgment that the appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA ZAGI KOZAROV AND APPELLANT STATE OF VICTORIA RESPONDENT [2022] HCA 12 Date of Hearing: 2 December 2021 Date of Judgment: 13 April 2022 ORDER Appeal allowed. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria made on 24 November 2020 and 7 December 2020 and, in their place, order that the appeal to that Court be dismissed with costs. The respondent pay the appellant's costs. On appeal from the Supreme Court of Victoria Representation J T Rush QC and A M Dinelli with J B Richards QC and G D Taylor for the appellant (instructed by Bowman & Knox) B W Walker SC with G A Worth and N A Wootton for the respondent (instructed by Russell Kennedy Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Negligence – Causation – Workplace injury – Psychiatric injury – Where appellant employed in Specialist Sexual Offences Unit of Victorian Office of Public Prosecutions ("OPP") – Where appellant found to have suffered psychiatric injury resulting from vicarious trauma suffered in employment – Whether respondent failed to take reasonable measures in response to evident signs of psychiatric injury – Whether respondent's failure caused exacerbation of psychiatric injury. Negligence – Duty of care – Content of employer's duty to employee to take reasonable care to avoid psychiatric injury – Where OPP adopted Vicarious Trauma Policy to protect psychiatric health of employees – Whether appellant needed to show evident signs warning of possibility of psychiatric injury – Effect of decision in Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44. Words and phrases – "duty of care", "evident signs", "psychiatric injury", "real review", "safe system of work", "sentinel event", "tort", "vicarious trauma". KIEFEL CJ AND KEANE J. The issues for determination in this appeal, the findings of fact, the reasons of the courts below and the arguments of the parties in this Court are summarised comprehensively in the reasons of Gageler and Gleeson JJ. We agree with their Honours that the appeal should be allowed. We write separately because it would be unfortunate if it were to be thought that the formulation and presentation of Ms Kozarov's case is a model to be emulated by others. The unduly complicated way in which this case was pursued on behalf of Ms Kozarov raised for determination issues that did not necessarily arise and which may have resulted in an artificially narrow view of her compensable injuries. The course taken should not be followed as a guide by plaintiffs who come after. Gratefully accepting the summary by Gageler and Gleeson JJ, we proceed directly to state the reasons for our concern. It is apparent that the issues with which this Court is concerned would not have arisen but for what seems to have been a misunderstanding of the effect of this Court's decision in Koehler v Cerebos (Australia) Ltd1. It must be appreciated that Koehler was concerned with the extent to which reasonable care for the mental health of an employee may require the employer to be alert for signs that, by reason of the exigencies of the employee's work, the employee is at risk of mental illness. On the undisputed findings of fact in this case, no question truly arose as to whether the employer was duty-bound to be alert in this regard. In light of the undisputed facts, it is clear the officers of the respondent who were responsible for the management of the SSOU were duty-bound to exercise reasonable care to protect Ms Kozarov against risks to her mental health that were actually known to the respondent. That this was so is readily apparent from the terms of the Vicarious Trauma Policy ("the VT Policy") adopted by the respondent for the protection of the psychiatric health of employees within the SSOU before Ms Kozarov's employment commenced. No further warning signs were necessary to establish that the content of the duty of care owed by the respondent to Ms Kozarov included active steps for the care of the psychiatric health of Ms Kozarov and her fellow employees within the SSOU. Koehler The fundamental proposition for which Koehler stands is that the content of the obligation of an employer to take reasonable care for the safety of employees at work cannot be determined in isolation from the obligations which the parties (2005) 222 CLR 44 ("Koehler"). owe each other under their contract of employment2. The plurality in Koehler emphasised the significance of the circumstance that, in that case, the plaintiff employee had "agreed to perform the duties which were a cause of her injury"3. Their Honours said4: "[The employee's] agreement to undertake the work runs contrary to the contention that the employer ought reasonably to have appreciated that the performance of those tasks posed a risk to the [employee's] psychiatric health". The plurality went on to say5: "Because the inquiry about reasonable foreseeability takes the form it does, seeking to read an [employee's] obligations under a contract as subject to a qualification which would excuse performance, if performance is or may be injurious to psychiatric health, encounters two difficulties. First, the employer engaging an employee to perform stated duties is entitled to assume, in the absence of evident signs warning of the possibility of psychiatric injury, that the employee considers that he or she is able to do the job. Implying some qualification upon what otherwise is expressly stipulated by the contract would contradict basic principle6. Secondly, seeking to qualify the operation of the contract as a result of information the employer later acquires about the vulnerability of the employee to psychiatric harm would be no less contradictory of basic principle. The obligations of the parties are fixed at the time of the contract unless and until they are varied." (emphasis added) The formulation and presentation of Ms Kozarov's case was focussed upon the reference in this passage to "evident signs warning of the possibility of psychiatric injury" that oblige the employer to take steps to obviate the risk of such injury. It should be understood, however, that the circumstances of a particular type of employment may be such that the work to be performed by the employee is inherently and obviously dangerous to the psychiatric health of the employee 2 Koehler (2005) 222 CLR 44 at 53-54 [21]. 3 Koehler (2005) 222 CLR 44 at 55 [27]. 4 Koehler (2005) 222 CLR 44 at 55-56 [28]. 5 Koehler (2005) 222 CLR 44 at 57-58 [36]. 6 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 (just as other kinds of work are inherently and obviously dangerous to the physical health of the employee). In any such case, the employer is duty-bound to be proactive in the provision of measures to enable the work to be performed safely by the employee. The present was such a case. Ms Kozarov's employment within the SSOU It is not in dispute that the respondent's employment of Ms Kozarov did not proceed on the assumption that Ms Kozarov was capable of doing her job safely without implementation of the protective measures identified, most importantly, in the VT Policy. To the contrary, Ms Kozarov, like other employees in the SSOU, was employed on the footing that the respondent would ensure that she and her fellow employees would be protected by the implementation of the VT Policy from the risks to their mental health that were recognised as being inherent in their roles7. It was clear from the terms of the VT Policy that the respondent had a lively appreciation of the serious risk to Ms Kozarov's mental health posed by her work within the SSOU. No further warning signs were necessary to oblige the respondent to take reasonable steps to safeguard Ms Kozarov's mental health. None of the protective measures identified in the VT Policy, or indeed any other reasonably available preventive or protective measures, were implemented by Ms Kozarov's managers within the SSOU. In particular, the primary judge found that, notwithstanding that the VT Policy both required management to "[e]ncourage" staff to rotate to minimise exposure to traumatic work and identified some options for doing so, rotations were neither in place for SSOU staff nor encouraged. In order to be moved into a different section in the Victorian Office of Public Prosecutions, it was necessary, contrary to the VT Policy, for staff to apply internally for jobs that had been advertised8. It was not in dispute that Ms Kozarov's mental illness manifested in April 2011 when she began to suffer from post-traumatic stress disorder ("PTSD"). In this Court, the respondent accepted that if Ms Kozarov had been offered occupational screening at the end of August 2011, she would have accepted that offer, and that screening would have revealed Ms Kozarov's mental illness. The primary judge did not make a finding that the failures of the managers of the SSOU to offer occupational screening and to implement the other steps contemplated by the VT Policy caused the onset of Ms Kozarov's PTSD in April 2011, no doubt because her Honour was not invited to do so given the way Ms Kozarov's case was presented. But no other finding would seem to have been appropriate having regard to the primary judge's conclusions as to the causative effect of subsequent failures See Kozarov v Victoria (2020) 294 IR 1 at 25-26 [97]-[99]. 8 Kozarov v Victoria (2020) 294 IR 1 at 20-21 [80]. to implement any similar steps in the worsening of Ms Kozarov's PTSD, and her additional later diagnosis of major depressive disorder. Had Ms Kozarov's case been formulated so that the respondent's duty of care and its breach of that duty arose from the commencement of Ms Kozarov's employment, there would have been no occasion to consider whether the "sentinel event" at the end of August 2011 should reasonably have conveyed to the respondent's officers that Ms Kozarov's mental health was being adversely affected by the exigencies of her work within the SSOU. Nor would there have been any occasion to enquire whether Ms Kozarov would have been willing to co-operate in rotating her out of the SSOU at some time between August 2011 and February 2012. Because of the way that the case was litigated at trial, however, the attention of the primary judge was focussed upon whether there were "evident signs"9 in August 2011 so as to have "enlivened" a duty of care owed by the respondent to Ms Kozarov10. It seems to have been thought that this focus was required by Koehler. That was not the case. The significance of the "evident signs" As to the "evident signs" of Ms Kozarov's distress referred to by the primary judge, we would be disposed to reach a different view from the Court of Appeal as to the significance of these signs in supporting the finding that the respondent had been placed on notice of a risk to the appellant's mental health by the end of August 2011. Some of these signs were not such as to warrant a conclusion that Ms Kozarov's managers were put on notice of a risk of a deterioration in her mental health, beyond the risk they would have been aware of had they known of the terms of the VT Policy. Importantly, as to the fact that Ms Kozarov signed the staff memorandum of 18 April 2011 complaining of the workload of employees within the SSOU and the stress they were experiencing, it should not be accepted as a general proposition that an employer is duty-bound to treat a demand made by a group of employees for a reduction in their collective workload as an indication, by some or all of them, that their mental health cannot cope with the kind of work they have been engaged to perform and have agreed to perform, so as to require the employer to make enquiries as to the mental health of its dissatisfied employees. 9 Kozarov v Victoria (2020) 294 IR 1 at 128-130 [578]. 10 Kozarov v Victoria (2020) 294 IR 1 at 11 [16], 127 [570], 140 [623]. A demand by employees for a reduction in their workload may or may not be a reasonable demand as a matter of industrial relations; but, of itself and however intemperate the terms in which such a demand might be made, it would not, in general, reasonably be understood by the employer as an indication that the employees are suffering, collectively or individually, impairments to their mental health. The contrary view would make the robust bargaining that is a familiar feature of industrial relations in Australia an occasion of peril for all concerned. As to this case, it is true that in the staff memorandum of 18 April 2011, there were complaints that the excessive workload of employees in the SSOU was causing those employees to suffer unacceptable levels of stress. But it is to be noted that these complaints related exclusively to excessive workloads: there was no complaint of a failure to implement the VT Policy in any respect. It will be understood that, in our view, in the peculiar circumstances of this workplace, the respondent was already in breach of its duty of care to Ms Kozarov; but, as a general proposition, in an "ordinary" workplace a reasonable response by a reasonable employer to complaints of overwork would not, without more, require that the psychiatric health of the employees be assessed. Generally speaking, employees who complain about being overworked want that complaint to be treated seriously by the employer and addressed by measures such as the employment of more employees to share the workload. It is not usually in their interests for such a complaint to be treated by the employer as an indication that they, or some of them, are potential plaintiffs in an action for damages for injury to their mental health. The employer might decide that such a prospect might best be avoided by terminating their employment. In addition, generally speaking, employees intent upon career advancement have a strong and legitimate interest in preserving their privacy so far as their ability to cope with the personal challenges of the work is concerned. It is poignant in this regard that Ms Kozarov, who was actively seeking promotion in the SSOU, kept from her managers the knowledge that she was seeking help from a psychologist. She was, of course, entitled to do so. But for the same reasons of personal autonomy and privacy that entitled her to keep to herself what passed between her and her psychologist, her managers were not duty-bound to seek to elicit this information from her simply by reason of her participation in collective complaints by the staff of the SSOU about being overworked and stressed as a result. As to the "sentinel event" of 29 August 2011, when Ms Kozarov came into dispute with Mr Brown, it might be said that Ms Kozarov overreacted to Mr Brown's criticism of her conduct. On the other hand, Ms Kozarov's response to Mr Brown's criticism may have reflected a level of exasperation with their dealings with each other that was not entirely unjustified. It is necessary to eschew the use of hindsight in one's assessment of whether the terms of Ms Kozarov's emails should reasonably have been regarded by Mr Brown as symptoms of psychiatric disturbance as opposed to righteous, albeit excessive, anger. In summary, we do not agree with the reasoning of the Court of Appeal in relation to the significance of the "evident signs"11. But, for the reasons we have given, we do not disagree with the primary judge's conclusion that the respondent was in breach of its duty of care to Ms Kozarov from late August 2011; indeed, in our view, the respondent was in breach of its duty from the commencement of Ms Kozarov's employment. That being so, the respondent's notice of contention does not warrant upholding the decision of the Court of Appeal. We agree with the orders proposed by Gageler and Gleeson JJ. 11 Compare Victoria v Kozarov (2020) 301 IR 446 at 470-471 [79]-[83]. GAGELER AND GLEESON JJ. This appeal arises out of proceedings commenced in the Supreme Court of Victoria for damages for the negligent failure of the respondent to prevent psychiatric injury to the appellant in the course of her employment with the respondent as a solicitor in the Specialist Sexual Offences Unit ("the SSOU") of the Victorian Office of Public Prosecutions ("the OPP"). In February 2012, the appellant was diagnosed with post-traumatic stress disorder ("PTSD") resulting from vicarious trauma which she had suffered until then in the course of her employment. She was later also diagnosed with major depressive disorder which was found to be a corollary of the PTSD. The trial judge (Jane Dixon J) held the respondent liable to the appellant in negligence and awarded damages in her favour12. Her Honour found that the respondent had been placed on notice of a risk to the appellant's mental health by the end of August 2011 ("the notice finding"), such as to require the respondent to take steps by way of reasonable response which included offering her rotation out of the SSOU to work in another section of the OPP. Her Honour also found that, at the end of August 2011, the appellant would have accepted an offer of rotation out of the SSOU to work in another section of the OPP ("the rotation finding"), thereby avoiding the exacerbation of her PTSD that occurred between August 2011 and February 2012. Upholding the notice finding but rejecting the rotation finding, the Court of Appeal (Beach and Kaye JJA and Macaulay A-JA) allowed the respondent's appeal13. In her appeal by special leave to this Court, the appellant sought to overturn the Court of Appeal's rejection of the rotation finding. The respondent sought to support the Court of Appeal's rejection of the rotation finding and, pursuant to a Notice of Contention filed in the appeal, contended as well that the Court of Appeal erred in failing to reject the notice finding. The appellant's case has been put at every stage on the basis that the respondent's liability arose from its failure to take reasonable measures in response to "evident signs" of the appellant's work-related PTSD. That language was drawn from the observation of the plurality in Koehler v Cerebos (Australia) Ltd14 that an employer engaging an employee to perform stated duties "is entitled to assume, in 12 Kozarov v Victoria (2020) 294 IR 1. 13 Victoria v Kozarov (2020) 301 IR 446. (2005) 222 CLR 44 at 57 [36]. the absence of evident signs warning of the possibility of psychiatric injury, that the employee considers that he or she is able to do the job". The appellant's case continued to be so put despite an unchallenged finding by the trial judge that the nature and intensity of the SSOU's work carried an obvious risk of psychiatric injury from exposure to vicarious trauma15. Indeed, the risk of serious psychiatric injury was recognised by the respondent in its "Vicarious Trauma Policy", dated January 2008, which identified vicarious trauma as "an unavoidable consequence of undertaking work with survivors of trauma", and as a "process [that] can have detrimental, cumulative and prolonged effects on the staff member". The assumption referred to in Koehler should not be taken to detract from the obligation of an employer, in the performance of a tortious duty to maintain a safe system of work, to exercise reasonable care to avoid a foreseeable risk of psychiatric injury to a class of employees. The question that arose in Koehler, whether psychiatric injury to the particular employee was reasonably foreseeable, was answered in the affirmative by the Vicarious Trauma Policy. Despite the appellant having taken on an unnecessary evidentiary burden, the appeal to this Court falls to be determined on the issues joined between the parties16. The appeal therefore turns wholly on this Court's assessment of the two findings of fact on which the parties have chosen to join issue: the notice finding and the rotation finding. For the following reasons, the Court of Appeal did not err in accepting the notice finding, but the Court of Appeal erred in rejecting the rotation finding. Accordingly, the appeal must be allowed. Background facts The SSOU was set up in April 2007 as a specialist unit within the OPP to prosecute all serious indictable sexual offences heard in the Magistrates', County and Supreme Courts of Victoria whether the victim was an adult or a child. At the relevant times, the SSOU comprised 25 solicitors of varying seniority, together with other professional and administrative staff. 15 Kozarov v Victoria (2020) 294 IR 1 at 126 [564]. 16 Coulton v Holcombe (1986) 162 CLR 1 at 7-8. Appellant's work in the SSOU In June 2009, the appellant joined the SSOU as a recently admitted solicitor, in a "VPS Grade 4" role. The appellant's work in the SSOU routinely involved interaction with survivors of trauma and exposure to their traumatic experiences including by attending court to instruct in sexual assault trials, meeting with child and adult alleged victims of sexual offences and their families, viewing explicit child pornography and preparing child complainants for cross-examination17. From time to time, the appellant worked in a more senior "VPS Grade 5" role, in temporary "backfilled" positions within the SSOU18. In 2009 or 2010, the appellant attended a one-day training workshop at the OPP on the topic of "Understanding and working with victims of trauma" ("the Benstead workshop"). The workshop became a forum for intense discussions about the emotional effects of work in the SSOU. On that occasion, the appellant asserted that there was not enough being done to assist SSOU staff, and she gave examples of how her work was affecting her as a mother. The appellant became increasingly vocal at staff meetings from late 2010 onwards about how work was affecting her daily life, including describing feelings of paranoia about leaving her children with other people, including at activities and with school teachers, her refusal to allow her son to be an altar boy, and dreaming of her children being the complainants in her matters. By 2011, the appellant was known by the manager of the SSOU, Mr Brown, and the deputy manager of the SSOU, Ms Robinson, to be a dedicated, hard- working, ambitious and loyal employee of the OPP. Mr Brown and Ms Robinson also knew that the appellant had upwards of 25 files, when the desirable file load was no more than 20; that she had been experiencing physical health ailments, including the need to take time off for medical appointments from time to time; and that she was a mother of young children and a sole parent. On 7 March 2011, the appellant applied for a permanent promotion to a VPS Grade 5 role at the OPP, either in Principal Prosecutions or in the SSOU. In early May 2011, she accepted an acting VPS Grade 5 role in the SSOU for a fixed term from 28 April 2011 to 15 August 2011. 17 Kozarov v Victoria (2020) 294 IR 1 at 17-19 [59]-[72]. 18 Kozarov v Victoria (2020) 294 IR 1 at 14 [45]. Events between April and August 2011 On 18 April 2011, SSOU staff including the appellant signed a memorandum addressed to Mr Brown and Ms Robinson concerning staff wellbeing ("the staff memorandum"). The staff memorandum followed an after- hours meeting in the absence of management at which significant concerns about wellbeing were discussed. The staff memorandum recorded that the SSOU solicitors were experiencing increasing court commitments; that solicitors were working long hours and taking work home on weeknights and on weekends; and that "solicitors ... reportedly experienced a marked increase in the symptoms associated with stress". The memorandum included a lengthy list of stress-related symptoms said to be experienced by SSOU solicitors, as well as a list of "unhealthy behaviour/lifestyle choices" that solicitors reported themselves to have made as a result of the stress-related symptoms. The trial judge found that the appellant's signature on the staff memorandum "notified the [respondent] of ongoing health and well-being impacts" experienced by SSOU staff, including the appellant19. This finding was supported by expert evidence that the staff memorandum should have alerted the SSOU's managers to the probability that SSOU staff members were suffering from symptoms of PTSD. Her Honour considered that the staff memorandum provided the context in which subsequent signs of risk attaching to the appellant were to be viewed and assessed. Her Honour found that "the [appellant's] demeanour, presentation and conduct both before and after the memo combined to show an accretion of signs that she was being adversely affected by her work", culminating in "the presentation of a staff member who, by around the end of August 2011, needed active intervention and proper supervision to ensure that she was not damaged by her work"20. Conversely, the staff memorandum conveyed the strong desire of SSOU staff to continue their specialisation in sexual offences work. The Court of Appeal accepted that the substance of the memorandum was a complaint that the SSOU solicitors were being asked to do too much in the time reasonably available21. The staff memorandum elicited action from Mr Brown, who sent it to senior management at the OPP immediately, requesting a discussion "about the 19 Kozarov v Victoria (2020) 294 IR 1 at 139-140 [620]. 20 Kozarov v Victoria (2020) 294 IR 1 at 140 [621]. 21 Victoria v Kozarov (2020) 301 IR 446 at 467 [73]. staff/work situation in the SSOU". In May 2011, Mr Brown sent an email to SSOU staff, summarising actions that he and Ms Robinson intended to take in response to the staff memorandum, including steps to reduce work load within the unit and to recruit more staff. Mr Brown subsequently prepared a business case to senior management which made a strong case for more SSOU staff. The business case revealed Mr Brown's awareness of health risks to which SSOU staff were exposed, in the following terms: "The staff in SSOU are reporting burn-out and staff turnover is increasing. This is putting further pressure on the unit due to time spent covering sick leave and recruiting and the inevitable delays with filling vacant positions. New staff require training (which they are not receiving at an adequate level) and cannot immediately assume full file loads. The [SSOU] has been operating at staff levels well below the minimum for the past six months due to departures. This has resulted in pressure building up to breaking point. Staff recently conducted a meeting from which a memorandum was produced outlining the effect this is having on their work and health. The current situation is untenable and there are serious OH&S risks looming. These issues have previously been brought to the attention of the Executive on a number of occasions." The staff memorandum coincided with a resilience training session at the SSOU, conducted by a psychologist, Mr Carfi, on 20 April 2011 ("the Carfi session"). Mr Brown recalled that the appellant expressed hypervigilance about paedophiles at the session but was not concerned that she might have "a particular problem". Ms Robinson recalled that the appellant spoke of being with her children, looking around, and regarding everyone as a paedophile, but did not believe that these comments related to mental ill health and they did not make Ms Robinson concerned. Ms Robinson noted that, after the session, she debriefed with Mr Carfi and nothing urgent was flagged as requiring attention. On 9 June 2011, the appellant resisted allocation to her of a new file, citing her inability to cope with it due to her current work load and forthcoming trials. Nevertheless, she was required to take the matter, which concerned two young victims who had been sexually abused by their grandfather ("the Lim matter"). On 11 August 2011, during the trial in the Lim matter, the appellant left work early after becoming extremely dizzy in the office of another SSOU solicitor. The appellant was then on sick leave until 29 August 2011. While on sick leave, she was admitted to hospital and had an iron infusion. During this time, the appellant was informed that the more vulnerable of the two complainants in the Lim matter had attempted to commit suicide. Ms Robinson became aware of the suicide attempt but did not raise or discuss it with the appellant. On 22 August 2011, the appellant attended her general practitioner and was referred to a psychologist, Mr Foenander. The appellant attended Mr Foenander the following day, 23 August 2011, again on 29 August 2011. On and 28 August 2011, while still on sick leave, the appellant applied for promotion to a permanent VPS Grade 5 role in the SSOU. The "sentinel event" The trial judge accepted that the appellant's presentation at work was "not one-dimensional", and noted the importance of avoiding "litigious hindsight", but found that the appellant's behaviour and presentation leading up to and around the time of the events of 29 August 2011, described below, was "abnormal and out of character"22. In particular, the trial judge found, and the Court of Appeal agreed, that a "sentinel event" occurred on 29 August 2011 when the appellant returned to work after two weeks on sick leave and came into conflict with Mr Brown23. The conflict arose out of Mr Brown's perception that the appellant had arrived at work late, when in fact she had come in early, and led to an exchange of emails. At midday, the appellant sent Mr Brown a verbose and emotional email. Later, she sent him a further email in response to a short reply from Mr Brown. The first email included a verbatim account of their verbal interactions that morning, contextualised by an account of a conversation two weeks earlier. The appellant's emails included multiple accusations (such as "you have labelled me", "[y]ou have stripped my pride", "[y]ou have shamed me today and made me feel that I have no incentive to work in [the SSOU]" and "[y]ou have made me feel I have no hope for permanent 5"); overgeneralised language (such as repetitious references to what was "always" and "never" the case); and melodramatic claims (such as claims that the appellant had apologised for being on sick leave "as it was beyond my control"; that the appellant had returned "ready to do my normal duties despite my doctor recommending I take further time to recover"; that "I am grateful for all your understanding ... during times my children were sick and I would come into work and continue working as I had no care for them with them sleeping in my office"; and that "you can't tell me where I have failed you despite saying it's always my matters that need covering. Of course they need covering I cannot physically be in more than one matter in court to instruct"). The appellant referred to herself six times as "dedicated", twice as "committed" and twice as "passionate". The gist of the appellant's emails was that, as a result of her interactions with Mr Brown, and principally his suggestion that she was not coping with her work, the appellant was unable to work for the rest of the day. On any view, this 22 Kozarov v Victoria (2020) 294 IR 1 at 134 [598]. 23 Kozarov v Victoria (2020) 294 IR 1 at 134 [598], 136-137 [609]; Victoria v Kozarov (2020) 301 IR 446 at 471 [80]. was a disproportionate reaction to the apparent conflict between the appellant and her manager, communicated in a disproportionate way. Events from September 2011 From 29 August 2011 until the end of December 2011, the appellant continued to deal with serious sexual offences in the SSOU and, in November 2011, she accepted a promotion to a permanent VPS Grade 5 role in the SSOU. She took annual leave and long service leave for the whole of January 2012, as had been arranged in October 2011. On 31 January 2012, the appellant sought an extension of her leave from 7 February 2012 (when the appellant had been due to 10 February 2012. On 9 February 2012, the appellant requested that she be moved out of the SSOU. Thereafter, there were attempts to return the appellant to work at the OPP in different areas until 20 April 2012. Those attempts were unsuccessful and, consequently, the appellant's employment was terminated. to work) to return Notice finding In pursuing its Notice of Contention, the respondent did not seek to challenge the practice of this Court not to disturb concurrent findings of fact "in the absence of special reasons such as plain injustice or clear error"24. In the result, the respondent failed to establish error or injustice of any kind on the part of the trial judge or the Court of Appeal in making and maintaining the notice finding. The trial judge found that "viewed prospectively", by the end of August 2011, a reasonable person in the position of the respondent "would have adverted to the evident signs regarding the [appellant] and observed that she was failing to cope with her allocated work and that her mental health was at risk"25. The signs relevantly included: (1) the appellant's signature to the staff memorandum, which stated staff complaints about health impacts, including psychologically based impacts, caused by the SSOU's work; (2) the appellant's statements at the Benstead workshop, staff meetings and the Carfi session about her hypervigilance and abnormally overprotective parenting practices as a result of her work; (3) the appellant's excessive file load, her case mix, which involved a high proportion of child complainant cases, and her patterns of working late and 24 Louth v Diprose (1992) 175 CLR 621 at 633-634. See also Roads and Traffic Authority (NSW) v Dederer (2007) 234 CLR 330 at 334-337 [5]-[12], 344 [42], 378- 379 [163]-[166], 410-415 [287]-[293]; MW v Director-General, Department of Community Services (2008) 82 ALJR 629 at 660-661 [184]; 244 ALR 205 at 246; Allen v Chadwick (2015) 256 CLR 148 at 165-166 [57]. 25 Kozarov v Victoria (2020) 294 IR 1 at 140 [623]. on weekends and public holidays; (4) the appellant's observable emotional involvement in some cases, such as using a nickname for her "favourite" child complainant; (5) the allocation to the appellant of the Lim matter, a particularly traumatic matter, in the face of her resistance to taking it because she was struggling with her existing case load; (6) the appellant's sudden departure from work on 12 August 2011, during the Lim trial, after an episode of dizziness, and her subsequent time away from work until 29 August 2011; (7) the attempted suicide of one of the child complainants in the Lim case, about which the appellant was informed while she was on leave; (8) the observation of Mr Brown (which he told the appellant was shared by others) that the appellant was not coping with the demands of her work; and (9) the appellant's "highly emotive and agitated reaction" to her disagreement with Mr Brown on 29 August 2011. The Court of Appeal reasoned that the "evident signs" which preceded 29 August 2011 provided context for the disagreement between the appellant and Mr Brown on that day26. Their Honours noted that they were matters of which the respondent was aware at the time of the disagreement. Their Honours considered that, in that context, the appellant's "highly emotional reaction" to her disagreement with Mr Brown, expressed in her emails on 29 August 2011, "would fairly be viewed as a clear indication, which should have been taken as a warning sign to the [respondent], that all was not well with the [appellant's] emotional state at that time"27. The Court of Appeal concluded that the emails were, in effect, a "histrionic" response to Mr Brown's suggestion that the appellant was not coping and that the appellant's "loaded tone ... was such that it was open to the judge to consider that, in the context of the events that had preceded it, the [appellant's] email, and her responses at that time, constituted a 'sentinel event' which ought to have put the [respondent] on notice that the [appellant] was suffering genuine emotional distress as a result of the nature and content of her work"28. It was significant that the emails were very emotional, dense and long, and were written by a hard-working, ambitious, professional solicitor29. Accordingly, the Court of Appeal detected no error in the trial judge's notice finding. Their Honours considered and rejected the suggestion that the finding involved "litigious 26 Victoria v Kozarov (2020) 301 IR 446 at 470-471 [79]. 27 Victoria v Kozarov (2020) 301 IR 446 at 470-471 [79]. 28 Victoria v Kozarov (2020) 301 IR 446 at 471 [80]. 29 Victoria v Kozarov (2020) 301 IR 446 at 471 [82]. hindsight", despite the trial judge explicitly adverting to the risks of such impermissible reasoning30. The respondent submitted that the Court of Appeal's affirmation of the notice finding was unreasonable when the so-called "evident signs" were viewed holistically and in the light of the respondent's responses to each matter. In particular, the respondent argued that the "evident signs" did not go beyond what would be expected in the ordinary course of the appellant's work, including the inevitable experiences of vicarious trauma. The respondent contended that the Court of Appeal failed to indicate how the "evident signs" would produce the conclusion that there was a "sentinel event" for PTSD, as opposed to vicarious trauma and its corollary, genuine emotional distress, which everyone in the SSOU necessarily experienced. The notice finding was the preferable conclusion. The "evident signs", described above, signified more than merely the inevitable and universal experience of vicarious trauma in the workplace of the SSOU, in the following ways: (1) the staff memorandum, signed by the appellant, was a plain indication that she might be suffering one or more of the adverse symptoms of vicarious trauma identified in the memorandum; (2) the appellant's statements were reports of her adverse symptoms of vicarious trauma; (3) the appellant was at heightened risk of adverse consequences of vicarious trauma from an excessive work load, and by a propensity to overwork; (4) the appellant was demonstrating an unhealthy emotional involvement in some of her cases; (5) the appellant was demonstrating difficulties managing her existing case load, which were not ameliorated but instead augmented; (6) the appellant took a period of two weeks sick leave during a trial and following an episode of dizziness; (7) the appellant experienced a recent significant traumatic event in the form of the attempted suicide of a child complainant in the trial that she had left to take sick leave; and (8) Mr Brown (and others) had formed the view that the appellant, a dedicated, hard-working, ambitious and loyal employee, was "not coping". Finally, the Court of Appeal did not err in finding that the appellant's "genuine emotional distress" in her interaction with Mr Brown was a significant indicator of possible work-related psychiatric injury. The respondent's submission that such distress in dealings between work colleagues was merely an aspect of the inevitable vicarious trauma experienced in the SSOU was not supported by any finding. 30 Victoria v Kozarov (2020) 301 IR 446 at 471 [83]. Rotation finding As it was conducting an appeal by way of rehearing, the Court of Appeal was required to conduct a "real review" of the evidence given at first instance and of the trial judge's reasons for judgment to determine whether the trial judge erred in fact or law31. The appellant did not dispute that the Court of Appeal was in as good a position as the trial judge to decide on the proper inference to be drawn about the appellant's probable conduct from the available evidence, giving appropriate respect and weight to the conclusion of the trial judge32. There is some ambiguity in the trial judge's reasons as to whether her Honour considered that, in the appellant's case, the only option that would have avoided the exacerbation of her PTSD between August 2011 and February 2012 was rotation out of the SSOU. However, the trial judge ultimately reached the conclusion that work-related screening of the appellant at the end of August 2011 "would have revealed that the [appellant] needed to be rotated out of the SSOU because of the connection between her work and her symptoms at that time"33. The trial judge found that there was no good reason why the appellant could not have been rotated to another part of the OPP that did not manage sexual offences34. The trial judge proceeded on the basis that the appellant's rotation from the SSOU required her cooperation, and the Court of Appeal observed that there was no suggestion that the respondent could have compelled the appellant to move to another unit that did not involve work relating to sex offences35. Thus, the appellant was required to prove on the balance of probabilities that, if offered rotation out of the SSOU, she would have accepted it. The trial judge found that the appellant discharged this burden, having regard to the appellant's recognition of her need for professional psychological help in August 2011 and her cooperation with exploring alternative roles at the OPP after 9 February 2012. 31 Fox v Percy (2003) 214 CLR 118 at 126-127 [25]; Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 686 [43]; 331 ALR 550 at 558. 32 Warren v Coombes (1979) 142 CLR 531 at 551; Fox v Percy (2003) 214 CLR 118 at 126-127 [25]-[26]; Lee v Lee (2019) 266 CLR 129 at 148-149 [55]. 33 Kozarov v Victoria (2020) 294 IR 1 at 164 [742]. 34 Kozarov v Victoria (2020) 294 IR 1 at 163 [733]. 35 Victoria v Kozarov (2020) 301 IR 446 at 478 [106]. The Court of Appeal noted that the appellant did not give evidence that she would have agreed to rotation out of the SSOU at the end of August 201136. Their Honours stated that the circumstances of 9 February 2012 relied upon by the trial judge were very different from the circumstances of late August 201137. Their Honours referred to the appellant's strong reaction to Mr Brown's suggestion that she was not coping and the terms of her second email on 29 August 2011, placing particular reliance on the appellant's statement that she was "passionate about continuing [her] work in the [SSOU]"38. Their Honours also noted that the appellant was by then also seeking promotion in the SSOU and that, on 9 November 2011, she signed a contract for a permanent position there39. On the basis of these matters, "having looked afresh at the evidence, and making due allowance for the advantage of the trial judge", the Court of Appeal formed the view that "it could not be concluded that the [appellant] proved, on the balance of probabilities, that the appropriate exercise of care by the [respondent] would have resulted in the [appellant] accepting a rotation out of the SSOU at any time between the end of August 2011 and February 2012"40. The Court of Appeal erred in forming this view. The appellant's cooperative conduct in February 2012, which was with the benefit of insight about the harmful effect of the nature and intensity of her work upon her mental health, while not determinative, was relevant evidence in support of the rotation finding41. Also relevant, and not adverted to by the Court of Appeal, was the expert evidence of Professor McFarlane, a psychiatrist, that a "significant majority" of people assessed by him and receiving appropriate advice, appropriately communicated, would accept that advice42. The substance of this evidence was that it is more common than not for persons to heed medical advice given to them about the cause of a diagnosed serious illness and the means by which that cause could be either 36 Victoria v Kozarov (2020) 301 IR 446 at 477 [104]. 37 Victoria v Kozarov (2020) 301 IR 446 at 478 [108]. 38 Victoria v Kozarov (2020) 301 IR 446 at 478-479 [108]. 39 Victoria v Kozarov (2020) 301 IR 446 at 479 [109]. 40 Victoria v Kozarov (2020) 301 IR 446 at 479 [110]. 41 See Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 42 Kozarov v Victoria (2020) 294 IR 1 at 89 [406]. mitigated or removed. This was important evidence in support of the rotation finding. The Court of Appeal also failed to advert to the inherent likelihood that a reasonable person advised of the risks of serious psychiatric injury might be expected, on the balance of probabilities, to accept advice to avoid those risks43. It was inherently likely that the appellant, faced with advice as to the need to rotate out of SSOU in order to avoid an exacerbation of her PTSD, would have acted self-interestedly in accordance with the advice. In this regard, it is significant that the appellant gave extensive evidence at the trial and the trial judge rejected the respondent's attacks upon her credibility, did not accept that she was an unsatisfactory witness and found her evidence to be "generally coherent and credible"44. The Court of Appeal should have adverted to the real possibility that the appellant's demeanour and credibility may have influenced the trial judge in making the rotation finding45. It is true that there was a body of material that tended against the rotation finding. This material included the appellant's commitment prior to February 2012 to the SSOU's work and the social importance of that work; the commitment of SSOU staff, including the appellant, to specialisation in sexual offence work with the accompanying inevitability of vicarious trauma and the limited opportunities for "time out"; the instances of the appellant's applications for promotion within the SSOU as further indication of her strong desire to do the traumatic work involved; and the appellant's apparent outrage at the possibility that Mr Brown thought that the appellant should no longer be in the SSOU. However, these factors were of relatively little weight in assessing the counterfactual, which involved a diagnosis of serious psychiatric illness and appropriate advice. On the whole of the evidence, the trial judge's rotation finding was the preferable one. Conclusion The appeal should be allowed with costs. The orders of the Court of Appeal should be set aside. In their place, it should be ordered that the appeal to that Court be dismissed with costs. 43 See Rosenberg v Percival (2001) 205 CLR 434 at 443 [24]. 44 Kozarov v Victoria (2020) 294 IR 1 at 94-98 [430]-[449]. 45 cf Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179. GordonJ GORDON AND STEWARD JJ. The appellant, Ms Kozarov, was employed by the respondent, the State of Victoria ("Victoria"), in the Specialist Sexual Offences Unit ("the SSOU") of the Office of Public Prosecutions ("the OPP") between June 2009 and April 2012. During the course of her employment, Ms Kozarov suffered a psychiatric injury, namely, chronic post-traumatic stress disorder ("PTSD") and a major depressive disorder ("MDD"), as a result of her cumulative exposure to vicarious trauma in SSOU casework. There were numerous signs, some more obvious than others, that Ms Kozarov was at risk of harm. She became increasingly outspoken at staff training sessions and monthly team meetings about her hypervigilance and abnormally overprotective parenting practices as a result of her work, she signed a staff memorandum to the SSOU management on staff well-being which identified the stress-related symptoms being experienced by solicitors in the SSOU, she became dizzy at work one day and went on sick leave for two weeks thereafter, and upon her return to work she was involved in a dispute with her manager about whether she was coping with her workload. Ms Kozarov ultimately requested to be rotated out of the SSOU and, after several unsuccessful attempts by the OPP to return her to work in different areas, her employment was terminated. The primary question in this appeal is whether Victoria's failure to provide Ms Kozarov with a safe system of work caused the exacerbation and prolongation of her PTSD, and subsequent development of MDD. The answer is "yes". Ms Kozarov's two grounds of appeal challenged, in different ways, the finding of the Court of Appeal of the Supreme Court of Victoria that causation could not be made out because Ms Kozarov would not have co-operated with steps to reduce her exposure to trauma in the SSOU. The first ground was directed to whether the Court of Appeal erred in overturning the trial judge's inference that Ms Kozarov would have co-operated with steps to reduce her exposure to trauma in the SSOU. The second ground was directed to whether the Court of Appeal, in finding that causation had not been made out, erred in failing to consider the nature and content of Victoria's duty of care. An ancillary issue, raised by Victoria's notice of contention, was whether Victoria was on notice of a risk of psychiatric injury to Ms Kozarov by the end of August 2011. It is convenient to deal with the notice of contention first and the grounds of appeal second. Notice of contention: When was Victoria on notice of risk of harm? Victoria was on notice of the risk of psychiatric injury to Ms Kozarov by no later than 29 August 2011. A reasonable person in Victoria's position would have foreseen the risk of injury to Ms Kozarov by that date, a risk that was not GordonJ far-fetched or fanciful46. This view was correctly reached by the trial judge and by the Court of Appeal, and no sufficient reason has been shown for reaching a The trial judge and the Court of Appeal identified 13 "evident signs"48 which were said to have provided notice to Victoria of the heightened risk regarding Ms Kozarov's mental health in connection with her work. The first nine evident signs related to events which had occurred by the end of August 2011. Those signs, as well as other relevant matters which preceded Ms Kozarov's work with the SSOU, may conveniently be divided into three time periods: (1) before Ms Kozarov commenced work with the SSOU (October 2007 to June 2009); (2) after Ms Kozarov commenced work with the SSOU (June 2009 to 29 August 2011); and (3) the "sentinel event" on 29 August 2011. It is necessary to address each time period in turn. The events within each time period, and across time periods, were cumulative. Before Ms Kozarov commenced work with the SSOU (October 2007 to June 2009) The events in the first time period – before Ms Kozarov commenced work with the SSOU – do not and cannot relate specifically to notice of risk of harm to Ms Kozarov49. Rather, they show that Victoria was on notice of the risks to SSOU solicitors generally from burnout, work stress and exposure to vicarious trauma. They direct proper attention to matters known to Victoria, namely the nature and extent of the work being done by Ms Kozarov when she commenced work with the SSOU. Put in different terms, they give the matters in the next period, concerning Ms Kozarov's work with the SSOU, a particular complexion. The first event occurred on 11 October 2007 when Ms Drysdale, who then held the title "Project Manager, Sexual Offence Reforms", emailed the group "OPP Sexual Offences", sharing a link to an article on vicarious trauma and saying: "[o]ne of the most often asked questions when I go out to talk about the work of 46 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48, cited in Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44 at 53 [19]. 47 See Allen v Chadwick (2015) 256 CLR 148 at 166 [57], citing Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 434-435, Louth v Diprose (1992) 175 CLR 621 at 633-634 and Roads and Traffic Authority (NSW) v Dederer (2007) 234 CLR 330 at 334-336 [6]-[11], 378-379 [164]-[166], 410-415 [286]-[293]. 48 Koehler (2005) 222 CLR 44 at 57 [36]. 49 See Koehler (2005) 222 CLR 44 at 57 [35]. GordonJ the [SSOU] is – [h]ow do staff look after themselves and cope with such difficult work and how does [the] OPP support staff to do so?". That was followed, in January 2008, with the SSOU publishing, as part of the SSOU manual, a policy document headed "Vicarious Trauma Policy", which (among other things) identified that vicarious trauma was "an organisational and [occupational health and safety ('OH&S')] issue, especially for specialist sex offences staff"; acknowledged that research indicated that vicarious trauma was "an unavoidable consequence of undertaking work with survivors of trauma … in particular, the survivors of sexual assault"; and stated that vicarious trauma could have "detrimental, cumulative and prolonged effects". Then, in March 2009, after conducting a one-day vicarious trauma workshop for SSOU staff, Ms Benstead, a psychologist, prepared a report for the SSOU which said that "[a]n overwhelming majority of the participants related to the signs and symptoms of [vicarious trauma] and the importance of self-care in their work". Two months later, in May 2009, Ms Penhall, then principal solicitor of the SSOU, sent a memorandum on the topic of staff well-being to Ms Fatouros, then Directorate Manager of the SSOU, which said that "the very nature of the work of prosecuting sex offence[s] can of itself elevate stress levels, [and] solicitors have reportedly experienced a marked increase of late in the symptoms associated with stress" ("the Penhall Memo"). A number of symptoms reported by staff were then listed. After Ms Kozarov commenced work with the SSOU (June 2009 to 29 August 2011) Ms Kozarov commenced work with the SSOU in June 2009. She dealt with cases of an abhorrent nature involving child rape and offences of gross depravity. She was required to consider, among other things, witness statements and video and audio recorded evidence which contained graphic and disturbing content. In some cases, she was also required to watch explicit child pornography. In September 2009 or March 2010, Ms Kozarov attended at least one of the one-day workshops on vicarious trauma conducted by Ms Benstead, at which she "gave examples of how her work was affecting her as a mother" and "spoke of being uncomfortable even leaving her children with their grandparents, because of thoughts of inappropriate behaviour". By late 2010, Ms Kozarov had become increasingly vocal at monthly staff team meetings, including instigating discussions on how work was affecting the daily lives of staff. Then, on 30 March 2011, Ms Kozarov attended an after-hours staff meeting which was held without management present, at which "significant concerns" were raised about how the SSOU staff were struggling and felt that they did not have GordonJ the support they needed. Subsequently, on 18 April 2011, Ms Kozarov signed a staff memorandum which (like the Penhall Memo) set out "stress-related symptoms experienced by solicitors" in the SSOU. Two days later, on 20 April 2011, Ms Kozarov attended resilience training for the SSOU staff run by Mr Carfi, a psychologist who worked for an organisation which provided counselling services that the SSOU staff were entitled to access as part of the OPP's Employee Assistance Programme. At the resilience training, Ms Kozarov spoke "about being alert to paedophiles at swimming pools ... and of her sense of being uncomfortable with people looking at her children". In addition to being vocal in public fora about the effects that the nature of the work was having on her, from June to August 2011 Ms Kozarov communicated directly with her superiors about her workload, specific cases and her health. On 9 June 2011, Ms Kozarov resisted – ultimately unsuccessfully – the allocation to her of what was called "the Lim case", saying that she was unable to handle that case with her existing workload. On 11 August 2011, Ms Kozarov became dizzy at work and afterwards sent an email to another solicitor in the SSOU, copying the then Directorate Manager of the SSOU, Mr Brown50, in which she said: "I do not think I will last the rest of the day. I truly am not feeling well." Following the dizziness, Ms Kozarov was on sick leave for two weeks. During her sick leave, she became aware that one of the complainants in the Lim case had attempted to commit suicide, an incident of which the deputy manager of the SSOU was aware. She returned to the office on 29 August 2011. "Sentinel event" – The dispute with Mr Brown (29 August 2011) On 29 August 2011, the morning of her return to work after two weeks of sick leave, Ms Kozarov had a dispute with her manager, Mr Brown, in which Mr Brown asserted that Ms Kozarov was not coping with her work. Ms Kozarov responded with a series of long, detailed and emotionally charged emails. In those emails, Ms Kozarov explained that it was her "first day back at work after two weeks off on sick leave" and that she had returned "ready to do [her] normal duties despite [her] doctor recommending [she] take further time to recover". In relation to Mr Brown's assertion that she was not coping with her work, Ms Kozarov relevantly said: in a recent file review, Mr Brown had praised her for "not dropping the ball despite all going on in [her] life"; after being allocated the Lim case, she had "worked every night from home and came in on weekends [and] even public holidays to produce the best work possible and keep on top of all [of her] matters"; and Mr Brown could not tell her where she had failed him "despite saying it's always [her] matters that need covering". Ms Kozarov also said in the emails that the dispute with Mr Brown had caused her to feel "discriminated against as a "Mr Brown" is a pseudonym. GordonJ single mother working full time" and "shamed", and that she had "no incentive to work in [the SSOU]". In her final email to Mr Brown that day, Ms Kozarov said that while she was "passionate about continuing [her] work in the [SSOU]", she was "very hurt and emotional" and for that reason "could not stay [the] rest of the day" and "felt it best to let the dust settle rather than come back to work emotional". Viewed against the background of the inherently difficult nature of the work carried out by Ms Kozarov and other solicitors in the SSOU, these matters, in combination, ought to have put Victoria on notice that Ms Kozarov was at risk of psychiatric injury in the continued performance of her work by no later than 29 August 2011. Victoria's notice of contention should be dismissed. Did Victoria's breach of duty cause Ms Kozarov's psychiatric injury? As both of Ms Kozarov's grounds of appeal are directed to the question of causation, they can be addressed together. Victoria's breach of its duty of care caused the exacerbation and prolongation of Ms Kozarov's PTSD and subsequent development of MDD. To understand the issue of causation, it is first necessary to address the nature and content of Victoria's duty of care and the way in which it was breached by Victoria's acts and omissions. Duty of care Victoria had a duty of care to take all reasonable steps to provide Ms Kozarov with a safe system of work51. The trial judge found that a safe system of work should have included: "an active OH&S framework; more intensive training for management and staff regarding the risks to staff posed by vicarious trauma and PTSD; welfare checks and the offer of referral for a work-related or occupational screening, in response to staff showing heightened risk; and, a flexible approach to work allocation, especially where required in response to screening, including the option of temporary or permanent rotation from the SSOU where appropriate". That finding was not challenged by Victoria in the Court of Appeal or in this Court. Victoria's duty was "not merely to provide [that] safe system of work", but to "establish, maintain and enforce such a system", taking account of Victoria's power, as employer, "to prescribe, warn, command and enforce obedience to [its] commands"52. Indeed, as senior counsel for Victoria conceded, the duty required 51 Koehler (2005) 222 CLR 44 at 53 [19]. 52 McLean v Tedman (1984) 155 CLR 306 at 313. GordonJ Victoria to do "almost everything" it could "short of forcing rotation" to protect Ms Kozarov from the risk of psychiatric injury. The duty of care not being in dispute, it does not fall for this Court to consider whether "[t]he trial judge and the Court of Appeal ... formulated an unrealistic duty to intrude into an employee's mental well-being", which might raise considerations of privacy, autonomy and dignity of the person53, or whether the content of the duty was defined without properly considering the contract of employment, equity and any applicable statutory provisions54. Victoria's submissions to that effect are rejected. Breach The trial judge found – and it has not been challenged – that Victoria breached its duty of care. Her Honour said that Victoria's "response to the risks to [the] SSOU staff and [Ms Kozarov] was not that of a reasonable employer. [Victoria] failed to implement the steps required to prevent injury to its employees." The trial judge explained that Victoria's breach was in respect of each aspect of the duty of care, as follows: "[t]he OH&S framework within the SSOU was woefully inadequate and did not include a sufficient program of rigorous training for staff and management about the cumulative impacts of vicarious trauma and the risks of PTSD from the work"; (2) Victoria did not "provide training to assist management to identify 'red flags' or training on how and when managers should respond to signs of concern, including by conducting welfare checks or referring an employee for optional work related screening"; "when a welfare inquiry [of Ms Kozarov] was plainly required (around the end of August 2011), this did not occur, and there was no offer of occupational screening"; and there was no "system in place to respond to the outcome of any such screening". 53 See Hegarty v Queensland Ambulance Service (2007) Aust Torts Reports ¶81-919 at 70,353 [45]-[46]; New South Wales v Briggs (2016) 95 NSWLR 467 at 476 [28], 54 See Koehler (2005) 222 CLR 44 at 53 [21]. Duty and breach prior to 29 August 2011 GordonJ During oral argument, senior counsel for Victoria acknowledged that Victoria's duty of care required it to implement a safe system of work from the beginning of the employment relationship, although no liability in negligence was found by the trial judge prior to 29 August 2011. This is likely explained by the trial judge's finding that "[i]f the measures [required to discharge the duty of care] are disaggregated ... neither an active OH&S system, nor training of staff, to prevention of each taken isolation, would necessarily have led The position is thus that Victoria had a duty which existed from the time Ms Kozarov commenced employment with the SSOU in June 2009, and aspects of that duty (for example, relating to the SSOU's OH&S framework and vicarious trauma training) were capable of being breached before 29 August 2011. However, it was not until 29 August 2011, when Victoria failed to intervene by making a welfare inquiry of Ms Kozarov and offering her occupational screening, that Victoria breached its duty in a way which could be said to have caused the exacerbation and prolongation of Ms Kozarov's PTSD and subsequent development of MDD. Indeed, subject to Victoria's notice of contention, which has been dismissed, both parties in this Court were content to argue the case on the basis that 29 August 2011 was the critical date. Causation As to causation, it was not in dispute in this Court that "if [Ms Kozarov] had been offered an appropriate welfare enquiry, she would have taken up that offer" and that "screening by a clinician at or about the end of August 2011 would probably have revealed [Ms Kozarov's] work-related symptoms of PTSD". The only question was whether notification of Ms Kozarov's work-related symptoms of PTSD would have "prompted reduction of [Ms Kozarov's] exposure to trauma by 'altering work allocation, or arranging time out, or rotation to another role, if required', because [Ms Kozarov] would have co-operated with those steps if appropriately informed of the rationale for such actions" (emphasis added). Contrary to what the Court of Appeal found, Ms Kozarov would have co-operated and her exposure to trauma would have been reduced. GordonJ On a "real review" of the evidence, that inference had a greater degree of likelihood than any competing inference and should not have been overturned by the Court of Appeal55. First, the matters relied upon by the trial judge in support of the finding that Ms Kozarov would have accepted an offer of screening also support the finding that Ms Kozarov would have co-operated with a reduction of her exposure to trauma. Those matters were that Ms Kozarov: "had previously been outspoken about the impacts of her work in the SSOU at staff meetings and during the resilience training session with Mr Carfi on 20 April 2011"; "was prepared to accept a referral to [a psychologist] by her [general practitioner] when she was unwell in August 2011"; "had been willing to liaise with Mr Carfi and [a human resources] manager about her future role at the OPP after 9 February 2012"; and "agreed to be assessed by Mr Carfi at the request of the OPP in March 2012". It is also inherently implausible that Ms Kozarov would have accepted an offer of screening, leading to a probable diagnosis of PTSD, but then would not have co-operated with a course of action to relieve the PTSD in the circumstances. Second, in the counter-factual where Victoria had discharged its duty of care56, Ms Kozarov would have responded to an offer to reduce her exposure to vicarious trauma if she: (a) had received "more intensive training" on the risks posed by vicarious trauma and PTSD; (b) had been diagnosed by a clinician with work-related symptoms of PTSD; and (c) had received an offer from management of modified work allocation, time out or rotation. That is very different to what in fact occurred. As such, very little (if any) weight should be given to Ms Kozarov's application for promotion within the SSOU on 28 August 2011 or her strong response to Mr Brown's assertion on 29 August 2011 that she was not coping with her work. As senior counsel for Victoria properly conceded, neither of those matters occurred against the background of Ms Kozarov having been diagnosed 55 Lee v Lee (2019) 266 CLR 129 at 148 [55], citing Fox v Percy (2003) 214 CLR 118 at 126-127 [25] and Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 686 [43]; 331 ALR 550 at 558. See also Masters Home Improvement Pty Ltd v North East Solution Pty Ltd (2017) 372 ALR 440 at 466 [101], citing, among other cases, Luxton v Vines (1952) 85 CLR 352 at 358, Holloway v McFeeters (1956) 94 CLR 470 at 480-481, Plomp v The Queen (1963) 110 CLR 234 at 242, Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 535-536, Naxakis v Western General Hospital (1999) 197 CLR 269 at 284-285 [45] and R v Baden-Clay (2016) 258 CLR 56 See Lewis v Australian Capital Territory (2020) 94 ALJR 740 at 753 [37], 762 [90], 783 [178]; 381 ALR 375 at 384-385, 396, 424. GordonJ with PTSD. Yet, those are the matters on which the Court of Appeal placed principal weight. Third, the unchallenged expert evidence of Professor McFarlane, a clinical psychiatrist and international expert on PTSD, was that "a very significant majority of people", if assessed as having a work-related psychiatric injury, and after having had explained to them what is happening to them and having been given the context, consequences and circumstances of their continued employment in their role, will accept the advice of a clinician in respect of that injury. While this is not conclusive, neither the Court of Appeal nor Victoria identified any reason why, on the counter-factual, Ms Kozarov's response to the diagnosis of work-related symptoms of PTSD would have been different from the response of the very significant majority of people57. And, as senior counsel for Victoria properly conceded, this was "a very important consideration". Finally, given that Ms Kozarov would have co-operated with the reduction of her exposure to trauma, no barrier to causation is presented by her contract of employment. As the trial judge found, assuming Ms Kozarov's co-operation, "no good reason was advanced by [Victoria] showing why [Ms Kozarov] could not have been rotated to another part of the OPP that did not manage sexual offences". The question of whether Victoria could have compelled Ms Kozarov to rotate does not arise, as compulsion would not have been necessary. Conclusion and orders For those reasons, the orders proposed by Gageler and Gleeson JJ should be made. 57 See Rosenberg v Percival (2001) 205 CLR 434 at 443 [24]. Edelman EDELMAN J. The facts and background to this appeal are set out in the reasons of Gageler and Gleeson JJ and Gordon and Steward JJ. I agree with the reasons in both judgments and the orders proposed by Gageler and Gleeson JJ. I seek to add only brief observations about the conceptual approach, and its application in this case, to ascertaining the liability of an employer for negligently failing to take reasonable steps to avoid allocating work, or creating a workplace, that causes or exacerbates psychiatric injury to an employee. The employer's duty of care to take reasonable steps to avoid psychiatric injury to an employee The first stage: the existence and scope of a duty of care At a high level of generality, the duties that arise in the law of torts fall into two categories: (i) those that arise by "a voluntary undertaking independent of contract"58 based upon "an assumption of responsibility"59; and (ii) those that are imposed, independently of any undertaking, by a statutory or common law rule. An employer's duty of care to prevent psychiatric injury to an employee can arise in either or both categories. If the duty arises by an undertaking based on an assumption of responsibility, express or implied, then neither the existence nor the content of the duty can "be considered without taking account of the obligations which the parties owe one another under the contract of employment"60. The "affinity between tort and contract here is strong"61. The contract might define the entirety of the undertaking or it might shape the content of the undertaking. The undertaking can be more or less extensive than the duty not to cause psychiatric injury that is separately imposed by law. No assumed duty to avoid psychiatric injury was put in issue in these proceedings. The case was argued as one based only upon the imposed duty to take reasonable steps to avoid allocating work, or creating a workplace, that causes or 58 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 at 528, quoting Pollock's Principles of Contract, 13th ed (1950) at 140. 59 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 at 528-529. See Swick Nominees Pty Ltd v LeRoi International Inc [No 2] (2015) 48 WAR 376 at 60 Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44 at 53 [21]. 61 Brown, "Assumption of Responsibility and Loss of Bargain in Tort Law" (2006) 29 Dalhousie Law Journal 345 at 354. Edelman exacerbates psychiatric injury to an employee. The employment contract was not even tendered in evidence at trial. By contrast with the assumed duty, the employer's duty to ensure the "[p]rotection of mental integrity from the unreasonable infliction of serious harm"62 is imposed by law and is not dependent upon any undertaking by the employer. In this sense, it is no different from the employer's duty to protect an employee's physical integrity from the unreasonable infliction of harm. It has long been recognised that psychiatric injury "is just as really damage to the sufferer as a broken limb ... [and] equally ascertainable by the physician"63. It was this imposed duty that Ms Kozarov's case was based upon, with her plea that the respondent's liability arose as a consequence of the "reasonably foreseeable risk of [Ms Kozarov] suffering psychiatric injury whilst undertaking her employment duties". Because there is no negligence "in the air"64, the imposed duty to take reasonable steps to avoid allocating work, or creating a workplace, that causes or exacerbates psychiatric injury to an employee will only be "engaged" when there is a reasonably foreseeable risk of psychiatric injury to the employee of the general kind that occurred65. Whether a risk of psychiatric injury is reasonably foreseeable will depend upon (i) "the nature and extent of the work being done by the particular employee" and (ii) any "signs given by the employee concerned"66. The second and third stages: breach and causation The existence of a duty of care owed to the employee is the first stage of the enquiry. If a duty exists, and the psychiatric injury is within the scope of that 62 Tame v New South Wales (2002) 211 CLR 317 at 379 [185]. 63 Owens v Liverpool Corporation [1939] 1 KB 394 at 400. See also Goold and Kelly, "Who's Afraid of Imaginary Claims? Common Misunderstandings of the Origin of the Action for Pure Psychiatric Injury in Negligence 1888-1943" (2022) 138 Law Quarterly Review 58. 64 Martin v Herzog (1920) 126 NE 814 at 816, quoting Pollock, The Law of Torts, 10th ed (1916) at 472; Chester v Waverley Corporation (1939) 62 CLR 1 at 12; Bourhill v Young [1943] AC 92 at 101-102. See also Palsgraf v Long Island Railroad Co (1928) 162 NE 99 at 101; Bourhill v Young [1943] AC 92 at 108, 116-117; Seltsam Pty Ltd v McNeill (2006) 4 DDCR 1 at 4 [4]-[5]. 65 Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44 at 57 [35]. 66 Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44 at 57 [35]. Edelman duty, the focus will then turn to an enquiry as to breach: having regard, on the one hand, to the magnitude of the possible harm and the degree of probability of its occurrence and, on the other hand, to the burden of alleviating action, what steps would a reasonable person in the position of the employer have taken in response67? This was the subject of the respondent's notice of contention in this Court. If it is concluded that an employer is in breach, the steps that should have been taken to avoid or reduce the risk of psychiatric injury will inform the question of causation. This question will usually require asking whether the failure by the employer to take reasonable steps was a necessary condition for the psychiatric injury that the employee suffered. In other words, would the existence or extent of the psychiatric injury not have occurred but for the employer's breach? This issue was the subject of Ms Kozarov's grounds of appeal. No other issue, such as remoteness or scope of liability, arises on this appeal. Duty, breach, and causation in this case In the circumstances of this case, psychiatric injury to every employee of the Specialist Sexual Offences Unit ("the SSOU") of the Victorian Office of Public Prosecutions ("the OPP") was a reasonably foreseeable consequence of the nature and extent of the work undertaken. The Vicarious Trauma Policy of the OPP, to which the primary judge referred68, cited research indicating that vicarious trauma "is an unavoidable consequence of undertaking work with survivors of trauma". But even without this policy, the very nature and extent of the work of the SSOU were such that the respondent was correct to concede on this appeal that at all relevant times the risk of psychiatric injury was such that it owed a duty of care to Ms Kozarov. By its notice of contention, however, the respondent alleged that it had not breached its duty of care. In considering the matters relevant to determining the reasonableness of the respondent's conduct – the magnitude of the possible harm and the degree of probability of its occurrence on the one hand, and the burden of taking precautions on the other – a critical matter is the point in time when the reasonableness of the respondent's conduct falls to be assessed. At the moment that Ms Kozarov commenced work in the SSOU in June 2009, the nature of the work undertaken in the SSOU required immediate precautions in relation to every employee in that unit. As Gordon and Steward JJ observe, the primary judge noted that these precautions included an active 67 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48. Compare Wrongs Act 1958 (Vic), ss 48-49, which, relevantly, do not apply to claims excluded by s 45. 68 Kozarov v Victoria (2020) 294 IR 1 at 23 [94] (emphasis of primary judge). Edelman Occupational Health and Safety framework and more intensive training for managers and staff about the risk posed by vicarious trauma and post-traumatic stress disorder in order to identify and to respond to signs of concern. But the primary judge concluded that neither of these measures, at least in isolation, would necessarily have prevented Ms Kozarov's psychiatric injury. It is possible that the measures, in combination, might have prevented Ms Kozarov's psychiatric injury but her case was not run on that basis either as a primary or alternative case. Her case focused only upon the greater precautions that were required to be taken by her employer at the later point in time of August 2011, and the correspondingly increased likelihood that these greater precautions would have prevented exacerbation of her psychiatric injury. A reasonable person in the position of Ms Kozarov's employer would have been aware of the risks that existed from the commencement of any work in the SSOU. As more "evident signs" of psychiatric injury to Ms Kozarov emerged, that reasonable person would have appreciated that there was a considerable increase in the likelihood and the seriousness of a psychiatric injury to her or, if psychiatric injury already existed, a considerable increase in the likelihood of it becoming worse. Correspondingly, the extent of alleviating precautions against the risk of harm that would reasonably be expected to be taken by the respondent in relation to Ms Kozarov also increased. At the very least, these increased precautions included, as the primary judge found, a welfare enquiry of Ms Kozarov69. It may be that, by the end of August 2011, the foreseeable risk of causing or exacerbating psychiatric injury was so great, and the likely extent of that foreseeable injury was so serious, that reasonable precautions would have included compulsory rotation of Ms Kozarov to a different part of the OPP that did not prosecute sexual offences. Putting to one side whether even at common law an employee can waive their rights to a safe place of work, an employer will not comply with the common law duty to ensure a safe place of work by acquiescing in the refusal of an employee to be rotated from a position that, by reason of some physical characteristic of the employee, involves a high risk of serious physical injury to that employee. Psychiatric injury is no different. Ultimately, it is unnecessary in this case to decide whether the reasonable precautions of the respondent required compulsory rotation. For the reasons given by Gageler and Gleeson JJ and Gordon and Steward JJ, the better view of the counterfactual based on lawful conduct70 is as follows: if the respondent had taken the reasonable steps of making a welfare enquiry and offering Ms Kozarov a 69 Kozarov v Victoria (2020) 294 IR 1 at 156 [704]. 70 Lewis v Australian Capital Territory (2020) 94 ALJR 740 at 753 [37], 762 [90], 775 [151], 783 [178]; 381 ALR 375 at 384-385, 396, 413-414, 424; Talacko v Talacko (2021) 95 ALJR 417 at 429 [51]; 389 ALR 178 at 191. Edelman referral for occupational screening then she would have accepted that offer and, with the benefit of screening by a clinician, the screening would probably have revealed that she had symptoms of post-traumatic stress disorder, with the result that Ms Kozarov would have agreed to a rotation out of the SSOU and her psychiatric injury would not have been exacerbated. Conclusion I agree with the orders proposed by Gageler and Gleeson JJ.

HIGH COURT OF AUSTRALIA WESTERN AUSTRALIAN PLANNING COMMISSION APPELLANT AND TEMWOOD HOLDINGS PTY LTD RESPONDENT Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63 9 December 2004 ORDER Appeal allowed. Orders 1, 2, 3 and 5 of the Full Court of the Supreme Court of Western Australia made on 22 May 2002 set aside. In their place order that the appeal to that Court be dismissed. The appellant pay the respondent's reasonable costs of the appeal to this Court. On appeal from the Supreme Court of Western Australia Representation: G T W Tannin SC with C J Thatcher for the appellant (instructed by the Crown Solicitor's Office of Western Australia) D H Solomon with J C Giles for the respondent (instructed by Solomon Brothers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Western Australian Planning Commission v Temwood Holdings Pty Ltd Town Planning (WA) – Statutory right to compensation conferred upon any person whose land or property was injuriously affected by the making of a specified planning scheme – Land injuriously affected by making of scheme not owned by respondent at time scheme was made but subsequently owned by respondent – Whether right to compensation passed with the land – Whether respondent had a statutory right to compensation. Town Planning (WA) – Subdivision of land – Application for subdivision approval – Progressive subdivision of larger area – Town planning authority granted subdivision approval subject to a condition that a portion of the larger area be vested in the Crown free of cost and without any payment of compensation by the Crown – Whether condition imposed for a proper "planning purpose" – Whether condition fairly and reasonably related to the development permitted – Whether condition validly imposed. Town Planning and Development Act 1928 (WA), ss 11, 20, 20A. Metropolitan Region Town Planning Scheme Act 1959 (WA), ss 3, 5, 36. McHUGH J. The issues in this appeal concern the construction of the Town Planning and Development Act 1928 (WA) ("the Town Planning Act") and the Metropolitan Region Town Planning Scheme Act 1959 (WA) ("the Metropolitan Region Scheme Act"). The central issue is whether the Town Planning Appeal Tribunal ("the Tribunal") erred in law in approving a condition on the grant of three subdivision approvals under s 20 of the Town Planning Act. The condition required certain land reserved under a town planning scheme to be ceded free of cost to and without payment of compensation by the Crown. In my opinion, the Tribunal did not err in law in approving the condition. The condition was one that the Tribunal had power to approve, was bona fide imposed for a legitimate planning purpose and was reasonably related to the proposed development. Statement of the case The appellant, the Western Australian Planning Commission ("the Commission"), is a body corporate established under s 4 of the Western Australian Planning Commission Act 1985 (WA). That Act, the Town Planning Act and the Metropolitan Region Scheme Act confer various functions on the Commission. One of the functions of the Commission under the Town Planning Act is to make decisions on applications for subdivision approval. As it then stood, s 42 of the Town Planning Act established the Tribunal. One of the functions of the Tribunal was to hear "appeals" from decisions of the Commission on applications for subdivision approval. They were appeals on the merits of the case. Section 54B of the Town Planning Act allowed appeals from decisions of the Tribunal to the Supreme Court of Western Australia on a question of law1. Temwood Holdings Pty Ltd ("Temwood") appealed to the Tribunal three against decisions of subdivisions of a larger parcel of land subject to the condition in each case that Temwood cede a certain portion of that land, which was reserved under a town planning scheme, to the Crown free of cost to and without payment of the Commission approving applications for 1 Section 11 of the Planning Appeals Amendment Act 2002 (WA) repealed Pt V of the Town Planning Act, which contained ss 42 and 54B, and inserted a new Pt V. Under the new Pt V, the Tribunal is established under s 36 of the Town Planning Act and appeals to the Supreme Court of Western Australia from decisions of the Tribunal on a question of law are permitted under s 67 of that Act. McHugh compensation by the Crown. The Tribunal dismissed Temwood's complaints about the Commission's decisions2. Temwood then appealed to the Supreme Court of Western Australia arguing that the condition was invalid because the Commission had no power to impose it and because, in any event, it was imposed for an improper purpose. It identified the purpose as the defeat of Temwood's presently subsisting but deferred right to compensation for injurious affection under s 11 of the Town Planning Act and s 36(3) of the Metropolitan Region Scheme Act. McLure J3 dismissed Temwood's appeal. Her Honour found that Temwood did not have a vested right to compensation under s 36 of the Metropolitan Region Scheme Act with respect to the reservation. Its "right" was merely a contingent or inchoate right4. Her Honour held that s 20 of the Town Planning Act gave the Commission (and on appeal the Tribunal) power to impose the condition5 and that the power was not improperly exercised even though the condition defeated Temwood's contingent or inchoate right to compensation6. Temwood then appealed to the Full Court of the Supreme Court of Western Australia (Wallwork and Scott JJ and Olsson AUJ), which allowed the appeal7. The Full Court held8 that s 11 of the Town Planning Act – which provides a mechanism for compensating persons whose land or property is injuriously affected by the making of a town planning scheme – conferred upon Temwood a "positive, unequivocal", "specific, definite, substantive" statutory right to compensation as a consequence of the reservation of that portion of its land under the relevant town planning scheme, the Metropolitan Region Scheme. The Court held9 that actual enjoyment of this right was deferred until "the Temwood Holdings Pty Ltd v Western Australian Planning Commission [2001] WATPAT 4. Temwood Holdings Pty Ltd v Western Australian Planning Commission (2001) 115 LGERA 152. 4 Temwood (2001) 115 LGERA 152 at 169. 5 Temwood (2001) 115 LGERA 152 at 171. 6 Temwood (2001) 115 LGERA 152 at 179. Temwood Holdings Pty Ltd v Western Australian Planning Commission (2002) 25 WAR 484. Temwood (2002) 25 WAR 484 at 495 per Olsson AUJ, Wallwork and Scott JJ agreeing. Temwood (2002) 25 WAR 484 at 495. McHugh relevant event stipulated in s 36(3) of the [Metropolitan Region Scheme Act] took place." The relevant event was when the land was first sold following the date of the reservation or when the Commission refused an application for subdivision approval or granted subdivision approval subject to conditions that were unacceptable to the applicant. The Court held10 that a manifest legislative intention was required to abrogate this statutory right. Olsson AUJ, with whose judgment Wallwork and Scott JJ agreed, said11: "I find it impossible to accept that, having conferred such a specific statutory right, the legislature had in mind that, per medium of the general power of imposing conditions of approval conferred by s 20(1)(a) of the [Town Planning Act], the [Commission] could, in its discretion, attach a condition to an approval to subdivide which directly negated that right by extinguishing it." The Court held12 that it was beyond the Commission's power under s 20(1)(a) of the Town Planning Act – which empowers the Commission to give subdivision approvals "subject to conditions" – to attach a condition to a subdivision approval that directly negated that right. Accordingly, the Court held that the condition was beyond power and invalid. The Full Court also found13 that the Commission had improperly exercised its power because the condition served no planning purpose and was not imposed as a bona fide exercise of the Commission's powers. Subsequently, this Court granted the Commission special leave to appeal against the decision of the Full Court. The material facts The Bayshore Garden Estate ("the Land") is situated in a coastal area of Western Australia at Singleton, north of Mandurah and approximately 55 kilometres south of Perth. A Metropolitan Region Scheme was created and gazetted14 in 1963 under ss 30 and 32 of the Metropolitan Region Scheme Act. On gazettal, the Scheme reserved a strip of land running the length of the foreshore frontage of the Land for the purpose of "Parks and recreation area". 10 Temwood (2002) 25 WAR 484 at 495. 11 Temwood (2002) 25 WAR 484 at 495. 12 Temwood (2002) 25 WAR 484 at 495. 13 Temwood (2002) 25 WAR 484 at 497-500. 14 Government Gazette of Western Australia, No 60, 9 August 1963 at 2318. McHugh The strip of land was approximately 200 metres wide and contained 20 ha ("the Foreshore Reserve"). The then registered proprietor of the reserved foreshore land retained ownership of that land: the reservation did not divest ownership. In 1992, the respondent, Temwood, became the registered proprietor of the Land. Neither Temwood nor any previous registered owner has received compensation as a result of the reservation of the Foreshore Reserve. Since 1993 Temwood has progressively subdivided and developed the Land as a residential area with associated facilities. In 1999 and 2000, Temwood lodged three applications with the Commission for subdivision approval in relation to portions of the Land. None of the applications sought approval to subdivide any part of the Foreshore Reserve. Acting under s 20(1)(a) of the Town Planning Act, the Commission approved the first application on 17 May 2000 and the other two on 7 September 2000. Each approval was subject to the condition that the Foreshore Reserve be "vested in the Crown under section 20A of the [Town Planning Act]" and "be ceded free of cost and without any payment of compensation by the Crown." The condition stated: "That portion of Pt Lot 1001 to the west of the land zoned 'Urban' under the Metropolitan Region Scheme being shown on the Diagram or Plan of Survey as a 'Reserve for Recreation' and vested in the Crown under section 20A of the [Town Planning Act], such land to be ceded free of cost and without any payment of compensation by the Crown." The Commission's contentions The Commission contends that its power to impose conditions on subdivision approval is not affected by any statutory presumption against interference with vested proprietary rights15. The Commission says that it is irrelevant that the Land is the subject of a reservation under the Metropolitan Region Scheme. The Commission also contends that the imposition of a condition on subdivision approval requiring the ceding of land to the Crown, free of cost, is not a confiscation or expropriation of a proprietary right. The Commission contends that the Full Court erred in characterising the imposition of the condition as an extinguishment of a statutory right. The Commission claims that the entitlement to compensation for injurious affection for land reserved under the Metropolitan Region Scheme is governed by ss 11 and 12 of the Town Planning Act, as modified by s 36 of the Metropolitan 15 Lloyd v Robinson (1962) 107 CLR 142 at 154. McHugh Region Scheme Act. An entitlement to compensation is conditional upon the occurrence of one of the events specified in s 36(3)(a) and (b) of the Metropolitan Region Scheme Act and upon the claimant making a claim within the time specified in s 36(5) of that Act. The Commission argues that a landowner's entitlement to compensation as a result of the reservation of the Foreshore Reserve is a potential or contingent right until the occurrence of one of the events specified in s 36(3)(a) and (b) of the Metropolitan Region Scheme Act. It contends that the principle in Clissold v Perry16 – that legislation is not presumed to interfere with vested proprietary rights unless the intention is manifest – does not apply to potential or contingent rights. The Commission also contends that it imposed the condition for a proper planning purpose and not for any ulterior purpose and that the condition related reasonably and fairly to the development permitted and was not so unreasonable that no reasonable planning authority would have imposed the condition17. It claims that it imposed the condition for the legitimate planning purpose of securing public ownership of land for public purposes and to preserve the Foreshore Reserve and to ensure public access for recreation. The Commission says that the condition reasonably related to the entire subdivision of the Land, considered as a whole, and that the existence of the owner's contingent right to compensation did not make the condition unreasonable. Temwood's contentions In answer to the Commission's arguments, Temwood contends that s 36 of the Metropolitan Region Scheme Act conferred on it a deferred right to compensation. This right was not to be extinguished without clear words and s 20(1)(a) of the Town Planning Act did not manifest a clear intention to extinguish that right. Temwood also contends that the condition was invalid because it was imposed for the improper purpose of defeating a presently subsisting but postponed statutory right to compensation for injurious affection that Temwood enjoyed under s 11 of the Town Planning Act and s 36 of the Metropolitan Region Scheme Act. The issues For Temwood's argument to succeed, it must show that: (a) when the condition was imposed, it had a presently subsisting but postponed statutory right to compensation; and (1904) 1 CLR 363 at 373 per Griffith CJ. 17 Newbury District Council v Secretary of State for the Environment [1981] AC 578. McHugh the Town Planning Act as modified by the Metropolitan Region Scheme Act did not manifest an intention to defeat that right to compensation; or the condition was imposed for the improper purpose of defeating Temwood's existing statutory right to compensation; or the condition was imposed for a purpose extraneous to a legitimate planning purpose, such that its imposition could not be regarded as the bona fide exercise by the Commission of its powers to achieve a legitimate planning object. Did Temwood have a presently subsisting, "vested" or deferred right to compensation? The first issue in the appeal is whether s 11 of the Town Planning Act, read with s 36 of the Metropolitan Region Scheme Act, conferred on Temwood a vested but deferred right to compensation, as the Full Court held. In my opinion, the reservation of the Foreshore Reserve conferred no right to compensation of any kind on Temwood until it made an application for development approval that was rejected by the Commission or approved subject to a condition that it found unacceptable. When the Metropolitan Region Scheme reserves land for public purposes, the interaction of the Town Planning Act and the Metropolitan Region Scheme Act may entitle an owner of the land to obtain compensation in one of three situations. The first is when the land is sold for the first time after the date of reservation. Only the person who owned the land when the reservation was made can obtain compensation in this situation. Temwood was not the owner of the Land when the reservation was made with respect to the Foreshore Reserve. Consequently, it never had any entitlement of any kind to compensation arising out of the first sale of the Land. The second and third situations that give rise to a right to compensation are where the Commission refuses a development application in respect of the land or approves it subject to a condition that the applicant will not accept. In either case, compensation is payable to the owner of the land at the time of the application. Temwood was the owner of the Land when the Commission approved its applications for development approval subject to the "transfer free of cost" condition. If Temwood found that condition "unacceptable", it then acquired a right to compensation. In this context, "unacceptable to the applicant" does not mean "disapproved by the applicant"; it means that the applicant does not accept the condition and will not pursue the development burdened by that condition. If the applicant proceeds with the development subject to that condition, it has no right to compensation. The result of the interaction of the Town Planning Act and the Metropolitan Region Scheme Act, therefore, is that at no stage prior to the Commission's conditional approval McHugh of Temwood's development applications did Temwood have any right, contingent or otherwise, to compensation. The relationship between the Metropolitan Region Scheme Act and the Town Planning Act By virtue of s 5 of the Metropolitan Region Scheme Act, the Town Planning Act applies to the metropolitan region, except as modified by the Metropolitan Region Scheme Act. The Metropolitan Region Scheme Act is to be construed in conjunction with the Town Planning Act, as if the provisions of the Metropolitan Region Scheme Act were incorporated with and formed part of the Town Planning Act18. If the Metropolitan Region Scheme Act is in conflict or is inconsistent with the Town Planning Act (as modified by the Metropolitan Region Scheme Act), the provisions of the Metropolitan Region Scheme Act prevail to the extent of any conflict or inconsistency19. Subdivision approval and the imposition of conditions by the Commission Under s 20(1)(a) of the Town Planning Act, the Commission may impose conditions on approvals for subdivision. The section prohibits a person from subdividing any lot without the approval of the Commission. Approval may be given "subject to conditions which shall be carried out before the approval becomes effective." Section 20(1)(a) relevantly provides: "[A] person shall not, without the approval of the Commission, … subdivide any lot …; and the Commission may give its approval under this paragraph subject to conditions which shall be carried out before the approval becomes effective." In giving its approval under s 20(1)(a), the discretion of the Commission is not fettered by the provisions of a town planning scheme except to the extent necessary for compliance with an environmental condition relevant to the land under consideration20. (No such condition applied in the present case.) The Commission must approve a plan of subdivision before any certificate of title may be created or registered. Where the Town Planning Act applies to a plan of subdivision, the Registrar of Titles must not create or register a certificate of title under the Transfer of Land Act 1893 (WA) for land the subject of that 18 Metropolitan Region Scheme Act, s 3. 19 Metropolitan Region Scheme Act, s 3. 20 Town Planning Act, s 20(5). McHugh plan unless the Commission has approved that plan21. If the Commission approves a plan of subdivision subject to the condition that a portion of the land vest in the Crown for the purpose of a reserve for foreshore management or recreation, the Registrar of Titles must vest that portion in the Crown without any conveyance, transfer or assignment or the payment of any fee. Section 20A(1) of the Town Planning Act relevantly provides: "When the Commission has approved, under this Act, a subdivision of land subject to the condition that certain portions of that land shown on a diagram or plan of survey relating to the subdivision shall vest in the Crown for the purpose of conservation or protection of the environment or … reserve for … foreshore management or ... recreation, … the Registrar of Titles … shall, in accordance with the condition, vest in the Crown any land shown on the diagram or plan as being reserved for the purpose of a … reserve for … foreshore management … or recreation without any conveyance, transfer or assignment or the payment of any fee." The Full Court described s 20A as "manifestly intended to achieve an administrative, machinery purpose only."22 If the Commission has approved a plan of subdivision on the condition that a portion of the land be vested in the Crown for parks, recreation grounds or open spaces generally, the owner of the land, in lieu thereof, may pay a sum that represents the value of the portion23. The compensation scheme Section 11 of the Town Planning Act, as modified by the Metropolitan Region Scheme Act, provides a mechanism for compensating "[a]ny person whose land or property is injuriously affected by the making of a town planning scheme" (emphasis added). The Metropolitan Region Scheme is such a town planning scheme. Section 11(1) of the Town Planning Act confers an entitlement 21 Town Planning Act, s 20(2). 22 Temwood (2002) 25 WAR 484 at 493. 23 Town Planning Act, s 20C. McHugh to obtain compensation from the "responsible authority" (in this case, the Commission24). Relevantly, s 11(1) provides: "Any person whose land or property is injuriously affected by the making of a town planning scheme shall, if such person makes a claim within the time, if any, limited by the scheme (such time not being less than 6 months after the date when notice of the approval of the scheme is published in the manner prescribed by the regulations), be entitled to obtain compensation in respect thereof from the responsible authority". (emphasis added) Section 11 has been in this form since 1928. Section 36 of the Metropolitan Region Scheme Act imposes certain limitations and conditions on the liberty to apply for compensation conferred by s 11. In so far as they are inconsistent with the terms of s 11, the meaning of the latter section must be modified to accommodate them. The conditions include the following: Under s 36(3), where "any land" has been reserved for a public purpose no compensation is payable until: the land is first sold following the date of the reservation; or refuses an application made under the the Commission Metropolitan Region Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant. 2. Where "the land" is sold or the Commission refuses an application made under the Metropolitan Region Scheme for permission to carry out development on "the land" or grants permission to carry out development on "the land" subject to conditions that are unacceptable to the applicant, the Commission must be satisfied of certain matters before compensation is payable under s 36(3). Where the land is sold, the owner must have sold the land in good faith and taken reasonable steps to obtain a fair and reasonable price for the land and where a development application is made in respect of the land, the application must be made in good faith25. 24 Metropolitan Region Scheme Act, s 36(1)(a). 25 Metropolitan Region Scheme Act, s 36(4). McHugh A claim for compensation under s 36(3)(c) must be made "at any time within 6 months after the land is sold or the application for permission to carry out development on the land is refused or the permission is granted subject to conditions that are unacceptable to the applicant."26 Compensation is payable under s 36(3)(a) to the owner of "the land" at the date of reservation in the case of a first sale of land27. It is payable under s 36(3)(b) to the owner of "the land" at the date of application in the case of the refusal of a development application or approval subject to unacceptable conditions28. Compensation for injurious affection to "any land" is payable under s 36(3) only once29. The owner at the time of reservation Section 11 of the Town Planning Act, read with ss 36(3) and 36(3a) of the Metropolitan Region Scheme Act, conferred on the owner of the Land at the time when the Metropolitan Region Scheme was made a liberty to apply for compensation at a future time. "Liberty" or "expectation" rather than "right" is the description that best fits the entitlement of such an owner. Section 11 must be read with s 36 of the Metropolitan Region Scheme Act. Those sections in combination look to the future. Section 11 of the Town Planning Act declares generally that, if an owner whose land is injuriously affected makes a claim within the time specified, the owner shall "be entitled to obtain compensation". Section 36, however, postpones the entitlement until the happening of one of three events identified in s 36(3) of the Metropolitan Region Scheme Act. None of them may occur in the lifetime of the owner. And it is far from fanciful to think that in many cases none of them may occur for generations. Injuriously affected land may be passed down to family members or relatives for many decades before the affected land is sold or developed. The mere reservation of the Foreshore Reserve conferred no right in a Hohfeldian sense on the owner of the Land at the time of reservation. No other person or persons came under any present or correlative duty, obligation, disability or liability by reason of the reservation. As Holmes CJ pointed out in Tyler v Judges of the Court of Registration30, when he was Chief Justice of the 26 Metropolitan Region Scheme Act, s 36(5). 27 Metropolitan Region Scheme Act, s 36(3a)(a). 28 Metropolitan Region Scheme Act, s 36(3a)(b). 29 Metropolitan Region Scheme Act, s 36(3a). 30 55 NE 812 at 814 (1900), cited in Hohfeld, "Fundamental Legal Conceptions As Applied in Judicial Reasoning", (1917) 26 Yale Law Journal 710 at 721. McHugh Supreme Court of Massachusetts, "all rights ... are really against persons." Until one of the three events occurs, there is no interest, right or privilege that the owner of the Land could enforce against anyone, and no interest, right or privilege that the courts would protect by way of injunction or otherwise. And none might arise. If the owner made a gift of the Land before the occurrence of one of the events, he or she would retain no entitlement to any kind of compensation. It may even be the case that, if the owner died before the occurrence of one of those events, nothing would pass to the owner's estate that could ripen into a claim for compensation when one of the three events occurred. Perhaps the liberty has sufficient substance to be saved by the Interpretation Act 1984 (WA) if s 11 were to be repealed31. But assuming that is so, the liberty to apply for compensation in the future conferred by s 11 and restricted by s 36 bears no relationship to the rights considered in Clissold v Perry32, the case upon which the Full Court relied. The rights in Clissold were existing rights that could be enforced against anyone except a person with a better title to the land. That is not the case with the liberty conferred by s 11 of the Town Planning Act, when it is read, as it must be, with s 36 of the Metropolitan Region Scheme Act. Moreover, any entitlement to compensation by the person who owned the Land when the reservation was made would depend on the particular event that triggered the claim for compensation. If the event was the first sale of the Land, that person would be the only person who could obtain compensation. A subsequent purchaser or transferee of the Land would have no right to compensation in respect of that event. Temwood's entitlements A claim by Temwood to have a vested right to compensation is even more tenuous than that of the person who owned the Land when the reservation was made. Temwood was not the owner of the Land when the reservation was made. Consequently, it never had any entitlement of any kind to compensation arising out of the first sale of the Land after the reservation of the Foreshore Reserve. However, Temwood was the owner of the Land when the Commission approved its development applications subject to the "transfer free of cost" condition. If Temwood finds the condition "unacceptable" in the sense that its presence causes Temwood not to pursue the subdivisions burdened by that condition, it obtains a right to compensation. If Temwood proceeds with the subdivisions subject to that condition, it has no right to compensation. The result of the interaction of the Town Planning Act and the Metropolitan Region Scheme Act, therefore, is 31 cf Esber v The Commonwealth (1992) 174 CLR 430; Dossett v TKJ Nominees Pty Ltd (2003) 78 ALJR 161; 202 ALR 428. 32 (1904) 1 CLR 363; aff'd on appeal in Perry v Clissold (1906) 4 CLR 374. McHugh that at no stage prior to the Commission's conditional approval of Temwood's development applications did Temwood have any right, contingent or otherwise, to compensation. Any right of Temwood could only arise upon its election to treat the condition as unacceptable and not proceed with the subdivisions. Moreover, in stating that Temwood has a right to compensation if it finds the condition unacceptable, I have assumed that the first sale of the Land – to Temwood or its predecessor – did not prevent Temwood from acquiring a right to compensation as a result of Temwood's finding the condition unacceptable. That assumption turns on the use of the disjunctive "until … or" in s 36(3) of the Metropolitan Region Scheme Act. Does the use of the disjunctive in that sub-section mean that compensation is payable as soon as one of the events referred to in s 36 occurs with the result that all rights to compensation are lost unless a claim is made within the prescribed period after the occurrence of that event? Effect of the disjunctive "until … or" in s 36(3) of the Metropolitan Region Scheme Act All the sub-sections of s 36 are expressed in "until … or" format or just in "or" format. No sub-section expressly states that compensation becomes payable once and for all as soon as one of the three events referred to in s 36(3) occurs. If s 36(3) has that construction, then the effect of s 36(3a) is that compensation becomes payable only to the owner of the land at the time of the reservation if the land is sold before any application for development is made. Conversely, it is payable only to the applicant for development if an application is refused or granted subject to conditions that are unacceptable to the applicant. Section 36(10)33 refers to the payment of a refund where a reservation is revoked or reduced in size and the Commission has already compensated an owner for injurious affection. Section 36(10) states that the refund is not payable by the owner of the land "until the land is first sold or subdivided following the date of the revocation or reduction referred to in subsection (9)(b) unless otherwise agreed by the owner and the Commission." If the sub-section refers to the time when the land is "first sold or subdivided", rather than when the land is "first sold" "or" "subdivided", the sub-section contemplates that it is the event that occurs first in time that is the relevant event which gives rise to the obligation to pay the refund. Arguably, a similar construction should apply in relation to the obligation to pay compensation when the reservation is first imposed. On the other hand, the silence in s 36 in relation to the time when the obligation to pay compensation arises supports the conclusion that it is not 33 Section 36(10) was inserted by the Planning Legislation Amendment Act (No 2) McHugh necessarily the event that occurs first in time that conclusively and finally triggers the right to compensation. If the question had arisen for decision before 1986, the better construction of s 36(3) would have been that once one of the three events triggered a claim for compensation, the later occurrence of the two remaining events could not trigger a further claim. The reasons of Gummow and Hayne JJ show why that is so. Thus, once the land the subject of the reservation was sold, the refusal of development approval or its grant subject to unacceptable conditions could not trigger a further claim for compensation. However, in 1986, s 36(3a), which had been inserted in 1968, was repealed and a new sub-section substituted. The new sub-section provided that, where land the subject of a reservation is "first sold" after the making of the reservation, compensation is payable to the person who was the owner of the land at the date of reservation. Where the Commission refuses a development application in respect of that land, or grants permission to carry out development on the land on conditions unacceptable to the applicant, compensation is payable to the person who was the owner of the land at the date of application. Whatever the effect of s 11 of the Town Planning Act may be if it stood alone, in cases where land has been reserved for public purposes, it must be read with s 36(3)-(5) of the Metropolitan Region Scheme Act. When that is done, the entitlement to compensation cannot be confined to the person who was the owner of the land when the reservation was made. Paragraph 36(3a)(a), when read with s 36(3), provides for the payment of compensation – where "the land is first sold following the date of the reservation" – to the owner of the land at that date. Paragraph 36(3a)(b), when read with s 36(3), provides for the payment of compensation – where an application for development has been rejected or approved subject to unacceptable conditions – "to the person who was the owner of the land at the date of application". It is impossible to escape the conclusion, therefore, that par 36(3a)(b) applies to a subsequent owner, and there is no reason for confining the class of subsequent owners to those who have obtained ownership other than by way of sale. Accordingly, the reference to "[a]ny person" in s 11(1), when read with ss 36(3) and 36(3a) does not require that the owner of the property the subject of a reservation be the same owner as the person who owned the property at the time of the making of the scheme. Further, when s 11 is read with s 36(3)-(5), the words "affected by the making of a town planning scheme" should not be given a temporal connotation. Hence, in a case where land has been reserved for public purposes, a claim for compensation may be made where the ownership of the property has changed. Thus, the terms of s 36(3a)(b) point irresistibly to the conclusion that a person who has bought the affected land and whose subsequent development application is rejected or approved subject to unacceptable conditions may be McHugh entitled to compensation. The words "owner of the land at the date of application" would have little scope for operation unless this was so. Section 36(3a)(b) would operate only in the limited class of case where the owner at the date of reservation made an application for development or where the land had been conveyed to the applicant other than by sale – for example, by will or operation of law. This is such an unlikely construction that it must be rejected. On the construction of s 36(3a) that I favour, par (b) of that sub-section must be regarded as giving an independent claim of compensation unrelated to the fact of ownership at the date when the Scheme was made. Moreover, once it is accepted that s 36 in combination with s 11 confers two independent rights, there is no reason why one right should expire because the other right to compensation was not pursued. Thus, where land is reserved under a town planning scheme, upon rejection of a development application or approval subject to conditions unacceptable to the applicant, a claim arises. If the claim lapses, however, for want of prosecution, I see no reason for holding that, upon the first sale of the land, a claim for compensation does not arise. And that is so, whether the rights subsist in different persons or the same person. Section 36(3a) declares that compensation is payable only once. It does not declare that both of the independent rights conferred lapse if one of them is not pursued after its triggering event occurs. Accordingly, although Temwood had no presently subsisting, vested, deferred or contingent right to compensation under the Metropolitan Region Scheme Act, it would obtain a vested right to compensation if its applications for subdivision were refused or if they were approved subject to an unacceptable condition. But at no time did it have or could it acquire a right to compensation in respect of the sale of the Land. That right belonged to the owner of the Land at the time of the making of the Metropolitan Region Scheme. The effect of the principle in Clissold v Perry Clissold v Perry34 held that legislation is presumed not to interfere with existing vested proprietary interests without adequate compensation. Griffith CJ said35: "In considering this matter it is necessary to bear in mind that it is a general rule to be followed in the construction of Statutes such as that with which we are now dealing, that they are not to be construed as interfering with vested interests unless that intention is manifest." (1904) 1 CLR 363. 35 Clissold v Perry (1904) 1 CLR 363 at 373. McHugh The principle applied in Clissold is but a particular exemplification of the wider principle that, in the absence of clear words, legislation is not construed as intending to interfere with economic rights and interests without compensation36. As I have indicated, however, s 11 of the Town Planning Act, read together with s 36 of the Metropolitan Region Scheme Act, did not confer on Temwood any "certain definite" or "vested" right or any other kind of right to compensation before the Commission dealt with Temwood's development applications. Before the Commission gave its decision and Temwood made its election, Temwood had no right, contingent or vested, to compensation. The principle referred to in Clissold did not apply to the Commission's exercise of its powers under s 20 of the Town Planning Act. Moreover, the decision of this Court in Lloyd v Robinson37 inevitably leads to the conclusion that the Commission had power to impose the condition that it did. The Commission's power to impose conditions The Town Planning Act empowers the Commission to impose conditions on applications for subdivision38. That Act gives the Commission a broad discretion to impose conditions. The Commission's discretion is not fettered by the provisions of a town planning scheme except to the extent necessary for compliance with an environmental condition relevant to the land under consideration39. (That fetter does not apply here.) Section 20A contemplates that conditions for subdivision approval may be for the purpose of conservation or protection of the environment or a reserve for foreshore management or recreation. 36 Attorney-General v Horner (1884) 14 QBD 245 at 256-257 per Brett MR; Central Control Board (Liquor Traffic) v Cannon Brewery Co [1919] AC 744 at 752 per Lord Atkinson; Bond v Nottingham Corporation [1940] Ch 429 at 435 per Sir Wilfrid Greene MR; R v Evans [1963] 1 QB 979 at 989; Hartnell v Minister of Housing and Local Government [1965] AC 1134 at 1172-1173 per Lord Wilberforce. (1962) 107 CLR 142 at 153-155. 38 Town Planning Act, s 20. 39 Town Planning Act, s 20(5). McHugh The Town Planning Act contemplates that the Commission may eventually acquire land the subject of a reservation40. The Metropolitan Region Scheme allows the Commission to elect to acquire land in respect of which a person claims injurious affection as a result of the making of a reservation under that Scheme41. If the Commission elects to acquire the land, the Metropolitan Region Scheme Act provides for the Commission and the owner to agree on a price for the land or, failing agreement, for the Commission to pay the owner the value of the land42. However, the provisions of the Metropolitan Region Scheme do not bind the Commission in the exercise of its discretion. The Commission submits that the purpose and effect of a reservation under the Metropolitan Region Scheme is to preserve the status quo with respect to that land until the Commission makes or is compelled to make a decision concerning its use or acquisition43. Although a reservation is not in itself a notice of intended acquisition, the reservation provisions imply eventual acquisition of the land by the Commission. In a Report prepared before extensive amendments to the legislative scheme in 1962, the Metropolitan Region Planning Authority 40 See, eg, the second reading speech for the Metropolitan Region Town Planning Scheme Act Amendment Bill 1962 (WA): Western Australia, Legislative Assembly, Parliamentary Debates (Hansard), 4 September 1962 at 820 per Lewis. See also the second reading speech in relation to the Metropolitan Region Town Planning Scheme Act Amendment Bill 1968 (WA), where the Minister for Town Planning said that the insertion of the caveat provisions into s 36 was designed to ensure that: "any subsequent purchaser is aware that compensation has been paid and that when the property is subsequently acquired by the authority the amount to be paid will be reduced by an amount that has a relationship to the compensation previously paid." (emphasis added) Western Australia, Legislative Council, Parliamentary Debates (Hansard), 3 September 1968 at 755 per Logan. 41 Metropolitan Region Scheme Act, s 36(2)(a). 42 Metropolitan Region Scheme Act, ss 36(2)(b), 36(2a), 36(2b). 43 See the second reading speech for the Metropolitan Region Town Planning Scheme Act Amendment Bill 1962 (WA): Western Australia, Legislative Assembly, Parliamentary Debates (Hansard), 4 September 1962 at 820 per Lewis; Western Australia, Metropolitan Region Planning Authority, Metropolitan Region Scheme Report, (1962) at 40, 44. 44 Western Australia, Metropolitan Region Planning Authority, Metropolitan Region Scheme Report, (1962) at 45-46. McHugh "There is no simple or formula answer to the question of when the Authority should prohibit development on reserved land and acquire it, and when it is expedient to allow the development to proceed and accept the consequences of eventual increase [sic] cost of acquisition. Most of these questions will have to be faced up to as individual cases, decided on such bases as the nature and scale of development projected, the availability of funds from time to time for acquisition, the length of time before the property is required for public development, and probably other individual factors. The time factor in itself may well be an uncertain one". The Metropolitan Region Scheme Act clearly contemplates the eventual public ownership (vesting in the Crown) of land reserved for public purposes. But does the Act support the imposition of a condition that requires the transfer of land free of cost to the Crown? In Lloyd v Robinson45, this Court held that a condition of subdivision approval that required the transfer free of cost to the Crown of land that did not form part of the application for subdivision was validly imposed by the predecessor of the Commission under the Town Planning Act. The condition was imposed on an application for subdivision under s 20(1)(a) of the Town Planning Act (as it then stood the section was not materially different from the present section). The condition specified that the subdividers should transfer a specified area of 25 acres of land46 to the Crown free of cost for park and recreation purposes. The area to be transferred was outside the area for which approval to subdivide was sought but formed a part of the original parcel of land and had not been subdivided. The area was not the subject of a reservation. The Court held that the condition was valid. In a unanimous judgment, Kitto, Menzies and Owen JJ held that the Town Planning Act should not be read down by principles of statutory construction concerning the confiscation of land47. Their Honours held that the Commission could impose conditions on approval that were bona fide and within the limits which, though not specified in the relevant legislation, were indicated by the nature of the purposes for which (1962) 107 CLR 142 at 153-155. 46 This included the transfer of 10 acres to which the subdividers had already agreed. The Board had originally required the transfer of 30 acres, but the Minister reduced this on appeal to 25 acres. 47 Lloyd v Robinson (1962) 107 CLR 142 at 154. McHugh the Commission was entrusted with the relevant discretion48. Their Honours said49: "Given the necessary relevance of the conditions to the particular step which the Board is asked to approve, there is no foothold for any argument based on the general principle against construing statutes as enabling private property to be expropriated without compensation. The Act at its commencement took away the proprietary right to subdivide without approval, and it gave no compensation for the loss. But it enabled landowners to obtain approval by complying with any conditions which might be imposed, that is to say which might be imposed bona fide within limits which, though not specified in the Act, were indicated by the nature of the purposes for which the Board was entrusted with the relevant discretion: see Swan Hill Corporation v Bradbury50; Water Conservation and Irrigation Commission (NSW) v Browning51. If approval is obtained for the subdivision of one area of land by complying with a condition which requires the giving up of another area of land for purposes relevant to the subdivision of the first, it is a misuse of terms to say that there has been a confiscation of the second. For the giving up of the second a quid pro quo is received, namely the restored right to subdivide the first. It may be that the quid pro quo is inadequate, and that the landowner, though under no legal compulsion to give up the second area of land if he chooses to forego the idea of subdividing the first, is nevertheless under some real compulsion, in a practical sense, to submit to the loss of it because of the importance to him of obtaining the approval. But there is no room for reading the [Town Planning Act] down in some fashion by appealing to a principle of construction that has to do with confiscation. If the Board has performed its statutory duty by giving approval to the subdivision subject only to conditions imposed in good faith and not with a view of achieving ends or objects extraneous to the purposes for which the discretion exists, the inescapable effect of the Act is that the landowner must decide for himself whether the right to subdivide will be bought too dearly at the price of complying with the conditions." The decision in Lloyd inevitably leads to the conclusion that the Commission could exercise its powers under s 20 of the Town Planning Act by approving Temwood's applications for subdivision subject to the condition that 48 Lloyd v Robinson (1962) 107 CLR 142 at 154. 49 Lloyd v Robinson (1962) 107 CLR 142 at 154. (1937) 56 CLR 746 at 757, 758 per Dixon J. (1947) 74 CLR 492. McHugh Temwood convey the Foreshore Reserve to the Crown free of cost and without compensation. When the Commission made its decision, Temwood had no right to compensation in respect of the Foreshore Reserve and, as the Court pointed out in Lloyd, the Act "took away the proprietary right to subdivide without approval, and it gave no compensation for the loss" of that right. Even if it is not correct to characterise the Act as taking away the proprietary right to subdivide without approval, the condition in the present case was validly imposed as it was within the limits which were indicated by the nature of the purposes for which the Commission was entrusted with the relevant discretion. The Full Court erred in holding52 that "the s 11 right ... was undoubtedly a specific, definite, substantive right of the type adverted to by Griffith CJ in Clissold". Indeed, it is not correct to speak of a s 11 right in the context of a reservation of land, particularly in the case of an owner who was not the owner of the land when the reservation was made. It is s 36 of the Metropolitan Region Scheme Act rather than s 11 of the Town Planning Act that confers compensation rights in respect of such reservations. When s 36 operates, it so modifies s 11 that that section is no more than a condition for the conferral of the rights described in s 36. Planning purpose On the assumption that the Commission had the power to impose the condition on Temwood's applications for subdivision approval, the question that then arises is whether the condition was imposed for a purpose extraneous to a legitimate planning purpose. Was it a bona fide exercise by the Commission of its powers for a legitimate planning purpose? Did it reasonably relate to the proposed development or was it so unreasonable that no reasonable planning authority would have imposed it? The Full Court's decision The Full Court found that the focus of the Metropolitan Region Scheme Act and the Metropolitan Region Scheme was not upon Crown acquisition of ownership of all, or any specific, reserve land. Instead, it saw the focus of the Act and the Scheme as "ensuring that adequate and appropriate reserves are created to satisfy proper planning objectives"53. It noted that, if a compensation claim is made in accordance with the statute, the Crown could "elect to acquire actual ownership, rather than pay compensation merely to preserve a status 52 Temwood (2002) 25 WAR 484 at 495. 53 Temwood (2002) 25 WAR 484 at 499. McHugh quo."54 It said that the Crown had no need to take further action to secure the existence of a reserve that had already been brought into existence by the Metropolitan Region Scheme55. It rejected the argument that a shortage of acquisition funds supported the proposition that the Western Australian Parliament could on the one hand confer a specific statutory right to compensation and on the other make provision for the Commission effectively to negate that right56. As a result, the Full Court held that no planning purpose was served by imposing a condition accelerating possible Crown ownership because it was not "pitched at the orderly development of the locality and preservation of the amenity of the locality at all."57 Rather, said the Court, "it simply manifests an administrative desire to contain monetary cost. Its essential thrust is based on fiscal, rather than planning, objectives."58 The Full Court also held that, even if the condition was imposed for a planning purpose, it was not imposed bona fide for that purpose. The Court acted on the Tribunal's statement that the condition was designed to circumvent the potential operation of s 36 of the Metropolitan Region Scheme Act in a situation where the requisite reserve already existed under the Metropolitan Region Scheme. The Court found that, as the Foreshore Reserve already existed, the purpose of avoiding a compensation liability to Temwood (which was conferred on Temwood by statute) was a major ulterior or extraneous purpose. Applying the reasoning in Newbury District Council v Secretary of State for the Environment59 and Thompson v Randwick Corporation60, the Full Court held that the imposition of the condition could not be regarded as the bona fide exercise by the Commission of its powers for a legitimate planning purpose61. 54 Temwood (2002) 25 WAR 484 at 499. 55 Temwood (2002) 25 WAR 484 at 499. 56 Temwood (2002) 25 WAR 484 at 499. 57 Temwood (2002) 25 WAR 484 at 499. 58 Temwood (2002) 25 WAR 484 at 499. (1950) 81 CLR 87. 61 Temwood (2002) 25 WAR 484 at 500. McHugh What is a legitimate planning purpose? The Commission does not dispute that the power to attach conditions to development consents is limited to those conditions that are reasonably capable of being regarded as related to a legitimate planning purpose. That purpose is ascertained from a consideration of the applicable legislation and town planning instruments to which the responsible authority is subject. The purpose is not ascertained from "some preconceived general notion of what constitutes planning"62. In Bathurst City Council v PWC Properties Pty Ltd63, this Court endorsed the statement of Walsh J in Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council that the power to attach conditions to development consents was to be understood64: "not as giving an unlimited discretion as to the conditions which may be imposed, but as conferring a power to impose conditions which are reasonably capable of being regarded as related to the purpose for which the function of the authority is being exercised, as ascertained from a consideration of the scheme and of the Act under which it is made. This purpose may be conveniently described, in accordance with the expression used by Lord Jenkins in Fawcett Properties Ltd v Buckingham County Council65, as being 'the implementation of planning policy', provided that it is borne in mind that it is from the Act and from any relevant provisions of the Ordinance, and not from some preconceived general notion of what constitutes planning, that the scope of planning policy is to be ascertained." The Commission also does not dispute that a condition attached to a consent must reasonably and fairly relate to the development permitted. A condition attached to a grant of planning permission will not be valid therefore unless66: 62 Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council (1970) 123 CLR 490 at 500 per Walsh J. (1998) 195 CLR 566 at 577. (1970) 123 CLR 490 at 499-500. [1961] AC 636 at 684. 66 This test was articulated by the House of Lords in Newbury District Council [1981] McHugh The condition is for a planning purpose and not for any ulterior purpose. A planning purpose is one that implements a planning policy whose scope is ascertained by reference to the legislation that confers planning functions on the authority, not by reference to some preconceived general notion of what constitutes planning. The condition reasonably and fairly relates to the development permitted. The condition is not so unreasonable that no reasonable planning authority could have imposed it. A condition attached to a grant of planning permission may be invalid although its ulterior purpose is not the sole purpose67. If the ulterior purpose is a substantial purpose68 for which the authority is exercising its power, the condition is invalid. Counsel for Temwood conceded that the purpose of reserving the Foreshore Reserve was a proper town planning purpose. The question is whether the condition was imposed for a proper planning purpose. Was the condition imposed for a proper planning purpose? I have already referred to the Commission's power to impose conditions on applications for subdivision. The Town Planning Act gives the Commission a broad discretion to impose conditions. Section 20A contemplates that a condition of subdivision approval may be for the purpose of conservation or protection of the environment or a reserve for foreshore management or recreation. The Town Planning Act contemplates that the Commission may eventually acquire land the subject of a reservation69. A condition is imposed for a proper planning purpose if it is "imposed in good faith and not with a view of achieving ends or objects extraneous to the purposes for which the discretion exists". In Lloyd, the land the subject of the condition was not reserved under the Metropolitan Region Scheme or any other town planning scheme. The condition that the land be ceded to the Crown free of cost was justified on the basis that the imposition of the condition was a reasonable response to the change in existing affairs created by the proposed subdivision. 67 Thompson (1950) 81 CLR 87 at 106. 68 Thompson (1950) 81 CLR 87 at 106. 69 See, eg, Western Australia, Legislative Assembly, Parliamentary Debates (Hansard), 4 September 1962 at 820 per Lewis; Western Australia, Legislative Council, Parliamentary Debates (Hansard), 3 September 1968 at 755 per Logan. McHugh referred The M107 recommendation Here, the Foreshore Reserve was already reserved. The Commission had previously imposed an essentially identical condition (but did not enforce the condition) when it approved subdivision applications in respect of other parts of the Land. The requirement that the Foreshore Reserve be ceded had its origin in a Consultative Environmental Review of the area by the Environmental Protection Authority ("the EPA"). The Department of Conservation and Environment had recommended that the land be classified as system 6 recommendation M107. the environmental features of the area. They included the extensive coastal dunes, valuable for coastal vegetation, recreational and aesthetic reasons70. The recommendation also referred to the need for a buffer zone of uncleared land to preserve the scenery and vegetation, a zone that would be an east-west link of open space between the coast and Mandurah Road71. The EPA Bulletin stated that the main purpose of the M107 area "was that the area's recreational and landscape values be protected by planning procedures which would not require public acquisition of the land involved."72 As the east-west strip had not become part of the planning framework for the area, the EPA decided to consider other alternatives. The EPA recommended that there be an expanded coastal foreshore reserve, wider than that normally required by the planning authority. The Consultative Environmental Review culminated in a statement issued by the Minister for the Environment under s 45 of the Environmental Protection Act 1986 (WA) ("Statement that the Proposal May be Implemented") setting out the conditions under which the proposal could be implemented73. One condition was that there should be a foreshore reserve and, at subdivision, Temwood "shall transfer to public ownership the proposed foreshore reserve."74 The statement also required that Temwood should provide, in exchange for a part of M107, additional open space adjacent to the Foreshore Reserve. By letter dated 13 January 1993, Temwood advised the Minister that "the conditions meet with our approval."75 Before the Tribunal, Temwood also accepted the environmental condition that the Foreshore Reserve should be set aside for public use. The boundary of the Reserve was altered by the 1994 South 70 Temwood [2001] WATPAT 4 at [31]. 71 Temwood [2001] WATPAT 4 at [31]. 72 Temwood [2001] WATPAT 4 at [32]. 73 Temwood [2001] WATPAT 4 at [35]. 74 Temwood [2001] WATPAT 4 at [35]. 75 Temwood [2001] WATPAT 4 at [35]. McHugh West Corridor Omnibus Amendment No 960/33. The Commission described its failure to require the ceding of the Foreshore Reserve when it approved other subdivisions of the Land as an "oversight" and suggested that it had "assumed that ceding had taken place."76 The Tribunal found that the Commission had designed the condition to to enliven the machinery provisions in s 20A of the Town Planning Act (thereby facilitating the mechanical transfer of title to the Foreshore Reserve to the Crown); and "to defeat the operation of Part V" of the Metropolitan Region Scheme Act, thereby rendering nugatory any right to compensation for injurious affection under s 36 of the Metropolitan Region Scheme Act. The Tribunal also referred to the "necessity" of the Commission being able to impose a condition that land be ceded free of cost upon subdivision in appropriate cases. This was "because of the legitimate community concern that a developer contribute to infrastructure costs to the extent permissible" on the basis that "the condition is the price for the privilege of subdivision."78 The Tribunal also noted the Commission's submission that the purpose of the condition was to enforce the historical condition. The purpose of enlivening the machinery provisions of the Town Planning Act is not, without more, an ulterior purpose; it is simply directed at a procedural step. It is the purpose for which the Commission sought to enliven those machinery provisions that is critical. If the purpose was to defeat any existing liability to pay compensation (or perhaps to render nugatory any right to compensation under the Metropolitan Region Scheme Act), then that purpose would be an ulterior purpose. Even though there was no potential liability to pay compensation before imposing the condition, the purpose of defeating the operation of Pt V of the Metropolitan Region Scheme Act is not irrelevant in determining whether the Commission was actuated by an improper purpose. What would be relevant – if the Commission's purpose was the relevant purpose – is that the Commission would have imposed a condition not for a planning purpose but because it sought to achieve an object outside the scope of its 76 Temwood [2001] WATPAT 4 at [39]. 77 Temwood [2001] WATPAT 4 at [7]-[8]. 78 Temwood [2001] WATPAT 4 at [26]. McHugh discretionary power. On that hypothesis, the Commission would have imposed – probably did impose – the condition for an improper purpose. the appeals, the Tribunal was affirming However, the Commission's purpose is not the relevant purpose in determining whether the condition was validly imposed. In hearing the appeals, the Tribunal was conducting a review of the merits based on the facts. In the dismissing Commission's decision. It is the Tribunal's purpose in upholding the imposition of the condition that is the relevant purpose, not the original purpose of the Commission. An examination of the Tribunal's reasons shows that it found that "the basis for the imposition of the condition is that it was imposed historically and, having not be [sic] effectuated, requires to be imposed again until it is fulfilled."79 The Tribunal did not say that it upheld the imposition of the condition because it would defeat Temwood's claim for compensation. And, given "the basis for the imposition of the condition" which the Tribunal stated, the purpose of defeating a claim for compensation should not be attributed to it. the merits of The Supreme Court had power to set aside the Tribunal's decision to impose the condition only if the Tribunal had made an error of law. The merits of the Tribunal's decision was not a matter for the Supreme Court. If there was evidence that could reasonably support the Tribunal's decision, and if its reasons contained no error of legal principle, the Supreme Court had no power to set aside the decision. The purpose of "enforcing" the historical condition was a legitimate planning purpose. Section 20A(1) of the Town Planning Act contemplates that the Commission may impose a condition that portions of "that land" be vested in the Crown for the purpose of conservation or protection of the environment or reserve for foreshore management or recreation. The Tribunal was entitled to regard the evidence as proving that the "historical condition" related to foreshore management and that it had a clear environmental protection or conservation purpose, namely, to maintain a buffer zone of uncleared land to preserve the scenery and vegetation. These purposes were deducible from the EPA M107 recommendation and the ministerial statement issued under s 45 of the Environmental Protection Act. In addition, s 20C(1) of the Town Planning Act contemplates that the Commission may require a portion of land the subject of an approved plan of subdivision to be "set aside and vested in the Crown for parks, recreation grounds or open spaces generally". The section permits the owner of the land to pay money in lieu thereof to the local government in whose district the portion is situated. Given that the Foreshore Reserve was reserved under the Metropolitan 79 Temwood [2001] WATPAT 4 at [45]. McHugh Region Scheme for the purpose of "Parks and recreation area", the condition is consistent with a vesting for the purpose of parks, recreation grounds or open spaces generally. Before the Tribunal, Temwood "accepted the environmental condition that the land should be set aside for public use."80 In my opinion, Temwood has failed to show that the Tribunal erred in law because the condition was imposed for an improper planning purpose. Did the condition reasonably and fairly relate to the development permitted? In this case, the condition did not relate to the land the subject of Temwood's three applications for subdivision. This raises the question whether the condition, although made for a legitimate planning purpose, reasonably and fairly related to the development permitted. A condition must "reasonably and fairly relate" to the permitted development to be valid. A condition is "relevant" to the development if it falls within the proper limits of the Commission's functions under the Town Planning Act and the Metropolitan Region Scheme Act or is imposed to maintain proper standards in local development. The condition need not relate to the subdivision in question, if the subdivision is one of a series of subdivisions of a larger parcel of land, and the condition relates to the larger parcel of land as a whole. In Lloyd v Robinson, this Court held81 that the Commission may impose a condition on a grant of subdivision approval that requires the giving up of another area of land for purposes relevant to the subdivision of the first. That condition must be "imposed in good faith and not with a view of achieving ends or objects extraneous to the purposes for which the discretion exists"82. The Court also held that the condition need not relate to the subdivision in question, if the subdivision is one of a series of subdivisions of a larger parcel of land, and the condition relates to the larger parcel of land as a whole83. Even if the condition approved by the Tribunal did not relate to the land the subject of the subdivision applications, Lloyd v Robinson supports the proposition that the condition reasonably and fairly related to the approved development. This is because the condition clearly related to the Land as a whole. 80 Temwood [2001] WATPAT 4 at [46]. 81 (1962) 107 CLR 142 at 153. 82 Lloyd v Robinson (1962) 107 CLR 142 at 154. 83 Lloyd v Robinson (1962) 107 CLR 142 at 153. McHugh Counsel for Temwood seemed to suggest that a condition reasonably and fairly relates to a proposed development only if the development is benefited by the imposition of the condition. Before the Full Court84, counsel asked rhetorically: "Why would the Crown wish or need to take further action to secure the existence of a reserve which has already been brought into existence by the [Metropolitan Region Scheme]?" But this misstates the issue – which is not whether the condition requiring the ceding of the Foreshore Reserve to the Crown secures the existence of a reserve, but whether the development is benefited by the Crown's acquiring all the rights and liabilities entailed by ownership of the Foreshore Reserve. The Town Planning Act contemplates the eventual public ownership of reserved land for public purposes, such as foreshore management or the protection of the environment. As the Court remarked in Lloyd v Robinson85, there may be no legally enforceable obligation on the Crown to keep the Foreshore Reserve reserved for the purpose of "Parks and recreation area": the ultimate sanction may be political only. Here, the subdivision was part of a series of subdivisions of a larger parcel of land. The condition was imposed for environmental protection reasons or foreshore management reasons in respect of that larger parcel of land. Moreover, the Minister had previously rejected an application for two grouped dwellings on the Foreshore Reserve. In these circumstances, the Tribunal was entitled to take the view that as a matter of fact the vesting of the Foreshore Reserve in the Crown secured that protection and those environmental protection or foreshore management objectives. Once this is accepted, there is no ground for concluding that the condition was so unreasonable that no reasonable planning authority could have imposed it. Accordingly, the condition was validly imposed. Order The appeal must be allowed. 84 Temwood (2002) 25 WAR 484 at 499. (1962) 107 CLR 142 at 155. GUMMOW AND HAYNE JJ. The issues in this appeal from the Full Court of the Supreme Court of Western Australia (Wallwork and Scott JJ, Olsson AUJ)86 concern the construction of the Town Planning and Development Act 1928 (WA) ("the Town Planning Act") and the Metropolitan Region Town Planning Scheme Act 1959 (WA) ("the Metropolitan Region Act"). The relevant facts are not in dispute, although there is disagreement as to the conclusions of law to be drawn from them. The appellant ("the Commission") is a body corporate established by s 4 of the Western Australian Planning Commission Act 1985 (WA) and, in addition to functions specified in that statute, has various functions conferred on it by other laws, including the Town Planning Act and the Metropolitan Region Act. The respondent ("Temwood") in 1992 became the registered proprietor under the Transfer of Land Act 1893 (WA) of certain land in a coastal area at Singleton, north of Mandurah and approximately 55 kilometres south of Perth. The land is known as the Bayshore Garden Estate ("the Land") and since 1993 Temwood progressively has been subdividing it and developing it as a residential area with associated facilities. The Town Planning Act establishes (s 42) the Town Planning Appeal Tribunal ("the Tribunal") whose functions include the determination of "appeals" from decisions of the Commission upon applications for subdivision approval87. The present litigation began in the Supreme Court (McLure J) as an appeal by Temwood under the Town Planning Act (s 54B) against the dismissal by the Tribunal of its complaints respecting decisions of the Commission88. The dispute before the Tribunal arose as follows. The Foreshore Reserve Well before the acquisition by Temwood of the Land, a strip running the length of the foreshore frontage of the Land and with an area of approximately 86 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484. 87 The provisions governing appeals from the Commission are contained in Pt V of the Town Planning Act. References to those provisions are to Pt V as it stood before the commencement of the Planning Appeals Amendment Act 2002 (WA) which repealed the old Pt V and introduced a new Pt V. For present purposes, nothing turns on that. 88 Temwood Holdings Pty Ltd v Western Australian Planning Commission (2001) 115 LGERA 152. 20 ha ("the Foreshore Reserve") had been reserved for the purpose of "Parks and recreation area". This step was taken in 1963 on the gazettal of the Metropolitan Region Scheme ("the MRS")89. The MRS was created pursuant to the Metropolitan Region Act (s 30). The boundary of the Foreshore Reserve was altered in 1994 and has been the subject of natural accretion of the shore line. The reservation made in 1963 did not divest the ownership from the then registered proprietor. Section 13 of the Town Planning Act conferred, subject to what was then the Public Works Act 1902 (WA), a power of compulsory acquisition of land for the purpose of a town planning scheme, but that power was not utilised90. However, cl 13 of the MRS forbad any development on the Foreshore Reserve without the prior approval of the Commission. Further, s 20(1)(a) of the Town Planning Act stipulates that: "[A] person shall not, without the approval of the Commission ... subdivide any lot ... and the Commission may give its approval under this paragraph subject to conditions which shall be carried out before the approval becomes effective." Section 20(2) forbids the creation or registration of a certificate of title for land the subject of an unapproved plan of subdivision. Section 11 of the Town Planning Act confers, subject to certain conditions, upon "[a]ny person whose land or property is injuriously affected by the making of a town planning scheme" an entitlement "to obtain compensation in respect thereof from the responsible authority" (emphasis added). In broad terms, the nature of this entitlement is the decrease in the market value of the land caused by the making of the scheme and the inability of the owner to use the land for purposes conflicting with that scheme (s 36(6) of the Metropolitan Region Act). Section 5(2) of the Metropolitan Region Act states91: 89 Government Gazette of Western Australia, No 60, 9 August 1963. 90 References to the Land Administration Act 1997 (WA) were substituted by ss 86 and 142 of the Acts Amendment (Land Administration) Act 1997 (WA). 91 The latter part of s 3 of the Metropolitan Region Act deals with the relationship between the two statutes where they are "in conflict or inconsistent". That section states: "This Act shall be construed in conjunction with the Town Planning Act, as if the provisions of this Act were incorporated with and formed part of that Act, but where the provisions of this Act are in conflict or are inconsistent (Footnote continues on next page) "The provisions of the Town Planning Act, except as modified by this Act, apply to the metropolitan region." Section 6 of the Metropolitan Region Act defines "Scheme" in terms which include the MRS. Section 36 of that statute includes provisions which have the effect in the present case of applying to the MRS s 11 of the Town Planning Act in a modified form. The "responsible authority" for s 11 is the Commission (s 36(1)(a)). Further, s 11 of the Town Planning Act conditions the entitlement to obtain compensation upon the making of a claim within any time limited by the scheme in question, but s 36 contains detailed provisions deferring or postponing entitlement to payment of compensation and imposing a time limit on the making of compensation claims. Section 36(3) provides: "Subject to subsection (4), where under the Scheme any land has been reserved for a public purpose, no compensation is payable by the responsible authority for injurious affection to that land alleged to be due to or arising out of such reservation until – the land is first sold following the date of the reservation; or the responsible authority refuses an application made under the Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant." Then, s 36(5) deals with the making of claims as follows: "A claim for compensation under subsection (3) shall be made at any time within 6 months after the land is sold or the application for permission to carry out development on the land is refused or the permission is granted subject to conditions that are unacceptable to the applicant." with the provisions of that Act, the provisions of this Act prevail to the extent to which they are so in conflict or inconsistent." Inconsistency or conflict for the purposes of s 3 is to be assessed only after the operation of s 5(2) has applied the provisions of the Town Planning Act, as modified by the Metropolitan Region Act, to the metropolitan region. For this reason, this case turns upon that modified application of the Town Planning Act, not upon the operation of the latter part of s 3. Section 36(4)(a) stipulates that, before compensation be payable under s 36(3), in the case of the first sale, the body fixing the amount of compensation must be satisfied of three matters. These are: (iii) that the owner of the land has sold the land at a lesser price than he might reasonably have expected to receive had there been no reservation of the land under the Scheme; that the owner before selling the land gave notice in writing to the responsible authority of his intention to sell the land; and that the owner sold the land in good faith and took reasonable steps to obtain a fair and reasonable price for the land". In the case of refusal of a development application, the requisite satisfaction is that the application was made in good faith (s 36(4)(b)). The phrases "first sold" in s 36(3) and "before selling the land gave notice" in s 36(4)(a)(ii) were construed in Bond Corporation Pty Ltd v Western Australian Planning Commission92 as if the references to sale were to conveyance. In so concluding, "I prefer the argument that Parliament intended the [Metropolitan Region Act] to provide that payment for compensation should only be made when the owner of land actually receives less money for the land than he or she would have received had there been no reservation, or when the genuine intention of the owner to develop the land is frustrated by a development refusal brought about by the reservation." Sub-sections (3) and (4) were added to s 36 of the Metropolitan Region Act94 before the gazettal of the MRS. It is not disputed that the making of the MRS injuriously affected at least that portion of the Land, but no compensation has been paid to any person in respect of the reservation in 1963 of the Foreshore Reserve. The record discloses that there was an application to change the zoning of the balance of the Land in 1990 but the changes (if any) in ownership between 1963 and the acquisition by Temwood in 1992 do not appear. 92 (2000) 110 LGERA 179. 93 (2000) 110 LGERA 179 at 188. 94 By s 5 of the Metropolitan Region Town Planning Scheme Act Amendment Act The Condition In the course of the year 2000, the Commission granted, pursuant to s 20(1)(a) of the Town Planning Act, approval to three applications by Temwood for subdivisions of portions of the Land but did so subject to a condition ("the Condition") that a part of the Land, being the Foreshore Reserve, be "vested in the Crown under section 20A of the [Town Planning Act]" and "be ceded free of cost and without any payment of compensation by the Crown". Section 20A provides for the steps whereby, in the present case, the Registrar of Titles would vest the land in question in the Crown without any conveyance, transfer or assignment or the payment of any fee. The imposition of the Condition was not a bolt from the blue. By letter dated 13 January 1993, Temwood had told the responsible Minister that proposed conditions for development of the Land met with its approval. These conditions included the transfer, at subdivision, of an expanded coastal foreshore reserve to public ownership. The events that occurred thereafter were described by "In October 1993, the [Commission] approved a subdivision of the [Land] on condition, inter alia, that the Foreshore Reserve be ceded to the Crown without compensation. For reasons which are not entirely clear, the plans of the subdivision were endorsed without the ceding of the Foreshore Reserve. In 1994 the [Commission] agreed to a proposal by [Temwood] that the Foreshore Reserve be ceded to the Crown in three stages. It was intended that the agreement be recorded in a deed. A draft deed was prepared but never executed. Seven subsequent subdivisions of the [Land] were approved by the [Commission] without a ceding condition in relation to the Foreshore Reserve. The evidence before the [Tribunal] was that this was an oversight. The [Condition] was again imposed by the [Commission] in its approvals of the May 2000 subdivision and the first and second September 2000 subdivisions." It is upon the validity of the Condition imposed by the Commission in 2000 that the present litigation turns. However, before proceeding further, it is convenient at this stage to refer to what was decided by this Court in Lloyd v Robinson96. That appeal from the Supreme Court of Western Australia concerned the construction of s 20(1) of the Town Planning Act as it stood in a form with no material differences, save for the identification of the approving 95 (2001) 115 LGERA 152 at 174. 96 (1962) 107 CLR 142. authority as the Town Planning Board of Western Australia. In particular, s 20(1)(a) provided: "[A] person shall not, without the approval of the Board ... subdivide ... or sell land ... except as a lot or as lots; and the Board may give its approval under this paragraph subject to conditions which shall be carried out before the approval becomes effective." The Board had required, as a condition of approval, that the subdividers of the land in question transfer a specified area of 20 acres to the Crown free of cost for park and recreation purposes. This Court held that the condition had been validly imposed. In their joint judgment, Kitto, Menzies and Owen JJ said97: "If approval is obtained for the subdivision of one area of land by complying with a condition which requires the giving up of another area of land for purposes relevant to the subdivision of the first, it is a misuse of terms to say that there has been a confiscation of the second. For the giving up of the second a quid pro quo is received, namely the restored right to subdivide the first. It may be that the quid pro quo is inadequate, and that the landowner, though under no legal compulsion to give up the second area of land if he chooses to forego the idea of subdividing the first, is nevertheless under some real compulsion, in a practical sense, to submit to the loss of it because of the importance to him of obtaining the approval. But there is no room for reading the Act down in some fashion by appealing to a principle of construction that has to do with confiscation." "If the Board has performed its statutory duty by giving approval to the subdivision subject only to conditions imposed in good faith and not with a view of achieving ends or objects extraneous to the purposes for which the discretion exists, the inescapable effect of the Act is that the landowner must decide for himself whether the right to subdivide will be bought too dearly at the price of complying with the conditions." (emphasis added) The Commission relies heavily upon what was said in these passages as supporting the validity of the imposition of the Condition. On the other hand, Temwood refers to the emphasised words and contends that the Condition was 97 (1962) 107 CLR 142 at 154. 98 (1962) 107 CLR 142 at 154. imposed not in good faith but with a view of achieving an extraneous object. That object is said to be the vesting of the Foreshore Reserve in the Crown, thereby to defeat the presently subsisting but postponed right of Temwood to compensation for injurious affection under s 11 of the Town Planning Act and s 36(3) of the Metropolitan Region Act. The litigation Part V of the Town Planning Act is headed "Appeals". Temwood instituted an appeal to the Tribunal against the imposition of the Condition upon the grants of the three subdivision approvals. The appeals were dismissed by the Tribunal. However, s 54B of the Town Planning Act provides for an appeal to the Supreme Court of Western Australia on condition that the appeal involves a question of law99. Pursuant to s 54B an appeal was taken by Temwood to the Supreme Court. As already indicated, the appeal was heard by McLure J, who dismissed it100. However, a further appeal by Temwood to the Full Court was allowed with costs. The orders of McLure J were set aside and in place thereof it was ordered that the appeal from the Tribunal be allowed and that the orders of the Tribunal be set aside and a declaration made that the Condition "be and is ... void". Special leave was granted by this Court to the Commission on terms that it pay Temwood's reasonable costs of the appeal and that it not seek to disturb the costs order made by the Full Court. The Full Court held that s 11 of the Town Planning Act conferred upon Temwood a statutory right to compensation as a consequence of the reservation of the Foreshore Reserve under the MRS, actual enjoyment of which was deferred until the occurrence of a relevant event stipulated in s 36(3) of the Metropolitan Region Act; that such a right was not taken away by some other statutory provision unless such an intention is manifest; and that the Commission could not by exercise of its powers under par (a) of s 20(1) of the Town Planning Act attach a condition to an approval to subdivide which directly negated that right. The result was that the purported exercise of power by the imposition of the Condition was ultra vires and invalid. In this Court the Commission challenges that conclusion. The Commission also challenges the further holding of the Full Court with respect not to the existence of power but to the improper exercise of the power. The Full Court concluded that a condition of a development approval which 99 cf Ruhamah Property Co Ltd v Federal Commissioner of Taxation (1928) 41 CLR 100 (2001) 115 LGERA 152. required the cession of land reserved for public purposes under a town planning scheme is invalid as serving no proper "planning purpose", and that the imposition of the Condition was invalid because it was not imposed by the Commission for a planning purpose. The appeal should succeed, for the reasons which follow. Planning purposes With respect to the meaning of the expression "planning purpose", in Bathurst City Council v PWC Properties Pty Ltd101 the Court adopted what had been said by Walsh J in Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council102. His Honour had pointed out that a power to attach conditions to development consents was to be understood as a power to impose conditions reasonably capable of being regarded as related to the purpose for which the functions of the responsible authority were being exercised; that purpose was to be ascertained from a consideration of the applicable legislation and town planning instruments rather than from "some preconceived general notion of what constitutes planning"103. Earlier, in Thompson v Randwick Corporation104, the Court had said of the conclusion that, in the exercise of these powers a local government body was not acting in good faith, that by this105: "we do not mean that the Council is acting dishonestly. All that we mean is that the Council is not exercising its powers for the purposes for which they were granted but for what is in law an ulterior purpose. It is not necessary that this ulterior purpose should be the sole purpose. The Council, no doubt, believes that the new road will have advantages over Bloomfield Street and Wisdom Street from the point of view of access and upkeep. But the evidence establishes that one purpose at least of the 101 (1998) 195 CLR 566 at 576-577 [15]. 102 (1970) 123 CLR 490 at 499-500. 103 (1970) 123 CLR 490 at 500. See also the speech of Lord Scarman in Newbury District Council v Secretary of State for the Environment [1981] AC 578 at 104 (1950) 81 CLR 87 at 105-106. 105 (1950) 81 CLR 87 at 106; see also Walton v Gardiner (1993) 177 CLR 378 at 410; Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135 at 148-149 [30]. Council in attempting to acquire the land not required to construct the new road is to appropriate the betterments arising from its construction." The Full Court stated and accepted these principles but there is dispute as to the way in which it applied them. Right to compensation? However, there is a threshold issue. If Temwood enjoyed no statutory right to compensation for injurious affection, as successor in title to the owner of the Land in 1963 when the Foreshore Reserve was created by the MRS, then so much of its case as assumes the contrary as a necessary step must fail. The point was not taken in the Tribunal or the Supreme Court but is a question of law and should, as the Commission now has it, be dealt with by this Court. Section 11(1) of the Town Planning Act, read with the Metropolitan Region Act, conferred an entitlement to compensation upon any person whose land or property was injuriously affected "by the making" of the MRS. The legislation thus recognised, as it was put in Bond Corporation106, that: "[o]wners of land suffer loss merely by the reservation of land for public purposes. That loss is constituted simply by the reduction in the market value of the land caused by the reservation and the inability of the owner to use the land for purposes conflicting with the reservation (even where the owner does not intend to develop the land in any way). The loss sustained on reservation occurs without the owner taking any action in connection with the land, and while the owner still holds the land in the form it was in immediately prior to the reservation." However, Temwood held no land which was injuriously affected in this fashion by the making of the MRS. Had Temwood been so affected in the necessary sense, its entitlement to compensation under the legislation would have been qualified by the restrictions imposed as to the time of payment by s 36(3) of the Metropolitan Region Act and by s 36(6) as to the amount of compensation. Upon that hypothesis, in the interval between the entitlement to compensation arising and the compensation becoming payable, Temwood may well have enjoyed under the legislation what, in the event of a repeal, s 37(1)(c) of the Interpretation Act 1984 (WA) would save as an accrued, acquired or established right, interest, title, power or privilege107. Those terms are to be understood by reference to the provision of the repealed statute which is in question; they are 106 (2000) 110 LGERA 179 at 187-188. 107 See Dossett v TKJ Nominees Pty Ltd (2003) 78 ALJR 161; 202 ALR 428. not used in s 37 solely in any technical sense derived exclusively from property law or analytical jurisprudence108. But, on the facts of this case, no question respecting s 37 arises. Nor does there arise the issue considered by this Court and then by the Privy Council in Perry v Clissold109. That issue concerned the construction of New South Wales legislation which required a valuation to be made upon disclosure to the Minister of a prima facie case for compensation upon resumption of land for public purposes; this Court and the Privy Council held that such a prima facie case was made out by the executors of an applicant who had had a possessory title to the resumed land. That possessory title was held to be an estate or interest within the meaning of the statute. Lord Macnaghten explained110: "It cannot be disputed that a person in possession of land in the assumed character of owner and exercising peaceably the ordinary rights of ownership has a perfectly good title against all the world but the rightful owner." The title against all the world but the rightful owner of a person in possession in the assumed character of an owner and exercising peaceably the ordinary rights of ownership was conferred by the common law, although by operation of limitation statutes the possessory owner might then acquire an absolute title111. In the present case, the Full Court regarded Perry v Clissold as an instance "where a statute confers specific, definite rights on a party" and as an authority that "those rights are not to be deemed to be taken away by some other statutory provision unless such an intention is manifest"112. The earlier case is not such an authority. A more appropriate realm of discourse would be found in the treatment of the notion of implied repeal in such authorities as Kartinyeri v The Commonwealth113. However, the special provision made in ss 3 and 5 of the Metropolitan Region Act for the reading of that statute with the Town Planning 108 See the remarks of Windeyer J in Mathieson v Burton (1971) 124 CLR 1 at 12-13; cf Esber v The Commonwealth (1992) 174 CLR 430 at 440-441, 445-448. 109 (1904) 1 CLR 363; affd (1906) 4 CLR (Pt 1) 374. 110 (1906) 4 CLR (Pt 1) 374 at 377. 111 (1906) 4 CLR (Pt 1) 374 at 377. 112 (2002) 25 WAR 484 at 494. 113 (1998) 195 CLR 337 at 352-354 [7]-[10], 375-376 [66]-[70]. Act evidently were designed to deal explicitly with questions of implied repeal which might otherwise have arisen. The Full Court went on to accept Temwood's submission, renewed in this Court, that114: "s 11 of the [Town Planning Act] expressly conferred on [Temwood] a positive, unequivocal, statutory right to compensation as a consequence of the MRS scheme reservation, actual enjoyment of which was deferred until the relevant event stipulated in s 36(3) of the [Metropolitan Region Act] took place." However, in its terms, s 11(1), as indicated earlier in these reasons, conferred no entitlement of any description upon Temwood, speaking as it did at a time and to a situation long before Temwood acquired the Land, including the Foreshore Reserve. Faced with that chronology, Temwood submitted in this Court that the entitlement conferred by s 11(1) arose at the time of the reservation by the MRS in 1963 but was "a species of a right in rem" which attached to the Land, passed to Temwood as subsequent owner, and was deferred so long as the owner for the time being did not wish to sell or develop the Foreshore Reserve. It was suggested that Bond Corporation was decided on such a footing, but the issue could not have arisen on the facts of that case. The land in question there had been owned by the appellant when reserved for "Parks and recreation" in 1996, and the appellant entered into an agreement to sell it in 1997115. The construction of the legislation put forward by Temwood should not be accepted. The controlling words of what follows are the opening words of s 11(1) of the Town Planning Act: "Any person whose land or property is injuriously affected by the making of a town planning scheme ...". (emphasis added) What follows in s 11(1) is to be read as if, among other things, sub-ss (3) and (4) of s 36 of the Metropolitan Region Act were included and the payment and quantification of compensation were deferred accordingly. In particular, s 36(3) defers any right to payment until (a) first sale following the date of the reservation, "or" (b) refusal of a development application or a grant of permission on conditions unacceptable to the applicant for approval ("development refusal"). The claim for compensation must be made within six months thereafter (s 36(5)). 114 (2002) 25 WAR 484 at 495. 115 (2000) 110 LGERA 179 at 182. Temwood would read "until" and the disjunctive "or" in s 36(3) as postponing the entitlement until the later to happen of first sale following reservation and refusal of a development application or a grant of permission subject to unacceptable conditions. However, the sub-section should be construed by treating the deferral of the entitlement to payment as terminated upon the first to occur of first sale or development refusal. There are several reasons why this is so. First, as it was put in Bond Corporation, the loss in value suffered on reservation "is less concrete or tangible" than "the kind of loss sustained on conveyance or development refusal where owners are prevented from developing land in accordance with their genuine intent"116. Secondly, this is confirmed by the Second Reading Speech on the Bill including what became s 36(3)117: "It can properly be argued that reservation under the scheme depreciates the value of land. However, the depreciation is, in many cases, hypothetical and becomes real only when the land is sold at a price which reflects this depreciation, or when development is frustrated by a refusal of consent under the scheme. The amendment proposes that compensation for injurious affection be limited to two circumstances: where a sale is effected at a depressed value attributable to reservation under the scheme, or where consent to develop is refused on the ground of reservation under the scheme." Thirdly, the depreciation of which the Minister there spoke "becomes real" upon the first to happen of the stipulated events; in this case, that was no later than when Temwood's vendor sold to it at what is postulated as a price reflecting the depreciation. Fourthly, as was pointed out in the Second Reading Speech in the Legislative Council on the Bill for what became the Metropolitan Region Town Planning Scheme Act Amendment Act 1968 (WA) ("the 1968 Amendment")118, s 36(3) was designed to protect the position of the owner at the time of the 116 (2000) 110 LGERA 179 at 188. 117 Western Australia, Legislative Assembly, Parliamentary Debates (Hansard), 4 September 1962 at 820. 118 Western Australia, Legislative Council, Parliamentary Debates (Hansard), 3 September 1968 at 754. reservation so that when he later sold he was to be compensated if unable to realise the full market value, but "[s]ubsequent purchasers are aware of the scheme provisions at the time of purchase" so that they "would not be at the same disadvantage as the original owner". Fifthly, reference also should be made to s 36(3a), which was added by the 1968 Amendment, further amended thereafter, and now reads: "Compensation for injurious affection to any land is payable only once under subsection (3) and is so payable – under paragraph (a) of that subsection to the person who was the owner of the land at the date of reservation; or under paragraph (b) of that subsection to the person who was the owner of the land at the date of application, referred that paragraph, unless after compensation further injurious affection to the land results from – the payment of that an alteration of the existing reservation thereof; or the imposition of another reservation thereon." The sub-section confirms the above indications as to the construction of s 36(3) by stipulating that compensation is payable only once, subject to the occurrence after that payment of further injurious affection of the land resulting from alteration of the existing reservation or imposition of another reservation. The inclusion of the reference in par (b) of s 36(3a) to the owner of the land at the date of a development application that is rejected or is approved with unacceptable conditions accommodates such special situations as the death by the owner before any sale and the making of a development application by those volunteers taking the land by testamentary or intestate succession from that owner. Paragraph (b) of s 36(3a) has no application where there has been a sale by the owner as indicated in par (a). The result of the foregoing is that Temwood had no presently subsisting, albeit postponed, right to compensation in respect of injurious affection by the making of the MRS in 1963. Thus, there was nothing to be defeated by the allegedly improper exercise of power by the Commission in imposing the Condition. Temwood sought to outflank that conclusion by submitting in argument that it was sufficient that the Commission exercised its power to defeat an arguable entitlement to compensation. Such an entitlement, in the eyes of the law, either did or did not exist. It did not exist. Upon further consideration, this submission appeared to be but a corollary of the principal submission that there was no "planning purpose" which could, as a matter of power, have founded the imposition of the Condition. If, contrary to Temwood's case, there was a "planning purpose" in the imposition of the Condition and the inevitable consequence in law of compliance with the Condition would be a vesting of the Foreshore Reserve in the Crown under other provisions of the legislation, the prospect of that outcome would not render that planning purpose an improper exercise of the power under s 20(1)(a) to impose the Condition. No planning purpose? The classification of the Condition as the manifestation of a "planning purpose" turns upon the considerations referred to by Walsh J in Allen Commercial Constructions119 and other authorities, as discussed earlier in these reasons. Looking to the subject-matter, scope and purpose of the Town Planning Act, when read with the Metropolitan Region Act, was the imposition of the Condition capable of being regarded as related to the purpose under s 20(1)(a) of the former statute for which the functions of the Commission were being exercised? The discretion of the Commission under s 20(1)(a) was "not fettered" by the provisions of a town planning scheme "except to the extent necessary for compliance with an environmental condition relevant to the land under consideration" (s 20(5)). In argument, Temwood accepted that the purpose of the reservation of the Foreshore Reserve was a "planning purpose". The Condition in terms spoke of vesting in the Crown "under s 20A". Section 20A, to which reference is made earlier in these reasons, speaks of a condition of approval by the Commission that portion of the land in a subdivision shall vest in the Crown, among other purposes, for the "purpose of conservation or protection of the environment"; the Registrar of Titles is to vest that land in the Crown without any transfer. In the alternative, s 20C establishes a system whereby, with the approval of the local government authority and the Commission, the owner of the portion of the land to be set aside and vested in the Crown for "parks, recreation grounds or open spaces generally" may, in lieu thereof, pay to that authority a sum that represents the value of the portion. The Town Planning Act thus in direct terms assumes the power under par (a) of s 20(1) to impose upon approvals of subdivisions a term of the nature 119 (1970) 123 CLR 490 at 499-500. of the Condition. The imposition of the Condition plainly is capable of being regarded as related to the purpose for which the functions of the Commission under par (a) were being exercised. The imposition of the Condition was within power. Further, the imposition of the Condition did not acquire the character of an exercise of power to achieve extraneous ends or objects merely because the inescapable effect of the legislation under which it was imposed was that, if Temwood were then to subdivide, the right to do so may have been achieved at what Temwood regarded as too high a cost. That, as the Commission rightly emphasised, is a proposition supported by Lloyd v Robinson. In that case, Kitto, Menzies and Owen JJ remarked120: "The assumption may be accepted that the statutory power to annex conditions to an approval of a subdivision does not extend to requiring the setting aside for public recreation of land which is so unrelated to the land to be subdivided, because of remoteness from it or some other circumstance, that there is no real connexion between the provision of the open space and the contemplated development of the area to be subdivided. But in the present case it must not be forgotten that the subdivision for which the respondents sought approval was one of a series by means of which an area, fairly to be considered as a whole, was being gradually carved up and placed on the market; and it was well within the limits of a proper understanding of the Board's functions under the [Town Planning Act] to insist, at appropriate stages in the course of applications for approval to the constituent subdivisions, that open spaces be suitably located within the total area to satisfy reasonable requirements in respect of the total area." Their Honours added121: "Moreover, any suggestion that the power to impose conditions was exercised arbitrarily, or otherwise than in an endeavour in good faith to serve the purposes for which it was conferred, is answered by the trial judge's acceptance of evidence given before him by the Town Planning Commissioner to the effect that the spaces required were reasonable and proper and were arrived at by the Board in accordance with recognized principles of town-planning." 120 (1962) 107 CLR 142 at 153. 121 (1962) 107 CLR 142 at 153. the present case, the Tribunal, which were the findings by unchallenged, showed that the requirement that the Foreshore Reserve be ceded had its origin in a statement by the Minister for the Environment issued under s 45 of the Environmental Protection Act 1986 (WA). That statement had been made after detailed considerations by the Environmental Protection Authority of the need for a "buffer zone" to protect the scenery and the vegetation of the coastal strip. Terms of vesting It remains only to refer to the statement in Lloyd v Robinson122: "True it is that if the land required for open space reserves is transferred to the Crown for park and recreation purposes as the conditions require, the beneficial title to it will pass to or be vested in the Crown without legal fetter. There will be a moral obligation on the Government to keep it reserved for legally enforceable obligation. The ultimate sanction must be political only." the purposes mentioned, but no The terms in which s 20A of the Town Planning Act describe the vesting as for one or more of public purposes there identified appear to require some qualification in the application of what was said in the above passage to the statute in its present form. The authorities considered in Bathurst City Council123 suggest that the Crown would be subject to more than a moral or political obligation to observe the purpose of the vesting under s 20A. This appeal may be disposed of without expressing a concluded view on the matter. Orders The appeal should be allowed; orders 1, 2, 3 and 5 of the Full Court set aside and in place thereof it be ordered that the appeal to that Court be dismissed. Costs are dealt with in accordance with the undertaking, to which reference has been made. 122 (1962) 107 CLR 142 at 155. 123 (1998) 195 CLR 566 at 582-583 [34]-[36], 585-592 [44]-[65]. Callinan CALLINAN J. It is no doubt tempting for planning authorities, especially those that are also rating or taxing authorities124, to seek to obtain for the perceived public benefit, such parcels of land as they can, for as little as they can, or for nothing. But that temptation cannot of itself justify the opportunistic imposition of a condition on a planning or a subdivisional approval, that the land owner convey land free of cost to an authority. The test of validity of such a condition is not whether its imposition is in the public interest, but whether the condition is for a planning purpose and reasonably required by, and related to the subdivision, in the light of other relevant considerations such as the changes, burdens and demands that the subdivision will produce. A condition which answers this description may still be valid even if it produces benefits for people other than the persons connected with, or who will occupy or use the subdivided land. It follows that the test is not simply one of Wednesbury125 unreasonableness, a matter to which I will in due course return. The actual question in this case is whether the appellant, as a planning authority, was entitled to impose the condition that it did, that the subdivider cede valuable coastal land to the Crown free of cost, as a condition of a series of grants of subdivisional approvals. It is not whether the respondent had a current right to claim compensation for injurious affection to that land by reason of its earlier gazettal as a Foreshore Reserve. An argument in support of the latter proposition based on a construction of the relevant enactments was suggested as a possible argument by the Court, and for the first time, during the appeal. The appellant was initially reluctant to embrace it. The problem with such an embrace is that this Court suffers, as I think it did here, the disadvantages of the absence of a studied preparation, and a careful analysis of the relevant enactments by the parties, and a reasoned judgment on the point by the intermediate Court of Appeal. A further problem with the argument is that it ran counter to a position that the appellant had until then maintained, not only in the courts and tribunals below, but also repeatedly during the appeal in this Court: that the time for the making of a claim had not arrived because the event after which it might be made had not occurred. Facts It is unnecessary for me to repeat all of the facts. One observation should at this point however be made. Neither party to this appeal has acted consistently in relation to the relevant land and the condition. For example, in January 1993 124 The appellant is a revenue raising authority under Pt VI of the Metropolitan Region Town Planning Scheme Act 1959 (WA). 125 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB Callinan the respondent had advised the responsible Minister, in effect, that it did not then object to the imposition of a condition of the kind the subject of the appeal. Notwithstanding that, the appellant took no steps to possess itself of the land covered by it, or to have it conveyed to the Crown. Instead, it permitted a number of subdivisions of land in the vicinity owned by the respondent to be undertaken. Nothing turns upon these circumstances: it was not suggested that either party was in any way estopped, or otherwise precluded from adopting the stances that each has done in the current litigation (save for the appellant's late embrace of the argument referred to in the previous paragraph). There are some facts and some aspects of the decisions in the Town Planning Appeal Tribunal of Western Australia ("the Tribunal"), and of the Supreme Court of Western Australia, which do require some further attention. The gazettal of the Reserve neither divested the appellant of its ownership of the land nor severed it from the land to the east of it of which it formed part. At any time since the gazettal the appellant could have compulsorily acquired the land if it wished. Indeed, as was pointed out in the Second Reading Speech in the Legislative Council on the Bill for the Amendment Act to the Metropolitan Region Town Planning Scheme Act 1959 (WA) ("the Scheme Act") in 1968, the responsible Minister repeated that the intention then, as it had been earlier, was that the owner should be compensated for any loss in market value of the land126. What then was the effect of the gazettal of the land as Foreshore Reserve? It certainly did not in terms prohibit subdivision of it. What it did, by cl 13 of the Metropolitan Region Scheme ("the Scheme"), was to repose in the appellant a power to oversee, and to forbid development without its prior approval. The gazettal of the Foreshore Reserve would, in all likelihood, have had an immediate adverse impact upon the value of the land the subject of it, and also, in all probability upon the value of the land now in the ownership of the respondent to the east of it. The precise legal effect of the gazettal upon the owner's proprietary rights is not entirely clear. There is no suggestion however that the gazettal deprived the land of all utility and value to the owner. Indeed, cl 13 of the Scheme provided that the owner could erect a boundary fence without the need for any consent by the appellant, and cl 14 provided that the owner might continue to use the land for any purpose for which it was lawfully being used before the Scheme had the force of law127. Whilst the Foreshore Reserve remained in private ownership therefore, the owner could still use and occupy it, 126 Western Australia, Legislative Council, Parliamentary Debates (Hansard), 3 September 1968, at 754. 127 The Scheme drew a distinction between "Parks and Recreation area" and "Parks and Recreation Area – restricted public access." Callinan and deny entry upon or use of it to anyone else except authorized official entrants. It should not be automatically assumed, and it was not suggested in argument, that all uses, or means of exploitation of the land within the Reserve would be necessarily incompatible with its reservation. Furthermore, whilst it remained in the ownership of the same person as owned land to the east of it, it continued to have added value for the purpose of preserving views, of preventing the obstruction of prevailing sea breezes, and as a means of giving direct access to the beach, thereby enhancing the value of the eastern lands. In addition, the owner had a valuable right to claim compensation in respect of it in due course. The result wrought by the imposition of the condition is a quite different and more drastic one. The Tribunal approached the case as if the only effect of the condition was to deprive the respondent of a right to compensation that it would otherwise have had. That was an erroneous approach and one which has subsequently infected this litigation. It is erroneous because the condition, if valid, did much more than that. The condition deprived the owner of its valuable proprietary rights relating to, and over the Foreshore Reserve, including, but by no means confined to, the right to claim compensation for the injurious affection caused by the Scheme, of the land to the east of it to which I have referred. In short in its passive and unused state it still enhanced the amenity of the land to the east128, and had a potential for uses not incompatible with its reservation as a Foreshore Reserve. The decision of the Tribunal The Tribunal in its decision recited that the respondent had argued that the condition did not fairly and reasonably relate to the approvals and was unreasonable. I should observe at this point that in my opinion, for reasons which will appear, the concept of "unreasonableness" will require some further consideration. test although the correct this After a discussion of some of the authorities, the Tribunal, possibly because that was the matter upon which the respondent was then concentrating, turned its mind to the question whether the condition failed to satisfy the 128 Compare Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493 at 498-499 per Williams J; and on appeal to the Privy Council reported at (1959) 100 CLR 1; [1959] AC 248; see also Marshall v Director General, Department of Transport (2001) 205 CLR 603 at 617 [22] per Gleeson CJ, Gummow, Kirby and Callinan JJ. Callinan appropriate test because it "takes away the right to compensation under the [Scheme Act]". Later in its reasons the Tribunal said this129: "[B]alanced against this difficulty [of reconciling the Western Australian authorities] is the necessity that the [Commission] be able to impose a condition, in appropriate cases, that land be ceded free of cost upon subdivision. This necessity arises because of the legitimate community concern that a developer contribute to infrastructure costs to the extent permissible, a concept accepted by the High Court in Lloyd v Robinson130 on the basis that the condition is the price for the privilege of subdivision." The Tribunal fell into error in the passage that I have quoted in these respects. First, the test is not one of legitimate community concern or otherwise, even though of course the community, or sections of it, may in fact be concerned. Secondly, the authority is not entitled to determine the conditions upon the basis of the maximum contribution that it can extract from the developer. It is true that the Tribunal uses the words "to the extent permissible" but those words are open to an inference that the authority should be looking to, and is entitled to extract the maximum that it can from the developer rather than what is fair and reasonable in the circumstances. Public authorities, particularly those with power to affect proprietary rights, are bound to act not only in good faith, but also fairly and reasonably. No public interest is truly served by conduct which falls short of this standard. Indeed, high-handed, unfair acquisitive conduct is not only unlawful but is also likely to weaken the authority of, and confidence in public administration. The third error in the passage is the assertion that Lloyd v Robinson131 stands for the propositions earlier stated. And, as will also appear, Lloyd does not accurately and fully state the current law on the topic. Next the Tribunal said this132: "... the effect of a free of cost ceding condition on a future right to compensation is overstated. The ceding condition does not take away a future right to compensation but requires the giving up of the land free of cost. The reality is that if land is reserved, the owner loses a possible right to compensation but, most importantly, if land is not reserved, the owner loses the value of the land ceded: the same value in each case. There is 129 Temwood Holdings Pty Ltd v Western Australian Planning Commission [2001] WATPAT 4 at [26]. 130 (1962) 107 CLR 142. 131 (1962) 107 CLR 142. 132 [2001] WATPAT 4 at [27]. Callinan no difference in the effect of the condition if the land is injuriously affected: in all cases, the value of the land is lost." This is another error. It is not right to say that the ceding condition does not take away a future right to compensation but (merely) requires the giving up of the land free of cost. Once the land is given up free of cost no right to compensation exists, because the land the subject of it has passed out of the ownership of its former owner. The former owner who continues to own the adjoining land would have no right to claim compensation for injurious affection to that adjoining, now severed land by reason of the loss of the Foreshore Reserve as a result of the imposition of the condition, a right which in all probability it had when the Foreshore and the adjoining land were unsubdivided, in the same ownership, and subject only to the gazettal of the Reserve. Neither the value nor the loss is the same in each case. The passage overlooks the fact that the Foreshore Reserve was of utility and value to the respondent whilst it was in its ownership. The Tribunal repeatedly spoke as if the legal and practical efforts of the gazettal and the imposition of the condition were identical. Even if, as I do not think to be the case, the right to compensation had already been lost, the condition deprived the respondent of more than it had lost by the gazettal of the Foreshore Reserve for the reasons that I have given. If it were otherwise there would have been no need to impose the condition: the reservation by the gazettal would have sufficed. The next step in the reasoning of the Tribunal was to hold that133: "the basis for the imposition of the condition is that it was imposed historically and, having not [been] effectuated, requires to be imposed again until it is fulfilled". The Tribunal records that it was not argued that the land the subject of the condition should not be set aside for Foreshore Reserve, and that the appellant accepted the environmental condition that the land should be set aside for public use. This did not mean however that the respondent accepted the condition as imposed, and is to overlook the critical element of it, that the land was to be ceded, free of cost. Nor has the respondent resiled from the arguments: (a) that the condition in its totality does not reasonably relate to the subdivision of any of the lands that it owns, and has owned, including those the subject of current applications for subdivision, and those intended to be subdivided in the future, and (b) that the condition does not implement a relevant planning purpose as contemplated by the Scheme. It is possible that a case could be made to justify imposing a condition that the land be ceded free of cost on the basis that it does reasonably relate to the lands subdivided or to be subdivided. It may be that having regard to the total quantity of those lands, their location, and the intended use of them, it is proper 133 [2001] WATPAT 4 at [45]. Callinan that foreshore land of the area in question should be put into public ownership, and used for open space, public recreation, or indeed preserved for passive enjoyment only134. But this was not the inquiry that was made by the Tribunal. Perhaps it was distracted from undertaking that inquiry because of the concentration by the respondent upon the arguments which the Tribunal recorded in detail. That is not however to the point. In its earlier statement of the test the Tribunal acknowledged what its obligation was, but proceeding and reasoning as it did, failed to meet that obligation. It should also be pointed out that the appellant made no attempt in evidence or otherwise, to explain why, in pursuance of a valid and proper planning purpose, land already reserved by gazettal as Foreshore Reserve, should now be ceded free of cost. The decision of the Tribunal was erroneous therefore in the several respects to which I have referred. I will now go directly to the decision of the Full Court of the Supreme Court of Western Australia to which the respondent appealed after its appeal against the Tribunal's decision to a single judge (McLure J) of the Supreme Court failed. Full Court of the Supreme Court of Western Australia In the Full Court, Wallwork J and Scott J agreed with the reasons for judgment of Olsson AUJ. His Honour first stated the facts which he said were uncontroversial, and then went on to say that it was not entirely clear as to what was concluded by the Tribunal with respect to the issue of planning purpose135. His Honour was right to raise that question in view of the matters that I have stated. He quoted from the decision of the Tribunal and pointed out that the Tribunal claimed that the condition served a proper planning purpose, and could not therefore be said to have infringed the Wednesbury principle136. In the course of his reasons his Honour said that there had been a decrease in the market value of the land caused by the reservation, and the inability of the owner to use the land for purposes conflicting with the reservation, and that was 134 Policy documents of the appellant in evidence suggest that what a subdivider should cede free, for public open space, was 10 per cent of the gross subdividable area. 135 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 489 [26]. 136 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 490 [30]. Callinan the matter which gave rise to the entitlement to compensation137. It was, his Honour said, an issue, but not, I would interpolate, the only issue on the appeal, whether that right could be extinguished by the imposition, pursuant to s 20 of the Town Planning and Development Act 1928 (WA) ("the TP Act"), of the condition. It was because that was thought to be the main issue, because again it was no doubt the one upon which the parties particularly focussed, that much of the balance of the reasoning of his Honour was taken up with an examination of the nature of the right to compensation arising out of the gazettal, and the effect of the TP Act upon it. Olsson AUJ did however record an argument by the respondent that the appellant had exercised its power for an impermissible "It was 'bound to treat the application for planning approval ... on its merits, and not in such a way as to enable the [Crown] to acquire the land for less, or more easily': see Moneywood Pty Ltd v Salamon Nominees Pty Ltd139. That was, in fact, the aim, or at least a substantial aim, of the imposition of the impugned condition. As such, it was improper ..." In my opinion, this argument, as recorded by his Honour, was substantially correct and should be accepted. In the following passage his Honour made this valid criticism of the reasoning of the Tribunal140: "In other words, the Tribunal, quite correctly, appreciated that it is one thing to be able to characterise, in conceptual terms, the topic of a condition as, prima facie, being related to a planning purpose. It is entirely another to conclude that it is in fact required to actually fulfil such a purpose, in the circumstances under consideration. Interestingly, for present purposes, the example ventured by the Tribunal was a condition requiring ceding of open space where, patently, that was unnecessary for the orderly and proper planning of a locality of which the relevant subdivision was a part. 137 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 493 [39]. 138 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 496 [65]. 139 (2001) 202 CLR 351 at 407 [175]. 140 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 497 [71]-[72]. Callinan In the present case, the relevant policy is, by virtue of the Scheme Act, to be derived from the [Scheme] which mandates the principles of orderly development to be applied to the subject land." Later his Honour said, and in my opinion, correctly, this141: "Finally, the shortage of acquisition funds, is scarcely any basis for supposing that the legislature envisaged creation of the somewhat Gilbertian situation that it would confer a specific statutory right, by interaction of s 11 of the [TP Act] and s 36 of the Scheme Act, and, at the same time, leave it open to the respondent, by exercise of a general power of imposing conditions on subdivision applications, to effectively negate that right. I am unable to accept the propositions either that the focus of the Scheme Act and the [Scheme] is as stated, or that it can fairly be said that it was a planning purpose, in the Fawcett142 sense, merely to accelerate possible Crown ownership in the manner adumbrated. Such a concept is not, in the circumstances before the court, pitched at the orderly development of the locality and preservation of the amenity of the locality at all. Rather, it simply manifests an administrative desire to contain monetary cost. Its essential thrust is based on fiscal, rather than planning, objectives. In my view, at the end of the day, not only was no planning purpose identified either before the Tribunal or in the court below, but also there was simply no evidence of such a purpose ever placed before the Tribunal. It follows that the appellant was entitled to succeed on the merits in any event and the Tribunal erred in dismissing its appeal." He added this143: "At the very least, the Tribunal reasons evidenced, by clear inference, the existence of a major ulterior or extraneous purpose – namely to avoid a compensation liability to the appellant, conferred on the 141 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 499-500 [90]-[93]. 142 Fawcett Properties Ltd v Buckingham County Council [1961] AC 636. 143 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 500 [96]. Callinan latter by statute. The reasoning in Newbury144 and Thompson145 inexorably leads to the conclusion that, in the circumstances, the imposition of the impugned condition cannot be regarded as the bona fide exercise by the respondent of its powers for a legitimate planning purpose." For those reasons his Honour concluded that the appeal should be allowed and that it was unnecessary to make any judgment about the other arguments that had been advanced by the parties. The appeal to this Court Lloyd v Robinson Lloyd requires separate consideration. I have foreshadowed that in my opinion Lloyd cannot stand in the way of a decision in this appeal in favour of the respondent. This is so for a number of reasons. Lloyd is a decision of three Justices of this Court (Kitto, Menzies and Owen JJ) on appeal from a single judge of the Supreme Court of Western Australia (Virtue J). The issue there was similar to, but not identical with, the issue here, whether a condition could be imposed in respect of staged subdivisions that the subdivider convey to the Crown free of charge a large area out of the subdivider's land not presently the subject of an application for an approval to subdivide, for park and recreation purposes. Much of what was said by their Honours in that case has either been overtaken by subsequent experience and authority, or was so sweepingly stated as to require qualification in the light of that experience and authority. In rejecting a holding of the primary judge in Lloyd that to impose the condition that the subdivider transfer the land free of cost to the Crown was outside the contemplation of the relevant Act, because in the absence of any provision of compensation, the Act should not be construed as intending to authorize what would amount to the confiscation of private property, the Court said this146: "Given the necessary relevance of the conditions to the particular step which the [Town Planning] Board is asked to approve, there is no foothold for any argument based on the general principle against construing statutes 144 Newbury District Council v Secretary of State for the Environment [1981] AC 578. 145 Thompson v Council of the Municipality of Randwick (1950) 81 CLR 87. 146 (1962) 107 CLR 142 at 154. Callinan as enabling private property to be expropriated without compensation. The Act at its commencement took away the proprietary right to sub- divide without approval, and it gave no compensation for the loss. But it enabled landowners to obtain approval by complying with any conditions which might be imposed, that is to say which might be imposed bona fide within limits which, though not specified in the Act, were indicated by the nature of the purposes for which the Board was entrusted with the relevant discretion: see Swan Hill Corporation v Bradbury147; Water Conservation and Irrigation Commission (NSW) v Browning148. If approval is obtained for the subdivision of one area of land by complying with a condition which requires the giving up of another area of land for purposes relevant to the subdivision of the first, it is a misuse of terms to say that there has been a confiscation of the second." Lloyd was decided in 1962 only three years after the Scheme Act had been passed. There had, accordingly, been relatively little experience of it by the time that the appeal was argued in June of that year. Although town planning Acts had been enacted in Australia from time to time in various rather rudimentary forms, sophisticated and detailed town planning enactments and procedures have only gradually evolved149 and, I would suggest, come to be well understood in this country in the last 30 or so years. During that period there has been a great increase in population, and in the development and subdivision of land to accommodate it. Over those years many instances have been noted of aggressive action, even impropriety, and excess of power on the part of planning authorities 147 (1937) 56 CLR 746 at 757, 758. 148 (1947) 74 CLR 492. 149 See Fogg, Australian Town Planning Law: Uniformity and Change, 2nd ed (rev) Callinan in regulating that development and subdivision150. Even the most cursory resort to planning law reports will throw up examples of that151. Whilst it is true that principles applying to the construction of statutes enabling the expropriation of private property are not directly relevant to the lawful imposition of conditions with respect to subdivisions and developments, the fact that the condition may result in the acquisition of property by an authority free of charge, does provide reason for a careful examination of the nature and extent of the development or subdivision, and the relevance of the condition to it. I cannot agree that the Act to which the Court was referring in Lloyd took away the proprietary right to subdivide without approval. In my opinion a more accurate statement of the position is that the Act made provision for the regulation of subdivision. This is particularly so because, in deciding whether to grant or withhold approval, and as to the appropriateness of conditions, the Board was bound to act reasonably and fairly, and in no way arbitrarily. Furthermore, to speak as if there were a proprietary right to subdivide without approval before the Act, and as if that right were an absolute one is to put the matter too high. The making of a subdivision that purports to create allotments without access to public roads will usually result in the creation of easements of necessity at common law152. Many subdivisions also involve the creation of new roads. This cannot be done unilaterally by the subdivider: the Crown or the local authority 150 Prentice v Brisbane City Council [1966] Qd R 394; Brisbane City Council v Mareen Development Pty Ltd (1972) 46 ALJR 377; R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170. A commission of inquiry (conducted by Bennett QC and established on 3 October 1966 by the Governor in Council of Queensland) inquired into the planning activities of the Brisbane City Council, a planning authority under Queensland enactments. The report of the Inquiry was made on 10 April 1967. It recorded many instances, not only of aggressive, but also of highly unreasonable and unlawful conduct by the Brisbane City Council in imposing conditions on subdivisional approvals or in refusing approvals altogether: see Queensland, Bennett QC, Report of the Brisbane City Council Subdivision Use and Development of Land Commission, June 1967 at 68-72. 151 See for example: Finlay v Brisbane City Council (1978) 36 LGRA 352; Corsi v Johnstone Shire Council (1979) 38 LGRA 316; Carroll v Brisbane City Council (1981) 41 LGRA 446; Allsands Pty Ltd v Shoalhaven City Council (1993) 78 LGERA 435; Trehy & Ingold v Gosford City Council (1995) 87 LGERA 262; Western Australian Planning Commission v Erujin Pty Ltd (2001) 115 LGERA 24; Ben-Menashe v Ku-ring-gai Municipal Council (2001) 115 LGERA 181. 152 See Megarry and Wade, The Law of Real Property, 6th ed (2000) at 1105-1106. Callinan must be willing for this to occur and to accept the road as a public road, and to permit it to intersect, or make a junction with an existing public road. Also, apart from the practical constraints upon any subdivider compelling it to subdivide in such a way as to ensure appropriate access, configuration and shape and size of lots to enable them to be utilized, and to meet a market, or serve some other purpose, the creation of subdivisions of land under the Torrens system (as this land is) was always subject to a degree of supervision by the Registrar of Titles153. The passage that I have quoted from Lloyd refers to the judgment of Dixon J in Swan Hill Corporation v Bradbury154. The issue in that case was whether a municipal by-law prohibiting the erection of any building within the municipality unless with the approval of the Council, was within a power to make by-laws "regulating and restraining the erection and construction of buildings". The by-law was unanimously held to be beyond power. The case was one of statutory construction, and many of the observations regarding the exercise of discretionary Council's powers were obiter. Dixon J said155 that an authority such as a Council had a discretion unlimited by anything but the scope and object of the instrument conferring it. That may be to state a familiar formula but it is not to state accurately and fully the relevant test. His Honour did go on to say that it is usually impracticable to say in advance what the permissible limits, within which the discretion is exercisable, will be. On any view however, it cannot be within the scope, and an object of either or both, of the Scheme Act and the TP Act to get the Foreshore Reserve for nothing, and without regard to relevant town planning considerations such as the effects of the proposed subdivisions, the demands and impacts that they may make upon the 153 Section 166 of the Transfer of Land Act 1893 (WA) from its inception has had this effect, and when Lloyd was decided provided as follows: "166. Any proprietor subdividing any land under the operation of this Act for the purpose of selling the same in allotments shall deposit with the Registrar a map of such land if so required. Such map shall exhibit distinctly delineated all roads streets passages thoroughfares squares or reserves appropriated or set apart for the use of the purchasers and all permanent drains and also all allotments into which the said land may be divided marked with distinct numbers or symbols and shall also show the areas and shall comply in every respect with the Rules and Regulations for the time being for the guidance of surveyors when practising under this Act. In case a portion only of the land comprised in any certificate be subdivided the existing certificate shall be cancelled to the extent of such portion and a fresh certificate shall be issued for the same." 154 (1937) 56 CLR 746. 155 (1937) 56 CLR 746 at 758. Callinan amenity and existing infrastructure, and the relevance of the ceding, free of cost of the Foreshore, to the Crown, to those considerations. Subsequent authority to which I will refer makes it clear that the test relating to conditions has more to it than the dictum of Dixon J suggests. The other case to which the Court referred in Lloyd was Water Conservation and Irrigation Commission (NSW) v Browning156. With the greatest of respect I cannot regard this case as other than a product of its time, and as one in which the same conclusion would not be reached today. The authority there was a water authority charged with the power as lessor, of granting or refusing consent to the transfer of irrigation farm leases. Its decision, to withhold consent to a transfer to a naturalized Australian of Italian, that is to say enemy origin, was affirmed by the Court. The case very much turns upon its own facts and the relevant legislation, and provides little guidance to the resolution of an appeal which is concerned with planning conditions. There are other reasons to doubt the correctness of Lloyd. The Justices in that case were critical of a statement by the primary judge in posing the question for his consideration in the way in which his Honour did, by referring to an expropriation of the land for the benefit of the Crown. They said157: "[T]here is here no expropriation for the benefit of the Crown in any real sense of the expression. True it is that if the land required for open space reserves is transferred to the Crown for park and recreation purposes as the conditions require, the beneficial title ... will pass ... without legal fetter. There will be a moral obligation on the Government to keep it reserved for legally enforceable obligation. The ultimate sanction must be political only." the purposes mentioned, but no This passage cannot be regarded as a sound statement of the law relating to the future use of the Foreshore Reserve by the Crown in light of Bathurst City Council v PWC Properties Pty Limited158 and the cases considered there159. Was the imposition of the condition lawful? A later case in which this Court, constituted on this occasion by five Justices, considered the validity of conditions attaching to the approval of a 156 (1947) 74 CLR 492. 157 (1962) 107 CLR 142 at 155. 158 (1998) 195 CLR 566. 159 See especially (1998) 195 CLR 566 at 582-583 [34]-[36], 585-592 [44]-[65]. Callinan subdivision, is Cardwell Shire Council v King Ranch Australia Pty Ltd160. The imposition of the condition there was governed by a Queensland enactment that expressly stated that a condition could not be imposed unless it was reasonably required by the subdivision of the land. I do not take this statutory test to be different from the test that should be applied to a subdivision under the TP Act. This is so because it seems to me to be highly unlikely that the legislature of Western Australia would have intended to confer upon any planning authority in that State a power to impose conditions that were not reasonably required by the subdivision. If it were otherwise, the authority could arbitrarily impose a condition that had little or nothing to do with the subdivision, or was quite unreasonable having regard to the likely consequences of the subdivision. Gibbs CJ, with whom the other four members of the Court (Mason, Wilson, Brennan and Dawson JJ) agreed, said this161: "The statutory test that has to be applied by a local authority in deciding whether to attach conditions to its approval in a case such as the present is whether the conditions are reasonably required by the subdivision. This means that the local authority, in deciding whether a condition is reasonably required by the subdivision, is entitled to take into account the fact of the subdivision and the changes that the subdivision is likely to produce – for example, in a case such as the present, the increased use of the road and of the bridge – and to impose such conditions as appear to be reasonably required in those circumstances." As Gibbs CJ made clear however, that did not mean that the condition could be regarded as reasonable only if the product of its implementation would be for the exclusive benefit of persons connected with the subject land162. It seems to me that even though the Court was considering a condition which was governed by particular legislation in Cardwell, the same approach as was adopted there should be adopted under the TP Act despite that it does not use the word "reasonably". The test stated in Cardwell is moreover, a similar test to the one adopted by the House of Lords in Newbury District Council v Secretary of State for the Environment163: that a condition must be for a planning purpose and not for any ulterior purpose, must fairly and reasonably relate to the proposed development, 160 (1984) 58 ALJR 386; 53 ALR 632. 161 (1984) 58 ALJR 386 at 388; 53 ALR 632 at 635. 162 (1984) 58 ALJR 386 at 388; 53 ALR 632 at 635. Callinan and, thirdly must not be so unreasonable that no reasonable planning authority could have imposed it164. It may be doubted whether the third limb of the test is necessary. It uses the language of Wednesbury165, but if, as the second limb of the test requires, the condition must fairly and reasonably relate to the proposed development, it must be a condition, not simply justifiable as one which a reasonable planning authority could impose, but one which is fair and reasonable in the circumstances of the particular case. The reference therefore to Wednesbury unreasonableness serves to confuse, rather than to illuminate the issue in cases of potentially unlawful conditions. On any view therefore I do not think it appropriate to regard the language of Lloyd, particularly the passages that I have quoted as being applicable to contemporary planning problems and the resolution of this appeal. The adoption by this Court (Gaudron, McHugh, Gummow, Hayne and Callinan JJ) in Bathurst166 of what was said by Walsh J in Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council167 does not dictate a different conclusion. It is necessary to keep in mind everything that was said by Walsh J in the passage quoted in Bathurst, in particular that the discretion (to impose conditions) was not unlimited, and that the conditions must be "reasonably capable of being regarded as related to the purpose for which the function of the authority is being exercised"168. Neither the purpose nor the function of the authority is to get land for nothing for a planning purpose at large: the function and purpose of the authority is of deciding whether the subdivision should be permitted, and if so, whether any and which conditions reasonably and fairly relate to it and should be imposed. The conclusion which I have reached is not affected by s 20C of the TP Act which provides that an owner may, with the approval of the local authority and the appellant, pay money in lieu of the provision of land for parks, recreation grounds or open spaces generally. It is clear that from the outset the appellant and the Crown in this instance were interested in the particular land, and not money in lieu of it. As the Scheme makes clear, they wanted all of the foreshore land in the vicinity for foreshore preservation as well as perhaps other purposes. There is not the slightest suggestion that the Crown or the appellant would have 164 [1981] AC 578 at 599-600 per Viscount Dilhorne and at 607-608 per Lord Fraser of Tullybelton. 166 (1998) 195 CLR 566 at 577. 167 (1970) 123 CLR 490. 168 (1970) 123 CLR 490 at 499 (emphasis added). Callinan consented to take money rather than reserve and ultimately take the land. The fact that the land was reserved long before the subdivision or subdivisions were conceived means that the reservation could have nothing to do with them. Whilst it cannot be doubted that there is a power to impose a condition of the kind imposed here, the condition has to be one which is fairly and reasonably related to the subdivision or development, the application for the approval of which is to provide the occasion and need for its imposition: no attempt has been made by the appellant to establish that vital connexion. Section 20C is obviously designed to allow flexibility in cases such as ones in which the general policies of, for example, taking a certain percentage of land for parks, cannot be implemented, or other circumstances make it appropriate for the appellant or the Crown to take money instead of land. The respondent's entitlement to compensation What I have said so far, that the Tribunal failed to make the proper inquiry and erred in the other ways that I have described, is sufficient to dispose of the appeal in the respondent's favour. If I am correct in so holding then whether the respondent had made a claim within time or not for compensation, or otherwise had an entitlement to it is not determinative, and no further consideration of this appeal would be required. But, as the question was argued and because I take a different view of it from other members of the Court I now turn to that question. Has the respondent a right to claim compensation? As Gummow and Hayne JJ have explained in their reasons, the right to compensation stems from the application, by s 36 of the Scheme Act, of s 11 of the TP Act to the injurious effects of a Scheme. Sub-sections 11(1) to (4) of the TP Act provide as follows: "11 Compensation (1) Any person whose land or property is injuriously affected by the making of a town planning scheme shall, if such person makes a claim within the time, if any, limited by the scheme (such time not being less than 6 months after the date when notice of the approval of the scheme is published in the manner prescribed by the regulations), be entitled to obtain compensation in respect thereof from the responsible authority: Provided that a person shall not be entitled to obtain compensation under this section on account of any building erected, or any contract made, or other thing done with respect to land included in a scheme after the date of the approval of a scheme, or after such other date as the Minister may fix for the purpose, being not earlier than the date of the approval of the scheme. Callinan Provided also that the local government may make agreements with owners for the development of their land during the time that the town planning scheme is being prepared. (2) Whenever, by the expenditure of money by the responsible authority in the making and carrying out of any town planning scheme, any land or property is within 12 months of the completion of the work, or of the section of the work affecting such land, as the case may be, increased in value, the responsible authority shall be entitled to recover from any person whose land or property is so increased in value, one half of the amount of such increase, if the responsible authority makes a claim for that purpose within the time, if any, limited by the scheme, not being less than 3 months after the date when notice of the approval of the scheme is first published. (3) Where a town planning scheme is altered or revoked by an order of the Minister under this Act, any person who has incurred expenditure for the purpose of complying with the scheme shall be entitled to compensation from the responsible authority, in so far as any such expenditure is rendered abortive by reason of the alteration or revocation of the scheme. (4) Any question as to whether any land or property is injuriously affected or increased in value within the meaning of this section, and as to the amount and manner of payment (whether by instalments or otherwise) of the sum which is to be paid as compensation under this section, or which the responsible authority is entitled to recover from a person whose land is increased in value shall be determined by arbitration under and in accordance with the Commercial Arbitration Act 1985, unless the parties agree on some other method of determination." Although the principles relating to confiscation or acquisition of property do not directly apply to conditions to attach to subdivisions under the TP Act, they do have relevance to the provisions relating to compensation under the Scheme Act169. It follows in my view, that the words in s 11(1) of the TP Act "[a]ny person whose land or property is injuriously affected by the making of a town 169 cf Marshall v Director General, Department of Transport (2001) 205 CLR 603 at 623 [38] per Gaudron J. See also Kettering Pty Ltd v Noosa Shire Council (2004) 78 ALJR 1022 at 1029-1030 [31]-[32]; 207 ALR 1 at 10 per McHugh, Gummow, Hayne, Callinan and Heydon JJ. Callinan planning scheme shall ... be entitled to obtain compensation" should not be read as confined to a person who actually owned the land at the time that the scheme was made if the land has subsequently been sold. The section simply does not say that. Any person who owns land affected by a scheme is injuriously affected by the making of the Scheme even if that person only acquired the land after the Scheme was made. Section 11 is not the provision which specifies the time within which a claim must be made. It can be seen that it contemplates that the Scheme itself may specify a relevant time for the making of a claim and indeed that that time must be not less than six months after the Scheme becomes lawfully enforceable. Clearly it is possible that during such a period of not fewer than six months the property could change hands. Furthermore, the Scheme has a continuing adverse effect after it is first made by continuing to restrict prospective development of land subject to it. It is not without significance that the section does not use the word "gazettal" rather than "making". Nor do I think that any other provisions of the Scheme Act preclude an owner becoming an owner subsequent to the making of the Scheme, from making a claim. Section 36 of the Scheme Act has been amended from time to time but it is common ground that s 36(3) in its current form applies to this case. That section limits the time within which a claim must be made, and provides as follows: "(3) Subject to subsection (4), where under the Scheme any land has been reserved for a public purpose, no compensation is payable by the responsible authority for injurious affection to that land alleged to be due to or arising out of such reservation until – the land is first sold following the date of the reservation; or the responsible authority refuses an application made under the Scheme for permission to carry out development on the land or grants permission to carry out development on the land subject to conditions that are unacceptable to the applicant." It can be seen that s 36(3) is phrased in such a way as to identify an event before which compensation may not be claimed. The relevant event is either the first sale following the date of the reservation, or the refusal by the responsible authority under the scheme of permission to carry out development on the land, or to carry out development on the land subject to conditions that are unacceptable to the applicant. In order for s 36(3) to bear a construction that would defeat a claim for compensation following an application for subdivisional approval by a person Callinan not the owner at the time of the making of the Scheme, and who is a purchaser from that owner or a subsequent owner, two implications must be read into it. The first is, after the word "land" in each place in which it appears, the words "or land of which the land forms part" should be added because "the land" in question is the Foreshore Reserve and not the adjoining land. The other implication consists of the words "whichever shall first occur". There is no necessary reason why these words should be read into s 36(3). To read such words into the sub-section is to introduce unnecessary implications and to adopt an approach to the construction of a compensation provision which is inconsistent with the cases referred to in Kettering170. There are other reasons why the words should not be read into s 36(3). Section 36(3a) is not without its obscurities, but it does make it clear that compensation for injurious affection is payable only once unless the reservation changes as it did in fact here171. To prevent double or multiple payments is its principal purpose. It provides as follows: "(3a) Compensation for injurious affection to any land is payable only once under subsection (3) and is so payable – under paragraph (a) of that subsection to the person who was the owner of the land at the date of reservation; or under paragraph (b) of that subsection to the person who was the owner of the land at the date of application, the payment of that paragraph, unless after referred compensation further injurious affection to the land results from — that an alteration of the existing reservation thereof; or the imposition of another reservation thereon." Section 36(4) does not produce any different a result. It is intended to ensure that an application for compensation is bona fide in the sense that if the event is the sale, it has been a sale genuinely made at the best possible price. 170 (2004) 78 ALJR 1022 at 1029-1030 [31]-[32]; 207 ALR 1 at 10 per McHugh, Gummow, Hayne, Callinan and Heydon JJ. 171 The boundary was altered in 1994 by the "South West Corridor Omnibus Amendment No 960/33." Callinan The fact is that if the construction that I prefer is correct, then the price on a sale following the date of the reservation should include a component for the compensation to which the purchaser or any subsequent purchaser will become entitled, if in due course the responsible authority refuses an application, or imposes unacceptable conditions in respect of an application, by a subsequent purchaser or purchasers. It may be that there is little or no loss on the first sale following the date of the reservation. Loss, if any, or the true and full loss, may only crystallise and be sustained by a purchaser seeking to develop the land, who is then able to see and assess the precise and full adverse effect of the Scheme. It was for this reason no doubt that the Full Court thought that some statements in the recent decision of this Court in Moneywood Pty Ltd v Salamon Nominees Pty Ltd 172 were relevant. Section 36(3a) is not an easy provision to construe. The words "unless after the payment of that compensation" which appear in the section produce the result that it is only if compensation has already been paid and received, that the criterion for further compensation, of a change in the reservation, has to be satisfied. There are other indications that the event giving rise to a right to claim has not occurred. Section 36(3) of the Scheme Act refers to, and identifies the relevant land as "any land [that] has been reserved for a public purpose". Section 36(3)(b) identifies the alternative event after which a claim for compensation can be made, as the refusal of an application, or the imposition of unacceptable conditions in relation to a proposed "development on the land". The application that was made here was an application for the subdivision, that is to say the development, of the adjoining land. As I understand it, the respondent has never made any application to subdivide, or otherwise develop the land reserved for a public purpose, the Foreshore Reserve. Accordingly, the event has not occurred, and the time within which an application should be made has not expired. Section 36(5) which provides that a claim must be made within six months of the relevant event again expresses the matter disjunctively without qualification and consistently with the earlier sub-sections. The construction which I prefer and which eschews implications, provides a fairer result. It allows the claim to be made when the true effect of the Scheme becomes known and the full loss is incurred. In the meantime, the owner of the land remains liable for the rates and other charges payable in respect of it, and the appellant enjoys the advantage of a large measure of control over the land, and the postponement of any liability to acquire or pay for it. If the owner wishes to claim immediately following the making of the Scheme, then that is a matter for 172 (2001) 202 CLR 351 at 407 [175]. Callinan it. Because only one claim can be made prudence would ordinarily dictate that it be made as and when the full loss is ascertainable. The construction which I consider to be correct is also consistent with the relevant extrinsic materials which were in evidence. The Metropolitan Region Scheme Report 1962 with which this Scheme was submitted for Parliamentary approval pursuant to the Scheme Act made this acknowledgment. "The depreciation [of the reserved land] in value is, in many instances hypothetical. It becomes real only when property is sold at a value depressed by the reservation, or when development is frustrated by a refusal of consent." Later this appears in the Report: "183 Different considerations arise in respect of compensation and reservations. As discussed earlier in this Report, the Authority believes it essential that legislative provision be made for compensation in respect of reservations to be contained to those areas where a sale at a depressed price has been effected or where consent for development has been withheld. There is accordingly no time specified in the Scheme within which a compensation claim must be lodged in respect of reservations. These may be expected to arise at any time following either a sale at a depressed price or a decision under the Scheme to refuse consent for development, and they must be lodged within six months thereafter." The use of the word "either", absent any reference to the first occurrence of either of the alternative events, and the reference to a sale at a depressed price, suggest that the emphasis is upon the ascertainment of the true loss, and the actual event which gives rise to it. Why, it may be asked should the Crown get the land for nothing unless that reasonably and relevantly fulfils a proper planning purpose relating to the subdivisions? It should be remembered that the reservation was made years before any subdivision was undertaken. It is difficult to see how then the fact of a subdivision or subdivisions could provide a basis for the ceding of the land, let alone the ceding of it free of cost in 1998. The Second Reading speech for the amendment of the Scheme Act is to a similar effect to the Report. The responsible Minister said this173: "The Bill also amends the compensation provisions in respect of the metropolitan region scheme. This amendment arises from a consideration of the financial resources of the metropolitan improvement fund and problems of planning authorities in other States where claims for compensation have totalled many millions of pounds – far beyond the 173 Western Australia, Legislative Assembly, Parliamentary Debates (Hansard), 4 September 1962 at 820. Callinan resources of the responsible authorities. It has been said that many of these claims were due to the uncertainty of the owners in respect of their right. As indicated in the report submitted by the authority, it is quite impossible to contemplate the acquisition immediately, or over a short period of time, of land which will not be required for many years ahead and the cost of which will, in the aggregate, run to many millions of pounds. However, as the Act stands, the authority could be confronted with a heavy claim for compensation in respect of the whole of the land reserved under the scheme and far beyond its financial ability to meet. Nevertheless, it is necessary that the land be reserved in the scheme for this future need; and the reservation imposes an obligation in respect of compensation. It can properly be argued that reservation under the scheme depreciates the value of land. However, the depreciation is, in many cases, hypothetical and becomes real only when the land is sold at a price which reflects this depreciation, or when development is frustrated by a refusal of consent under the scheme. The amendment proposes that compensation for injurious affection be limited to two circumstances: where a sale is effected at a depressed value attributable to reservation under the scheme, or where consent to develop is refused on the ground of reservation under the scheme. These provisions are designed to protect the interests of landowners as well as to secure that the scheme shall not be defeated by the inability of the fund to meet claims upon it. The authority is already empowered to purchase land; and, with the provisions now proposed, there should be no problem in dealing with a case of individual hardship should it arise." The speech also indicates that it was in the interest of the Crown to defer payment of compensation. The responsible Minister did not suggest that any reservations made by the Scheme needed to be made because of any subdivisions, current or prospective. Even if therefore, as I do not think to be the case, the existence of a continuing right or an unspent right to compensation was a necessary plank in the respondent's case, that plank is in place and is sound. Accordingly I would dismiss the appeal with costs. 178 HEYDON J. It is convenient to employ the terminology and abbreviations appearing in the reasons for judgment of Callinan J. Questions which do not arise The issue below and s 36 of the Scheme Act. The crucial issue below depended on s 20(1)(a) of the TP Act. It gave the appellant power to grant approval for the subdivision of lots on conditions. The question was whether the appellant had power to impose on three approvals for subdivision of the relevant land a condition that the Foreshore Reserve be vested in the Crown "free of cost and without any payment of compensation by the Crown." The resolution of that question turns largely on the significance of the finding by the Tribunal that one "intended effect of the condition is to defeat the operation of Part V of the [Scheme Act, which] provides … that compensation may be claimed for injurious affection of land that is reserved under [the Scheme]". That finding, which loomed large in the respondent's Notices of Appeal to McLure J and to the Full Court, is crucial to the respondent's argument. Conditions imposed by the appellant under s 20(1)(a) must not be imposed for any purpose extraneous to those permitted by the legislation. A planning authority which intends a particular effect may be said to have a purpose of bringing about that effect. Hence it is strictly irrelevant whether, assuming that the condition had not been imposed, the respondent would have been able to claim compensation: it suffices that the appellant had – if it did – the purpose of defeating any claim open to the respondent, which in the circumstances was outside the range of objects permitted by s 20(1)(a)174. A decision can be invalidated by an extraneous purpose even though the goal which underlies that purpose is futile or unnecessary or impossible of achievement. For that reason, the arguments of the parties in the courts below about whether the respondent had any right to compensation, and the discussions of those arguments by the courts below, are irrelevant. Further, for that reason, and for the reasons given by Callinan J175, it is not necessary to examine a question not raised below but raised in this Court, namely the true construction of s 36 of the Scheme Act. Since the question is one peculiarly affecting the complex and specialised subject of town planning law in a particular State, it would be valuable for this Court to have the assistance of a specialist institution charged with relevant responsibilities, like the Tribunal, as well as that of the judges of the Supreme Court of Western Australia. The Tribunal will certainly have had, and the judges will probably have had, vastly greater experience of the legislation than this Court. In view of the way the proceedings were conducted below, this Court has been deprived of that valuable assistance. 174 See McHugh J's reasons at [65]. 175 Callinan J's reasons at [122]. Bad faith/improper purpose. In argument, some colourful language was used about the relevant inquiry. The key question posed below is not whether the appellant acted in bad faith, or mala fide, or improperly, in one of the ranges of meaning which those words bear. The question is simply whether the appellant was actuated by a purpose which, in the circumstances of the case, was extraneous to those permitted by s 20(1)(a). Was Lloyd v Robinson right? The appellant placed Lloyd v Robinson176 at the centre of its argument. The respondent, on the other hand, contended that Lloyd v Robinson could be distinguished. But the respondent did not contend that Lloyd v Robinson should be overruled or that any particular part of the reasoning in it, so far as it rested on propositions of law, should be departed from. Those steps should not be taken unless it is necessary to do so. It is not necessary to do so for the following reasons. The question in Lloyd v Robinson was whether particular conditions imposed on a subdivision of the land involved in that case on 16 March 1960 were validly imposed (and, in particular, whether they had extraneous objects). That question is entirely distinct from the question in this case – whether the condition imposed on the subdivisions of the land on 17 May and 7 September 2000 had an extraneous object. In Lloyd v Robinson, this Court answered the question before it by finding that the imposition of the conditions by the Board was in order to serve purposes which it was justified in pursuing. It does not follow from that answer that the same answer should be given to the question raised by this case, and hence it is not necessary to consider the correctness of Lloyd v Robinson. Did the Commission have an extraneous purpose? The Tribunal's finding that one intended effect of the impugned condition was to defeat any claim the respondent had to compensation was arrived at by construing the condition177. As the respondent said in ground 4 of its Notice of Appeal to the Full Court, the appellant did not, in the appeal to McLure J, contest that finding in any notice of cross-appeal or notice of contention. And McLure J accepted the finding of intended effect. She said of the finding178: 176 (1962) 107 CLR 142 at 153-155 per Kitto, Menzies and Owen JJ. 177 Temwood Holdings Pty Ltd v Western Australian Planning Commission [2001] WATPAT 4 at [7], where the Tribunal referred to the effects of the condition "as it is worded". 178 Temwood Holdings Pty Ltd v Western Australian Planning Commission (2001) 115 LGERA 152 at 173-174 [79]. "The tribunal is saying nothing more than it infers from the wording of the condition that it was designed to achieve the stated effects. The tribunal then goes on in its reasons to test the validity and conduct a merits review of the condition. In particular, it makes an assessment that: for is necessary the commission in appropriate circumstances to impose a vesting condition because of the legitimate community concern that a developer contribute to infrastructure cost to the extent permissible on the basis that the condition is a price for the privilege of subdivision …; the condition does not take away a future right to compensation but requires the giving up of the reserved land free of cost which is the effect the condition has on an owner of unreserved land …; [and] having considered the history of the subdivision (set out earlier in these reasons) and the relationship between the relevant land and the condition, the condition had a clear planning purpose." Her Honour then said179: "the focus of the [Scheme Act] and the [Scheme] is to secure (eventual) public ownership of land reserved for public purposes. That is a planning purpose. That same purpose of achieving public ownership of land to be used for public purposes is achieved by the condition. It is no less a proper planning purpose because it is achieved at an earlier time as part of subdivisional approval of land of which the reserve forms part." Later, McLure J outflanked the finding of intended effect as follows180: "In this case there is no basis in the evidence to support a finding that the sole or dominant or substantial purpose of the condition was to prevent the [respondent] ever claiming compensation under the [Scheme Act]. It cannot be disputed that the intended effect of the 'free of cost' element of the condition is to secure public ownership of the land at no cost to the public purse. That does not render the purpose of a ceding condition improper … . It is not converted to an improper effect (and by inference, 179 Temwood Holdings Pty Ltd v Western Australian Planning Commission (2001) 115 LGERA 152 at 175 [86]. 180 Temwood Holdings Pty Ltd v Western Australian Planning Commission (2001) 115 LGERA 152 at 176 [90]. purpose) because the ceding of the land has the practical consequence of preventing the satisfaction of a condition upon which entitlement to compensation under the [Scheme Act] depends." I would agree with the reasons of Olsson AUJ for rejecting the reasoning of McLure J (and hence the reasoning of the Tribunal) in the first passage quoted181, and with the reasons which relate to that reasoning given by Callinan J182 (apart from the criticism of Lloyd v Robinson183). I also agree with the reasons given by Olsson AUJ for rejecting the reasoning in the second passage quoted184, which are quoted by Callinan J185. The third passage quoted from the reasons for judgment of McLure J erroneously assumes that an intended effect of securing public ownership free of cost is, in this case, an intra vires purpose, and can be distinguished from the substantial purpose of denying the respondent compensation. I would agree with Olsson AUJ's reasons186, quoted by Callinan J187, for differing from her Honour's conclusion. I agree with Callinan J188 that it is possible that in some cases an intended effect, and hence a purpose, of a condition that land be ceded to the Crown without compensation would not be extraneous to the purposes which are within s 20(1)(a), but that is not so here. Orders The appeal should be dismissed with costs. 181 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 498-499 [78] and [82]-[84]. 182 Reasons of Callinan J at [129]-[132]. 183 (1962) 107 CLR 142 at 153-155. 184 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 499-500 [85]-[93]. 185 Reasons of Callinan J at [137]-[140]. 186 Temwood Holdings Pty Ltd v Western Australian Planning Commission [No 2] (2002) 25 WAR 484 at 500 [96]. 187 Reasons of Callinan J at [140]. 188 Reasons of Callinan J at [133].

HIGH COURT OF AUSTRALIA LOCKWOOD SECURITY PRODUCTS PTY LTD APPELLANT AND DORIC PRODUCTS PTY LTD RESPONDENT Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [2004] HCA 58 18 November 2004 ORDER UPON the appellant by its counsel undertaking to the Court in writing forthwith to proffer to the Federal Court of Australia, for the period of the continuation of the stay provided in order 5 of these orders, the following undertakings: (a) to prosecute the proceedings in the Federal Court expeditiously; (b) forthwith to serve on the Commissioner of Patents a copy of this order with a request that particulars of this order be registered in accordance with s 187 of the Patents Act 1990 (Cth); (c) not to threaten any person with proceedings for infringement of claims 1-32 of Patent No 702534 ("the Patent"); (d) not to seek to amend any claims of the Patent otherwise than in the course of or in connection with the proceedings in the Federal Court; THE COURT ORDERS THAT The appeal is allowed with costs. Orders 1 and 2 made by the Full Court of the Federal Court on 7 March 2003 are set aside. It is declared that claims 1-32 of the Patent are fairly based on matters described in the complete specification. The matter is remitted to a Full Court of the Federal Court for the determination of the remaining issues on the appeal to that Court and to make such further orders as are necessary and appropriate, including orders disposing of the costs of the appeal to that Court and the proceedings before Hely J and disposing of any application to amend the Patent. The stay the subject of the orders of the Court made on 27 March 2003 and 23 December 2003 continue until the determination of the proceedings remitted to the Full Court of the Federal Court or further order of the Federal Court. On appeal from the Federal Court of Australia Representation: A J L Bannon SC with C Dimitriadis for the appellant (instructed by Phillips Ormonde & Fitzpatrick) D K Catterns QC with S J Goddard for the respondent (instructed by Spruson & Ferguson) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Lockwood Security Products Pty Ltd v Doric Products Pty Ltd Patents – Validity – Fair basing of claims – Patent for a door lock – Specification included a consistory clause and described a preferred embodiment – Central claim essentially repeated consistory clause – Whether claim was "fairly based" on the matter described in the specification within s 40(3) of the Patents Act 1990 (Cth) or travelled beyond it – Whether test of fair basing involves consideration of "merit", "inventive step", "technical contribution to the art" or general "fairness" – Whether grounds of invalidity under Patents Act must be kept distinct. Words and phrases – "consistory clause", "fairly based", "fair basing", "inventive step", "invention", "merit", "real and reasonably clear disclosure", "technical contribution to the art", "the matter described in the specification". Patents Act 1952 (Cth), s 40(2). Patents Act 1990 (Cth), ss 18(1), 40(2), 40(3), 45(1), 59, 138(3), Sched 1. Patents Act 1949 (UK), s 4(4). Patents Act 1977 (UK), ss 14, 72(1)(c). GLEESON CJ, McHUGH, GUMMOW, HAYNE AND HEYDON JJ. The nature of the Patent This appeal concerns Australian Letters Patent No 702534 ("the Patent"). The appellant is the Patentee ("the Patentee"). The Patent relates to key controlled latches – for example, those used in the front doors of dwellings. The respondent ("Doric") is a manufacturer and supplier of door locks. The issue is whether the claims which define the scope of the monopoly granted by the Patent are "fairly based on the matter described in" the balance (ie the body) of the Patent specification within the meaning of s 40(3) of the Patents Act 1990 (Cth) ("the Act"), or whether they travel beyond that matter1. Claim 1. The Patent comprises a complete specification headed "KEY CONTROLLED LATCH"; it describes the invention and ends with 33 claims. Claims 2-32 are built upon claim 1 and thus are narrower than claim 1. Claim 33 claims a latch assembly as particularly described with reference to the accompanying drawings. The issue on the appeal concerns fair basing and may be determined by regard to claim 1 alone. The appeal was conducted on that footing. If claim 1 is fairly based, so are claims 2-32. Claim 1 is for a combination, as that term is understood in patent law2. In Welch Perrin & Co Pty Ltd v Worrel3, Dixon CJ, Kitto and Windeyer JJ said that in a patent for a combination: "the most important function of the body of the specification is to show what are the mechanical means which, operating together, produce the result claimed; and how they so operate". Claim 1 is as follows. For ease of later reference, the six integers are numbered as they were by agreement of the parties at the trial. 1 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 12 [15]. 2 Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 611 per Dixon CJ, (1961) 106 CLR 588 at 612. "A latch assembly including, [(i)] a casing, [(ii)] a latch bolt mounted on the casing so as to be movable relative thereto between an extended latching position and a retracted release position, [(iii)] a first actuator operable from an inner side of the assembly to cause movement of the latch bolt to said release position, [(iv)] locking means operable from said inner side of the assembly to adopt an active condition and thereby render said first actuator inoperable, [(v)] a second actuator operable from an outer side of the assembly to cause movement of the latch bolt to the release position, and [(vi)] lock release means which is responsive to said operation of the second actuator so as to thereby render said locking means inactive." The background to integer (iv). At one time, a typical key controlled latch assembly included a single key-operated lock. The key hole of the lock was on the outside of the door. A person outside the door could use the key to release the latch and unlock the door. A person inside the door could release the latch, not by using a key, but instead by using a handle or knob. This arrangement is described in integers (i)-(iii) and (v) of claim 1. An "actuator" is something that causes an operation to occur. Thus the handle or knob is described in integer (iii) as a "first actuator operable from an inner side of the assembly". The "second actuator" in integer (v) refers to a device, usually a key-operated tumbler, which enables movement of the latch bolt to the release position from the outside of the door. The disadvantage of this arrangement was that an unauthorised person could open the door without having the key. For example, burglars could smash a pane of glass in or adjacent to the door and reach the inside handle or knob to gain entry. Or burglars could enter the premises through a window too small to permit the passage of bulky goods and open the door without a key from the inside in order to depart through it with the bulky goods which they had stolen. The introduction of integer (iv). Latches including integer (iv) were developed to overcome this shortcoming. Integer (iv) is a second key-operated lock on the inside of the door, located on the inside handle or knob. The purpose of the second lock was to enable the inside handle or knob to be locked into position, using the key, so that the handle or knob could not then be used to release the latch and open the door from the inside. While overcoming the disadvantage discussed above, this permitted the latch to be released using the key from the outside of the door, regardless of whether the inside handle had been locked into position. In integer (iv) the second lock facilitating the locking of the inside handle or knob (the "first actuator") is described as "locking means operable from said inner side of the assembly". The problem created by integer (iv). However, a problem arose with latches incorporating integer (iv). The body of the Patent specification described the problem thus: "Such locks are typically arranged so as to be operated from the inside of the door and are not operable from the outside of the door. In particular, key operation of the latch from the outside of the door will not release the lock. That can lead to serious problems in circumstances where the door needs to be opened urgently from the inside, particularly if the lock key has been misplaced or is not conveniently accessible." The problem was that while it was possible for an occupant of the premises to enter by unlocking the door from the outside and then to close it, the internal handle or knob remained locked until the key was used to unlock it from the inside. If the occupant failed to do this on entry, dangerous circumstances could arise. For example, an occupant, encumbered by full shopping bags, who entered by using a key from the outside, left the key in the door or misplaced it and then discovered that the door had banged shut would find it impossible to leave through the door if a fire broke out inside, or if a child were seen entering a position of danger outside. The solution to the problem created by integer (iv): integer (vi). According to the Patent specification, this problem was overcome by integer (vi). The specification said: "It is an object of the present invention to provide a key controlled latch which can be released from a locked condition by use of a key at the outside of the door or other member with which the latch is used." It then set out what it described as a "typical latch assembly to which the present invention is applicable". The description comprised integers (i)-(v). The specification continued: "In normal latch assemblies of the foregoing kind operation of the outer or second actuator [ie usually a mechanism involving the use of a key from the outside of the house] does not affect the operation of the locking means [on the inside of the door]. That locking means remains active in spite of operation of the outer actuator, and can be rendered inactive only by appropriate and deliberate operation of the locking means from the inner side of the latch assembly. It is usually the case in such prior assemblies that the locking means is key operated. That is, the locking means will generally include a key operated tumbler lock and locking mechanism connected to that lock so as to be influenced by operation of the lock. The second or outer actuator may also include a key operated tumbler lock, but in conventional assemblies of the foregoing kind operation of that lock does not influence operation of the first actuator locking means. The two locks are arranged so that one is operated from the inner side of the assembly and the other is operated from the outer side." The specification then described the inventive step as follows: "According to the present invention, a latch assembly of the foregoing kind [ie using integers (i)-(v)] is characterised in that it includes lock release means which is responsive to operation of the second actuator to render the locking means inactive." It will be noticed that this language corresponds with that of integer (vi) as it appears in claim 1. These words constitute a "consistory clause" – a general description of what the invention is said to consist of – and will be called that below. This clause was relied on by the Patentee as "the matter described in the specification" on which the claims were "fairly based" within the meaning of s 40(3) of the Act. The specification then said: "The first actuator will generally include a rotatable knob or handle which is connected to the latch bolt in a known manner so as to be operable to move that bolt into the release position, and the bolt may be spring biased into the latching position. The locking means preferably includes at least one cam controlled detent which is movable between actuator locking and actuator release positions. It is also preferred that the lock release means is operable to influence the detent cam in a manner such that operation of the second or outer actuator causes the detent cam to move to a position corresponding to the actuator release position of the detent. The cam may be spring biased towards that corresponding position, and retaining means may be operable to allow or prevent such movement according to whether or not, respectively, the second actuator is operated. Embodiments of the invention are described in detail in the following passages of the specification which refer to the accompanying drawings. The drawings, however, are merely illustrative of how the invention might be put into effect, so that the specific form and arrangement of the various features as shown is not to be understood as limiting on the invention." (Emphasis added.) There was other language suggesting that although a particular arrangement was shown in the drawings, the invention was not limited to that arrangement. For example the specification referred to the first drawing as showing "a latch assembly 1 incorporating one embodiment of the invention". (Emphasis added.) The specification then stated: "It is a feature of the assembly 1 that it includes lock release means 17 which responds to operation of the lock 10 so as to automatically deactivate the locking means 13. The release means may take any suitable form, and one particular form will be hereinafter described." (Emphasis added.) The crucial difference between the parties was that while the Patentee said that the invention was described in the consistory clause, Doric said that it was described by reference to the drawings thus: "Lock release means is provided to enable the lever 31 to be moved out of blocking engagement with the cam projection 40. In the particular arrangement shown, the lock release means 17 is arranged to have direct influence on the cam retainer means, and it is preferred that such influence is achieved through a rotatable camming member 42 which forms part of the release means 17 and is connected to the outside lock 10 so as to rotate in response to rotation of the lock barrel 12. As shown by Figure 11, that connection may include a drive bar 43 of non-circular cross-sectional shape which engages at one end within a slot 44 in an end of the barrel 10, and engages at its other end in a rectangular aperture 45 formed through the camming member 42. As best seen in Figures 4, 6 and 8, the camming member 42 is arranged to overlie the lever 31 at the side of that lever remote from the cam 22. A camming lug 46 provided on the member 42 has a sloping cam face 47 which is adapted to engage against an upstanding portion 48 of the lever 31 which projects above the plate 36, as shown in Figures 4, 6 and 8, when the lever 31 is in the cam retaining position. Rotation of the member 42 caused through operation of the lock 10, results in coaction between the cam face 47 and the lever portion 48 such that the lever 31 is progressively forced downwards against the action of the spring 41 towards the position shown in Figure 8." (Emphasis added.) Below, that passage will be referred to as "the invention urged by Doric". Doric contended that while claim 1 claimed any form of lock release means, the specification described only one form. The background of the appeal Commencement of proceedings. Doric commenced proceedings in the Federal Court of Australia pursuant to s 128 of the Act. It alleged that the Patentee had made unjustified threats of proceedings for infringement of the Patent against it and its two distributors. The Patentee cross-claimed for infringement of claims 1-8, 12-15, 17, 20, 22, 23 and 30-32. Doric in turn cross- claimed against the Patentee seeking revocation of the Patent on various grounds. These were that the alleged invention was not novel, contrary to s 18(1)(b)(i) of the Act; that the alleged invention was obvious and involved no inventive step, contrary to s 18(1)(b)(ii) of the Act; that the alleged invention was not useful, contrary to s 18(1)(c) of the Act; that the specification did not fully describe the invention claimed, contrary to s 40(2)(a) of the Act; that certain of the claims were not clear, or not clear and succinct, contrary to s 40(3) of the Act; and that none of the claims were fairly based on the matter described in the specification, contrary to s 40(3) of the Act. The conclusions of the trial judge. After a 10 day trial, Hely J dealt with the many issues arising out of these complex controversies in a chiselled, economical and speedily delivered judgment. He found that the manufacture and sale of Doric's products had infringed claims 1-6, 12-15, 20 and 30-324, but not claims 7, 8, 17, 22 and 235. He rejected all of Doric's attacks on validity save two: he found that claims 1-32 were not fairly based on the matter described in the specification6, and he found that claims 1-6, 12, 31 and 32 were not novel7. He made an order revoking claims 1-32 of the Patent. 4 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 317 [41], 325 [92], 326 [100] and 327 [107]. 5 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 324 [84], 325 [86], 326 [98] and [103], and 327 [105]. 6 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 7 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 329 [124] and 330 [128]-[129]. The appeal to the Full Court. Initially, the parties formulated numerous complaints about the trial judge's conclusions, but they then abandoned most of them. The Patentee pressed grounds of appeal to the Full Court against the trial judge's orders only so far as they were based on his conclusions (a) that claims 1-32 were invalid for not being fairly based on the matter described in the specification, and (b) that claims 7, 8, 17, 22 and 23 had not been infringed. For its part, Doric, so far as it pressed a notice of contention, sought to support the trial judge's revocation order on the grounds that the invention was not novel and that the complete specification did not describe it fully. The Full Court's disposition of the appeal. The Full Court (Wilcox, Branson and Merkel JJ) dismissed the appeal by upholding the trial judge's conclusion on but one of the many issues before him – that claims 1-32 were invalid because they were not fairly based on the matter described in the specification8. Full argument was presented to the Full Court over three days on all remaining live issues, but it did not need to decide, and did not decide, either the issues raised by the Patentee's appeal on infringement, or the notice of contention issues (although Wilcox J, with whom Branson J agreed, gave some The appeal to this Court. The Patentee has obtained special leave to appeal in relation to the Full Court's decision to uphold the trial judge's orders on the ground that claims 1-32 are not fairly based on the matter disclosed in the specification. Claim 1 as the basis for discussion. Although the Patentee does not challenge the trial judge's findings that claims 1-6, 12, 31 and 32 lack novelty, the trial judge's findings that claims 7, 8, 13-15, 17, 20, 22, 23 and 30 are novel are not challenged by Doric. (The Patentee foreshadowed an application to the Federal Court to amend some claims, but nothing turns on that for present purposes.) These latter claims are all ultimately dependent on claim 1. Their validity is a live issue for this Court in relation to fair basing, and remains a live issue (though not in this Court) in relation to obviousness and sufficiency of 8 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 at 496 [72] per Wilcox J, 497 [80] per Branson J and 503 [103] per Merkel J. 9 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 at 495-497 [69]-[77] per Wilcox J and 497 [80] per Branson J. description. Hence, as indicated above, it is convenient to adopt the course taken in the courts below of analysing the fair basis objection by reference to claim 1. Relevant legislation It is convenient to set out certain provisions of the Act in the form they took at the time material to these proceedings, but to speak of them in the present tense. Section 18 provides in part: "(1) Subject to subsection (2), a patentable invention is an invention that, so far as claimed in any claim: is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and (b) when compared with the prior art base as it existed before the priority date of that claim: is novel; and involves an inventive step; and is useful; and (d) was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee's or nominated person's predecessor in title to the invention." Section 40 provides in part: "(1) A provisional specification must describe the invention. (2) A complete specification must: describe the invention fully, including the best method known to the applicant of performing the invention; and (b) where it relates to an application for a standard patent – end with a claim or claims defining the invention … The claim or claims must be clear and succinct and fairly based on the matter described in the specification. The claim or claims must relate to one invention only." Section 138(3) creates the following exclusive list of grounds for revocation of a patent by a court: that the patentee is not entitled to the patent; that the invention is not a patentable invention; that the patentee has contravened a condition in the patent; that the patent was obtained by fraud, false suggestion or misrepresentation; that an amendment of the patent request or the complete specification was made or obtained by fraud, false suggestion or misrepresentation; that the specification does not comply with subsection 40(2) or "Patentable invention" is defined in Sched 1 as meaning "an invention of the kind mentioned in section 18". Section 59 creates the following exclusive list of grounds on which the grant of a standard patent can be opposed: that the nominated person is not entitled to a grant of a patent for the invention; that the invention is not a patentable invention because it does not comply with paragraph 18(1)(a) or (b); that the specification filed in respect of the complete application does not comply with subsection 40(2) or (3)." And s 45(1) provides in part: "Where an applicant asks for an examination of a patent request and complete specification, the Commissioner must examine the request and specification and report on: (a) whether the specification complies with section 40; and (b) whether, to the best of his or her knowledge, the invention, so far as claimed, satisfies the criteria mentioned in paragraphs 18(1)(a) and This appeal turns upon the phrase in s 40(3) "fairly based on the matter described in the specification". This sub-section is concerned purely with the relationship between the body and claims of the one specification. However, the criterion of fair basing appears elsewhere in patent law, in particular to establish a sufficient connection with an earlier disclosure to support that earlier date as the priority date for a claim or claims10. The Patents Regulations 1991 (Cth) use the phrase "the claim is fairly based on matter disclosed" in provisional applications, applications under the Patent Cooperation Treaty and divisional applications11. The Patentee's difficulties The Patentee submitted that the invention was stated in the consistory clause. The Patentee submitted that the rest of the body of the specification set out various "preferable" or "illustrative" embodiments or examples, and that the language emphasised in the quotations from the specification set out above made it plain that the invention was not limited to any one form described, and in particular to the invention urged by Doric. Both the trial judge12 and at least a majority of the judges of the Full Court13 recorded agreement with the Patentee's identification of the invention in the consistory clause. 10 Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 11 Regs 3.12, 3.13. 12 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 311 [13]-[14]; see also 316-317 [39]. 13 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 at 481 [9], 483-484 [26]-[27], 495-496 [71] per Wilcox J, 497-498 [84] per Branson J. At 500 [93] Merkel J appeared to agree, but he took a different view at The acceptance of that submission created potential difficulties for the Patentee. First, so broad a statement of the invention exposed it to attack on the ground that the complete specification had not described it fully, contrary to s 40(2)(a) of the Act. A limited attack of that kind was made, but it was rejected by the trial judge14. No broad attack based on the failure of the Patent to say how a suitable lock release means could be constructed was made: that was within the knowledge of a skilled addressee, and, as the trial judge said, any allegation of that kind would have contradicted Doric's case on obviousness15. Secondly, so broad a statement of an invention that was said to achieve a new result prima facie made the Patent vulnerable to attack on the ground that it was obvious in that it did not involve an inventive step, contrary to s 18(1)(b)(ii) of the Act. The trial judge found that while the problem was obvious, the solution was not, and thus he rejected that attack16. Thirdly, so broad a statement of achieving a new result prima facie made the Patent vulnerable to the contention that it was not novel, contrary to s 18(1)(b)(i) of the Act. The trial judge rejected this, save in relation to nine of Fourthly, an invention so broadly expressed was liable to attack on the ground that the claims defining it were ambiguous and therefore not clear, contrary to s 40(3) of the Act. The trial judge rejected this attack as well18. 14 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 15 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 16 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 336 [169], 341 [200] and 346 [226]. 17 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 329 [124] and 330 [128]-[129]. 18 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR Fifthly, while it might have been argued that the invention did not constitute a manner of manufacture, contrary to s 18(1)(a) of the Act, that objection was not taken. Sixthly, the trial judge rejected a limited contention that the invention lacked utility19. Accordingly, before both the Full Court and this Court, leaving aside the surviving issues raised by Doric's notice of contention concerning obviousness and s 40(2)(a) of the Act, and the dispute about fair basing under present consideration, the position is that the challenges to the Patent which could have been made were not made, or, so far as they succeeded, have become academic, or were rejected by the trial judge and are not revived. The s 40(3) issue is accordingly presented to this Court in isolation. The Patentee's submissions The Patentee submitted that the similarity of language between the statement of the invention in the consistory clause and that in integer (vi) in claim 1, while leaving the claim open to other attacks on its validity to be examined on their own merits, prevented any fair basing attack because it could not be said that claim 1 travels beyond the invention when it repeated the very words which stated it. Claim 1 claims a latch assembly with six integers. The body of the specification expressly states that the invention the subject of the Patent is characterised, and only characterised, by a latch assembly combining those six integers – five being in prior art latch assemblies, and the sixth being a lock release means to function in response to the second actuator so as to render the internal lock inactive. Nothing in the body of the specification suggests that the description of the invention to be found in the consistory clause is wider than the invention actually was. That submission should be accepted. For the reasons set out later, Doric has demonstrated no error in it. Doric's submissions Doric's contrary arguments asserted the axiomatic injustice of accepting the Patentee's contention. It was said to be unjust that the Patentee could claim 19 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR every method of achieving the result stated by integer (vi), when the law required only one result to be disclosed by claim 1 to satisfy the requirement of s 40(2)(a)20, when only one was disclosed, and when there was a disparity between the breadth of the claim and the limited merit of the preferred embodiment revealed in the drawings. Doric contended that it would be absurd if the s 40(3) test of fair basing could be satisfied by a "mechanistic" investigation of whether the specification contained language which did no more than match the key integer of a claim. Doric's arguments to that end, which must have influenced the courts below, tended to slip into grounds of invalidity other than s 40(3) which it had not run, or had run but abandoned, or had run but which remained to be decided, if necessary, by the Full Court. Doric appeared to proceed on the basis that even if its axiomatically just complaint could not be fitted within any other ground of invalidity, it was so analogous to other grounds that it ought to succeed and therefore, faute de mieux, ought to be fitted within the fair basing ground. In particular, much of Doric's s 40(3) argument kept cleaving back to a s 40(2)(a) argument based on insufficient description. But that argument is not open in this Court: the trial judge's rejection of the s 40(2)(a) attack is not before this Court, since its correctness remains for consideration by the Full Court if the present appeal succeeds. The unavailability of the s 40(2)(a) argument is not a passport to success under s 40(3). The key allegation in Doric's Particulars of Invalidity considered by the courts below was: "[E]ach of claims 1-33 claims as features limiting the invention respectively claimed in those claims, features in respect of which there is not a real and reasonably clear disclosure in the body of the specification." To this was added by amendment during the trial the following: 20 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 17 [25] per Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ. Their Honours there posed as the relevant question: "will the disclosure enable the addressee of the specification to produce something within each claim without new inventions or additions or prolonged study of matters presenting initial difficulty?" (Footnote omitted.) "Each of claims 1-6 travels beyond the matter described in the specification in that what is truly described in the specification is a single embodiment which provides the need referred to [at the start of the body of the specification]. Claims 1-6 cover very many ways additional to that of achieving that end." It is convenient first to discuss some aspects of s 40(3), then to analyse the reasoning of the courts below, and then to examine the reasons why Doric's arguments, so far as they differ from that reasoning, must be rejected. The construction of s 40(3): separate consideration of each ground of invalidity The language of the legislation suggests that it is wrong to employ reasoning relevant to one ground of invalidity in considering another. Section 18 compared with s 40. Section 18 of the Act is in Ch 2, headed "Patent rights, ownership and validity". Section 18 sets out requirements which go to the nature and subject-matter of patents. In contrast, s 40 appears in Ch 3, which is headed "From application to acceptance", and which deals with the filing, examination and acceptance of patent applications. Section 40 sets out requirements that are certainly important: in the specification, patentees give the public directions about how the advantages of the invention may be obtained after the patent expires, while in the claims, patentees warn their rivals what they must not do before the patent expires21. The requirements of s 40, however, unlike those of s 18, say nothing about the nature or subject-matter of patents, and go more to the form that specifications must take. Both the differences in the requirements which ss 18 and 40 impose, and their respective locations in the Act, suggest that s 18 issues have no relevance to s 40. So far as s 18 refers to "patentable inventions" and s 40 to "inventions", that conclusion is also supported by the definition in Sched 1 of the Act of "invention" as including an "alleged invention". Separation of matters going to and grounds of invalidity. That conclusion is also supported by the fact that the s 45(1) matters which an applicant can ask the Commissioner to conduct an examination into, the s 59 grounds on which a 21 Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 94-95 per Gummow J; CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 277 per Spender, Gummow and Heerey JJ. patent application may be opposed and the s 138(3) grounds for revoking a patent are separately stated in the paragraphs of each section. The distinctness of the grounds of invalidity. It is common in patent infringement litigation for invalidity to be alleged, and for more than one ground of invalidity to be relied on. Certain matters of fact and construction may be relevant to more than one issue. Thus common general knowledge is relevant not only to issues of construction by the skilled addressee, which underlie the infringement inquiry and interact with issues of validity22, but also to obviousness23. Other factual matters may be relevant to more than one ground of invalidity24. The issues may "intersect and overlap"25. However, as Doric conceded in this Court, the grounds of invalidity themselves are, and must be kept, conceptually distinct. In particular, as Doric also conceded, a lack of fair basing is a distinct ground for revocation. Hence the "inventiveness" or "meritoriousness" of, or the technical contribution made by, the specification are issues to be examined if there is an objection under s 18(1)(b) of the Act for want of novelty or absence of an inventive step (ie obviousness). There is no reason to introduce them into the fair basing question. The contrary is suggested by reading in isolation a statement of Blanco White, on which the trial judge relied26. It is that the fair basing objection "overlaps others to a large extent". A footnote gave as illustrations of those "others" the objections based on ss 18(1)(a), 18(1)(b)(ii) and 18(1)(c) of the Act. 22 Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 610 per Dixon CJ, 23 Section 7(2) of the Act and Firebelt Pty Ltd v Brambles Australia Ltd (2002) 76 ALJR 816 at 821-823 [31]-[36] per Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ; 188 ALR 280 at 287-289. 24 Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd (1961) 180 CLR 98 at 25 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 19 [34]. 26 Patents For Inventions, 5th ed (1983) at §4-801: see Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 348 [236]. Blanco White did not support that statement by the citation of any authority. The passage which preceded the statement contradicted it. It said27: "It is an objection to the validity of a patent that any claim is 'not fairly based on the matter disclosed in' the complete specification. This is a matter arising essentially on the contents of the complete specification. Subject to that, the objection would appear to include the old objection that 'the claim claims more than what the patentee invented if he invented anything.' The modern rule thus becomes: the inventor is not entitled to claim a monopoly more extensive than is necessary to protect that which he has himself (in his specification) said is his invention." If all that is essential in assessing a fair basing objection is recourse to the contents of the specification, there is no call, for example, for an examination (except on construction questions) of common general knowledge (which is essential when considering an objection based on want of an inventive step), or of prior art (which is essential when considering novelty (s 7(1))). And Blanco White's statement is contradicted by Australian authority. A specification can comply with s 40 even though what it claims has been invented is not a patentable invention because it is not novel or it is obvious28. Each of the grounds of invalidity referred to in ss 18(1)(a), 18(1)(b)(i), 18(1)(b)(ii) and 18(1)(c) is distinct from the others29. Thus there is a "logically precise"30 and "fundamental" difference31 between the objection for want of novelty and the objection for want of an inventive step32. The lack of inventive step ground of 27 Blanco White, Patents For Inventions, 5th ed (1983) at §4-801, footnotes omitted (emphasis added). 28 Rose Holdings Pty Ltd v Carlton Shuttlecocks Ltd (1957) 98 CLR 444 at 449 per 29 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 291 per Spender, Gummow 30 Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd (1961) 180 CLR 98 at 31 Graham Hart (1971) Pty Ltd v S W Hart & Co Pty Ltd (1978) 141 CLR 305 at 330 32 Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 at 181-182 [10]-[11] per Brennan CJ, Gaudron, McHugh and (Footnote continues on next page) invalidity is distinct from all the others, including fair basing33. A patent can be successfully challenged on the ground that the claims are not fairly based even though every other possible ground of challenge fails. Section 40 grounds analysed. The distinctness of the grounds of invalidity can also be illustrated by comparing the fair basing objection with those most closely connected with it, namely the failure to describe the invention fully, and the failure to claim clearly and succinctly. Section 59(c) of the Act creates as grounds for opposition, and s 138(3)(f) creates as grounds for invalidity, non- compliance with s 40(2) or (3). They are commonly called "s 40 points", and they do form a genus in that it is not necessary to look at common general knowledge at the priority date, except in construing the patent34. But the genus contains several distinct grounds. Section 40(2) deals with the "complete specification", that is, with a document which concludes with the claims defining the invention (s 40(2)(b)), and in which the material preceding the claims is commonly called the "body of the specification", or the "specification" for short. In assessing whether a patent complies with the requirement of s 40(2)(a) that the complete specification must describe the invention fully, it is necessary to take into account the whole of the complete specification – both the body of the specification and the claims35. On the other hand, when assessing whether there is fair basing within the meaning of s 40(3), it is necessary to split the patent into the claims and the body of the specification, in order to see whether the former are fairly based on the matter described in the latter36. These statutorily compelled differences in the mode of analysis point against any overlap in the provisions when considered as grounds of opposition or invalidity. Gummow JJ. For the history see R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1989) 25 FCR 565 at 594-601 per Gummow J (Jenkinson J concurring). 33 Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 at 184 [16] per Brennan CJ, Gaudron, McHugh and Gummow JJ. 34 Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 610 per Dixon CJ, 35 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 12-13 [14] and [16]. 36 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 12 [15]. The construction of s 40(3): irrelevance of "inventive step", "merit" and "technical contribution to the art" To some extent, various of the judgments below assume that the relevant test under s 40(3) requires a comparison between the claims and the "inventive step"37, or a comparison between the claims and the "merit" of the invention38, or a comparison between the claims and the "technical contribution to the art" made There are some key features of the legislation which suggest that these assumptions are wrong. The imprecision of "inventive merit". This Court has recently warned against use of the expression "inventive merit". It was employed in the 19th century to express ideas now relevant to what is novel and to what is an inventive step (ss 18(1)(b)(i) and (ii) of the Act). "The phrase invites error through imprecision of legal analysis."40 The language of s 40(3). Further, conceptions like "inventive step", "merit" and "technical contribution to the art" find no support in the statutory language of s 40(3). Section 40(1) speaks of a provisional specification describing "the invention" and s 40(2)(a) speaks of a complete specification describing "the invention fully". Section 40(2)(b) speaks of the claims "defining the invention". Section 40(4) speaks of the claims relating "to one invention only". Although s 40(3) does not use the word "invention", this context suggests, and the parties agreed, that the requirement in s 40(3) that the claims be fairly based on the matter described in the specification is a requirement that they be fairly based on the matter in it that discusses the "invention" (an expression 37 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 at 496 [72]-[73] per Wilcox J, 503 [102] per Merkel J. 38 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 at 502 [100] per Merkel J. 39 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 347-348 [235]-[236] per Hely J. 40 Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 at 188 [26] per Brennan CJ, Gaudron, McHugh and Gummow JJ. which includes the "alleged invention"). In s 40(1), "invention" means "the embodiment which is described, and around which the claims are drawn"41. It has the same meaning in s 40(2)42. So far as s 40(3) implicitly refers to an invention, it must bear the same meaning there. It does not mean the "inventive step taken by the inventor" or the "advance in the art made by the inventor"43. Nor does it refer to inventive "merit" or to any "technical contribution to the art". Even if s 40(3) did not impliedly refer to an invention, the language points to a comparison between the claims and what is described in the specification only, and again it does not call for any inquiry into an "inventive step", or inventive "merit" or a "technical contribution to the art". Section 40(3) in the light of pre-statutory authorities Sometimes s 40(3) is discussed by reference to authorities decided before the first statutory ancestor of s 40(3) was introduced in the United Kingdom by s 4(4) of the Patents Act 1949 (UK) ("the 1949 UK Act"), and in Australia by s 40(2) of the Patents Act 1952 (Cth) ("the 1952 Act"). A leading example is Mullard Radio Valve Co Ltd v Philco Radio and Television Corporation of Great Britain Ltd. There are phrases in it which give some support to the glosses relating to "merit" and "technical contribution" appearing in the courts below. Thus Lord Macmillan said44: "The fact that an article of obvious construction is discovered to give a valuable and new benefit if employed in a particular way does not entitle the discoverer to prevent everyone else from making that article. A patentee is granted his monopoly in order to protect the invention which in his specification he has communicated to the public. He is not entitled to 41 AMP Inc v Utilux Pty Ltd (1971) 45 ALJR 123 at 127 per McTiernan J; revd on other grounds: Utilux Pty Ltd v AMP Inc (1974) 48 ALJR 17; Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 14-15 [21] per Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ. 42 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 15 [21]. 43 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 15 [21]. 44 (1936) 53 RPC 323 at 346-347. claim a monopoly more extensive than is necessary to protect that which he has himself said is his invention. In the present case I think that in Claim 2 the Patentee has claimed more than his inventive idea entitles him to protect. He has not earned the right to say that no one else shall be permitted in manufacturing valves to connect the electrode nearest the anode with the cathode." (Emphasis added.) Lord Macmillan went on to say45: "The consideration which the patentee gives to the public disclosing his inventive idea entitles him in return to protection for an article which embodies his inventive idea but not for an article which, while capable of being used to carry his inventive idea into effect, is described in terms which cover things quite unrelated to his inventive idea, and which do not embody it at all. … It is undoubtedly the case that a claim may be too wide, in the sense that it claims protection for that for which the patentee is not entitled to protection, or that it gives him a wider protection than his discovery entitles him to receive. In the present instance the Patentee has claimed a monopoly of all valves with a certain feature of construction although the merit of his invention does not lie in that feature but in the utilisation in a particular and limited way of a valve containing that feature of construction. In so doing he has in my opinion over-reached himself and his claim is wider than the law will support." (Emphasis added.) Lord Macmillan's speech has been relied on in cases on s 40(2) of the 1952 Act in this Court46 but not in a manner essential to the result. The fact that that speech was dealing with objections based on novelty and obviousness47, and 45 (1936) 53 RPC 323 at 347. 46 Montecatini Edison SpA v Eastman Kodak Co (1971) 45 ALJR 593 at 597 per Gibbs J; Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236 at 263 per Stephen and Mason JJ. 47 Mullard Radio Valve Co Ltd v Philco Radio and Television Corporation of Great Britain Ltd (1936) 53 RPC 323 at 339. An application to amend claim 2 of the Mullard patent which was made to Morton J after the House of Lords decision succeeded ((1938) 55 RPC 197) but the Court of Appeal upheld an appeal against the allowance of the amendment ((1938) 56 RPC 1). was delivered at a time when there was no statutory equivalent to s 40(3) of the Act, however, requires that it be used with great care. In CCOM Pty Ltd v Jiejing Pty Ltd48, the Full Court of the Federal Court said of Mullard: "[T]he House of Lords had been concerned to find a rationale for disconformity between the body and claims in a complete specification, in the absence of express statutory provision. The rationale was found in the concept of the disclosure as the consideration for the monopoly delimited by the claim. But, in applying Mullard to what since 1952 are express statutory provisions, some caution is needed lest the history swamp the new text." It was for this reason that in Olin Corporation v Super Cartridge Co Pty Ltd49 Barwick CJ stressed the importance of abandoning tests developed at a time when the idea underlying the present s 40(3) did not take a statutory form, and concentrating instead on the statutory language. "The question whether the claim is fairly based is not to be resolved … by considering whether a monopoly in the product would be an undue reward for the disclosure. Rather, the question is a narrow one, namely whether the claim to the product being new, useful, and inventive, that is to say, the claim as expressed, travels beyond the matter disclosed in the specification." Barwick CJ dissented as to the construction of the patent in suit in Olin but the approval of his statement of principle by a unanimous court in Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd50 means that authorities decided before the enactment of the precursors to s 40(3), including Mullard's Case, should now be treated as being of very limited assistance in the construction of s 40(3). 48 (1994) 51 FCR 260 at 279 per Spender, Gummow and Heerey JJ. 49 (1977) 180 CLR 236 at 240. 50 (2001) 207 CLR 1 at 12 [15] per Gleeson CJ, McHugh, Gummow, Hayne and The actual result in Mullard's Case may have been the same if s 40(3) had been in force. The conclusion was that while the invention rested on the employment of a screening grid in conjunction with a control grid, the central claim made no reference to these grids. Hence it travelled beyond the matter disclosed in the specification51. The idea sought to be conveyed here was sometimes expressed in the phrase "covetous claim" but, as Clauson LJ put it in a subsequent Mullard case52, the phrase was used "in no sinister sense". Another authority in this category is Palmer v Dunlop Perdriau Rubber Co Ltd53. At that time, the Patents Act 1903 (Cth) ("the 1903 Act") was in force. That authority contains statements, on which Doric placed weight, in support of allowing the appeal in that case (although the appeal was dismissed because the Court was evenly divided). Because they precede the enactment of legislation separating out fair basing as a ground of invalidity, they do not assist in construing s 40(3)54. The statements relied upon fasten on the difficulty that can arise in some combination claims, of covering validly more than the particular aggregation of integers stated in the claims. While to some extent the language 51 Mullard Radio Valve Co Ltd v Philco Radio and Television Corporation of Great Britain Ltd (1936) 53 RPC 323 at 345 per Lord Macmillan. 52 Mullard Radio Valve Co Ltd v British Belmont Radio Ltd and Juviler (1938) 56 RPC 1 at 21. 53 (1937) 59 CLR 30 at 64-65 per Rich J, 76-78 per Dixon J. In the latter passage Dixon J in turn relied on Mullard Radio Valve Co Ltd v Philco Radio and Television Corporation of Great Britain Ltd (1936) 53 RPC 323 at 345 per Lord Macmillan and 350 per Lord Roche. 54 Section 36 of the 1903 Act provided: "A complete specification must fully describe and ascertain the invention and the manner in which it is to be performed, and must end with a distinct statement of the invention claimed." Section 86(3) provided: "Every ground on which a patent might at common law be repealed by scire facias shall be available as a ground of revocation." The judgments in Palmer contain no reference to s 36 of the 1903 Act. of Rich J turns on the claim being "too wide"55, other parts of the language employed by him and by Dixon J go more to the clarity of claims ("indefinite in the extreme"56, "a vague claim", "most indefinite"57). And in saying that, outside the operation together of the specific elements of the combination, "subject matter would fail", Dixon J's reasoning appears to proceed on the basis of a lack of inventiveness, ie obviousness58. Further, the statements of Rich J are preceded by passages indicating that the issue under debate by him was obviousness59. Latham CJ, who favoured dismissing the appeal, and with whom McTiernan J agreed, said obviousness was the most difficult issue60. Further, the case involved a patent to achieve an old result (vulcanised battery cases) by new means. It is thus distinct from the present case, which involves a patent to achieve a new result by existing means used in combination, and which falls within the principle stated in Shave v H V McKay Massey Harris Pty Ltd61: "When a combination claim states an invention which gives an old result by a new means, the monopoly is limited, at any rate prima facie, to the new means. But when by a new application of principle the inventor has obtained a new result or thing, even when it be done by a combination, he may claim all the alternative means by which the thing or result may be achieved." For the purposes of s 40(2)(a), it is not necessary for the inventor to disclose all the alternative means; it is enough that there is disclosure in the sense of enabling the addressee of the specification to produce something within each claim without new inventions or additions or prolonged study of matters 55 Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 at 65. 56 Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 at 65 per Rich J. 57 Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 at 77 per Dixon J. 58 Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 at 78. 59 Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 at 64. 60 Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 at 59 ("The most difficult question in this case is that of subject matter"). 61 (1935) 52 CLR 701 at 709 per Rich, Dixon, Evatt and McTiernan JJ. presenting additional difficulty62. The trial judge held that s 40(2)(a) was satisfied in this case. In the circumstances Palmer's Case is not a guide to the construction of s 40(3), and in any event the problem it dealt with is distinct from the present one. To some extent Dixon J saw Palmer's Case as turning on the fact that on its true construction the specification disclosed that the invention – a mould for producing vulcanised rubber boxes – depended on the telescoping action of the core of the mould within the mould, whereas the relevant claim referred only to a "power-actuated mechanism forcing relative movement between the mould lining and the core" without any limitation to telescoping action63. That reasoning is consistent with s 40(3), because the unconditional claim travelled beyond the conditional matter in the specification. The construction of s 40(3): irrelevance of post 1977 United Kingdom cases It is necessary to bear in mind, in examining United Kingdom cases, that in 1977 the language of fair basing disappeared from the United Kingdom legislation on its being changed to give effect to the European Patent Convention. Section 14(5)(c) of the Patents Act 1977 (UK) ("the 1977 UK Act") provided instead that the claims had to "be supported by the description" of the invention in the specification64. The patent in suit in Biogen Inc v Medeva plc65 related to a DNA sequence coding for hepatitis B virus antigen to stimulate the production of antibodies, and claimed priority from an earlier application ("Biogen 1"). If Biogen 1 did not support in the necessary sense the patent in suit then the patent was invalid because it was conceded that the invention was obvious when the application for 62 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 17 [25]. 63 Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 at 32, 34 and 77. 64 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 276. 65 [1997] RPC 1 (HL). it had been filed66. The House of Lords upheld the decision of the Court of Appeal which, reversing Aldous J67, held the patent invalid. Biogen 1 described one recombinant procedure for making the necessary antigen but this did not justify the claim made by the later patent for any recombinant method for making the antigen. The claimed invention was too broad68. Doric cited Biogen in support of a submission that Lord Hoffmann was of opinion, "in a very closely related context", that the Patentee's argument in this case was "mechanistic and impoverished". Doric referred to a statement by Lord Hoffmann69: "[C]are is needed not to stifle further research and healthy competition by allowing the first person who has found a way of achieving an obviously desirable goal to monopolise every other way of doing so." Doric also relied on the following passage70: "[T]here is an important difference between the 1949 and 1977 [UK] Acts which make decisions on the earlier Act an unsafe guide. Section 72(1)(c) of the 1977 [UK Act] is not only intended to ensure that the public can work the invention after expiration of the monopoly. It is also intended to give the court in revocation proceedings a jurisdiction which mirrors that of the Patent Office under section 14(3) or the [European Patent Office] under article 83 of the [European Patent Convention], namely, to hold a patent invalid on the substantive ground that, as the [European Patent Office] said … , the extent of the monopoly claimed exceeds the technical contribution to the art made by the invention as described in the specification. In the 1949 [UK] Act, this function was performed by another ground for revocation, namely that the claim was not 'fairly based on the matter disclosed in the specification' (section 32(1)(i)). The 66 [1997] RPC 1 at 52 per Lord Hoffmann (Lords Goff of Chieveley, Browne-Wilkinson, Mustill and Slynn of Hadley concurring). 67 [1995] RPC 25. 68 [1997] RPC 1 at 51-52. 69 [1997] RPC 1 at 52. 70 Biogen Inc v Medeva plc [1997] RPC 1 at 54. requirement of sufficiency was therefore regarded as serving a narrower purpose. But the disappearance of 'lack of fair basis' as an express ground for revocation does not in my view mean that [the] general principle which it expressed has been abandoned. The jurisprudence of the [European Patent Office] shows that it is still in full vigour and embodied in articles 83 and 84 of the [European Patent Convention], of which the equivalents in the 1977 [UK] Act are section 14(3) and (5) and section 72(1)(c)." Section 72(1)(c) provides that a patent may be revoked on the ground that "the specification of the patent does not disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the art". It and its corresponding provision creating a positive duty of disclosure, s 14(3), do not resemble the Australian fair basing requirement in s 40(3) of the Act, but are closer to s 40(2)(a) creating a duty to describe the invention fully. Further, Australia is not party to the European Patent Convention. The courts of Australia are not bound by what the European Patent Office says, and do not regard it as "jurisprudence". The language of the 1949 UK Act71 continues to be reflected in Australia in s 40(3) of the Act. Lord Hoffmann's reasoning suggests that in the United Kingdom the fair basing test has gone, rather than that it has survived. the fact that Lord Hoffmann applied The inapplicability in Australia of the reasoning in Biogen is heightened the words "mechanistic and impoverished", not to the patentee's argument under consideration, but to a "general rule of European patent law that an invention was sufficiently disclosed if the skilled man could make a single embodiment."72 That happens also to be the rule recognised in this Court's construction of s 40(2)(a) in Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd73. This criticism of an important aspect of Australian law, as reflected in s 40(2)(a) of the Act, suggests that current United Kingdom law is no guide to Australian law on s 40(3). (The 71 Section 4(4) provided: "The claim or claims of a complete specification must relate to a single invention, must be clear and succinct, and must be fairly based on the matter disclosed in the specification." 72 Biogen Inc v Medeva plc [1997] RPC 1 at 48. 73 (2001) 207 CLR 1 at 16-17 [25]. same is true of the treatment in Biogen74 of obviousness75.) Doric was frank enough to boil the House of Lords' reasoning down to the following Voltairean aphorism: "Since the fair basis doctrine no longer exists, it is necessary to invent it." That is not an approach open to this Court. The approach required by s 40(3) Erroneous principles. The comparison which s 40(3) calls for is not analogous to that between a claim and an alleged anticipation or infringement. It is wrong to employ "an over meticulous verbal analysis"76. It is wrong to seek to isolate in the body of the specification "essential integers" or "essential features" of an alleged invention and to ask whether they correspond with the essential integers of the claim in question77. "Real and reasonably clear disclosure". Section 40(3) requires, in Fullagar J's words, "a real and reasonably clear disclosure."78 But those words, when used in connection with s 40(3), do not limit disclosures to preferred embodiments. "The circumstance that something is a requirement for the best method of performing an invention does not make it necessarily a requirement for all claims; likewise, the circumstance that material is part of the description of the invention does not mean that it must be included as an integer of 74 [1997] RPC 1 at 45. 75 Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 at 429 [40], 431-432 [48]-[49] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. 76 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 281 per Spender, Gummow 77 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 281 per Spender, Gummow 78 The expression was used by Fullagar J in Société des Usines Chimiques Rhône-Poulenc v Commissioner of Patents (1958) 100 CLR 5 at 11 in relation to s 45(5) of the 1952 Act, which required that a claim in a specification lodged under the 1952 Act be "fairly based on matter disclosed" in a specification lodged under the 1903 Act. The expression has been applied to s 40(3): CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 281-282 per Spender, Gummow and Heerey JJ. each claim. Rather, the question is whether there is a real and reasonably clear disclosure in the body of the specification of what is then claimed, so that the alleged invention as claimed is broadly, that is to say in a general sense, described in the body of the specification."79 Fullagar J's phrase serves the function of compelling attention to the construction of the specification as a whole, putting aside particular parts which, although in isolation they might appear to point against the "real" disclosure, are in truth only loose or stray remarks. The reasoning of the courts below Conflation of obviousness and s 40(2)(a) with fair basing. The reasoning of the trial judge is of some importance to Doric, because no judge in the Full Court specifically adopted the trial judge's reasoning, and Doric, while not actually conceding that the reasoning in the Full Court was wrong, said it did not wish "to take too much time" defending it, defended it with very little relish and conceded that its primary approach was not to be found there. But some of the difficulties in the Full Court's reasoning are also present in that of the trial judge. One difficulty was an apparent conflation of the issue of fair basing with the issue of insufficiency of description or the issue of obviousness. The best Doric could do was to deny that in the courts below there was, despite appearances, any conflation of that kind, but to concede that if the conflation had taken place, the reasoning was unsustainable. The denial fails and the concession is sound. However, there are additional difficulties in the reasoning. Wilcox J. In a section of his reasons headed "Discussion about fair basis, insufficiency and obviousness", Wilcox J expressed agreement with the trial judge's conclusions on fair basing80. He then discussed obviousness in a fashion critical of the trial judge, but later said that it was not necessary to express any final conclusion about obviousness, nor to express a view on sufficiency of description. At the start of that section of his reasons, he said that there was a common fundamental question affecting the three issues referred to in the 79 Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 95 per Gummow J. 80 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 heading: "what, exactly, was the invention the subject of the patent?"81 That is true, in the sense that once that question is answered, it becomes possible to consider whether the invention is fully described, whether the claims are fairly based on it, and whether it is obvious. But the question must precede, rather than accompany or follow, any resolution of those three issues. The correct way of answering the question is to examine the body of the specification in order to see what it describes as the invention. This Wilcox J did not immediately do. Instead of discussing the issue of "invention" – part of the s 40(3) question – he discussed the issue of "inventive step" which relates to the s 18(1)(b)(ii) question of what a skilled but non-inventive worker would have seen as obvious in the light of common general knowledge. His Honour said that at the trial the Patentee had adopted an inconsistent case about what the invention was. Whether or not that is so, Wilcox J then observed that, as in this Court, the Patentee "took the unequivocal position that the inventive step was the addition of the widely-expressed sixth integer." He then said82: "However, it can hardly be an inventive step simply to say that the solution to the problem of the inside lock not being responsive to an outside actuator is to make it so. That tells the addressee nothing … If, contrary to my opinion, the addition of the widely-expressed sixth integer was thought to be an inventive step, [the Patentee] would face a serious difficulty in relation to obviousness". In assessing whether the invention claimed by a patentee is fully described or fairly based, it is necessary to take into account, apart from common general knowledge so far as it casts light on questions of construction, only what is said about it in the specification, independently of whether it is a "patentable invention", and, in particular, independently of whether it is a patentable invention on the ground that it is not obvious. The first and third of the three sentences quoted in the above passage centre on "inventive step" – a s 18(1)(b)(ii) but not a s 40(3) issue. The second, as Doric conceded in argument, appears to make a different point about whether the invention is fully described for s 40(2)(a) purposes. No part of this passage explains why the claims are not fairly based on the invention claimed in the consistory clause. 81 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 82 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 Any force in the points made is immaterial to the fair basing question. For the reasons given above, the various grounds of invalidity ought to have been kept distinct83. Branson J. Her Honour reasoned thus84: "[T]he invention as the [Patentee] seeks to define it is merely an idea; it is not a 'patentable invention' within the meaning of s 18(1) of [the Act]. It is probably not important whether the concept of an outside key which automatically releases the lock is said not to be a manner of manufacture within the meaning of s 6 of the Statute of Monopolies, or as [Doric] contended, not to involve an inventive step, or as the primary judge found, too broad to provide a fair basis for the claims of the specification which must relate to one invention only (s 40 of the Act). The important thing is that one cannot patent an idea or a mere principle." To the contrary, it is important whether it is s 18(1)(a), or s 18(1)(b)(ii), or s 40(3) that applies. This is partly so because the Particulars of Objection contain nothing about s 18(1)(a), or the patenting of an idea or mere principle, and Doric conceded that it did not put the case that way. It is also because none of these complaints is identical with or overlaps with the others: they are conceptually distinct, as Doric also conceded. Merkel J. Merkel J's reasoning depended on a distinction between the invention claimed by the Patentee and its "merit", or what it "really disclosed". He said85: "As latch assemblies commonly have features (i)-(v), … the practical effect of claim 1 is a claim of a monopoly in respect of latch assemblies with those features and the additional feature (vi) of an outside actuator that renders the locking means inactive. The 'merit' of the invention disclosed in the specification, and the 'real and reasonably clear' disclosure of the invention, concerns the manner in which an outside 83 See [43]-[49] above. 84 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 85 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 at 502-503 [100] and [102]. actuator can achieve the object of providing a key controlled latch which can be released from the locked position by the outside actuator. But claim 1 does not claim protection for that invention. Rather, it claims protection for a standard latch assembly which has a 'lock release means' constituted by 'something which causes an operation to occur' from the outer side of the latch assembly, which renders the 'locking means inactive'. But the invention really disclosed in the specification is the manner in which the lock release means has been achieved. Claim 1 is wide enough to embrace any form of lock release means operable by an actuator on the outer side of the latch assembly, notwithstanding that that type of lock release means was not invented by the patentee and so does not use the patentee's inventive steps disclosed in the specification, being the lock release means described in [the passage describing a preferred embodiment after the consistory clause as quoted above86]." (Emphasis added.) The expression "merit" is derived from Lord Macmillan's speech in Mullard's Case87. But, as discussed above88, "merit" plays no role in the statutory test, and Lord Macmillan's approach is no guide to the meaning of s 40(3). It follows that the test applied by Merkel J was incorrect. Further, the distinction drawn between those forms of lock release that were "invented" by the Patentee and those that were not has several difficulties. First, the distinction fails to apply the correct test, which calls for a comparison of the claim or claims with the matter described in the specification – not just with a preferred embodiment. Secondly, the distinction reveals a confusion between the question "What is the invention here?" – the answer to which is "A new combination of integers including integer (vi)" – and the question whether each integer was an invention or an inventive step (the passage uses both expressions). Claim 1 does not claim 86 See [11]. 87 (1936) 53 RPC 323 at 347. 88 See [50]-[57]. a monopoly in any integer by itself. Paragraph (ii) of s 18(1)(b), applied to the patent in suit, requires that the combination claimed in claim 1 involve an inventive step, not that each or any integer involve an inventive step. It is only necessary that each integer form part of a full description of the invention (s 40(2)(a)), and that in their totality in any given claim they be described clearly and succinctly and be fairly based (s 40(3)). All the integers were either conceded or found to be part of a full description and to be clear and succinct. The inventiveness of particular integers is irrelevant, both to the inventiveness of a combination of them and to whether there is fair basing. Thirdly, the distinction also contradicts (without any reasoning, as Doric accepted) the trial judge's conclusion that the specification taught that a "lock release means" may take "any suitable form"89 and that, on the evidence, and having regard to common general knowledge in the field at the priority date, the invention was not obvious and involved an inventive step90. The trial judge. The reasoning of the trial judge was as follows91. The trial judge, having repeated the statement of principle by Barwick CJ in Olin92, recorded Doric's submission that claim 1 travelled beyond the matter disclosed in the specification, because while the Patentee had come up with a particular device – the preferred embodiment – which solved the problem identified in the Patent, the Patent went further and claimed all ways of solving that problem. He then recorded the Patentee's submission that "the words in the specification match the words of the claim, hence the claims are necessarily 'fairly based' on 89 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 90 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 91 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 92 (1977) 180 CLR 236 at 240. 93 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR "This is too narrow an approach to the question. The notion of 'travels beyond' requires consideration of what is truly disclosed by the specification in terms of a 'real and reasonably clear' disclosure." The word "truly" has its source in Atlantis Corporation Pty Ltd v Schindler94. The trial judge continued: "That this is so is recognised by the decision of the Full Court [in that case] where claim 1 was couched in the same terms as the description of the invention in the specification. But the court did not allow that coincidence of language 'to disguise the fact' that the invention disclosed in the body of the specification 'is truly' one which was subject to limitations as to use. The claims, however, were to pure apparatus claims, not subject to any limitations as to use. The claims therefore travelled beyond, and were found to be not fairly based on the matter described in the specification. Hence claim 1, and all other claims since they were dependent on it, were held to be invalid." The trial judge then adopted from English cases95 the expression "technical contribution to the art". He continued96: "The structure of the specification in the present case refers to a known problem in relation to typical latch assemblies: key operation of the latch from the outside of the door does not release the inner handle, and as a result people may be locked in. The technical contribution to the art … is the disclosure that the solution to the problem is the use of the outside lock to release the lock on the inside handle, coupled with the disclosure of one way of doing that in terms of the preferred embodiment. Doric submits that the technical contribution made by the patentee, other than the preferred embodiment, is obvious, but I have declined to uphold that submission because of the evidentiary factors to which I have 94 (1997) 39 IPR 29. 95 Biogen Inc v Medeva plc [1997] RPC 1 at 54 per Lord Hoffmann (Lords Goff of Chieveley, Browne-Wilkinson, Mustill and Slynn of Hadley concurring); Raychem Corp's Patents [1998] RPC 31 at 41-42 per Laddie J. 96 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR earlier referred. However, the fair basis objection overlaps with other grounds of invalidity, including obviousness: see Blanco White, Patents For Inventions [, 5th ed (1983) at §4-801]. I agree with [Doric's] submissions that the specification does not contain a real and reasonably clear disclosure of matters broader than the particular embodiment. Yet the patent claims a latch assembly which contains [lock release means] (which may take any suitable form) which is responsive to the operation of the second actuator so as to render the locking means inactive, no matter what means or mechanism is employed to achieve that result. It follows that claims 1–6 are not fairly based upon the specification." In oral submissions to this Court, counsel for Doric found the first two sentences of the last paragraph something of an embarrassment and was not able to say what the point of including them was unless they related to the next two sentences. If they do, the Full Court's confusion between issues of obviousness and fair basing would appear to exist here as well. That is also suggested by the fact that in one of the English cases97 from which the expression "technical contribution to the art" is derived, it appears under the heading "Claims to known or obvious desiderata" and precedes a discussion of invalidity on grounds of obviousness. But putting those first two sentences aside, the following difficulties remain. The first is that the statutory test as expounded by Barwick CJ does not call for any evaluation of whether the breadth of the claims exceeds "the technical contribution to the art embodied in the invention", merely for an evaluation of whether the claims travel beyond the matter described in the specification. The second is that in the passages quoted above, the trial judge defined the invention relatively narrowly as "the use of the outside lock to release the lock on the inside handle, coupled with the disclosure of one way of doing that". That is contradicted by other passages98 in which the trial judge accepted that the invention was as described in the consistory clause set out in the specification – a "lock release means which is responsive to operation of the second actuator to render the locking means inactive." 97 Raychem Corp's Patents [1998] RPC 31 at 41-42 per Laddie J. 98 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 192 ALR 306 at 311 [13]-[14] and [17], 316-317 [39], 349 [241] and 350 [247]. The third is that the use of the word "real" suggests that the trial judge was applying a test which looked beyond the description of the invention as it appeared in the specification for some preferred embodiment of, or some optimal method of performing, the invention. Fourthly, the trial judge relied on the proposition, seemingly asserted by Blanco White, that the fair basing objection overlaps with obviousness, which Finally, it is necessary to consider the trial judge's citation of Atlantis Corporation Pty Ltd v Schindler100 for the proposition that to couch a claim "in the same terms as the description of the invention in the specification" did not of itself, by that mere "coincidence of language", establish fair basing. That proposition is correct, but it is not fatal to the Patentee's position in this case. A "coincidence of language" between a claim and part of the body of a specification does not establish fair basing if that part of the language of the specification does not reflect the description of the invention in the light of the specification as a whole. In the Atlantis Case, the specification, read as a whole, described an apparatus limited to a particular use as a sub-soil drainage system. The claims, however, were "pure apparatus" claims without that limitation on use. The Full Court of the Federal Court of Australia refused to construe them narrowly so as to conform with the description in the specification. A statement in the specification of a description of the invention in similar language to the first claim was not treated as the description of the invention. While the Full Court did not engage in close textual analysis, it did distinctly hold that the statement in the specification101: "should not be allowed to disguise the fact that the invention disclosed in the body of the specification is truly 'a sub-soil drainage method based on a particular apparatus' or 'a particular apparatus in its application to sub- soil drainage'. The claims, however, are 'pure apparatus claims'. They are 100 (1997) 39 IPR 29. 101 Atlantis Corporation Pty Ltd v Schindler (1997) 39 IPR 29 at 50 per Wilcox and Lindgren JJ. Lockhart J also held that the patent did not satisfy s 40(2)(b): at 36. not subject to any limitation as to use. They travel beyond, and are not fairly based on, the matter described in the specification." In short, the case is distinguishable. Here, the Patentee does not rely on mere "coincidence of language": it contends that the language used, unlike that employed in the Atlantis Case, does describe the invention. Doric's submissions considered: statutory construction Perhaps in recognition of its difficulty in supporting that reasoning at both levels in the Federal Court, Doric sought to outflank it by advancing two groups of further submissions. One group related to matters of statutory construction, the other to cases on the legislation. Doric submitted that the expression "fairly based" is a composite expression, not calling for any separate inquiry into "fairness" and "basis". The expression required that the claim must fairly reflect what the specification teaches or describes to the addressee. It required a "qualitative" comparison between the claim and the matter described (ie the matter describing the invention fully pursuant to s 40(2)(a)). The matter to be described is "[t]he embodiment … around which the claims are drawn."102 The claim should not be "wider than warranted by the disclosure made in the body of the specification."103 This "qualitative" comparison was, it was repeatedly said, a "matter of substance". These contentions were said to be supported by the history of fair basing before it became expressed as a statutory test in the 1949 UK Act and the 1952 Act104: but it must be said that no part of the identified history suggested any particular solution to the present problem. The essential difficulty with these arguments is that they never made it plain what quality was being sought or used as the basis of comparison. They tended towards circularity: it is not helpful to say that in making a qualitative comparison for the purposes of fair basing, the relevant quality is fairness. They 102 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 15 [21]. 103 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 276 per Spender, Gummow 104 See McBratney, "The Problem Child in Australian Patent Law: 'Fair' Basing", (2001) 12 Australian Intellectual Property Journal 211. contended that the quality was "fairness" in the sense of what was "reasonable" or "warranted" or "commensurate", but these expressions take the inquiry no further. The arguments asserted that the measure of fairness or reasonableness was that the claim must not travel beyond the disclosure, but this begs the question of what the disclosure was. Nor were the arguments advanced by the insistence that the matter was one of substance, not form. Doric contended that if its arguments were rejected and the consistory clause on which the Patentee relied was sufficient to provide a fair basis, s 40(3) could be satisfied in every case by an assertion of the kind it contained. That is not so. Section 40(3) would only be satisfied if the specification read as a whole corresponded with the consistory clause; it cannot be satisfied by mere assertion in a consistory clause. Doric argued that what was called above the "consistory clause" was not a true consistory clause, because it did not commence with the words "What I claim is". It argued that consistory clauses date from a time before the Patents, Designs, and Trade Marks Act 1883 (UK), s 5(5), which for the first time made it compulsory to list the claims separately. Consistory clauses continued after that time, even though they were no longer necessary. Doric submitted that to contend that integer (vi) of claim 1 was fairly based on the consistory clause was "purely circular", since the consistory clause was only a hangover from the time when it performed the function of the modern claim. That contention might have force if nothing else in the specification supported the consistory clause. But Doric conceded that the consistory clause was not itself impermissible. The consistory clause is supported by those parts of the specification describing features that "generally" or "preferably" exist, and which, while explaining the invention in detail by reference to the drawings, stress several times that the drawings are merely illustrative of how the invention might be put into effect, not exhaustive. Further, there are examples of cases in which courts have refused to construe the specification as disclosing an invention limited to the preferred embodiment because of statements that it is not so limited, and have treated the consistory clause as disclosing the invention105. Indeed, the employment of 105 Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 94-95 per Gummow J; Gambro Pty Ltd v Fresenius Medical Care South East Asia Pty Ltd (2000) 49 IPR 321 at 328-329 [33]-[36] per Burchett, Heerey and consistory clauses "co-extensive with or equivalent to the widest claim" was said by Blanco White in 1955, after the precursors to s 40(3) of the Act had come onto the statute book, to be usual106. This was referred to without disapproval by Dixon CJ, Kitto and Windeyer JJ, who also said that in a modern specification, after a statement of the objects of the invention, "one might expect to find a general description of what the inventor asserts his invention consists of, commonly called a 'consistory clause'. This, however, is not an essential part of the body of a specification."107 Doric's submissions considered: authorities The second category of Doric's arguments depended on authority. First, Doric submitted that its case was supported by Biogen Inc v Medeva plc108. It submitted that since there was sufficient description under s 40(2)(a) if the disclosure enabled the addressee to produce one thing within each claim, it was necessary to have "a robust law of fair basis". Counsel for Doric continued: "If you only have to enable something within the claim and that is all the consideration you give, then how can it be fair to claim every possible way of achieving that result?" However, the introduction of the type of fair basing achieved in Biogen Inc v Medeva plc is impermissible in Australia for the reasons given above109. Further, the word "fair" in that submission is used in a wholly different sense from the word "fairly" in s 40(3). The words "fairly based" refer to a relationship between what is claimed in the claims and what is described in the body of the specification. They do not refer to abstract fairness. Secondly, Doric relied on Mullard Radio Valve Co Ltd v Philco Radio and Television Corporation of Great Britain Ltd110 and Palmer v Dunlop Perdriau 106 Patents For Inventions, 2nd ed (1955) at 37 n 36. 107 Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 612. 108 [1997] RPC 1. 110 (1936) 53 RPC 323. Rubber Co Ltd111. These authorities are not of assistance because they antedate the precursors of s 40(3) and for other reasons given above112. Thirdly, Doric relied on some more modern cases. But, on analysis, these favour the Patentee rather than Doric. One was Olin Corporation v Super Cartridge Co Pty Ltd113. The invention related to a process for the manufacture of reusable plastic shotgun cartridge cases. The process had two key elements – the use of compressive deformation (as opposed to tensile deformation) and the carrying out of the process at particular low temperatures. Some of the claims were limited by reference to both elements. Some, claims 10-13, were not, since they did not refer to compressive deformation. Jacobs J therefore held that those claims were not fairly based on the two key elements disclosed in the specification114, and his decision on this point was upheld on appeal115. That conclusion did not depend, however, on the fact that the specification set out "aspects of the invention in much the same language as that of the subsequent claims"116. It depended on the body of the specification being construed as a whole to reach the conclusion that the invention had the two elements of compressive deformation at low temperatures, and the passages omitting compressive deformation as being loose or stray in nature, and not a decisive guide to the construction of the whole. Doric submitted that Olin decided that a claim based on a consistory clause cannot be fairly based. It did not. Rather, as the Patentee submitted, the correct position is that a claim based on what has been cast in the form of a consistory clause is not fairly based if other parts of the matter in the specification show that the invention is narrower than that consistory clause. The inquiry is into what the body of the specification read as a whole discloses as the 111 (1937) 59 CLR 30. 113 (1975) 49 ALJR 135 (Jacobs J); (1977) 180 CLR 236 (FC). 114 Olin Corporation v Super Cartridge Co Pty Ltd (1975) 49 ALJR 135 at 146. 115 Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236 at 250-251 per Gibbs J, 263-264 per Stephen and Mason JJ. Barwick CJ dissented at 242. 116 Olin Corporation v Super Cartridge Co Pty Ltd (1975) 49 ALJR 135 at 141. invention117. An assertion by the inventor in a consistory clause of that of which the invention consists does not compel the conclusion by the court that the claims are fairly based nor is the assertion determinative of the identity of the invention. The consistory clause is to be considered by the court with the rest of the specification. These points are reflected in the statements in an Australian text118: "Claims found to be inconsistent with the general description of the invention may be invalid as being not fairly based on the matter described in the specification. In order to avoid this possibility a well drawn specification will usually include in the body of the specification one or more formal 'consistory statements' setting forth what the patentee considers to be the scope of the invention, such statements often quoting the exact wording of the broadest claims in the specifications. … Such statements will generally follow an the specification, which may describe the technical field of the invention and the problems with the prior art which are to be addressed by the invention. It is important that the introductory part of the specification be worded so as to be consistent with the scope of the invention as defined in the claims and any formal consistory statements. introductory portion of A statement implying that the invention has a limited field of application or requires as an essential feature something which is not required by the claims may result in a finding that the claims are wider than the invention disclosed in the specification, and are accordingly invalid for lack of fair basis on the matter described in the specification." Doric's reliance on the decision of the Full Federal Court in Atlantis Corporation Pty Ltd v Schindler119 also was misplaced. The invention in that case was said in its title to relate to the provision of adequate drainage by artificial means with particular application to landscape gardening. The consistory clause described a particular apparatus but went on immediately to state that the invention taught a method of providing drainage utilising that 117 Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 612-613. 118 Lahore, Patents, Trade Marks and Related Rights, (2001), vol 1 at §15,345 (footnote omitted). 119 (1997) 39 IPR 29: see [87] above. apparatus. Claim 1 claimed the apparatus but with no limitation to its use for the purpose of drainage. Claim 1 was held to be unambiguous, not to be construed with such a limitation respecting drainage (as the primary judge McLelland CJ in Eq had construed it120) and so to be not fairly based. Although Doric did not explicitly request this Court to change settled principles in Australia respecting fair basing, it advanced arguments which could only be accepted if the law were changed. Thus its reliance on Biogen Inc v Medeva plc121 was an implicit invitation to adopt for s 40(3) the United Kingdom construction of a different provision. Doric contended, in effect, that success for the Patentee would be in various ways objectively "unfair", and hence that the claims were not "fairly based". But the kinds of unfairness it complained of, if remediable at all, had to be remedied under other heads of invalidity. If they could not be remedied under those heads, their "unfairness" did not mean that the claims were not "fairly based" on the matter described, and to hold otherwise would radically change the law. One source of these unfairnesses was said to be the fact that s 40(2)(a), on the construction given by this Court in Kimberly-Clark, is complied with if the complete specification enables the addressee to produce something within each claim without new inventions or additions or prolonged study of matters presenting initial difficulty122: but Doric, whilst willing to attempt to sap life from Kimberly-Clark, prudently eschewed any attack upon that binding authority. For the above reasons the appeal must be allowed. 120 Atlantis Corporation Pty Ltd v Schindler (1995) 33 IPR 91 at 98. McLelland CJ in Eq had held that ambiguity or lack of clarity in a claim whilst not appearing from the words of the claim considered in isolation may become apparent from the body of the specification. It is unnecessary to consider that aspect of Atlantis; cf Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461 at 478-479 per Barwick CJ 121 [1997] RPC 1. 122 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 17 [25]. Orders This Court has recently discussed the difficulties that arise when judges in an intermediate court of appeal do not decide particular questions which, on their reasoning, it is not necessary to decide, but which, when that reasoning is rejected on appeal, it becomes necessary to decide123. The difficulties are accentuated by the fact that here to some extent the Full Court offered opinions which were critical of the trial judge about one of the questions it put aside, namely obviousness, even though those opinions were said not to be "final"124. The Patentee submitted that a question arose "as to the appearance of the fairness of the matter being remitted to a Full Court of the same composition." Doric submitted that this question could not arise. It does arise, but it is better that it be resolved in the Federal Court than in this Court. The following orders should be made: UPON the appellant by its counsel undertaking to the Court in writing forthwith to proffer to the Federal Court, for the period of the continuation of the stay provided in order 5 of these orders, the following undertakings: to prosecute the proceedings in the Federal Court expeditiously; forthwith to serve on the Commissioner of Patents a copy of this order with a request that particulars of this order be registered in accordance with s 187 of the Patents Act 1990 (Cth); not to threaten any person with proceedings for infringement of claims 1- 32 of Patent No 702534 ("the Patent"); not to seek to amend any claims of the Patent otherwise than in the course of or in connection with the proceedings in the Federal Court; 123 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 19-20 [34]-[35]; Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 at 420-421 [12], 444 [82]. 124 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2003) 56 IPR 479 at 496-497 [73]-[76] per Wilcox J, with whom Branson J was in broad agreement. THE COURT ORDERS THAT The appeal is allowed with costs. (2) Orders 1 and 2 made by the Full Court of the Federal Court of Australia on 7 March 2003 are set aside. It is declared that claims 1-32 of the Patent are fairly based on matters described in the complete specification. The matter is remitted to a Full Court of the Federal Court for determination of the remaining issues on the appeal to that Court and to make such further orders as are necessary and appropriate, including orders disposing of the costs of the appeal to that Court and the proceedings before Hely J and disposing of any application to amend the Patent. The stay the subject of the orders of the Court made on 27 March 2003 and 23 December 2003 continue until the proceedings remitted to the Full Court of the Federal Court or further order of the Federal Court. the determination of

HIGH COURT OF AUSTRALIA K-GENERATION PTY LIMITED & ANOR APPELLANTS AND LIQUOR LICENSING COURT & ANOR RESPONDENTS K-Generation Pty Limited v Liquor Licensing Court [2009] HCA 4 2 February 2009 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of South Australia Representation S C Churches for the appellants (instructed by Starke Lawyers) Submitting appearance for the first respondent. M J Hinton QC with S A McDonald and T D McLean for the second respondent (instructed by Crown Solicitor for South Australia) Interveners J Gageler SC, Solicitor-General of the Commonwealth with C D Bleby intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) R J Meadows QC, Solicitor-General for the State of Western Australia with R M Mitchell SC intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor for Western Australia) M G Sexton SC, Solicitor-General for the State of New South Wales with M L Rabsch intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for New South Wales) P M Tate SC, Solicitor-General for the State of Victoria with S P Donaghue intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) W Sofronoff QC, Solicitor-General of the State of Queensland with G P Sammon and G J D Del Villar intervening on behalf of the Attorney-General of the State of Queensland (instructed by Crown Law Queensland) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS K-Generation Pty Ltd v Liquor Licensing Court Constitutional law (Cth) – Chapter III – Judicial power – Vesting of federal jurisdiction in State courts – Licensing Court of South Australia established under Liquor Licensing Act 1997 (SA) ("Licensing Act") – Licensing Court constituted by District Court judge – Whether Licensing Court "court of a State" within meaning of s 77(iii) of Constitution – Whether Licensing Court invested with federal jurisdiction by s 39(2) of Judiciary Act 1903 (Cth) ("Judiciary Act") – Significance of absence of express power of punishment for contempt. Constitutional law (Cth) – Chapter III – Judicial power – Vesting of federal jurisdiction in State courts – Integrity of State courts – Requirement of impartiality and independence for repository of federal jurisdiction – Licensing Act, s 28A required Licensing Court to take steps to maintain confidentiality of information classified by Commissioner of Police as "criminal intelligence" in proceedings under Licensing Act – Steps included receipt of evidence and argument in absence of parties – Whether s 28A invalid for denying Licensing Court character of independent and impartial tribunal. Statutes – Interpretation – Licensing Act, s 28A – "Criminal intelligence" defined to include information which "could reasonably be expected" to prejudice criminal investigations – Whether classification by Commissioner of Police of information as "criminal intelligence" amenable to review by Licensing Court – Whether mandatory for Licensing Court to hear evidence and argument in absence of parties. Constitutional law (Cth) – Chapter III – Judicial power – Vesting of federal jurisdiction in State courts – Integrity of State courts – Whether consequence of impairment of integrity is that Licensing Court no longer "court of a State" to which s 77(iii) of Constitution applies – Whether s 39(2) of Judiciary Act ambulatory and would cease to apply – Whether States may establish "court of a State" then subsequently deprive court of independence and impartiality. Constitutional law (Cth) – Chapter III – Judicial power – Nature of judicial power – Whether exercise by Licensing Court of judicial or administrative power. Practice and procedure – Interveners – Procedure where interveners seek remedy and assert arguments opposed by immediate parties. Words and phrases – "could reasonably be expected", "court of a State", "criminal intelligence". Constitution, Ch III, s 77. Judiciary Act 1903 (Cth), s 39. Liquor Licensing Act 1997 (SA), s 28A. Introduction K-Generation Pty Ltd ("K-Generation") is trustee for the K-Generation Unit Trust. Genargi Krasnov is the sole director of the company. He holds 100 units as trustee of the Krasnov Family Trust, of which he and Adeline Tay are beneficiaries. On 20 October 2005, K-Generation made an application to the Liquor and Gambling Commissioner under the Liquor Licensing Act 1997 (SA) ("the Act") for an entertainment venue licence. The licence was sought in respect of premises located in the basement and part of the ground floor of 362-366 King William Street, Adelaide to be known as Sky Lounge KTV. It was proposed to fit out the premises as a karaoke venue. The Commissioner of Police for South Australia gave notice of intervention in the proceedings on 28 July 2006. The stated purpose of his intervention was to introduce evidence or make representations on any question before the Liquor and Gambling Commissioner and, in particular, on whether: "It would be contrary to the public interest if Mr Genargi Krasnov and Ms Adeline Tay were to be approved as fit and proper persons." The application was heard by Liquor and Gambling Commissioner Pryor. A police officer tendered information which had been classified by the Commissioner of Police as criminal intelligence pursuant to s 28A of the Act. In reliance upon that section the information was not disclosed to the representative of K-Generation nor to Mr Krasnov. On 17 January 2007, acting upon that information, Commissioner Pryor refused the application on the ground that to grant it would be contrary to the public interest. K-Generation sought review of Commissioner Pryor's decision in the Licensing Court of South Australia. The Court was invited by the parties to determine whether, on the criminal intelligence information alone, the decision of Commissioner Pryor would be upheld. On 12 February 2007, the Court, after having considered the criminal the view of its agreement with intelligence Commissioner Pryor and made an order affirming his decision. information, announced K-Generation and Mr Krasnov ("the appellants") instituted proceedings in the Supreme Court of South Australia. They named as defendants the Licensing Court and the Commissioner of Police. They sought a declaration that s 28A of the Act was invalid insofar as it impermissibly interfered with the exercise by the Licensing Court of the judicial power of the Commonwealth. They also sought a declaration that the Court, in affirming the decision of Commissioner Pryor, had failed to observe the requirements of procedural fairness and that the decision of the Court was void and of no effect. They sought orders in the nature of certiorari and mandamus, quashing the decision of the Licensing Court and directing the Court to consider K-Generation's appeal from Commissioner Pryor according to law. On 8 May 2007 Kelly J made an order, by consent, referring the application to the Full Court of the Supreme Court. On 30 August 2007, the Full Court of the Supreme Court by a majority (Duggan and Vanstone JJ) refused the application for the declarations and dismissed the application for judicial review. On 23 May 2008, the appellants were granted special leave to appeal to this Court from the judgment and orders of the Supreme Court of South Australia. Section 28A infringes upon the open justice principle that is an essential part of the functioning of courts in Australia. It also infringes upon procedural fairness to the extent that it authorises and effectively requires the Licensing Court and the Supreme Court to consider, without disclosure to the party to whom it relates, criminal intelligence information submitted to the Court by the Commissioner of Police. However, it cannot be said that the section confers upon the Licensing Court or the Supreme Court functions which are incompatible with their institutional integrity as courts of the States or with their constitutional roles as repositories of federal jurisdiction. Properly construed the section leaves it to the courts to determine whether information classified as criminal intelligence answers that description. It also leaves it to the courts to decide what steps may be necessary to preserve the confidentiality of such material. The courts may, consistently with the section, disclose the material to legal representatives of the party affected on conditions of confidentiality enforced by undertaking or order. It leaves it open to the courts to decide whether to accept or reject such material and to decide what if any weight shall be placed upon it. The constitutional objections to s 28A are not made out and the appeal should be dismissed with costs. The decision of the Liquor and Gambling Commissioner The decision of Commissioner Pryor was preceded by a hearing on 20 December 2006 at which K-Generation was represented by Mr Hoban and the Police Commissioner was represented by Sergeant Jakacic. Mr Krasnov gave evidence and was cross-examined. No transcript of that proceeding has been reproduced. Sergeant Jakacic tendered two "Police Commissioner Office files", containing information which had been classified as criminal intelligence pursuant to s 28A of the Act. The files were "admitted into evidence at the hearing". Their contents were not disclosed to K-Generation. Commissioner Pryor did not read the files during the hearing. Counsel representing K- Generation did not ask him to provide a summary of the criminal intelligence at any time. Sergeant Jakacic also tendered material relating to a known associate of Mr Krasnov. This was received by consent. Statutory declarations testifying to Mr Krasnov's good character were received. In his reasons for decision dated 17 January 2007, Commissioner Pryor referred to s 56 of the Act. That section imposes the criterion that any person occupying a position of authority in an entity applying for a licence must be a fit and proper person to occupy such a position. Mr Krasnov occupied such a position with respect to K-Generation. The Commissioner referred to s 28A(1) of the Act and to the definition of "criminal intelligence". He said he had considered the criminal intelligence together with the statutory declarations and submissions made at the hearing. He then set out the terms of s 28A(2) and concluded, without further elaboration, by saying: "Accordingly, I refuse the application on the ground that to grant the application would be contrary to the public interest." The review hearing in the Licensing Court At the commencement of the hearing in the Licensing Court on 8 February 2007, counsel for K-Generation told the Court that the hearing before Commissioner Pryor had been on a "preliminary point" as to whether Mr Krasnov was fit and proper and that the Commissioner had found against Mr Krasnov on the basis of s 28A of the Act. Counsel sought review on the preliminary point only and proposed that the most satisfactory way of proceeding would be to place the criminal intelligence material which had been before Commissioner Pryor, before the Licensing Court. He said: "If you decide there is a foundation in the Commissioner's decision, then you find against Mr Krasnov and that will be, effectively, the end of the matter. However, if after looking at material you take a different view, then it may well be that we put further materials before you in the sense of a hearing or re-hearing as to the merits of the application in order to seek to persuade that notwithstanding the section 28A material, the man ought to be found to be fit and proper." Counsel said that he was satisfied that procedurally the criminal intelligence material had been "properly before the Commissioner". He conceded that he would have no opportunity to comment on it or to take instructions or put further evidence before the Court in relation to it. He eschewed, on the basis of economy, a suggestion that the Court should read the transcript of proceedings before Commissioner Pryor as well as the criminal intelligence material. His Honour, Rice DCJ, sitting as the Licensing Court, said he would proceed in stages if necessary. He would read the criminal intelligence material but would not read any transcript unless it had already been prepared. The review hearing resumed before the Licensing Court on 12 February 2007. After hearing further from the parties, his Honour expressed his understanding of their common submission that if he agreed with Commissioner Pryor about his use of the criminal intelligence and came to the same conclusion, then he would indicate that to the parties and they could decide where they went from there. If his review of the intelligence material inclined him to think that he would or may not have come to the same conclusion, he would indicate that and the parties could then decide whether they wanted to go to a full rehearing. After adjourning for 20 minutes, his Honour came back, having read the intelligence material which also related to Mr Krasnov's associate and said: "I think, in a nutshell, my view is that I would reach the same view as the Commissioner reached, to put it as simply and as quickly as I could. I have looked at the material the Commissioner looked at and quite frankly I would come to the same view." The order of the Licensing Court On 12 February 2007, the Licensing Court made the following orders: The decision of the Liquor and Gambling Commissioner is affirmed and, to the extent that it is necessary his Honour confirms that he makes the same decision. The matter is to be adjourned indefinitely." The judgment of the Full Court The judgment of the majority dismissing the application was delivered by Duggan J, with whom Vanstone J agreed1. In holding that Kable v Director of 1 K-Generation Pty Ltd v Liquor Licensing Court (2007) 99 SASR 58. Public Prosecutions (NSW)2 did not apply to invalidate s 28A, his Honour held inter alia: The Licensing Court is a "court" of the State of South Australia for the purposes of s 77(iii) of the Constitution The Court could have federal jurisdiction conferred upon it. (iii) Section 28A reflected a legislative intention to make inroads into the requirements of procedural fairness. (iv) Legislative inroads into procedural fairness do not necessarily impose a role on the Court incompatible with its constitutional function as a repository of federal jurisdiction. The Court can determine what weight is to be given to criminal intelligence information by reference, inter alia, to the fact that it has not been tested in any way. (vi) Section 28A does not generate a closer connection between the Court and the executive, nor does it introduce a procedure of a political nature or political bias calculated to influence the discretion of the Court. His Honour acknowledged that by limiting access to information, s 28A would place the applicant for a licence at a disadvantage and might prevent the Court from giving full reasons for its decision. While such departures from established rules of fairness were of concern, it remained the duty of the Court to assess the matter objectively and subject classified material to scrutiny as part of the process. His Honour concluded3: "In summary, therefore, I am of the view that the enactment does not impose on the Licensing Court a procedure which is constitutionally incompatible with its status as a court which is a potential repository of federal jurisdiction. Furthermore, the legislation does not require a District Court judge to perform a non-judicial function. Even if the function could be described as non-judicial, it is not of such a nature as to be constitutionally incompatible with the role of a District Court judge." (1996) 189 CLR 51; [1996] HCA 24. (2007) 99 SASR 58 at 78 [73]. His Honour held the same reasoning to apply to the situation where the Supreme Court was required to consider an appeal from a decision of a judge of the Licensing Court. Gray J in dissent held, inter alia: The usual duty to inform applicants of the case against them is excluded by s 28A to the extent that that duty would have required the Licensing Court to disclose the criminal intelligence. Even information derived from the criminal intelligence which did not identify either the source or a police operation could not be disclosed. (iii) Although the appellants accepted in the Licensing Court that they were not entitled to natural justice in respect of the criminal intelligence they did not thereby waive their entitlement. If there had been a breach of natural justice the Supreme Court would have the power to grant judicial review and to make an order in the nature of certiorari. (v) While judicial review of a classification decision in respect of criminal intelligence might be possible, the party seeking review would not be able to gain access to the material or have any information about its content. (vi) Legislation which requires a court invested with federal jurisdiction to exercise federal judicial power without affording a party an opportunity to respond to adverse claims is inconsistent with the integrated federal judiciary established by Ch III of the Constitution. (vii) The fact that it is a District Court Judge who holds the position as the Licensing Court and that the Full Court of the Supreme Court has no option under the legislation but to uphold the Licensing Court's breach of natural justice, results in s 28A being constitutionally invalid. The ground of appeal The single ground of appeal was: "The Full Court erred in law in finding that s 28A of [the Act] is valid insofar as it requires the Liquor Licensing Court to hear and determine a review pursuant to section 23 of [the Act] without disclosing to the applicant information classified as 'criminal intelligence', relied on by the Liquor Licensing Commissioner in refusing an application for a licence." Statutory framework – Liquor Licensing Act 1997 (SA) – general provisions The two principal decision-making bodies under the Act are the Liquor and Gambling Commissioner and the Licensing Court. The term "licensing authority" is defined in s 4 to mean: in relation to a matter that is to be decided by the Court under this Act – the Court; in relation to any other matter – the Commissioner". The Licensing Court, whose existence pre-dated the Act, is continued in existence4. It is declared to be a court of record5. The court comprises "the Licensing Court Judge" or some other serving or former District Court Judge "with authority to exercise the jurisdiction of the Court"6. The Governor is empowered to designate by proclamation a District Court Judge as the Licensing Court Judge or to confer on other District Court Judges, or former District Court Judges, authority to exercise the jurisdiction of the Court7. The Governor may also vary or revoke such a proclamation under the section. Where a proclamation so provides it lapses at the end of a specified period8. The Court has the jurisdiction conferred on it by the Act or any other Act9. The Act divides responsibilities between the Liquor and Gambling Commissioner and the Licensing Court10. The Commissioner is to determine all non-contested matters except those required under some other provision of the Act to be determined by the Licensing Court. The Commissioner is also required 4 Section 12. 5 Section 13. 6 Section 14. 7 Section 15(1). 8 Section 15(2). 9 Section 16. For example the Court has jurisdiction under s 69 of the Gaming Machines Act 1992 (SA) to hear appeals against decisions of the Liquor and Gambling Commissioner. Sections 12 and 70A of that Act replicate s 28A of the Act. 10 Section 17. to endeavour to achieve agreement between parties by conciliation in respect of certain classes of contested application and then either to determine the application or to refer the matter for hearing and determination by the Court11. In proceedings under the Act or any other Act, the Court is required to act without undue formality. It is not bound by the rules of evidence but may inform itself on any matter it thinks fit12. A similar provision applies to the Liquor and The Commissioner may refer questions for hearing and determination by the Court14. The Commissioner's decision may be reviewed by the Court15 save for subjects on which the Commissioner has "an absolute discretion"16. A review is in the nature of a rehearing17. The Court may affirm, vary or quash the decision, substitute its own decision or refer a matter back to the Commissioner for rehearing or reconsideration18. There is an appeal from orders and decisions of the Licensing Court to the Supreme Court subject to the permission of the Supreme Court19. Such appeals are to be heard and determined by the Full Court20. No appeal lies against an order or decision of the Licensing Court made on a review of a decision of the Commissioner or against an order or decision of the Licensing Court excluded from appeal under a provision of the Act or some other Act21. 11 Section 17(1)(b). 12 Section 23. 13 Section 18. 14 Section 21. 15 Section 22(1). 16 Section 22(2). 17 Section 22(4). 18 Section 22(5). 19 Section 27(1). 20 Section 27(4). 21 Section 27(2). The Act prohibits the sale of liquor without a licence22. The various classes of licence are set out in the Act and include an entertainment venue licence23. Mandatory conditions apply to every licence. Licensing authorities may also impose conditions that they consider appropriate24. Every application for a licence, other than categories which are irrelevant for present purposes, is to be given to the Commissioner of Police25. The Commissioner of Police is required thereafter to make available to the Liquor and Gambling Commissioner information about criminal convictions and other information to which the Commissioner of Police has access and which is relevant to whether the application should be granted26. The powers of a licensing authority to grant or refuse an application for a licence are set out in s 53: "(1) Subject to this Act, the licensing authority has an unqualified discretion to grant or refuse an application under this Act on any ground, or for any reason, the licensing authority considers sufficient (but is not to take into account an economic effect on other licensees in the locality affected by the application). (1a) An application must be refused if the licensing authority is satisfied that to grant the application would be contrary to the public interest." An applicant for a licence must satisfy the licensing authority that the applicant is a fit and proper person to hold the licence. If the applicant is a trust or corporate entity, it must satisfy the licensing authority that each person who occupies a position of authority in the entity is a fit and proper person to occupy such a position in an entity holding a licence of the class sought in the application27. In determining whether a person is fit and proper a licensing authority is to take into account the reputation, honesty and integrity (including 22 Section 29. 23 Section 31(2)(d) and s 35. 24 Sections 42 and 43. 25 Section 51A. 26 Section 51A(3). 27 Section 56(1). the creditworthiness) of the person and the reputation, honesty and integrity of people with whom the person associates28. The Commissioner of Police may intervene in proceedings before a licensing authority on questions before the authority including the question whether a person is a fit and proper person or whether to grant the application would be contrary to the public interest29. There is a general right of objection to the grant of a licence30. Part 8 of the Act provides for disciplinary action against licensees. The Commissioner may deal with disciplinary matters by consent31. A complaint may be lodged with the Licensing Court by the Liquor and Gambling Commissioner or by the Commissioner of Police32. The Court, if satisfied on the balance of probabilities that there is proper cause for taking disciplinary action, may make one of a variety of dispositions including reprimanding the licensee or imposing a fine. It may disqualify a person from being licensed or approved under the Act33. An order imposing a fine may be registered in the Magistrates Court or the District Court and enforced as an order of the court in which it is registered34. The section at the centre of the present appeal is s 28A entitled "Criminal intelligence". It must be read with the definition of "criminal intelligence" in s 4 of the Act. The text of the section and of the definition are set out in the other judgments. The contentions Key propositions to emerge from the written submissions filed on behalf of the appellants were: 28 Section 55(1). 29 Section 75A. 30 Section 77. 31 Section 119A. 32 Section 120. 33 Section 121(1). 34 Section 121(6). The Licensing Court is a court upon which federal jurisdiction may be conferred by laws made under Ch III of the Constitution. The Solicitor- General for South Australia, on behalf of the Commissioner of Police (SA), made the same submission. Section 28A mandates the acceptance by the Court of evidence tendered by the executive. Section 28A mandates unfair procedures, ie consideration of such evidence in the absence of a party. The substance of the argument founded on these propositions was that s 28A conferred a function upon the Licensing Court and upon the Supreme Court incompatible with their status as courts of a State in which federal jurisdiction could be invested under s 77(iii) of the Constitution. The Solicitor-General, on behalf of the Commissioner of Police, advanced the following propositions, inter alia: The duty imposed upon the Licensing Court under s 28A(5) does not arise unless the Court is satisfied that the information has been lawfully classified as criminal intelligence. The Court is free to accept or reject the information as it sees fit and may allow for the fact that it has not been fully tested. It can take steps to ameliorate unfairness that may result. The duty imposed upon the Licensing Court by s 28A(5) of the Act is not inconsistent with its character as a "court of a State" within the meaning of Ch III of the Constitution and is not otherwise inconsistent with Ch III. The intervening parties generally supported the South Australian position. The Attorney-General for Queensland submitted that, given the nature of its functions and the absence of security of tenure for its members the Licensing Court could not be regarded as a "court of a State" for the purposes of receiving federal jurisdiction pursuant to s 77(iii) of the Constitution. The Attorney- General for Victoria submitted that the Licensing Court, in carrying out a review under s 22, was discharging an administrative function. There is, it was submitted, no constitutional principle to prevent State parliaments from modifying rules of procedural fairness in relation to such functions when carried out by State judges. The Attorney-General for Western Australia submitted that if s 28A were found to be inconsistent with the Licensing Court having the character of a court for constitutional purposes, the consequence would be that the Licensing Court would not be a court of a State capable of being invested with federal jurisdiction pursuant to s 77(iii) of the Constitution. Nor would it be one of the "several Courts of the States" invested with federal jurisdiction by s 39(2) of the Judiciary Act 1903 (Cth). The point of departure for consideration of these submissions must be the interpretation of s 28A. The approach to interpretation It is a necessary first step in this appeal to consider what if any limitations s 28A places upon the Licensing Court and the Supreme Court in the exercise of their respective jurisdictions. Before the constitutional validity of a statute is considered its meaning and operation must be ascertained. The point of departure in that exercise is the ordinary and grammatical sense of the words having regard to their context and legislative purpose. Interpretation is also to be informed by the principle that the parliament, whether of the State or the Commonwealth, did not intend its statute to exceed constitutional limits35. It should be interpreted, so far as its words allow, to keep it within constitutional limits36. That is a principle of general application. It is also an approach mandated by the Acts Interpretation Act 1915 (SA)37. There is also a well established and conservative principle of interpretation that statutes are construed, where constructional choices are open, so that they do not encroach upon fundamental rights and freedoms at common law38. That is to say, there is a presumption against a parliamentary intention to infringe upon such rights and freedoms39. That presumption has been described 35 Federal Commissioner of Taxation v Munro (1926) 38 CLR 153 at 180; [1926] HCA 58. 36 Attorney-General (Vict) v The Commonwealth (1945) 71 CLR 237 at 267 per Dixon J; [1945] HCA 30; Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 14 per Mason CJ; [1992] HCA 64; New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 161 [355]; [2006] HCA 52; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 553 [11]; [2008] HCA 4. 37 Section 22A(1). 38 Potter v Minahan (1908) 7 CLR 277 at 304; [1908] HCA 63; Bropho v Western Australia (1990) 171 CLR 1 at 18; [1990] HCA 24; Coco v The Queen (1994) 179 CLR 427 at 436-437; [1994] HCA 15. 39 R v Secretary of State for the Home Department; Ex parte Pierson [1998] AC 539 at 587 per Lord Steyn. in the United Kingdom as an aspect of a "principle of legality" governing the relationship between parliament, the executive and the courts. It was explained by Lord Hoffmann in R v Secretary of State for the Home Department; Ex parte Simms40: "[T]he principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual." Gleeson CJ described the presumption as "a working hypothesis, the existence of which is known both to Parliament and the courts, upon which statutory language will be interpreted". He added, "[t]he hypothesis is an aspect of the rule of law"41. It is an aspect of the rule of law that courts sit in public and that they accord procedural fairness. The importance of these two principles requires a conservative approach to the interpretation of statutes affecting them. The open court principle is of long historical standing and well established in all common law jurisdictions. It was enunciated by the House of Lords in Scott v Scott42 and affirmed by this Court in Dickason v Dickason43. It was discussed in Russell v Russell44 which was concerned with the question whether a provision of the Family Law Act 1975 (Cth), requiring that State courts exercising jurisdiction under that Act sit in private, was valid. The provision was held invalid on grounds not material to this appeal. It was held not to be an exercise of the constitutional power to invest State courts with federal jurisdiction. Relevantly to this case, however, the open court principle in relation to State courts was affirmed as "an essential aspect of their character"45. 40 [2000] 2 AC 115 at 131. 41 Electrolux Home Products Pty Ltd v The Australian Workers' Union (2004) 221 CLR 309 at 329 [21]; [2004] HCA 40. 43 (1913) 17 CLR 50; [1913] HCA 77. 44 (1976) 134 CLR 495; [1976] HCA 23. 45 (1976) 134 CLR 495 at 520 per Gibbs J. Established exceptions to the general rule were recognised, as was the power of the Parliament to extend the categories of such exceptions46. The exceptional character of departure from the open court principle was emphasised by the "To require that a Supreme Court, possessing all the attributes of an English court of justice, should sit as of course in closed court is, I think, in the words of Lord Shaw, to turn that Court into a different kind of tribunal and involves that very intrusion into its constitution and organization which s 77(iii) does not authorize." A statute which affects the open court principle by requiring a court to hear certain classes of evidence or argument in private is thus to be construed, where constructional choices are open, so as to minimise its impact upon the principle and to maximise the power of the court to implement the statutory command conservatively. A question also arises in this case about the use which can be made of the Second Reading Speech for the Bill which led to the enactment of s 28A. If the Act were a Commonwealth statute, that Second Reading Speech could be considered pursuant to s 15AB of the Acts Interpretation Act 1901 (Cth). The South Australian Acts Interpretation Act does not contain any equivalent of s 15AB or the similar provisions of other States and Territories. Section 15AB permits consideration of extrinsic materials to determine the meaning of a provision of an Act when the provision is ambiguous or obscure or its ordinary meaning would lead to a result that is manifestly absurd or unreasonable. The question whether extrinsic materials may be considered in South Australia and in what circumstances they may be considered as an aid to statutory interpretation is to be answered by the common law. The answer at common law is that such materials can be considered to determine, inter alia, the mischief to which an Act is directed. This Court has referred to Hansard in aid of its interpretation of South Australian statutes48. In 1996 the Full Court of the Supreme Court of South Australia referred to a minister's Second Reading Speech in order to identify the purpose of a statutory provision49. 46 (1976) 134 CLR 495 at 520 per Gibbs J. 47 (1976) 134 CLR 495 at 532. See also at 505 per Barwick CJ. 48 Gerhardy v Brown (1985) 159 CLR 70 at 104 per Mason J, 111 per Wilson J; [1985] HCA 11; Hoare v The Queen (1989) 167 CLR 348 at 360-361; [1989] HCA 49 Owen v South Australia (1996) 66 SASR 251 at 256-257 per Cox J, 257 per Prior J; see also Nemer v Holloway (2003) 87 SASR 147 at 166-167 per Vanstone J and (Footnote continues on next page) At common law it is not necessary before entering upon a consideration of such material to surmount a threshold of ambiguity, obscurity or possible absurdity. Statutory interpretation requires the court to have regard to the context in which the words to be interpreted arise and also their statutory purpose. Context includes "the existing state of the law and the mischief which, by legitimate means … one may discern the statute was intended to remedy"50. The relevant extrinsic material is the Attorney-General's Second Reading Speech introducing the amendments which led to the enactment of s 28A. This material may be considered to determine the purpose of the section as an aid to its construction. That does not mean that the words of the Attorney-General can be substituted for its text51. That caution is apposite in the present case. The purpose of s 28A Section 28A was introduced into the Act by the Statutes Amendment (Liquor, Gambling and Security Industries) Act 2005 (SA). In his Second Reading Speech the Attorney-General referred to the infiltration by organised crime of the liquor and hospitality industries and, in particular, a significant level of involvement by outlaw motor cycle gangs. He pointed out that the liquor, gambling and security industries are attractive to and susceptible to infiltration by organised crime. Although this is reflected in regulatory regimes using various tests of fitness and propriety, existing licensing regimes had proved not sufficiently robust to combat infiltration. The Attorney-General referred to the following factors contributing to the ineffectiveness of the existing licensing regime in this respect: Organised crime typically legitimises involvement in industries through members without criminal convictions or "cleanskin" associates. Law enforcement agencies possess intelligence that they are reluctant to disclose because it could prejudice current or future investigations or legal proceedings and could put the welfare of persons such as informants at risk. generally, Interpretation in Australia, 6th ed (2006) at 70-71 [3.6]. in relation to South Australia, Pearce and Geddes, Statutory 50 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2. 51 Re Bolton; Ex parte Bean (1987) 162 CLR 514 at 518 per Mason CJ, Wilson and Dawson JJ; [1987] HCA 12. Liquor licensing legislation as it then stood did not allow for intelligence to be presented without challenge for consideration by the licensing authority. The Bill was said to address these problems by, inter alia, facilitating the use of police intelligence by protecting the confidentiality of that intelligence. Significantly, the Attorney-General said:52 "It is this last aspect of the Bill that is perhaps the most significant. The Bill amends the SIAA [Security and Investigation Agents Act 1995 (SA)], LLA [Liquor Licensing Act 1997 (SA)] and GMA [Gaming Machines Act 1992 (SA)] to facilitate the use of police intelligence in licensing decisions. The Bill provides that where police intelligence is used in any proceedings under those Acts, including in determinations of applications and disciplinary proceedings that can lead to cancellation of a licence or approval, that information or intelligence must not be disclosed, including to the applicant/licensee/approved person or his or her representatives. Where the licensing authority makes a determination of an application on the basis of this police information classified as criminal intelligence, it will not be required to provide reasons for that determination other than that to grant the application would be contrary to the public interest. A court hearing an appeal against a licence refusal or a disciplinary action against a licensee or approved person must hear the information the closed applicant/licensee/approved person and that person's representatives." including court all, The provisions concerning confidentiality of criminal intelligence were said to be modelled on those enacted in the Firearms Act 1977 (SA) by the Firearms (COAG Agreement) Amendment Act 2003 (SA)53. The Second Reading Speech incorporated an explanatory section covering each of the new provisions being introduced by the Bill. It referred in particular to s 28A but did little more than repeat the substance of the relevant parts of that section. 52 South Australia, House of Assembly, Parliamentary Debates (Hansard), 9 December 2004 at 1295. 53 South Australia, House of Assembly, Parliamentary Debates (Hansard), 9 December 2004 at 1295. The interpretation of s 28A Section 28A(1) imposes a general prohibition on disclosure of information "provided by the Commissioner of Police" to the Liquor and Gambling Commissioner. The generality of that prohibition is qualified by exceptions permitting disclosure to the Minister or a court or a person to whom the Commissioner of Police authorises its disclosure. It is a necessary condition of the prohibition that the information "is classified by the Commissioner of Police as criminal intelligence". The function conferred on the Commissioner of Police by use of the word "classify" is subject to the minimum constraint applicable to the exercise of any statutory power namely that it must be exercised in good faith and within the scope and for the purposes of the statute54. If the word "classify" were to be read merely as "designate" it is arguable that there would be little more than that minimum constraint upon the Police Commissioner's function. However, its ordinary meaning is55: "To arrange or distribute in classes according to a method or system". The process of classification is therefore to be informed by some selection principle. In this case the selection principle is disclosed by the definition of "criminal intelligence" in s 4 of the Act. The definition requires that for material to be classified as criminal intelligence it must satisfy a number of conditions. The subject matter of the classification must be "information". It must have the character of information "relating to" actual or suspected criminal activity56. Criminal activity means, at least, the commission of offences against the criminal law and could include incidental conduct. The activity must be "actual" or "suspected". The latter term does not require formation of a suspicion on the part of the Commissioner about 54 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon J; [1947] HCA 21. See also Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 [22] per Gaudron and Gummow JJ; [1998] HCA 11. 55 The Oxford English Dictionary, 2nd ed (1989), vol 3 at 283. 56 The expression "relating to" denotes a connection between two subject matters, the nature and closeness of which depends upon context: O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356 at 376 per McHugh J; [1990] HCA 16. In this context it may be equated, without further elaboration, to information "about" or "concerning" criminal activity. activity. It will suffice that the person providing the information has the relevant belief or suspicion. Whether these conditions are satisfied may be determined upon inspection of the information by reference to its content and sources. The information must also be such that its disclosure could reasonably be expected to prejudice criminal investigations or enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement. That criterion is objective. It is not satisfied merely by the formation of the Commissioner's opinion to that effect. It is a criterion requiring a non-trivial risk of prejudice or discovery. Given that the Police Commissioner has the non-delegable function of classification, it may be taken that he or she must make the relevant risk assessment. But the objective language of the criterion indicates that the assessment must be reasonably open having regard to the content and sources of the information. The information on the face of it must satisfy the criteria set out in the definition of "criminal intelligence". There must be a basis for the view that it could reasonably be expected that disclosure would have the effect referred to in the definition. A court presented with information classified as criminal intelligence could decide that the information did not, on its face, satisfy one or other of the criteria in the definition. This does leave a margin of appreciation for the Police Commissioner's assessment of the effect of disclosure subject to there being an objective foundation for that assessment. The prohibition in s 28A(1) is expressed in the passive sense. It is concerned with "information provided by the Commissioner of Police to the [Liquor and Gambling] Commissioner". It is thus directed to the Liquor and Gambling Commissioner. It does not prohibit disclosure to a court. The question is whether the prohibition applies further to prevent the relevant court from disclosing the information to any other person. As a general rule, absent clear words, a statute should not be construed so as to confine the way in which a court exercises its jurisdiction, including the way in which it accords procedural fairness. No such words appear from s 28A(1). Indeed it has nothing to say on that matter. The provision affecting the way in which a court may deal with criminal intelligence is s 28A(5). Section 28A(5) lies at the heart of the appellants' case. It is in terms a direction to the Commissioner, the Licensing Court and to the Supreme Court about how they are to deal, in proceedings under the Act, with information classified as criminal intelligence. The primary direction is to "take steps to maintain the confidentiality of [the] information". That direction is not absolute because it is conditioned upon "the application of the Commissioner of Police". The existence of that condition reinforces the conclusion that s 28A(1) does not itself prevent a court from making disclosure to the parties of classified criminal intelligence information. The purpose of the confidentiality, mandated by s 28A(5), can be discerned from the definition of "criminal intelligence". It is to avoid prejudice to criminal investigations and/or the discovery of the existence or identity of a confidential source of information relevant to law enforcement. That purpose was also reflected in the Attorney-General's Second Reading Speech as serving the larger purpose of more effectively preventing infiltration of the liquor industry by organised crime. The level of confidentiality to be maintained is not specified in s 28A. It is not absolute for the information will be known to the representatives of the Commissioner of Police before the Liquor and Gambling Commissioner. It will be known to the Liquor and Gambling Commissioner and to the judge or judges of the Licensing Court or of the Supreme Court before whom the relevant proceedings are brought. Sub-section (5) requires the Court to take steps to maintain confidentiality "including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives". This raises the question whether the Court is required to take the steps expressly specified or whether they are steps which it is authorised, but not obliged, to take in order to meet the obligation of confidentiality. The Attorney-General's assertion in the Second Reading Speech that the Court "must hear the information in a court closed to all, including the applicant … and that person's representatives" was a statement of his intention. It is not a substitute for the actual words of s 28A(5). Nor does it require those words to be interpreted so as to mandate exclusion of legal representatives of an applicant from a hearing in which evidence is received and argument entertained about criminal intelligence. The submission of the Solicitor-General for South Australia did not support a construction of s 28A(5) which would mandate exclusion of legal representatives. The Solicitor-General was no doubt conscious of the risk of invalidity associated with too prescriptive an interpretation. And it was no doubt for that reason that counsel for the appellants argued for the more draconian view of the provision which accorded with the Attorney-General's own proposed construction. The risk associated with excessively directive statutes was highlighted by the observations in the joint judgment in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police57: 57 (2008) 234 CLR 532 at 560 [39]. "As a general proposition, it may be accepted that legislation which purported to direct the courts as to the manner and outcome of the exercise of their jurisdiction would be apt impermissibly to impair the character of the courts as independent and impartial tribunals." (footnote omitted) The better view, which is permitted by the language of the statute, is that the Court is authorised but not required to exclude legal representatives from that part of the proceedings in which it receives evidence or hears argument about the classified information. That constructional choice applies the conservative interpretive approach consistent with the principle of legality referred to earlier. There is here no inevitable undermining of the legislative purpose enunciated in the Attorney-General's Second Reading Speech. For it may be that the Court would be less likely in some cases to feel confident about acting on information classified as criminal intelligence where it has not had the assistance of argument on both sides of the question about its classification, whether it should be received at all and, if so, what weight should be attached to it. As a practical matter it may be highly unlikely that relevant confidentiality could be assured if information were to be disclosed to an applicant adversely affected by it. The same level of risk may not apply to disclosure of information to a legal representative who is prepared to give a formal undertaking to the Court or submit to a prohibition by way of court order against disclosure of the information to the affected party or anyone else. Breach of such an undertaking to or order by the Supreme Court would be punishable as a contempt of that Court. Breach of an undertaking to or an order made by the Licensing Court would be punishable by the Supreme Court as a contempt committed in relation to an inferior court subject to its supervisory jurisdiction58. Breach of such an undertaking or order could also expose the legal representative to disciplinary action by the relevant professional regulatory body. that disclosure The Court could nevertheless decide legal representatives, even when subject to undertakings or orders as to confidentiality, would carry too high a risk. Still, s 28A(5) contemplates that the Court may hear "argument" about the information in private in the absence of the parties and their legal representatives. It impliedly accepts that the Court may itself inquire into the classification of the information. It may also wish to decide what weight it should give to it. Evidence "about the information" might relate to the reliability of the sources from which the information has been obtained or the risk of prejudice were it to be disclosed. 58 John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 at 360; [1955] HCA 12 and see generally Campbell, "Inferior and Superior Courts and Courts of Record", (1997) 6 Journal of Judicial Administration 249 at 251-252. Properly construed s 28A(5) gives the Licensing Court and the Supreme Court a degree of flexibility in the steps to be taken to maintain the confidentiality of criminal intelligence. It tends to support the conclusion that the Court can decide, no doubt after hearing argument from at least the Police Commissioner, if not the legal representatives of the applicant, whether the information has been correctly classified as criminal intelligence and, if so, what weight should be given to it. There is nothing in the Act to prevent the Court from taking into account the fact that the information has not been able to be tested by or on behalf of the applicant, in assessing its weight. Contrary to the submission on behalf of the appellants, which was directed to the most draconian construction, there is nothing in s 28A requiring the Licensing Court to accept or act upon information submitted to it by the Commissioner of Police even if the Court is satisfied that the information is properly classified as "criminal intelligence". In deciding whether to accept or reject or simply not to rely upon such information, the Court may have regard to: its relevance to the question it has to decide; (iii) its reliability – a judgment which may be made by considering the nature of the sources from which the information has been obtained and the extent to which it is supported from more than one source; its weight – if, for example, the information offers little more than suspicion or innuendo relating to an applicant or associated persons, the Court may decide that it should not act upon it. In this context the Court may have regard to the fact that the information has not been able to be tested by cross-examination. There is nothing to prevent an applicant faced with unseen "criminal intelligence" from tendering comprehensive evidence about his or her own good character and associations. To the extent that the Commissioner of Police seeks to maintain the confidentiality of criminal intelligence provided to the Court, that confidentiality may limit the extent to which such character evidence may be tested by cross-examination. The Court's capacity to accept or reject or not rely upon criminal intelligence is not affected by the fact that it is not bound by the rules of evidence and may inform itself on any matter as it thinks fit. That provision, which is in familiar terms, does not excuse the Court from the duty to act lawfully, rationally and fairly59. 59 Wajnberg v Raynor [1971] VR 665 at 677-679 per McInerney J. The nature of the Licensing Court There was no dispute between the principal parties to this appeal that the Licensing Court is a court of the State of South Australia, capable of being invested with federal jurisdiction pursuant to s 77(iii) of the Constitution and actually invested with such jurisdiction pursuant to s 39(2) of the Judiciary Act. The Attorney-General (Qld), intervening, contended that the function of the Licensing Court in the granting or withholding of licences, in reviewing the Liquor and Gambling Commissioner's decisions and even in the exercise of its disciplinary jurisdiction, are administrative in nature. He pointed to the broad policy considerations which it may apply, reflected, inter alia, in the "public interest" criteria under the Act. On that basis the Licensing Court was said not to be a court of a State for the purposes of s 77(iii) of the Constitution. It would follow that no question of the effect of s 28A on its fitness as a repository of federal jurisdiction could arise. Section 28A would therefore be valid. There is no doubt that various classes of decision which the Licensing Court is authorised to make may be informed by public policy and public interest considerations and to that extent have a polycentric character about them. That is particularly so in relation to the grant or withholding of licences. But the application of public interest criteria has a long history as part of the judicial function60. And the intrusion of policy considerations in its decision making does not necessarily deprive a tribunal of the character of a court61. The Licensing Court is not bound by the rules of evidence and may inform itself as it sees fit. This can be an indicator of an administrative rather than a judicial body, but it is not determinative. It does not negate the requirement that the Court act lawfully, rationally and fairly. Many important rules of evidence will arise as a consequence of the application of those criteria to the decision-making process. 60 In the 19th century public benefit could be a defence to nuisance actions arising out of partial obstruction of navigable waterways by riparian owners: R v Russell (1827) 6 B & C 566; [108 ER 560]; Attorney-General v Terry (1874) 9 LR Ch App 423. And public interest is to be taken into account in determining the enforceability of covenants in restraint of trade: Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 at 565; Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269; Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126; [2001] HCA 45. 61 Attorney-General v Alinta Ltd (2008) 233 CLR 542 at 551 [5] per Gleeson CJ, 553 [14] per Gummow J, 560 [37] per Kirby J, 597 [168] per Crennan and Kiefel JJ; [2008] HCA 2. The South Australian Parliament has established the Court as a court of record. It has provided for it to be headed by a serving judge of the District Court and otherwise comprised of serving and former judges. It has conferred upon it powers of the kind that are exercised by a court. While non-contested applications are heard by the Liquor and Gambling Commissioner, save where specifically required to be heard by the Court, contested matters are generally referred for hearing and determination by the Court. It has also conferred upon it a disciplinary function under Pt 8 which involves a judicial process even though it is the kind of chameleon function that could be carried out by an administrative body. Characterisation of a court as a court of a State for the purposes of s 77(iii) does not require that it possess the attributes necessary for a federal court created under Ch III of the Constitution. As McHugh J observed in Fardon v Attorney- General (Qld)62: "It is a serious constitutional mistake to think that either Kable or the Constitution assimilates State courts or their judges and officers with federal courts and their judges and officers. The Constitution provides for an integrated court system. But that does not mean that what federal courts cannot do, State courts cannot do. Australia is governed by a federal, not a unitary, system of government." In my opinion and particularly having regard to its designation as a court of record by the State legislature, the Licensing Court of South Australia should be regarded as a "court of a State" for the purposes of receiving federal jurisdiction under s 77(iii) of the Constitution. I also respectfully agree with and adopt the reasons given in the joint judgment for coming to the same conclusion. The validity of s 28A Under the Constitution the courts of the States "are part of an integrated system of State and federal courts and organs for the exercise of federal judicial power as well as State judicial power"63. Since the abolition in 1986 of appeals from State courts to the Judicial Committee of the Privy Council that integrated 62 (2004) 223 CLR 575 at 598 [36]; [2004] HCA 46. 63 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 114, 115 per national court system is subject to "final superintendence" by the High Court thus ensuring the unity of the common law throughout Australia64. The Parliament of the Commonwealth must, of course, take the courts of the States as it finds them. There is, consistently with the constitutional scheme for the exercise of the judicial power of the Commonwealth, a degree of institutional and procedural flexibility on the part of the parliaments of the States, which may travel beyond the limits permissible in federal courts created by the Parliament. That flexibility does not extend to conferring powers on State courts which are "repugnant to or incompatible with the exercise of the judicial power of the Commonwealth"65. Incompatibility with institutional integrity may exist where a power or function conferred upon a court is "apt or likely … to undermine public confidence in the courts exercising that power or function"66. In Forge v Australian Securities and Investments Commission67 in the joint judgment of Gummow, Hayne and Crennan JJ, their Honours referred back to Kable and identified the "relevant principle" emerging from it and authorities which came after it, in the following terms68: "But as is recognised in Kable, Fardon v Attorney-General (Qld)69 and North Australian Aboriginal Legal Aid Service Inc v Bradley70, the relevant principle is one which hinges upon maintenance of the defining characteristics of a 'court', or in cases concerning a Supreme Court, the defining characteristics of a State Supreme Court. It is to those characteristics that the reference to 'institutional integrity' alludes. That is, if the institutional integrity of a court is distorted, it is because the body no longer exhibits in some relevant respect those defining characteristics which mark a court apart from other decision-making bodies." 64 (1996) 189 CLR 51 at 138 per Gummow J. 65 (1996) 189 CLR 51 at 104 per Gaudron J, quoted with approval in Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 617 [101] per Gummow J, Hayne J agreeing at 648 [198]. 66 (2004) 223 CLR 575 at 617 [102] per Gummow J. 67 (2006) 228 CLR 45; [2006] HCA 44. 68 (2006) 228 CLR 45 at 76 [63]. 69 (2004) 223 CLR 575. 70 (2004) 218 CLR 146 at 164 [32]; [2004] HCA 31. It is important to bear in mind, as Gummow J pointed out in Fardon71 that the principle derived from Kable is a constitutional doctrine not framed in terms apt to dictate future outcomes: "Reflection upon the range of human affairs, the scope of executive and legislative activity, and the necessity for close analysis of complex and varied statutory schemes will indicate that this may be a strength rather than a weakness of constitutional doctrine." The question whether functions, powers or duties cast upon a court are incompatible with its institutional integrity as a court will be answered by an evaluative process which may require consideration of a number of factors. The evaluation process required is not unlike that involved in deciding whether a body can be said to be exercising judicial power. There are some similarities between this case and Gypsy Jokers72. Under the Corruption and Crime Commission Act 2003 (WA) the Supreme Court of Western Australia was empowered to review decisions by the Commissioner of Police to issue fortification removal notices in relation to fortified premises thought to be associated with organised crime. It was a condition of the power to issue such a notice that the Commissioner reasonably believed that the subject premises were heavily fortified and habitually used by people reasonably suspected to be involved in organised crime73. The Commissioner was also authorised to "identify" information provided to the Court upon a review as confidential "if its disclosure might prejudice the operations of the Commissioner of Police". If the information were so identified it was to be "for the court's use only and … not to be disclosed to any other person, whether or not a party to the proceedings, or publicly disclosed in any way"74. The joint judgment in Gypsy Jokers cited the requirement that a court capable of exercising the judicial power of the Commonwealth be, and appear to be, an independent and impartial tribunal75. The joint judgment acknowledged "the impossibility of making an exhaustive statement of the minimum 71 (2004) 223 CLR 575 at 618 [105]. 72 (2008) 234 CLR 532. 73 Corruption and Crime Commission Act, s 72(2). 74 Corruption and Crime Commission Act, s 76(2). 75 (2008) 234 CLR 532 at 552 [10], citing North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 at 163 [29]. characteristics of such an independent and impartial tribunal"76. Their Honours observed however that the conditions necessary for courts to administer justice according to law could be inconsistent with some forms of external control of the courts appropriate to the exercise of authority by public officials and administrators77. Importantly in Gypsy Jokers the power conferred on the Commissioner to "identify" information as "confidential" was not conditioned upon his opinion. It was a matter for the Supreme Court to decide whether the disclosure of the the Police information might have Commissioner's identification of it as confidential. the prejudicial effect underpinning In the present case, the Licensing Court and the Supreme Court can look behind the Police Commissioner's classification of information as criminal intelligence to determine whether it meets the objective criteria upon which that classification must be based. The reviewability of the Police Commissioner's classification means that upon the Commissioner making an application to the Court under s 28A(5) the representatives for the affected party may make submissions to the Court about the validity of that classification. It may be that those representatives will be precluded by the Court from having access to the information for the purpose of making their submissions. Even then, they can assist the Court by drawing its They could even cross-examine the attention to the relevant criteria. Commissioner about the way in which he or she arrived at the classification albeit it must be accepted that the scope of the cross-examination would be confined by their lack of access to the information. The legal representatives of an applicant affected by criminal intelligence may apply to the Court to be given the right to inspect the information under non- disclosure undertakings or orders. Such procedures are not unusual particularly in cases involving claims for the confidentiality of documents produced in commercial proceedings. In some commercial cases a party may issue subpoenas requiring production of documents by non-parties who are competitors with the party issuing the subpoena. Production of such documents may be ordered on the basis that they can only be inspected by the legal representatives of the party issuing the subpoena and then only subject to undertakings not to disclose the contents of the documents to their clients. 76 (2008) 234 CLR 532 at 553 [10]. 77 (2008) 234 CLR 532 at 553 [10]. Of course the Court may decide that disclosure to legal representatives would carry too high a risk of prejudice to criminal investigations or confidential sources of information. But that decision is a matter in the discretion of the Court. The maintenance of "confidentiality" mandated in s 28A(5) does not require confidentiality to be maintained in a particular way. Under that rubric the Court may, in an appropriate case, be able to provide a summary of the conclusions or inferences offered or arising from the criminal intelligence without disclosing its detailed content or sources. The terms of s 28A(5) do not subject the Licensing Court or the Supreme Court to the direction of the executive or an administrative authority. The sub- section does not require them to receive or act upon criminal intelligence classified as such by the Commissioner of Police. It does not deprive the Court of discretion as to how confidentiality is to be maintained. Nor does it mandate a general exclusion in all circumstances of legal representatives from access to the information. Section 28A(5) does not undermine the institutional integrity of either court. It does not render them unfit repositories for the exercise of federal jurisdiction. I should add that I agree with the observations in the joint judgment rejecting the submission by Queensland and Western Australia that if s 28A(5) had the effect on the Licensing Court contended for by the appellants it would have caused that Court to cease to be a "court of a State" which might exercise federal jurisdiction. Conclusion For the preceding reasons the appeal should be dismissed with costs. Crennan 101 GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. The second appellant Mr Genargi Krasnov is the sole Director of the first appellant ("K-Generation"). K-Generation is trustee of the K-Generation Unit Trust in which Mr Krasnov has an interest. K-Generation applied for an entertainment venue licence under s 35 of the Liquor Licensing Act 1997 (SA) ("the Act") in respect of premises at 362-366 King William Street, Adelaide. These were to be known as "Sky Lounge KTV". The Act was amended by the Statutes Amendment (Liquor, Gambling and Security Industries) Act 2005 (SA) ("the 2005 Act"). This appeal is concerned with the provisions made in the 2005 Act with respect to "criminal intelligence", particularly by the insertion into the Act of s 28A. That provision will be set out later in these reasons. Section 56 of the Act requires an applicant for an entertainment venue licence to be "a fit and proper person" to hold it. If the applicant, as in the present case, is a trust or corporate entity, the section requires that each person who occupies a position of authority in the entity be "a fit and proper person to occupy such a position in an entity holding a licence of the class sought in the application". Section 51A(2) requires the Liquor and Gambling Commissioner ("the Liquor Commissioner") (an office provided for in s 8 of the Act) to furnish a copy of the application to the Commissioner of Police. The Police Commissioner the Liquor Commissioner "information about criminal convictions" and may make available "other information to which the Commissioner of Police has access" being, in either case, information which is "relevant to whether the application should be granted" (s 51A(3)). then must make available The application was advertised, as required by s 52 of the Act. An objection under s 77 of the Act by Wright Street Chambers was settled by conciliation. Section 77 gives a right of objection to applications, on one or more of the grounds laid out in s 77(5). Section 76 gave to Adelaide City Council a right to intervene and it did so but that dispute also was resolved. The litigation The litigation which has reached this Court stems from the exercise by the Commissioner of Police of the right of intervention conferred by s 75A of the Act. This states: "The Commissioner of Police may intervene in proceedings before a licensing authority for the purpose of introducing evidence, or making submissions, on any question before the authority and, in particular, may, Crennan if the proceedings are in connection with an application under this Part, intervene on the question of – (a) whether a person is a fit and proper person; or (b) whether, if the application were to be granted, public disorder or disturbance would be likely to result; or (c) whether to grant the application would be contrary to the public interest." It should be noted immediately that an intervener or an objector becomes a "party" to the relevant proceedings by reason of the definition of "party" in s 4 of the Act. Thus, for example, a Commonwealth statutory authority occupying premises in the vicinity of the proposed entertainment venue might, as an objector, become a party to proceedings under the Act. The purpose of the intervention by the Commissioner of Police was to introduce evidence and make representations on the question of whether Mr Krasnov and another interested party in K-Generation, Adeline Tay, were fit and proper persons to occupy positions of authority in that proposed licence. On 17 January 2007, the Liquor Commissioner refused the application on the ground that to grant it would be contrary to the public interest. An application must be refused if the licensing authority is satisfied that to grant the application would be contrary to the public interest (s 53(1a)). The Liquor Commissioner refused the application after the Police Commissioner had provided what was classified as "criminal intelligence" within the meaning of s 28A of the Act. An application for a review of the decision of the Liquor Commissioner was made to the Licensing Court of South Australia ("the Licensing Court"), constituted by Judge Rice of the District Court of South Australia. His Honour affirmed the decision of the Liquor Commissioner on 12 February 2007. K-Generation and Mr Krasnov then sought from the Supreme Court of South Australia a declaration that s 28A of the Act was invalid, together with orders for judicial review in the nature of certiorari quashing the decision of the Licensing Court made on 12 February 2007 and in the nature of mandamus compelling that Court to consider according to law the review sought by K-Generation of the decision of the Liquor Commissioner made on 17 January 2007. The Supreme Court proceedings were referred to the Full Court for hearing. The Full Court (Duggan and Vanstone JJ, Gray J dissenting)78 dismissed the proceedings. 78 K-Generation Pty Ltd v Liquor Licensing Court (2007) 99 SASR 58. Crennan The appeal to this Court The appeal is brought to this Court by special leave. The sole ground on which special leave was given is that the Full Court erred in law in finding s 28A of the Act to be valid notwithstanding that it required the Licensing Court to hear and determine the review without disclosing to K-Generation information classified as "criminal intelligence" which had been relied upon by the Liquor Commissioner in refusing the application for an entertainment venue licence. The respondents to the appeal are the Licensing Court, which has entered a submitting appearance, and the Police Commissioner, for whom the South Australian Solicitor-General was leading counsel. The Attorneys-General for the Commonwealth, New South Wales, Victoria, Queensland and Western Australia intervened in the appeal. As will appear, the Attorneys-General differed between themselves in their submissions and some submissions were not adopted by either the appellants or the Police Commissioner. Section 39(2) of the Judiciary Act 1903 (Cth) ("the Judiciary Act") is enacted in the exercise of the power of the Parliament to make laws "investing any court of a State with federal jurisdiction": Constitution s 77(iii). The sub-section invests federal jurisdiction in "the several Courts of the States ... within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise ...". The appellants' submissions began with the proposition that the Licensing Court is such a court. The Police Commissioner accepts that this is the case. However, the appellants rely upon the principle identified with the decision in Kable v Director of Public Prosecutions (NSW)79. They contend that the effect of s 28A of the Act is to deprive the Licensing Court of the reality or appearance of independence or impartiality that is essential to its position as the object of an exercise of power by the Parliament manifested in s 39(2) of the Judiciary Act. It was said in the joint judgment of McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ in North Australian Aboriginal Legal Aid Service Inc v Bradley80 that to be capable of exercising judicial power of the Commonwealth a court must be, and appear to be, an independent and impartial tribunal. The consequence, on the case presented by the appellants, would be 79 (1996) 189 CLR 51; [1996] HCA 24. 80 (2004) 218 CLR 146 at 163 [29]; [2004] HCA 31. Crennan that s 28A was invalid and the review by the Licensing Court should be reheard without regard to s 28A. On that formulation of the issues in this Court, the subject of debate would be the discernment of the relevant minimum characteristics of an independent and impartial Licensing Court. Their Honours in Bradley81 said that "[n]o exhaustive statement of what constitutes that minimum in all cases is possible". Is the Licensing Court a "court of a State"? Queensland took a different position from that of the appellants and the Police Commissioner. It maintained that the Licensing Court did not answer the description of a court of the State of South Australia within the sense of s 39(2) of the Judiciary Act and s 77(iii) of the Constitution. The consequence would be that there is no occasion to apply the proposition in Bradley set out above, and no footing on which s 28A might be considered invalid. That submission by Queensland should be rejected. For the reasons which follow, the Licensing Court is a court of the State of South Australia within the sense of s 77(iii) of the Constitution and s 39(2) of the Judiciary Act. Part 2 Div 2 (ss 12-16) of the Act makes provision for the Licensing Court. Section 12 states that the Court "continues in existence". The Act repealed the Liquor Licensing Act 1985 (SA) ("the 1985 Act"). Section 10 of the 1985 Act had stated "[t]here shall be a court entitled the 'Licensing Court of South Australia'". Section 13 of the Act provides that the Licensing Court is a court of record. It is constituted by the Licensing Court judge, being a District Court judge designated by the Governor or by some other District Court judge or former District Court judge on whom the Governor confers authority to exercise jurisdiction of the Court (ss 14-15). The Governor may vary or revoke a proclamation designating the Licensing Court judge or conferring authority on other District Court judges or former District Court judges (s 15(1)(c)). Further, if it so provides, a proclamation designating the Licensing Court judge or conferring such authority may lapse at the end of a specified period (s 15(2)). However, as the Commonwealth correctly submitted, there is no scope for purely arbitrary removal by the Executive. This is because variation or revocation under 81 (2004) 218 CLR 146 at 163 [30]. Crennan s 15(1)(c) would itself be an administrative decision susceptible to challenge in the Supreme Court for bad faith or improper purpose82. Section 16 of the Act states "[t]he Court has the jurisdiction conferred on it by this Act or any other Act". Significant jurisdiction is conferred on the Licensing Court by Pt 6 (ss 69-70A) of the Gaming Machines Act 1992 (SA) ("the Gaming Machines Act"). In particular, Pt 2 Div 4 (s 12) deals with the classification of "criminal intelligence" and s 70A is drawn in terms resembling those of s 28A(5) of the Act83. The Licensing Court is required by s 17 to determine all matters referred by the Liquor Commissioner for hearing and determination under the obligation imposed by that section where certain disputes are not resolved by conciliation. The Licensing Court is also obliged to determine matters which under some provision of the Act other than s 17 are to be determined by the Licensing Court (s 17(1)(c)). The Liquor Commissioner also may refer for hearing and determination by the Licensing Court proceedings involving questions of substantial public importance or a question of law or any other matter which should, in the public interest or the interests of a party to the proceedings be determined by the Licensing Court (s 21). A party (within the sense of the definition to which reference has been made above) to proceedings before the Liquor Commissioner who is dissatisfied with the decision may apply to the Licensing Court for a review in the nature of a rehearing (s 22(1), (4)). However, a decision made in the exercise of "an absolute discretion" conferred upon the Liquor Commissioner "is not reviewable by the [Licensing Court]" (s 22(2)). A party to proceedings before the Licensing Court may appear personally or by other representatives including counsel (s 25(1)). The Court may require the attendance of the person before it and the production of records and require the taking of an oath or affirmation verifying evidence given, or to be given, and 82 See North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 at 171 [59]. 83 Sections 12 and 70A of the Gaming Machines Act were inserted by the 2005 Act, Crennan may require any person appearing before it to answer questions (s 24(1)). Failure to comply with these requirements is an offence (s 24(2)), but jurisdiction to try such offences is not given to the Licensing Court. The Licensing Court may refer a question of law for determination by the Full Court of the Supreme Court (s 28). With the permission of the Supreme Court, a party to proceedings before the Licensing Court may appeal to the Full Court of the Supreme Court, but no appeal lies against an order or decision of the Licensing Court in various instances, including orders or decisions on a review of a decision of the Liquor Commissioner (s 27). The Supreme Court also has jurisdiction with respect to judicial review of the proceedings of the Licensing Court. This was invoked in the present litigation and its scope was explained by Gray J in his reasons84. Section 23 of the Act states: "In proceedings before the [Licensing Court] (under this Act or any other Act) the Court – (a) must act without undue formality; and is not bound by the rules of evidence but may inform itself on any matter as it thinks fit." It was said in Sue v Hill85 of provisions of this type that they are not inimical to the exercise of judicial power: "They do not exonerate the Court from the application of substantive rules of law and are consistent with, and indeed require the application of, the rules of procedural fairness86." 84 (2007) 99 SASR 58 at 82. 85 (1999) 199 CLR 462 at 485 [42]; [1999] HCA 30. 86 British Imperial Oil Co Ltd v Federal Commissioner of Taxation (1925) 35 CLR 422 at 438-441; [1925] HCA 4; Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd (1943) 67 CLR 25 at 36, 46, 47; [1943] HCA 13. Crennan Consequently, s 23 does not assist the case put by Queensland that the Licensing Court is not a "court of a State" within the meaning of s 77(iii) of the Constitution and s 39(2) of the Judiciary Act. However, something more should be said respecting the provisions as to In Commonwealth v tenure of the members of the Licensing Court. Anti-Discrimination Tribunal that "the long-standing acceptance of the capacity of courts of summary jurisdiction to receive federal jurisdiction emphasises the role of history, and institutional and governmental arrangements, in the assessment of constitutional institutional independence". Her Honour went on to refer to the remarks by Gummow, Hayne and Crennan JJ in Forge v Australian Securities and Investments Commission88 that both before and long after federation courts of summary jurisdiction, constituted by Justices of the Peace or by stipendiary magistrates, forming part of the colonial or State public service and thus not enjoying Act of Settlement tenure, had been considered fit objects for the investing of federal jurisdiction. remarked The linking of the membership of the Licensing Court to tenure as a District Court judge is significant in this regard. It serves to answer criticisms made by Queensland. The District Court Act 1991 (SA) ("the District Court Act") provides that judges of that Court cannot be removed from office except on an address from both Houses of Parliament praying for removal (s 15(1)), and that their salary cannot be reduced by subsequent determination of the Remuneration Tribunal (s 13(2)). The Licensing Court of the present case was constituted by a District Court judge. There was no material before this Court indicating any current conferral of authority on former District Court judges pursuant to s 15(1) of the Act. It would be inappropriate in that setting further to consider the effect the making of such appointments might have on the constitutional character of the Licensing Court and in particular whether any consequent invalidity of the Act might entail severance of provisions respecting former District Court judges. Queensland also emphasised the apparent absence in the Licensing Court of a contempt power. Section 13 constitutes the Licensing Court as "a court of 87 (2008) 169 FCR 85 at 141. 88 (2006) 228 CLR 45 at 82 [82]; [2006] HCA 44. Crennan record"89. Subject to any particular provisions which might be found in the Act, that expression, if it stood alone, would carry with it a power to punish by fine or imprisonment any contempt committed in the face of the Licensing Court90, but would carry no broader contempt power. Further, as remarked above, whilst the powers of the Licensing Court with respect to witnesses and evidence are supported by the offence provision in s 24(2), jurisdiction to try those offences is not conferred on the Licensing Court. The situation in the Licensing Court may be contrasted with that of the District Court and the Magistrates Court. By force of s 48 of the District Court Act, the District Court has the same power to deal with contempt as does the Supreme Court with respect to contempts of the Supreme Court. The Magistrates Court of South Australia is created as a court of record by s 5 of the Magistrates Court Act 1991 (SA) and ss 45 and 46 make express provision for the punishment by it of contempts in face of the Court. The Act makes no such provision for the Licensing Court. The upshot is that there may be substance in the contention by Queensland that contempts of the Licensing Court would fall within the general supervisory function of the Supreme Court with respect to the administration of justice by the inferior courts of the State91. However, if that be the situation of the Licensing Court with respect to contempt, this could not deny to it the character of a court of a State within the meaning of s 77(iii) of the Constitution. Reference has been made to the long history of inferior courts in Australia, extending back to the period before federation. They may well have lacked a power such as that conferred by s 48 of the District Court Act but that must have been within contemplation when s 77(iii) was formulated. 89 See, as to the distinction between inferior and superior courts and courts of record, Campbell, "Inferior and Superior Courts and Courts of Record", (1997) 6 Journal of Judicial Administration 249. Professor Campbell (at 257) refers to the "dubious" practice in some State laws of designating as a "court of record" what otherwise is no more than a statutory tribunal. 90 In re Dunn [1906] VLR 493 at 499-500 per Cussen J. 91 See John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351; [1955] HCA 12. Crennan The nature of the jurisdiction of the Licensing Court Queensland (with qualified support from Victoria) directed attention to the nature of the jurisdiction conferred upon the Licensing Court. This is a matter conceptually distinct from the structure and organisation of the Licensing Court. The submission from Queensland appeared to be that, save for de minimis exceptions, the Licensing Court exercised purely administrative functions under the legislation as it now stands. In particular, Queensland contended that the authority of the Licensing Court with respect to the review by way of rehearing of decisions of the Liquor Commissioner on licensing applications was of an administrative nature. The Licensing Court was said not to be adjudicating by binding decision disputes as to rights or obligations arising from the operation of the law upon past events or conduct92; rather, the processes here were concerned with the creation of rights or obligations by grant of a licence. It is unnecessary to consider further this line of argument. Both the Act and the Gaming Machines Act provide in various instances for the exercise by the Licensing Court of authority which appears plainly judicial in nature. For example, as the Commonwealth emphasised in its submissions, s 121 of the Act confers jurisdiction in disciplinary action matters; an order may be made imposing a fine93. Further, s 133 provides for the Licensing Court on application by the Liquor Commissioner to assess the amount of financial advantage gained by the contravention of, or non-compliance with, the Act or the condition of a licence; the amount so assessed then becomes a debt due to the Crown in right of South Australia. 92 See Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 268; [1995] HCA 10; Albarran v Companies Auditors and Liquidators Disciplinary Board (2007) 231 CLR 350 at 358 [16], 360-362 [25]-[29]; [2007] HCA 23. 93 The Licensing Court order may be registered in the Magistrates Court or the District Court and enforced as an order of the court of registration (s 121(6)), but that does not deny the exercise of judicial power by the Licensing Court in making the order; Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245. Crennan Section 28A It is now convenient to return to the principal ground of dispute between the appellants and the second respondent, namely the alleged invalidity of s 28A of the Act. Section 28A comprises Div 6 of Pt 2. It was inserted by the 2005 Act and is headed "Criminal intelligence". That term is defined in s 4 in a form taken from an amendment made to the Firearms Act 1977 (SA) by the Firearms (COAG Agreement) Amendment Act 2003 (SA). The definition reads: "criminal intelligence means information relating to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could reasonably be expected to prejudice criminal investigations, or to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement". (emphasis added) The Commissioner of Police is not to delegate, "except to a Deputy Commissioner or Assistant Commissioner of Police", the function of classifying information as criminal intelligence (s 28A(6)). These provisions, as a matter of necessary implication, confer the function of making that classification upon these officers94. The phrase "could reasonably be expected" is significant. Where the term "criminal intelligence" supplies a factum for the operation of a provision of the Act, then upon judicial review it would be for the Licensing Court to be satisfied that facts existed sufficient to found that expectation95. The South Australian Solicitor-General readily accepted The Commonwealth Solicitor-General put the point somewhat differently, submitting that to be a valid classification, the classification must be "objectively correct", and accepting that this imposed a higher standard. this construction of the Act. Section 28A(1) operates upon information made available to the Liquor Commissioner by the Commissioner of Police under s 51A(3) (to which 94 See North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 at 169 [52]. 95 George v Rockett (1990) 170 CLR 104 at 112-113; [1990] HCA 26; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 557-558 [28]; [2008] HCA 4; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [No 2] [2008] WASC 166 at [78]-[92]. Crennan reference has been made), if that information has been classified by the Commissioner of Police as "criminal intelligence". Section 28A(1) states: "No information provided by the Commissioner of Police to the [Liquor] Commissioner may be disclosed to any person (except the Minister, a court or a person to whom the Commissioner of Police authorises its disclosure) if the information is classified by the Commissioner of Police as criminal intelligence." Sub-sections (2) and (3) of s 28A are directed to a "licensing authority" which is defined so as to include both the Liquor Commissioner and the Licensing Court in relation to a matter to be decided by it under the Act. If the Commissioner of Police lodges an objection to an application because of "criminal intelligence", the Commissioner of Police is not obliged to notify the applicant, but the licensing authority must notify the applicant that the Commissioner of Police has objected on the public interest ground (s 28A(3)). If, as in the present case, the licensing authority refuses a licence application because of information classified as "criminal intelligence", the authority is not required to provide any grounds or reasons other than that to grant it would be contrary to the public interest (s 28A(2)). The relief sought by the appellants includes a declaration of the invalidity of s 28A, but the principal attack by the appellants in oral submissions was directed to the validity of s 28A(5) and it was to this that the opposing arguments responded. Section 28A(5) reads: "In any proceedings under this Act, the [Liquor] Commissioner, the Court or the Supreme Court – (a) must, on the application of the Commissioner of Police, take steps to maintain the confidentiality of information classified by the Commissioner of Police as criminal intelligence, including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives; and (b) may take evidence consisting of or relating to information classified by the Commissioner of Police as criminal intelligence by way of affidavit of a police officer of or above the rank of superintendent." Crennan At the hearing before the Liquor Commissioner, Mr Krasnov gave evidence and was cross-examined, but not with respect to the "criminal intelligence" material. Five statements or references were tendered in his support. There was no evidence led by the Police Commissioner. At the hearing before the Licensing Court on 8 February 2007, counsel for the appellants said of the licence application: "It went before the Commissioner on a preliminary point as to whether the applicant, Mr Genargi Krasnov was fit and proper and the Commissioner found against Mr Krasnov on the basis of the new section 28A of [the Act] which deals with criminal intelligence. The review is sought then on this preliminary point, as to whether Mr Krasnov is fit and proper and it occurred to me that the most satisfactory way of dealing with the application would be for that material which was before the Commissioner to be placed before you. If you decide there is a foundation in the Commissioner's decision, then you find against Mr Krasnov and that will be, effectively, the end of the matter. However, if after looking at material you take a different view, then it may well be that we put further materials before you in the sense of a hearing or re-hearing as to the merits of the application in order to seek to persuade that notwithstanding the section 28A material, the man ought to be found to be fit and proper." Judge Rice said that he had looked at the material before the Liquor Commissioner and that "quite frankly I would come to the same view". He added "I think that this is criminal intelligence" and went on: "The [Liquor] Commissioner has refused the application, the approvals, because of criminal intelligence. He has indicated his reasons that it would be contrary to the public interest or he said, I should say: I refuse the application on the ground that to grant the application would be contrary to the public interest. That is a view with which I agree but not only agreeing with him, I make my own independent assessment, that is the view that I would come to as well and indeed have come to." It is convenient now to turn to matters of construction of s 28A(5), which arose in the course of submissions to this Court. There are seven points to be made at the threshold. First, s 28A(5) imposes a requirement upon not only the Crennan Liquor Commissioner, but also upon the Licensing Court and the Supreme Court. Secondly, it does so only in any proceedings under the Act. Thirdly, the requirement is enlivened only upon the application of the Commissioner of Police. Fourthly, the subject matter of the maintenance of confidentiality must be information classified by the Police Commissioner as "criminal intelligence". Fifthly, the definition of "criminal intelligence" in s 4, is so drawn that had a challenge been presented by the appellants it would have been for the Licensing Court to be satisfied that facts existed sufficient to found the expectation of the prejudicial consequences spelt out in the definition; or, that the classification was "objectively correct". Sixthly, it is unnecessary for present purposes to decide which construction should be preferred respecting this "trigger" to the operation of s 28A(5). Finally, nothing in s 28A at this stage modifies the powers conferred upon the Licensing Court by s 24 with respect to witnesses and evidence or the provisions of s 25 for legal representation. In this way, the decision of the Commissioner of Police to classify material involved in this litigation as "criminal intelligence" would have been open to "collateral attack" by the appellants in the Licensing Court96. Accordingly, it is not correct, as the appellants would have it, that the Licensing Court had been obliged to accept the information classified by the Commissioner as "criminal intelligence". If the decision of the Commissioner of Police to classify material as "criminal intelligence" withstands such a collateral attack, then the trigger to the operation of s 28A(5) remains effective. Thereafter, and upon application by the Commissioner of Police, the Licensing Court is required to take steps towards a particular outcome. That outcome is the maintenance of the confidentiality of the information. The Licensing Court is not directed as to which particular steps may be taken, nor is it denied the assistance of submissions by the legal representatives of parties other than the Police Commissioner as to what those steps should be. The steps taken may be provisional in the sense that they may be varied, added to or subtracted from, as the exigencies of the litigation in the Licensing Court progressively appear and as submissions are made to the Licensing Court. 96 See Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 108 [36], 131 [94]; [1999] HCA 28. Crennan The steps which are taken may go so far as to involve the reception of evidence and the hearing of argument by the Licensing Court in private and in the absence of the parties and their representatives. However, the phrase "including steps" in par (a) of s 28A(5) does not mandate the taking of such steps. Rather, the phrase appears in s 28A(5) to mark out the limits of the range within which the Licensing Court may act in particular cases when determining how to maintain the confidentiality of the information. Further, the Licensing Court is not bound to accept in its terms the "criminal intelligence" upon which the Police Commissioner relies. The Court itself may question the evidence in closed session. Evidence led by other parties, and any limited form of cross-examination on the affidavits supplied under par (b) of s 28A(5), must be taken into account. The potential that the s 28A(5) procedure has for injurious effects is reduced by the fact that a decision by the Police Commissioner to make a s 28A(5)(a) application itself may greatly reduce the chance of the "criminal intelligence" being decisive, because, in at least some cases, the Licensing Court may feel disinclined to place weight on material which the Police Commissioner's application has prevented the applicant for a licence being able to test, or even see. The result is that s 28A(5) did not operate to deny to the Licensing Court the constitutional character of an independent and impartial tribunal in the sense considered in Bradley. The majority of the Full Court was correct in dismissing the appellants' case. The contrary outcome What would have been the consequences for the operation of the Act and the constitutional status of the Licensing Court if s 28A(5) did render the Licensing Court a body which was not an independent and impartial tribunal in the exercise of its jurisdiction in this litigation? Two possibilities were canvassed in submissions. They are so markedly different in the view they represent of the operation of the Constitution that the subject should not pass unremarked. Queensland and Western Australia submitted that the consequence would be that the changes made by the 2005 Act would have so altered the character of the Licensing Court as to render it no longer a "court of a State" which might exercise federal jurisdiction. They submitted first that s 39(2) of the Judiciary Act is ambulatory in character and would thereafter (presumably until the repeal of the 2005 Act) cease to apply to the Licensing Court. Queensland and Western Crennan Australia accepted that references to the Supreme Court of the States expressly made in s 73 of the Constitution indicated that those courts must always be within the phrase a "court of a State" as it appears in s 77(iii) of the Constitution; the legislation of New South Wales considered in Kable had been directed to its Supreme Court. But in other respects, the submissions continued, the Parliaments of the States might abolish courts they had created and, that being so, the States were not obliged by the Constitution to maintain courts upon which federal jurisdiction might be conferred. The submissions to the contrary, particularly those of the Commonwealth, are to be preferred. There is no doubt that, with respect to subject matter outside the heads of federal jurisdiction in ss 75 and 76 of the Constitution, the State legislatures may confer judicial powers on a body that is not a "court of a State" and that in respect of a body that is a "court of a State", they may confer non-judicial powers. However, consistently with Ch III, the States may not establish a "court of a State" within the constitutional description and deprive it, whether when established or subsequently, of those minimum characteristics of the institutional independence and impartiality identified in the decisions of this Court. The effect of acceptance of the submissions by Queensland and Western Australia would be to weaken the effectiveness of the distinctive feature of Australian federalism represented by the general words of s 77(iii) of the Constitution. The consequences of a measure which has the constitutional vice attributed by the appellants to s 28A(5) are quite different. The appellants, the Police Commissioner, and the Commonwealth correctly submitted that the provision would be invalid and questions of severance from the remainder of the Act might arise, but the Licensing Court would retain its character as a "court of a State". Conclusions If accepted, the submissions by Queensland and Western Australia would call for a remedy not sought by the appellants and, indeed, opposed by them. They seek a declaration of invalidity of s 28A of the Act, whereas these interveners accept the validity of s 28A but, as a corollary, would have this Court decide that the Licensing Court does not answer the constitutional description of a "court of a State". In future cases in this Court, whether in the appellate or original jurisdiction, where it becomes apparent that interveners assert arguments not accepted by the immediate parties, directions may be given by the Court for a procedure analogous to the notice of contention provided by r 42.08.5 of the High Court Rules 2004. Crennan The appeal should be dismissed with costs. Kirby 157 KIRBY J. This appeal, from a divided decision of the Full Court of the Supreme Court of South Australia97, concerns the application of this Court's holding in Kable v Director of Public Prosecutions (NSW)98. That case decided that State courts enjoy certain minimum standards of institutional independence and integrity, necessary to ensure that they are suitable recipients for the vesting of federal jurisdiction99 as envisaged by the Constitution100. The requirement is implied from the provisions of Ch III of the Constitution. Only one case has been decided by this Court in which State legislation has been held invalid by the Kable principle. That was the New South Wales Act101 considered in Kable itself. Only one intermediate court decision has invalidated a State law by reference to the Kable principle102. These reasons will demonstrate that, once again, the invocation of Kable fails. However, they will also show that several arguments presented by the States, intervening to contest the ambit of the Kable principle or to resist its application to the present case, should be rejected. The appeal presents issues similar in some ways to those decided by this Court in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police103. As will be demonstrated, the legislation impugned in this appeal reserves to the relevant courts functions that are proper to the judiciary. It respects the institutional independence and integrity of the courts. It is not, therefore, invalid. The facts Licensing authorities in South Australia: Since at least the 16th century, legislation in England has provided for the regulation of outlets that sell alcoholic beverages104. So it has also been in Australia since colonial times, including in 97 K-Generation Pty Ltd v Liquor Licensing Court (2007) 99 SASR 58. 98 (1996) 189 CLR 51; [1996] HCA 24. 99 Judiciary Act 1903 (Cth) ("the Judiciary Act"), s 39(2). 100 Constitution, s 77(iii). 101 Community Protection Act 1994 (NSW), s 5(1). 102 Re Criminal Proceeds Confiscation Act 2002 [2004] 1 Qd R 40 (special leave to appeal from this decision was not sought). 103 (2008) 234 CLR 532; [2008] HCA 4. 104 See, for example, 5 & 6 Edward VI c 25. Kirby South Australia. In 1839, South Australia enacted colonial legislation to regulate the sale of "wines, spirits, and other fermented liquors"105. It conferred functions on Resident Magistrates and Justices of the Peace of each statutory district106. The Liquor Licensing Act 1997 (SA) ("the Act") presently governs such matters. It continues the office of the Liquor and Gambling Commissioner107 ("the Liquor Commissioner") who has primary responsibility as a licensing authority for outlets under the Act and, subject to the relevant Minister108, for the administration of the Act. The Act also provides for the continuance of the Licensing Court of South Australia ("the Licensing Court")109. That Court replaced the Licensing Bench of Justices provided for in earlier legislation110. The Licensing Court was first established by that name in 1932111. It then comprised Special Magistrates112. The Court was re-established in 1967113 and comprised a chairman, deputy chairman and Licensing Court Magistrates114. The chairman, who was "eligible for appointment as a Local Court Judge"115, had tenure116. From 1976 it comprised a "Licensing Court Judge" with tenure, special magistrates and Licensing Court Magistrates, who collectively constituted the Licensing Court117. In 1985, it was re-established again in the name of the 105 Licensed Victuallers' Act 1839 (SA), preamble. The earlier Act No 4 of 1837, which had dealt with the same subject matter, had previously been disallowed. 106 See, for example, Licensed Victuallers' Act 1839 (SA), s 23. 107 The Act, s 8(1). 108 The Act, s 8(2). 109 The Act, s 12. 110 See Licensed Victuallers' Act 1863 (SA), s 22; Licensing Act 1908 (SA), s 5. 111 Licensing Act 1932 (SA), s 6(1). 112 Licensing Act 1932 (SA), s 6(3). 113 Licensing Act 1967 (SA), s 5(1). 114 Licensing Act 1967 (SA), s 5(2). 115 Licensing Act 1967 (SA), s 5(3). 116 Licensing Act 1967 (SA), s 5(4). 117 Licensing Act Amendment Act (No 2) 1976 (SA), s 4(2), (4). Kirby Licensing Court of South Australia118. It comprised a "Licensing Court Judge" or other District Court Judge who was invested with relevant authority119. The 1997 Act, still in force, continued this Licensing Court, but enlarged its composition to allow the inclusion of former judges of the District Court120. Application for a licence: In October 2005, K-Generation Pty Ltd and its sole director Mr Genargi Krasnov ("the appellants") applied to the Liquor Commissioner for an entertainment venue licence under s 35 of the Act. The application related to premises in the central business district of Adelaide. Objections of neighbouring premises and of the Adelaide City Council were settled by agreement. However, as required by the Act121, the application was served on the Commissioner of Police of South Australia ("the Police Commissioner"), who is the second respondent to these proceedings. The Act requires that an applicant for a licence, or someone occupying a "position of authority" in an entity seeking a licence, must be a "fit and proper person"122. The Police Commissioner intervened before the Liquor Commissioner to present evidence and make representations on the issue of whether Mr Krasnov was a fit and proper person. The Act requires the Police Commissioner, following receipt of an application, to provide the Liquor Commissioner with information about any relevant criminal convictions123. The Police Commissioner is also authorised to provide the Liquor Commissioner with "other [relevant] information to which the [Police Commissioner] has access"124. This is what the Police Commissioner did. In an affidavit filed in the Supreme Court of South Australia, the relevant officer of South Australia Police deposed that he had filed a notice of intervention before the Liquor Commissioner in July 2006. This led, in December 2006, to a contested hearing of the appellants' application. At that hearing a police officer tendered two Police Commissioner's Office files, "both of which contained information which had been classified as 118 Liquor Licensing Act 1985 (SA), s 10. 119 Liquor Licensing Act 1985 (SA), s 12(1). 120 The Act, ss 14(1)(b), 15(1)(b). 121 The Act, s 51A. 122 The Act, s 56(1). 123 The Act, s 51A(3)(a). 124 The Act, s 51A(3)(b). Kirby criminal intelligence pursuant to s 28A of the Act". These files were admitted into evidence. Their contents were "not disclosed to the other parties". According to the police affidavit, the Liquor Commissioner "did not read the material contained within those files at any stage during the hearing"; nor did counsel then appearing for the appellants ask the Liquor Commissioner "to provide a summary of the criminal intelligence at any time during the contested hearing". On 17 January 2007, the Liquor Commissioner published his decision and order rejecting the appellants' application for an entertainment venue licence125. After setting out relevant references to the requirements of s 28A of the Act (reproduced below126), the Liquor Commissioner stated127: "The [Police Commissioner] has provided criminal intelligence PCO File No 2006/003522 and 003523 in support of his intervention. … I have considered the criminal intelligence together with the submissions made at the hearing on 20 December 2006 including the Statutory Declarations of [named persons] and the submission signed and dated by me 17 January 2007 (copy on file) … Accordingly, I refuse the application on the ground that to grant the application would be contrary to the public interest." The criteria for the grant or refusal of a licence required the Liquor Commissioner, as the relevant "licensing authority"128, to consider the objects of the Act129. These objects include the regulation and control of "the sale, supply and consumption of liquor for the benefit of the community as a whole"130. The Act gives the licensing authority "an unqualified discretion to grant or refuse an application … on any ground, or for any reason, the licensing authority considers 125 Order of the Liquor and Gambling Commissioner, W A Pryor, Application for an Entertainment Venue Licence, Application No 69891, Premises: Sky Lounge KTV (17 January 2007) ("the Decision of the Liquor Commissioner"). 126 See below, these reasons, at [191]. 127 Decision of the Liquor Commissioner at 2-3. 128 The Act, s 4 ("licensing authority"). 129 The Act, s 3(2). 130 The Act, s 3(1). Kirby sufficient"131. The licensing authority, however, "is not to take into account an economic effect on other licensees in the locality affected by the application"132. Of primary importance is that an "application must be refused if the licensing authority is satisfied that to grant the application would be contrary to the public interest"133. From the sequence of events described in the police affidavit, the published decision of the Liquor Commissioner and the stated reliance on s 28A of the Act, a clear inference arises. The adverse "public interest" determination against the appellants' application arose out of the contents of the undisclosed "criminal intelligence" files provided by the Police Commissioner. Licensing Court powers: The appellants applied to the Licensing Court under the Act for a review of the Liquor Commissioner's decision134. According to the Act, such a review is "in the nature of a rehearing"135. On the review, the Licensing Court is authorised to136: affirm, vary or quash the decision subject to the review; (b) make any decision that should, in the opinion of the [Licensing] Court, have been made in the first instance; refer a matter back to the [Liquor] Commissioner for rehearing or reconsideration; (d) make any incidental or ancillary order". By the Act, the Licensing Court is instructed to proceed "without undue formality" and is "not bound by the rules of evidence but may inform itself on any matter as it thinks fit"137. The Licensing Court is authorised to exercise various powers, including to summon persons to give evidence or to produce 131 The Act, s 53(1). 132 The Act, s 53(1). 133 The Act, s 53(1a). 134 The Act, s 22(1). 135 The Act, s 22(4). 136 The Act, s 22(5). 137 The Act, s 23. Kirby records; to inspect and take copies of records; to administer oaths or affirmations verifying evidence; and to require a person appearing before it to answer questions138. A person who does not comply with such a request of the Licensing Court is guilty of an offence punishable by fine139. A party may appear before the Licensing Court personally, or may be represented, including by counsel140. A party may, "with the permission of the Supreme Court, appeal against any order or decision of the [Licensing] Court"141. The Licensing Court can also "refer a question of law to the Supreme Court" which must then be "determined by the Full Court" of the Supreme Court142. Licensing Court proceedings: The proceedings were heard by the Licensing Court on 8 and 12 February 2007. For the hearing, the Licensing Court was constituted by Judge Rice, designated under the Act as the Licensing Court Judge143. His Honour is also a judge of the District Court of South Australia. Counsel then appearing for the appellants told the Licensing Court that review was "sought … on this preliminary point, as to whether Mr Krasnov is fit and proper", against the background of the recently enacted requirements of s 28A of the Act144. The appellants' counsel suggested that the "criminal intelligence" material be provided to Judge Rice and submitted to him that: "If you decide there is a foundation in the [Liquor] Commissioner's decision, then you find against [the appellants] and that will be, effectively, the end of the matter. However, if after looking at material you take a different view, then it may well be that we put further materials before you in the sense of a hearing or re-hearing as to the merits of the 138 The Act, s 24(1). 139 The Act, s 24(2). 140 The Act, s 25(1). 141 The Act, s 27(1). 142 The Act, s 28. 143 See the Act, s 15(1)(a). 144 Sections 28A, 51A, 53(1a) and 55 were inserted or amended by the Statutes Amendment (Liquor, Gambling and Security Industries) Act 2005 (SA), ss 27-30. See South Australia, Legislative Council, Parliamentary Debates (Hansard), 17 February 2005 at 1134. Kirby application in order to seek to persuade that notwithstanding the section 28A material, the [appellants] ought to be found to be fit and proper." This course was not opposed by the representative of the Police Commissioner. Judge Rice asked whether he should "read all the material" that the Liquor Commissioner had read. The appellants' counsel indicated that he could not be privy to it, nor could his client, and stated: "[W]e can't assist your Honour or make any submissions. It is a matter of the police putting material before you. I think we were satisfied that procedurally it was properly before the [Liquor] Commissioner. It is just that the Star Chamber era that we live in, we just don't get an opportunity to comment on it or take instructions or put further evidence before you in relation to it. … [T]here is no point us putting other material before you that might seek to persuade you if, indeed, you are going to uphold the [Liquor] Commissioner's decision which was based on that material under section The Police Commissioner's representative mentioned that other "evidence was given at the hearing" and suggested that a transcript of the proceedings before the Liquor Commissioner be obtained. The appellants' counsel did not invite Judge Rice to adopt that course. He accepted that: "[I]f the s 28A material that you would read is fatal to the [appellants], then that is the end of the matter and … it would be an uneconomical use of the [Licensing] Court's time for you to look into those other matters of evidence that might have been led before the [Liquor] Commissioner". Judge Rice decided to hear the proceedings, if necessary, in stages. He adjourned the matter to 12 February 2007 and indicated that he would read all of the subject material. The prospect was raised of presenting character evidence, noting the six character statements that had been tendered before the Liquor Commissioner. Judge Rice asked if the appellants wished to provide any additional evidence. The Police Commissioner's representative confirmed that evidence from certain witnesses had been tendered before the Liquor Commissioner, but "no questions [were] put to Mr Krasnov with respect to any of the criminal intelligence information that was relied upon". Judge Rice described the s 28A procedure as "odd". He emphasised the fact the Liquor that the Police Commissioner, his representative and Commissioner were privy to the "criminal intelligence" material; Mr Krasnov presented himself for cross-examination but was not cross-examined about that Kirby material; and the resulting decision was substantially based on that material. He summarised the course that both parties had invited him to undertake: "If my review of that intelligence material inclines me to say I would not have come to the same conclusion or may not have come to the same conclusion, then I would indicate that to you and you can decide then whether you wanted to almost go to what I would call a full re-hearing." Licensing Court decision: Both parties agreed to the course proposed. Judge Rice then adjourned for 20 minutes. He resumed the hearing and announced that he would reach the same view as the Liquor Commissioner. He repeated the Liquor Commissioner's statement that he had refused the application because to grant it would be "contrary to the public interest". He repeated what the Liquor Commissioner had stated and added: "That is a view with which I agree but not only agreeing with him, I make my own independent assessment, that is the view that I would come to as well and indeed have come to. … [I]t seems to be draconian legislation … but that is what Parliament has said and I am stuck with it. … [B]earing in mind the wording of subsection (5) of section 22, I affirm the decision subject to the review and to the extent that it is necessary I confirm that I make the same decision." The order of the Licensing Court was made in the terms previously stated. The appellants then applied to the Supreme Court seeking judicial review of that order145. The proceedings in the Supreme Court Application and affidavits: To support the proceedings before the Supreme Court, Mr Krasnov filed an affidavit on behalf of the appellants. He cited earlier liquor licences that he had been granted under the Act and his objective to operate a karaoke bar as licensed premises. He referred to the repeated efforts of his solicitor to obtain from South Australia Police particulars of any objections to the issue of a licence. According to Mr Krasnov, the only response he received was that it would be "contrary to public interest" for such a licence to be granted. 145 Pursuant to rr 199 and 200 of the Supreme Court Civil Rules 2006 (SA). See (2007) 99 SASR 58 at 82 [90]-[92] per Gray J. Kirby By a further affidavit filed in the Supreme Court, Mr Krasnov identified the grounds upon which review was sought. He complained that the Licensing Court, in affirming the decision of the Liquor Commissioner, had failed to afford him the requirements of natural justice. Specifically, the Licensing Court had omitted to consider whether the allegations in the relevant "criminal intelligence" material, provided to the Licensing Court by the Police Commissioner, were "capable of being summarised in such a manner that the provision of such a summary … would not contravene s 28A" of the Act. Further, it had failed to give the appellants the "opportunity to rebut or qualify by providing further information, and comment by way of submission, upon that summary". In the alternative, Mr Krasnov sought review on the basis that s 28A of the Act contravened the Kable principle. Decision of the Supreme Court: The review proceedings were heard by a Full Court of the Supreme Court. It divided. The Court unanimously agreed in the conclusion of Gray J that, in the way the proceedings had developed and in light of the course just described, the appellants had not waived any entitlements that they enjoyed at law146. The Full Court also agreed that, on its true meaning, the Act denied the appellants access to the evidence classified as "criminal intelligence"147. However, the judges divided over whether, in the circumstances, the Act breached the Kable principle. Gray J held that it did. Duggan J (with whom Vanstone J agreed) held that it did not. Gray J concluded that s 28A of the Act offended the implied requirements of Ch III of the Constitution. He rested his conclusion on the basis of the involvement of the independent judicial branch in the denial of natural justice to a person before a State court148; that the legislation forced that court to "act as an arm of the executive149" or as "an instrument of executive government policy"150; and that it dictated to the judiciary conduct that was procedurally unfair which "cuts deep into judicial integrity and independence"151. His Honour said that 146 (2007) 99 SASR 58 at 92-94 [136]-[140] per Gray J. See also at 62 [1] per Duggan J (Vanstone J concurring with Duggan J at 114 [213]). 147 (2007) 99 SASR 58 at 77 [67]-[68] per Duggan J, 112 [206] per Gray J (Vanstone J concurring with Duggan J at 114 [213]). 148 (2007) 99 SASR 58 at 112-113 [207]. 149 (2007) 99 SASR 58 at 113 [207]. 150 (2007) 99 SASR 58 at 113 [209] citing Kable (1996) 189 CLR 51 at 124 per 151 (2007) 99 SASR 58 at 113 [211]. Kirby these features of s 28A amounted to an "impermissible intrusion into judicial integrity"152. For the majority, Duggan J distinguished Kable and the only other case in which its principle has been applied, Re Criminal Proceeds Confiscation Act 2002153. He stated that the legislation invalidated in those two cases had "left almost no room for the application to be determined in the course of an appropriate exercise of judicial power". By contrast, in this case he found that s 28A of the Act involved "no such interference with the judicial function"154. Duggan J was clearly influenced by the reasoning of the majority of the Court of Appeal of Western Australia in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police155. The Full Court's decision in the present case was reached before the publication of this Court's reasons in the further appeal in Gypsy Jokers. Another consideration that clearly influenced Duggan J was the longstanding common law rule, observed by Australian courts, that protected criminal and like investigative intelligence. That rule had recently been upheld and applied by this Court in its unanimous decision in Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs156. Duggan J "Despite the fact that classified information cannot be tested or addressed by the other party, it is within the power of the licensing authority to determine its weight and, in appropriate cases, have regard to the fact that it may be unreliable suspicion or hearsay. It would also be entitled to have regard to the fact that the material has not been tested in any way. In these respects the authority acts in an independent manner. There is nothing in the procedure which leads to the creation of a close connection between the licensing authority and the executive. Nor is any inroad made into the independence of the licensing authority when 152 (2007) 99 SASR 58 at 113 [211]. 153 [2004] 1 Qd R 40. 154 (2007) 99 SASR 58 at 76 [62]. 155 (2007) 33 WAR 245. 156 (2005) 225 CLR 88 at 99-100 [28]-[29] per Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ; [2005] HCA 72. See also (2007) 99 SASR 58 at 77 [67]. 157 (2007) 99 SASR 58 at 78 [71]. Kirby determining the merits of an application resulting from 'any instruction, advice or wish of the Legislature or Executive Government'.158" Duggan J also expressed his opinion that, even if the function imposed on the Licensing Court "could be described as non-judicial", it was not "constitutionally incompatible" with the status of the Licensing Court which had to be constituted by present or past judges, of whom Judge Rice was one159. Vanstone J agreed with Duggan J's reasons without elaboration160. Appeal by special leave: The Full Court dismissed the appellants' application. By special leave, the appellants now appeal to this Court against that order. Special leave was granted on one ground: that the Full Court had erred in law in finding that s 28A of the Act was valid so far: "as it requires the [Licensing Court] to hear and determine a review pursuant to section 23 of the [Act] without disclosing to the applicant information classified as 'criminal intelligence', relied on by the [Liquor Commissioner] in refusing an application for a licence". Thus, the only issue in the appeal to this Court is the legal question concerning the ambit and application of the Kable principle in the circumstances of the appellants' case. The legislation Many of the provisions of the Act relevant to the determination of this appeal have already been described. However, a number of further provisions need to be mentioned. Section 27 of the Act enables a party before the Licensing Court, "with the permission of the Supreme Court, [to] appeal against any order or decision of the [Licensing] Court"161. No such "appeal" lies (relevantly) against "an order or decision of the [Licensing] Court made on a review of a decision of the [Liquor] Commissioner under this or some other Act"162. 158 Citing Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 17; [1996] HCA 18. 159 (2007) 99 SASR 58 at 78 [73]. 160 (2007) 99 SASR 58 at 114 [213]. 161 The Act, s 27(1). 162 The Act, s 27(2)(a). Kirby Section 28A, "Criminal intelligence", is the crucial provision of the Act. It is ultimately determinative of the outcome of this appeal. It lies in Pt 2 Div 6 of the Act which is also titled "Criminal intelligence". The section provides, relevantly: No information provided by the [Police Commissioner] to the [Liquor] Commissioner may be disclosed to any person (except the Minister, a court or a person to whom the [Police Commissioner] authorises its disclosure) if the information is classified by the [Police Commissioner] as criminal intelligence. If a licensing authority – refuses an application for a licence … ; and the decision to do so is made because of information that is classified by the [Police Commissioner] as criminal intelligence, the licensing authority is not required to provide any grounds or reasons for the decision other than that to grant the application would be contrary to the public interest, or that it would be contrary to the public interest if the person were to be … licensed or approved … If the [Police Commissioner] lodges an objection to an application under Part 4 because of information that is classified by the [Police Commissioner] as criminal intelligence – the [Police Commissioner] is not required to serve a copy of the notice of objection on the applicant; and the licensing authority must, at least 7 days before the day appointed for the hearing of the application, advise the applicant in writing that the [Police Commissioner] has objected to the application on the ground that to grant the application would be contrary to the public interest. If the [Liquor] Commissioner or the [Police Commissioner] lodges a complaint under Part 8 in respect of a person because of information that is classified by the [Police Commissioner] as criminal intelligence, the complaint need only state that it would be contrary to the public interest if the person were to be … licensed or approved. Kirby In any proceedings under this Act, the [Liquor] Commissioner, the [Licensing] Court or the Supreme Court – to maintain (a) must, on the application of the [Police Commissioner], take steps information classified by the [Police Commissioner] as criminal intelligence, including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives; and the confidentiality of (b) may take evidence consisting of or relating to information classified by the [Police Commissioner] as criminal intelligence by way of affidavit of a police officer of or above the rank of superintendent. The [Police Commissioner] may not delegate the function of classifying information as criminal intelligence for the purposes of to a Deputy Commissioner or Assistant this Act except Commissioner of Police." According to the evidence before the Supreme Court, the files containing the "criminal intelligence" were described as "Police Commissioner Office files". An affidavit of Assistant Commissioner Madeleine Glynn of South Australia Police was filed in the Supreme Court. It deposed that she had "classified" the information contained in the files as "criminal intelligence within the meaning of the Act". This satisfied the evidentiary requirements that govern the "classification" of the information in issue in these proceedings, as set out in s 28A(5)(b) and (6) of the Act. Section 4 of the Act provides three relevant definitions: "criminal intelligence means information relating to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could to prejudice criminal investigations, or to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement; reasonably be expected licensing authority means – in relation to a matter that is to be decided by the Court under this Act – the Court; in relation to any other matter – the [Liquor] Commissioner; Kirby party includes – an intervener or an objector." "Party" is significant because it relates to the entitlement of the Police Commissioner, under s 75A of the Act, to intervene in proceedings before a "licensing authority", and hence before the Licensing Court. When the Police Commissioner intervenes in that way, this definition of "party" makes him a "party" to the proceedings before the Licensing Court on "whether a person is a fit and proper person"163 and "whether to grant the application would be contrary to the public interest"164. Also relevant here is the fact that s 76(3) affords a broad general power of intervention in proceedings before the Licensing Court. That provision enacts that any body or person that is given notice of an application may intervene to introduce evidence or make representations. Likewise, ss 77 and 78 afford a wide right of objection. These provisions potentially enliven the exercise of federal jurisdiction by the Licensing Court. The Commonwealth, as a possible neighbour with relevant interests, could clearly become a "party" as an intervener or objector before the Licensing Court. Likewise, a resident of a different State. Such possibilities exist, as does the prospect of these or other parties raising questions under the Constitution or involving its interpretation. There is thus a real prospect that the Licensing Court could, from time to time, exercise federal jurisdiction in deciding matters before it165. Subject to what follows, in such circumstances any "appeal" on a question of law from, or reference of a question of law by, the Licensing Court, or application for judicial review directed to the Licensing Court, would enliven the exercise of federal jurisdiction by the Licensing Court and also by the Supreme Court. In addition, Pt 8 of the Act contains detailed "Disciplinary action" provisions. It enables the Liquor Commissioner to deal with disciplinary matters with the consent of the person liable166. Mandatory jurisdiction is conferred on the Licensing Court in that respect167. The Act relevantly empowers the Licensing Court to impose sanctions on a person found liable to disciplinary 163 The Act, s 75A(a). 164 The Act, s 75A(c). 165 The Constitution, ss 75(iii), 75(v), 76(1); Judiciary Act, s 39(2). 166 The Act, s 119A(1). 167 The Act, s 120. Kirby action. Such sanctions extend to the imposition of a fine on the person not exceeding $15,000168. The relevance of such provisions will be explained. The entitlement of the interveners to raise issues The contesting respondent, the Police Commissioner, was represented in this Court by the Solicitor-General of South Australia (hereafter, described as "the respondent"). He disputed the appellants' submissions. In addition, the Attorney-General of the Commonwealth and the Attorneys-General of New South Wales, Victoria, Queensland and Western Australia intervened pursuant to s 78A of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). They did so in support of the interests of the respondent. Substantially, the submissions of the Commonwealth and New South Wales supported those advanced by the respondent. However, the Attorneys- General for Victoria, Queensland and Western Australia advanced their own submissions which, in material respects, were different from those of the parties. When this Court questioned the consequences of that course, those Attorneys- General relied on the entitlement afforded to them by the Judiciary Act. Where the actual parties define the "matter" in controversy brought before this Court, can other persons (essentially interveners and parties only by statute) enlarge the "matter", if that is what their interventions seek to do? Can they raise arguments that are wider than, and different from, those presented by the parties? This is not the occasion to resolve those issues. No party raised any objection to the course that the Attorneys-General of Victoria, Queensland and Western Australia adopted. Likewise, the Attorney-General of New South Wales and the Attorney-General of the Commonwealth did not object. On one view, the course is available under the Constitution and the Judiciary Act. This Court may be assisted on the accurate application of the Constitution in matters that may impinge upon governmental parties affected by its interpretation169. Further, it would certainly be open to a State to present a constitutional argument in a matter of which it has been given notice and where it might later be affected by the outcome. That is what occurred in this case. 168 The Act, s 121(1)(c)(ii). Cf Hussain v Minister for Foreign Affairs (2008) 169 FCR 241. 169 See Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 446-447 [195], 453-454 [220]; [2002] HCA 16; cf Walker, "The Bishops, The Doctor, His Patient and the Attorney-General: The Conclusion of the McBain Litigation", (2002) 30 Federal Law Review 507 at 525-526. Kirby Self-evidently, all of the States of the Commonwealth have an interest in the correct exposition, and application, of the Kable principle. It is therefore appropriate in this appeal to address the contentions advanced by the States. Specifically, it is appropriate to do so in a preliminary way. Each submission of the States effectively offered a forensic short-cut to avoid the necessity of further elaboration and application of the Kable principle. If the distinctive arguments of Victoria, Queensland and Western Australia were accepted, that principle would not apply at all to the circumstances of this case. The parties' arguments could be rejected as misconceived and the appeal brought to a peremptory conclusion. The issues The issues of the interveners: Leaving aside the entitlement and consequences of the Attorneys-General of Victoria, Queensland and Western Australia proceeding as they did, the arguments urged by the States presented the following four preliminary issues: The Supreme Court issue: Western Australia argued, first, that the Kable principle applied only to the purported imposition, by State law on a Supreme Court of a State, of functions incompatible with the exercise by that court of federal jurisdiction. Secondly, that in the present case there was no relevant imposition on the Supreme Court of South Australia of any function of such a kind. Thirdly, in terms of other courts within a State, it was sufficient that the Parliament of that State should establish and maintain a system of State courts. This is what the Parliament of South Australia had indubitably done. Western Australia submitted that such other courts were not themselves subject to the Kable principle; The non-court issue: Queensland submitted that, upon a proper analysis, the Licensing Court was not a "court" for the purposes of Ch III of the Constitution. What the Parliament of South Australia had enacted about the title and designation of the Licensing Court was not determinative of its constitutional character. The Kable principle did not apply to it. The parties' opposing assumption or assertion was misconceived in law and should be rejected; it was nonetheless permissibly deployed during The administrative jurisdiction issue: Victoria submitted that, if the Licensing Court were a "State court" for the purposes of Ch III of the the Constitution, appellants' proceedings. Victoria argued that the Licensing Court was exercising an administrative and not a judicial decision-making function. Any departure from judicial functions derived from Ch III, as an implication from the requirements governing a State court's capacity to receive federal jurisdiction, therefore had to be evaluated in that light. Such departure could not be judged by a criterion equivalent to that applicable to federal courts or to the performance by federal judges as Kirby personae designatae of functions that are incompatible with the concurrent exercise of the jurisdiction of federal courts. By the less rigid standard applicable to State courts170, there was no offence to the Kable principle when a State court performed an administrative, not a judicial, function, as had occurred here; and The consequence of invalidity issue: Western Australia submitted that, if s 28A(5) of the Act were held to impose jurisdiction on a State court inconsistent with the postulate that it was a suitable recipient of federal jurisdiction, this did not invalidate s 28A of the Act. Neither did it invalidate the State court concerned. It only made that court incapable of receiving federal jurisdiction. That court would still validly exercise State jurisdiction, but would be bound to refuse any attempt (if that were to occur) to oblige it to exercise federal jurisdiction. The issues of the parties: Depending upon the resolution of the foregoing issues, presented by Victoria, Queensland and Western Australia, the parties propounded three issues for decision by this Court: The Gypsy Jokers' issue: There were obvious similarities between the legislation of South Australia in issue and the Western Australian legislation considered by this Court in Gypsy Jokers171. The Full Court of the Supreme Court of South Australia did not have this Court's decision available to it when deciding this case. Consequently, it was submitted that this Court should dismiss the present appeal by simply applying the reasoning and conclusion expressed by this Court in Gypsy Jokers; The ambit of s 28A issue: Does s 28A(5) of the Act and the residual functions reserved under that provision to the Licensing Court (and on appeal, reference or review in the Supreme Court) impose upon either court (or, if relevant, upon the District Court of which the primary judge was a member) the actuality or appearance of functions in such courts incompatible with the exercise of federal jurisdiction as forbidden by Kable? The relief issue: Assuming that the Kable principle could be invoked successfully, would the proper relief be: (a) the invalidation of the Act, in so far as it provided for the receipt by the Licensing Court of "criminal intelligence", on the basis that this function could not be severed from the 170 Wilson (1996) 189 CLR 1 at 9. 171 (2008) 234 CLR 532. Kirby Act under principles of severance172; or (b) the invalidation and severance of s 28A from the Act; or (c) the withholding of the exercise of federal jurisdiction from the Licensing Court? The Kable principle applies beyond State Supreme Courts Western Australian submission: Western Australia submitted that the foundation of the Kable principle lay in the particular requirement of Ch III of the Constitution. State Supreme Courts must continue to answer to the constitutional description of a "Supreme Court of a State" in respect of which this Court exercises appellate jurisdiction173. Further, they must continue as a "court of a State" in which the Federal Parliament could invest federal jurisdiction174. Western Australia relied in this respect on this Court's decision in Forge v Australian Securities and Investment Commission175. A defining characteristic of such a court was that it should be, and appear to be, an independent and impartial tribunal176. The argument that the Kable principle should be confined to the State Supreme Courts rested on the fact that such courts were the only courts that existed in every colony at the time of Federation. South Australia177 and Western Australia178, for example, first established their District Courts after Federation. Queensland abolished its District Court in 1921179 and revived it in 1958180. Tasmania has never established a District or County Court. 172 Pidoto v Victoria (1943) 68 CLR 87 at 109-111; [1943] HCA 37; Re Nolan; Ex parte Young (1991) 172 CLR 460 at 485; [1991] HCA 29; Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 339; [1995] HCA 16; see also R v Hughes (2000) 202 CLR 535 at 556-557 [43]; [2000] HCA 22. 173 Constitution, s 73. 174 Constitution, s 77(iii). 175 (2006) 228 CLR 45 at 67-68 [41], 76 [63]-[64]; [2006] HCA 44. 176 North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 at 163 [29]; [2004] HCA 31. 177 Local and District Criminal Courts Act 1969 (SA); District Court Act 1991 (SA), 178 District Court of Western Australia Act 1969 (WA), s 7(1). 179 Supreme Court Act 1921 (Q), s 3(1). 180 District Courts Act 1958 (Q), s 6(1). Kirby Western Australia thus argued that no constitutional implication could be derived, of necessity, that particular courts, as later created by legislation, must conform to a defined national standard. A State court of general jurisdiction might exist, then be abolished and subsequently reinstated. Western Australia argued that this demonstrated that no constitutional quality was imprinted upon such statutory courts except the Supreme Courts which had firm foundations in the Constitution itself181. The Supreme Court is mentioned in the Constitution and is thus preserved from abolition. This demonstrated that there would always be a potential repository of federal jurisdiction in each State and thus always a court susceptible to a principle such as that expressed in Kable, namely the State Supreme Court. In support, Western Australia emphasised that no decision of this Court had held that the Kable restriction applied to State courts below the Supreme Court. Earlier decisions of State courts might have assumed such a restriction182; likewise a decision of this Court in respect of a Northern Territory court183. However, such assumptions did not form part of the binding rule of any decision of this Court. Whilst the Constitution may have implied the existence of "courts of the States" other than Supreme Courts184, it was enough that a system of such courts should be created, as envisaged. There was no requirement that they should meet any particular federal standard. Kable and the Judicature: The foregoing submission should be rejected. An important feature of the Australian Constitution which distinguishes it from federal arrangements in other countries is that it creates an integrated Judicature. This is envisaged in Ch III, entitled "The Judicature". It intends that State and federal courts will be susceptible to appellate and other superintendence, ultimately by this Court185. There are standards to be observed by federal courts, federal judges and the Parliament when creating federal courts or providing for their creation186. These are derived from the special role that such courts, like 181 Constitution, s 73. 182 See, for example, R v Granger (2004) 88 SASR 453 at 460-462 [20]-[28] per Doyle CJ; Osenkowski v Magistrates Court of South Australia (2006) 96 SASR 456 at 471 [48] per Doyle CJ (Nyland and Anderson JJ concurring). 183 Bradley (2004) 218 CLR 146 at 163 [29]. 184 See Constitution, ss 51(xxiv) (service and execution of process); 77(iii) (federal jurisdiction). 185 Under the Constitution, ss 73, 75(v). 186 Constitution, s 72. Kirby this Court, play in a federal system of government. Moreover, the Kable principle is implied from a unique provision which empowers the Federal Parliament to make laws investing "any court of a State" with "federal jurisdiction". If the Constitution had meant to restrict integration to investing only the State Supreme Courts with federal jurisdiction, it could have said so. Instead, the constituent parts of the integrated Judicature were extended to include other courts, indeed "any" court of a State. If, therefore, a tribunal within a State qualifies as a "court" and is able to be invested with federal jurisdiction, it must meet the Kable requirements. Kable applies beyond Supreme Courts: The submission that the Kable principle extends only to State Supreme Courts is rejected. It is inconsistent with the language of the Constitution and with the constitutional purpose of the Kable principle187. That principle effectively assures Australian litigants that basic institutional standards will be observed, whether in federal or State courts, and also in Territory courts as this Court accepted in North Australian Aboriginal Legal Aid Service Inc v Bradley188. This is implicit in the membership of all such courts, continued or created, the Commonwealth. integrated Judicature of the one The Licensing Court is a "court of a State" Queensland submission: As an alternative, Queensland submitted that the Licensing Court of South Australia was not a "court of a State" within the meaning of s 77(iii). Thus, it was not subject to compliance with the Kable principle and the appeal should be dismissed. Queensland acknowledged the earlier concession of the respondent to the contrary and the assumption upon which all other arguments of the parties had been based. However, it contended that that concession and these arguments had been made upon an incorrect reading of the Constitution. Queensland correctly submitted that the mere description of a body as a "court", even by the legislature of a State, would not foreclose argument about the proper application of the Constitution to that body. Conceivably, a tribunal might be a court-like body for particular State purposes but not for federal constitutional purposes. 187 This conclusion is also compatible with the references to "the State courts" or "a State court" in the reasons of the majority in Kable (1996) 189 CLR 51 at, for example, 110, 111, 114, 115. 188 (2004) 218 CLR 146 at 163 [29]. Kirby So much may be accepted for present purposes. However, in addition to the designation by a State Parliament of that body as a "court", Parliament has assigned to it certain traditional court-like functions. Further, Parliament has provided for the appointment to the body of persons expressly described in the legislation as "judge" and who are members (or former members) of an undoubted court (the District Court of a State). These facts render the argument by Queensland difficult to accept. If s 77(iii) attaches the Constitution to "any court of a State", on the face of things that attachment would ordinarily be held to apply to a body described in law as a "court" of a State. This is especially so as the State Parliament is entitled to describe its "courts" as it decides and it did so here. Self-evidently, serious consequences can flow from such a description189. The Queensland submissions on this issue began by citing several decisions that held that, in certain circumstances, a body designated by a State Parliament as a "Commission" or a "Tribunal" was nonetheless a "court" for particular purposes190. So much may be allowed. But does the opposite follow in a constitutional setting? Queensland argued that this Court must consider the real functions of the court in question before concluding about the constitutional character of the body. Those functions were expressed by reference to such vague and generalised criteria that it was clear, so Queensland said, that the supposed "court" was not a "court" of the character envisaged as part of the integrated Judicature of the Commonwealth. It was thus not subject to the Kable principle. Queensland noted the functions of the Licensing Court in South Australia as stepping into the shoes of the Liquor Commissioner and using a very wide discretion191 to grant, or to refuse, liquor licences as the "licensing authority"192. It may exercise its powers "on any ground, or for any reason, the licensing authority considers sufficient"193. Finally, it makes particular decisions about 189 Ammann v Wegener (1972) 129 CLR 415 at 442; cf at 436; [1972] HCA 58. 190 Australian Postal Commission v Dao [No 2] (1986) 6 NSWLR 497 at 513; Hughes v Clubb (1987) 10 NSWLR 325 at 334; New South Wales Bar Association v Muirhead (1988) 14 NSWLR 173 at 185, 192; Reid v Sydney City Council (1995) 35 NSWLR 719 at 725; see also Newcastle Wallsend Coal Co Pty Ltd v Court of Coal Mines Regulation (1997) 42 NSWLR 351 at 386, 390; cf Trust Company of Australia Ltd v Skiwing Pty Ltd (2006) 66 NSWLR 77 at 87 [48]-[52]. 191 The Act, s 53(1). 192 The Act, s 53. See also ss 4 ("licensing authority"), 17(1)(b)(ii). 193 The Act, s 53(1). Kirby whether to grant or refuse licences by reference to the criterion of whether to do so "would be contrary to the public interest"194. These open-ended policy considerations were said to indicate a "non-judicial process of decision- making"195. Queensland thus classified the Licensing Court for constitutional purposes as an administrative tribunal or "licensing authority", not as a "court of a State". Various features of the Act were invoked to reinforce this submission. In particular, Queensland cited the large power of the Licensing Court to receive evidence196; the alteration of the Act to repeal the former security of tenure of the judges appointed to the Licensing Court197; the inclusion amongst those "judges" of former judges of the District Court198; and the essential function of the Licensing Court which was to create new rights and obligations rather than to decide controversies by reference to pre-existing facts and already applicable law. The Licensing Court is a court: Queensland persisted with the submission even though the respondent, representing the State primarily concerned, asserted and conceded that the Licensing Court fell within the provisions of s 75(iii) and was subject to the strictures of the Kable principle. Queensland's submission to the contrary should be rejected. Whilst the appellation used in the Act may not be conclusive, it is a very strong consideration. It warrants this Court's taking the State Parliament's description at face value. Controversies over statutory descriptions of tribunals in Australia have usually occurred where a body, held to be a "court" for particular purposes, was differently described. Various constitutional and statutory provisions apply to "any State court". No doubt this partly explains why State Parliaments in Australia use the word "court" sparingly and why they generally deploy "judges" only to bodies that are "courts" for constitutional purposes. There is insufficient reason to doubt the accuracy and applicability of the title assigned to the Licensing Court in this instance. 194 The Act, s 53(1a). 195 cf Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 at 597 [168] per Crennan and Kiefel JJ; [2008] HCA 2. 196 The Act, ss 23(b), 24(1). 197 The Act, s 15(1)(c). 198 The Act, s 15(1)(b). Kirby A series of inquiries has been held in respect of the Licensing Court and its predecessors. Those conducting such inquiries have turned their attention to whether that Court199: "having all the normal judicial attributes of being a court of record, presided over by a Judge or equivalent, dealing with questions before it upon sworn testimony in open hearings, exercising discretions according to judicial practices, and subject in appropriate cases to appeals to higher Courts" should be designated by the Act as a court. The report of the inquiry into the present Licensing Court expressly concluded that200: "a court structure with a judge experienced in the jurisdiction is required. This view is supported by the majority of submissions and by the Liquor Licensing Commissioner". The statutory designation of the Licensing Court as "a court of record"201 is to be understood in this light. Likewise the appointment to the Licensing Court of "judges" and former judges of the District Court, and further, the specific provisions for an "appeal" to the Supreme Court against orders other than those made on review of a decision of the Liquor Commissioner202. These features of the constitution and supervision of the Licensing Court tend to affirm its constitutional status as a "court of a State". Also, whilst Queensland would not concede this point, there can be no real doubt that the Licensing Court may exercise federal jurisdiction. This follows from the particular provisions of the Constitution, reflected in the Judiciary Act, by which a court of a State may be vested with federal jurisdiction203. Queensland submitted that the Commonwealth could not be a "party" to proceedings before the Licensing Court. However, that submission was destroyed when attention was drawn in argument to the extended definition of "party" in the Act. If the Licensing Court could exercise jurisdiction over such a 199 South Australia, Report of the Royal Commission Into the Law Relating to the Sale, Supply and Consumption of Intoxicating Liquors and Other Matters, (1966) at 17. 200 South Australia, T R Anderson QC, Report of the Review of the South Australian Liquor Licensing Act, 1985, (October 1996) at 62, par 4.1. 201 The Act, s 13. 202 The Act, s 27(1), (2). 203 Constitution, ss 71, 77(iii); Judiciary Act, s 39(2). Kirby "party" and determine controversies placed before it by the Commonwealth, subject to what follows, it would undoubtedly be exercising federal jurisdiction. It is therefore far from hypothetical that the Commonwealth, as a major land owner in South Australia and a potential neighbouring property owner, might object, or seek to intervene, in particular proceedings. Several of the criteria applied by the Licensing Court in reaching its decisions are expressed in very general language. However, it by no means follows that a decision of the Licensing Court that involves consideration of "the public interest" and whether an applicant is a "fit and proper person", for example, places the decision-making body outside the "State courts" that might be invested with federal jurisdiction. Such criteria are commonly applied by undoubted courts, including disciplinary cases involving members of the legal, medical and other professions. The criteria may be expressed in general terms. They are not, however, insusceptible to judicial decision-making or incapable of being decided by "courts", properly so called, both for statutory and constitutional purposes. Submission rejected: It would be contrary to basic principle to read s 77(iii) narrowly or to apply its provisions to particular tribunals with undue strictness. This is so because of the unique language of s 77(iii) of the Constitution that enables any State court to be invested with federal jurisdiction; the utility and efficiency of that provision for the good government of the Commonwealth; and the potential advantages that it affords to litigants to avoid disparity of jurisdiction in the courts of the national Judicature. The Constitution leaves it to the State Parliaments to create their own courts, except for the Supreme Court whose continuance is envisaged. It is then left to the Federal Parliament to "utilize the judicial services of State Courts [recognising] in the most pronounced and unequivocal way that they remain 'State Courts'"204. The Queensland submission would tend to deny these beneficial features of the Constitution. In the circumstances of this case, that submission should be rejected. The jurisdiction of the Licensing Court is judicial Victorian submission: Victoria accepted that the Licensing Court was a "court" for the purposes of Ch III of the Constitution and, as such, subject to the requirements of Kable. However, it submitted that the Kable principle had to adapt to the fact that, consistently with the Constitution, State courts can and do 204 R v Murray and Cormie; Ex parte The Commonwealth (1916) 22 CLR 437 at 452 per Isaacs J; [1916] HCA 58. Kirby exercise administrative power205, and State judges in such courts can and do perform non-judicial functions that might be forbidden to federal judges206. Further, in performing functions as personae designatae under State law, State judges sometimes perform duties that might not be undertaken by federal judges207. Victoria, like Queensland, urged caution before extending the Kable principle to State courts in a way that might impose on them the rigidities previously accepted only in relation to federal courts and federal judges. Building on the submissions earlier advanced by Queensland, Victoria argued that the functions performed by Judge Rice in the Licensing Court should be characterised as involving the proper exercise of administrative power. Substantially, this was because of the broad policy considerations involved in deciding whether, as a licensing authority, an applicant was a "fit and proper person to hold a licence"208. It did not involve the determination of pre-existing legal rights and obligations. Consequently, it was an administrative function akin to others previously classified as such by this Court209. Once the non-judicial nature of the decision was demonstrated, Victoria argued that established law recognised the entitlement of legislation, by clear provision, to override any requirements of natural justice and procedural fairness. In could therefore exclude, for example, the requirement to give notice to a person whose interests were likely to be affected by an adverse decision not 205 The Commonwealth v Hospital Contribution Fund (1982) 150 CLR 49; [1982] HCA 13. 206 For example, acting as Lieutenant Governor or as Acting Governor of a State. See Kable (1996) 189 CLR 51 at 118 per McHugh J. 207 For example, the Chief Justice of Western Australia at one time served as one of the Electoral Distribution Commissioners under the Electoral Distribution Act 1947 (WA), s 2(1)(a) (repealed by the Electoral Amendment and Repeal Act 2005 (WA)). See also Electoral Act 1907 (WA), s 16B(1)(a); cf Wilson (1996) 189 CLR 208 Under the Act, s 56(1). See also s 53. 209 R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 376 per Kitto J; [1970] HCA 8; The Commonwealth v Western Australia (1999) 196 CLR 392 at 414 [48]; [1999] HCA 5; Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 at 550-551 [4], 553-554 [14], 561 [40]-[42], 569 [71], 592-593 [153]; cf Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 191; [1991] HCA 58. Kirby revealed to that person210. In its true character, s 28A of the Act was to be seen as modifying only administrative decision-making, enacted in this instance by a State Parliament in full conformity with the Constitution. It could not be subject to any implied constitutional principle, based on Kable or anything else, that would purport to prevent a State Parliament from conferring on State judges administrative functions211. Victoria submitted that the "incompatibility condition" that attaches to the assignment of judicial functions to federal judges as personae designatae did not "provide a safe guide to the non-judicial functions that can be conferred on State judges". Ultimately, Victoria argued that, without an express constitutional prohibition on the conferral of non-judicial functions on State courts, there was "simply no foundation for the direct or strict application of the incompatibility condition to State judges"212. Kable applies to the Licensing Court: There is substance in the submission advanced by Victoria regarding the well-established principle that State courts and judges are not subject to all of the separation of powers requirements as have been held to apply to federal courts and judges. Any statement of the Kable principle therefore needs to reflect appropriately that differentiation. Nevertheless, it is unnecessary to explore this question further as there is no escape from the requirements of Kable in the present circumstances. There are three reasons for this conclusion. First, as previously indicated, in considering the "fit and proper person" criterion for a licence under the Act, the Licensing Court was not performing purely administrative and non-judicial functions. Despite the generality of the criteria, the Act relevantly conferred on the Licensing Court an exercise of judicial power as a State court, one susceptible to judicial determination. This is another way of expressing the "chameleon doctrine". To some extent, the character of the functions performed by a decision-making body may take their 210 Kioa v West (1985) 159 CLR 550 at 582 per Mason J, 615 per Brennan J; [1985] HCA 81. 211 cf Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 618 [104] per Gummow J; [2004] HCA 46; John Fairfax Publications Pty Ltd v Attorney- General (NSW) (2000) 181 ALR 694 at 702 [41] per Spigelman CJ. 212 Referring to Kable (1996) 189 CLR 51 at 103-104 per Gaudron J, 117-118 per McHugh J; cf Campbell, "Constitutional Protection of State Courts and Judges", (1997) 23 Monash University Law Review 397 at 414, 421. Kirby colour and their constitutional identity from the body to which those functions are assigned – whether a court or administrative tribunal213. It follows that, whatever might be the position in another case, the argument for a qualification of the Kable principle, as advanced by Victoria, does not arise here. In the present case, it is ultimately a decision by a commissioned judge in a court of a State upon a matter that is susceptible to judicial resolution. The circumstances that gave rise to the enunciation of the Kable principle apply. As an institution of that character, the Licensing Court was bound to observe the Kable standards. Secondly, no textual differentiation is made in s 77(iii) of the Constitution between the several "courts of a State". Once a body is so characterised, it is part of the integrated Judicature of the Commonwealth. That feature as a court attracts the Kable standards to protect the litigants who invoke its jurisdiction. The inclusion of a State court amongst the "courts" of the integrated Judicature of the Commonwealth could possibly mean that some functions that might earlier have been included within the jurisdiction of a colonial court (uncontrolled by Ch III) could not be conferred on a State court after federation. It is unnecessary to explore that question in the present case. The jurisdiction exercised by the Licensing Court in respect of the appellants was judicial. It addressed a justiciable issue presented by contesting parties, namely the appellants and the Police Commissioner. Thirdly, and in any case, the scheme of the Act allows for an appeal in some circumstances against an order of the Licensing Court to the Supreme Court of the State214 and for review by that Court. The appellants invoked this provision in these proceedings. It means, at least potentially, that the performance by the Supreme Court of the State (incontestably a constitutional court) of its jurisdiction might be affected or impaired by the requirements of s 28A(5) of the Act, if that provision were constitutionally infirm. These are reasons why it is appropriate to consider Kable in this case, and not to re-express or confine the Kable principle so that it does not apply to judges of State courts who are obliged to perform non-judicial, administrative functions in the course of their duties. That was not the case in the circumstances of the appellants' complaint. Accordingly, the ambit of the Kable principle, as 213 R v Quinn; Ex parte Consolidated Foods Corporation (1977) 138 CLR 1 at 18; [1977] HCA 62; Pasini v United Mexican States (2002) 209 CLR 246 at 267 [59]; [2002] HCA 3; Thomas v Mowbray (2007) 233 CLR 307 at 413 [303]; [2007] HCA 33. 214 The Act, s 27. Kirby applicable to purely administrative functions performed in State courts by State judges, does not need to be determined in this appeal. Continuance of an invalid court is not to be inferred A further submission: Western Australia made an alternate submission as a variation of the themes considered under the last two issues. A State Parliament is constitutionally entitled to create courts with functions deemed appropriate by the State Parliament. This can include, if so chosen, the exercise of administrative and non-judicial jurisdictions susceptible to the legislative exclusion of natural justice. As a consequence of this, State law would not be invalid, despite what was previously assumed following Kable. Instead, the State court in question would cease to be a court for s 77(iii) purposes. In effect, it would not be made available by the State to the Federal Parliament for the conferral of federal jurisdiction under s 77(iii) of the Constitution. Western Australia argued that, in this way, the State Parliament could fulfil its constitutional objectives in accordance with State legislative power. It would be untrammelled by the strict separation of powers applicable to the Federal Parliament in respect of federal courts and judges. In conferring federal jurisdiction on State courts, the Federal Parliament would simply have to eliminate from the courts available to receive federal jurisdiction any court considered or held to be an institution incapable of exercising such federal jurisdiction. Invalidation of compromised integrity: There are several reasons why this argument must be rejected. First, it is self-referential. Effectively, a State Parliament could decide conclusively the consequences of invalidation derived from the language and implications of the federal Constitution. This would particularly affect s 77(iii) which envisages that federal jurisdiction might be conferred on "any" State court by a law made by the Federal Parliament. Such an approach would effectively invalidate or read down s 39(2) of the Judiciary Act by reference to the presumed intention of a State Parliament as evidenced from time to time in particular State legislation. To accept this would be to turn considerations of constitutional invalidation on their head. Secondly, one of the purposes of s 77(iii) is to afford "a very convenient means of avoiding the multiplicity and expense of legal tribunals"215. The paragraph enables implementation of the unique scheme envisaged by s 71 of the 215 Kable (1996) 189 CLR 51 at 110 citing The Commonwealth v Limerick Steamship Co Ltd and Kidman (1924) 35 CLR 69 at 90; [1924] HCA 50. Kirby Constitution by which "[t]he judicial power of the Commonwealth" may be vested in "such other courts as [the Parliament] invests with federal jurisdiction". In his reasons in Kable, McHugh J pointed to the fact that s 77(ii) and (iii) "would be rendered useless and the constitutional plan of a system of State courts invested with federal jurisdiction, as envisaged by Ch III, would be defeated" if a State Parliament could abolish its court system "by the simple expedient of abolishing its courts and setting up a system of tribunals that were not courts"216. The State Parliaments may have the power to abolish, modify, rename or reinstitute particular State courts from time to time, other than Supreme Courts. However, it is doubtful that the Constitution intended that a State Parliament could defeat the exercise of the grant of power by the Federal Parliament under s 77(iii) by the even simpler expedient of leaving State "courts" intact but with compromised institutional integrity. Thirdly, s 28A(5) is expressed to apply to the Licensing Court, the Liquor Commissioner and the Supreme Court of South Australia. The Supreme Court cannot be abolished or eliminated from the requirements expressed by Kable217. Thus the hypothesis of maintaining the Licensing Court as a State court that could not be invested with federal jurisdiction does not respond to the totality of the appellants' complaint in this case. The jurisdiction of the Supreme Court under the Act remains alive, potentially attracting the Kable requirements. There are other severe impracticalities in this hypothesis. If a particular State law conferred non-judicial jurisdiction on a State court of general jurisdiction (such as the District Court), the capacity of that court in the vast range of other cases applicable to it, by which that court could receive and exercise federal jurisdiction, would potentially be imperilled. This would be the consequence should the legislation in a particular case result in an outcome that the District Court could not exercise federal jurisdiction generally. Such a consequence could be drastic and extremely inconvenient. Fourthly, and in any event, on the face of the Act, there is a possibility, or likelihood, that a continuing State law could, of its own force, exclude the exercise of federal jurisdiction where federal law otherwise so provided for it. Such an hypothesis would ignore the provisions of s 109 of the Constitution. Fifthly, there is no need to postulate such a heterodox constitutional theory which, in practical terms, would make the Kable principle impotent. The appellants and the respondent agreed (with the support of the Commonwealth) 216 (1996) 189 CLR 51 at 111. 217 (1996) 189 CLR 51; see also Re Criminal Proceeds Confiscation Act 2002 [2004] 1 Qd R 40. Kirby that, if the Kable principle applied, the correct response would be to sever "the Court or the Supreme Court" from s 28A(5). This would leave the requirements of that sub-section applicable to the Liquor Commissioner, an administrative officer, but not to a "court of a State". That approach would respond to the objective addressed by Kable, namely protecting the integrity of the State courts as institutions that can perform their functions within the integrated Judicature of the Commonwealth. It would uphold the implication derived from s 77(iii) of the Constitution that State courts, as such, must always be in a suitable condition to be vested with federal jurisdiction. Kable doctrine applies: All of the arguments deployed in this case to defeat the application of the Kable doctrine therefore fail. The Gypsy Jokers decision is not determinative Gypsy Jokers argument: The respondent and some of the interveners218 argued that the central legal question decided by this Court's decision in Gypsy Jokers219 was determinative, in law, of the constitutional question tendered to this Court by the Kable principle. Whilst the legislation under consideration in Gypsy Jokers220 was in some respects different from the provisions of the Act in issue here, any such differences are inevitable in the specificities of legislation. The implied constitutional doctrine expressed in Kable requires that a consistent path of principle should be followed. Thus care should be taken to avoid (especially within a very short interval) the re-opening and re-examination of issues that have substantially been decided by earlier decisions in closely analogous circumstances. As in Gypsy Jokers, a question arises under the Act as to the role of a State court in the face of restrictive legislation; the extent to which that court can still perform its functions with the necessary constitutional features of independence and integrity; and the degree to which external decisions by a State Police Commissioner could, in law or effect, control the decision of the State court so as to be, or to appear to be, "dictation" to the court concerning the way in which it would perform its functions221. 218 Such as Victoria. 219 (2008) 234 CLR 532. 220 Corruption and Crime Commission Act 2003 (WA), s 76(2). 221 cf Gypsy Jokers (2008) 234 CLR 532 at 559 [36] per Gummow, Hayne, Heydon Kirby In Gypsy Jokers, when deciding the Kable issue, the majority expressly compared the decision made by the Supreme Court on the review of the Police Commissioner's determination and the traditional function observed by a court under the common law in deciding an application that invoked the principles of public interest immunity222. Duggan J, writing for the majority in the Supreme Court in the present matter, also considered this factor but did not then have the advantage of the reasons of this Court in Gypsy Jokers223. The majority in Gypsy Jokers decided that, notwithstanding the legislation challenged in that case, the Corruption and Crime Commission Act 2003 (WA) ("the WA Act"), the Supreme Court could conduct a review based on materials that had been before the Police Commissioner. This review would not permit or require that Court to engage in any process of balancing competing public interests. However, if the restricted information were in fact information the disclosure of which might, in that Court's opinion, prejudice the operations of the Police Commissioner, the resulting inquiry would not necessarily deprive that Court of its character as a constitutional "court of a State". It would not otherwise be inconsistent with Ch III of the Constitution. Likewise, it would not subject the court concerned to the "dictates" of the legislature or of the Executive. It would remain for that court to determine for itself whether the information could objectively justify the Commissioner's belief. In this appeal, the respondent submitted that the same was true of the examination by the Licensing Court under the Act of the "criminal intelligence" relied on by the Police Commissioner. The function performed here involved the consideration of facts and circumstances that were not materially different from the task to be performed in Gypsy Jokers. On the other hand, Western Australia argued that there were some distinguishing features. The provisions of the WA Act would still be valid even if the South Australian provisions were invalid. In Western Australia, in respect of liquor licensing, the former Liquor Licensing Court has been abolished224. It has been replaced by a Liquor Commission which has no judicial membership225. 222 (2008) 234 CLR 532 at 556 [23]-[24] and 559 [36] per Gummow, Hayne, Heydon and Kiefel JJ, 596 [183] per Crennan J (Gleeson CJ concurring). 223 K-Generation (2007) 99 SASR 58 at 77 [67]. 224 Liquor and Gaming Legislation Amendment Act 2006 (WA), s 11, which repealed Pt 2 Div 2 of the Liquor Licensing Act 1988 (WA). 225 Liquor Licensing Act 1988 (WA), ss 8, 9B, as amended by Liquor and Gaming Legislation Amendment Act 2006 (WA), s 11. Kirby The submission distinguishing the current liquor legislation of Western Australia from that of South Australia was forensically understandable. However, it does not address the suggested analogy between the legislation considered in Gypsy Jokers and that in the present appeal which the respondent argued obliged the same outcome. Features of the South Australian legislation: Obviously, there are common features between the legislation considered in Gypsy Jokers and that of the present case. However, there are sufficient differences from the WA Act to oblige a fresh consideration of the Kable principles as measured against the requirements of the South Australian legislation. The decision in Gypsy Jokers is not determinative. It is first essential to construe s 28A of the Act. To do so, the many and varying expressions by members of this Court in earlier decisions about the content of the Kable principle must be understood; some of the considerations mentioned at the earliest phase of the emergence of the doctrine (including in Kable itself) must be eliminated226; it has to be remembered that the principle addresses institutional considerations that affect the court concerned227; and it must be appreciated that institutional independence is not the only consideration defended by Kable, but also institutional integrity228. The latter restrains any attempted conferral upon courts the Commonwealth of functions that might damage the capacity of such a court to manifest the "defining characteristics which mark a court apart from other decision-making bodies"229. integrated Judicature of the Appellants' interpretation: It is first helpful to explain the interpretations of s 28A(5) of the Act urged by the appellants: . First, the appellants emphasised the use of the imperative verb "must" in s 28A(5)(a). Relevantly, the command is addressed to "the Court or the Supreme Court". The appellants contrasted that provision with s 76(5) of the WA Act considered in Gypsy Jokers. That provision provided that: 226 Such as the suggested damage to the public perception of the independence of the courts. See Kable (1996) 189 CLR 51 at 108 per Gaudron J, 118-119 per McHugh J, 133 per Gummow J; cf Fardon (2004) 223 CLR 575 at 593 [23] per McHugh J, 617-618 [102] per Gummow J, 629-630 [144] of my own reasons. 227 Forge (2006) 228 CLR 45 at 76 [63]. 228 Fardon (2004) 223 CLR 575 at 591 [15], 595 [32], 598-599 [37], 617-618 [100]- 229 Forge (2006) 228 CLR 45 at 76 [63]. Kirby "The court may decide whether or not the Commissioner of Police could have reasonably had the belief required by section 72(2) when issuing the notice". The stated latitude there reserved to the court was an important consideration in the conclusion of the majority in Gypsy Jokers. It was held that the Supreme Court retained a genuinely judicial function of scrutinising, by reference to an objective standard, the reasonableness of the belief of the Police Commissioner. Under the South Australian legislation, the appellants argued that such a latitude had effectively been removed by requiring the Licensing Court to act in the way specified. The appellants submitted that this was tantamount to permitting an agency of the Executive Government, external to the Licensing Court, by its own actions, to control the outcome of the decision of the Licensing Court. Further, it could impose a procedure that involved a "private" hearing the ordinary conduct of without proceedings before the courts of the Australian Judicature. In this respect, it was submitted that the legislation considered in this appeal was akin to the legislation invalidated by the Queensland Court of Appeal in Re Criminal Proceeds Confiscation Act 2002230; the parties, something alien . Secondly, the appellants emphasised that the imperative duty imposed on the Licensing Court or the Supreme Court was, in terms of the paragraph, addressed to information "classified by the [Police Commissioner] as criminal intelligence". It was not addressed to "information" that could be objectively determined to be "criminal intelligence". By s 28A(1) of the Act, "classification" by the Police Commissioner as "criminal intelligence" immediately prevented disclosure other than as provided. The majority in Gypsy Jokers decided that review, according to such an objective standard, was still possible. However, review here was excluded by the present Act. The Police Commissioner had the stated power to perform the "classification" of the information. That classification then had the restrictive consequence of binding the Licensing Court or the Supreme Court, irrespective of whatever that Court might objectively decide. Upon this interpretation, Gypsy Jokers was distinguishable and the offence to judicial independence and integrity was demonstrated; . Thirdly, it might be contended that an objective function was reserved to a court, namely the judicial review of the confidential information classified by the Police Commissioner as "criminal intelligence". However, the appellants argued that, in practice, any such review was illusory. This was partly because the Police Commissioner (or delegate), by reason of office, was effectively in a position to classify the information in a way that a court could not sensibly challenge. Moreover, there was a statutory 230 [2004] 1 Qd R 40. Kirby the information command to maintain the confidentiality of the information so classified by the Police Commissioner and to receive evidence and hear argument their in private, without about representatives. This effectively meant that the usual facilities available to a court to scrutinise, question and test the evidence were withheld in this case. Unassisted by the excluded parties and their representatives, the Licensing Court was deprived of the normal court-like means for reaching an objective decision on the evidence, different from that involved in the "classification" by the Police Commissioner; the parties and . Fourthly, the appellants contrasted the procedure mandated in the sub- section with the procedures that had been upheld in earlier decisions involving the Kable principle or in other procedures reflecting the approach of the common law. The appellants submitted that this comparison made clear the impact of s 28A(5) upon the independence and integrity of the courts. Thus, the appellants disputed the supposed analogy to the decision of this Court in Fardon231. In that case, the majority envisaged that a prisoner, affected by the adverse decision, would be given full disclosure of all relevant material so that he or she could contest the suggested foundation for the decision that was adverse to the prisoner. In the present case, any adverse decision would follow a procedure that effectively forbade the person affected from receiving, or knowing about evidence or hearing arguments about critical information. Likewise, the representatives of the persons affected would be excluded. Instead, the Licensing Court would meet in private with representatives of the Executive Government in a "closeting", as it was put, between the agencies of the Executive and the judges, allegedly not seen since the reign of James II232. Indeed, events during that unhappy King's reign and the personal pressure he placed upon the judges led to the Commons' demand in England for a guarantee of the independence and integrity of the judges. This resulted in the Act of Settlement233; . Fifthly, the appellants rejected the supposed analogy to ex parte hearings involving police and judicial officers, anterior to the grant of search and 231 (2004) 223 CLR 575 at 656 [221]. 232 See Bradley, "Relations between Executive, Judiciary and Parliament: an Evolving Saga?", [2008] Public Law 470 at 470-472 citing Godden v Hales (1686) 2 Show KB 475 [89 ER 1050]; cf Re JRL; Ex parte CJL (1986) 161 CLR 342 at 350 per Mason J; [1986] HCA 39. 233 Act of Settlement 1700 (Imp) 12 & 13 Will III c 2, s 3; see also 1 Geo III c 23, s 1; Blackstone, Commentaries on the Laws of England, vol 1 (1765) at 258. Kirby arrest warrants234. They pointed out that the procedure in s 28A(5) of the Act applied to "any proceedings under the Act" including before the Licensing Court or the Supreme Court. Accordingly, it governed final determinations of the merits of an application. This was thus markedly different from the conduct of a proceeding before a judicial officer which determines finally no substantive rights or duties, only earlier ancillary decisions; . Sixthly, it was put against the appellants that an applicant for a liquor licence, confronted with "criminal intelligence", could always adduce his or her own character evidence to cast doubt on the unknown contents of the police file. The appellants responded in terms of the decision of the Supreme Court of Canada in Charkaoui v Canada (Citizenship and Immigration)235. There, in relation to legislation bearing some similarities to the present, McLachlin CJ, for the Court, observed236: "[S]ince the named person does not know what has been put against him or her, he or she does not know what the designated judge needs to hear. If the judge cannot provide the named person with a summary of the information that is sufficient to enable the person to know the case to meet, then the judge cannot be satisfied that the information before him or her is sufficient or reliable. … Such scrutiny is the whole point of the principle that a person whose liberty is in jeopardy must know the case to meet. Here that principle has not merely been limited; it has been effectively gutted. How can one meet a case one does not know?" legislation invalidated by in Charkaoui was The Canadian the Supreme Court as contravening the Canadian Charter of Rights and Freedoms237. However, the Court rejected another argument for the objector that the legislation "compromise[d] the perceived independence and impartiality of the designated judge" or was contrary to "the unwritten constitutional principle of judicial independence"238. Such arguments, more closely analogous to those of the appellants in the present appeal, were not accepted; and 234 See George v Rockett (1990) 170 CLR 104 at 112; [1990] HCA 26. 235 [2007] 1 SCR 350. 236 [2007] 1 SCR 350 at 388-389 [63]-[64]. 237 [2007] 1 SCR 350 at 419 [139]. 238 [2007] 1 SCR 350 at 381-382 [46]-[47]. Kirby . Seventhly, the appellants understandably drew attention to the dangers of to play the corrupt legislation that requires, or permits, courts to act, in final dispositions, upon the testimony of secret witnesses. The person affected is not then afforded a proper opportunity to challenge such evidence or even to know the gist or substance of the assertions239. The appellants argued that the law recoils from allowing police and other officials to place a "thumb on the scales" of justice in courts of law240. This was particularly so where the procedures permitted the use of secret testimony. Such materials often provide "a cloak for the malevolent, the misinformed, the meddlesome, and informer undetected and the role of uncorrected"241. The appellants cited numerous instances of serious wrongs occasioned by decision-makers acting upon criminal intelligence that could allegedly not be disclosed to the person most immediately affected242. By borrowing the independent courts to throw an apparent vestige of acceptability over such evidence, the appellants argued that s 28A(5) of the Act undermined the integrity of the courts. It spent the reputational capital of the courts in a way that the Kable principle was intended to prevent. The appellants suggested that, effectively, if the State Parliament and Executive wished to institute procedures such as those in s 28A(5) of the Act, they should, like the law-makers in Western Australia, be obliged to do so without involving the courts and risking their hard-won reputation for performing their functions with an assurance of basic justice to all parties. As in most cases where Kable has been invoked, the legislation under consideration here involves unusual and atypical features. It contains apparent departures from rules normally observed in legislation affecting Australian courts of law. However, the question for the courts in such cases is not whether that 239 cf R v Davis [2008] 1 AC 1128 at 1170-1171 [91], [94] citing the dissenting reasons of Judge Stephen in Prosecutor v Tadic, International Criminal Tribunal for the Former Yugoslavia, Case No IT-94-1-T, 10 August 1995. That dissenting opinion was preferred by the majority in Prosecutor v Blaskic, International Criminal Tribunal for the Former Yugoslavia, Case No IT-95-14-T, 5 November 1996; cf R (Roberts) v Parole Board [2005] 2 AC 738. 240 R v Lodhi [2006] NSWSC 586. 241 Knauff v Shaughnessy 338 US 537 at 551 (1950) per Jackson J (in dissent). 242 See Davis [2008] 1 AC 1128 at 1171 [93], referring to Prosecutor v Tadic, International Criminal Tribunal for the Former Yugoslavia, Case No IT-94-1-T, 10 August 1995. See also Note, "Secret Evidence in the War on Terror", (2005) 118 Harvard Law Review 1962 at 1980. Kirby legislation is desirable or even ultimately effective in departing from previously settled ways. The only question is whether the departure is of such a character and to such a degree as to attract the implied constitutional prohibition expressed in Kable. Since Kable, no other case has been found by this Court to attract the application of the principle243. This may be partly because, from the outset, the judges in the majority in Kable recognised that successful invocations of the principle would be extremely rare244. It may partly be so because elected governments and parliaments in Australia rarely depart from such basic norms in the legislative deployment of judges and the courts. Whatever the explanation, the engagement of the Kable principle is clearly reserved to attempts by legislation to impose upon courts functions that are seriously repugnant to, or incompatible with, the institutional independence and integrity of such courts245. Is the present such a case? Interpretation of s 28A(5): When a court is required to apply a constitutional principle to legislation, it is normally first necessary to construe the legislation in issue246. The respondent, the Commonwealth and a number of the States argued that, upon its proper interpretation, s 28A(5) of the Act did not have the drastic and exceptional consequences alleged by the appellants. . The implied power of the Police Commissioner to "classify" information as "criminal intelligence" is the starting point for the operation of s 28A(5) of the Act. However, attention must be drawn to several features of the 243 See, for example, Nicholas v The Queen (1998) 193 CLR 173 at 203 [57]; [1998] HCA 9; H A Bachrach Pty Ltd v Queensland (1998) 195 CLR 547 at 561-562 [14]; [1998] HCA 54; McGarry v The Queen (2001) 207 CLR 121 at 163-164 [133]- [134]; [2001] HCA 62; Silbert v Director of Public Prosecutions for Western Australia (2003) 217 CLR 181 at 186 [9]-[11], 194 [39]; [2004] HCA 9; Baker v The Queen (2004) 223 CLR 513 at 534-535 [51]; [2004] HCA 45; Fardon (2004) 223 CLR 575 at 593 [23], 601-602 [43], 621 [118], 658 [234]; Forge (2006) 228 CLR 45 at 86 [93]; Gypsy Jokers (2008) 234 CLR 532. 244 cf Kable (1996) 189 CLR 51 at 98 per Toohey J, 134 per Gummow J; Fardon (2004) 223 CLR 575 at 601 [43] per McHugh J. 245 cf Forge (2006) 228 CLR 45 at 76 [63]. 246 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 186 per Latham CJ; [1948] HCA 7; Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 662 [81]; [2000] HCA 33; Gypsy Jokers (2008) 234 CLR 532 at 553 [11], Kirby sub-section which the appellants' submissions appeared to overlook or to misread. . In classifying intelligence", information as "criminal the Police Commissioner is required to form an opinion as to whether such information falls within the definition of that expression in s 4 of the Act. That opinion must be formed reasonably upon material that was before the Police Commissioner (or the Commissioner's delegate) at the time. The Licensing Court and the Supreme Court are entitled to scrutinise the "classifications" made against an objective standard. The court concerned must judge for itself, with complete independence and impartiality, whether objectively the information is reasonably capable of meeting the statutory description247; . This approach to the function of the courts, outlined in the Act, is reinforced when the definition of "criminal intelligence" is considered. That definition explicitly requires that disclosure of the information "could reasonably be expected" to prejudice certain activities or persons. It also provides express criteria by which the court concerned might judge whether the information has been "classified" lawfully within a protected category. Amongst the criteria which the common law has accepted as giving rise to particular protections, two are identified for the purpose of s 28A of the Act. First, whether the disclosure of the information might prejudice criminal investigations or secondly, whether it would enable the discovery of the existence or identity of a confidential source248. Imposing restrictive protections to such information is not alien to the judicial process. On the contrary, in applying the common law, judges have long accorded specific protections to evidence of that character249; . Section 28A of the Act, specifically sub-ss (5)(b) and (6), establishes procedures that must be observed to protect the Police Commissioner's "classification" of information as "criminal intelligence". The court before which s 28A(5) is invoked is entitled, and obliged, to demand a demonstration that all such procedural preconditions have been met. In doing so, the independence and impartiality of the courts concerned are unaffected. Moreover, courts nowadays generally have access to the 247 Gypsy Jokers (2008) 234 CLR 532 at 559 [36]. 248 See, for example, Conway v Rimmer [1968] AC 910 at 966. 249 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 650-657 [126]-[147]; [1999] HCA 21; Gypsy Jokers (2008) 234 CLR 532 at 558 Kirby information in respect of which confidentiality is required. This principle is also reflected in s 28A(1). Prohibition of the provision of the "classified" information does not extend to "the Minister, a court or a person to whom the [Police Commissioner] authorises its disclosure"250. In this way, legal developments over the past 60 years251 are adequately reflected in the statutory provisions; . The verb "must" in s 28A(5)(a) is addressed to the Licensing Court and to the Supreme Court. However, any offensiveness of the use in that word of the imperative mood obviously depends on what the court "must" actually do. The command is softened somewhat by requiring that the court must "take steps" to maintain the classified information. This expression falls short of a universal obligation to "maintain the confidentiality of information" in every case. Had that been the intended obligation, there would have been no need to include the duty to "take steps" for the purposes identified. The submission of Victoria should be accepted that the "taking of steps" is not rigid or prescriptive language but, instead, allows for incremental action. Not being absolute, it permits appropriate steps to be taken that would not compromise the confidentiality of the information. These steps could afford an opportunity to a party, or to its legal representative, to have an expurgated and anonymised summary of evidence. That, in turn, would provide the party with a real chance to defend and advance its interests, consistent always with upholding the objectives of the classification. The respondent accepted that the "steps" could include those required to ensure that the court could adequately evaluate, and where appropriate, make effective use of, its confidentiality. In this sense, contrary to the submission of the appellants, the language of s 28A(5) begins to approximate, in important respects, more than in Gypsy Jokers, the traditional facility available to Australian courts at common law. Thus, the respondent accepted that, consistently information whilst maintaining the 250 The Act, s 28A(1) (emphasis added). See VEAL (2005) 225 CLR 88 at 99-100 [28]-[29]; Thomas v Mowbray (2007) 233 CLR 307 at 358 [124]. 251 cf Sankey v Whitlam (1978) 142 CLR 1 at 42, 43-44, 61; [1978] HCA 43; Duncan v Cammell, Laird & Co Ltd [1942] AC 624 at 633-634, 638; Conway [1968] AC Kirby with s 28A(5), the courts retained an implied or inherent jurisdiction to ensure that the proceedings before them were fair252. Where appropriate, the court could therefore exclude confidential evidence in the exercise of its discretion if the admission of that evidence would be seriously unfair to an applicant, beyond the unfairness necessarily inherent in the s 28A procedures. Moreover, a court could make it clear that it would refuse to act on information unless a particular witness was called to give oral evidence before it. The court itself is empowered to test that evidence by cross-examination. In any event, the use that is made of the "criminal intelligence" is left to the court. Acting independently, the court could give little weight to "classified" evidence if, for example, it was unpersuasive, untested, remote or hearsay. Likewise, if it ought to be discounted by reference to considerations of the kind mentioned by Dixon J in Briginshaw v Briginshaw253; . The appellants expressed the strongest objection to the requirement of s 28A(5) that the court should receive evidence and hear argument about the information in private, without the parties or their representatives. However, this obligation is likewise softened by the repetition of the introductory phrase "take steps". The hearing of argument in private is included amongst the "steps" which the court is required to take to maintain the confidentiality of the classified information. If such "steps" were not necessary for that purpose, their inclusion in the court procedures would not be mandatory. It should be noted that, in the appellants' case, Judge Rice actually received the file of evidence and heard argument in public, although, as can now be seen, the argument did not then address the true interpretation of s 28A of the Act as closely as it should have; . When confronted by the tender of "criminal intelligence", an applicant for a liquor licence is not entirely excluded from taking steps to challenge or to attempt to rebut information classified as "criminal intelligence". Invariably, under the Act, any material so classified must bear on the question of whether the applicant is a "fit and proper person" to hold a licence of the kind sought. As attempted to some degree in the present case, the applicant could adduce evidence to rebut an inference that he or she was not a fit and proper person. Such evidence would necessarily be of a general kind although by no means at large. A court, called upon to 252 Cameron v Cole (1944) 68 CLR 571 at 589 per Rich J; [1944] HCA 5; Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW (1956) 94 CLR 554 at 560; [1956] HCA 22. 253 (1938) 60 CLR 336 at 361-362; [1938] HCA 34. Kirby weigh any such evidence, including any character evidence submitted, would have to take into account the forensic disadvantages facing the applicant. the Police Commissioner of a The appellants complained that generalised character evidence could never effectively rebut specific but undisclosed allegations contained in "criminal intelligence". However, even at common law, "criminal intelligence", as defined in s 4 of the Act, would ordinarily be protected from disclosure. The point of differentiation in the Act lies in the for prior provision "classification". Likewise, to require the court to take "steps" to maintain the confidentiality of the information so classified. The error of the appellants, before the Liquor Commissioner and before the Licensing Court, was to read s 28A(5) too absolutely. They failed to apply to it the close scrutiny required by the ordinary principles of administrative law. Such principles are further reinforced by a general principle of statutory interpretation. Provisions, such as s 28A(5) of the Act, are always read strictly, in so far as they appear to derogate from the ordinary protections afforded by the law for basic civil rights254; and facility . The last-mentioned approach is reinforced by consideration of the reasons of Blaxell J in the Supreme Court of Western Australia in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [No 2]255. That decision was given upon the return of Gypsy Jokers to that Court, following the decision of this Court. The majority of this Court concluded that the WA Act afforded a continuing, objective and acceptable judicial role for the courts, notwithstanding the legislative provisions designed to protect the confidentiality of "criminal intelligence". Attached to the reasons of Blaxell J is a schedule that identifies particular items of information provided to the Court; which information was designated as confidential; the existence of evidence to support the claim to confidentiality; the relevant paragraphs of the police evidence; the evidence in respect of which some disclosure had been agreed; the determination of the residual claim for confidentiality; and the resulting orders. The schedule shows that confidentiality was upheld for several parts of the affidavits examined by the Court. However, an order was made that other parts of the paragraphs be disclosed. In short, the Court in that case performed a court-like function, apparently in the normal and regular way. 254 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11], 562-563 [43], 577 [90], 592-593 [134] and cases there cited; [2002] HCA 49. 255 [2008] WASC 166. Kirby Operating within the limitations of legislation of the kind applicable in Gypsy Jokers and the rather more facultative legislation applicable in the present case, the facility of judicial protection is undoubtedly restricted. It is confined beyond what might have been available in an evaluation of a claim to privilege at common law. The remedies generally available on judicial review are notoriously narrower than those available in an ordinary trial hearing or in an appeal on the merits. However, review of such a kind by judges remains a conventional and familiar judicial function in Australia. Gypsy Jokers [No 2] demonstrates, in a particular case, that such a review is not, in the result, without real and substantive judicial content. There is no reason to believe that the position under s 28A(5) of the South Australian legislation would be different. Indeed, the South Australian legislation contains provisions that indicate more clearly that the courts retain a substantive reviewing function. Conclusion: s 28A(5) is valid: The result of this analysis is that the provisions of s 28A(5) of the Act, properly construed, do not offend the Kable principle. As was intended, the provision diminishes the role of a court to decide claims to privilege with respect to "criminal intelligence". However, it does not involve the State Parliament or the Police Commissioner impermissibly "instructing" a court on a particular case. It does not prevent a court from performing traditional judicial functions. It does not diminish the integrity and independence of a court in a constitutionally impermissible way. The complaint that s 28A(5) of the Act is constitutionally invalid is therefore rejected. It follows that it is unnecessary to decide in this case whether, had it been otherwise, the proper remedy would have been severance of the offending portions of the Act or invalidation of all or part of the Act. Such questions do not now arise for decision. Order The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Nudd v The Queen [2006] HCA 9 9 March 2006 ORDER Appeal dismissed. On appeal from the Supreme Court of Queensland Representation: M J Byrne QC with C J N Eberhardt for the appellant (instructed by Graham Lawyers) A J Rafter SC with G R Rice for the respondent (instructed by Director of Public Prosecutions (Commonwealth)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Nudd v The Queen Criminal Law – Trial – Miscarriage of justice – Competence of counsel – Alleged failure to take instructions – Alleged failure to understand elements of offence and relevant statutory provisions – Alleged failure to be familiar with applicable judicial decisions. Appeal – Criminal appeal – Miscarriage of justice – Competence of counsel – Application of "proviso" – Whether denial of fair trial may sometimes without more amount to miscarriage of justice. Legal practitioners – Criminal trial – Competence of counsel and of solicitor – Alleged failures to take instructions, to understand elements of offence and to consider applicable judicial decisions – Extent to which, if at all, alleged incompetence contributed to any miscarriage of justice – Whether in some circumstances miscarriage of justice includes denial of fair trial according to law without more. Words and phrases – "on any ground whatsoever there was a miscarriage of justice". Criminal Code (Q), s 668E(1). GLEESON CJ. Following a trial in the Supreme Court of Queensland, before Philippides J and a jury, the appellant was convicted of being knowingly concerned in the importation into Australia of cocaine. He was sentenced to a lengthy term of imprisonment. He says that his conviction involved a miscarriage of justice, and blames his trial counsel. The appellant appealed unsuccessfully to the Court of Appeal of the Supreme Court of Queensland1. The jurisdiction invoked was that conferred by s 668E of the Criminal Code (Q), which is in a form similar to the statutory provisions governing criminal appeals in the other Australian States and Territories2. The statutory ground of appeal was that there was a miscarriage of justice. That, as was said in R v Birks3, Ignjatic4, TKWJ v The Queen5, and Ali v The Queen6, defined the issue to be decided. The appellant's criticisms of the conduct of his trial counsel were relevant to the issue7, but the issue was whether there was a miscarriage of justice. In this context, the concepts of justice, and miscarriage of justice, bear two aspects: outcome and process. They are different, but related. In Davies and Cody v The King8, this Court said: "From the beginning, [the English Court of Criminal Appeal] has acted upon no narrow view of the cases covered by its duty to quash a conviction when it thinks that on any ground there was a miscarriage of justice, a duty also imposed upon the Supreme Court of Victoria ... It has consistently regarded that duty as covering not only cases where there is affirmative reason to suppose that the appellant is innocent, but also cases of quite another description. For it will set aside a conviction whenever it 1 R v Nudd [2004] QCA 154. 2 See Weiss v The Queen [2005] HCA 81. (1990) 19 NSWLR 677 at 685. (1993) 68 A Crim R 333. (2002) 212 CLR 124. (2005) 79 ALJR 662; 214 ALR 1. 7 TKWJ v The Queen (2002) 212 CLR 124 at 134 [30] per Gaudron J, 147-148 [74]- (1937) 57 CLR 170 at 180 per Latham CJ, Rich, Dixon, Evatt and McTiernan JJ. appears unjust or unsafe to allow the verdict to stand because some failure has occurred in observing the conditions which, in the court's view, are essential to a satisfactory trial, or because there is some feature of the case raising a substantial possibility that, either in the conclusion itself, or in the manner in which it has been reached, the jury may have been mistaken or misled." This emphasis upon outcome and process as requirements of justice according to law is fundamental and familiar. It informed the explanation of miscarriage of justice given by Barwick CJ in Ratten v The Queen9: "Miscarriage is not defined in the legislation but its significance is fairly worked out in the decided cases. There is a miscarriage if on the material before the court of criminal appeal, which where no new evidence is produced will consist of the evidence given at the trial, the appellant is shown to be innocent, or if the court is of the opinion that there exists such a doubt as to his guilt that the verdict of guilty should not be allowed to stand. It is the reasonable doubt in the mind of the court which is the operative factor. It is of no practical consequence whether this is expressed as a doubt entertained by the court itself, or as a doubt which the court decides that any reasonable jury ought to entertain. If the court has a doubt, a reasonable jury should be of a like mind. But I see no need for any circumlocution; as I have said it is the doubt in the court's mind upon its review and assessment of the evidence which is the operative consideration. That is one instance of a miscarriage: another is where the appellant has not had a fair trial. There is no need here to refer to the various circumstances in which a trial may become unfair. Some of these are mentioned in the reasons of the Full Court. But it may be that even where there have been irregularities at the trial there may be no miscarriage of justice if the court forms the opinion that no jury of reasonable men, properly instructed and alive to their responsibilities, would fail on the evidence to convict the accused." The common statutory provision governing criminal appeals, of which s 668E of the Queensland Code is an example, covers matters of both outcome and process, referring to jury verdicts which are unreasonable or cannot be supported having regard to the evidence, to wrong decisions (of a judge) on any question of law, and to any other ground for concluding that there was a miscarriage of justice. These grounds for allowing an appeal are followed by a qualification, often referred to as a proviso, to the effect that, even if a point raised by the appellant has been made out, the appellate court may dismiss the (1974) 131 CLR 510 at 516. appeal if it considers that no substantial miscarriage of justice has actually occurred. The proviso was considered recently by this Court in Weiss v The Queen10. The concluding sentence in the passage from the judgment of Barwick CJ in Ratten adopted a formula sometimes used to explain the practical effect of the proviso. What is significant for present purposes is the qualified manner in which Barwick CJ expressed himself. Some irregularities "may" involve no miscarriage of justice if the appellate court forms a certain opinion about the strength of the case against the appellant. The corollary of that proposition is that a defect in process may be of such a nature that its effect cannot be overcome by pointing to the strength of the prosecution case. It is impossible to state exhaustively, or to define categorically, the circumstances in which such a defect will occur. In Mraz v The Queen11, Fullagar J said that "every accused person is entitled to a trial in which the relevant law is correctly explained to the jury and the rules of procedure and evidence are strictly followed" and that, if there is a failure in any of those respects "and the appellant may thereby have lost a chance which was fairly open to him of being acquitted", then there is a miscarriage of justice. That well-known passage relates the failure of process to the loss of a chance of acquittal. Even though it is impossible and undesirable to attempt to reduce miscarriages of justice to a single formula, there is at least one circumstance in which a failure of process cannot be denied the character of a miscarriage of justice on the ground of the appellate court's view of the strength of the prosecution case. That is where the consequence of the failure of process is to deprive the appellate court of the capacity justly to assess the strength of the case against the appellant. There may be other circumstances in which a departure from the requirements of a fair trial according to law is such that an appellate court will identify what occurred as a miscarriage of justice, without undertaking an assessment of the strength of the prosecution case. If there has been a failure to observe the conditions which are essential to a satisfactory trial and, as a result, it appears unjust or unsafe to allow a conviction to stand, then the appeal will be allowed. The concept of miscarriage of justice is as wide as the potential for error. Indeed, it is wider; for not all miscarriages involve error. Process is related to outcome, in that the object of due process is to secure a just result. Justice, however, means justice according to law, and the observance of the requirements of law according to which a criminal trial is to be conducted has a public as well as a private purpose. An unjust conviction is one form of miscarriage. Another is a failure of process of such a kind that it is impossible for an appellate court to decide whether a conviction is just. Another is a failure of process which departs from the essential requirements of a fair trial. 10 [2005] HCA 81. 11 (1955) 93 CLR 493 at 514. Where it is claimed that a miscarriage of justice of the second kind referred to in Davies and Cody and Ratten has occurred, the appellate court is primarily concerned with what happened at, or in relation to, the trial of the appellant; an investigation of why it happened is ordinarily irrelevant, and often impractical. It is natural for a person aggrieved by the outcome of a criminal trial to seek to assign blame, but where a miscarriage of justice is said to arise from a failure of process, it is the process itself that is judged, not the individual performance of the participants in the process. If a trial judge fails to instruct a jury on an essential point of law, the explanation might be that the judge was inexperienced, or ill, or absent-minded, or temporarily distracted by other concerns. That would be irrelevant. It is the acts and omissions of the judge that matter; not personal failings or problems that might account for those acts or omissions. Similarly, where the conduct of counsel, as a participant in the trial process, is said to give rise to, or to be involved in, a miscarriage of justice, ordinarily it was what was done or omitted that is of significance, rather than why that occurred. Sometimes, however, a decision as to whether something that happened at, or in connection with, a criminal trial involved a miscarriage of justice requires an understanding of the circumstances, and such an understanding might involve knowledge of why it happened. A criminal trial is conducted as adversarial litigation. A cardinal principle of such litigation is that, subject to carefully controlled qualifications, parties are bound by the conduct of their counsel, who exercise a wide discretion in deciding what issues to contest, what witnesses to call, what evidence to lead or to seek to have excluded, and what lines of argument to pursue. The law does not pursue that principle at all costs. It recognises the possibility that justice may demand exceptions. Nevertheless, the nature of adversarial litigation, with its principles concerning the role of counsel, sets the context in which these issues arise. Considerations of fairness often turn upon the choices made by counsel at a trial. In TKWJ v The Queen12, the appellant complained that evidence of his good character was not led. This, it was said, was unfair. In rejecting that argument, this Court said that the failure to call the evidence was the result of a decision by counsel, and that, viewed objectively, it was a rational decision13. That, in the circumstances of the case, was conclusive. It is the fairness of the process that is in question; not the wisdom of counsel. As a general rule, counsel's decisions bind the client. If it were otherwise, the adversarial system could not function. The fairness of the process is to be judged in that light. The nature of the adversarial system, and the assumptions on which it operates, will lead to the conclusion, in most cases, that 12 (2002) 212 CLR 124. 13 (2002) 212 CLR 214 at 130-131 [16] per Gleeson CJ, 133 [26]-[27] per Gaudron J, 155 [95] per McHugh J, 158 [107] per Hayne J. a complaint that counsel's conduct has resulted in an unfair trial will be considered by reference to an objective standard, and without an investigation of the subjective reasons for that conduct. It is convenient to make a digression concerning a point of appellate practice in one Australian jurisdiction. It would be unfortunate if this particular matter, otherwise irrelevant to the present appeal, were permitted to obscure the general principle discussed in the preceding paragraph. In New South Wales, r 4 of the Criminal Appeal Rules provides that no direction, omission to direct, or decision as to the admission or rejection of evidence, given by the judge presiding at the trial, shall, without the leave of the Court of Criminal Appeal, be allowed as a ground for appeal or an application for leave to appeal unless objection was taken at the trial to the direction, omission or decision. Applications for leave under the rule sometimes require consideration of the circumstances of a failure to take objection at the trial. In particular, where it appears that there may have been some tactical advantage sought by not taking the objection, the appellant, in applying for leave, may be concerned to rebut that inference. On some occasions, the Court of Criminal Appeal receives evidence from trial counsel to explain the circumstances of the failure to object. This, in turn, may raise issues of legal professional privilege, and express or implied waiver of privilege. On relatively rare occasions, an argument about the application of r 4 can widen into an argument about miscarriage of justice resulting from the conduct of trial counsel. More often than not, any such evidence is confined to a brief, unchallenged, assertion by trial counsel that the failure to object was not for a tactical purpose. Where, however, a substantial issue of fact arises concerning the conduct of counsel, the procedure sometimes reveals the difficulties inherent in the resolution of such an issue. A full explanation, and understanding, of why decisions are taken in the conduct of a trial will often require knowledge of information held, and opinions formed, by counsel, the revelation of which could be invidious, and contrary to the interests of an appellant. Furthermore, counsel whose conduct is in question is not a party to the appellate proceedings, is unrepresented, and may be in a position of conflict of interest with his or her erstwhile client. While there may be circumstances in which it is unavoidable, this can be an awkward procedure. A court of criminal appeal is an unsatisfactory forum for assessing the performance of trial counsel, and appellate courts, recognising that difficulty, seek to avoid such assessment unless it is unavoidable. I mention the practical problems that arise in the application of r 4, because the existence of such problems is of wider significance, and bears upon the principles to be applied in resolving a question of miscarriage of justice. To the extent to which it is reasonably possible, the focus of attention should be the objective features of the trial process. Nevertheless, there may be circumstances where it is relevant to ask why some act or omission occurred. In some cases, for example, it may be material to know that counsel took a certain course upon the instructions of the client. There could be circumstances in which it is material to know that a course was taken contrary to instructions. The possibility of a need to know the reason for conduct cannot altogether be eliminated. In general, however, as far as justice permits, the enquiry should be objective. As a matter of principle, such objectivity is consistent with the assumptions on which the adversarial system operates. As a matter of practicality, it avoids the difficulties inherent in turning a criminal appeal into an investigation of the performance of trial counsel. There is a further reason for caution in setting out to measure the performance of counsel. Criminal trials are conducted as a contest, but the adversarial system does not require that the adversaries be of equal ability. The system does its best to provide a level playing field, but it cannot alter the fact that some players are faster, or stronger, or more experienced than others. Opposing counsel may be mismatched, but this does not make the process relevantly unfair. Judges can do their best to minimise the effects of differences between the abilities of opposing counsel, but their capacity to intervene is limited by their own obligations of neutrality. Accreditation requirements impose basic standards of professional competence, but beyond those there are large differences in individual levels of competence. The practical effect of a certain level of performance by a defence counsel might depend upon the level of performance of the prosecutor. Any experienced advocate knows that what might amount to a minor slip against one opponent could be a fatal mistake against another. The reluctance of courts of criminal appeal to enter upon an assessment of the performance of trial counsel is well-founded in considerations both of principle and of pragmatism. That reluctance is reflected in the way in which courts respond to an argument that there has been a miscarriage of justice arising from the incompetence of counsel. Such arguments are becoming increasingly common. Nowadays, when most criminal trials and appeals are funded by legal aid, appellants are often represented by counsel who did not appear at the trial. By hypothesis, trial counsel lost; an appellant supported by legal aid will often want new counsel to conduct the appeal. The client may well be dissatisfied with the performance of trial counsel. Appeal counsel will have his or her own ideas about the way the defence case should have been conducted. Inevitably, in some cases, trial counsel will be blamed for failure. Such blame is pointless unless it can be related to a legal rubric of relevance to the jurisdiction being exercised by the court of criminal appeal. The relevant rubric is miscarriage of justice. In the United States, and Canada, accused persons have a constitutional, or quasi-constitutional, right to effective assistance from counsel. Yet even in those jurisdictions, the courts have been concerned to stress the objective nature of the standard to be applied, and the significance for the concept of miscarriage of justice of the adversarial context. In Strickland v Washington14, the Supreme 14 466 US 668 at 669 (1984). Court of the United States held that, when a complaint is made of counsel's ineffectiveness, the appellant must show both that counsel's conduct fell below an objective standard of reasonableness and that prejudice resulted. O'Connor J, writing for the majority, described prejudice thus15: "This requires showing that counsel's errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable ... a breakdown in the adversary process that renders the result unreliable." Later, her Honour said, in the context of error resulting in the absence of certain evidence16: "The defendant must show that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome." In Canada, the right to effective assistance of counsel has been held to be derived from certain provisions of the Criminal Code and the Canadian Charter of Rights and Freedoms. In R v GDB17, the Supreme Court of Canada followed the approach in Strickland. A significant feature of the North American cases is that, although they turn upon a legal right to effective assistance from counsel, and complaints are expressed in terms of a denial of the right, the complaints are dealt with by asking a question which, upon analysis, is similar to the question whether there has been a miscarriage of justice. Because of the impossibility of predicting every form of misfortune or error that may result in a miscarriage of justice; because there are cases where an understanding of why something happened, or did not happen, may be material to a conclusion as to whether there was unfairness; and because such an understanding may reveal that there is no explanation for what occurred other than counsel's ineptitude or inexperience, courts of criminal appeal do not overlook the possibility that the conduct of counsel may result in such a failure of process that there is a miscarriage. In the late 1980s, there were a number of cases in the Criminal Division of the English Court of Appeal where tactical decisions made by counsel without instructions from the client were claimed to have given rise to miscarriages of 15 466 US 668 at 687 (1984). 16 466 US 668 at 694 (1984). 17 [2000] 1 SCR 520. justice. In 1989, in R v Ensor18, Lord Lane CJ, reviewing earlier decisions, reaffirmed the general rule that a client is bound by counsel's conduct, but approved a qualification, expressed in an earlier decision, to the effect that where an appellant "might have suffered some injustice as a result of flagrantly incompetent advocacy by his advocate" the conviction would be quashed. This was not an invitation to substitute a standard of competence of counsel for the statutory test of miscarriage of justice. It was stated, as a qualification to a general rule, in recognition of the possibility of exceptional circumstances. Nor was it an attempt to define those exceptional circumstances with precision. Flagrant incompetence may be contrasted with conduct for which there is a rational explanation. If, instead of "flagrant incompetence", the English judge had spoken of "conduct incapable of rational explanation on forensic grounds", the meaning might not have been much different. There will be some cases in which it is not possible to decide whether injustice has occurred without knowing why a particular course was taken at trial. To take an extreme example, if an accused person failed to give evidence because counsel wrongly advised that an accused is not entitled to give evidence, it is difficult to imagine that a court of criminal appeal would not intervene. The example shows that, although, as a general rule, the test of whether a forensic decision has resulted in an unfair trial is objective, one cannot eliminate the possibility of exceptional cases in which it is relevant to know why a certain course was or was not taken. In 1990, the New South Wales Court of Criminal Appeal decided R v Birks19. A miscarriage of justice was held to have resulted from the "combined effect of ... various errors"20. The errors were errors of trial counsel, and of the trial judge. The explanation of counsel's errors was inexperience, but it was the errors (of counsel and the judge) that were said to give rise to the miscarriage of justice. It is important to note the significance of the combination of the errors, for the case provides a good example of a failure of the trial process, or what O'Connor J called "a breakdown in the adversary process"21. The accused was charged with rape. He admitted having sex with the complainant, but said she consented. A problem for the defence was that, following the incident, the complainant's face was found to be bruised and cut, in a manner consistent with her account of violence. The accused, before trial, instructed his lawyers that the damage to the complainant's face was the result of a mishap with a torch. When 18 [1989] 1 WLR 497 at 502; [1989] 2 All ER 586 at 590. 19 (1990) 19 NSWLR 677. 20 (1990) 19 NSWLR 677 at 692. 21 Strickland v Washington 466 US 668 at 687 (1984). cross-examining the complainant, defence counsel failed to put this to the complainant. When the accused gave evidence, and explained the facial injuries by reference to the torch, his credibility was attacked on the ground that, since his lawyer had not put this version of events to the complainant, it must have been something the accused invented on the spot. His lawyers knew that this was no recent invention, but that it was consistent with what he had said to them from the beginning. Counsel had simply forgotten to cross-examine on the point. There were various ways in which counsel could have dealt with the problem, but he had no idea what to do. In final address, the prosecutor told the jury about the rule in Browne v Dunn22, and invited the jury to infer, from counsel's failure to put it in cross-examination to the complainant, that the explanation about the torch had previously been unknown to the accused's lawyers, and was fabricated by the accused in the witness box. The trial judge took the matter even further. He told the jury they could infer, both from counsel's failure to put the innocent explanation of the facial injuries to the complainant in cross-examination at the trial, and from an earlier failure to raise the matter in cross-examination at the committal proceedings, that the accused had not instructed his lawyers about the incident involving the torch, but had made it up in the witness box. The first part of that direction was risky; the second part (concerning the committal proceedings) was wrong. There is no obligation on defence counsel at committal proceedings to put the defence case in cross-examination or, for that matter, to cross-examine at all. After all this had happened, and the jurors had retired to consider their verdict, counsel told the judge, in court, that his failure to cross- examine was an oversight, and that his instructions from the accused had included information about the torch. The report of the case, with some understatement, records that "confusion resulted"23. Before anything was done to resolve the confusion, the jury came back with a verdict of guilty. The Court of Criminal Appeal quashed the conviction and ordered a new trial. In some respects, what happened in Birks bears a resemblance to what had happened in Tuckiar v The King24. The trial went off the rails as a result of a combination of errors of counsel and the trial judge. The inexperience of counsel was part of the explanation of what happened, but it was the effect of the errors that was held to constitute the miscarriage of justice. The description of conduct as an "error", and the characterisation of something that happened as "unfair", could in some circumstances turn upon knowledge of why something was done or omitted, and this, in turn, might reveal a departure from standards of professional duty. As Lord Carswell said in 23 R v Birks (1990) 19 NSWLR 677 at 682-683. 24 (1934) 52 CLR 335. Teeluck v Trinidad25, there may be rare cases in which counsel's misbehaviour or ineptitude is so extreme as to constitute a denial of due process to the client. McHugh J gave two examples in TKWJ v The Queen26: cases where, for no valid reason, counsel fails to cross-examine material witnesses, or does not address the jury. (I take his Honour to have been referring to cases where there is no rational explanation of counsel's decision; not to cases where an appellate court simply thinks it was unwise to fail to cross-examine. That is indicated by his Honour's treatment of failure to cross-examine and failure to address as like cases). In Teeluck v Trinidad, Lord Carswell went on to say that, normally, "the focus of the appellate court ought to be on the impact which the errors of counsel have had on the trial and the verdict"27. In the present case, the Queensland Court of Appeal, which had before it evidence in addition to the evidence at the trial, was correct to conclude that there was no miscarriage of justice. The facts are set out in the reasons of Callinan and Heydon JJ. The case against the appellant was overwhelming. Like other counsel in other cases, trial counsel put some hopeless arguments; but he understood that the appellant's only real prospect of success lay in seeking to persuade the jury that there was a doubt about whether the extent of the appellant's demonstrated knowledge of, and connection with, the cocaine importation was sufficient to amount to being knowingly concerned in the importation. He had an erroneous view of the law on that point; but, again, that does not make the case unique. Nothing in the material before the Court of Appeal suggested there was any real doubt about the appellant's guilt. The Court of Appeal was in a good position to determine that the conviction was not unjust. There was no failure of process that departed from the essential requirements of a fair trial. There was no miscarriage of justice. The appeal should be dismissed. 25 [2005] 1 WLR 2421 at 2433. 26 (2002) 212 CLR 124 at 148 [76]. 27 [2005] 1 WLR 2421 at 2433. The appellant contends that he was incompetently represented at his trial. He does not contend that "the verdict of the jury should be set aside on the ground that it is unreasonable, or cannot be supported having regard to the evidence"28. He does not contend that "the judgment of the court of trial should be set aside on the ground of the wrong decision of any question of law"29. He does not dispute that, at his trial, "the relevant law [was] correctly explained to the jury and the rules of procedure and evidence [were] strictly followed"30. He does contend that there was "on any ground … a miscarriage of justice"31. He assigns as the ground for that contention: the incompetence of his representation at his trial. The facts of the matter and the course of events in the courts below are described in the reasons of Callinan and Heydon JJ. We need not repeat that description. As four members of this Court explained in TKWJ v The Queen32, describing trial counsel's conduct of a trial as "incompetent" (with or without some emphatic term like "flagrantly") must not be permitted to distract attention from the question presented by the relevant criminal appeal statute, here s 668E of the Criminal Code (Q). "Miscarriage of justice", as a ground on which a court of appeal is required by the common form of criminal appeal statute to allow an appeal against conviction, may encompass any of a very wide variety of departures from the proper conduct of a trial. Alleging that trial counsel was incompetent does not reveal what is said to be the miscarriage of justice. That requires consideration of what did or did not occur at the trial33, of whether there was a material irregularity in the trial34, and whether there was a significant 28 Criminal Code (Q), s 668E(1). 29 Criminal Code, s 668E(1). 30 Mraz v The Queen (1955) 93 CLR 493 at 514. 31 Criminal Code, s 668E(1). 32 (2002) 212 CLR 124 at 134 [31] per Gaudron J, 148 [75], 156 [97] per McHugh J, 157 [101] per Gummow J, 157 [103] per Hayne J. 33 TKWJ v The Queen (2002) 212 CLR 124 at 134 [31] per Gaudron J. 34 (2002) 212 CLR 124 at 149-150 [79] per McHugh J. possibility that the acts or omissions of which complaint is made affected the outcome of the trial35. Pointing to the fact that trial counsel did not take proper instructions from the accused, did not properly understand the statutory provisions under which the accused was charged, or had not read the cases that construed those statutory provisions, would reveal that counsel was incompetent. Showing all three of these errors would reveal very serious incompetence. But an appeal against conviction must ultimately focus upon the trial and conviction of the accused person not the professional standards of the accused's counsel. Was what happened, or did not happen, at trial a miscarriage of justice? In TKWJ there was said to be a miscarriage because evidence of the accused's character was not led at trial. In R v Birks36 the miscarriage lay in the accused's counsel not cross-examining the complainant about some aspects of her evidence. Both TKWJ and Birks were, then, cases of omissions by trial counsel for an accused: omissions in adducing or testing evidence at trial. In the present matter, there were said to be both acts and omissions of trial counsel which caused or contributed to a miscarriage of justice. Ten acts and omissions were specified in the appellant's notice of appeal to the Court of Appeal. Several focused upon what was said to be the ignorance of counsel about the elements of the offence with which the appellant was charged and a consequent failure to give proper advice to the appellant. Others focused upon what were said to be other failures of trial counsel to give proper advice to the appellant, both for want of proper instructions and otherwise. But a failure to give proper advice to the appellant would be significant only if, as a result of that failure, something was done or not done at trial that was, or occasioned, a miscarriage of justice. For the reasons given in TKWJ37, the inquiry about miscarriage must be an objective inquiry, not an examination of what trial counsel for an accused did or did not know or think about. The critical question is what did or did not happen at trial, not why that came about. The appellant's trial counsel, building upon something said in the prosecution's opening address to the jury, misstated in his address to the jury what had to be shown to demonstrate the appellant's knowing involvement in the 35 (2002) 212 CLR 124 at 135 [33] per Gaudron J, 149 [79] per McHugh J, 157 [101] per Gummow J, 157 [104] per Hayne J. 36 (1990) 19 NSWLR 677. 37 (2002) 212 CLR 124 at 158 [107]-[108] per Hayne J. alleged importation. He spoke of a need to demonstrate some form of "practical assistance". In her charge to the jury, the trial judge corrected that error and it is not contended that the jury was given insufficient or incorrect directions about what the prosecution had to prove. But nor was it contended that the submissions made at trial about the need for "practical assistance" meant that other, more substantial, and legally supportable arguments were not put. Rather, because the appellant, on the evidence led at trial, could do no more than assert that the prosecution had failed to prove its case, the trial judge's instructions on what had to be shown sufficed to put the appellant's case as well as it could be put. And the appellant's contention that there was a miscarriage of justice is revealed to be a case about the evidence that was or was not available to the jury at the appellant's trial. As Callinan and Heydon JJ explain in their reasons, the material led in evidence in the appeal to the Court of Appeal showed that the appellant had had little or no positive case to make against the charge brought against him. What the appellant said, in his evidence to the Court of Appeal, was that: "In relation to the charge I say as follows: I was not aware that Peter Jackson was intending to bring cocaine into Australia. I had some knowledge through Jorge Velarde that Peter Jackson was taking some chemicals, possibly Ephedra or Pseudoephedrine for a person whom I believe to be Jorge Velarde's cousin, whom I also believe resides in New Zealand. I had no financial interest in that importation and did not stand to benefit from it in any way. (d) After my meeting with Peter Jackson at the Los Angeles Airport on March 7, 2001 I had no further contact with Peter Jackson and no further involvement in any aspect of Peter Jackson's activities. In the course of the meeting at Los Angeles Airport on March 7, 2001 I told Peter Jackson I was not going to have anything more to do with him and the matter as I did not want to have any further involvement in the matter. I did not assist Peter Jackson obtain a passport in the name of [Geschke]." This evidence may properly be described as being, at best, equivocal, but it is convenient to treat it, as the appellant's submissions did, as showing that the appellant may have wished to contend: that he did not know that Australia was the intended destination for whatever was being imported; and that he had sought to dissociate himself from the enterprise. (His contention that he had no financial or other interest in the importation would seem to have been a point in aid of an argument that the prosecution had failed to prove its case.) All of this was material that, if it was to be advanced with any effect, would have required the appellant to give evidence at his trial. A decision to call the appellant was fraught with danger. If called he would, presumably, have admitted that it was his voice in the recordings of intercepted telephone conversations. (On appeal he did not seek to say that the admission made at trial, that it was his voice, was a false admission; he said only that it should not have been made.) Further, and no less importantly, the prosecution would have been able to cross-examine him about what were alleged to be coded aspects of the conversations with their references, for example, to "contamination" of cargo, "your new bible" and the like. But above all, it would have exposed the appellant to cross-examination that reinforced that the recorded conversations tendered in evidence revealed the continued close involvement of the appellant in dealings with Mr Peter Jackson who was aboard the "Sparkles Plenty" when intercepted in Australian waters with a large cargo of water damaged cocaine. It would have been well open to competent counsel to conclude that the very slight gains that might be obtained by putting forward a positive defence, of the kind that the appellant said he had, were well and truly outweighed by the disadvantages that would likely be suffered were the appellant to give evidence. It would, then, have been well open to competent counsel to conclude that the appellant should be advised against giving evidence in his defence. That being so, the fact that the appellant did not give evidence at his trial has brought about no miscarriage. There then remains the admission made at trial (that it was the appellant's voice in the recorded telephone conversations) and the allegation of failure to object to reception in evidence of some aspects of the taped conversations. Neither can be said to have brought about any miscarriage. The identity of the appellant as a speaker in the recorded conversations was not open to real dispute. In one critical conversation he was observed using a public telephone, with Mr Velarde, at the time that Mr Jackson was recorded as having a telephone conversation, first with one man, and then with another. Absent explanation by the appellant, the jury could not have concluded otherwise than that he had been observed speaking to Mr Jackson. Without evidence to the contrary from the appellant, the conclusion that it was the appellant who participated in the other conversations was likewise inevitable. The Court of Appeal concluded38 that there was one aspect of the recorded conversations to which some objection might have been taken. It concerned the appellant having been stopped and searched at an airport. If objection could have been taken to that part of the recording it was a part of little moment when judged against the whole of the taped conversations. The Court of Appeal rightly concluded that its reception occasioned no miscarriage. None of the matters on which the appellant relied has led to any miscarriage of justice in this matter. There remains for consideration the proposition advanced by the appellant that the incompetence of counsel went to the root of his representation at trial. This contention was evidently founded in what was said about the proviso to the common form of provision for appeal against conviction, by Brennan, Dawson and Toohey JJ, in Wilde v The Queen39: "The proviso has no application where an irregularity has occurred which is such a departure from the essential requirements of the law that it goes to the root of the proceedings. If that has occurred, then it can be said, without considering the effect of the irregularity upon the jury's verdict, that the accused has not had a proper trial and that there has been a substantial miscarriage of justice." It is not necessary to explore the boundaries of this proposition or to attempt to identify circumstances in which it could find application. To do so would require close attention to what is meant by "essential requirements of the law" and "the root of the proceedings". These notions may reflect what has been said by some members of the Court respecting aspects of "due process" discerned from Ch III of the Constitution40. However that may be, in the context of a criminal trial it may be open to doubt whether some requirements of the law are properly to be dismissed as inessential or whether some requirements are to be classified as radical and others not. In the present case, the proposition that the incompetence of the appellant's counsel went to the root of his representation is either self-evident or circular. If all that was meant was that counsel was incompetent, the addition of reference to the root of the appellant's representation is superfluous. If it was 38 R v Nudd [2004] QCA 154 at [74] per McMurdo J. 39 (1988) 164 CLR 365 at 373. 40 Wheeler, "Due Process, Judicial Power and Chapter III in the New High Court", (2004) 32 Federal Law Review 205. intended to convey that the incompetence of representation at trial led to a miscarriage of justice, it is a proposition that does not add to the considerations examined earlier in these reasons. The appeal should be dismissed. Kirby KIRBY J. This appeal41 is one of a trilogy42. It concerns the principles of law governing the provision of relief against conviction for a criminal offence where the matter of complaint is incompetence on the part of the legal representatives who appeared for the accused at the trial. The assumption of competent legal representation In three important decisions of this Court an implicit assumption appears that legal practitioners, representing a person at trial, will exhibit competence in their knowledge of the relevant law, awareness of applicable procedures and judgment in the forensic decisions that have to be made. In Dietrich v The Queen43, this Court affirmed the power of courts to stay criminal proceedings that would otherwise result in an unfair trial where an accused person is charged with a serious offence and, through no fault, is unable to obtain legal representation. Inherent in the need to have legal representation, particularly in criminal trials, is the special difficulty faced by accused persons standing trial, to represent themselves without a qualified lawyer who can provide "effective assistance"44. The result of Dietrich has been to expand significantly the public provision of legal representation at criminal trials, replacing earlier imperfect arrangements for such assistance45. This development has inevitably raised expectations about the standard of representation that will be afforded. 41 From a judgment of the Supreme Court of Queensland, Court of Appeal ("Court of Appeal"): R v Nudd [2004] QCA 154. 42 The other two are TKWJ v The Queen (2002) 212 CLR 124 ("TKWJ") and Ali v The Queen (2005) 79 ALJR 662; 214 ALR 1 ("Ali"). (1992) 177 CLR 292 ("Dietrich") reversing McInnes v The Queen (1979) 143 CLR 44 Dietrich (1992) 177 CLR 292 at 310 citing Cuyler v Sullivan 446 US 335 (1980) and Evitts v Lucey 469 US 387 (1985). 45 Provision was earlier made for proceedings in forma pauperis. See eg the Judicial Committee Rules (NSW), r 8 in Walker (ed), The Practice of the Supreme Court of New South Wales at Common Law, 4th ed (1958) at 636. In criminal trials dock briefs and like assignments were the improvisations tolerated by Australian law before modern publicly funded legal aid appeared. See Disney, Lawyers, 2nd ed Kirby In TKWJ46, the Court considered complaints concerning the alleged incompetence of counsel representing an accused person in a criminal trial. There, the failure was said to be the omission of counsel to call evidence before the jury as to the accused's good character. In rejecting that complaint, upon the ground that the failure of counsel to adduce character evidence did not give rise to a miscarriage of justice within the criminal appeal statute47, this Court implicitly accepted that, had a miscarriage been shown, it would have given rise to relief. Inherent in that conclusion is an affirmation of the relevance of professional competence to the decision. Legal representation, in other words, contemplates effective assistance, not simply having a person present in court in In D'Orta-Ekenaike v Victoria Legal Aid49, the Court, over my dissent50, maintained, and even widened51, the immunity which, it was held, legal practitioners who give advice affecting the conduct of a trial enjoy from subsequently being sued for negligence on account of their advice and conduct as such. The Court declined to follow decisions in England52, New Zealand53 and elsewhere54 that have rejected the immunity, including in criminal trials55. Yet 46 cf Ali (2005) 79 ALJR 662; 214 ALR 1. 47 Criminal Appeal Act 1912 (NSW), s 6(1). 48 Applying Dietrich (1992) 177 CLR 292 at 300. 49 (2005) 79 ALJR 755; 214 ALR 92 ("D'Orta-Ekenaike"). 50 (2005) 79 ALJR 755 at 792 [208]; 214 ALR 92 at 144. 51 As to the expansion of the immunity, see D'Orta-Ekenaike (2005) 79 ALJR 755 at 794 [216]; 214 ALR 92 at 146. 52 Arthur J S Hall & Co v Simons [2002] 1 AC 615, reversing Rondel v Worsley 53 Lai v Chamberlains [2005] 3 NZLR 291. See D'Orta-Ekenaike (2005) 79 ALJR 755 at 793-794 [215]; 214 ALR 92 at 145-146. 54 See references to the law in the United States, Canada, the European Union, Singapore, India and Malaysia in D'Orta-Ekenaike (2005) 79 ALJR 755 at 793 [211]; 214 ALR 92 at 145. 55 D'Orta-Ekenaike (2005) 79 ALJR 755 at 813-814 [331]; 214 ALR 92 at 174 citing Boland v Yates Property Corp Pty Ltd (1999) 74 ALJR 209 at 241 [148]; 167 ALR 575 at 617-618; Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 716 per Lord Hope of Craighead, 730 per Lord Hutton. Kirby implicit in the maintenance of such an immunity is a presumed attainment by the members of the legal profession concerned of a standard of reasonable competence and skill without which administration of justice in the courts would be unattainable. Sometimes the implicit assumption of reasonable competence and skill on the part of legal practitioners is not fulfilled. The default may arise from a lack of experience; a failure to study the applicable law and procedures; or the facts of the case; an unexpected turn of events in the trial that makes demands beyond the experience of the legal practitioner concerned; or, in some cases, personal characteristics that render that practitioner prone to misbehaviour, ineptitude or inattention56. What is then to be done? In Australia, in accordance with D'Orta-Ekenaike57, the dissatisfied client has no civil remedy for damages against the lawyer, however incompetent. A complaint to the relevant professional disciplinary body will bring little satisfaction, especially where the incompetence has occurred in a criminal trial and the accused, at the conclusion of it, has been convicted and sentenced to imprisonment. In some Australian States, a convicted person serving a term of imprisonment faces the additional hurdle of being barred by statute from suing for civil remedies58. A successful petition for mercy (or its modern statutory equivalent59) is a rare bird60. Hence the appeal, in the case of criminal convictions, to a court of criminal appeal for relief on the ground of professional incompetence. The issue of incompetent legal representation is not new in Australian criminal appeals. In Tuckiar v The King61, decided 70 years ago, one of the chief grounds that led this Court to uphold the appeal, and to quash the accused's conviction of murder62, was the incompetent presentation of the defence by 56 Teeluck v State of Trinidad and Tobago [2005] 1 WLR 2421 at 2433 [39] (PC). 57 (2005) 79 ALJR 755; 214 ALR 92. 58 See for instance, Civil Liability Act 2002 (NSW), Pt 2A. 59 eg, Criminal Code (Q), s 672A ("the Code"); Sentencing Act 1995 (WA), Pt 19. 60 cf Mallard v The Queen (2005) 80 ALJR 160; 222 ALR 236. 61 (1934) 52 CLR 335 ("Tuckiar"). For discussion of this case, see TKWJ (2002) 212 CLR 124 at 147 [74] per McHugh J. 62 (1934) 52 CLR 335 at 339. The accused was described as an "uncivilised aboriginal native". Kirby judicial directions; had counsel instructed by the Protector of Aboriginals in the Northern Territory. Counsel had failed to make submissions on the law; had wrongly concurred in impermissibly volunteered confidential erroneous instructions in open court and had made statements to the prejudice of his client which were later published. The conviction was found to be bad and the accused was discharged. Starke J concluded that the accused had been denied the substance of a fair trial63. However, Tuckiar was an extraordinary case. Until recently, generally speaking, appellate consideration of incompetent legal representation of criminal accused was comparatively rare. A proliferation of complaints about incompetent representation in Australia has followed the decision in Dietrich, and the changes to the availability of publicly funded legal assistance that occurred after that decision64. Those changes have raised expectations of effective representation for the alleged default of which persons convicted have complained to courts of criminal appeal. In this Court, there have been slightly different explanations of the response which the law gives to instances of serious professional incompetence. As I shall show, such variations are also reflected in recent decisions of overseas courts of high authority. They find their foundation in the laws giving rise to relief or in the common presuppositions upon which the text of such laws are expressed and applied. The facts The background facts: The facts are stated in the reasons of Callinan and Heydon JJ65. As their Honours point out, it is necessary in cases of this kind, to consider the facts in some detail. Their comprehensive explanation of the prosecution case brought against Mr Kevin Nudd (the appellant) as well as of the defects in his representation at the trial and the appellant's newly propounded defences relieves me of repeating this material. Trial counsel acknowledged that he had not previously conducted a criminal trial in a superior court. Neither he, nor his instructing solicitor, ever obtained a full and thorough proof of evidence from the appellant, containing the appellant's version of events, so far as the appellant was willing to provide this. 63 (1934) 52 CLR 335 at 354. 64 There were, however, earlier cases such as Re Knowles [1984] VR 751 and R v Birks (1990) 19 NSWLR 677. 65 Reasons of Callinan and Heydon JJ at [116]-[148]. Kirby This omission was found by the Court of Appeal to have occurred because trial counsel believed that obtaining such a statement from the appellant might in some way limit the choice of the arguments that he could advance before the jury66. In the hearing before this Court, it became clear that failure to secure a proper statement from a person accused of a serious criminal offence is not an accepted or common practice of the Queensland Bar in criminal or other trials67. The omission is clearly fraught with great dangers for the client. This is because only in the detailed understanding of the evidence may a defence, based on fact or law, appear to the trained eye of diligent legal representatives. Unfortunately, the communications revealed in the record between the appellant and the lawyers representing him at his trial mainly concerned legal fees. Similar attention was not lavished on the preparation of the case, either in recording the appellant's version of events or in studying the authority of the courts on the constituent elements of the federal crime with which the appellant had been charged68. The maximum penalty applicable, upon conviction, was 25 years imprisonment69. In the event, upon his conviction, the appellant was sentenced to 22 years imprisonment with a non-parole period of 11 years70. Self-evidently, the predicament facing the appellant in his trial was of a very serious order. It demanded professional attention of the most diligent and effective kind. The minimum standard required of such attention was a thorough awareness of the appellant's version of events, so far as he was prepared to disclose it, and careful research into the legal ingredients of the offence. Neither of the lawyers who appeared for the appellant is on trial in these proceedings. Neither is represented before this Court. We have certain testimony given by 66 R v Nudd [2004] QCA 154 at [50], per McMurdo J. 67 [2005] HCATrans 654 at 1072-1090, 3785-3800. 68 Under the Customs Act 1901 (Cth) ("Customs Act"), s 233B (as it provided then) of being "knowingly concerned" in the bringing into Australia of prohibited imports, being a quantity of cocaine not less than a commercial quantity. The Law and Justice Legislation Amendment (Serious Drug Offences and Other Measures) Act 2005 (Cth), repealed ss 233B and 235 of the Customs Act. By the amending Act, as from 6 December 2005, the offence of bringing into Australia prohibited imports is provided by s 233(1)(b) of the Customs Act. The amendments do not affect offences committed earlier. 69 [2005] HCATrans 654 at 695; Customs Act, s 235 (as it provided then). 70 R v Nudd [2004] QCA 154 at [9]. Kirby those lawyers before the Court of Appeal. However, the appeal before this Court proceeds on the footing that evidence of incompetence in the presentation of the appellant's case by trial counsel is established. I agree in the conclusion expressed by Callinan and Heydon JJ that "on any assessment, whether subjective or objective, counsel's conduct was incompetent to a serious degree"71. The professional incompetence: In summary, the professional Failing to understand, and properly advise the appellant on the elements of the offence with which he was charged73; Conducting the defence case and opening to the jury on the basis of an incorrect understanding of the offence, thereby putting the appellant on the back foot before the jury from the outset of the trial; Failing to take, or procure, detailed written instructions from the appellant relevant to his version of the facts; Failing properly to advise the appellant on such version as to his legal liability for the offence charged and to prepare and present the defence case accordingly; Failing, on the basis of a correct understanding of the offence and like appreciation of the appellant's version of the facts, to give advice to the appellant on whether or not to offer evidence on his own behalf at the trial; (6) Making a concession before the jury that it was the appellant whose voice could be heard on the telephonic interception tapes without first obtaining specific instructions in that respect and considering the necessity and wisdom of needlessly doing so74; 71 Reasons of Callinan and Heydon JJ at [158]. 72 R v Nudd [2004] QCA 154 at [49]. 73 Trial counsel stated that he did look up relevant authority, including The Queen v Tannous (1987) 10 NSWLR 303 ("Tannous"). However, in the light of his conduct of the trial, this appears at best to have been first, a superficial and secondly, mistaken reading of the cases. See [2005] HCATrans 654 at 2494. 74 R v Nudd [2004] QCA 154 at [58]. Kirby Failing to seek appropriate directions from the trial judge concerning the way in which the jury could use the content of discussions between other persons, not had in the presence of the appellant75; Failing to object to the tender of parts of telephonic tapes containing arguably inadmissible and prejudicial material irrelevant to the offence charged76; and Introducing immaterial and prejudicial information in the closing address to the jury concerning the appellant's arrest in the United States for visa violations, his deportation to Australia and the loss of property seized from him by the Australian authorities77. Taken individually, some of the foregoing acts and omissions of counsel were not instances of the most serious professional incompetence. Some may even (as McMurdo J considered in the Court of Appeal78) be put to one side as ill-judged, but available, tactical decisions, designed to advance the appellant's case in the context of very strong prosecution evidence. However, in combination, the instances of incompetence are clearly serious. McMurdo J thought that, although the prosecution case was "strong", it went "too far to say that there was no prospect of an acquittal absent evidence from the accused"79. The foundation was therefore well and truly laid for invocation of the principles of law governing appeals against criminal conviction by reference to legal professional incompetence occasioning a miscarriage of justice. The applicable legislation The appeal to this Court complains of error on the part of the Court of Appeal. That Court was obliged to decide the appeal by reference to applicable statutory provisions. 75 R v Nudd [2004] QCA 154 at [73]. 76 R v Nudd [2004] QCA 154 at [74]. 77 R v Nudd [2004] QCA 154 at [75]. 78 R v Nudd [2004] QCA 154 at [72], [73], [75], referring to instances (5), (6), (7), (8) and (9). 79 R v Nudd [2004] QCA 154 at [70]. Kirby In Australia appeal is always a creature of statute80. At common law, the powers of courts to disturb criminal convictions that followed a jury verdict, were very limited81. It is therefore the common form criminal appeal statute that ordinarily affords the jurisdiction and power to Australian courts82 to provide relief from a criminal conviction. Unless the preconditions expressed in such statutes are met and, in the particular case, are such as to justify the quashing of the conviction and the ordering of a new trial, the duty of the appellate court is to dismiss the appeal, leaving the criminal conviction and any consequent punishment to stand83. In the present case, the applicable statutory provision governing the decision of the Court of Appeal, was s 668E of the Code. That section provides, relevantly84: The Court on any such appeal against conviction shall allow the appeal if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or cannot be supported having regard to the evidence, or that the judgment of the court of trial should be set aside on the ground of the wrong decision of any question of law, or that on any ground whatsoever there was a miscarriage of justice, and in any other case shall dismiss the appeal. (1A) However, the Court may, notwithstanding that it is of the opinion that the point or points raised by the appeal might be decided in favour of the appellant, dismiss the appeal if it 80 Discussed in Conway v The Queen (2002) 209 CLR 203 at 228 [68]-[69] ("Conway"), citing State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306 at 322 [72]; 160 ALR 588 at 609 and authorities there cited. 81 R v Berger [1894] 1 QB 823. See O'Connor, "Criminal Appeals in Australia Before 1912", (1983) 7 Criminal Law Journal 262. 82 An exception arises in criminal appeals to the Federal Court of Australia, pursuant to Federal Court of Australia Act 1976 (Cth), s 28(1)(f). See Conway (2002) 209 CLR 203. 83 Conway (2002) 209 CLR 203 at 228 [68]. See also Weiss v The Queen [2005] HCA 81 at [12]-[15]. 84 The section has also been considered by this Court in recent years in KBT v The Queen (1997) 191 CLR 417; Gilbert v The Queen (2000) 201 CLR 414; and Festa v The Queen (2001) 208 CLR 593. Kirby considers that no substantial miscarriage of justice has actually occurred." As Gummow and Hayne JJ point out in their reasons85, the category into which the appellant's submissions in this case falls is, and is only, the residual case of appeal, namely that brought "on any ground … [of] a miscarriage of justice". The sole basis advanced to engage that provision was the incompetence of the representation of the appellant at his trial. The provisions of s 668E(1A) of the Code, although not stated in the form of a "proviso", are expressed in the same language appearing elsewhere in that form. It follows that the outcome of the appeal to the Court of Appeal (and hence the claim of error agitated in this Court) turns, and turns only, on the application of the foregoing statutory provisions to the evidence disclosed in the record. The question for this Court is whether, in the approach that it took or the conclusion that it reached, the Court of Appeal erred in the performance of its functions so described. The trial and the appeal The outcome of the trial of the appellant is described by Callinan and Heydon JJ86. Their Honours explain the ways in which the trial judge (Philippides J) sought to correct before the jury errors made by trial counsel, both as to the legal ingredients of the offence charged and as to his concession that it was the appellant's voice that the jury had heard on the tapes of the intercepted telephone conversations87. Whereas the latter concession, although imprudently made, especially without specific instructions, might truly have been a mistake of tactics on the run, the failure of trial counsel to acquaint himself with the basic law on the offence of being "knowingly concerned" in the importation to Australia of the specified prohibited drug, was of a different order. That law was not difficult for a trained lawyer to discover. If access to the Internet was not available, the hard copy index to the Australian Criminal Reports for vols 51-100 (1990-1998) contains, under "Drug Offences", numerous references to cases containing judicial explanations of the legal meaning of being "knowingly concerned" and "importation". Understanding the legal components of the offence was the first duty of counsel representing a person accused of it. 85 Reasons of Gummow and Hayne JJ at [22]. 86 Reasons of Callinan and Heydon JJ at [115]. 87 Relevant authorities include Tannous (1987) 10 NSWLR 303 at 307; Leff (1996) 86 A Crim R 212 at 214. Kirby The disposition of the appeal by the Court of Appeal is also sufficiently described elsewhere88. There is no need for me to repeat that description. Following the then recent decision of this Court in TKWJ89, the Court of Appeal correctly focused its attention on whether, within the language of the Code, a "miscarriage of justice" had occurred as a result of the instances of incompetence that it accepted. It concluded that it had not. It therefore dismissed the appeal. Now, by special leave, the appellant has appealed to this Court. He complains that he suffered a miscarriage of justice. He submits that he was deprived of the chance to advance the defences now identified and that, on that basis, his conviction is unsafe. But he also says that, because of the incompetence of those who represented him at his trial, he did not secure a fair trial. He asks that his conviction be quashed and that a retrial should be ordered. Did the Court of Appeal err in declining that relief? The principles on incompetent representation Starting with the statute: In TKWJ and in Ali, this Court emphasised the importance for appellate courts, considering complaints of incompetent representation in criminal appeals, to keep at the forefront of their attention the ambit of their jurisdiction and power contained in the applicable criminal appeal statute. Those appeals are not, as such, an inquiry into the professional competence of the legal representatives of the accused. That function, if it is to be undertaken, belongs to other bodies in a hearing in which procedural fairness is assured to the legal practitioner concerned. Of necessity, the only relevance of professional competence to a criminal appeal following conviction, is how far any proved incompetence contributed to the grounds enlivening the powers of the appellate court to quash the conviction. When, in recent years in criminal appeals, complaints came to be raised in increasing numbers concerning alleged incompetence in the representation of the accused at trial, appellate courts, in Australia and elsewhere, reached for non- statutory explanations as to when such a complaint would be entertained. Thus, a suggested requirement was adopted that the incompetence had to be "flagrant"90 88 Reasons of Callinan and Heydon JJ at [149]-[154]. 89 (2002) 212 CLR 124. The Court of Appeal also applied its own decision in R v N (2003) 149 A Crim R 497, in which a new trial had been ordered. 90 Clinton (1993) 97 Cr App R 320 at 326; Fergus (1994) 98 Cr App R 313 at 322. See also R v Thakrar [2001] EWCA Crim 1096 per Keene LJ at [34]. Kirby or "radical"91. For a short time, that became the accepted law in many jurisdictions. However, the defect of this approach was that the additional word, although designed to eliminate unimportant or immaterial mistakes, was ultimately unilluminating. It had, moreover, no textual foundation in the criminal appeal legislation applicable throughout Australia. Even in England and Scotland, where resort to such a formula had been common92, it has more recently been abandoned under the influence of the language of Art 6 of the European Convention on Human Rights93, which guarantees the criminal accused a fair trial. Thus, in R v Peeris94, Henry LJ observed: "… the proper approach does not depend upon any assessment of the quality or degree of any suggested culpability of counsel. It depends rather on consideration of whether the manner in which the defence was conducted – taken exclusively or in conjunction with other features of the case – was such as to raise any sensible doubt about the safety of the conviction." In this way, the resort to pejorative adjectives describing the professional incompetence complained of has been replaced by a "practical", "pragmatic" or "functional" analysis ("a practical approach") that addresses the consequences of any professional incompetence for the outcome of the criminal trial. A focus on outcomes: A focus on the consequences of the suggested incompetence has been emphasised by this Court95, principally because of its insistence upon adherence to the statutory mandate in such cases of courts of criminal appeal. A like approach is now common in virtually all jurisdictions of which I am aware, addressing issues of incompetent legal representation. 91 eg, Anderson v HM Advocate 1996 SLT 155. Other pejorative expressions are noted in TKWJ (2002) 212 CLR 124 at 134 [31] per Gaudron J, 150-151 [80]-[83] per McHugh J, referring to R v Birks (1990) 19 NSWLR 677 at 685. 92 See, eg, Anderson v HM Advocate 1996 SLT 155 at 163-164. See also Balston v The State (Dominica) [2005] UKPC 2 at [36] per Lord Hope of Craighead. 93 Convention for the Protection of Human Rights and Fundamental Freedoms, opened for signature 4 November 1950, 213 UNTS 222 (entered into force 3 September 1953). 94 [1988] EWCA Crim 597. 95 TKWJ (2002) 212 CLR 124 at 149 [79] per McHugh J, 157 [103] per Hayne J; Ali (2005) 79 ALJR 662 at 668 [38] per Hayne J; 214 ALR 1 at 10. Kirby United States cases: In the United States, where such issues often arise from a suggested failure to comply with an accused's constitutional right to "the assistance of counsel for his defence"96, the Supreme Court has addressed "… whether counsel's conduct so undermined the proper functioning of the adversarial process that the trial cannot be relied on as having produced a just result"97. The Court has said98: "… [T]he purpose of the effective assistance guarantee … is not to improve the quality of legal representation, although that is a goal of considerable importance to the legal system. The purpose is simply to ensure that criminal defendants receive a fair trial." Given that purpose, the Supreme Court has insisted99: "The defendant must show that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome." So expressed, the test in the United States has been described as "highly demanding"100. It has been applied in many recent cases101. It is now regarded as settled law in that country102. 96 United States Constitution, Sixth Amendment. 97 Strickland v Washington 466 US 668 at 686 (1984) ("Strickland") per O'Connor J, delivering the opinion of the Court. 98 Strickland 466 US 668 at 689 (1984) per O'Connor J, delivering the opinion of the Court. 99 Strickland 466 US 668 at 694 (1984) per O'Connor J, delivering the opinion of the Court. 100 Kimmelman v Morrison 477 US 365 at 382 (1986) per Brennan J, delivering the opinion of the Court. 101 eg, Nix v Whiteside 475 US 157 (1986); Kimmelman v Morrison 477 US 365 (1986); Lockhart v Fretwall 506 US 364 (1996); Glover v United States 531 US 198 (2001); Wiggins v Smith 539 US 510 (2003); and Rompilla v Beard 355 F 3d 102 Williams v Taylor 529 US 362 at 391 (2000). Kirby Canadian cases: The approach is similar in Canada. Whilst emphasising the critical importance to the operation of the "adversarial process" of effective legal representation, Canadian courts have said103: "Where counsel fails to provide effective representation, the fairness of the trial, measured both by reference to the reliability of the verdict and the adjudicative fairness of the process used to arrive at the verdict, suffers. In some cases the result will be a miscarriage of justice. This court is under a statutory obligation to quash convictions which are the product of a miscarriage of justice …." The Supreme Court of Canada has insisted that attention be addressed to the consequences (if any) of any alleged incompetence104. It has accepted that, where a miscarriage of justice is not established, appellate courts in such cases can properly leave any remaining concerns about the performance and conduct of incompetent counsel to the disciplinary bodies of the legal profession105. Canadian cases have explained the reticence of courts of criminal appeal to accept criticism of the conduct of trial counsel as operationally effective. In R v White, the Ontario Court of Appeal examined the need to draw a clear line between incompetence and tactical decisions later judged unwise or imprudent106: "The art of advocacy yields few, if any, absolute rules. It is a highly individualized art. What proves effective for one counsel may be ineffective for another. Most cases, therefore, offer defence counsel a wide scope for the exercise of reasonable skill and judgment. Appellate judges, many of them advocates in their own practices, should not be too quick to conclude that a trial lawyer's performance was deficient because they would have conducted the defence differently." United Kingdom cases: A like approach has also been adopted in the United Kingdom. English courts now accept that "the appellant has to go beyond the incompetence and show that the incompetence [has] led to identifiable errors or irregularities in the trial, which themselves [render] the process unfair or 103 R v Joanisse (1995) 102 CCC (3d) 35 at 57 per Doherty JA; R v GDB [2000] 1 SCR 520 at 531 [25] per Major J, delivering the reasons of the Court. 104 R v GDB [2000] 1 SCR 520. 105 R v GDB [2000] 1 SCR 520 at 532 [29]. 106 (1997) 32 OR (3d) 722 at 745. See also R v Wells (2001) 130 OAC 356 at [76] per Kirby unsafe"107. Similarly, in Scotland it has been held that, unless the incompetent conduct has "resulted in a miscarriage of justice", the criminal appeal statute requiring relief "will not apply". In Anderson v HM Advocate108, the Lord Justice General said109: "[Professional incompetence] can only be said to have resulted in a miscarriage of justice if it has deprived the accused of his right to a fair trial. That can only be said to have occurred where the conduct was such that the accused's defence was not presented to the court." New Zealand authority: The New Zealand Court of Appeal has likewise brought such cases back to the requirement that a miscarriage of justice must be shown by counsel's failure to comply with instructions, or by radical errors in counsel's conduct of the case (including lack of preparation)110. The Supreme Court of New Zealand recently dismissed an application for leave to appeal against a decision adopting this approach111. In R v S112, the Court of Appeal held specifically that: "In order to establish a miscarriage of justice an appellant must show that the mistake could well have had a significant prejudicial effect on the outcome of the trial." This review of authority makes it clear that the approach adopted by this Court in TKWJ and in Ali is substantially similar to that observed by courts of high authority elsewhere, considering the same problem within their legal systems. The factors that have influenced this approach are basically the same. The first duty in criminal appeals is to the text of the law authorising relief against infirm verdicts and miscarriages of justice. As well, courts deciding such appeals observe the practical approach demanded by such laws in the review of an outcome that has followed the verdict in a criminal trial. Such a verdict is ordinarily entitled to respect and treated as final, particularly where made by a 107 Day v The Queen [2003] EWCA Crim 1060 at [15] per Buxton LJ. 108 1996 SLT 155. 109 1996 SLT 155 at 164. 110 Taito v The Queen [2005] NZCA 22 at [42]. 111 Taito v The Queen [2005] NZSC 36 at [3]. 112 [1998] 3 NZLR 392 at 394-395; cf R v Horsfall [1981] 1 NZLR 116 at 123 per Cooke J, delivering the opinion of the Court. Kirby jury that acts upon the entirety of the evidence and with a collective wisdom that is addressed to the case viewed in its entirety. A practical approach: The foregoing analysis still leaves it for the appellate court to say whether the preconditions for relief, or any of them, have been made out, particularly whether "on any ground … a miscarriage of justice" has occurred. There are legal and pragmatic reasons why a great deal of latitude must be accorded to counsel appearing in a criminal, or indeed any, trial113. Ordinarily, a party is held to the way in which his or her counsel has presented that party's case114. This is not merely because the relationship between lawyer and client is grounded in the law governing agency and apparent authority115. There are other, highly pragmatic, reasons for this approach that cannot be ignored. The adversarial system of trial (including its variant of the accusatorial criminal trial) could not operate effectively without according a high measure of deference to the multitude of decisions necessarily made by a legal representative in the course of conducting a trial116. The appellate approach is thus a practical one, influenced by the realities of our trial process. In criminal appeals, courts are alive to the dangers of retrospective wisdom and appellate hindsight applied to instantaneous professional judgments that have to be made, often in fraught circumstances117. Moreover, they understand the natural tendency of some who "have been properly and deservedly convicted to attribute the result to the perceived incompetence of their counsel"118. 113 TKWJ (2002) 212 CLR 124 at 147 [74] per McHugh J. 114 R v Birks (1990) 19 NSWLR 677 at 684 per Gleeson CJ. See also Re Ratten [1974] VR 201 at 214; R v Miletic [1997] 1 VR 593 at 598. 115 Strauss v Francis (1866) 1 QB 379 at 381 per Blackburn J cited in TKWJ (2002) 212 CLR 124 at 147 [74] per McHugh J. 116 R v Birks (1990) 19 NSWLR 677 at 682-685; TKWJ (2002) 212 CLR 124 at 128 [8] per Gleeson CJ; Ali (2005) 79 ALJR 662 at 664 [7] per Gleeson CJ; 214 ALR 1 117 R v GDB [2000] 1 SCR 520 at 532 [27] per Major J, delivering the reasons of the Court. 118 R v S [1998] 3 NZLR 392 at 394. See Ratten v The Queen (1974) 131 CLR 510 at 516; cf TKWJ (2002) 212 CLR 124 at 149 [78] per McHugh J. Kirby Considerations such as these have led appellate courts everywhere to insist that those who complain on the score of suggested incompetence in their legal representation at trial must establish the defect of the resulting verdict or otherwise show a "miscarriage of justice". It is not the function of the appellate court to attempt "to rate counsel's conduct of the case according to some scale of ineptitude"119. Miscarriage – affront of extreme conduct: The foregoing analysis leaves to be decided the point noted by White J in the Court of Appeal upon which the appellant relied and in respect of which opinions, with different emphasis, have been expressed in this and other courts. Taking the criterion, relevantly, as the establishment of a "miscarriage of justice", the question remains: Is the "miscarriage" spoken of confined to a case where, directly or indirectly, the incompetence of counsel has led to a verdict that, judged on the evidence, is unsafe and cannot be left to stand? Or are there exceptional cases where, although the appellate court may be convinced from the whole of the evidence that the conviction is not unsafe, the affront to the appearance of justice in the trial is such that a fair trial was not had, requiring a retrial, in effect to uphold the integrity of the judicial process? This is not a new question. Nor is it one confined to criminal cases involving alleged professional incompetence. It is a question that has arisen more generally in the application of the "proviso" to the common form criminal appeal statutes120. It has also arisen in the cases concerning the provision of a permanent stay of criminal proceedings in circumstances of serious delay on the part of the prosecution121. The conceptual basis of such relief is disputed: Is it to prevent public authorities taking advantage of their own dilatory conduct? Or is it the obligation of the courts to protect the integrity of the judicial process per se and the perception of that process by parties, the community and the judges themselves? In short, is the foundation for relief simply the prevention of unjust outcomes? Or is it the defence of the "purity of the 'temples of justice'"122. 119 Teeluck v State of Trinidad and Tobago [2005] 1 WLR 2421 at 2433 [39] (PC). 120 Wilde v The Queen (1988) 164 CLR 365 at 373 per Brennan, Dawson and Toohey JJ. See reasons of Gummow and Hayne JJ at [35]. 121 Carver v Attorney-General (NSW) (1987) 29 A Crim R 24; Aboud v Attorney- General (NSW) (1987) 10 NSWLR 671 at 689; Jago v District Court (NSW) (1988) 12 NSWLR 558 at 568, 570, 578. 122 Levinge v Director of Custodial Services (1987) 9 NSWLR 546 at 557. Kirby Resonances of these debates may be found in the different ways in which McHugh J explained his conclusions in TKWJ123, and the way other Justices did so124. The difference is not removed by an appeal to the text of the applicable statutory provision. Each of the foregoing viewpoints accepts the necessity, relevantly, of demonstrating a "miscarriage of justice". However, each regards that phrase somewhat differently, depending on whether it is to be given an exclusively consequentialist content (judged by the outcome of the case) or also a perception content (judged, as well, by the general community's impression of a trial, given the community's interest in maintaining not only the reality, but also the appearance, of fair trials). The application of the consequentialist approach is clear enough. It asks the question, in a case such as the present, whether any incompetence in the legal representation contributed to an outcome (here, a conviction) that is unsafe when all the evidence is considered by the appellate court. However, in his reasons in TKWJ125, McHugh J explained his additional and alternative approach: "In some cases, the conduct of counsel may be such that it has deprived the accused of a fair trial according to law. If the conduct of counsel has resulted in an unfair trial, that of itself constitutes a miscarriage of justice. If, for no valid reason, counsel fails to cross- examine material witnesses or does not address the jury, for example, the accused has not had the trial to which he or she was entitled. In such a case, the failure of counsel to conduct the defence properly is inconsistent with the notion of a fair trial according to law. It cannot be right to insist that the appeal can succeed only if the court thinks that counsel's conduct might have affected the verdict. To require the accused to persuade the court that the conduct might have affected the verdict comes close to substituting trial by appellate court for trial by jury. No matter how strong the prosecution case appears to be, an accused person is entitled to the trial that the law requires. In principle, therefore, where the trial has been unfair, the accused should not have to show that counsel's conduct might have affected the result." Procedural and substantive outcomes: In my view, McHugh J was right to conclude that, for a criminal appeal to succeed on an argument of incompetent 123 (2002) 212 CLR 124 at 148 [76]. 124 See, eg, (2002) 212 CLR 124 at 157 [103] per Hayne J. 125 (2002) 212 CLR 124 at 148 [76] (emphasis added), referring to Wilde v The Queen (1988) 164 CLR 365. Kirby representation at trial, it is not a universal requirement that the accused must establish that the conduct complained of might have affected the result126. The issue is not finally settled by past authority in this Court. It did not need to be decided to reach the outcomes stated in TKWJ and Ali. Any observations on the point in those decisions were obiter dicta. Nevertheless, in Ali, remarks of Callinan and Heydon JJ lend some support to the conclusion expressed by McHugh J in TKWJ. Thus in Ali127, Callinan and Heydon JJ said: "The appellant has not demonstrated that any conduct on the part of his counsel at the trial deprived him of a fair chance of acquittal. In saying that we would not want to be taken as suggesting that the fact that a case appears a strong one in any way diminishes the obligation of those conducting the trial to ensure that it is a fair one. Indeed, the contrary is the case." In the end, Callinan and Heydon JJ rejected the appeal in Ali because counsel's errors "were not egregious ones"128. They held that the impact of the errors, if any, "could only have been slight and temporary". They were cured by accurate judicial directions. On this ground, "no miscarriage of justice occurred"129. Because the issue is not settled by authority, it is open in this appeal where, in my view, it is specifically presented for resolution. Moreover, as a matter of principle, neither the criminal appeal legislation nor the law generally confine attention solely to pragmatic consequences. The law is concerned with principles and with the appearance of justice in the conduct of trials130. This concern derives from the long experience of the law 126 cf Weiss v The Queen [2005] HCA 81 at [44]-[45]. 127 (2005) 79 ALJR 662 at 677-678 [100]; 214 ALR 1 at 22. 128 Note the similarity between the requirement that counsel's errors be "egregious", and the older non-statutory formulations, discussed above at [65], which required counsel's errors to be "flagrant" or "radical". As explained above at [65], the problem presented by this approach is that the additional word, although designed to remove from consideration minor errors, ultimately fails to shed any additional light on the content of "incompetence". Nor does it have any textual foundation in Australian criminal appeals legislation. 129 (2005) 79 ALJR 662 at 678 [104]; 214 ALR 1 at 23. 130 R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256 at 259. See also Johnson v Johnson (2000) 201 CLR 488 at 502 [42]; Re Minister for Immigration, Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37]; (Footnote continues on next page) Kirby that substantive justice is heavily dependent upon (and often flows from) observance of proper procedures and the conduct of hearings untainted by relevant unfairness. Care must be taken against dismissing complaints about the incompetence of legal representation solely on the basis that an impugned decision of counsel could have been taken competently, although for different reasons. That approach involves an inevitable element of speculation and retrospective justification. In a case of serious and multiple complaints (as here) the accused is entitled to object that he has been deprived of a fundamental right to a fair trial, with his defence put to the jury a priori, not considered only in a trial before appellate judges in which the apparent errors are justified or explained away ex post. To the extent that there is any doubt as to the meaning of the criminal appeal statute, the provisions of the International Covenant on Civil and Political Rights131 may assist in resolving the ambiguity. Australia has no constitutional Bill of Rights. However, it is a party to that Covenant, and to the First Optional Protocol132 which inevitably brings such provisions of international law to bear upon the elucidation of Australian law133. By Art 14.1 of the ICCPR, "[i]n the determination of any criminal charge against him … everyone shall be entitled to a fair … hearing by a competent, independent and impartial tribunal established by law". By Art 14.3, "[i]n the determination of any criminal charges against him, everyone shall be entitled to … minimum guarantees, in full equality", including "(b) [t]o have adequate time and facilities for the preparation of his defence and to communicate with counsel of his own choosing" and "(d) … to defend himself … through legal assistance of his own choosing". The Human Rights Committee of the United Nations, determining communications complaining about non-compliance with such provisions, has explained that they imply a guarantee of adequate, proper or effective legal NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 223 ALR 171. 131 International Covenant on Civil and Political Rights ("ICCPR"), opened for signature 16 December 1966, 1980 ATS 23 (entered into force 23 March 1976). The ICCPR entered into force in respect of Australia on 13 November 1980. 132 First Optional Protocol to the ICCPR, 1991 ATS 39 (entered into force 23 March 1976). The Protocol entered into force in respect of Australia on 25 December 133 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42 per Brennan J. Kirby representation134. The more serious the case and grave the potential punishment upon conviction, the greater is the obligation of the State party to ensure against incompetence in representation by providing the time and resources necessary to prepare an effective defence, so far as this is available135. The ICCPR and the elaboration of it by the independent treaty body, afford a useful reminder of the ambit of the obligation to ensure a fair trial for the criminal accused. The notion imports assumptions of basically competent representation without the need invariably to prove that any incompetence demonstrated actually altered the outcome. Because fundamental rights belong to individuals136, their provision is not necessarily confined to cases where their deprivation results in adverse consequences that might not otherwise have occurred. Upholding fundamental rights, when applicable, will sometimes have a value in itself. This may be so quite apart from the beneficial consequences of their observance for those immediately affected. Moreover, judicial authority from a number of sources lends support to the view, expounded by McHugh J in TKWJ, that it is not invariably necessary to prove that the outcome would have been different but for the incompetence of counsel. Thus, in Canada, the Supreme Court has emphasised that a miscarriage of justice, in the context of criminal appeals, may take many forms including both procedural unfairness and an impact on the reliability of the outcome of the trial137. This dichotomy was noted earlier in R v Joanisse138, where Doherty JA explained: "… this court's obligation to quash convictions which are the product of a miscarriage of justice requires that it consider the impact of counsel's 134 Vasilskis v Uruguay (Case 80/80); Kelly v Jamaica (Case 253/87); Campbell v Jamaica (Case 618/95) in Joseph, Schultz and Castan, The International Covenant on Civil and Political Rights, 2nd ed (2005) at 443 ("Joseph"). 135 Campbell v Jamaica (Case 618/95); Hussain v Mauritius (Case 980/01); HC v Jamaica (Case 383/89); Taylor v Jamaica (Case 705/96) in Joseph at 443-445. 136 NAGV and NAGW of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 609 at 619-620 [67]-[68]; 213 ALR 668 at 682. 137 R v GDB [2000] 1 SCR 520 at 532 [28] per Major J, delivering the reasons of the Court. 138 (1995) 102 CCC (3d) 35 at 62. Kirby incompetence on both the reliability of the result, and the fairness of the process by which that result was achieved. A reliable verdict may still be the product of a miscarriage of justice if the process through which that verdict was reached was unfair." In Sungsuwan v The Queen139, the Supreme Court of New Zealand likewise identified a distinction between cases where errors or irregularities in the trial, occasioned by counsel error, rendered the verdict unsafe and cases where they resulted in the denial of the right to a fair trial per se. In each of those "It is difficult to envisage that a verdict reached without fair trial or which is unsafe will not amount to a substantial miscarriage of justice." In endorsing this dual foundation for relief, Gault, Keith and Blanchard JJ cited with approval a statement of the Privy Council in Teeluck v State of Trinidad and Tobago141. In that case, Lord Carswell, giving the judgment of the Judicial Committee, said142: "There may possibly be cases in which counsel's misbehaviour or ineptitude is so extreme that it constitutes a denial of due process to the client. Apart from such cases, which it is to be hoped are extremely rare, the focus of the appellate court ought to be on the impact which the errors of counsel have had on the trial and the verdict rather than attempting to rate counsel's conduct of the case according to some scale of ineptitude." Obviously, care needs to be taken in deriving support from judicial opinions focused on texts other than the common form of Australian criminal appeal legislation applicable in the appeal. This is especially so because constitutional, statutory or treaty requirements existing in other jurisdictions may import norms missing from the Australian legal scene. Nevertheless, the trend of the decisions that I have mentioned appears to sustain the distinction drawn by McHugh J in TKWJ. Sometimes, rarely, the misbehaviour, errors or incompetence in the legal representation of an accused at 139 [2005] NZSC 57. 140 [2005] NZSC 57 at [6] per Elias CJ. 141 [2005] 1 WLR 2421 (PC). 142 [2005] 1 WLR 2421 at 2433 [39] (PC) citing Boodram v The State [2002] 1 Cr App R 103 [39]; Balson v The State [2005] UKPC 2; cf Anderson v HM Advocate 1996 SLT 155. Kirby trial may be so egregious, frequent or obvious as, without more, to amount to a miscarriage of justice. The "proviso" postulates upholding the verdict at the conclusion of a trial that has met the minimum standards required for a fair trial. It does not envisage the affront to the appearance of justice of upholding orders that have followed a proceeding that did not amount, in law, to a proper trial at all143. The application of the principles Unsafe outcome analysis: I turn to apply the foregoing principles to the evidence and circumstances of the appellant's trial. I can do this briefly because the reasons of Callinan and Heydon JJ do so comprehensively. Material incompetence of the appellant's legal representation at his trial was contested as to particular instances. However, in my view, it could not be disputed that, in important respects (especially in the failure to research and explain to the appellant the legal ingredients of the offence and to take a thorough proof from him on the basis of which available trial strategy could have been determined with his informed instructions) material incompetence was clear-cut. It was abundantly established. In their reasons, Callinan and Heydon JJ have described the powerful objective case that the prosecution built against the appellant at his trial144. That case was based mainly on the tapes of intercepted telephone conversations and the unchallenged observations of the appellant in the company of Jorge Velarde, conversing by telephone with Peter Jackson145. So overwhelming is the objective evidence presented against the appellant in this and other respects that the application to the record of a correct understanding of the offence of being "knowingly concerned" in the undoubted importation into Australia of the prohibited drug cocaine, clearly establishes the appellant's involvement in, and guilt of, that offence. It renders the belatedly suggested "defences" (that the appellant was ignorant of the nature of the drug; that he thought any drug importation was destined for New Zealand; and that he had cut off relations with the importers) thoroughly unconvincing. 143 An analogous approach is taken by the United States Supreme Court in cases where the performance of counsel is so deficient that the appellate court concludes that the lawyer at trial did not qualify as "counsel" as envisaged by the Sixth Amendment. See Strickland 466 US 668 at 687 (1984) per O'Connor J, delivering the opinion of the Court. 144 Reasons of Callinan and Heydon JJ at [159]-[160]. 145 R v Nudd [2004] QCA 154 at [25]. Kirby These "defences" were, as the respondent submitted, an after-thought suggested by the questions raised by the jury after they had been deliberating for nearly 24 hours146. Those questions asked whether the accused needed to know the final destination of the shipment and what would happen if he were knowingly concerned with the bringing of the drugs to another destination, not Australia, which only became the destination "through revised planning or other reasoning"147. No complaint was made of the trial judge's directions in answer to these questions. But now the appellant has latched on to the questions. He has propounded "defences" that are unconvincing when judged against the totality of the evidence, especially that contained in the recorded tapes. If, therefore, the sole miscarriage of justice that was in question in this appeal was that concerned with the appellate court's judgment of the guilt of the appellant, based on the entirety of the evidence in the trial, no error has been shown in the conclusion of the Court of Appeal, discharging its own function of assessing the appellant's conviction on the basis of that evidence. There was ample, indeed overwhelming, evidence at the trial to warrant the conclusion of the Court of Appeal that the prosecution had established, to the requisite standard, that the appellant was knowingly concerned in the importation of cocaine into Australia. On this basis, although the appellant's defence was most imperfectly conducted, his conviction in his trial resulted in no substantial miscarriage of justice which had actually occurred148. So judged, his appeal was rightly dismissed. In substance, on this point, I agree with the analysis of Fair trial analysis: But what of the alternative way in which the appellant pressed his appeal? Can it be said that the defects in his representation were so egregious, frequent and obvious as to have denied the appellant the basic elements of a fair trial? What of his submission, in the words of McHugh J in TKWJ149, that "the conduct of counsel has resulted in an unfair trial, that of itself constitutes a miscarriage of justice", without any need to prove more? I have found the resolution of this issue much more difficult. In my opinion the argument is available to the appellant on a correct understanding of the content of "miscarriage of justice", as that expression is used in s 668E(1) of the Code. So has this alternative submission been made out? 146 R v Nudd [2004] QCA 154 at [64]. 147 R v Nudd [2004] QCA 154 at [64]. 148 The language of s 668E(1A) of the Code. 149 (2002) 212 CLR 124 at 148 [76]. Kirby Of greatest concern is the failure of the appellant's legal representatives, and especially his counsel, to research and thoroughly understand the ingredients in law of the very serious charge brought against the appellant. Also troubling is the failure to take as full a proof of evidence as the appellant would provide and to advise him then on the conduct of the trial, applying the law as understood to the facts as so revealed. In a sense, these were tasks so rudimentary to the duties of a lawyer that the omission to perform them contaminated what followed. Competent counsel might have made this or that particular decision in the course of running the trial. But the concordance of well-made decisions with those actually made by trial counsel in ignorance of, or mistake about, the basic ingredients of the offence, was largely coincidental. In many cases it was accidental. The defence of the appellant was arguably not conducted as the basic postulate of a properly defended criminal trial envisages. All other mistakes and errors might be explained or excused. But the defects of legal understanding, of factual analysis and of securing proper instructions on that basis are self- evidently of a most serious order. Yet did they, in the end, result in a trial lacking in essential fairness as the law requires?150 I have hesitated over the answer to this question. I regard the case as being at the borderline. Ultimately, what convinces me that the trial was not unfair (and hence that there was no miscarriage of justice of the second category) is that the prosecution evidence against the appellant was so detailed, overwhelming and in large part uncontested, that it left no significant possibility of an acquittal, otherwise open, had the appellant been differently and competently represented at the trial. In short, like Callinan and Heydon JJ, I regard the case proved against the appellant as "effectively unanswerable"151. The appellant, serving his long prison sentence, may say (and doubtless will) that he never obtained a proper opportunity to answer the prosecution case because his mind, and those of his legal representatives, were never ultimately focused together on the real issues for trial and how, if at all, those issues could be answered. If I thought that any answer were reasonably available to the appellant in the record that I have read, that might have resulted in an acquittal, I would accept that complaint. Because there was no such possibility, and because the trial judge instructed the jury on the applicable law with complete accuracy, it cannot be said that the trial was unfair, occasioning a miscarriage of justice on that footing. 150 TKWJ (2002) 212 CLR 124 at 148 [76] per McHugh J. 151 Reasons of Callinan and Heydon JJ at [159]. Kirby Federal jurisdiction: The trial of the appellant occurred in the Supreme Court of Queensland, exercising federal jurisdiction in accordance with the Constitution152. The appellant was tried on indictment of an offence against the law of the Commonwealth, namely the Customs Act. In accordance with s 80 of the Constitution, the appellant was entitled to, and secured, trial by jury. Such trial was obliged to conform to all requirements of Ch III of the Constitution. No arguments were advanced in this Court, whether based upon the terms of s 80 of the Constitution or more generally upon any due process implications to be found in Ch III153 that the application of the criminal appeal provisions of the statute law of Queensland, picked up and applied to a trial in federal jurisdiction, were inconsistent with any constitutional requirements governing the appellant's trial. Because the parties were well represented in this Court, and raised no such issues, I am content to accept that they need not be addressed by me. The constitutional implications (if any) for cases of this kind of trial as Ch III requires, and trial by jury as s 80 requires, can be postponed to another day. Orders I agree that the appeal should be dismissed. 152 Constitution, s 73(ii). 153 Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 606-614 per Deane J, 703-706 per Gaudron J; cf at 532-535 per Mason CJ; Leeth v The Commonwealth (1992) 174 CLR 455 at 483-488 per Deane and Toohey JJ, 501 per Gaudron J; cf at 467-469 per Mason CJ, Dawson and McHugh JJ. See Parker, "Protection of Judicial Process as an Implied Constitutional Principle", (1994) 16 Adelaide Law Review 341 and note Weiss v The Queen [2005] HCA 81 at [30]. CALLINAN AND HEYDON JJ. The only ground of appeal in this case, as in the recent case of Ali v The Queen154, is that the appellant's counsel at his trial was so grossly incompetent that it miscarried, and that the Court of Appeal of Queensland should have so concluded. The appellant was convicted by the Supreme Court of Queensland (Philippides J with a jury) of being "knowingly concerned in" the importation of cocaine into Australia contrary to s 233B of the Customs Act 1901 (Cth). He was sentenced to 22 years imprisonment with a non-parole period fixed at 11 years. Facts It is necessary to set out the facts in some detail, not only because the events with which the Court is concerned are complex, but also because of the compelling complexion that they assume when they are so stated. Police and Customs officers intercepted the yacht "Sparkles Plenty" in Moreton Bay on 3 May 2001. On board they found 99 packets of cocaine, 29 of which were damaged by water. The undamaged cocaine weighed about 89 kilograms and had a purity of 70 per cent. There were two men on the yacht when it was boarded, a citizen of the United States, Peter Jackson, and his son Gareth Jackson. They had left Mexico in May 2000 on the yacht and crossed the Pacific Ocean to Noumea which they reached on 8 November 2000. From there they flew to Australia on 7 December 2000, where they remained until their visas expired in early March 2001. On 7 March 2001, Peter Jackson flew to the United States, where he obtained a false United States' passport in the name of "David Geschke". On 28 March 2001 he flew from the United States to Noumea on the false passport. He then sailed the yacht from Noumea to Moreton Bay where the boat was intercepted. The false passport and other items representing him to be Geschke were found on board. For part of the period of three months in which the two men were in Australia they lived in a motel in Sydney. A listening device had been installed in their room to intercept telephone conversations. Eleven of those conversations were between Peter Jackson and the appellant, who is an Australian citizen and Additionally, there were intercepted was then living in Los Angeles. conversations between Jackson and other participants in the importation of the cocaine, Jackson's two sons Gareth and Klaus, Jorge Velarde, and the appellant's 154 (2005) 79 ALJR 662; 214 ALR 1. The role of Velarde, another citizen of the United States, was to act as an intermediary between Jackson and unidentified Australian recipients of the cocaine. At the trial, the appellant admitted the passage of the yacht from Mexico, the identity of the various persons on board at different times, the movements of Peter and Gareth Jackson, the use by Peter Jackson of the false passport, the quantity of cocaine found on the yacht on its interception in Moreton Bay, and that Sylvia Aldren was his sister. It remained then for the prosecution to prove that the appellant was knowingly concerned in the importation of the cocaine. This it sought to do by the tender of tapes of the telephone conversations. Not surprisingly, taken in isolation, the contents of some of the conversations were cryptic. At the opening of its case, the prosecution alleged the appellant was knowingly concerned in the importation because he knew of it and "he gave some practical assistance in some way". In his address to the jury, the prosecutor characterized the core issues as ones of "knowledge and practical assistance" and argued that the appellant was one of the "inner circle" involved in this venture. The prosecutor conducted the case upon the basis that it was for the prosecution to prove that the appellant's conduct had "the effect of pushing this process along", thereby perhaps unnecessarily raising the hurdle which the prosecutor had to surmount to prove the offence155. Seven particulars were provided of the respects in which the appellant was said to be concerned in the importation. They were, first, that the appellant had travelled from the United States to Noumea to discuss the importation of the cocaine by Jackson under a false name. Secondly, the appellant inquired about hiring a yacht. The third was that the appellant facilitated contact between Jackson and Velarde. Next, it was said that the appellant helped Jackson to resolve difficulties in making arrangements for the importation. Fifthly, the prosecution pointed to the assistance afforded by the appellant in arranging for his sister to help Jackson to obtain a false passport. Sixthly, the prosecution contended that the purpose of a meeting between the appellant and Jackson at Los Angeles Airport was to assist with the importation of the cocaine. The last particular was that the appellant assisted Jackson to obtain the false passport. The yacht was owned by a company controlled by Jackson and his family. In its voyage across the Pacific it had berthed at Papeete and Tonga before arriving in Noumea. It had remained there for more than five months before 155 Leff (1996) 86 A Crim R 212 at 214 per Gleeson CJ. sailing for Moreton Bay. The delay, the prosecution submitted, was caused by problems the offenders had encountered in arranging for the importation: water damage to the cocaine; delays on the part of Velarde in making satisfactory arrangements for the distribution of the cocaine in Australia; and the detection by Customs officers of this country of a minute quantity of cocaine in Peter Jackson's luggage on his arrival in Australia. Despite the absence of a charge in relation to that, the prosecution asked the jury to infer that Jackson became so concerned that he had, or may have been identified and recorded as a cocaine user, that he decided to obtain a false passport to reduce the chances of apprehension on any re-entry to Australia. The intercepted conversations between the appellant and Jackson, the prosecution contended, showed clearly that the former was assisting or attempting to assist in the resolution of the problems. Two attempts were made by Jackson to obtain a false passport. One was an attempt to obtain an Australian passport, which was unsuccessful. The other attempt, which was ultimately successful, was to obtain a United States passport in the name of Geschke on his return to that country in March 2001. The taped conversations between Jackson and the appellant in late February and early March 2001 were capable of being understood as offers by the appellant to Jackson of assistance in seeking to obtain false passports. Jackson was recorded on 20 February 2001 as telephoning his son Klaus who was then in North America. Jackson instructed Klaus to go to Jackson's house in Mexico to find what he called "the Florida ID", a description used in many of the conversations, and which the prosecution alleged was a reference to items which were to be used to identify Jackson as Geschke for the purpose of obtaining the United States passport, including the items of identification found on the yacht when it was boarded in Moreton Bay. Those items included an "ID card" in the name of Geschke bearing a photograph of Jackson, and a student card and MasterCard in the same name. On 22 February, there were several conversations between the appellant and Jackson which were recorded. In these, Jackson referred to "that Florida information" and that Klaus "is going to the house to look for it", saying that if Klaus could find it, he could "proceed from there". Jackson and the appellant discussed the detection by the Australian Customs officials of traces of cocaine in the former's luggage on his entry into Australia in December 2000. In one of the conversations, referring to the ion scan equipment used to detect the cocaine in Jackson's possession, the appellant said: "If the bad guys have got these things why can't the good guys buy 'em ... there ... must be some way where we can buy one 'cause ... there's a lot of business involved." In another conversation on 22 February 2001, Jackson reminded the appellant that the appellant had previously said that it was possible to get what he referred to as "some kind of ... paperwork" in Australia. The appellant said that he would make inquiries and call Jackson back between 4 pm and 6 pm that afternoon. The appellant did in fact call Jackson at about 4:15 pm on that day. He said that he had made inquiries, and that he had "good news [regarding the] documentation you need for applying for the blue credit card", said by the prosecution to be code for an Australian passport. During the conversation, he told Jackson what needed to be done and that he had a sister in Sydney with whom he had made arrangements to help Jackson achieve this. He said that he had arranged for her to call Jackson the following morning. Early the next morning the appellant telephoned Jackson to ask if his sister had called, and if not, to tell him that she would be calling soon. The appellant then gave Jackson advice to obtain several sets of photographs. About an hour after this call, the appellant's sister did telephone Jackson. This was the first of several telephone conversations between them. They made arrangements to meet later that day. After that telephone call, Jackson was observed entering a photographic shop, and subsequently meeting Sylvia Aldren as arranged. Over the next few days, the appellant telephoned Jackson from time to time, apparently making inquiries as to what progress was being made with the matter the subject of Sylvia Aldren's assistance. On 28 February, a conversation between Jackson and Aldren recorded her as saying that she was having difficulty in obtaining people to vouch that they had known Jackson for the requisite period in support of his application for an Australian passport. Aldren told Jackson that she had tried to persuade a particular person to assist, saying that she had told him that "maybe it could be up to five (thousand)" but that he had "still said no ... [and that] he would be willing to do it for nothing if he had known you for twelve months but on the application ... it says ... that the person only had to know you for twelve months." A couple of days later, Aldren told Jackson that she had unsuccessfully sought assistance from others. On the prosecution case, the tapes of the intercepted telephone conversations demonstrated that by 2 March 2001, Jackson was aware that his son Klaus had successfully retrieved the Florida identification documents. Following this there were conversations between Jackson and the appellant in which Jackson's return to the United States, so that he could try to obtain a new "Bible", was discussed. The prosecution submitted that "Bible" also was code for a new passport. Jackson's visa was to expire on 8 March 2001, three months after his entry. The appellant was recorded as saying to Jackson: "[I]f you've ... got the things from ... Florida ... I can get the other thing ... you will have your new Bible probably within from the day you come with me, probably seven to ten days after." Shortly before he left Australia, Jackson was telephoned by the appellant to arrange to meet at Los Angeles Airport upon Jackson's arrival. In that conversation, Jackson referred to his having to "pick up those things from ... Klaus" to which the appellant said: "Okay that's fine because look ... I've contacted my friend and you know ... she ... is ... all ready to go the only thing we need to do is of course ... pay you know like because ... we need to pay a fee of course." The prosecution said that this was a reference to the procuring from the person described as "my friend", a false passport with the benefit of the documents Evidence obtained by surveillance established that Jackson's next meeting with the appellant was on 7 March 2001 at Los Angeles Airport. There was no evidence of anything done by the appellant after this meeting, until he was apprehended in Los Angeles as "Sparkles Plenty" was intercepted in Moreton Bay. Velarde's inability to find a suitable intermediary was contended to be the subject of several discussions between Jackson and the appellant. The tenor of those discussions was of complaints by Jackson that Velarde was not doing his job and was difficult to contact. The appellant, who was under regular surveillance by authorities in Los Angeles, was in contact with Velarde who was in the United States. At this time Jackson was staying in a motel in Sydney. On 22 February 2001, the appellant called Jackson and told him that "our friend", a reference to Velarde, was on the way to see him. Velarde did not arrive on 22 February 2001. The following day the appellant called Jackson and told him as much. On 25 February, he again telephoned Jackson and said that he had spoken to "our friend ... George Harrison". At the trial the prosecution alleged that "George Harrison" was in fact "Jorge Velarde". The appellant told Jackson that "George Harrison" would definitely call on 27 February. There was a telephone conversation between Jackson, the appellant and Velarde, on 27 February. The appellant and Velarde used the same telephone. They were under surveillance at the time by a Customs officer of the United States who observed them using a public pay telephone. The Customs officer saw the appellant make a call and appear to have a conversation for a few minutes before handing the phone to Velarde who continued it. That observation corresponds with a conversation between Jackson and the two men at that time which was recorded. The recording included a heated argument between Jackson and Velarde, in which allegations were made by both men regarding their respective contributions to the difficulties in implementing a plan. Velarde referred to the "damage to goods" telling Jackson that he needed to produce them for "these people's accounting". The evidence of the Customs officer observing Velarde and the appellant at the pay telephone was that the appellant stood by, within earshot throughout this conversation, after which they drove to a restaurant where they talked for some time. On the following day, the appellant called Jackson and apologised for the manner in which Velarde had spoken to him. There were several other conversations between the appellant and Jackson in which reference was made to the "damaged building supplies" and to "about thirty per cent of these ... Italian tiles" as being "broken". The appellant was in the building industry in the United States and the prosecution said that this was his way of referring to the damaged cocaine. On the prosecution case other telephone intercepts related to the chartering of a boat for the final leg of the trip to Australia. On 22 February 2001, the following conversation occurred: "NUDD: I also spoke to a couple of my friends in Australia and they were saying that ... if you head up north right ya know the same place I'm from ... just ... is maybe ... simplest to actually hire a yacht from up there. JACKSON: Oh definitely it is ... but they don't like that ... overseas stuff at all I ... inquired a bit. NUDD: You did. JACKSON: If there was a meeting a way to do a meeting you could maybe get away with that ya know ... it wouldn't really help my position but it would help the whole thing maybe. NUDD: Why don't you ... get your son to go to Gilligan's Island pick up your bus and come by and pick you up? JACKSON: Yeah that's ... another way but that's ... what I'm thinking more or less but it's ... you know that contamination problem is severe. NUDD: Oh the contamination right yeah ... I completely forgot about that." In a later conversation that day, Jackson was apparently discussing his plans when he said: "I'm deciding between here and the island" and said that one possibility was "what we were talking about before kind of meeting with the charter thing". The appellant asked: "why don't you charter one there? Charter the whole thing?" Jackson replied: "Well I am [going] to try some more. The first place was not interested ... and meet half way is what I was thinking ... to cut the time thing". A few days later, the appellant asked Jackson: "... have you made anymore calls for a charter?" to which Jackson replied: "Yeah I called today there it might be possible I really would like to go up there and talk to him in person". Much of the other evidence of the prosecution was directed to the probity of the recordings of the telephone conversations and the movements of the participants. None of these was susceptible to any credible challenge. The the incontrovertible evidence of the movements of the admitted facts, participants, and the probity of the tapes, left the prosecution merely to submit that the contents of the last, taken with the appellant's association with Velarde and the introduction of his sister to the project, proved that the appellant was knowingly concerned in the importation. Effective cross-examination on any of these matters would have enjoyed no reasonable prospect of success. It is now necessary to turn to the incompetence of counsel for the appellant at the trial. In examining that topic, it is necessary to bear in mind that the criticisms made below must be considered in the light of the fact that counsel was not represented in this appeal. It must also be remembered, as is explained below, that it is very hard to see what case on behalf of the appellant counsel could legitimately have advanced which would have had any prospect of success. The incompetence of counsel to which the appellant particularly pointed was the former's conduct of the trial, from beginning to end, under a fundamental misapprehension as to the elements of the offence with which the appellant was charged. The misapprehension was that it was an element of the offence that an offender must provide practical assistance to any person more directly concerned in the commission of such an offence or that before an offender could be convicted he must be shown to have caused the venture to move forward. It fell to the trial judge to correct counsel and this her Honour did in her summing up to which no objection is or could be made. Her Honour said this: "I have to correct some things on this issue said in addresses. It is not the law that in order to be concerned in the importation the accused must put forward an original idea or must assist in taking the venture in a new or different direction, nor is it the law that for the assistance to be practical that it must be effective. Rather, what is required is that the participation is a practical part of the venture. A person can give practical assistance even though the party to whom it is given is an expert on the subject of the assistance. The question is not whether the importation would have taken place without the accused, but whether the accused was concerned in the importation. Being concerned in bringing cocaine into Australia is not limited to direct involvement in the means by which the drugs were brought here such as handling the goods or sailing the boat or loading the goods or things of that nature. Someone who makes arrangements or assists in making arrangements for the importation can also be said to be concerned in the importation. The word 'concerned' covers a wide range of activities and includes acts and events which precede the actual bringing of the prohibited goods into the country. It is sufficient if a concern, that is the part played by the accused, occurs in some part of the venture which has as its object bringing drugs into the country, that is to say, if the involvement or participation is a practical part of the venture, the person is concerned in even though the participation occurs before their particular activity which actually brings the goods here." There were other respects in which counsel for the appellant at the trial, who had not previously conducted a major criminal trial before a jury, was incompetent. Neither he, nor the solicitor representing the appellant, obtained his version of events at any time. Even so, counsel submitted that the appellant knew that Jackson was importing cocaine into Australia. Repeating his understanding of a need for practical assistance, at one point in his address to the jury he said this: "My task today on the issue of practical assistance – and that's really the defence case – is to demonstrate that, really, anything that my client did, anything that you might be satisfied that my client did, is not, in the relevant criminal sense, a sense that will attract a very severe penalty, practical assistance." Both in the Court of Appeal and in this Court, the appellant has submitted that a failure to call him was another example of his counsel's incompetence. As will appear, had the appellant given evidence, the defence that he would have tried to mount was that he did not know the precise destination of the cargo, which turned out to be cocaine, and that he thought that it could have been pseudoephedrine or some other like substance, and that he believed that the boat and its cargo were headed for New Zealand. There is one further aspect of the conduct of the trial of counsel for the appellant to which reference should be made. In his address to the jury, he appeared clearly to accept on behalf of his client that it was his client's voice on the telephone that had been tape-recorded: "I didn't have to put [the appellant] in the witness box, that's his undoubted right and, having said that, you can't draw ... an adverse inference, and having said that about his silence he's hardly been silent in this Court, has he? You've heard him on tape and those tapes I'd ask you to bear in mind are contemporaneous with events." Again it was the trial judge who picked up the possibility of a misapprehension. Her Honour asked him whether he had instructions from his client that it was he who spoke on the telephone. The appellant's counsel said that these were his present instructions. When the trial resumed however, on the following Monday, and her Honour again in the absence of the jury, sought clarification, after some discussion counsel said that his instructions were to put the Crown to proof of the identity of the speaker on the telephone, and other substantial matters. Nonetheless he asked whether he might take further instructions. The trial judge allowed him to do so. After a brief adjournment, he then informed her Honour that he held instructions to admit that it was his client's voice on the tapes. After the jury had been deliberating for nearly 24 hours, they sought assistance from the trial judge by asking the following two questions156: "1. Does the accused need to know the final destination of shipment, ie, Australia, in order for him to have committed an illegal act as charged? If the accused was knowingly concerned in the bringing into destination X, if not being Australia, of prohibited imports and the ultimate destination became Australia through revised planning or other reasoning, does the charge still apply?" With respect to the first question, her Honour said: "And the answer to that question is yes. The charge is importation of the drugs into Australia and I think you now have copies of the indictment." With respect to the second question, her Honour said: "And as to question 2, the answer is that if the accused knew that the goods were being imported into Australia as a result of – well if the accused knew that the goods were being brought into Australia [and] that the ultimate destination was Australia and by whatever means, whether it be revised planning or whatever, the charge still applies. Because the charge is the importing of the goods into Australia and that is what the accused needs to have knowledge of." The appeal to the Court of Appeal The principal judgment of the Court of Appeal of Queensland, (Davies JA, White and McMurdo JJ) which dismissed the appellant's appeal, was given by McMurdo J. The appellant argued there the same ground as he relied upon in this Court. The particulars of incompetence to which the appellant's counsel on the appeal referred (who was not of course the same counsel as conducted the trial) were ten in number157: 156 R v Nudd [2004] QCA 154 at [64]. 157 [2004] QCA 154 at [49]. "(a) Counsel failed to understand, and properly advise the Appellant on, the elements of the offence charged; Counsel conducted misunderstanding of concerned'; the defence case on the meaning of the the basis of his 'knowingly term Counsel failed to take appropriate instructions from the Appellant; Counsel failed to properly advise the Appellant upon such instructions; Counsel failed to appreciate or advance two lines of defence reasonably open upon the Appellant's instructions; Counsel failed to appropriately advise the Appellant in relation to giving evidence; Counsel made admissions of fact instructions to do so; in error and/or without Counsel failed to seek an appropriate direction concerning the way in which the jury could use the contents of discussions between persons, such discussions not involving the Appellant; Counsel failed to object to inadmissible and highly prejudicial material contained in the telephone intercept tapes being admitted and failed to seek an appropriate direction from the learned Trial Judge relating to such material; Counsel introduced highly prejudicial and inadmissible material in his closing address." The appellant and his counsel at the trial gave evidence on the appeal. It is from that evidence that the purported defence upon which the appellant would have sought to rely had he been properly represented, emerges. In addition to the matters that we have already mentioned, the appellant claimed that he did not know that Jackson was importing cocaine into Australia, that he had no financial or other beneficial interest in the importation, and that he dissociated himself entirely from the affair of the "Sparkles Plenty" on or about 7 March 2001. In the Court of Appeal, McMurdo J correctly identified the ultimate question as being whether there had been a miscarriage of justice158. After reviewing the authorities, his Honour said this159: "As mentioned, the mainstay of the prosecution case was the evidence of the intercepted telephone conversations, and the evidence that it was the accused who was recorded speaking to Jackson was compelling. Without evidence given by or for the accused, the outcome depended upon the inferences which the jury could draw from those conversations. This required some considerable interpretation of the words spoken." The difficulty for the appellant with respect to his claim that he should have been advised to give evidence at his trial, as pointed out by McMurdo J, was that he would have had to undergo cross-examination on his assertion that all that he knew was that the cargo may have been pseudoephedrine or a like narcotic and that its destination may have been New Zealand, assertions self- evidently of little credibility and rendering the appellant vulnerable to a detailed cross-examination about the telephone conversations and his involvement generally. McMurdo J was accordingly of the view that a failure to call the appellant was most unlikely to have deprived him of a chance of an acquittal, and to have caused any miscarriage of justice. With respect to the appellant's claim that he would have given evidence of his withdrawal from any involvement and dissociation from the project, the difficulty for him is that by then he had in fact participated in the importation which, as Gleeson CJ said in Leff160, is a process or a venture not confined to the precise moment of the entry of a narcotic into Australia. Accordingly, again as McMurdo J pointed out, this evidence, had it been given, taken particularly with the other evidence on the tape recordings, would have been most unlikely to have availed the appellant. With respect to the other particulars of incompetence, McMurdo J said this161: "It is necessary to mention those suggested particulars of incompetence which have not been already addressed. The first is that counsel should have sought appropriate directions concerning the way in 158 [2004] QCA 154 at [59]. 159 [2004] QCA 154 at [61]. 160 (1996) 86 A Crim R 212 at 214. 161 [2004] QCA 154 at [73]-[75]. which the jury could use the content of discussions between persons, as recorded on the tapes, where those discussions did not involve the appellant. On the strategy which counsel employed, of endeavouring to make his client seem irrelevant to the scheme which was organised by others, there was some potential advantage in allowing the jury to hear these other conversations. Perhaps it was arguable that some of this evidence was inadmissible, because it was not evidence of the existing venture and the appellant's role in it. However, it does not appear to me that some particular direction was required and there is no ground of appeal which is critical of the summing up. A further complaint is that counsel failed to object to part of the tapes in which the appellant was recounting an occasion on which he was stopped at the airport and was searched. This is a fair criticism of counsel, but it hardly provides a basis for thinking that there has been a miscarriage of justice. Counsel is also criticised for failing to object to a passage from the tapes in which the appellant was recorded as saying that he had been involved 'quite a few times' in what the prosecution interpreted as obtaining false identification. In my view, however, that was admissible as evidence of the case that the accused had attempted to assist Jackson to obtain a false passport. Lastly, criticism is made of counsel for saying in the course of his address that the appellant was arrested in the United States for visa violations, deported to Australia, remanded in custody from the date of his arrest at the trial and had lost his property which had been seized and sold by the Australian government. The evident intention of counsel was to try to engender some sympathy for his client, consistently with his submission that he was facing such a serious charge in circumstances where he had had no close involvement and there was no evidence of any financial reward. In my view, the volunteering of this information, whilst inappropriate, was not so prejudicial as to be significant here." The appeal to this Court The appellant's argument In this Court, the appellant repeats the arguments which he advanced in the Court of Appeal. In developing his submissions, he argued that the incompetence involved here went to the root of his representation at trial, and that the decisions of his counsel were neither informed, rational nor made for any tactical reason: that he therefore has simply not had a fair trial according to law. It is not to the point, he argued, that, put another way, or in some other context, or with a different focus, some of the arguments made may have had some validity, or might be able to be plausibly or justifiably explained in retrospect. The entire defence as conducted by his counsel at the trial led inevitably to the conclusion that the appellant was guilty. The prosecution's arguments The prosecution's principal submission is that the case against the appellant was of such a kind and so strong that it seriously limited the forensic choices available and recognizable by even the most competent of counsel. It was further submitted that there were no facts which could have been elicited from any witness in cross-examination which could have supported or improved the defence. The tapes of the telephone conversations were the mainstay of the case for the prosecution and these were effectively beyond denial, and highly inculpatory, indeed consistent only with guilt. Disposition of the appeal In TKWJ v The Queen162, Gaudron J with whom Gummow J agreed, pointed out that the inquiry of an appellate court in a case of this kind was an objective one, and whether, so viewed, the course taken by counsel was capable of explanation163. Hayne J, with whom Gummow J also agreed, too said that an objective assessment of the conduct of the case is required164. In this case, on any assessment, whether subjective or objective, counsel's conduct was incompetent to a serious degree. So too, on either a subjective or an objective assessment, some at least of counsel's conduct cannot be rationally justified or explained, although perhaps it can be said that the overstatement of the matters required to be proved by the prosecution may have contributed to the appellant's counsel's further and significantly greater overstatement of them. That is not however the end of the matter. Was the appellant's trial a fair one in all of the circumstances? Did justice miscarry to the extent that the appellant was deprived by his counsel's conduct of a chance of an acquittal? In answering these questions, we keep in mind that the more apparently serious the offence, the greater the need there generally will be for punctiliousness in all respects in the conduct of the trial. In the end we have come to the conclusion that the appellant was not deprived of a chance of an acquittal despite the incompetence of his counsel at the trial. This is so because we consider the case against the appellant to have 162 (2002) 212 CLR 124. 163 (2002) 212 CLR 124 at 133 [27]-[28]. 164 (2002) 212 CLR 124 at 158 [107]. been a strong one, and indeed one which was effectively unanswerable. The questions he asked, the statements he made, his invitations, his advice, his persistence and his comments during the numerous telephone conversations were not those of a merely interested, but innocent bystander. Nor was the introduction of his sister to Jackson the act of a person remote from the enterprise. As the prosecution points out, there were no witnesses whom the appellant could call who could give any convincing evidence to controvert any aspect of the case against him. One among many of the inculpatory references during the telephone conversations was to the ion scanning equipment. It is almost impossible to believe that the appellant would have made that reference unless he was concerned in the project of importing the cocaine into Australia. The appellant's counsel at the trial did misunderstand, and accordingly fail to advise the appellant on the elements of the offence with which he was charged. He conducted the whole case upon the basis of that failure. But the trial judge did have a proper understanding of the elements of the offence, and was careful to instruct the jury correctly about them. It is not open to this Court, or indeed to any court, to take the view that had the appellant's counsel advised the appellant accurately about the elements of the offence, the appellant might, or would have changed his story to enable him to deny and disprove one or more of those elements. The Court now does know what the appellant's story is, and for the reasons which we have already given, and the reasons stated by McMurdo J in the Court of Appeal, that story would have been most unlikely to have provided an answer, or raised even a reasonable doubt with respect to the case for the prosecution, had it been told to the jury. Of somewhat more concern is the possibility that some of the evidence of the conversations which were tape-recorded may have been the subject of a valid objection as to their admissibility against the appellant. However, even if the clearly admissible evidence on the tapes, one instance of which we have specifically mentioned, had been isolated, the case against the appellant would still have been a very strong one. This is a case which does cause concern. It is most unfortunate that a person charged with such a serious crime as the appellant was, should come to be represented by a person whose competence fell short of the standard which a court should be entitled to expect. However, just as in medicine there may be terminal cases which not even the most brilliant surgeon can remedy, there will be prosecution cases which an accused could not successfully defend with the aid of the most resourceful and competent of counsel. We have come to the conclusion that this was such a case. That does not mean of course that a person against whom the case is a very strong one, is not entitled to a fair trial. But unlike in the operating theatre, there is in the criminal court a suitably qualified judge, detached from the protagonists and whose duty it is to intervene and make such corrections as need to be made to ensure a fair trial. Trial judges may only correct errors that become apparent to them, but in this case such errors as might otherwise have caused the trial to miscarry, were duly corrected by way of her Honour's summing up and insistence that instructions be duly obtained. We would dismiss the appeal.

HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION, CITIZENSHIP, MIGRANT SERVICES AND MULTICULTURAL AFFAIRS APPELLANT AND AAM17 & ANOR RESPONDENTS Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v AAM17 [2021] HCA 6 Date of Hearing: 3 December 2020 Date of Judgment: 4 March 2021 ORDER Appeal allowed. Set aside orders 3 to 5 of the orders made by the Federal Court of Australia on 25 November 2019 and, in their place, order that the appeal to that Court be dismissed. On appeal from the Federal Court of Australia Representation G R Kennett SC with C I Taggart for the appellant (instructed by Australian Government Solicitor) P E Cahill SC with D V Blades for the first respondent (instructed by Rothstein Lawyers) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v AAM17 Immigration – Visas – Application for protection visa – Procedural fairness – Where delegate of Minister rejected first respondent's application for protection visa – Where Administrative Appeals Tribunal affirmed delegate's decision – Where first respondent sought judicial review of that decision in Federal Circuit Court – Where first respondent unrepresented before Circuit Court and obtained assistance of interpreter – Where Circuit Court dismissed application for judicial review and delivered ex tempore judgment – Where Circuit Court orders were translated to first respondent but ex tempore reasons were not – Where written reasons delivered by Circuit Court after first respondent filed notice of appeal in Federal Court of Australia – Where Federal Court held that failure of Circuit Court to have ex tempore reasons for judgment translated resulted in denial of procedural fairness – Whether Federal Court erred in holding that Circuit Court denied first respondent procedural fairness – Whether Federal Court erred in holding that setting aside Circuit Court's judgment necessary to provide first respondent with practical justice. Words and phrases – "assistance of an interpreter", "ex tempore reasons", "failure to translate", "judicial function", "operative reasons", "oral reasons", "practical injustice", "practical unfairness", "procedural fairness", "written reasons". Federal Circuit Court of Australia Act 1999 (Cth), ss 5, 42, 57, 74, 75. Federal Circuit Court Rules 2001 (Cth), rr 15.27, 16.01, 16.02. KIEFEL CJ. I agree with Steward J. KEANE J. I agree with Steward J. GORDON J. I agree with Steward J. Edelman EDELMAN J. I agree with Steward J. Steward STEWARD J. The first respondent is a citizen of Pakistan who, in 2014, applied for a Protection (Class XA) visa after his application for a Student (subclass TU- 572) visa was refused. The first respondent had previously visited Australia on multiple occasions between 2009 and 2012 as the holder of successive Business Short Stay (subclass UC-456) visas. His protection visa application was rejected in 2015 by a delegate of the appellant Minister. In 2016, the Administrative Appeals Tribunal ("the Tribunal") affirmed the delegate's decision. The first respondent sought judicial review of that decision in the Federal Circuit Court of Australia. The first respondent was not represented before the Federal Circuit Court, but had asked for, and obtained, the assistance of an interpreter because, inferentially, he does not speak English. The primary judge dismissed the application and delivered an ex tempore judgment. Whilst the Federal Circuit Court's orders were translated for the benefit of the first respondent, the oral reasons for judgment were not. The first respondent appealed from that judgment to the Federal Court of Australia. The primary judge delivered written reasons for judgment after the first respondent filed his notice of appeal in the Federal Court. On appeal in the Federal Court, the first respondent was again unrepresented. For that reason, Mortimer J, exercising the Federal Court's appellate jurisdiction as a single judge, reviewed the reasons of the Tribunal and of the Federal Circuit Court "at a level broader than the express grounds of appeal, in order to ensure there is no obvious jurisdictional error"1 attending the Tribunal's decision. At a general level, Mortimer J concluded that the written reasons of the Tribunal and the primary judge did not disclose "any possible error deserving of close consideration"2 by the Federal Court, and that there was otherwise no error affecting the Tribunal's decision3. Nonetheless, Mortimer J allowed the appeal, set aside the orders made by the Federal Circuit Court and remitted the matter to that Court to be reheard by a different judge4. Mortimer J so decided because her Honour considered5 that the failure by the primary judge to have his oral reasons 1 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [9]. 2 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [43]. See AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [9], [43]-[48]. 4 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [42], [51]. 5 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [37], [51]. Steward for judgment translated for the benefit of the first respondent constituted a denial of procedural fairness, and that undoing this denial required the setting aside of the judgment of the Federal Circuit Court. For the reasons given below, I respectfully disagree with the conclusion reached by the Federal Court. The applicable facts The applicable facts were not in dispute. They were summarised6 by the first respondent relied upon an interpreter for his participation in the hearing before the Federal Circuit Court and was not represented by a lawyer; the Federal Circuit Court delivered ex tempore reasons for the orders it had pronounced; the Federal Circuit Court hearing lasted for one hour, including the delivery of reasons; the Federal Circuit Court's orders were interpreted to the first respondent; the first respondent did not receive a copy of the transcript of the ex tempore reasons for judgment; the first respondent had to prepare and file his notice of appeal in the Federal Court without having received any written version of the reasons for judgment of the Federal Circuit Court; the written reasons of the Federal Circuit Court were published on 18 July 2019, more than a month after the first respondent had filed his notice of appeal in the Federal Court, and well outside the period in which a notice of appeal was required to be filed; and there was no way the Federal Court could compare what had been said by the primary judge in his ex tempore reasons with what his Honour had written in the published reasons of the Federal Circuit Court. 6 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [20]. Importantly, because the ex tempore reasons delivered by the primary judge had not been translated when the reasons were delivered, Mortimer J found that the first respondent, at that time, had "no explanation at all, which was intelligible to him, of how or why the Court had made those orders"7. That explanation was only provided to the first respondent when written reasons were published on 18 July 2019. Certain further facts should be noted: First, whilst the published reasons incorrectly record that the Federal Circuit Court judgment had been delivered in Sydney rather than in Perth, the published reasons nonetheless included the primary judge's associate's certification that the paragraphs comprising those reasons were "a true copy of the reasons for judgment" of the primary judge. Secondly, for the purpose of preparing his notice of appeal, the first respondent made no attempt to obtain a transcript of the ex tempore reasons for judgment. Nor did he make any such attempt after filing the notice of appeal. Thirdly, the first respondent never sought to amend his grounds of appeal to take account of the published reasons of the Federal Circuit Court. Finally, notwithstanding the circumstances and chronology of what occurred in the first respondent's judicial review application in the Federal Circuit Court, the Federal Court did not adjourn the hearing of the appeal to give the first respondent an opportunity to obtain a transcript of the primary judge's ex tempore reasons in order to determine whether they differed, in any way, from the published reasons. The reasons of the Federal Court Mortimer J reasoned that an exercise of judicial power is conditioned by an obligation to afford procedural fairness to the parties before the court8. Her Honour was of the view, however, that this obligation extended to the giving of reasons for 7 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [23]. 8 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [34], quoting SZRUR v Minister for Immigration and Border Protection (2013) 216 FCR 445 at 456 [55] per Allsop CJ. final orders9. Mortimer J was also of the view that there was an available inference that a practice may have developed amongst some judges of the Federal Circuit Court of only preparing written reasons for judgment as a reaction to the filing of a notice of appeal. Such a practice, if it existed, could only be justified, according to her Honour, if the relevant litigant had previously been given, within a period that did not prejudice that person's right of appeal, "reasonable and timely access to some form"10 of the Court's reasons that were intelligible to that person. Absent this, Mortimer J was of the view that the pronouncement of ex tempore reasons to a non-English-speaking self-represented litigant, without translation, and which are not followed by written reasons "as soon as practicable after the orders are pronounced", is "an unfair procedure, and a denial of procedural fairness"11. In support of that conclusion, her Honour relied upon the decision of the Full Court of the Federal Court in CQX18 v Minister for Home Affairs12. In that case, the Full Court expressed concern that the primary judge had delivered ex tempore reasons which, pursuant to an instruction given by that judge, had not been translated13. There was no suggestion that any such instruction had been given in this proceeding. Mortimer J rejected14 the Minister's submission that there was no denial of procedural fairness on the facts of this case because the first respondent had filed his notice of appeal on time, and thereafter had not sought to amend his grounds of appeal following the publication of the primary judge's written reasons. That was so for two reasons. First, the submission was said to have "little weight with a 9 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [35], citing Wainohu v New South Wales (2011) 243 CLR 181 at 213-215 [54]-[58] per French CJ and Kiefel J, 225-226 [92], [94] per Gummow, Hayne, Crennan and Bell JJ and Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 71-72 [67] per French CJ. 10 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [31] (emphasis in original). 11 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [37]. (2019) 372 ALR 137. 13 CQX18 v Minister for Home Affairs (2019) 372 ALR 137 at 140 [11] per Allsop CJ, 14 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [38]. self-represented asylum seeker"15. Secondly, the first respondent lost "in a real and practical sense"16 the opportunity to take a document containing the reasons of the Federal Circuit Court to a person or persons who might assist him in formulating and preparing an appeal. He was "denied the opportunity to understand at all why he had lost his case"17. Mortimer J further reasoned that procedural fairness mandated that one of several different courses be adopted by the primary judge. Her Honour considered that the Federal Circuit Court should have had the oral reasons translated, produced formal reasons "in a few days" (in English), given the first respondent access to the transcript of the Court's reasons, or, finally, stayed the orders the primary judge proposed to make pending the provision of written reasons18. The primary judge's failure to adopt any of these methods interfered with the way in which the first respondent could have exercised his right of appeal, and "denied him the opportunity to seek any assistance about possible grounds of appeal, or whether indeed he should appeal at all"19. That failure also denied the first respondent an intelligible account of what had happened, or an opportunity to access such an explanation20. It followed, according to Mortimer J, that in these circumstances there had been no "real exercise of judicial power"21. Accordingly, her Honour was 15 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [38]. 16 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [38]. 17 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [40]. 18 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [41]. 19 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [41]. 20 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [41]. 21 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [41], citing Nicholas v The Queen (1998) 193 CLR 173 at 208-209 [74] per Gaudron J, Re Nolan; Ex parte Young (1991) 172 CLR 460 at 496-497 per Gaudron J, Wainohu v New South Wales (2011) 243 CLR 181 at 208-209 [44] per French CJ and Kiefel J, North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 593-595 [39] per French CJ, Kiefel and Bell JJ and Transport Workers' Union of Australia v of the view that there was only one way of correcting the denial of procedural fairness: the primary judge's orders had to be set aside and the matter remitted to be reheard by a different Federal Circuit Court judge22. The parties' contentions The Minister accepted that a requirement to provide reasons is an incident of the judicial process23. The Minister also accepted that a failure to deliver reasons, or adequate reasons, may ground an appeal24. However, that duty is not a product of any obligation to provide procedural fairness25. The content of the obligation to accord procedural fairness, the Minister submitted, is necessarily directed to the applicable processes before a relevant decision is made, not after26. In that respect, it was said, a critical question in determining whether a court should grant relief is whether any failure of procedure deprived an interested party of the "possibility of a successful outcome"27. It followed from that submission that the task of delivering reasons for final relief could never produce an affirmative answer to that question. For that reason, the Minister contended that the court below thus erred in describing the Federal Circuit Court's failure to have its oral reasons translated as a breach of procedural fairness. In oral argument, the Minister Registered Organisations Commissioner [No 2] (2018) 267 FCR 40 at 60 [101] per Allsop CJ, Collier and Rangiah JJ. 22 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [42], [51]. 23 See Wainohu v New South Wales (2011) 243 CLR 181 at 213-215 [54]-[58] per French CJ and Kiefel J. 24 See Thorne v Kennedy (2017) 263 CLR 85 at 111 [61] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. See also Pettitt v Dunkley [1971] 1 NSWLR 376 at 387-389 per Moffitt JA; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 442-443 per Meagher JA, citing Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 281 per McHugh JA; see also at 259 per Kirby P, 270-271 per Mahoney JA. 25 See Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at 26 See and compare Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 72 [68] per French CJ, 99-100 [156]-[157] per Hayne, Crennan, Kiefel and Bell JJ. 27 Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 at 342-343 [60] per Gageler and Gordon JJ. contended that if there was some obligation on a court to have its ex tempore reasons interpreted, it would then be difficult to distinguish between an applicant who did not speak English and an applicant who had another difficulty in comprehending the ex tempore reasons of the court as they were being delivered orally. In any event, it was submitted, the failure to translate the reasons for judgment did not result in any practical unfairness or injustice28. In the Minister's submission, the relevant loss of opportunity was required to be an opportunity to succeed before the primary judge, and not a loss of opportunity to succeed on appeal. Here, as already mentioned, the Federal Circuit Court's failure to translate its reasons could not logically bear upon the first respondent's prospects of success before the Federal Circuit Court. The Minister contended that, if the relevant loss of opportunity did include the opportunity of success on appeal before the Federal Court, the Federal Circuit Court's failure to translate its reasons was still not productive of any practical injustice. That was because the first respondent obtained the written reasons for judgment some months before the hearing of his appeal, yet he took no steps to amend his grounds of appeal. The first respondent never contended that there was some point he was prevented from raising on appeal because the written reasons were delivered after he had filed his notice of appeal. Moreover, it was submitted that any unfairness that might have arisen from the conduct of the primary judge was able to be, and was, cured by the procedurally fair hearing which subsequently took place in the Federal Court. The fact that the first respondent was not represented in either court below did not compel, it was contended, any different conclusion. That was because it had not been shown that the first respondent was unaware that his notice of appeal was capable of being amended. The Minister further submitted that Mortimer J erred in any event by ordering that the proceeding be remitted back to the Federal Circuit Court. He submitted that the Federal Court was able to remedy any denial of procedural fairness through the hearing it provided and, having done so, its duty was to give the judgment that should have been given below. The Minister contended that remittal here had no utility because any judge on remittal, faced with the same grounds of review, would effectively be bound by the conclusion of Mortimer J that the Tribunal's decision was not infected with jurisdictional error. And if the first respondent convinced the judge on remittal that she or he could depart from Mortimer J's conclusion, it would be an abuse of process, inconsistent with the 28 See Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 13-14 [37] per Gleeson CJ; Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 443 [38] per Bell, Gageler and Steward principle of finality of litigation, to permit the first respondent to raise new grounds of review. The first respondent did not support all of the reasons of Mortimer J. He did not, for example, seek to uphold Mortimer J's proposition that it is a general requirement of procedural fairness that reasons for decision should be delivered as soon as practicable after the delivery of judgment or prior to the expiration of the time period for commencing any appeal. Nor did the first respondent support Mortimer J's conclusion that he was denied procedural fairness by the Federal Circuit Court because the reasons were not translated and written reasons were not provided as soon as practicable after pronouncement of orders29. Finally, he also accepted that the way in which the primary judge delivered reasons could not amount to any denial of procedural fairness by that court. Instead, the first respondent submitted that the way in which reasons are delivered by a court can be relevant to what is required to ensure that a decision on appeal from that court is made fairly. In that respect, sufficient access to reasons for judgment is integral, it was said, to a determination of whether to appeal, to a determination of whether to respond to an appeal, and in either case to having a "fair opportunity" to advance one's case. In essence, it was submitted, Mortimer J's reasoning was directed to the first respondent's exercise of his rights of appeal to the Federal Court; the failure to translate the primary judge's ex tempore reasons impaired the first respondent's ability to pursue those appeal rights. The first respondent also submitted that remittal was the correct remedy for the impairment that he had suffered in connection with the exercise of his appeal rights. That was said to be because the primary judge's oral reasons were the "operative reasons" of the Federal Circuit Court for the purpose of exercising those rights. As Mortimer J could not consider those reasons, or compare them with the written reasons delivered subsequently – because a transcript of the ex tempore reasons was not before the Federal Court – her Honour was unable to review the oral reasons for discernible error, as Mortimer J did with the written reasons (and found none). The first respondent submitted that it was therefore appropriate for the decision of the Federal Circuit Court to be set aside and the matter remitted for rehearing. On the first respondent's asserted basis that the primary judge's oral reasons were the "operative reasons", it was submitted that remittal was not "inutile" because Mortimer J's assessment of the primary judge's published reasons did not foreclose the possibility of error in the oral reasons. The first respondent also sought to support the reasons of Mortimer J with a notice of contention which contained three grounds. Those grounds took as their premise that the oral reasons given by the primary judge were the only "operative 29 See AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [37]. reasons" for decision. The first ground contended that there had been a denial of an opportunity for the first respondent to have advanced a case based on those oral reasons. By the second ground, it was contended that the decision of the primary judge should also have been set aside because it was not possible to ascertain whether, and to what extent, the written reasons corresponded to the oral reasons given by the primary judge. Because the first respondent was unrepresented at first instance, and relied upon the assistance of an interpreter, it should be inferred, it was said, that he would not have been aware of the possible existence of a record of the ex tempore reasons that had been given. He was thus denied an opportunity of comparing the ex tempore reasons with the written reasons to discover whether there existed any disparity between the two expressions of reasons which might itself have constituted an error and, more fundamentally, he was denied the opportunity to present his case on appeal "with regard to ... the operative reasons for decision of the Federal Circuit Court". In that respect, it was contended that there was no onus on the first respondent to show that such a disparity existed in fact; it was enough that he had been denied the opportunity of demonstrating such disparity in reasoning30 in circumstances where there was the potential for, or the possibility of, disparity. The third ground of the notice of contention was that, because the ex tempore, "operative reasons" were not before the Federal Court, Mortimer J's conclusion that the primary judge's written reasons did not disclose error in his Honour's assessment of the Tribunal's reasons for decision was of no moment; Mortimer J had considered the wrong set of reasons. In that respect, the first respondent placed particular reliance on the finding made by Mortimer J that there was "no way"31 the Federal Court could compare what had been said by the primary judge in his ex tempore reasons with what his Honour had written in his reasons. The Minister submitted that the first respondent's notice of contention was misconceived. Contrary to the first respondent's contentions, it was necessary for him to have established some material difference between the ex tempore and written reasons. He had failed to do this. It also should not be inferred, by reason of the first respondent's lack of representation and need for an interpreter, that he was unaware that a record of the ex tempore reasons was available. In any event, it was said, the premise of the notice of contention – that the ex tempore reasons were the only "operative reasons" of the Federal Circuit Court – was mistaken. There was no basis for doubting that the published reasons, bearing as they did the certification of the primary judge's associate, were an expression of the authentic reasons of the Federal Circuit Court. And if there was a basis for doubt, it was 30 Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 at 342-343 [59]-[60] per Gageler and Gordon JJ. 31 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [20(h)]. submitted that Mortimer J should have adjourned the hearing of the appeal to enable the record of the ex tempore reasons, namely the transcript, to be obtained. Procedural fairness and practical justice Underlying the Federal Court's decision, and the first respondent's submissions in this Court, was a conception of procedural fairness that exceeds the range of matters with which that concept is concerned. In this case, as the Minister rightly submitted, the final instance of any right or entitlement of either party arising from the primary judge's obligation to afford procedural fairness occurred at the time the parties made their concluding submissions32. Thereafter, the trial having finished, procedural fairness had no role to play in respect of the matters the subject of the primary judge's decision33. That is not to gainsay the Minister's concession, properly made, that the duty to give reasons is an inherent aspect of the exercise of judicial power34 and that the need for fairness applies to the discharge of that duty35. As a matter of general fairness, rather than independent legal duty, the first respondent ought to have had the benefit of translated ex tempore reasons or written reasons at an earlier time. But to the extent that the practical manifestations of the first respondent's entitlement to be accorded procedural fairness were diminished as a result of the primary judge's failure to translate his ex tempore reasons or to produce written reasons timeously, any consequent practical unfairness36 to the first respondent could only logically arise 32 See Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at If further matters arose requiring the primary judge's consideration, such as enforcement of orders or costs, the primary judge's obligation to accord procedural fairness in respect of the adjudication of those matters would arise. 34 See Wainohu v New South Wales (2011) 243 CLR 181 at 213-215 [54]-[58] per French CJ and Kiefel J. 35 See Dietrich v The Queen (1992) 177 CLR 292. See also AMF15 v Minister for Immigration and Border Protection (2016) 241 FCR 30. 36 See Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 13-14 [37] per Gleeson CJ; Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 443 [38] per Bell, Gageler and Steward in the conduct of the first respondent's appeal to the Federal Court. That, however, was not the basis on which the appeal to the Federal Court was allowed37. The following propositions should be expressed. First, this appeal is not concerned with whether an unrepresented litigant, who does not understand English, is always entitled to have oral, or written, reasons for judgment translated for her or his benefit. The first respondent made no such general claim. Secondly, this is not a case where reasons were never delivered, or where the content of the given reasons was inadequate. The primary judge discharged his judicial duty to give reasons. In that respect, the first respondent did not dispute the Minister's contention that the giving of reasons in open court by the primary judge was not an aspect of the duty to provide procedural fairness, but rather a vital incident of the judicial function38. The first respondent's complaint was directed at the more narrow proposition that, in his precise circumstances, procedural fairness for the purposes of considering, and then exercising, his appeal rights required the primary judge's ex tempore reasons to be translated or written reasons to have been provided more promptly. Thirdly, the Federal Circuit Court is an inferior court, and as such has no inherent powers39. Being a creation of Parliament, that Court has no authority other than that found in the powers and functions conferred upon it by legislation40. Neither the Federal Circuit Court of Australia Act 1999 (Cth) ("the FCCA Act") nor the Federal Circuit Court Rules 2001 (Cth) ("the FCCA Rules") address the topic of whether the Federal Circuit Court is obliged to give written reasons, or, if the Court is to deliver ex tempore reasons, whether such reasons need to be translated for the benefit of an unrepresented non-English-speaking party. However, s 42 of the FCCA Act obliges the Federal Circuit Court to "proceed without undue formality" and to "endeavour to ensure that the proceedings are not 37 See AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [37], [51] per Mortimer J. 38 See Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at 666-667 per Gibbs CJ, citing Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386 per Mahoney JA. See also De Iacovo v Lacanale [1957] VR 553 at 557-558 per Monahan J; Wainohu v New South Wales (2011) 243 CLR 181 at 213-214 [54] per French CJ and Kiefel J. 39 See Palmer v Clarke (1989) 19 NSWLR 158 at 167 per Kirby P. 40 Palmer v Clarke (1989) 19 NSWLR 158 at 167 per Kirby P. protracted". Section 57 of the FCCA Act provides that proceedings in that Court are not invalidated by reason of "a formal defect or an irregularity" unless it is productive of substantial injustice that cannot be remedied by an order of the Federal Circuit Court. Section 74(1) of the FCCA Act requires an order of the Federal Circuit Court to "be in writing" or to "be reduced to writing as soon as practicable". That provision does not stipulate what language is to be used to express the orders of the Court. However, in Nguyen v Refugee Review Tribunal41, Sundberg J observed: "The official language of Australia is English. The Constitution, statutes, regulations and bylaws are written in English. Proceedings in Parliament and the Courts are conducted in English. Governments correspond with their citizens in English." That passage applies to orders made, and reasons for judgment given, by a judge of the Federal Circuit Court. Section 75 of the FCCA Act addresses what is to happen if the Federal Circuit Court "reserves judgment" and "the Judge who heard the proceeding subsequently prepares orders and reasons, but is not available to publish those orders and reasons". The term "judgment" is defined in s 5 of the FCCA Act to mean "a judgment, decree or order, whether final or interlocutory, or a sentence, and includes a decree within the meaning of the Family Law Act 1975". An unstated premise of s 75 is that a judge of the Federal Circuit Court is under no obligation to deliver orders and reasons immediately upon completion of a hearing; judgment may instead be reserved and, in some circumstances, the Court's orders and reasons may be published by a judge who did not hear the matter. It follows that the FCCA Act authorises a Federal Circuit Court judge to give ex tempore reasons and final orders upon completion of a hearing where it is possible to do so. The Act also authorises a judge to reserve judgment where it is not possible or desirable to deliver ex tempore reasons. The FCCA Rules do not resolve the issues for determination in this appeal, not least because the Federal Circuit Court may dispense with those rules42. However, I note that although the FCCA Rules make certain provision for the receipt of translated documents, no such provision is made in respect of giving judgment. Rule 16.01 authorises the Court to give "any judgment" and to make "any order". Rule 16.02 provides that "[u]nless the Court otherwise orders, a judgment or order takes effect on the day when it is given or made". By contrast to the FCCA Rules' silence on the translation of reasons and orders, r 15.27 (1997) 74 FCR 311 at 325-326. 42 Federal Circuit Court Rules 2001 (Cth), r 1.06. provides for the use of a translator to facilitate the making of affidavits in English by persons who do not have an adequate command of English. More fundamentally, however, there is no reason to suppose that a "judgment" or "order" for the purposes of the FCCA Rules is subject to a requirement that it be translated to a non-English-speaking litigant, where no such obligation conditions the power to give judgment or make orders under the FCCA Act43. Fourthly, the nature of the Federal Circuit Court's jurisdiction also supports the giving of ex tempore reasons which are then published in written form with revisions. As Gleeson CJ, writing extra-curially, has observed44: "There is no reason, in law or in policy, why a judicial officer who delivers a judgment ex tempore should be strictly bound to the precise manner in which the reasons were expressed. On the contrary, judges and magistrates are encouraged, where it is possible and appropriate to do so, to decide cases promptly and to give their judgments immediately. It would not advance that policy to prevent them from later improving the manner of expression of their reasons, provided, of course, that they do not alter the substance." Fifthly, as recognised in the above passage, a judge has some ability to improve the expression of her or his judgment in published reasons, so long as she or he does not change the substance of what was said in ex tempore reasons or make other material changes. Depending upon any applicable rules of court, it may be accepted that in civil proceedings (without a jury) there is latitude for a judge to revise ex tempore reasons. That capacity may not be limited to slips, or to mistakes, or to matters of style. However, changes of substance are not permitted45. Sixthly, and contrary to the submission of the first respondent, where written reasons of a court are published following the giving of ex tempore reasons, those written reasons must be taken to be the authentic expression of the judgment of the court unless it is otherwise shown that those reasons had materially deviated from what had been announced in court. Such deviations might be demonstrated by calling for the transcript (or other recording) of the ex tempore judgment; by the production of notes taken by counsel or by an instructing solicitor of what was 43 See Legislation Act 2003 (Cth), s 13(1)(b); Federal Circuit Court Rules 2001 (Cth), r 1.02A. 44 Gleeson, "Revising Transcripts of Summings-Up" (1997) 9 Judicial Officers' 45 Spencer v Bamber [2012] NSWCA 274 at [137] per Campbell JA (Basten and Macfarlan JJA agreeing), quoting Todorovic v Moussa (2001) 53 NSWLR 463 at 467-468 [41]-[47] per Beazley JA (Powell JA and Sperling J agreeing). said; or even by evidence given by counsel or an instructing solicitor in lieu of such notes. In Bromley v Bromley46, following the grant of a decree nisi of divorce, the wife sought the transcript of the judge's reasons for judgment. With two days left to appeal, a photograph of a revised transcript was produced by the shorthand writer to the wife, bearing the marked-up amendments and deletions made by the judge47. The wife submitted that the changes that had been made were material in nature and urged the Court of Appeal to examine the original transcript. It was said that certain of the judge's findings of fact in the original transcript, or the way in which he expressed his findings of fact as recorded in that transcript, ill-accorded with the conclusion at which he ultimately arrived. The Court of Appeal refused to inspect the original transcript. Willmer LJ said48 that in the absence of evidence to show that the judge had "so altered his judgment as to change its whole character", it would be "improper" for an appellate court to look at the original transcript "merely because it is the original transcript". Importantly, his Lordship said49: "What we must look at is that which bears the stamp of the judge's approval, and on that must stand or fall the success of the appeal." Willmer LJ did not foreclose the possibility that an appellate court might consider an examination of the original transcript if there was "cogent evidence"50 to support such an examination. As his Lordship said51: "I am far from saying that in no circumstances is it possible for this court to go behind the official transcript of the judgment with which it is furnished. If there were ever a case in which it could be shown that, after delivering judgment and after the drawing up of the order, the judge had in substance rewritten his judgment, so as to put a completely different complexion on the issues in dispute, then I apprehend that this court would not be slow to censure any such behaviour on the part of the judge, and I have no doubt that in such a case this court would think it not only proper but necessary to look at the transcript of the judgment in its original form. 47 Bromley v Bromley [1965] P 111 at 114 per Willmer LJ. 48 Bromley v Bromley [1965] P 111 at 115. 49 Bromley v Bromley [1965] P 111 at 115. 50 Bromley v Bromley [1965] P 111 at 114. 51 Bromley v Bromley [1965] P 111 at 114-115. But an application to do anything of that sort would, in my view, have to be supported by cogent evidence. There would have to be evidence from someone who was present at the trial and heard the judgment (preferably somebody who himself or herself took a note of the judgment) and who was able to say, and say in evidence, that the official transcript as approved by the judge was substantially different from what the judge actually said when he delivered his oral judgment at the trial." Danckwerts and Davies LJJ agreed with Willmer LJ52. Danckwerts LJ affirmed the "general principle" that a court must accept, as the authentic record of a judge's reasons, "that which has been approved by him after consideration of the draft"53. Seventhly, where an applicant is unrepresented or cannot understand English, or both, there are usually rules of court which may be deployed to ensure that a court performs its duty54 to give such a person a fair trial and that the person is otherwise accorded procedural fairness55. In the Federal Court, there are, for example, rules that permit a single judge exercising the appellate jurisdiction of that Court to extend the time to file a notice of appeal56, to permit a notice of appeal to be amended57, and to vacate a hearing date58. Three decisions of the Federal Court illustrate how court rules may be used to ensure fairness in the prosecution of appeal rights. In ELR18 v Minister for Home Affairs59, the appellants sought to challenge the Federal Circuit Court's decision – rejecting the appellants' application for judicial review – on the basis that the Federal Circuit Court gave an ex tempore 52 Bromley v Bromley [1965] P 111 at 116. 53 Bromley v Bromley [1965] P 111 at 116. See also Lam v Beesley (1992) 7 WAR 88 at 93-94 per Owen J. 54 See Dietrich v The Queen (1992) 177 CLR 292. 55 See AMF15 v Minister for Immigration and Border Protection (2016) 241 FCR 30 at 44-47 [37]-[42] per Flick, Griffiths and Perry JJ. 56 Federal Court Rules 2011 (Cth), r 36.05. 57 Federal Court Rules 2011 (Cth), r 36.11(2)(b). 58 Federal Court Rules 2011 (Cth), r 36.11(2)(i). [2019] FCA 1583. judgment which was not translated, even though, it would appear, the appellants needed the assistance of an interpreter. The primary judge's reasons were not published until after the appellants had commenced their appeal to the Federal Court. It was said on appeal that the Federal Circuit Court had erred in law because it had failed to give reasons. That ground was rejected60 by Snaden J, who observed that no attempt had been made to extend the time for filing an appeal or to seek leave to amend the grounds of appeal following publication of the written reasons. His Honour said61: "In the present case, the delay in the provision of written reasons was not as pronounced as the one upon which the [F]ull [C]ourt in CQX18 commented. Further and more significantly, the appellants received the [primary judge's reasons] nearly six months prior to the hearing of the present appeal. They indicated to the court that they received at least some (albeit perhaps peremptory) legal advice in respect of those reasons, including as to the merits of an appeal to this court. Plainly, they had ample opportunity in that regard. Having received the [primary judge's reasons], the appellants did not attempt to amend the grounds upon which they sought to appeal. Had they needed additional time to mount their appeal, or had they sought to amend their grounds on the basis that it was not until after the appeal was lodged that they first had an opportunity to understand why it was that their applications in the [Federal Circuit Court] failed, it is difficult to see how an indulgence either way might reasonably have been denied. But, as history records, none was requested." A similar situation confronted O'Callaghan J in BIJ16 v Minister for Immigration and Border Protection62. His Honour dismissed a ground of appeal relying upon the delay in the provision of the primary judge's reasons. While those reasons were provided after the expiry of the period within which to bring an appeal, O'Callaghan J considered63 that, given the reasons were provided some six 60 ELR18 v Minister for Home Affairs [2019] FCA 1583 at [37], [41], [45] per 61 ELR18 v Minister for Home Affairs [2019] FCA 1583 at [46]-[47]. [2018] FCA 1380. 63 BIJ16 v Minister for Immigration and Border Protection [2018] FCA 1380 at months before the hearing of the appeal, the appellant had "ample opportunity" to review the reasons and to amend his grounds of appeal. Finally, there is the observation of Wigney J in BTU18 v Minister for Home Affairs64, a case in which there had been a two-month delay in publishing reasons following the giving of an ex tempore judgment in the Federal Circuit Court. "[T]he appellant has not filed any further material since receipt of the primary judge's written reasons. That may be explained by the fact that there has been no suggestion that the primary judge's written reasons departed or differed in any material way from his ex tempore reasons. Even if there had been any difference, it would have been open to the appellant to amend his appeal grounds to reflect those differences. He did not do so." The foregoing cases illustrate how court processes can be used to avoid practical injustice for a litigant in situations similar to that faced by Mortimer J here. The failure in the present case to interpret the primary judge's ex tempore reasons was, in a general sense, unfair. So much may be accepted. However, with respect, rather than setting aside the decision of the primary judge, in the circumstances here, Mortimer J could have: adjourned the hearing of the appeal so that the transcript of the ex tempore reasons could be obtained; or invited the first respondent to amend his appeal grounds to address the contents of the published reasons, and, if necessary, adjourned the hearing of the appeal to permit this to take place. Either or both courses of action (depending on the needs of the first respondent) would have supplied the practical justice or fairness needed given the first respondent's inability to understand the ex tempore reasons delivered by the primary judge. Setting aside the orders of the primary judge, however, and remitting the matter to be reheard went beyond that which was necessary to provide practical justice. As to the notice of contention, the following propositions should be expressed: [2019] FCA 540. 65 BTU18 v Minister for Home Affairs [2019] FCA 540 at [40]. The first respondent made much of the fact that the Minister did not challenge the finding made by Mortimer J that there was no way to compare the primary judge's ex tempore reasons with his Honour's published reasons. It was said that her Honour's finding supported the proposition that any comparison between what was said ex tempore and what was published was an impossible task. With respect, that makes too much of the finding, which was limited to what Mortimer J could do (or not do) given that a transcript of the ex tempore judgment was not before her Honour. It was not a finding that the first respondent could not himself have obtained such a transcript. The premise of the notice of contention was that the ex tempore reasons were the "operative reasons" of the Federal Circuit Court. However, the first respondent did not lead any evidence, let alone "cogent evidence"66, to demonstrate that the published reasons were not the authentic record of the primary judge's reasons for judgment. In the absence of such evidence, those published reasons must be taken to be the approved, official judgment of the Federal Circuit Court. If it had been shown that the first respondent had been unaware that he could obtain the transcript of the ex tempore judgment, any resulting practical injustice could have been avoided by an adjournment of the Federal Court hearing to give the first respondent the opportunity to obtain that transcript. In the circumstances of this matter, there is no reason to suppose that any such application for an adjournment in order to obtain the transcript would have been refused. It follows that the first respondent was not deprived of the opportunity to formulate his argument on appeal because of the fact that the primary judge's ex tempore reasons were not translated, nor was he denied the opportunity to investigate any difference in substance between those reasons and the published reasons. The first respondent never demonstrated that the ex tempore reasons were, on the facts here, the operative reasons of the Federal Circuit Court. It also follows that the inability of the Federal Court to examine the ex tempore reasons for the possible presence of error was of no moment. That is because the Federal Court considered the published reasons of the Federal Circuit Court and it was not shown that these were not the authentic, operative reasons of that Court. The Federal Court found that the primary judge's published reasons contained no error. More emphatically, the Federal Court also reviewed the reasons of the Tribunal for error and found none67. In the circumstances of this 66 See [33] above. 67 AAM17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2019] FCA 1951 at [9], [43] per Mortimer J. case, contrary to the first respondent's submissions, the decision to set aside the judgment of the primary judge and to remit the proceeding to the Federal Circuit Court was not justified. The appeal should be allowed. The grounds of the notice of contention are rejected. Orders 3 to 5 below should be set aside, and in their place it should be ordered that the appeal to the Federal Court be dismissed. As the Minister undertook to pay the costs of the first respondent in this Court, there should be no order as to costs.

HIGH COURT OF AUSTRALIA THE STATE OF NEW SOUTH WALES APPELLANT AND JOYCE AMERY AND ORS RESPONDENTS State of New South Wales v Amery [2006] HCA 14 13 April 2006 ORDER 1. Appeal allowed. 2. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 10 December 2004 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: D F Jackson QC with T J Anderson for the appellant (instructed by Crown Solicitor for New South Wales) C J Birch SC with P F Lowson for the respondents (instructed by MacMahon Associates) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS State of New South Wales v Amery Industrial law (NSW) – Discrimination – Respondents were female teachers employed on a temporary basis as "supply casuals" by the New South Wales Department of Education and Training – Different salary scales applicable to permanent teachers and casual teachers – Permanent teachers entitled to progress along a common incremental salary scale consisting of 13 levels of annual salary – Casual teachers remunerated on a salary scale consisting of five levels, the highest of which equated to level eight of the salary scale of permanent teachers – All but two of the respondents had ceased teaching on a permanent basis either in order to rear children or for other family reasons – Evidence suggested that the proportion of permanent teachers employed in NSW government schools who are men is substantially higher than the proportion of casual teachers who are men – Permanent teachers subject to statutory requirements that did not apply to casual teachers – Whether subjection of casual teachers to different salary scale constituted discrimination on the grounds of sex in the terms or conditions of employment within ss 24(1)(b) and 25(2)(a) of the Anti-Discrimination Act 1977 (NSW) – Whether respondents were required to comply with a requirement or condition with which a substantially higher proportion of persons of the opposite sex comply or are able to comply, being a requirement which is not reasonable having regard to the circumstances of the case and with which the respondents do not or are not able to comply – Whether requirement that respondents obtain appointment as permanent full-time or part-time teachers was a "requirement or condition" within the meaning of s 24(1)(b) – Whether any such requirement was reasonable. Words and phrases – "requirement or condition", "employment", "terms or conditions of employment". Administrative Decisions Tribunal Act 1997 (NSW), ss 113, 119. Anti-Discrimination Act 1977 (NSW), ss 24, 25, 54. Industrial Relations Act 1996 (NSW). Supreme Court Act 1970 (NSW), s 48. Teaching Services Act 1980 (NSW), ss 4, 38, 44, 47, 50, 71, 73, 75, 76. GLEESON CJ. I would allow this appeal, substantially for the reasons given by Hodgson JA in his dissenting judgment in the Court of Appeal1. The relevant statutory provisions and facts are set out in the reasons for judgment of Gummow, Hayne and Crennan JJ ("the joint reasons"). The issues argued in this Court were narrower than those debated in the Administrative Decisions Tribunal of New South Wales ("the Tribunal"), the Appeal Panel of the Tribunal ("the Appeal Panel") and the Court of Appeal. For present purposes, it is necessary and sufficient to consider two related issues. The first is whether the New South Wales Department of Education and Training ("the Department"), the alleged perpetrator of indirect discrimination on the ground of sex, required the respondents to comply with a requirement or condition with which a substantially higher proportion of persons of the opposite sex comply or are able to comply, and with which the respondents do not or are not able to comply ("the requirement issue"). The second is whether it was shown that such requirement was not reasonable having regard to the circumstances of the case ("the reasonableness issue"). Both issues are raised by the terms of s 24(1)(b) of the Anti-Discrimination Act 1977 (NSW) ("the Act"). Although I accept the respondents' case on the requirement issue, a resolution of the reasonableness issue requires close attention to the nature of the relevant requirement. The requirement issue The Tribunal, the Appeal Panel, and all members of the Court of Appeal decided this issue in favour of the respondents. Nevertheless, it is evident that there was some difficulty in relating the complaint of the respondents to the terms of the Act. It is easy enough to state, in broad terms, the grievance expressed by the respondents. It is also of some importance to note what they were not complaining about. The Department functioned, and the respondents were employed, within a scheme of statutory regulation found in the Teaching Services Act 1980 (NSW)2 ("the Teaching Services Act"). That scheme was outside the control of any of the parties to these proceedings, and constituted one of the "circumstances of the 1 Amery v State of New South Wales (Director-General NSW Department of Education and Training) (2004) EOC ¶93-352 at 73,476-73,483. 2 This Act is now known as the Teaching Service Act 1980 (NSW), see Teaching Services Amendment Act 2004 (NSW), Sched 1(2). case" required by s 24(1)(b) to be considered. As explained in the joint reasons, under the statutory scheme, the Education Teaching Service is divided into "officers" and "temporary employees". The Director-General of Education is empowered to appoint appropriately qualified people to permanent positions as teachers in public schools. Under the Teaching Services Act, one of the incidents of permanent appointment is an amenability to direction by the Director-General to transfer from one teaching position to another (see ss 71 and 75 of the Teaching Services Act). Especially in relation to its geographical implications, this form of amenability to direction has important personal consequences for teachers. The evidence showed that the issue of teacher transfers is, so far as possible, dealt with consensually, and with regard to individual preferences and needs. Even so, behind the consensual arrangements there is a statutory power, which cannot be ignored by the parties to the arrangements. In fact, it is the inability of the respondents fully to submit themselves to a commitment to deployability that is at the heart of their claim of discrimination. Temporary employees, or casuals, are people who are not in permanent positions. In significant respects, the incidents of their employment differ from those which apply to permanent teachers. No doubt, the advantages and disadvantages of those incidents of employment vary in their effect on individuals, depending upon the personal circumstances, needs or preferences of the individual. From the point of view of the Department, managing a large, State-wide, teaching service, the differences are of importance. The complaint of the respondents has never been a complaint of unfair discrimination in the making of appointments to permanent positions. They do not complain of any requirement or condition that has to be met in order to qualify for permanent appointment. They do not complain of the manner in which permanent appointments are made. The Appeal Panel gave the following summary of the evidence with respect to the process by which teachers come to be employed with the New South Wales teaching service, whether as casuals or as permanent officers: "Whilst ss 47 and 50 of the [Teaching Services Act] respectively invests the Director General of Education with the power to appoint permanent and temporary staff, all applicants for appointment who have the appropriate qualifications in fact pass through the same 'gate'. The date of an application for employment is designated as the 'priority date'; in that application, the applicant can specify whether permanent or part time or casual employment is required, and can specify broad or narrow geographical areas, qualifications and interests in terms of subjects. The approval to teach is generally granted as approval to teach casually, it being unlikely that a permanent position meeting all of the applicant's criteria, and in respect of which the applicant has priority, is immediately available. When a vacancy in a permanent position arises, applications for permanency are ranked according to their priority date and the criteria nominated by the applicant. If that position is offered and declined, the priority date for that applicant becomes the date of declination. Thus, permanency becomes a function of the availability of a permanent position, the assigned priority date and the criteria stipulated by the applicant." Most of the respondents had applied for appointments as permanent teachers. They had placed geographical limitations on the teaching jobs they were prepared to accept. Their decisions in that regard were influenced by family responsibilities. The impact of those family responsibilities was central to a consideration of the comparative positions of men and women; but that comparison is not in dispute in this appeal. The respondents were not asserting that they had been discriminated against because their applications for permanency had been refused. It may be that the way in which the respondents put their claim of discrimination was constrained by the distinction drawn by statute between permanent officers and casual teachers, and by the statutory incidents of that difference in status. However that may be, it is important to note what the respondents were not asserting. The essence of the complaint of the respondents, and the basis of the damages awarded to them by the Tribunal, related to the rates of pay applicable to permanent officers and casual teachers respectively. In this respect, the respondents drew a distinction between "supply casuals" (such as the respondents) who, they said, for all practical purposes undertook the same teaching responsibilities as permanent teachers, and casuals who worked on a part-time, short-term basis. We are concerned only with the former. The Department pays teachers in accordance with rates and scales prescribed by the industrial agreements or awards operating from time to time. At the times relevant to this case, the rates and scales were set by the Teachers and Related Employees Enterprise Agreement made under the Industrial Relations Act 1991 (NSW) and, later, the Crown Employees (Teachers and Related Employees) Salaries and Conditions Award made under the Industrial Relations Act 1996 (NSW). Permanent teachers are paid according to a scale with 13 incremental components. A permanent teacher advances to the next increment every 12 months, until reaching the thirteenth increment. Casual teachers are paid according to a scale limited in its incremental increases to five, the highest increment of which is equivalent to the eighth increment on the permanent scale. As there is no further increment, casual teachers working after they have reached that level are paid less than permanent teachers with equivalent teaching experience. That is the nub of the complaint. The respondents do not complain of the fact that they were not appointed as permanent teachers; the limitations they placed upon their geographical availability brought that about. Nor do they make a wider criticism of the system for distinguishing between permanents and casuals, or of the relationship of that distinction to geographical availability. That system is based largely on statute. They say that the work value of supply casuals is no less than that of permanent officers. Supply casuals, of course, are both male and female; but the proportion of male teachers who are permanents is higher than the proportion of female teachers who are permanents. That is because family commitments tend to make some female teachers less mobile. In the Tribunal (which found in favour of the respondents), and the Appeal Panel (which found in favour of the Department), much attention was devoted to the background of the agreement and award, which were the outcome of a decision of the New South Wales Industrial Relations Commission. It was pointed out by the respondents that, in consequence of s 54 of the Act, it is no answer to what would otherwise be a case of unlawful discrimination to say that the conduct of the perpetrator is necessary to comply with the requirement of an award. Even so, the existence of an industrial agreement or an award may be a relevant circumstance in determining the issue of reasonableness. Part 6 of the Act contains a number of exceptions to the Act. Sections 55, 56, 57(2) and 59 provide that "[n]othing in [the] Act affects" certain activities or organisations. For example, nothing in the Act affects the provision of benefits by a building society (s 57(1)(d)). There are a number of such general exceptions. Section 54 provides that nothing in the Act renders unlawful anything done by a person if it was necessary for the person to do it in order to comply with an order of any court (s 54(1)(d)). Before 1994 "order of any court" included "an order or award of a court or tribunal having power to fix minimum wages and other terms and conditions of employment". Following amendment in 1994, the expression "order of any court" no longer includes such an order or award. It is, therefore, no longer an answer to what would otherwise be a contravention of the Act to say that the relevant conduct was necessary in order to comply with a requirement of an industrial award. In this case, as will appear, the conduct of the Department the subject of the respondents' complaint was never necessary in order to comply with a requirement of an award. However, the reasonableness of the Department's conduct is to be considered having regard to the circumstances of the case. As a matter of construction of the Act, s 54(1)(d), after the 1994 amendment, did not require that an industrial award be disregarded in identifying the circumstances of a given case. Where, as here, the complaint is that the Department should have made over-award payments to some teachers, the wider industrial significance of such a course of action may be a material matter. The Department cannot answer the respondents' case simply by pointing to an award and saying that it is acting in accordance with the award. At the same time, if the respondents' case is that the Department should be making over-award payments to some teachers, the award system, and the award itself, may bear upon the reasonableness of the Department's conduct. Section 54(1)(d) does not require that the award be ignored; and the structure of the award is central to the respondents' case. This is a matter to which it will be necessary to return. It is unnecessary to distinguish between the agreement and the award, and, for convenience, further reference will be to the award. The Tribunal summarised the case for the respondents as follows: "It is said that by reason of the policy and practice of the Department to restrict the casual pay scales to level 8 of the permanent scale, they are underpaid having regard to the duties which they perform and the seniority they have established as employees. It is further contended that the policy is discriminatory because it operates harshly in the case of women teachers because the [respondents], prior to engaging in casual employment, were employed as permanent staff at the higher levels of remuneration and resigned in response to family responsibilities, and have effectively been precluded from achieving permanent status again because of the limitations on travel and career that those family responsibilities have entailed. It is said that this policy, found in the conditions of the enterprise agreement and the award, is discriminatory and unlawful in that it has the effect of discriminating against the [respondents] on the ground of their sex. In this regard it is put that as a proportion of casual teachers affected by the policy, women significantly outweigh men." While the Department has at all stages sought to justify its conduct as reasonable, (and succeeded in doing so in the view of the Appeal Panel and Hodgson JA in the Court of Appeal), it is necessary to be clear about what it is that the Department needs to justify. It does not need to justify the Act, with its distinction between permanents and casuals, or the differing statutory incidents attaching to the status of permanent or casual, or, in particular, the amenability of permanent officers to relocation. That is the work of Parliament, not the Department. Nor does it need to justify the award, which is the work of the Industrial Relations Commission and, no doubt, the outcome of industrial interaction involving different interest groups within the teaching service. (The Teachers Federation has taken no part in these proceedings at any stage.) If its own conduct is otherwise within the Act, it needs to justify that conduct as reasonable (leaving aside questions of onus). But what, exactly, is the conduct it needs to justify? That turns upon the identification of the requirement of the respondents "to comply with a requirement or condition" within s 24(1)(b) of the Act. It is the requirement which is subject to the test of reasonableness. What is the requirement? "The Tribunal held that the award that governs teacher salaries contains a requirement or condition 'that in order to qualify for higher rates of pay and entitlements as a teacher in NSW, it is necessary to have permanent status'. This is not correct because the award does not contain such a condition. Rather, it is the Department's practice of not making over-award payments that imposes the requirement." (emphasis in original) The "requirement" was, at all levels of the litigation, said to be "the requirement to have permanent status". The requirement to have permanent status was said to be a condition of access to the higher level of salary scales. However, if it is necessary to identify what the Department does that imposes that requirement (that is to say, the conduct of which the Department, as opposed to Parliament, or the Industrial Relations Commission, is the perpetrator), it must be, as Beazley JA said, that the Department adheres to a policy and practice of paying teachers in accordance with the award. The Department has the legal capacity to make over-award payments if it wants to. It could change its policy so as to pay supply casuals whose teaching has, in the sense considered by the Tribunal, the same work value as that of permanent teachers, above the award. It is difficult to imagine that if, in practice, it did so, it could restrict the over-award payments to female supply casuals, but that is another question. The Department could, if it wished, make over-award payments. It is in that sense that, as was held in the Tribunal, the Appeal Panel, and the Court of Appeal, it requires teachers to comply with a condition of having permanent status (with all the statutory incidents of that status, including deployability) in order to have access to the higher salary levels from which casual teachers are excluded. It is to the requirement, so understood, that the test of reasonableness is to be applied. It is not "the system" that is under scrutiny; it is the conduct of the Department within the system. No doubt, from the personal viewpoint of the respondents, they are employed by the Government. They may not distinguish between the role of the New South Wales Parliament in legislating about the teaching service and the role of the Department in implementing the legislation. The distinction, however, is legally significant. It is the Department that is the alleged perpetrator of discrimination, and it is the conduct of the Department that is in question. The issue of reasonableness I agree with the conclusion of Hodgson JA, that the Department's practice of not making over-award payments to supply casuals has not been shown to be unreasonable. The Department has the responsibility of managing a teaching service which is large in numbers and extensive in geographical scope. Issues of deployability, and deployment, are of major practical importance and, no doubt, of industrial sensitivity. Such issues are central to the difference between permanent and casual status. The statutory amenability of permanent teachers to re-deployment is, in economic and managerial terms, a matter of value to the Department. No doubt, at a particular school, if a teacher in one classroom is a permanent officer and a teacher in an adjoining classroom is a supply casual teacher, the quality and quantity of their teaching output may be identical. However, leaving pay to one side, the incidents of their employment are significantly different, and it does not follow that it is unreasonable to pay them differently. Beazley JA said that the Tribunal "found that the transfer requirements placed upon permanent teachers were such that they did not assist in determining the work value issue". Yet, at all stages of the proceedings, the Department has questioned the appropriateness of a narrow identification of the work value issue. If the issue is whether the teaching work of a history teacher who is a supply casual has the same value of that of a history teacher who is a permanent officer, then one answer may follow. However, if the question is whether, having regard to their respective conditions of employment, it is reasonable to pay one less than the other, a different answer may follow. Furthermore, from the point of view of the Department, the question of making over-award payments to some teachers would have been a matter of considerable managerial, and industrial, significance. Issues of relativity are notoriously sensitive in any workplace. As Hodgson JA pointed out, it is hardly a practical possibility that the Department should make over-award payments only to women, or to teachers whose family commitments make it difficult for them to submit to the full conditions of permanent appointment. The first course would discriminate against men. The second course would involve setting up criteria that would be difficult to formulate, and to apply in practice. If the Department adopted a practice of making over-award payments to some teachers, how could it, as a matter of industrial reality, limit such payments to one particular class of teacher (supply casuals)? There may be classes of permanent teachers, or individual permanent teachers, who also could make out a case for special treatment. As has been noted, compliance with a requirement of an award is not of itself an excuse for conduct that is otherwise unlawful (s 54). Nevertheless, in deciding whether conduct is unlawful, and for that purpose asking in accordance with s 24(1)(b), whether conduct the circumstances of the case, the industrial context in which the conduct occurs, including the provisions of an award, may be a material circumstance. is reasonable having regard Hodgson JA said: "[The Tribunal] did not address the very existence of the enterprise agreement and award as a factor relevant to reasonableness, in that what had to be shown was that it was not reasonable for the Department [not] to make over-award payments to supply casual teachers. For reasons given above, in my opinion what then would have to be shown to be not reasonable was failing to make over-award payments available to all supply casual teachers with commitments to children." to women or teachers, not just I agree, but would go further and say that what would have to be shown to be not reasonable was failure to make over-award payments to any teacher, or group of teachers. The respondents appear to accept that they could not seriously suggest that over-award payments should be made only to female supply casual teachers, much less to a certain group of female supply casual teachers. Once over-award payments are on the agenda, it would be difficult to justify restricting them to any particular class of teacher. It is to be emphasised that the question is not whether the whole system of dividing teachers into permanent and casual teachers, or the requirement of deployability, is reasonable. That system is set up by an Act of Parliament. The question is whether the conduct of the Department in not making over-award payments was shown not to be reasonable. The answer to that question is no. Conclusion The appeal should be allowed. I agree with the consequential orders proposed in the joint reasons. Crennan GUMMOW, HAYNE AND CRENNAN JJ. This appeal by the State of New South Wales against a decision of the New South Wales Court of Appeal (Beazley JA, Cripps AJA; Hodgson JA dissenting)3 concerns the application of certain provisions in the Anti-Discrimination Act 1977 (NSW) ("the AD Act") to the practices adopted by the New South Wales Department of Education and Training ("the Department") in setting the pay scales of the State's permanent and casual public school teachers4. In particular, the respondents, 13 female teachers who were or have been employed on a casual basis by the Department in the period since November 1995, successfully contended in the Court of Appeal that the pay differentials between casual and permanent teachers have the effect of discriminating against them, even if indirectly, on the ground of sex, thus attracting, among other things, the monetary remedies provided for in the AD Act5. Resolution of the controversy requires close attention to three New South Wales statutes and the regimes established under them. The statutes are the AD Act, the Teaching Services Act 1980 (NSW) ("the Teaching Services Act")6 and the Industrial Relations Act 1996 (NSW) ("the IR Act"). In particular, close attention is required to the interaction of those statutes and the regimes they establish. The controversy is not to be resolved by attempting to discern some trend in three or four decisions the Court has made over the last decade in discrimination matters and then seeking to arrest that trend because in those other matters the parties who complained of discrimination did not succeed. Rather, as 3 Amery v State of New South Wales (Director-General NSW Department of Education and Training) [2004] EOC ¶93-352. 4 Section 5 of the AD Act provides that "[t]his Act binds the Crown not only in right of New South Wales but also, so far as the legislative power of Parliament permits, the Crown in all its other capacities". Section 5(1) of the Crown Proceedings Act 1988 (NSW) provides for the bringing of civil proceedings against the Crown under the title "State of New South Wales". 5 Section 113(1)(b)(i) provides that, after holding an inquiry into a complaint of discrimination, the Equal Opportunity Tribunal may "order the respondent to pay to the complainant damages not exceeding $40,000 by way of compensation for any loss or damage suffered by reason of the respondent's conduct". 6 The short title of this statute was changed to the Teaching Service Act 1980 (NSW) by the Teaching Services Amendment Act 2004 (NSW), Sched 1, Item 2. Crennan the Court has repeatedly emphasised7, it is necessary to look to the language of the relevant statute, or, in this case, statutes. The respondents were successful in the Equal Opportunity Division of the Administrative Decisions Tribunal of New South Wales ("the Tribunal") in establishing their respective claims for damages8. The Tribunal's decision was thereafter reversed9 by an Appeal Panel of the Tribunal ("the Appeal Panel") but the respondents succeeded in the Court of Appeal. Judge Latham presided in the proceeding before the Appeal Panel. Section 119 of the Administrative Decisions Tribunal Act 1997 (NSW) ("the ADT Act") provided for a proceeding in the Supreme Court, identified as an "appeal ... on a question of law". Neither the Appeal Panel nor any member thereof was to be made a party to that proceeding. By force of the Supreme Court Act 1970 (NSW)10 the proceeding was assigned to the Court of Appeal. The appeal by the State to this Court should be allowed and consequential orders made. To explain why this should be the outcome, it is necessary to begin with a consideration of the regime established under the Teaching Services Act and by an award under the IR Act for permanent and non-permanent teachers. 7 See, for example, Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 77 [9] per Gaudron, Gummow, Hayne and Callinan JJ, 89 [46] per Kirby J; Victorian Workcover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 526 [11] per Gleeson CJ, Gummow, Hayne and Callinan JJ, 545 [63] per Kirby J; Commonwealth v Yarmirr (2001) 208 CLR 1 at 37-39 [11]-[15] per Gleeson CJ, Gaudron, Gummow and Hayne JJ, 111-112 [249] per Kirby J; Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 1 at 6-7 [7]-[9] per Gleeson CJ, McHugh, Gummow and Hayne JJ; Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 79 ALJR 1850 at 1856 [30] per Gleeson CJ, Gummow, Hayne and Heydon JJ, 1877 [167]-[168] per Kirby J; 221 ALR 448 at 455, 484-485; Weiss v The Queen (2005) 80 ALJR 444 at 452 [31]; 223 ALR 662 at 671. 8 Amery v The State of New South Wales [2001] EOC ¶93-130. 9 The State of New South Wales v Amery (2003) 129 IR 300. 10 s 48(1)(a)(vii); s 48(2)(f). Crennan Permanent and non-permanent teachers The Education Teaching Service consists of all persons employed under Pt 4 Div 2 (ss 44-51) of the Teaching Services Act (s 44). However, there is a critical distinction drawn between "officers" and "temporary employees". Section 4 defines the term "officer" to mean "in relation to the Education Teaching Service, a person employed in that service, other than a temporary employee". The phrase "temporary employee" is in turn relevantly defined to mean "in relation to the Education Teaching Service a person employed under section 50". Section 50(1) of the Teaching Services Act provides that: "[t]he Director-General of Education may, if of the opinion that it is necessary to do so, appoint temporarily, on a full-time, casual or part-time basis, to any position to which he or she is entitled to make an appointment under section 47 a person who, in the opinion of the Director-General, has the appropriate qualifications". Section 47(1)(a) confers upon the Director-General of Education ("the Director-General") the power to appoint to permanent positions within the Education Teaching Service "persons who, in his or her opinion, have the appropriate qualifications to be employed as teachers in public schools in those permanent positions". Reference also should be made, for the purposes of what follows, to s 50(5) of the Teaching Services Act. That sub-section states: "A person appointed under sub-section (1), (2) or (3): shall not be employed for a period exceeding 12 months from the date of the appointment but the employment may be extended from time to time for a further period not exceeding 12 months on each occasion if [the Director-General] certifies that the extension is necessary in the public interest, and (b) may be dismissed at any time." The provisions outlined above thus show that in the Education Teaching Service the legislation establishes a distinction between teaching staff holding permanent positions and non-permanent teaching staff. It will be necessary later in these reasons to refer in some detail to the differences in the rights and obligations that attach to each category of teaching staff and to consider their significance in light of the provisions of the AD Act. In her reasons (with which Cripps AJA agreed), Beazley JA adverted to a further distinction. This was drawn within the category of casual teachers Crennan between short-term relief casuals and supply casuals. The distinction was expressed by her Honour as follows11: "Short-term relief casuals are employed to fill short-term vacancies, generally of less than 10 days duration and which may be as short as an hour. Supply casuals encompass two groups. The first consists of supply casuals who are employed to teach in a full-time or part-time vacant position that is part of a school's formula-based teacher entitlement. The second group is made up of teachers appointed to fill the position of a permanent teacher who is on a period of extended leave eg sick leave, maternity leave or long service leave, or of a teacher who is on secondment. This group may also be appointed to fill a specially-funded or school-funded position. A supply casual may be appointed for a period in excess of a year." The respondents were all supply casuals. Something now should be said about the relevance of the distinction between permanent and non-permanent teachers to the discharge by the Director- General of one of the key functions conferred upon that officer by the Teaching Services Act, namely, to "determine promotions and transfers of officers and transfers of temporary employees" (s 38(1)(h)). Section 71(1) of the Teaching Services Act empowers the Director-General to "direct the transfer of an officer from one position in the Teaching Service to another position in the Teaching Service equivalent in classification and salary to the firstmentioned position". Section 75 reinforces the power thus conferred by providing that: "[w]here an officer of a Teaching Service refuses to comply with a direction of the appropriate Director-General for the officer's removal from one position in the Teaching Service to another, the Director-General shall, unless satisfied that the officer had a valid and sufficient reason for so refusing, dismiss that officer from the Teaching Service". Relevantly for present purposes, no equivalent power is conferred upon the Director-General in respect of temporary employees. This circumstance finds some reflection in the manner in which permanent teachers are appointed. This was described by Beazley JA (accepting what had been explained by counsel for the State) in these terms12: 11 [2004] EOC ¶93-352 at 73,455. 12 [2004] EOC ¶93-352 at 73,455-73,456. Crennan "[I]n submitting an application, a teacher must specify (among other things) where the teacher is prepared to teach. A teacher need not, of course, specify any limitations. The teacher's name, together with the information required to be provided, is then placed on a computer- generated list. Teachers on the list may be appointed as soon as positions become vacant that correspond to their qualifications and any restrictions they may have placed on the subjects or schools/locations at which they are prepared to teach." Failing appointment to a permanent position within the geographical limits specified, a teacher may nonetheless be employed on a casual basis within those limits. All but two of the respondents had ceased teaching on a permanent basis in order either to rear children or for other family reasons. In each case, after attending to any such responsibilities, they reapplied to the Department for permanent positions, placing limitations on the areas in which they were prepared to work. Between January 1997 and March 1998, five of the respondents were appointed as permanent teachers. However, in the period from November 1995 until the time of their taking up those appointments, they had been, like the other respondents, employed on a casual basis. And, like the other respondents, their remuneration during that period was subject to the pay scale for casual teachers in New South Wales. The different pay scales In the period following December 1993, the terms and conditions under which teachers were employed by the Department and remunerated for their work were governed by the Teachers and Related Employees Enterprise Agreement ("the Enterprise Agreement"), made pursuant to the Industrial Relations Act 1991 (NSW). The Enterprise Agreement was subsequently replaced by the Crown Employees (Teachers and Related Employees) Salaries and Conditions Award ("the Award"). This commenced on 25 September 1996 but was expressed to apply from 27 August that year. The Award was made pursuant to the IR Act which in 1996 replaced the 1991 statute. Both the Enterprise Agreement and the Award preserved, and indeed were premised upon, the distinction between permanent and non-permanent teachers established by the Teaching Services Act. Schedule 1 of Pt B of the Award provided in a "common incremental salary scale" for 13 levels of annual salary payable to a permanent teacher. Pursuant to cl 7 of the Award, a permanent teacher was entitled to progress along this scale after each 12 months of service by "demonstrating ... continuing efficiency in teaching practice, satisfactory performance and professional growth". Upon reaching the thirteenth and highest level of pay, a permanent Crennan teacher might attain a higher annual salary only by appointment to the position of Deputy Principal or Principal. These salary arrangements may be contrasted with the rates of pay available to casual teachers, as provided for in cl 12.1 and Sched 6 of Pt B of the Award. In accordance with Sched 6, casual teachers were remunerated on the basis of a daily rate of pay, being a proportionate share of the annual salaries set down in the common incremental salary scale for permanent teachers. Moreover, unlike that scale, the casual pay scale had only five levels. The highest daily rate equated to a proportionate share of the salary payable to a permanent teacher on level eight of the 13-step common incremental salary scale. Clause 3 of Sched 7 of Pt B of the Award, which contained the conditions of employment for casual teachers, provided that a casual teacher was entitled to progress along the pay scale set out in Sched 6 on completing 203 days of casual teaching service. As was observed in the course of oral argument in this Court, 203 days amount, on the basis of a five-day week, to a little over 40 weeks, which length of time corresponds approximately to the length of a full school year. The pay differentials thus set between permanent and casual teachers had their genesis in the decision of Bauer J in the Industrial Commission of New South Wales in In re Crown Teachers (Casual) Award13. His Honour had held that the work performed by casual teachers was not of equal value to that of permanent teachers14, though it was said that "the work of [casual] teachers who work a large number of days in the year is more valuable and equates more to the work of permanent teachers than those who work fewer days"15. In 1992, the NSW Teachers' Federation ("the Federation") lodged an application for an award with the then Industrial Relations Commission of New South Wales ("the IRC"). That application sought, in the words of the Tribunal, "to break the nexus that had been established between the pay rates of permanent and casual teachers"16. However, the Federation subsequently abandoned this application, and entered instead into the Enterprise Agreement. The Federation has not participated in the present litigation. The Tribunal said in its reasons17: 13 [1983] AR 672; affd Re Crown Teachers (Casual) Award (1984) 11 IR 196. 14 [1983] AR 672 at 711. 15 [1983] AR 672 at 712. 16 [2001] EOC ¶93-130 at 75,286. 17 [2001] EOC ¶93-130 at 75,286. Crennan "The [Federation] did not apply to be a party to this inquiry to explain its apparent acceptance of the difference in treatment of the complainants or to maintain the contention which it supported in the various hearings before the Industrial Commission that supply casual teachers do not perform work of equal value to permanent staff." It should be noted that, under s 406(1) of the IR Act, the conditions of employment set by an industrial instrument such as an award are the minimum entitlements of employees. Some reference should also be made to s 54(1) of the AD Act. This provision was amended by the Anti-Discrimination (Amendment) Act 1994 (NSW)18. It presently, and significantly, provides as follows: "Nothing in this Act renders unlawful anything done by a person if it was necessary for the person to do it in order to comply with a requirement of: an order of any court, not including an order or award of a court or tribunal having power to fix minimum wages and other terms and conditions of employment" (emphasis added)19. The nature of the respondents' claims Part 3 of the AD Act (ss 23-38) is headed "SEX DISCRIMINATION". Division 2 (ss 25-31) is concerned with discrimination in work, and Divs 3 and 4 deal respectively with discrimination in other areas and exceptions in those areas. Division 1 (ss 23-24) makes introductory and general provisions as to what constitutes discrimination on the ground of sex and, as the particular case requires, is to be read with the appropriate and specific provision in Div 2 or 18 Sched 4, cl 23. 19 The operation of s 54 is reinforced by s 169 of the IR Act, which provides, among other things, that the IRC must, in the exercise of its functions, take into account the principles contained in the AD Act and that an industrial instrument may be varied at any time by the IRC in order to remove any unlawful discrimination arising from the instrument. A new s 109 was also inserted into the AD Act by the Anti-Discrimination Amendment (Miscellaneous Provisions) Act 2004 (NSW). That section now provides: "If the Tribunal makes an order that affects an industrial instrument within the meaning of [the IR Act], it must give notice in writing to the President of [the IRC] of the order as soon as practicable after the order is made." Crennan Div 3. Here the specific provision is s 25, dealing with discrimination against applicants and employees. So far as material, s 25 provides: It is unlawful for an employer to discriminate against a person on the ground of sex: in the terms on which the employer offers employment. It is unlawful for an employer to discriminate against an employee on the ground of sex: in the terms or conditions of employment which the employer affords the employee". By amended points of claims filed in the Equal Opportunity Division of the Tribunal on 15 October 1999, the respondents asserted that their subjection by the Department to the pay scale detailed above constituted discrimination on the ground of sex by virtue of ss 24(1)(b) and 25 of the AD Act. Section 24(1)(b) recognises and imposes a legislative prohibition on what is often termed "indirect discrimination"20. In Waters v Public Transport Corporation21, Mason CJ and Gaudron J explained that the notion signifies that: "some criterion has been used or some matter taken into account which, although it does not, in terms, differentiate for an irrelevant or impermissible reason, has the same or substantially the same effect as if different treatment had been accorded precisely for a reason of that kind". In proscribing such conduct in the context of sex discrimination, s 24(1) relevantly provides: "A person (the perpetrator) discriminates against another person (the aggrieved person) on the ground of sex if, on the ground of the aggrieved 20 See Purvis v New South Wales (2003) 217 CLR 92 at 156 [207]. 21 (1991) 173 CLR 349 at 357. Crennan person's sex or the sex of a relative or associate of the aggrieved person, the perpetrator: requires the aggrieved person to comply with a requirement or condition with which a substantially higher proportion of persons of the opposite sex, or who do not have such a relative or associate of that sex, comply or are able to comply, being a requirement which is not reasonable having regard to the circumstances of the case and with which the aggrieved person does not or is not able to comply." The respondents emphasised in this Court that the gist of their complaint lay, not in any failure to obtain appointment to permanent positions in the Education Teaching Service, but rather in what was asserted to be a failure of their remuneration to reflect the value of the work which they had performed as casuals. This is a matter of some significance. The contention by which the provisions of the AD Act were said to have been enlivened in the respondents' circumstances proceeded from several premises. Those premises may be understood by reference to what was said by Bowen CJ and Gummow J in their joint judgment in Department of Foreign Affairs and Trade v Styles22 concerning s 5(2) of the Sex Discrimination Act 1984 (Cth). This was in terms similar to s 24(1)(b) of the AD Act. Their Honours said23: "Section 5(2) contains four elements. The first is that the alleged discriminator 'requires the aggrieved person to comply with a requirement or condition'. The second is that the requirement or condition be one 'with which a substantially higher proportion of persons of the opposite sex to the aggrieved person comply or are able to comply'. The third is that the requirement or condition be 'not reasonable having regard to the circumstances of the case'. The last is that the requirement or condition be one 'with which the aggrieved person does not or is not able to comply'." In this case, the respondents sought to establish the first of the elements required by s 24(1)(b) by identifying, as a condition of their being able to access levels of pay corresponding with levels nine through to 13 of the common 22 (1989) 23 FCR 251. 23 (1989) 23 FCR 251 at 257. Crennan incremental salary scale, a requirement that they obtain appointment as permanent full-time or part-time teachers. It was then said that "[t]he proportion of permanent teachers employed in NSW government schools who are men is substantially higher than the proportion of casual teachers employed in NSW government schools who are men". The reasonableness of the condition thus identified and sought to be characterised as favouring male teachers was attacked by the respondents, to establish the third element, on the grounds that: "wherever the complainants are teaching or were teaching as casual teachers pursuant to appointments for continuous periods at the one school in excess of 8 weeks they perform work involving equivalent duties and responsibilities to teachers teaching classes at the said schools pursuant to appointment as permanent full-time or part-time teachers". In other words, the value of the work undertaken by a casual teacher appointed to the one school for a period in excess of eight weeks was equivalent to that of the work performed by a permanent teacher. Finally, the respondents maintained that they could not comply with the requirement of permanence because appointments to permanent positions "are or were only available at schools distant from their place of residence or because [they] require or required the increased flexibility in the hours worked available to casual appointees". The litigation The proceedings before the Tribunal were heard in August 1999; the reasons for decision were given many months later, on 12 March 2001. As has already been indicated in these reasons, the propositions advanced by the respondents found favour in the Tribunal. Thereafter, orders dated 7 December 2001 were made by the Tribunal for the payment by the State of differing amounts of damages to the respondents and, in some cases, the State was ordered to adjust payments for further work by reference to what the relevant respondent would be paid if holding a permanent appointment. The State exercised its right, conferred by s 113(1) of the ADT Act24, to "appeal" from the decision of the Tribunal to the Appeal Panel. Section 113(2) 24 That provision states: "A party to proceedings in which an appealable decision of the Tribunal is made may appeal to the Tribunal constituted by an Appeal Panel." Crennan provides that an appeal may be made on any question of law and that such an appeal may, with leave from the Appeal Panel, extend to a review of the merits of the decision from which the appeal is brought. The Appeal Panel heard the matter over three days in February-May 2002. In its reasons delivered on 12 June 2003, the Appeal Panel rejected many of the submissions by the State, but nonetheless identified two errors of law in the decision of the Tribunal. One was that the Tribunal had shifted from the respondents (as complainants) to the State the onus of establishing the third element required by s 24(1)(b) of the AD Act, namely, the reasonableness or otherwise of the requirement or condition said to be discriminatory in effect. The other was a failure by the Tribunal to weigh the nature and extent of the discriminatory effect wrought by the requirement or condition specified in the respondents' amended points of claim against the reasons advanced in favour of that requirement or condition. Having identified these errors, the Appeal Panel proceeded to decide that the respondents had not discharged the onus of demonstrating that the requirement or condition of permanence was, in all the circumstances of the matter, unreasonable. The respondents then instituted the proceeding in the Court of Appeal under s 119 of the ADT Act, to which reference has been made above. By a notice of contention, the State sought to recontest the ground covered by submissions that it had advanced unsuccessfully before the Appeal Panel. The respondents' appeal was allowed and the contentions of the State rejected. In her reasons for judgment, Beazley JA commented as follows on the Tribunal's "The Tribunal held that the award that governs teacher salaries contains a requirement or condition 'that in order to qualify for higher rates of pay and entitlements as a teacher in NSW, it is necessary to have permanent status'. This is not correct because the award does not contain such a condition. Rather, it is the Department's practice of not making over-award payments that imposes the requirement. However, it is apparent that this is the basis upon which the case was understood and conducted by the parties. It also appears that this is the way that it was understood and dealt with by the Appeal Panel." A similar point was made by Hodgson JA in his dissenting judgment. His Honour's reasons referred to an onus "on the complainants to show that it was not 25 [2004] EOC ¶93-352 at 73,453. Crennan reasonable for the Department not to make over-award payments to supply casual teachers"26. By orders entered on 10 December 2004, the Court of Appeal restored the awards of damages made by the Tribunal and awarded, in addition, interest payable on those sums. The submissions by the State The issues that fall to be determined in this appeal are narrower than those considered in the Court of Appeal. In this Court, the State submitted, first, that the Department had not, in the terms of s 24(1)(b) (as "picked up" by s 25), "require[d]" of the respondents that they "comply with a requirement or condition" to obtain appointment to a permanent position within the Education Teaching Service with access to levels of pay corresponding with levels nine through to 13 of the common incremental salary scale. This was said to be so even if the focus of attention were the Department's practice of not making over-award payments to supply casual teachers. The State did not confine its argument to this ground. It further contended that, even if the above submission failed, the majority in the Court of Appeal had erred in not concluding that the requirement or condition, in all the circumstances, was reasonable. The State gave three reasons in support of its case on reasonableness. First, members of the permanent teaching staff in the Education Teaching Service were subject to statutory requirements that did not apply to casual teachers. Secondly, by extension of the first reason, it was relevant to the question of reasonableness that the respondents had placed geographical limitations on their acceptance of permanent teaching positions. Thirdly, the very existence of the Enterprise Agreement and the Award was similarly relevant for the purpose of determining reasonableness, a point which, in the State's submission, the Tribunal had failed to appreciate. Finally, the State submitted that the Court of Appeal should either have decided the matter for itself on the merits or remitted it to the Appeal Panel for that purpose. For the reasons that follow, the first of the submissions by the State which has been outlined above should be accepted. 26 [2004] EOC ¶93-352 at 73,482. Crennan "Requirement or condition" The origins of the phrase "requirement or condition" in s 24(1)(b) of the AD Act and in other legislation in this field are to be found in s 1(1)(b) of the Sex Discrimination Act 1975 (UK) ("the UK Act")27. The phrase is to be given a broad rather than a technical meaning, given the nature of the mischief, indirect discrimination, with which s 24(1)(b) is concerned. Section 1(1)(b) of the UK Act speaks in terms of the application of a requirement or condition, rather than, as does s 24(1)(b), of a requirement of compliance with a requirement or condition. The respondents took no point respecting the difference, submitting that an express demand was not required and that the perpetrator may require the aggrieved person to comply if that be the practical effect of the circumstances. However, it is not the mere existence of a requirement or condition to which Pt 3 Div 1 of the AD Act is directed. It is discrimination which may involve the imposition of a requirement or condition. The question that must be asked in applying ss 24(1)(b) and 25 is whether the perpetrator engaged in a proscribed form of discrimination, not "what was the requirement or condition in this case". "Terms or conditions of employment" It is convenient to commence consideration of the relationship between ss 24(1)(b) and 25 of the AD Act by focusing upon s 25(2)(a). That provision prohibits discrimination by an employer against an employee on the ground of sex "in the terms or conditions of employment" which the employer affords the employee. Accordingly, it is unlawful for an employer, within the terms or conditions of employment afforded an employee, to require of that employee compliance with a requirement or condition of the nature identified in s 24(1)(b). It may be thought that the words "terms or conditions of employment", as they appear in s 25(2)(a), set some outer limit upon the range of stipulations by employers which may constitute, for the purposes of that provision, when read with s 24(1)(b), a "requirement or condition". During oral argument, counsel for the respondents directed the attention of the Court to the decision upon the AD Act of Lee J in Allders International Pty Ltd v Anstee28. His Honour there said that the expression "terms or conditions of 27 Australian Iron & Steel Pty Ltd v Banovic (1989) 168 CLR 165 at 195-197. 28 (1986) 5 NSWLR 47. Crennan employment which he affords him", which then appeared in s 25(2)(a) of the AD Act, was29: "not restricted to the matter of the terms of contract of employment, but being designed to encompass as well, all those demands and requirements, and benefits and concessions in the actual employment which the employee must comply with or can accept as the case may be". The concept of indirect discrimination posited by provisions such as s 24(1)(b) was said in Styles30 to be "concerned not with form and intention, but with the impact or outcome of certain practices". Accordingly the earlier statement by Lee J may be accepted as correct. However, it is a matter of some importance that, in construing the text of s 25(2)(a), Lee J should have used the words "actual employment". This is because the term "employment" may, in certain situations, denote more than the mere engagement by one person of another in what is described as an employer-employee relationship. Often the notion of employment takes its content from the identification of the position to which a person has been appointed31. In short, the presence of the word "employment" in s 25(2)(a) prompts the question, "employment as what?" The scheme of the Teaching Services Act meant that the respondents were employed, not merely as teachers, but as casual teachers within the Education Teaching Service. There is an element of incongruity in describing as a requirement or condition, compliance with which is required in the terms and conditions of employment as a casual teacher, a requirement that in order to access higher levels of salary, one must cease to be a casual teacher and obtain permanent appointment. In seeking to attack the statutory foundation upon which this last proposition is premised, counsel for the respondents submitted that "one must adopt a practical view of the job that [the respondents] have been hired to perform". On this basis, it was said that what one does, upon engagement as a member of the teaching staff in the Education Teaching Service, "is undertake the job of being a teacher", where one of the terms and conditions of such employment is that one will perform the job of being a teacher either as a permanent or as a casual. We turn now to consider this submission. 29 (1986) 5 NSWLR 47 at 55. 30 (1989) 23 FCR 251 at 258. 31 cf Qantas Airways Ltd v Christie (1998) 193 CLR 280 at 284 [1], 305-306 [74]- Crennan Employment as "a teacher"? In determining whether it can be said that each respondent was appointed to the position of "teacher", where the terms and conditions of this employment included a stipulation that work be done either as a permanent or as a casual, one must direct attention, not merely to any equivalence in the value of the work done by permanent teachers and supply casuals. Attention must also be paid to the rights and obligations attaching to each category of teacher. There may be posited a situation in which a private employer appoints persons to either one of two categories of position, one attracting a higher salary than the other. Upon adopting a practical view of the rights and obligations attaching to, and the work performed by persons in, each category, it might be said that there is, in substance, only one form of employment for which an employee is engaged. However, that is not this case. Statute plays an important role here. The distinction between permanent members of the Education Teaching Service ("officers") and non-permanent teachers is required by the Teaching Services Act. As has already been indicated, the power of the Director-General to direct transfers of teaching staff, reinforced by a power of dismissal, is confined, in its reach, to "officers". The respondents contended that "[i]n a practical sense casual staff were in a not dissimilar position". If the Department no longer requires the services of a particular supply casual at a given school, it will not renew that teacher's appointment, but may instead offer a new position at a different school. In effect, this directs the transfer of what is termed in the Teaching Services Act a "temporary employee". However, as was submitted by counsel for the State in response, at the point when the offer of a position at a different school is made to a supply casual, the Department and the casual teacher in question would be engaged, in effect, in the process of bargaining. In contrast, an "officer" is obliged under the Teaching Services Act to comply with a direction to transfer or to show a valid and sufficient reason for refusing compliance. Section 73(1) of the Teaching Services Act is engaged where the Director- General is satisfied that an "officer" of the Education Teaching Service "is in receipt of a greater salary than the maximum fairly appropriate to the work performed by the officer"; the Director-General is required either to assign the officer work of a class appropriate to the salary or to reduce the salary. The respondents contended that the supply casuals were subject to similar constraints as a result of the short-term nature of their tenure and the circumstance that they would not be employed if there was no appropriate work for them. However, it Crennan is one thing for the Department to allow a supply casual's tenure to lapse or to refuse to appoint a person to the position of a supply casual; it is another to assign different work to an officer or to reduce that officer's salary. Moreover, the differences in the rights and obligations of permanent and non-permanent teachers within the Education Teaching Service in New South Wales do not end there. Section 76(1) of the Teaching Services Act empowers the Director-General, in circumstances where an officer is an invalid or suffers physical or mental incapacity, either to cause that officer to be retired from the Education Teaching Service or, with his or her consent, to transfer that officer to another position within the Education Teaching Service. Section 79 extends only to officers an entitlement, upon accrual, to leave of absence. Further, an officer of the Education Teaching Service, but not "a temporary employee of the Education Teaching Service employed on a casual basis", is prohibited from engaging in various forms of commercial activity except with the written permission of the Director-General (s 89). With respect to s 89, the respondents submitted that the short-term nature of the appointments of casual supply teachers may result in their contracts not being renewed if they engaged in some inappropriate additional employment or business activity. However, even if this were so, officers would still be subject to a general prohibition on undertaking such additional employment or business activity, whereas, as a general proposition, temporary employees would be at liberty to attempt the proscribed forms of commercial activity as they please. The rights and obligations attaching to the two categories of teaching staff in the Education Teaching Service are so materially different that it would be an error to speak of the appointment of a person to "the position of teacher", where one of the terms and conditions of such appointment is that that person is required to undertake work either on a permanent or on a casual basis. Applying ss 24(1)(b) and 25(2)(a) of the AD Act to the circumstances of the respondents requires that consideration be given to the terms and conditions of their employment, not as teachers, but as casual teachers. Crennan Employment as casual teachers The immediate consequence of focusing upon the terms and conditions attendant upon the employment of the respondents as casual teachers is that the incongruity alluded to previously in these reasons becomes fatal to the respondents' case. It cannot be said to be a requirement or condition required to be complied with in the terms and conditions of employment as a casual teacher that, in order to obtain levels of pay corresponding with levels nine to 13 of the common incremental salary scale, the employee must cease to be a casual teacher. Nor can it be said to be a requirement or condition, compliance with which is required in the terms on which one is offered employment as a casual teacher, that, in order to access those higher levels of pay, the employee must accept appointment as something other than a casual teacher. This last proposition is sufficient to deny any application to the situation of the respondents of s 25(1)(c), which proscribes discrimination on the ground of sex in the terms on which an employer offers another person employment. The distinction between permanent and non-permanent teachers in the Education Teaching Service is a feature of the structure of the workforce employed in that Service. That structure was not adopted by decision or practice of the Department. It was imposed by the Teaching Services Act. The pay scales set by the Award and the practice, adopted by the Department, of not extending to its supply casual teaching staff over-award payments were an incident of the management of that structure. Not every such incident may be described as being a requirement or condition, compliance with which is required either in the terms on which employment in the Education Teaching Service is offered or in the terms or conditions of employment afforded by the Department. For the reasons given above, the so-called requirement of permanence which the respondents sought to impugn was not such a requirement or condition within the meaning of the AD Act. The Tribunal's decision was thus infected by an error of law and should not have been reinstated to any degree by orders of the Court of Appeal. For that reason, the appeal should be allowed. Other issues Given what has been said above respecting the proper construction of ss 24(1)(b) and 25 of the AD Act, it is unnecessary to address the submissions advanced by the State on the issues of reasonableness and the denial by the Court of Appeal of the entitlement of the State to a merits review. In particular, it is unnecessary to answer any question that may arise from the operation of s 54 of Crennan the AD Act concerning the relationship between the provisions of the AD Act and the IR Act, pursuant to which the Award was made. That relationship is rendered all the more problematic in this case by the circumstance that the Award operates within the framework set by, and thus is premised upon, the differing statutory rights and obligations attaching to the two categories of teaching staff created by the Teaching Services Act. Orders The appeal should be allowed. The State has agreed to pay the respondents' costs of the appeal to this Court in any event and no costs order respecting the appeal is required. The orders of the Court of Appeal should be set aside, and in place thereof, the appeal to that Court from the Appeal Panel should be dismissed. The State seeks and should have its costs in the Court of Appeal. The State is content that the parties bear their own costs of the proceedings before the Tribunal and the Appeal Panel. No costs order was sought by the State before either of those bodies and none should now be made in that regard by this Court. Kirby KIRBY J. This case32 joins a series, unbroken in the past decade, in which this Court has decided appeals unfavourably to claimants for relief under anti- discrimination and equal opportunity legislation33. It was not always so. In the early days of State and federal anti- discrimination legislation, this Court, by its approach to questions of validity and application, upheld those laws and gave them a meaning that rendered them effective. So it was in Ansett Transport Industries (Operations) Pty Ltd v Wardley34, an unsuccessful challenge to the applicability of provisions of the Equal Opportunity Act 1977 (Vic) concerned with discrimination on the ground of sex and marital status. So it was in Australian Iron & Steel Pty Ltd v Banovic35, another case of discrimination on the ground of sex in the employment context. Similar too was the unanimous outcome in Waters v Public Transport Corporation36, a case concerning discrimination on the ground of physical disability or impairment. None of these cases was more or less arguable than those that have followed. Few cases that now reach this Court are unarguable37. The Court's successive conclusions in these cases reflected the beneficial interpretation of the laws in question, ensuring they would achieve their large social objectives. In Mabo v Queensland [No 2]38, the general approach which the Court took to discrimination (in that case on the ground of race) was stated clearly. The Court there acknowledged the need to ensure that the law "in 32 An appeal from a judgment of the Supreme Court of New South Wales (Court of Appeal): Amery v State of New South Wales (Director-General NSW Department of Education and Training) [2004] ¶EOC 93-352. 33 The majority approach in this Court may be contrasted with the majority approach in the House of Lords in Percy v Church of Scotland Board of National Mission [2005] UKHL 73. 34 (1980) 142 CLR 237, Barwick CJ and Aickin J dissenting. 35 (1989) 168 CLR 165, Brennan and McHugh JJ dissenting. 36 (1991) 173 CLR 349. To these three cases might be added this Court's decisions concerning racial discrimination, including Koowarta v Bjelke-Petersen (1982) 153 CLR 168; Gerhardy v Brown (1985) 159 CLR 70 and Mabo v Queensland [No 2] (1992) 175 CLR 1. 37 cf News Limited v South Sydney District Rugby League Football Club Limited (2003) 215 CLR 563 at 580 [42]. 38 (1992) 175 CLR 1, Dawson J dissenting. This case involved discrimination by the operation of earlier understandings of the common law. Kirby today's world" should "neither be nor be seen to be frozen in an age of ... discrimination"39. The wheel has turned40. In no decision of this Court in the past decade concerned with anti-discrimination laws, federal or State, has a party claiming relief on a ground of discrimination succeeded. If the decision in the courts below was unfavourable to the claimants, it was affirmed. If it was favourable, it was reversed. This is what occurred in IW v City of Perth41, a case concerning discrimination on the ground of physical impairment. So too in Qantas Airways Limited v Christie42, a case concerning age discrimination, in which a judgment of the Industrial Court of Australia was reversed to favour the defendant. A similar outcome was reached in X v The Commonwealth43, a case involving HIV disability. So too in Purvis v New South Wales44, a case involving physical and mental disability. In each of these cases, the Court produced a finding unfavourable to the complainant. The differences in the Court's present approach to anti-discrimination legislation may lie in considerations of approach. That possibility is lent further support by the outcome of the present appeal. Here, the claimants succeeded at first instance before the New South Wales Administrative Decisions Tribunal ("the Tribunal")45. They did so on the basis that they had demonstrated that they were subject to a form of indirect discrimination on the ground of their sex46. That decision was reversed by the 39 (1992) 175 CLR 1 at 41-42. 40 A similar change has occurred in the law of torts and elsewhere. See eg Neindorf v Junkovic (2005) 80 ALJR 341 at 346 [19]; 222 ALR 631 at 635-636; cf Luntz, "Editorial Comment: Round-up of cases in the High Court of Australia in 2003", (2004) 12 Torts Law Journal 1 at 1-2; Luntz, "Torts Turnaround Downunder", (2001) Oxford University Commonwealth Law Journal 95. 41 (1997) 191 CLR 1, Toohey J and myself dissenting. 42 (1998) 193 CLR 280, myself dissenting. 43 (1999) 200 CLR 177, McHugh J and myself dissenting. 44 (2003) 217 CLR 92, McHugh J and myself dissenting. 45 Amery v State of NSW [2001] EOC ¶93-130. 46 Contrary to the Anti-Discrimination Act 1977 (NSW) ("AD Act"), s 24(1), as amended by the Anti-Discrimination (Amendment) Act 1981 (NSW); and the Anti- Discrimination (Amendment) Act 1994 (NSW), s 3 and Sched 4, cl 8(a). Kirby Appeal Panel of the Tribunal47. However, the decision in favour of the claimants was restored by majority decision of the New South Wales Court of Appeal48. In this appeal, the State of New South Wales has not demonstrated that the Court of Appeal erred in the conclusion that it reached on the issues still outstanding49. Neither in the Court of Appeal's identification of the "requirement or condition" that gave effect to the indirect discrimination alleged, nor in its conclusion that such "requirement or condition" was not "reasonable", has error been shown. In consequence, in a strict appeal50, there is nothing to warrant this Court giving effect to a differing conclusion of its own. There being no other argument justifying a contrary outcome, the appeal should be dismissed. Only that order will uphold the purpose of the Parliament of New South Wales to terminate unreasonable indirect discrimination on the ground of sex51. The facts Protracted litigation: The New South Wales Department of Education and Training ("the Department") employs both permanent and casual teachers, remunerating them in accordance with salary scales. At the relevant time, the minimum salary was determined by an industrial award. The highest increment on the award salary scale at the time of the respondents' complaints was 13. However, the scale draws a distinction between permanent and casual teachers. Casual teachers are only entitled to a maximum equivalent to the scale's eighth increment. The respondents are all female casual teachers. Pursuant to the AD Act, s 24, they contend that they have been discriminated against on the ground of sex. They argue that, as casual teachers, they cannot access the higher 47 State of NSW v Amery (2003) 129 IR 300. 48 Amery v State of NSW (Director-General NSW Department of Education and Training) [2004] EOC ¶93-352; per Beazley JA, Cripps AJA concurring; Hodgson JA dissenting. 49 As to the necessity to show error in order to secure reversal, see Manley v Alexander (2005) 80 ALJR 413; 223 ALR 228; CSR Ltd v Della Maddalena (2006) 224 ALR 1. 50 The requirements attaching to a strict appeal were described by this Court in Mickelberg v The Queen (1989) 167 CLR 259 at 265-271, 274, 298-299; Eastman v The Queen (2000) 203 CLR 1 at 77 [234]-[236]. 51 See New South Wales, Legislative Council, Parliamentary Debates (Hansard), 24 February 1977 at 4430. Kirby increments on the salary scale, although they perform work of equal value to that of their permanent counterparts. The fact that these proceedings concern allegedly unlawful discrimination against Ms Joyce Amery and thirteen other casual teachers52, dating back to their complaint to the Anti-Discrimination Board of New South Wales in November 1995, speaks volumes about the hostile litigious environment in which claims of the present kind are typically litigated. Even if one takes the start of the proceedings as October 1997 (the date on which the points of claim were filed by the respondents in the Equal Opportunity Tribunal of New South Wales as then existing53), their duration, the multiplicity of the issues, the complexity of the points of law argued and the delays in decision-making, have all added to the burdens facing people like the respondents, seeking to vindicate rights afforded to them by law to obtain relief against indirect discrimination. When there is now added the ultimately unfavourable outcome in this Court, and the burden of costs that will follow (only partly mollified by the appellant's concession on the grant of special leave54), the respondents could be forgiven for doubting the utility of the remedies ostensibly afforded to them by the AD Act, and for wondering why they ever bothered to invoke its protection. Confining the issues: Thanks largely to the careful reasons of Beazley JA in the Court of Appeal55, and to somewhat belated discernment on the part of the appellant concerning the matters to be argued, many of the issues identified below have fallen away in this Court. Beazley JA listed eight issues56 and proceeded seriatim to decide them all. The appellant, representing the Department, raised a multitude of issues before the Tribunal and Appeal Panel, and pressed many of them by way of contention in the Court of Appeal. However, only three issues are still outstanding. This permits the cutting away of a large number of facts relevant to the now 52 The thirteenth, Ms Mary Strong, was a party to the original complaint and to the Equal Opportunity Tribunal proceedings, but not to the subsequent appeals. 53 Under the AD Act, s 69B (Pt 7A). In 1997 the Administrative Decisions Tribunal, established under the Administrative Decisions Tribunal Act 1997 (NSW) was vested with jurisdiction under the AD Act, pursuant to the Administrative Decisions Legislation Amendment Act 1997 (NSW). 54 Notice of Appeal, proposed order 3(c). 55 [2004] EOC ¶93-352. 56 [2004] EOC ¶93-352 at 73,454 [21]. Kirby abandoned issues. It allows this Court, in deciding the appeal, to confine its attention to those facts that are relevant to the remaining issues. For what follows, it is important to appreciate that, despite the multitude of arguments advanced by the appellant up to the Court of Appeal, the Judges of that Court were eventually unanimous in the disposition of all of the issues argued, save that Hodgson JA, in ultimate dissent, concluded that there were "arguable grounds" to justify the condition or requirement of the employment of the respondents as teachers, in respect of which the respondents were complaining57. On this basis alone, Hodgson JA concluded that it was "prima facie reasonable for the Department not to make over-award payments" to the respondents or persons in their class58. Upon an assumption that he was incorrect in this conclusion, and that the majority in the Court of Appeal were correct, Hodgson JA favoured a remitter to the Appeal Panel of what he regarded as an outstanding application for leave to appeal to that Panel on the evidentiary merits59. In every other respect, Hodgson JA agreed with the disposition by the majority of the Court of Appeal of all of the other points in the appeal, including (upon an assumption of their entitlement) the orders in favour of the individual respondents in respect of interests and costs as proposed by the majority of that Court60. It follows that, because of the high measure of agreement in the Court of Appeal, and the way in which the issues were argued in this Court, the statement of facts can be narrowed. Doing this will simplify the case of indirect discrimination on the ground of sex, of which the respondents complained and on which they ultimately succeeded below. A case of discrimination: Since the middle of the nineteenth century, the appointment of teachers in public schools in New South Wales has been regulated by statutes enacted first by the colonial Parliament and later by the State Parliament61. From the earliest years of the provision of free, secular and 57 [2004] EOC ¶93-352 at 73,482 [202]. 58 [2004] EOC ¶93-352 at 73,482 [202]. 59 [2004] EOC ¶93-352 at 73,482 [204]. 60 [2004] EOC ¶93-352 at 73,482 [204]. 61 Dating back to an Act to Incorporate the Board of Commissioners for National Education 1848 (NSW). That Act was followed by the Public Schools Act 1866 (NSW); Public Instruction Act of 1880 (NSW); Free Education Act 1906 (NSW); Public Education Act 1906 (NSW); and Public Instruction (Amendment) Act 1916 (NSW). Kirby compulsory education to children within the large geographic area of New South Wales, it was recognised that special arrangements were needed to provide for the education of pupils in remote districts, where it was "not practicable to collect a sufficient number of children to form a permanent school"62. Whatever questions arose earlier as to the employment status of teachers in New South Wales63, after the passage of the Teaching Services Act 1980 (NSW) ("TS Act")64, the appointment of teachers in public schools was regulated by statute in some detail. The TS Act envisaged that such teachers would either be appointed to a "permanent position"65 and thus be "officers"66 or (relevantly) as a "temporary employee" or casual teacher. The evidence before the Tribunal sustained two conclusions of a general character expressed by Beazley JA. First, that the generic category of "teachers" was divided into permanent and casual teachers, with casual teachers being, in turn, subdivided by the Department's internal structure between short-term ("relief") casuals and longer term ("supply") casuals67. The former subcategory of casual teachers was commonly employed "to fill short-term vacancies, generally of less than 10 days duration and which may be as short as an hour". The latter ("supply casuals"), the category relevant to the respondents to these proceedings, was further subdivided into two groups. One such group comprised "supply casuals", employed to teach in a full-time or part-time vacant position which is part of a school's formula-based teacher entitlement. The second sub- group comprised "relief" teachers appointed to fill the position of a permanent teacher who was on a period of extended leave, eg sick leave, maternity leave or long service leave, or of a teacher who had been placed on secondment. The respondents were all in the former sub-category. They were all "supply casuals". After describing these classifications, Beazley JA stated a conclusion concerning the particular value of casual teachers to the large and complex 62 Public Instruction Act of 1880, s 23 ("Itinerant teachers may be appointed"). 63 See eg Ramsay v Larsen (1964) 111 CLR 16 at 27-28, 36-37 and, following the passage of the TS Act, Director-General of Education v Suttling (1987) 162 CLR 64 Now Teaching Service Act 1980 (NSW); see Teaching Services Amendment Act 2004 (NSW), Sched 1(2). 65 TS Act, s 47 (as it then provided). 66 Defined in TS Act, s 4. 67 [2004] EOC ¶93-352 at 73,455 [26]. Kirby establishment of teaching personnel deployed by the Department in public schools throughout the State68: "The availability of casual teaching staff is important, and probably essential, to the conduct of the teaching service. It assists the Department to maintain both the continuity and flexibility of teaching services. Thus, by way of example, the Department can, by the use of casual teaching staff provide relief for permanent teachers from face to face teaching; to properly take account of fluctuations in enrolments; to provide teaching resources for specialised programmes and to deal with changing curriculum patterns, and, as indicated, facilitates the taking of various types of leave by permanent teachers." Most of the respondents had earlier been permanent teachers but had terminated that appointment "because of family responsibilities"69. This is a generic euphemism to describe the reality for most long-term female employees, certainly up to the time when the respondents made their claims. It indicates that (in the event of their having children of their own) the primary practical tasks of rearing the children would normally fall on the mother and thus (where applicable) on female teachers such as the respondents. Moreover, in the event of a reassignment of the place of employment of persons in a marital or de facto married relationship, the female party would, with very few exceptions, follow the employment requirements of the male party. During schooling of their own children, reassignment of the employment of the mother could cause significant disruption for children, including in their education. It was these and like reasons that caused most of the respondents to transfer to supply casual teaching, placing a limitation on the areas in which they were prepared to work70. Notwithstanding such limitations, all but two of the respondents had reapplied to the Department for permanent positions. However, mostly due to family reasons, they had placed a limitation on the geographical 68 [2004] EOC ¶93-352 at 73,455 [27]. 69 [2004] EOC ¶93-352 at 73,455 [28]; cf Smith and Riley, "Family-friendly Work Practices and The Law", (2004) 26 Sydney Law Review 395. 70 [2004] EOC ¶93-352 at 73,455 [28]. 71 [2004] EOC ¶93-352 at 73,455 [28]. There was one teacher, Ms Amery, who was a pastor for her religious denomination. She had restricted her geographical area of service to the Sydney suburb of Kogarah in order to allow her to attend to her pastoral duties. Kirby Much of the original contest before the Tribunal had focused on whether the respondents, as "supply casual" teachers in New South Wales public schools, were drawn from the same class of persons, having the same general qualifications as permanent teachers and performing essentially the same duties as their permanent counterparts. The Tribunal concluded those issues in the respondents' favour72. They are no longer in contention before this Court. To differentiate between the typical category of long-term supply casual teachers (to which they all belonged) and short-term relief or otherwise temporary teachers, the respondents, before the Tribunal, by reference to the evidence, proposed the adoption of an eight week threshold. They submitted that adoption of that criterion was sustained by the evidence and would differentiate appropriately the particular sub-class within which they fell. The Tribunal accepted that threshold. It said73: "The appropriate comparison is between permanent teachers and casuals who have reached an equivalent stage and value of work performance. In this case, it is contended by the complainants that an appropriate approach is to adopt a period of eight weeks as the threshold for performance of work of equal value by casual teachers. On the evidence we agree with this contention. That is, it is clear that after working such a period continuously, there is little or no discernible difference in the tasks or responsibilities of teachers in the Service. Indeed, there is room for argument in some cases that work of equivalent value is performed prior to that period, particularly by teachers who are engaged to fill the roles of permanent staff for extended periods, a fact known on engagement of casual staff." The Tribunal thus concluded that the long-term casual teacher, working in the same school as a permanent teacher was, by the very nature of the duties performed, obliged to carry out essentially the same work, both in the classroom and beyond. Relevantly, the work was that of a teacher of the pupils attending a public school. Little wonder then, that a teacher, designated "supply casual", working in an adjoining classroom and performing what were found to be essentially the same duties as a teaching colleague, designated "permanent", would come to object to the differences in salary and remuneration paid to the other teacher because the "permanent" teacher had access to a different incremental salary scale. The objection was not personal. It was addressed to the Department's salary system. Understandably, the objection became enlarged when two further ingredients were added to the equation. Those ingredients were (1) the significant proportional difference between the salary and remuneration of 72 [2001] EOC ¶93-130 at 75,296 [79]-[80]. 73 [2001] EOC ¶93-130 at 75,289 [45]. Kirby long-term casual teachers on the one hand, and permanent teachers on the other; and (2) the significant and disproportionate number of long-term casual teachers who were women rather than men. As to the first of these considerations, Beazley JA concluded that the difference between the pay scales for permanent and casual teachers was "about 20%"74. This was a figure presumably derived from an average. Certainly, at the level of the respondents' salaries, it was significant. Under the common incremental salary scale, contained within the award, a supply casual teacher is denied access to incremental steps 9, 10, 11, 12 and 13. Thus, as fixed effective from 1 January 1999, the maximum annual salary payable to such a teacher was $40,576. This was so although a supply casual teacher might have performed (in years of service) the amount of work that would otherwise have entitled her or him to progression, through annual increments, to step 13 of the scale. At that stage, as a "senior teacher", a permanent teacher was entitled to be remunerated at an annual salary of "not less than $50,000". The salary difference of $9,424 each year therefore represented, for long-term supply casual teachers deprived of access to the final five annual increments, nearly 20% of the salary of a teacher classified as "permanent", performing the same substantive work and possibly doing so in the same school and in an adjacent classroom. The feeling of resentment and injustice occasioned by this inequality grew into a demand before the Tribunal for legal redress. In the Tribunal's reasons75, upholding such redress, reference was made to the evidence of Ms Heather Gray, Director of Personnel Operations of the Department. She had provided evidence analysing the Department's employment practices. A key schedule in that evidence, quoted both by the Tribunal at first instance76 and by Beazley JA in the Court of Appeal77, described the employment position in the Department's teaching service of approximately 79,000 teachers, both permanent and casual. As explained by Beazley JA: "The profession is a predominantly female profession, with approximately 80% of all teachers being female. However, the numbers of casual teachers employed by the Department is disproportionately female when 74 [2004] EOC ¶93-352 at 73,452 [8]. 75 [2001] EOC ¶93-130 at 75,283 [15]. 76 [2001] EOC ¶93-130 at 75,283 [15]. 77 [2004] EOC ¶93-352 at 73,472 [136]. Kirby compared to those employed permanently. The numbers that were current at the Tribunal hearing stage were: Male Female Permanent Casual Total According to these figures, 79% of all male teachers were employed on a permanent basis. The same was true of 59% of female teachers. Of the 28,010 casual teachers in NSW at the time, 23,182 (approximately 83%) were female. According to Beazley JA, the foregoing figures "have remained relatively stable over the years"78. The Department accepted that the differences in the sexual composition of the respective categories of teachers employed by it were "substantial"79. It was upon the basis of these differences and proportions that the respondents succeeded at trial in establishing their complaint of discrimination on the ground of sex in the access that they were allowed, as long-term supply casual teachers, to the last five annual increments, denied to them as non- permanent teachers. The principal causative factor postulated for these statistical differences was the burden imposed by sex-based obligations, such as child rearing and support of a domestic partner. Then (as now) for the most part in our society, these obligations fall upon women rather than on men. They fell on the respondents, as women, more heavily than on male counterparts who qualified as permanent teachers. involved (and did not It was in this way that the respondents built their claims of indirect sex discrimination. Although the applicable industrial award (and the earlier industrial agreement) did not, by denying access to the five later annual increments, do so by explicit reference to the sex of the teachers (or casual teachers) involve a case of "direct discrimination"), in practical terms it did. Statistically, the disentitlement clearly fell much more heavily upon female teachers than it did on male teachers. The comparative table demonstrates that point beyond doubt. In many cases, it resulted, effectively, in the inability of female teachers to meet the preconditions of geographical assignability said to be necessary for qualification as a "permanent" teacher. Moreover, in the case of female teachers with family responsibilities, as a practical matter, it commonly necessitated the identification therefore 78 [2004] EOC ¶93-352 at 73,472 [137]. 79 [2004] EOC ¶93-352 at 73,472 [137]. Kirby of geographical limitations compatible not merely with personal choice or individual convenience but with conditions of life ordinarily applicable to teachers who were women with family responsibilities. It was thus, in practice, related to the sex of the category of employees who lodged the complaints in the Tribunal. At no stage did the respondents argue that the entire casual teaching system of the Department was discriminatory as such. The Tribunal, having heard the evidence, concluded that the casual relief supply system for short-term casual teachers was distinct and severable from the category to which the respondents belonged as long-term casual teachers "who perform work of equivalent standard and value to permanent staff"80. The Tribunal upheld the "[T]he question before us … is not whether the whole system of casual staffing arrangements is beneficial for the Teaching Service, but whether it is unreasonable to pay female teachers at a lower salary scale if they perform work of equivalent standard and value to permanent staff with access to permanent pay scales." Dispositions below: Addressing that complaint, the Tribunal found in favour of the respondents. The majority of the Court of Appeal agreed. In his reasons, Hodgson JA agreed with the majority that suggested errors of law, identified by the Appeal Panel to justify its disturbance of the decision of the Tribunal, were erroneous82. Hodgson JA found that the Tribunal had not made any of the errors of law nominated by the Appeal Panel. However, in responding to a notice of contention filed by the appellant in the Court of Appeal, Hodgson JA identified what he considered to be three alternative errors of law on the part of the Tribunal83. In effect, these were addressed to the approach of the Tribunal, having found a "condition or requirement" that prima facie was discriminatory against the respondents on the ground of their sex, failing properly to conclude that the "condition or requirement" was "reasonable". By the terms of the legislation on sex discrimination, applicable to this case, the offending "requirement" had to be one that was "reasonable having regard to the 80 [2001] EOC ¶93-130 at 75,284 [20]. 81 [2001] EOC ¶93-130 at 75,284 [20]. 82 [2004] EOC ¶93-352 at 73,479 [178]. 83 [2004] EOC ¶93-352 at 73,480 [188]. Kirby circumstances of the case and with which the aggrieved person does not or is not able to comply"84. The judgment in favour of the respondents, ordered by the majority of the Court of Appeal, included the award of various money sums for damages in favour of each of them. The expected sums varied between $2,952.75 (at the lower end) for some of the respondents, to sums of $40,000 (the maximum payable) to three of the respondents, including Ms Amery. By special leave, the appellant has appealed to this Court raising three issues. These are the only issues that this Court is now required to address. The issues The issues for decision by this Court are as follows: The requirement or condition issue: The respondents contended that the Department required them, as "the aggrieved persons", to comply with a relevant "requirement or condition". According to the respondents, the relevant requirement or condition was that, to have access to the final five annual increments of salary as long-term supply casual teachers, the respondents had to comply with a requirement or condition of deployability with which a substantially higher proportion of persons of the opposite sex (males) complied, or were able to comply, than in the case of females. This, it was said, was indirect discrimination, contrary to the AD Act. The appellant, on the other hand, contended that there was no relevant discrimination on the ground of sex "in the terms on which the employer offers employment" within s 25(1)(c) of the AD Act. This was because the only relevant offer of "employment" was that as a "casual teacher" (not generically as a "teacher"). Accordingly, on the appellant's first argument, no discrimination on the ground of sex was shown in the differentiation between the terms of employment of male and female casual teachers, long-term or short-term, judged within the casual category. All casual teachers, of both sexes, were remunerated in precisely the same way, so that the claim failed at the threshold. Other issues did not then arise. The reasonableness issue: If the first issue were determined in favour of the respondents, as the Court of Appeal unanimously concluded, Hodgson JA nonetheless decided against the respondents' claim on the basis that confining access to the final five categories of incremental payments was not, within the AD Act, one "which is not reasonable" having regard to the circumstances of the case. Any discrimination was 84 AD Act, s 24(1)(b). See joint reasons of Gummow, Hayne and Crennan JJ at [16]- Kirby therefore excusable and, for it, the AD Act afforded the respondents no relief. The residual merits issue: In the event that each of the foregoing issues was determined in favour of the respondents, the appellant nonetheless asked that the Court of Appeal's judgment be corrected to provide for remitter of the proceedings to the Appeal Panel so that what was said to be an outstanding issue of the application by the appellant to that Panel for leave to appeal to the Panel on the merits, against the decision of the Tribunal, could be heard. The appellant asked for a re-hearing of the factual merits, a facility that it said was still available to it, in terms of the AD Act, having regard to the history of the proceedings. The new disposition by this Court: Despite the close attention that this case has enjoyed at three levels of decision-making before it reached this Court, none of the decision-makers who previously considered the case have upheld the appellant's argument on the first issue. Yet it now attracts a majority in this Court85. It is thus determinative of the outcome of the appeal. Like Gleeson CJ and Heydon J, I would not accept the view of the majority on the first issue86. It results, with respect, either from a misapprehension of the "requirement" asserted by the respondents; an unduly narrow reading of that word in the context of the AD Act; or both. I accept that the argument as to whether the "requirement" imposed by the Department for access to the higher incremental scale confined to permanent teachers was shown to be "not reasonable", and properly assessed by the Court of Appeal and by the Tribunal, is more debatable. This is the basis upon which Gleeson CJ and Heydon J would decide the case against the respondents87, agreeing in this respect with the conclusion of Hodgson JA in the Court of Appeal88. Callinan J also expresses agreement with this conclusion89 but disagreement with the Chief Justice on the first issue90. It is my opinion that the Tribunal and the majority of the Court of Appeal were correct in their resolution of the reasonableness issue. 85 See joint reasons at [79]-[82]; reasons of Callinan J at [205]. 86 Reasons of Gleeson CJ at [1]-[17]; reasons of Heydon J at [210]. 87 Reasons of Gleeson CJ at [22]-[26]; reasons of Heydon J at [210]. 88 [2004] EOC ¶93-352 at 73,480-73,481 [188]-[193]. 89 Reasons of Callinan J at [203]. 90 Reasons of Callinan J at [205]. Kirby Because of their conclusions on the foregoing issues, the other members of this Court are not obliged to consider the residual argument of the appellant that the proceedings should be remitted to the Appeal Panel of the Tribunal. My conclusions require me to address the third issue. Because, in my opinion, the majority of the Court of Appeal were correct in their disposition of this issue and because it was highly desirable, if not imperative, to bring these protracted proceedings to a close, I would reject the appellant's request for yet a further opportunity to reopen the factual merits. It is necessary for me to explain and support each of the foregoing conclusions. For the future application of State and federal anti-discrimination legislation, the first issue is by far the most significant. The majority approach inflicts a serious wound on the effectiveness of the AD Act, as I shall now demonstrate. The "requirement or condition" was established The postulated "requirement or condition": It is perhaps understandable that the "requirement or condition" about which the respondents complained has been mistaken at various times during these proceedings. There is a subtle distinction between the complaint actually advanced (that a "requirement" of permanent employment was imposed by the Department for access to the five senior incremental steps in the salary scale) and the complaint, as it was sometimes understood (that the respondents had been denied, or not granted, "permanent" teacher status). On occasion, the identification of the "requirement or condition" by the respondents themselves, and by the Tribunal, may have encouraged the confusion. Once, however, the appeal reached the Court of Appeal, there was no excuse for persisting with any such misunderstanding. In her reasons, Beazley JA made it clear that91: "The appellants contend that the requirement to hold a permanent appointment so as to be entitled to the higher pay scales is a requirement or condition within s 24(1)(b) [of the AD Act]." Beazley JA defined the "condition" as the "requirement to have permanent status". Her Honour pointed to an error in the reasons of the Tribunal, in so far as it had suggested that the applicable award contained a "requirement or condition" that "in order to qualify for higher rates of pay and entitlements as a teacher in NSW, it is necessary to have permanent status"92. Her Honour pointed 91 [2004] EOC ¶93-352 at 73,453 [11]. 92 [2004] EOC ¶93-352 at 73,453 [12] per Beazley JA, quoting the reasons of the Tribunal. Kirby out that this was not strictly accurate. The award does not contain such a condition. Instead, "it is the Department's practice of not making over-award payments that imposes the requirement"93. In this way, as Beazley JA explained, the applicable "requirement" had a double aspect. Appointment as a "permanent" teacher was sufficient to secure access to the higher incremental scales under the award. What deprived casual teachers, such as the respondents, of access to those higher scales was the dual condition of (1) not being permanent teachers; and (2) of being subject to a Departmental policy of making no over-award payments, even where such over- award payments might be suggested by particular circumstances, such as the avoidance of unlawful discrimination against some teachers ("supply casuals") on the ground of their sex. As Gleeson CJ has explained, where the Act is addressed to a "requirement or condition"94, it is necessary to identify with precision what the relevant "requirement" or "condition" is. In this case it was the "requirement", in order to qualify for the higher increments of salary, of having permanent status in a context in which no over-award payments were made to other employees (equally valuable as teachers and who were performing exactly the same work95). It was undisputed that the Department could, if it had wished, lawfully pay the more senior supply casual teachers over-award payments equivalent to the award increments. No statutory or other like impediment stood in the way of doing so; merely the Department's invariable practice. It simply chose not to do so. Given its choice, the applicable "condition" of appointment as a permanent teacher, whilst "facially neutral", had the consequence of discriminating against the respondents on the ground of their sex. It was therefore contrary to the AD Act. fewer, proportionately, of female teachers did fulfil as a matter of fact. Furthermore because of their particular "family responsibilities", fewer female teachers could fulfil the "requirement or condition". imposed a "requirement or condition" of permanency that Yet should it be concluded that the "requirement or condition" was inapplicable in this case because, by the statute, the terms of the award or otherwise, a clear distinction was drawn between "permanent" teachers and "casual" teachers, however the latter were to be further sub-classified? In my opinion, this is not an approach to the case that is warranted either by the way the respondents presented their arguments, or by the way the evidence was accepted [2004] EOC ¶93-352 at 73,453 [12]. 94 AD Act, s 24(1)(b). 95 cf reasons of Gleeson CJ at [17]. Kirby at every level below. Nor is it compatible with the proper approach to the statutory phrase "requirement or condition" when used in legislation of this kind. The meaning of "requirement or condition": It is settled law that, in construing anti-discrimination laws, courts are to adopt a "realistic" approach96. This has proved necessary because "the forms of such disadvantage [are] infinitely various"97, requiring the court or tribunal to consider whether, in the particular case, "there [has been] insistence upon a particular requirement". The insistence on the adoption of a practical and not a theoretical approach to such cases is well accepted by authority98. The phrase "requirement or condition" is the same as the language of s 1(1)(b) of the Sex Discrimination Act 1975 (UK)99. It had been recognised in England that it was essential "that the statutory words should be given a liberal interpretation in order to implement the object of the legislation"100. In Clarke v Eley (IMI) Kynoch Ltd101, the English Employment Appeal Tribunal rejected a submission that a "requirement", in such a context, meant a stipulation that calls for, or demands, something of the person to whom it is applied; and that "condition" did not include an identifiable qualification for immunity from a disadvantage. the purpose of Giving the decision of the English Tribunal in Clarke, Browne- indirect discrimination. Those laws had been copied from legislation enacted in the United States, designed to correct employment practices which had involved a disproportionate impact on African American as opposed to white workers102. A narrow approach to the expression "requirement or condition" would frustrate the achievement of the important social purposes of such provisions. As his Lordship explained103: laws against introducing 96 Secretary, Department of Foreign Affairs and Trade v Styles (1989) 23 FCR 251. 97 Styles v Secretary, Department of Foreign Affairs and Trade (1988) 84 ALR 408 at 424 per Wilcox J approved Banovic (1989) 168 CLR 165 at 197 per McHugh J. 98 Styles (1989) 23 FCR 251 at 258. 99 Banovic (1989) 168 CLR 165 at 195. See also at 175, 177 and 185. 100 Watches of Switzerland Ltd v Savell [1983] IRLR 142 at 146. 101 [1983] 1 ICR 165. 102 Griggs v Duke Power Co 401 US 424 (1971). 103 [1983] ICR 165 at 171. Kirby "If the elimination of such practices is the policy lying behind the Act, although such policy cannot be used to give the words any wider meaning than they naturally bear it is in our view a powerful argument against giving the words a narrower meaning thereby excluding cases which fall within the mischief which the Act was meant to deal with." Soon after this approach was established in England, a case arose before the English Tribunal in Home Office v Holmes104. In some ways it was similar to the present matter. The English Tribunal there held that an obligation to work full-time was a "requirement or condition" of employment within the meaning of the UK Act. Waite J, delivering the decision of the Tribunal, said105: "... words like 'requirement' and 'condition' are plain, clear words of wide import fully capable of including any obligation of service whether for full-time or for part-time, and we see no basis for giving them a restrictive interpretation in the light of the policy underlying the Act …" In adopting this approach, the English Tribunal rejected a submission advanced by the Crown employer in that case which was very similar to the submission of the appellant that now belatedly succeeds in this Court. The employer had urged106: "… that full-time work is not a matter which sounds in condition or requirement at all. It is the whole job. It is not a term of the job. It is the job. Part-time work [on this argument] is not a variant of full-time work. It is a different job. 'Requirement' or 'condition' are terms which, properly regarded in their statutory context, denote some hurdle, qualification or obstacle placed in the way of the employee. They are not apt ... to describe anything so fundamental as the duty of work in general or the duty of full-time work in particular." As the Tribunal noted at first instance in the present proceedings107, this approach was rejected in Holmes. Because of the identity and derivation of the relevant language of the AD Act as stated in the Long Title, the similarity of its purposes, and the like endorsement of the broad approach to cases of indirect 104 [1984] ICR 678. 105 [1984] ICR 678 at 683. The approach of the English Tribunal on this point was endorsed by the Irish Court of Appeal in Briggs v North Eastern Education and Library Board [1990] IRLR 181 at 186. 106 [1984] ICR 678 at 683 (emphasis added). 107 [2001] EOC ¶93-130 at 75,282 [10]. Kirby discrimination by courts in England and by this Court108, it is unsurprising that the view that now finds favour was rejected at every level before the appeal reached this Court. Yet now, out of the mists of time, a quarter century after the settled approach to the phrase "requirement or condition" was adopted in England and followed elsewhere, this Court reverses direction and embraces the converse view. It is necessary to realise that such an approach is contrary to many observations of a general character made by this Court. In Waters v Public Transport Corporation109, Dawson and Toohey JJ warned that the alleged perpetrator of discrimination ought not to be allowed to evade the implications of the Equal Opportunity Act 1984 (Vic) by redefining for itself the activities of which the aggrieved person has complained. Effectively, this is what the appellant has sought to do in this case. Yet it is the approach now endorsed by a majority of this Court. It involves insisting that, for the purposes of the AD Act, the aggregated "Education Teaching Service", referred to in the TS Act, must be viewed as strictly subdivided into permanent and temporary (casual) teachers. Consistently with the approach of this Court in Waters, the appellant should not be permitted to rely on such a subdivision of the relevant employment classes so as to escape the AD Act. It may not do so because the subdivision is the very source of the "requirement" which the respondents argue breaches the AD Act and inflicts the impermissible discrimination on them. The approach of the majority effectively allows a discriminator, by the categories of employment that it adopts, to walk straight out of the AD Act. It affords considerable scope for employers to circumvent remedial laws in the employment context, including the AD Act. By the majority's reasoning, all that is required in order to do so is for an employer to adopt the simple expedient of defining narrowly the "employment" that is offered. This cannot be the correct approach to ascertaining the meaning and application of legislation of this character. Because of the "remedial" character of that legislation, this Court is obliged to afford to it a "beneficial" interpretation, that is, "... the widest interpretation which its language will permit"110. The narrowness of the majority's approach can be seen by reflection on its application to the present case. Ms Amery and her colleagues would be known to their pupils as 108 Banovic (1989) 168 CLR 165 at 185, 191, 196. 109 (1991) 173 CLR 349 at 394. 110 Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 260-261 per McHugh J. See also Qantas Airways Limited v Christie (1998) 193 CLR 280 at Kirby "teachers". Parents and citizens would describe them as "teachers". They would conceive of themselves as "teachers". That is their profession. Yet by an irrelevant statutory classification, which is completely silent on their entitlement to access the full incremental scale of the salaries of permanent teachers, their complaint of discrimination is now supposedly defined out of existence. This is a narrow and antagonistic approach to the interpretation of anti-discrimination law which robs that law of its effectiveness. It is also an approach inconsistent with the purposive approach repeatedly (and recently) expounded by this Court111. That approach has been mandated specifically in respect of anti-discrimination legislation112, and it is not to be turned on and off at will113. It forms part of a modern understanding between this Court and the legislatures of the Commonwealth and the States. At its heart is the role of judicial interpretation in giving effect to the will of Parliament as embodied in its laws, to the fullest extent that the legislative language permits. in our community"114. The sweeping objectives of the AD Act were explained in the lengthy parliamentary debates preceding the passage of the Anti-Discrimination Bill, as "an attempt, as far as legislation can, to end intolerance, prejudice and discrimination the "pervasiveness of discrimination in our society"115, the legislature accepted the need for "positive action", including remedial measures, to redress endemic discrimination. Whilst "[i]n an ideal world, no remedies for discrimination would be required", "unhappily", this could not be said of Australian society at the time of the Bill's enactment. It was the express intention of Parliament that the Act would have Owing 111 Bropho v Western Australia (1990) 171 CLR 1 at 20 applying Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423. See also CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 112-113; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69], 384 [78]. 112 Waters (1991) 173 CLR 349 at 359. 113 cf Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249 at 284-285 [112]. 114 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard) 23 November 1976 at 3337. 115 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard) 23 November 1976 at 3337. Kirby "wide-ranging "constructive" measures would be used to secure a "more equitable society".117 the State of New South Wales: ramifications"116 for Whilst the words of parliamentary speeches are no substitute for the text of a statute, there is nothing relevant in the AD Act to suggest a narrow reading of the reference to a "requirement or condition". Those words should be given meaning so as to fulfil, and not defeat, the declared objectives of the Act. The first issue – conclusion: When the orthodox and hitherto accepted approach to the application of ss 24 and 25 of the AD Act is adopted, the "terms on which the employer offers employment" as a teacher, within s 25(1)(c) of the Act, include relevant terms specifically addressed to non-permanent casual supply teachers, such as the respondents. Those terms discriminated against the respondents. Subject to what follows, they were therefore unlawful by the operation of s 25(1) of the AD Act. They discriminated on the ground of sex contrary to s 24(1)(b) of the Act ("indirect discrimination"). They did so because the Department, for which the appellant is liable, required the respondents to comply with a requirement or condition of permanent employment in order to gain access to the higher incremental salary scale, a requirement with which a substantially higher proportion of persons of the opposite sex (men) complied or were able to comply. It was thus "imposed by" the Department, thereby rendering the appellant liable in this case to the operation of the AD Act. In the case as presented by the respondents (including the failure or refusal of the Department to pay over-award salaries so as to avoid the unlawful discrimination which the award provisions involved) the breach of the AD Act, complained of by the respondents, was established. The Tribunal was correct to so hold. The Court of Appeal was therefore right to uphold the Tribunal's conclusion on the first issue and to reject the appellant's argument on this point. The "requirement" was "not reasonable" The second issue: The terms of s 24(1)(b) of the AD Act contain an adjectival clause qualifying the noun "requirement". That clause states: 116 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard) 23 November 1976 at 4436. 117 New South Wales, Legislative Council, Parliamentary Debates (Hansard) 18 November 1976 at 3347. Kirby "being a requirement which is not reasonable having regard to the circumstances of the case and with which the aggrieved person does not or is not able to comply." Curiously, the clause is addressed only to a "requirement" and not to a "condition". However, nothing appears to turn on that limited qualification. It is not necessary to consider, in each case, whether the respondents were "not able to comply" with the precondition of permanent employment (due, for instance, to family responsibilities or domestic support to a male partner or principal breadwinner). It is sufficient that the aggrieved person "does not" comply with the nominated "requirement". Clearly, this was so in the case of each respondent. The second issue thus presents the question whether, having regard to the circumstances, the "requirement" was "not reasonable". This is the point upon which Hodgson JA dissented in the Court of Appeal. It is the foundation for the conclusion of Gleeson CJ and of Heydon J against the respondents. The view adopted by their Honours on this point is arguable118. The correct appellate approach: The starting point for legal analysis on this issue affords a useful reminder of the correct approach to be followed by a court when reviewing the application of the AD Act to the facts of a particular case. This Court has repeatedly insisted on the strict nature of constitutional appeals brought to it119. We are not, therefore, engaged in an appeal by way of rehearing from the Court of Appeal. In such an appeal, if error were shown, our function would be to replace any view taken by us about the reasonableness of a requirement imposed by the Department for the view adopted below120. Because what is "reasonable" and "unreasonable" necessarily involves elements of judgment and evaluation, in a strict appeal a rule of restraint is appropriate. The appellant must demonstrate error. This is another way of saying that, because minds can differ over what is "reasonable" and "unreasonable", it will be more difficult for a party before this Court to show that an intermediate court has erred in reaching a conclusion that a requirement was "not reasonable". In such matters, a court of appeal – and especially this Court – exercises restraint out of respect for its own role and for any advantage that other courts enjoy in the 118 And by Callinan J who is of like opinion, see at [208]. However, because on the first issue Callinan J agrees with the joint reasons, the second issue does not strictly arise for his decision, as the joint reasons recognise. 119 Under the Constitution, s 73. See Eastman v The Queen (2000) 203 CLR 1 at 77 [234]-[236] and the cases there cited. 120 Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 879 [65]; 179 ALR 321 at 336- Kirby evaluation of the evidence (which in this case was very considerable)121. It was for the appellant to establish error on the part of the majority of the Court of Appeal122. This it failed to do. The appellant's arguments: Three reasons were raised by the appellant to support its submission that the Court of Appeal (and the Tribunal) had erred in concluding that the requirements which it imposed to gain access to the higher incremental scales, available only to permanent teachers, were not reasonable. These were: The statutory provisions argument: That the conclusion below failed to pay due regard to the statutory provisions applicable to "permanent" and "casual" teachers respectively; The geographical limitations argument: That it failed to give due weight to the geographical limitations applicable to teachers seeking appointment as permanent teachers; and The industrial relations argument: That it failed properly to acknowledge the existence of the relevant enterprise agreement (and later industrial award) which provided the differentiated scale of salaries in an industrial relations environment that rendered alteration of relativities (as by the payment of over-award salaries to some but not all teachers) inconvenient, disruptive and therefore "not reasonable". I will take these arguments in turn. The statutory provisions argument: It is true that the TS Act draws a distinction between the employment of "officers"123 and "temporary employees". Thus, provision is made for the appointment of qualified persons to "permanent positions"124 and "... on a full-time, casual or part-time" basis125. Persons employed in the latter categories are to be appointed "for a period exceeding 12 months from the date of the appointment but the employment may be extended 121 cf Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492 at 493-494; 59 ALR 529 at 532-533. 122 Manley v Alexander (2005) 80 ALJR 413 at [14]; 223 ALR 228. 123 Defined in s 4 of that Act to mean (relevantly) a person employed in that Service other than a temporary employee. 124 TS Act, s 47. 125 TS Act, s 50(1). Kirby from time to time for a further period not exceeding 12 months on each occasion By s 71(1) of the TS Act, the Director-General may direct "the transfer of an officer from one position in the Teaching Service to another position in the Teaching Service" for which the officer is qualified. In the case of an "officer", that is, a permanent teacher, the Director-General is required to ensure concordance between the salary received and the work performed by that officer. In some circumstances, the Director-General may reduce the salary to the maximum determined as appropriate to the work performed by the officer127. Where an officer (that is, a permanent teacher) "refuses to comply with a direction … for the officer's removal from one position in the Teaching Service to another", the Director-General shall "unless satisfied that the officer had a valid and sufficient reason for so refusing", dismiss the officer from the Teaching Service128. Because s 54(1)(a) of the AD Act provides that nothing in that Act "renders unlawful anything done by a person if it was necessary for the person to do it in order to comply with a requirement of … any other Act, whether passed before or after [the AD Act]", the appellant submitted that the division contemplated by the TS Act, between (relevantly) permanent teachers and temporary (or casual) teachers, remained lawful. It did not, as such, oblige differentiation in salary between permanent and casual teachers. However, it afforded the relevant context for judging the requirements that flowed from these statute-based differences in the Teaching Service (including in respect of salary). The appellant also relied on s 89 of the TS Act restricting "officers" (that is, permanent teachers) from undertaking employment or commercial business activities without the written permission of the Director-General. The respondents accepted the differentiation between the status of permanent and casual teachers reflected in the several provisions of the TS Act. However, they submitted that, ultimately, these provisions were irrelevant to the "requirement" of which they complained. There was no "requirement" in the TS Act obliging differentiation between the remuneration paid to permanent and casual teachers for performing the same teaching duties. Nor was there any "requirement" in the TS Act forbidding the Department from affording access to the later stages of the salary incremental scale to long-term casual teachers. Nor did that Act prevent payment of over-award increments where they were 126 TS Act, s 50(5)(a). 127 TS Act, s 73(1)(b)(i). 128 TS Act, s 75. Kirby required, or suggested, by other provisions of the law. Upon such matters, the TS Act and other State legislation129 were totally silent. The respondents also pointed out that the cited provisions of the TS Act appearing to impose specific burdens on "officers", and hence on permanent teachers alone, were for the most part equally applicable, in practical terms, to temporary (casual) teachers. All casual appointments terminated at the end of the school year but could be terminated sooner. By offering a supply casual teacher a new position in a different school, in practical terms, the same power of transfer was achieved in such a case as in the case of an "officer". Similarly, the requirement for an officer to gain the Director-General's approval to engage in other employment, or commercial business activities, was not different in practical effect, in the case of casual teachers. The short-term character of their appointments exposed them to the risk of non-renewal if it should be discovered in additional employment or activities deemed that inappropriate by the Director-General. Moreover, the provisions of the TS Act governing breaches of discipline apply equally to officers and temporary employees, including supply casuals130 which, in this case, would include the respondents. they had engaged In evidence before the Tribunal, the statutory obligations, now so strongly relied on by the appellant, played no significant part. They were raised by the appellant for the first time in final submissions. This was doubtless because the principal witness for the Department, Ms Gray, explained in her evidence that, in practice, the recruitment and transfer of teaching staff, including of permanent teachers, was not conducted (as the provisions of the TS Act read in isolation might suggest) by peremptory assignment imposed by the Director-General unilaterally to suit departmental needs. Instead, it was conducted in accordance with a staffing agreement reached between the Department and the Teachers' Federation of New South Wales, an industrial organisation of employees. Against the background of the evidence concerning the actual deployment of teaching staff, both permanent and casual, it was therefore open to the Tribunal to conclude that the real, as distinct from the purely statutory, incidents of the employment of teachers by the Department were not as draconian as might appear131. 129 Such as the Public Sector Management Act 1988 (NSW). 130 TS Act, ss 83, 84, 85, 86, 87, 88, 89 and 90. 131 As to the reliance by the appellant on s 76 of the TS Act, which provides for retirement or transfer of "officers" through invalidity and incapacity (a provision not in terms applicable to temporary (casual) teaching staff), the respondents pointed out that the short-term appointments and common provisions with respect to discipline afforded ready means of dealing with a temporary employee in like circumstances. Kirby As pleaded, the appellant's complaint on this score was that the Tribunal had not taken the statutory provisions into account as a relevant consideration. This was the contention also pressed upon the Court of Appeal. Contrary to the appellant's submissions, the Court of Appeal did not ignore the statutory framework. In her reasons, Beazley JA accepted the statutory provisions but noted the practical arrangements, proved in the evidence and conceded by the appellant, under which the provisions "in their practical operation" were not as drastic "as the terms of the [TS Act] might indicate"132. Finally, like the majority in the Court of AppeaI, I would accept the respondents' argument that the statutory framework, including the differing legal incidents attached to permanent and temporary staff, is not sufficient to justify the substantial pay differential of 20% as between permanent teachers and supply casual teachers, effectively for work of the same value. As the settled approach to such questions in anti-discrimination law in Australia is one that addresses practicalities and not theoretical possibilities133, the approach of the majority of the Court of Appeal was correct. On the evidence, their conclusion on this issue is unassailable. The geographical limitations argument: This second argument appears to have arisen largely because of the misconception that the respondents' case involved a complaint that they had been denied permanency. In fact (in the way identified by Beazley JA in the Court of Appeal) it was rather that, being non- permanent teachers in circumstances where over-award payments were not made, the respondents were denied access to the higher increments of salary payable to permanent teachers for doing exactly the same work. In its submission to this Court, the appellant described the limitations that the several respondents had imposed on the schools to which they would accept permanent appointment. It suggested that these were explained on the basis of the "personal preferences" of those teachers. However, such a characterisation would not accurately describe the respondents' evidence before the Tribunal. That evidence indicated that the geographical limitations that the the consequence of having respondents nominated were substantially responsibilities for school-aged children and for providing domestic support to their husbands, often themselves engaged in the education sector. In respect of ten of the thirteen respondents, the evidence showed that they had worked for substantial periods as permanent teachers and then resigned these appointments 132 [2004] EOC ¶93-352 at 73,455 [30]. 133 Styles (1989) 23 FCR 251 at 258 per Bowen CJ and Gummow J; approved Waters (1991) 173 CLR 349 at 395-396. Kirby to bear and raise their children. When they returned to teaching duties they were obliged to reapply for permanency. However, they had to do this from the position of a mother with young children in schools, with husbands, who were themselves working, and with an established home to maintain. The limitations on the ability of the respondents to travel to geographically distant places were not, therefore, accurately described as a "personal" or "lifestyle" choice. They were not based on a whim or mere comfort considerations. They were part of an attribute of the respondents' family responsibilities that were significantly determined by their sex. As has been said in many cases, the focus of attention must be on the "requirement", the reasonableness of which is in question. Against the background of the evidence tendered at the trial, particularly that given by Ms Gray as to the practical attempts by the Department to accommodate the convenience and family circumstances of permanent teachers, it was well open to the Tribunal, and to the majority of the Court of Appeal, to find as they did. In other words, they were entitled to conclude that the unyielding imposition of an inflexible requirement of permanency, as a precondition to accessing the higher increments of the salary scale (in light of there being no over-award payments available to casual teachers like the respondents) was not a reasonable one. By imposing that "requirement" in the stated context, the Department, as employer, disabled itself from adjusting the salaries of casual teachers according to the actual value of their work. Other considerations included those to which They included the removal of indirect the AD Act was addressed. discrimination where it could be demonstrated (as here) that an inflexible requirement fell more heavily on women than on men. The industrial relations argument: I now reach the third and most arguable of the reasons advanced for the appellant to defend the reasonableness of the requirement that access to the later increments for salary increases, in the case of teaching staff, should depend upon appointment as a permanent teacher because this was what the industrial award provided. The appellant complained that the Tribunal, and the majority in the Court of Appeal, had paid insufficient, if any, attention to this consideration. It submitted that compliance by the Department with a formally adopted enterprise agreement or industrial award, determined by the relevant industrial tribunal after a thorough work-value assessment, was manifestly reasonable conduct on its part. Requiring conformity to its terms (including in respect of salary increments for casual teachers including supply casuals) was not therefore unreasonable. On the contrary, departure from such a provision would disturb industrial salary relativities, necessarily affect the salaries of male as well as female casual teachers and amount to an effective redetermination of work values in the payment of salaries to teachers by an anti-discrimination tribunal lacking the industrial expertise to perform that task. Kirby There is no doubt that disturbance of a calibrated scale of salary increments applicable to non-permanent (including supply casual) teachers would cause a measure of disruption and industrial uncertainty. As a matter of industrial reality, the payment of over-award salaries to supply casual teachers could probably not be confined to those who were female. Such payments would have to be made to the much smaller proportion of male supply casual teachers as well. This might, in turn, cause disturbance of previously supposed relativities between permanent and casual teachers, with the former demanding adjustment of their salaries to compensate them for any proved residual inconvenience caused by their unrestricted geographical assignability. Nevertheless, by the AD Act and by the authority of this Court, in judging questions of reasonableness, it is necessary to consider what is "reasonable in all the circumstances"134. This necessitates taking into account the financial implications of change, issues of efficiency and accommodation, as well as the justice of removing a requirement, compliance with which falls more heavily on members of one sex than the other135. Having regard to the purpose of the AD Act136, the discriminatory effect, on the one hand, against the reasons advanced in favour of the requirement or condition on the other"137. the decision-maker must "weigh the nature and extent of It is usually inconvenient, and sometimes costly, to change settled ways of doing things that, on closer examination, are found to be based on prejudice and unjust discrimination – direct or indirect – based on unlawful grounds. However, national and international developments, reflected in the AD Act, have adopted the high objective of correcting centuries of neglect, prejudice and injustice, attributable relevantly to differences, or supposed differences, based on the ground of sex138. These differences have existed notoriously in the context of employment and in the payment of benefits and salaries that differentiate between men and women doing what is substantially the same work, to the disadvantage of women. For example, the predominance of women in part-time work generally exists in countries beyond Australia and well outside the teaching profession. Thus, differentiation of this kind has been established in many cases before the 134 Waters (1991) 173 CLR 349 at 371, 379. 135 Waters (1991) 173 CLR 349 at 383-384. 136 cf AD Act, Long Title. 137 Styles (1989) 23 FCR 251 at 263. 138 Purvis (2003) 217 CLR 92 at 103-104 [18]-[19]. Kirby European Court of Justice where claims of indirect discrimination have been upheld139. Such claims have been brought before that Court complaining that the arrangements affecting the work of employees have departed from the principle of European law that the same work or work of equal value must be remunerated in the same way regardless of the sex of the worker. This principle was originally contained in Art 119 of the Treaty Establishing the European Community140. It is now contained in Art 141 of the Treaty on European Union141. This legal basis and its expression and purpose are sufficiently similar to make it useful to take notice of how the European Court of Justice has approached the issue. In Brunnhofer v Bank der Österreichischen Postsparkasse AG, the European Court of Justice emphasised that, whilst different classifications of work were to be considered, they could not be determinative of whether the work performed was in fact different. This was a matter that the Court had to decide on the basis of evidence. Under European law, differences in the remuneration generally paid to women as against that generally paid to men were long treated as presumptively contrary to Art 119 of the European Community Treaty. The position is to the contrary only if the difference in treatment is justified by objective factors unrelated to any discrimination based on sex142. In Australia, it would be wrong in law, and contrary to the purpose of the AD Act and like statutes, to construe the ameliorative provisions narrowly143. If this were done by courts, they would become the undoers and destroyers of the 139 See eg Case 170/84 Bilka-Kaufhaus GmbH v von Hartz [1986] ECR 1607; Rinner- Kühn v FWW Spezial-Gebäudereinigung GmbH and Co KG [1993] 2 CMLR 932. 140 Treaty Establishing the European Community, opened for signature 25 March 1957; OJ C 325 of 24 December 2002 (entered into force 1 January 1958). 141 Treaty on European Union, opened for signature 7 February 1992; OJ C 325 of 24 December 2002 (entered into force 1 November 1993). See Brunnhofer v Bank der Österreichischen Postsparkasse AG [2001] 3 CMLR 9 at 173. 142 See Case 129/27 Macarthys Ltd v Smith [1980] ECR 1275; Case C-243/95 Hill and Stapleton v Revenue Commissioners and Department of Finance [1998] ECR I- 143 Gifford v Strang Patrick (2003) 214 CLR 269 at 299 [81]; Qantas Airways Ltd v Christie (1998) 193 CLR 280 at 332 [152]; IW v City of Perth (1997) 191 CLR 1 at 12, referring to West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 631; Coburn v Human Rights Commission [1994] 3 NZLR 323 at 333; Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 260. Kirby remedies provided by such legislation144. Where a requirement, inherited from the past, is discriminatory on the ground of sex, and is not reasonable, the decision-maker must be ready to intervene, lest neglect and inaction "keep alive the effects of past discrimination on the ground of sex"145, a wrong which anti- discrimination legislation is designed to redress. Remembering these considerations of approach, laid down in earlier authority of this Court, I will now explain why, notwithstanding a measure of disruption that departure from the terms of the applicable industrial award would cause, the requirement complained of, as contained in the award, was not "reasonable" by the time it came, in this case, under the scrutiny of the Tribunal. I will also explain why there was no error in the Tribunal treating it as unlawful discrimination and in the Court of Appeal affirming that conclusion. The starting point for this exposition is the recognition of the different statutory purposes of the AD Act and the industrial relations law (and its successors) under which enterprise agreements and industrial awards were made in New South Wales. Industrial relations laws pursue the laudable objectives of industrial fairness, efficiency and peace. On the other hand, the AD Act has more specific targets. These are addressed to various forms of discrimination that can arise in society, including in awards and enterprise agreements. The existence of legitimate complaints of discrimination in the industrial context was the justification given by the State Attorney-General146 when introducing the amendment to the AD Act in 1994 that deleted the exception that had previously existed, under which an industrial award was removed from the protected category of legal instruments, compliance with which was excluded from conformity with the AD Act147. As a consequence of the amendment so effected, it was provided, after 1994, as an exception to acts done with relevant immunity under statutory and other authority, excused from compliance with the AD Act, that henceforth this would no longer include "an order or award of a 144 Purvis (2003) 217 CLR 92 at 103-104 [19]; cf IW v City of Perth (1997) 191 CLR 145 Banovic (1989) 168 CLR 165 at 181. This is precisely the idea expressed in Mabo v Queensland [No 2] (1992) 175 CLR 1, cited at the start of these reasons. See above at fn 38. 146 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 4 May 147 By the Anti-Discrimination (Amendment) Act 1994 (NSW), s 3 and Sched 4, cl 23. Kirby court or tribunal having power to fix minimum wages and other terms and conditions of employment"148. In the second reading speech proposing the foregoing amendments to the AD Act, the Attorney-General explained that between 1987 and 1989 the Women's Directorate of the Department of Industrial Relations and Employment in New South Wales had reviewed discriminatory provisions in State awards. Recommendations on 300 awards in nine industries had been referred to the relevant parties for action. In removing the exemption from the AD Act of awards and enterprise agreements, the Attorney-General stated that a one year period of grace existed "within which discriminatory practices in existing awards and agreements will have to be rectified, before the amendment comes into operation"149. Thereafter, the AD Act was intended to have its own direct operation on uncorrected provisions of awards and agreements shown to involve direct or indirect discrimination. The place to make that demonstration good was the venue chosen by the respondents on the faith of the amendment adopted by Parliament following the Attorney-General's explanation, namely the Tribunal established by the AD Act. The purpose of Parliament in enacting this reform was clearly (and was stated to be) to bring award provisions in the State of New South Wales within the jurisdiction of the tribunals and courts having functions under the AD Act. Provision was thus expressly made under that Act for notification to the Industrial Relations Commission of New South Wales of orders made by the Tribunal that affect industrial instruments within the meaning of the Industrial Relations Act 1996 (NSW)150. It is clear, therefore, that the Parliament of New South Wales contemplated orders by the Tribunal that would have the effect of modifying or varying industrial instruments, earlier made. Such were the orders made by the Tribunal in this case. It is easy enough, in the detailed operations of an industrial tribunal, to overlook principles of anti-discrimination law, although such principles are now themselves commonly included in the mandate of such tribunals and, if not, in 148 AD Act, s 54(1)(d). 149 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 4 May 150 See AD Act, s 109: "If the Tribunal makes an order that affects an industrial instrument within the meaning of the Industrial Relations Act 1996, it must give notice in writing to the President of the Industrial Relations Commission of the order as soon as practicable after the order is made". Kirby the reasoning that their members adopt151. Certainly, the fact that the incremental scale for casual teachers in New South Wales was the subject of a work-value determination by Bauer J in the Industrial Commission of New South Wales152 was a consideration to be addressed, and given weight, as part of the circumstances to which regard was required in deciding whether a "requirement", reflected in that award, was or was not "reasonable". However, for several reasons, legal and factual, these determinations could not control the decisions of the tribunals or courts having jurisdiction under the AD Act. On the contrary, the Industrial Relations Act makes it plain that the provisions of the AD Act apply to award-based conditions of employment153. Moreover, a scrutiny of the work value decision made by Bauer J suggests that his Honour's approach to the work value of casual teachers did not specifically address the class of casual teachers identified by the respondents, namely long- term supply casual teachers whose work in a particular school passed a threshold of time service and who were not, for that reason, to be assimilated with short- term casuals, relief and other purely temporary employees154. In addition to this, whilst the AD Act was in force at the time of Bauer J's determination of the salaries of casual teachers in New South Wales public schools, understandably, because of the provisions of the AD Act (then existing), no specific attention was given by Bauer J or anyone else to the arguments based on discrimination such as were placed before the Tribunal in the present case. In these circumstances, it is scarcely surprising that Bauer J (and the Industrial Commission in Court Session on appeal) did not specifically address such issues. It follows that there is no necessary contradiction between a determination of the salaries of casual teachers by an award made under industrial legislation and a determination based on a finding of sex discrimination made under the AD Act. Each tribunal was simply performing its own functions, as those functions stood at the time of their respective decisions. 151 Kirby, "Human Rights and Industrial Relations", (2002) 44 Journal of Industrial Relations 562 at 566; Kirby, "Industrial Conciliation and Arbitration in Australia – A Centenary Reflection", (2004) 17 Australian Journal of Labour Law 229 at 241. 152 In re Crown Teachers (Casual) Award [1983] AR 672. The award was upheld and an appeal against it was dismissed by the Industrial Commission in Court Session. See (1984) 11 IR 196. 153 ss 34, 35, 167 and 169. 154 See In re Crown Teachers (Casual) Award [1983] AR 672 at 711-712. Kirby Interactive dialogue between the Tribunal established by the AD Act and industrial tribunals was expressly contemplated by the law of New South Wales155. In providing relief against the discrimination found by it, the Tribunal, in this case, did no more than to discharge its statutory functions as the AD Act contemplated. The fact that doing so would affect, and disturb, an industrial award (or enterprise agreement) was no reason to stay its hand if (as was the case) indirect discrimination on the ground of sex was proved by the respondents. Yet can it be said that the Tribunal (and the majority of the Court of Appeal) failed to pay any, or sufficient, attention to the disruption which the decision in favour of the respondents would necessitate, having regard to the logical consequences of such a decision for the salaries of non-female supply casual teachers, for the relativities of the salaries of such teachers with those paid to permanent teachers and the resulting industrial uncertainty more generally? Were the respondents simply attempting, as the appellant argued, in a non- industrial tribunal, to reopen the work-value assessment made in 1984 in the Industrial Relations Commission, to which their application ought more properly to be made? Should the respondents be obliged, in effect, by the dismissal of their claims under the AD Act, to return to the Industrial Relations Commission as the proper venue for such complaints? There are several answers to these propositions. First, if the respondents can establish unlawful discrimination under the AD Act, there is no legal requirement for them to proceed elsewhere than before the Tribunal appointed by that Act and empowered by Parliament to give relief where unlawful discrimination, including in an industrial instrument, is proved. The respondents were entitled to redress under the AD Act. Nothing in that Act barred them from so proceeding. Secondly, as individuals, the respondents would appear to have no right to initiate redress, or to reopen an enterprise agreement or award negotiated between other parties, namely the Teachers' Federation and the Department156. The Federation played no part at any stage in the present proceedings. Why this was so is undisclosed. An inference might be drawn that the Federation did not specifically support the respondents157. The respondents may not have been members of the Federation. In any case, defence of the respondents from a 155 cf AD Act, s 109. 156 cf Industrial Relations Act 1996 (NSW), s 11(2). 157 On the other hand it is recorded in the reasons of Bauer J, and in the reasons of the Court Session, that the Teachers' Federation had advocated greater equality in the treatment of casual and permanent teachers. See In re Crown Teachers (Casual) Award [1983] AR 672 at 711-712. Kirby "requirement which is not reasonable" is not dependent on the opinion of the Federation or anyone else. By the AD Act, the respondents have their individual industrial entitlements at organisations may be set in their ways. They may be resistant to demands by individuals or minorities who challenge past approaches and assumptions. they have asserted. Sometimes, law, which When the interaction between the Equal Opportunity Tribunal and the State industrial tribunal, specifically contemplated after 1994, is taken into account, the notion that commended itself to Hodgson JA, that it would be unreasonable for the former tribunal to make decisions affecting industrial relations, cannot provide a blanket excuse for inaction in the face of an established case otherwise enlivening the AD Act158. The Parliament faced up to such interaction. It specifically amended the AD Act to permit it to occur and to provide for inter-tribunal communication about the result. Thirdly, while the award may explain why, as a matter of historical fact or industrial practice, the pay differentials existed (and therefore why the requirement was imposed), this is not the same as proving that the requirement is "reasonable" within the terms of the Act. The purpose of anti-discrimination legislation is to change the status quo and to eliminate endemic discriminatory practices. An approach which allows an employer to prove reasonableness simply by pointing to the current system and the features that explain how that system has developed would render anti-discrimination laws ineffective. To demonstrate that a discriminatory requirement is "reasonable" requires more than an explanation of why, as a matter of practice and history, such a requirement exists. Thus, indirect discrimination is not concerned with an employer's intentions or motives in applying a particular policy, but only with the outcome of its application159. The focus is on the requirement itself. It is not, as such, on the conduct of the respondent in imposing the requirement. In this case, the award and the statutory framework explain why, historically and as a matter of industrial practice, the Department imposed the requirement of permanency to access the higher salary scales. The considerations are indeed historical. They are not unusual in cases of indirect discrimination. However, they do not provide sufficient justification for the requirement itself, which has an established, indirectly discriminatory impact on women that must be eliminated and redressed, as the Tribunal and the majority in the Court of Appeal correctly found. 158 [2004] EOC ¶93-352 at 73,482 [202]. 159 Styles (1989) 23 FCR 251 at 258; Banovic (1989) 168 CLR 165 at 176; Perera v Civil Service Commission (No 2) [1983] ICR 428 at 436. Kirby Analogous industrial cases: There are at least two authorities that illustrate the way in which anti-discrimination law, and specifically the AD Act, may operate despite statutory provisions and industrial practices that appear to support the contrary conclusion. One such case was Allders International Pty Ltd v Anstee160. That case involved a claim against an employer on the basis of its retirement policy which required female employees to retire upon attaining the age of 60 years, whilst requiring male employees to retire upon attaining the age of 65 years. The evidence showed that the employment policy had been formulated years earlier to give effect to the then general age criteria operative in respect of aged pensions and prescribed by s 21 of the Social Security Act 1947 (Cth). Notwithstanding such federal statutory provisions, which had led to a widespread industrial practice throughout Australia, similar to that followed by the employer in that case, the Supreme Court of New South Wales found a breach of the AD Act. The resulting disruption, such as might be caused by giving effect to the AD Act, cut no ice with Lee J161: "[It is not] to the point that, if women like men are entitled in law to work on till sixty-five … the Commonwealth might in due course see no continuing reason to give women the benefits of a pension at sixty years of age. If this occurred, many women might well consider that anti- discrimination laws ostensibly intended to advance their interests had operated disadvantageously to their interests. But such considerations are irrelevant and of course wholly speculative … [They] cannot counteract the meaning to be attached to the clear words in the Statute … The Act is not concerned to deal with what might be called the ultimate interests of either or both sexes looked at objectively – it is concerned only to fasten onto the discrimination and to eradicate it." Secondly, if ever there was an industrial principle well established in Australian employment practice (and sometimes even reflected in industrial awards) it was the rule of "gate seniority" under which, in a case of retrenchment, the criterion "last on, first off" would be applied162. However, when this well established principle was put into effect by Australian Iron & Steel Pty Ltd, it occasioned a clear instance of indirect discrimination on the ground of sex. Such discrimination arose because the recruitment by the employer of female staff in substantial numbers had only occurred in more recent years. The traditional 160 (1986) 5 NSWLR 47. 161 (1985) 5 NSWLR 47 at 60. 162 Banovic (1989) 168 CLR 165 at 170. Kirby industrial practice, if given effect, would therefore fall more heavily on women than on men. This Court affirmed the decisions of the Tribunal and of the Court of Appeal of New South Wales upholding the female employees' complaints under the AD Act provisions, equivalent to those invoked in the present case. In disposing of the appeal, this Court was not bothered in the slightest that its decision involved the Equal Opportunity Tribunal intruding into a traditional domain of industrial tribunals. Nor was it concerned that its decision might cause disturbance of industrial practices long established and well entrenched. Sometimes, in the operation of anti-discrimination law, disruption, a period of inconvenience and disturbance of settled ways is precisely what should occur and what the AD Act, and statutes like it, intend to occur. Nor in that case was this Court persuaded that observance of the "last on, first off" method of retrenchment was "reasonable", having regard to the circumstances of the case. It was held that it was open to the Tribunal to find that the condition or requirement was not reasonable163. As Dawson J explained164: "The requirement imposed in this case was unreasonable because in the particular circumstances it repeated the discriminatory effect of the prior recruitment practice." The same can be said in the circumstances of the present case. The impugned "requirement" contained in the applicable industrial award, limiting access to higher increments in the case of long-term casual teachers because they were not permanent and denying such teachers equivalent, compensatory over- award payments as necessary to avoid discrimination, was "not reasonable". The fact that eliminating this "requirement" would cause disturbance of present relativities and might propel a fresh consideration of the award, in the light of the Tribunal's decision under the AD Act, afforded no reason for denying relief under that Act, where such relief was otherwise warranted. It is natural for the legal mind to thirst for settled ways, including by obedience to industrial awards. However, it must be recognised that laws such as the AD Act are designedly disruptive to some extent. They challenge settled ways because those ways are all too often infused by inequalities and stereotypes 163 (1989) 168 CLR 165 at 181. 164 (1989) 168 CLR 165 at 191. Kirby either expressly provided for or implicitly having that effect. Anti-discrimination laws "fasten onto the discrimination and to eradicate it"165. It was therefore open to the Tribunal, and to the majority in the Court of Appeal, to conclude in this case that the "requirement or condition" imposed by the Department (including as to salary), governing the employment of long-term supply casual teachers such as the respondents, was "not reasonable". The existence and the terms of the industrial award, relied on by the appellant to establish the contrary was unpersuasive. In a strict appeal especially, this Court should not interfere with this finding. No error is shown that would authorise that course. The second issue – conclusion: The appeal to this Court on the second issue also fails. The appellant was not denied an appeal on the merits The third issue: The appellant complained that the decision of the majority of the Court of Appeal had effectively deprived it of its success before the Appeal Panel. Specifically, it alleged that the Court of Appeal's orders had deprived it of the entitlement to seek leave to proceed with an appeal against the Tribunal's decision on the merits166. This complaint is without foundation. It was open to the Court of Appeal in the circumstances, to conclude that the appellant had enjoyed the full opportunity of an appeal on the merits before the Appeal Panel. Further submissions were procured by the Court of Appeal, after its hearing, on whether the appellant had properly kept alive its merits appeal and, if so, whether it had clearly expressed this fact before the Appeal Panel. In so far as the suggested "appeal on the merits" went beyond the debate between the parties as to the reasonableness of the requirement relied upon by the appellant to defeat the respondents' claims, this was not made clear at the proper time. In the end, counsel for the appellant invited the Court of Appeal to decide all matters as best it could on the record available to it. This the Court of Appeal did. The majority in the Court of Appeal concluded that, because of the way it had presented its case before the Tribunal, the appellant was not entitled to succeed on any remaining merits issues167. I am unconvinced that, in reaching this opinion, the majority of the Court of Appeal erred. In particular, having 165 Allders (1988) 5 NSWLR 47 at 60. See above at [189] of these reasons. 166 AD Act, s 115. 167 [2004] EOC ¶93-352 at 73,474 [147]. Kirby regard to the grossly delayed resolution of the respondents' claims and the multiple grounds of contest (many now abandoned), I am unpersuaded that any ultimate injustice was inflicted on the appellant by the course adopted by the majority of the Court of Appeal. Still further delay, by remitting these proceedings once again to the Appeal Panel, in order for it to consider whether to grant leave to reopen the merits of the case, would have imposed a most serious injustice on the respondents. The majority of the Court of Appeal was right to bring the saga of this litigation to a close. The third issue – conclusion: The complaint on the third issue also fails. In consequence, it is my opinion that the appellant's appeal has wholly failed. Orders No separate ground of appeal challenged the form and contents of the individual orders made by the Court of Appeal in favour of the several respondents for the unlawful discrimination against them on the grounds of sex established in their respective cases. This Court should therefore affirm the orders of the Court of Appeal. The appeal should be dismissed with costs. Callinan CALLINAN J. I agree with the Chief Justice that the conduct of the appellant with respect to the respondents, including the remuneration of them, was reasonable within the meaning of s 24(1)(b) of the Anti-Discrimination Act 1977 (NSW) ("the Act"). I would only add that I would have also brought into account, not as a decisive, but as another relevant matter in making that assessment, the observations of the Industrial Commission of New South Wales (Bauer J) in its judgment of 14 September 1983168, which led to the making of the Crown Employees (Teachers and Related Employees) Salaries and Condition Award, the precursor to the industrial instrument, the Teachers and Related Employees Enterprise Agreement, which governed the conditions of the respondents during part at least of the period in respect of which they make their claim: "The loading of casual rates in other awards is based upon the accepted view that the casual work is of at least equal value as the work of the permanent employee. I have expressed the view that this is not a correct conclusion for the work of casual teachers. Allowance therefore has to be made for the lesser value of the work being performed by the casuals in these circumstances. It is in this factor that I find the method of calculating the daily rate results in a loading in the rate of casuals." His Honour's observation could not bind the Tribunal, the Panel and the Court of Appeal of New South Wales in discharging the duty that each had to discharge under the Act, but it was certainly not irrelevant to the issue of reasonableness, that an experienced industrial tribunal, after a full exploration of the respective obligations and entitlements of the various classes of teachers, concluded that casual teaching work was not of equal value to permanent teaching work undertaken on behalf of the State, which, for a long time, has played an important role in educating children throughout the length and breadth of the expansive State of New South Wales169. The requirement or condition Unlike the Chief Justice I would not accept the respondents' case on the requirement issue. I agree with Gummow, Hayne and Crennan JJ that the appellant did not require the respondents to "comply with a requirement or condition" to obtain appointment to a permanent position with the appellant's Education Department. I agree generally with the reasons of their Honours in reaching this conclusion. 168 In re Crown Teachers (Casual) Award [1983] AR 672 at 712. 169 See Purvis v New South Wales (2003) 217 CLR 92 at 172-173 [266] for a brief legislative history of the State's role in education. Callinan There is this also. Their Honours make the point that: "There is an element of incongruity in describing as a requirement or condition, compliance with which is required in the terms and conditions of employment as a casual teacher, a requirement that in order to access higher limits of salary, one must cease to be a casual teacher and obtain permanent appointment." (Original emphasis) I quite agree. It is an incongruity which stems from the respondents' formulation of the requirement or condition, which in my opinion distorts the true factual position. The appellant relevantly required nothing of the respondents. It was the respondents who stipulated a condition, or, to put it another way, sought to impose a condition in respect of their employment, that their employment as teachers be confined to particular locations. It was from that, their stipulation, and no condition imposed by the appellant, that the differential in remuneration flowed. The Tribunal and the courts are not bound by an applicant's formulation of a condition or a requirement. It is their duty to ascertain the actual position, including whether an (alleged) perpetrator has truly sought to impose, or permits indirectly, the imposition of a requirement or a condition which is discriminatory, and not reasonable within the meaning of the Act. I would allow the appeal and join in the orders proposed by Gummow, 210 HEYDON J. I agree with the orders proposed in the joint reasons. On the assumption that the State had "require[d]" the respondents "to comply with a requirement or condition" of the type set out in s 24(1)(b) of the Anti- Discrimination Act 1977 (NSW), I agree with the conclusion of Hodgson JA in the New South Wales Court of Appeal that the respondents have not demonstrated that the conduct of the State was not reasonable, and with the reasons he gave for that conclusion170. In those circumstances it is unnecessary to decide whether the State's conduct could in fact be described as having required the respondents to comply with a requirement or condition of a s 24(1)(b) type. 170 Amery v State of New South Wales (Director-General NSW Department of Education and Training) [2004] EOC ¶93,352, particularly at 73,479 [185], 73,481 [193] and 73,482 [202].

HIGH COURT OF AUSTRALIA AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION APPELLANT AND LANEPOINT ENTERPRISES PTY LTD (RECEIVERS AND MANAGERS APPOINTED) RESPONDENT Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (Receivers and Managers Appointed) [2011] HCA 18 1 June 2011 ORDER Appeal allowed with costs. Set aside: paragraphs 1, 2, 3 and 4 of the order of the Full Court of the Federal Court dated 24 May 2010; and the further order of the Full Court as to costs dated 9 September 2010, as varied by the order of Siopis J dated 1 October 2010; and in place thereof order that the appeal by Lanepoint Enterprises Pty Ltd to the Full Court be dismissed with costs. On appeal from the Federal Court of Australia Representation J Gageler SC, Solicitor-General of the Commonwealth with P D Crutchfield SC and O Bigos for the appellant (instructed by Australian Securities and Investments Commission) G R Donaldson SC with A J Papamatheos for the respondent (instructed by Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (Receivers and Managers Appointed) Corporations law – Winding up in insolvency – Application for winding up by Australian Securities and Investments Commission – Where respondent presumed insolvent under s 459C(2)(c) of Corporations Act 2001 (Cth) ("Act") – Where principle applying under former companies legislation that company will not be wound up where debt subject of bona fide dispute on substantial ground – Whether principle applicable to Act in light of presumption of insolvency – Whether respondent solvent – Where primary judge did not accept respondent's explanation for alterations to accounts and no further evidence relevant to solvency could be identified by respondent – Whether primary judge's exercise of discretion miscarried in refusing to dismiss or stay proceedings – Whether necessary to join other parties. Words and phrases – "except so far as the contrary is proved". Corporations Act 2001 (Cth), ss 459A, 459C, 459P, 467. GUMMOW, HEYDON, CRENNAN, KIEFEL AND BELL JJ. The respondent, Lanepoint Enterprises Pty Ltd ("Lanepoint"), is a company within the Westpoint Group of companies and in 2005 was a developer of property. Its operations were financed by loans from Suncorp-Metway Limited ("Suncorp") and from Westpoint Management Ltd ("Westpoint Management"), which was the responsible entity for a managed investment scheme, the Westpoint Income Fund ("the WIF"). The loans were secured by floating charges over the assets of Lanepoint. On 25 October 2005 the Australian Securities and Investments Commission ("ASIC") issued the first of two interim stop orders, which prevented Westpoint Management from raising funds for the WIF. The final stop order was issued on 23 November 2005. On 9 February 2006 a provisional liquidator was appointed to Westpoint Management. On 3 March 2006 Suncorp appointed receivers and managers to Lanepoint. The provisional liquidator of Westpoint Management did likewise on 9 March 2006. On 2 June 2006 ASIC applied, pursuant to s 459P of the Corporations Act 2001 (Cth) ("the Act"), to the Federal Court for orders that it have leave to apply for the winding up of Lanepoint in insolvency, for an order that Lanepoint be wound up and for the appointment of liquidators on the ground of Lanepoint's insolvency. In its application ASIC relied upon a statutory presumption of insolvency created by s 459C(2)(c) of the Act. Section 459C appears in Pt 5.4 of the Act, which is entitled "Winding up in insolvency". Part 5.4 was introduced on 23 June 19931 and, together with Pts 5.4A and 5.4B, replaced the existing Pt 5.4 which dealt with orders for the winding up of companies. The provisions for winding up in insolvency which took effect in 1993 effected some significant changes. The statutory presumption of insolvency provided in s 459C was one. It is an important element of the scheme of Pt 5.42 and assumes importance on this appeal. The section has effect, inter alia, for the purposes of an application to wind up a company in insolvency Into the then Corporations Law, on the commencement of the Corporate Law Reform Act 1992 (Cth). 2 David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 278 per Gummow J; [1995] HCA 43. Crennan Bell brought under s 459P and an application for leave under that section3. It provides in relevant part: "(2) The Court must presume that the company is insolvent if, during or after the 3 months ending on the day when the application was made: a receiver, or receiver and manager, of property of the company was appointed under a power contained in an instrument relating to a floating charge on such property;". Sub-section (3) of s 459C provides that the presumption for which the section provides "operates except so far as the contrary is proved for the purposes of the application." Lanepoint filed a notice of opposition to ASIC's application. The ground given for that opposition was that Lanepoint was solvent. If it was able to satisfy the Court of that fact, the statutory presumption would be rebutted. It was common ground at the hearing of ASIC's application that Lanepoint's assets amounted to $5,729,837. Its liabilities, by way of tax and certain company loans, were of the order of $1.7 million. By the time of the hearing the debt due to Suncorp had been repaid but the liquidator of Westpoint Management had not recovered the debt to the WIF. The extent of that debt was the matter critical to the issue of Lanepoint's solvency. The receivers and managers of Lanepoint had expressed the opinion that the amount due by Lanepoint to the WIF, at 9 March 2006, was $6,607,978.41 and the liquidator of Westpoint Management agreed. In concluding that Lanepoint owed that amount to the WIF, the receivers and managers did not accept as correct certain changes which had been made to the accounts of Lanepoint and the WIF and which had the effect of reducing Lanepoint's indebtedness to the WIF by some $5 million. One change made to the accounts was referred to in the proceedings as the "Kingdream transfer" and the other, which resulted from two "round robin" transactions, the "$2M run-around". Lanepoint sought to establish that the changes reflected the true 3 Corporations Act 2001 (Cth), s 459C(1). Crennan Bell position, which is to say that the transactions in question were bona fide and effective, and that it was therefore solvent. The hearing of evidence took place over three days in 2008 and Gilmour J made the orders sought by ASIC on 14 May 20094. His Honour did not accept the explanation proffered by the witnesses called by Lanepoint, as to why the original records of monies advanced by the WIF to Lanepoint required correction. His Honour concluded that "Lanepoint has failed to establish its solvency and, thereby, rebut the statutory presumption. It is not able to pay its debts as they fall due and payable."5 A majority of a Full Court of the Federal Court (North and Siopis JJ, Buchanan J dissenting) allowed an appeal from his Honour's decision, set aside the orders made by his Honour and ordered a stay of ASIC's application "pending the determination of proceedings brought by the liquidator of Westpoint Management to determine the extent of the WIF liability."6 Such proceedings had not in fact been brought. Their Honours must be taken to refer to proceedings yet to be initiated for that purpose by the liquidator, although there was no suggestion that the liquidator had the intention of doing so. No error was identified by the majority in the findings made by Gilmour J as to the explanation for the changes to the accounts or as to his non-acceptance of Lanepoint's witnesses. The majority accepted two related contentions put by Lanepoint: that ASIC's winding up application was an inappropriate vehicle for the determination of questions as to Lanepoint's insolvency7; and that the discretion exercised by Gilmour J, as to whether to stay or dismiss the proceedings, had miscarried8. 4 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52. 5 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 65 [93]. 6 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 499 [75]. 7 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 493 [36] and 497 [61]-[62]. 8 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 497 [61]-[62]. Crennan Bell The starting point in the reasons of the majority was that it was well established prior to the changes effected in 1993 "that ordinarily a company would not be wound-up on the basis of a disputed debt."9 Their Honours considered that that principle was maintained after the coming into force of the statutory amendments in 1993 and that the exercise of the court's discretion: "is also to be informed by the legislative policy manifest by the reforms introduced by the Corporate Law Reform Act to the effect that where a disputed debt is relied upon as being demonstrative of insolvency, that dispute should be resolved outside of the winding-up process."10 It may be observed at once that their Honours do not appear to distinguish between ASIC and a creditor applying for an order to wind up in insolvency. Their Honours treat the question about the extent of Lanepoint's liability to the WIF as analogous to a dispute about the amount of a debt owed by a company to a creditor who is applying to wind up the company. The "policy" to which their Honours refer must therefore relate to the procedures provided by the 1993 amendments for the resolution of disputes concerning statutory demands by creditors. As will be explained in these reasons, the approach taken by their Honours to the status of ASIC and as to principles affecting the determination of its application is not correct. However, that approach necessitates consideration of the position of creditors as applicants for winding up in insolvency in the current statutory scheme. For present purposes it may be further observed that their Honours considered that the current statutory scheme does not inhibit the application of principles which informed the exercise of the court's discretion in the past. Attention is therefore directed to those principles and the statutory context in which they were applied. Disputed debts prior to the 1993 amendments The relevant provisions of the Corporations Law, as it existed prior to the 1993 amendments, were in relevant respects the same as those of the previous Companies Code. The then Australian Securities Commission could bring 9 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 493 [37]. 10 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 497 [59]. Crennan Bell proceedings for the winding up of a company, in certain circumstances11. A circumstance which permitted an order for the winding up of a company to be made was where the company was "unable to pay its debts"12. No further definition of insolvency was provided. The most common method used by creditors to establish the fact that a company was unable to pay its debts was the "statutory demand" procedure13. The procedure did not require a creditor to have a final judgment for the sum demanded. If the sum the subject of the demand was not paid within the prescribed period, or the company failed otherwise to secure or compound the sum to the reasonable satisfaction of the creditor, the company was "deemed to be unable to pay its debts"14. Non-compliance with the demand did not always result in the presumption applying. If the company proved that it had a genuine dispute, on a substantial ground, concerning the existence or amount of the debt, failure to comply with the notice or demand was not considered to give rise to a presumption that the company was unable to pay its debts. In the third edition (1987) of McPherson's The Law of Company Liquidation it is stated that the existence of such a dispute explained why the demand was not complied with "and so rebuts the presumption of insolvency which would otherwise arise."15 Where a creditor sought to prove a company's insolvency by relying upon a debt owed by it, but without resort to the procedure of statutory demand, the court, as a general principle, would not order winding up where a debt was bona fide disputed upon some substantial ground16. The principle informed the court's discretion whether to dismiss the application. McPherson says that, although the principle may have had some basis in the court's concerns as to the status of the applicant for winding up as a creditor where there was a genuine dispute about 11 Corporations Law, s 462(2)(e); Companies Code, s 363(1)(e). 12 Corporations Law, s 460(1); Companies Code, s 364(1)(e). 13 Corporations Law, s 460(2)(a); Companies Code, s 364(2)(a). 14 Corporations Law, s 460(2)(a); Companies Code, s 364(2)(a). 15 McPherson, The Law of Company Liquidation, 3rd ed (1987) at 63-64; see also at 53 (referencing the Companies Code). 16 Re KL Tractors Ltd [1954] VLR 505 at 512; McPherson, The Law of Company Liquidation, 3rd ed (1987) at 63. Crennan Bell the debt, the principal reason for it was that the court would not permit an application for winding up to be used for the improper purpose of compelling a solvent company to pay a disputed debt17. It followed that it had no application in the case of an insolvent company. The power given to the court to order a winding up of a company was expressed in permissive terms18, as it is now. Subject to two express limitations, the court could dismiss the application19. And the court might refuse to make an order for winding up even if a creditor proved a debt, although the discretion to do so was regarded as one to be exercised according to defined principles20. More pertinent to the present case was the practice of the court to dismiss an application for winding up where a debt was the subject of a genuine dispute on substantial grounds21. The practice is explained by the principles discussed above. An order for dismissal would not be made in the case of an insolvent company. The court also had the power to adjourn the hearing or to make such other order as it thought fit22. An "other order" might include a stay of the proceedings. The power to adjourn or to order a stay was sometimes exercised in order to allow a debt to be proved, or not, in other proceedings. The question which often arose for the court in winding up proceedings was the extent to which it should entertain questions about the bona fide nature of the dispute, and the debt the subject of it, within those proceedings. In In re QBS Pty Ltd23 Gibbs J said that in some cases it may be easy to determine the question whether the dispute was bona fide; in others that question could not be determined without determining the merits of the dispute itself. His Honour said: 17 McPherson, The Law of Company Liquidation, 3rd ed (1987) at 63. 18 Corporations Law, s 460(1); Companies Code, s 364(1). 19 Corporations Law, s 467(1); Companies Code, s 367(1). 20 McPherson, The Law of Company Liquidation, 3rd ed (1987) at 61-62. 21 McPherson, The Law of Company Liquidation, 3rd ed (1987) at 67. 22 Corporations Law, s 467(1); Companies Code, s 367(1). 23 [1967] Qd R 218 at 225. Crennan Bell "In some such cases convenience may require that the court decide the question whether or not a debt exists, but in other such cases it may appear better to allow that question to be determined in other proceedings before the petition for winding up is heard." The question necessary to be determined in In re QBS Pty Ltd was whether payments made by the company were preferences. Gibbs J considered that that question could conveniently be decided in proceedings which had been brought by the petitioner for that purpose and which were pending. To that end his Honour made an order staying the proceedings on the petition until the determination of the other proceedings. By contrast, in Brinds Ltd v Offshore Oil NL24 the Privy Council (which cited the observations of Gibbs J in In re QBS Pty Ltd with approval25) considered that, having regard to the nature of the dispute and the course the proceedings took, it was almost inevitable that the trial judge should determine the question which there arose, namely whether the debt was repayable on demand or only on 12 months notice. The intermediate appeal court in that case had observed that no evidence, in addition to that which had been tendered, could be identified by the company and it could not be said that the witnesses should have been cross-examined on other topics26. Similar observations were made by Gilmour J in this case27. Disputed debts and the current Pt 5.4 Included amongst the amendments effected in 1993 was a definition of insolvency. Pursuant to s 95A, a person is solvent if, and only if, the person is able to pay all the person's debts as and when they become due and payable28. A person who is not solvent is insolvent29. The words of s 95A are similar to those in s 95 of the Bankruptcy Act 1924 (Cth) ("unable to pay his debts as they 24 (1985) 60 ALJR 185 at 188; 63 ALR 94 at 100. 25 (1985) 60 ALJR 185 at 188; 63 ALR 94 at 99. 26 Brinds Ltd v Offshore Oil NL (1985) 60 ALJR 185 at 188; 63 ALR 94 at 99. 27 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 56 [28]. 28 Corporations Act 2001, s 95A(1). 29 Corporations Act 2001, s 95A(2). Crennan Bell become due from his own money") which were discussed by Barwick CJ in Sandell v Porter30. The presumption of insolvency provided by s 459C has previously been mentioned. It applies in proceedings brought under s 459P and operates unless the contrary is proved for the purpose of the application, placing the onus upon the company to establish that it is solvent within the meaning of the Act. Section 459P(1) of the Act lists those persons and entities who may apply for an order that a company be wound up in insolvency. The list includes ASIC, but it is required to obtain the leave of the court to do so31, which is to be granted only if the court is satisfied that there is a prima facie case that the company is insolvent32. However, as previously mentioned the statutory presumption, which arises in the circumstances provided in s 459C, applies on an application for leave. An application for a company to be wound up in insolvency is required to be determined within six months after it is made, subject to the court extending that time in special circumstances33. Orders of this kind were made in the present case. Section 459A provides that, upon the hearing of an application brought under s 459P, the court "may order that an insolvent company be wound up in insolvency." The extent of the discretion to refuse such an order is put beyond doubt by the terms of s 467(1), which appears in Pt 5.4B and provides that: "(1) Subject to subsection (2) and section 467A, on hearing a winding up application the Court may: 30 (1966) 115 CLR 666 at 670; [1966] HCA 28. 31 Corporations Act 2001, s 459P(2)(d). (The order for leave to bring the application was made at the same time as the order for winding up in this case. No argument was made on the appeal as to the correctness of this approach.) 32 Corporations Act 2001, s 459P(3). 33 Corporations Act 2001, s 459R. Crennan Bell dismiss the application with or without costs, even if a ground has been proved on which the Court may order the company to be wound up on the application; or adjourn the hearing conditionally or unconditionally; or (c) make any interim or other order that it thinks fit." As was the case with respect to the earlier legislation, "other order" is apt to include an order staying the proceedings. Statutory demands by creditors are dealt with in Divs 2 and 3 of Pt 5.4. A creditor may serve a demand for monies to be paid by a company34 and then base its application to wind up the company, under s 459P, upon a failure to comply with that demand. The statutory presumption of insolvency applies in the event of failure to comply35. Section 459F states what constitutes a failure to comply. It requires that the demand be in effect at the end of the period of compliance and that the company has not complied with it36. It is therefore essential to a conclusion of a failure to comply that the demand remains effective. A statutory demand has no effect while there is in force an order made under ss 459H or 459J setting aside the demand37. Those orders may be made on an application for that purpose. The application may only be brought within 21 days after the demand is served38. Section 459H is expressed to apply where the court is satisfied that there is a "genuine dispute" about the existence or amount of a debt to which the demand relates39. Unless the court makes an order 34 Corporations Act 2001, s 459E. 35 Corporations Act 2001, s 459C(2)(a). 36 Corporations Act 2001, s 459F. 37 Corporations Act 2001, s 459K. 38 Corporations Act 2001, s 459G(2). 39 Corporations Act 2001, s 459H(1)(a). See Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473; [2008] HCA 41. Crennan Bell under s 459H, or s 459J which provides for other grounds, the application to set a demand aside is to be dismissed40. The evident policy of Pt 5.4 is that there be a speedy resolution of applications to wind up in insolvency41. To that end, a challenge to a statutory demand is to be made promptly, before the application for the order for winding up in insolvency is determined and, where possible, disputes are to be resolved on the application to set aside the demand. Section 459S provides that where an application to wind up in insolvency relies upon a failure by the company to comply with a statutory demand, the company may not, without leave, oppose the making of an order on a ground which (a) it relied on in an application to set aside the demand or (b) it could have relied on but did not (whether or not it in fact made the application). That leave is not to be granted unless the court is satisfied that the ground is material to proving that the company is solvent42. Thus if leave is sought on the basis that the debt is disputed, the existence or amount of that debt must be relevant to a conclusion as to the company's solvency. This requirement of s 459S is consistent with the operation of the presumption of insolvency under s 459C, which applies even if leave is granted to raise a ground of opposition. It applies because there has been a failure to comply with a demand which remains in effect. Under the present statutory scheme, where a demand has not been complied with, the statutory presumption of insolvency applies unless the demand is set aside in proceedings brought for that purpose prior to the hearing of the application for an order to wind up. Unless the demand is rendered ineffective, by an order setting it aside, the company is required to prove to the contrary of the presumption. This may be contrasted with the position which formerly pertained, where the presumption that a company was unable to pay its debts could not arise if the debt the subject of the demand was shown to be the subject of a genuine dispute of substance. More relevant to the reasons of the majority in the Full Court is the principle applied by the court in winding up proceedings brought under the 40 Corporations Act 2001, s 459L. 41 Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 232 CLR 314 at 324-325 [17]-[18]; [2008] HCA 9. 42 Corporations Act 2001, s 459S(2). Crennan Bell former legislation, where the statutory demand process was not invoked. It will be recalled that the principle was based upon the potential abuse, by creditors, of the winding up process to compel a solvent company to pay a genuinely disputed debt. On that basis alone it could have no application to ASIC, which did not claim the status of creditor and did not seek winding up on the basis of a debt owed. It brought its application under the statutory entitlement given by s 459P and in reliance upon the presumption of insolvency in s 459C(2)(c), which operates on the fact of the appointment of receivers and managers. More fundamentally, because the principle has no application in the case of an insolvent company, it cannot apply in the context of the current Pt 5.4, where the statutory presumption of insolvency operates. The majority in the Full Court were therefore wrong to conclude that the general principle could apply to ASIC's application or that it continues to apply to creditors' proceedings, given the presumption provided by s 459C43. The current statutory scheme provides no basis for an assumption in favour of a dismissal or stay of proceedings where a company disputes the existence or amount of a debt. The majority were also persuaded to a conclusion that a stay should have been ordered by the view they formed, that Pt 5.4 manifests a legislative policy that a dispute as to a debt should be resolved separately and apart from the winding up process. Part 5.4 therefore requires further examination. There is a policy evident in the current statutory scheme that disputes concerning a statutory demand should, where possible, be determined prior to the determination of the winding up application and therefore separately from that application. The requirement of leave, to raise an objection at the hearing of that application which could have been taken in an application to set aside a demand, confirms this. But such a policy says nothing about what is to occur if there remains an issue about a debt at the time the application for an order for winding up in insolvency is heard. Sections 459A and 467(1)(c) make plain that the court retains a discretion to stay proceedings on an application to wind up a company in insolvency. What was said by Gibbs J in In re QBS Pty Ltd about practical considerations, which may attend the resolution of a dispute about the existence 43 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 496 [49]. Crennan Bell or extent of a debt, remains relevant to applications for winding up, subject to some qualifications arising out of the present statutory scheme. The court may consider that although such a dispute may affect a conclusion as to solvency, the dispute may be more conveniently resolved in other proceedings which have been, or will be, brought for that purpose. Much may depend upon the nature of the dispute, and the extent to which it is removed from the central question of solvency. In this regard the court will bear in mind that the question of solvency, which it is required to determine upon an application for winding up in insolvency, is affected by the statutory presumption. The starting point, where the presumption operates, is that the onus is on the company to rebut the presumption, by proof of its solvency. And when considering whether to separate out a dispute from the winding up proceedings, the court will also bear in mind the statutory objective, that such applications are to be determined within six months, subject only to extensions granted in special circumstances. The exercise of the discretion to stay the proceedings in this case There can be no doubt that the court's power to adjourn or stay proceedings can, and should, be exercised where the interests of justice require. But no application for an adjournment of the proceedings was current when the hearing before Gilmour J commenced. A prior application for adjournment had been dismissed because Lanepoint did not pursue it when the matter was set down for hearing. Further, as Gilmour J observed, no suggestion was made at the hearing that there was other relevant evidence such as might necessitate an adjournment. It was upon this basis that his Honour determined that questions about the transactions should be resolved. In his Honour's view to do otherwise would only add to the costs of the parties and the public. The submission by Lanepoint to Gilmour J, that the proceedings on ASIC's application were inappropriate to determine the issues arising with respect to the transactions, appears to have been first taken at the conclusion of evidence on the hearing. It was accompanied by the suggestion that the transactions were complex and could warrant further attention over many more days. However, as his Honour observed in his reasons, no further evidence was pointed to by Lanepoint as necessary for the purpose of a determination about them and his Honour did not identify any gaps in the evidence. Moreover, that submission was put in the alternative to one by which Lanepoint asserted that it had "done enough" to demonstrate that its accounts required correction and that it had rebutted the presumption of insolvency. The majority in the Full Court identified three considerations as relevant to the exercise of his Honour's discretion, which pointed to the need for it to be Crennan Bell exercised in favour of a stay of the proceedings. The first was that not all parties necessary to a resolution of the issues raised by ASIC had been joined to the proceedings. In the view of the majority, conclusions about the transactions which were the reason for the corrections to Lanepoint's accounts had the potential to affect other companies in the Westpoint Group and they concerned the conduct of officers or directors of Lanepoint and other Westpoint Group companies. These possible effects were highlighted, in their Honours' view, by findings made by Gilmour J that the transactions were "improper", "ineffective" and liable to be set aside under s 588FF of the Act44. The second matter to which the majority referred also concerned s 588FF. Their Honours pointed out that a claim under that section can only be made by the liquidator of Westpoint Management. This called into question the finding of Gilmour J, that the impugned transactions could not be relied upon by Lanepoint to reduce its liability to Westpoint Management and the WIF, and therefore the utility of the proceedings45. It will be recalled that the order for a stay, which their Honours considered to be necessary on the re-exercise of the discretion, was made until the determination of proceedings to be brought by the liquidator. It may be that their Honours had in mind an application under s 588FF. The third matter, which the majority held Gilmour J ought to have taken into account, was the fact that Lanepoint was no longer trading and was therefore less likely to cause prejudice to third parties46. By itself this fact would not seem to provide a reason for staying the proceedings. In any event it was a matter of which his Honour was aware, as his reasons disclose47. The other grounds, however, require reference to the transactions which were in contention and the findings of Gilmour J upon them. 44 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 498 [65]-[66]. 45 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 498-499 [69]-[71]. 46 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 499 [73]. 47 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 65 [90]. Crennan Bell Before turning to these transactions, it is necessary to restate the issue which arose for Gilmour J's determination on ASIC's application and what was necessary to that determination. The issue before his Honour was whether Lanepoint was solvent. That issue arose because the statutory presumption applied and because Lanepoint sought to rebut it. It is to be emphasised that the issue did not arise because of an allegation by ASIC that Lanepoint owed the WIF $6.6 million. In order to rebut the statutory presumption of insolvency it was necessary for Lanepoint to prove that it did not owe that sum to the WIF. In this case the evidence concerning transactions between the WIF and companies in the Westpoint Group consisted of entries in their accounts. Loans had been recorded as advanced to Lanepoint by the WIF for the sums in question and there were other documents which supported the fact of the loans. It was therefore necessary for Lanepoint to explain that these sums were not in fact advanced and that the alterations to the amounts reflected the true position. If these matters were established it would follow that the amount of Lanepoint's debt to the WIF was not as much as $6.6 million and Lanepoint might rebut the presumption of insolvency. His Honour was not persuaded by the evidence of the Lanepoint witnesses. The "Kingdream transfer" concerned three of four draw downs made by Lanepoint on its loan facility with the WIF in October 2005. The last of those draw downs was effected on the day that ASIC issued its first interim stop order. Mr Norman Carey, a director of Lanepoint, Westpoint Corporation Pty Ltd, Westpoint Management and the managing director of the Westpoint Group at the relevant time, denied that these events were influenced by ASIC's inquiries about the WIF at this time. Lanepoint did not have a bank account. Funds advanced from the WIF were recorded as inter-company loans in the books of account. Mr Gregory Nairn, whose positions within the Westpoint Group included that of Group Financial Controller, "corrected" the accounting entries for three of the draw downs by reducing Lanepoint's borrowings and increasing those of Kingdream Pty Ltd ("Kingdream"), another Westpoint company, by the same amount, namely $2 million. Lanepoint tendered the evidence of Mr Carey and Mr Nairn and others to explain the borrowings and to justify the changes made to the accounts. Other witnesses to whom Mr Nairn assigned accounting errors were not called by Crennan Bell Lanepoint and their absence was not explained. This drew adverse comment from Gilmour J48. There were other aspects of Lanepoint's evidence which his Honour did not consider satisfactorily explained the alterations to Lanepoint's accounts. Central to Mr Nairn's evidence about the "correction" to Lanepoint's draw downs and their allocation to Kingdream was that Lanepoint's Facility Limit with the WIF had been exceeded at the time. However, it appeared that the Facility Limit which both Mr Nairn and Mr Carey had in mind was some $2 million less than that which had been approved. And his Honour did not accept that the draw downs, which had been checked and were signed by Mr Nairn and Mr Carey, were the result of errors within the Westpoint Group. His Honour found that Mr Carey approved the transactions by Lanepoint in order to ensure that funds were available, in the knowledge that the stop order of 25 October 2005 was looming49. The effect, and inferentially a purpose, of the Kingdream transfer was to reduce the ability of the WIF to recover monies and thereby to meet its obligations to investors50. So far as concerned the substitution of Kingdream for Lanepoint as a debtor of the WIF, his Honour found that the loan to Kingdream was largely irrecoverable. The "$2M run-around" transaction involved the WIF and two other companies in the Westpoint Group, Bowesco Pty Ltd and Goldtag Pty Ltd ("Goldtag"). The $2 million debt owed by Lanepoint to the WIF, was replaced in the companies' books of account as a debt owed by Goldtag. Two "round robin" transactions were also recorded in the accounts and were said to support the substitution of Goldtag as debtor. As the description of the transactions suggest, they were neutral in their effect upon the other entities. The only effect, Gilmour J held, was to substitute Goldtag for Lanepoint51. The monies were not capable 48 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 59 [40]. 49 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 61 [52]. 50 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 61 [56]. 51 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 62 [62]-[63]. Crennan Bell of being recovered from Goldtag. His Honour also observed that Mr Carey's family benefited from a reduction in Lanepoint's borrowings52. In his findings his Honour described the transactions as being improper and accepted ASIC's submission that they were ineffective53. His Honour's views in this regard were relevant to his rejection of the evidence which sought to explain and justify the changes to the accounts. His Honour's reference to the transactions being "ineffective" should be understood in this context and not as suggesting some legal consequence which was not relevant to the questions before his Honour. His Honour said that the transactions were liable to be set aside under s 588FF54. His Honour clearly appreciated that he was volunteering an opinion, and was not making a ruling under the section, for he stated on more than one occasion that they were liable to be set aside at the instance of the liquidator of Westpoint Management55. No such application was before his Honour. His Honour appears to have offered his opinion about s 588FF in response to a submission to that effect by ASIC. But it was not necessary for the determination of the issues before his Honour to do so. His non-acceptance of the explanations about the alterations to the accounts was sufficient for that purpose. It is not apparent why the majority in the Full Court considered that other parties were necessary to be joined in the proceedings. Their Honours did not elaborate upon the matter. Generally speaking, consideration is necessary to be given to the joinder of other parties where orders might be made directly 52 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 62 [63]. 53 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 63 [70]. 54 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 63 [71], 64 [79]. 55 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (rec and mgr apptd) (No 2) (2009) 72 ACSR 52 at 63 [72], 64 [79]. Crennan Bell affecting the rights and liabilities of a non-party56. An order that Lanepoint be wound up in insolvency may have financial, and even legal, implications for other entities within the Westpoint Group, but it does not itself affect their rights and liabilities. The majority might have in mind the possibility that an issue estoppel might later be said to have arisen from Gilmour J's determination about the monies owed by Lanepoint and the findings along the path to that conclusion57 and that this had the potential to affect the other companies involved. There may be some difficulties in raising an issue estoppel58, but they do not need to be expanded upon for present purposes. If such a question did arise, the position of those companies vis-à-vis the winding up proceedings might assume some relevance. But this could provide no warrant for their joinder to those proceedings. The majority expressed concern that officers and employees of Lanepoint and other Westpoint companies were exposed to findings concerning their conduct without the benefit of pleadings in that regard. Their Honours no doubt had in mind that a plea akin to fraud requires detailed particulars and that such pleadings would not usually be provided in proceedings for winding up. The concern rather overlooks the fact that any questions concerning the propriety of the conduct of these persons, in relation to the financial affairs of the WIF and Lanepoint, did not arise from allegations made by ASIC. The persons in question were called by Lanepoint to prove that the alterations to the accounts were for a legitimate purpose. There was no evident reason to postpone the determination of ASIC's application to wind up and Lanepoint's notice of opposition to it. ASIC had the benefit of the presumption of insolvency and Lanepoint was required to prove to the contrary. Lanepoint could point to no further evidence necessary for this purpose the tender of which would warrant a postponement – a postponement 56 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at 46 [131]; [2010] HCA 19; Victoria v Sutton (1998) 195 CLR 291 at 316-318 [76]- [81]; [1998] HCA 56. 57 See Blair v Curran (1939) 62 CLR 464 at 531-533; [1939] HCA 23. 58 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 590 [156], 591 [160]; [1999] HCA 27; Kuligowski v Metrobus (2004) 220 CLR 363 at 386 [62]; [2004] HCA 34. Crennan Bell which would have added to the considerable delays which had already taken place since ASIC's application had been filed. The order for a stay made by the Full Court was premised upon the liquidator of Westpoint Management bringing proceedings concerning the loans made by the WIF to Lanepoint. The majority said that the liability of Lanepoint could only be finally determined by an order of the court upon an application made by the liquidator59. However, the statement fails to recognise that the extent of Lanepoint's liability was a matter properly to be determined by the court in connection with Lanepoint's solvency, which was the issue before it. And it fails again to appreciate that Lanepoint was obliged to prove that the monies were not owed by it to the WIF, in order to rebut the statutory presumption of insolvency which operated in ASIC's favour. It remains to add that it is nowhere apparent that the liquidator of Westpoint Management, who gave evidence on ASIC's application, had any intention of bringing the proceedings to which the majority referred. The majority in the Full Court did not proceed upon the basis that he did so intend and that this was the more convenient course. No suggestion to this effect appears to have been raised with Gilmour J. The utility of the order is therefore called into question. Conclusion and orders The discretion of the primary judge, in considering whether to dismiss or stay the proceedings, did not miscarry. There was no impediment to his Honour proceeding to determine whether Lanepoint could rebut the presumption of insolvency. Lanepoint failed to do so. Lanepoint submitted, in the event that this Court allowed the appeal, that the matter ought to be remitted to the Federal Court to determine the grounds of appeal which had not been dealt with by the majority in the Full Court. This Court has said on more than a few occasions that it is important for intermediate courts of appeal to deal with all grounds of appeal, not just that which is 59 Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) v Australian Securities and Investments Commission (2010) 78 ACSR 487 at 499 [70]. Crennan Bell identified as the decisive ground60, to overcome the need for remittal where a decision on that ground is the subject of a successful appeal. Fortunately in this case the difficulties presented by other grounds being outstanding may readily be resolved. No remitter will be necessary. The only grounds which were pursued by Lanepoint on the appeal to the Full Court concerned the question of the compromise of the debt due by Lanepoint to the WIF. It was conceded by Lanepoint that a compromise of the debts was not finalised with the liquidator of Westpoint Management, which removes one ground from further consideration. The remaining ground has no merit. It was that the liquidator's willingness to compromise, evident at some point in the negotiations, was somehow relevant to whether the debt was in fact owed. The appeal should be allowed with costs. The paragraphs numbered 1-4 inclusive of the order of the Full Court of the Federal Court made on 24 May 2010 and the further order as to costs made on 9 September 2010, as varied by the order of Siopis J made on 1 October 2010, should be set aside. In lieu of those orders it should be ordered that the appeal to that Court be dismissed and that Lanepoint pay the costs of ASIC of the appeal to that Court. 60 Kuru v New South Wales (2008) 236 CLR 1 at 6 [12]; [2008] HCA 26; Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274 at 312 [105]; [2004] HCA 58.

HIGH COURT OF AUSTRALIA BCM AND APPELLANT THE QUEEN RESPONDENT BCM v The Queen [2013] HCA 48 27 November 2013 ORDER Appeal dismissed. On appeal from the Supreme Court of Queensland Representation D C Shepherd with J Lodziak for the appellant (instructed by Legal Aid Queensland) A W Moynihan QC with C M Kelly for the respondent (instructed by Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS BCM v The Queen Criminal law – Appeal – Appeal against conviction – Whether verdict unreasonable or unsupported having regard to evidence – Indecent dealing with child under 12 years – Inconsistencies in evidence of child complainant – Whether inconsistencies affected reliability – Whether inconsistencies went to essential features of complainant's account of offences. Criminal law – Reasons – Whether Court of Appeal gave sufficient reasons – Whether Court of Appeal's reasons disclosed assessment of capacity of evidence to support verdict – Obligation to give reasons not discharged by observation that jury entitled to accept evidence of complainant. Words and phrases – "unsafe and unsatisfactory", "verdict cannot be supported having regard to the evidence", "verdict is unreasonable". Criminal Code (Q), ss 210, 668E(1). HAYNE, CRENNAN, KIEFEL, BELL AND KEANE JJ. After a trial in the District Court of Queensland (Long DCJ), the appellant was convicted of two counts of unlawfully and indecently dealing with E, a child under 12 years, who was for the time being under his care1. The jury was unable to agree on a third count of indecently dealing with E. The appellant appealed unsuccessfully to the Queensland Court of Appeal (de Jersey CJ, Muir and White JJA), contending that the verdicts are "unsafe and unsatisfactory". The appellant appeals by special leave granted on 6 June 2013 on two grounds. The first ground contends that the Court of Appeal failed to assess the evidence and to give adequate reasons for its conclusion that the verdicts were supported by the evidence. The second ground contends that the Court of Appeal erred in failing to conclude that the verdicts are unreasonable and unsupported by the evidence. As will appear, whatever criticisms may be made of the sufficiency of the Court of Appeal's analysis, the conclusion that the verdicts should not be set aside was correct. It follows that the appeal must be dismissed. The factual background E was six years old at the date of the offences. E viewed the appellant and his wife as her grandparents. Her stepfather is the appellant's stepson2. The three offences were alleged to have occurred on the one occasion when E was having a "sleepover" at the appellant's home. They were particularised as occurring between 30 September 2008 and 1 December 2008. The prosecution case was wholly dependent on E's evidence. E's first complaint was made to her mother when she was nine years old. It concerned the indecent dealings charged in the first two counts. The following day E was interviewed by Detective Enright about these offences. The interview, which took place on 26 April 2011, was video-recorded. 1 Criminal Code (Q), s 210(1)(a), (3) and (4). 2 According to the Court of Appeal, the appellant's stepson is E's own father. In E's interview with Detective Enright, however, E notes that her mother's husband is her stepfather. E's interview is consistent with her mother's evidence at trial that the appellant is her husband's stepfather and that she first met him in 2007, the year she married her husband. Hayne Crennan Bell In March 2012, when E was 10 years old, she told her mother about a further indecent dealing that had occurred on the occasion of the sleepover at the appellant's home. E participated in a second interview with Detective Enright about this alleged offence. The video recordings of the two interviews were in evidence at the trial3. E's evidence was pre-recorded and admitted pursuant to the provisions of ss 21AK and 21AM of the Evidence Act 1977 (Q). She was 10 years old at the date of giving evidence. The complaint E's mother gave evidence of E's complaint. One evening at E's bedtime she had asked to talk to her mother privately. She volunteered that "Poppy touched me down there". In response to questioning, E said that the appellant had tickled her "down there". He had not tickled her anywhere else. His hand was underneath her underpants. The mother asked if this had happened at any other time and E replied "yes, it had happened again the next day when Nana ... had gone out". On this occasion E said that she told the appellant that she needed to go to the toilet because she did not want the tickling to continue. E incidents had occurred on a sleepover "near Poppy's said birthday - surprise birthday party". She had a nightmare and she had gone into her grandparents' bedroom for comfort. She had snuggled up to the appellant and had awoken during the night to find him touching her. these that The first police interview E was interviewed by Detective Enright on the day after she made her complaint to her mother. In the interview E said that she and her younger brother, B, had been staying overnight with the appellant and his wife. She and B slept in different rooms. They were the only children in the house. E had a nightmare in which a boy turned into a massive alien. She woke up and went into the appellant's room and he said to her "sleep with me". E got into bed next to him. The appellant's wife was asleep on the other side of the bed. E noticed that the wife had "little yellow things in her ear". When E woke it was daytime and the appellant was tickling her private parts under her underpants. This was the conduct charged in the first count. 3 Evidence Act 1977 (Q), s 93A. Hayne Crennan Bell After the initial touching E said that she had gone into the toy room. The appellant's wife had gone for a drive, taking B with her. The appellant had come into the toy room and taken E back to the bedroom. The appellant started "doing it again". He took off her underpants and tickled her private parts. This was the conduct charged in the second count. E brought the incident to an end by saying that she needed to go to the toilet. When she went to the toilet she had seen a hairy spider. This second episode of indecent dealing took place about an hour after the first. Afterwards E watched a movie on the television. The appellant's wife had returned while she was watching the movie. E was able to place the incident because "a couple of days later we had E's further complaint In March 2012 E's mother learnt that a date had been set for the pre- recording of E's evidence. She explained this to E and discussed the offences with her again. On this occasion E described a third incident which had taken place during the sleepover. It had taken place while the appellant's wife was out. The appellant lay on the bed and placed E on top of him and bounced her. Neither had any clothing covering their private parts. E had laughed and giggled. She had not told her mother about the incident because she felt bad about giggling. Her mother reassured E, saying that it was probably just nerves. E said that she had not felt "good or happy" about this incident but she had tried not to upset the appellant and she was scared. Her mother said that "Poppy had told [E] not to tell anybody". E's mother informed Detective Enright of the further disclosure and E participated in a further interview with him. The second police interview In her second interview with Detective Enright E repeated her account of the first and second offences. She then went on to say that after the second incident the appellant had taken her to the bed and lain on it with her positioned on top of him. He had taken his pants off. He removed E's underpants and put her hand on his penis. His hand was on her vagina and he bounced her up and down. She pretended to laugh. The appellant's wife came home and the appellant stopped doing what he was doing. He told E not to tell anybody. Hayne Crennan Bell Detective Enright reminded E that they had spoken about these things on the first occasion and said that there was something she had not told him on that occasion. E agreed, saying "yeah I forgot about it". E's evidence E was cross-examined on 29 March 2012. She was recalled for further cross-examination on 11 July 2012. E's account in cross-examination in March 2012 was largely consistent with the account she had given in her interviews. She said that at the time of the sleepover when these incidents occurred she, B, the appellant and the appellant's wife were the only persons in the house. In her further evidence on 11 July 2012, E was uncertain about whether three foster children were also staying at her grandparents' home at the time of these incidents. It was put to E that the only time she had stayed at the appellant's house around the time of his birthday party was "a couple of weeks later". E was unable to remember. When pressed she said she was not sure about whether B was staying over at the appellant's house at the time of these incidents. E's mother gave evidence that her children slept over at the appellant's house on a regular basis throughout 2006, 2007 and 2008. This had been a frequent event taking place at least once a fortnight and sometimes weekly. That E had stayed overnight at the appellant's home on only one occasion in the period October-November 2008 did not accord with the mother's recollection. The defence case The appellant gave evidence. He denied that E had been in bed with him on any occasion. He also denied that he had engaged in any sexual misconduct with her. The appellant said that he and his wife had arranged to become foster carers and on 15 October 2008 had taken three children into their care. They had seen less of E and B in the period that they had the foster children staying with them. E had stayed overnight with them on only two occasions in the period covered by the indictment. The first occasion involved an excursion to Sea World. This took place on 11 and 12 October 2008. It was a treat to compensate E and B for the reduction in contact associated with the planned arrival of the foster children. On this occasion they stayed overnight in a unit. The appellant was able to date the excursion by the Sea World season ticket. Hayne Crennan Bell The three foster children were living with the appellant and his wife from 15 October until late December 2008 or early January 2009. The appellant's wife kept a diary in which she recorded observations of the foster children and details of expenses required to support claims for reimbursement from the Department. The second occasion when E stayed overnight with the appellant and his wife was on 14 November 2008. This was the only occasion when she stayed overnight at their home in the period covered by the indictment. The appellant was able to place the date of this overnight stay by an entry in his wife's diary. E had slept in the same room as the two female foster children. The surprise party for the appellant's birthday was held on 6 November The appellant's wife gave evidence which was supportive of his account. The only occasion in October and November on which E had stayed overnight in their home was 14 November. E had not come into their bedroom and got into bed with them on this or any occasion. The wife had not gone out leaving the appellant alone with the children on this occasion. The wife was cross-examined about her diary-keeping. She had been encouraged by the "foster care group" to keep a diary recording behavioural and other information about the children. The Department had advised them to keep records of who came and went from their home. She had done so. There was an entry recording E's overnight stay on 14 November 2008. B did not accompany E on this occasion. The wife said that she was a light sleeper and she denied that it was possible that E had come into the bedroom and got into the bed without her knowledge. She confirmed that she wore earplugs in bed. The Court of Appeal The appellant appealed to the Court of Appeal under s 668E(1) of the Criminal Code (Q)4. His notice of appeal filed on 23 July 2012 contained a 4 Section 668E(1) of the Criminal Code (Q) provides: "The Court on any such appeal against conviction shall allow the appeal if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or can not be supported having regard to the (Footnote continues on next page) Hayne Crennan Bell single ground that "[t]he verdicts reached by the jury [are] unsafe and unsatisfactory". In the language of the statute, this was a challenge that the verdicts are unreasonable, or cannot be supported having regard to the evidence. In written submissions filed before the hearing of the appeal the appellant sought leave to add two further grounds. The first further ground contended that the timing of the offences was material and it was an error not to have directed the jury of the necessity to prove that the offences occurred within days of the appellant's surprise birthday party. Alternatively, the second further ground contended that it was an error not to have directed of the necessity to prove that the offences occurred within the period particularised in the indictment. The focus of the appellant's submissions on his original ground, that the verdicts are unreasonable, was on the claimed inconsistency between the verdicts and the jury's inability to agree on the third count. De Jersey CJ (with whose reasons the other members of the Court agreed) dealt with the two further grounds together. His Honour appears to have accepted that proof that the offences occurred within the period particularised in the indictment was essential5. His Honour was satisfied that the trial judge's directions were adequate to convey this requirement6. His Honour did not deal separately with the contention that in the way the trial had been conducted it was necessary to prove that the offences occurred at a time within days of the surprise birthday party. The appellant does not challenge the rejection of either of these grounds. De Jersey CJ dealt with the challenge to the reasonableness of the verdicts last. His Honour's analysis, which is the subject of the first of the appellant's grounds in this Court, proceeded as follows. His Honour said that there was a rational explanation for the jury's inability to reach unanimity on count three. The fact that E delayed for a further year before raising an allegation concerning events that were said to have occurred within the same short interval may have been viewed by one or more jurors as adversely affecting the reliability of that allegation. E gave an explanation for the delay, which was that she was scared, evidence, or that the judgment of the court of trial should be set aside on the ground of the wrong decision of any question of law, or that on any ground whatsoever there was a miscarriage of justice, and in any other case shall dismiss the appeal." 5 R v BCM [2012] QCA 333 at [17]. 6 R v BCM [2012] QCA 333 at [18]. Hayne Crennan Bell and that she was embarrassed about responding inappropriately during the incident. The explanation, especially in a young witness, may well have been accepted as believable. In the result, some members of the jury may have doubted the reliability of E's account of the third incident without doubting her overall credibility7. Next, de Jersey CJ turned to the appellant's submission that the documentary support for his evidence of the arrival of the foster children and the date of the sleepover substantially eroded E's claim. His Honour noted the prosecutor's submission that the wife's diary was not a complete and accurate record of the comings and goings to and from the appellant's house. The balance of the analysis of the reasonableness ground is contained in the concluding paragraph of his Honour's reasons8: "In the end, the issue for the jury was whether, in the context of the defence evidence, they were nevertheless satisfied beyond reasonable doubt that the respective offences occurred as related by E, including within the nominated timeframe (as to which see SKA v The Queen (2011) 243 CLR 400, 409). Especially having regard to the consistency of E's accounts, from when she first spoke to her mother in relation to counts one and two, the jury, acting reasonably, was entitled to take that view. Having reviewed the evidence as required, I am satisfied these convictions are not unsafe. This is a case where the jury, alive to the competing considerations, were entitled, reasonably, to accept the evidence for the prosecution and convict." The sufficiency of the Court of Appeal's analysis The principles to be applied in determining a ground which challenges the sufficiency of the evidence to support a conviction are well established9. They are collected in SKA v The Queen10. Prominent in the majority's discussion in 7 R v BCM [2012] QCA 333 at [20]. 8 R v BCM [2012] QCA 333 at [24]. 9 M v The Queen (1994) 181 CLR 487 at 493 per Mason CJ, Deane, Dawson and Toohey JJ; [1994] HCA 63; MFA v The Queen (2002) 213 CLR 606 at 622-624 [52]-[59] per McHugh, Gummow and Kirby JJ; [2002] HCA 53. 10 (2011) 243 CLR 400 at 405-406 [11]-[14] per French CJ, Gummow and Kiefel JJ; [2011] HCA 13. Hayne Crennan Bell SKA of the application of those principles is the requirement that the appellate court's reasons disclose its assessment of the capacity of the evidence to support the verdict11. In this case, the obligation was not discharged by observing that the jury was entitled to accept E's evidence and act upon it. It is not in the interests of justice to remit the proceeding to the Court of Appeal for it to determine afresh the challenge to the reasonableness of the verdicts. This was a short trial that lasted not more than two days and in which the evidence was in short compass. The success of the appellant's second ground requires him to establish that the verdicts are unreasonable or cannot be supported by the evidence. We now turn to that ground. The appellant's submissions There are three strands to the appellant's second ground, which in combination are said not to allow the conclusion of guilt beyond reasonable doubt for each offence. First, the appellant relies on four inconsistencies in E's evidence that call into question her reliability: E's mother said that E claimed to have woken during the night to find the appellant touching her. E told Detective Enright that she had woken up in daytime to find the appellant touching her. E told Detective Enright that when she was first indecently touched by the appellant, both he and his wife were in the bed. In cross-examination she stated that only the appellant was present. (iii) E told Detective Enright that she was watching a movie when the appellant's wife came home. In cross-examination E said that the appellant's wife had come home while the appellant was indecently dealing with her. to her and E answered, "um, no". In the first interview Detective Enright asked E if the appellant had said anything cross-examination E said that the appellant had said to her "don't tell this to anyone". E said that at the time she made her first statement to Detective Enright she remembered that the appellant had told her not to tell anyone that this happened. 11 (2011) 243 CLR 400 at 409 [22]-[24] per French CJ, Gummow and Kiefel JJ. Hayne Crennan Bell The second strand of the unreasonableness argument arises out of E's delay in complaining about the third incident and her explanations for that delay. The appellant suggests that E's account that she was embarrassed to tell her mother about the incident because she had giggled in response to it cannot be reconciled with her account to Detective Enright that she had forgotten the incident at the time of her first interview with him. In cross-examination E gave an account that she was scared as the reason for delaying so long in telling her mother about the third incident. The appellant submits that this answer was suggestive of the deliberate withholding of information at the time of the first interview with Detective Enright. The third strand is at the forefront of the appellant's submissions in this Court. He submits that E's initial account given to Detective Enright cannot stand with compelling evidence led in the defence case. In her interview E identified the date of the offences by saying that the surprise birthday party was held "a couple of days later". This would put the offences as occurring around the third or fourth of November 2008. The wife's diary did not record an overnight stay by E before 14 November 2008. Throughout the period 15 October to 1 December 2008 the three foster children were all living in the appellant's home. Yet E maintained that she and B were the only children at the appellant's home at the time of the offences. It was not possible that E had woken from a nightmare alone in the bedroom as she described. The two female foster children were sleeping in the same room as E on the one occasion during the period covered by the indictment in which E slept at the appellant's home. Discussion The jury must have rejected the appellant's denials of wrongdoing and his wife's evidence that it was not possible that E had got into the matrimonial bed without her knowledge. Nonetheless, the diary contained a record of comings and goings to and from the home in the period 15 October to 1 December and did not record an overnight stay by E before 14 November 2008. This pointed firmly against the offences occurring before the appellant's surprise birthday party. In circumstances in which the prosecutor opened the Crown case by saying "[E] said the offences happened shortly before the [appellant's] surprise birthday party", was it open to the jury to be satisfied beyond reasonable doubt of the appellant's guilt? Defence counsel in his closing submissions put that E had repeatedly described the offences as happening "a short time before the surprise birthday party". This was to overstate the position. It is necessary to relate E's accounts respecting the date of the offences in some detail to demonstrate why that is so. Hayne Crennan Bell E's mother's evidence was that E said the incidents occurred at a time "near Poppy's birthday" (emphasis added). This is the first account given by E of the offences. In her first interview with Detective Enright, E gave this account of the timing of the incidents: I think it was the year [unintelligible] it was near Poppy's birthday. Enright: birthday. And, and tell me why you think it was near Poppy's 'Cause a couple of days later we had Poppy's birthday and um, yeah –". In cross-examination, which took place some 11 months after the first interview, E was asked: "Q. Okay. So, I think I've got to try and understand this, because it's a bit hard. You say that Poppy touched you just before his birthday, or was it just after his birthday, which one, do you remember or not? If you don't remember, by the way, you just tell me? After." E was recalled for further cross-examination more than three months after giving this evidence. On this occasion the cross-examiner put these questions to her: "Q. Now, do you remember giving evidence previously in this courthouse about the things that you say Poppy did to you? Yes. Now, do you remember giving evidence previously that those things happened a few days before his birthday party? Yes. And is that still the case? Do you remember these things happening a few days before his birthday party? Yes." Hayne Crennan Bell The second question put to E on the resumed hearing wrongly asserted that she had said in evidence on the first occasion that these events occurred before the appellant's surprise birthday party. It was objectionable. In the event, no objection was taken and the cross-examiner obtained E's assent to the proposition. E's answers in the balance of the cross-examination at the resumed hearing revealed uncertainty respecting the timing of events and the presence or absence of the foster children: "Q. And do you remember giving evidence previously about the foster children that came to live with Poppy? Yes. Now, when you say these things happened that your Poppy did to you, do you remember if the foster children were living there then? I'm not sure. Can you remember them being there on the day that you say these things happened? Not sure. Okay. Do you remember the first time that you met those foster children? Yes. And could it have been the case that that happened before Poppy's birthday party? I'm not sure. Q. Well, you say – you've told us previously that you remember these things happening before his birthday party; is that right? Yes. Hayne Crennan Bell [E], what I want to suggest to you – and it's okay if you can't remember, you can say that, but what I want to suggest to you is that the only time around Poppy's birthday party that you stayed over their house was a couple of weeks later, not beforehand at all. Does that sound right to you? Or is it the case, [E], that you definitely remember staying over Poppy's house before his birthday party? Can't remember." As earlier noted, the prosecution case was opened on the basis that E's evidence placed the offences as having occurred shortly before the appellant's surprise birthday party. In circumstances in which E's evidence had been pre-recorded this is surprising: it was known that E had given differing accounts of the timing of the sleepover in relation to the birthday party. It remains that the appellant was under no misapprehension as to the case he was to answer. In closing submissions the prosecutor did not tie the prosecution case to proof that the offences occurred before the surprise birthday party. She submitted that E had been uncertain about the timing of the sleepover and about whether the foster children had been present. E's willingness to agree with the proposition that the sleepover had been before the appellant's surprise birthday party is to be assessed taking into account that she was an 10 year old child describing an incident that occurred when she was six years old. E was consistent in associating the offences with a sleepover that had taken place near the appellant's surprise birthday party. The defence case acknowledged that E had had a sleepover some eight days after the party. This was within the period particularised in the indictment. The fact that E said B had been present with her on the occasion of the sleepover and that she did not recall the foster children being there at the time were matters to be taken into account in assessing her reliability. However, they were not matters that were critical to the acceptance of her evidence of the offences. The Court of Appeal was right to treat as believable E's explanation that she had not told her mother about the third incident because she was embarrassed about telling her how she had reacted to the assault and because she felt scared. The suggestion that E deliberately withheld information about the incident in her interview with Detective Enright was one that the cross-examiner chose not to put to her. Hayne Crennan Bell The four inconsistencies in E's accounts are to be considered in light of her age at the date of the offences, the interval between the offending and her first interview with Detective Enright, and the further interval between the interview and her evidence. On the essential features of her account of the offences E was consistent. She had woken from a nightmare in which a boy turned into a massive alien. She had gone into the appellant's room and got into bed with him. The appellant had indecently touched her as she lay in bed next to him. Sometime not long after this first incident, the appellant had sought her out and taken her back into the bedroom, where he had indecently touched her in the same way. She had extricated herself from the situation by saying that she needed to go to the toilet. When she went into the toilet she had seen a hairy spider. E was also consistent in her account that when she got into bed next to the appellant, his wife was asleep on the other side of the bed. It was open to consider that her recollection of the wife's earplugs was a damning detail. None of the criticisms of E's evidence discloses inconsistencies of a kind that lead, on a review of the whole of the evidence, to a conclusion that it was not open to the jury to convict. It follows that the appeal must be dismissed.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Cumberland v The Queen [2020] HCA 21 Date of Hearing: 15 April 2020 Date of Order: 15 April 2020 Date of Publication of Reasons: 3 June 2020 ORDER Appeal allowed. The orders of the Court of Criminal Appeal of the Supreme Court of the Northern Territory made on 19 June 2019 are set aside and in lieu thereof it is ordered that the appeal to the Court of Criminal Appeal is dismissed. On appeal from the Supreme Court of the Northern Territory Representation M E Shaw QC with S A McDonald and M W Thomas for the appellant (instructed by Peter McQueen, Solicitor) M W Nathan SC for the respondent (instructed by Director of Public Prosecutions (NT)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Cumberland v The Queen Criminal practice – Appeal – Crown appeal against sentence – Where appellant sentenced on pleas of guilty to six offences arising out of course of commercial dealing in cannabis plant material and MDMA – Where prosecution appealed against sentence on ground of manifest inadequacy – Where three-member Bench of Court of Criminal Appeal ("CCA") heard appeal and announced intention to allow appeal but referred relevant question of statutory construction to five-member Bench – Where eleven months after initial hearing, CCA delivered judgment of five-member Bench, then immediately re-constituted to deliver judgment of three-member Bench, allowing appeal and re-sentencing to increased term of imprisonment – Where appellant not given opportunity to place material before CCA as to progress in custody, nor make submissions on re-sentence or dismissal of appeal in exercise of "residual discretion" – Whether CCA failed to accord appellant procedural fairness in conduct of hearing of appeal against sentence – Whether CCA erred in determining to allow appeal against sentence when all circumstances relevant to exercise of "residual discretion" not yet known – Whether matter should be remitted to CCA for re-sentencing of appellant. Words and phrases – "aggregate sentence", "Crown appeal against sentence", "delay in the appeal process", "discretionary factors against allowing the Crown appeal", "imminence of the offender's release", "manifestly inadequate", "procedural fairness", "proper exercise of discretion", "re-sentencing exercise", "residual discretion". Criminal Code (NT), s 414(1)(c). BELL, GAGELER AND NETTLE JJ. On 11 April 2018, the appellant was sentenced in the Supreme Court of the Northern Territory (Blokland J) on his pleas of guilty to six offences against the Misuse of Drugs Act 1990 (NT) ("the MDA"). The offences arose out of a course of commercial dealing in cannabis plant material and MDMA1, commonly known as "ecstasy". The appellant, who was aged between 20 and 22 years at the time of the offending, was sentenced to an aggregate term of four years and six months' imprisonment to date from 27 June 2017. The sentencing judge directed his release from custody after two years, with the balance of the sentence being suspended for a term of three years. On 30 April 2018, the prosecution appealed against the sentence on the ground that it was manifestly inadequate2. The appeal was heard by the Court of Criminal Appeal of the Supreme Court of the Northern Territory (Kelly, Barr and Hiley JJ) on 18 July 2018. Following the hearing, the proceedings took an unusual course resulting in a delay of ten and a half months between the announcement, on 2 August 2018, that the appeal was to be allowed and the making of orders re- sentencing the appellant. On 19 June 2019, seven days before he was due to be released under Blokland J's order, the appellant was re-sentenced to a term of eight years' imprisonment with a non-parole period of five years, five months and one week. In the way the proceedings were finalised, the appellant was not given the opportunity to place material before the Court of Criminal Appeal as to his progress in custody, nor to make submissions on re-sentence or dismissal of the appeal in the exercise of "residual discretion"3. On 11 December 2019, Bell and Nettle JJ granted the appellant special leave to appeal from the orders of the Court of Criminal Appeal. The appeal was heard on 15 April 2020. At the conclusion of the hearing, the Court made orders allowing the appeal, setting aside the orders of the Court of Criminal Appeal, and ordering that the appeal to that Court be dismissed. These are the reasons for the making of those orders. 1 This the compound methylenedioxymethamphetamine, a dangerous drug under Sch 1 to the Misuse of Drugs Act. chemical name short the for 2 Criminal Code (NT), s 414(1)(c). 3 Green v The Queen (2011) 244 CLR 462 at 465-466 [1] per French CJ, Crennan and Bell Nettle Crown appeals Section 414(1)(c) of the Criminal Code (NT) ("the Code") confers on the Crown a right of appeal to the Court of Criminal Appeal against any sentence imposed for an indictable offence. Section 414(1A) provides that, in exercising its discretion on a Crown appeal against sentence, the Court of Criminal Appeal must not take into account any element of double jeopardy, involving the respondent being sentenced again, when deciding whether to allow the appeal or to impose another sentence or both. Section 414(1A), like the equivalent provision under the New South Wales sentencing statute considered in Green v The Queen4, was enacted to implement the proposal of the Council of Australian Governments for Double Jeopardy Law Reform5. As with the provision considered in Green, it is clear that s 414(1A) does not extinguish the appellate court's discretion, commonly referred to as the "residual discretion", to dismiss a Crown appeal notwithstanding that the sentence is erroneously lenient6. As explained in the joint reasons in Green, Crown appeals are distinguished from offender appeals against sentence in that their primary purpose is not directed to the correction of error in the particular case, but rather, to laying down principles for the guidance of sentencing judges7. And as their Honours also explained, the circumstances may be such that any guidance provided to sentencing judges is limited, while allowing the appeal may occasion injustice8. Among the circumstances that their Honours identified as enlivening the residual discretion is (2011) 244 CLR 462. 5 Green v The Queen (2011) 244 CLR 462 at 471 [25] per French CJ, Crennan and Kiefel JJ; Northern Territory, Legislative Assembly, Parliamentary Debates (Hansard), 23 February 2011 at 7394-7395. 6 Green v The Queen (2011) 244 CLR 462 at 471-472 [26] per French CJ, Crennan 7 Green v The Queen (2011) 244 CLR 462 at 465-466 [1] per French CJ, Crennan and 8 Green v The Queen (2011) 244 CLR 462 at 466 [2] per French CJ, Crennan and Bell Nettle delay in the appeal process9. Another circumstance that may enliven the discretion is the imminence of the offender's release from custody, on parole or otherwise10. The grounds of challenge The appeal was brought on three grounds, namely, that the Court of Criminal Appeal erred by: (i) failing to consider and apply the principles relating to Crown appeals in deciding whether to allow the appeal and in re-sentencing the appellant; (ii) separately determining that the appeal should be allowed when the circumstances at the time of any re-sentencing were not known; and (iii) failing to accord the appellant procedural fairness in the conduct of the hearing of the appeal. There was no challenge to the Court of Criminal Appeal's conclusion that the sentence imposed by the sentencing judge was manifestly inadequate. For that reason, the agreed facts upon which the sentencing proceeded, and the sentencing judge's findings with respect to the appellant's circumstances, can be briefly stated. The proceedings before the sentencing judge The appellant pleaded guilty to the unlawful supply of a dangerous drug, cannabis plant material, in a circumstance of aggravation, namely, that the recipient of the supply was a child (count 1)11. The facts of this offence are that the appellant supplied cannabis plant material on multiple occasions to a 16-year-old girl, knowing that she was a child. The supplies were in varying quantities, such as seven, 14 or 28 grams at a time. They took place over a period of four months between 16 April 2015 and 1 January 2016. The appellant was aged 20 and 21 years during this period. Counts 2 and 3 charged the appellant with the intentional supply of a commercial quantity of cannabis plant material between 17 July 2016 and 25 April 2017 (count 2)12, and in the same period, with the receipt of $368,120 in cash, knowing it was obtained directly or indirectly from the supply of the drug 9 Green v The Queen (2011) 244 CLR 462 at 466 [2] per French CJ, Crennan and 10 Munda v Western Australia (2013) 249 CLR 600 at 625 [77] per French CJ, Hayne, Crennan, Kiefel, Gageler and Keane JJ. 11 Misuse of Drugs Act, s 5(1) and (2)(a)(iii). 12 Misuse of Drugs Act, s 5(1). Bell Nettle (count 3)13. The facts of these offences are that, over a period of nine months, the appellant sold over 30 kilograms of cannabis plant material in return for the receipt of $368,120. His profit from these sales amounted to $61,676. The commercial quantity for cannabis plant material is 500 grams14. Counts 4 and 5 charged the appellant with the intentional supply of a commercial quantity of MDMA between 21 August 2016 and 25 April 2017 (count 4)15, and in the same period, with the receipt of $45,375 in cash, knowing that it was obtained directly or indirectly from the supply of MDMA (count 5)16. The facts of these offences are that, over the course of eight months, the appellant sold 425.6 grams of MDMA and received $45,375 from the sales, making a profit of approximately $13,285. The commercial quantity for MDMA is 25 grams17. Count 6 charged the appellant with possessing $8,060 in cash, knowing that it was obtained from the supply of dangerous drugs contrary to the MDA, on 25 April 201718. This count related to the discovery of $8,060 in cash at the appellant's residence during the execution of a search warrant by the Northern Territory Police. In the course of the search, the police also located a further 451.77 grams of cannabis, 0.66 grams of MDMA, 0.28 grams of MDA19 and a variety of drug-related paraphernalia. The appellant was aged 23 years at the date of sentence. He had been raised in a supportive and caring family environment. He had a reasonable work history and no relevant criminal history. In 2010, at the age of 15, he was the victim of a violent assault, which left him with long-term anxiety, fear and anger management problems. Louise McKenna, a psychologist, reported that the appellant met the diagnostic criteria for severe anxiety, depression and post-traumatic stress disorder as a result of the assault. The history that she obtained included that the appellant started using cannabis at the age of 17 and MDMA at the age of 20. His use of both 13 Misuse of Drugs Act, s 8(1). 14 Misuse of Drugs Act, Sch 2. 15 Misuse of Drugs Act, s 5(1). 16 Misuse of Drugs Act, s 8(1). 17 Misuse of Drugs Act, Sch 1. 18 Misuse of Drugs Act, s 8(1). 19 This is the short name for the chemical compound methylenedioxyamphetamine, a dangerous drug under Sch 1 to the Misuse of Drugs Act. Bell Nettle drugs had developed into a daily dependency. Ms McKenna noted that between 52 and 66 percent of people diagnosed with post-traumatic stress disorder develop substance abuse issues. The sentencing judge noted Ms McKenna's assessment that the appellant presented as a low risk of re-offending. He had attended drug counselling and was reported to have made significant progress. Her Honour accepted that there was an indirect connection between the earlier assault and the appellant's offending in that the assault had led to his drug use. Nonetheless, her Honour said this link did not explain the "very high-level, deliberate, effectively greed-based offending on an ongoing basis". Her Honour concluded: "The sheer gravity of the offending tends to point towards setting a non-parole period. However, with the timely pleas of guilty, his relatively young age, the matters of life adversity and psychological issues, and importantly, the good progress towards rehabilitation, the Court is justified to pass a total sentence of less than 5 years and order partial suspension on conditions set by Corrections. General deterrence, however, demands he must still serve a further term." Section 40(1) of the Sentencing Act 1995 (NT) provides that a court which sentences an offender to a term of imprisonment of not more than five years may make an order suspending the sentence where it is satisfied that it is desirable to do so. Under s 40(8) of the Sentencing Act, "[a] partly suspended sentence of imprisonment is taken, for all purposes, to be a sentence of imprisonment for the whole term stated by the court". The maximum penalty for the offences charged in counts 1 and 2 was 14 years' imprisonment. The maximum penalty for the offences charged in counts 3 to 6 was 25 years' imprisonment. The sentencing judge allowed a 25 percent reduction in the sentence that would otherwise have been imposed to reflect the appellant's early pleas of guilty. The starting point for the sentence was six years' imprisonment. Her Honour directed that the sentence was to be suspended after two years' imprisonment with an operational period of three years from the date of release, during which the appellant must not commit another offence punishable on conviction by imprisonment20. For the first year after his release, her Honour directed that the appellant was to be subject to supervision and to wear an approved monitoring device. The backdating of the sentence to 27 June 2017 took into account pre-sentence custody and a period during which the appellant had been on strict bail conditions. 20 Sentencing Act, s 40(6). Bell Nettle The course of proceedings in the Court of Criminal Appeal The prosecution's argument in the Court of Criminal Appeal relied, among other authorities, on R v Roe21, in which it was said that the supply of a commercial quantity of a dangerous drug (in that case methamphetamine) requires that punishment, denunciation and deterrence serve as the main objects of sentencing22. The appellant (the respondent in the Court of Criminal Appeal) submitted that the sentence was not erroneously inadequate. In the event that the Court of Criminal Appeal found that it was, the appellant did not submit that any factor would engage the residual discretion to dismiss the Crown appeal. At the conclusion of the hearing, the appellant was given leave to make submissions in writing within 14 days with respect to the question of re-sentence in the event that the appeal should succeed. On 31 July 2018, the appellant's counsel contacted the presiding judge's associate by email requesting that the Court order a report from "Corrections Staff" on the appellant's progress ("the prison report"). Counsel was advised by return email that "the decision" was to be handed down the following morning and that the Court had expressed the desire that the matters raised in the email be addressed on that occasion. On 1 August 2018, the appellant's counsel sent a further email to the presiding judge's associate, raising an issue concerning the application of s 55 of the Sentencing Act. Section 55(1) provides that a court sentencing an offender to imprisonment for a "specified offence" for 12 months or longer, where the sentence is not suspended in whole or in part, must fix a period of not less than 70 percent of the period of imprisonment that the offender is to serve under the sentence. Section 55 was amended with effect on 18 July 201623. The offences charged in counts 2 and 4 were "specified offences". Before the amendments, the minimum non-parole period applying to offences under the MDA was 50 percent of the effective sentence. [2017] NTCCA 7. 22 R v Roe [2017] NTCCA 7 at [47]. 23 Justice Legislation Amendment (Drug Offences) Act 2016 (NT), s 45. Bell Nettle Relevantly, in his email of 1 August 2018 the appellant's counsel stated: "[I]t could be argued that Mr Cumberland is penalised by being subject to th[e] new regime, if the comparison with [R v Roe24] is utilised, as the comparison is not fair – as the former case was not subject to the new s 55 regime, whereas the [appellant] in this case potentially is. In this regard, the residual discretion referred to in, inter alia, Wilson's case[25] comes into play, as it does in respect to the matter that follows, in relation to rehabilitation." The reference to "Wilson's case"26 was to Riley CJ's analysis of the scope of the residual discretion following the enactment of s 414(1A) of the Code. His Honour observed that apart from "double jeopardy considerations" the Court of Criminal Appeal retains a residual discretion. His Honour's use of the term "residual discretion" included not only the discretion to dismiss an appeal against an erroneously lenient sentence but also the discretion to impose a lesser sentence than would otherwise be appropriate when allowing an appeal27. On the hearing in this Court, the respondent submitted that counsel's email is to be understood, consistently with his disavowal of reliance on the residual discretion at the hearing, not as a submission that the asserted unfairness justified dismissal of the appeal, but as a submission that it warranted a lesser sentence. On 2 August 2018, before hearing the appellant's submissions, the presiding judge announced that "the appeal is allowed for reasons which we will publish in due course". Her Honour stated that the Court had determined to re- sentence the appellant and that the sentence was very likely to be in excess of five years' imprisonment, which would require the fixing of a non-parole period. Her Honour said that this raised issues concerning identification of the statutory minimum non-parole period. The parties were informed that the Court of Criminal Appeal had determined to refer the question of the interpretation of the provisions of the Sentencing Act governing minimum non-parole periods to a five-member Bench of the Court of Criminal Appeal. The appellant's counsel referred to the need for an order from the Court to obtain a prison report. The presiding judge responded that "there's plenty of time [2017] NTCCA 7. 25 R v Wilson (2011) 30 NTLR 51. 26 R v Wilson (2011) 30 NTLR 51. 27 R v Wilson (2011) 30 NTLR 51 at 59 [27(e)]. Bell Nettle because we've got to work out the basis on which he's going to be sentenced yet with a five-person [B]ench". Barr J informed counsel that the five-member Bench would deal solely with the question of interpretation, and when that question was resolved, "we then revert to the three-person [B]ench which has heard the appeal to this [C]ourt in time". Counsel submitted that he was "keen" nonetheless to obtain the prison report. Barr J pointed out that the report might be out of date by the time the Court came to re-sentence the appellant. No formal orders were made on 2 August 2018. The matter was left on the basis that it would normally take two weeks or thereabouts for the authorities to provide a prison report. It was apparent from the discussion at the conclusion of the proceedings that it was envisaged that, after the five-member Bench delivered judgment, the Court of Criminal Appeal would be re-constituted and an order for a prison report would be made at that time. On 12 March 2019, the Court of Criminal Appeal – constituted by Grant CJ; Kelly, Barr and Hiley JJ; and Riley A-J – heard argument on the question of statutory construction and judgment was reserved. On 17 June 2019, the parties were advised that the matter was listed for decision on 19 June 2019 before Grant CJ, Kelly and Hiley JJ. On that date, immediately following delivery of the judgment of the five-member Bench on the question of construction, the Court of Criminal Appeal was re-constituted and their Honours delivered the judgment of the three-member Bench, allowing the appeal and re-sentencing the appellant. The appellant's counsel had no notice that the latter judgment was to be delivered that day and, contrary to the understanding on which matters had been left at the conclusion of the hearing on 2 August 2018, the appellant was not given an opportunity to have the Court order a prison report. The Court of Criminal Appeal noted that the appellant had conducted a drug-trafficking business involving the supply of large quantities of two dangerous drugs. Their Honours said that substantial terms of imprisonment were warranted in relation to counts 2 and 428. Their Honours made relatively brief reference to the appellant's subjective circumstances29, observing that, for offences involving the commercial distribution of drugs, the pre-eminent sentencing consideration is general deterrence30. Making due allowance for the appellant's youth and lack of 28 R v Cumberland [2019] NTCCA 14 at [19]. 29 R v Cumberland [2019] NTCCA 14 at [20]. 30 R v Cumberland [2019] NTCCA 14 at [21], citing Clarke v The Queen [2009] NTCCA 5 at [46] per Riley J and R v Carey [1998] 4 VR 13 at 17 per Winneke P. Bell Nettle prior convictions, the objective seriousness of the offending was such that the sentencing judge's starting point of an aggregate sentence of six years' imprisonment was held to be manifestly inadequate31. In re-sentencing the appellant, their Honours took into account "the matters of mitigation identified by the sentencing judge", which included the appellant's youth, health and psychological issues, reasonable work history and favourable references32. Their Honours did not refer to the circumstance that the appeal had been pending for 13 months and that the new sentence would take effect one week before the appellant was to be released under the sentencing judge's order. The appellant was re-sentenced to an aggregate sentence of eight years' imprisonment33. When account is taken of the 25 percent reduction for pleas of guilty, the effective starting point for the sentence was around ten years and eight months' imprisonment. A non-parole period of five years, five months and one week was specified34. The sentence was backdated to 27 June 201735. The first date on which the appellant was eligible for consideration of release on parole was 4 December 2022. Submissions and consideration In written submissions filed before the hearing in this Court, the respondent conceded that the appellant had been denied procedural fairness by the Court of Criminal Appeal in the conduct of "the resentencing exercise" in that he had not had the opportunity to place further material before the Court. On the hearing, the respondent accepted that the appeal must be allowed on ground three. The appropriate consequential order, in the respondent's submission, was to remit the matter to the Court of Criminal Appeal for the appellant to be re-sentenced following a hearing at which he had the opportunity to adduce evidence and make submissions. The respondent's concession was confined to remitter for re-sentencing on the footing that dismissal of its appeal in the exercise of the residual discretion had 31 R v Cumberland [2019] NTCCA 14 at [22]. 32 R v Cumberland [2019] NTCCA 14 at [24]. 33 R v Cumberland [2019] NTCCA 14 at [28]. 34 R v Cumberland [2019] NTCCA 14 at [32]. 35 R v Cumberland [2019] NTCCA 14 at [28]. Bell Nettle not been in play before the Court of Criminal Appeal; the appellant's counsel had not purported to rely on it. The respondent's submission was posited on acceptance that counsel's email of 1 August 2018, in which the Court of Criminal Appeal was invited, in terms, to consider the residual discretion, was to be understood as limited to the contention that the Court should impose a reduced sentence in the event that the Crown appeal was allowed. Whether that is so is not known because the appellant's counsel was not given the opportunity to develop the submission before the Court pronounced orders. It remains that the Court was on notice of the appellant's desire to make a submission concerning the residual discretion. More fundamentally, the respondent's submission overlooks that, while it was appropriate for the appellant's counsel to acknowledge on 18 July 2018 that no circumstance engaged the residual discretion, matters were very different 11 months later when the Court of Criminal Appeal delivered judgment. The delay in the appeal process was of a marked degree. By the time the Court of Criminal Appeal came to pronounce sentence, the appellant was within one week of automatic release under the existing sentencing order. Regardless of any submission made on the appellant's behalf at the hearing of the appeal 11 months earlier, this circumstance necessitated consideration of the residual discretion to dismiss the Crown appeal. At all times, the onus was on the respondent to negate the existence of any reason why the Court of Criminal Appeal should decline to interfere notwithstanding that their Honours were satisfied that the sentence was erroneously lenient36. The respondent sought to neutralise the factor of delay by pointing out that on 2 August 2018 the Court of Criminal Appeal made clear that the appeal was to be allowed and foreshadowed the likelihood of the imposition of a sentence of five years or more. The effect of the submission was that consideration of the residual discretion ceased to be relevant once their Honours signified their intention to allow the appeal. The submission underscores the strength of the appellant's second ground of appeal. The existence of the residual discretion to dismiss a Crown appeal notwithstanding the identification of error below suffices to show that it was an error to decide to allow the appeal before the Court of Criminal Appeal was in a position to make final orders. The delay of ten and a half months inevitably meant that the considerations bearing on whether the appeal should be allowed or 36 CMB v Attorney-General (NSW) (2015) 256 CLR 346 at 366 [56] per Kiefel, Bell and Keane JJ, citing R v Hernando (2002) 136 A Crim R 451 at 458 [12] per Heydon JA (Levine J agreeing at 464 [31], Carruthers A-J agreeing at 464 [32]). Bell Nettle dismissed in the proper exercise of discretion were distinctly different from the circumstances that prevailed when the Court announced its intention to allow the appeal. As the appellant submitted, by June 2019 the discretionary factors against allowing the Crown appeal, and increasing the sentence beyond five years, were overwhelming. Had the Court of Criminal Appeal not overlooked the exchange with counsel at the conclusion of proceedings on 2 August 2018, it would have been necessary to order a prison report when the Court re-constituted after the five-member Bench delivered judgment on 19 June 2019. It will be recalled that the preparation of the report is likely to have taken two weeks. The appellant would have been released into the community before the appeal came back before the Court of Criminal Appeal for the making of final orders. That circumstance alone would have weighed heavily in favour of dismissal. In the event, the respondent's concession with respect to ground three entailed that the orders of the Court of Criminal Appeal had to be set aside. The effect of that disposition was to leave in place the original sentence, under which the appellant was to have been released from custody on 26 June 2019. Among the reasons for not remitting the proceeding to the Court of Criminal Appeal is that it would have been futile to do so; the only proper exercise of discretion was to dismiss the Crown appeal. This conclusion took into account that the appellant would have been released into the community pending the determination of the Crown appeal having served nine and a half months in custody in addition to the custodial part of the sentence imposed by Blokland J.

HIGH COURT OF AUSTRALIA PORT OF PORTLAND PTY LTD APPELLANT AND STATE OF VICTORIA RESPONDENT Port of Portland Pty Ltd v Victoria [2010] HCA 44 8 December 2010 ORDER Appeal allowed with costs. Set aside paragraphs 1 and 3 of the order of the Court of Appeal of the Supreme Court of Victoria made on 10 December 2009 and, in lieu thereof, order that: the appeal to that Court be allowed with costs; the judgment of Mandie J made on 6 December 2007 be set aside; and the proceeding be remitted to the Trial Division of the Supreme Court of Victoria for an assessment of damages and consequential orders, including as to costs of the whole of the proceedings in the Trial Division. On appeal from the Supreme Court of Victoria Representation J D Merralls QC with S T Pitt for the appellant (instructed by Mills Oakley Lawyers) P J Hanks QC with C M Kenny SC and C O H Parkinson for the respondent (instructed by Victorian Government Solicitor) R J Meadows QC, Solicitor-General for the State of Western Australia with A J Sefton intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Port of Portland Pty Ltd v Victoria Constitutional law – States – Reception of English law – Status in Victoria of constitutional principle recognised in s 12 of Bill of Rights 1688. Contract – Construction – Enforceability of contractual obligation – Treasurer of State of Victoria directed Port of Portland Authority to sell its assets and business to appellant under contract ("Contract") – Section 4A(1) of Port of Portland Authority Act 1958 (Vic) gave Treasurer power to make direction – Treasurer party to Contract on behalf of State – State agreed, in cl 11.4(a) of Contract, to amend statutes to ensure port improvements excluded from land value used to calculate appellant's land tax – State agreed, in cl 11.4(b), to refund or allow to appellant excess tax if amendments did not become law – Whether cl 11.4(b) void as dispensation by executive from land tax legislation contrary to s 12 of Bill of Rights – Whether cl 11.4(b) effected dispensation – Whether cl 11.4(b) authorised by legislature enacting s 4A(1). Land tax – Valuation of land – Whether State's obligation in cl 11.4(b) arose – Legislative amendments made in purported conformity with cl 11.4(a) – Whether amendments ensured port improvements excluded from land value – Statutory scheme provided for "general valuation" of all rateable land in municipal district every six years – At time of Contract, no valuation for part of appellant's land by reason of former municipal rates exemption – Whether valuer had power to make supplementary valuation – Whether supplementary valuation could take into account amendments not in force at time of last general valuation – Whether court or tribunal could take into account amendments on objection against general valuation of balance of land. Words and phrases – "dispensation", "dispensing power", "general valuation", "supplementary valuation". Bill of Rights 1688 (1 Will & Mar Sess 2 c 2), s 12. Imperial Acts Application Act 1980 (Vic), ss 3, 8. Land Tax Act 1958 (Vic), ss 3(2), 3(2A). Valuation of Land Act 1960 (Vic), ss 2(1), 2(2AA), 5A(1), 13DF, 42(1). FRENCH CJ, GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ. The Port of Portland Authority ("the Authority") was designated as such by s 3A of the Port of Portland Authority Act 1958 (Vic) ("the Authority Act")1. This effected a change of name to the body corporate first constituted as the "Portland Harbor Trust Commissioners" by s 4 of the Portland Harbor Trust Act 1949 (Vic). The Authority applied its real property, plant and equipment and other assets in the operation of the deep water commercial port known as the Port of Portland in the Western District of Victoria ("the Port"). The Contract The appellant was nominated as the purchaser under, and since has completed, an agreement dated 15 February 1996 ("the Contract"). The subject matter was the sale by the Authority (defined as "the Vendor") to the appellant (defined as "the Purchaser") of its assets and business for a purchase price of $30 million. The governing law was that applicable in Victoria (cl 22.8). The effect of the Contract was, through a process of "privatisation", to pass the Port from public to private ownership. The Contract stipulated (cl 6.1) that, subject to satisfaction of the conditions precedent in cl 4, completion was to take place on 1 March 1996. Clause 11 was headed "ADJUSTMENTS" and provided for the allowance on completion of various adjustments to outgoings, expenses, rents and profits. The dispute which has come to this Court on appeal from the Court of Appeal of the Supreme Court of Victoria (Maxwell P and Buchanan JA; Nettle JA dissenting)2 concerns the provision made in cl 11.4 respecting land tax. One of the conditions precedent to completion which was stipulated in cl 4.1 was that there still be in force the direction of the Treasurer of Victoria dated 14 February 1996 ("the Direction"). This was in the following terms: 1 The Authority Act was repealed, and the Authority abolished, by the Port Services (Amendment) Act 1997 (Vic). All remaining property, rights and liabilities of the Authority were transferred to the State Electricity Commission of Victoria: Port Management Act 1995 (Vic), s 154. 2 Port of Portland Pty Ltd v State of Victoria [2009] VSCA 282. Crennan Bell "I, Alan Robert Stockdale, MP, Treasurer, pursuant section 4A(1) of the [Authority Act] having consulted with the Minister for Roads and Ports direct the [Authority] to sell, assign, transfer and otherwise dispose of, to Infratil Australia Limited (ACN 071 909 816) and Ascot Investments Pty Ltd (ACN 007 664 360) (or to a company nominated by them as provided for in the Asset Sale Agreement) for the amount of AUD30,000,000 those of its assets, liabilities, undertaking and business as specified in the Asset Sale Agreement executed by Infratil Australia Limited, Ascot Investments and the State of Victoria on 13 February 1996 (the "Asset Sale Agreement") and further direct that such sale, assignment, transfer or disposition is subject to and in accordance with the terms and conditions in the Asset Sale Agreement." The appellant was a company in which each of Infratil Australia Ltd and Ascot Investments Pty Ltd held 50 per cent of the issued shares, and which was nominated by them as the Purchaser. Section 4A(1) of the Authority Act stated: "In addition to its other powers under this Act, the Authority must (if directed in writing to do so by the Treasurer after consultation with the Minister) sell, assign, transfer or otherwise dispose of any part of its assets, liabilities, undertaking or business to any person or body specified in the written direction, at the price specified in the written direction and subject to and in accordance with the other conditions (if any) specified in the written direction." In addition to imposing an obligation upon the Authority, s 4A(1) impliedly conferred upon the Treasurer the power of determining whether to give a direction and the conditions to be specified in the direction3. That power was exercisable "from time to time as occasion require[d]"4. The Contract, the subject of the Direction, was one to which the parties were not only the Vendor and the Purchaser, but also the Treasurer "for and on behalf of the Crown in right of the State of Victoria ('State')". Part II (ss 20-27) of the Crown Proceedings 3 See Minister for Immigration and Ethnic Affairs v Mayer (1985) 157 CLR 290 at 303; [1985] HCA 70; North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 at 169 [52]; [2004] HCA 31; Griffith University v Tang (2005) 221 CLR 99 at 126-127 [74]-[75]; [2005] HCA 7. Interpretation of Legislation Act 1984 (Vic), s 40. Crennan Bell Act 1958 (Vic) ("the Crown Proceedings Act") renders the Crown liable in respect of any contract made on its behalf in the same manner as a subject (s 23) and provides that proceedings against it shall be instituted under the title of the "State of Victoria" (s 22). However, it should be emphasised that the State, the respondent to the present appeal, became a party to the Contract not by reason of the exercise purely of executive authority, but rather from the exercise by the Treasurer of authority conferred by statute, namely s 4A(1) of the Authority Act. Section 4A(1) authorised the Treasurer to direct the Authority to sell its assets on terms and conditions which included the making of adjustments as spelled out in cl 11 and the assumption by the State of the obligation in cl 11.4(b). Clause 11.4 was headed "Land Tax" and stated: "(a) The State has agreed with the Purchaser that it will effect an amendment to statutes governing the assessment and imposition of land tax to ensure that the unimproved site value used as the basis for assessment of land tax liability for the Real Property excludes the value of buildings, breakwaters, berths, wharfs, aprons, canals or associated works relating to a port. In the event that, before or after Completion the relevant statutory amendments do not become law and, as a result of that the Purchaser is assessed to land tax on the Real Property at a rate higher than would have been the case if the relevant statutory amendments were law, the State will refund or allow to the Purchaser the difference between the two amounts." This presents various difficulties in construction. To the action brought against it by the appellant in the Supreme Court, the State pleaded that cl 11.4 was void or beyond the power of the State by reason of being a ministerial or executive act that purported to bind the Parliament, with the result that the State could not be sued for any failure of the Parliament to give effect to cl 11.4. In substance that plea was upheld at first instance by Mandie J5, and by the majority in the Court of Appeal. 5 Port of Portland Pty Ltd v State of Victoria [2007] VSC 488. Crennan Bell The Bill of Rights In this Court, the appellant (like the intervener, the Attorney-General of Western Australia) accepts that: (a) there applies in Victoria the constitutional principles associated with the treatment in England by the Convention Parliament in the Bill of Rights6 of the endeavours of King James II (in Scotland styled King James VII) to subvert the laws and liberties of the Kingdom by assuming and exercising a power of dispensing with and suspending of laws and the execution of laws without the consent of the Parliament at Westminster; and (b) in particular, there applies in Victoria the prohibition expressed in s 12 of the Bill of Rights that no executive "dispensation by non obstante of or to any statute or any part thereof shall be allowed but that the same shall be held void and of no effect except a dispensation be allowed" of by statute. The terms in which the Bill of Rights was expressed ("as it [the dispensing power] hath been assumed and exercised of late") may have been adopted to preserve the prerogative to pardon offences after they were committed7. They may also have been directed to the misuse by King James II of what previously had been the convenient means provided by the dispensing power of relieving against the operation of outdated, ill-drawn and ill-advised statutes. A consequence of the Bill of Rights was that thereafter full responsibility for the drafting of statutes fell to the Parliament8. The Convention of Estates of the Kingdom of Scotland had enacted its own Claim of Right Act 1689, c 289. This, whilst declaring that King James VII 6 1688 (1 Will & Mar Sess 2 c 2). The question of dates between 1688 and 1689 is considered in Cadia Holdings Pty Ltd v New South Wales (2010) 84 ALJR 588 at 610 [98]; 269 ALR 204 at 230; [2010] HCA 27. 7 R v Stead [1994] 1 Qd R 665 at 668. The prerogative of mercy is preserved in Victoria by s 327 of the Criminal Procedure Act 2009 (Vic), previously s 584 of the Crimes Act 1958 (Vic). 8 Edie, "Revolution and the Rule of Law: The End of the Dispensing Power, 1689", (1977) 10 Eighteenth Century Studies 434 at 450. 9 APS IX 38. Crennan Bell had forfeited the Crown, in presently relevant respects followed the Bill of Rights10. No legislation was passed by the Irish Parliament11 and the extent to which the constraints imposed by the Bill of Rights (particularly respecting the dispensing power) operated upon the exercise of executive power in Ireland remained unclear12. The constitutional rearrangements made by the Convention Parliament had the effect in England, and thereafter in the United Kingdom, of settling the scope of the executive power in various respects. In Australia it was with these limitations upon the executive that the constitutions of the States took their shape13. The position in the colonies is considered as follows by Justice McPherson in his work The Reception of English Law Abroad14: "Whether Parliamentary enactments like the Habeas Corpus Act 1679 or the Bill of Rights 1689 limited royal prerogatives in the overseas possessions as they did in England was for some time a matter of contention between the crown and colonists. Probably the correct view is that, although at first not all of the rights guaranteed by Acts like those were immediately in force at the settlement of a colony, they or some of their provisions were attracted to and received as and when a colony attained the stage of constitutional development at which those Acts became reasonably capable of being applied as a part of the locally adopted English statute law15." 10 Walker, A Legal History of Scotland, (1996), vol 4 at 88-89. 11 See The People (Attorney-General) v O'Callaghan [1966] IR 501 at 518. 12 Osborough, "The Failure to Enact an Irish Bill of Rights: A Gap in Irish Constitutional History", (1998) 33 Irish Jurist 392 at 412-413. 13 Cadia Holdings Pty Ltd v New South Wales (2010) 84 ALJR 588 at 603 [54]-[56], 611 [106]; 269 ALR 204 at 220-221, 232. 15 For example, s 9 of the Bill of Rights guaranteeing freedom of speech in Parliament would not have been capable of application until a colony had a representative legislature; but other parts of the Bill of Rights could be and have been applied: (Footnote continues on next page) Crennan Bell The Bill of Rights is one of the "transcribed enactments" set out in s 8 of the Imperial Acts Application Act 1980 (Vic) and by force of s 3 thereof continues "to have in Victoria ... such force and effect, if any, as [it] had at the commencement of this Act". The preferable view is that these provisions in the Victorian statute at best serve only to reinforce what are settled constitutional principles. From the grundnorm represented by the constitutional settlement by the Convention Parliament there was to be no turning back in England, or thereafter in the United Kingdom. In Australia the absence of a power of executive dispensation of statute law, what Dixon CJ called a "general constitutional principle"16, became an aspect of the rule of law and, as Wild CJ put it with respect to New Zealand, is "a graphic illustration of the depth of our legal heritage"17. Such a power is absent from the Constitutions of the States which are identified in s 106 of the Constitution. Paragraph (b) of cl 11.4 is effective The appellant does not place at the foundation of its case against the State par (a) of cl 11.4, with its reference to the effecting by the legislature of an amendment to the land tax laws. This makes it unnecessary to determine whether Nettle JA was correct in the view that par (a) should be construed as imposing an obligation upon the executive limited to what it could lawfully and effectively do to procure the passage of the legislation to which par (a) refers. The appellant places its case upon par (b) of cl 11.4, and submits that it is sufficient for its case to characterise the failure to legislate as specified in par (a) as no more than the factum for the operation of par (b). This submission should be accepted. It enables the appellant to skirt any issue that par (a) is void as an attempt to fetter by contract the exercise as the State legislature sees fit of the power provided by ss 15 and 16 of the Constitution Act 1975 (Vic). Section 15 Fitzgerald v Muldoon [1976] 2 NZLR 615 (no power to dispense with Act of Parliament); R v Stead [1994] 1 Qd R 665 at 668-669 (no power to pardon before offence committed: Bill of Rights, ss 1 and 2). 16 Cam and Sons Pty Ltd v Ramsay (1960) 104 CLR 247 at 258, see also at 272-273 per Windeyer J; [1960] HCA 82. 17 Fitzgerald v Muldoon [1976] 2 NZLR 615 at 622. Crennan Bell vests the legislative power of the State in the Parliament and s 16 identifies that power as one to make laws in and for Victoria in all cases whatsoever. Upon the factum supplied by failure to legislate as described in par (a), par (b) operates if the appellant is assessed to land tax at the higher rate referred to in par (b), whether this is in respect of an assessment before or after completion. In those circumstances, the difference is to be borne by the State, whether by refunding money paid or by allowance in computation of what is payable but unpaid. The payments are made by way of adjustment in the price for sale of public assets and do not have the character of a dispensation from the operation of the land tax legislation. Further, and in any event, the Authority Act supplied legislative support for the entry by the State into and performance of the obligation in par (b) of cl 11.4. The Authority was obliged by s 42(2A) of the Authority Act to pay the proceeds of sale received on completion of the Contract to a fund established by that section, but subject to directions given by the Treasurer under sub-ss (2B) and (2C). Under those provisions the Treasurer was empowered to direct payment of any specified part of the proceeds into the Consolidated Fund established and kept under s 9 of the Financial Management Act 1994 (Vic). The adjustments for which cl 11.4(b) provided qualified what otherwise would be the operation of the financial arrangements under the Authority Act for the sale of the assets of the Authority at the direction of the Treasurer under s 4A(1) of that statute. The Direction was supported by s 4A(1) and drew the terms of the Contract, including cl 11.4(b), into the operation of the legislative scheme for "privatisation". The upshot is that the plea by the State based upon constitutional principles emphasising the control by the legislature of the executive, particularly in revenue matters, was effectively confessed and avoided by the appellant. The "statutory backing" to the Contract, to use Windeyer J's words in Placer Development Ltd v The Commonwealth18, sufficiently supported the obligation of the State under cl 11.4(b). Judgment against the State would be satisfied by the appropriation provided for under s 26 of the Crown Proceedings Act. 18 (1969) 121 CLR 353 at 366; [1969] HCA 29. Crennan Bell The appeal on the merits The appeal thus falls for determination on the merits, namely whether in the events that happened and upon the proper construction of cl 11.4(b) and the relevant revenue and land valuation legislation, there is a differential which the appellant may recover and, if so, how it is to be assessed. Section 9 of the Land Tax Act 1958 (Vic) ("the Land Tax Act")19 exempted from land tax land vested in a public statutory authority constituted under a statute such as the Authority Act. The appellant, as the Purchaser, would not be in that position, and par (a) of cl 11.4 was designed to ensure that in assessment of the ongoing land tax liability of the appellant there would be excluded from the unimproved site value the works relating to the Port. If par (a) was satisfied, then the condition for the operation of par (b) would not be met and the State would have no obligations thereunder to the appellant. The obligation in cl 11.4(b) of the Contract In this Court, by way of notice of contention, the State submits that no obligation arose on the part of the State to refund to the appellant, after completion, any differential in the purchase price. By the terms of cl 11.4(b), that obligation would arise only if "the relevant statutory amendments [did] not become law" and as a result the appellant was assessed to land tax at a higher rate. The reference to the relevant statutory amendments is a reference to what was described in cl 11.4(a) as "an amendment to statutes governing the assessment and imposition of land tax to ensure that the unimproved site value used as the basis for assessment of land tax liability for the Real Property excludes the value of buildings, breakwaters, berths, wharfs, aprons, canals or associated works relating to a port". The State contends that the condition for the operation against it of cl 11.4(b) was not satisfied because an amendment meeting the description in par (a) became law upon the commencement of the State Taxation (Omnibus 19 The Land Tax Act was repealed on 1 January 2006 by s 116 of the Land Tax Act 2005 (Vic). Crennan Bell Amendment) Act 1996 (Vic) ("the Omnibus Amendment Act"). Section 27 of the Omnibus Amendment Act amended the definition of "improvements" in s 2(1) of the Valuation of Land Act 1960 (Vic) ("the Valuation Act") and inserted s 2(2AA). The effect of the amendment was that "[w]orks relating to a port, being buildings, breakwaters, berths, wharfs, aprons, canals or associated works" were improvements within the meaning of the Valuation Act. The "site value" of land, as defined in s 2(1) of the Valuation Act, was calculated upon the fictitious assumption that any improvements to land had not been made. However, "improvements" was defined so as not to include "work done or material used for the benefit of the land by the Crown or by any statutory public body". By reason of provisions20 in the Land Tax Act, "the site value", adjusted in accordance with s 3(4) of that Act, was the value of land upon which land tax was assessed. As the law stood at the time of the Contract, the land tax payable was to be calculated by reference to "the site value" which would have included numerous improvements at the Port. The amendment to the Valuation Act came into force on 25 June 199621, being the day on which the Omnibus Amendment Act received Royal Assent22. However, by reason of the time scale for the making of periodic valuations of land, the appellant contends that the amendment did not ensure that the value of the works described in cl 11.4(a) were excluded from the value of the land upon which land tax was calculated for the 1997-2001 calendar years. The submissions of the State in response are that: (a) once the amendments were enacted the contractual obligation was discharged; and (b) if, as the appellant contends, the obligation of the State went further and was to ensure that the amendments had an immediate effect upon land tax liability of the appellant, then they had, or at least were capable of having, that effect. The State seeks to make good that second submission by way of two propositions: the first is that a supplementary valuation for the main port area for the 1997-2001 tax period was made which excluded the works declared to be improvements in 20 Sections 3(2), 6 and 8. 21 Victoria Government Gazette, G25, 27 June 1996 at 1593. 22 Omnibus Amendment Act, s 2(1). Crennan Bell s 2(2AA); and the second is that the appellant was entitled to object, pursuant to the Valuation Act, to the valuation of the land it had acquired, and on review the operation of s 2(2AA) would have been a mandatory consideration. Before further consideration of the competing submissions of the parties, it is convenient to say more regarding the land acquired by the appellant and the structure of the statutory scheme for the imposition of land tax in Victoria. The land acquired by the appellant Under the Contract, the appellant acquired approximately 115 hectares of unalienated Crown land. The main port area, known as Barton Place and comprising approximately 68 hectares, was largely occupied by the Authority and subsequently the appellant. The balance of the main port area, and the remaining land acquired, was subject to leasehold interests. For ease of reference, all of Barton Place will be referred to in these reasons as "the main port area", that part of the land in the main port area occupied by the Authority and then the appellant shall be referred to as "Barton Place", and that part of the main port area subject to leases, as well as the rest of the acquired land, as "the leased land". The leased land and approximately 37 hectares of Barton Place were situated in the municipal district of the Shire of Glenelg ("the Shire"). By an Order in Council dated 21 January 199723, the municipal district of the Shire was extended to include land from the high water mark to 200 metres seaward, with the effect that, from 24 January 1997, the size of Barton Place within the Shire increased to approximately 49 hectares. Before acquisition by the appellant, Barton Place, as land vested in a public statutory body and used for public purposes, was land exempt from municipal rates by reason of s 154(2) of the Local Government Act 1989 (Vic) ("the Local Government Act"). Accordingly, Barton Place had never been valued for municipal rating purposes. The significance of this lies in the reliance upon valuations made for municipal rating purposes in the assessment of land tax under the Land Tax Act. Upon the appellant acquiring Barton Place in 1996 the exemption from municipal rates no longer applied. From 24 January 1997 a 23 Victoria Government Gazette, G3, 23 January 1997 at 194-196. Crennan Bell further 12 hectares, approximately, of Barton Place then also fell within the boundaries of the Shire. It appears that those 12 hectares, being land below the high water mark, were not formerly within any other municipal district and so had not been rateable. The land tax scheme Land tax was assessed by reference to the "site value" of land as at the "relevant date"24. For the purposes of assessing and levying land tax, the Commissioner of State Revenue25 was permitted to use valuations made by a rating authority within the meaning of the Valuation Act26. Section 2(1) of the Valuation Act provided that a "council" within the meaning of the Local Government Act was a rating authority, the relevant rating authority here being the Shire. Section 157(1) of the Local Government Act permitted a council, such as the Shire, to use the site value system of valuation. That is one of the valuation systems used by the Shire and was relevant to the assessment of land tax. Section 3(2A) of the Land Tax Act provided that, for land within the municipal district of a municipal council, the "relevant date" for valuation was generally the date as at which the land was valued for the purposes of the last "general valuation" returned to the municipal council before 1 January in the year immediately preceding the year for or in which land tax was being assessed. The term "general valuation" was not defined in the Land Tax Act but, given the definition of "supplementary valuation" in s 3(6) and the interrelation between the two Acts, it clearly referred to a "general valuation" as defined in s 2(1) of the Valuation Act; namely, "a valuation of all the rateable land in the area of a rating authority or in any one or more subdivisions of such an area". Prior to amendments made in 199827, s 13DC(5)(b) of the Valuation Act required a valuation of rateable land within a council's municipal district to be 24 Land Tax Act, s 3(2). 25 Defined as such in s 3(1) of the Land Tax Act. 26 Land Tax Act, s 16. 27 See Valuation of Land (Amendment) Act 1998 (Vic), s 3(2). Crennan Bell made and returned every six years. Despite the absence of the term "general valuation" in s 13DC(5)(b), it was clearly contemplated under the statutory regime that councils such as the Shire would conduct a general valuation every six years, and that in the intervening periods supplementary valuations could be carried out under s 13DF of the Valuation Act in certain circumstances28. Both s 13DC and s 13DF appeared in Pt 2, Div 3A of the Valuation Act, which was headed "Valuations for Local Government Act 1989". Division 3A was inserted in 198929, the year the Local Government Act was enacted. The date of the last general valuation for land within the Shire before the making of the Contract was 30 June 1993. Most of the leased land had been valued as at, or near to, that date. Barton Place was valued, for the first time, by Mr McDonald, the valuer for the Shire, in his supplementary valuation of 7 March 1997. He valued the site value of Barton Place as at 30 June 1993 as $2,050,500. By reason of a change in the size of Barton Place, a further supplementary valuation was returned on 28 June 2000 assigning a site value of $2,044,800. These two figures for site value were used as the basis for calculating the land tax payable by the appellant on Barton Place for the years The State contended, and the appellant accepted, that no supplementary valuation was carried out for the leased land, but it appears that some of the leased land had supplementary valuations. If that is so, the reasons below concerning the effect of any supplementary valuations of Barton Place on cl 11.4 are equally applicable to any supplementary valuations of parts of the leased land. The amendments to the Valuation Act in 1998 meant that the next general valuation did not take place until a valuation was made as at 1 January 2000, and would thereafter be made at two-year intervals. Mr McDonald returned a site value for Barton Place of $2,044,800 as at 1 January 2000. After an objection was lodged by the appellant, that figure was significantly reduced by 28 See also s 256 of the Local Government Act 1928 (Vic), s 256 of the Local Government Act 1946 (Vic) and s 258 of the Local Government Act 1958 (Vic) which had enabled a council to cause a supplementary valuation "without causing a valuation to be made of all rateable property within the municipal district or any one or more of the subdivisions thereof". 29 Valuation of Land (Amendment) Act 1989 (Vic), s 8. Crennan Bell Mr McDonald to $221,000 and subsequently confirmed by the Valuer-General. The appellant's contention, disputed by the State, is that the reduction in value was due to the proper exclusion of the s 2(2AA) improvements to arrive at the latter figure. But in this Court the question to be resolved is whether Mr McDonald's supplementary valuation in March 1997, or indeed any other supplementary valuations, could have excluded from the site value of Barton Place, or parts of the leased land, the improvements referred to in s 2(2AA) of the Valuation Act as amended from 25 June 1996. If it could not have done so, then no change to the law was made which ensured that those improvements, on the assumption they correlated with what was required by cl 11.4(a), were excluded from the site value. It would then follow that the State was in breach of its obligation under cl 11.4(b) of the Contract. Supplementary valuations The State contends that Mr McDonald's valuation in March 1997 was a supplementary valuation supported by s 13DF of the Valuation Act and capable of taking into account the insertion of s 2(2AA) in that Act. Subsections (1) and (2) of s 13DF relevantly provided: "(1) Despite anything in this or any other Act, a person referred to in section 13DA may carry out a supplementary valuation for the purposes of the [Local Government Act]. (2) A supplementary valuation may be made in any of the following circumstances– The State submits that sub-s (1) provided a general power for a supplementary valuation to be made and that pars (a) to (o) of sub-s (2) did not limit the exercise of that power to the circumstances there listed. The State contends that if sub-s (2) was an exhaustive list of circumstances in which a supplementary valuation could be made, then sub-s (1) would have no work to Section 13DA(1) provided that a council "may appoint" persons to make "valuations under this Act for the purposes of the [Local Government Act]" Crennan Bell the work performed by s 13DF(1) was (emphasis added). That provision meant that, at least as the Valuation Act then stood, a supplementary valuation was to be carried out by the same class of valuers entitled to carry out a general valuation in accordance with s 13DC. that a However, supplementary valuation could be made without the need to undertake a general valuation of all rateable land within the area of a rating authority. It could be made despite any prohibition or restriction on the making of supplementary valuations that might have existed (but does not then appear to have existed) in the Local Government Act or any other Act, but only in the circumstances found in sub-s (2). to stipulate The interpretation of sub-s (2) as providing an exhaustive set of circumstances should be accepted. It is supported by the terms of sub-ss (4) and (5) of s 13DF. These subsections dealt with the adjustment of any rate payable in relation to the land consequent on the making of a supplementary valuation. Sub-section (4) provided that where a supplementary valuation was made in any of the circumstances in sub-s (2), other than par (o), the rate was to be adjusted from the day after the supplementary valuation had been returned. Where par (o) applied, sub-s (5) provided the different result that the rate may be adjusted by the council retrospectively for any period it considered just. If a general power could also be exercised under sub-s (1), how then, temporally, would the rate of land tax be adjusted in consequence? An alternative argument by the State was that, in the circumstances, either par (e) or par (n) of s 13DF(2) was engaged. Paragraph (e) allowed the making of a supplementary valuation "if any land has become rateable since the return of the existing valuation". That certainly enabled a supplementary valuation to be made in the present case as 37 hectares of Barton Place only became rateable upon the appellant's acquisition of the land under the Contract and the loss of the exemption enjoyed by the Authority. A further 12 hectares became rateable only upon the Order in Council extending the Shire boundary. Thus, in two separate stages, the approximately 49 hectares of Barton Place within the Shire had become rateable since the return of the "existing valuation", being the last general valuation for the Shire. Whether par (n) was engaged is a matter of dispute to which it will be necessary to return below. How any supplementary valuation was to be made If par (e) of s 13DF(2) were engaged, the appellant submits that, by reason of sub-s (6) of s 13DF, the amendments made by the Omnibus Amendment Act, Crennan Bell with effect from 25 June 1996, could not be taken into account in any supplementary valuation, which had to value Barton Place as at 30 June 1993. Sub-section (6) directed the valuer as follows: "The valuer in making a supplementary valuation must– have regard to the general levels of value upon which the valuation in force within the municipal district or ward was based; and assess the value that the land to which the supplementary valuation applies would have had if at the time at which the last valuation of the municipal district or ward was made it had been in the condition in which it is at the time of the making of the supplementary valuation, having regard to every circumstance which affects the value of the land at the time of the making of the supplementary valuation, if it is a circumstance requiring the making of a supplementary valuation of the land under sub-section (2)." (emphasis added) The enactment of the Omnibus Amendment Act did not mean that Barton Place was, in 1997, in a different "condition" to which it had been as at 30 June 1993. However, the State submits that those statutory amendments were required to be taken into account in assessing the "value" of Barton Place. It further submits that the amendments were required to be taken into account by reason of s 5A(1) of the Valuation Act, which provided as follows: "Unless otherwise expressly provided where pursuant to the provisions of any Act a court board tribunal valuer or other person is required to determine the value of any land, every matter or thing which such court board tribunal valuer or person considers relevant to such determination shall be taken into account." In the present case, however, the land being in no different condition, the value in a supplementary valuation was to be that which Barton Place would have had at the time of the last general valuation, being 30 June 1993. At that time the amendment to the Valuation Act later made by the Omnibus Amendment Act was not in force. The next step required for a supplementary valuation by par (b) of s 13DF(6) would be to have regard to "every Crennan Bell circumstance" affecting the value of Barton Place, as at the supplementary valuation date of 7 March 1997, but only if it was a circumstance "requiring"30 the making of a supplementary valuation under sub-s (2). If par (e) was engaged in the present case, the change made by the Omnibus Amendment Act was irrelevant, it not being the circumstance attracting the operation of par (e) of s 13DF(2). Thus, the next question is whether par (n) of s 13DF(2) was engaged and, if so, whether the result was that the valuer might have regard to the change made by the Omnibus Amendment Act. Whether par (n) was engaged Paragraph (n) of s 13DF(2) of the Valuation Act provided that a supplementary valuation may be made: "if for any reason other than a reason referred to in any of paragraphs (a) to (m), the capital improved value, net annual value or site value– of any land specified by Order of the Governor in Council published in the Government Gazette; or of the land in any area specified by Order of the Governor in Council published in the Government Gazette– is or is likely to have been materially altered as a consequence of any Act, proclamation, Order in Council, regulation, by-law or local law". Section 220Q of the Local Government Act empowered the making of the Order in Council, published in the Government Gazette on 23 January 1997, that extended the boundaries of the Shire so as to include a larger portion of Barton Place. The point made by the State is that the source of power to make the Order in Council was located in the Local Government Act and that it was unnecessary to rely upon a power to do so implied by the terms of par (n) of s 13DF(2) of the 30 No circumstance in s 13DF(2) was capable of "requiring" the making of a supplementary valuation, each being a circumstance where a supplementary valuation "may" be made. This would best be read as a circumstance "enlivening the power for" the making of a supplementary valuation under sub-s (2). Crennan Bell Valuation Act. The State notes that the Order in Council specified the area which now fell within the Shire boundary; approximately 49 hectares of Barton Place was land in that area, and its site value was or was likely to have been materially altered as a consequence of an Act, namely, the Omnibus Amendment Act. If par (n) was engaged then the valuer was required under s 13DF(6)(b) to have regard to the amendment made by the Omnibus Amendment Act, this being the circumstance enlivening the power to make the supplementary valuation. As stated above31, par (e) contained the "reason" why the power to make a supplementary valuation in relation to Barton Place became exercisable, but that was not a reason why the site value was or was likely to have been materially altered. The introductory words of par (n) appear to be directed at excluding from its scope matters to which one of pars (b), (g), (i) or (l) would already apply. Those paragraphs applied to alterations to value linked to the operation of particular Victorian statutes32. The Victorian Parliament might have chosen in s 13DF(2) to provide that any amendment to the law with a consequential effect on land value was a circumstance engaging the power to make a supplementary valuation. However, the evident legislative purpose in sub-s (2) is that not all changes in land value consequent on a change in, or the operation of, the law will enable a valuation outside of the periodic cycle of general valuations. Changes in value as a consequence of the operation of the particular statutes identified in pars (b), (g), (i) or (l) will enliven the power to make a supplementary valuation. Changes in value as a consequence of the operation of any other statute, proclamation or subordinate instrument are then dealt with in the residual category in par (n). But the requirement for an Order in Council performs a limiting function. Paragraph (n) does not provide that changes in consequence of any statute, proclamation or subordinate instrument will suffice. The land must be specified in an Order in Council, or must be in an area specified in an Order in Council. The power to make such Orders in Council for the purposes of par (n) is 32 Respectively, the Planning and Environment Act 1987 (Vic), the Heritage Act 1995 (Vic), the Victorian Conservation Trust Act 1972 (Vic) and the Local Government Act 1972 (Vic). Crennan Bell impliedly conferred by that paragraph itself33. If an Order in Council is made pursuant to par (n) of s 13DF(2) of the Valuation Act there can be no dispute that par (n) applies, but a bare reference in any Order in Council to an area of land, or a specification of an area of land for some purpose unconnected with par (n), will not suffice. There are good reasons why this is so. The inclusion in par (n) of sub- pars (i) and (ii) clearly contemplates that the executive retains a discretion to decide which changes in the statute law and delegated legislation will engage the power to make a supplementary valuation. It would be an odd and somewhat arbitrary criterion which provided that whenever there was, by coincidence or otherwise, a reference to an area in an Order in Council published in the Gazette the power in par (n) would be engaged with respect to land within that area, but that, absent such an adventitious reference, the power would not be engaged. The introductory words of par (n) are of importance; they confirm that changes in value consequent on the operation of laws specified by the legislature in other paragraphs of s 13DF(2) need not satisfy the additional Order in Council requirement in par (n). Moreover, there are many and varied ways in which land or an area of land may come to be "specified" in an Order in Council published in the Gazette. The description of municipal boundaries is but one example and demonstrates the ease with which a vast amount of "land in any area" might come to be specified in an Order in Council. If no element of purpose were required, and given that no temporal limit is imposed, many Orders in Council made without s 13DF(2)(n) being in view nonetheless would have an impact upon the operation of the paragraph. It follows that upon its proper construction par (n) only applies where: (i) the capital improved value, net annual value or site value is or is likely to have been materially altered; (ii) the reason for that alteration is not found in pars (a) to (m); (iii) the alteration is as a consequence of any Act, proclamation, Order in Council, regulation, by-law or local law; (iv) an Order in Council has been made specifying the relevant land or specifying an area in which the relevant land is located; and (v) that Order in Council was made pursuant to, or for the purposes of, par (n). 33 See the authorities collected above, footnote 3. Crennan Bell Thus the State's argument that par (n) was engaged fails at point (v). The Order in Council extending the boundaries of the Shire was made pursuant to powers conferred by s 220Q of the Local Government Act and not pursuant to par (n) as a requisite to enliven the power to make a supplementary valuation. There was no sufficient statutory nexus or connection between the extension of the Shire boundary (to include a further 12 hectares of Barton Place) from 24 January 1997 and the coming into force of the Omnibus Amendment Act on 25 June 1996. Given that no supplementary valuation of Barton Place could have taken the Omnibus Amendment Act into account, it is unnecessary to consider the appellant's further submission that Mr McDonald's valuation was invalid for want of compliance with the prescription of the powers and duties of valuers which is made by s 13DH of the Valuation Act. It follows that, in relation to Barton Place (or, applying the same reasoning, in relation to any part of the leased land the subject of a legislative supplementary valuation), amendments excluded The amendments could not be taken into account in any supplementary valuation. No different result would obtain on an objection or review of the supplementary valuation for the reasons outlined below. The position with respect to the balance of the land acquired by the appellant is the next issue for determination. the State did not ensure improvements described in cl 11.4(a). that the the The leased land There is no evidence as to payment by the appellant of land tax in respect of the leased land, or whether the leased land had improvements of the kind described in the Omnibus Amendment Act. Assuming that the appellant did pay tax on the leased land, based upon a site value which included improvements to which the Omnibus Amendment Act applied, the issue again is whether the State ensured that the amendments made could have immediate consequences for the appellant's land tax liability. The State points to the existence of an objection procedure under Pt 3 of the Valuation Act. The appellant did not take advantage of that procedure in respect of the site value of Barton Place or the leased land. The State submits that the appellant could have objected to the valuation of the leased land, after acquiring it, and in that objection process the improvements to which the Crennan Bell Omnibus Amendment Act applied could be excluded from the site value arrived at for the leased land. Procedure for objections to valuations of land Section 24A of the Land Tax Act provided the taxpayer with a right to lodge with the Commissioner of State Revenue an objection to an assessment of land tax, but no objection lay under that section relating to the site value of land where the assessment was based on a valuation made under the Valuation Act. Part 3, Div 4 of the Valuation Act provided for a separate regime whereby a written objection could be lodged with the rating authority, here the Shire. The objection regime was replaced in 199834, but for present purposes both regimes were, at a general level, to the same effect. References here are to the provisions as they stood prior to the 1998 amendments. Section 36 provided that one of the grounds on which a valuation could be challenged was that the value assigned was too high. Section 37(3)(b) provided for the time within which an objection could be lodged, depending on whether the valuation appeared for the first time, or had appeared in a notice previously given by the Shire. Section 48 applied if for any reason a notice of valuation of land had not been given to the appellant under s 37. In such a case, the appellant would have had an opportunity within two months of receipt of its first notice of assessment to land tax for the leased land to object to the valuation of the land on any of the grounds in s 36 (s 48(1)). The provisions in Pt 3, Div 4 would then have applied as if an objection had been made under that Division (s 48(3)). The appellant referred to what was said by Nettle JA in Melbourne City Council v Port of Melbourne Corporation35. This was a case concerning the equivalent provision to s 48 after the 1998 amendments. But what his Honour said there is entirely consistent with the proposition that if the appellant had not been given a notice of valuation of the leased land, then upon it receiving a notice of assessment to land tax, including land tax payable on the leased land, the 34 See s 309 of the Tribunals and Licensing Authorities (Miscellaneous Amendments) Act 1998 (Vic), passed in consequence of the establishment of the Victorian Civil and Administrative Tribunal. 35 (2005) 139 LGERA 318. Crennan Bell appellant had a fresh time period in which to challenge the valuation of the leased land36. Nettle JA held that such a challenge would be limited to only those valuations of land of which the taxpayer had no notice and could not extend to other valuations of land the subject of the same notice of assessment, for which the taxpayer had already been given notice37. Accordingly the appellant enjoyed a right of objection against the valuation of the leased land that would have been governed by Pt 3, Div 4 of the Valuation Act. In the event, however, the appellant did not so object, and the time limit for doing so has long expired. The scope for review on objection or appeal The valuer for the Shire was to determine the objection in the first instance, the criterion for decision being whether "an adjustment in the valuation is justified" (Valuation Act, s 39(2)). The Valuer-General had power to disallow a recommendation of adjustment made by the valuer (s 39(4)). If the appellant was dissatisfied by the decision of the valuer or the Valuer-General, it could lodge written notice with the Shire requiring it to treat its objection as an appeal and to refer the matter to the Supreme Court or the then Victorian Administrative Appeals Tribunal (s 40). Section 42(1) relevantly provided that "the Court or Tribunal on an appeal shall review the assessment of valuation of the lands made by or for the rating authority (as the case may be) and may either confirm the valuation or increase or reduce the value assigned to the land or make such other amendment as it thinks fit". The State submits that each of the valuer, in determining whether an adjustment was "justified", and the Court or Tribunal, in determining whether to reduce the value as it thought fit, was given a wide discretion on review of a valuation. It submits that on review, the change in the law made by the Omnibus Amendment Act could be taken into account and the site value adjusted to exclude s 2(2AA) improvements. The State points again to s 5A(1) of the 36 (2005) 139 LGERA 318 at 332-333 [23]-[25]. 37 (2005) 139 LGERA 318 at 333-334 [26]-[27]. Crennan Bell Valuation Act, which required the valuer, Court and Tribunal to take into account every matter or thing considered relevant to a valuation. Certain fundamental elements of the land tax scheme preclude the success of that line of argument. On objection or appeal, the answer to any submission by the appellant that the inclusion of s 2(2AA) in the Valuation Act required an adjustment would involve the proposition that s 3(2) of the Land Tax Act required the leased land to be valued as at a particular past date. By operation of s 3(2A) of the Land Tax Act, that date in the present case was 30 June 1993. At that time the Omnibus Amendment Act had not come into force. Its enactment lay three years ahead. The circumstance that the amendments had come into force after the last general valuation, but prior to the next general valuation, could not affect the value of the land as at 30 June 1993 if that value was determined according to law. The Land Tax Act required that the unimproved value of the land be determined by reference to the site value as at a date prior to the amendments having legal effect. Accordingly, in the present appeal to this Court the existence of a right of objection in the appellant is of no avail to the State in answering the submissions made by the appellant respecting cl 11.4 of the Contract. Conclusions The factum specified in par (a) of cl 11.4 was not satisfied, par (b) of cl 11.4 is not void or ineffective for conflict with any constitutional principle, par (b) was engaged and the appeal should be allowed. The measure of recovery by the appellant under par (b) remains for determination. The matter must therefore be remitted to the Trial Division of the Supreme Court for this determination. The parties agreed that such a remitter would be appropriate were this Court to allow the appeal. Order The appeal should be allowed with costs. Paragraphs 1 and 3 of the order of the Court of Appeal made on 10 December 2009 should be set aside. In lieu thereof the appeal to that Court should be allowed with costs, the judgment of Mandie J made on 6 December 2007 set aside, and the proceeding remitted to the Trial Division of the Supreme Court of Victoria for an assessment of damages and consequential orders. The consequential orders should deal with the question of costs of the whole of the proceedings in the Trial Division.

HIGH COURT OF AUSTRALIA APPELLANT AND STATE OF QUEENSLAND RESPONDENT Henderson v Queensland [2014] HCA 52 16 December 2014 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Queensland Representation S Gillespie-Jones with E McKinnon for the appellant (instructed by Gary Prince) M D Hinson QC for the respondent (Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Henderson v Queensland Criminal law – Confiscation of property – Exclusion order – Where State sought forfeiture of proceeds of sale of jewellery given to appellant by deceased father – Where appellant sought exclusion from forfeiture under s 68(2) of Criminal Proceeds Confiscation Act 2002 (Q) ("Act") on ground money not "illegally acquired property" – Where "illegally acquired property" defined by s 22(2)(a) of Act to include "proceeds of dealing with illegally acquired property" – Whether sufficient for appellant to prove money was not proceeds of illegal activity on his part – Whether appellant discharged onus placed upon him by s 68(2)(b) to prove jewellery not illegally acquired by father. Words and phrases – "burden of proof", "civil standard of proof", "exclusion order", "forfeiture order", "illegally acquired property". Criminal Proceeds Confiscation Act 2002 (Q), ss 4, 22, 25, 26, 58(1), 68(2). Introduction On 22 November 2011, the Supreme Court of Queensland made an order under the Criminal Proceeds Confiscation Act 2002 (Q) ("the CPCA") forfeiting cash to the value of $598,325 which had been found in the possession of the appellant, who was a person who had engaged in a serious crime related activity within the meaning of the CPCA. An application by the appellant for exclusion of the cash from forfeiture was dismissed1. It was dismissed on the basis that although the cash was not itself the proceeds of any illegal activity, it was the proceeds of the sale of jewellery, given to the appellant to hold for himself and three of his siblings by their father, which itself was not shown not to have been illegally acquired property2. An appeal to the Court of Appeal of the Supreme Court of Queensland was dismissed on 16 April 20133. The appellant appeals to this Court against that decision by special leave granted on 16 May 20144. The appeal turns critically upon the construction of s 68(2) of the CPCA, which provides: "The Supreme Court must, and may only, make an exclusion order if it is satisfied— the applicant has or, apart from the forfeiture, would have, an interest in the property; and it is more probable than not that the property to which the application relates is not illegally acquired property." The appellant challenges the decision of the Court of Appeal primarily by reference to what he had to prove in order to satisfy the criterion in s 68(2)(b). For the reasons that follow, the appeal should be dismissed. Factual background The factual circumstances are set out in detail in the reasons for judgment of Gageler and Keane JJ respectively. The essential facts as found by the primary judge were: 1 Queensland v Henderson (2011) 218 A Crim R 111 at 122 [66]. (2011) 218 A Crim R 111 at 121 [60]–[61]. 3 Henderson v State of Queensland [2014] 1 Qd R 1. [2014] HCATrans 102 (Crennan and Kiefel JJ). The appellant had engaged in a serious crime related activity within the meaning of the CPCA within a period of six years before the application for a forfeiture order5. The money the subject of the order was found in the appellant's possession6. The money was the proceeds of the sale of jewellery given to the appellant for the benefit of the appellant and his siblings by their now deceased father7. The jewellery had been said by the appellant's father to have been a gift to the appellant's great grandfather from Russian royalty in the late 19th or early 20th century8. The account given to the appellant and his siblings of the provenance of the jewellery was untrue. The jewellery had in fact been made some time after 19509. It was not known how the appellant's father had come into possession of the jewellery10. On the basis of the preceding findings, the primary judge held that the Court could not be satisfied, on the balance of probabilities, that the jewellery itself was not illegally acquired property11. The term "illegally acquired property" includes all or part of the proceeds of dealing with illegally acquired property12. It followed that the money the subject of the exclusion application had not been shown on the balance of probabilities not to be illegally acquired property13. The exclusion order sought by the appellant was therefore refused. (2011) 218 A Crim R 111 at 118 [42]. (2011) 218 A Crim R 111 at 111 [1]. (2011) 218 A Crim R 111 at 118 [45], 120–121 [57]–[58]. (2011) 218 A Crim R 111 at 118 [45]–[46]. (2011) 218 A Crim R 111 at 119 [50]–[51]. 10 (2011) 218 A Crim R 111 at 121 [59]. 11 (2011) 218 A Crim R 111 at 121 [60]–[61]. 12 CPCA, s 22(2)(a). 13 (2011) 218 A Crim R 111 at 121 [60]–[61]. The Court of Appeal came to the same conclusion. It found no error in the primary judge's approach to the standard of proof14. It found that on the evidence the primary judge was entitled to conclude that the appellant had not discharged the onus on him15. Legislative framework A comprehensive overview of the CPCA and the text of relevant provisions are set out in the judgment of Keane J. What follows is an outline of salient features relevant to this appeal. The "main object" of the CPCA is to remove the financial gain and increase the financial loss connected with illegal activity, whether or not a particular person is convicted of an offence because of the activity16. Other "important" objects are protective of property rights. One of those is to protect property honestly acquired by persons innocent of illegal activity from forfeiture and other orders affecting property17. Nevertheless, the text of s 68(2)(b) of the Act, as construed by the primary judge and the Court of Appeal, does not, as in the circumstances of this case, protect from characterisation as "illegally acquired" property received as a gift from another unless it is also shown not to have been illegally acquired by that other. At the commencement of Ch 2 of the CPCA, which contains the substantive provisions directly relevant to this appeal, s 13 explains its operation. Chapter 2 enables proceedings to be started to confiscate property derived from illegal activity whether or not a person who engaged in the relevant activity has been convicted of any offence18. It requires the Supreme Court to make a forfeiture order confiscating property if it finds it more probable than not that the property is serious crime derived property because of a serious crime related activity of a person, even though a particular person suspected of having engaged 14 [2014] 1 Qd R 1 at 18 [86] per White JA, Holmes JA agreeing at 3 [1], Daubney JA agreeing at 20 [100]. 15 [2014] 1 Qd R 1 at 19 [92]. 16 CPCA, s 4(1). 17 CPCA, s 4(2)(b). 18 CPCA, s 13(1). in the serious crime related activity can not be identified19. The Chapter is also described as containing ancillary provisions20: "including provisions giving persons opportunities to have lawfully acquired property excluded from the effect of restraining orders and forfeiture orders." The substantive provisions of Ch 2 of the CPCA provide for the State to apply for a restraining order in respect of property of a person suspected of having engaged in one or more serious crime related activities (a "prescribed respondent")21. Property the subject of a restraining order may then be the subject of a forfeiture application by the State22. The Supreme Court must make a forfeiture order if it finds it more probable than not that the prescribed respondent engaged in a serious crime related activity during a six year period prior to the application23. There is a discretion to refuse, on public interest grounds, to make the order24. A doubt as to whether a person engaged in a serious crime related activity does not suffice to avoid a finding on which a forfeiture order may be made25. On the making of the order the property the subject of the order is forfeited to the State and vests absolutely in the State26. An application for an exclusion order in relation to property the subject of a forfeiture application may be made by the prescribed respondent27. Pursuant to s 68(2)(b), the order cannot be made unless the Court is satisfied that "it is more probable than not that the property to which the application relates is not illegally acquired property". The effect of an exclusion order is to exclude the applicant's 19 CPCA, s 13(4)(b). 20 CPCA, s 13(7). 21 CPCA, s 28(3)(a). 22 CPCA, s 56(1). 23 CPCA, s 58(1)(a) read with s 58(9). 24 CPCA, s 58(4). 25 CPCA, s 58(6). 26 CPCA, s 59(1). 27 CPCA, s 65(2). property from the forfeiture application28. The property is also freed from the effect of the restraining order otherwise applicable to it29. The term "illegally acquired property" is central to s 68(2)(b). The money the subject of this appeal is property30. Pursuant to s 22(1), property is "illegally acquired property" if it is all or part of the proceeds of an "illegal activity". An "illegal activity" is defined by reference to the commission of various classes of criminal offence31. Section 22(2) provides that property is also "illegally acquired property" if: it is all or part of the proceeds of dealing with illegally acquired property; or all or part of it was acquired using illegally acquired property." By virtue of s 25, illegally acquired property retains its character as such even if it is disposed of, including by using it to acquire other property, until it stops being property of that character by virtue of one or more of the circumstances set out in s 26. They include acquisition of the property by a person for sufficient consideration, without knowing, and in circumstances not likely to arouse a reasonable suspicion, that the property was illegally acquired property32. The jewellery was a gift to the appellant for the benefit of the appellant and his siblings and was not acquired for any consideration. None of the circumstances set out in s 26 was applicable to it or the money the subject of these proceedings. Contentions and conclusions On the facts as found by the primary judge and not in dispute before the Court of Appeal, the money the subject of the exclusion application was not "all or part of the proceeds of an illegal activity" within the meaning of s 22(1) of the 28 CPCA, s 69(1)(b). 29 CPCA, s 70. 30 Acts Interpretation Act 1954 (Q), s 36, meaning of "property". An argument in the Court of Appeal that the deposit of the money the subject of this appeal into a bank account following its seizure required a fresh forfeiture application, which would have been out of time, was rejected in the Court of Appeal and is not pursued in this Court: [2014] 1 Qd R 1 at 14–16 [68]–[79]. 31 CPCA, ss 15, 16 and 17. 32 CPCA, s 26(a). CPCA. The question is whether it was nevertheless "illegally acquired property" within the meaning of s 22(2)(a) as "all or part of the proceeds of dealing with illegally acquired property". The appellant's principal contention was that in order to satisfy the requirements of s 68(2)(b), he needed to prove no more than that the jewellery, sold for the money the subject of his application, was not the proceeds of any illegal activity on his part. That submission could find no footing in the text of s 68(2)(b) read with that of s 22(2). Pursuant to s 22(2), property is characterised as illegally acquired if it is all or part of the proceeds of dealing with illegally acquired property or was acquired using such property. Given that none of the circumstances set out in s 26 was applicable to the jewellery, if it had been illegally acquired by the appellant's father it would still have been illegally acquired property after being given to the appellant. On its face, s 68(2)(b) read with s 22(2) required the appellant to negative that proposition. The appellant would read s 68(2)(b) as requiring an applicant for an exclusion order to satisfy the Supreme Court that it was "more probable than not that the property to which the application relates was not acquired by illegal activity on the part of the applicant". That construction involves a judicial interpolation in the text of the statute. It is not a construction which the text permits. It may be argued that the construction adopted by the primary judge and the Court of Appeal is in tension with the protective objectives of the Act because the applicant for an exclusion order may have to prove not only that the property was honestly acquired by him or her, when s 26 is not applicable, but also that it is not tainted by its ancestry. The primary judge observed33: "it would appear to be anomalous that property may be confiscated, because the ultimate origin of the property is beyond the knowledge of, and means of proof available to, a prescribed respondent. Such a case would appear to be well outside the intended scope of the legislation, as identified in s 13(1) and (4) of the Confiscation Act." The tension thus indicated cannot be resolved by widening the scope of the protection effected by exclusion orders beyond the limits imposed by the text of the Act. The appellant fails in his primary argument in this Court. In order to discharge the burden imposed by s 68(2)(b) it was necessary for the appellant to satisfy the Supreme Court that it was more probable than not that the jewellery was not illegally acquired in his father's hands at the time that the appellant received it. The placement of the burden of proof is uncompromising and unable 33 (2011) 218 A Crim R 111 at 121 [65]. to be ameliorated by any "conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct"34. On the facts found by the primary judge, there was no available hypothesis to explain how the appellant's father acquired the jewellery. The appellant failed to discharge the onus placed upon him. The appellant further complained of the way in which the Court of Appeal referred to the hearsay testimony of the account given by the appellant's father of how he came by the jewellery. In this respect I agree with the reasoning of Bell J. In the end what was left after the rejection of that evidence as a true account of the provenance of the jewellery was a want of evidence about it. Conclusion For the preceding reasons, the appeal should be dismissed with costs. 34 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 at 171; 110 ALR 449 at 450; [1992] HCA 66. KIEFEL J. All relevant provisions of the Criminal Proceeds Confiscation Act 2002 (Q) are set out, and the scheme of the Act is explained, in the reasons of Gageler J and Keane J. The property which was the subject of an application for forfeiture, and which the appellant sought to have excluded from an order for forfeiture, was $598,325 in Australian currency. Section 68(2) of the Act required the appellant to prove a negative: that the cash was not "illegally acquired property". Section 22 in relevant part provides: "(1) Property is illegally acquired property if it is all or part of the proceeds of an illegal activity. Property is also illegally acquired property if— it is all or part of the proceeds of dealing with illegally acquired property; or all or part of it was acquired using illegally acquired property." The appellant was able to satisfy the primary judge that the cash was not the proceeds of an illegal activity, because it represented the proceeds of sale of a gift of jewellery which had been made to him by his father in his father's lifetime. Section 22(2) directed attention to the jewellery itself. It required the appellant to prove that the conversion of the jewellery into cash was not a dealing with illegally acquired property. The appellant could not discharge his burden of proof because he could not establish that the jewellery was lawfully acquired by his father. There is no basis for disturbing the findings of the primary judge, and the conclusion his Honour reached, for the reasons given by Bell J. The appeal should be dismissed with costs. Bell BELL J. The facts and relevant provisions of the Criminal Proceeds Confiscation Act 2002 (Q) ("the Act") are set out in the reasons of Gageler J and Keane J and need not be repeated, save to the extent that it is necessary to do so in order to explain my reasons. Mr Henderson appeals by special leave from the judgment of the Court of Appeal of the Supreme Court of Queensland on six grounds. Each ground35, save ground four, is premised upon the assumption that it was sufficient for Mr Henderson to prove "that he acquired the jewellery otherwise than by an illegal activity" in order to discharge the onus imposed on him under s 68(2) of the Act. I agree with Keane J's analysis of the Act and with his Honour's reasons for rejecting the premise for each of these grounds. Ground four contends that the Court of Appeal erred by "[a]ttributing evidential value to hearsay by the appellant's now deceased father and using the inadequacy of such hearsay against the appellant". On the hearing of the appeal in this Court, Mr Henderson explained the purport of ground four, submitting that "[w]here there is no evidence … you cannot just assume that the jewellery has been illegally acquired"36 and "just because the account given by the father was not true you cannot draw an inference that the jewellery was illegally 35 Ground one contends that the Court of Appeal erred by ruling that for Mr Henderson to succeed in his application he had to persuade the trial court that his deceased father prior to gifting him the jewellery had come by the jewellery lawfully. Ground two contends that the Court of Appeal erred by failing to find that possession of the jewellery by Mr Henderson's deceased father was prima facie evidence of ownership by Mr Henderson's father. Ground three contends that the Court of Appeal erred by failing to find that Mr Henderson's deceased father's declaration that he was gifting the jewellery to his children was a declaration against proprietary interest and as such was an exception to the rule against hearsay, in the absence of any superior title. Ground five contends that the Court of Appeal erred by failing to perceive that it was Mr Henderson's possession of the property that was the subject of the Criminal Proceeds Confiscation Act 2002 (Q), not the possession by Mr Henderson's deceased father. Ground six contends that the Court of Appeal erred by failing to distinguish between Mr Henderson's title to the jewellery and Mr Henderson's deceased father's title to the jewellery. 36 Henderson v State of Queensland [2014] HCATrans 229 at lines 340-341. Bell return; however, more acquired"37. The second proposition requires qualification to which it will be necessary fundamentally, each proposition misconceives the primary judge's finding. His Honour did not find that the jewellery was illegally acquired property: rather, he was not persuaded of the probability that the jewellery was not illegally acquired property38. The finding may reflect a conclusion that it is probable that the jewellery was illegally acquired or it may reflect a conclusion that there are hypotheses that are consistent with illegality and hypotheses that are consistent with the absence of illegality and that Mr Henderson simply failed to discharge the onus of proof39. To the extent that ground four is relied upon for the contention that, given the findings of primary fact, the only inference that was open was that the jewellery was not illegally acquired property, I would reject it. It is a radical reformulation of the case that was run at trial and before the Court of Appeal. At trial, Mr Henderson led evidence to establish that the jewels given to him by his father were "longstanding family heirlooms"40. The respondent sought to meet this case by demonstrating that all of the jewellery was of "a relatively modern period post 1950's"41. As conducted, the issue in the case was whether the account of the provenance of the jewellery could be true42. Contrary to Mr Henderson's submission – that the Act imposes an almost insuperable obstacle to proof that an inter vivos gift is not illegally acquired property – it was accepted that, if the primary judge was satisfied that the hearsay account of the provenance of the jewels was probably true, Mr Henderson had discharged the onus and was entitled to the exclusion order that he sought. The primary judge was not so satisfied43. Mr Henderson did not contend at trial that it was sufficient to point to the evidence of his father's possession of the jewellery and to invite the court to 37 Henderson v State of Queensland [2014] HCATrans 229 at lines 393-395. 38 Queensland v Henderson (2011) 218 A Crim R 111 at 121 [61]. 39 Holloway v McFeeters (1956) 94 CLR 470 at 476-477 per Dixon CJ; [1956] HCA 25. See also Cross on Evidence, 9th Aust ed (2013) at 315 [9015]. 40 Queensland v Henderson (2011) 218 A Crim R 111 at 115 [27]. 41 Queensland v Henderson (2011) 218 A Crim R 111 at 115-116 [28], 119 [50]. 42 Queensland v Henderson (2011) 218 A Crim R 111 at 120 [52]. 43 Queensland v Henderson (2011) 218 A Crim R 111 at 121 [61]. Bell apply a provisional presumption44 that individuals ordinarily do not engage in criminal activity. Putting to one side the correctness of the analysis, such a case may have led the respondent to explore other issues in cross-examination and to adduce other evidence in its case45. It might have sought, for example, to explore Mr Henderson's father's financial capacity to invest in jewellery having a retail value of $1,000,000. It may be accepted that the fact that a witness is disbelieved does not prove the opposite of that which is asserted46. However, this is not to say that the primary judge was precluded from drawing any inference from the fact that the father's account of the provenance of the jewellery was false. In some circumstances, a court may infer from the telling of a false story that the truth would harm the witness' interests47. It was not a question of making a finding that Mr Henderson's father came into possession of the jewellery as the result of criminal activity. Mr Henderson bore the onus and it would have been open to the primary judge to consider the fact that the father gave a false account of the provenance of the jewellery as a circumstance telling against satisfaction that it was discharged. Mr Henderson appealed to the Court of Appeal on four grounds48. The Court of Appeal was required to decide the appeal on the issues raised by these grounds. It is uncontroversial that the Court of Appeal was authorised, after giving respect and weight to the conclusion drawn by the primary judge, to decide for itself the proper inference to be drawn from the facts as found49. The 44 Denning, "Presumptions and Burdens", (1945) 61 Law Quarterly Review 379 at 45 Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1608 [51] per Gleeson CJ, McHugh and Gummow JJ; 200 ALR 447 at 461; [2003] HCA 48, citing, inter alia, Coulton v Holcombe (1986) 162 CLR 1 at 8-9 per Gibbs CJ, Wilson, Brennan and Dawson JJ; [1986] HCA 33. 46 Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 684 per Barwick CJ, 694 per Gibbs J; [1975] HCA 63. 47 Edwards v The Queen (1993) 178 CLR 193 at 208 per Deane, Dawson and Gaudron JJ; [1993] HCA 63, approving Gibbs J's statement in Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 694. 48 Mr Henderson's amended notice of appeal contained five grounds; however, proposed ground four was abandoned at the hearing. 49 Warren v Coombes (1979) 142 CLR 531 at 551 per Gibbs ACJ, Jacobs and Murphy JJ; [1979] HCA 9. Bell only ground that challenged the primary judge's ultimate conclusion was ground three. This ground contended that in circumstances which included acceptance of the evidence of Mr Henderson and his siblings, the absence of evidence that the father had unlawfully acquired the jewellery, and the inherent limitations in the evidence of Mr Penfold, it was not open to fail to be satisfied that it was more probable than not that the jewellery was not illegally acquired. The second of the three circumstances, as White JA observed50, reversed the onus of proof. Her Honour identified the focus of the challenge as the primary judge's acceptance of the opinion evidence of Mr Penfold51. Mr Penfold, a jeweller and valuer, considered that the jewellery had not come into existence before 195052. The principal criticism of Mr Penfold's evidence was that his opinion was not based on examining the jewels (Mr Henderson had sold the jewels to a man named Daniel and their whereabouts were unknown) but only upon sketches made by Mr Komianos53. White JA correctly rejected the criticisms of the primary judge's acceptance of Mr Penfold's opinion54. Her Honour concluded that it had been open to the primary judge to find that Mr Henderson had not discharged the onus imposed by s 68(2) of the Act55. Mr Henderson did not argue in the Court of Appeal that, notwithstanding the primary judge's acceptance of Mr Penfold's opinion, the only inference open to his Honour was that the jewels were not illegally acquired property. Accordingly, the Court of Appeal was not required to consider the relationship between the statutory allocation of the burden of proof and a presumption of the kind now suggested. Nor was the Court of Appeal required to review the evidence to determine whether, in the event that a presumption that persons do not ordinarily engage in criminal activity was to be applied, that presumption had been displaced. It is a large step for this Court to hold that it was not open to the primary judge to fail to be satisfied that the jewellery was not illegally acquired property, particularly when the evidence given at the trial is not before the Court on the appeal. Moreover, it is wrong to approach the determination of an exclusion application under the Act upon a presumption that individuals ordinarily do not 50 Henderson v State of Queensland [2014] 1 Qd R 1 at 18 [88]. 51 Henderson v State of Queensland [2014] 1 Qd R 1 at 18 [89]. 52 Henderson v State of Queensland [2014] 1 Qd R 1 at 10-11 [48]-[49]. 53 Henderson v State of Queensland [2014] 1 Qd R 1 at 18 [89]. 54 Henderson v State of Queensland [2014] 1 Qd R 1 at 18-19 [89]-[92]. 55 Henderson v State of Queensland [2014] 1 Qd R 1 at 19 [92]. Bell engage in criminal activity. Such a presumption is inconsistent with the allocation of the burden of proof in s 68(2) of the Act. The Act subjects a person who is suspected of engaging in one or more serious crime related activities ("a prescribed respondent") to the risk that some or all of the person's property may be restrained and thereafter forfeited to the State. The Act does not confine its reach to such of the prescribed respondent's property as is directly or indirectly derived from his or her serious crime related activity. The Act casts the onus on the prescribed respondent to prove that property that he or she seeks to have excluded from forfeiture is not "illegally acquired property". In determining whether the applicant for an exclusion order has discharged that onus, the court does not commence with an assumption that individuals either ordinarily do, or do not, engage in criminal activity. Mr Henderson was required to prove a negative. It was necessary for Mr Henderson to point to evidence of facts and circumstances supporting the conclusion that, according to the course of common experience, it was probable that the jewellery was not illegally acquired property56. Discharge of the onus was not a mechanical exercise; it required that the primary judge be actually persuaded as a matter of probability that the jewellery was not illegally acquired property57. The primary judge found that the father's account of the provenance of the jewellery could not be true58. His Honour went on to record that Mr Henderson had been unable to establish how his father came into possession of the jewellery and consequently unable to establish that the jewellery was not illegally acquired property59. His Honour's reasons were responsive to the single factual issue on which the case was fought. It was not an error to conclude that, in the absence of some evidence as to how the father came to be in possession of jewellery worth a very substantial sum60, Mr Henderson had failed to discharge the onus that s 68(2) imposed on him. The appeal should be dismissed with costs. 56 Holloway v McFeeters (1956) 94 CLR 470 at 476-477 per Dixon CJ, 480-481 per Williams, Webb and Taylor JJ citing Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5-6; Jones v Dunkel (1959) 101 CLR 298 at 304-305 per Dixon CJ, 305 per Kitto J, 309-310 per Menzies J; [1959] HCA 8. 57 Briginshaw v Briginshaw (1938) 60 CLR 336 at 361 per Dixon J; [1938] HCA 34. 58 Queensland v Henderson (2011) 218 A Crim R 111 at 120 [53]. 59 Queensland v Henderson (2011) 218 A Crim R 111 at 121 [61]. 60 Queensland v Henderson (2011) 218 A Crim R 111 at 121 [59]. Introduction On 20 April 2002 police found a bag in the boot of a hire car parked outside a motel in Cairns. The bag contained $598,325 in cash and 23.3 grams of cannabis. Three days later, police deposited the money in a bank account operated by the Queensland Police Service. The bag belonged formerly named William Marijancevic, whom police suspected of having engaged in serious crime related activity. On 1 January 2003, operative provisions of the Criminal Proceeds Confiscation Act 2002 (Q) ("the Act") entered into force. On 10 February 2003, on the application of the State of Queensland made that day under s 28(3)(a) of the Act, the Supreme Court of Queensland made a restraining order under s 31(1) of the Act restraining any person from dealing with identified property of Mr Henderson. The order, as subsequently varied, identified the restrained property as the money held on deposit in the bank account. On 22 November 2011, on the further application of the State made on 5 March 2003 under s 56(1) of the Act, the Supreme Court made an order under s 58(1)(a) of the Act forfeiting to the State the money then held on deposit in the bank account, being the principal sum of $598,325 deposited on 23 April 2002 together with accrued interest. The forfeiture order was based on the Supreme Court finding it more probable than not that Mr Henderson had engaged in a serious crime related activity, constituted by his conviction, early in 2002 in Victoria, of a charge of possessing cannabis and alternatively his possession of the 23.3 grams of cannabis found in his bag on 20 April 2002. Before making the forfeiture order, the Supreme Court dismissed an application by Mr Henderson made on 30 May 2003 under s 65 of the Act for an order excluding the whole of the money from the application for the forfeiture order. The Supreme Court was permitted and obliged by s 68 of the Act to make the exclusion order which Mr Henderson sought if, but only if, the Supreme Court was satisfied that Mr Henderson had an interest in the money and that it was more probable than not that the money was not "illegally acquired property". It will be necessary in due course to refer to the text of s 68, to the definition of illegally acquired property in s 22, and to related provisions of the Act. The primary judge (Peter Lyons J) found that the evidence adduced by Mr Henderson established that the $598,325 contained in the bag constituted the proceeds of the sale sometime in or about December 2001 of jewellery which had been given to Mr Henderson in or about December 1996 for the benefit of Mr Henderson and three of his siblings by their father, Franjo Marijancevic, who was born in Yugoslavia in 1923 and who died in Victoria on 29 April 2001. His Honour nevertheless held that he was unable to reach the satisfaction required to make the exclusion order because Mr Henderson was unable to establish how his father came into possession of the jewellery. His Honour characterised that result, to which he considered himself driven by reason of the lack of evidence about how Mr Henderson's father came into possession of the jewellery, as "anomalous"61. The Court of Appeal (Holmes and White JJA and Daubney J) dismissed an appeal by Mr Henderson62. The ultimate question in Mr Henderson's further appeal, by special leave, to this Court is whether the evidence adduced by Mr Henderson and accepted by the primary judge ought to have been sufficient for Mr Henderson to have discharged his burden of satisfying the Supreme Court that it was more probable than not that the money was not illegally acquired property. Before turning in more detail to the circumstances which give rise to that question and to the issues which arise in its resolution, it is convenient to set out the relevant statutory provisions and to locate them within the scheme of the Act in its applicable form63. The Act The Act identifies as its main object to remove the financial gain and increase the financial loss associated with "illegal activity", whether or not a particular person is convicted of an offence because of that activity64. The expression illegal activity encompasses a "serious crime related activity"65. A serious crime related activity is anything done by a person that was, when it was done, a "serious criminal offence"66. That includes any indictable offence for which the maximum penalty is at least five years' imprisonment67. The expression illegal activity also encompasses an act or omission that is an offence 61 Queensland v Henderson (2011) 218 A Crim R 111 at 121 [65]. 62 Henderson v State of Queensland [2014] 1 Qd R 1. 63 Reprint No 3D, as in force on 1 January 2011. 64 Section 4(1). 65 Section 15(a). 66 Section 16(1). 67 Section 17(1)(a). against the law of Queensland or the Commonwealth68, as well as an act or omission committed outside Queensland that is an offence against the law of the place in which it is committed and that would be an offence against the law of Queensland or the Commonwealth if it were committed in Queensland69. The Act goes on to identify what it describes as another important object. That other identified object includes ensuring that property rights are affected by orders made under the Act only through procedures which ensure that persons who may be affected by those orders are given a reasonable opportunity to establish the lawfulness of the activity through which they acquired the relevant property rights70. It also includes protecting from forfeiture property honestly acquired by persons innocent of illegal activity71. Subject to immaterial inclusions and exclusions72, a reference in the Act to "property" is to "any legal or equitable estate or interest ... in real or personal property of any description (including money)", whether situated in Queensland or elsewhere (including outside Australia)73. The term "money" in this context refers to money in any form, whether corporeal (such as when held in notes) or incorporeal (such as when held on deposit in a bank account)74. Other than a prosecution for an offence against the Act, a proceeding under the Act is not a criminal proceeding75. The rules of evidence applicable in proceedings under the Act are those applicable in civil proceedings76. Importantly, questions of fact must be decided on the balance of probabilities77. 68 Section 15(b). 69 Section 15(c). 70 Section 4(2)(a). 71 Section 4(2)(b). 72 Section 19. 73 Schedule 6 "property" and s 36 of the Acts Interpretation Act 1954 (Q). 74 Fox, Property Rights in Money, (2008), Ch 1. 75 Section 8(1) and (2). 76 Section 8(4). 77 Section 8(3). Chapter 2 of the Act makes provision for the procedures which were invoked by the State and by Mr Henderson in the present case. That chapter authorises the State to bring proceedings in the Supreme Court which are capable of resulting in the Supreme Court making orders forfeiting to the State all or any property of a person who the Supreme Court is satisfied on the balance of probabilities engaged in a serious crime related activity. The proceedings are in two stages. The first stage is initiated by the State applying to the Supreme Court under s 28 for an order restraining any person from dealing with property stated in the order. The application must be supported by an affidavit of an officer authorised under the Crime and Misconduct Act 2001 (Q) or a police officer. Section 28(3)(a) permits such an application to relate to all or any of the property of a person suspected of having engaged in one or more serious crime related activities. Such a person is referred to as a "prescribed respondent". Section 29(1)(a) provides that the relevant officer's affidavit must state, for property mentioned in s 28(3)(a) if the serious crime related activity involves an offence of a kind stated in Pt 1 of Sched 2 to the Act, that the officer suspects that the prescribed respondent has engaged in one or more serious crime related activities and the reason for the suspicion. Offences stated in Pt 1 of Sched 2 include any offence, punishable by imprisonment for five years or more, involving a dangerous drug as defined under the Drugs Misuse Act 1986 (Q). Under s 31(1), subject to s 31(2), the Supreme Court must make a restraining order in relation to property if, after considering the application and affidavit, the Supreme Court is satisfied that there are reasonable grounds for the suspicion on which the application is based. The second stage is initiated by the State applying to the Supreme Court under s 56(1) for a forfeiture order, forfeiting to the State particular property restrained under the prior restraining order. Under s 58(1)(a), subject to s 58(4), the Supreme Court must make a forfeiture order in respect of property that has been restrained on an application relating to property mentioned in s 28(3)(a) if the Supreme Court finds it more probable than not that the prescribed respondent mentioned in that application engaged in a serious crime related activity during the period of six years before the day the application for the forfeiture order was made. Subject only to that limitation period, Ch 2 is expressed to apply in relation to illegal activity or serious crime related activity whether happening before or after 1 January 200378. An application for a restraining order may be made without notice to the person to whom it relates79. In contrast, notice of an application for a forfeiture 78 Section 14. 79 Section 28(2)(b). order must be given to a person whose property is restrained under the restraining order and to anyone else considered by the Crime and Misconduct Commission or the Commissioner of the Police Service to have an interest in the property80. Where an application for a forfeiture order has been made, but the application has not been decided, s 65 allows a person who claims an interest in property to which the application relates to apply to the Supreme Court for an exclusion order. The applicant can be a prescribed respondent. An exclusion order is an order which states the nature and extent of the applicant's interest in the property81 and which, if made before the application for the forfeiture order has been decided, excludes the applicant's property from the application for the forfeiture order82. The making of an exclusion order also stops the restraining order continuing to have effect in relation to the excluded interest83. Section 68(1) authorises the Supreme Court to make an exclusion order on an application under s 65. Section 68(2), the construction and operation of which lies at the heart of the present case, provides: "The Supreme Court must, and may only, make an exclusion order if it is satisfied— the applicant has or, apart from the forfeiture, would have, an interest in the property; and it is more probable than not that the property to which the application relates is not illegally acquired property." The reference in s 68(2)(b) to illegally acquired property must be read with the definition of that expression in s 22. Section 22 provides in part: "(1) Property is illegally acquired property if it is all or part of the proceeds of an illegal activity. Property is also illegally acquired property if— it is all or part of the proceeds of dealing with illegally acquired property; or 80 Section 57(1). 81 Section 69(1)(a). 82 Section 69(1)(b). 83 Section 70. all or part of it was acquired using illegally acquired property. For subsection (2), it does not matter whether the property dealt with or used in the acquisition became illegally acquired property because of subsection (1) or subsection (2). Subsections (1) and (2) apply whether or not the activity, dealing or acquisition because of which the property became illegally acquired property happened before the commencement of this section." The definition in s 22 must itself be read with related definitions in ss 18 and 21, and with ss 25 and 26. Section 18 defines "[p]roceeds, in relation to an activity" to include "property and another benefit derived because of the activity ... by the person who engaged in the activity ... or ... by another person at the direction or request, directly or indirectly, of the person who engaged in the activity". Section 21 provides that "benefit" includes "service and advantage" and that a "benefit derived" by a person includes "a benefit derived by someone else at the person's request or direction". Schedule 6 defines "derived" to include "directly or indirectly derived" and "realised". Section 25, read with the definition of "character" in s 24, provides in part: "Illegally acquired property ... retains its character [as illegally acquired property]—even if it is disposed of, including by using it to acquire other property—until it stops being property of that character under section 26." Section 26 provides in part: "Property stops being illegally acquired property ... (a) when it is acquired by a person for sufficient consideration, without knowing, and in circumstances not likely to arouse a reasonable suspicion, that the property was illegally acquired property ...; or (b) when it vests in a person on the distribution of the estate of a deceased; or (c) when it is disposed of under this Act ...; or (d) when it is the proceeds of the disposal of property under this Act ...; (e) when it is acquired by Legal Aid as payment of reasonable legal expenses payable because of an application under this Act or in defending a charge of an offence; or in circumstances prescribed under a regulation." The definition in s 22 must also be read in light of what s 7(1) describes as examples of the practical operation of its application set out in Pt 1 of Sched 1. The first of those examples usefully illustrates the interaction of ss 22 and 25. Of the elaborate sequence of events referred to in the example, it is sufficient to consider the first three. The first event is that A acquires money as the proceeds of an illegal activity: the money is illegally acquired property by operation of s 22(1). The next event is that A uses the money to buy land from B in circumstances which do not attract the operation of s 26(a): the money paid by A to B remains illegally acquired property by operation of s 25, and the land becomes illegally acquired property by operation of s 22(2)(b). The next event is that A sells the land to C for a larger sum of money in circumstances which again do not attract the operation of s 26(a): the land remains illegally acquired property by operation of s 25, and the larger sum of money paid by C to A becomes illegally acquired property by operation of s 22(2)(a). Mr Henderson's application The restraining order in respect of the money held on deposit in the bank account was made by the Supreme Court under s 31(1) on an application of the State under s 28(3)(a) of the Act. Mr Henderson was necessarily mentioned in that application as the prescribed respondent. The subsequent making by the State of the application for the forfeiture order on 5 March 2003 triggered the ability of Mr Henderson to apply under s 65 of the Act for the whole of that amount to be the subject of an exclusion order. To obtain the exclusion order for which he applied, it was incumbent on Mr Henderson to establish to the civil standard of proof that the conditions set out in s 68(2)(a) and (b) of the Act were met in respect of the money which police found in his bag on 20 April 2002 and which they subsequently deposited in the bank account. There was and could be no dispute between the State and Mr Henderson that Mr Henderson, having possession of the money, also had title to the money in the absence of a superior claim by someone else84: that was the basis on which the State had sought and obtained the restraining order. There could therefore be 84 Russell v Wilson (1923) 33 CLR 538 at 546; [1923] HCA 60; Field v Sullivan [1923] VLR 70 at 86. no dispute that the Supreme Court ought to be satisfied that Mr Henderson had an interest in the money which met the condition in s 68(2)(a) of the Act. The substantial contest between Mr Henderson and the State concerned the condition in s 68(2)(b) of the Act: whether or not the Supreme Court ought to be satisfied that it was more probable than not that the money was not illegally acquired property. Evidence Mr Henderson gave evidence in support of his application in which he gave the following account of how he came into possession of the money. In or about December 1996, Mr Henderson was visiting his father in his father's house in Picola in Victoria. His father then gave him some jewellery, comprising a pair of earrings, a bracelet, a necklace and a brooch, which his father had kept in a box under a bed, saying to him "[l]ook after your family". Mr Henderson understood his to his brothers, Joseph and referring Frank Marijancevic, and to his sister Dianne Murphy. Mr Henderson regarded himself from then on as holding the jewellery on behalf of those siblings and himself in equal shares. Mr Henderson took the jewellery home to Melbourne where it was initially kept in a safety deposit box in a bank. to be father The account continued that, after the death of their father in April 2001, Mr Henderson and his siblings together decided to have the jewellery valued and sold, and to invest the proceeds. In or about December 2001, Mr Henderson took the jewellery to a jeweller in Melbourne, Mr Theodosis Komianos, who sketched the jewellery and told Mr Henderson that it had a wholesale value of between $600,000 and $700,000 and a retail value of $1,000,000. Sometime later, a person whose first name was Daniel contacted Mr Henderson and ultimately purchased the jewellery for $620,000, which he paid Mr Henderson in $50 notes. Mr Henderson and his wife went to different banks and a casino, where they exchanged the $50 notes for $100 notes. Mr Henderson then kept that cash in a safety deposit box in a bank. Mr Henderson and his siblings held a family meeting in which they decided that the cash should be invested in the In or about January and February 2002, Queensland property market. Mr Henderson travelled to Cairns several times, where he met with a Mr John Dredge to negotiate the possible purchase of an investment property. Mr Henderson then reached a verbal agreement with Mr Dredge to purchase a property in Kuranda, but he and Mr Dredge were continuing to negotiate on the price. They agreed to meet in a coffee shop in a shopping plaza in April 2002. Mr Henderson travelled to Cairns for that meeting, bringing with him the cash which was the proceeds of the sale of the jewellery. He thought he could use the cash as a bargaining tool to encourage Mr Dredge to accept the lowest possible price. That cash (which he maintained should have been $620,000 and from which an amount was therefore missing) was the cash which on 20 April 2002 police found in his bag in the boot of a car which Mr Henderson had hired. Joseph and Frank Marijancevic and Dianne Murphy each gave evidence generally supportive of Mr Henderson. None had seen the jewellery during their father's lifetime. Each first saw it when Mr Henderson showed it to them after their father's death. They explained that they associated the jewellery with their mother and father having told them that jewellery had been given to their great grandfather as a reward for providing transportation services for Russian royalty. No objection was taken to the hearsay nature of that evidence. An affidavit of Mr Komianos was also read in Mr Henderson's case. Mr Komianos deposed to having carried on business as a jeweller in Melbourne in December 2001, when a man he later came to know as Mr Henderson came into his office with jewellery in respect of which Mr Komianos gave a verbal valuation at approximately $600,000 wholesale and over $1,000,000 retail. Mr Komianos described the jewellery and also produced a sketch of the jewellery which he deposed to having made at the time. He explained in his affidavit that he recalled telling a few people that Mr Henderson had items for sale but that he could not recall the names of those people. Mr Komianos was not required for cross-examination. Medical certificates concerning him, tendered in evidence by Mr Henderson, explained that Mr Komianos was an alcoholic who had chronic brain damage and resulting memory loss, that he "became mentally unfit a few years ago", and that he was unfit to travel. The State called Mr Kenneth Penfold, a registered valuer and jeweller operating his business in Brisbane, to give an opinion as to the age of the jewellery based on Mr Komianos' sketch. Mr Penfold's opinion was that all of the items of jewellery were relatively modern, indeed that they were all manufactured after 1950. Findings The primary judge accepted the evidence of Mr Komianos that in December 2001 Mr Henderson produced jewellery to him, as depicted in his sketch, which at the time he had valued. His Honour also accepted the opinion of Mr Penfold that the jewellery had been manufactured after 1950. It followed that the account of the jewellery having been given to Mr Henderson's great grandfather as a reward for providing transportation services for Russian royalty could not be true. The jewellery, on that account, would have had to have been manufactured before 192085. The primary judge accepted, on balance, the evidence of Mr Henderson that the cash found by police in his bag in the boot of the hire car in Cairns was the product of the sale of the jewellery that had been valued by Mr Komianos. 85 (2011) 218 A Crim R 111 at 119-120 [51]-[56]. His Honour also accepted that the jewellery was given to Mr Henderson by his father and shown by him to his brothers and sister shortly after his father's death. His Honour treated it as significant that the evidence of Mr Henderson to that effect had been corroborated by his siblings. Notwithstanding criticisms made by the State as to the reliability of their evidence, there was, his Honour said, no His Honour continued87: "The consequence of these findings, however, is that it is unknown how Mr Marijancevic came into possession of the jewellery." "Since Mr Henderson has been unable to establish how Mr Marijancevic came into possession of the jewellery, and consequently that the jewellery was not illegally acquired property, it follows that the property the subject of the exclusion application has not been shown on the balance of probabilities not to be illegally acquired property, and the exclusion order sought by Mr Henderson cannot be made." In the Court of Appeal, to which Mr Henderson had a right of appeal under s 263 of the Act, Mr Henderson framed one of his grounds of appeal as follows: "In all the circumstances – including the learned judge's acceptance of the evidence of the appellant and his siblings, the absence of any evidence that the appellant's father had unlawfully acquired the jewellery and the inherent limitations in the evidence of Kenneth Penfold – it was not open to fail to be satisfied on the balance of probabilities that it was more probable than not that the jewellery was not illegally acquired." White JA, with whom Holmes JA and Daubney J agreed, responded that89: "it was for Mr Henderson to persuade his Honour that his father had not unlawfully acquired the jewellery. The primary judge was quite entitled to conclude that Mr Henderson had not discharged that onus." 86 (2011) 218 A Crim R 111 at 120-121 [57]-[58]. 87 (2011) 218 A Crim R 111 at 121 [59]. 88 (2011) 218 A Crim R 111 at 121 [61]. 89 [2014] 1 Qd R 1 at 19 [92]. Mr Henderson's arguments in this Court Mr Henderson argues in this Court that s 68(2)(b) of the Act, on its proper construction, required only that he prove that it was more probable than not that the jewellery was not derived by him because of an illegal activity in which he had engaged or in which someone else had engaged at his direction or request. Having proved that he had acquired the jewellery lawfully from his father, it was unnecessary for him to go further and to prove that his father had not unlawfully acquired the jewellery. Mr Henderson's construction argument is that, as applied to that expression in s 68(2)(b), the primary definition of illegally acquired property in s 22(1) is confined to property that is all or part of the proceeds of an illegal activity which was engaged in by the applicant for the exclusion order or by another person at the direction or request of the applicant for the exclusion order. Mr Henderson invokes the objects of the Act in support of that construction. He also raises the spectre of any other construction leading to the absurdity of infinite regression. If the family story of the jewellery having been given to his great grandfather as a reward for providing transportation services for Russian royalty had been accepted as true, Mr Henderson asks rhetorically, would he also have needed to have proved that the unknown and now long dead giver of the jewellery had not acquired the jewellery unlawfully? As an alternative to his construction argument, Mr Henderson advances in this Court a version of the argument he put unsuccessfully to the Court of Appeal challenging the ultimate finding of the primary judge. The argument as refined in the course of oral submissions is that, given the findings of primary fact which he made and notwithstanding the primary judge's rejection of the family story, the primary judge ought to have been satisfied on the balance of probabilities that the jewellery was not illegally acquired by Mr Henderson's father. Mr Henderson's construction argument cannot be sustained. His alternative argument is sound, and I accept it. Construction There is no textual or contextual warrant for construing the reference to illegally acquired property in s 68(2)(b) in the restrictive manner for which Mr Henderson argues. To do so would run counter to the plain words of s 22. It would also effectively negate the operation of ss 25 and 26. When s 22(1) is read with s 18, it is plain that property has the character of illegally acquired property if it is all or part of property derived because of any illegal activity either by any person who engaged in that illegal activity or by any other person at the direction or request of the person who engaged in that illegal activity. When s 22(2) is then read with s 22(1), it is equally plain that once property attains the character of illegally acquired property under s 22(1), any further property that is all or part of the proceeds of dealing with that property, or that was acquired using that property, also attains the same character. Section 22(3) then makes clear that s 22(2) operates to produce the same effect in relation to subsequent dealings and acquisitions. Section 25 operates in addition to produce the result that property that has once attained the character of illegally acquired property by operation of s 22 retains that character until the happening of one of the events referred to in s 26(a) to (f). If there could be any doubt about that operation of s 25, that doubt could only be dispelled by the examples set out in Pt 1 of Sched 1, to the first of which reference has already been made. Interpreted in light of those elaborate and interlocking definitional and illustrative provisions, the reference in s 68(2)(b) to illegally acquired property is, clearly enough, to any property that has at any time in the past attained the character of illegally acquired property by operation of s 22(1) or (2), provided only that it has not stopped retaining the character of illegally acquired property by reason of the happening of an event referred to in s 26(a) to (f). The objects of the Act do not suggest to the contrary. The main object, expressed in terms of removing the financial gain and increasing the financial loss associated with illegal activity, contains nothing to confine the illegal activity to which it refers to activities of persons within a particular class. Nor is any such confinement suggested by inclusion within the other identified object of the Act of reference to procedures which ensure that persons who may be affected by orders made under the Act are given a reasonable opportunity to establish the lawfulness of the activity through which they acquired relevant property. The further reference within that object to protecting from forfeiture property honestly acquired by persons innocent of illegal activity is best read as a shorthand reference to the operation of s 26(a). The consequence for the present case is as follows. If the jewellery had attained the character of illegally acquired property by operation of s 22(1) or (2) or s 25 at or before the time it came into the possession of Mr Henderson's father, the jewellery retained that character in Mr Henderson's possession by operation of s 25: his father's gift of the jewellery to Mr Henderson was not an event referred to in s 26(a) to (f). If the jewellery had so attained and retained the character of illegally acquired property, the money Mr Henderson received from the sale of the jewellery also became illegally acquired property by operation of s 22(2)(b). To discharge his legal burden of satisfying the Supreme Court that it was more probable than not that the money was not illegally acquired property, Mr Henderson therefore needed to satisfy the Supreme Court that the jewellery did not have the character of illegally acquired property when the jewellery was in the possession of his father. The spectre which Mr Henderson raises of him, or another applicant for an exclusion order, facing the potentially impossible task of needing to lead specific evidence to establish that no predecessor in title anywhere in the world ever derived title as a result of an illegal activity does not arise on the proper construction of s 68(2)(b). The spectre, however, is not avoided by any implicit limitation in the section's reference to illegally acquired property on the expression as defined in s 22 and explained in s 25: there is none. The spectre is avoided by the emphasis which the section gives, through its express reference to satisfaction of what is more probable than not, to proof that property is not illegally acquired property needing only to be proof to the ordinary civil standard. Neither the existence of the restraining order nor of the application for the forfeiture order gives rise to any presumption that property is illegally acquired property which the applicant for the exclusion order is required to overcome. Proof: inference and probability Two explanations of the ordinary civil standard of proof, although lengthy, are usefully recalled in this context. One is that of Dixon CJ in Murray v Murray90, with reference to Briginshaw v Briginshaw91: "What the civil standard of proof requires is that the tribunal of fact, in this case the judge, shall be 'satisfied' or 'reasonably satisfied'. The two expressions do not mean different things but as in other parts of the law the word 'reasonably', which in origin was concerned with the use of reason, makes its appearance without contributing much in meaning. However, its use as a qualifying adjective seems to relieve lawyers of a fear that too much unyielding logic may be employed. But the point is that the tribunal must be satisfied of the affirmative of the issue. The law goes on to say that he is at liberty to be satisfied upon a balance of probabilities. It does not say that he is to balance probabilities and say which way they incline. If in the end he has no opinion as to what happened, well it is unfortunate but he is not 'satisfied' and his speculative reactions to the imaginary behaviour of the metaphorical scales will not enable him to find the issue mechanically. The passages cited in Briginshaw's Case ... show that in English law there never were more than two standards of persuasion ... But they show that from the beginning of the nineteenth century courts did not impose on the parties, or one may perhaps say claim from the parties, the same strictness or exactness of proof about all questions arising in a civil trial without regard to their 90 (1960) 33 ALJR 521 at 524. 91 (1938) 60 CLR 336 at 360-363; [1938] HCA 34. triviality or importance, the unlikelihood or the probability of their occurring. In other words the tribunal might reason upon the evidence to a conclusion as a responsible and sensible man would in all the circumstances." The other is the often repeated explanation of Dixon, Williams, Webb, Fullagar and Kitto JJ in Bradshaw v McEwans Pty Ltd92: "The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence while [in] the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort where direct proof is not available it is enough [if] the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture ... But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise". Applying those principles to the civil case before them, in which the plaintiff bore the legal burden of proving harm to have arisen from the defendant's negligence, their Honours went on to explain93: "Once the plaintiff offers evidence which standing by itself raises a higher degree of probability that the harm arose from negligence for which the defendant is responsible that will support a verdict unless the defendant goes into evidence. ... All that is necessary is that according to the course of common experience the more probable inference from the circumstances that sufficiently appear by evidence or admission, left unexplained, should be that the injury arose from the defendant's negligence. By more probable is meant no more than that upon a balance of probabilities such an inference might reasonably be considered to have some greater degree of likelihood." 92 (1951) 217 ALR 1 at 5. See also Luxton v Vines (1952) 85 CLR 352 at 358; [1952] HCA 19; Holloway v McFeeters (1956) 94 CLR 470 at 480-481; [1956] HCA 25; TNT Management Pty Ltd v Brooks (1979) 53 ALJR 267 at 269; 23 ALR 345 at 93 (1951) 217 ALR 1 at 5-6. Generally speaking, and subject always to statutory modification, a party who bears the legal burden of proving the happening of an event or the existence of a state of affairs on the balance of probabilities can discharge that burden by adducing evidence of some fact the existence of which, in the absence of further evidence, is sufficient to justify the drawing of an inference that it is more likely than not that the event occurred or that the state of affairs exists. The threshold requirement for the party bearing the burden of proof to adduce evidence at least to establish some fact which provides the basis for such a further inference was explained by Kitto J in Jones v Dunkel94: "One does not pass from the realm of conjecture into the realm of inference until some fact is found which positively suggests, that is to say provides a reason, special to the particular case under consideration, for thinking it likely that in that actual case a specific event happened or a specific state of affairs existed." That description of the ordinary operation of the civil standard of proof applies equally to a case in which the legal burden of a party is to prove the non- happening of an event or the non-existence of a particular state of affairs as to a case in which a party's legal burden is to prove the happening of an event or the existence of a particular state of affairs. As Davidson J earlier explained in the Supreme Court of New South Wales in Ex parte Ferguson; Re Alexander95: "In all legal proceedings the basic principle at common law is that in civil cases a plaintiff must prove the essential elements of his case even if that course involves establishing the assertion of a negative ... He must establish what is really the affirmative in substance, not what is merely affirmative in form ... But if the party bearing the onus furnishes some evidence which gives rise to a presumption or inference of fact in his favor or that presumption already exists, the onus shifts to the other party". His Honour's reference to evidence adduced by the party bearing the legal burden of proof giving rise to a "presumption or inference of fact" was to nothing more than an inference of fact drawn, in accordance with ordinary processes of inferential reasoning, in the absence of further evidence96. His Honour's 94 (1959) 101 CLR 298 at 305; [1959] HCA 8. See also Carr v Baker (1936) 36 SR (NSW) 301 at 306; TNT Management Pty Ltd v Brooks (1979) 53 ALJR 267 at 269; 23 ALR 345 at 350. See generally Hodgson, "The Scales of Justice: Probability and Proof in Legal Fact-finding", (1995) 69 Australian Law Journal 95 (1944) 45 SR (NSW) 64 at 70. 96 Cross on Evidence, 9th Aust ed (2013) at 297 [7240], 299 [7255]. reference to an "onus" then shifting to the other party was to nothing more than the practical need (sometimes referred to as a "tactical burden") for an opposing party to adduce further evidence if that party wants to prevent such an inference of fact actually being drawn in the circumstances of the case97. The process of inferential reasoning involved in drawing inferences from facts proved by evidence adduced in a civil proceeding cannot be reduced to a formula. The process when undertaken judicially is nevertheless informed by principles of long standing which reflect systemic values and experience. One such principle, forming "a fundamental precept of the adversarial system of justice"98, is that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted"99. Another such principle, "reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct", is that "a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct"100. The reluctance of a court to infer fraudulent or criminal conduct is ordinarily somewhat stronger in respect of a person who is not a party to litigation and who is for that reason denied an opportunity to explain and justify his or her conduct as consistent with the conventional perception101. To discharge his legal burden of proving that the jewellery was not illegally acquired property, Mr Henderson did not need to lead specific evidence affirmatively to establish that each owner in the chain of title to the jewellery had derived that title otherwise than as a result of some illegal activity. It was enough that he adduced evidence within his capacity to produce to establish facts 97 Cross on Evidence, 9th Aust ed (2013) at 293 [7215]. 98 Russo v Aiello (2003) 215 CLR 643 at 647 [11]; [2003] HCA 53. 99 Blatch v Archer (1774) 1 Cowp 63 at 65 [98 ER 969 at 970]. See also Houston v Wittner's Pty Ltd (1928) 41 CLR 107 at 122; [1928] HCA 34; Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371-372; [1957] HCA 28; G v H (1994) 181 CLR 387 at 391-392; [1994] HCA 48; Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 454 [36]; [2001] HCA 12. 100 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 at 171; 110 ALR 449 at 450; [1992] HCA 66, referring to Briginshaw v Briginshaw (1938) 60 CLR 336 at 362, Helton v Allen (1940) 63 CLR 691 at 701; [1940] HCA 20 and Rejfek v McElroy (1965) 112 CLR 517 at 520-522; [1965] HCA 46. See also G v H (1994) 181 CLR 387 at 399. 101 Eg Bale v Mills (2011) 81 NSWLR 498 at 516-518 [70]-[79]. sufficient to allow the opinion to be formed that the more probable inference was that the title to the jewellery was not so derived. Mr Henderson adduced evidence by which he succeeded in proving to the satisfaction of the primary judge that the money was the proceeds of his own sale of jewellery given to him by his father. Those findings were not inevitable. But they were made. The State did not argue in the Court of Appeal, and does not argue in this Court, that they should be revisited. On his Honour's findings, Mr Henderson therefore succeeded in giving the innocent explanation that he came into possession of the jewellery as a gift from his father. He and his siblings went on to give an account, which they said they had been given by their mother and father, as to how their father came into possession of the jewellery. Having rejected that account as untrue, the primary judge might well have been justified in inferring that the account had been concocted, by Mr Henderson's parents or more latterly by Mr Henderson and his siblings, as a cover for an inconvenient truth of the jewellery having come into Mr Henderson's father's possession as the proceeds of some undisclosed illegal activity by Mr Henderson's father or someone else102. But his Honour did not draw any such adverse inference. His Honour rather treated the evidence as a whole as providing no indication, one way or the other, as to how Mr Henderson's father came into possession of the jewellery. There is no suggestion that Mr Henderson failed to call any other witness who might have provided another account. Mr Henderson's appeal to the Court of Appeal was an appeal by way of rehearing103. His further appeal to this Court is an appeal in the strict sense. To discharge its appellate function, the Court of Appeal was, and this Court is, obliged to reach its own conclusion as to the inference to be drawn from the primary facts found by the primary judge if and to the extent that the correct inference to be drawn is put in issue in the appeal104. Mr Henderson's grounds of appeal to the Court of Appeal were not framed in terms which unambiguously invoked that obligation. Understandably in that circumstance, the conclusion reached in the Court of Appeal, that the primary 102 Cf Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 694; [1975] HCA 63. 103 Rule 765 of the Uniform Civil Procedure Rules 1999 (Q), as applied by s 8(6) of the Act. 104 Warren v Coombes (1979) 142 CLR 531 at 551, 553; [1979] HCA 9; Fox v Percy (2003) 214 CLR 118 at 126-127 [25]; [2003] HCA 22; Roads and Traffic Authority (NSW) v Dederer (2007) 234 CLR 330 at 403 [266], 415 [294]; [2007] HCA 42. judge was "entitled" to conclude that Mr Henderson had not discharged the "onus" of persuading the primary judge that his father had not unlawfully acquired the jewellery, was not expressed in terms which unambiguously reflected that obligation. Mr Henderson's appeal to this Court does sufficiently put in issue the proper inference to be drawn from the primary facts found by the primary judge to permit and require this Court to reach its own conclusion. When due weight is given to the conventional perception that persons do not ordinarily engage in criminal conduct, the primary judge's findings of fact do not lead to the anomalous outcome to which his Honour considered himself driven. Absent some basis in the evidence for considering that conventional perception to be inapplicable to Mr Henderson's father, or to any earlier owner of the jewellery, the absence of evidence as to how any of them acquired title to the jewellery leaves as the more probable inference that it was not as a result of some illegal activity. That is the inference appropriate to be drawn, to which this Court should now give effect. Conclusion The evidence adduced by Mr Henderson and accepted by the primary judge was sufficient for Mr Henderson to discharge the burden placed on him by s 68(2)(b) of the Act of satisfying the Supreme Court that it was more probable than not that the money the subject of the restraining order was not illegally acquired property. The exclusion order for which he applied should have been made, from which it follows that the forfeiture order for which the State applied should not have been made. I would allow the appeal. 101 KEANE J. The Criminal Proceeds Confiscation Act 2002 (Q) ("the Act") makes provision for the forfeiture to the State of Queensland ("the State") of property in which persons who have been engaged in serious crime related activity have an interest. The appellant, Mr Henderson, is a person who has engaged in serious crime related activity105. He was the respondent to an application by the State for forfeiture of his property, being the cash proceeds of sale of jewellery found to have been given to him by his now deceased father. In response to the State's application for forfeiture, Mr Henderson applied to have the cash proceeds of the jewellery excluded from the scope of any forfeiture order on the basis that the jewellery was not "illegally acquired property". The primary judge (Peter Lyons J) and the Court of Appeal of the Supreme Court of Queensland (White JA, Holmes JA and Daubney J agreeing) held that the Act required Mr Henderson to prove that the jewellery had not been illegally acquired by his father, and that Mr Henderson had failed to discharge that onus. On appeal to this Court, Mr Henderson contended that the courts below erred in proceeding on the footing that the Act required him to prove that his father had not acquired the jewellery illegally. He contended that it was sufficient for him to prove that he had not himself acquired the jewellery illegally on his part; and that he had satisfied this burden. It was also said that the courts below should have found that the jewellery was not illegally acquired property in the hands of his father. For the reasons which follow, Mr Henderson's contentions should be rejected. Factual background Towards the end of 1996, Mr Henderson visited his father at his house in Picola, Victoria106. During the visit, Mr Henderson's father handed him various items of jewellery and said words to the effect, "take this and look after your brothers and sisters"107, which Mr Henderson understood to be a reference to his 105 Queensland v Henderson (2011) 218 A Crim R 111 at 116-117 [34], 118 [42]-[44]. 106 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [5]; Henderson v State of Queensland [2014] 1 Qd R 1 at 4 [9]. 107 Henderson v State of Queensland [2014] 1 Qd R 1 at 4 [9]. brothers, Mr Joseph Marijancevic ("Joseph") and Mr Frank Marijancevic ("Frank"), and his sister Ms Dianne Murphy108. After leaving his father's house, Mr Henderson took the jewellery to Melbourne where, he said, he deposited it in a safety deposit box at the Collins Street branch of the ANZ Bank109. According to Mr Henderson, there it remained110. Following the death of Mr Henderson's father on 29 April 2001, Mr Henderson invited Joseph, Frank and Ms Murphy to his house for a family meeting111. At that meeting, he showed them the jewellery for the first time. A collective decision was then made to have the jewellery valued and sold, and to have the proceeds invested112. In about December 2001, Mr Henderson the jewellery for valuation113. Mr Theodosis Komianos, self-employed Mr Komianos sketched the jewellery and told Mr Henderson that it had a retail value of $1 million, and a wholesale value of between $600,000 and $700,000114. took jeweller, At some point thereafter, a person known only as Daniel115 purchased the jewellery from Mr Henderson for $620,000 in cash116. Mr Henderson, Joseph, Frank and Ms Murphy subsequently decided to invest that cash in the Queensland real property market117. In that regard, Mr Henderson began 108 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [5]. The primary judge noted that Mr Henderson had another sister, but that she had been "estranged from the rest of the family since she was a baby": Queensland v Henderson (2011) 218 A Crim R 111 at 112 [3]. 109 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [5]. 110 Henderson v State of Queensland [2014] 1 Qd R 1 at 4 [10]. 111 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [6]. 112 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [6]. 113 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [7], 120 [56]. 114 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [7]. 115 Mr Henderson gave evidence that he could not remember Daniel's full name. 116 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [8]. 117 Henderson v State of Queensland [2014] 1 Qd R 1 at 5 [17]. negotiating with a Mr John Dredge in relation to the purchase of a retail shop property located in Coondoo Street, Cairns118. Mr Henderson and Mr Dredge arranged to meet in Cairns in April 2002 to negotiate a potential sale of that property119. Mr Henderson arrived in Cairns at some point in April 2002120. He brought with him most of the cash he had received from the sale of the jewellery, believing that he could use it to encourage Mr Dredge to accept a reduced price for the sale of the Coondoo Street property121. After arriving, Mr Henderson hired a car and placed the cash he had brought with him in a blue sports bag in the boot122. On 20 April 2002, Mr Henderson and an acquaintance visited some people who were staying in Cairns in a unit at the Reef Palms Motel123. During their visit, police attended the unit to investigate some matters related to the occupants124. A search of the unit uncovered a quantity of illegal drugs125. That discovery resulted in a police search of each person present, as well as the car Mr Henderson had hired, which was parked nearby126. In the boot of the car police discovered the blue sports bag and a small quantity of cannabis127. The police took the blue sports bag back to the Cairns Criminal Investigation Branch office128. There they discovered the cash129. Mr Henderson 118 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [9]; Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [17]. 119 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [18]. 120 Queensland v Henderson (2011) 218 A Crim R 111 at 112 [10]. 121 Queensland v Henderson (2011) 218 A Crim R 111 at 112-113 [10]. 122 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [18]. 123 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [19]. 124 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [19]. 125 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [19]. 126 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [19]. 127 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [20]. 128 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [20]. 129 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [20]. claimed ownership of the cash but declined to explain its origins, except to say that "it was not unlawfully obtained and was not related to police enquiries."130 Mr Henderson was arrested for possession of tainted property in respect of the cash and possession of cannabis131. Afterwards, police counted the cash and issued him with a receipt for the total amount132. On 22 April 2002, police delivered the cash to the Lake Street branch of the Commonwealth Bank in Cairns, where it was subsequently deposited into the Queensland Police Service Collections Account133. Mr Henderson eventually purchased the Coondoo Street property with finance provided by a bank loan134. The Act The objects of the Act are set out in s 4(1) and (2): "(1) The main object of this Act is to remove the financial gain and increase the financial loss associated with illegal activity, whether or not a particular person is convicted of an offence because of the activity. It is also an important object of this Act— to ensure that property rights are affected by orders under this Act, including orders limiting a person's ability to deal with the property, only through procedures ensuring persons who may be affected by the orders are given a reasonable opportunity to establish the lawfulness of the activity through which they acquired the relevant property rights; and 130 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [20]. 131 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [20]. 132 Henderson v State of Queensland [2014] 1 Qd R 1 at 6-7 [23]. 133 Queensland v Henderson (2011) 218 A Crim R 111 at 113 [11]. 134 Henderson v State of Queensland [2014] 1 Qd R 1 at 6 [22]. to protect property honestly acquired by persons innocent of illegal activity from forfeiture and other orders affecting property; and to ensure that orders of other States restraining or forfeiting property under corresponding laws may be enforced in Queensland." The term "illegally acquired property" is defined by s 22 of the Act, which relevantly provides: "(1) Property is illegally acquired property if it is all or part of the proceeds of an illegal activity. Property is also illegally acquired property if— it is all or part of the proceeds of dealing with illegally acquired property; or all or part of it was acquired using illegally acquired property." It can be seen that the concern of this definition is to describe a characteristic feature of property rather than to describe its acquirer. Section 15 of the Act defines the expression "illegal activity" to include "a serious crime related activity", which is, in turn, defined by s 16 as a "serious criminal offence", which is, in turn, defined relevantly for present purposes by s 17(1)(c) as "an offence under the law of … a place outside Queensland, including outside Australia, that, if the offence had been committed in Queensland", would be an indictable offence for which the maximum penalty is at least five years' imprisonment. Section 25 of the Act provides that "illegally acquired property" retains that character "even if it is disposed of, including by using it to acquire other property ... until it stops being [illegally acquired property] under section 26." Section 26 of the Act provides: "Property stops being illegally acquired property ... (a) when it is acquired by a person for sufficient consideration, without knowing, and in circumstances not likely to arouse a reasonable suspicion, that the property was illegally acquired property ...; or (b) when it vests in a person on the distribution of the estate of a deceased; or (c) when it is disposed of under this Act, including when discharging a pecuniary penalty order or a proceeds assessment order; or (d) when it is the proceeds of the disposal of property under this Act other than by sale under a condition of a restraining order or by order of the Supreme Court under section 46 or 138; or (e) when it is acquired by Legal Aid as payment of reasonable legal expenses payable because of an application under this Act or in defending a charge of an offence; or in circumstances prescribed under a regulation." One may now refer to the provisions of the Act which establish the scheme of the Act in respect of the forfeiture of property associated with persons who have engaged in serious crime related activity. Section 56(1) of the Act provides that the State may apply to the Supreme Court of Queensland for an order, described as a "forfeiture order", forfeiting to the State "particular property restrained under a restraining order." Section 58 of the Act provides for the making of a forfeiture order if the Supreme Court finds it more probable than not that, for property restrained under s 28(3)(a), the prescribed respondent engaged in a serious crime related activity. Sections 56 and 58 provide for the culmination of the process of forfeiture. It is necessary to understand the steps which lead to that culmination. Section 56(1) directs one to s 31(1) of the Act, which provides for the making of a restraining order. Section 31(1) requires, subject to presently immaterial exceptions135, the Supreme Court to make a restraining order "in relation to property if … it is satisfied there are reasonable grounds for the suspicion on which the application is based." The reference in s 31(1) to "the application" directs one, in turn, to s 28 of the Act, which provides for the first step in the process of forfeiture. Section 28(1) provides that the State may apply to the Supreme Court for: "an order (restraining order) restraining any person from dealing with property stated in the order (the restrained property) other than in a stated way or in stated circumstances." 135 See s 31(2). Section 28(3) provides that the application for a restraining order may relate to all or any of the following property: for property of a person suspected of having engaged in 1 or more serious crime related activities (a prescribed respondent)— stated property; or (iii) all property; or stated property, or a stated class of property, of a stated person, other than a prescribed respondent; stated property suspected of being serious crime derived property because of a serious crime related activity of a person, even though a particular person suspected of having engaged in the serious crime related activity can not be identified." By virtue of s 28(2), the application for a restraining order must be supported by an affidavit in which, in accordance with s 29(1), the deponent must state his or her suspicion as to the provenance of the property depending on whether it is property described in par (a), (b) or (c) of s 28(3). Bearing in mind that ss 56 and 58 contemplate a forfeiture order in respect of the property restrained under a restraining order, it is important to note that the reach of s 28(3)(a)(iii) is not confined to those items of property of a prescribed respondent derived from the serious crime related activity of that prescribed respondent, but may extend to all the property of a prescribed respondent. Although s 28(3)(a)(iii) was not invoked by the State in this case, the broad scope of s 28(3)(a)(iii) is instructive in relation to the operation of the Act. Property may be restrained under s 28(3)(a)(iii) and, hence, forfeited under s 58, without proof of a connection between the criminal activity of a prescribed respondent and that person's acquisition of property the object of the application for forfeiture. Section 65 of the Act applies if an application for a forfeiture order has been made but has not been decided. Under s 65(2): "A person, including a prescribed respondent, who claims an interest in property to which the application relates may apply to the Supreme Court for an exclusion order." Section 68(2) of the Act provides: "The Supreme Court must, and may only, make an exclusion order if it is satisfied— the applicant has or, apart from the forfeiture, would have, an interest in the property; and it is more probable than not that the property to which the application relates is not illegally acquired property." Under s 70 of the Act, where an exclusion order is made: "excluding an interest in property from an application for a forfeiture order, the restraining order applying to the restrained property stops having effect in relation to the excluded interest." The Act thus authorises the forfeiture of all of the property of a person shown to have been engaged in serious crime related activity, but allows property, shown on the balance of probabilities not to be illegally acquired property, to be excluded from forfeiture. By s 8, a proceeding for forfeiture of property under the Act is not a criminal proceeding; the rules of evidence are those applicable in civil proceedings, and questions of fact are to be decided on the balance of probabilities. It is instructive to contrast the scheme relating to forfeiture with s 77(1) of the Act, which provides for an application by the State for an order requiring: "a person to pay to the State the value of the proceeds derived from the person's illegal activity that took place within 6 years before the day the application for the order is made." Section 77(1) is expressly concerned with the proceeds of the person's own illegal activity; the scheme of ss 22, 26, 28, 31, 56 and 58 is not concerned with illegal acquisition by the person. Rather, the scheme of the Act in relation to forfeiture is concerned with the character of the property as "all or part of the proceeds of an illegal activity." The proceedings On 10 February 2003, the State successfully sought a restraining order in respect of property of Mr Henderson136 described as "cash to the value of $598,325 in Australian currency" ("the restrained property")137. As both the primary judge and the Court of Appeal noted138, the application for a restraining order was made in respect of all Mr Henderson's property, but the supporting affidavit sought an order only in respect of property described as "cash to the value of $598,325 in Australian currency". It is common ground that the restrained property is the cash that was seized by police on 20 April 2002. On 5 March 2003, the State filed an application for a forfeiture order in respect of the restrained property, and on 30 May 2003, Mr Henderson filed an application for an exclusion order in respect of the same ("the exclusion application"). Mr Henderson made the exclusion application on the ground that the money was not "illegally acquired property" within the meaning of s 68(2)(b) of the Act; rather, it was money that he had lawfully acquired in exchange for selling various items of antique jewellery he had been given by his father. A hearing to determine the outcome of both applications was conducted in the Supreme Court over the course of five days in June 2011. The proceedings before the primary judge The application which assumed primary importance in the proceedings was the exclusion application139. The decisive issue with respect to that application was whether it was more probable than not that the restrained property was "illegally acquired property" within the meaning of s 68(2)(b) of the Act. 136 The primary judge noted that, based on the evidence, Joseph, Frank and Ms Murphy may have an interest in the property. They were content for the proceedings to be conducted on the basis that the restrained property was the property of Mr Henderson: Queensland v Henderson (2011) 218 A Crim R 111 at 137 Queensland v Henderson (2011) 218 A Crim R 111 at 113 [12]; Henderson v State of Queensland [2014] 1 Qd R 1 at 7 [25]. 138 Queensland v Henderson (2011) 218 A Crim R 111 at 113 [12]; Henderson v State of Queensland [2014] 1 Qd R 1 at 7 [25]. 139 Queensland v Henderson (2011) 218 A Crim R 111 at 115 [26]. The parties140 and the primary judge141 proceeded on the basis that s 22(2) of the Act meant that the restrained property would be "illegally acquired property" if the jewellery which was sold to acquire it was also "illegally acquired property". That assumption was not challenged in this Court. In determining whether the jewellery was "illegally acquired property", attention was directed to whether the jewellery had been illegally acquired by Mr Henderson's father, rather than by Mr Henderson himself. The proceedings were conducted on the footing that it was for Mr Henderson to prove that his father had not illegally acquired the jewellery. Mr Henderson, Joseph, Frank and Ms Murphy all gave evidence that they had been told that the jewellery had been passed down to their father, having been given initially to their great-grandfather by the Russian royal family in exchange for transportation services he provided for them at the beginning of the twentieth century. This evidence was received as proof of the provenance of the jewellery without objection to its admissibility as hearsay. As the primary judge said142: "As the case was conducted, the issue was whether that account could be true." The State contended that that account as to the provenance of the jewellery was untrue. The State called Mr Kenneth Penfold, a self-employed jeweller and registered valuer, to give his opinion as to the likely age of the jewellery143. Based on the sketches of the jewellery taken by Mr Komianos, Mr Penfold gave his opinion that the jewellery was "of a relatively modern period post 1950's" and was inconsistent with Russian styles of the early twentieth or late nineteenth century144. The primary judge was "prepared to accept" that "the jewellery was given to Mr Henderson by his father, and shown by him to his brothers and his sister shortly after his father's death."145 Nevertheless, the primary judge found that 140 Queensland v Henderson (2011) 218 A Crim R 111 at 115 [27], [28]. 141 Queensland v Henderson (2011) 218 A Crim R 111 at 121 [60]. 142 Queensland v Henderson (2011) 218 A Crim R 111 at 120 [52]. 143 Queensland v Henderson (2011) 218 A Crim R 111 at 119 [50]; Henderson v State of Queensland [2014] 1 Qd R 1 at 10-11 [48]-[49]. 144 Queensland v Henderson (2011) 218 A Crim R 111 at 119 [50]; Henderson v State of Queensland [2014] 1 Qd R 1 at 10-11 [48]-[49]. 145 Queensland v Henderson (2011) 218 A Crim R 111 at 120 [58]. "[n]otwithstanding the limited nature of the information available to Mr Penfold ... his opinion as to the probable age of the jewellery depicted in Mr Komianos' sketches should be accepted."146 As a result, his Honour found that the account by Mr Henderson and his brothers and sister as to the provenance of the jewellery "cannot be true"147. His Honour went on to conclude148: "Since Mr Henderson has been unable to establish how [his father] came into possession of the jewellery, and consequently that the jewellery was not illegally acquired property, it follows that the property the subject of the exclusion application has not been shown on the balance of probabilities not to be illegally acquired property, and the exclusion order sought by Mr Henderson cannot be made." On that footing, the exclusion application was dismissed, and the State's application for a forfeiture order was granted149. The decision of the Court of Appeal Mr Henderson appealed to the Court of Appeal of the Supreme Court of Queensland. In his amended notice of appeal, Mr Henderson contended, among other things, that in all the circumstances – including the absence of any evidence that Mr Henderson's father had unlawfully acquired the jewellery and the inherent limitations in the evidence of Mr Penfold – it was not open to the primary judge to fail to be satisfied on the balance of probabilities that the jewellery was not illegally acquired. The Court of Appeal rejected that contention. White JA150 held that "it was for Mr Henderson to persuade [the primary judge] that his father had not unlawfully acquired the jewellery", and that "[t]he primary judge was quite entitled to conclude that Mr Henderson had not discharged that onus." The Court of Appeal dismissed the appeal. 146 Queensland v Henderson (2011) 218 A Crim R 111 at 119 [51]. 147 Queensland v Henderson (2011) 218 A Crim R 111 at 120 [53]. 148 Queensland v Henderson (2011) 218 A Crim R 111 at 121 [61]. 149 Queensland v Henderson (2011) 218 A Crim R 111 at 122 [66]. 150 Henderson v State of Queensland [2014] 1 Qd R 1 at 19 [92]. The issues in this Court The appeal to this Court proceeds pursuant to a grant of special leave made by Crennan and Kiefel JJ on 16 May 2014. The principal issue in this Court is whether the Act permits forfeiture only of property acquired illegally by the respondent to the State's application for forfeiture. If that issue is resolved against Mr Henderson, it is necessary to consider whether Mr Henderson discharged his burden of proving that it was more probable than not that the jewellery was not illegally acquired property in his father's hands. The onus of proof Mr Henderson contended that it was sufficient for the purposes of s 68(2)(b) of the Act for him to show that the jewellery had not been illegally acquired by him, regardless of whether it was illegally acquired property in his father's hands. In support of that contention, Mr Henderson referred to s 4(1) and s 4(2)(b) of the Act. The State accepted that if the Court accepted Mr Henderson's submission that s 68(2)(b) of the Act only required him to prove that the jewellery had not been illegally acquired by him, then the findings of the primary judge were sufficient for him to succeed in the appeal151. The State contended, however, that the circumstance that the jewellery was not illegally acquired by Mr Henderson was not an answer to the question whether the jewellery was "illegally acquired property" within the meaning of s 68(2)(b) of the Act. The State's contention should be accepted. The forfeiture for which the Act provides is civil forfeiture, that is to say, forfeiture in the absence of any need for a criminal conviction152. The "utility of civil assets forfeiture laws as a means of deterring serious criminal activity" is now widely recognised in Australia and internationally153. 151 See special leave application: [2014] HCATrans 102 at line 186. 152 cf Burton v Honan (1952) 86 CLR 169 at 178-179; [1952] HCA 30. 153 International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 at 345 [29]; [2009] HCA 49. It may be noted that the primary judge made the observation154 that: "it would appear to be anomalous that property may be confiscated, because the ultimate origin of the property is beyond the knowledge of, and means of proof available to, [the person whose property is liable to forfeiture]. Such a case would appear to be well outside the intended scope of the legislation". But, in a legislative scheme which expressly contemplates the forfeiture of all the property of a person found to have engaged in serious crime related activity, however that person may have come by that property, it is hardly anomalous that the person should be required to prove that a particular piece of property does not bear the character of illegally acquired property in order to gain an exemption from liability to forfeiture. The operation of the Act in this way is in accord with the objective of the Act of "remov[ing] the financial gain … associated with illegal activity"155. The Act prevents the accumulation of significant assets by those involved in serious criminal activity156, and, in particular, ensures that a person engaged in criminal activity is not allowed to benefit from the illegal activities of others. The Act has some resemblance to the Criminal Property Forfeiture Act (NT) ("the NT Act"), considered by this Court in Attorney-General (NT) v Emmerson157, which provided for forfeiture of all or any of the property owned by a person irrespective of any connection between any criminal activity of that person and his or her acquisition of the property in question. Both the Act and the NT Act operate to authorise the forfeiture of property which is not derived from criminal activity by the current owner of the property. But the Act operates less drastically than the NT Act, in that it affords a respondent to an application for forfeiture the opportunity to show that property is not illegally acquired property and so should be excluded from forfeiture. It is significant in this regard that s 26 of the Act makes comprehensive provision for the circumstances in which illegally acquired property loses its character as such. In particular, the terms of s 26(a) and (b) of the Act confirm 154 Queensland v Henderson (2011) 218 A Crim R 111 at 121 [65]. 155 Section 4(1). 156 International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 at 344-345 [25]-[29], 361-362 [81]-[82]; Attorney-General (NT) v Emmerson (2014) 88 ALJR 522 at 528 [15]; 307 ALR 174 at 178-179; [2014] HCA 13. 157 (2014) 88 ALJR 522; 307 ALR 174. that receipt of property without knowledge that it was illegally acquired property does not suffice to deny the property the character of illegally acquired property. The provisions of s 26(a) and (b) of the Act confirm that property illegally acquired, for example, by one family member should not lose its character as illegally acquired property by reason of a gift inter vivos to another family member. Discharging the onus of proof illegally acquired property. It was said that the Court of Appeal should have concluded that Mr Henderson had satisfied the onus of proof in relation to whether the jewellery was the difficulty confronting a person required to prove that property in his possession had not, at some indeterminate point in the chain of title of his predecessors, been illegally acquired. This invites both a general and a specific response. Speaking generally, the extent of the difficulty should not be exaggerated. The terms of s 26(a) and (b) of the Act suggest that it is likely to arise only in the case of gifts inter vivos of personal property. That said, it may well be that in some cases it will be difficult for a person who honestly acquires property by informal gift to prove that the property does not have the character of "illegally acquired property". The Act may, in some cases, operate harshly. But the wisdom of such a measure is a matter for the legislature158. As Lord Rodger of Earlsferry said in R v Smith159: "If in some circumstances [a confiscation scheme] can operate in a penal or even a draconian manner, then that may not be out of place in a scheme for stripping criminals of the benefits of their crimes. That is a matter for the judgment of the legislature". In any event, as noted above, the operation of the Act is less harsh than if the possibility of exclusion from forfeiture were denied altogether, as it was by the NT Act. Turning to the specifics of this case, it is important to appreciate that this is not a case where the passage of time denied Mr Henderson the possibility of giving an account of how the jewellery had come into his possession. The evidence of Mr Henderson and his siblings of their father's account of how he had come into possession of the jewellery was tendered and received as part of 158 Burton v Honan (1952) 86 CLR 169 at 179; Attorney-General (NT) v Emmerson (2014) 88 ALJR 522 at 540-541 [79]-[82]; 307 ALR 174 at 194-195. 159 [2002] 1 WLR 54 at 61 [23]; [2002] 1 All ER 366 at 373; Attorney-General (NT) v Emmerson (2014) 88 ALJR 522 at 541 [82]; 307 ALR 174 at 195. Mr Henderson's case at trial notwithstanding its hearsay character. It is important to appreciate that the issue tendered by the parties to the primary judge was whether "that account could be true". The primary judge resolved that issue emphatically in the negative. Mr Henderson's father's account was admitted into evidence and found, on the balance of probabilities, to be untrue. The primary judge and the Court of Appeal both rejected the only explanation consistent with the jewellery not being illegally acquired property in Mr Henderson's father's hands. In these circumstances, the primary judge and the Court of Appeal were right to conclude that they could not find that the jewellery was not illegally acquired property. As a result, the proceeds of the jewellery were rightly not excluded from the property liable to be forfeited to the State. The rejection of the only account of the provenance of the jewellery in the hands of Mr Henderson's father meant that there was, at best for Mr Henderson, no evidence as to how the jewellery had been acquired160; and so Mr Henderson did not begin to meet the burden of proving that the jewellery did not bear the character of illegally acquired property. The burden of proof that the jewellery was not illegally acquired property was squarely upon Mr Henderson: it was not discharged. The burden cast upon Mr Henderson by s 68(2)(b) cannot be reduced or overcome by some general presumption of lawful behaviour. That would be inconsistent with the statutory allocation of the burden of proof; indeed, a presumption of lawful behaviour has little place in the context of a statute which operates upon proof that the respondent has been found to have been a person who has engaged in serious criminal activity, and without the need for proof that the respondent acquired property by his or her own illegal activities. In any event, the case presented by Mr Henderson to the primary judge and the Court of Appeal did not seek to invoke any such presumption. The case was fought squarely on the basis that the account given by Mr Henderson's father was true. As the primary judge said: "As the case was conducted, the issue was whether that account [that is, the father's account] could be true." It cannot now be said that the courts below failed to heed the claims of a presumption of lawful behaviour. They were simply not invited to consider such a presumption as part of the case advanced on behalf of Mr Henderson. 160 Scott Fell v Lloyd (1911) 13 CLR 230 at 241; [1911] HCA 34; Hobbs v Tinling [1929] 2 KB 1 at 21; Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 684, 694; [1975] HCA 63. Conclusion and orders The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA STUART ANTHONY SILBERT (as Executor of the APPLICANT AND THE DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA RESPONDENT Silbert v Director of Public Prosecutions for Western Australia [2004] HCA 9 Date of Order: 9 December 2003 Date of Publication of Reasons: 3 March 2004 ORDER Application for special leave to appeal dismissed. On appeal from the Supreme Court of Western Australia Representation: M J Buss QC with M M N Byrne for the applicant (instructed by Talbot & Olivier) R J Meadows QC, Solicitor-General for the State of Western Australia, with C J Thatcher for the respondent and intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for the State of Western Australia) H C Burmester QC, Acting Solicitor-General of the Commonwealth with C J Horan intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) P A Keane QC, Solicitor-General of the State of Queensland, with G R Cooper intervening on behalf of the Attorney-General of the State of Queensland (instructed by Crown Law Division, Department of Justice) M G Sexton SC, Solicitor-General for the State of New South Wales, with K M Guilfoyle intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for New South Wales) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Silbert v Director of Public Prosecutions for Western Australia Constitutional law – Judicial power of the Commonwealth – Vesting in State courts – Power of State Parliament to confer functions incompatible with exercise by State court of judicial power of the Commonwealth – State Act deems person who dies before a charge is finally determined to be taken to have been convicted of a "serious offence" – Whether provision of State Act amounts to parliamentary determination of guilt and imposition of conviction – Whether provision of State Act precludes a court from making any or any sufficient inquiry into whether the deceased committed the offence – Whether State law invokes the principles in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. Criminal law – Confiscation of profits – Person charged with "serious offence" dies before charge finally determined – Crimes (Confiscation of Profits) Act 1988 (WA) deems deceased to be taken to have been convicted of the "serious offence" – Application for pecuniary penalty order and forfeiture order – Whether court precluded from making any or sufficient inquiry into whether the deceased committed the offence – Relevance of principles identified in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 – Whether legislative determination of guilt of the offence and imposition of conviction. Words and phrases – "abscond", "serious offence". Crimes (Confiscation of Profits) Act 1988 (WA), ss 3, 6, 15, 53. Criminal Property Confiscation Act 2000 (WA), ss 6, 157, 160. GLEESON CJ, McHUGH, GUMMOW, HAYNE, CALLINAN AND HEYDON JJ. On 9 December 2003 the Court ordered that this application for special leave be dismissed. What follows are our reasons for joining in that order. The applicant sought special leave to appeal to contend that the Crimes (Confiscation of Profits) Act 1988 (WA) ("the Confiscation Act") is invalid in its operation in relation to the estates of deceased persons who before death had been charged with, but not convicted of, serious crimes. The Confiscation Act has been repealed1 since the application to the Supreme Court of Western Australia in this matter, but it continues to operate in respect of that application2. It is convenient therefore to continue to speak of it in the present tense. Section 6(1) of the Confiscation Act provides that "[w]here a person is convicted of a serious offence" an appropriate officer may, subject to some qualifications not now relevant, apply to the Supreme Court of Western Australia, or to the court before which the person was convicted of the offence, for one or both of a forfeiture order in respect of particular property and a pecuniary penalty order. Section 3(2) of the Confiscation Act identifies four cases in which "[f]or the purposes of this Act, a person is to be taken to have been convicted of a serious offence". One of those circumstances (s 3(2)(d)) is if the person has been charged with the offence but, before the charge is finally determined, the person has absconded. The circumstances in which a person shall be taken to have absconded are exhaustively defined in s 3(5). One set of those circumstances, being the circumstances applicable in this matter, is if a complaint is made alleging the commission of the offence by the person, a warrant for the person's arrest is issued in relation to that complaint (or the person is arrested without warrant), and the person subsequently dies. Here, Stephen Retteghy was charged on indictment with two offences under the Misuse of Drugs Act 1981 (WA). Each of those offences was what the Confiscation Act calls a "serious offence". It is not clear whether Mr Retteghy 1 Criminal Property Confiscation (Consequential Provisions) Act 2000 (WA), s 4. 2 Criminal Property Confiscation (Consequential Provisions) Act, s 6. was arrested with or without warrant but it was common ground in the courts below that he died after his arrest and before he was tried. The applicant is executor of his estate. The application by the State Director of Public Prosecutions for orders under the Confiscation Act originally named the Public Trustee as representative of Mr Retteghy's estate, and joined the executors and beneficiaries named in the will. By order made on 12 November 1998 all defendants other than the present applicant ceased to be parties. The applicant, as the sole executor to whom probate had been granted, became the only defendant in the proceeding. The linchpin of the applicant's contention, that relevant provisions of the Confiscation Act are invalid, was that those provisions of the Confiscation Act by which the deceased was to be taken to have been convicted of a serious offence precluded the Court, asked to make either a pecuniary penalty order or a forfeiture order, making any, or at least any sufficient, inquiry into whether the deceased had committed the offence in question. This preclusion was said to invoke the principles identified in Kable v Director of Public Prosecutions (NSW)3. In the case of forfeiture orders, the short answer to the applicant's contention is that the Confiscation Act works no such preclusion. Section 53(2) requires that a court not make a forfeiture order in reliance on a conviction unless it is satisfied, beyond reasonable doubt, that the person committed the offence. In so far as pecuniary penalty orders are concerned, s 15(1)(a) empowers a court "if it considers it appropriate" to "assess the value of the benefits derived by the person against whom the application is made as a result of the commission of the serious offence in reliance on which the application is made or of any other unlawful act". It is unnecessary to explore whether this provision permits or requires any inquiry into whether the offence was committed. The applicant founds his argument in Kable. As was pointed out in H A Bachrach Pty Ltd v Queensland4: (1996) 189 CLR 51. (1998) 195 CLR 547 at 561-562 [14]. "Kable took as a starting point the principles applicable to courts created by the Parliament under s 71 [of the Constitution] and to the exercise by them of the judicial power of the Commonwealth under Ch III." As in Bachrach5, so too in this case: "If the law in question here had been a law of the Commonwealth and it would not have offended those principles, then an occasion for the application of Kable does not arise." Section 15(1)(a) of the Confiscation Act, if it had been a law of the Commonwealth empowering the making of a pecuniary penalty order by a court created under s 71 of the Constitution, would not have been invalid. If it permits a party to an application for pecuniary penalty to contend that the offence in reliance on which the application is made was not committed, the premise for the applicant's contention, that s 15(1)(a) of the Confiscation Act is invalid, would be wrong. That s 53(1) of the Confiscation Act would require the determination of such an issue on the balance of probabilities would not affect that conclusion. If, however, s 15(1) would not permit a party to an application for pecuniary penalty to contend that the relevant offence had not been committed, the Act would, nonetheless, be valid. On that hypothesis, the Confiscation Act would operate in a fashion not relevantly different from the way in which forfeiture provisions of the Customs Act 1901 (Cth), considered in Burton v Honan6, operated. Those forfeiture provisions, which could apply even if the goods in question were in the possession of an innocent third party, provided that a conviction of any person for an offence causing forfeiture of goods operated as a condemnation of the goods. The provisions were held to be valid. The references in the Confiscation Act to a person being "taken to have been convicted of a serious offence", like the reference to a conviction in the Customs provisions considered in Burton, describe the circumstances in which operative provisions of the Confiscation Act may be enlivened. There is no legislative determination of guilt of an offence; there is no legislative conviction of a person accused of crime. The central issue raised by an application for pecuniary penalty order is whether the value of benefits derived by the person (1998) 195 CLR 547 at 562 [14]. (1952) 86 CLR 169. against whom the application is made (who can be, and in this case was, a person other than the person "taken to have been convicted of a serious offence") as a result of the commission of that offence or any other serious offence7 should be assessed and, once assessed, whether that value of benefits should form a basis for calculation under s 15(1)(b) of a pecuniary penalty to be paid to the Crown. Nothing in the application for an order, the assessment of benefits derived, and the making of an order for payment of pecuniary penalty is antithetical to Ch III. An appeal would therefore have enjoyed no prospects of success if special leave to appeal had been granted. The Confiscation Act having been repealed, it is neither necessary nor appropriate to explore the matter beyond the point of identifying that the premises of the applicant's argument were flawed. 7 Crimes (Confiscation of Profits) Act 1988 (WA), s 15(1)(a), read in conjunction with the definition of "unlawful act" in s 3(1). Kirby This application for special leave, referred into the Full Court by a panel before whom it first came8, was dismissed by the Court at the conclusion of argument9. Reasons for the Full Court's order were reserved. I now state my reasons. I will first set out the basis for the appeal and consider the possible implications of the impugned provisions. I will then make clear why I cannot join in the reasoning of the majority. Finally, I will explain why I nevertheless agree in the Court's conclusion. Implications of a deemed conviction of a serious offence The matter of concern: The matter of concern that occasioned the reference to the Full Court was s 3(2)(d) of the Crimes (Confiscation of Profits) Act 1988 (WA) ("the Act")10. This states that, for the purposes of the Act, a person is to be taken to have been "convicted of a serious offence" if: "the person has been charged with the offence but before the charge is finally determined, the person has absconded". Section 3(5)(c)(i) provides that a person shall be taken to "abscond" in connection with an offence if: "the person dies without the warrant being executed or after the execution of the warrant or, in the case of a person arrested without warrant, after that arrest". These provisions which affect the appellant and the estate of the deceased person which he administers, when read in isolation, appear very broad. Do they mean, in effect, that the Parliament of Western Australia has, by legislative fiat, imposed a "conviction" upon the deceased person which no court of law in Australia has imposed, or possibly could impose, in such circumstances? Do they assert a legislative power in the State Parliament that, by extension, would 8 McHugh and Heydon JJ and myself. (See Trans, 9 May 2003 at 503-505). 9 On 9 December 2003. See Silbert v Director of Public Prosecutions for Western Australia [2003] HCATrans 515 at 2466. 10 As noted in the reasons of Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ ("the joint reasons"), the Act has been repealed since these proceedings were brought. However, by the Criminal Property Confiscation (Consequential Provisions) Act 2000 (WA), s 6, the Act continues to operate in respect of this application. As in the joint reasons, I shall refer to the repealed Act in the present tense. Kirby permit the legislative "conviction" of a serious criminal offence of a living person upon some other criterion, irrelevant to the guilt of that person of such a criminal offence11? Do they suggest a revival of parliamentary "convictions" of individuals, including in respect of "serious offences", which would be inimical to our system of criminal justice and the usual constitutional arrangements governing such convictions in this country12? Does the imposition upon a court (in this case, the Supreme Court of Western Australia) of such a statutory fiction constitute an offence to the constitutional implication concerning courts in Australia, explained in Kable v Director of Public Prosecutions (NSW)13, given that the court concerned is envisaged by the federal Constitution, expressly14 and by implication15, as part of the integrated Judicature of the Commonwealth? Given that such court is bound to receive federal jurisdiction invested in it by federal law16, and must therefore be a suitable recipient of such jurisdiction, does the Act infringe the Constitution? Vigilance to the boundaries of power: At least in constitutional questions, a court such as this does not address its attention solely to the issue presented by the parties, viewed in the narrowest of terms. Constitutional law is a river of doctrine. Constitutional decisions are watched by those who propose, draft and make laws. The lesson of constitutional history is that laws are sometimes made that test the boundaries of legislative power. Once upheld, further laws are sometimes enacted those boundaries, occasionally pushing constitutional power to snapping point17. to extend 11 The Act provides for deemed convictions of "serious offences" in the case of various living persons other than those factually convicted of such offences by a court of law. See the Act, s 3(2)(c) and (d). 12 See Liyanage v The Queen [1967] 1 AC 259 at 290-292; Nicholas v The Queen (1998) 193 CLR 173 at 188 [20], 211-212 [83], 221-222 [113]-[114], 232-233 13 (1996) 189 CLR 51. 14 Constitution, s 73(ii). 15 Constitution, s 106. 16 Constitution, s 77(iii). 17 The decision in Ha v New South Wales (1997) 189 CLR 465 is a good illustration. The history of the course of the Court's decisions on excise duties and State "licence fees" on the sale of tobacco is described there. Kirby Where a law intrudes into the traditional area of the courts, this Court should be vigilant lest there be a case of legislative excess or repugnancy. The Constitution, as it has been interpreted, so provides18. Unless the courts are vigilant, there is a risk that bad precedents, sanctioned by judicial endorsement, will undermine and erode important constitutional assumptions. Matters traditionally decided by courts of law, that are independent and impartial, may then come to be decided elsewhere, contrary to the express constitutional provisions and to constitutional implications. The issue and the decision of the Full Court The fundamental question presented by the application for special leave is therefore whether the present is an instance where the language of the Act, to which the applicant objected, in terms of what it provided and what it might grow into, justified the intervention of this Court. In the Full Court of the Supreme Court of Western Australia, Wallwork J dissented19. By reference to observations of this Court in Polyukhovich v The Commonwealth (War Crimes Act Case)20, Re Tracey; Ex parte Ryan21, Kable v Director of Public Prosecutions (NSW)22 and Nicholas v The Queen23, his Honour concluded that the deeming provisions of the Act, complained of by the applicant, were "repugnant to judicial process"24 and thus "inoperative because they were inconsistent with the proper exercise of the judicial power of the Supreme Court of Western Australia"25. The majority in the Full Court (Owen and Steytler JJ) disagreed. They upheld the validity of the State Act26. It is from the order that followed the majority conclusion that the present application was brought. 18 See Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27. 19 Silbert v Director of Public Prosecutions (WA) (2002) 25 WAR 330. 20 (1991) 172 CLR 501 at 704. 21 (1989) 166 CLR 518 at 580. 22 (1996) 189 CLR 51 at 102-106, 131. 23 (1998) 193 CLR 173 at 186 [16], 208 [73]. 24 Silbert (2002) 25 WAR 330 at 339 [51], citing Gummow J in Kable (1996) 189 CLR 51 at 134. 25 Silbert (2002) 25 WAR 330 at 340 [53]. 26 Silbert (2002) 25 WAR 330 at 347-348 [85]-[86]. Kirby The principle in Kable's case On the return of the application, an attempt was made to rely upon – and to clarify – the principle of the federal Constitution, upheld by this Court in Kable27. The basic concept in Kable is relatively simple. In my view, the essential ways in which it is expressed by the members of the majority in that decision are not very different from each other, despite complaints to that effect by some judges in intermediate courts28. The constitutional implication expressed in Kable has not, so far, attracted enthusiastic application by intermediate courts, although constitutional implications are inherent in the task of construing a written constitution. Some implications are very well established in Australia29. Other, even new, implications are occasionally embraced with judicial alacrity30. The cases in which Kable has been argued in State and Territory courts were drawn to this Court's attention31. In only one case has an argument based on Kable succeeded at that level32. Appeals or applications to this Court are pending in some other cases. Kable holds that Ch III of the Constitution limits the power of State Parliaments to confer non-judicial functions or non-judicial characteristics on State courts that are incompatible with, or repugnant to33, the core requirements of such courts as potential recipients of federal jurisdiction, as provided for in the Constitution34. The core requirements referred to include those of the manifest independence and impartiality of the judiciary in the discharge of their functions. 27 (1996) 189 CLR 51. 28 See R v Moffatt [1998] 2 VR 229 at 249-250 per Hayne JA (referred to in Silbert (2002) 25 WAR 330 at 347 [84]) and John Fairfax Publications Pty Ltd v Attorney-General (NSW) (2000) 158 FLR 81 at 111 [169] per Meagher JA. 29 For example Melbourne Corporation v The Commonwealth (1947) 74 CLR 31; R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254. 30 As in Austin v The Commonwealth (2003) 77 ALJR 491; 195 ALR 321. 31 See Johnston and Hardcastle, "State Courts: The Limits of Kable", (1998) 20 Sydney Law Review 216. 32 In Re Criminal Proceeds Confiscation Act 2002 (Q) [2003] QCA 249 (Court of Appeal per Williams JA, White and Wilson JJ). 33 See Fairfax (2000) 158 FLR 81 at 88 [43]. 34 Constitution, s 77(iii). See Kable (1996) 189 CLR 51 at 98, 103-104, 116, 132. Kirby This includes independence from legislative directions over individual judicial decisions and in the findings of fact and law that are necessary to them. The reasoning of the majority in Kable was possibly complicated by the references made in their reasons to a suggested consideration of public perception about, and confidence in, the integrity of the courts35. Public perception represents a consideration obviously difficult for judges to ascertain objectively and with complete certainty36. Properly analysed, I do not consider that this consideration was a criterion for the operation of the constitutional principle expressed in Kable. Instead, I regard it as a description of the likely outcome, in relation to the integrated Judicature provided by the Constitution, unless the principle in Kable is respected by the legislatures and executive governments of the nation and upheld, where necessary, by the courts. Judges should accept the responsibility of stating what is, or is not, inconsistent with (or repugnant to) judicial process – a subject upon which they have both knowledge and experience. They should not feel bound to invoke the fiction of public perceptions to explain or justify such conclusions. Approach, relevant facts and legislation Do the deeming provisions of the Act, challenged in this application, attract the Kable principle so explained? Clearly, the rule in Kable is not one confined to the extraordinary legislation that was considered in that case. The rule, as expounded by the majority in Kable, is one of general application37. I also accept that the rule requires attention to considerations of matters of substance, as befits an implication derived from the Constitution. It is not one confined to matters of form or to the mere expression of legislation, viewed in isolation. I further accept that the orthodox approach of this Court, where constitutional invalidity is charged, applies. In such cases, the first function of a 35 See Kable (1996) 189 CLR 51 at 108 per Gaudron J, 118-119 per McHugh J, 133 per Gummow J. See also Mann v O'Neill (1997) 191 CLR 204 at 245 per 36 The reference to "public perception" as a criterion of constitutional validity was criticised by Brennan CJ in Nicholas v The Queen (1998) 193 CLR 173 at 197 [37] with whom, at 275-276 [242], Hayne J agreed. 37 Fairfax (2000) 158 FLR 81 at 84 [15]; cf Bruce v Cole (1998) 45 NSWLR 163 at Kirby judge is to construe the impugned legislation – to understand what it says and what it does not say38. The background facts in the application were uncontested. They are stated in detail in the joint reasons in this Court, sufficient for the needs of my opinion39. The essential provisions of the Act are mentioned there, in addition to s 3(2) and (5) of the Act, which I have quoted40. Points of distinction from the joint reasons Repeal of the Act is not significant: I would not assign any weight, in resolving this application, to the fact that the Act has now been repealed41. I say this for three reasons. First, by a cognate measure, enacted with the repeal, the Act continues to apply to the case of the applicant. He has invoked the protection of the courts and is now before us for that purpose. Secondly, the new Act contains provisions in some ways similar to those which he challenges.42 The interpretation and validity of these provisions is therefore of significance to all persons potentially bound by them. Thirdly, the model of the legislation adopted in the Western Australian Act is the same, or virtually the same, as that in Victoria43, South Australia44, Queensland45 and the Australian Capital Territory46. By way of contrast, the analogous legislation in New South Wales47, Tasmania48 and the 38 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 186; R v Hughes (2000) 202 CLR 535 at 565 [66]; Residual Assco Group Ltd v Spalvins (2000) 202 CLR 39 The joint reasons at [2]-[7]. 40 The joint reasons at [3]-[4]. See above at [17]-[18]. 41 The joint reasons at [14]. 42 Criminal Property Confiscation Act 2000 (WA), ss 157(1)(d), 160(2)(c). 43 Confiscation Act 1997 (Vic), ss 4(1)(d), 5(a). 44 Criminal Assets Confiscation Act 1996 (SA), s 12(b). 45 Criminal Proceeds Confiscation Act 2002 (Q), ss 106(1)(c), 109(1)(b), 111. 46 Confiscation of Criminal Assets Act 2003 (ACT), ss 15(1)(c), 16(2)(a). 47 Confiscation of Proceeds of Crime Act 1989 (NSW), ss 5(1)(d), 6(1). Kirby Northern Territory49 does not contain provisions deeming a person who dies before trial to have absconded and thus taken to have been convicted of a serious offence. Nor does the present or former federal Act50 contain such provisions. However, the federal Act does provide for orders for the forfeiture of property and pecuniary penalties to be made in circumstances where the alleged offender has not been convicted of an offence51. These differences in legislative approach suggest that there is a way by which the problem of accused persons who have died before trial can be dealt with without requiring a court, in effect, to treat the deceased as having "absconded" (contrary to the fact) and thereby to be someone who has been "convicted of a serious offence" (also contrary to the fact)52. Moreover, the evidence of equivalent legislation in jurisdictions other than Western Australia suggests that, if the applicant could make good his arguments based on Kable, the decision would be of significance beyond his case and beyond the borders of his State. Focussing on the State Act: Contrary to the joint reasons53, I would not regard it as essential, or necessarily useful, in considering an argument based on Kable to start with the hypothetical case of the validity of the impugned provisions of the Act, were they contained in federal legislation. This may sometimes be a confirmatory technique for judging whether the principle in Kable has been breached54. However, I would hesitate to adopt it as a universal criterion for the more nuanced assessment that the reasoning in Kable demands. In the present case, adopting such an approach involves piling an additional fiction upon the fictions in the Act – all fictions known to be factually false. Such reasoning risks collapsing under the weight of its own artificial 48 Crime (Confiscation of Profits) Act 1993 (Tas), ss 5(1)(d), 6. 49 Criminal Property Forfeiture Act 2002 (NT), ss 161(1)(c), 162. 50 Proceeds of Crime Act 2002 (Cth), ss 331(1)(d), 334; see also Proceeds of Crime Act 1987 (Cth), ss 5(1)(d), 6(c)(i). 51 Proceeds of Crime Act 2002 (Cth), ss 47, 49, 51, 80, 84, 85, 110, 116, 120, 145, 52 The Act, s 3(2)(d), read with s 3(5)(c)(i). 53 The joint reasons at [11]. 54 See H A Bachrach Pty Ltd v Queensland (1998) 195 CLR 547 at 561-562 [14]. Kirby hypotheses. Here, we should focus our attention on the State Act itself, as it stands, and apply the constitutional standard to its provisions. Rebutting preclusion is not fatal: Nor do I regard it as necessarily fatal to the applicant (as the joint reasons suggest55) that the hypothesis demanded by the impugned provisions does not preclude the making of an inquiry, or sufficient inquiry, into whether the deceased did, in fact, commit the offence in question. In his argument, the applicant took a more fundamental and threshold point. He submitted that, once a matter of this character was before a court of the Australian Judicature, it was not competent for a State legislature, for whatever purpose, to require such a court to deem a person to be "convicted of a serious offence". Judicial acceptance of a conviction, so the applicant argued, was traditionally, properly and only assigned, within Australia's constitutional arrangements, to an independent and impartial court, acting judicially, following a hearing that observed proper standards of fairness, including the hearing of both sides before such a "conviction" was accepted56. Ultimately, this is what persuaded Wallwork J in the Full Court of the correctness of the applicant's case. He quoted what Gummow J had said in Kable57: "… if certain criteria are met, then the Supreme Court is to inflict upon that individual a penalty. Moreover, the penalty is not inflicted upon, and by reason of, conviction by the Supreme Court on any charge of contravention of the criminal law." Wallwork J expressed the view that the present was an analogous case and that the foregoing words of Gummow J applied to it58. With respect, it seems to me that there is more to the applicant's argument than the joint reasons suggest. In the face of the clear provisions of the Act, which I have quoted, it cannot be denied that the Act, for a specified purpose, attaches serious consequences to a deemed "conviction" of a serious criminal offence. It does so, although, by our history and law, such a "conviction" is normally a formal judicial act, performed by an independent judge in a given way and only after established procedures are duly followed. 55 The joint reasons at [8]-[11]. 56 See Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 580; Polyukhovich (1991) 172 CLR 501. 57 (1996) 189 CLR 51 at 125. 58 Silbert (2002) 25 WAR 330 at 338 [46]. Kirby Moreover, the Act, in effect, obliges the Supreme Court to accept the fictitious "conviction" and to perform specified judicial functions on that footing although everyone knows, in the case of an accused who has died before trial, that, by law, the criminal proceedings against him abate and that no such "conviction" can be secured thereafter by ordinary judicial process59. In considering the application and its constitutional argument, it is obviously important that the complaint be judged in terms of what would occur to the actual and perceived independence and impartiality of the courts if such legislative "convictions" became commonplace or extended to wider circumstances on the basis of this precedent. The Kable argument should be rejected I therefore understand the force of the applicant's arguments concerning the suggested invalidity of the provisions of the Act that he impugns. However, I ultimately come to the same conclusion as the other members of this Court. On closer analysis of the legislation, read as a whole, it does not engage the rule in Kable. My reasons for this conclusion are as follows: First, the terms of the Act evince an actual purpose to make a provision in relation to property. Arguably that is its primary character. Decisions of this Court establish that the federal Constitution does not deny legislative power to the States to deprive an owner of property, even without the provision of just terms60. Secondly, the Act does not, in fact or law, provide that the deceased is "convicted" of a criminal offence, serious or otherwise. On its face, the Act does not involve an impermissible determination of criminal guilt or liability to criminal punishment as such; nor an invalid legislative direction to a court concerning its fact-finding functions in such matters. If it did, it might indeed enliven considerations of constitutional invalidity61. 59 Archbold, Criminal Pleading, Evidence and Practice (2002) at [3-202]; R v Jefferies [1969] 1 QB 120 at 124; R v Kearley (No 2) [1994] 2 AC 414 at 422-423. 60 See Durham Holdings Pty Ltd v NSW (2001) 205 CLR 399 at 409-410 [12]-[14], 425 [56] and authorities cited there. 61 Polyukhovich (1991) 172 CLR 501 at 684-685, 703-704; Chu Kheng Lim (1992) 176 CLR 1 at 26-27; Leeth v The Commonwealth (1992) 174 CLR 455 at 469-470; Kable (1996) 189 CLR 51 at 98. Kirby No criminal consequences could, or do, apply to the deceased or to the executor of his estate by reason of the provisions complained about. The "conviction" is not entered on the person's criminal record, if any. Instead, the expression has been used solely as a legal fiction, a shorthand expression of statutory drafting62. So much appears in the language of the Act. As the statutes of other Australian jurisdictions show, a different formula might have been used. However, this is not alone a sufficient reason to attract the serious consequence of constitutional invalidity to the way in which the Parliament of Western Australia has chosen to express its statute63. Thirdly, that the provisions complained of are solely a legislative fiction is made clear by the use of the words "is to be taken to have been"64. The Act makes it plain that the fiction is limited. It is only "for the purposes of this Act". It is not a "conviction" for larger and different purposes of criminal justice and punishment. Of its nature, a legal fiction usually involves acceptance that, in truth and for other purposes, what "is to be taken to have been" the case is not in fact so65. Accordingly, the limited operation of the impugned provisions is plain. They do not oblige a court, contrary to the truth, to find facts or to adjudge a person criminally guilty on the basis of a legislative conclusion that is not judicially examinable. Decisions of this Court have occasionally suggested that in some circumstances the operation of deeming provisions, that prevent parties before the courts from proving the truth of contested matters, may involve an invasion of the judicial power and on that basis be unconstitutional66. Thus, if a legislature requires a court to apply the law to facts invented by the legislature, 62 See Hughes (2000) 202 CLR 535 at 550-551 [23]-[24], 572-573 [88]-[91]. 63 See Williamson v Ah On (1926) 39 CLR 95 at 117 per Isaacs J. 64 The Act, s 3(2). 65 cf R v The County Council of Norfolk (1891) 60 LJ QB (NS) 379 at 380-381; Rowe v Transport Workers' Union of Australia (1998) 90 FCR 95 at 112; Maroney v The Queen (2003) 202 ALR 405 at 408 [11], 419-420 [55]-[57]. 66 See Actors and Announcers Equity Association v Fontana Films Pty Ltd (1982) 150 CLR 169 at 214-215. See also The Queen v Bowen; ex parte Amalgamated Metal Workers & Shipwrights Union (1980) 144 CLR 462 at 480. cf The Queen v Ludeke; ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 651; McHugh, "Does Chapter III Protect Substantive as well as Procedural Rights?" (2001) 21 Australian Bar Review 235 at 243-244. Kirby occasioning a "travesty of the judicial process"67, the law might, in the case of federal courts, contravene s 71 of the Constitution and be invalid on that account. Relying on the Kable principle, instances might arise in which a similar question is presented in respect of State courts. However, the present case falls far short of such an instance. Fourthly, as the majority in the Full Court found68, the deeming provisions in the Act, of which the applicant complains, are no more than devices used to identify persons of a class against whom applications under the Act may be made. They have no other effect. In particular, they do not have the effect of making a "binding and authoritative"69 decision for other and different judicial purposes. In dealing with an application for a forfeiture order under the Act, made in relation to the property of a person who has died, the court deciding the application is still required to satisfy itself beyond reasonable doubt, before making the order, that the person committed a relevant offence70. Moreover, to determine that a person derived benefits as a result of the commission of a serious offence or applicable unlawful act, the court must, in my opinion, be satisfied that the person committed a serious offence or unlawful act. Such provisions fall far short of those declared invalid in Kable. Fifthly, the outcome of an application made under the Act remains to be determined by a court in accordance with the normal procedures of a court, decided by independent judicial officers, applying rigorous standards of proof. Under the Act, they retain a discretion reflecting the judicial duty to do justice. Thus, under the Act, the court may only make a forfeiture order or order a pecuniary penalty, "if it considers it appropriate"71. Moreover, the Act provides for a facility of appeal, including in respect of a finding that the person committed the offence72. In this sense, the impugned legislation bears no real similarity to the old laws on forfeiture, attainder and corruption of the blood73, 67 Polyukhovich (1991) 172 CLR 501 at 704 per Gaudron J. 68 Silbert (2002) 25 WAR 330 at 344-347 [76]-[82]. 69 Nicholas (1998) 193 CLR 173 at 187 [18] per Brennan CJ. 70 The Act, s 53(2). See also s 10(1). 71 The Act, ss 10(1), 15(1). 72 The Act, ss 19, 58. 73 See Dugan v Mirror Newspapers Ltd (1978) 142 CLR 583 at 588-589, 593, 602, Kirby abolished by statute in Western Australia74 as elsewhere75, which were mentioned in argument as a spectre against which this Court should be on guard76. In sum, the legislation bears numerous normal hallmarks of judicial assessment, discretion, judgment and reconsideration77. It has judicial substance. It does not impose on judges functions that make them effectively the agents of the other branches of government. The suggested flaw, in the particular and limited reference to a deemed conviction of a serious offence emerges, upon closer inspection of the Act, to be no more than a device of legislative drafting. The legislation, viewed as a whole, does not require the court concerned to act in a manner inconsistent with, or repugnant to, the exercise of judicial power within the Australian Judicature. Conclusion and order Kable is inapplicable: The foregoing are the reasons why I joined in the decision of the Court. In accordance with the language of the majority in Kable, the Act does not oblige the Supreme Court of Western Australia to act in relation to the applicant "in a manner which is inconsistent with traditional judicial process"78. Nor could the proceedings against the applicant under the Act be characterised as "proceedings [not] otherwise known to the law" or not partaking "of the nature of legal proceedings"79. They do not "compromise the institutional 74 Criminal Code (WA), s 683. 75 Director of Public Prosecutions (Cth) v Toro-Martinez (1993) 33 NSWLR 82 at 76 See Silbert Trans, 9 May 2003 at 18-68, 235-253; Silbert [2003] HCATrans 515 at 70-85. The Constitution of the United States of America, in Art I, s 9, forbids Bill(s) of Attainder. In Art III, s 3, it provides that "no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted". There is no equivalent provision in the Australian Constitution. 77 See Fencott v Muller (1983) 152 CLR 570 at 608; Chu Kheng Lim (1992) 176 CLR 78 (1996) 189 CLR 51 at 98 per Toohey J. 79 (1996) 189 CLR 51 at 106 per Gaudron J. Kirby impartiality of the Supreme Court"80. Nor are such proceedings "repugnant to judicial process"81. The fictional deemed "conviction", understood in the context of the entire Act, interpreted to give effect to its limited purpose, would not occasion public concern about the independence and impartiality of the Supreme Court, or the courts of Australia more generally, assuming (contrary to my view82) that this is a separate constitutional consideration in such cases. Dispositive orders: As the matter was prepared and fully argued as on the return of an appeal; as several law officers intervened to make detailed submissions; as considerable cost was incurred by the parties; as the issues concerned the application of the federal Constitution and affected the laws of several Australian jurisdictions, I would myself have been inclined to grant special leave, but to dismiss the appeal83. However, as the other members of the Court favoured dismissal of the application, and because nothing turned on the disposition, I joined in that order. 80 (1996) 189 CLR 51 at 121 per McHugh J. 81 (1996) 189 CLR 51 at 134 per Gummow J. 82 See above at [26]. 83 cf Durham (2001) 205 CLR 399 at 432 [78].

HIGH COURT OF AUSTRALIA JAMES HENRY STEWART (IN HIS CAPACITY AS LIQUIDATOR OF NEWTRONICS PTY LTD (IN LIQUIDATION)) & ANOR APPELLANTS AND ATCO CONTROLS PTY LTD (IN LIQUIDATION) RESPONDENT Stewart v Atco Controls Pty Ltd (in Liquidation) [2014] HCA 15 7 May 2014 ORDER Appeal allowed with costs. Set aside the order of the Court of Appeal of the Supreme Court of Victoria made on 25 June 2013 and, in its place, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of Victoria Representation A J Myers QC with P G Willis for the appellants (instructed by Gadens Lawyers) P D Crutchfield SC with C T Moller for the respondent (instructed by K & L Gates) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Stewart v Atco Controls Pty Ltd (in Liquidation) Equity – Equitable charges and liens – Liquidator's equitable lien for costs, expenses and remuneration – Where asset realised by liquidator's efforts in pursuing litigation – Where litigation involved unsuccessful attack on interest of secured creditor – Where liquidator acting with propriety and in course of his duties – Whether liquidator entitled to equitable lien over asset in priority to secured creditor. Words and phrases – "come in to the winding up", "costs and expenses of realisation", "equitable lien", "Universal Distributing principle". Corporations Act 2001 (Cth), s 564. CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ. The second appellant, Newtronics Pty Ltd (receivers and managers appointed) (in liquidation) ("Newtronics"), is a wholly owned subsidiary of the respondent, Atco Controls Pty Ltd (in liquidation) ("Atco"). Atco was a lighting manufacturer and Newtronics designed, manufactured and supplied electronic components. From Newtronics' inception in 1993, Atco provided it with financial support and, later, took a fixed and floating charge over Newtronics' assets. As at December 2001, just before Newtronics was wound up, it owed Atco in the order of $19 million. In addition to the financial support it provided from time to time, Atco provided Newtronics' auditors with letters of support in which Atco promised to provide Newtronics or its debt financier with funds in order that it could meet its trading obligations, and promised that it would not call up the debt owed to it within the relevant period to the detriment of unsecured creditors. In January 2002, Atco appointed receivers to Newtronics after Newtronics was ordered to pay damages of $8.9 million, together with interest and costs, to Seeley International Pty Ltd ("Seeley"), a former customer of Newtronics1. The receivers sold the business of Newtronics to another subsidiary of Atco for $13 million, credited by book entries against Newtronics' debt to Atco. Newtronics was wound up in February 2002 on Seeley's application. The first appellant, Mr James Stewart, was appointed liquidator. As Newtronics had no funds and no assets which could be realised in order to pay for the liquidator's work, the liquidator sought funding from its creditors for his investigations. Seeley was the largest unsecured creditor of Newtronics and agreed to provide funding for particular work. Seeley and the liquidator entered into a series of agreements by which Seeley undertook to indemnify the liquidator for his costs and expenses incurred with respect to the work. One such agreement was entered into on 27 March 2006. It provided that Seeley would indemnify the liquidator in respect of all costs and expenses reasonably incurred by the liquidator and his staff in pursuing an action to enforce what was described as "an agreement between Newtronics and [Atco] evidenced by, inter alia, a letter of support dated 21 July 2001" in proceedings to be instituted in the Supreme Court of Victoria and indemnify the liquidator against any adverse costs orders. The recitals to that indemnity agreement 1 Seeley International Pty Ltd v Newtronics Pty Ltd (2002) Aust Torts Reports Crennan Bell recorded that the liquidator had received advice from counsel. The indemnity agreement, in the form of a deed, was approved, retrospectively, by the Federal Court (Gordon J) in August 20072. The foreshadowed action was brought by Newtronics in April 2006. It was alleged that Atco, by reason of its promises, was entitled neither to repayment of the monies advanced to Newtronics nor to enforcement of its security. Newtronics also claimed damages against Atco for in excess of $13 million. In December 2006, Newtronics joined the receivers, who had been appointed by Atco, to the proceedings, alleging that their appointment was void and claiming damages for trespass and conversion arising from the sale by them of its assets. The critical issue in both actions was the validity of Atco's security. It was subsequently agreed by Seeley that the indemnity it had provided to the liquidator concerning the action against Atco would extend to the action against the receivers. Newtronics was successful at trial against Atco, but not against the receivers3. On the day appeals from that decision were to be heard, 3 September 2009, the receivers settled with Newtronics on terms that they pay it $1.25 million ("the settlement sum"). Atco proceeded with its appeal and was successful4 and Newtronics was ordered to pay Atco's costs of the appeal. Atco's security was held to be valid. It was that security upon which the receivers' appointment was based. Newtronics' action against them had, necessarily, been premised upon the invalidity of the security. It is an unusual feature of this matter that, had it proceeded, Newtronics' appeal respecting the receivers was unlikely to have met with success. Nevertheless, it remains the fact that the settlement sum was paid as a result of the proceedings brought against the receivers and that a fund, constituted by the settlement sum, was thereby created. On or about 22 September 2009, the liquidator of Newtronics received the settlement sum from the receivers and shortly thereafter paid it to Seeley by way of reimbursement of the costs and expenses Seeley had paid under the indemnity agreement respecting the actions against Atco and the receivers. The decision on 2 Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375. 3 Newtronics Pty Ltd (receivers and managers appointed) (In Liq) v Atco Controls Pty Ltd (In Liq) (2008) 69 ACSR 317. 4 Atco Controls Pty Ltd (In Liq) v Newtronics Pty Ltd (receivers and managers appointed) (In Liq) (2009) 25 VR 411. Crennan Bell Atco's appeal was handed down on 21 October 2009. Atco's solicitors subsequently demanded payment of the settlement sum pursuant to Atco's charge. Newtronics declined to pay the settlement sum to Atco, on the basis that the liquidator was entitled to an equitable lien over the sum. By this time, the liquidator had estimated that the costs and expenses of the litigation exceeded the settlement sum. If that is the case, a matter yet to be finalised, there will be no monies to meet Atco's charge. Atco then brought proceedings in the Supreme Court of Victoria, by way of appeal under s 1321 of the Corporations Act 2001 (Cth) from the liquidator's decision to refuse to pay it the settlement sum and to pay that sum to Seeley instead. It sought relief in the nature of declarations and the taking of accounts. No issue was taken in the proceedings about whether Atco's charge was capable of attaching to the settlement sum. Efthim AsJ upheld Atco's claim and ordered that the settlement sum be paid to Atco5. On an appeal by way of hearing de novo, Davies J found for Newtronics and the liquidator6. Atco in turn appealed to the Court of Appeal (Warren CJ, Redlich JA and Cavanough AJA), which allowed its appeal7. The principle in Universal Distributing and the question on the appeal The issue in this matter is whether the liquidator was entitled to an equitable lien over the fund constituted by the settlement sum with respect to the costs and expenses incurred in the litigation against both Atco and the receivers. The liquidator submits that what was said by Dixon J in In re Universal Distributing Co Ltd (In Liq)8 resolves that issue. Arguments advanced by Atco on the appeal necessitate that the relevant passage be set out in full: 5 Atco Controls Pty Ltd v Stewart (in his capacity as liquidator of Newtronics Pty Ltd (In Liq)) unreported, Supreme Court of Victoria (Commercial and Equity Division), 20 April 2011. 6 Re Newtronics Pty Ltd (In Liq) (2011) 29 ACLC ¶11-054. 7 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065. (1933) 48 CLR 171 at 174 (footnotes omitted); [1933] HCA 2. Crennan Bell "If a creditor whose debt is secured over the assets of the company come in and have his rights decided in the winding up, he is entitled to be paid principal and interest out of the fund produced by the assets encumbered by his debt after the deduction of the costs, charges and expenses incidental to the realization of such assets (In re Marine Mansions Co). The security is paramount to the general costs and expenses of the liquidation, but the expenses attendant upon the realization of the fund affected by the security must be borne by it (In re Oriental Hotels Co; Perry v Oriental Hotels Co). The debenture-holders are creditors who have a specific right to the property for the purpose of paying their debts. But if it is realized in the winding up, a proceeding to which they are thus parties, the proceeds must bear the cost of the realization just as if they had begun a suit for its realization or had themselves realized it without suit (cf In re Regent's Canal Ironworks Co; Ex parte Grissell; and see Batten v Wedgwood Coal and Iron Co)." Dixon J was stating a general principle to be applied in the circumstances there identified. His Honour went on to say9 that, in applying this principle, expenses reasonably incurred in the care, preservation and realisation of the property of the company in liquidation would be "thrown against" the fund created by the liquidator's efforts. His Honour concluded10 that the liquidator's remuneration for work done for the purpose of raising the fund should be charged against it. In Hewett v Court11, Deane J explained that an equitable lien is a right against property which, although called a lien, is, in truth, a form of equitable charge over the subject property. It will be observed from the passage in Universal Distributing that the charge securing a liquidator's realisation costs will take priority over a secured creditor's charge. In Davies v Littlejohn12, Isaacs J explained that an equitable lien arises by operation of law, under a doctrine of equity, "as part of a scheme of equitable adjustment of mutual rights and obligations". It may arise in a number of In re Universal Distributing Co Ltd (In Liq) (1933) 48 CLR 171 at 174. 10 In re Universal Distributing Co Ltd (In Liq) (1933) 48 CLR 171 at 175. 11 (1983) 149 CLR 639 at 663; [1983] HCA 7. 12 (1923) 34 CLR 174 at 185; [1923] HCA 64. Crennan Bell contexts. His Honour was there discussing the vendor's lien, but, as Gibbs CJ noted in Hewett v Court13, the words are of "general application". Gibbs CJ observed in Hewett v Court14 that it is not possible to state "a general principle which would cover the diversity of cases in which an equitable lien has been held to be created." However, equity has been able to develop and state a principle to be applied in or with respect to particular circumstances or relationships. With respect to a vendor's lien for unpaid purchase money, Gibbs CJ15 said that such a lien is founded on the principle that "a person, having got the estate of another, shall not, as between them, keep it, and not pay the consideration". The lien of a purchaser is based on a converse principle. In both cases, the lien is for money "justly due". More closely analogous to the present case is the solicitor's particular lien (which may be distinguished from the general or retaining lien that entitles retention of documents until fees are paid), which arises over any property recovered or judgment obtained by a solicitor's work16. In Guy v Churchill17, Lindley LJ said that "[i]t is right that they who get the benefit of the recovery of money should bear the expense of recovering it." A similar notion underlies the principle expressed in Universal Distributing. A secured creditor cannot lay claim to the benefit of realised assets without the costs of their realisation being met. Generally speaking, in a system based on case law, the type of general principle to which Gibbs CJ referred in Hewett v Court is derived from judicial decisions on particular instances. The principle stated by Dixon J in Universal Distributing was derived from the earlier decisions of the equity courts to which his Honour referred. 13 (1983) 149 CLR 639 at 645. 14 (1983) 149 CLR 639 at 645; see also at 667-668 per Deane J. 15 Hewett v Court (1983) 149 CLR 639 at 645, citing Mackreth v Symmons (1808) 15 Ves Jun 329 at 340 [33 ER 778 at 782]. 16 In re Meter Cabs Ltd [1911] 2 Ch 557 at 559 per Swinfen Eady J. 17 (1887) 35 Ch D 489 at 492. Crennan Bell In the firstmentioned case, In re Marine Mansions Co18, it was accepted that the costs of the realisation of a company's assets should be paid in priority to other claims. Sir W Page Wood VC noted19 that there was no objection taken to the liquidator having "all just allowances in respect of his realizing the property". The issue in that case was whether the mortgagee was entitled to be paid, but there was no dispute that, if that were the case, the mortgagee was to be paid only after deduction of the costs of realising the property. In the later case of In re Oriental Hotels Co; Perry v Oriental Hotels Co20, Sir John Wickens VC appears to have considered that Marine Mansions stated a point of general principle: that the expenses of the realisation of assets are payable out of the fund in priority to any claim of the mortgagee. In the third case mentioned by Dixon J, In re Regent's Canal Ironworks Co; Ex parte Grissell21, James LJ acknowledged that the debenture holders had a specific right to the property for the purpose of paying their debts, but held that "[i]f the property is realized in the proceedings to which they are parties they must pay the costs of the realization, just as they would have had to pay them if they had their own suit for the purpose of realizing it". This statement is reflected in the passage from Universal Distributing. Batten v Wedgwood Coal and Iron Co22, the fourth case to which Dixon J referred, was a case where the business of the company in liquidation was sold by the debenture holders, after a receiver had run the company at a loss, with the result that there was insufficient money to pay both the costs of realisation and the receiver's remuneration. It was held that the costs of realisation had priority. It was there said23: 18 (1867) LR 4 Eq 601 at 611. 19 In re Marine Mansions Co (1867) LR 4 Eq 601 at 612. 20 (1871) LR 12 Eq 126 at 132. 21 (1875) 3 Ch D 411 at 427. 22 (1884) 28 Ch D 317. 23 Batten v Wedgwood Coal and Iron Co (1884) 28 Ch D 317 at 325. Crennan Bell "With regard to the costs of the realization of the assets, I think Mr Cozens-Hardy [counsel for the plaintiff debenture holder] is right in contending that these costs stand in a different position from any of the other claims. The property must be realized by someone in order that it may be distributed, and whoever has realized it and brought the proceeds under the control of the Court, has really constituted the fund which has to be distributed for the benefit of the receiver and everyone else who is entitled. These costs must therefore be paid in priority to the receiver." The principle in Universal Distributing is stated at some length, no doubt because Dixon J was concerned to identify its sources. It may be more shortly stated as: a secured creditor may not have the benefit of a fund created by a liquidator's efforts in the winding up without the liquidator's costs and expenses, including remuneration, of creating that fund being first met. To that end, equity will create a charge over the fund in priority to that of the secured creditor. The circumstances in which the principle will apply are where: there is an insolvent company in liquidation; the liquidator has incurred expenses and rendered services in the realisation of an asset; the resulting fund is insufficient to meet both the liquidator's costs and expenses of realisation and the debt due to a secured creditor; and the creditor claims the fund. In these circumstances, it is just that the liquidator be recompensed. To use the language of Deane J in Hewett v Court24, it might be said that a secured creditor would be acting unconscientiously in taking the benefit of the liquidator's work without the liquidator's expenses being met. However, such a conclusion is avoided by the application of the principle stated in Universal Distributing. In this case, there are certain facts that are not disputed. The fund constituted by the settlement sum was created by the efforts of the liquidator in pursuing the litigation and realising Newtronics' chose in action against the receivers. It is uncontroversial that the liquidator acted with propriety in bringing and pursuing that litigation and there is a finding, unchallenged, that he was acting in the course of his duties in doing so. Atco claims that fund. These facts would appear to be sufficient for the principle stated in Universal Distributing to apply, yet it was not applied by the Court of Appeal. The question, therefore, is whether there is some fact or circumstance which renders the principle inapplicable. 24 (1983) 149 CLR 639 at 668-669. Crennan Bell The decisions in the courts below Davies J considered that the circumstances identified by Dixon J in Universal Distributing applied to this case and that the fund created out of the litigation should bear the cost of its realisation "in the ordinary way"25. Her Honour found that the liquidator was discharging his statutory obligations in pursuing the litigation26 and the settlement sum was recovered only as the result of the liquidator's actions, which is to say it was realised in the course of the winding up27. Davies J held that the liquidator was entitled to all the costs and expenses incurred in the litigation, subject to the liquidator verifying them and the remuneration he claimed28. Her Honour rejected Atco's argument that the liquidator should recover only with respect to the claim brought against the receivers and found that the claim against Atco was necessary, as it provided the foundation for the claim respecting the receivers' appointment29. This finding was not disturbed by the Court of Appeal. Each of the members of the Court of Appeal considered that there were features of this case which meant that the test in Universal Distributing either did not apply30 or did not apply directly and without qualification31. The fact that the 25 Re Newtronics Pty Ltd (In Liq) (2011) 29 ACLC ¶11-054 at 1,001 [13]. 26 Re Newtronics Pty Ltd (In Liq) (2011) 29 ACLC ¶11-054 at 1,001 [14]. 27 Re Newtronics Pty Ltd (In Liq) (2011) 29 ACLC ¶11-054 at 1,001 [13]. 28 Re Newtronics Pty Ltd (In Liq) (2011) 29 ACLC ¶11-054 at 1,003 [20]. 29 Re Newtronics Pty Ltd (In Liq) (2011) 29 ACLC ¶11-054 at 1,003 [19]. 30 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 864 [32] per Warren CJ, 883 [172] per Redlich JA. 31 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 905 [284] per Cavanough AJA. Crennan Bell expenses were properly incurred by the liquidator was not considered sufficient for the application of the principle32. It will be necessary to consider the various factors identified by each of the members of the Court of Appeal as distinguishing this case from one to which the principle in Universal Distributing applies. For present purposes, it suffices to identify the principal considerations which influenced the Court of Appeal. These considerations concerned the nature and purpose of the action against Atco, namely that: it involved a challenge to Atco's security33; it was not pursued in the interests of Atco as secured creditor34 or to its benefit35; and the liquidator's actions were Indeed, Cavanough AJA went so far as to say that the action was, in substance, an action between Seeley and Atco37 and that it was not, therefore, a typical case to which Universal Distributing could apply38. interests of Seeley36. taken the These views also informed their Honours' adoption of a different test as to whether an equitable lien should arise. That test was whether Atco would be acting unconscientiously if it were to assert priority over the assets without the relevant costs, expenses and remuneration having been discharged39. That test 32 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 868 [60] per Warren CJ, 907 [294] per Cavanough AJA; see also at 885 [186] per Redlich JA. 33 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 903 [277] per Cavanough AJA. 34 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 888 [199] per 35 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 870 [77] per 36 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 869 [71] per Warren CJ, 888 [199] per Redlich JA, 905 [284] per Cavanough AJA. 37 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 905 [286]. 38 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 905 [288]. 39 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 864 [29], 868-869 [63]-[64] per Warren CJ, 876 [134], 883 [173] per Redlich JA, 901 [268], 907 [294] per Cavanough AJA. Crennan Bell was said to be consistent with the judgment of Deane J in Hewett v Court40. In that case, his Honour listed three circumstances which would be sufficient for the implication of an equitable lien in favour of a purchaser respecting monies paid towards the purchase of property. The third circumstance was where the relationship between the indebtedness that might arise from the monies paid by the purchaser and the property is such that the owner would be acting unconscientiously or unfairly if it were to dispose of the property without that liability being discharged. Warren CJ stated41 that a consideration as to whether Atco would be acting unconscientiously in asserting its security necessarily involved an assessment of the conduct of the parties, the nature of the litigation and the context in which it occurred. This suggests that a broad-ranging enquiry is necessary. However, in Hewett v Court42, Gibbs CJ had cautioned that, while the rules of equity are not rigid or inflexible when faced with novel situations, this does not mean that courts should proceed on general notions of justice without A principle should be applied when the regard to settled principles. circumstances of a case fall within it. The factors relied on by Atco to distinguish Universal Distributing The language of Universal Distributing Some distinguishing features were said by Atco to arise from the language employed by Dixon J in Universal Distributing. It is, of course, necessary to bear in mind, in connection with these submissions, that the words of a principle stated in a judge's reasons for decision require consideration of what those reasons convey about the principle and are not to be applied literally43. In the passage from Universal Distributing set out above, Dixon J referred to a creditor whose security is to be postponed to the liquidator's equitable lien as 40 (1983) 149 CLR 639 at 667-668. 41 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 869 [65]. 42 (1983) 149 CLR 639 at 649. 43 Comcare v PVYW (2013) 88 ALJR 1 at 6 [15]-[16]; 303 ALR 1 at 7; [2013] HCA 41, referring to Brennan v Comcare (1994) 50 FCR 555 at 572 per Gummow J; Benning v Wong (1969) 122 CLR 249 at 299-300; [1969] HCA 58. Crennan Bell one who has "come in" and had his rights decided in the winding up. His Honour also referred to the secured creditor as being a party to the winding up. Atco submits that it did not "come in" to the liquidation in the sense referred to by Dixon J. Warren CJ considered that Dixon J was referring to a secured creditor which had willingly participated in the realisation of assets, which Atco had not44. The reference by Dixon J to a creditor coming in to the winding up was drawn from the decision in Marine Mansions. In that case, the mortgagee did not bring a separate action to enforce its security, but instead took "the simple and proper course of coming in under the winding-up to have his rights decided by summons in Chambers."45 The Chancery practice concerning the claims of creditors to an estate in administration permitted the bringing of proceedings, by way of a "creditor's bill", by one or more creditors to facilitate the taking of accounts. When this was undertaken, all other creditors might "come in under it, and obtain satisfaction of their demands equally with the plaintiffs in the suit"46. The practice was a matter of convenience intended to save the expense and delay which would result from a large number of creditors being made plaintiffs to the suit47. The Chancery Court would compel creditors to prove their debts and prevent them bringing proceedings in other courts48. In cases involving the general administration of an estate, the usual rule was that all proper and necessary parties were paid their costs before the estate's fund was distributed. In cases involving the ranking, in priority, of mortgages, the mortgagees' costs were recoverable according to their ranking, but only "after the payment of such costs as may be proper to the [p]laintiff, in the first instance, 44 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 866 [43], 45 In re Marine Mansions Co (1867) LR 4 Eq 601 at 611. 46 Mitford's Chancery Pleadings, 4th ed (1827) at 166; see also Ashburner on Mortgages, 2nd ed (1911) at 389; Story's Commentaries on Equity Jurisprudence, 3rd English ed (1920), §547; Maitland, Equity, 2nd ed (1936) at 249. 47 Mitford's Chancery Pleadings, 4th ed (1827) at 166-167. 48 Mitford's Chancery Pleadings, 4th ed (1827) at 168; Story's Commentaries on Equity Jurisprudence, 3rd English ed (1920), §549. Crennan Bell where all persons obtain the benefit of the suit"49. In Wright v Kirby50, Sir John Romilly MR explained that, where a fund realised in a mortgagee's proceedings would have been unavailable if proceedings had not been brought, the person who brought the proceedings ought to be paid their costs first. Universal Distributing, of course, did not involve the old Chancery practice. It did involve a liquidator taking action to get in uncalled capital, which was the subject of the debenture holder's charge, an action which the debenture holder could not himself take. The debenture holder objected to the liquidator's remuneration and expenses having priority to his security and claimed the fund constituted by the capital called in. In this context, Dixon J may be understood to say that a secured creditor "comes in" to a winding up when it lays claim to, and seeks the benefit of, a fund created by the liquidator in the winding up in order to satisfy its charge. This may be contrasted with the situation where a security holder acts independently of the winding up and realises and enforces the security by its own action. Atco does not seem to be in a position relevantly different from the debenture holder in Universal Distributing. It did not, and could not, bring proceedings with respect to Newtronics' chose in action against the receivers which gave rise to the fund. Atco made claim to the fund and sought orders against the liquidator to disburse it. It has, in the sense referred to, come in to the winding up. Atco's argument that it did so unwillingly and was effectively forced to claim the settlement sum does not alter that conclusion. The other matter, to which the Notice of Contention directs attention, has regard to Dixon J's statement51 that "I see no reason why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it" to rely upon a view expressed52 by (emphasis added). Cavanough AJA that the liquidator's work in bringing the proceedings was not Atco seeks 49 Ford v Earl of Chesterfield (No 3) (1856) 21 Beav 426 at 428 [52 ER 924 at 925]. 50 (1857) 23 Beav 463 at 467-468 [53 ER 182 at 184]. 51 In re Universal Distributing Co Ltd (In Liq) (1933) 48 CLR 171 at 175. 52 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 909-910 Crennan Bell done for the "exclusive purpose of raising the fund". In his Honour's view, the principal purpose was to remove Atco's status as a creditor. In Universal Distributing53, Dixon J went on to fix the liquidator's remuneration and, in that process, excepted certain items from the liquidator's first-ranking charge. His Honour's reference to exclusivity of purpose is likely to have been intended to convey that only work done in connection with creating the fund was to be reimbursed. It most certainly does not imply that the subjective purpose of the liquidator is a relevant consideration. The proper question that follows from what Dixon J said is whether, in a general sense, the costs and expenses claimed by the liquidator could be said to have been incurred in the realisation of the asset which created the fund. Whether the costs and expenses claimed were in fact so incurred is a matter to be determined when the liquidator verifies his accounts. As to the more general question, the finding made by Davies J about the interconnectedness of the action against the receivers and that brought against Atco stands in the way of Atco's attempt to separate out the costs of the action against it. An essential element of the cause of action against the receivers was the invalidity of Atco's security and the liquidator sought to establish that in the proceedings brought against Atco. That being the case, her Honour held, the liquidator was entitled to the costs and expenses of the litigation as a whole. Her Honour's finding was not challenged. Atco has always accepted that the case against the receivers required that its charge be held invalid. The relevance of MC Bacon Reliance was placed by Atco upon the decision of Millett J in In re MC Bacon Ltd54 because it was one of the few cases to have considered the question of costs, as between a liquidator and secured creditor, incurred by the liquidator in an unsuccessful challenge to a security. However, the case did not involve the question whether an equitable lien arose in connection with the realisation of assets by the liquidator. It concerned a claim by the liquidator for reimbursement, out of a fund in the hands of a secured creditor, of costs, which included costs the liquidator had been ordered to pay the secured creditor following the dismissal of the action in which he sought to invalidate the 53 (1933) 48 CLR 171 at 176-177. Crennan Bell creditor's security as a voidable preference. The action was dismissed when the liquidator called no evidence. Millett J observed55 that it would be "difficult to imagine anything more unjust" than making the order sought. This observation is perhaps best understood as addressed to the odd situation where the liquidator was effectively seeking reimbursement from the secured creditor with respect to the very costs the liquidator had been ordered to pay the creditor. The observation was relied upon in this case by the Court of Appeal in connection with the test of unconscientiousness56, and to show that something more was required than that a liquidator incurred expenses57, although their Honours acknowledged that MC Bacon concerned different factual and legal circumstances. The essential question in MC Bacon was whether the costs and expenses of the litigation, including those which the liquidator was ordered to pay the secured creditor, were "properly incurred in the winding up" within the meaning of a provision of the Insolvency Act 1986 (UK). No similar question arises in the present case respecting the liquidator's costs and expenses. Insofar as they included costs and expenses of the action against Atco, those costs and expenses are the subject of the finding of Davies J referred to above. Falcke's case In connection with the potential benefit accruing to Atco by reason of the fund created by the liquidator, the Court of Appeal58 upheld Atco's submission that the decision in Falcke v Scottish Imperial Insurance Co59 applies to the facts of this case, with the result that the liquidator is unable to claim the costs and 55 In re MC Bacon Ltd [1991] Ch 127 at 141. 56 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 891 [215] per Redlich JA, 905-907 [289]-[292] per Cavanough AJA. 57 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 867-868 [53]- 58 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 870-872 [79]- [94] per Warren CJ, 883-888 [174]-[198] per Redlich JA, 908 [297] per Cavanough AJA. 59 (1886) 34 Ch D 234. Crennan Bell expenses of realisation. A possible exception to the rule established in Falcke, drawn from theories of unjust enrichment and involving the question whether Atco may have nevertheless received an "incontrovertible benefit", was considered not to arise60. The decision in Falcke has no bearing on a case involving work undertaken by a liquidator in a winding up. The decision stands for the proposition that a stranger who carries out work or services, or otherwise confers a benefit on another, without a request, actual or implied, to do so, is not entitled to payment or compensation. In similar terms, in Lumbers v W Cook Builders Pty Ltd (In Liq)61, by reference to Falcke, it was said that "the bare fact of conferral of [a] benefit or provision of [a] service does not suffice to establish an entitlement to recovery." The propositions in Falcke and Lumbers are uncontroversial. In the context of claims for work or labour, they are concerned with whether indebtedness on the part of a person receiving the benefit of the work can arise, absent a request on their part for the work. They have no application to work undertaken in the realisation of assets as part of a liquidator's statutory duties62. Atco's mistaken reliance on these decisions stems from its wrong assumption that Atco, as a secured creditor, must have requested that the litigation be brought. No indebtedness On this appeal, Atco continued to pursue a submission, which found favour with Warren CJ63, that, at the time the settlement sum was received, there was no indebtedness that could give rise to an equitable lien, for the reason that Seeley had paid the liquidator's costs and expenses respecting the litigation under the indemnity agreement. The argument ignores Seeley's right to reimbursement and the liquidator's obligation to provide such reimbursement out of the settlement sum. 60 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 872 [94] per Warren CJ, 885 [185], 892-893 [223] per Redlich JA. 61 (2008) 232 CLR 635 at 663 [80]; [2008] HCA 27. 62 Corporations Act 2001 (Cth), s 474(1)(a), s 478(1)(a). 63 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 873 [108]; see also at 876 [133], 894 [230], 901 [262] per Redlich JA. Crennan Bell It has never been disputed in these proceedings that the agreement between Seeley and the liquidator took effect as an indemnity. It is an incident of such an agreement that an indemnifier has a right to reimbursement of all monies paid under the indemnity. The indemnifier has a right of subrogation to all the rights and remedies of the party indemnified and any monies recovered by that party64. It follows that the liquidator was obliged to reimburse Seeley and that the equitable lien attached to the settlement sum as a charge to permit that indebtedness to be met. Section 564 Atco also placed reliance upon cl 12 of the indemnity agreement of 27 March 2006, which was headed "Section 564" and provided that the liquidator "will make application to the Court for orders that if any assets or damages are recovered which occurs as a result of work performed … then Seeley be given priority ahead of all other creditors of Newtronics" for the recovery of the costs incurred by Seeley under the indemnity and for payment of its debt, including costs and interest on the judgment sum. Section 564 of the Corporations Act provides a court with power to make orders regarding the distribution of property which has been recovered under an indemnity for costs of litigation that give the creditors providing the indemnity an advantage over others, in consideration of the risk assumed by them. Clause 12 was said by Atco to provide for the sole method of recovery by Seeley of the costs paid under the indemnity, and therefore precluded a lien arising. In the Court of Appeal, Warren CJ65 considered that the requirement to seek an order displaced any implied obligation on the part of the liquidator to account to Seeley, and Redlich JA66 considered that the clause modified Seeley's right of subrogation. 64 Burnand v Rodocanachi Sons & Co (1882) 7 App Cas 333 at 335; Castellain v Preston (1883) 11 QBD 380 at 386, 393, 403-404; Morris v Ford Motor Co [1973] 65 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 874 [120]. 66 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 876 [133], Crennan Bell In its terms, cl 12 does not restrict the liquidator's right to claim an equitable lien. Moreover, as Cavanough AJA correctly observed67, Atco was not a party to the indemnity agreement and could not rely upon it as precluding a lien. The agreement was solely between Seeley and the liquidator and could not affect the liquidator's right to seek recourse against realised assets. Further, the indemnity agreement did not involve other creditors and did not bind the liquidator to a course of action. Atco then sought to rely upon cl 12 as reflecting the course of action which the liquidator had advised the Federal Court he intended to take at the time the indemnity agreement was approved. Atco did not explain how this advice could prevent an equitable lien arising. It was not suggested that it amounted to an undertaking to the Court. In any event, Atco's submission fails to take account of the purpose cl 12 was intended to serve, a purpose which was overtaken by the turn of events. At the time the indemnity agreement was approved, the claims against Atco and the receivers were in the order of $13 million. If Atco's security had been held invalid, a question would have arisen as to the extent to which Seeley should be preferred in the distribution by the exercise of the Court's powers under s 564. In approving the agreement, Gordon J said that it was important to ensure that the entity providing the funding for litigation is not given a benefit the disproportionate to the risk taken68. The extent of any benefit to be received by Seeley, in the event that monies became available to meet its costs and its debt, would have been a matter for the Court on the hearing of an application under When Atco's security was held to be valid and the fund resulting from the litigation was likely to be insufficient to satisfy its debt and the liquidator's costs and expenses, an application under s 564 was not necessary with respect to Seeley's debt. So far as concerned the costs and expenses paid to the liquidator, the issue became one as to whether the liquidator should have priority over Atco to the fund. Section 564 does not affect the rights of secured creditors and the issue which arose could not be determined on an application under s 564. 67 Atco Controls Pty Ltd (In Liq) v Stewart (2013) 31 ACLC ¶13-065 at 909 [306]- 68 Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 at [26]. Crennan Bell The nature and purpose of the action Atco's principal argument concerned the nature and purpose of the action brought against it and the fact that it did not stand to benefit from that action. These considerations were necessitated by the test of unconscientiousness which the Court of Appeal applied and which it concluded in Atco's favour. It is no part of a liquidator's duty to ensure that litigation conducted in the course of the realisation of assets is for the benefit of a secured creditor, or any particular creditor. A liquidator's duty is owed to the body of creditors as a whole and to the court69. The relevant benefit is that which is sought by the realisation of assets, namely the augmentation of assets available for distribution. A liquidator is to do what he or she can to augment the disposable assets of the company70. It is the duty of a liquidator to realise assets and, to that end, a liquidator has the power to bring proceedings71. While a liquidator must exercise care in determining whether to commence litigation, in this case the liquidator had received advice from counsel and there is no suggestion that the liquidator was reckless in bringing the actions or that the actions had no prospects of success. The liquidator acted with propriety in bringing them. It is also part of a liquidator's duties to "carefully scrutinise" charges existing over company property and, in certain circumstances, to attack them and have them declared void72. Challenges by liquidators to the securities held by creditors are not uncommon. It would appear that in Universal Distributing73, for example, there had been a question about the validity of the debenture holder's security. 69 In re Contract Corporation (Gooch's Case) (1872) LR 7 Ch App 207 at 211. 70 Re Tavistock Ironworks Co (1871) 24 LT 605 at 605 per Lord Romilly. 71 Corporations Act 2001, s 477(2)(a). 72 McPherson's Law of Company Liquidation, 5th ed (looseleaf) at 11-11051 73 (1933) 48 CLR 171 at 175. Crennan Bell The nub of Atco's argument, which is reflected in the judgments in the Court of Appeal, is that the action was in Seeley's interests. So much may be accepted, but it does not affect the question whether an equitable lien arose. No doubt Seeley considered that its interests would be best served by facilitating the litigation. But this does not imply that the action brought by the liquidator was in some way wrongful. It is accepted that the liquidator was acting with propriety and in the course of his statutory duties in bringing the proceedings. The true purpose of the proceedings which resulted in the fund was the realisation of Newtronics' assets. The challenge to Atco's security was a fundamental plank of those proceedings. Much is made of Seeley's indemnification of the liquidator, in an attempt to have the action brought against Atco viewed as one brought by Seeley. But there is nothing unusual about an unsecured creditor providing an indemnity to a liquidator to enable an action to be brought against, inter alia, a secured creditor. In MC Bacon74, for example, the liquidator had an indemnifier for his costs. The fact that the liquidator of a company without funds for litigation may need to seek financial support from among the ranks of creditors is not only acknowledged by s 564, it is encouraged by the preferential distribution which may be accorded under that provision to a creditor who provides an indemnity. The purpose of the proceedings in respect of which the liquidator incurred the costs and expenses for which an equitable lien was sought was the realisation of assets, just as it was in Universal Distributing. Conclusion and order There is no basis for excepting this case from the application of the principle in Universal Distributing. The appeal should be allowed with costs and the orders of the Court of Appeal set aside. In lieu of those orders, there should be orders dismissing Atco's appeal with costs. It remains for the liquidator's costs to be verified, pursuant to the directions made by Davies J. 74 [1991] Ch 127 at 134.

HIGH COURT OF AUSTRALIA CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION APPELLANT AND BHP COAL PTY LTD RESPONDENT Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41 16 October 2014 ORDER Appeal dismissed. On appeal from the Federal Court of Australia Representation H Borenstein QC with C M Howell for the appellant (instructed by Hall Payne Lawyers) B W Walker SC with I M Neil SC and R P P Dalton for the respondent (instructed by Ashurst Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd Industrial law (Cth) – General protections – Adverse action – Section 346(b) of Fair Work Act 2009 (Cth) prohibits employer from taking adverse action against employee because employee engages in industrial activity or has engaged in industrial activity – Where appellant was industrial association – Where member of appellant engaged in industrial activity – Where officer of respondent employer took adverse action against member – Where officer gave evidence at trial that adverse action not taken for prohibited reasons – Whether adverse action taken for prohibited reason. Words and phrases – "because", "engages in industrial activity", "prohibited reason". Fair Work Act 2009 (Cth), ss 346(b), 347(b)(iii), 347(b)(v), 360, 361. FRENCH CJ AND KIEFEL J. This appeal concerns the termination of the employment of an employee of the respondent ("BHP Coal") at the Saraji Mine, and whether that termination was an action taken for a reason which is prohibited by the Fair Work Act 2009 (Cth) ("the Act"). The employee in question, Mr Doevendans, was a member of the appellant ("the CFMEU"), an industrial association. Some months prior to the termination of his employment he had participated in a protest organised by the CFMEU, which was a lawful activity within the meaning of s 347(b)(iii) of the Act. In the course of that protest he held and waved a sign at passing motorists, which had been supplied by the CFMEU, and which read "No principles SCABS No guts". The general manager of the Saraji Mine, Mr Brick, gave evidence before the Federal Court of Australia as to why Mr Doevendans' employment had been terminated. The primary judge in the Federal Court, Jessup J, detailed this evidence in his reasons. His Honour then made findings, under the heading "The Reasons for Mr Doevendans' Dismissal". His Honour accepted the reasons given by Mr Brick for his action1. Those reasons may be summarised as follows: the word "scab", which appeared on the sign Mr Doevendans held up and waved, was inappropriate, offensive, humiliating, harassing, intimidating, and flagrantly in violation of BHP Coal's workplace conduct policy (that policy required courtesy and respect to be accorded to fellow employees); Mr Doevendans was well aware of the policy; Mr Doevendans demonstrated arrogance when confronted with the objections to his conduct; and Mr Brick regarded the conduct as not only contrary to the policy, but antagonistic to the culture that Mr Brick was endeavouring to develop at the mine. His Honour added2 that the decision to terminate Mr Doevendans' employment was "not a spur-of-the-moment reaction", but one arrived at by Mr Brick over time and after a systematic consideration of the facts. His Honour did not find that the mere fact that Mr Doevendans had held and waved the sign was one of Mr Brick's reasons for terminating the employment. Mr Brick's reasons had to do with the nature of Mr Doevendans' conduct. His Honour accepted Mr Brick's evidence that the fact that 1 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 211 [36], referring to 204 [22], 207-210 [28]-[31]. 2 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 211 [36]. Mr Doevendans occupied certain positions within the CFMEU, and had engaged in industrial activity, did not play any part in Mr Brick's decision3. Section 346(b) appears in Pt 3-1 of Ch 3 of the Act. It prohibits a person taking "adverse action" against another person "because" the other person has engaged in industrial activity within the meaning of s 347(a) or (b). "Adverse action" includes dismissal (s 342(1), Item (1)(a)). Section 347(b) relevantly provides the person: (iii) participates in a lawful activity organised by an industrial association; or (v) represents or advances the views or interests of an industrial association. that a person "engages industrial activity" Section 346 directs attention to the reason why a person – here Mr Brick – took the adverse action. If there were multiple reasons, s 360 provides that "a person takes action for a particular reason if the reasons for the action include that reason." Section 361 provides that if it is alleged that a person took action for a particular reason, being a prohibited reason, it is presumed that the action was taken for that reason unless the person proves otherwise. Section 361 therefore places the onus on BHP Coal to prove that a reason for the adverse action was not one of the two prohibited reasons in s 347(b)(iii) and (v). Central to the operation of s 361 is a balance between employers and employees determined by the legislature4. The focus of the enquiry as to whether s 346(b) has been contravened is upon the reasons for Mr Brick taking the adverse action5. This is evident from the word "because" in s 346, and from the terms of s 361. The enquiry involves a search for the reasoning actually employed by Mr Brick6. The determination to be made by the court is one of fact, taking account of all the facts and circumstances of the case and available inferences7. 3 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 211 [36], referring to 209 [30]. 4 Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 248 CLR 500 at 523 [61]; [2012] HCA 32. 5 Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 248 CLR 500 at 517 [44], 542 [127], 544 [140]. 6 Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 248 CLR 500 at 546 [146]. 7 Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 248 CLR 500 at 517 [45]; see also at 542 [127]. In Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] 8, French CJ and Crennan J observed that it would ordinarily be difficult for an employer who has taken adverse action to discharge the onus of proof in s 361 without calling direct evidence from the decision- maker as to his or her reasons. The court is not obliged to accept such evidence. It may be unreliable for a number of reasons. For example, other objective evidence may contradict it. However, s 346 does not involve an objective test. In Bendigo, Gummow and Hayne JJ explained9 that it is misleading to use the terms "objective" or "subjective" to describe the enquiry in s 346. To speak of objectively ascertained reasons risks the substitution by the court of its own view, rather than making a finding of fact as to the true reason of the decision-maker. None of the reasons given by Mr Brick, and accepted by the primary judge as true in fact, was a reason prohibited by s 346(b). Mr Brick did not dismiss Mr Doevendans because he participated in the lawful activity of a protest organised by the CFMEU (s 347(b)(iii)), nor did he dismiss Mr Doevendans because, in carrying and waving the sign, Mr Doevendans was representing or advancing the views or interests of the CFMEU (s 347(b)(v)), as the CFMEU alleged. Mr Brick's reasons related to the content of Mr Doevendans' communications with his fellow employees, the way in which he made those communications and what that conveyed about him as an employee. Mr Brick's reasons included his concern that Mr Doevendans could not or would not comply with the standards of behaviour which Mr Brick was attempting to instil in employees at the mine. The CFMEU submitted before the primary judge that it was to be inferred that Mr Brick was in fact motivated by these prohibited reasons rather than the reasons he gave. His Honour rejected10 the submission. Despite the findings referred to above, the primary judge concluded that s 346(b) had been contravened in two respects. His Honour held that Mr Doevendans' conduct in holding and waving the sign was, for the purposes of (2012) 248 CLR 500 at 517 [45]. 9 Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 248 CLR 500 at 540-541 [121], [126]. 10 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 211-212 [38]-[41]. s 347(b)(iii), conduct by way of participation in a lawful activity organised by an industrial association. His Honour said11: "Since a reason for his dismissal was that he did so hold and wave the sign, it follows that his dismissal was done in contravention of s 346(b)". His Honour also determined that holding and waving the sign could be characterised as representing or advancing the views and interests of an industrial association, for the purposes of s 347(b)(v)12. His Honour again concluded13: "Since he was dismissed for that conduct, it follows that the dismissal was done in contravention of s 346(b)". In the Full Court, Dowsett and Flick JJ considered that these conclusions were not based on the factual enquiry as to the reasons for the adverse action required by s 346(b), and which Bendigo confirmed as the correct enquiry14. Dowsett J also expressed the view15 that the primary judge's finding that the employee's engagement in industrial activity played no part in Mr Brick's decision-making process disposed of the matter. Kenny J agreed that the primary judge was in error in considering that Mr Doevendans was dismissed because he participated in a lawful activity organised by the CFMEU16. Her Honour pointed out17 that this Court in Bendigo 11 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 234 [115]. 12 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 236-237 [122]-[124]. 13 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 237 [124]. 14 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 219 FCR 245 at 276-277 [109]-[110]; see also at 250 [12]. 15 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 219 FCR 245 at 250-251 [13]. 16 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 219 FCR 245 at 264 [59]. 17 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 219 FCR 245 at 263 [57]. rejected the proposition that an employer must establish that the reasons for the adverse action were entirely dissociated from the employee's union activities, in order to discharge the onus of proof. Her Honour added that an employee's activity is not insulated from adverse action by an employer because it happens to be done in the course of an otherwise lawful industrial activity. Kenny J did not, however, consider that the primary judge was in error in concluding that Mr Doevendans was dismissed for representing or advancing the views or interests of the CFMEU, which was the second alleged ground for the contravention of s 346(b)18. The difficulty with this conclusion is that the primary judge's reasoning with respect to each of the two alleged grounds for contravention proceeded from the same premise. That is, it is a necessary inference from his Honour's reasons that, if the adverse action (the termination of employment) was connected to an industrial activity, it must be taken to be a reason for the adverse action. That reasoning is incorrect for the reasons Kenny J identified with respect to the first alleged ground for contravention. The reasoning of the primary judge is analogous to that of the majority of the Full Court of the Federal Court19 in Bendigo, which this Court held to be incorrect. In Bendigo, an employee, who was an officer of an industrial association, sent an email to other employees who were also members of the association. In the email, he warned them not to participate in the creation of false or fraudulent documents for the purposes of an audit being conducted of the employer Institute, the implication being that such fraudulent conduct was taking place. The Chief Executive Officer of the Institute suspended the employee and required him to show cause why he should not be subject to disciplinary action for serious misconduct. In evidence to the Federal Court, she explained her motivations for this action by saying that the employee had made serious allegations in the email without first having made any report or complaint to senior management about the alleged conduct. The primary judge accepted20 the Chief Executive Officer's evidence and found that the adverse action taken by her was not actuated by any reason associated with the employee's position as an officer of the industrial association, or his engagement in industrial activity. 18 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 219 FCR 245 at 267 [70]. 19 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212. 20 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2010) 193 IR 251 at 264-265 [54]. On appeal, a majority of the Full Court of the Federal Court reasoned that, because the sending of the email amounted to engagement in an industrial activity, and because the employer's adverse action was consequent upon the sending of the email, it necessarily followed that a reason why the adverse action was taken was that the employee was an officer of the industrial association and had engaged in industrial activity21. It is to be inferred that the majority considered that, so long as there was a connection between the industrial activity and the adverse action, it followed that the adverse action contravened s 346(b). Lander J, in dissent, held that a contravention is not made out simply by establishing that adverse action was taken whilst the union official was engaged in industrial activity22; which is to say, by a temporal connection between the two. Section 346 does not direct a court to enquire whether the adverse action can be characterised as connected with the industrial activities which are protected by the Act. It requires a determination of fact as to the reasons which motivated the person who took the adverse action. In Bendigo23, French CJ and Crennan J pointed out that it is erroneous to treat the onus imposed on the employer by s 361 as being heavier, or different, if adverse action is taken while an employee happens to be engaged in industrial activity. Their Honours said that it is incorrect to conclude that, because the employee's union position and activities were inextricably entwined with the adverse action, the employee was therefore immune, and protected, from the adverse action. Such an approach would destroy the balance between employers and employees which the Act seeks to attain and which is central to s 361. In the present case, the reasons found by the primary judge to actuate Mr Brick's decision did not include Mr Doevendans' participation in industrial activity, or his representing the views of the CFMEU. To the contrary, his Honour found that Mr Brick had not been motivated by such considerations. This was consistent with the reasons given by Mr Brick in evidence accepted by his Honour, which related to the nature of Mr Doevendans' conduct and what it represented to Mr Brick about Mr Doevendans as an employee. 21 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 234 [77]-[78]. 22 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 258 [227]. 23 Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 248 CLR 500 at 523 [60]-[61]. The primary judge then went on to consider whether Mr Doevendans' conduct constituted an industrial activity in the relevant respects. The only inference which can be drawn from this additional reasoning is that, because the adverse action was based upon the sign which Mr Doevendans held and waved, this activity must be taken as one of the reasons for the action. That is to say no more than that the adverse action had a connection, in fact, to the industrial activity. That connection may necessitate some consideration as to the true motivations of Mr Brick, but it cannot itself provide the reason why Mr Brick took the action he did. That enquiry was concluded by his Honour's earlier findings. His Honour, in effect, wrongly added a further requirement to s 361, namely that the employer dissociate its adverse action completely from any industrial activity. The appeal should be dismissed. Hayne The issue In May 2012, the respondent ("BHP Coal") dismissed one of its employees: Mr Henk Doevendans. Mr Doevendans had been employed at the Saraji mine, as a machinery operator, for about 24 years. He was a member of the appellant union ("the CFMEU"). The General Manager of the Saraji mine, Mr Geoff Brick, decided that Mr Doevendans should be dismissed because, during protests the CFMEU held in connection with a seven-day work stoppage, Mr Doevendans had several times held up, and waved at those entering the mine property, a sign which used the word "scab". Mr Brick decided that Mr Doevendans' conduct was intentional, deliberate and repeated, and breached a workplace conduct policy and a charter of values. In Mr Brick's view, the use of the word "scab" was "unacceptable in the workplace". Under the Fair Work Act 2009 (Cth)24 ("the Act"), dismissal is a form of "adverse action". The Act prohibits25 persons taking adverse action against another person because that person has engaged in "industrial activity" within the meaning of s 347(a) or (b). Two forms of "industrial activity" specified in s 347(b) are to "participate in ... a lawful activity organised or promoted by an industrial association" (sub-par (iii)) and to "represent or advance the views, claims or interests of an industrial association" (sub-par (v)). The CFMEU is an industrial association. The Act provides26 that, for the purposes of the relevant provisions, "a person takes action for a particular reason if the reasons for the action include that reason". BHP Coal bore27 the onus of proving that it did not act for a prohibited reason. Did BHP Coal establish that it dismissed Mr Doevendans for reasons that did not include a prohibited reason? Did BHP Coal show that it acted only for reasons other than because Mr Doevendans had participated in "a lawful activity Hayne organised or promoted by"28 the CFMEU, or because he had represented or advanced "the views, claims or interests"29 of the CFMEU? Proceedings in the Federal Court and this Court At trial in the Federal Court of Australia, Jessup J held30 that BHP Coal did dismiss Mr Doevendans because he had participated in a lawful activity organised by an industrial association (the CFMEU), and because he had represented and advanced the views and interests of that association. BHP Coal was ordered to pay a pecuniary penalty and to reinstate Mr Doevendans. BHP Coal appealed to the Full Court of the Federal Court. By majority (Dowsett and Flick JJ, Kenny J dissenting) the appeal was allowed31 and the orders made by Jessup J were set aside. Dowsett and Flick JJ concluded32 that BHP Coal had not dismissed Mr Doevendans because he had engaged in industrial activity within the meaning of either s 347(b)(iii) or s 347(b)(v). In dissent, Kenny J concluded33 that BHP Coal had not proved that Mr Doevendans' representing or advancing the views of the CFMEU written on the sign was not a reason for his dismissal. His dismissal was therefore because of his engaging in industrial activity of the kind described in s 347(b)(v). By special leave the CFMEU appeals to this Court. The appeal should be allowed, the orders of the Full Court of the Federal Court set aside and the appeal to that Court dismissed. The facts During 2011 and 2012, BHP Coal and its employees were negotiating about a new enterprise agreement to apply to BHP Coal's operations at various mines, including the Saraji mine. For the purpose of supporting or advancing 28 s 347(b)(iii). 29 s 347(b)(v). 30 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 234 [115], 237 [124]. 31 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 219 FCR 245. 32 (2013) 219 FCR 245 at 247 [1] per Dowsett J, 275-277 [107]-[111] per Flick J. 33 (2013) 219 FCR 245 at 264 [60]-[61], 267 [70]. Hayne their claims, employees of BHP Coal took protected industrial action34 in the form of work stoppages and overtime bans. There was a seven-day work stoppage between 15 and 22 February 2012. During this stoppage, members of the CFMEU who were employed at the Saraji mine, including Mr Doevendans, participated in protests beside the road leading into the mine property. Standing behind barriers BHP Coal had erected at the side of the road, the protesters held up signs which the CFMEU had provided and waved the signs at those who were driving into the mine. The signs were directly or indirectly critical of BHP Coal and of those who were driving into the mine. On four occasions over three days, Mr Doevendans held up a sign that read: "No principles Scabs No guts" ("the scabs sign"). Some employees of BHP Coal complained to management about the scabs sign. The trial judge described35 in some detail the steps that were then taken. For present purposes, it is enough to observe that, first, Mr Doevendans was given notice of what was alleged against him and was given opportunities (which he took) to respond to the allegations. Then, the General Manager of the mine, Mr Brick, wrote to Mr Doevendans saying, in effect, that what was alleged was not disputed and that he found Mr Doevendans' conduct to be inconsistent with the applicable workplace conduct policy and charter of values and "unacceptable in the workplace". In his letter, Mr Brick described the conduct as constituting "harassment and/or intimidation" of non-union employees and employees who chose to attend work during the industrial action, as creating a potential risk to the health and safety of workers who chose to attend work during the industrial action, and as failing to meet BHP Coal's "expectation that each employee will treat others in the workplace with courtesy, dignity and respect". Mr Brick recorded, in his letter, that Mr Doevendans admitted "that use of the word 'scab' at work is not acceptable". The letter required Mr Doevendans, in effect, to show cause why his employment should not be After further correspondence between the CFMEU and BHP Coal, Mr Brick decided to terminate Mr Doevendans' employment. terminated. At trial, there was elaborate examination of, and much debate about, why Mr Brick made that decision. Close consideration was given to whether Mr Brick had acted with some ulterior motive. But the trial judge rejected those arguments and found36 that Mr Brick dismissed Mr Doevendans for the reasons Mr Brick gave in evidence. 34 Fair Work Act 2009 (Cth), Ch 3, Pt 3-3, Div 2 (ss 408-416A). 35 (2012) 228 IR 195 at 201-209 [13]-[29]. 36 (2012) 228 IR 195 at 211-212 [36]-[41]. Hayne In his evidence, Mr Brick had described those reasons in 14 separate points. But shorn of the characterisations and consequences Mr Brick attributed to Mr Doevendans' conduct, which reflected Mr Brick's view of whether what had been done could be justified, the reasons for dismissal can be accurately summarised as being that Mr Doevendans had repeatedly, and deliberately, held up the scabs sign and waved it at those driving into the mine, even though he knew that the word "scab" was inappropriate in the workplace. No doubt, as the trial judge37 and Flick J38 both observed, Mr Brick also thought it important that the sign was contrary to BHP Coal's workplace conduct policy and that Mr Doevendans had demonstrated arrogance when confronted with his conduct. But the former consideration was Mr Brick's characterisation of the conduct and the latter was a consequence following from the parties' competing views about whether what had been done could be justified. Neither consideration adds to or subtracts from the accuracy of the summary which has been given of Mr Brick's reasons. And neither bears upon the relevant inquiry, being whether BHP Coal established that it acted only for reasons other than because Mr Doevendans had taken part in the protests. As the summary indicates, Mr Brick's complaint was with the manner in which Mr Doevendans had taken part in the protests. Did Mr Brick act for reasons that included a prohibited reason? Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] Properly, close consideration was given at all stages of the litigation (including in the appeal to this Court) to what this Court said in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1]39. It is important, however, to recognise that the central holding in Bendigo was that direct testimony from an employer's decision-maker, if accepted as reliable, is capable of discharging40 the burden on an employer under s 361(1), even where the employee is an officer or member of an industrial association and engages in industrial activity. Bendigo did not decide that accepting the decision-maker's evidence of why adverse action was taken necessarily concluded the issue in a case where the employee was engaged in industrial activity. As counsel for the Minister, intervening, rightly submitted41 37 (2012) 228 IR 195 at 211 [36]. 38 (2013) 219 FCR 245 at 275 [103]. 39 (2012) 248 CLR 500; [2012] HCA 32. 40 (2012) 248 CLR 500 at 517 [45] per French CJ and Crennan J, 525 [71] per 41 (2012) 248 CLR 500 at 504. Hayne in Bendigo, "[i]t is an error to reduce the question to a binary choice between believing or rejecting the evidence" of the relevant decision-maker. In Bendigo, neither side challenged in this Court the findings of fact made by the trial judge. As French CJ and Crennan J noted42, the trial judge found that "Mr Barclay's union position and activities were not operative factors" in his being suspended from duty. In Bendigo, argument proceeded in this Court by reference to the supposed distinction between "objective" and "subjective" reasons and whether, as the Full Court of the Federal Court had held43, there could be a "real reason" for the conduct that was "unconscious or not appreciated or understood". Because the trial judge's findings of fact were not challenged, rejection of the reasoning of the Full Court required that the appeal be allowed and the trial judge's orders restored. But that does not entail that this Court's decision in Bendigo foreclosed the analysis made by the trial judge in this matter. The underlying statutory question remains. Why was adverse action taken? Did the employer show that the reasons for acting did not include a prohibited reason? Dismissal for reasons which included a prohibited reason? In this case, the lawful activity organised by the CFMEU was a protest. The protest was held close to, but not on, the mine property. Neither the holding of the protest nor the manner in which it was conducted was unlawful. Mr Brick dismissed Mr Doevendans because he repeatedly and deliberately displayed the scabs sign. There can be no dispute that, as the trial judge found44, the sign which Mr Doevendans held ("No principles Scabs No guts") was offensive and abusive and that "the whole point of calling someone a scab was to offend and to belittle them". In an industrial context, the word cannot be used45 except to demean those who choose to exercise their right not to join in concerted industrial action. And it may readily be accepted that its use in this case was antithetical to what 42 (2012) 248 CLR 500 at 524 [65] (Gummow and Hayne JJ agreeing at 525 [71]). 43 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 221 [28] per Gray and Bromberg JJ. 44 (2012) 228 IR 195 at 229 [96]. 45 The Oxford English Dictionary, 2nd ed (1989), vol XIV at 550, describes one use of the word as "[a] term of abuse or depreciation applied to persons" and gives, as a definition, "[a] workman who refuses to join an organized movement on behalf of his trade; in extended uses: a person who refuses to join a strike or who takes over the work of a striker; a blackleg; a strike-breaker". Hayne Mr Brick said46 was BHP Coal's expectation: "that each employee will treat others in the workplace with courtesy, dignity and respect". But Mr Doevendans' use of the word (by his displaying the sign) cannot be divorced from the circumstances in which it was used. He used it in the course of participating in a union-organised protest. The protest was directed at BHP Coal as employer. But it was also directed at those employees who had not joined the work stoppage. As has been noted earlier, Mr Brick's for dismissing Mr Doevendans hinged around the language in which Mr Doevendans chose to express that latter form of protest. The central point was that he had chosen to express his protest using a word which he knew was offensive. That is, Mr Doevendans had participated in a lawful activity organised by the CFMEU (a protest against his employer and his fellow employees who were not participating in the work stoppage) in a way which he knew would give offence to others. reasons At trial, BHP Coal sought, unsuccessfully, to establish that displaying the sign was contrary to law (either as offensive behaviour contrary to s 6 of the Summary Offences Act 2005 (Q) or as a form of adverse action contrary to s 346(c) of the Act). The trial judge rejected47 those submissions. They were not renewed on appeal to this Court. It follows that the conduct which was the focus of Mr Brick's reasons for dismissing Mr Doevendans must be taken to have been lawful conduct. The conclusion that Mr Brick did not act for a prohibited reason can be reached only by distinguishing between Mr Doevendans' participation in the protest near the entrance to the mine property and the manner in which he expressed his protest. No relevant distinction of that kind can be drawn. The engaging industrial activity participating in a lawful activity. The Act draws no express distinction between kinds of participation in a lawful activity. It may be accepted that, if the activity must be lawful, the method and manner of participation in the activity must also be lawful. But when, as here, the activity is a protest, no further distinction can be made between those protests which are courteous or polite and those which (lawfully) give offence. in s 347(b)(iii) identified Both the activity and the manner in which Mr Doevendans took part in it were lawful. So long as the protest was conducted lawfully, it was not to the point to ask (as Mr Brick did) whether what was said or done in the protest 46 (2012) 228 IR 195 at 205 [23]. 47 (2012) 228 IR 195 at 233 [108], [111]. Hayne would offend others or, in particular, would offend some employees. And when Mr Brick concluded that Mr Doevendans should be dismissed because he had deliberately and repeatedly protested in an offensive manner, Mr Brick acted for a prohibited reason. He dismissed Mr Doevendans because he had participated in a lawful activity organised by the CFMEU. Representing or advancing union views or interests The CFMEU provided the scabs sign which Mr Doevendans chose to display. The trial judge found48 that the sign represented the views and interests of the CFMEU. The very terms of the sign ("No principles Scabs No guts") admitted of no other conclusion. Contrary to BHP Coal's submissions, it is neither necessary nor useful to inquire whether Mr Brick, in the course of his deliberations, paused to consider whether the sign represented the views or interests of the CFMEU. It may be accepted that he did not. But to attach significance to Mr Brick's not connecting the views expressed on the scabs sign with the CFMEU would be to resort again to the contrast between objective and subjective reasons dismissed49 in Bendigo as "an illusory frame of reference". There could be no doubt that Mr Brick understood that the word "scab" was used in the manner and circumstances that have already been described. That is, Mr Brick knew not only that the word was used to demean those who had not joined in the work stoppage, but also that the CFMEU had organised the protest at which the sign was repeatedly displayed. And Mr Brick knew that the protest was directed at both BHP Coal and those of its employees who had not joined in the work stoppage. Again, unless some distinction can be drawn between the act of representing or advancing the views or interests of the CFMEU and the manner in which that was done, Mr Doevendans was dismissed for reasons that included his representing or advancing those views. For the reasons given in connection with the application of s 347(b)(iii), no distinction of that kind can be made. Conclusion and orders The appeal to this Court should be allowed. The orders of the Full Court of the Federal Court of Australia made on 13 December 2013 should be set aside and in their place there should be an order that the appeal to that Court is dismissed. The appellant made no application for costs. 48 (2012) 228 IR 195 at 236-237 [122]-[123]. 49 (2012) 248 CLR 500 at 540 [121]. Crennan CRENNAN J. The issue and the facts in this appeal are set out in the reasons for judgment of Hayne J and will only be repeated here as necessary to explain these reasons. I agree with the orders which his Honour proposes. As to the issue involving ss 346(b), 347(b)(iii) and (v) and 361 of the Fair Work Act 2009 (Cth) ("the Act"), I agree with Hayne J. What follows are brief additional comments concerning what this Court said in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] 50, added because of the wider implications of misunderstanding Barclay. Section 346 of the Act protects an employee who engages in "industrial activity"51, either by participating in a lawful activity organised or promoted by an industrial association52 (s 347(b)(iii)), or by advancing the views, claims or interests of an industrial association (s 347(b)(v)), from "adverse action"53 by an employer. Importantly, s 360 provides that, for those purposes, "a person takes action for a particular reason if the reasons for the action include that reason". Under s 361(1) it is presumed that action taken by an employer was taken for a prohibited reason, or reasons which included a prohibited reason, unless the employer establishes otherwise. As recognised in Barclay, the provisions present an issue of fact to be decided on the balance of probabilities in the light of all the established facts and circumstances54. The court's task is to ask "why the employer took adverse action against the employee, and to ask whether it was for a prohibited reason or reasons which included a prohibited reason"55. In Barclay, the primary judge was satisfied that the decision-maker acted for the reasons she gave. His Honour also accepted her denials that she acted for any reason prohibited under the Act, particularly under s 346(a) 56. Neither party challenged those findings of fact by the primary judge. In this Court it was acknowledged that direct testimony of a decision-maker which is accepted as 50 (2012) 248 CLR 500; [2012] HCA 32. 51 Act, s 346(b). 52 Defined in s 12 of the Act. 53 Defined in s 342(1) of the Act. 54 Barclay (2012) 248 CLR 500 at 523 [62] per French CJ and Crennan J, 531 [88], 542 [127] per Gummow and Hayne JJ. 55 Barclay (2012) 248 CLR 500 at 506 [5] per French CJ and Crennan J. 56 See Barclay (2012) 248 CLR 500 at 505-506 [4] per French CJ and Crennan J. Crennan reliable is capable of discharging the burden of proof cast upon an employer57. This does not mean that an assertion by a credible decision-maker that adverse action was not taken because of any prohibited reason will always discharge the statutory onus on an employer to prove that the reasons for taking adverse action did not include a prohibited reason. It is open to a trier of fact to accept as honest and credible a decision-maker's explanation of his or her decision for taking adverse action, then to weigh all the evidence (including an assertion that the decision-maker did not act for any prohibited reason) but not be satisfied that an employer has discharged the statutory onus of proving that the reasons did not include any prohibited reason. In this case the decision-maker, Mr Brick, gave evidence of the factors on which his decision to dismiss the employee, Mr Doevendans, depended. The factors included the circumstance that Mr Doevendans had, on four occasions over three days, held up and waved at passing motorists the scabs sign described more fully in the reasons of Hayne J58. They also included Mr Brick's views: that Mr Doevendans' conduct in holding and waving the scabs sign was "offensive, humiliating, harassing and intimidating"; that the conduct was unacceptable for an employee of the respondent, flagrantly violated the respondent's charter and conduct policy and was contrary to the culture Mr Brick had developed at the mine; and that Mr Doevendans was arrogant when confronted with objections to his conduct. As well as giving evidence of the factors upon which his decision to dismiss Mr Doevendans depended, Mr Brick asserted that Mr Doevendans' engagement in industrial action or activity played no part in his decision-making process. The respondent advanced no serious submission at the trial that the protest in which Mr Doevendans participated was not lawful, and the appeal in this Court was conducted on that basis. It was also uncontested that the appellant was the source of the scabs sign, and that holding and waving it was part of a lawful protest. The respondent's unsuccessful attempts at trial to contend that holding and waving the scabs sign was unlawful, either under s 6 of the Summary Offences Act 2005 (Q), or under ss 342(1) and 346(c) of the Act, were not pressed in this Court. This left management's objection that the scabs sign was offensive as the basis for the respondent's contention that Mr Doevendans was precluded from invoking s 347(b)(iii) or (v). 57 Barclay (2012) 248 CLR 500 at 521 [54], 523 [62] per French CJ and Crennan J. 58 Reasons of Hayne J at [33]. Crennan This Court has had occasion to consider cognate legislative predecessors to ss 346 and 361 of the Act in Pearce v W D Peacock & Co Ltd59 and in General Motors-Holden's Pty Ltd v Bowling60. In Pearce61, a decision-maker affirmed that in dismissing an employee he did not concern himself with whether the employee was a union member or not; he dismissed the employee because the employee was not satisfied with his wages and conditions. The decision-maker also said he would not have dismissed the employee "because of being in a union" and added that he "would not keep a man in my employ who was dissatisfied"62. Of this assertion and the inquiry to be made under the statute, Barton ACJ said63: "No doubt, it is an inquiry in a large measure as to motive; and no doubt also, the motive is to be inferred from facts, and mere declarations as to the mental state that prompted the employer's action are entitled to little or no regard, though in the present case they seem to have been admitted without objection." His Honour went on to say that, if the evidence in defence of the employer was believed, it was open to a court to conclude that the statutory onus was discharged64. In Barclay, when considering Pearce, it was observed that declarations by an employer's decision-maker of innocent reasons for taking adverse action may not satisfy the statutory onus if contrary inferences are available on the facts65. In Bowling66, Mason J considered that, to be comprehensive, an employer's expression of reasons for the dismissal of an employee might well 59 (1917) 23 CLR 199; [1917] HCA 28. 60 (1976) 51 ALJR 235; 12 ALR 605. 61 Which involved the Conciliation and Arbitration Act 1904 (Cth) (as amended by the Commonwealth Conciliation and Arbitration Act (No 2) 1914 (Cth)), s 9(1) and 62 Pearce (1917) 23 CLR 199 at 202. 63 Pearce (1917) 23 CLR 199 at 203. 64 Pearce (1917) 23 CLR 199 at 204. 65 Barclay (2012) 248 CLR 500 at 521 [54] per French CJ and Crennan J. 66 Which involved the Conciliation and Arbitration Act 1904 (Cth) (as amended by the Conciliation and Arbitration Act 1973 (Cth)), s 5(1) and (4). Crennan include evidence that a dismissal of a shop steward occurred "without regard at all to his position as a shop steward"67. His Honour then said68: "even if [that evidence] had been given, there may have been a question as to its reliability. Once it is said that the [employer] dismissed [the employee] because he was deliberately disrupting production and was setting a bad example it is not easy to say without more that this had nothing to do with his being a shop steward." That passage makes it plain that the inquiry which the protective provisions require involves asking more than why a decision-maker acted as he or she did69. The primary judge found that Mr Brick was a reliable witness and he was satisfied that Mr Brick did not dismiss Mr Doevendans "for reasons other than those given by [Mr Brick]". When his Honour made that finding of fact, his Honour did not state, or imply, that he accepted Mr Brick's assertion that Mr Doevendans' engagement in industrial activity played no part in his decision-making process. His Honour's decision demonstrates that he reached the contrary view. The primary judge's approach to Mr Doevendans' case under s 346(b) can be contrasted with his Honour's statement that he accepted the denials of Mr Brick that Mr Brick acted for any reason prohibited under s 346(a) of the Act. The circumstance that the scabs sign used "conspicuously offensive language" (as found by the primary judge, and as it was considered to do by Mr Brick) does not take Mr Brick's dismissal of Mr Doevendans outside s 346(b). The only qualification of the protection given by s 347(b)(iii) is that the activity (in which an employee participates) which has been organised by a union be lawful – there is no additional qualification that it be anodyne. The factors which Mr Brick listed as justifying his dismissal of Mr Doevendans were accepted by the primary judge as honest explanations of why Mr Brick dismissed Mr Doevendans. However, the circumstances and conduct for which Mr Doevendans was dismissed were inconsistent with, and rendered unreliable, Mr Brick's assertion that Mr Doevendans' engagement with industrial action or activity had nothing to do with his decision. On all of the material before him the primary judge rejected the respondent's contention that holding and waving the scabs sign as part of lawful industrial activities protected 67 Bowling (1976) 51 ALJR 235 at 241; 12 ALR 605 at 617. 68 Bowling (1976) 51 ALJR 235 at 241; 12 ALR 605 at 617-618. 69 See also Barclay (2012) 248 CLR 500 at 506 [5] per French CJ and Crennan J. Crennan under s 347(b)(iii) and (v) could be abstracted from the Act's protection because the sign was offensive, albeit lawful. Having accepted Mr Brick's evidence of the factors which explained his decision to dismiss Mr Doevendans, which included Mr Doevendans' holding and waving the scabs sign, the primary judge was entitled to conclude that Mr Brick terminated Mr Doevendans' employment for the reasons he gave and that those reasons supported Mr Doevendans' inferential case against the respondent that the circumstances and the conduct for which he was dismissed fell within the protection of s 347(b)(iii) and (v). Such a possibility was anticipated by Mason J in Bowling, in the passage extracted above. Barclay does not hinder the drawing of available inferences which may controvert an honest decision-maker's assertion that he or she did not take adverse action for any prohibited reason. Mr Brick's evidence failed to prove that Mr Doevendans had been dismissed solely for reasons other than because of his engagement in industrial activity. For the reasons given by Hayne J, it was correct for the primary judge to conclude that the respondent had not discharged the statutory onus of proving that Mr Doevendans' dismissal had not contravened s 346(b) of the Act. GAGELER J. This appeal, from a decision of the Full Court of the Federal Court, concerns the operation of s 346(b) of the Fair Work Act 2009 (Cth) ("the Act"), which prohibits one person taking adverse action against another person "because" that other person has engaged in "industrial activity" within the meaning of s 347(a) or (b) of the Act. Facts Mr Henk Doevendans was employed by BHP Coal Pty Ltd ("BHP Coal") at the Saraji Mine, owned by BHP Billiton Mitsubishi Alliance ("BMA"), in the Bowen Basin in Queensland. He was an active member of the Construction, Forestry, Mining and Energy Union ("the CFMEU"), an industrial association registered under the Fair Work (Registered Organisations) Act 2009 (Cth). In the week commencing 15 February 2012, some workers at the Saraji Mine took protected industrial action in the form of a strike. Mr Doevendans was not rostered to work that week, but he chose to participate in a lawful protest near the entrance to the mine. The protest was organised by the CFMEU. As part of his participation in the protest, Mr Doevendans held signs supplied by the CFMEU and waved them at non-striking workers. The signs read "No principles SCABS No guts". Mr Geoff Brick was BHP Coal's General Manager of the Saraji Mine. Mr Brick was informed by a number of non-striking workers that they felt intimidated when the signs were waved at them. On 18 May 2012, after investigation, correspondence and meetings with Mr Doevendans, Mr Brick decided to terminate Mr Doevendans' employment. Mr Brick gave effect to that decision by letter to Mr Doevendans three days later. In evidence accepted at trial, Mr Brick explained in detail his reasons for the decision he made to terminate Mr Doevendans' employment. Prominent amongst those reasons was Mr Doevendans' repeated and deliberate use of the word "scab" displayed on the signs which Mr Doevendans had chosen to hold and wave at non-striking workers. Mr Brick understood the word "scab" to be used to describe workers who do not take part in industrial action, and to convey contempt for those workers. He understood its use in that way to have a long history within the mining industry in Australia and, in particular, to be entrenched throughout the mining community in the Bowen Basin. He was aware of, and evidently shared, the position of BMA "that there is no place for words like 'scab' to be used in a 21st century working environment". Mr Brick explained that he took the view that the word "scab" was "an offensive, intimidating and humiliating word" and that its use had "the potential to cause workers and other people at the Saraji Mine to feel harassed, insulted, abused, bullied and intimidated". He took the view that Mr Doevendans' use of the word was a "[f]lagrant violation" of BMA's workplace policy, which was known to Mr Doevendans and under which each employee was "expected to treat others in the workplace (at work and outside of work) with courtesy, dignity and respect". It was "[c]ompletely contrary" to the culture Mr Brick had developed and was continuing to develop at the Saraji Mine. Mr Brick took the view that Mr Doevendans had shown no "contrition or acknowledgement that his behaviour was inappropriate", had been "defensive and arrogant" in his meetings with Mr Brick, and was "unlikely to be able to be rehabilitated to the culture [Mr Brick] had developed and was continuing to develop at the Saraji Mine". Mr Brick explained that the fact that Mr Doevendans was an active member of the CFMEU "entered and operated" in his mind only to the extent he was conscious take disciplinary action against Mr Doevendans would be controversial. Mr Brick explained that the fact that Mr Doevendans was engaged in industrial action or activity did not play any part in his decision-making process. that any decision Act Section 346 is within Pt 3-1 of Ch 3 of the Act. It provides, so far as relevant: "A person must not take adverse action against another person because the other person: is or is not, or was or was not, an officer or member of an industrial association; or engages, or has at any time engaged or proposed to engage, in industrial activity within the meaning of paragraph 347(a) or (b); Section 342(1) relevantly provides that one of the circumstances in which an employer takes adverse action against an employee is if the employer dismisses the employee. Section 347 provides, so far as relevant: "A person engages in industrial activity if the person: becomes or does not become, or remains or ceases to be, an officer or member of an industrial association; or does, or does not: (iii) encourage, or participate in, a lawful activity organised or promoted by an industrial association; or represent or advance the views, claims or interests of an industrial association; ..." Section 360 provides, for the purposes of Pt 3-1, that "a person takes action for a particular reason if the reasons for the action include that reason". Section 361 provides, so far as relevant, that if, in an application in relation to a contravention of Pt 3-1, it is alleged that a person took action for a particular reason or with a particular intent, and taking that action for that reason or with that intent would constitute a contravention of that Part, it is presumed that the action was taken for that reason or with that intent unless the person proves otherwise. Federal Court In proceedings brought in the Federal Court by the CFMEU, the primary judge (Jessup J), accepting the evidence of Mr Brick, concluded that BHP Coal did not dismiss Mr Doevendans because he was a member of the CFMEU, and therefore did not contravene s 346(a) of the Act70. His Honour concluded, however, that BHP Coal did dismiss Mr Doevendans because he had engaged in industrial activity within the meaning of s 347(b)(iii) and (v), and therefore did contravene s 346(b) of the Act. The essence of his Honour's reasoning was captured in the statements of his conclusions. As to the conclusion that BHP Coal dismissed Mr Doevendans because he had engaged in industrial activity within the meaning of s 347(b)(iii), his Honour said71: "I take the view that Mr Doevendans' holding and waving of the scabs sign was conduct by way of participation in a lawful activity organised by an industrial association. Since a reason for his dismissal was that he did so hold and wave the sign, it follows that his dismissal was done in contravention of s 346(b) of [the Act]." 70 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) (2012) 228 IR 195 at 216 [54]. 71 (2012) 228 IR 195 at 234 [115]. As to the conclusion that BHP Coal dismissed Mr Doevendans because he had engaged in industrial activity within the meaning of s 347(b)(v), his Honour "I take the view that, in displaying the scabs sign at the protest, Mr Doevendans was representing and advancing the views and interests of an industrial association. Since he was dismissed for that conduct, it follows that the dismissal was done in contravention of s 346(b) of [the Act]." The majority in the Full Court (Dowsett and Flick JJ) disagreed with those conclusions73. Each considered that the primary judge's acceptance of Mr Brick's explanation that the fact that Mr Doevendans was engaged in industrial action or activity played no part in Mr Brick's decision-making process foreclosed a holding that BHP Coal dismissed Mr Doevendans because he had engaged in industrial activity within the meaning of either s 347(b)(iii) or s 347(b)(v)74. The other member of the Full Court (Kenny J) agreed with the majority as to the primary judge's conclusion in relation to s 347(b)(iii)75, but disagreed with the majority as to the primary judge's conclusion in relation to s 347(b)(v), in respect of which her Honour discerned no error76. Her Honour considered it sufficient to justify the primary judge's conclusion as to s 347(b)(v) that Mr Brick's evidence established that Mr Doevendans' holding and waving of the "scab" signs was an operative factor in Mr Brick's decision to dismiss and that in holding and waving these signs Mr Doevendans was representing the views and interests of the CFMEU77. Analysis Analysis in the appeal to this Court must begin, as analysis began at each stage of the proceedings in the Federal Court, with consideration of this Court's decision in Board of Bendigo Regional Institute of Technical and Further 72 (2012) 228 IR 195 at 237 [124]. 73 BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2013) 219 FCR 245. 74 (2013) 219 FCR 245 at 250-251 [13], 276 [108]. 75 (2013) 219 FCR 245 at 264 [59]. 76 (2013) 219 FCR 245 at 267 [70]. 77 (2013) 219 FCR 245 at 266 [66]-[67]. Education v Barclay [No 1] 78. The unanimous holding in that case was that, read in the context of ss 360 and 361 of the Act and of its legislative history, the word "because" in s 346 of the Act connotes the existence of a particular reason as an operative and immediate reason for taking adverse action79. Where the adverse action taken is in consequence of a decision made by a responsible individual within a corporation, the existence or non-existence of a particular reason as an operative and immediate reason for taking that adverse action turns on an inquiry into the mental processes of that individual80. The conclusion in Barclay was that the employer in that case had taken adverse action against the employee neither because the employee was an officer of an industrial association nor because the employee had engaged in industrial activity within the meaning of s 347(b)(iii) or (v). That conclusion was held to follow from the primary judge's acceptance of the evidence of the chief executive officer of the employer that her reasons for taking the action did not include the employee's membership or role in the union of which he was a member or the employee's engagement in any industrial activity. Two aspects of the background to the decision in Barclay are important to an understanding of the significance of that conclusion. The first was that evidence of the chief executive officer accepted by the primary judge did include prominently amongst the reasons for taking the adverse action the fact that the employee had sent an email to other employees. The second was that the majority in the Full Court of the Federal Court had made additional findings. Those additional findings were that the employee, in sending that email, encouraged or participated in a lawful activity organised by his union, and represented or advanced the views or interests of his union81. The conclusion in this Court was reached without addressing, much less disturbing, those additional findings. Whether or not the employee, in sending the email, encouraged or participated in a lawful activity organised by his union or represented or advanced the views or interests of his union was irrelevant to the reasoning adopted in this Court to reach the conclusion. The majority in the Full Court of the Federal Court in the present case was correct to treat Barclay as foreclosing the mode of analysis adopted by the primary judge in the present case to conclude that BHP Coal's dismissal of 78 (2012) 248 CLR 500; [2012] HCA 32. 79 (2012) 248 CLR 500 at 524 [65], 535 [103]-[104], 544 [140]. 80 (2012) 248 CLR 500 at 517 [44]-[45], 542 [127], 544 [140]. 81 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212 at 231 [64]. Mr Doevendans was because he had engaged in industrial activity within the meaning of s 347(b)(iii) and (v). In a case where the totality of the operative and immediate reasons for one person having taken adverse action against another person are proved, the question presented by s 346(b) is whether any one or more of those reasons answers the description of the other person having engaged in any one or more of the industrial activities listed in s 347(a) or (b). The specific question presented by s 346(b) in its application to s 347(b)(iii) is whether any one or more of those reasons was that the person had, or had not, encouraged or participated in some lawful activity organised or promoted by an industrial association. The specific question presented by s 346(b) in its application to s 347(b)(v) is whether any one or more of those reasons was that the person had, or had not, represented or advanced some view, claim or interest of an industrial association. In the present case, the totality of the operative and immediate reasons for BHP Coal having taken adverse action against Mr Doevendans were proved by the evidence of Mr Brick about his own process of reasoning. The fact that Mr Doevendans held and waved the signs while participating in the protest organised by the CFMEU was not an operative part of Mr Brick's reasoning. Nor was the fact that the signs represented or advanced the views or interests of the CFMEU. The correct answer to the question presented by s 346(b) in those circumstances was that given by the majority in the Full Court: BHP Coal's dismissal of Mr Doevendans was not because he had engaged in industrial activity within the meaning of s 347(b)(iii) and (v) and therefore did not The CFMEU argues that the consequence of allowing the decision of the Full Court in the present case to stand will be to undermine the statutory protection afforded to protected industrial activity by allowing an employer to escape culpability by choosing to apply its own characterisation to otherwise protected industrial activity. Part of the answer to that argument lies in recognition of the nature of the protection that is afforded to protected industrial activity through the operation of s 346(b). The protection afforded by s 346(b) is not protection against adverse action being taken by reason of engaging in an act or omission that has the character of a protected industrial activity. It is protection against adverse action being taken by reason of that act or omission having the character of a protected industrial activity. Another part of the answer lies in recognition of the significance of the combined operation of ss 360 and 361. An employer could not escape the proscription in s 346(b) merely by proving that the employer applied its own characterisation to an act or omission having the character of a protected industrial activity. The employer would need, in addition, to prove that the act or omission having the character of a protected industrial activity played no operative part in its decision. Order The appeal should be dismissed.

HIGH COURT OF AUSTRALIA NSW REGISTRAR OF BIRTHS, DEATHS AND MARRIAGES APPELLANT AND NORRIE RESPONDENT NSW Registrar of Births, Deaths and Marriages v Norrie [2014] HCA 11 2 April 2014 ORDER Set aside paragraph 3(b) of the order of the Court of Appeal of the Supreme Court of New South Wales made on 14 June 2013 and, in its place, order respondent's applications dated 26 November 2009 be remitted to the NSW Registrar of Births, Deaths and Marriages for determination in accordance with the reasons of this Court. that the Appeal otherwise dismissed. Appellant to pay the respondent's costs of the appeal to this Court. On appeal from the Supreme Court of New South Wales Representation J K Kirk SC with K M Richardson for the appellant (instructed by Crown Solicitor (NSW)) D M J Bennett QC with A J Abadee for the respondent (instructed by DLA Piper Australia) K L Walker with E A Bennett for A Gender Agenda Inc, as amicus curiae (instructed by Human Rights Law Centre) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS NSW Registrar of Births, Deaths and Marriages v Norrie Statutes – Interpretation – Registrar's power to register a "change of sex" under Births, Deaths and Marriages Registration Act 1995 (NSW) – Respondent underwent sex affirmation procedure – Respondent applied for registration of change of sex under Act – Whether Registrar has power to register change of sex to "non-specific". Words and phrases – "change of sex". Births, Deaths and Marriages Registration Act 1995 (NSW), ss 32A, 32DA, 32DB, 32DC, 32J. FRENCH CJ, HAYNE, KIEFEL, BELL AND KEANE JJ. Not all human beings can be classified by sex as either male or female1. The Births, Deaths and Marriages Registration Act 1995 (NSW) ("the Act") expressly recognises that a person's sex may be ambiguous2. It also recognises that a person's sex may be sufficiently important to the individual concerned to warrant that person undergoing a sex affirmation procedure to assist that person "to be considered to be a member of the opposite sex"3. When a person has undergone a sex affirmation procedure, s 32DC of the Act empowers the Registrar to register a change of sex of the person upon an application by that person. The question in this appeal is whether it was within the Registrar's power to record in the Register that the sex of the respondent, Norrie4, was, as she said in her application, "non-specific". That question should be answered in the affirmative. It is convenient to begin an explanation of the reasons why that is so by referring to the material provisions of the Act while summarising the circumstances of Norrie's application to the Registrar. The Act and the application The Act provides for the registration of births, deaths and marriages. Section 6 of the Act provides that the Registrar is to "establish and maintain the registers necessary for the purposes of this Act". The objects of the Act, stated in s 3, include "the recording of changes of sex". Pursuant to s 43(1) of the Act, the Registrar must maintain a register of "registrable events". Section 4(1) provides that a change of sex is a registrable event. 1 Corbett v Corbett [1971] P 83 at 100; Bellinger v Bellinger [2003] 2 AC 467 at 472 [5]-[6]; AB v Western Australia (2011) 244 CLR 390 at 402 [23]; [2011] HCA 42. 2 Section 32A(b). 3 Section 32A(a). 4 The respondent uses, and these reasons use, the personal pronouns "she" and "her" to refer to the respondent. Hayne Bell The provisions of the Act relating to the registration of a change of sex are contained in Pt 5A. They are engaged by an application made by an adult or, in respect of a child, by its parent or guardian. Part 5A of the Act was inserted by the Transgender (Anti-Discrimination and Other Acts Amendment) Act 1996 (NSW) ("the 1996 Amending Act"). The 1996 Amending Act made provision for the alteration of the Register to record a change of sex in the case of persons born in New South Wales5. The Act was further amended by the Courts and Crimes Legislation Amendment Act 2008 (NSW) to address the situation of people who were not born in New South Wales. This amendment added ss 32DA to 32DD and s 32J to Pt 5A of the Act. This case concerns an application made under these provisions. Section 32DA provides that a person whose birth was not registered in New South Wales may apply to register that person's sex. Sub-section (1) is in the following terms: "(1) A person who is 18 or above: (a) who is an Australian citizen or permanent resident of Australia, and (b) who lives, and has lived for at least one year, in New South Wales, and (c) who has undergone a sex affirmation procedure, and (d) who is not married, and (e) whose birth is not registered under this Act or a corresponding law, may apply to the Registrar, in a form approved by the Registrar, for the registration of the person's sex in the Register." Norrie was born in Scotland with male reproductive organs. In 1989 she underwent a "sex affirmation procedure". 5 Sections 32B to 32D. Hayne Bell A sex affirmation procedure is defined in s 32A as: "a surgical procedure involving the alteration of a person's reproductive organs carried out: for the purpose of assisting a person to be considered to be a member of the opposite sex, or to correct or eliminate ambiguities relating to the sex of the person." Norrie considered that the surgery did not resolve her sexual ambiguity. She applied on 26 November 2009 for her sex to be registered under the Act as "non-specific". Section 32DB of the Act requires that an application under s 32DA be accompanied by: "statutory declarations by 2 doctors, or by 2 medical practitioners ... verifying that the person the subject of the application has undergone a sex affirmation procedure". In conformity with s 32DB, Norrie's application was accompanied by statutory declarations from two medical practitioners. Each medical practitioner stated that Norrie had undergone a sex affirmation procedure. Each also stated, in a pro forma sentence in the declaration, that he supported the application of Norrie to have her birth record altered showing the sex now to be non-specific. Despite the provision in the statutory declaration for a statement of support, it had no apparent statutory significance as it was neither required nor provided for by the Act or the regulations made under the Act. Section 32DC of the Act provides for the determination of an application under s 32DA in the following terms: "(1) The Registrar is to determine an application under section 32DA by registering the person's change of sex or refusing to register the person's change of sex. Before registering a person's change of sex, the Registrar may require the applicant to provide such particulars relating to the change of sex as may be prescribed by the regulations. Hayne Bell (3) A registration of a person's change of sex must not be made if the person is married." Four points should be noted in respect of these provisions. First, a sex affirmation procedure is defined by reference to its purpose, not its outcome. Section 32DA(1)(c) does not refer to a "successful" sex affirmation procedure. Secondly, the function of the Registrar is principally that of recording in the Register information provided by members of the community. Section 32DB makes express provision for the verification of an aspect of the information to be provided. Further, s 32DC(1) confers a limited and specific decision-making power on the Registrar. While the Registrar may require such particulars "relating to the change of sex as may be prescribed by the regulations", neither the Act nor the regulations suggest that the Registrar's function extends to the making of any moral or social judgments; it certainly does not extend to the resolution of medical questions or the formation of a view about the outcome of a sex affirmation procedure. Thirdly, s 32DA is headed "Application to register change of sex"; but s 32DA(1) expressly authorises an application by a person "for the registration of the person's sex" rather than "a change of sex". Further, the modes of determination of an application under s 32DA provided by s 32DC, which involve either registration or refusal of registration of a "change of sex", are not precisely congruent with the express terms of s 32DA(1). It is tolerably clear, however, and it was not disputed, that s 32DC speaks of the registration of, or refusal to register, a "person's change of sex" on the basis of a legislative assumption that this first registration in New South Wales of an applicant's sex may differ from an earlier record (made outside New South Wales) of that person's sex. On that basis, an application under s 32DA for the registration of the sex of a person for the first time in New South Wales falls to be determined under s 32DC by a registration of, or a refusal to register, the person's change of sex. Fourthly, the 1996 Amending Act, which introduced Pt 5A (but not including ss 32DA to 32DD and s 32J) into the Act, also amended the Anti-Discrimination Act 1977 (NSW) by adding to that Act definitions of "recognised transgender person" (a person "the record of whose sex is altered under Part 5A of the Births, Deaths and Marriages Registration Act 1995") and "transgender person" (which is defined to include a person "who, being of indeterminate sex, identifies as a member of a particular sex by living as a member of that sex"). These definitions in the 1996 Amending Act are part of the context in which Pt 5A of the Act was enacted. Accordingly, the provisions Hayne Bell of Pt 5A are to be applied in a context of express legislative recognition of the existence of persons of "indeterminate sex". Section 32J of the Act provides that registration of a person's sex under Pt 5A is effective to deem the person to be of that sex. Importantly, it has that effect subject to other New South Wales laws. It relevantly provides: "(1) A person the record of whose sex is registered under this Part is, for the purposes of, but subject to, any law of New South Wales, a person of the sex so registered. (2) A person to whom an interstate recognised details certificate relates is, for the purposes of, but subject to, any law of New South Wales, a person of the sex stated in the certificate." (emphasis added) The Registrar's decision In response to Norrie's application, the Registrar wrote to her on 24 February 2010 approving her application. The Registrar also approved an application by Norrie for the registration of a change of name. The letter of 24 February attached a "Recognised Details (Change of Sex) Certificate" and a Change of Name Certificate, each of which recorded Norrie's sex as "not specified". Later, the Registrar wrote to Norrie again, this time advising her that the Recognised Details (Change of Sex) Certificate was invalid. Norrie's Change of Name Certificate was re-issued recording Norrie's sex as "not stated". Norrie lodged an application for review of the Registrar's decision in the Administrative Decisions Tribunal of New South Wales ("the Tribunal"). The course of proceedings The Tribunal The issue before the Tribunal was whether it was open to the Registrar under s 32DC of the Act to register an applicant's sex as "non-specific". The Registrar argued that his powers were confined to registering a person's sex as either "male" or "female"6. 6 Norrie v Registry of Births Deaths and Marriages [2011] NSWADT 102 at [38], Hayne Bell The Tribunal found that, as a matter of fact, Norrie does not identify as male or female, but as "non-specific"7, and that she considers that identifying herself as male or female would be a false statement8. Nevertheless, the Tribunal concluded that it was not open to the Registrar to register her sex as "non- specific"9. In this regard, the Tribunal proceeded on the footing that "the Act is predicated on an assumption that all people can be classified into two distinct and plainly identifiable sexes, male and female ... [T]he Registrar does not have the power under section 32DC of the Act to register a change of sex by a person to 'Non specific'"10. Norrie appealed to the appeal panel of the Tribunal, which dismissed her appeal11. The Court of Appeal Norrie appealed to the Court of Appeal of New South Wales, which allowed her appeal and ordered that the decision of the Tribunal be set aside and that the matter be remitted to the Tribunal for determination12. The Court of Appeal remitted the matter to the Tribunal because it held that the Act contemplated that Norrie might be assigned to a specific category of sex other than male or female such as "intersex", "transgender" or "androgynous"13. Whether the Tribunal should take that course was a matter 7 Norrie v Registry of Births Deaths and Marriages [2011] NSWADT 102 at [5]. 8 Norrie v Registry of Births Deaths and Marriages [2011] NSWADT 102 at [95]. 9 Norrie v Registry of Births Deaths and Marriages [2011] NSWADT 102 at [54]. 10 Norrie v Registry of Births Deaths and Marriages [2011] NSWADT 102 at [98]- 11 Norrie v Registrar of Births, Deaths and Marriages [2011] NSWADTAP 53 at 12 Norrie v NSW Registrar of Births, Deaths and Marriages [2013] NSWCA 145 at 13 Norrie v NSW Registrar of Births, Deaths and Marriages [2013] NSWCA 145 at Hayne Bell which would depend upon findings of fact which had not yet been made as to The Registrar appealed to this Court pursuant to special leave granted on 8 November 2013. It was a condition of the grant of special leave that the Registrar pay Norrie's costs in this Court and that the order for costs made in her favour by the Court of Appeal not be disturbed. The arguments in this Court The Registrar submitted that the Court of Appeal strayed too far from the text of the Act in reaching its conclusions. It was said that the Act does not contemplate a range of categories of sex, additional to the "opposite" sexes of male and female. In particular, the definition of "sex affirmation procedure" in s 32A suggests a process of seeking to become male or female, given that s 32A(a) states that the sex affirmation procedure is carried out for the purpose of "assisting a person to be considered to be a member of the opposite sex"; and to speak of the opposite sex is necessarily to speak only of male or female. Further, the Registrar submitted, it is reasonable to expect that an intention to recognise another category of "sex" would have been expressly stated in the Act. In this regard, the definition of "transgender" in Pt 3A of the Anti-Discrimination Act does refer to a person being of an "indeterminate" sex; but, significantly, this language was not used in Pt 5A of the Act. The Registrar also argued that unacceptable confusion would flow from the acceptance of more than two categories of sex given that s 32J of the Act affects the operation of other laws which assume the binary division of sex. This particular argument will be addressed after the submissions made on behalf of Norrie have been summarised. Norrie submitted that the purpose of the Register is to state the truth about matters recorded in the Register to the greatest possible extent. If the Act proceeded on the assumption that every person was male or female, then s 32A(b) would be superfluous because any change of sex would fall within the scope of s 32A(a). A sex affirmation procedure described in s 32A(b) of the Act, the purpose of which is to "correct or eliminate ambiguities relating to the sex of the person", was said to be predicated upon legislative recognition that not 14 Norrie v NSW Registrar of Births, Deaths and Marriages [2013] NSWCA 145 at Hayne Bell everyone may be classified as male or female. In this case, the sex affirmation procedure, which is a precondition of an application under s 32DA, was carried out, but Norrie's sex remained ambiguous so that it would be to record misinformation in the Register to classify her as male or female. There is evident force in this submission. Norrie's counsel went further, arguing that, as the Court of Appeal accepted, Norrie might more accurately be assigned to a category of sex such as "intersex" or "transgender". On this view, the expression "change of sex" in s 32DC does not mean changing from one sex (male or female) to another (female or male): a reference to change of sex simply means an "alteration" of a person's sex so that registration of categories of sex such as "transgender" and "intersex" is within the scope of the Registrar's powers under s 32DC. This further argument goes too far; it should be rejected. The Registrar's submission that the Act recognises only male or female as registrable classes of sex must be accepted. But to accept that submission does not mean that the Act requires that this classification can apply, or is to be applied, to everyone. And there is nothing in the Act which suggests that the Registrar is entitled, much less duty-bound, to register the classification of a person's sex inaccurately as male or female having regard to the information which the Act requires to be provided by the applicant. Additional categories of sex As a matter of the ordinary use of language, to speak of the opposite sex is to speak of the contrasting categories of sex: male and female15. Yet given the terms of s 32A(b) and the context in which it is to be construed, the Act recognises that a person's sex may be indeterminate. Norrie's application to the Registrar and the Registrar's determination did not give rise to an occasion to consider whether Pt 5A contemplates the existence of specific categories of sex other than male and female, such as "intersex", "transgender" or "androgynous". It was unnecessary to do so given that the Act recognises that a person's sex may be neither male nor female. The Registrar's initial determination of Norrie's application was right. The appropriate record of her change of sex was from "male" (as it may be taken to have previously been recorded outside of New South Wales) to "non-specific". 15 Bellinger v Bellinger [2003] 2 AC 467 at 483 [59], 488-489 [76]. Hayne Bell To make that record in the Register would be no more than to recognise, as the Act does, that not everyone is male or female and that the change to be registered was from an assumed registered classification outside of New South Wales as a male to, as Norrie's application put it, non-specific. Ambiguities and indeterminacy The Registrar's submission must be rejected at the point at which it insists that the Registrar is required to decide whether he or she is satisfied (let alone that it has been demonstrated objectively) that, despite an application showing persisting ambiguity in the sex of the applicant following a sex affirmation procedure, the applicant's sex should be recorded in the Register as being either male or female. The registration of a change of sex records the facts supplied by the application so long as the application is supported in accordance with s 32DB. The provision of the Act which acknowledges "ambiguities" and the context of the 1996 Amending Act, which referred to persons of "indeterminate sex", are a sufficient indication that the Act recognises that, as this Court observed in AB v Western Australia16, "the sex of a person is not … in every case unequivocally male or female." There is nothing in the text of the Act which gives support to the view that the Registrar must initiate, much less resolve, a dispute concerning matters of fact and expert opinions presented to the Registrar under ss 32DA and 32DB. Such a role would not be consistent with the provisions of the Act which charge the Registrar with the role of establishing and maintaining the registers by recording information provided by members of the community. There may be occasions when the Registrar is prompted by the circumstances of an application to address a concern as to whether an application to record a state of affairs in the Register is made in good faith. But this is not such an occasion. There is no suggestion that Norrie's application was not made in good faith. Norrie had undergone a sex affirmation procedure and verified that fact as required by s 32DB of the Act. Norrie's application was not deficient in terms of the information required by the Act. The opinions of the medical practitioners required by s 32DB were to the same effect as Norrie's own statement. The material before the Registrar (and the Tribunal) was to the effect 16 (2011) 244 CLR 390 at 402 [23]. Hayne Bell that the sex affirmation procedure had not eliminated the ambiguities relating to Norrie's sex. In these circumstances no question was raised by Norrie's application which required the Registrar to pursue or resolve any further issue. It was open to the Registrar, in the exercise of the power conferred by s 32DC, to register Norrie's change of sex by recording the change from classification as male to non-specific. Moreover, there was no reason for the matter to be remitted to the Tribunal to make further findings of fact in order for the matter to be finally determined. Section 32J The submission made on behalf of the Registrar that, given s 32J of the Act, unacceptable confusion would ensue if the Act recognised more than two categories of sex or an "uncategorised" sex should be rejected. The difficulty foreshadowed by this argument could only arise in cases where other legislation requires that a person is classified as male or female for the purpose of legal relations. For the most part, the sex of the individuals concerned is irrelevant to legal relations. In this regard, s 8(a) of the Interpretation Act 1987 (NSW) provides that "[i]n any Act or instrument … a word or expression that indicates one or more particular genders shall be taken to indicate every other gender". The chief, perhaps the only, case where the sex of the parties to the relationship is legally significant is marriage, as defined in the fashion found in s 5(1) of the Marriage Act 1961 (Cth)17. As the Registrar acknowledged, the circumstance that s 32J operates subject to other laws of New South Wales serves to ensure that where another Act does differentiate between male and female it will prevail over s 32J so that an individual is not left in a "legal no-man's land". The Registrar during the course of argument did not identify any particular statute which could not be construed so as to operate as intended in respect of a person whose sex was recorded in the Register as "non-specific". The Registrar's argument from inconvenience should be rejected. 17 In the Marriage of C and D (1979) 28 ALR 524; Bellinger v Bellinger [2003] 2 AC Hayne Bell Conclusions and orders The Court of Appeal went beyond the scope of Norrie's application to the Registrar and the issue as to the Registrar's power under s 32DC raised by the Registrar's refusal to record her sex as "non-specific". While the Court of Appeal did not proceed without encouragement from Norrie's counsel18, it was neither necessary nor appropriate for it to accept that encouragement. It would have been sufficient for it to determine the issue raised by the determination of Norrie's application and the appeal from the Tribunal to hold that the Tribunal erred in answering the question as to the Registrar's power under s 32DC on the basis that the Act is predicated on the assumption that "all people can be classified into two distinct and plainly identifiable sexes, male and female."19 The Act does not require that people who, having undergone a sex affirmation procedure, remain of indeterminate sex – that is, neither male nor female – must be registered, inaccurately, as one or the other. The Act itself recognises that a person may be other than male or female and therefore may be taken to permit the registration sought, as "non-specific". Accordingly, the orders of the Court of Appeal should be varied to the extent of setting aside the order of the Court of Appeal remitting the matter to the Tribunal, and ordering that Norrie's applications to the Registrar of 26 November 2009 should be remitted to the Registrar for determination in accordance with these reasons. Otherwise, the appeal should be dismissed. In accordance with the conditions subject to which special leave was granted, the order as to costs made by the Court of Appeal should not be disturbed, and the Registrar must pay Norrie's costs of the appeal to this Court. 18 Norrie v NSW Registrar of Births, Deaths and Marriages [2013] NSWCA 145 at 19 Norrie v Registry of Births Deaths and Marriages [2011] NSWADT 102 at [87].

HIGH COURT OF AUSTRALIA AND APPELLANT DIRECTOR-GENERAL, DEPARTMENT OF COMMUNITY SERVICES RESPONDENT LK v Director-General, Department of Community Services [2009] HCA 9 11 March 2009 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Family Court made on 24 June 2008 and 4 July 2008 and in their place order that: the appeal to the Full Court be allowed; and the orders of Kay J made on 29 August 2007 be set aside and in their place it be ordered that the application of the Director- General, Department of Community Services made on 15 March 2007 be dismissed. On appeal from the Family Court of Australia Representation P G Maiden SC with D L Ward for the appellant (instructed by the Legal Aid Commission of NSW) B W Walker SC with V A Hartstein for the respondent (instructed by the Department of Community Services Legal Services Branch) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS LK v Director-General, Department of Community Services Family Law – Children – Family Law (Child Abduction Convention) Regulations – Whether children habitually resident in convention country immediately before retention in Australia – Relevance of past and present intentions of each parent – Relevance of habitual residence of each parent – Weighting of relevant criteria – Appropriate time for determining habitual residence. Family Law – Children – Family Law (Child Abduction Convention) Regulations – Meaning of "habitually resident" – "habitual residence" distinct from connecting factors of domicile or nationality – Whether intention decisive of habitual residence or whether consideration of wide variety of circumstances permitted – Relevance of a finding of "settled purpose" – Meaning of "settled purpose" – Whether parent ceased habitual residence in Israel without making a final decision not to return there. International law – Treaties – Interpretation – Convention on the Civil Aspects of International Child Abduction – Consistent construction of terms by courts of contracting states. Words and phrases – "habitual residence", "habitually resident", "settled intention", "settled purpose", "wrongful retention". Family Law Act 1975 (Cth), s 111B(1). Family Law (Child Abduction Convention) Regulations, regs 4, 15, 16(1A). Convention on the Civil Aspects of International Child Abduction. FRENCH CJ, GUMMOW, HAYNE, HEYDON AND KIEFEL JJ. A husband and wife, married and living in Israel, separated in September 2005. The four children of the marriage continued to live with the mother in the matrimonial home. All four children had been born in Israel but were entitled to Australian citizenship by descent from their mother1. In May 2006, the mother and the four children, then aged between 15 months and 8 years, travelled by air from Israel to Australia. They held return tickets to Israel for 27 August 2006. Before the mother and the children left Israel, the father knew, and accepted, that they intended to travel to Australia. The father knew, and accepted, that the mother left Israel on the footing that she would return if she and her husband were reconciled, but would not if the husband persisted in his then stated intention to live separately from her. Both before she left Israel and immediately after arriving in Australia, the mother took steps for her and her children to establish a home in this country. Just over two months after the mother and children had arrived in Australia, the husband told the mother that he wanted the children to return to Israel but that, as he had said previously, he wanted a divorce. Were the children then habitually resident in Israel? That question of habitual residence is the dispositive issue in this appeal from orders of the Full Court of the Family Court of Australia2. By those orders, the Full Court (Bryant CJ, Coleman and Thackray JJ) dismissed the mother's appeal against orders3 of a single judge of the Family Court of Australia (Kay J) ordering the return to Israel of the four children pursuant to provisions of the Family Law (Child Abduction Convention) Regulations 1986 (Cth) ("the Regulations"). Those orders of the primary judge were made in proceedings commenced by the Director-General, Department of Community Services, as the State Central Authority appointed pursuant to reg 8(1) of the Regulations for the purposes of the Regulations. The Director-General's application to the Family Court responded to a request by the Central Authority for the State of Israel for the return of the children. 1 Australian Citizenship Act 1948 (Cth), s 10B. 2 Kilah v Director-General, Department of Community Services (2008) 39 Fam LR 3 Director-General, Department of Community Services v Kilah (No 3) [2007] FamCA 1099. The Full Court should have held that the children were not habitually resident in Israel when the father asked the mother to return them to Israel. The appeal to the Full Court should have been allowed and the orders made by the primary judge set aside. The appeal to this Court should therefore be allowed and consequential orders made to the effect described. The Regulations The Convention on the Civil Aspects of International Child Abduction ("the Abduction Convention") was signed at The Hague on 25 October 1980. The Abduction Convention entered into force for Australia on 1 January 1987 and for Israel on 1 December 1991. Section 111B(1) of the Family Law Act 1975 (Cth)4 ("the Act") provides for regulations making "such provision as is necessary or convenient to enable the performance of the obligations of Australia, or to obtain for Australia any advantage or benefit" under the Abduction Convention. The Regulations (made in accordance with s 111B(1) of the Act5) provide (reg 1A(2)) that they are to be construed having regard to the principles and objects mentioned in the preamble to and Art 1 of the Abduction Convention and recognising: "that the appropriate forum for resolving disputes between parents relating to a child's care, welfare and development is ordinarily the child's country of habitual residence". Regulation 14 provides for the making of applications to a "court"6 for any of several forms of order including7 an order for the return of a child under the Abduction Convention "[i]f a child is removed from a convention country to, or retained in, Australia". Application for an order of that kind may be made by "the responsible Central Authority". 4 As inserted by the Family Law Amendment Act 1983 (Cth) and amended by the Family Law Amendment Act 2000 (Cth). 5 Reference is made in these reasons to the Regulations as they stood at the date of the initiating application in the Family Court. 6 Defined by reg 2(1) as a court having jurisdiction under ss 39(5)(d), 39(5A)(a) or 39(6)(d) of the Act. Regulation 16(1) provides that if an application is made under reg 14(1) for an order for the return of a child, the application is made within one year of the child's removal or retention, and the applicant satisfies the court that "the child's removal or retention was wrongful under subregulation (1A) [of reg 16], ... the court must, subject to subregulation (3), make the order" (emphasis added). In this appeal, the chief focus of attention is upon the third of those conditions: that the child's removal or retention was wrongful under reg 16(1A). Regulation 16(1A) provides: "For subregulation (1), a child's removal to, or retention in, Australia is wrongful if: the child was under 16; and the child habitually resided in a convention country immediately before the child's removal to, or retention in, Australia; and the person, institution or other body seeking the child's return had rights of custody in relation to the child under the law of the country in which the child habitually resided immediately before the child's removal to, or retention in, Australia; and the child's removal to, or retention in, Australia is in breach of those rights of custody; and at the time of the child's removal or retention, the person, institution or other body: was actually exercising the rights of custody (either jointly or alone); or (ii) would have exercised those rights if the child had not been removed or retained." It will be observed that the requirements of each of the five paragraphs of reg 16(1A) must be satisfied if it is to be shown that a child's removal to, or retention in, Australia is wrongful. The first two requirements look to the age of the child (par (a)) and to whether the child habitually resided in a convention country immediately before the child's removal to, or retention in, Australia (par (b)). The remaining requirements hinge about the notion of "rights of custody in relation to the child". The rights that are to be considered are rights "under the law of the country in which the child habitually resided immediately before the child's removal to, or retention in, Australia". Although, as indicated at the start of these reasons, it is the application of the second requirement of reg 16(1A) (habitual residence) that is dispositive, it is as well to say something more about the requirements which refer to "rights of custody". The provisions of reg 16(1A) about "rights of custody" are to be understood by reference to the terms of reg 4: "(1) For the purposes of these regulations, a person, an institution or another body has rights of custody in relation to a child, if: the child was habitually resident in Australia or in a convention country immediately before his or her removal or retention; and rights of custody in relation to the child are attributed to the person, institution or other body, either jointly or alone, under a law in force in the convention country in which the child habitually resided immediately before his or her removal or retention. For the purposes of subregulation (1), rights of custody include rights relating to the care of the person of the child and, in particular, the right to determine the place of residence of the child. For the purposes of this regulation, rights of custody may arise: by operation of law; or by reason of a judicial or administrative decision; or by reason of an agreement having legal effect under a law in force in Australia or a convention country." Argument of the present matter in the courts below proceeded without the parties directing close attention to questions of breach of rights of custody. There was some evidence before the primary judge about Israeli statute law governing guardianship and custody of minor children. The general tenor of the statute – the Capacity and Guardianship Law 1962 – is that parents have joint custody of their minor children. Argument proceeded, at least in this Court, upon the assumption that, if Israeli law were to be applied, the retention of the children by one joint guardian (the mother) against the expressed wish of the other joint guardian (the father) would be in breach of the rights of custody of the father. Approaching the matter in that way makes some assumptions about the content of Israeli law which it is neither necessary nor appropriate to examine further. They need not be examined because questions of breach of rights of custody given by Israeli law would arise only if the children habitually resided in Israel immediately before their removal to, or retention in, Australia. It is important to add, nonetheless, that if the parties were right to give Israeli law the operation that was assumed, their approach to the present matter properly reflected what was said by the plurality in DP v Commonwealth Central Authority8: "Nothing in the definitions of 'removal' and 'retention' or of 'rights of custody' requires that, before removal or retention, there shall have been any judicial decision about rights of custody and nothing in those definitions requires that at some later time there be any application to a court to determine who shall have future rights of custody in relation to the child. All that the definitions require is that by the law of the place of habitual residence immediately before removal or retention, the child's removal to Australia or the child's retention in Australia is in breach of the rights of custody of some person, institution or body. Often enough, that will be so where, by operation of the law of the place of habitual residence, both parents have joint rights of custody of children of their union. Sometimes, before any application to the courts in Australia, the parent who has not removed or retained the child will have approached the courts of the place of habitual residence for interim or permanent orders about custody of the child but that will not always be so." The courts below Both the primary judge9 and the Full Court10 concluded that, immediately before the retention of the children in Australia, they were habitually resident in Israel. The primary judge treated the retention of the children as beginning when (2001) 206 CLR 401 at 412 [27]; [2001] HCA 39. [2007] FamCA 1099 at [38]. 10 (2008) 39 Fam LR 431 at 439 [25], 452 [64], 459 [100]. the father withdrew his consent to their remaining in Australia and identified11 this withdrawal of consent as occurring "no later than July 2006". Whether that withdrawal of consent was seen as requiring the immediate return of the children or only their return by use of the bookings made for 27 August 2006 was not explored. On its face the latter seems more likely but it is not necessary to examine that question further. The Full Court proceeded12 on the basis that it had been conceded at first instance that retention in Australia occurred either when the mother did not use the return air tickets that had been booked for 27 August 2006, or when the mother told the father, in December 2006, that she did not intend to return to Israel. In the particular circumstances of this case it will not be necessary to decide what date should have been fixed as the date of retention. That will not be necessary because even if that date was as early as July 2006, it should have been found that at that time the children were not habitually resident in Israel. It is convenient to notice two points about the proceedings in the courts below. First, the initiating process filed by the Director-General in the Family Court did not distinctly identify whether it was alleged that this was a case of wrongful removal of the children or wrongful retention. And in so far as it was alleged that there was a wrongful retention, neither the initiating process nor the supporting material identified when the retention was alleged to begin. Of course, it was open to the Director-General to seek to make alternative cases and there may well be circumstances (of which this may have been one) in which that is at least desirable, even inevitable. It is ordinarily to be expected, however, that the case (or cases) which an applicant seeks to make will be distinctly identified. The second point to make about the procedures followed at first instance concerns the resolution of disputed questions of fact. Three members of this Court pointed out in MW v Director-General, Department of Community Services13 that the requirements of the Regulations14 that applications by a Central Authority for an order for the return of a child are dealt with 11 [2007] FamCA 1099 at [25]. 12 (2008) 39 Fam LR 431 at 452 [65]. 13 (2008) 82 ALJR 629 at 639-640 [45]-[50]; 244 ALR 205 at 216-218; [2008] HCA 12. 14 reg 15. expeditiously does not yield any general, let alone inflexible, rule prohibiting cross-examination of deponents of affidavits filed in support of or opposition to the application. As the plurality reasons said15, "prompt decision making ... is one thing, and a peremptory decision upon a patently imperfect record would be another". In the present case (which was decided by the primary judge before MW), the affidavits before the primary judge deposed to conflicting accounts of what had been said between the mother and the father both before and after the mother travelled to Australia. Although no deponent was cross-examined, the primary judge found that "the mother's version of events is more probable than the father's"16. This finding was accepted17 in the Full Court of the Family Court and was not challenged in this Court. Both at first instance and on appeal to the Full Court, the intentions of the mother (perhaps the intentions of both parents) about where the children should live were treated as critical to the identification of the place of their habitual residence. It was said18 that the determination of the "settled intention" or "settled purpose" of the mother was a necessary and integral part of determining the place of habitual residence of the children. The conclusion that the mother was not shown to have a "settled intention" or "settled purpose", before the date of the return booking, of abandoning her Israeli place of residence was treated19 by the Full Court as determinative. It will be necessary to examine what is meant in this context when reference is made to "settled purpose". It is convenient to introduce that consideration by reference to a particular submission made in the Full Court. 15 (2008) 82 ALJR 629 at 639 [49]; 244 ALR 205 at 217. 16 [2007] FamCA 1099 at [23]. 17 (2008) 39 Fam LR 431 at 450 [57]. 18 (2008) 39 Fam LR 431 at 454 [73]. 19 (2008) 39 Fam LR 431 at 452 [64]. Counsel for the mother submitted in the Full Court that the Family Court should depart from earlier decisions in Australia20 and the United Kingdom21 about what matters are to be taken into account in deciding questions of habitual residence, and instead follow what was said to be a different approach adopted in New Zealand22. The approach adopted in Australia and the United Kingdom was identified23 as treating questions of "settled purpose" as a necessary and integral part of the determination, whereas that adopted in New Zealand was described as requiring "a broad factual inquiry" into all factors relevant to determining the habitual residence of a child, of which the settled purpose or intention of the parents is an important but not necessarily decisive factor. The Full Court concluded24 that it did not need to resolve "the apparently significant departure of the New Zealand courts" from previous Australian and United Kingdom authorities. Yet as noted earlier, it is clear that the Full Court treated the finding that the mother did not have a settled purpose or intention to abandon habitual residence in Israel as dispositive. These reasons will demonstrate that the Full Court erred in treating the absence of a "settled purpose" of abandoning habitual residence in Israel as determining the issue in this case about the habitual residence of the children. To do that it will be necessary to begin by saying something about the term "habitual residence" as it is used in the Abduction Convention and in other instruments, then to examine some of the difficulties and ambiguities which can arise in a search for a settled purpose or intention about a place of residence or its 20 State Central Authority v McCall [1995] FLC ¶92-552; Cooper v Casey [1995] FLC ¶92-575; Department of Health and Community Services v Casse [1995] FLC ¶92-629; Panayotides v Panayotides [1997] FLC ¶92-733; DW v Director-General, Department of Child Safety [2006] FLC ¶93-255; HBH v Director-General, Department of Child Safety (Q) (2006) 36 Fam LR 333. 21 Dickson v Dickson [1990] SCLR 692; In re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562; Re B (Minors) (Abduction) (No 2) [1993] 1 FLR 993; Cameron v Cameron [1996] SC 17; M v M (Abduction: England and Scotland) [1997] 2 FLR 263. 22 SK v KP [2005] 3 NZLR 590; Punter v Secretary for Justice [2007] 1 NZLR 40. 23 (2008) 39 Fam LR 431 at 454 [73]. 24 (2008) 39 Fam LR 431 at 454 [74]. abandonment, and lastly deal with the proposition that New Zealand cases considering the Abduction Convention take a different path from that taken in Australia or in the United Kingdom. Habitual residence The expression "habitual residence", and its cognate forms, have long been used in international conventions, particularly conventions associated with the work of the Hague Conference on Private International Law25. Although the concept of habitual residence was used in a Hague Convention (on civil procedure) as long ago as 189626, and has since been frequently used in other Hague Conventions27, none of those instruments has sought to define the term. Rather, as one author28 has put it, the expression has "repeatedly been presented as a notion of fact rather than law, as something to which no technical legal definition is attached so that judges from any legal system can address 25 The history of the Hague Conference is traced in North, "Hague Conventions and the Reform of English Conflict of Laws", (1981) 6 Dalhousie Law Journal 417 at 26 See art 15 of the Convention relative to Civil Procedure (1896), 88 British and Foreign State Papers 555 at 558. (This Convention was done in French and used the expression "résidence habituelle".) 27 See, for example, Convention Relating to the Settlement of the Conflicts Between the Law of Nationality and the Law of Domicile (1955) (a Convention done in the French language using the expression "réside habituellement"); Convention on the Conflicts of Laws Relating to the Form of Testamentary Dispositions (1961); Convention on Jurisdiction, Applicable Law and Recognition of Decrees Relating to Adoptions (1965); Convention on the Recognition of Divorces and Legal Separations (1970); Convention Concerning the International Administration of the Estates of Deceased Persons (1973); Convention on the Law Applicable to Maintenance Obligations (1973); Convention on Matrimonial Property Regimes (1978); Convention on the Law Applicable to Agency (1978); Convention on International Access to Justice (1980); and Convention on the Law Applicable to Succession to the Estates of Deceased Persons (1989). See also Cavers, "'Habitual Residence': A Useful Concept?", (1972) 21 American University Law Review 475 at 477-479 ("Cavers"). the Law Applicable 28 McClean, Recognition of Family Judgments in the Commonwealth, (1983) at 28 themselves directly to the facts". Thus the Explanatory Report commenting on the Abduction Convention said29 that "the notion of habitual residence [is] a well-established concept in the Hague Conference, which regards it as a question of pure fact, differing in that respect from domicile" (emphasis added). To approach the term only from a standpoint which describes it as presenting a question of fact has evident limitations30. The identification of what is or may be relevant to the inquiry is not to be masked by stopping at the point of describing the inquiry as one of fact. If the term "habitual residence" is to be given meaning, some criteria must be engaged at some point in the inquiry and they are to be found in the ordinary meaning of the composite expression. The search must be for where a person resides and whether residence at that place can be described as habitual. Having regard, however, to the stated determination to eschew definition of the expression in its use in the Abduction Convention, and other instruments derived from the work of the Hague Conference, it would be wrong to attempt in these reasons to devise some further definition of the term intended to be capable of universal application. Rather, it is sufficient for present purposes to make two points. First, application of the expression "habitual residence" permits consideration of a wide variety of circumstances that bear upon where a person is said to reside and whether that residence is to be described as habitual. Secondly, the past and present intentions of the person under consideration will often bear upon the significance that is to be attached to particular circumstances like the duration of a person's connections with a particular place of residence. Use of the term "habitual residence" to identify the required connection between a person and a particular municipal system of law amounts to a rejection of other possible connecting factors such as domicile or nationality. In particular, it may be accepted that "habitual residence" has been used in the Abduction Convention (as it has been used in other instruments) "[t]o avoid the distasteful problems of the English concept [of domicile] and the uncertainties of 29 Pérez-Vera, "Explanatory Report", in Permanent Bureau of the Hague Conference on Private International Law (ed), Actes et documents de la Quatorzième session 6 au 25 octobre 1980, (1982), vol 3, 426 at 445 [66]. 30 Cavers at 487-491. meaning and proof of subjective intent"31. It was said32 in the nineteenth century that the notion that lies at the root of the English concept of domicile is that of permanent home33. But it was soon recognised34 that domicile, in English law, is "an idea of law". Thus, in considering acquisition of a domicile of choice, questions of intention loomed large, and the relevant intention had to have a particular temporal quality (an intention to reside permanently or at least indefinitely). Use of "habitual residence" in the Abduction Convention rather than domicile as the relevant connecting factor entails discarding notions like the revival of domicile of origin and the dependent domicile of a married woman which marked the English law of domicile35. More importantly for present purposes, use of "habitual residence" in preference to domicile entails discarding the approach of the English law of domicile which gave questions of intention a decisive importance in determining whether a new domicile of choice had been acquired. It may well be said of the term "habitual residence", as it was of the expression "domicile"36, that "if you do not understand your permanent home ... 31 Scoles, Hay, Borchers and Symeonides, Conflict of Laws, 4th ed (2004) at 247 § 4.14 ("Scoles, Hay, Borchers and Symeonides"). 32 Dicey, Morris and Collins, The Conflict of Laws, 14th ed (2006), vol 1 at 123 [6-004] ("Dicey, Morris and Collins"). 33 Whicker v Hume (1858) 7 HLC 124 at 160 [11 ER 50 at 64]. See also In re Craignish [1892] 3 Ch 180 at 192; Winans v Attorney-General [1904] AC 34 Bell v Kennedy (1868) LR 1 Sc & Div 307 at 320. 35 Dicey, Morris and Collins at 122-164. See now the Domicile Acts of the Commonwealth and of each State, each of which came into force on 1 July 1982. Those Acts made a number of alterations to the law of domicile. They abolished the rule of dependent domicile of a married woman and the rule of revival of domicile of origin. They also provided (see, for example, Domicile Act 1982 (Cth), s 9(1)) that where, at any time, a child has his or her principal home with one of his or her parents and the parents are living separately or the child does not have another living parent, the domicile of the child is the domicile of the parent with whom the child has his or her principal home. 36 Whicker v Hume (1858) 7 HLC 124 at 160 [11 ER 50 at 64]. no illustration drawn from foreign writers or foreign languages will very much help you to it". Yet it may be accepted that "[h]abitual residence, consistent with the purpose of its use, identifies the center of a person's personal and family life as disclosed by the facts of the individual's activities"37. Accordingly, it is unlikely, although it is not necessary to exclude the possibility, that a person will be found to be habitually resident in more than one place at the one time. But even if place of habitual residence is necessarily singular, that does not entail that a person must always be so connected with one place that it is to be identified as that person's place of habitual residence. So, for example, a person may abandon a place as the place of that person's habitual residence without at once becoming habitually resident in some other place; a person may lead such a nomadic life as not to have a place of habitual residence. In deciding where a child was habitually resident at an identified time it is, no doubt, important to consider the context in which the inquiry is required. Here, the chief contextual consideration is that, in accordance with the Abduction Convention, the purpose of the Regulations38 is to facilitate resolution of disputes between parents relating to a child's care, welfare and development in one forum – the child's country of habitual residence – rather than any other forum. While that may tend in favour of finding that a child does have a place of habitual residence, neither the Regulations nor the Abduction Convention provides for a particular vindication or enforcement of rights in relation to the child. Vindication and enforcement of rights is to be a matter for the forum to which the Regulations and the Abduction Convention point: that of the child's habitual residence. When speaking of the habitual residence of a child it will usually be very important to examine where the person or persons who are caring for the child live – where those persons have their habitual residence. The younger the child, the less sensible it is to speak of the place of habitual residence of the child as distinct from the place of habitual residence of the person or persons upon whom the child is immediately dependent for care and housing. But if, as the writings about the Abduction Convention and like instruments repeatedly urge, the question of habitual residence of a child is one of fact, it is important not to elevate the observation that a child looks to others for care and housing to some principle of law like the (former) law of dependent domicile of a married woman. 37 Scoles, Hay, Borchers and Symeonides at 247 § 4.14. 38 reg 1A(2)(b). Purpose and intention Although intention is a necessary element in deciding domicile of choice, and "habitual residence" is chosen as a connecting factor in preference to domicile, examination of a person's intentions will usually be relevant to a consideration of where that person habitually resides. Sometimes, intention will be very important in answering that question. The example of a person who leaves a jurisdiction intending not to return is one such case. But unlike domicile, considerations relevant to deciding where a person is habitually resident are not necessarily confined to physical presence and intention, and intention is not to be given controlling weight. First, individuals do not always act with a clearly formed and singular view of what it is intended (or hoped) that the future will hold. Their intentions may be ambiguous. The facts of this case provide one example of such circumstances. The mother left Israel on the understanding that if the marriage was reconciled she would return, but if it was not, she would not return. In those circumstances, it is not possible to say that the mother then had a settled intention which was sufficiently described either as being an intention to reside permanently in Israel or an intention to reside permanently in Australia. Neither description would acknowledge the significance attached to the possibility of reconciliation. Both before and after she left Israel she set about establishing important connections with Australia consistent with her and her children establishing the centre of their lives here rather than in Israel. In particular, before she left Israel, she registered the children as Australian citizens and procured enrolment of the two older children at an Australian private school. In Australia she soon sought and obtained Centrelink benefits, the two older children started school and the next oldest was enrolled at preschool, the older children joined a soccer club and took music lessons. Later, with the assistance of her parents and the local Jewish community, she rented and furnished a home for her to live with the children. All of these steps (except the last) were taken before the father asked, in July 2006, for the children to be returned to Israel. All of the steps identified are consistent with, indeed support, the view that by registering the children as Australian citizens and enrolling the older ones in school before she left Israel, the mother was then set upon a course from which she did not thereafter deviate: to move to Australia unless the father decided (contrary to the then state of affairs between them) to live with her and the children. Because the possibility of reconciliation and return was not excluded when the mother left Israel, it may be said that her intentions, when she left, were to that extent ambiguous. Even accepting that to be so, because the notion of habitual residence does not require that it be possible to say of a person at any and every time that he or she has a place of habitual residence, it is important to recognise that a person may cease to reside habitually in one place without acquiring a new place of habitual residence. Secondly, because a person's intentions may be ambiguous, in asking whether a person has abandoned residence in a place it is necessary to recognise the possibility that the person may not have formed a singular and irrevocable intention not to return, yet properly be described as no longer habitually resident in that place. Absence of a final decision positively rejecting the possibility of returning to Israel in the foreseeable future is not necessarily inconsistent with ceasing to reside there habitually. Thirdly, when considering where a child is habitually resident, attention cannot be confined to the intentions of the parent who in fact has the day-to-day care of the child. It will usually be necessary to consider what each parent intends for the child. When parents are living together, young children will have the same habitual residence as their parents. No less importantly, it may be accepted that the general rule is that neither parent can unilaterally change that place of habitual residence. The assent of the other parent (or a court order) would be necessary. But again, if it becomes necessary to examine the intentions of the parents, the possibility of ambiguity or uncertainty on the part of one or both of them must be acknowledged. It follows from each of the three considerations just mentioned that to seek to identify a set list of criteria that bear upon where a child is habitually resident, or to attempt to organise the list of possible matters that might bear upon the question according to some predetermined hierarchy of importance, would deny the simple observation that the question of habitual residence will fall for decision in a very wide range of circumstances. And examination of decided cases in the area does not require the identification of a closed set of criteria, or the attribution of predetermined weighting between them. A division of authority? International treaties should be interpreted uniformly by contracting states39. Although the questions in this matter turn immediately upon the proper construction and application of the Regulations, the Regulations provide40 that, unless the contrary intention appears, an expression used in the Regulations and in the Abduction Convention has the same meaning in the Regulations as in the Abduction Convention. It follows that, unless it is shown that the term is used in the statute law of other contracting states in a sense different from the way in which it is used in the Abduction Convention, care is to be exercised to avoid giving the term a meaning in Australia that differs from the way it is construed in the courts of other contracting states. But it is no less important to recognise that, because the term is not defined in the Abduction Convention, and the absence of definition reflects the stated intention that it should be treated "as a question of pure fact", conclusions reached in the courts of other jurisdictions are not lightly to be treated as establishing principles of law which govern the term's meaning and application. Rather, they are to be read and understood as resolving the particular controversy tendered for decision. The Full Court concluded41 in the present matter that its own previous decisions, and decisions in the United Kingdom, had held that "a settled purpose is a necessary and integral part of a finding of habitual residence". What is meant by "settled purpose"? Use of the expression "settled purpose" in this context is often traced to the statement in the reasons of Lord Scarman in R v Barnet London Borough Council; Ex parte Shah42: "I agree with Lord Denning MR that in their natural and ordinary meaning the words ['ordinarily resident'] mean 'that the person must be habitually and normally resident here, apart from temporary or occasional absences of long or short duration'. The significance of the adverb 'habitually' is that it recalls two necessary features mentioned by Viscount Sumner in 39 Povey v Qantas Airways Ltd (2005) 223 CLR 189 at 202 [25]; [2005] HCA 33. 40 reg 2(1B). 41 (2008) 39 Fam LR 431 at 454 [73]. 42 [1983] 2 AC 309 at 342. Lysaght's case[43], namely residence adopted voluntarily and for settled purposes." Two points may be made at once. First, both Shah's Case and the case to which Lord Scarman referred (Lysaght's Case) were decided in contexts very different from the present. Shah's Case concerned the making of educational grants to students "ordinarily resident" in the United Kingdom. Lysaght's Case was a decision about the liability to pay income tax by a person "ordinarily resident" in the United Kingdom. Secondly, the reference to "settled purposes" in neither case was amplified. But in Shah's Case, in the course of considering other cases in which the expression ordinary residence had been examined, Lord Scarman pointed out44 that it would be erroneous to hold that demonstration of an intention to live in a place permanently or indefinitely was necessary to show ordinary residence. Such a conclusion would be erroneous, Lord Scarman held45, because it would import into the law, from the old law of domicile, those questions of subjective intention which the use of the concept of ordinary residence was intended to exorcise. It will be observed that reference was made in Shah's Case to residence "adopted voluntarily and for settled purposes" (emphasis added). Subsequent decisions, both in Australia and in the United Kingdom, have often referred to "settled purpose" or "settled intention". So, in In re J (A Minor) (Abduction)46, Lord Brandon of Oakbrook, having first noted47 that the term "habitually resident" is nowhere defined, is not to be treated as a term of art, and presents "a question of fact to be decided by reference to all the circumstances of any particular case" (emphasis added), expressed the opinion48 "that there is a significant difference between a person ceasing to be habitually resident in country A, and his subsequently becoming habitually resident in country B". Leaving a country with a "settled intention not to return to it but to take up 43 Inland Revenue Commissioners v Lysaght [1928] AC 234 at 243. 44 [1983] 2 AC 309 at 343. 45 [1983] 2 AC 309 at 343. 47 [1990] 2 AC 562 at 578. 48 [1990] 2 AC 562 at 578. long-term residence" elsewhere was identified as sufficient to terminate habitual residence in the first country, whereas "[a]n appreciable period of time and a settled intention will be necessary to enable" a person to become habitually resident in the second country49. But for the reasons given by Lord Scarman in Shah's Case, it would be wrong to treat the references to settled purposes (or settled purpose or intention) as importing the old law of domicile by directing an inquiry in cases arising in connection with the Abduction Convention into whether the person whose place of residence is in issue is shown to intend to live there permanently or at least indefinitely. Rather, as Waite J rightly said in Re B (Minors) (Abduction) (No 2)50, the effect of decisions in the United Kingdom about the Abduction Convention, particularly the decision of the House of Lords in re J, is that: "Habitual residence is a term referring, when it is applied in the context of married parents living together, to their abode in a particular place or country which they have adopted voluntarily and for settled purposes as part of the regular order of their life for the time being, whether of short or of long duration. All that the law requires for a 'settled purpose' is that the parents' shared intentions in living where they do should have a sufficient degree of continuity about them to be properly described as settled." (emphasis added) As was pointed out by the majority of the Full Court of the Family Court in DW v Director-General, Department of Child Safety51, the conclusions expressed by Waite J may be seen as at odds with the view of Rattee J, sitting at first instance in the Family Division of the High Court of Justice in A v A (Child Abduction)52. In A v A, Rattee J said53 that the reference in Lord Brandon's speech in re J to settled intention should be understood as "a settled intention to 49 [1990] 2 AC 562 at 578-579. 50 [1993] 1 FLR 993 at 995. 51 [2006] FLC ¶93-255 at 80,329-80,331 [32]-[37]. 52 [1993] 2 FLR 225. 53 [1993] 2 FLR 225 at 235. take up long-term residence in the country concerned". It is to be noted, however, that the conclusions expressed by Waite J about the state of the law in the United Kingdom were later adopted by the Full Court of the Family Court in Cooper v Casey54 and Panayotides v Panayotides55. To the extent to which the Full Court in the present matter is to be understood as preferring the view of Rattee J to that of Waite J, it would constitute the adoption of a view that does not appear to command general acceptance in either the English courts or the earlier decisions of the Full Court of the Family Court mentioned above56. And, as earlier explained in these reasons, if references to settled intention were to be understood as requiring inquiries about intention like those that are necessary to the application of the law of domicile, such an understanding would be sharply at odds with the use of the expression "habitually resident" the Abduction Convention in preference to domicile. the Regulations and In its reasons in the present matter, the Full Court examined whether its earlier decisions required it to apply principles different from those adopted in New Zealand. Particular reference was made57 to SK v KP58 and the reasons of McGrath J and Glazebrook J. It is, however, not necessary to examine the decision in SK in detail. Rather, it is sufficient to observe that in Punter v Secretary for Justice59, the effect of the decision in SK was described60 in the plurality reasons of the Court of Appeal of New Zealand (Anderson P, Glazebrook, William Young and 54 [1995] FLC ¶92-575 at 81,695. 55 [1997] FLC ¶92-733 at 83,897. 56 See also DW [2006] FLC ¶93-255 at 80,331 [37], 80,334 [51]. 57 (2008) 39 Fam LR 431 at 444-445 [38]-[39], 452-453 [66]-[67], 454-455 [74]-[77]. 58 [2005] 3 NZLR 590. 59 [2007] 1 NZLR 40. 60 [2007] 1 NZLR 40 at 61 [88]. O'Regan JJ) as holding that the inquiry into habitual residence is "a broad factual inquiry". The plurality went on61 to say in Punter: "Such an inquiry should take into account all relevant factors, including settled purpose, the actual and intended length of stay in a state, the purpose of the stay, the strength of ties to the state and to any other state (both in the past and currently), the degree of assimilation into the state, including living and schooling arrangements, and cultural, social and economic integration. In this catalogue, SK v KP held that settled purpose (and with young children the settled purpose of the parents) is important but not necessarily decisive. It should not in itself override what McGrath J called, at para [22], the underlying reality of the connection between the child and the particular state". As the plurality rightly said, the search is for the connection between the child and the particular state. That being the nature of the search the plurality's references to settled purpose are to be read as directing attention to the intentions of the parents. But as explained earlier in these reasons, the relevant criterion is a shared intention that the children live in a particular place with a sufficient degree of continuity to be properly described as settled. So understood, there is no disconformity between the approach of the New Zealand courts and the need, identified62 by Lord Brandon in re J, to decide the question of habitual residence "by reference to all the circumstances of any particular case" (emphasis added). Moreover, the approach described in Punter accords with the general tenor of decisions in the United States of America63. It may be observed of those decisions that there is seen to have been a division between the Circuit Courts of Appeals about the relevance of the parents' subjective intentions for the child or children concerned64. When it is also observed, however, that the resolution65 of 61 [2007] 1 NZLR 40 at 61-62 [88]. 62 [1990] 2 AC 562 at 578. 63 See, for example, Feder v Evans-Feder 63 F 3d 217 at 224 (3rd Cir 1995); Mozes v Mozes 239 F 3d 1067 at 1081 (9th Cir 2001); Karkkainen v Kovalchuk 445 F 3d 280 at 295 (3rd Cir 2006); cf Robert v Tesson 507 F 3d 981 at 992-993 (6th Cir 64 See Robert v Tesson 507 F 3d 981 at 989-990 (6th Cir 2007). 65 Robert v Tesson 507 F 3d 981 at 992-993 (6th Cir 2007). the competing approaches has been to invite attention to whether presence at a place has a "degree of settled purpose from the child's perspective"66 (emphasis added), the difference in expression of the relevant considerations may not be great. At all events, a thread common to the leading decisions in the United States remains the need to look at all of the circumstances of the case. And it is that approach, as described in Punter, which should be followed. How, then, should the present case have been decided? The present case When the mother left Israel with the children she was not shown to have the concluded intention that, come what may, she and the children would settle in Australia. The father did not agree to the children leaving Israel on any basis other than that expressed by the mother: that if the marriage was reconciled she would return, if it was not she would not. It follows that, when the children left Israel, the intentions of their parents could not be completely and accurately stated as being that the children would thereafter live in Australia. In that limited sense, it could not be said that the parents intended to "abandon" Israel as the place where their children habitually resided. But that statement could not be made because the parents' intentions were more complicated than the bald proposition of abandonment acknowledges. The more accurate statement of the parents' intentions, when the mother and children left Israel, was that mother and children were going to make their home in Australia unless the father chose to alter his then stated determination to live separately from the mother. The absence of an agreed and singular purpose or intention at the time of departure from Israel (which could be completely described by reference only to residence in Australia or in Israel) was not to be treated as deciding the question of habitual residence. First, the question in this case was not to be asked in relation to the time of the children's departure from Israel; it was to be asked in relation to the time of their allegedly wrongful retention. And as earlier indicated, that time may be assumed to be when the father first asked in July 2006 for their return to Israel. But secondly, and more importantly, the intentions of the parents are not the only factors which bear upon whether in July 2006 the children were habitually resident in Israel. 66 Feder 63 F 3d 217 at 224 (3rd Cir 1995); Karkkainen 445 F 3d 280 at 292 (3rd Cir 2006); Robert v Tesson 507 F 3d 981 at 992-993 (6th Cir 2007). Where, as here, the parents' intentions at the time of departure from Israel were expressed conditionally (to live in Australia unless ...) and the mother took the steps she did, both before and after arrival in Australia, to establish a new and permanent home for the children in Australia, it should have been found that the children were not habitually resident in Israel in July 2006. The possibility that they might again take up habitual residence in Israel (if their parents were reconciled) does not deny that they had ceased to be habitually resident there. Whether they were habitually resident in Australia when the father asked for their return need not be decided. What is decisive is that the children left Israel with both parents agreed that unless there were a reconciliation they would stay in Australia, and their mother, both before and after departure, set about effecting that shared intention. Conclusion and orders Having regard to the decision reached about whether the children were habitually resident in Israel it is not necessary to consider the further issues agitated in the courts below and in this Court about whether, if they were, the case was one in which an order for return should have been refused on the basis that the father had consented to or subsequently acquiesced in the children's retention in Australia67. Nor is it necessary, if there was consent or subsequent acquiescence, to examine whether or how the delay that occurred between the hearing of the appeal to the Full Court of the Family Court on 5 December 2007 and delivery of judgment on 24 June 2008 bore upon the exercise of the discretion given by reg 16(3)(a)(ii) to refuse to make an order for return. It is enough to say that prolonged consideration by the Full Court of its decision in the matter was undesirable, especially when the primary judge had already pointed out68, correctly, that the proceedings at first instance had not been dealt with sufficiently promptly. Further, it is not necessary to examine whether the Full Court erred in refusing to admit the additional affidavit evidence relied on in that Court by the mother and by the Director-General. None of that additional evidence contradicted or detracted from the description of circumstances touching the 67 reg 16(3)(a)(ii). 68 [2007] FamCA 1099 at [60]-[63]. question of habitual residence provided by the facts as found by the primary judge. No order for costs was made at first instance or on appeal to the Full Court of the Family Court. That is, the power given by reg 30 of the Regulations to order the person who in those courts was found to have retained the children to pay the costs of the application for an order for return was not exercised either at first instance or on appeal to the Full Court. As was pointed out in MW69, the matter of costs in this Court is controlled by the general provision of s 26 of the Judiciary Act 1903 (Cth). In the circumstances of this case there should be no order for the costs of the proceedings at first instance or in the Full Court of the Family Court. The appellant should have her costs of the appeal to this Court. The appeal to this Court should be allowed with costs. The orders of the Full Court of the Family Court made on 24 June 2008 and 4 July 2008 should be set aside. In their place there should be orders that the appeal to the Full Court is allowed, the orders of Kay J made on 29 August 2007 are set aside and in their place there be an order that the application of the Director-General, Department of Community Services made on 15 March 2007 is dismissed. 69 (2008) 82 ALJR 629 at 650 [120]-[121]; 244 ALR 205 at 231.

HIGH COURT OF AUSTRALIA TABCORP HOLDINGS LIMITED APPELLANT AND STATE OF VICTORIA RESPONDENT Tabcorp Holdings Limited v Victoria [2016] HCA 4 2 March 2016 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Victoria Representation A C Archibald QC and J C Sheahan QC with P G Liondas and B K Holmes for the appellant (instructed by Herbert Smith Freehills) W A Harris QC with R G Craig and K A Loxley for the respondent (instructed by Johnson Winter & Slattery) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tabcorp Holdings Limited v Victoria Statutes – Interpretation – Where conjoined "wagering licence" and "gaming licence" issued under statutory scheme – Where statute provided for payment on "grant of new licences" – Where statutory scheme amended so no new wagering licence and gaming licence could be issued – Whether "grant of new licences" confined to grant of new wagering licence and gaming licence – Whether payment due. Statutes – Interpretation – Context – Relevance of legislative history – Relevance of commercial context. Statutes – Interpretation – Principle of legality – Whether principle engaged where nature of right is contingent and interest to be protected is limited. Words and phrases – "gaming licence", "gaming machine entitlement", "grant of new licences". Gambling Regulation Act 2003 (Vic), Pt 4A of Ch 3, Pt 3 of Ch 4, ss 4.3.4A, FRENCH CJ, KIEFEL, BELL, KEANE AND GORDON JJ. Introduction Gambling activity involving the use of gaming machines was legalised in Victoria in 19911. In 1992, the respondent, the State of Victoria ("the State"), issued each of the Totalisator Agency Board of Victoria ("TAB") and the Trustees of the Will and Estate of the late George Adams ("Tatts"2) a gaming operator's licence for a term of 20 years3. It was a duopoly. Neither TAB nor Tatts paid a fee to the State for the grant of their respective gaming operator's licences. In 1994, TAB was privatised. The Gaming and Betting Act 1994 (Vic) ("the 1994 Act") was enacted. Investors subscribed for shares in the appellant, Tabcorp Holdings Limited ("Tabcorp"), through a public float. Under the 1994 Act, Tabcorp was granted conjoined licences – a wagering licence and a gaming licence – for a term of 18 years. The duopoly was retained4. The proceeds of the privatisation of TAB were paid to the State. The State was advised that, if Tabcorp was to be repaid the initial licence fee upon the granting of new licences after the expiry of Tabcorp's conjoined licences in 18 years, the capital value of the wagering licence and the gaming licence issued to Tabcorp would not need to be amortised in the financial statements set out in the prospectus. This would maximise the return to the State from the privatisation. That advice was accepted and s 21(1), containing what became known as the "terminal payment provision", was included in the 1994 Act. 1 Gaming Machine Control Act 1991 (Vic) ("the 1991 Act"). In 1998, that estate was restructured and corporatised and Tatts Group Limited became the holder of the gaming operator's licence previously held by the Trustees. In these reasons, for convenience the Trustees and Tatts Group Limited are referred to as "Tatts". 3 Under s 33 of the 1991 Act. 4 Subject to the geographically and functionally limited exception of the Crown Casino. Bell Gordon In 2003, multiple pieces of legislation regulating gambling in Victoria were re-enacted and consolidated into the Gambling Regulation Act 2003 (Vic) ("the 2003 Act"). The duopoly was retained. Tabcorp's wagering licence and gaming licence were provided for in Pt 3 of Ch 4 of the 2003 Act. The terminal payment provision was re-enacted in s 4.3.12(1) of the 2003 Act. It provided that, "[o]n the grant of new licences", the holder of the former licences would be "entitled to be paid an amount equal to the licence value of the former licences or the premium payment paid by the new licensee, whichever is the lesser". In 2008 and 2009, the State Government restructured Victoria's gaming industry. Neither Tabcorp's nor Tatts' licences were to be renewed after they expired in 2012. From that time, Tabcorp and Tatts were to lose their right to conduct gaming operations. The right to conduct gaming operations was to be granted to holders of a new authority called a "gaming machine entitlement" or "GME". Issue Tabcorp claims to be entitled to the terminal payment provided for in s 4.3.12(1) of the 2003 Act. Tabcorp contended below, and in this Court, that the allocation of the GMEs was the "grant of new licences" within the meaning of s 4.3.12(1) of the 2003 Act because the GMEs were "substantially similar" to the licences held by Tabcorp. Was there a "grant of new licences" within the meaning of s 4.3.12(1) of the 2003 Act which entitled Tabcorp to payment under that sub-section? In particular, does the phrase "grant of new licences" in s 4.3.12(1) mean the grant of a new wagering licence and gaming licence under Pt 3 of Ch 4 of the 2003 Act, as the State contends, or does it extend to the grant of other entitlements, not previously existing, the substantive operation of which was to authorise wagering and gaming activities in Victoria, as Tabcorp contends? For the reasons that follow, the phrase "grant of new licences" in s 4.3.12(1) of the 2003 Act means the grant of a wagering licence and a gaming licence issued under Pt 3 of Ch 4 of the 2003 Act. That construction is supported by reference to the plain and ordinary meaning of the text of s 4.3.12(1) as well as its context, including its legislative history5. 5 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[71]; [1998] HCA 28; Alcan (NT) Alumina Pty Ltd v Commissioner (Footnote continues on next page) Bell Gordon This appeal was heard with an appeal by the State against a decision of the Court of Appeal of the Supreme Court of Victoria in favour of Tatts6. The issues in that appeal were related to those in this appeal and are addressed in separate reasons7. Structure These reasons will set out the facts and legislative history and then turn to the question of construction of s 4.3.12(1) of the 2003 Act. Facts and legislative framework Introduction of gaming in Victoria and the creation of the duopoly In Victoria, gambling activity involving the use of gaming machines was illegal until the introduction of the Gaming Machine Control Act 1991 (Vic) ("the 1991 Act"). The 1991 Act legalised such conduct by providing for the grant of a "gaming operator's licence", which authorised the holder to conduct gaming on gaming machines at approved venues in Victoria. On 14 April 1992, the State issued each of TAB and Tatts a gaming operator's licence for a term of 20 years8. Neither TAB nor Tatts paid a fee to the State for the grant of its gaming operator's licence. The licences authorised TAB and Tatts to conduct gaming on gaming machines at approved venues in Victoria. Section 14 of the 1991 Act set out the authority conferred by a gaming operator's licence as follows: "(1) … a gaming operator's licence authorises the licensee, subject to this Act and any conditions to which the licence is subject— of Territory Revenue (2009) 239 CLR 27 at 47-48 [51]; [2009] HCA 41; Independent Commission Against Corruption v Cunneen (2015) 89 ALJR 475 at 487-489 [57], [62]; 318 ALR 391 at 405-407; [2015] HCA 14. 6 Victoria v Tatts Group Ltd [2014] VSCA 311. 7 Victoria v Tatts Group Ltd [2016] HCA 5. 8 Under s 33 of the 1991 Act. Bell Gordon to obtain from manufacturers and suppliers listed on the Roll [of Recognised Manufacturers and Suppliers of Gaming Machines and Restricted Components] approved gaming machines and restricted components; and to manufacture approved gaming machines and restricted components; and to supply approved gaming machines and restricted components to venue operators; and to conduct gaming at an approved venue; and to sell or dispose of gaming equipment with the approval of the Commission; and to service, repair or maintain gaming equipment through the services of licensed technicians; and to do all things necessarily incidental to carrying on the activities authorised by this section. In this section 'approved gaming machines' means gaming machines of a type approved by the Commission under section 69." The 1991 Act also provided for the grant of a venue operator's licence9. Section 13 of the 1991 Act set out the authority conferred by a venue operator's licence as follows: "… a venue operator's licence authorises the licensee, subject to this Act and any conditions to which the licence is subject— to obtain from a gaming operator, gaming machines of a type approved by the Commission under section 69; and to possess gaming equipment; and to do all things necessarily incidental to carrying on the activities authorised by this section." s 13 and Div 2 of Pt 3 of the 1991 Act. Bell Gordon TAB's gaming division began operating gaming machines in licensed clubs and hotels in Victoria on 16 July 1992. Tatts commenced gaming operations in Victoria on 6 August 1992. Neither TAB nor Tatts ever held a venue operator's licence. Instead, TAB and Tatts had contractual arrangements with the holders of venue operator's licences. From 1992, TAB and Tatts each held half of Victoria's gaming industry (outside of the Crown Casino) whilst they each held one of the two gaming operator's licences issued by the State under the 1991 Act. That duopoly remained until 2012, when their licences expired. In 1993, the Club Keno Act 1993 (Vic) was enacted. Under that Act, TAB and Tatts were authorised to conduct a lottery-style game known as "keno" or "club keno". Privatisation of TAB and the enactment of the 1994 Act In 1994, a number of steps were taken to privatise TAB. On 13 April 1994, Tabcorp, then called TAB Corp Limited, was incorporated and registered. It changed its name to Tabcorp on about 27 April 1994. On 25 May 1994, the State enacted the 1994 Act to provide a regulatory framework for the privatisation of TAB and to facilitate the public float of Tabcorp. By a letter dated 29 June 1994, the Treasurer of Victoria wrote to the Chairman of Tabcorp and the Chairman of VicRacing Pty Ltd confirming the principles on which the Government of Victoria was privatising TAB. The letter relevantly stated: "I must … make it clear that the statement of principles in this letter does not bind this Government or future Governments and, of course, that the Victorian Parliament has the power at any time to amend existing legislation or pass new legislation affecting the operations of the TABCORP group of companies, the Victorian Racing Industry or the terms on which those operations are conducted. [The principles] are as follows: TABCORP … has the sole licence for 18 years under [the 1994 Act] to conduct off-course wagering on horse, harness and greyhound racing and a concurrent right (with [Tatts] and Crown Casino) to conduct gaming, for a fixed period. Bell Gordon In order to maintain and improve the competitiveness of the Victorian Gambling Industry, amounts payable to the Government in relation to wagering operations under the new TABCORP licences will be reduced from an average across bet types of approximately 42% of net wagering revenue under the Racing Act to approximately 28.2% of net wagering revenue for the period of the licences. Amounts which may be retained by TABCORP by way of commission on gaming will be maintained at 33.33% for the period of the licences. Consistent with all of these objectives, the maximum commercial value for the licences should be recouped by the [State]. Accordingly: TABCORP has now been granted a wagering licence and a gaming licence which will come into effect on the successful conclusion of this float. The licences will be for terms of 18 years and will be concurrent and not separable. The Government does not currently intend to grant further gaming or wagering licences to persons who are not now authorised to conduct gaming or wagering during that 18 year period. TABCORP may apply for new licences after the initial licences terminate and on the same terms as other applicants. It is expected that the process of award of new licences will involve a public tender. It is also expected but not guaranteed that the new licences would be awarded to the highest qualifying bidder. If the new licensee is not TABCORP, TABCORP will be entitled to receive from bid the State an agreed capital proceeds compensation amount of approximately the net amount TABCORP will pay the Government for the initial licences calculated in accordance with [the 1994 Act] (subject to the bid proceeds being sufficient). received by Bell Gordon It is intended that any new licences will be granted on conditions which include conditions substantially to the same effect as those to which the TABCORP licences are subject." (emphasis added) Clause 6 of the letter reflected some critical aspects of the 1994 Act. The 1994 Act provided for the grant to Tabcorp of two conjoined licences – a wagering licence and a gaming licence10. Each had an 18-year term, expiring on 15 August 201211. The 1994 Act did not authorise the operation at the same time of more than one wagering licence or more than one gaming licence under Tabcorp's gaming licence conferred upon it the same authority granted to TAB and Tatts by the gaming operator's licences under the 1991 Act and gave it authority to conduct and promote club keno games in accordance with the Club Keno Act13. Tabcorp's wagering licence authorised the conduct of wagering and approved betting competitions14. On the day Tabcorp's wagering licence and gaming licence commenced (15 August 1994), TAB ceased to be the holder of the gaming operator's licence under the 1991 Act15 and trading of shares in Tabcorp commenced on the ASX. On 29 August 1994, Tabcorp paid to the State the net float proceeds of $597.2 million as consideration for the grant of its wagering licence and gaming licence16. These licences were defined in the 1994 Act as the "initial licences"17. 10 s 12(1) of the 1994 Act. 11 s 12(2)(a) of the 1994 Act. 12 s 8 of the 1994 Act. 13 s 7 of the 1994 Act. 14 s 6 of the 1994 Act. 15 s 222 of the 1994 Act. 16 Pursuant to s 13 of the 1994 Act. 17 s 3(1) of the 1994 Act. Bell Gordon The possibility of the grant of a subsequent wagering licence and gaming licence, after the grant of the initial licences, was addressed in Div 3 of Pt 2 of the 1994 Act, entitled "Grant of licences after initial licences". Section 14 of the 1994 Act relevantly provided: "(1) A company incorporated under the Corporations Law of Victoria may, within such period as the Authority[18] determines before the expiry of the initial licences or later licences or, if the initial licences or later licences are cancelled, within such period after the cancellation as the Authority determines, apply to the Authority for the grant of— a wagering licence; and a gaming licence. (2) A person who has been a licensee is not entitled to apply under sub-section (1) if a wagering licence or gaming licence held by the person has been cancelled." (emphasis added) Also in Div 3 of Pt 2 of the 1994 Act, s 20(1) provided for the grant of a subsequent wagering licence and gaming licence "on payment by the applicant of the premium payment". Section 20(2) went on to provide that: "The Governor in Council must not grant the licences unless the Minister, after consultation with the Authority— is satisfied— that the arrangements between the current licensee and VicRacing or Racing Products have been or, before the licences commence, will be, concluded to the reasonable satisfaction of the parties; or that a reasonable opportunity has been given for such a conclusion of those arrangements; and 18 The "Authority" was defined in s 3(1) of the 1994 Act to mean the Victorian Casino and Gaming Authority established under that Act. The Authority succeeded the Victorian Casino Control Authority and the Victorian Gaming Commission under s 166 of the 1994 Act. Bell Gordon is satisfied that the applicant has entered into, or made a binding offer to enter into, arrangements with VicRacing and arrangements with Racing Products that, in the opinion of the Minister, after consultation with the Authority, are no less favourable to VicRacing and Racing Products than those last in force between a licensee (other than a licensee appointed under section 34) and VicRacing or Racing Products, as the case requires." Section 20(3) then provided that if, because of s 20(2), the Governor in Council was "unlikely to grant the licences before the expiration of the term of 18 years of the licences held by the current licensee", the Governor in Council was able to "approve the extension of the term of the current licences until the commencement of the new licences or for such shorter period as is specified". Section 21(1) of the 1994 Act, in Div 4 of Pt 2, contained what became known as the "terminal payment provision". Section 21 provided: "(1) On the grant of new licences (other than the initial licences), the person who was the holder of the licences last in force (in this section called the 'former licences') is entitled to be paid an amount equal to the licence value of the former licences or the premium payment paid by the new licensee, whichever is the lesser. The person who was the holder of the former licences is entitled to the payment under sub-section (1) whether or not the person was, or was entitled to be, an applicant for the new licences. Sub-section (1) does not apply if the holder of the former licences has been wound up. The payment under sub-section (1) must be made not later than 7 days after the commencement of the new licences and the Consolidated Fund is hereby to the necessary extent appropriated accordingly. In this section, 'licence value' in relation to the former licences means the amount calculated in accordance with the formula [specified]." (emphasis in italics added) The expression "new licences" was not defined in the 1994 Act. However, "licence" was defined to mean "the wagering licence or the gaming licence granted under Part 2" of the 1994 Act; "gaming licence" was defined to mean "the gaming licence granted under Part 2" of the 1994 Act; and "wagering Bell Gordon licence" was defined to mean "the wagering licence granted under Part 2" of the 1994 Act19. Why was s 21 included in the 1994 Act? The State sought to maximise the amount raised by the privatisation of TAB. As noted earlier, the State had been advised that the amount raised would be substantially reduced if the profit forecasts in the Tabcorp prospectus included amortisation of the licences over their 18-year terms. The State was advised that amortisation could be avoided if Tabcorp was entitled to repayment of the licence consideration at the end of Tabcorp's licences in 18 years' time. It was for that reason that s 21(1) of the 1994 Act contained the terminal payment provision. 2003 Act The 1991 Act and the 1994 Act were repealed and materially re-enacted in the 2003 Act. The general prohibition on gambling (including gaming, wagering and betting) was retained20. The duopoly created in 1992 was retained. Tatts and Tabcorp were dealt with in different Chapters of the 2003 Act. That was unsurprising. Tatts held a gaming operator's licence under the 1991 Act. Division 3 of Pt 4 of Ch 3 of the 2003 Act materially re-enacted the provisions of the 1991 Act which were applicable to Tatts and its gaming operator's licence. Tabcorp, however, held its conjoined wagering licence and gaming licence under the 1994 Act. Those licences were addressed in Pt 3 of Ch 4 of the 2003 Act21. The purposes of Ch 4 included to make provision for the carrying on of licensed wagering and betting by the issue of a wagering licence22 and, no less importantly, "to provide for the issue of a gaming licence in conjunction with the issue of a wagering licence, allowing the licensee [namely, Tabcorp] to conduct gaming in accordance with Chapter 3"23. In other words, an object of Ch 4 was 19 s 3(1) of the 1994 Act. 20 Ch 2 of the 2003 Act. 21 See also cl 4.2(1) and (2) of Sched 7 to the 2003 Act. 22 s 4.1.1(a)(i) of the 2003 Act. 23 s 4.1.1(b) of the 2003 Act. Bell Gordon to ensure that Tabcorp conducted gaming in Victoria on substantially the same terms as Tatts did under Ch 3. Part 3 of Ch 4 of the 2003 Act, headed "Wagering Licence and Gaming Licence", materially re-enacted the provisions of the 1994 Act which were applicable to Tabcorp and its wagering licence and gaming licence. Part 3 of Ch 4 comprised a number of Divisions. Division 1, headed "Authority of Licences", identified the activities authorised to be conducted on the grant of a wagering licence24 and a gaming licence25. "[W]agering licence" was defined in the 2003 Act to mean "the wagering licence granted under Part 3 of Chapter 4"26. Similarly, "gaming licence" was defined in the 2003 Act to mean "the gaming licence granted under Part 3 of Chapter 4"27. Sections 4.3.1 and 4.3.2, which dealt with the rights conferred by the wagering licence and the gaming licence respectively, were included in Div 1, and were in substantially identical terms to ss 6 and 7 of the 1994 Act. Significantly, s 4.3.2 provided that the gaming licence conferred on the licensee (namely, Tabcorp) "the same authority as is conferred on the holder of a gaming operator's licence under Chapter 3" (namely, Tatts) as well as the authority to conduct and promote club keno games in Victoria. Again, the duopoly was maintained. Section 4.3.3 reinforced the duopoly by providing that the Chapter did not authorise the operation at the same time of more than one wagering licence or more than one gaming licence. Moreover, those licences were not transferable28. Division 2 of Pt 3 of Ch 4, headed "Grant of Licences", addressed, amongst other things, the process of applying for a wagering licence and a gaming licence29, the matters to be considered in determining an application for 24 s 4.3.1 of the 2003 Act. 25 s 4.3.2 of the 2003 Act. 26 s 1.3(1) of the 2003 Act. 27 s 1.3(1) of the 2003 Act. 28 s 4.3.4 of the 2003 Act. 29 s 4.3.5 of the 2003 Act. Bell Gordon those licences30, the grant of a wagering licence and a gaming licence31, and the duration of those licences and licence conditions32. An application for the grant of a wagering licence and a gaming licence had to be accompanied by, amongst other things, a statement of the premium payment offered by the applicant33. Section 4.3.9(2) was significant. It provided that if the Governor in Council was unlikely to grant new licences before the expiration of the term of 18 years of the licences held by the current licensee, the Governor in Council could approve the extension of the term of the current licences until the commencement of the new licences or for any such shorter period as specified. Division 3 of Pt 3 of Ch 4, headed "Entitlement of Former Licensee", re-enacted in substantially identical terms the terminal payment provision previously contained in s 21(1) of the 1994 Act. Section 4.3.12 of the 2003 Act provided: "(1) On the grant of new licences, the person who was the holder of the licences last in force (the 'former licences') is entitled to be paid an amount equal to the licence value of the former licences or the premium payment paid by the new licensee, whichever is the lesser. The person who was the holder of the former licences is entitled to the payment under sub-section (1) whether or not the person was, or was entitled to be, an applicant for the new licences. Sub-section (1) does not apply if the holder of the former licences has been wound up." (emphasis in italics added) The formula for calculating the "licence value" of the former licences was set out in s 4.3.13 and when payment was to be made was addressed in s 4.3.14. It will be necessary to return to consider these provisions later in these reasons. 30 s 4.3.6 of the 2003 Act. 31 s 4.3.8 of the 2003 Act. 32 s 4.3.9 of the 2003 Act. 33 s 4.3.5(3)(c) of the 2003 Act. Bell Gordon A number of other aspects of Ch 4 should be noted. The definition of "licence" that had been in s 3(1) of the 1994 Act was omitted. That was not surprising. As noted earlier, multiple pieces of legislation in Victoria regulating gambling in its various forms (by the grant of various kinds of statute-specific licences) were re-enacted and consolidated in the 2003 Act. A single definition of the word "licence" would have been inapt. However, for the purposes of Ch 4 only, "licensee" was defined to mean the holder of the wagering licence and the gaming licence34. The Premier's announcement, the 2008 Amendments and the 2009 Amendments On 10 April 2008, the Premier of Victoria announced that the State would introduce a new structure for Victoria's gaming industry, which would fundamentally reshape that industry, as part of a broader reform of all gaming and wagering in Victoria. The consequence was that Tabcorp's and Tatts' gaming licences would not be renewed. The Premier's announcement stated that: "The Government's decision represents an entirely new regulatory model for the operation of wagering, gaming and keno in Victoria after the expiration of the current licences in 2012, and the Government has formed the view that neither [Tatts] nor Tabcorp are entitled to compensation." The reference to "current licences" was, of course, a reference to the licences held by Tabcorp and Tatts. The new structure was relevantly introduced through amendments to the 2003 Act passed in 2008 in respect of wagering35 in respect of gaming36 ("the ("the 2008 Amendments") and 2009 Amendments"). The text of s 4.3.12 was not altered by the 2008 Amendments or the 2009 Amendments. However, s 4.3.4A was inserted into Pt 3 of Ch 4 of the 2003 Act by the 2008 Amendments. Section 4.3.4A(1) provided: 34 s 4.1.2 of the 2003 Act. 35 Gambling Regulation Amendment (Licensing) Act 2008 (Vic). 36 Gambling Regulation Amendment (Licensing) Act 2009 (Vic); Gambling Regulation Amendment Act 2009 (Vic). Bell Gordon "This Part applies only with respect to the wagering licence and gaming licence that were issued on 15 August 1994 and does not authorise the grant of any further wagering licence or gaming licence." Put simply, at the expiration of the wagering licence and the gaming licence then held by Tabcorp, no further or new wagering or gaming licence would be issued. There was to be a new regime. A similar provision was inserted into Ch 3 of the 2003 Act in relation to the licence held by Tatts37. It limited the application of Pt 4 of Ch 3 to the gaming operator's licence issued to Tatts on 14 April 1992 and then provided that the Part "does not authorise the grant of any further gaming operator's licence". As part of that new regime, the 2008 Amendments created a new "wagering and betting licence" under a new Pt 3A of Ch 4 of the 2003 Act which authorised the holder of such a licence to conduct wagering and approved betting competitions38. The amendments expressly provided that a wagering and betting licence could not be issued "that has effect" at any time while the wagering licence and the gaming licence were in effect under Pt 3 of Ch 439. In other words, the new regime came into operation once the licences under the existing duopoly expired. The 2008 Amendments also inserted a new Ch 6A into the 2003 Act which provided for the grant of a 10-year licence that permitted its holder to conduct keno games40. The 2009 Amendments inserted Pt 4A, which provided for GMEs to be allocated to venue operators, into Ch 3 of the 2003 Act41. A GME permitted the holder to conduct gaming on an approved gaming machine42. 37 s 3.4.3 of the 2003 Act. 38 s 4.3A.1 of the 2003 Act. 39 s 4.3A.8(2) of the 2003 Act. 40 ss 6A.3.1, 6A.3.7 and 6A.3.11 of the 2003 Act. 41 s 25 of the Gambling Regulation Amendment (Licensing) Act 2009 (Vic). 42 s 3.4A.2 of the 2003 Act. Bell Gordon Subsequent events On 7 June 2010, the Minister for Gaming created 27,500 GMEs with an effective date of 16 August 2012, being the day after Tabcorp's wagering licence and gaming licence expired. GMEs were allocated to holders of venue operator's licences. The result was that the gaming operations which Tabcorp conducted under its gaming licence ceased and were then carried on by the holders of GMEs. On about 19 December 2011, a subsidiary of Tabcorp obtained the new wagering and betting licence, which also took effect from 16 August 2012, upon the payment of a substantial premium. The new keno licence was also issued, to a different subsidiary of Tabcorp. The State received total payments of approximately $1.45 billion for these new licences. The State made no payment to Tabcorp under s 4.3.12(1) of the 2003 Act. On 24 August 2012, Tabcorp issued proceedings in the Supreme Court of Victoria seeking payment of $686.83 million, plus interest, pursuant to the terminal payment provision. Previous decisions The primary judge found that the aggregate authorities granted under the new regime (the keno licence and the GMEs) authorised substantially the same kind of activities as those authorised by Tabcorp's gaming licence under the 2003 Act prior to the 2008 Amendments and the 2009 Amendments43. But the primary judge dismissed Tabcorp's statutory case on the basis that "the grant of new licences" in s 4.3.12 of the 2003 Act was confined to new licences granted under Pt 3 of Ch 4 of the 2003 Act44. The Court of Appeal (Nettle, Osborn and Whelan JJA) dismissed Tabcorp's appeal from that decision45. Construction of s 4.3.12 of the 2003 Act As at 16 August 2012, after Tabcorp's licences expired and the new regime came into effect, s 4.3.12, found in Div 3 of Pt 3 of Ch 4 of the 2003 Act, relevantly provided: 43 Tabcorp Holdings Ltd v Victoria [2014] VSC 301 at [159]. 44 Tabcorp Holdings Ltd v Victoria [2014] VSC 301 at [75], [130]. 45 Tabcorp Holdings Ltd v Victoria [2014] VSCA 312 at [23]-[25]. Bell Gordon "(1) On the grant of new licences, the person who was the holder of the licences last in force (the former licences) is entitled to be paid an amount equal to the licence value of the former licences or the premium payment paid by the new licensee, whichever is the lesser. The person who was the holder of the former licences is entitled to the payment under subsection (1) whether or not the person was, or was entitled to be, an applicant for the new licences." (unbolded emphasis in italics added) The phrase "new licences" in s 4.3.12(1) was not defined. The word "licence" was not defined. However, for the purposes of Ch 4 of the 2003 Act only, "licensee" was defined to mean "the holder of the wagering licence and the gaming licence"46. As noted earlier, the phrases "wagering licence" and "gaming licence" were defined in s 1.3(1) for the purposes of the 2003 Act. "[W]agering licence" meant "the wagering licence granted" under Pt 3 of Ch 4 of the 2003 Act. "[G]aming licence" meant "the gaming licence granted" under Pt 3 of Ch 4 of the 2003 Act. Accordingly, having regard to those defined terms in the 2003 Act and, in particular, the defined meaning of "licensee" for Ch 4 of the 2003 Act, s 4.3.12(1) should be read: "On the grant of new licences, the person who was the holder of the licences last in force (the former licences) is entitled to be paid an amount equal to the licence value of the former licences or the premium payment paid by the new [holder of the wagering licence granted under Pt 3 of Ch 4 of the 2003 Act and the gaming licence granted under Pt 3 of Ch 4 of the 2003 Act], whichever is the lesser." The phrase "grant of new licences" in the first line of s 4.3.12(1) was a reference to, and could only be a reference to, the grant of a new wagering licence and a new gaming licence under Pt 3 of Ch 4 of the 2003 Act. That construction is compelled by the text of s 4.3.12(1). First, Pt 3 of Ch 4, which contained s 4.3.12, was headed "Wagering Licence and Gaming Licence". The heading to Ch 4 of the 2003 Act, and the headings to its Parts and its Divisions, formed part of the 2003 Act47. The subject 46 s 4.1.2 of the 2003 Act. 47 s 36(1) of the Interpretation of Legislation Act 1984 (Vic). Bell Gordon matter of the Part was the wagering licence and the gaming licence. Division 1 of Pt 3, headed "Authority of licences", identified the activities authorised to be conducted on the grant of a wagering licence and a gaming licence. It comprised five sections. Each reinforced the conclusion that the Part was dealing with a sole subject matter – the conjoined wagering licence and gaming licence. Sections 4.3.1 and 4.3.2 dealt respectively with the rights conferred by the wagering licence and the gaming licence. Significantly, s 4.3.2 provided that the gaming licence conferred on the licensee (namely, Tabcorp) "the same authority as is conferred on the holder of a gaming operator's licence under Chapter 3" (namely, Tatts) as well as the authority to conduct and promote club keno games in Victoria. That section maintained the duopoly. Section 4.3.3 reinforced the duopoly by providing that Ch 4 of the 2003 Act did not authorise the operation at the same time of more than one wagering licence or more than one gaming licence. Section 4.3.4 provided that the wagering licence and the gaming licence were not transferable. Section 4.3.4A was also in Div 1 of Pt 3 of Ch 4 of the 2003 Act. It was not inserted into the 2003 Act until 2008. It will be necessary to return to address this section later in these reasons. Division 2 of Pt 3 of Ch 4, headed "Grant of licences", addressed the process of applying for a wagering licence and a gaming licence, the matters to be considered in determining an application for those licences, the grant of a wagering licence and a gaming licence, and the duration of those licences and licence conditions. An application for the grant of a wagering licence and a gaming licence had to be accompanied, amongst other things, by a statement of the premium payment offered by the applicant. Each licence was for a term of 18 years (or such longer term determined by the Governor in Council) and was subject to the conditions set out in the licence and any conditions imposed by the 2003 Act. That brings us to Div 3 of Pt 3 of Ch 4, headed "Entitlement of former licensee" (emphasis added), which contained s 4.3.12. As noted earlier, "licensee" was a defined term and s 4.3.12(1) must be read as incorporating that definition. Next, the heading to s 4.3.12, "Entitlement of former licensee on grant of new licences", again referred to the former holder of the wagering licence and the gaming licence and supports the conclusion that the reference to "licences" throughout s 4.3.12 is a reference to the wagering licence and the gaming licence. Bell Gordon That conclusion is inevitable given the text of s 4.3.12 and Pt 3 of Ch 4 of the 2003 Act. There is nothing in s 4.3.12 to suggest that the word "licences" in that section can or should be distinguished from any of the other sections in Pt 3 of Ch 4 where the word "licences" appeared. Indeed, a careful reader will notice that the headings and provisions in Pt 3 of Ch 4 referred interchangeably to "licences" and "the wagering licence and the gaming licence". Why? Because the wagering licence and the gaming licence were the sole subject matter of the Part. Indeed, none of the provisions in Pt 3 of Ch 4 were directed to, or concerned, any subject matter other than the wagering licence and the gaming licence held by Tabcorp. Each of the remaining Divisions in Pt 3 of Ch 4 had as its exclusive subject matter the wagering licence and the gaming licence48. Next, s 4.3.12(1) provided that the holder of the former wagering licence and gaming licence "is entitled to be paid an amount equal to the licence value of the former licences or the premium payment paid by the new licensee, whichever is the lesser" (emphasis added). The two methods of calculation reinforced the conclusion that the reference to "the grant of new licences" in the first line of s 4.3.12(1) is a reference to the grant of a new wagering licence and a new gaming licence. A method for calculating the payment provided for in s 4.3.12(1) was by reference to "the premium payment paid by the new licensee". As noted earlier, by reason of the definition of "licensee" for the purposes of Ch 4, that was to be read as "the premium payment paid by the new [holder of the wagering licence and the gaming licence]". The event which triggered that limb of the calculation was, of course, the grant of the "new licences" referred to in the opening words of s 4.3.12(1). And it is important to recall that under Pt 3 of Ch 4, an applicant for a wagering licence and a gaming licence was obliged to offer a premium payment at the time of application49 and an applicant was only granted a wagering licence and a gaming licence on the payment of the premium payment50. No premium 48 Div 4 (Operators), Div 5 (Regulation of shareholding interests) (repealed in 2010), Div 6 (Further licensing restrictions and requirements), Div 7 (Disciplinary action and cancellation), Div 8 (Further obligation to provide information) (inserted in 49 s 4.3.5(3)(c) of the 2003 Act. 50 s 4.3.8(1) of the 2003 Act. Bell Gordon payment was payable for the allotment of GMEs51. In fact, under s 3.4A.5(9)(b) of the 2003 Act, the Minister could determine "whether an amount or amounts must be paid by a person to whom a gaming machine entitlement is allocated". That provision expressly contemplated that the Minister could exercise a discretion as to whether a person allocated a GME must make a payment for it and as to the amount of that payment (if any) for the allotment of a GME. There was no indication in the terms of the 2003 Act that GMEs might be allocated so as to continue the duopoly. Given that GMEs were to be allocated only to venue operators, the financial considerations at play in fixing the licence value and premium payment under s 4.3.12 have no place in fixing the amount payable for a GME. And there was no indication in the 2003 Act that some or all of the receipts for allocations of GMEs were to be appropriated to the terminal payment entitlement under s 4.3.12, unlike the premium payment for a new wagering licence and a new gaming licence. The alternative method of calculation in s 4.3.12 was the payment of an amount equal to the licence value of the "former licences". In its terms, "former licences" was not limited to the initial licences held by Tabcorp but would apply on the expiry of both the initial licences held by Tabcorp and any later wagering licences and gaming licences. The formula for calculating the "licence value of the former licences" was contained in s 4.3.13. Integers in that calculation were amounts referable to wagering and gaming activities conducted by the former holder of the licences. As the State submitted, there was a logic in the terminal payment entitlement in s 4.3.12(1). The former licensee was to receive the lesser of the value of its licence (calculated in accordance with the formula in s 4.3.13) or the premium payment paid by the new licensee under s 4.3.8. Both methods of calculating the payment under s 4.3.12 were ascertainable. Both methods were expressly provided for in Pt 3 of Ch 4. The Part was internally consistent and coherent. Contrary to Tabcorp's contentions, there was nothing to suggest that, in s 4.3.12(1), the phrase "new licences" was intended to include the grant of licences other than a wagering licence and a gaming licence or that the phrase "new licensee" was intended to include the holder of authorities other than a wagering licence and a gaming licence. The matter may be tested this way. Tabcorp's contention that the phrase "grant of new licences" in s 4.3.12 was generic (and was capable of extending to 51 s 3.4A.5(9)(b) and (c) of the 2003 Act. Bell Gordon and intended to extend to the allotment of GMEs) would require the Court to accept that, in a single section, and for the first and only time in Pt 3 of Ch 4 of the 2003 Act, Parliament adopted a generic and ambulatory meaning of the term "licences" in circumstances where the term had been, and continued to be, consistently used in a confined and defined way throughout the Part. In fact, Tabcorp's construction of "new licences" would impermissibly involve giving the term "licences" a different meaning within a single section (s 4.3.12) and, indeed, within a single sub-section (s 4.3.12(1)). There is nothing in the text or context of s 4.3.12 that supports Tabcorp's construction. A consistent meaning should ordinarily be given to a particular term wherever it appears in a suite of statutory provisions52. The result is that the phrase "grant of new licences" in the first line of s 4.3.12(1) referred to the grant of a new wagering licence and a new gaming licence under Pt 3 of Ch 4 of the 2003 Act. This meant that the trigger or pre- condition to Tabcorp receiving payment under s 4.3.12 – the grant of a new wagering licence and a new gaming licence under Pt 3 of Ch 4 – did not occur. Tabcorp had no entitlement to payment unless a new wagering licence and a new gaming licence were issued to a new licensee. They were not issued. In fact, Tabcorp's entitlement to such a payment was not guaranteed because there was no guarantee that any new wagering and gaming licences would be issued to anyone at any time. Tabcorp's entitlement to payment was contingent upon the issue of a new wagering licence and a new gaming licence to a new licensee. That did not occur. Legality It is for that reason that Tabcorp's submissions that s 4.3.12 of the 2003 Act somehow engaged the principle of legality53 should be rejected. The principle of legality, as a principle of statutory construction, requires that clear language be used in legislation if a person is to be deprived of a valuable right. 52 Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618; [1975] HCA 41; Kline v Official Secretary to the Governor-General (2013) 249 CLR 645 at 660 [32]; [2013] HCA 52; Selig v Wealthsure Pty Ltd (2015) 89 ALJR 572 at 578 [29]; 320 ALR 47 at 55; [2015] HCA 18. 53 See, for example, Potter v Minahan (1908) 7 CLR 277 at 304; [1908] HCA 63; Coco v The Queen (1994) 179 CLR 427 at 436-438; [1994] HCA 15; R v Secretary of State for the Home Department; Ex parte Simms [2000] 2 AC 115 at 131. Bell Gordon Tabcorp's submission that the principle was engaged failed to address the contingent – as distinct from vested – nature of the right to the terminal payment54 and the limited interest to be protected by that right. Tabcorp's interest was limited in a number of ways. The right did not arise simply upon the expiration of the former licences. It arose on the issue of new licences. That the Government might decide not to continue the duopoly by issuing new licences was a commercial risk that the duopolists knew existed from 1992. For those reasons, Tabcorp's interest could not be described as the value of its gaming business undiminished by the amortisation of the value of its wagering licence and its gaming licence. The terminal payment entitlement did not protect Tabcorp against the amortisation of the value of its now expired licences. The State did not guarantee the continuation of the duopoly. And, in any event, the "entitlement to payment" was not taken away. The event that was the trigger for it simply did not happen. Construction of s 4.3.4A(1) It is then necessary to address s 4.3.4A in Div 1 of Pt 3 of Ch 4. Section 4.3.4A was inserted into the 2003 Act by the 2008 Amendments. It is worth restating sub-s (1): "This Part applies only with respect to the wagering licence and gaming licence that were issued on 15 August 1994 and does not authorise the grant of any further wagering licence or gaming licence." That sub-section comprises two elements. It provides that Pt 3 of Ch 4 applies only to Tabcorp's wagering licence and gaming licence. It then provides that Pt 3 of Ch 4 does not authorise the grant of any further wagering licence or gaming licence. Section 4.3.4A was part of the broader reform of gaming and wagering in Victoria announced in 2008 which was to take effect on the expiration of Tabcorp's and Tatts' gaming licences. A consequence was that Tabcorp's and Tatts' gaming licences would not be renewed. And a further consequence followed if "new licences" in s 4.3.12 was construed as limited to new wagering or gaming licences: the trigger or pre-condition to Tabcorp's entitlement to payment under s 4.3.12 – the issue of a new wagering licence and a new gaming licence – had been removed by the State. No licences of those kinds could be 54 cf Clissold v Perry (1904) 1 CLR 363 at 373; [1904] HCA 12. Bell Gordon issued. Section 4.3.4A(1) expressly provided that such licences would not – indeed, could not – be issued. Tabcorp submitted that if "grant of new licences" in s 4.3.12 were limited to the grant of a new wagering licence and a new gaming licence, then, by reason of the operation of s 4.3.4A, s 4.3.12 would be deprived of "operative effect"55, "practical utility"56 and "any practical content"57. That submission hides more than it reveals. As the State submitted, the insertion of s 4.3.4A into the 2003 Act achieved a number of objectives. First, it brought about a "staged sunset" of the old gaming regime. After s 4.3.4A was inserted, some provisions of Pt 3 of Ch 4 ceased to have a continuing operation58 while other provisions of Pt 3 continued to operate until Tabcorp's licences expired59. Second, s 4.3.4A limited the operation of some sections in Pt 3 of Ch 4 so that they were only applicable to temporary licences60 in the event that Tabcorp's licences were cancelled prior to their expiration61. Third, s 4.3.4A imposed an end date on the whole of the Part by reference to the date that Tabcorp's licences expired. On that date, the whole of Pt 3 of Ch 4 could no longer operate. Those outcomes were consistent with the Government's stated objectives – "an entirely new regulatory model for the operation of wagering, gaming and keno in Victoria after the expiration of the current licences in 2012"62. The duopoly was to end. It was to end at the expiration of Tabcorp's licences, 55 See Tabcorp Holdings Ltd v Victoria [2014] VSCA 312 at [24]. 56 See Tabcorp Holdings Ltd v Victoria [2014] VSCA 312 at [24]. 57 See Tabcorp Holdings Ltd v Victoria [2014] VSCA 312 at [30]. 58 ss 4.3.5(3)(d), 4.3.6-4.3.8, 4.3.9(2), 4.3.13 and 4.3.14 of the 2003 Act. 59 ss 4.3.1-4.3.4, 4.3.5(1)-(3)(c), 4.3.5(4)-(5), 4.3.9(1), 4.3.10-4.3.11 and 4.3.15- 4.3.34 of the 2003 Act. 60 Under s 4.3.33 of the 2003 Act. 61 s 4.3.4A(2) read with ss 4.3.5(1)-(3)(c) and 4.3.5(4)-(5) of the 2003 Act. 62 See [41] above. Bell Gordon and not before. Section 4.3.4A achieved these objectives. Therefore, contrary to Tabcorp's submissions, if "grant of new licences" in s 4.3.12 was limited to the grant of a new wagering licence and a new gaming licence, s 4.3.12 was not deprived of "any practical content"63 by s 4.3.4A. The principle of redundancy was not engaged64. That construction of ss 4.3.4A and 4.3.12 did not result in any provision, clause, sentence or word of Pt 3 of Ch 4 of the 2003 Act being superfluous, void or insignificant65. Tabcorp contended that s 4.3.4A was inserted into the 2003 Act for different purposes from those put forward by the State. The first purpose was said to be to ensure that there was no overlap between the old and new regimes. That contention should be rejected. Section 4.3.4A was not directed to ensuring that there was no overlap between the old and new regimes. That objective was instead achieved by s 4.3A.8(2)66, which expressly provided that a licence that "has effect" could not be issued under the new regime "at any time while the wagering licence and the gaming licence are in effect under Part 3 of this Chapter". The second purpose for s 4.3.4A identified by Tabcorp was to "cut back to a single iteration the operation of [s] 4.3.12 to allow it to apply in respect of [Tabcorp's] licences but not other licences"67. That contention should also be rejected. If the "grant of new licences" in s 4.3.12(1) referred to licences other than the wagering licence and the gaming licence, such as GMEs, and the holder of the licences last in force is Tabcorp (as contended for by Tabcorp), it is readily apparent that the operation of s 4.3.12 cannot be "cut back to a single iteration". 27,300 GMEs were allocated to multiple licensed venue operators. On Tabcorp's own construction, s 4.3.12 would not operate once but rather would operate each and every time a GME was allocated because, on each occasion, Tabcorp would 63 See Tabcorp Holdings Ltd v Victoria [2014] VSCA 312 at [30]. 64 The Commonwealth v Baume (1905) 2 CLR 405 at 414; [1905] HCA 11; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382 [71]. 65 The Commonwealth v Baume (1905) 2 CLR 405 at 414. 66 Inserted into the 2003 Act by the 2008 Amendments at the same time as s 4.3.4A. See also s 3.4A.1(1)(c) of the 2003 Act. 67 [2015] HCATrans 288 at 546-548. Bell Gordon be the holder of the licences last in force. And questions about the calculation of the payment under the balance of s 4.3.12(1) would also remain68. Conclusion on proper construction of s 4.3.12(1) of the 2003 Act The Court of Appeal was right to conclude that "new licences" in s 4.3.12(1) of the 2003 Act must mean a new wagering licence and a new gaming licence granted under Pt 3 of Ch 4 of the 2003 Act69. The Court of Appeal was also right to say that the conclusion followed from textual considerations in the 2003 Act70. Both the relevant legislative history and the commercial context revealed by the legislation also support that conclusion. Those matters will now be addressed. Legislative history The legislative history of s 4.3.12, the regulation of the gaming industry in Victoria and the commercial context of the 2003 Act support and are consistent with the phrase "new licences" in s 4.3.12(1) meaning a new wagering licence and a new gaming licence granted under Pt 3 of Ch 4 of the 2003 Act. As noted earlier, gambling activity involving the use of gaming machines was legalised in Victoria in 1991. From 1992 until the expiration of Tabcorp's and Tatts' licences in 2012, the gaming machine industry was a duopoly. Whilst that duopoly remained in place, the statutory framework addressed the specific licences held by Tabcorp and Tatts. Tatts held its licence under the 1991 Act. Tabcorp, because of TAB's privatisation, held its conjoined licences under the 1994 Act. 1994 Act As seen earlier, the predecessor to s 4.3.12 in the 2003 Act was s 21 of the 1994 Act. Section 21 of the 1994 Act appeared in "Part 2—Wagering Licence and Gaming Licence", as the first section in Div 4 ("Entitlement of former licensee"), immediately following Div 3 ("Grant of licences after initial licences"). Section 21(1) provided: 68 See [60]-[64] above. 69 Tabcorp Holdings Ltd v Victoria [2014] VSCA 312 at [23]. 70 Tabcorp Holdings Ltd v Victoria [2014] VSCA 312 at [23(1)-(8)]. Bell Gordon "On the grant of new licences (other than the initial licences), the person who was the holder of the licences last in force (in this section called the 'former licences') is entitled to be paid an amount equal to the licence value of the former licences or the premium payment paid by the new licensee, whichever is the lesser." Unlike in the 2003 Act, "licence" was defined in the 1994 Act in s 3(1) to mean "the wagering licence or the gaming licence granted under Part 2" of the 1994 Act. The term "licensee" was also defined in s 3(1) of the 1994 Act to mean "the holder of the wagering licence and the gaming licence". The addition of the adjective "new" did not alter the meaning of "licence" in s 21(1). It simply referred to new (further) licences of the same character. As enacted, the word "licence" bore the specific meaning contended for by the State, unambiguously referring to the grant of a wagering licence and a gaming licence pursuant to s 20 of the 1994 Act. Contrary to Tabcorp's submissions, there was nothing in the text and context of s 21 of the 1994 Act to permit the phrase "new licences" to be assigned a different, generic meaning untied to the defined meaning of "licence". That conclusion is reinforced by the fact that the phrase "new licences" also appeared in s 20(3) (part of the immediately preceding provision) where that phrase could only refer to the wagering licence and the gaming licence. The subject matter of s 20 was the grant of a wagering licence and a gaming licence. Section 20(3) dealt with the Governor in Council's power to extend licences. It provided: "If … the Governor in Council is unlikely to grant the licences before the expiration of the term of 18 years of the licences held by the current licensee, the Governor in Council may … approve the extension of the term of the current licences until the commencement of the new licences or for such shorter period as is specified …" Consistently with the defined terms, the "current licences" were the wagering licence and the gaming licence held by Tabcorp and the "new licences" were the new wagering licence and the new gaming licence to be granted under s 20(1) of the 1994 Act. The 1994 Act did not make provision for any other kinds of licences which could conceivably have fitted the description of "new licences" as used in s 20 or s 21. 2003 Act The 2003 Act has been addressed. There is nothing to suggest that the legislature determined in the course of an exercise intended to "re-enact and Bell Gordon consolidate"71 the previous legislation to alter the meaning of the term "licences", or the phrase "new licences", when it re-enacted s 21 of the 1994 Act as ss 4.3.12 to 4.3.14 of the 2003 Act. 2008 Amendments and 2009 Amendments Only two changes were made to Pt 3 of Ch 4 of the 2003 Act by the 2008 Amendments. Section 4.3.4A, which has been addressed, was inserted72. The second change was to the provisions dealing with the appointment of a temporary licensee. In s 4.3.33(3), the words "a wagering and betting licence under Part 3A" replaced the words "another licence under this Part". This change was significant. It shows that where Parliament intended there to be a change in meaning where licences were referred to, it expressly provided for it. Each amendment confirmed that "new licences" in s 4.3.12 had a specific meaning, namely, a wagering licence and a gaming licence under Pt 3 of Ch 4. The 2009 Amendments did not bear on the meaning of "new licences" in Conclusion This legislative history supports the conclusion that the words "new licences" in s 4.3.12 of the 2003 Act mean a wagering licence and a gaming licence issued under Pt 3 of Ch 4 of the 2003 Act. Indeed, the legislative history identifies two significant deficiencies in Tabcorp's argument. Tabcorp failed to identify at which point in this legislative history the expression "new licences" ceased to refer to licences of the kind issued to Tabcorp under Pt 2 of the 1994 Act (materially re-enacted in Pt 3 of Ch 4 of the 2003 Act). And Tabcorp failed to provide any explanation of what might have brought about such a change of legislative purpose or the reasons for such a change. Put another way, one would expect a cogent explanation as to why the certainty of the legislative identification of the licences in the earlier legislation was abandoned for the uncertainty of licences which need only be "substantially similar" to the initial licences held by Tabcorp. At no point does the legislative history invite such a comparison or provide any guide as to what might be 71 s 1.1(1) of the 2003 Act. 72 See [43], [69]-[76] above. Bell Gordon sufficiently "substantially similar". Indeed, in asserting substantial similarity, Tabcorp identified no similarity other than the right to operate a gaming machine, a GME. Section 4.3.12 does not – as Tabcorp's submission requires – provide for the making of a terminal payment to Tabcorp "upon the expiration of its licences and the issue to any person of any licence to operate a gaming machine in any venue for which a venue operator's licence is held". Commercial context Tabcorp's contention that it was entitled to the payment provided for in s 4.3.12(1) of the 2003 Act because the allocation of the GMEs was the "grant of new licences" within the meaning of that provision also ignored, and was inconsistent with, the commercial context in which the 2003 Act is to be construed. Tabcorp's wagering licence and gaming licence were, together, an instrument of commerce, not merely an abstract legal concept. The legislative framework, from the enactment of the 1994 Act and the consolidation effected by the 2003 Act until the 2008 Amendments, supported the duopoly in legal gaming activities enjoyed by Tabcorp and Tatts. Tabcorp's wagering licence and gaming licence, together, constituted the legal element essential to the operation of a semi-exclusive gaming business in Victoria – namely, the duopoly. At the time of the 2008 Amendments, the relationship between Tabcorp's licences and the duopoly would have been readily apparent to anyone who turned his or her mind to the issue. In the commercial context in which s 4.3.12 operated, a reference to "new licences" in s 4.3.12 as being to new licences of the character of those formerly held by Tabcorp was unmistakable. The terminal payment provision in s 21 of the 1994 Act and s 4.3.12 of the 2003 Act was expressly predicated upon new licences issuing in a context which would mean that they would operate, as instruments of commerce, to authorise the continuation of the duopoly. Once it is appreciated that this is the context in which s 4.3.12 speaks of "new licences", that expression cannot sensibly be understood as speaking of any licence other than that of the character "formerly" held by Tabcorp. If the duopoly were to be discontinued, the machinery for the funding of the payment could not work, because there would be no incoming duopolist (or in Tabcorp's case an ongoing duopolist) to pay either the licence fee or the premium payment which represented the value of the commercial advantage which attached to Tabcorp's gaming licence. Whether the duopoly would continue was a matter ultimately to be determined by the legislature; and Bell Gordon the risk that the legislature might decide not to continue the duopoly was left squarely with the duopolists. Tabcorp seeks to claim compensation for a commercial risk that was always borne by it. To the extent that the terminal payment for which s 4.3.12 provides is said to be "compensation" for that portion of the consideration initially paid to the State by Tabcorp as a result of the non-amortisation of Tabcorp's licences, it was never the case that any "compensation" was to be paid to Tabcorp otherwise than as the value of a share in an ongoing duopoly. The obligation of the State to make a payment to Tabcorp was to be funded by a payment by the new licensee, and that payment would be for Tabcorp's share in the ongoing duopoly. That this was so is apparent from the provisions of the 1994 Act and the 2003 Act concerned with the obtaining of, and payment for, the new licences73. Those provisions direct not only the continuation of the licensed duopoly, but also that the funding of the terminal payment was to come from a payment to the State by the new licensee, who would be acquiring, and paying for, the same advantages enjoyed by Tabcorp as a duopolist. That direction was inconsistent with a notion that any moneys raised upon the grant of a licence of any kind to conduct gaming activities, however limited either geographically or functionally, would be aggregated and paid to Tabcorp if the licence which supported the duopoly was no longer in place. Section 4.3.12 operates on the basis that the "new licences" and the "former licences" are not different for the purposes of the determination of licence value or premium payment. As seen earlier, the terminal payment in s 4.3.12(1) was measured by "an amount equal to the licence value of the former licences or the premium payment paid by the new licensee, whichever is the lesser"74. Section 4.3.12 contemplates that the terminal payment will represent the value of a half-share in the duopoly which the acquirer of that share agrees to pay. This may be contrasted with the position in relation to the allocation of GMEs to venue operators who neither obtain, nor pay for, any such commercial interest. Conclusion For those reasons, the appeal should be dismissed with costs. 73 s 21 of the 1994 Act; ss 4.3.12-4.3.14 of the 2003 Act. 74 See [50] above.

HIGH COURT OF AUSTRALIA Matter No B19/2015 COMMISSIONER OF TAXATION APPELLANT AND AUSTRALIAN BUILDING SYSTEMS PTY LTD (IN LIQUIDATION) RESPONDENT Matter No B20/2015 COMMISSIONER OF TAXATION APPELLANT AND GINETTE DAWN MULLER AND JOANNE EMILY DUNN AS LIQUIDATORS OF AUSTRALIAN BUILDING SYSTEMS PTY LTD (IN LIQUIDATION) RESPONDENTS Commissioner of Taxation v Australian Building Systems Pty Ltd (In Liquidation) Commissioner of Taxation v Muller and Dunn as Liquidators of Australian Building Systems Pty Ltd (In Liquidation) [2015] HCA 48 10 December 2015 B19/2015 & B20/2015 ORDER Each appeal is dismissed with costs. On appeal from the Federal Court of Australia Representation J T Gleeson SC, Solicitor-General of the Commonwealth with N J Williams SC and M J O'Meara for the appellant in both matters (instructed by McInnes Wilson Lawyers) S L Doyle QC with M S Trim for the respondents in both matters (instructed by Thomson Geer) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Australian Building Systems Pty Ltd (In Liquidation) Commissioner of Taxation v Muller and Dunn as Liquidators of Australian Building Systems Pty Ltd (In Liquidation) Taxes and duties – Income tax and related legislation – Obligations of agents and trustees – Where liquidators caused company to sell property resulting in a capital gain – Whether retention obligation in s 254(1)(d) of Income Tax Assessment Act 1936 (Cth) arises before assessment – Whether liquidators are trustees of trust estate for the purposes of Div 6 of Pt III of Act. Statutes – Construction – Same or similar phrases within a statute – Whether construction of a phrase in one provision controls construction of the same or similar phrase in another provision – Relevance of context and purpose. Words and phrases – "agent", "answerable as taxpayer", "assessment", "capital gain", "collecting provision", "due", "due and payable", "income, profits or gains", "is or will become due", "owing", "sufficient", "trustee". Income Tax Assessment Act 1936 (Cth), ss 6(1), 254, 255, Pt III, Div 6. Income Tax Assessment Act 1997 (Cth), ss 5-5, 104-10. FRENCH CJ AND KIEFEL J. Introduction Section 254(1)(d) of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act") requires every agent and every trustee "to retain from time to time out of any money which comes to him or her in his or her representative capacity so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains." The question on these appeals is whether that retention obligation arises before the making of an assessment or deemed assessment in respect of the income, profits or gains. That question should be answered in the negative and the appeals dismissed. Factual background On 6 April 2011, the creditors of Australian Building Systems Pty Ltd ("ABS") resolved that it be wound up under s 439C of the Corporations Act 2001 (Cth) ("the Corporations Act"). Ms Ginette Muller and Ms Joanne Dunn, who had been appointed as administrators of the company on 2 March 2011, were appointed its liquidators. On 21 July 2011, the liquidators caused ABS to enter into a contract for sale of real property which gave rise to a capital gain designated as a CGT event A1 under s 104-10 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"). The capital proceeds were $4,000,000. The cost base for the property under Div 110 of the 1997 Act was about $2,880,000. The capital gain for the purposes of s 104-10(4) of the 1997 Act was approximately $1,120,000. The liquidators applied for a private ruling from the Commissioner of Taxation ("the Commissioner") in January 2012 pursuant to Div 359 of Sched 1 to the Taxation Administration Act 1953 (Cth) ("the Administration Act"). In their application they asked whether they had an obligation, pursuant to s 254 of the 1936 Act, to retain out of the proceeds of sale monies sufficient to cover any capital gains tax liability from the time that the capital gain crystallised or only when an assessment had issued. They also sought a ruling on whether they were required to account to the Commissioner out of the proceeds of sale for any capital gains tax liability arising from the sale. The Commissioner ruled, in May 2012, that under s 254 they were required to retain monies for any capital gains tax liability out of the proceeds of sale of an asset from the time of the crystallisation of the capital gain and that they were required to account to the Commissioner for that liability out of the proceeds of sale. The liquidators objected to the ruling. Their objection was disallowed and on 5 October 2012 ABS appealed against the Commissioner's decision in the the original the Federal Court pursuant jurisdiction of to s 14ZZ of Administration Act. The liquidators also commenced proceedings in the Federal Court on 11 October 2012 seeking declaratory relief effectively in terms of the private ruling for which they had applied1. The proceedings were heard concurrently by Logan J, who held that s 254 did not impose any obligation on the liquidators to retain money from the proceeds of sale of ABS's land unless and until an assessment had issued2. On 8 October 2014, the Full Court of the Federal Court dismissed the Commissioner's appeals3. Edmonds J, with whom Collier J agreed, held that, prior to the issue of an assessment to the liquidators, there could be no tax which "is ... due" by the liquidators in the sense of "owing". Nor, prior to that time, could it be said that tax "will become due" in the sense of owing4. That conclusion was linked to the proposition, not supported by the respondents to these appeals, that ABS was "presently entitled" within the meaning of Div 6 of Pt III of the 1936 Act, thus equating the liquidators to the position of trustees for the purposes of that Division5. Davies J did not adopt that reasoning. Her Honour held that the liquidators would be assessed in their representative capacity and that the obligation in s 254(1)(d) is to be read as referring to an amount of tax that has been assessed6. The application by Edmonds J of Div 6 of Pt III of the 1936 Act was not consonant with what was said in Federal Commissioner of Taxation v Bamford7, namely that a liquidator, although included in the definition of "trustee" in s 6(1) 1 The proceedings invoked the jurisdiction of the Court under s 1337B of the Corporations Act and s 39B of the Judiciary Act 1903 (Cth). 2 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 622–623 [22]. It was not necessary to decide the other issue in the case, namely whether s 254 affects the operation of ss 501, 555 and 556 of the Corporations Act. 3 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263. (2014) 226 FCR 263 at 271 [20], 273 [29]. (2014) 226 FCR 263 at 273 [29]. (2014) 226 FCR 263 at 274 [34]‒[35]. (2010) 240 CLR 481; [2010] HCA 10. of the 1936 Act, "is not a trustee of a trust estate in any ordinary sense"8. The Full Court's reasoning with respect to Div 6 of Pt III was erroneous. The Commissioner's submission in that respect was not contested and should be accepted. The question upon which the parties joined issue in these appeals was whether the retention obligation could arise prior to the making of an assessment (or deemed assessment) in respect of the relevant income, profits or gains. The Commissioner's appeals to this Court are made pursuant to the grant of special leave by Kiefel and Keane JJ9. The legislative history and framework Section 254 and its companion provision s 255, which imposes retention and payment obligations on persons in receipt or control of money from non- residents, have their roots deep in the history of taxation legislation. The history begins in the United Kingdom. Section 91 of the Income Tax Act 179910 applied to trustees or company officers (among other classes of person) who received income chargeable by virtue of the Act, and provided that where such persons: "shall be assessed by virtue of this Act, to contribute any Sum or Sums in respect of such Income, then and in every such Case it shall be lawful for every such Person who shall be so assessed, by and out of such Annual Income as shall come to his or her Hands or Hand as such Trustee ... or other Officer, to retain so much and such Part of such Annual Income as shall from Time to Time be sufficient to pay such Assessment". That provision created an authority, not in terms an obligation, to retain funds to pay an assessment. The authority was conditioned upon the event of an assessment. Similar provision was made in income tax legislation in the United Kingdom in the 19th century11. Australian colonial and early State taxing (2010) 240 CLR 481 at 503 [28] citing Federal Commissioner of Taxation v Linter Textiles Australia Ltd (In liq) (2005) 220 CLR 592; [2005] HCA 20. [2015] HCATrans 082. 10 39 Geo III, c 13. 11 Income Tax Act 1803 (43 Geo III, c 122), s 93; Income Tax Act 1805 (45 Geo III, c 49), s 103; Income Tax Act 1806 (46 Geo III, c 65), s 58. The 1806 Act was repealed at the end of the Napoleonic Wars and income taxation only resumed again with the Income Tax Act 1842 (5 & 6 Vict, c 35), which authorised retention in s 44. statutes were influenced by the United Kingdom statutes and contained retention provisions variously worded12. Section 12 of the Income Tax Act 1895 (Vic) ("the 1895 Victorian Act") made every agent for any taxpayer permanently or temporarily out of Victoria and every trustee "answerable" for the doing of all acts, matters or things required to be done by the Act in order to ensure the assessment of the income belonging to the person or company represented by the agent or which is the subject of the trust or received by the agent or trustee and for paying tax in respect of it13. Such agents and trustees were authorised and required to retain from time to time in each year out of any money coming to them as agent or trustee14: "so much as is sufficient to pay the tax for the current year in respect of any income subject to the tax". They were indemnified for all payments made under the Act15. They were also made personally liable for the tax payable in respect of any income if, while such tax remained unpaid, they disposed of the income or any fund or money received after the tax was payable from which the tax could legally have been paid16. The term "trustee" was given an extended definition and included officers having the administration or control of any income affected by any express or implied trust17. 12 Land and Income Tax Assessment Act 1895 (NSW), s 20, authorising the representative taxpayer to retain "so much as shall be required to indemnify him"; Income Tax Act 1895 (Vic), s 12(1)(c), requiring retention of monies "sufficient to pay the tax for the current year". See also The Real and Personal Estates Duties Act 1880 (Tas), ss 48‒49; Taxation Act 1884 (SA), ss 17 and 26; and Land and Income Tax Assessment Act 1907 (WA), ss 20–22, in a similar model to that of the 1895 NSW Act; and The Income Tax Act of 1902 (Q), s 25(iii), in a similar model to that of the 1895 Victorian Act. 13 1895 Victorian Act, s 12(1)(a). 14 1895 Victorian Act, s 12(1)(c). 15 1895 Victorian Act, s 12(1)(c). 16 1895 Victorian Act, s 12(1)(d). 17 1895 Victorian Act, s 2. Section 12 of the 1895 Victorian Act was considered in Webb v Syme18. Griffith CJ described the liability of the trustee as secondary and contingent upon the beneficiary failing to pay the tax for which he was liable. The provisions of the Act requiring trustees to make returns of income were ancillary, in the nature of machinery for ensuring payment by the beneficiary19. Barton and O'Connor JJ described s 12 in similar terms20. Barton J characterised the personal liability imposed by the section as "a penalty for not keeping a reserve of income or funds in hand to satisfy the tax, until it is seen whether it is paid by or recoverable from the beneficiary."21 On appeal the Privy Council held that s 12 made the trustee assessable "upon the same footing" as the beneficiary or company and did so "for the more convenient collection of the revenue"22. Unlike s 12(1)(a) of the 1895 Victorian Act, s 18 of the Land and Income Tax Assessment Act 1895 (NSW) ("the 1895 NSW Act") imposed liability directly on agents for out of State taxpayers23 and trustees24. Every such "representative taxpayer"25 was chargeable and to be subject to the same liabilities as if the relevant income had arisen or accrued to that person beneficially26. The representative taxpayer was authorised but not required to retain "so much as shall be required to indemnify him"27. Section 18 was held, in the Supreme Court of New South Wales, to do no more than "give to the 18 (1910) 10 CLR 482; [1910] HCA 32. 19 (1910) 10 CLR 482 at 490–491. 20 (1910) 10 CLR 482 at 497–498 per Barton J, 510 per O'Connor J. 21 (1910) 10 CLR 482 at 498. 22 Syme v Commissioner of Taxes for Victoria (1914) 18 CLR 519 at 525; [1914] AC 1013 at 1020. Although heard as an appeal from the Supreme Court of Victoria, this case was in effect an appeal from the decision of the High Court in Webb v Syme, as recognised by Lord Sumner: (1914) 18 CLR 519 at 520; [1914] AC 1013 23 1895 NSW Act, s 18(2). 24 1895 NSW Act, s 18(3). 25 As defined in the 1895 NSW Act, s 18. 26 1895 NSW Act, s 19. 27 1895 NSW Act, s 20. Commissioners the additional right of placing upon trustees the duty of providing for the payment of income tax before they hand the balance over to the beneficiary."28 No doubt a prudent trustee or agent would make provision to meet any assessment in order to avoid personal liability and would not require a specific legislative direction to that effect. Section 52 of the first federal income tax legislation, the Income Tax Assessment Act 1915 (Cth) ("the 1915 Act"), was modelled on s 12 of the 1895 Victorian Act. Unlike s 12, it made no express provision for agents of taxpayers outside Australia. The retention obligation created by s 52(e) was also worded somewhat differently from that in the 1895 Victorian Act: "With respect to every agent and with respect also to every trustee, the following provisions shall apply: (e) He is hereby authorized and required to retain from time to time out of any money which comes to him in his representative capacity so much as is sufficient to pay the income tax which is or will become due in respect of the income." The personal liability provision was narrower than that imposed by the 1895 Victorian Act29. A similar indemnity provision was included30. The definition of "trustee" in the 1915 Act31 expressly included a liquidator, who, as was said in Joshua Bros Pty Ltd v Federal Commissioner of Taxation32, was "therefore, made answerable by sec 52 for the payment of income tax on income derived by him in his representative capacity."33 28 The Commissioners of Taxation v Abbey (1901) 1 SR (NSW) (L) 4 at 6 per Walker J; see also Miller v Simpson (1903) 3 SR (NSW) 386 at 387 per AH Simpson CJ in Eq. 29 1915 Act, s 52(f). 30 1915 Act, s 52(g). 31 1915 Act, s 3. 32 (1923) 31 CLR 490; [1923] HCA 3. 33 (1923) 31 CLR 490 at 495 per Knox CJ, see also at 496 per Isaacs J, 501 per Separate provisions for agents and trustees on the one hand, and persons having the receipt, control or disposal of money belonging to persons resident out of Australia on the other, appeared in ss 47 and 48 of the War-time Profits Tax Assessment Act 1917 (Cth). The retention obligations for each class of case in that Act were relevantly identical34. The drafting dichotomy effected in the War-time Profits Tax Assessment Act was brought into the 1915 Act with the introduction of a new s 52A in 191835. Section 52A was the direct legislative precursor of s 255 of the 1936 Act. Sections 52 and 52A were reproduced in ss 89 and 90 of the Income Tax Assessment Act 1922 (Cth) ("the 1922 Act") and substantially reproduced in ss 254 and 255 of the 1936 Act. Section 47 of the War-time Profits Tax Assessment Act authorised the issue of an assessment against a liquidator in his representative capacity. Rich, Dixon and McTiernan JJ said in Anderson's Industries Ltd v Federal Commissioner of Taxation36: "But he could be assessed in his representative capacity only, and would incur only a vicarious liability which is limited and is never personal unless he disposes of assets while the tax is unpaid." That observation, and the like observation in Joshua Bros concerning s 52 of the 1915 Act, were relied upon by the Commissioner against the proposition in the judgment of the Full Court that s 254 of the 1936 Act could not apply to ABS's capital gain because it must be assessed to ABS and not to the liquidators. That proposition, relying upon Div 6 of Pt III, as noted earlier, was not supported by the respondents. It is apparent that, from a time early in the history of these provisions, the personal liabilities they imposed upon "trustees", including liquidators, were in aid of the retention and remittance obligations they imposed. None of the provisions requiring retention of funds in the antecedents to ss 254 and 255 expressly linked the obligation to the issue of an assessment. Nor do ss 254 and 255. That link was made by this Court in respect of the retention 34 War-time Profits Tax Assessment Act 1917 (Cth), ss 47(e) and 48(c): "He is hereby authorized and required to retain from time to time out of any money which comes to him [in his representative capacity/on behalf of the person resident out of Australia] so much as is sufficient to pay the war-time profits tax which is or will become due [in respect of the said profits/by that person]." 35 Introduced by the Income Tax Assessment Act 1918 (Cth), s 35. 36 (1932) 47 CLR 354 at 366; [1932] HCA 6. obligation in s 255(1)(b) in Bluebottle UK Ltd v Deputy Commissioner of Taxation37 by the Court's construction of the words "sufficient to pay the tax which is or will become due". The same link was made by the primary judge and the Full Court in this case in respect of the retention obligation in s 254(1)(d). It is a link which is necessarily informed by the provisions of the 1936 Act under which tax became due and payable after the issue of an assessment. It is now necessary to consider the text of ss 254 and 255. Sections 254 and 255 of the 1936 Act Section 254 of the 1936 Act relevantly provides: "Agents and trustees (1) With respect to every agent and with respect also to every trustee, the following provisions shall apply: (a) He or she shall be answerable as taxpayer for the doing of all such things as are required to be done by virtue of this Act in respect of the income, or any profits or gains of a capital nature, derived by him or her in his or her representative capacity, or derived by the principal by virtue of his or her agency, and for the payment of tax thereon. (b) He or she shall in respect of that income, or those profits or gains, make the returns and be assessed thereon, but in his or her representative capacity only, and each return and assessment shall, except as otherwise provided by this Act, be separate and distinct from any other. (d) He or she is hereby authorized and required to retain from time to time out of any money which comes to him or her in his or her representative capacity so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains. (e) He or she is hereby made personally liable for the tax payable in respect of the income, profits or gains to the extent of any amount that he or she has retained, or should 37 (2007) 232 CLR 598; [2007] HCA 54. have retained, under paragraph (d); but he or she shall not be otherwise personally liable for the tax." An indemnity provision follows. Subsections (2) and (3) are not material for present purposes. Section 255 relevantly provides: "Person in receipt or control of money from non-resident (1) With respect to every person having the receipt control or disposal of money belonging to a non-resident, who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder, debenture holder, or depositor in a company deriving income, or profits or gains of a capital nature, from a source in Australia, the following provisions shall, subject to this Act, apply: the person shall when required by the Commissioner pay the tax due and payable by the non-resident; the person is hereby authorized and required to retain from time to time out of any money which comes to the person on behalf of the non-resident so much as is sufficient to pay the tax which is or will become due by the non-resident; the person is hereby made personally liable for the tax payable by the person on behalf of the non-resident to the extent of any amount that the person has retained, or should have retained, under paragraph (b); but the person shall not be otherwise personally liable for the tax; the person is hereby indemnified for all payments which the person makes in pursuance of this Act or of any requirement of the Commissioner." Subsections (2) to (5) are not material for present purposes. When ss 254(1)(d) and 255(1)(b) were enacted, s 204 of the 1936 Act provided that income tax would be "due and payable" sixty days after service of the notice of assessment, or where specified, on the date set out in the notice of assessment. Section 166A, providing for deemed assessments upon furnishing of returns by taxpayers who are "relevant entities", was introduced by s 30 of the Taxation Laws Amendment Act (No 5) 1989 (Cth) and commenced operation on 17 January 199038. Section 204 was amended on a number of occasions and by the time of its repeal made more elaborate provision for the times at which income tax becomes "due and payable". It was repealed by the Tax Laws Amendment (Transfer of Provisions) Act 2010 (Cth) and replaced by s 5-5 of the 1997 Act headed "When income tax is payable". The primary provision, s 5-5(2), provides that income tax is only due and payable if the Commissioner makes an assessment of income tax for the year. There is provision in s 5-5(3) for tax to have been due and payable at a time before the assessment was made. That is to ensure (presumably in the case of a late return) that general interest charges on unpaid tax begin to accrue from the same date for all taxpayers. For self-assessment entities, income tax is due and payable on the first day of the sixth month after the end of the income year39. For other entities it is due and payable 21 days after the "return day", being the day on or before which the taxpayer is required to lodge an income tax return with the Commissioner40. If the return is lodged on or before the return day, but the notice of assessment is given after the return day, the tax is due and payable 21 days after the Commissioner has given the taxpayer the notice41. The construction of s 254 is not affected by the enactment of s 166A nor by the substitution of s 5-5 of the 1997 Act for s 204 of the 1936 Act. The construction for which the respondents contended would cover the case of income tax being "due" pursuant to the giving of a notice of assessment or a deemed assessment or otherwise by the mechanisms set out in s 5-5 of the 1997 Act. Consideration can now be given to the construction of the retention obligation imposed by s 255(1)(b) adopted by this Court in Bluebottle, and central to the respondents' argument about s 254(1)(d). 38 Taxation Laws Amendment Act (No 5) 1989 (Cth), s 2(1). 39 1997 Act, s 5-5(4). Section 995-1(1) gives the term "self-assessment entity" the same meaning as "full self-assessment taxpayer", defined in the 1936 Act, s 6(1). 40 1997 Act, s 5-5(5). 41 1997 Act, s 5-5(6). The Bluebottle decision The Bluebottle decision concerned the retention obligation imposed on a publicly listed company, pursuant to s 255(1)(b), in relation to tax payable by overseas corporate shareholders on dividends which the company had declared. It is not necessary for present purposes to refer to the factual complexities and other legal issues in that case. The Commissioner unsuccessfully submitted in Bluebottle that s 255(1)(b) should be read as speaking both of the time of assessment and of a time prior to assessment. It was sufficient, according to the Commissioner, that there be "an inchoate liability for tax" and that "the tax would become due, whether considered temporally or as a matter of probability"42. This Court held that the reference in s 255(1)(b) to "the tax which is or will become due by the non- resident" must be read as referring to an ascertained sum. If not read in that way, it would impose a retention obligation of undefined content on the controller of a non-resident's money. Moreover, the Commissioner could require the controller to retain more than the amount later assessed as due from the non-resident, that is, more than was sufficient to pay the tax which is or would become due43. "Until the tax payable by the non-resident has been assessed it is not possible to say more than that there may be tax due by the non- resident. It is not possible to say that tax is due or that tax will become due. The prediction that tax may be due (and any prediction of its likely amount) may be able to be made with more or less certainty by a person who is armed with a deal of information, but there is no reason to suppose that the controller of a non-resident's money would ordinarily, let alone invariably, have that information and be in a position to make any useful prediction about the taxation affairs of the non-resident whose money the controller receives." (emphasis in original) The Court concluded that par (b) of s 255(1) should be read as referring to an amount of tax that has been assessed. The phrase "tax which ... will become due" was to be understood as referring to tax which, although assessed, was not yet due for payment45. No challenge was made to the correctness of the decision in 42 (2007) 232 CLR 598 at 626–627 [77]. 43 (2007) 232 CLR 598 at 627 [78]. 44 (2007) 232 CLR 598 at 627 [79]. 45 (2007) 232 CLR 598 at 627 [80]. Bluebottle in these appeals, rather it was sought to distinguish the operation of s 255 from that of s 254. The considerations which moved the Court to that construction of s 255(1)(b) are, having regard to their textual setting, equally applicable to the retention requirement in s 254(1)(d). The proposition "that content can be given to the obligation imposed by s 255(1)(b) only if an assessment has issued"46 is true also of the obligation imposed by s 254(1)(d). Against that background, it is necessary to consider the contending constructional arguments about the operation of s 254(1)(d). The construction of s 254(1)(d) The Commissioner submitted that it is an error to treat decisions on the construction of a phrase in one section as controlling the construction of the same or a similar phrase in another section and cited Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority47. That case has no bearing on the present appeals. The passage cited made no more than the obvious point that the courts of one State in construing its legislation are not required to follow slavishly judicial decisions of the courts of another jurisdiction in respect of similar or even identical legislation. On the other hand, an interpretation by this Court of a particular provision of an Act is a powerful indicator of the correct interpretation of a provision of the same Act which serves similar purposes and uses identical or substantially similar language. That is not to say it is determinative if a different construction is required by the text, context and purpose of the other provision. The proposition is not new. In Clyne v Deputy Commissioner of Taxation48 Mason J, with whom Aickin and Wilson JJ agreed, accepted that there is a presumption that in a statute the same word is used with the same meaning albeit the presumption "readily yields to the context"49. He acknowledged judicial statements to the effect that the presumption has little force in Income Tax Acts because they deal with a wide variety of topics50 but discounted them as having "little value when we are examining the possibility that a word is used in different senses in one section of such an Act."51 The general approach is 46 (2007) 232 CLR 598 at 633 [97]. 47 (2008) 233 CLR 259 at 270 [31]; [2008] HCA 5. 48 (1981) 150 CLR 1; [1981] HCA 40. 49 (1981) 150 CLR 1 at 15. 50 (1981) 150 CLR 1 at 15–16. 51 (1981) 150 CLR 1 at 16. applicable to the use of the term "due" in the 1936 Act to give content to the retention obligations in ss 254 and 255, two adjacent provisions serving the same general purposes and sharing a common legislative history. Clyne concerned the interpretation of the term "amount due by the taxpayer" as used in the former statutory garnishee provision, s 218(1)(i) of the 1936 Act52. Mason J said that the correct view was that "income tax is due when it is assessed and notice is served of that assessment and that the tax does not become payable before the date fixed by s 204."53 He quoted from George v Federal Commissioner of Taxation54 for the proposition that "tax is only due after it is 'assessed'"55. On the basis of Clyne, tax could be "due" under the 1936 Act but not "payable" even though an assessment had been issued. That is because under the 1936 Act payment was not required until the expiry of the time fixed for payment by the assessment56. The Commissioner's reliance upon Clyne, as supportive of his construction of s 254(1)(d), was, with respect, misplaced. As Gibbs CJ said in Clyne57: "At the latest when tax is assessed it becomes a debt due to the Crown although it is not payable until the later date specified in the notice of assessment." He pointed, by way of example, to the use of the term "due and payable" in the payment obligation in s 255(1)(a) and contrasted it with the word "due" in the retention obligation imposed by s 255(1)(b)58. 52 Section 218 was repealed by the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 (Cth). 53 (1981) 150 CLR 1 at 16. 54 (1952) 86 CLR 183 at 207 per Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ; [1952] HCA 21. 55 (1981) 150 CLR 1 at 17. 56 1936 Act, s 204. 57 (1981) 150 CLR 1 at 9. 58 (1981) 150 CLR 1 at 10. An understanding of the term "tax which is or will become due" in s 254(1)(d) as referring to tax which has been assessed and is or will become payable, is therefore consistent with an established interpretation of the word "due" as used in the 1936 Act. The words "or will become" may have an element of surplusage but any argument against the Full Court's construction of s 254(1)(d) on that basis would also be good for s 255(1)(b). The Commissioner's construction was advanced substantially on the basis that it made a better fit with the class of case to which s 254 applies and with the nature and timing of the obligations imposed by s 254(1)(a) and (b) than the construction appropriate to s 255(1)(b). The Commissioner argued that the controller or holder of monies under s 255 may be a complete stranger to the derivation of the income, profits or gains the subject of the tax. By way of contrast the agent or trustee has derived the income, profits or gains in a representative capacity or by virtue of their agency. The payment obligations imposed by s 255 engage only when the tax of the non-resident has become "due and payable by the non-resident". The liability under s 254 arises at the point of derivation of the income, profits or gains by the agent or trustee. Then it was said that the nature of the obligations imposed by ss 254 and 255 differs. Section 255, unlike s 254, does not make the controller "answerable as a taxpayer". Section 254 was said to assimilate the role of the agent or trustee to that of a taxpayer by giving the Commissioner remedies against the property controlled, managed or possessed by the agent or trustee that he would have against the property of any taxpayer, in a way not reflected in s 255. That submission, with respect, does not warrant the construction as to the retention obligation for which the Commissioner contended and in particular, the personal liability attached the the obligation by s 254(1)(e). Commissioner's proposed construction, a taxpayer who conducted his or her business through an agent would be placed in a position different from that of an ordinary taxpayer. Moreover, on It may be accepted that the position of agent and trustee in s 254 is different from that of the controller of a non-resident's money in s 255 but this does not provide an answer to the question of when the obligation to retain arises. A differential construction of s 254 in that regard would provide the Commissioner with a level of security not provided by s 255. The Commissioner argued that while tax is "due" in the sense of "owing" only after it is assessed, taxpayers have an obligation to pay tax on income derived during the course of an income year. Although assessments are usually only made annually, s 168 of the 1936 Act confers a power to assess at any time. That may be accepted, but it does not provide any specific support for the Commissioner's preferred construction. The Commissioner submitted that the agent or trustee is likely to have or acquire much greater familiarity with the taxation affairs of the principal or beneficiary than the controller or holder of a non-resident's money with the taxation affairs of the non-resident. That is a statement of likelihood. It does not purport to cover the full range of agent and trustee relationships to which s 254 applies. Nor could it. While these appeals concern the position of liquidators of a company with investigative powers under the Corporations Act, s 254 applies to a much larger class of persons who derive income, profits or gains in a representative capacity. The respondents pointed to the examples of livestock agents selling cattle or sheep, agents selling collectibles at auctions and retail selling agents generally. There was a statement of general likelihood also implicit in the Commissioner's submission that the Full Court's construction would render an agent or trustee to whom s 254 applies "vulnerable" to calls from the principal or beneficiary for payment over of monies held by the agent or trustee prior to the making of an assessment. The term "vulnerable" is not apposite to describe the position of an agent or trustee who may be called upon to make payments to a principal or beneficiary in accordance with his or her rights and the duties of the agent or trustee. The Commissioner relied upon observations in Bluebottle about the retention obligation in s 52(e) of the 1915 Act, a precursor of s 254(1)(d). The Court said that s 52(e) operated in a context "radically different" from that provided by s 255 of the 1936 Act59. Section 52(a) of the 1915 Act made the agent "answerable as taxpayer" in effectively the same terms as s 254(1)(a). The retention authority and requirement created by s 52(e) related to tax due "in respect of the income" as if the amounts with which the agent dealt both founded the relevant taxation liability and marked its "outer boundary"60. The agent's personal liability for tax depended upon him paying away money from which the tax could be paid after the Commissioner had required him to make a return or "while the tax remains unpaid"61. The Court also observed that expressions similar to those used in s 52 of the 1915 Act were used in s 52A, the direct legislative antecedent of s 25562. In the end, as the Court said, the legislative 59 (2007) 232 CLR 598 at 629 [84]. 60 (2007) 232 CLR 598 at 629 [84]. 61 (2007) 232 CLR 598 at 629 [84]. 62 (2007) 232 CLR 598 at 630 [85]. history provided only limited assistance to the resolution of the questions before the Court about the application of s 25563. The Court made no observation about s 52 of the 1915 Act or s 89 of the 1922 Act or s 254 of the 1936 Act which indicated that it would have taken a different view of the construction of the retention obligation in each of those sections from the view it took of the retention obligation in s 255(1)(b). The term "outer boundary" merely reflected the reality that the agent or trustee cannot retain more than the money which the agent or trustee has received in his or her representative capacity. Subject to the "outer boundary" exceeding the taxpayer's liability, the agent or trustee must retain an amount "sufficient" to pay the tax which is or will become due. The Commissioner submitted that the word "sufficient" in s 254(1)(d) does not require "nominal equivalence"64 but indicates, consistently with a continuing retention obligation, that the future tax liability may not be known with precision. Plainly, however, the ordinary meaning of the word "sufficient" is entirely consistent with the proposition that the retention obligation arises only upon the making of the relevant assessment. It may be accepted that there is a difference between the immediate statutory contexts of the retention obligations in ss 254 and 255 respectively. Those differences, however, do not open a logical pathway to the construction of s 254(1)(d) for which the Commissioner contends. On the Commissioner's construction the agent or trustee would be burdened with a continuing obligation to retain sufficient money to pay at any time the amount of tax that would be payable upon a notional assessment made at that time. Losses and deductions would have to be factored in to avoid the agent or trustee exceeding the retention authority conferred by s 254(1)(d). Linked to the continuing obligation would be a continuing and variable personal liability defined by reference to the difference between what the agent or trustee has retained and what would have been sufficient to pay the relevant tax at that time. It is no answer to the practical difficulties attendant upon the Commissioner's construction to say that adjustments could be made as the agent or trustee became aware of the existence of losses and deductions. Neither the retention obligation nor the personal liability imposed by s 254(1)(e) is limited by the state of the 63 (2007) 232 CLR 598 at 632 [91]. 64 A term taken from the judgment of Allsop CJ in Federal Commissioner of Taxation v Resource Capital Fund IV LP (2013) 215 FCR 1 at 4 [11] in relation to the retention obligation in s 255 applied to foreign currency. Sufficiency did not require "nominal equivalence" of the money in Australian dollars. agent or trustee's knowledge of the true tax position of the principal or beneficiary. Counsel for ABS submitted that the legislation imposes a personal liability on the agent or trustee which is confined by the words "to pay tax which is or will become due". That imposition, on his submission, required for its operation certainty as to the amount of the tax due. The section does not impose any personal liability in respect of a failure to comply with s 254(1)(a) or (b). The personal liability has a narrower compass. That submission should be accepted. The Commissioner's submissions pointed to the treatment by s 254 of agents and trustees as notional taxpayers, asserted the consistency of his construction with that treatment and pointed to adverse consequences flowing from the Full Court's construction. His textual and contextual submissions cannot overcome the weight of the considerations which supported the construction of s 255(1)(b) in Bluebottle. They are equally applicable to the same language in s 254(1)(d). The acceptance of the construction of s 254(1)(d) for which the Commissioner contends would produce such a marked difference between that provision and the almost identically worded language of s 255(1)(b) that nothing less than strong contextual support would justify it. The matters of context referred to by the Commissioner do not justify this construction. Having regard to the text, context and purpose of s 254 and the considerations which moved this Court to its construction of s 255(1)(b) in Bluebottle, the Full Court's construction of s 254(1)(d) should be accepted. Conclusion For the above reasons the appeals should be dismissed with costs. These appeals raise an important question as to the construction of s 254 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"), which provides, "[w]ith respect to every agent and with respect ... to every trustee", that he or she is "answerable as taxpayer for the doing of all such things as are required to be done by virtue of [that] Act in respect of the income, or any profits or gains of a capital nature, derived by him or her in his or her representative capacity, or derived by the principal by virtue of his or her agency, and for the payment of tax thereon"65. The term "trustee" for the purpose of s 254 takes its meaning from the definition in the 1936 Act66: "trustee in addition to every person appointed or constituted trustee by act of parties, by order, or declaration of a court, or by operation of law, includes: an executor or administrator, guardian, committee, receiver, or liquidator; and every person having or taking upon himself the administration or control of income affected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control or management of the income of a person under any legal or other disability". The term "agent" is defined67, but not in terms now relevant. By force of s 254, an agent or trustee: is obliged "in respect of that income, or those profits or gains, [to] make the returns and be assessed thereon" ("the assessment obligation")68; is authorised and required "to retain from time to time out of any money which comes to him or her in his or her representative capacity so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains" ("the retention obligation")69; and is "made personally liable for the tax payable in respect of the income, profits or 65 Section 254(1)(a) of the 1936 Act. 66 Section 6(1) of the 1936 Act. 67 Section 6(1) of the 1936 Act. 68 Section 254(1)(b) of the 1936 Act. 69 Section 254(1)(d) of the 1936 Act. gains to the extent of any amount that he or she has retained, or should have retained" ("the taxation liability")70. Within the scheme of the 1936 Act, "assessment" is "the ascertainment ... of the tax payable"71 and is "the completion of the process by which the provisions of the Act relating to liability to tax are given concrete application in a particular case with the consequence that a specified amount of money will become due and payable as the proper tax in that case"72. From returns and from other information in the Commissioner's possession, the Commissioner of Taxation must make an assessment of the amount of income tax payable by a taxpayer73 (being "a person deriving income or deriving profits or gains of a capital nature"74), and may make an assessment of the amount of tax which any person is liable to pay under the 1936 Act whether or not that person meets the description of a taxpayer75. The ordinary rule is that income tax is only "due and payable" by an entity if the Commissioner makes an assessment of the income tax that is payable by that entity for a financial year76. The question in the appeals is whether the retention obligation is imposed on an agent or trustee before the Commissioner makes an assessment of the amount of tax payable on income or capital gains derived by that agent or trustee in his or her representative capacity or derived by the principal by virtue of his or her agency. For the appellant Commissioner, it is argued that the retention obligation extends to retaining money in anticipation of an assessment being made. Tax is "due" when it is assessed. Tax "which is ... due" is tax which has been assessed and which remains unpaid. Tax "which ... will become due" is tax which will be assessed in the future. 70 Section 254(1)(e) of the 1936 Act. 71 Section 6(1) of the 1936 Act, pars (a)-(d) of the definition. 72 Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 at 252; [1963] HCA 51. 73 Section 166 of the 1936 Act. 74 Section 6(1) of the 1936 Act. 75 Section 169 of the 1936 Act. 76 Section 5-5(2) of the Income Tax Assessment Act 1997 (Cth). For the respondents, it is argued that the retention obligation is limited to retaining money after an assessment has been made. Tax is "due" when it is assessed and payable. Tax "which is ... due" is tax which has been assessed and which remains unpaid after it has become due for payment. Tax which "will become due" is tax which has been assessed and which is not yet due for payment. That the question has not squarely arisen in the prior case law is surprising given that s 254: applies to all agents and trustees; has stood substantially unaltered since the enactment of the 1936 Act; and has a provenance which can be traced back through the Income Tax Assessment Act 1915 (Cth)77 ("the 1915 Act") to the Income Tax Act 1895 (Vic)78. There were references to the operation of the earlier in time of those predecessor Acts in a case in 191079 and to the later of them in a case in 192380. However, neither case was addressed to the present question. Cumulatively, they are insufficient to allow it to be said that the language of s 254 had in any way relevant to the question acquired a settled meaning, or been fixed with a certain application, at the time of the enactment of the 1936 Act. In a case arising under the 1936 Act, s 254 was described as amongst a group of provisions interpreted as imposing a liability on executors "only quoad assets and as meaning by assessment to impose a debt owing by the The respondents' argument accords to the retention obligation in s 254 the meaning attributed in Bluebottle UK Ltd v Deputy Commissioner of Taxation82 to the similarly worded retention obligation in s 255 of the 1936 Act, by which "every person having the receipt control or disposal of money belonging to a non-resident, who derives income ... from a source in Australia" is authorised and required "to retain from time to time out of any money which comes to the person on behalf of the non-resident so much as is sufficient to pay the tax which 77 Section 52(e). 78 Section 12(c). 79 Webb v Syme (1910) 10 CLR 482 at 490, 497-498, 507; [1910] HCA 32. 80 Joshua Bros Pty Ltd v Federal Commissioner of Taxation (1923) 31 CLR 490 at 495, 496; [1923] HCA 3. 81 Deputy Federal Commissioner of Taxation v Brown (1958) 100 CLR 32 at 42; [1958] HCA 2. 82 (2007) 232 CLR 598; [2007] HCA 54. is or will become due by the non-resident"83. Of the wording of that retention obligation in s 255, it was said in Bluebottle that84: "When [it] refers to 'the tax which is or will become due by the non-resident' it must be read as referring to an ascertained sum. If the paragraph is not read in that way, the obligation to retain money which is imposed on the controller is an obligation of undefined content. It is undefined because all that may be retained (the controller 'is hereby authorised … to retain') 'out of any money which comes to him on behalf of the non-resident' is suffıcient to pay the tax which is or will become due. And it is that amount (and only that amount) which the controller is obliged to retain." The reasoning in Bluebottle continued85: "Until the tax payable by the non-resident has been assessed it is not possible to say more than that there may be tax due by the non- resident. It is not possible to say that tax is due or that tax will become due. The prediction that tax may be due (and any prediction of its likely amount) may be able to be made with more or less certainty by a person who is armed with a deal of information, but there is no reason to suppose that the controller of a non-resident's money would ordinarily, let alone invariably, have that information and be in a position to make any useful prediction about the taxation affairs of the non-resident whose money the controller receives." The conclusion in Bluebottle was that the wording of the retention obligation in s 25586: "should be read as referring to an amount of tax that has been assessed. The phrase 'tax which … will become due' is to be understood as referring to tax which, although assessed, is not yet due for payment." It was noted that "'[t]he word "due" is ambiguous; it can mean owing, although not payable until some future date, or it can mean presently payable'"87. It was 83 Section 255(1)(b) of the 1936 Act. 84 (2007) 232 CLR 598 at 627 [78] (emphasis in original). 85 (2007) 232 CLR 598 at 627 [79] (emphasis in original). 86 (2007) 232 CLR 598 at 627 [80]. 87 (2007) 232 CLR 598 at 628 [81], quoting Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 8; [1981] HCA 40. explained that, as the word is used in the expression of the retention obligation in s 255, "the requirement for specifying the amount of money that meets that description requires that the word 'due' is read as meaning assessed as owing"88. There are differences between ss 254 and 255. Indeed, the context in which the predecessor to s 254's retention obligation appeared in the 1915 Act was described in Bluebottle as "radically different from that provided by s 255 of the 1936 Act"89. The differences caution against treating what was said in Bluebottle about the retention obligation in s 255 as providing an automatic answer to the present question about the retention obligation in s 254. The most significant of the differences is that the assessment obligation in s 254 removes much of the force of what was said in Bluebottle about the difficulty of the person on whom the retention obligation is imposed being authorised and required to retain an unascertained amount. Unlike the controller of the money of a non-resident, there is reason to suppose that an agent or trustee will be in a position to make a prediction of the amount of tax which will be ascertained by assessment to be payable on income or a capital gain derived by that agent or trustee in his or her representative capacity or derived by the principal by virtue of his or her agency. That is because the agent or trustee has a statutory obligation to make a return in respect of that income or capital gain so as to be assessed on it. I am nevertheless persuaded that the respondents' argument is to be preferred. The better view is that the retention obligation in s 254, like the retention obligation in s 255, is limited to retaining money after an assessment has been made. First, it fits with the structure of s 254 in giving the retention obligation an operation sequential to the performance of the assessment obligation. The content of the retention obligation is fixed by the assessment made in consequence of performance of the assessment obligation. The retention obligation then conforms to the taxation liability. The amount authorised and required to be retained out of any money which comes to the agent or trustee in his or her representative capacity following assessment is no more and no less than the amount for which the agent or trustee is made personally liable as a result of the assessment. Second, it produces certainty as to the total amount which the agent or trustee is authorised and required to retain in performance of the retention obligation. The total amount is fixed by the assessment. The certainty produced 88 (2007) 232 CLR 598 at 628 [81]. 89 (2007) 232 CLR 598 at 629 [84]. by the assessment is not just as to the extent of the statutory obligation to retain. Importantly, it is also as to the extent of the modification of the contractual or fiduciary rights and obligations of the agent or trustee wrought by the statutory authority to retain. The word "sufficient" is not, I think, indicative of a need on the part of the agent or trustee to estimate an amount of tax to be assessed in the future. In s 254, as in s 255, the word is more naturally referable to the cumulative nature of the authority and obligation to retain from time to time. The word "sufficient" acknowledges that the obligation is performed, and the authority is exhausted, once the total amount of the money retained is enough to pay the amount of tax that has been assessed. Third, it results in the lesser fiscal distortion of legitimate commercial choice between business models. A taxpayer carrying on business alone is not ordinarily obliged to quarantine money as it is received for the future payment of tax. A taxpayer carrying on business through an agent would be at a disadvantage were the agent required to retain money for the future payment of tax as it is received in his or her representative capacity. Fourth, it results in s 254 providing a measure of protection of the revenue commensurate with the measure of protection provided by s 255. Within the scheme of the 1936 Act, there is nothing incongruous about a person being obliged to retain an amount sufficient to pay the assessed but unpaid tax of another, yet not being obliged to retain an amount sufficient to pay the tax of another which is yet to be assessed. Neither in s 254 nor in s 255 is the money to which the retention obligation attaches necessarily linked to the income or capital gain in respect of which the tax in question is or will become due. The obligation attaches to "any money" which from time to time "comes to" the person in a relevant capacity. In s 254, as in s 255, the obligation attaches to any money which so comes to the person after the tax in question has been assessed. Finally, in its application to liquidators, it minimises the potential for disharmony between the obligations and liabilities of a liquidator under s 254 of the 1936 Act and the obligations of a liquidator and the rights of creditors under Ch 5 of the Corporations Act 2001 (Cth). One does not reach the question, which the Commissioner seeks to have remitted for determination, as to "whether the operation of ss 501, 555 and 556 of the Corporations Act is affected by s 254 of the [1936 Act], such that the [C]ommissioner enjoys a form of priority because of s 254, notwithstanding what would otherwise be the effect of these provisions of the Corporations Act in a winding up"90. 90 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 617 [13(a)]. For these reasons, I agree in substance with Logan J at first instance91 and Davies J in the Full Court of the Federal Court92. In relation to the reasoning of Edmonds and Collier JJ in the Full Court, I consider that the uncontested submissions of the Commissioner recorded by Keane J should be accepted for the reasons given by Keane J. The appeals should be dismissed with costs. 91 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614. 92 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 274 [34]-[35]. KEANE J. Section 254(1)(d) of the Income Tax Assessment Act 1936 (Cth) ("the Assessment Act") requires that an agent or trustee must retain out of any money which comes to him or her in his or her representative capacity "so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains" derived by him or her in that capacity. A liquidator is a "trustee" as defined in s 6(1) of the Assessment Act. The issue in these appeals is whether, upon the derivation of a capital gain by a liquidator in that capacity, the liquidator incurs a simultaneous obligation to retain from money in his or her hands an amount sufficient to pay tax that may be assessed on that gain, or whether that obligation arises only when an assessment of the tax owing by the liquidator has been issued by the Commissioner of Taxation ("the Commissioner"). If the words "tax which … will become due" are properly construed as "tax which … will be assessed", then this issue must be resolved in favour of the Commissioner. In Bluebottle UK Ltd v Deputy Commissioner of Taxation93, this Court considered s 255(1)(b) of the Assessment Act, which obliges a person having control of money belonging to a non-resident of Australia ("the controller") who has derived income, profits or gains from sources in Australia "to retain … so much as is sufficient to pay the tax which is or will become due by the non-resident". The Court held that the retention obligation imposed by s 255(1)(b) did not arise until the liability to tax of the non-resident taxpayer had been assessed by the Commissioner. It will be seen that the ordinary meaning of "tax due" in the Assessment Act is tax assessed as owing94. The Court construed95 the words "the tax which is or will become due", in their context, as follows96: "Paragraph (b) of s 255(1) should be read as referring to an amount of tax that has been assessed. The phrase 'tax which … will become due' is to be understood as referring to tax which, although assessed, is not yet due for payment." In this case, the primary judge, and Davies J in the Full Court, regarded the decision in Bluebottle as leading to the conclusion that the phrase "tax which is or will become due" in s 254(1)(d) has the same meaning as it has in 93 (2007) 232 CLR 598; [2007] HCA 54. 94 Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 16, 24; [1981] HCA 40. 95 (2007) 232 CLR 598 at 627-628 [80]-[82]. 96 (2007) 232 CLR 598 at 627 [80]. s 255(1)(b); that is, "tax which has been assessed or which, although assessed, is not yet due for payment." That conclusion does not give effect to the ordinary meaning of the language of s 254(1)(d), or recognise the substantial textual and contextual differences between ss 254 and 255. Nor does it reflect the purpose of s 254(1)(d) to ensure that an agent or trustee retains sufficient money to meet any liability to tax which is assessed as owing on income, profits or gains derived in that capacity. The textual and contextual considerations which led this Court in Bluebottle to adopt a meaning other than the ordinary meaning of "tax which is or will become due" do not constrain the meaning of s 254(1)(d). The retention obligation in s 254(1)(d) arises in relation to money in the hands of the liquidator as and when income, profits or gains are derived, and in respect of which tax has been assessed or will be assessed. Accordingly, the appeals should be allowed. Factual background The respondents in Matter No B20 of 2015, Ms Ginette Muller and Ms Joanne Dunn, are the liquidators of Australian Building Systems Pty Ltd ("ABS"), the respondent in Matter No B19 of 2015. In 2000, ABS purchased a property at 118-128 Magnesium Drive, Crestmead, Queensland ("the Crestmead property"). On 2 March 2011, ABS was placed into voluntary administration and Ms Muller and Ms Dunn were appointed administrators. On 6 April 2011, the creditors of ABS resolved that the company should be wound up, and Ms Muller and Ms Dunn were appointed liquidators ("the liquidators"). In July 2011, the liquidators arranged for the sale of the Crestmead property. That sale resulted in a capital gain of approximately $1.12 million, pursuant to s 104-10 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"). In January 2012, the liquidators applied for a private ruling from the Commissioner, seeking determination of three issues: first, whether s 254 of the Assessment Act obliges the liquidators to account to the Commissioner, out of the proceeds of sale of an asset that belonged to ABS before the liquidation, any capital gains tax liability that crystallises on the sale of that asset; secondly, if so, whether the liquidators are obliged to retain a sufficient amount of money to pay that tax liability only once an assessment issues from the Commissioner; and thirdly, if the obligation to retain that amount does not arise only once an assessment is issued, whether the amount is to be retained at crystallisation of the capital gain. The Commissioner ruled that under s 254 the liquidators were required to account to the Commissioner for capital gains tax liability arising from the sale of an asset of ABS out of the proceeds of that sale, and were obliged to retain sufficient money to do so upon the crystallisation of the capital gain. In July 2012, ABS lodged an objection to the Commissioner's ruling. In August 2012, that objection was disallowed. The course of proceedings On 5 October 2012, ABS commenced proceedings in the Federal Court appealing against the decision to disallow the objection. On 11 October 2012, the liquidators commenced a further set of proceedings in the Federal Court seeking declarations in the liquidators' favour corresponding to the issues presented to the Commissioner in the private ruling. The primary judge, Logan J, heard the two matters concurrently. Before the primary judge, the issues between the parties were reformulated somewhat so that the following questions were addressed97 by his Honour: "(a) whether the operation of ss 501, 555 and 556 of the Corporations Act is affected by s 254 of the [Assessment Act], such that the commissioner enjoys a form of priority because of s 254, notwithstanding what would otherwise be the effect of these provisions of the Corporations Act in a winding up; and (b) whether an obligation under s 254 arises upon the occurrence of a [capital gains tax] event (here, the disposal of the Crestmead property) or only upon the issuing of a notice of assessment?" The primary judge resolved question (b) in favour of ABS and the liquidators98, as a result of which it was not necessary to decide question (a). It is to be emphasised that question (a) was not the subject of argument in these appeals. The reasons which follow should not be taken as bearing in any way upon any question of priority between creditors which may be said to attend the operation of s 254(1)(d). The primary judge declared that, in the absence of an assessment, the liquidators are not required to account to the Commissioner for any capital gains tax liability that arises on the sale of an asset of ABS or to retain a sum sufficient 97 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 617 [13]. 98 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 623 [25]. to pay the amount of that liability. His Honour quashed the Commissioner's decision. The Commissioner appealed to the Full Court of the Federal Court. The By a grant of special leave, the Commissioner appealed to this Court in both matters100. The legislation Section 254 of the Assessment Act provides relevantly that: "(1) With respect to every agent and with respect also to every trustee, the following provisions shall apply: (a) He or she shall be answerable as taxpayer for the doing of all such things as are required to be done by virtue of this Act in respect of the income, or any profits or gains of a capital nature, derived by him or her in his or her representative capacity, or derived by the principal by virtue of his or her agency, and for the payment of tax thereon. (b) He or she shall in respect of that income, or those profits or gains, make the returns and be assessed thereon, but in his or her representative capacity only, and each return and assessment shall, except as otherwise provided by this Act, be separate and distinct from any other. If he or she is a trustee of the estate of a deceased person, the returns shall be the same as far as practicable as the deceased person, if living, would have been liable to make. (d) He or she is hereby authorized and required to retain from time to time out of any money which comes to him or her in his or her representative capacity so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains. 99 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263. 100 [2015] HCATrans 082 (17 April 2015). (e) He or she is hereby made personally liable for the tax payable in respect of the income, profits or gains to the extent of any amount that he or she has retained, or should have retained, under paragraph (d); but he or she shall not be otherwise personally liable for the tax. He or she is hereby indemnified for all payments which he or she makes in pursuance of this Act or of any requirement of the Commissioner." Section 254 of the Assessment Act has precursors in s 52 of the Income Tax Assessment Act 1915 (Cth) ("the 1915 Act"), which became s 89 of the Income Tax Assessment Act 1922 (Cth), as well as in s 12 of an earlier colonial Victorian Act, the Income Tax Act 1895 (Vic). The retention obligation in s 254(1)(d) facilitates the payment of tax, by requiring the trustee to "keep back out of the trust [or agency] receipts enough to pay the tax if it is not obtained from the beneficiary [or principal] and demand is made on himself"101. The personal liability imposed by s 254(1)(e) is, in effect, "a penalty for not keeping a reserve of income or funds in hand to satisfy the tax"102. These measures have the object of "ensuring payment of the tax" by making the agent or trustee "effectively answerable for its payment"103 if it is not paid by the principal or beneficiary. Section 255 is relevantly in the following terms: "(1) With respect to every person having the receipt control or disposal of money belonging to a non-resident, who derives income, or profits or gains of a capital nature, from a source in Australia ... the following provisions shall, subject to this Act, apply: the person shall when required by the Commissioner pay the tax due and payable by the non-resident; the person is hereby authorized and required to retain from time to time out of any money which comes to the person on behalf of the non-resident so much as is sufficient to pay the tax which is or will become due by the non-resident; 101 Webb v Syme (1910) 10 CLR 482 at 497; [1910] HCA 32. 102 Webb v Syme (1910) 10 CLR 482 at 498. 103 Webb v Syme (1910) 10 CLR 482 at 507. the person is hereby made personally liable for the tax payable by the person on behalf of the non-resident to the extent of any amount that the person has retained, or should have retained, under paragraph (b); but the person shall not be otherwise personally liable for the tax; the person is hereby indemnified for all payments which the person makes in pursuance of this Act or of any requirement of the Commissioner." A number of textual and contextual differences between ss 255(1)(b) and 254(1)(d) may be noted. First, under s 254(1)(a), the agent or trustee is "answerable as taxpayer" for the observance of the Act in respect of the income, profits or gains derived by him or her in his or her representative capacity, "and for the payment of tax thereon." Under s 254(1)(a) and (e), the agent or trustee is personally liable as a taxpayer to pay the tax payable in respect of the income, profits or gains derived by him or her, albeit only to the extent that he or she has retained or should have retained a sum sufficient to pay the tax in respect of which s 254(1)(b) obliges him or her to be assessed. Secondly, the obligation imposed on the agent or trustee by s 254(1)(b), to make returns of the income, profits or gains and to be assessed on that income or those profits or gains, is an important point of difference. Section 254(1)(b) proceeds on the evident assumption that the assessment to tax to which it refers will reflect the content of the returns to be furnished by the agent or trustee in relation to the derivation of income, profits or gains. That assumption accords with s 166 of the Assessment Act, which provides that the Commissioner must make an assessment from, inter alia, the returns of "the amount of the taxable income … of any taxpayer, and of the tax payable thereon". Thirdly, it is the "derivation" by the agent or trustee of income, profits or gains in a representative capacity that gives rise to the obligations in s 254(1)(a), (b) and (c). The retention obligation in s 254(1)(d) is collocated with these obligations. That collocation suggests that all these obligations arise when the agent or trustee engages in derivation of income, profits or gains in a representative capacity. And the payment obligation in s 254(1)(e), which refers to "the income, profits or gains", refers to income, profits or gains in respect of which the agent or trustee must provide returns and be assessed. In contrast, s 255(1) does not postulate that the controller has derived income, profits or gains on behalf of the non-resident taxpayer. The controller is not liable to be assessed to tax on the income, profits or gains derived by the non-resident taxpayer; and the controller is not obliged to make returns so as to facilitate the assessment of the tax liability in respect of that income or those profits or gains, or to be assessed in that regard. Section 255(1)(b) is not collocated with provisions which operate at the point when the derivation of income, profits or gains by the non-resident taxpayer occurs. Section 255(1) proceeds on the footing that the controller may have had nothing at all to do with the derivation of taxable income, profits or gains by the non-resident taxpayer so that the controller may have no knowledge at all of the tax affairs of the non-resident taxpayer. Most importantly, under s 255(1)(a), the controller's personal obligation to pay the tax payable by the non-resident taxpayer arises only when that tax is due by the non-resident taxpayer after an assessment issued by the Commissioner, and upon a "requirement" by the Commissioner in that regard. This aspect of the operation of s 255(1) was particularly material to the decision in Bluebottle because the retention obligation in s 255(1)(b) was held to be synchronised so as to arise with the payment obligation. Bluebottle In Bluebottle, it was held that the retention obligation imposed by s 255(1)(b) arises only once an assessment has been issued to the non-resident taxpayer. Because the amount of the tax payable by the non-resident taxpayer, which is the amount to be retained by the controller, can be established only by an assessment of the non-resident taxpayer, it was held that the intersection of the payment and retention obligations under s 255 occurs at the point of assessment. The Court explained its construction of s 255(1)(b)104: "This construction of s 255(1)(b) gives proper weight to the language used in that paragraph (the tax which is or will become due by the non-resident) when compared with the different expression used in para (a) (the tax due and payable by the non-resident). As Gibbs CJ observed in Clyne v Deputy Commissioner of Taxation, '[t]he word "due" is ambiguous; it can mean owing, although not payable until some future date, or it can mean presently payable'. And as the decision in Clyne illustrates, it is necessary to consider expressions like 'due', and 'due and payable', when used in the [Assessment Act], in the context of the Act as a whole. When 'due' is used in the collocation found in s 255(1)(b), 'the tax which is or will become due by the non-resident', the requirement for specifying the amount of money that meets that description requires that the word 'due' is read as meaning assessed as owing." (footnote omitted) 104 (2007) 232 CLR 598 at 628 [81]. In the upshot, the Court concluded105 that: "Once it is recognised that content can be given to the obligation imposed by s 255(1)(b) only if an assessment has issued, the operation of the provision, as a whole, can be seen to be that described [earlier]." It will be necessary to say something more about the reasoning in Bluebottle in due course; but for present purposes it is enough to note that the phrase "sufficient to pay the tax which is or will become due" was construed to mean "sufficient to pay the tax which has been assessed and is due for payment or the tax which, although assessed, is not yet due for payment". It will be seen that this construction was held to be necessary, otherwise there would be no basis for quantifying the controller's payment and retention obligations106. It may be noted that the construction given to s 255(1)(b) in Bluebottle meant ascribing a different meaning to the word "due" used in the present tense "is … due" from that applicable when "due" is used in the future tense "will become due". Ordinarily, one would be slow to attribute different meanings to the same word used in one phrase; but this attribution of varying meanings to "due" was necessary in order to give the whole phrase a coherent operation given contextual constraints upon its meaning. It is also convenient to note here that in Bluebottle the Court contrasted the context in which s 255(1)(b) appears with s 52 of the 1915 Act (the predecessor to s 254)107, describing the contextual differences as "radical"108. It may be said, respectfully, that to describe the differences as radical is to suggest the possibility that the provisions have a different operation; but that possibility did not engage the consideration of the courts below. The reasons of the primary judge The primary judge concluded109 that s 254 should be construed in the same manner as s 255 was construed in Bluebottle, holding that, "[b]y analogy with 105 (2007) 232 CLR 598 at 633 [97]. 106 (2007) 232 CLR 598 at 627 [78]-[80]. 107 (2007) 232 CLR 598 at 629-632 [84]-[91]. 108 (2007) 232 CLR 598 at 629 [84]. 109 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 622-623 [21]-[22]. Bluebottle, content can be given to the obligation imposed by s 254(1)(d) only if an assessment has issued."110 The primary judge characterised s 254 as "but a collection provision"111 on the basis that the liability to tax of the agent or trustee arises from the operation of other provisions of the Assessment Act and the 1997 Act. As noted above, that characterisation does not accommodate the express provisions of s 254 of the Assessment Act. The reasons of the Full Court In the Full Court, Edmonds J, with whom Collier J agreed, upheld the primary judge's conclusion, but approached the resolution of the issue in a somewhat different manner. The primary judge had framed the issue as being whether the liquidators were liable to tax "prior to the issuing of a notice of assessment to ABS"112. Edmonds J observed113 that it "seemed to be common ground" that an assessment of tax in respect of the sale of the Crestmead property would eventually be issued to ABS and not to the liquidators. On that basis, his Honour held that114: "no tax liability arose on the entry into of the contract of sale of the Crestmead property, either for ABS or, more relevantly, the liquidators. At most, ABS made a capital gain which entered into computation of its net capital gain for the year ... The most that could be said is that on 30 June 2012, ABS had an obligation to pay income tax in the future." 110 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 623 [22]. His Honour drew support for his construction of s 254(1)(d) from dicta of Fraser JA in the Queensland Court of Appeal in Deputy Commissioner of Taxation v Barkworth Olives Management Ltd [2011] 1 Qd R 326 at 340 [29] that the phrase "tax which is or will become due" is "an expression that postulates a degree of certainty about the fact and amount of the tax liability which might not be present before a notice of assessment is served." 111 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 624 [29]. 112 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 616 [2]. 113 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 264 [2]. 114 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 270-271 [19]-[20]. In the view of Edmonds J, regardless of whether or not an assessment must be issued to the liquidators, the liquidators themselves would have no tax liability. This approach rendered redundant the Commissioner's arguments about the proper construction of the phrase "is or will become due" in s 254(1)(d). As to whether s 254 is merely a collecting section that has no operation to create a liability where a liability is not otherwise imposed, Edmonds J, like the primary judge, confined the potential source of any liability in the liquidators of ABS to other provisions, namely those in Div 6 of Pt III of the Assessment Act115, which relate to trust income. Edmonds J held that116: "The words, 'will become due', in the sense of 'owing', predicate nothing less than certainty, and that, in my view, cannot be predicted prior to the issue of a relevant assessment; but if it can be predicted on the facts of a particular case ... it cannot be predicated [sic] on the facts of this case where it was common ground that the assessment, when it did issue, would issue to ABS." Davies J, in a separate judgment, did not agree with Edmonds J that "it is a complete answer to the Commissioner's case that it was, apparently, common ground that any assessment would issue to the company."117 Her Honour held that s 254 contemplates that an agent or trustee may be assessed as liable to tax albeit in a representative capacity118. Davies J held119 that: "the reasoning in [Bluebottle] in respect of the proper construction of s 255 … applies equally to the proper construction of s 254, and … s 254(1)(d) is to be read as referring to an amount of tax that has been assessed." 115 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 272 [25]. 116 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 273 [29]. 117 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 264 [2]. 118 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 274 [34]. 119 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 274 [35]. The Commissioner's submissions The Commissioner made three broad submissions to this Court. The first concerned what the Commissioner identified as the "central proposition" underpinning the judgment of Edmonds J, namely, that s 254 had no operation in this case because the capital gain would be assessed to ABS and not to the liquidators, on the basis that no liability falls upon the liquidators under Div 6 of Pt III of the Assessment Act. The Commissioner submitted that, following this Court's decision in Federal Commissioner of Taxation v Bamford120, a liquidator, although a "trustee" under s 6(1) of the Assessment Act, "is not a trustee of a trust estate in any ordinary sense". Thus, the liquidators are not in charge of a "trust estate" for the purposes of Div 6 of Pt III of the Assessment Act121. The Commissioner submitted that in light of Bamford, the essential premise of Edmonds J's judgment was misconceived. The respondents did not seek to contest this submission. In truth, there was, and could be, no trust estate as between the liquidators and ABS. The Commissioner's first submission should be accepted. Secondly, the Commissioner submitted that Edmonds J erred in construing s 254 on the basis that it was merely a collecting provision and that the liquidators' liability for tax, if any, must be found elsewhere in the Assessment Act. The Commissioner noted that, pursuant to s 102-5 of the 1997 Act, the capital gain arising from the disposal of the Crestmead property was included in ABS' assessable income. This circumstance formed the basis of Edmonds J's understanding that it was common ground that liability would fall to ABS and not to the liquidators. The Commissioner argued that the circumstance that ABS was principally liable to pay tax upon its capital gain does not defeat the operation of s 254 in relation to the liquidators. That is because, while s 254 assumes an anterior liability of a principal or beneficiary for tax on a capital gain, it nonetheless imposes a liability on the agent or trustee. Once again, the respondents did not contest the submission of the Commissioner. It should be accepted. Section 254(1) is both a collecting provision and a liability-imposing provision in that, as an aid to the collection of trustee. tax, Section 254(1)(a) expressly provides that an agent or trustee "shall be answerable as taxpayer … for the payment of tax" on income, profits or gains derived by him or her in his or her representative capacity. This language creates a personal imposes a personal the agent or liability tax on 120 (2010) 240 CLR 481 at 503 [28]; [2010] HCA 10. 121 Federal Commissioner of Taxation v Bamford (2010) 240 CLR 481 at 503 liability in an agent or trustee to pay tax albeit that this liability is ancillary to that of the principal or beneficiary122. One comes then to the Commissioner's third submission. The appeals to this Court turn upon the issue raised by this submission. The Commissioner argued that the word "due", used in s 254(1)(d) in both the present and future tense, is to be construed as meaning "owing as assessed" in both of its temporal operations. The use of both present and future tense in s 254(1)(d) – "is … due" and "will become due" – encompasses tax which is presently owing under an assessment or will become owing under an assessment. The Commissioner argued that, by reason of differences of text and context between ss 254 and 255, Bluebottle does not resolve the present case in favour of the respondents. Indeed, it was said that Bluebottle provides some reason to construe s 254(1)(d) as imposing an obligation upon an agent or trustee before an assessment is issued by the Commissioner. That is because the retention obligation may arise in relation to tax that will in the future be assessed as owing. The Commissioner noted that, in contrast to the class of persons at whom s 255 is directed, that is, "every person having the receipt control or disposal of money belonging to a non-resident", s 254 is addressed to a class of persons directly connected with the derivation of the relevant income, profits or gains on behalf of a principal or beneficiary. The Commissioner also argued that an agent or trustee's liability to pay tax arises automatically upon the derivation of income, profits or gains. As will be seen, that argument was not necessary to make good the Commissioner's submission as to the proper construction of s 254(1)(d). A present obligation to retain money to meet a future assessment to tax may arise independently of a present liability to pay tax. Whether it does arise as a matter of the proper construction of s 254(1)(d) depends, in part at least, upon whether, as under s 255(1), the quantification of the retention obligation is dependent upon the existence of the assessment which quantifies the payment obligation. As will be seen, under s 254(1) the retention obligation may arise in anticipation of an assessment. The respondents' submissions The main thrust of the respondents' argument was that the decision in Bluebottle dictates the outcome in this case. It was said that, as in Bluebottle, the phrase "is or will become due" in s 254(1)(d) requires the certainty of an assessment before the retention obligation can arise. The agent or trustee is 122 Webb v Syme (1910) 10 CLR 482 at 491. neither authorised nor required to retain any more than the precise sum which is owing as tax. Without an assessment, it is not possible to know what sum of money "will" (as opposed to "may") need to be paid in respect of the tax for which the agent or trustee may be liable. It was said that an agent or trustee's familiarity with the affairs of the principal or beneficiary does not cure that uncertainty. Further, if a retention obligation were to arise whenever the agent or trustee derived gains, an undue burden would be imposed on many agents and trustees. It was also said that, because the agent or trustee is answerable as a taxpayer, and taxpayers are usually assessed annually, it is impractical to construe the phrase in s 254(1)(d) "in respect of the income, profits or gains" as referring to individual transactions as distinct from a total annual amount of income, profits or gains. The reasoning in Bluebottle In order to resolve the contest between the submissions of the parties, it is necessary now to consider more closely the reasoning in Bluebottle. In Bluebottle, it was held that the phrase "the tax which … will become due" in s 255(1)(b) referred not to tax which will be assessed as owing, as it ordinarily would, but to the tax described in s 255(1)(a), that is, the tax which will become payable by the non-resident taxpayer in accordance with a current assessment issued to them. The first step in reasoning to this conclusion was to observe that the reference in s 255(1)(b) to "the tax which is or will become due" is to a quantified amount of tax. The Court said123: "When s 255(1)(b) refers to 'the tax which is or will become due by the non-resident' it must be read as referring to an ascertained sum. If the paragraph is not read in that way, the obligation to retain money which is imposed on the controller is an obligation of undefined content. It is undefined because all that may be retained (the controller 'is hereby authorised … to retain') 'out of any money which comes to him on behalf of the non-resident' is suffıcient to pay the tax which is or will become due. And it is that amount (and only that amount) which the controller is obliged to retain. And as the facts of the present matter show, if s 255(1)(b) the Commissioner may require the controller to retain more than the amount later assessed as due from the non-resident. But that would require the controller, as the Commissioner's first notices did in this case, to retain is not read as referring to an ascertained sum, 123 (2007) 232 CLR 598 at 627 [78]. more than sufficient to pay the tax which is or will become due." (emphasis in original) The next step in the Court's reasoning was to observe that the quantification of the obligation in s 255(1)(b) to retain money was aligned with the quantification of the obligation in s 255(1)(a) to pay tax when required by the Commissioner. The Court said124: "Until the tax payable by the non-resident has been assessed it is not possible to say more than that there may be tax due by the non-resident. It is not possible to say that tax is due or that tax will become due. The prediction that tax may be due (and any prediction of its likely amount) may be able to be made with more or less certainty by a person who is armed with a deal of information, but there is no reason to suppose that the controller of a non-resident's money would ordinarily, let alone invariably, have that information and be in a position to make any useful prediction about the taxation affairs of the non-resident whose money the controller receives. … Paragraph (b) of s 255(1) should be read as referring to an amount of tax that has been assessed. The phrase 'tax which … will become due' is to be understood as referring to tax which, although assessed, is not yet due for payment." (emphasis in original) The controller's retention obligation was said to "intersect" with its payment obligation. In this regard, the Court said125: "[T]he obligations to retain and to pay are seen as intersecting obligations. The point of their intersection is the specification of the tax which under para (a) is to be paid when required by the Commissioner, and which under para (b) is both the amount that may be retained (the controller 'is hereby authorised') and the amount that must be retained (the controller 'is hereby ... required')." It is important to note that, in contrast to s 255(1)(b), s 254(1)(d) gives rise to an obligation to pay any tax in respect of income, profits or gains, rather than the tax which has been assessed. Whereas in s 255(1)(a) the quantification of the payment obligation is effected by an existing assessment, in s 254(1)(a) the payment obligation is quantified by reference to the tax payable in respect of the income, profits or gains which have been derived and in relation to which the agent or trustee is obliged by s 254(1)(b) and (c) to provide returns and be 124 (2007) 232 CLR 598 at 627 [79]-[80]. 125 (2007) 232 CLR 598 at 628 [82]. assessed. As noted above, an agent or trustee who has derived income, profits or gains, which are, generally speaking, subject to the Assessment Act, is obliged to prepare returns and be assessed thereon. Section 254(1)(b), in creating an obligation to "make ... returns and be assessed thereon" in respect of income, profits or gains derived by the agent or trustee, expressly postulates the absence of a current assessment, and anticipates the making of an assessment in the future. This postulate immediately distinguishes Bluebottle from the present case. The ordinary meaning of "due" The upshot of the reasoning in Bluebottle126 was that the construction of the phrase "the tax which … will become due" in s 255(1)(b) is constrained by the context in which it is used so that it does not bear its ordinary meaning within the Assessment Act. In this case, considerations of text, context and purpose in relation to s 254(1)(d) do not point towards the construction which the Court in Bluebottle gave to the crucial phrase in s 255(1)(b). As to the ordinary meaning of "due" in the Assessment Act, in Clyne v Deputy Commissioner of Taxation127 Gibbs CJ said of the expression "due and payable" used in some of the provisions of the Assessment Act that: "although the expression appears on any view to be tautological, the change of words appears to be intended to indicate a change of meaning, so that 'due' in that phrase must mean 'owing'." His Honour went on to conclude128 that: "[w]hen the word 'due' is used in the Act, without the accompanying words 'and payable', it will prima facie mean simply owing. This distinction between 'due' and 'payable' is clearly drawn in s 255(1), which requires a person in receipt or control of money belonging to a non-resident to 'pay the tax due and payable by the non-resident' (par (a)) and 'to retain ... so much as is sufficient to pay the tax which is or will become due by the non-resident' (par (b)) (see also s 254(d))." 126 (2007) 232 CLR 598 at 629-632 [84]-[91]. 127 (1981) 150 CLR 1 at 8. 128 (1981) 150 CLR 1 at 9-10. In Clyne, Mason J, with whom Aickin and Wilson JJ agreed, and with whom Brennan J agreed on this point129, accepted130 that Isaacs J was right in Mack v Commissioner of Stamp Duties (NSW)131 when he said of the words "debts due": "'[P]rima facie' and if there be nothing in the context to give them a different construction, they would include all sums certain which any person is legally liable to pay, whether such sums had become actually payable or not." "presumption that in a statute the same word is always used with the same meaning … However, it is now settled that presumption readily yields to the context and, as Gibbs J noted in McGraw-Hinds (Aust) Pty Ltd v Smith133: 'It is well recognized that a word may be used in two different senses in the same section of the one Act'." In relation to income tax legislation in particular, Mason J went on to say134: "There are statements to the effect that the presumption has little force in Income Tax Acts – see Martin v Lowry135; Littlewoods Mail Order Stores Ltd v Inland Revenue Commissioners136." Mason J, like Gibbs CJ, noted137 that the expression "due and payable" is used in other sections of Pt VI of the Assessment Act, which "in itself suggests 129 (1981) 150 CLR 1 at 24. 130 (1981) 150 CLR 1 at 15. 131 (1920) 28 CLR 373 at 382; [1920] HCA 76. 132 (1981) 150 CLR 1 at 15. 133 (1979) 144 CLR 633 at 643; [1979] HCA 19. 134 (1981) 150 CLR 1 at 15. 135 [1926] 1 KB 550 at 561. 136 [1963] AC 135 at 150. 137 (1981) 150 CLR 1 at 16. that the word 'due' when used in isolation bears its prima facie meaning unless there is a constraining context." Mason J concluded138 that the correct view is that: "income tax is due when it is assessed and notice is served of that assessment and … the tax does not become payable before the date fixed". On the footing then that tax is ordinarily "due" within the meaning of the Assessment Act when it is assessed, s 254(1)(d) by its use of both the present tense ("which is … due") and future tense ("which … will become due") imposes an obligation on the agent or trustee "to retain … so much as is sufficient to pay tax which is owing as assessed or which will become owing as assessed." The ordinary meaning of s 254(1)(d) is that an agent or trustee is prima facie obliged to retain money sufficient to pay tax which has been or will be assessed as owing. The question then is whether textual or contextual considerations, or considerations of statutory purpose, point away from that construction. Textual and contextual considerations As to considerations of text, it is significant that, as noted above, s 254(1)(d) requires the retention of so much of any money which comes to the agent or trustee in his or her representative capacity as is sufficient "to pay tax which is or will become due in respect of the … gains." This may be contrasted with s 255(1)(b), which imposes a retention obligation which is measured by the amount of "the tax which is or will become due by the non-resident". The use of the definite article in s 255(1)(b) to identify the tax payable provided the basis for the reasoning in Bluebottle139 that s 255(1)(b) resolved the uncertainty which would otherwise exist as to the amount to be retained by the controller, by aligning the controller's retention obligation with the assessment which quantifies the tax payable by the non-resident taxpayer (and, consequently, payable by the controller). Section 254 proceeds on the quite different footing that the agent or trustee is obliged to make a return of the income, profits or gains derived by him or her and be assessed thereon and pay that sum. These returns will reflect his or her liability to tax when it is assessed140. The quantification of the amount of income, profits or gains and of the tax to be paid thereon (and to be retained) is the responsibility of the agent or trustee, who, as agent or trustee, is "answerable 138 (1981) 150 CLR 1 at 16. 139 (2007) 232 CLR 598 at 627 [78]-[80]. 140 Assessment Act, s 166. as taxpayer" and is obliged to provide returns and be assessed to tax on the income, profits or gains derived by him or her. These responsibilities in relation to the quantification of the income, profits or gains derived by the agent or trustee (which as already noted are substantially different from those borne by the controller in s 255) arise upon and by reason of the derivation of income, profits or gains by the agent or trustee. And they arise in anticipation of an assessment to tax in the future. The respondents' arguments based on the uncertainty of the payment and retention obligations under s 254(1) do not have the force here that they had in Bluebottle in relation to s 255(1). While s 255(1)(b) imposes a retention obligation the extent of which can be measured only by reference to the assessment issued to the non-resident taxpayer when it is issued, s 254(1)(d) imposes a retention obligation the quantification of which is squarely the responsibility of the agent or trustee. The obligation in s 254(1)(b) to provide returns in respect of, and to be assessed on, the income, profits or gains "derived by him or her in his or her representative capacity, or derived by the principal by virtue of his or her agency", proceeds on the assumption that the agent or trustee has available such information from the principal or beneficiary as may be required to complete that task. As a practical matter, this assumption is likely to be sound. Unlike the controller addressed by s 255(1)(b), the agent or trustee is to be assessed to tax in his or her own right, albeit in a representative capacity, and so will be cognisant of the income, profits or gains "derived by him or her in his or her representative capacity". And so far as the agent or trustee is obliged to prepare returns and be assessed upon income, profits or gains "derived by the principal by virtue of his or her agency", the agent or trustee can be expected, as a matter of ordinary commercial prudence, to make arrangements with the principal or beneficiary to ensure that the principal or beneficiary will make all necessary information available. The agent or trustee is, after all, engaged in earning income, profits or gains for the principal or beneficiary, and can be expected to be astute to ensure that his or her position in relation to his or her obligations is protected. Considerations of purpose Section 254 is addressed to a risk to the revenue posed by a class of persons identified by two essential characteristics: first, they are persons actively involved in deriving income, profits or gains on behalf of a principal or beneficiary; and secondly, they are persons whose relationship with the principal or beneficiary is such that they may be obliged to pay away to it the income, profits or gains derived on its behalf. The risk to the revenue which arises by reason of these two characteristics of the class of persons addressed by s 254 has two aspects. First, the income, profits or gains derived for the benefit of the principal or beneficiary may be paid away to it by the agent or trustee and the principal or beneficiary may not, for whatever reason, pay the tax it should have paid. Secondly, the agent or trustee may, because he or she has paid over funds to his or her principal or beneficiary, no longer have the means to meet his or her liability for the payment of tax on the income, profits or gains derived by him or her in his or her representative capacity. Without s 254(1)(d), the Commissioner would be at risk of being left with a claim against an agent or trustee who has paid away the funds from which his or her own liability to tax might be met, in circumstances where both the agent or trustee and the principal or beneficiary are not worth powder and shot. The object of s 254(1)(d) is to obviate both aspects of that risk. That risk arises at the moment that income, profits or gains are derived by the agent or trustee and moneys come into his or her hands which are payable to the principal or beneficiary. In contrast, the risk to the revenue addressed by s 255(1) arises only when the non-resident taxpayer has been assessed. The retention obligation serves to ensure that there is sufficient money in the hands of the agent or trustee to pay his or her liability for the tax which is assessed as owing or which will be assessed as owing should the principal or beneficiary, for any reason, not meet that liability when it is assessed. The achievement of this purpose is best aided by giving s 254(1)(d) its ordinary meaning within the Assessment Act. If it is accorded that meaning, the purpose of the provision will not be defeated by the agent or trustee paying away the moneys that come into his or her hands when income, profits or gains have been derived (and are required to be included in returns) before an assessment is issued. It may be said that the burden so imposed on an agent or trustee is a heavy one; but it is also the case that the occasion for the imposition of this burden is incidental to engaging in the activity of deriving income, profits or gains for a principal or beneficiary to whom the agent or trustee is obliged to pay away the funds so derived. Conclusion and orders There is no good reason to construe s 254(1)(d) otherwise than on the basis that the phrase "tax which … will become due" means "tax which … will be assessed". Each appeal should be allowed. The orders of the Full Court of the Federal Court of Australia made on 8 October 2014 should be set aside and, in their place, it should be ordered that the appeals to that Court be allowed and the orders of the primary judge of 21 February 2014 be set aside. The matters should be remitted to the primary judge for the determination of the issue identified at [13(a)] of the reasons of the primary judge. The Commissioner having made a decision to provide funding under the ATO Test Case Litigation Program, the Commissioner must pay the respondents' costs of the appeals as agreed or as assessed on a party and party basis. Introduction On 2 March 2011, Australian Building Systems Pty Ltd ("ABS") was placed into voluntary administration under Pt 5.3A of the Corporations Act 2001 (Cth) ("the Corporations Act"). On 6 April 2011, ABS's creditors resolved that it be wound up under s 439C of the Corporations Act. ABS's administrators, Ms Muller and Ms Dunn, were appointed liquidators of ABS ("the Liquidators"). At the time that ABS entered administration, ABS owned real property at 118-128 Magnesium Drive, Crestmead, Queensland ("the Crestmead Property"). On 21 July 2011, the Liquidators caused ABS to enter into a contract of sale for the Crestmead Property. That disposal caused CGT event A1 to happen under s 104-10 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"). The proceeds from the disposal of the Crestmead Property were $4 million. ABS's cost base for the Crestmead Property was around $2.88 million. This gave rise to a capital gain for ABS under s 104-10(4) of the 1997 Act of about $1.12 million. A dispute emerged between the Liquidators and the Commissioner of Taxation ("the Commissioner") as to whether the Liquidators were obliged by s 254 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"), prior to an assessment being raised against ABS, to retain money to meet any tax liability in relation to the CGT event. Section 254(1) of the 1936 Act relevantly provides: "With respect to every agent and with respect also to every trustee, the following provisions shall apply: (a) He or she shall be answerable as taxpayer for the doing of all such things as are required to be done by virtue of this Act in respect of the income, or any profits or gains of a capital nature, derived by him or her in his or her representative capacity, or derived by the principal by virtue of his or her agency, and for the payment of tax thereon. (b) He or she shall in respect of that income, or those profits or gains, make the returns and be assessed thereon, but in his or her representative capacity only, and each return and assessment shall, except as otherwise provided by this Act, be separate and distinct from any other. If he or she is a trustee of the estate of a deceased person, the returns shall be the same as far as practicable as the deceased person, if living, would have been liable to make. (d) He or she is hereby authorized and required to retain from time to time out of any money which comes to him or her in his or her representative capacity so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains. (e) He or she is hereby made personally liable for the tax payable in respect of the income, profits or gains to the extent of any amount that he or she has retained, or should have retained, under paragraph (d); but he or she shall not be otherwise personally liable for the tax. He or she is hereby indemnified for all payments which he or she makes in pursuance of this Act or of any requirement of the Commissioner. (g) Where as one of 2 or more joint agents or trustees he or she pays any amount for which they are jointly liable, each other one is liable to pay him or her an equal share of the amount so paid. For the purpose of insuring the payment of tax the Commissioner shall have the same remedies against attachable property of any kind vested in or under the control or management or in the possession of any agent or trustee, as the Commissioner would have against the property of any other taxpayer in respect of tax." (emphasis added) "[T]rustee" is defined in s 6(1) of the 1936 Act to include a liquidator. "[L]iquidator" is defined in s 6(1) of the 1936 Act to mean "the person who, whether or not appointed as liquidator, is the person required by law to carry out the winding-up of a company". "Agent" is not relevantly defined in the 1936 Act or the 1997 Act141. The Liquidators sought a private ruling from the Commissioner. The application specified the client as "[ABS] (in liquidation)". The questions posed and the answers given in the ruling were: 141 See s 6(1) of the 1936 Act and ss 960-105 and 995-1(1) of the 1997 Act. Section 960-105(2) of the 1997 Act provides that "[t]his Act, or a provision of this Act, applies to an entity as if the entity were an agent of another entity if the Commissioner determines in writing that the entity is the agent or sole agent of the other entity for the purposes of this Act or of that provision". In s 995-1(1) of the 1997 Act, "this Act" is defined to include the 1936 Act and parts of the Taxation Administration Act 1953 (Cth). "Question 1 Is the liquidator required under section 254 of the [1936 Act] to account to the Commissioner out of the proceeds of sale, any capital gains tax liability that crystallises on the sale of an asset that belonged to [ABS] before liquidation? Answer Yes Question 2 If the answer to question 1 is yes, are the monies to be retained once an assessment issues? Answer Question 3 If the answer to question 2 is no, are the monies to be retained at crystallisation of any capital gains? Answer Yes". ABS lodged an objection142 to the private ruling. That objection was disallowed by the Commissioner. ABS filed an appeal against that objection decision in the Federal Court of Australia. The Liquidators also filed an application seeking declaratory relief against the Commissioner in respect of their obligations under s 254 of the 1936 Act. The proceedings were heard together and were the subject of appeal to the Full Court of the Federal Court. 142 See s 359-60(1) of Sched 1 to the Taxation Administration Act 1953 (Cth). The primary judge143 and the Full Court144 held that s 254(1)(d) of the 1936 Act only imposes an obligation to retain once an assessment has issued145. Issues and preliminary observations Issues Three issues were raised on appeal to this Court. First, is s 254 of the 1936 Act in its application to trustees limited to where the trustee is assessable for the income, profits or gains in relation to a trust estate under Div 6 of Pt III of the 1936 Act? Second, does s 254 of the 1936 Act only operate where the agent or trustee is otherwise assessable under some other provision of the revenue law, or does s 254 create by its own force an ancillary liability in the agent or trustee (and associated obligation and authorization of the agent or trustee) for the more convenient collection of tax for which the principal or beneficiary is principally liable? Third, does s 254(1)(d) of the 1936 Act authorize and oblige the Liquidators, as trustees, to retain an amount sufficient to pay the tax to be assessed in respect of the sale of the Crestmead Property prior to the issue of an assessment or does the obligation to retain only arise after the issue of an assessment? The first two questions were raised for the first time by members of the Full Court on the hearing of the appeals before that Court. Neither party made any submissions in the Full Court about those questions. Before this Court, the Commissioner submitted that the Full Court was wrong in the conclusions it expressed. ABS and the Liquidators made no submissions in this Court in relation to those issues and did not seek to maintain the reasoning of the Full Court. For the reasons that follow, I would reach a different conclusion to the Full Court in respect of each issue. The third question is the principal question on appeal. As seen earlier146, the primary judge and the Full Court held that s 254(1)(d) of the 1936 Act only imposes an obligation to retain once an assessment has issued. 143 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 623 [25]. 144 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 273 [29], 274 [35]. 145 ABS and the Liquidators also filed in the appeals to this Court a Notice of Contention to raise this construction of s 254(1)(d) of the 1936 Act. 146 See footnotes 143 and 144 above. Before this Court, the Commissioner submitted that the retention authorization and obligation in s 254(1)(d) arose on and from derivation of the income, profits or gains identified in s 254(1)(a). ABS and the Liquidators' position was that the retention authorization and obligation in s 254(1)(d) did not arise until an assessment had issued. For the reasons that follow, the retention authorization and obligation in s 254(1)(d) arises on and from derivation. Preliminary observations Before turning to the three issues, some preliminary matters should be noted. First, s 254 of the 1936 Act is not a new provision. It had a colonial antecedent – s 12 of the Income Tax Act 1895 (Vic)147 ("the 1895 Act"). That section, in turn, can be seen to have been based on ss 41 and 44 of the Income Tax Act 1842 (5 & 6 Vict c 35)148. The colonial antecedent was used as a model for s 52 of the Income Tax Assessment Act 1915 (Cth) ("the 1915 Act"). In 1922, the Income Tax Assessment Act 1922 (Cth) ("the 1922 Act") was passed. The 1922 Act consolidated and amended the tax laws. Section 89 of that Act is the immediate predecessor to s 254 of the 1936 Act. There were some minor changes when s 254 was enacted in 1936. Section 89 of the 1922 Act had relevantly provided: "With respect to every agent and with respect also to every trustee, the following provisions shall apply:— (d) where as agent or trustee he pays income tax, he is hereby authorized to recover the amount so paid from the person in whose behalf he paid it, or to deduct it from any money in his hands belonging to that person; he is hereby authorized and required to retain from time to time out of any money which comes to him in his representative capacity so 147 Similar provisions were found in the revenue statutes of other colonies: see, eg, ss 19 and 20 of the Land and Income Tax Assessment Act 1895 (NSW). 148 Section 41 made trustees (among others) answerable only for receipt of profits and gains for certain persons without capacity and any person not resident in Great Britain. In contrast, the colonial and federal successors made a trustee answerable in respect of any income, profits or gains derived in a representative capacity. See Drummond v Collins [1915] AC 1011 at 1019; Williams v Singer [1919] 2 KB 108 at 115, 122-123; Whitney v Inland Revenue Commissioners [1924] 2 KB 602 at 610-611. Similar provisions can be traced back to 1799 (39 Geo III c 13, s 91). much as is sufficient to pay the income tax which is or will become due in respect of the income; he is hereby made personally liable for the income tax payable in respect of the income if, after the Commissioner has required him to make a return, or while the tax remains unpaid, he disposes of or parts with any fund or money which comes to him from or out of which income tax could legally be paid, but he shall not be otherwise personally liable for the tax". Section 89(d) of the 1922 Act was not re-enacted in s 254. Section 89(e) of the 1922 Act became s 254(1)(d). The personal liability obligation in s 89(f) became s 254(1)(e) but was amended with the effect that the personal liability of the agent or trustee was not restricted to moneys paid away after the Commissioner required the agent or trustee to make a return. The personal liability obligation was also amended to link the personal liability to the retention obligation in sub-s (1)(d). Section 254 has remained relevantly unchanged since 1936. As will become evident, this history is not unimportant. Second, much of the debate in this Court focused on sub-s (1)(d) of s 254 and whether the retention authorization and obligation in that paragraph operated before or only after the issue of an assessment by the Commissioner. In resolving that and other debates about the construction of the provision, the text of the whole of s 254 is important149. Section 254 is comprised of a number of parts. It would be wrong to approach the construction of s 254 "piecemeal"150. It would be wrong to consider the retention authorization and obligation in s 254(1)(d) without understanding the scheme created by s 254 as a whole. It is against that background that each issue will be considered. Issue 1 – s 254 and Div 6 of Pt III of the 1936 Act The majority of the Full Court concluded that no amount of tax had, or ever could, become "due" for payment by the Liquidators within the meaning of 149 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[71]; [1998] HCA 28; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 47-48 [51]; [2009] HCA 41. 150 Bluebottle UK Ltd v Deputy Commissioner of Taxation (2007) 232 CLR 598 at 633 [96]; [2007] HCA 54. s 254(1)(d) of the 1936 Act, whatever construction was accorded to the words "is or will become due" in s 254(1)(d)151. That conclusion was said to be founded on the fact that s 254 could not operate in relation to the "income, or any profits or gains of a capital nature" derived on the sale of the Crestmead Property because the capital gain would be assessed to ABS, and not the Liquidators, as a result of Div 6 of Pt III of the 1936 Act. The proposition was that ABS would be "presently entitled" to all the income (of the trust estate) under Div 6 of Pt III of the 1936 Act and, therefore, ABS would be assessed to tax and the Liquidators, as trustees, would not152. The premise underlying that conclusion, that the Liquidators were "trustees of a trust estate" to whom Div 6 of Pt III of the 1936 Act applied153, is, with respect, misconceived. Division 6 of Pt III of the 1936 Act sets out the basic income tax treatment of the net income of a trust estate154. The basic elements in relation to a resident trust estate are found in ss 96, 97, 98 and 99 of the 1936 Act. First, except as otherwise provided by the 1936 Act or the 1997 Act, "a trustee shall not be liable as trustee to pay income tax upon the income of the trust estate"155. Second, a beneficiary of a trust estate presently entitled to a share of the income of the trust estate, and not under a legal disability, is assessable on that share of the net income of the trust estate156. However, where a beneficiary is presently entitled to a share of the income of the trust estate, but is under a legal disability, the trustee is to be assessed and liable to pay tax on that share of the net income of the trust estate157. Finally, where there is a share of the income of the trust estate 151 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 272-273 [24]-[29]. 152 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 264 [2], 271 [20]-[21], 272 [25], 273 [28]-[29]. 153 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 272-273 [25]-[30]. 154 s 95AAA of the 1936 Act. 155 s 96 of the 1936 Act, read with the definition of "this Act" in s 6(1) of the 1936 Act. 156 s 97 of the 1936 Act. 157 s 98 of the 1936 Act. to which no beneficiary is presently entitled, the trustee is assessable on the net income of the trust estate equal to that share158. Two important principles underpin the operation of Div 6 of Pt III. First, while the definition of "trustee" in s 6(1) of the 1936 Act goes beyond trusts of a settlement or testamentary trusts159, the definition is stated to apply "unless the contrary intention appears". Not every person or entity which answers the statutory definition of "trustee" in s 6(1) will be a trustee for the purposes of Div 6 of Pt III160. As Rich and Dixon JJ stated in Howey v Federal Commissioner of Taxation161, the references to "income of the trust estate" in s 31 of the 1922 Act (the predecessor to Div 6 of Pt III) suggested that the person who answers the description "trustee" in that context "must stand in some relation to the proprietary right [by] which the income arises, even although [that person] need not be a trustee in the proper sense". A liquidator is identified in the definition of "trustee" in s 6(1) of the 1936 Act. But a liquidator is not a trustee of a trust estate in any ordinary sense162. A liquidator does not stand in some relation to the proprietary right by which the income of the company being wound up is generated. During the winding up of a company, the company continues to exist163. The liquidator takes over from the company's officers as the person to administer the company's property164. In a voluntary winding up, subject to the provisions of the Corporations Act as to preferential payments, the property of the company must be applied in 158 ss 99(1)-(3) and 99A of the 1936 Act. 159 Federal Commissioner of Taxation v Bamford (2010) 240 CLR 481 at 503 [27]- [28]; [2010] HCA 10. 160 Federal Commissioner of Taxation v Bamford (2010) 240 CLR 481 at 503 [27]- 161 (1930) 44 CLR 289 at 293; [1930] HCA 45. 162 Federal Commissioner of Taxation v Bamford (2010) 240 CLR 481 at 503 [28]. 163 See s 493 of the Corporations Act in relation to a voluntary winding up. 164 The company can no longer act through its officers without the approval of the liquidator or the court: s 471A of the Corporations Act. See also s 499(4) of the Corporations Act in relation to a creditors' voluntary winding up. satisfaction of its liabilities equally and, subject to that application, must, unless the company's constitution otherwise provides, be distributed among the members according to their rights and interests in the company165. To achieve this, the liquidator must take into their custody, or under their control, all of the property which is, or appears to be, the company's property166. But, in the absence of a vesting order made under a provision such as s 474(2) of the Corporations Act167, the appointment of a liquidator to a company does not divest the company of its beneficial ownership in, or render the liquidator a trustee of, the company's assets168. And there was no vesting order made in the liquidation of ABS. Second, the operation of Div 6 of Pt III of the 1936 Act depends upon the existence of a trust estate and the presence of net income of that trust estate169. In the present appeals, there was no trust estate and therefore no net income of any trust estate. Therefore, contrary to the view expressed by the majority of the Full Court, ABS was not, and could not be, a beneficiary of a trust estate presently entitled to the net income of that trust estate and thus assessable under Div 6 of Pt III. As between ABS and the Liquidators there was no "trust estate" to which Div 6 of Pt III could apply. Section 254 of the 1936 Act, in its terms, applies to persons, such as liquidators, who fall within the definition of "trustee" in s 6(1) of the 1936 Act. Unlike the position with Div 6 of Pt III, there is nothing in s 254 to suggest that the word "trustee" when used in that section should not extend to persons who (in the ordinary case) are not "trustees of a trust estate" within the scope of Div 6 of Pt III. 165 s 501 of the Corporations Act. 166 ss 474(1)(a) and 506(1)(b) of the Corporations Act. See Federal Commissioner of Taxation v Bruton Holdings Pty Ltd (in liq) (2008) 173 FCR 472 at 488 [42] (overturned in Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation (2009) 239 CLR 346; [2009] HCA 32, but not on this point). 167 Read with s 506(1)(b) of the Corporations Act. 168 Federal Commissioner of Taxation v Linter Textiles Australia Ltd (In liq) (2005) 220 CLR 592 at 611-614 [50]-[58]; [2005] HCA 20; cf s 58 of the Bankruptcy Act 1966 (Cth). 169 See Federal Commissioner of Taxation v Bamford (2010) 240 CLR 481 at 502-503 The three authorities cited by the majority of the Full Court170 do not support the adoption of a narrower construction of "trustee" in s 254. The first, Howey171, has been addressed. The statements in that case by Rich and Dixon JJ were directed to where a "trustee" was being assessed under s 31 of the 1922 Act. While their Honours suggested that it was "perhaps doubtful" that s 89 imposed a liability on a trustee beyond s 31 of the 1922 Act, their Honours specifically contemplated that "[i]f the appellant's case falls outside s 31", then s 89 of the 1922 Act might apply172. The other two authorities cited by the majority of the Full Court in support of a narrower construction of "trustee" (Union-Fidelity Trustee Co of Australia Ltd v Federal Commissioner of Taxation173 and Federal Commissioner of Taxation v Prestige Motors Pty Ltd174) each concerned a situation where there was income of a trust estate. They do not assist in resolving the proper construction of "trustee" in the context of s 254. The question of the application of the definition of "trustee" to a liquidator was considered by this Court in Joshua Bros Pty Ltd v Federal Commissioner of Taxation175 in the context of s 52 of the 1915 Act (a predecessor to s 254 of the 1936 Act). In that case, the question was whether income from the sale of trading stock by a company in liquidation was assessable under the 1915 Act. The Court held that it was. Three members of the Court addressed s 52. Knox CJ176 observed that a liquidator was included in the designation of "trustee" in the 1915 Act177 and was answerable by s 52 for the payment of income tax on income derived by them in their representative capacity. Isaacs J178 referred to s 52 and said that "[t]he intention of the [1915] Act was indubitably to reach 170 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 272-273 [24], [26]-[27]. 171 (1930) 44 CLR 289. 172 Howey (1930) 44 CLR 289 at 294-295. 173 (1969) 119 CLR 177 at 181; [1969] HCA 36. 174 (1994) 181 CLR 1 at 11; [1994] HCA 39. 175 (1923) 31 CLR 490; [1923] HCA 3. 176 Joshua Bros (1923) 31 CLR 490 at 495. 177 s 3 of the 1915 Act. 178 Joshua Bros (1923) 31 CLR 490 at 496. income of a company 'derived' during the regime of a liquidator". Rich J179 observed that s 52, when read with two other sections in the 1915 Act, "was intended to and does cover the case of income made by the liquidator for the company". There is no cause to doubt those observations. For these reasons, the conclusion of the majority of the Full Court that s 254 of the 1936 Act only operates in relation to "trustees" where those trustees are assessable upon the income, profits or gains to which the section applies under Div 6 of Pt III of the 1936 Act should be rejected. Issue 2 – s 254 of the 1936 Act imposes ancillary liability and is a collecting provision The second issue concerns the statutory scheme created by s 254 of the 1936 Act. The majority of the Full Court concluded that s 254 is a "collecting section" which only operates where the agent or trustee is otherwise assessable180. In other words, the majority concluded that s 254 imposes no separate liability on an agent or trustee which has not been imposed on that agent or trustee by some other provision of the revenue law. That construction of s 254 should be rejected. In understanding the statutory scheme, it is necessary to address key aspects of s 254. Section 254(1) does two things. It creates a liability in the agent or the trustee which is ancillary to the primary liability of the principal or beneficiary181. It is also a machinery provision182 which provides a means of collection against the agent or trustee in certain circumstances. 179 Joshua Bros (1923) 31 CLR 490 at 501. 180 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 272 [25], 273 [28]. 181 This view has prevailed in relation to the predecessors of s 254. For example, in relation to s 41 of the Income Tax Act 1842 (5 & 6 Vict c 35), see Brooke v Inland Revenue Commissioners [1917] 1 KB 61 at 69-70; Whitney v Inland Revenue Commissioners [1924] 2 KB 602 at 610-612. 182 This view has prevailed in relation to the predecessors of s 254. For example, in relation to ss 41 and 44 of the Income Tax Act 1842 (5 & 6 Vict c 35), see Drummond v Collins [1915] AC 1011 at 1018; Williams v Singer [1919] 2 KB 108 at 115, 122, 123; Whitney v Inland Revenue Commissioners [1924] 2 KB 602 at 610-611; in relation to s 12 of the 1895 Act, see In the Matter of the "Income Tax Acts 1895 and 1896" (1897) 22 VLR 539 at 540; Webb v Syme (1910) 10 CLR 482 at 497, 507; [1910] HCA 32; and in relation to s 89 of the 1922 Act, see Howey (1930) 44 CLR 289 at 294. Section 254(1)(a) in its terms creates a liability in the agent or trustee in respect of the income or any profits or gains of a capital nature (derived by them in their representative capacity, or derived by the principal by virtue of their agency) by making the agent or trustee "answerable as taxpayer for the doing of all such things as are required to be done by virtue of this Act in respect of the income, or any profits or gains of a capital nature", including "for the payment of tax thereon". It will be necessary to say more about this paragraph later in these reasons. For present purposes, it is sufficient to note that, first, the liability it imposes on an agent or trustee is "as taxpayer", and second, the liability is in respect of the income or any profits or gains of a capital nature derived by them in their representative capacity or by virtue of their agency, and includes a liability for the payment of tax on that income or those profits or gains. Section 254(1)(b) then provides that the agent or trustee shall, in respect of that income or those profits or gains, make the returns and be assessed but in their representative capacity only. What s 254(1)(b) does is emphasise that in respect of the income or the profits or gains referred to in sub-s (1)(a), the obligation of an agent or trustee to make a return and be assessed (as if the taxpayer) is in their representative capacity only. It is ancillary liability. Its purpose is to ensure payment of the tax; tax which at least ordinarily will be primarily payable by another person or entity. Adapting what Viscount Cave said in Williams v Singer183 when considering similar provisions in the United Kingdom, "[t]he object of the Acts is to secure for the State a proportion of the profits chargeable, and this end is attained (speaking generally) by the simple and effective expedient of taxing the profits where they are found". The "collecting" aspect is then addressed in s 254(1)(d) and (e). Sub- section (1)(d) provides that an agent or trustee is both authorized and required to retain "so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains". That reference to the "income, profits or gains" in the last line is, of course, a reference to the "income, or any profits or gains of a capital nature" referred to in sub-s (1)(a), which is the foundation for the liability imposed by that provision. Paragraph (e) of s 254(1) creates the personal liability of the agent or trustee and limits that liability to the amount which was or should have been retained under s 254(1)(d). It is, then, apparent that s 254 is a section with two purposes. It both imposes liability and is a collecting section. As the Commissioner correctly 183 [1921] 1 AC 65 at 72. submitted, s 254 imposes on a trustee184 liability for tax in respect of income, or any profits or gains of a capital nature, derived in their representative capacity, as an aid to collection of that tax185. On the proper construction of s 254, there is no need to find another specific section in the revenue law rendering the agent or trustee liable for tax in respect of the "income, or any profits or gains of a capital nature" referred to in s 254(1)(a). If an agent or trustee has a liability under s 254(1)(e) because they failed to satisfy the retention obligation in s 254(1)(d), that liability is in addition to, and not in substitution for, any assessment of the beneficiary, principal or company (although of course only one amount of tax could ultimately be recovered)186. The contrary view adopted by the majority of the Full Court should be rejected. The application of s 254, construed in the manner indicated, to the facts in these appeals is instructive. Under s 106-35 of the 1997 Act, the disposal of the Crestmead Property by the Liquidators was, for the purposes of Pts 3-1 and 3-3 of the 1997 Act, to be treated "as if the act had been done instead by [ABS]". The capital gain arising from that disposal entered the calculation of ABS's net capital gain and, then, ABS's assessable income187. ABS was principally liable and assessable for the capital gain arising on the sale of the Crestmead Property. That is not in dispute. But ABS was in liquidation and it was the Liquidators who caused ABS to enter into a contract of sale for the Crestmead Property. Those facts were essential to both the derivation of a capital gain and the application of s 254 in the present appeals. Issue 3 – retention authorization and obligation As has been seen, the principal issue in these appeals concerns the proper construction of the retention authorization and obligation in s 254(1)(d) of the 1936 Act and, in particular, whether that retention authorization and obligation 184 And imposes on an agent a liability for tax in respect of income, or any profits or gains of a capital nature, derived by the principal by virtue of their agency. 185 See also Fermanis v Cheshire Holdings Pty Ltd (1990) 1 WAR 373 at 377. 186 Webb v Syme (1910) 10 CLR 482 at 507; Syme v Commissioner of Taxes for Victoria (1914) 18 CLR 519 at 523; [1914] AC 1013 at 1018-1019. In relation to alternative assessments, see Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168; [1995] HCA 23. 187 s 102-5 of the 1997 Act. only applies after the Commissioner makes an assessment in respect of relevant income, profits or gains. Both the primary judge and the Full Court held that the retention authorization and obligation in s 254(1)(d) only applies after an assessment is made. The primary judge188 and Davies J in the Full Court189 reached their conclusions by an application of the reasoning of this Court in Bluebottle UK Ltd v Deputy Commissioner of Taxation190 in relation to the phrase "is or will become due" in s 255(1)(b) of the 1936 Act. The applicability of Bluebottle will be addressed later in these reasons. For the moment, it is sufficient to observe that the decision in Bluebottle is not determinative of the proper construction of s 254. The conclusion of Edmonds and Collier JJ in the Full Court was based on their reasoning addressed in "Issue 1 – s 254 and Div 6 of Pt III of the 1936 Act" and "Issue 2 – s 254 of the 1936 Act imposes ancillary liability and is a collecting provision" above and, for the reasons stated in those sections, should not be accepted. What then is the proper construction of the retention authorization and obligation in s 254(1)(d)? For the reasons that follow, the retention authorization and obligation in s 254(1)(d) applies on and from the derivation of income, profits or gains by the agent or trustee. That obligation applies both before and after any assessment is made for tax in respect of that income or those profits or gains, not merely from the time of the assessment (if any). This section of the reasons will address (1) the text, context and history of s 254 of the 1936 Act191, (2) the duties and obligations of a trustee and a liquidator under the general law, (3) the position of an agent, (4) the absurdity that would result if the contrary construction was adopted and (5) the decision of this Court in Bluebottle. Text, context and history of s 254 Section 254(1)(a) defines an agent or trustee's obligations by reference to the nature of the obligation, the categories of receipts covered and an end point. As has been seen, an agent or trustee (including a liquidator) is made answerable 188 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 621-623 [20]-[25]. 189 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) (2014) 226 FCR 263 at 274 [35]. 190 (2007) 232 CLR 598 at 624-628 [71]-[82]. 191 See [151]-[154] above. "as taxpayer" by s 254(1)(a). That paragraph identifies that the nature of the obligation of the agent or trustee is "as taxpayer" and is for the doing of all such things as are required to be done by virtue of the revenue law. But that liability of an agent or trustee, as taxpayer, is qualified. The qualification is important because it identifies, within the text of the provision, the central concept which recurs throughout s 254. The qualification is that the liability of each agent or trustee as taxpayer is not at large. It is limited by the character of the receipts. The liability is limited to liability "in respect of the income, or any profits or gains of a capital nature, derived by him or her in his or her representative capacity, or derived by the principal by virtue of his or her agency". It is in respect of those amounts, and only those amounts, that the agent or trustee is answerable as taxpayer for the payment of tax. So, for example, a liquidator is not liable for the payment of tax on income, profits or gains made by the company before their appointment as liquidator. The fact that an agent or trustee is answerable as taxpayer is amplified in s 254(1)(b). Section 254(1)(b) provides that an agent or trustee shall, in respect of the income, profits or gains referred to in sub-s (1)(a), make the returns and be assessed. That amplification is unsurprising. Under s 254(1)(a), an agent or trustee is answerable as taxpayer and obliged to do all such things as are required to be done by virtue of the revenue law in respect of that income or those profits or gains, including paying the tax. The obligation in sub-s (1)(b) might be thought to be subsumed in sub-s (1)(a). But, however sub-ss (1)(a) and (1)(b) are read, an obligation is imposed on an agent or trustee, as taxpayer, to make all due inquiries and keep all due records to ensure a proper return can be made in relation to the income, profits or gains referred to in sub-s (1)(a). As seen earlier, s 254(1)(b) emphasises that the obligation of an agent or trustee to make a return and be assessed (as taxpayer) is in their representative capacity only. It is ancillary liability192. Its purpose is to ensure the payment of tax; tax which at least ordinarily will be primarily payable by another person or entity. It creates a liability "quoad assets" which imposes a debt to be borne by the estate, the principal or the company193. The balance of s 254 assists to achieve that objective. Paragraphs (d) and (e) of s 254(1) address the collecting aspects of the statutory scheme. Sub-section (1)(d) provides that an agent or trustee is both authorized and required to retain "so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains". That reference to 192 See [171]-[177] above. 193 Deputy Federal Commissioner of Taxation v Brown (1958) 100 CLR 32 at 42; [1958] HCA 2. "income, profits or gains" is, of course, a reference to the "income, or any profits or gains of a capital nature" referred to in s 254(1)(a): the "income, or any profits or gains of a capital nature" derived by the trustee in their representative capacity (or by the principal by virtue of the agency). Section 254(1)(d) then specifies the amount that the agent or trustee is authorized and required to retain – "so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains". The "tax", of course, is the tax which the agent or trustee is answerable as taxpayer to pay under s 254(1)(a), and the agent or trustee is authorized and required to retain "so much as is sufficient to pay" that tax. Two further questions of construction arise: what is "sufficient", and what is the proper construction of the phrase "which is or will become due in respect of the income, profits or gains"? The answer to the first question informs, or at least assists in informing, the answer to the second question. And the answer to the first question depends again on a proper understanding of the statutory scheme. Section 254(1)(d) is a facilitating provision. It facilitates the tax payment obligation in s 254(1)(a) by stating that the agent or trustee is "authorized and required to retain" certain money. The form and content of that provision is important. Absent s 254(1)(d), there may be some argument about whether the retention by the agent or trustee of money belonging to another (an estate, a principal or a company), in the face of a demand from that person or entity, would be unlawful. On any view, s 254(1)(d) puts the matter beyond argument. Subject to important limitations contained within other sub-sections of s 254, s 254(1)(d) intersects with, and interrupts, any instruction to the agent or trustee for delivery up of money belonging to a beneficiary, a principal or a company and held by that agent or trustee194. Other aspects of s 254(1)(d) should be noted. The retention authorization and obligation imposed on the agent or trustee is "to retain from time to time out of any money which comes to [the agent or trustee] so much as is sufficient to pay tax". The obligation to retain from time to time reflects that the obligation is ongoing and that money may not (and often will not) come to an agent or trustee in one lump sum. It reflects reality. But the retention authorization and obligation has just one purpose – to meet the tax payment obligation imposed on the agent or trustee in s 254(1)(a). 194 cf Federal Commissioner of Taxation v Resource Capital Fund IV LP (2013) 215 FCR 1 at 10-11 [38], in relation to s 255(1)(b). The authorization and obligation to retain is limited to so much as is sufficient to pay tax that is or will become due in respect of the income, profits or gains, being the income, profits or gains in s 254(1)(a). As Barton J explained in Webb v Syme195, it enables and requires the agent or trustee to "keep back out of the trust [or agency] receipts enough to pay the tax if it is not obtained from the beneficiary [or principal] and demand is made on himself". If the money belonging to the principal or beneficiary (or in this case, the company in liquidation) that comes to the agent or trustee exceeds that which is sufficient to pay tax on the income, profits or gains, as required by s 254(1)(a), the agent or trustee is not authorized to retain the excess. How then does the agent or trustee determine what is sufficient to be retained? The upper limit of that obligation will be known, or will be readily ascertainable, by any agent or trustee. It is the amounts with which the agent or trustee deals that both found the relevant tax liability and mark the outer boundary of that liability196. The agent or trustee can apply the relevant marginal tax rate to the particular income, profits or gains with which the agent or trustee deals to determine how much to retain. If the agent or trustee later becomes aware of allowable deductions or losses which will reduce the amount of tax payable on the income, profits or gains, then the amount retained can be adjusted. Moreover, as discussed later in these reasons, not only is the retention of funds not an unusual task for a trustee, a liquidator, or an agent, it is a task which pervades their roles and functions. Section 254(1)(e) is in aid of s 254(1)(d). It imposes a personal liability on the agent or trustee "for not keeping a reserve of income or funds in hand to satisfy the tax, until it is seen whether it is paid by or recoverable from the Section 254(1)(h) "helps to show where the primary liability really is. It gives the Commissioner the like remedies against all … property of any kind vested in, controlled, or managed by any trustee as he would have against the … property"198 of any other taxpayer in respect of tax. As Barton J said in Webb v Syme199, "although power has been given to make a beneficiary's property in the 195 (1910) 10 CLR 482 at 497, referring to s 12(1)(c) of the 1895 Act, a predecessor provision. 196 Bluebottle (2007) 232 CLR 598 at 629 [84], in relation to s 52(e) of the 1915 Act. 197 Webb v Syme (1910) 10 CLR 482 at 498, referring to s 12(1)(c) of the 1895 Act. 198 Webb v Syme (1910) 10 CLR 482 at 498, referring to s 12(3) of the 1895 Act. 199 (1910) 10 CLR 482 at 498, referring to s 12(3) of the 1895 Act. hands of the trustee liable, as if it were in the hands of the owner himself, it is still recognised that the trustee is not the person 'liable to pay tax'". The object was then, and remains now, to enable "the Commissioner to resort to the trustee to prevent any risk of the beneficiary's income escaping the payment legally due"200. As Barton J went on to say, "[i]t is primarily the beneficiary who is to pay; but the amount of the tax is to come out of his [or her] income in any event – if necessary, before it comes to his [or her] hands"201 (emphasis added). The obligation, the payment of the tax before the balance is handed over to the beneficiary or principal, applies regardless of whether there has been an assessment202. These statements, and the features of s 254 that have been outlined above, support the construction that the phrase "which is or will become due in respect of the income, profits or gains" does not depend on there being an assessment issued by the Commissioner. The retention authorization and obligation is not restricted to the period after an assessment has issued for the income, profits or gains. It arises on and from the derivation of that income or those profits or gains. (2) Duties and obligations of a trustee and a liquidator under the general law That construction of s 254 reflects, and is consistent with, the duties and obligations of a trustee and a liquidator under the general law. Retention of moneys by a trustee or a liquidator is not new. Just as at general law a trustee is entitled to retain trust property against a beneficiary pending determination of contingent liabilities of the trust for which the trustee is liable203, under s 254(1)(d) an agent or trustee is authorized and required to retain moneys sufficient to pay tax which is or will become due in respect of income, profits or gains made by the agent or trustee in a representative capacity204. It would be 200 Webb v Syme (1910) 10 CLR 482 at 498. 201 Webb v Syme (1910) 10 CLR 482 at 498. 202 See, for example, The Commissioners of Taxation v Abbey (1901) 1 SR (NSW) (L) 203 Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 at 335-336; [1945] HCA 37; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367; [1979] HCA 61; Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 245-247 [47]-[51]; [1998] HCA 4. 204 Lym International Pty Ltd v Westpac Banking Corporation [2011] NSWSC 927 at strange if s 254 was construed in a way that was inconsistent with the duties of a trustee under the general law205. In relation to a liquidator, s 254 therefore puts beyond doubt the existence of a right and an obligation that would otherwise exist. Further, the construction of s 254(1)(d) that has the retention authorization and obligation applying on and from derivation is consistent with a liquidator's duties and obligations under, and the priority of payments provided for in, the Corporations Act. These reasons will now explain how that is so. A liquidator may carry on the company's business only so far as is necessary for the beneficial disposal or winding up of that business206. A liquidator's other powers, including the power to sell or otherwise dispose of, in any manner, all or any part of the property of the company207, are set out in s 477(1) and (2) of the Corporations Act208. As seen earlier, the company's property does not vest in the liquidator. Instead, the liquidator, in a representative capacity, in place of the directors or officers of the company, is authorised to do certain things including those specified in s 477(1) and (2) of the Corporations Act. The Corporations Act deals separately with the debts of a company according to whether the debts were incurred before or after the appointment of a liquidator. Section 553 relevantly provides: "(1) Subject to this Division and Division 8, in every winding up, all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date, are admissible to proof against the company. (1A) Even though the circumstances giving rise to a debt payable by the company, or a claim against the company, occur on or after the relevant date, the debt or claim is admissible to proof against the company in the winding up if: 205 See, for example, Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 308 [308]; [2013] HCA 39. 206 ss 477(1)(a), 493 and 506(1)(b) of the Corporations Act. 207 s 477(2)(c) of the Corporations Act. 208 See also ss 501 and 506(1)(b) of the Corporations Act in relation to a voluntary winding up. the circumstances occur at a time when the company is under a deed of company arrangement; and the company is under the deed immediately before the resolution or court order that the company be wound up." (emphasis added) The only debts and claims "admissible to proof against the company" are "debts or claims the circumstances giving rise to which occurred before the relevant date"209 (emphasis added). Section 555 provides that "[e]xcept as otherwise provided by this Act, all debts and claims proved in a winding up rank equally and, if the property of the company is insufficient to meet them in full, they must be paid proportionately". The Crown, as a creditor, is bound by this statutory order210. Subdivision 260-B of Sched 1 to the Taxation Administration Act 1953 (Cth) ("the TAA") deals with recovery from liquidators. It provides what a liquidator and the Commissioner must do. First, a liquidator must give written notice of the fact that he or she was appointed liquidator of a company to the Commissioner within 14 days of appointment211. Next, the Commissioner must, as soon as practicable, notify the liquidator of the amount (the "notified amount") that the Commissioner considers is enough to discharge any outstanding tax- related liabilities that the company has when the notice is given212. These are pre- appointment tax-related liabilities. The liquidator must not, without the Commissioner's permission, part with any of the company's assets before receiving the Commissioner's notice213. However, that prohibition does not prevent the liquidator from parting with the company's assets to pay debts of the company not covered by the matters set out in s 260-45(5), which include the outstanding tax-related liabilities and any debts of the company which are unsecured and are not required, by an Australian law, to be paid in priority to some or all of the other debts of the company214. Finally, after receiving the Commissioner's notice, the liquidator must set aside, out of the assets available 209 In these appeals, the relevant date for ABS is the day on which the administration began: ss 9, 513B(b), 513C(b) of the Corporations Act. 210 s 5A(2) of the Corporations Act. 211 s 260-45(2) of Sched 1 to the TAA. 212 s 260-45(3) of Sched 1 to the TAA. 213 s 260-45(4) of Sched 1 to the TAA. 214 s 260-45(5) of Sched 1 to the TAA. for paying amounts covered by s 260-45(5)(a) or (b) (the "ordinary debts"), assets with a value calculated using a specified formula215. None of these provisions address post-liquidation debts or claims. What then is to occur post-liquidation? That is addressed by s 556 of the Corporations Act. It relevantly provides: "(1) Subject to this Division, in the winding up of a company the following debts and claims must be paid in priority to all other unsecured debts and claims: first, expenses (except deferred expenses) properly incurred by a relevant authority in preserving, realising or getting in property of the company, or in carrying on the company's business; (dd) next, any other expenses (except deferred expenses) properly incurred by a relevant authority; (de) next, the deferred expenses[216]; …" (emphasis added) A "relevant authority" in relation to a company includes a liquidator217. A tax expense is an expense incurred by a liquidator. A tax expense may fall within s 556(1)(a) (an expense incurred in preserving, realising or getting in property of the company, or in carrying on the company's business) or s 556(1)(dd) (other expenses). It is not a question of priority for the Commissioner but a reflection of, and consistent with, the statutory scheme under the Corporations Act that post-liquidation creditors are to be treated equally, "in priority to all other unsecured debts and claims" and paid in a particular order. 215 s 260-45(6) of Sched 1 to the TAA. 216 "[D]eferred expenses" in relation to a company include expenses properly incurred by a liquidator in so far as they consist of remuneration, or fees for services, payable to the liquidator: s 556(2) of the Corporations Act. The distinction between pre- and post-liquidation debts or claims is reinforced by s 558 of the Corporations Act, dealing with debts due to employees, and s 260-45 of Sched 1 to the TAA. 217 s 556(2) of the Corporations Act. Of course, those post-liquidation debts are not limited to capital gains tax. They may include GST and income tax. Two judgments at first instance which have considered s 254 and tax expenses – Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd218 and Benedict v Olde; in the matter of ATS (Asia Pacific) Pty Ltd219 – are instructive in the fact and manner of treatment of tax expenses incurred by receivers and liquidators. Lanepoint addressed s 254 of the 1936 Act in the context of receivers who, in the course of their duties, had generated income and derived a capital gain. French J (sitting as a single judge of the Federal Court) did not resolve the competing legal contentions concerning s 254 but held that the receivers were entitled to take the view that they were obliged to make appropriate provision against tax liabilities220. Benedict concerned an application to terminate the winding up of a company in liquidation. There was a potential for liability for tax in respect of the trading undertaken during the period of liquidation. The liquidator sought directions and a regime was put in place to provide for the payment of "Expenses incurred by the Liquidator during the Liquidation"221. The State and federal taxes listed in the Order as "expenses" included employee PAYG tax payable to the Commissioner, GST payable to the Commissioner and payroll tax payable to the Office of State Revenue in Western Australia. For those reasons, a liquidator's duties under, and the priority of payments provided for in, the Corporations Act are consistent with the construction of s 254(1)(d) that has the retention authorization and obligation applying on and from derivation. Agents Section 254 also applies to agents. "Agent" is not exhaustively defined in the 1936 Act or the 1997 Act222. It is notorious that it is a word which can be used in many different ways with many different meanings223. The extent to 218 (2006) 64 ATR 524. 219 [2011] FCA 1008. 220 Lanepoint (2006) 64 ATR 524 at 536 [57]. 221 Benedict [2011] FCA 1008 at Order 4, [14]-[21]. 222 See s 6(1) of the 1936 Act and ss 960-105 and 995-1 of the 1997 Act. 223 Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 at 50; [1931] HCA 53. which, and the manner in which, s 254 operates in relation to an agent is not the subject of these appeals. It is, however, appropriate to notice two facts and matters which may bear on those questions. They are facts and matters which illustrate that the construction of s 254(1)(d) that has the retention authorization and obligation applying on and from derivation will not result in practical difficulties in its application to an agent. First, in its express terms, s 254 does not extend to all agents. It applies to "income, or any profits or gains of a capital nature", which have been "derived by the principal by virtue of his or her agency"224 (emphasis added). That conclusion about the scope of s 254 is reinforced by the reference in s 254(1)(b) to the fact that the agent is obliged to lodge a return "in his or her representative capacity only" and the further reference in s 254(1)(d) that the retention authorization and obligation only extends to money "which comes to him or her in his or her representative capacity". Second, in relation to the predecessors to s 254, the view that has prevailed (since at least 1896) is that "[t]he word 'agent' obviously cannot extend to every agent for whatever purpose he [or she] may be employed"225. The predecessor sections were held to extend to persons who were connected with the principal's business and who received the gross proceeds (in which the net proceeds are included)226. "Agent" was limited to those persons "who have charge and control"227, "direction, control or management"228 or "management, receipt, disposal or control"229 of the income, profits or gains which would otherwise escape duty altogether. Indeed, the Commissioner may (and does) determine by notice in writing served on the "agent" that the Act, or a provision of the Act, applies to an entity as if the entity were an agent of another entity230. 224 s 254(1)(a) of the 1936 Act. 225 Grainger & Son v Gough [1896] AC 325 at 337. 226 See, for example, Tarn v Scanlan [1928] AC 34 at 43. 227 See, for example, R v Newmarket Income Tax Commissioners; Ex parte Huxley [1916] 1 KB 788 at 793. 228 See, for example, Drummond v Collins [1915] AC 1011 at 1021. 229 See, for example, In re Mary Willis (1907) 7 SR (NSW) 435 at 443. 230 s 960-105(2) of the 1997 Act. Absurdity The contrary construction of s 254, that the retention authorization and obligation under s 254(1)(d) would only arise after assessment, not only is inconsistent with the evident purpose of s 254, the text of s 254 and the other legal obligations of trustees (including liquidators) but leads to (or at least has the capacity to lead to) absurd results. The contrary construction is inconsistent with the evident purpose of the provision because it would leave the agent or trustee vulnerable between the time of derivation of the income, profits or gains and the time of assessment to claims by the principal or beneficiary for payment over of that income or those profits or gains, thereby denying the agent or trustee the means to pay the tax in respect of that income or those profits or gains. That denial of means to pay would directly conflict with, and contradict, the statutory direction in s 254(1)(a) and (b) that the agent or trustee is answerable as taxpayer in respect of that income or those profits or gains and for payment of the tax thereon. It could also lead to absurd results. The effect of accepting that the retention authorization and obligation under s 254(1)(d) only arises after assessment would be that in many cases the income, profits or gains that would generate the tax liability will have been distributed by the agent or trustee before the obligation to pay the tax arises. The agent or trustee would then seek to recoup the tax on the income, profits or gains in year 1 from those (if any) generated in year 2. That result ignores critical aspects of, and the text of, It also ignores reality. There are at least two matters that need to be considered. First, the assessment process is now one of self-assessment – generally a system where the Commissioner is taken to have made, on the day the return is filed, an assessment of the relevant taxable income or net income and of the tax payable on that taxable income or net income, being the amounts as specified in the return232. It would be an odd result that a trustee (including a liquidator) could meet their obligations (under both the revenue law and the general law) to prepare a return for filing by way of self-assessment, recognise that tax is payable on the income, profits or gains derived by them in their representative capacity, but then distribute the funds sufficient to pay that tax immediately before filing the return. Second, the contrary construction ignores the fact that a liquidation effectively comes to an end when the liquidator has realised and distributed all 231 See [171]-[177] above. 232 s 166A of the 1936 Act. the company's available property and made their report to the Australian Securities and Investments Commission. In many liquidations, that occurs relatively quickly and without the need for the company in liquidation to file an income tax return. In those cases, on the construction contended for by the Liquidators, the obligation to retain would never arise because a return would not be lodged and a deemed assessment would never be raised. Such a result is contrary to the express terms of s 254. Bluebottle The construction this Court accorded to s 255(1)(b) of the 1936 Act, and, in particular, the words "is or will become due", in Bluebottle is inapplicable to As acknowledged by this Court in Bluebottle233, although there are "obvious similarities" in the wording of the retention authorization and obligation requirements in ss 254(1)(d) and 255(1)(b), the context of s 254 (and its predecessors) is "radically different" from s 255. The Commissioner identified a number of relevant differences. Those differences included the class of persons affected and their different tasks and roles, the different relationship each class has with the identified income, profits or gains, the different point at which the obligations attach, the different nature of the obligations imposed, the different subjects of the retention authorization and obligation and that the remedial powers in s 254 do not exist in s 255. The Commissioner's submissions should be accepted. It is to the differences identified by the Commissioner I now turn. First, the class of persons to whom s 254(1) applies is different from and wider than the class of persons to whom s 255 applies. Section 255 applies to persons ("controllers") who have receipt control or disposal of moneys belonging to non-residents where it is the non-resident who has derived income, profits or gains from a source in Australia, or where the non-resident is a shareholder in a company deriving income, profits or gains from a source in Australia. Section 254(1) applies to a person falling within the definition of "trustee" in the 1936 Act, and to an "agent"234, who has derived income, profits or gains in a representative capacity. Second, the classes of persons affected are in different positions. The Court in Bluebottle235, when dealing with s 255, stated that "there is no reason to 233 (2007) 232 CLR 598 at 629 [84], comparing s 255(1)(b) with s 52(e) of the 1915 Act. See also at 632 [92]-[93], comparing s 255 with s 218 of the 1936 Act. 234 See [210]-[212] in relation to "agent". 235 (2007) 232 CLR 598 at 627 [79]. suppose that the controller of a non-resident's money would ordinarily, let alone invariably", have information to place them "in a position to make any useful prediction about the taxation affairs of the non-resident whose money the controller receives". That stands in stark contrast with the position of a trustee (including a liquidator) and an agent under s 254, which is likely to enable them to have, or acquire, a much greater familiarity with the taxation affairs of the beneficiary or principal. Indeed, as seen earlier, s 254(1) assumes and requires such familiarity by obliging (in s 254(1)(b)) the agent or trustee to make returns in relation to the income, profits or gains derived in their representative capacity. Moreover, the focus of the retention authorization and obligation in s 254(1)(d) is the amount sufficient to pay the tax in respect of the income, profits or gains derived in their representative capacity. The agent or trustee would know the amount of income, profits or gains they have derived in their representative capacity. Under s 255(1)(b), a controller does not necessarily know or understand a beneficiary or principal's taxation affairs for the relevant income year. They are simply in control of money belonging to a non-resident and respond to a notice requiring them to pay the tax specified in the notice from the money they control. Third, the relationship of the agent or trustee in s 254 with the income, profits or gains the subject of the tax referred to in s 254(1)(a) is different from the relationship a controller has with the income, profits or gains referred to in s 255. In s 254, the agent or trustee derives the income, profits or gains in their representative capacity and pays tax on that income or those profits or gains. The relationship under s 254 is direct – consistent with the purposes of the section236. In s 255, the moneys held by the controller need not have any relationship with the income, profits or gains derived by the non-resident or company the subject of the tax liability. Under s 255, the controller may be a complete stranger to the derivation of the income, profits or gains the subject of the tax. The controller simply has receipt, control or disposal of money belonging to a non-resident. The non-resident is the person who derives income, profits or gains from a source in Australia or who is a shareholder in a company deriving income, profits or gains from a source in Australia. Fourth, the point at which the obligations attach to an agent or trustee under s 254 is different from the point at which they attach to a controller under s 255. Under s 255, it is only when the tax of the non-resident has become "due and payable by the non-resident" under s 255(1)(a) through an assessment of the non-resident that the controller can be required, by notice under s 255 issued to them, to pay the tax of the non-resident237. Under s 254(1), the obligation 236 See [176] above. 237 Bluebottle (2007) 232 CLR 598 at 626-627 [77]. engages at an earlier point in time – at the point of derivation of the income, profits or gains by the agent or trustee. It is at that point, and by force of s 254 itself, that the requirements of s 254(1)(a) and (b) attach to the agent or trustee. Fifth, the nature of the obligations cast on an agent or trustee under s 254 is different from the nature of the obligations cast on a controller under s 255. As seen earlier, by making the agent or trustee "answerable as taxpayer", s 254 casts on them a wide-ranging responsibility to ensure assessment, and payment, of the tax due in respect of the income, profits or gains they derived in their representative capacity. That obligation arises before the time of the assessment of the income, profits or gains and includes the obligation to make returns and a liability to be assessed for the tax due in respect of the income, profits or gains238. Section 255 does not make the controller "answerable as taxpayer", oblige them to make returns or render them liable to assessment on the income, profits or gains relating to the non-resident. It merely obliges them, when required by notice under s 255 being issued to them, to pay the tax that has been assessed to the non-resident from money of the non-resident which they control. Sixth, the subject of the retention authorization and obligation in s 254(1)(d) is the amount which is sufficient to pay tax which is or will become due in respect of the income, profits or gains derived by the agent or trustee in their representative capacity. Accordingly, as was pointed out in Bluebottle239, it is the amounts with which the agent or trustee deals that establish the relevant tax liability and mark its outer boundary240. Under s 255(1)(b), the subject of the retention authorization and obligation is the amount sufficient to pay the tax which is or will become due by the non-resident. It could encompass the whole of the non-resident's taxation affairs in a relevant income year. Seventh, s 255 lacks a remedial provision. Section 254(1)(h) further assimilates the position of an agent or trustee deriving income, profits or gains in a representative capacity to that of a taxpayer. It does that by giving the Commissioner, in respect of the income, profits or gains, the same remedies against the attachable property vested in or under the control or management or in the possession of the agent or trustee that the Commissioner would have against the property of any other taxpayer241. Section 255 has no similar provision. The different statutory scheme created by s 255 does not require it. 238 See [186]-[187] above in relation to s 254(1)(b). 239 (2007) 232 CLR 598 at 629 [84]. 240 See [195] above. 241 See [197] above. "Judicial decisions on similar or identical legislation … are guides to, but cannot control, the meaning of legislation"242. "Judicial decisions are not substitutes for the text of legislation"243. In determining whether a decision on the construction of a phrase in one section can be applied in the construction of that phrase in another section, close analysis of the critical steps in the construction of the section is necessary. That kind of close analysis reveals that the construction of the phrase "is or will become due" which the Court adopted in Bluebottle244 in relation to s 255 is inapposite to that phrase in s 254. In Bluebottle245, critical to the construction of s 255(1)(b) was the intersection between the retention authorization and obligation in s 255(1)(b) and the obligation to pay in s 255(1)(a). The obligation to pay in s 255(1)(a) is an obligation to, when required by notice by the Commissioner under s 255 being issued to a controller, pay amounts assessed to the non-resident. The retention authorization and obligation in s 255(1)(b) intersected with, and was informed and given content by, what was sufficient to meet that obligation. Accordingly, the words "is or will become due" in s 255(1)(b) were construed as referring to tax assessed to the non-resident, although not yet payable246. What then is the position with s 254? The primary judge247 observed in s 254 the same "intersecting obligation" to which this Court referred in Bluebottle in relation to s 255. That statement, with respect, was incorrect. Section 254(1)(d) does intersect with and support the obligations in s 254(1)(a) and (b). But, as seen earlier248, those obligations are different and more comprehensive, 242 Marshall v Director General, Department of Transport (2001) 205 CLR 603 at 633 [62]; [2001] HCA 37; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 at 270 [31]; [2008] HCA 5. See also Bluebottle (2007) 232 CLR 598 at 632 [92]-[93]. 243 Marshall v Director General, Department of Transport (2001) 205 CLR 603 at 633 [62]; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 at 270 [31]. 244 (2007) 232 CLR 598 at 628 [81]-[82], 632 [92]-[93]. 245 (2007) 232 CLR 598 at 628 [81]-[82], 632 [92]-[93]. 246 Bluebottle (2007) 232 CLR 598 at 627-628 [79]-[81], referring to Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1; [1981] HCA 40. 247 Australian Building Systems Pty Ltd (ACN 094 238 678) (in liq) v Commissioner of Taxation (2014) 97 ACSR 614 at 622 [22]. 248 See [222]-[224] above. arise at an earlier time and are imposed on persons in a different position in relation to the income, profits or gains the subject of tax compared to those the subject of notice under s 255. Put another way, the nature and timing of the obligations in s 254(1)(a) and (b), with which s 254(1)(d) intersects and which s 254(1)(d) supports, are different from those in s 255(1)(a). The point of intersection, and the timing of engagement, of the retention authorization and obligation in s 254(1)(d) is different from, and earlier than, that in s 255(1)(b). Conclusion For those reasons, the appeals should be allowed.

HIGH COURT OF AUSTRALIA ESSO AUSTRALIA PTY LTD APPELLANT AND THE AUSTRALIAN WORKERS' UNION RESPONDENT THE AUSTRALIAN WORKERS' UNION APPELLANT AND ESSO AUSTRALIA PTY LTD RESPONDENT Esso Australia Pty Ltd v The Australian Workers' Union The Australian Workers' Union v Esso Australia Pty Ltd [2017] HCA 54 6 December 2017 M185/2016 & M187/2016 ORDER Matter No M185/2016 Appeal allowed. Set aside orders 2 and 3 of the Full Court of the Federal Court of Australia made on 25 May 2016 in Matter No VID 435 of 2015 and in their place order that: Appeal allowed in part. Set aside declarations 1, 2 and 4 made by the primary judge on 13 August 2015 and in their place declare that by operation of s 413(5) of the Fair Work Act 2009 (Cth), the industrial action organised by the respondent in relation to a replacement enterprise agreement or agreements for the Esso Gippsland (Longford and Long Island Point) Enterprise Agreement 2011, the Esso Offshore Enterprise Agreement 2011 and the Esso Gippsland (Barry Beach Marine Terminal) Enterprise Agreement 2011, subsequent to the respondent's contravention on 6 March 2015 of the order made by the Fair Work Commission on that date was not protected industrial action. Appeal otherwise dismissed. Remit the matter to a judge of the Federal Court of Australia for the hearing and determination of the appellant's claims for pecuniary penalties and compensation. Matter No M187/2016 Appeal dismissed. On appeal from the Federal Court of Australia Representation F Parry QC with M J Follett for the appellant in M185/2016 and for the respondent in M187/2016 (instructed by Clayton Utz) H Borenstein QC with P C Rozen for the respondent in M185/2016 and for the appellant in M187/2016 (instructed by Maurice Blackburn Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Esso Australia Pty Ltd v The Australian Workers' Union The Australian Workers' Union v Esso Australia Pty Ltd Industrial relations – Fair Work Act 2009 (Cth) – Protected industrial action – Common requirements for industrial action to qualify as protected industrial action – Where s 413(5) of Fair Work Act requires that persons organising or engaging in proposed protected industrial action "must not have contravened any orders that apply to them" in relation to relevant agreement – Where order obtained from Fair Work Commission requiring union to stop organising certain industrial action – Where union contravened order – Whether union's contravention of order precluded satisfaction of common requirement in s 413(5) in relation to subsequent industrial action – Whether s 413(5) requires only that relevant persons not be contravening orders extant at time of proposed protected industrial action – Whether relevant contraventions limited to contraventions of orders committed in course of organising or engaging in proposed protected industrial action. Industrial relations – Fair Work Act 2009 (Cth) – Organising, taking or threatening action with intent to coerce contrary to s 343 or s 348 of Fair Work Act – Whether person must act with intent that action be unlawful, illegitimate or unconscionable – Whether person must have subjective understanding of factual circumstances rendering action unlawful, illegitimate or unconscionable. Words and phrases – "coercive action", "common requirements", "compliance with orders", "extant orders", "intent to coerce", "must not have contravened any "statutory "protected orders", interpretation", "unlawful, illegitimate or unconscionable". "past contravention", industrial action", Fair Work Act 2009 (Cth), ss 343, 348, Ch 3, Pt 3-3, Div 2. KIEFEL CJ, KEANE, NETTLE AND EDELMAN JJ. The Industrial Relations Reform Act 1993 (Cth) established a new concept of "protected" industrial action and conferred broad-ranging immunity from civil suit on persons engaging in or organising protected industrial action1. The relevant provisions have since been amended and now appear in Div 2 of Pt 3-3 of the Fair Work Act 2009 (Cth). These appeals arise out of industrial action that The Australian Workers' Union ("the AWU") took against Esso Australia Pty Ltd ("Esso") early in 2015. The AWU claimed that the industrial action was protected industrial action within the meaning of the Fair Work Act. Esso refuted that claim, which led to proceedings culminating in the decision of the Full Court of the Federal Court of Australia2 and in these appeals. Esso's appeal concerns the meaning of one of the provisions of the Fair Work Act that define protected industrial action. The question is whether a person who contravenes an order that is in operation at the time of contravention but that thereafter ceases to operate is a person who has contravened an order that applies to that person within the meaning of s 413(5) of the Fair Work Act. For the reasons which follow, the question should be answered yes and the appeal should be allowed. The AWU's appeal relates to coercive conduct of the kind proscribed by ss 343 and 348 of the Fair Work Act. The question is whether, in order to amount to organising or taking, or threatening to organise or take, action against another person with intent to coerce the other person within the meaning of s 343 or s 348, the person organising, taking or threatening the action must do so with intent that the action be unlawful, illegitimate or unconscionable. The answer to that question is that a contravention of s 343 or s 348 is constituted of organising, taking or threatening action against another person with intent to negate the other person's choice. It is unnecessary that the person organising, taking or threatening the action know that the action is, or intend that the action be, unlawful, illegitimate or unconscionable. The AWU's appeal should thus be dismissed. Esso's appeal Relevant statutory provisions Section 415 of the Fair Work Act provides that no action lies under any law (written or unwritten) in relation to any industrial action that is protected Industrial Relations Act 1988 (Cth), ss 170PG, 170PM as inserted by the Industrial Relations Reform Act 1993 (Cth), s 21. 2 Esso Australia Pty Ltd v Australian Workers' Union (2016) 245 FCR 39. Nettle Edelman industrial action unless it has involved or is likely to involve personal injury, wilful or reckless destruction of, or damage to, property, or the unlawful taking, keeping or use of property. Relevantly, industrial action will be protected industrial action for a proposed enterprise agreement under s 408(a) if it is an "employee claim action" for the agreement in the terms of s 409 and if it meets the "common requirements" in s 413. Section 409(1) provides that "employee claim action" for a proposed enterprise agreement is industrial action that is organised or engaged in for the purpose of supporting or advancing claims in relation to the agreement that are, or are reasonably believed to be, only about permitted matters; that is organised or engaged in by a bargaining representative3 of an employee who will be covered by the agreement or an employee included in a group of employees specified in a "protected action ballot order" for industrial action against an employer that will be covered by the agreement; and that meets the additional requirements in s 409 and the common requirements in subdiv B. Section 413 specifies the common requirements for industrial action to qualify as protected industrial action as follows: "Type of proposed enterprise agreement (2) The industrial action must not relate to a proposed enterprise agreement that is a greenfields agreement or multi-enterprise agreement. Genuinely trying to reach an agreement The following persons must be genuinely trying to reach an agreement: if the person organising or engaging in the industrial action is a bargaining representative for the agreement  the bargaining representative; if the person organising or engaging in the industrial action is an employee who will be covered by the agreement  the bargaining representative of the employee. 3 See Fair Work Act 2009 (Cth), s 176. Nettle Edelman Notice requirements The notice requirements set out in section 414 must have been met in relation to the industrial action. Compliance with orders The following persons must not have contravened any orders that apply to them and that relate to, or relate to industrial action relating to, the agreement or a matter that arose during bargaining for the agreement: if the person organising or engaging in the industrial action is a bargaining representative for the agreement  the bargaining representative; if the person organising or engaging in the industrial action is an employee who will be covered by the agreement  the employee and the bargaining representative of the employee. No industrial action before an enterprise agreement etc passes its nominal expiry date The person organising or engaging in the industrial action must not contravene section 417 (which deals with industrial action before the nominal expiry date of an enterprise agreement etc) by organising or engaging in the industrial action. No suspension or termination order is in operation etc (7) None of the following must be in operation: an order under Division 6 of this Part suspending or terminating industrial action in relation to the agreement; a Ministerial terminating industrial action in relation to the agreement; declaration subsection 431(1) under a serious breach declaration in relation to the agreement." The notice requirements prescribed by s 414 are in substance that, before a person engages in employee claim action for a proposed enterprise agreement, a bargaining representative of an employee who will be covered by the agreement Nettle Edelman must have given written notice of at least three working days after the results of the protected action ballot for the employee claim action have been declared. Protected action ballots are provided for in Div 8 of Pt 3-3 of the Fair Work Act. Under s 437, a bargaining representative of an employee who will be covered by a proposed enterprise agreement (or two or more such persons acting jointly) may apply to the Fair Work Commission for a protected action ballot order requiring a protected action ballot to be conducted to determine whether employees wish to engage in the proposed protected industrial action for the agreement. Section 440 requires that notice of the application be given to the employer of the employees who are to be balloted. Section 441 requires that, as far as practicable, the application be determined within two working days of being made. Section 443 directs the Fair Work Commission to make a protected action ballot order if satisfied that the application has been made in accordance with s 437 and that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted. Sections 447 and 448 allow for the variation or revocation of a protected action ballot order on the application of the applicant for the order. Section 460 relevantly provides that an organisation or person who organises or engages in industrial action in good faith on the basis of the declared results of a protected action ballot purporting to authorise the proposed protected industrial action is immune from action (other than action involving personal injury, intentional or reckless destruction of, or damage to, property, or the unlawful taking, keeping or use of property) if it later becomes clear that the action was not authorised by the ballot or if the decision to make the protected action ballot order is quashed or varied on appeal, or review by the Fair Work Commission, after the industrial action is organised or engaged in. industrial action Section 418 provides in effect that if it appears to the Fair Work Commission that one or more persons is or are engaging in, threatening or the organising Commission must make an order stopping the industrial action or preventing it from occurring or being organised. Section 421 provides inter alia that a person must not contravene an order under s 418, and s 539 provides that contravention of such an order attracts a maximum civil penalty of 60 penalty units. is not protected industrial action, that Division 8 of Pt 2-4 of the Fair Work Act provides separately for what are called "bargaining orders". In brief, if the Fair Work Commission is satisfied that one or more of the bargaining representatives for a proposed enterprise agreement is or are not meeting the good faith bargaining requirements specified in s 228, the Commission may make an order under s 230 of a kind which, s 231(2) provides, may include the following: Nettle Edelman "(a) an order excluding a bargaining representative for the agreement from bargaining; (b) an order requiring some or all of the bargaining representatives of the employees who will be covered by the agreement to meet and appoint one of the bargaining representatives to represent the bargaining representatives in bargaining; an order that an employer not terminate the employment of an employee, if the termination would constitute, or relate to, a failure by a bargaining representative to meet the good faith bargaining requirement referred to in paragraph 228(1)(e) (which deals with capricious or unfair conduct that undermines freedom of association or collective bargaining); (d) an order to reinstate an employee whose employment has been terminated if the termination constitutes, or relates to, a failure by a bargaining representative to meet the good faith bargaining requirement referred to in paragraph 228(1)(e) (which deals with capricious or unfair conduct that undermines freedom of association or collective bargaining)." Section 233 provides that a person must not contravene a bargaining order. A contravention attracts a maximum civil penalty under s 539 of 60 penalty units. If a bargaining representative for an agreement contravenes a bargaining order and an application is made for a serious breach declaration, the Fair Work Commission may make such a declaration under s 235 if satisfied of the matters in sub-s (2), including that: the contravention or contraventions: are serious and sustained; and have significantly undermined bargaining for the agreement; and the other bargaining representatives for the agreement ... have exhausted all other reasonable alternatives to reach agreement on the terms that should be included in the agreement; and agreement on the terms that should be included in the agreement will not be reached in the foreseeable future; and Nettle Edelman it is reasonable in all the circumstances to make the declaration, taking into account the views of all the bargaining representatives for the agreement." Once a serious breach declaration has been made, the parties to the dispute have a post-declaration negotiating period of 21 days (which the Fair Work Commission may extend to 42 days) to reach agreement, failing which the Fair Work Commission is required to determine the dispute under s 269 of the Fair Work Act by way of a "bargaining related workplace determination". The facts At relevant times, Esso and the AWU on behalf of its members were bargaining for a new enterprise agreement or agreements to apply at Esso's offshore platforms in Bass Strait, onshore processing plants at Longford and Long Island Point and marine terminal at Barry Beach, Victoria4. Consequently, each of Esso and the AWU was a bargaining representative in relation to the proposed enterprise agreement(s) within the meaning of s 176 of the Fair Work Act. In support of its claims, the AWU organised, and many of its members took part in, various forms of industrial action against Esso commencing early in 20155. The AWU claimed that all such industrial action was protected industrial action under s 408(a) of the Fair Work Act. Esso maintained that some aspects of the industrial action were not. The industrial action which the AWU claimed was protected industrial action, and which Esso disputed, included bans on the performance of equipment testing, air freeing and leak testing6. The AWU's bans on those activities were imposed from 2 March 2015. Although the AWU had issued a notice under s 414 of the Fair Work Act notifying Esso of action in the form of a ban on the "de-isolation of equipment"7, which had the effect of engaging the protected industrial action provisions in relation to the "de-isolation of equipment", Esso 4 Esso Australia Pty Ltd v Australian Workers' Union (2015) 253 IR 304 at 308-309 5 Esso v AWU (2015) 253 IR 304 at 316 [29]-[30]. 6 Esso v AWU (2015) 253 IR 304 at 322-323 [46], 325 [49]-[50]. 7 Esso v AWU (2015) 253 IR 304 at 316-318 [31]. Nettle Edelman maintained that equipment testing, air freeing and leak testing did not fall within the description "de isolation of equipment" and therefore were not protected industrial action8. On 6 March 2015, Esso obtained an order from the Fair Work Commission under s 418(1) of the Fair Work Act9. Clause 4.1 of the order required the AWU (and its delegates, officers, employees and agents) to stop organising certain "industrial action" including any constituting a ban, limitation or restriction on the performance of equipment testing, air freeing or leak testing. The order came into effect at 6.00 pm on 6 March 2015 and ceased to operate at 6.00 pm on 20 March 2015. In contravention of that order, the AWU continued to organise such action, including a ban on air freeing and leak testing between 6.00 pm on 6 March 2015 and 9.30 am on 7 March 2015, and a ban on the manipulation of bleeder valves to facilitate air freeing and leak testing between 9.30 am on 7 March 2015 and 17 March 201510. Proceedings at first instance Esso instituted proceedings in the Fair Work Division of the Federal Court of Australia, pursuant to s 562 of the Fair Work Act, seeking inter alia declarations that, because of the contravention of the order of 6 March 2015, the AWU was a person who had contravened an order which applies to it in relation to the agreement to which the proposed protected industrial action related, with the consequence that action thereafter organised by the AWU in relation to the agreement was not protected industrial action. More particularly, Esso contended that, upon the proper construction of s 413(5), once the AWU had contravened the order made on 6 March 2015, the AWU was incapable of satisfying the common requirement specified in s 413(5) of not having contravened an order that applies to it and relates to industrial action relating to the agreement or a matter that arose during bargaining for the agreement. Consequently, it was contended, no further industrial action organised by the AWU in relation to the proposed agreement could qualify as protected industrial action11. 8 Esso v AWU (2015) 253 IR 304 at 325 [50], 332 [69]. 9 Esso v AWU (2015) 253 IR 304 at 327-329 [52]. 10 Esso v AWU (2015) 253 IR 304 at 346-347 [119]-[120]. 11 Esso v AWU (2015) 253 IR 304 at 348-349 [126]-[129]. Nettle Edelman The primary judge (Jessup J) stated12 in effect that, but for a previous decision of Barker J in Australian Mines and Metals Association Inc v Maritime Union of Australia13 ("AMMA"), his Honour would have been disposed to uphold the construction of s 413(5) for which Esso contended. In AMMA, however, Barker J had held14 that the words "any orders that apply to them and that relate to ... the agreement or a matter that arose during bargaining for the agreement" include only such orders as continue to apply to the bargaining representative at the time of the commencement of the proposed protected industrial action; and, therefore, that, if before that time an order which has been contravened ceases to apply to the bargaining representative, the fact of the previous contravention of the order does not preclude the bargaining representative from satisfying the common requirement specified in s 413(5) in relation to the subsequent industrial action. The primary judge held that, notwithstanding his own view of the effect of the provision, he could not say that Barker J's interpretation of s 413(5) was plainly wrong, and therefore he was bound to follow it15. On that basis, the primary judge rejected Esso's claim. The appeal to the Full Court Esso appealed to the Full Court of the Federal Court (Siopis, Buchanan and Bromberg JJ)16. The same Court also heard an appeal against Barker J's judgment in AMMA. Reasons for judgment in the two appeals were delivered on the same day. In dismissing the appeal in AMMA, Buchanan J (Siopis J and Bromberg J agreeing) added a further qualification to the application of "I agree that s 413(5) is concerned with whether there has been a contravention of orders applying at the time of the taking or organising of the industrial action which is being assessed to see whether it is, or would 12 Esso v AWU (2015) 253 IR 304 at 354 [147]. 14 (2015) 251 IR 75 at 98-99 [155]-[159], 100 [169], 101-102 [174]-[175]. 15 Esso v AWU (2015) 253 IR 304 at 351-352 [135]-[139], 354-355 [144]-[148]. 16 Esso v AWU (2016) 245 FCR 39. 17 Australian Mines and Metals Association Inc v Maritime Union of Australia (2016) 242 FCR 210 at 218 [45] (Siopis J and Bromberg J agreeing at 211 [1], 230 [115]). Nettle Edelman be, protected industrial action. Furthermore, it seems to me to be apparent that any such order would need to be one which could be said to be contravened by the conduct or action of organising or taking the particular industrial action in question." (emphasis added) Buchanan J also delivered the leading judgment in the decision under appeal. Citing his reasons for dismissing the appeal in AMMA, his Honour held18 that s 413(5) applies only to such orders as are in operation at the time of the proposed protected industrial action that apply to the proposed protected industrial action. In essence, the reasons were that19: (1) s 413 states conditions which must be satisfied; (2) s 413(5) is concerned with an assessment of whether the particular industrial action the subject of consideration meets the common requirements stated in s 413; (3) in that context, it is relevant to establish whether the act of organising or engaging in that industrial action has contravened an order which applies to the persons concerned; (4) to be an order which applies to the persons concerned, an order must be "current and operative  ie order(s) applying to the person(s) at the time when the industrial action is being organised or engaged in"; and (5) that is so because the provision is concerned with orders "which might bear directly upon organising or engaging in the industrial action under assessment" and not with "matters more remote from that industrial action or with matters of history". "I accept ... that my construction involves subordinating one view of the language of s 413(5) to the premise which, in my view, informs an understanding of its purpose and intended operation. To that extent, it may be correct to say that my construction assumes the opening phrase  'In organising or engaging in the industrial action, the following persons etc'. 18 Esso v AWU (2016) 245 FCR 39 at 81 [162] (Siopis J agreeing at 42 [1]). See also at 126 [370] per Bromberg J. 19 AMMA (2016) 242 FCR 210 at 227-228 [92]-[94] (Siopis J and Bromberg J agreeing at 211 [1], 230 [115]). 20 AMMA (2016) 242 FCR 210 at 229 [101]-[102] (Siopis J and Bromberg J agreeing Nettle Edelman That, with respect, does not seem to me to be 'an insertion which is "too big, or too much at variance with the language in fact used by the legislature"'." Esso's contentions Before this Court, Esso contended, as it had below, that there should be no doubt that the contraventions of orders to which s 413(5) refers are not limited to orders in operation at the time of the proposed protected industrial action, still less to contraventions of orders committed in the course of organising or engaging in the proposed protected industrial action. Section 413(5) expressly refers to contraventions of orders that relate to industrial action relating to a proposed agreement or a matter that arose during bargaining for such an agreement. Consequently, it was submitted, the provision unquestionably contemplates, among its other applications, contraventions of bargaining orders made pursuant to Div 8 of Pt 2-4 of the Fair Work Act. In the scheme of things, the Fair Work Commission is likely to make any number of orders of that kind that relate to industrial action relating to a proposed agreement or to a matter that arose during bargaining for the agreement but which do not apply to later acts of organising or participating in industrial action. In Esso's submission, there is nothing in the text or context of s 413(5) which suggests that such orders are excluded from the operation of the sub-section. Further, Esso contended, if s 413(5) had the meaning given to it by the Full Court, it would have the effect that a person organising or engaging in industrial action relating to an agreement could choose to remain in defiance of an order until the order had expired (as it would if the order required something to be done or not done within or for a defined period of time) and then begin to engage in protected industrial action with all the immunity from suit which that entails. Equally, a person could engage in extended defiance of an order, conceivably causing very significant economic loss and other harm to the party the order was designed to protect and to third parties, and then, immediately upon ceasing to defy the order or orders, commence engaging in protected industrial action with immunity from suit. In Esso's submission, that is a most improbable purpose to attribute to the provision, especially when regard is had to its statutory antecedents. Ultimately, in Esso's submission, the natural and ordinary meaning of "any orders that apply to them and that relate to, or relate to industrial action relating to, the agreement or a matter that arose during bargaining for the agreement" is orders of the specified kind that apply to persons at the time of contravention. The adjectival clause "that apply to them" delineates the persons to whom the orders are directed, just as the adjectival clause "that relate to, or Nettle Edelman relate to industrial action relating to, the agreement" delineates the subject matter to which the orders are directed. Each expression is descriptive of the scope of operation of the orders and neither says anything as to the time of their application. The time of application is controlled by the present perfect conditional clause "must not have contravened". To construe the provision in any other way would be both at odds with the sense in which "apply" is used in other provisions of the Fair Work Act and productive of the improbable results earlier described. The AWU's contentions The AWU contended to the contrary that Esso's construction of s 413(5) should be rejected because it would be productive of capricious and unjust results. It would mean, for example, that, if a bargaining representative contravened an order that related to, or related to industrial action relating to, a proposed agreement, no matter how insignificant the order might be or how venial the nature of the contravention, the bargaining representative would thereafter be precluded from organising or engaging in protected industrial action in relation to the proposed agreement. Counsel for the AWU offered by way of example a breach of an order to file a document within a specified time committed by filing the document a day or two late, or a breach of an order to file a document complying with particular requirements committed by filing a document in the belief that it complied with the requirements but which, it was later determined, did not comply. The AWU contended that that would be an extreme and harsh construction, potentially productive of incongruous, irrational and unjust results, and therefore was not one which it should be supposed that Parliament intended. In the AWU's submission, so to construe s 413(5) would also result in double punishment: potential liability to a civil penalty upon contravention and deprivation of the "right" to engage in protected industrial action consequent upon the contravention. Additionally, as the AWU would have it, since the only substantive prerequisite to the Fair Work Commission making an order under s 443 for the holding of a protected action ballot is that the applicant "has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted", it is apparent that s 443 assumes that s 413(5) is confined to contraventions of orders that continue to apply at the time when the protected industrial action is proposed to be taken. Otherwise, s 413(5) would have the unlikely consequence that the whole of the protected action ballot process could be permitted to take place in circumstances where, due to a past contravention of an order no longer in force at the time of ballot, the proposed industrial action would be incapable of qualifying as protected industrial action even if authorised by the ballot. Further, the AWU argued, if s 413(5) referred to Nettle Edelman past contraventions of orders which have ceased to operate before the commencement of the proposed protected industrial action, s 413(5) would render s 413(7) otiose. In the AWU's submission, it can also be seen from the Explanatory Memorandum to the Fair Work Bill 2008 (Cth)21 that the "focus on current compliance is unmistakable"22, thus implying that s 413(5) is limited to contraventions of orders that continue to apply to the specified persons at the time of the proposed protected industrial action. The AWU sought to uphold the Full Court's construction of s 413(5): that it is restricted to contraventions of extant orders constituted of conduct occurring in the organisation of or engagement in the proposed protected industrial action. Failing that, the AWU submitted by notice of contention, the correct construction of s 413(5) is that it requires that the relevant persons must not be contravening orders that apply to them at the time of the proposed protected industrial action, even if the contravening conduct does not occur in the course of that action. The meaning of s 413(5) Section 413(5) is poorly drafted. The way it combines the present perfect tense "not have contravened" with the present tense "apply" is potentially ambiguous. Standing alone, the combination could be taken to mean either that a person must not have contravened an order which applied to the person at the time of contravention or, alternatively, that a person must not have contravened an order which continues to apply to the person. The ambiguity could have been avoided by the addition of a couple of extra words. But, since that was not done, it is necessary to look to the history23 and context24 of the provision and to relevant extrinsic indicators of its purpose. 21 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at 258 [1635]. 22 AMMA (2016) 242 FCR 210 at 230 [108] per Buchanan J (Siopis J and Bromberg J agreeing at 211 [1], 230 [115]). 23 See Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]; [2012] HCA 55; Alphapharm Pty Ltd v H Lundbeck A/S (2014) 254 CLR 247 at 265-266 [42] per Crennan, Bell and Gageler JJ; [2014] HCA 42. See also Tabcorp Holdings Ltd v Victoria (2016) 90 ALJR 376 at 379 [8], 389 [77], 390 [86]-[87]; 328 ALR 375 at 378, 391, 393; [2016] HCA 4. 24 See CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ; [1997] HCA 2; Alcan (NT) (Footnote continues on next page) Nettle Edelman History At common law, industrial action in the form of strikes and lock-outs was and is, generally speaking, unlawful. In the scheme of things, it is likely to involve a breach of contract and one or more of the industrial torts of nuisance, besetting or inducing breach of contract, or other forms of tortious interference with economic relations25. Since 1904, action in the nature of lock-outs and strikes has also been proscribed by Commonwealth industrial legislation26. The first relevant statutory definition of "industrial action" was introduced into the Conciliation and Arbitration Act 1904 (Cth) in 197727 and it has since been carried through in the Industrial Relations Act 1988 (Cth)28, the Workplace Relations Act 1996 (Cth)29 and the Fair Work Act, as s 19, in materially similar terms. Statutory power to order participants not to engage in or to desist from industrial action was first conferred on the Industrial Relations Commission by s 127 of the Industrial Relations Act30. Initially, it was confined to persons engaged in public sector employment. Then, in 1996, s 127 of the Industrial Relations Act became s 127 of the Workplace Relations Act and its operation was extended to "industrial action" in relation to an industrial dispute, the negotiation of a "certified agreement" (an antecedent of enterprise agreements) and work Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 31 [4] per French CJ, 46-47 [47] per Hayne, Heydon, Crennan and Kiefel JJ; [2009] HCA 41; Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 at 389 [24], 391-392 [30]-[31] per French CJ and Hayne J, 411-412 [88]-[89] per Kiefel J; [2012] HCA 56. 25 See generally Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 328-330 [19]-[23] per Gleeson CJ; [2004] HCA 40; National Workforce Pty Ltd v Australian Manufacturing Workers' Union [1998] 3 26 See Commonwealth Conciliation and Arbitration Act 1904 (Cth), ss 6, 7, 8. See also ss 32 and 33 as enacted by the Conciliation and Arbitration Act 1972 (Cth), 27 Conciliation and Arbitration Amendment Act (No 3) 1977 (Cth), s 3. 28 Section 4(1). 29 Section 4(1). 30 See and compare Conciliation and Arbitration Act, ss 32, 33. Nettle Edelman regulated by an award or certified agreement. In 2005, as part of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth), s 127 was amended and extended to all industrial action that was not "protected". It was renumbered as s 496 of the Workplace Relations Act. What was then s 496 now appears in relevantly similar terms as s 418 of the Fair Work Act. As was earlier noticed, the concept of protected industrial action was established by the enactment of the Industrial Relations Reform Act. Following its enactment in 1993, s 170PM of the Industrial Relations Act conferred a broad statutory immunity from civil suit on persons who engaged in "industrial action" that was "protected". The immunity thus created was in substance then re-enacted as s 170MT of the Workplace Relations Act, later renumbered as s 447 of the same Act, and now continues in substantially similar but textually different form as s 415 of the Fair Work Act. Since 1993, the conditions that must be satisfied in order for industrial action to qualify as protected industrial action have also been expanded. As the primary judge observed31, the condition now embodied in s 413(5) originated in s 170PI(1) of the Industrial Relations Act, which was as follows: "The engaging in industrial action by a person who is a member of an organisation of employees is not protected action unless the organisation has, before the person begins to engage in the industrial action: tried to reach agreement with the employer; and if the Commission has made an order as mentioned in section 170QK in relation to the negotiations – complied with the order in so far as it applies to the organisation." (emphasis added) Section 170QK relevantly provided that: "(2) The Commission may make orders under paragraph 111(1)(t) for the purpose of: ensuring that the parties negotiating an agreement under this Part do so in good faith; or 31 Esso v AWU (2015) 253 IR 304 at 349 [131]. Nettle Edelman promoting the efficient conduct of negotiations for such an agreement; or otherwise facilitating the making of such an agreement. In particular, the Commission may, for such a purpose, order a party to take, or refrain from taking, specified action. In deciding what orders (if any) to make, the Commission: (a) must consider the conduct of each of the parties to the negotiations, in particular, whether the party concerned has: agreed to meet at reasonable times proposed by another party; or attended meetings that the party had agreed to attend; (iii) complied with negotiating procedures agreed to by the parties; or (iv) capriciously added or withdrawn items for negotiation; or disclosed relevant information as appropriate for the purposes of the negotiations; or refused or failed to negotiate with one or more of the parties; or (vii) in or in connection with the negotiations, contravened section 170RB by refusing or failing to negotiate with a person who is entitled under that section to represent an employee; and (b) may consider: proposed conduct of any of the parties (including proposed conduct of a kind referred to in paragraph (a)); and any other relevant matter." Nettle Edelman In 1996, ss 170PI and 170QK were repealed but the former was re-enacted in substantially similar terms as s 170MP(1) of the Workplace Relations Act as follows: "Engaging in industrial action by a person who is a member of an organisation of employees that is a negotiating party is not protected action unless the organisation has, before the person begins to engage in the industrial action: genuinely tried to reach agreement with the employer; and if the Commission has made an order in relation to the negotiations – complied with the order in so far as it applies to the organisation." (emphasis added) Then, in 2005, s 170MP was repealed and replaced with s 443(1) of the Workplace Relations Act, thus: an organisation of employees is a negotiating party to a proposed collective agreement; and the Commission has, during the bargaining period, made or given orders or directions that relate to, or that relate to industrial action relating to, the making of the proposed collective agreement or to a matter that has arisen in the negotiations for the proposed collective agreement; industrial action engaged in by a person who is a member of the organisation is not protected action unless, before the person begins to engage in the industrial action, the organisation has complied with the order or direction so far as it applies to the organisation." (emphasis added) As the primary judge observed32, it appears that s 170MP, and later s 443(1), of the Workplace Relations Act was capable of application to an organisation that had not complied with an order where it remained possible to comply with the order before the commencement of the proposed protected industrial action. By contrast, his Honour said, there might have been an 32 Esso v AWU (2015) 253 IR 304 at 350-351 [133]. Nettle Edelman argument as to whether the provision applied where an organisation had failed to comply with an order and it had ceased to be possible to comply. Presumably, what his Honour meant was that, because the Workplace Relations Act was expressed in terms of compliance, it more naturally conveyed the sense of orders with which it was still possible to comply. By contrast, the same cannot be said of s 413(5) of the Fair Work Act. Although the title of s 413(5) still makes reference to "Compliance with orders", the change from "has complied with the order or direction so far as it applies to the organisation" (emphasis added), in the body of s 443(1) of the Workplace Relations Act, to "have [not] contravened any orders that apply to them" (emphasis added), in the body of s 413(5) of the Fair Work Act, bespeaks an explicit change in emphasis from a state of compliance with orders to a state of absence of past contravention of orders. And, so far as can be seen, the only reason for the change is to make clear, or possibly clearer, that the provision applies to past contraventions of orders. (ii) Context That impression is fortified by the structure of s 413 of the Fair Work Act: in particular the phenomenon that sub-ss (2) and (3) are expressed in the present tense, sub-ss (4) and (5) are expressed in the present perfect tense and sub-ss (6) and (7) revert to the present tense. In s 413(2), the present tense "is a greenfields agreement" mandates that the inquiry which it posits is whether the proposed agreement is a greenfields agreement: an inquiry as to what exists at the time of inquiry. In the same way, in s 413(3), the present tense "must be genuinely trying" dictates that there must be in existence a genuine attempt to reach agreement. By contrast, in s 413(4), the present perfect tense "must have been met" signifies that the inquiry posited is as to something that has already been done or, more accurately, that was required to be and was done. It mandates that the requirements set out in s 414 relating to notice must have been complied with at a point in time before  indeed, at least three working days before33  the point of inquiry. So, too, in s 413(5), the present perfect tense "must not have contravened" conveys that s 413(5) is directed to non-contravention of an order that was required to be complied with before the time of inquiry and mandates that there have been no past contraventions of any such order. Then, the return to the present tense in s 413(6) and (7) signifies that sub-ss (6) and (7), like sub-ss (2) and (3), are concerned with what is happening at the point of inquiry. Specifically, in s 413(6), the present tense "must not contravene section 417" conveys that the person organising or engaging in the proposed protected industrial action must not be contravening s 417; and, in s 413(7), the present 33 Fair Work Act, s 414(2). Nettle Edelman tense "must [not] be in operation" conveys that there must not be in current operation any of the specified types of orders or declarations. In short, the statutory pattern of s 413 presents as being that, where a sub- section of s 413 is directed to events that are occurring at present, the sub-section is drafted in the present tense and, where a sub-section is directed to events that have occurred in the past, the sub-section is drafted in the present perfect tense. Certainly, as the AWU contended, one must also have regard to the way that s 413(5) combines the present perfect tense "must not have contravened" with the present tense "orders that apply". More precisely, if it is accepted that the present perfect tense "must not have contravened" signifies that the provision is directed to past contraventions of orders, should the present tense "orders that apply" be taken to mean that, although concerned with past contraventions, s 413(5) applies only to past contraventions of orders that are still in operation at the time of the proposed protected industrial action34? As will be seen, s 413(5) should not be construed as being so limited. Perhaps, if s 413(5) had been expressed in the way that s 443(1) of the Workplace Relations Act was expressed  in terms of compliance with orders  it would have been arguable that the provision was so confined. But, even then, as counsel for the AWU fairly conceded, it would have been a most unlikely construction. What purpose could there be in affording the immunity of protected industrial action to persons who had contravened orders, merely because there remained another order or orders with which it was still possible to comply? Given that the Fair Work Act regime was then and remains predicated on participants abiding by the rules, it is much more likely that the purpose of a provision in that form would have been to deny the immunity of protected industrial action to persons who had not previously complied with a pertinent order or orders and who had thereby demonstrated that they were not prepared, or prepared to take sufficient care, to play by the rules. Conceptually, there might also have been something more to be said for the view that found favour with Buchanan J35 that s 413(5) is confined to compliance with orders which apply to the proposed protected industrial action. interpretation are But insurmountable. Standing alone, the descriptor "that relate[s] to, or relate[s] to the way of such an textual difficulties the 34 See AMMA (2015) 251 IR 75 at 100 [166]-[169]. 35 See AMMA (2016) 242 FCR 210 at 228 [94] (Siopis J and Bromberg J agreeing at Nettle Edelman industrial action relating to, the [proposed] agreement" could perhaps be seen as directed to orders which "bear directly upon organising or engaging in the industrial action under assessment", as Buchanan J suggested. But, in context, the expression "that relate[s] to, or relate[s] to industrial action relating to ... a matter that arose during bargaining for the [proposed] agreement" is plainly not so limited. In any event, the change in language from the requirement for compliance with an order (as was prescribed by s 443(1) of the Workplace Relations Act) to the requirement for non-contravention of an order (as prescribed by s 413(5) of the Fair Work Act) in effect resolves any doubt. Syntactically, a condition that there has not been a contravention of an order necessitates that there has not been non-compliance with an order with which it was necessary to comply. There is nothing in or about that which suggests that the order must be one that continues in operation at the time of the proposed protected industrial action, or with which it is still possible to comply at that time, or that it be an order that would apply to the proposed protected industrial action. Contrary to the AWU's submissions, the extrinsic materials are to the same effect. Relevantly, what is there said about the operation of s 413(5) is that36: "Specified persons organising or engaging in industrial action must not have contravened any orders that apply to them relating to the industrial action, the proposed enterprise agreement or a matter that arose during bargaining for the proposed enterprise agreement (subclause 413(5)). Examples of orders are bargaining orders made by [the Fair Work Commission] in response to a failure to meet the good faith bargaining requirements." Nothing in or about that suggests the provision is restricted to contraventions of orders which continue to apply after contravention, or with which there may yet be compliance, or which relate to the proposed protected industrial action. That conclusion is also supported by the implications of the difference in language between s 413(5) and s 413(7). When s 413(7) refers to orders which are in operation at the relevant time, it refers to them as orders which are "in operation" and not as orders that "apply". If the application of s 413(5) were 36 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at 263 [1664]. Nettle Edelman intended to be restricted to non-contravention of orders that are in operation, it is to be expected that s 413(5) would likewise refer to orders that are in operation and not to orders that apply. The fact that s 413(5) refers to "orders that apply to them" and not to orders which are "in operation" thus strengthens the conclusion that "apply to them" is used adjectivally to delineate the persons to whom the orders apply, just as "relate to ... the agreement or a matter that arose during bargaining for the agreement" is deployed adjectivally to delineate the matters to which the orders relate. In the result, in order to engage s 413(5), an order must have two qualities: it must be addressed to the relevant persons and it must deal with the relevant subject matter. (iii) Relevance of conditions for protected action ballots The AWU's contention based on the supposed inutility of conducting a protected action ballot if the proposed protected industrial action cannot meet the common requirements because of a past contravention of an order should be rejected. As is mentioned in the Explanatory Memorandum to the Fair Work Bill37, the scheme of the legislation was previously that an employer could apply for an order staying a protected action ballot in the event that the employer challenged that there had been compliance with other requirements for protected industrial action38. The ability of an employer to make an application of that kind was abrogated by the current legislation but with retention of the ability of an employer to apply to the Fair Work Commission, once a ballot has been conducted, for a declaration that other requirements of protected industrial action have not been complied with39. As it was put in the Explanatory Memorandum40: "Employers will still have recourse to [the Fair Work Commission] if industrial action is taken after the ballot and it is found that the other (non- ballot) requirements for protected action have not been met (for example, the party taking action is not genuinely trying to reach agreement)." That is what Esso did in this case. 37 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at lviii [r.276], lx [r.295]. 38 See Workplace Relations Act 1996 (Cth), ss 458, 459, 488, 489. See also s 461(2). 39 Fair Work Act, s 418. 40 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at lx [r.295]. Nettle Edelman It is also to be observed that it is not just failure to meet the common requirement specified in s 413(5) that may render a protected action ballot nugatory. The existence of a serious breach declaration has the same effect by operation of s 413(7). (iv) Section 413(7) not otiose The AWU's contention that construing s 413(5) as applicable to past contraventions of orders would render s 413(7) otiose is unpersuasive. The matters for which s 413(7)(a) and (b) provide are not covered by s 413(5) and, although s 413(7)(c) involves more complex considerations, it is apparent that sub-ss (5) and (7) are concerned with essentially different circumstances. Section 413(5) applies to bargaining representatives who are organising or engaging in industrial action, and to employees who are organising or engaging in industrial action, in relation to contraventions of orders that relate to the agreement the subject of the proposed protected industrial action or a matter that arose during bargaining for the agreement. And the bulk of orders that "relate to, or relate to industrial action relating to, the agreement or a matter that arose during bargaining for the agreement" are likely to be orders made by the Fair Work Commission under s 418 stopping industrial action that is not protected. By contrast, s 413(7)(c) applies only to bargaining representatives and only to serious and sustained breaches of bargaining orders that result in a serious breach declaration41. Granted, the expression in s 413(5) "orders that ... relate to, or relate to industrial action relating to, the agreement or a matter that arose during bargaining for the agreement" is arguably broad enough to capture a bargaining order made under s 230, contravention of which may result in a serious breach declaration to which s 413(7) applies. But, inasmuch as s 413(7) provides expressly for situations where serious contraventions of bargaining orders by bargaining representatives result in serious breach declarations, it appears implicitly to exclude such breaches of bargaining orders from the more general category of contraventions of orders described in s 413(5): expressum facit cessare tacitum42. 41 Fair Work Act, s 235. 42 See for example Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7 per Gavan Duffy CJ and Dixon J; [1932] HCA 9; R v Wallis (1949) 78 CLR 529 at 550 per Dixon J; [1949] HCA 30; Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 678-679 per Mason J (Barwick CJ and Aickin J agreeing at 674, 680); [1979] HCA (Footnote continues on next page) Nettle Edelman Even if that were not so, however, the fact that there might be some degree of potential overlap between the more general provision of s 413(5) and the more specific provision of s 413(7) would not justify confining s 413(5) to orders that are in existence or may still be complied with at the time of the proposed protected industrial action, or which relate to the proposed protected industrial action. There is no basis in the text for any such limitation. The more probable conclusion would be that it was considered appropriate to make specific additional provision for the consequences of a serious breach declaration because a serious breach declaration has the effect that the bargaining process is likely to be terminated and the terms of the proposed enterprise agreement determined by the intervention of the Fair Work Commission43; and because, whereas the requirements of s 413(5) can be met by the exclusion from industrial action of a person who has contravened an order of the kind referred to in s 413(5), the application of s 413(7) cannot be avoided by the exclusion of a person involved in a breach the subject of the serious breach declaration. (v) Not productive of capricious, unjust results The AWU's contention that to construe s 413(5) in the manner contended for by Esso would be productive of capricious, unjust results is also unpersuasive. The Fair Work Commission has broad powers under s 603 of the Fair Work Act to vary or revoke orders, including power to vary or revoke orders retrospectively44. The very considerable breadth of the power accorded by s 603 stands in contrast to the more limited power accorded by s 602 to correct "obvious errors". Thus, although it has been said that courts should eschew the exercise of inherent power to vary an order nunc pro tunc where the variation 26; Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 586-589 [54]-[59] per Gummow and Hayne JJ; [2006] HCA 50; Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144 at 176-177 [50] per French CJ; [2011] HCA 32. 43 Fair Work Act, s 269. 44 See R v Commonwealth Court of Conciliation and Arbitration; Ex parte North Melbourne Electric Tramways and Lighting Co Ltd (1920) 29 CLR 106 at 110-111 per Knox CJ, Gavan Duffy and Starke JJ, 111 per Isaacs and Rich JJ; [1920] HCA 82; Monard v H M Leggo & Co Ltd (1923) 33 CLR 155 at 170 per Higgins J; [1923] HCA 53; R v Isaac; Ex parte State Electricity Commission (Vict) (1978) 140 CLR 615 at 619 per Gibbs J, 624 per Mason J; [1978] HCA 33. See also Grabovsky v United Protestant Association of NSW Ltd [2015] FWC 5161 at [36]- [38]; Rheem - Rydalmere Plant Industrial Action Order 2002 [PR929970] at [38]. Nettle Edelman would have the effect of altering the substantive rights of the parties45, the statutory power accorded by s 603 is different. As was observed in George Hudson Ltd v Australian Timber Workers' Union46 in relation to the retrospective operation of the Conciliation and Arbitration Act, the provisions of that Act were not to be read down as if confined to a prospective operation at the expense of the "great public policy" which the Act embodied, namely, that of encouraging and maintaining "industrial peace in the Commonwealth". So also, in Australian Tramway and Motor Omnibus Employees Association v Commissioner for Road Transport and Tramways (NSW)47, the Court held that the Conciliation Commissioner had power to vary the terms of an award that had expired (but continued in force by operation of statute). As Murphy J stated in R v Gough; Ex parte Key Meats Pty Ltd48, it was clear that the Australian Conciliation and Arbitration Commission was entitled to vary or set aside an award provision in accordance with the Act even if its new provision operated "locally, temporarily, prospectively or retrospectively, provided the provision would have been within the scope or ambit of the original dispute". The same considerations informed this Court's decision in Re Dingjan; Ex parte Wagner49 that the power to set aside or vary the terms of a harsh or unfair contract under ss 127A and 127B of the Industrial Relations Act could be exercised in relation to a contract that had been discharged. And the same is surely true of the Fair Work Commission's statutory power under s 603 of the Fair Work Act to vary or revoke orders relating to a proposed agreement or matters arising during the bargaining for such an agreement. To adopt and adapt the language of Kirby J in Emanuele v Australian 45 See Mealing v P Chand (2003) 57 NSWLR 305 at 306-307 [8]-[9] per Handley JA (Meagher ACJ and Young CJ in Eq agreeing at 306 [1], 308 [20]); Hartley Poynton Ltd v Ali (2005) 11 VR 568 at 581-609 [24]-[80] per Ormiston JA (Buchanan JA and Eames JA agreeing at 620 [113], [114]); Castle Constructions Pty Ltd v North Sydney Council (2007) 155 LGERA 52 at 80 [97] per Tobias JA (Bell J agreeing at 90 [143]); MAC v The Queen (2012) 34 VR 193 at 196 [11], 198 [22], 199 [24]- [25] per Nettle JA (Bongiorno JA agreeing at 204 [50]). 46 (1923) 32 CLR 413 at 434-436 per Isaacs J (Starke J agreeing at 453); [1923] HCA 38. See also at 446-450 per Higgins J. 47 (1935) 54 CLR 470 at 490-492 per Latham CJ, 493-494 per Rich, Evatt and McTiernan JJ, 498-499 per Starke J, 503-504 per Dixon J; [1935] HCA 77. 48 (1982) 148 CLR 582 at 597; [1982] HCA 12. 49 (1995) 183 CLR 323 at 362-363 per Gaudron J (Mason CJ, Deane J and Toohey J relevantly agreeing at 333, 342, 356); [1995] HCA 16. Nettle Edelman Securities Commission50, it may be inferred that Parliament contemplated that oversight and inadvertence would sometimes occur for which the Fair Work Commission's powers of variation and revocation under s 603 would be available51. Hence, if a document cannot be filed within the time specified in an order made by the Fair Work Commission, an application might be made for the time to be enlarged, or alternatively for the order to be revoked and a new order made allowing greater time, and, if there were good reason for the failure to file the document timeously, no doubt time would be enlarged, especially when it is appreciated that to refuse to enlarge time would preclude the possibility of protected industrial action by reason of s 413(5). Similarly, if a document were filed within time but later found not to comply with requirements imposed by the Fair Work Commission, and there was a satisfactory excuse for the failure in compliance, time in which to file a document complying with requirements might be enlarged retrospectively52. If, in exercise of the power conferred by s 603, an order were made by the Fair Work Commission varying or revoking a previous order with effect from a time earlier than the alleged contravention, the effect would be that there would not have been a contravention of the order. If, however, it appeared that the failure to file the document on time or to file what was required by the previous order was the result of contumaciousness or unacceptably careless disregard for the terms of the order, or if it were thought that to alter the order retrospectively would amount to an inappropriate or unfair interference with the rights of the parties, it might be expected that the Fair Work Commission would decline to exercise the power conferred by s 603 with the effect that the immunity attaching to protected industrial action would not arise. Moreover, whether or not s 603 were available or adequate to overcome all such procedural or inconsequential breaches of orders by variation or revocation of those orders, the possibility that minor or unintended breaches of orders could preclude protected industrial action would not be a sufficient reason to construe s 413(5) as it was construed by the Full Court. For the reasons 50 (1997) 188 CLR 114 at 156; [1997] HCA 20. 51 Cf Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 232 CLR 314; [2008] HCA 9. See and compare Carey v Australian Broadcasting Corporation (2012) 84 NSWLR 90 at 99 [43]-[44] per Beazley JA, 103-107 [71]- [93] per McColl JA, 110-113 [114]-[126] per Sackville AJA. 52 See generally Hartley Poynton (2005) 11 VR 568 at 588-589 [39], 602-604 [68]- [69] per Ormiston JA (Buchanan JA and Eames JA agreeing at 620 [113], [114]). Nettle Edelman already given, the change in tense from the present tense in s 413(2) and (3), to the present perfect tense in s 413(4) and (5), followed by the change back to the present tense in s 413(6) and (7), read in context, leaves no room for doubt that the Parliament intended s 413(5) to apply to past contraventions of orders. Thus, even accepting for argument's sake that the Parliament did not foresee that s 413(5) might be taken to apply to a past venial breach of a minor order, or a past unintended breach of an order about which no issue was taken until much later, it still could not be concluded that the Parliament did not intend s 413(5) to apply to past contraventions of orders. The only proper conclusion would be that the Parliament overlooked an unintended consequence of its intended operation of s 413(5). The Court's ability to construe a statutory provision in a manner that departs from the natural and ordinary meaning of the terms of the provision in the context in which they appear is limited to construing the provision according to the meaning which, despite its terms, it is plain that Parliament intended it to have53. It is not the Court's function to attempt to overcome unintended consequences of the intended operation of a provision by construing the provision as if it had a meaning that Parliament did not intend it to have. To do so would go beyond the judicial function of construing legislation according to established precepts of statutory construction and into the legislative realm of amending the Act by reference to what it may be supposed Parliament might have provided if it had considered the specific circumstances before the Court54. Accordingly, since it is clear that s 413(5) was intended to apply to past contraventions of orders, it is not open to construe the provision as if it did not apply to past contraventions, or as if its operation were somehow restricted to orders that continue to operate or which apply only to the proposed protected 53 See Wentworth Securities Ltd v Jones [1980] AC 74 at 105-106 per Lord Diplock; Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 304-305 per Gibbs CJ, 310 per Stephen J, 319-321 per Mason and Wilson JJ, 336 per Aickin J; [1981] HCA 26; Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423 per McHugh JA; IW v City of Perth (1997) 191 CLR 1 at 12 per Brennan CJ and McHugh J; [1997] HCA 30; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 113-116 per McHugh J; [1997] HCA 53. 54 Magor and St Mellons Rural District Council v Newport Corporation [1952] AC 189 at 191 per Lord Simonds; Marshall v Watson (1972) 124 CLR 640 at 644 per Barwick CJ (McTiernan J agreeing at 646), 649 per Stephen J (Menzies J agreeing at 646); [1972] HCA 27. Nettle Edelman industrial action. There is no basis in the text of the legislation or otherwise for the implication of words of that kind. (vi) No double punishment Finally, the AWU's contention that so to construe s 413(5) would have the effect of doubly punishing those who contravene a relevant order  by the imposition of a civil penalty and by denying immunity from suit in respect of what would otherwise be protected industrial action  takes the matter no further. The denial of what the AWU calls the "right" to engage in protected industrial action is not a punishment. The punishment for contravention is the applicable civil penalty55. By contrast, the scheme of s 413 is that the ability to engage in industrial action in relation to an agreement under the immunity from civil suit provided by s 415 is a privilege that, according to the express terms of that privilege in s 413, is conditioned upon the absence of past contraventions by persons organising or engaging in the proposed protected industrial action of orders that relate to the proposed agreement or a matter arising in the course of bargaining for the proposed agreement. The apparent purpose of so providing is to ensure that persons who have shown that they cannot be trusted to comply with orders relating to the agreement or matters arising from bargaining for the agreement are not to be trusted with the immunity afforded in relation to protected industrial action. For the same reasons, the fact that the breach of a bargaining order attracts a civil penalty under s 233 is not a reason to deny s 413(7) its plain and ordinary effect. The AWU's appeal The issue in the AWU's appeal may be dealt with more briefly. The question is whether it is sufficient to constitute organising or taking, or threatening to organise or take, action with intent to coerce another person contrary to s 343 or s 348 of the Fair Work Act for the person organising, taking or threatening the action to intend it to cause the other person to agree to terms with which the other person would not otherwise agree, or whether it is also necessary for the person organising, taking or threatening the action to know, and therefore intend, that the action is or will be unlawful, illegitimate or unconscionable. 55 Fair Work Act, s 539. Nettle Edelman Section 343 of the Fair Work Act provides that: "(1) A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to: exercise or not exercise, or propose to exercise or not exercise, a workplace right; or exercise, or propose to exercise, a workplace right in a particular way. Note: This subsection is a civil remedy provision (see Part 4-1). (2) Subsection (1) does not apply to protected industrial action." Section 348 is in similar terms and provides: "A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to engage in industrial activity. Note: This section is a civil remedy provision (see Part 4-1)." For the purposes of s 343, a "workplace right" is defined by s 341(1) and (2) to include making, varying or terminating an enterprise agreement. For the purposes of s 348, "engage in industrial activity" is defined by s 347 to include complying with a lawful request made by an industrial association, for example, as here, a request to enter into an enterprise agreement. It is not in issue that the AWU banned the performance of equipment testing, air freeing and leak testing with intent to influence Esso to enter into a proposed enterprise agreement on terms stipulated by the AWU56. Section 361 of the Fair Work Act relevantly provides that where it is alleged that a person took action for a particular reason or with a particular intent, and taking the action for that reason or with that intent would constitute a contravention of Pt 3-1 (which includes ss 343 and 348), it is presumed that the action was taken for that reason or with that intent unless the person proves otherwise. Thus the burden of proof was on the AWU to establish the absence of coercive intent in relation to ss 343 and 348. 56 See Esso v AWU (2015) 253 IR 304 at 360 [171], 361 [174]. Nettle Edelman The AWU put its case below57 on the basis that, because its relevant officers did not appreciate that the bans on equipment testing, air freeing and leak testing were not protected industrial action, it was not established that the officers acted with intent to commit acts which were unlawful, illegitimate or unconscionable, and so was not established that the AWU had organised the action with intent to coerce. The primary judge and a majority of the Full Court rejected that argument. Their Honours held58 that it was sufficient to constitute organising, taking or threatening action with intent to coerce a person within the meaning of s 343 or s 348 of the Fair Work Act to organise, take or threaten action which is unlawful, illegitimate or unconscionable with intent to negate the person's choice. It was not necessary, they held, that the person organising, taking or threatening the action know or intend that the action will be unlawful, illegitimate or unconscionable. Hence, because the AWU had imposed the bans on the performance of equipment testing, air freeing and leak testing with intent to influence Esso to enter into a proposed enterprise agreement on terms favourable to the AWU, the AWU had taken action that was unlawful, illegitimate or unconscionable to coerce Esso to exercise a workplace right or engage in industrial activity within the meaning of ss 343 and 348. The idea that the action must be unlawful, illegitimate or unconscionable to amount to coercion within the meaning of s 343 or s 348 of the Fair Work Act derives from McHugh JA's statement in Crescendo Management Pty Ltd v Westpac Banking Corporation59 of the elements of common law economic duress. It has since been held that the same applies to ss 343 and 34860; although it is not immediately apparent why that should be so. Apart from anything else, s 343(2) provides that s 343(1) does not apply to protected industrial action. That suggests perhaps that the statutory conception of coercion is otherwise broad 57 Esso v AWU (2015) 253 IR 304 at 360 [171]; Esso v AWU (2016) 245 FCR 39 at 84 [175], 85 [188] per Buchanan J (Siopis J agreeing at 42 [1]). 58 Esso v AWU (2015) 253 IR 304 at 359 [166]; Esso v AWU (2016) 245 FCR 39 at 84 [176], 86-87 [194], 89 [200]-[201] per Buchanan J (Siopis J agreeing at 42 [1], Bromberg J not deciding at 128 [381]). 59 (1988) 19 NSWLR 40 at 45-46 (Samuels JA and Mahoney JA agreeing at 41). 60 See for example Fair Work Ombudsman v National Jet Systems Pty Ltd (2012) 218 IR 436 at 440 [12], 443 [23]; Victoria v Construction, Forestry, Mining and Energy Union (2013) 218 FCR 172 at 192 [91]-[92] per Buchanan and Griffiths JJ. Nettle Edelman enough to embrace protected industrial action, and thus coercion by lawful or legitimate means. If that is so, it would assume significance in relation to s 348, which has no express exclusion of protected industrial action. In this case, however, it is unnecessary to decide whether that is so. Either way, it is clear that a person taking coercive action need not have an accurate appreciation of the legal nature of the action. As Gleeson CJ said in Electrolux Home Products Pty Ltd v Australian Workers' Union61 in relation to s 170NC of the Workplace Relations Act, it was sufficient to establish an intent to coerce to demonstrate that the person organising, taking or threatening the action intended it to negate the other person's choice and that the person organising, taking or threatening the action had actual knowledge of circumstances that made his or her conduct coercive: "The elements of the conduct prohibited by s 170NC, so far as presently relevant, are action, or threats of action, with intent to coerce another to agree, or not to agree, to the making of an agreement under Div 2 or Div 3. An accurate appreciation of the legal nature of the agreement in question is not an element of the intent required by s 170NC." The fact that a person may be acting under a mistake of law as to whether industrial action is protected industrial action is no more relevant than would be the fact that the person neither knew nor cared whether the industrial action was protected industrial action62. The same applies to ss 343 and 348 of the Fair Work Act. In the course of oral argument before this Court, the AWU sought to put its case on a further basis apparently different from the way it was put below. Counsel for the AWU accepted that a person taking coercive action need not have a correct legal appreciation of his or her conduct or otherwise appreciate that the action is unlawful, illegitimate or unconscionable, but, relying on Merkel J's reasoning in Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia63, counsel submitted that it was necessary for the person taking the action to have a subjective understanding of the circumstances that, viewed objectively, would be perceived as rendering the action unlawful, illegitimate or unconscionable. Thus, it was contended, because the relevant 61 (2004) 221 CLR 309 at 330-331 [26]. 62 See Electrolux (2004) 221 CLR 309 at 330 [25] per Gleeson CJ. 63 (2001) 109 FCR 378 at 386-388 [30]-[43]. Nettle Edelman officers of the AWU believed, as a matter of fact, that equipment testing, air freeing and leak testing were acts within the description "de-isolation of equipment", they lacked subjective knowledge of the circumstance that, viewed objectively, placed the action beyond the reach of the immunity for protected industrial action and so into a category of action that, objectively discerned, would be seen as unlawful, illegitimate or unconscionable. Assuming, without deciding, that the analysis in Seven Network is applicable to ss 343 and 348 of the Fair Work Act; that the analysis supports the AWU's contention; and that a belief that equipment testing, air freeing and leak testing are acts within the description "de-isolation of equipment" amounts to a mistake of fact as opposed to a mistake of law or of mixed fact and law64, the problem with the AWU's further submission is that the evidence adduced below does not go as far as establishing that the relevant officers of the AWU truly believed as a matter of fact that equipment testing, air freeing and leak testing were "de-isolation of equipment". The evidence to which this Court was referred65 as supporting the AWU's submission at best shows that, in its bargaining with Esso, the AWU maintained that equipment testing, air freeing and leak testing were "de-isolation of equipment" within the scope of the protected industrial action notice and, on that basis, that the bans would be maintained. Although there was evidence that some employees and members of the AWU considered that the bans should be maintained66, counsel for the AWU could point to no evidence that any of the relevant officers of the AWU, let alone all of the relevant officers of the AWU involved in organising the bans, honestly believed as a fact that equipment testing, air freeing and leak testing were "de- isolation of equipment". Hence, even if it were necessary for the AWU's officers to have had a subjective understanding of the factual circumstances that, viewed objectively, would be seen as rendering the bans unlawful, illegitimate or 64 See and compare Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 395; [1996] HCA 36; Hope v Bathurst City Council (1980) 144 CLR 1 at 7 per Mason J (Gibbs and Stephen JJ, Murphy J and Aickin J agreeing at 3, 11); [1980] HCA 16; Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 450-452 [24]-[28] per Gleeson CJ, Gummow and Callinan JJ, 477-478 [108] per Hayne J; [2001] HCA 12; Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 at 427-428 [36] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; [2002] HCA 59. 65 Esso v AWU (2015) 253 IR 304 at 322-323 [46], 325 [49], 330-331 [58], [61]-[64]. Cf at 335 [78]-[79], 336-337 [84]. 66 Esso v AWU (2015) 253 IR 304 at 329 [55], 330 [58]. Nettle Edelman unconscionable, the AWU has not established, as s 361 requires, that those persons lacked subjective knowledge of those facts. Conclusion It follows from these reasons that Esso's appeal should be allowed and the notice of contention rejected. Orders 2 and 3 made by the Full Court in VID 435 of 2015 should be set aside. In lieu thereof, it should be ordered that the appeal to the Full Court be allowed in part; declarations 1, 2 and 4 made by the primary judge on 13 August 2015 be set aside; and, in place of those declarations, it should be declared that, as a result of the AWU's contravention of the order of 6 March 2015, the AWU was a person who has contravened an order which applies to it in relation to the proposed agreement and, therefore, by reason of the AWU's failure to meet the common requirement specified in s 413(5), that industrial action thereafter organised by the AWU in relation to the proposed agreement was not protected industrial action. The AWU's appeal should be dismissed. The matter should be remitted to a judge of the Federal Court for the hearing and determination of Esso's claims for pecuniary penalties and compensation. The employer, Esso, and the employee organisation, the AWU, both appeal from the decision of the Full Court of the Federal Court in Esso Australia Pty Ltd v Australian Workers' Union67. For the reasons given by Kiefel CJ, Keane, Nettle and Edelman JJ, I would dismiss the appeal by the AWU. For the reasons which follow, I would also dismiss the appeal by Esso. Esso's appeal turns on choosing between alternative constructions of "must not have contravened" in s 413(5) of the Fair Work Act. The choice comes down to whether "must not have contravened" is better construed as denoting: the absence of a past event (so as to be equivalent to "did not contravene"), as Esso argues; or the absence of a present state resulting from a past event (so as to be equivalent to "is not in contravention of"), as the AWU in substance argues on its notice of contention. Neither construction is ungrammatical. In grammatical terms, the question is whether "must not have contravened" is expressed in the experiential form of the present perfect tense, used to refer to an event having occurred in the past, or in the resultative form of the present perfect tense, used to refer to an existing state produced by an event that occurred in the past68. The modal auxiliary "must" and the fact that the provision is framed negatively do not alter that question or affect its resolution. Neither construction is manifestly absurd or unjust. No grand common law presumption is engaged69. The language of "rights", resorted to in argument by both parties, is a distraction given that what is at stake is fulfilment of a statutory precondition to the existence of a statutory immunity from common law and statutory liability. The stated objects of the Fair Work Act are too general to permit of a conclusion that one construction would better achieve those objects than the 67 (2016) 245 FCR 39. 68 Huddleston and Pullum, The Cambridge Grammar of the English Language, 69 See Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 328-330 [18]-[23]; [2004] HCA 40. other70. Extrinsic material is no help: the explanatory memorandum did no more than parrot the statutory text71. Legislative history is equivocal. The legislative antecedents of s 413(5)72 referred to compliance rather than an absence of contravention. Those antecedents were themselves ambiguous. There is no reason for thinking that the difference between then and now is attributable to a hardening of legislative policy as distinct from a change of drafting style. Difficult though it is, the constructional choice can and must be made in the application of workaday interpretative methodology. Nothing simpler or more sophisticated is involved than attempting sympathetically to determine which construction of the contested statutory text better fits the context of the statutory scheme of which that text forms part. Linguistic indications are important. More important is the "purpose and policy" reasonably attributed to the provision within the statutory scheme73. The statutory scheme is that relevantly foreshadowed in the reference in the stated objects of the Fair Work Act to the Act's "emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action"74. That scheme is comprised principally within two interlocking sets of provisions. The first is Pt 2-4, which in Div 8 implements the specific object of enabling the Fair Work Commission ("the FWC") "to facilitate good faith bargaining"75. The second is Pt 3-3, which in Div 2 sets out "when industrial action for a proposed enterprise agreement is 70 See Carr v Western Australia (2007) 232 CLR 138 at 142-143 [5]-[6]; [2007] HCA 71 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at 263 [1664]. 72 Industrial Relations Act 1988 (Cth) (as at 31 March 1994), s 170PI(1)(b) and (2)(b); Workplace Relations Act 1996 (Cth) (as at 20 January 1997), s 170MP(1)(b), (2)(b) and (3)(c); Workplace Relations Act 1996 (Cth) (as at 27 March 2006), ss 443 and 444(c). 73 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69]; [1998] HCA 28, quoting Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397; [1955] HCA 27. 74 Section 3(f). 75 Section 171(b). protected industrial action"76, with the consequence that "[n]o action lies under any law in force in a State or Territory in relation to [it] except in certain circumstances"77, and in Div 4 enables the FWC "to make orders, in certain circumstances, that industrial action stop, not occur or not be organised for a specified period"78. Before turning to consider the different constructions of s 413(5) for which the parties contended, it is necessary to describe the most salient aspects of the statutory scheme of which it is a part in some detail. Part 2.4 is concerned "to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits"79. Collective bargaining for an enterprise agreement is a statutory process commenced by formal notification80 and conducted between "bargaining representatives" who are ordinarily an employer (such as Esso) and an employee organisation (such as the AWU)81. Within Pt 2.4, Div 8 is concerned to provide for the FWC to facilitate collective bargaining, including by making "bargaining orders" and by making "serious breach declarations"82. Division 8 of Pt 2-4 enumerates the "good faith bargaining requirements" which a bargaining representative for a proposed enterprise agreement "must meet"83. The good faith bargaining requirements include certain high level substantive requirements ("giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative's responses to those proposals", "refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining" and "recognising and bargaining with the other bargaining 76 Section 406. 77 Section 406, referring to the effect of s 415. 78 Section 406. 79 Section 171(a). 80 Section 173. 81 Section 176. 82 Section 169. 83 Section 228. representatives for the agreement"84). They also include some specific procedural requirements ("attending, and participating in, meetings at reasonable times", "disclosing relevant information ... in a timely manner" and "responding to proposals made by other bargaining representatives for the agreement in a timely manner"85). The good faith bargaining requirements are not self-executing. There is no immediate sanction for their breach. Instead, a bargaining representative who has a concern that another bargaining representative has not met or is not meeting the good faith bargaining requirements, and who (after giving notice and an opportunity to respond) considers that the other bargaining representative has not adequately responded to the concern, has the option of applying to the FWC for a bargaining order in relation to the proposed enterprise agreement86. On such an application being made, the FWC has discretion to make a bargaining order if satisfied that certain preconditions are met87. Amongst the preconditions of which the FWC must be satisfied to enliven that discretion is that either "one or more of the relevant bargaining representatives for the agreement have not met, or are not meeting, the good faith bargaining requirements"88 or "the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement"89. If the FWC decides to make a bargaining order, the bargaining order which it makes must relevantly specify "the actions to be taken by, and requirements imposed upon, the bargaining representatives for the agreement, for the purpose of ensuring that they meet the good faith bargaining requirements"90. The bargaining order must also specify, if and to the extent applicable, "such matters, actions or requirements as the FWC considers appropriate ... for the 84 Section 228(1)(d)-(f). 85 Section 228(1)(a)-(c). 86 Section 229. 87 Section 230(1). 88 Section 230(3)(a)(i). 89 Section 230(3)(a)(ii). 90 Section 231(1)(a). purpose of promoting the efficient or fair conduct of bargaining for the agreement"91. A bargaining order made by the FWC has three relevant statutory characteristics. First, it is capable of being varied or revoked by the FWC either on the FWC's own initiative or on application by any person who is affected by it92. There is no reason to consider that the power of variation or revocation cannot be exercised to vary or revoke the bargaining order retrospectively to the date of its making93. Second, it has a strict temporal operation, coming into operation on the day it is made94 and ceasing to be in operation at the earliest of a number of specified events, one of which is "if the order is revoked – the time specified in the instrument of revocation"95 and others of which are "when a workplace determination that covers the employees that would have been covered by the agreement comes into operation"96 and "when the bargaining representatives for the agreement agree that bargaining has ceased"97. Third, it is binding: a person to whom a bargaining order applies "must not contravene" the order98 and such a contravention is capable of resulting, on application, in a court issuing an injunction or imposing a pecuniary penalty99. The issuing of an injunction or imposition of a pecuniary penalty is in each case discretionary. The statutory scheme places no restriction on the number or the detail of the bargaining orders which the FWC might make during bargaining for an enterprise agreement. The circumstances considered by the Full Court of the Federal Court in Australian Mines and Metals Association Inc v Maritime Union 91 Section 231(1)(d). 92 Section 603. 93 R v Commonwealth Court of Conciliation and Arbitration; Ex parte North Melbourne Electric Tramways and Lighting Co Ltd (1920) 29 CLR 106 at 110; [1920] HCA 82. 94 Section 232(a). 95 Section 232(b)(i). 96 Section 232(b)(iii). 97 Section 232(b)(iv). 98 Section 233. 99 Sections 539(2) (item 6), 545 and 546 (each located in Pt 4-1). of Australia100, decided contemporaneously with the decision now under appeal, illustrate that a single process of collective bargaining for a proposed enterprise agreement can result in cumulative or successive bargaining orders. The same circumstances also illustrate that contravention of a particular bargaining order might be short-lived (such as where a document or event ordered to be provided or to occur at or by a specified time is provided or occurs shortly after that time) and that determining whether or not a contravention has occurred might turn on contestable questions of fact of an evaluative nature (such as whether information disclosed in a document provided in purported compliance with the bargaining order meets the description of information of the quality ordered to be disclosed). It is against the background of the potential for there to be a wide range in the relative significance of the contraventions of bargaining orders which might occur in the course of collective bargaining for a proposed enterprise agreement that Div 8 of Pt 2-4 goes on to empower the FWC, again on the application of a bargaining representative101, to make a serious breach declaration102. To make a serious breach declaration, the FWC must be satisfied not only that one or more of the bargaining representatives has contravened one or more bargaining orders in relation to an enterprise agreement but that the contravention or contraventions "are serious and sustained" and "have significantly undermined bargaining for the agreement"103. The FWC must, in addition, be satisfied that the other bargaining representatives have exhausted all other reasonable alternatives to reach agreement on the terms that should be included in the enterprise agreement; that agreement on those terms will not be reached in the foreseeable future; and that it is reasonable in all the circumstances to make the declaration, taking account of the views of all bargaining representatives104. Like a bargaining order, a serious breach declaration comes into operation on the day it is made105. Unlike a bargaining order, a serious breach declaration cannot be varied or revoked by the FWC106. Nor is a serious breach declaration 100 (2016) 242 FCR 210. See Australian Mines and Metals Association Inc v Maritime Union of Australia (2015) 251 IR 75 at 79-81 [8]. 101 Section 234. 102 Section 235(1). 103 Section 235(2)(a)-(b). 104 Section 235(2)(c)-(e). 105 Section 235(5)(a). 106 Section 603(3)(b). an order that is capable of contravention. One consequence of a serious breach declaration is that, if the bargaining representatives do not settle all of the matters during bargaining for the agreement before a specified "post-declaration negotiating period" ends, the FWC must make a "bargaining related workplace determination" which will operate instead of the enterprise agreement107. Another consequence of a serious breach declaration is that, by force of s 413(7)(c) the terms of which it is appropriate in due course to note, its operation has an immediate disentitling effect on the taking of protected industrial action for the proposed enterprise agreement. Division 2 of Pt 3-3 defines protected industrial action for a proposed enterprise agreement to encompass industrial action organised or engaged in against an employer by the bargaining representative of an employee if that industrial action meets the description of "employee claim action" or "employee response action"108. Protected industrial action for the proposed enterprise agreement can in that way include, for example, a refusal by employees to attend for work or a restriction by employees on the performance of work109. Division 2 also defines protected industrial action for a proposed enterprise agreement to encompass industrial action taken by an employer that meets the description of "employer response action"110. Protected industrial action for the proposed enterprise agreement can in that way also include a lockout of employees from their employment by their employer111. The separate descriptions of employee claim action, employee response action and employer response action, set out in subdiv A of Div 2, each contain a common element. The common element is that the industrial action "meets the common requirements set out in" subdiv B of Div 2112. It is within that subdivision that s 413 is located. Before turning the common requirements to be met for industrial action for a proposed enterprise agreement to answer the description of employee claim action, employee response action or to examine s 413's prescription of 107 Division 4 of Pt 2-5. 108 Sections 408(a)-(b), 409(1) and 410(1). 109 Section 19(1)(b)-(c). 110 Sections 408(c) and 411. 111 Section 19(1)(d). 112 Sections 409(1)(c), 410(1)(c) and 411(c). employer response action, and on that basis to have the status of protected industrial action, it is convenient to note the provisions of Divs 4 and 6 of Pt 3-3. Division 4 of Pt 3-3 provides for the making by the FWC of orders stopping industrial action which appears to the FWC not to be protected industrial action. Of its own initiative or on the application of a person affected, the FWC must make an order (colloquially known as a "stop order") to the effect that industrial action specified in the order stop, not occur or not be organised for a period specified in the order if it appears to the FWC that industrial action by one or more employees or employers that is not, or would not be, protected industrial action is happening or is threatened, impending or probable or is being organised113. Like a bargaining order, a stop order is capable of being varied or revoked by the FWC either on the FWC's own initiative or on application by any person who is affected by the stop order114 and, like a bargaining order, there is no reason to consider that a stop order cannot be varied or revoked retrospectively. Also like a bargaining order, a person to whom a stop order applies "must not contravene" the order115 and such a contravention is capable of resulting, on application, in a court issuing an injunction or imposing a pecuniary penalty116. The issuing of an injunction or the imposition of a pecuniary penalty is, again, in each case discretionary. However, a person is not required to comply with a stop order if the industrial action to which the order relates is, or would be, protected industrial action117. The result is that, although the FWC is obliged to order that industrial action stop once it appears to the FWC that the industrial action is not protected industrial action, the stop order has no binding effect if the industrial action to which the order relates objectively answers the description of protected industrial action. The circumstances considered by the Full Court of the Federal Court in the decision under appeal illustrate that determining whether a contravention of a stop order has or has not occurred can involve questions of fact concerning whether industrial action that is taken falls within the precise scope of the industrial action specified in the order and that those questions of fact can be of a 113 Section 418. 114 Section 603. 115 Section 421(1). 116 Sections 421(3), 539(2) (item 15) and 546. 117 Section 421(2). technical nature. Those circumstances also illustrate that contravention of a particular stop order might be short-lived. Division 6 of Pt 3-3 provides for the making by the FWC of orders suspending or terminating protected industrial action. One of the circumstances in which the FWC has discretion to make such an order of its own initiative or on application is where the FWC is satisfied that the action is causing or is threatening to cause significant economic harm to any employer or employee who will be covered by the proposed agreement118. For the purpose of working out whether protected industrial action is causing or threatening to cause such significant economic harm, the FWC is required to take into account a number of factors119. Those factors include "the objective of promoting and facilitating bargaining for the agreement"120. They also include "whether the bargaining the good faith bargaining representatives for requirements and have not contravened any bargaining orders in relation to the agreement"121. To the extent that it requires the FWC to take into account whether the bargaining representatives "have not contravened any bargaining orders in relation to the agreement", the legislative expression of the second of those factors replicates rather than resolves the question of construction which arises under s 413(5). Whatever view is taken of "must not have contravened" in s 413(5), it may be that a consistent reading of ss 413(5) and 423(4)(e) confines the inquiry indicated by that factor to an inquiry into the conduct of bargaining representatives other than a bargaining representative taking the protected industrial action suspension or termination of which is under consideration. There are problems enough without attempting now to resolve that peripheral question. the agreement have met Turning then to examine s 413's prescription of the common requirements that must be met for industrial action for a proposed enterprise agreement to answer the description of employee claim action, employee response action or employer response action, it is necessary to begin with the explanation in s 413(1) that the section "sets out the common requirements for industrial action to be protected industrial action for a proposed enterprise agreement". What is immediately apparent from that explanation is that the common requirements are requirements that must be met at the time the industrial action is taken. 118 Section 423. 119 Section 423(4). 120 Section 423(4)(g). 121 Section 423(4)(e). Maintaining that present temporal standpoint and present temporal focus, s 413(2) states the negative requirement that the industrial action "must not relate to a proposed enterprise agreement that is" in one or other of two specified categories, s 413(3) states the positive requirement that the relevant bargaining representative "must be genuinely trying to reach an agreement", and s 413(6) states the further negative requirement that the person organising or engaging in the industrial action "must not" thereby contravene s 417 (the terms of which have the same present temporal focus). Maintaining the same present temporal standpoint and maintaining the same present temporal focus, s 413(7) relevantly provides: "None of the following must be in operation: an order under Division 6 of this Part suspending or terminating industrial action in relation to the agreement; a serious breach declaration in relation to the agreement." Maintaining the same temporal standpoint, but utilising the passive form of the present perfect tense and obviously looking back to the immediate past, s 413(4) states the further positive requirement that the notice requirements set out in s 414 "must have been met in relation to the industrial action". The notice requirements set out in s 414 are such that those requirements could only "have been met" at the time industrial action is taken if written notice of the proposed industrial action was given at a time "before" the industrial action is taken. Maintaining the same temporal standpoint, but lacking the clarity of temporal focus of each of s 413(2), (3), (4), (6) and (7), is s 413(5), which provides: "The following persons must not have contravened any orders that apply to them and that relate to, or relate to industrial action relating to, the agreement or a matter that arose during bargaining for the agreement: if the person organising or engaging in the industrial action is a bargaining representative for the agreement – the bargaining representative; if the person organising or engaging in the industrial action is an employee who will be covered by the agreement – the employee and the bargaining representative of the employee." Two aspects of the operation of s 413(5) are uncontroversial. One is that its reference to orders "that apply to" the bargaining representative, "and that relate to, or relate to industrial action relating to, the agreement or a matter that arose during bargaining for the agreement", encompasses bargaining orders and stop orders. The other is that its operation is objective and self-executing. To the extent it attaches consequences to contravention of a bargaining order or a stop order, those consequences apply irrespective of the gravity of the contravention and independently of a court imposing a pecuniary penalty or issuing an injunction. The requirement that the bargaining representative organising or engaging in the industrial action (and the employee or employees in a case to which s 413(5)(b) applies) "must not have contravened any orders that apply to them" would have a capricious operation were it read as referring only to the absence of a past breach of an existing order. There could be no reason to deny protection to industrial action organised or engaged in by a bargaining representative who has in the past breached an existing order and yet extend protection to industrial action organised or engaged in by a bargaining representative who has in the past breached a past order. Neither of the constructions advanced in the appeal encounters that difficulty. On the construction advanced by the AWU – that "must not have contravened" refers to the absence of a present state of contravention (equivalent to "is not contravening") – the use of the present tense to describe the orders to which the sub-section refers reinforces the totality of its temporal focus on the time at which the industrial action is taken. On the construction advanced by Esso – that "must not have contravened" refers to the absence of a past event of contravention (equivalent to "did not contravene") – the use of the present tense to identify the orders to which the sub-section refers is of no temporal significance. The reference is concerned merely to identify the characteristics of the order at the time of contravention. The construction advanced by Esso avoids that difficulty, however, by sacrificing linguistic consistency. Within a section otherwise conspicuous in using the present tense to refer to the present, the present tense is stripped of temporal significance. And within the one sub-section, determinative temporal significance is attributed to some words and none to others. More important than mere linguistic consistency is consistency of the consequences produced by each of the alternative constructions with the other elements of the statutory scheme. On the construction advanced by the AWU – that "must not have contravened" refers to the absence of a present state of contravention – the common requirement set out in s 413(5) is relevantly that the bargaining representative organising or engaging in the industrial action must not be in contravention of an existing order at the time of taking the industrial action. The bargaining representative is prevented by the common requirement from taking advantage of an immunity provided by one aspect of the statutory scheme while at the same time being in contravention of an existing obligation imposed under another aspect of the same statutory scheme. The bargaining representative is prevented from approbating and reprobating. On the construction advanced by Esso – that "must not have contravened" refers to the absence of a past event of contravention – the common requirement is relevantly that the bargaining representative organising or engaging in the industrial action must not have been in contravention of any order made at any time in the bargaining process for the enterprise agreement. The common requirement is a harsh and rigid form of industrial discipline which creates an incentive for self-auditing and for strict compliance with any order of the FWC made in or in relation to the bargaining process. Once having in any way contravened any bargaining order or any stop order at any time in the process, the bargaining representative is attainted. The bargaining representative, be it an employee organisation or an employer, thereby becomes an industrial cripple and an industrial outlaw – prevented from backing its negotiating stance with protected industrial action and prevented from organising or engaging in any protected industrial action for the enterprise agreement whether that action is employee claim action, employee response action or employer response action. My difficulty is in seeing such a sweeping denial to an employee organisation or an employer of the capacity to take protected industrial action as consonant with a statutory scheme which is concerned to create an environment for collective bargaining that is fair and flexible and efficient. There is a lack of proportionality between contravention of a bargaining order or a stop order and its consequences. There is also rigidity. Both are at odds with those aspects of the statutory scheme which make constraining or punitive consequences of contravention dependent on the discretionary making of an order by a court, on an application being made and on a contravention being found. Both are also at odds with other aspects of the statutory scheme making separate and elaborate provision for serious and sustained breaches of bargaining orders to result in the making by the FWC of a serious breach declaration the absence of which is a separate and distinct common requirement. No doubt, the arbitrariness of the resultant attainder might be alleviated to some extent by the capacity of an employee organisation or an employer who was in the past in contravention of a bargaining order or a stop order to approach the FWC seeking a retrospective revocation or variation of the order which would have the effect of expunging the contravention. To need to rely on that mechanism to clear the way to the taking of protected industrial action would introduce delays and inefficiencies into the collective bargaining process. The FWC's general power of revocation or variation is ill-suited to the task of conferring on the FWC what would in substance be a power to decide whether proposed industrial action will be protected or unprotected. The FWC would be asked to rake over the coals of the past and to exercise discretion for no reason other than to allow the employee organisation or employer to take protected industrial action in the future. The considerations appropriate to be taken into account by the FWC in exercising that discretion are unstated in the legislation and are by no means obvious. Further, an employee organisation or an employer who might dispute having been in contravention of a bargaining order or a stop order but who did not want to take the risk of proposed industrial action being unprotected would be placed in the awkward, if not invidious, position of needing either to seek from the FWC a retrospective revocation or variation of the order which it denies is necessary or to seek from a court a declaration that it had not been in contravention of the order. For those reasons, I consider the construction advanced by the AWU to be better. In the words of Buchanan J in the Full Court in the decision under appeal, the focus of s 413(5) is on "whether there is, at the relevant point of time, an existing or current order with which it is not complying, rather than whether at some time in the past it has failed to comply with an order"122. 122 (2016) 245 FCR 39 at 81 [162].

HIGH COURT OF AUSTRALIA AND THE QUEEN APPELLANT RESPONDENT [2020] HCA 10 Date of Hearing: 6 December 2019 Date of Judgment: 18 March 2020 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Queensland dated 12 March 2019 refusing leave to appeal and in lieu thereof order that: leave to appeal be granted; the appeal be allowed; the sentence imposed by the Supreme Court of Queensland on 18 December 2017 be quashed; and the proceeding be remitted to the Trial Division of the Supreme Court of Queensland for the appellant to be sentenced according to law. On appeal from the Supreme Court of Queensland Representation S C Holt QC with B P Dighton for the appellant (instructed by Bamberry Lawyers) M R Byrne QC with P J McCarthy for the respondent (instructed by Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Sentence – Manslaughter – Where appellant pleaded guilty to manslaughter – Where hearing held to determine factual basis upon which appellant to be sentenced – Where acts comprising offence disputed – Where appellant failed to give evidence at sentencing hearing – Whether sentencing judge applied R v Miller [2004] 1 Qd R 548 – Whether sentencing judge drew adverse inferences from appellant's silence in making factual findings – Whether R v Miller [2004] 1 Qd R 548 wrongly decided – Whether sentencing judge permitted to more readily draw inferences adverse to appellant. Words and phrases – "absence of contradictory evidence", "accusatorial proceeding", "adverse inference", "balance of probabilities", "beyond reasonable doubt", "burden of proof", "civil standard", "contested facts", "contradictory out of court statements", "criminal standard", "fact-finding", "failure to give evidence", "Jones v Dunkel inference", "plea of guilty", "presumption of innocence", "rare and exceptional circumstances", "right to silence", "sentencing hearing", "standard of proof". Evidence Act 1977 (Qld), s 132C. KIEFEL CJ, BELL, KEANE, NETTLE AND EDELMAN JJ. Under the common law of Australia, on the trial of a criminal allegation (save in rare and exceptional circumstances), no adverse inference should be drawn by the jury (or the judge in a trial without a jury) from the fact that the accused did not give evidence1. The question raised by the appeal is whether the same stricture applies to the resolution of a dispute as to the facts constituting the offence in sentencing. If it does, a further question is whether that position is modified by s 132C of the Evidence Act 1977 (Qld) ("the Act"), which relevantly provides that, if an allegation of fact is not admitted or is challenged, the sentencing judge may act on the allegation if the judge is satisfied on the balance of probabilities that the allegation is true. Procedural history By an indictment dated 10 October 2016, the appellant and her partner, Matthew Scown, were jointly charged before the Supreme Court of Queensland with the manslaughter of the appellant's son, Tyrell. Tyrell, who was aged four years and three months, died on the evening of Sunday, 24 May 2009 as the result of blunt force trauma to his abdomen. The injuries were inflicted within 48 hours of the child's death. Scown and the appellant were both alone with Tyrell for intervals during the 48 hours before his death. The fatal injuries were inflicted by one of them. Tyrell was vomiting on Saturday, 23 May 2009. He repeatedly vomited throughout the following day. Despite the fact that Tyrell was apparently severely unwell, neither the appellant nor Scown sought timely medical attention for him. On 11 October 2017, Scown pleaded guilty to the manslaughter of Tyrell and was sentenced on the agreed footing that he was criminally negligent in failing to seek medical assistance for the child. 1 RPS v The Queen (2000) 199 CLR 620 at 632-633 [27]-[28] per Gaudron A-CJ, Gummow, Kirby and Hayne JJ; Azzopardi v The Queen (2001) 205 CLR 50 at 75 [68] per Gaudron, Gummow, Kirby and Hayne JJ; Dyers v The Queen (2002) 210 CLR 285 at 292 [9] per Gaudron and Hayne JJ, 305-306 [52] per Kirby J, 327-328 Bell Nettle Edelman On 1 November 2017, the appellant pleaded guilty to manslaughter. The matter was set down for a hearing in the Supreme Court of Queensland (Applegarth J) to determine the factual basis on which the appellant was to be sentenced for the offence. The prosecution's primary case was that the appellant inflicted the blunt force trauma that caused Tyrell's death. The prosecution's alternative case was that the appellant omitted to provide the necessaries of life2 in that she, too, failed to seek medical assistance for the child. The appellant contested that she inflicted the fatal injuries but acknowledged liability for Tyrell's manslaughter on the alternative basis. Scown gave evidence for the prosecution at the appellant's sentencing hearing, in which he denied that he inflicted the fatal injuries. He did not give direct evidence that the appellant inflicted those injuries but his evidence supported the prosecution's circumstantial case that she had done so. The appellant did not give evidence at the hearing. Her version of events was before the court in the form of the answers she gave to the police in three interviews; the first two interviews were conducted on 25 May 2009 and a further interview was conducted on 10 July 2015. She provided an "addendum statement" to the police on 7 July 2009, which was also before the court. In the initial interviews, the appellant said positive things about Scown's relationship with Tyrell. By 2015, she and Scown were no longer on good terms and in her last interview she made statements about him that were critical. However, she did not purport to have witnessed any acts of physical violence or verbal aggression by him towards Tyrell. The hearing, which occupied six days, concluded on 17 November 2017. It was conducted with the assistance of a schedule of agreed and contested facts. On 11 December 2017, his Honour delivered comprehensive reasons for the determination of each of 22 contested facts. At the outset, his Honour explained his approach to fact-finding, stating that "[a] sentencing judge may proceed, as common sense dictates, more readily to accept evidence or draw inferences invited by the prosecution in the absence of contradictory evidence". This statement reflected the principles enunciated by the Court of Appeal of the Supreme Court of Queensland in R v Miller3, which the parties accepted applied to the proceedings. 2 Criminal Code (Qld), s 286. [2004] 1 Qd R 548 at 554 [27]. Bell Nettle Edelman His Honour made findings adversely to the appellant in relation to a number of contested circumstantial facts, taking into account that she had not given contradictory evidence. His Honour concluded that the appellant applied the blunt forces that were a substantial cause of Tyrell's fatal injury. The appellant was sentenced to a term of nine years' imprisonment. After taking into account a period of pre-sentence custody, his Honour ordered that the appellant be eligible for parole on 13 October 2021. The appellant applied for leave to appeal to the Court of Appeal of the Supreme Court of Queensland (Fraser and McMurdo JJA and Crow J) against the sentence, contending, among other grounds, that the sentencing judge erred in having regard to the fact that she had not given evidence and inviting the Court of Appeal to depart from Miller4. McMurdo JA gave the leading judgment in the Court of Appeal. His Honour distinguished Miller5 on the ground that Miller holds that a sentencing judge may more readily accept or draw inferences from prosecution evidence that is uncontradicted6. In this case, the appellant's contradictory account of events given to the police was in evidence. McMurdo JA said that the sentencing judge merely reasoned that the appellant's evidence was to be given less weight than it would have been given if it had been tested by cross- examination7. His Honour observed that this process of reasoning does not derogate from the right to silence8. The Court of Appeal found no error in the sentencing judge's findings. Leave to appeal was refused. On 11 September 2019, Bell and Nettle JJ granted the appellant special leave to appeal. By her amended ground of appeal, the appellant contends that the Court of Appeal erred in concluding that the reasoning of the sentencing [2004] 1 Qd R 548. [2004] 1 Qd R 548. 6 R v Strbak [2019] QCA 42 at [60]. [2019] QCA 42 at [61]. [2019] QCA 42 at [61], citing Mule v The Queen (2005) 79 ALJR 1573 at 1578- 1579 [20]-[23]; 221 ALR 85 at 92-94. Bell Nettle Edelman judge did not involve more readily drawing adverse inferences, and accepting prosecution evidence, by reason of her decision not to give sworn evidence. For the reasons to be given, Miller9 was wrongly decided and, contrary to the analysis below, when the sentencing judge's reasons are read as a whole, it is evident that his Honour applied the principles stated in Miller to the determination of at least some contested facts. When sentencing an offender where there is a dispute as to the facts constituting the offence, the judge should not draw an adverse inference by reason of the offender's failure to give evidence save in the rare and exceptional circumstances explained in the joint reasons in Azzopardi v The Queen10. It follows that the appeal must be allowed, the appellant's sentence quashed and the matter remitted to the Trial Division of the Supreme Court of Queensland for the appellant to be sentenced according to law. Section 132C Before turning to the sentencing judge's reasons, it is convenient to refer to s 132C of the Act and the analysis of the principles in Miller11. Section 132C relevantly provides: "Fact finding on sentencing This section applies to any sentencing procedure in a criminal proceeding. The sentencing judge or magistrate may act on an allegation of fact that is admitted or not challenged. If an allegation of fact is not admitted or is challenged, the sentencing judge or magistrate may act on the allegation if the [2004] 1 Qd R 548. (2001) 205 CLR 50 at 70 [52], 73 [61]-[62], 74 [64], 75 [68] per Gaudron, Gummow, Kirby and Hayne JJ; see also at 123 [210] per Callinan J. [2004] 1 Qd R 548. Bell Nettle Edelman judge or magistrate is satisfied on the balance of probabilities that the allegation is true. For subsection (3), the degree of satisfaction required varies according to the consequences, adverse to the person being sentenced, of finding the allegation to be true." Miller Miller pleaded guilty to assault occasioning actual bodily harm12. The prosecution invited the sentencing judge to find that the assault was motivated by Miller's knowledge that the complainant was a police officer13. Because the motive for the assault was in issue, the prosecution adduced evidence going to the issue14. The complainant gave evidence that Miller and a co-offender had set upon him and that one of them had said "[t]his will teach you cunts for picking on black fellas"15. The senior police officer at the watch house when Miller was charged gave evidence that, in the course of the charging process, Miller had said that he would "do it again and that it was his job to sort out coppers"16. Miller's former girlfriend, Ms Lambourne, gave evidence that she had seen him in the pool-playing area and cautioned him to behave himself because there was a police officer in the hotel17. After the incident she said that Miller had told her that he did not know that the men he was fighting with were police officers and claimed that the assault was provoked by a racial slur18. Miller did not give 12 R v Miller [2004] 1 Qd R 548 at 549 [7] per Holmes J. [2004] 1 Qd R 548 at 549-550 [9]. [2004] 1 Qd R 548 at 550 [10]. [2004] 1 Qd R 548 at 550 [10]. [2004] 1 Qd R 548 at 550 [12]. [2004] 1 Qd R 548 at 550 [11]. [2004] 1 Qd R 548 at 550 [11]. Bell Nettle Edelman evidence. It was submitted on his behalf that he had no recollection of events Section 15 of the Penalties and Sentences Act 1992 (Qld) provides that, in imposing a sentence, a court may receive any information it considers appropriate. Ms Lambourne's evidence of the statements made by Miller to her was received. The sentencing judge accepted that the statements were made but gave them little weight by reason that they were out of court, self-serving statements20. His Honour rejected that the assault was provoked by a racial slur. His Honour was satisfied that Miller knew the complainant was a police officer21. Miller sought leave to challenge the finding in the Court of Appeal of the Supreme Court of Queensland. Miller's argument in the Court of Appeal did not contend that the sentencing judge was wrong to give Ms Lambourne's evidence of his statements – including that he did not know the complainant was a police officer – less weight because they were "out of court self-serving statements"22. The focus of his challenge was the sentencing judge's statement that, in the absence of evidence from Miller, he was entitled to be "somewhat bold" in drawing inferences that were available on the evidence23. His argument was that, in determining factual disputes on sentence, a sentencing judge is not entitled to use the offender's failure to give evidence to reinforce an adverse finding24. The issue of whether he knew that the complainant was a police officer, in Miller's submission, was not one on which "failing to offer an explanation at sentence fell [2004] 1 Qd R 548 at 550 [13]. [2004] 1 Qd R 548 at 555 [32]. [2004] 1 Qd R 548 at 550 [14]. [2004] 1 Qd R 548 at 555 [32]. [2004] 1 Qd R 548 at 550 [14]. [2004] 1 Qd R 548 at 551 [15]. Bell Nettle Edelman within the 'rare and exceptional' class of cases referred to in Azzopardi v R as warranting comment"25. Leave to appeal was refused. The analysis in Miller proceeds upon the view that the common thread in Weissensteiner v The Queen26, RPS v The Queen27 and Azzopardi28 is that the presumption of innocence underlies consideration of what may be drawn from the accused's failure to give evidence29. At the stage of sentencing it was said to be self-evident that there is no longer a presumption of innocence which might be infringed by the expectation that the offender will give evidence30. While the offender maintains the right to silence, exercise of the right was held not to be infringed by drawing an inference in favour of the prosecution31. Holmes J, giving the leading judgment, explained the principles in this way32: "At the stage at which fact-finding on the sentence occurs, the situation, at least in Queensland, is more akin to that in a civil trial than that in the criminal trial which may have preceded it. The fact-finder is, of course, a judge, not a jury. Although the prosecution still carries an onus, it is, by virtue of s 132C of the Evidence Act 1977, to satisfy the sentencing judge on the balance of probabilities, with allowance for the the degree of Briginshaw standard by requiring a variation of [2004] 1 Qd R 548 at 551 [15], citing Azzopardi v The Queen (2001) 205 CLR 50 (1993) 178 CLR 217. (2000) 199 CLR 620. (2001) 205 CLR 50. 29 R v Miller [2004] 1 Qd R 548 at 553 [24]. [2004] 1 Qd R 548 at 553 [25]. [2004] 1 Qd R 548 at 553 [25]. [2004] 1 Qd R 548 at 553-554 [26]. Bell Nettle Edelman satisfaction according to the consequences. In those circumstances the distinction drawn by the majority in RPS and Azzopardi between criminal and civil trials is no longer valid. Nor, where a judge is himself or herself the fact-finder, is there any risk of detracting from the jury's role as tribunal of fact, of the kind identified in Dyers and Azzopardi." (footnotes omitted) Nothing, her Honour said, constrains a sentencing judge33: "from proceeding, as common sense dictates, more readily to accept prosecution evidence or draw inferences invited by the prosecution in the absence of contradictory evidence". Miller – the parties' submissions The appellant challenges the characterisation of fact-finding in sentence proceedings under Queensland law as being akin to fact-finding in civil proceedings. Where the evidence at trial, or the admissions inherent in the plea of guilty, leaves open "the mode and method of the offending", she argues, the defendant remains exposed to punishment by the State for conduct that the State has not proved. She proposes her case as a prime example, submitting that the difference between the negligent failure to seek medical attention for a child and the infliction of fatal violence on a child is profound and sounds in the likely length of any sentence. Her essential submission is that criminal proceedings retain their accusatorial character, notwithstanding the entry of a plea of guilty, in relation to the determination of the facts of the offence and, for that reason, the failure to give evidence should not generally give rise to any adverse inference. The respondent adopts Holmes J's reasoning and submits that the characterisation of fact-finding on sentence as being more akin to a civil trial than a criminal one is apt given that, on this analysis, the major distinguishing features between criminal and civil proceedings are the presumption of innocence and the standard of proof. The statements in Azzopardi34, emphasising the distinctive character of criminal proceedings, are concerned with the conduct of [2004] 1 Qd R 548 at 554 [27]. (2001) 205 CLR 50 at 64-65 [34]-[38] per Gaudron, Gummow, Kirby and Bell Nettle Edelman the trial and, the respondent submits, are of little assistance in the context of post- conviction fact-finding. The respondent calls s 132C in aid, submitting that the fact that the legislature has intervened to provide the lesser civil standard of proof for sentence proceedings suggests that, in Queensland, the presumption of innocence has no application in those proceedings. At the level of common law principle, the respondent observes that, in sentencing following conviction at trial, the judge is only bound to sentence on a version of facts that is consistent with the jury's verdict35. There is no sound reason, so the argument goes, to constrain the judge sentencing an offender on a plea of guilty by directions as to the use of evidence that would have been given had the matter proceeded to trial. Azzopardi36 is concerned with the directions given to the jury at a trial at which the accused does not give evidence. Nonetheless, it is clear from the majority's analysis that, save for rare and exceptional cases, it is not open to a judge trying a criminal case without a jury to draw a Jones v Dunkel inference37 against the accused. The question of whether, in determining a dispute as to the facts constituting the offence for the purpose of sentencing, it is open to the judge to draw a Jones v Dunkel inference, is not one that this Court has previously addressed. The last-mentioned submission does not assist in answering it: either the drawing of the inference is an available process of reasoning or it is not, and that is so regardless of whether the judge is determining a contested fact or facts following trial or upon a plea of guilty. The overseas authorities The parties sought to support their respective positions by reference to overseas authority. The appellant relied on the majority's analysis in Mitchell v 35 R v Isaacs (1997) 41 NSWLR 374 at 377-378; Cheung v The Queen (2001) 209 CLR 1 at 12-13 [13]-[14], 19 [36], 52-53 [161]-[163], [166]. (2001) 205 CLR 50. (1959) 101 CLR 298 at 320-321 per Windeyer J. Bell Nettle Edelman United States38, while the respondent looked to the approach adopted in England and Canada, reflected in R v Underwood39 and R v Shropshire40 respectively. Mitchell holds that the sentencing court is not to draw an inference adverse to the defendant from his or her silence in determining the facts of a crime following conviction41. It is to be noted, however, that the majority's reasons are grounded in the guarantee under the Fifth Amendment of the Constitution of the United States, that no person "shall be compelled in any criminal case to be a witness against himself"42. Critical to their Honours' analysis is the conclusion that sentencing proceedings fall squarely within the constitutional expression "any criminal case"43. By contrast, in Underwood, the Court of Appeal of England and Wales held that the sentencing court may draw an inference adverse to the offender with respect to contested factual issues in relation to a matter within the exclusive knowledge of the offender in the event that he or she does not give evidence44. It is not apparent that the requirement that the matter be within the exclusive knowledge of the offender is confined to the rare and exceptional category of case illustrated by Weissensteiner45. Any consideration of the approach adopted in England, however, needs to have regard to the modification of the right to silence effected by the enactment of s 35 of the Criminal Justice and Public Order Act 1994 (UK), which permits adverse inferences to be drawn from an accused person's silence at trial save in specified circumstances. [2005] 1 Cr App R 13. [1995] 4 SCR 227. (1999) 526 US 314 at 316-317, 328. (1999) 526 US 314 at 327. (1999) 526 US 314 at 328-329. [2005] 1 Cr App R 13 at 182 [7]. (1993) 178 CLR 217. Bell Nettle Edelman In Shropshire, the significance of the offender's post-conviction silence arose in the context of the determination to extend the statutory minimum term of parole ineligibility pursuant to the discretion conferred by s 744 of the Criminal Code (Can)46. Exercise of the discretion required the sentencing judge to consider, among other factors, "the circumstances surrounding the commission of the offence". The sentencing judge took into account Shropshire's unwillingness or inability to explain the reasons for the commission of an apparently senseless killing47. Iacobucci J, giving the judgment of the Supreme Court, rejected Shropshire's challenge that the sentencing judge erred in so doing. His Lordship found that Shropshire's silence was "readily assimilable within the 'circumstances surrounding the offence' criterion"48. His Lordship went on to express his agreement with the reasons of Goldie JA in the court below that "the right to silence, which is fully operative in the investigative and prosecutorial stages of the criminal process, wanes in importance in the post-conviction phase when sentencing is at issue"49. The facts of the killing were not in issue and it would seem that Shropshire's silence with respect to his reasons for committing it was treated as a failure to adduce evidence in mitigation. Iacobucci J said that it was not for the sentencing judge "to speculate [as to] what [Shropshire] might have said to mitigate the severity of the offence"50. In certain circumstances, such as those presented in Shropshire, his Lordship said, it is "proper to take into account the absence of an explanation of attenuating factors"51. The decision is at a considerable remove from the present. The issue in this appeal is the significance of the offender's silence to the determination of a dispute as to the act or omission constituting the offence for which a sentence is to be imposed. [1995] 4 SCR 227. [1995] 4 SCR 227 at 245 [35], 246 [38]. [1995] 4 SCR 227 at 246 [38]. [1995] 4 SCR 227 at 247 [39]. [1995] 4 SCR 227 at 247 [39]. [1995] 4 SCR 227 at 247 [40]. Bell Nettle Edelman Miller wrongly decided To return to Miller52, it will be recalled that the rationale for holding that the line of authority culminating in Azzopardi53 does not apply to fact-finding on sentence is two-fold: the presumption of innocence does not apply and the standard of proof in Queensland is the civil standard54. The presumption of innocence and the requirement of proof beyond reasonable doubt are attributes of a criminal trial but the analysis in Azzopardi55, distinguishing the criminal trial from its civil counterpart, proceeds from a more fundamental proposition, which is the accusatorial character of the former. It is because a criminal trial is an accusatorial proceeding in which the prosecution bears the burden of proving the allegations it makes that, as a general rule, there can be no expectation that the accused will give evidence. Absent such an expectation, no inference can be drawn from the choice not to do so56. It is also to be noted that the "companion rule", that the accused cannot be compelled to assist the prosecution in the discharge of its onus of proof, is an aspect of the accusatorial nature of the proceeding and not of the standard of proof57. A plea of guilty is the formal admission of each of the legal ingredients of the offence58. For this reason, as the joint reasons in R v Olbrich explain, references to the onus of proof in the context of sentencing may be misleading if they are taken to suggest that some general issue is joined between prosecution [2004] 1 Qd R 548. (2001) 205 CLR 50. [2004] 1 Qd R 548 at 553-554 [25]-[27]. (2001) 205 CLR 50. 56 Azzopardi v The Queen (2001) 205 CLR 50 at 64 [34] per Gaudron, Gummow, 57 Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375 at 387-388 [36]-[38] per French CJ, Kiefel, Bell, Gageler and 58 Maxwell v The Queen (1996) 184 CLR 501 at 508-510. Bell Nettle Edelman and defence59. Nonetheless, where the prosecution seeks to have the court sentence on a factual basis that goes beyond the facts admitted by the plea, and which is disputed, it is incumbent on the prosecution to adduce evidence to establish that basis60. Absent contrary statutory provision, the prosecution is required to prove matters on which it relies that are adverse to the interests of the offender to the criminal standard61. The adoption of the lesser, civil standard for proof of facts in sentencing under s 132C of the Act says nothing as to onus of proving a fact that is not admitted or is disputed. This Court has acknowledged that the process by which the court arrives at the sentence has as much significance for the offender as the process by which guilt is determined62. Here, by her plea of guilty, the appellant admitted that her act or omission substantially contributed to the unlawful death of her son. Her plea was not an admission of inflicting the blunt force trauma that caused Tyrell's death. The plea of guilty to manslaughter, an offence which may be committed in a notoriously wide range of circumstances, did not relieve the prosecution of the obligation to prove the facts of the primary case on which it sought to have the appellant sentenced without assistance from her63. There is no principled reason for holding that the determination of whether, as the prosecution alleged, this was a voluntary manslaughter ceased to be accusatorial upon the entry of the plea of guilty. Miller64 was wrongly decided and, to the extent that the sentencing judge determined contested facts applying the principles stated in Miller (as his Honour was obliged to do), he erred. (1999) 199 CLR 270 at 281 [25] per Gleeson CJ, Gaudron, Hayne and Callinan JJ. 60 R v Olbrich (1999) 199 CLR 270 at 281 [25]. 61 R v Olbrich (1999) 199 CLR 270 at 281 [27] per Gleeson CJ, Gaudron, Hayne and Callinan JJ, citing R v Storey [1998] 1 VR 359 at 369 per Winneke P, Brooking and Hayne JJA and Southwell A-JA. 62 R v Olbrich (1999) 199 CLR 270 at 274 [1] per Gleeson CJ, Gaudron, Hayne and 63 Lee v The Queen (2014) 253 CLR 455 at 466-467 [32] per French CJ, Crennan, Kiefel, Bell and Keane JJ. [2004] 1 Qd R 548. Bell Nettle Edelman Did the sentencing judge apply Miller? The respondent adopts McMurdo JA's analysis that the sentencing judge did not draw an adverse inference from the fact the appellant did not give evidence; rather his Honour gave less weight to the appellant's contradictory out of court statements65. The respondent draws attention to the sentencing judge's express acknowledgement that the prosecution bore the onus of proving the contested facts of its primary case and that there was a "real difference" between the punishment that the appellant might reasonably expect depending upon whether it succeeded in this endeavour. Critical to McMurdo JA's conclusion as to the sentencing judge's mode of reasoning is para [141] of the sentencing judge's reasons for decision, which appears in a section under the heading "[the appellant's] unsworn evidence". It is appropriate to set out that paragraph and those surrounding it in full: "[140] Despite the reservations which I have about [the appellant's] credibility and the reliability of many of the things which she told police, I remind myself that my rejection of parts of her evidence or disinclination to accept it when it conflicts with other, more reliable evidence, does not necessarily lead to the conclusion that the contested facts are thereby proven. The onus remains upon the prosecution to prove the contested facts, if it can. In addition, my reservations about the credibility and reliability of parts of her account of events does not automatically bolster the credibility and reliability of certain prosecution witnesses, such as Scown. The evidence relied upon by the prosecution must warrant acceptance in its own right. [141] In addition, the decision of [the appellant] not to give sworn evidence and to verify contentious parts of her statements to police means that I accord that evidence less weight than I would accord it if given on oath, and tested by cross-examination. [142] To the extent that there is a conflict between the sworn evidence of Scown and the unsworn evidence of [the appellant], including about the course of events that weekend, I prefer the evidence of Scown. This is not only because it was tested by cross-examination. It is because it accords 65 R v Strbak [2019] QCA 42 at [60]-[61]. Bell Nettle Edelman with the medical evidence of Tyrell's probable condition that weekend, including his condition late on Sunday. I also have reservations about the credibility and reliability of [the appellant's] account of events to police because the evidence shows that she lied to police about what she did and where she went that weekend, and in 2015 spoke to her brother, Bradley Allan, about lying to the [Crime and Corruption Commission]." As the appellant submits, this impeccable analysis is directed to the use to be made of the appellant's out of court statements. It does not gainsay that his Honour determined at least some contested facts consistently with the principles set out in Miller, which were extracted earlier in his reasons under the heading "[t]he onus of proof, the standard of proof and the degree of satisfaction required". It was under this heading that his Honour stated: "The presumption of innocence does not apply. In the absence of sworn evidence by the defendant about matters about which she could give evidence and be cross-examined, I can more readily accept prosecution evidence and draw inferences invited by the prosecution." Moreover, on a number of occasions, his Honour stated in terms his acceptance of prosecution evidence, or an inference adverse to the appellant, taking into account her failure to give evidence contradicting the evidence on which the prosecution relied. The determination of contested fact 37 – that the appellant requested Tyrell's father, Jason Cobb, to take Tyrell from her on the weekend of Tyrell's death – provides one example. His Honour stated: "Whilst [the appellant] contests the allegation that, over the weekend, she requested Jason Cobb to take Tyrell from her, his evidence and the evidence of Mr Spicer about such a request is not contradicted by evidence from her. In the circumstances, I find contested fact numbered 37 proved." The determination of contested fact 19 – that Scown encouraged the appellant to take Tyrell to hospital (following an injury to his arm at the day-care centre) and the appellant said she would do it later as she wanted time to obtain cannabis from her supplier, Brett Archer – is a second example. His Honour accepted Scown's evidence of this incident, taking into account that: Bell Nettle Edelman "The evidence of Scown, which is uncontradicted by evidence from [the appellant] or any other evidence, is that [the appellant] used to buy cannabis from Brett Archer." The determination of contested fact 38 – that, on the Friday or Saturday night prior to his death, the appellant slapped Tyrell's face leaving a bruise – provides a further example. So, too, does contested fact 39 – that, on the same weekend, when Tyrell vomited, the appellant grabbed his wrist and struck the back of his ribcage as she walked him to his room. These contested facts were referred to as "the slapping incident" and "the frogmarching incident" respectively. His Honour accepted Scown's evidence of each, stating: "Scown reported the slapping incident to police soon after the event and I am persuaded that such an incident occurred that weekend when Tyrell either refused to eat or was unable to eat. [The appellant] did not give sworn, oral evidence denying that such a slapping incident occurred that weekend. I am also persuaded that a day or two before the slapping incident, quite possibly after Tyrell had vomited or was playing with food in his mouth, [the appellant] lost her temper, grabbed him by the wrist, and frogmarched him to his room. This fact is proven by Scown's evidence and is uncontradicted by evidence given by [the appellant]." Tyrell had a scar on his ankle which was consistent with having been caused by the heated end of a cigarette lighter ("the smiley injury"). The smiley injury was at least four to six weeks old. Contested fact 76 was that the appellant caused the smiley injury. There was no direct evidence of the circumstances in which the smiley injury was sustained. His Honour found contested fact 76 proven, stating: "[The appellant] had an opportunity over weeks to observe the scar and to inquire of Tyrell how he sustained it. It is probable that she observed the scar when she showered him or on some other occasion. There is no evidence from [the appellant] to displace the probability that she saw the scar. There is no evidence from [the appellant] about how, when and why Tyrell sustained this scar. The circumstantial evidence, together with the absence of evidence from [the appellant], leads me to conclude that she probably caused the 'smiley' injury to her son." Bell Nettle Edelman There can be no question that, in determining contested fact 76 adversely to the appellant, his Honour was drawing a Jones v Dunkel66 inference as distinct from giving less weight to some contradictory out of court statement. His Honour observed that there was a circumstantial case against each of the appellant and Scown as the person who inflicted the fatal injuries on Tyrell. Each had the opportunity to do so and each had committed at least one act of physical aggression towards him. Despite these common features, his Honour identified important differences in the two cases. These differences included that Scown admitted to having kicked Tyrell in the backside whereas the appellant did not admit to inflicting the smiley injury or to slapping Tyrell. Explaining his ultimate conclusion, his Honour observed: "The sworn evidence given about [the appellant] slapping her son's face on the night before he died [contested fact 38], and of previously frogmarching him into his room [contested fact 39], was not contradicted by sworn evidence from her." Notwithstanding his Honour's meticulous review of a large body of evidence, the determination of at least some contested facts adversely to the appellant took into account her failure to give sworn evidence at the sentence hearing. It is not suggested that the case is within the rare and exceptional category in which the trier of fact might properly take such a failure into account67. It cannot be said that the findings respecting the appellant's callous failure to seek prompt treatment for Tyrell's arm injury and instances in which she subjected him to physical violence were not material to the ultimate conclusion that she inflicted the fatal injuries. In the circumstances, the appeal must be allowed. The parties are agreed that, in this event, the appropriate order is to remit the matter to the Trial Division. For these reasons there will be the following orders: Appeal allowed. (1959) 101 CLR 298. 67 Azzopardi v The Queen (2001) 205 CLR 50 at 75 [68] per Gaudron, Gummow, Bell Nettle Edelman Set aside the order of the Court of Appeal of the Supreme Court of Queensland refusing leave to appeal and in lieu thereof order that leave to appeal be granted, the appeal allowed, quash the sentence imposed by the Supreme Court of Queensland on 18 December 2017, and remit the proceeding to the Trial Division of the Supreme Court of Queensland for the appellant to be sentenced according to law.

HIGH COURT OF AUSTRALIA THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND TRAVELEX LIMITED RESPONDENT Federal Commissioner of Taxation v Travelex Limited [2021] HCA 8 Date of Hearing: 2 December 2020 Date of Judgment: 10 March 2021 ORDER Appeal allowed. Set aside the orders of the Full Court of the Federal Court of Australia made on 14 February 2020 and, in their place, order that: the appeal be allowed; orders 1 and 2 of the orders made by Wigney J on 12 July 2018 be set aside and, in their place, a declaration be made in the following terms: It is declared that in the circumstances no RBA surplus has arisen in relation to the tax period (within the meaning of A New Tax System (Goods and Services Tax) Act 1999 (Cth)) of Travelex Limited for the month of November 2009 and no interest is presently payable by the Commissioner of Taxation of the Commonwealth of Australia to Travelex Limited under the provisions of the Taxation (Interest on Overpayments and Early Payments) Act 1983 (Cth) in respect of that tax period; and Travelex Limited pay the Commissioner of Taxation of the Commonwealth of Australia's costs of the appeal. The appellant pay the respondent's costs of the appeal to this Court. On appeal from the Federal Court of Australia Representation N J Williams SC and M J O'Meara SC with C M Sievers for the appellant (instructed by Balazs Lazanas & Welch LLP) J O Hmelnitsky SC with L McBride and D P Hume for the respondent (instructed by MinterEllison) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Federal Commissioner of Taxation v Travelex Limited Taxation – Administration – Goods and services tax – Taxable supply – Running Balance Accounts ("RBA") – Commissioner's obligation to pay interest – Where Commissioner lacked statutory authority to amend taxpayer's GST return – Where net amount in GST return calculated in error – Where Commissioner purported to amend taxpayer's GST return and credited taxpayer's RBA – Whether mistaken balance in an RBA is efficacious in law to constitute an RBA surplus within meaning of Pt IIB of Taxation Administration Act 1953 (Cth) – Whether Commissioner obliged to pay interest under Taxation (Interest on Overpayments and Early Payments) Act 1983 (Cth). Words and phrases – "administration", "allocation", "amounts due to the Commonwealth under taxation laws", "erroneous balances", "goods and services tax", "interest", "RBA", "RBA deficit debt", "RBA surplus", "refund", "running balance account", "taxation administration". A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 17-5, 17-15, 33-5, 35-5, Pt 2-1 of Ch 2. Taxation Administration Act 1953 (Cth), ss 8AAZA, 8AAZC(1), 8AAZD(1), 8AAZH, 8AAZI, 8AAZL(1), 8AAZLF; Sch 1, ss 105-5, 105-20, 105-100. Taxation (Interest on Overpayments and Early Payments) Act 1983 (Cth), s 12AA. KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ. Part IIB of the Taxation Administration Act 1953 (Cth) ("the TAA") enables the Commissioner of Taxation to establish a "Running Balance Account" ("RBA") for a taxpayer. The Commissioner can allocate to an RBA amounts due to the Commonwealth under taxation laws and must allocate to an RBA certain amounts that the Commissioner must pay to the taxpayer under taxation laws. The resulting balance can be either an "RBA deficit debt", which the taxpayer must pay to the Commonwealth, or an "RBA surplus", which the Commissioner must pay to the taxpayer. The short question in this appeal is whether an RBA surplus can result from the Commissioner allocating to an RBA an amount that the Commissioner is not obliged to pay to a taxpayer under a taxation law. The answer is that it cannot. Factual and procedural context The context in which the question arises is a long-running dispute between Travelex Ltd and the Commissioner, the parameters of which have evolved in the course of litigation. The dispute began roughly a decade ago as a dispute about from when the Commissioner was obliged to pay interest to Travelex under the Taxation (Interest on Overpayments and Early Payments) Act 1983 (Cth) ("the TIOEP Act") on an amount which the Commissioner in fact treated as an RBA surplus and in fact paid to Travelex in the aftermath of the decision of this Court in Travelex Ltd v Federal Commissioner of Taxation ("Travelex [No 1]")1. In the course of litigation, the dispute has evolved into a dispute about whether the amount which the Commissioner in fact treated as an RBA surplus was in law an RBA surplus and, in consequence, about whether the Commissioner was obliged to pay interest at all. Travelex [No 1] established that certain supplies made by Travelex were GST free. The consequence was that Travelex was entitled under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("the GST Act") to input tax credits for associated creditable acquisitions. The applicable form of the GST Act and of associated provisions concerning collection and administration in Ch 3 of Sch 1 to the TAA is as those Acts stood before the Indirect Tax Laws Amendment (2010) 241 CLR 510. (Assessment) Act 2012 (Cth) introduced the current system of self-assessment on 1 July 2012. Central to the scheme of the GST Act, then as now, is that a taxpayer has a "net amount" for a "tax period"2. The net amount is worked out by deducting from the GST for which the taxpayer is liable on taxable supplies attributable to that period input tax credits to which the taxpayer is entitled for creditable acquisitions and creditable importations attributable to the same period3. If the net amount for the tax period is greater than zero, the taxpayer is obliged to pay that positive net amount to the Commissioner4. If the net amount for the tax period is less than zero, the Commissioner is obliged to refund that negative net amount to the taxpayer5. In Federal Commissioner of Taxation v Multiflex Pty Ltd ("Multiflex")6, the Full Court of the Federal Court interpreted the GST Act in its applicable form7 as operating to fix the net amount of a taxpayer for a tax period as the amount that was in fact worked out by the taxpayer and notified to the Commissioner in the approved form of the GST return of the taxpayer for that period. The Full Court held that the net amount was fixed upon notification to the Commissioner in the approved form even if the net amount had been worked out by the taxpayer in error. The mechanism for the correction of error in an amount notified in an approved form was explained to lie in the ability of the Commissioner to "supersede" that amount by making an assessment under the TAA8, notice of which was conclusive evidence (except for the purpose of proceedings under Pt IVC of the TAA on a review or appeal relating to the assessment) that the amounts and particulars in the assessment are correct9. See Pt 2-1 of Ch 2 of the GST Act. Section 17-5 of the GST Act. Section 33-5 of the GST Act. Section 35-5 of the GST Act. (2011) 197 FCR 580 at 589 [25]-[27]. 7 Then s 17-15 of the GST Act. Section 105-5 of Sch 1 to the TAA. Section 105-100 of Sch 1 to the TAA. Travelex [No 1] was decided in September 2010. Before Travelex [No 1] was decided, Travelex had on 16 December 2009 notified the Commissioner in a GST return forming part of its Business Activity Statement for its November 2009 tax period of a positive net amount for that period of $37,751. That positive net amount was worked out by Travelex in the approved form by deducting input tax credits for creditable acquisitions from GST on taxable supplies. Travelex had soon afterwards paid that positive net amount to the Commissioner. After Travelex [No 1] was decided, Travelex eventually wrote to the Commissioner in June 2012 requesting the Commissioner to amend Travelex's GST return for the November 2009 tax period to increase the amount claimed for input tax credits for creditable acquisitions by $149,020. Proceeding on the assumption that it was then permissible to amend a GST return, the Commissioner complied with Travelex's request. On 28 June 2012, the Commissioner credited the RBA he had established for Travelex by an amount of $149,020 by reference to a "transaction" described in an entry made that day in the RBA as "amended self-assessed amount for the period ended 30 Nov 09". The date assigned to the entry then made in the RBA was 16 December 2009. On 3 July 2012, the Commissioner sent Travelex a document entitled "Confirmation of revised activity statement for the period 01/11/2009 to 30/11/2009". The document stated that "the total amount of your activity statement has been changed from $37751Dr to $111269Cr". Three days later, the Commissioner paid an amount of $149,020 to Travelex by electronic funds transfer. Having treated the amount of $149,020 so paid as RBA surplus which he was obliged to pay and did pay to Travelex under the TAA, the Commissioner did not initially dispute that he was obliged to pay interest on the amount under the TIOEP Act10. The scope of the dispute between the Commissioner and Travelex was initially limited to the date from which that commonly assumed obligation to pay interest arose. The Commissioner took the view that interest was payable from 17 July 2012. Travelex took the view that interest was payable from 1 January Travelex commenced a proceeding against the Commissioner in the original jurisdiction conferred on the Federal Court by s 39B(1) of the Judiciary Act 1903 (Cth) seeking declaratory and injunctive relief to resolve the dispute about the date from which the commonly assumed obligation to pay interest under the TIOEP Act arose. The Commissioner and Travelex agreed on a Statement of 10 Section 12AA of the TIOEP Act. Agreed Facts ("SOAF") in the proceeding. The SOAF stated as a "fact" that the Commissioner had on 28 June 2012 allocated the amount of $149,020 to Travelex's RBA with an "effective date" of 16 December 2009. The SOAF also stated as a "fact" that the amount of $149,020 so allocated constituted an RBA surplus. The proceeding was heard and determined at first instance by Wigney J11. His Honour resolved the dispute about the commencement date for the payment of interest in favour of Travelex, granting a declaration and an injunction having the effect of requiring the Commissioner to pay interest on the amount of $149,020 to Travelex under the TIOEP Act from 31 December 2009. In reasoning to that result, however, Wigney J held that neither the GST Act nor the associated provisions concerning collection and administration in Ch 3 of Sch 1 to the TAA as they stood before 1 July 2012 gave a taxpayer or the Commissioner authority to amend a GST The Commissioner appealed to the Full Court of the Federal Court. The Commissioner's grounds of appeal included that the holding that Travelex and the Commissioner lacked statutory authority to amend a GST return ought to have led Wigney J to reject the agreed "fact" in the SOAF that the amount of $149,020 which the Commissioner had on 28 June 2012 allocated to Travelex's RBA constituted an RBA surplus, with the consequence that his Honour erred in concluding that the Commissioner was obliged to pay interest on that amount to Travelex under the TIOEP Act at all. The Full Court was constituted for the hearing of the appeal by Kenny, Derrington and Steward JJ. The Full Court was unanimous in accepting as correct the holding of Wigney J that neither Travelex nor the Commissioner had statutory authority to amend Travelex's GST return for the November 2009 tax period. The correctness of the holding is no longer in dispute. The Full Court divided as to the consequence of that lack of authority. Derrington J accepted that the lack of statutory authority to amend the GST return had the consequence for which the Commissioner contended. Because the amount then allocated failed to reflect any underlying entitlement of Travelex to a refund of a net amount under the GST Act, the allocation by the Commissioner of 11 Travelex Ltd v Federal Commissioner of Taxation (2018) 108 ATR 278. (2018) 108 ATR 278 at 292 [89]. the negative amount of $149,020 to Travelex's RBA on 28 June 2012 was incapable of resulting in an RBA surplus13. The net amount for the November 2009 tax period remained in law the positive amount of $37,751 of which Travelex had notified the Commissioner in its GST return on 16 December 2009 and which it had paid14. The agreed "fact" in the SOAF that the amount constituted an RBA surplus ought to have been rejected because it constituted an agreement between the parties about a matter of legal characterisation as to which the parties had been legally mistaken in framing the SOAF15. On that basis, his Honour would have allowed the appeal, substituting for the orders of Wigney J a declaration to the effect that the Commissioner had no obligation to pay interest to Travelex under the TIOEP Act. Steward J agreed with Derrington J save in one respect. The respect in which Steward J differed from Derrington J was that Steward J took the view that the fact that the Commissioner on 28 June 2012 allocated the amount of $149,020 to Travelex's RBA with an effective date of 16 December 2009 was enough to result in the amount having the legal status of an RBA surplus as at 16 December 2009. The foundation for that view was an understanding that Pt IIB of the TAA operated to give "the balance recorded in an RBA legal efficacy, even though the balance may be mistaken"16. Kenny J agreed with Steward J. In the result, the appeal was dismissed. The appeal By special leave granted on the papers by Bell and Nettle JJ17, the Commissioner appeals to this Court. The sole ground of appeal takes up the one respect in which the Full Court divided. The ground is that Kenny and Steward JJ (2020) 275 FCR 239 at 249-250 [59], 254 [80]-[82]. (2020) 275 FCR 239 at 255 [86]. (2020) 275 FCR 239 at 255-256 [87]-[89], applying Damberg v Damberg (2001) 52 NSWLR 492 at 522 [160]. To similar effect, see Holdway v Arcuri Lawyers [2009] 2 Qd R 18 at 45. (2020) 275 FCR 239 at 273 [165]. [2020] HCATrans 089. erred in concluding that a mistaken balance in an RBA is efficacious in law to constitute an RBA surplus and ought to have found, as did Derrington J, that the purported allocation by the Commissioner of the amount of $149,020 to Travelex's RBA did not result in an RBA surplus with the consequence that the Commissioner had no obligation to pay interest under the TIOEP Act. Without going so far as to seek revocation of the grant of special leave to appeal, Travelex argues that the Commissioner should not have "leave" to advance the ground of appeal given that the ground contradicts the position adopted by the Commissioner at first instance as reflected in the SOAF. The argument is procedurally misconceived. Evda Nominees Pty Ltd v Victoria18 established the "procedural convention" of requiring a party seeking to contend that a previous decision of this Court was wrongly decided to obtain the leave of the Court before being permitted to present full argument19. Except in relation to a ground of appeal to which that procedural convention has application, an unrevoked grant of special leave to appeal entitles an appellant to advance any ground of appeal on which special leave has been granted unless precluded by operation of law such as by waiver or estoppel. Whether or not an appellant should be permitted to advance an argument that goes beyond, or is inconsistent with, a position taken at an earlier stage of litigation is a factor considered in the grant or withholding or revocation of special leave to appeal. Once special leave is granted, no further leave is required. The sole ground of appeal on which there is an extant grant of special leave to appeal gives rise to a discrete question of statutory construction to which an authoritative answer must now be given. The answer accords with that given by Part IIB was introduced into the TAA in anticipation of the GST Act20. The objective was "to establish a taxpayer accounting system under which the Australian Taxation Office can record and monitor all of a business's different tax liabilities on a single account". "The introduction of running balance accounts" (1984) 154 CLR 311. 19 See Allders International Pty Ltd v Commissioner of State Revenue (Vict) (1996) 186 CLR 630 at 673. 20 Taxation Laws Amendment Act (No 3) 1999 (Cth); A New Tax System (Pay As You Go) Act 1999 (Cth). was designed arrangements."21 to "provide for simpler tax accounting and collection Part of the simplified accounting and collection arrangements was described at the time of the introduction of Pt IIB in terms of allocation of a primary tax debt to an RBA establishing a "parallel liability" which would "give the Commissioner the flexibility to pursue unpaid tax in proceedings for either a primary tax debt or the balance on an RBA which reflects that debt − but not both"22. Travelex seizes on that language but strains it in suggesting that the description of allocation of a primary tax debt to an RBA establishing a "parallel liability" supports the notion that allocation gives rise to a liability that has an existence wholly independent of the primary tax debt allocated. As will be seen, the separate liability that can result from allocation is "parallel" to a primary tax debt in the sense that it is a separately enforceable liability to pay the amount of the tax debt. Part IIB fulfils its objective by providing for the establishment of a system of accounts accurately characterised by senior counsel for the Commissioner on the hearing of the appeal as a system for the allocation of legal entitlements under taxation laws as distinct from a system for the creation of legal entitlements by allocation. Indeed, the Part itself describes RBAs as "systems of accounts for primary tax debts"23, the definition of a "primary tax debt" being limited to an "amount due to the Commonwealth directly under a taxation law"24. The scheme of Pt IIB both enables the Commissioner to allocate primary tax debts to an RBA that the Commissioner has created for an entity25 and obliges the Commissioner to allocate and apply amounts of certain kinds according to one 21 Australia, House of Representatives, Parliamentary Debates (Hansard), 10 December 1998 at 1898. 22 Australia, House of Representatives, A New Tax System (Taxation Laws Amendment) Bill (No 1) 1999, Explanatory Memorandum at [3.18]. 23 Section 8AAZC(1) of the TAA. 24 Section 8AAZA of the TAA. 25 Section 8AAZD(1) of the TAA. or other of two available methods each involving allocation to an RBA26. The kinds of amounts that must be so allocated and applied comprise "a payment the Commissioner receives in respect of a current or anticipated tax debt", a "credit" (including "an amount that the Commissioner must pay to a taxpayer under a taxation law"27), and an "RBA surplus". An "RBA surplus", which the Commissioner must refund if not allocated or applied28, is defined to mean a balance in an RBA in favour of the entity that is "based on" two factors. On the debit side are "primary tax debts that have been allocated to the RBA". On the credit side are "payments made in respect of current or anticipated primary tax debts of the entity, and credits to which the entity is entitled under a taxation law, that have been allocated to the RBA"29. Correspondingly, an "RBA deficit debt", which a taxpayer liable for tax debts allocated to an RBA must pay to the Commissioner30, is defined to mean a balance in an RBA in favour of the Commissioner that is "based on" the same two factors31. The statutory identification of the factors on which a balance in an RBA must be based in order to result in an RBA surplus or an RBA deficit debt is important. The efficacy of an allocation to result in an RBA surplus or an RBA deficit debt is not expressed to depend on the "belief" or "satisfaction" or "opinion" of the Commissioner. The efficacy of an allocation to result in an RBA surplus or an RBA deficit debt rather depends on the amount allocated answering the objective description of either an amount due to the Commonwealth under a taxation law, a payment made in respect of a current or anticipated amount due to the Commonwealth under a taxation law, or an amount that the Commissioner must pay to a taxpayer under a taxation law. 26 Section 8AAZL(1) of the TAA. 27 Section 8AAZA of the TAA. 28 Section 8AAZLF of the TAA. 29 Section 8AAZA of the TAA. 30 Section 8AAZH of the TAA. 31 Section 8AAZA of the TAA. A balance recorded in an RBA can meet neither the definition of an RBA surplus nor the definition of an RBA deficit debt if the balance is not solely the product of netting two categories of amounts. On the debit side are amounts due to the Commonwealth under taxation laws that have been allocated to the RBA. On the credit side are payments made in respect of current or anticipated amounts due to the Commonwealth under taxation laws that have been allocated to the RBA. On the credit side also are amounts that the Commissioner must pay to a taxpayer under taxation laws that have been allocated to the RBA. The overall result is that a balance recorded in an RBA must be refunded by the Commissioner as an RBA surplus or paid to the Commissioner as an RBA deficit debt only if the balance is the product of allocations of amounts which accurately reflect obligations of the Commissioner and of the taxpayer under taxation laws. An allocation that the Commissioner in fact makes to an RBA of an amount the Commissioner is not legally obliged to pay to a taxpayer under a taxation law cannot result in an RBA surplus any more than an allocation in fact of an amount not legally due to the Commonwealth under a taxation law can result in an RBA deficit debt. Consistently with the legislative design of having simplified accounting and collection arrangements, the obligations of the Commissioner to refund RBA surpluses and of the taxpayer to pay RBA deficit debts are secondary or auxiliary obligations discharge of which facilitates the efficient performance of the underlying primary payment obligations of the Commissioner and of the taxpayer under those taxation laws. Erroneous balances in RBAs simply do not engage those secondary or auxiliary obligations. Confirming that position, the TAA makes production by the Commissioner of an RBA statement no more than "prima facie evidence that the amounts and particulars in the statement are correct"32. The Commissioner's sole ground of appeal is accordingly upheld. Subject only to Travelex's Notice of Contention, the appeal must therefore be allowed. The Notice of Contention By Notice of Contention filed and served within the time prescribed by r 42.08.5 of the High Court Rules 2004 (Cth), Travelex seeks to present an argument to the effect that the Full Court "erred in failing to find that the Commissioner had, on or around 28 June 2012, made an assessment that there was 32 Section 8AAZI of the TAA. a negative net amount for the November 2009 tax period of $111,269 (being $149,020 less $37,751) as at 16 December 2009". The argument is a last-ditch attempt to put a wholly new legal complexion on a factual scenario about which there has previously been no dispute. The argument, in any event, is untenable. An "assessment" within the meaning of Ch 3 of Sch 1 to the TAA is a deliberative process directed to, and culminating in, the giving of a notice of assessment33, which constitutes conclusive evidence that the amounts and particulars in the assessment are correct except in so far as the assessment might be challenged on a review or appeal under Pt IVC of the TAA34. Neither the statutory requirement that the Commissioner must give notice of an assessment "as soon as practicable after the assessment is made" nor the statutory clarification that "failing to do so does not affect the validity of the assessment"35 suggests otherwise. The statutory requirement is directed simply to the timing of the completion of the process of assessment. To admit of the possibility that a process of correspondence and calculation avowedly directed by the Commissioner, at the instigation of a taxpayer, to a different end might be re- characterised after the event as having the legal consequences of an assessment would result in nothing but confusion in the administration of taxation laws. To admit of the possibility would stifle co-operative interaction between the Commissioner and taxpayers. By a proposed Amended Notice of Contention foreshadowed in its written submissions and annexed to an affidavit filed a week before the hearing of the appeal, Travelex seeks to raise the additional argument that the Full Court "erred in failing to find that, in respect of the November 2009 tax period, Travelex had a credit in an amount of $149,020". By that argument, Travelex seeks to challenge the holding in Multiflex that the net amount for a tax period notified to the Commissioner in the approved form of the GST return was fixed upon notification even if worked out by the taxpayer in error. Travelex would have this Court hold instead that the GST Act in its applicable form was self-executing. Multiflex has stood for too long for its authority now to be questioned without giving rise to the prospect of significant disruption. The GST Act has changed too much for the operation of its provisions as applicable to the November 33 cf Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 at 251-253. 34 Section 105-100 of Sch 1 to the TAA. 35 Section 105-20 of Sch 1 to the TAA. 2009 tax period now to be usefully re-explored by this Court. Travelex should not be granted the enlargement of time it needs to file the Amended Notice of Contention. Orders Travelex's application for leave to file an Amended Notice of Contention is to be refused. The Commissioner's appeal to this Court is to be allowed. The order of the Full Court dismissing the appeal from the judgment of Wigney J is to be set aside. In place of that order, the appeal to the Full Court is to be allowed, the declaration and injunction granted by Wigney J are to be set aside and in their place a declaration is to be made in the terms proposed by Derrington J36. In accordance with the order as to costs sought by the Commissioner in his Notice of Appeal, the Commissioner is to pay Travelex's costs of the appeal to this Court. (2020) 275 FCR 239 at 270-271 [155].

HIGH COURT OF AUSTRALIA VISY PAPER PTY LIMITED & ORS APPELLANTS AND AUSTRALIAN COMPETITION AND CONSUMER COMMISSION RESPONDENT Visy Paper Pty Limited v Australian Competition and Consumer Commission [2003] HCA 59 8 October 2003 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation: N J Young QC with M H O'Bryan for the appellants (instructed by Minter Ellison) B R McClintock SC with V F Kerr for the respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Visy Paper Pty Limited v Australian Competition and Consumer Commission Trade practices – Restrictive trade practices – Exclusionary provisions – Exclusive dealing – Arrangements for waste paper collection – Where non- competition provisions have dual and composite character – Non-competition provisions preventing both the acquisition of goods from, and the supply of services to, particular persons – Both aspects of the non-competition provisions contravened s 45(2)(a)(i) of the Trade Practices Act 1974 (Cth) and one of those aspects would, but for s 47(10), have contravened s 47 – Whether s 45(6) precluded the application of s 45(2)(a)(i) to both aspects of the non-competition provisions or only that aspect covered by s 47. Words and phrases – "provision", "by reason that", "give effect to", "condition". Trade Practices Act 1974 (Cth), ss 4(1), 4D, 45(2)(a)(i), 45(6), 47. GLEESON CJ, McHUGH, GUMMOW AND HAYNE JJ. This case arises out of attempts the first appellant ("Visy Paper") made to make an agreement with Northern Pacific Paper Pty Ltd ("NPP") under which NPP would have been prevented from acquiring goods from some third parties and would have been prevented from supplying services to those third parties. The respondent ("the ACCC") contended that these attempts contravened the Trade Practices Act 1974 (Cth) ("the Act"). Part IV of the Act contains a number of provisions dealing with what its heading describes as "Restrictive Trade Practices". Since the Act was first enacted, various amendments and additions have been made to the provisions of Pt IV. This appeal concerns the relationship between certain provisions of Pt IV, as they stood in 1996 and 1997. In particular, it concerns the relationship between provisions of ss 45 and 47. Section 45 dealt (among other things) with the making of a contract, arrangement or understanding which contained an "exclusionary provision"1. Section 47 dealt with "the practice of exclusive dealing". The central issue debated on the appeal concerned the operation of s 45(6) of the Act. So far as relevant, that sub-section provided that: "The making of a contract ... does not constitute a contravention of this section by reason that the contract ... contains a provision the giving effect to which would, or would but for the operation of subsection 47(10) ... constitute a contravention of section 47 and this section does not apply to or in relation to the giving effect to a provision of a contract ... by way of: engaging in conduct that contravenes, or would but for the operation of subsection 47(10) ... contravene, section 47". Section 47(1) prohibited exclusive dealing. It provided that: "Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing." Sections 47(2) to (9) identified various forms of dealing which constituted a corporation engaging in the practice of exclusive dealing. Sub-section (10) provided that sub-section (1) did not apply to identified forms of exclusive s 45(2)(a)(i). McHugh dealing, unless engaging in that conduct had the purpose, or would likely have the effect, of substantially lessening competition2. The particular provision about exclusive dealing which must be considered in this appeal is s 47(4), in so far as it dealt with the acquisition of goods or services on condition that the person from whom they are acquired will not supply particular goods or services to a particular class of persons. Section 4D of the Act defines an "exclusionary provision". It includes a provision of a contract, arrangement or understanding made, or proposed, between persons, any two or more of whom are competitive with each other, which has the purpose of preventing, restricting or limiting the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons, by all or any of the parties. The word "provision" is used here and elsewhere in Pt IV in a comprehensive rather than any technical sense reflecting its usage in contract law. It invites attention to the content of what has been, or is to be, agreed, arranged or understood, rather than any particular form of expression of that content adopted, or to be adopted, by the parties. This is emphasised by the statement in s 4(1) that "in relation to an understanding" provision means "any matter forming part of the understanding". It also should be observed that "condition", the word used in s 47(4), likewise has a meaning uncircumscribed by contract law notions. Section 47(13) stated in par (a) that, in s 47: "a reference to a condition shall be read as a reference to any condition, whether direct or indirect and whether having legal or equitable force or not, and includes a reference to a condition the existence or nature of which is ascertainable only by inference from the conduct of persons or from other relevant circumstances". The definition of exclusionary provision in s 4D encompasses more than that identified above but it is not necessary to consider those wider applications. What is important is that the definition of exclusionary provisions extends to provisions which deal with the supply or the acquisition of goods or services. Accordingly, s 45(2) prohibited corporations who are competitors from making a 2 Section 47(13) gave further content to what was meant by the reference to competition. McHugh contract, or arrangement, or arriving at an understanding, which had the purpose or effect of restricting or limiting the supply, or the acquisition, of goods or services, to or from particular persons. By contrast, the form of exclusive dealing said to be relevant in this appeal (that described in s 47(4)) does not deal with conditions which restrict both supply and acquisition. It deals with the acquisition of goods or services on the condition that the person from whom the goods or services are acquired will not supply goods or services to particular persons (as distinct from acquire goods or services from them). The facts In this Court, the parties accepted that collecting waste paper could be identified as providing a service to the person from whom it was collected (the service of waste collection) and as an acquisition of goods (the acquisition of title to the goods collected). This double characterisation reflected the market for waste paper. Sometimes, a collector paid to acquire the waste paper; sometimes a collector was paid to take it away. Sometimes no payment was made – the collector simply took it away. Sometimes the collector provided bins or other receptacles in which the waste paper was held pending its collection. In every case the collector took title to the waste paper, but in some circumstances it could be said that the collector provided a service to the person from whom it was collected. Who paid whom, and how much, was, at the relevant times, affected by the price obtainable for exporting waste paper. If export prices were high, Visy Paper sometimes found it difficult to acquire waste at a suitable price; if export prices were low, it might have lowered its price or even charged for its collection. Visy Paper conducts a vertically integrated business involving the collection of waste paper and cardboard, and the recycling of this material to produce paper and cardboard. At the relevant times, NPP conducted a business collecting waste paper which it sold to recycling companies, including Visy Paper. Visy Paper and NPP competed in collecting and acquiring waste paper; they dealt with each other as acquirer and supplier of goods when NPP supplied paper to Visy Paper. Visy Paper sought to make an agreement with NPP which would not only provide for NPP to supply waste to it, but would also preclude NPP from acquiring waste from actual, or certain prospective, suppliers of waste to Visy Paper. It proposed that the contracts contain both a provision restricting the supplier from acquiring goods (waste paper) from particular persons (Visy Paper's customers and those with whom it had entered discussions or negotiations McHugh to become a customer) and a provision restricting the supplier from supplying services to those persons (the service of waste collection). There were six separate proposals in issue in the proceedings below, four relating to agreements described as "Exclusive Collection Agreements" and two relating to "Supply Agreements". In fact, no concluded agreement was reached, but the respondent alleged that Visy Paper and certain of its employees (the second and third appellants) had attempted to contravene s 45(2) of the Act. It was alleged that on each of the occasions that Visy Paper, or its employees, tendered a form of agreement to NPP containing provisions of the kind earlier described, it, or they, attempted to make, or attempted to induce NPP to make, a contract in contravention of s 45(2). Section 45(2) stated, among other prohibitions, that a corporation shall not make a contract, arrangement or understanding containing an exclusionary provision (s 45(2)(a)(i)). Nor shall a corporation "give effect to" an exclusionary provision (s 45(2)(b)(i)). Here and in s 45(6), the expression "give effect to" included the doing of "an act or thing in pursuance of or in accordance with" a provision of a contract, arrangement or understanding, and the enforcement or purported enforcement thereof (s 4(1)). The appellants described the issue thus presented in the appeal as being how did s 45(6) apply to the attempted making of a contract containing an express provision, where giving effect to that provision would fall within both s 45(2)(a)(i) and s 47(4)? The proceedings below The primary judge (Sackville J) dismissed the proceedings brought by the ACCC, holding that, had any of the proposed agreements been made, s 45(6) would have applied to remove the making of the contract from the prohibition in s 45(2)(a)(i)3. It is desirable to say something about the reasons the primary judge gave for reaching that conclusion for they are reasons that closely reflect the way in which the ACCC put its case at trial. The ACCC conceded at trial (and it has not since been in issue) that Visy Paper's conduct could not be shown to have had a purpose, or the effect, of substantially lessening competition in a relevant market. No doubt that 3 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2000) 186 ALR 731 at 757 [129]. McHugh concession reflected the importance of the presence of one other large participant in the market – Amcor Ltd. It followed, therefore, that the making of any of the proposed agreements would not have constituted a contravention of s 47. Section 47(10) would have operated to take outside the prohibition of s 47(1) the conduct of making or giving effect to any of the agreements which it was proposed should be made with NPP. that The ACCC contended to make an agreement containing non-competition provisions of the kind proposed would have contravened s 45(2). It submitted that the non-competition provisions not only prohibited NPP from acquiring goods, but also prohibited it from supplying services. The ACCC submitted that, having regard to this so-called "dual operation" of the proposed non-competition provisions, s 45(6) applied neither to the making of the agreements, nor to any conduct by Visy Paper constituted by its giving effect to them, "in so far as the [non-competition provisions] prevented NPP from acquiring goods from third parties"4. That is, the submissions of the ACCC sought to take the proposed non-competition provisions and break them up into what were described as "discrete legal obligations"5: separate obligations not to supply services to, and not to acquire goods from, actual or prospective customers of Visy Paper. The primary judge did not accept that the non-competition provisions could be divided into discrete components without doing violence to the language in which they were couched6. That being so, he rejected the contention that the words "by reason that", when used in s 45(6), were to be understood, as the ACCC had contended, as equivalent to "if and in so far as". Support for that rejection was found7 in the apparently deliberate choice of different words in ss 45(5) and 45(7) ("in so far as") from those used in s 45(6) ("by reason that"). Further support was found8 in the explanatory memorandum for amendments to the Act made in 19869. That explanatory memorandum suggested that the (2000) 186 ALR 731 at 747 [82]. (2000) 186 ALR 731 at 754 [118]. (2000) 186 ALR 731 at 754 [118]. (2000) 186 ALR 731 at 756 [126]. (2000) 186 ALR 731 at 756 [127]. 9 By the Trade Practices Revision Act 1986 (Cth). McHugh purpose of changes to be made to the Act at that time was to prevent the prohibition, imposed by s 45(2), on making agreements containing exclusionary provisions, from applying to arrangements of the kind dealt with by s 47. This would leave the latter section to operate according to its terms, and thus import the competition test provided for by s 47(10). An appeal by the ACCC to the Full Court of the Federal Court was allowed10. The majority of the Court (Hill and North JJ) concluded that "by reason that" should be read as equivalent to "if and in so far as"11. In their Honours' opinion12 this was not inconsistent with the substitution in 197713, in s 45(6), of the expression "by reason that" for the expression "in so far as". Further, they considered that to read the sub-section in this way avoided what otherwise would be the unintended results that would follow from attaching significance to whether particular contractual stipulations found expression in one or two clauses of a written agreement14. The third member of the Court (Conti J) would have dismissed the appeal, essentially for the reasons given by The construction of s 45(6) In order to construe s 45(6) it is necessary to begin by identifying the place that the sub-section has in the scheme of s 45 and in Pt IV as a whole. In the courts below it would seem that most attention was given to the relationship between s 45 and other provisions in Pt IV. In particular, the parties emphasised that s 45(6) serves to prevent overlapping between s 45(2) and s 47. So much may be accepted, but it does not reveal what is to be understood as constituting some relevant overlap. That depends upon the operation which is to be given to 10 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2001) 112 FCR 37. 11 (2001) 112 FCR 37 at 55 [71]-[75]. 12 (2001) 112 FCR 37 at 54 [68]. 13 By s 25 of the Trade Practices Amendment Act 1977 (Cth) which repealed ss 45, 46 and 47 of the Act and substituted new provisions. 14 (2001) 112 FCR 37 at 54 [69]. 15 (2001) 112 FCR 37 at 57 [82]. McHugh In identifying the operation to be given to s 45(6), it is not useful to adopt a description of the relevant arrangement as "horizontal" or "vertical". There are at least three related reasons why that is so. First, the Act does not adopt a classification which uses those terms. Adopting them confuses the task of construing the Act's provisions. It is necessary to pay attention to the text of applicable statutes in preference to judicial or other glosses on that language16. Not only does adopting these terms distract attention from the language of the Act, it does so by introducing terms which are, so it seems, intended to convey value or other judgments about the social or economic consequences that are assumed or expected to follow from the making of or giving effect to the arrangement to which one of these descriptions is applied. Much turns, therefore, on both the content given to the terms and the validity of the assumptions about consequences that their use entails. Secondly, and no less importantly, employing the descriptions of "horizontal" and "vertical" appears intended to adopt, or at least runs a serious risk of inviting the adoption of, the usage of such terms in the wholly different statutory context of United States antitrust law. In particular, the use of these terms invites attention to the distinction drawn in the antitrust law of that country between arrangements which are to be condemned as "per se" violations of antitrust law and arrangements which are to be tested against the so-called "Rule of Reason". As Judge Posner rightly has written17, "[t]hese are not illuminating terms. What they gesture at is the distinction, fundamental in law, between a rule and a standard." (emphasis added) It is unhelpful to use the language of gesture in preference to construing the statute. Even in the United States, "horizontal" and "vertical" are not terms having agreed or fixed meanings. They are jargon, used as shorthand descriptions, sometimes conveying different meanings to different readers. Moreover, it is not accepted in that country that their use necessarily entails any conclusion about the economic consequences of the arrangement. As Professor Hovenkamp points 16 cf Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 89 [46] per Kirby J; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 545 [63] per Kirby J; Commonwealth v Yarmirr (2001) 208 CLR 1 at 111-112 [249] per Kirby J. 17 Posner, Antitrust Law, 2nd ed (2001) at 39. McHugh out18, "[s]imply to conclude that an agreement is horizontal establishes nothing about whether it is competitive or anticompetitive". These are reasons enough to conclude that the adoption of these terms is not useful in the present context. There is, however, a third point of particular application to this case. The non-competition provisions proposed restricted the acquisition of goods and restricted the supply of services. They can, therefore, be said to reflect a dual and composite relationship. Describing the effect of those provisions as a "horizontal" or a "vertical" restraint states a conclusion which masks that dual character. Moreover, it inverts the proper order of inquiry because the argument proceeds from classification to a conclusion about the application of the Act, rather than beginning with the proper construction and application of the relevant provisions. It is necessary to consider the place which s 45(6) has in s 45 itself. It is evident that s 45(6) qualifies in two distinct steps the operation of other provisions of s 45: "[t]he making of a contract ... does not constitute a contravention of this section ... and this section does not apply to or in relation to the giving effect to a provision of a contract" (emphasis added). Accordingly, the inquiry must begin by identifying the prohibition contained in s 45(2) that is said to be engaged. Is it the making of a contract, arrangement or understanding (s 45(2)(a)(i)), or is it the giving effect to a provision of a contract, arrangement or understanding (s 45(2)(b)(i))? If it is of the former kind, attention must be directed to the first part of the introductory words in s 45(6), which refer to the making of a contract, arrangement or understanding. If it is of the latter kind, the focus will fall upon the second part of those introductory words: "this section does not apply to or in relation to the giving effect to a provision ...". What was alleged here was that there had been an attempt to make, or induce the making of, a contract containing an exclusionary provision. The question presented under s 45(6) was whether the contravention alleged was "by reason that" the contract would contain a "provision" meeting the description given in s 45(6) – a provision the giving effect to which would, or would but for the operation of s 47(10), constitute a contravention of s 47. That question, and in particular the use of the expression "by reason that", invites attention to whether the contravention meets the description given in s 45(6). It does not invite or permit any distributive application of that part of the sub-section in which giving effect to the contract in some ways falls within the sub-section and giving effect to it in other ways does not. 18 Hovenkamp, Antitrust Law, (1998), vol 11, ¶1901b at 186. McHugh If giving effect to the agreed provision would constitute a contravention of s 47, or would do so but for the operation of s 47(10), it meets the statutory description and s 45(6) is engaged. This construction of s 45(6) gives effect to its text. Although not advanced by the ACCC in the courts below, it was not submitted that the course of proceedings precluded the ACCC from now relying on it. It is a construction which does not depend upon substituting, for the statutory expression "by reason that", an expression like "if and in so far as", or even, as the appellants submitted, the single word "if". It is, therefore, a construction which takes a different course from that proposed by the ACCC at trial. Instead of taking a particular term of the contract, arrangement or understanding as the starting point, and working out the extent to which that term meets the criterion stated in s 45(6), it is a construction which begins with the prohibition of s 45(2) and treats s 45(6) as a qualification to that prohibition. The question is whether the criterion for engaging the qualification is met, not the extent to which the parties' agreement can have an operation of the kind which meets that criterion. That requires the identification of whether the making of the contract, arrangement or understanding in question would contravene s 45 because it contained a provision of the specified kind. If it would contravene s 45 for either of two reasons – first, because it contained a provision of the specified kind but, secondly, because it contained a provision which would otherwise contravene s 45 – s 45(6) is not satisfied. The answer to the inquiry just described is not dictated by the particular drafting adopted by parties. There may be no written record of an agreement, let alone of any arrangement made by, or understanding reached between, the parties. Where there is no written record, there could be no resort to drafting. Further, and no less importantly, it is necessary to recognise that "contract, arrangement or understanding" encompasses such a wide range of consensual arrangements that the word "provision" and cognate expressions cannot be understood as confined to what might appear as a single clause of a written agreement. "Provision", when it is used in s 45(6), directs attention to the content of the agreement, arrangement or understanding rather than the manner of its expression. That conclusion is reinforced when due account is paid to the use of the expression "the giving effect to which". That is an expression of wide meaning and its use requires consideration of the various kinds of conduct which it encompasses. As has been indicated above, s 4(1) of the Act requires that "give effect to", in relation to a provision of a contract, arrangement or understanding, "includes do an act or thing in pursuance of or in accordance with or enforce or McHugh purport to enforce". Necessarily, then, the relevant inquiry is about what may be done under the contract, arrangement or understanding, not how it is drafted. That is, the inquiry must focus upon the content of the stipulations which the parties have made or agreed. Thus, upon analysis, the one verbal composite may contain stipulations each of which is a "provision" in the statutory sense, and with different statutory characteristics. Do the stipulations which cause a contravention of s 45(2) meet the criterion in s 45(6)? the present case, the admittedly dual significance of the non-competition stipulations is important. The parties intended both to restrict NPP's freedom to supply services to others, and to restrict its freedom to acquire goods from them. Making a contract with non-competition provisions to that effect would have constituted a contravention of s 45(2). But for the operation of s 47(10) the former provision would have contravened s 47(1). It would have been conduct of the kind described in s 47(4). The latter provision would not have contravened s 47. It follows that s 45(6) was engaged in respect of the former but not the latter provision. The limited effect of s 45(6) in the present case was as follows. The making of the contract would not have constituted a contravention of s 45 by reason that the contract contained the former provision. However, the making of the contract would have constituted a contravention of s 45 for other reasons, specifically because it contained the latter provision, the giving effect to which would not have contravened s 47. In respect of the latter provision, the criterion for engaging the qualification in s 45(6) to the prohibition imposed by s 45(2) was not met. In those circumstances, s 45(6) provides to Visy Paper no answer to the case made against it by the ACCC. The appeal should be dismissed with costs. Kirby KIRBY J. This appeal concerns the proper interpretation and application of provisions of the Trade Practices Act 1974 (Cth) ("the TPA"). The point of construction in issue relates to the allocation of regulatory responsibilities to different sections of the Act that forbid anti-competitive arrangements. The point arises in a factual and commercial context in which potentially more than one of the statutory provisions is applicable. The facts and the history of the proceedings are described in the reasons of Gleeson CJ, McHugh, Gummow and Hayne JJ ("the joint reasons")19. Also set out there are the relevant statutory provisions20. I will not repeat any of this detail. I agree that the appeal must be dismissed. However, I wish to add some observations of my own. My observations relate to the preferable course to be followed in exercising the dual tasks of (1) characterising the contracts alleged to contain anti-competitive provisions, which were adopted by Visy Paper and attacked by the ACCC, and (2) identifying the statutory provisions potentially applicable to them. Those tasks should be carried out in a manner that enables the clarification of the intended operation of the proposed contracts in their commercial context and that is consistent with the scheme, contained in the TPA, for regulating anti- competitive practices. In my opinion, consideration of the categories of vertical and horizontal arrangements21 assists in the performance of this task. Only when that task is carried out correctly is it possible to determine the controversy in issue: namely whether the qualification contained in s 45(6) of the TPA applies so as to take the proposed contracts out of the per se prohibition provided in s 45(2)(a)(i) of the TPA. Characterising the parties' arrangements A dual and composite relationship: In the present appeal, a number of unusual features of the commercial relationship between Visy Paper and NPP, the different markets in which they participated and the industry itself, posed difficulties for the task of characterising the arrangements for the purposes of applying ss 45 and 47 of the TPA to them. One such difficulty concerned the commercial practice in the waste collection industry of obtaining used paper as an input in the process of 19 Joint reasons at [10]-[21]. The same designations will be used to describe the parties and principal actors as appear in the joint reasons. 20 Joint reasons at [2]-[9]. 21 See eg Posner, Antitrust Law, 2nd ed (2001) at 39. Kirby production for recycled paper. Waste could be collected either in the form of acquiring goods (that is, waste purchased from customers) or providing services in the form of waste (or rubbish) removal services to customers at some or no charge. The form of obtaining waste used by a collector depended upon the quality and quantity of the waste generated22. It also depended upon the current export prices for waste product23. The fact that obtaining waste by collectors may be characterised as the supply of waste collection services, at least in some circumstances, is said to take on a particular significance in this appeal on the footing that it engaged s 47(4) of the TPA24. However, a number of observations should be made about that feature of the waste collection industry, particularly in the context of the relationship between Visy Paper and NPP. First, whilst it is true that the collection of waste had a dual and composite character, it is also true that the underlying purpose of any activity to collect used paper was to obtain a resource for producing recycled paper by manufacturers such as Visy Paper. Secondly, NPP itself never provided rubbish collection services. While it did receive waste from rubbish collectors for a fee, this was not the major source of the waste paper that NPP obtained and on-sold to Visy Paper25. Thirdly, from the time that its processing and decontamination plant at Silverwater closed, NPP received no payment from any customer for the removal or acceptance of waste26. Fourthly, it was the attempt by NPP to purchase waste paper from the Local Government Recycling Co-operative Ltd and subsequently from other Visy Paper customers that prompted Visy Paper to renegotiate its relationship with NPP by reference to the non-competition provisions27. Nature of the parties' relationship: The second factual point of difficulty encountered in characterising the arrangements concerns the nature of the relationship between Visy Paper and NPP. To the extent that both Visy Paper and NPP, at least initially, participated in the waste collecting industry as waste collectors, they were competitors. However, NPP was also a supplier to Visy 22 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2000) 186 ALR 731 at 736 [23]. 23 ACCC v Visy (2000) 186 ALR 731 at 737 [24]. 24 See also the joint reasons at [5]. 25 ACCC v Visy (2000) 186 ALR 731 at 737 [27]-[28]. 26 ACCC v Visy (2000) 186 ALR 731 at 737 [29]. 27 ACCC v Visy (2000) 186 ALR 731 at 738 [33]. Kirby Paper, which was a manufacturer of recycled paper. While NPP did not produce recycled paper, it initially had a plant for sorting and processing waste, as did Visy Paper28. Even after NPP shut down its processing facility, both Visy Paper and NPP continued to participate in the business of collecting waste as competitors. At the same time, Visy Paper had an existing contract for the purchase of waste paper products from NPP29. Accordingly, Visy Paper and NPP were in a vertical (supplier-purchaser) relationship, which they were negotiating to continue. It was in that context that the contracts, subsequently attacked in the Federal Court by the ACCC, were proposed by Visy Paper. The applicable characterisation: The legal question that emerges from these arrangements relates to the proper characterisation of the anti-competitive clauses and the role they played, or were intended to play, in structuring the Visy Paper-NPP relationship and the proposed arrangements. That question may be answered by reference to the concepts of vertical and horizontal arrangements. Did the proposed contracts (all of which included a non-competition clause) attempt to put in place an exclusive dealing arrangement as an aspect of the vertical (supplier-purchaser) relationship? Or were the proposed contracts to be characterised as forming a horizontal arrangement (as between competitors), containing an exclusionary provision to lessen the competition between them? To the extent that the proposed contracts could fall within both the vertical and horizontal arrangement categories, did s 45(6) of the TPA operate to absolve Visy Paper of any violation of s 45? At this point, the concessions made by the ACCC need to be considered. Given the ACCC's concessions about the purpose and effect of the arrangements, if no violation of s 45(2)(a)(i) occurred, the making of the proposed contracts would not constitute a violation of the TPA. The submissions of the parties Submissions of Visy Paper: Before this Court, Visy Paper pointed to the finding of the primary judge that the reference to the "collection" of waste in the non-competition clauses of the proposed agreements was wide enough to encompass both the acquisition of goods from, and the provision of services to, its customers30. The majority in the Full Court of the Federal Court held that the non-competition clauses had a dual character on the basis that they were intended to restrict both the acquisition of waste paper goods and the provision of waste 28 ACCC v Visy (2000) 186 ALR 731 at 737 [26]. 29 ACCC v Visy (2000) 186 ALR 731 at 737-738 [30]-[32]. 30 ACCC v Visy (2000) 186 ALR 731 at 754 [118]. Kirby removal services31. On this footing, Visy Paper submitted that giving effect to the non-competition clauses would restrict the supply of services by NPP to Visy Paper's customers. Relevantly to the relationship between Visy Paper and NPP, this would operate, in effect, as a condition for the acquisition of goods by Visy Paper from NPP and, as such, would be an "exclusive dealing" arrangement that would constitute a contravention of s 47(4), but for the operation of s 47(10). It followed, Visy Paper argued, that s 45(6) was engaged so that the making of the proposed contracts did not amount to a violation of s 45(2)(a)(i) of the TPA. This was so despite the fact that the non-competition clauses also purported to restrict NPP from acquiring waste (goods) from Visy Paper's customers. Submissions of the ACCC: For the ACCC, the latter restriction on the acquisition of waste paper goods was highly significant. The ACCC pointed to the breadth of the meaning of the term "provision" in the TPA32. It submitted that this word should not be narrowly construed, for example, to mean "clause"33. Thus, the ACCC argued that: "because of its dual character, [the non-competition clause] encompasses both a prohibition on NPP supplying services to Visy customers (the third element of s 47(4)) and a prohibition on NPP acquiring goods from Visy customers (which forms no part of s 47(4))". It followed, so the ACCC submitted, that giving effect to the prohibition on restricting the acquisition of goods from a class of persons, namely Visy Paper's existing and potential customers, had nothing to do with s 47 of the TPA. It was to be governed by s 45 of that Act. An apparent incongruity: The argument of the ACCC provides one answer to Visy Paper's invocation of s 45(6) of the TPA in this appeal as a defence to its alleged violation of the TPA. However, in certain respects, that answer is curious. It implies that, because the non-competition clauses only contained a restriction upon the supply of waste removal services by NPP to Visy Paper's customers, they might be treated as falling outside s 45. The reasons for such a differential consequence are not immediately apparent34. Both restrictions have a similar purpose and effect. Each aims to remove competition between 31 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2001) 112 FCR 37 at 52 [60]. 32 See TPA, s 4(1) cited in the joint reasons at [7]. 33 ACCC v Visy (2001) 112 FCR 37 at 54 [67]. 34 This may explain the hesitation of the primary judge to give the two aspects of the clauses a differential treatment: ACCC v Visy (2000) 186 ALR 731 at 754 [118]. Kirby Visy Paper and NPP. The "victims" of either restriction would be customers of Visy Paper which might, for whatever reason, decide either to sell waste products to NPP rather than to Visy Paper, or to engage NPP, rather than Visy Paper, for waste removal services. Before this Court the parties did not elaborate two issues that could have been relevant to the resolution of the questions presented for decision and to the apparent incongruity just mentioned. The first concerns the legislative policy that informs the statutory definition of "exclusive dealing" within s 47(4) of the TPA as the acquisition of goods and services on condition only that the seller "will not supply goods or services" to a particular person or class of persons35. As Hill and North JJ36 pointed out in the Full Court, the Swanson Committee, reviewing the TPA37, recommended that the definition of exclusive dealing in s 47 of the TPA should include the acquisition of goods and services on the condition that the seller will not acquire goods and services from, or supply goods and services to, particular persons or classes of persons. Given the final form in which s 47(4) was enacted, that recommendation was clearly not accepted in its entirety. The second, related issue is whether, in order to establish the practice of "exclusive dealing" as that practice is defined in s 47(4) of the TPA (and by analogy the other sub-sections in s 47), there is any necessary nexus between the "goods or services" acquired by the purchaser and the "goods or services" that the seller is restricted from supplying to particular persons or classes of persons. It is here that the concepts of vertical and horizontal arrangements are of assistance. Is the reference to a restriction on the supply of goods and services by the seller at large? Or is it necessarily related to the "goods or services" acquired by the purchaser38 and therefore an aspect of their vertical (supplier-purchaser) relationship? To answer these and the other questions, it is helpful to determine whether the restrictions contained in the anti-competitive clauses in the contracts proposed by Visy Paper are more an aspect of the horizontal than the vertical relationship between Visy Paper and NPP. This requires close analysis of the statutory provisions in the context of the legislative scheme contained in Pt IV of the TPA. 35 TPA, s 47(4) (emphasis added). 36 ACCC v Visy (2001) 112 FCR 37 at 53 [63]. 37 Australia, Trade Practices Act Review Committee (T B Swanson, Chairman), Report to the Minister for Business and Consumer Affairs, (August 1976); cf Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 77 ALJR 926 at 939-940 [71]-[72]; 197 ALR 153 at 172. 38 See TPA, s 47(4)(a) and (b). Kirby Anti-competitive arrangements and the TPA United States analogue: Part IV of the TPA appears under the heading "Restrictive Trade Practices". It contains a detailed scheme for the regulation of anti-competitive practices. Specific provisions in Pt IV prohibit joint39 and unilateral40 conduct on the part of corporations, where such conduct would tend to impede the competitive process. The approach adopted by the Parliament in Pt IV of the TPA may be contrasted with §1 of the Sherman Act41, which prohibits any "contract, combination … or conspiracy, in restraint of trade or commerce". The application of §1 is not confined to parties to a contract, combination or conspiracy who are in competition. It therefore includes arrangements between parties at the same level in the supply chain which are competitive in the same market (horizontal arrangements), as well as agreements between parties at different levels in the supply chain (vertical arrangements). Partly as a consequence of the broad language of §1, the development of antitrust doctrine in the United States of America has been largely left to the courts. Over time, those courts have relied upon screening mechanisms to assist in the identification of the types of arrangement that were inimical to the competitive process and that should therefore be subjected to the prohibitions contained in the Sherman Act. Such mechanisms became necessary because of the breadth of the prohibition appearing on the face of the statute. The TPA was enacted in Australia many decades after its United States counterparts. In its original form, s 45(2) prohibited arrangements "in restraint of trade and commerce"42. It appears that Pt IV, both in its original terms and as subsequently amended, borrowed from the United States experience of applying the Sherman Act to particular commercial arrangements. For example, those types of arrangement identified as inherently damaging to the competitive process were subjected to prohibition without further inquiry43. This category of prohibition corresponded to the per se rule of illegality developed in United 39 eg TPA, ss 45, 45A, 47. 40 eg TPA, ss 46, 48. 41 15 USC §1. 42 See the discussion of the legislative history by the primary judge in ACCC v Visy (2000) 186 ALR 731 at 751-752 [103]-[109]. 43 eg TPA, s 45(2)(a)(i) and s 45A(1) read with s 45. Kirby States jurisprudence44. In contrast, other types of restrictive arrangements were subjected by the TPA to less rigorous restriction, out of recognition that such arrangements could have legitimate justifications or were otherwise favourable to competition. Such arrangements were prohibited only if they had the purpose or effect of "substantially lessening competition"45. This latter inquiry calls for consideration of the design of the arrangement, as well as its effects or likely effects on competition and the competitive process in the relevant market, reflecting in United States antitrust reason", developed the "rule of Overlapping provisions: The detailed scheme of regulation of restraints on trade appearing in the TPA has the consequence that a variety of arrangements, occurring in different commercial contexts, must be tested against the criteria in the several sections of that Act. It follows that an arrangement may fall within the scope of more than one section of the TPA. The question of which section applies to an arrangement may be determinative of whether or not the arrangement constitutes a violation of the TPA, as different sections impose different legal consequences. That there would exist such overlap was recognised by the Parliament in enacting the TPA: for example, s 45(6) has the purpose of ensuring the proper allocation of regulatory responsibilities for a given arrangement that may fall within the scope of ss 45 and 47 of the TPA. In applying s 45(6) to particular factual circumstances, a court must give effect to its language. However, it should be recognised that the different sections in Pt IV of the TPA are not intended to work in a mechanical or artificial way. The scheme adopted in Pt IV therefore should be interpreted and applied in a manner that allows the provisions to work together so as to give effect to the identified legislative policies47. More than once in recent cases48 I have had 44 See United States v Socony-Vacuum Oil Co Inc 310 US 150 (1940). On the use of United States jurisprudence see Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 77 ALJR 623 at 646-648 [158]- [163] per Gaudron, Gummow and Hayne JJ; 195 ALR 609 at 639-641. See also News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 200 ALR 157 at 185-186 [115]-[117] in my reasons. 45 eg TPA, s 45(2)(a)(ii) and s 47(10). 46 See eg Broadcast Music Inc v Columbia Broadcasting System Inc 441 US 1 (1979). 47 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 48 eg Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 77 ALJR 623 at 677 [323]; 195 ALR 609 at 682; Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 77 ALJR 926 (Footnote continues on next page) Kirby occasion to insist upon the application to the TPA of the purposive approach to legislative construction. That approach has now been generally adopted as the usual approach of this Court to problems of statutory construction49. Adopting a contextual approach: The problem presented by this appeal should not, therefore, be resolved by consideration of the words of s 45(6), read in isolation from the two sections in issue or separate from the rest of Pt IV. Nor should attention be confined to semantics or a search for a judicial paraphrase for the statutory language50. Rather, it is necessary to take a contextual approach, by identifying the legislative policy behind the applicable sections (s 45(2)(a)(i) when read with s 4D, as well as s 47 of the TPA), in an attempt to ascertain the role that the sections play in the overall scheme of regulating arrangements that restrict competition in the particular market. Such an approach requires consideration of the statutory context in which the terms, "exclusionary provisions" and "exclusive dealing", are found. The concepts of horizontal and vertical arrangements are useful in locating the respective fields intended to be covered by the terms "exclusionary provision" and "exclusive dealing". The TPA: "exclusionary provisions" and "exclusive dealing" Two legislative constructs: "Exclusionary provision" and "exclusive dealing", as these terms are defined and used in the TPA, are legislative constructs. They do not have any particular or technical meaning, nor do they correspond to any specific type of anti-competitive conduct. Yet the Parliament has attached different consequences to arrangements according to the type of provision they contain, thereby pronouncing a stronger legislative condemnation of certain kinds of restrictive arrangements. The characteristics of those arrangements and the reasons they are subject to that stronger condemnation shed light on when and how the relevant provisions of Pt IV should be applied. To steer the mind safely through the relevant words of the TPA (which constitute a less than perfect example of the drafter's art), regard must be had to the reasons for the enactment of the statutory provisions; their potential intersection; and the intended field for their operation within the statutory scheme. at 938 [65]; 197 ALR 153 at 170; News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 200 ALR 157 at 186-187 [120]. 49 Bropho v Western Australia (1990) 171 CLR 1 at 20; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Eastman v Director of Public Prosecutions (ACT) (2003) 77 ALJR 1122 at 1148-1149 [137]; 198 ALR 1 50 cf Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 77 ALJR 398 at 425-426 [146]; 194 ALR 485 at 522. Kirby Exclusionary provisions: The TPA gives effect to special vigilance about certain types of arrangements among competitors. For example, s 45A(1) of the TPA prohibits any arrangement among parties "in competition with each other" containing a provision for the "fixing, controlling or maintaining … the price for, or a discount, allowance, rebate or credit" by deeming such an arrangement of itself to have the purpose or effect of "substantially lessening competition"51. Similarly, agreements among competitive parties containing an "exclusionary provision" are subject to an outright prohibition in s 45(2)(a)(i) of the TPA. The definition of "exclusionary provisions" in s 4D(1)(a) confines attention to arrangements between persons "any 2 or more of whom are competitive with each other". Such arrangements restrict output in the relevant market with effects substantially equivalent to the elimination of price competition. Experience (and economic theory) suggests that such horizontal arrangements are inherently harmful to the competitive process. They are "socially inefficient"52 and without legitimate justification. Exclusive dealing: Section 47 of the TPA defines and regulates the practice of "exclusive dealing". Unlike s 4D, s 47 does not restrict attention to arrangements where the parties are competitive with each other. Thus, the focus of the section is not upon horizontal arrangements among competitors, but on vertical non-price restrictions53 between parties that are at different levels in the supply chain, in a supplier-purchaser relationship. Importantly, exclusive dealing is prohibited only to the extent that it has the purpose or effect of substantially Before an arrangement will be found to violate the TPA on the basis of "exclusive dealing", it is necessary to consider the purpose and likely effect on the level of competition in the market of the arrangement (and, in particular, the restrictions it imposes on some or all of the parties). That such an inquiry is required reflects legislative recognition that vertical non-price restraints are not necessarily anti-competitive. Nor do they necessarily have an exclusionary purpose and effect. Whether or not a likely adverse effect on competition would result from such arrangements depends upon a number of factors. These include 51 TPA, s 45(2)(a)(ii). 52 Posner, Antitrust Law, 2nd ed (2001) at 39. 53 The practice of resale price maintenance is prohibited (reflecting the legislative policy against price fixing): s 48, read with Pt VIII. However, this is done only to the extent that the supplier seeks to enforce a minimum price below which the acquirer cannot on-sell the goods or services: ss 96, 96A. 54 TPA, s 47(10). Kirby the reason for, and nature of, the restriction imposed; the state of competition in the upstream and downstream markets; the duration of the arrangement between the parties; the relative size of the parties; and the degree to which the arrangement forecloses access to the market for other traders55. In circumstances where the level of competition is not under threat, such vertical restraints may have legitimate justifications. In a particular case they may even enhance competition. A horizontal or vertical arrangement? The common element in the definition of an "exclusionary provision" in s 4D of the TPA and some of the types of "exclusive dealing" identified in s 47, is the restriction on the supply of goods and services to (or the acquisition of goods and services from) a person or a particular class of persons. The key difference between the sections is that s 4D of the TPA is aimed at arrangements between parties "competitive with each other". In contrast, s 47 focuses on supply-acquisition relationships. Therefore, not every arrangement that falls within the "exclusive dealing" definition in s 47 will also fall within the scope of s 4D. In that statutory context, s 45(6) of the TPA performs one of two functions. First, it ensures that a vertical "exclusive dealing" arrangement is governed by s 47, given the broad definition of parties that are "competitive" for the purposes of s 4D. Secondly, where competitors in a market come into a supplier-purchaser relationship, any non-price restrictions that are an aspect of their vertical relationship (and that can fall within the definition of "exclusive dealing") are to be governed by s 47. Section 45(6) of the TPA is clearly not intended to remove from the per se prohibition in s 45(2)(a)(i), exclusionary restraints which are an aspect of the horizontal relationship between competitors, and which are designed to restrict supply or eliminate price competition. A provision in an arrangement that envisages the supply of goods or services from one of the parties to the other will not of itself attract the operation of s 45(6) so as to preclude the application of s 45(2)(a)(i). Characterisation of the arrangements between Visy Paper and NPP as either horizontal or vertical enables an evaluation of whether the restrictive provisions in the contracts proposed by Visy Paper are protected by the operation of s 45(6). Only then is it possible to conclude whether the restrictive provisions are "exclusionary provisions" within s 4D. On my analysis, the making of an arrangement does not constitute a violation of s 45 by reason of a restrictive provision being characterised as an element of a vertical "exclusive dealing" arrangement between the parties. However, the provision will be prohibited by s 45(2)(a)(i), regardless of the actual effect of the provision on competition in the market, if it restricts the supply of goods or services to the customers or potential 55 Posner, Antitrust Law, 2nd ed (2001) at 230-232. Kirby customers of the parties. This is because such a restriction would become an aspect of the parties' horizontal relationship as competitors and thereby restrain competition between them. Conclusion: a case of horizontal restraint Given the character of the commercial relationship between Visy Paper and NPP, it is impossible to avoid the conclusion that the non-competition clauses in the contracts proposed by Visy Paper, which restrained NPP from acquiring waste paper products from or providing waste removal services to Visy Paper's existing or potential customers, were primarily referable to the horizontal relationship between those two corporations as competitors, rather than to their vertical supplier-purchaser relationship. As part of the vertical relationship, Visy Paper could impose certain valid restraints on NPP's conduct that would also protect any investment in NPP's operations funded by Visy Paper56. For instance, Visy Paper could prevent NPP from supplying waste paper products to Visy Paper's manufacturing competitors, within s 47(4). The original 1995 contract provided for such a relationship57. Similarly, the draft supply agreements proposed by Visy Paper provided that NPP would sell exclusively to Visy Paper the whole of its stocks of certain categories of waste paper58. This would have imposed a restriction on NPP not to supply waste paper products to any of Visy Paper's competitors in the paper recycling industry that might also have been interested in purchasing such products. That restriction would not violate the TPA, to the extent that it did not have the purpose or effect of "substantially lessening competition"59. As part of the vertical relationship, Visy Paper could lawfully negotiate the price at which it would purchase waste paper products sold by NPP. Through negotiating the purchase price, Visy Paper was able to restrain the degree to which NPP could compete with Visy Paper for customers in the waste collection market. However, to the extent that Visy Paper remained in the waste collection market, and therefore remained competitive with NPP in that market, it could not lawfully negotiate restrictions about the price at which they would acquire waste products or the price at which they would supply waste removal services to customers. Nor could it lawfully restrict the customers from which NPP could obtain waste in either form. All such restrictions or attempted restrictions were a 56 ACCC v Visy (2000) 186 ALR 731 at 741 [54]. 57 ACCC v Visy (2000) 186 ALR 731 at 737-738 [31]. 58 ACCC v Visy (2000) 186 ALR 731 at 742-743 [63]. 59 See TPA, s 47(1) and (10) (emphasis added). Kirby feature of the horizontal relationship between Visy Paper and NPP as competitors. They were therefore governed by s 45(2)(a)(i) of the TPA read with s 4D. Competitors in a market cannot, by also engaging in a concurrent supply relationship, guard against the operation of a per se prohibition on certain types of arrangements deemed inherently inimical to the competitive process. By the operation of s 45(6) of the TPA, a contract may provide for the establishment of a vertical relationship of supply and acquisition subject to non-price restraints (that is, make provision for exclusive dealing) without constituting a violation of s 45 of the TPA. However, in the present appeal, the restrictive provisions created an exclusionary restraint on the competitive conduct of two parties which were, and continue to be, in competition with each other in the relevant market. Therefore, s 45(6) of the TPA was not engaged. The per se prohibition in s 45(2)(a)(i) of the TPA thus applied to the arrangement. Principled and consistent applications of the TPA The language of the provisions of the TPA applicable to this case is obscure. Indeed, it represents a significant challenge for interpretation. It is in need of redrafting by reference to concepts and purposes. It requires the negotiation of too many cross-references, qualifications and statutory interrelationships. This imposes an unreasonable burden on the corporations and their officers subject to the TPA, the ACCC enforcing the Act and courts with the responsibility of assigning meaning to, and applying, its provisions. It is in the context of such legislative opacity and unwieldiness that it is essential, in my view, to adopt a construction of the TPA that achieves the apparent purposes of that Act by furthering the objectives of Australian competition law. Keeping such purposes in mind helps to shine the light essential to finding one's way through the maze created by the statutory language. Even then, there is a substantial danger of losing one's way in the encircling gloom. The approach to the construction of s 45(6) of the TPA that I favour is consistent with the language of the Act. It has the benefit of treating in a substantially similar way restrictive provisions that have the same purpose and effect. It also promotes the apparent legislative policies of according greater vigilance towards, and scrutiny of, horizontal arrangements among competitors, which are aimed at restricting output and competitive conduct in a market. When competitive parties enter into a supply and purchase agreement, subject to a restrictive provision that can be characterised as establishing an "exclusive dealing" arrangement within s 47, the making of such an agreement will not constitute a violation of s 45 by reason of such restrictive provision alone. Kirby However, in this appeal, the contracts proposed by Visy Paper, apart from an exclusive supply relationship, also sought to impose non-competition arrangements that were primarily referable to the competitive relationship between Visy Paper and NPP in the waste collection market in which Visy Paper continued to participate. As such, those provisions were subject to the per se prohibition provided in s 45(2)(a)(i) of the TPA. The Full Court was correct to so conclude. The duty to provide a clear criterion The joint reasons in this Court express disagreement with the approach that I favour60. I agree that it would be a mistake to import uncritically into the TPA extra-statutory concepts. Doing that could, in some circumstances, distract attention from the task of interpreting the provisions of the TPA61. I said as much in my reasons in Boral Besser Masonry Ltd v Australian Competition and Consumer Commission62. The identical point was made once again in News Ltd v South Sydney District Rugby League Football Club Ltd63. This Court there warned against the use of the concept of a "boycott" to limit the scope of an "exclusionary provision" as defined in s 4D of the TPA. It would be especially inappropriate to introduce extra-statutory concepts that amounted to nothing but empty labels that neither aid the process of reasoning nor illuminate the interpretation of the TPA. Statutory construction is a text-based activity. But where the wording or structure of the statutory provisions is neither clear nor elegant, the duty of a court, and particularly of this Court, is to attempt to understand and explain the policy of the statute as it applies to the problem in hand64. Doing so helps in the task of statutory interpretation. It is not impermissible. It is essential. 60 Joint reasons at [23]-[27]. 61 Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 77 ALJR 623 at 642 [126] per Gleeson CJ and Callinan J; 195 ALR 609 at 62 (2003) 77 ALJR 623 at 685-686 [380]; 195 ALR 609 at 694. 63 (2003) 200 ALR 157 at 163 [19] per Gleeson CJ, 176-177 [77]-[78] per Gummow J (McHugh J agreeing), 184-185 [113]-[114] of my own reasons. See also Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 at 43-45, 51-52, 55. 64 Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800 at 827 per Lord Diplock. Kirby Reliance upon the writings of legal scholarship65, other disciplines (such as economic science in the context of the TPA66), the law of other countries, or international law, represents an intellectual contribution to judicial reasoning and judgment. It is not normative. Nor is it prescriptive. But such learning can help a court better to understand the nature of the problem presented for its decision67. For example, in Boral, members of this Court were of the opinion that the concept of "recoupment", as developed in antitrust decisions and literature in the very different statutory context of the United States, could be used to shed light on the circumstances in which, in this country, a corporation "take[s] advantage" of a substantial degree of market power for the purposes of s 46 of the TPA68. In Boral, the joint reasons of Gaudron, Gummow and Hayne JJ69 even made reference to "horizontal price-fixing arrangements". Knowledgeable readers of Boral would have understood what their Honours were getting at by their use of that expression. Such readers would not have mistaken that reference to horizontal arrangements for jargon or slogans. I am willing to assume that readers of my reasons in this case would bring the same appreciation to my use of the same adjective. In the present appeal, it is the TPA itself that makes a distinction between arrangements amongst parties that are competitive with each other (horizontal)70, and arrangements among parties in a supplier-acquirer relationship (vertical)71. Thus, in the context of the TPA, the words vertical and horizontal are not jargon. Nor are they foreign or otherwise suspect. They are useful shorthand descriptions of concepts firmly rooted in the text of the Australian Act. It is that 65 Kirby, "Welcome to Law Reviews", (2002) 26 Melbourne University Law Review 66 Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 77 ALJR 623 at 661 [247] per McHugh J; 195 ALR 609 at 659-660. 67 cf Posner, "Pragmatic Adjudication", (1996) 18 Cardozo Law Review 1 at 5. 68 (2003) 77 ALJR 623 at 642 [130], 652 [191], 666-667 [278]-[281], 670 [292], 689- 691 [399]-[413]; 195 ALR 609 at 634, 648, 667-669, 672, 699-702: Gleeson CJ and Callinan J expressed the view that the prospect of recoupment was of evidentiary importance, as did Gaudron, Gummow and Hayne JJ, while McHugh J went so far as to argue that recoupment was an essential element of a s 46 claim. 69 (2003) 77 ALJR 623 at 646 [158]; 195 ALR 609 at 639 (emphasis added). 70 See TPA, ss 4D(1)(a) and 45A. 71 See TPA, s 47. Kirby Act, the TPA, which imposes an outright prohibition on some contracts or arrangements, while treating others in accordance with a more flexible standard. This Court should not shut its eyes to the intended operation and effects in the marketplace of the proposed arrangements, impugned by the ACCC. Nor should the Court run away from the complexity of the interpretive task involved. In a statutory context such as the present, where certainty is of great importance, and the potential consequences of breach significant, we should provide reasons that give guidance to those in the marketplace, as well as the ACCC, about the circumstances in which such arrangements will run afoul of the TPA. With every respect, this is the difficulty that I had with the joint reasons in this case. It was a difficulty that led me to attempt, in this concurrent opinion, to express a criterion for the operation of the TPA which I did not find in the joint reasons. Out of politeness, I would not have said this but for the criticism addressed to my endeavour, to which I adhere. Orders The orders proposed in the joint reasons should be made. Callinan CALLINAN J. I am relieved of the necessity to set out the facts, the relevant legislation and the issues arising in this appeal because of the comprehensive statement of them in the joint judgment with which however I am unable to agree. Instead I find myself in agreement in substance with the reasoning and conclusion of the primary judge Sackville J, and Conti J in dissent in the Full Court of the Federal Court, to the judgment of the former of whom I would wish to add little. There is no doubt that the clauses of the proposed contracts have both a dual and composite character: they make no distinction between the acquisition of goods by the corporate appellant and the provision of services by it to its customers. The concession at the trial by the respondent should also be noted: that the corporate appellant's conduct could not be shown to have had the effect or purpose of substantially lessening competition in the market place. The primary judge dealt with the respondent's submissions (which were repeated in this Court) by reference to the legislative history of the Act in terms "Section 45(2) of the TP Act, in its original form, prohibited the making of a contract, arrangement or understanding 'in restraint of trade or commerce'. In that form, s 47 dealt with what the Swanson Committee described as73: 'agreements, or potential agreements, for the supply of goods or services involving the vertical practices of exclusive dealing, product forcing and territorial or customer restrictions'. As the Swanson Committee observed, s 47, for the most part, dealt with restraints that otherwise fell within the general prohibition in s 45. At that time, the relationship between ss 45 and 47 was governed by s 45(5). It provided that s 45 was not to apply to a contract, arrangement or understanding in so far as the contract, arrangement or understanding was of the kind referred to in s 47(2) or constituted the practice of exclusive dealing as mentioned in s 47(3) and (4). Section 47(2) and (3) dealt with 'full-line forcing': that is, supply of goods 72 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2000) 186 ALR 731 at 751-752 [103]-[109]. 73 Trade Practices Act Review Committee, Report to the Minister for Business and Consumer Affairs, (August 1976) (the Swanson Committee), par 4.1. Callinan or services on the condition that the person supplied would acquire other goods or services directly or indirectly from the supplier. Section 47(4) dealt with the practice of third-line forcing and was not subject to a substantial lessening of competition requirement. The Swanson Committee considered that ss 45 and 47 created distinctions between certain kinds of agreement and conduct which were illogical and sometimes harsh: Swanson Committee, par 4.105. It identified the most important of these matters as the 'usual grant of an The committee recommended that the most exclusive franchise'. appropriate way of dealing with restrictions imposed in an exclusive franchise arrangement was in the context of s 47, which was generally to apply only if the lessening of competition test were satisfied: Swanson Committee, par 4.106. The Trade Practices Amendment Act 1977 (Cth) (the 1977 Act) implemented some, although not all of the recommendations of the Swanson Committee. The 1977 Act dispensed with the concept of 'restraint of trade or commerce' and introduced ss 4D(1) and 45(2) in substantially their present form. The 1977 Act also introduced more elaborate exclusive dealing provisions in s 47, again in substantially their present form. In particular, s 47(4) dealt specifically with restrictions imposed by buyers on sellers of goods, a practice that had previously been left to the general language of s 45. Section 47(10) applied the test of substantially lessening competition to the vertical arrangements covered by s 47, except for third-line forcing (ss 47(6) and (7)) which remained 'per se' contraventions of the TP Act. The relationship between the collusive conduct provisions of s 45 and the restrictions on vertical arrangements in s 47 was governed by s 45(6). The 1977 Act enacted s 45(6) in its present form, except that the the operation of the words subsection did not subsection 47(10)'. Neither the explanatory memorandum to the Trade Practices Amendment Bill 1977, nor the second reading speech74 further explain the manner in which s 45(6) was drafted. 'but for include The effect of the 1977 Act was that s 45(6) applied, generally speaking, only where the conduct giving effect to the relevant provision had the purpose or effect of substantially lessening competition as required by s 47(10). This was thought to create difficulties75. In order to 74 Australia, House of Representatives, Parliamentary Debates (Hansard), 8 December 1976 at 3531ff. 75 Callaway, "Section 45 or 47?", (1980) 54 Australian Law Journal 200 at 202-203. Callinan address these difficulties, s 45(6) was amended by the Trade Practices Revision Act 1986 (Cth) (the 1986 Act), which added the words 'but for the operation of subsection 47(10)'. The explanatory memorandum gave this explanation for the insertion of the additional words: '3. This amendment extends the operation of the exclusion in subs 45(6) so that it prevents s 45, and in particular its prohibition on exclusionary provisions (s 4D) from applying to arrangements which, while coming within the definition of exclusive dealing in s 47, do not contravene that section because they do not have the purpose or the effect of substantially lessening competition (subs 47(10)).' It should be noted that, although the 1986 Act was preceded by a Green Paper (The Trade Practices Act: Proposals for Change, (February 1984)), the Green Paper did not consider the scope or drafting of s 45(6)." The core of his Honour's reasoning appears in the following passage with which I agree76: "In my opinion, there is no warrant for notionally breaking up the alleged exclusionary provision into … 'discrete legal obligations'. This approach receives no support from the statutory language or from the terms of any of the non-competition clauses themselves. Each of the non- competition clauses in the [exclusive collection agreements] and supply agreements prohibits NPP from collecting waste products from customers of Visy. None of them distinguishes between the acquisition of goods and the provision of services to Visy's customers. It would do violence to the language of the clauses to divide each single prohibition into 'discrete' components for the purposes of applying s 45(6)." I would simply add this: that the conditions in the markets, particularly as to supply and demand from time to time might well dictate whether what one day might be regarded as an acquisition, might, on another, be properly viewed as the provision of a service. This was no doubt a factor relevant to the drafting of the provisions in the composite form in which they were evolving. His Honour the primary judge continued77: 76 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2000) 186 ALR 731 at 754 [118]. 77 Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2000) 186 ALR 731 at 754-755 [120]. Callinan "In inquiring whether the giving effect to a provision would constitute a contravention of s 47, it is necessary to bear in mind the broad definition of 'give effect to' in s 4(1). The definition includes doing an act in pursuance of or in accordance with the provision or purporting to enforce the provision. If a provision restricts a seller of goods from supplying services to the buyer's customers (conduct caught by s 47(4)), the buyer acts in accordance with the provision by refusing to permit the seller to supply those services. This is so even though the provision also prevents the seller acquiring goods from the buyer's customers (something not within s 47(4))." (original emphasis) I would further note, without commenting on it, that no argument was advanced in this Court in respect of the possibility that the respondent had not proved an "attempt" notwithstanding that the appellants may have always intended to seek legal advice on the final form and legality of any contract before its execution and implementation. That is sufficient to dispose of the appeal in the appellants' favour. I would allow the appeal with costs. The respondent's application should be dismissed and the respondent should pay the appellants' costs of the trial and the appeal to the Full Court of the Federal Court.

HIGH COURT OF AUSTRALIA AND APPELLANT THE QUEEN RESPONDENT [2018] HCA 26 20 June 2018 ORDER Appeal dismissed. On appeal from the Supreme Court of South Australia Representation M E Shaw QC with B J Doyle for the appellant (instructed by Town & Country Lawyers) C D Bleby SC, Solicitor-General for the State of South Australia with B Lodge for the respondent (instructed by Director of Public Prosecutions Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Trial by judge alone – Adequacy of reasons – Where appellant convicted of "[p]ersistent sexual exploitation of a child" – Where offence comprised of two or more acts of sexual exploitation separated by not less than three days – Where complainant alleged various acts of sexual exploitation over many years – Where alleged inconsistencies and implausibilities in complainant's evidence – Where trial judge regarded complainant as reliable witness as to "core allegations" – Whether trial judge's reasons inadequate because failed to identify two or more acts constituting offence – Whether trial judge's reasons inadequate because failed to explain process of reasoning. Words and phrases – "adequacy of reasons", "basis for decision", "conflict between evidence", "credibility", "inadequacy of reasons", "inconsistencies in evidence", "process of reasoning", "reasons", "trial by judge alone". Criminal Law Consolidation Act 1935 (SA), s 50(1). KIEFEL CJ, KEANE AND EDELMAN JJ. Introduction The appellant was charged under s 50(1) of the Criminal Law Consolidation Act 1935 (SA) with one count of persistent sexual exploitation of a child. At the relevant time, that sub-section created an offence where an adult person, "over a period of not less than 3 days, commits more than 1 act of sexual exploitation of a particular child under the prescribed age". The appellant was tried by judge alone and convicted. He was sentenced to 10 years' imprisonment for "indecent assaults [upon the victim], acts of fellatio upon each other, the showing of pornographic magazines, masturbating in the victim's presence and causing the victim to masturbate". The appellant appealed to the Court of Criminal Appeal of the Supreme Court of South Australia. One ground of appeal to that Court was that the trial judge's reasons were inadequate. The Court of Criminal Appeal (Blue J, with whom Kourakis CJ and Bampton J agreed) held that the reasons were not inadequate. The appellant appeals to this Court from that conclusion. But he relies upon a different basis for the alleged inadequacy of the trial judge's reasons. The essential basis of his appeal raised an issue that overlapped with two other matters that were also given special leave to appeal1. The issue in this appeal is whether the trial judge's reasons failed to identify, and to disclose the process of reasoning leading to his finding of, the two or more acts of sexual exploitation upon which the conviction was based. The appellant's submission that the trial judge's reasons were inadequate for this reason should not be accepted. For the reasons below, the appeal should be dismissed. The particulars and the evidence The particulars of the offence charged The particulars of the offence charged in the information under s 50(1) of the Criminal Law Consolidation Act were that the appellant: (i) touched the complainant's genitals over the complainant pornography; (iii) masturbated in the complainant's presence; (iv) encouraged the complainant to masturbate in his presence; (v) caused the complainant to perform fellatio upon him; and (vi) performed fellatio upon the complainant. The period during which the offence was alleged to have been committed began on 6 February 1984, when the appellant was 31 years old and the complainant's clothes; (ii) showed 1 Hamra v The Queen (2017) 91 ALJR 1007; 347 ALR 586; [2017] HCA 38; Chiro v The Queen (2017) 91 ALJR 974; 347 ALR 546; [2017] HCA 37. Edelman the complainant was five years old. It was alleged to have concluded on 1 September 1994, when the appellant was 41 years old and the complainant was 15 years old. The prosecution case At the time of the acts relied upon by the prosecution, the complainant was a child who lived with his parents and his brother and sister. The appellant was the complainant's uncle. Because of the work commitments of the complainant's parents, the complainant and his siblings, an older sister and a younger brother, occasionally stayed with the appellant's family at the appellant's house in Christies Beach. The appellant lived with his then wife and, initially, one daughter. The prosecution case relied heavily upon evidence of the complainant although the prosecution also called the complainant's wife, his parents, his sister, his brother, and his aunt. The complainant's evidence was that the first occasion of a sexual assault by the appellant was when the complainant was "about five" years old, in the lounge room of the appellant's house. On that occasion, the appellant touched him on his genital area over his clothing while he and the appellant were playing with a slot car track. The complainant gave evidence of other occasions when the appellant touched him on his genital area over his clothing. One occasion was at his grandmother's house on Christmas Day when he was "nine ... or seven", when the appellant gave him a remote control car. Other occasions of such touching occurred after he was "close to nine", when the appellant would take him to a slot car venue called Red Line. The complainant said that during some of the journeys to Red Line, in the appellant's car, the appellant would touch the complainant on his genital area. The complainant said that when he was "about seven" the appellant began to show him pornographic videos and magazines "of Asian content". The appellant's ex-wife gave evidence that the appellant had been "quite persistent" that she watch pornographic videos with him and she recalled seeing a DVD or video of Asian pornography arrive at the house, about which she questioned him. The complainant said that on three or four occasions he and the appellant masturbated after the appellant showed him what to do. He said that each time this occurred he was playing on a computer in the master bedroom at the appellant's house, although he accepted in cross-examination that the computer could have been subsequently in a different room. Edelman The complainant gave evidence relating to two sheds at the appellant's house, described at trial as shed 1 and shed 2. The complainant said that when he was "past the age of nine, going on 12", accepting that his age was "somewhere in that gap", he and the appellant performed fellatio on each other in shed 2 at the appellant's house in Christies Beach. The complainant's evidence about the sheds at the appellant's house was that (i) the appellant grew marijuana hydroponically inside shed 1, which the appellant would give him to smoke nearly every time that he stayed from the age of nine, and (ii) the appellant built shed 2 and started growing the marijuana hydroponically in it when the complainant was around 12 years old. The complainant described two other occasions when he and the appellant performed fellatio on each other. One occasion was when he was "over 12, 12 nearly", in Cherry Gardens, where, as the appellant's ex-wife said in evidence, the appellant grew cannabis. The second occasion was when the complainant was "close to 12", at a South Terrace unit leased by a woman with whom the appellant was in an extra-marital relationship. In 1989, a second daughter was born to the appellant and his then wife. It was an agreed fact at trial that on 28 August 1994, when the appellant's second daughter was five years old and the complainant was 15, the complainant sexually assaulted her by putting his finger into her vagina. The complainant's evidence was that this occurred in shed 2 on the same day that he had performed fellatio on the appellant. He said that his act of fellatio was induced by being allowed to ride the appellant's motorbike, a privilege he said the appellant had permitted since he was "nine, ten, onwards". After the complainant's assault on the complainant was no longer permitted to stay with the appellant's family, although the complainant did continue to visit. The Crown's case, and the complainant's evidence, was that the appellant's offending ceased after the assault on 28 August 1994. the appellant's daughter, The complainant said that the appellant told him that the appellant would use a gun on him and his family if he told anyone about the activities between them. Around 2003 or 2004, at the beginning of his relationship with his partner, later his wife, the complainant told her that he had been abused as a child, although he did not give her any details of the abuse. The evidence from the complainant's wife was consistent with this, although she said that the disclosure was in 2001 or 2002. In 2007 or 2008, the appellant's daughter, assisted by the appellant, made a claim for compensation under the Victims of Crime Act 2001 (SA) for the indecent assault by the complainant. She received a payment of $50,000. The Edelman complainant was told of the claim by the Director of Public Prosecutions. He later learned that the appellant had encouraged his daughter to make the claim. The complainant said that he had told his counsellor about being sexually abused as a child and that she had suggested that he do something about it, stand up for himself, and see what the appellant was doing. Around 2010, he went to see the appellant twice. On the first occasion they smoked marijuana and on the second occasion the complainant sold marijuana to the appellant. In 2011, the complainant made a complaint at the Christies Beach police station. The appellant's evidence The only witness called by the defence was the appellant. The appellant admitted many of the circumstances described by the complainant but he denied that any of the sexual acts constituting the s 50 offence occurred in those circumstances. The appellant admitted growing marijuana in the bush near Cherry Gardens. But he denied taking the complainant there and denied that any sexual contact occurred there. He admitted growing marijuana in shed 1 and shed 2. But he denied ever supplying marijuana to the complainant prior to the complainant's sexual assault of his daughter. He admitted that there was a slot car track in shed 2 but he said that shed 2 was not built until 1991 (when the complainant was 12 years old) and, relying upon an entry in his calendar, said that he did not finish installing a slot car track in shed 2 until June 1993 (when the complainant was 14 years old). The appellant admitted having a pornographic video and having ordered a catalogue. But he denied ever showing pornography to the complainant. He admitted having a computer in his house but he denied any abuse of the complainant while the complainant used the computer. He also denied that the computer was located in the master bedroom; the evidence from him and his ex- wife was that the computer was located in a spare room that later became his daughter's bedroom. The appellant admitted taking the complainant to the South Terrace unit occupied by the woman with whom he had a relationship, but he said that this occurred after the complainant's assault on his daughter when the complainant was 15 years old. The appellant denied any sexual assault on that occasion and said that he had just taken the complainant there to help him cut up pieces of plastic to make a frame because, at the time, the appellant was "pretty stoned". The appellant admitted that he let the complainant ride his motorbike. But he said that this only occurred sometime after the assault upon his daughter when Edelman the complainant was at least 15 years old. The appellant denied that allowing the complainant to ride his motorbike had anything to do with fellatio. The appellant admitted that he had been at the complainant's grandparents' house on Christmas Day, but he did not recall the complainant receiving a remote control car. He denied ever abusing the complainant at the house. He admitted having an air rifle and a semi-automatic firearm, which he had shot at the complainant's family's property when the family was present. But he denied ever threatening anyone with a gun. Finally, the appellant gave evidence related to the complainant's evidence that in 2003 or 2004 the complainant had told his partner (later his wife) that he had been sexually abused, without giving her details. The appellant said that the complainant's father had told him that the complainant was sexually abused by a group of boys described at trial as the Moana boys. One possible inference, therefore, may have been that the sexual abuse about which the complainant had told his wife was abuse by the Moana boys. The complainant's father denied ever telling the appellant this. The trial judge expressly disregarded the complainant's evidence about his complaint of sexual abuse to his wife. The findings and reasons of the trial judge The trial judge was aware, and recorded in his reasons, that the offence in s 50 does not require the prosecution to prove every particular. The trial judge also correctly observed that even if he were to reject the evidence of the appellant, which would have to be rejected beyond reasonable doubt, he would still need to be independently satisfied beyond reasonable doubt about the allegations before he could convict. The trial judge's reasons set out the background to the case, the charges, the particulars, and the essential evidence of the witnesses. One particular matter which the trial judge considered was the significance of the complainant's visits to the appellant twice around 2010. He said that although these visits, on their face, seemed inconsistent with the alleged abuse, they were part of the complainant's way of dealing with his past. The trial judge also rejected the submission that the complainant, encouraged by the appellant's ex-wife, had made false allegations due to long-term ill-feeling that the complainant and the appellant's ex-wife held towards the appellant. The trial judge described a number of matters that he characterised as inconsistencies that the appellant submitted meant that the complainant could not be "relied upon about the substantive allegations" and that his account was implausible. In his summary of the appellant's case, the trial judge said that these formed "an attack upon [the complainant's] truthfulness and reliability". These Edelman matters included: (i) the failure by the complainant to mention the final occasion of an assault on him (28 August 1994) until a proofing session with counsel for the Director of Public Prosecutions on 25 July 2013; (ii) the complainant's failure to disclose the offences by the appellant during his counselling sessions; (iii) the evidence concerning the Moana boys, which the trial judge described as confusing but not affecting the complainant's credit and reliability; and (iv) inconsistencies about when and where the cannabis was grown and when the slot car track was completed, which are discussed in further detail below. When assessing the credit and reliability of the complainant generally, the trial judge described the complainant as having given evidence "in a forthright and convincing manner". He described the complainant as "a straightforward man", lacking in guile. He said that the complainant presented as "a man endeavouring to tell the truth". After discussing the complainant's demeanour he said that the complainant "was describing real events that happened to him and was not led by the suggestions of others". Although finding that the complainant was endeavouring to tell the truth and was describing real events, the trial judge accepted that some of the complainant's evidence "about when some events occurred [was] inaccurate". He also said that he was conscious that the complainant was a long-term user of drugs. The trial judge then said: "I also accept him as a reliable witness as to the core allegations. I have scrutinised his account very carefully. Some of his estimates of his age when events occurred were not reliable (for example, when he rode the motorbike or being 'stoned'), but they were not sufficient to cause me to doubt either his truthfulness or reliability. Any exaggeration was not deliberate. trouble remembering the process whereby statements were taken from him, who he told beforehand, who he was with and when he made particular allegations. My comments above should not be overlooked and it should not be forgotten that the conduct alleged took place many times over many years ... in cross-examination, he had reflected Even though he said he lied on one occasion, I do not consider that he deliberately told an untruth, rather he was careless in the way he answered; there is a clear difference. He corrected himself ... Although it is not determinative of the case, having listened to [the complainant] over a number of days, I simply believed him and found him to be reliable. I had the same view of him at the end of all of the evidence." When these paragraphs are considered in the context discussed above, the findings by the trial judge that the complainant "was describing real events that Edelman happened to him" and that he was "a reliable witness as to the core allegations" were an acceptance that the complainant was truthful and reliable about all of the sexual acts that he had described, which fell within the particulars of the s 50 offence for which the appellant was charged. The "core allegations" to which the trial judge referred must have been a reference to those acts that were the basis for the s 50 charge, with allegations such as the complainant's particular age at the time of the sexual offences or the precise location of those offences being outside the core allegations. The reference to "core allegations" is consistent with the description by the trial judge of all the allegations of sexual conduct as the "substantive issues". It is also consistent with the distinction that he drew between "substantive allegations" and inconsistencies on other matters arising from the evidence. the evidence concerning the The decision of the Court of Criminal Appeal and the appeal to this Court The appellant relied upon three grounds of appeal in the Court of Criminal Appeal. The first was that the verdict was unreasonable or could not be supported having regard to the evidence. The second was that the trial judge had erred in his application of the burden of proof. The third was that the trial judge erred "in failing to give adequate reasons in so far as he did not deal with incontrovertible, or arguably incontrovertible inconsistencies affecting the credibility of the complainant, and consequently his conclusion of proof beyond reasonable doubt". The Court of Criminal Appeal dismissed all grounds. None of those grounds was relied upon in this Court. Before this Court, there were three limbs to the appellant's sole ground of appeal. The appellant alleged that the Court of Criminal Appeal should have found that: (i) the trial judge had failed to give adequate reasons; (ii) the verdict of guilty was uncertain, unreasonable, and unsafe; and/or (iii) there was a miscarriage of justice. As the appellant clarified in oral submissions, the references to "unreasonableness" and "miscarriage of justice" were in support of the submission that the trial judge's reasons were inadequate due to a failure to identify sufficiently the actus reus of the offence. Although the appellant's oral submissions strayed at times from the grounds of appeal, the appellant's argument reduced ultimately to whether the trial judge's reasons were inadequate because they "did not identify the two or more acts of sexual exploitation found proved beyond reasonable doubt ... and the process of reasoning leading to guilt of those acts". The appellant submitted that the Court of Criminal Appeal erred because it did not approach the ground of appeal concerning adequacy of reasons "by reference to the proof of actual sexual offences comprising the actus reus". The submission that the trial judge's reasons were inadequate on that basis was not made in the Court of Criminal Appeal. The submission might not have been Edelman made in the Court of Criminal Appeal because counsel may have concluded that the trial judge's reasons, read as a whole, involved a finding that the appellant had committed all of the acts alleged in the particulars to constitute the s 50 offence. At the special leave hearing and in written and oral submissions on this appeal, the appellant submitted that the failure to rely upon the ground of inadequate reasons in the terms relied upon in this Court was because the decision of the Court of Criminal Appeal in R v Little2 was handed down the day before argument in the Court of Criminal Appeal in the present case. In fact, the decision in R v Little was handed down five months after the Court of Criminal Appeal decided the present case. Although there might have been doubt about the prospective result in R v Little at the time of hearing the present case in the Court of Criminal Appeal3, the relevant part of the decision in R v Little was not novel. It applied earlier South Australian authority4, which was held to be "correctly decided"5 and consistent with the 1997 decision of this Court in KBT v The Queen6, to conclude that s 50 requires that a trial judge direct the jury to agree on the same two or more acts of sexual exploitation7. Adequacy of reasons The content and detail of reasons "will vary according to the nature of the jurisdiction which the court is exercising and the particular matter the subject of the decision"8. In the absence of an express statutory provision, "a judge returning a verdict following a trial without a jury is obliged to give reasons sufficient to identify the principles of law applied by the judge and the main (2015) 123 SASR 414. 3 Cf R v C, G (2013) 117 SASR 162 at 187 [88]. 4 R v M, BJ (2011) 110 SASR 1. 5 R v Little (2015) 123 SASR 414 at 415 [4]. (1997) 191 CLR 417; [1997] HCA 54. 7 R v Little (2015) 123 SASR 414 at 415 [4]. See also Chiro v The Queen (2017) 91 ALJR 974 at 981 [19]; 347 ALR 546 at 552-553. 8 Wainohu v New South Wales (2011) 243 CLR 181 at 215 [56]; [2011] HCA 24. Edelman factual findings on which the judge relied"9. One reason for this obligation is the need for adequate reasons in order for an appellate court to discharge its statutory duty on an appeal from the decision10 and, correspondingly, for the parties to understand the basis for the decision for purposes including the exercise of any rights to appeal. The appellant submitted that the inadequacy of the reasons to identify two or more acts of sexual exploitation and the basis upon which they were found to be proved lay in the trial judge's failure to resolve a number of factual and evidential contests at trial. Not every failure to resolve a dispute will render reasons for decision inadequate to justify a verdict. At one extreme, reasons for decision will not be inadequate merely because they fail to address an irrelevant dispute or one which is peripheral to the real issues. Nor will they be inadequate merely because they fail to undertake "a minute explanation of every step in the reasoning process that leads to the judge's conclusion"11. At the other extreme, reasons will often be inadequate if the trial judge fails to explain his or her conclusion on a significant factual or evidential dispute that is a necessary step to the final conclusion. In between these extremes, the adequacy of reasons will depend upon an assessment of the issues in the case, including the extent to which they were relied upon by counsel, their bearing upon the elements of the offence, and their significance to the course of the trial12. In particular13: "Ordinarily it would be necessary for a trial judge to summarise the crucial arguments of the parties, to formulate the issues for decision, to resolve any issues of law and fact which needed to be determined before the verdict could be arrived at, in the course of that resolution to explain how competing arguments of the parties were to be dealt with and why the resolution arrived at was arrived at, to apply the law found to the facts found, and to explain how the verdict followed." 9 Douglass v The Queen (2012) 86 ALJR 1086 at 1089 [8]; 290 ALR 699 at 702; [2012] HCA 34. 10 Here, under Criminal Law Consolidation Act 1935 (SA), s 353(1). See Douglass v The Queen (2012) 86 ALJR 1086 at 1090 [14]; 290 ALR 699 at 703; R v Keyte (2000) 78 SASR 68 at 76 [38]. 11 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259. 12 Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 443. 13 AK v Western Australia (2008) 232 CLR 438 at 468 [85]; [2008] HCA 8 (footnote omitted). Edelman The trial judge's reasons were not inadequate In Hamra v The Queen14, this Court held that s 50(4) of the Criminal Law Consolidation Act "modifie[d] the common law by providing that although the information must allege a course of conduct consisting of acts of sexual exploitation it need not 'identify particular acts of sexual exploitation or the occasions on which, places at which or order in which acts of sexual exploitation occurred' (s 50(4)(b)(ii))". If "two or more distinct acts can be identified, [the sub-section] does not require the occasions of those acts to be particularised other than as to the period of the acts and the conduct constituting the acts"15. For instance, it would be open to a jury, and therefore also to a trial judge, to conclude that particular acts of sexual exploitation were committed every day over a two week period without "identifying an occasion and determining what is the evidence to prove that occasion"16. As described above, the reasons of the trial judge, at the outset, correctly set out the issue to be decided beyond reasonable doubt as required by s 50. He recorded that it was necessary, but not sufficient, that before he convicted he should reject the evidence of the appellant beyond reasonable doubt, which he did. He described the evidence of the witnesses and the central submissions of the parties, particularly the appellant's attack on the reliability and credibility of the complainant. He resolved that issue by finding that the complainant was honest and reliable about all of the allegations of sexual abuse. The ultimate conclusion of the trial judge was that "the [appellant] sexually assaulted [the complainant] on numerous occasions over a period of some years. The sexual assaults mainly took the form of indecent assaults and mutual oral sexual intercourse." The reference to "numerous occasions" was adopted directly from the complainant's evidence that mutual oral sexual intercourse had occurred numerous times. The trial judge did not, and perhaps could not, reach any conclusion about (i) the complainant's age when various types of offending commenced, or (ii) the likely number of occasions of indecent assaults or mutual fellatio before the assaults ended on 28 August 1994. Nevertheless, his conclusion meant that the elements of the s 50 offence had been proved. The "simple and obvious logic"17 of this conclusion was that over a (2017) 91 ALJR 1007 at 1014 [27]; 347 ALR 586 at 594. 15 Hamra v The Queen (2017) 91 ALJR 1007 at 1014 [27]; 347 ALR 586 at 594. 16 Hamra v The Queen (2017) 91 ALJR 1007 at 1014 [28]; 347 ALR 586 at 594. 17 Hamra v The Queen (2017) 91 ALJR 1007 at 1014 [28]; 347 ALR 586 at 594. Edelman period of not less than three days, the appellant had committed more than one act of sexual exploitation of the complainant. The appellant submitted that the failure by the trial judge to resolve some disputes of fact meant that his reasons were inadequate to explain why he had reached his conclusion beyond reasonable doubt. Some of the disputes were relied upon by the appellant only in passing. They can be disposed of shortly as either (i) matters which the trial judge expressly took into account, such as long- term drug use by the complainant, or (ii) matters that were not submitted to be relevant to any real issue and which were, in any event, expressly considered by the trial judge, such as the abuse by the Moana boys, whether the complainant received a remote control car for Christmas, and the content of pornographic videos shown to the complainant. Although the appellant made oral submissions alleging that the showing of pornography to the complainant did not constitute an act of sexual exploitation, this issue was not raised in the Court of Criminal Appeal, it was not the subject of the grant of special leave to appeal, and it was not contained in any ground of appeal or particular. The appellant focused upon five factual disputes. Four of those were referred to, but not specifically resolved, by the trial judge: (1) whether the complainant was "always stoned" because the appellant had given marijuana to the complainant to smoke from when the complainant was nine years old; (2) whether the complainant was permitted to ride the appellant's motorbike from about the age of nine to 10 years; (3) whether the appellant took the complainant to the bush near Cherry Gardens; and (4) whether the appellant built shed 2 in 1991 (when the complainant was 12 years old) and the slot car track in that shed in 1993 (when the complainant was 14 years old). This would have meant that if the complainant was wrong about the time that the sexual offences were committed then the first act of fellatio occurred when the complainant was 14 years old, and the offending would have ceased when he was 15 years old. If the trial judge had specifically resolved each of these issues to which he referred, there could have been no suggestion that his reasons were inadequate. Although the trial judge noted, but did not wholly resolve, these four issues, once the role of these issues in the trial is placed into context it can be seen that his reasons were not inadequate. As to issue (1), whether or not the appellant had Edelman given marijuana to the complainant from the age of nine, as the complainant claimed, would not have established the commission or lack of commission of any of the particularised acts. It is a matter that could only have affected the credibility of the complainant. The trial judge had assessed the credibility of the complainant with the awareness that the appellant had disputed the complainant's evidence on this point. And he could not have placed much weight upon the appellant's denials on this matter, because he was "unimpressed by the [appellant's] presentation", and found answers by the appellant to be "glib and evasive on some topics" and "quite evasive" on others. As to issue (2), the trial judge did not fail entirely to resolve this issue. The trial judge accepted that the complainant's estimate of his age when he rode the motorbike (nine or 10 years) was not reliable. Any assessment by the trial judge of the likely age, below 15 years, at which the complainant was allowed to ride the appellant's motorbike had little bearing on the real issues at trial. The complainant's evidence about riding the appellant's motorbike was linked to the final sexual assault by the appellant on 28 August 1994, when the complainant was 15 years old. It was not in dispute that the appellant had permitted the complainant to ride his motorbike from the age of around 15 years. As to issue (3), like the other evidence of offences, the trial judge accepted the complainant's evidence on this matter, rejected the appellant's evidence beyond reasonable doubt, and concluded beyond reasonable doubt that the sexual offence occurred on that occasion. The appellant's denial that he took the complainant to the bush area near Cherry Gardens was only a denial about the precise location of that sexual offence. As to issue (4), when the evidence is properly considered, there was little inconsistency between the evidence of the complainant and the appellant. A model of clarity in this respect is the reasons of Blue J in the Court of Criminal Appeal, when considering issue (4) as part of the appellant's submission that the verdict of the trial judge was unreasonable or not supported by the evidence. Blue J described the alleged inconsistencies in the complainant's evidence concerning his age when the acts of mutual fellatio began in shed 2. The complainant's evidence had varied from saying that he was "around 12" when shed 2 had been built, to saying that the mutual fellatio occurred when he was "past the age of nine, going on 12", or "[a]round about nine or 12 ... I don't know the exact year that it was, how old I was" or that it "didn't start happening until I was about 13 years old". However, the complainant did not accept that he was as old as 14 years when the events began. The complainant accepted that he was "certainly not talking about when [he was] 14 years of age" and that "there was definitely something [going] on by that time". Edelman As Blue J explained, the complainant had not purported to give his precise age in years and was addressing events that had occurred 15 to 25 years earlier. He had consistently identified the commencement of the mutual fellatio as being after the construction of shed 2 rather than by reference to his precise age18. The trial judge observed that "[t]he timing of the building of [s]hed 2 became an important topic during the course of the trial". At a police interview held before trial, the appellant said that shed 2 had not been built until around 1993, which would have meant that the first act of fellatio that the complainant described in shed 2 could not have occurred until the complainant was 14 years old. However, the trial judge correctly summarised the appellant's evidence at trial as being that "[s]hed 2 was built in 1991 to house the slot car track". The complainant would then have been 12 years old. Considerably less significant than the evidence concerning the date of construction of shed 2 was the contents of shed 2 at the time of the acts of fellatio described by the complainant. In his evidence in chief, the complainant said that the appellant's offences occurred when shed 2 contained a slot car track. In cross-examination, the complainant also said that the acts occurred "when shed 2 was built and that's when we smoked a lot of marijuana in shed 2, that's when that was built". The appellant said (relying upon his calendar) that the construction of the slot car track in shed 2 had not been completed until June 1993, when the complainant was 14 years old. He also said that he did not grow marijuana in shed 1 until 1996 or in shed 2 until late 1996 but that, although there was sometimes a mention of his crop in his calendar, he did not want to look at the calendar to see if there were details to assist with these dates. The trial judge generally rejected the appellant's evidence, including in relation to the slot cars. The trial judge concluded that the appellant had been glib and evasive about the occasions when he was alone with the complainant, and had understated the complainant's interest in using the slot car track in shed 2 because that track "provided an opportunity for sexual misconduct". As Blue J noted, the trial judge was entitled to reject the appellant's evidence about the slot cars "for the purpose of assessing the complainant's credibility"19. In summary, these four issues were not so essential to the complainant's credibility and reliability that the failure of the trial judge specifically to resolve them meant that his reasons for conviction were inadequate. Further, the trial 18 R v D, L [2015] SASCFC 24 at [74]. 19 R v D, L [2015] SASCFC 24 at [78]. Edelman judge did refer to these issues and their potential to undermine the reliability of the complainant's evidence concerning the particulars of the s 50 offence (which he described as the "substantive allegations"). And the trial judge concluded that the complainant was reliable as to the "core allegations" and was describing "real events". A fifth matter relied upon by the appellant on this appeal was that the trial judge had failed to consider an inconsistency between, on the one hand, the evidence of the complainant and, on the other hand, the evidence of the appellant and his ex-wife, concerning the location of the computer in the appellant's house. The complainant's evidence about the offences in the room containing the computer clearly identified the room as the master bedroom. But the appellant and his ex-wife gave evidence that the computer was located in the room that became the appellant's daughter's bedroom. It is unclear to what extent this alleged inconsistency was relied upon at trial. The parties did not reproduce on this appeal the closing submissions of counsel. In the Court of Criminal Appeal, the appellant relied upon this alleged inconsistency as casting doubt upon the complainant's evidence about the acts that occurred while he was playing on the computer in the master bedroom. However, as Blue J explained, although the evidence from the appellant's ex-wife was that she recalled that the computer had been located in her daughter's room, she did not know whether the computer had ever been set up anywhere else in the house20. The evidence from the appellant's ex-wife was that the computer had been located in their second daughter's room when her daughters were living with them. Her second daughter was born in July 1989. Since the appellant's ex- wife did not say whether the computer had been located in, or moved to, her second daughter's room immediately after birth or some years later, there is no inconsistency between her evidence and the evidence of the complainant. Her evidence is equally consistent with the supposition that the computer had been located in the master bedroom and moved to her second daughter's bedroom sometime after the sexual assaults (which concluded when her second daughter was five years old). The complainant also accepted that the computer might have been located in the daughter's bedroom at times after the sexual assaults occurred. The conflict in evidence therefore reduced to a conflict between the appellant's evidence that the computer was located in his second daughter's room even before she was born and the complainant's evidence that the computer had been located in the master bedroom. As Blue J observed in the Court of Criminal 20 R v D, L [2015] SASCFC 24 at [80]. Edelman Appeal21, that conflict was subsumed into the conflict about whether the sexual assaults had occurred whilst the complainant was playing on the computer. Conclusion None of the issues raised by the appellant, singly or in combination, had the effect that the reasons of the trial judge were inadequate. The trial judge's reasons were sufficient to identify, and to disclose the process of reasoning leading to his finding of, the two or more acts of sexual exploitation upon which the conviction was based. The appeal is dismissed. 21 R v D, L [2015] SASCFC 24 at [139]. Bell BELL J. This appeal is concerned with the adequacy of the reasons of a judge, trying a charge of the persistent sexual exploitation of a child contrary to s 50(1) of the Criminal Law Consolidation Act 1935 (SA) ("the CLCA") without a jury, to support the judge's verdict of guilt. Section 50 has since been re-enacted in different terms22. Reference in these reasons is to s 50 as it stood in May 2014. Section 50(1) made it an offence, punishable by a maximum penalty of imprisonment for life, for an adult person, over a period of not less than three days, to commit more than one act of sexual exploitation of a particular child under the prescribed age. An act of sexual exploitation was defined as an act in relation to the child of a kind that could, if it were able to be properly particularised, be the subject of a charge of a sexual offence23. The object of the creation of the s 50(1) offence was to permit the prosecution of offenders in cases in which the pattern of abuse left the child unable to differentiate one act of sexual exploitation from another24. To this end, the prosecution was relieved of the obligation to allege particulars of the acts of sexual exploitation with the degree of particularity that would be required if the acts were charged as offences25: the prosecution was not required to identify particular acts of sexual exploitation, or the occasions on which, places at which or order in which, the acts of sexual exploitation occurred. Nonetheless, the actus reus of the s 50(1) offence was the commission of two or more acts of sexual exploitation separated by the requisite interval. The procedural history The appellant was tried in the District Court of South Australia by a judge alone26 (Rice DCJ) on an Information that charged him with one count contrary 22 The Statutes Amendment (Attorney-General's Portfolio) (No 2) Act 2017 (SA) substituted a new s 50 offence of persistent sexual abuse of a child. 23 CLCA, s 50(2). "Sexual offence" was defined in s 50(7) as an offence against Div 11 of Pt 3 (other than ss 59 and 61) or s 63B, 66, 69 or 72; or an attempt to commit, or an assault with intent to commit, any of those offences; or a substantially similar offence against a previous enactment. 24 Hamra v The Queen (2017) 91 ALJR 1007 at 1013-1014 [25]-[26]; 347 ALR 586 at 593-594; [2017] HCA 38; Chiro v The Queen (2017) 91 ALJR 974 at 991 [57] per Bell J citing South Australia, House of Assembly, Parliamentary Debates (Hansard), 25 October 2007 at 1474 (the Hon M J Atkinson, Attorney-General); 347 ALR 546 at 565; [2017] HCA 37. 25 CLCA, s 50(4). 26 Juries Act 1927 (SA), s 7(1). Bell to s 50(1). The particulars of the offence were that over a period of not less than three days between 6 February 1984 and 1 September 1994 at Christies Beach and other locations, the appellant committed more than one act of sexual exploitation of MGF, a child under the age of 17 years, by: touching MGF's genitals over his clothes, showing MGF pornography, masturbating in MGF's presence, encouraging MGF to masturbate in the appellant's presence, causing MGF to perform fellatio upon the appellant, and performing fellatio upon MGF. The prosecution case was wholly dependent on MGF's evidence. The appellant gave evidence denying that he had engaged in any sexual activity with MGF. There were inconsistencies between MGF's evidence and the appellant's evidence as to the circumstances in which the alleged sexual activity occurred. The trial judge accepted the reliability of MGF's evidence respecting the "core allegations" without indicating with any greater degree of particularity what that finding entailed. His Honour rejected the appellant's evidence on substantive issues where the appellant denied the sexual activity, but he did not make findings with respect to the inconsistencies between the appellant's evidence of certain surrounding circumstances and MGF's evidence. His Honour concluded that the appellant sexually assaulted MGF on "numerous occasions over a period of some years" and that the sexual assaults "mainly took the form of indecent assaults and mutual oral sexual intercourse". The appellant appealed against his conviction to the Court of Criminal Appeal of the Supreme Court of South Australia (Kourakis CJ, Blue and Bampton JJ)27, contending, inter alia, that the trial judge erred in law in failing to give adequate reasons for the verdict. The appeal was argued, and judgment delivered, before the decision in R v Little28, which held, conformably with the essential reasoning of this Court in KBT v The Queen29, that the actus reus of the s 50(1) offence is the commission of two or more acts of sexual exploitation. The focus of the appellant's argument in the Court of Criminal Appeal was the trial judge's asserted failure to deal with "incontrovertible inconsistencies" affecting MGF's credibility, and not his Honour's failure to identify the actus reus of the offence. The Court of Criminal Appeal dismissed the appellant's challenge to the adequacy of the trial judge's reasons, holding that the first asserted inconsistency was implicitly resolved by his Honour's acceptance of MGF's, and rejection of the appellant's, evidence. The Court of Criminal Appeal said that it had not been necessary for the trial judge to address the remaining asserted inconsistencies 27 R v D, L [2015] SASCFC 24. 28 (2015) 123 SASR 414. 29 (1997) 191 CLR 417; [1997] HCA 54. Bell because, properly understood, MGF's evidence in these respects was not inconsistent with other evidence. On 24 October 2017 Nettle and Gordon JJ granted the appellant special leave to appeal. The essence of the appellant's challenge in this Court is the trial judge's failure to identify the two or more acts of sexual exploitation of the commission of which his Honour was satisfied beyond reasonable doubt, and to explain the process of reasoning leading to that satisfaction. He submits that the failures involved legal error. For the reasons to be given, that submission should be accepted. The failure to give adequate reasons for a verdict following a trial by a judge alone is a miscarriage of justice under the third limb of the common form criminal appeal provision (here, s 353(1) of the CLCA). It is unnecessary to consider whether it is also correctly characterised as a "wrong decision on any question of law"30 under the second limb of the provision. Relevantly, for the purposes of the consequential order, the appellant does not submit in this Court that his conviction is unreasonable, or that it cannot be supported having regard to the evidence, under the first limb of the provision. The appeal should be allowed and a new trial directed. The background evidence MGF was between 5 and 15 years old, and the appellant was between 31 and 41 years old, in the period of the alleged offending. Throughout this period the appellant was married to W, who is MGF's aunt. The offending was alleged to have taken place largely at the appellant's and W's home at Christies Beach, South Australia ("the Christies Beach house"). MGF, his older sister and, later, his younger brother stayed at the Christies Beach house during some school holidays and on some weekends. MGF first reported the offences to the police in late 2011. At the date of giving evidence, MGF was 35 years old. MGF's evidence MGF's evidence was as follows. The abuse commenced when he was aged around five years. He was playing with slot cars, which were set up in the lounge room of the Christies Beach house, when the appellant touched his "private parts" over his clothing. Indecent touching of this description "went on lots of times while I was in the lounge room". On occasions, indecent touching of the same description occurred when MGF was playing computer games in the master bedroom of the Christies Beach house. On "numerous" occasions the appellant masturbated in front of MGF in the master bedroom while MGF was playing computer games. On some of these occasions, with the appellant's 30 Cf AK v Western Australia (2008) 232 CLR 438 at 453 [47] per Gummow and Hayne JJ; [2008] HCA 8. Bell encouragement, MGF also masturbated. In cross-examination, MGF explained that the occasions of masturbation did not occur all the time but they occurred "more than once". When pressed, MGF put the number of occasions on which the appellant and he masturbated at "about three, four times". From when MGF was about seven years old, the appellant had shown him pornographic magazines and videos. The magazines had "Asian content" and the videos were "of Asian women with Aussie men and Asian men as well". MGF gave no further description of the nature of the material. MGF described some acts of sexual exploitation by reference to particular events or locations. On a Christmas Day when MGF "would have been nine years of age ... or seven years of age" and the whole family were at "Nan's" house the appellant inappropriately touched MGF as he was playing with a remote control car on the lawn at the back of the house. MGF and the appellant were keen on slot cars and on occasions they visited the "Red Line" slot car raceway. In the course of a car trip to Red Line, the appellant fondled MGF's penis over the top of his clothes. MGF was close to nine years old on this occasion. In evidence in chief, MGF said that there were "a lot of incidents where it just happened going [to Red Line]". In cross-examination, MGF clarified that "it" had happened "a few – a couple of times" on the way to Red Line. From "after age nine" every time MGF saw the appellant they played slot cars, smoked marijuana and got "very high". And from this age the appellant also had allowed MGF to ride his Yamaha motorcycle. There were two sheds at the Christies Beach house, which were referred to in evidence as shed 1 and shed 2 respectively. The appellant grew marijuana in shed 1. Shed 2 was constructed when MGF was around 12 years old and a slot car track was set up inside it. The sexual abuse progressed to mutual oral intercourse when MGF was "past the age of nine, going on 12". The first time this occurred MGF and the appellant were inside shed 2, sitting on a crate, and playing slot cars. The appellant asked if he could give MGF oral sex. MGF pulled his pants down and the appellant fellated him. After this, MGF fellated the appellant. Thereafter acts of mutual fellatio took place on "numerous" occasions in shed 2. A couple of times MGF and the appellant engaged in mutual fellatio at a place called Cherry Gardens. The first time this happened was when MGF "would have been over 12, 12 nearly". There was one other occasion when MGF and the appellant engaged in mutual fellatio when they were not at the Christies Beach house. This was an occasion when they visited a unit at South Terrace, in which a friend of the appellant's named Lucy was living. MGF would have been "close to 12" at this time. Acts of mutual fellatio "happened in a large period of time frame", and continued when MGF was 13, 14 and 15 years old. Bell The last occasion on which an act of sexual exploitation occurred was 28 August 1994; MGF fellated the appellant and was rewarded by being allowed to ride the Yamaha motorcycle. MGF was able to date this event because on that day he sexually assaulted the appellant's five-year-old daughter, M. Shortly after the assault, M's mother, W, confronted MGF and he admitted his guilt. The sexual assault of M drastically changed the relationship between MGF's immediate family and the appellant's family. MGF did not stay at the Christies Beach house again. The sexual assault of M was reported to the police and MGF was charged and appeared before the Youth Court. He was 15 years old at the time. He was required to undergo counselling. He did not tell the counsellor about the appellant's sexual abuse of him. MGF first disclosed that he had been sexually abused in a conversation with his future wife in 2003 or 2004. He did not give any details of the abuse or nominate his abuser. On two occasions as an adult MGF had visited the appellant. The two had talked and smoked marijuana together. MGF was prompted to visit the appellant because he had been getting counselling for "relationship problems" with his partner and the counsellor suggested that he see the appellant and "stand up for myself". In the event, MGF did not confront the appellant about his sexual abuse of him. MGF first reported the appellant's sexual abuse to the police on 21 December 2011. Just after Christmas that year he gave a more detailed account of the abuse to a detective. It appears that initially MGF described the occasions of mutual oral sex in shed 2 as having commenced when he was nine years old and he made no reference to having engaged in oral sex with the appellant on the day of the assault on M. The first time he referred to the latter incident was in a conference with the prosecutor in July 2013. In cross-examination, MGF said of the commencement of oral sexual intercourse, "I don't know the exact year that it was, how old I was. That's why I stated in the – in my reports that it was about the age of nine." In his statement signed in January 2012, MGF agreed that he had clarified his initial account by stating "I mentioned that [the appellant] would bribe me to give him head jobs. This didn't start happening until I was about 13 years old." He was asked if the detective taking the statement had suggested to him that shed 2 had not been built until the early 1990s and he responded "she said that – well, they said that shed, looking at the photos, when we were looking at them, because we got photos, that would have been about that time". MGF did not agree that he had changed his account of his age at the time the oral sexual abuse commenced at the prompting of the detective. After M turned 18, she applied under the Victims of Crime Act 2001 (SA) for compensation for the effects of MGF's sexual assault of her. She received an Bell award of $50,000 compensation. MGF was aware that the appellant had encouraged M to apply for compensation. He agreed that he believed the appellant had been instrumental in the failure of his, MGF's, business, and his subsequent bankruptcy, because the appellant had told members of the small community in which MGF was living about the sexual abuse of M. MGF denied that the appellant's assistance to M in her claim for compensation or his belief that the appellant was responsible for his bankruptcy had prompted him to make false allegations of sexual abuse. The appellant's evidence The appellant gave evidence and denied that he had ever sexually interfered with MGF. He put the occasions on which MGF and his siblings came to stay as occurring "two or three times a year at the most". He said that before the birth of his children (and MGF's birth) he had been interested in slot cars and a slot car track was set up in the third bedroom of the Christies Beach house ("bedroom 3"). Bedroom 3 was a spare room before M was born. Thereafter it became M's bedroom. There was only one occasion when a slot car track was set up in the lounge room. As a result of a workplace injury the appellant stopped working in 1991 and following this he had renewed his interest in slot car racing. Shed 2 was built in 1991, but the slot car track was not completed and functional until June 1993. The appellant was able to date this event by reference to entries on the 1993 family calendar: the entry for 1 April 1993 recorded the purchase of the copper braid for the track, the entry for 27 May 1993 recorded "braided track. One lane going". It was a three-track raceway. The entry for 16 June 1993 recorded the visit of several friends who had raced slot cars on the track. The appellant said the track could have been in use a couple of days before this. The appellant said that the computer was kept in bedroom 3 and not the master bedroom. W, the appellant's former wife, gave evidence in the prosecution case. She agreed that the computer at the Christies Beach house was set up in the room that became M's bedroom. She identified her handwriting and the appellant's handwriting on entries on the 1993 family calendar. The trial judge's reasons The trial judge commenced his analysis by observing that "in a practical sense" the question of whether the prosecution had proved the offence beyond reasonable doubt depended upon whether MGF was a truthful and reliable witness. His Honour addressed some of the appellant's criticisms of MGF's evidence. He rejected that the reliability of MGF's evidence was adversely affected by his failure to tell the police about the last occasion of sexual abuse, the episode of fellatio on the day of the sexual assault of M. His Honour assessed that the incident with M had been the real focus of MGF's disclosure in Bell his dealings with the police. His Honour accepted MGF's evidence, that despite his initial concerns he had been reassured that he was not required to pay the compensation awarded to M, and he rejected that the matter had provided MGF with a motive to make a false allegation against the appellant. His Honour assessed MGF as having given evidence in a "forthright and convincing manner", albeit that the evidence was not without "problems in terms of apparent inconsistencies and implausibility". Nonetheless, his Honour considered that MGF was "a man endeavouring to tell the truth" and that he "was describing real events that happened to him". Relevant to this assessment was the estimate that MGF was "a straightforward man, lacking in keen intellectual and verbal skills". While some of MGF's estimates of his age when events occurred were not reliable, as with his account of riding the appellant's motorcycle and being "stoned" when he was nine years old, these did not cast doubt on MGF's truthfulness or reliability. His Honour noted that he had observed and listened to MGF over a number of days and that "I simply believed him and found him to be reliable". By contrast, his Honour was unimpressed by the appellant's presentation. He found the appellant's answers "glib and evasive on some topics", in particular about the number and duration of occasions when MGF and his siblings stayed at the Christies Beach house or the number of occasions when the appellant was alone with MGF. His Honour found that the appellant had understated MGF's interest in slot cars and in the use of the track in shed 2 because the use of the slot car track had provided an opportunity for sexual misconduct. In the result, his Honour rejected the appellant's evidence "on substantive issues where he denied the alleged sexual conduct". At the commencement of his reasons, the trial judge observed that it was alleged that there were many acts over the years of indecent assault, mutual fellatio, showing MGF pornography, masturbating in MGF's presence and causing MGF to masturbate, and that the prosecution was not required to prove "each type of sexual conduct alleged, just two or more acts of sexual exploitation". After summarising MGF's evidence, his Honour recorded his acceptance of MGF "as a reliable witness as to the core allegations". After noting, and rejecting, the appellant's evidence on substantive issues where he denied the alleged sexual abuse, his Honour found that the appellant sexually assaulted MGF on "numerous occasions" and that the sexual assaults had "mainly" taken the form of indecent assaults and mutual oral sexual intercourse. Bell The obligation to give reasons South Australia was the first of the Australian jurisdictions to provide for the trial of a criminal offence on Information by a judge alone31. The Juries Act 1927 (SA) does not contain an equivalent to the provisions of the New South Wales32 and Western Australian33 statutes, considered in Fleming v The Queen34 and AK v Western Australia35 respectively, which each require the judge to include in reasons for judgment the principles of law applied and the findings of fact on which the judge relied. In Douglass v The Queen36, the Court referred with evident approval to Doyle CJ's statements in R v Keyte37 concerning the general law obligation on the judge to provide reasons for verdict following a trial by judge alone under s 7(1) of the Juries Act 1927 (SA)38. The correctness of Doyle CJ's conclusion that the failure to state adequate reasons following such a trial is an error of law39 was assumed in Douglass and is not in issue in this Court. The statements in Fleming and AK are informative with respect to the rationale for, and the content of, the reasons for verdict of a judge trying a criminal charge without a jury. Section 7(4) of the Juries Act 1927 (SA) provides that if a criminal trial proceeds without a jury under s 7(1), the judge may make any decision that could have been made by a jury and such a decision will, for all purposes, have the same effect as a verdict of a jury. A person convicted following a trial, whether by judge alone or with a jury, may appeal against the conviction as of right on any ground that involves a question of law alone and on any other ground with the permission of the Full Court40. The failure of a trial judge, sitting without a jury, to give reasons for his or her decision may make it impossible for the 31 Juries Act 1927 (SA), s 7(1). 32 Criminal Procedure Act 1986 (NSW), s 33 (now s 133). 33 Criminal Procedure Act 2004 (WA), s 120(2). 34 (1998) 197 CLR 250; [1998] HCA 68. 35 (2008) 232 CLR 438. 36 (2012) 86 ALJR 1086; 290 ALR 699; [2012] HCA 34. 37 (2000) 78 SASR 68. 38 Douglass v The Queen (2012) 86 ALJR 1086 at 1090 [14]; 290 ALR 699 at 703. 39 R v Keyte (2000) 78 SASR 68 at 79 [51]. 40 CLCA, s 352(1)(a). Bell appellate court to determine whether or not the verdict was based on an error of law or other error within s 353(1) of the CLCA41. The trial judge was required to identify the principles of law to be applied in determining whether guilt had been proved, to resolve material disputed factual questions, to address the parties' submissions and to explain (albeit not necessarily at any length) the process of reasoning by which his Honour arrived at the verdict42. The parties' submissions The appellant submits that the trial judge's conclusion, that MGF was a reliable witness with respect to his "core allegations", amounted to reasoning to guilt without satisfaction that the actus reus of the offence had been proved. He argues that it was necessary to explain why parts of his evidence, which seemingly were not rejected, did not give rise to a reasonable doubt as to the proof of the acts that constituted the actus reus. The generality of the finding, in the appellant's submission, did not allow the Court of Criminal Appeal to meaningfully assess the safety of the verdict. In the result, the appellant submits, the Court of Criminal Appeal's analysis was confined to the sufficiency of the reasons to explain the trial judge's preference for the evidence of MGF over his evidence and did not consider the capacity of MGF's evidence to support a conclusion on the criminal standard that the acts of sexual exploitation constituting the actus reus occurred. The respondent's essential argument is that the appellant's criticism of the trial judge's reasons does not come to terms with the holding in Hamra v The Queen, that the inability to delineate one offence from another by reference to circumstances of time and location does not preclude a conclusion of guilt43. A fair reading of the reasons is said to make clear that his Honour was satisfied that each of MGF's allegations of misconduct amounting to an act of sexual exploitation was proved beyond reasonable doubt. MGF said that there were "numerous" occasions on which mutual oral intercourse occurred; whether these occasions took place over a period of several years or a lesser time frame, it is evident they took place over an interval of not less than three days. 41 Fleming v The Queen (1998) 197 CLR 250 at 260 [22] citing Pettitt v Dunkley [1971] 1 NSWLR 376 at 381-382, 385, 388. 42 Fleming v The Queen (1998) 197 CLR 250 at 262-263 [28]; AK v Western Australia (2008) 232 CLR 438 at 453 [44] per Gummow and Hayne JJ, 468 [85] per Heydon J; R v Keyte (2000) 78 SASR 68. 43 Hamra v The Queen (2017) 91 ALJR 1007 at 1017 [45]-[46]; 347 ALR 586 at Bell The adequacy of the trial judge's reasons It remains that the omnibus finding, that the appellant sexually assaulted MGF on numerous occasions, does not identify two or more acts of sexual exploitation over an interval of not less than three days, the commission of which was proved beyond reasonable doubt. The trial judge's acceptance of MGF's reliability with respect to the "core allegations" reflected a favourable assessment based on MGF's demeanour. While it may be accepted that demeanour is not always a sound guide to reliability44, commonly on the trial of sexual offences the conclusion of guilt will ultimately depend upon acceptance of the complainant's account alone. Nonetheless, no matter how favourable an impression is formed of a witness' reliability, demonstrated inconsistencies between the witness' evidence and other evidence may not permit a finding based on the witness' evidence beyond reasonable doubt. This is not to suggest that it was not open to the trial judge to accept MGF's evidence as proof of the commission of each of the acts of sexual exploitation that he described on the criminal standard. It is to accept the force of the appellant's submission that the trial judge was required to address critical inconsistencies between MGF's evidence of the circumstances in which some acts of sexual exploitation occurred and other cogent evidence. It was necessary to explain why evidence in at least two respects, on which the defence relied, did not give rise to a reasonable possibility that particular acts of sexual exploitation did not occur as MGF described and did not cast doubt on the reliability of MGF's evidence more generally. The first critical inconsistency The first respect concerned the reliability of MGF's account of the time when the abuse progressed to mutual oral sexual intercourse. MGF described "numerous" occasions of mutual oral sexual intercourse. While in his initial disclosure to the police he dated this development to when he was 9 years old, in evidence he was consistent in describing occasions of mutual oral sexual intercourse from when he was around 12 years old. And he was consistent in claiming that abuse of this kind took place over a number of years, commencing on an occasion when he and the appellant were playing slot cars in shed 2. This account was inconsistent with the appellant's evidence concerning the completion of the slot car track in shed 2. The Court of Criminal Appeal observed that the trial judge had identified the conflict between MGF and the appellant on the issue of the timing of the 44 State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In liq) (1999) 73 ALJR 306 at 328-329 [88(4)] per Kirby J; 160 ALR 588 at 617-618; [1999] HCA Bell construction of the slot car track in shed 2. Their Honours considered it evident that the trial judge's acceptance of MGF's evidence, and rejection of the appellant's evidence, extended to this conflict45. It is correct that the trial judge noted the conflict between MGF's evidence and the appellant's evidence concerning the date of completion of the slot car track. It is, with respect, not apparent that his Honour's preference for MGF's evidence resolved the conflict. His Honour found that some of MGF's estimates of his age when events occurred were not reliable. The rejection of the appellant's evidence "where he denied the alleged sexual conduct" is not in terms a rejection of the appellant's evidence of the date the slot car track was completed. Rejection of the appellant's evidence on this question required a reasoned explanation: the appellant's evidence was supported by entries in the calendar; W, his former wife, acknowledged the appellant's handwriting on entries in the calendar; and, critically, the appellant was not challenged on his evidence on the date of the completion of the slot car track by reference to the calendar. The reliability, however, of MGF's The appellant's evidence of the date of completion of the slot car track placed the commencement of mutual oral sexual intercourse, on MGF's account, at a time when MGF was not less than 14 years and 4 months old. It provided a closed period of a little over a year during which any acts of mutual oral sexual intercourse as alleged by MGF could have occurred. Acceptance of the reasonable possibility that the slot car track was not completed until June 1993 did not mean that it was not open to be satisfied that the appellant and MGF had engaged in mutual oral sexual intercourse on occasions between mid-1993 and August 1994. evidence of "numerous occasions" of mutual oral sexual intercourse needed to take into account the frequency with which MGF stayed at the Christies Beach house between June 1993 and 28 August 1994. The trial judge accepted the "general thrust" of the varying estimates given by MGF's father and mother and W in this respect: "sometimes on the weekends and sometimes for a week or two during school holidays", "a day or two over a weekend or during school holidays", and "mainly school holidays for a couple of days or a week" respectively. The difference between MGF's account of acts of mutual oral sexual intercourse taking place over a span of years and acceptance of the reasonable possibility that any such conduct must have occurred over a notably shorter interval was material to the determination of whether the acts were proved to the criminal standard. 45 R v D, L [2015] SASCFC 24 at [138]. Bell The second critical inconsistency The second respect was the inconsistency between MGF's account of indecent assaults and acts of gross indecency that occurred when he was playing computer games in the master bedroom, and the evidence of the appellant and W that the only computer in the Christies Beach house was set up in bedroom 3. The Court of Criminal Appeal said it had not been necessary for the trial judge to address this claimed inconsistency because it had been put to MGF that the computer was kept in bedroom 3 and he had acknowledged that "it could have been. What I remember it was in bedroom 1." And in cross-examination, W had been asked whether the computer was ever set up anywhere else in the house and she said that she really did not know46. The Court of Criminal Appeal considered that in light of these answers there was no conflict between MGF's and W's evidence. Their Honours said the conflict between MGF's and the appellant's evidence as to the location of the computer was subsumed in the larger conflict as to whether there had been any inappropriate conduct. Again, the trial judge's acceptance of MGF's, and rejection of the appellant's, evidence was said to have made it unnecessary for his Honour to address the issue47. The Court of Criminal Appeal's analysis did not address the substance of the appellant's complaint. MGF described the location of the computer within the master bedroom by reference to a plan. His account of the circumstances in which the appellant masturbated while he, MGF, was playing computer games was not without detail referable to the master bedroom: on numerous occasions as MGF played computer games, the appellant masturbated while sitting on the red chaise lounge, which MGF said was in front of the curtains in the master bedroom. MGF maintained in cross-examination that on the occasions when he used the computer it was in the master bedroom, that he had never used the computer in bedroom 3, and that he had never seen the computer in bedroom 3. W's evidence was supportive of the appellant's account that the computer was set up in bedroom 3. Her answer, that she really did not know if the computer had been set up elsewhere, reads in the transcript as a slim foundation for finding that there was no conflict between her account and MGF's account in this respect; W's memory was that the computer was set up in bedroom 3. On the face of things, there was an inconsistency between MGF's account of the circumstances in which some indecent assaults and the acts of masturbation took place, and the appellant's evidence. And on the face of things, there was independent support for acceptance of the appellant's account. Of course, acceptance of the appellant's evidence in this respect did not require 46 R v D, L [2015] SASCFC 24 at [79]-[81], [139]. 47 R v D, L [2015] SASCFC 24 at [139]. Bell rejection of MGF's account of acts of sexual exploitation that occurred in association with his memory of playing computer games. It was a material inconsistency, however, which the trial judge needed to address in reasoning to the verdict. In the event, in circumstances in which it is not known what is encompassed in the reference to the "core allegations", it is unclear whether the omnibus finding, that the appellant sexually assaulted MGF on numerous occasions, included the acts of sexual exploitation which MGF said occurred in the master bedroom. The finding that the sexual assaults mainly took the form of indecent assaults and mutual oral sexual intercourse might include the indecent assaults that MGF said happened on occasions when he was playing computer games. The finding that the acts of sexual exploitation "mainly" took one of two forms does not exclude acceptance of MGF's account that the appellant masturbated in MGF's presence and encouraged MGF to masturbate in the appellant's presence. These are acts that if able to be particularised could have been charged as acts of gross indecency48. The point to be made is that the omnibus finding may, or may not, be a finding that all of the acts of sexual exploitation described by MGF occurred. A controversy over one particular The particulars of sexual exploitation contained in the Information included the showing of pornography to MGF. There was a controversy in this Court as to whether, during the period covered by the Information, the showing of pornography to a child was an act that could be charged as an offence within the meaning of s 50(7) of the CLCA. The respondent submits that throughout the period, the showing of pornography to a child amounted to an act of gross indecency, an offence within s 50(7) of the CLCA49. The appellant disputes that is so. It is an arid controversy given that it is not known whether the acts of sexual exploitation on which the verdict was returned included the showing of pornography to MGF. In the event that his Honour considered that the showing of pornography to a child was an act that could be charged as a sexual offence50, it is not known whether MGF's laconic description of the material that he was shown – "Asian content" with respect to magazines, and "Asian women with Aussie men and Asian men as well" with respect to videos – sufficed to prove to the criminal standard that the showing of it was in fact an act of gross indecency. The controversy is apt to highlight the inadequacy of reasons stated with the generality of acceptance of "core allegations". 48 CLCA, s 58(1)(a) and (b). 49 CLCA, s 58(1)(a) and see R v M, BJ (2011) 110 SASR 1. 50 See fn 23 for the definition of "sexual offence". Bell Conclusion The respondent's reliance on Hamra is misconceived. Hamra recognises that, by a process of inferential reasoning, a jury, or a judge sitting without a jury, may reason to satisfaction beyond reasonable doubt that two or more acts of sexual exploitation were committed over a period of not less than three days notwithstanding that the complainant is unable to differentiate one act from another. The example given is of a complainant who gives evidence of an act of sexual exploitation occurring on each day over a two week period51: the jury, or a judge sitting without a jury, might reason upon acceptance of the complainant's evidence that two or more acts must have occurred over a period of not less than three days. There is no question in such a case of the identification of the acts constituting the actus reus of the offence. Here, MGF gave evidence of a variety of acts capable of being found to be acts of sexual exploitation committed from time to time over a period of years. The trial judge's omnibus finding, that the appellant sexually assaulted MGF on numerous occasions, is not expressed to be a finding of the commission of each act of sexual exploitation described by MGF. It is a conclusion that reflected his Honour's earlier identification of the issue "in a practical sense" as whether the prosecution proved that MGF was a truthful and reliable witness. The issue, however, did not reduce to the trial judge's preference for MGF's account over that of the appellant. His Honour was required to identify the acts of sexual exploitation constituting the actus reus of the offence which he found proved and, in so doing, to explain why the evidence on which the appellant relied did not give rise to a reasonable doubt as to the commission of those acts. The appeal should be allowed and a new trial directed. 51 Hamra v The Queen (2017) 91 ALJR 1007 at 1014 [28]; 347 ALR 586 at 594. Nettle NETTLE J. Following a trial before judge alone in the District Court of South Australia, the appellant was convicted of one count of persistent sexual exploitation of a child contrary to s 50(1) of the Criminal Law Consolidation Act 1935 (SA) ("the CLCA") and sentenced therefor to 10 years' imprisonment with a non-parole period of seven years. His appeal against conviction to the Full Court of the Supreme Court of South Australia (sitting as the Court of Criminal Appeal) was dismissed. By grant of special leave, he now appeals to this Court. Relevant statutory provisions At the time of trial, s 50(1) of the CLCA provided that: "An adult person who, over a period of not less than 3 days, commits more than 1 act of sexual exploitation of a particular child under the prescribed age is guilty of an offence. Maximum penalty: Imprisonment for life." Section 50(2) of the CLCA provided that, for the purposes of s 50, an adult person commits an act of sexual exploitation of a child if the person commits an act in relation to the child of a kind that could, if it were able to be properly particularised, be the subject of a charge of a sexual offence. Section 50(7) defined "sexual offence" by reference to other provisions of the CLCA including, relevantly, in Pt 3, Div 11 (Rape and other sexual offences). The "prescribed age" for the purposes of s 50 of the CLCA was 18 years in the case of an adult person who was in a position of authority in relation to the particular child and 17 years in any other case52. As was recently explained in Chiro v The Queen53, because s 50(1) defined the offence of persistent sexual exploitation of a child as an offence constituted of underlying acts of sexual exploitation, in order for a jury to find an accused guilty of the offence the jury must reach unanimous agreement (or, after four hours, must reach agreement by a requisite statutory majority54) that the Crown has proved beyond reasonable doubt that the accused committed the same two or more underlying acts of sexual exploitation separated by not less than three days. It is thus an error of law productive of a miscarriage of justice for a trial judge to fail to direct a jury that they cannot convict an accused of an 52 Criminal Law Consolidation Act 1935 (SA), s 50(7). 53 (2017) 91 ALJR 974 at 981 [19] per Kiefel CJ, Keane and Nettle JJ; 347 ALR 546 at 552-553; [2017] HCA 37. 54 See Juries Act 1927 (SA), s 57. Nettle offence of persistent sexual exploitation of a child unless they are unanimously agreed that at least the same two acts of sexual exploitation separated by not less than three days have been proved beyond reasonable doubt. Similarly, in the case of trial by judge alone, the judge cannot find an accused guilty of an offence of persistent sexual exploitation of a child unless the judge directs himself or herself as to the need to be, and is, satisfied beyond reasonable doubt of the commission of two or more of the alleged acts of sexual exploitation separated by a period of not less than three days55. The Crown case at trial The complainant was born in February 1979. The Crown case at trial was that the appellant, who was the complainant's uncle, was guilty of the charged offence of persistent sexual exploitation of a child which allegedly took place between 6 February 1984 and 28 August 199456; the latter date being the same day on which the complainant had indecently assaulted the appellant's five year old daughter. The alleged acts of sexual abuse were, in effect, comprised of ten distinct groups of alleged acts of sexual exploitation delineated by reference to the type and time of commission of the alleged conduct. They were: (1) When the complainant was around five years old, there were "lots of times" when he was playing with slot cars, which he alleged were set up in the appellant's lounge room in front of some chairs, a fire place and a television, when the appellant stood behind the complainant and touched him on his private parts over his clothing. (2) When the complainant was "about seven years of age", the the complainant pornographic videos and appellant showed magazines of "Asian content" which the complainant alleged were kept in a cupboard "right in front of the main entrance to the [appellant's] house". (3) When the complainant was seven or nine years of age, the appellant gave the complainant a remote control car as a present when the family were all together on Christmas Day at the complainant's grandmother's home, and when the complainant was playing with the remote control car on the lawn outside the home the appellant 55 See R v Keyte (2000) 78 SASR 68 at 76 [38] per Doyle CJ (Wicks J agreeing at 84 [80]); Douglass v The Queen (2012) 86 ALJR 1086 at 1090 [14]; 290 ALR 699 at 703; [2012] HCA 34. 56 The period given in the information for the offence was 6 February 1984 to 1 September 1994, but on the complainant's evidence the offending last occurred on 28 August 1994. Nettle inappropriately touched the complainant over his clothes and said that he should not say anything about it because the appellant could get into trouble. (4) When the complainant "would have been close to nine", the appellant drove the complainant from the appellant's home to a slot car racing venue called "Red Line" and, on the way there in the car, the appellant fondled the complainant's penis on top of his clothes, which made the complainant "pretty hard", and the appellant threatened the complainant with consequences if he said anything to anyone about it. From the time that the complainant was about nine years old until he was 15, the appellant would allow the complainant to ride the appellant's motor bike, which he kept in a shed at his house, in return for acts of oral sex. In cross-examination, the complainant accepted that the motor bike was as shown in a photograph, which was tendered in evidence, but denied that he would have been physically incapable of riding such a bike from the age he alleged. (6) When the complainant was "growing up", there were "numerous times" (later, in cross-examination, described as "about three, four times") when the appellant sat on the chaise lounge in the master bedroom of his home "wanking himself off" while the complainant played games on the computer in the bedroom. The complainant pulled his pants down and the appellant showed the complainant how to masturbate but the complainant could not ejaculate at that time. (7) When the complainant was "the age of nine going on to 12", he was playing with slot cars at the slot car track set up in the second shed at the appellant's house ("Shed 2") when the appellant came behind the complainant "feeling [him] down on [his] genitals" and then asked him if the appellant could give him oral sex. The appellant performed oral sex on the complainant and the complainant performed oral sex on the appellant as well. This was the first act of oral intercourse that had occurred between them. (8) When the complainant "would have been close to 12", the appellant took the complainant to a two storey unit in South Terrace to look at some hydroponic plants "that [the appellant] had with a lady called Lucy". The appellant went up to the hydroponic room in the unit. The complainant sat at a table at the back of the unit and "[the appellant] came back down and smoking [cannabis] again, getting high and then it was oral sex again". The complainant and the Nettle appellant had "a good talk" and then the appellant performed oral sex on the complainant. (9) When the complainant was "over 12, 12 nearly", the appellant took the complainant to a place at Cherry Gardens where the appellant grew cannabis. They sat there, "[had] cones on [the appellant's] brass pipe and [got] stoned" and then performed oral sex on each other. (10) Lastly, on 28 August 1994, when the complainant was 15 and a half years old, he had a ride on the appellant's motor bike and in return gave the appellant oral sex. The complainant was then playing with slot cars in Shed 2 when the appellant's daughter began "jumping all over [his] back" and the complainant went to grab her and "felt her between the legs and … stuck [his] finger … into her vagina and broke her hymen". Following the complainant's indecent assault of the appellant's daughter, the complainant underwent three years of court appointed psychological counselling. He did not at any time throughout those three years say anything to the counsellor about having been sexually abused by the appellant. According to the complainant, the first time he ever spoke to anyone about it was in 2003 or 2004, when he told his partner that he had been sexually abused, without saying by whom, when or where. The complainant's partner gave evidence that the complainant had told her that "he had had a rough childhood, he had been sexually abused as a child", but he did not say by whom or give any detail. When the appellant's daughter turned 18 years of age, the appellant assisted her to make a claim for compensation under the Victims of Crime Act 2001 (SA) in respect of the complainant's indecent assault of her. On 22 October 2009, she was awarded $50,000 compensation. According to the complainant, the next time that he complained to anyone about the appellant having sexually abused him was in about 2010 or 2011 when he was receiving counselling for relationship problems with his partner. He said that he told the counsellor about the alleged sexual abuse and that she advised him that he should stand up for himself and go and see what the appellant was up to. The counsellor was not called to confirm that advice. The complainant said that, shortly thereafter, he went to the appellant's home and knocked on the door and the appellant let him in. They smoked cones of marijuana together and the appellant showed the complainant the cannabis plants that he was growing in Shed 2. The complainant asked for and received a cutting from one of the plants. The complainant said that, at that time, he was also growing marijuana, and he gave the appellant a telephone number on which to contact him if the appellant wished to purchase some of it. There was then a second occasion on which the complainant went back to the appellant's home to sell him some of the marijuana. Nettle The complainant did not say anything to the appellant about sexual abuse on either of those occasions. The first complaint that the complainant made to the police was on 21 December 2011, 17 years after the last of the alleged acts of sexual abuse. The defence case at trial The appellant gave evidence that he had never sexually assaulted the complainant. In particular, the appellant stated that there had only ever been one occasion on which slot cars had been set up in his lounge room, which was for someone else and the complainant was not there on that occasion. He deposed that the only pornography that he ever had in his home was a video about wife swapping, which had been lent to him and his ex-wife by a friend and was returned within a few weeks. He had ordered one catalogue containing Asian pornography and received a number of them, but he did not show them to the complainant. He said that he had not given the complainant a remote control car – his ex-wife used to purchase the Christmas presents for the family – and he had not sexually assaulted the complainant at the complainant's grandmother's home or at all. He did not recall ever taking the complainant to Red Line. He had only ever permitted the complainant to ride his motor bike from the time that the complainant was 15 years old, and he had never given the complainant permission to ride the bike in return for oral sex. He had not masturbated while the complainant was on the computer, and the computer had been kept in his daughter's bedroom. His slot car track was not set up in Shed 2 until June 1993, by which time the complainant was 14 years old. He had never stood behind the complainant and felt his genitals or performed oral sex on him, and the complainant had never performed oral sex on him. He met Lucy in 1995, which was after the last occasion of alleged sexual abuse, and did not take the complainant to Lucy's unit in South Terrace until then. He never took the complainant to Cherry Gardens and did not supply him with marijuana until years after 28 August 1994. The appellant's testimony was, in some respects, supported by evidence given by his ex-wife, who had been called as a witness for the Crown. In cross-examination, she testified that the computer was kept in their daughter's bedroom, and in re-examination she said that she did not know if the computer had ever been set up anywhere else in the house. She also gave evidence that a 1993 calendar containing handwritten entries that suggested the slot car track in Shed 2 was not operational until June 1993 was familiar to her, and that the handwriting in it was that of the appellant. The trial judge's reasons for judgment After summarising aspects of the evidence adduced by the Crown, the trial judge stated that he perceived there to be three aspects of the defence case: an Nettle attack on the truthfulness and reliability of the complainant; a submission that the appellant gave evidence and was not shaken in his testimony; and a submission that, having regard to the inconsistencies in and implausibility of the complainant's account and there was the appellant's unshaken denials, insufficient evidence to be satisfied of guilt beyond reasonable doubt. The trial judge acknowledged that it was clear to him that "some of [the complainant's] evidence about when some events occurred is inaccurate" but averred that he "[did] not have to accept everything [the complainant] says to be satisfied of the charge". The judge added that in his judgment, having watched the complainant and heard him give his evidence, the complainant's "presentation was that of a man endeavouring to tell the truth" and the complainant "was describing real events that happened to him and was not led by the suggestions of others". It is to be interpolated that "the suggestions of others" is possibly a reference to evidence that there had been a considerable falling out between the appellant and his ex-wife and that she had been active in persuading the complainant to complain to the police. The trial judge added, apparently epexegetically, that the complainant lacked guile, was not intellectually bright and was a long term drug user. The judge then stated: "I also accept [the complainant] as a reliable witness as to the core allegations. I have scrutinised his account very carefully. Some of his estimates of his age when events occurred were not reliable (for example, when he rode the motorbike or being 'stoned'), but they were not sufficient to cause me to doubt either his truthfulness or reliability. Any exaggeration was not deliberate. As reflected in cross-examination, he had trouble remembering the process whereby statements were taken from him, who he told beforehand, who he was with and when he made particular allegations. My comments above should not be overlooked and it should not be forgotten that the conduct alleged took place many times over many years". (emphasis added) By contrast, the trial judge stated: "I was unimpressed by the [appellant's] presentation. I found his answers to be glib and evasive on some topics, particularly about the number and duration of occasions when [the complainant] and his siblings stayed or the [appellant] was alone with [the complainant] ... In addition to that, the [appellant] was, in my view, understating [the complainant's] interest in slot cars and using the track in Shed 2 because the use of the slot car track provided an opportunity for sexual misconduct … I also thought his answers on the aspect of adult pornography quite evasive". Nettle Then, after brief reference en passant to "the difficulty an accused person is in when giving evidence and so long after the time of the alleged events" and the appellant's "personal difficulties" and "significant forensic disadvantage given that these alleged events occurred many decades ago and without any timely complaint", the trial judge concluded: "I have considered whether the attributes of [the complainant] as a person and the various criticisms of his evidence caused me to have a reasonable doubt and they do not. I reject the evidence of the [appellant] on substantive issues where he denied the alleged sexual conduct. I find that the [appellant] sexually assaulted [the complainant] on numerous occasions over a period of some years. The sexual assaults mainly took the form of indecent assaults and mutual oral sexual intercourse." That was it. The appeal to the Court of Criminal Appeal The appellant's appeal to the Court of Criminal Appeal was made on three grounds. The first, and as it appears principal, ground was that the verdict was unreasonable and not supported by the evidence. Under and in support of that, the appellant advanced two sets of particulars. The first related to an alleged failure by the trial judge to have sufficient regard to matters relevant to the complainant's credibility and reliability. It consisted of extensive, precise particulars of a number of alleged inconsistencies and implausibilities in the complainant's evidence, including inconsistencies as to his age when acts of sexual abuse were alleged to have occurred, inconsistencies and implausibilities in and between identified witnesses' testimony, the implausibility of the complainant's evidence with respect to the supply of cannabis by the appellant to the complainant, the implausibility of the complainant's evidence as to his use of the appellant's motor bike from the age of nine, the appellant's evidence as to the timing of his relationship with Lucy as against the complainant's evidence as to the timing of his visit to the South Terrace unit, the timing of the appellant's commencement of growing cannabis in Shed 2, and the complainant's motive to make false allegations against the appellant (scil the appellant's daughter's claim for compensation). It should be understood that those were the same inconsistencies and implausibilities that the judge dismissed peremptorily with the statement: "I have considered whether … the various criticisms of [the complainant's] evidence caused me to have a reasonable doubt and they do not." The second set of particulars in support of the first ground related to the appellant's contention that the trial judge placed undue weight on identified Nettle aspects of the appellant's evidence in the assessment of his credibility and reliability. Under and in support of that, the appellant provided particulars of five Crown witnesses' evidence which it was contended supported the appellant's testimony. The second ground of appeal was that the trial judge erred in his application of the burden of proof. The judge stated in his reasons: "Although it is not determinative of the case, having listened to [the complainant] over a number of days, I simply believed him and found him to be reliable." The appellant contended that that statement, taken together with the judge's reasons, demonstrated that the judge had formed a conclusion on the complainant's credibility and reliability at the end of the complainant's evidence, and thus did not retain an open mind as to his credibility and reliability when hearing from other witnesses. The third ground, which was advanced with leave given in the course of the hearing before the Court of Criminal Appeal, was that the trial judge erred as a matter of law in failing to give adequate reasons in that he did not deal with incontrovertible, or arguably incontrovertible, inconsistencies affecting the credibility of the complainant, and thus affecting the judge's conclusion of proof of guilt beyond reasonable doubt. The alleged inconsistencies included: inconsistency between the complainant's evidence that the first act of oral intercourse occurred when the complainant was playing with slot cars in Shed 2 at the age of "nine going on to 12", and thus at some time between 1988 and 1991, and the appellant's evidence that the slot car track in Shed 2 was not operational until June 1993; the complainant's evidence inconsistency between the appellant had sat on the chaise lounge in the master bedroom masturbating in front of the complainant as the complainant played games on the computer set up in the bedroom, and the appellant's evidence that the computer had only ever been located in his daughter's bedroom; and that the complainant's evidence inconsistency between the appellant had taken him to Lucy's South Terrace unit when the complainant was "close to" 12 years of age, and thus in 1991 or 1992, and the appellant's evidence that he did not meet Lucy until 1995 and consequently did not take the complainant to Lucy's unit until after the last alleged act of sexual abuse on 28 August 1994. that Nettle The judgment of the Court of Criminal Appeal57 was delivered by Blue J, with whom Kourakis CJ and Bampton J agreed. As to the first ground of appeal, of unreasonable verdict not supported by the evidence, Blue J reasoned58 that the mere fact that the trial judge may have made a credibility finding without giving sufficient weight to specific evidence or aspects of the evidence did not establish that the verdict was unreasonable or not supported by the evidence. Blue J stated59 that, while an appellate court will have regard to a trial judge's reasons, the ultimate question is whether the evidence in itself was sufficient to support the judge's findings and the verdict. Hence, even if the alleged inconsistencies and implausibilities in the complainant's evidence were established, they would not in themselves lead to the conclusion that the verdict was unreasonable or could not be supported having regard to the evidence60. Blue J then went in some detail through each of the alleged inconsistencies and implausibilities, noting in each instance either that no inconsistency or implausibility was demonstrated or that any such inconsistency or implausibility was insignificant or insubstantial61. As to the trial judge's assessment of the appellant's credibility, Blue J referred62 to each of the identified passages of the transcript on which the appellant relied, noting in each case that the judge had seen and heard the appellant give the evidence and that on the face of the transcript it was open to the judge to form the impression which he did. Blue J then concluded63 his analysis of the first ground with the observation that the case essentially turned on the direct conflict between the evidence given by the complainant and the evidence given by the appellant and that it was open to the judge to be satisfied beyond reasonable doubt that the complainant was telling the truth about the alleged sexual abuse and that the appellant was not. 57 R v D, L [2015] SASCFC 24. 58 D, L [2015] SASCFC 24 at [63]. 59 D, L [2015] SASCFC 24 at [63]. 60 D, L [2015] SASCFC 24 at [65], [69]. 61 D, L [2015] SASCFC 24 at [72]-[114]. 62 D, L [2015] SASCFC 24 at [119]-[129]. 63 D, L [2015] SASCFC 24 at [130]. Cf Liberato v The Queen (1985) 159 CLR 507 at 515 per Brennan J, 519 per Deane J; [1985] HCA 66. Nettle On the second ground, concerning the burden of proof and whether the trial judge had prejudged the matter of the complainant's credibility and reliability, Blue J found64 that the judge's statement, when read in context, demonstrated that the judge was "aware of and applied the axiomatic principle that it was his assessment of the complainant's evidence at the end of all of the evidence that was determinative and impressions formed before that point were only tentative and provisional". There was thus no basis to find prejudgment. As to the third ground, of inadequacy of the judge's reasons in failing to deal adequately or at all with the identified inconsistencies, including the three set out above, Blue J relevantly stated65: "Timing of construction of slot car track The Judge explicitly identified the conflict between the evidence of the complainant and the [appellant] on this issue and then summarised the [appellant's] case that the complainant was wrong about when cannabis was grown and 'when the slot car track was completed, such that, in conjunction with other inconsistencies, he cannot be relied upon about the substantive allegations.' The Judge said that he accepted the complainant's evidence and rejected the [appellant's] evidence and it is evident that this extended to the conflict concerning the slot car track. There is no substance in this complaint. Location of computer There was no conflict between the evidence of the complainant and [the appellant's ex-wife] … There was a conflict between the evidence of the complainant and the [appellant], but that conflict was subsumed in the larger conflict that the complainant asserted inappropriate touching and the [appellant] denied that allegation outright. The Judge accepted the complainant's evidence that such touching occurred and rejected the [appellant's] evidence denying it. In the circumstances, there was no need for the Judge to address specifically the question identified by the [appellant]. Relationship with the other woman There was no conflict between the evidence of the complainant and the [appellant] for the reasons given ... above. In the circumstances, there 64 D, L [2015] SASCFC 24 at [50]. 65 D, L [2015] SASCFC 24 at [138]-[140]. Nettle was no need for the Judge to address specifically the question identified by the [appellant]." Earlier in his reasons, Blue J had said in relation to the evidence about the alleged visit to Lucy's South Terrace unit66: "The complainant gave evidence that he and the [appellant] visited the Adelaide unit and the [appellant] performed oral sex on him. He said that he was 'close to 12' on that occasion and in cross-examination denied that this occurred after the incident with [the appellant's daughter] (when he was 15). The [appellant] gave evidence that there were separations from [his ex-wife] when she left in 1995, 1996 and then in 1998 for good. He said that all of the times that [his ex-wife] left were because of the other woman and that he was going with her at those times, but did not say when he commenced a friendship or relationship with her. The [appellant] gave evidence that he and the complainant visited her unit but said that, as far as he remembered, this occurred after the incident with [the appellant's daughter]. He said that he was 'not quite clear about it' and then that he was 'almost hundred-per-cent sure about it'. Given the vagueness of the [appellant's] evidence, there was no clear inconsistency between the evidence given by the complainant and the [appellant] concerning their visit to the unit. In any event, the Judge was not obliged to accept the [appellant's] evidence as to the timing of that visit for the purpose of assessing the complainant's credibility." Grounds of appeal to this Court The grounds of appeal to this Court are, in substance, that the Court of Criminal Appeal erred in not holding that: (1) the verdict was vitiated by the trial judge's failure to give adequate reasons; (2) the verdict was uncertain, unreasonable or unsafe; and (3) there was a miscarriage of justice. The first ground was put on the basis of the same inconsistencies and implausibilities relied on in support of the inadequacy of reasons ground of appeal before the Court of Criminal Appeal, but with the added element, not advanced below, that it was necessary for the trial judge to be satisfied beyond reasonable doubt of each of the two or more acts of sexual abuse which he found to be proved; and, therefore, that the reasons for judgment were deficient in that they failed to identify which two or more acts of sexual abuse the judge found to be proved beyond reasonable doubt and explain how, despite the identified 66 D, L [2015] SASCFC 24 at [82]-[84]. Nettle inconsistencies and implausibilities, the judge was able to reason to satisfaction beyond reasonable doubt of the proof of those acts. The second and third grounds of appeal were based on the first. In effect, the second was that the verdict was uncertain, unreasonable or unsafe because of the inadequacy of the trial judge's reasons, and the third was that there was a miscarriage of justice because of the inadequacy of the reasons. It was not contended that it would not have been open to the judge to be satisfied on the evidence beyond reasonable doubt of at least two of the alleged acts of sexual exploitation separated by a period of not less than three days. For reasons which will be explained, the first ground of appeal is determinative. But it is necessary to say something first of the law that governs the standard of reasons for judgment in a criminal case and also of the change in the state of authority in relation to the offence of persistent sexual exploitation of a child since the appeal to the Court of Criminal Appeal was determined. It was because of that change that special leave to appeal was granted in this case. The need for adequate reasons There was a time past when trial judges sitting in civil causes involving substantial conflicts of evidence sometimes delivered reasons for judgment that consisted of no more than a recitation of the evidence, an assertion of preference for the credibility of one witness over another – usually justified by incantation of the mantra of having seen and heard the witnesses in the witness box – and an asseveration of conclusion according to the preferred witness's version of events. As recently as 1983, the Privy Council gave its apparent approval to the practice67. But, if the law of this country ever countenanced the practice, it does so no longer. As early as 1947, the Supreme Court of New South Wales, in a judgment delivered by Jordan CJ, stated in Carlson v King68 that a court of first instance from which an appeal lies to a higher court had a duty "to make, or cause to be made, a note of everything necessary to enable the case to be laid properly and sufficiently before the appellate Court if there should be an appeal. This includes not only the evidence, and the decision arrived at, but also the reasons for arriving at the decision." A plethora of cases since then has established that, although the extent of reasons may depend on the circumstances of the case, reasons must identify the relevant principles of law, refer to relevant evidence, state the judge's findings upon material questions of fact and provide 67 See Selvanayagam v University of the West Indies [1983] 1 WLR 585 at 587-588; [1983] 1 All ER 824 at 825-826. 68 (1947) 64 WN (NSW) 65 at 66 per Jordan CJ, Davidson and Street JJ. Nettle an explanation for those findings and the ultimate conclusions reached by the judge69. Since parties must be able to see the extent to which their cases have been understood and accepted, a trial judge will ordinarily be expected to expose his or her reasoning on points critical to the contest between the parties70. This applies both to evidence and to argument. If a party relies on relevant and cogent evidence which the judge rejects, the judge should provide a reasoned explanation for the rejection of that evidence71. If the parties advance conflicting evidence on a matter significant to the outcome, both sets of evidence should be referred to and reasons provided for why the judge prefers one set of evidence to the other72. Similarly, while a judge is not required to deal with every argument and issue that might arise in the course of a trial73, if a party raises a substantial argument which the judge rejects, the judge should refer to it and assign reasons for its rejection. And in providing reasons, the judge is required to make apparent the steps he or she has taken in reaching the conclusion expressed, for reasons are not intelligible if they leave the reader to speculate as to which of a number of possible paths of reasoning the judge may have taken to that 69 See for example Pettitt v Dunkley [1971] 1 NSWLR 376 at 382 per Asprey JA; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 443-444 per Meagher JA; Hunter v Transport Accident Commission (2005) 43 MVR 130 at 136-137 [21] per Nettle JA (Batt JA and Vincent JA agreeing at 131 [1]-[2], [4]); Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219 at 237-238 [58]-[64] per Muir JA (Holmes JA and Daubney J agreeing at 224 [1], 240 [72]). 70 See Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 279 per McHugh JA; Assad v Eliana Construction & Developing Group Pty Ltd [2015] VSCA 53 at [34]. 71 See Sun Alliance Insurance Ltd v Massoud [1989] VR 8 at 18 per Gray J (Fullagar J and Tadgell J agreeing at 20). 72 See Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 at 382; [2000] 1 All ER 373 at 378; Jones v Bradley [2003] NSWCA 81 at [131] per Santow JA (Meagher JA and Beazley JA agreeing at [1], [2]); Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273 at 283 [28]; Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816 at 1835-1836 [131] per Hayne J; 221 ALR 402 at 428-429; [2005] HCA 57; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [66] per McColl JA (Ipp JA and Bryson AJA agreeing at [1], [85]); Assad [2015] VSCA 53 at [36]. 73 See Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1610 [62] per Gleeson CJ, McHugh and Gummow JJ; 200 ALR 447 at 464; [2003] HCA 48. Nettle conclusion74. Failure sufficiently to expose the path of reasoning is therefore an error of law75. The trial of an indictable offence (or, as it is called in South Australia, an offence charged on information) by judge alone is an extraordinary procedure fundamentally at odds with the deep seated conviction of Anglo-Australian criminal justice that a man or woman accused of a serious offence should be tried by a jury of peers76. Due as much, therefore, to the extraordinary nature of the procedure as, in some States, to specific legislative requirements77, a judge who tries an indictable offence without a jury is bound to produce reasons for judgment of at least the quality expected of his or her civil brethren78. It is, however, even more important in criminal proceedings than in civil that a trial judge's reasons meet the standard required. It follows that a judge's failure to deliver adequate reasons is an error of law productive of a miscarriage of justice which, subject to application of the proviso, will necessitate that a conviction be set aside79. 74 See Wright v Australian Broadcasting Commission [1977] 1 NSWLR 697 at 701 per Moffitt P (Glass JA agreeing at 713); Soulemezis (1987) 10 NSWLR 247 at 280 per McHugh JA; Houlahan v Pitchen [2009] WASCA 104 at [94] per Newnes JA (Pullin JA and Miller JA agreeing at [1], [2]). 75 Pettitt [1971] 1 NSWLR 376 at 382 per Asprey JA. 76 See generally Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 27 at 342-344; Kingswell v The Queen (1985) 159 CLR 264 at 300 per Deane J; [1985] HCA 72; Brown v The Queen (1986) 160 CLR 171 at 179 per Gibbs CJ, 188 per Wilson J, 196-197 per Brennan J, 201-202 per Deane J, 214-215 per Dawson J; [1986] HCA 11; R v Baden-Clay (2016) 258 CLR 308 at 329 [65]; [2016] HCA 35. 77 See for example Supreme Court Act 1933 (ACT), s 68C; Criminal Procedure Act 1986 (NSW), s 133; Criminal Code (Q), s 615C; Criminal Procedure Act 2004 (WA), s 120. 78 See Fleming v The Queen (1998) 197 CLR 250 at 261-264 [23]-[33]; [1998] HCA 68; R v Keyte (2000) 78 SASR 68 at 75-80 [30]-[54] per Doyle CJ (Wicks J agreeing at 84 [80]), 82 [64]-[65] per Williams J; AK v Western Australia (2008) 232 CLR 438 at 445-446 [16] per Gleeson CJ and Kiefel J, 453-454 [44]-[48] per Gummow and Hayne JJ, 467-469 [85] per Heydon J; [2008] HCA 8; Douglass (2012) 86 ALJR 1086 at 1088-1089 [8]; 290 ALR 699 at 701-702. 79 See Douglass (2012) 86 ALJR 1086 at 1090 [14]; 290 ALR 699 at 703. Nettle The change in the state of authority The appeal to the Court of Criminal Appeal was heard on 21 August 2014. Previously, in 2011, a differently constituted Court of Criminal Appeal in R v M, BJ80 had held that the reasoning in KBT v The Queen81 (as to the need for a jury to be unanimous in relation to the underlying sexual acts found to constitute an offence of maintaining a sexual relationship contrary to s 229B(1) of the Criminal Code (Q)) applied, mutatis mutandis, to an offence of persistent sexual exploitation of a child contrary to s 50 of the CLCA. In M, BJ, however, it was also held that despite the trial judge's failure to direct the jury as to the need to be unanimous as to each of the acts found to constitute the offence of persistent sexual exploitation, there had not been a miscarriage of justice. It was observed82 that, in the particular circumstances of that case, the possibility that different jurors based their findings of guilt on different underlying acts could be "entirely discounted", and, therefore, the conviction was not uncertain or unsafe. Two years later, in R v C, G83, a further differently constituted Court of Criminal Appeal in effect rejected the idea that this Court's reasoning in KBT applied to an offence of persistent sexual exploitation contrary to s 50 of the CLCA. Basing themselves on an earlier decision of the Court of Criminal Appeal in R v Warsap84, they held that it was not necessary for a trial judge sitting alone to identify particular acts of sexual exploitation. It sufficed to sustain a conviction, it was said85, "if a pattern of offending behaviour during the relevant period is established beyond reasonable doubt". Thus stood the state of relevant Full Court authority in South Australia at the time of the appeal to the Court of Criminal Appeal in this case. It was not until some 12 months after the hearing and determination of that appeal that a 80 (2011) 110 SASR 1 at 28-29 [70] per Vanstone J (Sulan J and White J agreeing at 81 (1997) 191 CLR 417 at 422-423 per Brennan CJ, Toohey, Gaudron and Gummow JJ, 431-433 per Kirby J; [1997] HCA 54. 82 (2011) 110 SASR 1 at 32 [80] per Vanstone J (Sulan J and White J agreeing at 83 (2013) 117 SASR 162 at 186-187 [85]-[88]. 84 (2010) 106 SASR 264 at 267 [7] per Bleby J (Duggan J and White J agreeing at 85 C, G (2013) 117 SASR 162 at 187 [88], quoting Warsap (2010) 106 SASR 264 at 267 [7] per Bleby J (Duggan J and White J agreeing at 265 [1], 278 [72]). Nettle five member Court of Criminal Appeal, convened by Kourakis CJ to resolve the point, held in R v Little86, correctly, that it is necessary for the Crown to prove beyond reasonable doubt the two or more underlying acts of sexual exploitation which constitute the offence of persistent sexual exploitation which it alleges and that a trial judge should direct a jury accordingly that they must be unanimous as to each of the underlying acts of sexual exploitation found to be proved beyond reasonable doubt. A failure to give the extended unanimity direction is an error of law productive of a miscarriage of justice which will necessitate a conviction being quashed unless the proviso can be applied87. It is to be observed in passing that it was also held88 in Little that, despite the trial judge's failure in M, BJ to give the jury an extended unanimity direction, the appeal was rightly dismissed because the failure to give that direction had not occasioned a miscarriage of justice. With respect, that is debatable. Possibly some of the reasoning in M, BJ suggested that the proviso was applicable and that, in holding that there was no miscarriage of justice, the Court of Criminal Appeal intended to convey that there had been no substantial miscarriage of justice. But, at least in terms, that was not the way in which the case was decided. It was decided89 on the expressed basis of there having been no miscarriage of justice, when plainly there was. Be that as it may, it was only after and as a consequence of Little that it appears to have been appreciated that, just as it is necessary in the case of a trial by judge and jury for an offence of persistent sexual exploitation for the trial judge to give the jury an extended unanimity direction, in the case of trial by judge alone it is necessary for the judge to identify in his or her reasons for judgment the underlying acts of sexual exploitation found to be proved and identify the evidence and explain the reasoning which has led the judge to be satisfied of proof beyond reasonable doubt of each such act90. It was only then that an application for special leave to appeal was made in this case – at the same time as applications for special leave to appeal were made in Chiro91 and Hamra 86 (2015) 123 SASR 414 at 417-420 [11]-[19]. 87 (2015) 123 SASR 414 at 420 [20]. 88 (2015) 123 SASR 414 at 420 [19]. 89 (2011) 110 SASR 1 at 31-32 [78]-[80] per Vanstone J (Sulan J and White J agreeing at 6 [1], 41 [138]). 90 Hamra v The Queen (2017) 91 ALJR 1007 at 1017 [45]; 347 ALR 586 at 598; [2017] HCA 38. 91 (2017) 91 ALJR 974; 347 ALR 546. Nettle v The Queen92 – and it was for that reason that special leave to appeal was then granted, out of time, in each case. The trial judge's reasons were inadequate Given the state of authority in South Australia at the time of the trial in this matter and at the time of the appeal to the Court of Criminal Appeal, it is hardly surprising that the trial judge did not identify and that the Court of Criminal Appeal did not consider it necessary for the judge to identify the acts of sexual exploitation which the judge found to be proved beyond reasonable doubt and properly to explain the reasoning which led him to those conclusions. Nonetheless, the reasons are deficient in both of those respects. The Crown contended to the contrary that, when the reasons are read as a whole, as it appeared the Court of Criminal Appeal had done, it was not open to doubt that the trial judge was entitled to be and was satisfied beyond reasonable doubt of each and every one of the acts of sexual exploitation which the complainant alleged. More specifically, it was submitted that, despite the judge's recognition of inconsistencies and implausibilities regarding the complainant's testimony as to times and dates, the fact that the judge stated that he accepted the complainant as a witness of truth and "as a reliable witness as to the core allegations" (emphasis added), coupled with his statements that he "simply believed" the complainant and that the complainant was "describing real events", signified the judge's acceptance of the allegations that lay at the core of the charge; meaning thereby that he was satisfied beyond reasonable doubt that each and every one of the alleged acts of sexual exploitation was proved beyond reasonable doubt. That contention cannot be accepted for two reasons. First, it is not what the trial judge wrote. He did not state that, despite his concerns about the inconsistencies and implausibilities in the complainant's recall of times and dates, he was nevertheless satisfied that each and every one of the acts of sexual exploitation alleged by the complainant had been proved beyond reasonable doubt. What the judge wrote was: "I find that the [appellant] sexually assaulted [the complainant] on numerous occasions over a period of some years." He had earlier remarked: "I do not have to accept everything [the complainant] says to be satisfied of the charge." One is left to wonder what was meant by the "core allegations" and, since this is a criminal matter, one should not be left to wonder. Secondly, if the trial judge meant to convey that, despite his concerns about the inconsistencies and implausibilities in the complainant's recall of times and dates, he was nevertheless satisfied that each and every one of the acts of 92 (2017) 91 ALJR 1007; 347 ALR 586. Nettle sexual exploitation alleged by the complainant had been proved beyond reasonable doubt, the judge's reasons do not explain how, given the extent of the inconsistencies and implausibilities as to times and dates, he could legitimately have reached that standard of satisfaction. As already observed, the furthest the judge went in the identification of the acts of sexual abuse which he found to be proved was to say that he was satisfied beyond reasonable doubt that "the [appellant] sexually assaulted [the complainant] on numerous occasions over a period of some years", and the furthest the judge went in the provision of reasons as to why, despite the extent of inconsistencies and implausibilities, he was satisfied of that beyond reasonable doubt was to say, in effect, that he had seen and heard the complainant in the witness box and considered him to be an honest and reliable witness as to the "core allegations". That is the kind of reasoning This is not to overlook that there are cases of a type posited in Hamra94 where a trial judge may encounter numerous underlying acts of sexual exploitation of a particular kind or kinds that are alleged to have taken place within a discrete, designated period of time, and, therefore, where, without being able precisely to identify the time or circumstances of commission of any one of those alleged acts, the judge is able to conclude on the basis of the evidence that he or she is satisfied beyond reasonable doubt that, within that discrete, designated period of time, at least two acts of the particular identified kind or kinds alleged took place, separated by not less than the required period of three days. By contrast, however, where, as here, there are distinct groups of underlying acts of sexual exploitation which are alleged to have occurred at different times and in different circumstances, and the evidence as to the likelihood of each group of acts having occurred as alleged is distinct, different and attended by disparate inconsistencies and implausibilities, each group requires separate analysis. Contrary to the Crown's contentions, in such cases it does not suffice for a trial judge to say that, having seen and heard the witnesses give their evidence in the witness box, the judge is satisfied beyond reasonable doubt that the complainant is telling the truth. Rather, just as when an offence of persistent sexual exploitation is tried before a jury the judge must direct the jury that they must be unanimous as to each underlying act of sexual abuse which they find to be proved beyond reasonable doubt, so, too, when such an offence is tried before judge alone it is mandatory for the judge to direct himself or herself of the need to be satisfied beyond reasonable doubt of the commission of two or more of the acts of sexual offending alleged and to explain in reasons for 93 See above at [130]-[131]. 94 (2017) 91 ALJR 1007 at 1014 [27]; 347 ALR 586 at 594. Nettle judgment how he or she has reasoned to the conclusion of guilt beyond reasonable doubt in respect of each such act. The importance of the distinction may be demonstrated by reference to three of the inconsistencies which the appellant urged in support of his third ground of appeal before the Court of Criminal Appeal. It will be recalled that one of those inconsistencies was as between the complainant's evidence that the first act of oral sex occurred when he was the age of "nine going on to 12" and playing with slot cars in Shed 2, and thus at some time between 1988 and 1991, and the appellant's evidence that the slot car track was not set up in Shed 2 until June 1993. It is impossible to say from the judge's reasons what he made of that inconsistency, or, therefore, whether he ever truly turned his mind to its ramifications. All one has is his inscrutable declaration that, despite all of the identified inconsistencies, he considered the complainant to be a truthful and reliable witness as to the "core allegations". As has been seen, the Court of Criminal Appeal dismissed the matter as one of no moment95. But plainly it was a matter of considerable forensic moment. As mentioned, the appellant's evidence that the slot car track in Shed 2 was not operational until June 1993 appeared to be corroborated by contemporaneous calendar entries identified by his ex-wife. In June 1993, the complainant would have been 14 years and four months of age, not "nine going on to 12", and it would have been only 14 months before the last act of sexual abuse was alleged to have been committed on 28 August 1994. Assuming the appellant's evidence coupled with the calendar entries and his ex-wife's testimony were accepted, or at least in aggregate created a reasonable doubt as to whether the slot car track was operational before June 1993, it would have to follow that there was a reasonable doubt as to whether the alleged act of sexual abuse ever occurred at all, or, at least, if it did occur, whether it occurred before June 1993. Since the complainant's evidence was that the first instance of oral sex occurred in Shed 2, it must equally follow that there was thereby created a reasonable doubt as to whether the occasion when the appellant was alleged to have taken the complainant to Lucy's South Terrace unit and fellated him when the complainant was "close to 12" ever occurred at all or, if it did, whether it occurred before June 1993, within 18 months of the last alleged act of sexual abuse on 28 August 1994. So, too, must it follow that there was thereby created a reasonable doubt as to whether the occasion when the appellant was alleged to have taken the complainant to Cherry Gardens when the complainant was "over 12, 12 nearly" ever occurred at all or, if it did, whether it occurred before June 1993. And, to the extent that the complainant's evidence suggested that instances of oral sex occurred when he was aged between "nine going on to 12" 95 D, L [2015] SASCFC 24 at [138]. Nettle and 14 years and four months, it must also follow that those instances were not proved beyond reasonable doubt. Conceivably, it may be that the trial judge was satisfied that, despite the appellant's corroborated and, save for the complainant's testimony, effectively uncontested evidence that the slot car track was not operational in Shed 2 until June 1993, the judge considered it was proved beyond reasonable doubt that the slot car track was in fact set up and operational in Shed 2 at an earlier date, and, therefore, that the alleged first act of oral sex did occur as and when alleged. But if so, the judge did not say so, still less disclose how, despite the inconsistency in the evidence, he was able to reason to that conclusion beyond reasonable doubt. Granted, as the Crown submitted, the trial judge stated that he was "unimpressed by the [appellant's] presentation", "found [the appellant's] answers to be glib and evasive on some topics, particularly about the number and duration of occasions when [the complainant] and his siblings stayed or the [appellant] was alone with [the complainant]" and that "the [appellant] was … understating [the complainant's] interest in slot cars and using the track in Shed 2". But in both terms and substance, that falls far short of rejecting beyond reasonable doubt the appellant's evidence that the slot car track was not operational in Shed 2 until June 1993 or, for that matter, that the appellant did not meet Lucy until 1995 and so could not have taken the complainant to the South Terrace unit until after 28 August 1994, and that he never took the complainant to Cherry Gardens. To repeat, the requirement to refer to the evidence is not limited to the evidence which a judge accepts. Where, as here, an accused has relied upon substantial and cogent evidence which the judge rejects, the judge must refer to it and explain why it has been rejected. More likely perhaps, although recognising the existence of reasonable doubt as to when the slot car track was first operational in Shed 2, the trial judge was satisfied beyond reasonable doubt that the track was operational by June 1993, by which time the complainant would have been 14 years and four months old, and that there then occurred the first occasion of oral sex. In point of principle, there would have been nothing wrong with reasoning to that conclusion. But if that were the case, the difficulty remains that it is not what the judge said he did. And as should now be understood, it is no answer that an appellate court may be able to reverse engineer a logical path of reasoning capable of sustaining a trial judge's conclusion. An appeal against conviction to the Court of Criminal Appeal is not a rehearing96. Unless it is clear from a 96 See R v ADW (2002) 84 SASR 178 at 181-182 [24] per Doyle CJ (Debelle J agreeing at 185 [44]), 188-189 [62]-[63] per Williams J (Debelle J agreeing at 185 [44]). See also Kurtic (1996) 85 A Crim R 57 at 59-60 per Hunt CJ at CL (Grove J and Barr J agreeing at 66, 67). Cf Fleming (1998) 197 CLR 250 at 260 Nettle judge's reasons that he or she has so reasoned, the reasons are inadequate and as such productive of a miscarriage of justice. And where, as here, the inadequacy of reasons relates to the central issue to be tried, the proviso can be applied only if it is apparent that the judge must have reasoned by that route and no other97. Otherwise the appellate court cannot be satisfied that the error at trial did not affect the verdict98. It will be remembered that a second inconsistency relied upon in the Court of Criminal Appeal related to the appellant's alleged acts of masturbation in front of the complainant while the complainant played on the computer. The complainant's evidence was that there were "numerous times" when he was "growing up" when the appellant would be sitting on the chaise lounge masturbating while the complainant played games on the computer. According to the complainant, the computer was in the master bedroom, where the chaise lounge was situated. The appellant's evidence, however, was that the computer was always kept in his daughter's bedroom (where there was no chaise lounge), and it was not put to him in cross-examination that it was ever located anywhere else. Similarly, as will be recalled, the appellant's ex-wife's evidence in cross-examination was that the computer was in the daughter's bedroom and, when asked in re-examination whether it had ever been set up anywhere else, she said that she did not know but that all she could remember was that it was set up in the daughter's bedroom. The Court of Criminal Appeal dismissed the matter as one of no moment99. But it, too, was a matter of moment. If the trial judge accepted that the computer was always kept in the daughter's bedroom, or at least that there was a reasonable doubt as to whether it had ever been elsewhere than in the daughter's bedroom, that meant that there was a reasonable doubt as to whether there was ever an occasion of the type alleged when the appellant sat on the chaise lounge in the master bedroom masturbating in front of the complainant while the complainant played games on the computer. Conceivably, the judge may have been satisfied beyond reasonable doubt that there were occasions when the appellant sat on the chaise lounge masturbating while the complainant was present in the master bedroom doing something other than playing games on the computer. If so, however, the judge did not say so or explain why, 97 See AK (2008) 232 CLR 438 at 457 [58]-[59] per Gummow and Hayne JJ; Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 104 [29] per French CJ, Gummow, Hayne and Crennan JJ; [2012] HCA 14. 98 See Baiada (2012) 246 CLR 92 at 104 [28] per French CJ, Gummow, Hayne and Crennan JJ; Reeves v The Queen (2013) 88 ALJR 215 at 223-224 [50] per French CJ, Crennan, Bell and Keane JJ; 304 ALR 251 at 261; [2013] HCA 57. 99 D, L [2015] SASCFC 24 at [81], [139]. Nettle notwithstanding the doubt about reliability that the discrepancy was bound to engender, he was able to exclude the reasonable possibility that the alleged acts of masturbation did not occur. And it is to be remembered that inconsistencies are cumulative. For the complainant to be wrong as to the date when the slot car track was first set up in Shed 2, and thus as to when occurred the first alleged act of oral sex, is one thing. For the complainant to be wrong about both that and the circumstances in which the appellant is alleged to have masturbated in front of him is another thing, and one which is of potentially greater forensic significance in the assessment of which of the allegations are established beyond reasonable doubt. So then to a third inconsistency relied upon, which was as between the complainant's evidence that the appellant had taken him to Lucy's South Terrace unit when the complainant was "close to 12" years old, and there fellated him, and the appellant's evidence that he did not meet Lucy until 1995 and, therefore, did not take the complainant to Lucy's unit until after 28 August 1994, being the date of the last alleged act of sexual abuse. The Court of Criminal Appeal held that there was no need for the trial judge to deal with that issue because the appellant did not say when he commenced a friendship or relationship with Lucy, and although he said that he did not take the complainant to Lucy's unit until after the complainant indecently assaulted the appellant's daughter, he said that he was "not quite clear about it" and then that he was "almost hundred-per-cent sure about it"100. That is incorrect. The appellant stated clearly that the visit to Lucy's South Terrace unit was not until after the incident in which the complainant indecently assaulted the appellant's daughter, which occurred on 28 August 1994. When it was put to him whether the complainant would then have been 15 or 16 years old, the appellant replied "15, 15 and a half or something like that, I'm not sure". On the next day of the trial, in the second day of the appellant's cross-examination, he was asked when he first saw Lucy and he said it was after his daughter was indecently assaulted by the complainant. He was then asked when he had his first massage with Lucy (she was a masseuse), and whether it was towards the end of 1994, and he answered 1995. Asked then whether it was a few months after his daughter was indecently assaulted by the complainant, he said: "I'm not really sure about the date when I went to get my first massage from Lucy" but agreed it was "[a] number of months after August 1994". Asked then again whether the complainant was 15 or 15 and a half years old when the appellant took the complainant to Lucy's unit he answered: "I'm not quite sure of exactly how old he was ... He was 15, something about that, yeah. I mean – when was he born again?" When it was then put to him that he could have taken the complainant to Lucy's unit before February 1995, he answered that he did not meet Lucy until 100 D, L [2015] SASCFC 24 at [83]-[84]. Nettle 1995. Put to him then that he took the complainant to Lucy's unit before his daughter was indecently assaulted, he denied it. Later, when the appellant was being questioned about how often the complainant and his siblings would stay at the appellant's and his ex-wife's home, the appellant was asked whether on occasions when the complainant stayed at the appellant's home the appellant had taken the complainant out on "boys' trips". He answered, emphatically, "I don't think so". That it was emphatic is apparent from the terms of the exchange: "Q. Do you agree that you would take [the complainant] on outings. A. By himself; just me and him? Q. Boys' trips. I don't think so. Q. What do you mean 'I don't think so'; are you sure. A. Of course I'm sure, absolutely 100%. Q. Never happened. A. Never ever. I'm emphatic about that." The appellant's evidence about the trip to Lucy's unit being after 28 August 1994 was clear and emphatic, just as was his evidence that he did not ever take the complainant on any "boys' trips" when the complainant and his siblings came to stay at his home. Whether or not the appellant's evidence on the point was accepted was a matter for the trial judge. But it could not properly be sloughed off on the basis that it was vague. For the reasons already stated, it needed to be dealt with specifically and in the detail which has been explained. Similar considerations apply to the act of oral sex which was alleged to have occurred at Cherry Gardens when the complainant was 12 years old (ex hypothesi, some two years before the first alleged act of oral sex in Shed 2), especially given the appellant's categorical and, save for the complainant's testimony, uncontradicted denial of ever having taken the complainant to Cherry Gardens. In that connection, too, it is to be noted that, although the Crown called the appellant's ex-wife, who deposed that she had been to Cherry Gardens with the appellant many times, she was not asked whether and did not suggest that the appellant had ever taken the complainant to Cherry Gardens. Finally, it may be observed that the same considerations also apply to the inconsistencies between the complainant's evidence and the appellant's evidence as to the occasions when the appellant allowed the complainant to ride the appellant's motor bike and whether it was in return for acts of oral sex. On the appellant's evidence, the complainant did not ride the motor bike until he was at Nettle least 15 years of age, after the incident involving the appellant's daughter – a version of events consistent with evidence of the size and capacity of the motor bike and the unlikelihood of a child of much less than 15 years of age being able to ride it. Presumably, it was for that reason that the trial judge stated that the complainant's estimates of his age when allowed to ride the appellant's motor bike were not reliable. But, as has been seen, having just made that observation, the judge then went on to observe that such lack of reliability was not sufficient to cause him to doubt the complainant's "truthfulness or reliability" (emphasis added). What that meant is impossible to say. One possibility perhaps is that, despite the judge's expressed doubt as to the reliability of the complainant's evidence of his age when he was permitted to ride the motor bike, the judge was satisfied beyond reasonable doubt that the complainant was allowed to ride the motor bike from the age of 15 and, too, that there were then instances of oral sex in return for motor bike rides. If so, however, that is not what the judge said. Nor does it explain how the judge managed to reason to that conclusion beyond reasonable doubt given that, if there were no motor bike rides until the age of 15, or at least if there was reasonable doubt as to whether there were any rides before then, there was reasonable doubt that there were instances of oral sex in exchange for motor bike rides before the age of 15, and the last date of alleged oral sex was said to have occurred when the complainant was 15 and a half years old. Another possibility is that, despite the judge's expressed doubt as to the complainant's reliability regarding his age when permitted to ride the motor bike, other evidence persuaded the judge that there were instances of motor bike rides for oral sex before the age of 15 and therefore before the date of the last alleged instance of oral sex. But again, that is not what the judge said and, in the absence of further explanation, it taxes credulity that the judge could have reasoned to that conclusion beyond reasonable doubt consistently with his misgivings about the complainant's reliability. Conclusion and orders The trial judge's reasons did not meet the standard required in the case of a trial by judge alone of a serious indictable offence. The failure to do so constituted an error of law productive of a miscarriage of justice. It is not suggested that the proviso can be applied, and, for reasons already explained, it cannot be applied. It follows that the appeal should be allowed. The conviction should be quashed, the sentence passed below should be set aside, and it should be ordered that a new trial be had.

HIGH COURT OF AUSTRALIA WHISPRUN PTY LIMITED (Formerly Northwest Exports Pty Limited) APPELLANT AND RESPONDENT Whisprun Pty Limited v Dixon [No 2] [2004] HCA 2 5 February 2004 ORDER Amend the orders made by this Court on 3 September 2003 by deleting the previous orders and substituting the following paragraphs: Appeal allowed. Set aside the orders of the Court of Appeal of New South Wales made on 28 September 2001. Remit the matter to the Court of Appeal to determine whether "the further evidence" should be admitted and to take such further steps as are necessary to dispose of the appeal to that Court including the costs of the trial. Respondent to pay the costs of the appeal to this Court and the proceedings in the Court of Appeal to date. Each party to pay its or her costs of the notice of motion. On appeal from the Supreme Court of New South Wales Representation: B W Walker SC with S E Pritchard for the appellant (instructed by Hicksons Lawyers) D F Jackson QC with K J Ryan and N G Ford for the respondent (instructed by Walker Kissane & Plummer) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. GLEESON CJ, McHUGH AND GUMMOW JJ. The issue in this Notice of Motion is whether the Court should vary the orders it made in an appeal decided last year and remit the matter to the Court of Appeal of New South Wales to determine whether it should admit further evidence and then re-hear the appeal. The issue arises because, in giving judgment, the majority Justices did not deal with a contention of the unsuccessful respondent to the appeal. On 3 September 2003, the Court made orders in an appeal brought by Whisprun Pty Limited ("Whisprun") against an order of the Court of Appeal for a new trial of an action for damages. The orders of this Court were: Appeal allowed with costs. Set aside the orders of the Court of Appeal of New South Wales made on 28 September 2001 and, in lieu thereof, order that the appeal to that Court be dismissed with costs. The effect of these orders was that the verdict entered in favour of Whisprun, the defendant in the trial, was reinstated. At the trial, the respondent to the appeal in this Court, Ms Sonya Lea Dixon, had claimed that she suffered from chronic fatigue syndrome as the result of being infected with Q fever. The trial judge accepted that Ms Dixon had contracted Q fever but, because of the view that he took of her credibility, he was not satisfied that she suffered from chronic fatigue syndrome as the result of contracting Q fever. The Court of Appeal set aside the verdict and judgment of the trial judge because it appeared to that Court that his Honour had not satisfactorily considered Ms Dixon's case. On appeal to this Court, a majority of the Court disagreed with this finding. The majority held that the case that the Court of Appeal found had not been properly considered was not the case that Ms Dixon had run at the trial. By a Notice of Motion, Ms Dixon now moves the Court for an order that the orders pronounced on 3 September 2003 be varied by deleting Order 2 and replacing it with the following orders: Set aside the orders of the Court of Appeal of New South Wales made 28 September 2001. 3. Matter remitted to the Court of Appeal for the determination of the issues the subject of the respondent's Notice of Contention dated 19 August 2002. That Notice of Contention stated: McHugh "The Respondent wishes to contend that the decision of the Court below should be affirmed but on grounds other than those relied on by the Court below. GROUNDS The Court of Appeal should have received the further evidence referred to on pages 46 and 47 of the Court of Appeal's reasons for judgment." Whisprun opposes the making of the orders sought in the Notice of Motion. Ms Dixon had contended in the Court of Appeal that the "further evidence" supported her claim that she suffered from chronic fatigue syndrome and that it showed that she was still suffering from Q fever. However, because that Court found that the verdict in favour of Whisprun should be set aside in any event, it did not rule on the admissibility of the further evidence. Whisprun correctly points out that the issue raised in the Notice of Contention did not entitle this Court to affirm the order of the Court of Appeal. Even if the Court of Appeal had erred in not admitting the evidence, that error would not entitle Ms Dixon to retain her order for a new trial. At best, it would only entitle her to have her appeal to the Court of Appeal determined on the basis of "the further evidence" and the evidence given at the trial. On its face, the Notice of Contention did not seek – nor could it have sought – an order that the matter should be remitted to the Court of Appeal if the appeal by Whisprun was upheld. The effect of a Notice of Contention is to support the order under appeal by an argument or arguments not accepted or applied by the court whose order is under appeal. However, despite the filing of and the terms of the Notice of Contention, on the hearing of the appeal Ms Dixon's counsel said that he did not seek to use the issue of the admissibility of the further evidence as a ground for affirming the Court of Appeal's order. After counsel for Whisprun had completed his argument in reply, Ms Dixon's counsel said1: "[W]hether the notice of contention be the right form or not, all that we seek in relation to it is that the matter be remitted to the Court of Appeal to 1 Transcript of proceedings, 7 November 2002 at 85. McHugh deal with the unresolved issue of the admission of further evidence if the appeal is otherwise successful." The question then is whether this Court should determine the issue of admissibility or make the orders sought by Ms Dixon. If the Court of Appeal should not have received the further evidence, the orders made on 3 September 2003 would stand. However, there are a number of difficulties with this Court determining the issue, the chief of which is that the Court has not had the benefit of a full argument from the parties on the issue. Moreover, if the Court decided the evidence was admissible, the case would have to be remitted to the Court of Appeal. Given the circumstances set out in the previous paragraph, the best course is for the matter to be remitted to the Court of Appeal. That Court can then determine the issue of the admissibility of the further evidence and take whatever additional steps are required to dispose of the appeal to that Court. Orders The orders made by this Court on 3 September 2003 should be amended by deleting the previous orders and substituting the following paragraphs: Appeal allowed. Set aside the orders of the Court of Appeal of New South Wales made on 28 September 2001. Remit the matter to the Court of Appeal to determine whether "the further evidence" should be admitted and to take such further steps as are necessary to dispose of the appeal to that Court including the costs of the trial. The respondent should pay the costs of the appeal to this Court and the proceedings in the Court of Appeal to date. Each party to pay its or her costs of the notice of motion.

HIGH COURT OF AUSTRALIA Matter No M51/2007 INTERNATIONAL AIR TRANSPORT ASSOCIATION APPELLANT AND ANSETT AUSTRALIA HOLDINGS LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) & ORS RESPONDENTS Matter No M52/2007 INTERNATIONAL AIR TRANSPORT ASSOCIATION APPELLANT AND ANSETT AUSTRALIA HOLDINGS LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) RESPONDENT International Air Transport Association v Ansett Australia Holdings Limited [2008] HCA 3 6 February 2008 M51/2007 & M52/2007 Matter No M51 of 2007 ORDER Appeal allowed. Set aside orders 1 and 2 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 16 November 2006, except in so far as those orders varied the orders in respect of the costs of proceedings at first instance, and, in their place, order that the appeal to that Court be otherwise dismissed. The appellant pay the respondents' costs of the appeal to this Court. Matter No M52 of 2007 Appeal allowed. Set aside orders 1 and 2 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 16 November 2006, except in so far as those orders varied the orders in respect of the costs of proceedings at first instance, and, in their place, order that the appeal to that Court be otherwise dismissed. The appellant pay the respondent's costs of the appeal to this Court. On appeal from the Supreme Court of Victoria Representation S J Gageler SC with C M Caleo SC for the appellant (instructed by Clayton Utz Lawyers) N J Young QC with M C Garner and O Bigos for the respondents (instructed by Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS International Air Transport Association v Ansett Australia Holdings Limited Contract – Construction – Agreements between the International Air Transport Association ("IATA") and participating airlines provided for the operation of a "Clearing House" in accordance with regulations ("the Regulations") – Pursuant to the Regulations IATA set off debits and credits that would otherwise exist between the airlines – The Regulations provided that no liability or right of action would accrue between participating airlines, including Ansett – Whether the effect of the Regulations was that IATA was the creditor of Ansett to the exclusion of other participating airlines. Insolvency – Voluntary administration under Pt 5.3A of the Corporations Act 2001 (Cth) ("the Act") – Deed of Company Arrangement – Public policy – Whether Pt 5.3A of the Act or a rule of public policy required that the whole of the debtor's estate be available for distribution to all creditors – Whether any such rule invalidated the effect of the Regulations properly construed. Insolvency – Voluntary administration under Pt 5.3A of the Act – Deed of Company Arrangement – Order of priorities – Relationship between contractual rights and obligations and the operation of Pt 5.3A – Whether the Regulations purported to circumvent the Deed or were otherwise repugnant to the Deed. Corporations Act 2001 (Cth), Pt 5.3A. GLEESON CJ. The primary issue in these appeals is one of construction of a contract, the Multilateral Interline Traffic Agreement – Passenger ("the Agreement"), of which the IATA Clearing House Regulations ("the Clearing House Regulations") are part. If the respondents' construction of the Agreement is accepted, an issue of public policy arises. Whether a similar issue arises if the appellant's construction is correct is a matter of controversy. The proceedings and the issues The facts concerning the Clearing House system operated by the appellant ("IATA"), the participation in that system by Ansett Australia Holdings Limited ("Ansett"), the insolvency of Ansett, the Deed of Company Arrangement ("the DOCA") executed on 2 May 2002 pursuant to Pt 5.3A of the Corporations Act 2001 (Cth) ("the Act"), and the claims by or with respect to Ansett under monthly clearances prior to the DOCA, are set out in the joint reasons of Gummow, Hayne, Heydon, Crennan and Kiefel JJ ("the joint reasons"). In December 2002, IATA brought proceedings in the Supreme Court of Victoria challenging decisions by the Deed Administrators of Ansett that IATA was not a creditor of Ansett in respect of the monthly clearances from August to December 2001. In June 2003, Ansett commenced proceedings in the same Court seeking a declaration that the Clearing House Regulations ceased to apply to all claims by or with respect to Ansett upon and by virtue of the execution on 2 May 2002 of the DOCA. The matters came before Mandie J1, who described the principal issue in both proceedings as a question whether IATA was and remained a creditor of Ansett in respect of the monthly clearances. The amount claimed by IATA was $US4,370,989. Relying on the authority of British Eagle International Air Lines Ltd v Compagnie Nationale Air France2, Ansett argued that, by virtue of Ansett's execution of the DOCA, the Clearing House arrangement "became repugnant to the insolvency legislation and contrary to public policy". This argument was put upon the premise that the Agreement, on its true construction, was not materially different from the agreement that was before the House of Lords in British Eagle and, in particular, that a relationship of debtor and creditor existed between issuing and carrying Clearing House members. The argument of IATA was that, as appeared from the evidence and as was acknowledged on all sides, the Agreement had been re-drafted, following the British Eagle decision, for the purpose of overcoming the effect of that decision, and that under the new International Air Transport Association v Ansett Australia Holdings Ltd (subject to a deed of company arrangement) (2005) 53 ACSR 501; 23 ACLC 1161. [1975] 1 WLR 758; [1975] 2 All ER 390. Agreement the airlines were not, as between themselves, debtors and creditors. IATA, and IATA alone, it was said, was a creditor of Ansett in respect of the relevant clearances. On that basis, the other airlines never became debtors or creditors of Ansett; neither the DOCA nor any statutory provision required that they be treated as debtors or creditors; and the rights of the general body of creditors of Ansett were not displaced or interfered with by the Clearing House "In my opinion there was no relevant asset of Ansett, being a debt or other chose in action [arising in favour of Ansett against other airlines when it carried passengers for them], of which the non-airline creditors were deprived by virtue of the clearing house arrangement. It was conceded on behalf of Ansett that, if this was so, the British Eagle principle 'did not bite'. I so conclude." Mandie J declared that IATA was a creditor of Ansett in respect of the transactions the subject of the clearances. The matters went to the Victorian Court of Appeal3. Maxwell P reached the same conclusion as Mandie J, that is to say, that according to the Agreement no relationship of debtor and creditor arose between the airlines who participated in the Clearing House system and that, instead, each airline had a monthly liability to, or a monthly claim against, IATA. That, as he saw the case, was all he needed to decide. Nettle JA, with whom Bongiorno AJA agreed, accepted the view for which Ansett contended, which was that debts and rights of action arose between the individual airlines, and they were not extinguished until they had been cleared. On that basis, there was no relevant difference between the Agreement and the clearing house arrangements considered in British Eagle; there was a purported contracting out of the relevant insolvency legislation; such contracting out was contrary to public policy; and the insolvency laws prevailed. In this Court, IATA contends that the construction of the Agreement accepted by Mandie J and Maxwell P should be preferred. IATA further contends that, if its construction of the Agreement is correct, then there was no purported contracting out of any relevant insolvency laws; there was never any relationship of debtor and creditor between the individual airlines; and the questions of public policy considered in British Eagle do not arise. On one matter the parties agree. The first step is to decide the meaning of the Agreement. Whether there is a further step remains to be considered. Nobody suggested in argument, and none of the judges who have considered this question in Australia, or who have considered a similar question in England, 3 Ansett Australia Holdings Ltd (subject to deed of company arrangement) v International Air Transport Association (2006) 60 ACSR 468; 24 ACLC 1381. suggested, that the construction of the Agreement is to be approached otherwise than according to the application of the orthodox principles used to decide the meaning of a commercial contract. Naturally, the airlines who were parties to the Agreement, and IATA itself, would have understood the potential significance of the insolvency laws of the countries in and between which the airlines provided services, and the differences between those laws. The risk of insolvency, which stands behind many commercial agreements, undoubtedly formed part of the context in which the Clearing House system was devised and intended to operate. Local insolvency laws, such as those of Australia, have to be applied in the light of the legal relationships created by the contract into which the airlines and IATA entered, but it is the agreement of the parties that establishes those legal relationships. In considering Ansett's public policy argument, it is necessary to be precise about the provisions of the Agreement that are said to offend public policy. There is no evidence, and no suggestion in argument, that the entire Clearing House system was designed to evade insolvency laws. In order to decide whether any aspect of the Agreement offends public policy, it is first necessary to decide what the Agreement means, for that is a matter of substantial dispute. The construction issue In giving a commercial contract a businesslike interpretation, it is necessary to consider the language used by the parties, the circumstances addressed by the contract, and the objects which it is intended to secure4. An appreciation of the commercial purpose of a contract calls for an understanding of the genesis of the transaction, the background, and the market5. This is a case in which the Court's general understanding of background and purpose is supplemented by specific information as to the genesis of the transaction. The Agreement has a history; and that history is part of the context in which the contract takes its meaning6. Before considering that history, it is necessary to explain, by reference to the text, how the issue of construction arises. International airline operators regularly issue passenger tickets in respect of journeys where it is contemplated that, for some part, or perhaps the whole, of 4 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 589 [22]; Lake v Simmons [1927] AC 487 at 509 per Viscount Sumner. 5 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 462 [22]; Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 995-996; [1976] 3 All ER 570 at 574; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 350. 6 Singh v The Commonwealth (2004) 222 CLR 322 at 331-338 [8]-[23]. the journey, the carrier will be another airline operator. IATA is an association of international airline operators. The members of IATA desired to enter into arrangements under which each party might sell transportation over the routes of the others. The Agreement embodies those arrangements. IATA was incorporated in 1945 under the Statutes of Canada. In or about November 1946, IATA established the IATA Clearing House, which is a division of IATA responsible for the clearance of accounts between member airline operators. The primary functions of the Clearing House are to effect monthly clearances and to pay or collect from IATA members the balance found to be due by or to the Clearing House. This enables airline operators to avoid having to make and receive numerous payments to and from other airlines. Mandie J pointed out that the essence of the process is that appropriate debits and credits are entered against or in favour of each operator in respect of dealings with other operators, and clearances of those entries result in settlements involving either a payment by an airline operator to the Clearing House (IATA) or a payment by IATA to an airline operator, rather than there being a multitude of payments between the operators themselves. Ansett joined this system in 1951, and at all material times since then was a party to the current Agreement. The Clearing House system is operated pursuant to the Clearing House Regulations. Membership of the Clearing House is open to IATA members on a voluntary basis (reg 4). Application for membership is made pursuant to, and on the terms of, the Regulations. Regulation 9 provides that admission to membership in the Clearing House shall constitute a contract between each member and every other member and IATA, and sets out terms of that contract. Those terms are incorporated in the Agreement by Art 8, which provides: "8.1 PAYMENT OF TRANSPORTATION CHARGES issuing airline agrees to pay Each to each carrying airline the transportation charges applicable to the transportation performed by such carrying airline ... in accordance with applicable regulations and current clearance procedures of the IATA Clearing House, unless otherwise agreed by the issuing airline and the carrying airline." Regulation 9, in the form applicable to these appeals, provides: "(a) With respect to transactions between members of the Clearing House which are subject to clearance through the Clearing House as provided in Regulations 10 and 11 and subject to the provisions of the Regulations regarding protested and disputed items, no liability for payment and no right of action to recover payment shall accrue between members of the Clearing House. In lieu thereof members shall have liabilities to the Clearing House for balances due by them resulting from a clearance or rights of action against the Clearing House for balances in their favour resulting from a clearance and collected by the Clearing House from debtor members in such clearance; (b) Notification to the Clearing House of any claim (debit or credit) for clearance shall, subject to the Regulations, constitute an irrevocable authority to clear the same in accordance with the Regulations and current clearing procedures and to pay or collect any balances due by or to the Clearing House as a result of the clearances effected; provided, however, that if the Clearing House receives notification that the amount of a claim that has been notified for clearance has been attached, garnished or otherwise seized by issue of an order of Court, the Clearing House Manager shall, whilst such situation exists, suspend all clearance between the members concerned until notified by both parties that normal clearance between them may be reinstituted. During the period of suspension, the parties affected shall remain absolved from their respective obligations under Regulation 10 to settle only through the Clearing House. The effecting of a clearance and payment of the balances due to or by the Clearing House in accordance with these Regulations and current clearance procedures shall constitute a satisfaction and discharge of every claim dealt with in such clearance. IATA shall be entitled to recover any balances due to the Clearing House by legal action. (d) Members of the Clearing House may include in the second clearance in which a new member participates their unpaid claims against the new member referring to pre-membership transactions, unless otherwise agreed between the new member and the member having the claim. The contract created hereby and the obligations created hereunder shall be binding upon the successors in interest, including administrators, trustees and receivers, of each member." Other regulations bear upon the question. They include reg 12 which appears in the following context: "SCOPE OF CLEARANCE The following classes of transactions shall be cleared through the Clearing House and not otherwise in any manner, except for particular transactions or particular classes of transactions with respect to which the parties thereto have expressly agreed that they shall not be cleared through the Clearing House: all transactions between members pursuant to their participation in the IATA Multilateral Interline Traffic Agreements, transactions arising from the Universal Air Travel Plan and Miscellaneous Charges of any nature including the carriage of mail, charters, Pool agreements, airport and terminal charges, aircraft servicing, maintenance and victualling and ground transportation services, telecommunications, etc and all similar services customarily rendered between carriers, including billings for authorised cash advances made by national airlines to representatives of foreign airlines for the following purposes: salvage work, charges, catering advances to crews for the purpose of accommodation and subsistence; advances to local representatives of foreign airlines under standing authority and within agreed monthly maxima for the purpose of meeting normal weekly and monthly current airport or town expenditure. 11. All other transactions including those relating to the purchase or sale of fixed assets such as aircraft, and aircraft engines and components, spares in bulk not obtained for immediate issue, plant and equipment and fittings, premises or properties, and transactions relating to leases may be cleared and settled through the Clearing House provided the consent of the member against which the claim is raised has first been obtained. It is an obligation of members to obtain all necessary approvals from their national bank or other appropriate authority before clearance through the Clearing House. 12. All transactions within the scope of clearance are hereby deemed mutual debts of the parties involved. Unless otherwise agreed to by the parties, a claim for such transaction shall arise upon the performance of the services rendered therefor." It was common ground, and the evidence showed, that the form of reg 9(a) set out above was the result of amendments to the Regulations made, following the decision of the House of Lords in British Eagle, for the purpose of overcoming the effect of the decision in that case. Unless the purpose of overcoming the effect of the decision was, for some legal reason, impossible of fulfilment, then Ansett's argument must be that the changes were inadequate to produce the intended result. That, in substance, is what Nettle JA decided. He concluded that reg 9(a) "cannot receive effect according to its terms." That is the focus of the issue of construction. The question is whether, in the context of the whole Agreement, including the Regulations, the provision in reg 9(a), that no liability for payment and no right of action to recover payment shall accrue between members of the Clearing House, and that in lieu thereof members shall have liabilities to and rights of action against the Clearing House, has effect according to its terms. Those words spell out what the Regulations in their previous form, without those words, had been held to mean in British Eagle by Templeman J7, by the Court of Appeal8, and by the minority in the House of Lords. In British Eagle, it was alleged that, at the time of its insolvency, British Eagle, having carried passengers for Air France, was owed a certain sum by Air France, and that such amount was an asset available to the general creditors of British Eagle. Air France's defence was that it owed nothing to British Eagle, and that, under the Clearing House system, British Eagle's only relevant assets or liabilities were rights or obligations between British Eagle and IATA. That defence was upheld at first instance and in the Court of Appeal. Russell LJ summarised the opinion of the Court of Appeal, saying9: "[W]e do not consider that the contract is one that can fairly be said to contravene the principles of our insolvency laws. Those laws require that the property of an insolvent company shall be distributed pro rata among its unsecured creditors: but the question here is whether the claim asserted against Air France is property of British Eagle. In our judgment it is not: British Eagle has long since deprived itself of any such property by agreeing to the clearing house system." The same view was taken by the dissenting members of the House of Lords, Lord Morris of Borth-y-Gest and Lord Simon of Glaisdale. The leading judgment for the majority in the House of Lords was given by Lord Cross of Chelsea, with whom Lord Diplock and Lord Edmund-Davies agreed. Lord Cross, after reviewing the detailed terms of the contract (which did not include what are now said to be the critical words of reg 9(a)), concluded, as a matter of construction, that British Eagle had a legal right to payment from Air France, which could properly be called a debt, even though it could not bring legal proceedings against Air France but was obliged to use the Clearing House system to obtain payment. Having reached that conclusion as a matter of construction, Lord Cross then dealt with the argument that the Clearing House system impermissibly conflicted with, or attempted to by-pass, the insolvency laws by subjecting the property of British Eagle (the debt owed to it by Air France) to the claims of the Clearing House. His Lordship came to that argument 7 British Eagle International Air Lines v Compagnie Nationale Air France [1973] 1 Lloyd's Rep 414. 8 British Eagle International Airlines Ltd v Compagnie Nationale Air France [1974] 1 Lloyd's Rep 429. [1974] 1 Lloyd's Rep 429 at 434. having first decided that there was property of British Eagle in the form of a debt (or an innominate form of liability not materially different from a debt) owed by Air France. Upon that premise, his Lordship concluded that the Clearing House procedures attempted to achieve a distribution of British Eagle's property which ran counter to the principles of the insolvency legislation. The procedures, he said, provided for a distribution of the property of the insolvent company different from that prescribed by law. This was contrary to public policy and the rules of general liquidation must prevail; not the rules of some special "mini liquidation"10. The purpose of the amendment made to reg 9(a) was to remove the premise upon which the reasoning of the majority in the House of Lords proceeded (that, at the time of its insolvency, British Eagle owned property in the form of a debt owed to it by Air France), and to restore the contractual position found at first instance, and in the Court of Appeal, and accepted by the minority in the House of Lords. If there never was any property of British Eagle in the form of a debt owed to it by Air France, then there was no attempt to dispose of or deal with such property in a manner inconsistent with the insolvency laws. A matter of commercial practicality may be noted. A clearing house system has many convenient features, some of which are too obvious to require elaboration. The members of IATA include airline operators in a wide variety of forms of ownership, including government ownership, and those operators are based in localities with different legal systems. It is not difficult to understand why operators might agree to a system that was not merely a method of enforcing legal rights against other operators but was intended to create rights of a different kind. If, properly construed, an agreement between operators meant that they had no property in the form of legal rights against other operators, and no liabilities in the form of debts owed to other operators, then it is difficult to identify any principle of public policy that would make it impossible to give effect to that agreement. This is a matter to which it will be necessary to return. A matter of drafting practicality also should be noted. In setting out to achieve a contractual result of the kind that IATA says was achieved by the amendment to reg 9(a), it was necessary to find some way of describing that which the Clearing House system was to clear. It is, therefore, hardly surprising that the Regulations make reference to claims arising from the issuing of passenger tickets. Whatever was being subjected to the Clearing House procedure had to be identified for the purpose of that procedure. The transactions on which the procedure operated involved the provision of services for reward. The procedure was to regulate payment for those services. The rights or 10 British Eagle International Air Lines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758 at 780-781; [1975] 2 All ER 390 at 411. entitlements upon which the procedure operated had to be identified. The general scheme of reg 9 was to refer to "clearance" of "transactions", and to "claims" for clearance. According to reg 12, a claim for a transaction arose upon the performance of the services rendered. Nettle JA observed that Art 8.1 of the Agreement provided for each issuing airline to pay each carrying airline the transportation charges applicable. This, he said, created an obligation and correlative right properly described as a debt. However, the agreement for payment in Art 8.1 was expressed to be an agreement to pay in accordance with the Regulations unless otherwise agreed by the issuing airline and the carrying airline. The capacity to opt out of the Clearing House system by agreement between an issuing airline and a carrying airline, and the qualification in reg 9(a) referring to protested and disputed items, indicated that it was contemplated that the ordinary operation of the system would not cover all transactions. That is not inconsistent with the construction of reg 9(a) for which IATA contends. Nettle JA accepted that if reg 9(a) stood alone, it would be hard to resist IATA's argument. Its terms, he said, imply the annihilation of a debt and its replacement with rights as against the Clearing House alone. IATA points out, however, that the matter is not left to implication; and there is not an anterior debt that is annihilated. Subject to the qualification mentioned, the regulation states that no liability shall accrue as between the airlines, and that in lieu thereof members have rights and liabilities against or in favour of the Clearing House. Regulation 9(b), to which Nettle JA referred, refers to an amount of a claim being "attached, garnished or otherwise seized". This, his Honour said, assumes the existence of a debt, at least until clearance. Maxwell P pointed out that, in British Eagle, all the members of the House of Lords rejected the argument that reg 9(b) demonstrated that there were debts owing between members. The provision is necessary to deal with the case where a creditor of a carrier, perhaps not knowing that transactions were subject to the clearance system, went to court upon an assumption that debts were owing between airlines. Provision for temporary suspension of the system in such a case is not inconsistent with reg 9(a). As to reg 12, its legal effect in a particular jurisdiction may vary according to the laws, including the laws concerning set-off, of that jurisdiction. It is a deeming provision, and part of the need for such deeming arises from the terms of reg 9(a). Without such a provision, transactions the subject of claims might not have the mutuality required for set-off. The form of setting-off for which the system provides is, in the case of a particular member, the setting off of the total of the debit claims notified against that member against the credit claims notified by that member. The Agreement contains a number of provisions consistent with the meaning for which Ansett contends. The task, however, is to decide the meaning of the Agreement, read as a whole, including reg 9(a) in its present form. There is no repugnancy between reg 9(a) and the rest of the Agreement, or any particular part of the Agreement. The division of opinion among the English judges who considered the Agreement in its unamended form at least shows that the other provisions are not necessarily inconsistent with the result for which IATA contends. What, then, is the legal significance of the fact, evident from the history of the Agreement and acknowledged on both sides, that reg 9(a) takes its present form as a result of an amendment made by IATA and the member airlines in response to the British Eagle decision? As noted earlier, that aspect of the historical context throws light on the purpose and object of the Agreement. It is information that assists in the ascertainment of the meaning of reg 9(a) and it confirms that such meaning is the ordinary meaning conveyed by the text of that regulation11. This is a modest use of contextual matter, but it is all that is necessary for present purposes. Regulation 9(a) means what it says. It cannot be ignored. It is not repugnant to some overriding provision. It is consistent with the other provisions. It makes commercial sense. It should be given effect according to its terms. On the true construction of the Agreement, in the case of the transactions the subject of the monthly clearances in question, the property of Ansett did not include debts owed to it by other airline operators and the liabilities of Ansett did not include debts owed by it to other airline operators. The relevant property of Ansett was "the contractual right to have a clearance in respect of all services which had been rendered on the contractual terms and the right to receive payment from IATA if on clearance a credit in favour of the company resulted."12 Public policy Upon the construction of the Agreement accepted above, as the joint reasons explain, the DOCA did not operate to defeat the claim of IATA or to support the claim of Ansett. The decision of the House of Lords in British Eagle, and of the Victorian Court of Appeal in the present case, and at least the primary argument of Ansett in this Court, concerning the effect of Ansett's insolvency, proceeded upon the premise that the Agreement (or, in the case of British Eagle, the Agreement in an earlier form) meant something different. The premise was that, upon the true 11 Compare, in the context of statutory interpretation, Acts Interpretation Act 1901 (Cth), s 15AB(1)(a). 12 British Eagle International Air Lines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758 at 765 per Lord Morris of Borth-y-Gest; [1975] 2 All ER 390 at construction of the Agreement, the members of the Clearing House stand as to claims to be cleared in relation to each other as debtors and creditors and that this relationship inures until the debt is cleared in accordance with the Clearing House procedures or otherwise settled. On that approach, reg 9(a) is no more than a stipulation that the rights and liabilities arising between members are not to be enforceable except in accordance with the Regulations. Given the premise on which the argument proceeds, the agreement that simple contract debts are to be satisfied, and may only be satisfied, in a particular way is an attempt to contract out of the insolvency laws and is contrary to public policy13. The premise having been rejected, that argument falls away. In opening the appeals to this Court, senior counsel for IATA, seeking to define the issues, said that "[i]f the construction question is resolved in IATA's favour, then, on the way in which Ansett seeks to present its public policy argument, the public policy for which it contends is not engaged and that is the end of the matter." That is certainly how Mandie J at first instance, and Maxwell P in dissent in the Court of Appeal, saw the case. The majority in the Court of Appeal, having resolved the construction question against IATA, did not consider whether a public policy issue would have arisen on the alternative construction. Even so, some of the submissions for Ansett in this Court appeared to embrace a wider proposition than that for which the decision in British Eagle stands. The effect of the proposition appears to be that, even if the majority in British Eagle had construed the Agreement (as it then stood) in the same way as the minority (and Templeman J and the Court of Appeal), the Agreement (or some unspecified part of the Agreement) would have been regarded as an ineffective attempt to contract out of the insolvency laws. On that approach, it becomes important to identify what exactly is said to be against public policy, and what the consequences of such a conclusion might be. If it were said, for example, that the whole Agreement is contrary to public policy, then that might have consequences for which nobody contends. If it were said that part of the Agreement is contrary to public policy, then it would be necessary to identify that part. There is a logical difficulty with the argument. If one construes the Agreement to mean that debts and property rights arise between member airline operators upon the performance of services, and a provision that such rights and liabilities are not enforceable otherwise than through the Clearing House system is treated as contrary to public policy and void, then there remains something on which the insolvency laws (to use Mandie J's word when recording Ansett's concession) may "bite". If, however, the alternative construction is accepted, as 13 British Eagle International Air Lines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758 at 780-781; [1975] 2 All ER 390 at 411; Horne v Chester and Fein Property Developments Pty Ltd [1987] VR 913 at 919. it should be, a problem arises. Public policy may render a contractual provision invalid; but it cannot create a contract to which the parties have never agreed. It is one thing to treat the Clearing House system as a mere procedural convenience which operates smoothly enough so long as all participants are solvent but which can have no lawful work to do in the event of supervening insolvency, when the parties are thrown back upon their basic contractual rights and obligations. What if the parties have agreed that there shall be no such rights and obligations as between themselves? They cannot be forced to become debtors and creditors when they have agreed that they would not be so. The argument involves an impermissible attempt to use public policy to create rights and liabilities, and to create for the parties a new agreement different from the agreement they have made. The airline operators have agreed between themselves and with IATA upon the legal basis on which they will provide services of the kind covered by the Agreement. Public policy does not enable a court to re-write their contract, and bind them to a different agreement. Ansett's public policy argument appears to depend upon an assumption that, notwithstanding their agreement, the "real" or "underlying" legal relationship between the airline operators is that of debtors and creditors, and that this legal relationship is ineradicable. Yet, on the true construction of the Agreement, that is not the basis upon which the operators agreed to provide the services in question. As Lord Morris pointed out in British Eagle14, the Agreement contained no provision that was designed to come into effect or bring about a change in the event of insolvency, and there is no ground to surmise or assert that a different agreement would have been made but for an attempt to evade insolvency laws. It is one thing to say (as was held in British Eagle and in the Victorian Court of Appeal) that the airline operators, if they were debtors and creditors of each other, could not lawfully agree that those debts and rights of property would escape the effects of the insolvency laws. It is another thing altogether to say that, although the airline operators agreed that they would not enter into relationships of debtors and creditors, the law will impose that relationship upon them, contrary to their agreement. Insofar as Ansett's public policy argument goes beyond what was decided in British Eagle and is said to apply even if the Agreement has the meaning for which IATA contends, it should be rejected. Conclusion I agree that the appeals should be allowed and that consequential orders should be made as proposed by Gummow, Hayne, Heydon, Crennan and 14 [1975] 1 WLR 758 at 769-770; [1975] 2 All ER 390 at 401. Crennan GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. Since 2000 the corporate respondent to these appeals has been styled Ansett Australia Holdings Limited ("Ansett"), following a change of name from Ansett Transport Industries Limited. In 1951 Ansett became a member of the Clearing House which had been established in 1946 as a department of the appellant, the International Air Transport Association ("IATA"). This litigation arises from events in 2001-2002 associated with the collapse of the business of Ansett and the impact this had upon the operations of the Clearing House and the dealings between Ansett and the Clearing House. The Clearing House system The operations of the Clearing House and of the Regulations ("the Regulations") pursuant to which they have been conducted from time to time will require further consideration later in these reasons. The basic modus operandi may now be stated as follows. International airline operators regularly sell and issue tickets to passengers for journeys wholly or partly by carriage over the routes of other airlines, carry baggage of such passengers, and issue air waybills for the transport of goods over the routes of other airlines. The operations of the Clearing House avoid the necessity for the airlines to make and receive between themselves numerous payments in respect of such operations. Debits and credits in accounts of the participating airlines with IATA are netted out at the end of every month. Those airlines with a net credit balance receive a payment from the Clearing House, whilst those with a net debit balance are obliged to pay it to the Clearing House. Payments are not made between the participating airlines themselves. There is a further aspect of this system which was emphasised in the submissions for Ansett and which should be noted here. This is that the netting- off system is not limited to the set-off of mutual dealings between any two airlines. For example, while mutual dealings between Ansett and, say, British Airways would be listed and set off, the netting-off system would also include (by way of "multilateral" set-off) claims against Ansett by a third airline which was subject to no claim by Ansett for mutual set-off. The claim by the third airline would be met from a pool of funds provided from the dealings between Ansett on the one hand and British Airways and other such airlines on the other hand. Crennan The operation of the Clearing House system as it stood over 30 years ago was considered by the House of Lords in British Eagle International Air Lines Ltd v Compagnie Nationale Air France15. There, the appellant ("British Eagle") had gone into a creditors' winding-up. British Eagle asserted a claim to payment of moneys by the respondent ("Air France"). By majority (Lords Diplock, Cross of Chelsea and Edmund-Davies; Lords Morris of Borth-y-Gest and Simon of Glaisdale dissenting) the House of Lords rejected the contention of Air France that the only claim of the liquidators of British Eagle lay against the Clearing House and was subject to the netting-off system. The effect of the decision was that in the liquidation of British Eagle the Clearing House system was ineffective to capture for netting-off under its provisions an asset of British Eagle (the money claim against Air France) which was available for distribution between the general creditors of British Eagle under the pari passu system of distribution mandated by s 302 of the Companies Act 1948 (UK). Several points of distinction should be noted between the situation in the present case and that in British Eagle. First, no claim is made here between particular airlines. It is IATA itself which asserts it is a creditor of Ansett. Ansett denies the efficacy of the Clearing House arrangements to produce such a claim in favour of IATA and against Ansett. Secondly, the terms of the Regulations have been changed since the decision in British Eagle. Thirdly, the present case arises not in a liquidation but in an administration conducted under Pt 5.3A (ss 435A-451D) of the Corporations Act 2001 (Cth) ("the Corporations Act"). Nevertheless it will be necessary to return to British Eagle. The present parties disagreed both as to what that case decided and as to the application of its reasoning to the facts of this case. Administration under Pt 5.3A of the Corporations Act Further reference should now be made to Pt 5.3A. In Brash Holdings Ltd v Katile Pty Ltd16, Brooking, J D Phillips and Hansen JJ observed: 15 [1975] 1 WLR 758; [1975] 2 All ER 390. The House of Lords reversed the decision of the Court of Appeal (Russell, Cairns and Stamp LJJ), [1974] 1 Lloyd's Rep 429, which had dismissed an appeal from the decision of Templeman J, [1973] 1 Lloyd's Rep 414. 16 [1996] 1 VR 24 at 28-29. See also Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 37-38 [47]-[51]. Crennan "Part 5.3A was introduced to provide a means whereby a company which is or may be insolvent may be subjected to control by an administrator to the exclusion of its normal officers for a strictly limited period during which the administrator is charged to investigate the affairs of the company in order to ascertain which of three courses should thereafter be adopted: a deed of company arrangement to be executed by the company, winding up, or simply the cessation of the administration without either of the foregoing. The scheme of Pt 5.3A is that at the end of the strictly limited period of administration, the creditors themselves will decide which of these three possible steps should be taken and in the meantime there is a moratorium on actions or proceedings against the company." There were three significant stages in the operation of Pt 5.3A with respect to the affairs of Ansett. They were as follows. First, on 12 September 2001, and pursuant to s 436A, Ansett appointed three persons as administrators of the company. (They were replaced as administrators by the second respondents to the first appeal in this Court later in that month.) Thereafter, clearances were made by IATA in respect of Ansett for the months from August 2001 up to December 2001. The clearance for August showed a debit balance due by Ansett to the Clearing House of $US359,208, that for September a credit balance of $US10,169,045, and those for October and November debit balances of $US5,954,559 and $US2,707,912 respectively. As a result of the December clearance Ansett was treated as having consumed the whole of the September credit and was shown by IATA as having overall a debit balance. This was not paid to IATA and on 5 March 2002 Ansett was suspended from membership of IATA. There were no clearances by IATA for January and succeeding months. Ansett's membership of IATA was terminated on 2 June 2002. Secondly, on 27 March 2002 a meeting of the creditors of Ansett, convened by the second respondents under s 439A, resolved pursuant to par (a) of s 439C that Ansett execute a Deed of Company Arrangement ("the Deed"). Thirdly, on 2 May 2002 the Deed was executed as provided in s 444B. Thereupon, and by force of ss 444D and 444G, the Deed bound Ansett, its officers and members, the administrators, and certain creditors of Ansett. This class of creditors included those with claims against Ansett where the circumstances giving rise to the claims occurred on or before 12 September 2001. Authorities including Hoath v Comcen Pty Ltd17 indicate that these claims must 17 (2005) 53 ACSR 708 at 711-712 [17]. Crennan also still have been current on 2 May 2002, the date of execution of the Deed. Further, and this follows from the construction given s 444D in Brash Holdings18, the claims are those which would have been admissible to proof under s 553 in a winding-up of Ansett if the circumstances giving rise to the claims had occurred before 12 September 2001. Some reference now should be made to certain provisions of the Deed. Clause 4.2 imposed a moratorium upon those bound by the Deed and having a claim against Ansett. They were barred from, among other things, taking any action to seek to recover any part of their claim other than pursuant to the Deed. This provision reflected the terms of s 444E. The moratorium continued while the Deed was in force and related back (by operation of cl 2.2 and s 444C) to 27 March 2002. Clause 14 provided: "The rules and mechanisms to be applied to proofs of debt and the ascertainment of Claims shall be similar to the rules and mechanisms for such things prescribed by the [Corporations Act] in the context of the liquidation of a company, amended or adjusted as appropriate to make the process as cost effective as possible." This had the effect of incorporating the general provision made in s 553C respecting mutual dealings and set-off in the case of insolvent companies. Clause 18 of the Deed then laid out an order of priority for the distribution of proceeds. The position taken by Ansett Ansett and the administrators submit that the effect of Pt 5.3A of the Corporations Act and the provisions of the Deed is that the Deed operated upon the property of Ansett which existed on 12 September 2001 and whatever claims of other airlines against Ansett existed at that time need to be proved in accordance with the requirements of the Deed; the conduct by IATA of the multilateral set-off Clearing House arrangements did not and could not achieve any other result. In correspondence between the solicitors for the parties, the administrators contended that the Regulations and Clearing House arrangements did not apply to Ansett's credits and debits which had not been cleared before 12 September 2001, that these credits and debits were to be dealt with only in Crennan accordance with the Deed and that this outcome was supported by what had been decided in British Eagle. Consistently with that position and after execution of the Deed on 2 May 2002, the administrators made demands upon 13 airlines, members of the Clearing House, for payment directly to the administrators of net indebtedness allegedly due and owing to Ansett for the clearance months beginning August 2001 and ending March 2002. The total sum so demanded exceeded $US11 million. Further action by Ansett on these demands was suspended, pending the outcome of the present litigation. The litigation Two proceedings were instituted in the Supreme Court of Victoria, one by IATA challenging certain decisions of Messrs Korda and Mentha as Deed Administrators of Ansett and the other by Ansett against IATA seeking declarations about the application of the Regulations. The proceedings were heard together and it is generally not necessary to distinguish between them. At first instance, IATA sought and obtained from Mandie J declaratory relief19. This established several propositions. One was that, notwithstanding the appointment of the administrators to Ansett on 12 September 2001, the Clearing House arrangements continued to apply with contractual force between IATA, Ansett and the other members of the Clearing House. Another was that in respect of monthly clearances for August-December which were effected by IATA after 12 September 2001, IATA was a creditor of Ansett. The amount claimed by IATA from Ansett under these clearances was $US4,370,989. However, Ansett and the administrators brought successful appeals to the Court of Appeal20. By majority (Nettle JA and Bongiorno A-JA; Maxwell P dissenting) the Court of Appeal substituted declaratory relief to the opposite effect of that granted by Mandie J. In particular it declared that IATA was not a creditor of Ansett in respect of the transactions the subject of the Clearing House clearances for the months of August 2001 to December 2001. 19 International Air Transport Association v Ansett Australia Holdings Ltd (2005) 53 ACSR 501; 23 ACLC 1161. 20 Ansett Australia Holdings Ltd v International Air Transport Association (2006) 60 ACSR 468; 24 ACLC 1381. Crennan The majority of the Court of Appeal considered that in respect of each claim where clearance had not occurred before the appointment of the administrators on 12 September 2001, the netting-off system did not apply and Ansett stood thereafter in the relationship of debtor of the carrying airlines or of creditor of the issuing airlines. On the other hand, Maxwell P (like Mandie J) considered that on 12 September 2001 the relevant rights and obligations of Ansett were (as to procedure) the right to have each claim made to and cleared by IATA, and (as to substance) the contingent right or obligation, upon clearance being effected, to receive the balance from IATA or to pay it to IATA as the case might be. Implicit in this reasoning is that in the administration under Pt 5.3A, as in an insolvent liquidation, whilst claims are to be treated equally, the determination of that equality is left (special statutory provisions apart) to the operation of the general law. Here the terms of the Clearing House arrangements produced, before 12 September 2001, rights and obligations of the character described above. The supervening administration did not change their nature or content. The administrators took those rights and obligations as they found them21. Special leave was granted to IATA to appeal to this Court in each matter, on terms that the costs orders made by the Court of Appeal not be disturbed and that IATA undertake to pay the reasonable costs in this Court of the respondents. For the reasons which follow, the appeals to this Court by IATA should succeed and the conclusions of Mandie J and of Maxwell P be accepted. The Clearing House arrangements It will be apparent that the first task is to consider the relevant terms of the governing documents. At all material times IATA provided for four forms of standard agreements, known as Multilateral Interline Traffic Agreements. These appeals concern two of them, the Multilateral Interline Traffic Agreement – Passenger, and the Multilateral Interline Traffic Agreement – Cargo. The provisions of these agreements are relevantly identical and it will be sufficient to refer to the first of them ("the Passenger Agreement"). 21 cf In re Smith, Knight, & Co; Ex parte Ashbury (1868) LR 5 Eq 223 at 226. Crennan The task of construction is to be approached in the manner described as follows by Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd22: "This Court, in Pacific Carriers Ltd v BNP Paribas23, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction24." Article 8 of the Passenger Agreement is headed "Interline Billing and Settlement". Article 8.1 states: "Each issuing airline agrees to pay to each carrying airline the transportation charges applicable to the transportation performed by such carrying airline and any additional transportation or non-transportation charges collected by the issuing airline for the payment of which the carrying airline is responsible in accordance with applicable regulations and current clearance procedures of the IATA Clearing House, unless otherwise agreed by the issuing airline and the carrying airline." (emphasis added) Article 8.2.3 provides with respect to services rendered by a party to the Passenger Agreement that "the right to payment hereunder" arises at the time those services are rendered; but it also says that this is "[e]xcept as may 22 (2004) 219 CLR 165 at 179 [40]. 23 (2004) 218 CLR 451. 24 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]. Crennan otherwise be provided in other agreements, rules or regulations". Articles 8.2.1 and 8.2.2 are important in this respect. They state: "8.2.1 Billing of amounts payable pursuant to the Agreement shall be in accordance with the rules contained in the IATA Revenue Accounting Manual as amended from time to time. 8.2.2 Unless otherwise agreed settlements of amounts payable pursuant to this Agreement between parties that are members of the IATA Clearing House shall be in accordance with the Manual of Regulations and Procedures of the IATA Clearing House." (emphasis added) These provisions have the object and effect of giving primacy to the Regulations in any analysis of the rights and obligations flowing from the Passenger Agreement. The relevant edition of the 13th edition of January 1999. The term "clearance" as used therein is defined in reg 1 as bearing the following meaning: the Regulations "The ascertainment each month of the balances due to members by the Clearing House and the balances due by members to the Clearing House after set-off of all claims duly notified to the Clearing House in accordance with these Regulations." (emphasis added) The term used is "claims" not "debts", and reference to "set-off" must be read with reg 12. The first sentence of that regulation reads: "All transactions within the scope of clearance are hereby deemed mutual debts of the parties involved." This confirms that multilateral dealings that otherwise are not "mutual" in the usual sense are within the scope of the definition of "clearance". Regulation 9 states that admission to membership of the Clearing House shall constitute a contract between each member and every other member and IATA to the effect thereinafter stated. It has been common ground that reg 9 was Crennan recast from the former reg 18 as it stood at the time British Eagle was decided25. Paragraphs (a) and (c) of reg 9 are of particular importance. Paragraph (a) states: "With respect to transactions between members of the Clearing House which are subject to clearance through the Clearing House as provided in Regulations 10 and 11 and subject to the provisions of the Regulations regarding protested and disputed items, no liability for payment and no right of action to recover payment shall accrue between members of the Clearing House. In lieu thereof members shall have liabilities to the Clearing House for balances due by them resulting from a clearance or rights of action against the Clearing House for balances in their favour resulting from a clearance and collected by the Clearing House from debtor members in such clearance". (emphasis added) Paragraph (c) states: "The effecting of a clearance and payment of the balances due to or by the Clearing House in accordance with these Regulations and current clearance procedures shall constitute a satisfaction and discharge of every claim dealt with in such clearance. IATA shall be entitled to recover any balances due to the Clearing House by legal action." (emphasis added) Reference also should be made to regs 38 and 39. Regulation 38 deals with the entitlement of the Clearing House to recovery and states: "Notwithstanding anything to the contrary herein, the right of the Clearing House to collect claims hereunder is created at the earlier of (a) the time payment is made for services upon which the claim is based or (b) the time such services are rendered by a party hereto or its agent. It is the intent of the members that funds collected by an issuing airline pursuant to accounts for clearance and services provided by a carrying airline pursuant to interline agreements shall be used for discharge of respective obligations of such airlines to the IATA Clearing House." (emphasis added) Regulation 39 describes the nature of the liability of the Clearing House as follows: 25 The text of the former reg 18 is set out, [1975] 1 WLR 758 at 773-774; [1975] 2 All ER 390 at 405. Crennan "The liability of the Clearing House to any member arising from any clearance is subject to payment of the balances due by debtor members in the clearance and is limited to any balance in favour of creditor members as the result of the clearance together with the net balance of any sum standing to the credit of such member on Standing Deposit Account after deducting all amounts due from such member to the Clearing House under these Regulations." (emphasis added) Of reg 39, Maxwell P said that it indicated that the Clearing House was not obliged to pay to a creditor member a credit balance until the debtor members in the relevant clearance had paid their debit balances. His Honour said26: "That the Clearing House does not bear the commercial risk of default is hardly surprising. Its function is to effect a monthly clearance of claims made by members against each other. It is not a bank. It has no funds of its own. ... The Clearing House's immunity from risk is consistent with its function, and in no way inconsistent with its having debtor/credit relationships with its members. After all, a secured creditor does not bear the commercial risk of a default by the debtor, but is no less a creditor for that." The Regulations, in particular reg 9, support the submission of IATA that under the Clearing House arrangements no liability to effect payment arises between airlines and that the only debt or credit which arises is that between IATA and the member airline in relation to the final, single balance of all items entered for the relevant clearance. This is the consequence of the bargain struck by airlines such as Ansett when they became parties to the relevant multilateral agreements. That construction of the Clearing House arrangements should be accepted. Nettle JA (with whom Bongiorno A-JA agreed) said27: "If reg 9(a) stood alone, it would be hard to resist [IATA's] argument. Its terms do imply the annihilation of the debt and its replacement with rights as against the clearing house alone. But, for the reasons already stated, the provision must be read in context and, in 26 (2006) 60 ACSR 468 at 475 [29]; 24 ACLC 1381 at 1386. 27 (2006) 60 ACSR 468 at 493 [95]; 24 ACLC 1381 at 1399. Crennan particular, having regard to the other paragraphs of reg 9. The first and perhaps most important of those for present purposes is reg 9(b)." Before turning to reg 9(b) something should be said respecting the second sentence in the above passage. Upon the construction accepted above in these reasons, it is not a matter of "the annihilation" of any otherwise subsisting debt due and owing by one airline to another and the "replacement" of that debt with rights exclusively against IATA. Certainly the contractual arrangements between the respective airlines and IATA for the operation of the Clearing House system gave rise to procedural and substantive rights and obligations of the nature identified earlier in these reasons. However, those substantive rights and obligations, as between airlines, did not have the character or quality associated with the relationship of debtor and creditor as ordinarily understood. The primary operation of reg 9(b) is to constitute for the Clearing House an irrevocable authority to clear "any claim (debit or credit) for clearance". What follows is a proviso whereby in certain circumstances the Manager of the Clearing House may "suspend" all clearance between certain members and during that period of suspension the parties are "absolved" from their respective obligations to settle only through the Clearing House. The circumstances which enliven the power of suspension are the receipt by the Clearing House of notification that the amount of a claim which has been notified for clearance has been attached, garnished or otherwise seized by issue of a court order. Nettle JA concluded28 that reg 9(b) is premised upon an assumption of the existence of a debt between the issuing and the carrying airline which remains in existence until it has been cleared. However, in this Court counsel for IATA made several responses to that proposition, and these should be accepted. First, the Regulations are to be read with an appreciation that the airlines concerned will conduct operations in many nation states and that these can be expected to have varying legal systems. Secondly, the airlines may be expected to incur in the course of their trading operations liabilities to a range of third parties, not themselves airlines. Thirdly, the proviso to reg 9(b) allows for the situation where such a third party obtains a court order which has the effect of attaching or garnishing or otherwise fixing upon, as an asset of the defendant airline, a claim which is subject to the Clearing House regime. Hence the occasion for suspension spoken of in reg 9(b) until normal clearance may be 28 (2006) 60 ACSR 468 at 493 [96]; 24 ACLC 1381 at 1399. Crennan reinstituted. It follows that the presence of the proviso to reg 9(b) does not conflict with reg 9(a) to the point where the manifest intention stated in reg 9(a) cannot be given its stated effect. Nettle JA also emphasised29 the treatment in reg 12 of the transactions within the scope of clearance as "deemed mutual debts of the parties involved". This regulation has its place in the structure of the Regulations indicated earlier in these reasons. It also is to be read with reg 49(i). This regulation deals with suspension from membership of members in default of their obligations and sub-reg (i) then provides: "Notwithstanding anything to the contrary in these Regulations, a suspension shall not affect the Clearing House's right to set-off claims in accordance with the Regulations and current clearance procedures." (emphasis added) Nettle JA referred30 to two decisions of the Privy Council on appeal respectively from the Supreme Court of South Australia and the Supreme Court of New South Wales where the outcome depended upon the distinction between an employee and an independent contractor. In the first, Australian Mutual Provident Society v Allan31, the written contract was between the appellant insurer and one of its representatives. In Narich Pty Ltd v Commissioner of Pay- roll Tax32, the written contract was between a franchisee of Weight Watchers International Inc and a "lecturer" who was to conduct classes for customers of the franchisee. In each case the contract contained a statement denying the relationship of employer and employee and asserting a relationship of independent contractor. 29 (2006) 60 ACSR 468 at 494 [101]; 24 ACLC 1381 at 1400. 30 (2006) 60 ACSR 468 at 498 [118]; 24 ACLC 1381 at 1403. 31 (1978) 52 ALJR 407; 18 ALR 385. 32 [1983] 2 NSWLR 597; (1984) 58 ALJR 30. Crennan Provisions of this character have been said in this Court to be "more likely to arouse misgivings as to what the practical situation of the agent may be in fact than to prevent a relation of master and servant being formed"33. In the Privy Council cases, upon an analysis of the whole of the relevant documents, it was held that the nature of the legal relationship was not dictated by the particular provisions denying the master-servant relationship. This result was reached in settings far removed from that in which the present appeals are placed. Further, for the reasons given above, other provisions of the Regulations do not contradict the operation of reg 9(a), so as to deny it effect according to its terms. Accordingly, the Clearing House arrangements operated in the manner for which IATA contends. It follows that the declaratory relief which IATA obtained at first instance was properly granted unless some reason founded in notions of repugnancy between the Clearing House arrangements and the statutory regime established by Pt 5.3A or of public policy requires another outcome. A rule of public policy? Ansett submitted that if the Regulations are to be construed in the way for which IATA contended (and as has been accepted in these reasons) a rule of "public policy" is engaged. The consequence of that engagement, as Ansett would have it, appeared to be to render the Regulations ineffective or void in the administration under Pt 5.3A, at least insofar as they otherwise operated to render IATA the creditor of Ansett in the claimed amount of $US4,370,989. Although not plainly articulated as such, what Ansett sought to invoke was that body of principle concerned with the relationship between contract and statute where the policy of the law renders contractual arrangements ineffective or void even in the absence of breach of a norm of conduct or other requirement expressed or necessarily implicit in the statutory text. 33 R v Foster; Ex parte The Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138 at 151. See also Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at Crennan Of the refusal of the courts as a matter of public policy to regard contracts as enforceable in such cases, in Fitzgerald v F J Leonhardt Pty Ltd34, McHugh and Gummow JJ said that this refusal: "stems not from express or implied legislative prohibition but from the policy of the law, commonly called public policy35. Regard is to be had primarily to the scope and purpose of the statute to consider whether the legislative purpose will be fulfilled without regarding the contract as void and unenforceable36." The rule of public policy for which Ansett contends was said to be recognised in British Eagle and to be a rule "requiring equal treatment of creditors within the same class". The effect of engaging that rule was said to be that "Australian courts should refuse to give effect to contractual provisions which purport to circumvent or dislocate the order of priorities which is set out in a [Deed of Company Arrangement] and given statutory force and effect" by Pt 5.3A of the Corporations Act. It is important to begin by recognising that the argument was not one about the construction of any relevant provision of the Corporations Act (whether one of the provisions of Pt 5.3A or some other provision). It was not an argument for the purposive construction of any provision in which a policy or purpose underpinning insolvency provisions by the Act was said to inform the reach given to particular avoiding provisions. An example of the application of reasoning of that nature may be the decision in Ex parte Mackay37. There, X and Y agreed that if Y became bankrupt the security held by X for the indebtedness of Y should increase from a lien over one half to one over the whole of certain royalties to which Y was entitled. This 34 (1997) 189 CLR 215 at 227. See also Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 59-60 [18]-[20]. 35 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 429-430, 432-433; Nelson v Nelson (1995) 184 CLR 538 at 36 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 434. 37 (1873) LR 8 Ch App 643. Crennan arrangement failed insofar as the quantum of security was increased upon bankruptcy of the debtor. The property of the bankrupt, the right to one half of the royalties, was not to be dealt with except under the provisions of the bankruptcy statute38. However, in the present case the argument of Ansett proceeded from the premise that no provision of the Corporations Act has the effect which it was submitted that the asserted rule of public policy had. Ansett submitted that the Court should nonetheless recognise and apply an overarching rule of public policy that would supplement the express provisions of the Act. These submissions should be rejected. Ansett traced the origin of the asserted rule of public policy to Lord Cross's speech in British Eagle. There, his Lordship said39: "But what the respondents are saying here is that the parties to the 'clearing house' arrangements by agreeing that simple contract debts are to be satisfied in a particular way have succeeded in 'contracting out' of the provisions contained in section 302 for the payment of unsecured debts 'pari passu.' In such a context it is to my mind irrelevant that the parties to the 'clearing house' arrangements had good business reasons for entering into them and did not direct their minds to the question how the arrangements might be affected by the insolvency of one or more of the parties. Such a 'contracting out' must, to my mind, be contrary to public policy. The question is, in essence, whether what was called in argument the 'mini liquidation' flowing from the clearing house arrangements is to yield to or to prevail over the general liquidation. I cannot doubt that on principle the rules of the general liquidation should prevail." There appear to be two strands of thought in this passage. One is that the Clearing House arrangements as they then stood so operated as to give British Eagle an asset, the money claim against Air France, and that in the face of the mandatory operation of s 302 of the Companies Act 1948 (UK), this asset could not be captured for the netting-off system. This conclusion would flow from the operation of s 302 and would be analogous to the situation in Ex parte Mackay 38 See now Bankruptcy Act 1966 (Cth), s 301(1)(b), which renders void a provision such as that considered in Ex parte Mackay. 39 [1975] 1 WLR 758 at 780-781; [1975] 2 All ER 390 at 411. Crennan discussed above. No recourse to "public policy" would be called for. The second strand of thought is apparent in the references to "mini liquidation", "contracting out" and "public policy". But the critical point is that there was "property" of British Eagle to which s 302 applied and a contractual provision negating that outcome could not prevail against the terms of the statute. Hence it perhaps is not surprising that Lord Cross did not spell out the content of any relevant public policy. Subsequently, however, in Horne v Chester and Fein Property Developments Pty Ltd, the rule was expressed40 as being that, "in insolvency law, the whole of the debtor's estate should be available for distribution to all creditors, and that no one creditor or group of creditors can lawfully contract in such a manner as to defeat other creditors not parties to the contract" (emphasis added). And Ansett submitted that this formulation of the rule captures the essence of a public policy said to have been recognised and applied41 as a "fundamental tenet of insolvency law generally" in various common law jurisdictions. It is not necessary to examine in any detail the several cases in which the rule is said to have been recognised and applied. Many can be understood as depending upon the proper application of a generally expressed provision in the relevant statute requiring that all debts proved in an insolvency rank equally and, if the property of the insolvent is insufficient to meet them in full, they are to be paid proportionately42. Others, including British Eagle, turned upon what was the "property" of the company that was to be applied in satisfaction of its 40 [1987] VR 913 at 919. 41 Horne v Chester and Fein Property Developments Pty Ltd [1987] VR 913 at 917, 919; United States Trust Co of New York v Australia and New Zealand Banking Group Ltd (1995) 37 NSWLR 131 at 141, 143; Attorney-General v McMillan & Lockwood Ltd [1991] 1 NZLR 53 at 60-62; Canada Deposit Insurance Corp v Canadian Commercial Bank [1992] 3 SCR 558 at 577; Re Air Canada [Priority determination of perpetual subordinated debt] (2004) 2 CBR (5th) 4; B Mullan & Sons Contractors Ltd v Ross [1996] NI 618 at 624-625; Hitachi Plant Engineering & Construction Co Ltd v Eltraco International Pte Ltd [2003] 4 SLR 384 at 407; Re Lam Fung [2003] HKCFI 773 at [49]. But cf In re Maxwell Communications Corporation Plc [1993] 1 WLR 1402; [1994] 1 All ER 737. 42 See, for example, Corporations Act 2001 (Cth) ("the Corporations Act"), s 555. Crennan liabilities43. Instead, it is essential to begin from the elementary proposition that insolvency law is statutory and primacy must be given to the relevant statutory text44. Whether the whole of the debtor's estate is available for distribution to all creditors, and whether all creditors are to participate equally in the distribution of that estate, are questions that depend entirely upon what the relevant statute provides. What is advanced as a rule of public policy assumes that there can be both an affirmative and a negative answer to each of those questions. To the extent that the rule of public policy depends upon there being universal and invariable rules that the whole estate is available to all creditors and all creditors are entitled to participate equally, the rule of public policy depends upon an affirmative answer to both of the identified questions. Yet by asserting that the public policy achieves what the statute otherwise does not achieve, the rule assumes that the questions identified have been answered in the negative. This contradiction suggests that the rule that is asserted is unsound. To demonstrate that the rule is unsound it is necessary to say something further about the provisions of Pt 5.3A of the Corporations Act that provide for the administration of a company's affairs with a view to its executing a Deed of Company Arrangement, and provide for such deeds. Division 6 of Pt 5.3A (ss 440A-440J) makes several provisions for protection of the company's property during administration. So, for example, a charge on the company's property cannot be enforced without the administrator's consent or the leave of the court45; an owner or lessor cannot recover property used or occupied by the company except with the administrator's consent or the leave of the court46; enforcement processes are generally suspended47. But no less important than these and other specific provisions intended to protect the company's property during administration are the provisions of s 437D. 43 Companies Act 1948 (UK), s 302; cf the Corporations Act, s 478. 44 Sons of Gwalia Ltd v Margaretic (2007) 81 ALJR 525; 232 ALR 232; Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56. 45 s 440B. 46 s 440C. 47 s 440F. Crennan in effect, that, during administration, only Section 437D provides, the administrator can deal with the company's property. The section does that by providing, in sub-s (2), that a transaction or dealing affecting the property of the company is void unless (a) the administrator entered into it on the company's behalf, or (b) the administrator consented to it, in writing, before it was entered into, or (c) it was entered into under an order of the court. At once it is apparent that any rule expressed as requiring that all of an insolvent company's property be made available for distribution among its creditors must accommodate the possibility that, during an administration, the administrator has dealt with, or made some transaction affecting, the property of the company. And if the administration is brought to an end by the making of a Deed of Company Arrangement, the property that is then available to the company will be whatever property the company then has (after any transactions or dealings affecting property of the company that the administrator has made). Ansett did not assert in the proceedings below that s 437D(2) avoided any transaction or dealing affecting any relevant property of the company. It did not assert that anything that IATA had done after Ansett's administration had commenced (with the appointment of administrators) constituted a transaction with, or a dealing affecting, Ansett's property avoided by operation of s 437D(2) or otherwise. In particular, Ansett did not allege that any of the clearances completed before suspension of Ansett's membership of the Clearing House on 5 March 2002 was avoided; Ansett did not allege that the Clearing House's application of the amount found to be due to Ansett in the clearance for September 2001, completed after the administration began, was avoided. As noted earlier in these reasons, Ansett emphasised that the setting-off provided by the Clearing House system was not limited to set-off of mutual debts between any two airlines. As a result, one airline having no mutual dealings with Ansett may receive 100 cents in the dollar for its claim from the pool of funds provided from the dealings between Ansett and other airlines. It was this result to which Ansett pointed as a departure from the rules of equal participation said to constitute, or at least to be reflected in, the asserted rule of public policy. Ansett sought to locate the application of the rule of public policy in the operation of the Deed. Ansett submitted that the Regulations purported to circumvent or dislocate the order of priorities set out in the Deed. There is, so the argument proceeded, "no justifiable reason for allowing creditors to contract out of a [Deed of Company Arrangement] that is given statutory force and effect by [Pt] 5.3A in such a manner as to defeat other creditors not parties to the contract". Crennan References to circumventing or dislocating the order of priorities, and to contracting out of the Deed, call for examination first of what the Deed provided and then a comparison between the operation of the Deed and the agreement (here the Regulations) which it is said has had the effects described. The principal provisions of the Deed have been described earlier in these reasons. The critical restrictions imposed on persons bound by the Deed were set out in cl 4.2. That clause provided, so far as now relevant, that: "During the Deed Period, without the Deed Administrator's prior written consent, a Deed Creditor shall not in relation to its Claim: 4.2.5 take any action whatsoever to seek to recover any part of its Claim other than pursuant to the Deed". The "Deed Period" fixed the duration of this prohibition. It was defined as the period beginning on the "Effective Date" (the date on which the Deed was executed – 2 May 2002) and ending on the Termination Date (the date on which the Deed was terminated by resolution of the creditors or court order, or a date fixed by reference to the payment of all of the Deed Creditors' Entitlements). The prohibition was directed against recovery of any part of a Deed Creditor's "Claim". "Claim" was defined in the Deed as "a debt payable by, and all claims against, the Company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred on or before the Appointment Date". The "Appointment Date" was defined (in effect) as the date of appointment of administrators to the company. Other than stating a different date as the date on or before which the circumstances giving rise to a debt or claim must arise, the definition of "Claims" contained in the Deed followed the terms of the provision of the Corporations Act (s 553(1)) which identifies the debts and claims admissible to proof against a company in winding-up. And because the definition of Claims fastened upon the Appointment Date as the date on or before which the circumstances giving rise to the Claim must arise, Ansett submitted that the evident intention of the Deed was to regulate the satisfaction of those claims, and to do so in a manner analogous to the regulation of claims against a company in liquidation. Crennan That this was the intention of the Deed was reinforced, so Ansett submitted, by the requirements of cll 14 and 18 of the Deed. As noted earlier, cl 14 provided that the rules and mechanisms to be applied to proofs of debt and the ascertainment of Claims "shall be similar to the rules and mechanisms for such things prescribed by the Act in the context of the liquidation of a company" amended or adjusted as needs be. Clause 18 regulated the way in which Claims were to be met and made provisions regulating the priority of payment which were substantially the same as those made by s 556 of the Corporations Act. After priority debts were met, each Deed Creditor was to be paid sums from realisation of the company's assets that were available for distribution to Deed Creditors and those sums were to be paid "on a pro rata basis" (cl 18.2.5). The Deed provided (cl 18.6.2) that no Deed Creditor was entitled to receive more than its entitlement and that, if it did, the Deed Creditor was bound to repay the excess. The engagement of all of these provisions of the Deed, however, hinged about the identification of who is a "Deed Creditor". The Deed defined that as "any person who has a Claim" (including various specified classes of persons). And the whole presupposition for the Deed was that it regulated claims by those who, at the date of the Deed, asserted a claim against Ansett. That claim had to be one that met the temporal requirement that "the circumstances giving rise to [it] occurred on or before the Appointment Date" but the Deed sought to regulate satisfaction of only those claims that were then or thereafter to be pursued. What Ansett complained of, in the present litigation, was that airlines who had provided services to or on behalf of Ansett did not propound any claim under the Deed. IATA did, but only for a net balance remaining after there had been that process of setting-off of amounts described earlier. And by that process an airline to which Ansett had not provided services may have obtained, as a result of the Clearing House system, satisfaction in full for its claim against Ansett. It was this operation of the Clearing House system that was said to contravene public policy; it was this operation of the Regulations that was said to amount to contracting out of the Deed. The asserted rule of public policy finds no footing in the relevant provisions of the Corporations Act. Those provisions take effect according to their terms and are not to be supplemented or varied by the superimposition of a rule of the kind alleged. Crennan Contracting out or repugnancy? Neither is there any contracting out of the Deed, or any repugnancy between the Regulations and the Deed. The Deed regulates Claims of Deed Creditors. IATA alleges that it has a Claim and that it is a Deed Creditor; individual airlines do not. As noted earlier, the Clearing House arrangements produced rights and obligations of the character described above. No liability to effect payment arises between airlines; the only debts which arise are those between IATA and the member airline in relation to the balance of all items entered for the relevant clearance. The supervening administration did not change the nature or content of those rights and obligations and the administrators took those rights and obligations as they found them. In so far as those rights were to be identified as property of the company, the Corporations Act provides for the preservation (subject to exceptions) of the property of a company in administration. But the Corporations Act recognises that there may be dealings with that property before a Deed of Company Arrangement is made. And if there are, the Deed will operate with respect to whatever then is the property of the company. In the end, the argument which alleges that there has been a contracting out of the operation of the Deed depends upon the proposition that after either the commencement of the administration or the execution of the Deed, the rights and obligations of Ansett were different from those the company had previously had. Unless that prior step is taken (and it should not be) there was no contracting out of the operation of the Deed and there is no repugnancy between the Deed and the Clearing House arrangements. Orders For these reasons, each appeal should be allowed. In Matter No M51 of 2007, paragraphs 1 and 2 of the orders of the Court of Appeal made on 16 November 2006 (except in so far as those orders varied the orders in respect of the costs of proceedings at first instance) should be set aside. In place of the orders set aside there should be an order that the appeal to that Court is otherwise dismissed. In Matter No M52 of 2007, paragraphs 1 and 2 of the orders of the Court of Appeal made on 16 November 2006 (except in so far as those orders varied the orders in respect of the costs of proceedings at first instance) should be set aside. In place of the orders set aside there should be an order that the appeal to that Court is otherwise dismissed. In accordance with the conditions on which special leave to appeal was granted, paragraph 3 of each of the orders of the Court of Appeal (ordering IATA to pay the costs of the appeal to that Court by Crennan Ansett and the Deed Administrators) should not be disturbed and there should be an order in each appeal that IATA pay the respondents' costs in this Court. Kirby KIRBY J. These appeals come from the Court of Appeal of the Supreme Court of Victoria48. That Court, by majority (Nettle JA, Bongiorno AJA concurring; Maxwell P dissenting), reversed the conclusions and orders of the primary judge in the Supreme Court (Mandie J)49. The judges below being divided and the issues being difficult and important, this Court granted special leave to appeal. I have been greatly assisted by the reasons of the judges of the Supreme Court. Those reasons have helped to sharpen the differences which this Court must now resolve. The differences arise out of the intersection of contractual arrangements entered into by airlines in the international air carriage industry and provisions of a public law of the Commonwealth of Australia concerned with a new method of administering an insolvent company under a deed of company arrangement. The new provisions governing corporate insolvency appear in the Corporations Act 2001 (Cth) ("the Corporations Act"), Pt 5.3A. Before its financial collapse in 2001-2002, the company in question, Ansett Australia Holdings Limited (formerly Ansett Transport Industries Limited) ("Ansett"), was a major Australian airline. It was a long-time member of the International Air Transport Association initially created as an unincorporated association, with its headquarters in the city of London. It was established following the Convention on International Civil Aviation in 194450. IATA was later incorporated by an Act of the Canadian Parliament51. By that constituting Act, IATA has, as one of its statutory objects52: IATA was ("IATA"). "to provide means for collaboration among the air transport enterprises engaged directly or indirectly in international air transport service". To facilitate collaboration, IATA established a clearing house facility for the "netting" of credits and liabilities between participating airlines ("the Clearing House"). The service so afforded is obviously of great value and 48 Ansett Australia Holdings Ltd v International Air Transport Association (2006) 60 ACSR 468; 24 ACLC 1381. 49 International Air Transport Association v Ansett Australia Holdings Ltd (2005) 53 ACSR 501; 23 ACLC 1161. 50 Done at Chicago, 7 December 1944; 1957 ATS 5. Ansett became a founding Associate Member of IATA in October 1945. 51 An Act to Incorporate International Air Transport Association, Statutes of Canada 1945, Ch 51 (assented to 18 December 1945) ("IATA Statute"). 52 IATA Statute, s 3(b). Kirby advantage to all participants. Given the huge expansion of international civil aviation since 1945, with the vastly increased carriage of passengers and cargo, it is difficult to imagine that the efficiencies of multi-carrier transportation throughout the world could have been established, or could be maintained, without some such international facility for the mutual settlement of debits and credits between airlines. Even with contemporary information technology, the settlement of such obligations, individually and bilaterally, would be inefficient and inconvenient. Moreover, the arrangement for mutual set-offs and for the resulting net payments diminishes, as between the participating airlines, the aggregate costs, including the costs of foreign currency transactions that would otherwise be incurred. No party to these appeals questioned the benefits of IATA and the Clearing House to airlines and, through them, to their passengers and cargo shippers. No party doubted that financial imperatives, convenience and utility would ensure that the Clearing House would remain in place for solvent airlines whatever this Court decided. The controversy presented to this Court was rather what was to happen, in accordance with Australian law, when a participating Australian airline became insolvent and, under the Corporations Act, its creditors agreed to enter into a deed of company arrangement so as to provide for the discharge of the liabilities of that airline. The appeals thus present questions concerning: the meaning and effect of the Clearing House arrangements which Ansett entered with IATA, and whether those arrangements are consistent with relevant provisions of the Corporations Act and the deed of company arrangement executed by Ansett on 2 May 2002 ("the Deed"); and if a direct inconsistency between the Clearing House arrangements, so construed, on the one hand, and the Corporations Act and the Deed, on the other, is not established, whether the general policy of the Corporations Act governing the equitable discharge of Ansett's obligations to its debtors and creditors prevails over Ansett's earlier contractual arrangements. On these questions there are obviously arguments both ways, as the reasons below demonstrate. A conclusion favourable to IATA would have the immediate attraction of minimising the impact on the operations of the Clearing House of the municipal law of this country. However, alike with the majority of the Court of Appeal, I consider that the private contractual arrangements made by Ansett with IATA and other carriers must yield to the requirements of the Deed and the provisions of, and policy evident in, the insolvency provisions of the Corporations Act applicable to this case. Kirby The result is that, in my view, IATA's appeals fail. Any relief from that outcome should await the adoption of a relevant international treaty given effect by local law; the enactment by the Australian Parliament of modifications to Pt 5.3A of the Corporations Act; or the passage of a federal law to cover all such cases of international "netting", including the Clearing House53. The facts, legislation and common ground The background facts: The background facts are stated in the reasons of Gummow, Hayne, Heydon, Crennan and Kiefel JJ ("the joint reasons")54. Those reasons explain how Ansett became a participant in the Clearing House in 1951; how it experienced serious financial difficulties resulting in its collapse in 2001- 2002; how it appointed administrators under s 436A of the Corporations Act on 12 September 2001; and how, following a resolution of its creditors in March 2002, it entered into the Deed on 2 May 2002 pursuant to s 444B of the Corporations Act. Upon the non-payment by Ansett of the notified clearance balances, IATA suspended Ansett from membership of the Clearing House on 5 March 2002. Subsequently, on 2 June 2002, Ansett's membership was terminated. In due course, IATA made a claim under the Deed for a net debit owing pursuant to the Clearing House arrangements of $US4,370,98955. the administrators of Ansett (the second respondents to the first appeal in this Court) ("the Administrators") promptly made claims on 13 airlines totalling more than $US11 million. Those claims were made in respect of the "debts" allegedly owed by those airlines to Ansett. The relevant debts were said to have come into existence before 12 September 2001 and were notified to the Clearing House before Ansett's suspension from that facility in March 2002. For Ansett and the Administrators, this was a simple matter of the operation upon private arrangements with IATA and its members of Australia's insolvency law, as provided by the relevant provisions of the Corporations Act to which the Deed conformed and gave effect. their part, For The course of the proceedings, and the different outcomes at first instance and on appeal, are summarised in the reasons of Gleeson CJ56 and the joint reasons57. Inevitably, these descriptions do not do full credit to the more detailed 53 cf Payment Systems and Netting Act 1998 (Cth). See below at [113]. 54 Joint reasons at [31]-[36], [40]-[42]. 55 Joint reasons at [46]. 56 Reasons of Gleeson CJ at [1]-[6]. 57 Joint reasons at [46]-[50]. Kirby analysis of the issues provided by the judges below, which I have taken into account. The standard interline agreements with IATA which Ansett executed to govern its participation in the Clearing House ("the Agreement") are described in the joint reasons58, as are the Clearing House Regulations ("the Regulations") which are incorporated in the Agreement by the provision that the settlement of amounts payable as between members of the Clearing House is to be made in accordance with the Manual of Regulations and Procedures59. It has been assumed that the Regulations form part of the contract between IATA and participating members, including (whilst it was a member) Ansett60. I am content to accept that assumption. It will be necessary, in these reasons, to refer to, and elaborate, some additional regulations. However, the main battle lines are sufficiently drawn, both as to the meaning of the Agreement and Regulations and their operation on the obligations (to use a neutral term) of Ansett to other airlines and on the obligations of other airlines to Ansett arising from their respective participation in the Clearing House, and as to the supervening impact on those obligations of the insolvency provisions of the Corporations Act and the Deed. The legislation and arguments: The written and oral submissions advanced by Ansett before this Court cannot be read as confined to a reliance only on the "public policy" of the statute, enlivened by the successive appointments of administrators, the resolution of creditors and the execution of the Deed already described. Counsel for Ansett made it clear that, so far as Ansett was concerned, the relevant inconsistency with Australian insolvency law upon which Ansett relied was presented on a dual basis. First, if the construction of the Agreement and Regulations contended for by Ansett was accepted, a direct inconsistency with nominated statutory provisions would arise. Counsel particularly identified ss 553C and 437D61. Inconsistency with the operation of s 444D upon the Deed was also nominated as "fundamental"62. Secondly, to the extent that any contractual provisions had a contrary operation, Ansett also relied on a more general argument of incompatibility 58 Joint reasons at [52]-[54]. 59 (2006) 60 ACSR 468 at 492 [91]; 24 ACLC 1381 at 1399. 60 (2006) 60 ACSR 468 at 470 [1]; 24 ACLC 1381 at 1382. 61 [2007] HCATrans 515 at 2030-2038, 2050-2060. 62 [2007] HCATrans 515 at 2090-2095. Kirby between any such private contractual arrangements, embodied in the Agreement and Regulations, and the public policy inherent in the form of statutory insolvency for which the Deed and the Corporations Act provided. The common ground: To some extent, there was common ground in these appeals between the parties. Thus, IATA did not point to any provision of international law that sustained and provided, in a way binding on Australia or anyone else, an exemption from municipal law governing insolvency of corporate airlines, designed specifically to protect the offsetting arrangements within the Clearing House. Perhaps there should be such international treaty arrangements incorporated into domestic law. However, past attention by this Court to the state of international law as it concerns the civil aviation industry demonstrates the imperfections of treaty law in this field63. The absence of relevant treaty provisions to cover this case is therefore scarcely surprising. Nor could IATA point to any specific provision, either of the Corporations Act or of other Australian insolvency law, to uphold the Agreement and Regulations in the event of insolvency of an Australian airline. Whilst enactments such as the Payment Systems and Netting Act 1998 (Cth) ("the Netting Act") expressly provide for payment and settlement systems and netting contracts in relation to foreign currency, trade and commerce, banking, insurance and telecommunications, it was not suggested that that Act, or any other Australian statutory provision, addressed the present problem. To the contrary, the existence of the Netting Act demonstrates the large ambit of federal legislative power that might be invoked to support such legislation64. Despite such power, no relevant law has been enacted by the Australian Parliament affecting IATA's netting arrangements. IATA is therefore thrown back upon common law principles so far as these are not inconsistent with the applicable insolvency provisions of the Corporations Act. Finally, as Nettle JA noted at the close of his reasons, all parties in these appeals put to one side questions of private international law as they might affect the arguments of principle which this Court was asked to resolve. Issues concerning the proper law of the obligations said to be owed by, or owing to, Ansett were not addressed because the appeals were "expressly argued on the basis that there is no evidence as to the proper law of the Ansett interline agreements and no reason to suppose that it is any different to the law in force in Victoria"65. It is appropriate for this Court to adopt the same approach. 63 Povey v Qantas Airways Ltd (2005) 223 CLR 189 at 230-234 [128]-[143]. 64 See Netting Act, s 5, definition of "Commonwealth constitutional reach". 65 (2006) 60 ACSR 468 at 506 [158]; 24 ACLC 1381 at 1409. Kirby Ansett's obligations under the Agreement and Regulations The first issue: The first issue raised by the appeals is thus whether, on a proper construction of the Agreement and Regulations, members of the Clearing House, such as Ansett, stood in the relationship of debtors and creditors pending the clearance of their claims. This issue must be resolved by reference to the Agreement and Regulations in force at the date of appointment of administrators, namely 12 September 2001. Amendments made since that date have to be IATA's case: IATA's argument on this first issue was accepted by the primary judge67. His Honour concluded that there was no relevant property of Ansett, being a debt or other chose in action, of which the non-airline creditors were deprived by virtue of the Clearing House arrangements. In the Court of Appeal, this view was favoured by Maxwell P68. His Honour held that the Regulations, and particularly reg 9(a), were effective in declaring that no liability for payment and no right of action to recover payment should accrue between the "issuer and the carrier" to recover payment in, or in respect of, any clearance transaction. Instead, reg 9(a) gave each of the IATA members "rights against, and liabilities to, the clearing house in respect of balances resulting from the clearance of transactions". Maxwell P declared that the clearance procedure set out in the Regulations was conceptually simple and legally efficacious69. In effect, it accomplished the IATA objectives that Templeman J had explained, at trial, in British Eagle International Air Lines v Compagnie Nationale Air France70, when considering an earlier version of the Regulations: "It must be remembered that every airline who is a member of the clearing house is bound by this agreement. Every member knows that when he performs services for somebody else the items for those services are to 66 An affidavit filed by IATA in the special leave hearing showed that the Regulations have been amended since these proceedings began. The applicable rules are found in the thirteenth edition of the Manual of Regulations and Procedures (1999). 67 (2005) 53 ACSR 501 at 515 [46]; 23 ACLC 1161 at 1173. 68 (2006) 60 ACSR 468 at 471 [8]; 24 ACLC 1381 at 1383. 69 (2006) 60 ACSR 468 at 471 [9]; 24 ACLC 1381 at 1383. 70 [1973] 1 Lloyd's Rep 414 at 429. Kirby appear in an account which he sends in at the end of the month, and every member knows that what he will be entitled to (if anything) is a sum payable by IATA, and no one else; he is entitled to put and bound to allow everything through the clearing house, even after he has ceased to be a member, for the requisite period of six months, and in my judgment the contract is consistent firstly with there never being a debt from Air France to British Eagle; secondly, it is consistent with the view that Air France say to British Eagle: 'We did not contract to pay you in cash for the services which you performed for us. We and all the other airlines contracted with you that, in return for those services, there should be satisfaction by virtue of all the services which are performed by us for you, and you are only entitled to any equalising balance, and that not from us but from IATA. Our debt, if you can call it a debt, has been more than satisfied by the services which the 75 other airlines performed on your behalf during a time when you were not, so far as the world knew, insolvent.'" The British Eagle decision: The decision of Templeman J was upheld on appeal by the English Court of Appeal71. Russell LJ, giving the reasons of that "British Eagle having contracted with every other member of the clearing house and with IATA not to enforce its net claim for services against, for example, Air France otherwise than through the clearing house, it could not while a member do so. Nor, in our judgment, is the liquidator of British Eagle in any better position in respect of the claim now made against Air France … [T]he question here is whether the claim asserted against Air France is property of British Eagle. In our judgment it is not: British Eagle has long since deprived itself of any such property by agreeing to the clearing house system." When, in British Eagle, a further appeal was brought to the House of Lords, their Lordships, by majority73, reversed the earlier judicial conclusions and orders. Essentially, they did so on the basis that the private contractual 71 British Eagle International Airlines Ltd v Compagnie Nationale Air France [1974] 1 Lloyd's Rep 429. 72 [1974] 1 Lloyd's Rep 429 at 433-434. 73 British Eagle International Air Lines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758; [1975] 2 All ER 390 per Lord Diplock, Lord Cross of Chelsea and Lord Edmund-Davies; Lord Morris of Borth-y-Gest and Lord Simon of Glaisdale dissenting. Kirby arrangements by which British Eagle had bound itself to IATA and other IATA members before insolvency could not prevail over, or effect a contracting out of, the rules for the general liquidation of a company provided by the public law of the United Kingdom74. English decisional authority: There was discussion in the courts below as to the proper approach of an Australian court to the foregoing holding of the House of Lords in British Eagle. The primary judge referred to an earlier case in the Supreme Court of Victoria, bearing some similarities to the present, in which Southwell J had concluded that he should treat himself as bound to follow an indistinguishable decision of the House of Lords, unless this Court had otherwise decided75. The primary judge in the present proceedings then stated that he would regard himself as bound it were indistinguishable on the facts"76. to apply British Eagle "if In the Court of Appeal in the present appeals, Nettle JA said that an intermediate appellate court in Australia "should ordinarily follow a relevant decision of the House of Lords unless clearly convinced it is wrong"77. His Honour recognised that the decision was not legally binding in this country. With respect to the learned judges who expressed these opinions, they represent a mistaken approach to the application of English decisional authority in contemporary Australia. In effect, they evidence a leftover from legal thinking of an earlier time78. The House of Lords was never part of the judicial hierarchy of the Commonwealth of Australia. As a matter of constitutional principle, decisions and reasoning of the House of Lords are not, therefore, to be accorded a status different from those of any other final national court of a foreign country. Self-evidently, they afford a most valuable source of comparative law, deserving of respect in an Australian court, including this Court. They do so because of the distinction of the judges, the history and tradition shared with Australia and the usual persuasiveness of the reasoning. However, the weight to be given to the judicial opinions of the House of Lords is entirely dependent on the cogency of 74 Namely Companies Act 1948 (UK), s 302. 75 Horne v Chester and Fein Property Developments Pty Ltd [1987] VR 913 at 916, cited in International Air Transport Association v Ansett Australia Holdings Ltd (2005) 53 ACSR 501 at 514 [42]; 23 ACLC 1161 at 1172. 76 (2005) 53 ACSR 501 at 514 [42]; 23 ACLC 1161 at 1172. 77 (2006) 60 ACSR 468 at 498-499 [123]; 24 ACLC 1381 at 1403. 78 cf Skelton v Collins (1966) 115 CLR 94 at 104 per Kitto J, 135 per Windeyer J; cf at 122 per Taylor J, 139 per Owen J. Kirby such reasoning, as assessed by Australian judges, who alone enjoy the constitutional legitimacy and power to determine the particular case that is before an Australian court. Some judges of this Court accorded a special status to decisions of the House of Lords when appeals still lay to the Privy Council, often comprising the same judicial personnel. At that time it was perhaps prudent and understandable to do so. However, that time has passed. If, in these appeals, the decision of the House of Lords in British Eagle deserved particular attention, it was because the decision concerned the predecessors to the present Agreement and Regulations. Those provisions are relevant to the decisions of courts in many countries. Consequently, so far as possible, common approaches to their interpretation are desirable79. The same would be so if the decision in question had been that of the Cour de Cassation of France or the Supreme Court of Appeal of South Africa. Moreover, following British Eagle, IATA proceeded to amend its Regulations in an attempt to overcome the difficulty which the House of Lords had there identified. The question presented by the first issue in these appeals is whether, despite such amendment, the legal difficulty remains. The majority of the Court of Appeal concluded that it did; the primary judge and Maxwell P reached the opposite conclusion. This Court must resolve that difference. It must do so by its own reasoning, without legal presuppositions of correctness attributed to the status of conclusions of the courts of other countries. The applicable Regulations: The critical regulation, upon which IATA relied to make good its first submission, is reg 9(a). As was recognised by the Court of Appeal, reg 9 was amended following the decision in British Eagle. The amendment was clearly aimed at strengthening the provisions of the Regulations and to make explicit what had already been implicit in the terms of the former reg 1880. The current terms of reg 9(a) and (c) are set out in the joint reasons, together with reference to regs 1, 12, 38 and 3981. I will not repeat those provisions but incorporate them by reference. Certain matters of approach to the task of interpretation should be noted. First, it is obviously important to read the Regulations as a whole so as to carry into effect (to the extent that it is lawful) the language and purpose of the 79 Povey (2005) 223 CLR 189 at 230 [128]. 80 Set out by Lord Morris in British Eagle [1975] 1 WLR 758 at 764; [1975] 2 All ER 81 Joint reasons at [55]-[58]. Kirby Agreement82. As well, it should be noted that it is the objective effect of the agreement and not any subjective purpose of the parties which determines the contract's meaning at law83. Nettle JA was correct to adopt this approach. To the extent that, in substance, the joint reasons in this Court suggest, in effect and reasoning, that the search is for what the parties to a contract subjectively intended, it represents a departure from well-settled principles of contract law in Australia84. I approach the resolution of the issue conscious of the importance of the development of international air transport with its manifest benefits for world trade, the interconnection of peoples, human convenience and peace. I would not be vigilant to defeat the effectiveness of the Agreement or Regulations as they contribute to the success and effectiveness of the Clearing House. It cannot be suggested that the Clearing House was established with a specific intention of undermining the municipal laws that virtually all countries have enacted for the equitable ranking of the claims of creditors in the event of corporate insolvency. In this sense, there is no need in these appeals to be concerned about deliberate evasion of domestic insolvency laws or fraud by IATA and the Clearing House members. All such concerns can be safely put aside. In the Court of Appeal, Nettle JA too accepted that, if reg 9(a) stood alone, "it would be hard to resist [IATA's] argument" concerning the meaning and effect of the Regulations. He accepted that the terms of reg 9(a) implied (as he put it) the "annihilation of the debt and its replacement with rights as against the clearing house alone"85. Nevertheless, reading the Agreement and Regulations as a whole, Nettle JA concluded that they did not have the effect in law for which IATA argued. In this Court, IATA criticised the criterion for effectiveness that his Honour posited ("annihilation of the debt"). For my own part, I am not in the slightest concerned by the use of the word "annihilated", which was repeated by Nettle JA in the course of his reasons86. I regard "annihilated" (concededly a strong word) as no more than a vivid way of saying that the underlying debts, 82 (2006) 60 ACSR 468 at 493 [99]; 24 ACLC 1381 at 1400. 83 See generally Carter, Peden and Tolhurst, Contract Law in Australia, 5th ed (2007) at 240-242 [12.02]-[12.03]; cf reasons of Gleeson CJ at [7]; joint reasons at [67]- 84 See also Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]. 85 (2006) 60 ACSR 468 at 493 [95]; 24 ACLC 1381 at 1399. 86 See eg (2006) 60 ACSR 468 at 498 [119]; 24 ACLC 1381 at 1403. Kirby that would otherwise exist on the part of an issuing airline to the carrying airline, were wholly extinguished as a matter of law. It would be a sorry day if judges were frightened into the use of colourless language in order to avoid appellate censure and correction. Ansett's arguments: Ansett endorsed the analysis of Nettle JA. It argued that regs 9(b), 22, 23 and 49 of the Regulations demonstrated that Nettle JA's detailed examination87 was correct, so that a debt or other chose in action continued to exist between the issuing and carrying airlines and was thus susceptible to enlivening the ordinary application of the insolvency requirements of the Deed and the related provisions of Pt 5.3A of the Corporations Act once the insolvency of Ansett intervened. I will not repeat the entirety of the analysis of the Agreement and Regulations contained in the opinion of Nettle JA. I accept it. It involves no legal error authorising the intervention of this Court. It is sufficient for me to identify, and emphasise, some of the main points made by his Honour. First, Nettle JA pointed out that reg 9(a) provides for a prohibition on enforcement of the initial debt otherwise than by way of adjustment through the Clearing House, except in specified circumstances where clearance is not available. Construed in this way, the obligation in cl 8.1 of the Agreement that "[e]ach issuing airline … pay … the transportation charges applicable to the transportation performed by [each] carrying airline" in accordance with the Regulations does not negate the original legal obligation to pay such charges88. On the contrary, it provides for what is to happen in consequence of that obligation. It stipulates the manner and place in which the payment for the consequent charge is to be made or settled, ie in the Clearing House. The factum enlivening the obligation remains, clearly enough, the "transportation charges"89. It was this analysis of the Agreement and Regulations that led Nettle JA to conclude that transactions between the issuing and carrying airlines gave rise to debts between them which were not extinguished. In my view, this is the natural, realistic and commonsense interpretation of the transactions concerned having regard to the terms of the Agreement and Regulations. Secondly, Nettle JA considered that reg 12 was "a further indication that debts which arise under the [Agreement] remain in existence until satisfied by 87 (2006) 60 ACSR 468 at 491-498 [87]-[120]; 24 ACLC 1381 at 1398-1403. 88 (2006) 60 ACSR 468 at 492 [90]; 24 ACLC 1381 at 1398. 89 (2006) 60 ACSR 468 at 494 [101]; 24 ACLC 1381 at 1400. Kirby clearance"90. As his Honour noted, reg 12 was added following the decision in British Eagle91. It provided: "All transactions within the scope of clearance are hereby deemed mutual debts of the parties involved. Unless otherwise agreed to by the parties, a claim for such transaction shall arise upon the performance of the services rendered therefor." Nettle JA concluded that, by characterising the precise amounts as "mutual debts", reg 12 confirms "that such amounts are debts which are to be set off one against another to produce the monthly balance"92. That is, they remain debts. He rejected IATA's submission that reg 12 created a "fictional state of indebtedness for the purposes of clearance"93 where, otherwise, there would not be any debts in existence. Against the background of the realities of the arrangement between the airlines participating in the Clearing House, it would take more than appears in the Agreement or the Regulations to induce me to accept the legal fiction which IATA propounded. The word "debt" is clear enough. It means what it says. The law should be hesitant to embrace fictions. Especially so where, as here, other elements of the arrangements between the parties contradict the suggested fiction and argue against embracing it. insolvency94. Thirdly, Nettle JA noted the long history of "mutual debts" in legislation governing bankruptcy and the critical consideration was that parties cannot choose to make legislative provisions referring to mutual debts, mutual credits or other mutual dealings apply to transactions that do not, in fact and in law, answer to these descriptions. Nettle JA considered that reg 12 postulated the initial existence and provisional continuation of obligations that were in fact and law "debts"95. Indeed, his For his Honour, 90 (2006) 60 ACSR 468 at 494 [101]; 24 ACLC 1381 at 1400. 91 (2006) 60 ACSR 468 at 494 [103]; 24 ACLC 1381 at 1400. 92 (2006) 60 ACSR 468 at 494 [101]; 24 ACLC 1381 at 1400. 93 (2006) 60 ACSR 468 at 494 [102]; 24 ACLC 1381 at 1400. 94 Notably since the Bankruptcy Statute 1825 (UK) 6 Geo 4 c 16. See Bankruptcy Act 1869 (UK), s 39 considered in Peat v Jones (1881) 8 QBD 147 at 149; see also Bankruptcy Act 1966 (Cth), s 86(1) considered in Day & Dent Constructions Pty Ltd v North Australian Properties Pty Ltd (1982) 150 CLR 85; Bankrupt Act 1849 (UK), s 171 considered in Naoroji v Chartered Bank of India (1868) LR 3 CP 444 95 (2006) 60 ACSR 468 at 496 [109]; 24 ACLC 1381 at 1401-1402. Kirby Honour regarded reg 12 as "a recognition of the 'indisputable conclusion' that claims the subject of clearance are debts, and that they remain such until extinguished by clearance"96. I agree with this analysis and conclusion. The very language of the Regulations represents a declaration of intention that the obligations as between carrying and issuing airlines were, and remained, "debts". If uncleared at the time of the commencement of a statutory insolvency, such "debts" therefore, without more, attract the provisions of the law governing insolvency as it applied to then outstanding "debts". In Australia, in the circumstances of the new arrangements under Pt 5.3A of the Corporations Act, they attract the equitable priorities as between the creditors of an insolvent company established by the Deed97. Fourthly, the foregoing analysis derives additional reinforcement from the fact that, absent novation, the multilateral netting arrangements envisaged in the Agreement and Regulations inevitably involved non-mutual set-offs. Under the Regulations, there was no novation to IATA of debts originally incurred between the issuing and carrying airlines. Had there been a legal novation, IATA would act as a central counter-party. It would then have entered a series of new bilateral netting transactions with its members, but as a principal98. Under the Agreement and Regulations, IATA was not, and never became, a creditor of the issuing airline in respect of the individual transactions. Nor did IATA bear the risk of default in payment by the issuing airline. Its role was no more than that of a clearing agent, or conduit, for the claims of the airlines concerned. To have assumed the role of principal would have attracted substantial consequences in the law of insolvency, insurance, taxation and otherwise. Fifthly, an appreciation of the true legal role of IATA reinforces the conclusion that, as between the participating airlines, the Agreement and Regulations gave rise to what were in substance continuing simple contractual debts. Such debts were maintained between the issuing and carrying airlines, although they were debts to be enforced (absent any complication such as supervening insolvency) through the Clearing House rather than bilaterally. In support of this interpretation of the arrangements between Ansett and IATA 96 (2006) 60 ACSR 468 at 496 [111]; 24 ACLC 1381 at 1402. 97 In the Deed as originally executed, that order was set out in cl 18.2. After the "pooling" of Ansett's assets with those of certain other entities, the Deed was varied on 31 August 2006 so that, inter alia, cl 18.2 was deleted, and the order of priority was reproduced in a separate deed of company arrangement for the pooled entity. 98 See eg Australian Securities Exchange, Australian Clearing House Clearing Rules, rule 12.2. Kirby members, Ansett referred to, and relied on, the analysis of Mr P R Wood in his text English and International Set-Off99: "So long as all participants are solvent, these [multilateral netting] schemes should be effective if approved by all parties involved. … But the non-mutual set-offs collapse if a relevant party becomes an insolvent by reason of the fact that the absence of mutuality generally involves a divestment of an asset of the insolvent." To avoid that consequence, which follows from the contractual provisions and the general law, specific legislation to validate the multilateral set-offs would be required100. Although Australian legislation exists for certain multilateral set- offs, as I have said it does not apply to those set-offs achieved in the IATA Clearing House. Sixthly, still further support for the conclusion expressed by Nettle JA may be found in the terms of the Agreement and Regulations providing that the debt between airlines may, in certain (exceptional) circumstances, be enforced directly as between them. One such instance was where clearance through the Clearing House ceased to be available. The relevant regulations are regs 9(b), 22, 23 and 49 (supplemented by the rejection procedure set out in Ch A10 of the IATA Revenue Accounting Manual). The unavailability of clearance will not, or may not, be known when the carriage transaction takes place as between the respective issuing and carrying airlines. From this it follows that an obligation to pay must likewise arise as between the issuing airline and the carrying airline at the time of the carriage. So much appears to be confirmed by the language of cl 8.2.3 of the Agreement. That sub-clause states (with emphasis added): "Except as may otherwise be provided in other agreements, rules or regulations, the right to payment hereunder arises at the time such services are rendered by a party hereto or its agent." Seventhly, reg 9(a) of the Regulations, which was the linchpin of IATA's submissions, must obviously be read consistently with the other regulations mentioned above. Without novation, the underlying obligation as between the issuing and carrying airlines must continue to exist, notwithstanding the Clearing House facility. This is so because of the contingent need for direct enforcement by the carrying airline against the issuing airline when specified events occur. Those events include suspension of the issuing airline envisaged under reg 9(b) 100 eg Netting Act, s 10. Kirby or reg 49, exclusion of a protested claim from clearance under reg 23 and exclusion of a rejected claim from clearance under Ch A10 of the Revenue Accounting Manual. Under regs 22 and 23, a claim will be excluded from clearance unless the protest is unanimously rejected by the adjudicating body. Alternatively, it might be excluded by the Clearing House manager as a matter of discretion under reg 22(e)(ii). In his reasons, Maxwell P attempted to explain this inconsistency with the postulate of extinguishment of the initial debt. He did so by arguing that mutual clearance applied only in respect of "valid claims"101. With respect, this attempt to define the problem out of existence, in order to overcome the obvious tension apparent on the face of the Regulations, is not convincing. Nowhere in the Regulations does the expression "valid claims" appear. Under the Regulations, claims may be excluded from clearance without any determination of whether or not they are "valid"102. The definitional transmogrification of the claim (and the legal "debt" that it relies upon), like the other legal fictions propounded by IATA, is unconvincing and highly artificial. Eighthly, Nettle JA placed particular emphasis on the assumption of the existence and continuance of a "debt" that is inherent in the provisions of reg 9(b) of the Regulations103. The joint reasons find IATA's response to Ansett's argument, based on that sub-regulation, convincing104. With respect, I do not. It would make no sense to conclude that claims arising during a period of suspension that are "attached, garnished or otherwise seized by issue of an order of Court" could be enforced in the ordinary way but that unresolved claims predating the period of suspension, that are likewise thereafter attached, garnished or seized, did not give rise to any debt or chose in action. Conclusion: debts subsist: The result is that the better view of the "claims" (or "items" as IATA refers to them in the Regulations) is that, until cleared, they are – and remain – "debts" as between the issuing and carrying airlines. Despite the attempt of IATA in argument to erase that character from them, and despite the revised form of reg 9(a) inferentially altered for that purpose after British Eagle, the Agreement and Regulations maintained the legal character of the resulting obligations as debts. 101 (2006) 60 ACSR 468 at 474-475 [23]-[24]; 24 ACLC 1381 at 1385. 102 See eg regs 22(e), 23, 49 and the Revenue Accounting Manual, Ch A10 establishing a procedure for "rebilling". 103 (2006) 60 ACSR 468 at 493 [96]; 24 ACLC 1381 at 1399. 104 Joint reasons at [64]-[65]. Kirby This is not a surprising conclusion given the economically valuable obligation discharged by the carrying airline for the issuing airline and the absence of legal novation or assignment of the debt arising out of the act of carriage, performed by the carrying airline for the issuing airline. Their mutual arrangements with other participating airlines in the Clearing House could best be viewed as constituting what they obviously were in substance. This was the provision of a convenient and mutually beneficial mechanism for the discharge of mutual debts inter se and for set-offs as between the aggregate debits and credits owed to each other and to other airlines participating in the Clearing House. Without novation and the assignment of the debt for all purposes to IATA (carrying risks and obligations which IATA understandably was not willing itself to assume), or a locally effective international treaty or validating legislation, the Agreement and Regulations did not extinguish the initial debt. Of course, I accept that there are arguments both ways on this issue, as there always are when a court such as this is asked to give meaning to a written text. There are also certain reasons of convenience and utility for adopting IATA's submissions concerning the effectiveness of its documentation to extinguish the underlying debts between the issuing and the carrying airlines. Nevertheless, the preferable construction of those documents and of the Manual of Regulations and Procedures, read as a whole, confirms the conclusion reached by the majority in the Court of Appeal. In their essential character for legal purposes, the claims (or "items") the subject of clearance began as, and remained, debts. On this construction of the Agreement and Regulations, the orders sought by IATA are inconsistent with the relevant provisions of the Corporations Act and the Deed. By s 444A(4)(b) of the Corporations Act, one of the matters that must be specified in such a deed is the property that is to be available to pay the claims of the company's creditors. By s 444A(4)(h), the deed must state the order in which the proceeds of realising such property are to be distributed among creditors bound by the deed. By s 444D(1) it is provided that, once executed, such a deed binds all creditors of the company so far as concerns claims arising on or before the day specified in the deed under s 444A(4)(i). The result of these provisions is that, upon the execution of a deed of company arrangement under Pt 5.3A of the Corporations Act (such as the present Deed), the deed orders and controls the manner in which the administrators must realise the property of the company to be distributed amongst the creditors bound by the deed105. Pursuant to the Corporations Act, the deed is given statutory force and effect. 105 (2006) 60 ACSR 468 at 505-506 [157]; 24 ACLC 1381 at 1408-1409. See also G M & A M Pearce and Co Pty Ltd v RGM Australia Pty Ltd [1998] 4 VR 888 at 893-894. As to the terms of the Deed, see above these reasons at [136]. Kirby The orders sought by IATA in these proceedings thus contemplate a disposal of Ansett's property otherwise than in accordance with the Deed. When the present Deed was executed, cl 1.4.1 provided that, if there were any inconsistency between the provisions of the Deed and any other obligations binding on Ansett, the provisions of the Deed would prevail. A direct inconsistency being established, the Court of Appeal was correct to give effect to the Deed. This conclusion is sufficient to decide these appeals in favour of Ansett and the Administrators106. However, because a majority of this Court has accepted the contrary conclusion on the issue of the construction of the Agreement and Regulations and because Ansett's remaining submissions afford an additional and distinct foundation for a conclusion in its favour, I will respond to the other way in which Ansett argues that the appeals should be dismissed. Effect on Agreement and Regulations of statutory insolvency The second issue: The second issue raised by the appeals is whether, assuming that (contrary to my view) the Agreement and Regulations, by their terms, extinguish any initial debt between Ansett and other participating airlines, any such agreed extinguishment survives the supervening insolvency of Ansett. Specifically, can such private contractual arrangements stand as legally effective, once insolvency supervenes, to defeat the statutory regime that would otherwise govern the ranking of the claims of creditors and dealings with the corporation's property? Must the private agreement by Ansett, when solvent, to extinguish the original debt as between itself and issuing airlines, yield to the legal obligations imposed by the Corporations Act and the Deed, and to the public policy there reflected, for the equitable discharge of all of the obligations of Ansett to its several creditors? The correct starting point: Much of the analysis of this issue in the courts below was taken up in a detailed consideration of the ongoing applicability in Australia of the public policy considerations identified by the majority of the House of Lords in British Eagle. According to their Lordships in that case, the Agreement and Regulations, as they then stood, amounted to a legally impermissible attempt, in effect, to contract out of the requirements established by United Kingdom public law for the administration of a potentially insolvent company. Ansett submitted that any such attempt, repeated in its case, should be classified by an Australian court as contrary to the public policy evident in the 106 (2006) 60 ACSR 468 at 498 [122]; 24 ACLC 1381 at 1403. Kirby Corporations Act and in the Deed. Ansett argued that the attempted circumvention of the statutory requirements rendered the attempt legally invalid. It did so in respect of all uncleared claims dealt with in the Clearing House after the commencement of Ansett's insolvency. In respect of such claims, and before the termination of Ansett's membership of the Clearing House, the airlines which had rendered services to Ansett during the period were not entitled to the benefit of the Clearing House mutualities. Putting it bluntly, like all other unsecured creditors of Ansett, such airlines were obliged to prove in the administration of the insolvent company107. Similarly, the uncleared claims Ansett had against other airlines were debts owed to Ansett that became part of the Deed assets. For reasons that I have already foreshadowed, the analysis in the courts below started in the wrong place. The decision of the House of Lords in British Eagle was neither legally binding nor necessarily determinative of the law to be applied in an Australian court. Nor was it to be followed unless "clearly wrong". In this respect, Australian judges should shake off old habits of thinking108. Insofar as the decision in British Eagle was relevant and persuasive in an Australian court, its utility in these proceedings was, in any case, limited. The House of Lords was closely divided in British Eagle. There were strong opinions on each side of the ledger. Relevant provisions of the Regulations have been altered since 1975. The issue at stake, before an Australian court, was necessarily the operation of Australian legislation, whose constitutional validity was unchallenged109. It was this legislation which the Administrators, on behalf of Ansett, invoked defensively. This presents yet another habit of thinking that Australian judges must learn to throw off. Where valid legislation speaks and is relevant, the proper starting point for analysis is the legislation110. It is not judicial dicta. Still less is it dicta of judges, however distinguished, of a foreign court111. 107 British Eagle [1975] 1 WLR 758 at 771 per Lord Diplock, 780 per Lord Cross, 781 per Lord Edmund-Davies; Lords Morris at 769 and Simon at 771 contra; [1975] 2 All ER 390 at 403, 410-411, 411, 401-402, 403. 108 See Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56 at [96], [130]; Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60 at [138]-[141]. 109 Constitution, s 51(xvii). See also s 51(i), (xx), (xxix). 110 Central Bayside General Practice Association Ltd v Commissioner of State Revenue (Vic) (2006) 228 CLR 168 at 198 [85] and cases there cited. 111 An example of the correct approach to the use of foreign judicial authority appears in the reasons of May and Thackray JJ for the Full Court of the Family Court of Australia in Wenceslas v Director-General, Department of Community Services (2007) 211 FLR 357 at 377 [108]: "[W]hilst judgments of the superior courts in (Footnote continues on next page) Kirby These are fundamentals of legal reasoning. They inhere in observance by the courts of this country of the rule of law. It is the duty of this Court to insist upon them and to apply them consistently. They are not overwhelmed by perceptions of convenience. To say this is not to evidence legal parochialism. To that charge I plead not guilty. It is no more than constitutional duty binding on every Australian judge. Instead of taking so many pains to try to identify what the House of Lords postulated as the requirement of United Kingdom corporate insolvency law, and the policy of that law, in 1975, the judges below (and the parties before this Court) should have focussed their attention, first and principally, on the provisions of, and legislative policy inherent in, the applicable Australian statute law. Relevantly, this was Pt 5.3A of the Corporations Act, including as it provided for the execution of deeds of company arrangement such as that executed by Ansett. Provisions of Pt 5.3A: Part 5.3A of the Corporations Act introduces a somewhat new and distinctive system of administration of corporations in insolvency112. The introduction of the Part followed proposals made by the Australian Law Reform Commission113. in other contemporaneous legislation, the objects of the new Part included the partial out-sourcing of functions formerly performed by public officials. Thus, the Part involves the more active participation of creditors in determining the consequences that flow from a recognition of possible insolvency. Nevertheless, it would be a mistake to treat Pt 5.3A as disjoined from Australia's earlier enacted provisions governing corporate insolvency. The statutory machinery has changed; but the fundamental objects remain the same. Relevantly, they include ensuring to all creditors and debtors of a corporation, in circumstances of actual or potential accordance with law and the proper ranking of their entitlements and obligations insolvency, equitable treatment New Zealand have much persuasive value, they are of no greater persuasive force than the judgments of superior courts of other signatory countries." 112 Joint reasons at [39] citing Brash Holdings Ltd v Katile Pty Ltd [1996] 1 VR 24 at 113 Australian Law Reform Commission, General Insolvency Inquiry, Report No 45, (1988) ("Harmer Report"), vol 1 at 5-6 [8], 28-29 [53]-[54]; cf Explanatory Memorandum to Corporate Law Reform Bill 1992 (Cth) at 9. Kirby inter se. In this respect, Pt 5.3A still reflects the basic principles of insolvency law explained in Palmer's Company Law114: "The first [rule] is that the legislation lays down a mandatory code of procedure to be administered in a proper and orderly way and this is a matter in which the commercial community generally has an interest. In other words it is not simply a matter of private right. Secondly, to allow contracting out would be unfair and possibly a fraud on the general body of ordinary creditors." The maintenance of the foregoing objectives the administration of an insolvent company in accordance with Pt 5.3A is made plain by the language of s 435A of the Corporations Act. That section, in stating the objects of Pt 5.3A as including "to provide for the business, property and affairs of an insolvent company", places the provisions of the Part, including those concerning deeds of company arrangement, squarely within the context of corporate insolvency law. in respect of The execution of a deed of company arrangement is one of the normal outcomes of an administration of an insolvent corporation under Pt 5.3A. Such a deed is executed both by the company and the administrator115. It follows that the combination of Pt 5.3A of the Corporations Act, together with the contents of a deed entered into in accordance with that Part, is equivalent to a collective statutory regime for the distribution of the property of the corporation in a way that is relevantly identical to the more traditional provisions governing corporate insolvency found, for example, in Pts 5.5 and 5.6 of the Corporations Act. Thus, Ansett became as much subject to the provisions for creditor equity inter se as British Eagle was to the United Kingdom legislation considered by the House of Lords in British Eagle. The relevant public policy: IATA contested the invocation of the public policy considerations mentioned by the House of Lords in British Eagle. Specifically, IATA pointed both to the differences that had been introduced into the Regulations since British Eagle was decided and to the distinctive features of the form of company administration in insolvency introduced by Pt 5.3A of the Corporations Act. Neither of these arguments is persuasive. The claim for Ansett did not represent an illicit attempt by the Administrators to enlarge the consequences of the Deed and the requirements of Pt 5.3A of the Corporations Act pursuant to 114 vol 3 at [15.419] (footnotes omitted). 115 Corporations Act, s 444B. Kirby which the Deed was executed. Instead, the public policy invoked by the Administrators was precisely the consideration that weighed with the majority of the House of Lords in British Eagle. It was perfectly simple. Once an insolvency regime provided by a valid public law was engaged, earlier attempts by a corporation, before its insolvency, to provide by contract in a way that would defeat that law, cannot be sustained. They amount, in effect, to an invalid effort by private agreement to override the public policy of the Australian Parliament. Such law and policy envisages that, where insolvency of a corporation supervenes, the regime established by, or under, statute will prevail. Any affected prior private arrangements of the parties must give way. Support for the public policy: The public policy applicable to the present case is exactly the same as that stated by Lord Cross of Chelsea, giving the reasons of the majority in the House of Lords in British Eagle116: "[W]hat the respondents are saying here is that the parties to the 'clearing house' arrangements by agreeing that simple contract debts are to be satisfied in a particular way have succeeded in 'contracting out' of the provisions contained in section 302 [of the Companies Act 1948 (UK)] for the payment of unsecured debts 'pari passu'. In such a context it is to my mind irrelevant that the parties to the 'clearing house' arrangements had good business reasons for entering into them and did not direct their minds to the question how the arrangements might be affected by the insolvency of one or more of the parties. Such a 'contracting out' must, to my mind, be contrary to public policy." In In re Maxwell Communications Corporation Plc117, Vinelott J recognised that this principle was "reflected in but not derived from section 302 or its predecessor". Similarly, in Money Markets International Stockbrokers Ltd (in liq) v London Stock Exchange Ltd118, Neuberger J insisted upon adherence to the principle that: "on insolvency, the insolvent's assets are to be available for distribution amongst in accordance with primary and delegated legislation, in this country the Insolvency Act 1986 and the Insolvency Rules 1986". its creditors 116 [1975] 1 WLR 758 at 780; [1975] 2 All ER 390 at 411. 117 [1993] 1 WLR 1402 at 1416; [1994] 1 All ER 737 at 750. 118 [2002] 1 WLR 1150 at 1160 [37]; [2001] 4 All ER 223 at 234. Kirby A similar approach is taken by courts in the United States of America. For example, in In re 203 North LaSalle Street Partnership119, the United States Bankruptcy Court observed: "It is generally understood that prebankruptcy agreements do not override contrary provisions of the Bankruptcy Code. Thus, in Klingman v Levinson120, the court noted that the Bankruptcy Code generally provides for the discharge of an individual's debts, and that it would be contrary to public policy to allow a debtor 'to contract away the right to a discharge.' See also Hayhoe v Cole (In re Cole)121 (collecting decisions refusing to enforce prepetition waivers of 'bankruptcy benefits' other than discharge). Indeed, since bankruptcy to produce a system of is designed reorganization and distribution different from what would obtain under nonbankruptcy law, it would defeat the purpose of the Code to allow parties to provide by contract that the provisions of the Code should not apply." Some of the arguments in this Court sought to derive from the House of Lords decision in British Eagle a public policy principle that was strictly confined to the protection of the pari passu settlement of creditor claims. However, this would be altogether too narrow a reading of what their Lordships in the majority were concerned to uphold, what other courts considering similar problems have asserted and what this Court should likewise defend. In his examination of the pari passu principle, Mr R J Mokal has remarked122: "[O]ne may not bargain for immunity from the collective bankruptcy regime (except as provided by the law) … What cannot be contracted out of (in an unacceptable way) is not the pari passu principle, but the whole collective system for the winding-up of insolvent estates … [It is] forbidden for a creditor to leave his assigned place in the queue and step ahead of others". This is, in effect, what Ansett attempted to do in advance by the contractual arrangements it made with the other airlines that were utilising the Clearing House. Whether this was effective or ineffective to extinguish the initial debt occasioned by the provision of services by the carrying airline for the 119 246 BR 325 at 331 (Bkrtcy ND Ill 2000). 120 831 F 2d 1292 at 1296 n 3 (7th Cir 1987). 121 226 BR 647 at 652 n 7 (9th Cir BAP 1998). 122 "Priority as Pathology: The Pari Passu Myth", (2001) Cambridge Law Journal 581 at 597 (emphasis added). Kirby issuing airline, once insolvency supervened it became necessary to re-examine the private contractual arrangements to see if they could stand with the fundamental purposes of administration of the affected corporation in insolvency, pursuant to the scheme established by Pt 5.3A of the Corporations Act. In answering that last question, I remind myself of the fundamental words of Bowen LJ written more than a century ago in Ex parte Milner123: "[T]he creditors who take part in the scheme act upon the faith and understanding that they are all coming in upon terms of equality, and if a deed is prepared to carry out this equal distribution, every creditor who executes it does so on the faith that there is no private bargain with any of the other creditors which will destroy this equality." The cardinal principle that sustains this conclusion is quite similar to that which this Court upheld in Akai Pty Ltd v People's Insurance Co Ltd124. That was a case where a contract of insurance with an Australian company contained a clause, inserted by the insurer (a Singapore company), providing for disputes to be referred to the courts of England. Allowing the appeal, this Court concluded that it was essential for an Australian court, whose jurisdiction was invoked, to measure any such contractual stipulation against the requirements of the applicable Australian public law. In that case the relevant law was the Insurance Contracts Act 1984 (Cth). In Akai, the majority in this Court observed125: "The grant of a stay would involve the [Australian] court so exercising its discretion as to stay its process in favour of an action in a court where the statute would not be enforced. This stay would be granted on the basis that in so doing a contractual obligation would be implemented. But the policy of the Act, evinced by s 8, is against the use of private engagements to circumvent its remedial provisions. To grant a stay in the present case would be to prefer the private engagement to the binding effect … of the law of the Parliament. This indicates a strong reason against the exercise of the discretion in favour of a stay. The policy of the law and of the Constitution militates against a stay. In the event, it is unnecessary to decide the case solely upon this basis. That is because the Act itself provides, in s 52, a direct answer. … The section operates to render void a provision of the Policy which would … have the effect of excluding, restricting or modifying … the operation 123 (1885) 15 QBD 605 at 616. 124 (1996) 188 CLR 418. 125 (1996) 188 CLR 418 at 447 per Toohey, Gaudron and Gummow JJ. Kirby of the Act. The phrase 'the operation of this Act' includes the operation, to the advantage of Akai, of s 54. In the Court of Appeal, Kirby P so held in his dissenting judgment126, and we agree." Conclusion: contracting out unsuccessful: The reasoning in Akai applies to the present case. This is so although there is not here an express statutory prohibition on contracting out of the provisions of Pt 5.3A of the Corporations Act as existed under the Insurance Contracts Act. Doubtless this was so because the scheme of that Part of the Corporations Act is to commit to a majority of creditors the decision, in the first instance, of whether or not to execute a deed of company arrangement. Once that has occurred, the familiar principles of insolvency law take effect. These include the normal consequences for the protection of the company itself and its creditors inter se against those who, in Mr Mokal's words, try to "leave [their] assigned place in the queue and step ahead of others". Inconvenience and policy: I appreciate that the outcome that I favour, alike with the majority of the Court of Appeal, would inconvenience IATA and its members, just as the outcome in British Eagle would doubtless have done. On the other hand, the Clearing House secures for participating airlines a distinctive priority, amounting to a preferential discharge at full price of unsecured obligations owed by an insolvent airline to other airlines. If effective, this would protect recipients of such payments at the cost of the equity defended by the priorities otherwise contemplated by the insolvency provisions of the Corporations Act and established by the Deed. No doubt unpaid airline pilots, employees, small contractors and other unsecured creditors would have their own views about the comparable merits of their respective claims upon the property of Ansett and the competing claims of large corporate airlines. They might well regard such airlines as much better able to absorb and defray the losses caused, exceptionally, by the financial collapse of an air carrier. This Court is not concerned to weigh the competing merits of the claims of the several creditors. Its only obligation is to give effect to the requirements of the applicable Australian law. Where, as I would hold, the private contractual arrangements between Ansett, other airlines and IATA before the insolvency conflict with the provisions and fundamental purposes of the public law on corporate insolvency, it is the latter that must prevail. The Clearing House will continue to govern, with efficiency and mutual benefit, the overwhelming number of transactions 126 Akai Pty Ltd v People's Insurance Co Ltd (1995) 126 FLR 204 at 215-216 (NSWCA), misreported in (1996) 188 CLR 418 as (1995) 126 FLR 204 at 225. Kirby between participating solvent airlines. If greater protection for participants in the Clearing House is required, it may be possible to achieve it by different contractual stipulations, involving for example novation of the original debt127. More likely, any such greater protection would require statutory provisions of a specific or general kind or international treaty arrangements given legal effect by municipal law. It is basic to the success of the equitable distribution of property amongst creditors, which lies at the heart of the statutory system on insolvency, that particular creditors may not, by their own private contractual dealings, bargain between themselves so that, if insolvency occurs, they will effectively be immune from the discipline of the statutory ranking. If that could be done by private contract, as IATA argued here, the operation and policy of the administration of a company in insolvency under statute would be seriously threatened. Effectively, it would be rendered optional. Individual creditors by their contractual arrangements could circumvent the statutory provisions and the important social and economic policy they reflect. I deprecate departures from the fundamental principles of insolvency and bankruptcy law which it is the duty of this Court, so far as it can, to uphold. In a choice between private contract and public statute, this Court's clear obligation under the Australian Constitution is to give effect to the statute. This is what the majority of the Court of Appeal did. They were correct to do so. Their orders should not be disturbed by this Court. All airlines, and IATA itself, when they reflect upon it, would fully understand Mr Mokal's metaphor that creditors of an insolvent company must not "be allowed to leave [their] assigned place in the queue and step ahead of others". Airlines have to deal all the time with passengers and shippers who try to jump the queue. Such conduct is not acceptable at airports or in airline offices. Nor, without clear and express legal authority, is it acceptable in courts of law or elsewhere, once the provisions of insolvency law have been engaged and apply. There was no such legal authority here. The individual creditors must therefore be told to return and take their proper place in the queue. Orders The appeals to this Court should be dismissed with costs. 127 See the General Regulations of the London Clearing House described in Goode, Principles of Corporate Insolvency Law, 3rd ed (2005) at 219. Kirby

HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION AND BORDER PROTECTION APPELLANT AND WZARH & ANOR RESPONDENTS Minister for Immigration and Border Protection v WZARH [2015] HCA 40 4 November 2015 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation G T Johnson SC with B D Kaplan for the appellant (instructed by Sparke Helmore Lawyers) S E J Prince with P W Bodisco for the first respondent (instructed by Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Border Protection v WZARH Administrative law – Procedural fairness – Refugee Status Assessment – Independent Merits Review ("IMR") – Where first reviewer conducted interview with first respondent but did not complete IMR – Where second reviewer completed IMR without interview but with regard to transcript and audio recording of first reviewer's interview – Where first respondent not informed of change in identity of reviewer – Where second reviewer formed adverse view of first respondent's credibility – Whether first respondent denied procedural fairness. Words and phrases – "legitimate expectation", "opportunity to be heard", "oral hearing", "procedural fairness", "unfairness". KIEFEL, BELL AND KEANE JJ. The respondent1 is a national of Sri Lanka of Tamil ethnicity. On 7 November 2010, he entered Australia by boat arriving at Christmas Island. At that time, Christmas Island was an "excised offshore place" and the respondent was an "offshore entry person", as then defined in s 5(1) of the Migration Act 1958 (Cth) ("the Act"). As the respondent did not hold a visa to enter Australia, he was an unlawful non-citizen as defined in s 14 of the Act, and so, upon his arrival at Christmas Island, he was taken into detention pursuant to s 189(3) of the Act. Because the respondent was an offshore entry person, s 46A of the Act as it then stood prevented him from making a valid application for a Protection (Class XA) visa. On 21 January 2011, he requested a Refugee Status Assessment ("RSA") as to whether he was a person to whom Australia owed protection obligations under the Refugees Convention2. This process was described in this Court's decision in Plaintiff M61/2010E v The Commonwealth3. In response to the respondent's request, a delegate of the appellant, the Minister for Immigration and Border Protection ("the Minister"), interviewed the respondent in respect of his claim to refugee status. The respondent claimed that he was owed protection as he feared harm at the hands of the Eelam People's Democratic Party and the Sri Lankan authorities because of his Tamil ethnicity, his perceived support of the Liberation Tigers of Tamil Eelam, and his having campaigned in Sri Lanka for a particular politician. On 29 April 2011, the Minister's delegate made an adverse assessment of the respondent's claim to refugee status. On 20 May 2011, the respondent requested an Independent Merits Review ("IMR") of the RSA. On 16 January 2012, the respondent was interviewed by an independent merits reviewer. It will be convenient, though strictly speaking inaccurate4, to refer to this individual as the First Reviewer. At this interview, the First Reviewer told the respondent that she would "undertake a fresh re-hearing of [his] claims" and "mak[e] a recommendation as to whether [he is] found to be a 1 The second respondent has filed a submitting appearance. It is, therefore, convenient to refer to the first respondent to the appeal as "the respondent". 2 The Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). (2010) 243 CLR 319 at 343 [41]-[44]; [2010] HCA 41. 4 Because this individual did not complete a review of the RSA. Bell refugee", and that "this will be given to the Minister … for consideration." She concluded the interview by telling the respondent that she would consider "all the information that [he has] provided" and "any further articles or information", then "make [her] recommendation." For undisclosed reasons, the First Reviewer became unavailable to complete the IMR. At some point after 16 January 2012, and unbeknown to the respondent, another individual assumed responsibility for the completion of the IMR. This individual is the second respondent to this appeal. It will be convenient to refer to him as the Second Reviewer. On 25 July 2012, the Second Reviewer found that the respondent did not meet the criteria for a Protection (Class XA) visa as set out in s 36(2) of the Act and, accordingly, recommended that the respondent not be recognised by the Minister as a person to whom Australia owed protection obligations. The Second Reviewer did not interview the respondent, but based his decision on a consideration of written materials, respondent's original applications, a transcript of his interview with the departmental officer on Christmas Island, the submissions made by his advisors on his behalf, country information, and a recording and transcript of his interview with the First including the The Second Reviewer formed an adverse view of the credibility of the respondent. In particular, the Second Reviewer rejected what he described as "a central plank of [the respondent's] fear of persecution", namely his association with the particular politician, on the basis of inconsistencies in his account of his activities in various election campaigns in Sri Lanka. Importantly, the Second Reviewer did not accept "that this kind of error was due to memory lapse or confusion, nor indeed to the effects of detention". Having formed this strong adverse view of the respondent's credibility, the Second Reviewer proceeded to find that: "there is not a real chance that [the respondent] would be persecuted, now or in the reasonably foreseeable future for reasons of political opinion … ethnicity or membership of a particular social group … [and] that his fear of persecution for a Convention reason is not well-founded." On 20 September 2012, the respondent filed an application in the Federal Circuit Court for judicial review of the decision of the Second Reviewer. On 5 WZARH v Minister for Immigration and Border Protection [2013] FCCA 1608 at Bell 14 October 2013, the primary judge (Judge Raphael) dismissed the respondent's application6. The respondent then appealed to the Full Court of the Federal Court of Australia. On 20 October 2014, the Full Court allowed the appeal and declared that the Second Reviewer arrived at his decision in breach of the rules of procedural fairness. The reasons of the primary judge Before the primary judge, the respondent argued that the Second Reviewer's failure to conduct an interview with him as part of the IMR meant that he was denied procedural fairness7. In support of that argument, the respondent referred to the fact that because the Second Reviewer did not conduct an interview, the Second Reviewer did not sight certain scars that the respondent claimed were evidence of torture to which he had been subjected8. The Minister relied upon the general proposition, supported by the decision of the Full Federal Court in Chen v Minister for Immigration and Ethnic Affairs, that9: "It is beyond argument that the rules of natural justice do not mandate in all cases an oral hearing for the person affected." The primary judge upheld the Minister's submission, holding that it was not procedurally unfair for the Second Reviewer to make his recommendation without conducting an In this regard, the primary judge concluded that questions as to the respondent's credibility could properly be resolved against him by the Second 6 WZARH v Minister for Immigration and Border Protection [2013] FCCA 1608. 7 WZARH v Minister for Immigration and Border Protection [2013] FCCA 1608 at 8 WZARH v Minister for Immigration and Border Protection [2013] FCCA 1608 at (1994) 48 FCR 591 at 597. 10 WZARH v Minister for Immigration and Border Protection [2013] FCCA 1608 at Bell Reviewer by reference to the documents and audio evidence available to him11. "This is not a case that [sic] a matter is considered solely on the papers. There had been a hearing. The [Second Reviewer] had heard the tape of that hearing and read the transcript." The primary judge also rejected the respondent's submission that the IMR process lacked procedural fairness because the Second Reviewer had failed to take into account a relevant consideration, namely the scars on the respondent's arm13. The reasons of the Full Court The respondent appealed to the Full Court on the basis that the primary judge erred in failing to hold that the respondent had been denied procedural fairness. The two grounds advanced in support of that contention were that the Second Reviewer did not conduct an interview with the respondent; and that visible scarring on the respondent's arm (a relevant consideration) was not taken into account by the Second Reviewer in making his decision. The Full Court (Flick and Gleeson JJ in a joint judgment, Nicholas J in a separate concurring judgment) rejected the second ground, but upheld the first ground and allowed the appeal14. The second ground has not been pursued further, and it is unnecessary to say any more about it. 11 WZARH v Minister for Immigration and Border Protection [2013] FCCA 1608 at 12 WZARH v Minister for Immigration and Border Protection [2013] FCCA 1608 at 13 WZARH v Minister for Immigration and Border Protection [2013] FCCA 1608 at 14 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at Bell Flick and Gleeson JJ accepted that there is no universal requirement for an oral hearing before an administrative decision is made15. Their Honours said that16: "Subject to any statutory provision to the contrary, any conclusion as to whether the rules of natural justice require an oral opportunity to be heard can perhaps be put no more specifically than by inquiring whether a fair opportunity to be heard requires such a hearing." Before pursuing that inquiry, however, their Honours observed that the respondent had a legitimate expectation that the person by whom he had been interviewed would be the person to make the recommendation to the Minister17. Their Honours said that, although the notion of "legitimate expectation" as the criterion for an entitlement to procedural fairness from an administrative decision-maker has been criticised, it remains a useful tool when considering "what must be done to give procedural fairness to a person whose interests might be affected by an exercise of power"18. In their Honours' view, the respondent had been put in a position where he believed that he would have an opportunity to make oral submissions to the decision-maker, and, without warning or opportunity to object, he was denied that opportunity19. Flick and Gleeson JJ noted that, in the present case, unlike in Abujoudeh v Minister for Immigration and Multicultural Affairs20 and MZXDH v Minister for Immigration and Multicultural Affairs21, on which the Minister relied, the 15 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 16 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 17 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 18 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 138 [18] citing Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 39; [1990] HCA 21. 19 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 20 (2001) 115 FCR 179. 21 [2007] FCA 719. Bell respondent had not been informed of the change in the identity of the person making the recommendation to the Minister, so that he had no reason to believe that the recommendation would be made by anyone other than the First Reviewer, by whom he had been interviewed22. Their Honours concluded that23: "If for whatever reason a person conducting an independent merits review becomes unavailable, a claimant is at the very least entitled to be heard before his legitimate expectation is defeated, by being given an opportunity to make submissions as to how the review process should continue." Their Honours also held that this was not a case in which an opportunity to make submissions was "little more than a formality"24. Their Honours said25: "Listening to a tape recording or reading a transcript is no substitute for extending to [the respondent] the opportunity which he was first given and which he was led to believe he would be given, namely an opportunity to impress upon the person who made the recommendation the merits and genuineness of his claims." Nicholas J held that, because the respondent was not told of the change in the identity of the decision-maker, he was denied an opportunity to make submissions as to how the IMR should proceed; and this was unfair26. Nicholas J rejected the Minister's submission that the outcome would not have been different even if the Second Reviewer had conducted an oral hearing with the respondent, because the respondent's demeanour at the interview might have led 22 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 23 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 24 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 25 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 26 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at Bell the Second Reviewer to resolve questions of credibility in the respondent's favour27. The appeal to this Court On 17 April 2015, Hayne and Gageler JJ granted the Minister special leave to appeal to this Court. The Minister's submissions The Minister seized upon the use by Flick and Gleeson JJ of the concept of "legitimate expectation" in the course of their consideration of whether there had been a denial of procedural fairness. The Minister submitted that their Honours treated the notion of "legitimate expectation" as the basis for an entitlement to a particular form of procedure including an interview. In this regard, the Minister placed particular reliance on this Court's decision in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam28. The Minister submitted that the Full Court erred in concluding that the respondent had been denied procedural fairness without first establishing why the denial of a second interview was procedurally unfair. The respondent's submissions The respondent submitted that Flick and Gleeson JJ did not apply the concept of "legitimate expectation" as the sole basis for their conclusion that the respondent had been denied procedural fairness29. The respondent submitted that all members of the Full Court correctly concluded that he was denied the opportunity to advance his case afforded by an interview with the person who actually made the recommendation to the Minister; and that the opportunity was denied without his being heard on the question. This was said to be sufficient reason to conclude that he had been denied procedural fairness. 27 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 28 (2003) 214 CLR 1; [2003] HCA 6. 29 cf WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 Bell The respondent's submissions should be accepted. Legitimate expectation The use of the concept of "legitimate expectation" as the criterion of an entitlement to procedural fairness in administrative law has been described in this Court as "apt to mislead"30, "unsatisfactory"31 and "superfluous and confusing"32. In Lam, Hayne J observed that the concept "poses more questions than it answers", such as "[w]hat is meant by 'legitimate'?" and "[i]s 'expectation' a reference to some subjective state of mind or to a legally required standard of behaviour?" and "whose state of mind is relevant?" and "[h]ow is it established?"33. Hayne J concluded that "reference to expectations, legitimate or not, is unhelpful"34. More recently, in Plaintiff S10/2011 v Minister for Immigration and Citizenship35, Gummow, Hayne, Crennan and Bell JJ referred to the discussion of the concept by four members of the Court in Lam36, and said that: "the phrase 'legitimate expectation' when used in the field of public law either adds nothing or poses more questions than it answers and thus is an unfortunate expression which should be disregarded." The position has been made sufficiently clear that it is not necessary for this Court to engage again in discussion of the concept of "legitimate 30 South Australia v O'Shea (1987) 163 CLR 378 at 411; [1987] HCA 39; Haoucher v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 648 at 659; [1990] HCA 22. 31 South Australia v O'Shea (1987) 163 CLR 378 at 417. 32 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 55. 33 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 38 [121]. 34 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 36 [111]. 35 (2012) 246 CLR 636 at 658 [65]; [2012] HCA 31. 36 (2003) 214 CLR 1 at 20 [61]-[63], 27-28 [81]-[83], 36-38 [116]-[121], 45-48 Bell expectation" in administrative law or to trace its progress from its controversial origins37, to its tentative acceptance in Australian law38, to its rejection39 as a touchstone of the requirement that a decision-maker accord procedural fairness to a person affected by an administrative decision. The "legitimate expectation" of a person affected by an administrative decision does not provide a basis for determining whether procedural fairness should be accorded to that person or for determining the content of such procedural fairness. It is sufficient to say that, in intention, administrative the absence of a clear, contrary decision-makers must accord procedural fairness to those affected by their decisions. Recourse to the notion of legitimate expectation is both unnecessary and unhelpful. Indeed, reference to the concept of legitimate expectation may well distract from the real question; namely, what is required in order to ensure that the decision is made fairly in the circumstances having regard to the legal framework within which the decision is to be made. legislative It is to be noted that Flick and Gleeson JJ concluded that the "fundamental change to the administrative process being pursued without [the respondent] being alerted to the change"40 was a failure by the Second Reviewer to observe the requirements of procedural fairness41. This conclusion was a sufficient basis for their Honours' decision, which might have been more readily apparent had 37 Schmidt v Secretary of State for Home Affairs [1969] 2 Ch 149 at 170-171; Salemi v MacKellar [No 2] (1977) 137 CLR 396 at 404; [1977] HCA 26; R v Secretary of State for the Home Department; Ex parte Khan [1984] 1 WLR 1337; [1985] 1 All ER 40; R v Inland Revenue Commissioners; Ex parte Preston [1985] AC 835 at 852, 864-867; R v Secretary of State for the Home Department; Ex parte Ruddock [1987] 1 WLR 1482 at 1497; [1987] 2 All ER 518 at 531; Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 22-23, 39. 38 Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 291-292, 301-302, 305; [1995] HCA 20. 39 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 20-23 [61]-[70], 27-28 [81]-[83], 36-38 [116]-[121], 45-48 [140]-[148]; Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at 658 [65]. 40 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 41 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at Bell their Honours not been disposed to deploy the concept of legitimate expectation in their analysis of the issue. The criticism that the Minister made of the reasoning of Flick and Gleeson JJ cannot be made of the reasoning of Nicholas J. His Honour's analysis proceeded on the basis that the issue was whether the respondent had been denied procedural fairness by the alteration in the review process which occurred without his being informed, and as a result of which he lost the possibility of the advantage he may have gained from a consideration of his demeanour at interview42. The review process was unfair In considering whether the respondent was denied procedural fairness so as to vitiate the recommendation of the Second Reviewer, two points may be made at the outset. First, it was common ground that the IMR process was required to accord the respondent procedural fairness even though the decision-making process proceeded under administrative guidelines43. Secondly, there is no general rule that procedural fairness requires an administrative decision-maker to afford a person affected by the decision an oral hearing in every case. Whether an oral hearing is required in order to accord procedural fairness to a person affected by an administrative decision depends on the practical requirements of procedural fairness in the circumstances of the case44. In this regard, this Court's decision in Lam does not support the Minister's challenge to the decision of the Full Court. In Lam, the applicant, who held a transitional visa, was notified that consideration was being given to cancelling his visa. In his response to that notification, he submitted that the best interests of his two children, who were Australian citizens, would be adversely affected if his visa were cancelled. Attached to his submission was a letter from his 42 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 43 cf Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 44 Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487 at 516; [1977] HCA 39; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 12-13 [34], 14 [38], 34-35 [105]-[106], 36 [113]-[114], 38-39 [122], 45 [140]; SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at 160-162 [26]-[29]; [2006] HCA 63. Bell children's carer. A departmental officer then wrote to the applicant requesting the contact details of the carer. The letter stated that the Department wished to contact the carer to assess the impact that cancellation of the applicant's visa would have on his children. The applicant provided the contact details, but no departmental officer made contact with the carer. The Minister cancelled the applicant's visa, and the applicant applied for certiorari to quash the Minister's decision on the basis that he had been denied procedural fairness as a result of the Department's failure to contact the carer and to notify the applicant of that fact. The application for certiorari was refused. In Lam, it was held45 that a failure by the decision-making authority to adhere to a foreshadowed line of inquiry may, but will not necessarily, amount to a denial of procedural fairness. The manner in which any given administrative process is conducted may generate expectations on the part of the person affected as to how he or she should present his or her case; in some cases, fairness may require that such expectations be honoured. In this regard, Gleeson CJ said46: "when a public authority promises that a particular procedure will be followed in making a decision, fairness may require that the public authority be held to its promise. ... Expectations created by a decision-maker may affect the practical content of the requirements of fairness in a particular case." (footnote omitted) (original emphasis) The present case is readily distinguishable from Lam. In that case, as Gleeson CJ said47, "[t]he applicant lost no opportunity to advance his case" and it was for that reason that no practical injustice was held to have occurred. And "[The applicant] was afforded a full opportunity to be heard. The Department's letter raised no new matter to be taken into account in making the impugned decision, and it did not divert attention in any way from the relevance of, or weight to be given to, the effect that cancellation of the applicant's visa would have on his children." 45 (2003) 214 CLR 1 at 9 [25], 12 [33], 34 [104]-[105]. 46 (2003) 214 CLR 1 at 12 [33]. 47 (2003) 214 CLR 1 at 14 [38]. 48 (2003) 214 CLR 1 at 38-39 [122]. Bell In the present case, the respondent had been afforded an interview with the concomitant advantage that the individual responsible for making a recommendation to the Minister in relation to his claim to refugee status would be able to use all the information provided by him, including impressions gained from his demeanour at the interview, in coming to a conclusion as to the genuineness of his account. It may be accepted that, as the Minister argued, the respondent was not entitled to insist upon the observance of a particular form of decision-making process. But that is not to the point. Rather, the questions are whether it was unfair for the Second Reviewer to proceed by reference only to some of the information made available to the First Reviewer and the impressions as to his credibility formed from those materials, and whether it was unfair to deny the respondent the opportunity to be heard on whether the IMR should proceed in that way. We now turn to a consideration of these questions. As to the first of these questions, the Minister accepted that in some circumstances a reasonable opportunity to be heard will involve some form of oral hearing. The Minister also accepted that, in those circumstances, procedural fairness would require the decision-maker to entertain and give consideration to submissions seeking to establish that an oral hearing is required. The fact that the First Reviewer interviewed the respondent affords, at the very least, some practical indication of what procedural fairness required in the circumstances of this case. An interview in the course of the IMR process provides the reviewer with opportunities for direct questioning of the applicant; for clarification of areas of confusion or poor understanding on both sides; and for the observation of the demeanour of the applicant. Impressions formed by a decision-maker from the demeanour of an interviewee may be an important aspect of the information available to the decision-maker. That this is so has long been recognised49. The opportunity for a decision-maker to clarify areas of confusion or misunderstanding, and to form an impression based on personal observation as to whether an applicant is genuinely confused or seeking deliberately to mislead, may be especially important to a fair assessment of a claim to refugee status 49 Dearman v Dearman (1908) 7 CLR 549 at 564; [1908] HCA 84; Jones v Hyde (1989) 63 ALJR 349 at 351-352; 85 ALR 23 at 27-28; [1989] HCA 20; Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179; [1990] HCA 47; Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479, 482-483; [1993] HCA 78. Bell when English is not the applicant's mother tongue and he or she is obliged to seek to communicate through an interpreter. As Nicholas J rightly said50: "The one situation in which oral hearings are most often thought to be desirable is where questions arise as to a witness's credibility. An oral hearing will often assist in the resolution of credibility issues by allowing the decision-maker to interact directly with the witness by asking the witness questions, considering his or her answers, and having regard to the witness's demeanour." The Full Court was right to conclude that it cannot be said in the present case that the respondent lost no opportunity to advance his case. As was said in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs51: "It is … not to the point to ask whether the [decision-maker's] factual the conclusions were [decision-maker's] processes, not its actual decision." relevant question is about The right. An interview by the Second Reviewer might have made a difference to the outcome of the IMR process52. This may be seen from what was involved in any assessment of the respondent's application to be undertaken by the Second Reviewer. The acceptance or rejection of his case was likely to turn, not only upon apparent inconsistencies or uncertainties in his account, but also upon impressions formed about how he had responded to questions about his recollection of events in the recorded interview with the First Reviewer. The benefit to a decision-maker of seeing a witness advance his or her case should not be exaggerated, but for the reasons already mentioned, it cannot be dismissed as illusory53. The respondent could not have been in a worse position if the Second Reviewer had not been disposed, after seeing him responding to questions, to take a more favourable view of his credibility. But he may have been in a better position if the Second Reviewer had formed the 50 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 51 (2006) 228 CLR 152 at 160 [25]. 52 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145-147; [1986] HCA 54. 53 cf Fox v Percy (2003) 214 CLR 118 at 125-127 [23]-[25], 138-145 [65]-[86]; [2003] HCA 22. Bell impression that he was genuinely doing his best to give truthful evidence in difficult circumstances. As to the second of the questions which arise in this case, for reasons entirely beyond the respondent's control, information available from the interview conducted by the First Reviewer was only partly reflected in the recommendation made to the Minister; and because the respondent was not told of the alteration of the review process, he was denied an opportunity to be heard as to how the changed process might be completed so that he would not be disadvantaged by the change. As Nicholas J rightly said54, the respondent: "was deprived of the opportunity to apply for an oral hearing before the [Second Reviewer], an application which … the Minister would have been hard pressed to resist." It is difficult to identify any reasonable basis on which the Second Reviewer could fairly have refused the respondent an opportunity to be heard on the question of how the review process should proceed once that process was altered by the withdrawal of the First Reviewer55. Elementary considerations of fairness required that the respondent be informed that the process explained to him by the First Reviewer would not be completed so that he would have the opportunity to be heard on the question of how the process should now proceed. In Lam56, Gleeson CJ said: "There are undoubtedly circumstances in which the failure of an administrative decision-maker to adhere to a statement of intention as to the procedure to be followed will result in unfairness and will justify judicial intervention to quash the decision". The Full Court was right to conclude that the present is an example of such a case. 54 WZARH v Minister for Immigration and Border Protection (2014) 230 FCR 130 at 55 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 352 [31], 369 [86], 379-380 [120]-[124]; [2013] HCA 18. 56 (2003) 214 CLR 1 at 9 [25]. Bell Orders The appeal should be dismissed with costs. GagelerJ GAGELER AND GORDON JJ. The facts and procedural history are set out in the reasons for judgment of Kiefel, Bell and Keane JJ. We agree with their Honours that the appeal should be dismissed. Plaintiff M61/2010E v The Commonwealth57 characterised the RSA and IMR processes as processes undertaken to inform the exercise by the Minister of statutory powers to consider whether or not to "lift the bar" to the making of a visa application or to grant a visa in every case where an offshore entry person claims to be a person to whom Australia owes protection obligations under the Refugees Convention. Plaintiff M61/2010E held that, because those processes had the practical effect of prolonging detention of an offshore entry person, the exercise by the Minister of his statutory powers was conditioned on the observance of procedural fairness, with the consequence that those processes must themselves be procedurally fair58. Procedural fairness in the RSA and IMR processes requires that an offshore entry person who invokes either process be given a reasonable opportunity to be heard as to whether or not the bar should be lifted or a visa granted. That entails that the person be given a reasonable opportunity to present an affirmative case that he or she is a person to whom Australia owes protection obligations under the Refugees Convention, and to answer material or information which might be thought to suggest otherwise. That requirement necessitates at least that the opportunity to be heard that is given to an offshore entry person in each process is an opportunity which a reasonable assessor or reviewer ought fairly to give in the totality of the circumstances. That standard for compliance derives from the fundamental obligation of the Minister to afford procedural fairness, which conditions the Minister's exercise of the statutory power which the processes inform. To satisfy the condition of procedural fairness, the Minister is obliged to adopt "a procedure which conforms to the procedure which a reasonable and fair repository of the power would adopt in the circumstances"59. 57 (2010) 243 CLR 319; [2010] HCA 41. 58 (2010) 243 CLR 319 at 334-335 [9], 350-354 [70]-[78]. See Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at 652-653 [43]- [44]; [2012] HCA 31. 59 Kioa v West (1985) 159 CLR 550 at 627; [1985] HCA 81. GagelerJ Gaudron and Gummow JJ pointed out in Re Refugee Review Tribunal; Ex parte Aala60: "[T]he conditioning of a statutory power so as to require the provision of procedural fairness has, as its basis, a rationale which differs from that which generally underpins the doctrine of excess of power or jurisdiction. The concern is with observance of fair decision-making procedures rather than with the character of the decision which emerges from the observance of those procedures." The concern of procedural fairness, which here operates as a condition of the exercise of a statutory power, is with procedures rather than with outcomes. It follows that a failure on the part of an assessor or reviewer to give the opportunity to be heard which a reasonable assessor or reviewer ought fairly to give in the totality of the circumstances constitutes, without more, a denial of procedural fairness in breach of the implied condition which governs the exercise of the Minister's statutory powers of consideration. Such a breach of the implied condition which governs the exercise of the Minister's statutory powers of consideration is material, so as to justify the grant of declaratory relief by a court of competent jurisdiction, if it operates to deprive the offshore entry person of "the possibility of a successful outcome"61. That approach to the determination of the existence and consequence of a breach of an implied condition of procedural fairness governing the exercise of a statutory power is wholly consistent with the often-repeated observation of Gleeson CJ in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam62 that the concern of procedural fairness is to "avoid practical injustice", and with his Honour's conclusion in that case that there was no denial of procedural fairness where "[n]o practical injustice ha[d] been shown"63. The absence of practical injustice in Lam lay in the fact that "[t]he applicant lost no opportunity to advance his case"64; it was not "shown that he 60 (2000) 204 CLR 82 at 109 [59]; [2000] HCA 57. 61 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147; [1986] HCA 54; Aala (2000) 204 CLR 82 at 116-117 [80]-[81], 122 [104]. 62 (2003) 214 CLR 1 at 14 [37]; [2003] HCA 6. 63 (2003) 214 CLR 1 at 14 [38]. 64 (2003) 214 CLR 1 at 14 [38]. GagelerJ lost an opportunity to put any information or argument to the decision-maker, or otherwise suffered any detriment"65. Contrary to the submission of the Minister in this appeal, and as has repeatedly been recognised in the Full Court of the Federal Court66, Lam is not authority for the proposition that it is incumbent on a person who seeks to establish denial of procedural fairness always to demonstrate what would have occurred if procedural fairness had been observed. What must be shown by a person seeking to establish a denial of procedural fairness will depend upon the precise defect alleged to have occurred in the decision-making process. There are cases in which conduct on the part of an administrator in the course of a hearing can be demonstrated to have misled a person into refraining from taking up an opportunity to be heard that was available to that person in accordance with an applicable procedure which was otherwise fair67. To demonstrate that the person would have taken some step if that conduct had not occurred is, in such a case, part of establishing that the person has in fact been denied a reasonable opportunity to be heard. Where, however, the procedure adopted by an administrator can be shown itself to have failed to afford a fair opportunity to be heard, a denial of procedural fairness is established by nothing more than that failure, and the granting of curial relief is justified unless it can be shown that the failure did not deprive the person of the possibility of a successful outcome. The practical injustice in such a case lies in the denial of an opportunity which in fairness ought to have been given68. 65 (2003) 214 CLR 1 at 13 [36]. 66 Eg WACO v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 131 FCR 511 at 524-525 [57]-[58]; NBNB v Minister for Immigration and Border Protection (2014) 220 FCR 44 at 46 [4]. 67 Eg Aala (2000) 204 CLR 82 at 88 [3], 122 [103], 150 [200]; Muin v Refugee Review Tribunal (2002) 76 ALJR 966 at 979-980 [62]-[68], 1009 [252]-[256], 1018 [309]; 190 ALR 601 at 617-619, 659-660, 672; [2002] HCA 30; Applicant NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 221 CLR 1 at 15 [43]-[44]; [2004] HCA 62. 68 WACO v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 131 FCR 511 at 525 [58]. GagelerJ That is to highlight one of the confusions that can be introduced when the concept of "legitimate expectation" is used as a basis for determining the content of procedural fairness. By focussing on the opportunity expected, or legitimately to have been expected, the concept can distract from the true inquiry into the opportunity that a reasonable administrator ought fairly to have given. The former is relevant only in so far as it bears on the latter. As Gleeson CJ put it in Lam69: "[T]he creation of an expectation may bear upon the practical content of that obligation. But it does not supplant the obligation. The ultimate question remains whether there has been unfairness; not whether an expectation has been disappointed." The present case is one in which the procedure adopted in the IMR process undertaken in relation to the respondent can be seen itself to have failed to afford the respondent a reasonable opportunity to be heard. The process as commenced was in accordance with a procedure under which interview and assessment were to be undertaken by the First Reviewer alone. The process as concluded was in accordance with a procedure under which the assessment was undertaken by the Second Reviewer. That change of procedure occurred after the respondent was interviewed by the First Reviewer and after the respondent's advisors made submissions to the First Reviewer. It occurred without notice to the respondent. Had the procedure at the outset been one in accordance with which an interview was to be conducted by the First Reviewer and an assessment was to be made by another administrator, it would be difficult to conclude that the respondent would not have been given a reasonable opportunity to be heard. There is no universal rule that procedural fairness requires the adoption of a procedure which affords an oral hearing to a person who claims to be a person to whom Australia owes protection obligations under the Refugees Convention70, much less an oral hearing before the administrator who is to make the ultimate assessment and recommendation71. The respondent and his advisors, being alerted to the procedure, would have been in a position to tailor their evidence and submissions accordingly. 69 (2003) 214 CLR 1 at 12-13 [34] (footnote omitted). 70 Kioa v West (1985) 159 CLR 550 at 628; Chen v Minister for Immigration and Ethnic Affairs (1994) 48 FCR 591 at 602. 71 South Australia v O'Shea (1987) 163 CLR 378 at 409; [1987] HCA 39. GagelerJ The problem is that the change of procedure changed the nature of the opportunity which had previously been given to the respondent. The opportunity that had been given was an opportunity personally to convince an identified individual who was to make the assessment, including by responding to specific questions which that person raised. The opportunity became, in retrospect, an opportunity to present a case to an unknown assessor by way of a record of oral evidence and of written submissions. The significance of that change in procedure is to be gauged by reference to the nature of the assessment which it became the responsibility of the Second Reviewer to perform, rather than by reference to the reasoning which the Second Reviewer came to adopt in the performance of that responsibility. Not only did issues of credit potentially arise in relation to the evidence given by the respondent as to past events, but to undertake the assessment necessarily required consideration of the subjective state of mind of the respondent as a person fearing persecution for a Convention reason. The Second Reviewer ought reasonably to have considered that the evidence and submissions presented to the First Reviewer could reasonably be expected to have differed in their coverage, detail and emphasis had the respondent and his advisors been aware that the First Reviewer would not be making the assessment. In light of the change in procedure that had occurred, fairness required that the Second Reviewer give to the respondent notice of the changed procedure, an opportunity to supplement the written submissions previously made on his behalf, and an opportunity to request supplementation of the record of interview by further oral evidence. If the respondent had made a request to supplement the record of interview by further oral evidence, questions would have arisen as to whether the Second Reviewer ought in fairness to have acceded to that request and as to the form and scope of any further hearing which ought in fairness to have been given. The answers to those questions would turn on considerations reasonably to have been taken into account by the Second Reviewer in considering the request. They would centrally include the strength of the justification advanced in support of the request. They would also potentially include logistical considerations. To explore those issues now would be to engage in a hypothetical inquiry. In failing to give the respondent notice of the changed procedure, the Second Reviewer failed to afford the respondent a reasonable opportunity to be heard. There is no basis on which it can be concluded that the decision made by the Second Reviewer (in the form of a recommendation to the Minister) would inevitably have been the same if the respondent had been given a reasonable GagelerJ opportunity to be heard. The Full Court of the Federal Court was therefore correct to declare that the decision of the Second Reviewer was made in breach of procedural fairness.

HIGH COURT OF AUSTRALIA EDWARD POLLENTINE & ANOR PLAINTIFFS AND THE HONOURABLE JARROD PIETER BLEIJIE ATTORNEY-GENERAL FOR THE STATE OF QUEENSLAND & ORS DEFENDANTS Pollentine v Bleijie [2014] HCA 30 14 August 2014 ORDER The questions referred on 28 February 2014 for the consideration of the Full Court be answered as follows: Question 1 Is s 18 of the Criminal Law Amendment Act 1945 (Qld) invalid on the ground that it is contrary to Chapter III of the Constitution, by way of infringing in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51, or otherwise? the principle identified Answer Question 2 Who should pay the costs of the case stated? Answer The plaintiffs. Representation S P Donaghue QC with K L Walker and R W Haddrick for the plaintiffs (instructed by Prisoners' Legal Service Inc) P J Dunning QC, Solicitor-General of the State of Queensland with G J D del Villar and J A Kapeleris for the first and second defendants (instructed by Crown Law (Qld)) Submitting appearance for the third defendant Interveners M G Sexton SC, Solicitor-General for the State of New South Wales with N L Sharp for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor (NSW)) M G Hinton QC, Solicitor-General for the State of South Australia with N M Schwarz for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) G R Donaldson SC, Solicitor-General for the State of Western Australia with J D Berson for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Pollentine v Bleijie Constitutional law – Constitution, Ch III – Institutional integrity of State courts – Section 18(1) of Criminal Law Amendment Act 1945 (Q) allowed trial judge to direct two or more medical practitioners to inquire as to mental condition of person found guilty of offence of sexual nature committed upon or in relation to child – Where medical practitioners report that offender is incapable of exercising proper control over offender's sexual instincts, s 18(3) allowed trial judge to declare offender to be so incapable and to direct offender to be detained in institution during Her Majesty's pleasure – Section 18(5) required offender to be detained and not to be released until Governor in Council satisfied on report of two legally qualified medical practitioners that it is expedient to release offender – Plaintiffs found guilty of committing sexual offences against children – Plaintiffs declared to be incapable of exercising proper control over sexual instincts – Plaintiffs detained in institution at Her Majesty's pleasure – Whether s 18 repugnant to or incompatible with institutional integrity of State courts. Words and phrases – "during Her Majesty's pleasure", "expedient to release", "institutional integrity", "is incapable of exercising proper control over ... sexual instincts". Constitution, Ch III. Criminal Law Amendment Act 1945 (Q), ss 18, 18A-18H. FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL AND KEANE JJ. The long title of the Criminal Law Amendment Act 1945 (Q) ("the CLA Act") described it as an Act to amend the Criminal Code (Q) and the Justices Acts 1886-1942 (Q) "in certain particulars in respect of, and to make further provision for, the Treatment and Punishment of Offenders convicted of Sexual Offences" and for other purposes. Part IV of the CLA Act (ss 17-18) was entitled "Indeterminate Detention and Probation of Offenders Convicted of Sexual Offences". Each of the plaintiffs (Edward Pollentine and Errol George Radan) is detained under the CLA Act "during Her Majesty's pleasure"1. Each alleges that s 18 of the CLA Act, which purports to authorise his indeterminate detention, is beyond the legislative power of the Parliament of Queensland and invalid. The plaintiffs' challenge to validity fails. The CLA Act In 1984, when each plaintiff was ordered to be detained under the CLA Act, s 18(1)(a) provided2 that, if a person was found guilty on indictment of "an offence of a sexual nature" committed upon or in relation to a child under the age of 17 years, the judge "may at his discretion" direct that two or more legally qualified medical practitioners (of whom one was to be specially qualified in psychiatry, if the services of such a person were reasonably available) "inquire as to the mental condition of the offender, and in particular whether his mental condition is such that he is incapable of exercising proper control over his sexual instincts". Section 2A of the CLA Act provided that the term "offence of a sexual nature" included "any offence constituted wholly or partly by an act whereby the offender has exhibited a failure to exercise proper control over his sexual instincts and any offence in the circumstances associated with the 2 Since 1984, s 18(1) and other relevant provisions of the CLA Act have been amended. Nothing was said to turn on those amendments. Argument proceeded, and these reasons proceed, on the footing that the relevant provisions of the CLA Act, as that Act stood when orders were first made against each plaintiff, remain in force in a form which for present purposes is of no relevantly different substantive effect. Hayne Crennan Bell committal whereof" the offender exhibited a failure of that kind and includes "an assault of a sexual nature". Section 18(3)(a) provided that, if the medical practitioners "report to the judge that the offender is incapable of exercising proper control over his sexual instincts", the judge may "in addition to or in lieu of imposing any other sentence ... declare that the offender is so incapable and direct that he be detained in an institution during Her Majesty's pleasure". This power was subject to the express the offender may proviso cross-examine the medical practitioners and call evidence in rebuttal of a report, "and no such order shall be made unless the judge shall consider the matters reported to be proved". to s 18(3)(a) (now found in s 18(3A)) that These provisions of the CLA Act were not, and are not, confined in their operation to persons found guilty on indictment. Section 18(1)(b) of the CLA Act further provided that, if a person is convicted summarily of an offence of a sexual nature upon or in relation to a child, the court of petty sessions (now Magistrates Court) may order the person to be brought before a judge of the Supreme Court to be dealt with in accordance with s 18(1)(a). In addition, an application for a declaration and direction under s 18(3) could, and may now, be made3 in a case where an offender is serving a sentence of imprisonment for an offence of a sexual nature (whether or not committed upon or in relation to a child). In this last kind of case, two medical practitioners (of whom one is specially qualified in psychiatry) must report4 to the Attorney-General not only that the offender is incapable of exercising proper control over his sexual instincts but also that two further conditions are met: that "such incapacity is capable of being cured by continued treatment"5 and that "for the purposes of such treatment it is desirable that such person be detained in an institution after the expiration of his sentence of imprisonment"6. s 18(4)(ii) (now s 18(4)(b)). s 18(4)(iii) (now s 18(4)(c)). Hayne Crennan Bell Every person in respect of whom a direction for detention is given under s 18(3) or s 18(4) must7 be detained in such institution as the Governor in Council directs. In 1984, an "institution" included8 not only any institution proclaimed by the Governor in Council for the purposes of s 18 of the CLA Act but also any prison or police gaol. (An "institution" is now defined9 to mean "a corrective services facility or watch-house" or other institution prescribed by regulation.) An offender detained under s 18(3) or s 18(4) was not (and is not) to be released10 "until the Governor in Council is satisfied on the report of two legally qualified medical practitioners that it is expedient to release him". An offender detained under s 18 of the CLA Act must11 be examined at least once in every three months by the Director of Mental Health12 (formerly the Director of Mental Hygiene) or a legally qualified medical practitioner appointed by the Director. When the plaintiffs were ordered to be detained, an offender detained under s 18 of the CLA Act could be conditionally released13 on parole or leave of absence. Until the commencement in 2002 of s 547 of the Mental Health Act 2000 (Q), the Mental Health Act 1974 (Q) also provided14 for detainees under s 18 of the CLA Act to be released on leave of absence. Since 2002, and amendments made chiefly by the Criminal Law Amendment Act 2002 (Q), Pt 3A s 18(5)(a). 10 s 18(5)(b). 12 Appointed under s 488 of the Mental Health Act 2000 (Q). 13 Prisons Regulations 1959 (Q), reg 447. 14 First by s 39, then, after the commencement of the Mental Health Services Act Amendment Act 1987 (Q), by s 46A. It is not necessary to identify more precisely the various provisions which, from time to time over the last 30 years, have governed the conditional release of offenders detained under s 18 of the CLA Act. Hayne Crennan Bell of the CLA Act (ss 18A-18H) has provided for the conditional release of offenders detained under s 18. Part 3A does this by applying, with some modifications, the general provisions made by Ch 5 of the Corrective Services Act 2006 (Q), which govern the release of prisoners on parole. Section 18B(1) of the CLA Act applies the parole provisions made by Ch 5 of the Corrective Services Act to a person detained under s 18 of the CLA Act as if that person were a prisoner serving a term of life imprisonment. By the combined operation of s 18B(2) of the CLA Act and s 181(2)(d) of the Corrective Services Act, each plaintiff, having committed the relevant offences before 1 July 1997 and having served more than 13 years' detention, is eligible to apply for parole. But under s 18E of the CLA Act, an offender detained under s 18 may not be granted parole unless the Queensland Parole Board is satisfied not only of any other matter of which the Board must be satisfied under the Corrective Services Act but also that "the detainee does not represent an unacceptable risk to the safety of others". The material before this Court does not suggest that either plaintiff has ever applied for parole but, as will later be explained, the first plaintiff, Mr Pollentine, has twice challenged decisions by the Governor in Council that his detention should not be terminated. The plaintiffs pointed to a number of issues about how some of the relevant provisions of the CLA Act are to be construed. Before noticing those issues, it is desirable to describe how each plaintiff came to be made subject to an order under s 18. The making of detention orders and subsequent proceedings In July 1984, Mr Pollentine pleaded guilty in the District Court of Queensland to 14 counts of sexual offences committed against four different children at various times between January and April of that year. During the sentencing proceedings, the prosecution called two medical practitioners, each a specialist psychiatrist, to give evidence about whether Mr Pollentine was incapable of exercising proper control over his sexual instincts. Each witness expressed the opinion that Mr Pollentine was not capable of exercising proper control. There was no cross-examination challenging the opinion the witnesses expressed. No question was put to either witness, whether by the sentencing judge or by counsel for the prosecution or prisoner, about what the witness meant when he said that Mr Pollentine was "incapable of exercising proper control over his sexual instincts". Hayne Crennan Bell The sentencing judge declared that Mr Pollentine "is incapable of exercising proper control over his sexual instincts" and directed that he be detained in an institution during Her Majesty's pleasure. No other sentence was passed. Mr Pollentine did not appeal against the orders made by the sentencing judge. In the 30 years that have passed since these orders were made, Mr Pollentine has twice sought judicial review of decisions made by the Governor in Council that he not be released from detention. In 1994, Thomas J set aside15 a decision not to release Mr Pollentine on the ground that Mr Pollentine had been denied procedural fairness. On reconsideration, however, the Governor in Council again decided that Mr Pollentine should not be released. In 1996, Mr Pollentine sought judicial review of a further decision that he not be released. The application failed, both at first instance and on appeal to the Court of Appeal16. In May 1984, the second plaintiff, Mr Radan, pleaded guilty in the District Court of Queensland to eight counts of sexual offences committed against two children between February 1982 and October 1983. Mr Radan actively sought the making of a declaration under s 18 of the CLA Act so that he might "be given treatment that would be available in a mental institution". One of the specialist psychiatrists required to report on Mr Radan's capacity to control his sexual instincts initially gave evidence to the effect that she considered that he was able to exercise proper control. Upon further examination, however, the doctor concluded that it was "highly likely that without some form of intervention [Mr Radan] would re-offend" and that he was "unable to control his sexual impulses". The sentencing judge sentenced Mr Radan to a total effective sentence of 12 years' imprisonment, made the declaration required by s 18(3) and directed that, at the expiration of the sentence of imprisonment, Mr Radan be detained in an institution during Her Majesty's pleasure. Mr Radan appealed to the Court of Criminal Appeal against the sentences imposed. He alleged that, if indefinite detention was directed, only "a light" sentence should be imposed for the 15 Pollentine v Attorney-General [1995] 2 Qd R 412. 16 Pollentine v Attorney-General [1998] 1 Qd R 82. Hayne Crennan Bell offences. The Court of Criminal Appeal concluded17 that, because the period of indefinite detention has "a reformatory purpose", it should begin as soon as practicable. To that end, the Court varied the sentence to a total effective sentence of three years' imprisonment but left the declaration and direction made under s 18 undisturbed. The challenge to validity The plaintiffs have brought proceedings in the original jurisdiction of this Court claiming relief including a declaration that s 18 of the CLA Act is invalid and orders setting aside the District Court orders directing the indeterminate detention of the plaintiffs. The parties have joined in stating questions of law for the opinion of the Full Court. The principal question is: "Is s 18 of the Criminal Law Amendment Act 1945 (Qld) invalid on the ground that it is contrary to Chapter III of the Constitution, by way of infringing the principle identified in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51, or otherwise?" They also ask who should pay the costs of the special case. Some preliminary considerations Two points should be made before considering the substantive issues. First, because the plaintiffs' challenge to validity fails, it will not be necessary to consider whether a decision that s 18 is invalid would permit or require the grant of relief quashing the relevant orders requiring continued detention of the plaintiffs. In particular, it will not be necessary to examine what consequences, if any, follow from Mr Radan's appeal to the Supreme Court of Queensland against sentence, or whether he is now to be regarded as detained in accordance with an order of the District Court or an order of the Supreme Court (a superior court of record18). 17 R v Radan [1984] 2 Qd R 554 at 557 per McPherson J; see also at 556-557 per Campbell CJ (Sheahan J agreeing). 18 cf New South Wales v Kable (2013) 87 ALJR 737; 298 ALR 144; [2013] HCA 26. Hayne Crennan Bell Second, lying behind the plaintiffs' submissions in this case can be seen two propositions, both of which were recorded by Gummow J in Fardon v Attorney-General (Qld)19. One, made by Professor Norval Morris in 195120, is that, in the absence of legal control of punishments (especially indeterminate punishments), there is the risk of administrative arbitrariness. The other, related, point was made21 by Sir Leon Radzinowicz in 1945, the same year the CLA Act was passed: "Unless indeterminate sentences are awarded with great care, there is a grave risk that this measure, designed to ensure the better protection of society, may become an instrument of social aggression and weaken the basic principle of individual liberty." This Court has said22 that great care must be exercised in seeking and considering the making of an order for indefinite imprisonment. But it is notions of the kind identified by Professor Morris and the consequences that follow from lack of care in awarding indeterminate sentences which may be seen as animating the plaintiffs' challenge to validity. Whether, or to what extent, the CLA Act lawfully admits of "administrative arbitrariness" depends first and foremost upon its proper construction. Some construction questions The expression "incapable of exercising proper control over ... sexual instincts" is used in s 18 to identify the question to be answered by medical practitioners appointed to report to a court and to identify the content of the declaration a court must make if indeterminate detention is to be directed. It is the statutory criterion critical to the operation of s 18. The expression is cast in 19 (2004) 223 CLR 575 at 606-607 [62]; [2004] HCA 46. 20 Morris, The Habitual Criminal, (1951) at 22; reprinted in (1967) 13 McGill Law Journal 534 at 552. 21 "The Persistent Offender", in Radzinowicz and Turner (eds), The Modern Approach to Criminal Law, (1945) 162 at 167 (footnote omitted). 22 McGarry v The Queen (2001) 207 CLR 121 at 132 [29]-[31]; [2001] HCA 62. See also Chester v The Queen (1988) 165 CLR 611; [1988] HCA 62; Lowndes v The Queen (1999) 195 CLR 665; [1999] HCA 29. Hayne Crennan Bell terms suggesting an inquiry about the present existence of some objective fact: about whether the offender can or cannot now exercise "proper control". But the inquiry required by s 18(3) of the CLA Act is more complex than that binary description suggests. First, the inquiry is about future human behaviour: about the offender's (future) control of sexual instincts. Second, it is an inquiry about the exercise of "proper control", and some content must be given to the adjective "proper". Third, the Act's requirements that medical practitioners report their opinion about the question, and that the court may direct indefinite detention only if two medical practitioners report that the offender is incapable of exercising proper control, suggest that the provisions assume that "capacity to control" is connected with matters discernible principally, perhaps even only, by a medical practitioner. And if that is so, what those underlying matters are, as well as what consequences follow from them, appear to be matters of opinion rather than objectively demonstrable fact. Whether, as was suggested in argument, these considerations point to the conclusion that the statutory criterion for directing indeterminate detention requires a court to make some assessment of whether the risk that the offender will reoffend is "acceptable" or "unacceptable" need not be decided. There are evident dangers in attempting to capture the whole of the operation of any statutory criterion by choosing some different collocation of words. And in this case, using notions of "risk" and what is "acceptable" or "unacceptable" to describe the content given to the statutory criterion may be thought to do no more than shift debate about the meaning of the statutory language to a debate about the meaning of the substituted expressions. But because the decision whether a person is "incapable of exercising proper control over his sexual instincts" requires consideration of what that person would do if not detained, predictions must be made. It is unsurprising, then, that the result of the inquiry can be described in terms of "risk" and "likelihood". It remains important, however, to emphasise two points about the statutory criterion. First, the consequences for an offender of a court making a direction for detention under s 18 are very large. Second, the use of the word "incapable" suggests that, absent some intervening fact or circumstance, reoffending is well-nigh inevitable. Applying the statutory criterion in any particular case may be difficult. That difficulty may reveal issues about the proper construction of the expression. As has been noted earlier, some issues of this kind were touched on in the course Hayne Crennan Bell of the proceedings against Mr Radan in the District Court. A court must decide whether to order detention in addition to or in lieu of imposing any other sentence. There may well be room for debate about what matters inform the proper exercise of that discretion. It is not necessary in this case, however, to attempt to identify, let alone resolve, all disputable questions of construction or discretionary considerations in order to decide the validity of s 18. If s 18 does present issues of these kinds in a particular case, they are issues which can and will be resolved in the ordinary way. Observing that the criterion for engagement of s 18 may be difficult to construe and apply, or that the discretion given by s 18 may be difficult to exercise, does not, in this case, bear upon the question of validity. To the extent to which the plaintiffs' arguments assumed or implied the contrary, the submission should not be accepted. It is to be observed that s 18 can be engaged only in cases where the offender is fit to stand trial and is found criminally responsible for the offences charged. Yet s 18 is directed to an offender whose "mental condition is such that he is incapable of exercising proper control over his sexual instincts"23. And that "mental condition" may, or may not, be "capable of being cured by continued treatment"24. And whether or not the offender's "mental condition" can be "cured", s 18 has what McPherson J called25 a "reformatory purpose". This purpose may be effected26 by incarceration in a prison rather than a place of treatment; it may be pursued27 by way of punishment "in addition to or in lieu of imposing any other sentence" (emphasis added). If a court directs indeterminate detention under s 18, neither the court which makes the direction nor any other court plays any part in deciding where the offender will be detained28 or whether the offender will be given any "treatment" for his "mental condition". It will be recalled that the stated basis for 23 s 18(1)(a). 24 s 18(4)(ii) (now s 18(4)(b)). 25 Radan [1984] 2 Qd R 554 at 557. 26 See the definition of "institution" in what was s 18(10) but is now s 18(14). 28 s 18(5)(a). Hayne Crennan Bell Mr Radan seeking an order for detention was so that he might be treated. Although s 18(4) speaks of the possibility of curing an incapacity properly to control sexual instincts, opinions about what is meant by "cure", and about how that might be achieved, may differ. And it may be that the CLA Act proceeds from premises about causes and prevention of sexual offending which, if accepted at the time of the passing of the Act, may now be disputed. Again, however, any differences in opinion or disputes about the validity of the premises for the operation of s 18 do not touch the question of the validity of s 18. If, as there may appear to be, there is some tension between notions, on the one hand, of mental condition, incapacity to control and "cure", and, on the other, of punishment for crime and community protection from crime, those tensions are relevant, if at all, only because they may bear upon the proper construction and application of s 18. Whether and how these apparent tensions in legislative purpose affect the proper construction or application of s 18 need not be decided. The section's validity does not turn upon whether it is a provision for punishment, reform, or both punishment and reform. It is necessary to say something more about the CLA Act's provisions for release. Criteria for release The plaintiffs submitted that the CLA Act provides different criteria for directing detention from those which govern release from detention. In this branch of their argument, the plaintiffs directed chief attention to s 18(5)(b) of the CLA Act and, in particular, what is meant by the phrase "it is expedient to release him". It is important to notice, however, that the provisions governing release from detention must be understood in the context of the Act as a whole. In particular, what is meant by "it is expedient to release him" must be understood in light of not only the Act's provisions authorising a direction for detention but also the provisions made for conditional release of a detainee. All of these considerations inform the meaning that is to be given to the word "expedient". The Governor in Council must29 be satisfied on the report of two medical practitioners that "it is expedient to release" the offender. The required state of 29 s 18(5)(b). Hayne Crennan Bell satisfaction must thus draw upon the reports and, in the context of this Act, those reports must be directed to whether, at the time of the report, the detainee remains a person whose "mental condition is such that he is incapable of exercising proper control over his sexual instincts"30. Section 18(5) makes no mention of any other source of material which may inform the formation of the required state of satisfaction. Because s 18(5) provides for the termination of detention, it should not be construed as conferring an unfettered discretion to grant or refuse a detainee's release. On the contrary, by identifying the report of the medical practitioners as the foundation for the decision about what is "expedient", the provision should be read as confining the matters which the decision maker may lawfully take into account to the matter with which those reports should deal: whether the detainee remains a person whose mental condition is such that he is incapable of exercising proper control over his sexual instincts. Whether the decision maker may be informed on that subject by reference to more than the reports provided is a question which need not be decided. But what is "expedient" turns only on whether the detainee remains incapable of exercising proper control. In the course of oral argument, the plaintiffs emphasised some passages31 from the reasons for judgment of Fitzgerald P in Mr Pollentine's second application for judicial review of a decision that he not be released. These passages, they submitted, suggested that "anticipated adverse community reaction" to release could properly be taken into account in deciding whether it is expedient to release a detainee. If that were so, there would indeed be a marked disparity between the matters which bear upon making a direction for indefinite detention under s 18 and those which bear upon the decision to terminate detention. It is not profitable to examine whether the reasons of Fitzgerald P are properly to be read as adopting a proposition of the kind suggested. It is enough to say that, for the reasons which have already been stated, neither "anticipated adverse community reaction" nor other forms of political consequence, whether assumed to be well founded or not, are relevant to whether it is expedient to release a person detained under s 18. As has been explained, whether it is 30 s 18(1)(a). 31 [1998] 1 Qd R 82 at 92. Hayne Crennan Bell expedient to release must depend upon the assessment that is made of the risk of reoffending and the nature of the offences that the detainee might commit if released from detention without conditions or supervision. To take into account "anticipated adverse community reaction" or "public opinion", even if those expressions could be and were given some legally sufficient meaning, would be to fall into legal error. The conclusions which have been stated follow from construing the expression "it is expedient" in the context in which it appears in s 18(5) and by reference to the subject matter, scope and purpose of the detention provisions made by s 18 and the CLA Act as a whole. They are conclusions which are consistent with, and reinforced by, the conditional release provisions now set out in Pt 3A of the CLA Act. The substance of those provisions has been described earlier in these reasons. For present purposes the observation of central importance is that, as noted earlier, s 18E requires that there be no release on parole unless the Parole Board "is satisfied the detainee does not represent an unacceptable risk to the safety of others". What is an "unacceptable" risk may, probably will, differ according to the conditions on which a detainee is released into the community. If detention is terminated under s 18(5), the detainee is released without condition. The risks that are to be considered are to be identified by reference to those circumstances. By contrast, if released on parole, a detainee may be released on conditions including, for example, continued compliance with medication or other forms of treatment. The risks to be considered in that case would be considered against a background where the detainee would risk return to detention for breach of those conditions, regardless of whether the detainee had committed any offence. It is not necessary to explore these aspects of the matter further. For the purposes of this case, the important observation to make is that there is no relevant difference between the basis on which a court will act in ordering indefinite detention under s 18(3) and the basis on which the Executive must act in deciding whether it is expedient to terminate the detention. Invalidity The plaintiffs identified three bases for their attack on the validity of s 18. Those bases of attack can be described under the following headings: "Impermissible delegation of the sentencing task?", "Different criteria for directing detention and release?" and "Want of sufficient safeguards?" Hayne Crennan Bell Each basis of attack was directed to the ultimate submission that s 18 infringes the principles first stated in Kable v Director of Public Prosecutions (NSW)32. incompatible with As the plurality recorded33 in Assistant Commissioner Condon v Pompano Pty Ltd, the principles first stated in Kable have since been considered and applied in several cases in this Court. The principles have their roots in Ch III of the Constitution and limit State legislative power. "[T]he Parliaments of the States [may] not legislate to confer powers on State courts which are repugnant to or the their exercise of Commonwealth."34 And it is now the accepted doctrine of the Court that, as Gummow J said35 in Fardon, "the essential notion is that of repugnancy to or incompatibility with that institutional integrity of the State courts which bespeaks their constitutionally mandated position in the Australian legal system". But, as the plurality in Pompano also pointed out36, the repugnancy doctrine "does not imply into the Constitutions of the States the separation of judicial power mandated for the Commonwealth by Ch III"37. Hence, "the notions of repugnancy to and incompatibility with the continued institutional integrity of the State courts are not to be treated as if they simply reflect what Ch III requires in relation to the exercise of the judicial power of the Commonwealth"38. judicial power of the 32 (1996) 189 CLR 51; [1996] HCA 24. 33 (2013) 87 ALJR 458 at 487 [122] per Hayne, Crennan, Kiefel and Bell JJ; 295 ALR 638 at 673; [2013] HCA 7. 34 Kable (1996) 189 CLR 51 at 103 per Gaudron J. 35 (2004) 223 CLR 575 at 617 [101]. 36 (2013) 87 ALJR 458 at 488 [124] per Hayne, Crennan, Kiefel and Bell JJ; 295 ALR 638 at 673. 37 Fardon (2004) 223 CLR 575 at 614 [86] per Gummow J. 38 Pompano (2013) 87 ALJR 458 at 488 [125] per Hayne, Crennan, Kiefel and Bell JJ; 295 ALR 638 at 674. Hayne Crennan Bell Impermissible delegation of the sentencing task? The plaintiffs submitted that an order for indefinite detention made under s 18 "delegates to the Executive the power to determine the period in which an offender will be deprived of his or her liberty". In oral argument, this was described as "outsourcing" sentencing to the Executive. There is, so the plaintiffs submitted, a radical difference between a sentence of life imprisonment (even where subject to release by the Executive on parole or licence) and an order for detention during Her Majesty's pleasure. The duration of the former kind of sentence is, they submitted, fixed by the sentencing court; the duration of the latter order is wholly determined by the Executive39. The delegation submission must be rejected for two related reasons: one concerning how a direction for indeterminate detention is made; the other about how detention is terminated. First, a sentencing court must decide, according to the ordinary processes of the criminal law, applying ordinary principles of statutory construction and judicial decision making, whether s 18 may be engaged in the case of the offender concerned. The court dealing with that offender, if satisfied that s 18 is engaged, then may, but need not, direct indefinite detention in addition to or instead of fixing a determinate sentence. The court is not bound40 to direct detention terminable only by executive decision. A direction for indefinite detention will serve purposes of punishment and community protection. According to what happens to the offender during the detention, the direction may serve some reformative purpose. None of these features of the matter points in any way to repugnancy to or incompatibility with the institutional integrity of the court that makes the direction or of State courts more generally. Second, once it is recognised that release is not at the unconfined discretion of the Executive, but dependent upon demonstration by medical 39 cf Hinds v The Queen [1977] AC 195 at 225-227; R v Secretary of State for the Home Department; Ex parte Venables [1998] AC 407 at 498; Browne v The Queen [2000] 1 AC 45 at 47-48; Director of Public Prosecutions of Jamaica v Mollison [2003] 2 AC 411 at 428 [20]. 40 cf Hinds [1977] AC 195; Venables [1998] AC 407 at 498; Browne [2000] 1 AC 45 at 47; Mollison [2003] 2 AC 411 at 418 [3]. In all of those cases the only order that a court could make was for detention at pleasure. Hayne Crennan Bell opinion of the abatement of the risk of reoffending, the notion that a court has delegated the fixing of the extent of punishment loses most, if not all, of its force. The continuation of detention depends upon danger to the community, not upon retribution for what the offender has done. And because an inquiry under s 18(1)(a) is into whether the offender's "mental condition is such that he is incapable of exercising proper control", there is an evident similarity between a court's power to order indeterminate detention on this account and the powers courts have long had41 not only to decide whether an offender is fit to stand trial or was criminally responsible for an alleged crime but also, on proof of unfitness or insanity, to direct the indeterminate detention of that offender. Different criteria for directing detention and release? The plaintiffs submitted that the criteria a court must apply when determining whether to direct indefinite detention are different from those the Executive must apply in deciding whether a detainee may be released. The consequence, they submitted, is that a political decision to allow detention to continue is cloaked "in the neutral colors of judicial action"42. The decision to release a person detained under s 18 is made by the Governor in Council and thus on the advice of the Minister. It is a decision which is, and is seen to be, made by a political branch of government. The decision is not, in any way, made to appear as if it were made by a court. And contrary to the plaintiffs' submissions, despite the decision being made on the advice of a political branch of government, the decision to release a detainee is not properly described as a "political decision". The decision to terminate or not to terminate detention is to be made according to a criterion which admits of judicial review. Indeed Mr Pollentine has twice sought judicial review of such a decision. And as has been noted, an offender can be released on parole according to a Parole Board determination of whether statutory conditions for release on parole are met, including, in particular, whether the detainee represents an unacceptable risk to the safety of others. Again, this decision is, and is seen to 41 Based on the Criminal Lunatics Act 1800 (UK) (39 & 40 Geo III c 94), ss 1 and 2. 42 Mistretta v United States 488 US 361 at 407 (1989); Fardon (2004) 223 CLR 575 at 615 [91] per Gummow J. Hayne Crennan Bell be, made by the Executive. It is a decision which is to be made by reference to stated statutory criteria. For these reasons, the Mistretta metaphor, which the plaintiffs adopted, of cloaking political decisions "in the neutral colors of judicial action", is wholly inapplicable. It is, therefore, unnecessary to do more than point out that even if the metaphor could be applied to this case (and it cannot), its use could be no substitute for consideration of the principles of repugnancy and incompatibility. Want of sufficient safeguards? Finally, the plaintiffs submitted that a State court may form part of a regime for preventive detention only if that regime contains safeguards to preserve the institutional integrity of the court. They submitted that the CLA Act provides safeguards to preserve the institutional integrity of State courts which are different from, and less effective than, those provided by the Dangerous Prisoners (Sexual Offenders) Act 2003 (Q) considered in Fardon. It is right to say, as the plaintiffs did, that decisions about absolute or conditional release of a person detained under s 18 are made by the Executive and not by a court whereas generally similar decisions under the Dangerous Prisoners (Sexual Offenders) Act (examined in Fardon) are made by the Supreme Court. It by no means follows, however, that the provisions of s 18 are incompatible with or repugnant to the institutional integrity of the State courts. And, in the end, the plaintiffs pointed to no feature of the CLA Act, beyond those already dealt with, which they submitted had that effect. Giving the Executive the power to make decisions about absolute or conditional release of persons detained under s 18 is not shown to be incompatible with or repugnant to the institutional integrity of the State courts. Conclusion and orders For these reasons, the plaintiffs' arguments for invalidity must fail. Section 18 of the CLA Act is not repugnant to or incompatible with that institutional integrity of the State courts which bespeaks their constitutionally mandated position in the Australian legal system. The principal question stated in the special case should be answered "No". The plaintiffs should pay the costs of the special case and the second question be answered accordingly. Introduction In separate proceedings in the District Court of Queensland in 1984, each plaintiff pleaded guilty on indictment to multiple offences of a sexual nature committed on or in relation to children under the age of seventeen years. The District Court declared each plaintiff to be incapable of exercising proper control over his sexual instincts and directed that he be detained in an institution during Her Majesty's pleasure. There each plaintiff remains. In a proceeding commenced in the original jurisdiction of this Court, the plaintiffs now claim that the conferral of power on the District Court to make those declarations and directions, by s 18 of the Criminal Law Amendment Act 1945 (Q) ("the CLAA"), is and was in 1984 incompatible with the status of the District Court as a State court able to be invested with federal jurisdiction under s 77(iii) of the Constitution. A special case in that proceeding reserves a single substantive question for the consideration of the Full Court: is s 18 of the CLAA invalid? Construction Section 18 of the CLAA was modelled on s 77a of the Criminal Law Consolidation Act 1935 (SA). In terms equally applicable to s 18, Mason CJ in South Australia v O'Shea described s 77a as providing "for a regime of preventive detention by means of the imposition of an indeterminate sentence on a person who is found guilty of one of a specified class of sexual offences and is declared by the court or judge to be incapable of exercising proper control over his sexual instincts"43. Given the nature of the plaintiffs' claim, it is sufficient to refer in detail only to those provisions of s 18 of the CLAA which bore on the declarations made and directions given in respect of the plaintiffs in the form in which those provisions stood in 1984. Conformably with the framing of the question reserved, it is convenient to refer to those provisions as they stood in 1984 using the present tense. The starting point is s 18(1)(a), which is expressed to confer a discretion on the judge presiding at the trial of a person found guilty on indictment of an offence of a sexual nature committed on or in relation to a child under the age of seventeen years. That discretion is to direct that two or more qualified medical practitioners named by the judge "inquire as to the mental condition of the 43 (1987) 163 CLR 378 at 383; [1987] HCA 39. See also at 396. offender, and in particular whether his mental condition is such that he is incapable of exercising proper control over his sexual instincts". It has been held, and is not in dispute, that an offender is incapable of exercising "proper" control over his sexual instincts if he is incapable of exercising that degree of self-control which would prevent him from committing a further offence of a sexual nature44. Section 18(3)(a) then provides: "If the medical practitioners report to the judge that the offender is incapable of exercising proper control over his sexual instincts the judge may, either in addition to or in lieu of imposing any other sentence ... declare that the offender is so incapable and direct that he be detained in an institution during His Majesty's pleasure: Provided that the offender shall be entitled to cross-examine such medical practitioners in relation to and to call evidence in rebuttal of such report, and no such order shall be made unless the judge shall consider the matters reported to be proved." Three features of s 18(3)(a) in its application to a case falling within s 18(1)(a) are significant. The first is that the declaration can be made and the direction can be given only in respect of a person who has been found guilty of an offence. The declaration can then be made and the direction can then be given by the trial judge "either in addition to or in lieu of imposing any other sentence" (emphasis added). The direction itself is continuing authority for detaining the person45, and the direction is specifically deemed by s 18(13)(a) to be a sentence for the purpose of appeal. The second significant feature of s 18(3)(a) in its application to a case falling within s 18(1)(a) is that the authority it confers on the trial judge is discretionary. Having received the medical practitioners' report that the person is incapable of exercising proper control over his sexual instincts and having found on the whole of the evidence that the person is in fact incapable of exercising proper control over his sexual instincts46, the judge may but need not make the declaration and give the direction. The third significant feature is that the direction in the form prescribed by s 18(3)(a), that the person "be detained in an institution during His Majesty's 44 R v Kiltie (1986) 41 SASR 52 at 65. 45 South Australia v O'Shea (1987) 163 CLR 378 at 405. 46 R v Waghorn [1993] 1 Qd R 563. pleasure", is given a precise content by s 18(5) and s 18(8). Section 18(5)(a) provides that a person in respect of whom the direction is given "[s]hall be detained in such institution as the Governor in Council directs". Section 18(8) provides that the person "shall be [medically] examined at least once in every three months". Section 18(5)(b) provides that the person "[s]hall not be released until the Governor in Council is satisfied on the report of two legally qualified medical practitioners that it is expedient to release him". It has been held, and it is not in dispute, that the Governor in Council has a duty to consider a request for release where justified by evidence, and is obliged to afford procedural fairness in the performance of that duty47. The combination of the second and third of those features makes plain that although making a declaration and giving a direction under s 18(3)(a) are appropriately described as resulting in the imposition of a sentence of indeterminate duration, their purpose is not punitive. Their purpose is wholly protective. The declaration is to be made and the direction is to be given on the basis of a judicial assessment that detention of the person in such institution as the Governor in Council directs – where he is to be examined medically at least every three months and from where he is not to be released until the Governor in Council is satisfied on the report of two legally qualified medical practitioners that it is expedient to release him – is warranted to protect society from an unacceptable risk of physical harm arising from that person being incapable of exercising that degree of self-control which would prevent him from committing a further offence of a sexual nature. The same combination of features also makes plain that the power conferred on the Governor in Council by s 18(5)(b) to release a person who has been made the subject of a declaration and direction under s 18(3)(a) is integral to the protective character of the detention. It is satisfaction on the part of the Governor in Council that it is expedient to release the person which alone triggers the person's release from detention. Release follows automatically if, but only if, the requisite satisfaction is formed. There is no superadded executive discretion either to shorten or to prolong detention. Satisfaction on the part of the Governor in Council that it is expedient to release a person is satisfaction that continued detention of the person is no longer warranted to protect society from unacceptable risk of physical harm. That satisfaction must be formed on the basis of executive assessment of a report of two medical practitioners. The content of such a report is (by implication) to be directed to the ability of the person to exercise proper control over his sexual instincts. 47 Pollentine v Attorney-General [1995] 2 Qd R 412. Risk being inherently a question of degree and the acceptability of a given level of risk being inherently a question of judgment, it is left by s 18(5)(b) to the Governor in Council to determine from time to time the level of risk of physical harm that is acceptable. Ministers who are members of the Executive Council advising the Governor are politically accountable to the Parliament and to the electorate for such determination as is made. It is open to them in formulating their advice to take public opinion into account48. Yet the decision to be made remains one bounded by statute. Beyond such bearing as they may rationally have on determining the level of risk of physical harm that is acceptable, "political considerations" are foreign to the protective purpose of detention, and are for that reason irrelevant to the formation of the statutory satisfaction on the part of the Governor in Council necessary to trigger release from detention. Validity Legislative regimes for the preventive detention of convicted persons by means of the imposition of indeterminate sentences have a long history in Australia49, have withstood constitutional challenge in State Supreme Courts50, and have been assumed to be valid in a number of decisions of the High Court51. Against that unpromising background, counsel for the plaintiffs support their claim that s 18 of the CLAA is incompatible with the status of the District Court as a court capable of being invested with federal jurisdiction by advancing what have been refined in oral submissions into three distinct arguments. Each argument focuses on a different way in which the precise form of preventive detention for which s 18 provides is said by the plaintiffs to undermine the District Court's integrity as an institution exercising judicial power independently of State executive government. The first argument invokes the observation in the joint reasons for judgment in Chu Kheng Lim v Minister for Immigration that, "exceptional cases" 48 South Australia v O'Shea (1987) 163 CLR 378 at 388; Pollentine v Attorney- General [1998] 1 Qd R 82 at 92. 49 Eg Habitual Criminals Act 1905 (NSW); Indeterminate Sentences Act 1907 (Vic); Criminal Code Amendment Act 1911 (WA), s 9; Crimes Act 1914 (Cth), s 17; Criminal Law Amendment Act 1917 (SA), s 7. 50 R v Moffatt [1998] 2 VR 229; R v England (2004) 89 SASR 316; McGarry v Western Australia (2005) 31 WAR 69. 51 South Australia v O'Shea (1987) 163 CLR 378; Chester v The Queen (1988) 165 CLR 611; [1988] HCA 62; Lowndes v The Queen (1999) 195 CLR 665; [1999] HCA 29; McGarry v The Queen (2001) 207 CLR 121; [2001] HCA 62; Buckley v The Queen (2006) 80 ALJR 605; 224 ALR 416; [2006] HCA 7. aside, "the involuntary detention of a citizen in custody by the State is penal or punitive in character and, under our system of government, exists only as an incident of the exclusively judicial function of adjudging and punishing criminal guilt"52. The plaintiffs argue that s 18 permits a court to outsource to the executive part of the intrinsically judicial function of quelling the controversy between the citizen and the State represented by the prosecution of a criminal charge. The section does so, they argue, by permitting the judge presiding at the trial of a person found guilty of an offence of a sexual nature to transfer to the Governor in Council the function of determining the severity of punishment for that offence. In Re Woolley; Ex parte Applicants M276/200353 Gleeson CJ said of Lim that "[t]he proposition that, ordinarily, the involuntary detention of a citizen by the State is penal or punitive in character was not based upon the idea that all hardship or distress inflicted upon a citizen by the State constitutes a form of punishment". His Honour went on to point out that the form of involuntary detention upheld in Lim itself bore a different character "because of the legal characteristics of the persons upon whom it was imposed, and the purpose for which it was imposed"54. The plaintiffs are correct that the judicial function of quelling the controversy between the citizen and the State represented by the prosecution of a criminal charge encompasses the imposition of a sentence55. The plaintiffs are also correct that the making of a declaration and the giving of a direction under s 18(3)(a) is the imposition of an indeterminate sentence56 which, alone or in combination with another sentence, brings such a controversy between a person and the State to an end. Where the plaintiffs are wrong is to characterise the detention which results from the making of a declaration and the giving of a direction under s 18(3)(a) as punishment of criminal guilt. The plaintiffs are wrong, in particular, to analogise s 18(3)(a) to legislative requirements for courts to 52 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27; [1992] HCA 53 (2004) 225 CLR 1 at 12 [17]; [2004] HCA 49. 54 Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 12 [17]. 55 Crump v New South Wales (2012) 247 CLR 1 at 26 [58]; [2012] HCA 20; Magaming v The Queen (2013) 87 ALJR 1060 at 1073 [67]; 302 ALR 461 at 475; [2013] HCA 40. 56 South Australia v O'Shea (1987) 163 CLR 378 at 383. sentence convicted persons to detention during royal or vice-regal "pleasure" which have been interpreted elsewhere to permit the continuation of detention for punitive purposes and on that basis to transfer discretion to determine the severity of punishment to be inflicted on offenders from a court to the executive57. The legislative authorisation of the making of a judicial order for detention during royal or vice-regal "pleasure" derives from the Criminal Lunatics Act 1800 (UK). The formulation in that original conception was "purely preventative and therapeutic"58. The formulation when used in a particular statute must always depend on its context. It follows, from the second and third of the features already highlighted in addressing construction, that the detention which results from the making of a declaration and the giving of a direction under s 18(3)(a) is properly characterised as wholly protective. The declaration can be made and the direction given in the exercise of judicial discretion only on proof that the person concerned (having already been found guilty of an offence of a sexual nature committed on or in relation to a child under the age of seventeen years) is incapable of exercising that degree of self-control which would prevent him from committing a further offence of a sexual nature and on the basis that the resultant detention is warranted to protect society from such unacceptable risk of physical harm as might be determined to arise from that person being incapable of exercising proper control over his sexual instincts. The incidents of the resultant detention are not left to executive fiat; they are statutorily prescribed. The person: is to be detained in such institution as the Governor in Council directs; is to be medically examined at least once in every three months; and under s 18(5)(b) is to be released if, but only if, the Governor in Council is satisfied on the report of two legally qualified medical practitioners (directed to the ability of the person to exercise proper control over his sexual instincts) that continued detention of the person is not warranted to protect society from unacceptable risk of physical harm. The power conferred on the executive by s 18(5)(b) complements that conferred on the judiciary by s 18(3)(a). They share a common purpose and have a combined effect: one which has no punitive element. The plaintiffs' second argument invokes the often-quoted statement in Mistretta v United States that the legislative and executive branches of government cannot "borrow" the reputation of the judicial branch "to cloak their 57 Cf Hinds v The Queen [1977] AC 195; R v Secretary of State for the Home Department; Ex parte Venables [1998] AC 407; Browne v The Queen [2000] 1 AC 45; Director of Public Prosecutions of Jamaica v Mollison [2003] 2 AC 411. 58 R v Secretary of State for the Home Department; Ex parte Venables [1998] AC 407 at 514. See also R v Sullivan [1984] AC 156 at 172. work in the neutral colors of judicial action"59. The plaintiffs contrast the circumscribed criterion governing the judicial exercise of power triggering detention with what they argue to be an absence of criteria governing the formation of executive satisfaction triggering release. That contrast is so stark, they argue, as to render the order of the judge no more than the formal authority for what is in substance an unconstrained executive power of detention. The answer to that second argument begins with recognition that the commonality of purpose of the powers conferred respectively on the judiciary and the executive by s 18(3)(a) and s 18(5)(b) is reflected in a complementarity in the decision-making criteria which properly inform their exercise: the former involving judicial assessment at a particular point in time of whether detention of a person found guilty on indictment of an offence of a sexual nature committed on or in relation to a child under the age of seventeen years is warranted to protect society from such unacceptable risk of physical harm as might be determined to arise from that person being incapable of exercising proper control over his sexual instincts; the latter involving executive assessment from time to time of whether continued detention of that person is warranted to protect society from unacceptable risk of physical harm. There are differences in the two forms of assessment to be performed in that the Governor in Council is not bound by the same curial procedures as was the judge, is not bound to apply the same tolerance for risk as did the judge, and may take public opinion into account in determining that level of risk of physical harm which is acceptable. Neither alone nor in combination do those differences result in the role of the Governor in Council under s 18(5)(b) being properly characterised as involving an unconstrained executive power of detention. Finally, the plaintiffs advance the proposition that a State court may form part of a regime for preventive detention only if that regime contains "safeguards" to preserve the integrity of the court. Pointing to the lack of any mechanism for a court either to vary or revoke a declaration or direction, or to "supervise" the continuation of a person's detention, they argue that the requisite safeguards are lacking from s 18. The argument is sufficiently answered by pointing out that both the duty imposed by s 18(8) and the power conferred by s 18(5)(b) (together with the attendant duty to consider a request for release, and the attendant obligation to afford procedural fairness in the performance of that duty) are subject to judicial review by the Supreme Court of Queensland. Judicial review of the power conferred by s 18(5)(b) is not rendered ineffective 59 488 US 361 at 407 (1989). merely because the Governor is not required to give reasons for the non-exercise Conclusion For these reasons, the question whether s 18 of the CLAA is invalid should be answered "No". The plaintiffs should pay the costs of the special case. 60 Cf Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360; [1949] HCA 26.

HIGH COURT OF AUSTRALIA Matter No S299/2005 AND THE QUEEN Matter No S300/2005 ANTOINE ANTOUN AND THE QUEEN APPELLANT RESPONDENT APPELLANT RESPONDENT Antoun v The Queen Antoun v The Queen [2006] HCA 2 8 February 2006 S299/2005 & S300/2005 ORDER In each matter: Appeal allowed. Set aside the orders of the Court of Criminal Appeal of New South Wales made on 16 August 2004 and, in their place, order that: the appeal be allowed; the conviction of the appellant is quashed; and there be a new trial. On appeal from the Supreme Court of New South Wales Representation: Matter No S299/2005 C Steirn SC with B L Clark for the appellant (instructed by Ryan and Bosscher Lawyers) G E Smith SC with S C Dowling for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Matter S300/2005 P Byrne SC with S W Wilkinson for the appellant (instructed by Ryan and Bosscher Lawyers) G E Smith SC with S C Dowling for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Antoun v The Queen Antoun v The Queen Courts and Judges – Apprehension of bias – Judge sitting alone in criminal trial – Standards of fairness and detachment required of a trial judge. GLEESON CJ. The appellants were jointly charged with demanding money with menaces from Michael Savvas, with intent to steal. The trial was conducted in the District Court of New South Wales before Judge Christie, sitting without a jury. The appellants were convicted, and sentenced to terms of imprisonment. They appealed unsuccessfully to the Court of Criminal Appeal of New South Wales1. The sole ground of their further appeal to this Court is that the trial judge conducted himself in such a way that a fair-minded observer might reasonably apprehend that he might not bring an impartial and unprejudiced mind to the resolution of the question whether the appellants ought to be convicted. The That ground apprehended bias is said to have arisen from two aspects of the trial judge's conduct in particular: first, the manner in which he dealt with what was described as a submission of no case to answer; secondly, his manner of raising and dealing with a question of bail. is conveniently summarised as "apprehended bias". The exchanges between the trial judge and counsel in relation to both matters are set out in the reasons of Callinan J. I agree that the ground of appeal succeeds. In relation to the first matter, the trial judge announced his decision, in a peremptory manner, as soon as he was informed that an application would be made on the following day, and he repeated that decision before hearing any argument. He then listened to argument on sufferance, then repeated his decision. As it happens, his decision was right. The submission was without merit. That, however, does not remove the impression created by the course that was followed. In relation to the second matter, as Hayne J has pointed out, the precise status of the appellants' bail arrangements throughout the trial is unclear. Nevertheless, the trial judge's intervention in that issue, in the manner in which it occurred, reinforced the impression earlier created. There is no need for me to add to what has been said by Callinan J and Hayne J about the subject of bail. Although my conclusion that the no case to answer submission was without merit does not alter the consequence that flows from the manner in which the trial judge dealt with it, some wider issues were raised in the course of argument, and I should therefore explain my reasons for that conclusion. Michael Savvas owned a nightclub at Darling Harbour. The business needed proper arrangements for security, and the nightclub licence required a certain number of guards. Security was provided by a firm unconnected with the appellants. In March 2001, Mr Savvas was approached by the second appellant, who offered security services. He said he was happy with his existing provider. Mr Savvas gave evidence of a number of visits from the second appellant between March and June 2001. In the course of those visits the second appellant, 1 R v Joseph Antoun; R v Antoine Antoun [2004] NSWCCA 268. as well as drawing attention to the security services he had to offer, asserted that the existing security provider had made an arrangement with the appellants and that, under that arrangement, an amount, ultimately said to be $8,000, was owing to the appellants, who looked to Mr Savvas for payment. The tone of the conversations, as recounted by Mr Savvas, became increasingly threatening. Mr Savvas denied that he owed any money to the appellants, and said he had no need of their security services. He was told he should "consider a payout". He said he "saw that as a serious threat". On 14 June 2001, a number of youths visited the premises while patrons were present, and destroyed furniture. The police were called. There was evidence of intercepted telephone conversations that were capable of being regarded as directly implicating both appellants in the event. On 15 June 2001, Mr Savvas received a telephone call from the second appellant asking whether he had received the warning. On 17 June 2001, the first appellant, accompanied by a group of men, visited Mr Savvas at his nightclub. Mr Savvas had never met him before. The first appellant said: "I'm not here to fuck around, you've got the warning." He demanded a "payout". Mr Savvas went to the police. On 19 June 2001, he had a meeting with the second appellant. Mr Savvas was wearing a concealed listening device. The conversation was recorded. On 22 June 2001, Mr Savvas had a meeting with the first appellant. Again, he was wearing a listening device. The conversation is set out in the reasons of Callinan J. It contains threats, and demands for money. The trial judge found, in his reasons at the conclusion of the trial, that the conversation clearly contained an intimation that future payments would be required, and that it would not be sufficient to pay the amount claimed to have been owing in the past. The trial judge concluded that the evidence revealed "an ongoing protection racket". At trial, because of the recording of the conversations between Mr Savvas and the appellants, the appellants were confronted with irrefutable evidence of demands for money, and of menaces. Whatever the defence case was to be, it had to accommodate that reality. The appellants elected to be tried without a jury. Counsel for the first appellant provided the trial judge, at the commencement of the trial, with a written opening, which is set out in the reasons of Callinan J. The opening made it obvious that the appellants would seek to establish their defence "on the evidence in the Crown case" (that is to say, without the appellants going into the witness box). The defence was said to be "based on a claim of right for monies due and owing arising out of a pre-existing agreement to conduct security at [the nightclub]." It was clear from the commencement of the trial that the appellants would attempt to meet the prosecution case without exposing themselves to cross- examination. This is not unusual; although such an approach is rarely signalled quite as clearly as it was in the present case. This may explain in part why the judge reacted as he did to the no case to answer submission. It does not, however, justify the reaction. The defence case, announced at the commencement of the trial, and pursued throughout the trial, was not to deny the demands for money, or the accompanying menaces, but to challenge the proposition that the demands were made in circumstances that, if successful, would amount to stealing. The basis of the challenge was said to be that the demands were made pursuant to a claim of right made in good faith, that is to say, an honest belief in a legal entitlement to what was claimed2. The defence was that this was a debt-collecting exercise; that, even if theirs was a method of dispute resolution not favoured by the courts, the appellants were honest business folk seeking to recover what they genuinely believed was owing to them. The prosecution case was that this was a "protection racket". It is understandable that counsel for the appellants would have wanted an opportunity to argue that their defence could succeed without the benefit of support from the testimony of their clients. It is commendable that they made this clear at the commencement of the trial. Yet the nature of the defence they raised meant that this approach was optimistic in the extreme. The boundaries of a defence of honest claim of right, in the circumstances of a case such as the present, were not explored in argument in this Court. The case for the appellants at trial proceeded upon an assumption that the appellants were only demanding $8,000, and if the evidence raised the possibility that the appellants had an honest belief that they were legally entitled to be paid $8,000 by Mr Savvas, then it was for the prosecution to exclude beyond reasonable doubt that possibility. Yet the evidence tendered in the prosecution case was capable of showing (and was ultimately held to show) that the appellants were demanding more than $8,000, and were making demands for ongoing payments. Furthermore, the nature of the menaces that accompanied the demands, and the events and circumstances deposed to by Mr Savvas, were capable of showing (and were ultimately held to show) that, far from being in honest pursuit of a debt, the appellants were engaged in extortion. It does not cut across established principles of onus of proof in civil or criminal cases to recognise the forensic reality that there are defence cases that have little practical chance of success unless supported by the testimony of a defendant, or an accused. Here, there was ample evidence to support a 2 Walden v Hensler (1987) 163 CLR 561. conclusion that what was going on was extortion. Such a conclusion may not have been inevitable, but it was clearly open on the evidence. It was possible to find, in the evidence, statements made by one or other of the appellants that were consistent with a possibility that they were seeking to recover a debt of $8,000. That did not mean the prosecution must fail. If there was material capable of raising an issue as to whether the appellants honestly held a certain belief, it may be accepted that it was legally necessary for the prosecution to prove that no such belief was held. Even so, in the absence of evidence from the appellants, the prosecution may have had little difficulty in persuading a tribunal of fact that the onus had been discharged. In the circumstances of a given case, evidence led by the prosecution, in the absence of a plausible explanation from an accused, may give rise to a strong inference adverse to the accused. An example is to be found in the decision of this Court in Weissensteiner v The Queen3. As was pointed out by Mason CJ, Deane and Dawson JJ in that case4, it is a question of evaluating evidence; a matter of factual judgment. When a tribunal of fact came to evaluate the evidence of Mr Savvas and the other witnesses in this case, including the evidence of the conversations between Mr Savvas and the appellants, in the absence of any explanation from the appellants, there were strong grounds for inferring that the appellants were not honestly pursuing a claim of right but were engaged in an attempt to extract payments to which they had no right. The issue which Judge Christie had to decide when dealing with the no case to answer submission was not an issue of fact; it was an issue of law. That is how it was described by trial counsel; that is how it was seen by the judge; and that is how it was characterised by counsel in argument in this Court. In the course of argument in the present appeal, counsel were invited to provide further written submissions on the nature of the application that was made to Judge Christie at the conclusion of the prosecution case. It appears from those written submissions that there is no disagreement on this point. In Doney v The Queen5, this Court held that, at a criminal trial before a judge and jury, if at the end of a prosecution case there is evidence that is capable of supporting a verdict of guilty then the trial judge may not direct a verdict of not guilty, but must leave the matter to the jury for its decision. This Court affirmed the New South Wales decision in R v R6, the South Australian decision in R v Prasad7, and the Victorian decision in Attorney-General's Reference (No 1 (1993) 178 CLR 217. (1993) 178 CLR 217 at 225. (1990) 171 CLR 207 at 214-215. (1989) 18 NSWLR 74. (1979) 23 SASR 161. of 1983)8. No challenge was made to the correctness of Doney. The question whether there is evidence capable of supporting a verdict at a civil or criminal trial by jury is a question of law. As was explained in Doney9, this is a different question from whether a jury ought to be warned about the probative value of evidence. It is different from the question whether a trial judge might properly inform a jury, at any time after the close of the prosecution case, of its power to acquit10. And it is different from the question which confronts an appellate court when it has to decide whether a conviction is unreasonable. There is no advantage to be gained by blurring these differences. Keeping them in mind helps to avoid confusion. In Haw Tua Tau v Public Prosecutor11, an appeal to the Privy Council from Singapore, Lord Diplock gave the reasons of the Judicial Committee. Trial by jury had been abolished in Singapore. His Lordship said12: "It is well established that in a jury trial at the conclusion of the prosecution's case it is the judge's function to decide for himself whether evidence has been adduced which, if it were to be accepted by the jury as accurate, would establish each essential element in the alleged offence: for what are the essential elements in any criminal offence is a question of law ... In their Lordships' view the same principle applies to criminal trials where the combined roles of decider of law and decider of fact are vested in a single judge (or in two judges trying capital cases). At the conclusion of the prosecution's case what has to be decided remains a question of law only. As decider of law, the judge must consider whether there is some evidence (not inherently incredible) which, if he were to accept it as accurate, would establish each essential element in the alleged offence." (Emphasis in original) His Lordship's references to the accuracy of evidence over-simplifies the nature of issues of fact that may arise at a trial, civil or criminal. Questions concerning the weight of evidence, or the inferences to be drawn from it, or, in (1990) 171 CLR 207 at 214. 10 cf R v Prasad (1979) 23 SASR 161. 12 [1982] AC 136 at 151. circumstantial cases, the reasonably available hypotheses, may also arise. The present case provides an example. There was no room for argument about what was said at the meeting of 22 June 2001. There was room for argument about the inferences to be drawn from what was said. But in deciding, as a matter of law, whether there was evidence which could establish the prosecution case, the trial judge was concerned with inferences that were available. He was not, at that stage, concerned to decide what inferences he would ultimately draw. In the same case, Lord Diplock said13: "Whoever has the function of deciding facts on the trial of a criminal offence should keep an open mind about the veracity and accuracy of recollection of any individual witness, whether called for the prosecution or the defence, until after all the evidence … has been heard and it is possible to assess to what extent (if any) that witness's evidence has been confirmed, explained or contradicted by the evidence of other witnesses." If a submission of no case to answer is understood as raising a question of law about whether there is evidence capable of supporting a finding of guilt, that warning presents no problem. It would be otherwise if a judge were invited to embark upon a factual evaluation of the evidence called up to a particular stage of the trial, and give a ruling based on the weight of that evidence. No such problem arose in the present case. Counsel for the first appellant, who had the carriage of the argument, made both written and oral submissions in support of his argument that there was no case to answer. Those submissions were consistent with the principles stated above. Counsel said: "I accept for the purposes of my submission that I must take the Crown case at its highest". The trial judge, in giving reasons for his later refusal to disqualify himself because of what had happened in connection with the "no case" submission, said that he had formed "a very, very firm view" that the submission must fail "as a matter of law". As a matter of law, there was a case to answer. On the evidence, it was open to the trial judge to interpret the demands made by the appellants as demands for ongoing protection payments, extending beyond the sum of $8,000. It was also open to the trial judge to conclude, in the light of the menacing words and conduct of the appellants, that, far from pursuing a genuinely held belief in their right to be paid $8,000, they were pursuing a campaign of extortion. When counsel for the first appellant acknowledged, as he was bound to do, that the judge had to take the prosecution case at its highest, implicit in that was an acknowledgment that the prosecution evidence was being examined, for its sufficiency of proof, without any testimony from the appellants in explanation of 13 [1982] AC 136 at 150-151. their conduct; in a context where the central issue concerned the existence and honesty of their belief in the legitimacy of their claims. At the time of the trial judge's ruling, they had not said they held such a belief; and there was ample evidence to sustain a conclusion that they did not hold such a belief. The terms of the written opening handed up by counsel for the first appellant suggest that, from the beginning, the trial judge would have been anticipating a no case to answer submission. He would have been thinking about the argument foreshadowed in the opening. If he had surmised that it would be very difficult to sustain, he would have been correct. Nevertheless, his peremptory announcement, as soon as the application was mentioned, that he would dismiss it, was a departure from the standards of fairness and detachment required of a trial judge. Judges do not have to devote unlimited time to listening to unmeritorious arguments. Sometimes, a brief hearing will suffice. Judges may anticipate events at trial, and foresee lines of argument that may be developed. Here, the appellants made it clear from the outset that they hoped to be able to secure acquittal without giving evidence themselves. Perhaps the judge felt indignant about the conduct disclosed by the evidence, or about the tactics adopted by the appellants. Indignation is a natural reaction to some facts that are disclosed, or some events that occur, at a criminal trial or, for that matter, on an appeal. It should never be permitted to compromise the appearance of impartiality that is required of judges. It appears from the remarks on sentence that the first appellant has a serious criminal record for offences including armed robbery. It further appears from comments made by the judge that he found the demeanour of the first appellant during the trial to be menacing. The judge regarded this as a strong case of extortion. He formed the view, with good reason, that the no case to answer submission was likely to be implausible. Yet he should not have decided to reject it without giving counsel an opportunity to put the argument. In the circumstances, that would not have required much time. The way in which the judge dealt with the no case argument, and later with the question of bail, gave rise to an appearance of lack of impartiality. Strong as the case against the appellants appeared to be, they were entitled to a fair hearing. The appeals should be allowed. The orders of the Court of Criminal Appeal should be set aside. The convictions and sentences should be quashed and there should be a new trial of each appellant. Kirby KIRBY J. I agree with the conclusion of Callinan J that these appeals must be allowed. Differences with the Court of Criminal Appeal The Court of Criminal Appeal of New South Wales, from which this appeal comes, reached the opposite conclusion unanimously. As I read the reasons of that Court, four considerations appear to have influenced their Honours' opinion that the appellants were not entitled to relief. I put aside a fifth suggested consideration, namely the conclusion earlier reached by Sully J on the question of bail pending appeal14. Although the reasons on that question were strongly expressed by a judge of much experience (and are, in a sense, paralleled by the outcome of the appeal to this Court), they did not bind the Court of Criminal Appeal. Sully J's reasons were given in an interlocutory decision. It remained for the Court of Criminal Appeal, exercising the separate powers reposed in it15, to reach its own conclusions and not to forfeit those conclusions to the opinion expressed by another judge. In this, I agree with Callinan J16. However, that left four considerations that appear to have led the court below to its different conclusion: That the trial judge's expression of views was "forthright" and "strong" but not sufficiently excessive to require disqualification17; That it is preferable, particularly in the case of a judge having the responsibility of deciding factual inferences in a trial, to express reactions to submissions, or foreshadowed submissions, so that they might be dealt with by the parties rather than that the judge remain silent whilst experiencing such feelings and reactions, leaving them unrevealed18; 14 See reasons of Sully J extracted in the reasons of Callinan J at [75]. These were noted in the Court of Criminal Appeal in the reasons of Dowd J: R v Antoun [2004] NSWCCA 268 at [59]-[61]. 15 By the Criminal Appeal Act 1912 (NSW), s 5. 16 Reasons of Callinan J at [89]. 17 See reasons of Smart AJ (Hislop J concurring) in [2004] NSWCCA 268 at [307] noted in reasons of Callinan J at [79]. 18 [2004] NSWCCA 268 at [307] noted in reasons of Callinan J at [79]. Kirby That judges on appeal or review are enjoined by this Court19 against too readily submitting to demands for disqualification of the judge of trial. Ordinarily, it may be expected that trial judges will discharge their functions properly and do so lawfully and fairly20; and That given the mode of trial elected by the appellants, and the strength of the evidence against them on the substantive charges, the trial was not ultimately unfair and their conviction was properly based on the evidence21. Forthright expression crosses the line So far as the first point is concerned, it is certainly true that the trial judge's remarks were strong and forthright. In some circumstances, that will be a permissible expression to adopt, especially where the trial judge is conducting a trial as the sole judge of fact and law and the parties are legally represented by counsel able to respond with clarity and forthrightness. Judicial indignation at a particular course of action, or proposed action, may on occasion be understandable22. Couched appropriately, at the proper time and in due sequence, it may give rise to no reasonable apprehension of bias. For centuries in courts of our tradition, judges have been telling parties and their lawyers, sometimes in quite robust terms, that they consider that a particular submission or course of action is hopeless, a waste of the court's time or doomed to fail. I would not want to say anything that needlessly mollycoddled candid judicial speech addressed to trained advocates. One of the advantages of a judge-alone trial is that it permits greater efficiency in the isolation of the real issues that will determine the case. Nevertheless, normally at least, it is essential that the judge give parties or their representatives at least some time to advance their submissions. This is because, however abbreviated proceedings may become by reason of pre-trial procedures, the tender of written submissions and other innovations, in a trial (particularly a criminal trial where liberty is at risk) the process conducted in public has its own significance and purpose. The manifest observance of fair procedures is necessary to satisfy the requirements not only of fairness to the accused but also 19 See Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352 per Mason J; cf Masters (1992) 59 A Crim R 445 at 464-465; S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 378, cf at 372. 20 [2004] NSWCCA 268 at [64]-[65] per Dowd J. 21 [2004] NSWCCA 268 at [307]. 22 cf reasons of Gleeson CJ at [22]. Kirby of justice before the public so that they may be satisfied, by attendance or from the record, that the process has followed lines observing basic rules of fairness. Excessively telescoping the procedures in such cases can lead to a sense of disquiet on the part of the accused, and of objective observers whose attitudes, where relevant, must be represented, and given effect, by appellate courts. A line is drawn between forthright and robust indications of a trial judge's tentative views on a point of importance in a trial and an impermissible indication of prejudgment that has the effect of disqualifying the judge from further conduct of the proceedings23. Sometimes, that line will be hard to discern. But, in this case, I agree with the other members of this Court that the trial judge crossed it. The most powerful evidence that he did so appears from the record. He expressed his conclusion as to the outcome of a submission before hearing any argument from the appellants, whether on the facts or the law. Every judge of experience knows that pertinent facts can be forgotten or mistaken. As well, the law can be misunderstood or an aspect of it overlooked. Some opportunity should therefore have been given to counsel to develop their submissions, if necessary in writing, prepared overnight. The repeated insistence that any submissions would not bear fruit and the later unrequested, unargued revocation (or non-continuance) of bail reinforced the conclusion initially given. The line was crossed. The trial judge thereby disqualified himself. Expressing tentative views tentatively I certainly agree with Smart AJ that it is preferable (at least in a trial by judge alone without a jury24) that the judge should express tentative or preliminary views to the parties so that they might address the judge on such matters. This Court had said as much. In Vakauta v Kelly25, Brennan, Deane and "[A] trial judge who made necessary rulings but otherwise sat completely silent throughout a non-jury trial with the result that his or her views about the issues, problems and technical difficulties involved in the case 23 Vakauta v Kelly (1989) 167 CLR 568 at 571. 24 As to which see Fleming v The Queen (1998) 197 CLR 250 at 261-264 [23]-[33]. 25 (1989) 167 CLR 568. 26 (1989) 167 CLR 568 at 571; cf Johnson v Johnson (2000) 201 CLR 488 at 493 Kirby remained unknown until they emerged as final conclusions in his or her judgment would not represent a model to be emulated." In this, the approach of this Court has now travelled beyond the apparent approbation of judicial silence expressed in R v Watson; Ex parte Armstrong27. In the United States of America, such silence has been held, on occasion, to constitute a denial of due process28. It deprives the party who will ultimately be affected by judicial conclusions of the "opportunity, before judgment, to be heard to correct and to persuade"29. Just as the judge should, to a proper extent, listen, so the judge should, to a proper extent, express any tentative views. However, the problem in the present case was that the views, as expressed, and re-expressed were not tentative, or not apparently so. They were stated peremptorily, repeated emphatically and given force by later remarks and actions, including the unrequested decision as to bail. Impartial hearings and over-ready disqualification It is true that, in the oft-repeated and oft-applied words of Mason J in Re JRL; Ex parte CJL30, this Court has "loudly and clearly" expressed a corrective against any view that a judge should too readily accept recusal because a party has demanded it. In the administration of justice in Australia, the parties do not (at least normally) have an entitlement to choose amongst the judicial officers who will conduct the trial31. This principle has been reasserted and applied in many cases32. It was not questioned in this appeal. 27 (1976) 136 CLR 248 at 294 per Jacobs J. 28 Shapiro, "In Defense of Judicial Candor", (1987) 100 Harvard Law Review 731 at 737; cf Stead v State Government Insurance Commission (1986) 161 CLR 141 at 29 Galea v Galea (1990) 19 NSWLR 263 at 279. 30 (1986) 161 CLR 342 at 352. 31 cf Fingleton v The Queen (2005) 79 ALJR 1250 at 1284 [176]; 216 ALR 474 at 32 See eg Johnson v Johnson (2000) 201 CLR 488 at 504 [45], 518 [80]; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [6], 380 [137]; Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka (2001) 206 CLR 128 at 136 [21]. Kirby The duty to discharge judicial functions is necessarily subject to any disqualifying conduct on the part of the judge subject to a recusal submission. The observations in Re JRL are a corrective to over-ready disqualification. But they are not a blanket that smothers the effect of disqualification where it has already arisen. That is the case here. Once the line was crossed, as I have held it to have been, it was not repositioned by the fact that the trial judge, seemingly acting under sufferance because he was obliged to, submitted to the procedure of hearing the no case arguments and then (as he had predicted and repeated) rejected them immediately33. A consideration that shows why this must be so is the increasing recognition of the fact that the entitlement to an impartial tribunal is one of the most important human rights and fundamental freedoms recognised by international law. It is stated in Art 14.1 of the International Covenant on Civil and Political Rights. Australia is a party to that Covenant and also to the First Optional Protocol that renders Australia accountable to the Human Rights Committee of the United Nations, upon communications alleging infractions34. Although the Covenant is not, as such, part of Australia's municipal law, the ratification of the First Optional Protocol, and national accountability to the treaty body, inevitably produce an impact on the content and understanding of the Australian common law35. The common law principle was already strong. Now it is reinforced by a rule of international law which expresses the entitlement to an impartial tribunal as a fundamental right of the individual concerned. It is not simply an aspiration or guideline of good judicial practice. It is a basic right which the appellants in this case have asserted. In the course of disposing of communications to it, the Human Rights Committee has upheld alleged violations of the right to a fair trial where a 33 In some cases, the subsequent conduct of the decision-maker may cure an earlier failure to observe fair procedures; but that conclusion will be reached more commonly in administrative rather than judicial hearings and even then will require a clear correction: Ridge v Baldwin [1964] AC 40 at 79 per Lord Reid. 34 [1980] Australian Treaty Series 23. The First Optional Protocol is [1991] Australian Treaty Series 39. Article 14.1 of the ICCPR states, relevantly: "All persons shall be equal before the courts and tribunals. In the determination of any criminal charge against him … everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law". 35 Mabo v Queensland (No 2) (1992) 175 CLR 1 at 42; Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365 at 418 [148]. Kirby national supreme court, referred to the issue, has failed to afford relief. One such instance involved the failure of the municipal court specifically to address complaints about the hostile atmosphere and pressure imposed by the conduct of the trial which effectively made it impossible for defence counsel to present the accused's defence36. It is not every complaint that engages the attention of the Human Rights Committee37. That body has recognised the different standards that will be required in different cases having regard to the importance of their respective outcomes to the life and liberty of the accused38. Nevertheless, the Committee has strongly emphasised the centrality of the manifest impartiality of court proceedings which "implies that judges must not harbour preconceptions about the matter put before them, and that they must not act in ways that promote the interests of one of the parties"39. If the judge is disqualified on such grounds by domestic law, the trial is flawed and "cannot normally be considered to be fair or impartial within the meaning of article 14"40. The jurisprudence of the European Court of Human Rights, giving effect to Art 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms41, expressed in similar terms, is to like effect. The right 36 Gridin v Russian Federation (Case No 770/97) at [3.5], [8.2]. See Joseph, Schultz and Castan (eds), The International Covenant on Civil and Political Rights: Cases, Materials, and Commentary, 2nd ed (2005) at 414 [14.47]. 37 See eg JK v Canada (Case No 174/84) at [7.2]; RM v Finland (Case No 301/88); van Meurs v The Netherlands (Case No 215/86), noted in Joseph, Schultz and Castan (eds), The International Covenant on Civil and Political Rights: Cases, Materials, and Commentary, 2nd ed (2005) at 416 [14.50]. 38 Pinto v Trinidad and Tobago (Case No 232/87) at [12.3], noted in Joseph, Schultz and Castan (eds), The International Covenant on Civil and Political Rights: Cases, Materials, and Commentary, 2nd ed (2005) at 416 [14.50]. 39 Karttunen v Finland (Case No 387/89) at [7.2], noted in Joseph, Schultz and Castan (eds), The International Covenant on Civil and Political Rights: Cases, Materials, and Commentary, 2nd ed (2005) at 417-418 [14.53]. See also Johnson v Johnson (2000) 201 CLR 488 at 501 [38]. 40 Karttunen v Finland (Case No 387/89) at [7.2]. 41 The position of the Convention in English law, its effect in Commonwealth countries and its interrelationship with the international law of human rights is described in Lester and Pannick (eds), Human Rights Law and Practice, 2nd ed Kirby to an impartial tribunal has been held to denote an absence of prejudice or bias on the part of the person constituting the tribunal42. Whilst the perception of an accused that the court or tribunal is not impartial is relevant and is taken into account, it is not decisive. The question is always whether any doubt as to impartiality can be justified objectively43. The accused is entitled to the benefit of any legitimate doubt as to impartiality44. The common law of Australia is not different from, but is reinforced by, these approaches to the expression of human rights and fundamental freedoms. The added element which this reflection on international law provides is that it gives emphasis to the basic entitlement of an accused person in a criminal trial to an impartial tribunal. In issue is not simply the outcome of the trial, the strength of the prosecution case presented against the accused or the observance of minimum judicial procedures. To the extent that the tribunal is shown not to have been impartial, a basic departure has occurred in the observance of fundamental rights inhering in the accused as a human being. The consideration of such rights is important and helpful in determining the common law of Australia applicable to an appeal such as the present. The weight of the evidence against the accused Not least is this last consideration significant for the final factor that appears to have weighed with the Court of Criminal Appeal, namely the role of the trial judge as decision-maker on fact as well as law and the weight of the evidence in the case presented against the appellants. It was this evidence that, according to Smart AJ (with whom Hislop J agreed), afforded "the real difficulties" for the appellants45. Upon one reading, it appears that at least a majority of the Court of Criminal Appeal disposed of the appeal to it by reference to considerations mentioned in the proviso governing criminal appeals in New South Wales46. At the end of his reasons, after stating that the real difficulties facing the appellants "lay in the evidence", Smart AJ held that there had been "no miscarriage of 42 Lester and Pannick (eds), Human Rights Law and Practice, 2nd ed (2004) at 239. 43 Ferrantelli and Santangelo v Italy (1996) 23 EHRR 288 at 309 [55]-[56]; Incal v Turkey (1998) 29 EHRR 449 at 470 [65]. 44 Hauschildt v Denmark (1989) 12 EHRR 266 at 279 [46]-[48]. 45 [2004] NSWCCA 268 at [307]. 46 Criminal Appeal Act 1912 (NSW), s 6(1). Kirby justice" (the language of the proviso). He therefore concluded that each appeal against conviction should be dismissed47. As Hayne J has pointed out48, neither in this Court nor in the Court of Criminal Appeal did the respondent raise a specific issue for decision, addressed to the application of the proviso. Nevertheless, the reasons of Gleeson CJ49 and of Callinan J50 show that, when the evidence as it was left at the end of the trial is examined, there is (particularly in the absence of oral evidence from the appellants) strong evidence from which it would ordinarily have been open to the trial judge to draw inferences and to conclude that the prosecution had negatived the suggested claim of legal right which was the appellants' common propounded defence. In these circumstances, should this Court treat the preliminary skirmishes between the trial judge and counsel for the appellants as a storm in a litigious teacup? Did they represent an event that sometimes blows up in a trial but settles down and is overtaken by the substance of the trial and the evidence adduced? There is no doubt that this is the way, in part, that the respondent pressed its case upon this Court. True, it did not file, or seek leave to file, a notice of contention specifically relying on the proviso in the criminal appeal statute. But it did lay strong emphasis upon the strength of the prosecution case51, a matter only relevant to the issues before this Court as it might be thought to attract the operation of the proviso. Conclusion: a retrial must be ordered Whilst I regard the prosecution case, on the record, as powerful, supporting in that sense a conclusion that the outcome in the conviction and sentencing of the appellants did not involve any ultimate miscarriage, for three reasons I join in the conclusion that a retrial should be had. First, by the common law, it is every person's right to have a trial conducted in accordance with law. The trial judge here was disqualified because 47 [2004] NSWCCA 268 at [308]-[309]. See also at [292]. 48 Reasons of Hayne J at [58]-[60]. 49 Reasons of Gleeson CJ at [4]-[14]. 50 Reasons of Callinan J at [63]-[64]. 51 Reasons of Hayne J at [58]. See also [2005] HCATrans 823 at 3291-3300, 3315- 3330, 3340 and 3396. Kirby he crossed the line. The trial did not conform to law. I would repeat the words I used in Goktas v GIO of NSW52: "Our system of justice must do better. This Court must accept its obligation to ensure against wrongs which can be proved and then corrected. At stake is something greater even than the interests of the parties to the case. At stake is the integrity of our system of law and justice". Secondly, and reinforcing this conclusion, is the recollection that the entitlement of the appellants to an impartial tribunal is not simply one afforded in disposing of appeals under Australian law. It reflects a human right and fundamental freedom that belonged to the appellants of which, by the way their trial was conducted, the trial judge deprived them. In a sense, the stronger the prosecution case against the appellants, the more important it was for the judge of trial to listen for a time to the submissions put on their behalf. No case is judged hopeless in our courts before a party has had a reasonable opportunity, by evidence and argument, to advance its case and contentions to the independent judge53. Thirdly, if the respondent truly had wished to rely upon argument based on the proviso governing criminal appeals, its proper course was to make that statutory provision a specific issue in the appeal. Then the argument before this Court would have taken a different course. The Court would have been obliged to address the question whether the "proviso" applied to a case of this kind, involving alleged disqualification and fundamental error54. Moreover, the Court would have had to examine more closely the evidence in the trial relevant to the question of whether a conclusion should affirmatively be reached that "no substantial miscarriage of justice has actually occurred"55. Without more, it may be a sufficient miscarriage of justice, in a case of this kind, to have denied the appellants the chance to have their propositions argued by their counsel before and not after they were rejected by the judge specially empowered to make all decisions of fact and law in their prosecution. 52 (1993) 31 NSWLR 684 at 690-691. 53 Jones v National Coal Board [1957] 2 QB 55 at 67 per Denning LJ. 54 Weiss v The Queen [2005] HCA 81 at [46] referring to Wilde v The Queen (1988) 164 CLR 365 at 373 and Conway v The Queen (2002) 209 CLR 203 at 241 [103]. 55 Criminal Appeal Act 1912 (NSW), s 6(1). Kirby Orders I agree in the orders proposed by Gleeson CJ. Hayne HAYNE J. The principle to be applied in determining these appeals is not in doubt. If "a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide"56, the judge is disqualified from trying the case. The qualifications to that principle, relating to waiver or necessity, are not presently relevant. The facts and circumstances of the case are set out in the reasons of Callinan J. I do not repeat them. I agree that, for the reasons his Honour gives, each appeal should be allowed and consequential orders made including an order that a new trial be had. A trial judge, sitting without a jury, will inevitably form impressions of the strength of a party's case as the hearing proceeds. Preliminary assessments are made of the evidence. Always the judge will be trying to relate what is happening in the courtroom during the trial not only to the final decision that will have to be made, disposing of the case, but also to questions that the judge may be called on to decide in the course of running. Precepts of efficiency and economy will require the trial judge to be astute to keep the focus of the trial upon relevant issues. If a party makes an application during the trial, the trial judge should deal with it as swiftly and decisively as the application permits. But there is a line to be drawn between deciding cases efficiently and economically and appearing to prejudge what has to be decided. Behind what happened when counsel for the appellants indicated an intention to submit that there was no case to answer may lie difficult questions about when and how such an application may be made in a criminal trial by judge alone. None of these questions was explored in argument in the present appeal but they should be recognised. Much of the argument in the appeal to this Court proceeded on the assumption that the no case submission which the appellants wished to make at trial was a submission that would have no relevant difference from the submissions that could be made at a trial by judge and jury57. That assumption is not self-evidently true. In particular, it is an assumption that appears to confine a submission that there is no case to answer to the submission that the prosecution's proof of the charge is deficient because there is no evidence that, if accepted, would establish the elements of the offence. But as Fullagar J pointed out in The Union Bank of Australia Ltd v Puddy58, in a civil trial by judge 56 Johnson v Johnson (2000) 201 CLR 488 at 492 [11] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [6] per Gleeson CJ, McHugh, Gummow and Hayne JJ. 57 cf Haw Tua Tau v Public Prosecutor [1982] AC 136 at 151. 58 [1949] VLR 242 at 244. Hayne alone, a submission of no case to answer may take the form of submitting that the evidence that has been led, when finally assessed, would not suffice to establish the charge to the requisite standard of proof. It must then be recognised that to permit the latter kind of submission (that the proof tendered should not be accepted) would require the trial judge to express an opinion about the evidence that has been called without knowing whether the accused will go into evidence. That may suggest, it may even require, the conclusion that in a criminal trial by judge alone, the judge, as the tribunal of fact, should not be asked to express a preliminary, if tentative, view of the evidence59. If that were so, it would follow that a submission of no case to answer because the proof tendered is said to be insufficient to satisfy the requisite standard of proof should not (or should not ordinarily) be entertained. But none of these questions was explored in the hearing of this appeal. For the moment, what is determinatively significant is that the trial judge said that a submission of no case to answer would be rejected without knowing what form that submission would take and without knowing in even the broadest outline what was said to be its basis. And having said that the submission would be rejected, the trial judge, after the case had been adjourned overnight, went out of his way when the case resumed to emphasise to counsel that he had meant what he had said. It was inevitable that a fair-minded lay observer might reasonably apprehend in this case that the judge might not bring an impartial mind to the resolution of the question that the judge was required to decide on the no case submission. And without knowing whether the no case submission would take the form of pointing to some alleged deficiency in the prosecution proofs or instead be directed to the weight of the evidence advanced by the prosecution, it was inevitable that the fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the final questions that the judge was called on to decide in the trial. What happened at a later point in the trial in connection with what was then said to be the revocation of the appellants' bail would not have allayed the fair-minded lay observer's apprehensions. Whether, standing alone, what happened in connection with that subject would have been sufficient to engender an apprehension of the requisite possibility of bias is a question that need not be decided. Again, however, lest it be overlooked, it should be noted that the arguments advanced in this Court on the hearing of the appeal, and in the courts below, about the powers of the trial judge to revoke bail were arguments that proceeded from certain assumptions about the conditions of the appellants' bail at the time the judge revoked it. The parties later sought to explore the validity of these assumptions in written submissions provided, with leave, after the 59 May v O'Sullivan (1955) 92 CLR 654 at 658. Hayne conclusion of oral argument. It may well be that the better view is that the appellants were not on bail when the judge purported to revoke it and that, rather, what was done amounted to a refusal to release the appellants on bail at the next adjournment of the Court. It is not, however, necessary to go further into that aspect of the matter beyond saying that it will always be of the first importance, when considering any question of bail, to consider both what power is being exercised and what bail conditions are being allowed, varied or revoked. Those are questions that will require much closer attention to the relevant statutory provisions (here the Bail Act 1978 (NSW)) than was given at first instance or in subsequent argument about this aspect of the matter. On the appeals to this Court the respondent filed no Notice of Contention that the decisions of the Court of Criminal Appeal should be upheld on the ground that the proviso to s 6(1) of the Criminal Appeal Act 1912 (NSW) should be held to apply. And although there was reference made, in the course of oral argument of the appeals in this Court, to the strength of the prosecution case against the appellants, it was not submitted that the proviso was engaged. At the hearing of the appeals, the parties were given leave to make further written submissions about a number of matters, including the matter of bail mentioned earlier. The respondent did not seek, and was not given leave, to file a Notice of Contention that the orders of the Court of Appeal should be upheld on the ground that the proviso applied. Yet the respondent submitted, in its supplementary written submissions, that, if it was found that there was a reasonable apprehension of bias, "it would still be appropriate to consider the application of the proviso". It was accepted, however, that "on an assessment of the significance of the irregularity in the context of the strong Crown case, this Court may conclude that a substantial miscarriage has occurred". There being no Notice of Contention, it is neither necessary nor appropriate to decide these questions about the proviso's possible application in these cases. It is, therefore, neither necessary nor appropriate to consider whether the evidence adduced at trial proved beyond reasonable doubt that the appellants were guilty of the offence charged. Nor is it necessary or appropriate to consider whether, if guilt was proved, these are cases in which the appeals should be allowed. That latter question would require examination of matters not explored in argument (beyond what was said in the later written submissions of the parties) which may include, but not be limited to, what importance should be attached to ensuring the maintenance of proper trial procedures and what difficulties, if any, may be encountered if a retrial is ordered. Callinan CALLINAN J. The question in these appeals is whether a judge hearing a criminal trial without a jury so conducted himself as to give rise to a reasonable apprehension of bias. Facts The appellants, who are brothers, were jointly charged on a single count of demanding money with menaces contrary to s 99 of the Crimes Act 1900 (NSW). The case against them was that they had attempted to "stand over" the proprietor of a nightclub in Sydney: that they did this by making threats and demands for money, and that they sent some young men to the nightclub to cause a disturbance, and to damage the furniture there as a further intimidatory act or menace to the proprietor. Their defence was that they had an honest claim of right for the money demanded. They claimed that it was owed to them, or to a person for whom they worked, for the provision of security guards, engaged and made available to the proprietor of the nightclub. The case for the prosecution was a very strong one. Central and persuasive components of it were recorded statements made by one of the appellants to the proprietor who had been equipped by the police with a concealed tape recorder. It would not be inaccurate to describe the evidence in support of the defence as being on the flimsy side. I set out some potentially inculpatory extracts from the transcript of a tape recording of a conversation between one of the appellants, the proprietor, Michael Savvas, and some other people on 22 June 2001: "Tony Raciti: Stressed today. Tony Raciti: You're stressed? Tony Raciti: Couldn't be stressed as what I am. I'm very stressed. I just got a phone call, the kitchen's bloody caught fire. Tony Raciti: Yeah? Can we sort this out? Tony, can I talk to you in the lounge, please? Is it all right if we do it here? Thank you. Callinan Michael Savvas: Do you sit at the boss's chair? Joseph Antoun: Wherever I sit, that's the boss's chair, mate. OK. Before we go any further, [inaudible]. The last thing I want is a tape recording. Michael Savvas: Yeah. I wouldn't do that to you. Just in case, give me your wallet. Give me your wallet. You haven't got ah, what we need? I've got what you need, don't worry. OK. This is just till we work this out. Now, I think I explained to you what is [inaudible]. Michael Savvas: Yeah, I, I'm equally upset too, Joe. That is good. Michael Savvas: OK. I'm a, I'm a family man - - - Mmm. - - - I've done nothing wrong here, as far as I'm concerned, I just want to run my business. Fine, OK. I'm, I understand what you said on Saturday night, I'm happy to pay you something, but I want assurance that basically, that you don't come to me again. Listen. If I was standing over you, you would've felt something different. I tell you what happened, so you know exactly what's going on. When that place had trouble, I was invited to solve it. By who? Doesn't matter. Michael Savvas: OK. All right. The place had trouble. Is that true? Callinan All right. Michael Savvas: Well, OK, yeah. There were assurances made to me on behalf of the business, now, when we protected that place, we didn't protect the doorman, we didn't protect, we protected the business. When it became a smooth sail for you people, I didn't even get the courtesy of a - - - whatever - - - But you never had any dealings with me, Joe. If we had a business transaction going, then yes, I, I'd - - - Indirectly. Indirectly. Michael Savvas: Yeah, but there was never involved with me. Did you bring the money today? I brought you some money. Joseph Antoun: Where is it? In my pocket. Show me. What's some money eh? Sorry? Joseph Antoun: What is some money? Six thousand. The deal was eight. I'll give you eight, Joe, but you've got to give me assurance - - - No, no, no, I won't. I'll tell you why, I don't. Do you know why, I don't? Do you know why I don't? Callinan Right. If you add up what wasn't paid, up to date, plus what it cost us to set that up Saturday, it works out to eight. Now broth, I won't ... you around, now, you are even. So, you give me your word? No, no, no. You are even. Now, what we want to do, you want to solve this? Now we can talk. So, what's this here? Six or eight? There's eight there. There's eight? Michael Savvas: Yeah, there's eight. Oh, OK. Count it if you don't trust me. No, no, no. Look, Joe, OK. I understand what you're saying. Just, we'll talk about, let me - - - Let me solve it for you - - - Michael Savvas: Alright. I've done what you asked me to do - - - This brings you up to date, all right. And depending how you treated me today, was gunna depend on how I go from here - - - Michael Savvas: Oh - - - - - - I was gunna hit you for a hundred grand or keep attacking you there, until it's worth nothing, or I was gunna give the courtesy of sayin', forget it. What I'll Callinan do, you've done well today, only the way you treated I told you, I'm treating you with respect - - - No, no, no - - - - - - but I expect that back. - - - you treated me very well. No, no, no. Michael Savvas: We're in business. I treat with courtesy, mate. Michael Savvas: Yeah, I know. I know. I did my job. You don't take your car to a mechanic, get him to do a job, and say, no, I can't pay you. Michael Savvas: Yeah. Right. I understand that. I understand. I did my job. I got people I looked after to take care of this job. You know what I'm sayin'? At the end of the day, I never went down there with a bunch of guys to intimidate your business. I never did that. When I'd go down, I'd sneak in, sneak out. Make sure everything's cool. All the work gets done outside the premises, not in there." (Emphasis added) After the respondent had opened the case for the prosecution the appellants availed themselves of an opportunity to present openings also. Joseph Antoun's opening was brief and in writing: "In essence the Defence case is the Crown case. Some essential facts are not in dispute. The defence is based on a claim of right for monies due and owing arising out of a pre-existing agreement to conduct security at the Daintree Nightclub Cafe. This will be established on the evidence in the Crown case. The claim of right will be established on two bases: Firstly, by reference to the conversation between the principal Crown witness Mr Savvas and the accused, Joe Anton [sic] at the meeting on 22 June 2001. It is common ground that Joe Anton [sic] was not aware that Callinan the conversation he had with Savvas was being recorded. The state of his mind in relation to his claim of right in relation to the $8000 is made explicit from their conversations at a time when he was unaware he was being recorded. Secondly, the alleged victim, Savvas, admitted in cross-examination at the committal proceedings (which will become evidence in this Trial) that the $8000 was not for protection but by way of payment for arrears due in and owing. This amount was in relation to a previous agreement between four parties, the alleged victim, Savvas, the principals of Big Time Promotions, one of which is Anthony Raciti; initially with a person by the name of Alex Shalala, (now in gaol); and upon Shalala going to gaol, the two accused. This will be established by the evidence in the Crown case. The Law The existence of a claim of right when genuinely held will constitute an answer to a crime in which the means used to take the property even when it involves a threat, assault or the use of arms. The relevant issue being whether the accused had a genuine belief in the legal right to the property rather than a belief in a legal right to employ the means in question to recover it. See R v Fuge60, where the cases are collected." (Emphasis added) The trial proceeded, and both of the appellants were convicted. Antoine Antoun was sentenced to three years and six months imprisonment with a non- parole period of two years and six months. Joseph Antoun was sentenced to six years imprisonment with a non-parole period of four years and six months. During the course of the trial three applications were made by counsel for the appellants, who were separately judge (Judge Christie QC) that he disqualify himself for apprehended bias. Each was refused. represented, trial the The first two applications to disqualify The first of the applications was made after Senior Counsel for Joseph Antoun (Mr Steirn SC) foreshadowed that he would make an application for a directed verdict of acquittal at the close of the Crown case on the basis that there was no case to answer. Counsel for Antoine Antoun (Mr Wilkinson) indicated that he intended to join in the application. The following exchange between Mr Steirn and the trial judge took place following a question from the latter about the likely length of the defence case: 60 (2001) 123 A Crim R 310 at 314-315 [24]. Callinan "Mr Steirn: Well your Honour there will be an application tomorrow for no case to answer. His Honour: I see, well that application will be refused. So how long then will the defence case take? Mr Steirn: How can your Honour possibly come to that view without having heard one word from either me or His Honour: Because I've closed the Crown case, and I have just said it. Mr Steirn: But you've heard not one word of any submission by either of us upon either the law or the fact. His Honour: No, I'm simply telling you the application will be refused. I perceive what's in the Crown case, I perceive there's a case to answer. Whether it be answered or not is entirely for - - - Mr Steirn: Might I ask your Honour to stay your Honour's judicial hand - - - His Honour: All right - - - Mr Steirn: - - - until such time – and please let me finish. Until such time as you've heard submissions by both defence counsel. His Honour: Right, now when I've heard those submissions will you be in a position to proceed with the defence case? Mr Steirn: Does that mean by that comment your Honour that your Honour has already considered the position without a word of submissions by - - - His Honour: I'll consider any submission you put. I'm obliged to consider any position you put." The Court then adjourned. The next morning both appellants asked the trial judge to disqualify himself by reason of the exchange I have extracted above. Written submissions were provided by the appellants. The respondent opposed the applications, submitting that the trial judge had "clearly indicated to both defence counsel that [he] would hear their submissions in relation to their application of no case to answer". Callinan The trial judge summarily rejected the application: "I simply point out in relation to whatever application is about to be made in relation to a no case that I have a very, very firm view that as a matter of law, and I am after all in this tribunal not only the tribunal of fact but the tribunal of law, that as a matter of law an application for a no case cannot succeed in this particular trial. I shall make that clear in the fullness of time, although I could make it clear now. I shall make it clear however at the conclusion of the submissions. It is said by both accused that by reason of my having said that the application will not be successful I have exhibited some bias in relation to this trial. That is simply not the case and I again draw the distinction between the tribunal of fact and the tribunal of law, because in a judge alone trial the judge is obliged to become in the jury's place the tribunal of fact. ... an application of that description in my considered view on the law is doomed to failure." Following delivery of those reasons counsel for Joseph Antoun made a further submission: "Mr Steirn: His Honour: Mr Steirn: Your Honour I don't wish to be pedantic, but what just fell from your Honour's lips allows me, in my respectful submission, to make a further submission that your Honour should disqualify yourself based on Mr Steirn I'll just say this and then I'll hear you out. All I have done is restate what I said yesterday. I do not deny what I said yesterday. I have simply restated it to be perfectly clear about it. I have simply restated it as a question of law and not a question of fact. Now, I am obliged to hear what other submission you wish to say in relation to my disqualifying myself, and if that's the submission you now wish to make please proceed. No. What I was about to say your Honour – this is a fresh application based specifically on what your Honour just said in using the words a no case to answer submission 'cannot succeed'. That's what your Honour. Callinan His Honour: That's exactly what I said. Mr Steirn: Your Honour has said that again without hearing from either of the accused. His Honour: Precisely. That's what I said yesterday. So now I'm in a position to hear your submission as to no case. Mr Steirn: My submission is that if your Honour is of that view still then it would be pointless in making a no case submission at this stage. His Honour: It's entirely a matter for you Mr Steirn. Mr Steirn: Because you've already said it cannot succeed. His Honour: In my view it cannot. If you dissuade me from it you'll be the first to know. Mr Steirn: Without hearing argument. His Honour: I realise that. That's what I said yesterday. Mr Steirn: As I say, I don't want to be pedantic. Your Honour has again said such a submission cannot succeed. My submission is how can your Honour say that without hearing submissions from either counsel for the accused and taking your Honour to the relevant law and the evidence which has now been adduced in the His Honour: That's what you said yesterday. Mr Steirn: Yes. I don't wish to labour the point, but you have said it again, again without hearing submissions, and that is my concern. His Honour: Okay. I realise it's your concern, but why don't you make the submission. Mr Steirn: So therefore I make a second application for your Honour to disqualify yourself given what your Honour has just said, that we cannot succeed in any submissions we make before you. His Honour: No, I didn't say that. I said you cannot succeed in a submission as to a no case. Am I entitled to assume Mr Wilkinson you join in this second application? Callinan Mr Wilkinson: Yes your Honour. His Honour: I don't wish to hear you Ms Crown and I shan't disqualify myself. Yes Mr Steirn?" A submission of no case, in writing, was then made by Mr Steirn and Mr Wilkinson. The trial judge adjourned to consider the submissions and to allow the respondent time to prepare a response to them. When the trial judge returned, he rejected the application. The third application to disqualify Antoine Antoun gave evidence in his defence. At the conclusion of it, but before the defence case had closed, the trial judge said that he had formed: "a very strong preliminary view in this case, very, very strong, to a stage where I am considering, indeed have almost made up my mind of my own motion, to revoke bail". It was entirely the initiative of the trial judge that the revocation of bail be considered. The respondent declined to make any submission about it. Mr Steirn submitted that his Honour would not be acting in compliance with the Bail Act 1978 (NSW) and that he would be denying the appellants natural justice if he were to do as he proposed. In order properly to understand the context of this further complaint of bias it is necessary to set out the relevant portions of the transcript: "His Honour: Mr Steirn: I would be less than honest if I didn't say it, that having heard both of the accused I presently hold a very, very strong preliminary view. They're the words I used. Yes, but with respect, your Honour you haven't heard the rest of the case by way of evidence - - - His Honour: I haven't. Mr Steirn: His Honour: Or me taking you to the submissions, other than this piecemeal fashion – I've done so at your Honour's request. I understand all of that. I have had the benefit of your submissions as to the no case, which to some extent, of course, canvassed the Crown case. Callinan Mr Steirn: Yes. His Honour: But otherwise I agree with you entirely. I have not heard any submission from you or the Crown. Mr Steirn: His Honour: Mr Steirn: His Honour: Well, your Honour, I'd ask your Honour to stay your Honour's hand in relation to the liberty of the subject until your Honour has taken, has listened to all of the evidence and all of the arguments. These people have been on bail for some years, and there's nothing in their record to indicate - - - I know nothing of their record. I know nothing of how long they've been on bail, it's none of my business to know either of those things. Nor is there anything before your Honour which would allow your Honour to come to a view that they intend to absent themselves from this trial. I propose, however, to revoke bail on the basis of what I perceive to be the strength of the Crown case at this stage. Mr Steirn: Your Honour, with great respect, your Honour would be falling into appealable error. His Honour: That's possibly correct, it's a risk I'll run. Mr Steirn: Your Honour, it's quite, your Honour - - - His Honour: It's a very, very unusual step, Mr Steirn - - - Mr Steirn: It's extremely unusual. His Honour: You would not need to convince me of that. It's a very, very unusual step. Mr Steirn: Especially when your Honour has not heard the rest of the Crown case, and especially when - - - His Honour: The rest of the accuseds' case. And I understand what is in the rest of the accuseds' case and it's not meeting the concerns that I presently face. The rest of the accuseds' case relates to the issue as to when – I'm sorry, if and when the Antouns met Mr Savvas prior to March 2001. That's the issue I perceive those witnesses will go to. Callinan Mr Steirn: His Honour: Yes. But if that – can I just address you on that your Honour. If that be the issue, and your Honour has a doubt about the veracity of Mr Savvas, then the whole Crown case falls in a heap. I will hear your submissions about that in due course, and I will maintain an open mind as to what view I take about the totality of Mr Savvas' evidence, believe me I will. But I propose to - - - Mr Steirn: I'd ask your Honour not to consider revoking bail at this stage. His Honour: Mr Steirn: His Honour: I propose to revoke forthwith – and I don't seek any submission from the Crown, I make it perfectly clear I do so on my own motion. Well your Honour, can I just say this, your Honour with great respect should not take a man's liberty just like that in a case such as this, given what's required pursuant to section 32 of the Bail Act. Your Honour has to have some information before you, especially in an adversarial situation where the Crown has not put to you any submission where your Honour should revoke bail. I'm not inviting the Crown to put – not inviting. There are two things and I've alerted you to one of them, the strength of the Crown case and the demeanour of the second accused and I propose to revoke bail, now it's as simple as that. I realise - - - Mr Steirn: The demeanour? His Honour: Mr Steirn: Yes, I just said it, the demeanour of the second accused who just left the witness box. Now Mr Steirn I don't propose to debate it, I shall, if you wish accept full responsibility for what I'm doing. I don't mind recording, I've never done it before and I'm not sure I've ever heard of anybody doing it before but I propose to do it on this occasion. Well your Honour, given your Honour's views, given the way with great respect to your Honour, your Honour has conducted yourself in this trial and given what has fallen from your Honour's lips immediately before I make this submission, I respectfully ask your Callinan Honour yet again to disqualify yourself from the hearing - - - His Honour: I realise - - - Mr Steirn: Let me finish please, from hearing the rest of this trial because in my respectful submission it is now turning into a travesty. His Honour: Very well. Mr Steirn: His Honour: Mr Steirn: I haven't finished. Before the adjournment, with great respect to your Honour, your Honour was under the misapprehension, if I understood your Honour correctly, that the person 'Tony' referred to was Tony Raciti. I was under that misapprehension for less than a couple of minutes and misapprehension, I was not certain which Tony they were referring [to] which is precisely why I asked the question I asked. I wasn't under Your Honour to revoke bail halfway through the defence case, which means it makes it that much difficult for both Mr Wilkinson and I to obtain further instructions at a crucial point in the defence case, in my submission is one of the reasons your Honour should not revoke bail because what the authorities do say is that one of the reasons a person should be at large is to prepare his case, that must mean a fortiori, when he's on trial, he should have immediate access to his counsel during the adjournments. Now your Honour would appreciate the logistics of having to go to the cells on each occasion that I speak to my client and Mr Wilkinson to his. Can I address your Honour on the demeanour. Has your Honour considered for a moment, even for a nanosecond, given that your Honour hasn't made up your Honour's mind that the Crown has not proved their case beyond reasonable doubt, has your Honour also considered, given the objective evidence before this court in the Crown case that Savvas is demonstrably lying to you, that my client could just possibly, just possibly be innocent on the basis that he does have a genuine claim of right and if he does have a genuine claim of right and Mr Savvas has set him up he's entitled to be Callinan angry and if he's angry and being asked questions in cross-examination because he is genuinely innocent he's entitled to be a little bit upset and if that develops into a demeanour which your Honour does not find pleasing to your Honour, then that's with great respect, just bad luck. If a man is innocent he'd therefore be entitled to be upset, he'd be entitled to know that Savvas has lied about him because he knows that Savvas has lied but your Honour has accepted Savvas up to this stage without hearing submissions by me or by me taking you to the evidence and that's the unfairness. They're my submissions your Honour, I'd ask your Honour to disqualify yourself, with great respect. Your Honour I join in that application and further your Honour the demeanour of that particular accused which you've made reference to in no way impinged upon the demeanour of my client. Mr Wilkinson: His Honour: I agree with that totally. Mr Wilkinson: Having regard to that I'd ask your Honour to grant bail for the very reasons that Mr Steirn has said, the difficulties experienced in preparing his case during the course of the trial. His Honour: Do you wish to be heard Ms Crown? Crown: Your Honour the Crown opposes the application for your Honour to disqualify yourself in relation to either of the two accused. His Honour: Do you wish to be heard on bail? Crown: No your Honour. His Honour: I propose to revoke bail for both accused. I shall adjourn this trial till about twenty past two to give you time if you wish to seek any further instructions." (Emphasis added) The appellants appealed to the Court of Appeal of New South Wales. They also made an application for bail pending the determination of those Callinan appeals. That application came on for hearing before Sully J. His Honour allowed it61: "I do not think that it could be contended sensibly that the learned trial Judge approached the question of the revocation of bail with anything like the particularity required by what is explained in the passages quoted from the judgment of the Court of Criminal Appeal in Winningham v The Queen62. A reasonable coupling of what is there said with the way in which the matter was dealt with in the High Court63 seems to me to lead as a matter of course to the conclusion that the deficiencies in the way in which the learned trial Judge dealt with the bail revocation question did entail that a fair minded observer might reasonably have apprehended or suspected that his Honour had prejudged, or might prejudge, the cases then before him." "In all of those circumstances, I think that the foreshadowed ground of appeal to the Court of Criminal Appeal has such evident prospects of success as would bring it within the category of 'special or exceptional circumstances' as referred to in s 30AA [of the Bail Act 1978 (NSW)]. It should be remembered throughout, in my opinion, that what was at stake in connection with any proposal to revoke bail was not some trifling or insubstantial procedural consideration, but a matter touching in the most direct and adverse way upon the liberty of the subject." (Original emphasis) All of the grounds of the appellants' appeals to the Court of Criminal Appeal (Dowd and Hislop JJ and Smart AJ) were rejected. Only one of them is in contention in this Court, that the trial judge should have disqualified himself by reason of apprehended bias. In relation to it, Dowd J said65: 61 R v Joseph Antoun; R v Antoine Antoun, unreported, New South Wales Supreme Court, 28 August 2003 at 18-19. 62 Unreported, New South Wales Court of Criminal Appeal, 10 May 1995. 63 Winningham v The Queen (1995) 69 ALJR 775. 64 R v Joseph Antoun; R v Antoine Antoun, unreported, New South Wales Supreme Court, 28 August 2003 at 19-20. 65 R v Joseph Antoun; R v Antoine Antoun [2004] NSWCCA 268 at [70]-[71]. Callinan "I do not consider that his Honour had considered the matter, but having heard the evidence, had a very strong view at that stage. A judge who is hearing a matter as judge and jury has a more critical view of the evidence than a judge who sits with a jury. His Honour did not prevent submissions being made, and his judgment shows that he had formed a view of the Crown case at that stage, which, on examination of the evidence, was not an unreasonable view. The exchange had occurred whilst the parties were considering the mechanics of the length of the trial, not at the time when the application had in fact been made. I can see no basis, on examination of the law in Masters, Richards and Wunderlich66, that there was anything in the nature of bias in the way in which his Honour determined the matter. That is not to say that the expression used by his Honour was the most felicitous way of expressing his view at that stage in relation to the application about to be made. It was Mr Steirn SC and Mr Wilkinson, for the parties, who declined to make further application. As observed above, his Honour gave reasons for convicting the appellants, it being clear from those reasons, that he held a strong view in relation to the Crown case, as he was entitled to do by the close of the Crown case, for the purposes of the application that the appellants had no case to answer." Of the trial judge's refusal to disqualify himself following his revocation of bail of his own motion Dowd J said67: "In relation to the bail application, it is clear that his Honour's course of action is uncommon, but the function performed in a bail application is performed in a large number of trials, both jury matters and non-jury matters, in all Courts. A determination under the Bail Act is a discreet application on a civil onus, notwithstanding that there may be higher standards set for the decisions made, such as under s 30AA of the Bail Act. Determinations are made all the time which are adverse to one party or another, unless made by consent. In Masters, Richards and Wunderlich68, the Court of Criminal Appeal held that the mere fact that another judge disagreed with the judge's finding is incapable of supporting any reasonable apprehension of bias. Persuasive though the views may be of a senior judge such as Sully J ... all that Sully J was doing was in fact determining a bail 66 (1992) 59 A Crim R 445. 67 R v Joseph Antoun; R v Antoine Antoun [2004] NSWCCA 268 at [73]-[74]. 68 (1992) 59 A Crim R 445. Callinan application, not performing the function of the Court of Criminal Appeal. His Honour's views are not relevant to the determination of this Court, and there is thus no light to be shed on the issue of apprehension of bias." Smart AJ (with whom Hislop J agreed) was of the same view regarding the submission of no case69: "The judge then heard oral submissions at considerable length from Senior Counsel for Joseph in support of the no case to answer application. During the course of his submissions Senior Counsel confirmed that it was not in dispute that a demand was made and that it was associated with some sort of menace. The judge said, 'The only matter this whole litigation centres around, is whether there is a genuine claim of right.' Senior Counsel replied, 'Whether there's a stealing, yeah.' It is apparent from the transcript that the judge was attentive to Senior Counsel's submissions and allowed them to be developed fully. Counsel for Antoine adopted those submissions. The prosecutor did not wish to add to her written submissions. The judge then ruled: 'I remain of the view, more greatly enforced than earlier, that there is a case to answer. I propose to publish some reasons …' It would be discouraging for Senior Counsel to be told at the outset that the submission of no case to answer could not succeed. However, despite his firmly stated views the judge gave Senior Counsel the fullest opportunity to put his submissions and attended to them. Senior Counsel at least knew the difficulties which he faced. The biggest hurdle which the appellants faced was that the no case to answer application could not succeed in view of the evidence which had been led. In most cases trial judges have a view about whether there is a case to answer at the close of the Crown case. It is a matter to which a trial judge directs his attention as the trial proceeds. Such applications are usually dealt with quite briefly and the judge usually indicates a view at an early stage, but often not in terms as emphatic as those used by the judge in the present case. From the transcript it does not appear that the judge treated the appellants' submissions as a formality, or that he had a closed mind. At the end of them his initial views were reinforced. Lack of delicacy in expression and expressing views forcefully are not sufficient to amount to an apprehension of bias if attention is paid to the submission that there was no case to answer. That submission failed on the merits. The Crown 69 R v Joseph Antoun; R v Antoine Antoun [2004] NSWCCA 268 at [289]-[292]. Callinan case had to be taken at its highest. There has been no miscarriage of justice." Smart AJ also thought the trial judge's conduct in revoking bail of his own motion did not give rise to a reasonable apprehension of bias, saying70: "It would have been unnerving to the appellants and their counsel that the judge, of his own motion rather than the Crown, raised the question of revocation of bail. The judge had been following the evidence closely and obviously thought that it was time to act. The judge heard full submissions from the appellants as to the proposed revocation of bail. The continuance or revocation of bail is a matter for the trial judge. Even if the judge made an incorrect determination as to bail, this does not mean that he was biased or that what had occurred gave rise to a reasonable apprehension of bias. It was submitted that the judge had failed to distinguish the roles of Antoine and Joseph when considering the question of bail and treated them as being in the same boat. While the evidence showed that Joseph was the dominant member of the enterprise and the principal decision maker, the two brothers acted in close liaison. Even if there were substance in the complaint this does not give grounds for a reasonable apprehension of bias, especially as counsel for Antoine did not submit that he stood in a different position from Joseph. In Masters, Richards and Wunderlich71 this Court held that where prior to the commencement of a trial the judge who was to preside revoked the bail of one of the accused and, in the course of doing so found he was an unsatisfactory witness, that judge was not acting in a way amounting to pre-judgment requiring him to disqualify himself to avoid apprehension of bias. This was so even though that judge had no power to revoke bail. The appellants submitted that this Court should look at the conduct of the judge overall. I agree. That was urged on the last application to the judge. The real difficulties facing the appellants lay in the evidence. Given the evidence and the mode of trial selected by the appellants, to which the Crown agreed, I am not persuaded that there was a reasonable apprehension of bias on the part of the trial judge. The judge was forthright and expressed his views strongly but he heard submissions in opposition to the opinions which he had expressed and then gave a final 70 R v Joseph Antoun; R v Antoine Antoun [2004] NSWCCA 268 at [304]-[307]. 71 (1992) 59 A Crim R 445. Callinan ruling. If a judge, having heard the evidence of the principals holds certain views it is better for him to tell the parties so that they can address him on such matters." The appeals to this Court There are some obvious but significant practical differences between a criminal trial before a judge and jury, and a trial before a judge alone. In the latter, all issues, factual and legal, are determined by the judge. Facts and matters from which a jury, as the finders of fact and arbiters of guilt or innocence are isolated, will inevitably be within the knowledge of a judge sitting alone. The judge, unlike the jury who are excluded during legal argument, hears every submission. Included in such matters may be, as here, the criminal records of the accused. The trial judge may need to know these in order to decide whether bail should be granted. Judges, unlike juries, are bound to give reasons for their verdicts. It may also be expected that a judge sitting alone might conduct the trial with a little less formality than if a jury were present, and might also express himself more directly in that event. Counsel too, may choose in such a case to frame both their questions and submissions differently, and to a more expeditious and expedient end in those circumstances. Judges are, unlike jurors, schooled by legal education and practice, to separate the facts from the law applicable to them, even though the latter may not be able to erase the law from the mind of the judge when he decides the facts. Judges can and do form preliminary views, sometimes quite strong ones. They should understand however that those views must not be fixed ones. From the first day of a prospective lawyer's education, and throughout a practitioner's and a judge's professional life, the importance of actual and apparent fairness, and the need for actual and apparent abstention from prejudgment are repeatedly stressed. The aphorism, that justice must not only be done, but also must be seen to be done, remains true. The test of apprehended bias is not in doubt. It was stated by Gleeson CJ, McHugh, Gummow and Hayne JJ in Ebner v Official Trustee in Bankruptcy72: "The apprehension of bias principle may be thought to find its justification in the importance of the basic principle, that the tribunal be independent and impartial. So important is the principle that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined. There are, however, some other aspects of the apprehension of bias principle which should be recognised. Deciding whether a judicial officer (or juror) might not bring an impartial mind to 72 (2000) 205 CLR 337 at 345 [7]. Callinan the resolution of a question that has not been determined requires no prediction about how the judge or juror will in fact approach the matter. The question is one of possibility (real and not remote), not probability. Similarly, if the matter has already been decided, the test is one which requires no conclusion about what factors actually influenced the outcome. No attempt need be made to inquire into the actual thought processes of the judge or juror." It should be noted that the test as stated emphasises that a possibility, that is relevantly to say, the appearance of a possibility of an absence of an impartial mind on the part of the judge, may lead to disqualification. Their Honours also make it clear that the test does not involve, or require an inquiry into the facts or matters which brought the apprehended state of mind of the judge to one of apparent bias. It follows that the fact that the case may not only at the time, but also in retrospect, seem to be a strong one, indeed a very strong one, does not absolve the judge from giving it a fair hearing, and attending carefully and open- mindedly to the submissions of the parties made at appropriate times. It does not follow that a trial judge in a criminal trial sitting alone, or with a jury, is obliged to give reasons for rejecting a "no case" submission, although in the former, on occasions, it might not be inappropriate for the judge to state briefly why that course has been adopted. It seems to me that in this case the trial judge's conduct did present an appearance, indeed an unmistakable one, of prejudgment. As the passage from Ebner makes clear, when conduct of that kind occurs, it is not relevant to the inquiry as to whether an apprehension of bias has arisen that the strength of one party's case may have brought the judge to the point of making the remarks that he did. It follows that the apparent strength of the respondent's case, and the weaknesses of the appellants' defence cannot be used as justification or excuse for the trial judge's expressions of a determination to reject submissions foreshadowed, but not yet made and developed. This will be so, even though, when a submission of "no case" is made, the trial judge asks the question whether there is evidence of each of the elements necessary to prove a conviction73, and not whether there is other evidence which, if accepted by the jury, would refute, or raise a reasonable doubt about the evidence for the prosecution. In the present case, for example, the trial judge in answering that question, after his attention had been drawn to some arguably exculpatory evidence in the case for the prosecution, would have been bound to hold that there was evidence of all of the necessary elements of the offence, and that therefore the trial should proceed. 73 R v R (1989) 18 NSWLR 74 at 81 per Gleeson CJ. Callinan This, on current authority would have been the situation, even if that evidence had been tenuous or inherently weak or vague74. Nonetheless the trial judge was bound to follow the proper process of considering submissions and applications without apparently prejudging them. This clearly he did not do, even though, after stating that they would fail, he said that he would hear them. In view of the dogmatism and asperity of the trial judge's expressions, the latter was hardly likely to instil any confidence in either an innocent bystander, or the appellants. Indeed, it had the ring, more of a protestation, than an assurance of impartiality, of the kind referred to by Aickin J in Re Lusink; Ex parte Shaw75 and was likely therefore to have reinforced, rather than dispelled, the apprehension of bias which must by then have arisen. The apprehension of bias which must have arisen as a result of his Honour's statements with respect to the appellants' foreshadowing of their "no case" submission could only have been further increased by his Honour's threatened revocation of bail in the absence, not only of any application in that regard by the respondent, but also of any reference to the considerations to which he was bound to have regard under the Bail Act. The demeanour of one only of the appellants in the witness box could provide little foundation, let alone any sound substitute, for the statutory considerations relevant to a grant or a revocation of bail in respect of both of them. The other ground urged by the appellants, that in some way the decision of Sully J sitting alone on the bail application preceding the appeals, bound the 74 See Doney v The Queen (1990) 171 CLR 207. In that case, this Court rejected the more robust approach to the contrary that has been adopted in the United Kingdom and which is allowed to Magistrates in committal proceedings in New South Wales by s 66 of the Criminal Procedure Act 1986 (NSW) which provides as follows: "If the Magistrate is not of the opinion that there is a reasonable prospect that a reasonable jury, properly instructed, would convict the accused person of an indictable offence, the Magistrate must immediately order the accused person to be discharged in relation to the offence." It is seriously open to question, in my opinion, whether it is in the public interest, having regard to the expense of criminal proceedings and the jeopardy to an accused, of permitting a tenuous, inherently weak or vague case to go to a jury, and whether, in view of the grant to Magistrates, but not to judges, of a power to end a criminal case before the time when a jury is to decide it, the approach in the United Kingdom or some like approach ought not to be adopted in this country. 75 (1980) 55 ALJR 12 at 16; 32 ALR 47 at 55. See also Johnson v Johnson (2000) 201 CLR 488 at 519 [85]. Callinan Court of Criminal Appeal, has no substance. His Honour at that stage was not entertaining the appeals. His decision was of an interlocutory kind only. It could not in any event bind the fully constituted Court of Criminal Appeal. The appeals must however be allowed for the reasons that I have given. The orders of the Court of Criminal Appeal made on 16 August 2004 should be set aside and in place thereof it should be ordered that the convictions of both appellants be quashed and that there be an order for a retrial of them. HEYDON J. I agree with the reasons of, and orders proposed by, Callinan J, and the additional remarks of Hayne J. I would, however, reserve to some occasion when it is necessary to decide it the question whether Doney v The Queen76 should be reversed. 76 (1990) 171 CLR 207.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Tully v The Queen [2006] HCA 56 7 December 2006 ORDER Appeal dismissed. On appeal from the Supreme Court of Queensland Representation A J Kimmins with K A M Greenwood for the appellant (instructed by Welldon Zande & Reddy) L J Clare with V A Loury for the respondent (instructed by Director of Public Prosecutions (Q)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tully v The Queen Evidence – Criminal trial – Sexual offence – Uncorroborated evidence – Delay in making of complaint – General rule from Longman v The Queen (1989) 168 CLR 79 requiring warning of danger of conviction – Whether trial judge bound to give a warning in present case – Duty to make comments in interests of justice – Requirement of fair trial – Conviction depended on evidence of complainant alone – Whether need for warning or comment as referred to in Robinson v The Queen (1999) 197 CLR 162. Evidence – Criminal trial – Sexual offence – Evidence of uncharged acts – Whether admissible as relationship evidence – Whether subject to the constraints imposed for the admissibility of similar fact or propensity evidence. Words and phrases – "delay", "Longman warning", "propensity evidence", "similar fact evidence", "uncharged acts", "uncorroborated evidence". Criminal Code (Q), ss 229B, 632. Criminal Law (Sexual Offences) Act 1978 (Q), s 4A. Evidence Act 1977 (Q), Div 4A, subdiv 3. KIRBY J. This is an appeal from a judgment entered by the Court of Appeal of the Supreme Court of Queensland1. By that judgment, the Court of Appeal dismissed the appellant's challenge to his conviction of sexual offences against a young girl ("the complainant"), the daughter of his then domestic partner. Although several issues were raised in the Court of Appeal, to support the challenge to the conviction, in this Court only two grounds remain. The first complains of the failure of the trial judge to give the jury a warning, with reference to features of the evidence, which the appellant said was necessary "to avoid a perceptible risk of miscarriage of justice arising from the circumstances of the case"2. The second concerns the suggested inadequacies and imperfections of the directions given to the jury on the subject of the standard of proof of uncharged acts which were described by the complainant in giving her evidence. The appellant is entitled to succeed on the first point. The case is not one for the application of the "proviso"3. A new trial should be ordered. The circumstances of the case make it unnecessary, and inappropriate, to deal with the issues concerned with the uncharged acts. Those issues are important, but this is not the occasion to decide them. The facts Nature and course of the trial: By an indictment dated 28 June 2004, the appellant was charged with ten counts of sexual conduct involving the complainant. Two of the counts involved the offence of rape4; four counts charged that the appellant had unlawfully permitted himself to be indecently dealt with by a child under 16 years of age5; and four counts charged that the appellant had unlawfully and indecently dealt with a child under 16 years of age6. At his trial, in the District Court of Queensland (Richards DCJ), the jury were unable to agree on the two counts of rape. One, count 2, was alleged to have occurred between 31 January 1999 and 1 June 2000; the other, count 10, between 1 January 2000 and 1 June 2000. The jury also disagreed on one of the 1 R v TN (2005) 153 A Crim R 129. 2 Longman v The Queen (1989) 168 CLR 79 at 86; see Robinson v The Queen (1999) 197 CLR 162 at 168 [19]. 3 Criminal Code 1889 (Q) ("the Code"), s 668E(1) and (1A). 4 The Code, s 349. 5 The Code, s 210(1)(c). 6 The Code, s 210(1)(a). Kirby counts alleging that the appellant had permitted himself to be indecently dealt with (count 1). That offence was alleged to have occurred between 31 January 1999 and 1 February 2000. On all of the remaining counts, the appellant was found guilty by the jury. He was convicted and sentenced on each count to concurrent sentences of three years' imprisonment. A retrial was ordered on those counts upon which the jury could not reach a verdict. However, no such retrial has occurred. The complainant was born on 11 March 1990. She was thus between the ages of nine and slightly more than 10 years of age when the alleged offences happened. The complainant's mother had begun a personal relationship with the appellant in early 1999 and the couple lived together with the complainant and her brother successively in their respective premises. It was soon after the relationship with the mother began that the complainant alleged that the appellant had begun to act inappropriately. At first this allegedly involved his exposing his penis to her; but later the events allegedly occurred that gave rise to the counts on the indictment7. The complainant did not tell her mother about any of the appellant's alleged conduct until April 2002. By that time, the mother, the complainant and her brother were living in New South Wales. The police were notified and the complainant underwent two recorded interviews in April 2002 and May 2002. No immediate charges were laid. In October 2003, the appellant's home in Queensland was searched. Hand guns for which he was licensed were found and photographs were taken of the appellant's pubic area. The photographs disclosed the presence of a mole near the appellant's penis to which the complainant had referred in her statement to police. She was 12 years old at the time of the interviews and 14 years of age when the trial took place in July 2004. There was no independent evidence confirming the complainant's allegations against the appellant save for her accurate description of the mole and of a tattoo on each of the appellant's buttocks and evidence of the complainant's mother concerning one occasion (the subject of counts 6 and 7 on which the appellant was found guilty). On that occasion the appellant and the complainant were absent in a carpark for so long that the mother began to look for them. She gave no evidence of having witnessed any sexual conduct. Otherwise, the prosecution case against the appellant depended solely on the complainant's version of the appellant's conduct in relation to her. At his trial the appellant neither gave, nor called, evidence. Evidence and verdicts on ten counts: The first count involved an allegation of indecent dealing that allegedly occurred after the complainant, her (2005) 153 A Crim R 129 at 134 [33]. Kirby mother, her brother and the appellant returned home after playing ten pin bowling together. The complainant said that the appellant asked her to touch his penis and testicles and when she refused, he grabbed her left hand and held it on his genitals for about five minutes8. In her second interview with police, the complainant said that this was when the appellant had first had sexual intercourse with her. She explained that she did not originally tell police of this fact because she was too embarrassed. She agreed that she had initially told police that after the appellant released her hand from his genitals, he went upstairs. The jury were unable to agree on a verdict on this count. The second count, concerning an alleged rape, involved an incident said to have occurred between 31 January 1999 and 1 June 2000 when the complainant, her mother and brother stayed overnight at the appellant's house. According to the complainant, the appellant woke her whilst her mother was asleep and persuaded her to go to his bedroom, where he pushed her onto his bed asking her to "have sex with me". The complaint said that she had threatened to tell her mother but that the appellant had put his penis in her vagina and pushed it up and down for about six or seven minutes before she left and returned to her own bed. The complainant claimed that she did not call out to her mother because the appellant had told her he would kill her. She stated that the appellant had a cupboard which contained guns and knives and that, on the previous day, she had carried ammunition to the cupboard and knew of its contents. In cross-examination, the complainant was tackled on earlier evidence concerning the very late arrival at the appellant's home on the night of this offence. That evidence appeared to conflict with her being there the previous day. The jury were also unable to reach agreement on a verdict on this count. The third count concerned an event which the complainant said had occurred at Easter 2000 when the appellant was camping with the complainant, her mother and brother and four family friends of the appellant. According to the complainant the appellant "flashed himself" on this occasion. The complainant went to the toilet and was followed by the appellant. She said that he put his finger in her vagina. When the appellant suggested intercourse, the complainant said that she had refused and returned to the camp site. She said that she did not tell her mother of these events because she was scared of the appellant's guns. The appellant was found guilty on this count. The fourth count concerned an event which the complainant described when she and others were returning, in convoy, from the camp at Easter 2000. According to the complainant, because she felt sick while travelling in the family car, she was transferred to the appellant's car where she was able to lie down. (2005) 153 A Crim R 129 at 131 [7]. Kirby However, the complainant said that the appellant pulled her underwear down and touched and squeezed her vagina whilst driving his car. Under cross- examination, the complainant said that the appellant's finger went inside her vagina. The complainant's mother confirmed that the complainant had ridden with the appellant after complaining of feeling sick. She had not wanted to do so but travelled with him for part of the journey. The jury returned a verdict of guilty on this count. The fifth count concerned an incident that allegedly occurred in the appellant's garage in May 2000. The complainant said that, after school, the appellant had asked her to come to the garage and help him with something. When she did, he shut the door, pulled his shorts down and told her to look at his genitals. It was on this occasion that the complainant said that she had noticed the mole on the left side of the appellant's penis. When the complainant threatened to tell her mother of the appellant's conduct, he said that he would kill her if she did. He allegedly tried to put his penis in her vagina but she backed away. Under cross-examination she said that on this occasion, his penis went into her vagina "a little bit". The complainant's mother confirmed that the appellant's house had a garage. The jury found the appellant guilty on this count. The sixth and seventh counts concerned incidents that were alleged to have occurred at a motel where the complainant, her mother, brother and the appellant were temporarily staying after moving home. The appellant said that her mother had gone to the toilet and asked the complainant to fetch a medical bag from the car. The appellant offered to accompany the complainant to the motel carpark. Whilst there, the complainant stated that the appellant had told her to "feel" him. When she refused, he had grabbed her hands and put them on his genitals. He also put his hand on the complainant's vagina and inserted a finger. The complainant secured the medical bag from the car and took it to her mother. The sixth count related to procuring the complainant to touch the appellant's penis. The seventh count related to the digital penetration. The jury found the appellant guilty on both counts. The eighth count concerned an incident that allegedly occurred when the complainant went out at night to look for her dog that had been barking. According to her evidence, her mother and brother were asleep at the time. The appellant was on the porch and exposed his genitals, grabbing the complainant's hand and putting it on them. The complainant said that the appellant then took her down to the garage where he tried to get up against her. She told him to go away, left him and returned to her bedroom. The jury found the appellant guilty on this count. The ninth and tenth counts concerned an incident that was alleged to have occurred in the laundry of the residence in which the complainant, her family and the appellant were then living. The complainant said that she had taken an object to the laundry to wash it. According to her evidence, the appellant came running Kirby down and told her to remember his gun. He also told her to touch his testicles. When she refused, he grabbed her hand and put it on them. The complainant said that the appellant tried to have sex with her again. It was in relation to this incident that the complainant saw the tattoos on the appellant's buttocks which she described. The complainant alleged that the appellant actually penetrated her vagina on this occasion. The appellant was found guilty by the jury of the offence of indecent treatment in the ninth count. However, the jury were unable to agree on the charge of rape contained in the tenth count. Evidence of uncharged acts: In addition to the evidence relating to the offences the subject of the ten counts in the indictment, other evidence was given by the complainant concerning sexual acts which were not the subject of specific charges. This evidence included the complainant's description of an occasion when the appellant placed his testicles against her breast and three acts of sexual intercourse that allegedly occurred on a camping trip to Agnes Water, including an event when the appellant took the complainant to get something out of his car. As well as this, the complainant testified that the appellant had penetrated her vagina digitally about a dozen times and had penile vaginal intercourse "over a couple of dozen times", "a real lot", "30 times" and "quite a few times". No objection was raised at the trial to the admission of this evidence of uncharged acts. Indeed, some of the evidence was elicited by cross-examination of the complainant by the appellant's trial counsel. In relation to the incident of rape referred to in the 10th count, the complainant said that the appellant had put his penis "all the way in"; that she had told the police officer that he had put his penis in her "maybe 30 times"; and that he had put his penis in "all the way". She agreed that he had done so "sometimes" and that "sometimes it was a bit". In relation to other occasions, the complainant said that the appellant had put his penis in "part of the way", "far enough" and "just a bit". A medical examination of the complainant, described at the trial, reported that her hymen was still intact. The medical practitioner who deposed to this fact originally reported that her examination of the complainant did not support a history of full penile penetration. Subsequently, however, on the basis of published research, the medical practitioner concluded that "findings of an intact hymen neither supports nor denies the history of full penile penetration of the vagina past the level of the hymen". Nevertheless, it would have been open to the jury to attach significance to the condition of the complainant's hymen. Some members of the jury appeared to have done so. No other fact would seem to explain the inability of the jury to reach a verdict on the two charges of rape and the first count of indecent dealing, being the one in respect of which the complainant had later told police that it was the occasion when the appellant first had sexual intercourse with her. Kirby Features of the defence case: As in other cases of this kind, the appellant faced difficulties in undermining the evidence of the complainant. Evidence about the residences in which the incidents were said to have occurred; the presence of the complainant's mother and brother on occasions; and details of the camping trips and visit to the motel carpark lent some circumstantial support to the complainant's evidence. Clearly enough, trial counsel elected to place much weight on the intact hymen and the apparent inconsistency between this objective fact and the complainant's allegations of many acts of penile and digital penetration, including occasions where the appellant had "put his penis all the way in". Nevertheless, there were other features of the prosecution case against the appellant that potentially strengthened his argument that the complainant's accusations should not be accepted9. First, there was the age of the complainant at the time of the alleged offences (between nine and 10 years) and the circumstances that had brought her into contact with the appellant (her mother's relationship with him that had ceased by May 2000). Secondly, there was the complainant's failure to make any complaint to her mother at the time of the events she described, although in virtually all of them, the mother and brother were immediately at hand and in some cases in an adjacent room. The further delay (of about two years) after the end of the relationship between the mother and the appellant and the complaint to police was not readily explicable by her fear of the appellant's guns. In any case, the delays made it impossible for contemporaneous medical examination to produce any worthwhile results to contradict or cast doubt on the claims of full penile penetration. The move of the complainant and her family to New South Wales put the complainant out of physical contact with the appellant. The additional delay between the complainant's first contact with police and the bringing of charges against the appellant inevitably increased still further his difficulties in contradicting the accusations once made and in remembering any alibis or contradictory evidence that an earlier notification of complaint might have made possible. Thirdly, various features of the accusations, their apparent embellishment with accusations of uncharged acts and unspecified multiple events, described only in general terms, raised questions concerning the reliability of the complainant's evidence. Effectively, if the appellant were to be convicted, it was on the evidence of the complainant alone, unconfirmed except in peripheral, circumstantial ways that might be explained consistently with innocence. Guilty verdicts, virtually inevitably, required the imposition of a significant custodial sentence on the appellant. For such a result, based on the evidence of one 9 See also reasons of Hayne J at [82]-[86]. Kirby witness alone, the law has customarily stressed the need for very careful scrutiny of the accusations10. The judge's instructions to the jury Elements of the judge's instructions: It is convenient to separate the content of the trial judge's instructions to the jury concerning the way in which they should approach the foregoing aspects of the case and her Honour's later directions to the jury concerning the use they could make of the evidence given by the complainant of the acts of a sexual kind that were not the subject of charges in the indictment. The directions on the latter point are the subject of the second ground of appeal, to be dealt with later. The trial judge gave the jury conventional instructions about the onus and burden of proof. Some of the directions (such as those concerning the resolution of conflicts in the accounts given by different witnesses) appear to derive from a judicial Bench Book and not to have been specifically apt to this trial, where, essentially, the question was whether the prosecution had proved its case on the basis of the evidence of the complainant alone concerning the offences charged. Nevertheless, so far as it went, the burden which the prosecution bore to prove the facts necessary to establish each offence was correct and adequate. Repeatedly, the trial judge reminded the jury of the importance of their assessment of the complainant's credibility. After explaining the legal ingredients of the offences charged and reminding the jury of the complainant's evidence in relation to each of the counts in the indictment, the trial judge turned to "the various addresses". She told the jury that the question for them was whether they were "satisfied beyond reasonable doubt that [the conduct allegedly committed by the appellant] happened because the defence basically say that nothing of the sort happened". She went on11: "… the Crown has to prove to you beyond reasonable doubt essentially through the complainant because she is really the witness that the evidence rises and falls on, that what she says in relation to each of the counts is not only truthful, but is reliable so that you are prepared to accept her evidence beyond reasonable doubt". 10 R v Murray (1987) 11 NSWLR 12 at 19. 11 (2005) 153 A Crim R 129 at 139 [53]. Kirby Explaining the defence case: The judge repeated the prosecutor's submissions, in the address to the jury, concerning the explanation of the failure of the complainant to complain about the appellant's conduct earlier on the basis of her age and the appellant's threats and possession of guns. She referred to the "enormity of what has happened to the child"; the confirmation by her mother of circumstantial facts about the house in which she was sleeping; the photograph of the mole and tattoos on the appellant's body; and the medical evidence which "… the Crown says … does not say one thing one way or the other". Squeezed in between two paragraphs reminding the jury of what the prosecution had said to rebut possible inconsistencies in its case was a short passage setting out the essence of the defence case: "The defence, on the other hand, say [the complainant's] evidence is so unreliable that you could not possibly convict. For example, the episode at Agnes Water where she says there was sex three times and the mother says there was only one night that they stayed and in any event, that was before August 1999 when she says the first act of intercourse occurred. The defence say, well, that is an amazing mistake to make if she is telling the truth and if she has got that wrong then how could you possibly rely on the rest of her evidence." A little later comes the following passage12: "The defence remind you that they do not have to try and show you why she would be untruthful about these things and of course it is not for the defence to prove anything, but she is so inconsistent that you simply could not accept what she says beyond a reasonable doubt or beyond any doubt for that matter for all the sorts of reasons that have been highlighted by the defence in their address." Apart from recounting excerpts of what defence counsel had said in her address, the trial judge gave no directions of her own to the jury concerning the way in which they should approach their task. She did not specifically remind the jury of any elements in the evidence that were of particular importance for the performance of that task; nor did counsel ask for any directions on such matters to be given to the jury. The jury's verdicts: The jury retired. After deliberating for more than a day they returned to announce that they could not reach agreement on counts 1, 2 and 10. However, they were agreed on the other counts. Their verdicts of guilty on those counts were taken. The conviction of the appellant followed as did his sentence. 12 (2005) 153 A Crim R 129 at 139 [53]. Kirby The Court of Appeal's decision Complaint based on Robinson: The initial notice of appeal to the Court of Appeal challenged the appellant's conviction on the counts on which he had been found guilty on the basis that the conviction was "unsafe and unsatisfactory". However, by the time the appeal was argued, a specific ground of appeal was formulated complaining that the trial judge had erred in failing adequately to direct the jury in relation to the evidence and that this had occasioned a miscarriage of justice13. The Court of Appeal rejected this submission. Its reasons were given by Keane JA (with whom Williams JA and Helman J agreed). On the first issue, after noticing the limited content of the trial judge's remarks to the jury on the approach that they should take and the observations of this Court in RPS v The Queen14 about the content of jury instructions, Keane JA turned to address the appellant's complaint that the trial judge had failed to direct the jury "that they needed to scrutinize the complainant's evidence with great care before they could convict the appellant"15. His Honour referred to the decision of this Court in Robinson v The Queen16. However, for two reasons, Keane JA concluded that Robinson did not demonstrate any error on the part of the trial judge in this case in failing to give a warning to the jury. The first reason stated by Keane JA was that Robinson had held back from requiring a warning to the jury "in every case where a child's complaint of sexual abuse is uncorroborated"17. He concluded that, although in the present case there was "no corroboration in the technical sense of evidence tending to confirm one or more of the elements of the offences charged, there was evidence which is capable of providing independent support for the complainant's version of events"18. Moreover, he concluded that there was "evidence which explains the complainant's delay in complaining about the appellant's conduct"19. 13 (2005) 153 A Crim R 129 at 131 [5]. 14 (2000) 199 CLR 620 at 637 [41]-[42]. 15 (2005) 153 A Crim R 129 at 139 [53]. 16 (1999) 197 CLR 162. 17 (2005) 153 A Crim R 129 at 140 [56]. 18 (2005) 153 A Crim R 129 at 140 [56]. 19 (2005) 153 A Crim R 129 at 140 [56]. Kirby The second reason advanced by Keane JA was that Robinson was, in his Honour's words, "truly an exceptional case so far as the justification for the warning was concerned"20. This, he said, was because aspects of the case involved matters in which "judicial experience may have given the trial judge an advantage in assessing the credibility of the competing versions of events "over and above worldly wisdom and experience of the jury"21. Attempt to distinguish Robinson: It is clear that Keane JA considered that this Court's observations in Robinson were special to the factual circumstances of that case; and the "curious" features of the case as revealed by the conflicting evidence of the complainant and the accused in that matter22. Whilst he accepted that the complainant's evidence"23, he was of the opinion that "it was for the jury to decide what to make of those inconsistencies and discrepancies"24. Clearly, he was affected by the fact that the accused in Robinson had given evidence of denial whilst the appellant here had not done so25: this case, "inconsistencies or discrepancies there were, "The point is that in this case the uncontradicted evidence of the complainant's relationship and the dealings with the appellant was not such as to render improbable her evidence of sexual misconduct on his part. There was not in this case the combination of factors present in Robinson which called for a strong warning to ensure that a jury did not accept the complainant's evidence without close scrutiny." It was on this basis that Keane JA considered that the trial judge's instruction to the jury that the prosecution case "rises and falls" on the evidence of the complainant was "perfectly accurate"26. The essential issue raised by this appeal is whether the conclusion that there was "no occasion for a stronger 20 (2005) 153 A Crim R 129 at 140-141 [58]. 21 (2005) 153 A Crim R 129 at 141 [58]. 22 (2005) 153 A Crim R 129 at 140 [57]. 23 (2005) 153 A Crim R 129 at 141 [58]. 24 (2005) 153 A Crim R 129 at 141 [58]. 25 (2005) 153 A Crim R 129 at 141 [58]. 26 (2005) 153 A Crim R 129 at 141 [59]. Kirby warning to prevent a perceptible risk of a miscarriage of justice"27 was a correct statement of the law applicable to the appellant's trial. The applicable legislation General duty on directions: In his reasons, Keane JA, correctly, adverted to the statutory setting in Queensland in which the foregoing issue had to be decided28. The starting point is s 620 of the Criminal Code (Q) ("the Code") concerning the procedure to be observed in a trial: "(1) After the evidence is concluded and the counsel or the accused person or persons, as the case may be, have addressed the jury, it is the duty of the court to instruct the jury as to the law applicable to the case, with such observations upon the evidence as the court thinks fit to make." Corroboration warnings: Under the common law, as was explained in Robinson29, certain categories of witnesses were considered to suffer from intrinsic lack of reliability, requiring trial judges to warn the jury of the danger of convicting upon their uncorroborated testimony. The categories concerned included the evidence of accomplices, of victims of a sexual offence and the sworn evidence of children30. It was to remove this approach of the common law that legislation was enacted throughout Australia to abolish the categories of evidence presumed to be unreliable. In Queensland, the relevant provisions on corroboration are found in s 632 of the Code31. That section reads: 27 (2005) 153 A Crim R 129 at 141 [59] citing R v DAH (2004) 150 A Crim R 14 at 28 (2005) 153 A Crim R 129 at 142 [62]-[65]. 29 (1999) 197 CLR 162. 30 Carr v The Queen (1988) 165 CLR 314 at 318-319; cf B v The Queen (1992) 175 CLR 599 at 615-617; Link (1992) 60 A Crim R 264 at 270-271. 31 See also Evidence Act 1995 (Cth), s 164; Evidence Act 1995 (NSW), s 164; Evidence Act 1929 (SA), s 12A; Evidence Act 2001 (Tas), s 164; Crimes Act 1958 (Vic), s 61; Evidence Act 1906 (WA), s 50; Evidence (Miscellaneous Provisions) Act 1991 (ACT), s 69; Evidence Act (NT), s 9C. Kirby "(1) A person may be convicted of an offence on the uncorroborated testimony of 1 witness, unless this Code expressly provides to the contrary. (2) On the trial of a person for an offence, a judge is not required by any rule of law or practice to warn the jury that it is unsafe to convict the accused on the uncorroborated testimony of 1 witness. (3) Subsection (1) or (2) does not prevent a judge from making a comment on the evidence given in the trial that it is appropriate to make in the interests of justice, but the judge must not warn or suggest in any way to the jury that the law regards any class of persons as unreliable witnesses." This section existed in Queensland, in an earlier form, at the time that Robinson, also a Queensland case, was decided. However, inferentially in response to the criticism of the language of s 632, the section has been amended. In response to this Court's comment that some witnesses who formerly required corroboration were not "complainants" (such as accomplices)32, the word "complainants" was deleted and the word "persons" substituted. Nevertheless, the substance of s 632 remains the same. Directions in the interests of justice: Also to be noticed is s 4A of the Criminal Law (Sexual Offences) Act 1978 (Qld) ("the Sexual Offences Act"). That section relevantly provides33: If a defendant is tried by a jury, the judge must not warn or suggest in any way to the jury that the law regards the complainant's evidence to be more reliable or less reliable only because of the length of time before the complainant made a preliminary or other complaint. (5) Subject to subsection (4), the judge may make any comment to a jury on the complainant's evidence that it is appropriate to make in the interests of justice." The effect of ss 632 of the Code and 4A of the Sexual Offences Act was explained in Robinson. "Stereotypical assumptions"34 have been abolished. 32 Robinson (1999) 197 CLR 162 at 170 [23]. 33 The entire section is set out in the reasons of Callinan J at [121]. See also reasons of Crennan J at [158] fn 155. 34 R v Ewanchuk [1999] 1 SCR 330 at 336 cited in Robinson (1999) 197 CLR 162 at Kirby However, the right and duty of the trial judge to make comments on the evidence to the jury, which the interests of justice render appropriate, are preserved35. The question, therefore, is what the interests of justice required in the appellant's trial. Was it sufficient for the trial judge to give the brief instruction to the jury that has been quoted? Was it sufficient for her to remind the jury of the submissions of the prosecution and the defence? Did the interests of justice in the case oblige her to give any warning, to make any reference to the evidence and to lend her authority to explaining to the jury the way in which they should, or should not, approach their determination of a case of this character? Principles for judicial instructions to the jury Addressing the real issues: In many recent decisions36, this Court has observed that the starting point for evaluating the trial judge's directions to the jury is to be found in the reasons of Dixon, Williams, Webb, Fullagar and Kitto JJ in Alford v Magee37. The passage is well known, but it bears repeating38: "[I]t may be recalled that the late Sir Leo Cussen insisted always most strongly that it was of little use to explain the law to the jury in general terms and then leave it to them to apply the law to the case before them. He held that the law should be given to the jury not merely with reference to the facts of the particular case but with an explanation of how it applied to the facts of the particular case. He held that the only law which it was necessary for them to know was so much as must guide them to a decision on the real issue or issues in the case, and that the judge was charged with, and bound to accept, the responsibility (1) of deciding what are the real issues in the particular case, and (2) of telling the jury, in the light of the law, what those issues are. … [L]ooking at the matter from a practical point of view, the real issues will generally narrow themselves down to an area readily dealt with in accordance with Sir Leo Cussen's great guiding rule." (emphasis in original) 35 Reasons of Hayne J at [89]. 36 See, eg, Melbourne v The Queen (1999) 198 CLR 1 at 52-53 [143]; RPS v The Queen (2000) 199 CLR 620 at 637 [41]; Zoneff v The Queen (2000) 200 CLR 234 at 256 [56]; Azzopardi v The Queen (2001) 205 CLR 50 at 69 [49]; Doggett v The Queen (2001) 208 CLR 343 at 373 [115]; De Gruchy v The Queen (2002) 211 CLR 85 at 96 [44]; Murray v The Queen (2002) 211 CLR 193 at 205 [37], 219 [78]. 37 (1952) 85 CLR 437. 38 (1952) 85 CLR 437 at 466. Kirby In the explanation of this guiding rule, this Court has repeatedly recognised this "fundamental" duty of the trial judge39. It has acknowledged the difficulty which the judge faces, given the great variety of issues, legal and factual, that present for consideration in every trial40. It has accepted that there is no fixed form of instruction that will suit every case41. To adopt a fixed approach would distort effective oral communication with the jury. Mechanical or artificial formulae are therefore not what are called for42. Judicial instructions must be comprehensible to a jury, made up as it is of lay members43. It should be addressed to the issues in the trial and evaluated in the context of those issues44. Securing a fair trial: The content of the instruction in a particular trial is ultimately determined by the judicial obligation to ensure that the accused secures a fair trial in accordance with law45. This obligation requires the trial judge to put fairly before the jury the case which the accused has made46 or is entitled to rely upon in the evidence that has been adduced. In particular, where, from the greater experience of the judge in the law and the conduct of trials, certain matters emerge that are relevant to the fair trial of the accused, the judge must explain those matters to the jury, with appropriate reference to the evidence. This point, and the reason for it, was explained by Hayne J in Melbourne v The Queen47: "The trial judge in a criminal trial must instruct the jury about some matters that affect how they set about finding the facts. Thus in some cases the judge must warn the jury of dangers of which they must beware when they are considering the facts. Directions about the dangers of 39 De Gruchy (2002) 211 CLR 85 at 96 [43]. See reasons of Hayne J at [75]-[76]. 40 Melbourne (1999) 198 CLR 1 at 52 [142]. 41 Zoneff (2000) 200 CLR 234 at 256 [55]. 42 Melbourne (1999) 198 CLR 1 at 52 [142]; Doggett v The Queen (2001) 208 CLR 43 Doggett v The Queen (2001) 208 CLR 343 at 373 [115]. 44 RPS (2000) 199 CLR 620 at 637 [41]; Zoneff (2000) 200 CLR 234 at 256 [55]. 45 RPS (2000) 199 CLR 620 at 637 [41]. 46 RPS (2000) 199 CLR 620 at 637 [41]. 47 (1999) 198 CLR 1 at 53-54 [144] (emphasis in original). Kirby identification evidence48 or about accepting uncorroborated evidence in some circumstances49 provide ready examples. But it is always necessary to bear steadily in mind that it is the jury that decides the facts – not the trial judge. Especially is this necessary when the question is … whether a trial judge is bound to direct the jury in some matter that touches how the jury finds the facts in the case. The warnings about factual issues … are given to the jury not just because they relate to one or more of the issues in the case but because, if they are not given, the jury may omit consideration of important matters (of which they may be unaware) and wrongly conclude that guilt has been demonstrated beyond reasonable doubt." Comments, warnings and directions: In deciding whether judicial observations to the jury are necessary in a particular case, this Court has distinguished between comments and directions50. Although a judge may comment on the facts generally, by reference to issues in the case, the jury are not bound to comply with such remarks, unless other functions so require51. However, directions pertain to the judicial duty to instruct the jury on the law that they must apply, whether in understanding the elements of the offence or in reasoning from the evidence to their verdict. Where a suggested direction falls outside those which the law holds to be obligatory, the omission of the trial judge to give the direction, later said to have been necessary, will be considered by the appellate court against the touchstone of the "ultimate issue". This is "whether, making due allowance for the advantages enjoyed by the trial judge, the circumstances of the case were such that it was not open to [the judge] to fail to be satisfied that such a warning was justified"52. It may be accepted that this contention presents a somewhat circular test. However, this is no more than a recognition of the need to fashion judicial directions in accordance with the great "guiding rule" stated in Alford53. The 48 Domican v The Queen (1992) 173 CLR 555. 49 eg, Longman v The Queen (1989) 168 CLR 79. 50 Azzopardi (2001) 205 CLR 50 at 69 [49]; Doggett v The Queen (2001) 208 CLR 51 Doggett v The Queen (2001) 208 CLR 343 at 373 [115]. 52 Longman (1989) 168 CLR 79 at 98 per Deane J. 53 (1952) 85 CLR 437 at 466. Kirby judge must identify the real issues and tell the jury, in the light of the law, what those issues are. If those issues necessitate particular warnings, so as to render the trial fair to the accused, it is an error of law on the part of the trial judge to fail to give such warnings. Application of principles to the present case Similarities to Robinson: When the foregoing principles are kept in mind, it is my view that the errors of the trial judge in the present case are clear. The case was analogous to Robinson. The Court of Appeal erred in concluding otherwise. It is true that there were peculiarities in the evidence in Robinson to which, of necessity, this Court referred in explaining its decision in that case. As this Court said, there were "particular features of the case which demanded a suitable warning"54. Nevertheless, each case will contain features that are special. It would be a mistake to treat the decision in Robinson as if the warning required in that case was confined to the facts disclosed there or facts that were very similar. The case law on judicial warnings does not progress by perceived similarity amongst the facts of particular cases but by reference to the dangers of miscarriages of justice that particular facts serve to illustrate. In Robinson, there were inconsistencies and a "curious feature" of the evidence as well as a "long period that elapsed before complaint"55. There was also the approximation of the ages of the complainant and the accused and evidence of the circumstances of schoolboy talk of sexual matters in which the accusation against the accused was first made. Clearly, such features called for a judicial warning to the jury that drew attention to them and of "the need to scrutinise with great care the evidence of the complainant before arriving at a conclusion of guilt"56. This is why, in Robinson, this Court held that it was necessary for the judge to give a warning "in terms which made clear the caution to be exercised in the light of those circumstances"57. In the present case, however, there were also a number of circumstances that gave rise to dangers similar to those in Robinson58. The complainants, at the 54 Robinson (1999) 197 CLR 162 at 170 [25]. See also Longman (1989) 168 CLR 79 55 Robinson (1999) 197 CLR 162 at 170 [25]. 56 (1999) 197 CLR 162 at 171 [26]. 57 (1999) 197 CLR 162 at 171 [26]. 58 cf reasons of Hayne J at [87]-[89]. Kirby time of the alleged offences, were roughly the same ages (the complainant in Robinson was eight years old at the relevant time). The delay between the alleged offences and the first complaint to the child's parent was comparable. In Robinson, the delay was three years. This was described by this Court as a "long period"59. The delay in the present case extended still further, after the complainant had moved with her mother and brother to another State. In each case, the delay extinguished any opportunity of contemporaneous medical examination of the complainant that might have revealed evidence to inculpate or exculpate the accused. Moreover, in the present case the one objective feature that the jury might have regarded as inconsistent with the accusation of many acts of full penile and digital penetration was the complainant's intact hymen. It would have been open to the jury to accept that this was consistent with the appellant's version of events. I agree with the reasons of Callinan J that a court should focus on the principle stated in Robinson and not on factual similarities or differences that inevitably arise. However, it is necessary to refer to the similarities to demonstrate the error of Keane JA in suggesting that Robinson was truly exceptional and suggesting that it is only in such a case that a judicial warning need be given. This is not what Robinson said and it is not the legal principle for which it stands. The most important similarity between the dangers existing in Robinson and in this case, that called forth the need for a warning to scrutinise the complainant's evidence with great care, was the absence of objective, reliable confirmatory evidence to support the complainant's testimony. True, there was evidence from the complainant's mother about circumstantial features of the case. There was also evidence of the complainant about the mole and tattoos which she saw on the appellant's body. But this evidence did not prove the actual offences. It was not inevitably inconsistent with innocence. Essentially, as in Robinson, conviction of the appellant depended on acceptance of the evidence of the complainant alone. Sole witnesses, comments and warnings: That fact, in Robinson, led this Court to refer at some length to the reasons of Lee J in R v Murray60. The cited passage applies to the dangers of a wrongful conviction in this case, as much as it did to the dangers identified in Robinson. His Honour said: "The fact that a judge does not comment upon the absence of corroboration of the complainant's evidence cannot, in my view, in the case of those offences to which s 405C [of the Crimes Act 1900 (NSW)] applies now be made the basis of a criticism of his summing-up, but again 59 (1999) 197 CLR 162 at 170 [25]. 60 (1987) 11 NSWLR 12 at 19. Kirby this does not mean that the judge cannot or should not, as is done in all cases of serious crime, stress upon the jury the necessity for the jury to be satisfied beyond reasonable doubt of the truthfulness of the witness who stands alone as proof of the Crown case. In all cases of serious crime it is customary for judges to stress that where there is only one witness asserting the commission of the crime, the evidence of that witness must be scrutinised with great care before a conclusion is arrived at that a verdict of guilty should be brought in; but a direction of that kind does not of itself imply that the witness' evidence is unreliable." The conclusion so stated in Murray applies to a trial where the relevant statute law on corroboration is s 362 of the Code, including as it has been amended since it was considered in Robinson. Nothing in the Sexual Offences Act leads to a different conclusion. The interests of justice required the trial judge in the present case to direct the jury that the complainant's evidence was to be scrutinised with great care before a conclusion was arrived at based on the complainant's evidence alone. Features requiring a warning: In giving such a direction, it would have been desirable for the judge to remind the jury of the "particular features of the case which demanded a suitable warning". Those features included the very young age of the complainant at the time of the alleged offences; the circumstances of her mother's new and ultimately temporary personal relationship with the appellant which could engender animosity and jealousy on the part of the complainant towards the appellant; the long delay between the alleged offences and of the complainant's statement to her mother (or anyone else) about those offences; the explanations given for such delay, including after the mother's relationship with the appellant ended and the family moved to New South Wales; the inconsistencies that arose between the original statements to police and the evidence under cross-examination in court; and the possible inconsistency of the claim of repeated deep sexual penetration and the intact hymen of the complainant. All of these were matters to be weighed by the jury. But, in accordance with Robinson, they needed to be evaluated by them with the assistance of a judicial warning or comment. Against the background of Alford, they needed to be drawn to notice as issues for the jury's attention in giving real content and substance to the requirement not to convict the appellant except on proof beyond reasonable doubt. The trial judge gave no such warning or comment. Far from directing attention to these issues, she contented herself with reminding the jury, briefly, of what defence counsel had said in her closing address. Although the setting of the contested issues and counsel's address are important for judging the sufficiency of the judicial instructions to the jury, they cannot substitute for a judicial warning where that is required by law in the circumstances of the case. This was such a case. Kirby The appellant primarily contended that a direction should have been given that it would be "dangerous" or "unsafe" to convict him on the basis of the complainant's evidence alone. Having regard to the statutory alteration of the law of corroboration, and the requirements of that law in respect of the evidence of a complainant in respect of sexual offences, a warning in those terms was not required. Nevertheless, a warning or comment along the lines described by Lee J in Murray, endorsed by this Court in Robinson, was required. It ought to have been given. Judges are aware of the heightened risks of miscarriages of justice when serious crimes, carrying extended custodial sentences, are proved on the evidence of, and impression given by, a single witness. Out of their experience, judges also know of cases where such evidence is retracted before an appeal, necessitating the later substitution of a verdict of acquittal61. Inapplicability of Longman warning: In this appeal, I would not have disturbed the jury's verdicts, or the convictions that followed, on the basis of an omission on the part of the trial judge to give a warning to the jury of the kind required by Longman v The Queen62. That is a decision that concerns (as many others have63) the particular problem, in certain cases of complaints of sexual offences, of very long delays between the time of the alleged offences and the first complaint and subsequent trial. Such was not this case. Longman is thus a distracting red herring64. Whatever directions were sought at trial, at the hearing of the appeal in this Court the appellant's counsel agreed that the appeal was not about a Longman warning65. Accordingly, Longman, as such, was not an issue before this Court. However, the equally important decision of this Court in Robinson was material66. Distinguishing that decision was a necessity that the Court of Appeal accepted. Its attempt is unconvincing, as Callinan J has himself acknowledged67. It does not add to the persuasion on this point to demonstrate that the problem addressed in Longman did not arise and that a Longman warning was not 61 R v Johnston (1998) 45 NSWLR 362 at 375. 62 (1989) 168 CLR 79. 63 Crampton v The Queen (2000) 206 CLR 161; Doggett v The Queen (2001) 208 CLR 343. 64 cf reasons of Crennan J at [156]-[158], [163], [169], [172]-[177]. 65 Tully v The Queen [2006] HCATrans 343 at 790. 66 (1999) 197 CLR 162. 67 Reasons of Callinan J at [131]. Kirby required. On the other hand, the problem dealt with in Robinson was clearly presented. And Robinson required a warning that was not given. When a warning is required, it should be said loudly and clearly by this Court that it is not enough for the trial judge to tell the jury what defence counsel have said. Juries rightly regard counsel's addresses as partisan. They are entitled to look to the judge, himself or herself, to tell them the true issues for decision and to give them any warnings which the law requires, relevant to those issues. That was not done in the appellant's trial. Conclusion: retrial required: The Court of Appeal erred in concluding that no warning was required and that the trial judge's directions were adequate. This was not a case for the application of the "proviso". In the absence of a proper direction, a miscarriage of justice has occurred. On this basis, there should be a retrial. The direction on uncharged acts Issues requiring clarification: In the light of this conclusion, it is strictly unnecessary for me to decide the appellant's second complaint about the directions given at his trial concerning the uncharged acts of which evidence was given by the complainant during the trial, mostly in response to cross- examination. The only basis upon which the Court would ordinarily examine the additional issue would be if doing so were essential for the proper conduct of a second trial. There is no doubt that the issue of judicial directions in respect of evidence concerning uncharged acts that would constitute criminal offences of a sexual character constitutes an important question upon which there have been differences of view in the intermediate appellate courts in Australia68. It would be desirable that such differences of view (which are also to some extent reflected in opinions stated in this Court69) be settled authoritatively by this Court 68 See, eg, R v Gale [1970] VR 669 at 672; Karunaratne (1989) 44 A Crim R 191; R v Geesing (1985) 38 SASR 226 at 230; R v Johnston (1998) 45 NSWLR 362 at 370, 375; R v Pearce [1999] 3 VR 287 at 294-299 [23]-[34]; R v Nieterink (1999) 76 SASR 56 at 72-73 [81]-[90]; BWT (2002) 129 A Crim R 153 at 194 [110]; R v Heuston (2003) 140 A Crim R 422 at 432 [51]; R v Hagarty (2004) 145 A Crim R 138 at 141 [15]; R v DRG (2004) 150 A Crim R 496 at 506-507 [55]-[58]; R v BJC (2005) 154 A Crim R 109 at 114-117 [11]-[20]. 69 See, eg, Gipp v The Queen (1998) 194 CLR 106 at 133 [78]-[79] per McHugh and Hayne JJ; cf at 156-157 [141] of my own reasons, 164 [173] per Callinan J; KRM v The Queen (2001) 206 CLR 221 at 233 [33] per McHugh J; 261 [121] of my own reasons; 264 [134] per Hayne J. Kirby in a suitable case70. Not only is there the question as to any direction the trial judge should give concerning the use that a jury may make of evidence of uncharged acts. There is also the question, presented by the judicial directions given in the appellant's trial, as to the standard of proof (if any) that the jury should adopt in judging whether the uncharged acts have been established71. Inappropriate case for clarification: There is a particular reason why this appeal is not a suitable occasion to explore, and clarify, the approach of this Court with respect to the law on uncharged acts72. During the hearing of the appeal, the transcripts of the oral arguments of the prosecutor and defence counsel at trial were tendered. These appear to indicate that defence counsel endeavoured to make forensic use of the multiple claims of sexual penetration included in the complainant's answers to cross-examination. This was apparently done following a tactical decision that sought to demonstrate gross exaggeration and unreliability on the complainant's part. Most instances of uncharged acts appear in cases where they are described by the complainant in giving evidence as part of the background and justified in order to help explain the relationship that existed with the accused. To that extent, the present is not a typical case. It would be preferable for this Court to consider the law on the directions appropriate to evidence of uncharged acts in a case that lacks the forensic peculiarity of the present appeal. The second issue in this appeal can therefore await a different case on another day. Orders The appeal from the Court of Appeal of the Supreme Court of Queensland should be allowed. The orders of that Court should be set aside. In place of those orders, this Court should order that the appeal to that Court be allowed, the appellant's convictions and sentences quashed and a new trial ordered. 70 See also reasons of Callinan J at [129]-[133]. 71 In the present case, the jury were told to consider whether they found the evidence of the uncharged acts to be "reliable". This expressed a standard which the appellant claimed was inadequate; cf R v Johnston (1998) 45 NSWLR 362 at 375. 72 cf reasons of Callinan J at [138]; reasons of Heydon J at [153]-[154]. Hayne HAYNE J. The facts and circumstances giving rise to the appeal are set out in the reasons of Kirby J and I need repeat none of that material. I agree with Kirby J that the appeal should be allowed and consequential orders made in the form he proposes. Argument of the appeal in this Court, quite properly, proceeded by reference to very specific propositions about what directions the trial judge should have given the jury at the appellant's trial. Did the directions given by the trial judge sufficiently satisfy the principles stated in Robinson v The Queen73 and Although broader questions of principle, about what directions should be given about uncharged criminal acts allegedly committed by an accused and revealed in evidence at trial, were touched on in argument, those questions need not be considered in this matter. Evidence of alleged uncharged acts of the appellant was admitted without objection at his trial, and at least as to part, was admitted at the instance of the appellant's trial counsel, in aid of an argument that the complainant's evidence should not be accepted by the jury as establishing the appellant's guilt of the offences with which he was charged. These larger questions, about when evidence of uncharged acts is admissible, and what directions should be given about the use of such evidence, should be reserved for another day. The specificity of the particular arguments that were advanced in the appeal to this Court, and that must be considered, should not be permitted to obscure, however, the basic principles that are engaged by the arguments about what directions or warnings the trial judge should have given the jury at the appellant's trial. Although the principles are well known, it is as well to restate them, and then relate them to the particular points that must be decided. A criminal trial is an accusatorial process in which the prosecution bears the onus of proving the guilt of the accused beyond reasonable doubt75. If an accused person pleads "not guilty", the accused puts the prosecution to proof, beyond reasonable doubt, of every element of the offence or offences charged. 73 (1999) 197 CLR 162. 74 (1989) 168 CLR 79. 75 RPS v The Queen (2000) 199 CLR 620 at 630 [22] per Gaudron ACJ, Gummow, Kirby and Hayne JJ; Azzopardi v The Queen (2001) 205 CLR 50 at 64 [34] per Gaudron, Gummow, Kirby and Hayne JJ. Hayne In a trial by judge and jury, the tasks of the trial judge and the jury are different. As the standard directions to juries say, it is the jurors who are the judges of the facts in the case. It is for the jury, and the jury alone, to decide whether the accused is guilty or not guilty of the crime that is charged. The tasks of the trial judge are different. They include those identified in the well known and now oft-repeated passage from the joint reasons of this Court in Alford v Magee76. It is for the judge to explain to the jury so much of the law as they need to know in deciding the real issue or issues in the case77. But no less importantly, it is for the trial judge to decide what those real issues are, and to tell the jury, in the light of the law, what those issues are78. It is to be noted that reference is made in Alford v Magee to the "real" issues in the case. The word "real" is no mere verbal flourish. It is important. By hypothesis, the accused has pleaded not guilty and, by that plea, has put in issue every element of the offence or offences charged. But it by no means follows that there is a "real" issue about every one of those elements. Leaving aside cases in which an accused makes some formal admission of one or more elements of an offence charged, by the time the judge comes to instruct the jury, it will often be apparent that evidence adduced by the prosecution in respect of one or more of the elements of the charge is not challenged, and that there is, therefore, no real issue about that element or those elements. To take a simple example, in a murder trial there will very often be no dispute that the victim is dead. There may be no dispute about how, when or where the victim died. In order to prove the case, the prosecution will lead evidence about those matters but it will be apparent, by the end of the trial (if not much sooner), that there is no "real" issue about those matters. A fundamental part of the task of the trial judge is to decide what are the "real" issues in the case. And another, no less important, part of that task is to tell the jury what those real issues are. It is in respect of those issues (and only those issues) that the judge must instruct the jury about so much of the law as the jury must understand to decide the case. Identifying the real issues in a case will not always be easy. In some jurisdictions, legislative provisions have been made for procedures evidently 76 (1952) 85 CLR 437 at 466. See also, for example, Melbourne v The Queen (1999) 198 CLR 1 at 52-53 [143]; De Gruchy v The Queen (2002) 211 CLR 85 at 96 [44]. 77 See, for example, Azzopardi (2001) 205 CLR 50 at 69 [49]. 78 Alford v Magee (1952) 85 CLR 437 at 466. Hayne intended to reveal what are the real issues in a case before the trial begins79. But even where there are such procedures, and they are applied, it is inevitable that, at many criminal trials, no positive defence case will be advanced and the accused will go to the jury on the basis only that the prosecution has failed to prove its case beyond reasonable doubt. It must be accepted, therefore, that there will be cases (including, but not only, those in which no positive defence is advanced) in which it may not be at all clear whether there is a real issue about some particular aspects of the matter. The trial judge must nonetheless decide what are the real issues, and must tell the jury what they are. It is of the first importance to the proper administration of criminal justice that trials not be made longer or more elaborate than they need to be. That object is defeated if trial judges do not focus the minds of the jurors upon what are the real issues in the case and confine the instructions that are given to the jury to only so much of the law as the jury needs to decide those issues. Prudence may well be said to suggest that the judge should err on the side of stating more rather than fewer issues. But it is important to recognise that doing that tends to defeat the object of confining the length and complexity of criminal trials to what is necessary for the attainment of justice. The trial judge must, therefore, steer a difficult course between stating only the real issues in the case, and stating too many issues for the jury's consideration, with consequent over-elaboration and prolongation of the trial. As Owen J said in Commissioner for Road Transport v Prerauer80, the first duty of the trial judge is "to explain to a jury in a simple, understandable fashion the law which is applicable to the particular case before them" (emphasis added). Because deciding what are the real issues in a case is a matter of judgment to be made in the context of the particular trial, there will be cases where minds may differ about what those issues are. There will, therefore, be cases where, on appeal, it is said that the trial judge failed to recognise that there was a real issue about some aspect of the matter. In that regard it may be that a deal of importance should be attributed by the appellate court to what was done at trial, having regard not only to the advantage a trial judge has in understanding the way in which a trial has been conducted, but also the responsibility of counsel (on both sides of the record) to draw attention to any omission in the trial judge's instructions to the jury. But these are questions that do not now arise and need not be examined here. It is as well to say something more about the way in which a trial judge should identify the real issues in a case. 79 See, for example, Crimes (Criminal Trials) Act 1999 (Vic), ss 6-8. 80 (1950) 50 SR (NSW) 271 at 277. Hayne The issues in a case can be described at any of a number of levels of abstraction. The ultimate issue in a criminal trial, stated in its most abstract form, is whether the prosecution has proved, beyond reasonable doubt, the accused's guilt of the offence charged. That issue can be restated, but still at a high level of abstraction, as being whether the prosecution has proved all of the stated elements of the offence charged, to the requisite standard of proof. Neither statement identifies the "real" issues in a criminal trial. In a case like the present, the central issue at the trial could be described as being whether the evidence of the complainant was to be accepted as establishing the appellant's guilt beyond reasonable doubt. But again, such a statement of the issue is too abstract. It does not direct the minds of the jury to what should properly be identified as the "real" issues in the case. It does not do that because the issues for the jury are both more elaborate and more refined than: "Do you believe the complainant?". They are more elaborate because the complainant's evidence dealt with a number of different subjects; they are more refined because evidence about those subjects must be related to elements of the offences charged. The real issues in the case must be identified in a more elaborate and refined way than by saying only that the issue is "Do you believe the complainant?". The point that has just been made can be put in another way – by reference to what one author has said81 on the subject of issue-framing in legal writing. He distinguishes82 between what he calls "deep issues" and "surface issues": "A 'deep' issue is concrete: it sums up the case in a nutshell – and is therefore difficult to frame but easy to understand. A 'surface' issue is abstract: it requires the reader [or listener] to know everything about the case before it can be truly comprehended – and is therefore easy to frame but hard to understand." "Do you believe the complainant?" and "Has the prosecution proved its case?" are surface issues. They do not reveal the decisional premises. The reader, or listener, must go elsewhere to learn what the real issue is. In particular the reader, or listener, must go to the facts of the case that have been revealed in the evidence led at trial. And that is why, to be useful, a statement of the real issues that are to be decided by the tribunal of fact in a criminal trial must be explicitly related to the facts of the case rather than stated in abstract terms. Doing that will mean that they are stated as "deep issues", not "surface issues". 81 Garner, A Dictionary of Modern Legal Usage, 2nd ed (1995) at 471-473. 82 Garner, A Dictionary of Modern Legal Usage, 2nd ed (1995) at 471. Hayne In the present case, the issue – "Do you believe the complainant?" – had a number of factual premises. They had been identified in the final addresses of counsel. The complainant had been aged between eight and 10 years at the times of the alleged offences; she was aged 14 years at the time of the trial. At the times the offences were alleged to have occurred, the appellant was in a relationship with the complainant's mother. The complainant had given more than one account of what she alleged had happened, and those accounts were not identical. Trial counsel for the appellant emphasised what she contended were inconsistencies in the complainant's accounts of what the appellant was alleged to have done. These accounts were said to be "so inherently improbable, unlikely, inconsistent within themselves, confusing, changing and presenting so many difficulties" as to require the jury to entertain a reasonable doubt about the complainant's testimony. Trial counsel illustrated her contention by reference to the complainant's evidence about incidents at Agnes Water and her account of an incident said to have occurred while the appellant was driving. More than once, trial counsel for the appellant dwelt upon the improbability of the complainant's suggestion that there had been as many as 30 incidents of penile penetration. Counsel for the prosecution accepted that the complainant had made some mistakes in giving her account of events, but sought to characterise other differences in the accounts she gave, as the complainant's adding details to her account as she became more confident. The issues thus presented for the jury to decide were issues arising from the facts that (a) the complainant was very young at the time of the alleged offences, (b) the complainant was still a young person when she gave evidence, (c) about four to five years had elapsed between the time of the alleged offending and the complainant giving her evidence at trial, (d) because time had elapsed between the alleged offending and medical examination of the complainant, the medical evidence could neither support nor contradict the allegation that there had been sexual penetration and (e) the offences were alleged to have occurred in a family setting that had since broken up but was one in which the complainant alleged that she feared the appellant both during and after the relationship had ended. Stated in abstract terms the factual issue for the jury was – do you accept the complainant's evidence as establishing the elements of each offence beyond reasonable doubt? Stated in more concrete terms, the issue was – do you accept the evidence of a young person about particular events of sexual misconduct, occurring in the family setting described, and said to have occurred, unwitnessed, some years ago, when she was aged between eight and 10 and which medical examination can now neither verify nor falsify? (That statement of the issue is not proffered as a formula that could have been adopted in instructing the jury about the real issues in the trial of the appellant. It is too compressed to be used for that purpose, at least without a deal of amplification and explanation. It is put Hayne forward as no more than a convenient summary of the information that had to be given to the jury by the trial judge.) When the issues in the trial are understood in this way, it is evident that, contrary to what was held in the Court of Appeal83, the present case was not to be distinguished from Robinson. What Robinson, and Longman, hold is that there are cases where there is a perceptible risk of miscarriage of justice if the jury is not warned of the need to scrutinise the evidence of a complainant with care before arriving at a conclusion of guilt84. That is not because complainants in sexual cases, as a class, are to be treated as intrinsically untrustworthy. Section 632(1) of the Criminal Code (Q) precludes such reasoning. And s 632(2) does away with the former requirement to direct a jury that it would be unsafe to convict an accused on the uncorroborated evidence of the complainant85. But those sub-sections do not prevent a judge from making a comment on the evidence given in the trial "that it is appropriate to make in the interests of justice"86. It is the interests of justice that dictate whether a warning should be given. Lengthy delay in making a complaint is often an important reason for concluding that a warning should be given. But as Robinson shows, delay measured in decades (as it was in Longman) is not the only reason for concluding that it is appropriate in the interests of justice to warn a jury of the dangers of acting on the uncorroborated evidence of a complainant. That is why the convenient shorthand description of a warning as a "Longman direction" will mislead if it is understood as requiring that a warning be given only if the facts of the instant case are generally similar to those that were considered in Longman. It is the nature of the issues that were to be decided by the jury in this case – the real issues in the case – that required a warning. The issues identified earlier in these reasons are not materially different from those that arose and were considered in Robinson. It was necessary for the trial judge to point out to the jury the need, when deciding those issues, to scrutinise the complainant's evidence with care before convicting the appellant. 83 TN (2005) 153 A Crim R 129 at 140-141 [56]-[58]. 84 Robinson v The Queen (1999) 197 CLR 162 at 171 [26]; Longman v The Queen (1989) 168 CLR 79 at 86. 85 cf Evidence Act 1906 (WA), s 36BE considered in Longman (1989) 168 CLR 79 at 86 Criminal Code (Q), s 632(3). Hayne Once it is recognised that the trial judge must decide what are the real issues in the trial, and tell the jury, in concrete terms, what those issues are, the purpose of a judge giving to the jury a warning, like those considered in Longman and Robinson, is more apparent. It is a warning given to the jury about how they are to decide one or more of the real issues in the case. If the real issues are identified for the jury in concrete terms, as they should be, the warning will evidently relate to one or more of those issues. Because the criminal law has become as complex as it now is, "bench books" of standard forms of instructions to the jury are readily available for the assistance of trial judges. Properly used, such books are invaluable. But there is a risk that the prescription of common forms of instruction, which must necessarily be framed without reference to specific facts, and thus in abstract terms, will be used without relating them to the issues that the jury has to decide. The proper use of standard forms of jury instructions requires the judge first to identify what are the real issues in the case, then to identify the relevant instructions that are to be given to the jury and then, and most importantly, to instruct the jury by relating the standard form of instruction to the real issues in the case. The bare recitation to a jury of the relevant sections of a bench book of standard instructions, unrelated to the real issues in the case, does not fulfil the trial judge's task. In particular, to recite the terms of a form of Longman or Robinson direction, without relating that direction to the issues that the judge has identified for the jury as the real issues in the case, will ordinarily not suffice. The real issues in the present case required the trial judge to give the jury instructions of the kind described in Robinson. The appeal should be allowed. Callinan CALLINAN J. The issues in this appeal are whether the trial judge, in a trial of a person charged with serious sexual misconduct, should have given a Longman87 direction, and whether an intermediate court of appeal should have quashed the appellant's convictions on that account, and on account of the way in which evidence of uncharged similar acts was dealt with at the trial. The facts The complainant was born on 11 March 1990. She alleged, in April 2002, that she was sexually abused by the appellant between January 1999 and June 2000, when she was nine to 10 years of age. The appellant and the complainant's mother had lived together during that period. The appellant was charged with 10 counts of indecently dealing with a child under 16 years of age, which included two charges of rape, and eight charges of indecent treatment. The particulars given of the charges were as follows: Indecent treatment. On 19 August 1999, at about 8.30 pm in the office downstairs of the complainant's home, and while the complainant's mother was sewing upstairs, the appellant used the complainant's hand to manipulate his penis. Rape. On 22 August 1999, the complainant and her mother and brother were at the appellant's house in Calliope, and while the complainant's mother was asleep on a mattress in another room, the complainant was taken by the appellant to a bedroom where he removed her clothing and engaged in sexual intercourse with her. Indecent treatment. During a camping trip on the Easter weekend of 2000, the appellant accosted the complainant in a toilet cubicle and digitally penetrated her. Indecent treatment. On the return from the camping trip on the Easter weekend of 2000, the complainant became ill and was sent from her mother's car to the appellant's car. There, while he was driving, the appellant squeezed the complainant's vagina. Indecent treatment. In about May 2000, at the appellant's house in Calliope, the appellant induced the complainant to come into his garage on a pretence, exposed himself, and attempted penetration. 87 Longman v The Queen (1989) 168 CLR 79. Callinan Indecent treatment. While staying overnight at the Camelot Motel in Gladstone, the appellant and the complainant went to get a medical bag from a car, and the appellant made the complainant touch his penis. Indecent treatment. While staying overnight at the Camelot Motel, the appellant and the complainant went to retrieve a medical bag from a car, and the appellant digitally penetrated the complainant. Indecent treatment. The complainant one evening, apparently after returning from the Camelot Motel, went out in the night to see to her barking dog while her mother and brother were asleep, and the appellant, who was on the porch, naked from the waist down and touching his penis, put the complainant's hand on him, took the complainant downstairs and tried to force himself against her. Indecent treatment. In about March 2000, the complainant went into the laundry of her house, and there the appellant put the complainant's hand on his testicles, directed her to touch them, and asked her if she liked it. Rape. In about March 2000, the complainant was in the laundry in her house. The appellant removed her clothes, pushed her on to a mattress there, and forced his penis fully into the complainant's vagina. Various other circumstantial details surrounding each of these events were given in evidence by the complainant. The complainant first told her mother of the appellant's molestation of her about two years after the last occasion of it, when her mother and the appellant had separated, and had moved away with the complainant and her brother to New South Wales. The trial The appellant was tried in the District Court of Queensland by a judge (Richards DCJ) and jury. It is necessary to explore in some detail the conduct of the trial, not only on behalf of the appellant but also on behalf of the respondent. But before doing that, it should be noted that counts 1, 3, 4, 5, 6, 7, 8 and 9 were of indecent dealing and the other two (counts 2 and 10) were of rape. The complainant's evidence-in-chief was pre-recorded pursuant to the provisions of Pt 1, Div 4A88, subdiv 389 of the Evidence Act 1977 (Q)90. The 88 Evidence of special witnesses. 89 Pre-recording of affected child's evidence. Callinan recordings were of two interviews with police officers. The first interview was conducted on 4 April 2002, and the second on 8 May 2002. The appellant was then 12 years of age. She was 14 by the time of the trial. In cross-examination, which was conducted remotely on video, pursuant also to the Evidence Act91, the complainant explained why she had allowed two years to elapse before making any complaint about the appellant's dealing with her: that the appellant had threatened her with firearms, which he had about him at all times, and, it may be inferred, because he also kept "huge knives". Even after the complainant's mother and the appellant separated, he continued for a time to contact the complainant by telephone and to threaten her. The complainant's evidence included allegations of acts which were criminal but which were not the subject of any of the counts on the indictment. No objection was taken to the admission of evidence of these, and some were either elicited or emphasized in cross-examination, it fairly clearly appears, for tactical purposes. The evidence of the uncharged acts included that the appellant held his genitalia against the complainant's breasts; that he committed three acts of sexual intercourse with her on a camping trip to Agnes Water; that he digitally penetrated her about a dozen times (in addition to the occasions the subject of counts 3, 4 and 7); and, that he raped the appellant "over a couple of dozen times", "a real lot ... 30" times, or, "quite a few times", "more than five or six times". The complainant described, quite accurately as it turned out, one unusual feature of the appellant's genitalia, and tattoos on his buttocks. Her ability to do this was not necessarily inconsistent with her having observed the appellant when he was living with her mother, but it was further, rather persuasive evidence, capable, to some extent at least, of verifying the complainant's accounts of indecent dealing. For reasons which will appear some of the actual evidence given by the complainant with respect to the allegation of 30 uncharged acts of rape, should be set out. This was her evidence in chief on the topic: "Q: OK. How many times do you think he put his penis inside your vagina? A lot, a real lot. 90 See particularly s 21AK(1), see also s 21A(2)(e) but note s 21A(1A). 91 For the purposes of s 21AK, "evidence" includes "cross-examination", see s 21AK(9). Callinan So when you say a real lot, are you able to put a number on it? 30's a big number? Yeah, it is. And over what period of time do you think that would've been? Over the time that Mum was going out with him, it was '99 till about 2000, I think it was 2001, 2000, oh, almost the start of The appellant was represented by counsel at his trial. She took no objection to the reception of the evidence that I have just quoted, or any other evidence contained in the two statements which referred to, or implied that there had been numerous other uncharged acts of indecent dealing and rape from time to time. Other matters damaging to the appellant emerged in evidence. The complainant said in cross-examination that she recorded information about the appellant's molestation of her in a diary which she kept from time to time when he and her mother were cohabiting. At one point the complainant said that every time that the appellant did something indecent or improper to her she made a note in her diary. That she did so was not directly challenged but the diary did not find its way into evidence as it might have done on the basis of the oral references to it during the trial. One rather likely reason why no objection was taken by the appellant to the evidence of 30 or so uncharged acts of rape, as was observed in argument in this Court, is the use to which it could be put for the purposes of the appellant's defence: the more extravagant the allegation, "the bigger the lie". Indeed, counsel for the appellant obviously did seek to make forensic points of this kind. In that regard she had some success for she was able to have the complainant contradict herself in cross-examination by having the latter reduce the claim of rape on 30 occasions, to one of, "quite a few times", "maybe five or six times" and "more than that [five or six]". The forensic points made in cross-examination were repeated in the appellant's counsel's speech to the jury. It was then submitted for the appellant that improbable, unlikely, inconsistent within [itself], confusing, changing and presenting so many difficulties to you ... [you will] have at least a reasonable doubt if not more". the complainant's evidence was "inherently A reading of the whole of the transcript of the trial leads inevitably to the conclusion that the real and substantial issue upon which the prosecution and Callinan defence were joined was the complainant's credibility, to be assessed having regard to some particular matters: the extravagance of the complainant's allegations generally, and in particular with respect to the uncharged acts; her delay in making a complaint; the plausibility or otherwise of her explanation for her delayed complaint; and, the truth or otherwise of her complaints of rape in the light of the medical evidence that her hymen had been found, on medical examination, to be intact. The last had to be weighed with further medical evidence that penetration was not necessarily inconsistent with the maintenance of an entire hymen. The complainant's mother was a witness for the prosecution. All that need be said of her evidence was that it established that there were many opportunities for the appellant to commit the offences with which he was charged, on or about the occasions alleged of them, and, in one instance, that the appellant absented himself unnecessarily with the complainant on a day and at a place where she alleged he indecently dealt with her. The appellant did not give evidence and called no witnesses on his behalf. In her summing-up to the jury, the trial judge said this: "Many factors may be considered in deciding what evidence you accept. I'll mention some general considerations that may assist. You have seen how the witnesses presented in the witness box in answering questions. Bear in mind that many witnesses are not used to giving evidence and may find the different environment distracting. Consider also the likelihood of the witness's account. It is important that the evidence of a particular witness seemed reliable when compared with other evidence that you accept. Did you think the witness seemed to have a good memory? You may also consider the ability and the opportunity the witness had to see, hear, or know the things that he or she testified about. Another point may be – has the witness said something different at an earlier time? These are only examples and you may well think that other general considerations apply. It is, as I have said, up to you to accept the evidence and what weight, if any, you give to a witness's testimony or an exhibit." Her Honour said this of the complainant's evidence: "[T]he Crown has to prove to you beyond reasonable doubt essentially through the complainant because she is really the witness that the evidence rises and falls on, that what she says in relation to each of the counts is not only truthful, but is reliable so that you are prepared to accept her evidence beyond reasonable doubt. Callinan The Crown says when you consider these matters, use your common sense and ask yourself how would a 14 year old react when she is giving her evidence, obviously it is a very stressful situation and how would an even younger child react [if she had] been abused in the way [the complainant] was by the accused. You might think the Crown says that it is perfectly natural that she would not complain, for example, until she got to New South Wales because you have this man who does have guns, the police confirmed that he has guns, and she said she was threatened with the guns and in those circumstances, you might not be surprised that there was no complaint made immediately to the mother or the brother or the teacher or whoever because she knew. She said at one stage in her evidence said he slept with the gun under the pillow and the mother confirmed that he did in fact sleep with a gun under his pillow. The Crown says to you, by all means, look for inconsistencies in the stories and while there might be some, you would find that generally speaking, she is consistent in what she says between the interview and cross-examination and I have just been through all that with you, ladies and gentlemen, you must form your own view about that." Later, her Honour drew attention to the appellant's contention that the evidence of the complainant was so inconsistent that the jury could not rely upon "The defence remind you that they do not have to try and show you why she would be untruthful about these things and of course it is not for the defence to prove anything, but she is so inconsistent that you simply could not accept what she says beyond a reasonable doubt or beyond any doubt for that matter for all the sorts of reasons that have been highlighted by the defence in their address." The trial judge dealt with the evidence of the uncharged acts in this way: "In this case, ladies and gentlemen, you have also heard evidence from the complainant about a number of offences which haven't been charged. You must remember that the accused is charged only with the 10 offences set out in the indictment and as I have already said to you, you have got to consider those charges separately. If you find that you have a reasonable doubt about an essential element of the charge, you must find the accused not guilty of the charge, but as I have said, in addition to the 10 offences, you have also heard evidence from the complainant of other incidents in which she says sexual activity involving the accused occurred. She wasn't particularly specific about that activity in her audio-tapes, although there were some more specifics given in cross-examination. Callinan Those incidents are not the subject of any charges before you and you can use the evidence of them for one purpose only, that is, if you accept the evidence, it shows the prosecution says, the real nature of the relationship between the accused and the complainant and it does put the 10 charges in their proper context, but you should really only have regard to the evidence of the incidents, not the subject of the charges, if you find them reliable. If you accept them, you must not use them to conclude that the accused is someone who has a tendency to commit the type of offence with which he is charged. It would be quite wrong for you to reason that if you are satisfied, for example, that he had sex with the complainant at Agnes Water, he is therefore likely to have committed count 1, 2, 3 or 4, or whatever. Remember that the evidence of the incidents, not the subject of the charges, comes before you only for the limited purpose mentioned and before you can convict the accused, you must be satisfied beyond reasonable doubt that the charge has been proved by evidence relating to that charge. However, if you don't accept the complainant's evidence relating to the incidents not the subject of the charges, you can take that into account when considering her evidence relating to the offences that have been charged. For example, if you think, I will use the Agnes Water example again, if you think that she is just making up these episodes of sexual intercourse at Agnes Water, obviously, that is going to significantly affect her credibility and that is going to reflect on whether you accept what she says in relation to counts 1 or 2 or 3 or 4, et cetera. So, that is just in relation to the offences which are not charged, which generally – I probably will not list them all, but there is the Agnes Water camping trip, there is the testicles against the breasts, there is the fact that she says she was raped up to 30 times by the accused and she says he also inserted his finger in her vagina on up to a dozen occasions. So those things all have not been charged and that I refer to when I say acts that have not been charged." Neither party made any application to the trial judge for any redirections. The jury found the appellant guilty on counts 3, 4, 5, 6, 7, 8 and 9, but was unable to reach agreement on the others, including the charges of rape. That they could not reach agreement on the charges of rape, may well be explained by the medical evidence that the complainant's hymen remained intact. Callinan The Court of Appeal The appellant argued in the Court of Appeal of the Supreme Court of Queensland (Williams and Keane JJA and Helman J) five grounds of appeal. Only those relating to the trial judge's directions, and the evidence of uncharged acts remain live in this Court. The Court of Appeal unanimously dismissed the appellant's appeal92. It was necessary for the Court of Appeal to construe s 4A of the Criminal Law (Sexual Offences) Act 1978 (Q), which provides: "Evidence of complaint generally admissible This section applies in relation to an examination of witnesses, or a trial, in relation to a sexual offence. Evidence of how and when any preliminary complaint was made by the complainant about the alleged commission of the offence by the defendant is admissible in evidence, regardless of when the preliminary complaint was made. (3) Nothing in subsection (2) derogates from the power of the court in a criminal proceeding to exclude evidence if the court is satisfied it would be unfair to the defendant to admit the evidence. If a defendant is tried by a jury, the judge must not warn or suggest in any way to the jury that the law regards the complainant's evidence to be more reliable or less reliable only because of the length of time before the complainant made a preliminary or other complaint. Subject to subsection (4), the judge may make any comment to a jury on the complainant's evidence that it is appropriate to make in the interests of justice. In this section – complaint includes a disclosure. preliminary complaint means any complaint other than – 92 T v TN (2005) 153 A Crim R 129 per Keane JA, Williams JA and Helman J agreeing. Callinan the complainant's first formal witness statement to a police officer given in, or in anticipation of, a criminal proceeding in relation to the alleged offence; or a complaint made after paragraph (a). the complaint mentioned Example – Soon after the alleged commission of a sexual offence, the complainant discloses the alleged commission of the offence to a parent (complaint 1). Many years later, the complainant makes a complaint to a secondary school teacher and a school guidance officer (complaints 2 and 3). The complainant visits the local police station and makes a complaint to the police officer at the front desk (complaint 4). The complainant subsequently attends an appointment with a police officer and gives a formal witness statement to the police officer in anticipation of a criminal proceeding in relation to the alleged offence (complaint 5). After a criminal proceeding is begun, the complainant gives a further formal witness statement (complaint 6). Each of complaints 1 to 4 is a preliminary complaint. Complaints 5 and 6 are not preliminary complaints." Keane JA, who wrote the principal judgment, said93: "Properly construed, s 4A(4) proscribes any suggestion by a trial judge that delay in making a complaint is a reason for regarding a complainant's evidence as unreliable. Any warning given by a trial judge must avoid any such suggestion. As Robinson[94] shows, delay in making a complaint may, in combination with other circumstances of the case, give rise to an appreciation on the part of the trial judge that the complainant's evidence of sexual abuse is sufficiently implausible to require a strong warning to the jury; but delay of itself must not be suggested as a reason for the scepticism which calls for close scrutiny." (Original emphasis) His Honour drew attention95 to a passage from the judgment of Brennan J in Carr v The Queen96, to identify "[t]hree points of present relevance"97 to the 93 (2005) 153 A Crim R 129 at 142 [64]. 94 Robinson v The Queen (1999) 197 CLR 162. 95 (2005) 153 A Crim R 129 at 143 [68]. Callinan giving of a warning to a jury. They were, first, that in most cases a warning is not a necessary aid to a jury's assessment of evidence; secondly, that the basis for a warning is the special knowledge, experience or awareness of the judge, whether it be actual or inherited; and, thirdly, that the purpose of a warning is to avoid a miscarriage of justice98. He said99: "Apart from the issue of the complainant's reliability by reason of delay in making a complaint, the justification for judicial intervention in the fact-finding process of present relevance was identified in Longman v The Queen100 and Doggett v The Queen101 as a judicial concern that the lay mind may not be alert to the forensic disadvantages which may be suffered by an accused by reason of the lapse of time. These disadvantages may involve problems, both in marshalling evidence in his or her defence, and in attacking a prosecution case made more plausible because the lapse of time gives rise to the risk of honest but erroneous memory on the part of a complainant. This latter problem may be especially acute in the case of a complainant who was a young child at the time of offences alleged to have occurred many years before trial. In this case, the new evidence upon which the appellant seeks to rely does not suggest that the appellant was disadvantaged by the delays of which the appellant complains. Rather, this evidence tends to confirm that a warning of the forensic disadvantage suffered by the appellant by reason of the lapse of time would have been given on a false assumption. That is so because, having regard to the further affidavit material presented on appeal, it would have been quite wrong to suggest that the appellant's ability to marshal evidence in support of his case was adversely affected by the delay on the complainant's part. The learned trial judge cannot fairly be criticized for failing to perceive that delay may have adversely affected the appellant's ability to present his case. No such prejudice was 96 (1988) 165 CLR 314 at 324-325. 97 (2005) 153 A Crim R 129 at 144 [69]. 98 This point was also, as Keane JA noted at par [69] of his Honour's reasons, made by Brennan J in Bromley v The Queen (1986) 161 CLR 315 at 324-325. 99 (2005) 153 A Crim R 129 at 144-145 [72]-[75]. 100 (1989) 168 CLR 79 at 91. 101 (2001) 208 CLR 343 at 356-357 [51]-[54], 377-378 [126]-[128]. See also R v Heuston (2003) 140 A Crim R 422 at 430-432 [43]-[52]. Callinan identified to her Honour however; and indeed no such prejudice was identified in the hearing in this Court. This was not a case where the complainant's age at the time of the occurrence of the offences of which she gave evidence, coupled with the lapse of time before her complaints were brought to the appellant's attention were such as to give rise to a realistic concern that the effects of the long passage of time on child fantasy or semi-fantasy may have created a problem that honest but erroneous memory has given the complainant's evidence a false plausibility.102 Finally in relation to this point, there was no application at trial for a Longman direction. It is now said that this is another example of the incompetence of those who represented the appellant at trial. The failure of those who represented the appellant at trial to seek a Longman direction is, however, reasonably explicable on the footing that the view was reasonably open that this was not a case of 'long delay' of the kind apt to disadvantage the accused in any of the ways discussed above." After setting out some passages from the trial judge's summing-up, Keane JA went on to say103: "Having been so instructed, the jury would have understood that they could not use the evidence of the uncharged acts to reason from acceptance of that evidence to a conclusion of guilt on any of these specific charges. In my view, the directions given by the learned trial judge, in this regard, were adequate.104 It is significant in this regard, that the jury did not accept the complainant's evidence in relation to the rape counts 2 and 10." Keane JA thought Robinson v The Queen105, upon which the appellant relied, distinguishable. After setting out a key passage from the judgment in that case he said that it did not mandate a warning to the jury in every case in which a child's complaint of sexual abuse is uncorroborated: features important to Robinson were absent here. He was also of the view that "although there [was] present here no corroboration in the technical sense ... there was evidence ... 102 Cf Longman v The Queen (1989) 168 CLR 79 at 101 and 107-109; Doggett v The Queen (2001) 208 CLR 343 at 376-377 [124]-[152]. 103 (2005) 153 A Crim R 129 at 148 [91]. 104 See KRM v The Queen (2001) 206 CLR 221 at 233 [31], 263-264 [132]-[133]. 105 (1999) 197 CLR 162. Callinan capable of providing independent support for the complainant's version ... That evidence confirms a degree of intimate contact between the complainant and the appellant ... Further ... there is evidence which explains the complainant's delay in complaining about the appellant's conduct"106. His Honour thought it also relevant that, unlike in Robinson, this appellant had not given evidence denying the allegations made at trial. The other distinguishing features of Robinson, he said, were that there the complainant and the defendant had maintained "a harmonious relationship" and there was no explanation, as here, for the delaying of any complaint. Keane JA was further influenced by the absence of any plausible, innocent explanation in the evidence as to how the complainant would know of the tattoos to which I have referred, and the physical peculiarity, a mole on the appellant's genitalia107. As to these last matters, I interpolate, it was not suggested to either the complainant or her mother that the latter had told her daughter about these matters, or that the complainant had had an opportunity of seeing the appellant when he was innocently unclothed, a matter otherwise, as I have already said, of possible inference. Keane JA made108 what he described as a second point about Robinson, that it was "truly an exceptional case so far as the justification for the warning was concerned". The complainant's claims there were, his Honour said, implausible to a serious extent: it was, moreover, because of the combination of factors present there that a strong warning should have been, but was not, as this Court held, given. The appeal to this Court In support of the submission that the Court of Appeal erred in not holding that the trial judge should have given a specific warning with respect to the possible unreliability of the complainant's evidence, the appellant argued that s 9109 of the Evidence Act provides a rebuttable presumption only as to the 106 (2005) 153 A Crim R 129 at 140 [56]. 107 (2005) 153 A Crim R 129 at 140 [57]. 108 (2005) 153 A Crim R 129 at 140-141 [58]. 109 Section 9 provides: "Presumption as to competency (1) Every person, including a child, is presumed to be — (a) competent to give evidence in a proceeding; and (b) competent to give evidence in a proceeding on oath. (Footnote continues on next page) Callinan competency of a child to give evidence, and that if s 632110 of the Criminal Code (Q) proscribed a warning, as, it was contended the Court of Appeal held, then no trial judge could ever make a comment reflecting on the reliability of a witness, regardless of the nature of the case, provided that a child or other witness as the case might be, was a competent witness. This, it was added, was in variance with what has been held by this Court on numerous occasions111. The appellant again relied upon Robinson, contending that the Court of Appeal failed convincingly to distinguish it, and that it was not an exceptional case in any relevant respect. It is to Robinson therefore that I now turn. In order to decide that case the Court had to consider s 632 of the Criminal Code, which was in the same form then as it now is except that the word "persons" has been substituted for "complainants" in sub-s (3). With respect to sub-s (2) the Court (Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ) said this112: "Sub-section (2) is to be understood in the light of common law rules which developed by way of qualification to the general principle stated above. Since an accused person could be convicted on the evidence (2) Subsection (1) is subject to this division." 110 Section 632 provides: "Corroboration (1) A person may be convicted of an offence on the uncorroborated testimony of 1 witness, unless this Code expressly provides to the contrary. (2) On the trial of a person for an offence, a judge is not required by any rule of law or practice to warn the jury that it is unsafe to convict the accused on the uncorroborated testimony of 1 witness. (3) Subsection (1) or (2) does not prevent a judge from making a comment on the evidence given in the trial that it is appropriate to make in the interests of justice, but the judge must not warn or suggest in any way to the jury that the law regards any class of persons as unreliable witnesses." 111 The appellant cited the following cases on that point: Kelleher v The Queen (1974) 131 CLR 534 at 564-569; Bromley v The Queen (1986) 161 CLR 315; Carr v The Queen (1988) 165 CLR 314; Longman v The Queen (1989) 168 CLR 79; B v The Queen (1992) 175 CLR 599; BRS v The Queen (1997) 191 CLR 275; Doggett v The Queen (2001) 208 CLR 343; MFA v The Queen (2002) 213 CLR 606. 112 (1999) 197 CLR 162 at 168-169 [19]-[21]. Callinan of one witness only, the law was required to address the problem of unreliability. Such unreliability could arise from matters personal to the witness, or from the circumstances of a particular case. The law requires a warning to be given 'whenever a warning is necessary to avoid a perceptible risk of miscarriage of justice arising from the circumstances of the case'113. However, as was held in Longman v The Queen114, in relation to a similar Western Australian provision, the sub-section is not directed to such a general requirement. Rather, it is aimed at a more specific rule, by which the common law identified certain classes of case where evidence was considered to suffer from intrinsic lack of reliability. Although the classes were not closed, they included certain well- established categories. Thus, in Carr v The Queen115, reference was made to 'the rules which oblige a trial judge to warn the jury of the danger of convicting upon the uncorroborated evidence of an accomplice, the victim of a sexual offence and the sworn evidence of a child'. It will be noted that the present case fell into both of the second and third categories. The reasons for those categories were discussed in such cases as Longman v The Queen116 and B v The Queen117. They included what are now rejected as 'stereotypical assumptions'118. Once it is understood that s 632(2) is not aimed at, and does not abrogate, the general requirement to give a warning whenever it is necessary to do so in order to avoid a risk of miscarriage of justice arising from the circumstances of the case, but is directed to the warnings required by the common law to be given in relation to certain categories of evidence, its relationship to the concluding words of s 632(3) becomes clear, although the symmetry between the two provisions is not perfect. ... That does not mean, however, that in a particular case there may not be matters personal to the uncorroborated witness upon whom the Crown relies, or matters relating to the circumstances, which bring into operation 113 Longman v The Queen (1989) 168 CLR 79 at 86. See also Bromley v The Queen (1986) 161 CLR 315 at 319, 323-325; Carr v The Queen (1988) 165 CLR 314 at 114 (1989) 168 CLR 79. 115 (1988) 165 CLR 314 at 318-319. 116 (1989) 168 CLR 79 at 91-94. 117 (1992) 175 CLR 599 at 616. 118 R v Ewanchuk [1999] 1 SCR 330 at 336. Callinan the general requirement considered in Longman. Moreover, the very nature of the prosecution's onus of proof may require a judge to advert to the absence of corroboration." It is upon the statements of principle in Robinson that a court should focus, rather than upon a comparison of the facts of it with the facts of the case before the Court. The features present in Robinson are certainly not a factual catalogue of the particular facts which will require a Longman direction in other cases. Nor was it, regrettably, a particularly exceptional case. The Court of Appeal took too narrow a view in this case of the principles for which Robinson stands. Furthermore, it was not a valid point of distinction that the appellant in that case had given evidence at his trial, whereas this appellant, had, as he was entitled to do, remained silent. That having been said, I am unable however to find that there were facts or circumstances in this case, or in the conduct of it, and having regard particularly to the appellant's failure to ask for it, that demanded that a Longman direction be given. In my opinion Keane JA was right to place some weight on the complainant's evidence of the distinctive marks upon the appellant's lower body, even though the evidence of them from the complainant may arguably have fallen short of corroboration in a strictly legal sense. The jury heard both the complainant's explanation for her delay, an explanation which was plausible, and the appellant's attack upon it. They also heard that it was after the appellant had ceased to contact the complainant and threaten her, albeit some considerable time afterwards, but when the complainant, her mother and brother were living in New South Wales, that the complainant told her mother for the first time, something of the appellant's molestation of her. The complainant's tender age, her likely embarrassment, the pressure upon and threats of the appellant to her, his ability to carry them out, and the shift from Queensland to New South Wales beyond the appellant's immediate reach, together, it seems to me, are capable of explaining much, if not all, of the delay. That the appellant chose not to ask for a Longman direction, and that, as has been regarded as relevant by this Court119 since Robinson, such delay as did occur here seems unlikely to be such as to have deprived the appellant of any means or capacity to defend himself, or otherwise to meet the case for the prosecution, taken with the other matters to which I have referred mean that the Court of Appeal was not wrong to conclude that a Longman direction was not imperative there. Accordingly I am of the opinion that although the Court of Appeal may have erred in some respects in its distinguishing and analysis of Robinson, the trial judge here was not, in the circumstances, bound to give a Longman warning. 119 Doggett v The Queen (2001) 208 CLR 343 at 356 [51] per Gaudron and Callinan Uncharged acts The appellant submitted that the trial judge erred in two respects in relation to the uncharged acts of the appellant. I have already referred to the contradictory evidence of 30 or fewer rapes. It is also right, as the appellant submits, that there were other allegations by the complainant, of uncharged digital penetration on up to a dozen occasions, and at least one other instance of uncharged indecent behaviour. In his written submissions the appellant submitted that these uncharged acts were inextricably intertwined with charged acts. I do not think that this is so, but if it were, then it might be that on that basis there would have been an argument that the evidence of the uncharged acts was admissible, a matter which I need not decide. The appellant is correct however, in submitting that the authorities of this Court are not as clear as they might be in relation to uncharged acts, most of which have tended to be cases of sexual misconduct. Uncharged acts were considered in Gipp v The Queen120. The evidence that was adduced there, of a general nature, was of repeated sexual abuse by the accused of the complainant. The trial judge told the jury that the history of that abuse was led to show the "relationship" between the accused and the complainant, and that there was no need for them to be satisfied beyond reasonable doubt of these so-called "background facts". By a majority (Gaudron, Kirby and Callinan JJ, McHugh and Hayne JJ dissenting), the Court decided that the verdicts of guilty were unsafe and unsatisfactory. The reasoning of the Justices in the majority was not all to exactly the same effect. Gaudron J was of the view that general evidence of uncharged sexual abuse is not admissible unless it has a special probative value as similar fact, or propensity evidence, or it becomes an issue by reason of the way in which the defence has been conducted121. Her Honour was also of the opinion that the view that history of sexual abuse need not be proved beyond reasonable doubt was erroneous, because it left open the possibility that a jury might reason from a finding, on the balance of probabilities, that if there was a relationship involving sexual abuse then the accused was guilty of the offences charged122. Kirby J concluded that the direction with respect to the evidence of uncharged acts was, as the Crown conceded in this Court, undesirable and should not have been given. His Honour's opinion was that evidence of that kind is admissible only if the facts to 120 (1998) 194 CLR 106. 121 (1998) 194 CLR 106 at 112-113 [11]-[13]. 122 (1998) 194 CLR 106 at 113 [14]. Callinan which it goes, may constitute "indispensable links in a chain of reasoning towards an inference of guilt"123. His Honour was of the further opinion that the evidence was, as it has been described variously, "dispositional", "background", "tendency", "propensity", "relationship", or in some circumstances "similar fact", its proper characterization, and therefore its admissibility, and any directions that should have been given regarding it, the trial there had miscarried125. I too concluded that the true character of the evidence was of propensity. As with Gaudron J, I expressed my concern about the reception of so called "background" evidence126: Because no consideration had been given "I do not accept that non-specific highly prejudicial evidence may be lead by the prosecution, and juries told that it might provide 'part of the essential background'127 against which the other evidence is to be evaluated. I would, with respect, therefore reject the notion that there is a special category of background evidence that may be adduced by the prosecution in a criminal case (absent, that is, any forensic conduct by the defence that may make it admissible). If such evidence is to be received it must owe its admissibility to some, quite specific, other purpose, including for example, in an appropriate case, proof of a guilty passion, intention, or propensity, or opportunity, or motive. There may also be cases in which a relationship between people may be directly relevant to an issue in a trial and in those circumstances admissible as such." (emphasis added) In KRM v The Queen128 McHugh J discussed propensity evidence and the consequences of a tender of it. He said this of Gipp129: 123 (1998) 194 CLR 106 at 155 [139], citing Shepherd v The Queen (1990) 170 CLR 124 (1998) 194 CLR 106 at 155-156 [140]. 125 (1998) 194 CLR 106 at 156 [141]. 126 (1998) 194 CLR 106 at 168-169 [181]-[182]. 127 B v The Queen (1992) 175 CLR 599 at 610 per Deane J. 128 (2001) 206 CLR 221. 129 (2001) 206 CLR 221 at 233 [31]. Callinan "By reason of the divided reasoning of the majority in Gipp, it cannot yet be said that evidence of uncharged acts of sexual conduct is no longer admissible to prove the relationship between the parties. Until this Court decides to the contrary, courts in this country should treat evidence of uncharged sexual conduct as admissible to explain the nature of the relationship between the complainant and the accused, just as they have done for the best part of a century. But that said, trial judges will sometimes, perhaps often, need to warn juries of the limited use that can be made of such evidence and will have to give a propensity warning concerning it130." Hayne J agreed with McHugh J, repeating "that until this Court decides to the contrary, courts should treat evidence of uncharged sexual conduct as admissible to explain the nature of the relationship between the complainant and the accused, just as they have in the past"131. Both of their Honours who were in the minority in Gipp, as appears from the passage in the judgment of McHugh J in KRM that I have just quoted, and from the judgment of Hayne J in the same case, can be seen therefore to have expressed their reservations about non-specific "relationship evidence", and the care with which its characterization, reception, and use must be treated. The judgments of the majority in Gipp and subsequent authority accordingly do not, I would emphasize, countenance the reception of evidence simply as relationship evidence "to explain the nature of the relationship". They require as a minimum that evidence of uncharged acts have some actual direct probative value relevant to the issues, that it be carefully scrutinized before it is admitted, that it may need to be characterized as propensity evidence, and that it almost always will require, if admitted over objection, directions appropriate for evidence of that kind. It is because the terms "relationship evidence" and "background evidence" tend, as does so-called "contextual evidence", to elude definition132, or, equally undesirably, to be referred to by judges and prosecutors imprecisely, that the concepts which these terms are assumed to embrace, need careful examination. 130 R v T (1996) 86 A Crim R 293 at 299. 131 (2001) 206 CLR 221 at 264 [134], quoting McHugh J at 233 [31]. 132 See, eg, R v Beserick (1993) 30 NSWLR 510 at 515; R v Josifoski [1997] 2 VR 68; R v Vonarx [1999] 3 VR 618 at 625; Pearce (1999) 108 A Crim R 580 at 591 (where R v Vonarx was approved). Callinan In this case the respondent submitted that the evidence of the uncharged acts was relationship evidence or evidence that put the charged offences "in context". The difficulty for the respondent in this submission was that nothing needed further to have been said or established at the trial regarding the relationship of the appellant with the complainant than the facts of the offences themselves which completely established it, that is, of offender and victim, and all other relevant circumstances, including the times and the particulars of the offences. The same may be said of "the context". The evidence of the uncharged acts neither explained nor added anything to these with respect to any "relationship" or "context", except the possibility of prejudice. Criticisms of Gipp have been made but they have not always been well founded. For example in R v Fraser133 the New South Wales Court of Appeal suggested that one or more of the majority in Gipp had no regard to Wilson v The Queen134, a case which, it was suggested, propounded an unqualified rule that relationship evidence was admissible as a matter of course. Wilson is authority for no such general rule. This is clear from what Barwick CJ said in that case135: "It is not that all evidence of the relationship of the parties is admissible, but only that from which a relevant inference may logically and reasonably be drawn." (emphasis added) The evidence in Wilson's case was of a threatening and quarrelsome relationship for a long time before the death. The evidence of the threats showing the bad relationship there did establish a fact genuinely in issue, guilty ill-will towards the victim, as well as motive, a fact over and beyond the facts of the actual offence, just as the evidence of the threats to the complainant here established a different kind of fact in issue: the reason for the complainant's delay in complaining. The reasoning of Menzies J in Wilson136 was to no different an effect as appears from his Honour's adoption of a statement of Kennedy J in R v Bond137, that the relations of the offender to his victim: 133 New South Wales Court of Criminal Appeal, unreported, 10 August 1998, per Mason P, Wood CJ at CL and Sperling J cited in Qualtieri v The Queen [2006] NSWCCA 95 at [77] per McClellan CJ at CL. 134 (1970) 123 CLR 334. See also Heydon, Cross on Evidence, 7th Aust ed (2004) at 135 (1970) 123 CLR 334 at 339. 136 (1970) 123 CLR 334 at 343-344. 137 [1906] 2 KB 389 at 401. Callinan "so far as they may reasonably be treated as explanatory of the conduct of the accused as charged ... are properly admitted to proof as integral parts of the history of the alleged crime for which the accused is on his trial". (emphasis added) Both McTiernan J and Walsh J agreed with Menzies J. Gipp and KRM establish that it is not enough for an advocate or a judge to treat undefined, non-specific or irrelevant evidence recording what passed between an accused and another at other times as "relationship evidence" and to admit it as such. Nothing that has been said in the cases before Gipp and since it, nor any criticism or otherwise of it, serves therefore to allay my very serious concerns about the reception, over objection, of non-specific, potentially prejudicial "relationship" or "contextual" or "background" evidence. Further, the practical reality is that in a case such as this one, in which there are multiple recurrent counts of the same offence or similar offences over a considerable period, any justification for the leading of "relationship", "contextual" or "background" evidence will not be well founded. The position may, for example, be different if there is only one or a small number of offences charged and138: "a truthful complainant is likely to be disbelieved if relationship evidence is excluded and in consequence the jury derive the impression that the complainant is saying that the accused molested him or her out of the blue". It is important, in my opinion, that both parties and trial judges pay close attention to any attempt to tender evidence of uncharged acts. If it truly is, as I think it was in Gipp and may have been, if anything, here, propensity evidence, and it is tendered without adverting to its true character as such, the prosecution may obtain the benefit of its prejudicial effect without the disadvantage of the strictures that apply to evidence of that kind. There is another potential disadvantage to a defendant in the reception of such evidence in a case in which the defendant does give evidence. The prosecution evidence of uncharged acts will have already further darkened the character of the accused, over and above the impact of the nature of the acts charged. He will in all likelihood then enter the witness box as a person of bad character, without necessarily having sought to show his own good character, or to impute bad character to a witness for the prosecution. Section 15 of the Evidence Act governs evidence of bad character, and lays down strict rules for its 138 R v GAE (2000) 1 VR 198 at 206 [22], cited in Heydon, Cross on Evidence, 7th Aust ed (2004) at 649 [21050]. Callinan introduction, rules which do not have any ready application to circumstances of the kind present here. Timely objection to the reception of possibly inadmissible "relationship evidence" will ensure that its actual character is identified, and whether it is truly admissible relationship evidence as such, within the narrow confines accepted by all of the judges in Wilson, stressed by the majority, if somewhat differently, in Gipp, and accepted in part at least by McHugh J and Hayne J in KRM. It may be that once it is established, if such be the case, that the evidence in question is truly relationship evidence, that the proper directions are those which Doyle CJ (Perry J and Mullighan J agreeing) in the Full Court of the Supreme Court of South Australia thought appropriate in R v Nieterink139. After reviewing the authorities, including Wilson, his Honour pointed out that in many cases of sexual offences against children, the evidence of uncharged acts had several potential uses. Almost certainly correctly, in my respectful opinion, his Honour said that the evidence of a particular relationship might be admissible to explain a criminal act, or the circumstances in which it was committed, that might otherwise be surprising, and, on that account, implausible. His Honour pointed out that the evidence may establish a pattern of guilt to explain a child's submission and silence140. I certainly agree with his Honour's opinion that there has been a tendency towards an unsatisfactory non-specificity in the use of the term "relationship"141. I further think, as did his Honour, that the term "background" is unsatisfactory because of its failure to identify the precise manner in which it is suggested that the evidence of uncharged acts can be used142. It is not as if in Queensland, and I understand it, elsewhere143, that the prosecution does not have at hand the means of prosecuting multiple sexual offences against children, who by reason perhaps of tender age, fear, embarrassment, denial, or inexact recall of dates, are unable to be precise about the occasions, but not the fact of molestation over a period. The means are provided by s 229B of the Queensland Criminal Code144, which was the charge under consideration in KBT v The Queen145. 139 (1999) 76 SASR 56. 140 (1999) 76 SASR 56 at 65 at [43]. 141 (1999) 76 SASR 56 at 65 at [45]. 142 (1999) 76 SASR 56 at 65 at [46]. 143 See, eg, Crimes Act 1900 (NSW), s 66EA; Crimes Act 1958 (Vic), s 47A; Criminal Code (WA), s 321A; Criminal Law Consolidation Act 1935 (SA), s 74; and Criminal Code (Tas), s 125A. 144 Section 229B(1) of the Criminal Code provides: (Footnote continues on next page) Callinan This case is not however one for the final resolution of these questions. No matter what the proper characterization of the evidence of the uncharged acts was here, the fact is the appellant did not object to it, and sought to make forensic capital out of the self-contradictions in it, and generally, its incredibility because of its excessiveness. Furthermore, the appellant sought no redirection as to the way in which the trial judge dealt with it. This was almost certainly because the trial judge emphasized more than once the necessity for the jury to be satisfied beyond reasonable doubt that the complainant's evidence about the offences charged was true, and repeated the submission on the appellant's behalf that there were inconsistencies in the evidence of the complainant. The trial judge's directions were certainly spare, but not quite to the point of insufficiency in the circumstances. It would no doubt have been better if close attention had been paid to the nature and admissibility of the evidence of the uncharged acts, and the possibility of the desirability of different directions concerning them from those which were given. But, as the trial was conducted by the parties, and the issues joined, there was no error which could have led to a miscarriage of justice. It was not insufficient in the circumstances for the trial judge to say, after referring to the evidence as "relationship evidence" that if the jury rejected it, then the credibility of the complainant would be significantly affected, and would reflect upon her evidence of the offences charged. I would therefore dismiss the appeal. "Any adult who maintains an unlawful sexual relationship with a child under the prescribed age commits a crime." Sub-section (7) provides: "An adult may be charged in 1 indictment with: (b) 1 or more other offences of a sexual nature alleged to have been committed by the adult in relation to the child in the course of the alleged unlawful sexual relationship (the 'other offence or offences')." 145 (1997) 191 CLR 417. 151 HEYDON J. I agree with the reasons of Callinan J for concluding that the trial judge committed no error in relation to uncharged acts which could have led to a miscarriage of justice146. In relation to the issue centring on Longman v The Queen147, I agree with Crennan J148. In the Court of Appeal counsel for the appellant (who did not appear at the trial, but did appear in this Court) made certain particular criticisms of his predecessor's conduct in relation to pre-trial procedure and in relation to the handling of the trial itself. The Court of Appeal rejected these criticisms in a convincing manner149. In this Court counsel for the appellant accepted that special leave had not been sought in relation to the competence of the appellant's counsel at trial, and that there was no ground of appeal in relation to it. However, on occasion he hinted that counsel for the appellant at the trial had been incompetent in not requesting a Longman warning; in not objecting to the tender by the prosecution of evidence as to uncharged acts; in not raising with the trial judge any difficulties about the uncharged acts either before the evidence was called, or before counsel's final addresses, or before the summing up; in introducing into evidence uncharged acts not tendered by the prosecution; and in failing to seek directions and failing to direct misdirections about the uncharged acts. If criticism was intended, it should be rejected. There were objectively reasonable explanations for what counsel for the accused did and did not do. She was dealt very bad cards. She played them very well. Her methods were the reverse of incompetent. I agree with Callinan J and Crennan J that the appeal should be dismissed. 146 Paragraphs [134]-[149] above. 147 (1989) 168 CLR 79. 148 Paragraphs [172]-[186] below. 149 R v TN (2005) 153 A Crim 129 at 137-138 [43]-[50] and 145 [75]. Crennan CRENNAN J. The issues in this appeal and the relevant facts are set out in the reasons of Callinan J. I agree with the conclusions of Callinan J that the Court of Appeal of Queensland was right to refuse to intervene on the ground that there was a miscarriage of justice150 because the trial judge did not warn the jury in accordance with Longman v The Queen151 and was also right to decide that there was no error in the trial judge's directions in respect of uncharged acts. I have nothing to add to what Callinan J has said in his reasons in relation to uncharged acts. My reasons for agreeing with Callinan J's conclusion that no warning in accordance with Longman was required are as follows. The appellant contended that the trial judge's directions to the jury on the necessity to scrutinise the complainant's evidence were neither adequate nor sufficient to discharge her function. Callinan J has set out relevant passages from the trial judge's summing up to the jury152 which obviates the need for me to do It was not in dispute that it was the duty of the trial judge "to instruct the jury as to the law applicable to the case, with such observations upon the evidence as the court thinks fit to make"153 and that a trial judge must give a warning to the jury "whenever a warning is necessary to avoid a perceptible risk of miscarriage of justice arising from the circumstances of the case"154. The appellant contended that the trial judge should have warned the jury in accordance with Longman that it would be dangerous to convict the appellant on forensic the complainant's evidence alone, because of disadvantage in attempting to marshal a defence as a result of the delay between the dates of the offences alleged and the preliminary complaint155 made by the complainant to her mother, unless the complainant's evidence was scrutinised the appellant's 150 Criminal Code (Q), s 668E. 151 (1989) 168 CLR 79. 152 Reasons of Callinan J at [113]-[116]. 153 Criminal Code (Q), s 620(1). The relevant legislation is set out in the reasons of Callinan J at [121], and footnotes 109 and 110. 154 Longman v The Queen (1989) 168 CLR 79 at 86 per Brennan, Dawson and Toohey JJ, citing Bromley v The Queen (1986) 161 CLR 315 at 319, 323-325 and Carr v The Queen (1988) 165 CLR 314 at 330; followed in Robinson v The Queen (1999) 197 CLR 162; Crampton v The Queen (2000) 206 CLR 161; Doggett v The Queen (2001) 208 CLR 343. 155 Criminal Law (Sexual Offences) Act 1978 (Q), s 4A distinguishes between a "complaint" and a "preliminary complaint". Crennan with great care. No redirection requiring the trial judge to give such a warning was sought at trial by the appellant. It was accepted by the appellant that s 4A(4) of the Criminal Law (Sexual Offences) Act 1978 (Q) proscribed a warning due to delay in making a complaint in relation to a sexual offence, if delay were the only reason said to oblige the giving of a warning. It was also conceded at the hearing of the appeal that the delay in question of between two and two and a quarter years between the offences, which were the subject of the appeal against conviction, and complaint in April 2002, was not a delay of the same order as occurred in Longman (more than 20 years), Crampton v The Queen156 (19 years), or Doggett v The Queen157 (between 12 and 19 years). The appellant also recognised that s 632(2) of the Criminal Code (Q), as amended, removes the former "rule of law or practice" that a trial judge give a corroboration warning158 by directing a jury that it would be dangerous or unsafe to convict an accused person on a complainant's uncorroborated evidence in a sexual matter. Further, s 632(3) proscribes a warning that a class of persons, such as children or young persons giving evidence in a sexual matter, are inherently unreliable. As explained in Crofts v The Queen159 concerning similar legislation in Victoria160, this Court in Longman dealt with similar legislation in Western Australia161, and made it clear that such legislation, properly understood "was to reform the balance of jury instruction not to remove the balance" by correcting practices which formerly required that "complainants of sexual misconduct were specially suspect, those complained against specially vulnerable and delay in complaining invariably critical"162. Nevertheless such legislation does not abrogate a general requirement for a trial instruct judges juries trial 156 (2000) 206 CLR 161. 157 (2001) 208 CLR 343. 158 The history of corroboration warnings can be found in R v Rosemeyer [1985] VR 945 at 956-966 per Ormiston J. 159 (1996) 186 CLR 427. 160 Crimes Act 1958 (Vic), s 61. 161 Evidence Act 1906 (WA), s 36BE. This section was repealed by the Criminal Law Amendment Act 1988 (WA), s 39. 162 (1996) 186 CLR 427 at 451 per Toohey, Gaudron, Gummow and Kirby JJ. Crennan judge to give a warning "whenever it is necessary to do so in order to avoid a risk In reliance on Robinson v The Queen164, concerning the same legislation as here, the appellant submitted that the concatenation of factors here, being the age of the complainant (nine or 10 at the time of the commission of the offences and 14 at the time of testifying), the sexual nature of the complaints, the delay between the commission of the offences and preliminary complaint to the the complainant's evidence, required that a warning be given in accordance with Longman. two years), and inconsistencies (around The issue The issue on appeal is whether the jury's findings of guilt were unsafe because the trial judge did not give the jury a warning in accordance with Longman. At trial, jury members were unable to agree in respect of one count of indecent dealing alleged to have occurred on 19 August 1999 (Count 1) and two counts of rape alleged to have occurred between 31 January 1999 and 1 June 2000 (Count 2) and between 1 January and 1 June 2000 (Count 10). The jury found the appellant guilty of four counts of indecently dealing with a child under 16 years of age, and of three counts of permitting himself to be indecently dealt with by a child under 16 years of age. The seven counts which are the subject of this appeal against conviction involved six occasions between January and May 2000. The facts The complainant lived with her mother and her brother at all material times and was between the ages of nine and just over 10 when the alleged offences occurred. The appellant was her mother's boyfriend and the four of them lived in a family arrangement from time to time. The complainant's mother ended her relationship with the appellant in about May 2000. For about four or five months thereafter the appellant telephoned the complainant's mother and invariably asked to speak to the complainant. 163 Robinson v The Queen (1999) 197 CLR 162 at 168 [20] per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ. 164 (1999) 197 CLR 162. Crennan The complainant first complained to her mother in April 2002, (having turned 12 years old on 11 March 2002), and she was interviewed by police shortly thereafter on 4 April and 8 May 2002. The appellant's home was searched by police in October 2002, and guns for which he held a licence were found. The appellant was committed for trial on 19 January 2004 and convicted on 8 July 2004. The trial The appellant neither called nor gave evidence at trial. There was some independent evidence to support the complainant. She described a mole on the appellant's penis and tattoos on each of his buttocks. It was not suggested to her in cross-examination that she could have observed such details in circumstances other than those of intimate sexual contact. The complainant said she did not tell her mother of the events covered by the indecent dealing charges when they occurred (one in 1999, seven in 2000) because she was afraid of the appellant: he had threatened her to secure her silence, and made her aware that he possessed guns and ammunition. Her mother gave evidence that the appellant owned two hand guns, two revolvers and two rifles at the times in question and slept with a handgun under his pillow. Her mother also supported various matters of detail and circumstance in respect of the complainant's evidence, but she could not corroborate any sexual misconduct by the appellant. As no redirection in accordance with Longman was sought by the appellant at trial, the appellant did not identify for the trial judge any forensic disadvantage to him arising from the circumstances that counts of indecent dealing on 19 August 1999 (Count 1) upon which the appellant was not convicted and between January to May 2000 (Counts 3 to 9) upon which the appellant was convicted were not reported until April 2002 or tried until July 2004. In particular, it was not alleged to the trial judge that the appellant had lost the chance to adequately test the evidence. The Court of Appeal Whilst it was alleged on this appeal that the appellant was forensically disadvantaged in "attempting to mount his defence", it was noted in the Court of Appeal there were ready explanations for the appellant's failure to call any evidence before the trial judge, including the fact that the appellant gained the forensic advantage of having the last word to the jury165. It was also noted that the appellant was given an opportunity by the trial judge to file further affidavit material in relation to further medical evidence, but no further evidence from the appellant was forthcoming. 165 R v TN (2005) 153 A Crim R 129 at 137 [44]. Crennan Before the Court of Appeal affidavit material was filed to show the appellant had been advised by both his counsel and solicitor at the trial not to give or call evidence and new evidence was put forward. It was observed by Keane JA (correctly in my view), that such evidence did not show that the appellant was disadvantaged by the delays now complained about, and the new evidence from witnesses tended to confirm that if the trial judge had given a warning on the assumption that the delay adversely affected the appellant's ability to marshal evidence, it would have been given on a false assumption166. Was a warning required? In Longman the majority, Brennan, Dawson and Toohey JJ, said it was imperative167 for a trial judge to warn a jury of the danger of convicting on uncorroborated evidence when an accused lost the means of adequately testing a complainant's allegations by reason of a long delay "of more than twenty years" in prosecution168. Harking back to Lord Hailsham's statement in R v Spencer169 that a danger may not be "obvious to a lay mind", it was stated that such a factor "may not have been apparent to the jury"170. Deane J considered a warning was necessary because of the danger that over a long time a child's "fantasy about sexual matters" might become a "conviction of reality"171. McHugh J considered a warning necessary because of the danger that, over a long time, the recollections of an honest witness can be distorted by "imagination, emotion, prejudice and suggestion"172. The recollections in question were of a 32 year old witness of sexual misconduct alleged to have occurred when she was between six and 10 years old and in the twilight state between being fully asleep and fully awake. Robinson involved a delay of three years before a complaint was made of an occasion of two anal rapes when the complainant was eight years old; the trial occurred nearly four years after the alleged offence, when the complainant was 166 R v TN (2005) 153 A Crim R 129 at 145 [73]. 167 (1989) 168 CLR 79 at 91; see also Crampton v The Queen (2000) 206 CLR 161 at 179-180 [39] per Gaudron, Gummow and Callinan JJ. 168 (1989) 168 CLR 79 at 91. 169 [1987] AC 128 at 135, see also Lord Ackner at 141. 170 (1989) 168 CLR 79 at 91. 171 (1989) 168 CLR 79 at 100-101 per Deane J. 172 (1989) 168 CLR 79 at 107 per McHugh J. Crennan 11. The identified forensic disadvantage arising out of delay of three years before complaint was made was that medical evidence may have been able to verify or falsify the allegation of two instances of anal rape alleged to have occurred on the one occasion. The facts in Robinson also involved the danger Deane J spoke of in Longman173, namely that the complainant said he was asleep when the first act of penetration occurred and woke up while it was going on, and the danger McHugh J spoke of in Longman, in that the complainant was suggestible174. The present case is unlike Robinson in both of those respects. However, I agree with an observation of Kirby J in his Honour's reasons that "the case law on judicial warnings does not progress by perceived similarity amongst the facts of particular cases but by reference to the dangers of miscarriages of justice that particular facts serve to illustrate"175. The majority in Longman required a trial judge to explain to the jury the reason why it would be dangerous to convict on the uncorroborated evidence of the complainant and then to explain to the jury how to avoid the danger176: "The jury should have been told that, as the evidence of the complainant could not be adequately tested after the passage of more than twenty years, it would be dangerous to convict on that evidence alone unless the the jury, scrutinizing circumstances relevant to its evaluation and paying heed to the warning, were satisfied of its truth and accuracy." the evidence with great care, considering In Crampton v The Queen177, Gaudron, Gummow and Callinan JJ said of "the very great delay" that the appellant was "unable adequately to test and meet the evidence of the complainant"178. They explained179: "An accused's defence will frequently be an outright denial of the allegations. That is not a reason for disparaging the relevance and 173 (1989) 168 CLR 79 at 100-101. 174 (1989) 168 CLR 79 at 107-108; see also Robinson v The Queen (1999) 197 CLR 175 Reasons of Kirby J at [51]. 176 (1989) 168 CLR 79 at 91 per Brennan, Dawson and Toohey JJ. 177 (2000) 206 CLR 161. 178 (2000) 206 CLR 161 at 181 [45]. 179 (2000) 206 CLR 161 at 181 [45]; see also 212 [142] per Hayne J. Crennan importance of a timely opportunity to test the evidence of a complainant, to locate other witnesses, and to try to recollect precisely what the accused was doing on the occasion in question. In short, the denial to an accused of the forensic weapons that reasonable contemporaneity provides constitutes a significant disadvantage which a judge must recognise and to which an unmistakable and firm voice must be given by appropriate directions." These observations were repeated by Gaudron and Callinan JJ in Doggett v The Queen180, a case in which Kirby J said that to determine whether warnings in accordance with Longman are required it is "essential to address the particular mischief which the judges in Longman identified"181, which he described as follows182: "This was the serious forensic disadvantage involved in responding to accusations made many years after events. And, in the case of long delay, it also included the special danger presented by honest, and apparently convincing, but erroneous testimony. It is the special knowledge which judges have gained through legal experience that needs to be brought to the notice of a jury in such cases." A delay between the date of offences and prosecution which is more than 20 years (Longman), 19 years (Crampton), or between 12 and 19 years (Doggett) creates a circumstance palpable or obvious to a judge, but which a jury might fail to appreciate. That is, that after such a long period an accused is forensically disadvantaged by losing a chance to adequately test the complainant's evidence183 or to adequately marshal a defence184. Here, as already mentioned, no specific or particular forensic disadvantage to the appellant, as a result of delay, was identified to the trial judge: rather it was contended on appeal that the concatenation of factors of age (nine-10 at the date of the offences and 14 at the trial), the sexual nature of the offences (indecent dealing), the delay in complaint (around two years) and inconsistencies in the complainant's evidence, necessitated a warning in accordance with Longman, as applied in Robinson. It was asserted that those factors together 180 (2001) 208 CLR 343 at 356 [52]. 181 (2001) 208 CLR 343 at 379 [134]. 182 (2001) 208 CLR 343 at 379 [134]. 183 (1989) 168 CLR 79 at 91. 184 (2000) 206 CLR 161 at 181 [45]. Crennan created a forensic disadvantage to the appellant in attempting to mount his defence. It was not explained how this occurred or why a jury might fail to appreciate such an occurrence. A practical and orthodox direction was given by the trial judge in relation to the inconsistencies in the complainant's evidence. Neither Longman nor Robinson are authority for the proposition that it is imperative to give a warning in accordance with Longman when faced with the specific concatenation of circumstances identified by the appellant. The question is whether all of the circumstances gave rise to some forensic disadvantage to the appellant, palpable or obvious to a judge, which may not have been apparent to the jury, thus necessitating a warning so as to avoid a miscarriage of justice. There is a clear distinction between such a case and a case where all the circumstances can be evaluated by a jury in the light of their own experiences185. Not unnaturally, the practical application of Longman in some trial situations has not always proved easy, particularly in respect of clarifying how great a delay might give rise to an imperative to give a warning186. As stated in Doggett this is not a question purely of mathematical precision187. Further, there is a distinction to be made between an inexplicable delay in reporting (as in Robinson) and an explicable delay as here, which may elicit comment but not necessarily require a warning (Longman). Intermediate courts of appeal have essayed various distillations of the principles to be applied to particular cases at hand188. As the reasons of the majority in Longman make clear, it is not imperative to give a warning because the circumstances include allegations of sexual 185 R v Miletic [1997] 1 VR 593 at 606 per Winneke P, Charles and Callaway JJA. 186 R v BWT (2002) 54 NSWLR 241 at 272-273 [95] per Sully J; R v GTN (2003) 6 VR 150 at 154 [12] per Callaway JA, 172-174 [90]-[101] per Eames JA. 187 (2001) 208 CLR 343 at 377 [127] per Kirby J. 188 R v Johnston (1998) 45 NSWLR 362 at 375 per Spigelman CJ with whom Sully and Ireland JJ agreed; GPP (2001) 129 A Crim R 1 at 15-27 [23]-[55] per Heydon JA with whom Wood CJ at CL and Carruthers AJ agreed; R v BWT (2002) 54 NSWLR 241 at 263 [75] and 272-275 [95] per Sully J; R v GTN (2003) 6 VR 150 at 163 [55] per Eames JA; R v RWB (2003) 87 SASR 256 at 262-270 [33]-[55] per Besanko J with whom Bleby J agreed, 272-275 [65]-[80] per Sulan J; R v BFB (2003) 87 SASR 278 at 282-284 [34]-[41] per Doyle CJ with whom Perry and Mullighan JJ agreed; R v MM (2004) 145 A Crim R 148 at 169-171 [111]-[122] per Howie J; R v DRG (2004) 150 A Crim R 496 at 501-503 [30]-[32] per Doyle CJ with whom Bleby and Gray JJ agreed; JJB v The Queen (2006) 161 A Crim R 187 at 194-197 [36]-[47] per Kirby J with whom Spigelman CJ and Crennan misconduct or because the complainant is young at the time of the events alleged (or at trial) or because there is some delay in complaint to, for example, a mother. While the purpose of a warning in accordance with Longman is to ensure a fair trial and to avoid a miscarriage of justice, the purpose of the relevant legislation is to ensure balance in jury instruction, without proscribing warnings when it is in the interests of justice to give them. Forensic disadvantage The critical issue in relation to the need for a warning in accordance with Longman is whether any delay in complaint (and/or prosecution), be it 20 years, or two or three years, creates a forensic disadvantage to an accused in respect of testing allegations189 or adequately marshalling a defence190, adequately the complaint were of "reasonable compared with contemporaneity"191. the position The shorter the delay, the more difficult it is to assert that an accused has lost the ability to adequately test the evidence of the complainant or to adequately marshal his defence. In circumstances where the delay is short by comparison with the delay in Longman, and is explained by an accused's threats, some forensic disadvantage which is palpable and obvious to an experienced judge, but which a jury may fail to appreciate, needs to be identified because a judge must warn of the relevant danger192 before explaining to the jury how the particular danger is to be avoided. Without that circumstance, a warning in accordance with Longman is not imperative because a trial judge is in no position to explain why it would be dangerous to convict on the complainant's uncorroborated evidence. that The complainant gave uncontradicted evidence the appellant threatened her on numerous occasions, often in parallel with the offences, by reference to his guns which he showed her several times. Her evidence was that she "would have told [her mother] but [she] was worried about the guns". The threats were directed not only at her but also involved threats to her mother and brother and were subsequently repeated after the last offence on several occasions, by telephone, during a five month period after the appellant and the complainant's mother ended their relationship. The complainant told her mother of the events very early in April 2002, some two to three weeks after her mother, 189 (1989) 168 CLR 79 at 91. 190 Crampton v The Queen (2000) 206 CLR 161 at 181 [45]. 191 (2000) 206 CLR 161 at 181 [45]. 192 R v Glennon (No 2) (2001) 7 VR 631 at 671 per Winneke P and Ormiston JA. Crennan her brother and she had moved from Queensland to New South Wales. The complainant introduced the revelations of alleged sexual misconduct when alone with her mother by saying she was glad not to live in Gladstone anymore. Gladstone was the place where four of the relevant offences occurred and where she had seen the appellant several times after her mother and the appellant had ended their relationship. No forensic disadvantage of a kind which a jury may not appreciate arises automatically because of delay193, or because the evidence is uncorroborated evidence of sexual misconduct194, or because of the complainant's youth195. Here the appellant did not contend that the warning sought was imperative because events occurred when the complainant was in the twilight state between waking and sleeping. Further, there was no identification before the trial judge of any forensic disadvantage to the appellant arising out of the delay in complaint or prosecution, in respect of the indecent dealing counts. There was medical evidence that the complainant's hymen was intact and no findings of guilt were made in respect of two counts of rape. It was not submitted at trial, before the Court of Appeal or in this appeal, that reasonably contemporaneous medical evidence could have verified or falsified the counts of indecent dealing, which were distinguishable from the counts of rape because they did not involve allegations of successful penile penetration, and the counts of the appellant permitting himself to be dealt with indecently by forcing the complainant to touch his genitalia. There was no forensic disadvantage to the appellant, arising out of the explained delay, which would have been palpable or obvious to the trial judge, but would not have been apparent to the jury. The concatenation of circumstances, being the age of the complainant at the time of the offences and at trial, the sexual nature of the offences, the explained delay between the offences and report, and trial, and inconsistencies in the complainant's evidence, could all be evaluated by the jury in the light of their own experiences. Therefore it was not necessary for the trial judge to give a warning to avoid a miscarriage of justice. 193 Criminal Law (Sexual Offences) Act 1978 (Q), s 4A(4). 194 Criminal Code (Q), s 632(1) and (2). 195 Criminal Code (Q), s 632(3). Crennan Conclusions I agree with Callinan J that there was nothing in the circumstances of this case which made it imperative for the trial judge to give a warning in accordance with Longman. I also agree with his Honour that there were no errors in relation to the trial judge's directions which could have led to a miscarriage of justice and I agree that the appeal should be dismissed.

HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION AND CITIZENSHIP APPELLANT AND SZIZO & ORS RESPONDENTS Minister for Immigration and Citizenship v SZIZO [2009] HCA 37 23 September 2009 ORDER Appeal allowed. Set aside orders 1 and 2 of the orders made by the Full Court of the Federal Court of Australia on 3 July 2008, and in lieu thereof order that: order 2 of the orders made by the Federal Magistrates Court of Australia on 5 September 2007 be set aside; and the appeal be otherwise dismissed. Appellant to pay the first to sixth respondents' costs of the appeal to this Court. On appeal from the Federal Court of Australia Representation N J Williams SC with K A Stern for the appellant (instructed by Clayton Utz Lawyers) B W Walker SC with B K Nolan for the first to sixth respondents (instructed by the first to sixth respondents) Submitting appearance for the seventh respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Citizenship v SZIZO Immigration – Refugees – Review of visa application before Refugee Review Tribunal ("RRT") – First respondent appointed third respondent as his "authorised recipient" to receive documents in connection with his review – Section 441G(1) of Migration Act 1958 (Cth) ("Act") required RRT to give review documents to authorised recipient instead of first respondent – RRT gave a notice inviting the respondents to attend a hearing to first respondent but not to authorised recipient – All respondents attended the hearing and no unfairness or prejudice arose from non-compliance with s 441G(1) of Act – Whether non- compliance with procedural steps in s 441G of Act compels conclusion that decision is invalid – Whether circumstances amount to denial of natural justice. Words and phrases – "authorised recipient", "natural justice". Migration Act 1958 (Cth), ss 422B, 425A, 441A, 441G. FRENCH CJ, GUMMOW, HAYNE, CRENNAN AND BELL JJ. A decision made by the appellant, the Minister for Immigration and Citizenship ("the Minister"), or his delegate, refusing to grant a protection visa to an applicant who is physically present in the migration zone is reviewable by the Refugee Review Tribunal ("the Tribunal")1. The conduct of the review is governed by the provisions of Div 4 of Pt 7 of the Migration Act 1958 (Cth) ("the Act"). Section 422B(1) provides that the provisions of Div 4 are taken to be an exhaustive statement of the requirements of the natural justice hearing rule ("the hearing rule") in relation to the matters that they deal with. The manner of giving and receiving documents in connection with the review is governed by the provisions of Div 7A of Pt 7 of the Act. Section 422B(2) provides that the provisions of Div 7A, in so far as they relate to the conduct of reviews under Div 4, are to be taken to be an exhaustive statement of the hearing rule in relation to the matters that they deal with. An applicant for review may appoint a person, an "authorised recipient", to receive documents in connection with the review on his or her behalf. In the event that an applicant nominates an authorised recipient, the Tribunal is required to give review documents to that person instead of giving the documents to the applicant2. In this case, the Tribunal failed to give a notice inviting the applicants for review to attend a hearing to the authorised recipient in the manner that is prescribed by Div 7A. As will appear, this did not occasion any adverse consequence to any of the applicants for review, who are the first to sixth respondents to the appeal ("the respondents"). An effective response was made to the notice and all the respondents, including the authorised recipient, attended the hearing, which was not otherwise the subject of any procedural flaw. The Full Court of the Federal Court of Australia (Moore, Marshall and Lander JJ) held that the Tribunal's failure to comply with the obligations imposed on it under Div 7A was a jurisdictional error. The Court considered that in the absence of exceptional circumstances it should not withhold relief in a case in which the Tribunal had failed to comply with imperative statutory obligations owed to an applicant for review3. Since there were no such exceptional 1 Sections 411, 412 and 414 of the Migration Act 1958 (Cth). The relevant text of the Act is reprint 9. 2 Section 441G. 3 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 168-169 [97] per Lander J (Moore and Marshall JJ concurring). Crennan Bell circumstances in this case the Court made orders quashing the Tribunal's decision and remitting the respondents' application for review to the Tribunal to be determined according to law. The Minister appeals by special leave to this Court from the decision of the Full Court. For the reasons that follow the appeal should be allowed and the orders made in the Full Court should be set aside. The facts The respondents are a family, who come from Lebanon. The first respondent is the husband, the second respondent is his wife and the third to sixth respondents are their children. The family arrived in Australia on 21 March 2001. On 14 November 2005 they applied for protection visas. The first respondent made substantive claims to being a person to whom Australia owes protection obligations under the Refugees Convention4 as amended by the Refugees Protocol5 (together "the Convention")6. The remaining respondents applied for protection visas as the first respondent's spouse and dependants respectively7. On 13 January 2006 a delegate of the Minister refused the respondents' applications on the ground that none satisfied the criterion for the issue of a protection visa. The respondents filed an application for review of the delegate's decision. Their application was submitted on a pro forma issued by the Tribunal. Multiple applicants for review are permitted to submit applications on the same form. The form which the respondents signed contained the following printed advice: "Each person is an applicant in his or her own right. Unless an included applicant advises the Tribunal otherwise, the Tribunal will communicate 4 The Convention relating to the Status of Refugees done at Geneva on 28 July 1951. 5 The Protocol relating to the Status of Refugees done at New York on 31 January 6 Section 36(2)(a). 7 The second to sixth respondents' application was made pursuant to s 36(2)(b) of the Act. Crennan Bell with Applicant 1 or his or her authorised recipient. Applicant 1 must inform each applicant of the contents of any communication from the Tribunal and reply to the Tribunal for them." The first respondent was named as Applicant 1 in the application. He nominated his eldest daughter, the third respondent, SZIZQ, as his authorised recipient. SZIZQ's address was given as the address of the premises at which all of the respondents were residing ("the family residence"). Telephone numbers for a landline and a mobile service were supplied as a means of contacting SZIZQ. The first respondent signed a declaration undertaking to inform each of the respondents of the contents of any communication from the Tribunal and to reply to the Tribunal on their behalf. The remaining five respondents, including SZIZQ, signed the application acknowledging that each had read and understood the information supplied in it and authorising the Tribunal to communicate with the first respondent or his authorised recipient about the application. The application was dated 6 February 2006. It was received by the Tribunal on 9 February 2006. The Tribunal sent a notice by prepaid post addressed to the first respondent inviting him and the other respondents to attend a hearing, to be held on 23 March 2006 ("the notice of hearing"). The first respondent was instructed to inform each of the other respondents of its contents, including that any response would be regarded by the Tribunal as a joint response, unless the Tribunal was advised otherwise. A brochure explaining what would happen on the day of the hearing, and a "response to hearing invitation" ("the response form"), were enclosed with the notice. Neither the first respondent nor the second respondent speak or are literate in English. SZIZQ speaks and is literate in the Arabic, French and English languages. The response form was completed in English. It was signed by the first respondent and dated 6 March 2006. It was expressed to be "[s]igned on behalf of, and with the consent of, all family members included in the application." The section of the response form containing a space for the provision of the name and contact details of the authorised recipient was left blank. The address of the family residence was given as the first respondent's home and mailing address. The same landline and mobile telephone numbers as had earlier been given as contact telephone numbers for SZIZQ were given as contact numbers for the first respondent. The response form recorded that the first respondent needed the services of an interpreter in the Arabic language at the hearing. Two persons were nominated as witnesses whose evidence the respondents wished to place before the Tribunal. Crennan Bell Each of the respondents attended the hearing on 23 March 2006. The two witnesses who had been nominated in the response form attended the hearing and gave evidence. A third witness also gave evidence in support of the respondents' application. The first and second respondents gave evidence at the hearing with the assistance of the interpreter. SZIZQ gave evidence without the assistance of an interpreter. In the course of the hearing the first respondent was shown his visa application and he said that his daughter had completed the form on his behalf on his instructions. At the conclusion of the hearing the Tribunal member informed the respondents: "[I]f everybody is happy with this unless there is something else you want to put to me … is we will adjourn now close the hearing … ten days if you want to put anything else in that you think it's relevant to your case". The Tribunal wrote to the first respondent by letter dated 27 March 2006 confirming the advice given at the hearing that the Tribunal had allowed 10 days in which to make further written submissions in relation to the review. The first respondent was asked to inform the other respondents of the contents of the letter. Written submissions signed by the first, second and third respondents were submitted to the Tribunal along with supporting documents. They were received by the Tribunal on 7 April 2006. On 6 June 2006 the Tribunal handed down its decision, affirming the decision under review. The respondents sought judicial review of the Tribunal's determination before the Federal Magistrates Court. The application was dismissed on 5 September 20078. The respondents appealed from that decision. The appeal came before a single judge exercising the appellate jurisdiction of the Federal Court9. Counsel appearing for the Minister drew to the Court's attention that the notice of hearing had been given to the first respondent and not to his authorised recipient. This issue had not been raised before the Federal Magistrates Court. The appeal was referred to the Full Court10. The respondents were referred by 8 SZIZO v Minister for Immigration [2007] FMCA 1339. 9 Section 25(1AA)(a) of the Federal Court of Australia Act 1976 (Cth). 10 Section 25(1AA)(b) of the Federal Court of Australia Act 1976 (Cth). Crennan Bell the Registrar of the Federal Court to a legal practitioner on the Pro Bono Panel for legal assistance in relation to their appeal. An amended notice of appeal was filed, which abandoned the grounds originally relied upon and substituted a single ground contending that the decision of the Tribunal had been attended by jurisdictional error. The statutory scheme If a valid application is made to review a decision to refuse to grant a protection visa the Tribunal must review the decision11. The Tribunal may, for the purposes of the review, exercise all the powers and discretions that are conferred by the Act on the person who made the decision12. Its powers include that it may set aside the decision and substitute a new decision, which is taken to be that of the Minister13. In carrying out its functions under the Act, the Tribunal is to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick14. It is not bound by technicalities, legal forms or rules of evidence and is required to act according to substantial justice and the merits of the case15. Because the Tribunal was not minded to decide the review in the respondents' favour on the basis of the material before it, it was required to invite the respondents to appear at a hearing to give evidence and present any arguments relating to the issues arising in relation to the decision under review16. The obligation to give notice of the hearing was imposed by s 425A, which relevantly provides: If the applicant is invited to appear before the Tribunal, the Tribunal must give the applicant notice of the day on which, and the time and place at which, the applicant is scheduled to appear. 11 Section 414(1). 12 Section 415(1). 13 Section 415(2)(d) and (3)(b). 14 Section 420(1). 15 Section 420(2). 16 Section 425. Crennan Bell The notice must be given to the applicant: (a) … by one of the methods specified in section 441A; … The period of notice given must be at least the prescribed period … The notice must contain a statement of the effect of section 426A." The prescribed period of notice in the case of an applicant who is not a detainee is 14 days after the day on which the notice is received17. Section 441C sets out when a person is taken to have received a document that is given by one of the methods in s 441A. Section 426A permits the Tribunal, in a case in which an applicant for review has failed to appear at a scheduled hearing, to make a decision on the review without taking any further action to allow or enable the applicant to appear before it. The first respondent gave the Tribunal written notice of SZIZQ's name and address as his authorised recipient. This engaged the provisions of s 441G, which, relevantly, provides: (a) A person (the applicant) applies for review of an RRT- reviewable decision; and the applicant gives the Tribunal written notice of the name and address of another person (the authorised recipient) authorised by the applicant to do things on behalf of the applicant that consist of, or include, receiving documents in connection with the review; the Tribunal must give the authorised recipient, instead of the applicant, any document that it would otherwise have given to the applicant. Note: If the Tribunal gives a person a document by a method specified in section 441A, the person is taken to have received the document at the time specified in section 441C in respect of that method. 17 Regulation 4.35D(b) of the Migration Regulations 1994 (Cth). Crennan Bell If the Tribunal gives a document to the authorised recipient, the Tribunal is taken to have given the document to the applicant. However, this does not prevent the Tribunal giving the applicant a copy of the document. The Tribunal may communicate with the applicant by means other than giving a document to the applicant, provided the Tribunal gives the authorised recipient notice of the communication. The provisions of s 425A(2)(a) applied to the review of the respondents' application and the Tribunal was required to give the notice of hearing by one of the methods prescribed in s 441A. One such method is by a member, the Registrar or an officer of the Tribunal dating the notice and dispatching it by prepaid post to the last address for service, or the last residential or business address, provided to the Tribunal by the recipient in connection with the review18. The provision does not, in terms, state that the recipient's name is to be included on the envelope. However, the Minister did not contend that the notice, which was sent by prepaid post to the family residence, at which SZIZQ, the authorised recipient, was residing, had been given to her within the meaning of s 441G. The Full Court's reasons The Full Court considered that s 422B, which is contained in Div 4, indicated the Parliament's intention that there be "strict adherence to each of the procedural steps leading up to the hearing"19. Section 422B provides: "422B Exhaustive statement of natural justice hearing rule (1) This Division is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with. 18 Section 441A(4). 19 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 167 Crennan Bell (2) Sections 416, 437 and 438 and Division 7A, in so far as they relate to this Division, are taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters they deal with." The Full Court pointed out that there are good reasons why the Tribunal is required to give notice to the authorised recipient instead of (or in addition to) the applicant; in many cases applicants for protection visas will not speak English or be literate in English and few may be expected to understand Australia's obligations under the Convention20. It considered that usually when an applicant nominates an authorised recipient it will be for the purpose of having that person assist the applicant to present his or her case at the hearing21. It concluded that "any failure by the Tribunal to comply with s 441G will, if uncorrected before the hearing takes place or the decision made, mean that the Tribunal will have committed jurisdictional error"22. The issue It is well established that the denial of natural justice to an applicant for a visa may result in a decision that exceeds jurisdiction for which prohibition will go23. This is not such a case. The Full Court found that no unfairness or prejudice was visited upon any of the respondents by reason of the Tribunal's 20 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 167 21 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 167 22 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 167 23 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 89 [5] per Gleeson CJ, 91 [17] per Gaudron and Gummow JJ; [2000] HCA 57; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 67 [26] per Gleeson CJ and Hayne J; [2001] HCA 22; Applicant NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 221 CLR 1; [2004] HCA 62; NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 470; [2005] HCA 77. Crennan Bell failure to comply with its statutory obligation24. It approached the matter on the footing that each procedural step in Divs 4 and 7A imposed an imperative duty on the Tribunal forming part of the statutory statement of the hearing rule25. The Act does not provide for the consequences of non-compliance with any of the provisions of Div 4 or Div 7A. Written notice of the invitation to appear before the Tribunal to give evidence and to present arguments26 came to the attention of the applicants for review (the respondents in this Court) and their authorised recipient27 within the prescribed period28. The notice contained the matters prescribed by the Act29. The notice was given to one of the applicants for review (the first respondent) in one of the ways provided by s 441A. There was no dispute, however, that the Tribunal did not give the notice of hearing to the authorised recipient. When s 441G(1) provides that, if an applicant for review has nominated an authorised recipient, "the Tribunal must give the authorised recipient, instead of the applicant, any document that it would otherwise have given to the applicant", what consequence follows if an invitation to attend a hearing was not given to the authorised recipient, but was given to one of the applicants for review, and came to the attention of other applicants for review and the authorised recipient in due time? Was it a purpose of the legislation30 that, despite holding a hearing at which all of the applicants for review, including their authorised recipient, appeared before the Tribunal to give evidence and to present arguments relating 24 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 167 25 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 166-167 26 Section 425(1). 27 Section 441G. 28 Section 425A(3). 29 Sections 425A(1) and 426(1). 30 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 388-389 [91]; [1998] HCA 28. Crennan Bell to the issues arising in relation to the decision under review31, the Tribunal could not validly decide the review? The submissions The respondents submit that the Full Court was right to conclude that compliance with each of the steps in Divs 4 and 7A conditions the Tribunal's jurisdiction to determine a review. In their submission the purpose of the statutory regime is to ensure that certainty attends Tribunal decisions; a decision made in conformity with each identified step is within jurisdiction and a decision not so made is not. They contend that the Parliament's intention was to remove debate in the courts about whether an applicant for review has been denied natural justice. In this respect they draw attention to the Minister's speech on the second reading of the Bill for the Migration Legislation Amendment (Procedural Fairness) Act 2002 (Cth), which introduced s 422B into the Act32: "In 1998, the codes of procedure for the Migration Review Tribunal and the Refugee Review Tribunal were enhanced. The purpose of each of these codes is to enable decision makers to deal with visa applications and cancellations fairly, efficiently and quickly. It was also intended that they would replace the uncertain common law requirements of the natural justice 'hearing rule', in particular, which had previously applied to decision makers. However, last year in the Miah case, the High Court found that the code of procedure relating to visa applications had not clearly and explicitly excluded common law natural justice requirements. This means that, even where a decision maker has followed the code in every single respect, there could still be a breach of the common law requirements of the natural justice hearing rule. 31 Section 425(1). 32 Australia, House of Representatives, Parliamentary Debates (Hansard), 13 March Crennan Bell A further consequence of the High Court's decision is that there is legal uncertainty about the procedures which decision makers are required to follow to make a lawful decision." The Minister submits that compliance with each of the identified steps in Divs 4 and 7A will always discharge the Tribunal's obligations under the hearing rule but that it does not follow that departure from any of the steps, including those dealing with the giving and receiving of review documents, is intended to exclude consideration by the court of whether the requirements of natural justice have been satisfied. SAAP v Minister for Immigration and Multicultural and Indigenous Affairs Before turning to the characterisation of the obligations imposed on the Tribunal under ss 441G and 441A, reference should be made to the decision of this Court in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs33. In that case the Tribunal failed to provide to the applicant for review written particulars of information that it considered would be the reason, or part of the reason, for affirming the decision under review. This was a breach of the requirements of s 424A, which is in Div 4. Justice McHugh, who was one of the Justices who formed the majority, concluded as follows34: "However, because the Act compels the Tribunal in the conduct of the review to take certain steps in order to accord procedural fairness to the applicant for review, before recording a decision, it would be an anomalous result if the Tribunal's decision were found to be valid, notwithstanding that the Tribunal has failed to discharge that obligation. It is not to the point that the Tribunal may have given the applicant particulars of the adverse information orally. It is also not to the point that in some cases it might seem unnecessary to give the applicant written particulars of adverse information … If the requirement to give written particulars is mandatory, then failure to comply means that the Tribunal has not discharged its statutory function. There can be no 'partial compliance' with a statutory obligation to accord procedural fairness. Either there has been compliance or there has not. Given the significance 33 (2005) 228 CLR 294; [2005] HCA 24. 34 SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 294 at 321 [77]. Crennan Bell of the obligation in the context of the review process (the obligation is mandated in every case), it is difficult to accept the proposition that a decision made despite the lack of strict compliance is a valid decision under the Act." Justice Hayne (with whose reasons on this aspect Kirby J agreed) observed that the evident purpose of Pt 7, and Div 4 in particular, is to afford procedural fairness to applicants35. His Honour identified the focus of the inquiry as to jurisdictional error as being the validity of the act done in purported performance of the Tribunal's obligation to review and decide the matter36. He concluded that37: "Where the Act prescribes steps that the Tribunal must take in conducting its review and those steps are directed to informing the applicant for review (among other things) of the relevance to the review of the information that is conveyed, both the language of the Act and its scope and objects point inexorably to the conclusion that want of compliance with s 424A renders the decision invalid." It is to be observed that the obligation imposed by s 424A, that the Tribunal give an applicant written particulars of any adverse information including of the relevance of that information to the review, is of a different character to the obligation imposed on the Tribunal to give notice of a hearing in the manner that is prescribed by s 441A. Consideration SAAP was concerned with the Act as it stood before the introduction of s 422B. The validity of s 422B was assumed by the parties and this appeal does not raise consideration of the scope of its operation. In SZBYR v Minister for Immigration and Citizenship38 Gleeson CJ, Gummow, Callinan, Heydon and 35 SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 294 at 350 [192]. 36 SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 294 at 353-354 [205]. 37 SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 294 at 354-355 [208] (emphasis in original). 38 (2007) 81 ALJR 1190 at 1195 [14]; 235 ALR 609 at 614; [2007] HCA 26. Crennan Bell Crennan JJ observed that in light of the introduction of s 422B it would be surprising if s 424A were interpreted as having an operation going well beyond the requirements of the hearing rule at common law. That observation is pertinent to the consideration of whether there is to be discerned from the legislative scheme an intention to invalidate in consequence of non-compliance with any of the obligations dealing with the manner of giving and receiving review documents. The obligations imposed by s 425A with respect to giving notice of the hearing are directed to ensuring that an applicant has adequate time in which to prepare his or her case. (The requirement for service by a method prescribed by s 441A may be thought to serve a different purpose, which is to lay the foundation for the Tribunal to determine a review without further notice where an applicant has failed to appear at a scheduled hearing.) As the Full Court found, s 441G contains a statutory recognition that some applicants are unlikely to understand the purport of the notice or to be able to properly prepare their case without assistance. In this respect s 441G may be seen as being concerned with the provision of effective notice of the hearing. In combination, ss 425A and 441G ensure that an applicant for review receives timely and effective notice of the hearing. They impose obligations which facilitate the conduct of a procedurally fair hearing. However, the manner of providing timely and effective notice of hearing is not an end in itself. The procedural steps dealing with the manner of giving notice are to be distinguished from other components of the statutory statement of the hearing rule, including the obligation to give particulars of adverse information39 and to invite the applicant to appear to give evidence and to present arguments relating to the issues arising in the decision under review40. While the legislature may be taken to have intended that compliance with the steps in ss 441G and 441A would discharge the Tribunal's obligations with respect to the giving of timely and effective notice of the hearing, it does not follow that it was the intention that any departure from those steps would result in invalidity without consideration of the extent and consequences of the departure. The respondents acknowledge that they suffered no injustice by reason of the Tribunal's omission and they do not take issue with the Full Court's 39 Section 424A(1). 40 Section 425. Crennan Bell characterisation of the result in the circumstances as being "rather absurd"41. The admitted absurdity of the outcome is against acceptance of the conclusion that the legislature intended that invalidity be the consequence of departure from any of the procedural steps leading up to the hearing42. In a case in which the Tribunal fails to comply with the requirements for the giving of notice of a hearing, the factual determination of whether the applicant for review and his or her authorised recipient received timely and effective notice of the hearing does not require the court to consider how the applicant might have presented his or her case differently had the Tribunal complied with the statutory procedures. No question arises, in the case of an applicant who has received timely and effective notice of the hearing, of the loss of an opportunity to advance his or her case. Notwithstanding the detailed prescription of the regime under Divs 4 and 7A and the use of imperative language it was an error to conclude that the provisions of ss 441G and 441A are inviolable restraints conditioning the Tribunal's jurisdiction to conduct and decide a review. They are procedural steps that are designed to ensure that an applicant for review is enabled to properly advance his or her case at the hearing; a failure to comply with them will require consideration of whether in the events that occurred the applicant was denied natural justice. There was no denial of natural justice in this case. For these reasons the appeal should be allowed. Orders As a condition of the grant of special leave the Minister undertook not to seek to disturb any orders as to costs which had been made in the courts below. The Full Court of the Federal Court allowed the respondents' appeal (order 1) and set aside the order made in the Federal Magistrates Court on 5 September 2007 (order 2) and ordered the Minister to pay the respondents' costs of the appeal (order 3). Accordingly, the orders that we propose are as follows: Appeal allowed. 41 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 167 42 SZIZO v Minister for Immigration and Citizenship (2008) 172 FCR 152 at 167 Crennan Bell Set aside orders 1 and 2 of the orders made by the Full Court of the Federal Court of Australia on 3 July 2008, and in lieu thereof order that: order 2 of the orders made by the Federal Magistrates Court of Australia on 5 September 2007 be set aside; and the appeal be otherwise dismissed. Appellant to pay the first to sixth respondents' costs of the appeal to this Court.

HIGH COURT OF AUSTRALIA AID/WATCH INCORPORATED APPELLANT AND COMMISSIONER OF TAXATION RESPONDENT Aid/Watch Incorporated v Commissioner of Taxation [2010] HCA 42 1 December 2010 1. Appeal allowed. ORDER Set aside orders 1, 2 and 3 of the order of the Full Court of the Federal Court of Australia made on 23 September 2009, and in their place order that the appeal to that Court be dismissed. On appeal from the Federal Court of Australia Representation D L Williams SC with S Kaur-Bains and R L Seiden for the appellant (instructed by Maurice Blackburn Lawyers) D M J Bennett QC with M N Allars and D F C Thomas for the respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Aid/Watch Incorporated v Commissioner of Taxation Taxation – Charitable institution – Appellant had object of promoting greater efficiency and effectiveness of foreign aid – Whether appellant "charitable institution" for purposes of Commonwealth tax exemptions and concessions – Whether meaning of "charitable institution" in revenue laws governed by law of charitable trusts – Whether meaning of "charitable institution" interpreted as at time of enactment – Whether appellant's main, predominant or dominant objects charitable – Whether for relief of poverty – Whether for advancement of education – Whether otherwise for purpose within spirit and intendment of preamble to Statute of Elizabeth 1601 (43 Eliz I c 4). Trusts – Charitable trusts – Political objects doctrine – Whether, and to what extent, doctrine recognised by common law of Australia. Words and phrases – "charitable institution", "political objects", "political purposes". A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 176-1. Fringe Benefits Tax Assessment Act 1986 (Cth), s 65J(1)(baa). Income Tax Assessment Act 1997 (Cth), s 50-5. FRENCH CJ, GUMMOW, HAYNE, CRENNAN AND BELL JJ. The appellant ("Aid/Watch") was incorporated on 26 May 1993 pursuant to the Associations Incorporation Act 1984 (NSW). From 14 July 2000 it was endorsed as a "charitable institution" and thus an entity exempt from income tax liability under the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"). From 1 July 2005 Aid/Watch also was endorsed as a "charitable institution" for the purposes of the Fringe Benefits Tax Assessment Act 1986 (Cth) ("the FBT Act") and the A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("the GST Act"). These endorsements were revoked by the respondent ("the Commissioner") with effect from 2 October 2006. Thereafter Aid/Watch lodged an objection to the revocations which was disallowed by the Commissioner on 6 March 2007. On 28 July 2008 the Administrative Appeals Tribunal (Downes J) ("the AAT") set aside the decision of the Commissioner and determined that Aid/Watch was a "charitable institution" within the meaning of the relevant legislation1. Upon appeal by the Commissioner, the Full Court of the Federal Court (Kenny, Stone and Perram JJ) set aside the decision of the AAT and affirmed the objection decision of the Commissioner of 6 March 20072. Aid/Watch now appeals to this Court. For the reasons which follow the appeal should be allowed and the decision of Downes J restored. The Full Court reasons The Full Court referred3 to the statement in Federal Commissioner of Taxation v Word Investments Ltd4: "[I]t is necessary to examine the objects, and the purported effectuation of those objects in the activities, of the institution in question. In examining the objects, it is necessary to see whether its main or predominant or 1 Re Aid/Watch Inc and Federal Commissioner of Taxation (2008) 71 ATR 386. 2 Federal Commissioner of Taxation v Aid/Watch Inc (2009) 178 FCR 423. (2009) 178 FCR 423 at 429 [29]. (2008) 236 CLR 204 at 217 [17]; [2008] HCA 55. See also Congregational Union of New South Wales v Thistlethwayte (1952) 87 CLR 375 at 442, 450; [1952] HCA 48. Crennan Bell dominant objects, as distinct from its concomitant or incidental or ancillary objects, are charitable5." The Full Court emphasised that it was common ground between the parties that Aid/Watch is an organisation concerned with promoting the effectiveness of Australian and multinational aid provided in foreign countries by means which include investment programs, projects and policies6. Their Honours referred to the evidence and said of the activities of Aid/Watch7: "It researches 'generally in partnership with people that are recipients of the aid and non-government organisations'; it brings the issues it identifies to light by publicly releasing the reports that are the result of its research; and it campaigns for changes to the ways in which aid is delivered through media releases and public events designed to influence relevant agencies to alter the way aid programs are administered." The Full Court remarked that while the activities of Aid/Watch might be described as educational, this was "a long way from being the dominant activity"8. Their Honours also said9: "This concern [of Aid/Watch] with the effectiveness of aid delivery is clearly aimed at the relief of poverty. Its premise is that if too little aid is delivered, if aid is delivered to the wrong areas, or if aid is of a particularly low quality it will be ineffective, or at least less efficient, at achieving its goal: namely, the relief of poverty. By promoting the effectiveness of foreign aid, Aid/Watch clearly seeks to promote more efficient use of resources directed to the relief of poverty. Indeed, it may be said that the focus on ensuring that aid is environmentally sustainable is also directed towards the relief of poverty. Where aid is delivered in an 5 Royal Australasian College of Surgeons v Federal Commissioner of Taxation (1943) 68 CLR 436 at 447, 448, 450, 452; [1943] HCA 34. (2009) 178 FCR 423 at 424 [1]. (2009) 178 FCR 423 at 427 [17]. (2009) 178 FCR 423 at 433 [46]. (2009) 178 FCR 423 at 427 [18]. Crennan Bell unsustainable way it may destroy ecosystems upon which communities rely in order to prosper." However, the Full Court concluded10: "Aid/Watch's attempt to persuade the government (however indirectly) to its point of view necessarily involves criticism of, and an attempt to bring about change in, government activity and, in some cases, government policy. There can be little doubt that this is political activity and that behind this activity is a political purpose. Moreover the activity is Aid/Watch's main activity and the political purpose is its main purpose. Recognising Aid/Watch's ultimate concern to relieve poverty does [not] diminish its political purpose." Because the immediate and prevailing aim of Aid/Watch was "to influence government" this, as a matter of the law of charitable trusts, "invalidated" any claim to charitable status for the purposes of the federal revenue laws11. In this Court, Aid/Watch challenges these conclusions. Tax exempt status In order to acquire and retain tax exempt status under the relevant provisions of the 1997 Act (s 50-5) and the FBT Act (s 65J(1)(baa)), and to enjoy tax concessions under the GST Act (s 176-1), it is necessary that Aid/Watch answer the description of a "charitable institution". Section 50-5 of the 1997 Act appears in Pt 2-15, Div 50 and is headed "Charity, education, science and religion". Item 1.1 of s 50-5 identifies as an "Exempt entity" a "charitable institution" that also meets the special conditions set out in s 50-50 (dealing with the presence Commissioner, as an entity exempt from income tax, pursuant to s 50-105). Charitable institutions are also required to be endorsed by the Commissioner under the FBT Act (ss 65J(1A), 123E) and the GST Act (s 176-1). in Australia) and s 50-52 (requiring an endorsement by The term "charitable institution" is not defined. It is this circumstance which gives rise to the issues in this litigation. These issues concern the 10 (2009) 178 FCR 423 at 430-431 [37]. 11 (2009) 178 FCR 423 at 430 [34]. Crennan Bell classification of the purposes of Aid/Watch as "political" and therefore as non-charitable in character. Charity and revenue legislation There is a long history of revenue legislation containing provisions respecting charitable institutions. The first British income tax statute, the Income Tax Act 179912, stated: "That no corporation, fraternity, or society of persons established for charitable purposes only, shall be chargeable under this Act, in respect of the income of such corporation, fraternity, or society." Provisions respecting charitable institutions have not always been designed to favour the revenue position of such bodies. For example, the Succession Duty Act 1853 (UK)13 imposed succession duty at rates beginning at one percent in respect of dispositions or devolutions in favour of close relatives and rising to ten percent in respect of dispositions or devolutions in favour of strangers (s 10). This highest rate of ten percent also was imposed upon dispositions in favour of "a trust for any charitable or public purposes" (s 16). The issue of statutory construction in Commissioners for Special Purposes of Income Tax v Pemsel14 concerned the provision in the Income Tax Act 1842 (UK)15 providing an allowance in respect of rents and profits of land "vested in trustees for charitable purposes, so far as the same are applied to charitable purposes"16. The majority of the House of Lords held that notwithstanding the application of the statute throughout the United Kingdom, and in particular in Scotland, the expression "trust for charitable purposes" and other expressions in the statute containing the word "charitable" were to be construed not according to some popular understanding of charity, which was seen as requiring the relief of 12 39 Geo III c 13, s 5. 13 16 & 17 Vict c 51. 15 5 & 6 Vict c 35, s 61. 16 The lengthy legislative provision is set out in full in the speech of Lord Halsbury LC: [1891] AC 531 at 540-541. Crennan Bell poverty, but with the technical meaning given by the English law of trusts. Under that law, as Barwick CJ later put it17, not every purpose beneficial to the community is a charitable purpose; the purpose must be "within the equity of the preamble to the Statute of Elizabeth[18]". The equity of the preamble may operate upon additional matters and circumstances which lie beyond its actual terms19. It is against this background that in the early years of the Commonwealth the Parliament enacted the Land Tax Assessment Act 1910 (Cth), the Estate Duty Assessment Act 1914 (Cth) ("the Estate Duty Act") and the Income Tax Assessment Act 1915 (Cth). Each statute contained a provision for favourable treatment for "charitable" institutions20. In Chesterman v Federal Commissioner of Taxation21 the Privy Council took as a starting point the decision in Pemsel and held that the expression "charitable purposes" in s 8(5) of the Estate Duty Act was used in its technical sense and did not bear any different and popular meaning. Their Lordships concluded that a gift of a fund to provide prizes for competitions in physical, moral and literary excellence, without regard to the pecuniary means of the competitors, was for charitable purposes within the meaning of the legislation. They said22: 17 Incorporated Council of Law Reporting (Q) v Federal Commissioner of Taxation (1971) 125 CLR 659 at 667; [1971] HCA 44. See also at 671 per Windeyer J. 18 1601 (43 Eliz I c 4). 19 See Nelson v Nelson (1995) 184 CLR 538 at 552-554; [1995] HCA 25. 20 Sections 13(e), 8(5) and 11(d) respectively. 21 (1925) 37 CLR 317; [1926] AC 128. See also Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1987) 163 CLR 236 at 245-246; [1987] HCA 30; Bellino v Australian Broadcasting Corporation (1996) 185 CLR 183 at 220-221; [1996] HCA 47; Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249 at 261 [24]-[25]; [2005] HCA 28. 22 (1925) 37 CLR 317 at 319; [1926] AC 128 at 130-131. See also Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 at 585-586 [45]-[46], 589 [57]; [1998] HCA 59. Crennan Bell "The [taxpayers] contend that the word 'charitable' in the Act bears its technical legal meaning as in the Statute of Elizabeth. The [Commissioner] contends that it bears its popular meaning, which involves the idea of assisting poverty or destitution and which may perhaps be expressed by the word eleemosynary." It was this latter submission that was rejected. The result was to deny the limitation which the submissions by the Commissioner had sought to impose upon the favourable treatment given to taxpayers by s 8(5) of the Estate Duty Act. The legislative response to the decision in Chesterman23 was the amendment of s 8(5) of the Estate Duty Act24. This, however, was not to vindicate the Commissioner's construction but to assist taxpayers by the addition of favourable treatment for any entity which was a "public benevolent institution in Australia". As Starke J emphasised in Perpetual Trustee Co Ltd v Federal Commissioner of Taxation25, that expression had no technical legal sense and thus was to be understood in accordance with common usage. The exempt entities for which provision now is made by ss 50-5 and 50-10 of the 1997 Act include "religious", "scientific" and "public educational" institutions, and bodies "established for community service purposes (except political or lobbying purposes)". In the present litigation, by way of contrast to the stance taken in the unsuccessful submissions in Chesterman, the Commissioner relies upon what is said to be the technical meaning of "charitable" to narrow the area of exemption from the revenue law. 23 See Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1931) 45 CLR 224 at 231; [1931] HCA 20. 24 Estate Duty Assessment Act 1928 (Cth), s 5(b). 25 (1931) 45 CLR 224 at 231-232. See, further, Chesterman, "Foundations of Charity Law in the New Welfare State", (1999) 62 Modern Law Review 333 at 340-342. Crennan Bell Statutory construction The speech of Lord Macnaghten in Pemsel26 is the source of the modern classification of charitable trusts in four principal divisions, namely, trusts for the relief of poverty, for the advancement of education, for the advancement of religion and for other purposes beneficial to the community. But even in 1891, the case law which gave the term "charitable" its technical meaning had developed considerably since the time of the British income tax statute of 1799. The case law may be expected to continue to do so as the cases respond to changed circumstances. As Lord Wilberforce put it, the law of charity is a moving subject which has evolved to accommodate new social needs as old ones become obsolete or satisfied27. There thus is engaged in the consideration of the revenue legislation upon which this appeal turns an important principle of statutory construction. A law of the Commonwealth may exclude or confirm the operation of the common law of Australia upon a subject or, as in the present case, employ as an integer for its operation a term with a content given by the common law as established from time to time. The phrase "charitable institution" employed in s 50-5 of the 1997 Act does not give to that provision the character which was fatal to the validity of s 12 of the Native Title Act 1993 (Cth). Section 12, by giving "the force of a law of the Commonwealth" to "the common law of Australia in respect of native title", unsuccessfully attempted to engage s 109 of the Constitution to make that common law immune from affection by State laws28. No such issue arises respecting s 50-5. 26 [1891] AC 531 at 583. The degree to which Lord Macnaghten drew upon the argument of Sir Samuel Romilly in Morice v Bishop of Durham (1805) 10 Ves Jun 522 at 532 [32 ER 947 at 951] has been a matter of some debate: Incorporated Council of Law Reporting (Q) v Federal Commissioner of Taxation (1971) 125 CLR 659 at 667. 27 Scottish Burial Reform and Cremation Society v Glasgow Corporation [1968] AC 138 at 154. See also Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 at 582 [34]. 28 Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 487-488; [1995] HCA 47; see also Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 512-513 [102]; [2003] HCA 2; and (Footnote continues on next page) Crennan Bell However, in National Anti-Vivisection Society v Inland Revenue Commissioners29 Lord Wright advanced, in support of the conclusion that the Society was devoted to the pursuit of "political" purposes and therefore was not a body "established for charitable purposes only" within the meaning of the Income Tax Act 1918 (UK), the proposition that this result would prevent the Society "from claiming the benefit of being immune from income tax, which would amount to receiving a subsidy from the state to that extent". The effect of the submissions for the Commissioner in the present case was that the case law respecting the exclusion of "political" purposes from charitable purposes should be applied and developed consistently with the remarks of Lord Wright. That would not be a proper approach to the construction of the 1997 Act, the FBT Act or the GST Act. In Esso Australia Resources Ltd v Federal Commissioner of Taxation30, Gleeson CJ, Gaudron and Gummow JJ remarked that the interrelation and interaction between the common law and statute may trigger varied and complex questions. They went on to consider instances where statute might provide an analogy for the purpose of developing the common law, and distinguished this from the process of statutory construction itself31. Where statute picks up as a criterion for its operation a body of the general law, such as the equitable principles respecting charitable trusts, then, in the absence of a contrary indication in the statute, the statute speaks continuously to the present, and picks up the case law as it stands from time to time. Further, where, as here, the general law comprises a body of doctrine with its own scope and purpose, the development of that doctrine is not directed or controlled by a curial perception of the scope and purpose of any particular statute which has adopted the general law as a criterion of liability in the field of operation of that statute. Accordingly, the use of the term "charitable" in the phrase "charitable institution" in s 50-5, item 1.1 of the 1997 Act and the corresponding provisions Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 504-510 [29]-[43]. 29 [1948] AC 31 at 52. 30 (1999) 201 CLR 49 at 59-60 [18]; [1999] HCA 67. 31 (1999) 201 CLR 49 at 60 [19]-[20]. Crennan Bell of the FBT and GST Acts is to be understood by reference to its source in the general law as it is developed in Australia from time to time. Revenue law of the United States and Canada In some jurisdictions the revenue law is expressed in terms which limit the exempt status of charitable institutions. Thus, the United States Internal Revenue Code limits tax exempt status to charities which dedicate no "substantial part" of their activities to attempting "to influence legislation"32. The result is that an institution whose purposes are charitable under the general law may be excluded from tax exempt status33. But that is not the form taken by the 1997 Act, the FBT Act or the GST Act. The Canadian income tax legislation34 provides for the registration of charitable organisations and charitable foundations35. It makes express provision for the conduct of "political activities"36; these are considered to be charitable activities or charitable purposes, only if they are of an ancillary and incidental nature and if they do not include the direct or indirect support of, or opposition to, any political party or candidate for public office. The special treatment in the Canadian statute law of "political activities" distinguishes it from the Australian legislation. Charitable purposes which are "political" Here lies the area of disputed principle between Aid/Watch and the Commissioner. The dispute is occasioned not by the terms of the revenue legislation itself but by the content of the general law respecting charitable purposes. The parties are at odds as to the significance now to be attached in this Court to a line of authority apparently beginning with remarks of Lord Parker of 32 26 USC §§501(c)(3), 501(h). 33 Regan v Taxation with Representation of Washington 461 US 540 (1983); Scott and Ascher on Trusts, 5th ed (2009), vol 6 at 2580, §38.7.9. 34 Income Tax Act, RSC 1985, c 1 (5th Supp). 35 Section 248(1) (definition of "registered charity"). 36 Section 149.1(6.1)-(6.2). Crennan Bell Waddington in the House of Lords in Bowman v Secular Society Ltd37. His Lordship said: "a trust for the attainment of political objects has always been held invalid, not because it is illegal, for every one is at liberty to advocate or promote by any lawful means a change in the law, but because the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit, and therefore cannot say that a gift to secure the change is a charitable gift." From those remarks there has developed since 1917 a body of English case law construing the phrase "political objects". These objects are not seen as limited to changes to the law of England or elsewhere. Both those who advocate change and those who oppose it pursue political objects in the relevant sense. Further, a trust with a principal purpose to procure a reversal of government policy, or of particular administrative decisions of government authorities, is proscribed as a trust for "political purposes"; this is so whether the government is that in England or elsewhere. Such trusts, even if otherwise within the spirit and intendment of the preamble to the Elizabethan statute, can never be regarded as being for the public benefit in the sense required for a charitable trust. These propositions were adopted by Slade J in McGovern v Attorney-General38. They were applied by the English Court of Appeal in Southwood v Attorney-General39. They were applied also by the Federal Court of Appeal in Canada in the influential decision of Positive Action Against Pornography v Minister of National Revenue40, when construing the phrase "political activities" in the Canadian revenue legislation. McGovern was 37 [1917] AC 406 at 442. 38 [1982] Ch 321 at 340. 39 [2000] WTLR 1199. 40 [1988] 2 FC 340 at 352-355. See also Action by Christians for the Abolition of Torture v Canada (2002) 225 DLR (4th) 99 at 113-117 [36]-[53], concluding that the exercise of moral pressure on government is a political purpose or activity. In the latter case, the Canadian Supreme Court refused leave to appeal: (2003) 320 NR 394 (note). Crennan Bell followed, with some reluctance, in New Zealand41. Bowman was adopted in India42. The only authority to which Lord Parker referred in Bowman was De Themmines v De Bonneval43. The trust in that case was for the promotion of the doctrine of the absolute and inalienable Papal supremacy in ecclesiastical matters by the printing and circulation of a treatise by 37 French bishops. The trust failed, as the law in England44 then stood45, but this was because the trust was considered to be for a superstitious use and thus at variance with English public policy46. In the Anti-Vivisection Case47, Lord Simonds considered that Lord Parker may have been influenced by a passage in the first edition of Tyssen, The Law of Charitable Bequests (published in 1888) stating that the law would "stultify itself" if it were held that "it was for the public benefit that the law itself should be changed"48. What was involved in the concept of stultification was not further explained. Tyssen referred to, but Lord Parker did not rely upon, the decision of Knight-Bruce V-C in Habershon v Vardon49, where the testator's object had been 41 Re Collier (Deceased) [1998] 1 NZLR 81 at 88-91. See also Molloy v Commissioner of Inland Revenue [1981] 1 NZLR 688 at 695-696. 42 Tribune Press, Lahore (Trustees) v Income Tax Commissioner, Punjab, Lahore [1939] 3 All ER 469 at 475-476; Subhas Chandra v Gordhandas I Patel (27) AIR 1940 Bombay 76 at 80, 81; Hidayat Beg v Behari Lal (28) AIR 1941 Allahabad 225 at 234; Iyer, The Indian Trusts Act, 2nd ed (1983) at 119. 43 (1828) 5 Russ 288 [38 ER 1035]. 44 But not in the Australian colonies, where the law as to superstitious uses did not apply: Nelan v Downes (1917) 23 CLR 546 at 550, 568, 572; [1917] HCA 51. 45 Before the enactment of the Roman Catholic Charities Act 1832 (2 & 3 Will IV 46 (1828) 5 Russ 288 at 297 [38 ER 1035 at 1038]. 47 [1948] AC 31 at 62. 49 (1851) 4 De G & Sm 467 [64 ER 916]. Crennan Bell "the political restoration of the Jews to Jerusalem and to their own land". The trust was void because this acquisition of political power would be by creation of a revolution in a friendly country and would be inconsistent with the amicable relations between Britain and the Sublime Porte. Tyssen, somewhat ingenuously, later took the view that the terms of the bequest did not indicate any contemplation by the testator of "unconstitutional measures" to effect his object within the Ottoman Empire. Tyssen then added50: "The case, therefore, is an authority on all gifts for promoting alterations in the constitution of foreign countries, whatever means may be employed for effecting such alterations; and we submit that the same principle would apply to gifts for promoting alterations in our own laws, at least when such gifts are not framed as gifts to existing associations." Professor Sheridan identified51 as perhaps the earliest example of an argument concerning a charitable purpose connected with politics, the brief decision of Stirling J in In re Scowcroft52. But Stirling J had upheld a trust to maintain a village hall "for the furtherance of Conservative principles and religious and mental improvement and to be kept free from intoxicants and dancing". Moreover, in 1892, Chancellor Boyd, when upholding a trust to promote the adoption by the Canadian Parliament of legislation prohibiting the manufacture or sale of intoxicating liquor, had considered the "political aspect" of the trust53. In his view the organism of government was moved and statutes shaped by the education of public opinion; to seek the amendment of the law, by means according to law, could not be stigmatised as a purpose contrary to law. 50 Tyssen, The Law of Charitable Bequests, (1888) at 177-178. 51 Sheridan, "Charity versus Politics", (1973) 2 Anglo-American Law Review 47 at 47. 53 Farewell v Farewell (1892) 22 OR 573 at 579-581. Crennan Bell The Charities Act 2006 (UK) ("the 2006 Act") In Hanchett-Stamford v Attorney-General54, Lewison J held that the 2006 Act does not change "the fundamental principle that if one of the objects or purposes of an organisation is to change the law, it cannot be charitable". In England some alleviation of the rigour of this rule is found by reliance upon statements in the Anti-Vivisection Case55 to the effect that a political purpose which is merely subsidiary or ancillary to a main or leading purpose that is charitable does not deny the validity of the trust. Section 4 of the 2006 Act directs the Charity Commission for England and Wales to issue guidance respecting the "public benefit" to which trustees of charitable bodies must have regard when exercising their powers or duties. The Commission takes the position that if a change or continuation of the law, policy, or the decisions of central or local governments or other public authorities would support the charitable purposes of the trust or organisation, then a campaign for that change or for preservation of the status quo is permissible56. The United States Given both the late development of the "political objects" doctrine in England and its shallow root in earlier precedent, it is perhaps not surprising that, as the Commissioner accepted in submissions in the present case, courts in the United States took a different path. [2009] Ch 173 at 181-182 [22]. 55 [1948] AC 31 at 51, 61-62, 75-77. 56 Charity Commission for England and Wales, Speaking Out – Guidance on Campaigning and Political Activity by Charities, CC9 (2008), section D1; Pettit, Equity and the Law of Trusts, 11th ed (2009) at 278-279. Crennan Bell In Public Trustee v Attorney-General (NSW)57, Santow J, after referring to Taylor v Hoag58 and Collier v Lindley59, said of the United States decisions that they treated "the cause of law reform" and the "public participation in the legislative and government process [as] themselves for the public benefit". The present position in the United States may be seen from three points made in the Comment upon §28 of the Restatement of the Law Third, Trusts, which was adopted and promulgated in 200160. The first point is that: "A trust may be charitable although the accomplishment of the purpose for which the trust is created involves a change in the existing law. If the purpose of the trust is to bring about a change in the law by illegal means, however, such as by revolution, bribery, or illegal lobbying, or bringing improper pressure to bear upon members of the legislature, the purpose is not charitable." The second is that: "The mere fact, however, that the purpose of a trust is to advocate and bring about a particular change of law does not prevent the purpose from being charitable. This is so whether the change is pursued indirectly through the education and persuasion of the electorate, so as to bring about a public sentiment favorable to the change, or through more direct but lawful influences, such as by proper lobbying and other persuasion brought to bear upon legislators." (emphasis in original) The third is that: "Although a trust to promote the success of a particular political party is not charitable, the development and dissemination of information 57 (1997) 42 NSWLR 600 at 618-619. See also the decision of Young CJ in Eq in Attorney-General (NSW) v The NSW Henry George Foundation Ltd [2002] NSWSC 1128 at [62], and Santow, "Charity in Its Political Voice: A Tinkling Cymbal or a Sounding Brass?", (1999) 52 Current Legal Problems 255 at 281-282. 58 116 A 826 at 827-828 (1922). 59 266 P 526 at 529 (1928). 60 At 23-24. See also Dal Pont, Law of Charity, (2010) at 304-305 [12.34]. Crennan Bell advocating or seeking to improve understanding of a particular set of social, economic, or political views is charitable, whether because it is educational ... or because it contributes to a market-place of ideas that is beneficial to the community." Bowman in Australia Young CJ in Eq observed of McGovern and the recent English cases stemming from Bowman that they had "not been wholeheartedly accepted in Australia"61. What then is the standing in Australia of the line of English authority which stems from Bowman? The starting point must be that the remarks of Lord Parker in Bowman were not directed to the Australian system of government established and maintained by the Constitution itself. That circumstance, as explained in what follows, provides a significant consideration in deciding the content of the common law of Australia respecting trusts for "political objects". Lord Parker's statement has received limited attention in this Court. It was noted by Dixon J in Roman Catholic Archbishop of Melbourne v Lawlor62, but as a step towards the conclusion that there are many purposes peculiar to religious denominations which go beyond religious purposes that are charitable. In the same case McTiernan J63 referred to Lord Parker's remarks but did so to differentiate "political or fiscal opinions" from the advancement of religion, the latter being "always presumed to be beneficial to the community". In Royal North Shore Hospital of Sydney v Attorney-General (NSW)64, this Court held that encouragement of the teaching of technical education in State schools was a valid charitable object and that a bequest for that purpose was not void as a trust for the attainment of a political object. Latham CJ65 set out the 61 Attorney-General (NSW) v The NSW Henry George Foundation Ltd [2002] NSWSC 1128 at [45]. 62 (1934) 51 CLR 1 at 33; [1934] HCA 14. 63 (1934) 51 CLR 1 at 54. 64 (1938) 60 CLR 396; [1938] HCA 39. 65 (1938) 60 CLR 396 at 410-412. Crennan Bell critical passage in the speech of Lord Parker in Bowman, and Starke J referred to it66, but both did so for the purpose of denying its application to the case at hand. Rich J did not refer to Bowman but denied the application of the "somewhat vague and indefinite but well-known objection to gifts for public purposes" and said that acceptance of the appellant's argument would drive the case to an absurd conclusion67. The remaining member of the Court, Dixon J, did not refer to "The case law dealing with the distinction between charitable purposes and political objects is in an unsatisfactory condition, but the basal ideas upon which it rests may be seen. It is, of course, quite clear that any purpose which is contrary to the established policy of the law cannot be the subject of a good charitable trust. But there is a further consideration arising from the very nature of the doctrine by which charitable trusts are supported. Under all four heads of the well-known classification to which such trusts are referred, an essential element is the real or imputed intention of contributing to the public welfare. A coherent system of law can scarcely admit that objects which are inconsistent with its own provisions are for the public welfare. Thus, when the main purpose of a trust is agitation for legislative or political changes, it is difficult for the law to find the necessary tendency to the public welfare, notwithstanding that the subject of the change may be religion, poor relief, or education. When the subject matter is none of these and the case must fall under the fourth class, viz., that of undefined purposes for the public good, the difficulty becomes even greater." His Honour added: "Again, where funds are devoted to the use of an association of persons who have combined as a political party or otherwise for the purpose of influencing or taking part in the government of the country, it is evident that neither the good intentions nor the public purposes of such a body can suffice to support the trust as charitable." 66 (1938) 60 CLR 396 at 420. 67 (1938) 60 CLR 396 at 419. 68 (1938) 60 CLR 396 at 426. Crennan Bell This reasoning appears to proceed by the following steps: (i) a purpose contrary to the established policy of the law cannot be recognised as a charitable purpose; (ii) even if (i) does not apply, the purpose in question must have the real or imputed intention of contributing to the public welfare; (iii) when the main purpose of the trust is "agitation" for legislative or political changes, with respect to religion, poor relief or education, "it is difficult" for the law to find that (ii) is satisfied; and (iv) the source of that difficulty is the apparent paradox in a "coherent system of law" treating as for the public welfare "objects which are inconsistent with its own provisions". Proposition (iv) invites further examination, particularly in the light of recent decisions in this Court. In Australia, the foundation of the "coherent system of law" of which Dixon J spoke in Royal North Shore Hospital is supplied by the Constitution. The provisions of the Constitution mandate a system of representative and responsible government69 with a universal adult franchise70, and s 128 establishes a system for amendment of the Constitution in which the proposed law to effect the amendment is to be submitted to the electors. Communication between electors and legislators and the officers of the executive, and between electors themselves, on matters of government and politics is "an indispensable incident" of that constitutional system71. While personal rights of action are not by these means bestowed upon individuals72 in the manner of the Bivens73 action known in the United States, the Constitution informs the development of the common law74. Any burden which the common 69 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 557-559; [1997] HCA 25. 70 Roach v Electoral Commissioner (2007) 233 CLR 162 at 174-175 [7]-[8], 186-188 [44]-[49]; [2007] HCA 43. 71 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 559-560. 72 Kruger v The Commonwealth (1997) 190 CLR 1 at 46-47, 93, 125-126, 146-148; [1997] HCA 27. 73 After Bivens v Six Unknown Named Agents of Federal Bureau of Narcotics 403 US 74 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562-566; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 220 [20]; [2001] HCA 63; Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 245 [180]-[181]; [2004] HCA 41. Crennan Bell law places upon communication respecting matters of government and politics must be reasonably appropriate and adapted to serve a legitimate end in a manner which is compatible with the maintenance of that system of government75. The system of law which applies in Australia thus postulates for its operation the very "agitation" for legislative and political changes of which Dixon J spoke in Royal North Shore Hospital. There is none of the "stultification" of which Tyssen wrote in 1888. Rather, it is the operation of these constitutional processes which contributes to the public welfare. A court administering a charitable trust for that purpose is not called upon to adjudicate the merits of any particular course of legislative or executive action or inaction which is the subject of advocacy or disputation within those processes. The submissions by Aid/Watch It was with this understanding of the system of law that applies in Australia that Aid/Watch submitted that the generation by it of public debate as to the best methods for the relief of poverty by the provision of foreign aid has two characteristics indicative of its charitable status. The first is that its activities are apt to contribute to the public welfare, being for a purpose beneficial to the community within the fourth head identified in Pemsel. The second is that whatever else be the scope today in Australia for the exclusion of "political objects" as charitable, the purposes and activities of Aid/Watch do not fall within any area of disqualification for reasons of contrariety between the established system of government and the general public welfare. Conclusions These submissions by Aid/Watch should be accepted. By notice of contention the Commissioner submitted that the Full Court should have decided the appeal in his favour on the ground that the main or predominant or dominant objects of Aid/Watch itself were too remote from the relief of poverty or advancement of education to attract the first or second heads in Pemsel. It is unnecessary to rule upon these submissions by the Commissioner. This is because the generation by lawful means of public debate, in the sense described earlier in these reasons, concerning the efficiency of foreign aid directed to the 75 Coleman v Power (2004) 220 CLR 1 at 50 [92], 77-78 [196], 82 [211]; [2004] HCA 39. Crennan Bell relief of poverty, itself is a purpose beneficial to the community within the fourth head in Pemsel. It also is unnecessary for this appeal to determine whether the fourth head encompasses the encouragement of public debate respecting activities of government which lie beyond the first three heads (or the balance of the fourth head) identified in Pemsel and, if so, the range of those activities. What, however, this appeal should decide is that in Australia there is no general doctrine which excludes from charitable purposes "political objects" and has the scope indicated in England by McGovern v Attorney-General76. It may be that some purposes which otherwise appear to fall within one or more of the four heads in Pemsel nonetheless do not contribute to the public welfare in the sense to which Dixon J referred in Royal North Shore Hospital77. But that will be by reason of the particular ends and means involved, not disqualification of the purpose by application of a broadly expressed "political objects" doctrine. Orders The appeal should be allowed, orders 1, 2 and 3 of the orders of the Full Court set aside, and in place thereof the appeal by the Commissioner from the decision of the AAT to the Full Court should be dismissed. No orders as to costs are required, there being an agreement between the parties on the matter. 76 [1982] Ch 321 at 340. 77 (1938) 60 CLR 396 at 426. HEYDON J. The issues in this appeal may be grouped under two questions. The first question is whether the purposes of the appellant fall within one of the four classes of purposes which the law calls charitable. If so, the second question is whether there is anything in the appellant's purposes which disqualifies it from being a "charitable institution" because there is something "political" about them. The appellant's objectives and activities The appellant did not contend that it advanced religion. But it contended that it fell within one or all of the other three classes into which charitable trusts are classified. It said that it had the purpose of relieving poverty. It said that it had the purpose of advancing education. And it said that it had other purposes beneficial to the community. What were its objectives and activities? The appellant's "main objectives". constitution, headed "Objectives", opened as follows: Clause 2 of the appellant's "[The appellant] monitors, researches, campaigns and undertakes activities on the environmental impact of Australian and multinational aid and investment programs, projects and policies." Clause 2 then went on to state that the "main objectives" of the appellant were to "seek to ensure" certain ends. Twelve were set out. The twelfth was to ensure the existence of a public fund to be used only to support the appellant's key purposes, ie the first eleven ends. The eleven ends were: aid projects and development programs and projects are designed to protect the environment and associated human rights of local communities in countries that receive Australian aid. there is increased aid funding for environment programs with specific attention to renewable energy, end-use efficiency and energy conservation, small scale irrigation schemes and sustainable agriculture, land rehabilitation programs, waste management, and protection of biodiversity. there are complete environmental impact assessment according to the highest standards for all projects, incorporating meaningful public/community participation. aid and development projects and programs incorporate the principles of ecologically sustainable development. there is respect for the rights of indigenous people and a recognition of their expertise in ecological management. aid agencies, development banks and export credit agencies [consultations with] community conduct planning, identification, the organisations, implementation, monitoring and evaluation of projects. full and regarding regular there is accountability and transparency in the Australian aid and export credit programs including freedom of information on all aspects of projects and programs of development agencies and multilateral development banks. there is greater recognition of women's needs and greater involvement of women on development projects, and greater gender equity at all levels of the development process, including in consultancy firms contracted to implement aid programs and projects. there is a halt to structural adjustment programs that contribute to environmental degradation and dislocate or damage the poorest populations. there is an increased proportion of appropriate professional staff in Australia's official overseas development agency (currently AusAID), official Export Credit Agency (currently EFIC) and multilateral development agencies and consultancy firms contracted for aid programs and projects and the development banks. there is increased funding of development education activities within Australia and an increased public awareness of the environmental and social impact of the Australian Overseas Development Assistance Program and related private investment, including input into environmental and developmental studies." The Administrative Appeals Tribunal ("the Tribunal") said that two threads ran through the detailed objects described in the appellant's constitution. "The first is to ensure local community involvement in the planning and implementation of aid projects. The second is to ensure that aid is delivered in an environmentally effective manner." Those are certainly two of the themes. But there are others. They relate to the role of indigenous people, consultations with community organisations, accountability and transparency, women, professional staff and educational funding. The way the appellant conducted its activities: the findings. Turning from the appellant's purposes as stated in its constitution to the way it conducted its activities, the Tribunal found that those activities accorded with the appellant's formal objectives of monitoring, researching and campaigning to improve the effectiveness of aid delivery. They included "publishing reports and assessments following its monitoring and research with the object that the reports and public response to them will influence government." The Tribunal gave numerous examples of the appellant's activities – submissions to government, reports, and other publications. The Tribunal found, indeed, that the "whole object" of the appellant was to influence public opinion, and ultimately government agencies and government itself. The Tribunal also said that the appellant's object was "to promote the effectiveness of aid, both by ensuring that it is delivered where it is intended and by ensuring that its delivery is environmentally effective" (emphasis added). The Tribunal said that "a fundamental part" of the appellant's work was "campaigning, very often against government". As the Full Court of the Federal Court of Australia ("the Full Court") said, echoing the repeated use of that expression by the Tribunal, the appellant's role was "campaigning". The Full Court also said that its goal was "to influence, and thereby to change, the way in which aid is delivered." The Tribunal found that Dr Goodman, Chair of the appellant, had said in the appellant's 2005 Annual Report that it was "campaign focused" and "dedicated to pursuing global justice" by "targeting the policies and practices of inter-governmental institutions, transnational corporations, and, most especially, the Australian Government and its allies." The Tribunal found that he also said that the appellant claimed to expose "injustices, whether committed in the name of power politics or economic interest, and [argued] for alternatives based on the principles of sustainable livelihood, environmental justice and global equity." The Tribunal found that the appellant's "Campaign Strategy" for 2005/2006 identified various goals. One goal was to "expose the corporate beneficiaries of the aid programme". Another was to "expose the disparity between aid policy and practice". Another was to "reveal Australian aid flows to communities in conflict." Another was to "expose the corporate beneficiaries of [International Financial Institutions] lending". Another was to "demand a complete phase out of all [International Financial Institutions] support for extractive industries (oil, gas and mining)". Another was to "support communities impacted [sic] by the Australian aid and trade programme". Another was to "demand [that] core labour standards be adopted by all [International Financial Institutions] as conditions of support". Another was to "halt the pro-privatisation of water policies at all [International Financial Institutions]". Another was to "expose the environmental and social impacts of the Australian aid and trade programme". The Tribunal also found that every publication by the appellant in evidence before the Tribunal contained "adverse comments relating to Australian government policy and AusAID activities, in particular." The Tribunal specifically identified as an example a "major report" by the appellant which "placed emphasis upon a conclusion that significant amounts of money, which were not directly related to aid, were reported as expended on the aid program." The Tribunal noted that that report concluded the that found appellant was with a "call to action to government" to "get real with our aid program." Finally, the Tribunal the "commercialisation" of aid and the provision of aid money to private Australian companies, a practice which the appellant described as "boomerang aid"; had "severely" criticised the operations of the World Bank; had advocated the abolition of an Australian agency, the Export Finance and Insurance Corporation; and had "opposed" the Free Trade Agreement between Australia and the United States of America. concerned with The way the appellant conducted its activities: the evidence. Those conclusions of the Tribunal were supported not only by the evidence to which the Tribunal did refer, but also by other evidence to which it did not refer. The appellant described itself as a group that "campaigns on Australian involvement in overseas aid and trade projects, programs and policies." It described itself as an "activist group" and an "activist and solidarity organisation". It said that its "activist" and "[p]rotest oriented" nature was one of its "[s]trengths". It claimed to employ a "multi-level strategy to effect change". The appellant had issued media releases which "exposed" the Australian Government's "abuse of its aid program". The appellant described Australia's aid program as "mired in domestic political expediency". The appellant's constitution had been amended in 2000 to remove the statement that it "works to ensure that aid reaches the poorest in the community" from the start of its objectives. One report prepared by the appellant noted that it had been calling for one specific policy change "for almost 12 years". Fourth class: generating debate about how poverty is best relieved In relation to the fourth class, the most fully developed way in which the appellant put its case, at the very end of its address in reply, was to say that it "seeks to generate debate about how poverty is best relieved" by Australia's provision of foreign aid. Assuming that seeking "to generate debate about how poverty is best relieved" is within the fourth class of charitable objects, can it be said that the appellant was seeking to "generate debate" on that subject? No. The appellant advanced points of view, but it was not generating debate in the sense of stimulating others to contribute competing points of view so that some higher synthesis or more acute understanding of issues might emerge. The appellant was not playing the role of a teacher in charge of a skilfully conducted seminar, or someone deftly presiding over a meeting. The appellant's activities were designed to ensure that the appellant's points of view about aid prevailed by ensuring that government did some things and did not do others. The appellant wanted concrete results in relation to aid – results for the environment, for local communities involved, for the rights of indigenous people and women, for the accountability and transparency of government programs, for improving staff skills, for increasing educational funding and raising public awareness about Australian aid. Those who ran the appellant did not see themselves as philosophers merely talking about the world, or encouraging others to talk about the world: they saw their task as being to change the world. That was the whole point of creating an "activist and solidarity organisation". Members of debating societies or other participants in debate do not need to be activist and do not need to show solidarity, but those who want practical changes do. To be "activist" is to advocate energetic action. A "solidarity organisation" is one which is perfectly united in a community of interests, feelings or purposes. An "activist and solidarity organisation" is one which is perfectly united in a community of interests, feeling or purposes in relation to an energetic course of action. It seeks the carrying out of deeds, not the mere uttering of words. No doubt quite a number of people and organisations who learned of the appellant's points of view might, if they thought it worthwhile, seek to controvert them. The appellant might in that sense generate debate. But it did not seek that outcome. The appellant's views were not put in a manner inviting a response, but in a manner seeking compliance. It did not want dialogue, nor even too long a monologue. The appellant wanted its views to be implemented, not debated. It wanted obedience, not conversation. The appellant pointed to two pieces of evidence which it said were to the contrary. One was a reference in one of the appellant's publications to the need for a debate about Australian aid. The other arose out of the cross-examination of Dr Goodman. He was taken to a report of the appellant which said: "We seek to push the Australian Government and multilateral institutions to promote a holistic approach." The cross-examiner asked whether "seeking to push" was synonymous with "seeking to persuade". In dealing with the group of questions that followed, Dr Goodman said that the appellant was: "committed to ensuring that aid – seeking to ensure that aid practices are most effective in alleviating poverty, addressing sustainable development and we seek to push that most certainly and this is simply another way of framing that as a holistic approach to enable local indigenous communities to start charting their own development. It's an aspect of a broader set of requirements that are widely acknowledged as being necessary [to] achieve effective aid delivery. So I don't think it's a matter of persuading so much as presenting the arguments. We're not specifically seeking to persuade anybody there, we're seeking to push the Australian Government to promote a holistic approach. So we're not necessarily trying to win them over. We're seeking to ensure that they do in fact promote the holistic approach that they say they're committed to." (emphasis added) The appellant relied on the reference to "presenting the arguments". When those two pieces of evidence are considered in the light of the other evidence taken as a whole, they do not support the proposition that the appellant was simply concerned with generating debate or presenting arguments for their own sake. That characterisation is inconsistent with the appellant's "campaigning" and its "targeting". It is inconsistent with its desire to "expose" evils, its tendency to "demand", to oppose, to criticise, to protest, and to be "activist". Above all, it is inconsistent with its concern for results, to be achieved with whatever amount of rancour and asperity was needed. Relief of poverty The appellant did not have the goal of relieving poverty. It provided no funds, goods or services to the poor. It did not raise funds to be distributed to the poor by others. The purposes of the appellant embraced aid to the poor, but they also embraced aid to many other sections of society as well. The goal of ensuring that there was local community involvement in the planning and implementation of aid projects was not targeted at the poor. Nor was the goal of ensuring that aid was delivered in an environmentally effective manner. Nor were the goals of respecting indigenous people and their expertise, ensuring "accountability and transparency" in relation to Australian aid programs, and increasing recognition of women's needs and involvement of women in development projects. The Tribunal was correct to find that the relief of poverty had "no particular emphasis in [the appellant's] formal objectives". The Tribunal contradicted itself when it said that "[v]irtually every purpose or activity of [the appellant] is directed towards promoting the relief of poverty." The Tribunal was not correct to find that implicitly the relief of poverty was a "major objective" of the appellant. It was an objective, but diluted and diffused by many other objectives, and actually contradicted by some. The purpose of providing aid to improve infrastructure might relieve poverty, but the appellant opposed infrastructure which damaged the environment. One of its goals was to "demand" a complete phase out of support for extractive industries: these industries often damage the environment, but they also often bring wealth to many who would otherwise be poor. Similarly, the connection between opposing the Free Trade Agreement between Australia and the United States of America and relieving poverty was obscure. Educational purposes Only the eleventh of the objectives stated in the appellant's constitution related to education. Thus education is not a main or even a substantial purpose of the appellant. And the appellant's activities did not involve any systematic method or procedure for the inculcation of knowledge, the cultivation of mental or physical powers or the development of character78. The Full Court correctly said that characteristics of those kinds did not exhaust the category of education. It relied on the appellant's "major publications" as being research. It suggested 78 Lloyd v Federal Commissioner of Taxation (1955) 93 CLR 645 at 661; [1955] HCA 71. that that research improved "the sum of communicable knowledge", in the words of Wilberforce J in In re Hopkins' Will Trusts79. However, the function of the appellant is not educative, but polemical. The appellant has a particular point of view, or a series of particular points of view. Those points of view are sometimes worked out, for example, in what Dr Goodman called "major, in- depth, on the ground, researched reports". But the points of view are pressed as part of a "campaign"; the appellant engaged in the "targeting" of various government policies and seeks to "argue for" others. The appellant has attacked various government policies as involving "perversity" or "hypocrisy". The appellant's publications take a polemical stand in relation to climate change issues: its stand may be virtuous, it may even be right, but it is not educational. As noted earlier, the Tribunal found that the "whole object of [the appellant] is to influence public opinion by making the results of its research available, with the further goals of influencing public opinion and ultimately government agencies and government itself" (emphasis added). Influencing public opinion is not by itself educational, even if information has been collected for the purpose of attempting to achieve that influence. To adopt the words of Hammond J in another context, the conduct of the appellant represents "an attempt to persuade people into a particular frame of mind. There is no instruction directed; nor is there to be any systematic accumulation of knowledge."80 Conclusion The first question in this appeal must be answered in the negative. The second therefore does not arise, and it is better not to say, one way or the other, anything about the issues – complex and to some degree obscure – which cluster around it. The appeal should be dismissed. 79 [1965] Ch 669 at 680. 80 Re Collier (Deceased) [1998] 1 NZLR 81 at 93. KIEFEL J. The question on this appeal is whether the appellant, Aid/Watch Incorporated, is a charitable institution within the meaning of s 50-5, item 1.1 of the Income Tax Assessment Act 1997 (Cth) and the corresponding provisions of the Fringe Benefits Tax Assessment Act 1986 (Cth) and the A New Tax System (Goods and Services Tax) Act 1999 (Cth). As is explained in the reasons of the majority, that meaning is informed by the principles relating to charitable trusts established under the general law. It may be accepted that what is regarded as charitable may develop or change, according to the needs of society81. What the different conceptions of charitable purposes, under the general law, have in common is that they all contain the provision of a benefit to the public. Whether an organisation has charitable purposes is determined by reference to the natural and probable consequences of its activities, as well as its stated purposes82. In examining those purposes and their purported effectuation in the activities of the organisation, attention is directed to the main or predominant purposes, rather than those which are ancillary or incidental83. It could scarcely be denied, these days, that it may be necessary for organisations, whose purposes are directed to the relief of poverty or the advancement of education84, to agitate for change in the policies of government or in legislation in order to best advance their charitable purposes. No-one would suggest that charitable and political purposes are mutually exclusive. A charitable institution may have charitable and political purposes, provided that the political purpose is not the main or predominant purpose of the organisation. Here, the appellant's main purposes are to agitate for change in the programmes and policies of the Government or its agencies, by putting forward the views of its members. I agree that there is no reason, in principle, that the political nature of an organisation's main purpose should mean its outright disqualification from charitable status. In each case it is necessary to consider the stated purposes and 81 Tudor on Charities, 9th ed (2003) at 4 [1-005]. 82 The Baptist Union of Ireland (Northern) Corporation Ltd v The Commissioners of Inland Revenue [1945] NI 99 at 106; Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204 at 226 [38]; [2008] HCA 55. 83 Federal Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204 at 84 The first and second classes set out in Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 at 583. the activities of the organisation, in order to determine whether the main purpose is for the public benefit, the feature common to all classes referred to in Commissioners for Special Purposes of Income Tax v Pemsel85. However, reaching a conclusion of public benefit may be difficult where the activities of an organisation largely involve the assertion of its views, as is here the case. It might have been otherwise were those activities, and the stated purposes, capable of being characterised as for the advancement of education, or as having some other evident benefit to society. A mere connection between those activities and the charitable purposes of others, to render aid, will not suffice as a public benefit. in National Anti-Vivisection Society v Slade J, in McGovern v Attorney-General86, extracted two reasons, from the speeches Inland Revenue Commissioners87, for the rejection of trusts for political purposes as charitable. The first was that the court will ordinarily not have sufficient means of judging whether such purposes will be for the public benefit. The second was that, even if the change of law or policy might be desirable, nevertheless, the court must accept that the law as it stands is right. It should not be seen as inconsistent with a court's maintenance of the existing law that it also recognises the importance and value of public discussion, education and debate about aspects of the law and changes which might be made to it. The same may be said of government policy. That recognition reflects the reality of the greater involvement, nowadays, of citizens and organisations in the shaping of law and policy. Nevertheless, it remains necessary that benefits of this kind flow from the pursuit of change before an organisation can qualify as charitable. Lord Parker of Waddington, in Bowman v Secular Society Ltd88, acknowledged that "every one is at liberty to advocate or promote by any lawful means a change in the law", but went on to say that a court would not hold a gift to secure a change in the law to be charitable, because it had no means of judging whether the change was for the public benefit. It should not be assumed that the courts will be unable to discern a public benefit in trusts concerned with agitation for reform, at least where they encourage public debate or education, by way of disseminating knowledge or 85 [1891] AC 531 at 583. 86 [1982] Ch 321 at 336-337. 88 [1917] AC 406 at 442. information, upon legitimate topics. The decision in National Anti-Vivisection Society shows that, at the least, the courts may be able to determine that a public benefit is not evident in a trust. Lord Parker's statement in Bowman may be understood as recognising the practical difficulties which will be presented in some cases involving trusts for political purposes. Their public benefit may not be evident if they do not principally involve public debate or other educative purposes. As is observed in Tudor on Charities89, not every object beneficial to the community is necessarily charitable. For a purpose to be charitable it must be beneficial in a way which the law regards as charitable. That is to say, it must come within the spirit and intendment of the preamble to the Charitable Uses Act of 1601 (the Statute of Elizabeth). The law assumes that the purposes of the relief of poverty and the advancement of education, the first and second classes referred to in Pemsel90, are for the public benefit. Such an assumption does not apply to the fourth class there referred to – "other purposes beneficial to the community, not falling under any of the preceding heads." A likely benefit to the public must be evident from the stated purposes and activities of an organisation. It is the fourth class which falls for consideration in this case, because the appellant's main purposes do not qualify under the first two. Under the heading "Objectives", in its Constitution, the appellant describes in a preamble its role as: "AID/WATCH monitors, researches, campaigns and undertakes activities on the environmental impact of Australian and multinational aid and investment programs, projects and policies." The "main objectives" which are then listed, at some length, may be shortly summarised. The Administrative Appeals Tribunal ("the Tribunal") observed91 that two main threads run through them: "The first is to ensure local community involvement in the planning and implementation of aid projects. The second is to ensure that aid is delivered in an environmentally effective manner." 89 9th ed (2003) at 7 [1-008], 98 [2-071]. 90 [1891] AC 531 at 583. 91 Re Aid/Watch Incorporated and Federal Commissioner of Taxation (2008) 71 ATR 386 at 391 [22] per Downes J, President. I would reverse the order of these threads, having regard to the significance given to environmental concerns in the preamble to the objectives, although the two strands are interrelated. Nothing turns upon this. In addition, the appellant's objectives are said to be to ensure "accountability and transparency" in Australian aid and export credit programmes. The objectives do not explain what is involved in their pursuit and it is therefore necessary to examine how the appellant operates, in order to ascertain what is really involved. Such an examination is necessary, in any event, to the determination of whether its main purpose is charitable, as earlier discussed. The appellant's processes were explained in evidence before the Tribunal. Consistent with the preamble to its objectives, it was said that the appellant begins with monitoring and then moves to research. The research is used to campaign, and to influence practices relating to the delivery of aid. Essentially, therefore, the appellant is concerned to effect changes in the practices of aid agencies. This was confirmed by evidence that the appellant has sought to persuade the Australian Agency for International Development (AusAID) to alter the way it administers aid programmes. It has advocated the abolition of an Australian export credit agency. It targets the policies and practices of intergovernmental institutions, the Australian Government and its allies. The Chairperson of the appellant denied that it was involved in lobbying government or directly influencing it. It gave, by way of example of its methods, its response, in 2006, to a White Paper on the Australian aid programme put out by the Government for comment. All of this confirms that the appellant's activities and purposes are to put forward its views as to changes it or its members consider are necessary to existing aid programmes. The Tribunal considered that the purposes of the appellant included the relief of poverty, since "[a]id itself is at the heart of charity."92 However, whilst the purposes and activities of the appellant may have a connection with aid, they can neither be seen to promote nor to advance it, in any practical way. It may be accepted that an organisation established to further an accepted public purpose, carried on by another, is itself charitable. Its purpose may come within the fourth class93. The effectiveness of a charitable organisation may be promoted by another, by the provision of support and services, for example. The activities of the appellant are not of this kind. 92 Re Aid/Watch Incorporated and Federal Commissioner of Taxation (2008) 71 ATR 93 Tudor on Charities, 9th ed (2003) at 103 [2-077] referring to Re White's Will Trusts [1951] 1 All ER 528; London Hospital Medical College v Inland Revenue Commissioners [1976] 1 WLR 613; [1976] 2 All ER 113. The appellant may well consider that the changes which it seeks, from time to time, would render aid more effective, but whether that is so depends upon the correctness of its views. At some points in its reasoning, the Tribunal appears to have assumed that the appellant's views concerning the delivery of aid have been, or would be, effective. Reference was made by the Tribunal94 to the appellant influencing the Government "to deliver more effective aid", "improve the quality of … aid", "increase or redirect … aid" and "promot[e] the most advantageous delivery of aid". But that is to assume, without more, that its views will necessarily promote the delivery of aid. Such a result cannot be said to follow from the assertion of its views. Its motives are not sufficient to establish public benefit. The appellant's stated objectives do include some references to education. It is said that it seeks to ensure that there is "increased funding of development education activities within Australia", and "an increased public awareness of the environmental and social impact of the Australian Overseas Development Assistance Program and related private investment, including input into environmental and developmental studies." The evidence given for the appellant before the Tribunal referred to some teaching being conducted, but principally of its members and concerning economics and methods of campaigning. There was no suggestion that it undertook public teaching. Individual members of the appellant have produced some reports, four or five in number, on aid projects, but it was not suggested that they were disseminated to the public, such as would support the characterisation of research as for the purpose of education95. The views of the appellant are published on its website, but this is part of its campaign to persuade others of its views, not to educate them. In any event, the enquiry to be undertaken is as to the main purpose of the appellant. A Full Court of the Federal Court (Kenny, Stone and Perram JJ) held that its main purpose was its political purpose96, which is to say, the assertion of its views. The Court considered that it was not possible to determine that the 94 Re Aid/Watch Incorporated and Federal Commissioner of Taxation (2008) 71 ATR 95 McGovern v Attorney-General [1982] Ch 321 at 352, referring to the unreported judgment of Slade J in In re Besterman's Will Trusts of 21 January 1980. 96 Federal Commissioner of Taxation v Aid/Watch Incorporated (2009) 178 FCR 423 appellant's purposes were for the public benefit97, since the Court was in no position to determine that the promotion of one view, rather than the other, was for the public benefit98. In my view, the Court's conclusion was plainly correct. The submission by the appellant, that its purposes are for the public benefit because it generates public debate, cannot be accepted at a number of levels. Its assertion of its view cannot, without more, be assumed to have that effect. Its activities are not directed to that end. If they were directed to the generation of a public debate about the provision of aid, rather than to the acceptance by the Government and its agencies of its views on the matter, the appellant might be said to be promoting education in that area. But it is not. Its pursuit of a freedom to communicate its views does not qualify as being for the public benefit. For these reasons, I would dismiss the appeal. 97 Federal Commissioner of Taxation v Aid/Watch Incorporated (2009) 178 FCR 423 98 Referring to Southwood v Attorney-General [2000] WTLR 1199.

HIGH COURT OF AUSTRALIA COMMONWEALTH OF AUSTRALIA APPELLANT AND HELICOPTER RESOURCES PTY LTD & ORS RESPONDENTS Commonwealth of Australia v Helicopter Resources Pty Ltd [2020] HCA 16 Date of Hearing: 10 October 2019 & 5 February 2020 Date of Judgment: 24 April 2020 ORDER The first respondent's application for leave to file a notice of contention is refused. Appeal allowed. Set aside orders 1 and 2(a) of the orders of the Full Court of the Federal Court of Australia made on 15 February 2019 and, in their place, order that the appeal to the Full Court be dismissed. The appellant pay the first respondent's reasonable costs on a solicitor/client basis. On appeal from the Federal Court of Australia Representation S P Donaghue QC, Solicitor-General of the Commonwealth, with T M Begbie and J D Watson for the appellant (instructed by Australian Government Solicitor) J T Gleeson SC with T J Brennan and K I H Lindeman for the first respondent (instructed by Norton White) Submitting appearances for the second and third respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commonwealth of Australia v Helicopter Resources Pty Ltd Criminal practice – Accusatorial system of criminal justice – Companion rule – Where subpoena issued for employee to attend to give evidence at coronial inquest into manner and cause of another employee's death – Where employer and Commonwealth of Australia prosecuted for alleged failures to comply with duty to ensure worker health and safety – Where s 87(1)(b) of Evidence Act 2011 (ACT) relevantly entailed that representation by employee of party relating to matter within scope of employment taken as admission by that party – Whether invocation of investigative power to compel employee to give evidence about matter with respect to which employer stands charged amounts to compelling employer to give evidence contrary to rule that accused not required to assist Crown in proving its case. High Court – Appellate jurisdiction – Practice – Extension of time – Where first respondent sought leave to file notice of contention out of time alleging that compulsion of its employee to give evidence at coronial inquest would constitute contempt of court in parallel criminal proceedings by creating real risk of interference with justice according to law – Where criminal proceedings concluded and first respondent acquitted of offences – Whether extension of time should be granted to resolve question of whether compulsory examination of potential witness other than accused can amount to contempt of court. Words and phrases – "accusatorial system of criminal justice", "admissions made with authority", "attribution", "companion rule", "compulsory investigative powers", "compulsory pre-trial examination", "contempt of court", "coronial inquest", "extension of time", "hypothetical circumstances", "practical reality", "real risk of improper interference with criminal proceedings". Coroners Act 1997 (ACT), ss 36, 43, 58(6). Evidence Act 2011 (ACT), s 87(1)(b). KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE AND GORDON JJ. This is an appeal from a judgment of the Full Court of the Federal Court of Australia concerning the operation of s 87(1)(b) of the Evidence Act 2011 (ACT)1. That provision relevantly entails that a representation by an employee of a party may be taken as an admission by the party if the representation relates to a matter within the scope of the employee's employment. The principal question is whether the provision has the effect that invocation of an investigative power to compel an employee to give evidence about a matter with respect to which his or her employer stands charged with a criminal offence amounts to compelling the employer to give evidence contrary to the rule that an accused cannot be required to assist the Crown in proving its case. For the reasons which follow, it does not. Thus, it is unnecessary to address the appellant's other appeal grounds. Section 87(1)(b) of the Evidence Act Section 87 of the Evidence Act provides as follows: "Admissions made with authority For the purpose of deciding whether a previous representation made by a person is also taken to be an admission by a party, the court must admit the representation if it is reasonably open to find that – (a) when the representation was made, the person had authority to make statements on behalf of the party in relation to the matter in relation to which the representation was made; or (b) when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person's employment or authority; or the representation was made by the person in furtherance of a common purpose (whether lawful or not) that the person had with the party or 1 or more people including the party. 1 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174. Bell Nettle Gordon For this section, the hearsay rule does not apply to a previous representation made by a person that tends to prove – that the person had authority to make statements on behalf of someone else in relation to a matter; or that the person was an employee of someone else or had authority otherwise to act for someone else; or the scope of the person's employment or authority." (emphasis added) The facts The appellant ("the Commonwealth") engaged the first respondent ("Helicopter Resources") to provide helicopter services to the Commonwealth in connection with Commonwealth operations in the Australian Antarctic Territory. On 11 January 2016, Captain David Wood, a pilot employed by Helicopter Resources to provide some of those services, landed his helicopter at a point on the West Ice Shelf where, unbeknownst to him, a crevasse lay hidden by snow. After undertaking work on the ground, Captain Wood fell into the crevasse while attempting to reboard the helicopter and remained there for some hours. He died the following day from hypothermia. By virtue of s 6 of the Australian Antarctic Territory Act 1954 (Cth), applicable laws of the Australian Capital Territory including the Coroners Act 1997 (ACT) apply in the Australian Antarctic Territory. Pursuant to the Coroners Act, on 19 September 2017 the Chief Coroner of the Australian Capital Territory commenced an inquest into the manner and cause of Captain Wood's death. The evidence before the Coroner included a statement by Helicopter Resources' Chief Pilot, Captain David Lomas, that was prepared for the purpose of the inquest. By virtue of s 11 of the Work Health and Safety Act 2011 (Cth) ("the WHS Act"), the WHS Act extends to every external Territory, including the Australian Antarctic Territory2. Under s 10 of the WHS Act, the Commonwealth is relevantly 2 Australian Antarctic Territory Acceptance Act 1933 (Cth); cf Acts Interpretation Act 1901 (Cth), s 2B (definition of "Australia"); Re Governor, Goulburn Correctional Centre; Ex parte Eastman (1999) 200 CLR 322 at 331 [7] per Gleeson CJ, McHugh and Callinan JJ. Bell Nettle Gordon bound by, and may be liable for an offence against, the WHS Act. By information and summons laid on behalf of Comcare, the work health and safety regulator, in the Magistrates Court of the Australian Capital Territory on 20 December 2017, the Commonwealth (acting through the Department of the Environment and Energy) and Helicopter Resources were each charged as co-accused with three summary criminal offences against s 32 of the WHS Act. The charges were apparently prosecuted by the Commonwealth Director of Public Prosecutions on instructions from Comcare. They alleged that failures to comply with the duty to ensure worker health and safety3 in three separate incidents had exposed workers to risks of serious injury or death. The second and third charges alleged breaches in relation to Captain Wood and another employee. The third charge arose directly out of the circumstances giving rise to Captain Wood's death. As the Commonwealth and Helicopter Resources had different safety responsibilities in the Australian Antarctic Territory, they were likely to take different positions in both the coronial inquest and the criminal proceedings. By letter to the Coroner dated 31 January 2018, the Commonwealth requested that Captain Lomas be made available for cross-examination at the coronial inquest, on topics including Helicopter Resources' relationship with the Commonwealth in relation to responsibilities for risk identification and management. Helicopter Resources applied to have the inquest adjourned, pursuant to s 36 or s 58(6) of the Coroners Act, pending the determination of the criminal proceedings. The Coroner refused that application and issued a subpoena for Captain Lomas to attend to give evidence pursuant to s 43 of the Coroners Act. Helicopter Resources then sought, but the Coroner refused, a direction that the examination of Captain Lomas not extend to matters arising in the criminal proceedings. It is not in dispute that the matters on which it was proposed to cross- examine Captain Lomas at the coronial inquest were matters within the scope of his employment or authority within the meaning of s 87(1)(b) of the Evidence Act. 3 WHS Act, s 19. Bell Nettle Gordon Proceedings at first instance Helicopter Resources applied to the Federal Court for judicial review of the Coroner's decision to issue the subpoena. The basis of the application was that to compel Captain Lomas to give evidence at the coronial inquest on the proposed topics would prejudice Helicopter Resources in the criminal proceedings, and undermine the accusatorial nature of the criminal process, in two ways: first, by giving the Commonwealth, as co-accused, the forensic advantage of exploring the evidence that Captain Lomas might give if called in the criminal proceedings, which advantage would not be available under the ordinary rules of criminal procedure; and, secondly, by arming the prosecution with evidence and admissions, attributable to Helicopter Resources pursuant to s 87(1)(b) of the Evidence Act, which could be tendered in the criminal proceedings. On 29 June 2018, the primary judge (Bromwich J) dismissed the application. His Honour reasoned4 that, although the accusatorial nature of criminal proceedings prevents the rights and privileges of an accused from being overridden without clear statutory authority, it was Captain Lomas, not Helicopter Resources, who was proposed to be examined at the coronial inquest, and Captain Lomas was in no "different position [from] any other witness who may be called at any inquest". It followed, in his Honour's view, that the forensic disadvantages identified by Helicopter Resources did not constitute an improper interference of the kind required by the authorities5. Alternatively, Bromwich J held6 that, even if 4 Helicopter Resources Pty Ltd v The Commonwealth [No 2] [2018] FCA 991 at 5 Helicopter Resources Pty Ltd v The Commonwealth [No 2] [2018] FCA 991 at [115], [120], citing Hammond v The Commonwealth (1982) 152 CLR 188, Lee v New South Wales Crime Commission (2013) 251 CLR 196, Lee v The Queen (2014) 253 CLR 455, X7 v Australian Crime Commission (2013) 248 CLR 92, R v OC (2015) 90 NSWLR 134, Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 ("BLF") and Royal Commission into Certain Crown Leaseholds [No 2] [1956] St R Qd 239 ("Townley Royal Commission [No 2]"). 6 Helicopter Resources Pty Ltd v The Commonwealth [No 2] [2018] FCA 991 at Bell Nettle Gordon a real risk to the administration of criminal justice had been established, Helicopter Resources' application to stay the subpoena was premature as any interference may not eventuate. Proceedings before the Full Court Helicopter Resources appealed to the Full Court on the ground that the primary judge had erred in failing to hold that the compulsory cross-examination of Captain Lomas at the coronial inquest would constitute an impermissible interference with the administration of criminal justice. Helicopter Resources argued that it is a fundamental feature of the accusatorial system of criminal justice in Australia that neither the prosecution nor a co-accused is permitted a process of compulsory pre-trial examination of persons who may be summonsed to give evidence at trial, as part of either the prosecution or a co-accused's case. The Full Court (Rares, McKerracher and Robertson JJ) did not accept that argument. Their Honours observed7 that the decision of this Court in Environment Protection Authority v Caltex Refining Co Pty Ltd8 "stands against the proposition that, of itself, the accusatorial nature of a criminal trial of a corporation means that an officer of the corporation may not be required to answer questions which tend to incriminate the corporation". Their Honours also observed9 that the so-called "companion rule" – "that an accused person cannot be required to testify" – "is not engaged [where] ... the prosecution is not seeking to compel the person charged with the crime ... to assist in the discharge of the prosecution's onus of proof". 7 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 210 [143], see also at 216 [174]. (1993) 178 CLR 477. 9 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 217 Bell Nettle Gordon But having so concluded, the Full Court then posed10 for themselves the question "Does s 87 of the ... Evidence Act have the effect that [Helicopter Resources] is being so compelled?", which their Honours answered11 as follows: "In our opinion, the crucial and dispositive consideration in relation to the issue of interference is that if Captain Lomas were compelled to give evidence in the inquest, as a matter of practical reality, [Helicopter Resources'] position as an accused corporation in the criminal proceedings would be altered fundamentally12. That is because s 87(1)(b) of the ... Evidence Act would make his evidence admissible, not merely as evidence of a witness of fact, but as evidence of an admission by [Helicopter Resources] itself." No compulsion of the accused The Full Court were correct not to accept the argument that compulsory pre-trial examination of a potential witness is inconsistent with the accusatorial system of criminal justice in Australia. Inquisitorial processes involving compulsory pre-trial examination by executive officers have formed part of English criminal procedure since the reign of Queen Mary13, and the nineteenth century reforms which enshrined much that is fundamental to the accusatorial 10 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 217 11 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 218- 12 Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1 at 18-19 [77]-[81] per Kiefel CJ, Bell and Nettle JJ; 361 ALR 23 at 42-43. 13 Statute 1 & 2 Ph & M c 13 (1554-5); Statute 2 & 3 Ph & M c 10 (1555). See Grassby v The Queen (1989) 168 CLR 1 at 11 per Dawson J; Azzopardi v The Queen (2001) 205 CLR 50 at 96-97 [136] per McHugh J; Crawford v Washington (2004) 541 US 36 at 43-44 per Scalia J for the Court; Australian Crime Commission v Stoddart (2011) 244 CLR 554 at 628 [204] per Crennan, Kiefel and Bell JJ. Bell Nettle Gordon system of criminal justice, here as in England14, retained compulsory pre-trial examination of witnesses, as distinct from the accused, in committal proceedings15. The Full Court were also correct in holding that the compulsory pre-trial examination of a potential witness does not engage the general rule that an accused cannot be required to assist the Crown in proof of its case. That rule has been identified as a companion to the fundamental principle that the burden is upon the Crown to prove the guilt of an accused beyond reasonable doubt16. It applies to an accused, not a witness or potential witness other than the accused; and, self- evidently, the compulsory examination of a potential witness other than the accused does not in itself involve any compulsion of the accused to give evidence or otherwise to assist the Crown in proof of its case. Contrary to the Full Court's reasoning, however, that is so even where s 87(1)(b) of the Evidence Act has the effect that representations by the potential witness in the compulsory examination may be taken as admissions by the accused in the criminal proceedings. Section 87(1)(b) of the Evidence Act departs from the common law primarily by extending the range of employees and agents whose representations may be treated as admissions against their employers or principals: from those having authority to make representations on the latter's behalf17 to those not so 14 See Woods, A History of Criminal Law in New South Wales: The Colonial Period, 1788-1900 (2002) at 385-386; X7 (2013) 248 CLR 92 at 135 [100] per Hayne and Indictable Offences Act 1848 (UK) (11 & 12 Vict c 42). See Stephen, A History of the Criminal Law of England (1883), vol 1 at 220-221; Sorby v The Commonwealth (1983) 152 CLR 281 at 319 per Brennan J. 16 Caltex Refining (1993) 178 CLR 477 at 503 per Mason CJ and Toohey J; Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 265-266 [175] per Kiefel J; Lee v The Queen (2014) 253 CLR 455 at 467 [33] per French CJ, Crennan, Kiefel, Bell and Keane JJ; R v Independent Broad-Based Anti-Corruption Commissioner (2016) 256 CLR 459 at 472 [44] per French CJ, Kiefel, Bell, Keane, Nettle and 17 eg Fairlie v Hastings (1804) 10 Ves Jun 123 at 126-127 per Grant MR [32 ER 791 at 792]; Starkie, A Practical Treatise on the Law of Evidence, and Digest of Proofs, in Civil and Criminal Proceedings (1824), vol 2, pt 4 at 60; United States v Gooding Bell Nettle Gordon authorised but whose representations relate to a matter within the scope of their employment or authority18. Thus, it may be accepted that, where an employee is compelled to give evidence about such matters, the employee is thereby compelled to give evidence that may be taken to be an admission by his or her employer. The provision does not, however, involve any "singular change" to the accusatorial system of criminal justice. To the contrary, the common law's "strict insistence upon the distinction between the agent's authority to act and his authority to speak concerning his action" was pilloried by Wigmore as making "a laughing-stock out of court methods"19, and, for similar reasons, Sir Rupert Cross considered20 it preferable to abandon the common law rule in favour of r 63(9) of the American Uniform Rules of Evidence as promulgated in 195321. Hence, as the Australian Law (1827) 25 US 460 at 469 per Story J for the Court; Garth v Howard (1832) 8 Bing 452 at 453 per Tindal CJ [131 ER 468 at 468]; Kirkstall Brewery Co v Furness Railway Co (1874) LR 9 QB 468 at 472 per Archibald J; Fraser Henleins Pty Ltd v Cody (1945) 70 CLR 100 at 133-136 per Williams J. 18 cf Langhorn v Allnutt (1812) 4 Taunt 511 at 519 per Gibbs J [128 ER 429 at 432]; The Great Western Railway Co v Willis (1865) 18 CB (NS) 748 at 756-757 per Erle CJ [144 ER 639 at 642]; Packet Co v Clough (1874) 87 US 528 at 540-541 per Strong J for the Court; New South Wales Country Press Co-operative Co Ltd v Stewart (1911) 12 CLR 481 at 491 per Griffith CJ. 19 Wigmore, Evidence in Trials at Common Law, Chadbourn rev (1972), vol 4, §1078, n 2 at 166. 20 Byrne and Heydon, Cross on Evidence, 4th Aust ed (1991) at 935. 21 National Conference of Commissioners on Uniform State Laws, Uniform Rules of Evidence (1954), s 63(9), relevantly providing an exception to the hearsay rule, "[a]s against a party", for "a statement which would be admissible if made by the declarant at the hearing if (a) the statement concerned a matter within the scope of an agency or employment of the declarant for the party and was made before the termination of such relationship". See and compare Federal Rules of Evidence (US), r 801(d)(2)(D). Bell Nettle Gordon Reform Commission explained22 in the recommendation that spawned s 87(1)(b), the change which it effected was to improve the fairness of the adversary process: "The primary argument for permitting an 'admission' by a third party to be proved against a party is based on the adversary nature of the trial system. It is fair to allow a party to be held responsible for an assertion made by a third party if that third party is an agent of the party acting under his authority. Thus, an admission made by a managing director should be admissible against the company, even if arguably unreliable, because he either had actual authority to make the admission or was put in a position where a reasonable observer would assume he had such authority. ... [I]t would seem that the best approach is to impose a requirement of authority to speak or a requirement that the statement relate to an area of personal responsibility." (emphasis added) Certainly, s 87(1)(b) means that a previous representation made by an employee related to a matter within the scope of his or her employment and adverse to the interest of his or her employer in the outcome of the proceeding23 may be taken as an admission by the employer. And such attribution may occur even where the representation is made under compulsion of law, rather than volunteered by the employee. But the fact that an employee can be compelled to give evidence that may be treated as an admission against the employee's employer does not mean that the employer is thus compelled in effect to give evidence or otherwise to assist the Crown in proof of its case. Section 87(1)(b) does not require the employer to make the employee available on behalf of the employer or to authorise him or her to make admissions on the employer's behalf. Essentially, it does no more than create a rule that an employee's representations as to matters within the scope of the employee's employment may be treated as admissions against the employer. In the circumstances postulated, the obligation to give evidence is a personal obligation of the employee, and the consequences of the employee so giving evidence are ordained by s 87(1)(b) on the basis of the nature of the relationship between employee and employer that was voluntarily created by the employer. 22 Australian Law Reform Commission, Evidence, Report No 26 (Interim) (1985), vol 1 at 422-423 [755]. 23 Evidence Act, Dictionary, Pt 1 (definition of "admission"). Bell Nettle Gordon there Contrary to Helicopter Resources' submissions, is nothing fundamental to the accusatorial system of criminal justice that requires that an accused employer be free to prevent statements of an employee from being used as evidence against the employer. And contrary to Helicopter Resources' submissions, it makes no difference that the employee in question may be of central importance to the employer's defence. An accused has no property in a witness or potential witness24, even one who may be identified as the guiding mind of the accused or whose answers may be attributable to the accused. As Mason J explained in A v Hayden25, the "interest in the enforcement of the criminal law" is "a fundamental head of public policy", and it implies "a powerful public interest in promoting and preserving the citizen's freedom to assist and co-operate with the authorities in the investigation and prosecution of crime". Thus, terms of employment and other contractual arrangements that purport to prohibit an employee from giving evidence in criminal proceedings, even as against his or her employer, are unenforceable as contrary to public policy26. Finally, the Full Court supported their decision with reference to the plurality's conclusion in Strickland (a pseudonym) v Director of Public Prosecutions (Cth)27 that the unlawful examination of accused persons about matters in relation to which they were likely to be charged would, as a matter of practical reality, fundamentally alter the position of those persons in subsequently instituted criminal proceedings. But the Full Court's reliance on that conclusion 24 Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380 at 1384-1385 per Lord Denning MR; [1979] 3 All ER 177 at 180-181; In re L (A Minor) [1997] AC 16 at 34 per Lord Nicholls of Birkenhead. But see New South Wales v Jackson [2007] NSWCA 279 at [33], [59] per Giles JA (Mason P and Beazley JA agreeing at [1], [2]). (1984) 156 CLR 532 at 553, 555. 26 Collins v Blantern (1767) 2 Wils KB 347 at 349 per Wilmot LCJ [95 ER 850 at 852]; Harmony Shipping [1979] 1 WLR 1380 at 1386 per Lord Denning MR; [1979] 3 All ER 177 at 182; A v Hayden (1984) 156 CLR 532 at 543 per Gibbs CJ, 554 per Mason J. See and compare Weld-Blundell v Stephens [1919] 1 KB 520 at 528 per Bankes LJ, 535 per Warrington LJ, 545, 547 per Scrutton LJ, affd Weld-Blundell v (2018) 93 ALJR 1; 361 ALR 23. Bell Nettle Gordon was misplaced. Strickland was concerned with grossly unlawful interrogation of persons who it was known or believed would shortly be charged with criminal offences. In holding that the administration of justice would be brought into disrepute unless the extraordinary remedy of a permanent stay of prosecution were granted, the plurality relied on that gross unlawfulness and the indeterminate element of incurable prejudice arising, as a matter of practical reality, from the widespread, uncontrolled dissemination of the examination product, including to federal prosecutors. investigative procedure may Strickland had nothing to do with the lawfulness of compulsory interrogation of potential third-party witnesses. In particular, the plurality in Strickland did not suggest, and the decision does not support, the notion that appears to have found favour with the Full Court that, because an otherwise lawful compulsory in a witness making representations that can be treated as an admission against an accused in subsequent criminal proceedings, the deployment of that procedure amounts, without more, to a breach of the companion rule or other interference with the accusatorial system of criminal justice. To the contrary, as this Court made clear in R v Independent Broad-Based Anti-Corruption Commissioner28, if a compulsory investigative procedure is sufficiently authorised by statute, it may be invoked notwithstanding that, as a matter of practical reality, the result will fundamentally alter the ability of an accused to defend charges that may have been or may be laid against him or her. result Contempt At first instance, Helicopter Resources' principal argument was that to compel Captain Lomas to give evidence at the coronial hearing, before the conclusion of the criminal proceedings, would constitute a contempt of court. The argument was based on a number of authorities29 in which the courts have considered whether the examination of a person while parallel criminal (2016) 256 CLR 459. 29 McGuinness v Attorney-General (Vict) (1940) 63 CLR 73 at 84-85 per Latham CJ; Townley Royal Commission [No 2] [1956] St R Qd 239; BLF (1982) 152 CLR 25 at 53-54 per Gibbs CJ; Hammond (1982) 152 CLR 188 at 198-199 per Gibbs CJ; Lee v New South Wales Crime Commission (2013) 251 CLR 196. Bell Nettle Gordon proceedings against the person are pending involves an improper interference with the due administration of criminal justice. The primary judge rejected the argument. His Honour observed30 that the cases on which Helicopter Resources relied were all matters in which it was sought to compel an accused person to give evidence and none of them supported the broader proposition for which Helicopter Resources contended, that the compulsory examination of an employee of an accused person involves an improper interference with the due administration of justice. In turn, his Honour relied31 on a critical distinction between something that rises to the level of interference with criminal proceedings and the mere potential for an executive or quasi-executive inquiry to have an effect on the interests of the accused in criminal proceedings. As no improper interference was established, his Honour concluded32 that it was difficult to see how the compulsory examination could amount to contempt. Before the Full Court, Helicopter Resources pressed its claim that the compulsory examination of Captain Lomas might amount to a contempt of court. But, as has been seen33, the Full Court decided the matter on the narrower basis that, because s 87(1)(b) of the Evidence Act would make Captain Lomas' evidence before the Coroner admissible as evidence of an admission by Helicopter Resources, the effect of compelling Captain Lomas to give evidence was to compel Helicopter Resources to give evidence against itself. When the Commonwealth's application for special leave to appeal from the Full Court's decision came on for hearing on 21 June 2019, it was anticipated that the criminal proceedings would be concluded before the appeal to this Court could be heard. Helicopter Resources thus opposed the application for special leave on the basis that, regardless of the outcome of the appeal, it would be devoid of 30 Helicopter Resources Pty Ltd v The Commonwealth [No 2] [2018] FCA 991 at 31 Helicopter Resources Pty Ltd v The Commonwealth [No 2] [2018] FCA 991 at 32 Helicopter Resources Pty Ltd v The Commonwealth [No 2] [2018] FCA 991 at 33 See [14]-[15] above. Bell Nettle Gordon practical utility. But Helicopter Resources otherwise expressed no interest in opposing the appeal, so long as the Commonwealth agreed to pay its costs of the appeal on a solicitor/client basis, much less an intention to defend the Full Court's orders on any basis other than that the Full Court were correct as to the effect of s 87(1)(b). In the result, special leave to appeal was granted on amended grounds that the Full Court erred as to the meaning and effect of s 87 of the Evidence Act, and thus as to the scope and effect of the accusatorial principle, by treating that provision as preventing an employee of a corporation from being compelled to provide evidence relevant to pending criminal charges against that corporation; and the grant of special leave was conditioned on the Commonwealth paying Helicopter Resources' solicitor/client costs of the appeal. Subsequently, Helicopter Resources sought leave to file a notice of contention, out of time, to the effect that, if the Full Court were not correct in their construction of s 87, the Full Court's decision should be upheld on the basis that compelling Captain Lomas to give evidence at the coronial inquest would constitute a contempt of court by creating a real risk of interference with justice according to law. The Commonwealth opposed the application as inappropriate given the circumstances in which, and the basis on which, special leave to appeal was granted. In order, however, to decide whether it was appropriate to extend time for the filing of the notice of contention, counsel for Helicopter Resources was allowed to present full argument in support of the contention and the Commonwealth was heard in reply. Having heard the argument, we are not disposed to grant the extension of time that is sought. As was anticipated at the time of granting special leave, the criminal proceedings have now concluded; and Helicopter Resources was acquitted of the offences with which it was charged. Consequently, any decision as to whether the issue of the subpoena for the compulsory examination of Captain Lomas was a contempt of court is no longer of interest to Helicopter Resources, and Helicopter Resources will suffer no prejudice if that question remains undetermined. Moreover, whether an exercise of compulsory investigative powers creates a real risk of improper interference with criminal proceedings, and thus amounts to a contempt of court, turns on questions of fact and degree dependent on all the Bell Nettle Gordon circumstances of the case34. In the result, any determination of whether the subpoena issued to Captain Lomas amounted to a contempt of the criminal proceedings in this case would be unlikely to provide any meaningful guidance for the determination of the issue in another, different case. Possibly, it might assist in resolving the fundamental question of whether the compulsory examination of a potential witness other than an accused can ever amount to a contempt of court. But it would be more likely to generate a perception of certainty that would not be warranted. It cannot be foretold what circumstances might arise in other proceedings, and it would be inappropriate for this Court to conjecture as to hypothetical circumstances in which contempt might be established by the compulsory examination of a third party35. Conclusion For these reasons, leave to file the notice of contention should be refused, and the appeal should be allowed. Orders 1 and 2(a) of the Full Court should be set aside, and, in their place, it should be ordered that the appeal to the Full Court be dismissed. In accordance with the conditions on the grant of special leave, the Commonwealth shall pay Helicopter Resources' reasonable costs on a solicitor/client basis. 34 See, eg, Johns & Waygood Ltd v Utah Australia Ltd [1963] VR 70 at 73-75 per Sholl J; Brambles Holdings Ltd v Trade Practices Commission (1980) 32 ALR 328; BLF (1982) 152 CLR 25 at 54 per Gibbs CJ; Hammond (1982) 152 CLR 188 at 198 per Gibbs CJ; Pioneer Concrete (Vic) Pty Ltd v Trade Practices Commission (1982) 152 CLR 460 at 467-468 per Gibbs CJ; Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 275 [206]-[207] per Kiefel J. 35 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 356-357 [48] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; cf Director of Public Prosecutions (Cth) v JM (2013) 250 CLR 135 at 154-155 [33]-[34] per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ. Edelman Introduction: a moot question of law Captain Wood was a pilot employed by Helicopter Resources Pty Ltd. He had unknowingly landed a helicopter on a hidden crevasse of ice in the Australian Antarctic Territory. He later fell into the crevasse when attempting to board the helicopter and subsequently died of hypothermia. The laws of the Australian Capital Territory apply in the Australian Antarctic Territory36. inquest A coronial into Captain Wood's death was held by the Chief Coroner of the Australian Capital Territory. The bulk of the evidence in the inquest was taken between 19 September 2017 and 11 October 2017. On 20 December 2017, whilst the inquest was in progress but nearing its end, Helicopter Resources and the Commonwealth of Australia were charged by information and summons in the Magistrates Court of the Australian Capital Territory with three offences against s 32 of the Work Health and Safety Act 2011 (Cth)37. The third charge arose from the circumstances of Captain Wood's death. The Chief Coroner invited the parties to the inquest to make any applications in respect of the progress of the inquest in light of the laying of those charges. By that time, only one, or possibly two, witnesses remained to be examined in the inquest. A remaining witness was Captain Lomas, the Chief Pilot of Helicopter Resources with control over all flight crew training and operational matters affecting the safety of the flying operations. On 31 January 2018, at the heel of the hunt, the Commonwealth requested that Captain Lomas be made available for cross-examination at the inquest. Helicopter Resources applied for an adjournment of the inquest pending the determination of the criminal proceeding. The Chief Coroner refused the adjournment application but issued a subpoena for Captain Lomas to be available for cross-examination. The cross-examination was to include issues that were relevant to both the inquest and the criminal proceeding. Helicopter Resources sought judicial review in the Federal Court of Australia of the Chief Coroner's decision to issue the subpoena. It was not suggested that the request was made, or the subpoena issued, for the purpose of obtaining Captain Lomas' evidence for use the criminal proceeding. Instead, Helicopter Resources submitted that the Chief Coroner had no power to issue the subpoena because doing so would give rise to a real risk of improper 36 Australian Antarctic Territory Act 1954 (Cth), s 6(1). 37 Applicable in the Australian Antarctic Territory: see Work Health and Safety Act 2011 (Cth), s 11. Edelman interference with the due administration of criminal justice. The application was dismissed by Bromwich J. The essence of his Honour's reasoning was that there can be no real risk of improper interference with the due administration of criminal justice if compulsion to give evidence in a forum external to an extant criminal process is exerted over a witness, provided that it is not asserted over the accused38. The Full Court of the Federal Court of Australia (Rares, McKerracher and Robertson JJ) allowed an appeal and ordered a stay of the operation of the subpoena and of any further subpoena issued to Captain Lomas. Before the oral hearing in this Court had been completed, the coronial inquest concluded without the cross-examination of Captain Lomas. The criminal proceeding against Helicopter Resources and the Commonwealth was also completed, with the former being acquitted and the latter being convicted. It was clear during the oral hearing that the resolution of this issue no longer had any relevance for any party to this litigation, not even as to costs. Helicopter Resources appeared in this Court only to assist as a contradictor, without any liability for costs. The Commonwealth has standing to appeal as it was the unsuccessful respondent to the appeal before the Full Court. But the Commonwealth's only practical interest is effectively to obtain advice from this Court relevant to future coronial inquests. Even then, any advice from this Court might have little utility in future cases other than potentially to endorse or to exclude only one possible path of reasoning in cases raising the same set of facts. The limited utility of reasons from this Court arises if the Commonwealth successfully resists an application by Helicopter Resources for leave to file a notice of contention out of time, which Helicopter Resources sought out of an abundance of caution to ensure only that it could address what Helicopter Resources submits is the better interpretation of the reasons of the Full Court. In short, the position of the Commonwealth is to seek the advice of this Court as to a legal issue that will have no effect on the parties to this litigation and will not even be dispositive of the identical fact scenario in future cases. For this reason, I would have acceded to the submission of Helicopter Resources that special leave should be revoked. If special leave were maintained, I would have granted leave for Helicopter Resources to file its notice of contention out of time so that this Court could address the whole of the legal issue without distraction about the precise interpretation of the reasons of the Full Court on a point that no longer affects either party to this litigation. Since neither of those courses is preferred by a majority of this Court, the preliminary question is the dispute between the Commonwealth and Helicopter 38 Helicopter Resources Pty Ltd v The Commonwealth [No 2] [2018] FCA 991 at Edelman Resources concerning the interpretation of the reasons of the Full Court. Not without considerable hesitation, I agree with the interpretation adopted in the joint judgment in this Court, with the effect that the Full Court did not decide the primary submission which was raised before it by Helicopter Resources. Therefore, all that remains are the narrow legal issues, as expressed by the Commonwealth, (i) whether s 87(1)(b) of the Evidence Act 2011 (ACT) has the effect that an admission by an employee in relation to a matter within the scope of their employment is taken to be an admission by the employer, and, if so, (ii) by reason of that alone, whether the employee of a corporation cannot be compelled to provide evidence that is relevant to pending criminal charges against the corporation. The answers are "yes" and "no". The legal issue The central issue raised before the primary judge and the Full Court The principal argument made by Helicopter Resources before the primary judge, before the Full Court, and before this Court was that, in all the circumstances of the case, to compel Captain Lomas to give evidence at the coronial inquest would, as a matter of "practical reality"39, create a real risk of improper interference with the due administration of criminal justice. This is not the legal issue that remains for determination in this Court. The primary judge did not make findings about all the circumstances of the case, including the purpose or purposes for which the subpoena was sought by the Commonwealth. Instead, the reason the primary judge rejected the submission by Helicopter Resources was his Honour's division of interferences with the due administration of justice into categories of "direct" and "indirect" interferences, and his view that compulsion over a third party would only have an indirect effect on a criminal proceeding and could never interfere with the fair accusatorial trial of an accused person40. There are difficulties with this novel taxonomy. An enquiry into whether an act creates a real risk of improper interference with the due administration of justice always requires consideration of all the circumstances of the act, including its purpose41. There has never been a different test for interferences, or a sub-classification of them, according to the manner in which 39 Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 315 [323]. 40 Helicopter Resources Pty Ltd v The Commonwealth [No 2] [2018] FCA 991 at 41 Clough v Leahy (1904) 2 CLR 139 at 161-162; Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 Edelman such a risk arises. Nor has this Court ever automatically excluded a consideration of a risk of improper interference based upon the source of the risk. For instance, in the context of considering an order for examination of a person against whom criminal proceedings are in progress, in Lee v New South Wales Crime Commission42 Gageler and Keane JJ expressed the issue as whether the act would give rise to a real risk of interference with the administration of justice "by interfering with the right of the person to be examined (or any other person) to a fair trial". Helicopter Resources appealed to the Full Court. The first ground of Helicopter Resources' appeal was expressed in a binary manner, abstracted from the particular circumstances of the case. It was asserted in that ground that an essential feature of the criminal justice system in Australia was that neither a prosecutor nor a co-accused on a summary charge be permitted to examine by compulsion persons who might be summoned to give evidence as part of the case against an accused person. Despite this, the appeal was argued by Helicopter Resources, quite properly, with a careful focus upon the particular circumstances of the case. As the Full Court explained, the issue raised by Helicopter Resources was whether, having regard to all of the circumstances, "there has been, or will be, an interference with the due administration of criminal justice amounting to contempt of court or otherwise constituting an impermissible interference with the criminal proceedings"43. Helicopter Resources submitted that the reasons of the Full Court in response to this submission contained four strands: (i) the compelled examination of Captain Lomas would involve the "locking in" of the account of a witness central to the defence; (ii) s 87(1)(b) of the Evidence Act has the effect that Captain Lomas' admissions in the examination would bind Helicopter Resources in the criminal proceeding; (iii) the compulsion would reveal the matters about which Captain Lomas will give evidence at the criminal trial, which could not otherwise be discovered without voluntary disclosure from Captain Lomas; and (iv) the compulsory examination would upset the balance in the criminal trial between the Commonwealth and its co-accused, Helicopter Resources. Each of these strands appears in the reasons of the Full Court44. But they do not feature in the seven dispositive paragraphs of the Full Court's reasoning. (2013) 251 CLR 196 at 319 [335] (emphasis added). 43 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 198- 44 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 215- Edelman Those paragraphs are the concluding paragraphs of the Full Court's consideration of this issue45. They begin with the Full Court rejecting the submission by Helicopter Resources that the prosecution was "seeking to compel [Helicopter Resources] to assist in the discharge of the prosecution's onus of proof". That rejection is expressed to be subject only to the reasoning that followed. The Full Court then asks whether "s 87 of the ACT Evidence Act [has] the effect that [Helicopter Resources] is being so compelled". After examining the operation of s 87(1)(b), and its consequences, the Full Court then concludes46: "In our opinion, the crucial and dispositive consideration in relation to the issue of interference is that if Captain Lomas were compelled to give evidence in the inquest, as a matter of practical reality [Helicopter Resources'] position as an accused corporation in the criminal proceedings would be altered fundamentally. That is because s 87(1)(b) of the ACT Evidence Act would make his evidence admissible, not merely as evidence of a witness of fact, but as evidence of an admission by [Helicopter Resources] itself. We therefore conclude that the primary judge erred in this respect". For these reasons, although the primary submission by Helicopter Resources was one that focussed upon all of the circumstances of the case, and although the Full Court addressed central strands in that submission, I conclude, not without considerable hesitation and contrary to my initial impression, that the Full Court decided the issue by reasoning which did not depend upon those strands. Since a majority of this Court has refused leave for Helicopter Resources to file its notice of contention out of time, and since I have concluded that the reasons of the Full Court of the Federal Court ultimately rest entirely upon the operation of s 87(1)(b) of the Evidence Act, the operation of that provision is the only matter that remains for consideration. The operation of s 87(1)(b) of the Evidence Act 2011 (ACT) Under the Evidence Act, admissions, together with contemporaneous representations that are reasonably necessary to understand the admission, are an exception to hearsay47. An admission is defined in the Dictionary to the Evidence 45 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 217- 46 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 218- 219 [189] (reference omitted). 47 Evidence Act 2011 (ACT), s 81. Edelman Act48 as a "previous representation that is – (a) made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding); and (b) adverse to the person's interest in the outcome of the proceeding". Prior to the Evidence Act, the position at common law was that an admission of an agent would be attributable to a principal who was party to the proceeding if the admission were made with authority, either actual (express or implied) or apparent49. The admission would be attributed to the principal if it were made in the course of acting with apparent authority such as where "the agent is authorized to represent the principal in any business, and the admissions are made in the ordinary course of, and with reference to, such business"50. Hence, an admission would be attributed if it were made as part of a communication which the agent was authorised to have with a third party51. Such an admission was, and was treated as, part of the course of acting with authority and thus binding upon the principal. This common law approach naturally applies to attribute to an employer those admissions made by an employee within the scope of authority. As Dixon CJ expressed the common law in Nominal Defendant v Hook52, the employee needs to be "the agent of the master to make admissions". The concept of an employee as an "agent to make admissions" means that the attribution to an employer of an employee's representations is difficult, because an employee generally has an authority to do acts that is far wider than an authority to speak about them53. 48 Evidence Act 2011 (ACT), Dictionary, Pt 1, definition of "admission", read with s 3. 49 Fraser Henleins Pty Ltd v Cody (1945) 70 CLR 100 at 112-113; Smorgon v Australia and New Zealand Banking Group Ltd (1976) 134 CLR 475 at 481. 50 Phipson, The Law of Evidence (1892), bk 2 at 138. See also United States v Gooding (1827) 25 US 460 at 470. 51 Cross, Evidence (1958) at 433; 5th ed (1979) at 524-525, citing Great Western Railway Co v Willis (1865) 18 CB (NS) 748 [144 ER 639] and Kirkstall Brewery Co v Furness Railway Co (1874) LR 9 QB 468. (1962) 113 CLR 641 at 645. 53 Cross, Evidence (1958) at 434-435, referring to Johnson v Lindsay (1889) 53 JP 599 and Burr v Ware Rural District Council [1939] 2 All ER 688. See also Cross, Evidence, 5th ed (1979) at 526, referring to Price Yards Ltd v Tiveron Transport Co Ltd (1957) 11 DLR (2d) 669. Edelman The common law approach has been criticised. Wigmore criticised it as making a "laughing-stock of court methods"54, and the author of a note on the leading English decision asked why, if authorisation is irrelevant to vicarious liability, "should it be vital in connexion with the admissibility of the servant's statement?"55. However, there were also defenders of the common law distinction as a matter of principle. Professor Morgan argued that it is "important to distinguish between authority to do an act and authority to talk about it". He added that B giving authority for A to do an act, X, "adds no whit of trustworthiness to A's narratives about X; nor does it furnish any grounds for depriving B of the usual protection against unexamined testimony"56. In a more restrained English style, and prior to a change of heart following the legislative amendment to hearsay in s 2 of the Civil Evidence Act 1968 (UK), Sir Rupert Cross said of the distinction between attributing statements and attributing acts that57: "there is, perhaps, a little more to be said for it on the score of public policy than is sometimes supposed to be the case. If the servant's admission is made immediately after the accident it may often be admissible as part of the res gestae. The possibility of the reception of an admission made at a later date would be a temptation to a servant with nothing to lose from a finding of negligence against him." In 1983, in a research paper prepared for the Australian Law Reform Commission during the development of the uniform evidence laws, Odgers suggested that the position was "uncertain where the admission, although unauthorised and not made in the course of an authorised communication, was made in the course of the [speaker's] employment"58. He referred to the breadth of Rule 801 of the United States Federal Rules of Evidence, which permitted as an exception to hearsay a statement by an agent or servant "concerning a matter within the scope of his agency or employment, made during the existence of the 54 Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law, 2nd ed (1923), vol 2, §1078 at 586 fn 2. See also Cross, Evidence (1958) at 435; 5th ed (1979) at 527. 55 DWL, "Note" (1939) 55 Law Quarterly Review 490 at 491. 56 Morgan, "The Rationale of Vicarious Admissions" (1929) 42 Harvard Law Review 57 Cross, Evidence (1958) at 435. Compare, after the 1968 legislation, Cross, Evidence, 5th ed (1979) at 527. 58 Odgers, Admissions, Australian Law Reform Commission Research Paper No 15 Edelman relationship", and recommended that the concept of "authorised admissions" be retained, but observed that the existing law was too strict and proposed an extension of the concept to capture admissions made with apparent authority59. The Law Reform Commission followed this approach. The Commission recommended that "[t]he present category of 'authorised admissions' ... be modified and expanded" by adoption of a rule that attributed admissions without authority if "the statement relate[s] to an area of personal responsibility"60. The Commonwealth Evidence Act was the recommendations of the Law Reform Commission in its report on Evidence"61. substantially on "based Section 87 of the Evidence Act is based upon the identically numbered equivalent provision of the Evidence Act 1995 (Cth), with some modifications to "accord with the drafting style of the ACT" which were "not intended to change the meaning"62 of the provision. The explanatory memorandum to the Evidence Act 1995 (Cth) described the equivalent provision as setting out "the circumstances in which a representation made by another person is treated as being an admission made by a party"63. Amendments made after the issue of that explanatory memorandum were described as "drafting changes ... to clarify its operation"64. Section 87(1), as adopted in the Australian Capital Territory Evidence Act, provides as follows: 59 Odgers, Admissions, Australian Law Reform Commission Research Paper No 15 60 Law Reform Commission, Evidence, Report No 26 (Interim) (1985), vol 1 at 423. 61 Australia, House of Representatives, Evidence Bill 1993, Explanatory Memorandum at 1. See also Law Reform Commission, Evidence, Report No 38 (1987), Appendix A at 170-171. 62 Australian Capital Territory, Legislative Assembly, Evidence Bill 2011, Explanatory Statement at 3. 63 Australia, House of Representatives, Evidence Bill 1993, Explanatory Memorandum 64 Australia, House of Representatives, Evidence Bill 1993, Supplementary Explanatory Memorandum at 8. Edelman "Admissions made with authority (1) For the purpose of deciding whether a previous representation made by a person is also taken to be an admission by a party, the court must admit the representation if it is reasonably open to find that – (a) when the representation was made, the person had authority to make statements on behalf of the party in relation to the matter in relation to which the representation was made; or (b) when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person's employment or authority ..." Section 87(1)(a) is an attempt to state the common law concerning authority to make admissions. The effect of s 87(1)(b) is to extend the common law concerning apparent authority by treating a previous representation by an employee that is adverse to the employer's interest in the outcome of the proceeding as attributable to the employer if the representation "related to a matter within the scope of the person's employment". The effect of s 87(1)(b) can be illustrated by reference to the circumstances of Captain Lomas. If Captain Lomas had made previous representations at a time and place other than the criminal trial, such as at the coronial inquest, and if those representations were related to a matter within the scope of his employment at that time and were adverse to the interest of Helicopter Resources in the criminal proceeding, then evidence could be led of those representations in the criminal proceeding. It would not matter if the representations were made without the authority of Helicopter Resources to make statements of that nature. Contrary to the reasons of the Full Court, s 87(1)(b) did not have the effect that "requiring Captain Lomas to answer questions at the inquest would be compelling [Helicopter Resources] to answer questions", nor did it have the effect of compelling Helicopter Resources "to assist in the discharge of the prosecution's onus of proof"65. Section 87(1)(b) was not a source of compulsion for Captain Lomas or Helicopter Resources to say anything. It operated whether or not those previous representations were the subject of lawful compulsion. Further, although s 87(1)(b) permitted the attribution of particular previous representations to Helicopter 65 Helicopter Resources Pty Ltd v The Commonwealth (2019) 264 FCR 174 at 211 Edelman Resources as employer, the answers to questions at the coronial inquest remained the answers of Captain Lomas. Previous representations, if given as the evidence of an employee in an inquest or as interrogatories, remain the evidence of that employee even if they are able to be later attributed to the employer. As Willmer LJ said in Penn-Texas Corporation v Murat Anstalt66 of answers to interrogatories: "I do not think it helps to say that when interrogatories are answered by the proper officer of a company, his answers are the company's answers and bind the company. I do not think that touches the question whether an officer can go into the witness-box and give oral evidence which can be said to be that of the company. The answers given by him would be his answers, based upon his own memory and knowledge; and though any admission by him would no doubt be binding on the company, the evidence would still be his evidence and not that of the company." For these reasons, s 87(1)(b) of the Evidence Act does not have the effect that, without more, the compulsion at an inquest of an employee of a corporation to provide evidence that is relevant to pending criminal charges against the corporation involves a real risk of improper interference with the due administration of criminal justice. By itself, s 87(1)(b) did not create a real risk that the subpoena to Captain Lomas to give evidence at the coronial inquest would be an improper interference with the due administration of criminal justice. Conclusion The appeal must be allowed. It suffices to reiterate that allowing this appeal will have no effect on the parties and will not provide an answer to the primary manner in which Helicopter Resources put its case before the primary judge or before the Full Court. [1964] 1 QB 40 at 56. See also Smorgon v Australia and New Zealand Banking Group Ltd (1976) 134 CLR 475 at 481; Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at 504.

HIGH COURT OF AUSTRALIA APPELLANT AND DIRECTOR OF PUBLIC PROSECUTIONS OF THE AUSTRALIAN CAPITAL TERRITORY & ORS RESPONDENTS Eastman v Director of Public Prosecutions (ACT) [2003] HCA 28 28 May 2003 1. Appeal allowed. ORDER 2. Set aside orders 4 and 5 made by the Full Court of the Federal Court on 3 July 2002 and, in lieu thereof, order that the appeal from the orders of the Supreme Court of the Australian Capital Territory in proceeding No SC 149 of 2002 dated 3 May 2002 be dismissed. 3. The first respondent to pay the costs of the appellant in this Court. On appeal from the Federal Court of Australia Representation: D Grace QC with M E Marich for the appellant (instructed by the appellant) D A Buchanan SC with S J Gageler SC for the first respondent (instructed by the Director of Public Prosecutions (ACT)) J D Harris SC for the second respondent (instructed by Kevin Holmes) P A Johnson SC with D J C Mossop for the third respondent (instructed by ACT Government Solicitor) J D Harris SC for the fourth respondent (instructed by the Registrar, ACT Supreme Court) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Eastman v Director of Public Prosecutions (ACT) Administrative law – Injunction and declaration sought to prevent magistrate from conducting an inquiry under s 475 Crimes Act 1900 (ACT) – Whether Supreme Court judge had power to instigate such an inquiry in the circumstances – Whether a doubt as to an accused person's fitness to plead is a doubt as to the "guilt" of that person – Whether "guilt" means "guilt as established by the conviction" or only the occurrence of the acts or omissions that constitute the offence – Whether a doubt as to the fitness to plead of an accused person is relevant to such an inquiry. Criminal law – Inquiry after conviction – Inquiry under s 475 Crimes Act 1900 (ACT) instituted – Whether Supreme Court judge had power to instigate such an inquiry in the circumstances – Whether a doubt as to an accused person's fitness to plead is a doubt as to the "guilt" of that person – Whether "guilt" means "guilt as established by the conviction" or only the occurrence of the acts or omissions that constitute the offence – Whether a doubt as to the fitness to plead of an accused person is relevant to such an inquiry. Statutes – Interpretation – Provision for inquiry into a suggested doubt or question as to the guilt of a person convicted of a criminal offence – Construction of words of legislation so that all integers operate congruously and harmoniously – Construction by reference to words included and omitted – Construction by reference to legal history of Australian and English progenitors to the subject provision – Construction to give effect to a beneficial, remedial provision – Adoption of a purposive approach to statutory construction. Words and phrases – "guilt", "doubt or question". Crimes Act 1900 (ACT), s 475. Administrative Decisions (Judicial Review) Act 1989 (ACT). GLEESON CJ. I have had the benefit of reading in draft the judgment of Heydon J. I agree with the orders proposed by his Honour, and with his reasons. McHugh McHUGH J. Section 475 of the Crimes Act 1900 (ACT)1 provided that, where a person has been convicted of a crime and "any doubt or question arises as to his or her guilt", a judge of the Supreme Court of the Australian Capital Territory could direct a magistrate to examine all persons likely to give material information on the matter. The question in this appeal is whether s 475 authorised a direction to a magistrate when a question arose as to whether the appellant, David Harold Eastman, was fit to plead to the charge of murder upon which he was convicted. The appeal is brought against an order of the Full Court of the Federal Court of Australia holding that s 475 did not authorise a direction "to summon and examine on oath all persons likely to give material information on the matter of the fitness to plead of David Harold Eastman". A majority of that Court (Whitlam and Gyles JJ, Madgwick J dissenting) held that "a doubt or question restricted to fitness of the accused to plead is not a doubt or question as to the guilt of that person."2 That conclusion reflected the argument of the first respondent, the Director of Public Prosecutions of the Australian Capital Territory, that the term "guilt" in s 475 referred to an objective state that existed anterior to the conviction of the prisoner. On that hypothesis, a doubt about the prisoner's fitness to plead to the charge was not relevant to whether the prisoner was in fact guilty of the crime for which he or she was convicted. 1 Section 475 is now repealed but continues to apply to this case. Relevantly it provided: "(1) Whenever, after the conviction of a prisoner, any doubt or question arises as to his or her guilt, or any mitigating circumstance in the case, or any portion of the evidence therein, the Executive, on the petition of the prisoner, or some person on his or her behalf, representing such doubt or question, or a judge of the Supreme Court of his or her own motion, may direct any magistrate to, and such magistrate may, summon and examine on oath all persons likely to give material information on the matter suggested. (4) Every deposition taken under this section shall be stated in the commencement to have been so taken, and in reference to what case, and in pursuance of whose direction, mentioning the date thereof, and shall be transmitted by the magistrate, before whom the same was taken, as soon as shall be practicable, to the Executive if the inquiry was directed by him or her, or to the judge directing the inquiry, and the matter shall be disposed of, as to the Executive, on the report of such judge, or otherwise, shall appear to be just." 2 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 378 [47]. McHugh In my opinion, s 475 was not so limited. It authorised a direction to summon witnesses and to take evidence whenever there was evidence or information that might raise a doubt as to whether the prisoner was rightly convicted according to law or fact. Statement of the case In November 1995 in the Supreme Court of the Australian Capital Territory, a jury convicted David Harold Eastman of murdering Colin Stanley Winchester, an Assistant Police Commissioner. The Full Court of the Federal Court rejected an appeal by Eastman against his conviction3. In May 2000, this Court dismissed an appeal by Eastman against the order of the Full Court of the Federal Court4. The following month Eastman forwarded a "Petition" to the Registrar of the Supreme Court, addressed to the Chief Justice of that Court, seeking a judicial inquiry under s 475 of the Crimes Act 1900. The contents of the petition indicated that one matter on which Eastman wanted a judicial inquiry concerned his fitness to plead to the charge of murder. That was not an issue that he had raised at his trial. Initially, Chief Justice Miles rejected the application. But, on 7 August 2001 after a hearing, the learned Chief Justice acceded to the petition. He said that he proposed "to direct the Chief Magistrate, or a Magistrate nominated by him, to summon and examine on oath all persons likely to give material information on the matter of the fitness to plead of David Harold In March 2002, the Director commenced two actions in the Supreme Court. The first sought (1) a declaration that the inquiry Miles CJ had ordered was outside the power conferred by s 475 and (2) an injunction to restrain the second respondent, a magistrate, from conducting it. The second action was brought under the Administrative Decisions (Judicial Review) Act 1989 (ACT). Those proceedings sought an order quashing the decision of the Chief Justice to direct the inquiry. In May 2002, Gray J dismissed both proceedings5. The Director then appealed to the Full Court of the Federal Court. As I have indicated, a majority of that Court allowed the appeal6. In November 2002, this Court granted special leave to appeal against the orders of the Full Court. 3 Eastman v The Queen (1997) 76 FCR 9. 4 Eastman v The Queen (2000) 203 CLR 1. 5 Director of Public Prosecutions (ACT) v Eastman (2002) 130 A Crim R 588. 6 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360. McHugh The construction of s 475 The first question in the appeal is whether the term "guilt" in s 475 referred to a state that existed anterior to the conviction of the prisoner, as the Director contends and as the Full Court of the Federal Court found. For once, neither history nor case law throws much light on the question. The terms of the section and the state of the law at the time do, however, throw some light on the mischief at which the section was aimed and what its purpose was. Section 475 was enacted as part of the law of the Australian Capital Territory by s 6 of the Seat of Government Acceptance Act 1909 (Cth). It was taken directly from s 475 of the Crimes Act 1900 (NSW) which in turn re- enacted s 383 of the Criminal Law Amendment Act 1883 (NSW). In 1883 and 1900, there was no common form criminal appeal statute in New South Wales. Because that was so, the circumstances in which a conviction for felony could be challenged for factual errors were limited7. They became even more limited after the Judicial Committee held in 1867 that the Supreme Court of New South Wales had no power to order a new trial of a charge of felony8. Against that background, s 475 can be seen as intended to authorise the Executive government to inform itself of possible miscarriages of justice resulting from deficiencies in the evidence adduced at the trial. The section left it to the Executive government to determine whether any actual or suspected miscarriages of justice had occurred. It also left to the discretion of the Executive government what steps should be taken to remedy any actual or suspected miscarriage of justice. The remedies were of course limited and confined to commuting death sentences, granting free and conditional pardons and releasing prisoners on licence. However, the power conferred by s 475 did not extend to investigating every possible miscarriage of justice. It did not, for example, extend to doubts or questions concerning any element of the trial process that might have affected the conviction of the prisoner. That seems to follow inevitably from the direction to the magistrate to "summon and examine on oath all persons likely to give material information on the matter suggested." The section assumed that evidence might exist that threw doubt on or questioned the prisoner's guilt or culpability. If such evidence might exist, the section authorised the Executive government or a Supreme Court judge to direct a magistrate to investigate the existence and strength of the evidence by summoning persons who might have information concerning the matter that gave rise to the question or doubt. Thus, the section would not have authorised a direction concerning the directions of the trial judge. Those directions were not "matters" upon which it was likely that 7 See Conway v The Queen (2002) 209 CLR 203 at 208-213 [7]-[16]. 8 R v Bertrand (1867) LR 1 PC 520. McHugh any person could "give material information". That does not mean that, in reporting on whether there was such a doubt or question, the judge who directed the calling of witnesses could not evaluate the effect of the inquiry evidence by reference to the strengths or weaknesses of the trial judge's directions9. But that is a different matter from ordering an inquiry into the judge's directions. It does not follow, however, that the Director is correct in contending that in s 475 "guilt" referred merely to the acts and omissions of the prisoner that constituted the offence for which that person was convicted. That is to say, it does not necessarily follow from the assumption that the section made about the existence of evidence that its "guilt" limb was concerned only with doubts and questions relating to the existence of the acts or omissions and state of mind that constituted the offence. Even when the primary facts are admitted, the "guilt" of an accused person depends on the law that has to be applied to those facts. Without applying the law to the facts as found or admitted, "guilt" in a legal sense is a meaningless concept. Whether the accused is guilty of murder or, alternatively, manslaughter, rape or, alternatively, indecent assault, burglary or, alternatively, housebreaking depends on the law that has to be applied to the primary facts. In some cases, the "guilt" of the prisoner may even depend on the assessment of a jury as to whether the conduct of the prisoner was reasonable in the circumstances. If the prisoner pleads self-defence to a charge of murder, for example, whether that person is guilty or not guilty of murder or guilty or not guilty of manslaughter depends on the assessment the jury makes of the reasonable grounds for the prisoner's alleged response. In some cases, "guilt" may be found only after the jury determines the nature of the office or employment of the prisoner or the nature of his or her relationship with other persons. Whether a person is guilty of the fraudulent misappropriation, for example, may depend on whether relationship between the prisoner and another person is that of trustee and beneficiary or debtor and creditor. Whether a person is guilty of embezzlement will depend on a finding that at the relevant time the prisoner was a clerk or servant of the person whose money has been taken. In other cases, "guilt" may depend on the acts, intentions or mental states of persons other than the accused. Rape and indecent assault depend on the victim's absence of consent. Larceny, embezzlement and misappropriation depend on whether the owner of the property consented to the taking by the accused. Larceny by finding depends on whether the "owner" of the property has or has not abandoned possession of it. 9 That was the view of Wood J in his Report of the Inquiry Held Under Section 475 of the Crimes Act, 1900 into the Convictions of Timothy Edward Anderson, Paul Shaun Alister, and Ross Anthony Dunn at Central Criminal Court, Sydney, on 1st August, 1979 (1985) at 63-64, 67. McHugh In all these cases, it is fanciful to speak of "guilt" as being an entity that is independent of the jury's verdict. It is the conviction recording the jury's verdict that establishes the "guilt" of the prisoner. Like Bishop Berkeley who "maintained that material objects only exist through being perceived"10, the lawyer maintains that "guilt" exists in a criminal law context only when it is perceived as the concomitant of a conviction. To assert otherwise is to deny the presumption of innocence, a presumption that operates until the entry of a conviction rebuts it. Three other matters indicate that "guilt" in s 475 was concerned with a finding of "guilt" by a judge, magistrate or jury and not merely the acts or omissions that constituted the offence for which the prisoner was convicted. First, the context of "guilt" was a judicial setting. Section 475 was concerned with guilt only "after the conviction" in a court of law. The power conferred by the section was triggered only when any doubt or question arose as to the prisoner's guilt "after the conviction". This context suggests that the doubt or question concerned the guilt of the prisoner as established by the conviction. Second, if a judge had directed the taking of evidence, by necessary implication the judge had a duty to make a report on the evidence taken by the magistrate and to transmit it to the Executive government. By necessary implication, the judge's report would have to discuss the effect of the evidence and whether it showed that there was any doubt or question concerning the prisoner's "guilt". In determining whether there was any such doubt or question, the judge could not avoid examining the legal effect of both the evidence at the trial and the evidence revealed by the s 475 examination. This consideration also indicates that the "guilt" of which the section spoke was guilt established by conviction according to law. Third, the other two limbs of s 475 are concerned with deficiencies in the evidence adduced at the trial. They are not concerned – or at all events not necessarily concerned – with the anterior acts or omissions that constitute the offence. As well as authorising a direction when any doubt or question arises as to (a) the prisoner's guilt, s 475 authorises a direction where any doubt or question arises as to (b) any mitigating circumstances of the case and (c) any portion of the evidence. Mitigating circumstances of the case may cover – indeed ordinarily would cover – matters other than the acts or omissions that constitute the offence. In most cases, that limb would be concerned with evidence that could not be or was not given at the trial. In a murder case, for example, the mitigating 10 Russell, History of Western Philosophy, (1946) at 673. McHugh circumstances limb might cover matters that were legally irrelevant to the guilt or innocence of that accused. Take a case where a woman was convicted of murder but claimed that, although she was a victim of the "battered wives syndrome", the law did not permit her to raise the defence of provocation. The "mitigating circumstance" limb of s 475 was wide enough to authorise a direction to take evidence concerning the claim. Similarly, that limb would have authorised a direction to take evidence concerning the diminished responsibility of the accused in the days before the law permitted a jury to use the diminished responsibility of the accused to find manslaughter rather than murder. And there is no reason why such a direction could not have been given after the law recognised diminished responsibility as an ameliorating factor, if it appeared that the accused might have suffered from that condition, whether or not that "defence" was raised at the trial. It would be surprising if the section permitted an inquiry of that kind but not an inquiry as to whether the accused was fit to plead to the charge. The surprise is increased by the realisation that s 475 obviously authorised an inquiry as to whether the accused was sane when he or she committed the crime. Perhaps more importantly, this limb was concerned with evidence that was not or could not have been adduced at the trial. The "any portion of the evidence" limb was also not confined to the acts and omissions of the accused. Its focus was evidence given at the trial. We know as a matter of history that that limb was placed in the section's predecessor to permit an inquiry into the background and character of persons other than the convicted prisoner. In the Second Reading Speech on the Bill containing the clause that became s 383, the Minister said11: "Clause 383 contains an important provision. In cases of capital offence, especially where the victim is a female, representations are frequently made to the Government – after the person charged with the offence has been found guilty – which reflect on the character, the honor, or the chastity of the prosecutrix, or some of the witnesses on her behalf. As the law stands at present the Government have not the power to institute inquiries on oath to ascertain whether the imputations or reflections are or are not well-founded ... [Clause 383] appears to me to afford much more solid ground on which the Executive may proceed when they have to deal with capital cases where doubts are thrown on the character of persons connected with them." (emphasis added) 11 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 22 February 1883 at 618. See Varley v Attorney-General in and for the State of New South Wales (1987) 8 NSWLR 30 at 45. McHugh This passage suggests that the "portion of the evidence" limb had two aims: (1) clearing the reputation or reputations of the deceased and witnesses at the trial, and (2) investigating whether the conviction of the accused had been obtained by the evidence of unsavoury or unreliable witnesses. It shows conclusively that this limb of s 475 was concerned with what happened at the trial. Together with the "mitigating circumstances" limb, it suggests that s 475 as a whole was concerned with what happened at the trial and with new evidence that suggests the prisoner should not have been convicted or that his or her culpability is less than might appear from the conviction. that the Director pointed out lawyers and others refer It is true, as the Director pointed out, that the term "guilt" is often used to mean "state of guilt". But used in that sense, "guilt" usually refers to culpable or morally reprehensible conduct that is deserving of punishment, penalty or social condemnation. It is not necessarily synonymous with the legal quality of the acts, omissions and state of mind that together constitute a particular criminal offence. In support of his argument that s 475 was not concerned with a finding of "guilt", "consciousness of guilt" and "admission of guilt", concepts that exist independently of any finding of guilt by a judge, magistrate or jury. But these examples of "guilt" are not really helpful. They refer to the state of mind of the accused. Such states of mind constitute evidence that a jury can use to infer that the accused is guilty of the offence with which he or she is charged. Sometimes those states of mind refer to the actus reus of the offence. Sometimes they refer to the mens rea of the offence. Sometimes, particularly in the case of simple criminal offences, they refer to both the actus reus and the mens rea of the offence. But the conduct recognised or admitted by those states of mind is not always or necessarily synonymous with the legal quality of the acts and omissions that constitute the elements of any particular criminal offence. A person may believe that he or she is "guilty" of a breach of the law when in fact no law has been breached. In the context of s 475, it was the legal quality of the acts and omissions of the prisoner that identified the "guilt" of the prisoner, not the prisoner's or other persons' beliefs as to his or her guilt. That "guilt" in s 475 was concerned with the legal quality of the prisoner's acts and omissions is not necessarily destructive of the Director's arguments. It is not necessarily inconsistent with his argument, strenuously maintained at all levels of these proceedings, that "guilt" in s 475 was concerned only with the prisoner having committed the acts or made the omissions that constitute the offence. But once the legal quality of those acts or omissions is recognised as a decisive consideration in determining the "guilt" of the prisoner, it is difficult to accept that "guilt" in s 475 was referring to anything but a curial determination of "guilt". In my opinion, the reference to "guilt" in s 475 was not concerned only with the acts or omissions that constituted the offence for which the prisoner was convicted. It authorised a direction to summon witnesses and to take evidence McHugh whenever there was evidence or information that might raise a doubt as to whether the prisoner was rightly convicted according to law or fact. That is to say, the "guilt" of which the section spoke was "guilt" established by conviction. This construction of s 475 also gives effect to the purpose of the section. That purpose was to provide machinery for supplementing the evidence at the trial so that the Executive government could determine whether a miscarriage of justice had or might have occurred or the culpability of the prisoner was less than it seemed. The purposive approach is the modern approach to statutory construction12. Wherever possible, a statute should be given a construction that promotes its purpose. To construe s 475 as the Director contends is not directly contrary to its purpose. But it has the effect of denying it an operation that its purpose indicates that it should have. Accordingly, in my opinion, in s 475 "guilt" meant "guilt" established by a conviction. Section 475 authorises an inquiry into the fitness of the prisoner to plead to the charge upon which he or she was convicted The second question in the appeal is whether s 475 authorises an inquiry into the fitness of a prisoner to plead to the charge upon which he or she was convicted. It needs no argument to show that, if a prisoner is unfit to plead to the charge, he or she will not be able to defend himself or herself adequately. Such a person is not only incapable of understanding the nature of the charge or the process by which it is proved but will be incapable of instructing legal representatives or of following the evidence. As a result, a doubt or question concerning the guilt of a prisoner must inevitably arise if that prisoner was unfit to plead to the charge upon which he or she was convicted. The Director contended, however, that the legislature in enacting s 475 could not have intended issues concerning fitness to plead to be the subject of inquiry under that section and its predecessors. The Director pointed out that the Executive government has no power to quash a conviction or order a new trial, the only remedies that justly deal with a case of unfitness to plead. The only remedies realistically available would be either to release the prisoner or to grant a free pardon, courses of action that are hardly appropriate where the prisoner had been unfit to plead to the indictment. No doubt the considerations to which the Director refers pose considerable difficulties for the Executive government if it is ultimately determined that the prisoner was unfit to plead to the charge. But these practical considerations do not bear on the construction of the section. In 12 Bropho v Western Australia (1990) 171 CLR 1 at 20; Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421-424. McHugh any event, they ignore the possibility that the Executive may persuade the legislature to introduce legislation quashing the conviction and permitting a new trial when the prisoner was fit to plead. Order The appeal should be allowed. Postscript On 28 March 2003 after I had circulated my reasons in this appeal to other members of the Court, the appellant informed the Registry that he had withdrawn his instructions to the Senior Counsel who had represented him on the hearing of the appeal. He also forwarded to the Court a seven page document that he described as "Appellant's Supplementary Submissions". I have had no regard to these "submissions". They should not have been forwarded to the Court. The Rules of the Court gave no authority for them to be forwarded. Nor did the Court give leave to the appellant to file them. If leave had been sought, I would have refused it. If the Court gave leave, it would have to give leave to the other parties in the appeal to file replies – with consequent delay in the business of the Court. Parties to matters before the Court need to understand that, once a hearing in the Court has concluded, only in very exceptional circumstances, if at all, will the Court later give leave to a party to supplement submissions. Parties have a legal right to present their arguments at the hearing. If a new point arises at the hearing, the Court will usually give leave to the parties to file further written submissions within a short period of the hearing – ordinarily seven to fourteen days. But a party has no legal right to continue to put submissions to the Court after the hearing. In so far as the rules of natural justice require that a party be given an opportunity to put his or her case, that opportunity is given at the hearing. This is not the first time that this Court has had to emphasise that the hearing is the time and place to present arguments. In Carr v Finance Corporation of Australia Ltd [No 1]13 Mason J said: "The material was submitted without leave having been given by the Court. The impression, unfortunately abroad, that parties may file supplementary written material after the conclusion of oral argument, without leave having been given beforehand, is quite misconceived. We 13 (1981) 147 CLR 246 at 258. McHugh have to say once again, firmly and clearly, that the hearing is the time and place to present argument, whether it be wholly oral or oral argument supplemented by written submissions." Once the hearing has concluded, the workload of the Court makes it impossible for the Court to give leave to file further submissions – with all the attendant delay in the Court's business by a fresh round of submissions. Efficiency requires that the despatch of the Court's business not be delayed by further submissions reflecting the afterthoughts of a party or – as perhaps is the case in this appeal – some dissatisfaction with the arguments of the party's counsel. GUMMOW J. I agree with the reasons for judgment of McHugh J and of The appeal should be allowed and consequential orders made as proposed KIRBY J. I agree in the orders proposed by Heydon J and with his reasons. Kirby Hayne HAYNE J. I agree with Heydon J. Callinan CALLINAN J. I have read the judgment of Heydon J. I agree with his Honour's reasons and conclusions. Background: the earlier proceedings On 3 November 1995, after a trial lasting five and a half months in the Supreme Court of the Australian Capital Territory ("the Territory"), a jury the appellant of murdering Colin Winchester, an Assistant convicted Commissioner of the Australian Federal Police. The appellant was represented for parts of the trial and unrepresented for other parts of it. The majority of the Full Federal Court from whose orders this appeal is brought said that during the trial the appellant exhibited "erratic and unusual behaviour"14. However, the issue of his fitness to plead was not raised during the trial – not by the appellant, nor by his legal representatives, nor by counsel for the Crown, nor by the trial judge. An appeal by the appellant against his conviction to the Full Court of the Federal Court of Australia was dismissed15. The appellant was represented during that appeal by senior and junior counsel experienced in the practice of criminal law. They argued numerous grounds of appeal. However, they took no point about the appellant's fitness to plead, and, according to the majority of the Full Court from whose orders this appeal is brought, expressly declined to do The appellant then applied for special leave to appeal to this Court from the dismissal of his appeal by the Full Federal Court. He did not re-agitate the grounds which had been rejected in the Full Court. Rather he sought to tender further evidence to this Court on the question of his fitness to plead. He also argued that the Full Court, by reason of the material that was before it, ought, of its own motion, to have inquired into the issue of his fitness to plead. On 25 May 2000, this Court decided two points. First, it held that, consistently with prior authority construing s 73 of the Constitution, the Court had no power to receive the further evidence. Secondly, it rejected the contention that the Full Court erred in failing to consider fitness to plead17. The former outcome was supported by Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Kirby and Callinan JJ dissented on that point. The latter outcome 14 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 362 [3]. 15 Eastman v The Queen (1997) 76 FCR 9. 16 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 363 [4]. 17 Eastman v The Queen (2000) 203 CLR 1. In earlier proceedings not relevant to the present appeal, this Court rejected a challenge to the legality of the trial based on the contention that the trial judge had not been validly appointed: Re Governor, Goulburn Correctional Centre; Ex parte Eastman (1999) 200 CLR 322. was supported by Gleeson CJ, McHugh, Gummow and Kirby JJ; Gaudron, Hayne and Callinan JJ dissented on that point. The Petition On 9 June 2000 the appellant sent a "Petition" to the Registrar of the Supreme Court of the Australian Capital Territory for dispatch to the Chief Justice. In that document he applied for a judicial inquiry under s 475 of the Crimes Act 1900 (ACT) ("the Crimes Act"). That document stated: "A 4-3 majority of the High Court (Gaudron, Kirby, Hayne and Callinan) considered that the negative outcome of my appeal was 'CLEARLY UNSATISFACTORY' (see pages 26, 100, 115 and 147), and specific reference was made to a Judicial Inquiry as one of the means of repairing this defect (see page 100)." The references to those pages are apparently intended to be references to the following passages. Gaudron J, who was in the majority on the first point and in the minority "Because the material before the Federal Court raised the possibility that the applicant might not have been fit to plead at the time of his trial, that court, of its own initiative, should have raised the issue of the applicant's fitness to plead and thereafter proceeded to take evidence and to determine whether, at the time of his trial, there was a question as to his fitness to plead. Special leave should be granted so far as concerns the question whether there was material before the Federal Court raising an issue as to the applicant's fitness to plead and the appeal treated as instituted instanter. The appeal should be allowed, the order of the Federal Court dismissing the applicant's appeal should be set aside and the matter remitted to that court for further hearing and determination as to whether there was a question as to the applicant's fitness to plead at the time of his trial." Kirby J, who was in the minority on the first point but in the majority on 18 Eastman v The Queen (2000) 203 CLR 1 at 31 [99]-[100]. 19 Eastman v The Queen (2000) 203 CLR 1 at 96 [287]. "This outcome is clearly unsatisfactory. In this case, there are other remedies that may permit the repair of the possible injustice to the applicant which the result entails. However, such remedies lie outside the appellate system of the Australian Judicature. Essentially, they belong to the Executive Government. By reason of the constitutional holding that is upheld in this case, the Australian judiciary is disclosed as incapable, even in a matter still before it in its highest court, to repair what may be a fundamental error or a proved injustice. This is an outcome which I would reject and from which I dissent. But upon the basis of this Court's adherence to its narrow view of its appellate jurisdiction, it is an outcome that must follow. The applicant must therefore fail." In a footnote to the second sentence, he said: "Such as an application under the Crimes Act 1900 (ACT), s 475." Hayne J, who was in the majority on the first point but in dissent on the second, said20: "The material to which I have referred as being before the Full Court was such as to require the Full Court, of its own motion, to raise with the parties to the appeal to that Court whether there was a question about the fitness of the present applicant to plead and stand his trial. On the material to which I have referred, I do not consider it possible to say that a finding that the applicant was fit was inevitable. No doubt the fact that neither the prosecution nor the defence suggested, either at trial or on appeal, that there was a question about the applicant's fitness to plead and stand his trial is a very important consideration suggesting that the applicant was fit. But three other matters must be considered. First, there was expert medical opinion that in 1992 the applicant suffered from a serious emotional or paranoid disorder that might be characterised by delusions. Secondly, there was the record of the way in which the trial had been affected by the applicant's conduct. Thirdly, there was the Full Court's own conclusion that some of that conduct had no reasonable or rational basis. The Full Court not having raised the issue, the prosecution, as respondent to the appeal, had no opportunity of meeting the material which raises the question. In these circumstances the proper order for this Court to make is to grant special leave to appeal, treat the appeal as instituted and heard instanter and allowed. The order of the Full Court of the Federal Court should be set aside and the matter remitted to that Court for further consideration in conformity with the reasons of this Court." 20 Eastman v The Queen (2000) 203 CLR 1 at 108 [324]-[326]. Finally, Callinan J, who was in the minority on both points, said21: "I am of the opinion that in the circumstances the members of the Full Court should have turned their minds to the possibility of the existence of a question of the applicant's fitness to plead at the trial. The last question is how the applicant's application for special leave to appeal to this Court should be disposed of? The issues as to whether the relevant question of fitness to plead arose, and if it did, what should follow were fully argued, with each party in agreement on the course which should be followed if the applicant were to succeed here. The respondent accepted that if the appeal were upheld the matter should be remitted to the Full Court for further hearing in that Court. Accordingly, I would order that special leave be granted, that the appeal be allowed, the order of the Full Court of the Federal Court dismissing the appeal be set aside, and that the matter be remitted to the Full Court of the Federal Court for further hearing and determination whether there was a question as to the appellant's fitness to plead at the time of the trial." Section 475 of the Crimes Act as it then stood provided: "(1) Whenever, after the conviction of a prisoner, any doubt or question arises as to his or her guilt, or any mitigating circumstance in the case, or any portion of the evidence therein, the Executive, on the petition of the prisoner, or some person on his or her behalf, representing such doubt or question, or a judge of the Supreme Court of his or her own motion, may direct any magistrate to, and such magistrate may, summon and examine on oath all persons likely to give material information on the matter suggested. The attendance of every person so summoned may be enforced, and his or her examination compelled, and any false statement wilfully made by him or her shall be punishable in like manner as if he or she had been summoned by, or been duly sworn and examined before, the same magistrate, in a case lawfully pending before him or her. (3) Where on such inquiry the character of any person who was a witness on the trial is affected thereby, the magistrate shall allow such person to be present, and to examine any witness produced before such magistrate. Every deposition taken under this section shall be stated in the commencement to have been so taken, and in reference to what case, 21 Eastman v The Queen (2000) 203 CLR 1 at 134 [407]-[408]. and in pursuance of whose direction, mentioning the date thereof, and shall be transmitted by the magistrate, before whom the same was taken, as soon as shall be practicable, to the Executive if the inquiry was directed by him or her, or to the judge directing the inquiry, and the matter shall be disposed of, as to the Executive, on the report of such judge, or otherwise, shall appear to be just." Section 475 was repealed with effect from 27 September 2001. However, by reason of s 84 of the Legislation Act 2001 (ACT), s 475 continues to apply to inquiries directed before its repeal. On 26 July 2000 the Registrar sent the appellant a letter informing him that the "Chief Justice has made an administrative decision not to direct an inquiry under s 475". On 31 May 2001 the appellant made a further application for a s 475 inquiry. The further application referred to four matters: a psychiatric report of Dr Jolly; evidence supposedly emanating from Detective Forster; evidence to the supposed effect that the victim was murdered by "organised crime"; and forensic On 28 June 2001 the Chief Justice announced that he had not yet been able to decide whether to direct a s 475 inquiry in relation to Dr Jolly's report, that he proposed to conduct a hearing on whether to direct a s 475 inquiry in relation to it, but that he had decided not to direct an inquiry on the other three matters. On 7 August 2001, after a hearing on 12 July 2001, the Chief Justice indicated that he proposed "to direct the Chief Magistrate, or a Magistrate nominated by him, to summon and examine on oath all persons likely to give material information on the matter of the fitness to plead of David Harold Eastman". On the same day the direction was made, and the Chief Magistrate thereafter directed the second respondent in this Court to act as the magistrate pursuant to s 475. The present proceedings On 20 March 2002 the Director of Public Prosecutions (ACT) ("the Director"), who is the first respondent in this Court, commenced two proceedings in the Supreme Court of the Australian Capital Territory in relation to the inquiry directed by the Chief Justice22. The first proceedings sought a declaration that 22 According to the majority of the Full Federal Court, the appellant has commenced proceedings for review of the decision of the Chief Justice declining to direct an inquiry on the issues raised by the appellant other than fitness to plead: Director of (Footnote continues on next page) the inquiry was not authorised by s 475, and an injunction restraining the second respondent from conducting it. The second proceedings sought relief under the Administrative Decisions (Judicial Review) Act 1989 (ACT) ("the ADJR Act") quashing the decision of the Chief Justice (the fourth respondent to those proceedings and in this Court) directing the inquiry. The second proceedings had been commenced out of time, and the Director applied for an extension of time accordingly. On 3 May 2002 Gray J dismissed both proceedings, and also refused to extend time for commencing the second proceedings. He did so on the substantive ground that the Chief Justice had acted within the power conferred by s 475. He said23: "[T]he words used to convey the circumstances for the provision to operate were each descriptive of aspects of the trial and ... 'guilt' encompasses the verdict that results from that process, just as mitigating circumstances and portion of the evidence are part of that process. ... [I]t is the trial process which is under scrutiny in each of the circumstances which might give rise to the operation of s 475. In most cases I agree that this will measure the evidence given at the trial with other material, but I do not think that this was intended to be exclusive or to make unreviewable matters which might affect the ultimate verdict." The Director then appealed to the Full Court of the Federal Court of Australia. By majority (Whitlam and Gyles JJ; Madgwick J dissenting), the Full Court allowed the appeal. The majority did so on the basis that "an inquiry and report which is limited to the fitness to plead of an accused person who has been convicted is not authorised by s 475". They said24: "Put another way, a doubt or question restricted to fitness of the accused to plead is not a doubt or question as to the guilt of that person." They extended the time for commencement of the second proceedings, and set aside the Chief Justice's decision. On 15 November 2002 this Court granted to the appellant special leave to appeal against the judgment and orders of the Full Court. Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 369 [22]. This Court is not concerned with these questions. 23 Director of Public Prosecutions (ACT) v Eastman (2002) 130 A Crim R 588 at 24 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 378 [47]. Irrelevant issues The primary issue in the appeal was the construction of s 475. Among the issues which the parties argued in writing, and came prepared to argue orally, were whether the Director had power to institute the Supreme Court proceedings; whether, if he did, he had power to appeal against Gray J's orders; whether he was a "person aggrieved" for the purposes of the ADJR Act; and whether the time for commencing the second proceedings should have been extended. In view of the conclusions reached below as to the construction of s 475, it is not necessary to consider the other issues. The structure of the appeal It was common ground in the Full Federal Court and in this Court that25: "the Chief Justice was, and was entitled to be, satisfied that there is a doubt or question as to whether [the appellant] should have been convicted at his trial, as there is a question or doubt as to his fitness to plead during the trial … [T]hat being so, it was an appropriate case to direct an inquiry pursuant to s 475 if the section permitted it." On the construction of s 475, the arguments advanced by the appellant in support of the reasoning of the trial judge and Madgwick J, and against the reasoning of Whitlam and Gyles JJ, were supported by the Attorney-General of the Australian Capital Territory (the third respondent before this Court). Those arguments were opposed by the Director (the first respondent). The second and fourth respondents (respectively the magistrate conducting the inquiry and the Chief Justice, who left office shortly before this appeal was argued) submitted to any order save as to costs, and took no part in the argument. In essence the appellant and the Attorney-General contended that "guilt" in s 475 meant "guilt as established by the conviction", and hence that a doubt or question as to guilt could include matters affecting the process by which guilt was established, in particular a defendant's fitness to plead. The Director contended that "guilt" referred only to the occurrence in fact of the acts or omissions proscribed by the criminal law which had been charged against the accused and of which he had been convicted. 25 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 377 [45] per Whitlam and Gyles JJ. The Director accepted what the appellant urged, namely that s 475 was a remedial provision and hence should be given a beneficial construction26. As Hope JA remarked27: "This well-known principle does not of course mean that courts can construe a statute so as to achieve a result which they think the legislature should have enacted; it means that they should construe the statute to give the fullest effect to the legislation's intention to remedy the mischief aimed at which the language of the statute will allow." The Director argued that the principal vice in the contentions advanced against his position was that they pursued the first rather than the second of the two approaches described by Hope JA. The Director submitted that to construe s 475 as the appellant urged would be to arrive at a conclusion which, while it might be desirable in certain respects, would go beyond what the words could mean even on their most beneficial construction. The Director's argument that the word "guilt" in s 475(1) referred to the occurrence of the acts or omissions proscribed by the criminal law, entirely independently of whether there was later a criminal conviction, distinguished questions of guilt from deficiencies in the process by which guilt was determined. Issues of fitness to plead, and other issues affecting the integrity of the process leading to a conviction, such as the bribery of jurors, the exercise of duress against jurors, deficiencies in the constitution of the court, and jury decision of the case by casting dice or tossing coins or other impermissible means, did not go to the question of whether the acts or omissions proscribed by law had actually taken place. Hence doubts or questions about issues of that kind fell outside s 475, and s 475 conferred no powers to direct an inquiry into them. On this construction, the expression "after the conviction of a prisoner" had temporal significance only; it had no other relevance in construing the section except to support the argument that "guilt" was used to mean nothing more than guilt in fact. 26 Varley v Attorney-General in and for the State of New South Wales (1987) 8 NSWLR 30 at 38 per Kirby P, 46 per Hope JA. 27 Varley v Attorney-General in and for the State of New South Wales (1987) 8 NSWLR 30 at 46. The Director pointed out that the question of fitness to plead is determined by a different tribunal from that which determines guilt28. He also pointed out that a finding of unfitness to plead does not result in acquittal29. The arguments advanced by the Director and by the opposing parties in this Court closely parallel those which they had respectively advanced below. Gray J and Madgwick J rejected the Director's arguments, and Whitlam and Gyles JJ accepted them. It is convenient initially to set out the history of s 475, and then to go immediately to the arguments of the Director, without setting out the reasoning of the judges who sat in the Full Court. The arguments will sufficiently disclose the issues. The legislative history of s 475 The legislative history of s 475 is as follows. In 1871 the First Report of Commissioners inquiring into the statute law of New South Wales was presented to the Legislative Assembly. That report dealt with the consolidation of the criminal law. The President of the Commissioners was Sir Alfred Stephen CJ, who had been a Supreme Court judge since 1839. The Report stated30: "It not unfrequently happens after a prisoner's conviction, generally on his representation, but sometimes at the instance of strangers, that doubts or questions are raised as to some part of the evidence, or some matter not in evidence, tending to impeach the verdict. Such doubts must 28 In the Territory, fitness to plead is determined by the Mental Health Tribunal: Mental Health (Treatment and Care) Act 1994 (ACT) ("the Mental Health Act"), 29 In the Territory, a finding of unfitness to plead results in a deferral of the trial if the unfitness is found by the Mental Health Tribunal to be temporary (ie of less than twelve months in duration). If the unfitness is likely to last longer, the Supreme Court conducts a special hearing to determine whether the accused is not guilty of the offence charged or whether the accused committed the acts which constituted the offence. Where the jury advises that the accused did commit those acts, the Court orders the accused to be detained until the Mental Health Tribunal otherwise orders or else orders the accused to submit to the jurisdiction of the Tribunal to enable the making of a mental health order: Crimes Act, Pt 11A, Divs 1 and 2 as in force before 2001, and Pt 13, Divs 13.1 and 13.2 since then. 30 First Report of Commissioners on the Consolidation of the Criminal Law (1871) at in the course of years have presented themselves without suggestion elsewhere, to the mind of every Judge. There is, however, as we all know, not only no Appeal in such cases, but no mode provided by law for investigating the facts represented, or satisfactorily solving any doubts so raised. The absence of such a provision has often been regretted; but there is great difficulty in applying an adequate remedy. We have endeavoured to meet this, to some extent, by an enactment enabling the Governor, or the presiding Judge in any case, to cause witnesses to be examined on oath before some Justice; and thus to obtain materials, under legal sanction, for determining how far the doubt or representation is well founded." The appellant stressed the words "tending to impeach the verdict". To the First Report was annexed a draft Bill. Clause 392 provided: "Whenever after a prisoner's conviction or sentence any question shall arise as to his guilt or any mitigating circumstance in the case or any portion of the evidence therein it shall be lawful for any Justice by the direction of the Governor or of the Judge before whom such prisoner was tried to summon and examine on oath all persons who may be thought likely to give material information on the matter suggested and to transmit every deposition taken thereupon to the Governor or Judge for his information. And the attendance of every person so summoned may be enforced and his examination compelled and any statement made by him wilfully false shall be punishable in like manner as if he had been summoned by or been duly sworn and examined before the same Justice in a case lawfully pending before him. Provided that every deposition so taken shall be stated in the commencement to be taken under this section and in reference to what case and in pursuance of whose direction mentioning the date thereof." Thereafter, the Criminal Law Amendment Act 1883 (NSW) ("the 1883 Act") was enacted. Sections 383 and 384 provided: "383. Whenever after the conviction of a prisoner any doubt or question arises as to his guilt or any mitigating circumstance in the case or any portion of the evidence therein it shall be lawful for any Justice by direction of the Governor on the petition of the prisoner or some person on his behalf representing such doubt or question – or by direction of a Judge of the Supreme Court of his own motion – to summon and examine on oath all persons likely to give material information on the matter suggested Provided that where on such inquiry the character of any person who was a witness on the trial is affected thereby the Justice shall allow such person to be present and to examine any witness produced before such Justice And such Justice shall transmit every deposition taken by him under this section as soon as shall be practicable to the Governor if the inquiry was directed by him or to the Judge directing the inquiry and the matter shall thereafter be disposed of as to the Governor on the report of such Judge or otherwise shall appear to be just. 384. The attendance of every person so summoned may be enforced and his examination compelled and any statement made by him wilfully false shall be punishable in like manner as if he had been summoned by or been duly sworn and examined before the same Justice in a case lawfully pending before him Provided that every deposition taken under the last section shall be stated in the commencement to have been so taken and in reference to what case and in pursuance of whose direction mentioning the date thereof." In the Second Reading Speech the responsible Minister described the mischief addressed by ss 383 and 384 as follows31: "Clause 383 contains an important provision. In cases of capital offence, especially where the victim is a female, representations are frequently made to the Government – after the person charged with the offence has been found guilty – which reflect on the character, the honor, or the chastity of the prosecutrix, or some of the witnesses on her behalf. As the law stands at present the Government have not the power to institute inquiries on oath to ascertain whether the imputations or reflections are or are not well-founded ... [Clause 383] appears to me to afford much more solid ground on which the Executive may proceed when they have to deal with capital cases where doubts are thrown on the character of persons connected with them." Sir Alfred Stephen and Mr Alexander Oliver (who was Parliamentary Draftsman and had been Secretary to the Commissioners when they presented their First Report) wrote a Criminal Law Manual on the legislation. Of s 383 it said32: "This section legalises and regulates inquiries after a prisoner's conviction – hitherto unauthorizedly conducted, (as in England by the Home Secretary,) and necessarily without oath – by way of review of a verdict 31 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 22 February 1883 at 618. See Varley v Attorney-General in and for the State of New South Wales (1987) 8 NSWLR 30 at 45 per Hope JA. 32 Criminal Law Manual Comprising the Criminal Law Amendment Act of 1883 with an Introduction, Commentary and Index (1883) at 151. represented as being a mistaken one, or in order to ascertain if grounds exist for exercising the power of mitigation. But, since any reference such as is here provided involves often, if not ordinarily, imputations upon the character, or impeachment otherwise of the veracity, of the prosecutor or some other witness, – especially in cases of Rape, where the woman would otherwise be at the mercy of her accuser, – the Proviso here has been introduced. The enactment contemplates, it will be seen, a Report to the Governor by the Judge (if any) directing the inquiry before final decision; and probably a Report on the whole case will be obtained from the Judge who tried the prisoner. The entire enactment is new." The Director stressed the word "mistaken". In the same year, 1883, Sir Alfred Stephen's cousin, Sir James Fitzjames Stephen, published his celebrated work A History of the Criminal Law of England. The Director relied on certain passages in it. The author pointed out33 that in English criminal procedure there was "no appeal properly so called", but that there were apparent or real exceptions to that state of affairs. The first exception he referred to was the writ of error, enabling the expansion of the record and the correction of certain errors of fact so revealed34. He referred to a second exception in criminal cases in which a jury had returned an imperfect special verdict: by a proceeding called a venire de novo it was possible for the proceedings to be treated as a nullity and for a new jury to be summoned to re- hear the matter. According to Stephen, special verdicts had by his day gone almost entirely out of use35. A third exception he referred to was the reservation by the trial judge of points of law for the consideration of the Court for Crown Cases Reserved. After noting that writs of error were rare, and that the Court for Crown Cases Reserved probably did not determine twenty cases a year, he said36: "It is a much more important circumstance that no provision whatever is made for questioning the decision of a jury on matters of fact. However unsatisfactory such a verdict may be, whatever facts may be discovered after the trial, which if known at the trial would have altered the result, no means are at present provided by law by which a verdict can be reversed. All that can be done in such a case is to apply to the Queen 33 A History of the Criminal Law of England (1883), vol 1 at 308-312. 34 See Gordon, "Certiorari and the Revival of Error in Fact", (1926) 42 Law Quarterly Review 521. 35 A History of the Criminal Law of England (1883), vol 1 at 311. 36 A History of the Criminal Law of England (1883), vol 1 at 312-313. through the Secretary of State for the Home Department for a pardon for the person supposed to have been wrongly convicted. This is one of the greatest defects in our whole system of criminal procedure. To pardon a man on the ground of his innocence is in itself, to say the least, an exceedingly clumsy mode of procedure; but not to insist upon this, it cannot be denied that the system places every one concerned, and especially the Home Secretary and the judge who tried the case (who in practice is always consulted), in a position at once painful and radically wrong, because they are called upon to exercise what really are the highest judicial functions without any of the conditions essential to the due discharge of such functions. They cannot take evidence, they cannot hear arguments, they act in the dark, and cannot explain the reasons of the decision at which they arrive. The evil is notorious, but it is difficult to find a satisfactory remedy. The matter has been the subject of frequent discussion, and it was carefully considered by the Criminal Code Commission of 1878-9. I have nothing to add to the following observations which occur in their Report as to the reforms which seem to be required in regard to the whole matter of appeals in criminal cases." The author then set out a lengthy quotation from the Report of the Criminal Code Commission which discussed a recommendation for wider rights of appeal. Towards the end of that passage, there was discussion of the difficulties involved in a proposal to permit an appellate court to grant a new trial "where circumstances throwing doubt on the propriety of a conviction are discovered after the conviction has taken place"37. The passage then continued38: "Cases in which, under some peculiar state of facts, a miscarriage of justice takes place, may sometimes though rarely occur; but when they occur it is under circumstances for which fixed rules of procedure cannot provide. Experience has shown that the Secretary of State is a better judge of the existence of such circumstances than a court of justice can be. He has every facility for inquiring into the special circumstances; he can and does, if necessary, avail himself of the assistance of the judge who tried the case, and of the law officers. The position which he occupies is a guarantee of his own fitness to form an opinion. He is fettered by no rule, and his decision does not form a precedent for subsequent cases. We do not see how a better means could be provided for inquiry into the circumstances of the exceptional cases in question. The powers of the 37 A History of the Criminal Law of England (1883), vol 1 at 315. 38 A History of the Criminal Law of England (1883), vol 1 at 316-317. Secretary of State, however, as to disposing of the cases which come before him are not as satisfactory as his power of inquiring into their circumstances. He can advise Her Majesty to remit or commute a sentence; but, to say nothing of the inconsistency of pardoning a man for an offence on the ground that he did not commit it, such a course may be unsatisfactory. The result of the inquiries of the Secretary of State may be to show, not that the convict is clearly innocent, but that the propriety of the conviction is doubtful; that matters were left out of account which ought to have been considered; or that too little importance was attached to a view of the case the bearing of which was not sufficiently apprehended at the trial; in short, the inquiry may show that the case is one on which the opinion of a second jury ought [to] be taken. If this is the view of the Secretary of State, he ought, we think, to have the right of directing a new trial on his own undivided responsibility. Such a power we accordingly propose to give him by section 545." Section 475 of the Crimes Act 1900 (NSW) ("the 1900 Act") provided: "(1) Whenever, after the conviction of a prisoner, any doubt or question arises as to his guilt, or any mitigating circumstance in the case, or any portion of the evidence therein, the Governor on the petition of the prisoner, or some person on his behalf, representing such doubt or question, or a Judge of the Supreme Court of his own motion, may direct any Justice to, and such Justice may, summon and examine on oath all persons likely to give material information on the matter suggested. (2) The attendance of every person so summoned may be enforced, and his examination compelled, and any false statement wilfully made by him shall be punishable, in like manner as if he had been summoned by, or been duly sworn and examined before, the same Justice, in a case lawfully pending before him. (3) Where on such inquiry the character of any person who was a witness on the trial is affected thereby, the Justice shall allow such person to be present, and to examine any witness produced before such Justice. (4) Every deposition taken under this section shall be stated in the commencement to have been so taken, and in reference to what case, and in pursuance of whose direction, mentioning the date thereof, and shall be transmitted by the Justice, before whom the same was taken, as soon as shall be practicable, to the Governor if the inquiry was directed by him, or to the Judge directing the inquiry, and the matter shall thereafter be disposed of, as to the Governor, on the report of such Judge, or otherwise, shall appear to be just." In 1909 s 475 was adopted for the Territory by s 6 of the Seat of Government Acceptance Act 1909 (Cth) ("the Acceptance Act"). To some degree the limited exceptions to the non-availability of a right of appeal continued in New South Wales after 1883, and indeed after the grant of more general rights of appeal. Writs of error were preserved by s 427 of the 1883 Act and by s 471 of the 1900 Act39. In the Territory, s 471 of the Crimes Act was repealed by the Crimes (Amendment) Act 1983 (ACT)40. The power to reserve questions of law was preserved by s 422 of the 1883 Act and s 470 of the 1900 Act. In the Territory, s 470 of the Crimes Act was repealed by the Justice and Community Safety Legislation Amendment Act 2001 (ACT)41. For some time after the 1883 Act, there continued to be no general right of appeal in criminal cases. This was so when s 475 of the 1900 Act was enacted. It remained so in 1909, when s 475 was extended to the Territory. When the Acceptance Act was enacted, s 8 provided: "Until the Parliament otherwise provides, the High Court and the Justices thereof shall have, within the Territory, the jurisdiction which immediately before the proclaimed day belonged to the Supreme Court of the State and the Justices thereof." That jurisdiction did not include a general appellate jurisdiction. It was not until 1912 that general rights of appeal were introduced in New South Wales by the Criminal Appeal Act 1912 (NSW) following the Criminal Appeal Act 1907 (UK). In 1927 s 8 was repealed, and by s 30B of the Judiciary Act 1903 (Cth) this Court was given the same original jurisdiction in the Territory as the Supreme Court had had before 1 January 1911. Section 30B(4) provided: "A decision of the High Court in the exercise of the jurisdiction vested by this section shall be final and conclusive except so far as, under the Constitution or the laws of the Commonwealth, an appeal may be brought to a Full Court of the High Court." Section 34A(1) provided: "The High Court shall have such jurisdiction to hear and determine appeals from all judgments whatsoever of any Court of the Territory for the Seat of Government as is vested in it by Ordinance made by the Governor-General." Sections 30B and 34A were repealed by s 4 of the Seat of Government Supreme Court Act 1933 (Cth). Section 52 of that statute introduced general rights of appeal, or rights to seek leave to appeal, against convictions on indictment by the 39 Fleming v The Queen (1998) 197 CLR 250 at 257-258 [16]-[17]. 40 Section 31(2), Sched 3. 41 Schedule 1, Item 1.6. Supreme Court of the Australian Capital Territory to the Full Court of this Court. Later, rights of appeal to the Full Court of the Federal Court of Australia were granted, and even more recently to the Court of Appeal of the Australian Capital Territory. Section 475 of the Crimes Act was repealed with effect from 27 September 2001, and the review of convictions and sentences otherwise than by appeal is now regulated by a different regime42. The Director's arguments from linguistic usage The Director submitted that the distinction between "guilt" (the fact or state of wrongdoing) and the process by which guilt was established, which he contended underlay s 475, corresponded with ordinary linguistic usage as revealed in dictionaries, and legal linguistic usage as revealed in legal dictionaries, treatises, statutes, cases and the language of practitioners. Thus the primary meaning in The Macquarie Dictionary43 is "the fact or state of having committed an offence or crime". Black's Law Dictionary defines "guilt" as "[t]he fact or state of having committed a wrong, esp a crime"44. Reference was made to passages in which Blackstone spoke of persons being guilty independently of conviction45. Reference was also made to parts of the Crimes Act as it stood at the relevant time46. Other statutes in the Territory, too, were said to employ a universal usage of "guilt" to mean "the state of being guilty", and to reveal that 42 Crimes Act, Pt 20, originally introduced as Pt 17 by the Crimes Legislation Amendment Act 2001 (ACT). 43 3rd ed (1997) at 949. 44 7th ed (1999) at 714. 45 Commentaries on the Laws of England, 18th ed (1829), Introduction at 45-46 and bk 4, c 14. 46 Section 448(6) provided: "An admission of guilt made by a person under this section in respect of an offence shall not be admissible in evidence in any proceedings or further proceedings taken against that person in respect of that offence." Section 556U provided that where the court revoked a community service order and proposed to make another order "then, pending the making of that order, the court has the same powers in relation to that person as it would have if, at the time of revocation of the community service order, it had made a finding of guilt against him or her of an offence." when a judicial determination of guilt was referred to, the expression "finding of Attention was also drawn to provisions for alternative verdicts in the 1883 Act in which the precursors to s 475 were introduced as ss 383 and 384. These provisions were said clearly to show that the legislature knew the difference between the concept of guilt and the incidents of a trial in which a finding of guilt is made. that in "describing The Director submitted the adjudgment and punishment of criminal guilt as an essentially and exclusively judicial function, this Court has distinguished between guilt as the fact or state of having committed crime and the curial determination of the existence of that fact or state." Reliance was placed on Chu Kheng Lim v Minister for Immigration48 where Brennan, Deane and Dawson JJ said: "In exclusively entrusting to the courts designated by Ch III the function of the adjudgment and punishment of criminal guilt under a law of the Commonwealth, the Constitution's concern is with substance and not mere form." The Director also referred to Re Tracey; Ex parte Ryan49 where Deane J said: "The power to adjudge guilt of ... breach of the law ... fall[s] within the concept of judicial power." He also said: "The guilt of the citizen of a criminal offence ... can be conclusively determined only by a Ch III court". The Director further submitted that, in cases setting aside convictions after a plea of guilty, "guilt" was used to mean "state of guilt" rather than "finding of guilt"50. The Director contended that lawyers commonly speak of an "admission of guilt" and of lies as revealing a "consciousness of guilt", well before any curial finding of guilt has been made. It may be accepted that "guilt" can be used to mean "the fact of contravention, independently of any curial finding", and that this usage can be noted in ordinary speech, in statutes, and in the language of judges and 47 Magistrates Court Act 1930 (ACT), s 92(1); Supreme Court Act 1933 (ACT), s 68C(1); Firearms Act 1996 (ACT), s 116(2); Prohibited Weapons Act 1996 (ACT), s 16(2) and Coroners Act 1997 (ACT), s 58(5). 48 (1992) 176 CLR 1 at 27. 49 (1989) 166 CLR 518 at 580. 50 Various instances are set out by Spigelman CJ in R v Hura (2001) 121 A Crim R practitioners. However, the crucial question is whether that usage was employed in this particular statute. The answer to that depends on the construction of the particular words used in their particular context, assisted by whatever light the history of the legislation casts on the question. It does not follow from the fact that in some contexts "guilt" is used to mean what the Director contended that it had that meaning in s 475. Words omitted from s 475 The next argument advanced by the Director was: "[T]he language of the section distinguishes between 'the conviction of a prisoner' on the one hand and 'any doubt or question ... as to his or her guilt, or any mitigating circumstances in the case, or any portion of the evidence therein' on the other. Had it been intended to bear the construction for which the appellant contends, the section could easily have been drafted to refer to 'any doubt or question as to the conviction'." The Director also submitted that to read s 475 in the manner urged by the appellant involved inserting words into the statute impermissibly. No doubt the section could have been more clearly drafted. The even and sharp division of carefully reasoned judicial opinion in the courts below supports that view. However, the Director's approach places immense emphasis on the word "guilt", and no emphasis on the words "any portion of the evidence therein". The Chief Justice's decision to make a direction turned on his conclusion that a question arose as to the appellant's "guilt" in the sense of the finding of guilt made about the appellant; it did not turn on the existence of "mitigating circumstance[s] in the case" or "any portion of the evidence" in the case. But, if it be open to do so, s 475 must be construed so that all of its integers operate congruently and harmoniously51. The question, for example, whether a particular witness was bribed, or otherwise biased, is strictly separate from the question of whether the convicted person actually carried out the acts or omissions constituting the crime proscribed. Yet the statutory language would appear to permit the direction of an inquiry into whether a particular portion of the evidence was perjured by reason of bribery or other bias. That, in turn, suggests that s 475 has an ambit extending beyond the issue of whether a convicted person in fact committed the crime, so as to permit inquiries into at least some aspects of the process by which the conviction was arrived at. It will be necessary to return to this aspect of s 475. 51 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at The possessive pronouns The Director next argued that "the linking of the 'doubt or question' to 'guilt' by the possessive pronouns 'his or her', provides some indication that it is the fact or state of guilt of the convicted prisoner (rather than [some defect in] the processes of criminal justice which led to his or her conviction) which is the relevant 'guilt'." This argument is weak. If "his or her" had been omitted, s 475(1) would have had the same meaning: the relevant "guilt" is obviously that of the "prisoner" who has been the subject of "the conviction". Hence "his or her" does not, as argued, provide "some indication" that it is only the fact of guilt, and not the integrity of the trial, which can be the subject of a s 475(1) inquiry. The subject of the trial and the incidents of the trial The Director then submitted that s 475 dealt with matters going to the subject of the trial, not to its incidents. "Guilt in fact", "mitigating circumstances" and "portions of the evidence" were matters which were the subjects of the trial. They were distinct from the incidents of the trial, such as "arraignment, taking a verdict, returning a verdict, entering a conviction, passing sentence." The purpose of a criminal trial was to conduct an inquiry to determine whether something had happened in the past which was prohibited by law. Any distinction between the "subject" and the "incidents" of a trial is not one which is, in terms, known to the law and it is not one which was, in terms, picked up by s 475(1). Defects in some of the "incidents" of a trial are capable of affecting its "subject matter", namely the issues of guilt in fact, the existence of mitigating circumstances, or the acceptability of portions of the evidence. The adequacy of the mechanism employed The Director argued further: "[T]he inquiry for which the section provides is one to be conducted by a magistrate who has power 'to summon and examine on oath all persons likely to give material information on the matter suggested'. Such a mechanism is well adapted to the examination of the factual substratum upon which an existing conviction is based. It is less well adapted to examining the process (much of it in a superior court) which led to the conviction." The majority of the Full Federal Court made a further point in agreeing with the general submission advanced by the Director52: "The procedure laid down by s 475 is rather like the role of a magistrate at a committal hearing, and is singularly inappropriate for the kind of review of the regularity of proceedings at a trial which a court of criminal appeal might now undertake." The Director did not advance that point to this Court. It does not follow that because all or part of a process leading to conviction took place in the Supreme Court, the examination of witnesses before a magistrate was not well adapted to inquire into that process. Even on the Director's construction, a magistrate might have had to form adverse views as to the handling of the trial by a Supreme Court judge. On either construction, the legislature has acted on an assumption that magistrates in the Territory were capable of an effective inquiry into whatever doubt or question triggered the inquiry. There is no relevant analogy with committal proceedings. The types of inquiry undertaken in New South Wales under s 475 in practice bore no analogy to committal proceedings. They were at least as exhaustive as those which a court of criminal appeal might have undertaken. Indeed they were commonly much more exhaustive, since the work of a court of criminal appeal in relation to a particular appeal is done in hours or days, while the work of those conducting s 475 inquiries took much longer and was much more general. Madgwick J said that it was only the "bifurcation of function between the examining magistrate and the reporting judge … that casts doubt on the modern appropriateness of the mechanism." He correctly concluded that "the mechanism owes its existence merely to the antiquity of its original conception and says nothing … as to the scope of the doubts or questions that may be examined"53. The inadequacy of remedies The Director referred to s 475(4) and pointed out that "at the end of the inquiry the 'matter' which was the subject of the inquiry is left to 'be disposed of, as to the Executive ... shall seem just'." He argued: 52 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 379 [51]. 53 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 393 "Whether by prerogative or by statute, the remedies available to the Executive are appropriate only to a conclusion of a doubt about guilt or about the presence of mitigating circumstances, namely pardon and remission of sentence. There is no remedy available to the Executive appropriate to a conclusion as to irregularity in a criminal trial unrelated to guilt. Such a remedy could only be the quashing of a conviction and the ordering of a new trial. No conditional pardon could achieve these results." In effect, this argument was an argument from futility. If the accused had been unfit to plead but had become fit to plead and the s 475 procedure could not lead to a new trial, it was futile. And if the accused had remained unfit to plead and the s 475 procedure could not lead to some other appropriate treatment, it was equally futile. The futility of s 475, either way, in cases of a doubt or question about fitness to plead, was a sign that on its true construction s 475 did not deal with doubts or questions about fitness to plead. To the "remedies" available to the Executive after a successful s 475 inquiry might be added the possibility of special legislation overturning the conviction and providing for the future disposition of the matter54. But that and other ad hoc solutions55 may be put to one side so as to permit an evaluation of the Director's argument taken at its highest. In Australia the right to pardon, to which the Director's submission referred, usually resides in the Governor-General or a Governor. However, there is no equivalent in the Australian Capital Territory to the office of Governor of a State or Administrator of the Northern Territory. As enacted, the Australian Capital Territory (Self-Government) Act 1988 (Cth) ("the Self-Government Act") provided, in s 72, for the tendering of advice to the Governor-General with respect to the exercise of the Royal Prerogative of mercy in relation to the Territory. Section 72 has since been repealed56. The Governor-General has only a few functions within the Territory57. This represents a curious and unique arrangement for the composition of a legislature within the Australian Commonwealth. 54 cf s 433A of the Criminal Code (NT), discussed in Re Conviction of Chamberlain (1988) 93 FLR 239 at 241-242. 55 Madgwick J suggested several in Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 392 [109]. 56 Arts, Environment and Territories Legislation Amendment Act 1993 (Cth), s 5. 57 See Self-Government Act, ss 16, 35 and 74. At the time when the s 475 inquiry was directed s 557 of the Crimes Act provided: "(1) The Executive may, by instrument, grant to a person a pardon in respect of an offence of which that person has been convicted. (2) A pardon granted to a person under subsection (1) in respect of an offence discharges the person from any further consequences of the conviction for that offence." Section 558 provided: "The Executive may, by instrument, remit, in whole or in part, a sentence of imprisonment imposed on, a fine or other monetary penalty ordered to be paid by, or a forfeiture of property ordered to be forfeited by, a person on conviction for an offence against a law of the Territory." (The corresponding provisions are now ss 433 and 434 of the Crimes Act.) The "Executive" is the Australian Capital Territory Executive constituted by the Chief Minister of the Australian Capital Territory and such other Ministers as are appointed by the Chief Minister58. Among the responsibilities of the Executive are those conferred by s 37(a) and (d) of the Self-Government Act: governing the Territory with respect to matters specified in Schedule 4; exercising prerogatives of the Crown so far as they relate to the Executive's responsibility mentioned in paragraph (a), (b) or (c)." Among the matters listed in Sched 4 are "Law and Order", "Magistrates Court and Coroners Court" and "Courts (other than the Magistrates Court and Coroners Court)". At common law the pardon "is in no sense equivalent to an acquittal. It contains no notion that the man to whom the pardon is extended never did in fact commit the crime, but merely from the date of the pardon gives him a new credit and capacity."59 In England it has been held that at common law, "the effect of a 58 Self-Government Act, ss 36 and 39. 59 R v Cosgrove [1948] Tas SR 99 at 106, approved by the English Court of Appeal (Watkins and May LJJ and Butler-Sloss J) in R v Foster [1985] QB 115 at 128; cf Ex parte Garland 71 US 333 at 380 (1866). Parliament can give a pardon a wider effect, eg Crimes Act 1914 (Cth), s 85ZR(1), which provides that where a person (Footnote continues on next page) free pardon is such as, in the words of the pardon itself, to remove from the subject of the pardon, 'all pains penalties and punishments whatsoever that from the said conviction may ensue,' but not to eliminate the conviction itself"60. This type of outcome is not the outcome which a person convicted of a crime and claiming to be innocent of it would desire. The common law conception of a conviction is that, by it, the convicted person receives justice; the common law conception of a pardon is that, by it, the convicted person receives mercy, notwithstanding the demands of justice. Once it is apparent that the conviction is unjust, the convicted person should receive something different from a pardon, which grants mercy but assumes the validity of the conviction. Only a court can quash a conviction. "At the heart of the pardoning power there is a paradox. To pardon implies to forgive: if the convicted person is innocent there is nothing to forgive."61 The Report of the Criminal Code Commission of 1878-962 noted "the inconsistency of pardoning a man for an offence on the ground that he did not commit it". Sir James Fitzjames Stephen deplored the "unsatisfactory" technique of pardoning convicted persons where the Home Secretary experienced a doubt, or relied on experts who experienced a doubt, about guilt, as distinct from ordering a new trial63. It may well not have been satisfactory that, if s 475 inquiries extended to issues relating to fitness to plead, the remedies available to the Executive were limited in the manner urged by the Director. If the inquiry revealed that the convicted person was not fit to plead at the time of the trial that led to the conviction, it may well have been more desirable for the conviction to be quashed and for a new trial to be ordered (if the accused person has become fit to plead) or for the other courses contemplated by the Crimes Act, Pt 13 Div 13.2 (as it now stands) to have been adopted64. But the Director's argument does not has been granted a free and absolute pardon for what is called a "Territory offence" because the person was "wrongly convicted" of the offence, the person shall be taken never to have been convicted of the offence. This has no application in the Australian Capital Territory, however: see definition of "Territory" in s 85ZL. 60 R v Foster [1985] QB 115 at 130. This was referred to without disapproval by Wilson J in Kelleher v Parole Board (NSW) (1984) 156 CLR 364 at 371. 61 Pattenden, English Criminal Appeals 1844-1994 (1996) at 383. 62 Quoted by Sir James Fitzjames Stephen in A History of the Criminal Law of England (1883), vol 1 at 317. 63 See Sir James Fitzjames Stephen in A History of the Criminal Law of England (1883), vol 1 at 317 and 438-456. 64 In New South Wales this view prevailed in 1993 with the introduction of Pt 13A of the 1900 Act. It prevailed in the Territory from 27 September 2001 onwards, when (Footnote continues on next page) take account of the fact that the existing "remedies" were not in any case well matched to all of the instances which, on that argument, were the sole cases to which s 475 could apply. Thus, if a convicted person successfully petitioned for a s 475 inquiry, and if that inquiry concluded that, because of doubts about guilt, the conviction was wrong, or even concluded that the convicted person clearly did not commit the crime, a pardon was not a satisfactory remedy so far as its effects at common law are concerned. In short, this deficiency in the operation of pardons at common law does not support the Director's argument, because the deficiency would have existed whatever the true construction of s 475. The Director's argument would depend on showing the existence of a remedy which worked satisfactorily if a s 475 inquiry were limited to questions of actual guilt or innocence, and on showing that there was no remedy which worked satisfactorily if s 475 extended to defects in the conviction independently of the convicted person's innocence in fact. But the common law effect of the "remedy" of pardon would have worked no more satisfactorily for the case of a convicted person who the magistrate conducting the inquiry said was innocent than it would have worked for the case of a convicted person who the magistrate conducting the inquiry said was not fit to plead. It would assist the appellant's construction if it were clear that at all material times free pardons have been given on grounds other than a perception of the convicted person's innocence, and correspondingly it would assist the Director's construction if it were clear that they never had been given in such cases. The Director said that his researches had not revealed any case in which a pardon had been granted "to address a claimed or proven irregularity in the proceeding". The appellant did not point to any clear case of that kind. However, the Attorney-General pointed out that in two Privy Council appeals from New South Wales, decided in the 1860s shortly before the 1871 Report which led to the introduction of the precursor to s 475 in 1883, their Lordships had indicated that purely procedural irregularities, not entitling a person convicted of a felony to a new trial and not of themselves pointing against guilt, could nonetheless trigger a successful application for a pardon65. there came into force the repeal of s 475 of the Crimes Act by the Crimes Legislation Amendment Act 2001 and the replacement of s 475 with Pt 20, originally Pt 17. 65 R v Bertrand (1867) LR 1 PC 520 at 535-536 (evidence of witnesses at first trial not given orally at the second, but read over to them from the judge's notes); R v Murphy (1869) LR 2 PC 535 (jury access to newspaper reports before verdict). It would appear that, since the close of the 19th century, it has been the English practice to refuse a free pardon unless the Home Secretary felt certain of the applicant's innocence66. However, according to a Home Office memorandum of 1874, a free pardon could be granted "on legal grounds, or where there is ascertained innocence or a doubt of guilt"67. In context, the expression "legal grounds" must refer to factors vitiating the conviction rather than to innocence or a doubt about guilt. If that memorandum represented English conceptions in the years when the equivalent of s 475 was recommended for adoption by the legislature of New South Wales, it probably represented New South Wales conceptions also. The language of the Home Office memorandum of 1874 corresponds with the assumptions underlying the approach of the Privy Council in the 1860s. That suggests that lawyers in the 1870s and 1880s would have considered that if the legislative forerunner to s 475, proposed in 1871, and the actual legislative forerunner introduced in 1883, permitted inquiries into matters other than guilt, an inquiry which was successful from the convicted person's point of view would lead to a remedy which was not unknown and was perceived to be useful, namely a pardon on grounds other than "ascertained innocence or a doubt of guilt"68. The function of s 475 was to give the Executive a means of conducting an effective inquiry into particular factual questions. The Executive or the Supreme Court judge was to act under s 475 when a relevant doubt or question arose. The result of the inquiry might have revealed that there is more than a doubt or question. The doubt might have swelled into certainty that something had gone wrong. The question might have been answered in positive terms favourable to the petitioner. Alternatively, the result of the inquiry might not only have answered the question adversely to the petitioner, thereby removing any doubt, but also have shown that the conviction was unquestionably well-based, and that public confidence in its soundness could legitimately intensify beyond the point which had been reached when the inquiry was directed. Section 475 thus furnished "the Executive with a means of putting an end to any public 66 Pattenden, English Criminal Appeals 1844-1994 (1996) at 379-380. 67 See Pattenden, English Criminal Appeals 1844-1994 (1996) at 379 n 238, discussing Home Office memorandum 33391 (1874). The relevant passage is set out in R v Secretary of State for the Home Department; Ex parte Bentley [1994] QB 349 at 357. 68 In R v Grand and Jones (1903) 3 SR (NSW) 216 at 223, Stephen ACJ operated on the same assumption as the Privy Council in contemplating that a pardon might be granted where inadmissible evidence had been received. agitation"69. If a doubt or question about fitness to plead could have triggered a s 475 inquiry, the inquiry could have clarified whether erratic and unusual behaviour by an accused person was a sign of unfitness to plead or was instead merely feigned, as part of an attempt to disrupt and frustrate the trial. "If a doubt or question arises because of an attack, and particularly an attack which is made public, upon a Crown witness, that witness may perhaps be seen to be the beneficiary of the inquiry as well as the convicted person."70 The outcome of the inquiry might have stimulated the Executive into action with specific regard to the particular prisoner, for example the grant of a pardon, or the presentation to the legislature of a Bill favourable to the prisoner's interests. Or the outcome of the inquiry might have stimulated the Executive into an action of more general significance, such as the presentation of a Bill to the legislature with a view to the law being reformed on a more general basis. For example, a s 475 inquiry turning on doubts or questions about mistaken identification evidence might cause the Executive to seek to effectuate legislative reform of the law and practice on that subject. In view of the range of functions which s 475 inquiries were capable of performing, the fact that a pardon was not well fitted for use in favour of a convicted person found unfit to plead is not decisively against a construction of s 475 that would permit the section to be used to direct an inquiry into unfitness to plead. The significance of the legislative history The Director advanced a further submission about the enactment of ss 383 and 384 of the 1883 Act and the enactment of s 475 of the 1900 Act: "[The materials] uniformly make clear that the provision was enacted to deal with cases of fresh evidence giving rise to a question as to whether a person actually committed the offence of which the person was convicted: that is, where the subject-matter of doubt or questioning was the factual sub-stratum of the offence of which the person was convicted. The immediate context was a concern that persons might be hanged for rape when material came to light after trial suggesting the alleged victim was not the woman of chaste character she appeared to be at trial. The general context, however, was a concern by Sir Alfred Stephen (shared with his cousin Sir James Fitzjames Stephen) of the need to regularise the post- 69 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 385 [77] 70 Varley v Attorney-General in and for the State of New South Wales (1987) 8 NSWLR 30 at 46 per Hope JA. conviction inquiries then conducted in the Colonial or Home Secretary's Office." He continued: "[I]t is (to say the least) highly unlikely that, in 1883, by using the words concerned in s 383 Criminal Law Amendment Act, the New South Wales legislature intended suddenly to provide a remedy for a defective process by which a charge of felony might have been tried. It is even less likely that the legislature would have intended such a remedy to take the form of an executive inquiry. Moreover, if that had been the intention, it defies belief that such intention would have been omitted from the New South Wales Law Reform Commission's 1871 report, from the 1883 second reading speech and from the contemporaneous learned commentary by Sir Alfred Stephen and parliamentary counsel, Alexander Oliver. With the enactment of the Criminal Appeal Act in 1912 in New South Wales, there became available ample and established avenue for exploration of the matters going to propriety of conviction consisting in procedure at trial. It is significant that at the time of enacting the Criminal Appeal Act, no step was taken to amend or repeal s 475 Crimes Act. This is consistent with the view of the NSW legislature at that time being that the purpose of the post-conviction inquiry provided for by s 475 was confined to doubts and questions about the factual sub-stratum of the conviction rather than any aspect of the process by which the conviction was obtained. Likewise in the Australian Capital Territory. As part of the law in force in the Territory at the time of its inception, s 475 of the Crimes Act 1900 (NSW) was picked up and applied as surrogate Commonwealth law. Given that original jurisdiction in criminal matters in the Territory was then conferred on this Court, and given the separation of judicial power from executive power effected by Chapter III of the Constitution, it would be surprising if s 475 were then seen as authorising an executive inquiry into the process that led to conviction. No attempt was made to repeal or modify s 475 when provision was made in 1933 for the establishment of the Supreme Court of the Australian Capital Territory and for appeal to this Court against conviction on indictment in the Supreme Court of the Australian Capital Territory." The Attorney-General, on the other hand, argued that the absence of rights to appeal and the limited availability of other techniques for correcting errors at trials pointed to the likelihood that the 1883 Act was intended to provide a broad and flexible power to remedy errors in convictions. The difficulty with the arguments based on the available background materials is that they do not assist on the present question of construction because the minds of the respective authors were not specifically directed to the present problem, and the use of particular nuances of phrase in attempting to explain the legislation thus lacks significance in assessing the general language of the actual legislation. In any event, different views are held, and have been expressed by courts, concerning the relevance of the understanding of the meaning and purpose of legislation at the time of its enactment for its operation years later. On occasion, particularly with respect to legislation having a procedural purpose71 (but not only with respect to that type of legislation72) the view has been taken that it is the modern meaning of the operative words that is finally determinative. It is unnecessary in this appeal to resolve these questions. Whatever approach is adopted the result is the same. Other authorities The Director conceded that on occasion the courts have described the purposes of s 475 as permitting the investigation of a doubt or question concerning a "conviction"73 or concerning the possibility of an accused person having been "improperly convicted"74. However, the Director argued that in all these cases the context was whether there was a doubt or question as to whether or not the offence had been committed, and that in none was there a suggestion of a conviction which was flawed by an error in the trial process. That argument has force. But its force is damaging to a contrary argument advanced by the Director, which was that three of those cases used language supportive of his contentions75. The precise choice of words by a court in relation to s 475 would 71 cf R v Gee (2003) 77 ALJR 812 at 830-831 [114]; 196 ALR 282 at 308. 72 Fitzpatrick v Sterling Housing Association Ltd [2001] 1 AC 27 at 35, 45-46. 73 Varley v Attorney-General in and for the State of New South Wales (1987) 8 NSWLR 30 at 37 per Kirby P, 46 per Hope JA; Sen v The Queen (1991) 30 FCR 173 at 176 per Morling, Neaves and Foster JJ. 74 eg White v The King (1906) 4 CLR 152 at 165 per O'Connor J; R v Rendell (1987) 32 A Crim R 243 at 245 per Hunt J. 75 White v The King (1906) 4 CLR 152 at 165 (it was submitted that since O'Connor J said the section enabled the accused to have "the opportunity of having his character cleared by a public proceeding", and since this could be done by demonstration of innocence but not by revelation of some procedural flaw, the section did not deal with the latter); R v Rendell (1987) 32 A Crim R 243 at 245 per Hunt J ("a direction can only be given where a doubt arises as to the prisoner's guilt"); Varley v Attorney-General in and for the State of New South Wales (1987) 8 NSWLR 30 at 48 per Hope JA ("a doubt must arise as to … guilt"). lack any significance in relation to the present problem unless that court were directing its specific attention to the present problem, and this no court has yet had to do. Justice Wood's report The Director conceded that in a report of Justice Wood of the Supreme Court of New South Wales, his Honour said that in s 47576: "guilt has the meaning given to it in the trial process, that is, guilt established beyond reasonable doubt. So far as any question or doubt may concern a conflict of evidence or the reliability of a witness, or may depend on fresh evidence concerning aspects of the case proven by the Crown, it seems to me that I must weigh those matters and express my own opinion in the report. So far as the question or doubt may concern a possible miscarriage of justice or involves the possibility that the convictions were improperly obtained, due to some error in the trial process, it seems to me that I must explore whether or not there was a mishap, and report my conclusion both as to its occurrence and as to its significance in relation to the guilt found by the convictions. Questions arose in the Inquiry whether it was proper for consideration to be given to whether or not further evidence now available might have brought about a different jury verdict, and whether or not the jury verdict might have been different if, absent any mishap shown to have occurred, the trial might have been conducted differently. In order to discharge my function I believe it necessary to consider and report in some detail on the new evidence and on the facts concerning any suggested error or mishap in the trial process and on its practical implications, so that the Executive may have the material needed to dispose of the matter as shall appear to it to be just." The appellant relied on that passage. Later Justice Wood said77: "For example, if I were to conclude at the end of the Inquiry that at the trial there was a miscarriage of justice in some respect, yet the jury would certainly have returned the same verdict if the matter complained of had 76 Report of the Inquiry Held Under Section 475 of the Crimes Act, 1900 Into the Convictions of Timothy Edward Anderson, Paul Shaun Alister, and Ross Anthony Dunn at Central Criminal Court, Sydney, on 1st August, 1979 (1985) at 63-64. 77 Report of the Inquiry Held Under Section 475 of the Crimes Act, 1900 Into the Convictions of Timothy Edward Anderson, Paul Shaun Alister, and Ross Anthony Dunn at Central Criminal Court, Sydney, on 1st August, 1979 (1985) at 67. not arisen ..., I do not believe that I could discharge my function by a simple conclusion that there was no doubt or question. Unlike the Court of Criminal Appeal, I do not believe that I could myself have resort to a process akin to an application of the proviso to Section 6(1) of the Criminal Appeal Act 1912. In such a case I consider that I would have to report in relation to the questions or doubts concerning the matter or matters involving a miscarriage of justice, and for the benefit of the Executive express my opinion as to their significance for the finding of guilt." The appellant stressed the words "mishap in the trial process". The Director submitted that this language did not support the appellant, and that Justice Wood only used this language in the cited passage because, in the circumstances before him, a trial irregularity had the potential to render a conclusion that the offences had actually been committed less likely. There is some force in that argument. However, after considering several possibilities, Justice Wood concluded that there was no "failure of trial process, such as to require the conclusion that there was a miscarriage of justice on that count, leaving a question or doubt as to the convictions"78. What is more, Justice Wood did not have under consideration the conviction of a prisoner in respect of whose fitness to plead there was a doubt or question. The words of Justice Wood in his report are thus not determinative of the present issue. They do, however, merit serious consideration. The significance of an accused person's fitness to plead The Director accepted that his construction turned on the idea that s 475 concentrated "on the fundamental issue of guilt or innocence", and not on "arguments about … procedures or defaults of a technical kind". As a matter of principle this construction is unattractive. It draws too sharp a distinction between that which is determined in a criminal trial and particular elements of the procedure employed to determine it. It is wrong to characterise the latter as "technical". An essential function of the criminal trial is to minimise the risk that innocent persons will be convicted. It does this by ensuring that the prosecution case, taken as a whole, consists of potentially reliable evidence presented in an unprejudiced manner. The legal system is prepared to tolerate some lack of concordance between those who are convicted and those who are in truth guilty, 78 Report of the Inquiry Held Under Section 475 of the Crimes Act, 1900 Into the Convictions of Timothy Edward Anderson, Paul Shaun Alister, and Ross Anthony Dunn at Central Criminal Court, Sydney, on 1st August, 1979 (1985) at 446. in the sense that it is prepared to accept the practical possibility that some persons who are not innocent are acquitted. But it does not accept that any persons who are innocent should be convicted. Because it does not accept the latter outcome, it employs numerous means to prevent accused persons who are innocent from being convicted. Those means centre on the institutions and techniques used to ensure a fair trial – an independent judiciary and, where applicable, an independent jury; an ethical code binding the prosecution which is in part reflected in rules of law; the burden and standard of proof; the applicable rules of evidence; and the rule preventing an accused person from being tried unless that person is fit to plead. That last rule is among the key rules of criminal procedure which seek to ensure that a successful prosecution case rests on reliable evidence. If the accused is not fit to plead and stand trial, there can be no trial79. If an appeal is allowed on the ground that an accused person was unfit to plead, it is not possible to apply the "proviso" that permits criminal appeals to be dismissed if the appellate court considers that, despite the ground of appeal having been made good, no substantial miscarriage of justice has actually occurred80. That is because the case is one "where an irregularity has occurred which is such a departure from the essential requirements of the law that it goes to the root of the proceedings"81. There has been "a fundamental failure in the trial process"82. If the accused is not fit to plead, the key adversary in a partly adversarial proceeding falls below a minimum level of competence. In this case, if the appellant had been unfit to plead, it would mean that he was incapable of understanding what he had been charged with, or incapable of pleading to the charge, or incapable of exercising rights of jury challenge, or incapable of understanding that the trial was an inquiry into whether or not he did what he was charged with, or incapable of following the course of the proceedings, or incapable of understanding the substantive effect of the evidence given against him, or incapable of deciding what defence to rely on, or incapable of instructing legal representatives, or perhaps incapable of doing any combination of these things83. If the appellant had been unfit to plead, there could have been no 79 Eastman v The Queen (2000) 203 CLR 1 at 22 [62]-[63] per Gaudron J, 98 [294] 80 Kesavarajah v The Queen (1994) 181 CLR 230 at 248 per Mason CJ, Toohey and 81 Wilde v The Queen (1988) 164 CLR 365 at 373 per Brennan, Dawson and 82 Eastman v The Queen (2000) 203 CLR 1 at 22 [62] per Gaudron J. 83 Eastman v The Queen (2000) 203 CLR 1 at 14 [23] per Gleeson CJ, analysing the application of s 68(3) of the Mental Health Act to the appellant's trial. adequate testing of the Crown case in cross-examination; no adequate process of objection to inadmissible Crown evidence; no adequate process of preventing erroneous rulings by the trial judge; no proper attention given to the defence answer to the Crown case or to any proper case which the defence might have been well advised to advance, whether that answer or case be testimonial, documentary or otherwise; and no proper development of defence submissions. It is undesirable to give particular instances, by reference to events at the trial of the appellant, of how the alleged unfitness to plead of the appellant might have had an impact on particular aspects of his trial. But when the matter is viewed generally, it is obvious that fitness to plead can have an impact on whether the prosecution has proved guilt and on whether or not the accused was guilty in fact. There will be parts of the evidence on which fitness to plead directly bears: the evidence which the accused personally gives, the evidence of prosecution witnesses giving a different version from that given by the accused in relation to matters within the personal knowledge of the accused, and the evidence of defence witnesses potentially confirmatory of the accused's testimony. If the accused is represented, the form and content of each of these kinds of evidence can be radically affected by the accused's instructions and by the capacity of the accused to give effective instructions. If the accused is unrepresented, the form and content of each kind of evidence can be radically affected by the capacity to articulate testimony given by the accused, and by the accused's ability to cross-examine prosecution witnesses, and to examine and re- examine evidence given by defence witnesses. There may well be other forensic decisions relating to the actual evidence given which could be affected by the accused's fitness to plead. Those decisions might relate to what objectionable questions should be objected to, what objectionable questions should not be objected to, what evidence should be called even in fields outside the accused's personal knowledge, and what tactical courses taken by the Crown should be consented to or opposed. And the significance of particular evidence as expounded in address, whether that address is presented by the accused or by a representative of the accused, can be affected by the accused's fitness to plead. An alternative route to success for the appellant One possible path to success for the appellant is to construe "guilt" as meaning "guilt as established by the conviction". Any doubt or question as to the validity of the process by which the conviction was obtained would, on this construction, have been sufficient to give power for a s 475 direction to be made. It was this path which the appellant and the Attorney-General contended was correct. It was also the path that Madgwick J took in his dissenting judgment in the Full Court. He considered that in s 475 "guilt" meant "guilt duly determined". The expression referred to84: "a conception such as guilt duly adjudged or guilt as known to the criminal law, that is (among other things) proved beyond reasonable doubt; upon admissible evidence; upon a formal charge (arraignment) to which the accused person was fit to plead; and, failing acceptance of a guilty plea, after a trial throughout which the accused was fit to be tried." It followed from this analysis that Madgwick J agreed with the trial judge's decision upholding the Chief Justice's direction on the following "If a person is not fit to plead, he or she cannot be tried for an alleged crime, indeed cannot be arraigned for it. If a person cannot be tried for a crime, he or she cannot be adjudged guilty of it. If an accused person cannot be adjudged guilty of a crime, he or she cannot legally be treated as if he or she were guilty – no punishment can be imposed; no foundation for a future plea of autrefois convict comes into existence. Indeed, he or she is still entitled to the presumption of innocence. Thus, if there is a doubt or question that [the appellant] was not fit to plead, there is necessarily a doubt or question that he is guilty, or at least that he has unlawfully been treated as guilty. That is to say, in law, that a doubt or question has arisen as to his guilt." An alternative head of power In order to decide the present controversy, it is not necessary to decide whether "guilt" means "guilt duly determined" or whether a doubt or question about any aspect of the trial would have been sufficient to justify a s 475 direction. It would be enough for the appellant's purposes if the Chief Justice's direction were upheld on the basis that a doubt or question had arisen in relation to any portion of the evidence at the trial. On that approach, even if the word "guilt" is to be construed as meaning "guilt in fact", a question or doubt can arise not only in relation to the ultimate question of guilt in fact, but also in relation to a particular portion, or particular portions, of the evidence. The foregoing approach avoids the need to consider whether the first limb of s 475 bore a wide construction. Taking that path, an inquiry could have been directed in one of three circumstances. An inquiry could have been directed if there had been a doubt or 84 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 386 [79]. 85 Director of Public Prosecutions (ACT) v Eastman (2002) 118 FCR 360 at 386 [80]. question about guilt in fact. An inquiry could have been directed if there had been a doubt or question about any mitigating circumstance (usually a matter going to sentence, but possibly including matters which were "mitigating" in the sense of provocation or diminished responsibility, leading to the conclusion that while the convicted person was guilty of a crime, it might be a different and lesser crime). Or an inquiry could have been directed if there had been a doubt or question about a particular portion of the evidence. That particular portion of the evidence might not have been decisive of guilt. But the Supreme Court judge might lawfully have initiated an inquiry into a particular portion of the evidence even though it was not decisive of guilt. After the inquiry the Executive would be obliged to consider what "shall appear to be just" in relation to a conviction which, though otherwise satisfactory, was the outcome of a trial at which a portion of evidence given was perjured, or manifestly mistaken, or inadequately given, or not properly tested on cross-examination, or otherwise unsatisfactory. In Varley v Attorney-General in and for the State of New South Wales86 Hope JA said he found the words "or any portion of the evidence therein" a "mystery" because it "is hard to understand what an inquiry would be about if a doubt or question as to some evidence could not give rise to a doubt or question as to guilt or sentence". He suggested that the function of the reference to "any portion of the evidence" was to enable the section to be used to redress unjustified attacks on a particular Crown witness. If it has that function, the reference would necessarily extend to unjustified attacks on particular defence witnesses. In either case the attack might not of itself raise a doubt or question about guilt in fact, but it might merit investigation. And it does not seem possible to limit the generality of the words "any portion of the evidence" to portions of the evidence of those two types. Before this Court counsel for the Director conceded: "It is conceivable that a doubt or question could arise about a portion of the evidence without it being a doubt or question about a person's guilt. One can conjure up questions that might so arise." That concession was sound. The Director also conceded that the Chief Justice was entitled to conclude, and did conclude, that there was a doubt or question about the appellant's fitness to plead. It follows that, in a trial of the kind that led to the conviction of the appellant, a doubt or question must, in turn, arise about portions of the evidence. No part of the Director's argument about the narrow meaning of "guilt" would have invalidated an inference that it did, and that inference is inescapable. The Chief Justice did not in fact reason in that way. However, his decision was an 86 (1987) 8 NSWLR 30 at 46. administrative decision87. If the maker of an administrative decision purports to act under one head of power which does not exist, but there is another head of power available and all conditions antecedent to its valid exercise have been satisfied, the decision is valid despite purported reliance on the unavailable head of power88. It follows that the Chief Justice's decision to direct a s 475 inquiry was valid. The appeal to the Full Court against the order of the primary judge should therefore have been dismissed. However, in view of the fact that the appellant and the Attorney-General did not take the point just discussed, with the result that the Director directed no argument to it, and in view of the extent of the argument on the construction of the words "any doubt or question arises as to his or her guilt", it is desirable to consider whether the Chief Justice's direction was valid when considered in the light of that head of power. Doubts or questions about aspects of the conviction bearing on the proof of guilt in fact It is not necessary, and hence it is undesirable, to decide whether the most extreme approach advocated by the appellant and the Attorney-General is correct, namely that s 475 permitted a direction if there were a doubt about any aspect of the conviction. It is only necessary to decide the narrower question whether s 475 permitted a direction if there were a doubt or question about fitness to plead. The issue is: "Is a doubt or question about the fitness to plead of a convicted person capable of being a doubt or question as to guilt?" There is another construction of s 475 which, if sound, is sufficient to decide the appeal in the appellant's favour. That construction would hold that s 475(1) gave power at least to direct an inquiry where there was a doubt or question about any element of the process which might have affected whether the 87 Varley v Attorney-General in and for the State of New South Wales (1987) 8 NSWLR 30 at 49-50 per Hope JA. 88 Moore v The Attorney-General for the Irish Free State [1935] AC 484; R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 487; Lockwood v The Commonwealth (1954) 90 CLR 177 at 184; Brown v West (1990) 169 CLR 195 at 203; Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1993) 40 FCR 409 at 412, 424-425, 435-437; Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 618-619; Pyrenees Shire Council v Day (1998) 192 CLR 330 at 353-354 [49], 383 [151]; Harris v Great Barrier Reef Marine Park Authority (1999) 162 ALR 651 at 654-657 [8]-[22]. existence of guilt in fact was properly determined. On this construction s 475(1) applied where a doubt or question arose about whether an element in the process was not carried out or was not correctly carried out in circumstances raising a doubt or question about guilt in fact. To put the matter another way, a s 475(1) inquiry could have been ordered where there was a question or doubt about an element in procedure at the trial which the law insists on as a means of ensuring that convictions are soundly based in substance. If the function of a particular element in criminal procedure is to ensure that a conviction is soundly based, in the sense that the accused in fact carried out the conduct charged, a doubt or question as to whether that element operated properly is capable of being a doubt or question as to guilt in fact. It raises a different doubt or question from that which is raised when fresh evidence of an exculpatory kind emerges, or when a key piece of prosecution evidence becomes, in hindsight, suspect. Rather the question arises: "How can we be sure that the accused was guilty on the basis of the jury finding of guilt if there is a doubt or question as to whether that element, seen as important to efficient jury fact finding, operated properly in this case?" On this approach, where a doubt or question arises about fitness to plead, a doubt or question can arise about "guilt", because there can be no confidence that the evidence underlying the conviction established such guilt. The Director rejected this approach because of the sharp distinction, on which his argument depended, between the existence of guilt in fact and the process of establishing guilt. He went so far as to submit that, if an accused person was convicted after standing mute, and later it was discovered that that person was in a psychiatric state precluding any comprehension of what was happening during the trial, no doubt or question was raised as to that person's guilt. He said that the only doubt or question raised was whether the trial was a nullity: no doubt or question was raised as to whether the accused in fact committed the conduct charged. The Director's construction should not be accepted. The correct construction of s 475 is that it gave power at least to direct an inquiry where there was a doubt or question about the fitness to plead of the convicted person to the extent to which that might have affected the proper determination of the existence of guilt in fact. That is so for several reasons. First, the whole of the Crimes Act may be said to vindicate the rule of law. The legislation states standards of conduct to be met by citizens on pain of criminal sanctions. It provides for the conduct of trials in order to determine criminal guilt, and the function of determining guilt is an essential and exclusive attribute of judicial power89. The legislation provides for appeals where trials which determined criminal guilt have been misconducted. One goal of a criminal trial is to ensure that no person is convicted who is innocent of the crime charged. Certain elements in criminal procedure are closely related to that goal. Amongst the most basic of these is that no accused person shall stand trial if unfit to plead. Secondly, as between the prosecutor and the accused, just as an acquittal is conclusive evidence that the accused was not guilty, a conviction is conclusive evidence of guilt. That is so because the system for determining criminal guilt is highly unlikely to convict the innocent because it is adapted in numerous ways to prevent that outcome. The law reacts so sharply against the possibility of persons who are not guilty being convicted that it treats any breakdown in the procedural machinery of the trial as carrying a prima facie risk of convicting the innocent. Because of that prima facie risk, if there is any breakdown, an appeal will be allowed, subject to the operation of the proviso. Thirdly, a "doubt" is one thing. A "question" suggests a less intense mental state. Particular information can stimulate a question without any particular answer being pointed to. A breakdown in some aspect of the trial capable of bearing on the accuracy of the jury's conclusion that the accused was guilty in fact can stimulate a question about whether the accused was guilty in fact. Criminal appeals, under the modern procedures adopted from the Criminal Appeal Act 1907 (UK), commonly succeed for reasons other than an actual demonstration of marked weakness in the Crown case or the highlighting of any strong ground for believing that the accused did not commit the crime. Rather, criminal appeals commonly succeed because some defect has arisen in the procedure of the trial. The integrity of the criminal trial and the extent to which there is professional and public confidence in its outcome depend heavily on correct procedures being followed. Failure to follow them is a common cause, not only of appeals succeeding, but also of doubts arising as to the correctness of convictions, because an error in procedure, even if it may not point decisively against guilt, may raise a "doubt" or "question" as to guilt. On the other hand, once it is demonstrated that correct procedures have been followed, "doubts" or "questions" which might otherwise arise do not arise, or if they have arisen they are removed or answered. Fourthly, the first limb of s 475(1), relating to "guilt", has to be read with the other limbs, "any mitigating circumstance" and "any portion of the evidence". The words "any portion of the evidence" are significant. Unfitness to plead will 89 Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 258-259, 269; Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 109 often raise a doubt or question about particular portions of the evidence, for example the testimony which the accused has given and the testimony which Crown witnesses have given about matters within the accused's personal knowledge. If the words "any portion of the evidence" permitted an inquiry as to some aspects of the way the process of finding guilt proceeded, as distinct from the isolated question of guilt in fact, they suggest that the word "guilt" permits an inquiry into aspects of the way the process of finding guilt proceeded, at least so far as it had an impact on the conclusion that there was guilt in fact. Fifthly, this construction has support in the language of Justice Wood in the report already mentioned90. In assessing it, certain qualifications must be remembered: it is not clear what precise arguments were advanced to the judge; that inquiry did not relate to a doubt or question about fitness to plead; and the inquiry was based not only on doubts or questions concerning guilt but also those concerning mitigating circumstances and portions of the evidence. However, it is clear from the parts of his language quoted below to which emphasis has been added that he saw himself as entitled to explore the possibility that convictions were "improperly obtained, due to some error in the trial process" and to explore "its significance in relation to the guilt found by the convictions". It follows that Justice Wood assumed that a direction given on that basis was a direction within power. That is, while a mere error did not suffice, the inquiry was not limited to guilt in fact. It included the extent to which a flaw in the process leading to conviction cast light on guilt in fact. The view of Justice Wood has been persuasive91. It is true, as the Director submitted, that Justice Wood's language did not support the appellant's argument that a doubt or question about any aspect of the conviction would have supported a s 475 direction. However, his Honour's language does support the narrower argument under consideration, that a doubt or question about any aspect of the conviction tending to negate guilt in fact would have supported a s 475 direction. Sixthly, if the Director's construction were correct, s 475 would have produced a curious outcome. If in particular circumstances there is a chance of 90 Report of the Inquiry Held Under Section 475 of the Crimes Act, 1900 Into the Convictions of Timothy Edward Anderson, Paul Shaun Alister, and Ross Anthony Dunn at Central Criminal Court, Sydney, on 1st August, 1979 (1985) at 63-64. 91 It was expressly adopted by Mr Justice Loveday in the Report of the Inquiry Held Under Section 475 of the Crimes Act 1900 Into the Conviction of Alexander Lindsay (formerly Alexander McLeod-Lindsay) at Central Criminal Court, Sydney on 5 March 1965 (1991) at 5-7 and 185 and by the Hon John Slattery QC in the Report of the Inquiry Held Under Section 475 of the Crimes Act 1900 Into the Conviction of Andrew Peter Kalajzich at the Central Criminal Court, Sydney on 27 May 1988 (1995) at 20-21. acquittal which is fairly open, it follows that there is a question about whether guilt can be established beyond reasonable doubt. If there is a question about the existence of a reasonable doubt, there is a doubt or question about guilt. On any construction of s 475 which has been proposed, there is no reason why an inquiry could not be directed where there is a doubt or question about guilt arising from a perception that the accused had lost a chance of acquittal which was fairly open. If an accused person has lost a chance of acquittal which was fairly open, an appeal, if pursued, will be allowed, subject to the operation of the proviso. Where an appeal of that kind succeeds, the appellate court does not necessarily conclude that the accused was innocent. Commonly, the order made is an order for a new trial, not an acquittal. If there were no appeal, but material suggesting the loss of a chance of acquittal which was fairly open came to light, it is likely to have been material raising a "doubt" or "question" about guilt. The inquiry might resolve the doubt or answer the question adversely to the accused, but that does not negate the possibility of a doubt or question arising to a sufficient degree to justify a direction that there be an inquiry. Yet a convicted person complaining about the loss of a chance of acquittal which was fairly open is in many instances complaining of an error which is of a lower order than the error complained of by a person claiming that the conviction is defective because that person was not fit to plead. If a trial takes place where the accused is not fit to plead, there has been "a fundamental failure in the trial process"92. The trial is not merely blemished or flawed by the risk that the accused may not have been guilty, it is so seriously defective that if the matter arises before an appellate court, no question arises of applying the proviso: the only course open is to set aside the verdict no matter how strong the Crown case and no matter how likely a conviction is if a trial is later held according to law93. It would be strange if, on the true construction of s 475(1), an inquiry could be triggered by doubts or questions about guilt arising from material which suggested that convicted persons lost a chance of acquittal which was fairly open, but a near-certainty that accused persons were unfit to plead would fail to trigger an inquiry. A construction that avoids such a strange result is to be preferred to one which generates it. Seventhly, the Director's argument draws a fundamentally false distinction, in the context of s 475, between a doubt or question about the process of determining whether guilt exists and a doubt or question about the existence of "guilt in fact". Let it be accepted, for the purpose of argument, that guilt in fact by reason of conduct at a particular point in time is conceptually distinct from the process of investigating that conduct, attempting to prove that it took place, and arriving at a jury conviction of guilt. Section 475 does not turn on that particular 92 Eastman v The Queen (2000) 203 CLR 1 at 22 [62] per Gaudron J. 93 Eastman v The Queen (2000) 203 CLR 1 at 22 [63] per Gaudron J. distinction. Section 475 is triggered by a "doubt or question … as to … guilt". A doubt or question as to guilt in fact can be stimulated by a doubt or question as to some aspects of the process by which the conclusion of guilt recorded in the conviction was arrived at. An observer may legitimately reason as follows: "The police force, the prosecuting authorities, the judges, the juries and the legal profession are supposed to administer the legal system for establishing criminal guilt in such a way that the fundamental principles of the system are complied with. One of these fundamental principles is that no person who is unfit to plead shall be tried and convicted. The Director concedes that there is a doubt or question about whether this appellant was fit to plead. In part that concession is based on what judges have said about one possible set of conclusions from his behaviour at the criminal trial. If he was tried and convicted in circumstances giving rise to a doubt or question about his fitness to plead, the doubt or question about the operation of the process must stimulate a doubt or question about whether he in fact did what the conviction which resulted from that process avers he did – that is, a doubt or question as to his guilt." The short answer to the Director's contention that proceedings of which a convicted person lacked any comprehension because of a psychiatric state raised no doubt or question as to guilt, only as to whether the trial was a nullity, is that the more radical certain types of defect in a trial resulting in a conviction are, the more they raise a doubt or question as to the fundamental propositions inherent in the conviction. It is conceded by the Director that the Chief Justice was, and was entitled to be, satisfied that there was a doubt or question about the appellant's fitness to plead. At least in the circumstances of this case, a doubt or question about fitness to plead would raise a doubt or question about "guilt in fact", in the sense accepted above, because the question as to fitness to plead raised the further question whether the adversarial process of ascertaining the facts selected by the law operated properly where one of the adversaries was unfit to participate. That in turn raises a question of whether the recorded conviction corresponds with the petitioner's guilt in fact. There may be cases where, even if there is a doubt or question about a convicted person's fitness to plead, there is no doubt or question as to guilt in fact. An example could arise where a crime, committed in the presence of many unimpeachable witnesses with good opportunities of observation, was admitted in several admissible videotaped confessions by the accused made to different people on different occasions. The fact that, after the crime and the confessions, the accused suffered bad head injuries in a car accident and became unfit to plead would not raise a doubt or question as to guilt in fact even if the trial should not have taken place because of the accused's unfitness to plead. But the present case is remote from those circumstances. This reasoning affirms the conclusion already stated that the Chief Justice had power under s 475(1) to make the direction he did94. Orders The appellant in substance seeks orders that the appeal be allowed with costs, that the orders of the Full Federal Court be set aside and that the appeal to that Court by the Director be dismissed. The appellant seeks no order as to costs in the courts below. The third respondent seeks no order as to costs. The Director submitted that if the appeal were allowed, no order for costs should be made against the Director because of the special nature of the proceedings and the identity of the parties and because no order for costs had previously been made in the proceedings. That submission explains why there should be no order as to costs as between the Attorney-General and the Director. It is also true that costs are not normally ordered against the Crown in criminal cases. However, the appeal is not a criminal appeal, but an appeal originating in civil litigation about the validity of an administrative order. It raised an important issue as to the scope of the power to direct inquiries under the Crimes Act. It is appropriate to order that the Director pay the appellant's costs in this Court. The following orders should be made. Appeal allowed. Set aside orders 4 and 5 made by the Full Court of the Federal Court on 3 July 2002 and, in lieu thereof, order that the appeal from the orders of the Supreme Court of the Australian Capital Territory in proceeding No SC 149 of 2002 dated 3 May 2002 be dismissed. The first respondent to pay the costs of the appellant in this Court. Appellant's Supplementary Submissions On 28 March 2003 the appellant informed the Registry that he had withdrawn his instructions from the counsel who represented him at the hearing 94 Underlying the reasoning is a purposive approach to construction: Bropho v Western Australia (1990) 171 CLR 1 at 20; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 112-113; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69], 384 [78]. This line of authority was highly influenced by McHugh JA's (dissenting) reasons in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421-424, which were specifically approved in Bropho v Western Australia (1990) 171 CLR 1 at 20. of the appeal. He supplied a seven page document entitled "Appellant's Supplementary Submissions". No leave was sought or given for the supply of this document, and it does not state any reason why it should now be received. Accordingly, it is rejected95. 95 See Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246 at

HIGH COURT OF AUSTRALIA Matter No S514/2005 CAMPBELLS CASH AND CARRY PTY LIMITED APPELLANT AND FOSTIF PTY LIMITED Matter No S515/2005 RESPONDENT AUSTRALIAN LIQUOR MARKETERS PTY LIMITED APPELLANT AND RESPONDENT Matter No S516/2005 IGA DISTRIBUTION (VIC) PTY LIMITED APPELLANT AND WHELAN & HAWKING PTY LIMITED RESPONDENT Matter No S517/2005 QUEENSLAND INDEPENDENT WHOLESALERS PTY LTD APPELLANT AND SYDNEY RICHARD VEITCH MURRAY & ANOR RESPONDENTS Matter No S518/2005 IGA DISTRIBUTION (SA) PTY LIMITED APPELLANT AND PAUL ASHLEY NEINDORF & ANOR RESPONDENTS Matter No S519/2005 COMPOSITE BUYERS PTY LIMITED APPELLANT AND BARRY GEORGE WILLIAMSON & ANOR RESPONDENTS Matter No S520/2005 IGA DISTRIBUTION PTY LIMITED APPELLANT AND JOANNE MARGARET GOW & ORS RESPONDENTS Campbells Cash and Carry Pty Limited v Fostif Pty Limited Australian Liquor Marketers Pty Limited v Berney IGA Distribution (Vic) Pty Limited v Whelan & Hawking Pty Limited Queensland Independent Wholesalers Pty Ltd v Murray IGA Distribution (SA) Pty Limited v Neindorf Composite Buyers Pty Limited v Williamson IGA Distribution Pty Limited v Gow [2006] HCA 41 30 August 2006 S514/2005 to S520/2005 In each matter: ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 31 March 2005 and in their place order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of New South Wales Representation A J Myers QC with H K Insall SC and A E Ryan for the appellants (instructed by Freehills) S J Gageler SC with M J Leeming for the respondents (instructed by Robert Richards & Associates) Interveners H C Burmester QC with R A Pepper for the Attorney-General of the Commonwealth intervening in all matters (instructed by Australian Government Solicitor) B W Walker SC with M C Walker seeking leave to intervene on behalf of IMF (Australia) Limited (instructed by McMahons National Lawyers) K P Hanscombe SC with L W L Armstrong and K W Dawson seeking leave to be heard as amicus curiae for the Australian Consumers Association (instructed by Public Interest Advocacy Centre) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Campbells Cash and Carry Pty Limited v Fostif Pty Limited Practice – Representative proceedings – Supreme Court Rules 1970 (NSW), Pt 8 r 13 – Representative proceedings brought in each case by a licensed tobacco retailer to recover from its wholesaler licence fees paid from the beginning of the financial year commencing 1 July 1997 until the decision in Ha v State of New South Wales which declared the licensing scheme invalid and which licence fees were not paid to the taxing authorities – Proceedings financed by litigation funder – Proceedings intended to be conducted by litigation funder on behalf of those retailers who "opted-in". Practice – Representative proceedings – Supreme Court Rules 1970 (NSW), Pt 8 r 13 – Whether provisions for representative proceedings in the Supreme Court Rules were validly engaged – "Same interest" – Common interest of fact or law – Whether there were, at the time the proceedings were commenced, numerous persons who had the same interest in the proceedings – Proceedings intended to be conducted on behalf of those retailers who subsequently "opted-in" – None had "opted-in" when proceedings commenced – Relationship between "same interest" and relief sought. Practice – Representative proceedings – Stay of proceedings – Abuse of process – Public policy – Proceedings financed by litigation funder – Litigation funder sought out possible claimants – Retailer gave up to funder one-third of its claim – Whether the representative proceedings should be stayed as contrary to public policy or an abuse of process – Maintenance, Champerty and Barratry Abolition Act 1993 (NSW). Practice – Discovery – Right to administer interrogatories in representative proceedings to identify others with the "same interest" in the proceedings. Constitutional law (Cth) – Judicial power of Commonwealth – Abuse of process – Consistency of common law doctrine of abuse of process with judicial process. Words and phrases – "abuse of process", "maintenance and champerty", "public policy", "representative proceedings", "same interest", "trafficking in litigation", "overriding purpose rule". Maintenance, Champerty and Barratry Abolition Act 1993 (NSW). Supreme Court Rules 1970 (NSW), Pt 1, r 3; Pt 8, r 13. GLEESON CJ. The issues in these appeals, and the relevant facts, are set out in the reasons of Gummow, Hayne and Crennan JJ. I agree with what is said in those reasons concerning the issues of public policy and abuse of process. The Court of Appeal's decision, favourable to the respondents, on those issues has not been shown to be in error. The proceedings do not constitute an abuse of process, and there was no reason in public policy why they should have been stayed. On the issue whether the provisions of the Supreme Court Rules 1970 (NSW), Pt 8 r 13(1), were validly engaged I would uphold the decision of the Court of Appeal. The decision of this Court in Carnie v Esanda Finance Corporation Ltd1 appears to me to require that conclusion. In order to explain why that is so, it is necessary to refer to some details of the litigation in Carnie, which, in certain respects, was a more difficult case for the plaintiffs than the present. The main problem is that the rule of court in question in Carnie, and in the present case, was based on a model taken from the nineteenth century, and was ill-adapted to the exigencies of modern commercial litigation funding. The rule is required to bear a weight for which it was not designed. In Carnie, the persons on whose behalf the plaintiffs brought their representative action all had separate contracts with Esanda. There was, however, more to the problem than that. The contracts in question were variations of contracts of loan between Esanda, a finance company, and borrowers who were unable to comply with their original obligations, and required some relief. By the variation agreements, they were given an extended time to pay their debts. The plaintiffs originally sought a declaration that their variation agreement, and the variation agreements of other borrowers with whom Esanda had dealt in the same manner, were "null and void and of no effect"2. The reason for this was a failure to comply with certain provisions of the Credit Act 1984 (NSW) ("the Credit Act"). The plaintiffs brought the proceedings on behalf of themselves and all other persons who entered into variation agreements which did not comply with the relevant provisions of the Credit Act. The variation agreements, however, to the extent to which they relieved their original position, were beneficial to the borrowers3. There was a real doubt whether it was in the interests of the people the plaintiffs were claiming to represent to have their variation agreements declared null and void. The plaintiffs sought to (1995) 182 CLR 398. 2 Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 at 386. (1992) 29 NSWLR 382 at 385-386. overcome this problem by modifying their claim to relief, but, as will appear, they were unable to make the problem disappear. It resulted from the nature of the contracts of variation. The three reports of the case, when it was before the Court of Appeal, then this Court, then Young J4, all reveal the difficulty the plaintiffs had in formulating a claim for relief that did not have the capacity to disadvantage at least some of the people said to be represented. This Court held that the provisions of Pt 8 r 13 were engaged. It also held, however, that there was a serious question whether the proceedings ought to continue as representative proceedings (a question of discretion as distinct from jurisdiction), and the matter was remitted to the Supreme Court of New South Wales. As Brennan J said5, the application of the provisions of the Credit Act relied on "could prove to be a pyrrhic victory for a debtor". When the matter went back to the Supreme Court of New South Wales, Young J recorded that a "very worrying aspect of [the] case [was] the possibility that [some borrowers] may, as a result of the plaintiffs' activity, which appears to have been taken without any reference to them, be left with a liability to Esanda"6. Young J imposed requirements as to explanatory circulars to be sent out in connection with an opt-in procedure that was devised in the absence of any provision in the rule to cover the situation. Subsequently, the plaintiffs announced that they were unwilling to incur the expense involved in meeting those requirements, and Young J, by consent, ordered that the action should not go ahead as a representative action. A concern existed, and was recognized at all stages in Carnie, as to whether the proceedings were in the interests of all the other borrowers whom the plaintiffs claimed to represent. Yet this Court held that the rule was engaged and, in particular, that "the represented debtors" and the plaintiffs had the "same interest" in the action7. What was described by Mason CJ, Deane and Dawson JJ as "the requisite commonality of interest"8 was held to follow from the common the question of requirements of the Credit Act) that affected the rights and obligations that existed between Esanda and each individual borrower. This conclusion was the variation agreements complied with law (whether 4 Carnie v Esanda Finance Corporation Ltd (1996) 38 NSWLR 465. (1995) 182 CLR 398 at 410. 6 Carnie v Esanda Finance Corporation Ltd (1996) 38 NSWLR 465 at 474. 7 The statement of claim said that the plaintiffs brought the proceedings on behalf of themselves and "the represented debtors" – see (1992) 29 NSWLR 382 at 385. (1995) 182 CLR 398 at 405. reached knowing that it was possible that some of the people whom the plaintiffs claimed to represent might be worse off if the action succeeded, and might not wish to be represented in the action. Hence the reservation of the discretionary issue, which turned out to be decisive. Yet, in Carnie, there was no other discretionary problem except such as arose from the potentially differing interests of some of "the represented debtors". If they all had the same interest in the broadest sense of that term, it is hard to see why there was any problem about allowing the proceedings to continue on a representative basis. The inadequacy of the rule in making no prescription as to whether or not consent was required from borrowers who were represented, or as to procedures for opting in or opting out of the action, or as to notice to represented persons, or as to settlement or discontinuance of the proceedings, was treated by this Court as a matter affecting only the discretionary decision as to whether the proceedings should continue as discretionary proceedings, and not as affecting the initial engagement of the rule9. In the particular circumstances of that case, such inadequacy was a problem precisely because of the uncertainty about how some borrowers would be affected by the outcome of the action. From the point of view of the present plaintiffs, a notable feature of this Court's decision in Carnie is that the problem that was held to require the reservation and remitter of the discretionary issue was not regarded as standing in the way of a favourable decision on the jurisdictional issue. This Court held that the "same interest" existed, even though it appreciated that at least some of the borrowers, for good reason, might take a different view of where their basic interest lay. The decision to reserve and remit the discretionary issue highlights the decision on the jurisdictional issue. On the question whether the rule is engaged, I am unable to distinguish Carnie. The statement of claim in Carnie asserted that the proceedings were brought by the plaintiffs on behalf of themselves and all other persons ("the represented debtors") who had entered into variation agreements which suffered from the same defects (in terms of compliance with the Credit Act) as did the plaintiffs' variation agreement. However, at the commencement of the action it was not known who those people were, or whether all (or any) of them would want to be represented in the action. The rule said nothing about obtaining their consent, or about procedures for opting in or opting out. This Court has left those difficulties to be worked out at the discretionary level of leave to proceed. In the present case the plaintiffs have sought to anticipate the problem. The summons contends that the proceedings are brought on behalf of themselves and all other persons ("the represented retailers") who paid the defendant supplier 9 See, for example, (1995) 182 CLR 398 at 405 per Mason CJ, Deane and during the relevant period the invalid excise (licence fee) and have not recovered the fee from the defendant. The summons in that respect appears to have been drafted to follow the form adopted in Carnie. The summons then anticipates an opt-in procedure, and says that the claim for relief will be made on behalf of the plaintiffs and members of the class earlier described who decide to opt in. In the present case, there are common questions of law and fact affecting the rights and obligations between wholesalers and retailers resulting from the invalidity of the excise. Those identified by Mason P in the Court of Appeal10 as common issues of law include not only the general matter of the scope of the principle established by Roxborough v Rothmans of Pall Mall Australia Ltd11 but also the significance to the cause of action upheld in that case of certain specific legislation12 and the relevance of the intention of individual retailers in evaluating their restitutionary claims. Common issues of fact included the invoicing practices of the defendants. The relief sought in this case, unlike the relief sought in Carnie, does not appear to have the potential to harm the financial interests of any retailers. Of course, there may be other reasons why a retailer might prefer not to join in a lawsuit against a supplier. It is therefore, correct to say that participation in the proceedings, and any consequence for the rights of a retailer, is a matter of choice for the retailer. At the time of the commencement of the proceedings, it was not possible to identify any particular person who would opt in, and belong to the represented class. Yet in that respect, as it appears to me, the case is the same as Carnie. Once it is accepted that the rule is engaged, and that the proceedings do not involve an abuse of process, then there is no independent ground for a conclusion that there should be an order, at least at this stage, that the matter should not proceed as a representative action. Mason P said: "One traditional function of representative proceedings is the avoidance of multiplicity of actions ... In my view there would have been a costly procedural morass if thousands of separate actions had been commenced by the various retailers ... The matters already addressed in these reasons demonstrate to my satisfaction that it is in the interests of justice to permit them to proceed along the lines of the opt-in basis proposed. Naturally, this will not preclude application for severance with 10 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203. 11 (2001) 208 CLR 516. 12 Business Franchise Licences (Tobacco) Act 1987 (NSW) s 41(3). respect to particular issues that may have to be tried touching the rights of individual retailers." There is no error in that approach. There was an argument about the orders for discovery sought against the appellants, but to the extent that it raised issues going beyond abuse of process the argument was within a fairly narrow compass. Einstein J, at first instance, had found against the respondents on issues of jurisdiction and abuse of process. Mason P said: to make the orders for discovery/ the representative interrogatories because he had concluded proceedings had the fundamental flaws discussed above. His Honour nevertheless indicated that there was no objection in principle to such relief, even for the purpose of ascertaining the members of the class. He pointed out that discovery for the purpose of identifying parties is a remedy known to the law." that Mason P went on to conclude that, once the conclusion that the proceedings were fundamentally flawed was rejected, there was no sufficient discretionary reason to refuse discovery in limine. The discretionary decision of the Court of Appeal on this point discloses no error, and should stand. These appeals were heard together with Mobil Oil Australia Pty Limited v Trendlen Pty Limited. In that case a constitutional argument was raised, and the appellants in these appeals adopted the argument and were given leave to amend their notices of appeal accordingly. It is convenient to deal with the point in these reasons. The first two steps in the argument are uncontroversial. The first step is that the proceedings involve an exercise of federal jurisdiction. The underlying foundation of the claim made in the proceedings is that the amounts sought to be recovered were duties of excise rendered invalid by s 90 of the Constitution. The second step is that federal jurisdiction can be exercised only in respect of a matter. The third, and controversial step, is that there is no matter in relation to which federal jurisdiction may be exercised. Rather, it is said, there is a litigation funder seeking, for its own profit, to manufacture controversies between as yet unidentified retailers and their suppliers. In this context, "matter" does not mean a legal proceeding. For there to be a matter there must be "some immediate right, that there be a conscious disagreement between duty or liability to be established by the determination of the Court"13. It is not necessary individuals. Representative proceedings, even of the most traditional kind, commonly involve circumstances in which some, perhaps many, group members are not aware of the proceedings. This point was made in Mobil Oil Australia Pty Limited v Victoria14. Furthermore, as the Attorney-General of the Commonwealth, intervening, pointed out, it is not unusual for judicial power to be exercised in relation to controversies generated by one person on behalf of another, such as a case where a person under a disability makes a claim through a tutor, next friend or guardian. Because a matter is distinct from legal proceedings, it is "identifiable independently of the proceedings which are brought for its determination"15. The rights and liabilities as between retailers and their suppliers in consequence of the imposition of charges on account of an excise later held to be constitutionally invalid are the subject of an actual dispute between some retailers and some suppliers, and of a potential dispute between others. Even if the intervention of a litigation funder, seeking to promote an assertion by more retailers of their rights, be regarded as some form of intermeddling, there is no justification for denying the existence of a matter. An alternative submission, also based on the assumption that what is involved is an exercise of federal jurisdiction, is that the common law doctrine of abuse of process is an inadequate rubric under which to consider the objections that can be taken to this kind of litigation, and that the proceedings offend normative implications to be derived from the structure of Ch III of the Constitution. In Chu Kheng Lim v Minister for Immigration16, Brennan, Deane and Dawson JJ identified as a limitation on the exercise of judicial power the requirement of consistency "with the essential character of a court or with the nature of judicial power". For the reasons given by Gummow, Hayne and Crennan JJ in their discussion of the abuse of process argument, with which I agree, there is no inconsistency with the essential character of a court or with the nature of judicial power involved in the exercise of federal jurisdiction invoked in the present case. 13 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265. 14 (2002) 211 CLR 1 at 27 [22]. 15 Fencott v Muller (1983) 152 CLR 570 at 603. 16 (1992) 176 CLR 1 at 27. The appeals should be dismissed with costs. Crennan GUMMOW, HAYNE AND CRENNAN JJ. In 1997, each of the appellants carried on business selling tobacco products by wholesale to supermarkets and other retailers. Together, the appellants had about 21,000 customers. As wholesalers of tobacco products the appellants paid licence fees pursuant to the Business Franchise Licences (Tobacco) Act 1987 (NSW) and equivalent legislation of other States and the Australian Capital Territory. Those licence fees were payable monthly and were calculated as a nominal sum plus a prescribed percentage of the value of tobacco sold in a period preceding the licence period. On 5 August 1997 this Court held, in Ha v New South Wales17, that the licence fees were duties of excise within s 90 of the Constitution, and hence were invalid. Subsequently, in Roxborough v Rothmans of Pall Mall Australia Ltd18, this Court held that retailers, who had bought tobacco products from a licensed wholesaler on terms that the "invoiced cost" comprised the wholesale price of the products and a further amount representing the licence fee, could recover from the wholesaler, as money had and received, the amount paid for the licence fee and which the wholesaler had not remitted to the taxing authority by the date of the decision in Ha. The Court further held, in Roxborough, that the action for money had and received is not defeated simply because the plaintiff had recouped the outgoing from others (as the appellants in Roxborough had when they sold the goods to customers at a price which covered the amount they sought to recover from the wholesaler). Mr Adrian Firmstone is the sole director of Firmstones Pty Ltd ("Firmstones"), a company which trades as "Firmstone & Feil, Consultants". Mr Firmstone said Firmstones provided "advice and assistance in relation to indirect tax matters, including with respect to the recovery for tobacco retailers of amounts referable to state tobacco licence fees paid by tobacco retailers to tobacco wholesalers". During 2002, Firmstones sought to encourage tobacco retailers to claim from wholesalers a refund of tobacco licence fees which the retailers had paid but the wholesalers had not remitted to the relevant taxing authority. From March 2002, Firmstones wrote to tobacco retailers asking for authority to act on the retailers' behalf in recovering these amounts. The letters took various forms but all said that Firmstones' "success fee" was 331/3 per cent of any money received by the retailer from the tobacco wholesaler. If costs were 17 (1997) 189 CLR 465. 18 (2001) 208 CLR 516. Crennan awarded to the retailer, Firmstones would retain the sum awarded; if costs were awarded against the retailer, Firmstones would bear those costs. Reference was made in the letters to another company (GST Partners Pty Ltd or, later, Horwath GST Pty Ltd) being responsible for "the administration of this project", but it is not necessary to examine what that other company did, or how the fees received by Firmstones were to be divided between Firmstones and the other company. In about the middle of September 2002, Firmstones retained a solicitor, Robert Richards & Associates, to act in what Mr Firmstone described to the sole principal of that firm, Mr Richards, as "[o]ur tobacco licence fee recovery project". Mr Richards was to be "the project's solicitor". During 2002 and the first half of 2003, a number of claims were made and settled, but Firmstones believed that there were many retailers who had not considered making a claim. Firmstones formed the view that the limitation period for retailers to make claims against wholesalers expired at the end of June The proceedings On 30 June 2003, Firmstones caused Mr Richards to issue a number of summonses in the Commercial List of the Equity Division of the Supreme Court of New South Wales. Among them were summonses instituting the seven proceedings which give rise to the present appeals. It is not necessary to consider the other proceedings. For all practical purposes, the summonses issued in the seven matters which give rise to the present appeals were identical. It is convenient to take the proceedings between Fostif Pty Limited ("Fostif") as plaintiff, and Campbells Cash and Carry Pty Limited ("Campbells") as defendant, as typical of the others. The steps which have been taken in those proceedings have been taken in the others. The Fostif proceedings were commenced as representative proceedings pursuant to Pt 8 r 13 of the Supreme Court Rules 1970 (NSW) ("the 1970 Rules")20. The plaintiff's contentions, recorded in the summons, alleged that the plaintiff "brings these proceedings on behalf of themselves and all other persons (the 'represented retailers')" who: 19 Limitation Act 1969 (NSW), s 14(1)(a). 20 Representation of concurrent interests is now dealt with in Div 2 of Pt 7 of the Uniform Civil Procedure Rules 2005 (NSW). Crennan during the whole or some part of the Relevant Period: were retailers of tobacco products carrying on business in one or more of New South Wales, Queensland, Victoria, South Australia, Australian Capital Territory and Tasmania; purchased tobacco products sold to them by the defendant; (iii) paid to the defendant the amount of the licence fee referable to the sales in (ii) as separately identifiable and severable parts of the consideration payable in respect of each sale; have not recovered from the defendant an amount or amounts referable to the licence fees paid to the defendant as referred to in (a)(iii) or otherwise released or agreed to release the defendant from any liability or alleged liability to make payment to them of the amount in (a)(iii)." No person was named in the summons as a "represented retailer". Rather, the summons provided for what it described as "opt-in" procedures by which persons might later consent to becoming a plaintiff. This procedure was described in the summons in the following terms: The plaintiff claims the relief set out in this Summons on behalf of themselves and the class of unnamed persons referred to in paragraph 2 of the plaintiff's contentions below whom the plaintiff represents in the proceedings pursuant to the Supreme Court Rules 1970, Part 8, rule 13. By reason of the 'opt-in' procedures referred to below, at the time of judgment there will be no unnamed person in respect of whom judgment is sought. Once a member of the class of represented retailers has signed and returned an 'opt-in' notice to the plaintiff's solicitor that person will become a named plaintiff in the proceedings entitled to judgment in his, her or its favour. The plaintiff proposes to give the unnamed members of the class whom the plaintiff represents an opportunity to decide whether they wish to be involved in the proceedings by the sending of an 'opt-in' notice to these persons. The members of the class will be required to sign and return the 'opt-in' notice to the solicitors for the plaintiff in order for these persons to become involved as plaintiff in the proceedings. Receipt by the plaintiff's solicitor of a signed 'opt-in' notice will establish that the represented retailer has consented to becoming a plaintiff." Crennan Because the plaintiff and its solicitors were said to know the names and addresses of "some but not all [of] the unnamed members of the class whom the plaintiff represents" it was said that "it will be necessary for the defendant, who possesses this information, to discover it in the proceedings". The plaintiff said, in its summons, that it would "seek orders for such discovery from the Court at the earliest opportunity". The applications at first instance As foreshadowed in the summons, the plaintiff applied for orders that the defendant give discovery of documents and discovery by answering interrogatories revealing the names and addresses of "represented retailers" with whom the defendant had dealt between 1 July 1997 and 5 August 1997. The plaintiff further sought directions that, within 28 days of the defendant giving discovery, the plaintiff should send to each represented retailer an opt-in notice and accompanying letter. Both the draft notice, and the letter which it was proposed should be sent with it, recorded that Firmstones would receive 331/3 per cent of any amounts recovered, together with any amount awarded to the plaintiff as costs. The draft opt-in notice gave Firmstones authority to act on behalf of the retailer concerned in relation (among other things) to the conduct of, and the giving of instructions in, the proceedings, and "entering into settlement agreement(s) with the defendant(s) (provided the amount is not less than 75% of the principal amount claimed from the defendant(s))". In response to these applications by the plaintiff, the defendant gave notice of motion for orders that the proceedings be dismissed or stayed as an abuse of process, or that the proceedings be struck out in so far as they purported to be representative proceedings, or alternatively not continue as representative proceedings. On 11 September 2003, Einstein J published21 reasons for decision concluding that there was "insufficient commonality of interest demonstrated presently to permit of a finding that it is appropriate for the proceedings to be permitted to go forward as representative proceedings". That conclusion was expressed as founding an order, pursuant to Pt 8 r 13(1), that the proceedings not continue as representative proceedings rather than as a conclusion about whether the rule had been validly engaged at the time the proceedings were commenced. Several distinct reasons were given for the conclusion that the Court should order 21 Keelhall Pty Ltd t/as "Foodtown Dalmeny" v IGA Distribution Pty Ltd (2003) 54 ATR 75. Crennan that the proceedings not continue as representative proceedings. In particular, Einstein J concluded that: (a) the "litigation funding arrangements proposed by the opt-in procedure are against public policy as well as comprising an abuse of the court process"; (b) the persons whom the plaintiff proposed to represent "cannot be said to have the 'same interest' in the proceedings"; and (c) contrary to the so-called "overriding purpose rule"22, to permit the proceedings to go forward as representative proceedings, "far from facilitating the just, quick and cheap resolution of the real issues, would give rise to a procedural morass likely ultimately to be able to be resolved only by a disaggregation of the representative proceedings into separate proceedings". The parties were given leave to address further submissions about the orders that should be made. Evidence tendered on the hearing of the applications with which the reasons for decision dealt had revealed that Firmstones had, by that time, already been retained by about 2,100 persons or entities who, so it was asserted, fell within the class of represented retailers described in the summonses that had been issued. After the reasons for decision were published, the plaintiff applied for orders that those who had already been retained by Firmstones should be given leave to elect to be joined as plaintiffs in the proceedings by filing a written consent to joinder. On 7 November 2003, having considered the further application made by the plaintiff, Einstein J made orders23 in the Fostif proceedings (and in the other proceedings) that they not continue as representative proceedings, that the plaintiff's applications for discovery and directions for the giving of opt-in notices be dismissed, and that the application to permit the joinder of additional plaintiffs also be dismissed. Fostif (and the plaintiffs in each of the six other proceedings which give rise to the present appeals) appealed to the Court of Appeal (by leave of that Court) against the orders made by Einstein J. The Court of Appeal (Mason P, 22 Supreme Court Rules 1970 (NSW), Pt 1 r 3, sub-rr (1) and (2) of which provided: "(1) The overriding purpose of these rules, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in such proceedings. (2) The Court must seek to give effect to the overriding purpose when it exercises any power given to it by the rules or when interpreting any rule." 23 Ekaton Corporation Pty Ltd v Shahin Enterprises Pty Ltd [2003] NSWSC 1018. Crennan Sheller and Hodgson JJA) allowed24 the appeals, set aside the orders of Einstein J and ordered that the proceedings continue as representative proceedings. By special leave, the respondents in the Court of Appeal appeal to this Court. The issues in this Court The issues that arise in the appeal to this Court can be identified as being: (a) whether the provisions for representative proceedings made by the 1970 Rules were validly engaged; if those Rules were validly engaged, whether the proceedings nonetheless should have been stayed as being contrary to public policy or as an abuse of process; and if those Rules were validly engaged, and if the proceedings were not to be stayed, was Einstein J right to order that the proceedings not continue as representative proceedings? The parties' arguments in this Court were principally directed to the questions about public policy and abuse of process said to arise from the arrangements Firmstones had made, and proposed to make, with "represented retailers". It is convenient to deal first, however, with the issue about the representative character of the proceedings (again by reference to the Fostif proceedings) and to begin by examining the relevant rules of court. In the submissions, the parties tended to speak of "class actions" as if there were a single, distinct kind of proceedings available by that name. However, the rules governing representative or group proceedings vary greatly from court to court. Two things of present significance follow from this. The first is that close attention must be given to the particular Rules of the Supreme Court upon which this litigation turns. The second is that the outcome of the present proceedings with respect to those Rules is not to be taken necessarily as indicating that there would have been the same outcome in proceedings under the rules of other courts. 24 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203. Crennan The 1970 Rules, Pt 8 r 13 At the time the proceedings were instituted, Pt 8 r 13 of the 1970 Rules provided: "Representation: concurrent interests (1) Where numerous persons have the same interest in any proceedings the proceedings may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them. (2) At any stage of proceedings pursuant to this rule the Court, on the application of the plaintiff, may appoint any one or more of the defendants or other persons (as representing whom the defendants are sued) to represent all, or all except one or more, of those persons in the proceedings. (3) Where, under subrule (2), the Court appoints a person who is not a defendant, the Court shall make an order under rule 8 adding him as a defendant. (4) A judgment entered or order made in proceedings pursuant to this rule shall be binding on all the persons as representing whom the plaintiffs sue or, as the case may be, the defendants are sued but shall not be enforced against any person not a party to the proceedings except with the leave of the Court. (5) An application for leave under subrule (4) shall be made by motion, notice of which shall be served personally on the person against whom it is sought to enforce the judgment or order. (6) Notwithstanding that a judgment or order to which an application under subrule (5) relates is binding on the person against whom the application is made, that person may dispute liability to have the judgment or order enforced against him on the ground that by reason of facts and matters particular to his case he is entitled to be exempted from the liability. This rule does not apply to proceedings concerning: the administration of the estate of a deceased person; property subject to a trust." Crennan Representative proceedings The form of Pt 8 r 13 of the 1970 Rules can be traced through O 16 r 9 of the English Rules of the Supreme Court 1883, via r 10 of the Rules of Procedure set out in the schedule to the Supreme Court of Judicature Act 1873 (UK), to the former Chancery practice25. The former Chancery practice with respect to representative proceedings was considered by this Court in Wong v Silkfield Pty Ltd26. The former Chancery practice was governed by two principles. The first was that all persons materially interested in the subject-matter of the suit ought generally to be made parties so as to settle the controversy by binding to the final decree those interested. The second principle was that, in observing the first, care was required to avoid embracing in the proceedings parties with an insufficient interest and thereby risking a demurrer on the ground of multifariousness. These questions of parties were determined "upon considerations of convenience with regard to the circumstances of each particular case"27. In 1901, Lord Macnaghten said28 that "[t]he old rule in the Court of Chancery was very simple and perfectly well understood ... Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent." Part 8 r 13 of the 1970 Rules, like other rules derived from O 16 of the 1883 English Rules, referred to "numerous persons [having] the same interest in any proceedings". It is not to be supposed that referring to "the same interest" was intended to give the rule a narrower operation than the former Chancery practice when that practice was described by reference to "common interest". Rules like Pt 8 r 13, and the former Chancery practice, were intended to facilitate 25 Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 29-30 [33]-[34]. 26 (1999) 199 CLR 255 at 261-263 [13]-[17] per Gleeson CJ, McHugh, Gummow, 27 Coates v Legard (1874) LR 19 Eq Cas 56 at 59 per Sir George Jessel MR. See also Templeton v Leviathan Proprietary Ltd (1921) 30 CLR 34 at 76 per Starke J; Cockburn v Thompson (1809) 16 Ves Jun 321 at 325-326 [33 ER 1005 at 1007]; Willats v Busby (1842) 5 Beav 193 [49 ER 551]. 28 Duke of Bedford v Ellis [1901] AC 1 at 8. Crennan the administration of justice29 and neither the Rules nor the former practice was to be restricted "to cases for which an exact precedent can be found in the reports"30. The principle on which rules of this kind were based was said31, in 1901, to be "as applicable to new cases as to old, and ought to be applied to the exigencies of modern life as occasion requires". Even so, in 1910, the English Court of Appeal held32 that the rule could not be engaged where plaintiffs sued for damages for breach of separate and individual contracts. But such a narrow approach to Pt 8 r 13 of the 1970 Rules was rejected by this Court in Carnie v Esanda Finance Corporation Ltd33. The Court held in Carnie that persons having separate causes of action in contract or tort may have "the same interest" in proceedings for the purposes of Pt 8 r 13(1). The fact that the claims arose under separate contracts was held not sufficient of itself to defeat the rule's requirement that numerous persons have the same interest in the proceedings. It is to be noted that Pt 8 r 13 of the 1970 Rules contained few provisions equivalent to those found in the more elaborate regulation of representative proceedings provided by Pt IVA (ss 33A-33ZJ) of the Federal Court of Australia Act 1976 (Cth). In particular, there are no provisions of the 1970 Rules that are immediately equivalent to the provisions of s 33C(1)(a) (requiring that seven or more persons have claims against the same person for the procedures of Pt IVA to be engaged), s 33J (providing for group members to opt out of representative proceedings), s 33T (empowering the Court to substitute another group member for a representative party not able adequately to represent the interests of the group) or s 33V (in so far as it requires the approval of the Court for settlement or discontinuance of the proceedings). 29 Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 at 404 per Mason CJ, Deane and Dawson JJ. 30 Taff Vale Railway v Amalgamated Society of Railway Servants [1901] AC 426 at 443 per Lord Lindley. 31 Taff Vale [1901] AC 426 at 443 per Lord Lindley. 32 Markt & Co Limited v Knight Steamship Company Limited [1910] 2 KB 1021. 33 (1995) 182 CLR 398. Crennan The absence of more elaborate provisions of the kind made by Pt IVA was held, in Carnie, to be no reason to give Pt 8 r 13 of the 1970 Rules a narrow construction or a narrow operation. As Mason CJ, Deane and Dawson JJ said34: "Much as one might prefer to have a detailed legislative prescription by statute or rule of court regulating the incidents of representative action, r 13 makes provision for an action to proceed as a representative action in a context in which there is no such legislative prescription. The absence of such a prescription does not enable a court to refuse to give effect to the provisions of the rule. Nor, more importantly, does the absence of such prescription provide a sufficient reason for narrowing the scope of the operation of the rule, as the Court of Appeal did[35], without giving effect to the purpose of the rule in facilitating the administration of justice." Nevertheless, accepting these general propositions, the question which the present rule presents is, as Toohey and Gaudron JJ pointed out in Carnie36: "Do numerous persons have the same interest in the action which the [plaintiff has] commenced? If they do not then that is the end of the matter. If they do, then the action is properly begun and, unless the Court otherwise orders, it may be continued." Numerous persons having the same interest? In this Court and in the courts below, those who are appellants in this Court (the defendants to the original proceedings) submitted that there were not numerous persons who had the same interest in the proceedings which had been commenced. This submission was put in a number of ways. The appellants emphasised what they submitted was the circular nature of the definition of represented retailers, in effect, as those entitled to judgment against the appellants. This manner of identifying those who were, or were to be, represented was said to reveal that there was no substantial issue of fact or law between the persons thus identified and the appellants that was common to the represented parties. The appellants submitted that the law being settled in Roxborough, all that would be in issue was an examination of the separate contracts which each retailer had made with the appellant concerned. 34 (1995) 182 CLR 398 at 404. 35 Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382. 36 (1995) 182 CLR 398 at 421. Crennan As noted earlier, the bare fact that the claims made by those who are represented by the named plaintiff in a representative action arise out of separate contracts does not necessarily deny the existence of a common interest between the represented parties and the defendant. In this case, a common issue of fact and law could be found to exist in deciding which particular transactions undertaken by the parties fell within the principles decided in Roxborough. The appellants' submissions assumed that that inquiry would be very simple. That may or may not be so, but even if it is, the fact that an issue may be simply resolved does not deny its existence, and does not demonstrate that it is not an issue common to a number of claims arising out of separate contracts. In the course of oral argument, however, a more deep-seated question emerged concerning the application of Pt 8 r 13(1) to the present proceedings. The authority given by Pt 8 r 13(1) to commence representative proceedings depended upon there being, at the time the proceedings were commenced, "numerous persons [having] the same interest" in the proceedings. So much follows from the opening clause of the rule: "[w]here numerous persons have the same interest in any proceedings the proceedings may be commenced". The procedure contemplated in these proceedings was that those who wished to take the benefit of the proceedings must "opt-in". None had done so when the proceedings commenced. Were there, at the time these proceedings were commenced, numerous persons who had the same interest in the proceedings? The summons by which the proceedings were commenced first identified the persons on whose behalf the plaintiff brought the proceedings as "themselves and all other persons" who fell within the description given in the summons of "represented retailers". That description, the text of which is set out earlier in these reasons, identified "represented retailers", in effect, as any person who could make a claim against the defendant like the claim made in Roxborough and who had not released the claim or been paid. But the summons went on to describe an "opt-in" procedure which, if followed, would bring about the result that "at the time of judgment there will be no unnamed person in respect of whom judgment is sought". Read as a whole, it is apparent that the summons sought to institute proceedings the result of which would bind only those from within the class of represented retailers who actively chose to be bound. That some (even all) of those whom it is alleged have the same interest as the named plaintiff know nothing of proceedings that are instituted on their behalf would not, standing alone, deny that numerous persons have the same Crennan interest in the proceedings37. Such ignorance (if it persisted) might later be said to be relevant to whether the action should be continued as representative proceedings, but that is beside the present point which looks to the institution of the proceedings, not their continuation. Accepting then that the rule did not require the separate identification of, and consent from, those who were said to constitute the "numerous persons", was there, nonetheless, a class of persons sufficiently identified that together could be seen to be "numerous persons [having] the same interest" in the proceedings? That question is not to be asked or answered in the abstract. It is a question that must be asked and answered with respect to the particular proceedings. In the present cases, that requires consideration of the whole of the summons issued in each matter. Not least is that necessary because questions about the engagement of Pt 8 r 13 must be considered having regard to the purposes of the rule. A central objective of the representative procedures for which Pt 8 r 13 provided was the avoidance of multiplicity of proceedings and the efficient determination, once and for all, of controversies in which parties have the same interest. An important indication of the nature of the interest that numerous persons must have in proceedings instituted under Pt 8 r 13 was given by Pt 8 r 13(4). A judgment entered or order made in the proceedings "shall be binding on all the persons as representing whom the plaintiffs sue". What the rules were intended to achieve was a single judicial determination of common issues in a way that binds those who were interested in those issues. Whether the present matters fell within Pt 8 r 13(1) must be considered having regard to what the summons said about parties, what issues were raised in the proceedings, and what relief was sought in the proceedings. The summons issued in the Fostif matter contained a prayer for relief claiming "[j]udgment against the defendant in favour of the plaintiff together with interest pursuant to section 94 of the Supreme Court Act (NSW)", "further or other orders", and costs. The nature or form of judgment sought was not further specified in the prayer for relief but it was apparent, from other parts of the summons (particularly the statement of the nature of the dispute and the statement of the plaintiff's contentions), that Fostif claimed judgment for a money sum, and that any who later chose to opt-in to the proceedings would make like claims. The amount of Fostif's claim was set out in a schedule to the summons. But when instituted, the proceedings made no other claim. 37 Wilson v Church (1878) 9 Ch D 552; Fraser v Cooper, Hall & Co (1882) 21 Ch D Crennan At the time the summons was issued there were persons, other than Fostif, whom it could be said would be "affected" by a decision of the claim made by Fostif against Campbells. The most obvious persons "affected" were any other persons who had bought tobacco products from Campbells by transactions relevantly identical to the transactions identified as having been made between Fostif and Campbells. But when the proceedings were instituted, Fostif made no claim on behalf of any of those other purchasers. Their participation in the proceedings, and any consequence for their rights, depended upon them choosing to join the proceedings. Deciding Fostif's claim would decide no issue between any of those other purchasers and Campbells unless or until those others chose to participate in the proceedings. The only effect that the decision of Fostif's claim would have would be its precedential value. At the time the summons was issued to commence the Fostif proceedings, there were no persons, other than Fostif, who had an interest in the proceedings which were instituted, as distinct from an interest in knowing which way the issues raised in those proceedings were decided. No other person had an interest in those proceedings because no order made or judgment given in the proceedings would bind that other person. No grant of declaratory relief was sought to resolve or determine any question38 common to the "numerous persons" alleged to have "the same interest in the proceedings". The summons is thus to be distinguished from the statement of claim in Carnie, where the plaintiffs claimed declarations for the common benefit of "the represented debtors"39. No doubt it was hoped that the procedures for "opting-in", which the summonses contemplated would be followed after the proceedings had been instituted, would lead to there being numerous persons with the same interest, but that was a hope or expectation about future events. It may readily be accepted that, when the proceedings in Carnie were issued, it may have been difficult to list all of the persons whom the plaintiffs represented. And some who met the relevant criteria may later have sought exclusion from representation. In that sense, one could not say at the time the proceedings in Carnie were issued who the plaintiffs represented. But it was clear that there were numerous persons who were represented. By contrast, in the Fostif proceedings, where it was sought to represent only those from within the class of represented retailers who actively chose to be bound, it could not be said that there was any person, let alone numerous persons, whom the plaintiff would represent. 38 Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 267 [27]. 39 Esanda Finance Corp v Carnie (1992) 29 NSWLR 382 at 386. Crennan The requirements of Pt 8 r 13(1) of the 1970 Rules were not met in the present matters. Neither when the proceedings were instituted, nor when Einstein J made his orders, were there numerous persons having the same interest in the proceedings that were commenced. The only persons who then had an interest in the proceedings were the named plaintiffs. That would be reason enough to conclude that the Court of Appeal erred in ordering that the proceedings should continue as representative proceedings. It is as well, however, to go on to consider the larger questions of public policy and abuse of process which were agitated. Public policy and abuse of process in the courts below As noted earlier, Einstein J held that the litigation funding arrangements, that had already been made and were proposed to be made by Firmstones, were "against public policy as well as comprising an abuse of the court process". It may be doubted, however, that any clear distinction was drawn at first instance between the principles that were to be applied under those two headings. At the least they were understood as being closely interconnected. Campbells (and the defendants in the other proceedings) had relied in their notice of motion upon Pt 13 r 5 and Pt 15 r 26 of the 1970 Rules for their application that the proceedings be dismissed as an abuse of the process of the Court. The relationship between the 1970 Rules and the inherent power of the Supreme Court with respect to abuse of its process was considered in Batistatos v Roads and Traffic Authority (NSW) by Gleeson CJ, Gummow, Hayne and Crennan JJ40. No point respecting that relationship was taken by the parties in the present appeals. It appears also to have been assumed that what was engaged here by the reliance upon public policy was that category of abuse concerned with invocation of the procedures of the Court for an illegitimate purpose41. The Court of Appeal concluded that neither the role occupied by Firmstones in connection with the litigation, nor the particular funding arrangements that were made and proposed to be made, justified the staying of the proceedings. The Court concluded that whether proceedings funded by a litigation funder are an abuse of process depends on whether the role of that funder "has corrupted or is likely to corrupt the processes of the court to a degree 40 (2006) 80 ALJR 1100 at 1108-1110 [19]-[26]; 227 ALR 425 at 431-433. 41 Batistatos v Roads and Traffic Authority (NSW) (2006) ALJR 1100 at 1108 [15]; 227 ALR 425 at 430. Crennan that attracts the extraordinary jurisdiction to dismiss or stay permanently for abuse of process"42. In the present matters, the Court of Appeal identified several facts as requiring the conclusion that there was no abuse of process. First, the proceedings were under judicial supervision43; second, Firmstones' control of the litigation was "not excessive"44; third, Firmstones' fees were not excessive45; fourth, there was a solicitor on the record46; and fifth, the individual claims were small (making separate recovery processes unlikely47). At first instance, Einstein J had characterised48 Firmstones' activities as "trafficking in the retailers' litigation", and made49 a number of more specific criticisms of the relationships that existed between Firmstones, the retailers and the solicitor engaged by Firmstones to act in "the project". Particular emphasis was given to statements made in correspondence between Firmstones and the solicitor to the effect that the solicitor was engaged by Firmstones as principal, not as agent for the retailers, and that Firmstones would "liaise with [its] clients, [the solicitor] will not directly liaise with [Firmstones'] clients". In the Court of Appeal, Mason P, who gave the principal reasons of the Court, rejected50 the criticisms made of the relationship between the solicitor and the retailers, concluding that the solicitor had adopted the normal role as a solicitor on the record in the litigation. Questions of public policy were treated51 as having turned at first instance on whether the funding arrangements were 42 (2005) 63 NSWLR 203 at 234 [132]. 43 (2005) 63 NSWLR 203 at 235 [136]. 44 (2005) 63 NSWLR 203 at 235 [137]. 45 (2005) 63 NSWLR 203 at 236 [144]. 46 (2005) 63 NSWLR 203 at 235 [136]. 47 (2005) 63 NSWLR 203 at 237 [149]. 48 Keelhall Pty Ltd t/as "Foodtown Dalmeny" v IGA Distribution Pty Ltd (2003) 54 ATR 75 at 100 [60]. 49 (2003) 54 ATR 75 at 101 [64]. 50 (2005) 63 NSWLR 203 at 223-224 [86]. 51 (2005) 63 NSWLR 203 at 227 [105]. Crennan champertous. Mason P said52 that the policy of the law had changed: "[t]he law now looks favourably on funding arrangements that offer access to justice so long as any tendency to abuse of process is controlled". Mason P concluded53 that the present litigation should be regarded as falling within the principle that "[p]ublic policy now recognises that it is desirable, in order to facilitate access to justice, that third parties should provide assistance designed to ensure that those who are involved in litigation have the benefit of legal representation"54. The Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) Examination of questions of public policy must begin from consideration of the Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) ("the Abolition Act"). By the Abolition Act the offence of maintenance, including champerty that, but for s 3 of the Act, would be punishable by the common law, was abolished. Section 4 of the Abolition Act provided that "[a]n action in tort no longer lies on account of conduct known as maintenance (including champerty)". Sections 3 and 4 indicated that the principles respecting maintenance and champerty were expressed both in the criminal law and the law of tort. But s 6 of the Abolition Act assumed that when the statute was enacted there may have been a more broadly based rule in the Australian common law. Section 6 provided that: "This Act does not affect any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal, whether the commencement of this Act." the contract was made before, or is made after, It is evident from s 6 of the Abolition Act that questions of maintenance and champerty are not to be regarded as always legally irrelevant. Section 6 assumes that considerations of public policy and illegality can still arise in connection with contracts providing for or dealing with maintenance or champerty. The Abolition Act, however, does not state explicitly whether questions of maintenance or champerty are relevant to issues of abuse of process. Nor does it deal directly with what scope is to be given to public policy or doctrines of illegality when the conduct in question is no longer to be characterised as criminal or tortious. To consider what scope might be given to 52 (2005) 63 NSWLR 203 at 227 [105]. 53 (2005) 63 NSWLR 203 at 227 [105]. 54 Gulf Azov Shipping Co Ltd v Idisi [2004] EWCA Civ 292 at [54] per Lord Phillips MR. Crennan public policy and illegality in this context, it is necessary to look more closely at some aspects of the development of the law of maintenance and champerty. Some aspects of the development of the law of maintenance and champerty The law of maintenance and champerty has been traced to the Statute of Westminster the First (3 Edw I c 25) of 127555. Some56 trace it back to Greek law and Roman law. Be this as it may, Coke identified maintenance as an law57 and champerty was a particular species of offence at common maintenance58. Although traditionally identified as a common law offence, several early statutes are understood as affirming or declaring that common law59. By the 19th century, the law of maintenance was understood by Lord Abinger CB60 as: 55 Dennis, "The Law of Maintenance and Champerty", (1890) 6 Law Quarterly Review 169 at 171. But see Winfield, "The History of Maintenance and Champerty", (1919) 35 Law Quarterly Review 50; Co Litt 368 b. 56 Elliott Associates LP v Banco de La Nacion 194 F 3d 363 at 372 (1999); Cohen and Schwartz, "Champerty and Claims Trading", (2003) 11 American Bankruptcy Institute Law Review 197 at 197. 57 2 Coke's Institutes 208. 58 Stephen defined the two terms in A Digest of the Criminal Law (Crimes and Punishments), (1877) at 86 as: "Maintenance is the act of assisting the plaintiff in any legal proceeding in which the person giving the assistance has no valuable interest, or in which he acts from any improper motive. Champerty is maintenance in which the motive of the maintainor is an agreement that if the proceeding in which the maintenance takes place succeeds, the subject matter of the suit shall be divided between the plaintiff and the maintainor." 59 The statutes, ranging from 3 Edw I c 25 to 32 Hen VIII c 9 are collected in Lord Phillimore's speech in Neville v London "Express" Newspaper Ltd [1919] AC 368 60 Findon v Parker (1843) 11 M & W 675 at 682-683 [152 ER 976 at 979]. Crennan "confined to cases where a man improperly, and for the purpose of stirring up litigation and strife, encourages others either to bring actions, or to make defences which they have no right to make ... [By contrast], if a man were to see a poor person in the street oppressed and abused, and without the means of obtaining redress, and furnished him with money or employed an attorney to obtain redress for his wrongs, it would require a very strong argument to convince me that that man could be said to be stirring up litigation and strife, and to be guilty of the crime of maintenance." (emphasis added) Yet in Bradlaugh v Newdegate61, Lord Coleridge CJ held that an action for maintenance at common law existed, but made no reference, in an extensive review of the authorities62, to any requirement that the claim maintained be an unjust claim. Rather, the exceptions recognised to the general prohibition on maintaining the claim of another were seen as turning on whether the maintainer acted from charitable motives or because the person maintained was near kin, a servant, or in some like relationship to the maintainer63. Champerty included every kind of maintenance for reward, whether by sharing of the "thing in plea" or otherwise64. This understanding of champerty was originally seen as precluding the assignment of choses in action. The reason given in Coke's report of Lampet's Case65 was: "the great wisdom and policy of the sages and founders of our law, who have provided, that no possibility, right, title, nor thing in action, shall be granted or assigned to strangers, for that would be the occasion of multiplying of contentions and suits, of great oppression of the people, and chiefly of terre-tenants, and the subversion of the due and equal execution of justice." 61 (1883) 11 QBD 1. 62 (1883) 11 QBD 1 at 7-9. 63 (1883) 11 QBD 1 at 11; Harris v Brisco (1886) 17 QBD 504 at 513-514. 64 Dennis, "The Law of Maintenance and Champerty", (1890) 6 Law Quarterly Review 169 at 179. 65 (1613) 10 Co Rep 46b at 48a [77 ER 994 at 997]. See also Co Litt 232b n.1. Crennan As Winfield pointed out66, Coke's theory was "perilously close to an anachronism". In Norman v Federal Commissioner of Taxation67, Windeyer J said of Lampet's Case that "[i]t was a somewhat unsophisticated view of legal rights that led the common lawyers to classify choses in action and debts with mere possibilities, and to condemn all assignments of them as leading to maintenance". Maintenance and champerty, though well known in early English law, "were known almost exclusively as modes of corruption and oppression in the hands of the King's officers and other great men"68. And as Buller J noted, in Master v Miller69, "Courts of Equity from the earliest times thought the doctrine [of maintenance as applied to preclude assignment of choses in action] too absurd for them to adopt; and therefore they always acted in direct contradiction to it". But the law of maintenance and champerty was not wholly expelled from this realm of discourse, either by the course of decisions in equity permitting and giving effect to the assignment of choses in action, or by the provisions of s 25 of the Supreme Court of Judicature Act permitting such assignments. Assignment of a chose in action "made with the improper purpose of stirring up litigation"70 would raise questions of maintenance and champerty. But the mere assignment of the proceeds of litigation would not. If the assignment stipulated that the assignee should participate in the litigation, the assignment was lawful only "if he have some legal interest (independent of that acquired by the assignment itself) in the property in dispute; but that where his interest is generated only by the assignment itself, such a stipulation would be improper"71. 66 Winfield, "Assignment of Choses in Action in Relation to Maintenance and Champerty", (1919) 35 Law Quarterly Review 143 at 143 (Winfield, "Assignment of Choses in Action"). 67 (1963) 109 CLR 9 at 26. 68 Winfield, "Assignment of Choses in Action", (1919) 35 Law Quarterly Review 143 at 143 referring to Winfield, "The History of Maintenance and Champerty", (1919) 35 Law Quarterly Review 50 at 65 and following. 69 (1791) 4 TR 320 at 340 [100 ER 1042 at 1053]. 70 Winfield, "Assignment of Choses in Action", (1919) 35 Law Quarterly Review 143 71 Winfield, "Assignment of Choses in Action", (1919) 35 Law Quarterly Review 143 at 152-154 citing, among other cases, Harrington v Long (1833) 2 My & K 590 [39 ER 1069]; Simpson v Lamb (1857) 7 El & Bl 84 [119 ER 1179]; Hutley v Hutley (Footnote continues on next page) Crennan The distinction between the assignment of an item of property and the assignment of a bare right to litigate was regarded as fundamental72 to the application of the law of maintenance and champerty. But drawing that distinction was not always easy73. And it was a distinction whose policy roots were not readily discernible, the undesirability of maintenance and champerty being treated as self-evident. Typical of the way in which the courts expressed this condemnation was the reference by Knight Bruce LJ74 to the "traffic of merchandizing in quarrels, of huckstering in litigious discord". That the practices were criminal, and also gave rise to civil liability, was treated as sufficient reason to condemn them. Yet practices no different in substance, from some of those condemned so roundly, became commonplace in the law of insolvency. Bankruptcy legislation75 was held76 to permit a trustee in bankruptcy who had commenced an action to sell and assign the subject-matter of the action to a purchaser for value. And, of course, the development of the doctrine of subrogation as applied to contracts of insurance77 qualified the apparent generality of rules against maintenance and champerty. No doubt it was against this background that, at the end of the 19th century, the courts of India and the Privy Council came to consider the (1873) LR 8 QB 112; Rees v De Bernardy [1896] 2 Ch 437; Glegg v Bromley 72 Prosser v Edmonds (1835) 1 Y & C Ex 481 [160 ER 196]; Defries v Milne [1913] 1 Ch 98; Williams, "Is a Right of Action in Tort a Chose in Action?", (1894) 10 Law Quarterly Review 143 at 147; Winfield, "Assignment of Choses in Action", (1919) 35 Law Quarterly Review 143 at 160. 73 Compare Prosser v Edmonds (1835) 1 Y & C Ex 481 [160 ER 196] and Dickinson v Burrell (1866) LR 1 Eq 337. 74 Reynell v Sprye (1852) 1 De G M & G 660 at 686 per Knight Bruce LJ [42 ER 710 75 For example, Bankruptcy Act 1869 (UK), s 25. 76 Seear v Lawson (1880) 15 Ch D 426. 77 Castellain v Preston (1883) 11 QBD 380. Crennan application of the law of maintenance and champerty in a society where one Indian judge (Phear J) is recorded78 as having said that: "[s]peculation in law proceedings has assumed the dimensions and respectability of an ordinary trade; a large class in the community fattens and grows rich on the spoils of needy suitors; and litigation is maintained without reference to the wishes or interests of the nominal parties." In Ram Coomar Coondoo v Chunder Canto Mookerjee79, the Privy Council held that the English statues, which founded the then state of the English law, did not apply in India and held80 that: "a fair agreement to supply funds to carry on a suit in consideration of having a share of the property, if recovered, ought not to be regarded as being, per se, opposed to public policy. Indeed, cases may be easily supposed in which it would be in furtherance of right and justice, and necessary to resist oppression, that a suitor who had a just title to property, and no means except the property itself, should be assisted in this manner." Yet the Privy Council went on to say81 that: "[A]greements of this kind ought to be carefully watched, and when found to be extortionate and unconscionable, so as to be inequitable against the party; or to be made, not with the bonâ fide object of assisting a claim believed to be just, and of obtaining a reasonable recompense therefor, but for improper objects, as for the purpose of gambling in litigation, or of injuring or oppressing others by abetting and encouraging unrighteous suits, so as to be contrary to public policy, – effect ought not to be given to them." The basis for such careful watching was not further explained. 78 Dennis, "The Law of Maintenance and Champerty", (1890) 6 Law Quarterly Review 169 at 186. 79 (1876) LR 2 App Cas 186. 80 (1876) LR 2 App Cas 186 at 210. 81 (1876) LR 2 App Cas 186 at 210. Crennan What this brief and incomplete survey of the state of the English law, as it stood by the early years of the 20th century, may be understood as revealing is that the law of maintenance and champerty depended more upon assertion of consequences said to follow from the existence of the common law criminal offences of maintenance and champerty, than it did upon any close analysis or clear exposition of the policy to which the rules were intended to give effect. Thus, in Alabaster v Harness82, Lord Esher MR said: "The doctrine of maintenance, which appears in the Year Books, and was discussed briefly by Lord Loughborough in Wallis v Duke of Portland83, and more elaborately by Lord Coleridge, CJ, in Bradlaugh v Newdegate84, does not appear to me to be founded so much on general principles of right and wrong or of natural justice as on considerations of public policy. I do not know that, apart from any specific law on the subject, there would necessarily be anything wrong in assisting another man in his litigation. But it seems to have been thought that litigation might be increased in a way that would be mischievous to the public interest if it could be encouraged and assisted by persons who would not be responsible for the consequences of it, when unsuccessful. Lord Loughborough, in Wallis v Duke of Portland, says that the rule is, 'that parties shall not by their countenance aid the prosecution of suits of any kind, which every person must bring upon his own bottom, and at his own expense.'" (emphasis added) By the early 20th century, the law of maintenance and champerty depended upon the application of qualifications and exceptions hinged, for the most part, about what was an item of property as distinct from a bare right to litigate85 and what sufficed as a common interest between maintainer and the maintained86. In British Cash and Parcel Conveyors Limited v Lamson Store Service Company Limited, Fletcher Moulton LJ said87: 82 [1895] 1 QB 339 at 342, cited by Dixon J in Stevens v Keogh (1946) 72 CLR 1 at 83 (1797) 3 Ves Jun 494 [30 ER 1123]. 84 (1883) 11 QBD 1. 85 For example, Fitzroy v Cave [1905] 2 KB 364; Glegg v Bromley [1912] 3 KB 474. 86 cf Holden v Thompson [1907] 2 KB 489 and, later, Martell v Consett Iron Co Ltd 87 [1908] 1 KB 1006 at 1013-1014. Crennan "The truth of the matter is that the common law doctrine of maintenance took its origin several centuries ago and was formulated by text-writers and defined by legal decisions in such a way as to indicate plainly the views entertained on the subject by the Courts of those days. But these decisions were based on the notions then existing as to public policy and the proper mode of conducting legal proceedings. Those notions have long since passed away, and it is indisputable that the old common law of maintenance is to a large extent obsolete. ... The present legal doctrine of maintenance is due to an attempt on the part of the Courts to carve out of the old law such remnant as is in consonance with our modern notions of public policy. ... Speaking for myself, I doubt whether any of the attempts at giving definitions of what constitutes maintenance in the present day are either successful or useful. They suffer from the vice of being based upon definitions of ancient date which were framed to express the law at a time when it was radically different from what it is at the present day, and these old definitions are sought to be made serviceable by strings of exceptions which are neither based on any logical principle nor in their nature afford any warrant that they are exhaustive. ... That there is still such a thing as maintenance in the eye of the law and that it constitutes a civil wrong and perhaps a crime is undoubted, and the general character of the mischief against which it is directed is familiar to us all. It is directed against wanton and officious intermeddling with the disputes of others in which the defendant has no interest whatever, and where the assistance he renders to the one or the other party is without justification or excuse. But in my opinion it is far easier to say what is not maintenance than to say what is maintenance." As was said in a radically different context (of construction of the British North America Act 1867 (Imp))88: "Customs are apt to develop into traditions which are stronger than law and remain unchallenged long after the reason for them has disappeared." By ss 13 and 14 of the Criminal Law Act 1967 (UK) criminal and tortious liability for maintenance and champerty were abolished but, like s 6 of the Abolition Act, any rule of law as to the cases in which a contract involving maintenance or champerty is to be treated as contrary to public policy or otherwise illegal was preserved. In 1981, in Trendtex Trading Corporation v 88 Henrietta Muir Edwards v Attorney-General for Canada [1930] AC 124 at 134. Crennan Credit Suisse, the House of Lords held89 that an agreement permitting a bank, which had guaranteed the costs of a party to litigation in which the bank itself was also interested, to sell the party's claims in the litigation "'savours of champerty,' since it involves trafficking in litigation – a type of transaction which, under English law, is contrary to public policy". Accordingly, the assignment of the cause of action was held to be void. Yet effect was given to so much of the agreement as conferred exclusive jurisdiction on a Swiss Court over disputes regarding "its conclusion, interpretation or fulfilment", by staying the action in England with a view to the Swiss Court deciding what effect the invalidity of the assignment, according to English law, had upon the agreement In the House of Lords, there was no examination of the content of the rule of public policy that was said to be engaged, beyond the reference made by Lord Wilberforce to trafficking in litigation91. In the courts below, in Trendtex92, the accepted premise for argument appears to have been that there remained a public policy against at least some forms of maintenance and champerty. The limits of the application of that public policy were identified in the Court of Appeal as to be found in the existence and sufficiency of notions of common interest between the maintainer and the maintained93. It is important to notice that the House of Lord's conclusion in Trendtex (that the provision permitting sale of the cause of action was contrary to public policy – as "savour[ing] of champerty" and involving "trafficking in litigation") was not held to afford a defence to the claim that was made and was not itself a reason to stay the further prosecution of the action. The order for stay that was made was founded upon the exclusive jurisdiction clause, not upon any consideration of public policy concerning maintenance or champerty. Indeed, as the respondents pointed out in the argument of the present appeals, before the enactment of the Abolition Act or its United Kingdom 89 [1982] AC 679 at 694 per Lord Wilberforce. 90 [1982] AC 679 at 695 per Lord Wilberforce. 91 [1982] AC 679 at 694. 92 Trendtex Trading Corporation v Credit Suisse [1980] 3 WLR 367; [1980] 3 All ER 721 (Robert Goff J); [1980] QB 629 (CA). 93 [1980] QB 629 at 653 per Lord Denning MR, 669 per Oliver LJ (with whose reasons Bridge LJ agreed). Crennan progenitor, the Criminal Law Act 1967, maintenance or champerty had not been held to constitute a defence to an action on the claim that was maintained, or a ground for staying such an action94. Of course it may be said that, at least for the most part, the cases reported about maintenance and champerty were principally directed to whether the maintenance agreement was to be enforced or to whether the named plaintiff had sufficient title to bring the action that was said to be maintained. But that does not detract from the validity of the observation that there was no case where maintenance or champerty was held to be a defence to, or reason enough to stay, the action that was maintained. Abuse of process? In the present matters, the appellants did not contend that maintenance or champerty provided any defence to the claims made against them. But they did contend that the nature of the funding arrangements made and to be made by Firmstones with retailers warranted the conclusion reached by Einstein J that those arrangements constituted an abuse of process. The appellants sought to encapsulate their submissions on this aspect of the appeals by describing Firmstones' conduct as "trafficking" in the litigation. Expressed in that way, the appellants' submission may be understood as conflating two separate propositions: first, that the funding arrangements constituted maintenance or champerty and, second, that for the maintainer to institute and continue proceedings, in the name of or on behalf of plaintiffs who were thus maintained, was an abuse of process which could be avoided only by ordering a stay of the proceedings. The second of these propositions, about abuse of process, assumed that maintenance and champerty give rise to public policy questions beyond those that would be relevant when considering the enforceability of the agreement for maintenance of the proceedings as between the parties to the agreement. In jurisdictions where legislation has been enacted to the same effect as the Abolition Act, the premise for the second proposition identified is not valid; there are several reasons to reject it. It is neither necessary nor appropriate to decide what would be the position in those jurisdictions where maintenance and champerty may remain as torts, perhaps95 even crimes. 94 Hodges v State of New South Wales (1988) 62 ALJR 190 at 193 per Brennan J; 77 ALR 1 at 6; Martell v Consett Iron Co Ltd [1955] Ch 363 at 421-422 per Jenkins LJ; Roux v Australian Broadcasting Commission [1992] 2 VR 577 at 609. 95 But see Clyne v NSW Bar Association (1960) 104 CLR 186 at 203. Crennan First, and foremost, s 6 of the Abolition Act preserved any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal. It preserved no wider rule of law. The Abolition Act abolished the crimes, and the torts, of maintenance and champerty. By abolishing those crimes, and those torts, any wider rule of public policy (wider, that is, than the particular rule or rules of law preserved by s 6) lost whatever narrow and insecure footing remained for such a rule. As Fletcher Moulton LJ had rightly said96, nearly a century ago, the law of maintenance and champerty, even then, suffered: "from the vice of being based upon definitions of ancient date which were framed to express the law at a time when it was radically different from what it is at the present day". Secondly, the asserted rule of public policy would readily yield no rule more certain than the patchwork of exceptions and qualifications that could be observed to exist in the law of maintenance and champerty at the start of the 20th century. As Fletcher Moulton LJ had also said97, it was then "far easier to say what is not maintenance than to say what is maintenance". No certain rule would emerge because neither the content nor the basis of the asserted public policy is identified more closely than by the application of condemnatory expressions like "trafficking" or "intermeddling", with or without the addition of epithets like "wanton and officious"98. the appellants described as "officious In the present matters, the appellants pointed to a number of matters which together were said to be important. First, there was Firmstones' seeking out of claimants, which intermeddling". Secondly, there was the degree of control which Firmstones would have over the proceedings, the litigants' interests being said to be "subservient" to those of the "intermeddler"99. Firmstones' retainer of a solicitor to act for the plaintiffs and represented parties was said not to lessen Firmstones' control of the proceedings but to give rise to possible conflicts of duty for the solicitor. Thirdly, it was said 96 British Cash and Parcel Conveyors Limited v Lamson Store Service Company Limited [1908] 1 KB 1006 at 1013. 97 British Cash and Parcel Conveyors [1908] 1 KB 1006 at 1014. 98 Giles v Thompson [1994] 1 AC 142 at 164 per Lord Mustill, citing British Cash and Parcel Conveyors [1908] 1 KB 1006 at 1014. 99 cf Clairs Keeley (a Firm) v Treacy (2004) 29 WAR 479 at 493 [71]. Crennan that Firmstones bought rights to litigate and did so with a view to profit. Firmstones was, so it was submitted, "a speculative investor in other persons' litigation". Shorn of the terms of disapprobation, the appellants' submissions can be seen to fasten upon Firmstones' seeking out those who may have claims, and offering terms which not only gave Firmstones control of the litigation but also would yield, so Firmstones hoped and expected, a significant profit to Firmstones. But none of these elements, alone or in combination, warrant condemnation as being contrary to public policy or leading to any abuse of process. As Mason P rightly pointed out100 in the Court of Appeal, many people seek profit from assisting the processes of litigation. That a person who hazards funds in litigation wishes to control the litigation is hardly surprising. That someone seeks out those who may have a claim and excites litigation where otherwise there would be none could be condemned as contrary to public policy only if a general rule against the maintenance of actions were to be adopted. But that approach has long since been abandoned and the qualification of that rule (by reference to criteria of common interest) proved unsuccessful. And if the conduct is neither criminal nor tortious, what would be the ultimate foundation for a conclusion not only that maintaining an action (or maintaining an action in return for a share of the proceeds) should be considered as contrary to public policy, but also that the claim that is maintained should not be determined by the court whose jurisdiction otherwise is regularly invoked? Two kinds of consideration are proffered as founding a rule of public policy – fears about adverse effects on the processes of litigation and fears about the "fairness" of the bargain struck between funder and intended litigant. In Giles v Thompson101, Lord Mustill said that the law of maintenance and champerty could best "be kept in forward motion" by looking to its origins; these his Lordship saw as reflecting "a principle of public policy designed to protect the purity of justice and the interests of vulnerable litigants". Neither of these considerations, whatever may be their specific application in a particular case, warrants formulation of an overarching rule of public policy that either would, in effect, bar the prosecution of an action where any agreement has been made to provide money to a party to institute or prosecute the litigation 100 (2005) 63 NSWLR 203 at 229 [116]. 101 [1994] 1 AC 142 at 164. Crennan in return for a share of the proceeds of the litigation, or would bar the prosecution of some actions according to whether the funding agreement met some standards fixing the nature or degree of control or reward the funder may have under the agreement. To meet these fears by adopting a rule in either form would take too broad an axe to the problems that may be seen to lie behind the fears. It is necessary to bear steadily in mind that questions of illegality and public policy may arise when considering whether a funding agreement is enforceable. So much follows from s 6 of the Abolition Act. Further, to ask whether the bargain struck between a funder and intended litigant is "fair" assumes that there is some ascertainable objective standard against which fairness is to be measured and that the courts should exercise some (unidentified) power to relieve persons of full age and capacity from bargains otherwise untainted by infirmity. Neither assumption is well founded. As for fears that "the funder's intervention will be inimical to the due administration of justice"102, whether because "[t]he greater the share of the spoils ... the greater the temptation to stray from the path of rectitude"103 or for some other reason, it is necessary first to identify what exactly is feared. In particular, what exactly is the corruption of the processes of the Court that is feared? It was said, in In re Trepca Mines Ltd (No 2)104, that "[t]he common law fears that the champertous maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses". Why is that fear not sufficiently addressed by existing doctrines of abuse of process and other procedural and substantive elements of the court's processes? And if lawyers undertake obligations that may give rise to conflicting duties there is no reason proffered for concluding that present rules regulating lawyers' duties to the court and to clients are insufficient to meet the difficulties that are suggested might arise. The appellants submitted that special considerations intrude in "class actions" because, so it was submitted, there is the risk that such proceedings may be used to achieve what, in the United States, are sometimes referred to as 102 Clairs Keeley (2004) 29 WAR 479 at 502 [125]. 103 R (Factortame Ltd) v Secretary of State for Transport, Local Government and the Regions (No 8) [2003] QB 381 at 413 [85]. 104 [1963] Ch 199 at 219-220. Crennan "blackmail settlements"105. However, as remarked earlier in these reasons, the rules governing representative or group proceedings vary greatly between courts and it is not useful to speak of "class actions" as identifying a single, distinct kind of proceedings. Even when regulated by similar rules of procedure, each proceeding in which one or more named plaintiffs represent the interests of others will present different issues and different kinds of difficulty. The difficulties thought to inhere in the prosecution of an action which, if successful, would produce a large award of damages but which, to defend, would take a very long time and very large resources, is a problem that the courts confront in many different circumstances, not just when the named plaintiffs represent others and not just when named plaintiffs receive financial support from third party funders. The solution to that problem (if there is one) does not lie in treating actions financially supported by third parties differently from other actions. And if there is a particular aspect of the problem that is to be observed principally in actions where a plaintiff represents others, that is a problem to be solved, in the first instance, through the procedures that are employed in that kind of action. It is not to be solved by identifying some general rule of public policy that a defendant may invoke to prevent determination of the claims that are made against that defendant. Conclusions and orders It follows that the funding arrangements made and proposed to be made by Firmstones did not constitute a ground to stay the present proceedings. In light of the conclusion reached that the requirements of Pt 8 r 13 were not met when the proceedings were instituted or when Einstein J made his orders, it followed that the proceedings as then constituted could not continue as representative proceedings. It further follows that the orders which were sought in relation to discovery and the giving of opt-in notices were not to be made. Accordingly, each of the appeals to this Court should be allowed with costs. In each matter, the orders made by the Court of Appeal on 31 March 2005 should be set aside and in their place there should be orders that the appeal to that Court is dismissed with costs. 105 Friendly, Federal Jurisdiction: A General View, (1973) at 120, referred to in In the Matter of Rhone-Poulenc Rorer Inc 51 F 3d 1293 at 1298 (1995) per Posner CJ. Kirby KIRBY J. Two proceedings are before the Court. They raise common issues. Each concerns representative proceedings brought in the Supreme Court of New South Wales for the recovery of amounts allegedly paid under State and Territory franchise licensing legislation. In August 1997 legislation of that type was held invalid under the Constitution106 as imposing a duty of excise reserved to the Federal Parliament107. Those who paid the invalid taxes, not remitted to the taxing authority, want their money back. In the first set of proceedings, the invalid legislation concerns the State and Territory licensing schemes enacted in respect of the sale of tobacco108. In the second, it concerns the sale of petroleum products109. Special leave was separately granted in the second proceedings to allow an appeal from a judgment of the primary judge (McDougall J)110 in the Commercial List of the Equity Division of the Supreme Court of New South Wales111. This unusual course was taken to permit the parties to those proceedings to make submissions on the common issues. So indeed they did. The two appeals were heard together. However, because there are separate and particular issues raised by the second appeal112, it is appropriate to deal with it separately. Necessarily, the resolution of the first proceedings will be determinative of the common issues. I have taken into account the submissions made in the second appeal so far as they are relevant to the first proceedings. 106 Ha v New South Wales (1997) 189 CLR 465 at 503. 107 Constitution, s 90. 108 Relevantly, Business Franchise Licences (Tobacco) Act 1987 (NSW); Business Franchise (Tobacco) Act 1974 (Vic); Tobacco Products Regulation Act 1997 (SA); Tobacco Products (Licensing) Act 1988 (Q); Tobacco Business Franchise Licences Act 1980 (Tas); Business Franchise (Tobacco and Petroleum Products) Act 1984 (ACT). 109 Relevantly, Business Franchise Licences (Petroleum Products) Act 1987 (NSW); Business Franchise (Petroleum Products) Act 1979 (Vic); Petroleum Products Regulation Act 1995 (SA); Transport Co-ordination Act 1966 (WA); Petroleum Products Business Franchise Licences Act 1981 (Tas); Business Franchise (Tobacco and Petroleum Products) Act 1984 (ACT). 110 Trendlen Pty Ltd v Mobil Oil Australia Pty Ltd [2005] NSWSC 741. 111 By Gleeson CJ and McHugh J on 30 September 2005. 112 Mobil Oil Australia Pty Ltd v Trendlen Pty Ltd [2006] HCA 42. Kirby The recovery of invalid taxes Four cases in this Court: The first proceedings involve the challenge of a number of wholesalers to a judgment of the Court of Appeal of the Supreme Court of New South Wales adverse to their position113. In so deciding, the Court of Appeal reversed the orders of the primary judge in those proceedings (Einstein J)114. By those orders, the primary judge had ordered that the proceedings not continue as representative proceedings under the Supreme Court Rules (NSW), Pt 8 r 13 ("the Rules")115. The primary judge also concluded that, in so far as the proceedings might be representative proceedings, he would exercise his discretion to stay them permanently, on the ground that they constituted an "abuse of process"116. He made further orders consequential upon the foregoing. He refused an order for discovery of the names and addresses of all other members of the class of retailers sought to be joined in the representative proceedings. He also declined to permit existing clients, who consented to that course, to elect to be joined in the proceedings as named plaintiffs117. All of the subject proceedings arise out of fees payable under the previous tobacco franchise licences legislation. This is therefore the fourth major case arising in this Court out of the scheme for such licences. The first case was Ha v New South Wales118 which held that the New South Wales legislation in that respect was invalid119. The second case was Roxborough v Rothmans of Pall Mall Australia Ltd120 which upheld the right of certain retailers, who had bought 113 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 ("Fostif"). 114 Keelhall Pty Ltd t/as "Foodtown Dalmeny" v IGA Distribution Pty Ltd (2003) 54 ATR 75. 115 These were the applicable rules at the time the proceedings were commenced. The representation of concurrent interests is now provided for in Div 2 of Pt 7 of the Uniform Civil Procedure Rules (NSW). 116 (2003) 54 ATR 75 at [143]. See extract in Fostif (2005) 63 NSWLR 203 at 212 [28] per Mason P (Sheller and Hodgson JJA concurring). 117 Ekaton Corporation Pty Ltd v Shahin Enterprises Pty Ltd [2003] NSWSC 1018. See Fostif (2005) 63 NSWLR 203 at 214 [42]-[43]. 118 (1997) 189 CLR 465. 119 (1997) 189 CLR 465 at 503. 120 (2001) 208 CLR 516. Kirby tobacco products from licensed wholesalers, to recover from the latter the amounts representing the purported "licence fees", paid by the retailers between 1 July 1997 and the date that Ha was decided121 and not remitted to the taxing authority. The third case, British American Tobacco Australia Ltd v Western Australia122 concerned the entitlement of the wholesaler to recoup from a State the licence fees paid to the State as an unconstitutional tax, notwithstanding State legislation that purported to regulate, and restrict, such recovery123. Now we have these appeals. The decision in Roxborough: In Roxborough124, I concluded that the legal solution to claims for the recovery of such unconstitutional taxes had to be framed in a way that was consistent with the postulate of constitutional invalidity. Such claims could not be decided solely by the invocation of private law remedies devised for inter partes litigation having no constitutional content. I rejected the appeals in that case by which tobacco retailers (who had already passed the licence fees paid by them on to their consumers) to recover the invalid tax from the wholesaler. I concluded that neither the law of constructive trusts, nor an implied contractual term nor any restitutory principle required, or permitted, such recovery125. Mine was a minority view. The other members of this Court, explaining their conclusions in differing ways126, decided that a cause of action to recover the moneys paid by the retailers to the wholesalers did exist and could be prosecuted where the licence fee, of the kind struck down in Ha, had failed for constitutional reasons. The logic of Roxborough: the view about recoverability that I expressed in Roxborough (and repeated in British American Tobacco127) it is appropriate in these proceedings that I should accept as the starting point for my reasons concerning the present attempted recoveries, the law as stated by the majority in Roxborough. That law necessarily acknowledges Whilst adhering 121 5 August 1997. 122 (2003) 217 CLR 30 ("British American Tobacco"). 123 Namely, the Crown Suits Act 1947 (WA), s 6(1). 124 (2001) 208 CLR 516 at 563 [124]. 125 (2001) 208 CLR 516 at 579-580 [174]. 126 As noted by Mason P in Fostif (2005) 63 NSWLR 203 at 251 [234]. 127 (2003) 217 CLR 30 at 67-69 [91]-[96]. Kirby that retailers may, in circumstances analogous to those found to exist in that case, recover monies paid to a wholesaler for the franchise licence fees later held by this Court to be unconstitutional where they were not paid over to the taxing authority. Naturally, this conclusion presents a significant potential legal benefit to the retailers who are entitled to rely on it. This is especially so, because the majority rejected my conclusion that there was an "important constitutional value" that would oblige the retailers, as a condition of their own recovery, first to refund that recovery in an appropriate way to the consumers to whom the tax had been passed on128. This Court has held that such an obligation is not part of Australian law. Whilst repeating my doubts, it is also proper that I should proceed on that basis. Approaching the attempted representative actions in this way, I turn to the issues argued in these appeals. The facts The background facts: Many of the facts relevant to an appreciation of the present proceedings are stated in the reasons of Gummow, Hayne and Crennan JJ129. Further detail concerning the several proceedings, and their distinct features, are contained in the reasons of Mason P, who wrote the principal reasons in the Court of Appeal130. In those reasons, Mason P describes the background to the litigation by the retailers to recover the invalid tobacco licensing fees131; the actual claims formulated in the proceedings132; the applications for discovery presented by the plaintiffs133; the applications for summary relief initiated by the defendants before the primary judge134; and the terms under which Firmstones Pty Ltd 128 (2001) 208 CLR 516 at 563 [124], 570 [143], 578-579 [171]. 129 Reasons of Gummow, Hayne and Crennan JJ at [23]-[38]. 130 (2005) 63 NSWLR 203. 131 (2005) 63 NSWLR 203 at 208-209 [1]-[11]. 132 (2005) 63 NSWLR 203 at 209-211 [12]-[20]. 133 (2005) 63 NSWLR 203 at 211 [21]-[23]. 134 (2005) 63 NSWLR 203 at 211-213 [24]-[35]. Kirby ("Firmstones")135, and related companies, undertook the "Project", described as the "tobacco licence fee recovery project", engaged solicitors and approached retailers with a view to recovering licence fees for those retailers in representative proceedings commenced in the Supreme Court for that purpose136. Those arrangements were detailed, complex and obviously very carefully planned. It is impossible to understand the conclusions to which the Court of Appeal came without a full appreciation of the entire project, as described by Mason P. I incorporate that description in these reasons. Cases reaching this Court should not be decided on a superficial appreciation of the facts. A fortiori, in important cases, involving novel questions of law, the facts require the most careful examination. Intransigent wholesalers: In evaluating the issues presented by the appeals, it is also necessary to note further facts, some of them found by the Court of Appeal and others disclosed in uncontradicted evidence. According to this material, following this Court's decision in Roxborough, which upheld the recovery rights of the tobacco retailers in that case, many Australian wholesalers (perhaps most) refunded the invalid tobacco licence fees. These were the fees collected from the beginning of the financial year commencing 1 July 1997 until the Ha decision was announced but not paid over to the taxing authorities. Some of the largest retailers involved (such as Coles Myer Ltd and Woolworths Ltd) reached prompt agreements with wholesalers to this effect in 2001. In 2002, some 9,500 smaller retailers brought proceedings against the two largest tobacco wholesalers, Philip Morris Ltd and British American Tobacco Australia Ltd. After a hearing, but before judgment, those proceedings were settled. British American Tobacco Australia Ltd refunded 105 per cent of the licence fees to the claimant retailers. Philip Morris refunded 100 per cent. That litigation was funded by a litigation funder, Insolvency Management Fund Ltd ("IMF"). In accordance with its agreement with the retailers concerned, IMF received 30 per cent of the refund137. The retailers received the balance. At the same time, Firmstones, another litigation funder, acted for the Shell Company of Australia Ltd and some 900 retailers. These proceedings also resulted in the recovery of settlements from tobacco wholesalers on the basis that 135 The same descriptions will be used in these reasons as in the reasons of Gummow, Hayne and Crennan JJ at [25]. 136 (2005) 63 NSWLR 203 at 215-224 [50]-[87]. 137 (2005) 63 NSWLR 203 at 217 [59]. Kirby the wholesalers refunded 100 per cent of the licence fees involved138. It is a fair inference that, but for the foregoing proceedings, the residual wholesalers would not have refunded the outstanding invalid licence fees to the retailers concerned. On the face of things, they would not have done so voluntarily, merely on the basis of the retailers' apparent legal entitlements in accordance with the decision in Roxborough. To extract the refunds, litigation was necessary. This was the context in which Firmstones caused the summonses, the subject of these proceedings, to be issued. As Mason P observed in the Court of Appeal139: "Firmstone[s] promoted the proceedings now before the Court as a last ditch effort for all of their existing and anticipated clients to be able to recover on what by this stage appeared to be well-established causes of action which had, to date, always culminated in favourable settlements following Roxborough." As if in vindication of this assessment of the proceedings, on the very day the present case for the residual tobacco retailers commenced before the primary judge, other proceedings, likewise funded by Firmstones against the Tasmanian wholesaler, Statewide Independent Wholesalers Ltd, were also settled. They were concluded on the basis that the wholesaler undertook to repay so many of its retailers as it was able to identify the full amount of the licence fee levied between 1 July and 5 August 1997 and not remitted to the taxing authority by virtue of the Ha decision. Viewed against this background, the proceedings brought against the present appellants were thus no more than an understandable outcome of the subject tobacco wholesalers' intransigence. If litigation was the only way to recover the unremitted licence fees from the remaining wholesalers who were holding out, where others had paid up, Firmstones' commencement of proceedings in the interests of the remaining retailers was scarcely surprising. This was especially so given the looming descent of a limitation bar140. The prospect that, in the available time, all the residual retailers (or many of them) would begin individual proceedings against the relucant wholesalers, often for relatively small amounts, facing such potentially stalwart resistance and unknown complications, was extremely remote. It is in this context that the 138 (2005) 63 NSWLR 203 at 217 [56]. 139 (2005) 63 NSWLR 203 at 217 [57]. 140 In New South Wales, the Limitation Act 1969 (NSW), s 14(1)(a). See (2005) 63 NSWLR 203 at 208 [5], 213 [36]-[38]. Kirby importance of the representative proceedings initiated by Firmstones becomes easier to understand. And to justify. Furthermore, the context of intransigence on the part of the wholesalers concerned assists in putting Firmstones' fees for the service that it offered to the tobacco retailers into proper perspective. Firmstones, and its principal, Mr Adrian Firmstone, accepted direct exposure to any order for costs in favour of the wholesalers that might be made in the litigation funded by them. In such litigation, Firmstones' fee was not invariably one third of the recovery. According to the evidence, in the case of two large retail groups, a negotiated fee of 25 per cent of the recovery was charged. In return for this variable and agreed fee, Firmstones undertook to conduct the litigation which was expertly defended; to bear all legal costs involved in the litigation; and to indemnify the individual retailers concerned against any adverse costs orders in favour of the wholesalers, should such adverse orders eventuate. The funder's obligations: In the present proceedings, these promises involved no small commitment. Firmstones were required to provide security for costs in the sum of $1 million; to fund the proceedings involving voluminous evidence over three days before the primary judge; to bear the further costs of two days of hearing in the Court of Appeal; and now to pay additional costs in this Court. The retailers concerned were fully informed as to the terms that Firmstones offered. Not a few of the retailers apparently concluded that, given the choice, they were better off surrendering a third of their recovery instead of exposing themselves, individually, to the perils and costs of litigation and the chimera of total recovery. For the retailers, it seems that a bird in [Firmstones'] hand was worth two in the [litigious] bush. Although the terms of Firmstones’ agreement with individual retailers included the power to settle proceedings, this power was significantly qualified. It was subject to a precondition that Firmstones had first to recover a settlement that exceeded 75 per cent of the amount paid by the retailer as licence fees. Moreover, the authority which Firmstones proposed should be granted by retailers who "opted in" to the proceedings was to be on the same basis. Material before the Court of Appeal suggested that the conditions that Firmstones offered to the tobacco retailers for funding the present proceedings were more favourable than those approved by the Federal Court of Australia in Re Addstone Pty Ltd (In Liq)141 and comparable to those approved in the United Kingdom142 in proceedings of a similar kind, taken in that country. 141 (1998) 83 FCR 583 at 590 per Mansfield J. There, the litigation funder was entitled to approximately 35 per cent of the net recovery. 142 Re Claims Direct Test Cases [2003] 4 All ER 508. See (2005) 63 NSWLR 203 at Kirby litigation funding, such To lawyers raised in the era before such multiple claims, representative actions and fees and conditions may seem unconventional or horrible. However, when compared with the conditions approved by experienced judges in knowledgeable courts in comparable circumstances, they are not at all unusual. Furthermore, the alternative is that very many persons, with distinctly arguable legal claims, repeatedly vindicated in other like cases, are unable to recover upon those claims in accordance with their legal rights. The legislation and Rules of the Court The legislation: As explained in the reasons of Gummow, Hayne and Crennan JJ, the Fostif proceedings against Campbells143 have been accepted as typical of the others in the present appeals. They were commenced under the Rules of the Supreme Court of New South Wales as in force at the times when the primary judge and the Court of Appeal decided these proceedings. Those rules were made in accordance with, and under, Pt 9 of the Supreme Court Act 1970 (NSW). In terms of their provisions144, the relevant rules were addressed to the Supreme Court of New South Wales to be read in accordance with the "Overriding Purpose Rule". This rule required that Court to facilitate the "just, quick and cheap resolution of the real issues” in proceedings and to give effect to this "overriding purpose" when exercising powers given by the rules or when interpreting any particular rule. Since the present proceedings were decided in the Court of Appeal, a significant portion of the rules, including Pt 8 r 13 and Pt 1 r 3, have been repealed145. This occurred upon the commencement of s 9 of the Civil Procedure Act 2005 (NSW). The purposes of that Act included the introduction of the Uniform Civil Procedure Rules (NSW). It was not suggested that, in deciding the complaints of error on the part of the Court of Appeal, this Court should do otherwise than to evaluate the decision of the Court of Appeal against the criteria stated in the rules applicable when the proceedings were decided. However, to the extent that the orders of the Court of Appeal remitted the proceedings to the 143 Reasons of Gummow, Hayne and Crennan JJ at [29]. 144 Supreme Court Rules (NSW), Pt 1 r 3(1), (2). 145 With effect from 15 August 2005. See Supreme Court Rules (Amendment No 405) (NSW), Sched 1. The rules governing representative proceedings and the overriding purpose in relation to the conduct of court proceedings have continued in ostensibly the same form (with some amendments). See Civil Procedure Act 2005 (NSW), Pt 6 Div 1; Uniform Civil Procedure Rules (NSW), Pt 2 r 2.1, Pt 7 Kirby Equity Division to continue as representative proceedings146, they would obviously have to continue under the new rules, as by then applicable. The contrasting provisions for representative proceedings contained in the Federal Court of Australia Act 1976 (Cth)147 are described in the reasons of Gummow, Hayne and Crennan JJ. Also mentioned there is the Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) ("the Abolition Act"), by which the common law offence of maintenance (including champerty) was abolished in New South Wales, but subject to the preservation of "any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal"148. In considering the ambit of the continuing operation of the common law rules of maintenance and champerty upon contracts and court proceedings, this Court is, of course, stating the common law for the whole of Australia149. There are provisions equivalent to the Abolition Act in some other Australian States150. To some degree, the Abolition Act reflects developments that were already occurring in the common law151. However, because the subject proceedings were brought in New South Wales, any exposition of the law as it affects abuse of process and public policy in these proceedings, must conform to the applicable provisions of the Abolition Act. 146 See (2005) 63 NSWLR 203 at 261 [292]. 147 ss 33A-33ZJ. See reasons of Gummow, Hayne and Crennan JJ at [47]-[48]. 148 The Abolition Act, s 6. See reasons of Gummow, Hayne and Crennan JJ at 149 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562-567; Lipohar v The Queen (1999) 200 CLR 485 at 507-508 [50]-[51] per Gaudron, Gummow and Hayne JJ, 551-553 [167]-[170] of my reasons; John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 514 [2], 517-518 [15] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. 150 Wrongs Act 1958 (Vic), s 32 (since 1969) and Criminal Law Consolidation Act 1935 (SA), Sched 11 (since 1992). In the United Kingdom, the Criminal Law Act 1967 (UK), ss 13 and 14 abolished criminal and tortious liability for maintenance and champerty. See Fleming, The Law of Torts, 9th ed (1998) at 689. 151 New South Wales Law Reform Commission, Barratry, Maintenance and Champerty, Discussion Paper No 36, (1994) at 7; cf Australian Law Reform Commission, Managing Justice - A review of the federal civil justice system, Report No 89, (2000) at 310-311 [5.25]. Kirby The applicable rules: The history of maintenance and champerty in the law of England is described in the reasons of Gummow, Hayne and Crennan JJ152. The origins and course of development of that body of law are illustrated there, with reference to the differing practice of common law and of equity153; the different approaches deemed proper in England and at least one of its colonies154; and the gradual realisation that some of the earlier judicial strictures against maintenance and champerty were in need of reconsideration in the light of modern conditions, analogous legal developments, practices in particular jurisdictions and the real impediments that commonly exist to affordable access to justice155. I will not repeat any of this material. It is usefully supplemented in the reasons of Mason P in the Court of Appeal156. The issues Four issues were argued in these proceedings. The two principal issues were as follows: The abuse of process issue: This was the primary way in which, both in their oral submissions157 and in their written submissions158, the appellants challenged the decision of the Court of Appeal and sought restoration of the stay and other relief provided by the primary judge. The appellants submitted that the proceedings, funded by Firmstones, amounted to "trafficking in litigation", which was an abuse of process per se. As well, particular aspects of the arrangement were criticised, namely the control over the litigation enjoyed by Firmstones as the funder; the alleged subservience of the individual litigants' interests to those of an "intermeddling" stranger; the role assumed by the funder in "buying and 152 Reasons of Gummow, Hayne and Crennan JJ at [68]-[82]. 153 Reasons of Gummow, Hayne and Crennan JJ at [68]-[72]. 154 Reasons of Gummow, Hayne and Crennan JJ at [76] by reference to Ram Coomar Coondoo v Chunder Canto Mookerjee (1876) LR 2 App Cas 186 at 210. 155 cf APLA Ltd v Legal Services Commissioner (NSW) (2005) 79 ALJR 1620 at 1678-1679 [316]-[318]; 219 ALR 403 at 480-481. 156 Fostif (2005) 63 NSWLR 203 at 224-229 [88]-[112]. 157 (2006) HCATrans 160 at [65]-[70] ["The primary submission … is that the continuation of the proceedings as a representative action is an abuse of the process of the Court and contrary to public interest"]. 158 Relying on Trendtex Trading Corporation v Credit Suisse [1982] AC 679 at 702 per Lord Roskill; Giles v Thompson [1994] 1 AC 142 at 164 per Lord Mustill. Kirby selling rights" to litigate before the courts; and the consequential involvement of those courts in the facilitation of what was described as an offensive and champertous ("spoils sharing") scheme159; The "same interest" issue: The appellants, alternatively, submitted that the Court of Appeal had erred in disturbing the primary judge's conclusion that the plaintiffs had failed to show, within the terms of Pt 8 r 13(1) of the Rules, that "numerous persons had the same interest" in the proceedings warranting the commencement and continuance of the proceedings as a representative action. This issue was addressed by the primary judge and by the Court of Appeal in terms of the respective points of similarity and diversity in the several "interests" revealed in the claims of the numerous tobacco retailers involved in pursuing their entitlements against the wholesalers. However, in argument before this Court160, the issue took quite a different turn. The debate shifted from being (as heretofore) about the potential disparities in the several interests of the many retailers. No longer was the issue viewed in terms of the retailers' personal agreements with the wholesalers; individual invoices disclosing or not disclosing the invalid tax; individual understandings - if that be relevant - as to what would and should happen in the event of invalidation; individual interests having regard to different statutory provisions in different States161; and different positions under the applicable limitations statutes. Instead, a wholly new focus was raised by the Court itself during argument. In this way, a submission came to be formulated based upon the language of Pt 8 r 13(1) of the Rules. The new argument questioned whether the language of that sub-rule required those who commenced the proceedings to "have time of the same numerous persons who have commencement"162. It is this argument, critical to the application of the Rules permitting a representative action to be organised, that the reasons of Gummow, Hayne and Crennan JJ treat as determinative of these appeals163. interest the 159 See eg (2005) 63 NSWLR 203 at 215 [48]. 160 See [2006] HCATrans 160 at [1565]-[1570], [1680]. 161 (2005) 63 NSWLR 203 at 248-249 [215]-[224] referring to Business Franchise Licences (Tobacco) Act 1987 (NSW), s 41(3) which was different from provisions in the legislation of other jurisdictions except the Australian Capital Territory. 162 See [2006] HCATrans 160 at [1660]-[1680]. 163 Reasons of Gummow, Hayne and Crennan JJ at [49]-[60]. Kirby There are two subsidiary, and consequential, issues that follow the resolution of the first two issues. They arise only if the first two issues are decided in favour of the respondents. In such circumstances, it is necessary to consider whether the Court of Appeal erred in reversing the decision of the primary judge on the ancillary questions. These issues, numbered as the third and fourth issues, are as follows: The discovery and interrogatories issues: The primary judge refused discovery to the respondents and rejected their applications to administer interrogatories to the appellants so that the representative proceedings could be constituted out of the appellants' records. The relevant records, it was suggested, would provide details of all the retailers who had paid the unlawful licence fee to the appellants. Securing them would enable Firmstones to contact all those eligible to "opt in" to the proceedings on the terms proposed. For its part, the Court of Appeal concluded that "at an appropriate stage in the proceedings" the lead plaintiffs would be entitled to discovery, as asked, as to the details of all transactions falling within the scope of the representative proceedings so far as they "touch on matters in dispute" as were necessary for the "fair trial of the issues"164. Having indicated that view, the Court of Appeal concluded that the application for such relief was premature at the stage the proceedings had reached before it. At that time, by the appellants' choice, their defences had not yet been filed. Whilst indicating that the primary judge's refusal of discovery in limine was erroneous, the Court of Appeal, without itself making the orders sought, resolved the issue by remitting the proceedings for trial, such trial to be continued as representative proceedings, consistently with its reasons165; and The constitutional issues: Finally, the appellants raised constitutional issues. They contended that, if the respondents' actions were not to be permanently stayed as an abuse of process at common law and had sufficiently engaged the rules governing representative actions in the Supreme Court, proceeding in that way would amount to a constitutionally impermissible attempt to impose on the Supreme Court, in the exercise of federal jurisdiction, a duty to make orders other than in relation to a "matter", as contemplated by Ch III of the Constitution. According to the appellants, the proceedings were in federal jurisdiction because they ultimately arose out of the constitutional invalidation of the tobacco licence fees and the legal consequences of that decision. This, the appellants argued, was the eventual foundation of the respondents' claims. 164 (2005) 63 NSWLR 203 at 258 [271]. 165 (2005) 63 NSWLR 203 at 258-259 [272]-[275], 261 [292]. Kirby On that basis, the claims enlivened the requirements of the Constitution for the exercise of the judicial power of the Commonwealth. Within federal jurisdiction166, the appellants submitted that the respondents' attempts to "create litigious controversies" where they did not otherwise exist and to use court processes of discovery and interrogatories to create controversies that did not previously need to be "quelled"167 involved an impermissible distortion of federal judicial power. On that footing too, the present appellants claimed relief from this Court168. In my opinion, the Court of Appeal was correct in the determinations it made on each of the first three issues. As to the fourth issue, there is no substance in the appellants' constitutional objection to the representative proceedings, as contemplated by the applicable rule, or to the ancillary procedures of discovery and interrogatories (or opt-in procedures) designed to render such proceedings effective. Accordingly, the appellants' appeals fail. I will now proceed to explain these conclusions. No abuse of process warranted a stay The representative facility: As the Court of Appeal repeatedly pointed out in its reasons, it is essential to differentiate between the so-called jurisdictional issue (of whether the respondents had validly engaged the representative procedure permitted by the Rules of the Supreme Court) and the discretionary the conditions under which any such representative issue, concerning proceedings should be allowed to continue169. This Court clarified that distinction in Carnie v Esanda Finance Corporation Ltd170. Addressing the provisions of the same rules, applicable in that case (Pt 8 r 13), McHugh J said: 166 British American Tobacco (2003) 217 CLR 30 at 44 [12] per Gleeson CJ, 50 [35] per McHugh, Gummow and Hayne JJ, 73 [111-112] of my reasons. 167 cf Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 458-459 [242] per Hayne J. 168 [2006] HCATrans 160 at 1350-1355. The appellants left the oral argument on this issue to Mobil Oil Australia Pty Ltd ("Mobil"), the appellant in the concurrent appeal. However, it pressed the argument in support of the reversal of the judgment below. 169 (2005) 63 NSWLR 203 at 239 [163]. 170 (1995) 182 CLR 398 at 427 ("Carnie"). Kirby "[A] plaintiff and the represented persons have 'the same interest' in legal proceedings when they have a community of interest in the determination of any substantial question of law or fact that arises in the proceedings. Other factors may make it undesirable that the proceedings should continue as a representative action, but that is a matter for the exercise of discretion, not jurisdiction." In Carnie, each member of this Court acknowledged the ample character of the discretion afforded by the rules, where they applied, whereby a judge of the Supreme Court is obliged to consider whether the particular case is one appropriate to commence or continue as a representative action or whether that judge should "otherwise order"171. In making that decision, the judge of the Supreme Court is invested with very large powers that permit the taking into account of the types of consideration mentioned by Gleeson CJ when Carnie was decided in the Court of Appeal172. As the Court of Appeal pointed out in the present proceedings, the observations of Gleeson CJ in Carnie were approved by this Court173, although this Court's orders reversed the disposition adopted by the majority of the Court of Appeal174. But, unless the issue of jurisdiction (or power) is separated from issues more appropriately considered as procedural and discretionary, error is bound to occur. The Court of Appeal obviously considered that this was what had occurred before the primary judge in the present case. Hostility to such proceedings: Despite the ample terms in which the power was granted to the Supreme Court, by its rules, the primary judge had given effect to an a priori view that was hostile to representative proceedings. the constitution of This was so although, once representative proceedings were established, the proper focus of the primary the preconditions for 171 (1995) 182 CLR 398 at 404-405 per Mason CJ, Deane and Dawson JJ, 408-410 per Brennan J, 415, 426 per Toohey and Gaudron JJ, 430-431 per McHugh J. 172 Esanda Finance Corp Ltd v Carnie (1992) 29 NSWLR 382 at 388. The considerations included "whether or not consent is required from persons who are to be group members in representative proceedings, the position of persons under disability, the right of a group member to opt out of a representative proceeding, alterations to the description of the group, settlement and discontinuance of proceedings, and the giving of various notices to group members". 173 See Fostif (2005) 63 NSWLR 203 at 239-240 [164] referring to Carnie in this Court (1995) 182 CLR 398 at 405 per Mason CJ, Deane and Dawson JJ, 431 per 174 See Fostif (2005) 63 NSWLR 203 at 239-240 [164]; Carnie (1995) 182 CLR 398. Kirby judge's concern should have been upon the discretionary considerations upon which such proceedings should be allowed to continue in a way which was fair to opponents, protective of all those participating in the proceedings and defensive of the proper administration of justice. A priori hostility to representative actions was a feature of several English decisions in the twentieth century following the wrong turning that was taken by the English Court of Appeal in Markt & Co Ltd v Knight Steamship Co Ltd175. Yet, both in Carnie176 and in Wong v Silkfield Pty Ltd177, this Court has been at pains to correct that approach so as to facilitate representative proceedings in which, under judicial supervision, the appropriate discretionary protections can be put in place. The present appeals represent an attempt to turn back the judicial clock. This Court should adhere to the approach that it explained in Carnie and in Wong. It is no part of this Court's function to frustrate the achievement of the representative procedures provided for in the rules, so long as such procedures are valid and involve no offence to the Constitution. In considering accusations that the funding arrangements introduced by Firmstones into the present proceedings amounted to an abuse of process, it is necessary to keep in mind the particular demands inherent in representative proceedings: the need to marshal effectively substantial resources; to gather voluminous evidence; to retain and pay competent counsel over a significant period; often to provide in advance substantial security for costs; to attend both to the general issues and to those particular to identified subcategories and individual cases; and to prove consequential losses usually with the evidence of several experts. In proceedings such as the present, faced with such daunting requirements, the ordinary tobacco retailer would commonly give up178. If the only way to vindicate legal rights was to bring individual proceedings or to find others with exactly the same interest, most ordinary retailers would abandon hope. They would not enforce legal rights of action belonging to them, existing in theory by analogy with the decision of this Court in Roxborough. They would withdraw rather than venture upon such expensive, stressful, perilous litigation. They would do this despite the earlier recovery by retailers of the unremitted taxes disgorged in circumstances apparently indistinguishable from their own. 176 (1995) 182 CLR 398 at 404 per Mason CJ, Deane and Dawson JJ, 408 per Brennan J, 421 per Toohey and Gaudron JJ, 427 per McHugh J. 177 (1999) 199 CLR 255 at 260-263 [11]-[17], 266-267 [27]. 178 See (2005) 63 NSWLR 203 at 234 [131]. Kirby Individually, for most or all of them, enforcement of legal rights would not be worth the cost, risk and effort. It is against the inherent inequalities, presented by these litigious facts of life, that a representative action may, under proper conditions, afford a litigant with an individual claim a justifiable prospect to secure practical access to that litigant's legal rights in association with many others. The individual claim may (as in the case of many tobacco retailers in these proceedings) be comparatively small and hardly worth the expense and trouble of suing. But the aggregate of the claims of those willing to proceed together, as proposed by a funder and organiser such as Firmstones, might be very large indeed. What is a theoretical possibility, as an individual action or series of actions, needs therefore to be converted into a practical case by the intervention of someone willing to undertake a test case179, followed by others willing to organise litigants in a similar position, and under appropriate conditions, to recover their legal rights by helping them to act together. The decisions in Carnie and Wong: Obviously, there are some legitimate concerns about representative actions, and litigation funding180. However, it is important to assess accusations of "abuse of process" against the standards accepted by this Court in Carnie, freed from preconceptions and from hostility inherited from the thinking of judges in earlier and different times. In Carnie, Mason CJ, Deane and Dawson JJ described the representative action, as provided by the Rule in question in these appeals, as designed181: "… to facilitate the administration of justice by enabling parties having the same interest to secure a determination in one action rather than in separate actions … It may be [the Rule] extends to a significant common interest in the resolution of any question of law or fact arising in the relevant proceedings. Be that as it may, it has now been recognised that persons having separate causes of action in contract or tort may have 'the same interest' in proceedings to enforce those causes of action." Prima facie, then, it will not be an abuse of process, under the rules, for such persons to commence and continue proceedings for such purposes. On the contrary, this is the very object of the rules permitting representative actions. 179 As, in a sense, Roxborough (2001) 208 CLR 516 was. 180 See (2005) 63 NSWLR 203 at 229-232 [114]-[123]; Aitken, "'Litigation Lending' in Consumer Protection, or a Licence after Fostif: 'Bottomfeeders'?", (2006) 28 Sydney Law Review 171 at 176-180. An Advance 181 (1995) 182 CLR 398 at 404. Kirby Because the rules in question were made with statutory authority, they must be given effect by courts according to their terms and purposes, unless doing so would involve the courts in unlawfulness, or because the rules exceeded the grant of power or involved a breach of the Constitution182. No one suggested that the rules were ultra vires. The Court of Appeal was therefore correct to read this Court's decisions in Carnie and Wong as affirming a "more liberal [approach] in allowing representative actions to proceed"183. As McHugh J put it184: "[i]n the Age of Consumerism, it is proper that this should be so"185. If, to be effective, this necessitates at once a broader approach to the availability of representative actions and less hostility to litigation funding under judicially supervised conditions, so much is inherent in a procedure designed to enable parties with legal claims in the same interest to be organised into one action rather than fobbed off with the theoretical (but practically unavailable) entitlement to bring a multitude of individual actions separately186. Real access to legal rights: Apart from the foregoing considerations, it is important to recognise how exceptional it is for a court to bring otherwise lawful proceedings to a stop, as effectively the primary judge did in this case. It is very unusual to do so by ordering the permanent stay of such proceedings187. The Court of Appeal recognised this consideration. Properly, it emphasised that it was for the appellants to establish that the respondents' proceedings constituted an abuse of process188. The reason why it is difficult to secure relief of such a kind is explained by a mixture of historical factors concerning the role of the courts; constitutional considerations concerning the duty of courts to decide the cases people bring to 182 And hence to the fourth issue. 183 Carnie (1995) 182 CLR 398 at 429 per McHugh J (referring to the judgment of Toohey and Gaudron JJ). 184 Carnie (1995) 182 CLR 398 at 429. 185 See (2005) 63 NSWLR 203 at 255 [254]. 186 cf (2005) 63 NSWLR 203 at 238 [160]. See especially Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46, (1988) at 187 Williams v Spautz (1992) 174 CLR 509 at 518-520. 188 (2005) 63 NSWLR 203 at 237 [151]. Kirby them; and reasons grounded in what we would now recognise as the fundamental human right to have equal access to independent courts and tribunals189. These institutions should be enabled to uphold legal rights without undue impediment and without rejecting those who make such access a reality where otherwise it would be a mere pipe dream or purely theoretical. The importance of access to justice, as a fundamental human right which ought to be readily available to all, is clearly a new consideration that stimulates fresh thinking about representative or "grouped" proceedings190. It is this consideration that has informed the decisions of other Australian appellate courts191 on such questions and also a decision of the Supreme Court of Appeal of South Africa192. No abuse of process: When the foregoing considerations are taken into account, I agree with the conclusion reached on this issue in the reasons of Gummow, Hayne and Crennan JJ193. In these appeals the appellants failed to demonstrate an abuse of process to warrant the primary judge's conclusion that they were entitled to a permanent stay on that basis194. I also agree with the reasons given by the Court of Appeal on this issue. In those reasons, Mason P successively rejects the arguments advanced by the appellants to sustain the primary judge's conclusion that the proceedings, in their existing form, constituted an abuse of process195. Thus, Mason P dismissed the criticisms addressed to the role of Mr Firmstone and his company196. He was 189 See International Covenant on Civil and Political Rights, Art 14.1. 190 Thai Trading Co v Taylor [1998] QB 781 at 786 per Millett LJ; cf Aitken, "'Litigation Lending' after Fostif: An Advance in Consumer Protection, or a Licence to 'Bottomfeeders'?" (2006) 28 Sydney Law Review 171 at 177. 191 Clairs Keeley v Treacy (a Firm) (2004) 29 WAR 479 at 494 [73]-[74], 502 [124] per Steytler, Templeman and McKechnie JJ; Clairs Keeley (A Firm) v Treacy [2005] WASCA 86 at [58]-[59] per Steytler P, Roberts-Smith and McLure JJA. 192 Price Waterhouse Coopers Inc v National Potato Co-operative Ltd 2004 (6) SA 66 at 78-80 [42]-[46] per Southwood AJA (Harms, Cameron, Conradie and Lewis JJA concurring). 193 Reasons of Gummow, Hayne and Crennan JJ at [83]-[95]. 194 See also Gleeson CJ at [1]. 195 (2005) 63 NSWLR 203 at 215-237 [46]-[152]. 196 (2005) 63 NSWLR 203 at 215-220 [50]-[74]. Kirby unconvinced by the criticisms voiced as to the involvement of the solicitor retained by the funder, Mr Richards197. He rejected the generalised complaints that the proceedings were likely per se to lead to an abuse of process, were contrary to public policy, as such, and constituted an impermissible "trafficking in litigation"198. He faced squarely the fact that it was inconceivable that the individual retailers, with an average claim of $1,000, would hazard the litigious risks and costs of pursuing their legal rights, were it not for the litigation funding that permitted this to happen and organised it so that it would199. I find all of the general and specific reasons in the Court of Appeal's decision convincing. I would endorse the reasons in the terms in which they are stated. They reinforce the conclusion on this issue expressed in the reasons of Gleeson CJ and the reasons of Gummow, Hayne and Crennan JJ in this Court. Moreover, they suggest the need for a facultative approach to the representative procedures envisaged by the rules. As I will show, that approach is missing from the reasons of the majority in this Court, when they turn to the second issue. With respect, it is wholly missing from the reasons which Callinan and Heydon JJ have written200. In my opinion those reasons disclose an attitude of hostility to representative procedures that is a left-over of earlier legal times. They are incompatible with the contemporary presentation of multiple legal claims. And, most importantly, they are fundamentally inconsistent with the rules made under statutory power and the need to render those rules effective. Conclusion: Court of Appeal was correct: It follows that the Court of Appeal was correct to find error in the primary judge's conclusion that the proceedings should be permanently stayed as an abuse of process. This Court should affirm the Court of Appeal's conclusion. No separate consideration of the suggestion that the proceedings should be stayed as contrary to public policy is necessary. The suggested arguments of public policy, as they were presented, effectively amount to the same bases upon which the abuse of process was propounded. They involved no different or separate point. There was no abuse of process. 197 (2005) 63 NSWLR 203 at 220-224 [75]-[87]. 198 (2005) 63 NSWLR 203 at 224-232 [88]-[123]. 199 (2005) 63 NSWLR 203 at 237 [148]-[149]. 200 Reasons of Callinan and Heydon JJ at [267]-[284]. Kirby The representative proceeding rules were engaged The applicable rule: To deal with the second issue, it is useful to repeat the applicable provision of the rules relating to these proceedings. Part 8 r 13 relevantly provided: "Representation: concurrent interests 13 (1) Where numerous persons have the same interest in any proceedings the proceedings may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them. A judgment entered or order made in proceedings pursuant to this rule shall be binding on all the persons as representing whom the plaintiffs sue or, as the case may be, the defendants are sued but shall not be enforced against any person not a party to the proceedings except with the leave of the Court. An application for leave under subrule (4) shall be made by motion, notice of which shall be served personally on the person against whom it is sought to enforce the judgment or order. Notwithstanding that a judgment or order to which an application under subrule (5) relates is binding on the person against whom the application is made, that person may dispute liability to have the judgment or order enforced against him on the ground that by reason of facts and matters particular to his case he is entitled to be exempted from the liability." In Carnie201, this Court made it clear that numerous persons may have the "same interest", and may thus satisfy the precondition for the engagement of Pt 8 r 13, although each person has a separate cause of action. Clearly, this is so because, otherwise, the rule would misfire. It would have a negligible application. Plainly, this would be contrary to its purpose. Moreover, all of the 201 (1995) 182 CLR 398 at 404 per Mason CJ, Deane and Dawson JJ, 408 per Brennan J, 420-422 per Toohey and Gaudron JJ, 427-428 per McHugh J. See also Fostif (2005) 63 NSWLR 203 at 238 [158]. Kirby reasons in Carnie emphasised (as has been a common theme in many recent decisions of this Court202) that it is necessary to apply the language of the rule in question in preference to judicial paraphrases of it203. Such paraphrases, especially in older cases, can easily reflect the earlier judicial hostility to representative or grouped proceedings. That is why it is best to avoid them. In order to make the rule effective for the achievement of its purpose and to fulfil the "Overriding Purpose Rule" of the rules themselves204, the meaning and application of Pt 8 r 13 must thus be construed in a beneficial and facultative way. This is the general approach now taken by this Court to the construction of statutory language. It applies equally to court rules made under statutory power205. With respect, the majority in this Court have overlooked these important considerations of approach206. By their very nature, representative proceedings facilitate the "just, quick and cheap resolution of the real issues" where plaintiffs have the same interest. A priori, that is the "overriding purpose" of Pt 8 r 13. The achievement of this purpose should not be subverted by a unduly narrow and restrictive interpretation of the language of the Rule itself. The propounded interpretation: The essential holding in the reasons of the majority is that the requirements of Pt 8 r 13(1) of the Rules were not met in the present proceedings207. The content of this holding is made clear by what follows. Thus, in the reasons of Gummow, Hayne and Crennan JJ, their Honours say: "Neither when the proceedings were instituted, nor when Einstein J made his orders, were there numerous persons having the same interest in the proceedings that were commenced. The only persons who then had an interest in the proceedings were the named plaintiffs." 202 See eg Weiss v The Queen (2005) 80 ALJR 444 at 452 [31]; 223 ALR 662 at 671 and cases there cited. 203 See Fostif (2005) 63 NSWLR 203 at 242 [183]. 204 Pt 1 r 3(1), (2). See above at [121]. 205 Bropho v Western Australia (1990) 171 CLR 1 at 20 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382. 206 cf my reasons in Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249 at 207 Reasons of Gummow, Hayne and Crennan JJ at [58], [60]; reasons of Callinan and Kirby To understand this ruling and the "more deep-seated question" which was said to have emerged "in the course of oral argument"208, it is necessary to appreciate that the ruling turns upon an extremely narrow view of the operation of Pt 8 r 13(1). Moreover, it is a view that did not constitute the basis upon which, up to the hearing in this Court, the appellants, in their oral or written argument, were complaining about the failure of the respondents to establish that the proceedings lacked the "same interest". Thus, in their written submissions to this Court, the complaints of the appellants were that the respondents had merely shown that there "may be some common interest" of law or fact to be resolved in the representative proceedings; had defined the represented persons in such a self-fulfilling way as to preclude any real controversy over the propounded "same interest"; had presented a claim where the common issue was "illusory"; and had failed to seek any common relief. These issues, which the appellants brought to this Court to "quell" in resolving their controversy with the respondents, were thus quite different from the ground upon which the reasons of the majority now find in the appellants' favour. This does not mean that the new point lacks substance. Sometimes, the examination of issues of construction or legal principle by this Court can produce fresh insights which others have earlier failed to perceive. Those others may have been influenced by previous assumptions about the content of the law or the approach that should be taken to new legal ideas. But when a new insight arises in this Court for the first time, it demands careful scrutiny of the point out of respect for the many who have gone before who, by hypothesis, have missed it209. They may all have been wrong. But, then again, they may not. Rejection of the interpretation: There are several reasons why, in my view, the interpretation given to Pt 8 r 13 of the Rules in the reasons of the majority should be rejected. First, the language of Pt 8 r 13(1), referring to the "same interest" postulates the existence of the "same interest" at a time before any proceedings have commenced. The reasons of the majority place their emphasis on the expression of the "same interest" in the proceedings as commenced. With respect, this is to invert the language of the sub-rule. The existence of the "same interest" is a precondition to the commencement of the proceedings. It is thus addressed to something wider, and different, from the exact way in which the 208 Reasons of Gummow, Hayne and Crennan JJ at [51]. 209 cf Combet v The Commonwealth (2005) 80 ALJR 247 at 307-308 [279]-[282] of my reasons; 221 ALR 621 at 697-698. Kirby "interest" is expressed in the proceedings, once commenced. Indeed, in the context, the "same interest" must refer to an "interest" that is generic. It may be informed by, but not limited strictly to, the legal specification of the "proceedings" thereafter commenced (and continued). Once this time sequence in the text of the sub-rule is understood, it is plain that the "same interest" postulated may be broader than, and somewhat different from, the pleadings by which the "proceedings", when commenced, are expressed. Secondly, this approach to the meaning of the "same interest" on the part of "numerous persons", before any "proceedings" may be commenced, is also a construction more likely to advance the purposes of the rule. That purpose is, exceptionally, to permit representative proceedings to be commenced and continued in the circumstances nominated. If the narrow view favoured in the reasons of the majority is adopted, the ambit of the application of the rule is severely cut back. The necessity of the "same interest" is not treated, as the text and purpose of the rule suggests it should be, as a precondition to the valid commencement of proceedings and as something that existed separately and independently from such proceedings. Instead, it is assimilated to the pleading of the proceedings. That approach turns the rule on its head and impedes its purpose. The purpose is to facilitate the litigation in the one proceeding of claims in respect of interests shared by "numerous persons" before such proceedings are commenced. This Court should not frustrate the achievement of the purpose of the rule. On the contrary, as in Carnie and Wong, it should be astute to give effect to that purpose, as the language of the rule suggests. Any anxiety about the dangers involved in that purpose must not be permitted (so long as the rule is valid) to frustrate the achievement of its objective. Such anxiety can only properly be reflected at a later stage in the discretionary orders that are made in the course of the Court's supervision of the commencement and continuation of the proceedings and their enforcement against particular persons who claim exemption from any judgment or order under the rule210. Thirdly, this approach to the meaning of the "same interest" is, as the Court of Appeal recognised211, the approach that was explained by this Court in Carnie212 and endorsed in Wong213. In the latter case, five members of this Court said214: 210 See eg Pt 13 r 8(6). 211 (2005) 63 NSWLR 203 at 238-255 [156]-[255]. 212 (1995) 182 CLR 398 at 404 per Mason CJ, Deane and Dawson JJ, 408 per Brennan J, 421 per Toohey and Gaudron JJ, 427 per McHugh J. Kirby "This rule provided for the commencement of proceedings by numerous persons having 'the same interest in any proceeding'. In Carnie, Mason CJ, Deane and Dawson JJ215 expressed the view that to equate the meaning of the phrase 'same interest' with a common ingredient in the cause of action by each member of the class might not adequately reflect the content of the statutory expression. Their Honours said that the expression may extend 'to a significant common interest in the resolution of any question of law or fact arising in the relevant proceedings'. Brennan J216 and McHugh J217 were of opinion that a plaintiff and the represented persons had 'the same interest' when they had a community of interest 'in the determination of any substantial question of law or fact that arises in the proceedings'. Toohey and Gaudron JJ218 treated as sufficient 'a significant question common to all members of the class' to be determined by the grant of declaratory relief." These explanations of the words the "same interest" stand in sharp contrast to the approach now taken by the reasons of the majority. Here, the "same interest" postulated is that of the named plaintiffs and the other persons "affected", defined as persons who had bought tobacco products from the appellants by transactions of an identical or analogous kind as those made between the respondents and the appellants. Fourthly, it is important to recognise that, in the present case, the proceedings came before the primary judge before the filing of any defences by the appellants. This being so, it was not possible, at that stage, to state with certainty what were the defined issues in the proceedings that any such defences would later identify. This is a further reason why it is erroneous, at such a preliminary stage, to speculate, as the majority do, on the issues that might later exist between other purchasers of tobacco products and the appellants, in advance of such pleadings219. 213 (1999) 199 CLR 255 at 260-261 [11]. 214 (1999) 199 CLR 255 at 267 [27]. 215 (1995) 182 CLR 398 at 404. 216 (1995) 182 CLR 398 at 408. 217 (1995) 182 CLR 398 at 427. 218 (1995) 182 CLR 398 at 421. 219 Reasons of Gummow, Hayne and Crennan JJ at [56]; reasons of Callinan and Kirby The fundamental mistake of the reasons of the majority is that they conflate the "interest" of other persons "in those proceedings"220 with the stated requirement of the sub-rule that envisages that the "same interest" shall precede "any proceedings" and is thus not confined to the way those proceedings are later pleaded. The serious consequence of this approach is that it needlessly restricts the availability of representative proceedings, effectively to a class of persons who had an interest in the proceedings when they were instituted (as distinct from when they are decided)221. This restrictive approach destroys much of the utility of the rule as a facility for representative proceedings. Effectively, it prevents such proceedings being mounted to protect persons, standing in a like position but not yet organised, from the descent of a limitation bar. Indeed, it prevents such proceedings being used to gather those with like claims into a suitable procedure for the enforcement of their "concurrent interests"222 and who decide to opt in to the proceedings. Especially against the background of the facultative approach that this Court has taken in Carnie and Wong (and the recognition in the reasons of Gummow, Hayne and Crennan JJ of the affirmative basis for facilitating proceedings of such a character223) the approach now taken by the majority should be rejected. It is not what the rule says. Nor is it what it has been held to say. Nor what it was intended to permit. Fifthly, the provisions elsewhere in Pt 8 r 13 of the Rules reinforce the approach to the meaning of sub-r (1) that I, alike with Gleeson CJ, favour. The terms of sub-rr (4), (5) and (6) obviously contemplate procedures by which others, amongst the "numerous persons" contemplated by sub-r (1), may "opt in" to the representative action after the proceedings have been commenced. Of necessity, the "interests" of such persons will not have been defined at the time the "proceedings" were "commenced" in terms of the pleadings of such "proceedings". This serves to confirm that the "same interest" being spoken of in Pt 8 r 13(1) is an interest of a generic, not of a pleading, kind. In the present case, the generic identity of interest was more than adequately established by reference to the class of retailers who had bought tobacco products from the appellants and who, like Fostif, had paid the appellants the unremitted invalid tax at the time defined by the delivery of this Court's decision in Ha. For the purpose of the sub-rule, and given its object, that was a sufficient specification of the "same interest". Clearly, it preceded the commencement of the proceedings. The proceedings then commenced, were 220 Reasons of Gummow, Hayne and Crennan JJ at [51]-[58]. 221 Reasons of Gummow, Hayne and Crennan JJ at [58]. 222 "Representation: concurrent interests" is the heading to Pt 8 r 13. 223 Reasons of Gummow, Hayne and Crennan JJ at [88]-[96]. Kirby subject to subsequent judicial supervision. Without such supervision, they could not be continued. Specifically, they were subject to protection against the enforcement of any judgment or order where it was shown that "by reason of facts and matters particular to his case" a party was entitled to be exempted from liability224. This is the way that Pt 8 r 13 envisages that the individualities and peculiarities of particular transactions will be adjusted at the discretionary stage. It is not by denying the commencement of a representative action applicable to such cases at the jurisdictional stage. Sixthly, so far as there is any suggestion that the approach adopted in the reasons of the majority is warranted because no common beneficial relief is sought225, in the form of judgment claimed by Fostif in its pleading, this too involves the adoption of an approach unacceptably hostile to the purposes of representative proceedings. It is one particularly inappropriate at the stage that these proceedings have so far reached. The notion that "common beneficial relief" is a necessary precursor to the proper invocation of Pt 8 r 13, as suggested by the majority226, is erroneous. In fact, Callinan and Heydon JJ describe the "declaration" sought in Carnie as the "crucial" factor in the outcome of that case, allowing the two plaintiffs existing at the time the proceedings were commenced to properly claim "on behalf of themselves and all other persons"227. As Gleeson CJ sets out228, a declaration was sought in Carnie because of the particular facts existing in that case. Indeed, in Carnie, a declaration was the only relief capable of being sought that would not have had the potential to harm the financial interests of likely plaintiffs. That problem is not present in this case229. Given that this Court accepts that parties need not have precisely the same cause of action to establish the "same interest" for the purposes of representative proceedings, it is difficult to comprehend how a specific claim for relief is determinative of whether or not there is a commonality of interests. 224 Pt 8 r 13(6). 225 Reasons of Gummow, Hayne and Crennan JJ at [55]-[59]. 226 Reasons of Gummow, Hayne and Crennan JJ at [58]; reasons of Callinan and Heydon JJ at [216], [221]-[226]. 227 Reasons of Callinan and Heydon JJ at [225]. 228 Reasons of Gleeson CJ at [7]-[11]. 229 Reasons of Gleeson CJ at [11]. Kirby The "same interest" of which Pt 8 r 13(1) speaks is addressed to the issues existing before the proceedings are commenced. It is not addressed to the relief ultimately sought. When the defences are filed to the present proceedings, it would be open to the respondents to cure any supposed defect in their pleading by the amendment of the summons to include a claim for a declaration. A facultative approach to Pt 13 r 8(1) would permit the proceedings to continue, subject to such an amendment being made. In my view, that is a course that should be left, as the Court of Appeal envisaged, to the judge in the Commercial List to whom the proceedings were returned by that Court's order. It is not a reason for this Court to deny the continuance of the representative proceedings to secure the vindication of the "same interest" of the retailers who purchased their tobacco products from the appellants where so many other retailers with the "same the interest" have already had commencement of other, similar, proceedings. their entitlements vindicated by Following this Court's decision in Roxborough and the predictably high degree of similarity in the dealings between tobacco wholesalers and retailers for the recovery of like unlawful taxes, it flies in the face of reality to deny the appellants' retailers, virtually alone, the opportunity to elect to "opt in" to the representative proceedings begun by the respondents with the similarity of their interests in mind. To the extent that, on closer examination and at a later stage, the interests proved not relevantly to be "the same" (a most unlikely conjecture in this case) adequate judicial means exist under Pt 8 r 13 of the Rules to permit judicial protection both of those interests and of the interests of the appellants. That would be the time for the appellants to agitate any alleged dissimilarity of interests. It is not necessary for a party, at the time of initiating a representative action, to vindicate such "interests" that may eventually be demonstrated to be "the same". The contrary view is incompatible with the language of the rule, the past authority of this Court, and with the achievement of the rule's purpose. Conclusion: the rule applies: I would therefore reject the suggestion that Pt 8 r 13(1) of the Rules was not applicable to the present proceedings. Specifically, I disagree with the contention that, at the time the proceedings were instituted and when the primary judge made his orders, there were not "numerous persons having the same interest in the proceedings". To say that only the respondents personally had an interest in the proceedings is to ignore the very purpose of such proceedings, the way they were expressed and the intended operation of the Rules designed to permit just such representative actions to be brought on behalf of persons later organised into the proceedings by the "opt-in" procedure proposed by the respondents230. 230 cf reasons of Gummow, Hayne and Crennan JJ at [58]-[60]. Kirby I agree with Gleeson CJ231 that the approach of the majority in this Court is inconsistent with the holding of this Court in Carnie. The approach of the majority ignores the obvious application of that decision and its demand that the decision-maker determine whether Pt 8 r 13(1) has been correctly invoked. In relation to this case, that inquiry asks232: "Do numerous persons have the same interest in the action which [Fostif] have commenced? If they do not then that is the end of the matter. If they do, then the action is properly begun and, unless the Court otherwise orders, it may be continued." It is clear that there were numerous persons with the "same interest"233 in the action commenced by Fostif on 30 June 2003. It must be remembered that in Carnie, this Court held that the onus was not on the plaintiffs to "identify every member of the class; rather it [was] to identify the class with sufficient particularity"234. This was clearly achieved by Fostif in the summonses to commence these proceedings, filed in June 2003. On any reading it is obvious that Pt 8 r 13(1) was properly invoked; the summonses described a class of "numerous other persons capable of being clearly defined who have the same interest in these proceedings"235. Thus, the possible existence of numerous parties and the requisite commonality of interest between them was satisfied.236 This conclusion is reinforced by the fact that Firmstones was subsequently retained by around 2,100 persons or entities that "fell within the class of represented retailers" as defined in the representative proceedings237. Yet, in the reasons of Gummow, Hayne and Crennan JJ238, it is argued that it was not 231 See reasons of Gleeson CJ at [2], [9]-[13]. 232 (1995) 182 CLR 398 at 421 per Toohey and Gaudron JJ (Mason CJ, Deane and 233 As defined in Carnie (1995) 182 CLR 398 at 404-405 per Mason CJ, Deane and Dawson JJ, 408 per Brennan J, 421, 424 per Toohey and Gaudron JJ, 427 per McHugh J and discussed above in these reasons at [161]. 234 (1995) 182 CLR 398 at 422 per Toohey and Gaudron JJ. 235 (1995) 182 CLR 398 at 424 per Toohey and Gaudron JJ. 236 (1995) 182 CLR 398 at 405 per Mason CJ, Deane and Dawson JJ, 424 per Toohey 237 Reasons of Gummow, Hayne and Crennan JJ at [35]. 238 See also the reasons of Callinan and Heydon JJ at [215], [222]-[223]. Kirby apparent from the proceedings, as commenced, that there was "any person, let alone numerous persons, whom the plaintiff would represent"239. That appears the very point upon which they decide these appeals in the appellants' favour240. I can only say that I am wholly unconvinced. In so far as the appellants repeated in this Court their earlier separate and different grounds for contesting the existence of the "same interest" of "numerous persons" in the proceedings, I would reject those arguments for the reasons given by the Court of Appeal. Those reasons are encapsulated in that Court's conclusion that the present respondents had demonstrated that the rule was engaged on the footing that there were "substantial common issues of law linking the claims of each represented group of retailers" and that "the scope and applicability of Roxborough [constituted] a genuine issue in each proceeding"241. This conclusion was fully supported by reference to the terms of the summonses, to the written submissions filed before the primary judge and indeed to the submissions made by the appellants themselves in the courts below242. Moreover, the Court of Appeal found there were also common issues of fact likely to arise within each proceeding. Their existence reinforced the conclusion that the precondition to the commencement of the representative action as brought, was established243: "There is a single defendant named in each proceeding. The evidence discloses that within the relevant period its invoicing practices were either identical in all its dealings or contained variations about which the [plaintiffs] say with arguable justification there is no material distinction. At the very least, it is established at this stage that, within each separate proceeding, there are material common issues of fact (invoicing, warehousing, methods of calculating and passing on the licence fee by the wholesaler) that establish a sufficient community of interest to satisfy the Rule's jurisdictional requirement and indicate the appropriateness of the proceeding continuing as a unity pursuant to the Rule, at least for the time being." 239 Reasons of Gummow, Hayne and Crennan JJ at [59]. (original emphasis) 240 Reasons of Gummow, Hayne and Crennan JJ at [58]-[60]. 241 (2005) 63 NSWLR 203 at 247 [212]. (emphasis added) 242 (2005) 63 NSWLR 203 at 247-255 [213]-[255]. 243 (2005) 63 NSWLR 203 at 255 [256]. Kirby The commonality of the parties and the identified issues of law and fact are established. It follows that no error has been shown in the understanding of the meaning of the rule or in its application that would warrant the intervention of this Court or its substitution of a different conclusion. On the second issue too the appellants fail. The approach to discovery was correct Disclosure of identities: The third issue was correctly perceived by the Court of Appeal to be whether, on the basis that the representative proceedings should not be stayed and were validly commenced, discovery and interrogatories as claimed by the respondents should be refused in limine244. The discovery orders requested by the respondent (and the interrogatories that they sought to have the appellants answer245) aimed at obliging the appellants to disclose the records of their transactions affecting "represented retailers", as defined in the respective summonses. The respondents sought to engage these procedures in aid of the prosecution of the proceedings as representative proceedings. The primary judge declined to make such orders. He did so because of his conclusions that the proceedings did not properly engage the rule for the commencement of representative proceedings or, if they did, that they should be stayed permanently as an abuse of process. Nevertheless, he indicated that he saw no objection, in principle, to the grant of such relief, although it was sought for the purpose of ascertaining the members of the class246. He accepted that discovery to identify potential parties was a remedy with a sound legal basis247. Objections to such orders: In this Court, the appellants maintained their objections to the provision of such relief. By hypothesis, it is necessary to consider their objections upon the assumption that the appellants' primary attack on the validity of the proceedings, as representative proceedings, has failed. This is so, because, were that attack to succeed, the ancillary questions would not arise for immediate determination. 244 (2005) 63 NSWLR 203 at 260-261 [290]. 245 Respectively under Pts 23 r 3 and 24 r 5 of the Rules. See (2005) 63 NSWLR 203 246 Keelhall (2003) 54 ATR 75 at 119-120 [152]-[153]. 247 Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 9-10 [24]-[26] per Wilcox, Sackville and Katz JJ. See Fostif (2005) 63 NSWLR 203 at 257 [264]. Kirby The appellants submitted that the discovery of the identity of persons whom the plaintiffs hoped to include as "represented retailers" did not relate to any matter or fact in issue in the proceedings as initially constituted; would impermissibly impose on the appellants an obligation to identify persons entitled to judgment against themselves; would involve the Court in facilitating a champertous project; and would be oppressive of the appellants solely for the purpose of furthering the financial benefit of Firmstones, which was not a party to the proceedings. The arguments rejected: None of these arguments is persuasive. Identity discovery has a long history. The rules invoked by the respondent are broad enough, viewed with their overriding purpose in mind, to permit the making of the orders sought. Such orders would facilitate access to the determination of their legal entitlements of those who, being identified, subsequently elected to "opt in" to the representative proceedings on the terms proposed248. As has been recognised in the United States, the propriety and viability of a representative type action cannot, in some cases, be determined without discovery "as for example, where discovery is necessary to determine the existence of a class or set of sub-classes". In such cases it has been held that "[t]o deny discovery … would be an abuse of discretion"249. Once the initiation and continuance of the proceedings as representative proceedings is postulated (as it must be for this purpose) the relief sought by the respondents is no more than an appropriate invocation of the rules, designed to ensure that the proceedings, so commenced, are successfully and fairly brought to trial. the primary The appellants' claim of oppression is as unconvincing to me as it was in the courts below. It is hard to reconcile that claim with the contention, upon which the appellants relied for other purposes, that at the time of the hearing before the potentially In these "represented retailers" remained customers of the appellants. circumstances, it is unsurprising that Mason P should have been "unpersuaded that the exercise is so oppressive that discovery should be refused outright with respect to such obviously pertinent information some of which is undoubtedly reasonably accessible"250. judge approximately 95 per cent of 248 cf Oppenheimer Fund Inc v Sanders 437 US 340 at 350-356 (1978) per Powell J (delivering the unanimous opinion of the Court). 249 Kamm v California City Development Co 509 F 2d 205 at 210 (1975). 250 (2005) 63 NSWLR 203 at 260 [289]. Kirby The correct disposition: The Court of Appeal concluded that the real problem presented by "the discovery dispute" was one of prematurity251. That Court's opinion was that it should be left to a judge in the Division of the Supreme Court where the trial of the proceedings would occur, to determine contested questions of discovery and interrogatories. Mason P recognised the assertion of the appellants, in their defence, that some (or all) of their retailers might fall into a class of persons who paid the amount of the tobacco licence fee referable to sales but without any "separately identifiable and serviceable parts of the consideration payable in respect of each sale" attributed to such fees. It was Mason P's view that "this is a matter to be explored in the litigation"252. I agree with that conclusion253. that discovery and Conclusion: orders correct: It follows that I would reject the appellants' the submission respondents, as a matter of legal principle. The fashioning and implementation of such remedies was properly remitted to a single judge. That is where such procedural questions are normally decided, once it is concluded that the remedies are available as a matter of law. interrogatories were unavailable No error has been shown in the Court of Appeal's treatment of the third issue. The appellants' submissions on this matter likewise fail. The constitutional objection also fails Supposed absence of a "matter": By an amended ground of appeal, the appellants raised a constitutional issue that had not been agitated before the primary judge or the Court of Appeal. Notwithstanding this omission, the respondents did not suggest that the point was unavailable to the appellants, in this Court, either for legal254 or procedural255 reasons. In these circumstances, this Court must decide the issue. It cannot be ignored, given that it is presented as a fundamental legal defect in representative proceedings of the kind postulated by the respondents. 251 (2005) 63 NSWLR 203 at 258 [273]. 252 (2005) 63 NSWLR 203 at 261 [290]. 253 See also the reasons of Gleeson CJ at [14]-[15]. 254 Gipp v The Queen (1998) 194 CLR 106 at 116 [23]-[24] per Gaudron J, 169 [185] per Callinan J, 145-147 [117]-[119] of my reasons; Crampton v The Queen (2000) 206 CLR 161. 255 Coulton v Holcombe (1986) 162 CLR 1 at 7-9 per Gibbs CJ, Wilson, Brennan and Dawson JJ; cf my observations in Roberts v Bass (2002) 212 CLR 1 at 54 [143]. Kirby Essential to the appellants' argument of constitutional invalidity is the suggestion that the proceedings are within federal jurisdiction and that, therefore, they must, so far as invested in any court of a State, involve a "matter" in the constitutional sense of that word256. In Fencott v Muller257, this Court explained: "[T]he unique and essential function of the judicial power is the quelling of such controversies by ascertainment of the facts, by application of the law and by exercise, where appropriate, of judicial discretion." that, far from quelling existing controversies, The appellants argued that, on various grounds, the representative proceedings which the respondents sought to bring to trial offended this basal notion of the character and purpose of federal judicial power. Thus, the the appellants submitted respondents were seeking to create controversies that otherwise did not exist258. They were stirring up controversies and enlisting courts in the exercise of federal jurisdiction, in their attempt to do so. They were endeavouring, without identifying those affected in advance, to obtain suspension of relevant limitation periods in respect of still unidentified persons. Moreover, they were doing this to make a personal profit for a third party who was an "alien to such future controversies", namely the funder, Firmstones. The appellants said that this was contrary to the fundamental assumptions of Ch III of the Constitution and was therefore constitutionally impermissible. Alternatively, the appellants argued that the representative proceedings envisaged by the respondents amounted to the furtherance of an abuse of the judicial power of the Commonwealth which was constitutionally forbidden. In support of this way of presenting their argument, the appellants invoked observations made by members of this Court in Nicholas v The Queen259. They submitted that, for matters within federal jurisdiction, abuse of power (or process) had a constitutional foundation, resting on the implications necessary to 256 Constitution, s 77(iii). 257 (1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and Deane JJ. 258 cf Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 458-459 [242] per Hayne J; Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 355 [45] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; Abebe v The Commonwealth (1999) 197 CLR 510 at 523-525 [24]-[25] per Gleeson CJ and McHugh J, 570-571 [165] per Gummow and Hayne JJ. 259 (1998) 193 CLR 173 at 208-209 [74] per Gaudron J, 226 [126] per McHugh J, 265 [213] of my reasons. Kirby the Constitution as to how the judicial power would be deployed260. These arguments repeated the contention that the respondents' proceedings amounted to an abuse of process, but this time with a constitutional dimension. Federal jurisdiction: I will assume that, in the proceedings, the Supreme Court of New South Wales was exercising federal jurisdiction. Whether that was so can sometimes be a matter of dispute and oversight261. On the approach that I favoured in Roxborough262, the entitlements of retailers such as the respondents to recover payments made on a tax invalidated by the Constitution was to be found as an implication of the Constitution itself. Hence it was necessarily a "matter" within federal jurisdiction. As stated in Roxborough, that view was rejected by the majority of this Court. The majority treated the claim for recovery as one based on private rights of action, founded in the common law or equity. Nevertheless, because the source of those private rights may ultimately be traced to a constitutional provision, I am prepared to accept that their enforcement is a matter "arising under the Constitution, or involving its interpretation"263. I can accept this conclusion more readily because of my own opinion as to the true character of the recovery action. Because, therefore, the proceedings in the Supreme Court of New South Wales were in federal jurisdiction, vested in that Court pursuant to the Constitution, it was necessary for any State law (or the common law) applicable to the proceedings to be consistent with federal law, most especially with the Constitution itself. Otherwise, such State law would not be "picked up" and applied in federal jurisdiction pursuant to the Judiciary Act 1903 (Cth)264. Specifically, if Pt 8 r 13 of the Rules involved procedures that were inconsistent 260 They referred by analogy to cases on contempt of court: Re Colina; Ex parte Torney (1999) 200 CLR 386 at 395-397 [16]-[25] per Gleeson CJ and Gummow J, 403 [47] per McHugh J; and on judicial impartiality: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 362-363 [80]-[81] per Gaudron J, 373 [116] of my reasons. 261 As in British American Tobacco (2003) 217 CLR 30 at 41-42 [5] per Gleeson CJ, 50-51 [36] per McHugh, Gummow and Hayne JJ, 67 [92] of my reasons. 262 (2001) 208 CLR 516 at 559 [111], 579-580 [174]. 263 Judiciary Act 1903 (Cth), s 39. See British American Tobacco (2003) 217 CLR 30 at 51 [37] per McHugh, Gummow and Hayne JJ. Kirby with the Constitution, it could not have any application to the exercise of federal jurisdiction265. A "matter" exists: The appellants' constitutional arguments should be rejected. It is true that the meaning of the word "matter" in the Constitution266 and in the Judiciary Act267 is somewhat elusive268. However, I remain of the view that "[i]t is undesirable that the word should be subjected to excessive refinement or submitted to inappropriate elaboration leading to unnecessary constitutional rigidity"269. The appellants' first argument, repeated by Mobil in the connected proceedings, bears a close similarity to the argument advanced by Mobil, and rejected by this Court in Mobil Oil Australia Pty Ltd v Victoria270. As recorded, the argument advanced by Mobil in that appeal was that271: "… parties who, having no consciousness of the controversy, are not involved in it. It therefore trespasses beyond the framework of a genuine justiciable controversy." This was another way of saying that it could not amount to a "matter" for constitutional purposes. In rejecting this argument, Gleeson CJ272 pointed out that273: 265 See my reasons in Solomons v District Court (NSW) (2002) 211 CLR 119 at 163 266 Constitution, ss 75, 76, 77 and 78. 268 See my reasons in Abebe v The Commonwealth (1999) 197 CLR 510 at 585 [215]. 269 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 650 [156]. See also at 669 [209]-[210] 270 (2002) 211 CLR 1. 271 (2002) 211 CLR 1 at 7. 272 (2002) 211 CLR 1 at 27 [22]. 273 cf the arguments raised in In re Freme's Contract [1895] 2 Ch 778 at 780-781. Kirby "It is not unknown for judicial decisions to determine the rights of people who were unaware of their existence, or even of people who were unborn at the time of the decision." In their reasons, Gaudron, Gummow and Hayne JJ said of the Victorian provisions, permitting the "group proceedings" in issue in the earlier case274: "Although a proceeding under Pt 4A may affect the rights both of those who know of and support the prosecution of the proceeding and of those who do not know of it, Pt 4A does not compel the unwilling to continue to remain a group member. The unwilling may seek to opt out. Further, in affecting the rights of those who know of the proceeding and those who do not, a proceeding under Pt 4A is no different from representative proceedings of a kind common in the State Supreme Courts since federation and in their colonial predecessors." In my reasons, I observed275: "… [D]ealing with representative claims, and doing so by adjudicating the rights of all who are in a class of persons, has long been a feature of the ordinary practice of courts. The order that results from representative proceedings of the traditional kind, and the order that results from proceedings of the kind for which Pt 4A provides will, absent some order to the contrary, finally bind all those in the class concerned, regardless of their particular state of knowledge of the proceeding. It is a judgment made in the exercise of judicial power." The appellants' argument assumed that there could be no "matter" because there was no controversy until a legal proceeding had been instituted or formulated by the person seeking recovery. This view of the constitutional word was rejected by the Federal Court in Hooper v Kirella Pty Ltd276 for reasons that I would endorse. The basic flaw in the appellants' argument is that it fails to take into account the fact that this Court, since its decision in In re Judiciary and Navigation Acts277, has distinguished between a "matter" and the legal proceeding 274 (2002) 211 CLR 1 at 34-35 [51] referring to Pt 4A of the Supreme Court Act 1986 (Vic). 275 (2002) 211 CLR 1 at 39 [65]. 276 (1999) 96 FCR 1 at 13-16 [45]-[55] per Wilcox, Sackville and Katz JJ. 277 (1921) 29 CLR 257 at 265-266 per Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ. See also Abebe v The Commonwealth (1999) 197 CLR 510 at 523-525 [24]-[25] per Gleeson CJ and McHugh J, 555 [117] per Gaudron J, 570-571 [164]-[167] per Gummow and Hayne JJ, 588 [225] of my reasons. Kirby in which the "matter" might be determined. A "matter" connotes a controversy "which might come before a Court of Justice"278. It is "identifiable independently of the proceedings which are brought for its determination"279. Thus a "matter" exists where there is a legal claim, "even though a right, duty or liability has not been established and, indeed, may never be established"280. In the present appeals, if individual retailers are aggrieved by reason of a legal obligation to pay unremitted moneys to the wholesaler on a constitutionally invalid tax and the wholesaler fails to refund that payment, there is a qualifying controversy. Hence there is a "matter". The retailers are aggrieved that the wholesaler has benefited from a legal windfall at their expense. The mere fact that, unless organised into representative proceedings, the retailers might not have the ready means to translate their grievance into legal proceedings to resolve the controversy does not alter the constitutional character of that grievance. It remains a "matter". The fact that the litigation funder, Firmstones, may have its own separate and additional interest in the retailers' grievance is also irrelevant to the constitutional character of that grievance in the first place. Given that representative proceedings of various kinds preceded federation in Australia, it would be a very surprising outcome now to conclude, on a quasi-theological elaboration of the word "matter", that federal jurisdiction did not permit such proceedings to be brought. That conclusion would be specially surprising, in a representative proceeding of the "opt-in" variety, which is what the respondents propose in these proceedings. It would be remarkable given that there is no hint of a constitutional defect in the treatment of such proceedings by this Court in Wong, a case clearly in federal jurisdiction. Moreover, the existence of a constitutional problem was rejected by members of the Court in the earlier Mobil Oil case. It would be nothing short of astonishing if the federal jurisdiction for which Ch III of the Constitution provides were to be so constrained as to forbid such proceedings, given the broad national purposes for which that jurisdiction was provided by the Constitution and the potential utility of such proceedings in an age when mass production of goods and services 278 The State of South Australia v The State of Victoria (1911) 12 CLR 667 at 675 per 279 Fencott v Muller (1983) 152 CLR 570 at 603 per Mason, Murphy, Brennan and 280 Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 15 [55] per Wilcox, Sackville and Kirby has a tendency to produce multiple claims of an identical or analogous character281. We should always remember282: "[The Constitution] … is the governmental charter of today's Australians. It belongs to the present and the future. It is not chained to the past283. It should be construed, so far as its text and structure permit, to avoid irrational rigidities or seriously inconvenient outcomes. Ordinarily, such rigidities and serious inconvenience will be inconsistent with the enduring character of the Constitution as the charter of government of a modern nation." By "organising" persons into a legal action for the vindication of their legal rights, representative proceedings are not creating controversies that did not exist. Controversies pre-existed the proceedings, even if all those involved in them were unaware of, or unwilling earlier to pursue, their rights. A litigation funder, such as Firmstones, does not invent the rights. It merely organises those asserting such rights so that they can secure access to a court of justice that will rule on their entitlements one way or the other, according to law. The appellants' first constitutional argument, that such proceedings are incompatible with the requirements of federal jurisdiction, fails. No constitutional abuse: The appellants' second constitutional argument seeks either to derive from the language of Ch III of the Constitution a doctrine of abuse of process that is constitutional in character or to subject the pre-existing common law doctrine on that subject to a constitutional imperative so as to be consistent with the assumptions of Ch III. Whilst I accept that the full ambit of the implications necessary to the operation of the Judicature for which Ch III provides has not yet been explored284 281 Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46, (1988) at 8-11 [13]-[20]. 282 As I observed in Abebe v The Commonwealth (1999) 197 CLR 510 at 582 [203]. 283 Victoria v The Commonwealth (1971) 122 CLR 353 at 396 per Windeyer J; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 171-173 per 284 Al-Kateb v Godwin (2004) 219 CLR 562 at 617-618 [154]. See also McHugh, "Does Chapter III of the Constitution protect substantive as well as procedural rights?", (2001) 21 Australian Bar Review 235; Lacey, "Inherent Jurisdiction, Judicial Power and Implied Guarantees under Ch III of the Constitution", (2003) 31 Federal Law Review 57. Kirby (as may be seen in the many cases that have invoked the "Kable doctrine"285 since it was first explained), I am unconvinced that it is necessary or useful to constitutionalise remedies for abuse of process. Long before the Constitution was written, common law courts in England and in the Australian colonies provided remedies against abuse of a court's processes. Such remedies are flexible. They adapt to new times and new circumstances286. Moreover, in particular cases, by particular statutory language, Parliaments can sometimes state where the balance of public interest lies287. In these circumstances, no convincing necessity has been shown as to why remedies against abuse of process must be given a constitutional status, to repel representative or like proceedings. I accept that such proceedings, including when organised by litigation funders concerned with their own profits, may involve risks of abuse of judicial process288. The need for protection of the vulnerable was mentioned by Gleeson CJ in the New South Wales Court of Appeal in Carnie289. It was also recognised by that Court in these proceedings290. However, it has not been demonstrated that the judicial supervision envisaged by the Court of Appeal's orders would be inadequate to prevent abuse of process or injustice in the proceedings initiated by the respondents. This Court was informed by the Attorney-General of the Commonwealth (intervening on the constitutional issue in support of the respondents) that the Standing Committee of Attorneys-General is presently considering the issue of litigation funding291. Further legislative regulation may emerge from that consideration. Alternatively, more elaborate provisions in the Rules may be 285 Following Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 286 See Batistatos v Roads and Traffic Authority of New South Wales (2006) 80 ALJR 1100; 227 ALR 425. 287 Nicholas v The Queen (1998) 193 CLR 173 at 197-198 [37]-[38] per Brennan CJ. 288 Beisner, Shors and Miller, "Class Action 'Cops': Public Servants or Private Entrepreneurs?", (2005) 57 Stanford Law Review 1441. 289 Esanda Finance Corp Ltd v Carnie (1992) 29 NSWLR 382 at 388. See above these reasons at [132]-[133]. 290 (2005) 63 NSWLR 203 at 258-259 [279]. 291 North, "Litigation Funding: Much to be Achieved With the Right Approach" (2005) 43(11) Law Society Journal (NSW) 66 at 68-69; cf Aitken, "'Litigation Lending' after Fostif: An Advance in Consumer Protection, or a Licence to 'Bottomfeeders'?", (2006) 28 Sydney Law Review 171 at 179. Kirby necessary in those jurisdictions that have persisted with abbreviated rules, such as those found in Pt 8 r 13 of the Rules in this case292. It has not been demonstrated that it is necessary to stamp on this new practice the rigidities of constitutional norms. Accepting that the common law rules on abuse of process must conform to any applicable constitutional assumptions293, that a constitutional requirement, more restrictive of representative proceedings, demands modification of previous understandings of the common law rules on abuse of process. it does not follow In the light of recent decisions, it cannot be said that the common law test of abuse of process compromises in any way the institutional integrity of the Supreme Court, as a repository of federal jurisdiction294. The capacity of the principles of abuse of process to respond to what was seen as the infliction of injustice on defendants in a particular case was demonstrated recently in Batistatos v Roads and Traffic Authority of New South Wales295. Although I dissented from the result in that appeal, I fully accepted the availability of the common law remedy, expressed as it was in broad terms296. The appellants have not shown any defect in the common law rule on abuse of process, or abuse of jurisdiction, that suggests a need to re-express that law according to more stringent Australian constitutional standards. Conclusion: no impediment: It follows that the two arguments that the appellants advanced, on constitutional grounds, to challenge the applicability to federal jurisdiction of Pt 8 r 13 of the Supreme Court Rules (NSW), fail. There is no constitutional defect in those proceedings. Nor is there any need to formulate a new constitutional rule on abuse of process to invalidate the 292 See (2005) 63 NSWLR 203 at 258 [278] contrasting Federal Court of Australia Act 1976 (Cth), Pt 1VA. 293 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 566; John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 533-535 [63]-[70] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; my reasons in Roberts v Bass (2002) 212 CLR 1 at 54-55 [143]-[144]. 294 cf Fardon v Attorney-General (Q) (2004) 78 ALJR 1519 at 1527-1528 [35] per McHugh J, 1539 [101], 1541-1542 [117] per Gummow J, 1564 [234] per Callinan and Heydon JJ; 210 ALR 50 at 62, 78, 81, 113. 295 (2006) 80 ALJR 1100 at 1141-1142 [223]; 227 ALR 425 at 475-476. 296 See also my reasons in Island Maritime Ltd v Filipowski (2006) 80 ALJR 1168 at Kirby respondents' proceedings or the interest in them of the litigation funder, Firmstones. Orders All of the challenges mounted by the appellants against the respondents' proceedings have therefore failed. Accordingly, all of the appeals should be dismissed with costs. CALLINAN AND HEYDON JJ. The circumstances are set out in the reasons for judgment of Gummow, Hayne and Crennan JJ. Part 8 r 13 of the Supreme Court Rules (NSW) There were two key conditions in Pt 8 r 13(1) which the plaintiffs had to satisfy for the proceedings to be commenced as representative proceedings. First, it was not enough that "numerous persons" had "the same interest" in the abstract – they had to have the same interest in the proceedings. To use words employed by Toohey and Gaudron JJ (with whom Mason CJ, Deane and Dawson JJ concurred) in Carnie v Esanda Finance Corporation Ltd, it had to be the case that there was "a significant question common to all members of the class and they stand to be equally affected by the declaratory relief which the [plaintiffs] seek"297. Similarly, to use words employed by Lord Macnaghten298 and approvingly quoted by Toohey and Gaudron JJ in Carnie v Esanda Finance Corporation Ltd, the action lay "if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent"299. The second condition was that "the same interest" must actually have existed when the proceedings began. It was not enough that it might exist at some future time. Both these conditions were satisfied in Carnie v Esanda Finance Corporation Ltd300. However, that case is distinguishable from the present one. In that case par 6 of the statement of claim alleged that the plaintiffs had brought proceedings on behalf of themselves and all other persons ("the represented debtors") who had entered certain described contracts. The relief claimed included a declaration that no represented debtor was required to pay any amount on account of credit charges in relation to contracts answering the description in par 6301. Because of the claim for a declaration so framed, the allegation in par 6 297 (1995) 182 CLR 398 at 421; see also at 424. 298 Duke of Bedford v Ellis [1901] AC 1 at 8. 299 (1995) 182 CLR 398 at 416. 300 (1995) 182 CLR 398. 301 Four declarations were sought, two of which in terms related to the represented debtors: these two mirrored the language of two declarations relating to the plaintiffs. The declarations were claimed in sub-pars (1), (1A), (1B) and (2) of the claims to relief, which are set out in Gleeson CJ's reasons for judgment in the Court (Footnote continues on next page) that the plaintiffs were bringing the proceedings on behalf of themselves and the represented debtors was in one sense true, even though the plaintiffs had no instructions from the represented debtors. There are words in the summonses which initiated the proceedings under consideration in the present appeals corresponding with the allegation in par 6 of the statement of claim of Carnie v Esanda Finance Corporation Ltd. However, they are not capable of bringing about the same result in this case. In the proceedings in which Fostif Pty Limited is the only plaintiff, par 1 of Section A of the summons begins: "The plaintiff claims the relief set out in this Summons on behalf of themselves [scil 'itself'] and the class of unnamed persons referred to in paragraph 2" of Section B of the summons. What is that relief? Apart from costs, the only specific order claimed is "Judgment against the defendant in favour of the plaintiff together with interest pursuant to section 94 of the Supreme Court Act (NSW)." What would that judgment be for? The answer is: a sum of money calculated by reference to the allegations in pars 12- 20 of Section C of the summons. Paragraphs 19-20 of Section C of the summons allege: "19. The plaintiffs are entitled to be paid the amounts referred to in paragraph 15 above. The plaintiffs are entitled to be paid interest pursuant to section 94 of the Supreme Court Act (NSW) or otherwise." Paragraph 15 alleges: "The plaintiffs paid to the defendant the total amount of the licence fee identified or included in the invoices to the plaintiffs." That in turn is a reference to pars 12 and 13. Those paragraphs allege: "12. During the Relevant Period the defendant sold, in the course of tobacco wholesaling, tobacco products to one or more of the plaintiffs. The said sales of tobacco products were made pursuant to written invoices issued by the defendant which invoices identified in relation to each sale the total value of tobacco products sold." of Appeal: Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 at The emphasis given to the plurals appearing in those three quotations has been added. This is an embarrassing and vexatious pleading in view of the fact that there is only one plaintiff – Fostif Pty Limited. The early parts of the summons draw a clear distinction between Fostif Pty Limited as the only plaintiff, and the "class of unnamed persons" on behalf of whom that plaintiff claims to be acting, the members of which were only to "become involved as plaintiff" if they signed and returned the "opt-in notices" described in par 2 of Section A of the summons302. In the summons the pleader refers sometimes to the "plaintiff" and sometimes to the "plaintiffs". Are these plural forms only clerical errors, or are they something more? In some parts they appear to be only clerical errors, perhaps to be accounted for by the fact that the seven summonses in the proceedings under consideration are in standard form, and in some of the proceedings there is one plaintiff and in some more than one. In other parts, like pars 12-20 of Section C, the part of the summons which is supposed to contain the allegations of material fact, the plural forms may be intentional. Whether intentional or not, pars 12, 13, 15, 19 and 20 of Section C suggest that in fact the "class of unnamed persons" have already become plaintiffs, when that is not the case. Once members of a "class of unnamed persons" become plaintiffs, then the language of pars 12, 13, 15, 19 and 20 is capable of applying appropriately to them. But until such time as members of the "class of unnamed persons" have become plaintiffs, the references to "plaintiffs" in those paragraphs can only be read as references to the single existing plaintiff, namely Fostif Pty Limited. It follows that at the time when the summons was filed and served – which was the crucial time for assessment of whether "numerous persons have the same interest in [the] proceedings" – what the plaintiff, Fostif Pty Limited, was claiming was simply a sum of money to be calculated by reference to its pleaded dealings with the defendant. That sum of money is entirely different from other 302 A change of plan took place after the proceedings were instituted. By notices of motion returnable on 5 September 2003, the plaintiffs sought discovery of documents identifying "the class of unnamed persons" with a view to inviting them to "opt-in". The notices of motion also sought an order that the proceedings continue as representative proceedings in respect of those members of the class who opted-in, but did not seek an order that they become plaintiffs. The proposed opt-in notice was amended accordingly in the proceedings before Einstein J. But the question whether Pt 8 r 13 is satisfied must be decided as from the time when the proceedings commenced. sums of money to which other retailers, who were not plaintiffs at that time, might be entitled by reason of their unpleaded dealings with the defendant. Hence it was not true to say, when the summons was filed and served, that in claiming the sum of money to which it may be entitled the plaintiff, Fostif Pty Limited, was acting "on behalf of ... the class of unnamed persons". The true position was that it was acting on its own behalf in seeking to recover the sum of money which it claimed to be entitled to. Nor was it true to say that the plaintiff was acting on behalf of any member of that class in relation to any claim for any other sum of money. That is because the pleading had not alleged any dealings between any particular member of that class and the defendant which would entitle that member to any sum of money, and no sum of money based on any particular member's dealings with the defendant had been claimed. Nor, when and if members of the "class of unnamed persons" become plaintiffs pursuant to the opt-in procedure, would it be true to say that the plaintiff, Fostif Pty Limited, was acting on their behalf when the proceedings began. Rather, the true position will be that, as plaintiffs, they will be acting on their own behalf, although no doubt, at least ostensibly, through the same legal team as the original plaintiff, Fostif Pty Limited. In the light of those circumstances, it can be seen that the declaration claimed in Carnie v Esanda Finance Corporation Ltd was a crucial factor in the outcome of that case. Although that was a declaration claimed by the only two plaintiffs who existed, it could be described, as it was in par 6 of the statement of claim, as a claim "on behalf of themselves and all other persons" in the class described. Further, it was a claim which would affect the rights of the non- plaintiffs as well as the plaintiffs because, if acceded to, it would establish that none of them was liable to pay certain monies. And if the claim for a declaration were acceded to, pursuant to Pt 8 r 13(4) the declaration would bind the non- plaintiffs. Those non-plaintiffs thus had an "interest" in the proceedings which was the "same" as that of the plaintiffs, even though no opting-in procedure had been complied with, or even, at that point, devised. The crucial claim in Carnie v Esanda Finance Corporation Ltd is not matched by any claim to a declaration in the proceedings under consideration here. The problem in the present appeal cannot be cured by amendment to seek a declaration now, and it could not have been cured had a declaration been sought in the summonses. That is because no declaration could legitimately have been claimed. In particular, taking the proceedings commenced by Fostif Pty Limited as an example, a declaration that the plaintiff and each of the members of the class of unnamed persons were entitled to be paid a particular sum of money could not legitimately have been claimed for two reasons. First, so far as the plaintiff, Fostif Pty Limited, and any other person who became plaintiff pursuant to the opt-in procedure, are concerned, once the money judgment claimed in order 1 at the start of the summons was made in favour of each plaintiff who had established an entitlement to it, there would have been no utility in granting the declaration; it would have been surplusage. Secondly, so far as any other members of the "class of unnamed persons" are concerned, the summons made no allegation about any entitlement they had to be paid, and any declaration made of their entitlements would have gone beyond the pleadings. Counsel for the respondent in Mobil Oil Australia Pty Ltd v Trendlen Pty Ltd303, which was heard on the same day as, and together with, these appeals, were also counsel for the respondents in the present appeals. Counsel made an attempt to overcome these difficulties by appealing to Pt 8 r 13(4) and Pt 42 r 10(1) of the Supreme Court Rules. It is convenient to deal with that attempt here. Part 8 r 13(4) made a judgment entered in proceedings pursuant to Pt 8 r 13 binding on all the persons as representing whom the plaintiff sued. But it could not justify a judgment in favour of those persons unless facts sufficient to justify recovery in favour of them had been alleged or proved, and it could not be said that those persons had the same interest in the proceedings until the relevant facts were alleged. Here they have not been. Part 42 r 10(1) provided that where in any proceedings an order was made in favour of a person who was not a party, that person might enforce the order. But this does not overcome the difficulty created by the failure to plead facts showing that the members of the "class of unnamed persons" had the same interest in the proceedings. Counsel for the respondent in Mobil Oil Australia Pty Ltd v Trendlen Pty Ltd also drew attention to the claim in Carnie v Esanda Finance Corporation Ltd for an "order that the defendant repay to the plaintiffs and any represented debtor any amount received by it on account of credit charges as defined by the Credit Act 1984, payable under the contracts from the date of the variation"304. Counsel then submitted that "[n]othing of substance can turn on the form of the orders seeking refunds, or on [the] fact that declarations were also sought." On the contrary, the application of Pt 8 r 13(1) must be considered with close attention to the precise formulation of the allegations and claims in the "proceeding" in which "numerous persons" are said to "have the same interest". The differences between the present case and Carnie v Esanda Finance Corporation Ltd cannot be brushed aside as turning on questions of form rather than of substance, at least 303 [2006] HCA 42. 304 This order was claimed in sub-par (4) of the claims to relief, which is set out in Gleeson CJ's reasons for judgment in the Court of Appeal: Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 at 386. so far as concerns the stress placed by Toohey and Gaudron JJ, in language quoted above, on the relief being in its nature beneficial to all whom the plaintiff proposes to represent, and on the fact that all those persons stand to be equally affected by the declaratory relief sought. The appellants advanced many arguments for the view that Pt 8 r 13 did not apply. In view of the conclusion that it did not apply for the reasons set out above, it is not necessary to deal with them. Abuse of process: factual aspects In view of the conclusions just reached, it is not necessary to evaluate the Court of Appeal's rejection of the appellants' case on abuse of process. However, in view of what was said in argument, and what is said on the subject in other judgments, something ought to be added. First, it is desirable to note some uncontroversial factual aspects. Firmstone & Feil. Firmstone & Feil is a company, the sole beneficial owner and sole director of which is Mr Firmstone. Mr Firmstone is not a solicitor, but a chartered accountant. None of the company's employees hold practising certificates entitling them to practise law. The business of Firmstone & Feil is providing advice and assistance on indirect taxes. One aspect of that business was assisting retailers to recover from wholesalers amounts referable to the State tobacco licence fees that were held invalid by this Court on 5 August 1997 in Ha v State of New South Wales305 and held liable to be repaid pursuant to this Court's decision in Roxborough v Rothmans of Pall Mall Australia Ltd306. Both Firmstone & Feil and another litigation funder had enjoyed success in obtaining recoveries from wholesalers in 2002 by means of settling litigation on favourable terms. Firmstone & Feil had never been a tobacco retailer. Before it interested itself in the recovery of amounts referable to the tobacco licence fees, one aspect of which relates to these appeals, it had no connection with the wholesalers, the retailers, or the subject-matter of the litigation. The Horwath arrangement. In or about March 2002 Firmstone & Feil entered an arrangement with Horwath GST Pty Ltd ("Horwath"). Under that arrangement, Horwath was responsible for procuring tobacco retailers to 305 (1997) 189 CLR 465. 306 (2001) 208 CLR 516. participate in proposed litigation against certain wholesalers who, it was thought, were retaining amounts referable to the licence fees. The aggressive marketing campaign. The trial judge found that pursuant to that arrangement Horwath conducted "an aggressive marketing campaign"307. It did so by word of mouth, by repeated letters on the letterhead of Firmstone & Feil from 5 March 2002 to 11 July 2003, and by advertisements in trade journals and in numerous regional and metropolitan newspapers. The engagement of Robert Richards & Associates. In about mid September 2002 Mr Firmstone and Mr Robert Richards of Robert Richards & Associates orally agreed that Mr Richards would "be the project solicitor on the usual basis". By letter of 27 November 2002 Robert Richards & Associates clarified what that basis was by reference to the terms on which that firm had acted in relation to earlier matters: a letter of 6 April 2001 was referred to. The institution of non-representative proceedings. On 11 February 2003, at the instigation of Firmstone & Feil, Robert Richards & Associates initiated proceedings in the Supreme Court of New South Wales on behalf of certain retailers against some of the appellant wholesalers. Those proceedings did not purport to be representative proceedings. It was expected that any further proceedings would be statute-barred unless instituted before July 2003 (six years after the time when the licence fee payments were made)308. The institution of representative proceedings. On 30 June 2003, shortly before the limitation period expired, 17 proceedings against 17 wholesalers were instituted on the instructions of Firmstone & Feil, as representative proceedings. Seven of these 17 proceedings are the subject of these appeals. The Court of Appeal described them as "a last ditch effort for all of their existing and anticipated clients to be able to recover"309. Each plaintiff had been approached by Mr Proud, a Firmstone & Feil employee, to act in this way as the "representative party on the summons". By July 2003, at least some hundreds of retailers – the parties disagreed about how many – had sent back to Firmstone & Feil signed forms authorising Firmstone & Feil to act on their behalf to obtain 307 Keelhall Pty Ltd t/as "Foodtown Dalmeny" v IGA Distribution Pty Ltd (2003) 54 ATR 75 at 90 [24]. 308 Before Einstein J the retailers said that the limitation period expired on 5 August 2003, while the wholesalers said it expired on 1 July 2003. 309 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 208 [5] and 217 [57] per Mason P (Sheller and Hodgson JJA concurring). refunds in relation to tobacco licence fees on terms entitling retailers to two- thirds of what was recovered without risk as to costs. It was, however, common ground that despite the marketing campaign many more retailers had not shown any interest in suing wholesalers. Thus Mr Firmstone estimated that the number of potential claimants was 10,000, having claims averaging $4,000 in value. There was no evidence that the retailers who had returned signed forms had made any claim against a wholesaler, or would have done so if Firmstone & Feil, through Horwath, had not approached them. The discovery motions. Shortly after the 17 proceedings commenced, Mr Firmstone gave instructions to Robert Richards & Associates to file notices of motion seeking orders that the defendant wholesalers give discovery of documents identifying any represented retailer to whom the relevant defendant had sold tobacco during the relevant period. By this means Mr Firmstone hoped to attract more plaintiffs to the litigation: once more retailers with potential claims were identified, they could be sent "opt-in" notices and thereby given an opportunity either to respond positively to those notices and become plaintiffs, or to elect to cease further participation in the proceedings. For their part, the defendants filed notices of motion seeking orders dismissing or staying the proceedings as an abuse of process, or orders that they not continue as representative proceedings. The opt-in notice authority and agreement. The "opt-in" notice which Firmstone & Feil proposed to send, and its covering letter, indicated that if the retailer consented to become a plaintiff, it would be on terms similar to those stipulated in the letters sent out from 5 March 2002 to 11 July 2003. The pro forma "Opt-in Notice Authority and Agreement" relevantly provided for the retailer to: authorise Firmstones Pty Ltd trading as Firmstone & Feil ('Firmstone & Feil') to act on my/our/its behalf in relation to: (iii) the conduct of and the giving of instructions in the representative proceedings; entering into settlement agreement(s) with the defendant(s) (provided the amount is not less than 75% of the principal amount claimed from the defendant(s)); to receive on my behalf all monies and any interest received from the defendant(s) as a result of judgment in or settlement of the representative proceedings; and to pay the said monies and any costs awarded to the plaintiffs into a trust account and to deduct therefrom the fees and costs referred to in 4(c) and (d). undertake to execute a limited Power of Attorney authorising Adrian Firmstone to execute Deeds of Settlement and Release for the purpose of entering into any settlement agreement referred to in 2(ii); and agree to the terms and conditions set out below: Firmstone & Feil will pay all costs associated with the representative proceedings; Firmstone & Feil will meet all costs orders made against the plaintiffs (including the representative proceedings; the represented retailers) Firmstone & Feil will receive 33⅓% of any amounts recovered by or on behalf of the plaintiffs (including the represented retailers) from the defendants by way of judgment or settlement of the representative proceedings; Firmstone & Feil will retain any amounts awarded to the the plaintiffs (including representative proceedings as costs." the represented retailers) The principal difference between these terms and those notified to retailers earlier was that in the earlier terms Firmstone & Feil were not authorised to enter a settlement agreement unless the amount was not less than 100% of the principal amount claimed. The Court of Appeal accepted the correctness of the trial judge's view that these terms gave Firmstone & Feil "control over settlement", and that this control "extend[ed] to the right to give instructions as to how the claims [were] to be moulded, what evidence to rely upon and similar matters". The solicitors' role. It is implicit in these terms that the plaintiffs were not to be entitled to be represented in the proceedings by solicitors of their own choice. The role of Robert Richards & Associates was not explicitly described, although the retailers were to be invited to "return the completed Opt-In Notice to our solicitors, Robert Richards & Associates c/- Mr Peter Gibson at Horwath GST Pty Ltd"310. 310 Emphasis added. There was one factual controversy about the solicitors' role. Einstein J found that the retainer between Mr Richards and Firmstone & Feil stipulated that Mr Richards would not directly liaise with the plaintiffs. He did so because, after Mr Firmstone and Mr Richards had orally agreed in September 2002 that Mr Richards would be "the project solicitor on the usual basis", Mr Richards sent the letter of 27 November 2002 from Robert Richards & Associates to Mr Firmstone referring to the letter of 6 April 2001 and stating that the future work "will be undertaken by me on the same terms (subject to the attached updated costs agreement) as those detailed in ... [the 6 April 2001] letter". The "attached updated costs agreement", headed "Terms of Engagement", set out various charges. In the 6 April 2001 letter Mr Richards said: "Whilst you are acting for your client you have engaged me as principal and not as agent for your clients." After describing some responsibilities which did not include client liaison, the letter continued: "I understand that you and your staff will provide assistance to me in respect of the matters. In particular – you will be responsible for the day to day carriage of the matters. However you make copies of all documents (in respect of the matters) between yourself and your clients available to me. You will inform me of all material oral communications between yourself and your clients. you will liaise with your clients. I will not directly liaise with your clients." The expression "yourself" meant Firmstone & Feil, the expression "your clients" meant the clients of Firmstone & Feil, and the expression "I" meant Mr Richards. The Court of Appeal disagreed with Einstein J's finding. It said311: "[t]he letter did not preclude the solicitor from communicating with his clients or those in the classes represented by them. At its highest, it stated an intention that Firmstone would be involved with client liaison. Mr Richards [sic] gave evidence that he never intended to abrogate any right of direct communication with his clients. His employed solicitor [sic] also 311 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 222- 223 [81] per Mason P (Sheller and Hodgson JJA concurring). gave unchallenged evidence to similar effect. I see no reason why this evidence should not be accepted." This reasoning is erroneous, given the following considerations. (a) Mr Richards did not give evidence. Mr Firmstone did. He said in that evidence that he did not intend the statement "[Y]ou will liaise with your clients. I will not directly liaise with your clients" to be part of his arrangements with Mr Richards. (b) No solicitor employed by Mr Richards gave evidence. An employee of Firmstone & Feil, Mr Proud, who was not a solicitor, did. However, he did not give evidence supporting the evidence of Mr Firmstone just mentioned, and he was not challenged on the point. The reason in each case was no doubt that he was not privy to dealings between Mr Firmstone and Mr Richards. Sections 175 and 177 of the Legal Profession Act 1987 (NSW), as they stood in September 2002, required solicitors to make written disclosure to clients of the basis of the costs of legal services to be provided to the clients. This can entail a description of legal services to which the costs relate. Certainly the letter of 6 April 2001, adopted by the letter of 27 November 2002, described the services to which the enclosed "costs agreement" related. The letter of 6 April 2001 recorded that the services of Robert Richards & Associates were engaged by Firmstone & Feil acting as principal, and not as agent for the clients of Firmstone & Feil. The description of the services specifically excluded liaison between Mr Richards and the clients of Firmstone & Feil. The only documents produced in answer to notices to produce directed to the plaintiffs and subpoenas directed to Mr Firmstone requiring production of documents letters of 6 April 2001 and the relating 27 November 2002. the retainer were In these circumstances the uncommunicated reservations of Mr Firmstone were inadmissible on the construction of the retainer agreement. Accordingly, the trial judge's conclusion that under the terms of his retainer Mr Richards was not to liaise directly with the plaintiffs is to be preferred. Abuse of process: background principles In Mobil Oil Australia Pty Ltd v Victoria, in which the questions directly arising here did not have to be answered, Callinan J referred to some of the consequences of group or class proceedings and their conduct on an entrepreneurial basis312: "The question here is not whether, by their nature, group or class proceedings are oppressive to defendants, give rise to entrepreneurial litigation, in fact proliferate and prolong court proceedings, undesirably substitute private for public law enforcement or are contrary to the public interest, with disadvantages outweighing a public interest in enabling persons who have been damnified but who would not, or could not bring the proceedings themselves, to be compensated for their losses. The question simply is whether the Victorian Act is valid." (footnote omitted) Because this is entrepreneurial legislation and for the other reasons which we explain these questions do have to be answered here. The expression "litigation funding" is commonly used in the sense of a person organising, and paying the outgoings necessary for, the conduct of litigation on terms that the organiser will receive a share of the proceeds if the litigation succeeds. Among the principles which apply to it are the following. A preliminary point is that under the Supreme Court Rules in force at the material time, a litigation funder was capable of engaging in abuse of process even though the funder was not a party to the proceedings313. Next, it is desirable to consider the law, so far as it survives and is relevant, of maintenance and champerty. Maintenance was the unlawful "intermeddling with litigation in which the intermeddler has no concern"314. Champerty was "maintenance aggravated by an agreement to have a part of the thing in dispute"315. Although the torts of maintenance and champerty were abolished by s 4 of the Maintenance, Champerty and Barratry Abolition Act 1993 (NSW), s 6 312 (2002) 211 CLR 1 at 73 [172]. 313 Part 52 r 4(2) provided that subject to sub-r (5) the court was obliged not to make a costs order against a non-party. Sub-r (5)(d) provided that sub-r (2) did not limit the power to make an order for payment of the costs of a party by a person who had committed an abuse of process. 314 Neville v London "Express" Newspaper Ltd [1919] AC 368 at 382 per Lord Finlay LC. 315 Wild v Simpson [1919] 2 KB 544 at 562 per Atkin LJ. provided that that Act "does not affect any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal". The rested on law of maintenance, and hence of champerty, "considerations of public policy"316. "Notions of public policy are not fixed but vary according to the state and development of society and conditions of life in a community."317 The relevant principle of public policy was "designed to protect the purity of justice and the interests of vulnerable litigants".318 The expression "vulnerable litigants" has a special meaning. Thus according to Atkin LJ, the law of maintenance was "directed primarily, not at the client maintained, but at the other party to the litigation". That party "has the right to be free from litigation conducted by the assistance of persons working for their own interests, and not in order to give lawful professional aid to the opposing litigant"319. How could the purity of justice be affected by maintenance and champerty? Lord Denning MR gave three examples: "[T]o inflame the damages, to suppress evidence, or even to suborn witnesses"320. There is also "a public interest in preventing the development of an unlicensed and unregulated market in litigation for fear of the abuses to which that might lead by attraction of the unscrupulous"321. 316 Stevens v Keogh (1946) 72 CLR 1 at 28 per Dixon J, citing Alabaster v Harness [1895] 1 QB 339 at 342 per Lord Esher MR. 317 Stevens v Keogh (1946) 72 CLR 1 at 28 per Dixon J. 318 Giles v Thompson [1994] 1 AC 142 at 164 per Lord Mustill. In Stocznia Gdanska SA v Latvian Shipping Co (No 2) [1999] 3 All ER 822 at 831 Toulson J construed Lord Mustill's reference to the interests of vulnerable litigants as a reference to those who were in privity with the person responsible for the maintenance or the champertous conduct, since he referred to "a public interest in seeing that vulnerable litigants are protected from opportunistic exploitation". With respect, this is out of accord with traditional principle. 319 Wild v Simpson [1919] 2 KB 544 at 563; Giles v Thompson [1993] 3 All ER 321 at 336 per Steyn LJ; Clairs Keeley (a Firm) v Treacy (2003) 28 WAR 139 at 171 320 In re Trepca Mines Ltd (No 2) [1963] Ch 199 at 220. 321 Stocznia Gdanska SA v Latvian Shipping Co (No 2) [1999] 3 All ER 822 at 831 per There are numerous areas in which the proscriptions effected by the principles of maintenance and champerty do not apply. Among them are statutory exceptions322; the provision of assistance out of motives of friendship, family relationships323, charity or compassion324; and the provision of assistance by landlords to tenants325 and by employers to employees326. Others relate to special fields like insurance327, trade unions328 and trade associations and persons with a common interest329. In Clyne v NSW Bar Association330, Dixon CJ, McTiernan, Fullagar, Menzies and Windeyer JJ said, obiter, that a solicitor may act for a client, and spend money in payment of outgoings even though there is no prospect of fees being paid or outgoings repaid unless a judgment against the other party to the proceedings is obtained, on two conditions. The first is that the solicitor has considered the case and believes that the client has a reasonable cause of action or defence331. The second is that the solicitor must not bargain with the client for "an interest in the subject-matter of litigation, or (what is in substance the same thing) for remuneration proportionate to the amount which may be recovered" by 322 For example, Legal Profession Act 1987 (NSW), ss 186-187; Corporations Act 2001 (Cth), s 477(1)(c). 323 Bradlaugh v Newdegate (1883) 11 QBD 1 at 11 per Lord Coleridge CJ. 324 Harris v Brisco (1886) 17 QBD 504 at 513 per Lord Esher MR, Bowen and 325 Alabaster v Harness [1895] 1 QB 339 at 343 per Lord Esher MR. 326 Bradlaugh v Newdegate (1883) 11 QBD 1 at 11 per Lord Coleridge CJ. 327 Compania Colombiana de Seguros v Pacific Steam Navigation Co [1965] 1 QB 328 Stevens v Keogh (1946) 72 CLR 1. 329 Martell v Consett Iron Co Ltd [1955] Ch 363 at 386-387 per Danckwerts J. 330 (1960) 104 CLR 186 at 203. 331 In Clyne v NSW Bar Association (1960) 104 CLR 186 at 204 the Court quoted Lord Russell of Killowen CJ as charging a jury in terms requiring that the solicitor take "pains" and employ "careful inquiry" to determine whether a "bona fide" cause of action existed: Ladd v London Road Car Co (1900) 110 LT (NS) 80, approved in Rich v Cook (1900) 110 LT (NS) 94. the client in the proceedings332. In debates about this matter, reference is sometimes made to Giles v Thompson333, where Lord Mustill said that the latter aspect was "now in the course of attenuation" and "survives nowadays, so far as it survives at all, largely as a rule of professional conduct". Whether or not that is so in England, no authority of this Court has held it to be so in Australia, and s 6 of the Maintenance, Champerty and Barratry Abolition Act preserves the second condition. In any event, Lord Mustill's observations, read in context, were directed to maintenance and champerty considered as crimes and torts rather than from the point of view of public policy. No equivalent to the first condition exists for litigation funders who are not solicitors334. An intervener pointed to the High Court's view that a solicitor who complied with the above conditions was behaving in a manner "perfectly consistent with the highest honour"335. The intervener suggested an analogy between the position of the solicitor and the position of Firmstone & Feil. If there is, it is fatal to the respondents' position in these appeals because of non-compliance with the second condition. Abuse of process: aspects of the Court of Appeal's reasoning "Champertous intermeddling". First, the Court of Appeal criticised Einstein J for relying on Firmstone & Feil's "champertous intermeddling"336 in determining whether the proceedings were an abuse of process. This criticism is not sound. Whether or not champertous intermeddling alone is sufficient to justify a conclusion that the proceedings are an abuse of process, the existence of matters of fact which make the conduct champertous intermeddling is a relevant factor. Relevance of "access to justice". Secondly, the Court of Appeal said: "The law now looks favourably on funding arrangements that offer access to 332 Clyne v NSW Bar Association (1960) 104 CLR 186 at 203. 333 [1994] 1 AC 142 at 153 (Lords Keith of Kinkel, Ackner, Jauncey of Tullichettle and Lowry agreeing). 334 Although the materials brought to the attention of retailers, as well as Mr Firmstone's affidavits, exuded an air of optimism about the proceedings, he did not state a belief that either he himself or anyone else had carefully considered the case and believed that the client had a reasonable cause of action. 335 Clyne v NSW Bar Association (1960) 104 CLR 186 at 204. 336 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 227 [104] per Mason P (Sheller and Hodgson JJA concurring). justice so long as any tendency to abuse of process is controlled."337 It would be truer to say that the law prevents litigation funding contracts from being enforced, even though they may offer access to justice, if they have the character of maintenance or champerty, and the law looks neutrally on the prosecution of the proceedings being funded unless they are an abuse of process. Of the four cases cited by the Court of Appeal in support of the proposition stated only one actually supports it. Two of the cases do not support it338, and one is against it339. In the fourth, Gulf Azov Shipping Co Ltd v Idisi, the English Court of Appeal stated340: "Public policy now recognises that it is desirable, in order to facilitate access to justice, that third parties should provide assistance designed to ensure that those who are involved in litigation have the benefit of legal representation." But that statement was made in relation to circumstances very different from the present. Any suggestion that the principles of abuse of process have been diminished by a more "relaxed common law attitude to litigation funding"341 because of a recent recognition of the importance of assisting impecunious plaintiffs to sue is unrealistic. The importance of not preventing "humble men" from receiving "contributions to meet a powerful adversary"342 has been long recognised, and underlies the exceptions to the common law doctrines of maintenance and champerty. The facilitation of access to justice, however, is not to be treated as having absolute priority over traditional principle. 337 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 227 [105] per Mason P (Sheller and Hodgson JJA concurring). 338 Stocznia Gdanska SA v Latreefers Inc (No 2) [2001] 2 BCLC 116 at 151 [59] per Morritt and May LJJ and Wall J; Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429 at 450 [59] per O'Loughlin, Whitlam and Marshall JJ. 339 Re William Felton & Co Pty Ltd (1998) 145 FLR 211 at 220 per Bryson J. 340 [2004] EWCA Civ 292 at [54] per Lord Phillips MR. 341 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 227 [107] per Mason P (Sheller and Hodgson JJA concurring). 342 Martell v Consett Iron Co Ltd [1955] Ch 363 at 386 per Danckwerts J. "Trafficking in litigation". Thirdly, the Court of Appeal correctly said that the cases condemn "trafficking in litigation"343. It also said, understandably, that the content of that expression is "elusive"344. It certainly can be. Sometimes it is used as little more than a term of abuse. Sometimes it is employed in a circular or indeterminate fashion. An example is Stocznia Gdanska SA v Latreefers Inc (No 2) where the English Court of Appeal said that the expression connoted "unjustified buying and selling of rights to litigation where the purchaser has no proper reason to be concerned with the litigation"345. The Court also said that "'[w]anton and officious intermeddling with the disputes of others in which they [the funders] have no interest and where that assistance is without justification or excuse' may be a form of trafficking in litigation."346 These propositions lack full definition until one knows what is meant by "unjustified", "proper", "wanton and officious", "interest" and "justification or excuse". But the cases do point to some clear criteria. As between the funder and the party funded, there is "trafficking" in causes of action where they are assigned by the latter to the former in circumstances where there is neither any transfer of any property interest to which the causes of action are ancillary nor any genuine commercial interest which the funder has in taking the assignment of the causes of action and enforcing them for the funder's own benefit. Although the term "genuine commercial interest" calls for further definition, in 343 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 227 [107] per Mason P (Sheller and Hodgson JJA concurring). 344 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 227 [107] per Mason P (Sheller and Hodgson JJA concurring). 345 [2001] 2 BCLC 116 at 152 [61]. 346 The English Court of Appeal attributed these words to Lord Mustill in Giles v Thompson [1994] 1 AC 142; in fact in that case Lord Mustill, at 161, quoted similar words used by Fletcher Moulton LJ in British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd [1908] 1 KB 1006 at 1014. Of this passage Millett LJ said in Thai Trading Co v Taylor [1998] QB 781 at 786: "The language and the policy which it describes are redolent of the ethos of an earlier age when litigation was regarded as an evil and recourse to law was discouraged. It rings oddly in our ears today when access to justice is regarded as a fundamental human right which ought to be readily available to all." Whether this is so may depend on the kind of litigation, the amount at issue, the extent to which the plaintiff controls the litigation, and the extent to which the plaintiff will benefit from it. These matters are considered below at [267]-[283]. this sense to traffic in litigation is to attempt an invalid assignment of a bare cause of action, or to enter a champertous agreement347. The Court of Appeal questioned whether in New South Wales there truly existed "any residual category of 'trafficking'"348. In the usage just described, the category does exist. It is true, however, that even that kind of usage does leave open the question: "In what circumstances will the presence of 'trafficking in causes of action' entitle the defendant to the litigation brought on those causes of action to a stay of it?" Assignability of retailers' claims. Fourthly, the Court of Appeal also offered the tentative view, on an issue not debated before it, although it received some mention before this Court, that "the retailers' causes of action ... for money had and received" were "historically a claim in debt", and that debts are readily assignable "without apparently engaging the principles about trafficking"349. There is a serious question about whether the Court of Appeal was right350. But even if the alleged right of the retailers were otherwise assignable, an assignment of those rights in consideration of the payment by Firmstone & Feil the amount recovered would be champertous and of a proportion of unenforceable351. If the transaction between Firmstone & Feil and each retailer had taken the form of an assignment to Firmstone & Feil so that it could sue as plaintiff, the claim would fail because the assignment would be ineffective. Whether in an endeavour to escape that consequence, or for some other reason, the transaction took a different form. But, contrary to the respondents' 347 See Trendtex Trading Corporation v Credit Suisse [1982] AC 679 at 703 per Lord Roskill; Kaukomarkkinat O/Y v "Elbe" Transport-Union GmbH (The "Kelo") [1985] 2 Lloyd's Rep 85 at 89 per Staughton J. 348 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 232 [122] per Mason P (Sheller and Hodgson JJA concurring). 349 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 232 [123] per Mason P (Sheller and Hodgson JJA concurring). 350 It relied on Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 176 per Brennan J. Compare Mason CJ in the same case at 173, and Poulton v The Commonwealth (1953) 89 CLR 540 at 602 per Williams, Webb and 351 Laurent v Sale & Co (a Firm) [1963] 1 WLR 829 at 831; [1963] 2 All ER 63 at 65; Trendtex Trading Corporation v Credit Suisse [1982] AC 679 at 695 per Lord Wilberforce. submissions, the substance is the same. In substance, the contemplated transactions depended on persons having rights to sue giving up those rights in consideration of receiving two-thirds of what Firmstone & Feil were able to recover by verdict from the court or by settlement out of court (provided the settlement exceeded 75% of the face value of the principal claimed, or authority to settle for less were given). Similar transactions were said in Clairs Keeley (a Firm) v Treacy352 to constitute de facto assignment of the plaintiffs' causes of action. It is not necessary to decide whether that is so here. What is clear is that the degree of control which Firmstone & Feil has over the litigation, independently of instructions from the plaintiffs or input from the solicitors for the plaintiffs, reveals that the plaintiffs are close to ciphers. They are not conducting the actions in which they are named as plaintiffs to enforce their rights to sue by means of funding from Firmstone & Feil for a commission of one-third of the amounts recovered; rather Firmstone & Feil is conducting their actions for its own benefit, in consideration of a payment to the plaintiffs of two- thirds of the recovery. Relevance of maintenance and champerty to stays. Fifthly, the Court of Appeal considered that maintenance or champerty did not make the proceedings to which they related capable of being stayed. In their view a stay could only be granted if there were an abuse of process. They said353: "[A] conclusion about abuse of process must stem from a finding directed at the actual or likely conduct of the party in whose name the litigation is brought (or its agents). The court is not concerned with balancing the interests of the funder and its clients. Indeed, it is not concerned with the arrangements, fiduciary or otherwise, between the plaintiff and the funder except so far as they have corrupted or have a tendency to corrupt the processes of the court in the particular litigation. It is only when they have that quality that the defendant has standing to complain about them." On that basis they criticised the view of the Full Court of the Supreme Court of Western Australia in Clairs Keeley (a Firm) v Treacy354 that an abuse of process arises where litigation is pursued "in such a way that the interests of the plaintiffs are subservient to those of the funder". 352 (2003) 28 WAR 139 at 163 [134] per Templeman J (Parker, Wheeler and Pullin JJ concurring). 353 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 229 [114] per Mason P (Sheller and Hodgson JJA concurring). See also at 234 [132]. 354 (2004) 29 WAR 479 at 493 [71] per Steytler, Templeman and McKechnie JJ. There was perhaps an excessive concentration in the arguments of the appellants, and hence in the minds of those concerned to refute those arguments, with questions about how far the public policy relating to maintenance and champerty survives. It is preferable to consider the matter from the point of view of abuse of process generally. It does not follow that factors relevant to maintenance and champerty are not also relevant to abuse of process. For present purposes, however, it may be assumed that: any harshness in the terms of dealing between the funder and those being funded does not of itself create an abuse of process355; and the existence of maintenance or champerty does not of itself create an abuse of process sufficient to grant a stay (nor did the appellants so contend)356. However, it is clear that in particular cases the facts which make an agreement champertous, whether taken by themselves or taken with other facts, may also cause the prosecution of proceedings under the agreement to be an abuse of process. Further, it is not the law that proceedings funded by a litigation funder can only be stayed on the ground of abuse of process if there is an actual corruption, or a tendency to corruption, of the processes of the court. The approach stated by the Court of Appeal is much stricter than, and does not accord with, that which is suggested by the expression "abuse of process". The expression is a wide one, capable of application in very diverse circumstances. But, in general, the aspect 355 This fits in with the traditional view, discussed above at [251], that the law of maintenance and champerty, and the principles underlying it preserved by s 6 of the Act, are directed not to the client maintained but the other party to the litigation. 356 Some English cases hold that a stay is not to be granted merely on the ground that there is maintenance: Martell v Consett Iron Co Ltd [1955] Ch 363 at 388-389 per Danckwerts J; see also at 422 per Jenkins LJ and 429 per Hodson LJ (on appeal); Abraham v Thompson [1997] 4 All ER 362 at 374 per Potter LJ. Einstein J himself was of this view in the present case: Keelhall Pty Ltd t/as "Foodtown Dalmeny" v IGA Distribution Pty Ltd (2003) 54 ATR 75 at 99 [52]. See also Roux v Australian Broadcasting Commission [1992] 2 VR 577 at 608-609 per Byrne J. Some hold that a stay can be granted merely on the ground of maintenance: for example, Grovewood Holdings plc v James Capel & Co Ltd [1995] Ch 80 at 87-89 per Lightman J. Some reserve their opinion: Wild v Simpson [1919] 2 KB 544 at 564 per Atkin LJ. of "abuse of process" which is relevant for present purposes is that the process of the court is abused when it is employed for some purpose other than that which it is intended by the law to effect357. The justifications for the court's intervention against this kind of abuse of process as exemplified by some forms of litigation funding are diverse. Court process is expensive for the State to supply and for litigants to participate in. It is coercive and otherwise injurious both to litigants and to third parties and should not be employed beyond legitimate necessity. To the extent that people with urgent claims are held out from having them heard by actions in abuse of process, the latter actions should be stayed so that the former may be heard. Normal litigation is fought between parties represented by solicitors and counsel. Solicitors and counsel owe duties of care and to some extent fiduciary duties to their clients, and they owe ethical duties to the courts. They can readily be controlled, not only by professional associations but by the court. The court is in a position to deploy, speedily and decisively, condign and heavy sanctions against practitioners in breach of ethical rules. The appearance of solicitors is recorded on the court file. Institutions like Firmstone & Feil, which are not solicitors and employ no lawyers with a practising certificate, do not owe the same ethical duties. No solicitor could ethically have conducted the advertising campaign which Firmstone & Feil got Horwath to conduct. The basis on which Firmstone & Feil are proposing to charge is not lawfully available to solicitors. Further, organisations like Firmstone & Feil play more shadowy roles than lawyers. Their role is not revealed on the court file. Their appearance is not announced in open court. No doubt sanctions for contempt of court and abuse of process are available against them in the long run, but with much less speed and facility than is the case with legal practitioners. In short, the court is in a position to supervise litigation conducted by persons who are parties to it; it is less easy to supervise litigation, one side of which is conducted by a party, while on the other side there are only nominal parties, the true controller of that side of the case being beyond the court's direct control. Finally, the function of court proceedings is to provide a means of quelling real and active controversies that have arisen between persons who are unfortunate enough to have fallen into disputes with each other and that exist independently of and anterior to the 357 In Walton v Gardiner (1993) 177 CLR 378 at 393, Mason CJ, Deane and Dawson JJ approved the reference of Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536 to "the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people". The last expression is indeterminate, but employment of the court's process for some purpose other than that which it is intended to effect would bring the administration of justice into disrepute among right-thinking people. commencement of the proceedings. The purpose of court proceedings is not to provide a means for third parties to make money by creating, multiplying and stirring up disputes in which those third parties are not involved and which would not otherwise have flared into active controversy but for the efforts of the third parties, by instituting proceedings purportedly to resolve those disputes, by assuming near total control of their conduct, and by manipulating the procedures and orders of the court with the motive, not of resolving the disputes justly, but of making very large profits. Courts are designed to resolve a controversy between two parties who are before the court, dealing directly with each other and with the court: the resolution of a controversy between a party and a non- party is alien to this role. Further, public confidence in, and public perceptions of, the integrity of the legal system are damaged by litigation in which causes of action are treated merely as items to be dealt with commercially. The factors pointing to abuse of process These proceedings constitute an abuse of process by reason of several factors considered in combination. It is not necessary to decide whether a different result would be produced by the removal of some factors but not others. However, in view of the wide variety of possible funding arrangements, a different conclusion may be reached in other cases. The factors which in combination point to abuse of process are as follows. Firmstone & Feil's motive of profiting from the litigation of others. Firmstone & Feil's assistance was not given out of charity or compassion. It was not given on the basis that the poor were being oppressed by the rich358. Firmstone & Feil is not, to use a phrase which sprang up in argument, "a generous spirited company who are trying to bring people to justice". It has no public duties, nor is it held to public account, in the same way as an Attorney- General or other public servant359. The Court of Appeal found that Firmstone & Feil's "motives were not altruistic"360. Mr Firmstone himself agreed that his company's involvement in the proceedings constituted "a speculative investment ... in other persons' litigation". The profit which Firmstone & Feil were seeking was to be derived entirely from the litigation itself. It was not to stem from the 358 Harris v Brisco (1886) 17 QBD 504. 359 See generally Beisner, Shors and Miller, "Class Action 'Cops': Public Servants or Private Entrepreneurs?", (2005) 57 Stanford Law Review 1441. 360 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 232 [124] per Mason P (Sheller and Hodgson JJA concurring). vindication of any pre-existing right of Firmstone & Feil's. Firmstone & Feil had no interest in the proceedings, whether individual or shared with a plaintiff, beyond the chance of winning one-third of the proceeds. The wrongs allegedly done by the wholesalers to the retailers were not done to Firmstone & Feil. Firmstone & Feil had no proprietary or commercial interest in the retailers' businesses. Many of the retailers had been in commercial relations with the wholesalers for years before the critical period in 1997, and those relations have continued since that time. Firmstone & Feil has never been in commercial relations with the wholesalers, and is seeking to intrude into and "meddle" with the relations between the wholesalers and the retailers to which it is not party for reasons of personal profit. Firmstone & Feil sought out and encouraged persons to sue who would not otherwise have done so. The retailers did not seek the assistance of Firmstone & Feil to fund the litigation. Instead, Firmstone & Feil sought out the retailers and attempted to persuade them to sue. The key to the persuasion was the intended representation that the plaintiffs who were to join the representative proceedings bore no risk. The explicit language of one item of publicity corresponded with the theme of many others: "WHAT HAVE YOU GOT TO LOSE?????" In conventional litigation some restraint is placed on the desire to start litigation by the risk of having to pay the defendant's costs if the litigation fails. Firmstone & Feil's plan removed that restraint361. Although Firmstone & Feil, not being a firm of solicitors, was not able to offer legal advice about the proceedings, the publicity did not provide a balanced description of the nature or consequences of the proposed litigation, which removed further restraints from the retailers agreeing to let Firmstone & Feil go ahead. The respondents hinted at the almost dishonourable stance of the wholesalers in refusing to pay up in the face of cases against them which were so factually and legally simple as to be open and shut, and made submissions about the smallness and poverty of the retailers and about how commencing litigation, retailer by retailer, to recover small sums would be economically impossible. However, there was no evidence that any retailer solicited by Firmstone & Feil had ever made a claim on a wholesaler who is a defendant in the present proceedings, that any such wholesaler had ever refused to pay, that without Firmstone & Feil's intervention any retailer who has sued would have done so, that any retailer to be invited to opt-in would do so without that intervention, or that any retailer had joined the representative proceedings apart from the lead plaintiffs. The respondents argued that many retailers had made claims against other wholesalers as a result of aid from another litigation funder, but they did not submit that these claims were not themselves the result of solicitation by that 361 See Clairs Keeley (a Firm) v Treacy (2003) 28 WAR 139 at 173 [203] per Pullin J. funder. Rather they submitted that many or most of the retailers were unaware of their claims, and hence were parties "who most need access to justice". There was in fact no evidence of this supposed unawareness either. The only evidence on the willingness of retailers to join any of the 17 proceedings is one letter from a retailer dated 4 June 2003 advising Mr Firmstone that it did not wish to sue. This retailer was described in argument, without contradiction, as a large organisation. In short, this part of the respondents' argument proceeded by slogan rather than evidence, and by allusions to complex forms of "class" proceedings as if they were relevant to the present proceedings, which for some purposes the respondents chose to characterise as being so simple that it was scandalous that they had to be brought at all. On the evidence, it is clear that Firmstone & Feil sought to create a dispute which did not otherwise exist, to make it the subject of litigation, to wrest control of the conduct of the litigation from the nominal plaintiffs, and to extract as the price for this activity a substantial part of each plaintiff's potential proceeds. Thus it may be said to have engaged in "officious intermeddling" with "the disputes of others" which, but for its conduct, would not have existed and in which it had no interest362. Nature and smallness of the plaintiffs' "losses". As has just been noted, the respondents made much of the bona fide nature and validity of the "small but strong" claims of the retailers, of the retailers' ignorance of their claims, of their incapacity, without assistance, to advance their claims because of their smallness balanced against the cost of individual recovery, of the recalcitrance of the wholesalers in not complying with their just obligations, and of the strong incentives for the wholesalers to engage in litigation which would be "nasty, brutish and long"363. The respondents submitted that the risk of abuse of process had to be weighed against the plaintiffs' interest in the litigation and the fact that they were suing wholesalers who were unwilling to pay them, and who were experienced, determined and well-resourced. The evidentiary hole behind many of these arguments has already been noted, and the respondents resorted to more abstract contentions. It was said that for the court to stay the litigation was "contrary to the traditional respect of the common law for the autonomy of the individual". Other blessed phrases like "access to justice" and "equality of arms" were referred to in their arguments or were adopted by them. The respondents relied on a statement of the Full Federal Court that there was no cause for instant alarm if, in these circumstances, "a business house, openly and reasonably, 362 See British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd [1908] 1 KB 1006 at 1014 per Fletcher Moulton LJ, adopted in Giles v Thompson [1994] 1 AC 142 at 161 per Lord Mustill (Lords Keith of Kinkel, Ackner, Jauncey of Tullichettle and Lowry agreeing). 363 Emphasis in respondents' submissions. wishes to engage in the business of funding litigation and is prepared to meet the costs of the opposing party"364. Additionally, the Court of Appeal described the wholesalers' retention of the relevant monies as a "windfall gain"365, and the respondents took that description up. That description is a true one. On the other hand, in Roxborough v Rothmans of Pall Mall Australia Ltd, five members of this Court pointed out that the retailers who obtained the relevant monies by court order were also making "a windfall gain"366 in view of the difficulties those smokers who bought from the retailers would have in recovering their share of the monies. Here, as there, it cannot be said that the retailers indicated "the slightest interest in recovering the whole, or any part, of the windfall for the benefit of the consumers. They wanted the windfall for themselves."367 Although the law may permit retailers falling within the class involved in this appeal which can prove their case to enjoy recovery, and although the recovery of sums paid on a consideration which has failed may seem to involve the recovery of "loss", no loss need be proved, and it is wrong to assume that the recovery by the retailers targeted by Firmstone & Feil necessarily equates to recovery by persons who are truly out of pocket. The persons who are truly out of pocket are those who purchased tobacco products from retailers who passed on the licence fee component, and as the respondents conceded, here that component was passed on in every case. Where retailers who make a claim are claiming a windfall gain from wholesalers who wish to retain what is in their hands a windfall gain, there is nothing in that aspect of the position of the former group which weighs favourably in assessing whether the proceedings should be stayed as an abuse of process. There are other noteworthy aspects of the claims. The sums to be claimed would be claimed, in many cases, by retailers who had been in continuing business relationships with wholesalers and would be likely to wish to remain in them. It is understandable that there is no evidence that any of them wished to make a claim or to sue until Firmstone & Feil persuaded them to do so. Traditionally it has been thought that to provoke litigation to take place which would not otherwise have taken place is undesirable. It is an idea which underlay 364 Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429 at 451 [59] per O'Loughlin, Whitlam and Marshall JJ. 365 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 218 [67] per Mason P (Sheller and Hodgson JJA concurring). 366 (2001) 208 CLR 516 at 522 [5] per Gleeson CJ, Gaudron and Hayne JJ, 559-560 [114]-[116] per Kirby J, 591 [204] per Callinan J. 367 (2001) 208 CLR 516 at 559-560 [114] per Kirby J. maintenance and champerty368. But it is not limited to those fields. It is one thing to fund plaintiffs who wish to sue independently of the persuasion of the funder. It is another thing to fund plaintiffs who, but for the funding, would not have sued at all. This point was made by Pullin J in Clairs Keeley (a Firm) v Treacy369: "Losses suffered by some members of the community might be regarded by those persons as a vicissitude of life. Those persons, left to their own devices, may choose not to sue. It is not a failure of the system that some members of the community choose not to sue, even if there has been a breach of duty by some person or another. Persons suffering injury should not be encouraged to commence proceedings if they would, left to their own devices and based on their own assessment of the risks, not have contemplated litigation. However, such persons are likely to be willing to pursue litigation if they bear no risk of an adverse outcome." Whether or not, as the Court of Appeal thought, the law now looks favourably on funding arrangements, it is highly questionable whether the law looks favourably on litigation by a plaintiff to cover small sums of the order of rather less or rather more than $4,000370. Lawsuits are to be dreaded "beyond almost anything else short of sickness and death"371. Ought not at least Supreme Court litigation of 368 See British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd [1908] 1 KB 1006 at 1020 per Buckley LJ. 369 (2003) 28 WAR 139 at 172 [196]. 370 Precisely what sums were claimable is obscure. The figure of $4,000 as being the size of the average claim was one accepted in Mr Firmstone's evidence. That figure is not necessarily falsified by the publicity directed to retailers, which spoke of refunds of at least $10,000 or $11,250 being possible. An advertisement in the Daily Telegraph said: "A typical retailer could expect a refund of about $15,000." The point made in the text stands, even for those claiming more than $4,000. In the seven sets of proceedings affected by the present appeals, Fostif Pty Ltd claimed $3,143.20, Mr Berney claimed $2,039.85, Whelan & Hawking Pty Ltd claimed $7,899.04, the two Murrays claimed $657.47, the two Neindorfs claimed $2,563.35, the two Williamsons claimed $8,947.63, and the five plaintiffs in the Gow and Green proceedings claimed a total of $22,939.58. The Court of Appeal mentioned "an average claim of $1,000 or perhaps a little more", but the evidentiary basis for this is unclear: Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 237 [149] per Mason P (Sheller and Hodgson JJA concurring). 371 Judge Learned Hand, "The Deficiencies of Trials to Reach the Heart of the Matter", in Rosenberg, Lectures on Legal Topics 1921-1922 (1926) 87 at 105. that kind be discouraged, as a foolish way for a plaintiff to spend time and money and nervous energy? If so, litigation instituted by one such plaintiff representing many others is no more attractive. Plaintiffs may sue if they wish, but it is not easy to see why the courts should decline to characterise proceedings as an abuse of process merely because they permit litigation funders avaricious for large recoveries to foment litigation by numerous parties making claims to small sums of money which, although they may be legally entitled to them, they never in truth lost. Gains hoped for by Firmstone & Feil. The gains which Firmstone & Feil might make from the proceedings are potentially enormous. On the assumption that there are 10,000 retailers each with an average claim of $4,000, and on the assumption that interest would by now amount to at least 50% of the principal sum claimed, if all of them opted-in, Firmstone & Feil would be entitled to about $20 million plus costs recovered from the wholesalers less costs expended but not recovered from the wholesalers. Yet another estimate was at least $100 million for "the amounts the subject of the claims in ... all of the proceedings presently before the court", but it was not clear if this included interest. On that basis, if all went well, Firmstone & Feil would get over $30 million. Of course the enterprise was attended by risks. Many retailers might not opt-in. Many claims might be unprovable. But, making all allowances and discounts, the potential recovery is on a scale which no solicitor who dealt with clients on these terms could ethically defend. A solicitor who requested retailers to opt-in on Firmstone & Feil's terms, or charged fees of equivalent economic worth, would not long remain on the roll. The respondents did not explain why litigation funders, untrammelled by ethical rules or supervisory professional bodies, should be able to conduct litigation on terms which no solicitor could. Firmstone & Feil's control of the litigation. It is a factor pointing against an abuse of process that the funder of litigation "does not meddle at all"372 or by its contract is left "very little room to intermeddle"373. Conversely, the more room to intermeddle, the more likely is it that the litigation is an abuse of process. To some extent the respondents challenged that proposition, asserting that Firmstone & Feil were better placed to prosecute the litigation than the retailers. But the respondents did not otherwise explain why the proposition was unsound. Here any retailer agreeing to opt-in to the litigation would do so on terms giving Firmstone & Feil total control of it. 372 Giles v Thompson [1994] 1 AC 142 at 161 per Lord Mustill (Lords Keith of Kinkel, Ackner, Jauncey of Tullichettle and Lowry agreeing). 373 QPSX Ltd v Ericsson Australia Pty Ltd (No 3) (2005) 219 ALR 1 at 16 [61] per The respondents relied on three matters to negate control: Firmstone & Feil could not settle the litigation for less than 75% of the principal claimed; Firmstone & Feil retained a solicitor; Firmstone & Feil took advice from counsel. The fact is that but for the settlement limit, Firmstone & Feil's power to control was absolute, and it exercised it accordingly. Counsel did no more than settle the form of the summonses. The constricted role of the solicitor is noted elsewhere374. Mr Proud, an employee of Firmstone & Feil, drafted the summonses, had them settled by counsel, selected retailers to be approached as "lead plaintiffs", persuaded them to act on that basis, and obtained from them some relevant information. Although the retailers were told, or to be told, that Firmstone & Feil would pay the costs associated with the proceedings, they were not told of their potential liability to costs orders, nor of the precise financial capacity of Firmstone & Feil to meet them. That is the fact, even though Firmstone & Feil sought to overcome the difficulty before Einstein J by offering undertakings to the court to submit to such orders as to costs as the court might make, and to meet any orders as to costs as might be made against the plaintiffs or any represented person, and Mr Firmstone offered an undertaking to the court to underwrite any shortfall in payments by Firmstone & Feil up to a limit of $1 million. In addition, the retailers were not told that they or their officers might have to give evidence; they were not given any legal advice received by Firmstone & Feil. Further, Mr Firmstone had not instructed Robert Richards & Associates to inform the plaintiffs in the representative proceedings of the defendants' motions to strike them out, and neither he nor, as far as he knew, Robert Richards & Associates had communicated with them on any subject, although Mr Richards did communicate with some of them by means of a standard form letter in relation to a notice to produce. It enclosed some "Notes on Discovery". That letter suggests an absence of any prior contact, since it commences: "We are the solicitors on record engaged on your behalf by Firmstone & Feil in relation to the representative legal proceedings". There is no evidence that anyone provided any plaintiff with a copy of the relevant summons: Mr Proud did not do this, and as far as he knew no-one else had. The same is true of the plaintiffs' notices of motion for discovery. The question is not, as the Court of Appeal seemed to think, whether Mr Richards had conformed with his professional obligations: it is not suggested that he did not. The question is whether the limited role assigned to Mr Richards facilitated Firmstone & Feil's control of the proceedings. That role is relevant, in view of an earlier assumption, not as evidencing some breach of duty or unconscionable conduct on the part of Firmstone & Feil towards the retailers and 374 Above at [242]-[245]; below at [282]. the plaintiffs, but as a badge of Firmstone & Feil's indifference to them. That indifference to the retailers was understandable, for despite the use of the name of the lead plaintiffs, and the proposed use of the names of other retailers in the event that they opted-in, the real character of the proceedings was as a means of earning Firmstone & Feil large sums and each plaintiff only a very small sum. The real character of the proceedings was that they were started by Firmstone & Feil, not by the lead plaintiffs, and that they would be continued by Firmstone & Feil, not by the lead plaintiffs and any extra plaintiffs who opted-in. Subservience of the retailers' interests to those of Firmstone & Feil. The pursuit of the litigation in such a way as to render the interests of the nominal plaintiffs subservient to those of the funder is capable of being an abuse of process375. The respondents denied the possibility of conflicts of interest. The point is not that there may be conflicts of interest between funder and plaintiffs. The point is rather that the subserviency reveals the real nature of the proceedings. Here the large share of recoveries to which Firmstone & Feil were entitled accentuated the disparity between the vast sums which Firmstone & Feil might make and the relatively petty sums each retailer might recover. This, coupled with the control given to Firmstone & Feil, reveals that the proceedings were in truth being employed for a purpose alien to their legitimate function – the advantaging of the interests of the funder in its speculative investment rather than those of the retailers. Of course the retailers had to win for the funder to profit, but their success was only the means to a single end – the profit of Firmstone & Feil. The real character of the proceedings was not the vindication of the plaintiffs' rights, but their employment as a means of generating profit for Firmstone & Feil. Limited role of plaintiffs' solicitor. The limited role of Robert Richards & Associates, who appeared on the record as solicitors for the retailer plaintiffs, is relevant to the question whether Firmstone & Feil's role created an abuse of process because it is relevant to the issue of control. The authorities have seen as a factor pointing against abuse the fact that the solicitors for plaintiffs are not chosen by the funder, that instructions were given to those solicitors by the plaintiffs and not the funder, and that the retainers of the solicitors were made by the plaintiffs and not the funder376. The respondents questioned whether 375 Clairs Keeley (a Firm) v Treacy (2004) 29 WAR 479 at 493 [71] per Steytler, 376 Stocznia Gdanska SA v Latreefers Inc (No 2) [2001] 2 BCLC 116 at 152 [62] per Morritt and May LJJ and Wall J; Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394 at 419 [85] per Stone J; QPSX Ltd v Ericsson Australia Pty Ltd (N 3) (2005) 219 ALR 1 at 16 [61] per French J. solicitors of this kind lessened the potential for abuse of process, but they did not challenge these authorities. The presence of an independent solicitor dealing directly with the plaintiffs tends to reduce control of the litigation by the funder and leave it in the hands of the plaintiffs. The control given to Firmstone & Feil by reason of the inability of the plaintiffs to make informed decisions and the limited contact which Firmstone & Feil is likely to have had with them could have been alleviated by the presence of solicitors who were independent of the funder, were entitled to advise their clients, and were likely to do so. But Firmstone & Feil had ensured that Robert Richards & Associates were not in that position. The respondents also questioned what level of involvement was appropriate for a solicitor dealing with a $4,000 claim. Perhaps not great; but the ceding of most involvement to a non-solicitor pursuing a one-third share of a multimillion dollar claim arrived at by aggregating many small claims suggests that the proceedings nominally brought for the plaintiffs' benefits are really brought for the non-solicitor's. Firmstone & Feil's monopoly position. The failure of Firmstone & Feil to attract more retailers into litigation during the time while the limitation period was running led it to adopt the technique of soliciting lead plaintiffs to start representation proceedings just before the limitation period expired. The result – an unintended one, according to Mr Firmstone, whose evidence on this point Einstein J summarised without criticism – is that any retailer who wishes to recover from wholesalers can only do so on the terms put forward by Firmstone & Feil. The constitution of the proceedings as representative proceedings has given Firmstone & Feil, and only Firmstone & Feil, access to a share of the retailers' rights to litigate. Firmstone & Feil has thus used the court's process to give it the chance of a monopoly profit. The attempts of Firmstone & Feil to enlist the aid of the Supreme Court of New South Wales were attempts to get it to permit and facilitate the buying by the retailers of the product which Firmstone & Feil were seeking to sell, and the selling to Firmstone & Feil of the retailers' causes of action on terms which did not appear to be open to negotiation. In particular, the seeking of an order giving discovery of the names of retailers to whom the opt-in offers could be sent was an attempt to use the compulsory processes of the court to identify people with whom Firmstone & Feil might trade in these claims to its advantage. Analogy with others who profit from litigation? The Court of Appeal downplayed the significance of Firmstone & Feil's profit motive by saying that many people seek profit from assisting the processes of litigation – lawyers, expert witnesses, forensic accountants, printers and couriers. There is no analogy. Those classes of people either have no desire to foment litigation which would not otherwise exist, or are ethically barred from doing so. Those classes are suppliers of particular professional or commercial services to many people. One category of the people supplied comprises people who are parties to litigation, who control that litigation, and who exercise their own judgment as to what services should be supplied. The suppliers do not themselves create disputes out of nothing, decide how those disputes should proceed, and control the proceedings without input from the clients. The price, at least for the professional services supplied, can be hefty, but it is regulated, in part by competitive forces and in part by ethical constraints. Those ethical constraints prevent lawyers stipulating for a share of the fruits of victory. In the circumstances of this case there were in the end no competitive forces, and there are no ethical restraints on litigation funders. Remaining arguments of the respondents. Finally, the respondents advanced two linked arguments. First, the court had overall supervision of the proceedings – under Pt 8 r 13, it could "otherwise order"; under Pt 8 r 17 it could give the conduct of the proceedings to any person it thought fit; and any settlement resulting in discontinuance depended on court approval under Pt 21 r 2. Secondly, the burden on those seeking to establish an abuse of process and thereby obtain a permanent stay was heavy. It was necessary for the court to be satisfied that there was no other available means of overcoming the abuse of process. To some extent Firmstone & Feil and the trial judge explored methods of judicial control of the proceedings which could prevent there being an abuse of process, for example the offering of undertakings to the court in relation to costs. The respondents did not suggest any specific regime, using the court's powers under the rules or otherwise, for overcoming the problems described above, and in truth there are none available. Conclusion. In short, the proceedings as structured by Firmstone & Feil depended on a harnessing of the alleged wrongs of the plaintiffs and of the curial processes established to remedy alleged wrongs for the primary purpose of generating profits for Firmstone & Feil. That was an abuse of process. That conclusion may justify wider orders than the trial judge made. However, since the appellants do not ask for wider orders, it is not necessary to consider whether or not they should be made. If that conclusion is thought by those who have power to enact parliamentary or delegated legislation to be unsatisfactory on the ground that the type of litigation funding involved in these appeals is beneficial, then it is open to them to exercise that power by establishing a regime permitting it. It would be for them to decide whether some safeguards against abuse should be incorporated in the relevant legislation. Other issues There is no need to deal with other arguments advanced by the appellants relating to whether the attempt to get discovery for the purpose of identifying members of the class to whom invitations to opt-in could be sent was defective for various reasons, and relating to whether there was a "matter" for the purposes of Ch III of the Constitution. Orders We agree with the orders formulated by Gummow, Hayne and Crennan JJ.

HIGH COURT OF AUSTRALIA APPELLANT AND RESPONDENT Miller v Miller [2011] HCA 9 7 April 2011 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of Western Australia made on 6 November 2009 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of Western Australia Representation B W Walker QC with J A Thomson for the appellant (instructed by Kott Gunning Lawyers) G M Watson SC with N J Owens and R A Yezerski for the respondent (instructed by Tottle Partners) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Miller v Miller Negligence – Duty of care – Illegality – Plaintiff and defendant illegally using stolen motor vehicle in contravention of s 371A of The Criminal Code (WA) ("Code") – Plaintiff twice asked defendant to be let out of vehicle – Requests not complied with – Whether plaintiff can recover damages for injuries sustained as result of defendant's negligent driving of vehicle – Whether defendant owed duty of care to plaintiff – Whether statutory purpose of s 371A of Code incongruous with duty of care between joint illegal users of vehicle – Whether plaintiff's requests sufficient to effect withdrawal from joint illegal enterprise – Whether reasonable steps available to plaintiff to prevent commission of offence. Words and phrases – "duty of care", "illegal use", "joint illegal enterprise", "statutory purpose". The Criminal Code (WA), ss 8, 371A. Criminal Code Act Compilation Act 1913 (WA), Appendix B, s 5. FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ. Early in the morning of 17 May 1998, the appellant (Danelle Miller – "Danelle"), then aged 16 years, wanted to go from Northbridge, a Perth suburb, to her home in Maddington, another Perth suburb. She had been drinking, had tried unsuccessfully to enter a nightclub and was wandering in the streets with her sister and cousins. The last train had left. She did not have the money to pay for a taxi. So she decided to steal a car. Having started a car in the car park near the nightclub, Danelle asked her older sister (Narelle) to drive her and her younger cousin (Hayley) home. Danelle knew that Narelle had been drinking and did not hold a driver's licence. The respondent (Maurin Miller – "Maurin") was at a cab rank when he saw the car leaving the car park where it had been standing. Maurin was a cousin of Danelle's mother. He was aged 27 years. He said to Narelle: "I'm your uncle let me drive." Narelle moved out of the driver's seat and he took the wheel. Some of Maurin's friends who were waiting at the cab rank also got into the car. Nine passengers jammed themselves into the car with Maurin driving, and off they set. For a time, Maurin drove sensibly. But then he began to speed and to drive through red lights. Danelle asked him to slow down, and then she asked him to stop and let her and Narelle out. But Maurin drove on, saying that they were "all right", and should come with him to his house. Near Maddington, the suburb where Danelle lived, Maurin slowed the car down and Danelle again asked to be let out. Maurin laughed off her concerns. Shortly afterwards, having sped up, he lost control of the car. The car struck a pole. One passenger was killed. Danelle was very seriously injured and is now a tetraplegic. She sued Maurin in the District Court of Western Australia claiming damages for negligence. Can Danelle recover damages for negligence from Maurin? Does her theft of the car, or her subsequent use of the car (or some combination of both her theft and her use of the car), defeat her claim for damages for negligence? In many Australian these questions would require consideration of statutory provisions intended to regulate recovery of damages for personal injury suffered when the plaintiff was acting illegally1. There being jurisdictions, 1 See, for example, Civil Liability Act 2002 (NSW), s 54. Crennan Bell no relevant statutory provisions of this kind in Western Australia, the issues that arise in this matter turn upon the application of common law principles. At trial in the District Court of Western Australia, the parties agreed that the only live issue in the proceeding was whether Maurin owed Danelle a duty of care. They agreed that, if he did, Danelle should be found guilty of contributory negligence and that her responsibility for her injuries should be assessed at 50 per cent. A pleaded defence of voluntary assumption of risk was not pressed. The denial of negligence in fact was not pressed. The primary judge (Schoombee DCJ) held2 that Maurin owed Danelle a duty of care. On appeal, the Court of Appeal of the Supreme Court of Western Australia (McLure, Buss and Newnes JJA) held3 that Maurin owed Danelle no duty of care and that her action should therefore fail. As the case was argued at first instance, and on appeal, the denial of the existence of a duty of care rested entirely upon the assertion that Maurin and Danelle had engaged in a joint illegal enterprise of illegally using a motor car without the consent of the owner, contrary to s 371A of The Criminal Code (WA) ("the Code"). By special leave, Danelle appealed to this Court. The appeal should be allowed. By the time the accident happened, Maurin and Danelle were no longer engaged in a joint illegal enterprise. Danelle had stolen the car. She and Maurin and some, perhaps all, of the other passengers became parties to a joint illegal enterprise when they agreed to Maurin driving them in what they knew to be a stolen car. Danelle withdrew from that joint enterprise, of using the vehicle without the consent of its owner, when she asked to be allowed to get out of it. To explain why Danelle's requests to get out of the car are important to the resolution of the issues in this matter, it is necessary to examine how the fact that a plaintiff has engaged in illegal conduct in the course of, or in connection with, events said to give rise to liability in negligence bears upon the liability of the defendant to the plaintiff. The examination of the significance that is to be attached to illegality of the kind described will take the following course. First, reference will be made to some preliminary considerations. Second, illegality in tort will be placed in the larger context provided by looking at the significance 2 Miller v Miller (2008) 57 SR (WA) 358. 3 Miller v Miller [2009] WASCA 199. Crennan Bell that has been attached to illegality in the law of contract and trusts. Third, reference will be made to some of the cases that have considered the issue. Fourth, the relevant principles will be identified. Fifth, consideration will be given to the statutory provisions that were engaged in this matter, some reference made to their legislative history, and their purposes identified. Sixth, the principles will be applied to the facts of this case. Preliminary considerations It is convenient to begin examination of the issues in the case by making two preliminary points: first, the illegality of a plaintiff's conduct presents the question, but does not provide the answer to, whether the plaintiff can recover damages for negligence for injury suffered in the course of or as a result of that illegal conduct; and second, causation alone does not provide a satisfactory principle by which to resolve the issue, and was rejected as a determinative criterion by this Court in Henwood v Municipal Tramways Trust (SA)4. Over the last century, both in Australia and in other common law jurisdictions, courts have offered different statements of the principle or principles that govern whether and how the fact that a plaintiff acted illegally in the course of, or in connection with, events said to give rise to liability in negligence bears upon the liability of the defendant to the plaintiff. Academic commentators have offered not only different criticisms of those principles, but also several different alternative formulations of the principles. One point that emerges with complete clarity from the cases and the commentary is that the relevant principles are not identified by stopping the inquiry at the point of observing that a plaintiff has contravened the criminal law in the course of the events that the plaintiff alleges render the defendant liable to the plaintiff in tort. Nor are the principles identified by asserting, without further explanation, that public policy "requires" that such a plaintiff have no claim. Likewise the principles are not identified by simply intoning the Latin maxim ex turpi causa non oritur actio. As Windeyer J demonstrated, in Smith v Jenkins5, it is greatly to be doubted that the maxim, properly understood, has any (1938) 60 CLR 438; [1938] HCA 35. (1970) 119 CLR 397 at 409-414; [1970] HCA 2; see also Gollan v Nugent (1988) 166 CLR 18 at 28, 46; [1988] HCA 59. Crennan Bell application in tort. Its intrusion into the debate "has caused a confusion which would not have occurred if the writers had condescended to translation and had not taken the maxim into territory where it does not belong"6. In any event, reference to the maxim does not reveal the reasoning that leads to the conclusion that liability is denied. The maxim "notwithstanding the dignity of a learned language, is, like most maxims, lacking in precise definition"7. None of these observations denies that questions of public policy are presented when a plaintiff sues another for damages sustained by the plaintiff in the course of, or as a result of, some illegal conduct of the plaintiff. They are. But it is important to identify not only what are the policy considerations that are engaged, and how they are said to be engaged in the particular case, but also, and more fundamentally, why policy considerations are engaged. These reasons will show that the central policy consideration at stake is the coherence of the law. The importance of that consideration has been remarked on in decisions of this Court8. Its importance in this particular context was emphasised by the Supreme Court of Canada9. It is a consideration that is important at two levels. First, the principles applied in relation to the tort of negligence must be congruent with those applied in other areas of the civil law (most notably contract and trusts). Second, and more fundamentally, the issue that is presented by observing that a plaintiff was acting illegally when injured as a result of the defendant's negligence is whether there is some relevant intersection between the law that made the plaintiff's conduct unlawful and the legal principles that determine whether the plaintiff should have a cause of action for negligence against the defendant. Ultimately, the question is: would it be incongruous for the law to 6 Smith v Jenkins (1970) 119 CLR 397 at 410. 7 Beresford v Royal Insurance Co Ltd [1937] 2 KB 197 at 219-220 per Lord Wright MR. 8 Sullivan v Moody (2001) 207 CLR 562 at 576 [42], 580-581 [53]-[55]; [2001] HCA 59; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 602 [100]; [2008] HCA 57; CAL No 14 Pty Ltd v Motor Accidents Insurance Board (2009) 239 CLR 390 at 406-410 [39]-[42]; [2009] HCA 47. 9 Hall v Hebert [1993] 2 SCR 159 at 176-180. Crennan Bell proscribe the plaintiff's conduct and yet allow recovery in negligence for damage suffered in the course, or as a result, of that unlawful conduct? Other questions, such as whether denial of liability will deter wrongdoers or advantage some at the expense of others, are neither helpful nor relevant. And likewise, resort to notions of moral outrage or judicial indignation10 serves only to mask the proper identification of what is said to produce the response and why the response could be warranted. The second preliminary observation to make is that the issue cannot be resolved by asking only whether there is a causal connection between the plaintiff's illegal conduct and the occurrence of the damage of which the plaintiff complains. Why not? The fact that a plaintiff was acting contrary to law when he or she suffered damage of which the defendant's negligence is alleged to be a cause does not automatically preclude the plaintiff from recovering damages from the defendant. Pollock wrote11, in 1887, that although "[l]anguage is to be met with in some books to the effect that a man cannot sue for any injury suffered by him at a time when he is himself a wrong-doer ... there is no such general rule of law." Rather, Pollock offered12 the view that: "[i]t does not appear on the whole that a plaintiff is disabled from recovering by reason of being himself a wrong-doer, unless some unlawful act or conduct on his own part is connected with the harm suffered by him as part of the same transaction: and even then it is difficult to find a case where it is necessary to assume any special rule of this kind." (emphasis added) The notion of "connection" between the unlawful conduct and harm suffered was evidently drawn from the law that had developed during the 19th century in the United States, especially Massachusetts, concerning the relevance of the violation of Sunday observance laws to claims for injuries sustained while 10 Glanville Williams, "The Legal Effect of Illegal Contracts", (1942) 8 Cambridge Law Journal 51 at 61-62. 11 Pollock, The Law of Torts, (1887) at 150. Crennan Bell travelling for secular purposes on a Sunday. Pollock noted13 the conflict of opinion in the United States in cases raising such a question, and concluded14 that the decisions denying liability on account of breach of the Sunday observance statutes were "not generally considered good law". Writing about the Sunday observance cases in the Harvard Law Review in 1905, Harold Davis saw15 the principle engaged in such cases as depending upon questions of causation: "It seems plain that if the illegal act is the immediate, active cause of the damage, recovery is rightly refused. But it is by no means so clear that public policy demands that, if the illegal act was simply a remote link in the chain of causation, the action shall be barred, and the almost unanimous opinion of the authorities is strong evidence that it does not." (emphasis added) The author explained16 the distinction as being between an unlawful act that was a causa sine qua non (that put the plaintiff or his property in a position to be affected by the defendant's negligent act) and an unlawful act that was "the active agency which finally produces the result". Echoes of the distinctions drawn, and language used, when contributory negligence was a complete defence to an action in negligence17 can be heard distinctly in this treatment of the defence of illegality. And as was rightly said of the former rules about contributory negligence, with their associated notions of 15 Davis, "The Plaintiff's Illegal Act as a Defense in Actions of Tort", (1905) 18 Harvard Law Review 505 at 513 (footnote omitted). 17 See, for example, the discussion of the "last opportunity rule" in Wheare v Clarke (1937) 56 CLR 715; [1937] HCA 7; Alford v Magee (1952) 85 CLR 437; [1952] HCA 3. Crennan Bell "proximate" or "substantial" cause, the law was a "logical and legal labyrinth"18. Developing the law relating to the significance of a plaintiff's illegal conduct to recovery by that plaintiff in negligence by reference only to notions of causation would inevitably lead the law into a similar "logical and legal labyrinth". In Henwood19, Dixon and McTiernan JJ rejected analysis of the significance of illegality to liability in tort by reference only to questions of causation. In Henwood, the plaintiffs sued under legislation enacted on the pattern of Lord Campbell's Act20 in respect of the death of their son, allegedly as a result of the defendant's negligence. The son died as a result of injuries sustained when, contrary to a by-law made under statute, he leaned out of a tram on its off-side, and hit his head on poles erected by the defendant Tramways Trust in the centre of the road. As Dixon and McTiernan JJ pointed out21, there was a direct connection between the illegal act and the injury. The illegal conduct of the deceased was a necessary cause of his injury. But their Honours were of the view22 that the plaintiffs should succeed in their claim on the footing that it was not a "part of the purpose of the law against which the plaintiff has offended to disentitle a person doing the prohibited act from complaining of the other party's neglect or default, without which his own act would not have resulted in injury". The analysis made23 by Latham CJ was to substantially similar effect. In the present case, it is said that other considerations intrude when a plaintiff is shown to have been injured in the course of a joint illegal enterprise with the defendant. It is suggested that, because the conduct in question was part of a joint enterprise, attention can no longer be confined (as it was in Henwood) to whether the statute which penalised the particular conduct in which the 18 Stallybrass (ed), Salmond on Torts, 9th ed (1936) at 484 quoted in Wheare v Clarke (1937) 56 CLR 715 at 737 per Evatt J. 19 (1938) 60 CLR 438 at 457-460. 20 The Fatal Accidents Act 1846 (UK) (9 & 10 Vict c 93). 21 (1938) 60 CLR 438 at 458. 22 (1938) 60 CLR 438 at 460. 23 (1938) 60 CLR 438 at 445-448. Crennan Bell plaintiff engaged is to be understood as affecting civil responsibility. Rather, the appellant submitted, the critical question is whether the illegal act materially caused the injuries to the appellant by increasing the risk of injury to her. The answer to that question was said to depend upon the purpose of the illegal use of the motor car and a contrast was drawn between cases of "joy-riding" and cases, such as the present was said to be, where the purpose of the illegal use was "simply to drive home". Neither the precise content of the two categories, nor the stability of a distinction between them, is self-evident. Difficulties of those kinds may be set aside for the moment. Instead, it is important to observe how illegality is dealt with in some other areas of the law. Illegality in contract and trusts It has long been established that a contract whose making or performance is illegal will not be enforced24. Often enough, however, the statute in question does not expressly prohibit the making of the relevant contract and does not expressly prohibit its performance. Whether such a statute "prohibits contracts is always a question of construction turning on the particular provisions, the scope and purpose of the statute"25. Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd identifies26 considerations of the kind that are engaged in the task of statutory construction. But in addition to, and distinct from, cases where a statute expressly or impliedly prohibits the making or performance of a contract, are cases "where the policy of the law renders contractual arrangements ineffective or void even in the absence of breach of a norm of conduct or other requirement expressed or 24 Cope v Rowlands [1836] 2 M & W 149 at 157 per Parke B [150 ER 707 at 710]. 25 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 425 per Mason J; [1978] HCA 42. 26 (1978) 139 CLR 410 at 425 per Mason J. Crennan Bell necessarily implicit in the statutory text"27. In cases of the latter kind the refusal to enforce the contract has been held28 to stem: "not from express or implied legislative prohibition but from the policy of the law, commonly called public policy29. Regard is to be had primarily to the scope and purpose of the statute to consider whether the legislative purpose will be fulfilled without regarding the contract as void and unenforceable30." The same kinds of question have been identified as arising in relation to allegations of illegality in the constitution or performance of a trust. In Nelson v Nelson, Deane and Gummow JJ said31 that authorities in contract law (including Yango) suggest drawing distinctions between three cases: "(i) an express statutory provision against the making of a contract or creation or implication of a trust by fastening upon some act which is essential to its formation, whether or not the prohibition be absolute or subject to some qualification such as the issue of a licence; (ii) an express statutory prohibition, not of the formation of a contract or creation or implication of a trust, but of the doing of a particular act; an agreement that the act be done is treated as impliedly prohibited by the statute and illegal; and (iii) contracts and trusts not directly contrary to the provisions of the statute by reason of any express or implied prohibition in the statute 27 International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at 179 [71] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; [2008] HCA 3. 28 Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 227 per McHugh and Gummow JJ; [1997] HCA 17. 29 Yango (1978) 139 CLR 410 at 429-430, 432-433; Nelson v Nelson (1995) 184 CLR 538 at 551-552, 593, 611; [1995] HCA 25. 30 Yango (1978) 139 CLR 410 at 434. 31 (1995) 184 CLR 538 at 551-552. Crennan Bell but which are 'associated with or in furtherance of illegal purposes'. The phrase is that of Jacobs J in Yango32." Deane and Gummow JJ said33 that, in the last of these three kinds of cases, "the courts act not in response to a direct legislative prohibition but, as it is said, from 'the policy of the law'". As McHugh J explained34 in Nelson v Nelson, to approach the doctrine of illegality in this way, in cases where the statute in question does not expressly or impliedly prohibit the contract or trust, or the doing of some particular act that is essential for carrying it out, recognises that the legal environment in which the doctrine now operates is much more regulated than once it was. Moreover, as McHugh J also pointed out35, Lord Mansfield's statement in Holman v Johnson36 that "[n]o Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act", by its all-embracing generality, fails to take sufficient account of the different ways in which questions of illegality may arise. Hence the emphasis given in Nelson v Nelson37, and in both Fitzgerald v F J Leonhardt Pty Ltd38 and International Air Transport Association v Ansett Australia Holdings Ltd39 to the discernment, from the scope and purpose of the statute, of whether the legislative purpose will be fulfilled without regarding the contract or the trust as void and unenforceable. But implicit in, indeed at the very heart of, that process lies the recognition that there are cases where the breach of a norm of conduct stated expressly or implied in the statutory text requires the conclusion that an obligation otherwise created or recognised is not to be enforced by the courts. 32 (1978) 139 CLR 410 at 432; see also at 430 per Mason J. 33 (1995) 184 CLR 538 at 552. 34 (1995) 184 CLR 538 at 611. 35 (1995) 184 CLR 538 at 611. 36 (1775) 1 Cowp 341 at 343 [98 ER 1120 at 1121]. 37 (1995) 184 CLR 538 at 570, 616-618. 38 (1997) 189 CLR 215 at 227. 39 (2008) 234 CLR 151 at 180 [72]. Crennan Bell As noted in the preliminary considerations set out earlier in these reasons, in Henwood, Dixon and McTiernan JJ approached the relationship between a plaintiff's illegal act and recovery in negligence for damage (of which the illegal act and the negligence of the defendant were each a cause) by identification of the purpose of the law against which the plaintiff offended. Their Honours said40 that it may be that the same methods of statutory construction are engaged in determining whether the doing of an act forbidden by statute disqualifies the offender from recovery for negligence as are engaged when deciding whether a penal statute gives a private remedy in damages for breach of the duty it imposes. There is evident force in that proposition. But it is then necessary to observe the difficulties and dangers that attend that task. The chief difficulty was described by Dixon J in O'Connor v S P Bray Ltd41 in a passage to which reference was made in Henwood42. That difficulty is that "the legislature has in fact expressed no intention upon the subject"43. As explained in Sovar v Henry Lane Pty Ltd44, care must therefore be taken lest the relevant legislative intention be "conjured up by judges to give effect to their own ideas of policy and then 'imputed' to the legislature". As McHugh and Gummow JJ explained in Byrne v Australian Airlines Ltd45, quoting Kitto J in Sovar46, the task is one that requires consideration of the whole range of circumstances relevant upon a question of statutory interpretation, including the nature, scope and terms of the statute, the nature of the evil against which it is directed, the nature of the conduct prescribed and the pre-existing state of the law. 40 (1938) 60 CLR 438 at 463. 41 (1937) 56 CLR 464 at 477-479; [1937] HCA 18. 42 (1938) 60 CLR 438 at 463. 43 (1937) 56 CLR 464 at 477. 44 (1967) 116 CLR 397 at 405; [1967] HCA 31. 45 (1995) 185 CLR 410 at 460-461; [1995] HCA 24. 46 (1967) 116 CLR 397 at 405. Crennan Bell The decided cases Argument of the present matter necessarily focused upon the decisions of this Court said to be most directly in point: Henwood, Smith v Jenkins47, Jackson v Harrison48 and Gala v Preston49. Neither party submitted that the applicable principle or principles that are engaged in this matter was authoritatively stated in any of those cases. Each party, to a greater or lesser degree, sought to have the court restate the relevant principles. It is therefore necessary to pay close attention to what is said in those cases. Sufficient has been said, for present purposes, about Henwood. More must be said about the other three cases. Each of them (Smith v Jenkins, Jackson v Harrison and Gala v Preston) arose out of an action for damages for personal injury suffered by a person complicit in an offence committed by the driver. What is said in those cases, especially in Smith v Jenkins and Jackson v Harrison, must be understood against a background provided not just by the decision in Henwood, but also by the course of decisions in State courts after Henwood. Decisions of State courts In Christiansen v Gilday50, the Full Court of the Supreme Court of New South Wales considered a case in which the master of a trawler sued the owner for damages for personal injury suffered at sea when the master fell against the moving parts of an inadequately guarded winch. Under the Navigation Act 1901 (NSW) it was a misdemeanour for the owner to send a ship to sea, and for the master knowingly to take it to sea, in a state so unseaworthy as to be likely to endanger life. The defects in the winch were of that kind and both the plaintiff as master, and the defendant as owner, were found to have contravened the Navigation Act. 47 (1970) 119 CLR 397. 48 (1978) 138 CLR 438; [1978] HCA 17. 49 (1991) 172 CLR 243; [1991] HCA 18. 50 (1948) 48 SR (NSW) 352. Crennan Bell The Full Court held that the plaintiff could not recover damages. Jordan CJ agreed51 with the conclusion of the trial judge that the plaintiff could not "recover damages for injuries sustained by him in the course of his doing an act which was not only illegal but criminal". The analysis of Street J was to substantially similar effect. By contrast, Davidson J referred to Henwood and looked52 to the objects of the Navigation Act. Davidson J concluded53 that the Act was not directed to saving employees or others from their own acts, or to protecting the owner or master against liability to actions by the crew. On the contrary, Davidson J continued54, the object of the Act was "to impose rigid obligations, including criminal consequences, upon the owner and the master for the protection of everyone using the ship at sea". Accordingly, his Honour held that the master could not recover from the owner. In 1952, Smith J of the Supreme Court of Victoria had decided, in Williams v McEwan55, that a plaintiff's complicity in the illegal use of a motor car was not a bar to his recovery in an action for damages for negligence. The decision turned on the law of the place where the accident occurred – New South Wales. A New South Wales statute provided56 that nothing in the Act (which, among other things, proscribed57 the illegal use of a motor vehicle) "shall affect any liability of any person by virtue of any statute or at common law". The decision did not turn on the application of any common law principle about illegality. Issues about illegality in tort were more frequently litigated in the 1960s. By then, the statute law of New South Wales and Victoria had altered. No longer was illegal use of motor vehicles dealt with by traffic legislation. It was an 51 (1948) 48 SR (NSW) 352 at 355. 52 (1948) 48 SR (NSW) 352 at 356. 53 (1948) 48 SR (NSW) 352 at 356. 54 (1948) 48 SR (NSW) 352 at 356. 55 [1952] VLR 507. 56 Motor Traffic Act 1909 (NSW), s 17. 57 Motor Traffic Act 1909, s 8A. Crennan Bell offence dealt with by the general criminal statute of each jurisdiction, and the penalty prescribed was greater than had been the case when dealt with by traffic legislation. Because the offence of illegal use of a motor vehicle was dealt with in the relevant Crimes Acts, no legislative savings provision of the kind considered by Smith J in Williams v McEwan applied. In Boeyen v Kydd58, Adam J held, in the Supreme Court of Victoria, that there is no general principle of law that a person engaged in an unlawful act (there, the illegal use of a motor vehicle) cannot sue for damages for injuries sustained as a result of the negligence of his confederate. Adam J founded his conclusion on what had been held in Henwood, not upon a statutory savings provision of the kind considered by Smith J in Williams v McEwan. By contrast, in New South Wales a defence of illegality to a claim in negligence was upheld by the Full Court of the Supreme Court of New South Wales in Godbolt v Fittock59. In that case, a vehicle being used to transport stolen cattle ran off the road and struck a tree. The passenger, who had stolen the cattle with the driver, sued the driver for damages for negligence. The Full Court held the plaintiff to be precluded from recovery, founding60 the conclusion upon there being a direct connection between the journey during which the accident occurred and the execution of the relevant criminal purpose. In Andrews v The Nominal Defendant61 the New South Wales Full Court held that a passenger in a motor car which was owned by the passenger and which he had failed to insure could recover damages from the negligent driver despite the passenger's breach of the statutory requirement to insure. Applying Henwood, the Court held62 that it was not a part of the purpose of the law against which the plaintiff offended to deprive him of his civil remedy. 58 [1963] VR 235 at 237-238. 59 (1963) 63 SR (NSW) 617. 60 (1963) 63 SR (NSW) 617 at 624 per Sugerman J (Brereton J agreeing), 630-631 61 (1965) 66 SR (NSW) 85. 62 (1965) 66 SR (NSW) 85 at 93. Crennan Bell A few years later, in Bondarenko v Sommers, the New South Wales Court of Appeal held that a defence of illegality defeated a claim in negligence by one illegal user of a motor car against another. Jacobs JA, who gave the principal judgment63, identified the actual act complained of as done negligently as being "itself the criminal act in which both plaintiff and defendant were engaged". Because "[t]he legislation creating the criminal act shows no intention to preserve civil rights in the circumstances ... no cause of action would lie"64. Smith v Jenkins This Court's decision in Smith v Jenkins was reached against the background provided by this division of outcomes and opinions in the State courts. The Court concluded, unanimously, that the plaintiff could not recover damages from the driver of the motor vehicle which both plaintiff and driver were illegally using at the time of the accident. Each member of the Court gave separate reasons. Barwick CJ rested65 his conclusion on there being no duty of care owed by one illegal user to another. But that conclusion was expressly founded upon attributing to the relationship between the parties only one of what were seen as two competing and singular characterisations of the relationship: as joint participants in an illegal act, rather than as passenger and driver. Kitto J concluded66 that a case of joint illegal enterprise could and should be distinguished from Henwood, because there only the deceased had acted illegally. In the opinion of Kitto J, the determinative consideration67 was that the actual act done negligently was itself the criminal act in which both plaintiff and defendant were engaged. The acts which several persons knowingly contribute 63 (1968) 69 SR (NSW) 269 at 277. 64 (1968) 69 SR (NSW) 269 at 277. 65 (1970) 119 CLR 397 at 400. 66 (1970) 119 CLR 397 at 401-402. 67 (1970) 119 CLR 397 at 404. Crennan Bell to the joint commission of a wrong were, in his Honour's view68, legally inseverable. The reasons of Windeyer J are as important for his Honour's rejection of some propositions as they are for their acceptance of others. First, Windeyer J rejected69 formulation of the relevant principles in a way that made the critical question "whether the unlawful act has a causal connexion with the harm suffered and 'proximately contributed' to it". Second, Windeyer J rejected70 formulation of the relevant principles in a way that depended upon the kind of crime in the course of which the tort occurred. As his Honour demonstrated71, no satisfactory distinction can be drawn between breaches of statutory rules and violations of the criminal law, not least because most crimes are statutory. Nor can any other form of satisfactory distinction be made, at least for this purpose, between grades or types of illegal activity. The step critical to the reasoning of Windeyer J was the manner of formulating the relevant question. Windeyer J stated72 the question in the case as "whether when two persons are jointly engaged in a particular criminal enterprise – unlawfully taking or using a motor car – one can sue the other because he has been negligent in the course of carrying out his part in their unlawful undertaking" (emphasis added). The answer he gave to the question was stated73 by applying a rule that: "If two or more persons participate in the commission of a crime, each takes the risk of the negligence of the other or others in the actual performance of the criminal act." This formulation, Windeyer J said74, "can be regarded as founded on the negation of duty, or on some extension of the rule 68 (1970) 119 CLR 397 at 404. 69 (1970) 119 CLR 397 at 420-421. 70 (1970) 119 CLR 397 at 422-424. 71 cf Godbolt v Fittock (1963) 63 SR (NSW) 617 at 623. 72 (1970) 119 CLR 397 at 416-417. 73 (1970) 119 CLR 397 at 422. 74 (1970) 119 CLR 397 at 422. Crennan Bell volenti non fit injuria, or simply on the refusal of the courts to aid wrongdoers", but which analysis or explanation was adopted was said75 not to matter. Owen J was of the opinion76 that the relationship between two criminals engaged in carrying out a criminal venture gave rise to no duty of care owed by one to the other "in the execution of the crime". Walsh J concluded77 that there is no "single rule by which, in all cases, the question raised by a plaintiff's commission of an illegal act, or his participation in it, is to be answered". His Honour accepted that in some cases the correct approach would be to ask, as in Henwood, about the intention of the relevant statute. In others he suggested78 that "the inquiry is not whether the offender is disqualified from obtaining from the Court a remedy in respect of a wrong ... it is whether, in the circumstances, he will be treated as having suffered any civil wrong which is recognised by the law". the To the extent to which the Court's reasons depended upon assigning a single characterisation the parties, subsequent relationship of considerations of an approach of that kind to constitutional interpretation79 show that the reasoning is flawed. In deciding a question of connection between a statute and a head of power, the fact that the law fairly answers the description of being with respect to two subject-matters, of which one is within power, is sufficient to answer the relevant question. But in deciding whether one person owes a duty of care to another, it is necessary to consider the whole of the 75 (1970) 119 CLR 397 at 422. 76 (1970) 119 CLR 397 at 425. 77 (1970) 119 CLR 397 at 427. 78 (1970) 119 CLR 397 at 427. 79 For example, Re F; Ex parte F (1986) 161 CLR 376 at 387-388; [1986] HCA 41. Crennan Bell relationship between the parties80. As was said in Graham Barclay Oysters Pty Ltd v Ryan81: "[t]he totality of the relationship between the parties, not merely the foresight and capacity to act on the part of one of them, is the proper basis upon which a duty of care may be recognised." Thus where the relationship between parties engaged in a joint illegal enterprise may be characterised in more than one way, there is no sound basis for choosing one characterisation to the exclusion of the other or others. One aspect of the relationship between the parties in the present case was that they were joint participants in an illegal act. Another aspect of their relationship was that the plaintiff was a passenger in a motor vehicle being driven by the defendant. The relationship between the parties could therefore be described as a relationship of passenger and driver. But, just as it is wrong to describe the relationship between them only as that of participants in a joint criminal enterprise, it is wrong to describe their relationship only as that of passenger and driver. Both characterisations of the relationship are accurate, but neither is complete. Both characterisations must be applied to describe the relevant circumstances fully. The importance of recognising that the relationship between the parties has more than one aspect is revealed by the reasons in Smith v Jenkins. Common to the reasoning of all members of the Court was the emphasis given to the facts that the negligence of which the plaintiff complained was the defendant's negligent execution of the relevant illegal act (using the motor vehicle) and that the plaintiff was committing the same crime as the defendant. This description of events and relationships did not stop short at observing that one was a 80 See, for example, Perre v Apand Pty Ltd (1999) 198 CLR 180 at 253 [198] per Gummow J; [1999] HCA 36; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 41 [44] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ; [2001] HCA 44; quoting Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29 per Mason J; [1986] HCA 1; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 596 [145] per Gummow and Hayne JJ; [2002] HCA 54. 81 (2002) 211 CLR 540 at 596 [145]. Crennan Bell passenger in a car driven by the other. It took account of the fact that the driving was a crime in which the passenger was complicit. The significance given to the facts just described proceeded from the uncontroversial premise that it is necessary to determine whether the defendant owed a duty to a class of persons (including the plaintiff) to take reasonable care not to cause personal injury to those persons. Plainly, the driver of a motor car that the driver has taken and is using illegally owes other road users a duty to take reasonable care not to cause personal injury. But the question in Smith v Jenkins was more complex. The relevant question was as it is here: does the class of persons to whom the driver owes that duty of care include the driver's confederate in the crime of illegally using the vehicle? The emphasis given in the reasons for judgment to the negligence alleged being in the execution of the relevant illegal act for which both plaintiff and defendant were criminally responsible can be seen as founding the negative answer to the question about duty of care. For Windeyer J, that answer followed82 not from public policy precluding the assertion of a right of action but rather from the conclusion that the law will not regulate, as between two wrongdoers, how each performs the tasks that fall to him or her in effecting their wrong83. For other members of the Court, public policy precluded the assertion of a right of action. In Jackson v Harrison, the plaintiff, a passenger in a motor vehicle driven negligently by the defendant, sued for damages for personal injury. At the time of the accident the defendant was driving while disqualified. The plaintiff knew the defendant was disqualified and was found to be a joint participant in commission of the offence. In this Court, the plaintiff was held by majority (Mason, Jacobs, Murphy and Aickin JJ; Barwick CJ dissenting) to be entitled to recover damages. Again, no single view of the applicable principles commanded the assent of a majority of the Court. Mason J concluded84 that Smith v Jenkins did not establish a general rule that the participants in a joint illegal enterprise owe no duty of care to each other. 82 (1970) 119 CLR 397 at 418. 83 (1970) 119 CLR 397 at 422. 84 (1978) 138 CLR 438 at 453. Crennan Bell Rather, Mason J said85 that a general rule of that kind would lead to two distinct forms of difficulty. First, the rule would have unduly harsh operation in some circumstances, and it was not possible to formulate any criterion for engaging the principle that would avoid outcomes of that kind. Second, and more fundamentally, Mason J concluded86 that to deny the existence of a duty of care was to discard foreseeability as a criterion for determining the existence of a duty. Mason J therefore proposed87, as "[a] more secure foundation for denying relief", that a plaintiff "must fail when the character of the enterprise in which the parties are engaged is such that it is impossible for the court to determine the standard of care which is appropriate to be observed". Jacobs J, with whom Aickin J agreed, adhered88 to the view expressed, in the then recent decision of this Court in Progress and Properties Ltd v Craft89, that "[a]n illegal activity adds a factor to the relationship [between plaintiff and defendant] which may either extinguish or modify the duty of care otherwise owed". A conclusion that no duty was owed was said90 by Jacobs J to proceed by steps. First, it was observed that finding a duty presupposes that the relevant standard of care can be identified. Second, the courts should "decline to permit the establishment of an appropriate standard of care"91 if the relationship between the act of negligence and the nature of the illegal activity is such that "a standard of care owed in the particular circumstances could only be determined by bringing into consideration the nature of the activity in which the parties were engaged"92 (emphasis added). In those cases, Jacobs J concluded, the courts will not do this for reasons of public policy. And if no standard will be determined there can be no duty. But, in the case then under consideration, these difficulties 85 (1978) 138 CLR 438 at 455. 86 (1978) 138 CLR 438 at 455. 87 (1978) 138 CLR 438 at 455-456. 88 (1978) 138 CLR 438 at 457. 89 (1976) 135 CLR 651 at 668; [1976] HCA 59. 90 (1978) 138 CLR 438 at 457. 91 (1978) 138 CLR 438 at 457. 92 (1978) 138 CLR 438 at 457. Crennan Bell were not seen as intruding. The facts that the driver was disqualified, that the passenger knew that to be so, and that the passenger aided and abetted the driver in driving whilst disqualified, were seen93 as having no bearing at all upon the standard of care reasonably to be expected of the driver. The fourth member of the majority in Jackson v Harrison, Murphy J, pointed out94 that the cases in which a court cannot, as distinct from will not, determine an appropriate standard of care must be infrequent. The standard of care expected of the driver of a motor vehicle is well established. To conclude that one participant in a joint illegal enterprise owes no duty of care to the other would serve "the same purpose as a conclusive imputation of voluntary assumption of the risk [of tortious conduct by the other] by each participant"95. Accordingly, Murphy J concluded96 that, apart from a controlling statute, policy considerations should not render a careless defendant immune from civil action because of illegality. (The reference to "a controlling statute" was linked expressly97 to Henwood and it was said98 that there should be "strict application of the test" referred to in that case.) Three comments may be made about these different paths of reasoning. First, it should be accepted that it is not useful to speak of a court not being able to fix a relevant standard of care. Resort to the now well-worn example of safe breakers, and the posing of rhetorical questions about how a court would know what steps a reasonable safe breaker would take, are not helpful. The courts must deal with many difficult questions and with many forms of very discreditable human behaviour. Setting a norm of behaviour as between criminals may be difficult, but it is not impossible. 93 (1978) 138 CLR 438 at 461. 94 (1978) 138 CLR 438 at 462-463. 95 (1978) 138 CLR 438 at 464. 96 (1978) 138 CLR 438 at 464. 97 (1978) 138 CLR 438 at 465-466. 98 (1978) 138 CLR 438 at 465. Crennan Bell Second, it follows that, instead of asking how the courts can set a relevant standard of care, attention must fall upon whether the courts should be doing that in the particular case. All of the judgments in Jackson v Harrison (and in Smith v Jenkins) accepted that there are cases where the courts should not permit recovery by a plaintiff who has acted illegally. And no party to the present appeal contended to the contrary. Third, the cases in which a court should hold that there is no duty of care may be identified by reference to what Mason J described99 as "the character and incidents of the enterprise and to the hazards which are necessarily inherent in its execution". But in the case of an enterprise which is the commission of a statutory offence, inquiries of that kind direct attention not only to what the statute prohibits, but also to the purposes of that statute. It is the statute and its purposes which will identify the relevant character and incidents of the enterprise and the relevant hazards inherent in its execution. More fundamentally, it is the statute and its purposes which will reveal whether it would be incongruous to hold that a participant in a joint enterprise to contravene the statutory prohibition owed a duty of care to another participant in the enterprise. And because it is the relevant statute and its purposes that must be the focus of attention, rather than discussion of public policy divorced from the particular questions of coherence that must be decided, the decisions in other jurisdictions which follow that different path100 are of limited use. In the early 1990s this Court considered again, in Gala v Preston101, whether a driver of a stolen motor car owed a duty of care to a passenger who was injured as a result of the careless driving of the vehicle in the course of a joint criminal enterprise that included the illegal use of the vehicle. At that time, a majority of the Court favoured102 the view that a relevant duty of care: 99 (1978) 138 CLR 438 at 455. 100 See, for example, Gray v Thames Trains Ltd [2009] AC 1339. 101 (1991) 172 CLR 243. 102 (1991) 172 CLR 243 at 252-253 per Mason CJ, Deane, Gaudron and McHugh JJ. Crennan Bell "will arise under the common law of negligence only in a case where the requirement of a relationship of proximity between the plaintiff and the defendant has been satisfied: see Sutherland Shire Council v Heyman103; Stevens v Brodribb Sawmilling Co Pty Ltd104; San Sebastian Pty Ltd v The Minister105; Cook v Cook106". The Court had also held, in Cook v Cook107, that exceptional facts may alter the relationship between a driver and passenger so as to impose a different standard of care adjusted to the relationship. The case of driving instructor and learner driver was identified as one such case. All members of the Court held, in Gala v Preston, that a passenger who was criminally complicit in the illegal use of a vehicle by its driver could not recover damages for personal injury suffered as a result of the driver's careless driving. The plurality concluded108 no duty of care was owed because "the parties were not in a relationship of proximity to each other". It was said109 that Cook v Cook was "[a]n exemplification of the relationship of proximity which provide[d] particular assistance" in dealing with the circumstances under consideration in Gala v Preston. The demise of proximity as a useful informing principle in this area is now complete110. The decision in Cook v Cook is no longer good law111. The 103 (1985) 157 CLR 424 at 461-462, 506-507; [1985] HCA 41. 104 (1986) 160 CLR 16 at 30, 50-52. 105 (1986) 162 CLR 340 at 354-355; [1986] HCA 68. 106 (1986) 162 CLR 376 at 381-382; [1986] HCA 73. 107 (1986) 162 CLR 376. 108 (1991) 172 CLR 243 at 254. 109 (1991) 172 CLR 243 at 253. 110 Hill v Van Erp (1997) 188 CLR 159 at 210, 237-239; [1997] HCA 9; Perre v Apand Pty Ltd (1999) 198 CLR 180 at 193-194 [7]-[10], 197-198 [25]-[27], 208-212 [70]-[82], 283-284 [280]-[282], 300-303 [330]-[335]; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 13 [3], 32 [73], (Footnote continues on next page) Crennan Bell combination of these considerations may suggest that what was held in Gala v Preston should be set aside and the law should be developed as though the slate were clean. That is not right. First, it is important to remember why proximity has been discarded from the Australian judicial lexicon. The expression is one which has been found not to be useful. It is not useful because it neither states, nor points to, any relevant principle that assists in the resolution of disputed questions about the existence of a duty of care, beyond indicating that something more than foreseeability of damage is necessary. Instead, "proximity" was used as a statement of conclusion. And, because it was used as a statement of conclusion, it is important to look to the reasoning that lay behind the conclusion, rather than the bare fact that the conclusion was expressed by using the terms "proximity" or "relationship of proximity". In Gala v Preston, the plurality concluded112 that the parties were not in a "relationship of proximity" because "[i]n the special and exceptional circumstances that prevailed, the participants could not have had any reasonable basis for expecting that a driver of the vehicle would drive it according to ordinary standards of competence and care". This was said113 to follow from the fact that 33-34 [77], 56 [149], 80 [222], 96-97 [270]-[272]; [1999] HCA 59; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 630-631 [316]; [2001] HCA 29; Sullivan v Moody (2001) 207 CLR 562 at 578-579 [48]; Tame v New South Wales (2002) 211 CLR 317 at 355-356 [104]-[107], 405 [257], 408-409 [266]-[268]; [2002] HCA 35; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 583 [99], 624 [234]-[236]; Joslyn v Berryman (2003) 214 CLR 552 at 564 [30]; [2003] HCA 34; Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 528-529 [18]; [2004] HCA 16; Vairy v Wyong Shire Council (2005) 223 CLR 422 at 433 [28], 444-445 [66]-[68]; [2005] HCA 62; Imbree v McNeilly (2008) 236 CLR 510 at 524 [41], 552-553 [141], 564 [181]; [2008] HCA 40; Stuart v Kirkland-Veenstra (2009) 237 CLR 215 at 260 [132]; [2009] HCA 15. 111 Imbree v McNeilly (2008) 236 CLR 510. 112 (1991) 172 CLR 243 at 254. 113 (1991) 172 CLR 243 at 254. Crennan Bell "each of the parties to the enterprise must be taken to have appreciated that he would be encountering serious risks in travelling in the stolen vehicle when it was being driven by persons who had been drinking heavily and when it could well be the subject of a report to the police leading possibly to their pursuit and/or their arrest." Accordingly, the plurality decided114 that "[t]o conclude that he [the defendant- driver] should have observed the ordinary standard of care to be expected of a competent driver would be to disregard the actual relationship between the parties" (emphasis added) and that "[t]o seek to define a more limited duty of care by reference to the exigencies of the particular case would involve a weighing and adjusting of the conflicting demands of the joint criminal activity and the safety of the participants in which it would be neither appropriate nor feasible for the courts to engage." The validity of this reasoning does not depend upon the use of the word "proximity" as a description of its outcome. Likewise the reference to and reliance on Cook v Cook does not warrant ignoring all that was said or done in Gala v Preston. The references made by the plurality to Cook v Cook were made in aid of the proposition that there are cases in which the relationship between parties is not sufficiently described as that of driver and passenger. This Court's overruling of Cook v Cook in Imbree v McNeilly focused upon the treatment in Cook v Cook of questions of standard of care rather than duty of care. As the plurality pointed out115 in Imbree, in so far as the reasoning of the plurality in Cook v Cook depended upon the application of notions of proximity, it is reasoning that "does not accord with subsequent decisions of this Court denying the utility of that concept as a determinant of duty". But, as the plurality in Imbree also pointed out116, that observation did not conclude the issues that arose in Imbree. The immediate question in Imbree was about the 114 (1991) 172 CLR 243 at 255. 115 (2008) 236 CLR 510 at 526 [46]. 116 (2008) 236 CLR 510 at 526-527 [46]. Crennan Bell content of a duty of care, not whether any duty was owed. Further, the idea that, in determining the content of a duty of care, primacy must be given to identifying the relationship between the parties is a principle of long standing in the law of Australia, stemming as it does from the dissenting reasons of Dixon J in The Insurance Commissioner v Joyce117. Joyce concerned a gratuitous passenger accepting carriage in a vehicle driven by a person known by the passenger to be drunk. In Joyce, Dixon J offered118 three possible bases for concluding that the passenger's action should fail: no breach of duty, voluntary assumption of risk and contributory negligence (then a complete defence). Of them, Dixon J preferred119 the first form of analysis. As the plurality in Imbree said120, the conclusion that a defendant owed the plaintiff no duty of care is open in a case like Joyce if the drunken driver cannot be expected to act sensibly (an idea that would also underpin a conclusion that the plaintiff voluntarily assumed the risk of being driven by a drunken driver). And as Windeyer J said121 in Smith v Jenkins, a conclusion that one illegal user owes no duty of care to a confederate "can be regarded as founded on the negation of duty, or on some extension of the rule volenti non fit injuria, or simply on the refusal of the courts to aid wrongdoers". But as is implicit in what was said in all three cases (Joyce, Smith v Jenkins and Imbree) the question whether A owes B a duty to take reasonable care is not to be answered by reference only to whether A was the driver of and B a passenger in a motor vehicle. A duty of care arises from the "relations, juxtapositions, situations or conduct or activities"122 in question. All aspects of the relations between the parties must be considered. Other members of the Court in Gala v Preston (Brennan, Dawson and Toohey JJ) analysed the matter in separate reasons in ways that differed in 117 (1948) 77 CLR 39; [1948] HCA 17. 118 (1948) 77 CLR 39 at 56-58. 119 (1948) 77 CLR 39 at 59-60. 120 (2008) 236 CLR 510 at 536 [82]. 121 (1970) 119 CLR 397 at 422. 122 The Insurance Commissioner v Joyce (1948) 77 CLR 39 at 57. Crennan Bell important respects from the reasoning adopted by the plurality. For Brennan J, the decisive point123 was that to admit a duty of care would destroy the "normative influence" of the statutory provision124 which made the illegal use of a vehicle a crime. The destruction of "normative influence" was said125 to occur where the effect of admitting a duty of care would be to "condone" a breach of the criminal law. But introducing the notion of "condonation" into the debate does not cast light upon the problem. Rather, it is important to observe the way in which Brennan J sought to identify when the admitting of a duty of care may "condone" a breach of the criminal law. It was said126 to depend on the "nature of the offence". That was said127 to be "not the same as seeking to divine the intent of a statute creating an offence". Instead, the matters to be considered were said128 to include: "the gravity of the offence, the threat to public order or public safety or the infringement of the rights of third parties which the law seeks to prevent, any other mischief at which the law creating the offence is aimed, the penalties prescribed for breach of the law and the effectiveness of those penalties to secure obedience to the law if a duty of care be admitted". In large part the considerations mentioned would be relevant to inquiries of the kind described by Dixon and McTiernan JJ in Henwood in determining the purpose of the law against which the plaintiff offended. What is added, however, in the catalogue of matters to which Brennan J referred, is an attempt at assessing the effectiveness of penalties in securing obedience to the law and, perhaps, some assessment of what is described as "the threat" which the law seeks to prevent, independent of whatever may be gleaned from the subject-matter, scope and purpose of the statute. Neither the way in which these tasks might be undertaken, nor any sound footing for undertaking them, is identified. 123 (1991) 172 CLR 243 at 273. 124 Criminal Code (Q), s 408A. 125 (1991) 172 CLR 243 at 270-273. 126 (1991) 172 CLR 243 at 271. 127 (1991) 172 CLR 243 at 272. 128 (1991) 172 CLR 243 at 272. Crennan Bell Two points may be made about this form of analysis. First, as Windeyer J demonstrated in Smith v Jenkins129, no satisfactory distinction can be made between breaches of statutory rules and violations of the criminal law and no satisfactory distinction can be made between grades or types of crime. Second, and no less fundamentally, reference to matters such as the "effectiveness" of penalties in securing obedience to the law appears to sever any connection between the conclusion reached and the legal and practical operation of the statute identified according to ordinary methods of statutory construction. More particularly, it may readily lead to an error closely analogous to that identified in Sovar v Henry Lane Pty Ltd130 where legislative intention is "conjured up by judges to give effect to their own ideas of policy and then 'imputed' to the legislature". In his reasons in Gala v Preston, Dawson J doubted131 "that it is possible to gauge the extent to which allowing a civil remedy might impair the normative (especially the deterrent) effect of the criminal law". Instead, Dawson J concluded132 that the relevant policy of the law "goes deeper than possible interference with the normative effect of the criminal law" and is founded in a notion that it is repugnant to the law to set a standard of care to be observed between accomplices "in the performance of their criminal venture". In the case of joint illegal users of a vehicle: "[t]he criminal nature of the activity with its concomitant lack of responsibility for the safety of the vehicle involved and the inevitable desire to avoid detection which might result in the imposition of a criminal penalty must mean that the participants in such a venture cannot be placed, as regards each other, in the position of ordinary, prudent users of the road. There is a special element in their relationship which, if a 129 (1970) 119 CLR 397 at 422-423. 130 (1967) 116 CLR 397 at 405. 131 (1991) 172 CLR 243 at 278. 132 (1991) 172 CLR 243 at 278. Crennan Bell standard of care were to be set, would require its modification by reference to the criminal nature of their activity."133 In his reasons, Toohey J concluded134 that Smith v Jenkins established that if two persons participate in the commission of a crime each takes the risk of the negligence of the other in the actual performance of the criminal act and neither participant owes a duty of care to the other. There being, in his Honour's view135, nothing in later decisions which cut down that principle established in Smith v Jenkins, and136 there being no sufficient reason shown to depart from what was decided in that case, it should be held that the defendant in Gala v Preston owed the plaintiff no duty of care. Common threads in the decided cases What has been said about the previous decisions in this Court shows that some propositions can be made. First, the fact that a plaintiff was acting illegally when injured as a result of the defendant's negligence is not determinative of whether a duty of care is owed. Second, the fact that plaintiff and defendant were both acting illegally when the plaintiff suffered injuries of which the defendant's negligence was a cause and which would not have been suffered but for the plaintiff's participation in the illegal act is not determinative. Third, there are cases where the parties' joint participation in illegal conduct should preclude a plaintiff recovering damages for negligence from the defendant. Fourth, different bases have been said to found the denial of recovery in some, but not all, cases of joint illegal enterprise: no duty of care should be found to exist; a standard of care cannot or should not be fixed; the plaintiff assumed the risk of negligence. Fifth, the different bases for denial of liability all rest on a policy judgment. That policy judgment has sometimes been expressed in terms that the courts cannot regulate the activities of wrongdoers and sometimes in terms that the courts should not do so. 133 (1991) 172 CLR 243 at 280 per Dawson J. 134 (1991) 172 CLR 243 at 285. 135 (1991) 172 CLR 243 at 285-289. 136 (1991) 172 CLR 243 at 290-292. Crennan Bell Twice this Court has held (unanimously in each case) that one illegal user of a motor vehicle cannot recover damages for injuries sustained as a result of the negligent driving of another illegal user of the vehicle. Central to the conclusion in each of those cases was the observation that the negligence alleged was negligence by one criminal in carrying out his part in the unlawful undertaking in which both plaintiff and defendant were engaged. The proposition that courts cannot regulate the activities of wrongdoers has already been rejected. In a case of illegal use of a motor vehicle there is a readily identified standard of care that could be engaged: the standard of care which road users other than the driver's criminal confederates are entitled to expect the driver to observe. Why should courts not regulate the activities of the wrongdoers by requiring of the driver that he or she exercise reasonable care for the safety of other road users and any passenger in the vehicle, whether or not the passenger is complicit in the crime? As explained at the outset of these reasons, the answer must lie in whether it is incongruous for the law to provide that the driver should not be using the vehicle at all and yet say that, if the driver and another jointly undertake the crime of using a vehicle illegally, the driver owes the confederate a duty to use it carefully when neither should be using it at all. Incongruity (whether described by that word or as "contrariety" or "lack of coherence") will not be demonstrated or denied by bare assertion of the answer. More analysis is required. If a statute has been contravened, careful attention must be paid to the purposes of that statute. It will be by reference to the relevant statute, and identification of its purposes, that any incongruity, contrariety or lack of coherence denying the existence of a duty of care will be found. That is the path that was taken in Henwood. It is the same as the path that has been taken in relation to illegality in contract and trusts. The same path should be taken in cases where the plaintiff sues the defendant for damages for the negligent infliction of injury suffered in the course of, or as a result of, the pursuit of a joint illegal enterprise. Relevant statutory provisions In this case, the centrally relevant provision was s 371A of the Code. That provision made it an offence to take or use a motor vehicle without the consent of the owner or person in charge of the vehicle. The only offence in which it was alleged that Danelle was complicit was the offence of taking and illegally using the vehicle. She had taken the vehicle; both she and Maurin used it illegally. Crennan Bell Maurin, the driver of the vehicle, was charged with, and pleaded guilty to, other offences arising out of his use of the car that night: dangerous driving causing death, dangerous driving causing grievous bodily harm, and driving under the influence of alcohol. At the relevant time, s 371A provided: "(1) A person who unlawfully – uses a motor vehicle; or takes a motor vehicle for the purposes of using it; or drives or otherwise assumes control of a motor vehicle, without the consent of the owner or the person in charge of that motor vehicle, is said to steal that motor vehicle. This section has effect in addition to section 371 and does not prevent section 371 from applying to motor vehicles." There is a substantial legislative history behind that provision and it will be necessary to consider some aspects of that history. Before doing that, however, note must also be made of two other provisions of the Code as it stood at the relevant time. First, it will be observed that s 371A(2) provided that s 371A "has effect in addition to section 371 and does not prevent section 371 from applying to motor vehicles". Section 371 provided: "(1) A person who fraudulently takes anything capable of being stolen, or fraudulently converts to his own use or to the use of any other person any property, is said to steal that thing or that property. (2) A person who takes anything capable of being stolen or converts any property is deemed to do so fraudulently if he does so with any of the following intents, that is to say:– (a) An intent to permanently deprive the owner of the thing or property of it or any part of it; Crennan Bell (b) An intent to permanently deprive any person who has any special property in the thing or property of such special property; (c) An intent to use the thing or property as a pledge or security; (d) An intent to part with it on a condition as to its return which the person taking or converting it may be unable to perform; (e) An intent to deal with it in such a manner that it cannot be returned in the condition in which it was at the time of the taking or conversion; In the case of money, an intent to use it at the will of the person who takes or converts it although he may intend to afterwards repay the amount to the owner. The term 'special property' includes any charge or lien upon the thing or property in question, and any right arising from or dependent upon holding possession of the thing or property in question, whether by the person entitled to such right or by some other person for his benefit. The act of stealing is not complete until the person taking or converting the thing actually moves it or otherwise actually deals with it by some physical act. In this section, 'property' includes any description of real and personal property ..." Second, it will be observed that s 371A provided, in effect, that the person who illegally takes or uses a motor vehicle "is said to steal that motor vehicle". Section 378 prescribed the punishment for theft, if no other punishment was provided, as imprisonment for seven years. Section 378(2) made special provision for some cases of illegal use of a motor vehicle. It provided: Crennan Bell If the thing stolen is a motor vehicle and the offender – (a) wilfully drives the motor vehicle in a manner that constitutes an offence under section 60 of the Road Traffic Act 1974 (i.e. the offence known as reckless driving); or drives the motor vehicle in a manner that constitutes an offence under section 61 of the Road Traffic Act 1974 (i.e. the offence known as dangerous driving), the offender is liable to imprisonment for 8 years." Thus, different maximum penalties were prescribed for the illegal taking or use of a motor vehicle and the illegal taking or use of a motor vehicle accompanied by one or other of two aggravating circumstances: driving in a manner that constitutes either the offence of reckless driving or the offence of dangerous driving. Reference must also be made to s 8 of the Code, which dealt with offences committed in prosecution of a common purpose. Section 8 provided: "(1) When 2 or more persons form a common intention to prosecute an unlawful purpose in conjunction with one another, and in the prosecution of such purpose an offence is committed of such a nature that its commission was a probable consequence of the prosecution of such purpose, each of them is deemed to have committed the offence. (2) A person is not deemed under subsection (1) to have committed the offence if, before the commission of the offence, the person – (a) withdrew from the prosecution of the unlawful purpose; by words or conduct, communicated the withdrawal to each other person with whom the common intention to prosecute the unlawful purpose was formed; and having so withdrawn, took all reasonable steps to prevent the commission of the offence." It is to be noted that the hinge about which s 8 turns is the formation of "a common intention to prosecute an unlawful purpose" and that s 8(1) makes those Crennan Bell who have that common intention criminally liable for an offence committed "of such a nature that its commission was a probable consequence" of the prosecution of the common purpose. If one of those who was party to the common purpose withdraws from its prosecution in the manner described in s 8(2), that person is not responsible for offences committed subsequently, even if their commission was a probable consequence of the prosecution of the common purpose. The legislative history Larceny was an offence in Western Australia from the time of establishment of the Colony. The path by which that was effected need not be described. The first Western Australian codification of the criminal law, made by the Criminal Code Act 1902 (WA), provided for offences of stealing which would encompass stealing a motor vehicle but, as had been the case with earlier larceny offences, an element of the offence137 was the intention, in effect, to permanently deprive the owner of the relevant thing. And The Criminal Code provided for by the Criminal Code Act Compilation Act 1913 (WA) made like provision138. Use of a motor vehicle without consent was first made an offence in Western Australia by the Traffic Act 1919 (WA)139. No intention to permanently deprive the owner of the vehicle had to be shown. The offence was punishable by fine of up to £50 or imprisonment, with or without hard labour, for three months. In 1932, the Criminal Code (Chapter XXXVII) Amendment Act 1932 (WA) introduced s 390A into the Code. That section made it a misdemeanour, punishable by imprisonment with hard labour for up to three years, to unlawfully use, or take for the purpose of using, or drive or otherwise assume control of, any vehicle as defined in the Traffic Act 1919 without the consent of the owner or the person in charge of the vehicle. Again, no intention to permanently deprive the owner of the vehicle had to be proved. The provision for an offence of illegal Crennan Bell use made by the Traffic Act 1919 was not then repealed. That provision remained in force until the Traffic Act 1919 was repealed and replaced by the Road Traffic Act 1974 (WA). And the latter Act made like provision (by s 89(1)) to that made by s 50 of the Traffic Act 1919. In 1974, the punishment provided under the Road Traffic Act for illegal use of a motor vehicle contrary to s 89 of that Act was, for a first offence, a fine of not less than $200 or more than $1000, or imprisonment for not less than one month or more than 12 months, and for a second or subsequent offence, imprisonment for not less than three months or more than two years. Both the Traffic Act 1919140 and the Road Traffic Act 1974141 contained savings provisions which provided that nothing in the Act "shall take away or diminish any liability of the driver or owner of a vehicle by virtue of any other Act or at common law". In 1991, the Criminal Law Amendment Act 1991 (WA) repealed both s 390A of the Code and s 89(1) of the Road Traffic Act 1974 and inserted s 371A into the Code. As has been observed, the new s 371A, unlike the former s 390A, provided that the person who illegally took or used a motor vehicle "is said to steal that motor vehicle" and the offence of illegal use then became a species of theft, regardless of whether the user had an intention to permanently deprive the owner of the vehicle. Savings provisions As noted earlier, both the Traffic Act 1919 and the Road Traffic Act 1974 contained a savings provision expressly preserving any liability of the driver of a vehicle "by virtue of any other Act or at common law". Section 5 of Appendix B of the Criminal Code Act Compilation Act 1913 provides, and has provided since first enacted, that: "When, by the Code, any act is declared to be lawful, no action can be brought in respect thereof. Except as aforesaid, the provisions of this Act shall not affect any right of action which any person would have had against another if this Act had not been passed; nor shall the omission from the Code of any penal Crennan Bell provision in respect of any act or omission, which before the time of the coming into operation of the Code constituted an actionable wrong, affect any right of action in respect thereof." The extent of the operation of s 5 may be controversial. It is to be observed that it provides that "the provisions of this Act" shall not affect certain rights of action: "any right of action which any person would have had against another if this Act had not been passed" (emphasis added). And it is further to be observed that, in all other respects, s 5 refers to "the Code" as distinct from "this Act". Another introductory provision of Appendix B to the Criminal Code Act Compilation Act 1913 (s 7 dealing with contempt of court) provides that "[n]othing in this Act or in the Code" shall have an identified consequence. It is neither necessary nor desirable to attempt to identify all of the issues presented by these features of s 5 or to explore where the boundaries of s 5 may lie. What are the rights of action spoken of in s 5, and which are not affected by the provisions of "this Act"? It may greatly be doubted that those rights of action are confined to rights that existed before the enactment of the legislation in 1913. The use of the expression "would have had" suggests an ambulatory operation for the provision. Assuming that to be so, s 5 preserves rights of action that would otherwise exist. It does not determine, one way or the other, whether a person who has contravened a provision of "this Act" (assuming that "this Act" includes the provisions of the Code) owed a duty of care to a confederate in crime. By contrast, the savings provisions of the Traffic Act 1919 and the Road Traffic Act 1974 provided that nothing in those Acts took away or diminished any liability of the driver of a vehicle by virtue of any other Act or at common law. It is not necessary to decide in this matter what consequences follow from the repeal of the Road Traffic Act 1974 with its savings provision that (among other things) making illegal use of a vehicle a crime did not take away or diminish the driver's liability at common law. Nor is it necessary to decide whether the savings provision of s 5, on its proper construction, denies that it is a statutory purpose of s 371A to preclude finding that one illegal user owes a duty of care to another. Instead, the decision in this case should be reached by consideration, first, of the statutory purposes of s 371A, and finally of the significance to be attached to Danelle's twice asking to be let out of the car before the accident happened. Crennan Bell The purposes of the legislation Savings provisions apart, the legislative history behind s 371A of the Code demonstrates that the offence of illegal use of a motor vehicle soon passed from the relatively minor offence created by the Traffic Act 1919 to a more serious crime (with the enactment of s 390A of the Code in 1932) and thence (by the enactment of s 371A of the Code, and repeal of s 89(1) of the Road Traffic Act in 1991) to a still more serious crime equated with theft. An association between the illegal use of a motor vehicle and driving in a manner that was reckless or dangerous was reflected by the introduction of aggravated forms of the offence of illegal use. These changes in the legislation reflected not only a rise in the incidence of illegal use of motor cars, but also a recognition of the dangers to life and limb that often attended the commission of that crime. No doubt the legislation, both as it now stands and as it stood in earlier times, must be understood as effecting a purpose of protecting the property interests of vehicle owners. But in more recent years the legislature also recognised the fact that those who took and used vehicles without the permission of their owners often drove (as Dawson J pointed out142 in Gala v Preston) with a "concomitant lack of responsibility for the safety of the vehicle involved and the inevitable desire to avoid detection". The legislative purposes of s 371A are not confined to protection of property rights. They include the advancement of road safety. If expressed only as the protection of property rights and the promotion of general road safety, the statutory purposes of s 371A, standing alone, appear not to speak to any question of the liability for negligence of one illegal user to another. But there is a further question that must be considered before concluding that one illegal user can sue another in negligence. As noted earlier, a critical step in the reasoning in earlier cases in this Court considering the liability in negligence of one illegal user of a vehicle to another was that the negligence has been committed in the performance143 of the joint criminal venture. That manner of expressing the issue should not be 142 (1991) 172 CLR 243 at 280. 143 Gala v Preston (1991) 172 CLR 243 at 278 per Dawson J; see also Smith v Jenkins (1970) 119 CLR 397 at 416-417 per Windeyer J. Crennan Bell permitted to mask the significance of the proper identification of the venture and its nature. More particularly, it is a description of the circumstances that directs attention to questions about what is the venture and what, if any, criminal responsibility the passenger may have for the manner of the confederate's driving that is a cause of the passenger's injury. The venture between the parties may be described as a venture to use the vehicle illegally. But, as has already been seen, s 8(1) of the Code provides that when two or more persons form a common intention to prosecute an unlawful purpose in conjunction with one another, and in the prosecution of such purpose "an offence is committed of such a nature that its commission was a probable consequence of the prosecution of such purpose", each is deemed to have committed that offence. If two or more persons agree to take and use a vehicle illegally, and one of them drives it unsafely, it will likely be concluded that "a probable consequence of the prosecution of such purpose" is the driving of the vehicle with a "lack of responsibility for the safety of the vehicle", its occupants and other road users, and in a way that departs markedly from a standard of driving with reasonable care. The cases in which those are not probable consequences of two or more persons joining in the taking and illegal use of a vehicle will likely be rare. It is the recognition of that fact that lies beneath the conclusions reached in both Smith v Jenkins and Gala v Preston. The joint criminal venture to which reference was made in those cases was a venture in which reckless or dangerous driving was a probable, but not inevitable, incident of the venture. If, in a particular case, it were to be shown that a probable consequence of commission of an offence of taking or using a vehicle illegally was the commission of other driving offences (including reckless or dangerous driving) those who were complicit in the initial offence would be criminally liable for the subsequent offences as well. More particularly, if, as here, the driver of the illegally used vehicle drove dangerously, and driving in that manner was a probable consequence of the prosecution of the joint illegal purpose, a person complicit in the crime of illegal use would also be complicit in the offence of driving dangerously. And if, as a result of the dangerous driving, the complicit passenger were injured, it would evidently be incongruous to decide that the offender who drove the vehicle owed that passenger a duty to drive with reasonable care. The passenger would have committed the offence of dangerous driving and yet, if the driver owed the passenger a duty to take reasonable care, the passenger (who would be criminally responsible for the driver's dangerous driving) might sue the driver for damages for driving negligently. Crennan Bell The incongruity identified stems immediately from the injured passenger's complicity, not only in the illegal use of the vehicle, but also in the driver's commission of the offence of driving dangerously. To conclude that the driver owed the passenger a duty to take reasonable care when driving would not be consistent with the purpose of the statute proscribing dangerous driving. Does the conclusion of incongruity apply in every case of joint illegal use? Does the conclusion depend upon whether, in the particular case, the driver drove recklessly or dangerously and the passenger was complicit in that further offence? In many cases in which an illegal user of a vehicle seeks to recover damages from a driver complicit in that crime, the passenger and the driver will also be complicit in a further offence proscribing driving in the manner which was a cause of the passenger's injury. But some cases may not be of that kind. An example may be where the driver of a stolen car, affected by alcohol, makes an error of judgment which causes an accident. In such a case, the fact that the vehicle was being used illegally would seem not to be immediately relevant to the liability of driver to passenger. Would it be inconsistent with the statutory purposes of the proscription of illegal use of a vehicle to hold that the driver owed the passenger a duty to drive with reasonable care? Should not the significance attached to the driver being affected by alcohol fall for consideration only as a question about contributory negligence? A complaint frequently made144 in the cases and academic commentary is that the law relating to illegality in tort wields too broad an axe to provide a satisfactory principle that will not have unintended and unjust consequences 144 Jackson v Harrison (1978) 138 CLR 438 at 453, 455 per Mason J, at 464-465 per Murphy J; Gala v Preston (1991) 172 CLR 243 at 270, 271 per Brennan J; Nelson v Nelson (1995) 184 CLR 538 at 611 per McHugh J; Law Commission for England and Wales, "The Illegality Defence in Tort", Consultation Paper No 160 (2001) at 84-85 [4.73]-[4.74] and Pt V generally; Fleming, The Law of Torts, 7th ed (1987) at 278; Weinrib, "Illegality as a Tort Defence", (1976) 26 University of Toronto Law Journal 28 at 33, 38-39, 45-46; Swanton, "Plaintiff a Wrongdoer: Joint Complicity in an Illegal Enterprise as a Defence to Negligence", (1981) 9 Sydney Law Review 304 at 317-319, 323, 325-328; Goudkamp, "A Revival of the Doctrine of Attainder? The Statutory Illegality Defences to Liability in Tort", (2007) 29 Sydney Law Review 445 at 451-455. Crennan Bell (often described as "Draconian"145). Another complaint frequently made146 is that one wrongdoer is given an unjust and unjustifiable advantage if a defence of illegality is recognised. Both criticisms have been levelled at the decisions, in Smith v Jenkins and Gala v Preston, that one illegal user of a vehicle does not owe a duty of care to a passenger complicit in the illegal use. The rule is said to be too broad and undiscriminating in its application. Two points may be made in answer to the criticisms. First, if the relevant principle turns, as it must, upon a search for statutory purposes, most if not all of the asserted difficulties fall away. The application of the relevant principle is the consequence of the proper application of the statute. The balance of advantage or disadvantage to criminal participants is a matter for the legislature. Secondly, and of more particular relevance to the immediate matter, whether or not the criticisms are expressed in this way, they must assume that the 145 Jackson v Harrison (1978) 138 CLR 438 at 453, 455 per Mason J; Gala v Preston (1991) 172 CLR 243 at 265, 270, 271 per Brennan J; Law Commission for England and Wales, "The Illegality Defence in Tort", Consultation Paper No 160 (2001) at 146 Jackson v Harrison (1978) 138 CLR 438 at 465 (7) per Murphy J; cf the seminal statement of Lord Mansfield in Holman v Johnson (1775) 1 Cowp 341 at 343 [98 ER 1120 at 1121] that the policy behind the courts' refusal to enforce an illegal contract, "which the defendant has the advantage of, contrary to the real justice", is "not for the sake of the defendant, but because [the courts] will not lend their aid to such a plaintiff"; see also the discussion of "windfall gain" to the defendant in the context of trust and contract in Nelson v Nelson (1995) 184 CLR 538 at 610 per McHugh J and Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 252 per Kirby J; see also Law Commission for England and Wales, "The Illegality Defence in Tort", Consultation Paper No 160 (2001) at 69 [4.17]; Law Commission for England and Wales, "The Illegality Defence", Consultation Paper No 189 (2009) at viii; Weinrib, "Illegality as a Tort Defence", (1976) 26 University of Toronto Law Journal 28 at 50-51; Ford, "Tort and Illegality: The Ex Turpi Causa Defence in Negligence Law (Part One)", (1977) 11 Melbourne University Law Review 32 at 40; Swanton, "Plaintiff a Wrongdoer: Joint Complicity in an Illegal Enterprise as a Defence to Negligence", (1981) 9 Sydney Law Review 304 at 330; Goudkamp, "A Revival of the Doctrine of Attainder? The Statutory Illegality Defences to Liability in Tort", (2007) 29 Sydney Law Review 445 at 450. Crennan Bell relevant legislative purposes of s 371A are completely stated as being the protection of property interests and the promotion of road safety. A purpose described only as the promotion of road safety may well be said not to affect whether a duty of care should be found. But the statutory purposes of s 371A are more particular than a general concern with road safety. The section proscribes and punishes the taking and use of a vehicle illegally as it does because it recognises that, in a case where two or more persons form a common intention to prosecute that unlawful purpose, it is often a probable consequence of the commission of the crime that the driver will drive recklessly or dangerously. Whether one participant should be held to owe the other a duty to take reasonable care in the performance of the common purpose of using the car illegally cannot depend upon whether the possibility of reckless or dangerous driving eventuates. It would be absurd to hold that one owed the other a duty to take reasonable care unless and until he or she departed markedly from observing that standard of care. The refusal to find a duty of care between those complicit in the offence follows from the more precise identification of the way in which the statutory proscription of illegal use of a vehicle seeks to promote road safety. The offence of illegally taking and using a vehicle is dealt with as it is because of its association with reckless and dangerous driving. The statutory purpose of a law proscribing dangerous or reckless driving is not consistent with one offender owing a co-offender a duty to take reasonable care. And in a case where two or more are complicit in the offence of illegally using a vehicle, the statutory purpose of the law proscribing illegal use (here, s 371A) is not consistent with one offender owing a co-offender a duty to take reasonable care. The inconsistency or incongruity arises regardless of whether reckless or dangerous driving eventuates. It arises from the recognition that the purpose of the statute is to deter and punish using a vehicle in circumstances that often lead to reckless and dangerous driving. These conclusions accord with the way in which the courts approach questions of illegality in contract and in relation to trusts. Whether an analogy can be drawn with the rule that a contract whose making or performance is expressly or impliedly made illegal by statute, or is better drawn with those cases "where the policy of the law renders contractual arrangements ineffective or void even in the absence of breach of a norm of conduct or other requirement Crennan Bell expressed or necessarily implicit in the statutory text"147, may be open to debate. Whichever analogy may be the more apt, the root principle that is engaged is, as noted earlier, sufficiently captured by any of the expressions "incongruity", "contrariety" or "lack of coherence". The circumstances of this case As noted at the outset of these reasons, Danelle twice asked to be let out of the car before it ran off the road. She was not. Reference has already been made to the provisions of s 8 of the Code concerning liability for offences committed in prosecution of a common unlawful purpose and to the provisions made by s 8(2) for withdrawal from a joint criminal enterprise. It was not disputed, in this Court, that it was open to Danelle to submit that she had withdrawn from the common purpose of illegally using the vehicle before the accident, and no positive argument was advanced to demonstrate that she had not done so in the manner required by s 8(2) of the Code. The requirement, in s 8(2)(c) of the Code, that an offender, having withdrawn from an enterprise and communicated that fact to his or her confederates, take "all reasonable steps to prevent the commission of the offence" invites attention in this case to what Danelle could reasonably have done to prevent the continued illegal use of the car. Section 8(2)(c) does not require that there have been some steps available to her of the kind specified in that paragraph. And in this case there were none. There were no reasonable steps she could take to prevent the continued illegal use of the vehicle. As Buss JA records148, a submission that Danelle had withdrawn from the common purpose of illegally using the vehicle was not made, in terms, in the Court of Appeal, or at trial. It was accepted that this did not prevent Danelle from advancing the argument in the appeal to this Court. Because Danelle had withdrawn from, and was no longer participating in, the crime of illegally using the car when the accident happened, it could no longer be said that that Maurin owed her no duty of care. That he owed her no duty earlier in the journey is not to the point. When he ran off the road, he owed 147 International Air Transport Association (2008) 234 CLR 151 at 179 [71]. 148 Miller [2009] WASCA 199 at [86]-[89]. Crennan Bell a passenger who was not then complicit in the crime which he was then committing a duty to take reasonable care. Conclusion and orders The appeal should be allowed with costs, the orders of the Court of Appeal of the Supreme Court of Western Australia set aside, and the appeal to that Court dismissed with costs. 108 HEYDON J. I agree with the conclusion of the majority that, at least up to the time when the appellant made two requests to be let out of the car, the respondent owed the appellant no duty of care. However, there has not been a satisfactory demonstration by the appellant, in the circumstances of this case, that those requests constituted a withdrawal by the appellant from the common purpose of using the car without the owner's consent, and that thereafter a duty of care arose. In relation to the withdrawal point several issues arise. It was open to the appellant to rely on the withdrawal point Was it open to the appellant to take the withdrawal point in this Court? Yes. The withdrawal point was arguably pleaded in par 2(c) of the appellant's Reply. The relevant contention of the appellant was put in answer to the respondent's allegation that he owed no duty of care because he and she "were jointly engaged in an illegal enterprise". Her Reply averred: "the plaintiff expressly denies that she and the defendant were engaged in a joint illegal enterprise and says that: the defendant refused the requests of the plaintiff to stop the vehicle and let her out, thereby rendering the plaintiff an unwilling passenger". Counsel for the appellant in this Court appeared to concede that the trial had not been run on the basis of the withdrawal point149. In the Court of Appeal a member of the bench raised a question about whether withdrawal from the joint illegal enterprise was relied on. Counsel for the appellant specifically disavowed it. The trial judge was able to find that a duty of care was owed to the appellant for reasons other than the withdrawal point. Though she mentioned the appellant's requests that the respondent stop the car, she said nothing about the withdrawal point. Paragraph 2(c) of the appellant's Reply made it difficult for any point based on Suttor v Gundowda Pty Ltd150 to be taken by the respondent in this Court. It may be151 that that pleading was insufficient in law to make out 149 See below at [117]. 150 (1950) 81 CLR 418; [1950] HCA 35. 151 See below at [122]-[131]. withdrawal, and that more was needed than the appellant's requests. It might have been arguable that more evidence could have been called at the trial in relation to the additional factual material needed. However, counsel for the respondent both expressly and properly declined to take any Suttor v Gundowda Pty Ltd point. The respondent did not concede the withdrawal issue in argument in this Court Did the respondent concede the proposition that the appellant had in fact withdrawn from the common purpose? No. Counsel for the respondent submitted: "To suggest that any criminality in terms of either the using or the taking would cease at the instant of expressing a willingness or desire to get out of the car, with respect, would not be so." It is true that a little earlier counsel for the respondent said that "at its most extreme level, a statement that 'I wish to get out of the car' might indicate an indication that there was no longer a wish to participate" in using the car. But he did not concede either that the appellant gave that indication or that it amounted to withdrawal in law. Argument about the withdrawal issue in this Court Was there argument in this Court about whether the requests to leave the car constituted a withdrawal from the common illegal purpose? This demands a lengthier answer. The proposition that a duty of care owed by the respondent to the appellant sprang up when the requests to leave the car were made is a proposition favourable to the appellant. It was a proposition which she had a duty to plead, and as to which she bore the burden of proof and the burden of demonstration. It is a proposition which, arguably, she pleaded in the Reply. But it was not a proposition which was dealt with by the Courts below. Nor did it find a place in the notice of appeal to this Court. Her written submissions in chief said nothing about it. The respondent's written submissions revealed no awareness of it. Her written submissions in reply said nothing about it. In oral argument in chief her counsel said nothing about it before he was asked the following question by a member of the Court: "What is the position in respect of the appellant using the motor vehicle at the time of the accident, having regard to the finding as to the request to be let out?" Counsel said the matter was "a little awkward", and referred to his predecessor's disavowal of the point in the Court of Appeal152. He then submitted that although "it is a little awkward for us", the failure to take the point "should not be a bar". He went on: "Certainly all the evidence was in. I cannot say, it is not the case, that the trial was run on that basis, but I am not aware that there is any circumstance that would" prevent the point being taken in this Court. His submission on the point was: "it is not protest in general terms, it is not even the protest along the lines of 'slow down', it is the request to be let out, in our submission, in that context, preceded by those protests, should have been held, perhaps I should say should have been argued, to have produced a cessation of her use and thus a cessation of her membership of, to use the jargon, a joint criminal enterprise. Now, clearly enough, there has to be some close analogy between that kind of argument and arguments in a true criminal case, such as a conspiracy case or another complicity case, but, in our submission, these facts would easily match that for a criminal case as well. If people, in the enthusiasm of youth, late at night take a car to use it for a joyride and shortly thereafter decide this is the worst idea they have ever had and they wish it to cease, so long as they take reasonable steps, both by communication and as circumstances permit other action of avoidance or removal, then, in our submission, they will be able to rely upon that (a) in crime and (b) therefore, in this civil case, to say the use had finished, therefore, the complicity or membership of the joint criminal enterprise had finished." These passages assert a conclusion favourable to the appellant, but say nothing about why it should be reached. They preserve a position, but do not state its grounds. Counsel for the appellant thereafter briefly alluded to the withdrawal point on two occasions but added nothing. Counsel for the respondent did not deal with the withdrawal point more fully than his opponent, and, like him, did not descend into the strengths and weaknesses of possible underlying reasons for competing conclusions153. This was scarcely surprising, since counsel for the respondent had not been put on notice that the withdrawal point would be taken in this Court. This is so despite the existence of a formal forensic structure, to be found in the requirements for a notice of appeal and written submissions, which is designed to give adequate notice to the parties and the Court. 152 See above at [112]. 153 See above at [117]. The decision of the majority on the withdrawal point is certainly a decision of some importance in tort cases of which this appeal is an illustration. But it is of very great importance in criminal law. The withdrawal point turns on the Criminal Code (WA) ("the Code"), s 8(2)154. There are provisions similar to, though not identical with, s 8(2) in other jurisdictions in this country155. The problem with which the legislation – and the corresponding common law – deals is difficult. It is complex. Various solutions have been proposed, but they have been controversial156. The decision of the majority that s 8(2) applies in the present circumstances is the ratio decidendi of this case – the fulcrum on which the appellant's success turns. It will bind every court in this country in the law of tort and the criminal law. It is plain from the silence of counsel for the appellant in written submissions, from the fact that no oral argument was advanced until the matter was raised by a member of this Court, from counsel's position that the point was "a little awkward", from the brevity of the submissions advanced, and from the fact that those submissions advanced a conclusion but offered no supporting reasoning, that counsel for the appellant had not intended to take the withdrawal point and was certainly not equipped to provide detailed argument in its support. One purpose of having a prior exchange of written submissions in this Court is to ensure that, when points of law are raised, the parties and the Court have full notice of the specific arguments being deployed. That notice enables thorough legal research, by both the parties and the Court, to take place before oral argument. That is particularly necessary where this Court is, by reason of the parties' conduct, unassisted by any examination of the topic by the trial court 154 See above at [104]. 155 Section 8(2) was introduced in 1986. In 1995, when the Criminal Code (Cth) was enacted, it included s 11.2(4): "A person cannot be found guilty of aiding, abetting, counselling or procuring the commission of an offence if, before the offence was committed, the person: terminated his or her involvement; and took all reasonable steps to prevent the commission of the offence." In 2002, when the Criminal Code (ACT) was enacted, it included s 45(5), a provision in the form of s 11.2(4). The Criminal Code (NT) was enacted in 1983; in 2005 the legislature inserted s 43BG(5), a provision also in the form of s 11.2(4). 156 See the debates recorded and analysed in Smith, "Withdrawal in Complicity: A Restatement of Principles", [2001] Criminal Law Review 769. and the intermediate appellate court. It is the duty of the courts of this country to expound, and where legitimate to develop, the law of Australia – whether it be the common law, the resolution of doubts about statutory construction, or constitutional law. It is a necessary condition for the carrying out of that duty of exposition and development that there be a clash of adversaries well prepared to conduct detailed forensic debate. That necessary condition was amply satisfied in this appeal by the thoughtful and full submissions of the parties in relation to the problem thrown up by the Gala v Preston line of cases. It was not satisfied in relation to the withdrawal point. Had counsel for the respondent been given adequate notice that the withdrawal point, which apparently had had no role in the case after the pleadings closed, was to be revived in this Court, he might have been able to construct a submission along the following lines. A possible submission for the respondent The appellant was 16 and had been drinking at intervals since the previous evening. So had the respondent's companions. She chose to get into a car which she had stolen, and which she had managed to get started. She asked her sister, Narelle, who had been drinking and who had no driver's licence, to drive her home in that car. She accepted the offer of the respondent, who had been drinking, and whom she correctly assumed not to have a driver's licence, to drive her home. He was to do so in a dangerously overloaded car, for there were, as well as himself, nine passengers in it. Just as the appellant was tired and affected by drink, so was the respondent, and so were at least several of the others in the car. The respondent had been involved in a verbal altercation with a man named Shanelle, who in turn had been involved in an ongoing argument with his girlfriend until he jumped into the car, followed by a bottle of perfume flung at the car by the girlfriend. In those circumstances the following findings of the trial judge – which are not based on acceptance of the appellant's testimony but on inferences from the circumstances – must be rejected. "Neither the plaintiff, nor for that matter a reasonable hypothetical plaintiff, had any reason to appreciate that she would be encountering serious risks. … [T]he mere fact that they were driving in a stolen car would not of itself have made the plaintiff concerned about any risk of the defendant driving recklessly. … [U]nless there is evidence which shows that the parties were about to embark on a joy-ride and to have some fun in flaunting the law, the mere fact that they are driving in a stolen vehicle does not mean that this would necessarily be associated with an encounter of a serious risk." Did the appellant have "any reason to appreciate that she would be encountering serious risks"? The trial judge's language turns not on whether the appellant did appreciate the existence of serious risks, but on what reason she had to appreciate them. Accepting the trial judge's finding that no joy-ride was initially contemplated, the facts are that she had stolen the car and managed to get it started; that she had no control over the respondent, her "uncle", in view of his age, 27, and apparent authority over her; that she knew he had been drinking and assumed he was unlicensed; that the theft of cars is often speedily reported and the police often speedily identify those stolen cars in the streets; that even if a car is not being driven recklessly it is likely to attract the attention of passing police officers if it is so grossly and dangerously overloaded that some passengers were not able to wear seatbelts; that the presence of excessive numbers of young people who have been drinking in a car increases the risk of the driver showing off or being distracted; and that if the respondent driver saw police officers he would be likely to flee at high speed. That is because the driver was unlicensed, he had been drinking, his car was very overloaded, and he knew that the car had been stolen by the appellant. No dangerous and speedy flight from police officers did in fact take place, but there were good reasons known to the appellant to appreciate that the journey was, to use the words of the majority in Gala v Preston157, "fraught with serious risks". Among the risks which existed, whether the appellant actually appreciated it or not, was the one which eventuated – that the respondent might not exercise the degree of care and skill to be expected of a reasonably careful and competent driver. Against the background of those circumstances, can it be said that by reason of her requests for the car to be stopped the appellant had withdrawn from the illegal joint enterprise? There is no doubt that the appellant could effectively have terminated the joint illegal enterprise by declining to get into the car, or getting out of it, as it became overloaded and before the respondent drove it off. The question is whether her later expressions of desire to leave the car satisfy s 8(2). A request that the vehicle stop and that she be let out by itself was insufficient to terminate the joint illegal enterprise. It would not have sufficed at common law, which required, in addition to a countermand or withdrawal, the carrying out of whatever action the party claiming to have withdrawn "can reasonably take to undo the effect of his previous … participation."158 And, in any event, in Western Australia what applies is not the common law, but a similar regime established by s 8(2). 157 (1991) 172 CLR 243 at 254 per Mason CJ, Deane, Gaudron and McHugh JJ; [1991] HCA 18. 158 White v Ridley (1978) 140 CLR 342 at 351 per Gibbs J; [1978] HCA 38. The function of the requirement in s 8(2)(c) that, after the relevant person has withdrawn from the prosecution of the unlawful purpose, that person take "all reasonable steps to prevent the commission of the offence" is to prevent or hamper the effectuation of the unlawful purpose. That is, its function is to prevent or hamper the future commission of the offence, or, if it is a continuing offence, its commission by continuance. Section 8(2)(c) has the same function as the equivalent common law rule. In a United States case on the common law159, it was said that: "A withdrawal from a conspiracy cannot be effected by intent alone; it must be accompanied by some affirmative action which is effective. A declared intent to withdraw from a conspiracy to dynamite a building is not enough, if the fuse has been set; he must step on the fuse." If conspirators have lit the fuse, an announcement by one of them of withdrawal from the conspiracy is ineffective if it is too late for that person to step on the fuse, or otherwise avert the explosion. When two or more persons have formed a common intention to prosecute an unlawful purpose, there cannot be a withdrawal from the prosecution of the unlawful purpose, and there cannot be the taking of reasonable steps to prevent the commission, or further commission, of any offence which is the probable consequence of the prosecution of the purpose, unless the circumstances are such as to give an opportunity for those steps to be taken. There are some enterprises which, once they are embarked on, give no opportunity for instant withdrawal. In relation to enterprises of that kind, a decision to withdraw, even if clearly communicated, cannot have immediate effect. The facts of the present case illustrate one of these enterprises. "The execution of the purpose had reached the stage when it would not be possible to withdraw from it in the terms of the section."160 When the appellant indicated that she wanted to be let out of the car, it may be that she could be said to have withdrawn from the prosecution of the unlawful purpose within the meaning of s 8(2)(a) of the Code, and also to have communicated that withdrawal in the manner described in s 8(2)(b). But could it be said that, "having so withdrawn", she "took all reasonable steps to prevent the commission of the offence" within the meaning of s 8(2)(c)? No. She took no 159 Eldredge v United States 62 F 2d 449 at 451 (10th Cir, 1932) per Judge McDermott (Judge Phillips concurring). 160 Seiffert v The Queen (1999) 104 A Crim R 238 at 259 per Pidgeon J (Kennedy and steps. It might have been submitted on her behalf (although it was not) that s 8(2)(c) was complied with on the ground that there were no reasonable steps which, by that time, could have been taken. The difficulty is that her conduct had rendered it impossible for any reasonable steps to be taken. The fundamental factual problem for the appellant is that, despite all the findings by the trial judge in her favour, there is no finding that she expected that the respondent would comply instantly with any request she made of him to stop. Since none of the evidence admitted at the trial is in the appeal book, it is not possible to say whether any finding of that kind could be made by this Court. The appellant could only have taken reasonable steps within the meaning of s 8(2)(c) if, taking into account what she had reason to know when the journey started, she had put herself in a position to ensure that an expression of her wishes later in the journey would be instantly complied with. This she had not done. Since the appellant had disabled herself from taking reasonable steps, it was not open to her to have contended that there were no reasonable steps she could have taken. Conclusion What has just been set out is an outline of a possible submission which counsel for the respondent might have advanced had he had proper notice of the withdrawal point and of the manner in which his client might lose on it. His ingenuity and skill would have led him to put it better, and might have suggested other submissions worthy of consideration. Whether any of these submissions would have been worthy of acceptance cannot be determined in the absence of a thorough appellate examination of the issue. Without that examination it cannot be said that the appellant has demonstrated compliance with s 8(2). Order The respondent's application is only that the appeal be dismissed. That order should be made.

HIGH COURT OF AUSTRALIA AND APPELLANT ALEXANDER THIERING & ORS RESPONDENTS [2013] HCA 45 6 November 2013 ORDER Appeal allowed. Set aside order 2 of the Court of Appeal of the Supreme Court of New South Wales made on 20 February 2013 and, in its place, order that: the appeal from the Supreme Court of New South Wales to the Court of Appeal be allowed; and set aside the determination and formulation of Question 5 made by the Supreme Court on 19 December 2011 and, in its place, reformulate and answer that question as follows: Question 5 Whether on proper construction of section 130A of the Motor Accidents Compensation Act 1999 (NSW), Mr Thiering has any entitlement as against Mr Daly other than damages for non-economic loss and loss of earning capacity. Answer On the proper construction of s 130A of the Motor Accidents Compensation Act 1999 (NSW), Mr Thiering has no entitlement to recover damages in accordance with s 128 of the Motor Accidents Compensation Act with respect to the provision of gratuitous attendant care services from Mr Daly or his compulsory third party insurer. The appellant pay the first and second respondents' costs of this appeal including the application for special leave to appeal. On appeal from the Supreme Court of New South Wales Representation K P Rewell SC with D M Wilson for the appellant (instructed by Moray & B W Walker SC with E G Romaniuk and E E Grotte for the first and second respondents (instructed by Slater & Gordon Lawyers) S B Lloyd SC with B J Tronson for the third respondent (instructed by WorkCover Authority of New South Wales) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Statutes – Statutory construction – Whether Court of Appeal erred in construction of s 130A of Motor Accidents Compensation Act 1999 (NSW) – Whether Griffiths v Kerkemeyer damages precluded by s 130A in respect of participants under Scheme in Motor Accidents (Lifetime Care and Support) Act 2006 (NSW) – Whether "provided for or are to be provided for" in s 130A means "paid for or are to be paid for". Words and phrases – "provided for or are to be provided for". Motor Accidents Compensation Act 1999 (NSW), ss 128(1), 130A. Motor Accidents (Lifetime Care and Support) Act 2006 (NSW), ss 6, 8, 23, 26, CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ. From 1 October 2006 until 25 June 2012, s 130A of the Motor Accidents Compensation Act 1999 (NSW) ("the MAC Act") provided that: "No damages may be awarded to a person who is a participant in the Scheme under the Motor Accidents (Lifetime Care and Support) Act 2006 for economic loss in respect of the treatment and care needs (within the meaning of that Act) of the participant that relate to the motor accident injury in respect of which the person is a participant in that Scheme and that are provided for or are to be provided for while the person is a participant in that Scheme." (emphasis added) The Motor Accidents (Lifetime Care and Support) Act 2006 (NSW) ("the LCS Act") was enacted at the same time as the MAC Act was amended by the introduction of s 130A1. The LCS Act established the Lifetime Care and Support Scheme ("the Scheme") for the lifetime care and support of certain persons who had been catastrophically and permanently injured in motor vehicle accidents in New South Wales2. In this case, the Court of Appeal of the Supreme Court of New South Wales held that s 130A of the MAC Act did not preclude an award of damages in respect of the treatment and care needs of a participant in the Scheme in circumstances where those needs had been met by services rendered gratuitously. The Court of Appeal reached that conclusion by reading the words "that are provided for or are to be provided for" in s 130A of the MAC Act to mean "that are paid for or are to be paid for"3. For the reasons that follow, that interpretation of the legislation cannot be accepted. The legislation Under s 8 of the LCS Act, an application for an injured person to become a participant in the Scheme could be made, either by or on behalf of the injured person, or by the compulsory third party insurer ("CTP insurer") of a claim made by the injured person in respect of the injury. Section 8(2) provided that an application by a CTP insurer did not require the consent of the injured person. 1 Thiering v Daly (2011) 60 MVR 42 at 59 [83]. 2 Thiering v Daly (2011) 60 MVR 42 at 59-60 [84]. 3 Daly v Thiering (2013) 63 MVR 14 at 34-35 [73]-[74]. Crennan Bell Thus it was open to the CTP insurer of a claim to override a choice by an injured person not to become a participant in the Scheme. Under s 23 of the LCS Act, the Lifetime Care and Support Authority of New South Wales ("the Authority") was required to make an assessment of the participant's treatment and care needs that are reasonable and necessary in the circumstances and relate to the motor vehicle accident in respect of which the person is a participant in the Scheme. The assessment was to be made in accordance with the guidelines issued by the Authority under s 58 of the LCS Act. The Authority was obliged to certify in writing as to its assessment4. Under s 26(1) of the LCS Act, the Authority's assessment of the treatment and care needs of a participant was "final and binding for the purposes of this Act and any proceedings under this Act." Section 28 of the LCS Act contemplated that the guidelines might make provision for the intervals at which assessments of a participant's treatment and care needs are to be carried out. By s 6(1), the LCS Act provided that the Authority: "is to pay the reasonable expenses incurred by or on behalf of a person while a participant in the Scheme in providing for such of the treatment and care needs of the participant as relate to the motor accident injury in respect of which the person is a participant and as are reasonable and necessary in the circumstances." (emphasis added) The plain meaning of s 6(1) is that the reasonable expenses, if any, incurred by or on behalf of a participant in the Scheme, in providing for his or her treatment and care needs from time to time, must be paid by the Authority. By s 6(2) of the LCS Act, the "treatment and care needs" of a participant included: "the participant's needs for or in connection with … attendant care services, [and] domestic assistance". 4 Motor Accidents (Lifetime Care and Support) Act 2006 (NSW), s 23(4). Crennan Bell The LCS Act was not explicit as to whether the Authority was to be the sole provider of treatment and care needs to a participant in the Scheme. The Authority and Mr Daly were at issue as to whether the LCS Act contemplated that the Authority was obliged to provide all the treatment and care needs of a participant in the Scheme; but it is not necessary in this case to resolve that point. It is tolerably clear that the effect of ss 23 and 26 was that the Authority determined what services were to be rendered to a participant by way of treatment and care. Section 128(1) of the MAC Act provided that: "Compensation, included in an award of damages, for the value of attendant care services: (a) which have been or are to be provided by another person to the person in whose favour the award is made, and for which the person in whose favour the award is made has not paid and is not liable to pay, must not exceed the amount determined in accordance with this section." Section 128 went on to limit the quantum of compensation to be awarded for attendant care services; but it is not presently necessary to consider those limitations. What is significant is that s 128 was predicated upon the continuing availability under the common law of that component of damages usually described as the "Griffiths v Kerkemeyer" component. This description derives, of course, from the decision of this Court5 which established that under the common law in Australia an injured plaintiff may recover from a tortfeasor an award of damages by way of compensation for economic loss measured by reference to the value of treatment and care needs occasioned by the injuries suffered by the plaintiff, even though the services by which those needs were met were rendered gratuitously to the plaintiff. 5 Griffiths v Kerkemeyer (1977) 139 CLR 161; [1977] HCA 45. Crennan Bell The primary judge summarised the purpose animating the LCS Act and s 130A of the MAC Act6 in terms which were approved by the Court of Appeal7 and were not disputed in this Court. It is convenient to adopt that summary here: "It seems tolerably clear that it was the intention of the government to introduce legislation which would establish a scheme with these features: It would cover those who, as a consequence of a motor vehicle accident, were catastrophically and permanently injured; The injuries were such that the individuals would require treatment and care for the whole of their lives; The LCS Scheme would provide for all of that treatment and care, including attendant care, for as long as it was necessary on an individually assessed basis; Because the LCS Scheme would attend to the provision of lifetime treatment and care, an injured person would not need, and would not be entitled to, compensation by way of damages for any treatment and care needs including attendant care; The only limitation on the provision of treatment and care was that it was reasonable in the circumstances, and that the injury was caused in a motor vehicle accident." Factual background Mr Thiering, the first respondent, suffered catastrophic and permanent injuries in a motor vehicle accident on 28 October 2007. Since then he has been, for all relevant purposes, a participant in the Scheme under the LCS Act. Pursuant to arrangements between the Authority and Mrs Rose Thiering (Mr Thiering's mother, the second respondent), a significant part of Mr Thiering's 6 Thiering v Daly (2011) 60 MVR 42 at 60-61 [85]. 7 Daly v Thiering (2013) 63 MVR 14 at 29 [47]. Crennan Bell domestic care has been undertaken by Mrs Thiering. She has not been paid for the services she has rendered in that regard. Mrs Thiering offered her services out of concern for her son, and the Authority agreed to her meeting part of his treatment and care needs. These needs were included in those identified by the Authority in its assessments under s 23 of the LCS Act. In the assessments of those needs by the Authority, responsibility for many hours of Mr Thiering's care was "allocated" to The proceedings Mr Thiering sued Mr Daly (the driver of the motor vehicle allegedly at fault) for damages for negligence in respect of the injuries suffered by Mr Thiering on 28 October 2007. His claim included a claim for the value of the services provided by Mrs Thiering in the care of Mr Thiering. Mr Daly's CTP insurer stands behind his liability, if any, to Mr Thiering. Mr Daly denied liability to Mr Thiering for the value of the services rendered by Mrs Thiering. In particular, Mr Daly relied upon s 130A of the MAC Act, contending that Mr Thiering's claim to recover the value of those services was a claim for economic loss in respect of the treatment and care needs of Mr Thiering, a participant in the Scheme whose domestic care needs were provided for while he was a participant in the Scheme. In addition to Mr Thiering's claim against Mr Daly, Mrs Thiering and Mr Thiering brought proceedings against the Authority to recover the value of the domestic services provided by Mrs Thiering. The Authority defended those proceedings on the basis that Mr Thiering and his mother volunteered that she would undertake the provision of part of his treatment and care needs (being needs that the Authority would have arranged to meet but for the efforts of Mrs Thiering) in circumstances which negated any obligation in the Authority to pay for those services. Several preliminary questions were posed by the parties for determination by the primary judge. These included a question as to the effect of s 130A of the The preliminary questions also included questions concerning the viability of Mr and Mrs Thiering's claims against the Authority. Whether Mr or Mrs Thiering has a viable claim against the Authority for the value of the services rendered by Mrs Thiering has no bearing on whether s 130A of the Crennan Bell MAC Act affords Mr Daly an answer to Mr Thiering's claim against him, and is immaterial to the resolution of the issue of construction of s 130A of the MAC Act with which this appeal is concerned. In determining that issue it is necessary to refrain from commenting upon the questions which were not debated in this Court. The determination at first instance The primary judge, Garling J, held that s 130A of the MAC Act does not preclude Mr Thiering's claim for damages in respect of the value of the treatment and care services rendered by his mother. His Honour's determination in this regard related to Question 5, which was in the following terms8: "Whether on proper construction of section 130A of the [MAC Act], [Mr Thiering] has any entitlement as against [Mr Daly] other than damages for non-economic loss and loss of earning capacity", and which his Honour answered9: "Yes, Mr Thiering, as a participant in the LCS Scheme is entitled to recover from [Mr Daly or his CTP insurer] damages in accordance with s 128 of the MAC Act for the period from the accident to the date of judgment, or settlement, as the case may be, unless the LCS Scheme has incurred an expense under s 6(1) of the LCS Act with respect to the provision of such gratuitous attendant care services." It is to be noted that, on this view, damages recoverable in respect of this head of loss did not extend to services rendered after the resolution of Mr Thiering's claim by judgment or settlement. This limitation reflected his Honour's view of the operation of s 7(3) of the LCS Act10. Whether or not that view is correct need not be determined on this appeal. 8 Thiering v Daly (2011) 60 MVR 42 at 47 [15]. 9 Thiering v Daly (2011) 60 MVR 42 at 77 [169]. 10 Thiering v Daly (2011) 60 MVR 42 at 65-66 [109]-[110], 67 [124], 71 [143(k)], 73 [150]. That view was accepted by the Court of Appeal as well: Daly v Thiering (2013) 63 MVR 14 at 21 [14], 29-31 [50]-[52]. Crennan Bell Mr Daly sought leave to appeal from the decision of the primary judge to the Court of Appeal. Mr Daly's application for leave to appeal was granted, but the Court of Appeal dismissed his appeal. The Court of Appeal the Court of Appeal, Hoeben JA, with whom McColl and Macfarlan JJA agreed, held that Mr Thiering, as a participant in the Scheme, may claim damages against Mr Daly pursuant to s 128 of the MAC Act notwithstanding s 130A of the MAC Act. In this Court, the written submissions made on Mr Thiering's behalf supported the reasoning of the Court of Appeal. In oral argument, however, counsel for Mr Thiering did not seek to support that reasoning, but rather advanced a new and different argument in support of the Court of Appeal's conclusion. In these circumstances it is convenient to consider the reasoning of the Court of Appeal before turning to consider the novel argument which was pressed on Mr Thiering's behalf. The steps in the reasoning whereby Hoeben JA reached his conclusion do not lend themselves to summary restatement. Hoeben JA began by summarising the submission advanced on behalf of Mr Daly11: "The applicant submitted that gratuitous attendant care provided by a friend or family member of the participant, if it were included in the care plan, and the care plan had been implemented or was to be implemented, satisfied the description in s 130A of 'treatment and care needs ... that are provided for or are to be provided for'. The applicant submitted that such an interpretation was consistent with the intention behind the [S]cheme". Hoeben JA then stated the first step in his reasons for rejecting that submission12: "The contrary interpretation is that s 130A of the MAC Act excludes recovery of damages under s 128 only to the extent that the participant's needs 'are provided for or are to be provided for' while in the [S]cheme. This means that for the exclusion to operate, the participant 11 Daly v Thiering (2013) 63 MVR 14 at 34 [71]. 12 Daly v Thiering (2013) 63 MVR 14 at 34 [72]. Crennan Bell must be entitled to compensation for those needs under the [S]cheme. Otherwise, what is apparently a provision to prevent the double recovery of damages, would have the effect of depriving the participant of compensation in certain circumstances. Explicit language would have to be used to achieve that result." The second and third sentences of that paragraph conflate damages by way of compensation with "providing for" needs under the Scheme. The LCS Act established a no-fault scheme concerned to ensure that the treatment and care needs of a participant in the Scheme were assessed and met. Sections 128 and 130A of the MAC Act were concerned to regulate the common law entitlement of a person injured in a motor vehicle accident to recover damages for tortiously inflicted injury. Section 6(1) of the LCS Act was the source of the Authority's obligation to pay all expenses incurred in providing for the assessed treatment and care needs of a participant in the Scheme. Section 6(1) of the LCS Act required that any expenses incurred in providing for the assessed treatment and care needs of a participant in the Scheme, to the extent that they were reasonable expenses, were to be paid by the Authority. But the Authority had no obligation in relation to the payment of damages by way of compensation for injury: on no view of the legislation was the Authority made an indemnifier of the liability of a tortfeasor to a participant in the Scheme. For the exclusion in s 130A to operate, it was necessary that the treatment and care needs of a participant were met under the Scheme; it was not necessary that the participant be entitled to monetary compensation. The final sentence of the paragraph under discussion invokes the principle of statutory construction that common law rights should be taken to have been cut down by statute only where there is a clear legislative expression of an unmistakable and unambiguous intention to do so13. The interpretation of the legislation does not admit of any real doubt; but it should be said that the jealous scrutiny which is applied by courts to statutes which might incidentally affect common law rights is not appropriate to s 130A14. As Basten JA said in 13 Potter v Minahan (1908) 7 CLR 277 at 304; [1908] HCA 63; Coco v The Queen (1994) 179 CLR 427 at 437-438; [1994] HCA 15. 14 Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269 at 284 [36]; [2003] HCA 33; Electrolux Home Products Pty Ltd v Australian Workers' Union (Footnote continues on next page) Crennan Bell Harrison v Melhem of legislation concerned to ensure the availability of compensation to victims of motor vehicle accidents15: "[B]oth the existence of an effective remedy and controls over the extent of compensation have long since moved beyond the scope of the general law unaffected by statute, and have become the specific attention of widespread statutory interventions. … [W]here consideration of the legislation, in a given statutory context, favours a construction involving greater rather than lesser constraint, there is no reason not to give effect to the construction so indicated." In the field of motor vehicle accidents, legislative intervention to ensure that injured persons are provided meaningful compensation and care which the community is able to afford is now commonplace. There was no occasion to read the language of s 130A with an eye to preserving the common law rights of a participant in the Scheme, especially given that s 128 of the MAC Act evinces an unmistakable intention to cut back those rights, and given further that s 130A was enacted as an integral part of legislative measures to provide for the lifetime care of a participant in the Scheme established by the LCS Act. We now turn to consider the reasoning by which Hoeben JA accepted the submission advanced by Mr Thiering16: "The submission [for Mr Thiering] proceeds that for the reasons already indicated, if the participant is not liable to pay a family member or friend for the attendant care services provided, there are no relevant expenses under the [S]cheme to be reimbursed by the [A]uthority to him or her. The needs fulfilled by the friend or family member are thus not ones 'provided for under the Scheme' and are not excluded by s 130A of the MAC Act from a damages claim. This would require that the words 'are provided for' or 'are to be provided for' as used in s 130A be given the meaning 'are paid for or are to be paid for'. (2004) 221 CLR 309 at 328-329 [19]; [2004] HCA 40; Harrison v Melhem (2008) 72 NSWLR 380 at 382 [2], 383-384 [7]-[10], 407-409 [212]-[221]. 15 (2008) 72 NSWLR 380 at 409 [220]-[221]. 16 Daly v Thiering (2013) 63 MVR 14 at 34-35 [73]-[74]. Crennan Bell I prefer the latter interpretation of the words 'provided for'. Such an interpretation fits more easily with a provision to prevent double recovery of damages. It also fits more easily with a provision which is specifically referring to 'damages', that is a monetary amount." This reasoning reworks the language of s 6(1) of the LCS Act in a way which does not give effect to the plain meaning of the words, and then deploys that reworked language artificially to confine the scope of s 130A of the The words "providing for" in s 6(1) of the LCS Act (and "provided for" in s 130A of the MAC Act) should be given their ordinary and natural meaning. It is readily apparent that one may provide for services without paying for them. Thus, for example, services may be provided for an injured person pursuant to an arrangement with a charitable organisation which involves no payment to that organisation. Sections 23 and 26 of the LCS Act made it clear that the treatment and care needs of a participant are all of the participant's treatment and care needs as assessed from time to time by the Authority that are reasonable and necessary and that relate to the motor vehicle accident. Because each of the Authority's assessments of Mr Thiering's care and treatment needs included the needs which were met by Mrs Thiering, the Authority was obliged by s 6(1) of the LCS Act to pay for the expenses, if any, incurred in meeting those needs. That obligation was imposed on the Authority. If no expense was incurred in relation to the provision of those services, there might have been a windfall benefit to the Authority. Whether or not the Authority is entitled to a windfall in this case is not a question to be resolved in this appeal17. The point which is germane to this appeal is that any such windfall benefit to the Authority did not come at the expense of Mr Daly or his CTP insurer. The recovery of damages for economic loss in respect of the treatment and care needs of a participant in the Scheme was precluded by s 130A so long as they were provided for or to be provided for, whether or not the value of those services was an "expense incurred" by Mr Thiering or on his behalf. 17 In fairness to the Authority it should be noted that it has not set out to obtain a windfall. It has made it clear that it stands ready to pay for services necessary to meet the needs attended to by Mrs Thiering if those services are rendered by a person approved under the guidelines. Crennan Bell Section 130A of the MAC Act did not invite an inquiry as to how the Authority, or any other person, might go about the provision of services to meet the needs of a participant in the Scheme for treatment and care. Nor did it suggest any intention to differentiate between care needs that were provided by the Authority itself and those provided by contractors to the Authority, or between whether they were paid for or not paid for by the Authority. Section 130A stated, in terms, that "economic loss in respect of the treatment and care needs (within the meaning of [the LCS] Act) of the participant" was no longer compensable by way of an award of damages. The reference in s 130A to "economic loss" in respect of the treatment and care needs of an injured person was apt to describe, not only the loss resulting from "expenses incurred" to meet those needs, but also, as Griffiths v Kerkemeyer18 itself established, the loss of capacity to meet one's own treatment and care needs. That loss of capacity was held to be economic loss suffered by an injured plaintiff even though the services rendered to meet that loss of capacity were rendered gratuitously. As Stephen J said19: "[I]t is for the plaintiff's loss, represented by his need, that damages are to be awarded." And as Mason J said20: "[T]he true loss is the loss of capacity which occasions the need for the service." It was on this footing that economic loss in respect of treatment and care needs was held to be compensable by an award of damages even though the services by which those needs were met were provided gratuitously. The same result follows from the adoption of a more broadly purposive approach to the construction of s 130A of the MAC Act. In that regard, the evident purpose of s 130A of the MAC Act was to render the concept of damages for economic loss in respect of treatment and care needs redundant so far as participants in the Scheme were concerned. That purpose was given effect by removing the occasion for an award of compensation by way of damages for economic loss in respect of treatment and care needs. Under the Scheme those needs were, or were to be, provided for under the LCS Act by virtue of that person's participation in the Scheme. 18 (1977) 139 CLR 161 at 163-164, 171, 192-193. 19 (1977) 139 CLR 161 at 178. 20 (1977) 139 CLR 161 at 193. Crennan Bell A novel argument The new argument advanced on Mr Thiering's behalf focused on the Authority's assessments of Mr Thiering's treatment and care needs. Noting that these assessments referred to the hours devoted by Mrs Thiering to the care of her son, counsel for Mr Thiering argued that these assessments reflected a conclusion by the Authority that, to the extent that Mrs Thiering was providing care to her son, his need for care was met. Since his needs had, to that extent, been met, they were not "provided for" to Mr Thiering as a participant under the Scheme as there was no relevant "need" to be provided for. The fair resolution of this argument is attended by some difficulty because it was raised so late in the course of proceedings. At the very least, the argument should have been heralded by a notice of contention21. The argument also raised questions of fact as to the effect of the Authority's assessments; and counsel for the Authority urged that these questions cannot be resolved on this appeal, these questions not having been litigated yet, as between the Authority and the Thierings or at all. All that having been said, it is possible to resolve the new argument without entering upon the resolution of the factual issues adverted to by counsel for the Authority. That is because the proposition of law on which Mr Thiering's new argument depends cannot be sustained. That proposition is that such of Mr Thiering's treatment and care needs as were met by his mother were not treatment and care needs within the meaning of s 6 of the LCS Act or s 130A of the MAC Act. The LCS Act did not contemplate a distinction between "met needs" and "unmet needs". Nor did s 130A of the MAC Act. Section 6(1) of the LCS Act obliged the Authority to pay the reasonable expenses incurred by anyone, by or on behalf of a participant, in providing for all of the needs so assessed by the Authority. Section 23 of the LCS Act contemplated an assessment from time to time of all of the current treatment and care needs of a participant in the Scheme; and s 26 made that assessment binding. The effect of these provisions was that the Authority's assessment of a participant's treatment and care needs from time to time conclusively determined the needs to be provided for under the Scheme and not merely those needs for the provision of which the Authority was obliged to pay. 21 High Court Rules 2004 (Cth), r 42.08.5. Crennan Bell That the legislative package consisting of the LCS Act and s 130A of the MAC Act observed no distinction between met needs and unmet needs of the kind for which Mr Thiering contended is hardly surprising. If the interpretation advanced by Mr Thiering's counsel were correct, it would mean that a participant in the Scheme would be free to choose the extent that the Scheme applied to them. Thus an injured person with sufficient means could choose to arrange for his or her treatment and care needs to be met from his or her own resources, and then recover that expense from the CTP insurer unaffected by s 130A. In that way, the choice conferred on the insurer by s 8 of the LCS Act might be rendered nugatory. That is not an outcome countenanced by the legislation. Conclusion and orders The appeal should be allowed and the decision of the Court of Appeal set aside. The appeal to the Court of Appeal should be allowed, and the determination of Question 5 by the primary judge should be set aside. In place of that determination, Question 5 should be answered: "On the proper construction of s 130A of the MAC Act, Mr Thiering has no entitlement to recover damages in accordance with s 128 of the MAC Act with respect to the provision of gratuitous attendant care services from Mr Daly or his CTP insurer." Pursuant to the undertaking given on behalf of Mr Daly as a condition of the grant of special leave to appeal, Mr Daly must pay Mr and Mrs Thiering's costs in this Court. The costs orders made in favour of Mr and Mrs Thiering in the courts below are to stand.

HIGH COURT OF AUSTRALIA FAIRBAIRN AND APPELLANT RESPONDENT [2022] HCA 18 Date of Hearing: 8 March 2022 Date of Judgment: 11 May 2022 ORDER Appeal allowed. Set aside orders 2, 3 and 4 of the Full Court of the Family Court of Australia made on 11 December 2020 and, in their place, order that the appeal to that Court be dismissed. The NSW Trustee and Guardian pay the costs of both parties of the application for special leave to appeal and of the appeal. On appeal from the Family Court of Australia Representation B W Walker SC with G Levick and R J May for the appellant (instructed by Powe & White Family Lawyers) J T Gleeson SC with D M Forrester for the respondent (instructed by Attwaters Solicitors) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Family law – De facto financial cause – Alteration of property interests – Meaning of "breakdown of de facto relationship" – Where appellant and respondent had been in de facto relationship and resided in appellant's home – Where appellant and respondent agreed to keep assets strictly separate – Where appellant subsequently suffered rapid cognitive decline and diagnosed with dementia – Where NSW Trustee and Guardian ("Trustee") appointed to manage appellant's financial affairs – Where Trustee moved appellant into aged care facility permanently and resolved to sell appellant's home to fund aged care facility costs – Where respondent opposed proposed sale of home – Where Trustee sought property settlement orders pursuant to s 90SM of Family Law Act 1975 (Cth) – Whether de facto relationship had broken down within meaning of s 90SM. Words and phrases – "assets strictly separate", "breakdown of a de facto relationship", "cognitive decline", "cohabitation", "de facto relationship", "financial manager", "living together on a genuine domestic basis", "mutual commitment to a shared life", "necessary or desirable adjustments", "NSW Trustee and Guardian", "property settlement orders", "sharing life as a couple". Family Law Act 1975 (Cth), ss 4AA, 90SM. KIEFEL CJ, GAGELER, KEANE, GORDON, EDELMAN, STEWARD AND GLEESON JJ. In late 2005 or early 2006, the appellant and the respondent commenced a de facto relationship. They agreed to keep their assets strictly separate but lived in a house owned by the appellant ("the home"). The appellant was subsequently diagnosed with dementia. By 2017, the appellant's capacity to make long-term decisions was largely, if not completely, absent. In January 2018, the NSW Civil and Administrative Tribunal ("NCAT") appointed the NSW Trustee and Guardian ("the Trustee") to make health and welfare decisions on behalf of the appellant and, subsequently, to be her financial manager. In March 2018, the Trustee decided to move the appellant into an aged care facility, where she has since resided. The Trustee wished to sell the home to fund the appellant's ongoing care. The respondent opposes this. The Trustee, on behalf of the appellant, sought property settlement orders from the Federal Circuit Court of Australia1, including for the sale of the home. For that Court to have jurisdiction to make orders altering the interests of the parties to their property, there needed to be a de facto relationship between the appellant and the respondent under the Family Law Act 1975 (Cth) ("the Act") which had existed but which had broken down for the purposes of s 90SM of the Act. There was no dispute that the parties had been in a de facto relationship. The question was whether the de facto relationship had broken down and if so by what date. The primary judge held that by no later than 25 May 2018 it had broken down2. The Full Court of the Family Court of Australia3 disagreed4. The appellant's appeal to this Court must be allowed. The de facto relationship had broken down by no later than 25 May 2018. 1 Now Division 2 of the Federal Circuit and Family Court of Australia. 2 Fairbairn v Radecki [2020] FCCA 1556. 3 Now Division 1 of the Federal Circuit and Family Court of Australia. 4 Radecki v Fairbairn (2020) 62 Fam LR 62. The statutory framework The jurisdiction of the federal family law courts to make property settlement orders for de facto relationships arises from a series of referrals made to the Parliament of the Commonwealth by several States in accordance with s 51(xxxvii) of the Constitution5. The existence of jurisdiction turns upon whether a de facto relationship has broken down. Section 90SM of the Act relevantly provides that "[i]n property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate" and "in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them" may alter "the interests of the parties to the de facto relationship in the property"6. The court, however, must not make an order under s 90SM unless it is satisfied that, in all the circumstances, "it is just and equitable to make the order"7. A "de facto relationship" is defined in s 4AA of the Act. It is necessary to set that section out. It relevantly provides: "(1) A person is in a de facto relationship with another person if: the persons are not legally married to each other; and having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis. 5 Australia, House of Representatives, Family Law Amendment (De Facto Financial Matters and Other Measures) Bill 2008, Explanatory Memorandum at 1, 6 [14]; Australia, House of Representatives, Parliamentary Debates (Hansard), 25 June 2008 at 5823. These referrals led to the enactment of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth), which, in general terms, conferred on federal family law courts the power to make property settlement orders for de facto relationships. 6 Family Law Act 1975 (Cth), s 90SM(1)(a) (emphasis added). 7 Family Law Act 1975 (Cth), s 90SM(3). Paragraph (c) has effect subject to subsection (5). Working out if persons have a relationship as a couple Those circumstances may include any or all of the following: the duration of the relationship; the nature and extent of their common residence; (c) whether a sexual relationship exists; the degree of financial dependence or interdependence, and any arrangements for financial support, between them; the ownership, use and acquisition of their property; the degree of mutual commitment to a shared life; (g) whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship; the care and support of children; the reputation and public aspects of the relationship. (3) No particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the persons have a de facto relationship. (4) A court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case. For the purposes of this Act: a de facto relationship can exist between 2 persons of different sexes and between 2 persons of the same sex; and a de facto relationship can exist even if one of the persons is legally married to someone else or in another de facto relationship." The Act contains no exhaustive definition of the term "breakdown", save that s 4 of the Act relevantly provides that in relation to a de facto relationship, it "does not include a breakdown of the relationship by reason of death". It will be necessary to return to consider these provisions. The relationship The facts recorded by the primary judge were not in dispute. His Honour found that the de facto relationship between the appellant and the respondent had been "very practical and supportive"8. In 2010, the appellant and the respondent entered into a "Domestic Relationship Agreement (Cohabitation Agreement)", which recorded that the parties had agreed to quarantine their respective property and that the home was to remain owned absolutely by the appellant; in 2015, they entered (Cohabitation Agreement)", updating their earlier agreement to include the quarantining of a property since acquired by the respondent (together, "the Cohabitation Agreements"). The primary judge found that it was a "core element of the parties' relationship throughout ... that they agreed to keep their assets strictly separate". into another "Domestic Relationship Agreement By 2015, the appellant began to suffer rapid cognitive decline. Her mental state continued to deteriorate during 2016. By early 2017, the appellant's treating specialist thought that she had dementia; she demonstrated Parkinsonian features including a shuffling gait. The specialist also recorded their concern with the respondent's planned three-month holiday overseas, which he commenced in April 2017 when the appellant's health was "quite precarious". By this time the parties occupied separate rooms in the home, with their own personal belongings in their respective rooms. During the respondent's absence, the appellant would oscillate between hating the respondent and missing him. For instance, she complained bitterly to her daughter about the respondent, saying he was on a "bloody good wicket", and that when he returned he would be given his "marching orders". She also told her son that she believed the respondent had been "taking her for a ride" 8 Fairbairn [2020] FCCA 1556 at [54]. and that she needed to sell the home to get the respondent "out". On other occasions, however, she said she missed the respondent. By mid-2017, the appellant qualified for full-time placement into an aged care facility. On the advice of her doctor, she executed an enduring power of attorney in favour of her children. Subsequently, for the appellant's protection, and at her request, the children stopped her access to her bank accounts. The respondent was very unhappy with what the appellant's children had done while he was overseas. Following his return, he manipulated the appellant, while she was in a vulnerable and confused state, into accusing her children of taking her money, selling her home and putting her into an institution. Shortly thereafter, the respondent sent an email to the children stating that the appellant wanted to suspend the enduring power of attorney in their favour. Attached to the email were letters, handwritten by the respondent but signed by the appellant, in which the appellant told her children that she loved them but that she expected them to support the respondent in his care of her. Two events then took place that led to appointment of the Trustee by NCAT. The first occurred in July 2017. The respondent drove the appellant to a local courthouse whereupon the existing enduring power of attorney was revoked and replaced by another enduring power of attorney in favour of the respondent and the appellant's brother. The primary judge found that by this step the respondent had begun to act as though he were no longer bound by the earlier commitment to keep the parties' assets strictly separate. The second event took place when the appellant was in hospital in late 2017, following a fall at home. The respondent arranged for a solicitor to attend upon her for the purpose of drawing an updated will. The new will, duly executed, was more favourable to the respondent than the appellant's previous will: it conferred upon him a life estate in the home. In contrast, the appellant's previous will gave the respondent only a right to live in the home for six months after her death. Over the opposition of the respondent, in January 2018, NCAT ultimately appointed the Trustee to make health and welfare decisions on behalf of the appellant. A further NCAT hearing was held concerning the new enduring power of attorney. The appellant gave evidence, which included that she could not remember attending the courthouse and was fearful and anxious about people harming her. NCAT was satisfied that the appellant was "significantly cognitively impaired" when she signed the new enduring power of attorney and that she did not fully understand what she was signing. NCAT ultimately ordered its revocation. At that subsequent hearing, NCAT also considered who should be appointed the appellant's financial manager pursuant to s 25E(1) of the Guardianship Act 1987 (NSW). The respondent sought that appointment. He told NCAT that he would pay for the appellant's accommodation costs so that the home could be retained. NCAT declined to appoint the respondent, noting that he was not open to any proposal that might see the home sold to pay for the appellant's care. NCAT also declined to appoint the appellant's children because the respondent would not cooperate with them (given he did not accept the validity of the first enduring power of attorney). The Trustee was instead appointed as the financial manager. The respondent appealed that decision, but his appeal was dismissed. NCAT's orders support two inferences. First, NCAT was satisfied, consistently with s 25G of the Guardianship Act, that the appellant was not capable of managing her financial affairs. Secondly, NCAT was not prepared to appoint the respondent to be the appellant's financial manager because he was not a "suitable person" to undertake that role in accordance with s 25M of the Guardianship Act. In March 2018, the Trustee placed the appellant into an aged care facility. It was accepted by all parties that this was a permanent move. A dispute took place between the respondent and the Trustee as to how this placement was to be funded. The Trustee wished to sell the home to fund the "refundable accommodation deposit" ("the RAD") required by the aged care facility. Payment of the RAD would avoid the need to otherwise pay the facility the daily accommodation payment ("the DAP"). The respondent disagreed with this plan; he wanted to remain in the home – even though he owned two other properties – claiming this to be the appellant's wish. Instead, he suggested that the DAP first be funded from the appellant's superannuation, and when that was depleted he would make contributions from his own resources. Later, he proposed that he pay the DAP in the first instance but then be reimbursed from the appellant's estate. The Trustee refused these proposals; they were not in the appellant's best financial interests. The Trustee decided that selling the home and using the proceeds of sale to pay the RAD was the best way of supporting the appellant. The primary judge found that the respondent's proposals "plainly" favoured his financial interests, permitting him to live at the home rent-free while mortgage repayments, rates and other property outgoings continued to accrue9. The respondent was also unwilling to cooperate with the appellant's children in the administration of her affairs. By early 2018, in the words of the primary judge, "the gloves were off" between the respondent and the children10. Frustrating matters further, the respondent had previously completed a Centrelink "income and assets assessment form" nominating himself as the appellant's "spouse", but had declined or failed to answer questions relating to his own assets and income. His ongoing refusal – even at the insistence of the Trustee – to disclose his financial circumstances to Centrelink meant that in May 2018 Centrelink suspended the appellant's income support payments11. Ultimately, the respondent belatedly – some 15 months after the appellant was first admitted into the aged care facility – commenced making payments of $1,000 per fortnight to meet the DAP fees. These payments merely kept the aged care facility debt at around the same level. By January 2020, he had paid $16,000. Not all of the respondent's conduct at this time was unsupportive of the appellant. For example, using the appellant's money, the respondent purchased a Townace van with a wheelchair lift, which he used to transport the appellant. He gave evidence in an NCAT hearing that he brought the appellant home each week in the interest of her general wellbeing. He wanted her to return home. He regularly visited the appellant at the aged care facility to assist at meal times. By 2019, the Trustee had formed the view that the de facto relationship between the appellant and the respondent had broken down. The respondent did not agree with that conclusion. He asserted and maintained that the appellant wanted him to remain living at the home and that there had been no breakdown of 9 Fairbairn [2020] FCCA 1556 at [121]. 10 Fairbairn [2020] FCCA 1556 at [119]. 11 Only 12 months later, in May 2019, did the respondent supply details of his financial circumstances. Payments to the appellant resumed, but these were subsequently reduced to nil on the basis of the combined assets of the appellant and the respondent. the de facto relationship. Inferentially, due to the serious decline in her mental health, it is impossible to know whether the appellant wished to be in a relationship with the respondent, or whether she was even capable of forming a view one way or the other. Commencement of proceedings In these unhappy circumstances, rather than pursuing its right to sell the property conferred by the NSW Trustee and Guardian Act 2009 (NSW)12, the Trustee commenced proceedings in the Federal Circuit Court on behalf of the appellant seeking property settlement orders pursuant to s 90SM of the Act13. In particular, the Trustee sought an order for the sale of the home. Proceedings before the primary judge were confined to the issue of whether the de facto relationship had broken down. The primary judge found that the respondent's conduct during the demise of the appellant's mental capacity was inconsistent with a "fundamental premise" of their relationship, namely the strict separation of their assets14. That inconsistent conduct, all of which occurred while the appellant was "labouring under an incapacity"15, comprised16: the entry into a new enduring power of attorney that "favoured [the respondent's] rights over hers"; the respondent instructing solicitors to prepare an updated will "on terms vastly more favourable to him"; the respondent's "unwillingness to cooperate" with the appellant's children in the administration of her affairs; the respondent's "persistent" refusal to permit the Trustee to sell the home to cover the RAD while "neglecting to pay any of the [appellant's] care costs", thus depleting her estate; the respondent's proposal that the appellant's "super be used in the first instance to meet her costs", and then his subsequent proposal that "he pay the DAP fees in the first instance and be reimbursed by the [appellant's] estate"; and the respondent's 12 Pursuant to s 16(g). See also ss 56-57. 13 Fairbairn [2020] FCCA 1556. 14 Fairbairn [2020] FCCA 1556 at [154]. 15 Fairbairn [2020] FCCA 1556 at [154], [161]. 16 Fairbairn [2020] FCCA 1556 at [155]-[160]. "ongoing and deliberate frustration" of the Trustee's lawful administration of the appellant's financial affairs. The primary judge found that this conduct was "unequivocally indicative of and consistent only with ... the cessation of the de facto relationship as it previously existed"17. His Honour held that the relationship had ceased at the latest by 25 May 2018, when the respondent suggested that the DAP be paid for in the first instance from the appellant's superannuation while he remained in the home. On an objective assessment of the respondent's conduct, the primary judge imputed an intention to separate from the appellant. It followed that there had been a breakdown in the de facto relationship. On appeal, the Full Court characterised the events described above differently18. The respondent sought leave to adduce further evidence of certain matters said to have taken place since the primary hearing. It is unnecessary to traverse that material in any detail but it comprised, in general terms, claims that the respondent had visited the appellant regularly since the date of the primary hearing (until the aged care facility imposed various restrictions due to the onset of COVID-19). As the Full Court found in favour of the respondent for other reasons, it determined that it was not necessary to consider that material. In this Court, that material was only relied upon by the respondent to support an application for revocation of special leave. That application is refused19. The appellant did not seek to defend the primary judge's conclusion about imputed intention. Nor did she contend that a breakdown had occurred by reason of her mental incapacity and her living permanently in aged care. The appellant accepted that more was needed before it could be concluded that a de facto relationship had broken down. Instead, the appellant submitted that the Full Court should infer from the course of events that the respondent had in fact intended to separate from the appellant. That submission was rejected. The Full Court reviewed the conduct identified by the primary judge. None of the conduct was found to be fundamentally inconsistent with a continuing de facto relationship. Some of it was considered to be "bad behaviour" on the part of the respondent but 17 Fairbairn [2020] FCCA 1556 at [161]. 18 Radecki (2020) 62 Fam LR 62. 19 See [41] below. such behaviour, the Full Court observed, is "all too often a hallmark of a relationship"20. At most, their Honours concluded that the conduct demonstrated that a dispute existed between the respondent, on the one hand, and the Trustee and the appellant's children, on the other, "as to how best [to] manage" the appellant's affairs21. The appellant's arguments The appellant's primary argument was that a de facto relationship breaks down when the parties stop "living together", as required by s 4AA(1)(c) of the Act, and in this case that occurred when the appellant moved into the aged care facility. This contention had previously been disavowed by the appellant in the Full Court below. The appellant submitted that the phrase "living together" in s 4AA(1)(c) requires cohabitation at some place and in some way, and that this is an irreducible minimum of what a de facto relationship, as defined, must continuously display. A permanent cessation of cohabitation, whether voluntarily undertaken or involuntarily imposed, and for whatever reason, was said to result, in every case, in a de facto relationship ending. Senior counsel for the appellant did not shy away from the potentially harsh consequences of this primary submission. A breakdown, it was said, would take place for the purposes of s 90SM of the Act, triggering the possibility of property settlement orders, regardless of any continuing genuine love or affection between the couple, so long as there had been a permanent cessation of cohabitation. The appellant submitted that such a bright line test was appropriate because s 90SM was simply the "gateway" to a court having jurisdiction. Thereafter, once seized with jurisdiction, a court has a broad discretion to make orders that would be "just and equitable"22; such discretion would permit the court to consider factors like the possible presence of continued love and affection. Here, because the appellant had been placed into aged care permanently, and because the parties had ceased to 20 Radecki (2020) 62 Fam LR 62 at 70 [49]. 21 Radecki (2020) 62 Fam LR 62 at 71 [53]. 22 Family Law Act 1975 (Cth), s 90SM(3). cohabit at the home, it followed that there had been a breakdown for the purposes of s 90SM of the Act. The appellant's alternative argument was that the de facto relationship between the appellant and the respondent had broken down by no later than 25 May 2018 by reference to the circumstances listed in s 4AA(2). In this context, the appellant submitted that "breakdown" does not necessarily mean "end". "Living together" and "breakdown" Section 4AA(1)(c) identifies the relationship which is the concern of the Act: "a relationship as a couple living together on a genuine domestic basis". The existence of such a relationship is determined having regard to "all the circumstances" of a relationship; significantly, those "circumstances" include any or all of the circumstances listed in s 4AA(2), and, by reason of s 4AA(3), no particular finding about any circumstance is necessary for there to be a de facto relationship. Consistently with the reality that human relationships are infinitely mutable, in determining whether a de facto relationship exists a court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate23. A de facto relationship will have broken down when, having regard to all the circumstances, the parties no longer "have a relationship as a couple living together on a genuine domestic basis". Such a conclusion is not precluded by the presence of an ongoing relationship of some sort. That is not the inquiry. The question is whether a de facto relationship exists or has broken down. In the context of a human relationship, "breakdown" refers to the "end" or "breakup" of what had been an enduring emotional bond. It is the "breakdown" or "end" of a de facto relationship that is the trigger point for the Federal Circuit and Family Court to be seized of jurisdiction to make a property settlement order under s 90SM of the Act. It would make no sense for such a jurisdiction to arise before a de facto relationship had ended. The appellant's submission finds no support in statutory context, in history, or in any extrinsic material referred to the Court's attention. 23 Family Law Act 1975 (Cth), s 4AA(4). Other provisions in the Act support the view that "breakdown" refers to the "end" of a de facto relationship. For example, s 44(5) addresses the timing of when, amongst other things, a proceeding under s 90SM may commence. It relevantly provides that a party to a de facto relationship may apply for an order under s 90SM if the application is made "2 years after the end of the de facto relationship"24. The phrase "after the breakdown" in s 90SM(1), when considered in this context, must refer to what is described in s 44(5) as "the end of the de facto relationship". The temporal fixing of "breakdown" with the "end" of a relationship is reinforced by each of ss 90UB, 90UC and 90UD, which respectively deal with financial agreements made before, during or after the breakdown of a de facto relationship. In that respect, s 90UC(1)(a) is especially instructive. That section refers to parties "while in a de facto relationship" making a "written agreement" about the distribution of their property "in the event of the breakdown of the de facto relationship". The juxtaposition of a continuing de facto relationship, denoted by the phrase "while in", with the word "breakdown" strongly supports the conclusion that "breakdown" refers to the end of a relationship25. The need for cohabitation The appellant's primary argument that the parties' de facto relationship had broken down when the appellant was placed into an aged care facility such that the parties were no longer physically living together must be rejected. It is contrary to the text of s 4AA and to statutory context and purpose to which reference has been made. It is also contrary to real-world considerations. It would be productive of injustice if two people who live apart (including for reasons of health) were incapable of remaining in a de facto relationship. Living together for the purposes of s 4AA(1) will often, perhaps usually, mean cohabitation of some residence by a couple for some period of time. But cohabitation of a residence or residences is not a necessary feature of "living together". That phrase must be construed to take account of the many various ways in which two people may share their lives together in the modern world26. Two 24 Family Law Act 1975 (Cth), s 44(5)(a)(i). 25 The respondent also referred to ss 90RC, 90SE, 90SL. 26 cf the circumstances described in SZOXP v Minister for Immigration and Border Protection (2015) 231 FCR 1 and in Crabtree v Crabtree (1963) 5 FLR 307. people, for any number of reasons, may not reside in the same residence, but nonetheless be in a de facto relationship in the sense required by s 4AA. The fact that here the appellant was placed into an aged care facility may be relevant to the existence or breakdown of a de facto relationship under the Act, but it could not, of itself, be determinative of that issue. The same observation applies to the decline in the appellant's cognitive ability. Two decisions support the proposition that physical cohabitation at a single home or homes is not a necessary feature of an ongoing relationship whether by way of marriage or otherwise; it is not an irreducible minimum that all relationships must exhibit. In SZOXP v Minister for Immigration and Border Protection27, the Full Court of the Federal Court of Australia traversed the authorities concerning the phrase "live separately and apart" in s 5CB(2)(c)(ii) of the Migration Act 1958 (Cth), for the purposes of the definition of "de facto relationship" in s 5CB(2). Section 5CB(2) provides, amongst other things, that a person is in a de facto relationship with another person if: "they have a mutual commitment to a shared life to the exclusion of all others"28; their relationship is "genuine and continuing"29; and they "live together" or "do not live separately and apart on a permanent basis"30. The authorities considered by the Court included Crabtree v Crabtree31, in which the Full Court of the Supreme Court of New South Wales concluded that a husband and wife could live "separately and apart"32 even when they both resided in the same home. That might take place where "there is such a forsaking and abandonment by one spouse of the other that the court can say that (2015) 231 FCR 1. 28 Migration Act 1958 (Cth), s 5CB(2)(a). 29 Migration Act 1958 (Cth), s 5CB(2)(b). 30 Migration Act 1958 (Cth), s 5CB(2)(c). (1963) 5 FLR 307. 32 For the purposes of s 28(m) of the Matrimonial Causes Act 1959 (Cth). the spouses were living lives separate and apart from one another"33. Consistently with that conclusion, the Full Court recognised that it was possible for a husband and wife who maintained "separate residences" to not be living separately and apart, so long as they lived as a "single household"34. The Full Court drew a distinction between living in separate houses as against separate households. That distinction, it was held, applied also to the concept of "cohabitation"35. It followed that in SZOXP, the relevant parties did not "live separately and apart" even though they had not physically lived together due to, amongst other things, the applicant being in detention. Next, involuntary and enduring separation – due to, for example, illness – will not always justify a conclusion that a relationship has ended, thus triggering a need for a court to intervene to make a property settlement order. So much was decided in Stanford v Stanford36. That case concerned a marriage and a residence in which a husband and wife had lived for 37 years. The wife had a stroke and developed dementia. She was admitted into full-time residential care while the husband remained at the residence. He continued to provide for her and put $40,000 into a bank account to contribute to her medical needs or requirements. The plurality of this Court held that the "bare fact" of involuntary separation would not demonstrate, for the purposes of s 79(2) of the Act, that it was "just and equitable to make a property settlement order"37. The plurality observed that when both parties are competent it can be assumed that any "necessary or desirable adjustment" to their previous financial arrangements will be made consensually38. 33 Hopes v Hopes [1949] P 227 at 234 per Bucknill LJ, approved in Crabtree (1963) 5 FLR 307 at 309 per Sugerman and Dovey JJ. 34 SZOXP (2015) 231 FCR 1 at 13-14 [57]-[59] per Kenny, McKerracher and 35 SZOXP (2015) 231 FCR 1 at 13 [58] per Kenny, McKerracher and Edelman JJ. (2012) 247 CLR 108; cf Main v Main (1949) 78 CLR 636 at 643 per Latham CJ, 37 Stanford (2012) 247 CLR 108 at 122 [43] per French CJ, Hayne, Kiefel and Bell JJ. 38 Stanford (2012) 247 CLR 108 at 123 [44] per French CJ, Hayne, Kiefel and Bell JJ. Importantly, the plurality also observed that if one of the parties has become incompetent "it is not to be assumed that the other party lacks the will and ability to make those necessary or desirable adjustments"39. Those necessary or desirable adjustments were made in Stanford when the husband provided for his wife. In such circumstances, it was not "just and equitable" to make a property settlement order requiring the sale of the residence when it had not been shown "that the wife's needs during her life were not being or would not be met"40. The presence of a mutually recognised de facto or marital relationship involving a shared life was critical in each of SZOXP, Crabtree and Stanford. In Stanford, the continued subsistence of such a relationship explained the making of the "necessary or desirable adjustments" to the property interests of the husband and wife. In contrast, where the "necessary or desirable adjustments" are not made, and one party fundamentally acts contrary to the interests of the other in relation to the property of the couple, it may be possible to conclude that the mutual commitment to a shared life has ceased. The language of s 4AA of the Act and its reference to "living together" requires no different approach to determining whether a relationship exists of the kind defined. "Living together", consistently with authority, should be construed as meaning sharing life as a couple. Section 4AA does not prescribe any way by which a couple may share life together. Its language is sufficiently broad to accommodate the great variety of ways a de facto relationship may exist41. That conclusion is supported by the varied factors listed in s 4AA(2). In a given case, some of the factors listed in s 4AA(2) may be relevant and some may be irrelevant; inevitably some may have greater prominence than others. A conclusion that a de facto relationship has ended may also arise because of factors not listed in s 4AA(2). Such a conclusion is mandated by s 4AA(3) and (4). In particular, s 4AA(4) is a statutory recognition that what may constitute a genuine de facto relationship is not be determined in the same way in every case by reference to rigid criteria that must always be satisfied. In that respect, the language of 39 Stanford (2012) 247 CLR 108 at 123 [44] per French CJ, Hayne, Kiefel and Bell JJ. 40 Stanford (2012) 247 CLR 108 at 124 [49] per French CJ, Hayne, Kiefel and Bell JJ. 41 cf FO v HAF [2007] 2 Qd R 138 at 149 [26] per Keane JA (White J agreeing). s 4AA(2)(b) does not assume that every de facto relationship must have a "common residence" to some "extent" and of some "nature". Such a construction is entirely denied by s 4AA(3). The decision in Yesilhat v Calokerinos42, upon which the appellant relied, requires no contrary conclusion. The reasoning in that case was directed to the proposition that a de facto relationship cannot exist if two people have never lived together43. That is not this case. The correctness of the proposition need not be determined. The respondent here had applied for special leave to be revoked, on the ground that the appellant's primary argument was new. That application is dismissed. The argument has been addressed and dismissed on its merits. The de facto relationship here had broken down The appeal must be allowed. That is not because the appellant was obliged to move permanently into an aged care facility. Nor is it because of the appellant's mental incapacity. While each of these matters may be relevant to the inquiry into whether the de facto relationship between the appellant and respondent had broken down, neither is determinative. A de facto relationship may continue even though the parties physically reside at different locations, and despite one of those parties suffering from (severe) illness. Instead, for the purposes of ss 90SM and 4AA of the Act, having regard to all of the circumstances, including the conduct of the respondent, the de facto relationship between the appellant and the respondent had, by no later than 25 May 2018, broken down. Those circumstances demonstrated a persistent refusal by the respondent to make "the necessary or desirable adjustments", to use the language of Stanford, which might have evidenced an ongoing relationship. Those circumstances included the fact that the parties had lived together since about 2005 but by 2017 were occupying separate rooms, and that from [2021] NSWCA 110. 43 Yesilhat [2021] NSWCA 110 at [93] per Macfarlan JA (Bathurst CJ agreeing), [137] per Brereton JA (Bathurst CJ agreeing). January 2018 the appellant lived at an aged care facility44. It may be accepted that those two circumstances are not of themselves determinative. It was, however, an essential feature of the relationship here that the appellant and respondent kept their assets separate from each other, consistently with the Cohabitation Agreements; but by 2017, the respondent had begun to act as if he were no longer bound by this arrangement45. He secured a new enduring power of attorney giving him considerable control over the appellant's assets, including the home; he procured a revised will obtained while the appellant was hospitalised, which markedly favoured his financial interests; and he took these steps when he must have known that the appellant's capacity to act in her own best interests was impaired. The respondent's conduct was so marked that it led to the intervention of NCAT and the appointment of the Trustee. Thereafter, the respondent refused to permit the home to be sold, made parsimonious attempts to make financial contributions to support the appellant's care, refused to cooperate with the Trustee and the appellant's children concerning her ongoing care, and failed to disclose his own assets to Centrelink. The respondent's persistent refusal to reside elsewhere and permit the home to be sold served his and not the appellant's interests46. Whilst there had been a degree of mutual commitment to a shared life47, that commitment ceased when the respondent refused to make the "necessary or desirable adjustments" in support of the appellant and, by his conduct, acted contrary to her needs. It may otherwise be accepted that the breakdown of the respondent's relationship with the appellant's children is not, in the circumstances of this case, a decisive consideration48. In contrast, the "public aspects"49 of the 44 Family Law Act 1975 (Cth), s 4AA(2)(b). 45 Family Law Act 1975 (Cth), s 4AA(2)(d). 46 Family Law Act 1975 (Cth), s 4AA(2)(e). 47 Family Law Act 1975 (Cth), s 4AA(2)(f). 48 Family Law Act 1975 (Cth), s 4AA(2)(h). 49 Family Law Act 1975 (Cth), s 4AA(2)(i). relationship are important. This is a case where the respondent's conduct in threatening the interests of the appellant justified the intervention of NCAT and the appointment of the Trustee to take responsibility for her. Thereafter, it has been the Trustee, and the not the respondent, that has made, and is trying to make, the "necessary or desirable adjustments". In aggregate, these circumstances support the conclusion that there had been a breakdown in the parties' de facto relationship by no later than 25 May 2018. With respect to the Full Court below, this was more than just a dispute between the respondent – a man found to have behaved poorly – and the Trustee and the appellant's children. Orders For these reasons the appeal must be allowed. Orders 2, 3 and 4 made on 11 December 2020 by the Full Court must be set aside and, in their place, the appeal to that Court must be dismissed. It was a condition of the grant of special leave that the Trustee must pay the costs of both parties of the application for special leave and of the appeal. Those orders as to costs should be made.

HIGH COURT OF AUSTRALIA BRUTON HOLDINGS PTY LIMITED (IN LIQUIDATION) APPELLANT AND COMMISSIONER OF TAXATION & ANOR RESPONDENTS Bruton Holdings Pty Limited (in liquidation) v Commissioner of Taxation [2009] HCA 32 26 August 2009 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 25 February 2009, and in their place order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation S D Robb QC with D R Stack for the appellant (instructed by Nash O'Neill Tomko Lawyers) A H Slater QC with R L Seiden and E Bishop for the first respondent (instructed by Australian Government Solicitor) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Bruton Holdings Pty Limited (in liquidation) v Commissioner of Taxation Taxation – Recovery of tax debts – Company deposited moneys with third party – Passage of creditors' resolution for winding up of company – Commissioner of Taxation ("Commissioner") issued notice under s 260-5 in Sched 1 to the Taxation Administration Act 1953 (Cth) ("Administration Act") requiring moneys held by third party be paid to Commissioner – Whether s 260-5 notice may be issued after commencement of winding up – Whether steps taken by Commissioner void and unenforceable as an "attachment" within meaning of s 500(1) of Corporations Act 2001 (Cth) – Relationship between s 260-5 and Companies – Winding up – Creditors' voluntary winding up – Whether s 260-5 in Sched 1 to Administration Act applicable – Relationship between s 260-5 and Words and phrases – "attachment", "property". Bankruptcy Act 1966 (Cth), s 118. Corporations Act 2001 (Cth), ss 5A(2), 9, 468(4), 500(1), 500(2), 501, 555, 569. Legal Profession Act 2004 (NSW), s 255. Taxation Administration Act 1953 (Cth), Sched 1, ss 260-5, 260-15, 260-20, FRENCH CJ, GUMMOW, HAYNE, HEYDON AND BELL JJ. The ultimate question on this appeal from the Full Court of the Federal Court of Australia (Ryan, Mansfield and Dowsett JJ)1 may be stated as follows. Shortly before the creditors of the appellant, a company in voluntary administration, resolved that the company be wound up, the first respondent ("the Commissioner") issued an assessment assessing the company to tax of more than $7.7 million. After the passing of the resolution for winding up, the Commissioner lodged a proof of debt in the winding up but also issued a notice under s 260-5 in Sched 1 to the Taxation Administration Act 1953 (Cth) ("the Administration Act"). Section 260-5 appears in a Division which also contains particular provisions dealing with company liquidations. In its terms the notice ("the s 260-5 Notice") required the second respondent, a firm of solicitors ("Piper Alderman"), to pay to the Commissioner money the appellant had deposited with that firm2. Was Piper Alderman obliged to pay the Commissioner the amount demanded by the s 260-5 Notice from the sum standing to the credit of the company in the firm's trust bank account? The primary judge (Allsop J) granted a declaration that the s 260-5 Notice was void3. The Full Court allowed an appeal by the Commissioner and the company in this Court seeks the restoration of the orders of the primary judge by the setting aside of the Full Court orders. For the reasons which follow, the appeal to this Court should be allowed. Chapter 5 of the Corporations Act It is convenient to turn first to provisions of Ch 5 of the Corporations Act 2001 (Cth) ("the Corporations Act") which had been enlivened with the passing of the resolution for the creditors' voluntary winding up of the appellant, that is to say, before the issue of the s 260-5 Notice. Section 501 provides for the distribution of the property of a company on its winding up. It provides that: 1 Federal Commissioner of Taxation v Bruton Holdings Pty Ltd (in liq) (2008) 173 FCR 472. 2 Piper Alderman entered a submitting appearance in this Court. 3 Bruton Holdings Pty Ltd (in liq) v Commissioner of Taxation (2007) 244 ALR 177. Bell "Subject to the provisions of this Act as to preferential payments, the property of a company must, on its winding up, be applied in satisfaction of its liabilities equally and, subject to that application, must, unless the company's constitution otherwise provides, be distributed among the members according to their rights and interests in the company." The term "property" is defined in s 9 as meaning: "any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action". Section 555 of the Corporations Act gives further content to the requirement of s 501 that, on winding up, the company's property is to be applied "in satisfaction of its liabilities equally". It provides that: "Except as otherwise provided by this Act, all debts and claims proved in a winding up rank equally and, if the property of the company is insufficient to meet them in full, they must be paid proportionately." Section 500 of the Corporations Act regulates execution and civil proceedings against a company or its property after the passing of a resolution for voluntary winding up. Sub-sections (1) and (2) of s 500 provide: "(1) Any attachment, sequestration, distress or execution put in force against the property of the company after the passing of the resolution for voluntary winding up is void. (2) After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes." Section 468(4) applies to a winding up by the court and is relevantly in the same terms as s 500(1). These provisions have an ancestry which commences with s 163 of the Companies Act 1862 (UK) ("the 1862 Act")4. 4 25 & 26 Vict c 89. Bell Section 5A(2) of the Corporations Act provides that, subject to some exceptions that are not presently material, the provisions of Ch 5 of the Corporations Act regulating winding up, which include ss 500, 501 and 555, bind the Crown in right of the Commonwealth. The critical issue This is whether, after the passing of the resolution for the winding up of the appellant, the property of that company, which, subject to "preferential payments"5, must be applied in the manner prescribed by ss 501 and 555 of the Corporations Act, could be diminished by the subsequent engagement of s 260-5 in Sched 1 to the Administration Act. The answer to that question requires consideration both of the relationship between the two statutes of the Commonwealth and also of the relationship between provisions of the Administration Act. These reasons will demonstrate that the Commissioner's general power to issue a notice under s 260-5 is not available if a liquidator has been appointed to a company. In that latter circumstance, only the more particular provisions of s 260-45 of the Administration Act are engaged. That being so, there is no disruption of the operation of Ch 5 of the Corporations Act, and, in particular, no attachment to be rendered void by s 500(1). The Administration Act Something further should now be said respecting the provisions of Div 260 in Sched 1 to the Administration Act, beginning with the notice provisions in s 260-5 and then turning to s 260-45. The heading to Div 260 speaks of "[s]pecial rules about collection and recovery" of tax. A notice under s 260-5 gives the Commissioner the right to recover from a third party an amount that the third party owes or may later owe to a taxpayer who is indebted to the Commonwealth for tax. It is established that the remedy given to the Commissioner by s 260-5 is available in respect of revenue obligations, which are given the character of "debts" by force of the Administration Act itself6 and without prior curial determination. 5 Chiefly the priority payments prescribed by s 556. See Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 82 ALJR 1411 at 1417 [26]-[29]; 248 ALR 693 at 700; [2008] HCA 41. Bell The third party is obliged to pay the Commissioner what is demanded by is a criminal offence7. the notice; failure Section 260-5(3), read with s 260-15, provides, in effect, that the Commissioner has the right to give to the third party a valid receipt and discharge for money paid in compliance with the notice. to comply with the notice In these respects, a notice under s 260-5 operates in the manner in which, in Hall v Richards8, Kitto J described a garnishee order as operating to attach a "Such an order, though not working an assignment or giving the judgment creditor any proprietary interest in the debt, yet gives him positive rights with respect to it which a creditor having no more than a judgment does not possess; not merely a negative right to prevent the judgment debtor from accepting payment of the debt or disposing of it, but positive rights for the recovery of what is owing on the judgment, namely a right to give a valid receipt and discharge for the money, and a right in case of non-payment to obtain execution against the garnishee: In re Combined Weighing and Advertising Machine Co9." The provisions in s 260-5 and following have an ancestry beginning with s 50A of the Income Tax Assessment Act 1915 (Cth)10 and including s 218 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"). In Bluebottle UK Ltd v Deputy Commissioner of Taxation11 the Court described s 218 of the 1936 Act as containing "statutory garnishee provisions". Earlier, in FJ Bloemen Pty Ltd v Federal Commissioner of Taxation12, Mason and Wilson JJ spoke of "the 7 Section 260-20. (1961) 108 CLR 84 at 92; [1961] HCA 34. (1889) 43 Ch D 99 at 105, 106. Inserted by s 32 of the Income Tax Assessment Act 1918 (Cth). (2007) 232 CLR 598 at 632 [92]; [2007] HCA 54. 12 (1981) 147 CLR 360 at 375; [1981] HCA 27. See also the use of that expression by Fox J in Huston v Deputy Commissioner of Taxation (1983) 49 ALR 566 at 567. Bell garnishee power in s 218", and in Clyne v Deputy Commissioner of Taxation13, Mason J remarked upon the "quite striking" similarity between s 218 and the rules of court respecting garnishee orders. Section 260-45 deals specifically with collection and recovery of tax liabilities of companies from liquidators. Section 260-45 provides that the Commissioner must notify14 the liquidator of the amount the Commissioner considers is enough to discharge any outstanding tax-related liabilities of the company. The section further provides, in effect, that the liquidator is obliged15 to set aside from the assets of the company available to pay tax-related liabilities and other, non-priority, unsecured debts, the proportion of those available assets that would be applied in accordance with s 555 of the Corporations Act to meet the notified amount of tax-related liabilities. The liquidator is then further personally obliged16 to discharge the outstanding tax liabilities of the company to the extent of the value of the assets the liquidator is required to set aside under the proportionate formula. Failure by the liquidator to comply with these obligations is a criminal offence17. There the Administration Act an example of a specific regime which, in cases where it applies, excludes more general provisions which otherwise might be engaged18. thus disclosed by these provisions in Sched 1 Counsel for the Commissioner referred to Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd19 and to Deputy Commissioner of 13 (1981) 150 CLR 1 at 19; [1981] HCA 40. 14 Section 260-45(3). 15 Section 260-45(6). 16 Section 260-45(7) and (8). 17 Section 260-50. 18 Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7; [1932] HCA 9; Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 583-589 [44]-[59], 612 [149], 615-616 [162]-[165]; [2006] HCA 50. See also Minister for Immigration and Citizenship v SZKTI [2009] HCA 30 at [39]-[44]. (2008) 82 ALJR 1411; 248 ALR 693. Bell Taxation v Moorebank Pty Ltd20. The first case concerned the specific recovery provisions for disputed tax debts and the inapplicability thereto of the "genuine dispute" provision in s 459H of the Corporations Act. The second case decided that State limitation statutes were not "picked up" by the Judiciary Act 1903 (Cth) and rendered applicable to recovery of tax debts. These authorities may provide some support for a proposition that, in the event of a conflict, preference is given to specific schemes in the Administration Act to protect the revenue over the more general scheme of the Corporations Act. But what first must be identified is the relevant specific scheme in the Administration Act itself. for liquidators The conclusion that would otherwise follow from the making of the special provisions the Commissioner's general powers under s 260-5 are not available if there has been a resolution passed for the winding up of a company or if an order for winding up by the court or for winding up in insolvency has been made) is at least reinforced, even required, by the application by s 5A(2) of ss 501 and 555 of the Corporations Act to the Crown in right of the Commonwealth. in s 260-45 that appear (that The conclusion is further supported by the recognition that: the process for which s 260-5 provides falls within the expression "attachment" when used in s 500(1); the emphatic language of s 500(1) ("[a]ny attachment ... put in force against the property of the company after the passing of the resolution for voluntary winding up is void") is consistent with reading s 260-5 as not extending the Commissioner's general power to give such a notice to the particular circumstances for which s 260-45 makes special provision; before the Taxation Debts (Abolition of Crown Priority) Act 1980 (Cth) ("the 1980 Act") and in the period when the Crown retained priority for tax debts it was necessary to provide specially (by s 221(1)(b) of the 1936 Act21) that "notwithstanding anything contained in any other Act or State Act" the liquidator of a company being wound up was bound to apply the assets of the (1988) 165 CLR 55; [1988] HCA 29. 21 Introduced into that Act by the Income Tax Assessment Act 1942 (Cth), s 31, and repealed by s 5 of the 1980 Act. Bell company in payment of tax in priority to all other unsecured debts22; and the proportionate system established by s 260-45 for liquidations would be subject to adventitious disruption if the circumstance that a third party was indebted to the company gave to the Crown full garnishee rights under s 260-5; the extent of recovery of a tax debt owed by an insolvent company would depend upon the extent to which the assets of the company comprised debts owed by third parties and the speed with which the liquidator gathered them in; once so gathered the debts would be beyond the scope of the notice provisions and within the scheme of Ch 5 of the Corporations Act. The result is that the present appeal discloses not a situation where the relevant provisions of the Corporations Act and the Administration Act are at odds and in need of reconciliation. Rather, the former assists in the construction of the latter23. It is, however, necessary to say something more as to consideration (a), that concerning the term "attachment" in s 500(1), and then to note some further factual matters founding issues which, while argued, do not arise for decision. Attachment of debts Section 500(1) of the Corporations Act uses the term "any attachment". An attachment was understood at common law as including the act or process of taking, apprehending or seizing, under a writ of fieri facias, chattels capable of sale to meet the entitlement of the judgment creditor24. However, at common law there was no remedy enabling a creditor after judgment to appropriate debts and moneys of the debtor in the hands of third parties; such assets were available for insolvency the satisfaction of creditors only under a bankruptcy or 22 See The State of Victoria v The Commonwealth (1957) 99 CLR 575 at 613, 658; [1957] HCA 54; Bank of New South Wales v Federal Commissioner of Taxation (1979) 145 CLR 438 at 450-451; [1979] HCA 64. 23 See Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc (2003) 214 CLR 397 at 411-412 [28]-[29]; [2003] HCA 43; Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 66 FCR 511 at 530. 24 Halsbury's Laws of England, 1st ed, vol 14, Title "Execution" at 44. Bell administration. Section 12 of the Judgments Act 1838 (UK)25 proved to be of limited utility because it applied only to specific coin or notes which could be taken without assaulting the debtor and to debts secured by cheques, bills of exchange and other securities for money, which could easily be secreted. This state of affairs was described in the Second Report of the Common Law Commissioners in 185326. The Commissioners reported: "We are not aware of any process, either in the superior courts of law or equity, in suits between subject and subject, by which this [attachment of debts] can directly be done, though the course of proceeding under writs of execution at the suit of the crown[27], and by way of foreign attachment in the mayor's court of London[28] and some other cities, as well as in the courts of many foreign countries, shows that such a remedy would be practicable and useful." In accordance with their recommendations a new remedy was provided by the Common Law Procedure Act 1854 (UK)29 ("the 1854 Act"). The 1854 Act soon was copied in the Australian colonies30. 25 1 & 2 Vict c 110. 26 Second Report of Her Majesty's Commissioners for Inquiring into the Process, Practice, and System of Pleading in the Superior Courts of Common Law, (1853) at 38; reprinted in British Parliamentary Papers, Legal Administration General, (1971), vol 9, 165 at 204. 27 See Chitty, A Treatise on the Law of the Prerogatives of the Crown, (1820), Ch XII, Pt I, Sec VI, "Of seizing the Debts, Specialties, and Credits of the Crown Debtor, and herein of Extents in Chief, in the second degree, ie against Debtors to the Crown Debtor"; Ling v The Commonwealth (1994) 51 FCR 88 at 93. 28 See The Mayor and Aldermen of the City of London v Cox (1867) LR 2 HL 239 at 265 where Willes J, on behalf of the Judges, reported to the House of Lords that "foreign" did not mean "alien", but "merely not civic", as, for example, outside the jurisdiction of the Lord Mayor's Court in London. 29 17 & 18 Vict c 125, ss 60-67. 30 See Common Law Procedure Act 1857 (NSW), ss 26-33; Supreme Court Procedure Act 1855 (SA), ss 49-56; Supreme Court (Common Law Procedure) Act 1865 (Vic), ss 200-207; Common Law Practice Act 1867 (Q), ss 51-58. Bell Section 61 of the 1854 Act used the term "garnishee" to identify the third party and spoke of the debts being "attached". Thus, by the time of the introduction of s 163 of the 1862 Act, the ancestor of s 500(1) of the Corporations Act, the term "attachment" was in use to describe the then new statutory garnishee remedy. Speaking of the system introduced by the 1854 Act, Bowen LJ said that the garnishee order created an attachment of the debt31. The meaning of "attachment" in s 500(1) The Commissioner submits that the term "any attachment" in s 500(1) of the Corporations Act does not extend to the operation of the s 260-5 Notice. The question is whether, given the subject, scope and purpose of Ch 5 of the Corporations Act, of which s 500(1) is part, the term "any attachment" has a more restricted meaning than that which it otherwise bears. The service of a s 260-5 notice imposes upon the recipient an obligation to pay the amount specified therein to the Commissioner, renders it unlawful for the recipient to pay the creditor, invalidates any attempted assignment by the creditor after the receipt of the notice, and gives to the Commissioner the sole right to discharge the debtor and to sue the debtor upon non-payment32. Section 260-15, as explained above, protects the party paying under the notice. The appellant correctly submits that, as a matter of general understanding, these are indicia of an attachment. Observations by von Doussa J in Commissioner of Taxation v Donnelly33 ("Donnelly") are in point here. His Honour said: "It may be accepted that historically, and in present usage, the meaning of 'attachment' may extend to means other than a process of the court by which a debt is frozen or seized; the meaning may extend to similar procedures otherwise authorised by legal authority." 31 In re Combined Weighing and Advertising Machine Company (1889) 43 Ch D 99 32 Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1. (1989) 25 FCR 432 at 446. See also the reasons of Burchett J in Re Edelsten (1988) 84 ALR 547 at 560-561. Bell The essential point, to adapt what was pointed out by Willes J in The Mayor and Aldermen of the City of London v Cox34, is that the third party debtor "is safe" in making the payment, whether that safety be by reason of the protection of a curial order or the operation of statute, such as s 260-15 of the Administration Act. However, the Commissioner relied upon the conclusion reached by the Full Court that s 500(1) is limited to "curial attachments". Section 163 of the 1862 Act was enacted in the following terms: "Where any Company is being wound up by the Court or subject to the Supervision of the Court, any Attachment, Sequestration, Distress, or Execution put in force against the Estate or Effects of the Company after the Commencement of the Winding-up shall be void to all Intents." This section does not contain words of limitation which would indicate that its operation was limited to curial attachments. Furthermore, there appears to be no decision, before that currently subject to this appeal, which has held that s 500(1), or any of the preceding provisions to the same effect, is limited in operation to curial attachments. The reasons of the Full Court The Full Court, in holding that s 500(1) was so limited, stated that35: "the need for certainty in the law can best be recognised by applying the decision in Donnelly to s 500". The Full Court in Donnelly36 concluded that "attachment", in s 118 of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act"), is confined to attachments by curial order and does not extend to non-curial charges created by notices issued under s 218 of the 1936 Act. However, subsequently, the Full Court in Macquarie Health Corp Ltd v Commissioner of Taxation37 noted the 34 (1867) LR 2 HL 239 at 267. 35 (2008) 173 FCR 472 at 497 [72]. 36 (1989) 25 FCR 432. (1999) 96 FCR 238. Bell "considerable force" of the contention that the decision in Donnelly does not apply to what is now s 468(4) of the Corporations Act38. The contention applies with equal force to s 500(1). Section 118 of the Bankruptcy Act is a special provision dealing with the payment to the trustee in bankruptcy of the proceeds of certain executions and attachments by a creditor within six months before, or after, the presentation of a petition. The corresponding provision in the Corporations Act is found in s 569. Section 118 contains several features, upon which the Full Court relied in Donnelly in reaching its decision, which are not present in s 500(1). First, the legislative history of s 118 indicates that it is confined to curial attachments; when it was introduced it included a reference to a creditor who had "instituted proceedings to attach a debt". Secondly, s 118 links attachments with executions against property and proceedings to enforce a charge, all of which are court procedures to enforce judgments. Thirdly, the amount to be paid to the trustee under s 118(1) is to be reduced by the taxed costs of the execution or attachment. None of these features are present in s 500(1). Indeed, s 500(1) includes the non- curial remedy of distress. The legislative history of s 500(1) is distinct from that of s 118 of the Bankruptcy Act and contains no indication that its operation is limited to curial attachments. Section 118 is derived from s 92 of the Bankruptcy Act 1924 (Cth), which in turn was derived immediately from s 40 of the Bankruptcy Act 1914 (UK). In McQuarrie v Jaques, Dixon CJ noted that the predecessors to s 92, which "come from the English Bankruptcy Acts 1883 and 1890", were introduced to remedy the conflicting priorities created by the operation of the doctrine of relation back when an execution had been levied upon the bankrupt's property, after the act of bankruptcy, but before the fiat or commission in bankruptcy39. Section 500(1), on the other hand, only applies after the passing of a resolution for voluntary winding up and there is no "relation back" period of its operation. Thus the features of s 118 which led the Full Court in Donnelly to decide that its operation should be confined to curial attachments are absent from s 500(1) and the decision in Donnelly is to be distinguished. (1999) 96 FCR 238 at 266-267 [109]-[118]. (1954) 92 CLR 262 at 269-272; [1954] HCA 76. Bell The Full Court in this case attached importance to the use of the term "attachment" in s 569 of the Corporations Act, which expressly refers to the taxation of costs. And s 569 has a shared legislative history with s 118 of the Bankruptcy Act. The particular confinement of the term "attachment" in s 569 of the Corporations Act which follows from both its text and history is not indicative of the meaning of "any attachment" in s 500(1). An examination of s 500(1), and Ch 5 of the Corporations Act of which it forms part, does not reveal any reason to restrict the meaning of the expression "any attachment" employed in the section and it should be given the meaning explained earlier in these reasons. This extends to curial and non-curial attachments, including those effectuated by notices issued pursuant to s 260-5 in Sched 1 to the Administration Act. Accordingly, and contrary to the holding by the Full Court, the term "any attachment" in s 500(1) does not have a restricted meaning which would exclude the operation of a valid notice given under s 260-5. That conclusion supports the proposition that, as a matter of construction, the power conferred on the Commissioner by s 260-5 does not extend to the case of a company in liquidation. The tension which would otherwise exist if a provision of one statute avoided a notice issued under another does not arise. As explained earlier, the Commissioner's general powers under s 260-5 are not available if there has been a resolution passed for the winding up of a company or if an order for winding up has been made. The facts Something more should be said respecting the facts of this case. This is necessary in order to show that the appeal may be decided without embarking upon all the questions raised by the submissions. The appellant was incorporated on 27 May 1997 and its sole purpose was to act as trustee of the trusts of a settlement made by deed dated 8 July 1997 ("the Trust Deed") and known as the Bruton Educational Trust ("the Trust"). The income and capital were to be applied by the trustee for charitable purposes (cl 3). On 28 April 2006, the Commissioner disallowed the objection by the appellant to the refusal of its application for endorsement as a tax exempt entity. The appellant challenged that outcome by application made to the Federal Court on 23 June 2006. Piper Alderman acted for the appellant in that Federal Court litigation. Bell Over a period beginning on 26 October 2005 and ending on 28 February 2007, the appellant paid to Piper Alderman some $470,000 to be held in its trust account on account of costs and disbursements of that litigation. On 28 February 2007 administrators of the appellant were appointed pursuant to s 436A of the Corporations Act. By force of cl 10.2(b) of the Trust Deed the entry into administration brought about the termination of the trusteeship of the appellant pursuant to the appointment made by the Trust Deed. No replacement trustee has been appointed. The appellant was not entitled to charge any remuneration, but, by force of cl 13 of the Trust Deed, the appellant has a lien on the trust assets for all liabilities, costs and expenses properly incurred by it in administration of the Trust. Further, even without that express provision, the appellant has rights of recoupment or exoneration in respect of all obligations incurred by it in that administration. These rights were supported by a lien over the whole of the trust assets which amounted to a proprietary interest therein40 and they survived the appellant's loss of office as trustee41. The amount so secured to the appellant has yet to be determined. On 26 March 2007 the Commissioner issued to "the Trustee for Bruton Educational Trust" an assessment for the year ending 30 June 2004 in the sum of $7,715,873.73, and due for payment on 30 April 2007. On 30 April 2007 the appellant was placed into liquidation following passage of a creditors' resolution under s 439C of the Corporations Act. The two administrators were appointed joint liquidators. The date of commencement of the winding up was 28 February 2007, the day on which the administration began42. On 8 May the Commissioner lodged a proof of debt for the sum of the assessment issued on 26 March. On 9 May 2007, Piper Alderman received the s 260-5 Notice dated 8 May and issued by the Commissioner in reliance upon s 260-5 of the Administration 40 Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 245-246 [47]-[49]; [1998] HCA 4. 41 Dimos v Dikeakos Nominees Pty Ltd (1996) 68 FCR 39; Glazier Holdings Pty Ltd (in liq) v Australian Men's Health Pty Ltd (in liq) [2006] NSWSC 1240. 42 Corporations Act, s 513B(b) and s 513C(b). Bell Act. This recited that Piper Alderman owed money to the appellant and the indebtedness of the appellant to the Commonwealth of $7,715,873.73 and required payment to the Commissioner of $447,420.20. The Legal Profession Act 2004 (NSW) governed the relationship between the appellant and Piper Alderman. Section 255 of that statute required Piper Alderman to pay the moneys to or in accordance with the direction of the appellant. On its part, the appellant had, in respect of the obligation of Piper Alderman to account under s 255, the proprietary interest given by the lien described above. This proprietary interest would appear to be "property" of the appellant protected by s 500(1) of the Corporations Act against any attachment put in force against it during the winding up. Both the primary judge43 and the Full Court44 so held. "Property" and s 500(1) Particular questions may arise in the winding up of a trustee corporation which also conducted non-trust activities by reason of which there are third party creditors who seek access by subrogation to the lien of the trustee over trust assets45. Those questions do not arise in the present litigation. However, the Commissioner fixes upon the circumstance that the appellant has its lien for recoupment or exoneration, and upon the further circumstance (which the appellant contests but may be assumed for present purposes) that the Commissioner is likely to be the only creditor admitted to proof, to make several submissions which would deny scope for the operation in this case of s 500(1). The Commissioner emphasises that the tax debt has not been paid so that the appellant's right at best is to exoneration not recoupment from the assets of the Trust and that the Commissioner is subrogated to the exercise of that right, with no prospect of any excess being left for the appellant. It is said to follow that the "property" represented by that right is not that of the appellant and s 500(1) has not been enlivened. 43 (2007) 244 ALR 177 at 187 [51]. 44 (2008) 173 FCR 472 at 494 [61]. 45 See Jacobs' Law of Trusts in Australia, 7th ed (2006), §2114. Bell the Administration Act, It is unnecessary to rule upon those submissions. This is for several reasons. The first is that for the reasons given above which concern the construction of the Commissioner on the facts of this case was that under the regime for liquidations (s 260-45), not the garnishee regime provided by s 260-5. Secondly, the Commissioner takes inconsistent positions in making the above submissions. The garnishee regime, in its terms, only applies if the third party owes money to the taxpayer (s 260-5(2), (3)), yet the Commissioner denies that the third party, the appellant, had any "property" within the broad meaning of "property" for the operation of s 500(1) of the Corporations Act. the remedy available Orders The appeal is allowed with costs, the orders made by the Full Court of the Federal Court of Australia on 25 February 2009 are set aside and in their place the appeal to the Full Court is dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANTS AND NEMESKE PTY LTD & ORS RESPONDENTS Fischer v Nemeske Pty Ltd [2016] HCA 11 6 April 2016 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation N C Hutley SC with A B Edington and R A Yezerski for the appellants (instructed by S Moran & Co Solicitors) Submitting appearance for the first respondent C J Birch SC with B DeBuse for the second and third respondents (instructed by Curwoods Lawyers) Submitting appearance for the fourth to twelfth respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Fischer v Nemeske Pty Ltd Trusts – Trustees' powers – Power of advancement – Where trust property included shares in a company – Where value of shares recorded in "asset revaluation reserve" – Where trustee made resolution to distribute entire asset revaluation reserve to specified beneficiaries – Where trustee covenanted to pay specified beneficiaries on demand – Whether valid exercise of power to "advance" and "apply" trust capital or income – Whether trustee indebted to specified beneficiaries – Whether action for money had and received maintainable. Words and phrases – "advance", "apply", "pay", "pay or apply", "raise". Trustee Act 1925 (NSW), s 44. Trustee Act 1925 (UK), s 32. FRENCH CJ AND BELL J. Introduction This appeal, from a decision of the Court of Appeal of New South Wales1, primarily concerns the power of the trustee of a discretionary trust to advance and apply to two designated beneficiaries, by resolution and entry in the trust accounts, an amount of money representing the value of unrealised trust assets comprising shares in a company. Also in issue is the effect of a deed reciting the alleged indebtedness of the trustee to the designated beneficiaries in that amount and purporting to charge the shares in their favour. The detailed facts are set out in the judgments of Kiefel J and Gordon J2. The trust was the Nemes Family Trust ("the Trust"). Nemeske Pty Ltd was its trustee ("the Trustee"). The designated beneficiaries were Mr Emery Nemes and his wife, Madeleine. The shares were in a company, Aladdin Ltd ("Aladdin"). The value of the shares in September 1994 was recorded in an "Asset Revaluation Reserve" in the amount of $3,904,300, created as an entry in the accounts of the Trust. The entry did not describe an asset or a fund from which amounts could be withdrawn or paid. On 23 September 1994, the Trustee passed a resolution in the following terms: "RESOLVED that pusuant [sic] to the powers conferred on the Company as Trustee in the Deed of Settlement of the Nemes Family Trust:- That a final distribution be and is hereby made out of the asset revaluation reserve for the period ending 30th September, 1995 [sic] and that it be paid or credited to:- the beneficiaries in the following manner and order: The entire reserve if any, to be distributed to:- [Mr and Mrs Nemes] as joint tenants."3 The "Beneficiaries Accounts" prepared the period ending 30 September 1994 showed the Asset Revaluation Reserve diminished by a "Capital Distribution" out of that reserve of $3,904,300. The balance sheet of the for 1 Fischer v Nemeske Pty Ltd [2015] NSWCA 6, on appeal from Stevenson J, Fischer v Nemeske Pty Ltd [2014] NSWSC 203. 2 Reasons of Kiefel J at [35]-[47]; reasons of Gordon J at [116]-[145]. It is not in dispute that the reference to the year 1995 was a typographical error and should have been 1994. Bell Trust as at 30 September 1994 showed "non-current liabilities" comprising secured loans from "EG & M Nemes" amounting to $3,904,300, leaving a net asset position of $1,000 which was shown as being the original settlement sum4. The primary judge found that the loan account entry was created to give effect to the distribution by purporting to create an enforceable debt owed by the Trustee to the beneficiaries named in the resolution5. Mr and Mrs Nemes were named in the Deed of Settlement establishing the Trust as Specified Beneficiaries. So too were the appellants, who are siblings of the Fischer family ("the Fischers"). Their mother was a cousin of Mr Nemes. The Fischers did not benefit from the resolution of 23 September 1994. The power relied upon by the Trustee to support the resolution appeared in cl 4(b) of the Deed of Settlement. That provision was relevantly in the following terms6: "The Trustee may from time to time exercise any one or more of the following powers that is to say:- (b) At any time or times to advance or raise any part or parts of the whole of the capital or income of the Trust Funds and to pay or to apply the same as the Trustee shall think fit for the maintenance education advancement in life or benefit of any of the Specified Beneficiaries ..." This appeal was also concerned with the effect of a deed dated 30 August 1995 made between the Trustee and Mr and Mrs Nemes whereby the Trustee purported to charge the shares in Aladdin in their favour ("the Deed of Charge"). The Deed of Charge recited the indebtedness of the Trustee to them in the sum of $3,904,300 ("the principal monies"). By cl 5 of the Deed of Charge, the Trustee covenanted that it would pay the principal monies to Mr and Mrs Nemes on their demand. Clause 7 provided that the principal monies would become payable without demand or notice upon the happening of any one of thirteen events of 4 The settlement sum in the Deed of Settlement was $200. The difference between the figures was not material in this appeal. [2014] NSWSC 203 at [101]. 6 A proviso requiring written notice to other beneficiaries of the Trustee's intention to advance and apply a sum greater than $10,000 is not reproduced, as it was not in issue in the appeal to this Court. Bell default. The charge was registered with the Australian Securities Commission on 20 March 1996. Madeleine Nemes died on 9 November 2010 and Emery Nemes, who was the sole beneficiary under her will, died on 26 September 2011. He bequeathed all the shares in the Trustee and in Aladdin to the Fischers. The residuary estate was left to a number of other persons. Accounts for the financial years ending 30 June 2003 and 30 June 2007, which were before the primary judge, were to the same effect as the accounts of 1994. The adverse effect on the Fischers' bequest of a debt of $3,904,300 owed by the Trustee to Mr Nemes' estate was apparent7. On 9 April 2013, solicitors acting for the Fischers sent a letter to the directors of the Trustee, Lorand and Karen Loblay8, denying the debt. The Loblays, who were also the executors of Mr Nemes' will, suggested by their solicitors that the Fischers bring an action for a declaration as to the validity of the loan and the enforceability of the charge. In the event, the Fischers instituted proceedings against the Trustee, the Loblays and other beneficiaries of the Trust in the Equity Division of the Supreme Court of New South Wales on 11 June 2013. The resolution was found to be effective by the primary judge9 and by the Court of Appeal10 and the Deed of Charge was found, again by both the primary judge11 and by the Court of Appeal12, to have created a debt payable on demand. The Fischers appealed to this Court by special leave granted by French CJ and Bell J13. 7 The contest in the Supreme Court was between "Mr Nemes' estate ... and the persons who, as 'Specified Beneficiaries', stood to gain if there had been no favour of Mr and Mrs Nemes": effective exercise of [2015] NSWCA 6 at [6]. the power 8 Mr Loblay was an old friend of Mr Nemes. Karen Loblay was his daughter. Neither was a beneficiary under the Trust. [2014] NSWSC 203 at [142]. 10 [2015] NSWCA 6 at [64], [73]-[74]. 11 [2014] NSWSC 203 at [173]. 12 [2015] NSWCA 6 at [100]. 13 [2015] HCATrans 262. Bell For the reasons that follow, the Court of Appeal was correct to find that the Trustee had validly exercised the power conferred on it by cl 4(b) of the Deed of Settlement. The appeal should be dismissed with costs. The decision of the primary judge The Fischers' statement of claim, so far as relevant to this appeal, included allegations that the purported distribution of the Asset Revaluation Reserve and the associated creation of the loan account in favour of Mr and Mrs Nemes were void and of no effect. The Fischers claimed declarations accordingly. The Loblays joined issue and contended that on entry into the Deed of Charge the Trustee and the Fischers were estopped from disputing the debt recited in it14. The Loblays filed a cross-claim against the Trustee and Mr Robert Fischer, the first appellant, alleging that the Trustee was indebted to them, as executors of Mr Nemes' estate, in the amount of $3,904,300. The parties agreed at trial that all purported actions and transactions reflected by documents in evidence (even though some were unsigned) were to be accepted as genuine and effective according to their terms. The primary judge, who proceeded on that basis, relevantly found in favour of the executors that: The resolution of 23 September 1994 should be construed as written in the Minutes with the last sentence to read15: "An amount equal to the entire reserve ... to be distributed to [Mr and Mrs Nemes] as joint tenants."16 That construction was not disturbed by the Court of Appeal nor challenged on appeal in this Court. The Trustee had resolved to make an advance or distribution to Mr and Mrs Nemes pursuant to cl 4(b) of the Deed of Settlement of an amount equal to the recently created Asset Revaluation Reserve, namely 14 The other defendants entered submitting appearances. They have taken no active role in the proceedings. 15 [2014] NSWSC 203 at [84]. 16 The emphasised words were read into the minuted text. Bell $3,904,300, and gave effect to that resolution by crediting Mr and Mrs Nemes' loan account with the Trustee in the same amount17. In the result Mr and Mrs Nemes became creditors of the Trust rather than discretionary objects. As creditors they had the ability, at any time, to call on the Trustee to repay the debt; a result which conferred a "benefit" on them within the meaning of cl 4(b) of the Deed of Settlement18. The Court of Appeal The judgment of the Court of Appeal, dismissing the appeal against the decision of the primary judge, was given by Barrett JA, with whom Beazley P and Ward JA agreed. His Honour's reasoning, so far as relevant to this appeal, involved the following steps: Clause 4(b) of the Deed of Settlement conferred on the Trustee a single composite power "to earmark or assemble capital or income for use and to use it ... 'for the maintenance education advancement in life or benefit of' any of the specified beneficiaries". That power extended to the "unrealized but expressly recognized accretion in the value of the shares to the extent of $3,904,300" as it was part of the income or capital of the "Trust Funds" as defined in the Deed of Settlement19. The resolution of 23 September 1994 caused the Trustee's obligations with respect to the trust assets to change so that, to the extent of $3,904,300, the Trustee was required to recognise and accommodate an immediate and absolute vested interest of Mr and Mrs Nemes20. The Trustee on 23 September 1994 had thereby exercised its power under cl 4(b) to advance and apply capital or income of the Trust Funds to the extent of The powers and duties of the Trustee with respect to the sum so advanced and applied were those applicable to and consistent with holding the Trust 17 [2014] NSWSC 203 at [101]. 18 [2014] NSWSC 203 at [109]-[110]. 19 [2015] NSWCA 6 at [53]-[54]. 20 [2015] NSWCA 6 at [62]. 21 [2015] NSWCA 6 at [64]. Bell Funds upon trust to pay thereout $3,904,300 to Mr and Mrs Nemes in satisfaction of an absolute entitlement on their part22. In order for an action at law to be maintainable by the beneficiary against the trustee, something more was necessary than the unconditional and trustee to account to the absolute equitable obligation upon the beneficiary. It had to be found that the trustee had "stated an account" or "admitted himself to the plaintiff that he held any sum of money in his hands payable to him absolutely"23. In this case, an action for money had and received was available against the Trustee by reason of the resolution and account entries. There was no power under the Deed of Settlement or the Trustee Act 1925 (NSW) to subject the shares to the purported security under the Deed of Charge. The Trustee did, however, have the power to confirm by separate covenant, as it did in cl 5 of the Deed of Charge, that the debt created was payable on demand24. That finding was relevant to a limitation argument which was not pursued in this Court. Due to the conclusion reached on the availability to the estate of a cause of action in debt, it was not necessary to deal with the estoppel arguments raised by the executors25. The issues The issues raised in this appeal were: 1. Whether the "Capital Distribution" effected by the resolution of 23 September 1994 and the subsequent entry in the trust accounts was a valid and effective exercise of the Trustee's powers under cl 4(b) of the Deed of Settlement to advance and apply capital or income for the benefit of any of the Specified Beneficiaries. 2. Whether the resolution and the subsequent recording in the Trust's accounts of a loan of $3,904,300 would have entitled Mr and Mrs Nemes 22 [2015] NSWCA 6 at [76]. 23 [2015] NSWCA 6 at [83], citing Bartlett v Dimond (1845) 14 M & W 49 at 56 per Pollock CB [153 ER 385 at 387]. 24 [2015] NSWCA 6 at [92], [100]. 25 [2015] NSWCA 6 at [115]. Bell to bring an action for money had and received against the Trustee for the amount of the loan. 3. Whether, in any event, the covenant contained in the Deed of Charge imposed a binding obligation on the Trustee to pay the amount of the advancement to Mr and Mrs Nemes. 4. Whether the Trustee is estopped by the Deed of Charge or by representation from denying the existence of the debt. 5. Whether the Trustee is entitled to an indemnity from the trust assets. The Fischers conceded that there was no issue about the characterisation of the appreciation in value of the shares as capital or income. The Beneficiaries Accounts of 30 September 1994 referred to a "Capital Distribution". The power in cl 4(b) applied equally to "capital or income". For present purposes the purported exercise of the power may be taken as an exercise with respect to the capital of the Trust. There was no contention in this Court that the resolution was made other than bona fide or that if valid it did not confer a "benefit" on Mr and Mrs Nemes within the meaning of cl 4(b). Having regard to the reasons that follow, issues 3, 4 and 5 above are not reached. Trust and debt It was submitted for the executors that the combination of the Trustee's resolution of 23 September 1994 and the entry in the accounts of the Trust for the period ending 30 September 1994 created an unconditional vested equitable interest and a debt enforceable at law owing by the Trustee to Mr and Mrs Nemes. It is a long established proposition that no action at common law for money had and received lies against a trustee in respect of its equitable obligations even if those obligations extend to the payment of money26. The same authorities which established that proposition also established the proposition that a trustee can end a trust with respect to capital or income in whole or in part and create a creditor/debtor relationship with a beneficiary. In Edwards v Lowndes, Lord Campbell CJ said27: 26 Bartlett v Dimond (1845) 14 M & W 49 at 56 per Pollock CB [153 ER 385 at 387]; Pardoe v Price (1847) 16 M & W 451 at 458-459 per Rolfe B [153 ER 1266 at 1269]; Edwards v Lowndes (1852) 1 El & Bl 81 at 89 per Lord Campbell CJ [118 ER 367 at 370]. 27 Edwards v Lowndes (1852) 1 El & Bl 81 at 89 [118 ER 367 at 370]. Bell "If ... the trustee, by appropriating a sum as payable to the cestui que trust, or otherwise, admits that he holds it to be paid to the cestui que trust, and for his use, the character of the relation between the parties is changed; and the trustee does not hold it as a trustee properly so called, but as a receiver for the plaintiff's use". The general proposition was set out in the third edition of Bullen and Leake's "A trustee who has received trust-money is accountable for it to the cestui que trust in the Court of Chancery, but in the courts of law he is treated for most purposes as the absolute owner, and no action can in general be maintained by the cestui que trust against him to recover trust money. ... If, however, he admits to the cestui que trust that he holds such money as the money of the cestui que trust to be accounted for to the latter, he is debarred from setting up his character of trustee, and becomes liable at law to the cestui que trust for money received to his use." The executors also relied upon the observation by Gummow J in Roxborough v Rothmans of Pall Mall Australia Ltd29 that by the time Edwards v Lowndes was decided it was settled that only when nothing remained for the trustee to do except to pay over money to the beneficiary, or when the trustee had admitted the debt, that an action for money had and received might lie at the suit of the beneficiary against the trustee. Otherwise, at law, the trustee was treated as the absolute owner and the beneficiary's remedy was exclusively equitable, with the possibility that the court might give effect to equitable set offs and other equitable defences available to the trustee. That being accepted, the question is whether in this case the power conferred on the Trustee by cl 4(b) of the Deed of Settlement empowered the Trustee to create a debt reflecting all or part of the value of the share capital at a particular time as a mechanism by which the capital could be said to be advanced and applied within the meaning of the provision. 28 Bullen and Leake, Precedents of Pleadings, 3rd ed (1868) at 46-47. 29 (2001) 208 CLR 516 at 541 [67]; [2001] HCA 68. Bell The power to advance and apply Statutory provisions in Australia30 and New Zealand31 conferring what has been called a "power of advancement"32 on trustees have been modelled on s 32 of the Trustee Act 1925 (UK) ("the UK Act") which itself reflected common form provisions in books of conveyancing precedents33. The statutory provisions typically confer on a trustee a power to "pay or apply" income or capital for the "advancement or benefit" of any person entitled to the income or capital. Section 32(1) of the UK Act authorised trustees to "pay or apply any capital money subject to a trust, for the advancement or benefit, in such manner as they may, in their absolute discretion, think fit, of any person entitled to the capital of the trust property ..."34. Section 44(1) of the Trustee Act 1925 (NSW) ("the NSW Act") is expressed in similar terms. Clause 4(b) of the Deed of Settlement is broader in its language than those provisions and differs in its logical structure. Its construction may be informed, but is not to be determined, by generalisations about statutory powers of advancement and common form provisions. Clause 4(b) uses "advance", "raise", "pay" and "apply" to denote the actions which it empowers the Trustee to take. It uses "maintenance", "education", "advancement in life" and "benefit" to describe the purposes and necessary effects of those actions. It makes a distinction between actions and purposes. Thus, "advance" and "advancement" are used in different senses. One is an action, the other is the purpose it serves defined by reference to its effect. The term "advancement" in common form clauses and statutory provisions conferring powers on trustees to "pay or apply" capital or income for the "advancement" of beneficiaries has been used in judicial exegesis and textbook 30 Trustee Act 1925 (NSW), s 44; Trustee Act 1958 (Vic), s 38; Trustee Act 1936 (SA), s 33A; Trusts Act 1973 (Q), s 62; Trustees Act 1962 (WA), s 59; Trustee Act 1898 (Tas), s 29; Trustee Act (NT), s 24A; Trustee Act 1925 (ACT), s 44. 31 Trustee Act 1956 (NZ), s 41. 32 See eg Tucker, Le Poidevin and Brightwell, Lewin on Trusts, 19th ed (2015) at [32-001]-[32-046]; Ford and Lee, The Law of Trusts, 4th ed (2010, updated February 2014) at [12.12510]-[12.12630]; Hayton, Matthews and Mitchell, Underhill and Hayton: Law Relating to Trusts and Trustees, 18th ed (2010) at [63.1]-[63.10]; Thomas and Hudson, The Law of Trusts, 2nd ed (2010) at [14.29]-[14.55]; Heydon and Leeming, Jacobs' Law of Trusts in Australia, 7th ed 33 In re Pilkington's Will Trusts [1964] AC 612 at 634 per Viscount Radcliffe. 34 The provision was amended in 2014: see footnote 62. Bell commentary in a way that sometimes conflates actions taken by the trustee and their effect or purpose35. The term "advance", not appearing in the statutory provisions, has nevertheless been used as a synonym for "pay" or "apply"36, which do appear in those provisions. The use of "advancement" to refer to the actions of a trustee in the exercise of powers conferred by common form and statutory provisions is of some assistance in understanding the application of the terms "advance" and "apply" in cl 4(b). However, the necessary starting point is the ordinary meaning of those words and the logical structure of the provision. The relevant ordinary meaning of the word "advance" is to "[p]ay (money) before it is due"37. That may be generalised to the creation, in advance of any entitlement under the terms of the trust, of equitable and legal rights binding on the trustee and depending for their enforceability on the trustee's ability to resort to trust capital or income. As appears below, that extends, in this context, to the creation in favour of beneficiaries of a vested, absolute equitable interest, realisable by payment out to the beneficiaries or by an action for money had and received and, as in this case, supported by a covenant to pay the amount the subject of the resolution out of the trust capital in favour of the beneficiaries. The closest relevant meaning of "raise" is to "collect (rents, funds, etc); bring together, obtain, procure"38. "Apply" in this setting may be taken as meaning "[p]ut to use; employ; dispose of"39. Barrett JA's construction of cl 4(b) in essence applied those ordinary meanings and the sequential logic of the text, identifying "advance and pay", "advance and apply", "raise and pay" and "raise and apply" as alternative aspects of the power. His Honour proposed that the phrase "advance or raise" "contemplates immediate deployment of any portion of the capital or income that, in the absence of that action, would remain to be dealt with in the future in some other way"40. He also recognised that the purpose for which the power is to be used "is ... limited by the words 'for the maintenance 35 See eg the discussion of "advancement" in Jacobs, The Law of Trusts in New South Wales, (1958) at 350-353, referring inter alia to Re Aldridge; Abram v Aldridge (1886) 55 LT 554 at 556 per Cotton LJ. 36 See eg Molyneux v Fletcher [1898] 1 QB 648; In re Pauling's Settlement Trusts [1964] Ch 303; In re Clore's Settlement Trusts [1966] 1 WLR 955; [1966] 2 All ER 37 The New Shorter Oxford English Dictionary, (1993), vol 1 at 31, "advance". 38 The New Shorter Oxford English Dictionary, (1993), vol 2 at 2468, "raise". 39 The New Shorter Oxford English Dictionary, (1993), vol 1 at 100, "apply". 40 [2015] NSWCA 6 at [52]. Bell education advancement in life or benefit of' any of the specified beneficiaries"41. It is perhaps of some importance to observe that no particular form of words is required nor any particular mechanism specified for the exercise of the power conferred by cl 4(b). The purposive usage of the term "advancement", appearing in s 32 of the UK Act and like statutory and common form provisions, is broad. The collocation "advancement or benefit" in s 32 was described in the leading case in the House of Lords, In re Pilkington's Will Trusts, as designed to achieve a "wide construction of the range of the power, which ... did not stand upon niceties of distinction provided that the proposed application could fairly be regarded as for the benefit of the beneficiary who was the object of the power"42. The same may also be said of the collocation "advancement in life or benefit" in cl 4(b). Viscount Radcliffe, with whom the other Law Lords agreed, adverted to the distinction between authorised actions and their purposes. He spoke of the need to avoid confusion between the idea of advancing money out of a beneficiary's expectant interest and the "advancement" of the beneficiary. He said43: "The one refers to the operation of finding money by way of anticipation of an interest not yet absolutely vested in possession ... the other refers to the status of the beneficiary and the improvement of his situation." The term "advance", which does not appear in s 32, seems to have been used in Pilkington as a synonym for the term "pay or apply", which does. Nevertheless, the distinction between "pay" or "apply" and "advancement" was emphasised by "The power to carry out the operation of anticipating an interest is not conferred by the word 'advancement' but by those other words of the section which expressly authorise the payment or application of capital money for the benefit of a person entitled 'whether absolutely or contingently on his attaining any specified age or on the occurrence of any other event, or subject to a gift over on his death under any specified age or on the occurrence of any other event, and whether in possession or in remainder or reversion,'". 41 [2015] NSWCA 6 at [53]. 42 [1964] AC 612 at 634-635. 43 [1964] AC 612 at 635. 44 [1964] AC 612 at 635. Bell The express authority conferred by cl 4(b) in the Deed of Settlement to "advance" capital or income is not found in the Australian statutory powers derived from s 32. Neither is the word "raise". As discussed earlier they are used in cl 4(b) in a way that is logically anterior to the words "pay or apply". What is advanced or raised can then or later be paid or applied. Authorities on the term "pay or apply" in common form and statutory provisions, used with caution, can also provide some guidance about the range of trustee actions authorised by cl 4(b). In In re Baron Vestey's Settlement; Lloyds Bank Ltd v O'Meara45, cited by Barrett JA, the trustees declared by resolution that a part of the income of the trust should "belong" in specified shares to infant beneficiaries whose interests were contingent or discretionary. The income the subject of the declaration was to be accumulated rather than paid over. The declaration was nevertheless held to be an exercise of the power to "pay or apply" the income for the benefit of those beneficiaries46. Vestey was applied by the Court of Appeal of New Zealand in Commissioner of Inland Revenue v Ward47, another decision cited by Barrett JA in the present case. The New Zealand court, by majority, held that a declaration by a trustee that it held a stated amount of the trust income for each of four infant beneficiaries constituted an application of the income for the children, who became absolutely entitled to the sums allocated to them. North P, with whom McCarthy J generally agreed, held that the term "pay or apply" could embrace the retention and accumulation of income48. The constructional question arose in relation to a provision of taxation legislation directed to the case in which a trustee was empowered to "pay or apply income derived by him to or for the benefit of specified beneficiaries"49. That constructional conclusion applies a fortiori to the exercise of the threshold power to advance or apply under cl 4(b). It does not require an immediate transfer of the asset to the beneficiaries. The question is whether it requires a change in the ownership of the trust assets or extends to steps which create legal rights that do not have that effect but will ultimately lead to that outcome. It is true that North P in Ward made a distinction between an advance of capital and an advance of income. In so doing he accepted a submission, not 46 [1951] Ch 209 at 220 per Evershed MR, Asquith and Jenkins LJJ agreeing. 47 [1970] NZLR 1. 48 [1970] NZLR 1 at 15, rejecting the more restrictive approach of Barrowclough CJ in Montgomerie v Commissioner of Inland Revenue [1965] NZLR 951. 49 Land and Income Tax Act 1954 (NZ), s 155. Bell essential to his reasoning, that it was of the very essence of the exercise of the power of advancement with respect to a capital sum that the capital sum so advanced ceased to form part of the trust property. In that respect he relied upon Pilkington, which involved a resettlement of part of the trust fund50. However, Pilkington and therefore Ward should not be taken as limiting the means by which an advance and application of capital can be effected pursuant to a specific provision such as cl 4(b). More particularly, they should not be taken as excluding from the ambit of the power of advancement the creation of a creditor/debtor relationship between trustee and beneficiary by the creation of a vested, absolute equitable interest in capital realisable by an action for money had and received or otherwise. Indeed, so much was recognised by the dissentient in Ward, Turner J, who held that an application could be achieved by the creation of a creditor/debtor relationship between the trustee and the specified beneficiaries51. In 2007 in the Court of Appeal of Western Australia in Chianti Pty Ltd v Leume Pty Ltd52, Buss JA, with whom Martin CJ and Pullin JA agreed, referred to Vestey and Ward and concluded that distribution resolutions coupled with account entries constituted an admission by a trustee of an obligation to pay the money distributed on demand. The ultimate issue in that case was whether the beneficiary's claim was an action for money had and received and thereby a "personal action" within the jurisdiction of the District Court of Western Australia. The trust deed empowered the trustee to determine "to pay, apply or set aside the income to or for any one or more of the General Beneficiaries living or in existence at the time of the determination". The word "pay" was defined to include "transfer, convey and assign" and the word "set aside" to include "placing sums to the credit of the beneficiary in the books of account of the Trust"53. The word "apply" was not defined. Buss JA observed that on an assessment of the authorities it did not appear to be essential, for there to be a binding admission in relation to an amount owing by a trustee to a beneficiary, that the relevant amount was held as, or represented by, cash at bank or some other monetary sum when the alleged admission was made54. Barrett JA, in the present case, referred to Vestey, Ward and Chianti as authority for the proposition that a resolution deliberately arrived at and recorded can of itself be sufficient to effect an 50 [1970] NZLR 1 at 16. 51 [1970] NZLR 1 at 20. 52 (2007) 35 WAR 488. 53 (2007) 35 WAR 488 at 495 [22]. 54 (2007) 35 WAR 488 at 515 [77]. Bell immediate vesting of a specific part of the trust income55. That general proposition may be accepted as also applicable to capital. The question is whether the resolution in this case, coupled with what appeared in the trust accounts, constituted the actions of advance and application contemplated by cl 4(b). Plainly there are many ways of achieving an advancement for the benefit of beneficiaries. The range of options available in any particular case depends upon the scope of the power conferred by the trust deed or by statute. In Pilkington, the trustees proposed to apply up to half of an infant beneficiary's expectant share in the trust fund by making it subject to a new settlement of which they would also be the trustees56. The "advancement" involved appropriation of a block of shares under a new settlement with the same trustees and in favour of an infant beneficiary. That was not the only way of achieving that result. In support of a submission that the exercise of an "advancement power" could only be effected by the removal of the property advanced from the original settlement altogether and its vesting in the object of the advance the Fischers relied upon the observations of Romilly MR in Re Gosset's Settlement57: "an advancement has a definite meaning, distinct from an appointment. It means that a certain portion of the fund is actually taken out of the settlement altogether, and paid over to the object of the power." Lewin on Trusts was also quoted for its description of the general purpose of a power of advancement as58: "enabl[ing] trustees in a proper case to anticipate the vesting in possession of an intended beneficiary's contingent or reversionary interest by raising money on account of his interest and paying or applying it immediately for his benefit. By so doing they release it from the trusts of the 55 [2015] NSWCA 6 at [59]-[61]. 56 [1964] AC 612 at 631. See also Roper-Curzon v Roper-Curzon (1871) LR 11 Eq 452 — a case in which an advancement was permitted under the power on the terms that the money was to be secured by settlement. 57 (1854) 19 Beav 529 at 535 [52 ER 456 at 458], quoted in In re Fox; Wodehouse v Fox [1904] 1 Ch 480 at 484-485. 58 Tucker, Le Poidevin and Brightwell, Lewin on Trusts, 19th ed (2015) at [32-001]. Bell settlement and accelerate the enjoyment of his interest". (footnote omitted) There is, however, more than one way of advancing and applying trust property to a beneficiary. In Pilkington no actual transfer of the shares the subject of the advancement was proposed because of the identity of the trustees of the settlement and of the will. Viscount Radcliffe attached no importance to those factors, observing59: "To transfer or appropriate outright is only to do by short cut what could be done in a more roundabout way by selling the shares to a consenting party, paying the money over to the new settlement with appropriate instructions and arranging for it to be used in buying back the shares as the trust investment." That observation reflects a general approach, relied upon by the executors, which does not require a trustee to go through circuitous formalities in the exercise of the power. By way of example, In re Collard's Will Trusts60 concerned trustees who would have been empowered by s 32 of the UK Act to advance £20,000 in cash to an expectant contingent beneficiary to enable him to purchase a farm which was part of the trust estate. The court held that the trustee could convey the farm directly to the beneficiary on the principle that "the court will not insist on circuity of action if the same result can be achieved by direct action which legitimately could be achieved by more circuitous action"61. In that case a purpose of the conveyance was the avoidance of estate duty on the farm62. 59 [1964] AC 612 at 639. 61 [1961] Ch 293 at 300 per Buckley J. 62 Section 32(1) of the UK Act was amended by s 9(2) of the Inheritance and Trustees' Powers Act 2014 (UK) to insert the italicised words below: "Trustees may at any time or times pay or apply any capital money subject to a trust, or transfer or apply any other property forming part of the capital of the trust property, for the advancement or benefit, in such manner as they may, in their absolute discretion, think fit, of any person entitled to the capital of the trust property ..." (Footnote continues on next page) Bell On the face of it the creation of a debt to be satisfied out of the property of the Trust was a means of effecting an advance and application of the capital of the Trust. The provision of a covenant to pay the debt supported the advance and application thus made. The Fischers, relying upon the proposition that it was necessary to effect an immediate removal of the property advanced from the original settlement and its vesting in the object of the advance, made the point that the Trustee in this case did not purport to confer any absolute beneficial interest on Mr and Mrs Nemes in any property held in the Trust. On that basis they distinguished each of Vestey, Ward and Chianti. They pointed to a finding by Barrett JA that the resolution of 23 September 1994 "did not result in any cash payment or change in ownership of specific property"63. It may be accepted that each of Vestey, Ward and Chianti involved resettlements of actual property held on trust and that, as the Fischers contended, none was authority for the proposition that a power to "apply" trust capital could be exercised without altering the beneficial ownership of the property the subject of the advancement. As already observed, those cases are not authorities for the proposition that the mechanisms by which an advance and application can be achieved are limited to an immediate resettlement of trust property. Moreover the Fischers were relying upon general descriptions of the operation and purpose of generically designated "powers of advancement". As observed earlier, they may properly inform, but not necessarily determine, the construction of the particular power set out in cl 4(b). The effect of the resolution and the account entries It was not in dispute that the resolution of 23 September 1994 was badly worded. It seems likely that it was framed by reference to declarations of dividends payable by companies, which create debts due to their shareholders64. There was no fund represented by the Asset Revaluation Reserve from which to make a distribution to give effect to the resolution. The text of the resolution, however, disclosed a clear intention, indicated by the use of a form of words The explanatory note to that legislation states that the amendment "clarifies and extends the effect of existing case law", citing In re Collard's Will Trusts. The amendment was thus designed to enshrine in statute the avoidance of unnecessary circuitous action. 63 [2015] NSWCA 6 at [62]. 64 South Brisbane Gas and Light Co Ltd v Hughes (1917) 23 CLR 396 at 405 per Barton J; [1917] HCA 37; Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 at 578 per Mason J; [1977] HCA 59; Bluebottle UK Ltd v Deputy Commissioner of Taxation (2007) 232 CLR 598 at 609 [20]; [2007] HCA 54. Bell appropriate to the declaration of a dividend, to create a debt due by the Trustee to Mr and Mrs Nemes to the extent of the amount shown in the accounts of the Trust relating to the Asset Revaluation Reserve. The entry in the accounts was an action by the Trustee which further demonstrated and gave effect to its intention. In so doing, the Trustee adopted a mechanism which, without altering the ownership of the Aladdin shares, provided a basis for the application of the trust capital to Mr and Mrs Nemes by sale of the shares to meet the debt. The resolution and the entry in the accounts by creating a creditor/debtor relationship constituted an advance and application within the meaning of cl 4(b). The interest thus conferred on Mr and Mrs Nemes could be realised by the sale of the shares and remittance of the proceeds or by direct transfer of the shares to them. We agree with Gageler J that the power conferred by cl 4(b) should be read in light of the ancillary powers conferred by cl 4(e), cl 4(f) and cl 8 of the Deed of Settlement, and with his Honour's observations in respect of those ancillary provisions. Either course was permitted by the ancillary powers read in conjunction with cl 4(b). What is clear is that at the times of the resolution, account entries and covenant, the debt could only have been satisfied out of the assets of the Trust comprising the shares. The Trustee, of course, took the risk that the value of the shares might fall below the amount of the debt acknowledged in its accounts. Given that it was created as a trust company and that its only asset of any substantial value was the shares, it was hardly a risk of any significance. We should add that we agree with Gageler J's rejection of the Fischers' argument that a trustee's liability to an action at law for money had and received can only arise where the trustee holds the relevant assets on a bare trust. Conclusion For the preceding reasons the Court of Appeal was correct to conclude that the Trustee had advanced and applied capital of the Trust Funds to Mr and Mrs Nemes by creating a debt reflecting the value of the shares comprising that capital at the time that the advance was made. That advance and application was complete by 30 September 1994 when the relevant entries were made in the books of account of the Trust, and was supported by the covenant in the Deed of Charge. On any view, a creditor/debtor relationship existed between the Trustee and Mr and Mrs Nemes. The appeal should be dismissed with costs. KIEFEL J. Mr Emery Nemes and Mrs Madeleine Nemes were two of a number of "Specified Beneficiaries" in the Nemes Family Trust ("the Trust"), a discretionary trust which had been settled by a deed ("the Trust Deed") in 1974. The current trustee of the Trust (who was also the trustee at all relevant times) is the first respondent, Nemeske Pty Ltd ("the Trustee"). The "Trust Funds" of the Trust comprise the settlement sum and "all other assets from time to time held by the Trustee hereunder". At all relevant times the only assets of the Trust, apart from the settlement monies, were 10 B class shares in Aladdin Ltd ("the Shares"), a company which held investments in shares in other companies. On 23 September 1994, a meeting of the directors of the Trustee resolved: "that pursuant to the powers conferred on the Company as Trustee in the Deed of Settlement of the Nemes Family Trust:- That a final distribution be and is hereby made out of the asset revaluation reserve for the period ending 30th September [1994] and that it be paid or credited to:- the beneficiaries in the following manner and order: The entire reserve if any, to be distributed to:- Emery George Nemes & Madeleine Nemes as joint tenants." ("the Resolution") The "asset revaluation reserve" referred to in the Resolution appears in the Beneficiaries Accounts for the period ended 30 September 1994 as follows: BENEFICIARIES ACCOUNTS SETTLEMENT SUM Opening Balance ASSET REVALUATION RESERVE Assets Revalued Capital Distribution TOTAL TRUST FUNDS The reference to an "asset revaluation reserve" was not to a fund of monies nor to property which had been set aside, as the ordinary meaning of the word "reserve" implies. It was merely the accounting treatment given to an unrealised accretion in the value of the Shares. No monies apart from the settlement sum were ever held by the Trust and no monies were in fact paid to Mr and Mrs Nemes. The only substantial assets of the Trust, the Shares, remained under the ownership of the Trust and were not dealt with or allocated in any way which would detract from the Trust's title in them. The Balance Sheet as at 30 September 1994 listed the assets and liabilities of the Trust as: BENEFICIARIES FUNDS Settlement Sum REPRESENTED BY INVESTMENTS Shares in Public Companies at Cost Aladdin Ltd 10 "B" Class Shares of $1 Fully Paid NON-CURRENT LIABILITIES Loans – Secured EG & M Nemes NET ASSETS The reference to a loan from Mr and Mrs Nemes being secured at this time was erroneous and is the result of the accounts having been prepared in 1995, after a charge had been taken over the Shares. Some explanation is given for the book entries in a letter written by Mr Elliott, the accountant for the Trustee, to Mr and Mrs Nemes' solicitors on 26 April 1995, providing information which had been requested of him: " Most of the assets of Mr and Mrs Nemes are owned by companies the asset shares of which are owned by Aladdin Limited, a Norfolk Island company, the shares of which are owned by [the Trust]. The assets in the whole group of companies has been revalued as at 1st July, 1994, this has led to an asset revaluation reserve being created in [the Trust] ... [The Trustee] held a meeting at which it was resolved to distribute the asset revaluation reserve to Mr and Mrs Nemes jointly … The above distribution was made by way of crediting the loan account of Mr and Mrs Nemes in [the Trust]. Mr and Mrs Nemes would like to secure their loan to [the Trust], and ... require your assistance, as follows:- Make a debenture over the shares in Aladdin Limited which [the Trust] owns as security for the loan by Mr and Mrs Nemes … The purpose of these transactions is for Mr and Mrs Nemes to secure control of their assets or estate." On 30 August 1995, the Trustee and Mr and Mrs Nemes entered into a deed whereby the Trustee charged the Shares in favour of Mr and Mrs Nemes ("the Charge"). The Charge recited: [The Trustee] is indebted to [Mr and Mrs Nemes] as joint tenants in the sum of [$3,904,300] (the principal monies). For the purpose of securing repayment of the principal moneys [sic] [the Trustee] has agreed with [Mr and Mrs Nemes] to execute this Deed of Charge pursuant to which [the Trustee] charges [the Shares] as hereinafter set forth in favour of [Mr and Mrs Nemes] as joint tenants." By cl 5 of the Charge, the Trustee covenanted with Mr and Mrs Nemes that the Trustee would pay them the principal monies on demand. As mentioned above, Mr and Mrs Nemes did not receive the monies from the Trust and there is no suggestion that they paid any monies to it. Mrs Nemes died in 2010 and Mr Nemes in 2011. At no time prior to Mr Nemes' death was repayment of the "loan" required by either of them. The most recent accounts of the Trust, prepared for the year ended 30 June 2012, continue to refer to the whole of the assets of the Trust as the Shares, having a value of $3,905,300. The accounts continue to refer to there being a non-current loan from Mr and Mrs Nemes of $3,904,300. At no time have the accounts shown the capital or assets of the Trust as reduced, or otherwise affected, by any interest of Mr and Mrs Nemes. Mr Nemes had been the sole shareholder in the Trustee. Pursuant to his will, the appellants were to become the shareholders of the Trustee. Because of their interest in the Trust as beneficiaries, the appellants were permitted to bring proceedings on behalf of the Trustee in the Supreme Court of New South Wales. In these proceedings at first instance, the appellants sought declarations that the Trustee was not indebted to Mr Nemes' estate in the sum of $3,904,300. The executors of his estate, the second and third respondents to this appeal ("the executors"), cross-claimed for that sum as a debt. The appellants' claim was dismissed at first instance by Stevenson J and judgment was given on the executors' cross-claim65. The Court of Appeal of the Supreme Court of New 65 Fischer v Nemeske Pty Ltd [2014] NSWSC 203. South Wales (Beazley P, Barrett and Ward JJA) dismissed the appeal66 from that decision. Barrett JA, with whom the other members of the Court agreed, concluded67 that, by the Resolution, the Trustee advanced and applied capital or income of the Trust to the extent of $3,904,300 by the due exercise of the power conferred by cl 4(b) of the Trust Deed. The Resolution and cl 4(b) of the Trust Deed The primary question in this appeal is whether the Resolution was an exercise of the power of advancement provided by cl 4(b) of the Trust Deed, which is in the following terms: "4. The Trustee may from time to time exercise any one or more of the following powers that is to say:- (b) At any time or times to advance or raise any part or parts of the whole of the capital or income of the Trust Funds and to pay or to apply the same as the Trustee shall think fit for the maintenance education advancement in life or benefit of any of the Specified Beneficiaries". A power of advancement enables trustees to provide some permanent benefit or advantage in life to the beneficiary in question68. Its general purpose is "to enable [trustees] in a proper case to anticipate the vesting in possession of an intended beneficiary's contingent or reversionary interest by raising money on account of his interest and paying or applying it immediately for his benefit"69. Property of a trust may also be "applied" under the power of advancement. An application of monies or property is not to be equated with a payment or distribution to the beneficiary. Monies or property may be applied by allocating 66 Fischer v Nemeske Pty Ltd [2015] NSWCA 6. 67 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [64]. 68 Tucker, Le Poidevin and Brightwell, Lewin on Trusts, 19th ed (2015) at 1458 69 Pilkington v Inland Revenue Commissioners [1964] AC 612 at 633. See also Tucker, Le Poidevin and Brightwell, Lewin on Trusts, 19th ed (2015) at 1458 them in some way so that they are removed from the trust. A payment or distribution may therefore be postponed through the exercise of this power. The question whether the power given by cl 4(b) was exercised is a question which requires investigation of the intention of the Trustee70, which can be gleaned from the terms of the Resolution and the circumstances in which it was made. Regard may also be had to how the Trust property was dealt with following the Resolution, as evidence of what was intended to occur. Where it is said that a trustee has exercised a particular power given by the trust instrument over particular property, it may be expected that the relevant power and property will be identified in some way. Whilst identifying statements of this kind, made in a resolution or other declaration of a trustee, are not conclusive of the question of intention, they provide some evidence of what the trustee was undertaking. The Resolution does not identify cl 4(b) as the source of the power which is sought to be exercised by making it. It does not identify the purpose of the power purporting to be exercised as one for the "advancement in life or benefit" of Mr and Mrs Nemes, which could be the only purpose in cl 4(b) relevant to them as adult Specified Beneficiaries. Indeed, the Resolution does not mention the purpose of what is sought to be undertaken save that a "final distribution" is to be made. The Resolution does not say that this "distribution" is to be made out of the capital or income of the Trust, but rather out of the "asset revaluation reserve". This does not identify any property of the Trust as the subject of the exercise of any power. As previously explained, the "asset revaluation reserve" does not represent any asset of the Trust as such, but merely the accounting treatment of the increase in value of the Shares at the time a new revaluation was undertaken. The Resolution does not speak of doing those acts to which cl 4(b) refers. It does not speak of "raising" part of a fund, in order to pay Mr and Mrs Nemes or to take investments out of the fund71. It does not refer to an "advance" of cash or property directly to Mr and Mrs Nemes72. It does not mention advancing or 70 See Thomas, Thomas on Powers, 2nd ed (2012) at 357-358 [7.132], especially 71 See Tucker, Le Poidevin and Brightwell, Lewin on Trusts, 19th ed (2015) at 1475 72 Tucker, Le Poidevin and Brightwell, Lewin on Trusts, 19th ed (2015) at 1475 raising from the capital or income of the Trust fund in order "to pay or to apply" the same to Mr and Mrs Nemes, nor would it make sense to do so when the subject of the purported exercise of the power is not itself property. The concession made in argument by the appellants that the directors of the Trustee intended to exercise the power in cl 4(b) when making the Resolution cannot change the fact that this does not appear from the objective circumstances. The lack of intention of the Trustee to exercise the power given by cl 4(b) is further evidenced by what was done following the Resolution. Was any Trust capital or income "applied"? Given no monies were ever paid to Mr and Mrs Nemes, the only power given by cl 4(b) that could be relevant is the power to "apply" capital or income. The "distribution", so called in the Resolution, is said to be "paid or credited to" Mr and Mrs Nemes. Nothing is said to be applied for their benefit, which would have been expected had it been intended that property was to be set aside for or allocated to them. In the entries in the accounts of the Trust a notional distribution of the "asset revaluation reserve" is made to Mr and Mrs Nemes and a loan is then notionally made by them to the Trust in order to create the appearance of a debt. Neither the terms of the Resolution nor the entries in the accounts reflect an application under a power of advancement of the property in the Shares representing the capital of the Trust. An important feature of the accounts of the Trust is that at all times the Shares remained intact and subject to the terms of the settlement. The assets were never, in whole or in part, set aside or allocated in any way to suggest that they were "applied" or were to be applied at any time in the future, as a postponed distribution. Barrett JA73 accepted that there had been no cash payment made to Mr and Mrs Nemes nor any change in ownership of any specific property in the Trust. Nevertheless, his Honour considered that the words "distributed to" in the Resolution caused capital or income to be "applied" for their benefit and that those words effected a "setting aside or appropriation". Whilst this did not result in any change in the ownership of the Trust property, in his Honour's view the words "be distributed to" caused the Trustee's obligations with respect to that property to change, requiring the Trustee to accommodate "an immediate and absolute vested interest" of Mr and Mrs Nemes. In reaching this conclusion, his Honour considered that the words "be distributed to" carried the same connotation as the words "shall belong to", which 73 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [62]. were considered in In re Baron Vestey's Settlement; Lloyds Bank Ltd v O'Meara74. In that case, trustees were directed to "pay or apply" the income of the trust fund for the support or benefit of a named class of persons, in such manner and in such terms as the trustees thought proper. The infant beneficiaries had a contingent reversionary interest in the corpus of the trust. By a resolution stated to have been made under that power, the trustees resolved that, after some payments to the adult beneficiaries, the balance of the income should be made available for immediate distribution and "shall belong" in specified shares to the infant beneficiaries. They proceeded to allocate shares out of the trust fund accordingly, but they then resolved that, as the income was not required for the maintenance of the infants, it should be accumulated. The English Court of Appeal held that the resolution for accumulation should be disregarded. The trustees had exercised the power to apply the monies for the benefit of the infant beneficiaries. The appropriated sums had become part of their estates75. There were present in Vestey's Settlement factors supporting a conclusion that the power for support or benefit had been exercised which are not present in this case, considering the terms of the Resolution and the conduct which followed it. It will be observed that in Vestey's Settlement the power being exercised was identified, as was the property the subject of its exercise. The words used in the resolution conveyed an intention on the part of the trustees to apply part of the income for the benefit of the infant beneficiaries. The trustees acted in accordance with their declaration and proceeded to allocate the shares in the accounts of the trust. The question here is not whether "be distributed to" bears the same meaning as "shall belong to", but whether or not the words "be distributed to", in the context in which they are used, are sufficient to show that some allocation76 of Trust property out of the Trust was intended. It is only in that situation that it may be concluded that capital or income has been "applied". It may be accepted, as Barrett JA pointed out, that an effective exercise of cl 4(b) does not depend upon there being cash in the Trustee's hands in order that 75 In re Baron Vestey's Settlement; Lloyds Bank Ltd v O'Meara [1951] Ch 209 at 76 Tucker, Le Poidevin and Brightwell, Lewin on Trusts, 19th ed (2015) at 1475 [32-040], referring to In re Baron Vestey's Settlement; Lloyds Bank Ltd v O'Meara a payment can be made77. However, for a conclusion that capital was applied, there should be a corresponding reduction in the capital of the Trust. Vestey's Settlement was referred to with approval by the New Zealand Court of Appeal in Commissioner of Inland Revenue v Ward78. In Ward, a trustee made a declaration that she held stated amounts of trust income for that year for each of the infant beneficiaries. The question was whether the trustee should be assessed for tax with respect to that income and it was held that she should not, as the beneficiaries had become absolutely entitled to the monies on the making of the declaration. North P found that the trustee's declaration was carried into effect in the books of account of the trust79, although the amounts were not actually paid to the infant beneficiaries until some years later. It was nevertheless argued80 that the monies which had been credited to the beneficiaries continued to be intermingled with capital funds of the trust and that for them to be "applied" required the positive step of providing the income to the beneficiaries then and there. It was not sufficient to make the declaration and credit the income in the books of the trust. North P did not accept the argument and held81, by reference to Vestey's Settlement, that it was sufficient that there was an allocation of the income in terms which made it the property of each infant. The declaration had the effect of immediately vesting a specific portion of the income in the infant In the Court of Appeal in this case, Barrett JA83 took the decision in Ward to be that "a resolution deliberately arrived at and recorded is of itself sufficient 77 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [55]. 78 [1970] NZLR 1. 79 Commissioner of Inland Revenue v Ward [1970] NZLR 1 at 7. 80 Commissioner of Inland Revenue v Ward [1970] NZLR 1 at 8-9. 81 Commissioner of Inland Revenue v Ward [1970] NZLR 1 at 15. 82 Commissioner of Inland Revenue v Ward [1970] NZLR 1 at 17. 83 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [61]. to effect an immediate vesting of a specific part of the trust income"84. This appears to be a reference to the similar statement by McCarthy J in Ward85. Barrett JA cited the passage in Ward referred to above where North P said86 that he took Vestey's Settlement to stand for the proposition that if a trustee exercises the power to "pay or apply" income, it is immaterial whether income is immediately used for the benefit of the infants. North P went on to say that it "is sufficient if it is allocated to them in terms which makes the parts of the income so allocated the separate property of each infant". In this case, it is not possible to say that it was intended that Mr and Mrs Nemes were to become absolutely entitled to any property of the Trust. Again, as in Vestey's Settlement and unlike this case, in Ward there had been a clear identification of the power which was being exercised and the property which was set aside for the infants. The intention of the trustee was clear. The fact that the beneficiaries did not receive the monies for some years did not detract from a conclusion that the trustee had applied the income for the benefit of the infant beneficiaries. No new trust When the trustee in Ward made the declaration and recorded the application of the funds in the accounts of the trust, the monies were effectively taken from the existing trust and the trustee thereafter held them on a new trust for the infant beneficiaries. McCarthy J in Ward, who agreed with North P, made an observation to this effect87, and noted that this was hardly an unusual occurrence in the administration of trusts. The position which obtained in Vestey's Settlement after the exercise of the power of advancement may be viewed in the same way. When the trustees retained the monies, the monies were impressed with a new trust in favour of the infant beneficiaries. The point to be made is that the monies were no longer part of the original trust to be dealt with according to its terms. Such a circumstance may be contrasted with that which prevailed in this case. There is no suggestion that the Trustee held the sum of $3,904,300 on trust 84 Adopting what had been said in Chianti Pty Ltd v Leume Pty Ltd (2007) 35 WAR 488 at 511 [72] per Buss JA. 85 [1970] NZLR 1 at 29. 86 Commissioner of Inland Revenue v Ward [1970] NZLR 1 at 15. 87 Commissioner of Inland Revenue v Ward [1970] NZLR 1 at 30. for Mr and Mrs Nemes. It was common ground that there was no resettlement following the Resolution. Was the application out of "capital or income"? It will be recalled that cl 4(b) requires that any application must be made out of "the capital or income of the Trust". The answer to the question as to what the property was which Barrett JA considered vested in Mr and Mrs Nemes as a result of the Resolution is the asset revaluation reserve. The primary judge had dealt with the problem that the Resolution did not refer to property as such by reading the Resolution as if it contained the words "an amount equal to" that reserve88. The difficulty with that approach is that is not the language used by the Trustee. Moreover, it is not possible to infer that those words were intended from any subsequent act of payment or allocation. In comparison, in the Court of Appeal Barrett JA reasoned89 that the accretion in value represented by the asset revaluation reserve was part of either the income or capital of the Trust. It may be observed that the references in the Resolution to the asset revaluation reserve do not appear to be to only part of the amount of any increase in value since the last valuation, but rather to substantially the total current value of the trust assets (that total value being the increase in value of the Shares, plus $1,000 which is recorded as being the settlement sum). This is confirmed by references to the "entire reserve" and "final distribution" in the Resolution. In any event, the fact is that the asset revaluation reserve did not represent the capital or income of the Trust. It was merely a record of substantially the total value of the Shares. Were it possible to take the reference in the Resolution to the "asset revaluation reserve" as a reference to capital or income of the Trust, more particularly capital, the difficulty in the way of finding that it was intended that $3,904,300 be applied out of capital is that the Trustee did not ever take steps to put that into effect. The accounts reveal that the Trust continued to hold all of its assets subject to the trust settlement. The effect of the Resolution The most that can be said about the Resolution is that it sought to create the appearance of a distribution of something out of the Trust, but that something was not property. The Trustee cannot be taken by the Resolution to have intended to set aside, allocate or otherwise "apply" Trust property. Rather, it was intended at all times that the whole of the property of the Trust continue to be 88 Fischer v Nemeske Pty Ltd [2014] NSWSC 203 at [84]-[85]. 89 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [62]. owned by it. This is borne out by the accountant's letter of 26 April 1995, the Charge and entries in the accounts of the Trust concerning trust assets. In argument on this appeal, the executors embraced the possibility that there was something of a "round robin" transaction in the book entries which were made following the Resolution. This was explained in various ways, but essentially came down to characterising the transaction as the Trustee making an advance of monies to Mr and Mrs Nemes and Mr and Mrs Nemes lending it back. However, this is not an exercise of the power of advancement in cl 4(b). Nor was any other provision of the Trust Deed identified as providing a power to make transactions of this kind, one by which the Trust property was charged with a notional debt in favour of Mr and Mrs Nemes, who, after all, were only two of a number of Specified Beneficiaries. Money had and received? Barrett JA also found90 that the Trustee, by book entries made in consequence of the Resolution, admitted and acknowledged itself to be indebted to Mr and Mrs Nemes in the sum of $3,904,300; that an action for money had and received was accordingly maintainable; and that there was therefore a pre-existing debt, as the Charge recited. His Honour clearly considered that such an admission by a trustee was itself sufficient to found an action for money had and received and, inferentially, that this might be so regardless of whether the monies were in fact owed. His Honour had earlier referred in this regard to what had been said by Gummow J in Roxborough v Rothmans of Pall Mall Australia Ltd91. Gummow J discussed the circumstances in which a beneficiary could bring an action for money had and received against the trustee of the trust for monies to which the beneficiary is entitled. Generally speaking, the action will not lie whilst a trustee has duties yet to perform with respect to the trust, for the reason that equitable defences and set-offs remain available until the completion of the trust. In Pardoe v Price92, a case to which Gummow J referred, Rolfe B explained how an admission by the trustee may operate: "When, indeed, there is no trust to execute, except that of paying over money to the cestui que trust, the trustee, by his conduct, as for instance, by admission that he has money to be paid over, or by settling accounts on that footing, may, and often does, make himself liable to an action at law 90 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [89]. 91 (2001) 208 CLR 516 at 541 [67]; [2001] HCA 68. 92 (1847) 16 M & W 451 at 458-459 [153 ER 1266 at 1269]. at the suit of the cestui que trust, for money had and received, or for money due on account stated." Assuming for present purposes that the executors were seeking payment of the monies due to Mr Nemes in his capacity as a beneficiary who was the object of the exercise of the power under cl 4(b), the admission by the Trustee that the monies were due might provide a basis for an action for money had and received, but only if the Trustee had otherwise completed what was required under the Trust. Neither Pardoe v Price nor Roxborough v Rothmans suggest that an admission of this kind has the effect of creating a debt which did not otherwise exist. A trustee would be entitled to defend the action for money had and received. Whilst the trustee's admission would be evidence against it, the trustee could rebut it by showing that there were in fact no monies owed. In any event, these matters do not arise for consideration in this case. The debt which is acknowledged in the Charge as owing is one resulting from a notional loan. It is not one said to be due to Mr Nemes as a beneficiary entitled to monies under the Trust. Estoppel The executors sought to establish that the Trustee was estopped from denying that it was indebted to Mr Nemes and therefore his estate. In the event that the Trustee lacked power to bind the beneficiaries to the representation or acknowledgment in the Charge and particularly cl 5 of that document, because that representation did not reflect the true facts, it was contended that the Trustee was personally liable but that it was nevertheless entitled to be indemnified out of the Trust estate. An argument based upon promissory estoppel was not developed by the executors beyond an assertion that Mr and Mrs Nemes relied upon the acknowledgment of the debt when making their wills. None of the difficulties which attend such an argument were dealt with. The executors' case on estoppel was limited to one based on an estoppel by deed or convention. In relation to the latter, the necessary assumed state of affairs93 pursuant to which the parties conducted their affairs was said to be the creation of the debt. 93 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244; [1986] HCA 14. However, as the appellants point out, where in fact there had been no payment, a purported acknowledgment of one cannot create an estoppel94. At its highest, such a statement is evidence against the party said to be indebted, which that party can rebut by showing that the amount had never actually been advanced95, as is the case here. So far as concerns estoppel by convention, it is somewhat difficult to accept that the parties conducted their affairs on the basis that the debt was real. Conclusion and orders None of the terms of the Resolution, the circumstances surrounding it or the conduct of the Trustee thereafter support an inference that the powers given by cl 4(b) of the Trust Deed were intended to be exercised by the Trustee. In particular, there was no setting aside or allocation of any property for Mr and Mrs Nemes which would amount to an application of capital or income within the meaning of that clause. The Trust property remained just that at all times, as the Trust accounts confirm. The importance of the accounts, not only for those having an interest in the Trust and its property, but also for third parties who may need to deal with the Trustee or rely upon Trust records, should not be lost sight of. The appeal should be allowed, and the order of the Court of Appeal made on 11 February 2015 should be set aside. In lieu thereof there should be the following orders: The appeal should be allowed. Set aside orders 1, 2 and 4 of the Short Minutes of Order made by Stevenson J on 24 March 2014 and in lieu thereof order and declare that: (i) Nemeske Pty Ltd as trustee of the Nemes Family Trust is not indebted to the executors of the estate of Emery Nemes; the resolution of 23 September 1994 is of no effect; (iii) the charge dated 30 August 1995 does not secure any monies owed by the trustee to the executors of the estate of Emery Nemes; and 94 Petersen v Moloney (1951) 84 CLR 91 at 100; [1951] HCA 57; Burchell v Thompson [1920] 2 KB 80 at 86. 95 Mainland v Upjohn (1889) 41 Ch D 126 at 136. (iv) the executors of the estate of Emery Nemes pay the plaintiffs' costs and interest on costs. The second and third respondents pay the appellants' costs in the Court of Appeal. The second and third respondents should pay the appellants' costs in this appeal. GAGELER J. While it is unnecessary to repeat the facts or the procedural history set out in the reasons for judgment of other members of the Court, it is convenient to restate the two critical steps in the reasoning of the Court of Appeal under challenge in this appeal. The Court of Appeal did not disturb the primary judge's interpretation of the resolution of 23 September 1994 as a resolution by the Trustee "to distribute to Mr and Mrs Nemes an amount of money equal to the value of the asset revaluation reserve, namely $3,904,300"96. The Court of Appeal acknowledged that the resolution "did not result in any cash payment or change in ownership of specific property"97. The Court of Appeal nevertheless held the resolution so interpreted to have been a proper exercise of the power conferred by cl 4(b) of the Deed to "advance" and "apply" "any part or parts of the whole of the capital or income of the Trust Funds" and, as such, to have given rise to an immediate unconditional equitable obligation on the part of the Trustee to account to Mr and Mrs Nemes in the sum of $3,904,300 out of the Trust Funds98. The Court of Appeal went on to hold that the Trustee's implementation of the resolution, by recording a liability to Mr and Mrs Nemes in the sum of $3,904,300 in the Trust's balance sheet, was sufficient to have given Mr and Mrs Nemes a cause of action against the Trustee to recover that sum at common law99. Unable to accept the appellants' challenge to either of those steps in the reasoning of the Court of Appeal, I would dismiss the appeal with costs. Effect of the resolution In challenging the Court of Appeal's holding concerning the effect of the resolution, the appellants do not dispute that the power conferred by cl 4(b) of the Deed, to advance and apply part or parts of the whole of the capital or income of the Trust Funds, was capable of being exercised by the Trustee resolving to hold some portion of the property comprising the Trust Funds on trust for Mr and Mrs Nemes. What the appellants argue is that the power was so limited that no resolution could have been effective as an exercise of that power unless the resolution manifested an intention to effect an immediate alteration of the 96 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [47], quoting Fischer v Nemeske Pty Ltd [2014] NSWSC 203 at [83]. 97 [2015] NSWCA 6 at [62]. 98 [2015] NSWCA 6 at [62], [64], [75], [114(1) and (2)]. 99 [2015] NSWCA 6 at [89], [114(3)]. beneficial ownership of specific trust assets forming part of the capital or income of the Trust Funds. The resolution was not effective as an exercise of that power, they argue, because it purported to give Mr and Mrs Nemes a specific sum of money to be paid out of the Trust Funds instead of purporting to give them beneficial ownership of specific trust assets. The words "advance" and "apply", appearing as integers of the expression of the composite power conferred by cl 4(b) of the Deed "to advance or raise ... and to pay or to apply" part or parts of the whole of the capital or income of the Trust Funds, refer respectively to the "anticipation of an interest not yet absolutely vested in possession"100, and to means by which that anticipation is achieved. The power, relevantly, is to "apply" any part or parts of the whole of the capital or income of the Trust Funds so as to bring forward the benefit of part or parts of the Trust Funds in respect of which any beneficial interest would otherwise remain future and contingent. Once it is accepted – as it was in In re Baron Vestey's Settlement; Lloyds Bank Ltd v O'Meara101 and in Commissioner of Inland Revenue v Ward102 – that a trustee can "apply" trust property to the advancement of a specified beneficiary by resolving to allocate trust property unconditionally and irrevocably to the benefit of that beneficiary, it is difficult to see any reason in principle why such an unconditional and irrevocable allocation of trust property must take the form of an alteration of the beneficial ownership of one or more specific trust assets. The allocations in each of those cases were of specified proportions of a single monetary amount which stood to the credit of a bank account which the trustee held as trust property at the time of the resolution. The allocations were held to be sufficient to result in the specified beneficiaries to whom the allocations were made each obtaining an immediate absolute beneficial entitlement to the sums so allocated. It appears that the sums in question in the first case were soon afterwards paid into separate bank accounts, but that fact does not appear to have been treated as relevant to the holding. The sums in question in the second case were not paid into separate accounts for many years. In neither of those cases was there any suggestion that the trustee's exercise of the power to apply trust property involved a resettlement of trust property so as to result in the creation of a new trust. The exercise of the power by way of unconditional and irrevocable allocation of trust property was seen rather to result in the crystallisation of an immediate absolute beneficial entitlement in respect of property which, before and after the resolution of the 100 Cf In re Pilkington's Will Trusts [1964] AC 612 at 635. 101 [1951] Ch 209; [1950] 2 All ER 891. 102 [1970] NZLR 1. trustee, remained property which the trustee held on trust under the terms of the existing settlement103. The trustee's power to apply trust property having been held in each of those cases to be available to be exercised by means of an unconditional and irrevocable allocation of trust property, the consequence that the exercise of that power effected an alteration of beneficial entitlements in property which the trustee continued to hold on trust under the terms of the existing settlement was orthodox as a matter of principle. It was also unremarkable as a matter of practice. The power to apply trust property, as interpreted in the cases, was but an example of a power conferred on a trustee by the terms of settlement to bring about an alteration of beneficial entitlements: the power was of such a nature that the exercise of the power was "so to speak, to be read into" the existing settlement with the result that the beneficial entitlements as altered by the exercise of the power were to be recognised and administered by the trustee after the exercise of the power "as if the settlement had actually provided" for them104. An absolute beneficial entitlement to some part of a fund of property that is held on trust need not be reflected in an absolute beneficial entitlement to the whole or some part of any specific asset within that fund105. That must be so whether the absolute beneficial entitlement to some part of a fund of property that is held on trust is defined by the terms of the trust settlement itself, or whether such absolute beneficial entitlement to some part of a fund of property that is held on trust is defined by an exercise of a power conferred on a trustee under the terms of a trust settlement. Whether or not a particular beneficial entitlement to some portion of a trust fund is reflected in a beneficial entitlement to the whole or some part of a specific asset within that fund depends on the terms of the trust settlement. Furthermore, an absolute beneficial entitlement to some part of a fund of property may be defined as an entitlement to be paid a sum of money out of the fund of property that is held on trust, irrespective of whether or not the assets 103 Commissioner of Inland Revenue v Ward [1970] NZLR 1 at 30. 104 Cf Queensland Trustees Ltd v Commissioner of Stamp Duties (1952) 88 CLR 54 at 65; [1952] HCA 52. 105 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 313-314; [1990] HCA 45; Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 246 [48]; [1998] HCA 4; Kent v SS "Maria Luisa" (No 2) (2003) 130 FCR 12 at 32-33 [58]-[60]; CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) (2005) 224 CLR 98 at 110 [16]-[17], 111 [20], 111-112 [22], 113-116 [29]- [36]; [2005] HCA 53. within the fund are currently held in monetary form106. Again, it depends on the terms of the trust settlement. Turning to the particular terms of the settlement of the Trust as set out in the Deed, the power conferred by cl 4(b) to advance and apply "any part or parts of the whole of the capital or income of the Trust Funds" must be read in light of the definition of "the Trust Funds" as including the settlement sum "and all other assets from time to time held by the Trustee". The power conferred by cl 4(b) was not expressed merely as a power to advance and apply assets which were at the time of advancement and application held by the Trustee as part of the Trust Funds, and no restriction was placed on how any part or parts of the whole of the capital or income of the Trust Funds advanced and applied might have been identified. Nothing in the terms in which the power was expressed excluded such a part or parts of the whole being defined, in a resolution made in the exercise of the power, as one or more specified monetary sums. The power conferred by cl 4(b) must also be read in light of the additional, relevantly ancillary, powers conferred by cl 4(e), cl 4(f) and cl 8 of the Deed. The power conferred by cl 4(e) was "to raise out of any capital or income in the hands of the Trustee any sum or sums from time to time required and in the opinion of the Trustee properly payable thereout for the exercise of any of the powers" contained in the Deed. The power conferred by cl 8 was "to sell the whole or any part of the settled fund or the investments representing the same at any time or times for such price or prices and on such terms as the Trustee may think fit". Each was ample to permit the subsequent liquidation of non-monetary assets in order to meet an entitlement to a part of the whole of the capital or income of the Trust Funds arising from an exercise of power under cl 4(b) specified as a monetary sum. The power conferred by cl 4(f) was "[i]n the division or distribution of the Trust Funds ... to appropriate any part thereof to any person entitled thereto and as to the true value of any part so appropriated to accept the amount sworn by a sworn valuator ... to be in his opinion the value thereof". It was ample to permit the alternative course of allowing an entitlement to a part of the whole of the capital or income of the Trust Funds arising from an exercise of power under cl 4(b) specified as a monetary sum to be met by a distribution of trust assets to the value of that monetary sum. Neither in principle nor in the particular terms of the Deed am I therefore able to discern any basis for confining the power conferred by cl 4(b) so as to limit a resolution made in the exercise of that power to one which manifested an intention to effect an immediate alteration of the beneficial ownership of specific trust assets. 106 Eg MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494 at 502 [8], 509 [34]; [1999] HCA 51. Adopting the interpretation of the resolution of 23 September 1994 as a resolution by the Trustee to distribute an amount of $3,904,300 out of the Trust Funds to Mr and Mrs Nemes, the Court of Appeal was in my view correct to hold that resolution to have been a valid exercise of the power conferred by cl 4(b). On and from the making of the resolution, the Trustee continued to hold such trust assets as might from time to time comprise the Trust Funds subject to an immediate unconditional obligation on the part of the Trustee to account to Mr and Mrs Nemes in the sum of $3,904,300 out of the Trust Funds. That obligation arose not outside the Deed but under the Deed. It was immediately enforceable in equity by Mr and Mrs Nemes against the Trustee in the same way as if an unconditional obligation to account to Mr and Mrs Nemes in that sum had been expressed as a term of the Deed. In order to perform that equitable obligation, the Trustee had at its disposal the powers conferred by cl 4(e), cl 4(f) and cl 8 of the Deed. Effect of the balance sheet entry In challenging the Court of Appeal's holding concerning the effect in law of the Trustee going on to record a liability to Mr and Mrs Nemes in the sum of $3,904,300 in the Trust's balance sheet, the appellants do not dispute that a trustee who admits to having an unconditional obligation to pay a specified amount of money to a beneficiary can thereby become liable to an action at law for the recovery of that amount as money had and received to the benefit of the beneficiary, so as to overlay the equitable relationship of trustee and beneficiary with the legal relationship of debtor and creditor. That has been settled since at least the middle of the nineteenth century107. What the appellants argue is that the trustee's liability to such an action at law can only arise where the trustee "holds the relevant assets on a bare trust". The reasoning in Chianti Pty Ltd v Leume Pty Ltd 108, which the Court of Appeal followed in the present case109, the appellants argue to be wrong. 107 Turner v New South Wales Mont de Piete Deposit and Investment Co Ltd (1910) 10 CLR 539 at 546, 553, 555-556; [1910] HCA 15; R v Brown (1912) 14 CLR 17 at 25; [1912] HCA 6 and Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 541 [67]; [2001] HCA 68, referring to Pardoe v Price (1847) 16 M & W 451 at 458-459 [153 ER 1266 at 1269] or Edwards v Lowndes (1852) 1 El & Bl 81 at 89 [118 ER 367 at 370]. See also Bullen and Leake, Precedents of Pleadings, 3rd ed (1868) at 46-47. 108 (2007) 35 WAR 488. 109 [2015] NSWCA 6 at [77]-[85]. Like the expression "discretionary trust"110, the expression "bare trust" is plagued by terminological indeterminacy111. The appellants use it in the present context to refer to a trust under which the trustee has no interest in the trust assets other than legal title and no duties other than those which exist by virtue of the office of trustee112, and thereby to exclude a trustee whose holding of trust assets is subject to terms of settlement. Were the availability of the common law action not confined to an action against a trustee holding assets on such a bare trust, the appellants argue, the common law would have the potential to cut across rights and duties which the trustee might have in equity as well as to circumvent defences which the trustee would have to a claim to enforce the trust in equity which the trustee would not have to an action at law. The argument is put at a high level of generality. No attempt is made to demonstrate actual conflict with any specific right or duty of the Trustee under the Deed. No equitable defence is suggested, much less one which the Trustee would have to a claim to recover the sum of $3,904,300 in equity which the Trustee would not have to a claim to recover that sum in an action for money had and received. The appellants place particular weight on an early statement of principle by Rolfe B in Pardoe v Price as picked up by Griffith CJ in R v Brown. The holding in Pardoe v Price was that the action for money had and received was not available where there was no relationship between the parties other than that of trustee and beneficiary. Rolfe B acknowledged, however, that the trustee would become liable for money had and received if there were "no trust to execute, except that of paying over money" and the trustee made an admission that the trustee had "money to be paid over"113. In R v Brown, Griffith CJ explained with reference to Pardoe v Price that "in the case of an express trust, if nothing remained to be done but pay over money, the trustee by his conduct, as for instance by admitting that he had money to be paid over, might make himself liable to [the] action"114. Those statements are consistent with the common law action being available in circumstances which encompass the case of an admission of liability to pay made by a trustee who holds trust assets on a bare trust in the sense in 110 Cf Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 111 Cf Byrnes v Kendle (2011) 243 CLR 253 at 264-265 [21]; [2011] HCA 26. 112 Cf CGU Insurance Ltd v One.Tel Ltd (In liq) (2010) 242 CLR 174 at 182 [36]; [2010] HCA 26. 113 Pardoe v Price (1847) 16 M & W 451 at 458-459 [153 ER 1266 at 1269]. 114 R v Brown (1912) 14 CLR 17 at 25. which the appellants use that expression. At the same time, they contain nothing to exclude the availability of the common law action in the case of an admission of liability to pay made by a trustee whose holding of trust assets is subject to an unconditional equitable obligation to pay the beneficiary the admitted sum. If the equitable obligation truly the beneficiary unconditional, the imposition of common law liability for an admitted sum in the latter case would not conflict with any equitable right or duty of the trustee. the admitted sum to pay To acknowledge the common law action to be equally available in each case is consistent with the overarching statement of principle by Griffith CJ in R v Brown, itself a reflection of the exposition of principle by Lord Mansfield in Moses v Macferlan115, that the action for money had and received "lay whenever the defendant had received money which in justice and equity belonged to the plaintiff and when nothing remained to be done except pay over the money"116. To accept the common law action to be available in the case of an admission of liability to pay made by a trustee holding trust assets subject to an unconditional equitable obligation to account to the beneficiary in the admitted sum is also consistent with longstanding practice in New South Wales, where the separate administration of law and equity continued until the last quarter of the twentieth century. In a text on common law pleading in the Supreme Court of New South Wales published in 1961, for example, it was stated in general terms in relation to the action for money had and received that "[a] cestui que trust or legatee may sue the trustee or executor under this count where the latter admits that he holds trust moneys or a legacy as a debt payable to the former"117. That the common law cause of action can arise where the trustee holds the relevant assets on a bare trust is alone sufficient to demonstrate that the coming into existence of the common law cause of action is not inconsistent with the continuing existence of a trust under which the trustee remains subject to fiduciary and other duties of a trustee for so long as the trustee's absolute equitable obligation to pay the admitted sum of money to the admitted beneficiary remains unperformed. Obligations of a trustee which exist by virtue only of that office, having been described as applicable to a bare trustee, include the obligation "to get the trust property in, protect it, and vindicate the rights attaching to it"118. There can be no reason in principle why the availability of the 115 (1760) 2 Burr 1005 at 1012 [97 ER 676 at 681]. 116 (1912) 14 CLR 17 at 25, quoted in Chianti Pty Ltd v Leume Pty Ltd (2007) 35 WAR 488 at 508 [61]. 117 Rath, Principles and Precedents of Pleading, (1961) at 28, cited in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 541 [67]. 118 CGU Insurance Ltd v One.Tel Ltd (In liq) (2010) 242 CLR 174 at 182 [36]. common law action should be excluded in circumstances where some or all of those obligations are spelt out in the terms of settlement. Conclusion The Court of Appeal was correct for the reasons it gave in concluding that the Trustee was indebted to Mr and Mrs Nemes in the sum of $3,904,300 at the time of entering into the deed of charge under which the Trustee covenanted to pay that sum to Mr and Mrs Nemes on demand. The judgment against the Trustee in reliance on that covenant should stand. Introduction A trust's principal asset was a parcel of 10 shares119. The trust's balance sheet recorded the shares at cost and credited an increase in their value to an asset revaluation reserve. The trustee, purportedly exercising a power to "advance" and "apply" the capital or income of the trust funds, resolved that a "final distribution" be made out of the asset revaluation reserve and that the entire reserve, if any, be paid or credited to two specified beneficiaries. After the resolution, the trust's balance sheet continued to record the shares as a revalued asset but also recorded, as a non-current liability of the trust, a loan by the specified beneficiaries to the trust of the amount of the purported distribution. Is the trustee indebted to the estate of the first of those specified beneficiaries? The answer is no. These reasons will address the facts, describe the issues and then address the resolution made and the power of the trustee to pass the resolution under the deed of settlement that governed the trust. The reasons will then address two other arguments advanced by those parties who said that the trustee is indebted to the estate – an action for money had and received and estoppel. Facts The Trust The Nemes Family Trust ("the Trust") was created by a deed of settlement dated 24 June 1974 ("the Deed"). The first respondent, Nemeske Pty Ltd, is the trustee ("the Trustee"). The appellants are four of the "Specified Beneficiaries" of the Trust. The second and third respondents are the current directors of the Trustee and the executors of the estate of another Specified Beneficiary, Mr Emery Nemes ("the Executors"). The Executors were the only respondents who played an active role in this appeal120. There was no dispute about the occurrence of critical events even though evidence about them was sparse. 119 The settlement sum was $200. The trust accounts later recorded it as $1,000. That amount is not in issue and may be put aside. 120 The first respondent and the fourth to twelfth respondents entered submitting appearances. The thirteenth respondent was removed as a party. The Trust was described by the parties as a "discretionary trust". That term "has no fixed meaning and is used to describe particular features of certain express trusts"121. Instead, its meaning is "disclosed by a consideration of usage rather than doctrine, and the usage is descriptive rather than normative"122. In the case of this Deed, "the identity of those who might receive income or capital, the amounts they might receive, the period or duration of the trusts, the content from time to time of the fund impressed with those trusts, and the very terms of the trusts themselves all depended wholly or significantly upon the exercise of, or the failure to exercise, powers bestowed by the [Deed] upon the [Trustee]"123. The Deed defined the settlement sum of $200 and "all other assets from time to time held by the Trustee" as "the Trust Funds"124. The Trustee held the Trust Funds subject to the Trust's directions and discretions set out in the First Schedule to the Deed125. The First Schedule provided the trusts upon which the Trust Funds were to be held. Clauses (a)-(c) of the First Schedule were concerned with income; cll (d) and (e) dealt with the capital of "the Trust Fund" on the vesting day; cl (f) defined the "vesting day"; and cl (g) defined the "Specified Beneficiaries". "Income" and "capital" were not defined in the Deed. Under cl (a)(i) of the First Schedule, the Trustee held the Trust Fund upon trust as to income: "to pay or apply the whole or any part of such income for or towards the maintenance education advancement or benefit of all or such one or more of the specified beneficiaries … in such shares and proportions as the Trustee in its absolute discretion may … determine." 121 Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 234 [8]; [1998] HCA 4. 122 Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 123 See Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 124 Recitals of the Deed. 125 cl 2 of the Deed. If a determination was made and recorded, it was irrevocable for the income year to which it related126. Any income not paid or applied pursuant to cl (a)(i) was deemed to be included as Trust Funds127. Returning to the body of the Deed, its provisions were primarily concerned with the Trustee's powers. Clause 3 dealt with the Trustee's powers of investment. Clause 4 conferred a range of other powers, relevantly: "(b) At any time or times to advance or raise any part or parts of the whole of the capital or income of the Trust Funds and to pay or to apply the same as the Trustee shall think fit for the maintenance education advancement in life or benefit of any of the Specified Beneficiaries … In the division or distribution of the Trust Funds or the investments for the time being representing the same to appropriate any part thereof to any person entitled thereto and as to the true value of any part so appropriated to accept the amount sworn by a sworn valuator … and any division distribution or appropriation made in reliance upon such valuation or certificate shall exonerate the Trustee from any liability or responsibility even though such valuation was in fact incorrect or even though such part may subsequently increase or decrease in value." (emphasis added) In addition to the express powers conferred on the Trustee by the Deed, the Trustee also had all the powers, authorities and discretions conferred on trustees by the laws of the State of New South Wales128. Trust Funds, transactions and resolutions The Trust's principal asset was a parcel of 10 "B" class shares in Aladdin Limited ("Aladdin"), a company registered in Norfolk Island ("the Shares"). Aladdin held shares in other companies which owned real property. In July 1994, the Shares were revalued and an asset revaluation reserve was created in the Trust's accounts. This was an accounting or bookkeeping entry only. The primary judge said that the relevant accounting entries were 126 cl (b) of the First Schedule to the Deed. 127 cl (a)(ii) of the First Schedule to the Deed. 128 cl 5 of the Deed. "created as a result of an assessment made by someone on behalf of the Trust that the assets of the Trust (being the Shares) should be re-valued"129. A valuation statement was prepared as at 31 July 1994. The Beneficiaries Accounts for the Trust as at 31 July 1994 were in the following form: BENEFICIARIES ACCOUNTS SETTLEMENT SUM Opening Balance ASSET REVALUATION RESERVE Assets Revalued TOTAL TRUST FUNDS The balance sheet of the Trust as at 31 July 1994 recorded the following: BENEFICIARIES FUNDS Settlement Sum Asset Revaluation Reserve TOTAL TRUST CAPITAL REPRESENTED BY INVESTMENTS Shares in Public Companies at Cost Aladdin Ltd 10 "B" Class Shares of $1 Fully Paid On 23 September 1994, the directors of the Trustee resolved ("the 1994 Resolution"): "[T]hat pusuant [sic] to the powers conferred on the [Trustee] in the [Deed]:- That a final distribution be and is hereby made out of the asset revaluation reserve for the period ending 30th September, 1995 [sic] and that it be paid or credited to:- the beneficiaries in the following manner and order: 129 Fischer v Nemeske Pty Ltd [2014] NSWSC 203 at [31]. The entire reserve if any, to be distributed to:- Emery George Nemes & Madeleine Nemes as joint tenants." There is no dispute that the reference to "30th September, 1995" was a misprint and should have read "30th September, 1994". The error arose because, as described below, the transactions were not documented until 1995. The purported distribution was effected by further entries in the Beneficiaries Accounts and the Trust's balance sheet prepared as at 30 September 1994. The Beneficiaries Accounts as at 30 September 1994 were as follows: BENEFICIARIES ACCOUNTS SETTLEMENT SUM Opening Balance ASSET REVALUATION RESERVE Assets Revalued Capital Distribution TOTAL TRUST FUNDS The balance sheet as at 30 September 1994 recorded the net assets of the Trust. The Shares remained on the balance sheet at full value. BENEFICIARIES FUNDS Settlement Sum REPRESENTED BY INVESTMENTS Shares in Public Companies at Cost Aladdin Ltd 10 "B" Class Shares of $1 Fully Paid NON-CURRENT LIABILITIES Loans - Secured E.G. & M. Nemes NET ASSETS In fact, as will be explained below, as at 30 September 1994 the "loan" was not secured. It was common ground that no money was paid to Mr and Mrs Nemes pursuant to, or following, the 1994 Resolution. On 26 April 1995, Mr and Mrs Nemes (through a firm of accountants) engaged solicitors. The letter of instruction relevantly stated: "• Most of the assets of Mr and Mrs Nemes are owned by companies the asset shares of which are owned by [Aladdin], a Norfolk Island company, the shares of which are owned by [the Trust]. The assets in the whole group of companies has [sic] been revalued as at 1st July, 1994, this has led to an asset revaluation reserve being created in [the Trust], a copy of the balance sheet is enclosed for your reference. [The Trustee] in its capacity as trustee of [the Trust] held a meeting at which it was resolved to distribute the asset revaluation reserve to Mr and Mrs Nemes jointly, a copy of the minute is enclosed for your reference. The above distribution was made by way of crediting the loan account of Mr and Mrs Nemes in [the Trust]. Mr and Mrs Nemes would like to secure their loan to [the Trust], and it is in this matter that they require your assistance, as follows:- Make a debenture over the shares in [Aladdin] which [the Trust] owns as security for the loan by Mr and Mrs Nemes, together with signed blank share transfers. Advise on the stamp duty and legal implications of registering the debenture with the register of deeds. Advise [Aladdin] of the debenture on its shares. The purpose of these transactions is for Mr and Mrs Nemes to secure control of their assets or estate. …" As the letter records, the Nemes' instructions were that the asset revaluation reserve had been distributed to Mr and Mrs Nemes by "crediting the loan account of Mr and Mrs Nemes in [the Trust]". Put another way, the distribution was treated as creating a "debt" owed by the Trust to Mr and On 19 May 1995, the solicitors responded to the accountants. The letter from the solicitors recorded the instructions and then asked for further information: "[The Trustee] as Trustee of [the Trust] owes monies to Mr & Mrs Nemes. Mr & Mrs Nemes wish to obtain security for the amount owing to them over the shares held by [the Trustee] … and for that purpose to obtain a debenture to be given by [the Trustee] over those shares. The question arises as to whether that debenture will be a loan security within the meaning of the Stamp Duties Act of New South Wales and so liable for New South Wales loan security duty. To enable us to prepare the necessary documentation would you please advise us:- The amount of the debt to be secured. (b) Whether this is to be secured by a debenture to Mr & Mrs Nemes or whether there will be debentures to each of them for separate amounts. (c) Details of the shares … to be dealt with." On 19 June 1995, the accountants provided written instructions that the amount of the debt to be secured was $3,904,300, the debenture was to be to Mr and Mrs Nemes as joint tenants and the shares in Aladdin to be dealt with were the Shares. On 28 June 1995, the solicitors forwarded documents to the accountants. The form of the transaction had changed. The solicitors stated that they had prepared the following documents for the accountants: "1. A Deed of Charge in respect of the sum of $3,904,300.00 to be given by [the Trustee] as Trustee of [the Trust]. The Charge is over [the Shares] and in favour of Mr & Mrs Nemes as joint tenants. … We have used a full form of Charge as it was easy to do so with less work involved. Transfer of [the Shares] for execution in blank. … We are returning to you the copies of the Memorandum and Articles of [the Trustee] and [Aladdin] and we also return the original Share Certificate in respect of [the Shares]. This Certificate should be held with the Deed of Charge when that is returned executed from Norfolk Island. On 3 July 1995, the directors of the Trustee resolved that the Trustee execute a charge over the Shares in favour of Mr and Mrs Nemes as joint tenants in respect of $3,904,300 "repayable on demand which is the amount presently owing by [the Trust] to [Mr and Mrs Nemes] and also a Transfer in blank" of the Shares in support of the charge ("the Charge Resolution"). On 30 August 1995, a deed was made between the Trustee (defined as "the Mortgagor") and Mr and Mrs Nemes (defined as "the Mortgagee") ("the Deed of Charge"). The Recitals of the Deed of Charge relevantly recorded that: the "Trustee [held] Ten B Class Fully Paid shares in the capital of [Aladdin] (the mortgaged premises)"130; the Trustee was indebted to Mr and Mrs Nemes as joint tenants in the sum of $3,904,300131; and for the purpose of securing repayment of that sum, the Trustee had agreed with Mr and Mrs Nemes to execute the Deed of Charge, pursuant to which the Trustee charged the Shares in favour of Mr and Mrs Nemes as joint tenants132. The charge over the Shares was stated to be a first ranking fixed charge133. The Trustee warranted to Mr and Mrs Nemes that, as Trustee, it was the owner of the Shares134 and had "good right and full power to charge" the Shares and that 130 Recital C of the Deed of Charge. 131 Recital D of the Deed of Charge. 132 Recital E of the Deed of Charge. 133 cl 2 of the Deed of Charge. 134 cl 3(b)(i) of the Deed of Charge. the Shares were "free from all encumbrances"135. The Trustee covenanted with Mr and Mrs Nemes136: "(a) That [the Trustee] and all persons having or lawfully or equitably claiming any estate or interest in [the Shares] or any part thereof will from time to time and at all times hereafter upon the request of [Mr and Mrs Nemes] and at the cost of [the Trustee] until sale and afterwards of the person or persons requiring the same make do and execute or cause to be made done and executed all such acts deeds and assurances whatsoever from all such persons for the purpose of more satisfactorily securing to [Mr and Mrs Nemes] the payment of the principal moneys and/or more satisfactorily assuring [the Shares] to [Mr and Mrs Nemes] or as [Mr and Mrs Nemes] may direct and in particular will whenever requested by [Mr and Mrs Nemes] so to do execute in favour of [Mr and Mrs Nemes] such legal mortgages transfers assignments or other assurances of all or any part of [the Shares] in such form and containing (in the case of mortgages or other assurances) such powers (including power of sale) and provisions (including the express exclusion of all Moratorium Acts and/or Regulations) as [Mr and Mrs Nemes] shall require. That [the Trustee] shall not at any time during the continuance of this security execute or create any mortgage lien charge or encumbrance over or affecting [the Shares] or any part thereof in favour of any person other than [Mr and Mrs Nemes] without the previous consent in writing of [Mr and Mrs Nemes]." The Trustee also covenanted with Mr and Mrs Nemes to pay the sum to them on demand137. On the same day, 30 August 1995, an Australian Securities Commission "[n]otification of details of a charge" form was signed on behalf of the Trustee. The form recorded the liability as a "debt of $3,904,300.00 presently owing", the chargee as Mr and Mrs Nemes and the charged property as the Shares. Mr and Mrs Nemes did not report the distribution in their tax returns in the 1994/1995 financial year. 135 cl 3(b)(ii) of the Deed of Charge. 136 cl 4 of the Deed of Charge. 137 cl 5 of the Deed of Charge. The Trust accounts for the year ended 30 June 2003 were dated 25 May 2004. A Directors' Declaration which accompanied the financial statements stated that the Trust was "not a reporting entity" and that the "financial statements and notes present[ed] fairly the [Trust's] financial position as at 30th June 2003". The notes to the financial statements recorded a non-current secured "loan" of $3,904,300 from Mr and Mrs Nemes. On 26 September 2011, Mr Nemes died. Mrs Nemes had predeceased him. No steps had been taken to seek payment of the amount said to be owing as a result of the 1994 Resolution or the Deed of Charge. On 11 June 2013, the appellants commenced proceedings in the Supreme Court of New South Wales seeking declarations that the Trustee was not indebted to Mr Nemes' estate in the amount of $3,904,300. The Executors cross-claimed alleging that the Trustee was so indebted and seeking judgment for that amount. Previous decisions The primary judge dismissed the appellants' claim and ordered judgment for the Executors on the cross-claim138. The primary judge concluded that on the proper construction of the 1994 Resolution, the Trustee resolved to make an advance or distribution to Mr and Mrs Nemes pursuant to cl 4(b) of the Deed of an amount equal to the asset revaluation reserve of $3,904,300 and that the Trustee gave effect to that resolution by crediting Mr and Mrs Nemes' loan account with the distribution139. the same amount, thereby effecting the Trustee The Court of Appeal dismissed the appellants' appeal140. The Court of Appeal found that the 1994 Resolution was a valid and effective exercise of the Trustee's powers under cl 4(b) of the Deed. Barrett JA (with whom Beazley P and Ward JA agreed) stated141: "In the present case, [the Trustee], as trustee, expressly identified an unrealized accretion in value arising from revaluation of [the Shares] and therefore a particular share of the value of the trust assets. It then determined, by [the 1994 Resolution], that that accretion or share should 138 Fischer v Nemeske Pty Ltd [2014] NSWSC 203. 139 Fischer v Nemeske Pty Ltd [2014] NSWSC 203 at [101]. 140 Fischer v Nemeske Pty Ltd [2015] NSWCA 6. 141 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [62]. be used immediately (that is, 'advanced') rather than being left to be dealt with in the fullness of time. The accretion or share formed part of either the 'capital' or the 'income' of the 'Trust Funds'. [The Trustee's] resolution that the identified portion of the 'capital' or 'income' (described, perhaps inaptly, as the 'asset revaluation reserve' that stood in the books at $3,904,300) be 'distributed to' Mr and Mrs Nemes caused capital or income to be dealt with in a way contemplated by clause 4(b), that is, by being 'applied' for the benefit of those two persons. The specific setting aside or appropriation that the resolution effected by means of the words 'be distributed to' – which carried precisely the same connotation as the words 'shall belong to' in Vestey's case – did not result in any cash payment or change in ownership of specific property. But it did cause [the Trustee's] obligations with respect to the trust assets to change so that, to the extent of $3,904,300, [the Trustee] was required to recognize and accommodate an immediate and absolute vested interest of Mr and Mrs Nemes." (emphasis added) His Honour concluded142: "In summary, I am of the opinion that … [the Trustee], on 23 September 1994, advanced and applied capital or income of the Trust Funds to the extent of $3,904,300 by due exercise of the power conferred by clause 4(b)." The approach adopted by the Court of Appeal should be rejected. Issues Was the 1994 Resolution a valid and effective exercise of the Trustee's power "to advance or raise … and to pay or to apply" the capital or income of the Trust Funds under cl 4(b) of the Deed? If the answer to that question is yes, then two further issues arise: did making the 1994 Resolution and recording a liability of $3,904,300 to Mr and Mrs Nemes in the Trust accounts entitle Mr and Mrs Nemes to maintain an action for money had and received against the Trustee for that sum, and did the Trustee effectively covenant to repay that existing debt in the Deed of Charge? The 1994 Resolution and the cl 4(b) power Clause 4(b) of the Deed empowered the Trustee "to advance or raise any part or parts of the whole of the capital or income of the Trust Funds and to pay 142 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [64]. or to apply the same" for the maintenance, education, advancement in life or benefit of Mr and Mrs Nemes. By the 1994 Resolution, the Trustee resolved that pursuant to the powers conferred on it in the Deed: "a final distribution be and is hereby made out of the asset revaluation reserve for the period ending 30th September, 199[4] and that it be paid or credited to:- the beneficiaries in the following manner and order: The entire reserve if any, to be distributed to:- [Mr and Mrs Nemes] as joint tenants." (emphasis added) But did the 1994 Resolution "advance or raise any part or parts of the whole of the capital or income of the Trust Funds" and then "pay or … apply" that capital or income of the Trust Funds for the maintenance, education, advancement in life or benefit of Mr and Mrs Nemes? The answer is no. Resolution of this appeal depends on recognising that there is a real and radical difference between an asset and its value. The conclusions reached by the primary judge and the Court of Appeal and the Executors' argument in this Court depended upon treating the two – asset and value – as interchangeable concepts. They are not. No capital or income of the Trust Funds First, it is necessary to identify "the capital or income of the Trust Funds" the subject of the 1994 Resolution. The 1994 Resolution purported to deal with "the asset revaluation reserve" and to distribute "the entire reserve if any". But the asset revaluation reserve was not "part of" "the capital or income of the Trust Funds"143. The "asset revaluation reserve" was an accounting entry which recorded, in the accounts of the Trust, an unrealised accretion in the value of the Shares at a particular point in time. That value was subject to fluctuation given the nature of the underlying assets. Indeed, the 1994 Resolution recognised the uncertain value of the asset revaluation reserve by resolving that "[t]he entire reserve if any, [was] to be distributed" (emphasis added). The asset revaluation reserve was not an asset or a pool of funds from which amounts could be withdrawn and paid. 143 cf Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [54]. On 23 September 1994, the date of the 1994 Resolution, the only property relevantly held by the Trust was the Shares. The property available for advancement and removal from the Trust was the Shares and only the Shares. The value of the Shares could not be realised until the Shares were used or dealt with in some way. Of course, as at 23 September 1994, the total capital value of the Trust might be described as about $4 million in the same way one might describe the value of any share portfolio at a particular date. But "value" is not property held by the Trust. However the Trustee described it, the Trustee did not deal with any capital of the Trust Funds. Nor did the Trustee deal with any income from any trust asset. All it dealt with was a bookkeeping entry intended to reflect change in the value of an asset. How accountants treat these things is interesting, but irrelevant to the resolution of this appeal. It is not to the point to enquire how accountants would permit or require financial statements to be prepared in such a way as gives a true and fair view of the value of an asset at balance date. It may nonetheless be observed that the balance sheet prepared after the impugned resolution showed144, as was the fact, that the assets of the Trust (relevantly, the Shares) remained unaffected by the 1994 Resolution. The Shares continued to be held on the terms of the original settlement under the Deed. The Court of Appeal, in reliance on Clark v Inglis145, stated that "it must be accepted that an unrealized gain on revaluation is capable of being 'income' as referred to in clause 4(b)"146. That statement should not be accepted. As counsel for the Executors correctly submitted, Clark v Inglis was no more than an example where an advance was made by a trustee under the terms of a particular deed and which was effected by (and capable of being effected by) a loan back. The discretionary trust there was distinguishable from the Trust here in crucial respects. First, the trustee of the discretionary trust was given a binding discretion to determine whether any property or moneys held by it constituted capital or income. Second, there was no direction which required income and profits to be paid, transferred or handed over to any beneficiary. Third, the terms of the trust deed were in other respects significantly different147. This appeal is about the terms of this Deed and the 1994 Resolution. Clark v Inglis may be put to one side. 144 See [130] above. 145 (2010) 79 ATR 447. 146 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [45]. 147 Clark v Inglis (2010) 79 ATR 447 at 450-451 [14], 455-456 [33], 459 [51]-[53]. Nothing advanced or raised Second, even if, contrary to the view formed, the asset revaluation reserve was capital or income of the Trust Funds, the 1994 Resolution was not an exercise of the power in cl 4(b) of the Deed "to advance or raise any part or parts of the whole of the capital or income of the Trust Funds and to pay or to apply" that capital or income (emphasis added). By the terms of the 1994 Resolution, the directors of the Trustee resolved to make "a final distribution … out of the asset revaluation reserve" for the year ended 30 September 1994 and that the "entire reserve if any" be "paid or credited to" and "distributed to" Mr and Mrs Nemes. Does that constitute an exercise of the power under cl 4(b) of the Deed "to advance or raise any part or parts of the whole of the capital or income of the Trust Funds and to pay or to apply" that capital or income (emphasis added)? Clause 4(b) is a composite power. It was common ground that there were four possible alternative means by which the power could be exercised – advance and pay; advance and apply; raise and pay; raise and apply. Under the Deed, the power to raise was distinct from the power to advance. The power to raise was a process by which money or funds could be obtained by dealing with property, usually through sale or mortgage. That construction is reinforced by the other clauses in the Deed148. It is accepted that this power was not exercised by the Trustee. The power of advancement in the Deed was directed to a different end. Exercise of the power of advancement removes the property advanced from the original settlement149. The power of advancement might be exercised by moving the property to a new trust (a resettlement of part of the trust for the benefit of one or more named objects)150 or by simply transferring the property directly to the process of cash advancement and sale151. the beneficiary without 148 See, eg, cll 4(c) ("to raise money by way of mortgage"), 4(e) ("to raise out of any capital or income … any sum or sums from time to time required"), 4(h) ("to raise money on the security of the Trust Funds"). 149 Re Gosset's Settlement (1854) 19 Beav 529 at 535 [52 ER 456 at 458]; Re Aldridge; Abram v Aldridge (1886) 55 LT 554 at 556; In re Fox; Wodehouse v Fox [1904] 1 Ch 480 at 484; In re Pilkington's Will Trusts [1964] AC 612 at 634, 638-639; Tucker, Le Poidevin and Brightwell, Lewin on Trusts, 19th ed (2015) at 150 In re Pilkington's Will Trusts [1964] AC 612 at 635-639. 151 In re Collard's Will Trusts [1961] Ch 293 at 300. But whatever mechanism is adopted, the power operates by altering the proprietary interests in the property advanced so that the property is no longer property of the trust. It involves more than a notional "earmarking" of property for specific beneficiaries152. What then was advanced (ie removed) from the corpus of the Trust Funds so that it could be paid or applied? The answer is nothing. As noted earlier, the assets of the Trust (the Shares) remained unaffected by the 1994 Resolution. The Shares continued to be held on the terms of the original settlement under the Deed. The Trustee, exercising the power of advancement, did not purport to confer on Mr and Mrs Nemes any interest in any of the Trust Funds. title some property held on What is necessary is that the resolution effects an immediate vesting of in a beneficiary. absolute The 1994 Resolution did not do that. And simply crediting amounts to a beneficiary in the Trust's accounts was not sufficient to effect an immediate vesting of a specific part of the capital or income of the Trust Funds. The power to advance in cl 4(b) was not exercised because no part of the Trust Funds was separated from the corpus of the Trust to be paid or applied. trust Nothing paid or applied Did the Trustee exercise the power "to apply", it being common ground that no money was paid to Mr and Mrs Nemes pursuant to, or following, the 1994 Resolution? The answer is no. The power to apply was not exercised because there was no change in the beneficial ownership of any asset of the Trust. The asset revaluation reserve, or the accretion in value of the Shares, was never an asset of the Trust. At all times, the only assets of the Trust recorded in the balance sheet were the Shares and the settlement sum153. Even if the Trustee had purported to effect the distribution by a resettlement – settling a new trust for Mr and Mrs Nemes absolutely for $3,904,300 worth of the Shares – that trust would fail for want of certainty of subject matter154. The value of the Shares necessarily fluctuated. The money 152 cf Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [53], [55]. 153 See [126] and [130] above. 154 Kauter v Hilton (1953) 90 CLR 86 at 97; [1953] HCA 95; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588 at 604 [29]; [2000] HCA 25; Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 at 524 [116]; [2013] HCA 35; Heydon and Leeming, Jacobs' Law of Trusts in Australia, 7th ed (2006) at 3 [106], 67 [523], 637 [2401]. value alone would be an insufficiently certain criterion to identify what specific portion of the Shares was held on the new trust. The proportion of the value of the Shares accounted for by the amount of $3,904,300 was subject to change from time to time, as reflected by the nature of the underlying asset, the nature of the asset revaluation reserve and the terms of the 1994 Resolution. A trust for $3,904,300 worth of the Shares would be uncertain because at no time would it be possible to know which of the Shares was covered by the trust and to what extent. In any event, it was common ground that there was no resettlement. It is then necessary to address the propositions that "income may be 'applied' by a process of crediting" it to a beneficiary155 and that a resolution to "apply" trust income by crediting it effects "an immediate vesting of a specific part of the trust income" in the beneficiary156. Those propositions do not assist in the resolution of this appeal. First, as seen earlier, there was no income the subject of the 1994 Resolution and no distribution or advancement of income157. Second, the cases cited by the Court of Appeal158 to support those propositions are not authority for them. In re Baron Vestey's Settlement; Lloyds Bank Ltd v O'Meara159 is authority for the proposition that a trustee can "apply" the income or capital of a discretionary trust by resolving to vest the absolute beneficial ownership of property held on trust in one or more of the discretionary objects of the trust. Vestey is not authority for the more general proposition that a trustee can "apply" income (or capital) simply by crediting it to a beneficiary in the accounts of a trust. In Vestey, the discretionary objects of the trust had no immediate right to possession of any asset of the trust under the deed160. Clause 7 of the trust deed conferred a mandatory power on the trustees to "pay or apply the income of [the] 155 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [59]. 156 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [61]. 157 See [131], [154], [156]-[160] and [162]-[168] above. 158 In re Baron Vestey's Settlement; Lloyds Bank Ltd v O'Meara [1951] Ch 209 at 219-220; Commissioner of Inland Revenue v Ward [1970] NZLR 1 at 15; Chianti Pty Ltd v Leume Pty Ltd (2007) 35 WAR 488 at 511-512 [72]. 159 [1951] Ch 209 at 219-220. 160 Vestey [1951] Ch 209 at 219. fund … unto or in any manner for the support or benefit of all or any one or more of the following persons for the time being in existence"161. A sum of money was held "in hand" by the trustees162. The trustees resolved that a specified proportion of that sum "shall belong" to certain beneficiaries163. Notwithstanding that resolution, the trustees also resolved to accumulate the amount pursuant to s 31 of the Trustee Act 1925 (UK). The issue was whether the first resolution was a valid and effective exercise of the power to apply in cl 7. The Court of Appeal held that the resolution was an effective exercise of the power to apply the income of the trust and that the effect of the resolutions was to "give to each [beneficiary] a specific portion of the income"164 so that in the exercise of the trustees' discretion "each one of these [beneficiaries] became absolutely entitled to a particular sum of money so appropriated, and … those appropriated sums have now become part of the [beneficiaries'] respective estates"165. The facts in this appeal are different. Here, the Trustee did not have funds "in hand", there was no change in the beneficial ownership of any asset of the Trust and the Trustee did not resettle part of the Trust Funds for the benefit of Mr and Mrs Nemes. Similarly, in Commissioner of Inland Revenue v Ward166, North P of the New Zealand Court of Appeal held that a resolution that certain money should "be held for the credit of" four children in equal shares167 effected by book entries in the trust accounts was an effective exercise of a power to "apply" trust income. However, in reaching that conclusion, North P held that the effect of the resolution was to make the money "the separate property" of each child168. In other words, the income was "applied" when it ceased to be held under the prior trust and became the absolute property of each child. 161 Vestey [1951] Ch 209 at 210. 162 Vestey [1951] Ch 209 at 217. 163 Vestey [1951] Ch 209 at 212. 164 Vestey [1951] Ch 209 at 219. 165 Vestey [1951] Ch 209 at 220. See also at 221-222. 166 [1970] NZLR 1. 167 Ward [1970] NZLR 1 at 7. 168 Ward [1970] NZLR 1 at 15-17. Turner J agreed with the relevant principles but differed on the application of the principles to the facts: at 24-26. Reference should be made to Chianti Pty Ltd v Leume Pty Ltd169. It does not assist because the relevant trust power was "to pay, apply or set aside" trust income (emphasis added)170. The phrase "set aside" was defined in the trust deed to include "placing sums to the credit of the beneficiary in the books of account of the Trust"171. The trust deed further provided that amounts set aside in this way would "cease to form part of the Trust Fund and … [would] thenceforth be held by the Trustee as a separate trust fund on trust for that person absolutely"172. Accordingly, while Chianti involved the exercise of a power of advancement by crediting trust income to a trust account, it turned on the specific power to set aside, not the power to "apply" trust income or capital. As will be apparent, the fundamental difference between Vestey, Ward and Chianti and the present appeal is that whereas in those three cases absolute title to trust assets was transferred or vested, the 1994 Resolution did not have the effect of transferring or immediately vesting absolute title to any of the Trust Funds. That is, the Trustee did not, by the exercise of the power to "advance or raise … and to pay or to apply" in cl 4(b) of the Deed, purport to confer an absolute beneficial interest in Mr and Mrs Nemes in any property held by the Trust. And none of Vestey, Ward or Chianti is authority for the proposition that a power to "apply" trust capital or income can be exercised without altering the beneficial ownership of the property the subject of the advancement. Here, the Shares relevantly comprised the whole of the capital and income of the Trust Funds. Title to the Shares had to be altered in some way in order for the capital or income of the Trust Funds to be paid or applied. Finally, even if the purported distribution of the "entire reserve if any" to Mr and Mrs Nemes recorded in the 1994 Resolution created some equitable obligation in favour of Mr and Mrs Nemes, that would not assist the Executors. It would not assist them because unless a specific power in the Deed can be identified which permitted or empowered the Trustee to take that equitable obligation (however it is described) and convert it into a legal debt owed by the Trust to Mr and Mrs Nemes which would warrant the creation of the charge referred to in the Deed of Charge (with the potential to affect all specified beneficiaries), the legal obligation cannot provide the basis of exoneration out of the Trust for the benefit of Mr and Mrs Nemes (and now the Executors). 169 (2007) 35 WAR 488. 170 Chianti (2007) 35 WAR 488 at 495 [22]. 171 Chianti (2007) 35 WAR 488 at 495 [22]. 172 Chianti (2007) 35 WAR 488 at 496 [24]. Conclusion In the case of this Deed, "the identity of those who might receive income or capital, the amounts they might receive, the period or duration of the trusts, the content from time to time of the fund impressed with those trusts, and the very terms of the trusts themselves all depended wholly or significantly upon the exercise of, or the failure to exercise, powers bestowed by the [Deed] upon the [Trustee]"173. Here, the Trustee failed to exercise effectively the power to advance and to apply in cl 4(b) by the 1994 Resolution. That the debt recorded in the Trust accounts could only have been satisfied out of a sale of the Shares does not provide an answer to an ineffective exercise of the cl 4(b) power by the Trustee. The "risk" that the value of the Shares might fall below the debt recorded emphasises that nothing was advanced or applied by the Trustee. The text and purpose of cl 4 attaches precise legal effect to dealings with the capital and income of the Trust Funds. That precision is more than a mere formality. Specific legal meaning has been given to terms such as "advance", "raise", "pay" and "apply", so that, upon the exercise of a power such as that contained in cl 4(b), one can ascertain precisely the effect that the exercise of the power has on the capital and income of a trust. Unless provisions such as cl 4 are construed, are exercised and operate according to their terms, the potential for imprecise or wrongful dealings with trust property may be increased. Imprecise and wrongful dealings with trust property concern and affect not only a trust, its trustee and its beneficiaries but also third parties dealing with that trust. It remains to consider the other arguments advanced by the Executors. Action for money had and received The next issue is whether making the 1994 Resolution and recording a liability of $3,904,300 to Mr and Mrs Nemes in the Trust accounts entitled Mr and Mrs Nemes to maintain an action for money had and received against the Trustee for that sum, and whether the Trustee effectively covenanted to repay that existing debt in the Deed of Charge. The Executors' claim for money had and received to recover the debt secured by the charge referred to in the Deed of Charge cannot succeed. First, there was no effective charge as there was no debt to secure. A charge is a security for a debt or other legal or equitable obligation. As the Court of Appeal 173 Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at acknowledged174, one cannot have a charge in a vacuum175. Here, there was no debt to secure. The Deed of Charge was without legal effect. Second, a beneficiary may maintain an action for money had and received against a trustee only where there remains nothing for the trustee to do except to pay over the money to the beneficiary and the trustee admits itself to be indebted to the beneficiary176. But, in this appeal, the first limb was absent because the 1994 Resolution did not vest any asset of the Trust in Mr and Mrs Nemes. Put another way, so long as the Trust continued, no action for money had and received was maintainable by Mr and Mrs Nemes against the Trustee until such time as the Trustee came to hold some asset on bare trust for them and admitted as much to them. At no time did the Trustee hold anything on bare trust for Mr and Mrs Nemes. The Shares continued to be held by the Trust, as recorded in the balance sheet of the Trust. Further, where, as here, a trustee maintains active duties as trustee and does not hold the relevant assets on a bare trust, a claim for money had and received is not maintainable, because otherwise beneficiaries could use the claim to circumvent the equitable defences available to trustees177. Estoppel The Executors also relied upon estoppel by deed and estoppel by convention. The Executors submitted that by executing the Deed of Charge (which included Recital D and the cl 5 covenant178), the Trustee was estopped from denying the legal effectiveness of the Deed of Charge because the Deed of Charge operates according to its terms as a legally effective instrument or 174 Fischer v Nemeske Pty Ltd [2015] NSWCA 6 at [88]-[89]. 175 HCK China Investments Ltd v Solar Honest Ltd (1999) 165 ALR 680 at 726-727 [258]-[259] citing Jacobson v Williams (1919) 48 DLR 51 at 57. 176 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 541 [67]; [2001] HCA 68 and the authorities cited therein. 177 See, eg, Turner v New South Wales Mont de Piete Deposit and Investment Co Ltd (1910) 10 CLR 539 at 553, 556; [1910] HCA 15; R v Brown (1912) 14 CLR 17 at 25; [1912] HCA 6. See also Pardoe v Price (1847) 16 M & W 451 at 458-459 [153 ER 1266 at 1269]. 178 See [138] and [140] above. because, on its execution, the Deed of Charge perfected the creation of a debt owed by the Trustee as trustee of the Trust to Mr and Mrs Nemes or, at the very least, because it constituted the exercise of the power under cl 4(b) of the Deed. These submissions should be rejected. First, estoppel by deed does not arise because, for the reasons set out above179, the Deed of Charge was legally ineffective. The Deed of Charge was without legal effect because there was no debt to secure. Next, the amount allegedly loaned by Mr and Mrs Nemes was, in fact, never received by the Trust. In equity, no estoppel could arise in respect of a receipts clause in a deed (such as Recital D in the Deed of Charge180) where the money recited to have been received was not, in fact, paid or where the loan recited to have been advanced was not, in fact, made181. The execution of the Deed of Charge could not, and did not, perfect the creation of a debt owed by the Trust to Mr and Mrs Nemes. Similarly, the Deed of Charge could not perfect the exercise of the power under cl 4(b) of the Deed recorded in the 1994 Resolution. Neither the Deed of Charge nor the Charge Resolution182 was made in the exercise of the power under cl 4(b) of the Deed. Third, in relation to both estoppel by deed and estoppel by convention, an estoppel by a trustee in relation to a beneficiary cannot bind other beneficiaries unless the other beneficiaries participate in the conduct giving rise to the estoppel183. Here, it was not contended that the other specified beneficiaries of the Trust were precluded from contending that what the Trustee did was beyond power and that the Trustee had no right of indemnity against the Trust Funds. Fourth, there can be no estoppel by convention. Estoppel by convention is a doctrine whereby parties who have conducted their relations with each other on an agreed or assumed state of affairs (adopted as the conventional basis of their 179 See [186]. 180 See [138] above. 181 Petersen v Moloney (1951) 84 CLR 91 at 100; [1951] HCA 57; Labracon Pty Ltd v Cuturich (2013) 17 BPR 32,497 at 32,522 [162]-[164] citing Greer v Kettle [1938] AC 156 at 170-172. See also Mainland v Upjohn (1889) 41 Ch D 126 at 136; Burchell v Thompson [1920] 2 KB 80 at 86. 182 See [137] above. 183 Trustee Solutions Ltd v Dubery [2007] 1 All ER 308 at 320 [50]. relationship) will, in proceedings against one another, be estopped from denying that agreed or assumed state of affairs184. It is not dependent on the existence of a deed, or even writing. Here, the Executors seek to take the notion of holding the parties to the Deed of Charge to the "agreed or assumed state of affairs" stated in that Deed of Charge and then extend that "agreed or assumed state of affairs" to the Trust and other Specified Beneficiaries of the Trust. That is not permissible. Estoppel by convention is limited to the parties to the conduct relied upon in proceedings against one another. That is not this appeal. In this appeal, it is both unnecessary and undesirable to address the unresolved debate about whether Australia recognises three categories of estoppel and, if it does, the extent to which this division should remain and how it might be applied. Conclusion and orders The appeal should be allowed and the Executors should pay the appellants' costs in this Court. The orders of the Court of Appeal made on 11 February 2015 should be set aside and, in lieu thereof, the following orders should be made: Appeal allowed. Set aside orders 1, 2 and 4 of the Short Minutes of Order made by Stevenson J on 24 March 2014 and, in lieu thereof, make the following orders and declarations: a declaration that Nemeske Pty Ltd is not indebted to Lorand Loblay and Karen Loblay as executors of the estate of the late Emery Nemes; a declaration that the 1994 Resolution was of no effect; a declaration that the Deed of Charge was of no effect; and (D) Lorand Loblay and Karen Loblay as executors of the estate of the late Emery Nemes to pay the plaintiffs' costs. The second and third respondents to pay the appellants' costs. 184 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244; [1986] HCA 14. See also Labracon Pty Ltd v Cuturich (2013) 17 BPR 32,497 at 32,513 [106] and the authorities cited therein.

HIGH COURT OF AUSTRALIA Matter No B61/2018 AND APPELLANT RESPONDENTS Matter No B62/2018 AND APPELLANT RACQ INSURANCE LIMITED RESPONDENT Matter No B63/2018 AND APPELLANT RACQ INSURANCE LIMITED RESPONDENT Hsu v RACQ Insurance Limited Lee v RACQ Insurance Limited [2019] HCA 28 4 September 2019 B61/2018, B62/2018 & B63/2018 ORDER Matter No B61/2018 The appeal is allowed. The third respondent is to pay the appellant's costs. The order of the Court of Appeal of the Supreme Court of Queensland made on 1 June 2018 is set aside and in lieu thereof it is ordered: the appeal to the Court of Appeal is allowed and the orders of the trial judge made on 23 March 2017 are set aside; the sum of $3,350,000.00 judgment for the appellant on his claim against the third respondent (clear of rehabilitation expenses by the third respondent pursuant to the Motor Accident Insurance Act 1994 (Qld)), with the date of judgment to take effect pursuant to r 660(3) of the Uniform Civil Procedure Rules 1999 (Qld) on 23 March 2017; the counterclaim of the third respondent against the appellant is dismissed; the third respondent pay the appellant's costs of and incidental to his claim on the indemnity basis; and the third respondent pay the appellant's costs of and incidental to the third respondent's counterclaim and of the appeal to the Court of Appeal on the standard basis. Matter No B62/2018 The appeal is allowed with costs. The order of the Court of Appeal of the Supreme Court of Queensland made on 1 June 2018 is set aside and in lieu thereof it is ordered: the appeal to the Court of Appeal is allowed; the orders of the trial judge dated 23 March 2017 are set aside and in lieu thereof judgment for the appellant on the respondent's counterclaim against the appellant; the respondent pay the appellant's costs of the counterclaim on the standard basis; and the respondent pay the appellant's costs of the appeal to the Court of Appeal on the standard basis. Matter No B63/2018 The appeal is allowed with costs. The order of the Court of Appeal of the Supreme Court of Queensland made on 1 June 2018 is set aside and in lieu thereof it is ordered: the appeal to the Court of Appeal is allowed; the orders of the trial judge dated 23 March 2017 are set aside and in lieu thereof judgment for the appellant on the respondent's counterclaim against the appellant; the respondent pay the appellant's costs of the counterclaim on the standard basis; and the respondent pay the appellant's costs of the appeal to the Court of Appeal on the standard basis. On appeal from the Supreme Court of Queensland Representation G W Diehm QC with M M Callaghan for the appellant in B61/2018 (instructed by Slater & Gordon Lawyers) J M N Hewson for the first respondent in B61/2018 and the appellant in B63/2018 (instructed by VBR Lawyers) M Grant-Taylor QC with J M N Hewson for the second respondent in B61/2018 and the appellant in B62/2018 (instructed by Littles Lawyers) R J Douglas QC with B F Charrington for the third respondent in B61/2018 and the respondent in B62/2018 and B63/2018 (instructed by Gilchrist Connell Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Hsu v RACQ Insurance Limited Lee v RACQ Insurance Limited Insurance law – Motor vehicles – Personal injury – Where appellant injured in motor vehicle collision – Where appellant gave evidence father driving vehicle at time of collision – Where appellant alleged injuries caused by negligence of father – Where appellant’s blood located on driver's airbag – Where expert evidence relating to possible source of blood – Where expert evidence relating to seatbelt and airbag design – Where trial judge concluded appellant driving vehicle – Where Court of Appeal dismissed appeal – Whether trial judge's findings glaringly improbable or contrary to compelling inferences. Appeal – Rehearing – Where trial judge drew inferences and made findings of fact based on lay and expert evidence – Where Court of Appeal found inferences wrong in material respects – Whether Court of Appeal erred in failing to conclude trial judge misused advantage as trial judge – Whether Court of Appeal failed to conduct "real review" of evidence given and trial judge's reasons for judgment. Words and phrases – "contrary to compelling improbable", "real review", "trial judge's advantage". inferences", "glaringly KIEFEL CJ. The evidence relevant to the issue raised by these appeals is detailed in the reasons of Bell, Gageler, Nettle and Edelman JJ. It will be necessary for me to refer only to critical aspects of it. I agree with the orders proposed by their Honours for the reasons given, and wish only to add the following regarding the Court of Appeal's analysis of the evidence. The appellant in the first appeal was seriously injured as a result of a collision between the motor vehicle in which he was travelling and another motor vehicle. The driver of his vehicle was at fault. The appellant claimed that his father was the driver. RACQ Insurance Limited ("the RACQ") defended the action on the basis that that claim was false and that the appellant himself had been the driver when the accident occurred. Each of the parties sought to prove the factual scenario for which they contended by expert evidence of different kinds, from which inferences could be drawn. When considering the Court of Appeal's reasons, it is useful to bear in mind what fact a party has undertaken to prove, and to identify the evidence by which it seeks to prove it and the evidence by which the other party seeks to meet and deal with that case. The reasons of the Court of Appeal commenced with a detailed review of the trial judge's findings. McMurdo JA was obliged to make a number of corrections to those findings. In relation to the trial judge's rejection of the evidence of the appellant and his mother, his Honour observed1 that the statement that the appellant's evidence had been given through an interpreter was incorrect. His Honour did not consider that that error affected the trial judge's findings of credit, or the lack thereof. So much may be accepted. But the rejection of their evidence did not mean that the appellant was unable otherwise to prove his case or that the RACQ had succeeded in establishing that the appellant was the driver. Some of the other evidence, such as the medical evidence relating to the injuries suffered by the appellant, was neutral in the process of evaluation as was the fact that the father had not given evidence2. McMurdo JA made other, more important, corrections to the findings. One of these concerned the possibility, for which the RACQ had contended, that the appellant had been moved from the driver's seat to the passenger seat behind the driver's seat, where he was first observed by the driver of the other vehicle involved in the collision. That person arrived at the scene very shortly after the collision. McMurdo JA was strongly of the view that there would have been considerable practical difficulties for the father in relocating the appellant from the driver's seat within such a short period of time. 1 Lee v Lee (2018) 84 MVR 316 ("Lee") at 340 [127]. 2 Lee (2018) 84 MVR 316 at 342 [140], 343 [142]. These factors were sufficiently compelling for his Honour to state that, on the basis of the evidence to this point, he would have held that the appellant was not the driver3. His Honour may be understood to have meant that unless there was evidence which prevented that preliminary conclusion, the appellant's case was made out. The evidence that his Honour went on to consider was the "DNA evidence". This was evidence as to the presence of the appellant's blood on the driver's airbag which had been led by the RACQ through its medical witness, Dr Robertson. The evidence, McMurdo JA observed, had been most influential in the trial judge's reasoning4. In McMurdo JA's view two inferences were available from that evidence5 and one was more probable than the other. It was quite probable that the blood came to be on the driver's airbag because the appellant had been in the driver's seat, due to contact between the appellant's bleeding facial and teeth injuries and the airbag. The alternative hypothesis, that the appellant's father had transferred blood from the appellant's injuries to the airbag via his hands, was less probable. His Honour concluded that the trial judge's preference for the first hypothesis could not be said to be wrong6. The effect of its acceptance was to weaken the Given the finding made by his Honour that it was improbable that the father could have moved the appellant from the driver's seat to the rear seat in the time available, it is not obvious that the DNA evidence compelled a conclusion that the appellant was present in the driver's seat. If the DNA evidence was the only other evidence to be taken into account, it was not a matter of choosing which of the two hypotheses it raised was the more probable in isolation from that earlier finding. Each hypothesis would have to be considered in light of the level of certainty which attended that finding. There were other matters which it was necessary to consider but which were not taken into account. As the joint reasons explain, it is by this means that the Court of Appeal fell into error. These matters affected the weight which 3 Lee (2018) 84 MVR 316 at 343 [143]. 4 Lee (2018) 84 MVR 316 at 343 [144]. 5 Lee (2018) 84 MVR 316 at 344 [150]. 6 Lee (2018) 84 MVR 316 at 344 [152]. 7 Lee (2018) 84 MVR 316 at 344 [151]. could be given to the DNA evidence and effectively forestalled any consideration of the two hypotheses. In the first place, the DNA evidence was based upon an erroneous assumption. The evidence given by Dr Robertson about the presence of the appellant's blood on the driver's airbag and surrounds was based upon an assumption that the appellant was unrestrained by the driver's seatbelt at the time of the collision. In the second important correction to the trial judge's findings, but consistently with the cases of each of the parties, McMurdo JA had found that it was more probable than not that the driver was wearing the seatbelt provided8. This finding necessitated consideration of the evidence of Dr Grigg, the engineer called by the appellant. Dr Grigg's evidence was unchallenged. It was to the effect that a driver restrained by the type of seatbelt provided would have been immediately pulled back into the driver's seat upon impact due to the operation of the seatbelt pre-tensioners. So understood, had the appellant been the driver, the blood on the airbag could not be accounted for by direct contact between the appellant's face and the airbag. It must have come to be there by other means. The finding concerning the use of the seatbelt and Dr Grigg's evidence of the seatbelt's operation rendered the DNA evidence of little, if any, value. The RACQ could not make out its case that the appellant was the driver. Nothing remained to prevent the Court of Appeal acting upon the foreshadowed conclusion that the appellant's case was made out. 8 Lee (2018) 84 MVR 316 at 341 [134]. Bell Nettle Edelman BELL, GAGELER, NETTLE AND EDELMAN JJ. These three appeals arise from a motor vehicle collision in which the appellant in the first appeal was rendered an incomplete tetraplegic. At the time, the appellant in the first appeal, then a 17-year-old youth, was travelling in a Toyota Tarago ("the Toyota") with his mother, Chao-Ling Hsu (the appellant in the second appeal), his father, Chin-Fu Lee (the appellant in the third appeal), and his two younger brothers, James and Adam. The appeals are brought on the same grounds and the interests of the three appellants are coincident. For convenience, the appellant in the first appeal will be referred to as "the appellant" and the appellants in the second and third appeals will be referred to as "the mother" and "the father" respectively. The appellant brought proceedings in the Supreme Court of Queensland (Boddice J) claiming damages for negligence against the father, the mother and RACQ Insurance Limited ("the RACQ"), the compulsory third-party insurer of the Toyota. The case pleaded against the father was that he was the driver of the Toyota. The case pleaded against the mother was wholly defensive: if, as asserted by the RACQ, but denied by the appellant, the appellant was driving the Toyota, the father and the mother owed the appellant a duty of care which was breached in all the circumstances. The collision was caused by the negligence of the driver of the Toyota: as it rounded a bend on a relatively narrow, unmarked bitumen road on North Stradbroke Island, it encountered a Nissan Patrol ("the Nissan") travelling in the opposite direction. The driver of the Nissan, David Hannan, swerved to the left and braked but the Toyota swerved to the right, colliding with the Nissan head- on, on the Nissan's side of the road. The sole issue at the trial was the identity of the driver of the Toyota. The collision occurred at around 1.30 pm on 25 September 2013. In its aftermath, Mr Hannan was concerned about the risk of fire. He got out of the Nissan and carried his dog to a point about 30 metres from the site of the collision. He then returned to the vehicles. He estimated that this took him between 30 and 90 seconds. At this time there was no-one in the driver's seat of the Toyota. He recalled that there were two adults and three children in the vehicle. The father was standing in the area between the first and second row of seats. He was trying to help one of the children. Mr Hannan opened the sliding door of the Toyota and the father passed the first child to him. Mr Hannan walked some metres and placed the child on the ground. The father repeated the manoeuvre with the other children although Mr Hannan could not remember whether he assisted with two or three children. While Mr Hannan was unable to state who had been driving the Toyota, in an earlier statement he said that there were three younger male children in the back seat and from what he saw he believed that the father must have been driving at the time of the collision. Bell Nettle Edelman Jeffery Harvey was among the police officers who attended the scene while the occupants of the Toyota were still present. He spoke with a number of people including Mr Hannan. He also spoke with the father, making use of a civilian at the scene who acted as an interpreter. The appellant and his family came from Taiwan in 2008. Mr Harvey recalled that he needed an interpreter to speak with all of them. He believed that the father identified himself as the driver of the Toyota. Mr Harvey commenced making notes at 2.22 pm. He recorded the positions of the occupants of the Toyota at the time of the collision: the father in the driver's seat, the mother in the front passenger seat, the appellant behind the driver, James behind the mother, and Adam in the middle. Senior Constable Pepper, the principal investigating officer, attended the scene later that afternoon. By the time he arrived, none of the persons involved in the collision remained at the scene. Senior Constable Pepper does not appear to have been informed of the account obtained by Mr Harvey. Senior Constable Pepper examined the Toyota and noted, among other things, that there was apparent bloodstaining on the driver's airbag ("the airbag") and that the driver's seatbelt was buckled. He believed that the driver's seat was reclined slightly. When he returned from the scene, Senior Constable Pepper spoke to a volunteer fireman who attended the collision. Senior Constable Pepper was given to understand that the occupants of the Toyota had not been cooperative in identifying the driver. A "forensic crash unit incident summary sheet" completed by Senior Constable Pepper was in evidence. This recorded that the driver of the Toyota was unknown as the occupants were refusing to state who was driving it, but that inquiries indicated that it may have been an unlicensed 16-year-old male. It was asserted that the driver was not wearing a seatbelt and that the seatbelt appeared to have been clipped in place to eliminate the warning beep. It was also noted that on 8 October 2013 the appellant was spoken to in hospital by police and that he did not recall much about the collision but said that his father was the driver. Senior Constable Pepper arranged for a sample of bloodstaining from the interior of the Toyota to be taken for DNA testing. Apart from the bloodstains on the airbag there were also bloodstains in the well between the driver's seat and the passenger seat behind it. Only the bloodstaining on the airbag was tested. Samples were taken from three locations on the airbag using the same swab. The appellant and the father voluntarily supplied samples of their DNA. The results of testing established that the blood on the airbag came from the appellant. The RACQ counterclaimed, in deceit, against the appellant, the mother and the father for the recovery of payments made to each upon the representation, pleaded as false, that the father was the driver of the Toyota. The RACQ's case Bell Nettle Edelman depended upon establishing that the bloodstains on the airbag were the result of direct contact with the appellant's face, which was bleeding from injuries sustained in the collision. On this case, in the immediate aftermath of the collision the father, who was seated behind the driver, lowered the driver's seat and pulled the appellant back into the passenger compartment, seating him in the seat behind the driver. The appellant and his mother each gave evidence that the father was driving. Their accounts of the positions occupied by each occupant of the Toyota accorded with the account Mr Harvey recorded at the scene. On the appellant's case, his blood must have been transferred to the airbag by a third person. Photographs taken at the scene showed the father with blood on his hands. A doctor who rendered assistance at the scene satisfied himself that the father did not have any injuries although he noticed that the father had bloodstains on the palms of both hands. The mother, who was also badly injured, was trapped inside the Toyota. The appellant argued that it was likely that the father wiped his, the appellant's, blood from his hands on the deflated airbag in the course of attempting to assist the mother. The father did not give evidence. A statement that he made to an insurance investigator was tendered in the RACQ's case. The statement was taken with the assistance of an interpreter. In the statement the father said that he was driving the Toyota. He said that when he saw the Nissan coming towards him he had tried to steer to the left but that he had trouble with the steering. He said that, after the collision, he tried to get out of the vehicle but he could not remove his seatbelt. He managed to move his seat backwards which enabled him to get out of the seat and the seatbelt. He said that the blood on the driver's seat was not the appellant's blood and "[t]hat would be my blood as I was bleeding from my hands". The evidence did not suggest that the father had suffered any injury to his hands. Nor did the evidence suggest that there was any difficulty with the mechanism of the Toyota's steering. The trial judge formed an adverse impression of the credibility of the appellant and the mother. His Honour recorded that he had made allowance for the fact that their evidence was given with the assistance of an interpreter. In the case of the appellant's evidence, his Honour was mistaken; the appellant gave evidence in English without the assistance of an interpreter. His Honour rejected the evidence of each of them and found that the appellant was driving the Toyota at the time of the collision. The appellant's claim was dismissed and judgment was given in favour of the RACQ on its counterclaim. The appellant and his parents were ordered to pay the RACQ the sum of $439,840.96 and the parents were ordered to pay the RACQ a further sum of $234,428.41. Bell Nettle Edelman The appellant, the mother and the father appealed to the Court of Appeal of the Supreme Court of Queensland (Fraser, Philippides and McMurdo JJA). The leading judgment in the Court of Appeal was given by McMurdo JA. McMurdo JA identified critical errors in the trial judge's findings, concluding that, save for the inference to be drawn from the DNA evidence, it was "much more likely" that the appellant was not the driver of the Toyota9. However, the the DNA evidence, appellant's case10. Nonetheless, his Honour characterised the case as "very closely balanced". At this juncture McMurdo JA stated that the Court of Appeal's task was to re-hear the case "but not without regard to the decision of the trial judge". His Honour concluded that it had not been shown that the trial judge had misused his advantage in seeing and hearing the appellant and his mother give evidence, nor was the trial judge's decision "glaringly improbable" or "contrary to compelling inferences"11. The appeals were dismissed with costs. in McMurdo JA's analysis, substantially weakened On 16 November 2018, Bell, Keane and Nettle JJ granted the appellant and his father and mother special leave to appeal. The appeals are brought on two grounds. The first ground challenges the adequacy of the Court of Appeal's reasons. It is contended that on the determinative issue, being the inferences to be drawn from the DNA evidence, McMurdo JA failed to engage with a critical argument based on unchallenged expert evidence on which the appellant relied. The second ground challenges the Court of Appeal's restraint in the face of the trial judge's "advantage" in circumstances in which it is argued that the finding that the appellant was the driver of the vehicle was contrary to the compelling inferences from uncontroverted evidence. The complaint as to the adequacy of the Court of Appeal's analysis of the inferences to be drawn from the DNA evidence is subsumed by the second ground of appeal, which, for the reasons to be given, must be upheld. A number of factual controversies were resolved by the Court of Appeal and are not in issue in these appeals. It suffices for present purposes to refer to the expert evidence that is the subject of the first ground of appeal. 9 Lee v Lee (2018) 84 MVR 316 at 343 [143]. 10 Lee v Lee (2018) 84 MVR 316 at 344 [151]. 11 Lee v Lee (2018) 84 MVR 316 at 344 [152]. Bell Nettle Edelman The expert evidence Dr Grigg, a mechanical engineer with extensive experience in the investigation of motor vehicle accidents, was called in the appellant's case. Two reports prepared by Dr Grigg were in evidence. In the second report, Dr Grigg described the operation of the airbag and the seatbelts fitted to the front seats in a Toyota Tarago of the same model as the Toyota. Supplemental restraint system (SRS) airbags of the type fitted to the Toyota are deployed when the inflator, a solid chemical gas generator, receives a signal from crash sensors. The sensors detect sudden deceleration and an electrical signal from the diagnostic module causes the gas generator to fire in an explosive manner producing gas, which deploys the airbag. Inflation typically takes about 0.04 seconds and deflation occurs about 0.2 seconds after impact. The ordinary rate of deflation is typically less than 0.2 seconds. The airbags are made from a synthetic material with some form of protective coating, which protects the fabric from scorching from the heat generated during deployment. The front seatbelts in the Toyota were equipped with pre-tensioners, which are activated by the airbag control module. The pre-tensioners fire when the airbag is deployed. As Dr Grigg explained in his oral evidence, when triggered, the pre-tensioners produce a powerful force pulling the wearer back against the seat. This may be contrasted with conventional, inertia seatbelts that serve merely to prevent forward movement beyond a fixed point. The airbag is housed in the steering-wheel boss. The plastic cover of the boss is designed to break into upper and lower flaps when the airbag is deployed. The lower Y-shaped plastic flap has a tendency to spring back to its original position after deployment pressing on the deflated airbag. When the airbag is inflated the plastic flaps are on the windscreen side of the airbag. The bloodstaining was predominantly on the windscreen side of the airbag (when inflated) on both the left and the right side. There was bloodstaining on the underside of the airbag beneath the lower plastic flap. There were no bloodstains on the central front portion of the airbag, which, when inflated, faced the driver. Dr Robertson, whose speciality is in forensic medicine and pathology, was retained by the RACQ to provide an expert opinion on the likely source of the bloodstaining on the airbag. Dr Robertson considered that the appearance of the Bell Nettle Edelman bloodstaining was consistent with close contact between the airbag and a person with heavily bleeding facial injuries. The staining was not consistent with the deposit of blood by dripping or splatter. Dr Robertson did not examine the airbag. Her opinion was based on photographs of the airbag taken by the police. She could not exclude that the blood may have been deposited by some means other than direct contact with the bleeding source but she considered that the absence of impressions of fingerprints or handprints made the hypothesis of transfer by a third party less likely. that bloodstain pattern analysis is a "notoriously inexact science", one in which there is considerable scope for subjective judgment and a "reasonably high error rate in any assessment". She said that she had taken into account the fact that the presence of a large bloodstain on the left side of the collapsed airbag was consistent with the appellant's dental injuries, which were to the left side of his mouth. Dr Robertson was unaware at the time she formed her opinion that the bloodstaining on the left of the airbag was predominantly on the windscreen side when it was deployed. Her attention was drawn to this circumstance in cross- examination and she maintained her opinion, stating that she had "not discounted that there could have been even quite small movement of the face following initial contact with the airbag". Dr Robertson had not previously examined blood patterns on an airbag and she had no knowledge of how airbags are deployed. She accepted that blood on synthetic material such as the airbag material can spread before it soaks in. Nonetheless, she said that she expected that some trace, such as a handprint, would be visible had the blood been transferred by an intermediary. The appearance of the bloodstaining, in her view, made it extremely unlikely that it was transferred from a person's hand. Dr Hallam, a DNA forensic biology consultant, explained that, because of the high concentration of DNA in blood, it was possible, if the appellant's blood had been transferred to the airbag by a third person, that only the appellant's DNA would be detected from the sample. Dr Hallam considered it was possible that the blood could have been transferred to the airbag by an intermediary. The trial judge's analysis The trial judge described the appellant and the mother as evasive in giving evidence. The appellant had been "particularly guarded" in his responses. Bell Nettle Edelman His Honour considered the mother's account, that the father got out of the Toyota through the driver's door immediately after the collision, as inherently improbable given that the seatbelt was locked in position after the collision12. As will appear, this conclusion appears to be at odds with his Honour's finding that the driver was not wearing the seatbelt. His Honour found that Mr Hannan's evidence was the most reliable account of the collision. A critical consideration in assessing the RACQ's case was how the appellant in his paralysed state could have been moved from the driver's seat to the rear passenger seat in the brief interval before Mr Hannan arrived. The trial judge reasoned that, if the father was able to extricate himself from the driver's seat in no more than 90 seconds, there was no reason to find that he could not have removed the appellant into the back seat in the same period of time13. The trial judge found, contrary to the case put by each party, that the driver had not been wearing a seatbelt. The conclusion took into account that the seatbelt was in the locked position after the collision. His Honour thought it likely that the driver had buckled it to disengage the alarm14. The analysis took into account acceptance of the opinion of a medical expert, Dr Weidmann, who considered that it was more likely that the appellant's spinal injury would have been sustained were he the driver and had he not been wearing a seatbelt. The trial judge considered that Dr Robertson's evidence was highly persuasive as to the probable explanation for the presence of the appellant's blood on the airbag. Dr Robertson's opinion, that the appellant's face may have moved after deployment of the airbag, provided a reasoned, rational explanation for the fact that the bloodstaining was heaviest towards the underside of the airbag15. Given the finding that the driver was not wearing the seatbelt, it was unnecessary for his Honour to consider the likelihood of this explanation being correct if the appellant were held against the driver's seat by the seatbelt. His Honour rejected as implausible the appellant's case that the appellant's blood on the father's hands might have been transferred to the airbag. Had the father been minded to wipe 12 Lee v Lee (2017) Aust Torts Reports ¶82-328 at 64,157 [194] per Boddice J. 13 Lee v Lee (2017) Aust Torts Reports ¶82-328 at 64,159 [212] per Boddice J. 14 Lee v Lee (2017) Aust Torts Reports ¶82-328 at 64,160 [217] per Boddice J. 15 Lee v Lee (2017) Aust Torts Reports ¶82-328 at 64,158-64,159 [208]-[210] per Bell Nettle Edelman his hands, his Honour observed, he had "his own clothes or the seats of the Tarago" on which to do so16. The Court of Appeal McMurdo JA recognised that the trial judge's recollection of the appellant's evidence as having been given through an interpreter was mistaken. However, his Honour considered that that mistake did not mean that the trial judge's credibility finding had not been justifiably influenced by the way the appellant's evidence was given. McMurdo JA did not consider that the appellant's criticisms of the trial judge's credibility finding justified disregarding the trial judge's impression of the credibility of the appellant and his mother17. At the commencement of McMurdo JA's analysis, he observed18: "This case was and is finely balanced and it requires an assessment of the probabilities of competing hypotheses where many things are unknown. The question in this court is whether the decision of the trial judge was erroneous, having regard to the advantages of a trial judge in deciding factual questions where the credibility of witnesses was critical to the outcome." As will appear, his Honour returned at the conclusion of his analysis to the advantages of the trial judge in seeing and hearing the evidence of the appellant and his mother. This restraint in the face of the trial judge's advantage is the subject of the appellant's second ground. Notably, McMurdo JA did not in fact approach the determination on the footing that the credibility of witnesses was critical. As the first sentence of the above passage suggests, his Honour approached this as a circumstantial case. For McMurdo JA, the critical circumstance was that, within 90 seconds of the collision, the paralysed appellant was seen by Mr Hannan in the second row of seats. Contrary to the trial judge's analysis, McMurdo JA considered that, in the aftermath of the collision, it would have been much more difficult for the father to remove the appellant from the driver's seat into the rear passenger seat than for the father to extricate himself from the driver's seat in no more than a 16 Lee v Lee (2017) Aust Torts Reports ¶82-328 at 64,159 [211] per Boddice J. 17 Lee v Lee (2018) 84 MVR 316 at 340 [127]. 18 Lee v Lee (2018) 84 MVR 316 at 319 [8], citing Fox v Percy (2003) 214 CLR 118 at 128 [29]; [2003] HCA 22. Bell Nettle Edelman minute or so19. The conclusion took into account a number of uncontroversial circumstances. First, the appellant was unable to move. Secondly, the Toyota had come to rest after the collision with its front end lower than its rear, such that the father would have had to pull the appellant from the driver's seat up a slight grade. Thirdly, the space between the driver's seat and the passenger's seat behind it would have been taken up by the driver's seat, if it had been fully reclined. Fourthly, the father would have had to pull the appellant back into the rear passenger seat while standing to the side of it in front of his other injured sons. Finally, there was the difficulty of lowering the driver's seat from the father's position in the rear passenger section, given that the lever was on the side of the driver's seat adjacent to the driver's door20. As McMurdo JA observed, the question of whether the driver was wearing the seatbelt was potentially decisive. This was because, if the appellant was the driver, and if he was not wearing the seatbelt, it was highly unlikely that his father would have moved him into the rear seat. The more obvious and the easier way to move the appellant would have been through the driver's door. It was not a realistic possibility that, in the stress of the situation, and in the short interval before Mr Hannan arrived, the father would have been so concerned to make it look as if the appellant had not been the driver, that he would not only remove the appellant from the driver's seat but then place the appellant into the rear passenger seat. McMurdo JA concluded that, if the driver was not wearing the seatbelt (as the trial judge found), there was "no real prospect that the driver was the appellant"21. McMurdo JA considered that there was, however, little support for an inference that the seatbelt was not worn by the driver. There was no direct evidence to support such a finding and it was no more than a theoretical possibility that the seatbelt had been buckled so that, when the driver sat on it, he would not be troubled by the alarm. It was likely that the driver was wearing the seatbelt. His Honour considered there were a number of possible explanations for why, assuming the seatbelt was worn by the driver, the photographs taken after the collision showed that it was buckled. These explanations included the 19 Lee v Lee (2018) 84 MVR 316 at 341 [132]. 20 Lee v Lee (2018) 84 MVR 316 at 341 [131]-[132]. 21 Lee v Lee (2018) 84 MVR 316 at 341 [133]. Bell Nettle Edelman possibility that it had been fastened by the paramedics to keep it out of the way as they endeavoured to remove the mother from the Toyota22. McMurdo JA agreed with the trial judge that the negligence of the driver of the Toyota did not indicate that the driver was inexperienced. As McMurdo JA observed, the reaction of the father may well have been to swerve to the right, given that most of his driving experience had been in Taiwan23. Contrary to the trial judge's finding, McMurdo JA concluded that the appellant's injuries were neutral in that they provided no clear indication of whether he was the driver or a passenger24. Notwithstanding that the father was a defendant, McMurdo JA said it was to be expected that he would have been called in the appellant's case had it been thought that his evidence would be helpful. The likelihood was that, if called, the father's evidence would have been consistent with his statement in asserting that he had been the driver. The inference to be drawn from the failure to call the father was that he would not have given evidence of wiping his bloodstained hands on the airbag. McMurdo JA observed that this did not require a finding that the father did not wipe his hands on the airbag; he may simply have not had a memory of doing so25. McMurdo JA's conclusion that, save for the DNA evidence, it was much more likely that the appellant was not the driver was principally based on the improbability of him having been pulled from the driver's seat and seated in the rear passenger seat where Mr Hannan first saw him26. McMurdo JA's analysis of the DNA evidence is critical to the appellant's challenge on each ground. His Honour noted that the appellant's facial and dental injuries were likely sources for the blood on the airbag27. His Honour recognised that no blood was deposited on the section of the airbag which would have been immediately in front of the driver as the bag inflated but he said that 22 Lee v Lee (2018) 84 MVR 316 at 341-342 [134]-[135]. 23 Lee v Lee (2018) 84 MVR 316 at 342-343 [141]. 24 Lee v Lee (2018) 84 MVR 316 at 342 [136]-[140]. 25 Lee v Lee (2018) 84 MVR 316 at 343 [142]. 26 Lee v Lee (2018) 84 MVR 316 at 343 [143]. 27 Lee v Lee (2018) 84 MVR 316 at 343 [145]. Bell Nettle Edelman this fact "did not prove that the blood on the airbag had not come from the driver"28. His Honour said that Dr Robertson's explanation for how the blood could have come from the driver and yet be deposited on those other parts of the airbag could not be readily rejected. The inherent probability that if the appellant was the driver his blood would be on the airbag was not negated by the locations of the bloodstains on the airbag. His Honour reasoned that, if the appellant was in the driver's seat, the bleeding would have continued after the split second in which the airbag had been fully inflated. The hypothesis in favour of the RACQ's case was therefore "quite probable"29. The same, in his Honour's view, could not be said for the alternative hypothesis advanced by the appellant. While there were other possible explanations for the bloodstaining, McMurdo JA observed that "the question for the trial judge was which of the two hypotheses is the more probable"30. The adequacy of the Court of Appeal's reasons In written and oral submissions in the Court of Appeal, the appellant argued that Dr Grigg's evidence of the operation of the airbag in conjunction with the seatbelt pre-tensioner was inconsistent with acceptance of Dr Robertson's opinion that it was likely that the blood was deposited on the airbag by direct contact with his face. Shortly put, his argument was that, had he been the driver, at the moment of impact he would have been pulled back against the seat and any contact between his face and the airbag before it deflated would have been fleeting and insufficient to explain the location and extent of the bloodstaining. In the course of reviewing the evidence, McMurdo JA referred to Dr Grigg's evidence, noting that each of the front seatbelts was equipped with pre-tensioners, which, when fired, tighten and lock to prevent the person being thrown forward. His Honour did not return to Dr Grigg's evidence when considering which of the competing inferences concerning the DNA evidence was the correct inference. The appellant's argument acknowledges that McMurdo JA's review of the evidence was in many respects comprehensive. Success on his first ground requires demonstration that Dr Grigg's evidence was of such moment that the Court of Appeal's failure to address it when dealing with the inferences to be 28 Lee v Lee (2018) 84 MVR 316 at 343 [146]. 29 Lee v Lee (2018) 84 MVR 316 at 344 [149]. 30 Lee v Lee (2018) 84 MVR 316 at 344 [150]. Bell Nettle Edelman drawn from the DNA evidence amounted to legal error. The appellant seeks to make good that contention by demonstrating that, when Dr Grigg's evidence of the operation of the airbag in conjunction with the seatbelt pre-tensioner is taken together with the other circumstances found by the Court of Appeal, the conclusion that the appellant was the driver of the Toyota is contrary to compelling inferences. Success on the first ground of appeal is thus dependent upon success on the second ground of appeal. For that reason, these appeals do not provide the occasion to consider the circumstances in which an appellate court's failure to deal with a particular line of reasoning might constitute legal error31. The Court of Appeal's treatment of the trial judge's advantage The appellant's second ground fastens on McMurdo JA's concluding observation32: "This factually complex case was very closely balanced. The task of this Court is to rehear the case, but not without regard to the decision of the trial judge. Although there were limitations upon the use which the judge could make of the way in which the appellant and his mother gave their evidence, it is not demonstrated that the trial judge misused the advantage which he had from hearing and seeing this evidence as it was being given. The decision of the trial judge was neither 'glaringly improbable' nor 'contrary to compelling inferences'. The appellant's careful and sometimes forceful arguments do not demonstrate that the decision of the trial judge was erroneous." (emphasis added) This passage is not without difficulty. True it is that McMurdo JA considered that the trial judge's mistaken recollection of the way in which the appellant gave evidence did not justify disregarding his Honour's assessment of his credibility, nor did allowance for the difficulty of assessing the mother's justify disregarding evidence, which was given his Honour's assessment of her credibility33. The rejection of the appellant's and through an interpreter, 31 Macks v Viscariello (2017) 130 SASR 1 at 109 [523]; DL v The Queen (2018) 92 ALJR 636 at 643 [33] per Kiefel CJ, Keane and Edelman JJ, 661 [131] per Nettle J; 356 ALR 197 at 204, 228; [2018] HCA 26, citing Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259, 279. 32 Lee v Lee (2018) 84 MVR 316 at 344 [152]. 33 Lee v Lee (2018) 84 MVR 316 at 340 [127]. Bell Nettle Edelman the mother's evidence did not establish, however, that, contrary to their evidence, the appellant was the driver. The trial judge's conclusion that the appellant was the driver was based upon a line of inferential reasoning proceeding from other, circumstantial, evidence, particularly the forensic evidence. A court of appeal is bound to conduct a "real review" of the evidence given at first instance and of the judge's reasons for judgment to determine whether the trial judge has erred in fact or law34. Appellate restraint with respect to interference with a trial judge's findings unless they are "glaringly improbable" or "contrary to compelling inferences"35 is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence. It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts36. Thereafter, "in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge"37. Here, the trial judge's findings of primary fact were not disturbed. However, in material respects, the Court of Appeal found that the inferences that his Honour drew from those findings were wrong. Notably, the trial judge's finding that the driver was not wearing the seatbelt not only was contrary to each party's case but, if correct, on the Court of Appeal's analysis, would lead to the conclusion that there was no real prospect that the appellant was the driver38. And the trial judge's acceptance of the RACQ's case, that the appellant had been pulled from the driver's seat to the passenger seat immediately behind in 34 Fox v Percy (2003) 214 CLR 118 at 126-127 [25] per Gleeson CJ, Gummow and Kirby JJ; Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 686 [43]; 331 ALR 550 at 558; [2016] HCA 22. 35 Fox v Percy (2003) 214 CLR 118 at 128 [29] per Gleeson CJ, Gummow and Kirby JJ; Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 687 [43]; 331 ALR 550 at 558-559. 36 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 434-435 [144]; [2013] HCA 25; Thorne v Kennedy (2017) 263 CLR 85 at 104 [42]; [2017] HCA 49. 37 Warren v Coombes (1979) 142 CLR 531 at 551 per Gibbs A-CJ, Jacobs and Murphy JJ; [1979] HCA 9; see also Fox v Percy (2003) 214 CLR 118 at 127 [25]. 38 Lee v Lee (2018) 84 MVR 316 at 341 [133]. Bell Nettle Edelman something less than 90 seconds, was, in the Court of Appeal's analysis, unlikely39. Having rejected the essential planks of the trial judge's reasoning, it was not to the point for the Court of Appeal to formulate the question as which of the two hypotheses the trial judge considered to be the more probable40. Nor was it to the point to consider whether the trial judge had been unduly influenced by the DNA evidence41. It was an error for the Court of Appeal to dismiss the appeals in this "very closely balanced" case on the footing that the trial judge's decision was neither glaringly improbable nor contrary to compelling inferences. It was the duty of the Court of Appeal to decide for itself which of the two hypotheses was the more probable. It was the duty of the Court of Appeal to persist in its task of "weighing [the] conflicting evidence and drawing its own inferences and conclusions"42, and, ultimately, to decide for itself which of the two hypotheses was the more probable. It did not. The appellant's second ground is made good. McMurdo JA's restraint in the face of the trial judge's decision had the consequence that his Honour did not return to consider whether his tentative conclusion, contrary to the trial judge's reasoning, that it was much more likely that the appellant was not the driver, was displaced by the DNA evidence. And his Honour's agreement with the trial judge, that the DNA evidence was persuasive, was apt to overlook that the trial judge's acceptance of Dr Robertson's opinion was based upon the assumption that the appellant was unrestrained by the seatbelt at the time of the collision. Proceeding in this fashion was, in turn, to overlook the significance of Dr Grigg's unchallenged evidence regarding the existence and operation of the seatbelt pre-tensioners and the rates of inflation and deflation of an airbag of the type found in the Toyota. The father was the driver of the Toyota In circumstances in which the evidence of the appellant and his mother is not critical to the determination of this largely circumstantial case it is not 39 Lee v Lee (2018) 84 MVR 316 at 343 [143]. 40 Lee v Lee (2018) 84 MVR 316 at 344 [150]. 41 Lee v Lee (2018) 84 MVR 316 at 344 [151]. 42 Dearman v Dearman (1908) 7 CLR 549 at 564; [1908] HCA 84, quoting The Glannibanta (1876) 1 PD 283 at 287; Fox v Percy (2003) 214 CLR 118 at 127 Bell Nettle Edelman appropriate to order a new trial. This Court in the exercise of its appellate jurisdiction may give such judgment as ought to have been given in the first instance43. The RACQ does not challenge the Court of Appeal's conclusion that the driver of the Toyota was wearing the seatbelt. Indeed, that has been its case throughout. It is not correct to argue, as the RACQ does, that it was incumbent on the appellant to establish how his blood came to be on the airbag. The question is whether it is more probable than not that the father was the driver. As McMurdo JA reasoned, the fact that the appellant was located in the rear passenger seat within 90 seconds of the collision is a circumstance powerfully in favour of the conclusion that he was not the driver44. The likelihood that the driver was wearing the seatbelt makes acceptance of Dr Robertson's opinion that the bloodstaining on the airbag was the result of direct contact with the appellant's bleeding face distinctly less sustainable when assessed in light of The RACQ contends that Dr Robertson's opinion is not inconsistent with Dr Grigg's evidence. It argues that the latter should not be understood as suggesting that an airbag deflates much like a balloon. That submission relies on photographs attached to Dr Grigg's second report, which show an airbag of the same description as the airbag in the Toyota in a state of partial deflation following deployment. The RACQ also submits that Dr Grigg did not address to what degree the "coarse airbag fabric may adhere or attach to the driver's person after deployment". The latter submission appears to have been raised for the first time in this Court. No basis for it was explored in evidence. Dr Robertson was unable to estimate the length of contact between the appellant's bleeding face and the airbag that would have been required to deposit the blood other than to say that "it would be more than instantaneous, more than a few – a second or so". Dr Robertson agreed that it could have taken several minutes. She volunteered that contact with the airbag might produce some compression and help to stem the bleeding. Dr Robertson understood that the airbag "would be inflated, at least initially" when in contact with the appellant's face, but she was "not sure if the airbag subsequently deflates after deployment at some stage, but there could still be contact". 43 Judiciary Act 1903 (Cth), s 37. 44 Lee v Lee (2018) 84 MVR 316 at 341 [133]. Bell Nettle Edelman Dr Grigg's evidence of the commencement and rate of deflation of an airbag of the type found in the Toyota was unchallenged. A difficulty with the RACQ's submission based on the photographs appended to Dr Grigg's second report is that the evidence is silent on whether the photographs depict the airbag at the moment of deployment or at some later time. Moreover, even if deflation is to be understood as a gradual process, it remains that within about 0.2 seconds of impact the airbag would have been subsiding towards the steering wheel. Contrary to the Court of Appeal's conclusion, Dr Robertson's opinion that some small movement of the appellant's face could account for the presence of substantial bloodstaining on the windscreen side of the airbag including under the Y-shaped plastic flap at the boss (and the absence of bloodstaining to the front side, which would be expected to make contact with the driver) is not readily reconciled with the finding that he would have been held in place against the driver's seat. In determining whether the appellant proved upon the balance of probabilities that the father was driving the Toyota at the time of the collision, all the circumstances must be taken into account. Contrary to Senior Constable Pepper's understanding, the father appears to have been cooperative at the scene. About an hour after the collision, when spoken to by Mr Harvey, he stated that he was the driver. The presence of the appellant's blood on the airbag appears to have given rise to the hypothesis upon which the RACQ's case relied. As the Court of Appeal recognised, it is an hypothesis that is, to a high degree, improbable: in less than 90 seconds the father pulled the paralysed appellant from the driver's seat and positioned him in the rear passenger seat in which he, the father, had been sitting, where Mr Hannan first saw the appellant. One of the first civilians to arrive on the scene, Mr Hough, saw the appellant lying with his back against the father's chest. The father was cradling the appellant in a seated position, supporting his upper body, while touching his face and calling his name in an apparent attempt to keep him conscious. Mr Hough recalled seeing bright red blood on the appellant's face. A likely explanation for the blood on the father's hands is that it came from the appellant. How the appellant's blood came to be deposited largely on the windscreen side of the airbag (when inflated) is unknown. However, in light of the finding that the driver was restrained by the seatbelt, the likelihood that it was the product of direct contact with the appellant's bleeding face cannot be accounted greater than the likelihood that it was transferred from the father's hands. McMurdo JA's tentative conclusion that it is much more likely that the father was the driver is correct for the reasons that his Honour gave. It is not a conclusion that is weakened, much less contradicted, by the presence of the appellant's blood on the airbag given Dr Grigg's unchallenged evidence of the Bell Nettle Edelman operation of the seatbelt and the airbag. For these reasons the appeals must be allowed. Orders The parties were agreed in this event upon the orders in the first appeal. There should be the following orders: B61 of 2018 – Lien-Yang Lee v Chin-Fu Lee & Ors The appeal is allowed. The third respondent is to pay the appellant's costs. The order of the Court of Appeal of the Supreme Court of Queensland made on 1 June 2018 is set aside and in lieu thereof it is ordered: the appeal to the Court of Appeal is allowed and the orders of the trial judge made on 23 March 2017 are set aside; the sum of $3,350,000.00 judgment for the appellant on his claim against the third respondent (clear of rehabilitation expenses by the third respondent pursuant to the Motor Accident Insurance Act 1994 (Qld)), with the date of judgment to take effect pursuant to r 660(3) of the Uniform Civil Procedure Rules 1999 (Qld) on 23 March the counterclaim of the third respondent against the appellant is dismissed; the third respondent pay the appellant's costs of and incidental to his claim on the indemnity basis; and the third respondent pay the appellant's costs of and incidental to the third respondent's counterclaim and of the appeal to the Court of Appeal on the standard basis. B62 of 2018 – Chao-Ling Hsu v RACQ Insurance Limited The appeal is allowed with costs. Bell Nettle Edelman The order of the Court of Appeal of the Supreme Court of Queensland made on 1 June 2018 is set aside and in lieu thereof it is ordered: the appeal to the Court of Appeal is allowed; the orders of the trial judge dated 23 March 2017 are set aside and in lieu thereof judgment for the appellant on the respondent's counterclaim against the appellant; the respondent pay the appellant's costs of the counterclaim on the standard basis; and the respondent pay the appellant's costs of the appeal to the Court of Appeal on the standard basis. B63 of 2018 – Chin-Fu Lee v RACQ Insurance Limited The appeal is allowed with costs. The order of the Court of Appeal of the Supreme Court of Queensland made on 1 June 2018 is set aside and in lieu thereof it is ordered: the appeal to the Court of Appeal is allowed; the orders of the trial judge dated 23 March 2017 are set aside and in lieu thereof judgment for the appellant on the respondent's counterclaim against the appellant; the respondent pay the appellant's costs of the counterclaim on the standard basis; and the respondent pay the appellant's costs of the appeal to the Court of Appeal on the standard basis.

HIGH COURT OF AUSTRALIA APPELLANT AND COMMISSIONER FOR PUBLIC EMPLOYMENT RESPONDENT Ferdinands v Commissioner for Public Employment [2006] HCA 5 2 March 2006 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of South Australia Representation: S C Churches with S D Ower for the appellant (instructed by Iles Selley Lawyers) C J Kourakis QC, Solicitor-General for the State of South Australia with C A Stevens for the respondent (instructed by Crown Solicitor's Office South Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Ferdinands v Commissioner for Public Employment Industrial law – Police – Termination of appointment – Appellant member of South Australia Police – Appellant convicted of assault contrary to s 39 Criminal Law Consolidation Act 1935 (SA) – Appellant's appointment as member of SA Police terminated – Appellant applied to Industrial Relations Commission for relief against dismissal – Appellant alleged termination of appointment harsh, unjust or unreasonable – Jurisdiction of Industrial Relations Commission to entertain appellant's application. Police – Termination of appointment – Appellant member of SA Police – Appellant convicted of assault – Appellant's appointment as member of SA Police terminated – Whether Police Act 1998 (SA) impliedly repealed provisions of the Industrial and Employee Relations Act 1994 (SA) providing for unfair dismissal. Statutes – Implied repeal. Statutes – International law – State statute – Incorporation of reference in State statute to international convention – Relevance of such incorporation – Whether such incorporation favours adoption of an interpretation favourable to the availability of the convention remedies in the particular case. Statutes – Successive State statutes – Suggested inconsistency between statutory remedies for dismissal of police officers – Whether any such inconsistency or ambiguity resolved by the time sequence of enactment of the statutes – Whether resolved by reference to generality of language and identity of the particular and general character of the legislation – Whether beneficial character of statutory provisions relevant – Whether reference to international convention in a State statute a relevant consideration. Words and phrases – "harsh, unjust or unreasonable". Industrial and Employee Relations Act 1994 (SA). Police Act 1998 (SA). Police (Complaints and Disciplinary Proceedings) Act 1985 (SA). GLEESON CJ. The Industrial and Employee Relations Act 1994 (SA)1 ("the IER Act") provided a procedure whereby certain employees, including public employees, who were dismissed could seek, from the Industrial Relations Commission of South Australia, a determination that the dismissal was harsh, unjust or unreasonable, and an order for re-employment. The Police Act 1998 (SA) ("the Police Act") established a scheme for the control and management of South Australia Police which included provision for termination of the appointment of police officers by the Police Commissioner in certain circumstances. The appellant was convicted of an offence of assault. His appointment was terminated by the Police Commissioner. He applied to the Industrial Relations Commission complaining of harsh, unjust or unreasonable dismissal. The Full Court of the Industrial Relations Court held that the Industrial Relations Commission had no jurisdiction to entertain the application. The Full Court of the Supreme Court of South Australia, by majority, agreed2. Stated in broad terms, it was held that the legislative scheme relating to appointment, and termination of appointment, of police officers under the Police Act was not subject to review under the IER Act. Stated more precisely, it was held that the Police Act, in its application to persons in the position of the appellant, by necessary implication repealed the IER Act3. It was not suggested that there is repugnancy between the two State statutes, in the sense that they create conflicting commands, which cannot both be obeyed, or produce legal rights or obligations which cannot be reconciled; although the implications of a potential order under the IER Act for re- employment of a police officer were not fully explored. Rather, the contention, which was upheld in the South Australian courts, was that there is such contrariety in the two legislative schemes that, by necessary implication, the Police Act excluded the operation of the IER Act in its application to termination of the appointment of a person in the position of the appellant. The problem is one of statutory interpretation; a problem that arises only because the legislature did not state an intention either that the two statutory regimes should both apply in such a case, or that the second regime should apply to the exclusion of the first. The legislature may, by necessary implication, manifest an intention of the 1 This Act is now known as the Fair Work Act 1994 (SA), see Industrial Law Reform (Fair Work) Act 2005 (SA), s 4. 2 Ferdinands v Commissioner for Public Employment (2004) 233 LSJS 110. 3 Goodwin v Phillips (1908) 7 CLR 1; Butler v Attorney-General (Vict) (1961) 106 CLR 268. latter kind, although partial repeal of an earlier statute by a later statute will only be inferred on "very strong grounds"4. An example of such implied repeal is found in Butler v Attorney-General (Vict)5. A Victorian statute of 1943 provided for preference in promotion in favour of discharged servicemen. A Victorian statute of 1946, relating specifically to the public service, provided that, in any appointment to an office in the public service, consideration should be given, first to relative efficiency, and then to relative seniority. A majority in this Court found that the later statute specified with "apparent exhaustiveness" the matters to be considered with respect to public service promotions and left "no room" for preference to discharged servicemen6. Kitto J said that it was in the nature of the later Act, as much as in its words, that its incompatibility with the earlier Act appeared7. The same, it seems to me, applies in the present case. The nature of the Police Act, and its appearance of exhaustiveness on the subject of termination, create the same kind of incompatibility. The two legislative schemes, and the statutory provisions of particular relevance, are set out in the reasons of Gummow and Hayne JJ. The provisions of the Police Act concerning the control and management of the police force are to be understood in a context which includes the history and character of the police force; a context that was considered recently by this Court in Jarratt v Commissioner of Police for New South Wales8, and earlier by Griffith CJ in Enever v The King9. The Police Act makes the Commissioner of Police responsible for the control and management of the police force, subject to the directions of the Minister (s 6). Significantly, however, the capacity for ministerial direction is excluded in certain cases. No ministerial direction may be given to the Commissioner in relation to the appointment, transfer, remuneration, discipline or termination of a particular person (s 7). Section 40 of the Police Act confers a range of powers upon the Police Commissioner in the event that a member of the police force has been found guilty of an offence against a law of the State, the Commonwealth, or another 4 Saraswati v The Queen (1991) 172 CLR 1 at 17 per Gaudron J. (1961) 106 CLR 268. (1961) 106 CLR 268 at 281. (1961) 106 CLR 268 at 280. (2005) 79 ALJR 1581 at 1584 [4]; 221 ALR 95 at 96. (1906) 3 CLR 969 at 975-976. State or Territory, or in the event of a breach of the Code of Conduct established for the maintenance of professional standards of members of the police force. Such a breach may be found by a determination of the Police Disciplinary Tribunal. The powers include termination of appointment, suspension, reduction in pay, transfer, reduction in seniority, fine, reprimand and counselling. The present case concerns an exercise of the power of termination, but the existence of the other powers is relevant to the question whether, in the case of termination, the disciplinary regime set up by the Police Act is intended to be subject to the possible intervention of the industrial regime created by the IER Act. In Jarratt10, it was held that the requirements of procedural fairness applied to a statutory scheme relating to powers of discipline and removal under the Police Service Act 1990 (NSW). The principles applied in that case would operate in the case of the Police Act. A decision of the Commissioner to dismiss a member under s 40 of the Police Act is subject to judicial review by the Supreme Court of South Australia upon the ordinary common law grounds of judicial review of administrative action. We are presently concerned, however, with what is sometimes called merits review. Under the Police Act, and the Police (Complaints and Disciplinary Proceedings) Act 1985 (SA), there is established a special statutory regime for complaints against, and discipline of, members of the police force. There is a Police Complaints Authority and a Police Disciplinary Tribunal. Findings of that Tribunal of a breach of discipline may lead to remittal to the Commissioner for the imposition of punishment11. There is also a Police Review Tribunal. An appeal to the District Court may lie in respect of a decision of the Commissioner to terminate the appointment of a member for physical or mental incapacity or unsatisfactory performance, or in respect of a decision by the Commissioner to terminate the appointment of a member on probation, or in respect of a finding by the Police Disciplinary Tribunal that a member is guilty of a breach of discipline, or in respect of a decision by the Commissioner imposing punishment for a breach of discipline. There is no such appeal available in respect of a decision to terminate the appointment of a member who has been convicted of an offence. Of course, the conviction itself is subject to the ordinary avenues of appellate review, which will vary according to the nature and seriousness of the offence. There is an elaborate system of merits review of decisions relating to transfer, promotion, termination on certain grounds, and discipline. However, the Police Act reserves to the Commissioner the power to decide whether the 10 (2005) 79 ALJR 1581; 221 ALR 95. 11 Police (Complaints and Disciplinary Proceedings) Act 1985 (SA), s 39. appointment of a member of the police force should be terminated following a conviction. The evident reason for that reservation lies in the disciplined nature of the police force, the Commissioner's responsibilities of control and management, and the range of information and considerations that would need to be taken into account in deciding whether, in a particular case, retention of appointment is consistent with such a conviction. In particular, issues of morale and integrity, perhaps extending beyond the circumstances of the individual officer, are likely to arise. The arrangements for control and management of the police force, and for merits review of some kinds of decision by the Commissioner, and the absence of merits review of others, have the appearance of exhaustiveness. Having regard to the nature of the subject of police appointment, discipline, and termination, and to the scheme established by the Police Act to deal with that subject, the Industrial Relations Court and the Full Court of the Supreme Court of South Australia were right to conclude that it would be incompatible with that scheme to treat an exercise of the Commissioner's power under s 40(1)(a) of the Police Act as subject to the industrial regime of the IER Act. The appeal should be dismissed with costs. GUMMOW AND HAYNE JJ. The Police Act 1998 (SA) ("the Police Act") provided for the establishment and management of South Australia Police (referred to in that Act and in these reasons as "S.A. Police"). Section 40(1)(a) of the Police Act provided that "[i]f a member of S.A. Police … is found guilty of an offence under a law of this State, the Commonwealth or another State or a Territory of the Commonwealth" the Commissioner of S.A. Police ("the Police Commissioner") could take any of 12 different kinds of action in relation to that person. One of those actions was to terminate the person's appointment as a member of S.A. Police. Part 6 of Ch 3 of the Industrial and Employee Relations Act 1994 (SA) ("the Industrial Act") provided for relief in certain cases of unfair dismissal of employees, including public employees. At the times relevant to this matter12, an employee whose employment was governed by an industrial instrument, or whose remuneration was less than a specified sum13, and who had been dismissed, might apply to the Industrial Relations Commission of South Australia ("the Industrial Commission") for a determination that the dismissal was harsh, unjust or unreasonable. If the Industrial Commission was satisfied that the dismissal was harsh, unjust or unreasonable it might order14, among other things, that the employee be re-employed in his or her former position. The appellant was a member of S.A. Police. In March 2001, he was convicted in the Adelaide Magistrates Court of the offence of assault contrary to s 39 of the Criminal Law Consolidation Act 1935 (SA). On 22 November 2001, the Police Commissioner terminated the appellant's appointment as a member of S.A. Police. The appellant applied to the Industrial Commission for relief against what he alleged was a dismissal that was harsh, unjust or unreasonable. The issue in the appeal to this Court is whether the Industrial Commission had jurisdiction to entertain the appellant's application, or, as the respondent contended, whether the Police Act impliedly repealed those provisions of the Industrial Act providing for unfair dismissal to the extent to which they otherwise would have applied to a member of S.A. Police. 12 References to the Industrial and Employee Relations Act 1994 are to the Act in the form it took in 2002, before the amendments made by the Industrial Law Reform (Fair Work) Act 2005 which, among other things, renamed the Act the Fair Work Act 1994. 13 s 105A(1). It is as well to sketch the history of the proceedings that give rise to this appeal and then to say something about the principles that are to be applied in deciding whether one statute impliedly repeals an earlier statute. It will then be necessary to make a detailed examination of both the Police Act and the Industrial Act and to refer as well to the Police (Complaints and Disciplinary Proceedings) Act 1985 (SA) ("the Discipline Act") and the legislative predecessor of the Police Act – the Police Act 1952 (SA). The history of the proceedings After the appellant made his application to the Industrial Commission for relief against what he alleged was his unfair dismissal, a Commissioner of the Industrial Commission, pursuant to s 214(1) of the Industrial Act, and at the request of the parties, referred certain questions to the Industrial Relations Court of South Australia. One of those questions was (in effect) whether the Industrial Commission had jurisdiction to entertain the appellant's application. The Full Court of the Industrial Relations Court answered that question, "No", and accordingly did not have to deal with the other questions that had been referred. The appellant gave notice of appeal to the Full Court of the Supreme Court of South Australia. That Court, by majority (Prior and Bleby JJ; Debelle J dissenting), treated the notice of appeal as an application for leave to appeal pursuant to s 191(1)(b) of the Industrial Act and ordered15 that the application be refused. The majority of the Court concluded16 that "the Police Act was intended by Parliament to deal exclusively with all terminations of employment" of members of S.A. Police. Implied repeal It has long been recognised17 that even though one statute does not expressly repeal an earlier statute, the later statute must be read as impliedly repealing the earlier, if the two are inconsistent. Inconsistency lies at the root of 15 Ferdinands v Commissioner for Public Employment (2004) 233 LSJS 110. 16 (2004) 233 LSJS 110 at 119 [48]. 17 Foster's Case (1614) 11 Co Rep 56 b [77 ER 1222]; Garnett v Bradley (1878) 3 App Cas 944 at 965-966. this principle18. But, as Isaacs J pointed out in 190719, "[i]t is very hard to formulate a rule which will apply to every case of implied repeal". There are, however, two cardinal considerations. First, as Gaudron J said in Saraswati v The Queen20, "[t]here must be very strong grounds to support [the] implication, for there is a general presumption that the legislature intended that both Secondly, deciding whether there is such provisions should operate". inconsistency ("contrariety"21 or "repugnancy"22) that the two cannot stand or live together23 (or cannot be "reconciled"24) requires the construction of, and close attention to, the particular provisions in question. In the present case, that examination will reveal the following features of the two Acts. The unfair dismissal provisions in Pt 6 of Ch 3 of the Industrial Act (ss 105-111): (a) were enacted25 to give effect to principles stated in the Termination of 18 Goodwin v Phillips (1908) 7 CLR 1 at 7 per Griffith CJ; Butler v Attorney-General (Vict) (1961) 106 CLR 268 at 276 per Fullagar J, 290 per Windeyer J; Rose v Hvric (1963) 108 CLR 353 at 360 per Kitto, Taylor and Owen JJ; Saraswati v The Queen (1991) 172 CLR 1 at 17 per Gaudron J; Shergold v Tanner (2002) 209 CLR 126 at 136-137 [34]-[35] per Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ. 19 Mitchell v Scales (1907) 5 CLR 405 at 416-417. 20 (1991) 172 CLR 1 at 17. 21 Butler (1961) 106 CLR 268 at 275 per Fullagar J. 22 Butler (1961) 106 CLR 268 at 290 per Windeyer J. 23 Butler (1961) 106 CLR 268 at 280 per Kitto J; Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 at 34 per Gibbs J. 24 Butler (1961) 106 CLR 268 at 290 per Windeyer J. 25 See Industrial and Employee Relations (Harmonisation) Amendment Act 1997 (SA), s 3(a). 26 Convention concerning Termination of Employment at the Initiative of the Employer, adopted by the General Conference of the International Labour Organisation on 22 June 1982. applied to some public employees27; and recognised28 that an employee may have remedies for dismissal other than the remedies provided by the Industrial Act. The Police Act, on the other hand: (a) made the Police Commissioner (subject to the Act and any written directions of the Minister) responsible for the control and management of S.A. Police29; and provided for appointment and resignation of members of S.A. Police30, dealt with misconduct and discipline of police31, and made provision for the review of some, but not all, decisions concerning termination of appointment, transfer and promotion32. The provisions made by the Police Act for termination of appointment as a member of S.A. Police in consequence of conviction for an offence, coupled with the limited provisions made by that Act for review of some decisions concerning termination of appointment, were inconsistent with the wrongful dismissal provisions of the Industrial Act. The Police Act impliedly repealed the wrongful dismissal provisions of the Industrial Act to the extent to which they otherwise would have applied to the termination of appointment of a member of S.A. Police in consequence of conviction for an offence. To demonstrate why that is so it is necessary to examine not only the particular provisions of the two Acts that we have identified as inconsistent but also some other provisions of each Act. It is convenient to conduct that examination by reference to the features of each Act identified above, and to begin with the Industrial Act. 27 s 4(1) definition of "employee". 28 s 105 definition of "adjudicating authority" and s 106(2). 30 Div 1 of Pt 4 (ss 20-29). 31 Pt 6 (ss 37-44). 32 Pt 8 (ss 48-58). Industrial Act and the Termination of Employment Convention Section 111(1) of the Industrial Act (as originally enacted) provided that in enacting Pt 6 of Ch 3 "it is Parliament's intention to give effect to the Termination of Employment Convention". The text of the Convention was set out in Sched 7 to the Act. Section 111(2) (again, as originally enacted) provided that if in any respect Pt 6 of Ch 3 did not provide a remedy that was an adequate alternative remedy, within the meaning of what was then s 170EB of the Industrial Relations Act 1988 (Cth), to the remedy available to an employee in respect of termination of employment under the Commonwealth Act, Pt 6 was to be read subject to the modifications necessary to provide an adequate alternative remedy. After the Workplace Relations Act 1996 (Cth) was enacted, the Industrial Act was amended by the Industrial and Employee Relations (Harmonisation) Amendment Act 1997 (SA) ("the Harmonisation Act"). The Harmonisation Act altered Pt 6 in a number of respects. For present purposes, it is to be noted that s 111 of the Industrial Act (with its statement of parliamentary intention and its provision for an adequate alternative remedy to the remedy available under Commonwealth legislation) was repealed. Express reference was still made in the Industrial Act, however, to the Termination of Employment Convention. Three references may be noted. The Harmonisation Act amended the objects of the Industrial Act, stated in s 3, to include as one of the objects: employees with expressing to provide employment-related grievances and having them considered and remedied including provisions for a right to the review of harsh, unjust or unreasonable dismissals – avenue for directed towards giving effect to the Termination of Employment Convention; and ensuring industrial fair play". Section 105A of the Industrial Act (which provided for the making of regulations exempting certain classes of employees from the unfair dismissal provisions) provided, in sub-s (3), that "[t]o the extent that a regulation under subsection 2(c), (d) or (e) is inconsistent with the Termination of Employment Convention it is invalid". And s 108(2) of the Industrial Act obliged the Industrial Commission, in deciding whether a dismissal was harsh, unjust or unreasonable, to have regard to the Termination of Employment Convention, as well as rules and procedures for termination of employment prescribed by or under Sched 8 to the Industrial Act. The Industrial Act making these provisions referring to the Termination of Employment Convention, it is necessary, in construing the Industrial Act, to notice four aspects of the Convention, if only to put some of them aside from further consideration. First, Art 2(1) provided that the Convention "applies to all branches of economic activity and to all employed persons". Although Art 2(2) went on to provide that a Member (of the International Labour Organisation) might exclude certain categories of employed persons from all or some of the provisions of the Convention, those categories are not now relevant; they were restricted to probationers and casuals. The Convention applied, therefore, to employment of public officials. Secondly, Art 4 provided that: "The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service." On its face, criminal conduct by a police officer may be a valid reason for terminating that officer's service and would be a reason connected with that officer's conduct. Thirdly, Art 7 provided that: "The employment of a worker shall not be terminated for reasons related to the worker's conduct or performance before he is provided an opportunity to defend himself against the allegations made, unless the employer cannot reasonably be expected to provide this opportunity." This provision is directed to what is to be done before termination, not to the remedies that are to be available for allegedly wrongful termination. Finally, Art 8(1) provided that: "A worker who considers that his employment has been unjustifiably terminated shall be entitled to appeal against that termination to an impartial body, such as a court, labour tribunal, arbitration committee or arbitrator." Article 9(1) amplified the provisions of Art 8(1) by providing that: "The bodies referred to in Article 8 of this Convention shall be empowered to examine the reasons given for the termination and the other circumstances relating to the case and to render a decision on whether the termination was justified." And Art 5 of the Convention stated a number of matters that may not constitute valid reasons for termination – union membership or activities; seeking office or acting as a workers' representative; filing a complaint or participating in proceedings against an employer involving alleged violation of laws or regulations; race, colour, sex, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin; or absence from work during maternity leave. But the Convention did not further specify what was or was not justification for termination beyond its reference, in Art 4, to a reason connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service. In particular, it made no reference to termination that was "harsh, unjust or unreasonable". And as five members of the Court held in Victoria v The Commonwealth (Industrial Relations Act Case)33, the "harsh, unjust or unreasonable" criterion is a criterion which has a content different from that for which the Convention provided. It is, for that reason, a criterion the inclusion of which "does not implement the terms of the Convention but goes beyond its requirements"34. Industrial Act – application to public employees The Industrial Act dealt with much more than questions of unfair dismissal. As the earlier references to the Industrial Commission and the Industrial Relations Court suggest, the Industrial Act established means for the settlement of industrial disputes35, provided for the making of awards36 and enterprise agreements37, provided for the enforcement of awards and enterprise agreements38, made general provisions regulating the conditions of employment 33 (1996) 187 CLR 416 at 517-518 per Brennan CJ, Toohey, Gaudron, McHugh and 34 (1996) 187 CLR 416 at 518 per Brennan CJ, Toohey, Gaudron, McHugh and 35 Ch 2 (ss 7-65); Ch 5 , Pt 3, Div 3 (ss 197-205). 36 Ch 3, Pt 3 (ss 90-99). 37 Ch 3, Pt 2 (ss 73-89). 38 Ch 3, Pt 5 (ss 102-104). of workers39, and provided for the formation and registration of industrial associations40. The Industrial Act defined41 a "public employee" as: a person employed under, or subject Management and Employment Act 1985; or the Government any other person employed for salary or wages in the service of the State". "[E]mployee" was defined42 as "a person employed for remuneration under a contract of employment and includes a public employee". Although s 6(b) provided that the Industrial Act did not apply to "employment excluded by regulation from the ambit of this Act", no regulation had been made excluding employment as a member of S.A. Police from the ambit of the Act. The present matter was argued on the footing that a police officer is a public employee and, for that reason, an employee for the purposes of the Industrial Act. It must then be recognised that, if that is so, members of S.A. Police would fall within those other provisions of the Industrial Act that deal with "employees". In particular, provisions such as those dealing with awards or enterprise agreements or those dealing with industrial disputes could be engaged. Yet the respondent contended that the wrongful dismissal provisions of the Industrial Act could not be engaged because they had been impliedly repealed in their application to members of S.A. Police. Wrongful dismissal – other remedies The Industrial Act recognised that an employee who has been dismissed may have more than one way in which to challenge the dismissal. Section 106(2) provided that: "If an employee takes proceedings seeking a remedy for dismissal either under this Part or another law, the employee – 39 Ch 3, Pt 1 (ss 66-72). 40 Ch 4 (ss 115-147). is taken to have elected to pursue that remedy to the exclusion of other remedies that may be available on the same facts either under this Part or under other laws; and is estopped from taking proceedings for other remedies based on the same facts, unless the proceedings fail for want of jurisdiction or the adjudicating authority decides not to proceed on the ground that proceedings have been brought, or might more appropriately be brought, under this Part or another law (as the case requires)." The unfair dismissal provisions of the Industrial Act were, therefore, not intended to constitute the only way in which questions concerning the legitimacy of termination of employment might be considered. Police Act – the Police Commissioner As noted earlier, the Police Act provided43 that, subject to the Act and any written ministerial direction, the Police Commissioner was responsible for the control and management of S.A. Police. Section 7, however, provided that no ministerial direction could be given "in relation to the appointment, transfer, remuneration, discipline or termination of a particular person". It follows that the powers given to the Police Commissioner by s 40(1) to take any of a number of different actions in relation to a member of S.A. Police who had been found guilty of an offence under the law of South Australia, the Commonwealth or another State or Territory, were subject to the Act, but not subject to ministerial direction. The steps the Police Commissioner might take in such a case ranged from the termination of the person's appointment to steps such as an "unrecorded reprimand", "counselling", or "education or training". The steps specified in s 40(1) were available not only in cases where a member of S.A. Police had been found guilty of an offence, but also in cases where the member admitted a breach of the Code of Conduct, established by regulation made under s 37(1), "for the maintenance of professional standards by members of S.A. Police" or the member was found guilty of a breach of that Code in proceedings before the Police Disciplinary Tribunal. Again, the Police Commissioner's power to take any of the prescribed steps in consequence of a member admitting or being found guilty of a breach of the Code of Conduct was a power exercisable subject to the Act. These disciplinary powers of the Police Commissioner given by s 40(1) should be understood as being conditioned upon observance of the requirements of procedural fairness44. It is not necessary to examine the content to be given to those requirements in a case like the present. It is enough to say that to read the powers of the Police Commissioner as conditioned in this way would mean that a member of S.A. Police would have what Art 7 of the Termination of Employment Convention referred to as "an opportunity to defend himself against the allegations made". (The allegation relevant to the exercise of power under s 40(1) would be that the member had been convicted of an offence, admitted a contravention of the Code, or been found guilty of contravention of the Code; the relevant allegation would not be constituted by the facts lying behind the relevant conviction, admission, or finding.) The Police Act provided45 that the purpose of S.A. Police is "to reassure and protect the community in relation to crime and disorder by the provision of services", among other things, to "uphold the law … preserve the peace … and … prevent crime". The powers given to the Police Commissioner were to be exercised having regard to that purpose of reassuring and protecting the community by providing services to uphold the law. Further, with respect to personnel management, the Police Commissioner was bound46 to "ensure that practices are followed under which [among other things] employees are treated fairly and consistently and are not subjected to arbitrary or capricious administrative decisions … and … employees are afforded reasonable avenues of redress against improper or unreasonable administrative decisions". The reference to "employees" in s 10(2) may be contrasted with the reference in s 10(1) to the Police Commissioner ensuring that management practices are followed "with respect to S.A. Police and the police cadets and police medical officers". It may further be contrasted with repeated references elsewhere in the Police Act to "appointment as a member of S.A. Police" and "appointment to a position in S.A. Police". Nonetheless, there being no reference 44 Kioa v West (1985) 159 CLR 550 at 615 per Brennan J; Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 40 per Brennan J; Annetts v McCann (1990) 170 CLR 596 at 598-600 per Mason CJ, Deane and McHugh JJ, 604-605 per Brennan J; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 591 per Brennan J; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 99-100 [38]-[39] per Gaudron and Gummow JJ; see also at 89 [5] per Gleeson CJ, 142-143 [168] per Hayne J. elsewhere in the Police Act to "employees" as a class distinct from those appointed as members of S.A. Police, police cadets, or police medical officers, s 10(2) is not to be read as excluding members of S.A. Police from those in respect of whom the Police Commissioner was to ensure practices were followed which met the criteria stated in the sub-section. It follows that the power, given to the Police Commissioner by s 40(1), to terminate the appointment of a member of S.A. Police was a power to be exercised not only for the purpose earlier identified by reference to s 5 (with its reference to the purposes of S.A. Police) but also within the statutory boundaries provided by s 10(2). Police Act – appointment, resignation, misconduct and discipline As might be expected, the Police Act made detailed provisions regulating appointment to and resignation from S.A. Police and dealt with the subject of misconduct by, and discipline of, police officers. Separate provision was made in the Act for appointment of the Police Commissioner47, a Deputy Commissioner of Police48 and Assistant Commissioners49. Separate provision was also made50 for termination of the appointments of these officers. Other members of S.A. Police were appointed by the Police Commissioner51. A person appointed as a member of S.A. Police was obliged to make a prescribed form of oath or affirmation52. A person who was appointed a member of S.A. Police, and had made the prescribed oath or affirmation, was to be "taken to have entered into an agreement to serve in S.A. Police in each position that the person may hold until he or she lawfully ceases to be a member of S.A. Police"53. A member of S.A. Police, other than the Police Commissioner, 51 Section 20 provided for the appointment of officers; s 21 provided for the appointment of sergeants and constables. the Deputy Commissioner, or an Assistant Commissioner, might resign by not less than a stated period of written notice54. Part 6 of the Police Act (ss 37-44) dealt with misconduct and discipline of police. Some of those provisions made reference to the Discipline Act and two bodies established under that Act – the Police Complaints Authority55 and the Police Disciplinary Tribunal56. At the times relevant to this matter, however, the Discipline Act referred in a number of provisions to the Police Act 1952; it made no reference to the 1998 legislation referred to in these reasons as the Police Act. It was not suggested by either party that, for the purposes of this appeal, anything turned on this disconformity in the provisions dealing with S.A. Police. Rather, attention was directed in argument principally to those provisions of Pt 8 of the Police Act which provided for and regulated the review of some, but not all, decisions to terminate the appointment of a member of S.A. Police and to those provisions of the Discipline Act which provided for review of certain kinds of disciplinary decision. The chief point made about Pt 8 of the Police Act was that s 48 gave a member, or former member, of S.A. Police a right to seek review of only two kinds of decision to terminate the member's appointment: termination during a period of probation, or termination on a ground for termination under Pt 7 of the Act. (Part 7 dealt with termination because of incapacity by reason of physical or mental disability or illness57 or because of unsatisfactory performance where it was not practicable to transfer the member to a position of the same or lower rank with duties suited to the member's capabilities or qualifications58.) Section 48 of the Police Act made no provision for review of a decision to terminate a member's appointment under s 40(1). The Discipline Act was treated in argument as dealing with breaches of the Code of Conduct established pursuant to s 37 of the Police Act. That is, breaches of that Code were treated in argument as meeting the definition of "breach of discipline" given in s 3(1) of the Discipline Act59. It is not necessary 55 Pt 2 (ss 5-12). 56 Pt 6 (ss 37-45). 59 "[A] breach that may be the subject of a charge by the Commissioner under the Police Act 1952". to consider the validity of this assumption. What is important, for present purposes, is that if a breach of the Code is a "breach of discipline" as defined in the Discipline Act, the Police Disciplinary Tribunal established under the Discipline Act60 may hear and determine that charge61 and if satisfied that the member was guilty of the breach of discipline "remit the proceedings to the Commissioner for the imposition of punishment on the member in accordance with the Police Act 1952"62. Part 7 of the Discipline Act63 then made provision for appeals in respect of discipline. First, a party to proceedings before the Tribunal might appeal to the Administrative and Disciplinary Division of the District Court64 against a decision made by the Tribunal in the proceedings. Secondly, a member of the police force might appeal to that Court against an order of the Police Commissioner imposing punishment on him or her for a breach of discipline65. These provisions for appeal (particularly the provision for an appeal against an order of the Police Commissioner terminating the appointment of a member of S.A. Police for breach of the Code of Conduct, but the absence of provision for an appeal against an order terminating appointment upon conviction for an offence) were said to demonstrate that the Police Act is inconsistent with the application of the wrongful dismissal provisions of the Industrial Act to members of S.A. Police. This conclusion was said to be reinforced by reference to the provisions made by the Police Act for the review of decisions to transfer a member of S.A. Police66 and decisions about who should be promoted67. In order to examine these contentions it is necessary to say more about inconsistency and implied repeal. 60 Pt 6 (ss 37-45). Inconsistency No conclusion can be reached about whether a later statutory provision contradicts an earlier without first construing both provisions. If, upon their true construction, there is an "[e]xplicit or implicit contradiction"68 between the two, the later Act impliedly repeals the earlier. One example that may be given of an explicit contradiction is provided by the legislation considered in Michell v Brown69 where the later Act gave the same definition of an offence as had been stated in the earlier Act, but specified a different punishment, and varied the procedure to be followed for its prosecution. It was not possible to comply with both Acts simultaneously. In Rose v Hvric70, a distinction was drawn between explicit or implicit contradiction on the one hand and "merely 'inferential contradiction', as Lord Hatherley called it in Attorney-General v Great Eastern Railway Co71" on the other. Thus, it was said72 that to show that provisions of the later Act would ground a conclusion that the train of thought of those who drafted that later Act, if logically pursued, would have led the drafters to enact an exception to the operation of the former Act, would not suffice to demonstrate implicit contradiction. It would show only an inferential contradiction. It would not show implicit contradiction because, as Gaudron J said in Saraswati73, the general presumption is that there is no contradiction between two Acts of the one legislature. Reference to "implicit contradiction" may suggest that it is both permissible and useful to resort to "covering the field" tests developed in the application of s 109 of the Constitution74 in deciding whether a later Act impliedly repeals an earlier. It is, however, necessary to recognise that s 109 concerns the paramountcy of a law of the Commonwealth over a law of a State. The question in the present case is not whether one law enacted by one 68 Rose v Hvric (1963) 108 CLR 353 at 358. 69 (1858) 1 El & El 267 [120 ER 909]. 70 (1963) 108 CLR 353 at 358. 71 (1873) LR 6 HL 367 at 375. 72 (1963) 108 CLR 353 at 358. 73 (1991) 172 CLR 1 at 17. 74 Ex parte McLean (1930) 43 CLR 472 at 483 per Dixon J. legislature prevails over a law enacted by another legislature; it is whether the presumption that two laws made by the one legislature are intended to work together is displaced. It is unnecessary to decide in this case whether, or how much, guidance is provided in cases of allegedly implied repeal by the law that has developed in the application of s 10975. In the present case there would be difficulties in accommodating provisions of the Police Act with the application of the wrongful dismissal provisions of the Industrial Act. What would happen if the Industrial Commission were empowered to order re-employment of a member of S.A. Police whose appointment had been terminated? Would that person have to make a fresh oath or affirmation under s 25 of the Police Act? Upon re-employment of a member of S.A. Police by order of the Industrial Commission, could the Police Commissioner take some other less severe action against that member on account of the conviction that led the Police Commissioner to terminate his or her appointment? Or would the Police Commissioner's powers under s 40(1) be spent upon the Police Commissioner's deciding that the appointment should be terminated? In deciding whether a termination of appointment of a member of the police force was harsh, unjust or unreasonable, would the Industrial Commission be bound to take account of, and be limited to considering, matters the Police Commissioner was bound to consider when exercising the power given by s 40(1) of the Police Act? Or would the Industrial Commission be guided by those considerations that are usually grouped together under the description the "industrial justice" of the These difficulties in reconciling the two Acts stem from two features of the legislation which, although it is convenient to deal with them separately, are linked one to the other. First, different considerations inform the exercise of power under the Police Act from those that inform the exercise of power under the wrongful dismissal provisions of the Industrial Act. Secondly, the Police Act appears intended to deal comprehensively with questions of termination of appointment of a member of S.A. Police. As is pointed out earlier in these reasons, the Police Commissioner must decide whether to exercise the powers given by s 40(1) of the Police Act having regard to the purpose and objects of the Act which confers those powers. Two of 75 Butler (1961) 106 CLR 268 at 276 per Fullagar J. 76 cf Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 466-467 per McHugh and Gummow JJ; Termination, Change and Redundancy Case (1984) 8 IR 34 at those statutory purposes77 are that S.A. Police reassure and protect the community in relation to crime and disorder by the provision of services to uphold the law and prevent crime. That is, the power given by s 40(1) to the Police Commissioner to take action against a member of S.A. Police who has contravened the criminal law is to be exercised having regard to the Police Act's purpose of establishing and maintaining a police force (or service) whose members are not only sworn to uphold and enforce the criminal law, but do so in fact. Moreover, the Police Commissioner is obliged to ensure that personnel management practices are followed in S.A. Police under which employees are treated fairly and consistently, and are not subjected to arbitrary or capricious administrative decisions78. Performance of this obligation would, at least for the most part, if not entirely, avoid harsh, unjust or unreasonable termination of a member's appointment. What is fair and consistent and is not arbitrary or capricious will usually not be harsh, unjust or unreasonable. But if there are considerations encompassed by the expression "harsh, unjust or unreasonable" or the "industrial justice" of the case which would fall outside the principles which the Police Act requires the Police Commissioner to take into account in deciding whether to terminate a member's appointment, it would follow that the exercise of powers under the wrongful dismissal provisions of the Industrial Act would be informed by different considerations from those which are to be derived from the Police Act. Standing alone, the considerations just mentioned would not demonstrate explicit or implicit contradiction between the two Acts. The two Acts could be accommodated by reading the requirements which the wrongful dismissal provisions of the Industrial Act would require an employer to take into account in exercising the power to terminate an employee's services, as additional considerations to be taken into account by the Police Commissioner when exercising the powers under s 40(1) of the Police Act. There are, however, two further matters that must then be taken into account in deciding whether the two Acts are contradictory. Again, they are linked. First, it is important to recognise that "affirmative words appointing or limiting an order or form of things may have also a negative force and forbid the doing of the thing otherwise"79. Secondly, when read as a whole, the Police Act 77 Police Act, s 5(a) and (c). 78 Police Act, s 10(2)(b). 79 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 270. reveals an intention to deal comprehensively not only with questions of appointment and termination of appointment of members of S.A. Police, but also with what decisions of the Police Commissioner to terminate appointment of a member are to be subject to review apart from the general supervisory jurisdiction of the Supreme Court, a general supervisory jurisdiction exercised principally by the grant of relief in the nature of prohibition, mandamus and Termination of appointment is only one of 12 actions which the Police Commissioner may take against a member who has been convicted of an offence. It would indeed be strange if the Police Commissioner's action of terminating an appointment could be measured by the Industrial Commission, against the standard of "harsh, unjust or unreasonable", without also committing to the body required to make that assessment the power to decide what other form of action, short of termination of appointment, the conviction warranted. Yet that is the step which would have to be taken if the two Acts are to be read as operating together. That is not the better construction of the Police Act. Rather, the Police Act should be read as a comprehensive statement of (a) the powers of the Police Commissioner to terminate the appointment of a member of S.A. Police (powers that are conditioned upon affording procedural fairness to the member concerned); (b) the matters that are to be taken into account in exercising those powers (including the need to treat employees fairly and consistently, and not arbitrarily or capriciously); (c) the kinds of termination decision that are to be subject to review apart from the general processes of judicial review; and (d) the ways in which those termination decisions that are amenable to review are to be reviewed. The affirmative words of these provisions of the Police Act are to be read as also having a negative force and forbidding the doing of the thing otherwise under the Industrial Act. It follows that the Police Act explicitly or implicitly contradicts the wrongful dismissal provisions of the Industrial Act. The appeal should be dismissed with costs. Kirby KIRBY J. Resolving suggested inconsistency, contrariety80 or conflict81 between legislation is a staple activity of Australian courts. In a society in which the quantity, variety and sources of law made by or under parliaments (already great) expands at a significant rate82, it is unsurprising that suggested incompatibilities frequently need to be resolved. In a federal polity, such conflicts can easily arise between laws made by the Federal Parliament and those made by the legislatures of the States and Territories. For a conflict with State laws, s 109 of the Constitution affords an explicit provision to resolve the clash by upholding the paramountcy of the federal law83. However, problems also arise within the same jurisdiction. To some extent, the ambit of conflicts of the latter type is confined by a technique of express textual amendments generally observed in Australia by those who draft and enact legislation and laws made under it. Yet cases arise where there is no express provision in successive laws of the same polity to inform those subject to them as to how such laws are intended to inter-relate. The present appeal, from a divided decision of the Full Court of the Supreme Court of South Australia84, is such a case. The courts have devised maxims and canons of construction in an attempt to ensure (so far as human reasoning permits) consistent approaches to the resolution of suggested conflicts. Yet such rules, whilst sometimes helpful, only take the mind part of the way in the process of reasoning. As Higgins J remarked in an early case, Bank Officials' Association (South Australian Branch) v Savings Bank of South Australia85 ("the Bank Officials' Case"), "[t]hese maxims merely aid us in taking our bearings in the movement of our reason". Before the maxims and canons of construction are deployed, there remain duties of close analysis of 80 Butler v Attorney-General (Vict) (1961) 106 CLR 268 at 275 per Fullagar J. 81 Butler (1961) 106 CLR 268 at 285 per Taylor J. 82 See McHugh, "The Growth of Legislation and Litigation", (1995) 69 Australian Law Journal 37 at 37-39. 83 Both in cases of operational inconsistency and in cases of inconsistency from intrusion into a field covered by federal legislation: Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466 at 488-489; Ex parte McLean (1930) 43 CLR 472 at 485-486. A like resolution exists in the case of repugnancy of Territory laws: Northern Territory v GPAO (1999) 196 CLR 553 at 582-583 [59]-[60], 636-638 84 Ferdinands v Commissioner for Public Employment (2004) 233 LSJS 110. 85 (1923) 32 CLR 276 at 299. Kirby the legislation, side by side as it were, to see whether it can "stand together" or "live together"86. When this is done there will often (but not always87) be division of opinion on the part of appellate judges, either as to the approach that is proper to resolve the suggested conflict88 or as to whether there is a relevant inconsistency at all89. In the Full Court in the present case, the judges in the majority concluded that the Police Act 1998 (SA) ("the Police Act"), empowering the Commissioner of South Australia Police to terminate the appointment of a member of the Force, excluded the operation of the Industrial and Employee Relations Act 1994 (SA) ("the Industrial Act"), which affords relief to employees against "harsh, unjust or unreasonable"90 dismissal. The dissenting judge concluded that the two enactments could operate together. Now, by special leave, the question comes before this Court. The facts and issues The facts: Before 22 November 2001, Mr Trevor Ferdinands ("the appellant") was a police officer serving with the South Australia Police. In December 1999, at the Adelaide City Watch House, he was involved in an incident that led to his being charged with an offence of assault contrary to s 39 of the Criminal Law Consolidation Act 1935 (SA)91. The appellant was found guilty of the offence and convicted. The Police Commissioner terminated the appellant's appointment as a member of the South Australia Police92. 86 Butler (1961) 106 CLR 268 at 280 per Kitto J; cf Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 at 34 per Gibbs J. 87 Shergold v Tanner (2002) 209 CLR 126 at 137 [35]. 88 See eg Travinto (1973) 129 CLR 1 – as between the approach of Barwick CJ, McTiernan and Stephen JJ and that of Menzies and Gibbs JJ. The latter invoked the maxim leges posteriores priores contrarias abrogant. 89 See eg Bank Officials' Case (1923) 32 CLR 276, in which Higgins and Starke JJ dissented, Cobiac v Liddy (1969) 119 CLR 257 where McTiernan J dissented and Saraswati v The Queen (1991) 172 CLR 1 where Deane and Dawson JJ dissented. 90 Industrial Act, s 108(1). The Industrial Act was renamed the Fair Work Act 1994 (SA) by the Industrial Law Reform (Fair Work) Act 2005 (SA), the relevant provisions of which commenced on 16 May 2005. The amending Act preserved the appellant's rights in relation to the Act as it stood at the relevant times. 91 (2004) 233 LSJS 110 at 120 [54]. 92 Pursuant to s 40 of the Police Act. Kirby The appellant initiated an appeal against his conviction to the Supreme Court of South Australia93. This was not pursued. He also initiated proceedings in the District Court of South Australia to seek judicial review of his termination94. However, these proceedings were rejected for want of jurisdiction, a decision that the appellant does not now contest. The appellant then commenced proceedings in the Industrial Relations Commission of South Australia ("the Commission") claiming relief pursuant to s 106 of the Industrial Act. The relief was sought on the basis that his dismissal from the Police was "harsh, unjust and unreasonable". Pursuant to s 214(1) of the Industrial Act, the Commission, at the request of both parties, referred two questions to the Full Court of the Industrial Relations Court of South Australia ("the Industrial Relations Court")95. The first was whether the Commission could extend the time within which the appellant could apply for the relief that he had sought under the Industrial Act. The second question, assuming the answer to the first to be in the affirmative, was whether the Commission was deprived of jurisdiction to determine the appellant's application because the Police Act, and associated police legislation, operated to the exclusion of s 106 of the Industrial Act, or because the appellant's failed application to the District Court had estopped him from claiming the remedy that he later sought under the Industrial Act96. In the Commission, the appellant named the Commissioner for Public Employment ("the respondent") as the respondent to the proceedings. In these proceedings, he has been taken to represent the Commissioner of South Australia Police. No point has been raised as to the correctness of naming the respondent as the proper party for the issues that have been argued. On 24 March 2003, the Industrial Relations Court unanimously concluded that the police legislation, specifically the Police Act, excluded the jurisdiction of the Commission under s 106 of the Industrial Act. That Court gave effect to 93 See reasons of South Australian Industrial Relations Court: Ferdinands v Commissioner for Public Employment [2003] SAIRC 19 at [4]. 94 Pursuant to the Police (Complaints and Disciplinary Proceedings) Act 1985 (SA), 95 [2003] SAIRC 19 at [1]. 96 Pursuant to s 106(2) of the Industrial Act. Kirby earlier decisions of its own on the point97. The appellant then sought to appeal to the Full Court of the Supreme Court of South Australia. By majority98, that Court refused leave to appeal, holding that the decision of the Industrial Relations Court was correct. The appellant applied in person for special leave to appeal to this Court. Special leave was granted and arrangements were made for the appellant to be legally represented pro bono. The assistance of counsel is appreciated. It would have been difficult or impossible for a self-represented litigant to argue the issues without it. Matters not in issue: The following matters are not in contention in these proceedings: This Court is not concerned with the factual merits of the Police Commissioner's termination of the appellant's appointment as a member of the South Australia Police. Nothing in these proceedings touches that issue. The sole question is one of law concerned with the jurisdiction and power of the Commission to hear and determine the appellant's claim under s 106 of the Industrial Act. (2) Nor is this Court concerned with the first question which was reserved by the Commission, namely whether the Commission has the power to extend the time within which the appellant might apply for relief. That issue remains outstanding because both the Industrial Relations Court and the Full Court of the Supreme Court proceeded directly to the more fundamental second question reserved by the Commission, relating to the jurisdiction and powers of the Commission to determine the application under the Industrial Act. This Court heard no argument on the first reserved question of law, which remains undetermined. (3) During argument of the appeal, a third question of law arose. Section 106(1) of the Industrial Act provides for applications for relief in a case where "an employer dismisses an employee"99. By s 4 of the Industrial Act ("Interpretation") the word "employee" is defined to include "public employee". At the relevant time, that expression was, in turn, defined to mean "a person employed under, or subject to, the Government 97 McQuillan v Commissioner for Public Employment (Department of Correctional Services) (1993) 51 IR 356; Stone v Commissioner for Public Employment (2002) 98 Prior J and Bleby J; Debelle J dissenting. 99 Emphasis added. Kirby Management and Employment Act 1985"100 or "any other person employed for salary or wages in the service of the State". In Enever v The King101, a question arose in this Court whether it was competent for a plaintiff to bring an action against the Government of Tasmania for wrongful arrest by a police constable in the intended performance of his duties. Legislation in Tasmania permitted an action against the Government by any person having a claim against the Crown for an actionable wrong in respect of "any act or omission, neglect or the Government of default of any officer, agent or servant of Tasmania"102. This Court held that, because the police constable held an office and was not, as such, an "agent or servant" of the governmental appointing body that engaged him, he alone was responsible in law for his acts and omissions. The Government was not. Extensive The decision in Enever, inconvenient as it was103, has never been overruled by this Court. It has been followed and applied in many cases104. the Commonwealth to overcome its effect and to provide for governmental liability for defined acts and omissions of police officers105. The appellant did not contend that Enever was incorrectly decided. Instead, he submitted that it had no operation in the context of s 106 of the Industrial Act. legislation has been enacted throughout Neither by a notice of contention nor in written or oral submissions did the respondent argue that (because of Enever or on any other grounds) the appellant's application to the Commission was doomed to fail for want of the appellant held an an employment relationship and because independent office equivalent to a constable. In my view, this was a correct approach to the issue. Enever does not require a different 100 See now Public Sector Management Act 1995 (SA), s 3. 101 (1906) 3 CLR 969. 102 Crown Redress Act 1891 (Tas), s 4. 103 See Fleming, The Law of Torts, 9th ed (1998) at 418-419. 104 See eg Blom v The Commonwealth (1917) 17 SR (NSW) 469; Cradock v Mackenzie (1920) 37 WN (NSW) 280; R v Lorenzo [1921] SASR 55; Fisher v Oldham Corporation [1930] 2 KB 364. 105 Australian Law Reform Commission, Complaints Against Police, Report No 1, Kirby approach106. I am content to consider the issues in this appeal as they were argued by the parties, whilst noticing the possible problem for the appellant presented by the Enever decision. The intersecting legislation The Police Act: The provisions of the legislation of South Australia need to be noticed. By s 40 of the Police Act, it is provided: If a member of SA Police or police cadet – is found guilty of an offence under a law of this State, the Commonwealth or another State or a Territory of the Commonwealth; or admits in accordance with this Act a breach of the Code with which he or she has been charged; or is found guilty of a breach of the Code in proceedings before the Police Disciplinary Tribunal, the Commissioner may take action, or order the taking of action, of one or more of the following kinds in relation to the person: termination of the person's appointment; suspension of the person's appointment for a specified period; reduction of the person's remuneration by a specified amount for a specified period … (g) where the person is a member of SA Police, transfer of the member to another position in SA Police (whether with or without a reduction in rank, seniority or remuneration); (h) where the person is a member of SA Police, reduction in the member's seniority; imposition of a fine not exceeding the amount prescribed by regulation; 106 Cf Kirby, "Controls over Investigation of Offences and Pre-trial Treatment of Suspects", (1979) 53 Australian Law Journal 626 at 641; Luntz and Hambly, Torts: Cases and Commentary, 5th ed (2002) at 940-941 [17.3.23]-[17.3.24]. Kirby where the person is a police cadet, withdrawal of specified rights or privileges for a specified period; a reprimand recorded in the person's conduct and service history … an unrecorded reprimand; counselling; education or training; action of any other kind prescribed by regulation." The Industrial Act: The appellant's application to the Commission was purportedly brought under Pt 6 of Ch 3 of the Industrial Act ("Unfair Dismissal"). By s 105A, provision is made in the first division of that Part concerning its application. Thus, s 105A(1) provides that the Part does not apply to a "non-award employee" whose remuneration, immediately before the dismissal took effect, is not less than the specified, indexed annual amount. Clearly, that provision is intended to exclude senior employees from relief under the Part. It was not suggested that the appellant came within this exception. Section 105A also provides for the exclusion by regulation of various categories of employee from the operation of the Part, or specified provisions of the Part. These include probationers (s 105A(2)(a)); certain casual employees (s 105A(2)(b)); employees whose terms of employment are governed by special arrangements giving rights of review of, or appeal against, decisions to dismiss from employment which provide protection "that is at least as favourable to the employees as the protection given under this Part" (s 105A(2)(c)); employees to whom application of the Part "would cause substantial difficulties" because of the conditions of their employment or the size or nature of the undertakings in which they are employed (s 105A(2)(d)); and "employees of any other class" (s 105A(2)(e)). The result of s 105A is that it would have been a simple matter, had it been the purpose of the Executive Government of the State, to exclude by regulation police "employees", such as the appellant, from the remedies provided in Pt 6 of Ch 3 of the Industrial Act. No such regulation or exclusion has been made. The respondent argued that doing so was not necessary because of the focus and detailed provisions of the Police Act which constituted an entire regulation of the incidents of police service, including termination, without any external avenue of merits review on the ground that termination was "harsh, unjust or unreasonable". By s 106 of the Industrial Act, provision is made for an employee, within the stated time, to apply to the Commission for relief under the Part (s 106(1)). Kirby This section clearly contemplates that, in some instances, the employee will have additional and different remedies under other laws. Thus, at the relevant time, it was provided in s 106(2) that, where an employee took proceedings seeking a remedy for dismissal under Pt 6 or another law, he or she was taken to have elected to pursue that remedy to the exclusion of others and was estopped from taking other remedies based on the same facts107. The Act gives as an example the case of an employee who brings proceedings under the Equal Opportunity Act 1984 (SA). The incorporated ILO Convention: The Industrial Act then relevantly provided, in s 108, for the determination of the application: "(1) At the hearing of an application under this Part, the Commission must determine whether, on the balance of probabilities, the dismissal is harsh, unjust or unreasonable. In deciding whether a dismissal was harsh, unjust or unreasonable, the Commission must have regard to – the Termination of Employment Convention; and the rules and procedures for termination of employment prescribed by or under Schedule 8." By s 109, provision is made for remedies for unfair dismissal from employment. Under s 109(1), if the Commission is satisfied that the employee's dismissal is harsh, unjust or unreasonable, it may "order that the applicant be re- employed in the applicant's former position without prejudice to the former conditions of employment" or, if this would be impracticable, "order that the applicant be re-employed by the employer in some other position (if such a position is available) on conditions determined by the Commission" or, where this would not be an appropriate remedy, "order the employer to pay to the applicant an amount of compensation determined by the Commission". By s 109(2), if the Commission makes an order for re-employment, subject to any contrary direction of the Commission, the employee "must be remunerated for the period intervening between the date that the dismissal took effect and the date of re-employment as if the employee's employment in the position from which the employee was dismissed had not been terminated". Provision is also made by s 109(2) for adjustment of payments to take into account leave and any payments made to the employee upon his or her dismissal. 107 See now Fair Work Act 1994 (SA), s 106(2). Kirby The "Termination of Employment Convention" referred to in s 108(2) of the Industrial Act is the Convention concerning Termination of Employment at the Initiative of the Employer adopted by the International Labour Organisation in June 1982. The Convention has been ratified by Australia108. The Convention appears in its entirety in Sched 7 to the Industrial Act. Article 4 of the Convention states: "The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service." Article 7 of the Convention states that: "The employment of a worker shall not be terminated for reasons related to the worker's conduct or performance before he is provided an opportunity to defend himself against the allegations made, unless the employer cannot reasonably be expected to provide this opportunity." Article 8.1 of the Convention provides, in terms which the appellant suggested were applicable to his case: "A worker who considers that his employment has been unjustifiably terminated shall be entitled to appeal against that termination to an impartial body, such as a court, labour tribunal, arbitration committee or arbitrator." Article 9.1 provides: "The bodies referred to in Article [8.1] of this Convention shall be empowered to examine the reasons given for the termination and the other circumstances relating to the case and to render a decision on whether the termination was justified." The parties' arguments The respondent's arguments: Substantially, the parties before this Court supported the respective approaches to the intersection of the Police Act and the Industrial Act expressed by the majority and minority in the Full Court. The respondent supported the majority, arguing that the two statutory regimes were incompatible unless Pt 6 of Ch 3 of the Industrial Act were read down to exclude any application to a member of the Police Force such as the appellant. 108 [1994] Australian Treaty Series, No 4. See also Workplace Relations Act 1996 (Cth), Pt VIA, Div 3. Kirby The respondent laid emphasis on what he claimed to be the inaptness, in the context of termination under the Police Act, of the remedy provided under s 109 of the Industrial Act, namely "re-employment". That remedy, it was suggested, did not mesh appropriately with the Police Act. Specifically, it did not provide for the quashing of the Police Commissioner's earlier decision to terminate the appointment. Nor did it expressly reactivate the Commissioner's powers to take action, other than termination of the person's appointment, as provided by s 40(1)(e) to (o) of the Police Act. Neither did it provide expressly for a "re-employed" member of the South Australia Police or police cadet to take a fresh oath, appropriate to what was said to be the new employment relationship created by "re-employment" pursuant to an order made under s 109(1)(a) of the Industrial Act. In the alternative, the respondent submitted that the Police Act, being a statute of 1998, impliedly repealed, to the extent of the inconsistency, provisions of the Industrial Act, a statute of 1994109. This argument lost much of its force because the lineage of the relevant provisions in the Industrial Act and the Police Act110 makes it difficult to infer from the maxim giving priority to a later law which law was relevantly earlier and which later, in point of time. Thus, the first statutory remedy in South Australia for unfair dismissal was enacted by the Industrial Code 1967 (SA). Section 26(2) provided for the President of the Commission to determine whether the dismissal was harsh, unjust and unreasonable and to direct re-employment as he or she thought fit. This power was temporarily transferred to the Industrial Court by the Industrial Conciliation and Arbitration Act 1972 (SA), s 15(1)(e). It was returned to the Commission in 1984 by the Industrial Conciliation and Arbitration Amendment Act 1984 (SA). At the time these laws were enacted, police appointment and termination was regulated in South Australia under the Police Regulation Act 1952 (SA). Section 22(6) of the last-mentioned Act provided for the making of regulations with respect to discipline and s 22(7) for the making of regulations governing disciplinary inquiries. Regulation 28 of the Police Regulations 1982, made under the 1952 Act, empowered the Commissioner to impose penalties, including dismissal, with the approval of the Governor or Chief Secretary. These provisions were later replaced by the Police (Complaints and Disciplinary Proceedings) Act 1985 (SA) and the Police Act. 109 Invoking Goodwin v Phillips (1908) 7 CLR 1 at 7. 110 It is a mistake for this purpose to consider only the dates of the original enactment of the statutes said to be in conflict. It is more helpful to consider when the respective provisions in question were enacted: Royal Automobile Club v Sydney City Council (1992) 27 NSWLR 282 at 287. Kirby The appellant contested these propositions. However, the strength of the respondent's case in this regard lay in the suggested disharmony between the sections of the Police Act providing various avenues of review, but not for the case of termination of a member's appointment where that member was found guilty of an offence against the penal law. The respondent supported the policy which, he suggested, lay behind this exception, by reference to the character of the South Australia Police as a disciplined force, with duties to enforce the penal law, and the need to accept the decisions of the Commissioner of Police in such matters without external interference. The appellant's arguments: The appellant's submissions supported the approach of the dissenting judge in the Full Court. In addition, the appellant placed emphasis on the provisions of the international Convention which, unusually, is scheduled to the Industrial Act, a State law, and which, by the terms of that Act, must be taken into account by the Commission in deciding whether an applicable dismissal is harsh, unjust or unreasonable. The other arguments advanced by the appellant will be identified later in these reasons. As appears from the competing approaches of the judges in the Full Court and the arguments of the parties, this is another case where, for default of expressly enacted provisions resolving the intersection of the two statutes, the resulting law is uncertain. I acknowledge that there are good arguments to support the conclusions successively reached by the Industrial Court, the majority in the Supreme Court and now the majority of this Court. Nevertheless, I have concluded that the better view is that the two statutes should be read together so that a member of the South Australia Police, such as the appellant, whose appointment is terminated after being found guilty of an offence, has a right of access to the Commission. I will explain the main considerations that have led me to this conclusion. Access to the Commission is available The language of the law: The first thing to be noticed is that there is nothing in the language, either of the Police Act or the Industrial Act, to take members of the South Australia Police, such as the appellant, as a class or in particular cases, outside the protective provisions afforded by the language of s 106 of the Industrial Act. That language is expressed in perfectly general terms. On its face, it applies to a person, like the appellant, who claims that his termination by the Police Commissioner amounts to unfair dismissal. The foundational rule for ascertaining the purpose (sometimes called "intention") of a Kirby parliament or other law-maker is that the search must begin in the language of the law itself111. Given the strong tradition, in the drafting of Australian legislation, of noting amendments or exceptions to earlier legislation expressly in a later text (and assuming that, for this particular purpose, the Police Act is to be treated as later in time than the Industrial Act) it would have been a simple thing for the drafter the Police Commissioner in the case of a member of the South Australia Police, who is found guilty of an offence, excludes remedies afforded for unfair dismissal in Pt 6 of Ch 3 of the Industrial Act. The passage of the latter remedies in an enactment of the South Australian Parliament was only four years earlier. Yet express amendment was not attempted. to make unambiguously clear termination by that Even easier would have been the utilisation of regulations under s 105A of the Industrial Act to exclude members of the Police as a class. This might have been achieved by the Executive Government without any need for legislation. However, this too was not done. These omissions fall to be considered in the light of the serious consequences that attend unreviewable decisions involving the harsh, unjust or unreasonable termination of a person's employment. Construing beneficial laws: The provisions in Pt 6 of Ch 3 of the Industrial Act for remedies against unfair dismissal are clearly important and beneficial privileges, expressed in unqualified language112. By their nature, being protective of valuable legal rights, they would not ordinarily be read down to exclude a particular class of "employees". At least, this would not be done without clear provisions indicating that such was the purpose of the legislature113. In its reasons, the Industrial Court cited a passage in the earlier decision of the Commission in Mislov v Port Lincoln Health Services Inc114. There the Commission said, correctly: "Termination of employment is often a very significant and traumatic event for the affected employee. It can have profound 111 Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518; cf Butler (1961) 106 CLR 268 at 276 per Fullagar J. 112 Cf Colley v Futurebrand FHA Pty Ltd (2005) 63 NSWLR 291 at 298 [30]-[33]. 113 Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 260-261; Colley (2005) 63 NSWLR 291 at 293 [4]. 114 (2001) 110 IR 45 at 52 [41]: see [2003] SAIRC 19 at [12]. Kirby consequences that can go well beyond the immediate economic impact resulting from the loss of paid employment." Part 6 of Ch 3 of the Industrial Act was enacted in recognition of this feature of employment termination. It reflects an appreciation that the common law, by its substantive rules and expensive procedures, does not provide adequate protection to employees from arbitrary, capricious and unfair decisions to terminate an employee's services. As the Industrial Court recognised in this case115, and as Debelle J emphasised in the Full Court, the Police Commissioner was not obliged to terminate the appointment of the appellant, notwithstanding that the appellant had been found guilty of an offence against the law. By s 40(1), a wide panoply of powers was conferred on the Commissioner. In Debelle J's words116: "The very width of these powers highlights the possibility that the Commissioner might on some occasion terminate an officer's appointment when another form of discipline would have been entirely adequate." The Industrial Court judges also said117: "[T]he Commissioner was not obliged to do anything and having resolved to act, he could have chosen from any of a number of lesser sanctions, including suspension, demotion, a fine, a reprimand or counselling." Given the then recent enactment by the South Australian Parliament of such important beneficial and protective legislation as Pt 6 of Ch 3 of the Industrial Act, it is scarcely a satisfactory resolution of the suggested intersection of such provisions with the Police Act to hang the outcome on the sequence of the provisions in time or the alleged particularity of the Police Act when compared to the Industrial Act. On one view, it is the Industrial Act that has expressed the command of Parliament, in broad and specific language, protective of employees against the serious injustice of unfair dismissal. Without express exclusion by Parliament of members of the Police Force, the arguments that such an exclusion should be read into the Industrial Act are not persuasive. The many potential injustices that are repaired by that Act suggest that a court should not struggle to diminish the Act's apparently general field of operation. Whilst a Police Force is indeed a 115 [2003] SAIRC 19 at [13]. 116 (2004) 233 LSJS 110 at 111 [3]. 117 [2003] SAIRC 19 at [13]. Kirby disciplined service, it is impossible to suggest that a Police Commissioner, in a termination decision, is somehow immune from reaching erroneous conclusions and assessments. The fact that so many other decisions of the Police Commissioner, including in cases of termination other than for offences, are subject to judicial reassessment in the District Court, indicates that the disciplined character of the South Australia Police can survive ex post judicial scrutiny of the Commissioner's decisions, including to terminate an appointment. The wide variety of offences: Notwithstanding the foregoing, it is necessary to consider whether there is something in the case of termination under s 40(1)(d) of the Police Act, following a finding of guilt of an offence, of such a character that it rationally repels the opportunity of review by the Commission. In support of this approach, there were suggestions that recent troubles in the nation's police services warranted a strict and unreviewable power in the Police Commissioner where guilt of an offence was made out, although a similar power was not required where the infraction was of the Code of Conduct applicable to police members118. This is also an unconvincing proposition for the reasons expressed by Debelle J in the Full Court119. The Police Act refers to offences not only against the law of South Australia but against the law of any State or Territory or of the Commonwealth. A huge variety of offences is thereby incorporated by reference in s 40(1)(a), thus legally authorising a decision to terminate the appointment of a member of the Force. The offences extend from serious criminal offences of the kind that would unquestionably merit termination to a vast range of regulatory provisions that are nonetheless offences because supported by penal sanctions, even if only those of a fine120. Debelle J pointed to the offence of exceeding the speed limit which, at least in many, perhaps most, circumstances, would fall short of providing proper grounds for termination of the member's appointment121. The same might be said of jaywalking and even more so of regulatory "offences". The risk of casting such a wide net, thrown over tens of thousands of offences under State, Territory or federal law in this country, is that an offence might, in a particular case, be 118 This is the Code of Conduct established by regulation under Pt 6 of the Police Act. See ss 3, 37. 119 (2004) 233 LSJS 110 at 111 [3]. 120 Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at 121 (2004) 233 LSJS 110 at 111 [3]. Kirby used as a pretext for getting rid of a member of the Police unwanted for a reason other than that of conviction for such offence. Although it is true that it could normally be expected that a Police Commissioner would not abuse his or her powers, this is precisely the reason why, in cases of termination of employment (dismissal), remedies for the exceptional case where the dismissal is "harsh, unjust or unreasonable" are commonly provided by Australian law122. Reposing statutory and other powers in a Police Commissioner is not a fail-safe guarantee that such powers will be used correctly. The misuse of Commissioners' powers is revealed from time to time in official reports and court proceedings123. Wrongs happen. For unfair dismissals and terminations remedies in independent courts and tribunals are sometimes needed. It follows that there is a principle to be satisfied here. Parliaments can, within their respective powers, abolish, reduce or confine such remedies as they decide. But where they express them in general and unqualified terms, courts should not perform to supposed the necessary surgery by implications124. On the basis that members of the South Australia Police are employees, they are by the Industrial Act apparently entitled to have claims of such unfair dismissal reviewed by the Commission where no other review is available and taken. I am unconvinced that such review was excluded by implication in the circumstances of this case. reference Battle of the maxims: The respondent, however, relied heavily on various maxims that express canons of construction deployed by the courts when faced with problems of the present kind. I have already mentioned the maxim favouring preference for a later law over an earlier one: leges posteriores priores contrarias abrogant125. The difficulty with applying this maxim is the constantly changing character of the State laws on the respective subjects of police discipline and termination and industrial relief from unfair dismissal. As here, it is difficult to discern which law relevantly came first and is hence purportedly 122 See eg Workplace Relations Act 1996 (Cth), s 170CE(1)(a). 123 Some of the reports are mentioned in the reasons of Callinan J at [160]; cf Whitrod, Before I Sleep: Memoirs of a Modern Police Commissioner, (2001) at 138-191. 124 Commissioner of Police v Tanos (1958) 98 CLR 383 at 396; Coco v The Queen (1994) 179 CLR 427 at 436; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 562- 125 Later laws abrogate prior contrary laws. Kirby repealed by implication126. Certainly, it is difficult to attribute an implied repeal to Parliament where the legislators themselves have refrained from clearly so enacting. Another maxim emphasised for the respondent was that a statute of general provision will not normally be taken to override one with special provisions governing the circumstances with greater particularity: generalia specialibus non derogant127. It is true that this maxim is sometimes helpful in classifying the intersecting laws and deciding which of them must be taken to have priority128. In particular circumstances, I have myself approached such problems in this way129. However, a difficulty of applying this maxim is that it is sometimes contestable as to which enactment is the special and which the general provision130. Those more attuned to notions of industrial justice, and its importance in society and for vulnerable individuals, might regard the Industrial Act in this respect to be special and the Police Act (which deals with many and varied matters of police regulation) a general statute, not enacted to expel the particular beneficial remedies afforded against the special mischief of unfair dismissals. This is why Higgins J cautioned about the limited use that might be made of such rules of thumb131. The most enduring of the canons of construction that have been applied throughout the history of this Court is that which enjoins the decision-maker, faced with apparent statutory intersection, to endeavour, to the fullest extent permitted by the language, to read the two statutes so that each, within its own 126 See above these reasons at [85]. 127 General expressions do not derogate from special expressions. 128 Bank Officials' Case (1923) 32 CLR 276. That was a case in which this rule was invoked by the majority but contested by the minority. See also Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation (1948) 77 CLR 1 at 29. 129 See, eg, Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365 at 420-422 [156]-[159]. 130 See, eg, Bank Officials' Case (1923) 32 CLR 276 at 297 per Higgins J. 131 See above, these reasons at [61]. See also in relation to this maxim Associated Minerals Consolidated Ltd v Wyong Shire Council [1975] AC 538 at 553-554. Kirby sphere, can continue to operate, such that no part of either is taken to be repealed or inoperative, for Parliament has not said so132. It is this rule that helps to explain many old and recent decisions of this Court. Thus, in Saraswati v The Queen133, Gaudron J, in words that have often been quoted, observed134: "It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied. There must be very strong grounds to support that implication, for there is a general presumption that the legislature intended that both provisions should operate and that, to the extent that they would otherwise overlap, one should be read as subject to the other". It is this approach to legislative intersection that was again quoted and applied by the recent and unanimous decision of this Court in Shergold v Tanner135. It was important for this Court's resolution of the supposed intersection and implied repeal that was rejected in that case. The same rule should be given effect in the present case. There were three express restrictions enacted by the South Australian Parliament in respect of the jurisdiction of the Commission in applications under s 106 of the Industrial Act136. None of those restrictions applies to the present case. There is no reason for this Court to invent and add a fourth restriction. Powers of an independent tribunal: Moreover, this Court has said on many occasions that it is inappropriate to read down the provisions of statutory language conferring jurisdiction and granting powers to a court according to 132 Bank Officials' Case (1923) 32 CLR 276 at 285 per Knox CJ, 292 per Isaacs and Rich JJ. The rules of international law governing the interpretation of treaties illustrate the same problems and adopt analogous solutions: Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at 251-256, 294-296. 133 (1991) 172 CLR 1 at 17; cf Goodwin v Phillips (1908) 7 CLR 1 at 11; Rose v Hvric (1963) 108 CLR 353 at 360. There is a need to "import a contradiction": Garnett v Bradley (1878) 3 App Cas 944 at 966. See also R v Champneys (1871) LR 6 CP 134 Citing Butler (1961) 106 CLR 268 at 276 per Fullagar J, 290 per Windeyer J. 135 (2002) 209 CLR 126 at 137 [34]. 136 The exceptions are employment excluded by regulation (ss 6 and 105A), election of remedies (s 106(2) and (3)) and employees on higher remuneration (s 105A(1)). Kirby implications not found in the express words of the law137. Whilst, in the past, this principle has been repeatedly expressed by reference to courts and not quasi- judicial independent tribunals, such as the Commission, a functional analysis of the principle would suggest that it applies to the jurisdiction and powers of the Commission, constituted in the way relevant to this case. The Industrial Relations Commission of South Australia shares many of the ordinary features of a court. Its members are guaranteed by statute tenure and independence in their decision-making138. The Commission's decisions are final139. The Commission is empowered to punish persons for contempt140. An order made by the Commission, pursuant to s 109 of the Industrial Act, may be registered in a civil court. It may be enforced as a judgment of that court141. In such circumstances, it is clear that the Commission enjoys, and should enjoy, wide powers to deal with the variety of matters coming before it, in the confidence that it will do so with complete independence and will not misuse such powers142. Thus, in reviewing a decision by the Police Commissioner to terminate the appointment of a member of the South Australia Police, it is unimaginable that the Commission would not give weight to the special character of this form of employment; to the need for discipline and high repute on the part of members of the Police; and to the purposes of the Police as a service established to combat offences against applicable State, Territory and federal laws rendering the absence of findings of guilt of such laws a norm of such service, at least where the law in question expresses offences relevant to the capacity of the member to discharge the functions of his or her appointment with the confidence of fellow police officers, the judiciary and the community. Nonetheless, for the exceptional case of an ill-considered, hasty or disproportionate decision to terminate the appointment of a member of the Police, the facility of review of a dismissal impugned as "harsh, unjust or 137 Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 138 Industrial Act, s 32. 139 Industrial Act, s 206. 140 Industrial Act, ss 176-177. 141 Industrial Act, s 230; cf Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245. 142 Cf Hillpalm Pty Ltd v Heaven's Door Pty Ltd (2004) 220 CLR 472 at 499-500 [84]. Kirby unreasonable"143 is unsurprising. It is unquestionably available across a wide spectrum of public employment by virtue of the express provisions of the Industrial Act. This makes the reliance of the respondent on the suggested uniqueness of this variety of public employment, and its insusceptibility to such measures, impossible to accept in the present context144. As Windeyer J pointed out in Cobiac v Liddy145, the ultimate resolution of the inter-relationship of statutes such as the Industrial Act and the Police Act is not achieved by maxims. It depends on "a comparison of the actual language of each [statute], to see whether they do stand together or whether the latter has … abrogated the former". Because of the assumption that Parliament normally intends two statutes to work harmoniously together, so that each operates within its respective field of application146, courts entrusted with making a judgment about the operation of the two statutes do not look at the problem in a quest to find hypothetical or possible conflicts147: "Legislation being concerned with the highly practical business of lawmaking, the issue in every case of a suggested conflict will be the practical ways in which the legislation operates together and whether, in that context, an irreconcilable conflict of duties really arises." I am unconvinced that a conflict of that order has been shown in this case. The effect of re-employment: Consider, for example, the respondent's complaint that the Industrial Act does not mesh with the Police Act because it omits to provide expressly for the quashing of the Commissioner's decision to terminate the appointment of a member of the Police Force; to provide for the administration of a new oath or affirmation upon "re-employment"; to provide expressly for practical details such as restoration of insignia and equipment; to 143 Industrial Act, s 108(1). 144 Cf North West County Council v Dunn (1971) 126 CLR 247 at 251. 145 (1969) 119 CLR 257 at 268. 146 Hack v Minister for Lands (1905) 3 CLR 10 at 23-24; Maybury v Plowman (1913) 16 CLR 468 at 473-474, 480; Lukey v Edmunds (1916) 21 CLR 336 at 341, 352; South-Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603 at 623. 147 Royal Automobile Club (1992) 27 NSWLR 282 at 294. Kirby provide for the displacement of newly appointed employees; and to afford alternative responses to the proved offence short of termination. These arguments have a superficial attractiveness. But when close attention is paid to the language of s 109 of the Industrial Act, the attraction melts away. It is clear from s 109 (and its provision for restoration to the former conditions of employment; for determination by the Commission exceptionally of other conditions; for the restoration of intervening salary and adjustment of payments) that the "re-employment" contemplated by the Industrial Act is to the position exactly as it was before the dismissal determined by the Commission to be "harsh, unjust or unreasonable". The fact that other persons have been employed in the position previously occupied by the re-employed member is specifically provided for in s 109(1)(b) of the Industrial Act. The case where re- employment would not be appropriate is dealt with by s 109(1)(c). But where "re-employment" is ordered, despite arguments deserving of weight concerning the Police Commissioner's powers and the disciplined character of the Police, the Industrial Act provides for restoration of the employee to the employment status which the employee held before the dismissal. He or she is then necessarily subject, in this employment, to the former oath or affirmation and to all the requirements of the Code previously applicable. Indeed, the police member who has been "re-employed" is subject to any action that the Police Commissioner may take under s 40(1) of the Police Act. Thus, if it were found that the termination of the person's employment was because of unfair procedures, such as a failure to hear the police member or to consider the evidence, there is no reason why, acting in a just and lawful way, the Police Commissioner could not proceed once again to terminate the employment of the police member, but to do so without the procedural defects that led to the order for re-employment under s 109(1) of the Industrial Act. Alternatively, if the re-employment were ordered because the previous action of the Police Commissioner was judged harsh or unreasonable, by virtue of being disproportionate to the offence found, I see no reason why the Police Commissioner could not proceed to a decision and action, short of termination, within the large range of powers afforded to the Commissioner under s 40(1) of the Police Act. "Re-employment" in this context means no more than reinstatement in the position previously held by the employee concerned148. In the cases to which it applies, the Industrial Act must be given effect. Relief of this kind, afforded by industrial tribunals in cases of unfair dismissal, has been conventional in Australia for nearly a century. There is 148 Blackadder v Ramsey Butchering Services Pty Ltd (2005) 79 ALJR 975 at 978 [14], 980 [28], 989 [68]-[69]; 215 ALR 87 at 90-91, 93, 104-105. Kirby nothing in Pt 6 of Ch 3 of the Industrial Act that suggests that it is different in this case. The re-employed employee is not guaranteed an appointment for life. He or she is not immune from the ordinary incidents of the employment to which the employee is restored. It is true that the earlier action of the Police Commissioner is not quashed. But, in effect, the order for re-employment under s 109 of the Industrial Act has the same consequence. No other reading of the two Acts would give the language of each its full force and effect according to its terms. Discipline in a police service is important. But, according to the Industrial Act, fairness in termination decisions is also important for the affected employees in South Australia. The two objectives of the respective Acts are not irreconcilable. Upon one view, a harsh, unjust or unreasonable termination of the appointment of a police officer, unrepaired by any opportunity of external review, may undermine, rather than promote, discipline within the South Australia Police. the Industrial Act Consistency with the Convention: Finally, it is important to remember the unusual provisions of s 108(2)(a) of the Commission, in deciding whether a dismissal was harsh, unjust or unreasonable, to have regard to the Convention. Although it is not uncommon to see references to such Conventions in federal legislation149, their appearance in State and Territory laws in Australia is much less common. It must thus be assumed that the Parliament of South Australia took the course of scheduling the Convention deliberately and for the high purpose of ensuring, throughout the State, conformity of State law, and relevant State decision-making, with the provisions of international law stated in the Convention. instructing Where an enactment has been adopted by an Australian legislature, with a view to implementing an international Convention as part of municipal law, it is normal to construe any ambiguous provisions in the enactment in such a way, so far as possible, as to ensure compliance with the Convention, that being the imputed purpose of the legislature concerned150. In so far as there is an ambiguity in the language of ss 106, 108 and 109 of the Industrial Act, or uncertainty as to whether that Act applies to the case of termination of the employment of a member of the South Australia Police, it would conform to 149 See, eg, Workplace Relations Act 1996 (Cth), ss 93A, 170BA-170BC, 170BG, 170CA-170CB, 170CK, 170FA, 170GC, 170KA, 170KC. 150 Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 287; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 384 [97]; Coleman v Power (2004) 220 CLR 1 at 27-28 [19], 92-96 [242]-[249]; McGee v Gilchrist- Humphrey (2005) 92 SASR 100 at 112-115 [56]-[79]. Kirby normal principles for the construction of statutes of this character to prefer the interpretation that fulfils the objects of the Convention to an interpretation that would involve a departure from the Convention. It was suggested in argument, faintly, that there would be no derogation from the norms of the Convention if s 40(1)(d) of the Police Act were construed to uphold an unreviewable termination of the "employment" appointment of a member of the Police because such a member would still have a facility to approach the Supreme Court for judicial review, invoking the modern equivalents of the prerogative writs151. Given the language of the Convention, this is an unpersuasive argument. Article 8 requires that the worker whose employment has been terminated should be entitled to "appeal" to "an impartial body, such as a court, labour tribunal, arbitration committee or arbitrator". But Art 9 makes it clear that mere access to a court, for the type of remedies typically available on judicial review, would not suffice. Judicial review is normally limited to relief for errors of jurisdiction and law. Such errors can include departures from the requirements of natural justice. However, in the ordinary case, the review is confined to considerations of power and lawfulness. As such, as this Court has said repeatedly, judicial review is not addressed to reconsideration of the factual merits152. Article 9 makes it clear that the Convention is concerned with the merits and not simply formalities, procedures or matters of jurisdiction. The "bodies referred to in Article 8", including the "court" there mentioned, must be "empowered to examine the reasons given for the termination and the other circumstances relating to the case". Judicial review for errors of jurisdiction and law would not authorise a court to do what Art 9 requires. Consideration of "whether the termination was justified" clearly demands consideration of the merits of the termination. This means consideration of whether the termination was, as s 108 of the Industrial Act puts it, "harsh, unjust or unreasonable". Such consideration is not normally possible, at least directly, in proceedings analogous to the prerogative writs. The consequence is that, if an employee, such as a member of the South Australia Police whose appointment had been terminated by the Police Commissioner, had access to the Commission to hear and decide a complaint, 151 The Supreme Court of South Australia has jurisdiction to make orders in the nature of certiorari. See Supreme Court Rules 1987 (SA), r 98.01(2). 152 Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 597- 600; Abebe v The Commonwealth (1999) 197 CLR 510 at 571 [168], 579-580 Kirby claiming relief under s 106 of the Industrial Act, the requirements of the Convention would be satisfied. Its provisions would be fulfilled in South Australia, as was the purpose of the Parliament of that State in enacting s 108 of the Industrial Act. If, however, a person such as the appellant were confined to judicial review in the Supreme Court, there would be a departure from the remedies contemplated by the Convention, particularly when Art 8 is read with Art 9. It follows that the normal rule for the construction of legislation upholding the implementation of an international treaty favours the interpretation advanced by the appellant153. This Court should uphold that interpretation. It should do so because it is the only way to give effect to the Convention in this case as the Parliament indicated was its purpose and objective. Conclusion and orders The result is that, whilst, as in virtually every case, in default of express provision clarifying the intersection, there are arguments both ways, the preferable interpretation of the interaction of the Police Act and the Industrial Act is that submitted for the appellant. Each Act is important. The two Acts can, as a matter of practicality, operate together. Adopting this course conforms to the regular and recent practice of this Court in similar cases. It gives effect to the language of both Acts, according to their terms and operating in their respective spheres. It upholds an important and beneficial provision enacted by the South Australian Parliament to repair instances of unfair dismissal and to remedy shortcomings of Instances of unfair dismissal are inherent, as common law remedies. possibilities, in an uncontrolled interpretation of the Police Act. The appellant's interpretation also fulfils the objective of the South Australian Parliament to ensure the availability of a substantial review of the justification of a termination of employment in the case of police members that would not otherwise be achieved on the respondent's argument. Express exemptions of such police members would have been readily available but were not taken. This Court should not imply an exemption from the operation of the Industrial Act in this case where the State Parliament has refrained from expressly so providing. The appeal should be allowed with costs. Orders 2 and 3 of the orders of the Full Court of the Supreme Court of South Australia should be set aside. In place of those orders, the appellant's application for leave to appeal to the Full 153 Cf Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 492 [29]. Kirby Court should be granted and the appeal to that Court should be allowed with costs. The matter should be remitted to the Industrial Relations Court of South Australia to be determined according to law. Callinan Issue This appeal raises a question whether legislation enacted with respect to the establishment and administration of the Police Force of South Australia should be read as subject, so far as the termination of members of the Police Force is concerned, to industrial legislation of general application throughout the State. Facts and earlier proceedings The appellant was a police constable in the South Australian Police Force. On 27 March 2001 he was convicted of assault in the Adelaide Magistrates Court. He filed, but did not pursue an appeal to the Supreme Court of South Australia against his conviction. The Commissioner of Police terminated his service in the Police Force on 22 November 2001 as a result of it. He unsuccessfully sought to have the District Court of South Australia review the termination. Next, on 22 May 2002 the appellant made an application to the Industrial Relations Commission of South Australia ("the Commission") purportedly under s 106 of the Industrial and Employee Relations Act 1994 (SA) ("the IER Act")154 for a determination, pursuant to s 108 of that Act, that his termination from the Police Force was harsh, unjust or unreasonable. He sought a further order, for re- employment or other relief, provision for which was made by s 109 of the IER Act155. An Industrial Relations Commissioner referred the following question of law to the South Australian Industrial Relations Court pursuant to s 214(1) of the IER Act: 154 The IER Act was renamed the Fair Work Act 1994 (SA) by the Industrial Law Reform (Fair Work) Act 2005 (SA). The appellant's rights under the IER Act had continued as at the date of his application to the Commission. 155 Section 109 empowers the Commission to order re-employment in another position or payment of compensation if re-employment in the original position is impractical or inappropriate. Callinan Is the Industrial Relations Commission of South Australia deprived of jurisdiction to determine the applicant's application on any of the following grounds: That the Police Act 1998, the Police Regulations 1999 and the Police (Complaints and Disciplinary Proceedings) Act 1985 provide a complete code in respect of the applicant's dismissal such that section 106 of the Industrial and Employee Relations Act 1994 has no application; or That the applicant's application No DCAAT 60 of 2001 to the District Court of South Australia is a remedy for dismissal and that the applicant is thereby estopped by section 106(2) of the Industrial and Employee Relations Act 1994 from bringing this application?" The Full Court of the Industrial Relations Court (Senior Judge Jennings, Judge Parsons and Judge Gilchrist) unanimously held that it did not have jurisdiction to entertain the appellant's application for relief under Ch 3, Pt 6 of the IER Act. The principal basis of the decision of the Industrial Relations Court was that the Police Act 1998 (SA) manifested a clear intention by Parliament to render decisions made by the Commissioner of Police to terminate serving members of the Police Force immune from review by the Commission, notwithstanding the breadth of its jurisdiction with respect to harsh, unjust or unreasonable dismissals from employment generally. This decision was consonant with earlier decisions of that Court156. The appellant then filed a notice of appeal to the Full Court of the Supreme Court of South Australia. The appeal was held to be incompetent by the Full Court but as the appellant was not legally represented, it exercised its discretion to treat the matter as an application for leave to appeal, and heard full argument from both the appellant and the Commissioner for Public Employment who responded to the notice of appeal. The Full Court's reasons The Full Court was constituted by Prior, Debelle and Bleby JJ. Bleby J wrote the leading judgment with which Prior J agreed. Debelle J dissented. 156 McQuillan v Commissioner for Public Employment (Department of Correctional Services) (1993) 51 IR 356; Stone v Commissioner for Public Employment (2002) Callinan The majority accepted that the Commissioner of Police acted under s 40(1)(a) of the Police Act in dismissing the appellant. Section 40 relevantly provided: If a member of SA Police or police cadet – is found guilty of an offence under a law of this State, the Commonwealth or another State or a Territory of the Commonwealth; ... the Commissioner may take action, or order the taking of action, of one or more of the following kinds in relation to the person: termination of the person's appointment; suspension of the person's appointment for a specified period; reduction of the person's remuneration by a specified amount for a specified period (but not so that the total amount forfeited exceeds the amount prescribed by regulation); (g) where the person is a member of SA Police, transfer of the member to another position in SA Police (whether with or without a reduction in rank, seniority or remuneration); (h) where the person is a member of SA Police, reduction in the member's seniority; imposition of a fine not exceeding the amount prescribed by regulation; where the person is a police cadet, withdrawal of specified rights or privileges for a specified period; a reprimand recorded in the person's conduct and service history kept under the regulations; an unrecorded reprimand; counselling; education or training; action of any other kind prescribed by regulation." Callinan In the Full Court, Bleby J also found that the Police Act excluded the operation of the more general provisions of the IER Act. After referring to the reasons of Griffith CJ in Goodwin v Phillips157 and of Gaudron J in Saraswati v The Queen158, his Honour identified the relevant authorities and principles and said this159: "It follows that if the two Acts can be read as being able to operate together they should be allowed to do so: Trade Practices Commission v BP Australia Ltd160. In other words, every attempt should be made to reconcile the competing statutes before holding that there has been an implied repeal. What I have said relates to the position where a later Act dealing with a specific situation is said to repeal, by implication, the earlier Act of more general application. Another similar situation can sometimes arise where a later Act of general application is said to have no effect on a situation covered by an earlier specific Act. The classic exposition of this canon of construction is contained in the judgment of the Earl of Selborne LC in Seward v Vera Cruz161: 'Now if anything be certain it is this, that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so.'" His Honour then turned to the Acts in question. The issue, his Honour said, was whether there was an implied partial repeal of the IER Act by the Police Act. After examining the relevant provisions he said162: 157 (1908) 7 CLR 1. 158 (1991) 172 CLR 1. 159 Ferdinands v Commissioner for Public Employment (2004) 233 LSJS 110 at 115- 160 (1985) 7 FCR 499 at 506. 161 (1884) 10 App Cas 59 at 68. 162 Ferdinands v Commissioner for Public Employment (2004) 233 LSJS 110 at 119- Callinan "[I]n my opinion the Police Act was intended by Parliament to deal exclusively with all terminations of employment of members of the South Australian Police. That intention is manifested by a number of factors. In the first place, there are the possibly limited grounds on which the Commissioner is able to terminate a member of the police force in any event. Those grounds are much narrower than grounds available to an employer at common law. Next, there are procedural obligations required to be observed in ascertaining whether the relevant grounds exist for the termination. In that sense the Police Act has made its own express provisions for the application of procedural fairness for disciplinary terminations to the exclusion of those contained in the [IER Act]. The fact that Parliament has provided for a system of review of determinations to terminate an officer on some grounds but not on others is, in itself, significant. The review is prescribed only for non-disciplinary terminations. Put another way, termination taken for disciplinary reasons under s 40 of the Police Act is the only type of termination not subjected to some form of review in the Police Act. The police force, like the armed services, but unlike any other body of employees, must at all times be and remain a highly disciplined force if it is to achieve its objective of reassuring and protecting the community in relation to crime and disorder by the sort of service it is required to provide: see s 5 Police Act. Section 6 of the Police Act vests responsibility for the control and management of the South Australian Police in the Commissioner, subject only to any written directions of the Minister. However, s 7 specifically provides that no ministerial direction may be given to the Commissioner in relation to 'the appointment, transfer, remuneration, discipline or termination of a particular person'. Thus, the Commissioner's power to control and manage the police force in those particular areas is to be absolute and without interference. Nevertheless, by s 10 of the Police Act the Commissioner is required to ensure that management practices, particularly those relating to personnel management, are followed and are directed towards certain objectives stated within the section. To that end, the Commissioner is empowered by s 11 to give general or special orders for the control and management of the South Australian Police. These are all detailed statutory obligations. If there is a failure to observe them, the Commissioner will be open to judicial review. In my opinion, Parliament has manifested the clear intention that, within those statutory parameters, the Commissioner should have complete control over the police force – a control which cannot be compromised by a determination of the Industrial Relations Commission Callinan that, according to generally accepted community standards, a dismissal is harsh, unjust or unreasonable. It is not surprising that Parliament should have set up a dedicated system of review of a decision of the Commissioner to terminate a member of the police force where questions of discipline are not involved. Equally, it is not surprising that Parliament should wish to confer such apparently wide powers on the Commissioner, without any right of review, in respect of matters of discipline which are fundamental to the satisfactory operation of a disciplined police force. It has, nevertheless, ensured that necessary safeguards of proof of the underlying facts, according to acceptable standards, have been built into the Police Act to ensure that termination cannot be effected without satisfactory proof of those underlying facts. In my opinion, there is a necessary implication in the terms of the Police Act that the provisions of Chapter 3, Part 6 of the [IER Act] are repealed, at least to the extent that they might otherwise apply to members of the South Australian Police. The Commissioner terminated Mr Ferdinands' employment because he had been found guilty of a charge of assault, contrary to s 39 of the Criminal Law Consolidation Act. That is sufficient justification for the Commissioner to have acted under s 40 of the Police Act. It was therefore a valid termination, but one which is not subject to review under Chapter 3, Part 6 of the [IER Act]. Accordingly, I do not consider that Mr Ferdinands has an arguable case that the Industrial Relations Court was wrong in its decision in Stone or McQuillan or that it was wrong in this case. For these reasons I would refuse leave to appeal from the Industrial Relations Court." Justice Debelle's reasons for reaching a different opinion appear from the following paragraphs163: "The very width of these powers [under s 40(1) of the Police Act] highlights the possibility that the Commissioner might on some occasion terminate an officer's appointment when another form of discipline would have been entirely adequate. For example, a police officer might be found to have been guilty of exceeding the speed limit. Whilst that might be a poor example for police officers to set to the public, it is unlikely to warrant termination of appointment as a police officer. One can readily identify a large number of offences where, according to circumstances, termination of the police officer's appointment would be unjustified. 163 Ferdinands v Commissioner for Public Employment (2004) 233 LSJS 110 at 111- Callinan Although the Police Act 1998 deals with issues affecting the administration of SA Police including discipline and in that respect might be considered to be a special Act in contrast with the more general application of the [IER Act], it was nevertheless enacted against the legislative background of the [IER Act] and the provisions of Part 6 of that Act relating to unfair dismissal. It is, therefore, reasonable to infer that it was not intended to deny a police officer a right to make an application under Part 6 for unfair dismissal. The absence, therefore, from the Police Act of a right of review of a decision terminating appointment under s 40 does not I think have the consequence that it was not intended that a police officer could not [scil, could] make an application under Part 6 of the [IER Act]. If Parliament had intended that the rights available under Part 6 should not be available to police officers, it could easily have so provided in the Police Act. The fact that the termination of employment under s 40 is the only kind of termination of employment under the Act is not, standing alone, a sufficient reason for concluding that the intention of the Police Act is to invest the Commissioner with a non-reviewable authority under s 40 to terminate employment. In addition, I do not think that the powers of the Industrial Relations Commission to determine that a dismissal is harsh, unjust or unreasonable compromises the disciplinary powers of the Commissioner. The question whether a dismissal is harsh, unjust or unreasonable will be determined by reference, among other things, to the need for proper standards of conduct in and the overall discipline of the police force. In my view the provisions of the Police Act 1998 do not have the consequence that a police officer may not apply under Part 6 of the [IER Act] for relief where his employment as a police officer has been terminated pursuant to s 40 of the Police Act. One consequence of this conclusion is that there is a remedy available if the Commissioner terminates appointment but not if he exercises any of his other powers listed in s 40(1). However, termination of appointment is such an extreme remedy that the intention is to enable a remedy for that but not for the exercise of any of his other powers of discipline in s 40(1)." The appeal to this Court The appellant's principal submission in this Court is that the jurisdiction of the Commission under the IER Act extends to all employees in the State of South Australia except those specifically exempted; that it extends to police officers terminated under s 40(1) of the Police Act; and that there is no statutory language in the IER Act that reduces its apparently very broad jurisdiction. Callinan An alternative submission was put by the appellant. It is, that even if the jurisdiction of the Commission can be read down by implication, there is no reason in this case why such a reading down should occur as the two Acts under examination can operate in a consistent fashion. The respondent's submission substantially adopts the reasoning of the majority in the Full Court, that the Police Act constitutes a self-contained scheme for challenges to decisions of the Police Commissioner. That submission should be accepted. That it is correct follows from the detailed provision that the Police Act makes for all aspects of the engagement and disciplining of members of the force, and by reason of the nature of the duties and obligations of police officers to which Bleby J made reference, and which need no repetition. It may be observed at this point that neither party sought to rely on Enever v The King164 in which the Court165 discussed the independent position of police officers, and the absence of vicarious liability at common law, of the State for them. Therefore, the case falls to be decided on the basis that its outcome depends entirely on the proper construction of the relevant enactments. It is not irrelevant that the Police Act is a later enactment. I would have thought that if the legislature had intended the IER Act to apply to police officers it would have said so in terms in the Police Act making clear in doing so the extent to which the earlier was to operate in relation to probationary officers, cadets, commissioned officers and other officers respectively, and the relationship between the Tribunal to which I will refer later, and the Commissioner. It is not to the point that like provisions to the relevant ones in the two enactments may have appeared in earlier enactments. What is to the point is that the legislature, in enacting the Police Act in 1998 must be taken to have rejected the subjection of any part of it to the IER Act, by making no reference in it to the matters to which I have referred. The effect of the relevant provisions of the Police Act may be summarized. By ss 20, 21, 23, 24, 27 and 29 the Commissioner is empowered to appoint, promote, transfer and to dismiss officers, in certain circumstances. Section 27 is concerned with the probationary appointment of police officers. Under s 27(3), the Commissioner may terminate the employment of a member appointed on probation, "having regard to the person's suitability for permanent appointment". Section 37 provides for the making, by regulation, of a police Code of Conduct ("the Code"). Such a code has been made by regs 11-24 of the Police Regulations 1999 (SA). Under s 39 of the Police Act the Commissioner may charge a member with a breach of the Code. If the breach is not admitted by 164 (1906) 3 CLR 969. 165 (1906) 3 CLR 969 at 975-976 per Griffith CJ, 992 per O'Connor J. Callinan the member, it must be determined by the Police Disciplinary Tribunal, which is established by s 37 of the Police (Complaints and Disciplinary Proceedings) Act Part 6 of the Police Act, which is headed "Misconduct and discipline of police and police cadets" deals with misconduct by, and the disciplining of members of the Police Force and cadets. Section 40(1), which is in Pt 6, states a catalogue of measures available to the Commissioner, from counselling, training or an unrecorded reprimand, a recorded reprimand, a fine or reduction in seniority or rank, to a suspension or termination of the employment of a member, or a cadet, in certain circumstances. Those circumstances are, if a member or a cadet is found guilty of an offence under a law of South Australia, the Commonwealth or another State or Territory, or admits in accordance with the Police Act a breach of the Code with which he or she has been charged, or is found guilty of a breach of the Code in proceedings before the Police Disciplinary Tribunal. Part 7 of the Police Act, which is headed "Termination and transfer of police", relates to the termination and transfer of officers for reasons unrelated to misconduct. Under s 45(1), which is in Pt 7, the Commissioner may terminate the employment of a member by reason of incapacity owing to physical or mental disability or illness. Under s 46(1), which is also in Pt 7, the Commissioner may terminate the employment of a member by reason of unsatisfactory performance if it is not practicable to transfer that member to a position of equal or lower rank with duties suited to the member's capabilities or qualifications. Section 48 provides that a member may apply to the Police Review Tribunal166 for review of a decision to terminate the member's appointment during a period of probation, or on a ground for termination under Pt 7 of the Police Act. There is force in the respondent's submissions that it follows that it is a likely inference that no application may be made to the Police Review Tribunal for review of a decision to terminate a member's appointment under Pt 6. Similarly, a decision to terminate the employment of a police cadet may not be reviewed by that Tribunal. Section 51 of the Police Act provides that, following a decision by the Police Review Tribunal, the applicant or the Commissioner may appeal to the Administrative and Disciplinary Division of the District Court. Section 46 of the Police (Complaints and Disciplinary Proceedings) Act provides that a party to proceedings in the Police Disciplinary Tribunal, or a 166 The Police Review Tribunal is established by Sched 1 to the Police Act. Callinan member against whom the Commissioner of Police makes an order imposing punishment for a "breach of discipline"167 may appeal to the District Court. Under the Police Regulations 1982 (SA), which were made under the Police Act 1952 (SA), the Commissioner could lay a charge only for a breach of the Regulations (which charge, if not admitted, would be determined by the Police Inquiry Committee), although the Commissioner could impose a penalty upon a member found guilty of a breach of the Regulations, or of an offence against "the Act or any other Act". It is right and relevant, as the respondent submits, that the effect of the Police Act, the Police (Complaints and Disciplinary Proceedings) Act and the Police Regulations is that an appeal to the District Court is available from each of the following decisions: a decision of the Police Review Tribunal affirming a decision of the Commissioner to terminate the employment of a member under Pt 7 of the Police Act for physical or mental incapacity or unsatisfactory performance; a decision of the Police Review Tribunal affirming a decision by the Commissioner to terminate the appointment of a member on probation; a finding by the Police Disciplinary Tribunal that a member is guilty of a breach of discipline; and a decision by the Commissioner imposing punishment for a breach of discipline, but not, it may be observed, of the Commissioner to terminate the service of a member of the Police Force on his or her conviction of an offence of the kind of which the appellant was convicted. The respondent also points out that a convicted member does have rights of recourse to courts beyond the court entering the conviction (which conviction operates as the jurisdictional precondition to the exercise of the Commissioner's power). The member may appeal in accordance with the statutory regime governing an appeal in South Australia. In this case the appellant apparently chose to abandon an appeal which he had filed in the Supreme Court against the conviction. It seems to me that it is unlikely in particular, that the legislature, having made express provision for a review of a termination of a probationer, or a termination under Pt 7 of the Police Act for disability or illness (s 45), or unsatisfactory performance (s 46), would have intended that members of the Police Force otherwise totally unmentioned (in the Police Act) right of recourse to the Commission. Nor can I accept that the legislature could have failed to make appropriate provision for a terminated, have an entirely different, 167 "[B]reach of discipline" is defined in s 3 of the Police (Complaints and Disciplinary Proceedings) Act to mean "a breach that may be the subject of a charge by the Commissioner under the Police Act 1952". The parties argued on the basis that this definition applied to actions by the Commissioner under the Police Act 1998 (SA). Callinan review of a member's termination on conviction by oversight. The better view is that the legislature deliberately armed the Commissioner with a generally unreviewable right of termination for criminal conduct by a member. I say "generally unreviewable" because a decision of the Commissioner to dismiss a member under s 40 of the Police Act may be subject to judicial review upon appropriate grounds, in the Supreme Court of South Australia168. It may also be – and I express no concluded view on this – that an officer might be entitled to seek relief by way of mandatory injunction, or an order in the nature of certiorari or mandamus by reason of a breach by the Commissioner of ss 10(2)(b), 10(2)(c) and 10(2)(f) of the Police Act169. Those sections may, in any event, in an appropriate case, be relevant to an application to the Supreme Court for certiorari or a like remedy. That this may be so is not of itself sufficient reason to construe the Police Act as I do. It does however open up the possibility of the availability of a remedy in a case of serious injustice, a matter of which the legislature may be 168 The Supreme Court of South Australia has jurisdiction to make orders in the nature the Supreme Court Rules 1987, r 98.01(2). of certiorari: Commissioner's decision may be available on grounds of, inter alia, improper purpose, Wednesbury unreasonableness, ultra vires and breach of the rules of procedural fairness. Review of 169 Those paragraphs provide as follows: "General management aims and standards (2) With respect to personnel management, the Commissioner must ensure that practices are followed under which – employees are treated fairly and consistently and are not subjected to arbitrary or capricious administrative decisions; and there is no unlawful discrimination against employees or persons seeking to become employees; and employees are afforded reasonable avenues of redress against improper or unreasonable administrative decisions". Callinan taken to have been aware in enacting the Police Act in the form in which it has. It is not difficult to understand why, having regard to the number of public inquiries and the misconduct by police officers that they have uncovered170, a legislature might take the view that criminal conduct, the subject of a conviction after due process, and the exhaustion of all avenues of appeal, should result in the liability of a police officer to termination without any further right of challenge. That the definition of "employee"171 in s 4 of the IER Act may appear capable of embracing a police officer does not require any different conclusion. The Police Act, taken with the Police (Complaints and Disciplinary Proceedings) Act, is a specific statutory scheme, clear, explicit and comprehensive with respect to the matters with which it deals. The subject matter with which these enactments are concerned includes not only all aspects of the disciplining of police officers, but also their engagement, promotion and termination. Public employees they may be, but public employees of a kind for whom specific provision is unnecessary and has not been made, they are not. The appellant places reliance upon s 105A(2)(c) of the IER Act which provides as follows: "(2) The regulations may exclude from the operation of this Part or specified provisions of this Part – employees whose terms and conditions of employment are governed by special arrangements giving rights of review of, or appeal against, decisions to dismiss from employment which, when considered as a whole, provide protection that is at least as favourable to the employees as the protection given under this Part". He points out that the legislature by mere regulations could, and should, if it wished to put police officers clearly beyond the reach of the IER Act, have 170 Recent examples include: Wood, Royal Commission into the New South Wales Police Service: Final Report, 1997 (the Wood Royal Commission) and Fitzgerald, Report of a Commission of Inquiry pursuant to Orders in Council, 1989 (the Fitzgerald Inquiry). 171 Section 4 provides: "'employee' means a person employed for remuneration under a contract of employment and includes a public employee; ... 'public employee' means – (a) a person employed under, or subject to, the Government Management and Employment Act 1985; or (b) any other person employed for salary or wages in the service of the State". Callinan excluded police officers by regulation in terms under that section. The short answer is that, by the Police Act, this has been differently but clearly done, and an excluding regulation would therefore be otiose. Nor is there anything else in Pt 6 of the IER Act to indicate an intention to bring police officers within its purview. That the IER Act, in s 108 requires that regard be had to the Convention concerning Termination of Employment at the Initiative of the Employer 1982 ratified by Australia, and referred to in detail in the judgment of Kirby J, does not compel any different a conclusion. Its relevance is to applications duly made to and to be decided by the Commission. It is not relevant to acts done by the Commissioner of Police under express authority conferred upon him by the Police Act. It is unnecessary to explore in detail the difficulties to which an attempted reinstatement of a police officer dismissed by the Commissioner could give rise. Even if they were surmountable, the fact that they undoubtedly exist tends to lend force to the construction of the relevant enactments that I prefer. In any event, for the other reasons that I have given, the appeal should be dismissed. I would order that this be done with costs.

HIGH COURT OF AUSTRALIA SZAYW AND APPELLANT MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS & ANOR RESPONDENTS SZAYW v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 49 5 October 2006 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation I E Davidson with I G E Archibald for the appellant (instructed by Michael Jones Solicitor) N J Williams SC with M A Wigney for the first respondent (instructed by Clayton Utz Lawyers) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS SZAYW v Minister for Immigration and Multicultural and Indigenous Affairs Immigration – Refugees – Protection visa decision – Review by Refugee Review Tribunal – Hearing of an application for review by the Tribunal to be "in private" – Appellant making common cause with other visa applicants – Application for review conducted with other applicants present – Whether hearing of application conducted "in private". Words and phrases – "in private". Migration Act 1958 (Cth), s 429. GLEESON CJ, GUMMOW, HAYNE, CALLINAN AND CRENNAN JJ. Part 7 of the Migration Act 1958 (Cth) ("the Act") provides for administrative review, by the Refugee Review Tribunal ("the Tribunal"), which is the second respondent, of protection visa decisions1. Division 3 of Pt 7 deals with the manner of exercise of the Tribunal's powers. Section 420 provides that the Tribunal is to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. The Tribunal is not bound by technicalities, legal forms or rules of evidence. Division 4 of Pt 7 deals with the conduct of a review. It includes s 429, which provides that the hearing of an application for review by the Tribunal must be in private. The appellant, who came to Australia from Lebanon in 1998, applied for a protection visa. His application was refused by a delegate of the first respondent. He applied for a review of that decision by the Tribunal. The Tribunal affirmed the delegate's decision. The appellant complains that there was non-compliance with s 429 of the Act because the hearing of his application for review was not in private. This complaint was upheld by Driver FM, who also held that the non- compliance with s 429 constituted jurisdictional error, and quashed the Tribunal's decision2. The appellant also complained that he was denied procedural fairness. This complaint was rejected by the learned magistrate, and does not form part of the present appeal. The magistrate's finding that there was a failure to comply with s 429 was reversed by the Full Court of the Federal Court (Moore and Weinberg JJ, Kiefel J dissenting)3. The appellant now appeals to this Court, seeking, in substance, to reinstate the decision of Driver FM. The decision of the Full Court of the Federal Court should be upheld. In order to explain why that is so, it is convenient first to note some aspects of the statutory context in which s 429 appears, and then to explain the facts and circumstances which have given rise to the allegation of non-compliance with s 429, before turning to consider the meaning of the section. It is convenient to speak in the present tense of the provisions of the Act as they stood at the time relevant to this appeal (the Tribunal decision was made in July 1999), although in some respects they have since been amended. 2 SZAYW v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 187 FLR 104. 3 Minister for Immigration and Multicultural and Indigenous Affairs v SZAYW (2005) 145 FCR 523. Crennan The statutory context The immediate context of s 429 is Pt 7 of the Act and, in particular, Div 4 of Pt 7. The reference in s 429 to a hearing must be understood in that context. The procedure of review is inquisitorial, and does not involve an adversarial trial, at which evidence is adduced and tested, and issues are debated. There are no parties. The Tribunal investigates an applicant's claims in a process of administrative merits review of the delegate's decision. Section 423 provides for an applicant for review to provide a statutory declaration in relation to any matter of fact that the applicant wishes the Tribunal to consider, together with written arguments on the issues arising in relation to the decision under review. The Secretary of the Minister's Department may also submit written argument. Section 424 provides that, in conducting the review, the Tribunal may "get any information that it considers relevant". It may invite a person, including an applicant, to give additional information. The procedures to be followed in conveying to, and obtaining from, the applicant certain kinds of additional information were examined by this Court in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs4. Section 425 provides that, subject to some presently immaterial exceptions, the Tribunal must invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review. Section 426 entitles the applicant to notify the Tribunal that the applicant wants the Tribunal to obtain evidence from some other person or persons. The Tribunal is empowered, by s 427, to take evidence on oath or affirmation, adjourn the review from time to time, and summon witnesses. The wider context includes s 420, noted above. As the facts of the present case show, circumstances may arise in which the practical content of the requirement of privacy will need to allow for the capacity to meet the statutory objectives of fairness, economy and informality. Part 5 of the Act deals with review of certain decisions by another tribunal, the Migration Review Tribunal. Part 5 includes s 365, which may be contrasted with s 429. Section 365 provides that, subject to some qualifications, any oral evidence taken before the Migration Review Tribunal must be taken in public. The relationship between the expressions "in public" and "in private" will be considered below. Section 276, which is in Pt 3, dealing with migration agents, is also of relevance. It defines (2005) 79 ALJR 1009; 215 ALR 162. Crennan "immigration assistance" to include representing an applicant in proceedings before a review authority, which, in turn, is defined to include the Tribunal. Registered migration agents may give immigration assistance. As will appear, the appellant was represented before the Tribunal by migration agents. Such representation is common. No one suggests that it is inconsistent with the requirement of privacy. Clearly then, the requirement of privacy does not mean that, apart from the Tribunal member and officers of the Tribunal necessarily involved, no one except an applicant may be present at a hearing. At least, the Act contemplates that migration advisers and witnesses may attend for the purpose of carrying out their functions. Section 439 of the Act, which is in Div 7 of Pt 7, imposes obligations of confidentiality upon Tribunal members and officers. It does not apply to applicants or others. It does not, for example, prevent an applicant from disclosing what goes on in the course of a hearing. On the other hand, s 440 empowers the Tribunal, if satisfied that it is in the public interest so to do, to direct that evidence or information put before the Tribunal not be published or otherwise disclosed. It was common ground in argument that, in addition to the express power conferred by s 440, the Tribunal also has certain implied powers to regulate its proceedings. The precise extent of these powers was not explored but, subject to the ultimate question as to the meaning of s 429, and to any other relevant provision, in certain circumstances they would include a power to impose conditions subject to which a person might be permitted to be present at a hearing. The proceedings before the Tribunal Because this appeal turns upon the procedure adopted by the Tribunal it is unnecessary to describe the substance of the appellant's case before the Tribunal otherwise than in broad outline. It is, however, important to note certain features of that case, the involvement in it of three persons other than the appellant, and the submissions made to the Tribunal by the migration agents representing the appellant and those three persons. The appellant, and three of his friends who were described as applicants 226, 228 and 229, were stateless Palestinians who had been living in Lebanon. They all left Lebanon and travelled to Australia. They all claimed to fear that, if they returned to Lebanon, they would be persecuted by Hezbollah or Islamic Jihad. The basis of that fear was said to be that together they had become involved with Hezbollah, and had received military training for the purpose of attacking Israel or Israeli interests in South Lebanon. They had lost their enthusiasm for the conflict, and left Lebanon. They feared that, if they returned, Crennan they would suffer reprisals for desertion. The Tribunal rejected their claims that they had a well-founded fear of persecution. The Tribunal's reasons for that conclusion are not presently material. A substantial part of their evidence was disbelieved. After the four original applications for protection visas were refused by a delegate of the first respondent, Refugee Advice and Casework Service (Australia) Inc ("RACS") wrote to the Tribunal on behalf of each man. The letter concerning the appellant said: "We confirm that we act for [the appellant] in his application for review of the decision refusing to grant a Protection Visa. Please find attached an application for review signed by him. We note that the four young men ... were together for the events which form their claim. We ask therefore that consideration be given to the same member being allocated to the four persons." (emphasis added) The reference, in the singular, to the claim of the four men was consistent with the manner in which the matter was presented to the Tribunal. At no stage was there any suggestion that their interests, or their cases, conflicted. Evidently, RACS felt no embarrassment in representing them all. As the Tribunal member recorded in her reasons relating to the appellant's application for review, "the group's claims were based on experiences all four claimed to have shared in common". In argument to the Tribunal, RACS relied upon the consistency of the claims made by the four men and submitted that "their claims are furthermore strengthened by each other's testimony". The four applicants for review were making common cause, and argued that their individual claims should be regarded as more credible because of the consistency of their accounts of their shared experiences in Lebanon. The Tribunal agreed to the request that the one member be assigned to deal with all four applications for review. The same date (7 April 1999) was fixed as the date for all four hearings. One applicant was a little late in arriving. All four were represented by RACS. The girlfriend of one of the applicants (not the appellant) was present. All applicants had previously received written notices, in standard form, from the Tribunal, inviting them to state whether they wanted to bring someone to the hearing, and indicating that such a person could be an adviser, friend or relative. Crennan The appellant and the other two applicants who were present at the beginning were sworn in each other's presence. The latecomer was sworn when he arrived. The Tribunal member said that she would explain the Refugees Convention to all applicants collectively, and that she would then talk to them all individually. She said that the girlfriend of one of the applicants could be present for moral support while he gave evidence, but not while the appellant and the other applicants were being questioned. At that stage the Tribunal member intended to question the applicants separately. She offered the migration advisers the opportunity of being present during all four hearings, and the offer was accepted. The Tribunal member took evidence from one of the applicants (not the appellant) in the absence of the others. This lasted about three hours. The member then decided to question the appellant and the other two applicants together. In her reasons she later explained that, by the end of the questioning of the first applicant, it had become apparent that the claims were all based on shared experiences. At the time, she said to the applicants: "[A]lthough your stories are very similar ... and I can think of you as a group in a certain way in listening to what you have to say at the same time I have to consider you as individuals and I don't want to lose sight of that fact." The Tribunal member then questioned the three remaining applicants (including the appellant) together, in the presence of their migration advisers. This took about two hours. Two interpreters were used. No complaints or objections were raised about the procedure, either then or at any time before the Tribunal's decisions were made. After 7 April 1999, RACS made lengthy written submissions to the Tribunal concerning the claims of the appellant and the other applicants. The complaints about the Tribunal's procedure Following the Tribunal's decision to affirm the delegate's refusal to grant the appellant a protection visa, the appellant commenced proceedings to have the decision quashed. Those proceedings came before Driver FM. The appellant complained of procedural unfairness, asserting, among other things, that he had been inhibited in putting his case to its best advantage. This complaint was rejected. The learned magistrate said: Crennan "I am satisfied, based upon the evidence of what occurred at the [Tribunal] hearing, that the hearing was conducted fairly by the presiding member. The [appellant] and his migration adviser were given ample opportunity to request to speak to the presiding member in private. They were given ample opportunity to reveal whatever they wished to reveal to the presiding member. I reject as false the [appellant's] claim that he was inhibited in revealing further details about his involvement with [a certain] group. The present application, to the extent that it relies upon asserted procedural unfairness under the general law, fails." That aspect of Driver FM's decision was upheld by the Full Court of the Federal Court, and is not the subject of the present appeal. Before passing from the topic of procedural fairness, however, two matters should be noted. First, having regard to the nature of the cases that the four applicants were presenting, and the support they hoped to gain from the consistency of their stories, fairness would probably have obliged the Tribunal member to follow some procedure, in compliance with the Act, which would have enabled each applicant to know what the others had said. To the extent to which there were material inconsistencies, they were all entitled to deal with those inconsistencies. Since they were all relying on consistency, they were entitled to know of the extent of the consistency. Secondly, it was to the advantage of the applicants, in the particular circumstances of this case, to be questioned in the presence of one another. It assisted them to maintain consistency. These considerations may explain why it did not occur to anyone at the time that there might be some reason to object to the course that was taken. As was noted earlier, Driver FM upheld an argument that there was a failure to observe the requirement of s 429 of the Act and, on that account, jurisdictional error. He said: "I find that the [Tribunal] breached s 429 in permitting three unrelated applicants to be in the hearing room at the time [the appellant] presented his evidence. I find that the section was breached notwithstanding that the [appellant] raised no objection to this procedure and may have even desired it. I find that the section was breached notwithstanding that there was no procedural unfairness in this procedure being followed by the [Tribunal]. I find that the section was breached notwithstanding that the [appellant] suffered no detriment from the breach. Adherence to s 429 is a jurisdictional pre-requisite to the exercise of power by the [Tribunal] and a breach of the section therefore constitutes jurisdictional error." Crennan This decision of Driver FM was reversed, by the majority, in the Full Court of the Federal Court. That reversal presents the issue the subject of this appeal. "In private" Expressed in the language of s 429, the argument for the appellant is that the hearing of his application for review by the Tribunal was not in private. Expressed in concrete terms, by way of particulars, the complaint is that, while the appellant was giving evidence to the Tribunal, the other applicants were present in the hearing room and were able to hear what he said. The circumstances in which they came to be there are claimed to be irrelevant. Their very presence, it is said, meant that the hearing was not in private. Counsel for the appellant submitted that privacy demands that only the member and necessary officers of the Tribunal, and an applicant and his or her agent or agents, be present when an applicant is giving evidence. This submission should be rejected. It involves an unduly narrow and inflexible interpretation of s 429. Under pressure of argument, counsel was obliged to give the concept of "agent" a rather expansive and unnatural meaning in order to accommodate some obvious practical difficulties. There is no problem about regarding a migration adviser as an agent. What, however, of a carer; or a friend, such as the girlfriend of one of the other applicants in this case, there to lend moral support? On the appellant's argument, the standard form inviting applicants to identify a friend or a relative they would like to bring with them would appear to be misleading, and to constitute an invitation to bring about jurisdictional error. The concept of privacy is imprecise, and is not to be equated either with secrecy or isolation. Where, as in s 365, the Act requires that evidence be given "in public", then the requirement is satisfied if, subject to any relevant provisions of the Act, and to the exercise of a Tribunal's express or implied powers, the proceedings are open to the public in the sense that members of the public who wish to be present may attend and observe what is going on. Obviously, in order for a hearing to be in private it is necessary that it not be in public. However, it is not sufficient. A hearing would not be in private if, for example, a Tribunal member decided to invite a group of his or her acquaintances to be present. In such a case the hearing would not be open to the general public, but the applicant's entitlement to privacy would be disregarded. "Public" and "private" are words that are used in contrast, but they do not cover the entire range of Crennan possibilities5. Furthermore, the question whether proceedings are taking place in public is not the same as the question whether there are present at the proceeding persons who, vis-à-vis an applicant, are to be regarded as members of the public6. The group of onlookers, in the example just given, would, vis-à-vis an applicant, properly be regarded as members of the public, but the hearing would not be open to the public because ordinary members of the public, other than members of the group of onlookers specially invited to be present, would be excluded. It was noted earlier that Driver FM described the other three applicants as "unrelated" to the appellant. What exactly he meant by that is not clear. If all he meant was that they were not blood relatives, that is correct, but beside the point. The claims of the four men were certainly related, in the manner earlier explained. They were close associates. Their claims were based on shared experiences. Each was a witness in support of the others. They had the same migration agents. They had applied to have their cases heard by the same member. Each was entitled, as a matter of fairness, to know what evidence the others had given. There was no suggestion that any one of them wanted to say something that the others should not hear. If the learned magistrate was intending to convey that, vis-à-vis the appellant, the other three applicants were no more than members of the public, then such suggestion would be unwarranted. The hearing of the appellant's claim was not "in public" although, for the reasons already given, that does not of itself mean that it was "in private". It was accepted on both sides that s 429 was enacted to benefit or protect applicants in at least two respects. It is in the nature of proceedings of the kind in question that an applicant may make allegations that could expose the applicant to a risk of reprisals, either in Australia or abroad, if they were made public. A related consideration is that applicants should feel uninhibited in presenting their cases to the Tribunal. Since the requirement of privacy is for the benefit of an applicant, it is not open to the Tribunal member to allow anyone to be present at the hearing so long as it is not open to the general public. On the other hand, persons whose presence is reasonably required for purposes of or in connection with the performance of the Tribunal's functions are clearly within the contemplation of the statute as persons who may be present at the hearing. 5 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 226 [42]. cf Lee v Evans (1964) 112 CLR 276; Corporate Affairs Commission (SA) v Australian Central Credit Union (1985) 157 CLR 201. Crennan Obvious examples may interpreters, security officers, necessary administrative staff and witnesses, although privacy may require the exclusion of witnesses when they are not giving evidence. include Subject to the powers of the Tribunal earlier mentioned, it is consistent with the statutory purpose, and with common use of language, to treat the concept of privacy as embracing, not only agents of an applicant, but also persons whom an applicant desires to be present and thus to be made privy to what occurs at a hearing. The girlfriend referred to earlier in these reasons provides an example. If one of the applicants wanted her to be with him for moral support, and the Tribunal member had no reasonable grounds for objecting to her presence during that applicant's evidence, then her presence would not destroy the privacy of the occasion. It is unnecessary for present purposes to examine the extent of a Tribunal member's powers to exclude such a person. No such issue arises in the present case. A meeting between A and B does not cease to be private if, by mutual consent, one is accompanied by a friend or supporter. There may be cases where a Tribunal member would feel a need to impose some requirement of confidentiality upon an applicant's friend or supporter but, again, that issue does not arise in this case. Section 429 does not necessarily prevent hearings which are wholly or partly concurrent, if that course is dictated by the objectives stated in s 420 and is consistent with procedural fairness. It is not difficult to think of cases, such as those involving separate applications by members of the one family, where that could be appropriate. In some circumstances s 429 may present an obstacle to that course; but not in the circumstances of this case. The other applicants who were present when the appellant was giving his evidence to the Tribunal were people with whom the appellant was making common cause. His migration agents had told the Tribunal that all four men knew what the others' claims would be. As a matter of fairness it appeared that the other applicants would have been entitled to be told what the appellant said in his evidence. The Tribunal thought it appropriate that they be present when the appellant gave his evidence. The appellant and his migration agents raised no objection to their presence. That presence caused no unfairness. It was to the appellant's advantage. The procedure adopted by the Tribunal member in the present case did not infringe the privacy to which the appellant was entitled under the Act. It was consistent with the purpose of s 429. The proceedings were not open to the public. The other applicants were witnesses upon whose evidence the appellant intended to rely. Their presence at the hearing of his application was necessary Crennan at least for the purpose of enabling them to give evidence in his support. He knew that his evidence was intended to be used in support of their claims. As Weinberg J pointed out in the Federal Court, the argument for the appellant seems to contemplate the use of some kind of "revolving door" process to accommodate the requirements of procedural fairness. This seems impossible to reconcile with the objectives stated in s 420. In the circumstances, the presence of the other applicants while the appellant was giving his evidence did not mean that the hearing of his application was not in private. Other issues The appellant having failed to establish non-compliance with s 429, it is unnecessary to consider, on the hypothetical assumption that the appellant's narrow construction of s 429 is correct, whether any failure to comply with s 429 involves jurisdictional error. It is also unnecessary to deal with discretionary considerations which, on the same assumption, were urged in opposition to a grant of relief. Conclusion The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS APPELLANT AND SGLB RESPONDENT Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 17 June 2004 ORDER Appeal allowed. Orders of the Federal Court of Australia made on 11 March 2003, to the extent that they relate to the appeal to that Court from the orders of the Federal Magistrates Court made on 20 December 2002, set aside (save that as to costs). In place thereof, order that the appeal to that Court against the orders of the Federal Magistrates Court is dismissed. Appellant to pay the respondent's costs in this Court. On appeal from the Federal Court of Australia Representation: S J Gageler SC with S B Lloyd for the appellant (instructed by Sparke Helmore) S Walsh QC with S C Churches for the respondent (instructed by Refugee Advocacy Service of South Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Multicultural and Indigenous Affairs v SGLB Immigration – Refugees – Procedural fairness – Refugee Review Tribunal – Jurisdictional error – Expert medical advice – Psychological state of applicant assumed to be possible explanation for unsatisfactory evidence – Whether denial of procedural fairness by failing to order further psychological assessment of applicant – Whether denial of procedural fairness by accepting that applicant suffered stress disorder – Whether denial of procedural fairness by acceptance of effects of disorder on applicant without expert medical advice. Statutes – Construction – Privative clause – Whether putative errors of the Refugee Review Tribunal fell within the operation of s 474 of the Migration Act 1958 (Cth). Migration Act 1958 (Cth), ss 65, 415, 474, 496. GLEESON CJ. For the reasons given by Gummow and Hayne JJ, I agree that the grounds upon which Selway J, in the Federal Court, decided this case against the appellant cannot be sustained. I also agree with what their Honours have said about the procedural aspects of the matter, and with their rejection of an alternative submission made on behalf of the appellant concerning s 474 of the Migration Act 1958 (Cth) in the event that the findings by Selway J of error on the part of the Refugee Review Tribunal were upheld. In this Court, the respondent relied upon a Notice of Contention, submitting that the decision of the Federal Court should be affirmed but on a ground other than those relied on by Selway J. The ground was expressed as follows: "The Tribunal denied procedural fairness, amounting to jurisdictional error, in refusing the then applicant's request that a psychiatric report be obtained." I agree with what has been said by Gummow and Hayne JJ, and Callinan J, about the matter of procedural fairness, but I wish to add some comments related to the facts of the case. In considering whether the Tribunal's refusal of the respondent's request that a further report be obtained involved a denial of procedural fairness, it is important to keep in mind the exact nature of the request, and the context in which it was made. The proceedings before the Tribunal were the respondent's proceedings, seeking review of an adverse decision by a delegate of the appellant. In the proceedings before the Tribunal, the respondent was represented by a migration agent, and was also being advised by a barrister. Although, at one stage, a request was made for the hearing before the Tribunal to be postponed, it was subsequently indicated by the respondent's advisers that he was ready to proceed. In her reasons for decision, the Tribunal Member recorded the following: "On 20 June 2002 the Tribunal as presently constituted held a 'pre-hearing conference' with [the respondent]. This was necessary because [the respondent] had asked the Tribunal to postpone his hearing indefinitely because of his mental state. The Tribunal understood that he had 'self- harmed' on several occasions and wished to discuss with him whether he wanted to give oral evidence and if so, when he might feel able to do so. On the day of the pre-hearing conference [the respondent] expressed a wish to give oral evidence as soon as possible, and it was agreed with him that the hearing would take place on 26 June 2002 ... With the agreement of the Department, the Tribunal also arranged for an assessment of [the respondent's] psychological condition to be undertaken by a psychologist at the detention centre at Woomera. [The respondent] had no objection to doing this. The purpose of the assessment was to enable the Tribunal to take into account any memory or other difficulties which might be experienced by [the respondent] during the forthcoming hearing." Thus, before the hearing of 26 June 2002, the Tribunal had dealt with the matter of a postponement in accordance with the respondent's wishes, and had also, on its own initiative, and with the respondent's agreement, arranged to have him assessed by a psychologist. No complaint is made about any aspect of what the Tribunal did up to, or at, the hearing. The hearing of 26 June 2002 was conducted by videolink. Present, as well as the respondent, were the respondent's migration agent and the barrister. It was not suggested, during the hearing of 26 June 2002, that the matter should not proceed to finality. The correspondence following the hearing of 26 June 2002 is referred to in the reasons of Callinan J. Of particular importance to the Notice of Contention is the migration agent's letter of 30 July 2002, which contained the request referred to in the Notice of Contention. The letter was written as a response to the Tribunal's letter of 27 June 2002, which set out, for comment, certain matters that the Tribunal regarded as potentially adverse to the respondent's case. Once again, to that stage the Tribunal conducted itself with scrupulous fairness. The letter of 30 July 2002 was some 13 pages in length. It was accompanied by an affidavit of the respondent dealing with the substance of his case. In the Tribunal's letter of 27 June, the following had been said: "The Tribunal has now received an assessment of [the respondent's] general state of mind ... The Tribunal could infer from it that the inconsistencies in [the respondent's] account do not arise from blurred or confused recall." It was in response to that observation that the presently relevant parts of the letter of 30 July 2002 were written. The letter of 30 July 2002 said: "We are not attempting to impugn the Woomera camp psychologist's ability, but contend that a further, more independent and expert assessment be undertaken to determine [the respondent's] state of mind and whether there can be justified links to his past claims of trauma and persecution. In other words, an expert assessment to determine the source of such behaviour and whether it stems from serious Post Traumatic Stress Disorder (PTSD). We consider that the Tribunal has a duty to ask the question about [the respondent's] anger and the source of that anger." That is the request referred to in the Notice of Contention. In elaborating that request, the letter of 30 July 2002 advanced two reasons for seeking an "expert assessment". Those reasons were not clearly separated, but they were both apparent to the Tribunal Member. One reason concerned the problem of inconsistency in information given at various times by the respondent. It arose out of the warning in the letter of 27 June 2002 that the Tribunal could infer that such inconsistencies were not the result of "blurred or confused recall". It was to that warning that the letter of 30 July was responding. Another, and different, reason involved the suggestion that an expert might provide opinion evidence directly relevant to the substance of the respondent's claims that he had suffered persecution. The letter suggested that the expert whom the Tribunal was being invited to consult might express the opinion that the respondent's psychological problems were of a kind that demonstrated that he had suffered harm in the past, and that this could support his claim that he was a victim of persecution. The letter said: "We submit that it could be possible that our client's anger is a symptom of deeper trauma, which only an expert opinion could determine." This second aspect of the proposal contained in the letter of 30 July 2002 was, no doubt, what the Tribunal Member had in mind when, in giving her reasons for refusing the request for a further psychological assessment, she said: "As to whether [the respondent's] current condition is a consequence of Convention-related events in Iran, (rather than during his period of over two years in detention in Australia, for example), it is for the Tribunal to make findings on the events which [the respondent] claims led to his decision to leave Iran." She also said, in relation to the evaluation of the respondent's evidence, that she was prepared to accept that he was suffering from PTSD, and in those circumstances would not draw the adverse conclusion foreshadowed in her letter of 27 June. She said that she proposed to accept that the respondent's ability to give evidence clearly was almost certainly influenced by PTSD. Senior counsel for the respondent, in this Court, expressly, and correctly, disclaimed any suggestion that there was a denial of procedural fairness in failing to give the respondent an opportunity to add to the substantive evidence in support of his claim by obtaining an opinion from a psychologist to the effect that he had been a victim of violence. Quite apart from the dubious reliability and relevance of any such opinion, and the possibility (adverted to by the Tribunal) that the respondent had been traumatised since arrival in Australia, there was no request by the respondent's adviser for the respondent to have an opportunity to present further information to the Tribunal in support of his case. In any event, that is not the way in which the argument in this Court was put. The complaint is about the failure to seek a second opinion on the matters about which the Woomera psychologist had reported. The letter of 30 July 2002 did not contend that the respondent was not competent to give evidence. In so far as it contained a proposal that the Tribunal should obtain a further psychological assessment for the purpose of establishing the truth of the respondent's allegations that he had suffered serious harm in Iran, the Tribunal was entitled to reject any such suggestion, and no such suggestion was relied upon in this Court as a reason why a further assessment should have been obtained. In so far as the suggestion was made in response to the problem raised by the Tribunal Member's letter of 27 June 2002, the Tribunal's response was favourable to the respondent, and involved no unfairness. As the written submissions for the appellant in this Court point out, the Tribunal originally gave the respondent a postponement of the hearing when it was requested to do so. It then held a hearing quickly when it was requested to do so. It gave the respondent's advisers an opportunity to comment on its concerns after the hearing. One of those concerns was raised by the psychologist's report. The Tribunal accepted at face value the response that was given to that concern. It was perfectly justified in not pursuing a suggestion that the purpose of it should seek a further psychological assessment for endeavouring to obtain substantive evidence relating to alleged persecution. The detailed and extensive reasons given by the Tribunal for its decision were not of such a kind that fairness required the Tribunal Member to obtain a further psychological assessment of the respondent. The Tribunal Member, in her reasons, said that, being willing to assume that the inconsistencies referred to in the letter of 27 June 2002 were the result of PTSD, she would proceed on the basis of the oral evidence given by the respondent at the Tribunal hearing, coupled with the written submissions in the letter of 30 July and the accompanying affidavit. She then went on to evaluate the respondent's claims, testing them against the objective facts and her view of the probabilities. Many people who appear before administrative tribunals, and many litigants in courts, including some litigants in this Court, suffer from psychological disorders or psychiatric illness. That may affect their capacity to do justice to their case. Fairness does not ordinarily require the court or tribunal to undertake a psychiatric or psychological assessment to investigate the extent to which the person in question may be at a disadvantage; and ordinarily it would be impossible to tell. In the present case, the Tribunal, apprehending that the respondent might be disadvantaged by "memory or other difficulties", of its own motion, and with the respondent's agreement, obtained a psychological assessment. That assessment was for a limited and reasonably specific purpose. The Tribunal was not then obliged to embark upon an open-ended investigation of the respondent's psychological condition to see whether, in any way, it might have affected his ability to put his case to best advantage. It was not suggested in the letter of 30 July that anything the respondent said at the hearing of 26 June, or in his later affidavit, was unreliable. Two things were suggested. The first was that, if the respondent was suffering from PTSD, that would explain the inconsistencies in his earlier information. The Tribunal was willing to accept that, and not hold those inconsistencies against him. The second, which was rejected, and is not now pursued, is that a further assessment might have provided evidence that he had in fact been seriously harmed before he came to Australia. The ground in the Notice of Contention has not been made out. I agree with the orders proposed by Gummow and Hayne JJ. GUMMOW AND HAYNE JJ. On condition that the appellant ("the Minister") not seek to disturb any costs orders made in the Federal Court and will pay the respondent's costs in this Court, the Minister was granted special leave to appeal from the orders of that Court made on 11 March 2003. Those orders were made by a single judge (Selway J)1. The source of the jurisdiction exercised by the Federal Court is not entirely clear but must be identified to establish the foundation of the jurisdiction of this Court. The jurisdiction of this Court The Refugee Review Tribunal ("the Tribunal"), exercising authority conferred by the Migration Act 1958 (Cth) ("the Act"), affirmed the decision of a delegate of the Minister to refuse the application of the respondent for a protection visa. The Tribunal decision was dated 13 August 2002. The Tribunal was not satisfied that the respondent is a person to whom Australia has protection obligations with the result that he did not satisfy the criterion set out in s 36(2) for a protection visa. On 4 September 2002, the respondent, who was then legally represented, applied to the Federal Court under Pt 8 of the Act for judicial review of the decision of the Tribunal. The application was transferred to the Federal Magistrates Court and on 20 December 2002 that Court (Driver FM) dismissed the application. In the meantime, by application filed on 29 November 2002, the respondent instituted a proceeding in the Federal Court seeking review of the decision of the Tribunal. Selway J regarded the Court as dealing with that application and construed it as an invocation of the jurisdiction with respect to mandamus against officers of the Commonwealth conferred on the Federal Court by s 39B of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). However, after the delivery of the decision by the Federal Magistrates Court, the respondent, by notice of appeal filed on 13 January 2003, sought to appeal the decision of Driver FM to the Federal Court. The Chief Justice of that Court, acting pursuant to s 25(1A) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"), considered it appropriate that the appellate jurisdiction be exercised by a single judge. Selway J regarded the Court as dealing also with this proceeding. The upshot, which appears from the orders made by Selway J, is that his Honour was dealing with both the application in the original jurisdiction under s 39B of the Judiciary Act and the appeal under the jurisdiction regulated by the Federal Court Act together. The orders entered on 26 March 2003 provided: 1 SGLB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 176. "(1) The order of the Tribunal dated 13 August 2002 is quashed. Remit the matter to the [Tribunal] for further consideration. The [respondent] have his costs of the appeal and his application for judicial review (if any)." In his reasons, Selway J had said that he ordered mandamus to the Tribunal but this was not reflected in the settled order. In this Court, the Minister submits that the subject-matter is those orders in their application to the decision of the Federal Magistrate, albeit that only par (3) of the order just set out is directed expressly to that appeal. The distinction is important because no appeal would lie to this Court from orders made by a single judge of the Federal Court in exercise of the original jurisdiction conferred by s 39B of the Judiciary Act. However, such an appeal does lie in respect of the disposition of the appeal from the Federal Magistrates Court. The point is made clear by s 33(2) of the Federal Court Act as follows: "Except as otherwise provided by another Act, an appeal shall not be brought to the High Court from a judgment of the [Federal] Court constituted by a single Judge. However, this subsection does not apply to a judgment of the [Federal] Court constituted by a single Judge exercising the appellate jurisdiction of the Court in relation to an appeal from a judgment of the Federal Magistrates Court." The submissions of the Minister as to the foundation for the appeal to this Court should be accepted. However, in the treatment of the orders of Selway J in the disposition of the appeal by this Court, difficulties will arise as to the remaining status of the disposition by his Honour of the s 39B application. Applicable legislation The privative clause provision contained in s 474 of the Act applies in respect of the judicial review of decisions made on or after 2 October 2001. That was the commencement date of the Schedule to the amending Act2. In this case, 2 Section 474 was inserted by Item 7 of the Schedule to the Migration Legislation Amendment (Judicial Review) Act 2001 (Cth) and its commencement was controlled by s 2 of that statute read together with Item 8(2)(a) of the Schedule. it was on 13 August 2002 that the Tribunal affirmed the decision to refuse the respondent's visa application. Therefore, s 474 was relevant to the determination of the review by Driver FM, the appeal and application to the Federal Court and the appeal to this Court. Selway J approached the matter before him on the footing that s 474 applied. It is settled by Plaintiff S157/2002 v Commonwealth that3: "[o]nce it is accepted, as it must be, that s 474 is to be construed conformably with Ch III of the Constitution, specifically, s 75, the expression 'decision[s] ... made under this Act' must be read so as to refer to decisions which involve neither a failure to exercise jurisdiction nor an excess of the jurisdiction conferred by the Act. Indeed so much is required as a matter of general principle. This Court has clearly held that an administrative decision which involves jurisdictional error is 'regarded, in law, as no decision at all'4. Thus, if there has been jurisdictional error because, for example, of a failure to discharge 'imperative duties'5 or to observe 'inviolable limitations or restraints'6, the decision in question cannot properly be described in the terms used in s 474(2) as 'a decision ... made under [the] Act' and is, thus, not a 'privative clause decision' as defined in s 474(2) and (3) of the Act7." (2003) 211 CLR 476 at 506 [76]. 4 See Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 614-615 [51] per Gaudron and Gummow JJ, 618 [63] per McHugh J, 646-647 [152] per Hayne J. 5 See R v Metal Trades Employers' Association; Ex parte Amalgamated Engineering Union, Australian Section (1951) 82 CLR 208 at 248 per Dixon J. See also Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 at 632 per Gaudron and Gummow JJ. 6 R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 419 per Mason ACJ and Brennan J. See also R v Metal Trades Employers' Association; Ex parte Amalgamated Engineering Union, Australian Section (1951) 82 CLR 208 at 248 per Dixon J; Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 at 632 per Gaudron and Gummow JJ. 7 See Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 at 635 per Gaudron and Gummow JJ. In so concluding, the Court rejected a submission put by the Commonwealth which was identified in the joint judgment as follows8: "On behalf of the Commonwealth, it was contended that s 474 should first be construed as meaning and intended to mean that decisions are protected so long as there has been a bona fide attempt to exercise the power in question, that they relate to the subject matter of the legislation and are reasonably capable of reference to the power." Notwithstanding that outcome in Plaintiff S157, on one branch of the Minister's argument in the present case, she appeared to attempt to resuscitate that earlier unsuccessful submission. It will be necessary to return to this point later in these reasons. Facts The facts are set out in full in the reasons of Callinan J. We will not repeat them, except to note that the respondent had on various occasions provided inconsistent evidence in respect of his life in Iran and his reasons for leaving Iran. Alleged errors In an unreserved judgment, Selway J held that the Tribunal's decision was flawed by three errors, each said to go to jurisdiction: That there was no evidence before the Tribunal upon which it could be satisfied that the respondent was suffering from Post Traumatic Stress Disorder ("PTSD") (the "no evidence" ground)9; The Tribunal erred in making findings as to the credibility of the respondent where there was no evidence before it which would enable it to assess the effects of PTSD on the credibility of the respondent (the "credibility" ground)10; and (2003) 211 CLR 476 at 502 [62]. [2003] FCA 176 at [15]. 10 [2003] FCA 176 at [16]. (3) Having found that the respondent suffered from PTSD, the Tribunal failed to satisfy itself that he could take part in the proceedings (the "competence" ground)11. The Minister submitted that, contrary to the holdings of Selway J, the Tribunal had not erred in any respect and that, in any event, the errors attributed to it would not have been jurisdictional errors. The Minister's submissions should be accepted. In this Court, the respondent sought to outflank submissions for the Minister by a contention that the alleged errors found by Selway J also constituted a denial of procedural fairness. This argument is without foundation. The conduct of the proceedings by the Tribunal reveals no failure in its observance of the requirements of procedural fairness. To the contrary, the Tribunal went to great lengths to accommodate the respondent and his concerns. The Tribunal postponed the hearing when requested to do so and promptly undertook the hearing when requested to do so. The Tribunal stopped the hearing when it became apparent that the respondent was agitated. It gave him an opportunity to comment on its concerns after the hearing. In addition, as will later appear from these reasons, there was no obligation on the Tribunal to obtain a psychiatric report. The Act indicated that the Tribunal was not required to accede to any such request by an applicant. It remains then to consider the three errors upon which Selway J based his decision. Each was said to be an error going to jurisdiction. That misconstrued the operation of the Act and the decisions concerning jurisdictional error. It is convenient to postpone the consideration of the detail of his Honour's findings until after a consideration of these fundamental and preliminary concerns. The jurisdiction of the Tribunal Section 36 of the Act provides for a class of visas to be known as "protection visas" and in sub-s (2) stipulates: "A criterion for a protection visa is that the applicant for the visa is: a non-citizen in Australia to whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol; or 11 [2003] FCA 176 at [17]. a non-citizen in Australia who is the spouse or a dependant of a non-citizen who: is mentioned in paragraph (a); and holds a protection visa." For the purposes of this case, only the criteria set out in s 36(2)(a) are relevant as there was no suggestion that the respondent was eligible for a protection visa on the basis that he came within s 36(2)(b). Further, s 65 of the Act provides that the Minister is to grant a visa sought by valid application "if satisfied" of various matters. These include that any criteria for the visa prescribed by the Act are satisfied (s 65(1)(a)(ii)). Section 65 imposes upon the Minister an obligation to grant or refuse to grant a visa, rather than a power to be exercised as a discretion. The satisfaction of the Minister is a condition precedent to the discharge of the obligation to grant or refuse to grant the visa, and is a "jurisdictional fact" or criterion upon which the exercise of that authority is conditioned12. The delegate was in the same position as would have been the Minister (s 496) and the Tribunal exercised all the powers and discretions conferred on the decision-maker (s 415). The satisfaction of the criterion that the applicant is a non-citizen to whom Australia has the relevant protection obligations may include consideration of factual matters but the critical question is whether the determination was irrational, illogical and not based on findings or inferences of fact supported by logical grounds13. If the decision did display these defects, it will be no answer that the determination was reached in good faith. To say that a decision-maker must have acted in good faith is to state a necessary but insufficient requirement for the attainment of satisfaction as a criterion of jurisdiction under s 65 of the Act. However, inadequacy of the material before the decision-maker concerning the attainment of that satisfaction is insufficient in itself to establish jurisdictional error. The "no evidence" ground To return to the first ground identified in the Federal Court, the "no evidence" ground, nothing in the Act made the question of whether or not the 12 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 609 [183]. 13 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165 at 1172 [37], 1175 [52], 1194 [173]; cf at 1168 [9]; 198 ALR 59 at 67, 71, 98; cf at 62. respondent suffered from PTSD a precondition to the exercise of jurisdiction. No question of a "no evidence" ground of jurisdictional error arises. Moreover, in the absence of any finding of PTSD, the Tribunal would not have been prevented from following the same course and disregarding the respondent's previous inconsistent accounts for the purposes of assessing credibility. The finding of PTSD was in fact beneficial to the respondent, being offered as the most favourable explanation available for the respondent's conflicting accounts. In any case, there was material before the Tribunal which allowed it reasonably to infer that the respondent was suffering from PTSD. There was a history of self-harm of which the Tribunal was aware. There was the Tribunal's own observations of the respondent at the pre-hearing conference and at the hearing. Further, there were the observations by the respondent's adviser in the letter dated 30 July 2002, and within it extracts from a report by a psychiatrist, Dr Stuart Turner, entitled "Discrepancies and delays in asylum seekers". Credibility The second ground of alleged error amounts to a finding by Selway J that the Tribunal was under a duty to inquire as to the effects of PTSD. This is apparent from his Honour's judgment14: "But, having found that the [respondent] was suffering from PTSD there was no evidence before the Tribunal which would have enabled it to assess whether or not any of the evidence the [respondent] gave was reliable. Having (wrongly) diagnosed that the [respondent] was suffering from PTSD it was an error of law for the Tribunal then to proceed to make credibility findings in relation to the [respondent's] evidence without evidence as to what effect the PTSD might have on the [respondent's] capacity to give evidence." (emphasis added) This ground of error is misconceived for two reasons. First, there was evidence before the Tribunal to assist it in determining how to deal with the question of unreliability. There was the Turner report and the fact that the respondent did not object to providing evidence either at the hearing or by affidavit following the hearing. Secondly, whilst s 427 of the Act confers power on the Tribunal to obtain a medical report15, the Act does not impose any duty or 14 [2003] FCA 176 at [16]. 15 Section 427 of the Act relevantly provides: (Footnote continues on next page) obligation to do so. Rather, s 42616 provides that, even if an applicant requests that the Tribunal take oral or written evidence from a witness (such as a medical practitioner or psychiatrist), the Tribunal is not required to obtain such evidence. Thus, the Tribunal is under no duty to inquire. As was noted in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/200217: "The Tribunal was required by s 430 of the Act to prepare a written statement setting out its decision on the review, 'the reasons' for that decision and 'the findings on any material questions of fact', and referring to 'the evidence or any other material' on which those findings were based." "(1) For the purpose of the review of a decision, the Tribunal may: require the Secretary to arrange for the making of any investigation, or any medical examination, that the Tribunal thinks necessary with respect to the review, and to give to the Tribunal a report of that investigation or examination." 16 Section 425A deals with the giving by the Tribunal of notices of invitations to appear before it. Section 426 relevantly provides (emphasis added): "(1) In the notice under section 425A, the Tribunal must notify the applicant: of the effect of subsection (2) of this section. (2) The applicant may, within 7 days after being notified under subsection (1), give the Tribunal written notice that the applicant wants the Tribunal to obtain oral evidence from a person or persons named in the notice. (3) If the Tribunal is notified by an applicant under subsection (2), the Tribunal must have regard to the applicant's wishes but is not required to obtain evidence (orally or otherwise) from a person named in the applicant's notice." 17 (2003) 77 ALJR 1165 at 1172 [38]; 198 ALR 59 at 68. This obligation required that where two conflicting accounts were before it, the Tribunal was to determine which it accepted. Thus, after accepting that the respondent's ability to give evidence may have been impaired, the Tribunal went "As to whether his current condition is a consequence of Convention- related events in Iran, (rather than during his period of over two years in detention in Australia, for example), it is for the Tribunal to make findings on the events which [the respondent] claims led to his decision to leave Iran." That is to say, while the Tribunal was prepared to take the respondent's claims at their highest, namely, as last described in the oral evidence (at hearing) and written evidence (by affidavit after the hearing), where there was a conflict the Tribunal was nevertheless bound to decide between those inconsistent accounts. Indeed, this is borne out by the example given by Selway J in support of this alleged error18: "For example, the Tribunal found that [the respondent's] first version of where he was living immediately prior to leaving Iran was true, and the later version untrue. The Tribunal analysed the issue in this way: 'These two assertions as to his whereabouts in the months leading to his departure from Iran are entirely irreconcilable, and he has not provided any explanation as to why they differ. I consider untrue his claim to have been in hiding throughout his last six months in Iran. I am satisfied that he was living at his family home throughout that period. It follows, and I am satisfied, that he was not detained again by the authorities because they did not wish to detain him. It also follows, as he willingly remained at his family home where he could be readily located by the authorities, that he did not fear arrest.'" At the hearing, the respondent gave evidence that he had spent the last six months before leaving Iran living at his family home. In contrast, when invited to give further evidence in writing after the hearing, he claimed that he had spent that time in hiding. Thus, disregarding all accounts given by the respondent prior to the hearing, the Tribunal was still required to make a factual finding. 18 [2003] FCA 176 at [16]. Competence The third alleged error presupposes that there is some competency requirement as to the satisfaction of which the Tribunal must be convinced before an applicant can take part or continue to take part in proceedings before the Tribunal. This assumption is without foundation. The Act does not provide for any such competency requirement, analogous, for example, to that of fitness to plead19. Section 420(2)(a) of the Act expressly provides that the Tribunal is not bound by the rules of evidence20. The phrase "the rules of evidence" is taken to include both the common law rules of evidence and the Evidence Act 1995 (Cth)21. The only requirements that could be described as competency requirements are that an application for review by the Tribunal can only be made by a non-citizen who is the subject of the primary decision (by the Minister's delegate)22 and who is physically present in the migration zone when the application for review is made23. The Act permits an application for a protection visa to be made by any person who is in Australia and who is not a citizen of Australia24. That is not to deny that the rules of procedural fairness may, in 19 See Eastman v The Queen (2000) 203 CLR 1. 20 Section 420 of the Act provides: "(1) The Tribunal, in carrying out its functions under this Act, is to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. (2) The Tribunal, in reviewing a decision: is not bound by technicalities, legal forms or rules of evidence; and (b) must act according to substantial justice and the merits of the case." 21 By its own provisions the Evidence Act 1995 (Cth) only applies to proceedings in a federal court or a court of the Australian Capital Territory: see s 4 and s 3, together with the extended definition of "federal court" in the Dictionary to that Act. 22 See s 412(2) of the Act. 23 See s 412(3) of the Act. 24 See ss 5(1) (definition of "non-citizen"), 45 and 46(1)(b) of the Act, read together with Item 1401 of Sched 1 to the Migration Regulations 1994 (Cth). particular circumstances arising in individual cases before the Tribunal, require some special steps or procedure to be followed. But there was no denial of procedural fairness in the present case. Further, the alleged error has an air of unreality about it given that the proceeding before the Tribunal was in fact the respondent's proceeding. It was in the interest of the respondent that the matter proceed so that he might obtain from the Federal Court the relief he sought. The privative clause In the alternative to the submissions which have been considered above, the Minister contended that, even if the errors found by Selway J were substantiated, they fell within the operation of the privative clause (ie, the decision of the Tribunal was made under the Act)25. In order to resolve this appeal it is not necessary to deal with these submissions, but it is desirable to say something on the subject. The critical holding in Plaintiff S157 has already been set out in these reasons, along with the rejection of a submission by the Commonwealth respecting the adequacy of the criterion of bona fide decision-making. Consistently with the reasoning in Plaintiff S157, there may be a question as to whether there has been a jurisdictional error by reason of the failure to discharge what have been called "imperative duties" or to observe "inviolable limitations or restraints" found in the Act. In Plaintiff S157, this question was readily answered, given the nature of the alleged error by the Tribunal. The joint judgment explained the situation as follows26: "The plaintiff asserts jurisdictional error by reason of a denial to him of procedural fairness and thus s 474, whilst valid, does not upon its true construction protect the decision of which the plaintiff complains. A decision flawed for reasons of a failure to comply with the principles of natural justice is not a 'privative clause decision' within s 474(2) of the Act." 25 See s 474 of the Act and Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 26 (2003) 211 CLR 476 at 508 [83]. As to natural justice and jurisdictional error, see Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57. In other cases, the nature of the alleged error will turn upon the meaning of the legislative criterion of jurisdiction, making the construction of the legislation the primary and essential task. Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/200227 was such a case. The Court divided on the question whether, on the proper construction of the relevant regulations under the Act, as picked up by s 65(1), the Tribunal had been obliged to determine to its satisfaction whether applicants were entitled to protection visas by reason of membership of the family unit of a person who had already been granted a protection visa. The majority answered "no"; Gaudron and Kirby JJ were of the other view28. However, in the light of the detailed specification of the criteria for the grant of the various classes of visa, including protection visas, it is impossible to treat the consideration by the Minister's delegate (and hence the Tribunal) of what are the relevant criteria (the issue in Applicants S134), and the satisfaction thereof, as other than conditions precedent to the making of a valid decision to grant or refuse to grant a visa under s 65. Further, certain observations by Gaudron and Kirby JJ in Applicants S134 (not on an issue upon which the division in the Court turned) are, with respect, compelling. Their Honours said29: "The detailed specification of matters bearing upon the grant of a protection visa inserted into the Act at the same time as was s 474 makes it clear that the Parliament was not enacting provisions to the effect that decision-makers could validly grant or refuse to grant protection visas on the basis of a bona fide attempt to determine whether the criteria for the grant of a protection visa have been satisfied, as distinct from the decision-maker's actual satisfaction or lack of satisfaction as to those criteria. And as already pointed out, a decision-maker cannot be said to be satisfied or not satisfied if effect is not given to those criteria because, for example, they have been misconstrued or overlooked." In support of an attempt to advance a case to the contrary of what was said in the above passage, the Minister relied in particular upon Coal Miners' Industrial Union of Workers of Western Australia v Amalgamated Collieries of Western Australia Ltd30. That case concerned an order made by the Court of Arbitration, a body established by a law of Western Australia. The order 27 (2003) 211 CLR 441. 28 (2003) 211 CLR 441 at 457 [29]-[32], 471 [86]-[88]. 29 (2003) 211 CLR 441 at 471 [85]. 30 (1960) 104 CLR 437. prohibited the respondent employer from giving a certain notice to any of the members of the appellant union who were employed by the respondent. The notice was one terminating the employment of workers because of a failure or refusal by workers to increase the production of coal. The appeal in this Court turned upon the construction of the provision in s 137(1) of the Industrial Arbitration Act 1912 (WA) conferring jurisdiction upon the Court of Arbitration. The sub-section relevantly provided: "Where it appears reasonably likely to the [Court of Arbitration] that an act, omission or circumstance will occur, or has occurred, or having occurred, will be repeated or continued; and that the result of the act, omission, circumstance, repetition, or continuance, is or will be to cause, contribute to, or hasten the occurrence of a lock-out ... the [Court of Arbitration] may make such order as it considers necessary to terminate or avoid that result." (emphasis added) The expression "lock-out" was defined so as to include any closing of a place of employment or suspension of work or refusal by an employer to continue to employ any number of workers with a view to enforcing compliance with demands by any employer of any workers (s 6). The Supreme Court of Western Australia made an order absolute for certiorari quashing the order that had been made under s 137(1) but, on appeal to this Court by the employees' union, that decision was set aside. Dixon CJ emphasised the criterion of jurisdiction appearing from the introductory words of s 137(1), "[w]here it appears reasonably likely to the [Court of Arbitration]", and said that this committed to that body the judgment of the very facts concerning the lock-out which the respondent employer submitted were jurisdictional. His Honour continued31: "The result is to make it impossible to base prohibition or certiorari on any error of the [Court of Arbitration] made in a bona fide attempt to apply these conceptions in the course of exercising the power which that 31 (1960) 104 CLR 437 at 446. Court possesses, a power to which the order might reasonably be referred. Plainly it is not a misapprehension which would take the order completely outside the scope of the [Court of Arbitration's] authority." The legislation considered in that case thus anticipated what was later said by Gaudron and Kirby JJ in Applicants S13432 with respect to the involvement of significant discretionary elements as to matters to be satisfied before a particular act is done or decision taken. Their Honours added33: "In such a case it may be possible to construe the provision governing that act or decision as one which does not impose restraints or limitations which must be observed if the act or decision is to be valid." Gaudron and Kirby JJ went on to construe s 65 of the Act as containing specific requirements or restraints observance of which was essential to the validity of the decisions thereunder. It should be added that the qualification concerning bona fides discerned in s 137 of the Western Australian legislation in issue in Coal Miners may have had a pedigree in The Colonial Bank of Australasia v Willan34. This was an appeal from the Supreme Court of Victoria which, despite the presence in the relevant statute law of a privative clause (in a form which is not accurately reproduced in the report)35, had quashed by way of certiorari an order by a mining court for the winding up of a mining company. The Supreme Court had acted on the ground of fraud in procuring the winding-up order, but the Privy Council allowed the appeal on the ground that the evidence fell short of establishing fraud. The result was that the winding-up order ought not to have 32 (2003) 211 CLR 441 at 469 [80]. 33 (2003) 211 CLR 441 at 469 [80]. 34 (1874) LR 5 PC 417. The authorities cited in argument (at 437) had included R v Bolton (1841) 1 QB 66 [113 ER 1054]; Brittain v Kinnaird (1819) 1 Brod & B 432 [129 ER 789] and Mould v Williams (1844) 5 QB 469 [114 ER 1326]. 35 Section 244 of the Mining Statute 1865 (Vic) read: "No proceedings under this Act shall be removed or removable into the Supreme Court save and except as hereinbefore provided." cf (1874) LR 5 PC 417 at 422-423, 440. been quashed on certiorari. However, their Lordships did speak of the inefficacy of the privative clause to exclude certiorari, observing36: "It is, however, scarcely necessary to observe that the effect of this is not absolutely to deprive the Supreme Court of its power to issue a writ of certiorari to bring up the proceedings of the inferior Court, but to control and limit its action on such writ. There are numerous cases in the books which establish that, notwithstanding the privative clause in a statute, the Court of Queen's Bench will grant a certiorari; but some of those authorities establish, and none are inconsistent with, the proposition that in any such case that Court will not quash the order removed, except upon the ground either of a manifest defect of jurisdiction in the tribunal that made it, or of manifest fraud in the party procuring it." This led Professor de Smith to write37: "A statute which purports to take away the right to apply for certiorari is wholly ineffective to exclude or attenuate the jurisdiction of the court to issue the order in cases where fraud or collusion is established", and Professor Sir William Wade to say that what in Plaintiff S15738 were to be identified as the "three Hickman provisos" appeared to derive from Willan39. However, as was emphasised in the joint judgment in Plaintiff S157, what is involved with those three provisos is a construction rendering a privative clause inapplicable unless they are satisfied. Their Honours rejected the proposition that the provisos always would be sufficient, so that the satisfaction of them necessarily takes effect as an "expansion" or "extension" of the power of the decision-makers in question40. 36 (1874) LR 5 PC 417 at 442. 37 De Smith's Judicial Review of Administrative Action, 4th ed (1980) at 409 (footnote omitted). 38 (2003) 211 CLR 476 at 502 [64]. 39 Administrative Law, 7th ed (1994) at 742. 40 (2003) 211 CLR 476 at 502 [64]. Orders The appeal should be allowed. However, the Minister is to pay the costs of the respondent of the appeal in accordance with the terms of the grant of special leave. To the extent that the orders of the Federal Court relate to the appeal to that Court from the decision of the Federal Magistrates Court, those orders should be set aside (save that as to costs). In place thereof it should be ordered that the appeal to that Court from the decision of the Federal Magistrates Court delivered on 20 December 2002 should be dismissed. There remains for consideration the treatment by the Federal Court in the one set of undifferentiated orders of the appeal from Driver FM and the application in the original jurisdiction under s 39B. The orders just indicated leave intact the orders made by Selway J to the extent that they relate to the s 39B application. For the reasons indicated earlier, this Court has no jurisdiction to deal with those orders. It therefore remains for the Federal Court to make any further orders for the disposition of the s 39B application. However, consistently with these reasons, the only outcome in the Federal Court upon the s 39B application could be an order dismissing that application. It will be for the Federal Court to make such an order upon application, and to consider any application to displace the present costs order in favour of the applicant in the s 39B application. Kirby KIRBY J. The central issue in this appeal is whether a tribunal denied procedural fairness to an applicant for refugee status. If it did, the denial would amount to jurisdictional error rendering the tribunal's decision invalid and requiring a rehearing of the application by the tribunal, differently constituted. This appeal is not a trial by this Court of the merits of the applicant's claim. It is not, as such, an occasion for us to evaluate the facts or to assess the applicant's credibility. The experience of the law is that adherence to fair procedures is an important safeguard against erroneous conclusions. It also has its own value in helping to secure acceptance of outcomes and thereby to quell controversies. Here, there was unfairness in the procedures followed in the tribunal. This Court's limited role is to confirm the Federal Court which said so; to affirm the order for a rehearing; and to leave the reconsideration of the merits where it belongs – in the tribunal, avoiding the unfairness demonstrated by the hearing under review. The course of the proceedings The Minister for Immigration and Multicultural and Indigenous Affairs ("the Minister"), by special leave, challenges a decision of the Federal Court of Australia41. The Federal Court was constituted by a single judge (Selway J) exercising that Court's appellate jurisdiction42. The issue before the Federal Court was whether jurisdictional error had been demonstrated in the review conducted by, and the decision of, the Refugee Review Tribunal ("the Tribunal") in relation to an application by SGLB43 ("the respondent") for a protection visa44 on the grounds of refugee status45. 41 SGLB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 176. 42 Pursuant to the Federal Court of Australia Act 1976 (Cth), s 25(1A), which permits the Chief Justice of the Federal Court to allow the appellate jurisdiction of the Federal Court to be exercised by a single judge. 43 The respondent's name has been anonymised pursuant to the Migration Act 1958 (Cth), s 91X. See Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 495-496 [44]; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/2002 (2003) 211 CLR 441 at 461-462 [50]; Germov and Motta, Refugee Law in Australia, (2003) at 712. 44 Migration Act 1958 (Cth), s 36(2)(a). 45 Pursuant to the Convention relating to the Status of Refugees done at Geneva on 28 July 1951, [1954] Australian Treaty Series No 5; Protocol relating to the Status of Refugees done at New York on 31 January 1967, [1973] Australian Treaty (Footnote continues on next page) Kirby The Federal Court found jurisdictional error. It ordered that the decision of the Tribunal under challenge be quashed and that the matter be remitted to the Tribunal for further consideration. The Minister submits that the reasoning of the Federal Court was erroneous and that no jurisdictional error was identified to warrant that Court's orders. In support of the Minister's argument, it was submitted that the decision of the Tribunal was a "privative clause decision" within s 474 of the Migration Act 1958 (Cth) ("the Act")46. On that footing, it was said that the Federal Court had no jurisdiction in relation to the decision of the Tribunal "which involve[d] neither a failure to exercise jurisdiction nor an excess of the jurisdiction conferred by the Act"47. The respondent supported the reasoning of the Federal Court; relied on a notice of contention specifying that the vitiating jurisdictional error included denial of procedural fairness; and contended that such jurisdictional error took the purported decision of the Tribunal outside those declared by the Act to be final. The general background to this case is stated in the reasons of other members of this Court48. I will not repeat it. I have come to the conclusion opposite to that reached by the majority. I shall explain why. Procedural unfairness and jurisdictional error The no evidence conclusion: First, it is necessary to clear away a procedural complication. In the Federal Court, Selway J recognised that, for the Series No 37. See Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at 287. 46 Section 474, a "privative clause", was inserted into the Act in 2001: Migration Legislation Amendment (Judicial Review) Act 2001 (Cth). Section 474 limits, but does not exclude, the jurisdiction of this Court to review decisions of the Tribunal. A decision of the Tribunal will not be protected from review by the privative clause where the decision involves jurisdictional error: Plaintiff S157/2002 (2003) 211 CLR 476 at 504-507 [71]-[78]; Robertson, "Truth, Justice and the Australian Way – Plaintiff S157 of 2002 v Commonwealth", (2003) 31 Federal Law Review 373. 47 SGLB [2003] FCA 176 at [6], quoting Plaintiff S157/2002 (2003) 211 CLR 476 at 48 Reasons of Gummow and Hayne JJ at [23]-[34]; reasons of Callinan J at [98]- Kirby respondent to succeed, he had to demonstrate jurisdictional error which the Federal Magistrate (Driver FM), who dismissed the primary application for judicial review, had failed to correct49. The Federal Court's reasons for coming to the conclusion of jurisdictional error were expressed in terms of the language of "no evidence"50; a misconceived finding of credibility51; and a threshold failure to consider the respondent's competence to give evidence52. These explanations of jurisdictional error have been attacked in this Court as factually and legally erroneous and, in any case, as attracting the operation of s 474 of the Act. It is not necessary to resolve the Minister's attack on the reasoning of the Federal Court. This is because the respondent, in his argument, sought to outflank the Minister's criticisms of that reasoning. He did so by relying on a notice of contention that expressly raised the argument that the Tribunal had denied the respondent procedural fairness, amounting to jurisdictional error sustaining the Federal Court's orders on that ground. The denial of procedural fairness: The respondent was not legally represented before the Federal Court53 although he did have the assistance of migration agents in his earlier applications to the delegate of the Minister and to the Tribunal. Before the Federal Magistrate, the respondent was represented by counsel who appeared pro bono pursuant to a referral made under the Federal Court Rules54. It seems likely that it was the want of legal representation in the Federal Court that led to the failure in that Court to express the claim for relief in terms of denial of procedural fairness. The judge exercising the appellate jurisdiction of the Federal Court had to carry the additional burden of identifying precisely the respondent's available arguments; of amending the grounds of appeal to bring them into legal form; and of then conducting the hearing with assistance from counsel for the Minister and as much assistance as he could procure from the respondent appearing in person and a representative of the Refugee Advocacy 49 SGLB [2003] FCA 176 at [18]. The Federal Magistrate's decision is SGLB v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FMCA 50 SGLB [2003] FCA 176 at [15]. 51 SGLB [2003] FCA 176 at [16]. 52 SGLB [2003] FCA 176 at [17]. 53 SGLB [2003] FCA 176 at [8]. 54 SGLB [2002] FMCA 309 at [3]. Kirby Service of South Australia present as amicus curiae. The respondent's command of English was negligible. By any account the evidence showed that he was a person mentally disturbed by his experiences. This Court does well to remember the special difficulties under which the Federal Court, and the Tribunal, must labour in cases of this kind. Generally, we are spared most of them. This much is clear. When the respondent was represented by counsel, as before the Federal Magistrate and in this Court, express reliance was placed on the suggested denial of procedural fairness before the Tribunal. Whereas the Federal Court's reasons make passing mention of defects in procedural fairness as a ground of jurisdictional error55, that issue was in the forefront of the consideration of the Federal Magistrate56. He recorded counsel's then submission "that the [Tribunal] fell into jurisdictional error by failing to accord the applicant procedural fairness in the conduct of proceedings before [it]"57. The submission of the Minister, in response to this argument, was also summarised. The conclusion that the proceedings before the Tribunal were "procedurally fair" was then explained58: "The [Tribunal] went to considerable lengths to establish that it had provided an interpreter suitable to the applicant … The [Tribunal] accepted that the applicant suffers from [post-traumatic stress disorder (PTSD)], on the basis of a psychologist's report obtained by the [Tribunal]. Having accepted the disability suffered by the applicant there was no need for the [Tribunal] to further prolong proceedings to obtain a further medical assessment. His legal advisers were apparently satisfied that they could obtain instructions from him and represent him. Persons suffering from PTSD commonly conduct legal proceedings without particular difficulty. The [Tribunal] took into account that the answers given by the applicant may be confused, consistent with his PTSD and adjourned proceedings early when it became apparent that the proceedings had become unproductive. The [Tribunal] took the precaution of submitting further questions in writing … This was, in my view, a proper approach for the [Tribunal] to take." Against this background, it was unsurprising that this Court granted the respondent, although out of time, leave to file his notice of contention raising the 55 SGLB [2003] FCA 176 at [6], with reference to Plaintiff S157/2002 (2003) 211 CLR 476. 56 SGLB [2002] FMCA 309 at [9]. 57 SGLB [2002] FMCA 309 at [9]. 58 SGLB [2002] FMCA 309 at [23]. Kirby procedural fairness point. It is not unknown for a respondent to an appeal to succeed in this Court on the basis of a contention, even one presented effectively for the first time59. Such a result may certainly follow in a case where the contention was argued earlier. Procedural unfairness represents the preferable legal categorisation of the error that led the Federal Court to intervene. I will therefore direct my attention to the issues that the notice of contention presents. Approach and common ground First, it is appropriate to collect a number of points that, in my view, should be accepted as common ground in the present appeal: Avoiding merits review: The appeal is not an opportunity for a merits review, permitting the court performing judicial review simply to substitute a different conclusion because it regards that conclusion as preferable in the facts60. The Federal Court acknowledged this limitation61. It is reinforced in this field of judicial review by the limitations relevantly confining the review to the demonstration of jurisdictional error62. Avoiding over-critical analysis: A court performing judicial review should not over-zealously scrutinise the reasons of the administrative decision-maker to find error63. As it happens, the Tribunal's reasons in the present case comprise 35 closely typed pages. This was the second occasion on which the Tribunal had considered the respondent's claim. The first decision (which also affirmed the decision of the delegate of the Minister not to grant a protection visa) had been set aside by the Federal 59 Gattellaro v Westpac Banking Corporation (2004) 78 ALJR 394 at 405 [74]; 204 ALR 258 at 273. 60 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272, 291; Minister for Immigration and Multicultural Affairs v Rajamanikkam (2002) 210 CLR 222 at 254 [105]. 61 SGLB [2003] FCA 176 at [20]. 62 The Act, s 474; Plaintiff S157/2002 (2003) 211 CLR 476 at 504-507 [71]-[78]. 63 Wu Shan Liang (1996) 185 CLR 259 at 271-272, 291-292; Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 585-586; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 372 [153]. See also Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 286-287. Kirby Court on the basis of a suggested problem with interpretation of the respondent's testimony before the first Tribunal64. In such circumstances, there would be a reasonable, and understandable, desire to bring the extended proceedings in the Tribunal to a conclusion without further undue delay. The confinement of the respondent to immigration detention during the proceedings before the Tribunal would add a sense of urgency to this endeavour. Recognising the serious stakes: The decision concerning the respondent's application for a protection visa is serious and important. As was remarked in Abebe v The Commonwealth65: "It is necessary always to bear in mind that an applicant for refugee status is, on one view of events, engaged in an often desperate battle for freedom, if not life itself." The decision has significance for the composition of the Australian population and for the compliance of the nation with its obligations, by international law, under the Refugees Convention66. These are reasons why, properly, the Australian legal system treats such applications seriously and insists upon the attainment of high levels of accuracy in compliance with the Act and with the requirements of procedural fairness. Adopting approach of vigilance: It was accepted by the Tribunal that the respondent did not wish to return to his country of nationality, Iran, and that he "may have a strong subjective fear in relation to doing so"67. Moreover, the Tribunal accepted (and the evidence supported the conclusion) that "arbitrary arrest and detention are common in Iran and 64 SGLB [2003] FCA 176 at [3]. 65 (1999) 197 CLR 510 at 577-578 [191] per Gummow and Hayne JJ. See also Yusuf (2001) 206 CLR 323 at 369 [143], 373 [156]-[157]; Rajamanikkam (2002) 210 CLR 222 at 248-249 [91]. 66 Minister for Immigration and Multicultural Affairs v Haji Ibrahim (2000) 204 CLR 1 at 70-71 [198]; Yusuf (2001) 206 CLR 323 at 373 [156]-[157]. See also Schloenhardt, "To Deter, Detain and Deny: Protection of Onshore Asylum Seekers in Australia", (2002) 14 International Journal of Refugee Law 302; Edwards, "Tampering with Refugee Protection: The Case of Australia", (2003) 15 International Journal of Refugee Law 192. 67 Reasons of the Refugee Review Tribunal, unreported (N02/42401), 13 August 2002 ("Reasons of the Tribunal") at 35. Kirby that serious ill-treatment occurs in prisons"68. The material on the record before the Tribunal included a news report in relation to the return of Iranian men refused refugee status in Australia after spending two years in immigration detention at the Woomera Detention Centre69. These materials properly oblige the Tribunal, and other Australian decision- makers, to adopt an approach of vigilance to such applications. All Australian decision-makers in this field must test their conclusions against the possibility that the conclusions might be wrong. The benefit of any reasonable doubt should ordinarily be given (at least in a case such as the present) to a person in the position of the respondent70. Especially is this so because, under current arrangements, the respondent remains in immigration detention whilst the legal process is being completed. He pays for the further scrutiny of his claim, and for delays caused by any legal errors, in a coinage purchased at the price of his own liberty71. Accepting the case of mental disturbance: By the time of the second hearing before the Tribunal, there appeared to be no doubt that the respondent was suffering from some form of psychiatric or psychological disturbance. The suggestion to this effect occasioned the second Tribunal's own initiative to obtain an opinion from the psychologist employed by the body managing the Woomera Detention Centre. That person's report noted that the respondent was "emotionally and physically volatile" and the administration of self-inflicted wounds) rising in the respondent's case to repeated cases of attempted suicide. The Tribunal accepted the "repeated incidents of serious self-harm while in detention"72. In the conduct of the that he had "self-harmed" (a euphemism for 68 Reasons of the Tribunal at 35, referring to United States Department of State, Bureau of Democracy, Human Rights, and Labor, Country Reports on Human Rights Practices 2001: Iran, (March 2002). 69 Skelton, "Returnees arrested in Iran", The Age, Melbourne, 29 April 2002 at 5, in evidence before the Tribunal. 70 United Nations High Commissioner for Refugees, Handbook On Procedures and Criteria for Determining Refugee Status under the 1951 Convention and the 1967 Protocol relating to the Status of Refugees, (1979, reedited Geneva, January 1992) ("UNHCR Handbook") at [203]. This paragraph, also appearing in the 1979 version of the UNHCR Handbook, was quoted in Chan v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379 at 425. 71 See the Act, ss 209, 210; Judiciary Act 1903 (Cth), 26. Also see Germov and Motta, Refugee Law in Australia, (2003) at 722. 72 Reasons of the Tribunal at 28. Kirby second hearing before the Tribunal, the respondent "became highly agitated". The Tribunal found it "apparent that he was not in a condition to answer any further questions"73. This led to the abandonment of the hearing and the substitution of a series of written questions for the oral hearing. Considering the initial application: On first arrival in Australia, the respondent did not recount the attacks on him in Iran, the murder of members of his family and the serious civil deprivations suffered by members of his community, the Arab ethnic minority in Iran. The migration agent then representing the respondent, in a letter to the Tribunal, suggested that the respondent might not have mentioned these matters because of his mental disorder and past trauma. Although the respondent was unable to speak or write in English, his initial application was written by someone, other than the respondent himself, obviously fluent in that language. Based upon multiple factors, various authorities have noted the risks of errors in initial interviews of refugee applicants, on first arrival in a country of refuge74. Remembering the purpose of credibility: Credibility is often seen as the crucial issue in Tribunal determinations of refugee status. The references in the Refugees Convention to the existence of "fear", and to the grounds of that emotion, necessarily imply that those deciding refugee claims will have to make highly personal evaluations of the subjective feelings and motivations of applicants. As I said in Minister for Immigration and Multicultural Affairs v Rajamanikkam75, "[m]any, perhaps most, claims to refugee status involve examination of the truthfulness of the factual assertions of the applicant. Many turn on the assessment of credibility". There was some suggestion during the hearing of this appeal that inconsistent statements by asylum seekers might suggest fabrication of evidence, and might justifiably lead to negative conclusions as to credibility. While such a conclusion is sometimes justified, refugee cases involve special considerations where credibility is an issue76. There is no necessary correlation between inconsistency and credibility in such cases. Many factors may explain why applicants present with the appearance of 73 Reasons of the Tribunal at 16. 74 Selliah v Minister for Immigration and Multicultural Affairs [1999] FCA 615 at [2]-[5]. See also UNHCR Handbook at [198]-[200]. 75 (2002) 210 CLR 222 at 248 [91]. 76 Sujeendran Sivalingam v Minister for Immigration and Multicultural Affairs [1998] 1167 FCA. Kirby poor credibility. These include: mistrust of authority; defects in perception and memory; cultural differences; the effects of fear; the effects of physical and psychological trauma; communication and translation deficiencies; poor experience elsewhere with governmental officials; and a belief that the interests of the applicants or their children may be advanced by saying what they believe officials want to hear77. The Tribunal must be firmly told – if necessary by this Court – that the process is one for arriving at the best possible understanding of the facts in an inherently imperfect environment. It is not to punish or disadvantage inconsistent vulnerable people because statements, or are believed to have done so. they have made false or The evidence before the Tribunal: It is for the Tribunal to assess the facts, including questions of credibility and the genuineness of the application made by the respondent. The Tribunal has a duty to reach its own conclusion on the review and to give effect to it in the form of a "decision"78. By the Act, it is relieved from the obligation to comply strictly with the rules of evidence79. The Evidence Act 1995 (Cth) does not, in terms, apply to proceedings before the Tribunal80. The inquisitorial obligation: Nevertheless, the Tribunal is not a body engaged in purely adversarial proceedings. It operates according to inquisitorial procedures81. This feature of the Tribunal's operation casts 77 Hathaway, The Law of Refugee Status, (1991) at 84-87; Taylor, "Informational Deficiencies Affecting Refugee Status Determinations: Sources and Solutions", (1994) 13 University of Tasmania Law Review 43 at 64-71. See also Sivalingam [1998] 1167 FCA; Abebe v The Commonwealth (1999) 197 CLR 510 at 577 [190] per Gummow and Hayne JJ; Kneebone, "The Refugee Review Tribunal and the Assessment of Credibility: an Inquisitorial Role?", (1998) 5 Australian Journal of Administrative Law 78. 78 The Act, ss 411, 414, 415, 420, 425, 426, 427, 430. 79 The Act, s 420. 80 Evidence Act 1995 (Cth), ss 3, 4(1) and Dictionary; the Act, s 420. 81 Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 69-70 [31]-[32]; Re Refugee Review Tribunal; Ex parte H (2001) 75 ALJR 982 at 990 [29]-[30]; 179 ALR 425 at 435; Muin v Refugee Review Tribunal (2002) 76 ALJR 966 at 1001 [208]; 190 ALR 601 at 648; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S154/2002 (2003) 77 ALJR 1909 at 1918-1919 [57], 1922-1923 [81], 1923 [86], 1924 [88]; 201 ALR 437 at 450, 455-456, 457; Minister for Immigration and Multicultural Affairs v Respondents S152/2003 (2004) 78 ALJR 678 at 697 [97]; 205 ALR 487 at 513. Kirby obligations upon it that are different from, and in some respects more onerous than, those applicable to more traditional bodies acting according to the more passive decision-making virtues of adversarial trial. Against the background of these features of review in the Tribunal, the respondent's case and the evidence as to his mental condition, the question in this appeal is ultimately whether the Tribunal's procedures in the second hearing denied a fair hearing to his claim for a protection visa. If so, the Federal Court's orders, although for a different reason, will be sustained. In my opinion the procedures were unfair. This constitutes jurisdictional error82. That error cannot be saved by the privative provision in the Act83. In the circumstances, it results in dismissal of the appeal. The unfairness of the Tribunal's procedures The Tribunal was on notice: The majority in this Court, like the Federal Magistrate, have concluded that there was no procedural injustice to the respondent in the way the Tribunal proceeded. In effect, the majority are of the view that it was sufficient for the Tribunal to accept to the full, as it did, that the respondent was suffering from PTSD, that this had "led to [the respondent] not revealing all his claims from the outset, and has also given rise to some confusion in his description of particular events"84. It is argued that this course of reasoning is not unusual to a body such as the Tribunal; that effectively, it favoured the respondent, perhaps more than was warranted; and thus that the Tribunal's approach involved no procedural unfairness. Like Selway J in the Federal Court, I regard this reasoning as seriously flawed. The migration agent then acting for the respondent was not qualified with the appropriate expertise to diagnose any mental disorder from which the respondent may have suffered, whether PTSD or otherwise. When the agent's letter to the Tribunal of 30 July 2002 is read carefully, it does not even purport to perform such a diagnosis. Still less does it request the Tribunal to act upon the agent's particular assessment of the respondent's mental condition. All that the agent's letter did, relevantly, was to "address the very worrying and complex issue of our client's psychological and emotional condition" and to bring that condition to the notice of the Tribunal. The agent referred to his "self-harming … happening over an extended period of time". She expressed a belief that this 82 Plaintiff S157/2002 (2003) 211 CLR 476 at 489-490 [25], 494 [38], 508 [83]. 83 Plaintiff S157/2002 (2003) 211 CLR 476 at 508 [83]. 84 Reasons of the Tribunal at 28. Kirby "may indicate considerably deeper trauma than reported by the Woomera camp psychologist". The letter then went on: "It is imperative that the source of this anger [in the respondent] is assessed thoroughly by an expert in the field of psychology or psychiatry to enable the Tribunal to know its true source." These observations must be read with an earlier letter of 20 May 2002 sent by the respondent to the Tribunal. By that letter, the respondent had asked for the hearing before the second Tribunal to be adjourned because he was "not psychologically fit to attend the upcoming [Tribunal] hearing". That statement itself was made against the background of the respondent's further attempt at suicide on 17 May 2002. This had been sufficiently serious to result in his being transferred from the Woomera Detention Centre to the Derby Hospital. It was this request by the respondent that led to the Tribunal's initiation of the advice from the psychologist employed by the detention centre. There can therefore be no doubt that the Tribunal was on notice that the respondent was making an application for the adjournment of the second hearing on the basis of his mental condition. And that his agent was suggesting that the Tribunal should not be satisfied with the opinion of the detention centre psychologist alone. The defects in the report: The migration agent was careful not to "impugn the Woomera camp psychologist's ability". But she did contend that: "[A] further, more independent and expert assessment be undertaken to determine [the respondent's] state of mind and whether there can be justified links to his past claims of trauma and persecution. In other words, an expert assessment to determine the source of such behaviour and whether it stems from serious [PTSD]. We consider that the Tribunal has a duty to ask the question about [the respondent's] anger and the source of that anger … We submit that it could be possible that our client's anger is a symptom of deeper trauma, which only an expert opinion could determine." Objective evidence was before the Tribunal to support this expressed dissatisfaction with the opinion of the employed psychologist. The evidence of "self-harming" was not apparently contested. The further instance of attempted suicide was objectively demonstrated by the admission to hospital. The concerns regarding the employed psychologist's opinion were given support from a report Kirby by Dr Stuart Turner85 and by the UNHCR Handbook, quoted by the respondent's agent86. The opinion of the employed psychologist was criticised, by reference to Dr Turner's report, on the following grounds87: "[H]olding a first degree in psychology does not mean that the individual is appropriately clinically qualified or competent to carry [out] detailed psychological assessments … In my view, these are hard to see as expert reports. The danger is that non-expert advice may lead to incorrect decisions in which an asylum-seeker [i]s wrongly refused. The acceptance of non-expert advice may also make those responsible for adjudication more cynical about all reports … [T]he interpretation of such restricted evidence should in matters of uncertainty or doubt always be in favour of the asylum-seeker in order to avoid the inherent risks arising from the use of such material." The UNHCR Handbook emphasises that88: "It frequently happens that an examiner is confronted with an applicant impede a normal having mental or emotional disturbances examination of his case. A mentally disturbed person may, however, be a refugee, and while his claim cannot therefore be disregarded, it will call for different techniques of examination. that The examiner should, in such cases, whenever possible, obtain expert medical advice. The medical report should provide information on the nature and degree of mental illness and should assess the applicant's ability to fulfil the requirements normally expected of an applicant in presenting his case". The apparent mental state of the respondent was sufficient to cause the Tribunal to obtain a report on his condition. However, the report secured was not that of a fully independent expert. Nor was it a "medical report" as recommended in the UNHCR Handbook. Its terms, when known, supported the respondent's application for postponement of the second hearing before the 85 "Discrepancies and Delays in Asylum Seekers", cited in the letter from the respondent's agent to the Tribunal. 86 UNHCR Handbook at [207]-[208]. 87 Letter from the respondent's agent to the Tribunal, quoting from Dr Turner's report. 88 UNHCR Handbook at [207]-[208] (emphasis added). Kirby Tribunal. The established history of "self-harm", repeated attempted suicide and the expressed opinion of the respondent's pro bono barrister who had personal dealings with him, all suggested that the proper course for the Tribunal to take was to postpone the hearing and to obtain an independent, expert and medical report on his psychiatric condition. The tribunal's own diagnosis: In other circumstances the failure of the Tribunal to adopt the preferable procedure might be viewed as an error within its jurisdiction, not as an error of jurisdiction vitiating the ensuing "decision". However, the Tribunal proceeded, in effect, to make its own diagnosis, based on the imperfect materials before it. This was the turn of events that properly concerned Selway J in the Federal Court89. The Federal Magistrate felt that it was enough for the Tribunal to accept that the respondent "suffers from PTSD"90. However, as Selway J pointed out, the employed "psychologist did not diagnose PTSD"91. That condition had been mentioned by the respondent's agent, with reference to the report of Dr Turner. But Dr Turner's report was not specific to the respondent's condition. It was one general to "asylum seekers" as a class. Whether it was a correct diagnosis in the respondent's particular case was entirely a matter of speculation. What the incidence and relevance of PTSD were to the case was a matter for evidence, not assumption. It was wholly unsatisfactory for the Tribunal to make its own medical diagnosis of the respondent's condition and then to proceed, on the basis of that diagnosis, to reach its own, unsupported, conclusions concerning the impact of that condition (assuming it to apply) on the respondent; his competence to give evidence at all at that time; and the effect that any psychiatric condition from which he then suffered might have had on his initial ability to recall and express events and traumas to which he had earlier been subjected. The arguable impact of trauma: Obviously, courts and tribunals act under practical constraints. The tribunal concerned with the respondent's application was no exception. Giving evidence or appearing before such bodies is often stressful and upsetting. For most applicants, the matters at stake in the hearing, the investment of time and emotion before and the prospects of failure and future events, inevitably make the hearing one of the most traumatic and stressful before any Australian court or tribunal. When to the normal burdens of this kind are added months (or in the respondent's case more than two years) of detention in isolated and unfamiliar circumstances, it may readily be accepted that the Tribunal could be entrusted with making a general allowance for the impact of 89 SGLB [2003] FCA 176 at [14]-[20]. 90 SGLB [2002] FMCA 309 at [23]. 91 SGLB [2003] FCA 176 at [18]. Kirby stress and even for acute feelings of anxiety. If that had been all that the Tribunal did in the present case, there would be no ground for judicial intervention on the basis of procedural unfairness. However, this was not what occurred. This was a case with objectively established circumstances of extreme distress, including uncontested, repeated attempts at suicide. This was therefore not merely an instance where an administrative decision-maker with inquisitorial powers and duties could make assumptions and perform assessments of a degree of stress without proper expert materials. What might have been an assumption concerning the respondent's mental condition, appropriate to a normal case of stress, was not permissible against the background of this particular respondent's history, and his request for postponement of the imminent hearing and for securing the opinion of an independent medical expert concerning the respondent's condition. The Tribunal has a large power to conduct hearings and to reach its conclusions, as the Act provides92. However, its powers are not completely at large. The proceeding must remain a "hearing" as the Parliament has provided. It must conform to basic principles of natural justice (procedural fairness). If it does not, there will have been no "hearing" at all. The purported "decision" will not be one such as the Act contemplated. For a very long time, it has been recognised in our legal system that the mere mention, even the proof, of mental disability of some kind does not necessarily render a person incompetent to give instructions to legal or other representatives or to give evidence that will be received and considered in a formal legal proceeding93. However, in the present case the objection advanced on the respondent's part was two-fold. First, that he might not be in a position to give evidence before the Tribunal competently in a case of great importance to his future – potentially to his life and safety. This suggestion proved prescient. In a sense, it was demonstrated by the breakdown of the hearing before the second Tribunal. Secondly, that, without expert medical evidence, it would be impossible to reach a conclusion on the suggested explanation of the respondent's inconsistent versions of his treatment in Iran. This included the traumas to which he and his immediate family had been subjected there, and the fears that he allegedly suffered as a consequence. Those fears, it was argued, may have caused the respondent to suppress, or withhold, that information in his initial account upon his arrival in Australia. Lawyers may like, for their purposes, to dissect the impact of trauma upon a person's mental state and upon their capacity and competence to give an 92 The Act, ss 420, 425, 426, 427. 93 eg R v Samuel Hill (1851) 2 Den 254 [169 ER 495]. Kirby account of their claims. In a case such as the present, lawyers may prefer to address the impact of experience whilst in detention and to ignore the vulnerability that may have been caused by events earlier in the person's life. However, an individual's mental state and their capacity and competence to give evidence is an integrated phenomenon. The effect of prolonged detention might be borne stoically by an individual who has led an uneventful life. But, for a vulnerable person, with experiences giving rise to accepted fears and with so much at stake, the impact of events might be more telling. That was how the respondent put his case. His was not the ordinary instance of stress and tension, inherent in most proceedings of this kind. It was a case of serious and repeated "self-harm", attempted suicides and exceptional trauma, "diagnosed" in the end by the Tribunal itself. The role of procedural fairness: In the decisions of this Court, a difference emerges concerning the role of the common law principles of natural justice (procedural fairness) as they relate to the conduct of administrators, exercising powers given to them by statute94. One view that has been expressed is that the common law principles continue to operate, save insofar as the legislature has explicitly or clearly abolished them95. This view is consonant with the rule, followed since the earliest days of this Court96, that common law principles expressing basic civil rights are not taken to be abolished by statute unless the legislature clearly and validly so provides97. The other view is that the rules of procedural fairness, found in the common law, may be implied in the statutory grant of power to the administrator98. This is explained in terms of an implication that the statutory power is conditioned on observance of the principles of natural justice (procedural fairness). It is presumed that the Parliament, in providing for a "hearing" and in requiring the administrator to reach a "decision", envisages that the "hearing" will be carried out with justice to both sides and will result in a "decision" achieved by due process. 94 Miah (2001) 206 CLR 57 at 83 [89] per Gaudron J. 95 Kioa v West (1985) 159 CLR 550 at 575-579, 582-585 per Mason J. 96 Potter v Minahan (1908) 7 CLR 277 at 304; Ex parte Walsh and Johnson; In re Yates (1925) 37 CLR 36 at 93. 97 Bropho v Western Australia (1990) 171 CLR 1 at 17-18; Coco v The Queen (1994) 179 CLR 427 at 436-438; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 77 ALJR 40 at 49 [43], 57 [90]; 192 ALR 561 at 573, 584-585; Attorney-General (WA) v Marquet (2003) 78 ALJR 105 at 134 [167]-[168]; 202 ALR 233 at 273. 98 Kioa v West (1985) 159 CLR 550 at 614-619 per Brennan J. Kirby This is not the occasion to attempt to resolve that debate. The result of either theory will normally be the same. I do not for a moment consider that the Tribunal acted in relation to the respondent with conscious unfairness. Every indication in the record is to the contrary. Nor do I believe that there was any lack of bona fides on the part of the member constituting the Tribunal. She thought that it was fair to proceed upon an assumption that the respondent had a the particular psychiatric condition (PTSD) and consequences that this condition would have had both for his competence to participate in the hearing and for the Tribunal's evaluation of his successive conflicting stories concerning his reasons for coming to Australia and his treatment in Iran, before he set out. that she could infer Conclusion: objective unfairness: Unfortunately, the course adopted by the Tribunal was objectively unfair. Independent, expert medical advice was requested, and its need was demonstrated. The particular condition "accepted", and its operation upon the competence and conduct of the respondent, were not within matters of general knowledge or matters of which even an expert and experienced body, such as the Tribunal, could take notice without proof99. The result was that, in the procedures adopted by the Tribunal, an injustice was done to the respondent. In the Federal Court, Selway J identified that injustice, even if his reasons did not precisely classify the legal category by which it might best have been described. The privative clause argument is unavailing As a fallback argument (and somewhat sotto voce I thought) the Minister submitted that the Federal Court had erred in failing properly to consider the effect of the privative clause in the Act on whether any error of law relied upon constituted jurisdictional error giving rise to judicial relief. Specifically, the Minister argued that, if (contrary to the primary submission) the Tribunal had infringed an express or implied requirement of the Act in making its decision, it was still necessary for the Federal Court to consider whether a breach of such requirement went to the jurisdiction of the Tribunal100. It was said that if the Tribunal appeared to make a jurisdictional error, it remained for the Federal 99 Gattellaro (2004) 78 ALJR 394 at 397 [15]-[18], 404-405 [68]-[69]; 204 ALR 258 at 262, 272. See also Holland v Jones (1917) 23 CLR 149 at 152-154; Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 478-481 [64]-[68]. 100 The Minister relied on Coal Miners' Industrial Union of Workers of Western Australia v Amalgamated Collieries of Western Australia Ltd (1960) 104 CLR 437 Kirby Court, providing judicial review, to undertake a "reconciliation process" required in the light of s 474 of the Act101. It is possible that this argument might need to be addressed in a case wholly dependent upon the way in which the reasons of Selway J in the Federal Court were stated. I will not decide that point. However, once the suggested jurisdictional error is revealed as a failure to accord procedural fairness to a party, the result is that the reasoning of this Court in Plaintiff S157/2002 v The Commonwealth102 applies. The purported "decision" was not a "decision" for the purposes of the Act. As Gleeson CJ put it in Plaintiff S157/2002103: "In the case of a purported exercise of decision-making authority, limitation on authority is given effect, notwithstanding the privative provision. That may involve a conclusion that there was not a 'decision' within the meaning of the privative clause. In a case such as the present, it may involve a conclusion that a purported decision is not a 'decision … under this Act' so as to attract the protection given by s 474." In my view, Plaintiff S157/2002 is indistinguishable from the present case. The result that follows must be the same. Orders The orders made by the Federal Court were correct. That Court's conclusion can more readily be confirmed in this appeal because of the objective indication of the serious mental disturbance of the respondent, whatever may have been its cause; the Tribunal's finding that he had a genuine subjective fear of being returned to his country of nationality; and the objective proof (seemingly uncontested by the Tribunal) that many arbitrary cruelties and wrongs occur to people in that country that justify genuine fears of persecution, at least in some cases. It would be burdensome indeed to require a third hearing before the Tribunal. However, nothing less is necessary where procedural unfairness, however unintended, has been established. Such, in my view, are the high standards required by the Act and specifically in a case of a person such as the respondent, objectively demonstrated to be seriously damaged by his life's experiences. 101 Plaintiff S157/2002 (2003) 211 CLR 476 at 501-504 [61]-[70]. 102 (2003) 211 CLR 476. 103 (2003) 211 CLR 476 at 488 [19]. See also the joint reasons in that case at 506-507 Kirby The appeal should be dismissed with costs. Callinan CALLINAN J. This appeal is concerned with the conduct of a hearing by the Refugee Review Tribunal and raises questions as to the nature and detail of the evidence upon which it may act and any obligations that it may have to obtain it. Facts The respondent is an Iranian citizen who travelled to Australia by sea without a visa on or about 8 June 2000. He was immediately detained and interviewed by an officer of the Department of Immigration and Multicultural Affairs on 9 June 2000 at the Port Hedland Immigration Reception and Processing Centre. The officer told the respondent that he should answer the questions put to him carefully and honestly because any subsequent inconsistent claims could raise doubts about his reliability. The respondent said that he had left Iran because his life there was monotonous: that he had been unable to marry as he had to "work hard from morning to evening". He informed the officer that he never had any problems with the "Military/Police/Security" in Iran. I set out two of his responses in more detail. "6. WHY DID YOU COME TO AUSTRALIA? It was mainly to secure my future, find a job in my own profession or in any other occupation. I have come to work, to live to get married. After I get married hopefully my children will lead a happy life. … 7. DO YOU HAVE ANY REASONS FOR NOT WISHING TO RETURN TO YOUR COUNTRY OF NATIONALITY? Why should I return to that addicted community. It is like going back to prison as there is no recreation and you work all the time to earn money for your food. You can't go to a park because they say you are a single man and not allowed. My eldest brother is 40yrs old and is single the same with my other brother. At least I have a little room nothing else." It appeared clearly from those answers therefore that the respondent had come to Australia to find a job and a wife, and to secure his future. There was no suggestion by him that any fear of persecution and possible incarceration by the authorities there motivated his departure from Iran. On 20 October 2000, the respondent applied for a protection visa. The account that he gave was markedly inconsistent with his answers on his arrival in Australia. He asserted that he and his family had suffered discrimination, detention, and torture at the hands of the Iranian authorities since the time of the Iran-Iraq war because they belonged to the Arab minority in Iran. There could be little doubt that if the account which he gave in his application were to be accepted, he had lived in such a state of well-founded fear of persecution before Callinan he came to Australia as would justify the grant to him of the status of refugee104. I set out relevant parts of his account. "During the interview conducted with me upon my arrival in Australia, I could not reveal all the information simmering in my heart about the tragic circumstances I passed through in Iran. That was due to the fact that I was seized with fear over the information being divulged and taken as evidence to expose my family in Iran to destruction at the hands of the Iranian security organs. I tried during the months of my detention to appoint a personal solicitor to explain to him my problems free of fear. I lived with my family and the members of my clan a tragic life in Iran. We were treated with disdain and contempt and were subjected to all forms of discrimination. We were denied our rights and barred from work. We were not allowed to compete according to our qualifications with the Iranians of Persian origin. The policy of the Iranian government is almost identical with the policy followed in America to eradicate the Red Indians. The Iranian government dumped our area with drugs to poison the youths of the Arab origin, distance them from national politics and demoralise them. Moreover, that government cast them into prisons where they were subjected to all forms of intolerable terrorism, repression and torture. My grandfathers had long ago migrated from Iraq and settled in Al Mohammarah on the Iranian-Iraqi borders. They cultivated vast areas of land which were not under Iranian sovereignty. But due to the weakness of Iraq, the Persian Empire imposed its hegemony on our cities and villages. Our people found themselves forced to abandon their Iraqi identity and Arabism and shift towards Persianism. At the start of the Iranian Iraqi war (1980-1988), my grandfather, his elder son and grandson were arrested and detained. They were accused of dealing with the Republic of Iraq and hiding Iraqi weapons on their land. They were further accused with communicating information to the Iraqi 104 Article 1A(2) of the Convention relating to the Status of Refugees adopted on 28 July 1951, as amended by the Protocol relating to the Status of Refugees adopted on 31 January 1967, defines a refugee as any person who: "owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence, is unable or, owing to such fear, is unwilling to return to it." Callinan government. In 1983, other members of my family were arrested. After a period, my grandfather and uncle were executed. My cousins remained imprisoned up till now. Then my father and brother were arrested and cast into prison. They were sentenced to ten months imprisonment on charges of dealing and collaborating with the Iraqi authorities. After spending the period, they were released. During their imprisonment they were subjected to all forms of torture and persecution as they denied any relations whatsoever with Iraq. Their only sin was that they were of the Arab origin and took pride in their Arabic background and strongly denounced forcing our people in Al Ahwaz to deny their Arab nationalism and join the Persian nationalism. The imprisonment of my father and brother was followed by the confiscation of our lands. The Iranian government also confiscated the truck operated by my father under the pretext of public interest and the seizure of the properties of traitors. They also claimed that the vehicle was used to transport weapons to the mountainous areas to activate the Movement of Arab Nationalism and achieve independence from the Persian hegemony. My father was threatened with being imprisoned again if he refused to accept the confiscation. We had been cornered in a very dangerous situation as a result of these incessant security harassment, acts of revenge, continuous surveillance, raiding of our homes and places of work in search of arms and secret publications hostile to Iran and the Persian hegemony. In each act of raiding, they would take all of us to the security centres in the night for interrogation where we would be subjected to assaults, insults and threats. They wanted to force us to accept their political-religious system and the conception of the Persian Empire. They wanted to force us to realise that there would be no other solution and that any Arabic orientation would not be condoned. Acts of detention and torture became common practice each time we were led to the security centres. We would remain for a period exceeding one month in the detention. They would not release us unless after inflicting all forms of torture and assaults and after extracting a declaration of good behaviour and conduct. In July 1999, an anti-government demonstration broke out in our area. I and my family felt we had to participate as an important sign of our people's emancipation and to call for respect of Human Rights and our Arabic heritage. We deliberately did not remain until the end of the demonstration, preferring to return to our home fearing the revenge of the Islamic authorities. We were taking our lunch when strong knocks were heard at the door. My mother went out to open the door fearing the security men to be there. As soon as she opened the door, the security men burst in and my mother fell on her head as they pushed her aside. Callinan She started to scream as blood poured out of her head. Faced with this unacceptable situation, we could not control our nerves. We entered into a sort of a battle with the raiders where we exchanged insults and punches. But they were more numerous and well armed. They arrested and controlled us. They did not give me time to aid my mother. We left her at the hands of my father who was alone appealing the human conscience to alleviate this heart-rending tragedy. Thus, we were again cast into the security prison where we remained for a period of five months without any charge being leveled against us save resisting the security men at our house. We faced all forms of torture. We were only released on financial bail and a personal declaration given by my father. Upon my release, I decided to leave the country seeking safety and freedom. Fearing to be detained again and probably liquidated, I left immediately for an agricultural area cultivated by one of my friends. I remained there away of the eyes of the security and started to look for a way out of Iran." At a subsequent interview by a delegate of the appellant, the respondent again altered his claims. For example, faced with evidence that the Iranian authorities did not discriminate against the Arab minority, the respondent indicated that he faced harm more by reason of his political opinion, than of his Arabian ethnicity as earlier claimed. It was put to the applicant that there are several ethnic groups within Iran and that country information indicates that none of them as a rule face serious discrimination on the basis of ethnicity alone. Despite wide documentation of human rights abuses that do take place in Iran, none of them refer to discrimination against those of Arabic ethnicity. The applicant indicated his problems were more on account of his political opinion." Another change in his account appears from the following. The applicant was asked about the demonstration against the government he claimed to have been involved in 1999. The applicant said that he was not involved in any demonstration in 1999. He said he had been involved in one in 1998. The demonstration occurred because the government had been negligent in providing assistance to local residents after the area had been flooded. People had to sleep on the roof of their houses for five days. The residents drove trucks onto the highway and staged a blockade. Plain-clothes agent came and filmed those involved." Callinan The application for a protection visa was refused by a delegate of the appellant on 8 December 2000. The delegate in reliance upon the country information was of the view that an Arab person who refused to participate in Iranian nationalistic activities would not face the kind of harm claimed by the respondent. She also rejected the respondent's explanation for the significant changes in his claims over time. "I do not accept that the applicant has a well founded fear of persecution in Iran on account of his Arabic ethnicity. A search of available country information does not identify any reports that indicate that Iranians of Arabic ethnicity face any form of harm or discrimination amounting to persecution. Rather the available reports state that in general the Iranian government does not discriminate on account of race. I also note that the US State Department Country Report on Human Rights Practices for 1999 makes no mention of Arabic Iranians in its report concerning racial discrimination. Given the extensive coverage of human rights abuses that do occur in Iran, I consider the absence of any such report concerning ethnic Arabs is indicative of an absence of persecution of that particular racial group. I also do not accept that the applicant has a well founded fear of persecution on account of his political opinion. The political opinion the applicant holds is one of pride in his Arabic heritage and ethnicity and this has been demonstrated by his refusal to adopt an Iranian identity and join in Iranian nationalistic activities. There is no country information available which supports the applicant's claim that mere refusal to join in nationalistic activities will result in adverse attention such as arrest, detention and torture. The World Directory of Minorities reports the following about the Arab minority in Iran: 'There are probably one million Arabs, mainly Shia, living primarily along the Gulf littoral in the province of Khuzestan and more generally in the South. The Arabs of Khuzestan and of Southern Iraq form a cultural unit. Many Arabs on the coastline are Sunni, originally from the Arabian peninsula, and have a history since the sixteenth century of migrating between the east and west sides of the Gulf. They are thus thought of as neither wholly Iranian or wholly Arab. As a group they are known as Hawila. In spite of such factors, Iraqi attempts to foment unrest for largely the Pahlavis and unsuccessful. Arabs of Khuzestan demanded autonomy like the Baluch, Kurds and Turkomans in 1979, but demonstrated their loyalty to the Islamic regime during the Iran-Iraq war 1980-1988.' the Islamic republic have been Callinan I consider that this report indicates that the Arabs in Iran are able to maintain their cultural identity without experiencing persecution from the Iranian government. The report states that the Arabs pushed for autonomy and gives no indication that this push resulted in treatment amounting to persecution. I consider that if the Iranian government tolerated the Arab push for autonomy, then the applicant's claim of arrest, detention and torture for merely not involving himself in Iranian nationalistic activities is inconsistent with country information. As such I am not satisfied that the applicant has a well founded fear of persecution in Iran on account of his political opinion. In this context I note the inconsistencies between the applicant's claims put forward at his initial entry interview and those provided in his application for a protection visa. I do not accept the applicant's explanation for the inconsistencies in his statements and consider that they confirm my findings above that the applicant does not have a well founded fear of persecution for a Convention reason." On 15 December 2000, the respondent applied to the Refugee Review Tribunal ("the Tribunal") to review the delegate's decision. On 20 February 2001, the respondent made a further submission. He claimed, among other things, that he faced harm not because he was an Arab but because he was a member of the Hamid tribe, who had become associated with the Iraqis during the Iran-Iraq war. He was assisted by a Farsi interpreter at the hearing conducted by the Tribunal. On 26 April 2001, the Tribunal affirmed the decision not to grant a protection visa. The respondent applied to the Federal Court for judicial review of that decision and on 2 April 2002 the matter was remitted by consent to be reheard by the Tribunal. It was common ground that the respondent needed, and should have had an Arabic rather than a Farsi interpreter. The respondent was invited to attend a hearing on 30 May 2002 by the Tribunal as reconstituted. On 20 May 2002 however, the respondent requested that the hearing be adjourned because he was "not psychologically fit to attend". On 11 June 2002, the Tribunal wrote to the Health Services Manager at the Woomera Detention Centre (to which the respondent had been transferred) seeking a written assessment from a psychologist of the respondent's "general state of mind". The relevant passage from that letter is set out below. "The Member would be grateful if you could provide to her a written assessment of [the respondent's] general state of mind so that she can decide how best to conduct the hearing, and how well he is presently able to express himself and explain his actions. In particular she would like to know what to expect in terms of his ability to accurately recall incidents Callinan from his past. She also needs to know whether he is having difficulties in concentrating which might affect how he gives oral evidence at a hearing. She would appreciate any other observations you may wish to make which you think might assist her to take oral evidence from [the respondent]." On 18 June 2002, the psychologist responded as follows. "I am forwarding this information in response to your enquiry regarding the presentation of [the respondent]. I have had two formal interviews with [the respondent] and several informal interactions. General Presentation and Psychological State: [The respondent] presents as extremely tense, and shows signs of being both emotionally and physically volatile. In general he presents as a very angry self-focused person. [The respondent] has had a lot of contact with the medical staff due to his self-harming behaviour, and continues to behave in a threatening fashion towards staff. After physically violent acts either to himself or property, [the respondent] shows no sign of remorse or reflection on his behaviour. I have discussed with [the respondent] managing his anger through physical activities available at the centre such as use of the gym, etc but [the respondent] is not receptive to these suggestions. [The respondent's] Powers of Recall: [The respondent] has not been interested in discussing his past with me however I don't believe that he cannot recall his past. He says it makes him too angry to discuss his past. He holds very strong views on a variety of situations but expresses his views in few words. [The respondent] has sworn on the Koran that if he gets a negative RRT he will kill himself. [The respondent] has referred to conversations we have had previously. He does not seem to have blurred or confused recall. Although [the respondent] is tense and angry I believe he has the ability and the resources to present information if he felt he would benefit from that process. [The respondent] claims to suffer from headaches, poor concentration, and insomnia through anxiety however it seems that many of his actions are still clearly thought through and premeditated so I believe he has the capacity to think through events if required." The Tribunal held a preliminary hearing on 20 June 2002. The hearing was conducted by video. The member constituting the Tribunal asked the respondent whether he wished to give oral evidence, and if he did, whether he thought himself able to do so. He replied that he wished to give evidence as soon as possible. Callinan A further hearing by video link was conducted by the Tribunal on 26 June 2002. At the hearing, an incident occurred which the Tribunal subsequently described in this way: "I asked [the respondent] what problems he thought he might have if he went back to Iran now, and what might motivate them. He responded that he would take his life rather than return to Iran. At this point in the hearing [the respondent] became highly agitated. As it was apparent that he was not in a condition to answer any further questions, I agreed to send my final questions to his new adviser (who was present via telephone link) in the hope that she could obtain his responses to them." On 27 June 2002, the Tribunal wrote to the respondent's adviser drawing attention to a number of matters of concern. One appears from the following: "The Tribunal has now received an assessment of [the respondent's] general state of mind (a copy of the Tribunal's letter requesting this, dated 11 June 2002, and the letter of assessment dated 18 June 2002, are enclosed). The Tribunal could infer from it that the inconsistencies in [the respondent's] account do not arise from blurred or confused recall." The reference to "the inconsistencies" is to particular inconsistencies outlined earlier in the letter. They related to differences between the respondent's various accounts of his life in Iran earlier referred to in the Tribunal's reasons. On 30 July 2002, the respondent's adviser, who was a migration agent105, made a detailed response to the matters raised by the Tribunal. The adviser contended that there was evidence "that [the respondent] is suffering from some form of psychological difficulty, which is complicating his giving of evidence with regard to his claims". The adviser also referred to extracts of a report entitled "Discrepancies and Delays in Asylum Seekers" by a psychiatrist, Dr Stuart Turner ("the Turner Report"). That report suggested that persons suffering from Post Traumatic Stress Disorder (PTSD) may have difficulty in immediately providing a coherent narrative of past events. It was suggested by the adviser that the respondent might be suffering from PTSD. At the same time, the respondent provided an affidavit seeking to explain why he gave false evidence in his original interview and why his subsequent claims varied from time to time. He also sought to restate and elaborate upon his claims to some extent. As to the former, he deposed as follows: 105 A barrister participated in the video link hearing on 26 June 2002 by telephone, together with the migration agent. Callinan "After I arrived in Australia I was interviewed about why I had left Iran and come to Australia. I gave false or incomplete answers because I feared the consequences for my family if I told the truth about the persecution my family and I had been subjected to. I feared that the information about me and my family, and the fact that I was seeking asylum in Australia, might get back to the Iranian authorities. This fear was in part based on the fact that the interpreter was Iranian. I also feared that the Australian authorities would see me as a troublemaker or terrorist and refuse to allow me to stay in Australia. I did not tell the truth about leaving Iran on a false passport at the first interview because I thought the Australian authorities would make adverse conclusions about me. I told Dr Al Jabiri [the respondent's previous migration agent] of all the times I was arrested. Dr Al Jabiri told me I did not need to mention all the details of my history and arrests. Specifically, Dr Al Jabiri told me I did not need to mention: (1) my arrest during my last year at school for involvement in protest demonstrations and my subsequent expulsion from that school, (2) my involvement with community protests in 1998 against the government after our area had been flooded because people of the neighbouring area (occupied by wealthy oil company employees) had removed a water barrier protecting our suburb. He told me that my case was strong enough based on my last arrest. I relied on his expertise, believing Dr Al Jabiri knew how best to advance my application." The substance of the restatement and elaboration of his claims appears from the decision of the Tribunal on 13 August 2002, affirming the delegate's decision to refuse a protection visa. In its reasons for that decision, the Tribunal dealt with the issue of inconsistency in the respondent's earlier claims in a way that was highly favourable to him by treating him as if he had in fact been suffering from PTSD and that the presence of this condition was the reason for the inconsistencies. "[The respondent] was aged seven when the war with Iraq commenced, and was aged sixteen when it ended (in July 1988). I have considered the plausibility of his claims that his family continued to be subjected to harm because of a political opinion imputed to them arising from their membership of the Hamidi tribe and their family links with its late leader. It is the case that [the respondent's] evidence has changed over time as to his family's, and his own, problems in Iran after the end of the war in 1988. The Tribunal is asked to accept, in brief, that he may be suffering Callinan from Post Traumatic Stress Disorder, and that this has led to his not revealing all his claims from the outset, and has also given rise to some confusion in his description of particular events. I have not agreed to his adviser's request that he be assessed by a psychologist in order to confirm this. That is because I consider it highly likely that [the respondent] is suffering from PTSD, as indicated by his repeated incidents of serious self-harm while in detention. I therefore propose to accept that his ability to give evidence clearly has almost certainly been influenced by this. As to whether his current condition is a consequence of Convention-related events in Iran, (rather than during his period of over two years in detention in Australia, for example), it is for the Tribunal to make findings on the events which the [respondent] claims led to his decision to leave Iran. … Thus, rather than rely on the claims made by [the respondent] on various occasions before [the] hearing [on 26 June 2002], I propose to treat the oral evidence given by him at the hearing, coupled with the content of the written submissions from his adviser (30 July 2002) and himself (30 July 2002) after the hearing, as an accurate reflection of the claims he wishes to make." On 4 September 2002, the respondent lodged an application for judicial review in the Federal Court. The application was transferred to the Federal Magistrates Court pursuant to s 32AB of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"). On 20 December 2002, Driver FM dismissed the application. The Federal Court On 13 January 2003, the respondent, who at that time did not have legal assistance, filed a Notice of Appeal taking as a ground that his case had never been "considered deeply". On 11 March 2003, the appeal was heard by Selway J exercising the appellate jurisdiction of the Federal Court under ss 24(1)(d) and 25(1A) of the Federal Court Act. His Honour gave an ex tempore judgment allowing the appeal. After referring to the evidence before the Tribunal and its holdings with respect to the assumed presence of PTSD, and its likely effect upon the respondent, his Honour said this: "There are a number of problems with this. First, there is simply no evidence before the Tribunal upon which it could be satisfied that the [respondent] was suffering from PTSD. I do not suggest that the Tribunal Callinan is under a duty to inquire whether a person has a mental disability, even where that person's behaviour may seem bizarre106. Certainly in this case there may not have been a jurisdictional error if the Tribunal had simply relied upon the psychologist. But the Tribunal did not do so. Nor could the member be criticized for not relying on the psychologist. She was perfectly entitled to reach the view, particularly after observing the [respondent's] behaviour, that she was not prepared to rely upon the psychologist. But the Tribunal was not entitled to diagnose the [respondent] as suffering from PTSD without evidence. To do so was an error as to jurisdiction. The second problem is that, even if the [respondent] is suffering from PTSD there was no evidence before the Tribunal, other than the quotations from the Turner report referred to above, which would enable the court to assess the effects of PTSD on the creditability of the [respondent]. As the above quotation makes clear, the Tribunal was prepared to rely upon the diagnosis of PTSD in relation to 'his ability to give evidence clearly.' It is not altogether clear what this means. What is clear though is that the Tribunal nevertheless made credit findings based upon inconsistencies in his evidence. For example, the Tribunal found that his first version of where he was living immediately prior to leaving Iran was true, and the later version untrue. The Tribunal analysed the issue in this way: 'These two assertions as to his whereabouts in the months leading to his departure from Iran are entirely irreconcilable, and he has not provided any explanation as to why they differ. I consider untrue his claim to have been in hiding throughout his last six months in Iran. I am satisfied that he was living at his family home throughout that period. It follows, and I am satisfied, that he was not detained again by the authorities because they did not wish to detain him. It also follows, as he willingly remained at his family home where he could be readily located by the authorities, that he did not fear arrest.' But, having found that the [respondent] was suffering from PTSD there was no evidence before the Tribunal which would have enabled it to assess whether or not any of the evidence the [respondent] gave was reliable. Having (wrongly) diagnosed that the [respondent] was suffering from PTSD it was an error of law for the Tribunal then to proceed to make credibility findings in relation to the [respondent's] evidence without evidence as to what effect the PTSD might have on the [respondent's] capacity to give evidence. 106 See Eastman v The Queen (2000) 203 CLR 1. Callinan The third problem is directly related to the second. Having found that the [respondent] was suffering from PTSD there was no evidence before the Tribunal which would enable the Tribunal to determine whether the [respondent] could properly take part in the proceedings. Having found that the [respondent] was suffering from a disease which affected his capacity to give evidence it was then incumbent upon the Tribunal to satisfy itself that the [respondent] could take part in the proceedings. The failure to do so was also an error of law. In my view these errors were jurisdictional errors. The Federal Magistrate dealt with it in the following way: 'The RRT accepted that the applicant suffers from PTSD, on the basis of a psychologist's report obtained by the RRT. Having accepted the disability suffered by the applicant there was no need for the RRT to further prolong proceedings to obtain a further medical assessment. His legal advisers were apparently satisfied that they could obtain instructions from him and represent him. Persons suffering from PTSD commonly conduct legal proceedings without particular difficulty. The RRT took into account that the answers given by the applicant may be confused, consistent with his PTSD and adjourned proceedings early when it became apparent that the proceedings had become unproductive. The RRT took the precaution of submitting further questions in writing and legal obtain representatives. This was, in my view, a proper approach for the RRT to take.' (sic) written answers the applicant's from However, the psychologist did not diagnose PTSD. As referred to above it seems to have first been mentioned in the submissions of the [respondent's] advisers. Any diagnosis seems to have been made by the Tribunal member. Further, the assumption made by the Federal Magistrate that many people with PTSD commonly conduct legal proceedings, does not deal with the problem of the capacity of this [respondent] to do so. This is particularly so when the Tribunal has accepted that the PTSD has affected the [respondent's] capacity to give evidence. In my view the learned Federal Magistrate was in error in concluding that there were no errors of law in the reasoning of the Tribunal. In my view the relevant errors were jurisdictional errors." The appeal to this Court The appellant appealed to this Court on the following grounds. Callinan The Court erred in holding that it was not open to the Tribunal to accept without evidence that the respondent had PTSD. The Court erred in holding that, having accepted that the respondent had PTSD, there was no evidence before the Tribunal which would have enabled it to assess whether or not any of the evidence the respondent gave was reliable. The Court erred in holding that, having found that the respondent had PTSD, it was incumbent on the Tribunal to satisfy itself that the respondent could take part in the review proceedings. The Court erred in holding that the errors identified were jurisdictional errors. The decision of the Federal Court is flawed in more than one respect both factually and in law. I will proceed for present purposes on the basis that despite s 420(2)(a) of the Migration Act 1958 (Cth) ("the Act"), the Tribunal could only act upon an evidentiary foundation of the kind that Selway J held to be absent and necessary, matters as to which there is some doubt. The provision provides as follows: "(2) The Tribunal, in reviewing a decision: is not bound by technicalities, legal forms or rules of evidence". There was, contrary to his Honour's holding, abundant evidence to justify a finding by the Tribunal that the respondent was suffering from PTSD. The nature, symptoms and possible effects of it were the subject of the extract from the Turner Report provided to the Tribunal. The possible or likely effects of the condition were asserted by the respondent's advisers. The psychologist at Woomera made a comprehensive assessment of the respondent's condition. The Tribunal also had the benefit of observing the respondent on the television screen during the video linked hearing. Together, these matters clearly provided an evidentiary basis for the assumption that the Tribunal was prepared to make in the respondent's favour, that he was suffering from PTSD, that this affected his ability to give evidence, and, further, that it provided an explanation for the inconsistencies between his accounts. Even without any evidence of PTSD, the Tribunal would have been entitled to abstain from making an adverse finding in respect of the inconsistencies in the respondent's accounts. He contends that he was denied procedural fairness. The respondent's complaint is a strange one and involves these propositions. The Tribunal should not have proceeded without ascertaining that the respondent was not suffering from PTSD. If it had made further Callinan inquiries the presence of PTSD would or might have been established. Its presence provided an explanation for inconsistencies in his evidence. The Tribunal should and would have accepted that explanation and not held against him, in assessing his current claim, that he had been inconsistent. But the last is of course the precise position that the Tribunal reached. In short, had the Tribunal done what the respondent says, and the Federal Court accepted, should have been done, the position would have been no different. Acceptance of all of these propositions by no means demands the conclusion that the respondent's last, or current claim had to be taken to be true. The Federal Court may not have expressly stated that the Tribunal was under a duty to inquire, but there is little doubt that his Honour assumed the existence of such an obligation. In that respect, his Honour said this: "Having found that the [respondent] was suffering from a disease which affected his capacity to give evidence it was then incumbent upon the Tribunal to satisfy itself that the [respondent] could take part in the proceedings." This finding disregarded four matters: that a psychologist had carefully considered and assessed the respondent's capacity to remember and give a reliable account of his past; that the respondent had said that he was not disabled and wished to give evidence; that the Tribunal had the benefit of the Turner Report; and, that the obligation of any court or tribunal does not generally extend beyond an obligation to satisfy itself that a party can understand the nature of the proceedings and can give instructions and evidence as required, matters to which further reference will be made later. Under s 427 of the Act, the Tribunal may require the Secretary to arrange, and report upon, any investigation or medical examination that the Tribunal thinks necessary with respect to a review107. That does not mean that the Tribunal is bound to make particular inquiries or to obtain evidence on medical or other matters108. There is nothing to suggest in this case however that the 107 "Powers of the Refugee Review Tribunal etc. For the purpose of the review of a decision, the Tribunal may: require the Secretary to arrange for the making of any investigation, or any medical examination, that the Tribunal thinks necessary with respect to the review, and to give to the Tribunal a report of that investigation or examination." 108 Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 290. Callinan Tribunal failed, whether it was bound to do so or not, to make all appropriate and sufficient inquiries. The Tribunal was faced with a request by the respondent that the hearing proceed, which it did, and it was well aware of the possibility that the respondent was stressed and made due allowance for that. Even if the respondent had made a request that a particular psychologist or psychiatrist give evidence, the Tribunal was not obliged to comply with it109. It certainly made no jurisdictional error in not undertaking further inquiries. It had a discretion and not an obligation to pursue such other inquiries, if any, as it saw fit. It is a powerful consideration that in the Tribunal proceeding, neither the respondent nor his advisers contended that he was unable to give evidence or take part in the proceedings. The contrary was the case. He indicated that he wished to do so and he gave sensible evidence for a substantial portion of the hearing and provided an affidavit afterwards. The Tribunal did not err in permitting the respondent to take part in the proceedings in the way that it did. The Federal Court fell into error in reaching a different conclusion. This should also be said about stressed witnesses. They are by no means rarely encountered in courts and tribunals. Legal and inquisitorial proceedings can be very stressful occasions even for people who have no direct interest in their outcome. That a witness or a party may be stressed will rarely of itself constitute sufficient reason to postpone a hearing. Whether a party or a witness is so stressed as to be unable to give a reasonable account of himself or herself, or whether further inquiries as to the capacity of a person to do so should be 109 Section 426 of the Act provides: "Applicant may request Refugee Review Tribunal to call witnesses In the notice under section 425A, the Tribunal must notify the applicant: that he or she is invited to appear before the Tribunal to give evidence; and of the effect of subsection (2) of this section. The applicant may, within 7 days after being notified under subsection (1), give the Tribunal written notice that the applicant wants the Tribunal to obtain oral evidence from a person or persons named in the notice. If the Tribunal is notified by an applicant under subsection (2), the Tribunal must have regard to the applicant's wishes but is not required to obtain evidence (orally or otherwise) from a person named in the applicant's notice." Callinan made, is pre-eminently a matter for the court or the tribunal to decide, and courts and tribunals by experience are generally well equipped to do so. The respondent's submissions would, if correct, place him in a more favourable position than a person with mental deficiencies charged with a serious crime, as to which Gleeson CJ in Eastman v The Queen said110: "Unfortunately, it is not unusual for the criminal justice system to have to deal with people with mental disorders; sometimes severe disorders. The existence of the disorder does not, of itself, prevent them from being brought to trial. It certainly does not mean that they must be allowed to be at liberty. It is not to be overlooked, as Deane and Dawson JJ pointed out in Kesavarajah v The Queen111, that the usual consequence of a finding that a person is unfit to plead is indefinite incarceration without trial. It is ordinarily in the interests of an accused person to be brought to trial, rather than to suffer such incarceration. In the case of R v Berry112 Geoffrey Lane LJ, criticising a direction to a jury empanelled to determine an issue of fitness to plead, said: 'It may very well be that the jury may come to the conclusion that a defendant is highly abnormal, but a high degree of abnormality does not mean that the man is incapable of following a trial or giving evidence or instructing counsel and so on.' The Ontario Court of Appeal, in R v Taylor113, recorded the following propositions, agreed by counsel, as representing the state of authority in that province: '(a) The fact that an accused person suffers from a delusion does not, of itself, render him or her unfit to stand trial, even if that delusion relates to the subject matter of the trial. (b) The fact that a person suffers from a mental disorder which may cause him or her to conduct a defence in a manner which the court considers to be contrary to his or her best interests does not, of itself, lead to the conclusion that the person is unfit to stand trial. 110 (2000) 203 CLR 1 at 14-15 [24]-[27]. 111 (1994) 181 CLR 230 at 249. 112 (1977) 66 Cr App R 156 at 158. 113 (1992) 77 CCC (3d) 551 at 564-565. Callinan (c) The fact that an accused person's mental disorder may produce behaviour which will disrupt the orderly flow of a trial does not render that person unfit to stand trial. (d) The fact that a person's mental disorder prevents him or her from having an amicable, trusting relationship with counsel does not mean that the person is unfit to stand trial.' In the present case, the ultimate test to be applied is the statutory test set out earlier. However, each of the above propositions is sound, and they are consistent with the statutory test." The respondent demonstrated ample capacity to follow and participate in the Tribunal proceedings and to answer questions coherently. The Tribunal evaluated the evidence in an orthodox manner and made findings based on the evidence and its observations of the respondent when answering questions. The Tribunal made no error in doing so, neither factual, jurisdictional nor legal of any kind. What I have said so far is sufficient to dispose of the appeal and obviates the necessity of dealing with any arguments relating to the operation of the privative clause provision in s 474 of the Act114. 114 "Decisions under Act are final (1) A privative clause decision: is final and conclusive; and (b) must not be challenged, appealed against, reviewed, quashed or called in question in any court; and is not subject to prohibition, mandamus, injunction, declaration or certiorari in any court on any account. In this section: privative clause decision means a decision of an administrative character made, proposed to be made, or required to be made, as the case may be, under this Act or under a regulation or other instrument made under this Act (whether in the exercise of a discretion or not), other than a decision referred to in subsection (4) or (5). A reference in this section to a decision includes a reference to the following: (Footnote continues on next page) Callinan The appeal should be allowed. a decision on review of a decision, irrespective of whether the decision on review is taken under this Act or a regulation or other instrument under this Act, or under another Act".

HIGH COURT OF AUSTRALIA HONG PHUC TRUONG APPELLANT AND THE QUEEN RESPONDENT Truong v The Queen [2004] HCA 10 4 March 2004 ORDER Appeal dismissed. On appeal from the Supreme Court of Victoria Representation: O P Holdenson QC with J B McDougall for the appellant (instructed by Clarebrough Pica) P A Coghlan QC with K E Judd for the respondent (instructed by Solicitor for Public Prosecutions (Victoria)) Interveners: D M J Bennett QC, Solicitor-General of the Commonwealth with M M Gordon intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) at the hearing on 28 May 2003 D M J Bennett QC, Solicitor-General of the Commonwealth with the M M Gordon SC and L G De Ferrari Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) at the hearing on 3 December 2003 intervening on behalf of R J Meadows QC, Solicitor-General for the State of Western Australia with J C Pritchard intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor's Office (Western Australia)) at the hearing on 3 December 2003 P M Tate SC, Solicitor-General for the State of Victoria with K L Emerton intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) at the hearing on 3 December 2003 Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Extradition – Extradition to Australia from other countries – Extradition Act 1988 (Cth), Pt IV (ss 40-44) – Speciality – Offences for which extraditable person surrendered – Request for extradition for offences including murder, kidnapping, conspiracy to commit murder and conspiracy to kidnap – Appellant surrendered to Australia in relation to conspiracy to commit murder and conspiracy to kidnap – Appellant charged and tried in Supreme Court of Victoria for murder and kidnapping – Whether offences of murder and kidnapping were offences of which the appellant could be convicted on proof of the conduct constituting the offences of conspiracy to commit murder and conspiracy to kidnap. Extradition – Speciality – Speciality arrangement between Australia and the United Kingdom – Speciality arrangement under Extradition Act 1989 (UK) – Whether breach of speciality arrangement. Constitutional law – State Supreme Court – Jurisdiction of the Supreme Court of Victoria – Extraditable person "shall not ... be ... tried in Australia" for any offence other than any offence in respect of which the person was surrendered or "any other offence ... of which the person could be convicted on proof of the conduct constituting any such offence" – Whether trial of appellant for offences of murder and kidnapping beyond the jurisdiction of the Supreme Court of Victoria – Whether prohibition of trial for offences (other than offence for which extradited and offence of which the extraditable person could be convicted on proof of the conduct constituting the extradition offence) founded special plea to the arraignment or withdrew jurisdiction from court over the trial for the offence for which the extraditable person "shall not be tried" – Whether trial of offence for which the extraditable person "shall not be tried" a miscarriage of justice. Criminal law – Murder – Kidnapping – Conspiracy to murder – Conspiracy to kidnap. Extradition Act 1988 (Cth), ss 10, 42. Crimes Act 1958 (Vic), ss 321A, 323. Extradition Act 1989 (UK). GLEESON CJ, McHUGH AND HEYDON JJ. This appeal concerns the meaning and effect of s 42 of the Extradition Act 1988 (Cth) ("the Act"), which deals with a topic commonly known as "speciality"1, in its application to a person who was surrendered by a foreign country in respect of offences of conspiracy to kidnap and conspiracy to murder, and subsequently tried in Australia for the offences of kidnapping and murder. The appellant claims that he was tried in contravention of s 42. He was convicted of kidnapping and murder. The point was not taken at the trial, which took place in the Supreme Court of Victoria before Vincent J and a jury. It was relied upon as the sole ground in an application to the Court of Appeal of Victoria for leave to appeal against both convictions. The application was dismissed2. The appellant was granted special leave to appeal to this Court. Because such a point would ordinarily be taken before a trial, perhaps in an attempt to stay further proceedings, the Court of Appeal was in the unusual position of considering the arguments of the appellant in the light of the case made against him, and accepted by the jury, at trial. It is convenient to explain the facts by reference to that case, bearing always in mind that greater significance may attach to the case against the appellant as presented in the proceedings for extradition, if there were a material difference. The case at trial The appellant, a Vietnamese national who resided in London, was alleged to be the head of a network of criminals engaged in trafficking in illegal drugs and operating in Hong Kong, Vietnam, Australia and elsewhere. He had a sister named Mrs Van, who lived in Melbourne. Through her, he came to know Mrs Ha, a wealthy importer of clothing and footwear, who also lived in Melbourne. Mrs Ha had a son, Le Anh Tuan. The appellant and his sister attempted to recruit Mrs Ha to join their illegal activities. In March 1996, the appellant met Mrs Ha in Melbourne. In addition to seeking her assistance, he also threatened that there would be serious consequences for her or her family if she did not co-operate. He then flew to Hong Kong, but continued to communicate with Mrs Ha by telephone. She rejected his requests. He demanded $400,000 protection money. She refused to pay. cf Oates v Attorney-General (Cth) (2003) 77 ALJR 980 at 982 [13]; 197 ALR 105 2 R v Truong (2002) 5 VR 1. McHugh In mid-April 1996, two Vietnamese criminals, resident in the United States, arrived in Sydney. They were allegedly acting at the direction of the appellant. They kidnapped Mrs Ha's son. A ransom was demanded but refused. The ransom note stated that the victim had "gone with the guys from [the appellant's] company" and that Mrs Ha had "72 hours to pay the money". After the kidnapping the appellant, by telephone, made further threats to Mrs Ha. Both before and after the kidnapping, the threats included reference to the need for her to have coffins ready. In early June 1996, the son's body was found in an aqueduct. The cause of death was a single gunshot wound to the head. Ormiston JA, who wrote the leading judgment in the Court of Appeal, summarised the prosecution case as follows: "It was contended that the [appellant] (and his co-accused [Mrs Van]) procured the commission of both the kidnapping and the consequent murder. It was said that they planned and organised both the kidnapping and the subsequent murder and that the [appellant] was the mastermind and Mrs Van was the facilitator in that she passed on the demands to Mrs Ha. So it was said that both the [appellant] and Mrs Van were actively involved and thus directly responsible for the kidnapping and that, inasmuch as they were fully aware of the consequences if the ransom were not paid, they were also responsible for the young man's murder, even though the later execution was carried out by others." If the prosecution established beyond reasonable doubt that the appellant procured the kidnapping and murder, as alleged, he was liable as a principal offender3. Furthermore, even though the appellant may have been outside Victoria (whether in Hong Kong, London, or, for that matter, Sydney) for part or even the whole of the time when he procured the commission in Victoria of the crimes, he was guilty of offences against the law of Victoria4 and was amenable to the jurisdiction of the Supreme Court of Victoria5. The original charges After the discovery of the body of Le Anh Tuan there was a police investigation in Victoria which resulted in the bringing and filing of eight 3 Crimes Act 1958 (Vic), s 323. 4 R v Robert Millar (Contractors) Ltd [1970] 2 QB 54; Liangsiriprasert v United States [1991] 1 AC 225; R v Fan (1991) 24 NSWLR 60. 5 Lipohar v The Queen (1999) 200 CLR 485. McHugh charges against the appellant. (Other people were charged as well.) Those charges were murder, kidnapping, conspiracy to murder, conspiracy to kidnap, blackmail, making a demand with a threat to kill, and two charges of illegal importation of heroin. The extradition In September 1997, pursuant to s 40 of the Act, a request was made by Australia, under the authority of the Commonwealth Attorney-General, to the Secretary of State for Home Affairs of the United Kingdom, for the surrender of the appellant. The request was not in evidence in the present proceedings, but Ormiston JA noted that "there seems little doubt that the subject offences were expressed in terms of State or Commonwealth (the drug offences) law". That must be so. Section 40 refers to a request by Australia for the surrender of a person from a country "in relation to an offence against a law of Australia of which the person is accused". This led the Secretary of State for Home Affairs of the United Kingdom to issue an authority to proceed directed to the Chief Metropolitan Stipendiary Magistrate sitting at Bow Street, which described the subject matter of the inquiry to be conducted as "conduct in the jurisdiction of the Government of Australia which appears to the Secretary of State to be conduct which, had it occurred in the United Kingdom, would have constituted offences of murder, false imprisonment, conspiracy to commit murder, conspiracy to commit blackmail, kidnap, conspiracy to kidnap, threats to kill, conspiracy to be knowingly concerned in the fraudulent evasion of the prohibition on the importation of a controlled drug, namely heroin". The relevant provisions of the United Kingdom legislation relating to extradition are set out in the joint reasons for judgment of Gummow and Callinan JJ ("the joint reasons"). We will not repeat them. Reference is also made in the joint reasons to the course of proceedings before the Bow Street Magistrate, who was initially informed by counsel for Australia that the appellant was wanted by the Government of Australia for murder, kidnapping, conspiracy to commit murder, conspiracy to kidnap, blackmail, extortion with threat to kill, conspiracy to import a prohibited drug, namely heroin, and knowing involvement in the importation of heroin. Once again, that is plainly a reference to offences against Australian law. The Government of Australia would not be wanting a person for offences against some other country's law. It is convenient to refer at this point to a matter that is ordinarily of concern in extradition proceedings, but is not directly relevant in the present appeal. That is the matter of double criminality. In Riley v The Commonwealth6, (1985) 159 CLR 1 at 11-12. McHugh it was pointed out that this is a general principle of extradition law which is ordinarily reflected in statutes governing extradition, and applies according to the terms of the relevant statute. The general principle was identified by reference to a passage in Oppenheim's International Law7: "And no person is to be extradited whose deed is not a crime according to the Criminal Law of the State which is asked to extradite, as well as of the State which demands extradition." That principle is reflected in the United Kingdom legislation, and explains a potential ambiguity in the concept of "offences". As the joint reasons point out, that ambiguity appears to have given rise to confusion in some of the documents in the extradition proceedings. The material before the Magistrate included a lengthy affidavit of Detective Senior Constable Tragardh of the Victoria Police Force. That affidavit set out the results of the investigation into the kidnapping and death of Le Anh Tuan, and explained the nature of the evidence against the appellant. In terms of s 10(2) of the Act, it is the document that sets out the acts or omissions by virtue of which the offences alleged against the appellant had been committed. There was no material difference between the evidence that was led against the appellant at his trial and the facts outlined in the Tragardh affidavit. Three important aspects of those facts should be noted. First, the case against the appellant was circumstantial. Secondly, so far as the alleged offences of conspiracy to murder and conspiracy to kidnap were concerned, the overt acts from which the existence of the conspiracies was to be inferred included the actual kidnapping and murder. There is nothing unusual about this. Criminal conspiracies are commonly proved by overt acts; and the overt acts often include the substantive crimes which are the object of the conspiracy. A legally informed reader of the Tragardh affidavit would clearly have understood that the overt acts of kidnapping and murder were important, perhaps critical, aspects of the cases of conspiracy which Australia, at that stage, intended to present against the appellant at his trial. They constituted the most significant parts of the evidence upon which those cases depended. Furthermore, the conspiracies in which the appellant participated were alleged to be continuing conspiracies which remained on foot up to and including the time of the kidnapping and the murder. There was no suggestion in the affidavit that the prosecution would, or could, seek to make out cases of conspiracy which involved an unperformed agreement to commit crimes. It is apparent from the material in the affidavit that the acts of performance of the agreement were relied on heavily, both in proof of the 7 8th ed (1955), vol 1 at 701. McHugh agreement, and in defining the extent of the agreement. Thirdly, the allegation was that the appellant was "the most senior member of a network of Vietnamese criminals" based in Hong Kong and that Mrs Van and the two men who entered Australia from the United States, and who allegedly committed the acts of kidnapping and murder, were assisting, and acting at the direction of, the appellant. In other words, the allegation was that, and the material outlined in the Tragardh affidavit supported the inference that, the appellant organised and directed the kidnapping and murder. Thus, the conduct of the appellant alleged to make the appellant liable as a principal for kidnapping and murder (procuring the two men from the United States to kidnap and, if necessary, kill the victim) was the same as the conduct alleged to make him a party to a conspiracy to kidnap and murder. He was not said to be guilty of kidnapping or murder because he himself kidnapped or killed the victim. His liability was based on the procuring. But that was also the act by virtue of which he was allegedly a party to the conspiracy to kidnap and murder. The Tragardh affidavit concluded with a statement of the charges against the appellant that had been filed in Melbourne. They were, of course, expressed in terms of offences against Australian law. They were murder, kidnapping, conspiracy to murder, conspiracy to kidnap, demanding money with menaces (blackmail), demanding money with a threat to kill, conspiracy to import heroin, and being knowingly concerned in the importation of heroin. For a reason that is unknown, counsel for Australia, when identifying the "draft charges upon which extradition is sought", included the conspiracy charges, but omitted the charges of murder and kidnapping. In the course of argument in this Court, there was some speculation as to why that might have occurred. In the light of the decision of the House of Lords in Director of Public Prosecutions v Doot8 it can hardly have been because of some apprehension that the principles of territoriality which affect procuring the commission of a crime might be different from those which affect conspiracy. Whatever the reason, one thing is clear. Having regard to the contents of the Tragardh affidavit, neither the speciality provisions of the United Kingdom statute, nor the terms of the speciality agreement that was entered into by Australia, would have been inconsistent with a prosecution of the appellant in Australia for murder and kidnapping, even if he were only surrendered in respect of the offences of conspiracy to murder and conspiracy to kidnap. The reasons for that will be explained below. Counsel would have been aware of that. Accordingly, we do not accept that the narrowing of the charges in respect of which surrender was sought involved any express or implied undertaking not to try the appellant for McHugh the substantive offences. On the contrary, the terms of the speciality agreement entered into by Australia for the purpose of the extradition left that possibility open. The Metropolitan Magistrate, pursuant to s 9(9) of the Extradition Act 1989 (UK), certified that the conduct alleged within the jurisdiction of the Government of Australia would amount to certain offences against the law of the United Kingdom, namely conspiracy to commit murder, conspiracy to kidnap, conspiracy to commit blackmail and conspiracy to be knowingly concerned in the fraudulent evasion of the prohibition on the importation of a controlled drug, namely heroin. On receipt of that certificate, the Secretary of State signed a surrender warrant ordering the appellant to be returned to Australia in respect of the offences for which he was committed to custody by the Magistrate. The warrant, erroneously, identified the offences of which the appellant was accused in terms of United Kingdom offences. This is evident because one of them, "conspiracy to be knowingly concerned in the fraudulent evasion of the prohibition on the importation of a controlled drug, namely heroin", is an offence known to the law of the United Kingdom, but not to Australian law. The offences included conspiracy to murder and conspiracy to kidnap, but not murder or kidnapping. Those were the circumstances in which the appellant was surrendered to Australia where, in due course, he was tried for the substantive offences of murder and kidnapping. The speciality Section 42 of the Act, upon which the present appeal turns, provides: "Where an extraditable person surrendered to Australia by a country (other than New Zealand), the person shall not, unless he or she has left, or has had the opportunity of leaving, Australia or, in a case where the person was surrendered to Australia for a limited period, has been returned to the country: to Australia in relation be detained or tried in Australia for any offence that is alleged to have been committed, or was committed, before the surrender of the person, other than: any offence in respect of which the person was surrendered or any other offence (being an offence for which the penalty is the same or is a shorter maximum period of imprisonment or other deprivation of liberty) of which the person could be McHugh convicted on proof of the conduct constituting any such offence; or any other offence in respect of which the country consents to the person being so detained or tried, as the case may be; or in Australia for the purposes of being be detained surrendered to another country for trial or punishment for any offence that is alleged to have been committed, or was committed, before the surrender of the person to Australia, other than any other offence in respect of which the country that surrendered the person to Australia consents to the person being so detained and surrendered." That section must be understood in the light of s 10(2) of the Act which provides: "A reference in this Act to conduct constituting an offence is a reference to the acts or omissions, or both, by virtue of which the offence has, or is alleged to have, been committed." The reference to the acts or omissions by virtue of which an offence is alleged to have been committed is of central importance in this appeal. It directs attention to the concrete, rather than the abstract. The offences of which s 42, interpreted in accordance with s 10(2), speaks are not theoretical offences, to be described by reference to the contents of a text book. They are specific offences, alleged to have been committed by a particular individual, by virtue of particular conduct. This is of special importance when dealing with such a protean offence as conspiracy. Section 42 reflects a general principle of extradition law which has been formulated in varying ways, and which has found somewhat different forms of statutory expression. The reasons of Ormiston JA contain a detailed examination of those variations and differences9. Some caution is necessary in adopting general statements of the principle which may have been made in a context in which it was unnecessary to advert to questions of its detailed application. It is the language of the particular statutory provision reflecting the principle that matters, although the resolution of uncertainty about the meaning of that language may be assisted by an understanding of broader issues, and of the legislative history. 9 R v Truong (2002) 5 VR 1 at 27-34. McHugh The Extradition Act 1870 (UK) was the precursor of both the current Australian legislation and the current United Kingdom legislation, although there was intermediate legislation. Section 19 of the Act of 1870 provided that where, in pursuance of any arrangement with a foreign state, any person accused of a crime is surrendered by that foreign state, "such person shall not, until he has been restored or had an opportunity of returning to such foreign state, be triable or tried for any offence ... other than such of the said crimes as may be proved by the facts on which the surrender is grounded". The reference to "the facts on which the surrender is grounded" relates to a significant practical consideration in connection with extradition. By hypothesis, the person surrendered to the United Kingdom or Australia is wanted for trial for an offence or offences against the law of the country where the trial is to occur. But the criminal law of the foreign country surrendering the person will almost certainly be different in some respects, and will often be different in many respects, from that of the country of trial. The administrative or judicial officers dealing with extradition are not experts in foreign law. It happens, in the present case, that the law of the United Kingdom in relation to the appellant's alleged conduct is not very different from Australian law. That should not obscure the fact that extradition legislation is designed to operate as between countries whose laws may be quite different. Hence the operation of the speciality, in the Act of 1870, by reference to the facts on which the surrender by the foreign country was grounded rather than, for example, the offences against the law of the foreign country disclosed by those facts. There may have been no such offence known to the law of the United Kingdom, or Australia, as the case may be. Even if there were similar offences, they may not correspond precisely in their elements. There is a discussion of this problem in Riley v The Commonwealth10. The current United Kingdom legislation, pursuant to which the appellant was surrendered, in s 6(4) provides that a person shall not be returned from the United Kingdom unless provision is made by an arrangement with the country seeking return for securing that the person shall not, unless he has first had the opportunity to leave such country, be dealt with for any offence committed before his return to it other than the offence in respect of which his return is ordered, an offence "which is disclosed by the facts in respect of which his return was ordered", or any other offence being an extradition crime in respect of which the Secretary of State may consent to his being dealt with. In accordance with that requirement, the Secretary of State certified that an arrangement had been made with the Government of Australia that the appellant, unless he had first had 10 (1985) 159 CLR 1. McHugh an opportunity to leave Australia, would not be dealt with in Australia for any offence committed before his return other than the offences in respect of which his return was ordered, or another offence "which is disclosed by the facts in respect of which his return was ordered" or any other offence being an extradition crime in respect of which the Secretary of State may consent to his being dealt with. Having regard to the contents of the Tragardh affidavit it is clear that the substantive offences of kidnapping and murder were offences disclosed by the facts in respect of which the return of the appellant was ordered. It cannot be, and is not, claimed that Australia was in breach of the speciality agreement it made with the United Kingdom by reason of the appellant's trial for kidnapping and murder. However, the appellant contends that the constraint imposed by s 42 of the Act is more stringent than the speciality principle as reflected in the United Kingdom statute, and in the speciality agreement made in the present case. According to the argument, the Australian legislation imposes a tighter regime of speciality, and one with which the trial of the appellant did not comply. The first point to be made about s 42(a) is that the offences to which it refers are offences against an Australian law. The provision is about trying people for offences in Australia. That can only be a reference to offences against Australian law. People are not tried in Australia for offences against foreign law. The word "offence" has the same meaning throughout s 42(a). Thus, "offence" in s 42(a)(i) means "offence against the law of Australia". Having regard to the course of the extradition proceedings in London, we accept that the offences in respect of which the appellant was surrendered included conspiracy to kidnap and conspiracy to murder, and did not include kidnapping and murder. The question then is whether kidnapping and murder, in the circumstances of the present case, were offences of which the appellant could be convicted on proof of the conduct constituting the offences in respect of which he was surrendered. (At the relevant time no problem existed by reason of the words in parenthesis in s 42(a)(i).) In that respect, in consequence of s 10(2), the reference to the conduct constituting the offences in respect of which he was surrendered is a reference to the acts or omissions by virtue of which those offences had, or were alleged to have, been committed. The acts or omissions by virtue of which the offences of conspiracy to kidnap and conspiracy to murder were, or were alleged to have been, committed are to be identified by reference to the Tragardh affidavit, understood in the light of the criminal law of conspiracy as it applies in Australia. McHugh The question, in our view, is not to be answered merely by a comparison of the elements of the (Australian) offences in respect of which the person has been surrendered and the (Australian) offences in respect of which he is to be, or was, tried, although an understanding of those elements is material. The acts or omissions, that is, the conduct, by virtue of which an offence has been, or is alleged to have been, committed, lie at a level of abstraction between a formal statement of the elements of the offence, on the one hand, and an account of the evidence relied on to prove the relevant conduct, on the other. Nor is the relevant comparison between the bare minimum that would be necessary to make out offences of the kind under consideration. The exercise required by the statute is concrete, not abstract, and is to proceed by reference to the actual conduct alleged against the person in question. In the present case, it is also important to bear in mind that the substantive offences for which the appellant was ultimately tried were offences in respect of which his liability as a principal was based upon a statutory provision to the effect that a person who aids, abets, counsels or procures the commission of an indictable offence may be tried, indicted or presented and punished as a principal offender11. While the concept of aiding, abetting, counselling or procuring may extend beyond cases in which there is an agreement between the principal offender and the secondary participant12, the term procure has a narrower meaning. In Attorney-General's Reference (No 1 of 1975)13, Lord Widgery CJ said: "To procure means to produce by endeavour. You procure a thing by setting out to see that it happens and taking the appropriate steps to produce that happening." Not all procuring necessarily involves a conspiracy. However, in the present case, the nature of the procuring alleged against the appellant was straightforward. It did not vary between the Tragardh affidavit, and the prosecution case at trial. It was summarised in Vincent J's remarks on sentence: "Central to the prosecution case against you was the contention that you were ... 'the controlling mind', 'the shadow force' and 'the shadow master' who directed all that took place in relation to the kidnapping. It was never argued that you may have been implicated in some less 11 Crimes Act 1958 (Vic), s 323. 12 Giorgianni v The Queen (1985) 156 CLR 473 at 493 per Mason J. 13 [1975] QB 773 at 779. McHugh important way or that you may have performed some other role. The jury was instructed and must, accordingly, be taken to have found you guilty on that very clearly identified basis. With respect to the count of murder, when and where Le Anh Tuan was executed by a bullet being fired into the back of his head is unknown and it is highly unlikely that we will ever learn who fired this single fatal shot. What we do know is that he was kidnapped with the threat being made explicitly and implicitly that if the ransom was not paid as demanded his life would be forfeited ... The jury has found beyond reasonable doubt that you directed that kidnapping and that you well appreciated that a reasonable possible consequence of your actions was the death of the deceased." (emphasis added) In order to compare that case with the case of conspiracy in respect of which the appellant was surrendered, it is necessary to bear in mind certain aspects of the law of conspiracy. Conspiracy The nature of the conspiracy to kidnap and conspiracy to murder alleged in the Tragardh affidavit, and in respect of which the appellant was surrendered, is not described adequately simply by saying that he was a party to an agreement to kidnap and, if necessary, kill Le Anh Tuan. There was more to it than that. Agreement (here, agreement to commit a crime) is the essence of conspiracy, but the nature and scope of the alleged agreement is important when performing the exercise, required by the statute, of identifying the acts or omissions by virtue of which the particular offence of conspiracy in question has, or is alleged to have, been committed. The alleged agreement was constituted initially by a direction rather than a request. According to the Tragardh affidavit, the appellant was the controller of a criminal syndicate, and engaged and directed the operatives from the United States who performed the kidnapping and killing. He was in charge of their activities, from beginning to end. There is no material difference between the conduct of the appellant which amounted to making and participating in the agreement for the purposes of conspiracy and the procuring for the purposes of the substantive offences. Furthermore, the conspiracy was alleged to have continued in existence, and to have been completed by performance. Although a crime of conspiracy has been committed, and in that sense is complete, once an agreement to commit a crime has been made, conspiracy is a continuing offence. It is an error to think that the crime comes to an end once the agreement has come into existence. That McHugh is the error that was rejected by this Court in Savvas v The Queen14. The point was explained by Lord Pearson in Director of Public Prosecutions v Doot15: "A conspiracy involves an agreement expressed or implied. A conspiratorial agreement is not a contract, not legally binding, because it is unlawful. But as an agreement it has its three stages, namely (1) making or formation (2) performance or implementation (3) discharge or termination. When the conspiratorial agreement has been made, the offence of conspiracy is complete, it has been committed, and the conspirators can be prosecuted even though no performance has taken place ... But the fact that the offence of conspiracy is complete at that stage does not mean that the conspiratorial agreement is finished with. It is not dead. If it is being performed, it is very much alive. So long as the performance continues, it is operating, it is being carried out by the conspirators, and it is governing or at any rate influencing their conduct. The conspiratorial agreement continues in operation and therefore in existence until it is discharged (terminated) by completion of its performance or by abandonment or frustration or however it may be." It is not to the point in the present case to say that the appellant could have been convicted of conspiracy even if the plan had been intercepted by the police before the victim was kidnapped or killed. We are not concerned with the theoretical question of what various crimes the appellant might have committed. We are concerned with the particular conspiracy into which he allegedly entered, and in which he participated. The conduct by virtue of which this particular conspiracy, in this particular case, was alleged to have been committed included the continuing performance of the agreement up to and including the killing of the victim. Savvas is authority for the proposition that, if the appellant had been tried for, and convicted of, conspiracy rather than the substantive offences, the kidnapping and the killing would have been matters for the sentencing judge to take into account, being aspects of "the degree of criminality involved in the appellant's participation in the conspiracy"16. 14 (1995) 183 CLR 1. 15 [1973] AC 807 at 827. 16 Savvas v The Queen (1995) 183 CLR 1 at 9. McHugh Reference was made in argument to McAuliffe v The Queen17 in support of a suggestion that the murder charge against the appellant involved materially different conduct from that involved in the conspiracy to murder charge. Once again, the point is purely theoretical. It involves making the wrong comparison. It is unrelated to the circumstances of this particular case. That is made plain by the remarks on sentence of the trial judge quoted above, which, in turn, reflect the way the jury was directed. The allegation, in relation to procuring, at trial, was that the appellant was in command. He "directed all that took place in relation to the kidnapping", including the threat of killing and the ultimate execution of the victim. There was never any suggestion that the two thugs who were engaged by the appellant to carry out the kidnapping might have acted with excessive force, or behaved in some other way contrary to his instructions. If they had done so, their own life expectations may have been considerably shortened. The appellant's liability was based on procuring. He was not left exposed as some unfortunate secondary participant caught up in events that escalated beyond what was planned. He was the person in charge. That was the way the conspiracy cases were put against him. And that is the basis on which he was convicted of the substantive offences. Conclusion The case falls within the second limb of s 42(a)(i) understood in the light of s 10(2) of the Act. In the light of the nature of the cases of conspiracy to kidnap and conspiracy to murder that were put against the appellant, the acts or omissions by virtue of which he was alleged to have committed those offences were such that, on proof of those acts or omissions, he could be convicted of kidnapping and murder, as he was. The appeal should be dismissed. 17 (1995) 183 CLR 108. Callinan GUMMOW AND CALLINAN JJ. On 9 May 2000, at his trial in the Supreme Court of Victoria before Vincent J and a jury, the appellant was convicted on each of two counts in the presentment. One count was of kidnapping contrary to s 63A of the Crimes Act 1958 (Vic) ("the Crimes Act")18. The other count was of murder contrary to the common law. Vincent J sentenced the appellant to life imprisonment on the count of murder and to 15 years imprisonment on the count of kidnapping, with a non-parole period of 23 years and 8 months. The appellant had been extradited to Australia from the United Kingdom in circumstances which will be detailed later in these reasons. It should be noted that, on his arraignment on 24 January 2000, the appellant had pleaded "Not Guilty" to both counts in the presentment. By that plea, the appellant was deemed by s 391 of the Crimes Act to have put himself upon the country for trial. Upon arraignment, the appellant had been "entitled to make plea of not guilty in addition to any demurrer or special plea" (s 390A). It is significant for what follows in these reasons that the appellant had not, rather than enter a plea of not guilty, demurred or entered a special plea that he could not be put on trial in the face of s 42 of the Extradition Act 1988 (Cth) ("the Act"). The Court of Appeal In his application to the Court of Appeal for leave to appeal against the conviction19, the appellant contended that there had been a miscarriage of justice within the meaning of the first paragraph in s 568(1) of the Crimes Act because (i) the convictions were unlawful and (ii) the trial had constituted an abuse of process. The appellant further contended that the convictions and sentences were nullities. These complaints had not been made at the trial. To a significant degree, they turn upon provisions of the Act, including s 42. It may be accepted that, in the Court of Appeal, a matter arose under the Act, attracting the exercise of federal jurisdiction. However, as will appear, the conduct of the trial had not 18 Section 63A states: "Whosoever leads takes or entices away or detains any person with intent to demand from that person or any other person any payment by way of ransom for the return or release of that person or with intent to gain for himself or any other person any advantage (however arising) from the detention of that person shall, whether or not any demand or threat is in fact made, be guilty of an indictable offence and liable to level 2 imprisonment (25 years maximum)." 19 R v Truong (2002) 5 VR 1. Callinan involved the exercise of federal jurisdiction. The Court of Appeal (Winneke P, Ormiston and Buchanan JJA) dismissed the application. The grounds of appeal to the Court of Appeal, and now to this Court, reflect complaints respecting the circumstances in which the appellant was returned to Australia from the United Kingdom. The appellant was arrested in London on 22 August 1997. On 25 September 1997, a request was made on behalf of the Attorney-General of the Commonwealth to the United Kingdom that the appellant be returned to Australia to be dealt with according to law ("the Request"). The Request stated that the appellant was accused in the State of Victoria of the following offences: "(i) Murder contrary to the common law of Victoria (1 count); kidnapping contrary to section 63A of the [Crimes Act] (1 count); (iii) conspiracy to commit murder, and agreement to commit murder outside of Victoria, contrary to sections 321(1) and 321A of the [Crimes Act] (1 count); conspiracy to kidnap and agreement to kidnap outside of Victoria contrary to sections 321(1) and 321A of the [Crimes Act] (1 count); Blackmail contrary to section 87 of the [Crimes Act] (1 count); (vi) Extortion with threat to kill contrary to section 27(1) of the [Crimes Act] (1 count); (vii) conspiracy to import a prohibited import, namely a commercial quantity of heroin contrary to section 233B of the Customs Act 1901 (Commonwealth) ['the Customs Act'] (1 count); and (viii) knowingly involved in the importation of a prohibited import, namely a commercial quantity of heroin contrary to section 233B of the [Customs Act] (1 count)." It will be observed that in the events that happened the appellant was convicted and sentenced in respect of offences (i) and (ii) and not on any of offences (iii)-(viii). Further, offences (vii) and (viii) were offences against a law of the Commonwealth; had they been charged on the presentment for trial in the Supreme Court, the Court would have been exercising federal jurisdiction, but there was no such eventuality. Something more also should be said respecting offences (iii) and (iv), those concerned with conspiracy. With a presently immaterial qualification, Callinan s 321F of the Crimes Act abolishes the offence of conspiracy at common law. Then s 321(1) states: "Subject to this Act, if a person agrees with any other person or persons that a course of conduct shall be pursued which will involve the commission of an offence by one or more of the parties to the agreement, he is guilty of the indictable offence of conspiracy to commit that offence." Section 321A makes specific provision with respect to agreements to commit offences outside Victoria. Two provisions are made in that regard. First, s 321A(1) states: "The expression 'the commission of an offence' in section 321(1) extends to the commission of an offence against a law in force only in a place outside Victoria if, but only if – the necessary elements of that offence include elements which, if present or occurring in Victoria, would constitute an offence against a law in Victoria; and one or more of the persons referred to in section 321(1) is or are in Victoria when the agreement referred to in that sub-section is made." Secondly, s 321A(2) provides: "Where all parties to an agreement are outside Victoria when it is made, section 321 shall apply in relation to it if, but only if, that agreement is to pursue a course of conduct which, if the agreement is carried out in accordance with their intentions, will necessarily amount to or involve the commission of an offence against a law in force in Victoria." The materials before the Court of Appeal included a number of documents relative to the steps taken by the executive and judicial authorities of the United Kingdom in response to the Request. The appellant maintains that under the procedures set out in the relevant law of the United Kingdom, the Extradition Act 1989 (UK) ("the UK Act")20, he was returned to Australia in respect only of some of the offences listed in the Request, and that he was not returned in respect of those offences (i) and (ii) for which he was tried and convicted. The result is said to be the vitiation of the appellant's trial on one or other of the grounds relied upon before the Court of Appeal and now in this Court. 20 References to the UK Act are to the statute as it stood in 1997, before the changes made pursuant to the Hong Kong (Extradition) Order 1997, SI 1997/1178. Callinan The facts It is convenient now to say something more of the facts. That task is assisted by the circumstance that the appellant has been tried, convicted and sentenced and that the record in this Court includes the evidence which the jury may be taken to have accepted and the remarks on sentence of the trial judge. But it should be emphasised that the complaints made by the appellant focus upon an earlier stage in the proceedings and the identification of the offences in respect of which he was surrendered by the United Kingdom and those offences of which, looking at the matter before trial, he could have been convicted on proof of the conduct constituting the offences in respect of which he was surrendered. That process of identification is not to be performed with the hindsight now available. In his remarks on sentence, Vincent J said that the appellant had travelled across the world using false travel documents, was obviously involved in criminal activity, handled large sums representing the proceeds of crime and had the capacity to recruit assistance in Hong Kong, the United States and Australia. All the principal actors were persons of Vietnamese national origin. The appellant was a member of a Chinese ethnic minority in Vietnam. At the time of trial, he was approximately 40 years of age. The sister of the appellant, Mrs Van, lived in Melbourne. The victim, Le Anh Tuan, was the 21-year-old son of Mrs Ha. She was an importer and exporter of clothing and footwear and a person of wealth. On 16 March 1996, the appellant, who had arrived from Hong Kong, met Mrs Ha in Melbourne. He endeavoured to enlist her assistance in the importation of heroin. At a later meeting, the appellant threatened Mrs Ha with unfortunate consequences for herself and her family should she not agree to take part. Mrs Van also put pressure on Mrs Ha. The appellant returned to Hong Kong and later went to London, but he continued in telephone conversations to put pressure on Mrs Ha, including demands for payment of $400,000 "protection money". On 29 April 1996, Mrs Ha's son was kidnapped. His body was found on 7 June 1996. The cause of death was a single gunshot wound in the head. The prosecution alleged that the killing was carried out by two Vietnamese identified as the Biu brothers, at the instigation of the appellant. The trial judge, in accordance with authorities in this Court including McAuliffe v The Queen21, directed the jury that, in order to convict the appellant of murder, the jury need only find beyond reasonable doubt that the appellant, having been a party to the kidnapping of the victim, knew or was aware that a realistic possible consequence of such was that the victim would be murdered. 21 (1995) 183 CLR 108. Callinan The law of the United Kingdom Against that background, the first issue is the identification of those offences against the law in force in Victoria for which the appellant was surrendered by the United Kingdom. More specifically, did those offences include those for which the appellant was tried and convicted? In attempting to answer that question, all parties, including the Attorney- General of the Commonwealth who intervened, looked to the UK Act and the steps taken by the authorities in that country in response to the Request. That puts the Court in the necessary but somewhat invidious position of considering the efficacy under British law of the steps taken in the United Kingdom. There was no evidence before the Court of Appeal upon any matters of foreign law and therefore none is before this Court. However, no other course is immediately apparent if the Court is to determine the consequential issues of Australian law upon which the appeal turns. The UK Act applies in respect of the extradition of persons at large after conviction of an extradition crime in the requesting State, and also in respect of those such as the appellant who are accused in that State of an extradition crime. Section 1(2) provides for the arrest and return to certain Commonwealth countries, including Australia22, in accordance with extradition procedures under Pt III of the statute, of certain persons in the United Kingdom. They are persons accused of an extradition crime in Australia or alleged to be unlawfully at large after conviction of such an offence in Australia. The expression "extradition crime" is so defined in s 2 to distinguish between "conduct in the territory of", relevantly, Australia (s 2(1)(a)), and "an extra-territorial offence against the law of [Australia]" (s 2(1)(b)) where the Australian jurisdiction is based on the nationality of the offender (s 2(3)(a)), or where the "equivalent conduct" would constitute an extra-territorial offence against United Kingdom law (s 2(2)). This requirement of "double criminality" is assessed at the time of commission of the It should be noted that the extradition proceedings with which this case is concerned were conducted on the basis that, notwithstanding the identification in the Request of offences (iii) and (iv) by reference to the special provisions of 22 Extradition (Designated Commonwealth Countries) Order 1991, SI 1991/1700. 23 R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet Ugarte (No 3) [2000] 1 AC 147. Callinan s 321A of the Crimes Act (the text of which has been set out above), Australia did not rely upon extra-territorial offences within the meaning of s 2(1)(b). Part II of the UK Act, which comprises s 6, is headed "RESTRICTIONS ON RETURN". Section 6(4) implements in the United Kingdom that rule of international practice known as "the speciality rule". The sub-section provides that a person shall not be returned, or committed or kept in custody for the purposes of such return, unless, among other things, provision is made by an arrangement with the relevant Commonwealth country for securing that the person: "will not, unless he has first had an opportunity to leave it, be dealt with there for or in respect of any offence committed before his return to it other than – the offence in respect of which his return is ordered; an offence, other than an offence excluded by subsection (5) below, which is disclosed by the facts in respect of which his return was ordered; or subject to subsection (6) below, any other offence being an extradition crime in respect of which the Secretary of State may consent to his being dealt with". Nothing turns for present purposes upon the exclusions by sub-ss (5) and (6). The arrangement referred to in s 6(4) may be an arrangement made for the particular case (s 6(7)). Further, for the purposes of s 6(4), a certificate issued by or under the authority of the Secretary of State confirming the existence of such an arrangement and stating its terms is conclusive evidence of the matters contained in the certificate (s 6(7)). In the present case, on 2 October 1997, the Secretary of State certified to the effect that an arrangement as mentioned in s 6(4) of the UK Act had been made with Australia with respect to the appellant. The certificate used terms which followed the provisions of s 6(4), including pars (a), (b) and (c). The procedures for surrender are set out in Pt III (ss 7-17) and are governed by s 7. That section stipulated that the appellant was not to be dealt with under Pt III except in pursuance of an order of the Secretary of State (referred to as an "authority to proceed") issued in pursuance of a request for his surrender (s 7(1)). Section 7(2) states: "There shall be furnished with any such request – particulars of the person whose return is requested; Callinan particulars of the offence of which he is accused or was convicted (including evidence or, in a case falling within subsection (2A) below[24], information sufficient to justify the issue of a warrant for his arrest under this Act); in the case of a person accused of an offence, a warrant or a duly authenticated copy of a warrant for his arrest issued in the foreign state, Commonwealth country or colony; and in the case of a person unlawfully at large after conviction of an offence, a certificate or a duly authenticated copy of a certificate of the conviction and sentence, and copies of them shall be served on the person whose return is requested before he is brought before the court of committal." Section 7(2), like other provisions in the UK Act, is drawn so as to identify one offence in respect of which return is requested. The Request with which this appeal is concerned stipulated a plurality of offences and the UK Act was applied accordingly. The materials furnished with the Request in the present case included the affidavit of Detective Senior Constable Tragardh sworn on 26 September 1997. This was a document of 70 pages and gave a detailed summary of the then available evidence against the appellant. The affidavit concluded with the specification of the eight charges identified in the Request. The phrase in s 7(1) "authority to proceed" is given content by s 7(5). This states: "An authority to proceed shall specify the offence or offences under the law of the United Kingdom which it appears to the Secretary of State would be constituted by equivalent conduct in the United Kingdom." Although the term is not used in the legislation, s 7(5) was identified in argument as reflecting the "principle of double criminality" to which reference already has been made. In Riley v The Commonwealth25, Deane J said of this "principle" that: "although not binding as a mandatory rule under international law, [it] has long been recognized as an accepted principle which is customarily 24 Section 7(2A) is a special provision concerning extradition where certain Orders in Council are in force. 25 (1985) 159 CLR 1 at 16. Callinan observed by states in making and applying arrangements for the extradition of alleged offenders". The arrangement reflected in the certificate of the Secretary of State under s 6 and dated 2 October 1997 was concerned with a different matter. This was identified in argument as the requirement of speciality found in s 6(4). The authority to proceed was given by a certificate of the Secretary of State also dated 2 October 1997. It was addressed to the Chief Metropolitan Stipendiary Magistrate or other designated magistrate sitting at Bow Street, was expressed to be issued in pursuance of s 7 of the UK Act, and stated: "Now the Secretary of State hereby authorises you to proceed in conformity with the provisions of Part III of the [UK Act]." The authority to proceed dealt with the specification of United Kingdom offences which would be constituted by equivalent conduct in the United Kingdom, as required by s 7(5). It did so by stating that the appellant was: "accused of conduct in the jurisdiction of the Government of Australia which appears to the Secretary of State to be conduct which, had it occurred in the United Kingdom, would have constituted offences of murder, false imprisonment, conspiracy to commit murder, conspiracy to to kill, commit blackmail, kidnap, conspiracy conspiracy to be knowingly concerned in the fraudulent evasion of the prohibition on the importation of a controlled drug, namely heroin". (emphasis added) to kidnap, threats The emphasised portion confirms that the Secretary was concerned to identify offences under United Kingdom law for the purposes of considering double criminality. But it should be noted that the offences so identified included murder and kidnapping and were not limited to conspiracy counts. The committal proceedings The proceedings before the magistrate continued over at least two days, and there was a long adjournment, apparently at the request of the appellant. Representations were made to the magistrate by counsel for Australia and the appellant. The court was empowered by s 9(8) of the UK Act to commit the appellant to custody or on bail, to await the decision of the Secretary of State as to his return to Australia and, if the Secretary so decided, to await his return to Australia. The exercise of that power was conditioned by s 9(8) upon (i) the issue of an authority to proceed, a condition that had been met in the present case; and (ii) the satisfaction of the court that (a) the offences to which the authority to proceed related were extradition crimes within the meaning of s 2 of Callinan the UK Act, and (b) the evidence before the court "would be sufficient to make a case requiring an answer by [the appellant] if the proceedings were the summary trial of an information against him" (s 9(8)(a)). The term "extradition crime", used in s 9(8), is concerned here with conduct in Australia; the authority to proceed had, in accordance with s 7(5), specified offences under the law of the United Kingdom which would be constituted by equivalent conduct in the United Kingdom. The course of proceedings before the magistrate was determined by the submissions put by Australia's counsel. In a four page opening note, it was stated that the appellant was "wanted by the Government of Australia for murder; kidnapping; conspiracy to commit murder; conspiracy to kidnap; blackmail; extortion with threat to kill; conspiracy to import a prohibited drug, namely heroin; and knowing involvement in the importation of heroin". That statement tracked the identification of offences (i)-(viii) in the Request and was speaking of the law in force in Victoria, not putative offences against United Kingdom law. However, the opening note went on to list five offences which were described as "the draft charges upon which extradition is sought". Four of these are conspiracy counts, none of them murder or kidnapping, and from the last of them it appears it is United Kingdom offences which are identified. The last charge repeats from the authority to proceed the words "to be knowingly concerned in the fraudulent evasion of the prohibition on the importation of a controlled drug, namely heroin". Thus, it appears that the statement in the opening note should be understood as if it had stated that what was set out were the draft charges under the law of the United Kingdom in respect of which the evidence would be sufficient to make a case requiring an answer by the appellant if the proceedings were the summary trial of an information against him (s 9(8)(a)). The magistrate gave reasons dated 30 September 1998. The issues which may arise in committal proceedings include the authentication of the documents supporting the request, the identity of the person whose extradition is sought, the limitations imposed by the authority to proceed, the identification of what answers the description of an "extradition crime", and the sufficiency of the evidence to make out a case to answer were the proceedings a summary trial of an information26. In the present case, the magistrate stated that the only factual issue he had to decide was whether the man in the dock was the person identified in the evidence. The magistrate continued: 26 Halsbury's Laws of England, 4th ed reissue, vol 17(2), pars 1115, 1190. Callinan "If he is so identified then he will have, subject to the representations advanced by the defence in relation to authentication and territorial jurisdiction, a case to answer, as there is the clearest evidence that 'PHUC' was a conspirator in each of the conspiracies." The magistrate concluded on this issue: "Mr Truong claims he was in London, signing on at the local benefit office, when 'PHUC' was in Australia or Hong Kong on certain material dates. The purpose of the very long adjournment was to enable the defence to consider whether they wished to call any evidence in support of that alibi in these proceedings. In the event the defence has decided not to call any evidence before me. I am satisfied on the totality of all the evidence put before me that Mr Truong does have a case to answer on each of the conspiracy allegations." (emphasis added) The magistrate earlier in his reasons had noted the presence in the record of what he called "the speciality certificate". He also dismissed objections to the authenticity of the documents provided by Australia. The magistrate rejected a submission that Australia was seeking to establish extra-territorial offences within the meaning of par (b) of s 2(1) of the UK Act, rather than extradition crimes within the meaning of par (a) of s 2(1). The magistrate said: "All the overt acts in each of the conspiracies were committed in Australia." The magistrate was satisfied that the conditions precedent to the exercise of the power of committal had been met. In particular, the offences to which the authority to proceed related were extradition crimes and, on the issue of double criminality, the evidence provided would be sufficient to make a case requiring an answer by the appellant if the proceedings were a summary trial of an information against him. But what were the Australian offences to which the authority related and in respect of which the requirement of double criminality was assessed? The magistrate made an order under s 9(8) committing the appellant "to await the decision of the Secretary of State as to his return to Australia". The magistrate also took the step indicated in s 9(9). That provides: "If the court commits a person under subsection (8) above, it shall issue a certificate of the offence against the law of the United Kingdom which would be constituted by his conduct." That certificate, when read with the schedule, certifies that the conduct alleged within the jurisdiction of the Government of Australia would amount to four Callinan offences against the law of the United Kingdom. The first three are respectively conspiracy to murder, conspiracy to kidnap and conspiracy to blackmail. The fourth was conspiracy to be knowingly concerned in the fraudulent evasion of the prohibition on the importation of a controlled drug, namely heroin, the United Kingdom offence to which earlier reference has been made. Murder and kidnapping were not mentioned. The magistrate began his statement of reasons by saying: "The Government of Australia seeks the return of Mr Truong so that he can face trial in Australia in respect of linked allegations that he conspired with others to kidnap, blackmail, and murder. There is a further conspiracy allegation relating to the importation of substantial quantities of heroin. Originally there was a substantive charge of blackmail, but the Government on the second day of hearing abandoned this." It is apparent from the tenor of the magistrate's reasons that he proceeded on the footing that Australia no longer pressed the Request in so far as it related to the offences of murder and kidnapping. The warrant The next step in the procedures of Pt III of the UK Act is indicated in s 11 thereof. Sub-sections (1) and (2) state: "(1) Where a person is committed under section 9 above, the court shall inform him in ordinary language of his right to make an application for habeas corpus, and shall forthwith give notice of the committal to the Secretary of State. (2) A person committed shall not be returned – in any case, until the expiration of the period of 15 days beginning with the day on which the order for his committal is made; if an application for habeas corpus is made in his case, so long as proceedings on that application are pending." The materials do not indicate the making of any habeas corpus application under s 11. The final stage is detailed in s 12. In particular s 12(1) states: "Where a person is committed under section 9 above and is not discharged by order of the High Court or the High Court of Justiciary, the Secretary of State may by warrant order him to be returned unless his return is prohibited, or prohibited for the time being, by this Act, or the Callinan Secretary of State decides under this section to make no such order in his case." On 16 November 1998, one of Her Majesty's Parliamentary Under Secretaries of State issued a warrant addressed to the Governor of the Brixton Prison and other officers. It concluded: "Now, therefore, it is hereby ordered that the fugitive be returned to Australia in respect of the offences for which he was committed by the Metropolitan Stipendiary Magistrate." The operative words in the warrant are clear enough. This is so notwithstanding apparent errors in the first two of the three preceding recitals of the warrant. The first recital erroneously identifies the offences in the Request in terms of the United Kingdom offences indicated in the certificate under s 9(9) by the magistrate, dated 1 October 1998. The error is compounded in the second recital, the effect of which is to state that the magistrate was satisfied that the evidence given before him would be sufficient to warrant the appellant's trial for these offences (ie, the United Kingdom offences, not the Australian offences in the Request) "if they had been committed in the Inner London area". The certificate by the magistrate had fixed upon "the conduct alleged within the jurisdiction of the Government of Australia" and had stated a conclusion as to the corresponding offences against the law of the United Kingdom. No consideration was given to double criminality in respect of the offences indicated in the Request of kidnapping and murder. That reflected the basis upon which the magistrate had proceeded, namely that Australia now sought the return of the appellant so that he could face trial in respect of linked allegations of conspiracy. The speciality arrangement The speciality arrangement under s 6(4) of the UK Act had limited the offences for which the appellant would be dealt with in Australia. So far as is relevant, the limitation was to the offences in respect of which his return under the UK Act was ordered and, significantly, to offences disclosed by the facts in respect of which the return was ordered. These "facts" had been detailed in the Tragardh affidavit to which reference has been made. It had been conceded by the appellant in the proceeding before the magistrate "that there is prima facie evidence that LE Anh Tuan was kidnapped and murdered", leaving as the only factual issue the identification of the appellant with the person called "PHUC" in the evidence. The result is that the subsequent trial and conviction of the appellant on the counts of murder and kidnapping did not breach the speciality arrangement Callinan between Australia and the United Kingdom made pursuant to s 6(4) of the UK Act. The jurisdiction of the Supreme Court Section 85(1) of the Constitution Act 1975 (Vic) ("the Constitution Act") states: "Subject to this Act the Court shall have jurisdiction in or in relation to Victoria its dependencies and the areas adjacent thereto in all cases whatsoever and shall be the superior Court of Victoria with unlimited jurisdiction." The jurisdiction of the Supreme Court of Victoria in respect of the trial and conviction of the appellant was founded upon his presence at that time in the State27. The following statement by McLelland A-JA in Levinge v Director of Custodial Services28 is in point: "[S]ubject to any statutory provision to the contrary, a person physically within New South Wales is amenable to criminal process in this State regardless of the circumstances in which he came or was brought here." To that statement, it should be added that the circumstance that an accused person was brought into a State by processes provided in federal law for extraditions to Australia does not render the subsequent State curial processes an exercise by the State court of federal jurisdiction. That no federal jurisdiction is exercised merely by reason of those antecedent federal processes follows from the reasoning in Flaherty v Girgis29 and Lipohar v The Queen30. The appellant did not dispute these propositions, but fixed upon the reference by McLelland A-JA in Levinge to a contrary statutory provision. He submits that (i) such a provision was made by federal law, in particular by s 42 of the Act; (ii) its effect was to deny the exercise in respect of his trial and conviction on non-federal offences of what otherwise was the jurisdiction of the 27 Lipohar v The Queen (1999) 200 CLR 485 at 527 [106]; Levinge v Director of Custodial Services (1987) 9 NSWLR 546 at 556, 562, 567; R v Hartley [1978] 2 NZLR 199 at 215. 28 (1987) 9 NSWLR 546 at 567. 29 (1987) 162 CLR 574 at 598, 603, 609. 30 (1999) 200 CLR 485 at 514 [69], 551 [166]. Callinan Supreme Court enjoyed under State law; and (iii) the consequence, in the events that happened upon his arraignment, not guilty plea, trial and conviction, is that his convictions and sentences are nullities and are vitiated by abuse of process. These submissions should be rejected. We turn to explain why this is so and why the appeal to this Court should be dismissed. The Australian legislation It is convenient to begin with federal law, in particular Pt IV of the Act (ss 40-44). The principal objects of the Act are specified in s 3. They are "to codify" the law relating to extradition from Australia (s 3(a)), "to facilitate" extradition requests by Australia (s 3(b)), and "to enable Australia to carry out its obligations under extradition treaties" (s 3(c)). Part IV furthers the objects in pars (b) and (c) of s 3 and is headed "EXTRADITION TO AUSTRALIA FROM OTHER COUNTRIES". Section 40 is "expressed in terms which assume the existence of a power in the Executive Government"31 and the section restricts its exercise by stipulating that a request by Australia to a country such as the United Kingdom for the surrender of a person in relation to an offence of which the person is accused "shall only be made by or with the authority of the Attorney- General". Section 40 also speaks to offences against a law of Australia of which the person has been convicted. In such cases the objective of the extradition processes will be return to Australia to be dealt with according to law, including detention or further detention as required by Australian law. Where the person returned is accused, but not yet convicted, the objective is return to be dealt with by trial according to law. These various outcomes are encompassed in s 41 of the Act. Section 41 states: "Where a person is surrendered to Australia in relation to an offence against a law of Australia of which the person is accused or of which the person has been convicted (whether or not pursuant to a request under section 40), the person shall be brought into Australia and delivered to the appropriate authorities to be dealt with according to law." This section applies to surrenders both pursuant to a request made under s 40 and otherwise. Further, as AB v The Queen32 illustrates with reference to a treaty 31 Oates v Attorney-General (Cth) (2003) 77 ALJR 980 at 984 [29]; 197 ALR 105 at 32 (1999) 198 CLR 111 at 116-117 [5], 144 [88]. Callinan with the United States, an extradition treaty to which Australia is a party may make its own provisions for return to Australia with a particular speciality clause. In that regard, important provision is made by s 11(1). This states: "The regulations may: state that this Act applies in relation to a specified extradition country subject to such limitations, conditions, exceptions or qualifications as are necessary to give effect to a bilateral extradition treaty in relation to the country, being a treaty a copy of which is set out in the regulations; or (b) make provision instead to the effect that this Act applies in relation to a specified extradition country subject to other limitations, conditions, exceptions or qualifications ..." In the present case, it was Pt II of the UK Act which stipulated restrictions on the return of the appellant to a relevant Commonwealth country such as Australia. This then, in due course, engaged s 42 of the Australian legislation. The Court was referred to no regulations made under s 11 which would vary the operation of s 42. Section 42 provides: "Where an extraditable person surrendered to Australia by a country (other than New Zealand), the person shall not, unless he or she has left, or has had the opportunity of leaving, Australia or, in a case where the person was surrendered to Australia for a limited period, has been returned to the country: to Australia in relation be detained or tried in Australia for any offence that is alleged to have been committed, or was committed, before the surrender of the person, other than: any offence in respect of which the person was surrendered or any other offence (being an offence for which the penalty is the same or is a shorter imprisonment or other maximum period of deprivation of liberty) of which the person could be convicted on proof of the conduct constituting any such offence; or any other offence in respect of which the country consents to the person being so detained or tried, as the case may be; or Callinan in Australia for be detained the purposes of being surrendered to another country for trial or punishment for any offence that is alleged to have been committed, or was committed, before the surrender of the person to Australia, other than any other offence in respect of which the country that surrendered the person to Australia consents to the person being so detained and surrendered." (emphasis added) The reference in s 42 to cases "where the person was surrendered to Australia for a limited period" directs attention to s 44. Surrender to Australia may be obtained upon an undertaking by the Attorney-General respecting trial in Australia for a particular offence or offences, return thereafter to the surrendering country and custody of the person while travelling to and from, and while in, Australia (s 44(1)). In such cases, the person "shall not be tried in Australia" for other offences, and shall not under federal, State or Territory law "be subject to any detention that would prevent the person being returned to the country pursuant to the undertaking" (s 44(1)). Nothing in this case turns directly upon s 44, but the phrase "shall not be tried" appears there and in s 42. However, the text in s 42 differs, stating "shall not ... be detained or tried" (emphasis added). The reason for the additional words in s 42 is found in the scope of the two sections. Section 44 is limited to surrenders for trial, whilst s 42 applies also to surrenders of those already convicted, for the purpose of their detention in Australia. The present case concerns a surrender for trial. It is par (a)(i) of s 42 which is of central importance for the present case. That provision deals distinctly with the offence for which there was surrender and "any other offence ... of which the person could be convicted on proof of the conduct constituting any such offence". It is not suggested that par (a)(ii) applied. The United Kingdom had not consented to the appellant being tried in respect of any offence not otherwise identified in par (a)(i)33. The phrase in par (a)(i) "the conduct constituting any such offence" is to be read as referring to the acts or omissions, or both, by virtue of which the offence is alleged to have been committed (s 10). The heading to s 42 is "Speciality". The heading is not part of the statute (Acts Interpretation Act 1901 (Cth), s 13(3)) but, as s 15AB(2)(a) of that statute provides, the meaning of s 42 (s 15AB(1)(b)). Paragraph (a)(i) of s 42 is inaptly drawn to protect the it may be considered in ascertaining 33 cf AB v The Queen (1999) 198 CLR 111 at 136 [67]. Callinan observance of the speciality arrangement with respect to the Request for the extradition of the appellant from the United Kingdom. The relevant clause in that arrangement speaks of offences "disclosed by the facts in respect of which [the appellant's] return was ordered". On the other hand, par (a)(i) fixes, more narrowly, upon the identification of murder and kidnapping as offences on which the appellant could be convicted on proof of the conduct constituting the conspiracy offences in the Request in respect of which the appellant was surrendered by the United Kingdom. However, as was indicated in argument with respect to murder and conspiracy to murder, (a) it was easier to secure a conviction of murder on the McAuliffe basis because that involved contemplation of the possibility of intentional killing by the kidnappers, whilst the conspiracy would require proof of an agreement that the victim be killed, and, on the other hand, (b) the conspiracy charges did not require proving the death of the proposed victim. So, in one respect, the murder charge on which the appellant was convicted was less serious in terms of subjective criminality, but more serious in that it involved the death of the victim. Murder could not be an "other offence" within the second limb of s 42(a)(i) when put beside the offence of conspiracy to murder for which the appellant was returned. Similar reasoning applied to the charges of kidnapping and conspiracy to kidnap. The second limb of s 42(a)(i) is to be read with the statutory requirement, of which it is part, that the appellant was only to be tried in Australia for certain offences alleged to have been committed before his surrender. It may be that, in the events that happened at trial, the jury must be taken to have convicted the appellant of conspiracies, where the agreements were fully performed. But the question posed by the second limb of s 42(a)(i) was addressed to the making by the accused of the plea upon arraignment, to which we will refer in a later section of these reasons. Hence the question was necessarily prospective and not to be answered in retrospect after the conduct of the trial. The question asked whether the appellant could be convicted of murder and kidnapping on proof of the conduct constituting the alleged conspiracies. In that setting, the reasoning in Savvas v The Queen34 respecting the significance for sentencing of events relating to the implementation of a conspiracy is of no assistance. Nor are cases such as R v Hoar35 disapproving the charging of conspiracy where it is alleged that the substantive offence has been committed. 34 (1995) 183 CLR 1. 35 (1981) 148 CLR 32 at 38. Callinan For tactical or other reasons which do not appear, the issue under the UK Act respecting "double criminality", which is a distinct matter under that statute from limitations of speciality, was so restricted in the committal proceedings as to limit the offences stipulated in the Request in response to which the appellant was surrendered. To conclude that the appellant was not to be tried in Australia for the offences of murder and kidnapping by reason of the terms of s 42(a)(i) of the Act does not give effect to the evident purpose of that provision. That is the protection of the speciality36. Nevertheless, the language in which par (a)(i) is expressed is sufficiently intractable to gainsay the submissions for the respondent and the Attorney-General that (i) the offences of murder and kidnapping fell outside its terms and thus (ii) the prohibition imposed by s 42(a)(i) was not attracted in this case. As was emphasised in Re Bolton; Ex parte Beane37, in such a case the function of the Court must be to give effect to the will of the legislature as expressed in the words of the statute. Further issues However, it remains to determine (i) those institutions of government or individuals to which that prohibition in s 42 of the Act is directed; (ii) those who have a justiciable complaint in respect of non-observance of the prohibition; and (iii) the effect of s 42 upon the general jurisdictional provision made for the Supreme Court by s 85(1) of the Constitution Act. With respect to (iii), there may arise the questions (a) whether s 85(1) and its predecessors are included in the Constitution of the State of Victoria which is protected by s 106 of the Constitution; (b) whether, in any event, the power conferred by s 51(xxix) to make laws with respect to external affairs extends to support an operation of s 42 which withdraws from the Supreme Courts of the States the non-federal jurisdiction they otherwise enjoy; and (c) particularly in relation to (b), the significance of the reasoning and certain observations in Re Tracey; Ex parte Ryan38. 36 AB v The Queen (1999) 198 CLR 111 at 128-129 [41], 142 [82]. 37 (1987) 162 CLR 514 at 518, 520, 523, 532, 547. See also Mann v Carnell (1999) 201 CLR 1 at 45 [143]; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 95 [132]. 38 (1989) 166 CLR 518. Callinan Abuse of process None of these further issues necessarily would arise for decision if the alternative ground of abuse of process were made out. That ground accepts the jurisdiction of the Supreme Court to try and convict the appellant. But the argument is that in the exercise of that jurisdiction the prosecution should have been stayed, albeit, apparently, in the absence of any such application. The result of that failure is said to have been a miscarriage of justice with which the Court of Appeal should have dealt. These submissions, as indicated, have curious aspects. But there is a short answer. The power to stay prosecutions after extradition was recognised in this country in Levinge39, in New Zealand in R v Hartley40 and in the United Kingdom in R v Horseferry Road Magistrates' Court; Ex parte Bennett41. However, in the present case, it was for the appellant to make a case that there was a deliberate disregard by the Australian authorities and by the respondent prosecutor of the statutory requirements of s 42 or a knowing circumvention thereof42. The appellant did not attempt when he first raised the subject of abuse of process in the Court of Appeal to present any such case of deliberate misuse of authority. This ground must fail. It should be added that it was not suggested in Levinge that there had been any breach of the conditions necessary for a valid extradition from the United States. Rather, as McHugh JA emphasised, the United States courts had held that Levinge could lawfully be extradited to Australia43. The unsuccessful complaint was that his forcible abduction from Mexico to the United States rendered the subsequent proceedings in New South Wales an abuse of process in the New South Wales courts. There was no evidence that the Australian police were involved in or connived at the expulsion of Levinge from Mexico44. 39 (1987) 9 NSWLR 546. 40 [1978] 2 NZLR 199. 42 Levinge v Director of Custodial Services (1987) 9 NSWLR 546 at 564, 567. 43 (1987) 9 NSWLR 546 at 561. 44 (1987) 9 NSWLR 546 at 552, 565, 567. Callinan In R v Horseferry Road Magistrates' Court; Ex parte Bennett45, the House of Lords was dealing with a situation where there was no extradition treaty between the United Kingdom and South Africa and no arrangements made under the special provisions of s 15 of the UK Act. The defendant claimed he had been kidnapped in South Africa and returned to England as a result of collusion between the two police forces. The House rejected the holding of the Divisional Court that it had no power to inquire into the circumstances under which the defendant had been brought into the jurisdiction. The factual issues had not yet been tried and the case was remitted for further consideration. We turn to consider the outstanding issues. These were the subject of additional written and oral submissions and attracted intervention by several Attorneys-General. "Shall not ... be ... tried" The use of the passive voice ("be tried") presents difficulty in identifying those to whom the command is directed and those for whose benefit the command is made. Various possibilities were suggested in argument. One was that the only "rights" involved are those of the country which has rendered up to Australia the individual concerned. Another was that the command is directed to the State courts respecting the exercise of their jurisdiction and that the appellant can assert that absence of jurisdiction and consequent nullity of his convictions. The third, which should be accepted, is that there is no attempted withdrawal of jurisdiction; rather, the federal law founds a special plea to the arraignment which in this case was not made by the appellant. The expression appears in s 44 as well as in s 42, as has been remarked. It appears also in s 22(4). Section 22 (which is in Pt II, dealing with extradition from Australia) requires determination by the Attorney-General of whether a person who has been committed to prison by order of a magistrate is to be surrendered by Australia in relation to a qualifying extradition offence. There may be no such surrender unless a "speciality assurance" has been given by the extradition country, a phrase expounded in s 22(4). The assurance is deemed to be given if the person in question will not be tried for any other offence and this result is by virtue of a provision of the law of that country, a treaty provision or an undertaking given to Australia. The various contexts in the Act in which the prohibition on trial appears may suggest that the Act reflects the general practice of international relations whereby the "rights" generated by a speciality undertaking vest in the state Callinan receiving that undertaking46. That conclusion is supported by the provision in par (a)(ii) of s 42 for the giving of consent by the extraditing country to a relaxation of the prohibition in par (a)(i) of s 42. However, the phrase "shall not be tried" suggests a command with effect in municipal law and upon the conduct of the trial for an offence other than those indicated in sub-pars (i) and (ii) of s 42(a). Does this lead to the conclusion that in such circumstances the court in question is deprived of what otherwise would be its authority to try the extradited person? The answer must be in the negative. It has been emphasised in recent decisions of this Court47 that it is to be expected that the Parliament will state clearly its will where there is a redefinition of the jurisdiction of a federal court by withdrawing rights and liabilities from what otherwise would be the engagement of Ch III of the Constitution. Reasoning of at least the same strength applies in the present case. The State courts are an essential branch of the government of the States48. Here the jurisdiction is non-federal jurisdiction of the Supreme Court of Victoria and federal law is said to create rights and liabilities, the giving effect to which involves the withdrawal of subject-matter from that Court. In Re Tracey; Ex parte Ryan49, Mason CJ, Wilson and Dawson JJ50 explained that a federal law which denied the imposition of criminal liability, otherwise justiciable in the non-federal jurisdiction of the courts of a State, "upon defence members or defence civilians" might, depending upon its terms, be supported by s 51(vi) and s 51(xxxix) of the Constitution. Such a law would prevail, by operation of s 109, over relevant State laws founding the jurisdiction of the State courts. In that way there would be effective "interference" with the exercise by the State courts of their general criminal jurisdiction. However, their Honours held that the federal law in question in Tracey was not supported by s 51 of the Constitution and so s 109 of the Constitution was not engaged. 46 AB v The Queen (1999) 198 CLR 111 at 116 [4], 144 [89]. 47 Shergold v Tanner (2002) 209 CLR 126 at 135 [27]; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 505 [72]. 48 Austin v Commonwealth (2003) 77 ALJR 491; 195 ALR 321. 49 (1989) 166 CLR 518. 50 (1989) 166 CLR 518 at 547; cf at 575 per Brennan and Toohey JJ, and see also Re Nolan; Ex parte Young (1991) 172 CLR 460 at 491 per Deane J, 494-495 per Callinan In the present case, it is not necessary to determine whether any paragraph or paragraphs of s 51 would support a law which in terms ousted or displaced what otherwise was the general criminal jurisdiction of the Supreme Court of Victoria to try the appellant. It would need to be borne in mind that, without the extradition effected necessarily under federal law, the appellant would not have been present in the State and so liable to be put on trial there. However that may be, the elliptical method of drafting adopted by s 42 of the Act falls well short of a clear statement by the Parliament of such legislative will to oust or displace jurisdiction. The submissions respecting denial of jurisdiction should not be accepted. However, that does not conclude all aspects of the matter adversely to the interests of the appellant. Counterpoised to the principles of construction just considered is another important general principle. It is exemplified in Re Bolton; Ex parte Beane51 and is to the effect that a person constrained by the exercise of executive authority which is not supported by statutory mandate may challenge that constraint by access to the judicial power. When s 41 of the Act speaks of the bringing of the extradited person into Australia and delivery to the appropriate authorities "to be dealt with according to law", it accommodates that principle. The custody of the appellant after arrival in Australia was part of the lawful processes attending his readiness for trial in the Supreme Court. Did the injunction in s 42 of the federal law that, upon the hypotheses accepted earlier in these reasons, he was not to be tried give to him, quite apart from repercussions in the relations between the two nations, rights enforceable by curial procedures? The answer is that such rights did arise but they were in the nature of an immunity of a specific nature. At any time before trial on both counts, the United Kingdom might have given its consent to that course. If it had done so, then sub-par (ii) of s 42(a) would have operated to remove the prohibition imposed by that section upon his trial and the appellant would have retained no cause for curial complaint. The United Kingdom did not take that step. That left the appellant in the position that, upon arraignment, he was entitled under the appropriate procedures of the Supreme Court of Victoria to plead that he was not required to put himself upon the country for trial. It may be accepted, consistently with the reasoning in Felton v Mulligan52, that such a plea, based in a federal law, s 42 of the Act, if made would thereupon have attracted the exercise of federal jurisdiction by the Supreme Court. But this plea was not made. 51 (1987) 162 CLR 514. 52 (1971) 124 CLR 367. Callinan It was with the arraignment that, in ordinary usage, the trial may be said to have commenced53. Reference is made in the second paragraph of these reasons to s 390A and s 391 of the Crimes Act. It is not useful to use the term "waiver" in this context. The reasons why the point was not taken do not appear in the record. But there is no suggestion that the appellant was the victim of any malpractice in this regard. In the absence of such a plea and in the face of the pleading of the general issue by the plea of not guilty, the appellant's personal right derived from s 42 was spent. Conclusion The circumstances of the surrender of the appellant to Australia were such as to attract the operation of s 42 of the Act. However, the right given by s 42 to an extradited person is exercisable by demurrer or special plea under the applicable procedures of the trial court. It is not open to plead the general issue, then, after conviction, to seek to impeach that conviction in the fashion sought to be done in this case. There remains the general powers of the trial court with respect to abuses of its processes, but no such case could be sustained here. Orders The appeal should be dismissed. 53 Director of Public Prosecutions (SA) v B (1998) 194 CLR 566 at 578 [17], 582 Kirby 113 KIRBY J. Where a completely new point is raised by a convicted prisoner, in objection to the lawfulness of a conviction following a lengthy trial, it is natural for a decision-maker to feel impatience and to resist the point54. However, whilst the matter remains before the judicature of the nation, the point may still be decided if the interests of justice so require55. Sometimes the avoidance of a miscarriage of justice in the case56 or the importance of the legal issue presented57 will oblige a determination of the point. This will be so notwithstanding impatience over the merits of the proceeding and concern about its consequence for the discharge of a prisoner and the possibility of a costly retrial58. In this appeal Hong Phuc Truong ("the appellant") raised a new point in the Court of Appeal of Victoria59. It concerned alleged departures of his trial from the requirements of the law of speciality as expressed in s 42 of the Extradition Act 1988 (Cth) ("the Act"). The Court of Appeal rejected the point. Now, by special leave, the appellant has maintained it before this Court. The facts, legislation and the fundamental question The facts of the case are set out in the reasons of other members of this Court60. Also set out there is a description of the somewhat muddled course of the proceedings brought by Australia in the United Kingdom to have the appellant extradited to this country to face trial (putting it neutrally) in respect of offences arising out of, or concerned with, the death of Mr Le Anh Tuan ("the deceased")61. The deceased was killed in Victoria some time between April and June 1996. 54 Gillard v The Queen (2003) 78 ALJR 64 at 71-72 [40]-[41]; 202 ALR 202 at 211; cf Gipp v The Queen (1998) 194 CLR 106 at 153 [134]. 55 Gipp v The Queen (1998) 194 CLR 106. 56 As in Gipp v The Queen (1998) 194 CLR 106 at 116 [23], 153 [135], 164 [170]; cf at 125-126 [56]. 57 As in Giannarelli v The Queen (1983) 154 CLR 212 at 221, 222; Gillard v The Queen (2003) 78 ALJR 64 at 72 [42]-[43]; 202 ALR 202 at 211-212. 58 Arulthilakan v The Queen (2003) 203 ALR 259 at 277 [70]. 59 R v Truong (2002) 5 VR 1. 60 Reasons of Gleeson CJ, McHugh and Heydon JJ at [4]-[17]; reasons of Gummow and Callinan JJ at [47]-[49]. 61 Reasons of Gleeson CJ, McHugh and Heydon JJ at [9]-[17]; reasons of Gummow and Callinan JJ at [60]-[74]. Kirby The relevant law of the United Kingdom governing extradition of persons to Australia from that country is explained in other reasons62. The extradition documents that were issued in the case are described there63. Finally, those other reasons contain the applicable provisions of the Act64 binding Australian courts and officials in the matter of extradition. I incorporate all of this material by reference. I will not repeat it. The fundamental question in the case concerns the application, and effect, in the events that have occurred, of the command of the Federal Parliament65 that "an extraditable person … shall not … be … tried in Australia for any offence that is alleged to have been committed … other than … in respect of [those offences for the trial of] which the person was surrendered". This provision, which reflects a long-standing rule of international law and international practice66, had, and has long had, its counterpart in the law of the United Kingdom67. However, the point in issue in this appeal concerns the requirements of the law in Australia. It is those requirements that this Court, as the final court in the Australian judicature, is constitutionally bound to obey. The issues in the appeal The fundamental issue so described was reduced to a number of subsidiary issues, argued in the appeal. Those still relevant are: The speciality issue: In the facts that occurred, and upon the true meaning of the Act, was the appellant tried in the Supreme Court of Victoria for offences he was alleged to have committed other than the offences in respect of which he was surrendered by the United Kingdom for extradition to Australia? 62 Reasons of Gleeson CJ, McHugh and Heydon JJ at [10], [22]-[24]; reasons of Gummow and Callinan JJ at [52]-[71]. 63 Reasons of Gleeson CJ, McHugh and Heydon JJ at [9], [13]-[16]; reasons of Gummow and Callinan JJ at [58]-[59]. 64 Reasons of Gleeson CJ, McHugh and Heydon JJ at [18]-[19]; reasons of Gummow and Callinan JJ at [80]-[85]. 65 The Act, s 42. 66 Barton v The Commonwealth (1974) 131 CLR 477 at 483 per Barwick CJ; AB v The Queen (1999) 198 CLR 111 at 128-129 [41], 141-143 [80]-[85]. 67 Extradition Act 1870 (UK), s 19. See now Extradition Act 1989 (UK), s 6(4). Kirby The abuse of process issue: If so, did the appellant's trial constitute an abuse of process in respect of which he was entitled to judicial relief in his appeal? The unlawful trial issue: If relief for abuse of process is unavailable, was the ensuing process at the trial conducted according to law? Having regard to the failure of the appellant to challenge the lawfulness of his trial at its outset, is the appellant, on an appeal against his convictions, entitled to judicial relief against such convictions? The foregoing issues, if the first and either the second or third issues are answered favourably to the appellant, give rise to still further issues, canvassed principally by the interveners: The federal jurisdiction issue: Having regard to the command in s 42 of the Act, was the Supreme Court of Victoria, in the purported conduct of the trial of the appellant, exercising federal or State jurisdiction when consideration is paid to the fact that no issue was expressly raised at the trial for adjudication, based upon the Act? Was the Supreme Court of Victoria, if exercising federal jurisdiction, bound by the Constitution and federal law to give primacy to federal law over an otherwise applicable State law and, if so, with what consequences for the breach of that obligation? Even if not exercising federal jurisdiction, was the Supreme Court so obliged? The void convictions issue: What is the result of non-compliance with s 42 of the Act? Does it present a justiciable question? Is it solely a subject for complaint by the government of the United Kingdom, not by the appellant personally? Alternatively, are his rights and interests affected in a way giving rise to an entitlement to obtain judicial relief? Is the trial, once concluded, a nullity? Are the convictions void or otherwise liable to be quashed? The constitutional issue: In the event that, otherwise, s 42 of the Act would suggest that the appellant's trial was a nullity and that his convictions were liable to be quashed in his appeal, is the Act, to the extent that it would so provide, contrary to the federal Constitution? Does it exceed the legislative powers of the Federal Parliament in that respect? Does it involve an impermissible intrusion of federal legislation into the authority and exercise of its powers by the Supreme Court of a State, contrary to s 106 of the Constitution? Should s 42 of the Act be read down so as to avoid these particular constitutional difficulties? Kirby The speciality requirement in the Act was breached On the first two issues arising in the appeal, I am in broad agreement with the reasons of Gummow and Callinan JJ. Thus, I agree in the construction of s 42(a)(i) of the Act which their Honours prefer. In the circumstances disclosed, it is the construction that accords with the language of the Act as it applies to this case. It also accords with the principle of the international law of extradition known as speciality, which is reflected in s 42 of the Act, as its heading ("Speciality") indicates68. Likewise, the construction reflects the imperative terms in which s 42 is expressed ("shall not … be … tried"). It is consonant with the long-standing common law principle that no person is to be sent out of the jurisdiction for trial elsewhere except with the express authority of law enacted by Parliament or incorporated in a treaty made within the powers of the executive69. And, if there be any doubt, it is the construction of s 42(a)(i) of the Act which, in the circumstances of this case, most closely ensures that the Australian federal law, applicable following the appellant's extradition from the United Kingdom to Australia, conforms to the rule of speciality in international law70. It upholds the comity of nations. Consistently with such comity, particular care and attention has usually been taken by the final courts of civilised nations to ensure that the rule of speciality is scrupulously observed according to statute and treaty. Allowance must be made, as the Act permits, for occasional discordance between the expression of offences in the law of the receiving nation and the way the most proximate and relevant offence, suggested by the alleged conduct of the accused, is defined in the law of the surrendering nation. Thus, as between a country such as Poland and a country such as Australia, with a different language and legal tradition, precise equivalence between certain offences may sometimes be missing, making the interpretation of the provisions of the Act ("offence in 68 cf reasons of Gummow and Callinan JJ at [88]. 69 United States v Rauscher 119 US 407 at 416-417 (1886). 70 Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 363; Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42; Mason, "The tension between legislative supremacy and judicial review", (2003) 77 Australian Law Journal 803 at 808-809. Kirby respect of which the person was surrendered") and the application of the rule of speciality there stated more difficult and contestable71. Such potential difficulties of correspondence between offences do not so often arise as between the criminal laws of the United Kingdom and Australia, given the common language and the shared legal history. Least of all do they arise in relation to the specification of common, generic and well-known offences such as "conspiracy", "murder" and "kidnapping". Such offences are all "offences" long established in the criminal law of both nations. There could be no reasonable doubt about them or about their essential legal incidents. The rule of speciality is an important one72. We obey it not only because the Act so provides and expressly deals with exceptions73, but because so much is required by Australia's self-respect and national honour74 in dealing with other nations with which it has extradition arrangements. Compliance with the rule of speciality is reinforced by Australia's expectation of reciprocity in the treatment of its own citizens and persons within its territory, surrendered to other nations. Such compliance is a contribution to the success of the international system of extradition of criminals in contemporary circumstances of easy access to international transport by fugitives, fleeing from criminal justice75. The price of the international extradition system that has been created in the past century and more includes strict observance of the rule of speciality, as provided by law. The construction of s 42(a)(i) of the Act urged by the respondent would debase that notion as upheld in Australian law. Effectively, it would read the notion out of the Act in what is otherwise a very clear case. In my view, the rule of speciality, expressed in s 42(a)(i), should be scrupulously observed. It should be upheld by the courts. It must apply, and be applied, in a 71 cf Oates v Attorney-General (Cth) (2003) 77 ALJR 980 at 983 [17]; 197 ALR 105 72 Aughterson, Extradition: Australian Law and Procedure, (1995) at 83-84. 73 Such as proof of certain conduct in the specified circumstances (the Act, s 42(a)(i), second element); where the surrendering country consents (s 42(a)(ii)); where the surrendering country is New Zealand for which separate provision is made (s 42); where the accused had left Australia or has had the opportunity to do so (s 42, opening words). 74 United States v Rauscher 119 US 407 at 411-412 (1886). 75 Barton v The Commonwealth (1974) 131 CLR 477 at 483; Trimbole v The Commonwealth (1984) 155 CLR 186 at 190; AB v The Queen (1999) 198 CLR 111 Kirby consistent way in many countries with legal systems distinct from those of the United Kingdom and Australia. There can be no different approach or rule. These are reasons for a measure of strictness in the interpretation of the requirements of the rule as stated in the Act. They apply to the present case. Further, the principle of speciality protects inter alia the interests of the surrendering country, primarily from abuses of its processes. It was originally devised to ensure that an alleged offender was not extradited to face completely different allegations. A concern was that the person would be charged with a political offence not disclosed upon the extradition application. This is not a contention in the present case. Nevertheless, it was upon the United Kingdom's authority that that country granted the extradition request for the offences of conspiracy to kidnap and conspiracy to murder, despite Australia's requesting extradition for a range of other offences including the substantive offences of kidnapping and murder. Respecting this authority is paramount. Australia's extradition arrangements with the United Kingdom (and other nations) depend upon it. It is only a strict approach to the principle, and the language of the Act, that respects this authority. Here the appellant was surrendered for trial in Australia for conspiracy to murder and conspiracy to kidnap. He was not surrendered to be tried for the substantive offences of murder and kidnapping. The offences concerned are not the same, either in law or fact. The legally tutored would not regard them as the same "offences" in the United Kingdom. None of the exceptions stated in the Act applies76. The substantive offence of murder, in particular, which in Victoria carries a possible sentence of life imprisonment upon conviction77, is the most grave offence provided for in the criminal law. A conviction of murder still carries special punishment and opprobrium. It is always treated as a crime of particular seriousness78. It may be accepted that detailed evidence was fully disclosed to the United Kingdom authorities, sufficient to establish the substantive offences of murder and kidnapping79. However, the Act requires a comparison between the offence "in respect of which the person was surrendered" and the offence with which that person is charged. The appellant was surrendered for the offences of conspiracy to kidnap and conspiracy to murder. He was subsequently charged, tried and 76 Reasons of Gummow and Callinan JJ at [87]. 77 By s 3 of the Crimes Act 1958 (Vic), the sentence may be life imprisonment or "imprisonment for such other term as is fixed by the court". 78 cf Charlie v The Queen (1999) 199 CLR 387 at 400 [29]. 79 Reasons of Gleeson CJ, McHugh and Heydon JJ at [13]-[15], [25]. Kirby convicted of kidnapping and murder. Under the Act, it is the offence in respect of which the person was surrendered that is important, not what was disclosed in the form of evidence to the surrendering authorities. Were it otherwise, any country could call much evidence and then turn around and argue that the "other offence" was disclosed to the relevant authorities. The requesting country has the burden of establishing the relevant offences. It may attempt to establish as many offences as it can. However, it is the surrendering country that ultimately decides which offences the person shall be extradited for. The requesting country cannot simply ignore or dismiss this selection80 and charge, or try, the person for another offence and argue that such offence was "disclosed" to the authorities. The offences for which the surrendering country grants extradition are the critical considerations, even where it is suggested that the surrendering country Conformably with the international rule of speciality and its own law of extradition, if Australia wished, or intended, to put the appellant on trial for the substantive offence of murder, it was obliged to endeavour to secure the appellant's surrender by the United Kingdom for trial for that offence. Likewise with the offence of kidnapping. If this was not done initially, it was the obligation of Australia to endeavour to argue for an enlargement of the specified offences or to seek the consent of the United Kingdom to try the appellant for such offences82. None of these things was done. With respect, there appears to have been a lack of attention to detail in the extradition procedures and documentation in the United Kingdom. The defects seem not to have been noticed by anyone until after the trial and conviction of the appellant83. In all other respects I agree with what Gummow and Callinan JJ have written on this issue. I agree that the language of s 42(a)(i) of the Act is sufficiently intractable to answer the contentions of the respondent and of the Attorney-General84. That conclusion is not altered by the language of s 10(2) of the Act when ss 42 and 10(2) are read against the background of the important principles that I have mentioned. 80 I am not suggesting that the relevant Australian authorities did this in the present case or would do so. 81 Reasons of Gummow and Callinan JJ at [67]-[74]. 82 The Act, s 42(a)(ii); cf AB v The Queen (1999) 198 CLR 111 at 145 [90]. 83 cf reasons of Gleeson CJ, McHugh and Heydon JJ at [13]-[16]. 84 Reasons of Gummow and Callinan JJ at [92]. Kirby The appellant therefore succeeds on the first issue. In conducting the trial, contrary to s 42(a)(i) of the Act, the command stated in that provision of the Act was breached. What follows? Stay for abuse of process is not available I agree with Gummow and Callinan JJ, substantially for the reasons they give, that the circumstances of the case did not enliven the Court of Appeal's power to grant the appellant a permanent stay of proceedings on his convictions on the basis that, for the prosecutor to endeavour to enforce those convictions, in the light of the established breach of s 42(a)(i) of the Act, would constitute an abuse of process which the Court would prevent. The authority of a court, under the common law, to stay proceedings as an abuse of process is an exceptional one85. It is exercised with due regard for society's strong interest in having the jurisdiction of the courts invoked to put on trial persons lawfully accused of criminal offences86. The precise conceptual foundation of the jurisdiction with respect to abuse of process is not yet certain. Thus, it is not entirely clear whether, in Australia, it arises from postulates of the Constitution, whether it represents an aspect of the courts' defending the integrity of their process (the "temples of justice" view) or whether it rests upon a notion akin to estoppel, so that those who have failed to comply with the law are not permitted to gain the benefit of their unlawful conduct87. Because I incline to the former explanations of the basis of the jurisdiction, rather than exclusively to the last88, the foundation for the provision of a stay is not, in my view, confined solely to a case where the party against whom the stay for abuse of process is sought has acted deliberately in the misuse of that party's authority or power89. This view is consistent with the authorities that suggest that a stay for abuse of process will be available in a proper case 85 Williams v Spautz (1992) 174 CLR 509 at 518-519; R v Horseferry Road Magistrates' Court; Ex parte Bennett [1994] 1 AC 42 at 74. 86 Williams v Spautz (1992) 174 CLR 509 at 519. 87 Levinge v Director of Custodial Services (1987) 9 NSWLR 546 at 556-557, 564- 565; Rochin v California 342 US 165 at 169 (1952). See also Herron v McGregor (1986) 6 NSWLR 246; R v Hartley [1978] 2 NZLR 199. 88 cf Levinge v Director of Custodial Services (1987) 9 NSWLR 546 at 556; Pearce v The Queen (1998) 194 CLR 610 at 648-649 [117]; cf Connelly v Director of Public Prosecutions [1964] AC 1254; R v Beedie [1998] QB 356 at 360-361. 89 Reasons of Gummow and Callinan JJ at [95]-[98]. Kirby otherwise involving a waste of judicial resources, particularly in litigation unrelated to a determination of a genuine dispute90. Nevertheless, I accept that the prevention of deliberate misuse of a party's authority and power is the language in which the provision of a stay has been explained in many cases. Thus McHugh JA, in Levinge v Director of Custodial Services91, wrote of whether the prosecutor had "knowingly circumvented" the law. This notwithstanding, the relief is not confined to cases of deliberate and knowing misconduct, although that may be sufficient to enliven the jurisdiction. It extends to serious cases where, whatever the initial motivation or purpose of the offending party, and whether deliberate, reckless or seriously negligent, the result is one which the courts, exercising the judicial power, cannot tolerate or be part of. Whatever the prerequisites to the exercise of the power to stay proceedings for abuse of process, it is clearly established by the cases that it is not available to cure some "venial irregularity"92. Thus, where a "technical" breach of extradition law and procedure is later found to have occurred, in circumstances where the relevant officials were determined to have held the affirmative belief that they were acting appropriately, a stay has been refused, rightly in my view93. At the very least, therefore, the departure complained of must be very serious, such that in the circumstances, for the court to continue with the proceedings would offend the very integrity and functions of the court, as such. In the present case the element of deliberate misuse of authority is missing. Nor is the case otherwise one that attracts the stay power on the basis that enforcement of the conviction would reward recklessness on the part of the authorities or would offend the manifest integrity of the courts or of the judges and officers required to enforce the court's orders. The appellant may have remedies derived from the Act itself and from the powers of a court of criminal appeal. But his contention that there had been an abuse of process requiring, or warranting, exceptionally, a permanent stay of proceedings was not made out. No error is shown in the Court of Appeal's failure to afford such relief. 90 Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279, cited with approval in Djaigween v Douglas (1994) 48 FCR 535 at 545. 91 (1987) 9 NSWLR 546 at 564-565. 92 R v Horseferry Road Magistrates' Court; Ex parte Bennett [1994] 1 AC 42 at 77 per Lord Lowry. 93 See eg R v Raby [2003] VSC 213 at [37] per Byrne J. Kirby The breach of the speciality requirement renders the trial unlawful The foregoing brings me to the point where I part company from Gummow and Callinan JJ. Their Honours conclude that, despite the language of s 42(a)(i) of the Act, and the events that have occurred, the Supreme Court of Victoria was not deprived of what would otherwise have been its authority under Victorian law to try the appellant once he was extradited to Victoria upon the offences alleged in the presentment94. Their Honours decide that the appellant enjoyed rights to object to the conduct of the trial in breach of s 42(a)(i) of the Act; but that such rights existed only at the time before and up to the commencement of the appellant's trial95. They accept that, had the appellant raised his objection to the trial then, it would have enlivened the power of the respondent to seek the consent of the United Kingdom to the trial of the appellant on offences different from those for which he was surrendered to Australia96. According to their Honours, the time for objection, and the only time, was before or upon the appellant's plea to the arraignment97. Having failed to object then, at least in circumstances, as here, where there was no suggested malpractice or deliberate wrongdoing on the part of the respondent, the appellant forever lost the right to complain about the point. That point was "spent"98. I accept, with their Honours99, that s 42(a)(i) of the Act implies a personal right in the appellant to object to a trial for an "offence" other than those upon which he had been surrendered for trial in Australia. There are occasional judicial observations, prompted by the expression of provisions such as s 42(a)(i) in the passive voice, that suggest that such provisions are addressed solely to national polities and not to the rights of individuals100. However, properly, in my view, the prosecutor did not argue that this was the true meaning of s 42(a)(i) of the Act. I agree that it is not. 94 Reasons of Gummow and Callinan JJ at [103]. 95 Reasons of Gummow and Callinan JJ at [108]-[109]. 96 Reasons of Gummow and Callinan JJ at [108]. 97 Under the Crimes Act 1958 (Vic), ss 390A and 391. 98 Reasons of Gummow and Callinan JJ at [110]. 99 Reasons of Gummow and Callinan JJ at [108]. 100 Such was the dissenting opinion of Waite CJ in United States v Rauscher 119 US Kirby The provisions of s 42 may appear as providing a duty of imperfect obligation, addressed principally at the executive government of the receiving nation concerned in the trial of the surrendered person. However, the language and purpose of the provision, and the serious consequences for accused persons of its breach, support the conclusion that such accused have a sufficiently relevant personal interest in the observance of s 42 as to warrant the conclusion that the Parliament meant them to be able to enlist the jurisdiction of the courts to secure obedience to its terms. The point of disagreement, between myself and Gummow and Callinan JJ, concerns whether that entitlement is lost forever after the plea has been taken without raising the objection and once the trial has commenced. In my opinion it is not. I shall express the main reasons that persuade me to the conclusion opposite to that adopted by Gummow and Callinan JJ in this regard. judges, and people of every State and of every part of First, the language of s 42 is stated in extremely strong terms. It is expressed in the imperative mood ("shall not … be … tried"). The section appears in a federal statute of the Parliament of the Australian Commonwealth. If it is a valid law it is, by covering cl 5 of the Constitution, "binding on the courts, the Commonwealth, notwithstanding anything in the laws of any State". This means that the command in s 42 was binding on the Supreme Court of Victoria, on the trial judge, on the prosecutor and on all who are required to carry out the orders of the courts. It is not a pious aspiration. Its content and expression, its purpose and history indicate clearly that s 42 expresses a rule that the Parliament intended to be obeyed by all persons with a relevant power and responsibility to do so. Secondly, the language of s 42 may have been stated in the passive voice for a particular reason. The officials and other persons who are engaged in the complex process of detention and trial of persons surrendered by another country to Australia are many and varied. They are different in the various States and Territories, where the procedures and the role of these office holders engaged in extradition arrangements, custodial detention, and prosecutions also differ. The extent of a "trial" can itself be a matter of controversy101. Even if a trial did not include the appellate process102, it would presumably include a retrial. A trial may nowadays be conducted in stages that differ as between the 101 Director of Public Prosecutions (SA) v B (1998) 194 CLR 566 at 577-579 [15]- [20]; cf Bond v The Queen (2000) 201 CLR 213. 102 cf Seaegg v The King (1932) 48 CLR 251 at 256-257; Adams v Cleeve (1935) 53 CLR 185 at 191; R v Gee (2003) 77 ALJR 812 at 815 [12], 821 [58], 832 [121], 839-840 [178]; 196 ALR 282 at 286, 294-295, 310, 320-321. Kirby several States and Territories103. Given the mandatory expression of s 42 and its protective purposes – both for the accused and for the entire extradition process – that section should be interpreted with these considerations in mind. The applicable meaning should be chosen to ensure, so far as the words permit, the fulfilment of the purpose of the Parliament104. On the face of things, that purpose would not be fulfilled if the obedience to the command of the Parliament depended exclusively on decisions made by governmental authorities or on the vigilance and knowledge of those representing the appellant at his trial so that they advised him to raise at the arraignment an objection based on the Act's provisions concerning speciality. Thirdly, there is nothing in the Act, including s 42, that suggests that any objection to non-compliance with the instruction of the Act concerning the conduct of a trial must be taken on a plea to the arraignment or forever lost. In accordance with the Act, most prisoners surrendered to Australia would be tried in State or Territory courts. The procedures governing such trials differ from State to State and also in federal courts and in the Territories. Given the language of s 42, there is a strong federal interest in ensuring compliance by authorities and courts (federal, State and Territory) with the speciality provisions there stated. It would therefore take very clear words to allow the effective importation into its terms of a procedure enacted in one State, to override, or thereafter to neutralise, the mandatory instruction of federal law. Section 42 of the Act speaks to courts, prosecutors and other officials throughout Australia. The terms of s 42 contradict, and certainly do not provide for or support, a temporal limitation or operation which the Federal Parliament has not seen fit to enact. By the terms of s 42, if a "trial" contrary to the section has been had, that disobedience to the law remains a fact, for whatever legal consequences may follow. It does so notwithstanding the failure of the judge or prosecutor to notice the point or the omission of those representing the accused to rely upon it. Fourthly, the larger purposes of the rule of speciality expressed in s 42 of the Act reinforce this conclusion. Those purposes105 include the compliance of Australia with reciprocal treaty obligations, the principles of international law and the comity of nations and the achievement of successful arrangements of 103 Director of Public Prosecutions (SA) v B (1998) 194 CLR 566; R v Gee (2003) 77 ALJR 812; 196 ALR 282. 104 Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518; Bropho v Western Australia (1990) 171 CLR 1 at 20. 105 See above at [121]-[126]. Kirby extradition of criminal fugitives between countries of many kinds with many different legal systems. These considerations remain applicable in the State of Victoria once the time for a plea to the arraignment has passed in the accused's trial. They exist, at the very least, during the whole time that the case is before the judicature of the nation that has secured the surrender of the accused for trial upon offences of a limited and defined kind. This was the approach taken in AB v The Queen106, where the point relying on the rule of speciality was not even taken (as here) in the intermediate court but was raised for the first time in this Court107. This fact notwithstanding, the majority of the Court gave legal effect to the rule. To interpret s 42 in this respect by reference only to the interests and duties of the accused involves serious error. Whilst those interests are obviously involved, they are not the only ones at stake. In many ways, the national concerns108 represent a more important interest that the courts must vindicate. If Australian courts fail to do so, in respect of persons surrendered to Australia, Australians can scarcely be surprised if the courts of foreign nations fail to observe the rule of speciality in respect of persons, including Australian citizens, that Australia has surrendered to them. If this indifference to speciality in offences were to become common, the international system of extradition would be fractured. This Court should adopt a construction of the Act that avoids such consequences. This suggests that the allegedly rigid procedural precondition favoured by Gummow and Callinan JJ, although not expressed in the Act or extradition law, should be rejected. Fifthly, the fact that the Act imposes the duty of compliance with the rule of speciality in s 42 upon governmental authorities, in the context of the accusatorial criminal trial conducted in this country, means that the primary duty of ensuring that the requirements of s 42 are obeyed rests upon those authorities. It does not primarily rest upon the accused. In the nature of things the accused will normally be detained awaiting trial. Virtually without exception, he or she will be dependent upon legal representatives to recognise, and take, legal points on his or her behalf. It is normally for the prosecution authorities to make sure that proper documentation is prepared, in terms sufficiently broad to include all "offences" for which the trial of the accused may properly be conducted. This is not the duty of the accused or the accused's representatives. 106 (1999) 198 CLR 111. 107 (1999) 198 CLR 111 at 128-129 [40]-[42], 145 [92], 153-154 [110]-[111]. 108 United States v Rauscher 119 US 407 at 411-412, 419-420 (1886). Kirby If, subsequently, as the case against the accused is prepared for trial, a disparity is discovered between the offence(s) in respect of which the accused was surrendered and the offence(s) for which it is wished to try the accused, the prosecuting authorities are not without remedy. They may seek the consent of the surrendering country to the course they propose109. To suggest that the onus lies on the accused to detect and take the point at the plea to the arraignment or forever lose it, is to reverse the ordinary obligations that rest on the prosecution for criminal process in this country. If, with their legal obligations and significant resources, public officials cannot ensure that the extradition and its consequences comply with the Act, it is an unreasonable construction of s 42 to hold the rights and liberty of the accused hostage to having legal points recognised and taken, on the accused's behalf, before or on the arraignment110. Sixthly, Australian courts have in recent times taken a more realistic view concerning the operation of procedural rules and the need for a measure of flexibility defensive of substantive justice. This approach reflects a recognition of the imperfections of legal process, the variability of professional skills and the need to defend the substantive merits of cases rather than adherence to rules for their own sake111. This is especially so in the case of criminal trials, where what is, or may be, at stake is the liberty of the accused. In the present case, this Court needs to remind itself that the appellant, on the conviction in the trial that he challenges, was sentenced to life imprisonment: the highest punishment known to our law. I would not readily come to a conclusion that this consequence was lawful, although the trial of the appellant was contrary to s 42 of the Act and breached a command of the Federal Parliament, solely because his counsel failed to advise him to take the present point on his plea. It was not suggested that the appellant's failure in this respect was a deliberate, strategic decision. I would not infer that it was. It was always in the interests of the appellant to confine the offences on which he was tried to those for which he was surrendered to Australia. The notion that, on the arraignment, it would have been open to the respondent, in answer to a plea, to obtain promptly, or at all, the consent of the United Kingdom to the trial of the appellant for different and more serious offences is not established, either as a matter of fact or as a matter of law. Given the precise character of extradition arrangements and the cumbersome nature of its procedure, this suggestion seems intuitively unlikely. 109 The Act, s 42(a)(ii); AB v The Queen (1999) 198 CLR 111 at 145 [90]. 110 Conway v The Queen (2002) 209 CLR 203 at 241 [102]. 111 See eg Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 167-172; Jackamarra v Krakouer (1998) 195 CLR 516 at 539-543 [66]. Kirby Seventhly, whilst a case is still being considered by the judicature in Australia, and in criminal appeals in particular, courts have often permitted late amendments to raise new points that need to be considered to avoid a substantial miscarriage of justice112. In part, this approach, which has been upheld by this Court despite the limited nature of the appeals it hears under the Constitution, reflects the contemporary attitude of the law: generally preferring substance over form. In part, it also follows the language of criminal appeal statutes with their typical emphasis on the avoidance of injustice, which includes legal injustice. In the present case it is difficult to believe that, if the appellant could make good his objection to the lawfulness of his trial, he would lose the opportunity to be heard on that issue simply because of a delay in raising it. Much less substantial grounds of objection to less serious convictions carrying much shorter sentences have been permitted by this Court, notwithstanding a failure of the prisoner to raise the objection at trial. Here, the appellant submitted that the conduct of any trial at all, on the offences in the presentment, was contrary to the express command of federal law. If this was so, it is arguable that the "proviso"113 is inapplicable, being designed to defend a lawful trial which was flawed in its conduct, not one which explicit federal legislation said should not be conducted at all114. Eighthly, to the argument that the Supreme Court of Victoria had jurisdiction over the appellant because he was physically present at his trial, and in that sense within the power of that Court, the appellant raised no contest. However, it is commonplace that in the law, the word "jurisdiction" has many meanings115. The appellant's point, correct in my view, is that it remained to be determined what that Court was obliged to do in the discharge of that jurisdiction. By the terms of s 42 of the Act, it was instructed not to try the appellant for any offence other than those upon which he had been surrendered to Australia. 112 Pantorno v The Queen (1989) 166 CLR 466 at 475-476; Mickelberg v The Queen (1989) 167 CLR 259 at 272-273; Gipp v The Queen (1998) 194 CLR 106 at 153- 155 [134]-[138]; Smith v The Queen (2001) 206 CLR 650 at 658 [22]; Gillard v The Queen (2003) 78 ALJR 64 at 79-80 [89]; 202 ALR 202 at 222-223. 113 Crimes Act 1958 (Vic), s 568(1) (proviso). See Ousley v The Queen (1997) 192 CLR 69 at 95; cf at 158. 114 Conway v The Queen (2002) 209 CLR 203 at 241 [102]. 115 Harris v Caladine (1991) 172 CLR 84 at 136; Lipohar v The Queen (1999) 200 CLR 485 at 516-517 [78]-[79]. Kirby The terms of s 42 are not conditional upon an objection being raised by the accused or anyone else. This fact tends to confirm that, in the case of a prisoner who has been surrendered by another country for trial in Australia, it is the duty of the prosecutor to ensure that s 42 has been complied with. If it has not been, and that fact is discovered whilst the case is still before the judicature of Australia, in my view it remains open to the appellate court to allow the accused to rely upon the unlawfulness of the trial and hence of its outcome. Any other interpretation of the Act renders the accused hostage to the conduct of public officials and to the knowledge and vigilance of the accused's legal advisers in a way that is either arbitrary, capricious or both. Ninthly, the reasons of Gummow and Callinan JJ accept, as I do, that it is difficult to treat the omission of the appellant to raise the point under the Act, at the stage of his plea to the arraignment, as constituting a legal "waiver" that would prevent him from advancing a challenge to the lawfulness of the trial later, as he has now done116. There are at least two reasons why waiver does not apply117. There is no evidence that the appellant's failure to raise an objection based on s 42 of the Act at that stage constituted an informed or deliberate decision by the appellant. All indications are to the contrary. In any case, it is arguable that it was not competent for the appellant to waive the requirements in s 42 of the Act. Those requirements are addressed to many people apart from an accused. On the face of things, the accused cannot waive the obligations of those other people118. He cannot waive the interests of others in due compliance with the section. Those others include (1) the people of the Commonwealth, who have an interest in the conformity of courts and officials with the law stated by the Federal Parliament; (2) the Commonwealth itself, which has an interest in the compliance of trials before Australian courts following extradition of the accused with the rule of speciality upon which the international regime of extradition depends; and (3) the governments of surrendering countries (in this case the United Kingdom), which, by international law, have expectations under treaties and other instruments that Australia will adhere to its obligations, acknowledged in s 42 of the Act, not to try a person surrendered to it for an "offence" other than the "offence" for which the person was surrendered119. 116 Reasons of Gummow and Callinan JJ at [110]. 117 cf AB v The Queen (1999) 198 CLR 111 at 116 [3], 144-145 [89]-[92]. 118 cf Jago v District Court (NSW) (1989) 168 CLR 23; Walton v Gardiner (1993) 177 CLR 378; Rogers v The Queen (1994) 181 CLR 251. 119 The Act, s 42(a)(i). Kirby I do not have to resolve this last-mentioned argument finally. It is sufficient to say that I agree with Gummow and Callinan JJ that waiver is not relevant in this case. Tenthly, a decision in this appeal favourable to the appellant would certainly be a forensic misfortune in his case. Considerable costs of the appellant's first trial would be thrown away. The decision would doubtless present new and different legal problems if attempts were made to retry the appellant, possibly upon the conspiracy offences for which he was originally extradited; possibly upon the offences of murder and kidnapping after fresh extradition proceedings; or possibly following attempts to secure the consent of the United Kingdom to the enlargement of the triable "offences", if that is legally permissible. However, the appellant would meantime be subject to an order for his lawful custody. He could not ultimately escape a retrial for any offences for which he could be lawfully tried. He is entitled to invoke the law of this country, as he has. In a real sense, what is at stake in the appeal is an interest much larger than that of the appellant. It concerns obedience of an Australian court to the imperative language of the Federal Parliament in s 42 of the Act and faithful compliance by Australia and its institutions with the reciprocal rule of speciality expressed in international law, in extradition treaties and in Australia's own statute. It follows that, subject to the succeeding remarks, I would uphold the appellant's right to rely in the appeal upon the objection that he raises to the lawfulness of his trial. Because that trial upon the offences in the presentment was conducted contrary to the command of the Federal Parliament, the convictions and sentences that ensued must be quashed in accordance with the powers of the Court of Appeal in criminal appeals. They are the formal consequences of a "trial" that could not lawfully take place in the way that it did. The jurisdiction within which the trial was conducted The parties' submissions: In the event that this Court reached such a conclusion, the respondent, and governmental interveners, urged various propositions to dissuade the Court from giving effect to it. They argued that the trial had taken place in the Supreme Court exercising State jurisdiction and that the Supreme Court was not bound, in the way the trial had been conducted, to determine any issue arising under the Act. The outcome of the trial thus stood as valid. No basis was shown to disturb the appellant's conviction on appeal. The appellant submitted, to the contrary, that his trial had involved the exercise by the Supreme Court of federal jurisdiction and that, in exercising such jurisdiction, that Court was bound to comply with the Act, whether or not any party relied on Kirby The exercise of federal jurisdiction: Federal jurisdiction is "the authority to adjudicate derived from the Commonwealth Constitution and laws"120. Subject to the Constitution, federal law may confer the power to adjudicate particular matters upon courts, federal, State and Territory. Within the ambit of its legislative powers, and subject to other provisions or implications of the Constitution121, the Federal Parliament may, expressly or by necessary implication, forbid the exercise of the authority to adjudicate specific matters if valid preconditions are complied with. Or it may regulate, in particular respects, the ways in which that exercise is to be performed. It is open to argument that, in conducting the appellant's trial, the Supreme Court was exercising federal jurisdiction, although unaware of that fact. According to this argument, the opposite of the authority to conduct a trial is a valid withdrawal of authority. By s 42 of the Act, assuming it to be valid (as I will hold), the Federal Parliament withdrew the authority to conduct the trial of the appellant otherwise enjoyed by the Supreme Court of Victoria pursuant to s 85 of the Constitution Act 1975 (Vic). In proceeding to conduct the trial, notwithstanding such federal withdrawal of State authority, the Supreme Court was not merely failing to exercise State jurisdiction in accordance with relevant federal regulation. It was effectively, and in law, asserting State statutory authority to ignore an applicable command of federal law. By doing so, even if unconsciously, the Supreme Court was resolving a clash between applicable federal and State legal authority. It was doing so by upholding the latter and thereby resolving a constitutional question. In doing this it was, however unconsciously, exercising federal jurisdiction. It could not resolve the question, as it did, exercising purely State jurisdiction. It is not at all uncommon for Australian courts to proceed without noticing a governing federal law and resolve an issue that such federal law presents for the 120 Baxter v Commissioners of Taxation (NSW) (1907) 4 CLR 1087 at 1142. As observed in Baxter, Lipohar v The Queen (1999) 200 CLR 485 at 516-517 [78] and many other cases, the term "jurisdiction" has many meanings. 121 Such as provisions or implications concerning the scope of the judicial power, for example in the determination of criminal guilt and the trial of actions for breach of contract and for civil wrongs: Polyukhovich v The Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 at 706; Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 258; cf Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; Nicholas v The Queen (1998) 193 CLR 173 at 232-233 [145]-[146]; H A Bachrach Pty Ltd v Queensland (1998) 195 CLR 547 at 562 [15]. Kirby outcome of a case122. Upon the appellant's argument, to do so the court needs (and exercises) federal jurisdiction. The exercise of State jurisdiction: Although this is a possible view of the jurisdiction question, it is not the only one. The alternative view is that the appellant's trial was a matter within State jurisdiction and that this was so notwithstanding the appellant's surrender to Australia by another country pursuant to federal action and despite the command of s 42 of the Act, a federal law, which regulated one aspect of the trial in the exercise of State jurisdiction. In the appellant's case, the primary authority of the Supreme Court to adjudicate upon his trial was clearly derived from s 85 of the Constitution Act. According to the second view, the federal Act regulated his trial. However, it did not grant the authority for the trial. The State jurisdiction of a court is not changed to federal jurisdiction as a consequence of the court's giving, or not giving, effect to rights arising under federal legislation. Jurisdiction is determined by authority. Federal jurisdiction on appeal: In the view that I take, it is not necessary to resolve the foregoing controversy concerning the jurisdiction that the Supreme Court of Victoria exercised in the trial of the appellant. This is because, whatever label is placed upon the jurisdiction at trial, the Supreme Court was bound to obey applicable federal law. When the Court of Appeal was called upon to adjudicate the speciality issue, it was clearly exercising federal jurisdiction. This was because it was determining an issue that arose directly under the Act, a federal law123. To determine it, the Court of Appeal exercised federal jurisdiction. Only federal jurisdiction would confer the authority on the State court to do so. Subject to the issue of the suggested invalidity of the federal law under the Constitution, no provision of State law could override, qualify or negate the obligations stated in s 42 of the Act. Thus the provisions of the State Crimes Act 1958 (Vic), expressing in general terms the procedures ordinarily to be followed in a plea to the arraignment in a trial conducted in the Supreme Court, could not override the explicit instruction contained in s 42 of the Act. Indeed, the State Act does not purport to do so. Any attempt to do so would fail for constitutional reasons. The federal law would prevail in accordance with s 109 of the Constitution – so long as it was valid. 122 As illustrated in British American Tobacco Australia Ltd v Western Australia (2003) 77 ALJR 1566; 200 ALR 403. 123 Reasons of Gummow and Callinan JJ at [43]. Kirby Conclusion: federal law prevails: The Act obliged the Supreme Court, its judges and other relevant public officials not to conduct a trial of the appellant whilst the "offences" named in the presentment did not conform to the "offences" in respect of which the appellant had been surrendered to Australia by the United Kingdom. The Act's requirements were clear. It addressed successively the prosecutor, the Supreme Court of Victoria, the trial judge and the Court of Appeal. There was no relevant exception. Its terms were not obeyed. Specifically, they were not obeyed in the appeal when the Court of Appeal was undoubtedly exercising federal jurisdiction and had the power, after trial, to ensure that the federal law was given effect to prevent any miscarriage of justice that was demonstrated. A miscarriage of justice may be of a legal, as well as of a factual (or merits) kind. There could be no greater legal miscarriage of justice than the conduct of a trial upon counts of a presentment that, in terms, contradicted the express command of federal law. It constitutes a fundamental error in the proceeding124. The Court of Appeal failed to correct this miscarriage of justice. This Court, also exercising federal jurisdiction, must ensure that applicable federal law is obeyed. It is not too late. The matter is still within the judicature. The convictions and sentences must be quashed I have already indicated that the failure of the prosecution to present the appellant for trial only on the "offence[s] in respect of which the person was surrendered"125 is not a matter solely concerning the relations between the United Kingdom and Australia. The appellant's personal rights and interests were directly affected. If the appellant's purported "trial" was conducted contrary to the Act, it was arguably not a "trial" at all. Certainly, it was seriously flawed. Its outcomes were not lawful verdicts, convictions or sentences. Subject to the Constitution, no provision of State law could make them so, contrary to the Act. Subject to the constitutional issues, therefore, the convictions and sentences must be quashed. The constitutional objections are meritless It is difficult to take seriously the constitutional issues propounded in final resistance to this outcome. The notion that the Federal Parliament did not have the power to enact s 42 of the Act in the terms there appearing, either because of a lack of the relevant legislative power in s 51 of the Constitution, or because of 124 Wilde v The Queen (1988) 164 CLR 365 at 373; cf Penhallurick, "The Proviso in Criminal Appeals", (2003) 27 Melbourne University Law Review 800 at 806-811. 125 The Act, s 42(a)(i). Kirby supposed limitations expressed or implied elsewhere in the Constitution, borders on the fanciful. The enactment of a law with respect to extradition of alleged offenders and, relevantly, the surrender of offenders by other countries to Australia for trial in this country, clearly falls within s 51(xxix) of the Constitution ("external affairs"). Amongst other things, it is a subject designed to give effect to extradition treaties. Such treaties were an established feature of the external affairs of nations long before the creation of the Commonwealth126. Other heads of federal legislative power specified in the Constitution are also relevant, including s 51(xxviii) ("the influx of criminals") and s 51(xxxix) ("the execution of any power"). Together these are sufficient to sustain the general validity of the Act. The particular provision in s 42 of the Act, with regard to the international rule of speciality in extradition as there defined, is a valid law. It is a law upon an attribute of all national laws on the subject of extradition of which I am aware. Such a provision was included in the Extradition Act 1870 (UK). That Act was in force when the Australian Constitution was written and adopted. Similar provisions have been a feature of extradition laws and treaties ever since. The argument that the attempt by s 42 of the Act to impose restrictions on State criminal trials is contrary to s 106 of the Constitution, as amounting to an invalid endeavour to control the conduct of such trials in a State Supreme Court, is equally meritless. It was based on a misunderstanding of the decision of this Court in Re Tracey; Ex parte Ryan127. Whatever that decision exactly stands for, it cannot cast doubt on the enactment by the Federal Parliament of a specific requirement of federal law designed to safeguard and enforce a clear federal, indeed national and international, interest. Specifically, this is the interest of Australia in securing the reciprocal surrender of fugitive offenders and others found overseas who are accused of offences against the laws of Australia. To defend that interest and to obtain the trial of such persons it is clearly within the power of the Federal Parliament to enact a law controlling the circumstances of the trial and commanding when such trials take place and when they shall not take place, conformably with the applicable treaties and other arrangements with foreign nations. 126 Such as the successive treaties between Great Britain and the United States of America described in United States v Rauscher 119 US 407 at 410-412 (1886). See also the Extradition Act 1870 (UK), s 19. 127 (1989) 166 CLR 518. Kirby Here the Federal Parliament did not purport to interfere in the conduct of a trial by a State court. It simply regulated when such a trial could, and could not, occur. It did so in accordance with a well-established and international principle inherent in the comity of nations128. There was not, therefore, any disturbance of the arrangements of the Constitution concerning the government or a court of a State contrary to s 106 of the Constitution. It was no more than the enactment of a valid federal law in a matter of unquestionable federal concern regulating a trial in order to give effect to a principle of legitimate federal concern. But for the Act and the system of international agreements to which it gives effect – including on the basis of the stated rule of speciality – there could normally be no trial of persons, such as the appellant, who are accused of offences in one country, but who are present in another. Unless such persons could be snatched or otherwise secured by trickery or force they would remain beyond the jurisdiction of Australian courts and prosecutors – federal, State and Territory alike. It is the Act that makes it possible for those courts and prosecutors – including in the Supreme Court of Victoria – to secure and exercise jurisdiction over the surrendered prisoner. But such jurisdiction is afforded upon conditions regulated by federal law. Important amongst these is the series of conditions, defensive of the rule of speciality, set out in s 42 of the Act. They are valid. They must be obeyed by all those to whom they are addressed – relevantly the prosecutor and the judges of the Supreme Court of Victoria at trial and on appeal. Conclusion and orders The appellant has therefore made good his complaint that the rule of speciality, stated in s 42 of the Act, was breached by his trial. In the circumstances, he is not entitled to relief by way of a stay for abuse of process. He is, however, entitled to rely on his personal rights to which s 42 of the Act gives rise. Those rights are not "spent" merely because they were not raised in his plea at his trial. That would be an unacceptably artificial view of the applicable federal law, its language and its purpose. The Supreme Court of Victoria, in conducting the trial of the appellant, was obliged to conform to the applicable federal law. This included s 42 of the Act. Its failure to do so in this case renders the resulting orders of that Court invalid and of no legal effect. Those orders must be quashed. The objections to the constitutional validity of s 42 of the Act are without merit. They should be rejected. 128 Barton v The Commonwealth (1974) 131 CLR 477 at 483; AB v The Queen (1999) 198 CLR 111 at 128-129 [41], 141-143 [81]-[84]. Kirby The appeal should be allowed. The orders of the Supreme Court of Victoria (Court of Appeal) should be set aside. In place of those orders, it should be ordered that leave to appeal be granted and the appeal to that Court be allowed and the appellant's convictions and sentences quashed. Any new trial must conform with the Act. Hayne 183 HAYNE J. As the reasons of other members of the Court show, there are two questions in this appeal. First, were the offences of kidnapping and murder, for which the appellant was tried and convicted in the Supreme Court of Victoria, offences of which the appellant "could be convicted on proof of the conduct constituting"129 an offence in respect of which he was surrendered to Australia? Secondly, if the offences of kidnapping and murder were not offences meeting that description, what consequence does that have for his conviction? I would answer the first question, "Yes", and the second question, "In the circumstances of this case, it would have had no consequence for his conviction". The facts and circumstances which give rise to the appeal are set out in other reasons. The relevant provisions of the Extradition Act 1988 (Cth) ("the Act") are also set out in those other reasons. I need not repeat any of that material except to the extent necessary to explain my reasons. The first question – speciality internationally or The first question concerns what the Act calls "speciality". It may or may not be possible to discern some principles about speciality which find general acceptance in a number of other jurisdictions130. The first question argued in this Court does not require the identification of principles of that kind. Nor does it require the construction or application of the law of the surrendering country. It requires the construction and application of the relevant provisions of Australian law – the Act. find acceptance As the reasons of Gummow and Callinan JJ demonstrate, it is possible to determine whether the appellant's trial for kidnapping and murder contravened the particular arrangements made with the United Kingdom for his surrender to Australia. For the reasons given by Gummow and Callinan JJ, the appellant's trial for those offences did not contravene those arrangements. But the question which the appellant agitated in the Court of Appeal, and in this Court, does not depend upon any internationally accepted principles about speciality. It does not depend upon the particular arrangements which were made between the governments of Australia and the United Kingdom. The question which the appellant agitated is a question about the construction and application of the Act and, in particular, s 42. The specific question which arises concerns the application of that part of s 42(a)(i) which provides that, unless certain conditions are met, a person who is surrendered to Australia, by a country other than New Zealand, shall not be tried 129 Extradition Act 1988 (Cth), s 42(a)(i). 130 R v Truong (2002) 5 VR 1 at 27-34 [69]-[79] per Ormiston JA. Hayne in Australia for any offence that is alleged to have been committed before the surrender other than, first, any offence in respect of which the person was surrendered, or, second, any other offence (for which the penalty is the same or a shorter maximum period of imprisonment) "of which the person could be convicted on proof of the conduct constituting any such offence" (emphasis added). The reference to any "such" offence is a reference back to "any offence in respect of which the person was surrendered". The offences for which the appellant was surrendered included conspiracy to kidnap and conspiracy to murder. They did not include the offences of kidnapping or murder. Could the appellant be convicted of kidnapping and murder on proof of the conduct constituting the offences in respect of which he was surrendered, namely, conspiracy to kidnap and conspiracy to murder? In deciding that question it is necessary to take account of the provisions of s 10(2) of the Act that: "A reference in this Act to conduct constituting an offence is a reference to the acts or omissions, or both, by virtue of which the offence has, or is alleged to have, been committed." Thus the question becomes: would proof of the acts or omissions by virtue of which it was alleged that the appellant had committed the offences of conspiracy to kidnap and conspiracy to murder have proved that he committed kidnapping and murder? That requires consideration of what was alleged against the appellant in support of the application in the United Kingdom for his extradition to Australia, not what was proved at his trial. But it also requires recognition of two further matters: first, the fact that particular conduct may reveal alternative legal bases upon which it may be found that a person committed a particular crime and, secondly, that the conduct may reveal the commission of more than one offence. Where two offenders agree to commit an offence, and that offence is later committed, it is possible to describe the criminality of their conduct both as the offence of conspiracy and the substantive offence committed. And where two offenders act in concert in pursuit of a common criminal design each may be found guilty of the offence that has been committed even if it is shown that each participated in its commission in some different way131. And again, persons may be guilty of an offence as an accessory before the fact or as a principal in the second degree who, being present at the scene of a crime, aids or abets its commission. 131 McAuliffe v The Queen (1995) 183 CLR 108; Gillard v The Queen (2003) 78 ALJR 64; 202 ALR 202. Hayne The establishment of each of these different forms of criminal responsibility will require proof of the particular elements which go to establish that responsibility. The elements of a charge of conspiracy differ from the elements to be established in proving joint criminal enterprise. The elements of each of those offences differ from what must be established to make out a case that an accused person was an accessory before the fact or a principal in the second degree. In the case of conspiracy, because the offence is complete upon the conspirators reaching an agreement to commit the crime, the charge may be proved without showing that the intended crime was committed. By contrast, doctrines of complicity or common purpose only apply where the substantive offence has been committed. In such a case a person will be held responsible for a crime, the commission of which was contemplated by the parties sharing a common purpose132, even if there is no specific agreement that that crime be committed. Doctrines of complicity or common purpose apply only where the crime is committed, but apply even if there is no positive agreement to commit that crime. In considering the application of s 42 of the Act, must attention be confined to those facts which sufficed to establish the offence for which the appellant was extradited (the two charges of conspiracy)? That is, must attention be confined to those facts which, if proved, would have demonstrated the making of an agreement to kidnap and an agreement to kill, or may account be taken of the fact that at the time of extradition it was alleged that those agreements had been carried into effect? In proving a case of conspiracy to commit an offence, it is open to the prosecution to prove, as one step in demonstrating the existence of the agreement, that the offence was in fact committed. That is why there are many cases in which it would be open to charge both conspiracy to commit an offence and the substantive offence itself. The courts have said that prosecutors should charge the substantive offence, where it is alleged that the offence was committed, rather than the offence of conspiracy133 in order to avoid, among other things, the engagement of those evidentiary rules that attend the trial of a charge of conspiracy134 and what is sometimes said to be the consequent 132 Gillard (2003) 78 ALJR 64 at 82-83 [111]-[112]; 202 ALR 202 at 226-227. 133 R v Hoar (1981) 148 CLR 32 at 38 per Gibbs CJ, Mason, Aickin and Brennan JJ. 134 Tripodi v The Queen (1961) 104 CLR 1; Ahern v The Queen (1988) 165 CLR 87. Hayne advantages to the prosecution135. But the point of present relevance is that there are many cases where the criminality of a person's conduct may properly be reflected in a number of different charges. Is s 42 to be understood as directing attention only to that evidence which would suffice to establish the elements of the offence for which an accused was surrendered? Reading the section in that way would, of course, still give it useful work to do. It would permit prosecution for an offence wholly included in the offence for which a person was surrendered. But so to read the section does not appear to me to give full weight to the requirement of s 10(2) to consider the acts or omissions (of the particular accused in question) by virtue of which it is alleged that that person (the accused) committed the offence for which he or she was surrendered. When the extradition of the appellant was sought, the material advanced in support of the request for extradition not only alleged that the appellant conspired with others that the victim should be kidnapped and murdered, but also alleged that the conspiracy had been carried into effect. In those circumstances, the acts and omissions of the appellant, by virtue of which the offences of conspiracy to kidnap and conspiracy to murder were alleged to have been committed, included the acts of murder and kidnapping which it was alleged that the appellant had instigated. That he could be shown to be party to a joint criminal enterprise to commit those crimes, by demonstrating that he not only contemplated the possibility that the other party to the joint criminal enterprise would carry out the agreement136, but actively sought that end, required the proof of no other act or omission than, in the circumstances of this case, it was alleged that, if proved, would demonstrate his guilt of conspiracy to kidnap and conspiracy to murder. I agree with Gleeson CJ, McHugh and Heydon JJ that the trial of the appellant on charges of kidnapping and murder did not contravene s 42(a)(i). Although that conclusion is sufficient to require the dismissal of the appeal, it is desirable to deal with the second question because, if the appellant's submissions about that second question were correct, further, constitutional questions would arise. For the reasons given by Gummow and Callinan JJ, the appellant's contention that his trial constituted an abuse of process of the court, if the offences of murder and kidnapping were not offences of which he could be convicted on proof of the conduct constituting an offence in respect of which he was surrendered, is a contention that should be rejected. The appellant entering a plea of not guilty, the Supreme Court had jurisdiction to try the issues which thus 135 Howard's Criminal Law, 5th ed (1990) at 375-381. 136 McAuliffe (1995) 183 CLR 108; Gillard (2003) 78 ALJR 64; 202 ALR 202. Hayne were joined, even if, contrary to my view, s 42 of the Act applied in the way now alleged by the appellant. And once the appellant, on being arraigned, pleaded not guilty he could not later, having been convicted, say that he should not have been tried. On arraignment he could have entered, as a special plea137, the plea that his trial would contravene s 42 of the Act. Not having done so, even if the premise for this second contention had been made out, there would have been no miscarriage of justice warranting the intervention of the Court of Appeal138. Otherwise, in respect of this second question, I agree in the reasons of Gummow The appeal should be dismissed. 137 Crimes Act 1958 (Vic), s 390A. 138 Crimes Act, s 568(1).

HIGH COURT OF AUSTRALIA MZAPC AND APPELLANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR RESPONDENTS MZAPC v Minister for Immigration and Border Protection [2021] HCA 17 Date of Hearing: 5 March 2021 Date of Judgment: 19 May 2021 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation D J Hooke SC with S H Hartford Davis, S G Lawrence and D J Reynolds for the appellant (instructed by Conditsis Lawyers) S P Donaghue QC, Solicitor-General of the Commonwealth, with M A Hosking for the first respondent (instructed by Clayton Utz) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS MZAPC v Minister for Immigration and Border Protection Immigration – Refugees – Application for protection visa – Where appellant applied to Refugee Review Tribunal ("Tribunal") for review of first respondent's decision to refuse protection visa under Migration Act 1958 (Cth) ("Act") – Where s 438 notification issued under Act in relation to material including appellant's criminal record – Where Tribunal did not disclose existence of s 438 notification to appellant – Where first respondent conceded failure to disclose amounted to breach of procedural fairness – Where information covered by s 438 notification not referred to in reasons for decision – Whether breach material – Whether Tribunal in fact took s 438 notification information into account in making decision – Whether Federal Court erred by erecting presumption that Tribunal did not take s 438 notification information into account – Whether disclosure to appellant of fact of s 438 notification could realistically have led to different decision – Whether appellant or first respondent bore onus of proof of materiality – Whether Federal Court erred by confining materiality consideration to offence of dishonesty to exclusion of other offences. Words and phrases – "counterfactual inquiry", "credit", "discharging the burden of proof", "failure to disclose", "judicial review", "jurisdictional error", "lost opportunity to present legal and factual argument", "materiality", "onus of proof", "opportunity to be heard", "practical injustice", "presumption", "procedural fairness", "statutory interpretation", "subconscious impact", "threshold of materiality". possibility", conjecture", "reasonable "realistic Migration Act 1958 (Cth), Pt 7, s 438. KIEFEL CJ, GAGELER, KEANE AND GLEESON JJ. This appeal raises issues concerning the content and proof of the element of materiality identified in Hossain v Minister for Immigration and Border Protection1 as ordinarily required to exist for a breach of an express or implied condition of a conferral of statutory decision-making authority to result in jurisdictional error. Materiality was subsequently explained in Minister for Immigration and Border Protection v SZMTA2 to involve a realistic possibility that the decision in fact made could have been different had the breach of the condition not occurred. Existence or non-existence of a realistic possibility that the decision could have been different was explained to be a question of fact in respect of which the plaintiff in an application for judicial review of the decision on the ground of jurisdictional error bears the onus of proof. The explanation in SZMTA is sound in principle and consistent with precedent. SZMTA ought not to be revisited. SZMTA was correctly applied in the result in the decision under appeal3 to hold that a breach of an implied condition of procedural fairness by the Refugee Review Tribunal ("the Tribunal") in the conduct of a review under Pt 7 of the Migration Act 1958 (Cth) ("the Act") did not result in jurisdictional error in the decision of the Tribunal which affirmed a decision of a delegate of the Minister for Immigration and Border Protection to refuse the appellant a protection visa. The breach was constituted by a failure on the part of the Tribunal to disclose to the appellant the existence of a notification by the Secretary of the Department of Immigration and Border Protection under s 438(2)(a) that s 438(1)(b) applied to information contained in documents given to the Tribunal by the Secretary under s 418(3) of the Act. Facts and procedural history The appellant is a citizen of India. He arrived in Australia in 2006 on a student visa which expired in 2008. He applied in 2007 for a further student visa which a delegate of the Minister refused in 2012. He then applied to the Migration Review Tribunal ("the MRT") for merits review of the decision of that delegate under Pt 5 of the Act. The MRT decided that it lacked jurisdiction because the (2018) 264 CLR 123. (2019) 264 CLR 421. 3 MZAPC v Minister for Immigration and Border Protection [2019] FCA 2024. application was lodged out of time. He then applied to the Federal Circuit Court for judicial review of the decision of the MRT. The Federal Circuit Court dismissed that application in 2013. Having failed to obtain a further student visa, the appellant applied in 2014 for a protection visa. Amongst the claims he made in support of that application was a claim to fear that his uncle would kill him on his return to India in connection with a dispute between his uncle and his father over land in Punjab. He claimed that he was his father's oldest son and that his uncle had threatened to kill him if the land went under his name. He claimed that he had been kidnapped when visiting Punjab from Delhi in 2004. The kidnappers demanded that his father sign papers putting the land in their names. They released him after his father paid them a settlement amount. Another delegate of the Minister refused the protection visa in June 2014. The appellant then applied to the Tribunal for merits review of that decision under Pt 7 of the Act. As required by s 418(3) of the Act, the Secretary gave to the Tribunal documents within the Secretary's possession or control which the Secretary considered to be relevant to the review by the Tribunal. Accompanying the documents so given was a letter notifying the Tribunal under s 438(2)(a) that s 438(1)(b) applied to information contained in specified documents on a specified departmental file. By way of advice under s 438(2)(b), the letter expressed the view that the information should not be disclosed to the appellant or his representative because the information had been "shared by Victoria Police with the Department for investigative purposes only". The documents specified in the notification included a "Court Outcomes Report" which indicated that the appellant had been convicted of offences in the Dandenong Magistrates' Court in September 2011. The offences of which he had been convicted were three counts of drink driving, eight counts of driving while disqualified, three counts of using an unregistered vehicle on a highway, two counts of using a vehicle not in a safe and roadworthy condition, one count of removing a defective vehicle label, one count of failing to wear a seat belt and one count of an offence described as "state false name". There is no dispute between the parties to the appeal that the offence described as "state false name" was an offence of dishonesty. Neither the existence of the notification nor any of the information contained in the documents specified in the notification was disclosed to the appellant by the Tribunal. Proceeding on the mistaken understanding that the appellant had been invited to a scheduled hearing and had failed to attend, the Tribunal made an initial decision in September 2014, affirming the decision of the delegate. The Tribunal's statement of reasons for that initial decision stated that it had "considered all the material before it relating to [the] application". The statement of reasons went on relevantly to explain that, on the "limited and vague evidence", the Tribunal did not accept the appellant's claim to fear harm in connection with the dispute over land in Punjab. The statement of reasons made no reference to the notification or to any information contained in any of the documents specified in the notification. When later it emerged that the appellant had not been notified of the time of the scheduled hearing, the Tribunal accepted advice that the initial decision was affected by jurisdictional error4 and re-opened the review. The Tribunal, constituted by the same member who had made the initial decision, conducted a rescheduled hearing in October 2014 which the appellant attended. The Tribunal made a final decision in November 2014, again affirming the decision of the delegate. The Tribunal's statement of reasons for that final decision set out the member's findings in relation to the appellant's claim to fear harm in connection with the dispute over land in Punjab as follows: "Despite some concerns about the applicant's credibility, I am willing to accept that there was a dispute between his father and his uncle over land in Punjab. I accept that when the applicant visited Amritsar in 2003 or 2004, he was taken to a house by his cousin (though not actually threatened as he stated at the hearing), drugged and held there until his father arrived and paid the amount of $AUD3500 for his release. I accept that the applicant stopped going to the Punjab after this until he came to Australia in 2006. I do not accept that the applicant has been subject to continuing threats in relation to the land dispute because he is the eldest son of his father. The applicant was able to reside in Delhi, India for 2-3 years after the Amritsar incident without facing any further harm from his uncles and his relatives. The Amritsar incident was 12-13 years ago and resolved when the father made payment to his uncle. Furthermore, on the applicant's oral evidence at hearing, in recent times his father has been pressured but not actually harmed or threatened by the relatives despite his father refusing to sign over the land through an affidavit. I do not accept that if the relatives wanted to cf Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR harm the applicant over the land that they would not be threatening or harming his father in circumstances where the dispute originates in relation to the father and the father has the ability to sign a document giving them the land. I do not accept as credible or plausible that simply because his father was in Delhi and not Amritsar that this would completely deter the relatives from undertaking threatening or violent action against his father to obtain legal ownership of the land. The applicant stated at the hearing that his mother's brother was a policeman, which I accept. However, I do not accept as credible or plausible that the relatives would not threaten or harm his father (but would threaten or harm the applicant) because his mother's brother was a policeman. In all the circumstances, I do not accept that the relatives have a continuing adverse interest in the applicant. Considering all the circumstances, I find that the applicant does not face a real chance of persecution in the reasonably foreseeable future in India for any reason ... from his relatives over the land dispute." Like the statement of reasons for the initial decision, the statement of reasons for the final decision made no reference to the notification or to any information contained in any of the documents specified in the notification. The appellant in due course applied to the Federal Circuit Court for judicial review of the final decision of the Tribunal. The Federal Circuit Court dismissed that application in 2016. The appellant next appealed to the Federal Court. The appeal was held in abeyance pending the decision in SZMTA. Following that decision, the notice of appeal to the Federal Court was amended by consent to comprise a single ground of challenge to the final decision of the Tribunal. The single ground of challenge, which had not been raised before the Federal Circuit Court, was that the decision "was affected by jurisdictional error, in that the Tribunal failed to comply with the rules of procedural fairness". There was no dispute between the appellant and the Minister before the Federal Court that the Tribunal's failure to disclose to the appellant the existence of the notification had breached an implied condition of procedural fairness identified in SZMTA. The parties to the appeal were at issue only as to the materiality of that breach to the final decision made by the Tribunal. Reasoning in the Federal Court The Federal Court was constituted for the hearing of the appeal by Mortimer J alone. Her Honour recognised that the issue of materiality turned on whether disclosure to the appellant of the existence of the notification could realistically have resulted in the Tribunal having made a different decision5. Noting that the information covered by the undisclosed notification had been potentially contrary to the interests of the appellant, Mortimer J went on to accept that she could not conclude that disclosure of the notification could realistically have resulted in the Tribunal having made a different decision without first finding that the Tribunal had in fact taken information covered by the notification into account in making the decision6. That accords with the approach taken by the Full Court of the Federal Court earlier in MZAOL v Minister for Immigration and Border Protection7 and more recently in Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v CQZ158. Focusing on the potential for the offence of dishonesty referred to in the Court Outcomes Report covered by the notification to have borne on the Tribunal's rejection of the appellant's claim to fear harm in connection with the dispute over land in Punjab, and unable to find on the evidence before her that the offence of dishonesty had in fact been taken into account by the Tribunal in its findings in relation to that claim9, Mortimer J dismissed the appeal. Mortimer J arrived at that result with evident reluctance. Echoing concerns she had already raised10 and was later to repeat11 about the need to find materiality at all in order to establish jurisdictional error where a breach of a condition of procedural fairness has been found, her Honour described the explanation of materiality in SZMTA as "difficult to understand and apply" and described the [2019] FCA 2024 at [39]. [2019] FCA 2024 at [50]. [2019] FCAFC 68. [2021] FCAFC 24. [2019] FCA 2024 at [52]-[58]. 10 DPI17 v Minister for Home Affairs (2019) 269 FCR 134 at 160-163 [96]-[107]. 11 PQSM v Minister for Home Affairs (2020) 382 ALR 195 at 196-203 [1]-[28]. process of reasoning required to find materiality as "convoluted" and "confusing"12. To an aspect of her Honour's criticism it will be necessary to return. Appeal to this Court In his appeal by special leave to this Court, the appellant does not go so far as to challenge the need to find materiality at all in order to determine that a breach of an implied condition of procedural fairness has resulted in jurisdictional error. He confines his attention to the content of materiality and its proof. By his principal ground of appeal, the appellant disputes that he needed to prove that the Tribunal in fact took information covered by the notification into account in making the decision in order to establish that the failure to disclose the notification was material to the decision. He argues that the explanation of materiality in SZMTA properly understood demanded no more of him than that he demonstrate by way of reasonable conjecture that the Tribunal could have taken information covered by the notification into account adversely to him in making the decision and that, if it did, it could have been persuaded by him to make a different decision if it had disclosed the notification to him. He argues that demonstration of the reasonableness of that conjecture caused the onus to shift to the Minister, as the party to the application for judicial review seeking to uphold the decision of the Tribunal, to prove that disclosure of the notification could not in fact have resulted in the Tribunal having made a different decision. He argues that SZMTA should be re-opened and overruled if that understanding of its proper application is incorrect. By his principal ground of appeal, the appellant also contends that Mortimer J independently erred by erecting and acting on a presumption of fact that the Tribunal did not take information covered by the notification into account in making the decision and casting the onus on him to displace that presumption. He argues that SZMTA should likewise be re-opened and overruled if and to the extent that it supports erection of that presumption. By an additional ground of appeal, the appellant contends that Mortimer J was wrong to confine her consideration of the materiality of the non-disclosure of the notification to the potential for the offence of dishonesty to have borne on the Tribunal's findings in relation to the appellant's claim to fear harm in connection with the dispute over land in Punjab to the exclusion of consideration of the potential for the other offences referred to in the Court Outcomes Report covered [2019] FCA 2024 at [40], [48]. by the notification to have borne on the Tribunal's final decision. That additional ground of appeal raises no additional question of principle. The two strands of the appellant's argument on his principal ground of appeal are best addressed sequentially. To address the first strand necessitates examination of the content and proof of materiality at the level of principle. To address the second necessitates examination of contextual considerations bearing on proof of the materiality of a failure to disclose a notification under s 438(2)(a) of the Act. Materiality and its proof To understand materiality, it is necessary first to understand jurisdictional error. Though the concept of jurisdictional error is rooted in our constitutional history, only in this century has jurisdictional error come to be articulated as an explanation of the scope of the constitutionally entrenched original jurisdiction of this Court to engage in judicial review of the actions of Commonwealth judicial and executive officers13, and hence the scope of the statutory jurisdiction conferred in identical terms on other courts created by the Commonwealth Parliament14, and as an explanation of the scope of the constitutionally entrenched supervisory jurisdiction of State Supreme Courts to engage in judicial review of the actions of State judicial and executive officers15. Our contemporary understanding of jurisdictional error is the product of acceptance of propositions embraced incrementally in decisions of this Court beginning in the final decade of the last century. In their application to an administrative decision made by an executive officer whose decision-making authority is conferred by statute, those core propositions can be expressed as follows. The constitutionally entrenched jurisdiction of a court to engage in judicial review of the decision, where that jurisdiction is regularly invoked, is no more and no less than to ensure that the decision-maker stays within the limits of the decision-making authority conferred by the statute through declaration and 13 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476. 14 Relevantly, s 476 of the Act. 15 Kirk v Industrial Court (NSW) (2010) 239 CLR 531. enforcement of the law that sets those limits16. To say that the decision is affected by jurisdictional error is to say no more and no less than that the decision-maker exceeded the limits of the decision-making authority conferred by the statute in making the decision. The decision for that reason lacks statutory force. Because the decision lacks statutory force, the decision is invalid without need for any court to have determined that the decision is invalid17. The statutory limits of the decision-making authority conferred by a statute are determined as an exercise in statutory interpretation informed by evolving common law principles of statutory interpretation18. Non-compliance with an express or implied statutory condition of a conferral of statutory decision-making authority can, but need not, result in a decision that exceeds the limits of the decision-making authority conferred by statute. Whether, and if so in what circumstances, non-compliance results in a decision that exceeds the limits of the decision-making authority conferred by the statute is itself a question of statutory interpretation19. Having expounded the contemporary understanding of jurisdictional error in substantially those terms20, Kiefel CJ, Gageler and Keane JJ, who constituted the plurality in Hossain, proceeded to enunciate a common law principle of statutory interpretation. The principle enunciated is that a statute conferring decision-making authority is not ordinarily to be interpreted as denying legal force to every decision made in breach of a condition which the statute expressly or impliedly requires to be observed in the course of a decision-making process. The statute is instead "ordinarily to be interpreted as incorporating a threshold of materiality in the event of non-compliance"21. 16 Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 24 [39]. See earlier Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35. 17 Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 18 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at 666 [97]. See earlier Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36. 19 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1. (2018) 264 CLR 123 at 130-134 [17]-[27]. (2018) 264 CLR 123 at 134-135 [29]-[30]. The principle of statutory interpretation enunciated in Hossain reflects what was there described as a "qualitative judgment[] about the appropriate limits of an exercise of administrative power to which a legislature can be taken to adhere in defining the bounds of such authority as it chooses to confer on a repository in the absence of affirmative indication of a legislative intention to the contrary"22. The principle might equally be described as "a common sense guide to what a Parliament in a liberal democracy is likely to have intended"23. The principle accommodates determination of the limits of decision-making authority conferred by statute to the reality that "[d]ecision-making is a function of the real world"24 by distinguishing the express and implied statutory conditions of the conferral from the statutory consequences of breach and by recognising that the legislature is not likely to have intended that a breach that occasions no "practical injustice"25 will deprive a decision of statutory force. Having been enunciated, and subject always to being revisited, the principle can be treated as "a working hypothesis ... upon which statutory language will be interpreted"26. The qualification "ordinarily", and the focus on conditions required to be observed in the course of a decision-making process, are important. The threshold of materiality was not expressed to be additionally required to be met for every breach of every condition of a conferral of statutory decision-making authority to result in a decision-maker having exceeded the limits of the authority conferred by statute in the absence of an affirmative indication of a legislative intention to the contrary. There are conditions routinely implied into conferrals of statutory decision-making authority by common law principles of interpretation which, of their nature, incorporate an element of materiality, non-compliance with which will result in a decision exceeding the limits of decision-making authority without (2018) 264 CLR 123 at 134 [28]. 23 Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 24 Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at 134 [28], quoting Enichem Anic Srl v Anti-Dumping Authority (1992) 39 FCR 458 25 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37]. See Minister for Immigration and Citizenship v SZIZO (2009) 238 CLR 627 at 640 [35]. 26 Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR any additional threshold needing to be met. The standard condition that a decision- maker be free from actual or apprehended bias is one example27. The standard condition that the ultimate decision that is made lie within the bounds of reasonableness is another28. Beyond observing that the threshold of materiality will not ordinarily be met in the event of a failure to comply with a condition of a conferral of statutory decision-making authority "if complying with the condition could have made no difference to the decision that was made in the circumstances in which that decision was made"29, the plurality in Hossain did not elaborate on the content of materiality. Nor was there occasion in Hossain to examine the onus of proof of materiality in an application for judicial review of an administrative decision. Occasion both to examine the content of materiality and to consider the onus of its proof in an application for judicial review of an administrative decision arose in SZMTA. There the majority constituted by Bell, Gageler and Keane JJ held that "[a] breach is material to a decision only if compliance could realistically have resulted in a different decision"30 and that "the question of the materiality of the breach is an ordinary question of fact in respect of which the applicant [for judicial review] bears the onus of proof"31. Those holdings of the majority were determinative of the outcome in SZMTA. In the judgment under appeal in that case, a judge of the Federal Court had found jurisdictional error in a decision of the Tribunal having regard to the "prospect" that the Tribunal had not taken certain documents and information into account in making its decision under review. The majority held the finding to have been erroneous in precisely delineated respects. One was that "his Honour failed to make a finding as to whether the Tribunal had in fact failed to take such documents and information into account in reaching its decision". Another was that, "in the event of finding that the Tribunal had failed to take such documents and information into account, his Honour erred in not going on to determine 27 See CNY17 v Minister for Immigration and Border Protection (2019) 94 ALJR 140 at 151 [47], 155 [70], 164 [129]; 375 ALR 47 at 59, 64, 76. 28 Tsvetnenko v United States of America (2019) 269 FCR 225 at 245-246 [96]-[101]. (2018) 264 CLR 123 at 134-135 [30]. (2019) 264 CLR 421 at 445 [45]. (2019) 264 CLR 421 at 445 [46]. whether the Tribunal's decision could have been different if the Tribunal had taken the documents and information into account"32. Subsequently, in CNY17 v Minister for Immigration and Border Protection33, Kiefel CJ and Gageler J referred to the determination of materiality by a court as involving "a question of counter-factual analysis to be determined by the court as a matter of objective possibility as an aspect of determining whether an identified failure to comply with a statutory condition has resulted in a decision that has in fact been made being a decision that is wanting in statutory authorisation". The same point was made in different language by the Full Court of the Federal Court in BDY18 v Minister for Immigration and Border Protection34, where it said that "[m]ateriality is concerned with the significance of the failure to conform to the statutory task entrusted to the decision-maker" and that "[t]he inquiry is backward looking and concerns what the decision-maker did in the particular case". The counterfactual question of whether the decision that was in fact made could have been different had there been compliance with the condition that was in fact breached cannot be answered without determining the basal factual question of how the decision that was in fact made was in fact made. Like other historical facts to be determined in other civil proceedings35, the facts as to what occurred in the making of the decision must be determined in an application for judicial review on the balance of probabilities by inferences drawn from the totality of the evidence. And like other counterfactual questions in civil proceedings as to what could have occurred – as distinct from what would have occurred – had there been compliance with a legal obligation that was in fact breached36, whether the decision that was in fact made could have been different had the condition been complied with falls to be determined as a matter of reasonable conjecture within the parameters set by the historical facts that have been determined on the balance of probabilities. (2019) 264 CLR 421 at 451 [69]. (2019) 94 ALJR 140 at 151 [47]; 375 ALR 47 at 59. (2020) 273 FCR 170 at 187 [87]-[88]. 35 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 350, referring to Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 639-640, 642-643. 36 Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 639-640, 642-643. See also Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 575. Bearing the overall onus of proving jurisdictional error37, the plaintiff in an application for judicial review must bear the onus of proving on the balance of probabilities all the historical facts necessary to sustain the requisite reasonable conjecture. The burden of the plaintiff is not to prove on the balance of probabilities that a different decision would have been made had there been compliance with the condition that was breached. But the burden of the plaintiff is to prove on the balance of probabilities the historical facts necessary to enable the court to be satisfied of the realistic possibility that a different decision could have been made had there been compliance with that condition. There is no reason to consider that the burden placed on the plaintiff of proving on the balance of probabilities the historical facts necessary to enable the court to be satisfied of the realistic possibility that a different decision could have been made had there been compliance with the condition that has been breached is significantly more onerous than the burden indisputably borne by the plaintiff of proving on the balance of probabilities the historical facts necessary to enable the court to be satisfied that the condition has in fact been breached. And especially in a case such as the present, where the principle in R v Australian Broadcasting Tribunal; Ex parte Hardiman38 prevents a decision-maker appearing as an active party in a proceeding for judicial review of one of its decisions, there is no reason to consider that the burden would more fittingly be borne by the active defendant in a proceeding for judicial review to prove the historical facts necessary to enable the court to be satisfied that a different decision could not have been made. In support of his argument that the onus should shift to the Minister to disprove materiality, the appellant relies on several decisions of this Court before Hossain and SZMTA. Neither individually nor cumulatively do those decisions indicate that a different analysis is warranted. Balenzuela v De Gail39, the earliest of the decisions on which the appellant relies, concerned the grant of a new trial at common law where evidence was found to have been wrongly rejected in a trial before a civil jury. The principles governing the grant by a court of a new trial at common law can at best be applied by analogy 37 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 616 [67], 623 [91]-[92]; Plaintiff M64/2015 v Minister for Immigration and Border Protection (2015) 258 CLR 173 at 185 [24]; BVD17 v Minister for Immigration and Border Protection (2019) 93 ALJR 1091 at 1100 [38]; 373 ALR 196 at 205. (1980) 144 CLR 13 at 35-36. (1959) 101 CLR 226. to the discernment by a court of jurisdictional error. Because those principles concern the legal consequence for an ultimate decision of a legal error in the process that led to that decision, however, the analogy is close. In Balenzuela40, Dixon CJ endorsed the view expressed by Higgins J in Robinson & Vincent Ltd v Rice41 that at common law, as under the judicature rule, a court would not grant a new trial on the ground of improper rejection of evidence unless satisfied that "some substantial wrong or miscarriage [had] been thereby occasioned". Dixon CJ went on to hold that it was enough for a court to be satisfied of a substantial wrong or miscarriage that "evidence definitely material to the determination of the case" was wrongly excluded at the instance of the successful party42. In referring to evidence "definitely material to the determination of the case", his Honour was referring to evidentiary material within the category of evidentiary materials he had earlier referred to as "evidentiary materials by which it is not an unreasonable hypothesis to suppose the judgment of the jury might be affected, even if illogically"43. The "basal fact" warranting the grant of a new trial in the case was that "material evidence was erroneously excluded from the consideration of the jury". Outside the province of the court in deciding that a new trial was warranted was either "to inquire into the effect which the evidence if admitted would produce upon the [c]ourt if the [c]ourt were the tribunal of fact" or "to speculate on the effect which it would have produced on the jury"44. Taylor J referred similarly to "material evidence"45. The Court in Dairy Farmers Co-operative Milk Co Ltd v Acquilina46 was constituted by Justices who included all other Justices who had constituted the Court in Balenzuela. The unanimous reasons for judgment of the Court in Acquilina referred to the law laid down in Balenzuela as no different from that laid (1959) 101 CLR 226 at 235. (1926) 38 CLR 1 at 10. (1959) 101 CLR 226 at 237. (1959) 101 CLR 226 at 236. (1959) 101 CLR 226 at 236-237. (1959) 101 CLR 226 at 238. (1963) 109 CLR 458. down more than one hundred years earlier in Crease v Barrett47. There it had been said that a court would be justified in refusing to grant a new trial in a case where evidence was improperly rejected "where, assuming the rejected evidence to have been received, a verdict in favour of the party for whom it was offered would have been clearly and manifestly against the weight of evidence". The Court added in Acquilina that "clear" from Balenzuela was "that a new trial ought not to be ordered if the Court is satisfied that if the rejected evidence had been received it could not have affected the jury's verdict"48. After a detailed examination of the evidence that had been led at the trial in that case, the Court in Acquilina was satisfied that reception of the wrongly rejected evidence could not have affected the jury's verdict and on that basis concluded that there was no justification for a new trial to have been ordered. Stead v State Government Insurance Commission49, the next of the decisions on which the appellant relies, concerned the grant of a new trial by an appellate court on an appeal by way of rehearing where procedural unfairness had occurred in the conduct of a trial before a judge alone. Because procedural unfairness can result in jurisdictional error, the analogical force of the reasoning in Stead is especially strong, as was recognised in SZMTA50. The unanimous holding in Stead was captured in the statement of the Court that, to obtain an order for a new trial, "[a]ll that the appellant needed to show was that the denial of natural justice deprived him of the possibility of a successful outcome" and that "[i]n order to negate that possibility, it was ... necessary for the [intermediate appellate court] to find that a properly conducted trial could not possibly have produced a different result"51. It may be said immediately that it would plainly be wrong to understand that statement as conveying that the appellant did not need to show that the denial of procedural fairness had deprived him of the possibility of a successful outcome in order to obtain an order for a new trial. To say that a demonstration that the appellant had been deprived of the opportunity of a successful outcome is an aspect of proof of procedural unfairness (1835) 1 C M & R 919 at 933 [149 ER 1353 at 1359]. (1963) 109 CLR 458 at 463. (1986) 161 CLR 141. (2019) 264 CLR 421 at 445-446 [49]. cf Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [26]. (1986) 161 CLR 141 at 147 (emphasis added). is necessarily to accept that procedural unfairness is a matter of practical injustice, so that a demonstration of a bare or merely technical denial of procedural fairness alone is not sufficient to establish an entitlement to a new trial. Fully to appreciate the content of that statement about the need for an unnegated possibility, it is necessary to appreciate the procedural and factual context in which the statement was made. Necessary to appreciate is that the context was a contested appeal before an intermediate appellate court. The record before the appellate court showed that, in the trial of an action for damages for personal injury arising out of a motor vehicle accident, counsel for the appellant plaintiff had in fact sought to submit to the trial judge that evidence given by a doctor to the effect that there was no causal link between the accident and the appellant's condition should not be believed. The record showed that counsel had in fact been stopped by the trial judge from making that submission. The record further showed that the trial judge had gone on in a reserved judgment to accept the evidence of the doctor and to find that there was no causal link between the accident and the appellant's condition. Plainly, what was being said in Stead was that those facts, appearing starkly on the face of the appellate record, should have been sufficient to satisfy the intermediate appellate court that there was a realistic possibility that the trial judge could have found a causal link between the accident and the appellant's condition had counsel been permitted to complete his submission. There was no need for the appellant to lead evidence of what counsel would have submitted to the trial judge about why the evidence of the doctor should not have been believed and there was no need for the appellant to prove on the balance of probabilities that the trial judge would have found the submission of counsel persuasive. But equally, what was being acknowledged in Stead was that there might have been other facts disclosed by the appellate record that undermined the realistic possibility of the trial judge having found a causal link between the accident and the appellant's condition had counsel been permitted to complete his submission. Within the forensic contest of the appeal, it was open to the respondent in argument to seek to identify those facts and to persuade the appellate court that the possibility was not realistic. That might have been a tall order given the centrality of the issue on which counsel had not been permitted to complete his submission, but not an inherently impossible one. Whether the appellate court was or was not satisfied that the appellant had been deprived of the realistic possibility of the trial judge having found a causal link would then fall to be determined at the end of the whole of the argument on the appeal having regard to inferences available to be drawn from the whole of the appellate record. Once it is acknowledged that the inquiry postulated by Stead was as to whether or not the appellate court was ultimately to be satisfied that the outcome of the trial could realistically have been different had the procedural error that in fact occurred not occurred, what becomes apparent is that the inquiry postulated by Stead was not different in substance from the inquiry postulated by Balenzuela as explained in Acquilina. What also becomes apparent is that, although directed to determining whether an error in a decision-making process engaged in by a court should result in an order for a new trial, the inquiries postulated by Balenzuela and Stead are not different in substance from the inquiry postulated by SZMTA directed to determining whether an error in a decision-making process engaged in by an administrator has resulted in jurisdictional error. Just as a court called upon to determine whether a new trial should be ordered must be careful not to assume the function of the primary trier of fact (whether it be a judge or a jury), so a court called upon to determine whether jurisdictional error has occurred must be careful not to assume the function of the decision-maker. Faced with a procedural irregularity having been shown to have occurred in a decision-making process, the court is nevertheless in each case charged with the responsibility of determining for itself whether the result in fact arrived at by the decision-maker in the decision-making process could realistically have been different had that procedural irregularity not occurred. To the extent that there can be said to be a difference between the approach that Balenzuela and Stead indicate is to be taken to the grant of a new trial and the approach that SZMTA indicates is to be taken to the determination of jurisdictional error, the difference lies not in the substance of the counterfactual inquiry that must be undertaken but in the identification of the factual foundation on the basis of which the counterfactual conjecture of a realistic possibility falls to be assessed. In an application for a new trial, the decision-making process in fact engaged in by a court will almost invariably appear on the face of the appellate record. In an application for judicial review of an administrative decision, the decision-making process in fact engaged in by the decision-maker will inevitably need to be proved by inferences drawn from admissible evidence to the extent that it is in controversy. The substantial correspondence between the Balenzuela and Stead approach to the grant of a new trial and the SZMTA approach to the determination of jurisdictional error was presaged in Nobarani v Mariconte52, which was decided on the same day as Hossain. Balenzuela and Stead were there stated to reflect a requirement that "the error must usually be material in the sense that it must (2018) 265 CLR 236 at 247 [38]. deprive the party of the possibility of a successful outcome". By reference to the holding in Hossain, the same requirement was said to be reflected also in the ordinary requirement for an error to be considered jurisdictional. Next chronologically in the decisions of this Court preceding Hossain and SZMTA on which the appellant relies is Kioa v West53. The appellant seeks to support a more limited fact-finding role by a court by parsing some of the reasoning of some members of the Court in relation to the facts. Kioa v West was a landmark decision in the development of our understanding of the content and provenance of obligations to afford procedural fairness in the context of statutory decision-making. Having arisen under the Administrative Decisions (Judicial Review) Act 1977 (Cth), however, Kioa v West has nothing to say about jurisdictional error. Much more to the point is the appellant's reliance on Re Refugee Review Tribunal; Ex parte Aala54. Aala was not only a case about jurisdictional error; it was the case that established that non-compliance with a statutory obligation to afford procedural fairness can result in jurisdictional error attracting relief in the constitutionally entrenched original jurisdiction of this Court. One of the arguments put to the Court in Aala was cast in terms that, to attract relief, the non- compliance "must be sufficiently serious to allow the process to be characterised as beyond power, as involving procedural ultra vires"55. The argument was dealt with differently in the reasoning of different members of the Court. Notably, all the responses to the argument invoked Stead. McHugh J foreshadowed Hossain and SZMTA in emphasising that not every denial of procedural fairness occurring in a decision-making process necessarily affects the decision that results from that process56. Satisfied that there was "no realistic possibility" that the decision-maker could have been persuaded to take a different view of the prosecutor's credibility had the prosecutor been afforded procedural fairness, his Honour would have dismissed the application for judicial review on the basis that the denial of procedural fairness had not deprived the prosecutor of the possibility of a successful outcome57. His view of the facts, (1985) 159 CLR 550. (2000) 204 CLR 82. (2000) 204 CLR 82 at 87. (2000) 204 CLR 82 at 122 [104]. (2000) 204 CLR 82 at 127-128 [121]-[122]. however, was a minority view. Separately analysing the facts, Gleeson CJ58, Kirby J59 and Callinan J60 each expressed themselves to be satisfied that the decision-maker could have taken a different view of the prosecutor's credibility had the prosecutor been afforded procedural fairness and that a decision favourable to the prosecutor could have been reached had the decision-maker accepted the prosecutor's credibility. The reasoning of Gaudron and Gummow JJ, with which Hayne J relevantly agreed, was more complex. The reasoning contains passages that can be read as stating that even a "trivial" denial of procedural fairness amounts without more to a jurisdictional error and as relegating any consideration of the significance of the denial of procedural fairness to the decision that was made to be taken into account by a court, if at all, in exercising discretion to grant relief once jurisdictional error has been found61. Tellingly, however, after undertaking their own factual analysis of the decision-making process that had occurred, their Honours borrowed from the language of Stead to conclude that "the denial of natural justice deprived [the prosecutor] of the possibility of a successful outcome"62. Despite differences in emphasis and expression, the reasoning of all members of the Court in Aala to the result in that case was ultimately not inconsistent with the prosecutor having borne the onus of establishing that compliance with procedural fairness could realistically have resulted in a different decision. Finally, the appellant places reliance on Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs63 and on reasoning of Gageler and Gordon JJ in Minister for Immigration and Border Protection v WZARH64. Whilst it may be accepted that the breach of procedural fairness found to have occurred in VEAL was not analysed in terms of materiality, having regard (2000) 204 CLR 82 at 88-89 [3]-[4]. (2000) 204 CLR 82 at 130-132 [130]-[134]. (2000) 204 CLR 82 at 153-155 [211]. (2000) 204 CLR 82 at 101 [41], 106-110 [51]-[62]. (2000) 204 CLR 82 at 116-117 [80]. (2005) 225 CLR 88. (2015) 256 CLR 326. to the centrality and prejudicial nature of the undisclosed information which had in fact been taken into account by the decision-maker despite being said to have been given "no weight", it is not at all difficult to regard the outcome in that case as consistent with a requirement for a breach of procedural fairness to be material in order to result in jurisdictional error. The reasoning in WZARH on which the appellant places reliance was introduced with citation to Stead by express recognition that breach of the condition of procedural fairness implied into the statutory power in issue in that case would have been "material" only if it deprived the applicant of "the possibility of a successful outcome"65. Implicit in the characterisation of the case as one in which "practical injustice" lay in the denial of "an opportunity which in fairness ought to have been given"66 was that the case was one in which that previously identified threshold of materiality was met67. Accordingly, the decisions on which the appellant relies provide no support for the shift in onus for which he contends. Where materiality of a breach of an express or implied condition of a conferral of statutory decision-making authority is in issue in an application for judicial review of a decision on the ground of jurisdictional error, the onus of proving by admissible evidence on the balance of probabilities historical facts necessary to satisfy the court that the decision could realistically have been different had the breach not occurred lies unwaveringly on the plaintiff. Proof of materiality of a failure to disclose a notification under s 438(2)(a) of the Act Necessary next is to consider the more specific question of what historical facts a plaintiff in an application for judicial review must prove in order to establish the materiality of a breach of procedural fairness constituted by failure on the part of the Tribunal, in the conduct of a review under Pt 7, to disclose the existence of a notification by the Secretary under s 438(2)(a) that s 438(1)(b) applied to information contained in documents given to the Tribunal by the Secretary pursuant to the procedural obligation imposed on the Secretary by s 418(3). (2015) 256 CLR 326 at 341 [55]-[56]. (2015) 256 CLR 326 at 343 [60]. (2015) 256 CLR 326 at 343-345 [62]-[69]. The automatic statutory consequences of a notification under s 438(2)(a), spelt out in SZMTA68, are that the Tribunal has no power to take information covered by the notification into account in making its decision unless it affirmatively exercises the discretion conferred by s 438(3)(a) and has no power to disclose that information to the applicant for review unless it affirmatively exercises the discretion conferred by s 438(3)(b). Also spelt out in SZMTA69 is that the Tribunal is obliged to exercise those discretions within the bounds of reasonableness and is obliged to perform its procedural obligations under ss 424AA, 424A and 425 to the maximum extent permitted by the reasonable exercise of the discretion conferred by s 438(3)(b). It is precisely because a notification has those statutory consequences that the implied condition of procedural fairness requiring the Tribunal to give the applicant for review notice of the notification was held in SZMTA to arise70. Armed with notice of the notification, the applicant for review becomes equipped to exercise the general entitlement that he or she has under s 423 specifically to present legal and factual argument to the Tribunal for a favourable exercise of the discretions conferred by s 438(3)(a) and (b)71. The materiality of a failure to disclose a notification under s 438(2)(a) must in that context turn on the potential for information covered by the notification to have borne on the decision which the Tribunal in fact made on the review and on how the Tribunal in fact dealt with that information in making that decision. The potential for information covered by the notification to have had some subconscious impact on the Tribunal in making the decision can for a moment be deferred. As to the potential for information covered by the notification to have impacted on the Tribunal's conscious deliberation if taken into account in making the decision, two categories of case have been shown to have arisen. The first category of case, illustrated by SZMTA, is where information covered by the undisclosed notification might have the potential to have borne on the decision in a manner helpful to the applicant. Logically, disclosure of the notification in a case in that first category could not have resulted in the Tribunal making a different decision if the Tribunal did in fact take the information into account in making the decision that it did. Hence, it was emphasised in SZMTA (2019) 264 CLR 421 at 439 [23]-[24]. (2019) 264 CLR 421 at 439 [24]. (2019) 264 CLR 421 at 440-441 [29]-[30]. (2019) 264 CLR 421 at 441 [30]-[31]. that a necessary but not sufficient step in establishing the materiality of non- disclosure in that case was proof on the balance of probabilities that the Tribunal did not take the potentially supportive information into account in making its decision. The second category of case, illustrated by the circumstances giving rise to this appeal, as well as by MZAOL and CQZ15, is where information covered by the undisclosed notification might have the potential to have borne on the decision in a manner adverse to the interests of the applicant. Logically, disclosure of the notification in a case in that second category could not have resulted in the Tribunal making a different decision if the Tribunal did not in fact take the information into account in making the decision that it did. Hence, as was recognised by Mortimer J and emphasised by the Full Courts in both MZAOL and CQZ15, a necessary but not sufficient step in establishing non-disclosure to have been material in a case in that category is proof on the balance of probabilities that the Tribunal did take the potentially adverse information into account in making its decision. There is no reason to think that the ease or difficulty of discharging the burden of proof should in practice be the same for a plaintiff in each category of case. To the contrary, the statutory consequences of giving a notification for the procedure to be adopted by the Tribunal provide reason to think that in practice an inference that the Tribunal did not take potentially helpful information into account in making its decision will more readily be drawn on the balance of probabilities than will an inference that the Tribunal did take potentially adverse information into account in making its decision. That is because, as the majority observed in SZMTA72, "[t]he drawing of inferences can be assisted by reference to what can be expected to occur in the course of the regular administration of the Act". The majority continued: "[T]he Tribunal can be expected in the ordinary course to treat a notification by the Secretary that the section applies as a sufficient basis for accepting that the section does in fact apply to a document or information to which the notification refers. Treating the section as applicable to a document or information, the Tribunal can then be expected in the ordinary course to leave that document or information out of account in reaching its decision in the absence of the Tribunal giving active consideration to an exercise of discretion under s 438(3). Absent some contrary indication in the statement of the Tribunal's reasons for decision or elsewhere in the evidence, a court on judicial review of a decision of the Tribunal can therefore be justified in (2019) 264 CLR 421 at 445 [47]. inferring that the Tribunal paid no regard to the notified document or information in reaching its decision." That observation of the majority was singled out for criticism by Mortimer J in the judgment under appeal as appearing to require a court on judicial review of a decision of the Tribunal to apply a "presumption" that the Tribunal did not take information covered by a notification into account in making the decision73. The observation was not so stated and should not be so interpreted. The observation is no different in its significance or its generality from the routinely cited and routinely illustrated observation in Minister for Immigration and Multicultural Affairs v Yusuf74 to the effect that the obligation imposed on the Tribunal by s 430(1)(c) to set out its findings on material questions of fact entitles a court to infer that a matter not mentioned by the Tribunal in the statement of the reasons that it in fact gives for its decision was not considered by it to be material. The plaintiff on an application for judicial review of a decision of the Tribunal faces no presumptive impediment to the discharge of his or her burden of proof. Whether or not the plaintiff has discharged the burden of proving on the balance of probabilities that particular information covered by a particular notification was or was not taken into account by the Tribunal in making the decision under review falls to be determined at the end of the day by reference to inferences appropriate to be drawn from the totality of the evidence adduced on the application. Before turning to examine whether the appellant discharged his burden of proving on the balance of probabilities that the Tribunal took potentially adverse information covered by the notification into account in making its final decision in the present case, it is appropriate to return to the topic of the potential for information covered by a notification to have had a subconscious impact on the Tribunal even if the Tribunal did not consciously take that information into account. The potential arises from the availability of an inference, which the appellant seeks to call in aid, that the Tribunal can be expected in the conduct of a review at least to look at information covered by a notification for the purpose of considering exercise of the discretions conferred by s 438(3)(a) and (b). Quite apart from practical difficulties inhering in proof of a subconscious impact, there is a conceptual difficulty in fathoming how the potential for information covered by a notification to have had an impact on the subconscious [2019] FCA 2024 at [43]. (2001) 206 CLR 323 at 346 [69]. of a member who constitutes the Tribunal can properly bear on the legal consequence of a failure to discharge the procedural obligation that it breaches through non-disclosure of a notification. As was noted in Minister for Immigration and Border Protection v SZSSJ75, whilst "compliance with an implied condition of procedural fairness requires the repository of a statutory power to adopt a procedure that is reasonable in the circumstances to afford an opportunity to be heard to a person who has an interest apt to be affected by exercise of that power", "[o]rdinarily, there is no requirement that the person be notified of information which is in the possession of, or accessible to, the repository but which the repository has chosen not to take into account at all in the conduct of the inquiry". There is an oddity in conceiving of the opportunity to be heard of which the appellant was deprived by non-disclosure of the notification as a lost opportunity to present legal and factual argument to the Tribunal directed to the Tribunal's subconscious. There is a similar oddity in thinking that the Tribunal was required to examine its own subconscious in considering the exercise of the discretions conferred by s 438(3)(a) and (b). Best is to conceive of the potential for information covered by a notification to have had a subconscious impact on the Tribunal not as bearing on the statutory consequence of non-compliance with the Tribunal's procedural fairness obligation to give notice of the notification but rather as having the potential to bear on the discharge of the Tribunal's distinct obligation of procedural fairness to ensure that what occurs in the conduct of the review "is never such that a fair-minded lay observer properly informed as to the nature of the procedure for which [Pt 7] provides might reasonably apprehend that the [Tribunal] might not bring an impartial and unprejudiced mind to the resolution of the factual and legal questions that arise for its decision in the conduct of a review"76. In the case of potentially adverse information covered by a notification that has not been proven to have been taken into account by the Tribunal in making its decision, a question for a court on judicial review in an appropriate case can still remain whether the information was so "highly prejudicial" to the applicant for review that "the fair-minded lay observer, acting reasonably, would not dismiss the possibility that the [Tribunal] may have been affected by [the information] (2016) 259 CLR 180 at 206-207 [82]-[83]. 76 CNY17 v Minister for Immigration and Border Protection (2019) 94 ALJR 140 at 146-147 [17]; 375 ALR 47 at 52. albeit subconsciously"77. So much was illustrated by the approach taken in CQZ15. The Full Court there found that a breach by the Tribunal of its procedural fairness obligation to give notice of a notification did not result in jurisdictional error because the Tribunal did not in fact take the highly prejudicial information covered by the notification into account in making the decision. The Full Court nevertheless went on to find that the decision was affected by jurisdictional error on the basis that "[t]he fair-minded lay observer might entertain the possibility that, having read the information for the purpose of considering the discretion in s 438(3), the Tribunal might have been subconsciously influenced by the prejudicial information ... in making its decision"78. The structure of that analysis undertaken by the Full Court was sound in principle. Failure of proof of materiality Turning to the circumstances of the present case, there would be no difficulty in accepting as a realistic possibility that the final decision of the Tribunal could have been different had the Tribunal in fact taken the offence of dishonesty referred to in the Court Outcomes Report covered by the undisclosed notification into account in assessing the appellant's credit to reject the appellant's claim to fear harm in connection with the dispute over land in Punjab. The determinative question is whether the Tribunal in fact so took the offence into account. The answer is that there is simply no basis in the evidence to find on the balance of probabilities that it did. The fact that the Tribunal breached one procedural obligation by failing to disclose to the appellant the existence of the notification provides no foundation in the circumstances of the case for inferring that it had breached others. Nothing in its statement of reasons for the final decision, or elsewhere in the evidence, contains any hint that the Tribunal failed to heed the automatic statutory consequences of the notification or that the Tribunal made a choice affirmatively to exercise the discretion conferred by s 438(3)(a) to take the offence of dishonesty into account but not the discretion conferred by s 438(3)(b) to draw the information that it had about that offence to the attention of the appellant. The general reference 77 CNY17 v Minister for Immigration and Border Protection (2019) 94 ALJR 140 at 148-149 [29]; 375 ALR 47 at 55, quoting Minister for Immigration and Border Protection v AMA16 (2017) 254 FCR 534 at 552 [75]. [2021] FCAFC 24 at [116]. in the statement of reasons for the Tribunal's initial decision to it having considered all the material before it cannot sensibly be read as indicating otherwise. And nothing in the Tribunal's findings in relation to the appellant's claim to fear harm in connection with the dispute over land in Punjab set out in the statement of reasons for its final decision suggests that it took an adverse view of his credit that was incapable of explanation other than by reference to the Tribunal having treated him with distrust because he had been convicted of the offence of dishonesty. On a fair reading of the statement of reasons, the Tribunal did not disbelieve the appellant's account of the historical circumstances of the dispute. The Tribunal's scepticism was directed to the appellant's account of the ongoing consequences of the dispute. What the Tribunal found in substance was that those ongoing consequences did not provide an objective basis for the appellant to entertain a reasonable fear. Notwithstanding any weight Mortimer J may have accorded to what she wrongly characterised as a "presumption" emerging from the observation of the majority in SZMTA in the passage of which she was critical, her Honour was undoubtedly correct in finding that the Tribunal's statement of reasons "[did] not disclose any real assessment of the appellant's honesty at all, let alone an assessment of a kind that might suggest its reasoning was affected by the presence of the 'State false name' conviction in the ... notification information"79. Her Honour's conclusion that the appellant had failed to discharge the onus of proving that the Tribunal in fact took the offence of dishonesty into account in making the final decision was not affected by appealable error. No error in not considering other offences Left to last is the appellant's argument that Mortimer J was wrong to confine her consideration of materiality to the offence of dishonesty to the exclusion of consideration of the other offences referred to in the Court Outcomes Report. The Minister points out that the argument contradicts the appellant's position before Mortimer J that the offence of dishonesty was the only offence rationally capable of affecting the final decision. That would be a compelling reason to revoke special leave to appeal on the additional ground. The Minister, however, does not seek that revocation. The additional ground of appeal stands. The merits of the appellant's argument on it must therefore be addressed. [2019] FCA 2024 at [57]. The short and complete answer to the argument is an extrapolation from what has already been said about the failure of the appellant to prove that the Tribunal in fact took the offence of dishonesty into account. There is simply no basis in the evidence to find on the balance of probabilities that the Tribunal took any part of the information covered by the notification into account in making the decision. The appellant has not sought to argue that the information about the offences was cumulatively so highly prejudicial to the appellant as to lead to the conclusion that a fair-minded lay observer might reasonably apprehend that the Tribunal might not have brought an impartial and unprejudiced mind to the conduct of the review. The nature of the offences, in any event, provides no foundation for such an argument. The offences are not so serious that their accumulation might reasonably be argued to be capable of leading a fair-minded lay observer to think that the Tribunal might not bring an impartial and unprejudiced mind to bear on its determination of the merits of any claim in issue in the review. Disposition The appeal must be dismissed with costs. GordonJ GORDON AND STEWARD JJ. This appeal concerns judicial review of administrative action for jurisdictional error. The Court has recently divided about the content of the applicable principles80. Identifying those principles demands attention to the significance of the fact that the Court is concerned with the exercise of public power by the State against an individual and the consequences for the administration of justice. The applicable principles should now be restated. Non-compliance with an express or implied condition of an exercise of power will result in a decision exceeding the limits of the decision-making authority conferred by statute unless compliance with the condition could not have made a difference to the decision that was made in the circumstances in which the decision was made. There are evidently two steps. First, it is necessary for an applicant for judicial review to identify an error and establish that the identified error could realistically have resulted in a different decision. This sets a low bar. It would be a mistake to describe this as an evidentiary onus. The task of demonstrating that a decision could realistically have been different had an error not occurred is better understood as directed at the quality or severity of the error and what, as a matter of logic and common sense, might have resulted. It necessarily calls for an assertion as to how a decision might have been different and an explanation as to why that is so. But because the bar is low, a court should hesitate to reject a sensible and reasonable postulation about what the result could have been. Naturally, speculation and conjecture will not be sufficient. More is needed. But it is not necessarily a task which is determined by leading evidence and by demonstrating what is possible on the balance of probabilities. That is because the subject matter of the inquiry is hypothetical; it is not a matter of proving what could have happened. Rather, the task is one of persuasion, based upon the nature of the breach and the claims that have been made, as well as logic and common sense. Put in different terms, precisely what must be shown will depend upon the nature of the alleged error. In some cases, however, an error will be jurisdictional regardless of the effect the error may have had on the conclusion of the decision-maker. If the applicant cannot establish such an error, the judicial review application fails. If, however, the applicant does establish such an error, the issue of materiality is then raised. It then is necessary for the respondent to establish that that error was immaterial – that compliance with the condition could not have made a difference to the decision that was made – in order to establish that 80 Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123; Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421; ABT17 v Minister for Immigration and Border Protection (2020) 94 ALJR 928; 383 ALR 407. GordonJ non-compliance with the condition did not lead to jurisdictional error. It is convenient to refer to this second aspect of the rule as an issue about "materiality". The two steps are different. The two steps are directed at different ends. The first step is for the applicant to establish a connection or relationship between the identified default and the course of decision-making actually followed. It does not require the applicant to predict or conjecture about what the decision-maker could or might have done if there had been no error. (And, as has been observed, there will be cases where the error made is of such a kind that the error will be jurisdictional regardless of its effect on the outcome of the particular case.) The second step, if it is reached, requires the decision-maker to show that the error could not have made a difference. The restated principles differ from the approach adopted by the majority in this Court in Minister for Immigration and Border Protection v SZMTA81. There the majority said that the applicant bore the onus of showing that the error was material. But the question of onus was not the subject of submissions and was not decisive of the result82. This is the first case in which the Court has considered the issue of onus with the benefit of argument. As these reasons will show, the restated approach is both principled and practical. Public power We are concerned with the application of public power to individuals. That always requires justification. The justification here is statute. It must now be accepted that breach of a condition regulating the exercise of a statutory power does not always mean that the exercise of power is invalid and of no effect83. Fundamental principle requires the conclusion that, subject to contrary legislative intention, where an applicant shows a decision-maker to have failed to comply with a statutory condition, and where that failure could realistically have affected the outcome, it is for the respondent (the Executive) to establish that compliance with the condition could not have made a difference to the outcome. (2019) 264 CLR 421. 82 SZMTA (2019) 264 CLR 421 at 444 [41]; cf John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-440. 83 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 388-391 [91]-[93]; Hossain (2018) 264 CLR 123 at 134-135 [29]-[30], 136 [39], 145 [65]; SZMTA (2019) 264 CLR 421 at 433 [2]-[3], 458 [90]; ABT17 (2020) 94 ALJR 928 at 948 [72], 954-955 [110]; 383 ALR 407 at 429-430, 438-439. GordonJ It is not for the individual affected by the wrongful exercise of power to establish that it could have made a difference to the outcome. The Constitution "is framed upon the assumption of the rule of law"84. The precise meaning of the rule of law may be, and often is, contested. But what is in issue in this appeal takes the content of the rule of law at its narrowest. That one "cardinal principle" of the rule of law, the irreducible minimum about which there is not and cannot be any debate, is "that Government should be under law, that the law should apply to and be observed by Government and its agencies, those given power in the community, just as it applies to the ordinary citizen"85. As Sir John Laws has written, the "agreed beginning" for debates about the rule of law is "that State power must be exercised in accordance with promulgated, non-retrospective law made according to established procedures"86. Section 75(v) of the Constitution – which confers jurisdiction on the High Court in all matters in which a writ of mandamus, or prohibition, or an injunction, is sought against an officer of the Commonwealth – "secures [that] basic element of the rule of law"87. The individual who is subject to the exercise of public power is "provided with a mechanism to challenge the lawfulness of the exercise of official power"88. In Australia, the separation of the judicial power of the Commonwealth from executive and legislative powers by Ch III of the Constitution recognises the "deeply rooted notions of the relationship of the individual to the state going to the character of the national polity created and sustained by the Constitution"89. 84 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 492 [31]. See also Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193; Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 24 85 Stephen, "The Rule of Law" (2003) 22(2) Dialogue 8 at 8. See also Laws, The Constitutional Balance (2021) at 13, 15. 86 Laws, The Constitutional Balance (2021) at 15. 87 Plaintiff S157 (2003) 211 CLR 476 at 482-483 [5]. 88 French, "Administrative Law in Australia: Themes and Values Revisited", in Groves (ed), Modern Administrative Law in Australia: Concepts and Context (2014) 24 at 29. See also Plaintiff S157 (2003) 211 CLR 476 at 482-483 [5]. 89 Magaming v The Queen (2013) 252 CLR 381 at 400 [63]. GordonJ Chapter III of the Constitution "reflects and protects"90 that relationship, recognising that Ch III is the "only general guarantee of due process" in a controversy between the Executive and the individual91. Where, as here, the law is concerned with the exercise of executive power, "judicial review is a principal engine of the rule of law"92. As Brennan J said in Church of Scientology v Woodward93: "Judicial review is neither more nor less than the enforcement of the rule of law over executive action; it is the means by which executive action is prevented from exceeding the powers and functions assigned to the executive by law and the interests of the individual are protected accordingly". (emphasis added) Judicial review ensures that the Executive does not exceed its powers94. It ensures that decision-makers "obey the law and neither exceed nor neglect any jurisdiction which the law confers on them"95. In particular, it ensures that 90 Magaming (2013) 252 CLR 381 at 401 [67]. 91 Magaming (2013) 252 CLR 381 at 400 [64], quoting Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 580. See also Plaintiff S157 (2003) 211 CLR 476 at 513-514 [104]; R (Lord Carlile of Berriew) v Secretary of State for the Home Department [2015] AC 945 at 981-982 [56]; In re McGuinness [2021] AC 392 at 415 [64]. 92 R (Cart) v Upper Tribunal (Public Law Project intervening) [2011] QB 120 at 137 [34]. See also R (Cart) v Upper Tribunal (Public Law Project intervening) [2012] 1 AC 663 at 680 [30]; R (Privacy International) v Investigatory Powers Tribunal [2020] AC 491 at 543 [116], 571 [190]; Gageler, "The Constitutional Dimension", in Groves (ed), Modern Administrative Law in Australia: Concepts and Context (1982) 154 CLR 25 at 70. See also Re Minister for Immigration and Multicultural Affairs; Ex parte Abebe [No 1] (1997) 72 ALJR 574 at 577 [18]; 151 ALR 711 at 715; Plaintiff S157 (2003) 211 CLR 476 at 492 [31], 513-514 [104]; Combet v The Commonwealth (2005) 224 CLR 494 at 579 [167]; Argos Pty Ltd v Corbell (2014) 254 CLR 394 at 411 [48]; Graham (2017) 263 CLR 1 at 24-26 [39]-[44]. 94 Plaintiff S157 (2003) 211 CLR 476 at 492 [31], 513-514 [104]. See also Smethurst v Commissioner of the Australian Federal Police (2020) 94 ALJR 502 at 535 [134], 546 [181]; 376 ALR 575 at 608-609, 622. 95 Plaintiff S157 (2003) 211 CLR 476 at 514 [104]. See also Crawford and Boughey, "The Centrality of Jurisdictional Error: Rationale and Consequences" (2019) 30 Public Law Review 18 at 30-31, 34-35. GordonJ decision-makers stay within the limits (express or implied) of the decision-making power conferred by statute. Judicial review recognises the importance of the Executive acting within lawful authority: that public power is not to be exercised against an individual in a way that is contrary to law. It recognises that the executive power of the Commonwealth is "exercised at a functional level by Ministers and by other officers of the Executive Government" and that in the exercise of those powers, they can and do err96. In addition, and of no less significance, it recognises that the Executive cannot itself authorise a breach of the law. Not only does the rule of law require that the Executive act within legal authority, but as this Court has repeatedly stated97, in various ways and in various contexts, "[i]t is fundamental to our legal system that the executive has no power to authorize a breach of the law"98. In cases of the kind under consideration in this appeal, public power has been exercised in a way that disadvantages an applicant – an individual. Once the individual shows a departure from the lawful exercise of power and that the departure might realistically have affected the outcome of a decision, the individual cannot be expected or required to show that they would have obtained a favourable exercise of statutory power but for the departure. It is for the decision-maker to show that the individual would not have done so. The relationship between members of the public and the Executive, and the it, was described by Boughey and Weeks as idea that underpins "government accountability": "one of the key 'values' or 'ideals' that administrative law is designed to uphold"99. It is said to encapsulate100: 96 Plaintiff M68/2015 v Minister for Immigration and Border Protection (2016) 257 CLR 42 at 95 [128]; see generally 92-96 [119]-[128]. 97 Clough v Leahy (1904) 2 CLR 139 at 155-156; R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 117 at 189; R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 at 187; A v Hayden (1984) 156 CLR 532 at 540, 550; Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 157 [56]; Ruddock v Taylor (2005) 222 CLR 612 at 644-645 [120]; Plaintiff M68 (2016) 257 CLR 42 at 98 [135]. 98 A v Hayden (1984) 156 CLR 532 at 540. 99 Boughey and Weeks, "Government Accountability as a 'Constitutional Value'", in Dixon (ed), Australian Constitutional Values (2018) 99 at 99. 100 Boughey and Weeks, "Government Accountability as a 'Constitutional Value'", in Dixon (ed), Australian Constitutional Values (2018) 99 at 103. GordonJ "the basic idea that the executive branch and its delegates must be answerable, and as a general principle justify their actions, to the public, the Parliament, the courts or any administrative agency (ombudsmen, tribunals, anti-corruption agencies etc)." Judicial review of administrative action derives its legitimacy and constitutional importance from the rule of law. Rule of law values provide principled support for the view that if an individual establishes error in an administrative decision, it should be for the Executive to establish that, even without the error, the same outcome would have been reached. Once it is accepted that the rule of law requires that the Executive must act within legal authority and that the purpose of judicial review is to provide individuals with a mechanism to challenge the lawfulness of the exercise of official power, it is conceptually difficult to understand why the individual would need to show anything more than that public power was exercised in a manner that exceeded a condition of the exercise of that power and that it is realistically possible that the error could have affected the result. To require an individual to show that executive power – public power – could have been exercised differently if preconditions on the exercise of that power had been met is to fail to understand the constitutional relationships between Parliament, the Executive and courts and the role of judicial power in seeking to ensure that executive power which exceeds the authority conferred on the Executive is controlled. The idea that breaches of statutory conditions by decision-makers should not lightly be seen to have no legal consequences for the decision may sometimes be described as "legality", but it is an idea more fundamental than the principle of statutory construction identified in Potter v Minahan101. As Professor Daly has rightly remarked, "[w]hereas one might be content to accept that the applicant bears the burden of proof generally in judicial review cases, one might nonetheless consider that putting the onus of proving materiality on the applicant does not adequately ensure that administrative decision-makers will comply with the law"102. This Court has recognised that not every error of law will invalidate an exercise of statutory executive power103. But there may be cases where an error is 101 (1908) 7 CLR 277. See Lim, "The Normativity of the Principle of Legality" (2013) 37 Melbourne University Law Review 372. 102 Daly, "A Typology of Materiality" (2019) 26 Australian Journal of Administrative Law 134 at 144. 103 Project Blue Sky (1998) 194 CLR 355 at 388-391 [91]-[93]; Hossain (2018) 264 CLR 123 at 134-135 [29]-[30], 136 [39], 145 [65]; SZMTA (2019) 264 CLR 421 at 433 [2]-[3], 458 [90]; ABT17 (2020) 94 ALJR 928 at 948 [72], 954-955 [110]; 383 ALR 407 at 429-430, 438-439. GordonJ jurisdictional regardless of the effect the error may have had on the conclusion of the decision-maker and despite not depriving a party of the realistic possibility of a different result104. The cases may include105 where a decision-maker is required to make a decision by reference to a single specified criterion and, in error, the decision-maker addresses a different and wrong criterion and where lack of respect for the dignity of the individual results in a denial of procedural fairness. That is not an exhaustive list. The nature of the error has to be worked out in each case concerning a specific decision under a particular statute. In most cases, an error will only be jurisdictional (that is, will only exceed the jurisdiction conferred on the decision-maker by statute) if the error was "material" to the decision, in the sense that there has been an error relevant to the actual course of the decision-making and the decision-maker has not shown that the error could not have made a difference to the outcome actually reached. Recognising a criterion of materiality before an error is treated as jurisdictional is a mechanism for drawing a line between those cases where a supervising court has jurisdiction to remedy an error made by an administrative decision-maker and those cases where it does not106. In the United Kingdom, this has been explained by reference to the demands placed on the administrative state: "a certain level of error is acceptable in a legal system which has so many demands upon its limited resources"107. In the literature, it has been described as a "control mechanism" for determining which errors of law are amenable to judicial intervention108. But acceptance that the law will permit an immaterial error of law to stand against an individual who has been subject to an exercise of State power − indeed, acceptance that a supervising court may have limited power to remedy an immaterial (non-jurisdictional) error of law − must necessarily be of significance 104 See Hossain (2018) 264 CLR 123 at 137 [40], 147-148 [72]. 105 Hossain (2018) 264 CLR 123 at 137 [40], 147-148 [72]. 106 The ability of a reviewing court to remedy a non-jurisdictional error of law is limited: Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36. See the discussions in Crawford and Boughey, "The Centrality of Jurisdictional Error: Rationale and Consequences" (2019) 30 Public Law Review 18 at 21, 23-27; Crawford, "Immaterial Errors, Jurisdictional Errors and the Presumptive Limits of Executive Power" (2019) 30 Public Law Review 281 at 281-282. 107 R (Cart) v Upper Tribunal [2012] 1 AC 663 at 684 [42]. 108 Knight, "Clarifying Immateriality" (2008) 13 Judicial Review 111 at 111 [2]-[3], GordonJ when considering who ought, as a matter of principle, to bear the onus of establishing immateriality. Fundamental principles − namely, the rule of law; the constitutional relationship between the Executive and the judicial branch; the relationship between individuals and the State; and, in particular, the role of the judicial branch in the protection of the individual against incursions of executive power − together weigh decisively in favour of a conclusion that it is the respondent (the Executive) in an application for judicial review who should and must bear the onus of establishing immateriality of error. The rule that, if an applicant has demonstrated error and the loss of a possibility of a successful outcome, it is for the respondent to establish immateriality of error is entirely coherent with the way in which the law operates, including in other areas in which the power of the State is applied to the individual. The application of a rule that it is for the respondent to establish immateriality of error in the exercise of public power in cases of the kind under consideration in this appeal is not unique. It takes its place in the broader application of the stated rule in accordance with the rule of law and is one which is practically sensible. The contrary approach is at odds with the way the law operates elsewhere. These considerations make it all the more important to apply the ordinary rule for the allocation of burden of proof in connection with the application of statutes. That rule was stated in Vines v Djordjevitch109 as follows: "in whatever form the enactment is cast, if it expresses an exculpation, justification, excuse, ground of defeasance or exclusion which assumes the existence of the general or primary grounds from which the liability or right arises but denies the right or liability in a particular case by reason of additional or special facts, then it is evident that such an enactment supplies considerations of substance for placing the burden of proof on the party seeking to rely upon the additional or special matter" (emphasis added). Here, the applicant identifies departure from a condition of the exercise of public power. The restated rule acknowledges that the decision is invalid and of no effect only if the departure was "material". The requirement of materiality "assumes the existence of the general or primary grounds from which the [applicant's] ... right arises but denies the right ... in [the] particular case by reason of additional or special facts"110. 109 (1955) 91 CLR 512 at 519-520. See also Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 257. 110 Djordjevitch (1955) 91 CLR 512 at 519. GordonJ Onus in public law Although we consider that the rule to be applied should be restated, it is essential, as was noted in SZMTA, to take account of past decisions of this Court − including, in particular, Stead v State Government Insurance Commission111, Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs112 and Minister for Immigration and Border Protection v WZARH113. Those cases, and the many decisions that have followed them114, recognise that although the exercise of public power against the individual arises in different contexts, the balance of the relationship between the individual and the State is best protected by the State having to show why a departure from the legal constraints on the exercise of public power was immaterial to the outcome that was reached. The decisions recognise that, although the onus of proof in judicial review may fall generally upon an applicant, courts "expect public authority defendants to explain themselves"115. As Edelman J demonstrates116, Stead117 and Balenzuela v De Gail118 do not support the rule stated by the plurality in this case. 111 (1986) 161 CLR 141. 112 (2005) 225 CLR 88. 113 (2015) 256 CLR 326. 114 See especially Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 88-89 [4], 116-117 [80], 153-154 [211]; Nobarani v Mariconte (2018) 265 CLR 236 at 247 [38]. See also, eg, Applicant VBB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1141 at [24]; King v Delta Metallics Pty Ltd [2013] FCAFC 93 at [59]; Boyd v Thorn (2017) 96 NSWLR 390 at 403-404 [60]; Minister for Immigration and Border Protection v CQZ15 (2017) 253 FCR 1 at 15 [73]; Livers v Legal Services Commissioner [2018] NSWCA 319 at [82]; Gambaro v Mobycom Mobile Pty Ltd (2019) 271 FCR 530 at 544 [49]; Flightdeck Geelong Pty Ltd v All Options Pty Ltd (2020) 147 ACSR 227 at 239 [58], but cf 240 [59]. 115 Fordham, Judicial Review Handbook, 7th ed (2020) at 587 [42.2]; see also 56-57 116 Reasons of Edelman J at [188]-[196]. 117 (1986) 161 CLR 141. 118 (1959) 101 CLR 226. GordonJ In Stead119, in an appeal by way of rehearing, having noted the difficulty for a court of appeal asked to conclude that compliance with the requirements of natural justice could have made no difference to the outcome in the particular case, the Court said that "[a]ll that the appellant needed to show was that the denial of natural justice deprived [the appellant] of the possibility of a successful outcome" and it was for the respondent to demonstrate "that a properly conducted trial could not possibly have produced a different result" (emphasis added). The decisions in VEAL and WZARH are not inconsistent with the restated rule. In VEAL, this Court found, on the particular facts, that a denial of procedural fairness occasioned by a failure to disclose adverse information constituted a jurisdictional error which warranted setting aside the decision below, notwithstanding that the reasons of the Tribunal had contained an affirmative statement that it had given the adverse information in question "no weight"120. In WZARH, where a procedure adopted by an administrator was shown to have failed to afford a fair opportunity to be heard, not only was the rule stated in similar terms but the practical significance of the rule was recognised as follows121: "[A] denial of procedural fairness is established by nothing more than that failure, and the granting of curial relief is justified unless it can be shown that the failure did not deprive the person of the possibility of a successful outcome. The practical injustice in such a case lies in the denial of an opportunity which in fairness ought to have been given". (emphasis added) The restated rule is consistent with approaches taken in other areas of public law, including: (1) where there is unreasonable delay in the making of an administrative decision, it is for the respondent to establish a satisfactory justification for the delay122; 119 (1986) 161 CLR 141 at 147. See also Balenzuela (1959) 101 CLR 226 at 232-235. 120 (2005) 225 CLR 88 at 92 [5]. 121 (2015) 256 CLR 326 at 342-343 [60]. 122 Thornton v Repatriation Commission (1981) 35 ALR 485 at 492, but cf 489; Wei v Minister for Immigration, Local Government and Ethnic Affairs (1991) 29 FCR 455 at 476; Oliveira v The Attorney General (Antigua and Barbuda) [2016] UKPC 24 at [43]. See also AQM18 v Minister for Immigration and Border Protection (2019) 268 FCR 424 at 434 [59]. GordonJ in an application for habeas corpus, provided that the detainee has established probable cause or a case fit to be considered, the person directing detention must prove the lawfulness of the detention123; and (3) where material is unlawfully seized by a public official in purported execution of a warrant, the onus is on the respondent to establish a basis for a court to refuse discretionary remedies124. The proposition also sits comfortably with the operation of the "proviso" to the common form criminal appeal provisions125. That is, in short, once an appellant has made out an error or irregularity under the second or third appeal criterion – namely, a wrong decision on a question of law or a miscarriage of justice – the onus shifts to the Crown to satisfy the court that there has been no substantial miscarriage of justice126. Other areas Other areas of law are replete with examples of the onus being placed on, or shifted to, one party once a prima facie case has been made out by another party. This can be seen in cases concerning, among others: 123 Liversidge v Anderson [1942] AC 206 at 245; Trobridge v Hardy (1955) 94 CLR 147 at 152; Plaintiff M47/2018 v Minister for Home Affairs (2019) 265 CLR 285 at 124 Smethurst (2020) 94 ALJR 502 at 535 [134], 566 [278]; 376 ALR 575 at 608-609, 649. See also Challenge Plastics Pty Ltd v Collector of Customs (1993) 42 FCR 397 125 Criminal Appeal Act 1912 (NSW), s 6(1); Criminal Procedure Act 1921 (SA), s 158(1)-(2); Criminal Code (Qld), s 668E(1)-(1A); Criminal Appeals Act 2004 (WA), s 30(3)-(4); Criminal Code (Tas), s 402(1)-(2); Criminal Code (NT), s 411(1)-(2); Supreme Court Act 1933 (ACT), s 37O(2)-(3). 126 Mraz v The Queen (1955) 93 CLR 493 at 514; KBT v The Queen (1997) 191 CLR 417 at 434; TKWJ v The Queen (2002) 212 CLR 124 at 143 [63]; Lindsay v The Queen (2015) 255 CLR 272 at 294 [64]; GBF v The Queen (2020) 94 ALJR 1037 at 1042 [24]; 384 ALR 569 at 575. GordonJ negligence, where a defendant who seeks to argue that a plaintiff's injury was caused by a condition which pre-existed a negligent act bears the onus of proof127; unlawful imprisonment, where, if imprisonment is found to have occurred, the defendant has to justify the lawfulness of the imprisonment128; fraudulent misrepresentation, where, if a false statement is made with the intention of inducing a person to enter a contract and that person enters that contract, the defendant bears the onus of disproving inducement129; bailment, where, once a bailor establishes that goods bailed pursuant to a contract of bailment were lost or damaged, a bailee must disprove negligence130; the admissibility of improperly or illegally obtained evidence, where, if a party seeking to exclude evidence establishes that the evidence was improperly or illegally obtained, the party seeking its admission must persuade the court that the desirability of admission outweighs any undesirability131; and nuisance, where the onus lies on a defendant relying on the defence of statutory authority to establish that the nuisance was authorised by statute 127 Watts v Rake (1960) 108 CLR 158 at 163-164; Purkess v Crittenden (1965) 114 CLR 164 at 168. 128 Lewis v Australian Capital Territory (2020) 94 ALJR 740 at 751 [24]; 381 ALR 375 at 382, citing Brown v Lizars (1905) 2 CLR 837 at 853-854, Watson v Marshall (1971) 124 CLR 621 at 626 and Ruddock (2005) 222 CLR 612 at 631 [64], 650-651 129 Gould v Vaggelas (1985) 157 CLR 215 at 238; see also 219, 262. 130 Tozer Kemsley & Millbourn (A'Asia) Pty Ltd v Collier's Interstate Transport Service Ltd (1956) 94 CLR 384 at 397-398; Pitt Son & Badgery Ltd v Proulefco (1984) 153 CLR 644 at 646. 131 Evidence Act 1995 (Cth), s 138; Parker v Comptroller-General of Customs (2009) 83 ALJR 494 at 500-501 [28]; 252 ALR 619 at 626; Director of Public Prosecutions v Marijancevic (2011) 33 VR 440 at 445 [17]; R v Mokbel (2012) 35 VR 156 at 184 GordonJ and was an inevitable consequence of the performance of a statutory activity or duty or the exercise of a statutory power132. None of this is exhaustive. It reflects what was said in Djordjevitch133, as explained above: namely, that the ordinary rule is for the burden of proof to be allocated to the party seeking to rely on an "additional or special matter" in support of a ground of defeasance or exclusion to deny a right to another party in a particular case. Practical considerations Requiring a decision-maker to establish that compliance with a statutory condition of an exercise of power could not have made a difference to the decision that was made in the circumstances in which the decision was made also is practical and works practicably. The reverse is not and does not. There are three independent, but related, practical considerations. First, predicting how the outcome of a decision-making process might have differed if an error had not occurred is not an easy task even for those legally trained. That difficulty was recognised in Stead when this Court said that "[i]t is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact. And this difficulty is magnified when the issue concerns the acceptance or rejection of the testimony of a witness at the trial"134. In SZQGA v Minister for Immigration and Citizenship135, Barker J explained that predicting how the outcome of a decision-making process might have differed if an error had not occurred is fraught. His Honour put the point in these terms136: "It will often be extremely difficult to say what decision might have been made by an administrative decision-maker if there had been no denial of procedural fairness in a given case – and it is not for the review court to speculate. To try to reconstruct a decision-making process or to rework the apparent basis upon which a decision has been made, in order to state with 132 Benning v Wong (1969) 122 CLR 249 at 308-309; Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287 at 310-311 [118]-[125]. 133 (1955) 91 CLR 512 at 519-520. 134 (1986) 161 CLR 141 at 145-146. 135 (2012) 204 FCR 557. 136 SZQGA (2012) 204 FCR 557 at 591 [157]. GordonJ any confidence what the result might have been or would have been but for denial of procedural fairness, is likely to be a speculative and unproductive task and certainly one likely to lead to injustice, because the judicial reviewer is not equipped and is not charged with responsibility to make the sort of administrative decision that the primary decision-maker has been set up to determine." The observations apply with greater force if the task must be undertaken by the applicant (and especially in respect of unrepresented applicants). As was explained in ABT17 v Minister for Immigration and Border Protection137: "To require an individual to show that executive power – public power – would have been exercised differently if preconditions on the exercise of that power had been met is to fail to understand [the constitutional relationships between Parliament, the Executive and courts] and the role of judicial power. It places the onus on an individual to show why public power should be re-exercised, rather than protecting that individual from exercises of public power which are contrary to the law. And, it must be observed, at least in some cases it places the onus on an individual to show why public power should be re-exercised, without the necessary facts." (emphasis added) the necessary the ability to obtain facts, or That leads to the second, related, consideration. The decision-maker, the person whose decision is in issue, is "free to assist"138 in discharging the onus of establishing why the absence of the identified error, their error, would not have led to a different result. The respondent in a judicial review application enjoys distinct advantages as the decision-maker responsible for the decision-making process which has led to the impugned decision. The respondent will have access to the departmental files and records relevant to the impugned decision. Indeed, in a case of the kind here in issue, where a tribunal has committed an error by failing to disclose the existence of a notification under s 438 of the Migration Act 1958 (Cth) to an applicant, the Minister is usually the only party to the dispute capable of adducing evidence that the error has occurred139. This observation should not be taken to suggest that a tribunal on judicial review of one of its 137 (2020) 94 ALJR 928 at 954 [109]; 383 ALR 407 at 438. 138 Guo v The Commonwealth (2017) 258 FCR 31 at 56 [83]. 139 See, eg, SZMTA (2019) 264 CLR 421 at 446 [50], 447 [55]-[57], 467 [121]; MZAPC v Minister for Immigration and Border Protection [2019] FCA 2024 at GordonJ decisions should become a "protagonist" in the judicial review proceeding140. Rather, it recognises that, in law and effect, where an administrative tribunal has made a decision in substitution of the decision of the primary administrative decision-maker, the Executive Government"141. The tribunal stands in the shoes of the decision-maker whose decision is under review142. that decision "becomes the decision of The advantages enjoyed by public authorities and officers have been explained in other contexts when addressing the fact that the onus of proof is on the decision-maker. In R v Southwark London Borough Council; Ex parte Ryder143, Dyson J emphasised that the decision-maker whose decision was impugned in that case said that she took a point into account that "[p]rima facie ... was irrelevant", and "[i]n the absence of details as to how and why [the decision-maker] took it into account", his Lordship was "driven to conclude that [the decision-maker] may well have relied upon it in a material sense". Although Dyson J did not expressly refer to matters of practicality in his Lordship's decision, it is self-evident that if details about how and why a decision-maker took a particular matter into account were not set out in the reasons for a decision, then they would be solely within the knowledge of the decision-maker or, perhaps, in records held by the government. The same basic proposition explains why the onus is on the decision-maker to demonstrate why a delay in making a decision is not an unreasonable delay. In decisions on unreasonable delay as a ground of review, considerable weight is attached to the evidence offered by the public authority justifying the delay. In such cases, ordinarily the only evidence which could be adduced by an applicant relevant to materiality would be the fact of the delay or length of time since lodging the relevant application. Determination of the matter would then depend on an inference or evaluative conclusion being drawn by a court on application for judicial review that the length of time was unreasonable. In contrast, as is evident from the Privy Council's treatment of this issue in Oliveira v The Attorney General (Antigua and Barbuda)144, a public authority is in a judicial 140 R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 141 Shi v Migration Agents Registration Authority (2008) 235 CLR 286 at 299 [40]; Frugtniet v Australian Securities and Investments Commission (2019) 266 CLR 250 142 Frugtniet (2019) 266 CLR 250 at 271 [51]. 143 (1996) 28 HLR 56 at 67. 144 [2016] UKPC 24 at [43]. GordonJ position to adduce a range of relevant evidence, including documentary evidence that might (for instance) identify a backlog or unavoidable procedural delays. In short, it is the decision-maker (not the individual in respect of whom the decision is made) who is capable of explaining the reason for a lengthy period of inactivity145. Likewise, in respect of applications for habeas corpus, Allsop CJ has recently explained that the Minister and Department ultimately responsible for the conduct of prisons and detention centres should "be in a position to justify the lawful nature of a person's detention, at any time. If that depends upon proof of someone's state of mind and the reasonable foundation for it that proof should be readily available whether from the officers who are responsible for the detention, or otherwise by reference to clear records"146. In relation to the tort of unlawful imprisonment, courts have rejected the argument that the Commonwealth should not bear the "impracticality and inconvenience" of having to prove the existence and subsistence of the required state of mind on the part of the detaining officer or officers147. In Guo v The Commonwealth148, Jagot J said "proof sufficient to establish the lawfulness of immigration detention involves matters of fact and of inference from fact. The Commonwealth is free to assist itself in discharging the onus of proof by the implementation of whatever systems, processes and safeguards it sees fit and by the calling of such evidence in any particular case as it sees fit." Finally, there is a difficulty which is both legal and practical: the risk that a review court will ask itself the wrong question by erroneously considering for itself questions of fact which were determined by a primary decision-maker. This risk was adverted to by Dixon CJ in Balenzuela149: "Care must be taken lest in exercising an authority to decide whether an error of law occurring at the trial is likely to have influenced the result, what is really done is to examine the evidence as if the court were forming 145 Wei (1991) 29 FCR 455 at 476. See also AQM18 (2019) 268 FCR 424 at 434 [59]. 146 McHugh v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2020) 385 ALR 405 at 407 [5]. 147 Guo (2017) 258 FCR 31 at 55 [80], 56 [83], 77 [151]. 148 (2017) 258 FCR 31 at 56 [83]. See also Burgess v The Commonwealth (2020) 276 FCR 548 at 567 [68]. 149 (1959) 101 CLR 226 at 235. GordonJ a conclusion of fact for itself. The basal distinction between the court's duty and the function of the jury cannot be confused in this way." All the judges of this Court in SZMTA were alive to the same possibility. Bell, Gageler and Keane JJ said that in the case of an invalid notification purportedly made under s 438 of the Migration Act, "where the court on judicial review of a decision of the Tribunal can infer that the Tribunal left the notified document or notified information out of account in reaching its decision, the question that still remains is whether there is a realistic possibility that the Tribunal's decision could have been different if it had taken the document or information into account"150. But their Honours immediately cautioned that "[t]he court must be careful not to intrude into the fact-finding function of the Tribunal"151. Similarly, the minority said that: "to shift the onus of proof would fundamentally change the nature of judicial review. Instead of a court concluding that an act or omission constitutes an error going to jurisdiction ... [judicial review] would become a form of merits review where jurisdictional error is found only if the breach is material to the applicant for review because it has denied that applicant the possibility of a successful outcome"152. The risk that a review court will erroneously consider for itself questions of fact determined by the primary decision-maker highlights the potential practical injustice that could flow from requiring applicants to do anything more than establish a relevant error (that is, one which could realistically have resulted in a different decision). The practical difficulties are real: for those legally trained and those not legally trained. But one side or the other must bear the onus and the issue is which. In some cases, the respondent will enjoy practical advantages which mean that the respondent is best placed to answer the question of what would have occurred but for the error. In many other cases, the respondent may not enjoy any such advantage. We accept that there may be cases where all either party may have is the decision-maker's reasons and the material before the decision-maker. But there needs to be a stated rule which is principled and practical. The question that arises is: why should the task of establishing that an error would have affected the outcome fall to the applicant once they have established that a breach of the law has occurred and that the error could realistically have denied them the possibility of a successful outcome? The answer is, it should not. Once error is identified by an applicant, the onus of proving that the error is immaterial to the decision that 150 SZMTA (2019) 264 CLR 421 at 445 [48]. 151 SZMTA (2019) 264 CLR 421 at 445 [48]. 152 SZMTA (2019) 264 CLR 421 at 460 [95]. See also Quin (1990) 170 CLR 1 at 35-36; ABT17 (2020) 94 ALJR 928 at 948 [72], 954 [105]; 383 ALR 407 at 429-430, 437; PQSM v Minister for Home Affairs (2020) 382 ALR 195 at 211 [75], 228 [150]. GordonJ was reached is on those who seek to affirm the decision's validity – namely, the Executive. MZAPC The appellant is an Indian citizen who validly applied for a protection visa on 22 January 2014153. A delegate of the first respondent, the Minister for Immigration and Border Protection, refused the application on 4 June 2014. The appellant applied to the Refugee Review Tribunal, now the Administrative Appeals Tribunal ("the Tribunal"), for review of that decision. The appellant made two central claims in support of his protection visa application. The first arose out of a land dispute with relatives; the second was that he became stateless when his family disowned him for changing his religion, cutting his hair and adopting an Australian lifestyle. On 5 June 2014, a delegate of the Minister issued a notification to the Tribunal under s 438 of the Migration Act in respect of the appellant's protection visa application. The information to which the notification applied was contained in the following documents: an "Immigration Status Service Report" dated 31 March 2012, which stated, among other things, that an officer of Victoria Police had advised the then Department of Immigration and Citizenship ("the Department") that the appellant "has over 28 pages of offences and is currently on a suspen[d]ed sentence until Sept 2012"; a screenshot of a "Client Detail" page for the appellant, which set out information such as the appellant's name, date of birth and address; a facsimile cover sheet for a ten-page facsimile message from Victoria Police to the Department dated 31 March 2012; and the remaining nine pages of the facsimile message, which was a Victoria Police court outcomes report in relation to the appellant, which showed that he had been convicted of a number of driving-related offences on 30 September 2011. 153 When the appellant arrived in Australia on 22 January 2006, he held a student visa which ended on 15 March 2008. The appellant applied for a different class of student visa on 30 August 2007, which was refused, and he made an invalid protection visa application on 31 October 2013, before making his valid protection visa application. GordonJ The court outcomes report revealed that on 30 September 2011 the appellant received a three-month suspended term of imprisonment for one count of drink driving and one count of driving while disqualified. On the same day, he received non-custodial punishments for the following additional convictions: seven counts of driving while disqualified; two counts of drink driving; three counts of using an unregistered vehicle; two counts of using a vehicle not in a safe and roadworthy condition; one count of "state false name"; one count of removing a defective vehicle label; and one count of failing to wear a seatbelt in a moving vehicle. The appellant was not told that the s 438 notification had been issued or that the court outcomes report was provided to the Tribunal. On 4 November 2014, the Tribunal affirmed the decision of the delegate not to grant the appellant a protection visa. the relation land dispute claim, although the Tribunal had "some concerns about the [appellant's] credibility", it accepted there had been a dispute between the appellant's father and uncle over land in Punjab and that the appellant had been taken to a house in Amritsar by his cousin, drugged and held there until his father paid the amount of A$3,500 in exchange for the appellant's release. However, the Tribunal did not accept the appellant's claim that he had been subject to continuing threats from his relatives in relation to the land dispute, saying: "I do not accept that the [appellant] has been subject to continuing threats in relation to the land dispute because he is the eldest son of his father. The [appellant] was able to reside in Delhi, India for 2-3 years after the Amritsar incident without facing any further harm from his uncles and his relatives. The Amritsar incident was 12-13 years ago and resolved when the father made payment to his uncle. Furthermore, on the [appellant's] oral evidence at hearing, in recent times his father has been pressured but not actually harmed or threatened by the relatives despite his father refusing to sign over the land through an affidavit. I do not accept that if the relatives wanted to harm the [appellant] over the land that they would not be threatening or harming his father in circumstances where the dispute originates in relation to the father and the father has the ability to sign a document giving them the land. I do not accept as credible or plausible that simply because his father was in Delhi and not Amritsar that this would completely deter the relatives from undertaking threatening or violent action against his father to obtain legal ownership of the land. The [appellant] stated at the hearing that his mother's brother was a policeman, which I accept. However, I do not accept as credible or plausible that the relatives would not threaten or harm his father (but would GordonJ threaten or harm the [appellant]) because his mother's brother was a policeman. In all the circumstances, I do not accept that the relatives have a continuing adverse interest in the [appellant]." (emphasis added) In relation to the claim that he had been disowned by his family, the Tribunal accepted that the appellant's family had disowned him but did not consider that being "disowned" constituted significant harm for an adult, 29-year-old man. The Tribunal also noted that the appellant did not claim to have been threatened for adopting an Australian lifestyle, and that the Tribunal had not identified any "recent reports of Sikhs in India being harmed because they have cut their hair, adopted Western lifestyles or drank alcohol". The Tribunal made no reference in its reasons to any of the matters contained in the information and documents the subject of the s 438 notification. The appellant sought judicial review of the Tribunal's decision in the Federal Circuit Court of Australia. On 17 May 2016, the Federal Circuit Court (Judge Hartnett) dismissed the appellant's application. The appellant was unrepresented and his application essentially sought to challenge the merits of the Tribunal's decision, rather than asserting any jurisdictional error. The primary judge considered whether any jurisdictional error arose on the face of the Tribunal's reasons, but dismissed the application. The appellant appealed to the Federal Court of Australia. While the matter was pending in the Federal Court, two significant developments occurred: first, the Minister filed an affidavit which disclosed for the first time the existence of the s 438 notification; and second, the matter was held in abeyance pending the decision of this Court in SZMTA. On 4 December 2019, the Federal Court (Mortimer J) dismissed the appellant's appeal. Mortimer J observed that the Minister had conceded, in light of the decision in SZMTA, that the failure by the Tribunal to disclose the existence of the notification given by the Secretary of the Department ("the Secretary") under s 438(2) to the appellant "constituted a denial of procedural fairness"154. However, her Honour concluded that the appellant had failed to show, as her Honour considered was required by SZMTA, that there was a realistic possibility that he could have succeeded in the Tribunal if he had been told of the s 438 notification and the documents that had been sent to the Tribunal155. This conclusion was said to follow from her Honour's finding that "the Tribunal's 154 MZAPC [2019] FCA 2024 at [35]. 155 MZAPC [2019] FCA 2024 at [56]-[58]. GordonJ reasoning was not in fact affected by the potentially adverse information in the first Issues on appeal There were two issues on appeal in this Court. The first was the issue of principle discussed above: namely, who does, and who ought to, bear the onus of establishing materiality or immateriality in an application for judicial review of administrative action157. The second issue on appeal concerned how the applicable principles were to be applied where, as here, an applicant for a protection visa is denied procedural fairness by reason of the Tribunal's failure to disclose that a notification has been issued under s 438 of the Migration Act. The restated principle applied Applying the restated rule, the root of the analysis is one of statutory construction158. In the present appeal, the applicable statutory framework is a review under Pt 7 of the Migration Act of the delegate's refusal to grant the appellant a protection visa in circumstances where the Tribunal has received a notification under s 438 of the Act in respect of information that is potentially adverse to the appellant and where the Tribunal has failed to disclose to the appellant the existence of the notification. As has been observed, the Minister accepted that the failure by the Tribunal to disclose the existence of the Secretary's notification under s 438(2) to the appellant constituted a denial of procedural fairness. The question which then arises is whether that breach of procedural fairness constitutes jurisdictional error. In this case, the Tribunal's failure to provide procedural fairness could realistically have deprived the appellant of the possibility of a successful outcome. To establish as much, the appellant was not required to demonstrate that the Tribunal in fact exercised its discretion under s 438(3)(a). It is enough that the Tribunal could realistically have exercised the s 438(3)(a) discretion and that the s 438 information could realistically have contributed to the Tribunal's ultimate decision. The question then is whether the Minister 156 MZAPC [2019] FCA 2024 at [58]. 157 See [89]-[123] above. 158 Project Blue Sky (1998) 194 CLR 355 at 388-391 [91]-[93]. cf Hossain (2018) 264 CLR 123 at 134 [29], 145 [65]; SZMTA (2019) 264 CLR 421 at 444 [44], 458-459 [90]; MZAOL v Minister for Immigration and Border Protection [2019] GordonJ demonstrated that affording procedural fairness to the appellant, by disclosing the fact that the s 438 notification had been made to the Tribunal, would not have resulted in a different outcome. The appellant rightly accepted that if the Minister established that the s 438 information was not taken into account by the Tribunal, then the Minister would have established that the error – the breach of procedural fairness – was immaterial and did not constitute jurisdictional error. The issue is to be decided by the ordinary processes of fact finding, which start with the relevant statutory framework – here, Pt 7 of the Migration Act and the proper construction of s 438 – and, against that legislative framework, then look to the record and the evidence adduced on the application, and inferences to be drawn from that material. As the Minister accepted, the issue is not to be decided by applying an irrebuttable presumption about what the Tribunal did or did not do. Nor is it to be decided by applying some rebuttable presumption about what the Tribunal did or did not do. In this case, the Minister demonstrated that compliance with the statutory requirements would not have led to a different outcome. It is necessary to explain how and why and to begin by considering the relevant statutory framework. The appellant applied to the Tribunal under Pt 7 of the Migration Act for review of the dismissal of his application for a protection visa159. If a valid application is made, then, subject to a presently irrelevant exception, the Tribunal must review the decision160 within 90 days of the Secretary giving the Registrar of the Tribunal ("the Registrar") the documents that s 418(2) requires161. The Tribunal may, for the purposes of the review, exercise all the powers and discretions conferred by the Migration Act on the decision-maker and may, among other things, affirm the decision, vary the decision, or set aside the decision and substitute a new decision162. Such a decision is a decision of the Minister163. Significantly, if an application for review is made to the Tribunal, the Registrar must, as soon as practicable, give the Secretary written notice of the application and, within ten working days of such notice, the Secretary must give to the Registrar a statement about the decision that sets out the findings of fact made by the decision-maker, refers to the evidence on which those findings were 159 Migration Act, s 412. 160 Migration Act, s 414. 161 Migration Act, s 414A (as it stood at the relevant time). 162 Migration Act, s 415(1)-(2). 163 Migration Act, s 415(3). GordonJ based and gives the reasons for the decision164. In addition, the Secretary must give to the Registrar "each other document, or part of a document, that is in the Secretary's possession or control and is considered by the Secretary to be relevant to the review of the decision"165 (emphasis added). The exercise of the Tribunal's powers is addressed in Div 3 of Pt 7. In exercising its powers, the Tribunal is to pursue the stated objective of "providing a mechanism of review that is fair, just, economical, informal and quick"166. The Tribunal is not bound by technicalities, legal forms or rules of evidence and must act according to substantial justice and the merits of the case167. The conduct of the review is addressed in Div 4 of Pt 7. The natural justice hearing rule is exhaustively168 addressed in s 422B, which provides that, in applying Div 4, the Tribunal must act in a way that is fair and just169. Both an applicant for review, and the Secretary, may give the Registrar prescribed documents170. An applicant may give a statutory declaration in relation to any matter of fact that the applicant wishes the Tribunal to consider and written arguments relating to the issues arising in relation to the decision under review171. The Tribunal may "get any information that it considers relevant" and, if it does so, it must have regard to that information in making the decision on review172. In addition, subject to some limited exceptions, the Tribunal must invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review173. In the present matter, against the background of the Secretary's general obligation under s 418(3) to provide the Tribunal with relevant documents, 164 Migration Act, s 418(1)-(2). 165 Migration Act, s 418(3). 166 Migration Act, s 420(1) (as it stood at the relevant time). 167 Migration Act, s 420(2) (as it stood at the relevant time). 168 Migration Act, s 422B(1). 169 Migration Act, s 422B(3). 170 Migration Act, s 423; see also s 418(2)-(3). 171 Migration Act, s 423(1). 172 Migration Act, s 424(1). 173 Migration Act, s 425; see also ss 425A and 426. GordonJ the Secretary also provided to the Registrar documents and information under s 438 of the Migration Act174. Section 438(2) requires that, in giving the documents and information, the Secretary must notify the Tribunal that s 438 applies in relation to the specific document or information and may give the Tribunal any written advice that the Secretary thinks relevant about the significance of the document or information. The nature and contents of the documents and the information provided in this appeal have been described. Section 438(3) is important. It provides that if the Tribunal is given a document or information and is notified under s 438(2) that the section applies to it, the Tribunal may, for the purpose of the exercise of its powers, have regard to any matter contained in the document or to the information and may, if the Tribunal thinks it appropriate to do so, disclose any matter contained in the document or the information to the applicant. SZMTA established that when the Secretary notified the Tribunal in writing under s 438(2)(a) that s 438(1)(b) applied to certain information given to the Department, the Tribunal incurred an obligation of procedural fairness to disclose the fact of that notification175. But, as we have seen, the fact that such notice was not given did not necessarily give rise to jurisdictional error. The question was whether that error was immaterial to the outcome. That is a question of fact and one in respect of which the Minister discharged the onus of demonstrating that the error was immaterial. The documents and information provided by the Secretary under s 438 were adverse to the appellant and included reference to the appellant's conviction for giving a false name. It was common ground before Mortimer J that the nature of the "state false name" offence could contribute to a decision-maker forming an adverse view of the appellant's honesty. Where the Tribunal makes its decision on review, the Tribunal must make a written statement that, among other things, sets out the decision of the Tribunal; sets out the reasons for the decision; sets out the findings on any material questions of fact; and refers to the evidence or other material on which the findings of fact were based176. 174 See SZMTA (2019) 264 CLR 421 at 436 [15]. 175 (2019) 264 CLR 421 at 433 [2], 440 [27], 440-441 [29], 442-443 [34]-[38], 447 [57], 176 Migration Act, s 430(1). GordonJ The Tribunal's reasons for decision do not refer to the Tribunal, "for the purpose of the exercise of its powers, hav[ing] regard to any matter contained in the document[s], or to the information"177. There is no reference, express or implied, to the documents or the information. As Mortimer J observed in the decision below, there is nothing to indicate "that the Tribunal even turned its mind to the exercise of the powers under s 438(3)"178. Moreover, as Mortimer J stated, the Tribunal's reasons do not disclose any real assessment of the appellant's honesty at all179. In conducting its review, the Tribunal accepted many aspects of the appellant's claims. Critically, it accepted that there was a dispute between the appellant's father and uncle over land in Punjab and that when the appellant visited Amritsar in 2003 or 2004, he was taken to a house by his cousin, drugged and held there until his father arrived and paid an amount for his release. The Tribunal also accepted that after this event and until he came to Australia, the appellant stopped going to Punjab. What the Tribunal did not accept was that the appellant had been subject to continuing threats in relation to the land dispute or that his relatives had a continuing adverse interest in him. As the Minister submitted, the Tribunal provided three independent reasons for that finding: the appellant was able to reside in Delhi for two or three years after the kidnapping without facing any further harm from his relatives; by the time of the Tribunal's decision, some 12 or 13 years had passed since he was kidnapped; and the appellant's evidence to the Tribunal had been that, in more recent times, his father had been pressured but not actually harmed or threatened by the relatives even though he had refused to sign over the land. As the Minister submitted, the Tribunal reasoned that where the land dispute had originated with the appellant's father and it was the appellant's father who had the ability to sign over the land, then if the relatives had actually wanted to harm the appellant, they would also have threatened or harmed the appellant's father. In reaching that finding, the Tribunal rejected as not "credible or plausible" the appellant's two alternative explanations for the absence of any threats of harm made against the father. The Tribunal accepted the facts relied upon by the appellant – that the father had moved to Delhi and his maternal uncle was a policeman – but found that the alternative explanations were not credible because they were not plausible. That is, the Tribunal did not accept that because the father was in Delhi rather than Punjab, this would deter the relatives from threatening or taking violent action against the father to obtain the land and, secondly, that the 177 Migration Act, s 438(3). 178 MZAPC [2019] FCA 2024 at [52]. 179 MZAPC [2019] FCA 2024 at [57]. GordonJ relatives would refrain from threatening the father (but would threaten or harm the appellant) because the appellant's maternal uncle was a policeman. Therefore, the Tribunal's rejection of the appellant's claim that he had been subject to continuing threats in relation to the land dispute or that his relatives had a continuing adverse interest in him did not result from the Tribunal making any adverse finding regarding the appellant's honesty. As Mortimer J stated, "[t]his was a review where the Tribunal largely accepted the appellant's narrative, and his claimed circumstances, but rejected the visa application because it was not satisfied the appellant's fears were well-founded"180. It therefore is unnecessary to decide whether Mortimer J erred in holding that only "dishonesty offences" were capable of impacting upon the credibility of the appellant before the Tribunal. The Minister thus established that the denial of procedural fairness was immaterial: compliance with the condition would not have made a difference to the decision that was made. Conclusion and orders The appeal is dismissed with costs. 180 MZAPC [2019] FCA 2024 at [56]. Edelman Introduction I have had the considerable benefit of reading both the joint reasons of Kiefel CJ, Gageler, Keane and Gleeson JJ and the joint reasons of Gordon and Steward JJ. The central issue of distinction between those reasons, and the principal point of law in issue on this appeal, concerns the party who bears the onus of proof in relation to the materiality of non-compliance with a statutory condition. Kiefel CJ, Gageler, Keane and Gleeson JJ conclude that the onus of proof is borne by the party seeking to prove that the non-compliance was material and therefore was jurisdictional. Gordon and Steward JJ conclude that the onus of proof is borne by the party asserting immateriality and denying that the non-compliance was jurisdictional. For reasons of history, authority, principle, and coherence, I consider that the better approach to the onus of proof in this case, concerning a denial of procedural fairness in a review under Pt 7 of the Migration Act 1958 (Cth), is that of Gordon and Steward JJ. Given the strength with which the opposing views have been expressed, it is necessary to explain why the same reasons of history, authority, principle, and coherence that require the usual implication of a requirement of materiality before a court will conclude that non-compliance with a statutory condition will lead to invalidity also usually require that the onus of proof is upon the party asserting immateriality. Ultimately, however, my different conclusion from that of Kiefel CJ, Gageler, Keane and Gleeson JJ on the onus of proof might have little practical effect for three reasons. First, any conclusion on onus of proof is not capable of universal generalisation. Just as the source of a statutory condition upon a duty, power, or function is derived expressly or impliedly from the statute, so too is the requirement of materiality and the onus of proof for materiality derived expressly or impliedly from the statute. As the courts of the United States have long recognised, the location of the onus will depend upon the terms and context of the statute. In criminal cases in the United States, like Australia, it has been held that the onus lies upon the government to prove immateriality because the result will "deprive an individual of his liberty"181. In civil cases in the United States, unlike Australia, the general approach is that the person "who seeks to have a judgment set aside because of an erroneous ruling carries the burden of showing that prejudice resulted"182. But there are no "hard-and-fast standards governing the 181 Shinseki v Sanders (2009) 556 US 396 at 410. 182 Palmer v Hoffman (1943) 318 US 109 at 116. Edelman allocation of the burden of proof in every situation"183. The different general rule on onus of proof in civil and administrative cases in the United States might not apply depending "on the statutory setting or specific sort of mistake made"184. Secondly, irrespective of the location of the onus, as was observed more than a half century ago in the United States, the court still has the duty "to determine whether the error affected the judgment"185. A similar point was made in this Court by Dixon CJ186. In this context, the question of onus may not usually be one that has any real consequence and might make little difference to the outcome of any case. It makes no difference to the result in this case. And in many other cases the low bar to establishing materiality means that, on the approach of Kiefel CJ, Gageler, Keane and Gleeson JJ, it will be sufficient to point to any role that non-compliance with a statutory condition played in the decision-making process to ground the conclusion that the result reached by the decision-maker was not inevitable. Thirdly, even in cases where the location of the onus of proof might make a difference, such as a rare case where evidence is necessary to establish the effect that non-compliance would have had upon the decision-making process, a review court will usually apply the general principle that the extent of an onus will depend upon the capacity of a party to adduce evidence187. "[S]light evidence may be enough"188. The distinction between a threshold for a ground of review and "materiality" As Gordon and Steward JJ explain189, there are evidently two steps that must be taken before a conclusion of jurisdictional error is reached. This section of these reasons is concerned with the first step. Before any issue of materiality can arise an applicant must establish that there has been non-compliance with a statutory condition or, put more loosely, that there has been an error capable of 183 Keyes v School District No 1 (1973) 413 US 189 at 209. 184 Shinseki v Sanders (2009) 556 US 396 at 415. 185 Traynor, The Riddle of Harmless Error (1970) at 26, suggesting that this must be done "without benefit of such aids as presumptions or allocated burdens of proof". 186 Balenzuela v De Gail (1959) 101 CLR 226 at 234-235. 187 Blatch v Archer (1774) 1 Cowp 63 at 65 [98 ER 969 at 970]. See G v H (1994) 181 CLR 387 at 391-392; Russo v Aiello (2003) 215 CLR 643 at 647 [10]. 188 Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371. Edelman being a jurisdictional error. There will often be a threshold requirement of injustice before it is concluded that there has been non-compliance with a statutory condition. For instance, a statutory condition that requires a decision-maker to have regard to mandatory relevant considerations usually involves a threshold which material must cross before it reaches the standard of relevance. To take one definition of relevant material, it must be material that "if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding"190. Once relevance is established, a decision-maker's failure to consider such material will meet the threshold of injustice so as to be capable of being a jurisdictional error. The statutory condition of procedural fairness is another example of a condition that contains a threshold requirement before there will be failure to comply. Any procedural irregularity must reach a threshold of sufficient injustice before procedural unfairness will be found to exist. For instance, a person "does not have to be given an opportunity to comment on every adverse piece of its credibility, relevance or significance"191. information, The threshold of injustice that is necessary for an obligation of procedural fairness can be understood as a need to establish that an irregularity is capable of causing "practical injustice"192. Without the possibility of practical injustice, a procedural irregularity will not involve procedural unfairness. irrespective of An applicant bears the onus of proving procedural unfairness and therefore must bear the onus of proving that an irregularity constitutes procedural unfairness. It will usually be sufficient to point to the seriousness of the irregularity to establish that it is capable of producing practical injustice. This is, emphatically, not an inquiry into whether the actual result might have been different. It is an inquiry into whether the irregularity reached the threshold of "error". The same principle applies to irregularities in civil trials: the capacity to cause practical injustice is established once it is concluded that evidence that was admitted was inadmissible, and the party against whom it was tendered has "a prima-facie right to a new trial", with a separate, and different, question being whether that right can be "displaced" 190 Evidence Act 1995 (Cth), s 55. 191 Kioa v West (1985) 159 CLR 550 at 628. 192 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 13-14 [37]-[38]; Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at 443 [38]; BVD17 v Minister for Immigration and Border Protection (2019) 93 ALJR 1091 at 1104 [66]; 373 ALR 196 at 212; Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v AAM17 (2021) 95 ALJR 292 at 300 [22], 303 [39], [41], 304 Edelman if "the evidence erroneously admitted cannot reasonably be supposed to have affected the result"193. The same principle also applies to errors of law or miscarriages of justice in criminal trials. Again, the capacity for practical injustice is inherent in the rules which establish when an irregularity is an error of law. But, once the threshold is reached, the appellant has a prima facie right to have the appeal allowed; a separate question is whether the error could not have affected the result194. Again, a miscarriage of justice, not falling within the category of an "error of law", still requires the capacity for practical injustice: a "departure from [a] trial according to law"195. Expressed in different terms, but amounting to the same thing, this can be shown by demonstration that something "has gone wrong and which was capable of affecting the result of the trial", which, again, is separate from a question of whether "that potentially adverse effect on the result may actually, that is, in reality, have occurred"196. As Gleeson CJ explained during oral argument in Weiss v The Queen197, the erroneous admission of evidence of a fact is a miscarriage of justice, with a separate question being whether the miscarriage is shown not to be substantial, or material, such as where the accused later gives evidence admitting the same fact. There is room to doubt whether the irregularities identified in Minister for Immigration and Border Protection v SZMTA198 were really circumstances where there was a capacity to cause practical injustice so that procedural unfairness existed. In two of the appeals considered by this Court in SZMTA it was assumed by the Minister199 that it was procedurally unfair for the Tribunal not to disclose to the applicant the mere fact that the Tribunal had been notified by the Secretary that s 438 of the Migration Act applied to certain information or documents which the Secretary had given the Tribunal. The notification that was not disclosed to the their claims. applicants contained no information concerning relevant 193 Piddington v Bennett and Wood Pty Ltd (1940) 63 CLR 533 at 554. 194 Mraz v The Queen (1955) 93 CLR 493 at 514. See also Weiss v The Queen (2005) 224 CLR 300 at 308 [18]. 195 Weiss v The Queen (2005) 224 CLR 300 at 308 [18]. 196 R v Matenga [2009] 3 NZLR 145 at 158 [31] (emphasis in original). See also Cesan v The Queen (2008) 236 CLR 358 at 392-393 [116]-[122], 393-396 [123]-[132]. 197 (2005) 224 CLR 300 at 302. 198 (2019) 264 CLR 421. 199 (2019) 264 CLR 421 at 428, 432. Edelman The "procedural context" was undoubtedly altered200 but it might be questioned whether that procedural irregularity was capable of producing practical unfairness. Equally, there might be room to doubt whether the failure to notify in this case was really a circumstance that was capable of producing practical injustice. But, since it was common ground that the failure to notify in this case was a denial of procedural fairness, this point need not be further considered. Once an applicant establishes that an administrative action has involved non-compliance with a statutory condition there is a further issue to consider before that non-compliance will lead to invalidity. This further issue is materiality. The concept of materiality – or harmless error, as it is sometimes described in the United States – is not concerned with whether there has been non-compliance with an express or implied statutory condition. Instead, it is concerned with whether Parliament intended that non-compliance will have the effect that a decision is beyond power and thus invalid. Where the statutory condition is not fundamental then the usual focus is upon whether the non-compliance might possibly have affected the decision201. For instance, if a mandatory consideration is not intended to be a fundamental condition then non-compliance in a trivial way will not invalidate a decision. As Mason J said, a mandatory consideration "might be so insignificant that the failure to take it into account could not have materially affected the decision"202. The concept of materiality has applied for more than a century in relation to whether a new civil or criminal trial should be ordered after a miscarriage of justice. In those areas, and subject to statutory provision to the contrary, it has long been settled that the usual position is that the onus is upon the party asserting that the miscarriage of justice was immaterial so that no new trial should be granted. Once the reason for the implication of materiality is appreciated, it can be seen that the same approach should be taken to administrative decisions. The implication of materiality as a requirement for invalidity Implication of statutory conditions upon power generally More than a century ago, Isaacs J explained that an implication "is included in what is expressed" and, on a proper interpretation, is to be understood to have 200 (2019) 264 CLR 421 at 440-441 [29]-[31]. 201 Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at 137 [40], 147-148 [72]; BVD17 v Minister for Immigration and Border Protection (2019) 93 ALJR 1091 at 1104-1105 [66]; 373 ALR 196 at 212. 202 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40. Edelman been "meant by what is actually said, though not so stated in express terms"203. In this sense, like the "same rules which common sense teaches every one to use", statutory meaning also includes many assumptions because "[h]owever minutely we may define, somewhere we needs must trust at last to common sense and good faith"204. This use of statutory assumptions does not differ from our ordinary use of language. As Professor Pinker has observed205, "language itself could not function if it did not sit atop a vast infrastructure of tacit knowledge about the world and about the intentions of other people". For instance, "[w]hen the shampoo bottle says 'Lather, rinse, repeat', we don't spend the rest of our lives in the shower; we infer that it means 'repeat once'". Coke was referring to such assumptions when he wrote that the "surest construction of a Statute is by the rule and reason of the Common Law"206, that "it is a good exposition of a Statute, when the reason of the Common Law is pursued"207 and that "in construction of Statutes, the reason of the Common Law give[s] great light, and the Judges, as much as may be, follow the rule thereof"208. The "reason" of the common law as a statutory assumption was the foundation for the celebrated decision of Byles J in Cooper v Wandsworth Board of Works209, when he said of the rules of procedural fairness that "although there are no positive words in a statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature". As decisions in this Court have explained, that passage described how the common law, as part of the "matrix of legislation", is an assumption upon which legislative 203 Merchant Service Guild of Australasia v Newcastle and Hunter River Steamship Co Ltd [No 1] (1913) 16 CLR 591 at 624. See also Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 at 118; R v Rigby (1956) 100 CLR 146 at 151; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 368 [120]. 204 Lieber, Legal and Political Hermeneutics, enlarged ed (1839) at 28, 30-31. See also Goldsworthy, "Implications in Language, Law and the Constitution", in Lindell (ed), Future Directions in Australian Constitutional Law: Essays in honour of Professor Leslie Zines (1994) 150 at 157-161. 205 Pinker, The Blank Slate (2002) at 210-211. 206 Coke, Institutes of the Laws of England (1628), pt 1, bk 3, ch 8, s 464 at 272. 207 Coke, Institutes of the Laws of England (1642), pt 2, Marlebridge, ch 25 at 148. 208 Coke, Institutes of the Laws of England (1642), pt 2, Glocester, ch 5 at 301. 209 (1863) 14 CBNS 180 at 194 [143 ER 414 at 420]. Edelman intention is based210. Hence, conditions upon statutory powers have long been recognised as a matter of statutory implication. Examples include conditions that require a decision-maker: to afford procedural fairness211; to take into account relevant considerations212; and not to exercise powers, including making decisions, unreasonably213. The understanding of statutory conditions upon power as underlying assumptions was more than a century old when it was expressed in 1961 by its most famous proponent, Dr Wade, terms which described statutory interpretation as being at the "heart" of determining conditions upon statutory power214. In Walton v Gardiner215, Brennan J acknowledged that he had adopted or applied Wade's approach in a line of decisions from 1982 onwards216. Wade's view was also adopted by Hayne, Kiefel and Bell JJ in 2013 in Minister for Immigration and Citizenship v Li217. 210 FAI Insurances Ltd v Winneke (1982) 151 CLR 342 at 408. See also Twist v Randwick Municipal Council (1976) 136 CLR 106 at 109-110; Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487 at 491; Kioa v West (1985) 159 CLR 550 at 610-615. 211 Kioa v West (1985) 159 CLR 550 at 610, 615; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 100 [39]. 212 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505. See also Swan Hill Corporation v Bradbury (1937) 56 CLR 746 at 758; R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 213 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36; Kruger v The Commonwealth (1997) 190 CLR 1 at 36; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 650 [126]. 214 Wade, Administrative Law (1961) at 40. 215 (1993) 177 CLR 378 at 408. 216 Church of Scientology Inc v Woodward (1982) 154 CLR 25 at 70; FAI Insurances Ltd v Winneke (1982) 151 CLR 342 at 409; Coutts v The Commonwealth (1985) 157 CLR 91 at 105; Kioa v West (1985) 159 CLR 550 at 609-611; Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 34-36. 217 (2013) 249 CLR 332 at 364 [67]. Edelman Implication that non-compliance with a statutory condition will invalidate an administrative decision An exercise of public power has long been held to be invalid if that exercise is beyond a statutory condition expressly or impliedly conferred upon the repository. As de Smith observed, the prerogative writ of certiorari had been used since the fourteenth century to keep inferior courts or tribunals "within their spheres of jurisdiction"218. In 1886, in the United States, Hawes cited many authorities for the proposition that if a court "acts without authority its judgments and orders are regarded as nullities"219. Just as the conditions upon statutory power are to be discerned as a matter of legislative intention, so too is legislative intention the basis for discerning whether non-compliance with a condition upon statutory power will deprive a decision-maker of authority. These legal principles concerning the setting aside of decisions for non-compliance with a statutory condition did not change at Federation in 1901 by the inclusion of s 75(v) in the Constitution, a provision that conferred authority on this Court to act according to "the known principles of law"220. These known principles of law continued to be refined. For centuries, judges spoke of discerning the validity of action purportedly authorised by statute by considering "the meaning and intention of the Legislature" and focusing upon a distinction between circumstances that were "of the essence 218 de Smith, "The Prerogative Writs" (1951) 11 Cambridge Law Journal 40 at 46. 219 Hawes, The Law Relating to the Subject of Jurisdiction of Courts (1886) §38 at 59, citing Elliott v Peirsol (1828) 26 US 328 at 340; Lovejoy v Albee (1851) 33 Me 414; 54 Am Dec 630; Rodgers v Evans (1850) 8 Ga 143; 52 Am Dec 390; Horner v Doe (1848) 1 Ind 130; 48 Am Dec 355; Mercier v Chace (1864) 9 Allen 242; Miller v Brinkerhoff (1847) 4 Denio 118; 47 Am Dec 242; Attorney General v Lord Hotham (1823) Turn & R 209 at 219 [37 ER 1077 at 1081]; Briscoe v Stephens (1824) 2 Bing 213 at 217 [130 ER 288 at 289]. 220 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1883-1884 (Mr Barton). See also Official Record of the Debates of the Australasian Federal Convention (Melbourne), 4 March 1898 at 1878 (Mr Symon); Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901) at 784. See further Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 139-140 [156]-[158]; Smethurst v Commissioner of the Australian Federal Police (2020) 94 ALJR 502 at 537 [143]-[144], 555 [229]-[230]; 376 ALR 575 at 610-611, 634. Edelman of a thing required to be done" and those that were "merely directory"221. In the former category, non-compliance would lead to invalidity. In the latter category, non-compliance would lead to invalidity only if there had not been "substantial compliance with the requirement"222. The language of "mandatory" and "directory" provisions, at least as an exclusive test, was disfavoured by the Court of Appeal of the Supreme Court of New South Wales in Tasker v Fullwood223. But it was nevertheless emphasised that the question was one of statutory interpretation: "to determine whether the legislature intended that a failure to comply with the stipulated requirement would invalidate the act done"224. When the approach in Tasker v Fullwood was adopted by this Court225, McHugh, Gummow, Kirby and Hayne JJ reiterated the focus upon legislative intention, saying that the test should be "whether it was a purpose of the legislation that an act done in breach of the provision should be invalid"226. Some of the circumstances that will be considered in assessing whether non-compliance with a statutory condition will lead to invalidity are: any public inconvenience that might be expected to arise from invalidity227; the imperative language of the provision228; and whether the statutory condition regulates the exercise of functions rather than "impos[ing] essential preliminaries to the exercise 221 R v Loxdale (1758) 1 Burr 445 at 447 [97 ER 394 at 395]. See also R v The Justices of Leicester (1827) 7 B & C 6 at 9 [108 ER 627 at 628]; Montreal Street Railway Co v Normandin [1917] AC 170 at 174-175; Clayton v Heffron (1960) 105 CLR 214 222 Scurr v Brisbane City Council (1973) 133 CLR 242 at 256. 223 [1978] 1 NSWLR 20. 224 [1978] 1 NSWLR 20 at 23-24. 225 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391 [93]. See also at 375 [41]. 226 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 227 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 228 SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 294 at 321 [77], 344 [166], 354 [206]. Edelman of ... functions"229. In Minister for Immigration and Citizenship v SZIZO230, this Court considered that the absurdity of the outcome was a strong reason militating against treating as a source of invalidity the departure from any procedural steps leading up to the hearing. Related to this, and subject to any contrary intention, there will also be a usual implication that an act is not invalid if the non-compliance is immaterial. The basis for this usual implication, and the meaning of immateriality, lies in the long history of such an approach being taken to refusing to grant new civil or criminal trials following miscarriages of justice or legal error. Materiality as a condition for a new civil or criminal trial There is a long history to the requirement of materiality of a legal error before a new civil or criminal trial will be ordered231. The original rule, which existed in both civil and criminal cases in the Court of King's Bench232, as well as at Common Pleas233, and in Chancery when issues had been decided by a common law jury234, was that an erroneous ruling in relation to evidence would lead to a new trial unless no injustice resulted from the error. One instance where no injustice might arise was described by the Lord Chief Justice in R v Teal235 as where the error "could have made no difference, at least it ought not to have made any difference in the verdict". That original rule was displaced for a period of time by the "Exchequer rule", which was ushered in by the decision of the Court of Exchequer in Crease v 229 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 230 (2009) 238 CLR 627 at 640 [35]. 231 See the more detailed historical discussion in Weiss v The Queen (2005) 224 CLR 232 R v Ball (1807) Russ & Ry 132 at 133 [168 ER 721 at 722]; R v Treble (1810) Russ & Ry 164 at 166 [168 ER 740 at 741]. 233 Horford v Wilson (1807) 1 Taunt 12 at 14 [127 ER 733 at 734]; Doe v Tyler (1830) 6 Bing 561 at 563, 564 [130 ER 1397 at 1398]. 234 Pemberton v Pemberton (1805) 11 Ves 50 at 52-53 [32 ER 1006 at 1007]; Bullen v Michel (1816) 4 Dow 297 at 319, 330 [3 ER 1171 at 1179, 1182]; Barker v Ray (1826) 2 Russ 63 at 75-76 [38 ER 259 at 263-264]; Lorton v Kingston (1838) 5 Cl & F 269 at 340 [7 ER 406 at 433]. 235 (1809) 11 East 307 at 312 [103 ER 1022 at 1024]. Edelman Barrett236. The Exchequer rule was that the admission of inadmissible evidence meant that the "losing party has a right to a new trial"237. But the Exchequer rule had little to commend it. Professor Wigmore described it as the "Exchequer heresy" and lauded the judges who did not comply with it as "refusing to bow the knee to the Baal-worship of the rules of Evidence"238. The Exchequer rule was abolished in civil matters by a judicature rule enacted by the Supreme Court of Judicature Act 1873239: r 48 provided that a new trial shall not be granted for misdirection or improper admission of evidence unless the court considered that a "substantial wrong or miscarriage" had occurred. In a decision later approved in this Court240, Cussen J said in Holford v The Melbourne Tramway and Omnibus Co Ltd241 that a substantial wrong or miscarriage in relation to jury misdirection existed where "the result of the case is such as to show that [the jury] may have been influenced in their verdict by the misdirection". The Exchequer rule was abolished in criminal matters by the proviso to s 4(1) of the Criminal Appeal Act 1907242, which permitted the newly created Court of Criminal Appeal to dismiss an appeal despite an error of law or miscarriage of justice if "they consider that no substantial miscarriage of justice has actually occurred". In New South Wales in 1912, the Criminal Appeal Act 1912 (NSW) permitted a new trial to be ordered if the Court of Criminal Appeal considered that a miscarriage of justice had occurred243 but nevertheless also contained a proviso 236 (1835) 1 Cr M & R 919 [149 ER 1353]. And see the discussion in Weiss v The Queen (2005) 224 CLR 300 at 306-307 [13]. 237 Wright v Doe d Tatham (1837) 7 Ad & El 313 at 330 [112 ER 488 at 495], quoted in Weiss v The Queen (2005) 224 CLR 300 at 307 [13]. 238 Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law, 3rd ed (1940), vol 1 at 368. This section reflected in large part his earlier writing: Wigmore, "New Trials for Erroneous Rulings upon Evidence; A Practical Problem for American Justice" (1903) 3 Columbia Law Review 433. 239 36 & 37 Vict c 66. 240 See Balenzuela v De Gail (1959) 101 CLR 226 at 233; Hembury v Chief of the General Staff (1998) 193 CLR 641 at 656 [38]; Radio 2UE Sydney Pty Ltd v Chesterton (2009) 238 CLR 460 at 485 [66]. 241 [1909] VLR 497 at 526. 242 7 Edw VII c 23. 243 Criminal Appeal Act 1912 (NSW), s 8(1). Edelman that permitted the appeal to be dismissed if the court considered that "no substantial miscarriage of justice has actually occurred"244. It is therefore now long established that the general test for the refusal of a new civil trial under legislation or rules of court despite an error of law is that "the court might refrain from granting a new trial if it was affirmatively satisfied that the actual verdict returned could not have been affected"245. And as to new criminal trials, in Weiss246 this Court explained that the common form proviso was enacted against the shared history of the grant of new civil and criminal trials following legal error. Like the condition for a new civil trial, it will usually be sufficient to engage the proviso if the error was immaterial in the sense that the appellant was not deprived of the possibility of acquittal247 because conviction by the jury was "inevitable"248. And also like the conditions for a new civil trial, "some errors will establish a substantial miscarriage of justice even if the appellate court considers 244 Criminal Appeal Act 1912 (NSW), s 6(1). 245 Piddington v Bennett and Wood Pty Ltd (1940) 63 CLR 533 at 563. See also Balenzuela v De Gail (1959) 101 CLR 226 at 234; Nobarani v Mariconte (2018) 265 CLR 236 at 247 [38], discussing the meaning of "substantial wrong or miscarriage" in Uniform Civil Procedure Rules 2005 (NSW), r 51.53(1). 246 (2005) 224 CLR 300 at 306-312 [12]-[30]. 247 Wilde v The Queen (1988) 164 CLR 365 at 371-372; Kalbasi v Western Australia (2018) 264 CLR 62 at 88 [71], 111 [136], 121 [160]. See also Mraz v The Queen (1955) 93 CLR 493 at 514; Driscoll v The Queen (1977) 137 CLR 517 at 524-525; R v Storey (1978) 140 CLR 364 at 376; Pollock v The Queen (2010) 242 CLR 233 at 252 [70]; Filippou v The Queen (2015) 256 CLR 47 at 54-55 [15]; Lane v The Queen (2018) 265 CLR 196 at 212 [56]. 248 Collins v The Queen (2018) 265 CLR 178 at 193 [41]; OKS v Western Australia (2019) 265 CLR 268 at 282-283 [38]-[39]. See also Gallagher v The Queen (1986) 160 CLR 392 at 412-413; Wilde v The Queen (1988) 164 CLR 365 at 372; Festa v The Queen (2001) 208 CLR 593 at 631 [121], 636 [140], 661 [226]; Conway v The Queen (2002) 209 CLR 203 at 226 [63]; Arulthilakan v The Queen (2003) 78 ALJR 257 at 269 [62], 270-271 [68]-[69]; 203 ALR 259 at 275, 276-277; Kamleh v The Queen (2005) 79 ALJR 541 at 547 [29], 549 [39]; 213 ALR 97 at 104, 106; Darkan v The Queen (2006) 227 CLR 373 at 402 [95], 407 [117]; Baini v The Queen (2012) 246 CLR 469 at 481-482 [33], 484 [40]; Lindsay v The Queen (2015) 255 CLR 272 at 276 [4], 301-302 [86]; Castle v The Queen (2016) 259 CLR 449 at 472 [65], 477 [81]; R v Dickman (2017) 261 CLR 601 at 605 [4]-[5], 620 [63]; Kalbasi v Western Australia (2018) 264 CLR 62 at 88 [71], 121 [159]-[160]; Lane v The Queen (2018) 265 CLR 196 at 212 [56], 213 [59]. Edelman that conviction was inevitable"249. This Court in Weiss said that a "significant denial of procedural fairness at trial" was an example of such a fundamental error250. Materiality as a condition for a new administrative hearing Just as long-standing assumptions form the basis for an implication of statutory conditions upon power, so too do the long-standing assumptions about materiality form the basis for an implication that non-compliance with those conditions will not lead to invalidity unless the non-compliance is material. In Nobarani v Mariconte251, this Court recognised the equivalence of (i) the requirement of a "substantial wrong or miscarriage" before a new trial will be ordered and (ii) the materiality review before non-compliance with a statutory condition will lead to invalidity of the decision. In both cases, the question is whether a new trial or hearing should not be granted despite the miscarriage or error of law. requirement judicial In the same manner as the rules that have developed in relation to new civil or criminal trials, and subject to any express statutory provision to the contrary, some errors or failures to comply with statutory conditions will always involve a material breach irrespective of whether the result might have been inevitable. One type of statutory condition that will always involve material non-compliance is a duty to make the ultimate decision within the bounds of legal reasonableness252. A decision that is legally unreasonable will, by definition, involve an error that is not trivial or harmless. A different type of statutory condition that will always involve material non-compliance is where the non-compliance is fundamental to the hearing process. For instance, just as it was said of new criminal trials in Weiss, it could be no answer to an extreme denial of procedural fairness in an administrative hearing to say that if the applicant had been given the opportunity to put their case then the 249 Lane v The Queen (2018) 265 CLR 196 at 207 [38]. 250 (2005) 224 CLR 300 at 317 [45]. 251 (2018) 265 CLR 236 at 247 [38]. See also BVD17 v Minister for Immigration and Border Protection (2019) 93 ALJR 1091 at 1104-1105 [66]-[68]; 373 ALR 196 at 212-213. See further Wehbe v Minister for Home Affairs (2018) 92 ALJR 1033 at 1037 [24]; 361 ALR 1 at 6; OKS v Western Australia (2019) 265 CLR 268 at 252 Rather than other duties or powers: see Minister for Home Affairs v DUA16 (2020) 95 ALJR 54 at 61 [26]; 385 ALR 212 at 220; ABT17 v Minister for Immigration and Border Protection (2020) 94 ALJR 928 at 958 [125]; 383 ALR 407 at 443. Edelman case would inevitably have failed253. Nor could it be an answer to a hearing tainted by actual or apprehended bias to say that the case would inevitably have failed before an impartial decision-maker. In the language of the United States decisions, bias is a ground that is so fundamental that it will "defy harmless-error review"254. The implication of the onus concerning materiality The onus where a new civil or criminal trial is sought As a matter of principle, the role of legislative intention should not be limited to discerning the existence of statutory conditions and the requirement for non-compliance with statutory conditions to be material. It should also extend to discerning the party who bears the onus of proving materiality or immateriality. The consequence of the onus of proof being a matter of expression or implication of legislative intention is that the onus of proof of materiality or immateriality must depend on the statutory context. As explained in the introduction to these reasons, this is the position that has been reached in the United States. Many statutes will contain little or no indication to guide a court as to which party bears the onus of proof. The legislative intention in these circumstances can only be based upon assumptions derived from the historical matrix of common law and statute. Like the history of the materiality requirement which established materiality as a usual assumption, the Australian history of the onus of proof has established that the onus is generally borne by the party opposing a new trial or a new hearing. That is, the onus is generally to prove immateriality, not to prove materiality. The common law need not have taken this path. Indeed, the judicature rule, in its literal terms which provided that "[a] new trial shall not be granted ... unless"255, could have comfortably been understood as placing the onus upon the party seeking a new trial. But the onus of proof was not generally understood in this way. An early case involving the recognition that the onus is to prove immateriality and not for an applicant to prove materiality, described by Wigmore 253 Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at 254 Neder v United States (1999) 527 US 1 at 8-9. 255 Supreme Court of Judicature Act 1873 (36 & 37 Vict c 66), Schedule, r 48 (emphasis added). Edelman as a "model example"256, was the decision of Porter J in People v Fernandez257, where he said: "there is no distinction between civil and criminal cases. The reception of illegal evidence is presumptively injurious to the party objecting to its admission; but where the presumption is repelled, and it clearly appears, on examination of the whole record, beyond the possibility of rational doubt, that the result would have been the same if the objectionable proof had been rejected, the error furnishes no ground for reversal." In Australia it is established beyond doubt in relation to the common form proviso in criminal law that the onus of proof lies upon the State to establish that no substantial miscarriage of justice has occurred258. As McHugh J said in TKWJ v The Queen259: "Cases on the proviso operate on the hypothesis that there has been a legal error that prima facie requires the conviction to be set aside. The issue then becomes whether the Crown has shown that no substantial miscarriage of justice occurred because the error could not have affected the result of the trial." For a period of time, however, the opposite view prevailed in relation to civil trials. In Holford260, Cussen J said that it was sufficient for the party seeking a new trial to demonstrate that the jury may have been influenced by the misdirection and then continued: "The plaintiffs' counsel contended that the onus of showing the miscarriage is on the party asking for the new trial. I think this is clearly right, but I think that onus is satisfied when the facts appear to be as above set out, and that unless the party opposing the grant of the order for a new trial can point to some further fact, the conclusion that there was a miscarriage must be drawn." 256 Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law, 3rd ed (1940), vol 1 at 368. 257 (1866) 35 NY 49 at 59. 258 Mraz v The Queen (1955) 93 CLR 493 at 514; TKWJ v The Queen (2002) 212 CLR 124 at 143 [63]; Lindsay v The Queen (2015) 255 CLR 272 at 294 [64]. 259 (2002) 212 CLR 124 at 143 [63]. 260 [1909] VLR 497 at 526 (italics in original). Edelman This approach to the onus of proof, whilst conforming with the literal terms of the judicature rule, did not last, at least in jurisdictions such as New South Wales which were governed by the common law rule rather than the judicature rule. As Dixon CJ observed in Balenzuela v De Gail261, historically there had been cases, like Holford, that placed the onus upon the party seeking a new trial to establish that the error might possibly have affected the result. But there were many cases where the burden was upon the party resisting the new trial. The "accepted practice in New South Wales" was the latter262. In the passage from which Dixon CJ quoted, this accepted practice was described in terms that plainly placed the onus upon the party resisting the new trial263: "[T]he court would as a rule grant a new trial where evidence had been improperly admitted: but that in its discretion the court might refrain from granting a new trial if it was affirmatively satisfied that the actual verdict returned could not have been affected by the inadmissible evidence." The accepted practice in New South Wales had previously been applied by Dixon J, who spoke of how "the prima-facie right to a new trial is displaced" by an error that "cannot reasonably be supposed to have affected the result"264. In Balenzuela, whilst Dixon CJ doubted whether the question of onus of proof was really of any importance, he reiterated that the "true view" was that265: "at common law it was necessary to grant a new trial unless the court felt some reasonable assurance that the error of law at the trial whether in a misdirection or wrongful admission or rejection of evidence or otherwise was of such a nature that it could not reasonably be supposed to have influenced the result". It is plain beyond argument that in the passage above Dixon CJ was approving the accepted practice in New South Wales as the common law rule that the onus of proof lay upon a party asserting that there should be no new trial because the error could not reasonably be supposed to have influenced the result. Indeed, his Honour also observed that "the burden is the other way" in the language 261 (1959) 101 CLR 226 at 233-234. 262 (1959) 101 CLR 226 at 234, quoting Piddington v Bennett and Wood Pty Ltd (1940) 63 CLR 533 at 563 and citing Macleod v Attorney-General (NSW) (1890) 11 LR (NSW) 218; [1891] AC 455 and Makin v Attorney-General (NSW) [1894] AC 263 Piddington v Bennett and Wood Pty Ltd (1940) 63 CLR 533 at 563. 264 Piddington v Bennett and Wood Pty Ltd (1940) 63 CLR 533 at 554. 265 (1959) 101 CLR 226 at 234-235. Edelman of the judicature rule, which suggested "an intention that the court should not grant a new trial ... unless it was persuaded that a substantial wrong or miscarriage had been occasioned by the error"266. The Chief Justice concluded his discussion of this point by saying that the location of the onus may form one distinction between the common law and the judicature rule. He endorsed the view in Best on Evidence267 that the distinction between the common law and the judicature rule was that "[f]ormerly, where evidence had been improperly admitted or rejected, a new trial was granted, unless it was clear that the result would not have been affected; but this rule is reversed by the [judicature rule]". In Balenzuela, Dixon CJ separately considered whether there was "[a]nother distinction" (ie a different distinction) between the judicature rule and the common law, being that "a rather more substantial wrong or miscarriage has been required under the judicature rule than had been required at common law"268. Unlike the distinction on the point of onus, Dixon CJ thought that this other alleged distinction was "doubtful" and considered that what Higgins J had said in Robinson & Vincent Ltd v Rice269 was "justified in substance", namely that the position under the judicature rule was the same as that at common law before the Common Law Procedure Act 1852270 as applied subsequently in England and New South Wales. The Chief Justice was here making a different point about the extent of a substantial miscarriage that was required. He was not contradicting what he had said immediately beforehand about the onus of proof being borne by the party alleging immateriality. Nor did Dixon CJ directly contradict himself in relation to the distinction that he recognised between the common law and the judicature rule in the next paragraph when he said that a new trial should be ordered because the "basal fact is that material evidence was erroneously excluded from the consideration of the jury"271. His concern with "material evidence" was a concern with whether an error had been established at all, not with the materiality of the error. And as Dixon CJ said earlier in his reasons272: 266 (1959) 101 CLR 226 at 235. 267 Phipson and Best, The Principles of the Law of Evidence, 12th ed (1922) at 70. 268 (1959) 101 CLR 226 at 235. 269 (1926) 38 CLR 1 at 10. 270 15 & 16 Vict c 76. 271 (1959) 101 CLR 226 at 236. 272 (1959) 101 CLR 226 at 232. Edelman "When material evidence has been erroneously rejected at the instance of the party who succeeds, then to deny nevertheless to the unsuccessful party the remedy of a new trial the Court must have some sure ground for saying that the reception of the evidence would not have affected the result or that it ought not to have done so." The other Justices in Balenzuela all took the same approach as Dixon CJ, stating the rule in terms which effectively described it as one of an entitlement to a new trial unless the court was satisfied that the error could not have affected the verdict of the jury. In particular, Kitto J said that a new trial had to be granted unless the jury could not have been led by the rejected evidence to find for the plaintiff273. Windeyer J, who agreed with Dixon CJ, added that although questions of onus would not often be decisive, the position in New South Wales differed from the judicature rule – where the onus might be on the appellant – because in New South Wales an error of law "prima facie furnishes a ground for a new trial"274. The general rule for the onus in civil cases was thus settled in Balenzuela and not doubted subsequently. It was borne by the appellant who successfully opposed a new trial in McLellan v Bowyer275. It was again borne by the appellant who successfully opposed a new trial in Mann v Dumergue276, where this Court accepted that a new trial must be granted unless the Court was prepared "to go so far" as to conclude that the wrongly rejected evidence could not have affected the verdict. Balenzuela, McLellan, and Mann were all cited by this Court in Dairy Farmers Co-operative Milk Co Ltd v Acquilina277, where the Court added that the position was the same as that laid down in Crease v Barrett278. The Court could not have meant, by its reference to Crease v Barrett, to resurrect the heretical Exchequer rule and to abolish the doctrine of trivial error. Its focus must instead have been upon the remarks of the Court in that case that however strong the Court's opinion may have been on the "propriety of the present verdict" it could 273 (1959) 101 CLR 226 at 237. 274 (1959) 101 CLR 226 at 244-245. See also at 238 (Taylor J), 239 (Menzies J). 275 (1961) 106 CLR 95. 276 Unreported, High Court of Australia, 22 August 1963 at 3-4. 277 (1963) 109 CLR 458 at 463. 278 (1835) 1 Cr M & R 919 [149 ER 1353]. Edelman not say – that is, the Court was not satisfied that it had been shown – that the wrongful exclusion of evidence "would have had no effect with the jury"279. It was against this background that this Court decided Stead v State Government Insurance Commission280. In the course of ordering a new trial following a denial of procedural fairness, the Court said281: "All that the appellant needed to show was that the denial of natural justice deprived him of the possibility of a successful outcome. In order to negate that possibility, it was, as we have said, necessary for the Full Court to find that a properly conducted trial could not possibly have produced a different result." It is not entirely clear what the Court meant by the suggestion that the appellant needed to show that the denial of natural justice had "deprived him of the possibility of a successful outcome". The most likely meaning is that by showing the possibility of a different outcome, the appellant could establish that what might otherwise be a mere procedural irregularity would amount to a failure of a statutory condition. If the failure in that case to allow the appellant the opportunity to make submissions had concerned a matter that was entirely trivial then the failure might not have reached the threshold of procedural unfairness. But since the submissions might have affected the outcome, the denial of that opportunity established procedural unfairness. The onus then was borne by the respondent to show immateriality, namely that "a properly conducted trial could not possibly have produced a different result". The very next paragraph of the decision confirms this meaning. Referring to the passages of the decision of Dixon CJ in Balenzuela282 discussed above in these reasons, their Honours said that a new trial was ordered in that case because "material evidence was wrongly rejected" (ie an error was established) but that it "would have been otherwise had the respondent been able to demonstrate that the rejected evidence could have made no difference to the result"283. 279 Crease v Barrett (1835) 1 Cr M & R 919 at 933 [149 ER 1353 at 1359]. 280 (1986) 161 CLR 141. 281 (1986) 161 CLR 141 at 147. 282 (1959) 101 CLR 226 at 232, 235. 283 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147 (emphasis added). Edelman The onus in relation to materiality in judicial review Although the decision in Stead concerned an application for a new civil trial, it has been relied upon in hundreds of applications where an applicant for judicial review sought a new hearing on the basis of a decision-maker's failure to comply with an express or implied statutory condition. The approach taken in Stead was expressly adopted by all members of this Court in Re Refugee Review Tribunal; Ex parte Aala284. In that case, the issues for decision were clearly separated into two distinct questions. First, had there been a denial of procedural fairness? Secondly, was the breach material? All members of the Court concluded that there had been a denial of procedural fairness. And, although McHugh J concluded that the breach was not material, all members of the Court understood Stead to have imposed the onus of proof upon the party asserting that the non-compliance was immaterial. Hence, the various judgments expressed the approach to materiality in terms of: whether it could "be concluded" that the breach made no difference to the result285 (Gleeson CJ); whether the court had "satisf[ied] itself" that the breach made no difference to the result286 (McHugh J); whether the "victim of the breach", who is "ordinarily entitled to relief", is to be denied that relief because the court had been "convince[d]" that the breach made no difference287 (Kirby J); or whether the court can positively "say that a different result would not have been reached"288 (Callinan J). Although Gaudron and Gummow JJ, with whom Hayne J agreed on this point289, did not expressly decide whether the condition on the statutory power requiring procedural fairness was one which denied jurisdictional error for a trivial breach or whether the triviality of breach led to refusal of relief as a matter of discretion290, the onus of proof in either case would have been the same. The onus of proof for the exercise of a discretion to refuse relief is upon the party so asserting291. 284 (2000) 204 CLR 82. 285 (2000) 204 CLR 82 at 88 [4]. 286 (2000) 204 CLR 82 at 122 [104]. 287 (2000) 204 CLR 82 at 130-131 [131]. 288 (2000) 204 CLR 82 at 155 [211]. 289 (2000) 204 CLR 82 at 144 [172]. 290 (2000) 204 CLR 82 at 109 [59]. 291 Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at Edelman Against all of these authorities stands a single sentence in a joint judgment of three members of this Court in SZMTA292, making a point which was not necessary for the decision and was not argued, meaning that the point cannot be authority293: "There is also no dispute between the parties that it is the applicant for judicial review of the decision of the Tribunal who bears the onus of proving that a jurisdictional error has occurred". That common assumption in SZMTA was incorrect. The circumstances of this case Part 7 of the Migration Act was enacted within the common law context described above. In 2002, s 422B was inserted into the Migration Act294 to provide that provisions including Div 4 of Pt 7, concerning the conduct of the review, "are taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters they deal with". The provisions imply, by the long-standing assumptions sometimes loosely described as "a common law principle of interpretation"295, rules of procedural fairness, materiality, and onus of proof. No submission was made by the Minister to suggest that anything in the history or context of Pt 7 supported the onus of proof of materiality being borne instead by the applicant. Strictly, the appellant is correct in relation to the first ground of appeal: Mortimer J, understandably following the approach of three Justices of this Court in SZMTA, was wrong to impose an onus of proof of materiality on the appellant. But, as the Minister submitted, the decision of Mortimer J should be upheld on the basis that her findings of fact were correct. The Minister conceded before Mortimer J, as he did before this Court, that the failure to disclose the s 438 notification was a breach of the implied statutory condition of procedural fairness. But the Minister supported the conclusion of Mortimer J that the only manner in which any failure to afford procedural fairness could realistically have resulted in a different decision would be if disclosure of 292 (2019) 264 CLR 421 at 444 [41]. 293 R v Warner (1661) 1 Keb 66 at 67 [83 ER 814 at 815]; Felton v Mulligan (1971) 124 CLR 367 at 413; Baker v The Queen [1975] AC 774 at 787-789; Coleman v Power (2004) 220 CLR 1 at 44-45 [79]; CSR Ltd v Eddy (2005) 226 CLR 1 at 11 [13]. See also Cross and Harris, Precedent in English Law, 4th ed (1991) at 158-161. 294 Migration Legislation Amendment (Procedural Fairness) Act 2002 (Cth), Sch 1, item 6. 295 Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421 at Edelman the notification might have led to the appellant making submissions about the documents or information, relevantly the Court Outcomes Report, that were the subject of that notification296. Whether those submissions would have made any difference depended upon whether the Tribunal had taken the Court Outcomes Report into account at all. This is not a question which could realistically be affected by the location of the substantive onus of proof. Once the issue was raised by the Minister, the question was simply whether the Court Outcomes Report had any effect on the Tribunal's decision. If it did, then the decision might have been different. If it did not, then the decision would not have been different. An assessment of whether the Court Outcomes Report had any effect on the Tribunal's decision is not affected by the application of any presumption. As Mortimer J correctly observed, the materiality issue would be convoluted and confusing, and a true obstacle to the appellant, if it were to be presumed that the absence of any mention of the appellant's criminal record meant that it had no effect on the Tribunal's decision297. Such a presumption, if recognised, is a standardised inference. It would permit inference from common experience that the failure by the Tribunal to refer to a matter meant that the matter had not been considered to have any effect at all on the decision298. No such common experience exists. Further, the obligation upon the Tribunal to set out reasons for decision and to make findings on any material question of fact299 did not require the Tribunal to express in its reasons every matter that had any effect on its reasoning in a review, particularly for a review that, as was then provided, was required to be "fair, just, economical, informal and quick"300. Nevertheless, the failure by the Tribunal to refer to a matter in its reasons is a circumstance from which an inference might be drawn that the matter had no effect on the Tribunal's reasons. In other words, the failure "may indicate that the 296 MZAPC v Minister for Immigration and Border Protection [2019] FCA 2024 at 297 MZAPC v Minister for Immigration and Border Protection [2019] FCA 2024 at 298 See Thorne v Kennedy (2017) 263 CLR 85 at 101 [34], citing Calverley v Green (1984) 155 CLR 242 at 264. 299 Migration Act, ss 430(1)(c), 430(1)(d). See, similarly, DL v The Queen (2018) 266 CLR 1 at 12 [32]. 300 Migration Act, s 420(1). Edelman Tribunal did not consider the matter to be material"301 and it would entitle, but would not require, the inference to be drawn302. In short, however, any inference must be based upon all of the circumstances. In addition to the absence of any express reference by the Tribunal to the Court Outcomes Report, there are four other circumstances that support the inference that the Court Outcomes Report had no effect on the Tribunal's reasons. First, before the Tribunal could take the Court Outcomes Report into account it would have been required positively to exercise its discretion under s 438(3)(a) of the Migration Act to have regard to matters contained in a document that is the subject of a notification under s 438. The Tribunal made no mention of the exercise of that discretion. Secondly, the information in the Court Outcomes Report was of marginal relevance to the issues before the Tribunal. To the extent that the Court Outcomes Report had potential to impact upon the appellant's credibility, the "state false name" offence of dishonesty was, as Mortimer J said, "buried" in the Court Outcomes Report along with the appellant's other driving and alcohol-related offences303. Thirdly, the Tribunal did not reach any positive conclusion that the appellant lied in relation to any issue. As Mortimer J said, although the Tribunal rejected some of the appellant's evidence as not being "credible or plausible", this was a finding of objective unlikelihood of the evidence independently of any suggestion that the appellant was a person who should not be believed304. Fourthly, the Tribunal accepted significant parts of the appellant's evidence. The Tribunal accepted that there had been a dispute between the appellant's father and the appellant's uncle. The Tribunal accepted the appellant's evidence about being taken to a house by his cousin and drugged and held there until a ransom was paid for his release. The Tribunal accepted that the appellant's family had disowned him and accepted the evidence of the appellant that this was because he had cut his hair and had "adopted the Australian lifestyle and started drinking alcohol". The appellant also relied upon the opening remarks made by the Tribunal in the initial, but later revoked, decision in September 2014 that the Tribunal had "considered all the material before it relating to [the appellant's] application". 301 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 330 [5] (emphasis added). 302 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 303 MZAPC v Minister for Immigration and Border Protection [2019] FCA 2024 at 304 MZAPC v Minister for Immigration and Border Protection [2019] FCA 2024 at Edelman This statement should not be taken to suggest a treatment by the Tribunal of the Court Outcomes Report as material that it had considered. Rather, the statement by the Tribunal that it had considered all the material before it demonstrated its consideration of whether it should decline to offer an interview to the appellant and should instead "decide the review in the [appellant's] favour on the basis of the material before it"305. Indeed, this initial decision, like the decision given after the appellant had been properly afforded the opportunity of an interview, contained no reference to the Court Outcomes Report. The Tribunal described the evidence before it as "extremely limited and vague". The appellant relied upon the decision of this Court in Kioa v West306 for the submission that even if relevant material had not been considered by the decision-maker, it was enough that the material was before the decision-maker for an obligation of procedural fairness to arise, entitling the appellant to make submissions about it. An issue in Kioa v West concerned s 5(1)(a) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and whether Mr Kioa had been denied procedural fairness by not being given the opportunity to make submissions in relation to an adverse statement in material that had not affected the reasoning of the delegate. The language of s 5(1)(a) imports the usual principle of natural justice and hence the usual rules of procedural fairness. As Mason J said, the Act was not intended "to work a radical substantive change in the grounds on which administrative decisions are susceptible to challenge at common law"307. Brennan J also observed that "there is no reason to construe in a novel manner provisions which state in familiar terms the well-known grounds of judicial review"308. The reasoning in Kioa v West is, however, inapt to the circumstances of this appeal. No issue of materiality was raised in Kioa v West by the Minister. The case was argued on the premise that if the rules of procedural fairness applied and were breached then the decision should be set aside309. It was not submitted that the result would inevitably have been the same if Mr Kioa had been given the opportunity to make submissions about the paragraph containing the adverse statement. In any event, such an argument would not likely have succeeded. The adverse statement was "extremely prejudicial"310 and created "a real risk of 305 Migration Act, s 425(2)(a). 306 (1985) 159 CLR 550. 307 (1985) 159 CLR 550 at 577. 308 (1985) 159 CLR 550 at 625. 309 (1985) 159 CLR 550 at 603. 310 (1985) 159 CLR 550 at 588. See also at 602. Edelman prejudice, albeit subconscious" such that it was "unfair to deny a person whose interests are likely to be affected by the decision an opportunity to deal with the information"311. For the same reasons, information, albeit of a more prejudicial nature, was held by a majority of this Court to give rise to an apprehension of bias in CNY17 v Minister for Immigration and Border Protection312. The appellant's second ground of appeal – that Mortimer J had erred in concluding that only dishonesty offences were capable of adversely impacting upon the credibility of the appellant before the Tribunal – can be dealt with briefly. Her Honour's conclusion that there was nothing in the Tribunal's reasons for decision that suggested that its reasoning was affected by the presence of the "state false name" dishonesty offence reflected the appellant's own "appropriately restrained" approach, which asserted that this was the only information the subject of the s 438 notification that might have made a difference313. But even if the appellant's case had been put more broadly, and had relied upon all of the information in the Court Outcomes Report as matters to which submissions by the appellant might have made a difference, that submission would have failed due to Mortimer J's correct conclusion that the Tribunal did not consider any of the Court Outcomes Report. Conclusion The appeal must be dismissed with costs. 311 (1985) 159 CLR 550 at 629. 312 (2019) 94 ALJR 140; 375 ALR 47. 313 MZAPC v Minister for Immigration and Border Protection [2019] FCA 2024 at Edelman

HIGH COURT OF AUSTRALIA Matter Nos M117/2010, M118/2010, M119/2010 & M120/2010 THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND RESPONDENT Matter Nos M121/2010 & M123/2010 THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND BHP BILLITON PETROLEUM (NORTH WEST SHELF) PTY LTD RESPONDENT Matter No M122/2010 THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND THE BROKEN HILL PROPRIETARY COMPANY PTY LTD RESPONDENT Matter Nos M124/2010 & M125/2010 THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND BHP BILLITON MINERALS PTY LTD RESPONDENT Commissioner of Taxation v BHP Billiton Limited Commissioner of Taxation v BHP Billiton Petroleum (North West Shelf) Pty Ltd Commissioner of Taxation v The Broken Hill Proprietary Company Pty Ltd Commissioner of Taxation v BHP Billiton Minerals Pty Ltd [2011] HCA 17 1 June 2011 M117/2010, M118/2010, M119/2010, M120/2010, M121/2010, M122/2010, M123/2010, M124/2010 & M125/2010 ORDER In each matter: Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation S J Gageler SC, Solicitor-General of the Commonwealth with H M Symon SC, M T Flynn and L W L Armstrong for the appellant (instructed by Australian Government Solicitor) D H Bloom QC with J W De Wijn QC, L A Hespe and K J Deards for the respondents (instructed by Mallesons Stephen Jaques) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v BHP Billiton Limited Commissioner of Taxation v BHP Billiton Petroleum (North West Shelf) Pty Ltd Commissioner of Taxation v The Broken Hill Proprietary Company Pty Ltd Commissioner of Taxation v BHP Billiton Minerals Pty Ltd Income tax – Allowable deductions – Funds advanced for construction of plant and facilities – Div 243 of Income Tax Assessment Act 1997 (Cth) ("Act") required taxpayer to include additional amount in assessable income at termination of limited recourse debt arrangement if limited recourse debt used to finance or refinance expenditure and certain other criteria met – "Limited recourse debt" relevantly defined in s 243-20(2) of Act as debt where creditor's rights against debtor in event of default capable of being limited to rights in relation to financed property or property provided as security for debt, having regard to various factors – Wholly-owned subsidiary ("BHPDRI") of parent company ("BHPB") partly financed capital expenditure for processing plant with monies borrowed from other wholly-owned subsidiary ("Finance") – Finance wrote off balance of loan as irrecoverable – BHPDRI and BHPB claimed capital allowance deductions for project expenditure – Appellant applied Div 243 of Act to reduce deductions – Whether loan from Finance to BHPDRI "limited recourse debt" under s 243-20(2) of Act – Whether BHPDRI and Finance dealing at arm's length – Meaning of "capable of being limited" in s 243-20(2) of Act. Words and phrases – "capable of being limited", "capital allowance deductions", "limited recourse debt". Income Tax Assessment Act 1997 (Cth), ss 243-15(1), 243-20(1), 243-20(2). FRENCH CJ, HEYDON, CRENNAN AND BELL JJ. These nine appeals arise out of the Commissioner's application of Div 243 of the Income Tax Assessment Act 1997 (Cth) ("the Act") to reduce "capital allowance"1 deductions in the circumstances described below. It was agreed at trial that the outcome in four appeals brought by BHP Billiton Limited ("BHPB") concerning reversal of capital allowance deductions for the income years 2003 to 2006 would also determine the appeals of other respondents, all subsidiaries of BHPB. BHPB was incorporated in 1885 and is the ultimate parent company of a diversified public company group ("BHPB Group") of multinational natural resource companies. In the period relevant to the proceedings, the BHPB Group included a minerals group which undertook the exploration of minerals and included the production and processing of iron ore. The BHPB Group has within it a corporate services group, which provides transactional services, including finance, to other members of the Group. From 1 July 2002, BHPB formed a consolidated group for income tax purposes2. The issue in dispute is whether a loan from one wholly-owned subsidiary of BHPB, BHP Billiton Finance Limited ("Finance") to BHP Billiton Direct Reduced Iron Pty Ltd ("BHPDRI") was a "limited recourse debt" within the meaning of Div 243 of the Act. BHPDRI is a wholly-owned subsidiary of BHP Minerals Holdings Pty Ltd ("Holdings") which is in turn a wholly-owned subsidiary of BHPB. The facts On 29 June 1995, the BHPB board approved capital expenditure of $1,550 million for the design, construction and commissioning of an iron briquette processing plant and associated facilities for converting iron ore fines into briquettes at Boodarie near Port Hedland in Western Australia. Iron ore fines are of little, if any, economic value and are an impediment to the extraction and sale of ore because of the need to store the fines. Apart from enabling more lump ore to be extracted, the conversion of iron ore fines to briquettes would satisfy obligations of BHPB to the government of Western Australia to carry out secondary processing of iron ore. 1 Defined in s 995-1 of the Act. 2 Pursuant to s 703-50 of the Act. Crennan Bell BHPDRI was to be the project entity which owned the plant and associated facilities and was to be funded 50 per cent through a subscription of equity from Holdings and 50 per cent through borrowing from Finance. In October 1995 and May 1996, Holdings respectively subscribed for 35 million and 75 million $1 shares in BHPDRI. At all relevant times, Finance was the principal financier to the BHPB Group and Finance borrowed funds from numerous financial institutions and issued promissory notes and commercial paper to raise short to medium term finance for lending to companies within the Group. It was not in dispute before the primary judge (Gordon J) that the BHPDRI debt in respect of the project was provided by a loan facility from Finance using Finance's standard lending terms for loans within the Group, which included the payment of interest at a rate higher than the rate at which Finance borrowed funds. The loan was for a standard term of five months but in practice at the expiry date of each five month period the loan was rolled over by Finance, which involved Finance recording the repayment of the loan in one account, together with recording a fresh loan in another account. In the event of a default in payment of the debt or interest, Finance enjoyed all the rights of an unsecured creditor. The first advance under the facility was made on 31 July 1995. The primary judge found that Finance made the loan to BHPDRI in the expectation that the loan would be repaid in full with interest. As matters transpired, the cost of the project exceeded the amount of capital expenditure which had been initially approved. Additional capital expenditure of $123.6 million was approved by the BHPB board in November 1996 to be funded 50 per cent through further subscription of equity by Holdings and 50 per cent through further borrowing from Finance. On 30 January 1997, Holdings subscribed for 370 million $1 shares in BHPDRI. The project experienced technical difficulties and a further review of the project, which commenced in August 1997, recommended further capital expenditure of BHPDRI of $730 million to complete the project, to be funded predominantly by further borrowing from Finance. In March 2000, the BHPB board approved further capital expenditure by BHPDRI of $46 million and resolved that further review of the investment should occur in September 2000. Crennan Bell Also in March 2000, the Finance board resolved to engage Ernst & Young as independent experts to report on the carrying value of the BHPDRI. Pending the Ernst & Young report, Finance made a doubtful debt provision in respect of the BHPDRI loan which was then approximately $2,174 million, which left Finance with negative net assets in excess of $940 million. A week later BHPB arranged for an injection of equity into Finance of $950 million. In May 2000, Ernst & Young delivered its report valuing the BHPDRI loan at $346 million. In response, at a meeting held on 3 May 2000, the directors of Finance resolved to treat the balance of the loan, $1,845,833,281, as irrecoverable and bad and directed that it be written off as bad. On 10 May 2000, Finance advised BHPDRI of the write-off of the loan. Between the period ending 31 May 1996 and the period ending 31 May 2000, BHPDRI made repayments to Finance. There was evidence at the trial in respect of the amount of total advances, accrued interest and repayments as set out in the table below: Year Total Advances Interest Repayments Having regard to the rolling over of the loan every five months, as explained above, when Finance wrote off part of BHPDRI's debt on 3 May 2000, the debt related to a loan of principal of $2,014,599,808 advanced to BHPDRI on 30 November 19993. Thereafter BHPDRI was funded only with share capital and the project continued for another five years. The funds advanced to BHPDRI (together with the proceeds of the share capital subscribed) were used progressively to pay the expenses incurred by BHPDRI in the development and construction of the project's facilities. The expenditure which BHPDRI incurred on the project gave rise to "capital allowance" tax deductions claimed by it in the income years 1996 to 2002. In the income years 2003, 2004, 2005 and 2006, BHPB had claimed the capital allowance deductions as head of the BHPB Group. 3 Section 243-15(1)(a), set out below at [21], covers debt which has been used to "refinance expenditure". Crennan Bell In preparing its income tax return for the year ended 30 June 2000, Finance claimed a bad debt deduction4 and BHPB applied the commercial debt forgiveness rules5 to bring about the cancellation or forfeiture of tax deductions and losses and to reduce cost bases in a total amount of $1,427,366,828. There was an issue before the primary judge concerning Finance's entitlement to an allowable deduction in respect of the bad debt which is not part of the current appeals. The Commissioner applied Div 243 of the Act to reduce the capital allowance deductions claimed by BHPB by $603,096,634. As the tax losses of BHPDRI in the income years 2000 to 2002 were transferred to other companies within the BHPB Group, the adjustments made by the Commissioner resulted in reductions in losses transferred to those other companies, which were then reflected in assessments issued to those companies. Following disallowance of objections, BHPB (and those subsidiaries of BHPB which had received transfers of losses from BHPDRI) appealed to the Federal Court of Australia under s 14ZZ(a) of the Taxation Administration Act 1953 (Cth). The applicable legislation Division 243 of the Act6 applies when an additional amount must be included in a taxpayer's assessable income at the termination of a limited recourse debt arrangement. Section 243-10, the "Guide to Division 243"7, explains that Div 243 "applies where the capital allowance deductions that have been obtained for expenditure that is funded by the debt[8] and the deductions are excessive having regard to the amount of the debt that was repaid." It is further 4 Under s 25-35(1)(b) of the Act. 5 Division 245 of Sched 2C of the Income Tax Assessment Act 1936 (Cth). Inserted by the Taxation Laws Amendment Act (No 1) 2001 (Cth), Sched 2. 7 Section 950-100 provides that a Guide forms part of the Act and s 950-150 provides that a Guide may be considered in determining the purpose and meaning of a provision. 8 As to which, see Div 40 of the Act, inserted by the New Business Tax System (Capital Allowances) Act 2001 (Cth), Sched 1. Crennan Bell explained that "[t]he reason for the adjustment is to ensure that, where you have not been fully at risk in relation to an amount of expenditure, you do not get a net deduction if you fail to pay that amount." Section 243-15(1) relevantly provides that Div 243 applies if: limited recourse debt has been used to wholly or partly finance or refinance expenditure; and at the time that the debt arrangement is terminated, the debt has not been paid in full by the debtor; and the debtor can deduct an amount as a capital allowance for the income year in which the termination occurs, or has deducted or can deduct an amount for an earlier income year, in respect of the expenditure or the financed property." The expression "limited recourse debt" is relevantly defined in s 243-209: "(1) A limited recourse debt is an obligation imposed by law on an entity (the debtor) to pay an amount to another entity (the creditor) where the rights of the creditor as against the debtor in the event of default in payment of the debt or of interest are limited wholly or predominantly to any or all of the following: rights (including the right to money payable) in relation to any or all of the following: the debt property or the use of the debt property; (iii) goods produced, supplied, carried, transmitted or delivered, or services provided, by means of the debt property; the loss or disposal of the whole or a part of the debt property or of the debtor's interest in the debt property; 9 Section 995-1 provides: "in determining whether parties deal at arm's length, consider any connection between them and any other relevant circumstance." Crennan Bell rights in respect of a mortgage or other security over the debt property or other property; rights that arise out of any arrangement relating to the financial obligations of an end-user of the financed property towards the debtor, and are financial obligations in relation to the financed property. (2) An obligation imposed by law on an entity (the debtor) to pay an amount to another entity (the creditor) is also a limited recourse debt if it is reasonable to conclude that the rights of the creditor as against the debtor in the event of default in payment of the debt or of interest are capable of being limited in the way mentioned in subsection (1). In reaching this conclusion, have regard to: the assets of the debtor (other than assets that are indemnities or guarantees provided in relation to the debt); any arrangement to which the debtor is a party; (c) whether all of the assets of the debtor would be available for the purpose of the discharge of the debt (other than assets that are security for other debts of the debtor or any other entity); (d) whether the debtor and the creditor are dealing at arm's length in relation to the debt." (footnotes omitted) There are two other definitions of a "limited recourse debt", not presently relevant, in sub-ss (3) and (4). A debt will be a limited recourse debt if it falls within any one of the four definitions and is not excluded by sub-ss (5) and (6)10. 10 Sub-section (6) provides: "Also, an obligation that is covered by subsections (1), (2) or (3) is not a limited recourse debt if, having regard to all relevant circumstances, it would be unreasonable for the obligation to be treated as limited recourse debt." Crennan Bell The expressions "financed property"11 and "debt property12 are defined in s 243-30. Section 243-25 defines the various circumstances in which a debt is taken to terminate. The appeals turn essentially on the question of what is encompassed by the statement in s 243-20(2) that the rights of a creditor as against a debtor, in the event of default, "are capable of being limited in the way mentioned in subsection (1)." (emphasis added) It can be noted that Div 245 in Sched 2C of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"), which predated the introduction of Div 243 into the Act by three years, introduced new rules for dealing with the "Forgiveness of commercial debts"13. Prior to the introduction of Div 245, upon the forgiveness of debt, the creditor was entitled to a bad debt deduction or a capital loss and the debtor would be entitled to deduct losses accumulated before the debt was terminated and to claim capital allowance deductions for expenditure funded by the forgiven debt. This perceived "structural weakness"14 was addressed by 11 Section 243-30(1) provides: "Property is the financed property if the expenditure referred to in paragraph 243-15(1)(a) is on the property, is on the acquisition of the property, results in the creation of the property or is otherwise connected with the property." 12 Section 243-30(3) provides: "Property is the debt property if: it is the financed property; or the property is provided as security for the debt." 13 Division 245 of the 1936 Act was subsequently repealed by the Tax Laws Amendment (Transfer of Provisions) Act 2010 (Cth), Sched 2. That Act also inserted a similar but not identical Div 245 into the Act. 14 See the Second Reading Speech, Taxation Laws Amendment Bill (No 2) 1996, Australia, House of Representatives, Parliamentary Debates (Hansard), 27 June "Notwithstanding that the act of forgiveness relieves the debtor of the economic loss represented by the debt, tax losses that accumulated before (Footnote continues on next page) Crennan Bell Div 245 of the 1936 Act, which was directed to ensuring that the economic benefit of a taxpayer being forgiven a debt was properly taxed. This was achieved by applying the value of the forgiven debt to reduce accumulated revenue losses, then capital losses, then other deductions and finally the cost bases of assets. At all material times, both Div 243 of the Act and Div 245 of the 1936 Act were concurrently in force, but s 243-75 provided that if there was an overlap between the two provisions Div 243 should be applied first. Subdivision 243-B of the Act provides for the working out of excessive deductions. The decisions below Primary judge The primary judge found that limited recourse debt was not used wholly or partly to finance or refinance BHPDRI's expenditure and accordingly Div 243 had no application to BHPDRI's debt with Finance. During the course of determining several issues before her, the primary judge found that Finance's lending accorded with the description of the essential business of a finance company in Avco Financial Services Ltd v Federal Commissioner of Taxation15. Her Honour found that Finance was not a sham or a mere conduit for its parent but was in the business of lending money for profit making16. Her Honour noted that each decision to invest or reinvest in the BHPDRI project was taken on the basis that there would be a return on the project. Initially a payback period of five years from the project's completion was the debt was terminated generally remain available to shield future income from taxation." (1982) 150 CLR 510 at 527; [1982] HCA 36. 16 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 at 778-779 [104] and [107]. Crennan Bell expected17, although this was adjusted in 1997 to an expectation of a payback period of six to seven years18. Further, her Honour characterised the decisions made throughout the life of the project as "a series of reasonable and diligent decisions" made "on the basis of obtaining the best possible return in circumstances that were not ideal"19. It must be accepted that her Honour's observation was not confined to Finance. When her Honour came to consider the application of s 243-20(1), she rejected the Commissioner's argument that Finance's practical rights of recovery or recourse against BHPDRI were wholly or at least predominantly limited to BHPDRI's assets at the plant at Boodarie20. In dealing with submissions concerning s 243-20(2) the primary judge said that s 243-20(2) did not adopt or incorporate a test of economic equivalence, which she regarded as "the substance if not the form of the Commissioner's submissions"21 in relation to that provision. Her Honour regarded the interaction between Div 245 in Sched 2C of the 1936 Act and Div 243 of the Act as supporting her Honour's rejection of the economic equivalence argument22. Her Honour made orders allowing the appeals from the Commissioner's disallowance of objections. 17 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 18 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 19 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 20 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 at 800-801 [212]-[213] and 801 [216]. 21 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 22 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 Crennan Bell The Full Court The Full Court (Sundberg and Stone JJ agreeing with the reasons of Edmonds J) dismissed the appeals from orders made by the primary judge. Edmonds J identified the legislative policy underlying Div 243, by reference to s 243-10, as being a policy to reverse capital allowance deductions that have been obtained for expenditure that is funded by debt where the debtor is not fully at risk in relation to the expenditure and the debt is not fully repaid23. On that basis, his Honour construed s 243-20(1) and (2) correctly as confined to situations where, at the time of borrowing, the debtor is not fully at risk in relation to expenditure because of contractual limitations on the lender's rights of recourse on a relevant event of default (s 243-20(1)) or where, at the time of borrowing, the debtor, or someone else, has the capacity to bring about that state of affairs subsequently (s 243-20(2))24. In so doing his Honour rejected the Commissioner's submission that s 243-20(2) requires consideration of possibilities for contractual variation which exist at the time of borrowing, a submission which was further developed before this Court. Both the primary judge25 and the Full Court26 expressed concern that, if the Commissioner's construction of s 243-20(1) and (2) were accepted, reversal of capital allowance deductions by including equivalent amounts in assessable income would depend on the success of projects, which would be particularly significant for special purpose project companies with few assets at the time of borrowing. Edmonds J considered that this would have the practical effect that new projects could only be undertaken easily in established companies with unencumbered assets which, at the time of borrowing, exceed the borrowing in value. 23 Federal Commissioner of Taxation v BHP Billiton Finance Ltd (2010) 182 FCR 24 Federal Commissioner of Taxation v BHP Billiton Finance Ltd (2010) 182 FCR 25 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 26 Federal Commissioner of Taxation v BHP Billiton Finance Ltd (2010) 182 FCR Crennan Bell Submissions There was no dispute between the parties that pars (b) and (c) of s 243-15(1) were satisfied. The only issue was whether, under par (a), the obligation of BHPDRI to repay its loan to Finance to "refinance expenditure" was limited recourse debt, as defined in s 243-20. Further, the Commissioner accepted the construction of s 243-20(1) of the primary judge, upheld in the Full Court, that the reference in s 243-20(1) to the rights of the creditor as against the debtor, in the event of default, being limited to recourse against debt property is a reference to a legal, here a contractual, limitation on the creditor's right of recourse. Accordingly, in the circumstances of the appeal (and in contrast to the way the Commissioner's case was primarily argued below) the Commissioner proceeded on these appeals on the basis that s 243-20(1) does not apply to the loan between Finance and BHPDRI. Before the primary judge the Commissioner submitted that s 243-20(2) was intended to catch those arrangements which have the capacity to bring about a limitation on a creditor's rights of the kind described in sub-s (1). The primary judge accepted that submission27. The Commissioner further elaborated the submissions on Commissioner's case on the appeals before this Court did not lie outside the compass of the case run at trial. these appeals and demonstrated the point that Construction In this Court, the Commissioner contended that s 243-20(2) is concerned neither with current contractual limitations or rights, nor with economic equivalence, but rather with "a practical capacity or ability to bring about legal limitations on legal rights" irrespective of whether there is any arrangement to which the debtor is a party (s 243-20(2)(b)). The Commissioner contended that the expression "capable of", as used in relation to rights in s 243-20(2), means "susceptible to"28. That construction was said to encompass "the possibility of contractual variation" between the creditor and the debtor. In urging that construction, and in recognising that any contract 27 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 28 The Oxford English Dictionary, 2nd ed (1989), vol 2 at 856, senses (3) and (4). Crennan Bell may be subsequently varied, the Commissioner sought to distinguish between a legal right which was "theoretically capable" of being varied and one which was "practically or commercially susceptible" to being varied. It was urged that the word "capable" in s 243-20(2) evoked "practical and commercial considerations rather than highly refined legalistic tests" or theoretical considerations. That submission had its source in Canwest Global Communications Corporation v Australian Broadcasting Authority29, a case concerning a question of control of television licences, in which the tax cases referred to below30 were distinguished. Thus, so the argument went, where a creditor's rights were, in practice, susceptible to being altered, so as to introduce a legal limitation on the rights of the creditor against the debtor in the event of default, then the debtor "has not been fully at risk in relation to the amount of the expenditure" funded by the debt. The respondents contended that the "capacity" to which s 243-20(2) must refer is a capacity existing at the time of the inception of the loan to bring about legal limitations on contractual rights in the future. It was submitted that the expression "capable of being limited" is not qualified to mean capable of being "practically limited" but must refer to a capacity for limitation as a present attribute (that is, at the time of borrowing), rather than the mere possibility that the attribute might exist in the future. The respondents' contention – that a practical susceptibility to being altered was not what was covered by the expression "capable of being limited" – had the result that the respondents that such a characterised as speculative susceptibility meant that the debtor had not been fully at risk in relation to expenditure funded by the debt. the Commissioner's contention A consideration of context in the widest sense31 helps to establish the meaning and reach of s 243-20(2) and the particular statement that a creditor's rights are "capable of being limited". One wide contextual consideration is that Div 243 of the Act can be expected to operate harmoniously with any applicable companies legislation regulating the conduct of corporate taxpayers. It is also appropriate to recognise that, as well as containing Div 243, the Act makes 29 (1998) 82 FCR 46 at 77-83. 31 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ; [1997] HCA 2. Crennan Bell specific and detailed provisions in respect of bad debt deductions32 and the 1936 Act dealt specifically with commercial debt forgiveness33. Even accepting some overlap between the Divisions, a loan which fell within Div 243 at the relevant time must be capable of being distinguished from a loan which fell within Div 245 as it then stood. The mischief to which Div 243 was directed, described in s 243-10, is that a taxpayer may obtain deductions greater than the total amounts outlaid in relation to capital expenditure. In the Explanatory Memorandum to the Bill which introduced the provision, an example34 is given of the mischief as occurring "where the balance of an outstanding debt that has financed the expenditure is not paid and the financier can only recover a specific asset on the termination of the financial arrangement." Then it is stated35: "Under new subsection 243-20(2), a debt is also limited recourse if, notwithstanding that there may be no specific conditions to that effect, it is reasonable to conclude that the creditor's rights against the debtor are able to be limited, directly or indirectly, to those property rights specified in new subsection 243-20(1) in relation to the financed property." While such statements illuminate, they do not overcome the need to consider the words of the section36. Section 243-20(2) plainly has a different area of operation from s 243-20(1), which encompasses express contractual limits on a creditor's rights of recourse in the event of default. Parties to a loan contract have an undoubted 32 Section 25-35(1)(b) of the Act. 33 Division 245 of Sched 2C of the 1936 Act. 34 Australia, House of Representatives, Taxation Laws Amendment Bill (No 5) 1999, Explanatory Memorandum at 16 [2.6]. 35 Australia, House of Representatives, Taxation Laws Amendment Bill (No 5) 1999, Explanatory Memorandum at 32 [2.73]. 36 Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 264-265 [31]-[32]; [2010] HCA 23; see also Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]; [2009] HCA 41. Crennan Bell power to vary or amend their contract subsequently37. By way of contrast sub-s (2) is directed to legal limitations on legal rights which arise otherwise than by contract. Viewed in isolation the general word "capable" has different, even opposite, applications38, which demonstrates afresh the well-recognised danger of making "a fortress out of the dictionary"39 when interpreting a statute. The expression to be construed is "capable of being limited". The respondents relied on two tax cases, W P Keighery Pty Ltd v Federal Commissioner of Taxation40 and Federal Commissioner of Taxation v Sidney Williams (Holdings) Ltd41. The question in Keighery's case was whether, for the purposes of income tax legislation, a company was a "private company", that is, relevantly, a company "capable of being controlled … by one person or by persons not more than seven in number"42. In a joint judgment, Dixon CJ, Kitto and Taylor JJ dealt with an argument that "capable of being controlled" encompassed the possibility of control from a power existing at the last day of the year of income. Their Honours said43: "It must be acknowledged, of course, that it is the capability, and not the control, which must exist on the last day of the year of income. But to describe a company as capable of being controlled by a person or group of persons is to attribute to that person or group a presently existing power of control. 'Capable of being controlled' in this context cannot be interpreted so widely as to be satisfied whenever a possibility of obtaining 37 Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520 at 533-534 [22]-[24]; [2000] HCA 35. 38 Federal Commissioner of Taxation v Sidney Williams (Holdings) Ltd (1957) 100 CLR 95 at 115 per Webb J; [1957] HCA 1; see also The Oxford English Dictionary, 2nd ed (1989), vol 7 at 856. 39 Cabell v Markham 148 F 2d 737 at 739 (1945). 40 (1957) 100 CLR 66; [1957] HCA 2. 41 (1957) 100 CLR 95. 42 Keighery (1957) 100 CLR 66 at 83. 43 Keighery (1957) 100 CLR 66 at 86. Crennan Bell control over the company exists by reason of something in its constitution or its special circumstances. The natural sense of the expression is that of possessing, as a present attribute, a liability to be controlled." In Sidney Williams, Dixon CJ, Kitto and Taylor JJ stated44 that if persons "may obtain in the future" an ability to control the company, all that can be said of the company as at the last day of the year of income is "that it is capable of being thereafter made controllable by those persons." Keighery's case and Sidney Williams were relied upon by a Full Court of the Supreme Court of Victoria (Murphy, Fullagar and Gobbo JJ) in Equiticorp Industries Ltd v ACI International Ltd45 to support the proposition that "when one speaks of a company capable of being controlled in terms of voting power … one looks for an enforceable and presently and immediately existing right enabling the voting power to be controlled." To describe a creditor's rights of recourse as "capable of being limited" is to refer to a power of a person to limit or bring about a limitation on those rights. In possible deference to the definition of "arrangement" in the Act46, it was accepted by the respondents in argument that s 243-20(2) is not necessarily confined to enforceable arrangements; however, this case does not call for any decision about an unenforceable arrangement. It is the certain liability of the creditor's rights of recourse to limitation – by the exercise by a person of a power to limit, or to cause a limitation to those rights – which has the effect that a debtor has not been fully at risk in relation to an amount of expenditure. Such a power must exist at the inception of the loan, whether it arises as a result of an arrangement or a circumstance or conduct (from which an arrangement may be inferred47) or in some way other than the way covered by sub-s (1). It follows that s 243-20(2) would not be satisfied by the existence, at the inception of the 44 Sidney Williams (1957) 100 CLR 95 at 111. 45 [1987] VR 485 at 489. 46 Section 995-1 of the Act provides: "arrangement means any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings." 47 Federal Commissioner of Taxation v Lutovi Investments Pty Ltd (1978) 140 CLR 434 at 443-444; [1978] HCA 55. Crennan Bell loan, of a possibility of a person acquiring a capacity (that is a power) to limit, or a power to cause the relevant limitation of, a creditor's rights of recourse at some point in the future. Otherwise it would seem that all loans used by a debtor to acquire property, including loans for special purpose projects involving a corporate group and intra-group financing, must be characterised as giving rise to obligations which must be treated as limited recourse debts within s 243-20(2), even though the provision is directed at a debtor taxpayer who has not been fully at risk in relation to an amount of expenditure. Such an interpretation carries the potential, recognised by Edmonds J, for discouraging investment in special purpose projects. The interpretation of s 243-20(2) set out in these reasons aligns closely with the language of the Act, which supports the clear legislative purpose48 of allowing an adjustment of a taxpayer's income if the taxpayer has not been fully at risk in respect of an amount of expenditure. Secondly, the interpretation gives a clear operation to s 243-20(2) and excludes a conjectural approach to the question of whether an adjustment should be made to a taxpayer's income. This fits with the character of the provision as one which affects liability to taxation. Thirdly, this construction facilitates obedience in circumstances where, despite overlap, a debtor taxpayer wishes to determine whether a debt is capable of being dealt with as a commercial debt which has been forgiven or whether it should be dealt with as a limited recourse debt. Application Whether or not a debt falls within s 243-20(2) is to be determined by the factual exercise there set out. The Commissioner applied his construction of s 243-20(2) to underpin a submission that, having regard to the four factors made relevant by pars (a) to (d) inclusive of s 243-20(2), it is reasonable to conclude that Finance's contractual rights against BHPDRI, in the event of default, were capable of being restricted – at the instance of BHPB – to rights against the debt property of BHPDRI. The Commissioner did not the Commissioner's argument in respect of pars (a) and (c) was that the extent of rely on par (b). In essence, 48 Thompson v His Honour Judge Byrne (1999) 196 CLR 141 at 159 [49] per Gaudron J; [1999] HCA 16; see also Mills v Meeking (1990) 169 CLR 214 at 236-237 per Dawson J; [1990] HCA 6. Crennan Bell Finance's ability to recover its loan was substantially limited to BHPDRI's plant; that, therefore, there was "no economic disincentive" to Finance accepting a contractual variation formulating the limitation; and that it was therefore reasonable to conclude that there was a capacity in BHPB to procure Finance's acquiescence in a modification of its contractual right so as to confine Finance's recourse to property comprising the plant. The respondents relied on extensive assets of BHPDRI in evidence before the primary judge including general purposes leases and intellectual property and her Honour's conclusion49 that "[i]t was by no means clear that all of [BHPDRI's] property was located at or connected with the plant at Boodarie." It was not contested that all of BHPDRI's assets remained available at all relevant times for the purpose of discharging the debt. Finance's status of unsecured creditor gave it no right to any particular asset belonging to BHPDRI, such as the plant50. In relation to par (d) it was contended by the Commissioner that the relationship between BHPDRI and Finance was not at arm's length. It was asserted that Finance's conduct in postponing repayment of the loan for a period of 12 months (which was in place at the time of the November rollover) and in not seeking repayment, and Finance's notification to BHPDRI that it would not seek recovery of the amount reported to be irrecoverable, evidenced the fact that Finance and BHPDRI were not dealing at arm's length in relation to the loans. The respondents submitted that the question as to whether or not BHPDRI and Finance dealt with each other at arm's length is posed in relation to the debt and that the unchallenged findings of the primary judge supported the conclusion that Finance and BHPDRI dealt with each other at arm's length. That argument reflected a distinction relevant to related party transactions, recognised by Habersberger J in Orrong Strategies Pty Ltd v Village Roadshow Ltd51, between parties being at arm's length and parties dealing with each other at arm's length. Paragraph (d) of s 243-20(2) expressly refers to a "dealing"52. Something more 49 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 50 Inland Revenue Commissioners v Herdman [1969] 1 WLR 323 at 327; [1969] 1 All ER 495 at 511. 51 (2007) 207 FLR 245 at 411-413 [719]-[724]. 52 See also the definition of "arm's length" in s 995-1 of the Act, set out above at note 9. Crennan Bell will be said shortly about the relationship between the parties to the loan and the parent company, BHPB. Reliance was also placed by the Commissioner on what was described as the BHPB Group's modus operandi under which difficulties in respect of intra-group obligations were resolved. In Walker v Wimborne53, Mason J referred to the principle that each company within a corporate group is "a separate and independent legal entity" with duties imposed by the applicable companies legislation. That this is so was reaffirmed more recently by this Court in NEAT Domestic Trading Pty Ltd v AWB Ltd54. In a joint judgment, McHugh, Hayne and Callinan JJ recognised that a wholly-owned subsidiary may be required to pursue the interests of its parent (and its parent's shareholders) to the extent that those obligations are compatible with other obligations of the subsidiary imposed by the applicable companies legislation and applicable judge-made law55. It is not in contest that on 23 March 2000 the directors of the BHPB board approved additional capital expenditure for BHPDRI, but Finance provided no additional funding and Finance took steps already outlined above. Finance had external creditors. As at 30 June 2000, Finance owed approximately $37 billion to third parties. While the primary judge recognised that Finance may have acted in the BHPB Group's interests, as already noted, her Honour went on to find that Finance was not a sham56. The Commissioner affirmed in oral argument that he does not allege that Finance is a sham. Rather, the Commissioner submitted that it was sufficient for the purposes of s 243-20(2) to show that "[t]he corporate mind of Finance, properly exercised, was legitimately able to have Finance give up rights against [BHPDRI] if the giving up of those rights was in the interests of the [BHPB] Group as a whole." Finally, after a consideration of the factors in pars (a), (c) and (d), it was contended by the Commissioner that the structure and modus operandi of the BHPB Group support the reasonableness of a conclusion that Finance, from the inception of the BHPDRI loans, would have complied with a request or direction from BHPB to accept a contractual limitation on its rights of recourse against 53 (1976) 137 CLR 1 at 7; [1976] HCA 7. 54 (2003) 216 CLR 277; [2003] HCA 35. 55 NEAT Domestic Trading Pty Ltd v AWB Ltd (2003) 216 CLR 277 at 296 [47]. 56 BHP Billiton Finance Ltd v Federal Commissioner of Taxation (2009) 72 ATR 746 Crennan Bell BHPDRI in the event of default if it was expedient to do so or if, in BHPB's assessment, it was in the interests of the BHPB Group to do so. That the construction of s 243-20(2) contended for by the Commissioner will give rise to a conjectural approach to the question of whether a taxpayer's income should be adjusted is exemplified by this submission. The crucial submission of the respondents on this aspect of the case is that the Commissioner's contention that Finance would have complied with a request or direction from BHPB to modify its contractual rights of recourse so as to confine its recourse to the plant was "unsupported by any evidence and is … entirely speculative". The submission can be assessed in the light of the construction of s 243-20(2) set out in these reasons. The Commissioner's case supporting the application of Div 243 to BHPDRI's debt with Finance was consistent with the construction of s 243-20(2) proposed by him. The Commissioner's identification of a "practical capacity" in BHPB, existing at the inception of the loan, to cause a relevant limitation on Finance's rights of recourse against BHPDRI, by giving a request or direction to Finance so to limit its rights, never rose above being a possibility of what might happen if certain contingencies arose. Because s 243-20(2) is not directed to possibilities for a limitation of a creditor's rights of recourse which may arise in the future, s 243-20(2) does not apply to BHPDRI's debt to Finance. That conclusion renders it unnecessary for this Court to resolve the factual contest concerning the factors in pars (a), (c) and (d). Conclusion Having regard to the construction of s 243-20(2) set out in these reasons, there was no error in the primary judge's conclusion that the loan between Finance and BHPDRI did not give rise to a limited recourse debt within the meaning of s 243-20(2). It follows that the orders made by the Full Court should be upheld. Orders The appeals should be dismissed with costs. GUMMOW J. The Court heard together nine appeals from the decision of the Full Court of the Federal Court (Sundberg, Stone and Edmonds JJ)57, dismissing appeals against the decision of the primary judge (Gordon J)58. Her Honour set aside the decisions of the appellant ("the Commissioner") disallowing objections to assessments to income tax. Pursuant to s 14ZZP of the Taxation Administration Act 1953 (Cth) ("the Administration Act"), the primary judge allowed the objections and remitted the matters to the Commissioner to reassess the taxpayers in accordance with law. The objections related to the four consecutive years of income beginning with that ending 30 June 2003. BHP Billiton Limited ("BHP") is a listed company and its directly or indirectly wholly-owned subsidiaries include BHP Billiton Finance Limited ("BHP Finance") and BHP Billiton Direct Reduced Iron Pty Ltd ("BHP Reduced Iron"). From 1 July 2002 the companies formed a consolidated group pursuant to s 703-50 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"). BHP Finance raised for the purposes of the BHP Group large sums by loan facilities in various currencies and by the issue of promissory notes and commercial paper. BHP Finance applied those funds by making loans to other members of the BHP Group on terms which had been adopted by Board resolution on 30 November 1994 and which did not purport to limit the rights of BHP Finance as an unsecured creditor of the borrowers. The Commissioner has expressly disclaimed in this Court any reliance upon the existence of any arrangement, contrary to those terms, to which BHP Finance was a party. As applied to the borrowings by BHP Reduced Iron from BHP Finance with which this litigation is concerned, the loans were each for a five month term, with interest in Australian dollars at 11.4 per cent reducible to 11.2 per cent for prompt payment. This interest rate was higher than that payable by BHP Finance on its borrowings and BHP Finance earned substantial interest income. This generated substantial accounting profits after tax and taxable income. The evidence is silent upon these further points, but it may be observed that the third party sources of funds to BHP Finance would have had a strong interest in any purported limitation upon the rights of recovery by BHP Finance of funds it had lent on to members of the BHP Group, and the listing requirements of exchanges upon which BHP was listed may have had a similar significance. Nevertheless, the Commissioner has sought to characterise the relevant dealings by BHP Finance as of a "non-arm's length nature". 57 (2010) 182 FCR 526. 58 (2009) 72 ATR 746. As is more fully explained by the joint reasons59, the Board of BHP approved the construction of plant and facilities required for the manufacture, near Port Hedland in Western Australia, of iron briquettes using iron ore fines as feedstock ("the Project"). The expenditure to build the plant and associated facilities for the Project was assessed at $1,550 million. BHP Reduced Iron was to undertake the Project. This company was funded partly by share capital and partly by a loan facility provided by BHP Finance on the standard terms referred to above. The picture this presented is the not unfamiliar one whereby one member of a company group undertakes a particular development project with finance provided by another member of the group. However, the Project had a particular characteristic, the strong involvement of the State of Western Australia. BHP Reduced Iron was the holder of a combined total of 195 general purpose leases under the Mining Act 1978 (WA) and was party to an agreement with the State made on 16 October 1995 and contained as Sched 1 to the Iron Ore – Direct Reduced Iron (BHP) Agreement Act 1996 (WA). This recites the agreement of the State to assist in the establishment and operation of a direct reduction plant at Port Hedland. The Project did not prosper. Further capital expenditures had been required to complete the Project, as explained in the joint reasons60. The Project was suspended in May 2004 when one employee died in an industrial accident and two others were severely injured. In November 2004, the plant was placed in care and maintenance while a review of options for the future of the Project was determined. Eventually, in May 2005, BHP announced that the Project was to be terminated. There were significant revenue consequences which have given rise to this litigation. The parties agreed before the primary judge that the outcome in the appeals brought by BHP under s 14ZZ(a) of the Administration Act concerning the years 2003 to 2006 would determine the appeals by the subsidiaries which had received transfers of losses from BHP Reduced Iron. The expenditure of some $2.1 billion which BHP Reduced Iron incurred on the design and construction of the Project gave rise to "capital allowance" deductions as defined in s 995-1 of the 1997 Act61. These deductions were claimed by that company itself for the years 1996-2002, and by BHP for the 61 The definition includes deductions under Div 40 (capital allowances) and Div 43 (capital works). years 2003-2006 in its capacity as "head" company of the tax consolidated BHP group. The expenditure by BHP Reduced Iron on the Project in part was funded by advances by BHP Finance totalling some $2,657 million. Of those advances, BHP Finance in May 2000 wrote off $1,845 million. The Commissioner then sought to apply Div 243 of the 1997 Act: to disallow capital allowance deductions totalling $603,096,634 claimed by BHP in respect of the Project for the income tax years 2003-2006; to decrease by $430,764,520 the capital allowance deductions allowed BHP Reduced Iron in respect of the Project for the income tax years 2001 and 2002; and to increase by $380,850,062 the assessable income of BHP Reduced Iron for the income tax year 2000. On 24 July 2004 the Commissioner conducted an audit into the financial arrangements of BHP Reduced Iron. A Position Paper was issued on 7 June 2007 to which BHP replied on 31 August 2007. On 29 November 2007 a Notice of Assessment was issued applying Div 243 of the 1997 Act to reduce the capital allowance deductions claimed by BHP Reduced Iron for the years ended 30 June 2003 to 30 June 2006. BHP Reduced Iron transferred its tax losses in the years 2000 to 2002 to other companies in the BHP Group, and the above adjustments by the Commissioner resulted in reductions in those transferred amounts. This was reflected in assessments issued to a number of the transferees and they became the appellants, with BHP itself, under s 14ZZ(a) of the Administration Act. Section 243-10 purports to tell the reader what Div 243 "is about". It reads: "This Division tells you when you must include an additional amount in your assessable income at the termination of a limited recourse debt arrangement. It also tells you what the additional amount is. Basically, the Division applies where the capital allowance deductions that have been obtained for expenditure that is funded by the debt and the deductions are excessive having regard to the amount of the debt that was repaid. The reason for the adjustment is to ensure that, where you have not been fully at risk in relation to an amount of expenditure, you do not get a net deduction if you fail to pay that amount." The Division only applies if a "limited recourse debt" has been used to wholly or partly finance or refinance expenditure (s 243-15(1)(a)). The term "limited recourse debt" then is defined at length in s 243-20, sub-ss (1) and (2) of which will be set out below. An obligation covered by sub-ss (1) or (2) will not be a "limited recourse debt" if "having regard to all relevant circumstances" it would be "unreasonable" so to treat it (s 243-20(6)). The Commissioner does not contend that Div 243 is an "anti-avoidance" provision like Pt IVA of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"), and accepts both that the Division refers to legal rights and that in construing its provisions notions of ordinary commercial dealings are to be taken into account. Nor does the Commissioner agitate on these appeals the conclusion of the Full Court62 that the primary judge made no error in finding BHP Finance did not enter into or carry out a scheme for the dominant purpose of obtaining a tax benefit so that Pt IVA of the 1936 Act was not brought into operation. the construction of s 243-20 which the Commissioner in this Court. The appeal by the Commissioner to the Full Court having been dismissed, the Commissioner seeks in this Court to contest that s 243-20(2) is engaged where the legal rights of a creditor against a debtor, in the event of a default, are capable of a legal limitation in the way mentioned in s 243-20(1). For the reasons which follow, the appeals to this Court should be dismissed. is challenged by Before turning to the comprehensive reasons of the primary judge, it is convenient to set out s 243-20(1) and (2): "(1) A limited recourse debt is an obligation imposed by law on an entity (the debtor) to pay an amount to another entity (the creditor) where the rights of the creditor as against the debtor in the event of default in payment of the debt or of interest are limited wholly or predominantly to any or all of the following: rights (including the right to money payable) in relation to any or all of the following: the debt property or the use of the debt property; goods produced, supplied, carried, transmitted or delivered, or services provided, by means of the debt property; 62 (2010) 182 FCR 526. (iii) the loss or disposal of the whole or a part of the debt property or of the debtor's interest in the debt property; rights in respect of a mortgage or other security over the debt property or other property; rights that arise out of any arrangement relating to the financial obligations of an end-user of the financed property towards the debtor, and are financial obligations in relation to the finance property. (2) An obligation imposed by law on an entity (the debtor) to pay an amount to another entity (the creditor) is also a limited recourse debt if it is reasonable to conclude that the rights of the creditor as against the debtor in the event of default in payment of the debt or of interest are capable of being limited in the way mentioned in subsection (1). In reaching this conclusion, have regard to: the assets of the debtor (other than assets that are indemnities or guarantees provided in relation to the debt); any arrangement to which the debtor is a party; (c) whether all of the assets of the debtor would be available for the purpose of the discharge of the debt (other than assets that are security for other debts of the debtor or any other entity); (d) whether the debtor and creditor are dealing at arm's length in relation to the debt." (emphasis in original) The phrase "arm's length", which appears in par (d) of s 243-20(2), is defined in s 995-1(1) as requiring, in any determination where parties deal at arm's length, consideration of "any connection between them and any relevant circumstance". The primary judge referred63 to the focus of the definitions in s 243-20(1), being one which fixes upon the existence of obligations upon the debtor (in this case BHP Reduced Iron) to repay a creditor (BHP Finance) the amount advanced plus interest. The primary judge then said that s 243-20(2) is intended to operate in the following manner64: 63 (2009) 72 ATR 746 at 800-801 [210]-[213]. 64 (2009) 72 ATR 746 at 804 [228]. "Subsection (2) is clearly intended to catch those debts which bear no existing legal limitation of the kind specified in [sub-s (1)] but where 'it is reasonable to conclude that the rights' in the event of default are 'capable' of being limited to those rights specified in [sub-s (1)]. As the applicants submitted, [sub-s (2)] is intended to catch those arrangements which have the capacity to bring about the limitation described in [sub-s (1)]. The form of that capacity is, unsurprisingly, broad and extends, for example, to 'any arrangement to which the debtor is a party'. It is an objective test. Whether the capacity of the kind described exists is, of course, a question of fact to be resolved having regard to the matters listed in [pars (a) to (d) of sub-s (2)]." The Full Court65 considered that the primary judge correctly applied s 243-20(1) and (2) and that her Honour did not err in her findings. Edmonds J, who gave the leading judgment, said of these sub-sections66: "They are to be construed so that their application is confined to situations where, at the time of borrowing, the debtor is not fully at risk in relation to the expenditure because of contractual limitations on the lender's rights of recourse on a relevant event of default or, where, at the time of borrowing, the debtor or someone else has the capacity to subsequently bring about that state of affairs." I agree with what is said by his Honour in that passage. I should add that in this Court the Commissioner eschewed any reliance upon the existence of any "arrangement" to which BHP Reduced Iron was a party, so as to attract par (b) of Section 243-20(2) uses the phrase "capable of being limited in the way mentioned in subsection (1)", and the phrase is not qualified. It is not to be taken to mean "practically capable", or "able to be affected" in the future. Rather, the question is resolved in the present appeals by asking whether capacity exists at the inception of each loan by having regard to the four factors listed in pars (a) to (d) (excluding par (b), by reason of the Commissioner's disclaimed reliance upon it). It was submitted by the Commissioner that BHP Finance's contractual rights, at the inception of each loan, were "capable" of restriction should BHP Reduced Iron default by failing to meet its loan and interest repayments to BHP Finance. That was because, the submissions by the Commissioner went, the 65 (2010) 182 FCR 526 at 581-582 [106]-[108]. 66 (2010) 182 FCR 526 at 581 [104]. parties were not dealing at arm's length within the meaning of par (d) of s 243-20(2), and before the Federal Court it had been left up to the taxpayer to prove the contrary. Implicit in these submissions is the contention that unless the taxpayer establishes that par (d) is not satisfied, it is reasonable to conclude (within the meaning of s 243-20(2)) that the rights of the creditor are "capable of being limited in the way mentioned in [s 243-20(1)]". The propositions that par (d) applied in these appeals should be rejected. That being so it is unnecessary to determine whether, if it had applied, that would have led to the reasonable conclusion that the creditors' rights were capable of being limited within the meaning of s 243-20(1). In Nordland Papier AG v Anti-Dumping Authority67 Lehane J considered the definition in s 269TAA(1) of the Customs Act 1901 (Cth) for the purposes of the anti-dumping provisions of that legislation. The sub-section reads: "(1) For the purposes of this Part, a purchase or sale of goods shall not be treated as an arms length transaction if: there is any consideration payable for or in respect of the goods other than their price; or the price is influenced by a commercial or other relationship between the buyer, or an associate of the buyer, and the seller, or an associate of the seller; or in the opinion of the Minister the buyer, or an associate of the buyer, will, subsequent to the purchase or sale, directly or indirectly, be reimbursed, be compensated or otherwise receive a benefit for, or in respect of, the whole or any part of the price." The provision addresses purchases and sales of goods which are not to be "treated as arms length transactions"68. Lehane J observed69: (i) that it was par (b) of the above definition which came closest to the ordinary concept of an arm's length transaction; but (ii) the circumstance that "there is a commercial relationship between the buyer and the seller which influences price does not necessarily result in the purchase or sale 67 (1999) 93 FCR 454. 68 (1999) 93 FCR 454 at 458 [17]. 69 (1999) 93 FCR 454 at 458 [19]. being other than an arms length transaction in the ordinary sense". Likewise in the present case, with respect to the standard terms governing the relationship described earlier in the reasons between BHP Finance as lender and BHP Reduced Iron as borrower. In its detailed Appeal Statement filed in accordance with the practice under O 52B of the Federal Court Rules, BHP set out the facts subsequently led in its evidence and described earlier in these reasons and in the joint reasons, in support of its contention that there was no "limited recourse debt", and, in particular, that dealings in relation to the debts were at arm's length. The result is that, in the absence of counteracting evidence led by the Commissioner, BHP met in respect of Div 243 the burden of proof upon it pursuant to s 14ZZO of the Administration Act of showing the assessments in question were excessive. The appeals should be dismissed with costs.

HIGH COURT OF AUSTRALIA Matter No S310/2009 COMMISSIONER OF TAXATION APPELLANT AND PHILLIP BAMFORD & ORS RESPONDENTS Matter No S311/2009 PHILLIP BAMFORD & ANOR APPELLANTS AND COMMISSIONER OF TAXATION & ANOR RESPONDENTS Commissioner of Taxation v Bamford Bamford v Commissioner of Taxation [2010] HCA 10 30 March 2010 S310/2009 & S311/2009 ORDER In each matter, the appeal is dismissed. On appeal from the Federal Court of Australia Representation J T Gleeson SC with T P Murphy SC and K J Deards for the appellant in S310/2009 and the first respondent in S311/2009 (instructed by Australian Government Solicitor) Submitting appearance for the first and second respondents in S310/2009 A H Slater QC with R L Seiden and I S Young for the appellants in S311/2009 and the third respondent in S310/2009 (instructed by Robert Richards & Associates) Submitting appearance for the second respondent in S311/2009 Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Bamford Bamford v Commissioner of Taxation Income tax – Income of trust estate – Assessable income of beneficiary – Income Tax Assessment Act 1936 (Cth) ("the Act"), s 97(1) provided that where beneficiary presently entitled to "a share of the income of the trust estate", assessable income of beneficiary included "that share of the net income of the trust estate" – Beneficiaries entitled to specific amounts of distributable income – One beneficiary also entitled to residue of distributable income – Disparity between net income and distributable income – Meaning of "that share of the net income" in s 97(1)(a)(i) of the Act – Whether beneficiaries to be assessed by reference to their proportion of distributable income or specific amounts. Income tax – Income of trust estate – Trustee determined, pursuant to deed of settlement, net capital gain to be treated as distributable income – Whether net capital gain was "income of the trust estate" under s 97(1) of the Act – Relevance of trustee's determination – Whether "income of the trust estate" income according to trust law or "ordinary concepts" but excluding "statutory income". Words and phrases – "income of the trust estate", "presently entitled", "that share of the net income of the trust estate", "trust estate", "trustee". Income Tax Assessment Act 1936 (Cth), ss 6(1), 95-99A. FRENCH CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. These appeals are brought from the Full Court of the Federal Court (Emmett, Stone and Perram JJ)1 and have been heard together. They concern the operation with respect to the income tax years of 2000 ("the taxpayers' appeal") and 2002 ("the Commissioner's appeal") of the provisions of Div 6 of Pt III of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"). Division 6 is headed "Trust income" and comprises ss 95-102. There is no relevant difference in the text of Div 6 as it stood in 2000 and 2002. It is appropriate at this stage to note that s 97(1) applies where "a beneficiary of a trust estate ... is presently entitled to a share of the income of the trust estate" and that, if so, the assessable income of the beneficiary includes "that share of the net income of the trust estate". For the reasons which follow each appeal should be dismissed. The facts The facts are not in dispute and were fully detailed by Emmett J2. It is sufficient to state what follows. the taxpayers' appeal and P & D Bamford Enterprises Pty Ltd ("the Trustee") is the second respondent the Commissioner's appeal. By deed of settlement made 9 February 1995 it was trustee of the trusts of the settlement established by that deed ("the Deed"). Mr and Mrs Bamford were among the class of "Eligible Beneficiaries" defined in cl 1(d). So also was Church of Scientology Inc ("the Church"). Mr and Mrs Bamford were directors and employees of the Trustee. They are the appellants in the taxpayers' appeal, and first and second respondents in the Commissioner's appeal. third respondent the The Deed provided that, as to "the income arising from the Trust Fund" (as defined in cl 1(n)), the Trustee was to hold it for such of the Eligible Beneficiaries as it selected under a provision in cl 4. This clause was of a kind Clause 7(n) found in what are commonly called "discretionary trusts". 1 Bamford v Federal Commissioner of Taxation (2009) 176 FCR 250. (2009) 176 FCR 250 at 253-257. Crennan empowered the Trustee to determine whether any receipt "is or is not to be treated as being on income or capital account". The 2002 year of income In respect of the 2002 year of income, the subject of the Commissioner's appeal, it was common ground that the Trustee treated as income available for distribution the net capital gain of $29,227 arising from the sale of certain real property in which the Trustee had held a half share. That capital gain was divided equally and included in the distribution made to Mr and Mrs Bamford by the Trustee. Mr and Mrs Bamford each lodged a tax return for the 2002 year in accordance with that distribution3. However, the Commissioner considered that the capital gain was not included in "the income of the trust estate" of which s 97(1) speaks, with the result that there was no income of the trust estate to which s 97(1) could apply and that the Trustee itself was to be assessed under s 99A of the 1936 Act. In this Court the Commissioner submits, contrary to the decision of the Full Court, that "the income of the trust estate" did not include this amount. This is said to be so because, while available for distribution in accordance with the Deed, the capital gain amount was not, in the sense of the 1936 Act, "income according to ordinary concepts". On the second day of the hearing of the appeals the Commissioner made it clear that he accepts that the appeal should be dismissed if "the income of the trust estate" within the meaning of s 97(1) includes "statutory income" such as capital gains which are brought in as "assessable income". The 2000 year of income In respect of the 2000 year, the subject of the taxpayers' appeal, the state of affairs giving rise to the dispute is more complex. Shortly put, the issue of construction concerns the application of the phrase "that share" in s 97(1) in circumstances where the entitlement of beneficiaries is not to fixed proportions of the income of the trust estate but, as to some beneficiaries, to specific amounts and, as to another beneficiary, to the residue. (2009) 176 FCR 250 at 256-257. Crennan The Trustee determined under the Deed that the income for the year ended 30 June 2000 be distributed, as to consecutive amounts of $643 each to a child of Mr and Mrs Bamford, the next $12,500 to Narconon Anzo Inc, the next $106,000 to the Church, the next $68,000 to Mr and Mrs Bamford in equal shares, and the balance to the Church. The Trustee determined pursuant to cl 7(n) of the Deed that certain outgoings be treated as expenses and, in error, treated them as allowable deductions in computing the net income of the trust estate for the purposes of s 97(1). This was shown as $187,530. Upon making the distributions in the above sequence, there was insufficient remaining to provide the $68,000 to Mr and Mrs Bamford, and no balance to go to the Church. There remained $67,744, which was distributed equally between Mr and Mrs Bamford (ie each received $33,872). Rather than being merely $187,530, the net income of the trust estate included the non-deductible outgoings of $191,701. The Commissioner assessed Mr and Mrs Bamford by calculating the ratio which the actual distributions of $33,872 bore to the total of $187,530, and then applied that ratio to the excess of the net income addition of $191,701 over the distributable income. The Commissioner included the product of that calculation ($34,624) in the assessable income of each of the taxpayers. The taxpayers (contrary to the decision of the Full Court) contend that their share of the net income of the trust estate and thus the amounts included in their assessable incomes should have been ascertained as if the terms of the Deed, including the effect of any exercise of power of appointment over income, applied to the calculation of that "net income". The difference between the parties' submissions may be illustrated as follows. Upon the taxpayers' case, if there were trust income of $300,000 and net income of $180,000 and a beneficiary with an annuity of $100,000, the beneficiary's assessable income would be fixed at $100,000. Upon the Commissioner's case, the beneficiary's assessable income would not be fixed at $100,000 but would be the same one-third proportion (ie $60,000). Trust law and income tax law Before turning to consider further the relevant provisions of the 1936 Act, the following points of a general nature should be made respecting the intersection between the statute and the law of trusts. First, both sides in argument on the present appeals accepted that whichever of the competing constructions of Div 6 were accepted examples Crennan could readily be given of apparent unfairness in the resulting administration of the legislation; it is more than 20 years since Hill J observed that "the scheme of Div 6 calls out for legislative clarification, especially since the insertion into [the 1936 Act] of provisions taxing capital gains as assessable income"4. Secondly, as Stone and Perram JJ emphasised5 in the Full Court, the distinction between income and capital in trust law was a product of the administration of successive equitable estates with the balancing in particular of the concern of those with life interests in the receipt of income and those with remainder interests in the conservation and augmentation of capital. Thirdly, the "rules" which were developed in Chancery regarding apportionment between capital and income of receipts and outgoings and losses largely took the form of presumptions which would yield to provision made in the trust instrument6. Fourthly, against this background it was to be expected that the treatment of receipts and outgoings by a trustee would not necessarily correspond with that in a taxing statute such as the 1936 Act. Fifthly, the degree to which a revenue statute adopts or qualifies or supplants the general understanding of terms with a particular application in property law will be a matter of statutory construction, but bearing in mind the caution expressed by Lord Wilberforce in Gartside v Inland Revenue Commissioners7 that the transfer from one context to another may breed confusion. Finally, there is the difficulty that while the general provisions in s 17 and s 19 of the 1936 Act8 speak of income derived by a "person" and a trustee will answer that description, the trust itself, in the absence of special provision in the legislation, will not be a separate entity with the distinct character of a taxpayer. Writing of the provisions of the 1936 Act dealing with trusts and companies as they stood in 1958 Professor Ford said that looking at "a trust in the 4 Davis v Federal Commissioner of Taxation (1989) 86 ALR 195 at 230. (2009) 176 FCR 250 at 265. Jacobs' Law of Trusts in Australia, 7th ed (2006) at 485 [1952]. [1968] AC 553 at 617. 8 Now rendered into "plain English" by the "Core provisions" in Pt 1-3 of the Income Tax Assessment Act 1997 (Cth). Crennan abstract" there appeared to be two methods by which it could be dealt with in the scheme of income taxation9. He continued10: "First, the trust could be treated as a separate entity and the income of the trust as a whole could be assessed as one unit. Under this approach no regard would be had to the income which beneficiaries under the trust derive from other sources. The rate of tax would be that appropriate to the total taxable income of the trust and the trustees would be assessed in respect of that income. If a trust were treated as a tax entity in this way its position would, in a broad sense, be like that of a company. In fact, not only is tax assessed and paid on the taxable income of a company but in addition, dividends paid by the company to its shareholders are, in general, taxed as part of the income of each shareholder. The suggested analogy between a trust treated as a tax entity and a company is a broad one, and is not intended to imply that similar double taxation should operate when trust income is distributed to beneficiaries." However, Professor Ford went on to write that wherever possible the 1936 Act adopted in Div 6 of Pt III what he described as the second approach for a scheme of income taxation. This was as follows: "[T]he trust could be treated as a mere conduit through which the beneficiaries under the trust receive income. Under this approach the income received by each beneficiary would be aggregated with his income from other sources and tax would be assessed against the beneficiary on that aggregated income at the rate appropriate thereto." This second approach was implemented by Div 6. The provisions of Div 6 The primary provision remains s 96. This states: "Except as provided in this Act, a trustee shall not be liable as trustee to pay income tax upon the income of the trust estate." (emphasis added) 9 Ford, "Income and Estate Taxation Affecting Trusts", (1958) 1 Melbourne University Law Review 419 at 420. 10 Ford, "Income and Estate Taxation Affecting Trusts", (1958) 1 Melbourne University Law Review 419 at 420. Crennan Section 96 had its immediate predecessor in s 31 of the Income Tax Assessment Act 1922 (Cth), which in turn had been preceded by s 26 of the Income Tax Assessment Act 1915 (Cth)11. The Court was taken to the text of this and earlier federal and Victorian legislation12 respecting the taxation of trust income, but it provides no immediate assistance in the construction of Div 6 for the purposes of the present appeals. The structure of Div 6 as first enacted was as follows. Special provision was made in s 98 for assessment of and payment by the trustee where a beneficiary was presently entitled to "a share of the income of a trust estate" but under a legal disability. Further, where no beneficiary was presently entitled the trustee was to be assessed and liable to pay (s 99); s 99 is now subject to s 99A. Finally, in the case of revocable trusts whereby the person creating the trust had the power to acquire a beneficial interest in the income derived during the year of income the Commissioner was empowered to assess the trustee (s 102). A central provision was s 97. It is upon the construction of this provision, as it stood in the 2000 and 2002 income tax years after amendments to Div 6 over the years, that these appeals turn. As enacted s 97 stated: "(1) Where any beneficiary is presently entitled to a share of the income of a trust estate and is not under any legal disability, his assessable income shall include that share of the net income of the trust estate. The exempt income of any such beneficiary shall include his individual interest in the exempt income of the trust estate, except to the extent to which that exempt income is taken into account in calculating the net income of the trust estate." Section 97(1) in its current form substitutes for "income of a trust estate" the phrase "income of the trust estate". The two phrases appear throughout Div 6 (in both its original form and its current form) but are not defined. The expression "net income" when used in Div 6 in relation to a trust estate is defined in s 95(1). The relationship, in the construction of s 97(1), between the terms 11 Inserted by Income Tax Assessment Act 1918 (Cth), s 21. 12 Including s 12(1)(d) of the Income Tax Act 1896 (Vic). This rendered the trustee liable, as a taxpayer, in respect of income earned, derived or received by the trustee where no other person was "presently entitled" to it and the trustee was "in actual receipt" of it. Crennan "the income of the trust estate" and "the net income of the trust estate" gives rise to difficulties some of which require resolution in these appeals. The term "trust estate" appears throughout Div 6 and is attached to the term "trustee", but not defined. Nor is the term "beneficiary". However, the term "trustee" is defined in s 6(1) in terms that take the reader immediately beyond a realm limited to the trusts of a settlement or testamentary trust. The definition of "trustee" in s 6(1) is as follows: "trustee in addition to every person appointed or constituted trustee by act of parties, by order, or declaration of a court, or by operation of law, includes: an executor or administrator, guardian, committee, receiver, or liquidator; and every person having or taking upon himself the administration or control of income affected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control or management of the income of a person under any legal or other disability". In considering this definition it is important to note that it is said in s 6(1) to apply "unless the contrary intention appears". Thus, it is not to be assumed that every person or entity which answers the statutory definition will be a trustee for the purposes of Div 6 of Pt III. The opening words of the definition speak of a trustee in the ordinary sense of a person who holds property on trust while pars (a) and (b) include persons in whom trust property is not vested. For example, a liquidator, although identified in par (a), is not a trustee of a trust estate in any ordinary sense13. Nevertheless, the reach of Div 6 beyond settlements and testamentary trusts is illustrated by three decisions of this Court. The official receiver of the estate of a bankrupt was taxed under Div 6 in Official Receiver v Federal Commissioner of Taxation (Fox's Case)14. In Harmer v Federal Commissioner 13 Federal Commissioner of Taxation v Linter Textiles Australia Ltd (In liq) (2005) 220 CLR 592; [2005] HCA 20. 14 (1956) 96 CLR 370 at 383-384; [1956] HCA 63. Crennan of Taxation15 Div 6 applied to moneys paid into the Supreme Court of Western Australia where no claimant had any vested interest in them; it was sufficient to attract Div 6 that the effect of the relevant West Australian legislation and Rules of Court was that the moneys were held upon trust for statutory purposes. On the other hand, in Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation16 the majority in this Court held that the Registrar was a trustee "pure and simple"17 of awards of compensation required by Victorian legislation to be paid into a fund under control of the Registrar. The trusts were for the benefit of those entitled to the compensation moneys, as individual beneficiaries, notwithstanding that the trusts arose under the legislation, rather than as a result of the acts of individuals18. The result was that interest then earned was income of trust estates to which Div 6 applied. Division 6 is now drawn to distinguish between a trust estate which is "a resident trust estate" and "a non-resident trust estate" in relation to the relevant year of income (s 95(2), (3)). Nothing turns on that distinction for these appeals, which, it is accepted, concern resident trust estates. Section 97 is now expressed to be subject to the "closely held trust" provisions of Div 6D (ss 102UA-102UV). The purpose of Div 6D is to provide the Commissioner with information respecting the "ultimate beneficiaries" of certain net income and tax-preferred amounts (s 102UA(1)). A "tax-preferred amount" includes "income of the trust that is not included in its assessable income in working out its net income" (s 102UI). If a "net capital gain", as defined in s 995-1(1) of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"), is made it will be taken into account in computing the net income of the trust estate within the meaning of s 95(1) of the 1936 Act as part of the assessable income, which is defined by reference to Div 6 of the 1997 Act19. Special rules found in Subdiv 115-C of the 1997 Act 15 (1991) 173 CLR 264; [1991] HCA 51. 16 (1993) 178 CLR 145; [1993] HCA 1. 17 (1993) 178 CLR 145 at 171. 18 (1993) 178 CLR 145 at 170. 19 See s 6(1) of the 1936 Act (definition of "assessable income") and ss 6-10 and 102-5 of the 1997 Act. Crennan then may allow beneficiaries to reduce their liability by their available capital losses and unapplied net capital losses. So far as is presently relevant s 97(1) reads: "Subject to Division 6D, where a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate: the assessable income of the beneficiary shall include: so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and ..." (emphasis added) The phrase "the net income of the trust estate" is to be read with the definition in s 95(1): "net income, in relation to a trust estate, means the total assessable income of the trust estate calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions, except deductions under Division 16C or Schedule 2G and except also, in respect of any beneficiary who has no beneficial interest in the corpus of the trust estate, or in respect of any life tenant, the deductions allowable under Division 36 of the Income Tax Assessment Act 1997 in respect of such of the tax losses of previous years as are required to be met out of corpus." On the other hand, and as already remarked, the expression "the income of the trust estate" which appears both in s 97 and in the basic provision of s 96 is not defined. This poses the first construction issue, that in the Commissioner's appeal. "The net income of the trust estate" and "the income of the trust estate" The very juxtaposition within s 97(1) of the defined expression "net income of the trust estate" and the undefined expression "the income of the trust estate" suggests that the latter has a content found in the general law of trusts, upon which Div 6 then operates. Crennan The opening words of s 97(1) speak of "a beneficiary of a trust estate" who is "presently entitled to a share of the income of the trust estate". The language of present entitlement is that of the general law of trusts, but adapted to the operation of the 1936 Act upon distinct years of income. The effect of the authorities dealing with the phrase "presently entitled" was considered in Harmer v Federal Commissioner of Taxation20, where it was accepted that a beneficiary would be so entitled if, and only if, "(a) the beneficiary has an interest in the income which is both vested in interest and vested in possession; and (b) the beneficiary has a present legal right to demand and receive payment of the income, whether or not the precise entitlement can be ascertained before the end of the relevant year of income and whether or not the trustee has the funds available for immediate payment." The elaboration of those propositions that may be called for in the application of s 98 (being the elaboration to which Kitto J adverted in Taylor v Federal Commissioner of Taxation21) need not be examined in this matter. The identification in s 97(1) of "a trust estate" of which there is "a beneficiary" also bespeaks the general law of trusts. It is true that s 97(1) must be read with s 96. This is addressed to "a trustee", and the effect of the decisions to which reference has been made is that there may be a trustee of a trust created by the operation of a legislative regime not by settlement inter vivos or testamentary disposition. Nevertheless, there must be a "trust estate". Further, the phrase "presently entitled to a share of the income" directs attention to the processes in trust administration by which the share is identified and entitlement established. The relevant operation of those principles, supported by a review of the authorities, was described as follows by Bowen CJ, Deane and Fitzgerald JJ in Federal Commissioner of Taxation v Totledge Pty Ltd22. Their Honours said: 20 (1991) 173 CLR 264 at 271. 21 (1970) 119 CLR 444 at 451-452; [1970] HCA 10. 22 (1982) 40 ALR 385 at 393. Crennan "A beneficiary under a trust who is entitled to income will ordinarily only be entitled to receive actual payment of the appropriate share of surplus or distributable income: the trustee will be entitled and obliged to meet revenue outgoings from income before distributing to a life tenant or other beneficiary entitled to income. Indeed, circumstances may well exist in which a trustee is entitled and obliged to devote the whole of gross income in paying revenue expenses with the consequence that the beneficiary entitled to income may have no entitlement to receive any payment at all. This does not, however, mean that a life tenant or other beneficiary entitled to income in a trust estate has no beneficial interest in the gross income as it is derived. He is entitled to receive an account of it from the trustee and to be paid his share of what remains of it after payment of, or provision for, the trustee's proper costs, expenses and outgoings." Reliance was placed by the Commissioner upon a passage in Federal Commissioner of Taxation v Australia and New Zealand Savings Bank Ltd23. There was, however, in that case no submission to the effect that the trust deed could operate to treat as capital receipts what otherwise might have been included as income of the trust estate. This is apparent from the argument in the Full Court of the Federal Court in that case24, and the argument there, as in this Court, was, as the Trustee submitted in this appeal, upon other issues. Finally, the Commissioner only partially invoked the operation of the 1936 Act to give content to the expression "income of the trust estate", and would exclude "statutory income", which is not income according to ordinary concepts. The lack of consistency which this involves tells against the submission. The result is that the Commissioner's appeal should be dismissed. There remains the second construction issue. The resolution of that issue is sequential to that of the first issue. 23 (1998) 194 CLR 328 at 337 [15]; [1998] HCA 53. 24 Australia and New Zealand Savings Bank Ltd v Commissioner of Taxation (No 2) (1997) 75 FCR 25 at 32. Crennan "That share" The second question of construction is presented by the presence in par (a)(i) of s 97(1) of the phrase "that share", which links the preceding identification of present entitlement to "a share" of the income of the trust estate to the defined expression "the net income of the trust estate". On its face the section may appear to postulate the same share of two subject matters which do not correspond. Emmett J referred to the submissions by Mr and Mrs Bamford that where the entitlement of a beneficiary is to a specified amount, as in the present case, and not to a proportionate part, the word "share" means that amount and that this is because "share" reflects the particular method for determination of entitlement to trust income25. His Honour continued26: "Mr and Mrs Bamford say that, where there is a disparity between the net income of the trust estate and the distributable income, entitlement to which is governed by the trust instrument, the amount in respect of which each beneficiary is assessable must be calculated as if the terms of the trust instrument and any relevant appointment operated upon the amount of the net income of the trust estate as if it were the distributable income. They say that such a result accords with the concept that the liability to tax upon income should follow from the distribution of income according to the terms of the trust." These submissions were correctly rejected. The resolution of the second issue of construction is to be found in the analysis by Sundberg J in Zeta Force Pty Ltd v Commissioner of Taxation27. His Honour dealt with the first issue of construction to the same effect as that just explained, saying: "The words 'income of the trust estate' in the opening part of s 97(1) refer to distributable income, that is to say income ascertained by the trustee according to appropriate accounting principles and the trust 25 (2009) 176 FCR 250 at 259. 26 (2009) 176 FCR 250 at 259. 27 (1998) 84 FCR 70 at 74-75. Crennan instrument. That the words have this meaning is confirmed by the use elsewhere in Div 6 of the contrasting expression 'net income of the trust estate'. The beneficiary's 'share' is his share of the distributable income." "Having identified the share of the distributable income to which the beneficiary is presently entitled, s 97(1) requires one to ascertain 'that share of the net income of the trust estate'. That share is included in the beneficiary's assessable income. The expression 'net income of the trust estate' in par (a)(i) has the meaning given it by s 95(1) – taxable income as opposed to distributable income. The words 'that share' in par (a)(i) refer back to the word 'share' in the expression 'a share of the income of the trust estate', and indicate that the same share is to be applied to an income amount calculated according to a different formula (taxable income as opposed to distributable income). Since the income amount may differ according to which formula is applied, the natural meaning to give to 'share' where it appears for the second time is 'proportion' rather than 'part' or 'portion'. When Parliament wanted to convey the latter meaning, as it did in ss 99 and 99A, it used the word 'part'. The contrast between the expressions 'share of the income of the trust estate' and 'that share of the net income of the trust estate' shows that the draftsman has sought to relate the concept of present entitlement to distributable income, and not to taxable income, which is, after all, an artificial tax amount. Once the share of the distributable income to which the beneficiary is presently entitled is worked out, the notion of present entitlement has served its purpose, and the beneficiary is to be taxed on that share (or proportion) of the taxable income of the trust estate." That analysis should be accepted. It follows that the taxpayers' appeal should be dismissed. Orders Each appeal should be dismissed. No costs orders were made in the Federal Court, there being an agreement between the parties respecting costs28, and no costs orders should be made in this Court. 28 (2009) 176 FCR 250 at 265.

HIGH COURT OF AUSTRALIA BLUEBOTTLE UK LIMITED & ORS APPELLANTS AND DEPUTY COMMISSIONER OF TAXATION & ANOR RESPONDENTS Bluebottle UK Limited v Deputy Commissioner of Taxation [2007] HCA 54 5 December 2007 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with A J Sullivan QC, S H Steward and S A Goodman for the appellants (instructed by Clayton Utz Lawyers) A Robertson SC with S W Gibb SC and J H Momsen for the first respondent (instructed by Australian Government Solicitor) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Bluebottle UK Limited v Deputy Commissioner of Taxation Taxes and duties – Income tax and related legislation – Collection and recovery of tax – Collection of tax due and payable by a non-resident from a third party – Two non-resident shareholders in Virgin Blue Holdings Limited ("Virgin Blue") allegedly derived income or profits or gains of a capital nature from a source in Australia – Directors of Virgin Blue declared a dividend due for payment on 15 December 2005 to those who were shareholders on a specified record date of 28 November 2005 – After the record date but before the date for payment of the dividend, the Deputy Commissioner of Taxation ("the Commissioner") issued notices to Virgin Blue pursuant to s 255 of the Income Tax Assessment Act 1936 (Cth) ("the Act") purporting to require Virgin Blue to retain an amount from the dividend owed to each shareholder to meet the shareholder's tax liability – The following day, which was before the date for payment of the dividend, the shareholders agreed to assign their rights to the dividend to a third party and informed Virgin Blue of that agreement – The following day, which was still before the date for payment of the dividend, the Commissioner issued tax assessment notices to the shareholders and further notices to Virgin Blue pursuant to s 255 of the Act – Whether Virgin Blue was required to retain the dividend to pay the shareholders' tax liability. Taxes and duties – Income tax and related legislation – Whether s 255 of the Act required the Commissioner to assess a non-resident's tax liability before the Commissioner could require a third party to pay the tax due and payable by that non-resident – Relevance of relationship between s 218 and s 255 of the Act. Corporations – Share capital – Shares – Dividends – Assignment of rights to receive a dividend – Whether a shareholder could assign its rights to receive a dividend to a third party – Whether a corporation was bound to recognise a shareholder's assignment of its rights to receive a dividend to a third party – Relevance of statutory contract under s 140(1) of the Corporations Act 2001 (Cth) – Time at which Virgin Blue incurred a "debt" to its shareholders in respect of the dividend – Relevance of distinction between declaring a dividend and determining that a dividend is payable – Relevance of "record date". Equity – Assignments in equity – Whether the shareholders' agreement to assign the rights to the dividend purported to effect an equitable assignment or a statutory assignment pursuant to s 199 of the Property Law Act 1974 (Q). Words and phrases – "declare", "debt", "determine", "due", "due and payable", "final dividend", "interim dividend", "record date". Corporations Act 2001 (Cth), ss 140(1), 254T, 254U, 254V. Company Law Review Act 1998 (Cth). Income Tax Assessment Act 1936 (Cth), ss 218, 255, 256, 257. Property Law Act 1974 (Q), s 199. GLEESON CJ, GUMMOW, KIRBY, HAYNE AND CRENNAN JJ. The second respondent, Virgin Blue Holdings Limited ("Virgin Blue"), is a listed public company, limited by shares. Its constitution provides that the replaceable rules contained in the Corporations Act 2001 (Cth) ("the Corporations Act") do not apply to the company. Its constitution gives the directors power "from time to time [to] determine that a Dividend is payable". On 11 November 2005, the directors of Virgin Blue resolved that, subject to receiving an unqualified audit report, the directors "declared" a final, fully franked dividend of 25 cents per ordinary share. The directors fixed the "record date for the dividend" as 28 November 2005 "with payment being made on 15 December 2005". On the record date of 28 November 2005, the second appellant (Cricket SA – "Cricket") held 23.00 per cent of the issued capital of Virgin Blue1; the third appellant (Virgin Holdings SA – "Holdings") held 2.08 per cent; (Barfair Limited – "Barfair") held 0.48 per cent. The dividend attributable to the shareholdings of Cricket and Holdings was about $65 million. fourth appellant the The Deputy Commissioner of Taxation ("the Commissioner"), the first respondent in this Court, alleges that Cricket and Holdings each became liable to pay income tax on the capital gain made on disposal of shares each held in Virgin Blue. Those disposals were said to have occurred in the one case on or about 30 June 2003, and in the other on or about 4 November and 8 December 2003. This litigation concerns attempts made by the Commissioner to intercept Virgin Blue's payment of the dividend that the directors resolved was to be paid on 15 December 2005, and have the amounts attributable to the shares held by Cricket and Holdings applied in satisfaction of the tax liabilities of Cricket and Holdings. Cricket and Holdings contend that on 13 December 2005 each made a valid and effective deed of assignment assigning its rights in respect of the dividend to the first appellant (Bluebottle UK Limited – "Bluebottle"), and that Bluebottle gave Virgin Blue an irrevocable direction to pay the sums in question to Barfair. On 15 December 2005, Bluebottle, Cricket, Holdings and Barfair commenced a proceeding in the Supreme Court of New South Wales seeking 1 Cricket was recorded twice in the list of the top 20 holders of shares in Virgin Blue, once in respect of 22.51 per cent of the issued capital and once in respect of a further 0.49 per cent. Different addresses were recorded in respect of the two holdings. The significance of this was not explored in argument. Kirby Hayne Crennan declarations (in effect) that the various transactions described were effective and that certain notices issued by the Commissioner had "no force or effect in relation to" the dividend. At first instance, Gzell J made declarations of the kind sought by the plaintiffs2. The Commissioner's appeal to the Court of Appeal was allowed3. That Court (Mason P, Santow and Basten JJA) set aside the principal orders of the primary judge and ordered Virgin Blue to pay the Commissioner the dividends that had been declared. By special leave, Bluebottle, Cricket, Holdings and Barfair appeal to this Court. Virgin Blue has filed a submitting appearance. The order of events It is necessary to describe in more detail the events that occurred after the directors' resolution of 11 November 2005 and after the record date of 28 November 2005 fixed by that resolution. The order of the events is important. First, on 12 December 2005, the Commissioner gave Virgin Blue two notices, each described as "Notice Pursuant to Section 255 of the Income Tax Assessment Act 1936". Each notice recited that, in the one case Cricket, in the other, Holdings, "is a non-resident who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder in a company deriving income, or profits or gains of a capital nature from a source in Australia". The notice went on to say that a number of companies (of which Virgin Blue was one): "shall, when required by the Commissioner, pay the tax due and payable by the Taxpayer [Cricket in the one case; Holdings in the other] and are, accordingly, authorised and required pursuant to section 255 of the Income Tax Assessment Act 1936 ... to retain [a specified amount] being the amount of tax that is due or will become due by the Taxpayer, from the amount the Companies have receipt, control or disposal of belonging to the Taxpayer". It will be convenient to call these notices "the Commissioner's first notices". 2 Bluebottle UK Ltd v Deputy Commissioner of Taxation (2006) 233 ALR 747. 3 Deputy Commissioner of Taxation v Bluebottle UK Ltd 2006 ATC 4803; 64 ATR Kirby Hayne Crennan Subsequent events reveal that the amount specified in each of the Commissioner's first notices was more than the sum of the amount the Commissioner stated, in position papers sent to Cricket and Holdings, to be the amount of tax due from each, together with the amount of general interest charge calculated to 15 December 2005. The Commissioner's first notices required Virgin Blue to retain $72,518,346.06 in respect of Cricket and $20,839,554.45 in respect of Holdings. The later position papers alleged that Cricket was liable to tax of $61,680,494.10 and general interest charge to 15 December 2005 of $2,761,119.76 (a total of $64,441,613.86) and that Holdings was liable to tax of $17,722,873.80 and general to 15 December 2005 of interest charge $2,761,119.764 (a total of $20,483,993.56). Second, on 13 December 2005, after receipt of the Commissioner's first notices, Cricket and Holdings each made a deed of assignment with Bluebottle. On the same day, a supplementary deed was made by Cricket and Bluebottle amending the deed of assignment, and an associated loan agreement, but nothing was said to turn on the terms of this supplementary deed. It may be put aside from further consideration. Clause 2.1(a) of each deed of assignment provided that the assignor (Cricket or Holdings) "transfers and assigns to [Bluebottle] in equity all Rights of the Assignor which are capable of assignment". The term "Rights" was defined in the deed as "all right, title and interest to receive the Dividend which the Assignor has, or will have upon them coming into existence, against Virgin Blue". Clause 2.1(b) of each deed provided that: "On the date fixed for payment of the Dividend, the Assignor transfers and assigns to [Bluebottle] absolutely all Rights of the Assignor both legal and beneficial which have not otherwise been transferred and assigned under clause 2.1(a)." Clause 2.1(c) of each deed provided that the consideration for the transfers and assignments in pars (a) and (b) of cl 2.1 was a sum being the equivalent in Swiss francs of the Dividend and that this amount was to remain outstanding on the terms of a loan agreement also made 13 December 2005 between the parties to the respective deeds of assignment. Clause 2.2(c) obliged Holdings or Cricket to give or to concur in the giving of any notice required by Bluebottle to Virgin Blue or any other person. Each deed contained an express choice of governing law as the law of Queensland. 4 Why identical sums should be due for the general interest charge was not explored. Kirby Hayne Crennan Third, on the same day, 13 December 2005, Bluebottle executed an irrevocable direction to Virgin Blue requiring Virgin Blue to pay a stated amount of money which was described as "payment from Virgin Blue for the dividend owed to Bluebottle (as announced by Virgin Blue on 16 November 2005)". The direction required Virgin Blue to make the payment to Barfair "or any other entity specified in writing to Virgin Blue" by Barfair. Fourth, on the following day, 14 December 2005, Virgin Blue received a letter from Cricket and Holdings enclosing copies of the deeds of assignment and the irrevocable direction to pay. The letter said that: "Pursuant to the above Deeds of Assignment, [Cricket and Holdings] have assigned all legal and beneficial rights to the Dividend to [Bluebottle]. Consequently, when the monies comprising the Dividend become payable on 15 December, they will belong and will have always belonged to [Bluebottle] and will not be monies held or controlled by [Virgin Blue] for [Cricket and Holdings]." A document referred to as a "brief analysis of the legal effect of the assignments" was attached to the letter. It asserted that the Commissioner's first notices did not prevent the assignments taking effect according to their terms. Fifth, on the same day, 14 December 2005, the Commissioner issued and served notices of assessment on Cricket and Holdings. Each assessment was a default assessment issued under s 167 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act") and was accompanied by a position paper setting out the Commissioner's views. Each assessment related to the year ended 31 March 2004 and gave 1 September 2004 as the due date for payment of the amount assessed. Sixth, also on 14 December 2005, but after the assessments just described had issued and after Virgin Blue had received the letter from Cricket and Holdings (the fourth event), Virgin Blue received letters from the Commissioner advising that "payment of any amount retained pursuant to [the Commissioner's first notices] is now required". These letters may be referred to as "the Commissioner's second notices". The issues In the courts below, attention was directed principally to the proper construction and application of the relevant provisions of the 1936 Act, and Kirby Hayne Crennan particularly s 255. Before dealing with those issues, however, it is necessary to consider what was the effect of the several steps taken by Virgin Blue in connection with the fixing and payment of a final dividend and the several steps taken by Cricket and Holdings (as shareholders of Virgin Blue) in relation to that dividend. It is not useful to examine the questions about the engagement of s 255 of the 1936 Act without first considering the effect of the transactions described earlier. Questions about the effect of those transactions were raised in the course of the oral argument of the appeal. After the completion of the hearing the parties, by leave, filed further written submissions directed to those questions. Subsequently, the appellants sought amplification of the leave that had been granted to permit them to rely on additional written submissions then filed in response to some matters raised in the Commissioner's written submissions. That leave should be granted. Two premises underpinned much of the appellants' arguments about the effect of the transactions. First, they submitted that Virgin Blue did not "incur a debt merely by fixing the amount or time for payment of [the] dividend"5 and that the debt arose "only when the time fixed for payment" (15 December 2005) arrived6. Secondly, the appellants submitted that the deeds of assignment, of which notice had been given to Virgin Blue, operated according to their terms. In consequence, so the argument proceeded, at no time was Virgin Blue a person of the kind described in s 255(1) – a "person having the receipt control or disposal of money belonging to a non-resident, who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder, debenture holder, or depositor in a company deriving income, or profits or gains of a capital nature, from a source in Australia". The first premise underpinning the appellants' arguments assumed that the relevant "debt" is sufficiently identified by identifying its amount, who owes it, and when it is due. That is, the first premise assumed that the identity of the creditor is unimportant, even though the "debt" is a company dividend. Whether that is so will require consideration of important questions of company law. The validity of the second premise depends upon the correctness of the first. 5 Corporations Act 2001 (Cth) ("the Corporations Act"), s 254V(1). 6 Corporations Act, s 254V(1). Kirby Hayne Crennan Company dividends before the Company Law Review Act Before the enactment of the Company Law Review Act 1998 (Cth) some propositions about company dividends were well established. Some of those propositions directly reflected provisions of the applicable companies legislation; others depended upon the particular terms of commonly adopted forms of the constituent documents of companies. A distinction was drawn7 between a power given in the constituent documents of a company to declare a final dividend and a power to pay an interim dividend. The distinction between interim and final dividends reflected two related considerations – that a dividend could be paid only out of profits and that profits were determined according to annual statements of accounts that were to be laid before the company in general meeting. A final dividend thus reflected the results of a completed year of trading; an interim dividend reflected what was anticipated to be the position at the end of the relevant year of trading8. The distinction between the two forms of dividend was also reflected in the description usually applied to the decision to make the dividend payment. A final dividend was "declared" and the power to declare a final dividend was often vested in the company in general meeting. By contrast, the power with respect to interim dividends (usually vested in the board of directors) was commonly described as a power to "pay" interim dividends. A decision to pay an interim dividend, even if described as a "declaration", was revocable until the dividend was paid9. By contrast, "the declaration of a final dividend [gave] rise to a debt payable by the company to the shareholder immediately or from the date stipulated for payment"10. And in the case of a final dividend, it was clear from at least the end of the nineteenth century that, absent particular provision to the contrary in the company's Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 at 572. 8 See, for example, Lucas v FitzGerald (1903) 20 TLR 16 at 18. 9 Brookton Co-operative Society Ltd v Federal Commissioner of Taxation (1981) 147 CLR 441 at 455; Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616 at 622. 10 Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 at 572. Kirby Hayne Crennan constituent documents, a shareholder could not sue to recover a dividend unless and until it had been declared11. The Company Law Review Act made radical changes to company law. The provisions of what was then the Corporations Law on a number of subjects were rewritten. The changes that were then made have, for the most part, continued to apply following the change from the national scheme rooted in the Corporations Act 1989 (Cth) and separate State Corporations Laws12 to the 2001 federal Act – the Corporations Act. For present purposes, it is necessary to notice some of the changes made by the Company Law Review Act in relation to the constituent documents of companies and in relation to dividends. It is only with an understanding of those changes that the effect of the dividend resolution passed by the directors of Virgin Blue can be determined. Constituent documents Before the Company Law Review Act, the constituent documents of a company were the Memorandum of Association and the Articles of Association. The rules that governed alteration of the Memorandum of Association differed from those governing alteration of the Articles. The Company Law Review Act provided13 for the government of a company's internal management either by provisions of the Corporations Law that applied to the company as "replaceable rules", or by a constitution, or by a combination of both. Those sections of the Law designated as "replaceable rules" could be "displaced or modified by the company's constitution"14. A public company adopting, modifying or repealing its constitution (all of which were steps requiring a special resolution of the company) was bound to lodge copies of both the resolution and the constitution with the regulator (then the Australian Securities Commission, now the Australian Securities and 11 In re Severn and Wye and Severn Bridge Railway Co [1896] 1 Ch 559; Bond v Barrow Haematite Steel Co [1902] 1 Ch 353 at 362. 12 Some aspects of the origins and the operation of the national scheme were examined by this Court in R v Hughes (2000) 202 CLR 535. 13 By what became s 134 of the Corporations Law. 14 Corporations Law, s 135(2). Kirby Hayne Crennan Investments Commission – "ASIC"). The constitution of a public company was, and is, a matter of public record. The company's constitution, like the former constituent documents of Memorandum and Articles of Association, is one of the two critically important sources of the rights of members. The other source of those rights is the relevant legislation, particularly the Corporations Act. The two sources intersect in what is now s 140(1) of the Corporations Act, which provides: "A company's constitution (if any) and any replaceable rules that apply to the company have effect as a contract: between the company and each member; and between the company and each director and company secretary; and between a member and each other member; under which each person agrees to observe and perform the constitution and rules so far as they apply to that person." Company dividends after the Company Law Review Act The provisions made by the Company Law Review Act in relation to dividends were set out in a new Pt 2H.5 of Ch 2H of the Corporations Law and those same provisions are now set out as Pt 2H.5 of Ch 2H of the Corporations Act. The central requirement of these provisions, contained in s 254T, is not a replaceable rule and is that dividends be paid only out of profits of the company. Section 254U provides a replaceable rule. So far as now relevant it provides that: "(1) The directors may determine that a dividend is payable and fix: the amount; and the time for payment; and the method of payment. The methods of payment may include the payment of cash, the issue of shares, the grant of options and the transfer of assets." Kirby Hayne Crennan Section 254V then deals with when the company incurs a debt in respect of dividends. It provides: "(1) A company does not incur a debt merely by fixing the amount or time for payment of a dividend. The debt arises only when the time fixed for payment arrives and the decision to pay the dividend may be revoked at any time before then. (2) However, if the company has a constitution and it provides for the declaration of dividends, the company incurs a debt when the dividend is declared." Virgin Blue's constitution and dividends In the present matter, the appellants submitted that s 254V(1) was engaged, not s 254V(2), and that Virgin Blue did not "incur a debt" when its directors passed the resolution of 11 November 2005. The appellants submitted that a debt arose only when the time fixed for payment of the dividend arrived and that, by that time, Cricket and Holdings had assigned their rights to Bluebottle. These submissions proceeded from the premise that, although the directors' resolution spoke of "declaring" a final dividend, the only relevant power given to the board by the constitution of Virgin Blue was a power to determine that a dividend is payable and to fix the amount, the time for payment and the method of payment. As noted at the outset of these reasons, the constitution of Virgin Blue provided that the replaceable rules contained in the Corporations Act did not apply to the company. It follows that s 254U (giving directors a power to determine that a dividend is payable) did not apply. The constitution of Virgin Blue contained a number of provisions relevant to the subject of dividends. The central provision was r 63. It provided: "(a) The Directors may from time to time determine that a Dividend is payable. The Directors may fix the amount, the time for payment and the method of payment of a Dividend. The method of payment may include the payment of cash, the issue of shares, the grant of options and the transfer of assets, including shares or other Securities in another body corporate (or any combination of them). Kirby Hayne Crennan (b) No Dividend bears interest against the company." The appellants emphasised that this rule is, for all practical purposes, identical with s 254U. They submitted that it should therefore be construed as meaning what s 254U means. In particular, they submitted that the rule should be read as using the word "determine" as not providing for what s 254V(2) refers to as "the declaration of dividends". Rule 63 cannot be construed in isolation from its context. First and foremost, it cannot be construed as if, despite the general provision that the replaceable rules do not apply, it simply incorporated the replaceable rule set out in s 254U. Of course, it is important to recognise that r 63 of Virgin Blue's constitution used the same words as s 254U, but those words sit in a context provided by the whole of the constitution and the Corporations Act, not in a context provided only by the Act. It is, therefore, important to notice other provisions of the constitution that spoke of "declaration" of a dividend and other provisions of that document that used the word "determine" or cognate words. Rule 5 concerning preference shares provided in par (c)(ii) that, "in addition to the preferential Dividend, the preference shares may participate with the ordinary shares in Dividends declared by the Directors ...", but the same rule also provided in par (d)(i)(B) for "the aggregate of any Dividends accrued (whether determined or not) but unpaid" (emphasis added). Rule 14 provided for the company having a lien on every share and on the proceeds of sale of every share and, by par (c), that "[t]he lien extends to all Dividends and entitlements declared in respect of the shares" (emphasis added). Rule 73 provided for the establishment of Dividend Reinvestment Plans, and in par (a)(i)(B) spoke of some or all shareholders electing "that Dividends from the company not be declared or paid and that instead a payment or distribution other than a Dividend ... be made" (emphasis added). The uses of the word "declared" in these particular provisions point against reading r 63 as using the word "determine" in a way that distinguishes determination from declaration. It may readily be accepted that, as the appellants submitted, care must be taken before placing too much weight upon use of the word "declared" or cognate terms elsewhere in the constitution. But the care that must be taken stems ultimately from the recognition of the possibility that "declared" and "determined" were used interchangeably by those who drafted the constitution of the company, without the drafters adverting to the distinction between determination to pay a dividend and declaration of a dividend which the companies legislation has made since the Company Law Review Act. And contrary to the appellants' submissions, that possibility does not mean that the Kirby Hayne Crennan uses in the constitution of the word "declared" and its cognate forms may be set aside as irrelevant to the proper construction of r 63. In particular, it does not entail that attention may be confined to the way in which the Corporations Act uses the words "determine" and "declaration". Rather, the uses made in Virgin Blue's constitution of both "declared" and "determined" (and their cognate forms) point towards reading "determine" as being used in r 63 to convey no narrower or more precise a meaning than "decide". That view of r 63 is supported by references, made in other rules dealing with the subject of dividends and distributions to members, to matters being "determined" by the directors. Thus, r 64(a) provided that, "[s]ubject to any special rights or restrictions attached to any shares, every Dividend on a share in the company is to be paid as follows, unless otherwise determined by the Directors" (emphasis added). Rule 66 provided that "[i]f the Directors have determined to pay a Dividend or to return capital by a reduction of capital, a buy-back or otherwise", certain provisions were engaged. The provisions thus engaged included that "if a difficulty arises in regard to that distribution, [the directors may] settle the matter as they determine", and further provisions for the directors "to appropriately adjust the rights of all shareholders as the Directors determine in their discretion" (emphasis added). Similarly, r 67 provided that where payment of dividends and of other distributions is to be made in a currency other than Australian dollars, "the Directors may determine in their discretion the appropriate exchange rate and the time of calculation"; these determinations of the directors were said to be final, in the absence of manifest error (emphasis added). All of these uses of the words "determine" and "determined", in combination with the several other considerations mentioned earlier in these reasons, lead to the conclusion that the better construction of r 63 is that the word "determine" means "decide". The rule should not be construed as confining the directors' power over dividends to making only what s 254U identifies as a "determination" as distinct from a "declaration" of dividend. So understood, the rule would empower the directors to declare a dividend or to determine that one is to be paid. This understanding of the rule leads to no inconsistency with applicable provisions of the Corporations Act. To demonstrate why that is so, it is necessary to say something further about those provisions, their purposes and their operation. Kirby Hayne Crennan The Corporations Act and dividends As noted earlier, it had been established before the enactment of the Company Law Review Act that the decision to pay an interim dividend differed in important respects from the decision to pay a final dividend. The decision to pay an interim dividend was revocable until implemented by payment. When a final dividend was declared, the company incurred a debt when the declaration was made or from the date on which the dividend was to be paid in accordance with the declaration15. The difference between interim and final dividends was critical to the application of those provisions of the companies legislation which governed insolvent trading. Those provisions were then contained in Div 3 of Pt 5.7B of the Corporations Law (ss 588G-588H) and are now found, in generally similar terms, in Div 3 of Pt 5.7B of the Corporations Act (ss 588G-588H). (One difference is that the Company Law Review Act provided, in its enactment of s 588G(1A), rules governing when, for the purposes of s 588G, a debt is incurred. In relation to dividends, s 588G(1A) of the Corporations Act now provides that a debt is incurred "when the dividend is paid or, if the company has a constitution that provides for the declaration of dividends, when the dividend is declared".) If, after deciding to pay an interim dividend, a company's financial position deteriorated to the point where, before or upon payment of the dividend, it could not pay its debts as and when they fell due, and the directors proceeded to make the payment, the directors might be liable to pay the amount of the dividend to the company16. A purpose of the bill for what was to become the Company Law Review Act was17 to "allow companies to avoid the problems that would arise if profits that would have been sufficient to cover the dividend when it was declared have ceased to exist when the time comes to pay the dividend". This was said18 to be achieved by implementing two propositions – first, that "a debt will not arise until the time fixed for payment has arrived, unless the 15 Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 at 572. 16 Ammonia Soda Co v Chamberlain [1918] 1 Ch 266 at 291-292; Hilton International Ltd v Hilton [1989] 1 NZLR 442. 17 Explanatory Memorandum, Company Law Review Bill 1997, par 11.40. 18 Explanatory Memorandum, Company Law Review Bill 1997, par 11.40. Kirby Hayne Crennan company has a constitution that provides for the declaration of a dividend" and secondly, that "[d]irectors will be able to revoke a decision to pay a dividend at any time before the time fixed for payment, and thus avoid a debt being incurred". But as the reference to declaration of dividends shows, no absolute rule was imposed. Rather, it was left to companies to decide when a debt was to be incurred. If, as we would hold to be the better construction of Virgin Blue's constitution, the board of that company was empowered to choose between declaring a dividend and determining that a dividend would be paid, fixing its amount and time for payment, the question of when did the company incur a debt will be decided by applying the relevant branch of s 254V. In this matter, on 11 November 2005, the board of Virgin Blue declared a dividend, and, by operation of s 254V(2), the company incurred a debt when the dividend was declared. Because the declaration made in this case was subject to satisfaction of a condition precedent (receiving an unqualified audit report) the declaration took effect on satisfaction of that condition. The debt was payable on 15 December 2005, the date stipulated for payment19. But the liability to make the payment was complete when the shareholders to whom the liability was owed were identified. Those shareholders were identified on the record date, 28 November 2005. Whether, and when, the term "debt" can be applied to the relevant obligations may obscure some deeper questions presented by the appellants' arguments. It is to those questions that these reasons now turn. Dividends as debts As noted earlier, the relationship between Virgin Blue on the one hand and its members, Cricket and Holdings, on the other, was regulated by the constitution of the company and the applicable legislative provisions. The constitution had effect as a contract between the company and each member20 and between a member and each other member21 "under which each person 19 Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 at 572. 20 Corporations Act, s 140(1)(a). 21 s 140(1)(c). Kirby Hayne Crennan agrees to observe and perform the constitution and rules so far as they apply to that person"22. Rule 6 of Virgin Blue's constitution provided that: "(a) Except as required by law, the company is not bound to recognise a person as holding a Security on any trust. (b) Whether or not it has notice of the rights or interests concerned, the company is not bound to recognise: any equitable, contingent, future or partial claim to, or interest in, any Security or unit of a Security; or any other right in respect of a Security, except an absolute right of ownership of the Security holder or as otherwise provided by this Constitution or by law." "Securities" were defined as including "shares, rights to shares, options to acquire shares and other securities with rights of conversion to equity". Thus, by r 6, Virgin Blue was "not bound to recognise ... any ... right in respect of" a share. By the resolution declaring a dividend the directors of Virgin Blue fixed a record date, 28 November 2005. The better view may well be that the directors were required to fix a record date because Virgin Blue was a public listed company subject to the listing rules23 of the financial market on whose official list its shares were traded, and the operating rules24 of a relevant clearing and settlement facility (a "CS facility"). In particular, the ASX Listing Rules may be understood as obliging listed entities to "follow the time limits set out in this timetable [contained in Appendix 6A to the Rules] when paying a dividend". One of the "events" in that timetable was "[r]ecord date to identify security holders entitled to the dividend" (footnote omitted). "[R]ecord date" was defined in Ch 19 of the Listing Rules (in effect) as the date fixed for the purpose of identifying those entitled to dividends or other entitlements. 23 Corporations Act, s 761A definition of "listing rules". 24 Corporations Act, s 761A definition of "operating rules". Kirby Hayne Crennan A "body corporate that is, with its acquiescence, included in the official list of a licensed market ... is taken to be under an obligation to comply with the operating rules of that market to the extent to which those rules purport to apply to the body corporate"25. Listing rules are one form of operating rules of a financial market26. A person aggrieved by a failure to comply with operating rules may obtain orders for compliance with or enforcement of the rules27. It is not necessary, however, to decide whether the directors of Virgin Blue were bound to fix a record date for payment of the dividend now in question. Nor is it necessary to examine further the source or extent of such an obligation. For present purposes, it is important to notice only that a record date was fixed. By fixing a record date the directors identified who were to be the members entitled to participate in the dividend – those who were entitled to be recorded on the register of members on the record date. It well may be that, as the Commissioner submitted, this result (that the company was obliged to pay dividends to those who were registered shareholders on the record date) follows from the operation of reg 7.11.39 of the Corporations 25 Corporations Act, s 793C(3). 26 Corporations Act, s 761A, definition of "operating rules". 27 Corporations Act, s 793C(1) and (2). Kirby Hayne Crennan Regulations 200128 and r 5.20.5 of the ASTC Settlement Rules29. But whether or not those provisions require the conclusion that the company was bound to pay 28 Regulation 7.11.39 provided: "Determination of who holds Division 4 financial products for the purposes of conferring security benefits (1) If the ASTC operating rules include provisions relating to the determination, for the purposes of conferring security benefits, of who holds or is taken to hold Division 4 financial products at a particular time, those provisions have effect accordingly despite anything in: (a) the Act; and (b) these Regulations; and (c) any other law (written or unwritten) that applies to the conferral; and (d) any document that applies to the conferral (for example, the body corporate's constitution or a relevant trust deed). (2) In subregulation (1), conferring a security benefit means: (a) paying or transferring money or property to a person because the person holds or held a Division 4 financial product; or (b) issuing securities to a person because the person holds or held a Division 4 financial product; or (c) conferring a right on a person because the person holds or held a Division 4 financial product." 29 ASX Settlement and Transfer Corporation Pty Ltd ("ASTC") is a prescribed CS facility. It has issued ASTC Settlement Rules, r 5.20.5 of which provided: "Distribution of Entitlement under Corporate Actions If ASTC and an Issuer have established Cum Entitlement Balances for a Corporate Action in accordance with these Rules, then: (Footnote continues on next page) Kirby Hayne Crennan the dividend to those who were shareholders on the record date, that result follows from other, more general, considerations about assignments and company membership. The assignments The assumption underpinning the appellants' case, broadly expressed, was that the right of a shareholder to receive a dividend was assignable. Before giving attention to the accuracy of that assumption, something more should first be said respecting the operation of cl 2.1 of the deeds of assignment dated 13 December 2005. Clause 2.1 is headed "Equitable and Legal Assignments". It is apparent from what follows in pars (a) and (b) that the purported subject matter was the respective legal and equitable (or "beneficial") rights of Cricket and Holdings to receive the dividend which had been declared by Virgin Blue on 11 November. Paragraph (a) was drawn as an equitable assignment (for value, as indicated by par (c)) of those legal and equitable rights, with effect immediately on 13 December. Paragraph (b) was drawn as an agreement for value to catch any legal and equitable rights not assigned by par (a) but the assignment was to be effective on the payment date of 15 December. Clause 2.1 thus indicates the taking of some caution concerning the temporal derivation of the assigned rights with respect to the dividend declared 11 November but with a payment date yet to arrive when the deeds were executed on 13 December. Despite assumptions made in written submissions and oral argument, neither par (a) nor par (b) of cl 2.1 was drawn so as to effect a statutory (a) the identity of persons who are to receive an Entitlement under the Corporate Action will be determined by reference to those persons in respect of whom the Cum Entitlement Balance is recorded immediately prior to ASTC terminating Cum Processing for that Entitlement; and (b) distribution of Entitlements under the Corporate Action will be determined by reference to the number of Parent Financial Products recorded in the Cum Entitlement Balance for each person immediately prior to ASTC terminating Cum Processing for that Entitlement. Note: Rule 5.20.5 derives binding effect from Regulation 7.11.39 of the Corporations Regulations." Kirby Hayne Crennan assignment under the Queensland statutory provisions30 relating to assignment of choses in action. The Queensland provisions were modelled on the Judicature Act 1873 (UK) provisions (s 25(6)) that provide the common form31 for such provisions. Section 199 of the Property Law Act 1974 (Q) provided: "Statutory assignments of things in action (1) Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice— the legal right to such debt or thing in action; and all legal and other remedies for the same; and the power to give a good discharge for the same without the concurrence of the assignor. If the debtor, trustee or other person liable in respect of such debt or thing in action has notice— that the assignment is disputed by the assignor or any person claiming under the assignor; or of any other opposing or conflicting claims to such debt or thing in action; the debtor may, if the debtor thinks fit, either call upon the persons making claim to the debt or other thing in action to interplead concerning the same, or pay the debt or other thing in action into court under and in conformity with the provisions of the Acts relating to relief of trustees." 30 Property Law Act 1974 (Q), s 199. 31 See, for example, Conveyancing Act 1919 (NSW), s 12; Property Law Act 1958 (Vic), s 134; Law of Property Act 1936 (SA), s 15; Property Law Act 1969 (WA), s 20; Conveyancing and Law of Property Act 1884 (Tas), s 86. Kirby Hayne Crennan The statutory system was not engaged for several reasons. First, par (a) of cl 2.1 was drawn in terms as an equitable assignment for value, to be effective forthwith, with no precondition for the giving of notice as required by the statute. Secondly, par (b) was drawn so as to be effective in the future, namely on the payment date, and was an agreement for value which equity would enforce; it was not drawn as an absolute assignment of presently subsisting rights and as immediately effectual at law. However, the classification of the species of assignment attempted in cl 2.1 is not determinative of the relevant issue. This turns upon the identification of the nature and content of the rights created by the declaration of dividend and the identity of those parties which enjoyed those rights. The assignments could have no greater efficacy than that given by the rights which provided their subject matter. Here, requirements of the constitution of Virgin Blue and the Corporations Act were of primary importance. The appellants' argument characterised the obligation of Virgin Blue to pay the dividend as a "debt". That term is apposite but its use may mislead if inquiry stops at asking whether the word may be applied to describe the relevant obligation. A duty or obligation to pay a liquidated sum may be enforced by the action of debt32. The availability of that action does not identify, however, either the source, or the full content, of the duty or obligation that is enforced. In particular, the "debt" which Virgin Blue incurred in respect of the dividend is incompletely described by reference only to its amount, the date on which it would fall (or had fallen) due for payment, and its being a dividend. It is incompletely described because no creditor is identified. The identification of the creditor is an essential element of the description of the kind of debt which is in issue in this case. It is an essential element because the Corporations Act and the constitution of Virgin Blue make it essential. To explain why that is so, it is necessary to begin with some matters of history that found reflection in this Court's decision in Norman v Federal Commissioner of Taxation33. 32 Mallinson v Scottish Australian Investment Co Ltd (1920) 28 CLR 66 at 70, citing Shepherd v Hills (1855) 11 Ex 55 at 67 [156 ER 743 at 747]. See also The Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 313 [65] per 33 (1963) 109 CLR 9. Kirby Hayne Crennan One premise for the decision in that case was that the taxpayer was a shareholder, registered in the share registers as such, in the companies declaring the dividends and that34 "[a]s between him and the companies, he was therefore entitled to the dividends". The Court divided about the effect of a deed purporting to assign future dividends in the companies to another, by way of gift. But the unchallenged premise for the debate appears to have been that absent some enabling provision in the companies' Articles of Association, the companies were bound to pay dividends, once declared, to only the registered shareholders. This premise reflected what were then long-established provisions of statutes regulating company law that forbade the entry on a register of members of notice of any trust, expressed, implied or constructive35. That rule is no longer absolute. It is qualified in relation to companies that are not listed companies36 and in relation to trustees, executors or administrators of the estates of deceased, bankrupt or infirm persons37. But subject to those qualifications, no other notice of a trust whether express, implied or constructive may be entered on a share register kept within the jurisdiction or be receivable by ASIC38. The significance of provisions like s 30 of the Companies Act 1862 (UK) forbidding entry on a register of members of notice of a trust was examined in a number of nineteenth century cases. In Bradford Banking Co v Briggs39, it was held that the statutory provision (standing alone) relieved the company from taking notice of trusts, but not from the obligation to take notice of an equitable mortgage of the shares made by a shareholder. But, by contrast, where the Articles of Association of the company provided that the company was not bound by, or compelled to recognise (even when having notice thereof), any equitable or other interest in a share, the company was held entitled to disregard 34 (1963) 109 CLR 9 at 15 per Dixon CJ. 35 Companies Act 1862 (UK) (25 & 26 Vict c 89), s 30. See also Muir v City of Glasgow Bank (1879) 4 App Cas 337 at 360. 36 Corporations Act, s 169(5A). 37 s 1072E. 38 s 1072E(10). 39 (1886) 12 App Cas 29. Kirby Hayne Crennan notice of equities40. The reason for the rule was expressed by Lord Coleridge CJ41: "It seems to me that, if we were to throw any doubt upon that rule, we should make the carrying on of their business by joint stock companies extremely difficult, and might involve those companies in very serious questions, and the ultimate result would be anything but beneficial to the holders of shares in such companies themselves." And it is, therefore, not surprising that a form of Article intended to have this effect was included in standard precedents of Articles in successive editions of Palmer's Company Precedents42. Eventually, a form of such an Article was set out in Table A in the First Schedule to the Companies Act 1948 (UK) and in Table A in the so-called uniform Companies Acts 1961 of several Australian States, and succeeding Australian companies legislation until Table A was repealed with the enactment of the Company Law Review Act. As noted earlier, Virgin Blue's constitution contained a provision of the kind described. Paragraph (a) of r 6 provided that "[e]xcept as required by law, the company is not bound to recognise a person as holding a Security on any trust". There having been no assignment of the shares or any interest in the shares, this paragraph had no application in the present matter. It may be 40 Browne v The Bank of New South Wales (1872) 11 NSWR 392; Budge v The Bank of New South Wales (1890) 11 NSWR 385; New London and Brazilian Bank v Brocklebank (1882) 21 Ch D 302; In re Perkins; Ex parte Mexican Santa Barbara Mining Co (1890) 24 QBD 613; Société Générale de Paris v Walker (1885) 11 App Cas 20 at 30 and see also, in the Court of Appeal, Société Générale de Paris v Tramways Union Co (1884) 14 QBD 424 at 451-452 per Lindley LJ; cf Harvey v Commercial Bank of Australia Ltd (1937) 58 CLR 382 at 394 per 41 In re Perkins (1890) 24 QBD 613 at 616. 42 See, for example, Palmer, Company Precedents for use in relation to Companies subject to the Companies Acts 1862 to 1880, 2nd ed (1881) at 97-98; Palmer, Company Precedents for use in relation to Companies subject to the Companies Acts, 1862 to 1890, 6th ed (1895), Pt 1 at 309-310; Palmer, Company Precedents for use in relation to Companies subject to the Companies Acts, 1862 to 1900, 9th ed (1906), Pt 1 at 537-539; Mackinnon and Buchanan-Dunlop (eds), Palmer's Company Precedents, 17th ed (1956), Pt 1 at 418-421. Kirby Hayne Crennan noticed, however, that the introductory exception ("[e]xcept as required by law") makes plain that the clause does not prevent a person having an equitable interest in the shares procuring the intervention of the court to protect that interest by order43. Paragraph (b) of r 6 was engaged. It provided that "[w]hether or not it has notice of the rights or interests concerned, the company is not bound to recognise ... any other right in respect of a Security, except an absolute right of ownership of the Security holder or as otherwise provided by this Constitution or by law". The provision deals expressly with the case where the company has notice of the rights or interests concerned. It provided that whether or not the company had notice it was not bound to recognise "any other right in respect of a Security". Again, an exception is made – by the words "as otherwise provided by this Constitution or by law". But this exception, like the exception to r 6(a), is directed to requirements imposed by law (as, for example, by court order) otherwise than from the bare fact of notice of the rights or interests concerned. For present purposes, it is important to recognise that the debt which is now in question arises out of and is governed by the contract constituted by Virgin Blue's constitution. By fixing a record date of 28 November 2005, the directors determined the class of those who would be entitled to receive the dividend as those entitled to be registered as members on that day and by fixing a record date the directors determined that it was those and only those members with whom Virgin Blue was to deal with respect to the dividend. (Of course, the fixing of a record date takes on added significance if its fixing was mandatory and if its fixing has significance in the securities market for dividing trading in the shares between trading cum-dividend and trading ex-dividend. It is convenient, however, to leave these statutory consequences aside.) Assignments and dividends What is the significance of the provisions of Virgin Blue's constitution that have been described for the provision of the subject matter of the assignments set out in cl 2.1 of the deeds of 13 December 2005? That question is best approached by first pointing to what the provisions of the constitution do not do. Virgin Blue's constitution does not purport to prohibit a member alienating any rights the member may have. In particular, the relevant provisions do not 43 Taylor v Midland Railway Co (1860) 8 WR 401; Binney v Ince Hall Coal and Cannel Co (1866) 35 LJ Ch 363. Kirby Hayne Crennan purport to make inalienable the right to receive a dividend that has been declared. Questions about applying the doctrine against restraint on alienation that applies in relation to interests in land44 do not arise. Further, the relevant provisions of Virgin Blue's constitution do not purport to (and do not) render the deeds of assignment void45 or unenforceable as between the parties to the deeds46. The assignments in cl 2.1 of each deed of assignment47 were expressed to be for value and, as between assignor and assignee, once the dividend was received by the assignor (Cricket or Holdings) equity obliged the assignor to hold it on trust for the assignee (Bluebottle). But as between assignor (Cricket or Holdings) and debtor (Virgin Blue) the terms of the company's constitution which s 140(1) of the Corporations Act provides has effect as a contract between the company and its members stipulated that the company (the debtor) remained free to pay the assignor and, because the record date identified those to whom the dividend was to be paid, was bound to pay the assignor. By that imputed contract, the company remained free to set up equities against the assignor as if no assignment had taken place. That is, the imputed contract stipulated that, regardless of notice of the deeds of assignment, Virgin Blue could look only to its members on the record date for a discharge of the debt and could set up against any member the lien it had under r 14 of the constitution on "all Dividends and entitlements declared in respect of the shares". How is effect to be given to those stipulations? 44 Hall v Busst (1960) 104 CLR 206 at 217 per Dixon CJ; Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225 at 234-237 per Northrop, Gummow and Hill JJ; Caboche v Ramsay (1993) 119 ALR 215 at 231-232 per Gummow J. See also Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 at 106-107; Tolhurst, The Assignment of Contractual Rights, (2006) at 249-254. 45 Starke, Assignments of Choses in Action in Australia, (1972) at 66-67 [91]. 46 cf Tom Shaw & Co v Moss Empires Ltd (1908) 25 TLR 190 at 191; Hodder & Tolley Ltd v Cornes [1923] NZLR 876 at 878; Allcock, "Restrictions on the Assignment of Contractual Rights", (1983) Cambridge Law Journal 328; Goode, "Inalienable Rights?", (1979) 42 Modern Law Review 553; Goode, Legal Problems of Credit and Security, 3rd ed (2003) at 106-107 [3-40]. 47 See these reasons at [9]. Kirby Hayne Crennan As R M Goode (later Professor Sir Roy Goode) wrote48, "If A, when contracting to pay money to B, makes it clear that his undertaking to B is of a personal character and that payment will be made to B alone, there is no reason why he should be compelled to accept a variation of the contract by being required to pay B's assignee, C." And that, in essence, was the nature of the contract that is deemed49 to be constituted by the constitution of Virgin Blue. The company agreed to deal with its members for the time being, not with the assignees of rights enjoyed by the members. Insofar as these questions arise (as they do here) in the context of equitable assignments for value of legal and equitable rights, the simple proposition is that equity follows the provisions of company law and the constitution of Virgin Blue which create and define the nature and scope of the rights with which equity deals under the assignments. Insofar as the questions arise in a case where statutory provisions on the Judicature Act pattern apply, the following may be said. Those provisions have not been construed as permitting assignment of the benefit of a contract involving "personal skill or confidence, such that personal performance by one party can be insisted upon by the other"50. As Isaacs J put the point in Bruce v Tyley51, to permit assignment of the benefit of such a contract "would alter the rights" of the other party to the contract. And once it is observed that there are contracts of a kind where the benefit of the contract cannot be assigned, it follows that the apparently general words of the relevant statutory provision governing assignment (here, s 199 of the Property Law Act) must be read as subject to some relevant qualification or limitation on its operation. That is not done by grafting some judicially determined exception upon the generality of the provision. There is no textual or other footing upon which that could be done. Rather, the relevant limitation in the operation or engagement of the statutory provision lies in the proper identification of the particular "debt or other legal thing in action" to which it is sought to have the 48 Goode, "Inalienable Rights?", (1979) 42 Modern Law Review 553 at 553. 49 Corporations Act, s 140. 50 Starke, Assignments of Choses in Action in Australia, (1972) at 64 [90]. 51 (1916) 21 CLR 277 at 289. Kirby Hayne Crennan provision apply. In the present matter, the debt or other legal thing in action was the right to receive a dividend. For the reasons given earlier, that right is not completely and accurately identified if no account is taken of those provisions of Virgin Blue's constitution which regulate with whom the company will deal in that regard. Complete and accurate identification of the right requires recognition of the fact that under the company's constitution, by fixing a record date the directors determined the class of those entitled to receive the dividend as those entitled to be registered as members on that record date. Whether an absolute covenant against assignment would raise any wider or different issues than those that must be considered in this matter need not be examined. Questions about assignment in breach of a covenant against assignment were touched on, but not decided, in Broadcast Australia Pty Ltd v Minister Assisting the Minister for Natural Resources (Lands)52. Nor is it necessary to enter the debate about whether the Judicature Act provisions for assignment create what one author has described53 as a "procedural regime" as distinct from a "substantive regime". Even if, as that author concludes54, the statutory provisions are substantive in effect, "so that the assignee becomes the owner at law of the subject chose in action", it is essential to recognise, and give full effect to, what is a defining characteristic of the "debt or other legal thing in action" which is the subject of debate in this case. Here the contractual stipulation regulating with whom the debtor (Virgin Blue) will deal in relation to dividends (its members on the record date) is a stipulation that cannot be severed from the "debt or other legal thing in action" which is the subject of the assignment. Any assignments by Cricket or Holdings which attempted to rely upon the Judicature Act provisions could not alter that stipulation or deprive it of force. For these reasons, it follows that on and from the record date Cricket and Holdings, as members of Virgin Blue on the record date, had rights to receive the 52 (2004) 221 CLR 178 at 185-186 [15]. See also Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588 at 601 [21]; Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225 at 234-237; Don King Productions Inc v Warren [2000] Ch 291 at 318-320; affd [2000] Ch 291 at 327. 53 Tolhurst, The Assignment of Contractual Rights, (2006) at 103-117 [5.01]-[5.27]. 54 Tolhurst at 117 [5.27]. Kirby Hayne Crennan dividend which the directors had declared on 11 November 2005 and which was due for payment on 15 December 2005. The assignments each made of those rights created rights and obligations as between each assignor and Bluebottle as assignee. Those assignments did not, however, alter the force of the contractual stipulation deemed to exist between Virgin Blue and each of Cricket and Holdings that Virgin Blue could and in this case would deal with the dividend only with those who were its members on the record date. Virgin Blue therefore was and remained liable to pay the dividend to those who were its members on the record date. It is only against this understanding of the legal consequences of Virgin Blue's declaration of dividend, and the assignments and other documents passing between Cricket and Holdings, Bluebottle and Virgin Blue, that the application of s 255 of the 1936 Act can be considered. It is with that subject that these reasons will now deal. Section 255 of the 1936 Act At the times relevant to this matter, s 255 provided: "Person in receipt or control of money from non-resident (1) With respect to every person having the receipt control or disposal of money belonging to a non-resident, who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder, debenture holder, or depositor in a company deriving income, or profits or gains of a capital nature, from a source in Australia, the following provisions shall, subject to this Act, apply: he shall when required by the Commissioner pay the tax due and payable by the non-resident; he is hereby authorised and required to retain from time to time out of any money which comes to him on behalf of the non-resident so much as is sufficient to pay the tax which is or will become due by the non-resident; he is hereby made personally liable for the tax payable by him on behalf of the non-resident to the extent of any amount that he has retained, or should have retained, under paragraph (b); but he shall not be otherwise personally liable for the tax; Kirby Hayne Crennan he is hereby indemnified for all payments which he makes in pursuance of this Act or of any requirement of the Commissioner. Every person who is liable to pay money to a non-resident shall be deemed to be a person having the control of money belonging to the non-resident, and, subject to subsection (2A), all money due by him to the non-resident shall be deemed to be money which comes to him on behalf of the non-resident. (2A) For the purposes of this section, money due by a person to a non-resident by way of a natural resource payment within the meaning of Division 3B of Part VI of this Act, or section 12-325 in Schedule 1 to the Taxation Administration Act 1953 (as the case requires), shall be deemed not to be money which comes to the person on behalf of the non-resident. (3) Where the Commonwealth, a State or an authority of the Commonwealth or a State has the receipt, control or disposal of money belonging to a non-resident, this section (other than paragraph (1)(c)) applies to and in relation to the Commonwealth, the State or the authority, as the case may be, in the same manner as it applies to and in relation to any other person. In this section, tax includes the general interest charge under section 163AA, section 170AA, subsection 204(3), subsection 221AZMAA(1), subsection 221AZP(1), subsection 221YD(3) or section 221YDB, additional tax under Part VII and shortfall interest charge. Note 1: The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act. Note 2: Subsection 8AAB(4) of that Act lists the provisions that apply the general interest charge. This section applies to an equity holder in the same way as it applies to a shareholder." Uninstructed by authority, and considered in isolation from other provisions of the 1936 Act, s 255 takes a form which suggests that its operation can be described as being: Kirby Hayne Crennan to oblige persons of the kind described in the chapeau to s 255(1) to pay the tax assessed as due and payable by a non-resident who meets the relevant characteristics identified in that chapeau (s 255(1)(a)); to permit the person paying the tax to recoup the tax paid or to be paid by retaining sufficient out of the money of the non-resident coming into the payer's hands and to oblige the person to retain sufficient of the non-resident's money to do so (s 255(1)(b)); to extend the notion of money of the non-resident in the hands of the payer to include amounts which the payer is liable to pay the non-resident (s 255(2)) but subject to the presently irrelevant qualification made by s 255(2A); to limit the liability of the payer to the amount that comes into the hands of the payer (s 255(1)(c)); to give the payer indemnity for all payments made in pursuance of the Act (s 255(1)(d)); and to make like provision with respect to the Commonwealth, a State or an authority of the Commonwealth or a State (s 255(3)). The Commissioner, however, contended the provision has a more extensive operation. In particular, the Commissioner submitted (a) that s 255 could be engaged before any assessment of tax due by the non-resident had issued; (b) that the section "deals separately and differently with the obligation to retain and the obligation to pay" with the consequence that the section should be read as providing for two different kinds of notice: a notice to retain moneys (issued under s 255(1)(b)) and a notice to pay (issued under s 255(1)(a)); and (c) that even without the Commissioner giving a notice to retain moneys (under s 255(1)(b)) a person of the kind described in s 255(1) was bound to retain from moneys of the non-resident coming into that person's hands sufficient to pay whatever taxation liabilities the non-resident then had or would have in the future. The central proposition about which the Commissioner's submissions about the construction of s 255 ultimately hinged was the second of those just identified: that the section deals separately and differently with the obligation to pay and the obligation to retain. In part that question was examined by reference to whether the section provides for two forms of notice: notice to retain and Kirby Hayne Crennan notice to pay. It is not useful, however, to begin by asking whether the section provides for or allows the giving of two kinds of notice. The answer to that last question either would address only a question of form, or its answer would depend upon the answer to the substantive question which underlies the Commissioner's contention that the 1936 Act treats the obligations of retention and payment separately. That substantive question is what are the relevant differences? It is to be noticed that s 255(1)(a) obliges the person who has "the receipt control or disposal of money belonging to a non-resident" ("the controller"), "when required by the Commissioner [to] pay the tax due and payable by the non-resident". By contrast, s 255(1)(b) gives the controller authority to retain (and requires the controller to retain) "so much as is sufficient to pay the tax which is or will become due by the non-resident". The Commissioner emphasised both the need to give effect to the phrase "the tax which ... will become due" in par (b) and the use of the different phrase in par (a) "the tax due and payable". There are two principal points to make about these differences between the two paragraphs. First, par (a) concerns payment; par (b) concerns retention. It is, therefore, not surprising that the provision for payment (par (a)) should deal with what is "due and payable", and the provision for retention should acknowledge and deal with the possibility that the time for payment of the tax in question may not have arrived when the controller first becomes liable to pay money to the non-resident or money of the non-resident first "comes to him". Secondly, the amount of money which is to be dealt with in accordance with par (a) (by payment) is readily ascertained. It is the amount of the tax that is due and payable by the non-resident. The description of the tax as "due and payable" necessarily presupposes that an assessment has been made55. The Commissioner submitted that par (b) should be read differently, and as speaking "both of the time of assessment and of a time prior to assessment". It was said that it was sufficient that there should be "an inchoate liability for tax" and that "the tax would become due, whether considered temporally or as a matter of probability". These submissions should be rejected. 55 Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 at 251-252 per Kitto J; Federal Commissioner of Taxation v Prestige Motors Pty Ltd (1994) 181 CLR 1 at 13; Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 191-192. Kirby Hayne Crennan When s 255(1)(b) refers to "the tax which is or will become due by the non-resident" it must be read as referring to an ascertained sum. If the paragraph is not read in that way, the obligation to retain money which is imposed on the controller is an obligation of undefined content. It is undefined because all that may be retained (the controller "is hereby authorised ... to retain") "out of any money which comes to him on behalf of the non-resident" is sufficient to pay the tax which is or will become due. And it is that amount (and only that amount) which the controller is obliged to retain. And as the facts of the present matter show, if s 255(1)(b) is not read as referring to an ascertained sum, the Commissioner may require the controller to retain more than the amount later assessed as due from the non-resident. But that would require the controller, as the Commissioner's first notices did in this case, to retain more than sufficient to pay the tax which is or will become due. Until the tax payable by the non-resident has been assessed it is not possible to say more than that there may be tax due by the non-resident. It is not possible to say that tax is due or that tax will become due. The prediction that tax may be due (and any prediction of its likely amount) may be able to be made with more or less certainty by a person who is armed with a deal of information, but there is no reason to suppose that the controller of a non-resident's money would ordinarily, let alone invariably, have that information and be in a position to make any useful prediction about the taxation affairs of the non-resident whose money the controller receives. The present case illustrates why that is so. The taxation liabilities of Cricket and Holdings relate to transactions they are alleged to have made on capital account and yielded a tax liability in the year ended 31 March 2004. The sums of money which Virgin Blue is now alleged to have been obliged to retain were payments in a different tax year and owing to its shareholders on revenue account. Neither the holding of shares by Cricket and Holdings, nor the fact that Virgin Blue was bound to pay the dividend that was declared, gave any basis for Virgin Blue knowing anything of the relevant Australian taxation affairs of Cricket or Holdings. Paragraph (b) of s 255(1) should be read as referring to an amount of tax that has been assessed. The phrase "tax which ... will become due" is to be understood as referring to tax which, although assessed, is not yet due for payment. This construction of s 255(1)(b) gives proper weight to the language used in that paragraph ("the tax which is or will become due by the non-resident") when compared with the different expression used in par (a) ("the tax due and payable by the non-resident"). As Gibbs CJ observed in Clyne v Deputy Kirby Hayne Crennan Commissioner of Taxation56, "[t]he word 'due' is ambiguous; it can mean owing, although not payable until some future date, or it can mean presently payable". And as the decision in Clyne illustrates, it is necessary to consider expressions like "due", and "due and payable", when used in the 1936 Act, in the context of the Act as a whole. When "due" is used in the collocation found in s 255(1)(b), "the tax which is or will become due by the non-resident", the requirement for specifying the amount of money that meets that description requires that the word "due" is read as meaning assessed as owing. Once those steps are taken, the obligations to retain and to pay are seen as intersecting obligations. The point of their intersection is the specification of the tax which under par (a) is to be paid when required by the Commissioner, and which under par (b) is both the amount that may be retained (the controller "is hereby authorised") and the amount that must be retained (the controller "is hereby ... required"). Once this intersection between the operation of par (a) and par (b) of s 255(1) is identified, many of the issues that would otherwise arise on the construction urged by the Commissioner fall away. It is, however, necessary to consider the statutory setting in which s 255 takes its place. Two aspects of the statutory setting for s 255 require consideration: the history of the section and the other provisions of the 1936 Act that relate to the collection of tax from persons other than the taxpayer. Legislative antecedents of s 255 Some of the expressions found in s 255 of the 1936 Act can be traced to provisions first made in the Income Tax Assessment Act 1915 (Cth) ("the 1915 Act") dealing with "agents" and "trustees". An "agent" was defined, in s 3 of the 1915 Act, as including: "every person who in Australia, for or on behalf of any person out of Australia (in this section called 'the principal') has the control receipt or disposal of any income belonging to the principal, and every person declared by the Commissioner to be an agent or the sole agent for any person for the purposes of this Act." 56 (1981) 150 CLR 1 at 8. Kirby Hayne Crennan Section 52 of the 1915 Act provided: "With respect to every agent and with respect also to every trustee, the following provisions shall apply:– (a) He shall be answerable as taxpayer for the doing of all such things as are required to be done by virtue of this Act in respect of the income derived by him in his representative capacity and the payment of income tax thereon. (b) He shall in respect of such income make the returns and be assessed thereon, but in his representative capacity only, and each return and assessment shall, except as otherwise provided by this Act, be separate and distinct from any other. (d) Where as agent or trustee he pays income tax, he is hereby authorised to recover the amount so paid from the person in whose behalf he paid it, or to deduct it from any money in his hands belonging to that person. (e) He is hereby authorised and required to retain from time to time out of any money which comes to him in his representative capacity so much as is sufficient to pay the income tax which is or will become due in respect of the income. He is hereby made personally liable for the income tax payable in respect of the income if, after the Commissioner has required him to make a return, or while the tax remains unpaid, he disposes of or parts with any fund or money which comes to him from or out of which income tax could legally be paid, but he shall not be otherwise personally liable for the tax: Provided the Commissioner may, upon application by the agent, permit disposal of such fund or money or part thereof as he considers necessary. that Kirby Hayne Crennan (g) He is hereby indemnified for all payments which he makes in pursuance of this Act or by requirements of the Commissioner. For the purpose of insuring the payment of income tax the the same remedies against Commissioner shall have attachable property of any kind vested in or under the control or management or in the possession of any agent or trustee, as he would have against the property of any other taxpayer in respect of income tax, and in as full and ample a manner." The authority given (and requirement made) by s 52(e) of the 1915 Act to retain "sufficient to pay the income tax which is or will become due" has obvious similarities with the present provisions of s 255(1)(b). But the context in which s 52(e) appeared is radically different from that provided by s 255 of the 1936 Act. First, s 52(a) of the 1915 Act made the agent "answerable as taxpayer for the doing of all such things as are required [by the Act] in respect of the income derived by him in his representative capacity and the payment of income tax thereon" (emphasis added). Secondly, the authority given (and requirement made) by s 52(e) related to the tax due "in respect of the income" as if the amounts with which the agent dealt both founded the relevant taxation liability and marked the outer boundary of that liability. Thirdly, the agent's personal liability for tax depended upon his paying away money from which tax could be paid after the Commissioner had required him to make a return or "while the tax remains unpaid". Expressions similar to those used in s 52 of the 1915 Act were then used in the first provision that can be seen as the direct legislative antecedent of s 255 of the 1936 Act. The Income Tax Assessment Act 1918 (Cth) amended the 1915 Act by inserting s 52A. That section provided: "With respect to every person who has the receipt control or disposal of money belonging to a person resident out of Australia, who derives income from a source in Australia or who is a shareholder, stock holder, debenture holder, or depositor in a company carrying on business in Australia, the following provisions shall, subject to this Act, apply:– (a) He shall when required by the Commissioner pay the income tax due and payable by the person on whose behalf he has the control receipt or disposal of money. Kirby Hayne Crennan (b) Where he pays income tax in accordance with the preceding paragraph he is hereby authorised to recover the amount so paid from the person on whose behalf he paid it or to deduct it from any money in his hands belonging to that person. (c) He is hereby authorised and required to retain from time to time out of any money which comes to him on behalf of the person resident out of Australia so much as is sufficient to pay the income tax which is or will become due by that person. (d) He is hereby made personally liable for the income tax payable by him on behalf of the person resident out of Australia if after the Commissioner has required him to pay the tax he disposes of or parts with any fund or money then in his possession or which comes to him from or out of which the income tax could legally be paid, but he shall not be otherwise personally liable for the tax: Provided the Commissioner may upon application permit disposal of such fund or money or part thereof as he considers necessary. that (e) He is hereby indemnified for all payments which he makes in pursuance of this Act or by requirements of the Commissioner." For present purposes, it is necessary to notice that s 52A(d) imposed personal liability on the controller of money belonging to a non-resident. That liability was imposed if, after the Commissioner had required him to pay the tax, the controller disposed of or parted with any fund or money then in his possession or which came to him from which the tax could be paid. Neither the provisions of s 52A(d) nor any of the other provisions of s 52A limited the liability of the controller to the amount of money of the non-resident that came into the hands of the controller. Section 52A(a) obliged the controller (when required by the Commissioner) to pay the tax due and payable by the non-resident. Paragraph (b) entitled the controller to recover what was paid from the non-resident or to deduct it from any money in the controller's hands. In this respect, s 52A differs markedly from the presently applicable provisions of s 255 of the 1936 Act where the personal liability imposed on the controller is limited "to the extent of any amount that he has retained, or should be retained" under s 255(1)(b). Kirby Hayne Crennan The change in provisions relating to non-residents that has just been identified was effected by the 1922 consolidating and amending legislation – the Income Tax Assessment Act 1922 (Cth) ("the 1922 Act") – s 90 of which was substantially in the form now found in s 255(1). The 1922 Act contained only 100 sections. Apart from s 90, two provisions should be mentioned. Section 89 made provisions about agents and trustees that were generally similar to s 52 of the 1915 Act. Section 65 of the 1922 Act (a predecessor of which had been brought into the 1915 Act in 1918) provided for the Commissioner to collect tax from persons owing money to a taxpayer. Section 65(1) provided for the Commissioner, by notice in writing, to require (a) any person by whom any money is due or accruing due to a taxpayer, (b) any person who holds money for or on account of a taxpayer, (c) any person who holds money on account of some other person for payment to a taxpayer, and (d) any person having authority from some other person to pay money to a taxpayer, to pay the tax due by the taxpayer (as well as fines and costs imposed by a court in respect of an offence against the Act). Failure to comply with such a notice was an offence. A person making a payment in pursuance of the provision was "deemed to have been acting under the authority of the taxpayer and of all other persons concerned"57. This latter provision (which it is convenient to refer to as a form of "statutory garnishee provision") was, for many years, found in s 218 of the 1936 Act58. The 1936 Act contained the three kinds of provision identified earlier in these reasons as found in the 1922 Act: a provision (s 254) about agents and trustees substantially the same as s 89 of the 1922 Act; a provision (s 255) about non-residents substantially the same as s 90 of the 1922 Act; and a statutory garnishee provision (s 218) like s 65 of the 1922 Act. What now is s 255(2), deeming certain persons who owe money to a non-resident to have the control of money belonging to the non-resident, was first enacted in the 1936 Act. In addition, s 256 of the 1936 Act dealt specifically with persons paying royalties to a non-resident taxpayer. Section 256(2) provided that s 255 was to "apply in respect of payments of royalty referred to in this section". Further, s 257 of the 1936 Act provided that: 58 Section 218 was repealed, after the events giving rise to this appeal, by the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 (Cth). See now Taxation Administration Act 1953 (Cth), Sched 1, ss 260-5 to 260-20. Kirby Hayne Crennan "Where any income of any person out of Australia is paid into the account of that person with a banker, the Commissioner may, by notice in writing to the banker, appoint him to be the person's agent in respect of the money so paid so long as the banker is indebted in respect thereof, and thereupon the banker shall accordingly be that person's agent." In the end, these matters of legislative history provide only limited assistance to the resolution of the questions about the application of s 255 that arise in this matter. Two features of the history warrant notice. First, provisions of a kind generally similar to s 255 were more fully developed before the statutory garnishee provisions until recently found in s 218. But the non-resident provisions began life in a form in which the controller of a non-resident's money could be personally liable for the whole of the tax payable by the non-resident regardless of the amount of money of the non-resident that person controlled. Now, of course, the controller's liability is limited to the amount of money held by or subject to the control of that person. Secondly, the provisions about non-residents have always sat in a context provided by the provisions with respect to agents and trustees, and more recently in a context provided by both those provisions and the statutory garnishee provisions. The significance of s 218 Much of the Commissioner's argument about the construction of s 255 was informed by the need to differentiate between the operation of that section and the operation of the statutory garnishee provisions of s 218. Implicit in much of the Commissioner's argument was the assertion that to give s 255 a construction or operation narrower than that propounded by the Commissioner would give the section little or no work to do different from the work done by s 218. Two points may be made about this aspect of the matter. First, s 255 is directed to a more limited class of tax liabilities than those with which s 218 deals. Section 255 concerns only tax which is or will become due from a non-resident; s 218 is not so limited. Secondly, and perhaps more importantly, s 255 makes the controller of moneys liable for the tax payable by the non-resident (to the extent of the amount that was, or should have been, retained); s 218 is a penal provision and does not permit the Commissioner to recover any of the tax due from the person to whom the notice is given. These differences suffice to distinguish between the two provisions and give each a separate operation in the 1936 Act. Kirby Hayne Crennan Two decisions about s 255 Reference was made in argument to only two other decisions in which the construction and application of s 255 has been considered: Commissioner of Taxation v Wong59 and Elsinora Global Ltd v Healthscope Ltd (No 2)60. The analysis of the section made in those cases formed the basis for much of what was said on that subject in the reasons of the primary judge and the Court of Appeal in the present matter. It is necessary to deal with only one aspect of that analysis. In Wong, argument appears to have proceeded from the premise that s 255 permitted (perhaps even required) the giving of two notices: one under par (a) of sub-s (1) and the other under par (b). Notice under par (a) was treated as a "trigger" activating the operative provisions of s 255(1)61 and a generally similar approach was adopted in Elsinora62. But the central focus of attention in both cases was upon questions of control of moneys of a non-resident and whether notice can be given under s 255 at a time when the person to whom the notice is directed does not have control of moneys of the non-resident. Argument in neither case seems to have been directed to the issue of what is meant by "tax which is or will become due by the non-resident". It would be wrong to approach the construction of s 255 piecemeal. In particular, it would be wrong to treat s 255(1)(a) as wholly distinct and separate from s 255(1)(b). In that regard, the "trigger" metaphor adopted in Wong, though useful, should not be allowed to divert attention from recognising that pars (a) and (b) of s 255(1) have an intersecting operation. As noted earlier in these reasons, the point of that intersection is the amount with which both paragraphs deal: the tax which is or will become due by the non-resident (which defines the amount to be retained) and the amount which is to be paid to the Commissioner when required under par (a) (the tax due and payable by the non-resident). 59 (2002) 121 FCR 60. 60 (2006) 227 ALR 570. 61 Commissioner of Taxation v Wong (2002) 121 FCR 60 at 65 [23]. 62 (2006) 227 ALR 570 at 581-582 [51]. Kirby Hayne Crennan Once it is recognised that content can be given to the obligation imposed by s 255(1)(b) only if an assessment has issued, the operation of the provision, as a whole, can be seen to be that described at par [72] of these reasons. Conclusion and orders It follows that in the particular circumstances of this case, the Commissioner's first notices did not comply with s 255(1). At the time of the Commissioner's first notices, no assessment had issued to Cricket or to Holdings and there was then no "tax which is or will become due by the non-resident" within the meaning of s 255(1)(b). By contrast, when the Commissioner's second notices were given, assessments had issued to Cricket and to Holdings. There was then tax due and payable. Virgin Blue was then a "person having the receipt control or disposal of money belonging to" Cricket and to Holdings. Virgin Blue had receipt, control or disposal of money belonging to its shareholders because, within the meaning of s 255(2), it was then "liable to pay money", the declared dividend, to those who were its shareholders on the record date. In particular, despite the assignments, Virgin Blue remained liable to pay the declared dividend to Cricket and Holdings. Each of Cricket and Holdings was a non-resident who was said to have derived gains of a capital nature from a source in Australia. Virgin Blue was, therefore, obliged by the Commissioner's second notices to retain from the dividends otherwise due to be paid to Cricket and Holdings sufficient to pay the tax due under each assessment. Virgin Blue was personally liable for the tax due to the extent it should have retained funds. Virgin Blue was indemnified for all payments it made in pursuance of the Commissioner's requirements. The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANTS AND AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION RESPONDENT Rich v Australian Securities and Investments Commission [2004] HCA 42 Date of Order: 22 April 2004 Date of Publication of Reasons: 9 September 2004 ORDER Appeal allowed with costs. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 26 November 2003 and in their place order: appeal allowed with costs; set aside paragraphs 1, 2 and 3 of the order of Austin J made on 30 April 2003 and paragraphs 1, 4, 5 and 6 of the order of Austin J made on 7 October 2003 and in their place order that the plaintiff's application for discovery is dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: Mr B W Walker SC with D L Williams SC and S A Goodman for the appellants R B S Macfarlan QC with M A Wigney and N J Beaumont for the respondent (instructed by Australian Securities and Investments Commission) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Rich v Australian Securities and Investments Commission Practice and procedure – Discovery – Privileges against exposure to penalties and forfeitures – Proceedings brought by Australian Securities and Investments Commission seeking declarations of contravention under the Corporations Act 2001 (Cth), s 1317E, compensation orders pursuant to the Corporations Act 2001, s 1317H and orders pursuant to the Corporations Act 2001, ss 206C and 206E disqualifying each defendant from managing corporations – Rules of evidence and procedure for civil matters to apply – Where defendant ordered to make discovery – Where disqualification described as "civil penalty provision" by the Corporations Act 2001 – Whether exposure to disqualification order is exposure to a penalty – Whether order is "punitive" or "protective" and whether this classification is useful – Whether order for discovery should have been made. Statutes – Interpretation – Construction of Corporations Act 2001 – Provision for disqualification of company officers from managing corporations in the future – Disqualification contained in "civil penalty provisions" of the Corporations Act 2001 – Whether exposure to disqualification order is exposure to a penalty for purposes of the penalty privilege – Whether order for discovery should have been made. Words and phrases – "penalty", "civil penalty provision", "punitive", "protective". Corporations Act 2001 (Cth), ss 180(1), 206C, 206E, 1317E, 1317H, 1317L. GLEESON CJ, GUMMOW, HAYNE, CALLINAN AND HEYDON JJ. The appellants were directors of One.Tel Ltd ("One.Tel"), a company now in liquidation. The respondent ("the Commission") has commenced proceedings in the Supreme Court of New South Wales against the appellants. The Commission seeks three kinds of relief in those proceedings: declarations under s 1317E of ("declarations of contravention"); the Corporations Act 2001 (Cth) orders pursuant to s 1317H(1) of the Act ("the 2001 Act") that the appellants pay One.Tel compensation ("compensation orders"); and orders pursuant to ss 206C and 206E of the 2001 Act disqualifying each appellant from managing a corporation for such period as the Court considers appropriate ("disqualification orders"). The Commission sought an order in those proceedings that the appellants make discovery of documents. The appellants resisted that application, contending that the proceedings exposed the appellants to penalties and that, for that reason, they should not be ordered to make discovery. The primary judge, Austin J, ordered the appellants to make discovery of documents by verified list1. The appellants' appeal to the Court of Appeal of New South Wales against that order, and against an order that the appellants file and serve affidavits giving the evidence they would intend to adduce at the trial of the proceedings, was dismissed2. Spigelman CJ, with whose reasons Ipp JA agreed, concluded3 that the Commission's proceedings against the appellants were not penal. In their Honours' view4, the power to disqualify the appellants from managing a corporation was "purely protective", and was not a power that could "be exercised in order to punish". The third member of the Court of Appeal, McColl JA, disagreed, concluding5 the distinction between that 1 Australian Securities and Investments Commission v Rich (2003) 45 ACSR 305; 21 ACLC 920. 2 Rich v Australian Securities and Investments Commission (2003) 203 ALR 671. (2003) 203 ALR 671 at 693 [114]-[116]. (2003) 203 ALR 671 at 693 [115]. (2003) 203 ALR 671 at 733 [344]. "punitive" and "protective" purposes was a false dichotomy. Rather, in her Honour's view6, a long stream of authority, including this Court's decision in Police Service Board v Morris7, required the conclusion that a proceeding which sought orders disabling a person from acting as a director was a proceeding for a penalty, even if8 the making of such an order may also have had some protective purpose. By special leave, the appellants appealed to this Court. The only question argued in this Court was whether an order for discovery should have been made. The questions agitated in the courts below about the order requiring the appellants to file their affidavit evidence, before the commencement of the trial, were not argued in this Court. The Commission accepted that if discovery should not have been ordered, the order requiring the appellants to file and serve affidavits should not have been made. At the conclusion of the oral argument of the appeal, the Court ordered that the appeal be allowed with costs, the orders of the Court of Appeal made on 26 November 2003 be set aside and in their place there be orders: (i) appeal allowed with costs; (ii) set aside paragraphs 1, 2 and 3 of the order of Austin J made on 30 April 2003, and paragraphs 1, 4, 5 and 6 of the order of Austin J made on 7 October 2003, and in their place order that the plaintiff's application for discovery is dismissed with costs. What follows are our reasons for joining in those orders. Consideration of the issues raised in the appeal must begin from an examination of the statutory provisions that are sought to be engaged in the Commission's proceedings against the appellants. The conduct and events which the Commission alleges warrant the making of the orders sought all occurred before 15 July 2001, when the 2001 Act came into force, and at a time when the legislative provisions governing corporations and their officers were principally found in the Corporations Laws (2003) 203 ALR 671 at 739 [386]. (1985) 156 CLR 397. (2003) 203 ALR 671 at 739 [383]. of the States9. The Corporations Act 1989 (Cth) was repealed, with effect from 15 July 2001, by the Corporations (Repeals, Consequentials and Transitionals) Act 2001 (Cth) and State legislation was enacted to accommodate that repeal. It was not suggested that, for the purposes of this appeal, anything turned on these legislative events or upon the related changes made to the legislation establishing The Commission commenced its proceedings against the appellants in December 2001, after the commencement of the 2001 Act. It was accepted that the 2001 Act regulated the procedures to be followed in the Commission's proceedings. Argument of the appeal went forward by reference to the 2001 Act which, when first enacted, in all relevant respects was substantially identical to the equivalent provisions of the Corporations Law. Despite some subsequent amendments, the relevant provisions do not now differ in any material respect. It is convenient to refer to the provisions of the 2001 Act and the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act") in the form they took at the time the order for discovery was made. Three particular features of those provisions will be noted: first, the basis of the Commission's authority to institute the proceedings; secondly, the interrelationship of the several provisions under which the Commission seeks relief; and, thirdly, the legislative description of the nature of the relief for which the 2001 Act provides. The Commission's authority The Commission is a body corporate established under the ASIC Act. It has11 such functions and powers as are conferred on it by or under the ASIC Act, the 2001 Act and regulations made under the 2001 Act. 9 The Corporations Law of each State was the Law set out in s 82 of the Corporations Act 1989 (Cth) applied by the relevant State's Corporations Act of 10 Australian Securities and Investments Commission Act 1989 (Cth), repealed by Sched 1, Pt 1, Item 1 of the Corporations (Repeals, Consequentials and Transitionals) Act 2001 (Cth) and replaced by the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). 11 The ASIC Act, s 11(1). As noted earlier, the Commission seeks declarations of contravention, under s 1317E of the 2001 Act, compensation orders pursuant to s 1317H and disqualification orders pursuant to ss 206C and 206E disqualifying each appellant from managing a corporation. Section 1317J(1) of the 2001 Act provides that the Commission may apply for a declaration of contravention of any of a number of provisions (identified in s 1317E) including s 180(1) of the 2001 Act (and its equivalent provision under the Corporations Law12) and may apply for a compensation order. Both ss 206C and 206E expressly provide that disqualification orders may be made on application by the Commission. The second feature of the relevant provisions that is to be noted is the relationship between some, but not all, aspects of the relief which the Commission seeks in the proceedings against the appellants. Related relief The declarations of contravention which the Commission seeks are declarations of contravention of s 180(1) of the Corporations Law. That sub-section provided at relevant times that: "A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: (a) were a director or officer of a corporation the corporation's circumstances; and occupied the same the office held by, and had responsibilities within the corporation as, the director or officer." The power to seek declarations of contravention is given by s 1317E. So far as now relevant, that section provides: If a Court is satisfied that a person has contravened 1 of the following provisions, it must make a declaration of contravention: subsections 180(1) ... (officers' duties); 12 Corporations Act 2001 (Cth) ("the 2001 Act"), s 1400. These provisions are the civil penalty provisions. (2) A declaration of contravention must specify the following: the Court that made the declaration; the civil penalty provision that was contravened; the person who contravened the provision; the conduct that constituted the contravention; ... the corporation ... to which the conduct related." Section 1317DA13 divided the civil penalty provisions identified in s 1317E into two classes: "corporation/scheme civil penalty provision[s]" and "financial services civil penalty provision[s]". Contravention of s 180(1) of the 2001 Act and its equivalent provision under the Corporations Law is of the first class. The compensation orders which the Commission seeks are orders under s 1317H. Section 1317H(1) provides that: "A Court may order a person to compensate a corporation ... for damage suffered by the corporation ... if: the person has contravened a corporation/scheme civil penalty provision in relation to the corporation ...; and the damage resulted from the contravention. The order must specify the amount of the compensation." Sub-sections (2) to (5) of s 1317H provide (among other things) some amplification of what is meant by damage and provide for the way in which compensation orders may be enforced. For present purposes, nothing turns on those provisions. What is important to note is that the availability of both the 13 Added by the Financial Services Reform Act 2001 (Cth) and subsequently amended by the Financial Services Reform (Consequential Provisions) Act 2002 (Cth). relief for which s 1317E provides, and the relief for which s 1317H provides, depends upon demonstration of contravention of particular provisions of the Act which are identified as "corporation/scheme civil penalty provision[s]", a subset of the provisions described as "civil penalty provisions". Most attention was directed in the courts below to the relief sought by the Commission under s 206C and s 206E of the 2001 Act and much of the argument in this Court focused upon those provisions. Section 206C(1) provides that: "On application by [the Commission], the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if: a declaration is made under section 1317E (civil penalty provision) person corporation/scheme civil penalty provision; and contravened that has the the Court is satisfied that the disqualification is justified." The relationship between a claim for relief under s 206C and a claim for a declaration of contravention under s 1317E is evident. By contrast, the power of disqualification conferred by s 206E is not conditioned upon the making of a declaration of contravention. Section 206E(1) provides that: "On application by [the Commission], the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if: the person: (iii) has at least twice been an officer of a body corporate that has contravened this Act while they were an officer of the body corporate and each time the person has failed to take reasonable steps to prevent the contravention; or has at least twice contravened this Act while they were an officer of a body corporate; or has been officer of a body corporate and has done contravened something that would have subsection 180(1) or section 181 corporate had been a corporation; and the body the Court is satisfied that the disqualification is justified." In the present proceedings the Commission seeks to rely upon s 206E(1)(a)(ii), alleging that the appellants at least twice contravened a relevant provision of the Corporations Law while each was an officer of One.Tel, rather than upon s 206E(1)(a)(i) (which would require demonstration of contraventions by One.Tel which the appellants failed to take reasonable steps to prevent). (Although not explored in argument, it may be assumed that it is said that, by operation of s 1400 of the 2001 Act, the liability for a contravention of the Corporations Law was replaced by a new liability under the corresponding provisions of the 2001 Act.) Apart from the claim for relief under s 206E, in all other respects the relief which is sought in the proceedings is either relief under Pt 9.4B or relief predicated upon the making of a declaration of contravention. It is important to notice that the relief which is sought by the Commission includes the making of declarations of contravention (and that much of the other relief sought is predicated upon the making of such a declaration) because s 1317L provides that: "The Court must apply the rules of evidence and procedure for civil matters when hearing proceedings for: a declaration of contravention; or a pecuniary penalty order". It follows from s 1317L that the statute itself requires the application of the body of law which has developed in relation to the privileges against penalties and forfeitures, when deciding whether the appellants should be ordered to make discovery of documents in the proceedings. It should be emphasised that, rightly, this proposition is not disputed by the Commission, and, in the course of oral argument in this Court, its counsel affirmed that it had not argued that "such privilege as there may be has been abrogated". There are several consequences for the disposition of the appeal. First, the operation of s 1317L requires consideration of whether the relief sought against the appellants or any head of that relief is "a penalty, or anything in the nature of a penalty"14. Secondly, that is not a question of disobedience to the statute, or of whether the statute affords an exemption to the appellants from, or does not leave any room for the operation of, the ordinary incidents of the rules of evidence and procedure for civil matters spoken of in s 1317L; the body of law respecting the privileges relied upon by the appellants is encompassed within s 1317L, the debate between the parties being as to their application in the particular proceedings here in question. That is apparent from the competing submissions, to which we now turn. The competing submissions The Commission submitted that because no pecuniary penalty order was being sought in the present proceedings – only declarations of contravention, compensation orders and disqualification orders – the appellants were not exposed to penalties. The appellants, by contrast, submitted that the declarations of contravention and disqualification orders being sought required the conclusion that they were exposed to penalties. It may be noted that the 2001 Act provides for what it describes as the civil consequences of contravening provisions that it classes as "civil penalty provisions". But neither the use of the expression "civil penalty provisions", nor the reference to civil consequences, conclusively determines whether these proceedings (seeking some sorts of relief under Pt 9.4B and, as well, disqualification orders) expose the appellants to penalties. The expression "civil penalty provisions" no doubt points towards that conclusion, but does so only because of its adoption as a convenient description for a disparate group of provisions. In the end, it is necessary to focus upon the content of the privilege against exposure to penalties and forfeitures rather than upon the use of the tag "civil penalty provisions". The privilege against exposure to penalties Four members of the Court, in their joint reasons in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission15, 14 Smith v Read (1736) 1 Atk 526 at 527 per Lord Hardwicke [26 ER 332] cited by Isaacs J in R v Associated Northern Collieries (1910) 11 CLR 738 at 744. 15 (2002) 213 CLR 543 at 553-554 [13] per Gleeson CJ, Gaudron, Gummow and pointed out that the privilege against exposure to penalties is one of a trilogy of privileges that bear some similarity with the privilege against incrimination. (The other two privileges are the privilege against exposure to forfeiture and the privilege against exposure to ecclesiastical censure.) As was also pointed out in "The privilege against exposure to penalties and that against exposure to forfeiture had their origins in the rules of equity relating to discovery17, but it is clear, as noted by Mason ACJ, Wilson and Dawson JJ in Pyneboard [Pty Ltd v Trade Practices Commission], that the privilege against exposure to penalties has long been recognised by the common law and is no longer simply a rule of equity relating to discovery18." Although the privilege against exposure to penalties had its origins in the rules of equity relating to discovery, when discovery and interrogatories were provided for under the rules made under the Judicature Act, the Court of Equity's principle (that an order for discovery or for the administration of interrogatories in favour of the prosecutor, whether the prosecutor was the Crown or a common informer or some other person, should not be made where the proceeding was of such nature that it might result in a penalty or forfeiture) was applied more 16 (2002) 213 CLR 543 at 554 [13]. 17 See R v Associated Northern Collieries (1910) 11 CLR 738 at 744 per Isaacs J citing the judgment of Lord Hardwicke LC in Smith v Read (1737) 1 Atk 526 at 527 [26 ER 332]; Naismith v McGovern (1953) 90 CLR 336 at 341-342 per Williams, Webb, Kitto and Taylor JJ; Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation (1979) 42 FLR 204 at 208 per Deane J; Sorby v The Commonwealth (1983) 152 CLR 281 at 318-319 per Brennan J; Maddock, A Treatise on the Principles and Practice of the High Court of Chancery, 2nd ed (1820), vol 1 at 214-215; Spence, The Equitable Jurisdiction of the Court of Chancery, (1846), vol 1 at 680; Mitford, A Treatise on the Pleadings in suits in the Court of Chancery, 5th ed (1847) at 229-230; Daniell, The Practice of the High Court of Chancery, 5th ed (1871), vol 1 at 485, vol 2 at 18 Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 336 referring to Mexborough (Earl of) v Whitwood Urban District Council [1897] 2 QB 111 at 115 per Lord Esher MR. See also Ligertwood, Australian Evidence, (1988) at [5.67]; McNicol, Law of Privilege, (1992) at 136, 186-189; Sorby v The Commonwealth (1983) 152 CLR 281 at 317-318 per Brennan J. generally19. As was further pointed out in the joint reasons in Daniels Corporation20, the privilege against exposure to penalty now serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it21. That is not to say that the privileges against exposure to penalties or exposure to forfeitures are substantive rules of law, like legal professional privilege, having application beyond judicial proceedings22. In the present matter, however, the only issue is about the application of these privileges to discovery in judicial proceedings. No wider question arises. Nor, as has already been pointed out, is there any question about the statutory abrogation of the privileges. As noted earlier, s 1317L of the 2001 Act obliges the Court to apply the rules of evidence and procedure for civil matters when hearing proceedings for a declaration of contravention. That provision requires the application of the principles governing the application of the privilege against exposure to penalties. The Commission pointed to no provision of the Act as abrogating or qualifying the privilege against exposure to penalties in relation to the procedure which gave that privilege its birth – discovery. In particular, no provision like those found in ss 597(12) and 1316A of the 2001 Act, which limit the availability of the privilege against exposure to penalties, was said to apply to discovery in the proceedings instituted by the Commission. Thus the question in the present matter becomes whether the privileges against exposure to penalties or forfeitures are engaged. Do the proceedings expose the appellants to penalties or forfeitures? Penalties and forfeitures The penalties and forfeitures which attract the privileges include, but are not confined to, monetary exactions. The privilege against exposure to penalties 19 Naismith v McGovern (1953) 90 CLR 336 at 341-342 per Williams, Webb, Kitto 20 (2002) 213 CLR 543 at 559 [31]. 21 See Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 22 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 559 [31]. has been applied in common informer proceedings23 and actions for monetary penalties24 or treble damages25. But: "[t]he term 'penalty' was not used in courts of equity merely in the sense of an exaction pursuant to statute as a punishment for contravention thereof. It embraced the wider concept of penalty as understood in the law of relief in equity against the exaction of penal payments in contractual disputes and the forfeiture of property interests."26 That is why the privileges against exposure to penalties or forfeiture have been allowed in cases as diverse as those already mentioned and to cases of forfeiture of estate, as for simony27, for infringing the Pluralities Act (1 & 2 Vict c 10)28, for breaches of covenants in leases29, by marriage without consent30, or by having acted as agent for the Confederate States of America31. Moreover, the privilege against exposure to penalties has been held applicable to preclude an order for discovery by the debtor in a petition for bankruptcy32 on the basis that the loss of civil status consequent on bankruptcy is penal. These considerations respecting the scope of the privileges against exposure to penalties or forfeiture, necessarily drawn from experience in the legal 23 Orme v Crockford (1824) 13 Price 376 [147 ER 1022]; Martin v Treacher (1886) 16 QBD 507. 24 Associated Northern Collieries (1910) 11 CLR 738. 25 Jones v Jones (1889) 22 QBD 425. 26 Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 143 27 Parkhurst v Lowten (1816) 1 Mer 391 [35 ER 718]. 28 cf Boteler v Allington (1746) 3 Atk 453 [26 ER 1061]. 29 Mexborough (Earl of) v Whitwood Urban District Council [1897] 2 QB 111. 30 Chancey v Fenhoulet (1751) 2 Ves Sen 265 [28 ER 171]. 31 United States of America v McRae (1867) LR 3 Ch App 79. 32 In re a Debtor [1910] 2 KB 59 at 66. tradition inherited in this country, do more than shed vague illumination upon the central issue on this appeal. They explain, why, for example, to conclude that the legislation has the character of a regulatory law to be applied in accordance with civil procedures, including those respecting discovery, would be to stop well short of resolving the issue whether the proceedings expose the appellants to penalties or forfeitures. In several cases33 it has been held that exposure to loss of office is exposure to a penalty or forfeiture. And in Police Service Board v Morris34 it was at least assumed that exposure to dismissal from a police force was a form of penalty. By contrast, however, orders for compensation have been held35 not to be penalties. That stream of authority would suggest that for the Commission to seek an order disqualifying a person from acting in the management of a corporation on the ground that the person has contravened the law is to seek a penalty or forfeiture. The order is sought by a regulatory authority; its grant would be founded on demonstration of a contravention of the law; it is an order which leads to the vacation of existing offices in a corporation and imposition of a continuing disability for the duration of the order. What is it that would deny that conclusion? The decisions of the primary judge and the majority in the Court of Appeal proceeded from the premise that a distinction between "punitive" and "protective" proceedings was possible and useful and that, when applied to the present proceedings, it led to the conclusion that the present proceedings have a protective not punitive purpose. There are several reasons to reject that reasoning. First, adopting such a classification diverts attention from the relevant question which is whether the privilege against exposure to penalties applies. That requires consideration of the kinds of relief which are sought in the 33 Honeywood v Selwin (1744) 3 Atk 276 [26 ER 961]; Nelme v Newton noted as a footnote to MacCallum v Turton (1828) 2 Y & J 183 [148 ER 883 at 884]; Scott v Miller (No 2) (1859) Johns 328 [70 ER 448]. 34 (1985) 156 CLR 397 at 403 per Gibbs CJ, 408 per Wilson and Dawson JJ. 35 Adams v Batley; Cole v Francis (1887) 18 QBD 625. proceeding. Neither the purpose which the applicant may have in seeking relief of that kind, nor the effects on persons other than the appellants of obtaining that relief, bears upon whether the proceedings expose the appellants to penalties. Yet an attempt to classify the proceedings as "punitive" or "protective" appears to require consideration of only those purposes or effects. Thus it is said that to disqualify a person from managing a corporation protects shareholders or creditors of the corporations in which the person concerned would otherwise have held office. If a disqualification order has that effect, and it may well, that is not relevant to whether exposing the person concerned to the possibility of such an order being made is to expose that person to a penalty. Secondly, and more fundamentally, the supposed distinction between "punitive" and "protective" proceedings or orders suffers the same difficulties as attempting to classify all proceedings as either civil or criminal36. At best, the distinction between "punitive" and "protective" is elusive. That point is readily illustrated when it is recalled that, as McColl JA pointed out37, account must be taken in sentencing a criminal offender of the need to protect society, deter both the offender and others, to exact retribution and to promote reform38. Thirdly, and no less fundamentally, not only does the supposed distinction between punitive and protective procedures find no sure footing in the course of decisions concerning the application of the privilege against exposure to penalties, it is inconsistent with the principles revealed by those authorities. Both the primary judge39 and the majority in the Court of Appeal40 pointed to cases in which it has been said that the purpose of disqualification orders made against directors or other officers of a company is to protect the public rather than to punish. Subject to one exception, Australian Securities Commission v Kippe41, 36 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd (2003) 77 ALJR 1629; 201 ALR 1. 37 (2003) 203 ALR 671 at 734 [353]. 38 Veen v The Queen [No 2] (1988) 164 CLR 465 at 476. 39 (2003) 45 ACSR 305 at 313 [31]-[32]; 21 ACLC 920 at 927-928. 40 (2003) 203 ALR 671 at 680-682 [48]-[62]. 41 (1996) 67 FCR 499. those cases were all concerned, directly or indirectly, with setting an appropriate period of disqualification42. It by no means follows, however, that this leads to the conclusion43 that the privilege against exposure to penalties has some narrower or different application in connection with proceedings against officers of corporations from the application it would ordinarily have. The relevant question is not, as the majority in the Court of Appeal appears to have understood it, whether there is some special rule of corporations law. (The early cases about discovery in relation to stock jobbing44 would tend to deny that there is such a special rule.) The question is how should the general principles of the privileges against exposure to penalties and forfeiture find application in the particular circumstances of these proceedings. That inquiry is not assisted by examining why the orders sought in the proceedings might be made or what purposes might 42 See Re Altim Pty Ltd and Companies Act 1961 [1968] 2 NSWR 762 at 764; Poyser v Commissioner for Corporate Affairs [1985] VR 533 at 537 and Commissioner for Corporate Affairs v Bracht [1989] VR 821 at 827, all of which concerned the operation of s 117 of the Companies Acts 1961; Re Magna Alloys & Research Pty Ltd (1975) 1 ACLR 203 at 205; Re Ferrari Furniture Co Pty Ltd and the Companies Act [1972] 2 NSWLR 790 at 791 and Zuker v Commissioner for Corporate Affairs [1981] VR 72 at 77, all of which concerned the operation of s 122 of the Companies Acts 1961; Nicholas v Commissioner for Corporate Affairs (1986) 5 ACLC 258 and on appeal [1988] VR 289 at 299, 305 and Friend v Corporate Affairs Commission (1988) 7 ACLC 106 at 115 which concerned s 562A(3) of the Companies Codes; Re Tasmanian Spastics Association; Australian Securities Commission v Nandan (1997) 23 ACSR 743 at 751; Australian Securities Commission v Donovan (1998) 28 ACSR 583 at 602-603 and Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 at 349-350; 17 ACLC 511 at 521-522, all of which concerned the operation of s 1317EA(3) of the Corporations Law; Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561 at 580-581 [101], 581-582 [105] which concerned s 206E of the 2001 Act; and Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80 at 97-99 [56] and on appeal (2003) 46 ACSR 504 at 643-644 [659] which concerned ss 206C and 206E of the 2001 Act. 43 cf (2003) 203 ALR 671 at 682 [63] per Spigelman CJ. 44 For example, Green v Weaver (1827) 1 Sim 404 [57 ER 630]; Williams v Trye (1854) 18 Beav 366 [52 ER 145]. be achieved by their making. Rather, attention must be focused upon the nature of the orders that are sought. That it may be possible to characterise proceedings as having a purpose of protecting the public is not determinative. And to begin the inquiry from an a priori classification of proceedings as either protective or penal invites error. It invites error primarily because the classification adopted assumes mutual exclusivity of the categories chosen when they are not, and because the classification is itself unstable. To assume mutual exclusivity of the categories is to fall into the same kind of error as was identified in the constitutional context in Actors and Announcers Equity Association v Fontana Films Pty Ltd45. Just as a law may bear several characters, a proceeding may seek relief which, if granted, would protect the public but would also penalise the person against whom it is granted. That a proceeding may bear several characters does not deny that it bears each of those characters46. Moreover, as Hayne J emphasised in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd47, those who seek the "essential character" of statutory provisions do not proffer explanations of that process of distillation. It was not suggested, and could not seriously be suggested, that directors, alternate directors and company secretaries do not hold offices to which the privileges against forfeiture and penalties may apply. Rather, the contention of the Commission was that discussed above, namely that the relevant proceedings were protective rather than penal. If a disqualification order is made, the person against whom the order is made ceases to be a director, alternate director, or a secretary of a company48, unless given permission under s 206F or s 206G of the 2001 Act to manage the corporation concerned. The order for disqualification thus causes the person against whom it is made to forfeit any office then held in a corporation and 45 (1982) 150 CLR 169 at 192-194. See also Re F; Ex parte F (1986) 161 CLR 376 at 387-388; Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 188; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 295; Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 492 [16]. 46 Stone, Legal System and Lawyers' Reasonings, (1964) at 248-252. 47 (2003) 77 ALJR 1629 at 1653 [136]; 201 ALR 1 at 34. 48 s 206A(2). forbids that person from holding office in a corporation for the duration of the disqualification order. Those consequences, whether taken separately or in combination, when inflicted on account of a defendant's wrongdoing, are penalties. That the penalty is not exacted in the form of a money payment does not deny that conclusion. As the authorities referred to earlier in these reasons reveal, equity's concern with penalties was never confined to pecuniary penalties. If exposure to loss of office or exposure to dismissal from a police force49 is exposure to penalty, exposure to a disqualification order is exposure to a penalty. The company cases referred to earlier, as cases concerning how an appropriate period of disqualification should be set, rightly focused upon why the orders sought might be made and what purposes might be achieved by their making. To that stream of authority Kippe stands as an exception. It concerned a different question. In Kippe, the question was whether statements made in an examination under s 19 of the Australian Securities Commission Act 1989 (Cth) were admissible in evidence in proceedings before the Administrative Appeals Tribunal in which banning orders were sought under ss 829 and 830 of the Corporations Law. Section 68(3) of the Australian Securities Commission Act provided that the statements were not admissible in "a proceeding for the imposition of a penalty". The Full Court of the Federal Court held50 that a proceeding which might result in a banning order was to be characterised as "'protective' in purpose and not as one for the imposition of a penalty". For the reasons given earlier, that conclusion was wrong. Kippe should be overruled. What order should have been made? The primary judge ordered that the appellants make discovery of documents by verified list. That order would permit the appellants to object to production of any document on a ground of privilege. At first sight, that might suggest that the appellants' challenge to the order for provision of a verified list of documents is premature. That is, it might suggest that any question of privilege is one about privilege from production rather than privilege from making discovery. That is not so. As Isaacs J pointed out in R v Associated Northern Collieries51, once it is determined that the proceedings expose a person 49 Police Service Board v Morris (1985) 156 CLR 397. 50 (1996) 67 FCR 499 at 508. 51 (1910) 11 CLR 738 at 747. to penalty, the proper course is to refuse any order for discovery. As Isaacs J said52, to leave the party at risk of penalty to object to production of documents, having first listed them, may lead to the very mischief which the privilege is designed to prevent. In the words of Lord Coleridge CJ in Jones v Jones53, to "The whole case for the plaintiff may depend upon his power to trace a particular document into the possession of the defendant, and, upon its non-production, to prove its contents by secondary evidence." That being so, the proper course in this matter was to refuse the application for discovery. Conclusion It is for these reasons that we joined in the orders set out earlier. 52 (1910) 11 CLR 738 at 747. 53 (1889) 22 QBD 425 at 428-429. 54 (1910) 11 CLR 738 at 747-748. McHugh 41 McHUGH J. My reasons for agreeing that this appeal should be allowed are substantially contained in the reasons of Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ. In addition to those reasons, however, I think that the factors that courts take into account when ordering disqualification and fixing periods of disqualification under the corporations legislation make it impossible to hold that the "civil penalty" provisions and, in particular, the disqualification provisions, are purely protective in nature. Despite frequent statements by the judges who administer the legislation that the purpose of the disqualification provisions is protective, what the judges actually do in practice is little different from what judges do in determining what orders or penalties should be made for offences against the criminal law. Elements of retribution, deterrence, reformation and mitigation as well as the objective of the protection of the public inhere in the orders and periods of disqualification made under the legislation. If the disqualification provisions were purely protective, the only issue for the court would be whether the defendant is now or will in the future be a fit and proper person to manage corporations. If the court were to find that, despite the misconduct, the defendant is now a fit and proper person to manage corporations, the court should refuse to make an order of disqualification. If the court were to find that the defendant would be a fit and proper person to manage corporations in the future, the only issue for determination would be the time when that would occur. Moreover, if the jurisdiction were purely protective, it is hard to see why orders for disqualification should be for fixed periods, as they almost invariably are. Fixed periods of disqualification suggest punishment rather than protection in the same way that disqualification from driving for a period is a punishment rather than an act protective of the public. If the jurisdiction were purely protective, one might have thought that the proper order would be indefinite disqualification with the onus on the defendant to show at some future date that he or she were now a fit and proper person to manage corporations55. At all events, if the jurisdiction were purely protective, the defendant should have liberty to apply during the period of disqualification to show that he or she is now a fit and proper person to manage corporations. In exercising their discretion, however, courts which administer the legislation do not concern themselves solely with the issue of whether the defendant now is or in the future will be a fit and proper person to manage corporations. They take into account a wide variety of factors in addition to determining whether any and, if so, what period of disqualification should be imposed. They consider more than the present and future fitness of the defendant 55 For example, in Australian Securities and Investments Commission v Hutchings (2001) 38 ACSR 387, Windeyer J ordered that the defendant directors be disqualified from managing corporations for life, with the right to apply on three months' notice after five years for a variation of the order: at 395. McHugh to manage corporations. They take into account factors such as the size of any losses suffered by the corporation, its creditors and consumers, legislative objectives of personal and general deterrence, contrition on the part of the defendant, the gravity of the misconduct, the defendant's previous good character, prejudice to the defendant's business interests, personal hardship and the willingness of the defendant to render assistance to statutory authorities and administrators. No doubt some – maybe all – of these matters are relevant in determining whether the defendant ought to be disqualified or the period of disqualification that is required in order to protect the public. But in practice courts do not use these matters merely as evidentiary indicators of the time when the defendant will, if ever, be fit to manage corporations. Rather, they become part of a synthesis from which the judges make a value judgment concerning whether to order disqualification and, if so, the period of disqualification that should be imposed. It is not the practice of judges to say: "On the evidence, I find that after (say) five years, the defendant will be sufficiently reformed to make it safe for him or her to manage corporations." This suggests that the disqualification provisions are not purely protective in nature. The legislative history of the disqualification provisions, in particular, ss 206C and 206E of the Corporations Act 2001 (Cth), also indicates that the Sections 206C and 206E of the provisions are not purely protective. Corporations Act essentially replicate ss 206C and 206E of the former Corporations Law. Those provisions were inserted into that Law by the Corporate Law Economic Reform Program Act 1999 (Cth). The Explanatory Memorandum to the Corporate Law Economic Reform Program Bill 1998 (Cth) suggested that the provisions would merely "rewrite without substantial change" the previous "civil penalty" provisions of the Corporations Law56. The previous provisions included ss 230 and 1317EA of the Corporations Law. Section 230 empowered the court to prohibit a person from managing a corporation where the corporation repeatedly contravened the corporations legislation while the person was an officer of that corporation and the person failed to prevent the corporation from repeatedly breaching that legislation, or the person in their capacity as an officer of the corporation repeatedly breached that legislation, for example, by acting dishonestly or failing to exercise a reasonable degree of care and diligence. In 1992, the Corporate Law Reform Act 1992 (Cth) inserted s 1317EA into the Corporations Law. Section 1317EA(3) empowered the court, if satisfied that a person had contravened a civil penalty provision, to prohibit a person from managing a corporation57. 56 Australia, Corporate Law Economic Reform Program Bill Explanatory Memorandum, (1998) at 12. 57 For a discussion of the relevant provisions under the former Corporations Law, Companies Code and Companies Acts, see Cassidy, "Disqualification of Directors under the Corporations Law", (1995) 13 Company and Securities Law Journal 221; (Footnote continues on next page) McHugh An explanatory paper accompanying the first draft of the Corporate Law Reform Bill 1992 (Cth) stated58: Subsection 1317AJ [the equivalent of s 1317EA(1) when enacted] enables the Court to make a civil penalty order against a person who has contravened a civil penalty provision. A civil penalty order may be an order prohibiting the person, for such period as is specified in the order, from managing a corporation ... It is expected that in settling an appropriate [civil penalty] order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant’s conduct, whilst not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. It is expected that the Courts would consider imposing a pecuniary penalty only if it considered that a civil penalty disqualification provided an inadequate or inappropriate remedy. A Court might, in appropriate circumstances, such as where it proposes to give the defendant leave to manage a corporation impose both a civil penalty under proposed section 1317AQ, disqualification and a pecuniary penalty the one contravention. in relation Whilst a civil penalty order may prohibit a person from managing a corporation, the civil penalty provision contravened by the person may not necessarily relate to the person's participation in the Hicks, "Disqualification of Directors - Forty Years On", [1988] Journal of Business Law 27; Corkery, "Convicted Offenders and Section 227 of the National Companies Code: Restrictions on Certain Persons Managing Companies", (1983) 1 Company and Securities Law Journal 153. See also in relation to the Company Directors Disqualification Act 1986 (UK), Hicks, "Director Disqualification: Can it Deliver?", [2001] Journal of Business Law 433. 58 Australia, Corporate Law Reform Bill 1992: Draft Legislation and Explanatory Paper, (1992) at 296-298. McHugh management of a corporation. For example, a contravention of proposed Corporations Law section 588G, a civil penalty provision, may relate to ... for example, certain the person's conduct in connection with incorporated associations. In appropriate circumstances, the Court may be satisfied that a person's conduct in relation to [that body] warrants the making of an order prohibiting the person from managing a corporation." In the second reading speech for the Bill, the federal Attorney-General, Mr Michael Duffy, observed that the Bill59: "says that shareholders should be protected against breaches [of directors' duties] by the substitution of appropriate civil penalties, including … disqualification in the case of serious breaches." Statements in both the Explanatory Memorandum and the second reading speech that disqualification may be appropriate in the case of serious breaches or breaches with serious consequences also suggest that the disqualification provisions contain a retributive element and, accordingly, are not simply protective. Many and varied are the contraventions of the Corporations Act that give rise to applications for the disqualification of a person from managing corporations. Those contraventions are the grounds for the exercise of the court's discretion to order disqualification. The nature and seriousness of the contraventions are important matters to which the courts have regard when determining whether to order disqualification. Contraventions under the Corporations Act and its predecessor legislation that have been found to enliven the court's discretion include breaches of directorial duties of honesty, good faith and due care and diligence60, making improper use of the position of director to gain an advantage for that person or for others to the detriment of the company61, 59 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 November 1992 at 2400. 60 Australian Securities Commission v Donovan (1998) 28 ACSR 583; Australian Securities Commission v Roussi (1999) 32 ACSR 568; Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339; Re Gold Coast Holdings Pty Ltd (in liq); Australian Securities and Investments Commission v Papotto (2000) 35 ACSR 107; Australian Securities and Investments Commission v Parkes (2001) 38 ACSR 355; Australian Securities and Investments Commission v Forge [2002] NSWSC 760; Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80; Re One.Tel Ltd (in liq); Australian Securities and Investments Commission v Rich (2003) 44 ACSR 682. 61 Re Strikers Management Pty Ltd; Australian Securities Commission v Dimitri (unreported, Federal Court of Australia, 7 May 1997, Burchett J); Roussi (1999) 32 ACSR 568; Parkes (2001) 38 ACSR 355; Forge [2002] NSWSC 760. McHugh making inappropriate use of company funds62, engaging in misleading and deceptive conduct63, permitting corporations to trade while insolvent64, operating unregistered schemes unlawfully or carrying on a business such as a securities business or an investment advice business without a licence65 and failing to comply with administration obligations66. In substance, the nature of these contraventions is little different from those which attract the sanctions of the criminal law. The leading authority on the reasons for a court exercising its powers under ss 206C and 206E to order the disqualification of a person from managing corporations is Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler67. In that case, Santow J derived 15 propositions from the case law on both ss 206C and 206E (and their predecessor sections in the Corporations Law and the Companies Code)68. The propositions assume that a disqualification order is protective, rather than punitive69. But, when examined, they track the various matters that judges take into account in the criminal jurisdiction when sentencing offenders. The 15 propositions formulated by Santow J are as follows70: 62 Re Tasmanian Spastics Association; Australian Securities Commission v Nandan (1997) 23 ACSR 743; Parkes (2001) 38 ACSR 355; Forge [2002] NSWSC 760. 63 Australian Securities and Investments Commission v Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561; Adler (2002) 42 ACSR 80; Australian Securities and Investments Commission v Starnex Securities Pty Ltd [2003] FCA 64 Australian Securities and Investments Commission v Plymin (No 2) (2003) 21 ACLC 1237. 65 Hutchings (2001) 38 ACSR 387; Pegasus Leveraged Options Group Pty Ltd (2002) 41 ACSR 561. 66 Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519; Roussi (1999) 32 ACSR 568. (2002) 42 ACSR 80. 68 Adler (2002) 42 ACSR 80 at 97-99. 69 Adler (2002) 42 ACSR 80 at 97 per Santow J. 70 Adler (2002) 42 ACSR 80 at 97-99. McHugh Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards. The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office. Protection of the public also envisages protection of individuals including consumers, creditors, who deal with companies, shareholders and investors. The banning order is protective against present and future misuse of the corporate structure. The order has a motive of personal deterrence, though it is not punitive. General deterrence is an object of the legislation. In assessing the fitness of an individual to manage a company, it is necessary that the individual have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company. Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty. In assessing an appropriate length of prohibition, consideration is given to the degree of seriousness of the contraventions, the propensity of the defendant to engage in similar conduct in the future and the likely harm that may be caused to the public. It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the defendant's conduct. 11. A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming. The eight criteria to govern the exercise of the court's powers of disqualification set out in Commissioner for Corporate Affairs McHugh (WA) v Ekamper71 have been influential. It was held that in making such an order it is necessary to assess: the character of the defendant; the nature of the breaches; the structure of the company or companies and the nature of its or their business; the interests of shareholders, creditors and employees; the risks to others from the continuation of the defendant as a director; the honesty and competence of the defendant; hardship to the defendant and to his or her personal and commercial interests; and the defendant's appreciation that future breaches could result in future proceedings. Factors that have led to the imposition of the longest periods of disqualification (that is, disqualifications of 25 years or more) include: large financial losses; high propensity that the defendant may engage in similar activities or conduct; activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy; the defendant's lack of contrition or remorse; disregard for the law and compliance with corporate regulations; dishonesty and intent to defraud; and 71 (1987) 12 ACLR 519. McHugh previous convictions and contraventions activities. for similar In cases in which the period of disqualification ranged from 7 years to 12 years, the factors that led to the conclusion that these cases were serious though not the "worst cases", included: serious incompetence and irresponsibility; substantial loss; the fact that the defendant had engaged in deliberate courses of conduct to enrich himself or herself at others' expense, but with lesser degrees of dishonesty; continued, knowing and wilful contraventions of the law and disregard for legal obligations; and lack of contrition or acceptance of responsibility, although that must be weighed against the prospect that the defendant may reform. The factors leading to the shortest disqualifications (that is, disqualifications for up to 3 years) were: although the defendant had personally gained from the conduct, he or she had endeavoured to repay or partially repay the amounts misappropriated; the defendant had no immediate or discernible future intention to hold a position as manager of a company; and the defendant had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings against him or her. The first four propositions formulated by Santow J go directly to the protection issue, that is, the protection of the public from the defendant's future conduct. Other propositions, such as the ninth, tenth and twelfth propositions, also pertain to the protection of the public. Some propositions, however, which relate to considerations that operate to reduce the period of disqualification, such as personal hardship to the defendant, mitigating factors, repayment of amounts misappropriated and the defendant's expressed intention no longer to hold a management position, benefit the defendant rather than protect the public. Still others, such as the fifth and sixth propositions, recognise that the disqualification provisions also have the objectives of personal and general deterrence. These latter propositions strongly resemble sentencing principles under the criminal law. McHugh In Elliott v Australian Securities and Investments Commission72, the Court of Appeal of the Supreme Court of Victoria said, correctly in my opinion: "Many of the propositions and factors listed by Santow J bear a similarity to sentencing principles. Matters going to aggravation and mitigation in relation to contraventions of s 588G [of the Corporations Law] need to be considered and accorded proper weight. But above all else protection of the public and deterrence, specific and general, must also be given appropriate consideration." Both Santow J's list of propositions and the comments of the Victorian Court of Appeal indicate that the factors taken into account in the criminal jurisdiction – retribution, deterrence, reformation, contrition and protection of the public – are also central to determining whether an order of disqualification should be made under the Corporations Act and, if so, the appropriate period of disqualification. Those factors also support the conclusion that the jurisdiction exercised under this part of the Corporations Act cannot properly be characterised as purely protective. A good example of the approach of judges in this particular area of the law is found in the judgment of Bryson J in Re One.Tel Ltd (in liq); Australian Securities and Investments Commission v Rich73. His Honour's reasons show that the jurisdiction cannot be characterised as purely protective. They reflect an approach that can be found in many other cases concerning the disqualification from office of company officers. Among the matters Bryson J thought were relevant were the second defendant's age and stage of career at which disqualification would fall, the office held, the extent of the second defendant's responsibilities in terms of the value of assets, the complexity of the activities and the number of people within the range of adverse effects of the second defendant's breaches of duty74. His Honour warned that the guidance to be obtained from other decisions with respect to the reasons for ordering disqualification and the period of disqualification is limited. Each decision is closely related to its own facts, which tend to be highly complex. Further, the circumstances of each defendant are special to that person75. Bryson J also said that there is "not much to be gained from considering or attempting to classify 72 (2004) 48 ACSR 621 at 658. 73 (2003) 44 ACSR 682. 74 Rich (2003) 44 ACSR 682 at 692. 75 Rich (2003) 44 ACSR 682 at 691 per Bryson J, citing Adler (2002) 42 ACSR 80 at McHugh periods of disqualification which have been imposed in other cases."76 That is because breaches of the Corporations Act, the circumstances of the breaches and the outcomes of the breaches, including the number of persons and the value of the interests affected, may take many forms. In addition, the personal circumstances of persons in breach vary greatly77. In accepting that a 10 year period of disqualification was appropriate for the second defendant in that case, Bryson J said78: "Severe though the expression is, I have to say that the admitted facts show incompetence. To be managing director of a public company, and not to know or find out, by a margin of tens of millions of dollars, its current cash position, or by a margin of hundreds of millions of dollars its need for cash, reveal incompetence of a high order. It is also important to say that the facts show nothing in the nature of dishonesty or other moral failing. His practical expressions of contrition and the financial remedy which he has submitted to favour amelioration of the disqualification, and favour selection of a period which will leave to him some prospect that, late in his career, he may again participate in the management of companies. I do not think it would be right to impose a term of disqualification which, in practical terms, would close off forever a return to the kind of management occupation he has followed for the last 2 decades." (emphasis added) His Honour went on to say79: "Conduct such as that of [the second defendant] in acknowledging his breaches, expressing appropriate contrition and agreeing to be subject to remedies including judgment for an enormous sum, ought to be recognised when it occurs and given encouragement by accepting some moderation in what must be a severe outcome." It is difficult to read these passages without concluding that there is little difference in the approach of his Honour and the approach of judges making orders or imposing sentences in the criminal jurisdiction. It is hard to escape the conclusion that, in determining the period of disqualification, the courts consider that the larger the loss the longer the period of disqualification that is justified. If 76 Rich (2003) 44 ACSR 682 at 692. 77 Rich (2003) 44 ACSR 682 at 692 per Bryson J. 78 Rich (2003) 44 ACSR 682 at 692. 79 Rich (2003) 44 ACSR 682 at 693. McHugh that is so, and I think that it is, it indicates that retribution is as much a factor as protection of the public. There is no a priori reason why the protection of the public requires a person who is responsible for the loss of $100 million to be disqualified for a longer period than a person who is responsible for the loss of $100,000. The person responsible for the smaller loss may be a far greater danger to the public than the person responsible for the larger loss. Yet, given the approach of the courts, if other things are equal, the person responsible for the major loss will almost certainly receive a far longer period of disqualification. Another matter which suggests that retribution is a factor behind the making of a disqualification order, including the appropriate length of disqualification, is the relevance of the defendant's having obtained some personal benefit from the conduct that gives rise to the application for disqualification. Thus, in Australian Securities Commission v Donovan, Cooper J said80 that in determining whether a disqualification order is appropriate and, if so, the length of such disqualification, the extent to which the person benefited from the conduct personally or tried to conceal it are relevant matters. Further, the fact that courts take into account mitigating factors suggests that the jurisdiction is not purely protective. For example, both the Victorian Supreme Court and the Court of Appeal in Australian Securities and Investments Commission v Plymin (No 2)81 and Elliott82 and Gzell J in the New South Wales Supreme Court in Australian Securities and Investments Commission v Whitlam (No 2)83 took into account mitigating factors when determining whether to order disqualification and when assessing the appropriate period of disqualification of the defendant company directors. In Plymin and Elliott such factors included the defendants' previous unblemished corporate record, remorse and their co- operation with relevant authorities, including the Australian Securities and Investments Commission and external administrators84. In Whitlam (No 2), Gzell J also took into account the loss to the community of the defendant's services if he were disqualified and the irreparable effect of the proceedings upon the defendant's reputation, income, career and family85. 80 (1998) 28 ACSR 583 at 606. 81 (2003) 21 ACLC 1237. 82 (2004) 48 ACSR 621. 83 (2002) 42 ACSR 515. 84 Plymin (2003) 21 ACLC 1237 at 1247-1248, 1252 per Mandie J; Elliott (2004) 48 ACSR 621 at 660. 85 (2002) 42 ACSR 515 at 520-521. McHugh It is for the reasons given in the joint judgment and these additional reasons that I join in the orders of the Court in the present case. Kirby KIRBY J. Two related points lead me to a conclusion different from that reached by the other members of this Court86. I would have dismissed the appellants' appeal from the judgment of the New South Wales Court of Appeal87. I accept, as that Court did88, that some considerations favour the conclusion now endorsed by this Court. However, the opposite conclusion is to be preferred. The first consideration, critical for me, concerns the approach to the task in hand. As I see it, it involves, fundamentally, the ascertainment of the meaning and application of the Corporations Act 2001 (Cth) ("the Act"). The case was turned, instead, into one addressed to the principles of the common law affording a privilege in certain circumstances against exposure to penalties or forfeiture ("the penalty privilege"). Whilst the survival of the penalty privilege in the context of the Act was an issue presented in argument, the fundamental duty of the Court is to interpret, and give effect to, the Act according to its true meaning. Secondly, in fulfilling that duty, this Court could scarcely minimise the indications in the Act, and in the corporate context to which the Act responds, of the serious problems which the provisions of the Act were designed to address. These have both an Australian and global character. When those problems are remembered, the provisions of the Act can be better understood. They were designed to fulfil very important purposes concerned with corporate governance. Those purposes are part of a very detailed regulatory scheme enacted to contribute to the improved management and control of Australian corporations. They are not, as such, "inflicted"89 or "imposed"90 as a "penalty"91, or as punishment, or as an order "in the nature of a penalty"92, on the appellants. Getting the character of the provisions of the Act right is essential to the proper application in this context of any residual rule of the common law as to penalty privilege. 86 Reasons of Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ ("the joint reasons") and reasons of McHugh J. 87 Rich v Australian Securities and Investments Commission (2003) 203 ALR 671. 88 Rich (2003) 203 ALR 671 at 693 [113] per Spigelman CJ, [119] per Ipp JA (concurring). 89 Smith v Read (1737) 1 Atk 527 at 527 per Lord Hardwicke LC [26 ER 332 at 332]. 90 Adams v Batley (1887) 18 QBD 625 at 629 per Lord Esher MR. 91 Smith v Read (1737) 1 Atk 527 at 527 per Lord Hardwicke LC [26 ER 332 at 332]. 92 R v Associated Northern Collieries (1910) 11 CLR 738 at 744 per Isaacs J; Police Service Board v Morris (1985) 156 CLR 397 at 403 per Gibbs CJ. Kirby Mine is a minority view. The other members of the Court joined in the orders announced at the end of oral argument93. I now state my reasons for coming to the opposite conclusion. The facts, legislation and decisional history The facts and legislation: Most of the facts, particular to the proceedings involving Mr John Rich and Mr Mark Silbermann ("the appellants") and their resistance to the application for discovery brought by the Australian Securities and Investments Commission ("the Commission") are set out in the joint reasons94. Also explained there, by reference to the Act and other legislation95, may be found descriptions of the functions and authority of the Commission and the proceedings it has taken against the appellants under the Act for a "declaration of contravention"96, compensation orders97, and disqualification "from managing corporations for the Court considers appropriate"98. As is explained, the Commission relied upon one subparagraph of the Act providing for a person's disqualification if such person99: the period that "has at least twice contravened this Act while they were an officer of a body corporate". Like the other members of this Court, I will assume that breach of the nominated provision of the former Corporations Law would be picked up by the transitional provision in the Act100, so that past contravention of the Corporations 93 See joint reasons at [5] and reasons of McHugh J at [59]. 94 Joint reasons at [1]-[10]. 95 Australian Securities and Investments Commission Act 2001 (Cth); Australian the former Securities and Investments Commission Act 1989 (Cth) and Corporations Law; see joint reasons at [11]-[20]. 96 The Act, s 1317E(1). 97 The Act, s 1317H(1). 98 The Act, s 206E(1). 99 The Act, s 206E(1)(a)(ii). 100 The Act, s 1400. Kirby Law, if proved, would amount, for these purposes, to a contravention of the Act101. I will not repeat the other provisions of the Act or of the Corporations Law. As appears from those provisions, the Parliament has made it plain that "[i]f a Court is satisfied that a person has contravened 1 of the … provisions [including contravention of s 180(1) of the Act], it must make a declaration of contravention"102. The provisions giving rise to the obligatory declaration are described by the Parliament as "civil penalty provisions". The reference to the concept of "civil penalty" is contained in the heading to the part of the Act in which the provision for declarations of contravention appears ("Part 9.4B – Civil consequences of contravening civil penalty provisions"). The words "civil penalty provisions" appear repeatedly, as if in emphasis, throughout that Part. As the joint reasons observe, such legislative descriptions do not foreclose the classification by a court of the true character of the relief consequent upon "declarations of contravention"103. By the same token, these references and the companion provisions (by contra-distinction) for "criminal proceedings"104, are not unimportant. They make it clear that the concept of "civil penalty" was deliberately introduced. On the face of things, the language employed by the Act was designed to draw a sharp distinction between remedies for the enforcement of corporations law that are to be classified as "criminal" (or "penal") in character and those that are to be classified as "civil". This distinction has a history in Australian federal legislation105. It can be traced to early provisions of the Customs Act 1901 (Cth) and the Excise Act 1901 (Cth)106. Similar distinctions have long existed in the 101 See joint reasons at [18]. 102 The Act, s 1317E(1) (emphasis added). 103 Joint reasons at [22]. See also Behrooz v Secretary, Department of Immigration and Multicultural and Indigenous Affairs [2004] HCA 36 at [107]-[111] of my own reasons; Al-Kateb v Godwin [2004] HCA 37 at [155]. 104 The Act, ss 1317M, 1317N, 1317P, 1317Q. 105 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd (2003) 77 ALJR 1629; 201 ALR 1. 106 The history is described in Labrador (2003) 77 ALJR 1629 at 1633 [24] per Gummow J, 1646 [101]-[107] per Hayne J; 201 ALR 1 at 6-7, 24-26. See also Australian Law Reform Commission, Principled Regulation: Federal Civil and Administrative Penalties in Australia, Report No 95, (2002) at 115 [3.45]. Kirby legislation of other countries107. In more recent times, the distinction has been supported, as a matter of principle, because of the large growth in the number of statutory criminal offences, with the suggested consequence that the notion of criminality itself is becoming debased. That concern has led to the view that "true" crimes should be distinguished from substantially regulatory concerns. Such a distinction is particularly important where the law in question is addressed to the regulation of economic conduct, including the management of corporations108. The decisional history: The joint reasons describe the conclusions adverse to the appellants on the present point, reached successively by the primary judge in the Supreme Court of New South Wales (Austin J)109 and the majority of the Court of Appeal110. It is impossible, in a brief description, to do full credit either to the view of the majority judges below or to the dissenting opinion that is now vindicated by the majority of this Court. All of the judges addressed themselves to the language, and imputed purposes, of the Act read in its legislative context and considered alongside the longstanding common law (and equitable) principles relating to the penalty privilege. In resolving the point of objection raised by the appellants, the primary judge was greatly influenced by what he took to be the "well established" principles governing penalty privilege explained by Deane J in Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Livestock Corporation111. He noted that Deane J's exposition in this regard had been referred to, and applied, by the majority of this Court in Pyneboard Pty Ltd v 107 Notably in the United States and Germany. In Germany, regulatory offences (Ordnungswidrigkeiten) follow procedures different from those governing criminal offences (Straflichkeiten). See Ogus, Regulation: Legal Form and Economic Theory, (1994) at 80. 108 Australian Law Reform Commission, Principled Regulation: Federal Civil and Administrative Penalties in Australia, Report No 95, (2002) at 113 referring to Yeung, "Quantifying Regulatory Penalties: Australian Competition Law Penalties in Perspective", (1999) 23 Melbourne University Law Review 440 at 458-459. 109 Australian Securities and Investments Commission v Rich (2003) 45 ACSR 305; 21 ACLC 920. 110 Rich (2003) 203 ALR 671 per Spigelman CJ, Ipp JA concurring; McColl JA (diss). See joint reasons at [3], [30]-[34]. 111 (1979) 42 FLR 204 at 207. See ASIC (2003) 45 ACSR 305 at 309-310 [19]; 21 ACLC 920 at 925. Kirby Trade Practices Commission112. After an analysis of The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission113, the primary judge decided that the principles in Refrigerated Express remained the law following Daniels114. Certainly, that view is consistent with my own opinion as stated in Daniels115. As a matter of principle, because Daniels was basically concerned with the Trade Practices Act 1974 (Cth) and legal professional privilege, the primary judge's analysis of the law in this regard cannot be faulted. In Refrigerated Express116, Deane J said: "[I]n a case such as the present where the proceedings are not for the recovery of a penalty, there is no general rule precluding the making of an order for discovery or interrogatories and there will ordinarily be no proper ground for objecting to an order for production of documents or provision of information being made. The party against whom such an order is made is left to object to producing particular documents or providing particular information on the ground that such production or provision may tend to expose him to a penalty (see Mayor of the County Borough of Derby v Derbyshire County Council117)". It was this principle that the primary judge proceeded to apply. His orders, described in the joint reasons118, reflected the principle. Upon his analysis of the Act, it afforded no exemption to the appellants from the ordinary incidents inherent in the civil character of the legal proceedings initiated by the Commission. It followed that the obligation, usual in proceedings of such a character, applied. The appellants were bound to make discovery of documents relevant to the proceedings by verified list. The primary judge reserved any other privilege which the appellants might subsequently claim and to which they might be entitled. However, he refused them the blanket exemption, sought by the appellants, from the obligation to make discovery of the affected documents. No 112 (1983) 152 CLR 328 at 336 per Mason ACJ, Wilson and Dawson JJ. 113 (2002) 213 CLR 543 at 559 [31]. 114 ASIC (2003) 45 ACSR 305 at 312 [29]; 21 ACLC 920 at 927. 115 (2002) 213 CLR 543 at 569 [65]. 116 (1979) 42 FLR 204 at 208. 117 [1897] AC 550 at 553. 118 Joint reasons at [39]. Kirby such exemption was provided by the Act. Applying Refrigerated Express, endorsed by Pyneboard, the primary judge concluded that no such exemption should be read into the Act. The majority of the Court of Appeal affirmed this approach. The suggested error warranting correction is not established Suggested error: punitive/protective: It would not be sufficient for this Court to disturb the conclusions reached by the primary judge, and the majority of the Court of Appeal, simply because it formed a different impression as to the meaning of the Act and its operation where a claim of the penalty privilege had been made. Because the process before this Court is an appeal, it was necessary for the appellants to establish error in the reasoning of the Court of Appeal majority, endorsing the conclusion of the primary judge. Most matters involving statutory construction – including as it relates to pre-existing principles of equity and the common law – are contestable by the time they reach this Court. Upon many such questions there is no absolutely correct decision, certainly in the objective sense119. That is one reason why it is necessary for appellants to point to error. The present appellants assumed that obligation. They contended that the error that had intruded into the reasons of Spigelman CJ (who delivered the majority opinion in the Court of Appeal) was to be found in his Honour's repeated reference to the "protective purpose" of the provisions of the Act invoked against the appellants by the Commission120. The appellants argued that, by drawing a distinction between "protective" and "punitive" purposes, the majority of the Court of Appeal had given effect to a false dichotomy. Much indisputably punitive legislation also has a purpose of protecting society, particular segments of society or identified victims from the conduct that is sanctioned. Indeed, one of the recognised objects of the criminal law itself is the protection of society121. A majority of this Court now accepts that this was an error in the approach of the majority of the Court of Appeal, justifying and requiring correction by this Court122. I disagree. It is true that there are several references in the reasons of Spigelman CJ to the distinction between a "punitive" and a "protective" purpose of legislation. 119 News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 77 ALJR 1515 at 1524 [42] per McHugh J; 200 ALR 157 at 168. 120 Rich (2003) 203 ALR 671 at 679 [45], 680-685 [50]-[80]. 121 A point well made by McColl JA in Rich (2003) 203 ALR 671 at 739 [381], by reference to authority. 122 Joint reasons at [30]-[33] and reasons of McHugh J at [41], [59]. Kirby They appear in reasoning that necessarily had to address the question of how the Act operated in circumstances where the appellants claimed immunity from the duty of discovery because they were subjected to a "penalty or [something] in the nature of a penalty"123. Thus, in an important section of his reasons, under the heading "The punitive/protective distinction"124, Spigelman CJ referred to, and elaborated, passages in the reasoning of the primary judge recounting125 "a long line of authority which identifies orders for the disqualification of persons from being involved in the management of corporations as having a 'protective' rather than a 'punitive' purpose"126. Spigelman CJ also pointed out that "the distinction between a 'protective' and 'punitive' purpose has been made in numerous legal contexts"127. He cited passages from the reasons in Chu Kheng Lim v Minister for Immigration128 where Brennan, Deane and Dawson JJ, as well as McHugh J, differentiated "punitive" and "non-punitive" objectives and effects of federal legislation for constitutional purposes129. From these, it was argued (and is now decided) that the judges of the majority opinion below fell into error, necessitating reversal of their orders by this Court. Attention to classification and characterisation: I regard this conclusion as unsustained by a careful reading both of the reasons of the primary judge and of Spigelman CJ in the Court of Appeal. The primary judge was most careful to emphasise the caution that had to be taken in transposing remarks made for other purposes "into the context in which a classification must be made for the purposes of the privilege against exposure to penalties"130. The word that the primary judge repeatedly used in his 123 Smith v Read (1737) 1 Atk 527 at 527 per Lord Hardwicke LC [26 ER 332 at 332]. 124 Rich (2003) 203 ALR 671 at 680 [48]. 125 ASIC (2003) 45 ACSR 305 at 313 [31]; 21 ACLC 920 at 927. 126 Rich (2003) 203 ALR 671 at 680 [48]. 127 Rich (2003) 203 ALR 671 at 680 [50]. 128 (1992) 176 CLR 1 at 28, 71. 129 In the context of distinguishing between "immigration detention" that might be imposed by legislative provisions or executive action and "imprisonment" that might only be imposed as punishment pursuant to a judicial order. 130 ASIC (2003) 45 ACSR 305 at 313 [32]; 21 ACLC 920 at 927 (emphasis added). Kirby reasons was "classification"131. He recognised, as is self-evident, that many things done by courts in the exercise of civil jurisdiction have "catastrophic consequences" upon parties. They imposed "substantial hardship" on them. He accepted that a disqualification order, such as that sought here, would be such an instance. However, addressing himself to the claim for exemption from the ordinary obligation to make discovery, that would otherwise be required in proceedings classified by the Act as "civil" in character, the primary judge said that the submission of hardship consequences "misses the point"132. For his Honour, "the issue" was "whether a disqualification order should be placed in the same group as punishment, penalty, forfeiture and ecclesiastical censure"133 – those being the historical categories from which the penalty privilege originated. The primary judge's repeated references to "classification" and placing the disqualification order in an identified "group" makes it clear that he understood his task as one rather more subtle than the appellants have pictured it. Where his Honour referred to the treatment of disqualification orders "as protective rather than punitive in nature"134, his words must not be divorced from their context and the judicial task he had set himself – to "classify" and "group" the disqualification order as attracting, or not attracting, the penalty privilege in what were otherwise civil proceedings135. When Spigelman CJ endorsed136, as he did, the reasoning of the primary judge, he was not embracing a simplistic or universal distinction between orders that were "punitive" or "protective" in purpose. It would be unlikely that a judge regularly engaged in criminal appeals would draw such a manifestly erroneous Pope's Line through the whole world of judicial orders and for all legal purposes. To the contrary, the detail of Spigelman CJ's reasoning makes it clear that he cannot be charged with falling into such a rudimentary error. In fact, the reasons of Spigelman CJ contain two very clear indications that no such error was made. The reasons are full of references to the judicial task as being one of "characterisation" of the subject orders for the purpose of 131 ASIC (2003) 45 ACSR 305 at 313 [32]; 21 ACLC 920 at 927. 132 ASIC (2003) 45 ACSR 305 at 313 [32]; 21 ACLC 920 at 928. 133 ASIC (2003) 45 ACSR 305 at 313 [32]; 21 ACLC 920 at 928. 134 ASIC (2003) 45 ACSR 305 at 313 [32]; 21 ACLC 920 at 928. 135 See also ASIC (2003) 45 ACSR 305 at 317 [53]; 21 ACLC 920 at 931, where the primary judge returned to how it was "appropriate to classify" the order. 136 Rich (2003) 203 ALR 671 at 680 [48]-[49]. Kirby considering whether, subject to the Act, they were of such a "character" as to attract the penalty privilege. The repeated reference to the duty of "characterisation" for penalty privilege purposes137 makes it clear, to me at least, that Spigelman CJ recognised that his function was to "characterise", "classify" or "catalogue" the provisions of the Act in question and to do so by reference to the legislative scheme and for the purpose of considering whether it had sufficiently excluded the penalty privilege or not. Thus, his Honour said138: "For some purposes it may be appropriate to characterise the consequences of a sanction in terms of language such as 'punitive' and 'punishment'. issue of That does not however determine characterisation with respect to the application of the penalty privilege." the If this passage is not sufficient to demonstrate a recognition of the complex evaluative function in which the Court of Appeal was engaged, Spigelman CJ made his position completely clear in his conclusions. He acknowledged countervailing considerations in the Act. He recognised the burden that a disqualification order cast on those affected. However, he concluded, "on balance, that an order under either s 206C or s 206E of the Act should not be characterised as a penalty for purposes of the penalty privilege"139. In such circumstances, to hold that Spigelman CJ simply applied a crude "punitive/protective" dichotomy in reaching the orders of the Court of Appeal ignores the way his Honour reasoned to his result. The reasoning shows that he did what was required. He conducted a search for the "essential character" of the proceedings in order to classify them for the purpose in hand140. Analysis of the statutory provisions: A second indication confirms this conclusion. A substantial part of the reasons of Spigelman CJ involved a detailed analysis of the provisions of the Act141. It was this that brought his Honour to the conclusion that he finally expressed as to the characterisation of the disqualification order "as a penalty for purposes of the penalty privilege"142. 137 See Rich (2003) 203 ALR 671 at 683 [73], 686 [88], [90], [92], 687 [93], 693 138 Rich (2003) 203 ALR 671 at 686 [88] (emphasis added). 139 Rich (2003) 203 ALR 671 at 693 [114] (emphasis added). 140 Labrador (2003) 77 ALJR 1629 at 1653 [136] per Hayne J; 201 ALR 1 at 34. 141 Rich (2003) 203 ALR 671 at 687-691 [94]-[107]. 142 Rich (2003) 203 ALR 671 at 691-693 [108]-[114]. Kirby Words may be taken from his reasons to support the suggested error of imposing a false dichotomy of "punitive/protective" as a sole criterion for the availability or otherwise of the penalty privilege. However, a fair reading of the entire reasons makes it plain that no such error was made. Nor was that error made by the primary judge. At both levels below, it was recognised that the judicial task was one of "classification" and "characterisation" of the disqualification order for the instant purpose. That task had to be discharged by a close examination of the language, scheme and purposes of the Act. That examination was understood and accurately discharged. In his reasons143, McHugh J has sought to sustain the order favoured by the majority of this Court by reference to cases at first instance that have approached questions of disqualification of company officers in ways similar to criminal sentencing144. Those decisions are not themselves under review in this appeal. Accordingly, their correctness (and in particular the correctness of the "fifteen point guide" to disqualification orders considered in one of them145) was not argued or considered in this appeal. Principle and fair procedures require that this Court reserve its position upon them. Given that the relevant part of the Act provides separately for criminal and civil sanctions, it is erroneous to conflate the two or to approach disqualification orders, classified by the Parliament as civil, in the same way as if they imposed criminal sanctions. This is not to question the correctness of the actual orders made in the cited decisions. Nor is it to doubt that, in resolving disqualification questions, it is necessary for the trial court to consider in detail the nature, quality, duration and intent of the alleged contraventions of the Act by the officer concerned. Only in that way will the trial court be able to decide whether the disqualification in the future is "justified" or not146. The Act obliges consideration to be given to "conduct in relation to the management, business or property of any corporation" and other matters considered appropriate147. But it does so not, as such, to measure any criminal punishment on the officer concerned. It does so to judge the likely future conduct of the officer if 143 Reasons of McHugh J at [48]-[58]. 144 Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80; Re One.Tel Ltd (in liq); Australian Securities and Investments Commission v Rich (2003) 44 ACSR 682. See reasons of McHugh J at [48]-[58]. 145 Re HIH Insurance Ltd (in prov liq) (2002) 42 ACSR 80 at 97-99 [56] per Santow J. 146 See the Act, ss 206C(1)(b), 206E(1)(b). 147 See the Act, s 206E(2). Kirby disqualification is refused. Of its nature, disqualification looks to the future; not to the past. It protects the investing public, shareholders and others by immobilising the proved contravener and depriving him or her, for the specified period, of the position of trust and power that office in a corporation involves. Of course, the order has a serious economic and reputational consequence for the officer who is disqualified. But its purpose is not, as such, to impose criminal punishment. If it were punitive, it would say so and it would have been placed in a different part of the Act. Conclusion: error is not shown: It follows that the suggested error that was said to justify the intervention of this Court was not made good. In any case, I consider that the conclusion reached by the majority judges below involved the correct application of the relevant legal authority, taking into account applicable considerations of legal principle and legal policy. This brings me back to the matters mentioned at the outset of these reasons: the primacy of the Act and the relevant national and global circumstances to which the Act is intended to respond. The primacy of the Act Duty to the written law: Despite appearances to the contrary, which would have been left as a lasting impression to anyone who heard the argument of this appeal, properly analysed, this case is not about the enforcement of principles of the common law affording a privilege to persons against exposure to penalties. That issue is only incidentally raised. The fundamental duty of the Court is one with which the appellants appeared much less happy to grapple. This was, and is, the duty, where there is valid legislation made by an Australian Parliament, to give effect to the written law, discovering its purposes from the language, structure and context. I made this point in Daniels148, in explaining my more hesitant acceptance of the conclusion reached in that case. The Court there decided that, notwithstanding the terms of s 155 of the Trade Practices Act 1974 (Cth), legal professional privilege, afforded by the common law, was not abrogated by the section149. In Daniels, I explained my approach (to which I adhere) in these terms150: 148 (2002) 213 CLR 543 at 571 [73]. 149 Daniels (2002) 213 CLR 543 at 578 [95]. See also at 560 [35], 561 [37], 563-564 150 Daniels (2002) 213 CLR 543 at 571 [73] (footnotes omitted). Kirby "[T]he law on the subject having been reduced to statutory form (and no constitutional objection being raised as to its validity), the correct starting point for analysis is the language of s 155, not pre-existing doctrines of the common law. Where valid legislation has been enacted, the function of a court is to give effect to it, not to common law rights as if the Parliament had not spoken. This is obviously the approach favoured by Brennan J in Pyneboard. It has the merit of concentrating the attention of the decision-maker upon the enactment of the Parliament and giving primacy to its purposes as stated in its words." As I pointed out in Daniels151, this approach is conformable with the repeated insistence by this Court on focussing upon the terms of any applicable legislation "rather than use [of] pre-existing common law or unconnected expositions" to distract the decision-maker from the primary obligation. Later, in Trust Company of Australia Ltd v Commissioner of State Revenue152, I returned to this point153: "Obedience to the text of legislative provisions is founded on a critical postulate of democratic governance that is inherent in the Australian Constitution. In our Commonwealth it is the first duty of the courts to give effect to a valid legislative purpose where it is expressed in law. The primacy of that obligation derives from the special legitimacy of the written law that may, in turn, be traced to the imputed endorsement of such a law by legislators elected by the people." It is important to repeat these observations in the present appeal. Excessive attention was paid in argument to the history of the penalty privilege. I do not say that the history is without interest. After all, it rekindles memories of the urgent need in earlier times of a privilege "against exposure to 151 Daniels (2002) 213 CLR 543 at 571 [73], by reference to Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (2001) 207 CLR 72 at 77 [9], 89 [46]; The Commonwealth v Yarmirr (2001) 208 CLR 1 at 38-39 [14]-[15], 111-112 [249]. See also Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 77 ALJR 1893 at 1897 [24] per Gleeson CJ, McHugh, Gummow and Hayne JJ; 201 ALR 414 at 420. 152 (2003) 77 ALJR 1019; 197 ALR 297. 153 (2003) 77 ALJR 1019 at 1029 [68]; 197 ALR 297 at 310. See also Attorney-General (WA) v Marquet (2003) 78 ALJR 105 at 130-131 [146]-[148]; 202 ALR 233 at 268. Kirby ecclesiastical censure" and the like154, to prosecutions by common informers155, to cases involving forfeiture of estates for simony156 and to the activities of the disreputable Mr McRae who acted, during the American Civil War, as an agent for the Confederate States157. Such exotic relics of legal history demonstrate the lineage of the penalty privilege. However, they throw but a candle's light upon the issue in this appeal. That issue, from first to last, is the meaning of Australian federal statute law. It is whether the Act, read to achieve the important objectives of the Federal Parliament, leaves any room for the penalty privilege to operate in the appellants' case. Assignment to civil procedure: Difficulties sometimes arise in classifying a statutory proceeding as a "civil" or "criminal" procedure. A recent illustration may be found in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd158. That case demonstrates that the starting point in questions of this kind must always be a close analysis of the legislation. If the matter in question is not dealt with expressly or by clear implication in the Act, a judgment is required. It will be informed both by textual analysis and by consideration of legal principle and policy. In this case, the applicable provisions of the Act draw the clearest possible distinction between "civil proceedings" and "criminal proceedings" in respect of conduct constituting a contravention of a civil penalty provision as defined159. The proceedings that the Commission brought against the appellants were for contravention of "civil penalty provisions"160. Here, there was no civil remedy in the nature of a "conviction" (a word whose appearance proved decisive for the resolution of the question in Labrador161). The Act in this case expressly 154 See eg Trial of Sir John Freind (1696) 13 St Tr 1 at 17; R v Lord George Gordon (1781) 2 Doug 591 [99 ER 372]. 155 Joint reasons at [23], citing Naismith v McGovern (1953) 90 CLR 336 at 341-342. 156 Joint reasons at [26], citing Parkhurst v Lowten (1816) 1 Mer 391 [35 ER 718]. 157 Joint reasons at [26], citing United States of America v McRae (1867) LR 3 Ch App 158 (2003) 77 ALJR 1629; 201 ALR 1. 159 The Act, ss 1317M, 1317N, 1317P, 1317Q. 160 The Act, s 1317E(1). 161 (2003) 77 ALJR 1629 at 1638 [56], 1648 [110], 1653-1654 [137]; 201 ALR 1 at Kirby envisages criminal proceedings that may lead to a "conviction". However, such proceedings are differentiated in the legislative text from the proceedings that the Commission has brought against the appellants. The relief claimed by the Commission includes the making of declarations of contravention. This imports the requirement of s 1317L of the Act obliging the trial court to "apply the rules of evidence and procedure for civil matters when hearing [the] proceedings". The joint reasons derive from that instruction the importation of the principle governing the penalty privilege. This is not how I read the Act, including s 1317L. For me, that section is simply one of a number by which the Parliament has taken pains to make it clear that in specifying "[c]ivil consequences of contravening civil penalty provisions"162, deliberately classifying the remedies provided as "civil" (regulatory) and not "criminal" (penal) – including for the penalty privilege. It is true that, by the Act, a "declaration of contravention" is sought in this case in respect of breaches of provisions that the Parliament has described as "civil penalty provisions"163. However, in the context, the noun ("penalty") is less important than the adjective ("civil"). On its own, a "penalty provision" might attract the penalty privilege. However, by expressly qualifying these penalties by the adjective "civil", the Parliament has, in my view, deliberately placed them outside the category that would otherwise enliven that privilege. Where (as in this case) neither "pecuniary penalty orders"164, nor other relief of a hybrid and clearly punitive or penal kind165 have been sought against the appellants, issues that might have been relevant to assigning the remedies sought to the "nature of a penalty" (for the purpose of the penalty privilege) have been avoided. The relief claimed by the Commission was restricted to declarations of contravention (s 1317E), compensation orders (s 1317H) and disqualification orders (ss 206C and 206E). Whatever might be the case where other relief is sought, that claimed by the Commission against the appellants is neither overtly "criminal" or "penal" in character nor "in the nature of a penalty" when measured against the language, structure and design of the Act. In argument of the appeal, I raised a question whether the very large orders for compensation sought by the Commission might be characterised as penal 162 The Act, Pt 9.4B (heading). 163 The Act, ss 1317DA, 1317E(1)(a) (emphasis added). 164 The Act, s 1317G. 165 See eg the Act, s 206F, and Rich (2003) 203 ALR 671 at 692 [108], where possible constitutional issues are noted, should such provisions be deemed penal in character. Kirby because of their size. However, this was not contended and the better view is that they are, in character, as they are described: "compensatory". The over-reach of "prove it": For people who have derived a livelihood as company officers, disqualification from holding such offices is doubtless a very serious personal, financial and reputational burden. But so may be the outcome of a civil action in the courts asserting negligence or misconduct against professional defendants. The consequences for the person affected cannot, alone, determine the characterisation of the contested order for the instant purpose. Such a view would expand enormously the application of the penalty privilege. Subject to any statutory provisions, it would, for example, allow professionals summoned before disciplinary proceedings to refuse discovery and to deny access to relevant documents, meeting such demands with the dismissive statement "you prove it". To the extent that anything said in the joint reasons in Daniels would give support to such an over-wide view of the reach of the penalty privilege166, it goes far beyond the previous law. It does so in a case where it was unnecessary for the decision. And it expands the penalty privilege in a way, and at a time, when such an expansion is out of harmony with the introduction of a "pyramid" of statutory responses to the complex subjects of contemporary social and economic regulation167. Disqualification of directors: Because it was not suggested that the compensatory orders sought by the Commission were penal, so as to attract the penalty privilege, the ultimate issue in the appeal became whether the disqualification orders were such. Provision for court orders preventing a person from engaging in relevant acts of management of corporations can be traced, at least, to amendments of the Companies Act 1928 (UK). The provisions then enacted followed complaints about the suggested abuse of the protection of limited liability accorded to corporations. The amendments were accepted following the report of an expert committee168 that identified a mischief by which bankrupts were reportedly using 166 See Daniels (2002) 213 CLR 543 at 559 [31]; Rich (2003) 203 ALR 671 at 677 167 Australia, Senate, Standing Committee on Legal and Constitutional Affairs, Company Directors' Duties: Report on the Social and Fiduciary Duties and Obligations of Company Directors, (1989) ("the Cooney Committee Report"). See Rich (2003) 203 ALR 671 at 688 [100]. 168 United Kingdom, Report of the Company Law Amendment Committee, (1926) at Kirby corporations "to continue trading under the guise of a limited company, with results often disastrous to those who have given credit to the company". Disqualification from corporate management was a quid pro quo for the trust essential to the enjoyment of the powers and privileges of that position. Because corporations are creatures of statute, as are their officers, the entitlement of corporate governance is a statutory privilege. It is inherently susceptible to variation or withdrawal upon demonstrated unfitness to enjoy that privilege. An impact of that withdrawal on the person affected is inescapable. However, that impact does not give the disqualification order its character. That character derives from the regulation of corporations and of the officers whom the community permits to hold themselves out to the world as fit managers of shareholders' funds, entitled as such to the confidence of investors, employees, traders and the community generally. People such as the appellants (or anyone else for that matter) have no right to be involved in company management. It is a statutory privilege to be earned each day. That privilege may be withdrawn for misconduct but also for incompetent, improper or lax activities in the functions of corporate management. Given the critical importance of the good management of corporations for investors, employees, traders, the nation and the wider world, the Act, like its 1928 predecessor in Britain, has provided for the removal from corporate management of persons guilty of repeated contraventions of the Act169. The burdens of disqualification for a manager affected are recognised in the Act by the provision of defences and by the protection afforded by judicial evaluation and assessment of the claim. However, in the scheme of the Act, the disadvantages for the individual manager are entirely incidental to the achievement of the legitimate statutory objective of ensuring the integrity of the management of corporations in Australia for all who are involved with them. It is destructive of this high purpose to adopt a construction of the Act that reads down the relevant section with a view to the protection of the personal rights of the director as such. Such a reading undermines the strong policy of Pt 2D.6 of Ch 2D of the Act ("Disqualification from managing corporations"). It is not a reading of the Act that the Parliament intended. It is not a reading that this Court should accept. 169 The Act, s 206E(1). Kirby The graduated enforcement pyramid: Both the primary judge170, and the majority in the Court of Appeal171, examined at length the statutory texts together with the legislative history and materials relevant to the debates concerning graded non-criminal responses to the necessities of contemporary economic regulation172. As McColl JA remarked in the Court of Appeal173, much of this background material reflects a rejection of the rigid "bipolar" classification of legislative provisions as "civil" or "criminal". That rejection is harmonious with recent decisions of this Court174. However, an understanding of the very significant shift in the design of legislative sanctions and remedies to enforce the Parliament's will makes it important that this Court should avoid superimposing on the graduated statutory pyramid of sanctions and remedies any over- simplification inherent in past common law and equitable principles reflected in the penalty privilege. That privilege developed in an earlier time of less legislation and simpler provisions. To graft it now onto every statutory provision that casts a burden on an individual and to describe that burden as a "penalty" may risk undermining legislative attempts to develop graduated sanctions and remedies that go beyond the strict civil/penal paradigm. In the approach urged for the appellants, I saw no reflection of any appreciation of these major debates about economic and social regulation and differentiated legislative responses. The Act is clearly one such response. The legislative indications: Significant parts of the reasons of the primary judge and of the Court of Appeal were devoted to an analysis of the Act and of the equivalent provisions in the former Corporations Law. I will not retrace all 170 ASIC (2003) 45 ACSR 305 at 307 [5], 308-309 [15]; 21 ACLC 920 at 922-923, 171 Rich (2003) 203 ALR 671 at 687-693 [94]-[113]. 172 See Australian Law Reform Commission, Principled Regulation: Federal Civil and Administrative Penalties in Australia, Report No 95, (2002) at 76 [2.60]; see also Mann, "Punitive Civil Sanctions: The Middleground Between Criminal and Civil Law", (1992) 101 Yale Law Journal 1795 at 1799; Gillooly and Wallace-Bruce, "Civil Penalties in Australian Legislation", (1994) 13 University of Tasmania Law Review 269 at 288. 173 Rich (2003) 203 ALR 671 at 736 [366]-[371]. 174 See Gray v Motor Accident Commission (1998) 196 CLR 1 at 8; Labrador (2003) 77 ALJR 1629; 201 ALR 1. Kirby of these steps. I incorporate them by reference175. Some telling points, however, should be noticed. Under the Corporations Law as at 1991 there was no provision empowering a court to disqualify a person from managing the affairs of a corporation by reason of a contravention of s 232(4)176 as such. Such contravention amounted to an offence against the Corporations Law177. It rendered the offender liable, upon conviction, to a fine of $5,000178. That conviction empowered a court to order the payment of compensation to the corporation179. The corporation itself had wider rights of recovery180. Under the Law, where a person was an officer of a corporation who "repeatedly breached relevant legislation", the court could make an order prohibiting the person from managing a corporation181. There were other provisions in the Corporations Law by which a court could prohibit a person from managing a corporation182. The provisions of the Corporations Law were amended in 1992 by the insertion of the new Pt 9.4B, with its comprehensive treatment of "civil penalty provisions". The 1992 reforms were designed to implement the principle of a "pyramid of enforcement containing a hierarchy of sanctions"183. The explanatory paper accompanying the first draft of the Bill for the 1992 amendments explained the basic parliamentary objects184: 175 ASIC (2003) 45 ACSR 305 at 307-309 [5]-[15]; 21 ACLC 920 at 922-924; Rich (2003) 203 ALR 671 at 687-692 [94]-[113]. 176 The relevant statutory duty of care and diligence and predecessor to ss 180(1) and 181 of the Act. 177 Corporations Law, s 1311. 178 Corporations Law, Sched 3. 179 Corporations Law, s 232(7). 180 Corporations Law, s 232(8). 181 Corporations Law, s 230(1)(c). 182 Corporations Law, ss 599, 600; see Rich (2003) 203 ALR 671 at 687 [94]-[97]. 183 Rich (2003) 203 ALR 671 at 688 [100]. 184 Australia, Parliament, Corporate Law Reform Bill 1992: Draft Legislation and Explanatory Paper, (1992) at 50-51 [178], cited in Rich (2003) 203 ALR 671 at 688 [101] per Spigelman CJ. Kirby "It is expected that in settling an appropriate order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant's conduct, while not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. It is expected that the Court would consider imposing a pecuniary penalty only if it considered that a civil penalty disqualification provided an inadequate or inappropriate remedy." With some minor variations185, the provisions of the Corporations Law described above were incorporated in the Act when it was adopted. Given this history and the purposes thus revealed, together with the important economic objectives of the legislation, the insertion by this Court into the Act of an unexpressed protection from production on discovery of the documents of a manager cannot be justified. Because it arises as an issue in civil proceedings concerned with a manager's possible disqualification and removal from managing corporations, it impermissibly cuts across the achievement of the Parliament's clear purposes stated in its carefully calibrated provisions. So long as the legislation is constitutionally valid (a matter not here in dispute) the function of this Court is to give effect to those purposes. It is not to frustrate them186. It is clear from an examination of s 206C of the Act that its essential character is one of regulating the proper governance of corporations. The same conclusion applies to s 206E under which the Commission has sought the contested relief against the appellants. Only sub-par (ii) of s 206E(1)(a) requires a personal contravention of the Act by the relevant officer. By contrast, sub-par (i) requires only that the person has twice failed, while an officer of a body corporate that contravened the Act, to take reasonable steps to prevent such contraventions, that is, even if the failure to take those reasonable steps was not itself a contravention of the Act. Similarly, sub-par (iii) of s 206E(1)(a) refers to something that "would have contravened" ss 180(1) or 181, if the body corporate had been a corporation. No actual contravention is necessary. 185 Corporate Law Economic Reform Program Act 1999 (Cth). 186 Bropho v Western Australia (1990) 171 CLR 1 at 20; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382. Kirby These provisions of s 206E indicate clearly to my mind that the purpose and character of the Act in this respect, enlivened by the Commission's application for disqualification orders against the appellants, is not, as such, punishment of the appellants or something of that nature. True, a consequence is a burden on the appellants. However, viewed in the particular context of corporations law, that is not the character of the provisions in issue. Properly characterised, they constitute part of a law for the regulation of acceptable corporate management in Australia. It is a regulatory law to be applied in accordance with civil procedures. That incorporates obligations of verified discovery by parties such as the appellants. Conclusion: no glossing the Act: For this Court to insert judicial protections against discovery for managers in the position of the appellants undermines the provisions of the Act. It contradicts this Court's repeated endorsement of the primacy of statute and of a purposive approach to the ascertainment of legislative meaning. It makes these errors by starting the examination of the problem at the wrong point – with the old common law and equitable principle of the penalty privilege rather than with the contemporary Act and its implementation to achieve important purposes of corporate governance introduced successively by legislatures throughout Australia in the 1990s and then enacted by the Parliament in 2001 in the form of the Act. National and global corporate context The national corporate environment: If the Court's function is to give effect to the Act, in accordance with its purpose stated in its language, there can be little doubt that the purpose of the provision for the disqualification of persons from the management of corporations was to improve the standard of corporate governance in Australia by monitoring the performance of corporate managers. Cases of dishonest intent might require the initiation of criminal proceedings. However, the innovation of the 1992 reforms was the introduction of a range of civil sanctions for serious cases of incompetence, neglect and repeated mismanagement of corporations. Such were the demonstrated abuses and errors in the management of Australian corporations in the 1980s that widespread demands were made for an end to complacency and for an attack on "bad corporate governance" along a broad and varied front187. The provisions for court declarations of contravention of the civil penalty provisions and for the disqualification of directors were the 187 du Plessis, "Reverberations after the HIH and other recent corporate collapses: the role of ASIC", (2003) 15 Australian Journal of Corporate Law 225 at 229. See generally Sykes, The Bold Riders, (1996). Kirby outcome. The provisions cannot be viewed in isolation. They must be understood as a response by the legislatures of Australia to the serious dangers to the economy of the nation inherent in the multiple corporate collapses of the 1980s, repeated in equally "spectacular" form in more recent years188. Where the Parliament goes to the trouble of enacting reforms addressed to this large problem, it behoves this Court (unless there is a compelling reason to the contrary) to construe the resulting provisions so that they hit their mark and do not misfire189. The provision to the Commission of a wide range of remedies has resulted in many reported criminal proceedings; still more civil proceedings resulting in large recoveries and compensation orders; multiple successful cases of disqualification from corporate management; and other actions designed to improve the standards of corporate governance in this country190. Such considerations do not, of course, resolve the legal issue presented by this appeal. However, its resolution, without regard to the social and economic problem to which the Act was targeted, is equivalent to reading the Act with one eye closed. The international corporate environment: Nor is the national context in which the Act provides for disqualification orders against corporate managers special to Australia. Developments in global and regional markets have "been a major driver of change in many aspects of financial markets and communications [and have had an] impact on corporate governance"191. International bodies, in which Australia participates, have developed regulatory principles designed to improve corporate regulation and behaviour192. These principles, in turn, have 188 du Plessis, "Reverberations after the HIH and other recent corporate collapses: the role of ASIC", (2003) 15 Australian Journal of Corporate Law 225 at 225. See also Farrar, Corporate Governance in Australia and New Zealand, (2001) at 6. 189 Lord Diplock, "The Courts as Legislators", in Harvey (ed), The Lawyer and Justice, (1978) at 274, cited in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 424 per McHugh JA. 190 The Commission statistics for 2001-2002 are cited in du Plessis, "Reverberations after the HIH and other recent corporate collapses: the role of ASIC", (2003) 15 Australian Journal of Corporate Law 225 at 242. They include reference to 20 disqualification orders in that interval. 191 Segal, "Corporate governance: substance over form", (2002) 25 University of New South Wales Law Journal 320 at 336. 192 eg Organisation for Economic Cooperation and Development, Principles of Corporate Governance, (1999). See Segal, "Corporate governance: substance over form", (2002) 25 University of New South Wales Law Journal 320 at 322. Kirby drawn upon the work of advisory bodies in Australia193, the United Kingdom194 and elsewhere195. Such developments respond, in a transnational way, to publicised cases of corporate failures which now often have economic significance far beyond national borders. They emphasise managerial and directorial responsibilities and community expectations of a more proactive regulation of corporations, aimed at the steady maintenance of standards of integrity and competence in corporate governance. They reflect the view that participation in corporate governance is a privilege enjoyed by individuals subject to compliance with conditions. It is not a private right to be defended, as such, by notions such as the penalty privilege. Conclusion: upholding the Act's objectives: This Court should therefore favour an interpretation of the Act, read in this national and global environment, that responds to such expectations. It should prefer that interpretation to one that frustrates the achievement in Australia of these large objectives. Conclusions: the preferable construction of the Act Express reference to the privilege: Like the Court below, I accept that there are some textual indications and arguments that could be invoked to support the appellants in their appeal. One such consideration was the inclusion in the Act of a specific provision addressing the penalty privilege in the context of mandatory examinations about a corporation's manageable affairs196. By s 597(12) a person is not excused from answering a question put at an examination "on the ground that the answer might tend to incriminate the person or make the person liable to a penalty"197. The terms of this provision gave rise 193 Australia, Working Group on Corporate Practices and Conduct, Corporate Practices and Conduct: a Public Discussion Paper, (1995); Australia, Report of the Independent Working Party into Corporate Governance, Strictly Boardroom: Improving Governance to Enhance Company Performance, (1993). 194 United Kingdom, Committee on the Financial Aspects of Corporate Governance, The Code of Best Practice, (1992); United Kingdom, Committee on Corporate Governance, Final Report, (1998). 195 See Segal, "Corporate governance: substance over form", (2002) 25 University of New South Wales Law Journal 320 at 322, noting General Motors Corporation, Board Guidelines on Significant Corporate Governance Issues, (1994). 196 Under the Act, Pt 5.9, Div 1. See the Act, s 596A. 197 Emphasis added. Kirby to an argument198 that, where the Parliament intended to remove the application of the penalty privilege, it said so expressly. However, this Court has warned many times that care must be exercised in the use of the expressio unius rule of construction199. Especially in an Act as large and cumbersome as that under consideration (with its history of patchwork accretions) it is impossible to be confident that the express exclusion of penalty privilege in s 597(12) indicates affirmatively the continued operation of the privilege in the context of civil proceedings for the disqualification of persons from the management of corporations. If one starts from the assumption that such provisions are substantially regulatory, to be distinguished from the criminal proceedings for which provision is separately made, the need expressly to exclude the penalty privilege is not obvious. Adherence to accusatorial features: Secondly, it must be acknowledged that, in some cases, "civil penalties" and the remedies attaching to them could constitute penal or quasi-penal sanctions. The character and the context determine whether this is so, and not, as such, the legislative appellation. Where that character is established, there are good reasons of principle for preserving the accusatorial features of criminal procedure and resisting erosion of those elements of our law by language that is unclear or ambiguous200. By the same token, it is a mistake to pick up the penalty privilege and to apply it in a modern statutory context without paying close regard to that context. Unless such attention is given, a great deal of carefully calibrated regulatory law will be judged, not by its language and character, but simply by reference to its burdens. A swathe will then be cut through such laws so as to afford the penalty privilege to many undeserving beneficiaries contrary to the legislative design. Those who condemn the supposed dichotomy between "protection" and "punishment" should not replace it by an equally rigid dichotomy between penal sanctions and "truly" civil remedies. The distinction between a power given by statute for the purposes of protection of the public (or a section of the public) and a power that is punitive 198 Joint reasons at [25]. See also the Act, s 597(12A)(d). 199 (That the express mention of one subject excludes by implication others not mentioned.) See Houssein v Under Secretary, Department of Industrial Relations and Technology (NSW) (1982) 148 CLR 88 at 94. 200 See RPS v The Queen (2000) 199 CLR 620 at 630 [22]; Ousley v The Queen (1997) 192 CLR 69 at 132-133; Daniels (2002) 213 CLR 543 at 582-583 [108]. Kirby and involves criminal sanctions is well known to the law201. Thus, orders for the removal of the name of a legal practitioner from the roll of practitioners are commonly described as protective202. Self-evidently, such orders have features of punishment about them, especially when viewed from the standpoint of the person subject to them203. But the essential character and purpose of the court's powers are protective and, subject to legislative provision, that fact affects many things: the mode of trial, the standard of proof and the procedures available to the complainant. So it is in the case of a disqualification under the Act. The provision for disqualification for fixed periods is the compromise struck by the Parliament. The court is expected to fix the period, within the statutory prescription, by reference to protective purposes but taking into account proved past conduct. No maximum length for the disqualification period is prescribed by the Act204. For serious contraventions, the period could conceivably cover the greater part of the productive life of the average company officer. But even if a disqualification order's "punitive" consequences led to a conclusion that it was not "purely protective", that would not be determinative of the issue in this appeal. The question remains whether a court is justified in this context to impose a common law gloss on the clearly expressed will of the Parliament. In my view, we have no authority to do so in this case. The appellants relied on the decision of this Court in Police Service Board v Morris205. However, the statutory scheme in Morris was completely different from that of the Act. The legislation there provided that a member of the police force "charged" with an "offence" and then found "guilty" could be subject to "disciplinary action". Such disciplinary action might include dismissal from the police force206. In such a context, it can readily be understood why this Court treated the order of "dismissal" in that legislation as penal in character. 201 Weaver v Law Society of New South Wales (1979) 142 CLR 201 at 207; O'Reilly v Law Society of New South Wales (1988) 24 NSWLR 204 at 211; Law Society of New South Wales v Foreman (1991) 34 NSWLR 408 at 440-441. 202 Ex parte Lenehan (1949) 77 CLR 403 at 421-425. 203 Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 at 287, 289, 300. 204 The Act, s 206C. 205 (1985) 156 CLR 397. 206 Morris (1985) 156 CLR 397 at 403. Kirby Indeed, no argument seems to have been advanced in Morris to the contrary207. It does not follow that every effective removal from office under a statutory provision is penal or in the nature of a penalty for this purpose. The differentiation of the provisions of the Act and the law considered in Morris is obvious. Disqualification from participating in the future management of corporations is different from a sanction of dismissal of a police officer from that rank as part of a legislative scheme labelled "disciplinary". Legislatures and privilege modification: Thirdly, I accept that there are arguments of principle that support an insistence, where privileges are abolished or modified, that the Parliament responsible for doing so should normally assume clear accountability to the electors for that action208. I gave effect to that principle in Daniels and have done so in other cases. However, the privileges in Daniels were those against involved self-incrimination and suggested derogations of legal professional privilege. Those privileges are different from the penalty privilege invoked in this case209. Compared to the penalty privilege, each of those privileges has a longer history in the law. Each is more fundamental to its operation. Each is reflected in universal principles of human rights210. The penalty privilege is not. The penalty privilege is of a lower order of priority. It has a more recent and specialised origin and purpose in our law. It should not be blown into an importance that contradicts or diminishes the operation of the Act and the achievement of its purposes. Effect of the decision in this case: This point can be illustrated by the consequences of this Court's order in the appellants' case. The primary judge's determination and orders fully protected the appellants against any risk of self-incrimination. No one suggested in this appeal (as was attempted in Daniels) invasion of the legal professional privilege belonging to the appellants. In this regard, it is worth mentioning that English authority since our decision in 207 (1985) 156 CLR 397 at 398. 208 Daniels (2002) 213 CLR 543 at 582-583 [108] citing R (Morgan Grenfell and Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563. 209 Daniels (2002) 213 CLR 543 at 569 [65]. 210 International Covenant on Civil and Political Rights, done at New York on 19 December 1966, [1980] Australian Treaty Series No 23. See Art 14.3.b ("to communicate with counsel") and Art 14.3.g ("[n]ot to be compelled to testify against himself or to confess guilt"). Kirby Daniels has adopted a more stringent approach to the ambit of legal professional privilege in the corporate context than this Court did211. By this Court's order, the appellants in the present case will be released from the obligation that the Act would otherwise have imposed on them in civil proceedings for disqualification. They would have had to produce documents in their possession that are relevant to the issues concerning their management of One.Tel Ltd. Such documents were not prepared for their lawyers in order that the appellants might receive confidential legal advice. They are not, as such, documents exposing them to self-incrimination. They are documents prepared for corporate purposes at the very time the appellants were managing the corporation where such documents might be important for the determination of the disqualification issue in the way that the Parliament envisaged. The construction of the Act now adopted needlessly restricts the Commission and the court trying the claim. The restriction has no foundation in the language of the Act. Judges should not insert it. Doing so seriously impedes the attainment of the Act's important purposes for corporate governance in this country. The Parliament validly provided for civil procedures in such cases. There are good reasons of legal principle and policy for adhering to the civil standards and procedures. According to civil procedures, a party must produce relevant documents by the procedure called discovery. The appellants should be obliged to produce the documents in their possession as they would have to do in any other civil proceeding. If the Parliament had intended to exempt them from that obligation, it would have said so expressly. It enacted precisely the contrary. This Court should uphold, and not frustrate, the will of Parliament. It protects very important social and economic purposes. Orders Although the Court has upheld the appeal, I favoured an order dismissing it with costs. 211 Three Rivers District Council v Bank of England [2004] 2 WLR 1065; 3 All ER

HIGH COURT OF AUSTRALIA TASTY CHICKS PTY LIMITED & ORS APPELLANTS AND CHIEF COMMISSIONER OF STATE REVENUE RESPONDENT Tasty Chicks Pty Limited v Chief Commissioner of State Revenue [2011] HCA 41 5 October 2011 1. Appeal allowed. ORDER Set aside the order of the Court of Appeal of the Supreme Court of New South Wales dated 4 January 2011. 3. Remit the matter to the Court of Appeal of the Supreme Court of New South Wales for further hearing in accordance with the reasons for judgment of this Court. The costs to date in the Court of Appeal of the Supreme Court of New South Wales be determined by that Court on its final disposition of the appeal. The respondent pay the appellants' costs in this Court. On appeal from the Supreme Court of New South Wales Representation C J Bevan with A Tsekouras for the appellants (instructed by Legal Ease Lawyers) G C Lindsay SC with I C Latham for the respondent (instructed by Crown Solicitor (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Tasty Chicks Pty Limited v Chief Commissioner of State Revenue State taxation – Pay-roll tax – Taxpayer dissatisfied with Chief Commissioner's determination of objection to assessments may apply to Supreme Court for "review" pursuant to Taxation Administration Act 1996 (NSW), s 97. Administrative law – Courts – Original jurisdiction upon statutory "appeal" and "review" in respect of administrative decision – Nature, power and duties of court in exercise of that jurisdiction. Words and phrases – "appeal", "review". Taxation Administration Act 1996 (NSW), ss 97, 101. Pay-roll Tax Act 1971 (NSW), Pt 4A. FRENCH CJ, GUMMOW, CRENNAN, KIEFEL AND BELL JJ. This appeal from the Court of Appeal of the Supreme Court of New South Wales (Giles and Macfarlan JJA and Handley AJA)1 arises from a dispute concerning assessments of the liability of the appellants to pay-roll tax, but turns upon the construction of the statutory provisions governing objections to assessments, and "review" thereof by the Supreme Court. The central provisions are found in Pt 10 of the Taxation Administration Act 1996 (NSW) ("the Administration Act"). Division 1 (ss 86-95) of Pt 10 is headed "Objections" and Div 2 (ss 96-103A) is headed "Reviews". Except as provided by Div 2 of Pt 10, no court or tribunal or other body or person has "jurisdiction or power" to consider any question concerning the determination of any objection under Div 1 of Pt 10 (s 103A(1)). Section 97 provides that a taxpayer may apply to the Supreme Court of New South Wales for a "review" if dissatisfied with the determination by the ("the Chief the Chief Commissioner of State Revenue respondent, Commissioner") of an objection by the taxpayer under Div 1. A taxpayer may also apply under s 96 to the Administrative Decisions Tribunal ("the ADT") for a "review" in respect of a decision of the Chief Commissioner. The ADT is established by s 11 of the Administrative Decisions Tribunal Act 1997 (NSW) ("the ADT Act"). However, if the taxpayer applies to the ADT pursuant to s 96 of the Administration Act, the taxpayer cannot apply to the Supreme Court in respect of the same decision (s 97(2)). It will be apparent that in Pt 10 Div 2 the term "review" is used with respect to proceedings both in the ADT and in the Supreme Court. The office of the Chief Commissioner is created by s 60 of the Administration Act; s 61 gives to that officer the general administration of the State taxation laws identified in s 4. An "appeal" from an administrative decision to a court is the creature of statute and it confers original, not appellate, jurisdiction2. Further, where a jurisdiction called an "appeal" is enlivened, it is essential to identify its nature 1 Chief Commissioner of State Revenue v Tasty Chicks Pty Ltd [2010] NSWCA 326. 2 Osland v Secretary to Department of Justice [No 2] (2010) 241 CLR 320 at 331-332 [18]; [2010] HCA 24. Crennan Bell and the duties and power of the court in the exercise of that jurisdiction3. The term "review" presents similar considerations. It takes its meaning from the context in which it appears4. It may be used by the statute in question to empower decision-making by an administrative body, or to confer a species of original jurisdiction on a court5. If the latter, again it will be necessary to identify the nature of the "review" and the duties and powers of the court in the exercise of that jurisdiction. These distinctions are essential to the resolution of the issues presented on this appeal. The fourth and fifth appellants, Mr and Mrs Souris, conducted in partnership a chicken meat processing business ("the Firm"). The third appellant ("Souris Holdings") owned premises portions of which were separately let to the Firm, the first appellant ("Tasty Chicks") and the second appellant ("Angelo Transport"). The Chief Commissioner "grouped" the appellants for the purposes of the Pay-roll Tax Act 1971 (NSW) ("the Pay-roll Tax Act")6 and the Administration Act. Mr and Mrs Souris have not challenged the "grouping" of the Firm and Souris Holdings under Pt 4A of the Pay-roll Tax Act and have not sought their "de-grouping" for pay-roll tax purposes. What has been challenged is the refusal by the Chief Commissioner to "de-group" Tasty Chicks, Angelo Transport and the Firm. In the Equity Division of the Supreme Court, Gzell J7 set aside the disallowance by the Chief Commissioner of objections made by the appellants against assessments under the Pay-roll Tax Act and the Administration Act for six years, being the years ending 30 June 2002 to 30 June 2007 inclusive. The 3 Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390 at 399-400 [27]; [2010] HCA 32. 4 Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 261; [1995] HCA 10. 5 See Pasini v United Mexican States (2002) 209 CLR 246 at 253-254 [11]-[13]; [2002] HCA 3. 6 Since repealed with effect 1 July 2007 by s 104 of the Payroll Tax Act 2007 (NSW). 7 Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (2009) 77 ATR 394. Crennan Bell Chief Commissioner had applied the "grouping" provisions in Pt 4A of the Pay-roll Tax Act and had refused to apply the "de-grouping" provisions. Prima facie each taxpayer had the benefit of a pay-roll tax threshold of $600,000 which applied in each of the relevant years. The "grouping" provisions were designed to counter tax avoidance through the splitting of business activities by the use of additional entities, each attracting a threshold. The "de-grouping" provisions were available for application by the Chief Commissioner upon determination, in broad terms, that it would be unreasonable to apply the "grouping" provisions. that judge held the primary The assessments fell within three periods, and the terms of Pt 4A varied between the first period and the other two periods. With respect to the first period, ending 30 June 2003, the Chief Commissioner had not been entitled to apply the "grouping" provisions to the Firm, Tasty Chicks and Angelo Transport and so did not need to consider whether the "de-grouping" provisions should have been applied to all or any of these appellants. With regard to the second and third periods, ending respectively 30 June 2005 and 30 June 2007, no complaint was made of the "grouping" of these appellants. Rather, the proceedings before the primary judge turned upon the application of the "de-grouping" provisions to Tasty Chicks and Angelo Transport. His Honour held that he was entitled to re-exercise the powers of the Chief Commissioner under those provisions and, in doing so, replaced the decision of the Chief Commissioner with a decision that on and after 1 July 2003 Tasty Chicks and Angelo Transport were not members of a group with the Firm. The Court of Appeal allowed the appeal by the Chief Commissioner and set aside the judgment and orders of Gzell J. In delivering the leading judgment, Handley AJA indicated that it was necessary for the Court of Appeal to determine at the outset the nature of the proceeding in the Supreme Court under s 97 of the Administration Act. However, with reference to s 97, his Honour used the term "appeal" rather than "review". His Honour concluded that to this "appeal" there applied the analysis by Dixon J in Avon Downs Pty Ltd v Federal Commissioner of Taxation8. (1949) 78 CLR 353; [1949] HCA 26. [2010] NSWCA 326 at [33]. Crennan Bell "On such an appeal [under s 97] the [Supreme] Court must consider whether the appellant has established that the Commissioner erred on the materials that were before him. Where, as in this case, the [Pay-roll Tax Act] makes the taxpayer's liability depend on the Commissioner being 'satisfied' that a fact exists, the question for the Court on appeal is whether the Commissioner's decision to the contrary was vitiated by error of the kinds referred to by Dixon J." In Avon Downs10, Dixon J had said: "[The decision of the Federal Commissioner of Taxation], it is true, is not unexaminable. If he does not address himself to the question which the sub-section formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review. Moreover, the fact that he has not made known the reasons why he was not satisfied will not prevent the review of his decision. The conclusion he has reached may, on a full consideration of the material that was before him, be found to be capable of explanation only on the ground of some such misconception. If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law." relevant considerations and no the For the reasons which follow, the analysis in the Court of Appeal was faulty and the appeal to this Court should be allowed. The consequence is that the appeal to the Court of Appeal will require reconsideration in the light of the determination by this Court of the nature of the "review" upon which Gzell J was engaged under s 97 of the Administration Act. Upon an application for review under Pt 10 Div 2 of the Administration Act, the cases of the applicant and respondent "are not limited to the grounds of 10 (1949) 78 CLR 353 at 360. Crennan Bell the objections" before the Chief Commissioner (s 100(2)). The powers of the Supreme Court and the ADT are spelled out in s 101(1). This provides: "The court or tribunal dealing with the application for review may do any one or more of the following: confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit." The importance of par (b) of s 101(1) is emphasised by the definition of "assessment" in s 3(1). This includes not only an assessment of tax liability by the Chief Commissioner, but also an assessment by the Supreme Court or ADT on an application for review. Section 100(2) of the Administration Act confirms that the powers given to the ADT by s 101(1) of that Act are supplemented by the provision in s 63(1) of the ADT Act that the ADT decide "the correct and preferable decision ... having regard to the material then before it", and that in s 63(2) to the effect that the ADT may exercise all the functions conferred on the Chief Commissioner. Section 19(2) of the Supreme Court Act 1970 (NSW) ("the Supreme Court Act") renders proceedings in the Supreme Court under s 97 of the Administration Act an "appeal" for the purposes of the Supreme Court Act if so described in the Administration Act. Section 97(4) of the Administration Act then engages s 19(2) of the Supreme Court Act by stating: "A review by the Supreme Court is taken to be an appeal for the purposes of [the Supreme Court Act] and the regulations and rules made under that Act, except as otherwise provided by that Act or those regulations or rules." Crennan Bell Part 7 (ss 101-110) of the Supreme Court Act deals with "appeals" from the Supreme Court itself and is not picked up by operation of s 97(4) of the Administration Act. However, s 75A of the Supreme Court Act applies to "appeals" from administrative bodies11. Section 75A is "picked up" by dint of s 97(4) of the Administration Act, along with relevant regulations and rules made under the Supreme Court Act. The qualification in s 75A(4) of the Supreme Court Act that s 75A "has effect subject to any Act" directs attention to the particular provisions of s 100 and s 101 of the Administration Act to which reference has been made above. These are supplemented by s 75A(7) (the Supreme Court may receive further evidence) and s 75A(10) (the Supreme Court may make any assessment which ought to have been made). When all these provisions are read together it becomes readily apparent that Gzell J correctly proceeded on the basis that the Supreme Court was empowered to set aside the disallowance by the Chief Commissioner of the objection by the appellants, allow the appellants' objection, set aside the determination of the Chief Commissioner not to exercise his "de-grouping" discretion, revoke the assessments, and require reassessments by the Chief Commissioner. Reliance for the contrary result in the Court of Appeal upon Avon Downs is misplaced. In that case, the taxpayer was dissatisfied with the disallowance of a deduction which would have been allowable but for the operation of s 80(5) of the Income Tax Assessment Act 1936 (Cth) ("the Income Tax Act") as it then stood. The sub-section turned upon the taxpayer satisfying the Commissioner of the existence of a certain state of affairs. There was no requirement that the Commissioner give reasons, and his decision presented an inscrutable face12. On the other hand, s 93 of the Administration Act required that the Chief Commissioner give, in the notice of determination of an objection, reasons for the disallowance of the objection or its partial allowance. The dissatisfied taxpayer in Avon Downs had utilised the avenue provided by s 187(b) of the Income Tax Act by requesting that the Commissioner treat its objection "as an appeal" and forward it to the High Court; upon that "appeal" the taxpayer was 11 Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390 at 399 [27]. 12 See Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 at 623 [34], 639 [104]-[105]; [2010] HCA 16. Crennan Bell limited to the grounds stated in the objection. By way of contrast, where the taxpayer pursued the avenue leading to a Board of Review, the Board had all the powers and functions of the Commissioner and its decisions upon review were deemed to be assessments, determinations or decisions of the Commissioner Against that background, Gzell J observed13: "The powers in the [Administration Act], s 101 are quite different from the powers of a court on appeal under the [Income Tax Act]. They are specific and include the power to make an assessment or other decision in place of the assessment or decision the subject of the review. And any dichotomy between the powers of the Supreme Court and the powers of the [ADT] has been abrogated." His Honour added that the powers on review are the same for the Supreme Court and the ADT. That requires qualification to allow for the supplementation of the Supreme Court's powers by s 75A of the Supreme Court Act, but otherwise is correct. these reasons after substantial amendments made by It should be added that Pt 10 of the Administration Act took the form described the Administrative Decisions Tribunal Legislation Amendment (Revenue) Act 2000 (NSW)14. In his second reading speech in the Legislative Council on the Bill for that Act, the Treasurer had explained as follows the reasons for the provision of concurrent "jurisdiction" in the ADT and the Supreme Court15: "It is anticipated that, by conferring concurrent jurisdiction on the [ADT] and the Supreme Court, taxpayers who are presently deterred from pursuing a review of the Chief Commissioner's decision past the objection stage because of the complexity, expense and delay associated with Supreme Court proceedings will take advantage of access to the cheap and flexible review mechanisms offered by the [ADT]. Conversely, those 13 (2009) 77 ATR 394 at 413 [165]. 14 Section 97(4) was added thereafter by the State Revenue Legislation Amendment Act 2001 (NSW), Sched 4, cl 5. 15 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 11 October 2000 at 8935. Crennan Bell taxpayers who wish to access the judicial expertise of the Supreme Court because their particular matter involves highly technical and difficult legal issues or because the amount of tax in issue is substantial can do so." The Court of Appeal should not have allowed the Chief Commissioner's appeal by proceeding on the basis that the jurisdiction and powers conferred upon the Supreme Court were such that before Gzell J it had been for the taxpayers to show that the Chief Commissioner had erred on the materials before the Chief Commissioner and to show that the exercise of discretion by the Chief Commissioner was vitiated by error of a kind referred to in Avon Downs. The appeal to this Court should be allowed with costs, the orders of the Court of Appeal dated 4 January 2011 set aside, and the matter be remitted to that Court for further hearing. The costs to date in the Court of Appeal will be for the determination of the Court of Appeal on its final disposition of the appeal.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT [2003] HCA 29 29 May 2003 ORDER Appeal dismissed. On appeal from the Supreme Court of Western Australia Representation: G A Archer for the appellant (instructed by Legal Aid Western Australia) S E Stone with C C Porter for the respondent (instructed by Director of Public Prosecutions (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal Law – Wilful murder – Alternative verdicts of murder and manslaughter available – Directions of trial judge – Whether trial judge reversed onus of proof – Whether trial judge erred in informing the jury about the circumstances in which they could consider alternative verdicts. The Criminal Code (WA), ss 277, 278, 279, 280, 595, 689(1). Juries Act 1957 (WA), s 41. GLEESON CJ, McHUGH AND HAYNE JJ. Following a trial in the Supreme Court of Western Australia, before Anderson J and a jury, the appellant was convicted of the wilful murder of Marie Ann Stanton, his estranged wife. This was a second trial. At a previous trial, the jury had been discharged because of an inability to agree upon a verdict. On 11 March 1999, the appellant, armed with a shotgun, and a number of rounds of heavy gauge ammunition, went to the victim's house. It was not in dispute that she died as a result of the discharge of the shotgun. The appellant did not deny that he pulled the trigger and caused the gun to discharge. There was only one substantial issue of fact, which was the intent with which the appellant acted. He denied any intention to kill or harm the victim. He said he took the gun with him in order to frighten her. The two had been quarrelling about Family Court proceedings, and the appellant said he took the weapon to "make her see some sense and negotiate". There was abundant evidence on which a jury could infer an intent to kill. It appeared that the appellant had endeavoured to conceal his arrival at the house. He hired a car for the occasion, and parked it in a location where it could not be seen from the house. He walked up to the house unannounced, apparently surprising his wife before she had a chance to flee. He had equipped himself with a shotgun and ammunition. The evidence was that the shotgun would only discharge when placed in a fully cocked position, which involved exerting approximately three kilograms of pressure. The shotgun was discharged on a level parallel to the floor, and at a very close range to the victim. There was forensic evidence to the effect that the victim had her left forearm in front of her chest in a protective gesture at the time she sustained the fatal wounds. After the appellant shot the victim, he picked up the spent cartridge shell, placed it in his pocket, and walked out of the premises. He did not attempt to assist the victim although she did not die immediately. The indictment charged the appellant with wilful murder. It was common ground that, by reason of the provisions of The Criminal Code (WA), there were four verdicts that were technically available: wilful murder; murder; manslaughter; and not guilty. However, it was also common ground, in the Full Court of the Supreme Court of Western Australia, and in this Court, that, for practical purposes, the only verdicts that were realistically open on the evidence were wilful murder and manslaughter. Section 277 of The Criminal Code provides that any person who unlawfully kills another is guilty of a crime which, according to the circumstances of the case, may be wilful murder, murder, manslaughter or infanticide. Section 278 defines wilful murder. It provides that a person who unlawfully kills another, intending to cause his or her death or that of some other McHugh Hayne person, is guilty of wilful murder. Section 279 defines murder. It provides, relevantly to the present case, that a person who unlawfully kills another is guilty of murder if the offender intends to do some grievous bodily harm to the person killed or to some other person. Section 280 provides that a person who unlawfully kills another under such circumstances as not to constitute wilful murder or murder is guilty of manslaughter. In the circumstances of the present case, bearing in mind the nature of the weapon involved, and the range from which it was discharged, if the appellant intended to shoot the victim, then his intent was obviously to kill, rather than merely to cause grievous bodily harm. Furthermore, although defence counsel at trial put an argument to the effect that the shooting was accidental, in the sense that it was not a willed act, the argument had nothing to commend it. The appellant's best hope was that the jury might regard the case as one of manslaughter, based upon a view that he was menacing his wife with a loaded shotgun, but did not actually intend to shoot her. No exception is taken to the directions given by Anderson J to the jury as to the elements of the offences of wilful murder, murder, or manslaughter, or as to the basis upon which they might acquit the appellant. Counsel for the appellant acknowledged that the trial judge's description of the elements of the offences was accurate, and that although there were other possible verdicts available to the jury at law, in light of the evidence and the manner in which the trial was conducted, the evidence only supported verdicts of either wilful murder or manslaughter. In the Full Court of the Supreme Court of Western Australia, the grounds of appeal were as follows: The learned Trial Judge directed the jury at T1002 as follows: 'You first consider wilful murder and if you're unanimously of the view that the accused is guilty of wilful murder, that will be your verdict. If you are unanimously of the view that he's not guilty of wilful murder, then you proceed to consider whether you find him guilty of murder. If you are unanimously of the view that he is guilty of murder, then that will be your verdict. If you are unanimously of the view that he's not guilty of murder, then you will consider manslaughter.' The learned Trial Judge further directed the jury at T1006 as follows: 'You can't come to consider the alternative verdicts of murder or manslaughter unless you are unanimously of the view that he is not guilty of wilful murder'. McHugh Hayne The learned Trial Judge erred in law in giving the directions for the following reasons: The jury was directed to consider [its] verdict in a particular order. The [jury] should have been directed that it could consider [its] verdict in any order. The directions, taken together and as a whole, had the effect of precluding individual members of the jury from considering manslaughter at all so long as any one of the jury found that the accused was guilty of wilful murder. The jury should have been directed that it could return any verdict consistent with the evidence." The Full Court of the Supreme Court of Western Australia dismissed the appellant's appeal.1 Malcolm CJ and Murray J concluded that the directions set out in grounds 1 and 2 both involved error of law, but regarded the case as a proper one for the application of the proviso in s 689 (1) of The Criminal Code, on the basis that there was no miscarriage of justice. Owen J, in dissent, considered that the direction in ground 2 (although not the direction in ground 1) involved an error of law, and did not regard the case as a proper one for the application of the proviso. In this Court, the respondent filed a notice of contention, arguing that the directions in grounds 1 and 2 involved no error of law. In order to explain the manner in which the case was approached in the Full Court, it is necessary to make further reference to the directions, and the context in which they were given. At the commencement of the trial, before any evidence was called, the trial judge gave the jury some general instructions about the task ahead of them, and informed them that any verdict which they might ultimately return, whether guilty or not guilty, must be unanimous. (The charge being one of wilful murder, a majority verdict was not open – Juries Act 1957 (WA), s 41). In his summing- up to the jury at the end of the trial, the trial judge referred on a number of occasions to the requirement of unanimity. He instructed the jury that it was a fundamental rule that the prosecution bore the onus of proof, and that it was obliged to prove its case beyond reasonable doubt. As was noted above, the trial judge gave the jury accurate instructions as to the elements of the offences of wilful murder, murder, and manslaughter. He said: 1 Stanton v The Queen (2001) 24 WAR 233. McHugh Hayne "Unless you can all agree unanimously and beyond reasonable doubt that this man's intent was an intent to kill, you cannot find him guilty of wilful murder." The trial judge left murder as an alternative verdict, although it was common ground in this Court that it was not a realistic possibility. In that connection, he said: "As to murder, you couldn't get to consider the alternative verdict of murder unless you were unanimously of the opinion that the crime of wilful murder had not been committed. You must unanimously come to that conclusion before you move to consider whether the alternative crime of murder has been proved. As to murder, there must of course be a killing by one person of another and the killing must be unlawful, and I have told you about unlawfulness." The possibility that the appellant might have deliberately shot the deceased, not with an intent to kill her, but only with an intent to cause grievous bodily harm, was bordering on the fanciful. The direction just quoted was not that referred to in the grounds of appeal in the Full Court, but in argument in this Court counsel for the appellant pointed out, correctly, that it involves an error. The word "committed" should have been "proved". It will be necessary to return to that matter when considering the argument about the reversal of the onus of proof. The trial judge then said: "If you are unanimously of the view that the crime of murder has not been proved, then you can proceed to consider the alternative verdict of manslaughter. Let me talk to you about manslaughter. If you are satisfied that the accused cause[d] his wife's death; that is, that he killed her, he shot her, but you are not satisfied as to his intent, you can bring in a verdict of manslaughter, but before you could do that, you would have to be satisfied that the killing was unlawful. The killing was not unlawful if it was simply an accident." He went on to relate the offence of manslaughter to the circumstances under consideration. He then gave the first of the directions the subject of a ground of appeal, saying: "You first consider wilful murder and if you're unanimously of the view that the accused is guilty of wilful murder, that will be your verdict. If you are unanimously of the view that he's not guilty of wilful murder, then you proceed to consider whether you find him guilty of murder. If McHugh Hayne you are unanimously of the view that he is guilty of murder, then that will be your verdict. If you are unanimously of the view that he's not guilty of murder, then you will consider manslaughter. If you are unanimously of the view that he is guilty of manslaughter, then that will be your verdict. If you are unanimously of the view that he is not guilty of manslaughter, then the verdict will be not guilty. I suggest you start your deliberations by considering whether the killing was unlawful in the sense of whether it was not accidental. Unless you're satisfied of that; that is, unless you're satisfied to the required degree that the shooting was not accidental, then the verdict must be not guilty and that will be that. It's entirely for you, of course, but the circumstances are such that I think you will hardly bring in a verdict of not guilty in this case. I don't think you will have any difficulty in concluding that ... pointing a loaded and cocked shotgun at the chest of another with your finger on the trigger is, at the very least, such a grossly negligent act as to rule out accident. If you decide that the killing was unlawful in the sense that it was not an accident, then the verdict must be at least manslaughter. If intent to kill is proved, the verdict must be wilful murder. If intent to do grievous bodily harm is proved, the verdict must be guilty of murder." Finally, before sending the jury out to consider their verdict, the trial judge said: "When you are ready to deliver your verdict you will be asked first whether you find the accused guilty or not guilty as charged and whatever that verdict is, whether guilty or not guilty, it must be unanimous. If the verdict is not guilty as charged then you will be asked whether the verdict – whether you find the accused guilty or not guilty of murder and so on. On each announcement of your verdict you will be asked whether it is the verdict of you all. They are all the matters that I wish to mention to you." Trial counsel for the appellant raised no complaint about any of the above directions. After the jury had retired for about four hours, they asked a question: McHugh Hayne "If the jury is in conflict, do those who believe he is guilty of wilful murder have to move down to the charge of manslaughter? Do 12 people have to agree to manslaughter?" The trial judge discussed the question with counsel in the absence of the jury. Counsel agreed that the answer to the question was "very straightforward" and that it was that the members of the jury must unanimously agree with respect to the charge brought before they could proceed to consider alternative verdicts. There was some discussion as to whether it was appropriate, at that stage, to give the jury a direction of the kind considered by this Court in Black v The Queen2. The trial judge indicated that he was not inclined to give a Black direction at that stage, but would prefer to "wait a little". The members of the jury were then brought into Court, the question was repeated, and the trial judge said: "Yes, the law is quite clear. You can't come to consider the alternative verdicts of murder or manslaughter unless you are unanimously of the view that he is not guilty of wilful murder. So, whatever your verdict is on the first charge of wilful murder, it must be unanimous." That is the direction that was the subject of the second ground of appeal in the Full Court. Before turning to the arguments advanced on behalf of the appellant, it is convenient to refer to some matters of general principle. Anderson J was correct to inform the jury that any verdict they returned, whether of guilty or not guilty, had to be unanimous. Furthermore, the prosecution was entitled to have the trial judge seek a verdict on the charge in the indictment, and if the jury were unable to agree, either on a verdict of guilty of wilful murder or a verdict of not guilty of wilful murder, then the proper course was to discharge the jury. This was acknowledged in argument in this Court by counsel for the appellant, but it appears to have been the subject of some misapprehension in the Full Court. As Anderson J told the jury immediately before they retired, the first question they would be asked when they returned was whether they found the appellant guilty or not guilty of wilful murder. It would not have been a permissible response to that question for the jury to announce that they were unable to agree on that, but were all agreed that, if the appellant was not guilty of wilful murder, he was at least guilty of manslaughter. If they were unable to agree on whether the (1993) 179 CLR 44. McHugh Hayne appellant was guilty or not guilty of wilful murder, then they would be unable to agree on their verdict in relation to the charge in the indictment. They would then be discharged. The corollary of that proposition is that, as Anderson J told the jury, they would only be asked whether they found the appellant guilty or not guilty of murder if they had already found him not guilty of wilful murder; and they would only be asked whether they found the appellant guilty or not guilty of manslaughter if they had already found him not guilty of wilful murder and not guilty of murder. In Gammage v The Queen3, Kitto J said: "The common law, authorizing as it did a verdict of guilty of manslaughter on an indictment for murder, always made it a condition of the validity of that verdict that the jury should first have returned a verdict of not guilty of murder." In R v McCready4, the Full Court of the Supreme Court of Victoria, speaking of a case where the indictment charged rape and where there was, by statute, a possible alternative verdict of assault with intent to commit rape, said: "The terms of [the statute], in our view, make a verdict of assault with intent to commit rape dependent upon the jury being not satisfied that the accused is guilty of the crime of rape. The question of his guilt of the alternative charge does not arise unless and until the jury is not satisfied of his guilt of rape, and whilst the jury is in a state of disagreement upon the latter, the accused's guilt of the alternative crime remains irrelevant." There is nothing in The Criminal Code that warrants a different conclusion in a case such as the present. In the Full Court, this was accepted by Owen J, but Murray J took a different view. If, as appears to be the case, his Honour contemplated that the jury, while still in a state of inability to agree upon a verdict (guilty or not guilty) in relation to the charge in the indictment, might have been invited to return a verdict on an alternative charge, then there is no justification for such a course. (1969) 122 CLR 444 at 453. [1967] VR 325 at 329. McHugh Hayne It was not submitted that the trial judge should have given a direction of the kind considered in Gilson v The Queen5, or that the case was one for a special verdict of the kind permitted by statute in some jurisdictions to overcome the problem that arises in relation to alternative charges of theft and receiving. In the Full Court, both Murray J and Owen J agreed that Gilson was not in point. That was not contested in this Court. As the direction recommended in Black acknowledges, when the jury were considering the charge of wilful murder, it was proper for individual jurors to attach weight to the opinions of others, and if persuaded by those opinions, to modify or alter their own views in response. But if, after full deliberation, and interchange of views, some were of the opinion that the prosecution had established its case beyond reasonable doubt (which, in this case, meant that the prosecution had proved beyond reasonable doubt the appellant's intent to kill his wife), and others were of the opinion that the prosecution had not established its case beyond reasonable doubt (that is to say, if they had a doubt about intent to kill), then there was a state of disagreement. They might seek to resolve that disagreement by further discussion, which could lead some to change their opinions. But so long as they adhered to those opinions, they would be unable to agree on a verdict on the charge in the indictment. On that hypothesis, some jurors would consider that the appellant was guilty of wilful murder and other jurors would consider that the appellant was guilty of manslaughter. If those were their final opinions, then the outcome would be discharge and, potentially, a new trial; not a verdict of manslaughter, much less a "verdict" of "at least manslaughter". Nothing that was said by Anderson J was inconsistent with the above principles. And, as has been noted, nothing that he said was the subject of complaint by trial counsel. However, three criticisms are now advanced on behalf of the appellant. The third criticism was accepted by all three members of the Full Court, although two (Malcolm CJ and Murray J) applied the proviso. The respondent contends that all three criticisms are without substance, and that the Full Court erred in accepting the third. If that contention succeeds, it will be unnecessary to consider the proviso. The appellant's first criticism is that the effect of the directions given to the jury was to reverse the onus of proof. This is a new point, not raised at trial or in the Full Court. It is based principally, not upon the directions referred to in the Notice of Appeal to the Full Court, but upon the trial judge's reference, in (1991) 172 CLR 353. McHugh Hayne relation to the (purely theoretical) alternative of murder, as distinct from wilful murder, that they "couldn't get to consider the alternative verdict of murder unless [they] were unanimously of the opinion that the crime of wilful murder had not been committed". The use of the word "committed" was erroneous, and the error was not repeated when the judge came to refer to the alternative of manslaughter. There he said: "If you are unanimously of the view that the crime of murder has not been proved, then you can proceed to consider the alternative verdict of manslaughter." (emphasis added) The trial judge, in other parts of his directions, repeatedly and accurately directed the jury on the onus of proof. At the commencement of his summing-up, he told the jury that it was a fundamental rule that, from start to finish, the onus was on the Crown to prove its case beyond reasonable doubt. When he directed the jury on the elements of wilful murder, and manslaughter, he accurately placed the onus of proof of the elements of each offence on the prosecution. The failure of trial counsel to object, and seek a correction or clarification, may be of considerable importance when it is suggested on appeal that something said by a trial judge would have given rise to a misunderstanding, or would have been taken to have a particular meaning. It never occurred to anybody at this trial that the judge was reversing the onus of proof. A reading of the entire summing-up explains why this was so. This point is not of substance. The second criticism is that the directions of the trial judge erroneously removed what counsel described as "the jury's power to return a 'wrong' verdict". The nature of the power, as distinct from the right, in contemplation was discussed by this Court in Gammage v The Queen6. The issue normally arises in cases, unlike the present, where an accused is charged with murder, and the trial judge, having formed the view that there is no evidentiary foundation for an alternative verdict of not guilty of murder but guilty of manslaughter, does not leave manslaughter to the jury. Perhaps as a result of a question asked by the jury, or a submission made by counsel, or for some other reason, an issue may arise as to whether the trial judge has misled the members of the jury as to their powers. In the present case, the trial judge formed the view that a verdict of guilty of manslaughter was open to the jury, and directed them, accurately, as to the basis upon which they might reach such a conclusion. He was not required to do more. He explained to them the elements of the offence of wilful murder, and (1969) 122 CLR 444. McHugh Hayne the elements of the offence of manslaughter, relating the explanation to the evidence in the case. Since no request for a re-direction was made at the trial, it is not clear what it is suggested he should have said by way of further direction. In Gammage7, the trial judge did not leave manslaughter to the jury. Having been asked by trial counsel to mention their power to bring in an alternative verdict of manslaughter, he did so, but promptly went on to tell them why they would not be justified in doing so. His directions were upheld. Here, the trial judge told the jury they would be justified in bringing in a verdict of manslaughter if they took a particular view of the facts. He was not obliged to tell them that they had a power to bring in a verdict of manslaughter even if they took a different, and more serious, view of the facts. The appellant has nothing to complain about in that respect. There was neither "a wrong decision of any question of law" nor "on any ground ... a miscarriage of justice"8. The third criticism is that which, subject to the proviso, was accepted in the Full Court. Owen J saw no error in the direction referred to in ground 1 of the Notice of Appeal to the Full Court. However, he took a different view of the answer given to the jury's question, which was the subject of ground 2, as did the other members of the Full Court. The point of concern was that the answer to the jury's question would have given the jurors to understand that they could not even think about the matter of manslaughter until they had first decided unanimously upon a verdict of not guilty of wilful murder. Owen J considered that the answer dictated to the jury a sequence of deliberation, and impermissibly restricted them in the manner in which they might properly exercise their function. If that were a fair appreciation of the effect of what Anderson J told the jury, then error would be demonstrated. Jurors are free to organize their individual processes of reasoning, or their discussions as a group, in whatever manner appears to them to be convenient. The question is whether Anderson J might reasonably have been understood to convey anything to the contrary, or whether he was merely informing them of the sequence in which, at the point of final decision, they were to deal with the possible verdicts available to them. What he said was: "You can't come to consider the alternative verdicts of murder or manslaughter unless you are unanimously of the view that he is not guilty of wilful murder. So, whatever your verdict is on the first charge of wilful murder, it must be unanimous." (1969) 122 CLR 444 at 460. 8 The Criminal Code (WA), s 689(1). McHugh Hayne A proper appreciation of what Anderson J said requires attention to three matters: the issues as they emerged at the trial; the other directions that the jury had already been given; and the precise question to which he was giving an answer. As to the first, it was common ground in argument in this Court that, ultimately, this was a single issue case. The critical question was whether the jury were satisfied beyond reasonable doubt of the appellant's intent to kill his wife. As a practical matter, if they were so satisfied, they would find wilful murder, and if they were not so satisfied they would find manslaughter. On the evidence, any other verdict was not a realistic possibility. There being, for practical purposes, only one issue, the answer to which (if agreed upon unanimously) would resolve the matter one way or the other, it is difficult to understand how any possibility of sequential reasoning on that issue could have arisen. In whatever order they examined the evidence, and considered the primary facts, when they came to decide whether the case was one of wilful murder or manslaughter, the jury would necessarily do that by reference to the single issue, of intent, on which the outcome depended. As to the second matter, as the extracts from the directions quoted above show, the trial judge had in fact made a suggestion (as he was entitled to do) as to what the jury might find to be a convenient approach to their deliberations. He suggested that they start by considering whether the killing was unlawful in the sense that it was not accidental. If they were not satisfied of that, the verdict would be not guilty. He pointed out that, although it was entirely a matter for them, it was unlikely that they could bring in a verdict of not guilty, for reasons he explained. He then said that whether the guilty verdict was manslaughter or wilful murder depended on the issue of intent. Thus, having suggested that the jury first consider and dispose of the possibility that the killing was not unlawful, the judge said that would bring the jury directly to the issue of intent, and, depending on their view about that issue, the appellant was either guilty of manslaughter or guilty of wilful murder. No exception was taken, either at trial or in this Court, to what the judge there said. It was one of the last things he said to the jury before they retired. This reinforces the point made in the preceding paragraph. As to the third matter, the question asked by the jury concerned the consequences of disagreement. It postulated that the jurors were "in conflict", that some "believed" the appellant was guilty of wilful murder and, by implication, that others believed he was guilty of manslaughter. It asked whether, in that event, those who were in the former group "have to move down McHugh Hayne to the charge of manslaughter". This was clearly a reference back to the judge's direction in which he said: "If you are unanimously of the view that he's not guilty of wilful murder, then you will consider murder ... If you are unanimously of the view that he's not guilty of murder, then you will consider manslaughter". The jurors were responding to that by asking a question as to their responsibilities if some of them were of the view that he was guilty of murder and others were not. They asked whether the former group would then be obliged to "move down". That must have been a reference to the point of final decision; the finding of a verdict. Since the choice between wilful murder and manslaughter turned upon the resolution of the one issue, intent, the question cannot have been directed to a sequence of reasoning, as distinct from the formal act of finding a verdict. It was clearly understood, by the judge and by trial counsel (who agreed with the judge's response), as a question about the formal act of finding a verdict. That was the sense in which he used the word "consider" in the first sentence of his answer, as is further indicated by the terms of the second sentence of the answer. So understood, the answer was consistent with what the judge had earlier told the jury, and it involved no error. The trial judge asked the jury whether he had answered their question and, although the transcript records no verbal response, it is evident that the trial judge considered that the jury agreed that he had done so. The jury's question might have been answered in different ways. The judge thought it too early to give a Black direction, and no complaint is made about that. Trial judges are, understandably, often reluctant to embark upon an exercise of explaining to a jury the consequences of disagreement, which might have its own risks. The judge was right to tell the jury that their verdict on the charge of wilful murder, whether of guilty or not guilty, had to be unanimous. He did not go on to tell them that, if they could not agree on a verdict on the charge of wilful murder, he would discharge them. He might properly have done so, but it was open to him to take the view that he would wait before giving a Black direction. The interpretation that was placed by the Full Court upon Anderson J's answer to the jury's question, upon analysis, was not correct. The respondent's notice of contention should be upheld. This makes it unnecessary to consider whether the Full Court was right to decide by majority that, in any event, there was no miscarriage of justice. In particular, it is unnecessary to consider whether there were such irregularities at the trial that, even without regard to the effect that they may have had on the verdict, there was a substantial miscarriage of justice9. 9 Wilde v The Queen (1988) 164 CLR 365 at 372-373. McHugh Hayne The appeal should be dismissed. Callinan The facts The facts in outline were these. The appellant was alleged to have intentionally unlawfully killed, that is to say, wilfully murdered his estranged wife on 11 March 1999. He admitted these matters at his trial: the identity of the deceased, the date and place of her death, and that she died as a result of the discharge of a shotgun held by him. The appellant went to his estranged wife's house in Lake Clifton near Mandurah, Western Australia on 11 March 1999. He took with him a shotgun, and, according to him, four or five shells. There was however other evidence that the appellant had armed himself with 20 shells of an especially lethal kind. The other relevant facts are set out in the joint judgment. The appellant gave evidence. He denied that he intended to kill or harm his wife, but maintained that he took the gun only to frighten her. He gave these answers in cross-examination: "You were contemplating discharging that gun, weren't you? --- Not really. I thought that if it came to a thing I could discharge it in the roof to frighten Marie Ann. That was all. I see. You have told the ladies and gentlemen of the jury that you haven't used violence prior to then but you were going to discharge a loaded shotgun into the roof. Is that so? --- That's not violence. Sorry? --- That's not violence. For what purpose - - - ? --- To frighten her. That's all. Just let me - to frighten her; to frighten her. Just on that, to frighten her for what? --- To make her see some sense and negotiate. To see some sense about what? --- To negotiate. To negotiate. Is it your case, Mr Stanton, that you were going to conduct a negotiation at gunpoint? --- That wasn't at gunpoint. Were you going to make your wife an offer she couldn't refuse? --- No. I was - - - Is that so - - - ? --- I was there to negotiate with her." Callinan The appellant did not deny that he pulled the trigger on the gun and caused it to discharge. His evidence was: "When she was just there where were you? --- I was coming through the doorway - it's not - to the breakfast room. What happened then? - - - I said - then I spoke. I said, 'Marie Ann, we have to talk' or something like that, 'I want to talk to you' - I can't remember exactly what I said now, but something in those lines. What happened then? - - - Well, she was facing away from me. With that, she swung around. I was sort of still moving towards her. She swung around and growled at me. I don't know why. What was the word you used, growled? - - - Growled, aah aah, something like that, and at the same time she raised her hands - I don't know how - I just said on the video she raised her hands like that, but I just indicate that she raised her hands somehow. I stepped back because she came towards me. I recoiled and the gun went off. How did the gun go off? - - - Well, I must have pressed the trigger. It's the only way I could make it go off. Why did you press the trigger? - - - I don't know; didn't think. It happened so quickly. I didn't even realise it was cocked. I can't even recall it. Let me be more precise and go back for a moment. You said to me, 'I must have pressed the trigger.' Did you press the trigger? - - - I can't - it happened so quickly I can't - it wasn't a conscious effort. I can't recall it. What happened then? - - - Well, Marie Ann slumped. I saw that and I immediately left. I was only holding it lightly. Eventually I found I had a very deep gash in my webbing of my right hand." The trial In the Supreme Court of Western Australia, the trial judge (Anderson J) left verdicts of wilful murder, murder, manslaughter and not guilty to the jury. It was accepted by the appellant however that realistically the likely alternatives were wilful murder or manslaughter. And because the charge was wilful murder a unanimous verdict was required pursuant to s 41 of the Juries Act 1957 (WA) (the "Juries Act"). There is no challenge to his Honour's directions to the jury with respect to the elements of the offences. In the course of his summing up his Honour gave these six directions: Callinan "Unless you can all agree unanimously and beyond reasonable doubt that this man's intent was an intent to kill, you cannot find him guilty of wilful murder." Later he said this ("the second direction"): "As to murder, you couldn't get to consider the alternative verdict of murder unless you were unanimously of the opinion that the crime of wilful murder had not been committed. You must unanimously come to that conclusion before you move to consider whether the alternative crime of murder has been proved. As to murder, there must of course be a killing by one person of another and the killing must be unlawful, and I have told you about unlawfulness." (emphasis added) A third direction was given in these terms: "If you are unanimously of the view that the crime of murder has not been proved, then you can proceed to consider the alternative verdict of manslaughter." (emphasis added) This further direction was subsequently given: "You first consider wilful murder and if you're unanimously of the view that the accused is guilty of wilful murder, that will be your verdict. If you are unanimously of the view that he's not guilty of wilful murder, then you proceed to consider whether you find him guilty of murder. If you are unanimously of the view that he is guilty of murder, then that will be your verdict." His Honour continued with a like direction with respect to the alternative verdicts of murder and manslaughter. He added this, the fifth direction: "I suggest you start your deliberations by considering whether the killing was unlawful in the sense of whether it was not accidental. Unless you're satisfied of that; that is, unless you're satisfied to the required degree that the shooting was not accidental, then the verdict must be not guilty and that will be that. It's entirely for you, of course, but the circumstances are such that I think you will hardly bring in a verdict of not guilty in this case. I don't think you will have any difficulty in concluding that ... pointing a loaded and cocked shotgun at the chest of another with your finger on the trigger is, at the very least, such a grossly negligent act as to rule out accident. If you decide that the killing was unlawful in the sense that it was not an accident, then the verdict must be at least manslaughter. If intent to Callinan kill is proved, the verdict must be wilful murder. If intent to do grievous bodily harm is proved, the verdict must be guilty of murder." His Honour later told the jury this: "When you are ready to deliver your verdict you will be asked first whether you find the accused guilty or not guilty as charged and whatever that verdict is, whether guilty or not guilty, it must be unanimous. If the verdict is not guilty as charged then you will be asked whether the verdict - whether you find the accused guilty or not guilty of murder and so on. On each announcement of your verdict you will be asked whether it is the verdict of you all. They are all the matters that I wish to mention to you." After the jury had been deliberating for about four hours, the foreperson asked this question: "If the jury is in conflict, do those who believe he is guilty of wilful murder have to move down to the charge of manslaughter? Do 12 people have to agree to move down to manslaughter?" The trial judge answered as follows: "Yes, the law is quite clear. You can't come to consider the alternative verdicts of murder or manslaughter unless you are unanimously of the view that he is not guilty of wilful murder. So, whatever your verdict is on the first charge of wilful murder, it must be unanimous." No objection to his Honour's directions or to his answer to the question was taken by the appellant at the trial. The appellant was convicted of wilful murder. The appeal to the Court of Criminal Appeal The appellant appealed to the Court of Criminal Appeal (Malcolm CJ, Murray and Owen JJ)10. Their Honours held that the answer given to the jury's question involved an error of law. Malcolm CJ and Murray J also concluded that the second and third directions set out above were erroneous, but Owen J disagreed11. Finally, Malcolm CJ and Murray J concluded that the proviso to 10 (2001) 24 WAR 233. 11 (2001) 24 WAR 233 at 251. Callinan s 689(1) of The Criminal Code (WA) ("the Code") applied on the basis that no substantial miscarriage of justice had occurred. Owen J was of a different mind and would have allowed the appeal and ordered a new trial. The appeal to this Court The appellant makes three submissions in this Court: the first is that the directions effectively reversed the onus of proof, and further that they thereby deprived the jury of their power to return, in effect a "merciful" verdict.12 The error which this submission identifies we refer to later as the third error. Secondly, the jury were erroneously told that they were under a legal obligation to consider the offences in a particular order. Thirdly, and during the course of argument the appellant took the further point that the directions impermissibly deprived members of the jury of their right to disagree. The appellant also submits that if any of these submissions is made out, the proviso should not be applied. Before dealing with the appellant's submissions it is necessary to set out the provisions of the Code and of the Juries Act which are relevant to this case. Sections 277-280 of the Code provide as follows: "277 Unlawful homicide Any person who unlawfully kills another is guilty of a crime which, according to the circumstances of the case, may be wilful murder, murder, manslaughter, or infanticide. 'Wilful murder', definition of Except as hereinafter set forth, a person who unlawfully kills another, intending to cause his death or that of some other person, is guilty of wilful murder. 'Murder', definition of Except as hereinafter set forth, a person who unlawfully kills another under any of the following circumstances, that is to say - If the offender intends to do to the person killed or to some other person some grievous bodily harm; 12 See Gilbert v The Queen (2000) 201 CLR 414; MacKenzie v The Queen (1996) 190 CLR 348; and Gammage v The Queen (1969) 122 CLR 444. Callinan If death is caused by means of an act done in the prosecution of an unlawful purpose, which act is of such a nature as to be likely to endanger human life; If the offender intends to do grievous bodily harm to some person for the purpose of facilitating the commission of a crime which is such that the offender may be arrested without warrant, or for the purpose of facilitating the flight of an offender who has committed or attempted to commit any such crime; If death is caused by administering any stupefying or overpowering thing for either of the purposes last aforesaid; If death is caused by wilfully stopping the breath of any person for either of such purposes; is guilty of murder. In the first case it is immaterial that the offender did not intend to hurt the particular person who is killed. In the second case it is immaterial that the offender did not intend to hurt any person. In the 3 last cases it is immaterial that the offender did not intend to cause death or did not know that death was likely to result. 280 'Manslaughter', definition of A person who unlawfully kills another under such circumstances as is guilty of not manslaughter." to constitute wilful murder or murder Section 595 of the Code is as follows: "Wilful murder, murder, etc; alternative verdicts Upon an indictment charging a person with the crime of wilful murder, murder, manslaughter or infanticide, the person charged may be convicted of an offence mentioned opposite that crime in the Table if that offence is established by the evidence. Callinan Wilful murder Murder Manslaughter Infanticide Table Murder, manslaughter, infanticide or an offence under section 283, 290, or 291 of this Code or section 59 of the Road Traffic Act 1974. Manslaughter, infanticide or an offence under section 290 or 291 of this Code or section 59 of the Road Traffic Act 1974. An offence under section 290 or 291 of this Code or section 59 of the Road Traffic Act 1974. An offence under section 283, 290, or 291 of this Code." The proviso is found in s 689 (1) of the Code: "Determination of appeals in ordinary cases The Court of Criminal Appeal on any such appeal against conviction shall allow the appeal, if they think that the verdict of the jury should be set aside on the ground that it is unreasonable or cannot be supported having regard to the evidence, or that the judgment of the court before whom the appellant was convicted should be set aside on the ground of a wrong decision of any question of law or that on any ground there was a miscarriage of justice, and in any other case shall dismiss the appeal: Provided that the Court may, notwithstanding that they are of opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if they consider that no substantial miscarriage of justice has actually occurred." Reference to s 41 of the Juries Act is also necessary: "Number of jurors required to agree on verdict in criminal trials Where a jury in a criminal trial, not being a trial for an offence punishable with strict security life imprisonment or for the offence of murder, has Callinan retired to consider its verdict and remained in deliberation for at least 3 hours and has not then arrived at a unanimous verdict, the decision of not less than 10 of the jurors shall be taken as the verdict; and if after the jury has deliberated for 3 hours 10 or more of the jurors have not agreed upon their verdict the jury may be discharged from giving a verdict unless in the opinion of the Judge or Chairman it is desirable that the jury should deliberate further, and he so directs." In R v Saunders13 Lord Ackner referred to a passage in R v Salisbury14 which explained the historical basis for the distinction between murder and other unlawful killings15: "The crime of murder has always been in a special category. As long ago as R v Salisbury juries have been entitled to return verdicts of manslaughter on indictments charging murder16: 'when he was arraigned for killing a man upon malice prepense, the substance of the matter was, whether he killed him or not, and the malice prepense is but matter of form or the circumstance of killing. And although the malice prepense makes the fact more odious, and for this cause the offender shall lose divers advantages, which he should otherwise have, as sanctuary, clergy, and the like, yet it is nothing more than the manner of the fact, and not the substance of the fact, for the substance of the fact is the killing him, and then when the substance of the fact and the manner of the fact are put in issue together, if the jurors find the substance and not the manner, yet judgment shall be given according to the substance.'" The question which arose in Saunders was whether, in a murder trial the jury might be informed that they could return a verdict of manslaughter if they were agreed on it, and that if they were, the trial judge could and would then discharge them from returning a verdict on the count of murder. Neither party to this appeal suggests that the course which the trial judge there followed, and which was disapproved by the House of Lords should have been followed here. It is accepted that the prosecution is entitled to, and the jury is bound to return, a verdict on the principal count on the indictment, and for it to be taken first. 15 [1988] AC 148 at 160. 16 (1553) 1 Pl 97 at 101 per Bromley CJ KB. Callinan The powers of juries are however ample ones. They are as ample in those criminal jurisdictions that are governed by the Code as they are in jurisdictions in which the common law applies. As Dixon J said in Packett v The King17: "If the judge presiding at the trial of an indictment of murder is of opinion that the evidence discloses no matter capable of forming provocation, or that the matter alleged by the prisoner as provocation is not capable of doing so, it is, of course, proper for him to direct the jury to that effect. But, under the code as at common law, it remains within the power of the jury to find a verdict of manslaughter, even although it means disregarding the direction. To tell the jury that they have not such a power is to state what is not correct in law and a prisoner is entitled to complain in a Court of Criminal Appeal of such a direction. There is all the difference between such a direction and a direction that the evidence given upon a trial for murder does not support a verdict of manslaughter. If a judge is of opinion that because such a verdict implies findings of fact that are not reasonably open the jury ought not to return it, he may so direct them without necessarily usurping the functions of the jury, and, if his opinion is correct in law, the verdict may stand. Lawyers have no difficulty in apprehending the distinction between, on the one hand, the impropriety of finding without evidence facts amounting to manslaughter, and, on the other hand, the existence of a right to return a verdict of manslaughter although it be a wrong verdict. But it is easy to believe that a jury would not make the distinction and would treat a direction that they ought not to find manslaughter as meaning that they had not power to do so, unless it was very clearly expressed. Yet the jury must not be led to understand that to find a verdict of manslaughter is actually beyond their power. Further, upon the question whether a finding of manslaughter on the ground of provocation would in a given case be unreasonable, the ruling of the House of Lords in Woolmington's Case18 has, of course, an important bearing. For it may be open to entertain a reasonable doubt of provocation although it would be unreasonable to find affirmatively that provocation existed and was sufficient. These are all considerations showing the need of caution before a judge undertakes to direct a jury against finding manslaughter." The directions to which the appellant now takes exception, being the second, third and fifth of the directions that have been quoted, and his Honour's 17 (1937) 58 CLR 190 at 213-214. Callinan answer to the jury's question, were, in our opinion capable of misleading the jury. Before saying why this is so we should refer to Black v The Queen19 in which this Court stated a model form of direction that may be given when a jury is having difficulty in reaching agreement on its verdicts. The first paragraph is sufficient to convey the flavour of it20: "Members of the jury, I have been told that you have not been able to reach a verdict so far. I have the power to discharge you from giving a verdict but I should only do so if I am satisfied that there is no likelihood of genuine agreement being reached after further deliberation. Judges are usually reluctant to discharge a jury because experience has shown that juries can often agree if given more time to consider and discuss the issues. But if, after calmly considering the evidence and listening to the opinions of other jurors, you cannot honestly agree with the conclusions of other jurors, you must give effect to your own view of the evidence." In this case the jury had been deliberating for four hours. No one now suggests that his Honour was remiss in not giving a direction of the kind referred to in Black. His Honour was not however entitled to lead the jury to believe that they were not permitted to do what the question suggested they were inclined to do, and were in substance asking whether they could do: "Not having for the present been able to reach agreement on the count of wilful murder, may we, the jury consider, explore, whether there is agreement on manslaughter?" A responsive and better answer to the jury's question than the one his Honour gave would have been to this effect: "You may consider the possible verdicts in whatever order you wish. You must keep in mind however that when you have finished your deliberations you will be required to give your verdict first on the count of wilful murder. It will be only if you reach a verdict of not guilty of wilful murder that you will be asked to return another or other verdicts." The fact that the trial judge might understandably have been reluctant to say anything that might be construed as an invitation to the jury to disagree, or to reach a compromise verdict, does not provide a sufficient basis for the erroneous 19 (1993) 179 CLR 44. 20 (1993) 179 CLR 44 at 51 per Mason CJ, Brennan, Dawson and McHugh JJ. Callinan direction as to the order of consideration of the verdicts. The answer to the question and the directions complained of effectively denied the jury their right to disagree, and their right to consider (but not of course to return) their verdicts in whatever order they choose. The error in the directions was compounded by the use of the word "committed" when "proved" should have been used in the second direction. The respondent accepted that a not improper approach by the jury to their task might have been to consider the lesser counts first, or, after it was apparent to the jury that there might be disagreement as to the most, or more serious of them, and to which they could and should return if they were agreed that the least, or less serious of the counts had certainly been made out. The directions and the answer to the question failed to make the necessary distinction between the jury's freedom to "consider" their verdicts in whatever order they choose, and their obligation to return verdicts in descending order of seriousness if they were not satisfied of the appellant's guilt on the most or more serious of the counts. The third error, the subject of the appellant's first submission, was the expression in the fourth direction of the jury's obligation, as an obligation to consider murder and manslaughter only if the jury were "unanimously of the view that he's not guilty of wilful murder ...", and the similar direction in respect of murder and manslaughter. To put the matter in the negative terms that his Honour did was to suggest that the jury's duty was different from what in law it truly was. The jury could only convict if the prosecution had proved the elements of the respective charges beyond reasonable doubt. It is true that elsewhere the trial judge did emphasize the prosecution's obligations in this regard. But in our judgment even that emphasis was insufficient to cure the erroneous directions which might well have had a tendency to lead the jury to believe that their task was to ascertain unanimously whether the appellant had discharged what was, in effect an onus on him, of establishing that he was not guilty. Owen J in the Court of Criminal Appeal was of the opinion that the one error only that he identified required that there be a retrial. The three errors which we are satisfied were made could well have had a cumulative effect upon the jury's deliberations. In those circumstances there have been "irregularit[ies] ... depart[ing] from the essential requirements of the law ... [going] to the root of the proceedings"21. The cumulation of the errors, despite the strength of the prosecution case, means that the appellant might have been denied a chance of a lesser verdict. Our concern that such a chance might have been lost is confirmed to some extent by the information given to the Court, without objection, and 21 Wilde v The Queen (1988) 164 CLR 365 at 372-373 per Brennan, Dawson and Callinan therefore to which we may have regard, that a jury in an earlier trial of the appellant on the same count had been unable to agree. We would allow the appeal, quash the verdict and order that there be a retrial.

HIGH COURT OF AUSTRALIA AND APPELLANT STATE OF NEW SOUTH WALES & ANOR RESPONDENTS A v State of New South Wales [2007] HCA 10 21 March 2007 ORDER Appeal allowed in part; Vary paragraph 1 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 2 September 2005 by adding the words "with costs" after "dismissed"; Set aside paragraphs 2 to 7 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 2 September 2005 and, in their place, order that the cross-appeal be dismissed with costs; and The respondents to pay the appellant's costs of the appeal to this Court. On appeal from the Supreme Court of New South Wales Representation D F Jackson QC with A P Stenmark SC and J C Sheller for the appellant (instructed by Greg Walsh & Co) M G Sexton SC, Solicitor-General for the State of New South Wales with P J Saidi and J C Chapman for the first and second respondents (instructed by Crown Solicitor for New South Wales) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS A v State of New South Wales Torts – Malicious prosecution – Whether prosecutor acted without reasonable and probable cause – Public rather than private prosecution – Applicant acquitted of offence charged – Prosecutor had no personal knowledge of the facts underlying the charge – Whether prosecutor did not honestly form the view that there was a proper case for prosecution or whether the prosecutor formed that view on an insufficient basis. Torts – Malicious prosecution – Whether prosecutor acted maliciously – Whether the sole or dominant purpose of the prosecutor was other than the proper invocation of the criminal law. Words and phrases – "malicious prosecution", "malice", "absence of reasonable and probable cause". GLEESON CJ, GUMMOW, KIRBY, HAYNE, HEYDON AND CRENNAN JJ. This appeal raises issues concerning two of the four elements of the tort of malicious prosecution. For a plaintiff to succeed in an action for damages for malicious prosecution the plaintiff must establish: that proceedings of the kind to which the tort applies (generally, as in this case, criminal proceedings) were initiated against the plaintiff by the defendant; that the proceedings terminated in favour of the plaintiff; that the defendant, in initiating or maintaining the proceedings acted maliciously; and that the defendant acted without reasonable and probable cause1. At a jury trial, the third of those issues is for the jury; the fourth is for the judge, although it may be necessary for the judge to obtain the decision of the jury upon a disputed matter of fact relevant to the issue. Many of the decided cases have involved argument as to the circumstances in which it is proper to invite a decision of a jury upon a question relevant to the fourth issue, or as to the form of question appropriate to the circumstances of the case. In this case the action was tried by a judge sitting without a jury. There is no dispute as to the legal nature of the third element: malice is a broader concept than ill-will or spite, and means an improper purpose. In this appeal, there is an issue of fact concerning malice. There are issues of law and fact concerning the absence of reasonable and probable cause. The case arises out of a public, not a private, prosecution brought against the appellant, A. Detective Constable John Floros (the second respondent) is a police officer. He is alleged to have committed the tort. At the time he was a member of the New South Wales Police Service. The first respondent, the State of New South Wales, was sued on the basis that it was vicariously responsible for his wrongdoing. If the second respondent is found liable, the State's vicarious liability is not in dispute. Some of the leading judicial statements concerning the fourth of the above elements and, in particular, the significance of a prosecutor's state of belief, were made at a time when prosecutions were largely in private hands, and in a context where a prosecutor had personal knowledge of the facts 1 Bullen & Leake, Precedents of Pleadings, 3rd ed (1868) at 350-356. Kirby Hayne Crennan alleged. As Viscount Simonds pointed out in Glinski v McIver2, different factual considerations arise "where in the administration of criminal justice the information is laid by a particular police officer who is in charge of the prosecution and responsible if it is held to be malicious, but it is, as a matter of police organisation, obvious that he must act upon the advice and often upon the instruction of his superior officers and the legal department", and, it may be added, where the prosecutor is acting upon information given to him by a member of the public. In that context, the concept of "belief", as a fact relevant to the question whether a defendant had reasonable and probable cause to institute a prosecution, bears a different aspect. The prosecution On 9 March 2001, the appellant was arrested, and charged with two offences of homosexual intercourse contrary to s 78H of the Crimes Act 1900 (NSW). The first charge alleged homosexual intercourse with the appellant's stepson D (then aged eight) between 8 May and 31 December 1997. The second charge alleged homosexual intercourse with the appellant's stepson C (then aged nine) between 1 and 11 October 2000. The charge sheet in each case identified the second respondent as the informant3. The offences alleged were indictable offences. The hearing of committal proceedings commenced at the Children's Court at Campbelltown on 23 August 2001. By that time, the Director of Public Prosecutions had taken over the conduct of the prosecutions. This was done on 6 April 2001, pursuant to ss 9 and 10 of the Director of Public Prosecutions Act 1986 (NSW). On 23 August 2001, each of D and C testified that the appellant had engaged in an act of anal intercourse with him. The proceedings were part heard on that day. They continued on 28 August. On 28 August, in the course of cross-examination, C admitted that his evidence in chief was false, and that he had told lies to help his brother. The magistrate, with the concurrence of the representative of the Director of Public Prosecutions, discharged the appellant on [1962] AC 726 at 744. 3 For a description of procedures of committal and indictment in relation to indictable offences in New South Wales see R v Butler (1991) 24 NSWLR 66. See also Justices Act 1902 (NSW) (since repealed) ss 21, 22, 22A. Kirby Hayne Crennan the charge concerning C, stating that he was of the opinion "that a jury would [not] be likely to convict on the evidence"4. The case was then adjourned to 31 August 2001. On that day D completed his evidence. The magistrate, after hearing argument, concluded "that there [was] no reasonable prospect that [a] jury could convict the [appellant]". The appellant was discharged. The appellant then commenced these proceedings. He sued for malicious prosecution, unlawful arrest, unlawful imprisonment and abuse of process. The action was commenced in the District Court of New South Wales and was heard by Cooper DCJ. The judge held that the evidence did not establish a case of unlawful arrest, unlawful imprisonment or abuse of process. The claim for damages for malicious prosecution was partly successful. Before examining the reasons of Cooper DCJ, it is necessary to refer to the material that was before the second respondent when he charged the appellant. It consisted principally of allegations made by D and C about conduct said to have occurred in private between them and the appellant, and the appellant's response to those allegations. The complaints The appellant, a civilian employee of the Police Service, married S on 8 May 1997. At the time, S had three children from a previous marriage, including D and C. According to S, D disliked and resented the appellant to the point of hatred. In January 2000, D made a vague complaint to S which could have suggested sexual misconduct by the appellant towards D. Later, D told S that C had been sexually assaulted by the appellant. C confirmed this, but later denied it. The second respondent was a member of a Joint Investigation Team within the Child Protection Enforcement Agency. The team comprised officers of the Department of Community Services and the Police Service. Cooper DCJ was critical of some aspects of the methods of investigation employed by the team where, he said, "fairness gave way to zealotry". In July 2000, the team 4 As to the decisions to be made by a magistrate on committal proceedings, see Justices Act 1902 (NSW) s 41 (since repealed: see now Criminal Procedure Act 1986 (NSW) Ch 3, Pt 2, Divs 2 and 3). Kirby Hayne Crennan received a complaint about the conduct of the appellant towards D and C. There was no evidence as to who made the complaint, or as to its details. On 13 October 2000, District Officer Krkach conducted an interview of D, then aged 11. During that interview, after prolonged questioning, D made an allegation of anal rape. On the same day, District Officer Krkach interviewed C, then aged nine. The second respondent monitored the interview. More than 800 questions were asked. C denied that he had been a victim of any sexual assault. That day the boys were placed in foster care. On 18 October 2000, the second respondent interviewed C again. This time, C alleged that he had been anally raped by the appellant on several occasions, the most recent being on or about 11 October 2000. On 19 October 2000, D was interviewed by the second respondent and Constable Campbell. D asserted a single act of sexual assault about one month after the appellant and S were married. On 30 October 2000, the second respondent and Constable Campbell interviewed S. She said she did not believe the allegations being made by D and C. On 8 February 2001, there was a third interview of C, at which the second respondent was not present. On this occasion at one point, C affirmed that he had been anally raped by the appellant but later asserted an act of oral sex. He said that "some things happened but mostly it didn't happen". He did not clarify what it was that he said did not happen. The interviews with D and C were recorded on videotape. In January 2001, there were proceedings in the Children's Court concerning the care of the children. On about 23 January 2001, the second respondent was informed that the Children's Court had found on the balance of probabilities that D and C had been sexually abused. The evidence in these proceedings does not disclose the nature of the material before the Children's Court, but Cooper DCJ referred in his reasons for judgment to a report of a psychologist appointed by the Department of Community Services, dated 16 December 2000. The judge criticised the report, which he regarded as unfair and as based on inadequate information. The second respondent was given the task of reviewing all the material obtained in the interviews. He was on leave from early December 2000 until about 4 January 2001. Before he went on leave he asked for this case to be re- allocated. When he returned from leave, he found that had not happened. He was given permission to work overtime to read all the material. He had other pressing commitments as well. The second respondent gave evidence that during January 2001 he received a number of phone calls from the Child Protection Enforcement Agency inquiring about the status of the investigations. He was asked why the investigation was taking so long. At the time, his wife was very Kirby Hayne Crennan ill, and he had a heavy workload. As has been noted, it was on 8 February 2001 that a third interview with C was conducted. At the trial much importance was attached to statements later made by the second respondent to the appellant's solicitor to the effect that he felt he was under pressure to charge the appellant because the appellant was an employee of the Police Service. Evidence of those statements was critical to the decision of Cooper DCJ. The Court of Appeal took a somewhat different view of the evidence. On 9 March 2001, the second respondent interviewed the appellant. The appellant denied the allegations of sexual assault. After the interview, the second respondent charged the appellant. It appears that an arrest was effected without warrant, and that accordingly there was no sworn information, the charges being recorded on charge sheets, in accordance with ss 22 and 22A of the Justices Act 1902 (NSW). Statements by the second respondent to the appellant's solicitor On 6 July 2001, after the prosecution had been taken over by the Director of Public Prosecutions, the second respondent telephoned the appellant's solicitor, Mr Walsh. The second respondent said that he had been away on leave and on his return he had seen a communication from Mr Walsh asking to see the video recordings of the interviews with D and C. Mr Walsh said that he had already seen them. The second respondent then went on to make some comments about the case. He said he had advised the appellant to apply to have the complainants cross-examined at the committal hearing. He said that he felt sorry for the appellant and that he (the second respondent) had been under pressure to charge the appellant because the appellant was employed by the Police Service. He said that he had been advised by people above him to the following effect: "Look, if you had a prime facie case, you've got to leave it up to the court". A second conversation took place on 28 August 2001, at the committal proceedings, during an adjournment after C had admitted he had lied in his evidence in chief. The second respondent referred to the earlier telephone conversation. He repeated that he had felt he was under pressure to charge the appellant because the appellant was an employee of the Police Service, and said that if it had been up to him he would not have charged the appellant. Mr Walsh said that his client had been through an ordeal, and that the evidence of D and C was unreliable. The second respondent said: "I agree but what could I do, they told me in town I should have done this or I should have done that but what could I do?" Kirby Hayne Crennan In commenting on the above evidence, and in particular on the evidence of what was said about a prima facie case, Cooper DCJ said: "It needs to be noted that it is not enough that there be a prima facie case in the sense of information which, if accepted, would establish the elements of the criminal charge. In addition the person laying the charge must have the belief based upon reasonable grounds that the allegations are probably true." The soundness in law of that proposition was contested in the Court of Appeal, but what is of immediate importance is the way it was reflected in the judge's findings of fact. The decision of the primary judge Cooper DCJ dismissed the appellant's action insofar as it related to the charge concerning D, but found in favour of the appellant in relation to the charge concerning C. Because the Director of Public Prosecutions took over the proceedings on 6 April 2001, the judge held that the appellant was entitled to damages to compensate him for the consequences of the laying of the charge involving C on 9 March 2001 and the maintenance of the prosecution up to 16 May 2001, which was regarded as allowing for a reasonable period for the Director to consider his position after taking over the proceedings. The judge assessed compensatory damages at $20,000 and increased this sum to $25,000 by way of aggravated compensatory damages. He awarded exemplary damages in an amount of $5,000. After an amount for pre-judgment interest was added, there was judgment for the appellant, against the first and second respondents, for $31,250. In his reasons, Cooper DCJ dealt first with the issue of malice. Relying principally upon inferences he drew from the statements made by the second respondent to Mr Walsh, he said: "For reasons previously given it is beyond doubt that there were a number of pressures both family and professional upon Detective Constable Floros. It is also beyond doubt that [this] investigation was alone among the many he was then conducting in respect of which he was receiving repeated phone calls. Evidence was adduced by Counsel for the State that this investigation was being monitored by officers of the Child Protection Enforcement Agency because it had been reported to them by reason of the plaintiff's employment by the Police Service. Kirby Hayne Crennan The plaintiff has comfortably satisfied me on the balance of probabilities that Detective Constable Floros laid both charges against the plaintiff not for the purpose of bringing a wrongdoer to justice, but for the improper purpose of succumbing to the pressure from officers of the Child Protection Enforcement Agency to charge the plaintiff because he worked for the Police Service. Accordingly, the plaintiff has satisfied me that Detective Constable Floros acted maliciously." That finding was reversed by the Court of Appeal. The finding related to both charges. The second respondent denied the conversations, but Cooper DCJ accepted the evidence of Mr Walsh, which was supported by file notes. The statements made by the second respondent to Mr Walsh were treated by the judge as relating to the charges concerning both D and C. That interpretation was not inevitable, but it was open. In the conduct of the trial, there does not appear to have been any suggestion that what was said applied only to the charge concerning C. In dealing with the issue of malice, Cooper DCJ repeated what he had earlier said in his general review of the law concerning malicious prosecution, that is to say, that it is not enough that there be a prima facie case in the sense of information which, if accepted, would establish the elements of the charge, and that the person laying the charge must have the belief, based upon reasonable grounds, that the allegations are probably true. On the issue of reasonable and probable cause, Cooper DCJ found in favour of the second respondent in relation to the charge concerning D, and in favour of the appellant in relation to the charge concerning C. As to the charge concerning D, the judge said: "[T]he prosecutor does not have to believe that a court will find the person charged guilty, merely that he believes [sic] that on the probabilities upon reasonable grounds, that the person committed the offence charged. The plaintiff has failed to satisfy the court on the balance of probabilities that Detective Constable Floros did not have reasonable grounds for believing and that he did not in fact believe that the plaintiff had committed the offence upon [D] notwithstanding the countervailing evidence. In short I am satisfied on the balance of probabilities that it was a proper case to bring to court." The reference to "the countervailing evidence" was a reference to matters of circumstantial detail which were argued to be inconsistent with D's Kirby Hayne Crennan allegations. The proposition that a prosecutor "has to believe", on reasonable grounds, that the allegations are probably true, that is to say, that, on the probabilities, the accused committed the offences charged, was a recurring theme in the learned judge's reasons. As to the charge concerning C, the judge said: "I can well appreciate that Detective Constable Floros had great difficulty in determining what he should do in relation to [C's] allegation. And it is in this context that what he called 'pressure' becomes significant. On the balance of probabilities I am satisfied that Detective Constable Floros succumbed to the pressure from senior officers in the Child Protection Enforcement Agency to charge the plaintiff because he was employed by the Police Service. In relation to the charge involving [C] the totality of the evidence satisfies me on the balance of probabilities that Detective Constable Floros did not believe that the plaintiff had committed the offence, or alternatively, that if he did believe it, then such belief was not based upon reasonable grounds." There was argument as to what it was that Cooper DCJ found concerning the second respondent's belief. Literally, the finding is expressed in the alternative. The words "if he did believe it" (that the appellant had committed the offence) could be understood to negate a finding that he did not believe it. If the judge meant that the second respondent did not believe that the appellant had committed the offence and, in addition, that he did not have reasonable grounds for any such belief, then the findings were cumulative, not alternative, and the expression "if he did believe it" was at least a slip. The appellant contends, and the respondents dispute, that Cooper DCJ made a finding that the second respondent did not believe that the appellant had committed the offence against C, and an additional finding that there were no reasonable grounds for believing that the second respondent had committed the offence. The decision of the Court of Appeal The Court of Appeal dismissed an appeal by the appellant against the trial judge's decision concerning the charge in relation to D, allowed a cross-appeal by the first and second respondents against the decision concerning the charge in relation to C, set aside the judgment of Cooper DCJ and entered judgment in the Kirby Hayne Crennan action for the respondents5. The principal judgment was that of Beazley JA, with whom Mason P and Pearlman AJA agreed. The appeal was by way of re-hearing. No challenge was made to the trial judge's views of the credibility of the witnesses. He had accepted the evidence of Mr Walsh as to his conversations with the second respondent, and that evidence was accepted in the Court of Appeal. The second respondent had given evidence about his state of mind when laying the charges, including evidence that he made an independent assessment of the evidence and that he was not merely responding to pressure to charge the appellant because he was an employee of the Police Service and, inferentially, because it was seen as important that an employee of the Police Service should not be given special or favourable treatment. The general tenor of the second respondent's evidence was that he was told that he had to lay charges if he thought that there was a prima facie case, and he thought there was a prima facie case. That, it was argued, was the only sense in which he was responding to pressure. Beazley JA reviewed all of the evidence, including the material which showed the strengths and weaknesses of the case against the appellant at the time of the laying of the charges. The trial judge's conclusions on the issues of reasonable and probable cause, and malice, in a number of respects reflected his view of the nature of the belief a prosecutor should entertain in order to justify the laying of a charge. (Putting it that way ignores questions of onus of proof, but it sufficiently indicates the point of present relevance.) Beazley JA considered that this was a topic upon which there were conflicting authorities, that the trial judge had followed the wrong line of authority, and that his erroneous views were of pervasive influence in his reasoning. The suggested conflict of authority was found in statements of principle by Jordan CJ, giving the judgment of the Court, in Mitchell v John Heine & Son Ltd6, on the one hand, and by Dixon J in Sharp v Biggs7 and Commonwealth Life 5 A v State of New South Wales [2005] NSWCA 292, reported in part at (2005) 63 NSWLR 681. (1938) 38 SR (NSW) 466. (1932) 48 CLR 81. Kirby Hayne Crennan Assurance Society Ltd v Brain8, on the other. In brief, Beazley JA considered that, according to Jordan CJ, the question was whether a prosecutor believed that the accused is probably guilty, whereas according to Dixon J it was enough, to defeat a claim of absence of reasonable and probable cause, that a prosecutor believed that the probability of the accused's guilt was such that upon general grounds of justice a charge was warranted. This problem of the nature of the belief that is required (in the sense that absence of such a belief, if proved by a plaintiff, will show absence of reasonable and probable cause), and of the caution that must be exercised in applying judicial statements of principle without regard to their context, was a matter to which Cooper DCJ referred. Early in his judgment, he quoted the well-known passage in the judgment of Jordan CJ in Mitchell v John Heine in which it was said, among other things, that the prosecutor must believe that the accused is probably guilty, and that the information on which the prosecutor acts, whether it consisted of things observed by the prosecutor himself, or things told to him by others, must be believed by him to be true9. Immediately thereafter, however, the trial judge quoted passages from the speeches of Lord Denning and Lord Devlin in Glinski v McIver10. In the first of those passages, Lord Denning said that the word "guilty" is apt to be misleading and that a prosecutor has only to be satisfied that there is a proper case to lay before the court. In the second of the passages quoted by the trial judge, Lord Devlin cited with approval the statement by Dixon J in Commonwealth Life Assurance Society v Brain11 that what is required is belief that the probability of the accused's guilt is such that upon general grounds of justice a charge against him is warranted. Beazley JA said that Dixon J's statement was correct and ought to be regarded as authoritative. She then went on to analyse the evidence, and make findings of fact, in that light. In one important respect, Beazley JA's evaluation of some evidence differed from that of Cooper DCJ. It concerned the inferences (1935) 53 CLR 343. 9 Mitchell v John Heine & Son Ltd (1938) 38 SR (NSW) 466 at 469. 10 [1962] AC 726 at 758 and 767. 11 (1935) 53 CLR 343. Kirby Hayne Crennan to be drawn from the evidence of Mr Walsh about his conversations with the second respondent, and, in particular, the nature of the pressure to which the second respondent had said he was subjected. The second respondent was asked on a number of occasions about the progress of his investigation. For reasons that were explained in evidence, it is clear that the investigation proceeded slowly. The second respondent went on leave in December 2000, he wanted the case allocated to someone else, he was burdened by other cases, and his wife was seriously ill. The Children's Court found, on the balance of probabilities, that the children had been abused, and made orders as to their care. This occurred in January 2001, before the second respondent had conducted his third interview with C, and before he had interviewed the appellant. The inquiries about what the second respondent was doing were made against that background. It was in that context that he was told that, if there was a prima facie case, he had to "leave it up to the court". That was the only thing that was said to him that could have been described as a direction. The second respondent said in his evidence: "I charge[d] him on my decision. I assessed the case. It was my investigation". "[I]t is one thing to find that a person was under pressure to charge if there was a prima facie case. It is another to find that a prosecutor, in laying a charge, had a motive 'other than bringing a wrongdoer to justice', as must be established to prove malice. Despite the second respondent's sometimes confused thinking as to what was important and what was not, I do not consider that it was established that he did not believe he had a 'prima facie case', being the phrase used by his superiors, or that his intention in charging the appellant was other than to bring him to justice." The Court of Appeal reversed the trial judge's finding on malice. It also reversed his finding on the issue of reasonable and probable cause in relation to the charge concerning C. The position with respect to C was complicated by the relationship between C's allegations and those of D. After examining the material that was available to the second respondent in relation to C, and having earlier considered the trial judge's finding about the second respondent's belief concerning D (a finding that was favourable to the second respondent), 12 [2005] NSWCA 292 at [188]. 13 [2005] NSWCA 292 at [171]-[172]. Kirby Hayne Crennan "It is also possible that the Crown may have sought to use the charges in respect of D and C as being mutually corroborative, although neither party advanced that argument in this Court and there would have been a real question whether they could be so used ... But even if the cases did not corroborate each other, they were closely linked, and it was a reasonable response to lay charges in both matters. There are other ways to test the matter. Accepting the weaknesses in the case relating to C to which I have referred, but also accepting that there were factors that supported the likelihood that C was being truthful, the question might be asked as to what a prudent prosecutor ought reasonably to have done. One answer might have been to lay the charge [concerning] D and adopt a 'wait and see' approach to the charge [concerning] C. There are many public policy reasons why that would have been quite inappropriate. Another answer was not to charge in relation to C at all ... that, too, would not have been a reasonable response by the second respondent in this case. Accordingly, I am of the opinion that a reasonable prosecutor exercising 'prudence and judgment' would have been justified in laying the charge in respect of C. I do not consider that the second respondent's statements that he would not have charged the appellant had it been left to him, or that he was not surprised that the case in relation to C had collapsed, detracts from that finding. Those statements reveal an understanding by the second respondent that the case in relation to C was weak. It is also apparent on the evidence as discussed earlier that at some later stage the second respondent formed the view that the case may not survive the criminal process. The evidence does not establish when the second respondent formed that view. But in any event, such a belief does not, of itself, amount to evidence that there was not reasonable and probable cause or that he did not believe the material upon which he could properly make an assessment was such as to justify the laying of a charge." On the issue of reasonable and probable cause in relation to the charge concerning D, after making her own assessment of the evidence, and applying her own view as to the matter of belief, Beazley JA concluded that the trial judge was correct to hold that absence of reasonable and probable cause had not been established. Issues for resolution There was no argument in this Court, and it appears, from the absence of any discussion in the reasons of Cooper DCJ or Beazley JA, that there was no Kirby Hayne Crennan argument in the District Court or the Court of Appeal, about the first two elements of the tort of malicious prosecution. As to the second element, the position was obvious. As to the first, it is of some significance to note why the matter was not in dispute. The identification of the appropriate defendant in a case of malicious prosecution is not always straightforward. "To incur liability, the defendant must play an active role in the conduct of the proceedings, as by 'instigating' or setting them in motion"14. In Martin v Watson15, a woman made an allegation that her neighbour had indecently exposed himself to her whilst standing on a ladder in his garden. She went to a police station and complained. A detective constable laid an information against the neighbour. At a hearing before the Magistrates' Court, the Crown Prosecution Service offered no evidence, and the charge was dismissed. The House of Lords held that, since the facts relating to the alleged offence were solely within the complainant's knowledge, and that as a practical matter the police officer who laid the information could not have exercised any independent discretion, the complainant could be sued for malicious prosecution, and upheld an award of damages against her. The complainant had "in substance procured the prosecution"16. The police officer to whom the complaint was made had no way of testing the truthfulness of the accusation17. Lord Keith of Kinkel quoted with approval a statement by McMullin J in the Court of Appeal of New Zealand18, that a person may be regarded as the prosecutor if he puts the police in possession of information which virtually compels an officer to bring a charge. For present purposes, it is unnecessary to explore the circumstances in which, in an action for malicious prosecution, a complainant, rather than a police officer who lays an information or signs a charge sheet, will be regarded as the prosecutor. The second respondent, in his evidence, acknowledged, and indeed asserted, that it was his decision, and his responsibility, to lay the charges. He 14 Fleming, The Law of Torts, 9th ed (1998) at 676. 16 [1996] AC 74 at 89. 17 [1996] AC 74 at 89. 18 Commercial Union Assurance Co of NZ Ltd v Lamont [1989] 3 NZLR 187 at 207- Kirby Hayne Crennan certainly did not act in haste, by laying the charges as soon as he became aware of the allegations. Almost five months elapsed between the making of the complaints and the laying of the charges. A finding of the Children's Court, adverse to the appellant, preceded the charges by about six weeks. No one suggested that the real prosecutors were the children, D and C. Yet although in the present case it was not said that the conduct of the children put the second respondent in a position where he was virtually compelled to lay the charges, so that they, and not he, should be regarded as the true prosecutors, the case illustrates the fact that there are circumstances, of which accusations of sexual offences may sometimes provide an example, where the capacity of a police officer to verify information, and form an opinion about where the truth appears to lie, in a practical sense is very limited. The conduct alleged by D and C was of such a nature that, if it occurred at all, it occurred in private. Uncorroborated allegations of private sexual misconduct are notoriously difficult to test. That is why warnings are given to juries. That difficulty, however, is not only a problem for juries deciding whether to convict; it may also be a problem for a police officer deciding whether to lay a charge. Juries sometimes convict upon the uncorroborated evidence of a complainant. This police officer heard uncorroborated allegations of sexual abuse from two young children. It is accepted on all sides that he had to take the responsibility for deciding whether to lay charges. It is said that his state of belief is relevant to whether he had reasonable and probable cause to prosecute. In such a context, what is the nature of the belief that is in question? For the reasons explained by the House of Lords in Glinski v McIver19, justice requires that the prosecutor, the person who effectively sets criminal proceedings in motion, accept the form of responsibility, or accountability, imposed by the tort of malicious prosecution. Insofar as one element of the tort concerns reasonable and probable cause, the question is not abstract or purely objective. The question is whether the prosecutor had reasonable and probable cause to do what he did; not whether, regardless of the prosecutor's knowledge or belief, there was reasonable and probable cause for a charge to be laid. The question involves both an objective and a subjective aspect. 19 [1962] AC 726. See, for example, Viscount Radcliffe at 756-757, Lord Devlin at Kirby Hayne Crennan The standard form of pleading alleges that the defendant acted (maliciously and) without reasonable and probable cause. A plaintiff who sets out to prove that allegation may, or may not, endeavour to establish, by direct evidence (including admissions), or inference, something about a defendant's belief. In a jury trial that may raise an issue for the jury. At a trial without a jury, that may raise for the judge's decision a specific question of fact. The nature of the question may depend upon what, in the circumstances of the case, is said to demonstrate that a defendant did not have reasonable and probable cause to prosecute. Those circumstances, in turn, may be affected by the nature of the allegations, and the prosecutor's capacity to form an opinion about their strength and reliability. Similarly, where a plaintiff alleges that a prosecutor acted maliciously, that is, for an improper purpose, not for the purpose of carrying the law into effect20, the circumstances of the prosecution may determine the nature of the case the plaintiff will seek to make. Absence of reasonable and probable cause may, in a given case, be evidence of malice; but there are two separate issues to be decided. In the case of a public prosecution, initiated by a police officer, or a Director of Public Prosecutions or some other authority, where a prosecutor has no personal interest in the matter, and no personal knowledge of the parties or the alleged events, and is performing a public duty, the organisational setting in which a decision to prosecute is taken could be of factual importance in deciding the issue of malice. In the present case, which is not unusual, the second respondent's conduct was being overseen by other authorities (that, indeed, is said to be part of the problem), and he must have been aware that, soon after the charges were laid, the proceedings could be taken over by an independent prosecuting authority and, presumably, discontinued if the view were taken that there was not a proper case to go forward. In the case of a private prosecution, it may be easier to prove that a prosecutor was acting for a purpose other than the purpose of carrying the law into effect than in a case of a prosecution instituted in a bureaucratic setting, where the prosecutor's decision is subject to layers of scrutiny and to potential review. 20 Fleming, The Law of Torts, 9th ed, (1998) at 674. Kirby Hayne Crennan At a jury trial, where a question relevant to the issue of reasonable and probable cause is left to a jury, it is usual for that question to precede a question concerning malice, which is always a question for the jury. That is because of a concern that an adverse conclusion about malice could, in effect, swamp the other issues. It is convenient, in this case, first to deal with the issue of reasonable and probable cause and, in that connection, the nature of the belief that is relevant, and then to consider the issue of malice. Some matters of history In Abrath v North Eastern Railway Co21, Cave J formulated three questions for the jury: "1. Did the defendants in prosecuting the plaintiff take reasonable care to inform themselves of the true state of the case; 2. Did they honestly believe the case which they laid before the magistrates; and, 3. Were the defendants actuated by any indirect motive in preferring the charge against the plaintiff[?]" The jury were directed to consider the first two questions before proceeding to the third. They were directed that it was necessary to consider the third question, about malice, only if one of the first two questions was answered, "no". On appeal, first to the Court of Appeal22 and then the House of Lords23, the questions formulated by Cave J were approved and thereafter, those, or questions like them, were seen as sufficiently identifying the issues that would arise in a claim for malicious prosecution. But, as noted earlier, it was well settled that whether the absence of reasonable and probable cause was established was ultimately a question for the judge, not the jury. The task of the jury was to be confined to deciding disputed questions of primary fact, not the ultimate question of whether the facts, as found, established an absence of reasonable and probable cause24. 21 (1883) 11 QBD 79 at 79. 22 (1883) 11 QBD 440. 23 (1886) 11 App Cas 247. 24 Herniman v Smith [1938] AC 305. Kirby Hayne Crennan This division of functions between judge and jury was examined by Thayer25 and said to be "a peculiar doctrine". In Johnstone v Sutton, Lord Mansfield and Lord Loughborough described26 the question of reasonable and probable cause as "a mixed proposition of law and fact". But Thayer rightly said27 that "[b]aptizing the question of reasonable and probable cause with this name, as a 'mixed question of law and fact,' common and almost universal as it is, has only added to the confusion." Rather, Thayer preferred to describe28 the question as "a mixed question of fact; 'mixed' in the sense that the two tribunals [of judge and jury] are blended in deciding it, that the issue of fact is divided between them". Yet despite what appears thus to be an unusual division of functions, Lord Chelmsford could say in 1870, in Lister v Perryman29, that: "[T]here can be no doubt since the case of Panton v Williams30, in which the question was solemnly decided in the Exchequer Chamber, that what is reasonable and probable cause in an action for malicious prosecution, or for false imprisonment, is to be determined by the Judge ... No definite rule can be laid down for the exercise of the Judge's judgment. Each case must depend upon its own circumstances, and the result is a conclusion drawn by each Judge for himself, whether the facts found by the jury, in his opinion, constitute a defence to the action." (emphasis added) The reason assigned31 by Thayer for this division of functions was to control the question "lest those who would come forward in aid of public justice should be 25 Thayer, A Preliminary Treatise on Evidence at the Common Law, (1898) at 221. 26 (1786) I TR 510 at 545 [99 ER 1225 at 1243]. 27 Thayer, A Preliminary Treatise on Evidence at the Common Law, (1898) at 224. 28 Thayer, A Preliminary Treatise on Evidence at the Common Law, (1898) at 225. 29 (1870) LR 4 HL 521 at 535. 30 (1841) 2 QB 169 [114 ER 66]. 31 Thayer, A Preliminary Treatise on Evidence at the Common Law, (1898) at 230. Kirby Hayne Crennan intimidated or discouraged". And as Fleming pointed out32, "as early as 1599 it was regarded as unsafe to send the general issue to the 'lay gents'33, who are too easily swayed by the feeling that, merely because an innocent man has been subjected to prosecution, he deserves recompense". There are many reported decisions about malicious prosecution. Many of them consider whether the plaintiff demonstrated that the prosecution had been instituted or maintained without reasonable and probable cause. Much of what is said in the early cases about the tort must be understood in the light of the fact that the action would inevitably be tried by judge and jury. Many of the early cases focus upon working out the respective functions of judge and jury and, in particular, what questions should be asked of the jury. Moreover, much of what is said in the early cases must also be understood against the background provided by the then very different arrangements for the detection and prosecution of crime. In particular, the early cases must be read with the recognition that organised police forces for the detection of crime, and elaborate administrative and bureaucratic arrangements within the executive arm of government for the prosecution of crime, were not developed until after the framework of the tort was established. The frequency of reference in the decided cases to whether the defendant prosecutor "believed" the plaintiff to be guilty of the crime alleged may be explained, at least in part, by reference to these considerations. It is also important to recognise that the assumption that a prosecutor would have personal knowledge of the facts alleged to found a criminal prosecution may appear to be at odds with modern notions of elaborate arrangements within the executive branch of government for the detection and prosecution of crime. It is, however, an assumption that reflects important and long-established features of criminal procedure. There are two features of that branch of procedure which are of particular importance. First, criminal proceedings can be instituted by any member of the public. During the nineteenth century, there was much debate in England and Wales about who 32 Fleming, The Law of Torts, 9th ed (1998) at 683. 33 Pain v Rochester and Whitfield (1599) Cro Eliz 871 [78 ER 1096 at 1097]. Kirby Hayne Crennan should control prosecutions34. It is not necessary to trace these controversies. A private individual's ability to institute criminal proceedings remained unaffected although the creation of public prosecuting authorities normally introduced provisions for them to take over, and sometimes to terminate, such proceedings. Secondly, under the procedures established by Sir John Jervis's Act, The Indictable Offences Act 1848 (UK)35, the first step in initiating a prosecution of another, in England and Wales, was, in most cases, either the arrest of the alleged offender, and the bringing of that person before a justice, or the laying of an information before a justice for the issue of a warrant or summons36. An action for malicious prosecution (as distinct from an action for trespass to the person committed by wrongfully arresting the person) would therefore arise, much more often than not, out of proceedings that had been commenced by the laying of an information – often an information on oath. The laying of an information presupposed that the informant had at least some personal knowledge of the matters alleged. Australian criminal procedure, both before and after federation, was generally similar. The relevant statutory provisions were closely modelled on Sir John Jervis's Act. In particular, criminal proceedings, more often than not, began with either the arrest of the alleged offender or with the laying of an information before a justice which, if a warrant was sought, was to be "laid in writing, and the matter thereof substantiated by the oath of the informant or of a witness"37. 34 Cornish, "Defects in Prosecuting – Professional Views in 1845", in Glazebrook (ed), Reshaping the Criminal Law, (1978) at 305; Australia, The Law Reform Commission, Standing in Public Interest Litigation, Report No 27 (1985) at 182-183 [343]; Gouriet v Union of Post Office Workers [1978] AC 435 at 477 per Lord Wilberforce. 35 11 & 12 Vict c 42. 36 The Indictable Offences Act 1848 (UK), ss 8 and 9. 37 Justices Act 1902 (NSW), s 22. (The reference is to that Act in the form it took when charges were laid against the appellant. See now, Criminal Procedure Act 1986 (NSW) ss 47-50). Kirby Hayne Crennan Two requirements In Johnstone v Sutton38, Lord Mansfield and Lord Loughborough said "[t]he essential ground of this action is, that a legal prosecution was carried on without a probable cause". But as their Lordships went on to say39, "[a] man, from a malicious motive, may take up a prosecution for real guilt, or he may, from circumstances which he really believes, proceed upon apparent guilt; and in neither case is he liable to this kind of action40". Much of the development of the law concerning malicious prosecution reflects the attempts to balance the provision of a remedy where criminal processes have been wrongly set in train with the need not to deter the proper invocation of those processes. The two requirements of absence of reasonable and probable cause, and malice, represent the particular balance that is struck. At first sight, requiring both malice and absence of reasonable and probable cause may seem an unnecessary elaboration of the requirements necessary to achieve that balance. Both Holmes, in The Common Law41, and Herbert Stephen, in his 1888 monograph, The Law Relating to Actions for Malicious Prosecution, challenged whether it was necessary to require that both elements be established. Holmes favoured discarding the requirement of malice. He said42: "On the one side, malice alone will not make a man liable for instituting a groundless prosecution; on the other, his justification will depend, not on his opinion of the facts, but on that of the court. When his actual moral condition is disregarded to this extent, it is a little hard to believe that the existence of an improper motive should be material." (emphasis added) 38 (1786) 1 TR 510 at 544 [99 ER 1225 at 1243]. 39 (1786) 1 TR 510 at 545 [99 ER 1225 at 1243]. 40 Warren v Mathews (1704) 6 Mod 73 [87 ER 831]. 41 Holmes, The Common Law, (1882), Lecture IV, "Fraud, Malice, and Intent – The Theory of Torts", 130 at 141-142. 42 Holmes, The Common Law, (1882), Lecture IV, "Fraud, Malice, and Intent – The Theory of Torts", 130 at 142. Kirby Hayne Crennan Likewise, Stephen, in the preface to his work43, said that he saw "no reason why the necessity for proving malice should be retained". He continued44 by saying that the necessity for proving malice "is ineffectual, because the jury are at liberty to infer it from the want of reasonable cause". Stephen thought45 that it should suffice to establish that the "defendant instituted the prosecution against [the plaintiff], either without honestly believing [the plaintiff] to be guilty, or without having a reasonable ground for believing [the plaintiff] to be guilty". No court has embraced these views46. They are views that were expressed before the resolution, at the end of the nineteenth and start of the twentieth centuries, of controversies that emerged in England, in disputes between employers and employees, about the significance to be given in a civil action to proof of an intention to injure another. Not until 1897 did the House of Lords decide, in Allen v Flood47, that an act "lawful in itself" is not converted by a malicious or bad motive into an unlawful act so as to make the doer of the act liable to a civil action. In this regard the tort of malicious prosecution was seen as anomalous. Lord Davey said48 of that tort that: "From motives of public policy the law gives protection to persons prosecuting, even where there is no reasonable or probable cause for the prosecution. But if the person abuses his privilege for the indulgence of his personal spite he loses the protection, and is liable to an action, not for the malice but for the wrong done in subjecting another to the annoyance, expense, and possible loss of reputation of a causeless prosecution." (emphasis added) It is on this basis that the tort has hitherto been understood as requiring proof of two distinct elements, one positive (malice) and the other negative 43 Stephen, The Law Relating to Actions for Malicious Prosecution, (1888) at vi. 44 at vi. 45 at v. 46 cf the remarks of Richards J in Assheton v Merrett [1928] SASR 11 at 14. 48 [1898] AC 1 at 172-173. Kirby Hayne Crennan (absence of reasonable and probable cause). The two requirements meet the two different kinds of case posited in Johnstone v Sutton – maliciously taking up a prosecution "for real guilt", and proceeding upon apparent guilt from circumstances which the prosecutor "really believes". That is, the positive requirement of malice, and the negative requirement of absence of reasonable and probable cause, each have a separate role to play in the tort. A conclusion about malice does not render irrelevant the inquiries about what the prosecutor did make, and should have made, of the material available when deciding whether to initiate or maintain the prosecution. For immediate purposes it suffices to describe malice as acting for purposes other than a proper purpose of instituting criminal proceedings. Purposes other than a proper purpose include, but are not limited to, purposes of personal animus of the kind encompassed in ordinary parlance by the word "malice". It also suffices to refer for the moment to what the prosecutor "made" or "should have made" of the available material without pausing to explore what is meant by those expressions. It will be necessary to return to these topics. Even if a prosecutor is shown to have initiated or maintained a prosecution maliciously (for example, because of animus towards the person accused) and the prosecution fails, an action for malicious prosecution should not lie where the material before the prosecutor at the time of initiating or maintaining the charge both persuaded the prosecutor that laying a charge was proper, and would have been objectively assessed as warranting the laying of a charge. There are three features of the present law to which attention should be drawn. First, because questions of malicious prosecution can arise only where the prosecution has ended in the plaintiff's favour, the paradigm case to consider is where the plaintiff has been acquitted of the offence charged. (It is convenient to leave aside what other circumstances suffice to show that the prosecution has ended in the plaintiff's favour, and focus on the paradigm case of acquittal.) That acquittal is not to be controverted49. The hypothesis for a subsequent action for malicious prosecution arising from such a case is, therefore, that the plaintiff was not guilty of the offence charged. But that alone does not entitle the plaintiff to a remedy against the prosecutor. 49 Rogers v The Queen (1994) 181 CLR 251 at 273; Pearce v The Queen (1998) 194 CLR 610 at 625-626 [53]-[55]; D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 29 [77]. Kirby Hayne Crennan Secondly, the inquiry about reasonable and probable cause has two aspects. That is, to decide whether the prosecutor did not have reasonable and probable cause for commencing or maintaining the prosecution, the material available to the prosecutor must be assessed in two ways. What did the prosecutor make of it? What should the prosecutor have made of it? To ask only whether there was material available to the prosecutor which, assessed objectively, would have warranted commencement or maintenance of the prosecution would deny relief to the person acquitted of a crime prosecuted by a person who not only acted maliciously, but who is shown to have acted without forming the view that the material warranted prosecution of the offences. Conversely, to ask only what the prosecutor made of the material that he or she had available when deciding to commence or maintain the prosecution would favour the incompetent or careless prosecutor over the competent and careful. Thirdly, the action for malicious prosecution has a temporal dimension. To ask whether a prosecution was commenced or maintained without reasonable and probable cause directs attention to the state of affairs when the prosecution was commenced, or when the prosecutor (the defendant in the subsequent civil claim) is alleged to have maintained that prosecution. Moreover, it necessarily directs attention to what material the prosecutor had available for consideration when deciding whether to commence or maintain the prosecution, not whatever material may later have come to light. Absence of reasonable and probable cause It is important to recognise that, in an action for malicious prosecution, the plaintiff must establish a negative (the absence of reasonable and probable cause). The forensic difficulty of proving a negative is well known. At least some of the questions presented in this appeal arise because there is an inevitable tendency to translate the negative question – whether the defendant prosecutor acted without reasonable and probable cause – into the different question – what will constitute reasonable and probable cause to institute criminal proceedings. The logical relationship between the two forms of question tends to obscure first, the importance of the burden of proof, and secondly, the variety of factual and forensic circumstances in which the questions may arise. Because the absence of reasonable and probable cause is understood as containing both subjective and objective elements, one of the chief forensic difficulties confronting a plaintiff is how to establish what the prosecutor (the defendant in the civil proceeding) had in his or her mind when instituting or maintaining the prosecution. Absent some admission by the defendant, the Kirby Hayne Crennan plaintiff must make the case by inference and, if the defendant gives evidence, by cross-examination. The shape of the forensic contest in the particular case will inevitably dictate the way in which the plaintiff puts the argument that absence of reasonable and probable cause is established. In particular, what, if anything, the defendant prosecutor says in court, or has said out of court, about why he or she launched the prosecution, will loom very large in the plaintiff's contentions about absence of reasonable and probable cause. It must be recognised that much of what is said in the decided cases about want of reasonable and probable cause is moulded by the nature of the forensic contest in the particular case. Especially in the nineteenth century cases, the focus of the forensic contest was upon what the prosecutor knew or believed when instituting or maintaining a prosecution. It was inevitable that this should be so, if only because much more often than not the prosecutor brought or continued the prosecution on the basis of what was alleged to be personal knowledge of the matters giving rise to the charge. It was, therefore, only comparatively late in the development of the law relating to malicious prosecution that consideration was given to the launching of criminal proceedings because of what had been reported to the prosecutor. In Lister v Perryman50, the House of Lords decided, albeit in the context of an action for wrongful imprisonment, that absence of reasonable and probable cause was not necessarily established by showing that the prosecutor acted51 "upon the information of a trustworthy informant [but had] not made inquiry of some one else who could have repeated and confirmed what was told him"52. But until well into the twentieth century, most cases of malicious prosecution arose in circumstances where the prosecutor was to be supposed to have had personal knowledge of at least the central facts upon which a criminal charge had been based. Two different tests? Much of the argument in the present matter, in the Court of Appeal, was directed to exploring what were thought to be differences between what 50 (1870) LR 4 HL 521. 51 (1870) LR 4 HL 521 at 537. 52 See also Herniman v Smith [1938] AC 305. Kirby Hayne Crennan Jordan CJ had said, in Mitchell v John Heine53, about what would constitute reasonable and probable cause for prosecuting another for an offence, and what Dixon J said, in Sharp v Biggs54, about when there would not be reasonable and probable cause for prosecuting another. It may be noted, however, that the reasons of the primary judge suggest that no such differences were observed at trial or, if they were, that the arguments of the parties were not focused upon them in the same way as they were in the Court of Appeal. Jordan CJ said55, in Mitchell v John Heine, that there were five conditions to be met if one person was to have reasonable and probable cause for prosecuting another for an offence: "(1) The prosecutor must believe that the accused is probably guilty of the offence. (2) This belief must be founded upon information in the possession of the prosecutor pointing to such guilt, not upon mere imagination or surmise. (3) The information, whether it consists of things observed by the prosecutor himself, or things told to him by others, must be believed by him to be true. (4) This belief must be based upon reasonable grounds. (5) The information possessed by the prosecutor and reasonably believed by him to be true, must be such as would justify a man of ordinary prudence and caution in believing that the accused is probably guilty." To succeed on the issue of reasonable and probable cause the plaintiff had to establish "that one or more of these conditions did not exist"56 (emphasis added). "This he may do by proving, if he can, that the defendant prosecutor did not believe him to be guilty, or that the belief in his guilt was based on insufficient grounds." 53 (1938) 38 SR (NSW) 466 at 469. 54 (1932) 48 CLR 81 at 106. 55 (1938) 38 SR (NSW) 466 at 469. 56 (1938) 38 SR (NSW) 466 at 469. 57 (1938) 38 SR (NSW) 466 at 469. Kirby Hayne Crennan Taken in isolation from these concluding propositions, the five conditions stated by Jordan CJ may be contrasted with what Dixon J said58 in Sharp v Biggs: "Reasonable and probable cause does not exist if the prosecutor does not at least believe that the probability of the accused's guilt is such that upon general grounds of justice a charge against him is warranted. Such cause may be absent although this belief exists if the materials of which the prosecutor is aware are not calculated to arouse it in the mind of a man of ordinary prudence and judgment." (emphasis added) The closing words of this passage suggest the provenance of the language used by the trial judge in relation to the charge concerning C. In Commonwealth Life Assurance Society Ltd v Brain59, Dixon J repeated what he had earlier said in Sharp v Biggs but also said that: "[w]hen it is not disputed that the accuser believed in the truth of the charge, or considered its truth so likely that a prosecution ought to take place, and no question arises as to the materials upon which his opinion was founded, it is a question for the Court to decide whether the grounds which actuated him suffice to constitute reasonable and probable cause." The five conditions stated by Jordan CJ focus upon the prosecutor's belief in the guilt of the person charged; the statements of Dixon J in Sharp v Biggs speak of the probability of guilt being sufficient "upon general grounds of justice" to warrant a charge. But it is wrong to make too much of these differences in expression. In particular, they should not be read as propounding radically different tests. Especially is that so when it is recognised that the conditions stated by Jordan CJ are conditions to be met if there is reasonable and probable cause to prosecute another, and Dixon J spoke in Sharp v Biggs of what would suffice to show an absence of reasonable and probable cause. As Dixon J explained in Brain60, belief in the truth of the charge, or considering its truth so likely that a prosecution ought to take place, does not conclude the issue of absence of reasonable and probable cause. 58 (1932) 48 CLR 81 at 106. 59 (1935) 53 CLR 343 at 382. 60 (1935) 53 CLR 343 at 382. Kirby Hayne Crennan The better view is that the five conditions stated by Jordan CJ may provide guidance about the particular kinds of issue that might arise at trial in those cases where the defendant prosecutor may be supposed to have personal knowledge of the facts giving rise to the charge and the plaintiff alleges either, that the prosecutor did not believe the accused to be guilty, or that the prosecutor's belief in the accused's guilt was based on insufficient grounds. The five conditions were not, and could not have been, intended as directly or indirectly providing a list of elements to be established at trial of an action for malicious prosecution. It would be wrong to understand them in that way. As Jordan CJ said, a plaintiff had to establish that one or more of those conditions did not exist. And, as will later be explained, the five conditions stated by Jordan CJ should not be understood as completely or exhaustively describing what will constitute reasonable and probable cause. Both Mitchell v John Heine and Sharp v Biggs were actions against private, not public, prosecutors. In both cases the prosecutor was alleged to have personal knowledge of facts directly relevant to whether the person prosecuted was guilty of the offence charged. In Mitchell v John Heine, the plaintiff had been charged with theft of a grinder owned by the defendant company. The plaintiff alleged that one director of the defendant company (Victor Heine) had given him the grinder and that Alfred Heine, the director who had promoted the prosecution on behalf of the company, had been told of the gift by his brother Victor. But as the evidence emerged at trial, when Alfred accused the plaintiff of theft, and the plaintiff responded by alleging that he had been given the grinder, Victor had been sent for, asked whether he had made the gift, and denied it. Only then was the plaintiff charged with theft. At trial of the action in Mitchell v John Heine, the judge directed the jury to return a verdict for the defendant on the ground that there was no evidence of the absence of reasonable and probable cause. The appeal to the Full Court of the Supreme Court of New South Wales was, as Jordan CJ said61, "chiefly argued [on questions concerning] the principles governing the relative functions of judge and jury in an action for malicious prosecution". Particular attention was directed to whether any question should have been put to the jury "as to Alfred Heine's belief, or as to any matter of fact necessary to enable [the trial judge] to form a conclusion as to whether absence of reasonable and probable cause had 61 (1938) 38 SR (NSW) 466 at 468-469. Kirby Hayne Crennan been proved"62. The Full Court held, following the then recent decision of the House of Lords in Herniman v Smith63, that no such question should have been put. As Jordan CJ, who gave the Full Court's reasons, said64: "Merely to prove that the defendant had before him information which might or might not have led a reasonable man to form an opinion that the plaintiff was guilty supplies no evidence that the defendant did not believe him to be guilty ... [T]he necessary evidence is not supplied by proof that the defendant was aware of facts which might or might not have satisfied him of the plaintiff's guilt, or that he had before him information, some of which pointed to guilt and some to innocence." To speak of proving "that the defendant did not believe [the plaintiff] to be guilty"65 makes sense if the defendant prosecutor may be supposed to know where the truth lies. And that was the central allegation made by the plaintiff in Mitchell v John Heine. The plaintiff said, in effect: "the prosecutor knew I had been given the item which I was accused of stealing". Likewise, the proposition that absence of reasonable and probable cause is demonstrated by proving that the prosecutor "does not at least believe that the probability of the accused's guilt is such that upon general grounds of justice a charge against him is warranted"66 finds ready application in a case, like Sharp v Biggs, where the defendant prosecutor had charged the plaintiff with giving perjured evidence about what the plaintiff alleged he had seen the defendant doing. And as the use of the expression "at least" reveals, Dixon J was not proffering a general or all-embracing specification of what would suffice to establish the absence of reasonable and probable cause. 62 (1938) 38 SR (NSW) 466 at 473. 64 (1938) 38 SR (NSW) 466 at 470. 65 (1938) 38 SR (NSW) 466 at 469. 66 (1932) 48 CLR 81 at 106 (emphasis added). Kirby Hayne Crennan What is absence of reasonable and probable cause? There are several questions bound up in the proposition that absence of reasonable and probable cause requires an examination of what the prosecution "made" or "should have made" of the material available to the prosecutor when he or she decided to prosecute, or to maintain an existing prosecution. As has already been noted, two kinds of inquiry are postulated: one subjective (what the prosecutor made of the available material) and the other objective (what the prosecutor should have made of that material). Does proof of the absence of reasonable and probable cause require proof of the absence of a state of persuasion (a "belief") in the mind of the prosecutor? What is the subject-matter of the state of persuasion that is to be considered? Is it a persuasion about the likelihood of a particular outcome of the prosecution (the conviction of the person prosecuted)? Is it a persuasion about what the material considered by the prosecutor reveals ("guilt" or "probable guilt" of the person prosecuted)? Or is it a persuasion about that material's sufficiency to warrant setting the processes of the criminal law in motion? What, if any, weight may be given by the prosecutor to the existence of various checks and balances, like the interposition of committal proceedings and the assignment of particular functions to the Director of Public Prosecutions, that form an integral part of the system of criminal justice? Those questions should be answered as follows. If the plaintiff alleges that the defendant prosecutor did not have the requisite subjective state of mind when instituting or maintaining the prosecution, that is an allegation about the defendant prosecutor's state of persuasion. The subject-matter of the relevant state of persuasion in the mind of the prosecutor is the sufficiency of the material then before the prosecutor to warrant setting the processes of the criminal law in motion. If the facts of the particular case are such that the prosecutor may be supposed to know where the truth lies (as was certainly the case in Sharp v Biggs) the relevant state of persuasion will necessarily entail a conclusion (a belief of the prosecutor) about guilt. If, however, the plaintiff alleges that the prosecutor knew or believed some fact that was inconsistent with guilt (as the plaintiff alleged in Mitchell v John Heine) the absence of reasonable and probable cause could also be described (in that kind of case) as the absence of a belief in the guilt of the plaintiff. Kirby Hayne Crennan But what of a case like Martin v Watson67 where the prosecutor knows only of the fact that a complaint has been made? What of Glinski v McIver68, a case arising out of the prosecution of the appellant, Mr Glinski, for offences of conspiracy to defraud and obtaining goods by false pretences? The prosecution had been instituted by the respondent, a Detective Sergeant of police. The appellant alleged that the prosecution had been brought to punish him for giving evidence, in another case, which the police believed to be perjured. In a case where a police officer prosecutes a person on the basis of statements by third parties, there are evident difficulties in applying a test of reasonable and probable cause which would be satisfied by demonstrating only that the subjective state of mind of the prosecutor fell short of positive persuasion of guilt. A test of that kind would presuppose the need for a police officer to have some degree of personal commitment to a case. That would, or at least would often, not be consistent with what should desirably be the objective assessment and analysis of material provided by others. The appellant in Glinski v McIver69 argued that a prosecutor did not have reasonable and probable cause for a prosecution without "an overall belief in the guilt of the accused, a personal opinion as to the facts and their effect in law and a belief in the facts on which the prosecution is founded." The respondent contended70 that belief in guilt is not an ingredient in reasonable and probable cause and that the role of the subjective element of belief "is confined to the belief in the existence and reliability of facts known to the prosecution and does not extend to mere abstract belief in guilt in the sense of the prosecutor's personal opinion". As Lord Devlin pointed out71, "in the reported cases the question put to the jury has almost universally been whether the defendant believed in the plaintiff's 69 [1962] AC 726 at 729 (emphasis added). 70 [1962] AC 726 at 733. 71 [1962] AC 726 at 769. Kirby Hayne Crennan guilt or in the truth of the charge". But as Lord Devlin also pointed out72, "guilt" has the ambiguity identified earlier in these reasons. Does "guilt" refer to the strength of the case revealed by the material then available, or does it refer to some objective state of guilt which, presumably, should find reflection in the ultimate outcome of the prosecution? There is evident difficulty in using the word in this context with the second of these meanings if only because a fundamental hypothesis for the institution of an action for malicious prosecution is that the prosecution failed. The absence of reasonable and probable cause will not in every case be shown by demonstrating that the prosecutor had no positive belief that the accused person was, or was probably, guilty. In particular, references to belief in guilt, or more properly, the absence of belief in guilt, will very likely prove distracting in any case where the prosecutor may not be supposed to know where the truth lies. A case where the prosecutor acts on the statements of others is one example of such a case. There are three critical points. First, it is the negative proposition that must be established: more probably than not the defendant prosecutor acted without reasonable and probable cause. Secondly, that proposition may be established in either or both of two ways: the defendant prosecutor did not "honestly believe" the case that was instituted or maintained, or the defendant prosecutor had no sufficient basis for such an honest belief. The third point is that the critical question presented by this element of the tort is: what does the plaintiff demonstrate about what the defendant prosecutor made of the material that he or she had available when deciding whether to prosecute or maintain the prosecution? That is, when the plaintiff asserts that the defendant acted without reasonable and probable cause, what exactly is the content of that assertion? As noted earlier in these reasons, the jury questions formulated by Cave J in Abrath v North Eastern Railway Co73 asked whether the prosecutor "honestly believe[d] the case ... laid before the magistrates". But the content of the question – "did the prosecutor believe the case which [he or she] laid before the magistrates?" – is not altered if the word "honestly" is added before "believe". The word "honestly" may therefore be thought to have no substantive function to 72 [1962] AC 726 at 770. 73 (1883) 11 QBD 79. Kirby Hayne Crennan perform. Nonetheless, the qualitative element of the contention that the defendant prosecutor acted without reasonable and probable cause may often be captured best by the word "honesty". In most cases, honesty, or more accurately, the allegation of lack of honesty, will require consideration of what the prosecutor knew, believed, or concluded, about some aspect of the material. If the prosecutor's knowledge or belief must be considered, honesty will add nothing to the inquiry. But it will not always be necessary or appropriate to look only at what the prosecutor knew or believed. Not least will that be so where the prosecutor's knowledge or belief is confined to knowledge or belief of what others have said or done. In Mitchell v John Heine, did the prosecutor know, or believe, that the accused person had been given the property which the accused was or was to be charged with stealing? If "yes", the prosecutor would not have acted honestly in launching the prosecution. And it would also be right to describe the prosecutor as not believing the case. The prosecution would have been instituted without reasonable and probable cause. In Sharp v Biggs, did the prosecutor know, or believe, that the evidence which the accused had given about the prosecutor's actions was right? Again, if "yes", the prosecutor did not act honestly, the prosecutor did not believe the case, and there was no reasonable and probable cause to institute a prosecution for perjury. In both cases the plaintiff would show, in the words of the jury question, that the prosecutor did not "honestly believe" the case that was to be laid before a magistrate. If, however, the answer is "no", it may or may not be apt to describe the prosecutor as believing the accused to be guilty. The aptness of the description would turn on the nature of the material at issue. In cases where the prosecutor acted on material provided by third parties, a relevant question in an action for malicious prosecution will be whether the prosecutor is shown not to have honestly concluded that the material was such as to warrant setting the processes of the criminal law in motion. (There may also be a real and lively question about the objective sufficiency of the material, but that may be left to one side for the moment.) In deciding the subjective question, the various checks and balances for which the processes of the criminal law provide are important. In particular, if the prosecutor was shown to be of the view that the charge would likely fail at committal, or would likely be abandoned by the Director of Public Prosecutions, if or when that officer became involved in the prosecution, absence of reasonable and probable cause would be demonstrated. But unless the prosecutor is shown either not to have honestly formed the view that there was a proper case for prosecution, or to have formed Kirby Hayne Crennan that view on an insufficient basis, the element of absence of reasonable and probable cause is not established. The expression "proper case for prosecution" is not susceptible of exhaustive definition without obscuring the importance of the burden of proving the absence of reasonable and probable cause, and the variety of factual and forensic circumstances in which the questions may arise. For the reasons given earlier, it will require examination of the prosecutor's state of persuasion about the material considered by the prosecutor. That should not be done by treating the five conditions stated by Jordan CJ in Mitchell v John Heine as a complete and exhaustive catalogue of what will constitute reasonable and probable cause. First, to focus upon what is reasonable and probable cause distracts attention from what it is that the plaintiff must establish – the absence of reasonable and probable cause. And secondly, because those conditions are framed in terms of belief about probable guilt, they are conditions that, for the reasons already given, do not sufficiently encompass cases where the prosecutor acts upon information provided by others. The objective aspect of reasonable and probable cause It is convenient to deal at this point with the objective aspect of an allegation of absence of reasonable and probable cause. As Dixon J said in Brain74, if there is no dispute that a prosecutor "believed in the truth of the charge, or considered its truth so likely that a prosecution ought to take place" and no question arises as to the materials upon which the opinion was founded, there remains the question, for the Court to decide, "whether the grounds which actuated [the prosecutor] suffice to constitute reasonable and probable cause." Reference is sometimes made in this context to the statement of Hawkins J in Hicks v Faulkner75 defining reasonable and probable cause: "to be, an honest belief in the guilt of the accused based upon a full conviction, founded upon reasonable grounds, of the existence of a state of circumstances, which, assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the 74 (1935) 53 CLR 343 at 382. 75 (1878) 8 QBD 167 at 171. Kirby Hayne Crennan accuser, to the conclusion that the person charged was probably guilty of the crime imputed." The objective element of the absence of reasonable and probable cause is thus sometimes couched in terms of the "ordinarily prudent and cautious man, placed in the position of the accuser" or explained by reference76 to "evidence that persons of reasonably sound judgment would regard as sufficient for launching a prosecution". Or, as Griffith CJ put it in Crowley v Glissan77, the question can be said to be "whether a reasonable man might draw the inference, from the facts known to him, that the accused person was guilty". None of these propositions (nor any other equivalent proposition which might be formulated to describe the objective aspect of absence of reasonable and probable cause) readily admits of further definition. It is plain that the appeal is to an objective standard of sufficiency. The references to "reasonable" and "reasonably", to "ordinarily prudent and cautious", make that clear. Because the question in any particular case is ultimately one of fact, little useful guidance is to be had from decisions in other cases about other facts78. Rather, the resolution of the question will most often depend upon identifying what it is that the plaintiff asserts to be deficient about the material upon which the defendant acted in instituting or maintaining the prosecution. That is an assertion which may, we do not say must, depend upon evidence demonstrating that further inquiry should have been made. It is, nonetheless, important to recognise what, standing alone, may not suffice to show a want of objective sufficiency. It is clear that absence of reasonable and probable cause is not demonstrated by showing only that there were further inquiries that could have been made before a charge was laid. When a prosecutor acts on information given by others it will very often be the case that some further inquiry could be made. Lister v Perryman79, where a charge was 76 Fleming, The Law of Torts, 9th ed (1998) at 681 (emphasis added). 77 (1905) 2 CLR 744 at 754 (emphasis added). 78 Sungravure Pty Ltd v Meani (1964) 110 CLR 24 at 37; Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 885 [90]; 179 ALR 321 at 345; Joslyn v Berryman (2003) 214 CLR 552 at 584 [100], 602 [158]; Herniman v Smith [1938] AC 305 at 317. 79 (1870) LR 4 HL 521. Kirby Hayne Crennan preferred on account of what had been reported to the prosecutor, is a good example of such a case. And as Lord Atkin rightly said in Herniman v Smith80: "It is not required of any prosecutor that he must have tested every possible relevant fact before he takes action. His duty is not to ascertain whether there is a defence, but whether there is a reasonable and probable cause for a prosecution." For like reasons it cannot be stated, as a general and inflexible rule, that a prosecutor acts without reasonable and probable cause in prosecuting a crime on the basis of only the uncorroborated statements of the person alleged to be the victim of the accused's conduct. Even if at trial of the offence it would be expected that some form of corroboration warning would be given to the jury, the question of absence of reasonable and probable cause is not to be decided according to such a rule81. The objective sufficiency of the material considered by the prosecutor must be assessed in light of all of the facts of the particular case. Malice There remains for separate consideration the question of what will constitute malice. When it is said that malice is demonstrated by showing that the prosecutor acted for purposes other than a proper purpose of instituting criminal proceedings, what kinds of extraneous purpose suffice to show malice? Fleming rightly said82 that "'[m]alice' has proved a slippery word in the law of torts". It will be recalled that Lord Davey, in the passage of his speech in Allen v Flood83 set out earlier in these reasons, had spoken of the law giving protection to prosecutors even where there is no reasonable and probable cause for the prosecution, but losing that protection "if the person abuses his privilege 80 [1938] AC 305 at 319. 81 Bradshaw v Waterlow & Sons Ltd [1915] 3 KB 527 at 534. 82 Fleming, The Law of Torts, 9th ed (1998) at 685. 83 [1898] AC 1 at 172-173. Kirby Hayne Crennan for the indulgence of his personal spite". To the same general effect, Fleming said84, of the use of the word "malice" in relation to this tort that: "At the root of it is the notion that the only proper purpose for the institution of criminal proceedings is to bring an offender to justice and thereby aid in the enforcement of the law, and that a prosecutor who is primarily animated by a different aim steps outside the pale, if the proceedings also happen to be destitute of reasonable cause." "Malice" in malicious prosecution is a separate element of the tort. It is to be contrasted with "malice in law" – what Kitto J described85, citing Shearer v Shields86, as "the unlawful intent which is present whenever an injurious act is done intentionally and without just cause or excuse". No little difficulty arises, however, if attempts are made to relate what will suffice to prove malice to what will suffice to demonstrate absence of reasonable and probable cause. In particular, attempts to reduce that relationship to an aphorism – like, absence of reasonable cause is evidence of malice87, but malice is never evidence of want of reasonable cause88 – may very well mislead. Proof of particular facts may supply evidence of both elements. For example, if the plaintiff demonstrates that a prosecution was launched on obviously insufficient material, the insufficiency of the material may support an inference of malice as well as demonstrate the absence of reasonable and probable cause. No universal rule relating proof of the separate elements can or should be stated. 84 Fleming, The Law of Torts, 9th ed (1998) at 685. 85 Trobridge v Hardy (1955) 94 CLR 147 at 162. 86 [1914] AC 808 at 813, 814, 815. 87 cf Johnstone v Sutton (1786) 1 TR 510 at 545 per Lord Mansfield and Lord Loughborough [99 ER 1225 at 1243]: "From the want of probable cause, malice may be, and most commonly is, implied"; Varawa v Howard Smith Co Ltd (1911) 13 CLR 35 at 100 per Isaacs J: "[T]he want of reasonable and probable cause is always some, though not conclusive, evidence of malice." 88 cf Johnstone v Sutton (1786) 1 TR 510 at 545 per Lord Mansfield and Lord Loughborough [99 ER 1225 at 1243]: "From the most express malice, the want of probable cause cannot be implied." Kirby Hayne Crennan What is clear is that, to constitute malice, the dominant purpose of the prosecutor must be a purpose other than the proper invocation of the criminal law – an "illegitimate or oblique motive"89. That improper purpose must be the sole or dominant purpose actuating the prosecutor90. Purposes held to be capable of constituting malice (other than spite or ill will) have included to punish the defendant91 and to stop a civil action brought by the accused against the prosecutor92. But because there is no limit to the kinds of other purposes that may move one person to prosecute another, malice can be defined only by a negative proposition: a purpose other than a proper purpose. And as with absence of reasonable and probable cause, to attempt to identify exhaustively when the processes of the criminal law may properly be invoked (beyond the general proposition that they should be invoked with reasonable and probable cause) would direct attention away from what it is that the plaintiff has to prove in order to establish malice in an action for malicious prosecution – a purpose other than a proper purpose. Two further observations should be made about the element of malice. First, its proof will often be a matter of inference. But it is proof that is required, not conjecture or suspicion93. Secondly, the reference to "purposes other than a proper purpose" might be thought to bring into this realm of discourse principles applied in the law of defamation or in judicial review of administrative action. No doubt some parallels could be drawn with the principles applied in those areas. But drawing those parallels should not be permitted to obscure the distinctive character of the element of malice in this tort. It is an element that focuses upon the dominant purpose of the prosecutor and requires the identification of a purpose other than the proper invocation of the criminal law. 89 Gibbs v Rea [1998] AC 786 at 804. 90 Trobridge v Hardy (1955) 94 CLR 147 at 162 per Kitto J; cf Williams v Spautz (1992) 174 CLR 509 at 529 per Mason CJ, Dawson, Toohey and McHugh JJ. 91 Glinski v McIver [1962] AC 726. 92 Springett v The London and South-Western Bank (1885) 1 TLR 611. 93 cf Gibbs v Rea [1998] AC 786 at 804 per Lord Goff of Chieveley and Lord Hope of Craighead dissenting as to the result of the appeal in that matter. Kirby Hayne Crennan At a time before the development of what now is known as administrative law, significant questions of public law, and of abuse of power by public officials, were determined as issues in tort actions94. What may be understood as echoes of the administrative law principles respecting improper purpose in the exercise of a statutory power may sometimes be heard in the reference in the tort of malicious prosecution to improper purposes of prosecutors. However, this does not warrant any conclusion that a failure to take irrelevant account of relevant considerations, or a considerations, would necessarily constitute malice for the purposes of this tort. The tort of malicious prosecution is a private law remedy that is not available to all who have been prosecuted unsuccessfully. It is available only upon proof of absence of reasonable and probable cause and pursuit by the prosecutor of some illegitimate or oblique motive. Lord Goff of Chieveley and Lord Hope of Craighead said95, of the related but distinct tort of malicious procurement of a search warrant: taking account of "The sole function of the tort is to enable the person to recover damages, and in regard to that private law remedy the guiding principle is that it is for the plaintiff to make out his case. It is for him to prove that the search warrant was obtained maliciously and that there was a want of reasonable and probable cause." A like statement may be made in respect of the tort of malicious prosecution. Applying the principles in this case The findings made, and the conclusions reached, by the trial judge and by the Court of Appeal have been described earlier in these reasons. It will be recalled that the trial judge held that the appellant made out his claim in respect of the charge concerning C, but failed in his claim concerning D. At trial, the case had been pleaded and presented without differentiating between the two charges preferred against the appellant. That is, the case was conducted at trial 94 Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 558; State of New South Wales v Ibbett (2006) 81 ALJR 427; 231 ALR 95 Gibbs v Rea [1998] AC 786 at 804. Kirby Hayne Crennan on the basis that there was a single prosecution to be considered. Correctly, however, no submission was made in this Court that it was not open to the trial judge to come to different conclusions in respect of the prosecution of each charge. It is well established that where an indictment contains several assignments of perjury or theft, proof that some of them lacked reasonable cause, and were laid maliciously, warrants a verdict for the plaintiff96. That rule is not confined to cases where the charge was theft or perjury. Reference was also made earlier to a passage in the reasons of Beazley JA where her Honour discussed the appropriateness of bringing a charge in relation to D but not in relation to C. In the way the trial was conducted, and in particular in the way the evidence of the second respondent emerged, this was not a matter that was investigated. Beazley JA did not explain why laying a charge in relation to D but not in relation to C "would not have been a reasonable response". It was not argued in this Court that the primary judge's ultimate conclusion, which differentiated between the two charges, was not open to him. Nor was it argued that there is any procedural unfairness to either party in approaching the matter on the basis that to uphold that differentiation is at least a possibility. It is convenient to begin consideration of the application of the principles set out earlier in these reasons to the facts of this case by juxtaposing the three critical paragraphs of the reasons of the trial judge. They are, first, the conclusion about malice: "The plaintiff has comfortably satisfied me on the balance of probabilities that Detective Constable Floros laid both charges against the plaintiff not for the purpose of bringing a wrongdoer to justice, but for the improper purpose of succumbing to the pressure from officers of the Child Protection Enforcement Agency to charge the plaintiff because he worked for the Police Service. Accordingly, the plaintiff has satisfied me that Detective Constable Floros acted maliciously." Second, there is the conclusion about reasonable and probable cause in respect of the charge concerning D: 96 Dent v Standard Life Association (1904) 4 SR (NSW) 560; Birchmeier v The Council of the Municipality of Rockdale (1934) 51 WN (NSW) 201; Leibo v Buckman Ltd [1952] 2 All ER 1057. Kirby Hayne Crennan "The plaintiff has failed to satisfy the court on the balance of probabilities that Detective Constable Floros did not have reasonable grounds for believing and that he did not in fact believe that the plaintiff had committed the offence upon [D] notwithstanding the countervailing evidence. In short I am satisfied on the balance of probabilities that it was a proper case to bring to court." This conclusion about reasonable and probable cause in respect of the charge concerning D, if not overturned, is determinative of the appellant's claim in respect of that prosecution. Third, there is the conclusion about reasonable and probable cause in respect of the charge concerning C: "In relation to the charge involving [C] the totality of the evidence satisfies me on the balance of probabilities that Detective Constable Floros did not believe that the plaintiff had committed the offence, or alternatively, that if he did believe it, then such belief was not based upon reasonable grounds." This juxtaposition of the critical findings reveals what may be thought to be two difficulties. First, as noted earlier in these reasons, there may appear to be a difficulty presented by the alternative expression of the finding about reasonable and probable cause in respect of the charge concerning C. Secondly, there may be thought to be a tension between the finding about malice, and the finding about reasonable and probable cause in respect of the charge concerning D. That latter tension can be expressed interrogatively as: How can it be said that a prosecution was launched in order to succumb to pressure yet be launched in the belief that the accused was guilty? How can it be said that a prosecution was launched by the prosecutor in order to succumb to pressure upon him in respect of the charge concerning C when the suggested pressure did not, in its terms, differentiate between the offences against C and D? Upon analysis, however, what may appear to be tensions, even inconsistencies, between the critical findings are readily resolved. It is important to recognise that the findings about reasonable and probable cause were primarily focused, as they should have been, upon whether the appellant had established the absence of reasonable and probable cause. Although the trial judge went on to say that he was satisfied that the case concerning D "was a proper case to bring to court", the central thrust of his finding about that prosecution was that the appellant had not demonstrated an absence of reasonable and probable cause. Kirby Hayne Crennan The further finding that it was "a proper case to bring to court" is best understood as a finding about the objective sufficiency of the material before the second respondent to warrant laying the charge concerning D. In the case concerning C, the expression of findings in the alternative – the second respondent did not believe that the appellant had committed the offence, or alternatively, if he did believe it, that belief was not based upon reasonable grounds – is a finding of the absence of reasonable and probable cause. It was sufficient for the trial judge to find, as he did, that either the second respondent did not form the view that the material considered warranted laying a charge in respect of C or, if in fact the second respondent did form that view, that there was no sufficient basis for doing so. It was not necessary to take the further step of choosing between the alternatives. The absence of an adequate objective basis for the formation of the requisite opinion made it unnecessary to decide whether the second respondent had in fact formed the opinion that the material considered warranted laying a charge in respect of C. Further, the finding about malice, that neither charge was laid for the purpose of bringing a wrongdoer to justice, would be inconsistent with a conclusion that the second respondent had formed the subjective opinion that a charge should be laid in respect of C. But there is no inconsistency in the trial judge concluding, as he did, that either the second respondent did not believe there was a case fit for prosecution or, viewed objectively, the material then available did not warrant forming such an opinion. Nor is there any inconsistency in concluding, in relation to the charge concerning D, that although that charge was not laid to bring a wrongdoer to justice, the appellant had failed to establish that the second respondent did not believe that the appellant had committed the offence, or that, if he did believe it, the belief was not based upon reasonable grounds. If the trial judge was right to conclude that absence of reasonable and probable cause was demonstrated in respect of the charge concerning C, the conclusion that neither that charge nor the charge concerning D was brought for the purpose of bringing a wrongdoer to justice, but both were brought to succumb to pressure, required the conclusion that the appellant had proved malicious prosecution in respect to the charge concerning C. Taken out of its context, the reference to succumbing to pressure is apt to mislead. It is necessary to notice several issues that the use of the expression may be thought to present. It may be said that to speak of the prosecutor's purpose as being to succumb to pressure confuses cause and purpose. That is, Kirby Hayne Crennan succumbing to pressure may more readily be described as a cause of conduct rather than a purpose for conduct. Further, succumbing or yielding to pressure, whether from superiors or some other external source, may, in at least some circumstances, direct attention to such questions as whether the purposes of those exerting pressure are to be attributed to the prosecutor, or whether, in truth, those who exerted pressure are to be identified as the prosecutors of the charges laid. Finally, succumbing to pressure evokes notions of "dictation" or "undue influence"97 encountered in connection with administrative decision-making. Especially is that so in a hierarchical and disciplined police force, where, as noted earlier, it is to be expected that police officers launching prosecutions should be subject to supervision and control by superiors and should, at least in cases of difficulty, seek advice and direction from superiors. It would be wrong, however, to approach the question of malice by assuming that the principles developed in administrative law under the rubrics of "dictation" or "undue influence" may be applied directly. In this case, the particular finding made by the trial judge about the prosecutor succumbing to pressure is to be understood first and foremost by reference to the finding which immediately preceded it, namely, the finding that the charges preferred against the appellant were laid "not for the purpose of bringing a wrongdoer to justice". Further, the reference to "succumbing to pressure" is also to be understood as the trial judge's summary of the effect of the evidence given about conversations between the second respondent and the appellant's solicitor during the committal hearing. That evidence was evaluated by the primary judge in the context of his assessment of the witnesses, and of the wider investigative process undertaken by the Child Protection Enforcement Agency. The second respondent said that he had been under "pressure" to charge the appellant "because he worked for the Police Service" and that "if it was up to me I wouldn't have charged him". Whether these words were said and, if they were, what was meant by them, were issues to be determined by the trial judge according to the whole of the evidence led at trial. It was open to the trial judge to conclude, as he did, that the words were said, and that they were intended, not as words of solace, but as a true reflection of the second respondent's frame of mind at the time he laid the charges. It was therefore open to the trial judge to conclude, as he did, that the charges were laid not for the purpose of bringing a 97 Bread Manufacturers of NSW v Evans (1981) 180 CLR 404 at 411. Kirby Hayne Crennan wrongdoer to justice but for some other purpose. That other purpose was described as "succumbing to pressure". Because the second respondent denied saying the words attributed to him there could be no exploration in evidence of what exactly was meant by his reference to "pressure". It did emerge that the second respondent had been told that he should charge the appellant if there was a prima facie case. The reference to "prima facie case" was ambiguous. It may have meant no more than that there was some evidence which, if taken at its highest and accepted, would establish each element of the charge under consideration; it may have meant that there was sufficient evidence to commit the appellant for trial. No matter what contradictions there were in the accounts given by C and D, those accounts contained descriptions of events which, if accepted, established the crimes charged. In the first and limited sense in which the words "prima facie case" might be understood, those statements revealed such a case. But central to the case of the appellant, in his claim for damages for malicious prosecution, was that, when looked at as a body of evidence, there were so many inconsistencies and uncertainties in those statements, that they did not warrant laying the charges that were laid, and that there would not be sufficient evidence to commit him for trial. There was, however, no exploration at trial of who in the Police Service had spoken of charging the appellant if there was a prima facie case; there was no exploration of what the speaker may have meant by the words; there was no direct exploration of what the second respondent understood the words to mean. It was in this evidentiary setting that the evidence of the conversations between the second respondent and the appellant's solicitor assumed the significance it did at trial. In particular, there being no evidence of what the "pressure" was, or who exerted it, the trial judge had only the evidence of what had been said by the second respondent to the appellant's solicitor, as evidence revealing the second respondent's purpose or purposes for charging the appellant. Once the trial judge accepted that the second respondent had said that, "if it was up to [him]", he would not have charged the appellant, and that he had said he had been under "pressure" to do so, it was well open to the trial judge to conclude that the dominant purpose of the second respondent was not to bring a wrongdoer to justice but to secure at least the absence of criticism by, perhaps even favour of, his superiors in the Police Service. It is in that sense that the trial judge spoke of the second respondent charging the appellant for the purpose of succumbing to pressure. As noted earlier in these reasons, the decision of the Court of Appeal hinged about the conclusion that the trial judge's reasoning had followed an Kirby Hayne Crennan incorrect line of authority and that this error pervaded his reasoning. For the reasons given earlier, there is no conflict of authority as suggested by the Court of Appeal. The applicable principles have been restated in these reasons but the restatement of those principles does not lead to the conclusion that the trial judge's reasoning miscarried. The findings of fact made by the trial judge were open to him and there was no basis for the Court of Appeal to interfere with them. In particular, the findings made by the trial judge about what was said, and meant, by the second respondent in his conversations with the appellant's solicitor were of critical importance. Those findings depended, in important respects, upon the assessment the trial judge made of the credibility of the evidence given by the second respondent and the appellant's solicitor. There was no basis for setting these findings aside. The statements made to the appellant's solicitor were carefully recorded by him in contemporaneous file notes kept by him and cited by the trial judge in his reasons. As well, the trial judge concluded: "I found the evidence of Detective Constable Floros singularly unimpressive and unreliable. For him to say that he had no memory of such significant conversations [with the solicitor] defies the probabilities. I am satisfied that he remembered what he said. He did not want to deny having said it yet he wanted to cover up not only for his indiscretion but also the indiscretion of those superior officers who told him to lay the charges if there was a prima facie case because the plaintiff was an employee of the Police Service"98. In relation to the charge concerning D, the Court of Appeal considered for itself whether the appellant had demonstrated absence of reasonable and probable cause, and concluded99 that he had not. Both the trial judge and the Court of Appeal having applied to the determination of that question principles that are expressed differently from those stated earlier in these reasons, it would not be correct to treat the findings of the trial judge and the Court of Appeal on this aspect of the matter as concurrent findings of fact. No basis was established, however, for setting aside the trial judge's finding about the state of mind of the second respondent in relation to the charge concerning D – that it was not shown that he did not believe the appellant to be 98 Fox v Percy (2003) 214 CLR 118 at 128 [26]-[27]. 99 [2005] NSWCA 292 at [161]. Kirby Hayne Crennan guilty of the charge brought in respect of D. Nor was it demonstrated that the trial judge erred in concluding that the appellant had failed to show that the second respondent did not have reasonable grounds for that belief. That being so, it follows that the appellant failed to establish that the second respondent did not honestly form the view that the matter concerning D was a proper case for prosecution, and did not establish that there was not a sufficient basis for the second respondent to form a view that there was a proper case for prosecution. It is on this footing that the orders of the Court of Appeal dismissing the appellant's appeal to that Court should not be disturbed. The respondents' cross-appeal to the Court of Appeal against the judgment, given at trial in favour of the appellant in respect of the charge relating to C, was allowed, the judgment was set aside, and in its place there was judgment for the respondents. Those orders of the Court of Appeal should be set aside. They depended upon not only the conclusions reached about the supposed difference in the decided cases about the applicable principles, but upon the Court of Appeal's conclusion100 that the trial judge's finding of malice should be set aside and a finding101 made that malice had not been proved. A critical step in the reasoning of the Court of Appeal about malice was that it was open to the Court to draw its own inference about that issue. That appears to have depended upon the conclusion that it was open to the Court of Appeal to determine for itself what weight and meaning was to be given to what the second respondent had said in the conversations with the appellant's solicitor. It can only be on this basis that the Court of Appeal concluded, as it did, that the second respondent's dominant purpose in charging the appellant was not shown to be other than "to bring [the appellant] to justice"102. But the question of malice was not a matter of inference. The trial judge's conclusion was based upon what he found to have been the second respondent's out-of-court admission – the second respondent's statement that "if it was up to me I wouldn't have charged him", coupled with the associated statements about pressure. The Court of Appeal did not set aside the finding about what the second respondent had said. There was no basis upon which it was open to that Court to attribute a meaning 100 [2005] NSWCA 292 at [192]. 101 [2005] NSWCA 292 at [193]. 102 [2005] NSWCA 292 at [188]. Kirby Hayne Crennan to the second respondent's statements that differed in any relevant respect from the way in which the trial judge understood them. It was, therefore, not open to the Court of Appeal to substitute its own finding about malice. Conclusions The four elements for the tort of malicious prosecution, stated at the outset of these reasons, remain. In particular, elements three and four, the elements of malice and absence of reasonable and probable cause, serve different purposes and remain as separate elements which a plaintiff must prove in order to succeed in establishing the tort. There is no disharmony between the expressions of the applicable principles by Jordan CJ in Mitchell v John Heine103 and by Dixon J in Sharp v Biggs104 and Commonwealth Life Assurance Society Ltd v Brain105. Where a prosecutor has no personal knowledge of the facts underlying the charge, but acts on information received, the issue is not whether the plaintiff proves that the state of mind of the prosecutor fell short of a positive persuasion of guilt. As explained earlier in these reasons, it is whether the plaintiff proves that the prosecutor did not honestly form the view that there was a proper case for prosecution, or proves that the prosecutor formed that view on an insufficient basis. In the present case, the Court of Appeal erred in setting aside the trial judge's findings about the state of mind of the second respondent in relation to the charge concerning the complaint by C. Those findings were supported by the evidence. The findings of the trial judge in that respect should be restored and his findings and conclusions in other respects not disturbed. Orders For these reasons the appeal to this Court should be allowed, in part. Paragraph 1 of the orders of the Court of Appeal made on 2 September 2005 should be varied by adding the words "with costs" after "dismissed". Paragraphs 103 (1938) 38 SR (NSW) 466 at 469. 104 (1932) 48 CLR 81 at 106. 105 (1935) 53 CLR 343 at 382. Kirby Hayne Crennan 2 to 7 of the orders of the Court of Appeal made on 2 September 2005 should be set aside. In their place there should be an order that the cross-appeal to that Court is dismissed with costs. Although the appellant has not achieved complete success in his appeal to this Court, he has obtained the restoration of the judgment he obtained at trial. That being so, he should have his costs in this Court. There should therefore be a further order that the respondents pay the appellant's costs of the appeal to this Court. Callinan CALLINAN J. This appeal raises these questions. How should the test for the tort of malicious prosecution be stated? Did the Court of Appeal misstate the test or, if it did not, was it nonetheless in error in reversing the decision of the trial judge? The facts The appellant is an employee of the police service of New South Wales. He, S and her three children lived as a family from 1996. The appellant and S married on 8 May 1997. Two of the children are boys, D, born in 1989, and C, in 1991. D disliked the appellant intensely, as his mother said, "to the point of hatred". In January 2000, after seeing his natural father at Christmas in 1999, D made allegations against the appellant in a conversation with his mother, S, who gave evidence of it: "D: Well, I can get rid of him. S: Well, what do you mean? [D] you just can't take things into your – Yes I can. Well, if I told people that he, if I told people he did things to me that he shouldn't have done, he'd be gone then." In about July 2000, D complained to S that C had been sexually abused by the appellant. According to S, C, in the presence of D, said: "Yeah, you want me to tell you about the things that Dad's been doing to me as well, do you?" S said yes. C said: "[D] told me." S replied: "I don't want to know what [D]'s told you to tell me, you tell me." C said in reply: "Dad's been doing things to me that he's not supposed to do ... [H]e just does things that are disgusting that he is not supposed to do. You're supposed to do those with women, not children." In consequence, S decided to confront the appellant. The trial judge summarized the evidence of the confrontation: "[S] said that she then took the largest knife in the house, confronted [the appellant] with it as he came out of the shower, held that at his throat and said: 'If this is what it's going to take I want the truth'. [The appellant] looked her straight in the eye and said: 'No I haven't done anything at all'. She turned to [C] and said: 'Have you or have you not? Which is the truth?' He replied: 'No, but [D] wanted me to'. She said to [C]: 'Okay. That tells me enough it's all right'." On 27 July 2000, a complaint of sexual abuse against the boys was made to the "Joint Investigation Team", a group of officials chosen from the State Callinan Department of Community Services and the police service. The complainant remains unidentified. On 13 October 2000, a police officer, Constable Campbell, interviewed D. On the same day, the second respondent interviewed C. Some 600 questions were asked of D, and more than 800 questions of C. C denied having been touched improperly by the appellant. The trial judge expressed his disapproval of one of the questions in particular: "C: He hasn't touched me in all those bad touches. He hasn't touched you in all those bad touches. Okay why would somebody tell me that you told your mum that your dad touched you, your dad, [the appellant], touched you and it was a bad touch?" The judge's criticism of this evidence was well founded: "To call this question improper would be an understatement. [The questioner] was inviting a nine year old boy to speculate on the motivation of a person whose identity is not known to him. The purpose of such a question can only be to trap him into making a guess which, if inaccurate or improbable, could later be used to discredit him." On the day of the interviews an interim order under s 60 of the Children (Care and Protection) Act 1987 (NSW)106 was made by the Campbelltown 106 "60 Removal of children without warrant An authorised officer, or a member of the Police Force, may (without any authority other than that conferred by this subsection): a) enter any premises in which the officer or member suspects that there is a person who is a child, if the officer or member suspects on reasonable grounds that the person is in need of care by virtue of the person's being in immediate danger of abuse, and b) search the premises for the presence of any such person, and c) remove any such person from the premises. An authorised officer, or a member of the Police Force, may use all reasonable force for the purposes of entering and searching any premises or place pursuant to this section and for the purpose of removing a person pursuant to this section. (Footnote continues on next page) Callinan Children's Court. Pursuant to it, D and C were taken away from the appellant and S and placed in foster care. On 18 October 2000, the second respondent interviewed C again. This time he asked the child some 500 questions. On this occasion, C alleged that the appellant had had anal intercourse with him "heaps of times". He said that he had been raped on 10 occasions and as recently as about a week ago. On 19 October 2000, D was interviewed by Constable Campbell and the second respondent. They asked some 400 questions during the interview. D repeated that the appellant had had anal intercourse with him. He alleged that he had been raped about a month after the appellant and S were married. On 30 October 2000, the second respondent and Constable Campbell interviewed S. They told her of the children's claims and asked her whether she believed them. S said: "No, not about the sexual abuse, I don't. I believe that there is a problem and I do believe that the boys and [the appellant] have to go through counselling to try and rectify that problem. There has to be a greater understanding and a better form of communication between them, because well, the boys have obviously got their back up, [the appellant] will his, and I mean, that's not solving anything. And I am not a trained counsellor or arbitrator by any means." A person authorised to exercise powers by a subsection of this section may exercise any or all of the powers, as appropriate in the circumstances. In this section: place means any place, whether or not a public place, and whether or not on premises. This Act was repealed by the Children and Young Persons Legislation (Repeal and Amendment) Act 1998 (NSW) s 3. The repeal of s 60 took effect on 18 December Callinan A psychologist appointed by the Department of Community Services expressed this opinion in a report on 16 December 2000: "It is clear that the couple cannot entertain the children's claims of sexual abuse could be accurate, which translates into the children remaining at risk if returned to the care of their parents." On 8 February 2001, C was interviewed for a third time. He accepted that he had told "some lies" earlier but maintained his claims of having been raped, and of oral sexual relations. On about 23 January 2001 the second respondent was informed that the Children's Court had found, on the balance of probabilities, that both C and D had been sexually abused. It is relevant to notice however, that the Children's Court follows a much less rigorous procedure than the Criminal Courts, or indeed, even the orthodox civil courts, in making its determinations. That this is so appears from s 93 of the Children and Young Persons (Care and Protection) Act 1998 (NSW): "General nature of proceedings Proceedings before the Children's Court are not to be conducted in an adversarial manner. Proceedings before the Children's Court are to be conducted with as little formality and legal technicality and form as the circumstances of the case permit. The Children's Court is not bound by the rules of evidence unless, in relation to particular proceedings or particular parts of proceedings before it, the Children's Court determines that the rules of evidence, or such of those rules as are specified by the Children's Court, are to apply to those proceedings or parts." The evidence in these proceedings shows that the second respondent was labouring under a heavy workload throughout his investigation of the boys' complaints. Plainly there was insufficient staff to investigate cases of child abuse. The pressures upon the second respondent were compounded by his wife's pregnancy which was complicated by a life endangering illness. At the same time, police officers senior to the second respondent were pressing him to finalise his investigations. The combination of these pressures probably explains why a number of matters to which the trial judge referred in his careful and detailed judgment and which, if investigated, would have cast doubt on the boys' claims, were not pursued. Callinan On 9 March 2001, the second respondent interviewed the appellant who denied all of the allegations of sexual impropriety. The second respondent then laid the following charges: "CHARGE NO 1. That [the appellant] on the [sic] between the 8th of May 1997 and the [31st] day of [December] 1997, at Wentworth Falls in the state of New South Wales, did have homosexual intercourse with [D] a male person, then under the age of 10 years to wit, of the age of 8 years of age. CHARGE NO 2. That [the appellant] on the [sic] between the 1st day of October 2000 and the 11th of October 2000, at Narellan Vale in the state of New South Wales, did have homosexual intercourse with [C] a male person, then under the age of 10 years to wit, of the age of 9 years." The evidence established that at the time alleged in the first charge, D's leg was in plaster from the ankle to the upper thigh, following an operation to correct a deformity of his foot. A week later, the second respondent received a request from the Director of Public Prosecutions ("the DPP") to provide two copies of the brief to him. Subsequently, the DPP advised that Ms Jeffries, a solicitor, would be in charge of the matter. The second respondent provided the copies of the brief to the DPP's office at Campbelltown. The charges were first mentioned in Court on 16 May 2001 and adjourned. The DPP formally assumed control of the prosecution pursuant to his powers under s 9 of the Director of Public Prosecutions Act 1986 (NSW). Under s 10 of that Act, if the DPP decides to take over a matter, he is obliged, as soon as practicable, to notify the person otherwise responsible for it. The second respondent was so notified on 6 April 2001. After charging the Child Protection the appellant, members of Enforcement Agency ("CPEA") spoke to the second respondent from time to time. In evidence in chief at the committal proceedings, the second respondent suggested a reason for the Agency's particular interest: "I don't know for sure, but I think that because such a long period of time had taken for it to be finalised." On 6 July 2001 the second respondent telephoned the appellant's solicitor who made a diary note of the ensuing conversation. He recorded that the second respondent said that "he had been under a lot of pressure to charge the [appellant]"; that "he was sorry that he charged [the appellant]"; that the alleged sexual assault in the first charge could have occurred in spite of the plaster [on D's leg]; and that the second respondent's superiors had said words to this effect: Callinan "Look, if you had a prima facie case, you've got to leave it up to the court." The diary note records these other statements by the second respondent: "I feel really sorry for [the appellant]. Will you make sure you tell him that I feel sorry for him and that he has been put through this. You know I got a lot of pressure from management to charge him because of the position that he's in you know with the Police Department. ... [T]hat's right I was under a lot of pressure to charge him. ... He handled himself pretty well in the record of interview but he did make admissions that it just made it possible that it could have occurred you know so far as what the boy was saying. I know it's probably impossible but there it is." (emphasis added) The committal proceedings The committal hearing began at the Children's Court at Campbelltown on 23 August 2001. Both C and D gave evidence107 on that day that the appellant had raped them. The hearing was resumed on 28 August 2001. On this occasion C admitted that he had lied in his earlier testimony. The Magistrate intervened to clarify that C was genuinely denying what he had earlier said, asking him very specific questions about the earlier evidence: "A. No. Never did at all? So what you told the other day was lies? Yes. And you're saying to me that you told lies to help your brother? Yes." Following that evidence, and with the concurrence of the DPP's representative, the Magistrate dismissed the charge against the appellant based on C's complaint. The other charge was adjourned until 31 August 2001. 107 The appellant had successfully submitted that the children should be made available for examination personally because "special reasons" existed under s 48E of the Justices Act 1902 (NSW). Callinan The committal resumed on 31 August 2001. The Magistrate, after hearing further evidence and submissions decided that "there [was] no reasonable prospect that [a] jury could convict the [appellant] of the indictable offence charged" and discharged him. The appellant was awarded costs. On 28 August 2001, after C had withdrawn his allegations and admitted that he had lied, the appellant's solicitor and the second respondent had a discussion at the Court House. According to the appellant's solicitor, the second respondent said: "Like I told you on the telephone call, I was under a lot of pressure to charge your client because he worked for the Police Service". The appellant's solicitor's diary note also recorded these statements by the second respondent: "I feel very sorry for [the appellant] and gee they put a lot of pressure on me, you don't know the pressure I was under to charge him because he works for the Police Service. ... [W]hat could I do, they told me in town I should have done this or I should have done that but what could I do?" The civil proceedings at first instance The appellant instituted proceedings in the District Court of New South Wales against the first and second respondents for damages for malicious prosecution, false imprisonment, false arrest and abuse of process. The appellant pleaded that the respondents' conduct was malicious in that they: "PARTICULARS failed to conduct a proper and thorough investigation of the facts relating to the charges which they intended to proffer against the [appellant]; failed to conduct the aforesaid investigation in accordance with proper Police practice and procedure; did not terminate the Prosecution when it became apparent that the evidence was unreliable and/or insufficient to prove any offence beyond a reasonable doubt; did not comply with the Police Service Act 1996, as amended, and proper Police practice and procedure in that the Police officers failed to: treat the [appellant] in a fair and impartial manner; Callinan ensure that after arresting the [appellant], there was a proper assessment of the material relevant to conducting an interview; interviewed the children [D] and [C] in a manner which contaminated the said investigations; failed to competently and properly investigate prior to the arrest of the [appellant], the circumstances in which the allegations had been made; failed to properly investigate the time frame of the allegations made by the child [D] when the circumstances indicated that should have been done; failed to properly investigate the allegation made by the child [C] that on the afternoon of 11 October 2000 the [appellant's] wife may in fact have been home and further that the said child attended at a local Shopping Centre with his sibling ... during the proceedings when he alleged that he had been the subject of sexual abuse/assault by the [appellant]; charged the [appellant] as the result of pressure brought to bear as a result of the fact that the [appellant] was an employee of the NSW Police Service; charged the [appellant] with knowledge there was no proper basis upon which to charge the [appellant]; In amplification of this allegation, the [appellant] will rely on the fact that the [appellant] was arrested and the Prosecution was instituted and continued in the absence of credible information pointing to the [appellant's] guilt, or alternatively upon information which was clearly insufficient. The [appellant] further alleges that the Prosecution was malicious in that it was instituted, maintained and continued without reason, or probable cause: PARTICULARS One or more of the Police officers knew or ought to have known that there was no case for the [appellant] to meet; (ii) One or more or both of the Police officers failed to conduct a proper and fair investigation of the alleged charges; Callinan (iii) The imprisonment of the [appellant] was unlawful and otherwise false and was not justified in all the circumstances; (iv) The maintenance and continuation of the prosecution against the [appellant] was maintained and continued; The [appellant] was charged by virtue of him being an unsworn officer of the NSW Police Service; (vi) The maintenance and continuation of the prosecution against the [appellant] was maintained to justify the unlawful and improper conduct of the Police officers in charging the [appellant] in the first place without proper evidence." The action was tried by Cooper DCJ without a jury. In addition to hearing oral evidence of which there was a great deal, reading the brief for the committal proceedings and other exhibits, his Honour had the advantage of watching the children's interviews, which had been recorded on video tape. In considering the element of reasonable and probable cause his Honour clearly appears to have adopted the approach and much of the language of Jordan CJ delivering the judgment of the Full Court of New South Wales in Mitchell v John Heine & Son Ltd108: "In order that one person may have reasonable and probable cause for prosecuting another for an offence, it is necessary that the following conditions should exist: (1) The prosecutor must believe that the accused is probably guilty of the offence. (2) This belief must be founded upon information in the possession of the prosecutor pointing to such guilt, not upon mere imagination or surmise. (3) The information, whether it consists of things observed by the prosecutor himself, or things told to him by others, must be believed by him to be true. (4) This belief must be based upon reasonable grounds. (5) The information possessed by the prosecutor and reasonably believed by him to be true must be such as would justify a man of ordinary prudence and caution in believing that the accused is probably guilty. In order that the plaintiff may succeed on the issue of reasonable and probable cause, it is essential that he should establish that one or more of these conditions did not exist. This he may do by proving, if he can, that the defendant prosecutor did not believe him to be guilty, or that the belief in his guilt was based on insufficient grounds. 108 (1938) 38 SR (NSW) 466 at 469-471. Callinan To establish the first of these matters, it is essential that evidence should be given of some fact or facts which, either inherently or coupled with other matters proved in evidence, would enable the inference that the defendant did not believe in the plaintiff's guilt. If such evidence is given, the question must be left to the jury, whether it has been proved to their satisfaction that the defendant did not believe in the plaintiff's guilt. But unless such evidence is given it is not proper to put a question to the jury as to the defendant's belief ... Merely to prove that the defendant had before him information which might or might not have led a reasonable man to form an opinion that the plaintiff was guilty supplies no evidence that the defendant did not believe him to be guilty. If this ground is relied on, the plaintiff must give some evidence from which an inference may be drawn as to what the defendant's belief actually was. It is not sufficient to give evidence from which a guess may be made as to what it was. Nor is it sufficient merely to supply evidence of reasons for non-belief; and if such evidence is relied on there must also be evidence that these reasons were in fact operative ... If he contends that the defendant did not believe some of the information which he had, he must supply evidence supporting an inference as to what the defendant's belief actually was with respect to the accuracy of the information in question, not a guess as to what it was. … If the plaintiff does place before the Court evidence of the nature of the whole of the information which the defendant had, it is for the judge and not the jury to determine whether it was reasonable for the defendant to believe in the accuracy of the information ... and also to determine whether it was reasonable for him to act on it, ie, whether it was sufficient to justify a man of ordinary prudence and caution in believing that the plaintiff was probably guilty." (footnotes omitted) With respect to the second respondent's evidence that he was unable to remember the conversations recorded in the diary notes of the appellant's solicitor, his Honour said: "I found the evidence of [the second respondent] singularly unimpressive and unreliable. For him to say that he had no memory of such significant conversations defies the probabilities. I am satisfied that he remembered what he said. He did not want to deny having said it yet he wanted to cover up not only for his indiscretion but also the indiscretion of those superior officers who told him to lay the charges if there was a prima facie case because the [appellant] was an employee of the Police Service." The trial judge made a finding on purpose in these terms: Callinan "The [appellant] has comfortably satisfied me on the balance of probabilities that [the second respondent] laid both charges against the [appellant] not for the purpose of bringing a wrongdoer to justice, but for the improper purpose of succumbing to the pressure from officers of the [CPEA] to charge the [appellant] because he worked for the Police Service. Accordingly, the [appellant] has satisfied me that [the second respondent] acted maliciously." His Honour continued: "This, however, is not sufficient to entitle the [appellant] to judgment against the [respondents]. He must go further and satisfy the court on the balance of probabilities that [the second respondent] did not in fact believe upon reasonable and probable grounds that the [appellant] was probably guilty in relation to each respective charge." His Honour appropriately gave separate consideration to each charge. He accepted that the one based on D's allegations was not laid without such a belief: "As is pointed out earlier, the prosecutor does not have to believe that a court will find the person charged guilty, merely that he believes that on the probabilities upon reasonable grounds, that the person committed the offence charged. The [appellant] has failed to satisfy the court on the balance of probabilities that [the second respondent] did not have reasonable grounds for believing and that he did not in fact believe that the [appellant] had committed the offence upon [D] notwithstanding the countervailing evidence. In short I am satisfied on the balance of probabilities that it was a proper case to bring to court." But his Honour held that the charge based upon C's allegations was laid without the requisite belief. He said of it, that "the totality of the evidence satisfies me on the balance of probabilities that [the second respondent] did not believe that the [appellant] had committed the offence, or alternatively, that if he did believe it, then such belief was not based upon reasonable grounds". In stating his conclusion in this way, I do not take his Honour to be expressing himself provisionally or uncertainly. All that he was doing was saying that even if the second respondent did, which the trial judge rejected, believe that the appellant had committed the offence, there were no reasonable grounds for such a belief: a not uncommon way for trial judges to make findings on sequential issues. The prosecution was, as the trial judge held, very distressing for the appellant. In assessing the damages, his Honour confined the respondents' liability to the period beginning with the laying of the charges and concluding at Callinan a reasonable time after 6 April 2001, the date upon which responsibility for the prosecution rested with the DPP. Judgment was accordingly given against the respondents for $31,250.00, inclusive of aggravated and exemplary damages. They were ordered to pay 90 per cent of the appellant's costs. No issue as to the first respondent's vicarious liability for the acts of the second respondent, as a police officer, pursuant to s 6 of the Law Reform (Vicarious Liability) Act 1983 (NSW), was raised at the trial or on appeal. The Court of Appeal The appellant appealed to the New South Wales Court of Appeal109 (Mason P, Beazley JA and Pearlman AJA) against the dismissal of his claim in respect of the charge involving D, and the rejection of his other claim, of abuse of process. The respondents cross-appealed against the judgment in the appellant's favour in respect of the charge involving C. The Court of Appeal unanimously dismissed the appellant's appeal, and upheld the respondents' cross- appeal. Beazley JA, with whom the President and Pearlman AJA agreed, was of the opinion that the trial judge erred in preferring the test for malicious prosecution propounded by Jordan CJ in Mitchell v John Heine & Son Ltd to that of Dixon J in this Court in Sharp v Biggs110 and Commonwealth Life Assurance Society Ltd v Brain111. In Sharp, Dixon J had said112: "Reasonable and probable cause does not exist if the prosecutor does not at least believe that the probability of the accused's guilt is such that upon general grounds of justice a charge against him is warranted. Such cause may be absent although this belief exists if the materials of which the prosecutor is aware are not calculated to arouse it in the mind of a man of ordinary prudence and judgment." In Commonwealth Life Assurance Society Ltd v Brain, his Honour substantially reaffirmed that opinion113: 109 A v State of New South Wales (2005) 63 NSWLR 681 (partial report); [2005] NSWCA 292. 110 (1932) 48 CLR 81. 111 (1935) 53 CLR 343. 112 (1932) 48 CLR 81 at 106. 113 (1935) 53 CLR 343 at 382-383. Callinan "Upon the issue of the absence of reasonable and probable cause the jury were asked one question only, namely, whether the appellant company genuinely and honestly believed that the prosecution was justified. In the circumstances of this case, I think that it was desirable, if not necessary, to put the question to the jury and that the answer given to it, unless set aside, makes it impossible for the Court to decide that there was not an absence of reasonable and probable cause for the prosecution of the respondent Brain. When it is not disputed that the accuser believed in the truth of the charge, or considered its truth so likely that a prosecution ought to take place, and no question arises as to the materials upon which his opinion was founded, it is a question for the Court to decide whether the grounds which actuated him suffice to constitute reasonable and probable cause. In such a case, unless there be some additional element of an exceptional kind, there is no further fact needed to enable the Court to judge whether the prosecutor was warranted in proceeding. I repeat what I said in Sharp v Biggs: 'The ultimate inference, whether or not the facts of the case amount to a want of reasonable and probable cause, is for the Court, but it is for the jury to determine what are the facts of the case. … The question submitted to the jury was aptly framed to obtain their opinion as to the existence of the requisite belief. If that belief had been found to exist, the question would have remained whether the materials were enough to arouse it in a man of reasonable prudence and judgment, and this latter question it would have been for the Court to decide." (footnotes omitted; original emphasis) In her reasons in this case, Beazley JA said114: "Dixon J's formulation focuses upon the question whether the material available to the prosecutor is such as to at least lead to 'a belief that the probability of the accused's guilt is such that upon general grounds of justice a charge against him is warranted'. The prosecutor does not have to believe in the guilt of the accused. This statement has to be read subject to the qualification mentioned by Lord Denning, that in a case where the prosecution is based upon the prosecutor's own evidence, an absence of honest belief in the case being advanced would be evidence of absence of reasonable and probable cause. That qualification does not apply in this case as the second respondent was not prosecuting on his own account but rather was doing so in the course of his duties as a police officer. 114 (2005) 63 NSWLR 681 at 696-697 [108]-[110]; NSWCA 292 at [108]-[110]. Callinan Dixon J's formulation bears the mark of good sense given the task a prosecutor must undertake when deciding whether to lay a charge. In my opinion, Jordan CJ's formulation poses the test too highly and in doing so gives rise to a number of potential problems. In particular, it could lead either to unwarranted timorousness or excessive zealousness on the part of a prosecutor in deciding whether to lay a charge. Either would be an Modern unwelcome development in the criminal justice system. prosecutorial practice also reflects this approach115… The test as formulated by Dixon J itself provides the necessary restraint upon the exercise of this very serious power given to police officers and other prosecutors and, for that matter, to any private individual who seeks to bring a prosecution in relation to the commission of a criminal offence. The test carries with it a standard, that is of reasonable and probable cause, which is well understood by the common law. This is important for a number of reasons, not the least of which is that the same test applies regardless of whether the charge relates to an offence that involves little or great factual complexity. Dixon J's formulation also provides adequate parameters around the decision making process. First, it requires that a prosecutor must be seised of sufficient information to warrant the laying of the charge. Secondly, it protects a prosecutor from action for malicious prosecution (insofar as the want of reasonable and probable cause element of the tort is concerned) should it transpire that over the course of proceedings potentially exculpatory evidence emerges, an accused raises a successful defence, witnesses fail to 'come up to proof', or the credibility of evidence is successfully attacked. Such a point was made by Lord Denning in Glinski v McIver116 where his Lordship alluded to the impossibility of a prosecutor being fully cognisant, at the time the charge is laid, of whether 'witnesses are telling the truth' or 'what defences the accused may set up'." Beazley JA was of the opinion that notwithstanding the exertion of pressure upon the second respondent by his superiors, there was insufficient evidence to support a finding that it was in response to that pressure, rather than in the exercise of his own judgment, that on general grounds of justice the charges were warranted, that he decided to lay them117: 115 See Ipp, "Must a Prosecutor believe that the accused is guilty? Or, was Sir Frederick Jordan being recalcitrant?" (2005) 79 Australian Law Journal 233 at 116 [1962] AC 726 at 758. 117 [2005] NSWCA 292 at [188]. Callinan "[I]t is one thing to find that a person was under pressure to charge if there was a prima [facie] case. It is another to find that a prosecutor, in laying a charge, had a motive 'other than bringing a wrongdoer to justice', as must be established to prove malice. Despite the second respondent's sometimes confused thinking as to what was important and what was not, I do not consider that it was established that he did not believe he had a 'prima facie case', being the phrase used by his superiors, or that his intention in charging the appellant was other than to bring him to justice. 'Bringing a person to justice' does not mean that the person must be convicted. It means to bring a person before the processes of the law. That may be done where there is reasonable and probable cause to lay the charge. Indeed, the trial judge appears to have held that he did believe that, but did not believe the appellant was guilty. The two matters are both logically and juridically distinct and the latter is not a necessary aspect of malice." (original emphasis) After referring to shortcomings in the evidence, of absence of reasonable and probable cause with respect to the charge of sexual abuse of D, her Honour reached this conclusion118: "The bi-fold test applied by his Honour is a more onerous test than is required. As the trial judge was not satisfied on the more onerous test, it is not likely that a court would be satisfied on the correct test. But in any event, a review of the whole of the evidence has led me to conclude that the appellant has not established that there was not reasonable and probable cause to lay the charge in respect of D." Regarding the charge made in reliance upon C's complaints her Honour said this119: "It is apparent that the second respondent devoted a great deal of time to an examination of the material. It is also apparent that he felt pressured by his superiors to lay the charges in the context in which I have discussed. However, given that his Honour accepted that what the second respondent was in fact told by his superiors was that if there was a 'prima facie' case he had to 'leave it up to the court', the fact that he did feel pressured to lay charges against the appellant is not evidence supporting a want of reasonable or probable cause. When the evidence relating to the charge in respect of C is viewed as a whole, I do not consider that it can be said that there was not reasonable and probable cause to lay the charge. The appellant told the second respondent that C was a 'sincere child' and 118 [2005] NSWCA 292 at [161]. 119 [2005] NSWCA 292 at [170]. Callinan that a child of that age would be likely to be embarrassed about being interviewed about such matters. Likewise, it is apparent from S's Record of Interview that she considered C to be less likely than D to fabricate such a matter. She also considered that there was less motivation for him to do so as unlike D, C generally had a good relationship with the appellant. When those factors are added to the fact that there was reasonable and probable cause to lay the charge in relation to D, I am of the opinion that a prosecutor, exercising proper caution, would be justified in laying the charge against C." (original emphasis) The appeal to this Court The only elements of the four elements necessary to establish the tort of malicious prosecution in issue here, are absence of reasonable and probable cause, and malice. The correct test There is no reason why this Court should depart, in relation to the first of these elements, from the test stated by Dixon J in Sharp120. The Court of Appeal was right in my opinion to prefer and apply that test. It is as to the application of it to the facts of the case that I part company with the Court of Appeal. Before I explain why I do that, I will state my reasons why the formulation of Dixon J is preferable and should be taken to continue to state the relevant law. First, as Beazley JA said121, after reviewing the authorities both Australian and English, the test propounded by Dixon J has strong judicial endorsement in both the reasoning and decisions of subsequent cases, and the texts and extra- curial writings of judges. Secondly, his Honour's statement is capable of flexible but practical application to the varying circumstances in which the laying of charges has to be conducted. The words "at least" used by Dixon J stipulate a minimum requirement, but not one which is excessively difficult to satisfy. The requirement is not an unqualified belief of a prosecutor, but rather a belief in a probability of guilt taking account of general grounds of justice, warranting, which I take to mean making it appropriate, that a prosecution be brought. The test is flexible and practical because it directs attention to general grounds of justice. It is unnecessary to attempt to define them comprehensively. 120 (1932) 48 CLR 81. 121 [2005] NSWCA 292 at [107]. Callinan The question whether general grounds of justice make it appropriate that a prosecution be brought prompts these further relevant questions. Has there been a sufficient investigation of the case? Has the admissible evidence against the person been fully analysed? Are any material inconsistencies in the available evidence reasonably explicable or understandable? Has the accused co-operated in the investigation? Has he made any admissions of guilt or otherwise compromised himself? Has consideration been given to evidence, if any, that would tend to show that the case against the accused could not be proved beyond reasonable doubt? Has consideration been given to the taking of such professional or other advice as might usefully bear upon the case? Has the mind of the person responsible for the prosecution prudently and cautiously been brought to bear upon these considerations, separately and in combination? It is only if, and after, the prosecutor has asked questions of these kinds, and is able to answer them honestly in the affirmative, that he will be able to ask himself the further question whether there is a prima facie case properly, that is on general grounds of justice, to be brought against the accused. I have deliberately inserted the word "properly" in this question for several reasons: in order to give effect to the qualification in the formulation of Dixon J in Sharp which makes it clear that in some situations the mere existence of an apparent prima facie case may not be enough to found the requisite honest and reasonable belief; in acknowledgment of his Honour's insistence upon the exercise, in deciding whether to proceed, by the prosecution of both prudence and judgment; to reinforce the distinction between the Executive and Judiciary, the former of which always has a discretion whether to charge, and the latter which does not, and which, on the current authority of this Court may not, in a criminal trial with a jury, withdraw even a weak or tenuous case122 from the latter. The third reason why his Honour's statement of principle should continue to apply is that it accommodates well, indeed I think best, the different functions of the judge and jury in a case in which the latter participates, because it enables the judge to isolate such questions of fact as may need to be asked of them, and so enables him or her to decide the ultimate question of law; of the existence of reasonable and probable cause. The fourth reason for my preference for the test proposed by Dixon J is that his formulation of it, referring as he does to each of belief, probability of guilt, prudence and judgment, gives real effect to the two essential and ultimate requirements, honesty and probability. The fifth reason to prefer Dixon J in Sharp is that his Honour's test accommodates well the involvement, in fact generally the control, exercised in 122 Doney v The Queen (1990) 171 CLR 207. Callinan modern times by Directors of Public Prosecution holding independent statutory offices, of the prosecution of serious offences. A Director could not possibly personally be fully acquainted with every case. But somebody in the DPP's office must be and must apply his or her mind to the strength of it, just as at other stages, and in other cases, a particular police officer, rather than an anonymous police service, must do so. The test propounded by Dixon J is more finely nuanced than the others suggested, and its flexibility and practicality equip it well for to contemporary statutory offices, departments and circumstances. its application The sixth reason why there should be no departure from what Dixon J propounded is that the suggested alternatives to it suffer from an unnecessary and inconvenient degree of over-elaboration. The application of the test As this Court has recently held123, having regard, in particular, to the generally unqualified jurisdictions conferred upon intermediate courts of appeal by statute, and upon this Court as the final court of appeal under the Constitution, findings of fact by trial judges are open on appeal to review and cautious reversal. In this case however, the Court of Appeal erred in preferring its own view of the facts to the trial judge's. The Court of Appeal referred to the second respondent's evidence that he was influenced by the fact that "an independent organisation [the Children's Court] had established that abuse had occurred, based on the information the children had offered"124. The Court of Appeal said that although the second respondent did not say that the finding of the Children's Court relieved him of the obligation to investigate the complaints himself, that he understood that he was so obliged was "implicit" in his evidence125. That was, in my view, to read too much into what was left unstated by his evidence. The standard of proof and the manner of proceedings in that Court are, as I have pointed out, very different from those of the Criminal Courts. The fact that the children were no longer in any perceived danger removed any necessity for particular haste in conducting the investigation. The trial judge was alive to these matters. His criticism of the psychologist's report, which was apparently part of the material prompting the seeking of the order made by the Children's 123 See Fox v Percy (2003) 214 CLR 118 at 156-157 [27], 165-166 [148]. 124 [2005] NSWCA 292 at [114]. 125 [2005] NSWCA 292 at [115]. Callinan Court, bears this out. To contend, as the respondents did, that the sexual abuse had been "established" by that Court was to overstate the position. The Court of Appeal thought that the trial judge erred in not giving weight to the second respondent's reliance upon a statement made by the appellant's wife: that she wished the children's father would kill the appellant "[to get] both of them out of [her] life"126 and that she had threatened the appellant with a knife. But the trial judge neither overlooked these matters nor failed to weigh them with the other evidence, a relevant part of it being that after the confrontation with the knife, the appellant's wife accepted the appellant's denial of any impropriety. The Court of Appeal accepted that the investigation did reveal some inconsistencies and implausibilities in the children's evidence127, and that the second respondent was influenced by irrelevant and "coincidental" matters128. One of the last was the child D's recall of an occasion of an alleged assault. The trial judge did not overlook this. He was of the view that the second respondent should have either doubted it, or at least explored it further, because at the time D was recovering from an operation that had left his leg in plaster and necessitated the use by him of a walking frame. As to some of the factual matters to which the Court of Appeal referred, its view was that although the trial judge was justified in finding that the second respondent's reasoning was illogical, his investigation insufficient, and his analysis of the evidence flawed, it was, in effect, to be unduly critical of him to regard these matters as important or even influential as the trial judge had the benefit of, and presumably was relying too much on, hindsight. The Court of Appeal accepted that the second respondent's reliance upon inadmissible evidence that medical examinations of C and D although not revealing abnormalities of any kind did not "preclude an assault as described", was ill-founded, but that because the law in that regard had only been settled about 10 months before the charges were laid, it was understandable that the second respondent would not have known of it. The Court of Appeal then turned to the critical conversations between the appellant's solicitor and the second respondent, pointing out that the former agreed in cross-examination that the second respondent had said during one of the conversations, "… that people above him advised him, 'look if you had a 126 [2005] NSWCA 292 at [118]. 127 [2005] NSWCA 292 at [128]. 128 [2005] NSWCA 292 at [132]. Callinan prima facie case, you've got to leave it up to the court.'"129 According to the Court of Appeal "a quite different picture [of departmental pressure] emerges" when this piece of evidence is taken into account130. That, with respect, is simply not so. The second respondent volunteered and reiterated that he acted under departmental pressure. He well knew that there was abroad an over-zealousness on the part of his superiors because the appellant was an employee of the police service. The evidence in this regard leaves me, as it did the trial judge, with the overwhelming impression that the second respondent's superiors were imposing pressure upon him to lay charges, and that it was by this pressure that he was moved. It follows from what I have said that despite the large jurisdiction conferred upon the Court of Appeal to review facts, as well as the application of the law to them by a trial judge, it was not justified in dismissing as irrelevant, insufficient or erroneous the trial judge's findings of fact as it did. The trial judge here enjoyed several very real advantages over the Court of Appeal. He had the opportunity of watching video tapes of the boys' interviews. He saw and heard the second respondent, and the appellant, and evaluated their evidence in the light of the other oral evidence and the voluminous material that he read. Assuming that, in a case of this kind, differences on the part of a Court of Appeal, as to the weight to be accorded to some only of the matters found and held by a trial judge to be of importance to his decision, may produce a different result on appeal, the Court of Appeal was not justified in here differing as it did, for the reasons that I have given. The case, it may be accepted, could not have been an easy or simple one for the second respondent. His difficulties were compounded by his personal distractions and the unduly heavy workload that he had been assigned. Society abhors child abuse. This abhorrence imposes a further burden upon an investigator. These matters were all known, or should have been known, to the second respondent's superiors. They, as well as the second respondent, would have understood that the laying of a charge of child abuse against anyone, let alone a child's step-parent, is a very grave matter, likely to leave a stigma upon the parent even if the charge fails. All of this called for caution and prudence on the part of the respondents. The second respondent should have asked himself the questions to which the test propounded by Dixon J gives rise. Had he done so he would have been unable, on the findings, fairly and carefully made, of the trial judge, to say that there was reasonable and probable cause to charge the appellant with respect to the allegations made by D. It is of no consequence 129 [2005] NSWCA 292 at [149]. 130 [2005] NSWCA 292 at [150]. Callinan therefore that the trial judge sought to apply the law as stated by Jordan CJ in Mitchell v John Heine & Son Ltd 131 rather than as stated by Dixon J. It is necessary to say only a little about the other matter that was argued. Malice may have different meanings in different branches of the law. For example, in defamation, knowledge of falsity, or an absence of belief in the truth of the publicised material, may constitute it, as will spite or ill will132. Recklessness too can amount to malice in defamation133 and, in my opinion, may do so in cases falling short of wilful blindness or the like. Malice in a case of malicious prosecution may, however, be established if some collateral purpose is shown to have provoked or driven the prosecution. That does not mean that a person bringing a prosecution who dislikes, perhaps even despises, the subject of it should necessarily on that account alone be adjudged to have brought it maliciously. If the charge is one that should have been laid according to the precept of Dixon J, the prosecutor's distaste for, or dislike of, the accused will be an incidental matter only. Clearly enough, some of the questions which should be asked to ascertain whether reasonable and probable cause existed, may also arise in relation to malice. The two elements will not always in practice neatly divide into two different topics. Here however, indirect purpose and therefore malice was established: the purpose of giving effect to pressures from senior officers. All of the elements of the tort were made out on the evidence accepted by the trial judge in respect of the charge based on C's complaint. The appeal to the Court of Appeal in that matter should have been dismissed. 131 (1938) 38 SR (NSW) 466 at 469-471. 132 Horrocks v Lowe [1975] AC 135 at 149-150; see also Roberts v Bass (2002) 212 CLR 1 at 32 [77]. 133 Horrocks v Lowe [1975] AC 135 at 152; see also Roberts v Bass (2002) 212 CLR 1 at 21 [44] per Gleeson CJ, 34-35 [84]-[86] per Gaudron, McHugh and Gummow JJ, 79 [230] per Hayne J, 103 [288] per Callinan J. Callinan For the reasons given in the joint judgment I would however dismiss the appellant's appeal in respect of the charge brought in reliance upon D's evidence. I would join in the orders proposed in the joint judgment.